Wednesday, 14 December 2011

Accounting loopholes used by bankers to 'inflate profits' (and their bonuses)!

Following on from my recent post about the locusts, leeches and vultures in our society (i.e. financial services companies and lawyers) a report has been published today by the Adam Smith Institute showing how banks (the locusts) use outdated/flawed accounting rules to fictitiously boost profits in order to maximise their bonuses.

The report highlights how technically insolvent banks are using IRFS accounting rule annomalies to report massive profits by using expectations of future values when calculating/reporting profits ... to make it look as if they are not insolvent and to make it look as if the bankers are making lots of money (in order to boost their own individual bonuses).  Yet many of these assets, contrary to increasing in value can easily, and in fact do (as we have seen!), become worthless.

The report highlights how the 'financial engineering' going on in banks is no more than a legalized scam/ponzi scheme (e.g. Credit Default Swaps) and how it's effectively fraud (which compliments/augments the legalized counterfeiting they also undertake)! It also highlights how politicians and regulators are doing nothing to tackle the anomalies in the accounting procedures to stop them from doing this in the future.  

The report also exposes how the ratings systems not only allow, but positively support, them making up and using 'fraudulent' financial vehicles to fictitiously drive up profits (by giving scam 'products' triple AAA ratings),  whilst making it very difficult for hard-working small/medium enterprises to get a loan (due to not giving them triple AAA ratings and/or no rating at all). This makes it easy, and much more lucrative, for banks to 'manufacture profits' from 'financial products' (or 'vehicles'), rather than generate profit by lending money to an enterprise working hard to manufacture 'real products' (e.g. real 'vehicles')!

So what are the Government doing? ... Well rather than tackling the problem at its source (e.g. by starting to address the flawed rules/systems that allow such scams to go on), they have instead said they are going to set a little bit of taxpayers money aside (i.e. your money!) for small/medium businesses (whipppeee)! ... and at the same time they are preparing for the next bank bailout - which will occur when the value of all these fictitious financially engineered products actually prove to be worthless (and when the current commodity boom they are currently pushing also goes bust). With 'ring-fencing' effectively put into the long grass by politicians*, nothing of any substance will have been implemented to protect the taxpayer before the next collapse (currently being driven by the bankers).

The end result ... mega-rich bankers/speculators ... bankrupt nations/taxpayers. 

The process ... legalized fraud, robbery and counterfeiting ... endorsed by corrupt politicians and law makers (n.b. lobby groups such the CBI also lobby heavily on behalf of banks, claiming they are the 'Voice of Business', when due to the vast amounts of money given to them by the banks, they are really the 'Voice of Banks').

In China such people would be tried for economic sabotage ... and, if guilty, hanged ...

So when will people in the Western World realize what is happening and start to demand action ... a couple more years perhaps? ... when the next bailout is required?

Well, whatever the timescale, the bankers are clearly looking to make hay while the sun shines (i.e. taking a shedload of your future wages - i.e. the taxes they will take from you in the future to pay for previous/future bailouts) ... whilst the politicians/lawyers try to put up barriers, blow up bridges, and get their lifeboats ready ... so when people do finally realise what's actually been going on they won't be able to reach them ... or their corrupt bank friends!

* David Cameron has put plans for any ring-fencing at least 5-10 years away, and he also put aside our national interests last week when trying to protect his banking friends in the City from any regulatory changes taking place in Europe.

Thursday, 8 December 2011

I predict a riot ... or public disorder ... says ex Police Chief

With budgets under increasing pressure, unemployment growing and Police morale also becoming an issue, Lord Stevens, recently launched an independent commission into the future of Policing, saying "my own belief is - and it's a very personal one - that (over) the next 18 months, two to three years, one of the main issues will be public order, or rather public disorder".

"I don't think anyone would disagree with that in terms of the challenges facing policing. We'll be looking at that in some detail," he said.

"My gut feeling and beyond is that it's going to be a very difficult 18 months, two years, but I hope to God I'm wrong."

He predicted "disquiet on the streets" and said he was really concerned about unemployment - particularly youth unemployment and "a sense of increasing crime" and said "The police have to be absolutely match fit to deal with these issues."

