Corrupt capitalism: Fraudulent bankers are running amok!

Following recent posts, and on from my many previous posts about the immoral and corrupt practices of bankers, today we got yet more of a glimpse into the culture of investment (casino) banking and what they really get up to ... in their immoral pursuit of profit ...

... they are running amok, creating 'money out of nothing' ('electronic money') so they can gamble on rates, derivatives, assets and currencies etc ... and they are also fraudulently ensuring the 'casino wheels' are 'rigged' in their favour! ... and how do they do this ... well today it emerged they've been fraudulently rigging the 'rates' (e.g. reported libor/euribor rates) ... that they themselves have gambled on ... to make sure all their bets 'win' (... and sharing the 'profit' between them)!

You couldn't make this stuff up ... and there are clearly lots more scandals still come out too!

The case for taking back control of money supply (i.e. the creation of 'electronic money'), and separating casino banking from retail/commercial banking, should now be absolutely clear to everyone. These are both imperative to i) take back control of our economy (and off of the banks!) ... and to ii) ensure we do not give money (either directly or indirectly) to casinos! 

Without a tie to our personal and business accounts, the taxpayer would not have had to bailout/subsidize casino banks ... as they could go bust ... without affecting the accounts of voters or businesses.

Moreover, gambling/financial transactions should be taxed, to fall into line with other forms of gambling! All 'money for nothing' schemes should be outlawed (i.e. banks creating 'electronic money' themselves) and gambling heavily taxed, to subsidize tax reductions to activities that 'add real value' to our economy and society.

Yet Cameron and Osborne actively boycott any such proposals, and vehemently oppose the introduction of a financial transaction (gambling) tax on their immoral betting ... 

Cameron and Osborne also appear to have given up on the economy in terms of trying to create jobs/growth ... and are now set on slashing benefits and blaming the poor ... instead of tackling the corrupt actions of bankers, or reversing flawed policies currently destroying jobs/growth!

They are also slashing public services and raising taxes for hardworking people ... whilst incredulously cutting tax for the rich ... and allowing/overseeing widespread tax avoidance by the rich too (schemes where the ultra-rich pay less than 1% cf the 30-40% tax paid by the vast majority)!

People can clearly now see there are one set of rules for the rich/powerful (i.e. no real rules) ... e.g. the counterfeiting of money, widespread tax avoidance, no criminal prosecution of bankers/executives ... but there are an ever increasing set of rules policing everyone else (e.g. 'big brother', 'police tasers' ...)!

As far as the bankers are concerned we need to hit them hard immediately ... as a trivial fine (i.e. £60m from the FSA ... nb the £290m includes US charges!) is not enough ... we should immediately take back control of money supply (i.e. 'electronic' money as well as 'paper' money - see the excellent Positive Money reports below!) ... and make sure our money is only used to provide carefully regulated loans directed to customers and business (i.e. not for themselves to gamble in pursuit of more profits/bonuses). 

A forensic legal inquiry should also be started to uncover all corrupt practices and to jail the ring leaders (nb which will no doubt quickly spread to the regulators, politicians and Government officials manipulated/'run' by these people!) ... and a complete separation of retail/casino banking should also start immediately too.

Positive Money Report ...

Whenever major decisions are taken about the future of the UK, news cameras will be aimed at reporters standing in front of Parliament. But is Parliament really where the key decisions are being made today, or has power shifted down the river to London’s financial sector, the City?

This news report from Positive Money finds a banking system that has more ‘spending power’ than the democratically elected government, no accountability to the people, and a massive concentration of power in the hands of a few individuals. 

However, the greatest concern is that government has surrendered one of its most important powers — the power to create money and control the money supply — to the private sector, which has exploited this power to blow up housing bubbles and indirectly transfer wealth upwards and inwards, with disastrous results. There has been no democratic debate about this transfer of power, and no law actively sanctions the current set-up.

As the last few years have shown, the banking sector can have a serious negative impact on our lives. Leaving it with such a huge and unaccountable degree of power is no more likely to work in the best interests of society or democracy in the future than it has in the past.