Indeed - I don't think anyone needs a crystal ball to see this one coming ... and I think the timeframes are probably about right too.

Locusts, Leeches and Vultures

Financial Services companies are locusts in society, and if anyone is still in any doubt about the level of greed/immorality of bankers then they need look no further than the latest news about HSBC mis-selling bonds which systematically stripped vulnerable old people of their hard-earned money/nest eggs ...

At the same time, ambulance chasing lawyers are like vultures, chasing any opportunity to profit from someone else's misery and pushing people to make fictitious claims (e.g. whiplash injuries). It is almost ironic that lawyers are trying to feed off the locusts now too, following the widespread mis-selling of insurance (PPI) by banks ... 

Oh what a corrupt, rotten, immoral world we live ... and whilst we are on this topic let's not forget the immoral behaviour of Insurance companies, the leeches, who have recently been exposed for profiting heavily from passing on the details of accident victims to ambulance chasing lawyers (and in the process pushing up car insurance premiums).

These leeches promise the world to get their hands on your money, but when there is a risk of paying any money back they'll use any trick in the book to wriggle out of it.  For instance it has recently been revealed how the vast majority of insurance companies aren't checking prior accidents/claims before providing car insurance (despite it costing pennies and being really easy to do) because they prefer to take a huge chunk of people's money knowing that they'll never have to pay any of it back (nb they carry out these cheap/simple checks as soon as you try to claim, and then use this to relinquish themselves of any liability).

The current state of the economy is due to successive inept and corrupt Governments choosing to believe financial services (e.g. casino banking, counterfeiting banking and insurance companies) to be the key to the future prosperity in the UK ... when in reality, just as locusts, these groups systematically destroy value, not add value, to an economy!

Unless these people are stopped and made to pay for their actions, they will bleed the country dry and the vultures will feed off any remains. The bankers and insurance executives will then try to push themselves onto other emerging economies to feed/leech off them (but places like China have already seen right through them - and anyone found trying to destroy their economy like the bankers have here would be tried for economic sabotage and hanged).

An increasingly unequal country where people are definitely not 'all in this together'

Income inequality has risen faster in Britain than in any other rich nation since the mid-1970s, according to a report by the OECD

The think-tank says the gap has come about due to the rise of a financial services concentrating wealth into the hands of a tiny minority and has warned about the rise of the top 1% in rich societies and the falling share of income going to poorer people.

This trend is especially pronounced in Britain*, where the dramatic rise in inequality has been fuelled by the creation of a super-rich class. The share of the top 1% of income earners increased from 7.1% in 1970 to 14.3% in 2005.

Just prior to the global recession, the OECD says the very top of British society – the 0.1% of highest earners – accounted for a remarkable 5% of total pre-tax income, a level of wealth hoarding not seen since the second world war.

At the same time as accumulating great wealth, the rich have seen tax rates fall. The top marginal income tax rate dropped from 60% in the 1980s to 40% in the 2000s, before its recent increase to 50% (which the current Tory leadership is trying hard to scrap).

Cameron is also going to the EU Summit with the sole aim of 'protecting' his 'friends' in the City ... the people who helped to bankrupt our nation, who are still not lending to small business, and who are now busy speculating on commodities/currencies and trying to bankrupt the nations (and taxpayers) who bailed them out!

The OECD report re-enforces previous reports of FTSE100 executives receiving 50% pay rises (on already multi-million pay packages), whilst the vast majority of hard-working people are facing pay freezes/cuts and/or redundancy.

Sunday, 6 November 2011

Business, Finance and Politics are 'Out of Touch' with People ...

Politicians are starting to 'feel the heat' and some are starting to see where the 'wind is blowing' ... Ed Miliband's article from the Observer newspaper today ... published below in full:

"This is a frightening time for Britain: unemployment at record levels, inflation going up, living standards squeezed; a European crisis, lurching from Athens to Brussels to Cannes, adding to the sense that the economy is on the brink; a government sitting on the sidelines, unwilling or unable to help.

That is the backdrop for the protests at St Paul's and hundreds of similar demonstrations in cities across the world. Some are swift to dismiss them for putting forward what is a long list of diverse and often impractical proposals.

Certainly, few people struggling to makes ends meet and worried about what the future holds for their children will have either the time or the inclination to camp outside a cathedral. And many people will not agree with the demands or like the methods of the protesters. But they still present a challenge: to the church and to business – and also to politics. The challenge is that they reflect a crisis of concern for millions of people about the biggest issue of our time: the gap between their values and the way our country is run.

The role of politicians is not to protest, but to find answers. I am determined that mainstream politics, and the Labour party in particular, speaks to that crisis and rises to the challenge.

Many of those who earn the most, exercise great power, enjoy enormous privilege – in the City and elsewhere – do so with values that are out of kilter with almost everyone else. The warning lights on the dashboard are flashing. And only the most reckless will ignore or, still worse, dismiss the danger signals.

The problem – as I said in my Labour conference speech at the end of September – is a system of irresponsible, predatory capitalism based on the short term, rather than productive, responsible behaviour which benefits business and most people in the long term.

Just think about the last couple of weeks: the energy companies making record profits per customer, and the top directors getting a 50% pay rise while everyone else feels their living standards squeezed. Banks not heeding the lessons of the financial crisis: still dishing out big bonuses and still not lending to the entrepreneurs our economy needs.

You do not have to be in a tent to feel angry. People feel let down by aspects of business, finance and politics which seem in touch with the richest 1% – but badly out of touch with the reality facing the other 99%. They wonder if things can be different — and whether politics can make a difference.

There is much about what David Cameron and George Osborne are doing with which I disagree. But our problems go deeper than any one government. "Take what you can." "In it for yourself." "The fast buck." Most people never embraced these values but we were told they would help us, and Britain, to succeed. But too many thought they could do whatever they wanted, and pay themselves whatever they wanted. And some became so powerful or so big, they believed no one would dare challenge them.

When people at the top show such irresponsibility, it should be not be a surprise to find it elsewhere in society too. We must make big changes in the way our country works. And that is why the choices we make now to address people's immediate worries should also pave the way to a better economy, society and country in the long term.

We want the deficit to be reduced. A Labour government would be making measured spending cuts and tax rises. But any family would find it impossible to pay off a mortgage or a credit card bill if no one in that household is earning an income. That is the immediate problem in our economy. With unemployment at a 17-year high, there are not enough people in work to help pay down the deficit. Nowhere is this more true than for young people.

It makes no sense to allow one in five of them to languish out of work. I was talking with members of what could be a "lost generation" in London the other day who, after being out of work for nearly a year, told me there was no hope for them. We must give them hope, not offer more of the same.

The Tories are discussing how to make it easier for firms to fire people. We are developing policies so they can hire people. We would start by creating thousands of new jobs paid for by a tax on the bank bonuses. It is about rewarding the right values, not the wrong values, in our economy. Young people wanting to go to university fear being burdened down with debts of £50,000 when they leave. It makes no sense and it does not reward aspiration and hard work. So, instead of proceeding with tax cuts for the banks as the government plans to do, we should use that money to cut the maximum tuition fee from £9,000 to £6,000.

And we should apply the right values in the rest of our economy. Our welfare system needs change to reflect not just the compassion of our country, but also the values of hard work, contribution and getting something out when you put something in.

Rather than wringing our hands about electricity bills, we would break up the rigged market of the energy cartel so that new competitors can drive prices down. And let us tell the top CEOs that, if they are unwilling to justify their rewards to an employee on the committee that decides salary packages, they will not get it. These choices are all affordable and can all be made now to help get Britain working again for most people. But they also pave the way for a better economy and a more responsible capitalism in future.

Business as usual is not an option. In every generation, there comes a moment when the existing way of doing things is challenged. It happened in 1945. It happened in 1979 and again in 1997. This is another of those moments because the deeper issues raised by the current crisis are too important to be left shivering on the steps of St Paul's. We cannot leave it to the protesters to lead this debate.

But we can only win this debate with a movement which stretches beyond politics. That is why in the months and years ahead Labour is determined to construct and to lead a coalition which includes business and civil society to make the case for a responsible economy, fairer society and a more just world".

Morals vs Money ... the 'battle' has begun ...