An Overview:

Ceding the Power to Create Money to the Banking Sector

In the current system, banks create the vast majority of money in the UK, in the form of the electronic bank deposits that appear in your bank account. They create this money without regard to how much is needed for the economy and society as a whole to operate effectively, and they put over 90% of this money towards activities that do not contribute to the growth of the real economy.

This power to create money causes inflation that insidiously transfers wealth from savers and those who hold their wealth in cash (i.e. the poor and those on medium incomes) to those who are rich enough to hold their wealth in other assets (such as property). Giving private sector banks a monopoly on the creation of money also means that whenever additional money is needed in the economy, only private banks can provide it. In effect the entire money supply must be rented from the banking sector, at great cost to the economy. The creation of electronic money is a service that could be provided by the government at no cost to anyone.

The business model that permits banks to create money—so far from the popular perception of banks as simple intermediaries between savers and borrowers—is inherently unstable and will systematically require periodic taxpayer-funded bailouts. The cost of these bailouts diverts revenue from the activities that the government was elected to do, compromising its ability to fulfil its democratically mandated objectives.

Leaving this power to create money to the private sector creates a serious democratic deficit: a process that many would consider to be the sole prerogative of the state is in the hands of corporations who have no accountability to the wider public and whose interests are completely at odds with those of society as a whole.

Overstating the True Contribution of the Banking Sector

Politicians and policy makers are misinformed about the true contribution of the banking sector because they are only shown the positive side of the sector’s contribution to government finances, i.e. the taxes they pay. The overall contribution of the UK banking sector to the Exchequer is about 6% of overall tax revenues. In the year that the banking sector paid its highest ever tax, the manufacturing sector paid over three times more.

Society is now acutely aware of the direct cost to the taxpayer of bailing out banks but less attention is directed to the hidden subsidies they benefit from, even in the good times. Firstly, because of both implicit and explicit government guarantees, when a bank borrows money it does so at an interest rate lower than it would be able to otherwise. Secondly, by giving up the power to create money the government forgoes an important source of revenue, which results in higher taxes, lower spending or a bigger national debt. Conversely, the banks benefit financially from the power to create money. These hidden subsidies more than outweigh any taxes paid by the banks.

No Accountability to Customers

Unlike pension funds, banks are not required to disclose how they will use their customers’ money. As 97% of the UK’s money supply is effectively held with banks, this allows them to allocate a larger sum of money than either the entire pension fund industry or the elected government itself. Consequently the UK economy is shaped by the investment priorities of the banking sector, rather than the priorities of society.

Just five banks hold 85% of the UK’s money, and these five banks are steered by just 78 board members whose decisions shape the UK economy. This is a huge amount of power concentrated in very few hands, with next to no transparency or accountability to wider society.

The Close Relationship Between Banking and Government

It is impossible to know how much influence the financial sector has over policy but they certainly devote substantial resources to getting it. The financial sector makes large donations to political parties: the Conservative Party is 50% financed by donors associated with the financial industry, and it offers a ‘backstage pass’ to meet the Prime Minister in exchange for a £50,000 annual donation, raising the question of whether ‘cash for access’ is subverting the political process.

Lobbying is a fact of political life and only the most naïve politician would fail to take account of their naturally biased agenda. However, the resources of banking sector lobbyists far exceed those from other sectors and therefore the views of the banking industry may be drowning out those of civil society.

The close relationship between the banking sector and its chief regulator, the FSA, should be worrying, especially given the record of the last few years.  The revolving door between the banks and their regulators revolves faster in the UK than in any country other than Switzerland and a former Prime Minister now consults for one of the world’s largest investment banks, for a salary approximately 12 times more than he earned as Prime Minister.

Policy Implications

A few economically simple changes to the banking system would return power back to the people and restore some level of democratic control over the economy. These changes are:

1. Make banks ask for permission from their customers before they lend out their money.

2. Make banks disclose how customers’ money will be invested, so that members of the public can refuse to fund activities that they are not ethically comfortable with.