The Archbishop of Canterbury and the Church have stepped further into the frame and are preparing for 'battle' ...

Following the Occupy Movement setting up their protest camp outside St Paul's, more senior figures, led by the Archbishop of Canterbury, have stepped up their attack on the City, speaking of a financial sector which sets a moral tone for a society which had become "scandalously unfair", and drawing attention to the human cost of financial injustice, as well as the need to reset the debate about financial institutions firmly within the context of a bigger story about what human life is for.

They include:

 Dr John Sentamu, The Archbishop of York, has launched an attack on executive pay, saying that FTSE-100 company chief executives were doing a disservice to society with their remuneration, saying "It is hard to imagine a more powerful way of telling someone that they are of little value than to pay them one-third of 1% of your salary ... and among the ill effects of very large income differences between rich and poor are that they weaken community life and make societies less cohesive."

 Ken Costa, a former bank chairman (of investment bank Lazard International) and the Church’s newly appointed leader of an initiative/commission to build links with the City and build bridges between the anti-capitalist protesters and the City (appointed by Dr Richard Chartres, the Bishop of London, following his 'u-turn'). Mr Costa has already said: "It will look at how the market has managed to slip its moral moorings, and explore pragmatic ways of uniting the financial and the ethical." 

• Dr Giles Fraser, the cleric who quit as canon chancellor of St Paul’s, said there was “financial injustice” that had to be addressed. He resigned from the Chapter of St Paul's as clerics fell out over how to deal with the Occupy London protesters camped outside, and has added that the Church should highlight the human cost of financial injustice, but warned its leaders against "proposing specific answer to complex economic problems."  

"Rather, it's the calling of the Church to draw attention to the human cost of financial injustice, and to reset the debate about our financial institutions firmly within the context of a bigger story about what human life is for," he said.

The cathedral executed a u-turn after the intervention of Dr Williams, who sided with the anti-capitalist protesters camped outside the cathedral, and as a result the Corporation of London has now had to suspend its legal action.

Dr Williams, has also called for specific action, calling for the introduction of a financial transaction tax (sometimes referred to as a 'Robin Hood' tax), and started to intervene after becoming increasingly dismayed at the stance taken by Richard Chartres, the Bishop of London, who backed the legal action to have them removed. 

There is still quiet concern at the Cathedral that the stance now being taken by senior clerics and the Church will put off City donors ... who significantly fund St Paul's Cathedral ... which goes a long way to explaining the initial desire of some (such as the Bishop of London initially) to start legal action to remove the protestors ... 

The 'battle' has indeed begun ... Morals vs Money ... and it's not going to be easy ... as even some in the church have clearly initially struggled with this!

From a historical perspective, by not allowing protestors to protest in 'The City' or outside the Stock Exchange, and with the Occupy Movement subsequently choosing to camp out at St Paul's Cathedral instead (which is next to the Stock Exchange), little could they have known that this would spark into action one of largest movements in the world, and see the Church step into the frame to back their cause ... a ground-swell within the Church is clearly developing and gaining a renewed sense of vigor ...

PS Ed Miliband has finally stepped forward again today by writing an article ...

Friday, 28 October 2011

Global Capitalism vs Christianity - has a 'battle' begun?

By demanding that the worst excesses of global capitalism be reined in, the Holy See echoed the message of protesters encamped outside St Paul's Cathedral in London, the indignados of Spain and the Occupy Wall Street movement in the US.

In a forthright statement, the Vatican's Pontifical Council for Justice and Peace called for an end to rampant speculation, the redistribution of wealth, greater ethics and the establishment of a "central world bank" to which national banks would have to cede power.

Such an authority would have "universal jurisdiction" over governments' economic strategies. Existing financial situations such as the World Bank and International Monetary Fund were outdated and no longer able to deal with the scale of the global financial crisis, which had exposed "selfishness, greed and the hoarding of goods on a grand scale".

The global financial system was riddled with injustice and failure to address that would lead to "growing hostility and even violence", which would undermine democracy. Wealthy countries should not be allowed to wield "excessive power" over poorer nations, the Vatican said. Cardinal Peter Turkson, the head of the pontifical council, said banks needed to question whether they were "serving the interests of humanity" in the way they operated. 

The proposal calls for a new tax on international financial transactions, but the battle for the future of humanity (based upon robust values/ethics) has only just begun and is becoming more vocal from Christians ... and is joining forces with others (e.g. the Occupy Movement).

However the 'battle' is not going to be easy or without 'casualties', as some church leaders are clearly not happy about this ... for instance the Revd Canon Giles Fraser resigned yesterday after having sided with anti-capitalist protestors camped outside St Paul's cathedral. The cathedral was losing £20k a day in lost takings (e.g. it charges £20 just for entry) and was coming under increasing pressure from local authorities ... clearly some in their senior ranks felt this financial loss (and unwanted attention) was just too much to bear ... hypocrisy indeed!

In a sign of the deeper splits within the clergy, a report that Canon Fraser had been due to publish, which was damning of the lack of ethics amongst bankers, had been shelved by the cathedral amid concerns that it would escalate the row by appearing to add weight to the protesters' cause.

Double dip ... here we come!

Further evidence today that we are heading for a double-dip recession ... 

1. Two of the nine Bank of England Monetary Policy Committee (MPC) members have effectively now admitted it ... with one now saying there is a 50-50 chance the economy will contract in the final three months of the year. They are trying to 'rescue us', or should I say 'cover the recession up', with a further £75bn of quantitative easing (printing money) ... and they hinted a further extension of this is likely in the coming months. The problem with this approach is that the money simply ends up in banks (who caused the problem in the first place) for them to speculate with (rather than lend out to businesses) and it also pushes up prices/inflation (nb the idea that the stock market is 'rallying' is a big con ... it simply follows the effective devaluation of the pound).

2. Sentiment among the British public has dwindled to recession levels as fears mount over the outlook for the economy and household finances. GfK NOP's consumer confidence index fell to -32 in October from -30 in September. It has only breached that level on two occasions since the survey began in 1974 - March 1990, and June 2008. At both points the UK was heading into recession.

But don't worry ... the Chancellor and the Government now have something else to 'pin the blame on' ...  not themselves ... or any of their policies/inaction ... but the crisis in Europe* ... how convenient ... and timely!

* After all the rhetoric from Cameron and the Government about listening to the voice of the people (and giving them a referendum on Europe), it's interesting that they imposed a 'three line whip' to force MP's to vote against a proposal aimed at giving ordinary people an opportunity to have their say over Europe ... whilst they continue to use taxpayers money to prop Europe up! Hypocrisy indeed.

Proof we are definitely not 'all in this together' - Directors pay jumps 49% in one year!

At a time when high inflation, high unemployment, and low wage growth are weighing down on UK household budgets a report has been published demonstrating how we are definitely NOT "all in this together".

With pay freezes being imposed on the vast majority, the 'cosy club' of people sitting in boardrooms, and who also sit on renumeration committees, are rewarding themselves handsomely ... 

Today an IDS report confirmed that FTSE 100 directors have seen their pay increase by a staggering 49% in just one year ... and this is a very large percentage increase on an already very large salary! 

The problem is that the vast majority of people sitting in boardrooms and on renumeration committees are also directors themselves ... so these people are effectively live in an 'incestuous world' where they all vote to push up boardroom pay and give each other a big pay rise ... however good/bad their company is doing!

Average FTSE 100 director pay is now up to £2.7m, including fixed pay, benefits, bonuses, value of long-term incentive plans and gains made on the exercise of any share options cashed in during the year.

Britain's economy may be struggling to return to pre-recession levels of output, but the same cannot be said of FTSE 100 directors' remuneration," said Steve Tatton, editor of the IDS report.

IDS said: "At a time when employees are experiencing real wage cuts and risk losing their livelihoods, it may be difficult for FTSE 100 companies to justify the significant increase in earnings awarded to their directors ... the pay gap between the boardroom and the shop floor does not yet show any signs of closing."

Which is a complete understatement ... the gap is actually widening rapidly and at an increasing rate ... not just in percentage terms ... but in terms of actual value too (pay rise of £0 compared to a pay rise of over £1m)!