3. Remove the power to create money from the banks and return it to a democratically accountable body.
 
Making these changes would help redress the democratic deficit in banking and limit the ability of the banking sector to damage society. After the experience of the last few years, these are changes that urgently need to be made.

Tax Cuts for the 'Rich', Debt Slavery for the 'Majority' and Wage Slavery for the 'Poor'

The Government has openly demonstrated that we are definitely "not all in this together" again today, as it delivered a "budget for multi-millionaires" ... 'cloaked' with a great deal of spin.

First of all the Government coalition, mostly made up of multi-millionaires (e.g. Osborne, Cameron and Clegg), are taking more money away from the elderly, hard-working and poor (by removing more of their tax related benefits/allowances) ... and giving it to the rich (i.e. by cutting the 50% top rate of tax for incomes over £150,000).

In trying to justify removing the 50% rate, the Government used the argument that rich people, prior to its initial introduction (2009-10), had 'moved' a total of £16-18bn of their income into a previous tax year to avoid paying the increased rate. However this is effectively little more than spin, as this was a one-off opportunity for them to be able to avoid the tax increase (and one they couldn't use again). Worse still, the rich will be able to effectively defer pay into the future in order to avoid the 50% tax rate again now too ... what spin and hypocrisy, and what a failure of opposition/media if they fail to properly point this out (nb Ed Balls has attempted to do this today, but he's unfortunately 'damaged goods' and his attempt was also poor)!

The second argument the Government used was they that are balancing this tax cut by imposing increased stamp duty on the purchase of expensive properties ... but for rich people not looking to buy lots of expensive properties (e.g. Osborne, Cameron and Clegg!) this is great ... as they will not be subjected to this tax at all and will therefore be the big winners - receiving a massive windfall/tax cut (worth £3bn annually).

Not surprisingly absolutely nothing is being done to introduce a tax on land (i.e. a Land Value Tax - a yearly rent on land - not a one off sale tax on property), which is by far the best way of taxing wealth/ unearned income (as by design the ultra-rich cannot avoid it) and a way of progressively moving away from taxing work/jobs. Failure to do this will mean people continue to see effective cuts to pay/allowances, the slashing of public services, and debt slavery for the vast majority (e.g. due to the high costs of housing and the introduction of tuition fees).

And what about the poor? ... well any benefits/support are being slashed ... and people are being driven to work for large private corporations for no extra pay (or lose their benefits) ... which effectively means they are being made to work for £1.50/hour - a small fraction (less than a quarter) of the national minimum wage (which should effectively be illegal)! 

And for the poor it's wage slavery, and if they (and/or indeed the 'middle-class') choose to protest ... well, as raised in previous posts, this Government is looking to arm the police with tear gas, water cannons and tasers, in readiness for potential riots (i.e. turning the police into a para-military force in order to protect themselves, and their rich friends)!

What an unfair, undemocratic, and immoral place the UK is turning into ...

NB Given the lack of democracy, and the level of dictatorship, shown by the Government ... with their pushing through of damaging NHS reforms, with no electoral mandate and despite outright opposition from every professional group, ... doctors are now saying that they are going to stand for election against these immoral hypocritical politicians, due to an absence of any real alternative for people to vote for ...

Tax the Rich more and the Poor less ... says US Billionaire

Warren Buffett has today called for the US to make him and his "mega-rich friends" pay more income tax. In an article for the New York Times newspaper, the billionaire investor and philanthropist said the rich should do more to help plug the deficits.

He called for a tax rise for those earning more than $1m (£600,000), and a higher rate for those on over $10m.

In a rebuttal of arguments made by Republicans, he said tax rises would not hurt investment or jobs in the US and he told the Government to "stop coddling the super-rich".

"Our leaders have asked for 'shared sacrifice'," he wrote. "But when they did the asking, they spared me."

Mr Buffett explained that, like many top earners, his income came entirely from investments rather than from employment, which are subject to lower taxes in the US. He said last year he paid an effective tax rate of 17.4%, less than the 33% to 41% paid by the employees in his office.