The Unite union has called executive pay "obscene" and has called for shareholders to be given more power to hold directors accountable. The union's general secretary, Len McCluskey said: "The Government should strongly consider giving shareholders greater legal powers to question and curb these excessive remuneration packages".

""Institutional shareholders need to exercise much greater scrutiny and control of directors' pay and bonuses ... it's obscene and it shows that the City has learnt nothing during the financial troubles of the last four years."

Brendan Barber, the TUC's general secretary, said: "Top directors have used tough business conditions to impose real wage cuts, which have hit people's living standards and the wider economy, but have shown no such restraint with their own pay ... Reform should start with employee representation on remuneration committees, which would give directors a much-needed sense of reality."

Deborah Hargreaves, chair of the High Pay Commission, also said "We have got a closed shop here and someone needs to break it open."

In a recent speech Ed Miliband also said this must be challenged ... let's see if he speaks up about this again and does something about it now ... or let's see if he chooses to quietly walk away from the challenge after finishing yet another attention grabbing and crowd-pleasing speech! 

It's a shame so many people are either ignorant or apathetic ... and also have such short term memories!

Saturday, 10 September 2011

GP's 'rationing' healthcare already ... and they're not even being 'bonused' on it yet!

The number of patients being referred by their GP to see a hospital specialist has dropped by almost 5% over the past year, prompting fresh concern that access to care is being rationed as a direct result of the pressure on NHS finances.

GPs in England referred about 3.6 million patients for a first hospital consultation between April and July, according to data from the Department of Health (DoH). That was 4.7% fewer than the same period in 2010 – 3.8 million referrals.

The number of patients being seen by consultants after a GP's referral also fell during the same period, from 3.1 million last year to 2.9 million – a drop of 5.2%. The two sets of figures do not match because many patients remain on waiting lists.

The British Medical Association (BMA), the doctors' trade association, said that reductions in patients' access to healthcare were happening more often.

"The NHS is under a lot of pressure to do less, for example through referral management initiatives, which seem to be on the increase. These may save money but for every lost referral there is a patient who is not getting diagnosed or treated, and a hospital that is more likely to encounter financial problems," said a BMA spokesman.

John Healey, the shadow health secretary, also warned that some patients may be missing out on drugs, surgery or other treatment because of the falling number of referrals.

"While it is important to reduce demand for hospital care, patients will want reassuring that they are not being denied necessary treatment," he said. "These figures show the huge pressure on hospital finances at a time when David Cameron is wasting millions of pounds reorganising the NHS bureaucracy."

The NHS in England is struggling as its budget increase this year is just 0.1% – after a decade of big annual rises – while it seeks to save £20bn by 2015. The efficiency drive was ordered by the NHS's chief executive, Sir David Nicholson, in 2009, intending to free resources for the growing number of patients, especially elderly people, with long-term conditions such as cancer, diabetes and obesity. Nicholson has told the NHS several times not to limit services in order to meet the target.

GP's are not being 'bonused' to 'ration' healthcare yet but make no mistake ... plans for GP commissioning has this at its heart ... e.g. the less spent on patient care the more their consortium will profit ... and the more the consortium profits the more the GP's will receive in dividends (i.e. cash straight into their bank accounts) ... to compliment the multimillion pound windfall they'll also receive when they decide to sell off their 'stake' in their consortium. 

Conflict of interest? You bet! Government prepared to fix this fundamental flaw in the reforms plans? Absolutely not! The real reason for these reforms is cut the healthcare budget ... and 'rationing at source' (i.e. at the point where people might be diagnosed and/or referred) is the simplest and most effective way the Government see to do this ... but they know they'll have to 'bribe' the GP's to get them to do this!

Some GP's are clearly already 'signalling' their 'enthusiasm' and 'ability' to do this ... whilst others steadfastly refuse out of principle. What people fail to realise is that not only will they be rationing healthcare, these soon to be multi-millionaires will also be looting the NHS of the finance is desperately needs to spend on healthcare!

Hippocratic oath - or Hypocrasy ...?

When diagnosing patients in the future ... will patients believe and have trust in what their doctor says and recommends? ... or will that vital trust be broken ... with patients trusting them little more than politicians? **

Unsure ... well if you need more information in order to decide ... why don't you listen to what trustworthy and honorable GP's say ... and/or the latest news on GP's being caught charging the NHS for treating patients that don't exist ... or who died years ago!

** Age old saying: 

Question: "When do you know a politician is lying?"
Answer:   "When their lips are moving!"

"Weapons of mass destruction", "I pledge not to raise tuition fees", "I'll cut the deficit, not the NHS" ...

Friday, 2 September 2011

Irradicating the "Economics of Exploitation"

A great blog from the Renegade Economist ... which makes the case for a new economics ...

"While unearned wealth is both a symptom and a driver of economic injustice, the objective of transformative social change is not to soak the rich, but to create an environment in which economic opportunities are more widely distributed among the population ...

The recent riots and looting in London and other English cities are symptomatic of deep economic dysfunction. The social fabric is straining under the weight of an economics unable to offer any possibility of a different, better future.  The social contract is under greater pressure than at any time since the 1930s. But there is a crucial difference between the world then and the world today: a transformation in our collective moral aspirations that offers a spark of hope for the future, the kind of spark that in the dark days of the mid-20th century it took a world war, and the horrors of the holocaust, to ignite.

A just economy will not emerge from the tired debate between left and right, or endless arguments over whether free markets or state control of the economy deliver the best outcome. Justice requires that we transcend these stale and failed dialectics. Neither the contemporary vision of a free-market economy, nor a state-socialist or Keynes-inspired social democratic model can deliver a just economy; each is too riven by conflicts and compromises to get anywhere close.

Nothing short of fundamental reforms to the three pivotal institutions of the modern economy will do. Without substantial changes to the tax system; the financial system and the monetary system, a just economy will remain beyond reach.

Foundations of a New Social Contract

While a smaller, less expensive, state is perfectly achievable once everyone is permitted a viable stake in the economy, the state will still have an important function for which it will need to raise revenue through taxation. But it should tax the use of land and natural resources, things that are limited supply, rather than wages and profits. Taxing the output of economic activity discourages entrepreneurship and penalises hard work.

Financial markets must be reformed so that their sole purpose becomes the channelling of investment capital to the real, productive economy; activities that create the goods, services and experiences that people need to live decent lives, and the extras that promise the possibility of fulfilment and happiness.

Alongside these changes we need a new system of money creation; one that ensures stability in the money supply and that sufficient credit is available to fund every viable new business start up, or sustainable plan for expansion. Money should no longer be created as debt, as this places an unnecessary and counterproductive burden on both business and the economy as a whole.

Economic Renaissance for the Majority

These measures would curtail the minority enjoyment of unearned wealth and bring the benefits of a dynamic, opportunity-rich economy within reach of many more people. It’s perhaps not easy to imagine such a future economy, and it’s probably impossible to model the precise impact of these changes in terms that conventional economics demands, but such modelling is not necessary. These reforms would have to be implemented gradually so they can be fine-tuned as their impact becomes evident. And a great deal more research is required, especially into the impact that changes in each of these spheres will have on the other two: the mechanisms of the tax, financial and monetary systems are complex and interdependent.

If such changes are to be successfully implemented, they will have to be coordinated internationally. This may seem an impossible goal, but it’s not so very different in scale or complexity to the changes unleashed by the process of economic globalisation over the last thirty or so years; it’s just better motivated.

Over to You…

But none of this can happen without the commitment of a critical mass of people. Where that tipping point lies is impossible to know but it is out there. What we need now is the most successful marketing campaign in history. Central to that campaign should be the message that transformative change to economic structures and institutions is possible, and if such change were achieved, the life experience of the vast majority of human beings would be dramatically improved.

Next week, in the final article in this series, I shall look at the prospects for this campaign, and at the importance of established democratic structures in the process of revolutionary economic change"

"Nothing in the world... not all the armies... is as powerful as an idea whose time has come." Victor Hugo 

... This is a great article. IMHO the current form of 'economics' is a mixture of Poweromics (the 'economics' of exploitation, self interest and greed) and little will change until Ignoromics reduces (as suggested in the last paragraph ... 'over to you').