He dismissed arguments made by senior Republicans, including John Boehner, speaker of the House of Representatives, that taxing higher earners more would damage investment and job creation in the US.

"I have yet to see anyone... shy away from a sensible investment because of the tax rate on the potential gains," he said, adding "People invest to make money, and potential taxes have never scared them off". 

He pointed out that the effective tax rate paid by the highest earners was much higher in the 1980s and 1990s than in the last decade, and yet job creation was much higher in the earlier decades.

His proposed tax rises would not affect 99.7% of taxpayers, he claimed, adding that a 2% payroll tax cut passed in December should stay in place to help the poor and middle classes.

Warren Buffett's message is clear ... tax the rich more and the poor less ... and tax investments more (an example of 'money from nothing') and cut the tax on jobs ... as recommended in my last post ... and Buffett's message is the complete opposite to, and pours total scorn upon, Boris Johnson's and George Osborne's demands to cut the top rate of tax too. 

Their request is nothing to do with boosting the economy ... but everything do with lining their own pockets (they are both multi-millionaires) and the pockets of their ultra-rich friends ... at the expense of everyone else. Buffett's comments also show the hypocrisy of these people, especially when they also use a strap-line like we are 'all in this together' ....

Ignorance is unfortunately not bliss and, as we saw last week, is only going to create more trouble ...

Lack of Opportunity and Lack of Responsibility

Riots flared up last week as thousands of people (mostly young people) took to the streets and looted shops. 

Young people currently face a plethora of challenges, e.g. double the rate of unemployment, the stopping of Education Maintenance Allowances (EMA) and the tripling of tuition fees ... and on getting older they face a lifetime of debt slavery and paying of their mountain of debt (now estimated to be around £60k due to the tripling of tuition fees) and crippling house prices too (due to Government policy and corrupt bankers). The truth is they have been completely let down by Government and given little opportunity or hope ... partly because they were seen as an 'easy target' in the cuts (as most of them do not have a vote and those that do rarely vote anyway)!

Yet there is no excuse for young people doing this. Rather than protesting directly to those responsible for creating this mess (i.e. the self interest and greed of the politicians/bankers), they have also shown their own ignorance and greed ... by destroying their own communities and looting shops instead! This inexcusable ignorance, shown by a small minority, in effect condones the self interest and greed of those who actually created this mess (i.e. the politicians and bankers).

They did not loot Libraries/Waterstones for knowledge ... and they did not loot farmers fields because they could not afford to eat either ... instead they looted JJB, Carphone Warehouse and Dixons for trainers, blackberry's and flat screen TV's! ... All organised using social media ... and their expensive Blackberry's and iPhones! Greed and self interest has in effect bred yet more greed and self interest, destroying communities in the process.

A lack of responsibility, by Government, parents and the 'politically correct', has in effect led to a lack of accountability and responsibility in a growing number of young children, who uncorrected by their parents and the system, want to do nothing ... but expect everything (nb playing computer games doesn't count*)! Rather than an outward looking, helpful and hardworking society, Government over the last 20-30 years has overseen the creation of an inward looking, selfish and lazy society ... where 'value' is determined by "what you have", not "who you are" or "what you do" ... 

"Greed is Good" and "Money for Nothing" have become mantras for many ... which is why rising house prices has become a national obsession (e.g. look at the number of house programmes on TV) ... and is why financial services, such as banking and insurance (who create money from nothing - they counterfeit it, charge interest on it, and gamble it) was seen as the future for Britain ... whilst manufacturing (i.e. people actually adding value and making things) was classed as too 'hard work', boring and irrelevant (nb look where Germany is now, having taken the opposite view ... despite having to prop up the Eurozone, and having already had to absorb the problems of East Germany and the collapse of the Berlin Wall too).

We need to heavily tax the creation of money from nothing (including gambling and counterfeiting by bankers) ... and provide tax incentives for creating jobs. We need an economics where "People taking responsibility for adding value and continuously improving the situation for others (e.g. customers, communities, overall environment), based upon fundamental values such as trust, honor, responsibility and respect".