For instance over the last few days the banks have made a conserted and co-ordinated effort (with the CBI - the "Voice of Banks" - not the "Voice of Business" - as they are most bankrolled by the Banks) to strike fear in the public and threaten the Government not to split retail banking away from investment banking (nb which is being brought in to stop taxpayers having to bailout reckless bankers again). Creating fear is a common tactic used by those in Power (remember the Iraq war and those 'weapons of mass destruction'?) ... and the banks are using the 'destruction of the economy' as their 'weapon of choice' (even though it is they that destroyed the economy in the first place)! 

The Liberal Democrats say the want to press ahead with reform, but David Cameron and George Osborne are taking the opportunity (i.e. comments about the threats to the economy) to say they would like to 'park the reforms in the long grass' until the economy is stronger (anything to do with the 'backhanders', lobbying and their ultra-rich friends perhaps?) Just have a guess where these guys are likely to go after they leave Politics ... and I am sure it will be, just like Tony Blair before them, to lucrative jobs in the City!

The problem with the current economics is that it is not just the financial system that is corrupt, but it is all the other essential pillars of society too ... such as Government, the Media (remember Murdoch and the News of the World) and the Judiciary.

The move away from taxing jobs/profit to taxing unearned income/wealth (e.g. land values, gambling, financial transactions etc) is IMHO a 'no brainer' ... as is taxing the extraction of limited natural resources ... and making illegal the electronic counterfeiting of money (which the legal system allows the banks to do every day - i.e. creating money out of thin air, loaning it out and charging interest on it!) as well as the reckless and deliberate destabilising activities of banks (e.g. shorting, and the creation of 'toxic products' such as credit default swaps).

Current economics is unfortunately proving itself to be more about the movement of money/resources to wherever Governments allow them to exploit/profit from people the most ... a form of 'economics' contrary to 'growth' and 'well-being' ... and more about the "Economics of Exploitation". 

Friday, 26 August 2011

Tax the Rich more and the Poor less ... say the Rich in France

Following on from similar comments by US Billionaire Warren Buffett, the rich people of France have called upon their Government to tax them more in order to turn the economy around ... 

... in a letter, signed by some of France's most high-profile chief executives, said: "We, the presidents and leaders of industry, businessmen and women, bankers and wealthy citizens would like the richest people to pay a special contribution ... in a spirit of solidarity" and the French Government is acting accordingly (with an extra tax of 3% on income over 500,000 euros) ...

So why in Britain do we have George Osborne, Boris Johnson and the rest of the Conservative party trying to argue that to escape from our economic problems we need to tax the rich less (i.e. they want to get rid of the 50% tax rate for incomes over £150,000) and tax the poor more (whilst helping them a lot less) ?  

Is it that they know 'better' ... or is it pure selfishness and greed on behalf of themselves (they are all millionaires) and their rich friends?  IMHO this isn't a hard one to work out ... pretty obvious really ... however the problem is most people in the UK are either ignorant or apathetic about it ... so these corrupt 'spin-doctors' (who are trying to push the 'ultimate con' - namely 'trickle-down' economics) think they can get away with it!

The Conservatives try to tell us we "are all in this together" (whilst the truth is in fact the complete opposite) whilst the French don't just talk about, they stand-up to be counted, speak out about solidarity and what is needed to really turn things around, and act upon it!

Wednesday, 17 August 2011

The 'Four Horsemen' are coming ...

The trailer of a forthcoming documentary by The Renegade Economist.

The Four Horsemen is an independent feature documentary which lifts the lid on how the world currently works ... 

Those in power are "controlling the money ... and controlling the way we think" ... to make sure they "stay in power" ... and to make sure that "capital and power concentrate further" ... 

"They're getting away with all kinds of legal thievery" and "people are beginning to get angry, but not nearly enough"

Directed By: Ross Ashcroft

Featuring: Joseph Stiglitz, Michael Hudson, Prof. Herman Daly, Gillian Tett, Noam Chomsky, Max Keiser,  Dr. Ha-Joon Chang, Simon Johnson, Colonel Lawrence Wilkerson, John Perkins, Tarek Al Diwany, Camila Batmanghelidjh, James Turk, David Morgan, Hugo Salinas Price and more ...

Coming soon: Autumn 2011