And we need to turn around the accountability and responsibility of young people, parents and 'leaders' (including politicians). Young people should be held accountable for their actions, and parents for their children. Politicians need to also be held accountable for their failure to reward the values any civilized society needs to be founded upon ... namely Trust, Honor, Responsibility and Respect. They should also reward 'People taking responsibility for adding value and continuously improving the situation for others', and heavily tax/outlaw those things that do not or do the opposite (which includes most of the practices of banks, insurers and parasitic no-win-no fee lawyers).

The Government are desperately trying to deflect blame onto Gangs and are calling in an ex-New York Police Chief to sort it out ... but the failure is a mixture of ignorance, a lack of morality, responsibility and social justice (nb the gap between the rich and poor has spiraled in the last 20-30 years). 

The current Government is deliberately dividing society, rather than bring it together, and trying to stop society turning its gaze on their immoral actions ... e.g. whilst all this is going on, George Osborne is looking to follow Boris Johnson and his call to cut the top rate of tax for the rich (which will make the gap between rich and poor even greater), whilst increasing taxes and cutting services for the young and poor! 

They both claim this is needed to 'boost' the economy - what a joke! ... the rich simply use their money to accumulate more money (e.g. by buying up and then renting houses, excluding young people from home ownership)! If they really wanted to boost the economy they would invest in young people and the future and providing tax incentives for job creation, not tax cuts for the rich! He would also boost tax revenues by taxing areas that generate 'money for nothing' too (e.g. land values, housing speculation, investment banking and insurance). 

Unfortunately ignorance is not bliss, and as seen last week, ignorance can result in actions that are totally misguided and counterproductive! Unrest will unfortunately continue to grow whilst power is unbalanced and self-interest and greed remain acceptable mantras in society** ... and for things to change for the better, looters need to be replaced by serious, responsible, and organized protesters, who are keen to see justice, trust, honor, responsibility and respect ... not just in society ... but from their 'leaders'.

* Many young people are today immersed in computer games, including 18 rated ones such as Grand Theft Auto, which involves them stealing, killing,  rioting and looting! Such games must make it harder for them to distinguish between good and bad, right and wrong, fiction and reality ... when doing all the wrong things is 'rewarded'!

** Cameron's comments about holding people to account, and fixing the morality in society, are I'm afraid mostly smoke and mirrors and spin (from an ex PR spin doctor) ... because the courts are doing very little in terms of sentencing, and his chancellor has yet again shown they are continuing with their plans to raid the poor for the benefit of the rich. Just like the NHS, Cameron/Osborne will try to push ahead quickly ... before any subsequent review is completed (just like he did with GP commissioning)!

The people marched ... and the Coalition ignored

Hundreds of thousands of people descended on the London this weekend to march in protest at Government plans and to call for an urgent re-think ... and the next day Vince Cable* says the Coalition is going to carry on regardless!

They want us to believe they are listening to the people ... but clearly they are not! 

They'll point to their change of plan with regard to selling off the forests, after supposedly listening to the people (because a change of heart here was not a big issue for them), but when it comes to everything else, including tuition fees and reforms to the NHS (bribing GP's with bonuses to ration healthcare), they'll listen to no-one and will not budge!

No wonder people are becoming more cynical, annoyed and frustrated, and for a small minority this clearly boiled over. If the coalition continue not to listen to the people, IMHO things will unfortunately only get worse. It appears you can march all you like, but it won't make any difference to what they do ... so people will now have to hit these people hard in the forthcoming May elections too (forcing thousands of their rank and file supporters to get kicked out of local councils).

When students marched about tuition fees being tripled they were ignored and the Government were quick to tell us only a small number of Universities would actually charge the maximum £9k per year. In reality, virtually every university to date has announced it will be charging the £9k per year! The Government is also scrapping EMA for 16-18 year olds too, when youth unemployment has risen to an all time high (1 in 5 and rising). 

IMHO the Government need to remember, those with nothing ... have nothing to lose! 

* NB Vince Cable has also said today he wants to see the 50p tax cut for the rich! Shame on the man ... a man with no morals who has clearly lost all credibility and trust ... a man quickly corrupted by Power.

Reality check - public says we're still in recession!

According to the latest Consumer Confidence Survey by the Nielsen Company and the British Retail Consortium (BRC), one in three people do not have any spare money to spend ... and yet the Government's austerity measures have only just begun!

Yet the most startling revelation in this report was not this, but the fact that their study also found that 82pc of consumers still believed Britain was in recession!  

It also revealed that only 14pc of consumers believed the country would be out of recession in 12 months time!

Stephen Robertson, the BRC's director general, said: “The survey shows mounting worries about household costs, an unshakeable belief that we are still in recession and record numbers with no spare cash. A significant and permanent strengthening of consumer confidence is clearly some way off.”

You can say that again ... as this is yet another reality check from the consumer questioning the reality of the supposed 'recovery' ... will this lead to a self-feeding negative downward spiral ? ... no wonder the Government's looking elsewhere for someone to bail this broken economy out (e.g. business investment, exports) ...

And according to the IMF, they should not be pushing the myth of 'trickle-down' economics and proposing tax cuts for the rich! 

NB Watch out because politicians are experts in spin ... and the Government are lining up to tell us that tax cuts for the rich are essential for creating growth and tackling 'the forces of stagnation' ... what rubbish ... as the rich aren't going to spend it and put it back into the economy, they'll just save it so they can become more rich!

Boris Johnson pushes for tax cuts ... for the rich

Boris Johnson, the Tory Major of London, previously a fellow member of the elite Bullingdon Club alongside David Cameron, is no master of political spin and is well known for coming straight out with what he thinks.

In an interview with The Daily Telegraph, the Conservative Mayor of London urged the Chancellor, George Osborne (another past member of the Bullingdon Club), to set a course for low tax and stated we need “a clear direction of travel” that will include how taxes will be reduced over the course of this parliament ... but for who?

Yes you guessed it ... the rich!  ... as he's only arguing for a reduction in the 50% top rate of income tax,  suggesting it is harmful to London's economy (and therefore Britain’s)! David Cameron and George Osborne are obviously having to play a much more political game (particularly given their need to keep their coalition "partners" on board), and are careful to currently offer only vague assurances that they will lower tax.

David Cameron and Boris Johnson

Mr Johnson says he does not want his comments to be seen as “a criticism of my friends”, but he adds: “I need to speak up for London and its interests. I think we need to set out a pretty clear direction of travel, a pro-enterprise direction of travel. He said “I understand about 50p tax politically but there has got to be a sense of where we are going and where we want to be as a country.”

Mr Johnson hints that the Chancellor is planning tax reductions in the March Budget. He says: “I know this is something George knows and he wants to do. Labour have created a climate that is miserable and anti-wealth creation and was resentful … it takes a real effort of political will to dispel that. I hope very much that is what George will do and I will lay money he will. That is the way forward and I know he thinks this.”

Boris Johnson appears to definitely be 'in the know' (no surprise there), so maybe David Cameron and George Osborne are quietly behind him asking for such a tax cut, stressing it to be an 'absolute necessity for kick-starting economic growth' ... so they can gauge reaction ... and determine if they'll be able to get away with it!  Shock, horror, do these kind of things really happen ... absolutely, and all the time in politics ... if the reaction's not too bad then they'll know they can get away with it ... and if there's a violent reaction to it then they'll know they can't (just yet) ... and can conveniently distance themselves from Boris!  

It's worthy of note that Mr Johnson is also urging Mr Cameron to step in quickly to bolster trade union legislation too, to make it difficult for union leaders to call strikes, saying the Coalition needs to develop its “Norman Tebbit side”, a reference to Margaret Thatcher’s industrial enforcer in the past. Yet another interesting 'test' ... at a time of growing concern/unrest about this Government's motives (and actions) ... and at a time where other Government's around the world (1,2,3) are under pressure and being kicked out*!

NB It's interesting to see the political elite in Egypt are moving rapidly to cut off the internet and any mobile communications, to avoid a 'coup de text'!