Corrupt capitalism: Banks are throttling Economic Recovery

The Business Secretary, Vince Cable, today accused Britain's banks of "throttling" the economic recovery because of an anti-business culture which focuses on short-term profits. 

Speaking on the BBC1's Andrew Marr Show, the business secretary said: "The real problem at the moment is that the banks – because of their existing culture which is frankly anti-business, obsession with short-term trading profits, not focusing on the long term – are throttling the recovery of British industry."

The business secretary blamed the banks for undermining the multibillion-pound quantitative-easing programme by the Bank of England to inject liquidity into the economy.

He said: "There has been a breakdown in the mechanism, in the transmission. It just doesn't get through to companies. We are going to ensure that the new money that the chancellor and the governor of the Bank of England talked about at the mansion house does actually directly reach the companies.

"Given that our leading banks are, frankly, throttling recovery by not making business-lending available, particularly to small-scale companies, we now have to focus single mindedly on that task. How to make sure that the additional money gets through to business."

However talk is cheap ... as he/his party voted against a wide ranging judicial inquiry into the culture and practices of banks. His limited understanding of the level of corruption involved is also deeply worrying (n.b. the banks actually create/counterfeit over 90% of the money supply in the UK, not the Bank of England, and given this they are able to decide how they want to spend/gamble it).

We need to i) take back control of money supply (off the private banks), ii) separate casino banking and retail banking fully (i.e. not just 'ring-fencing') and iii) tax financial (casino bank) transactions just like any other form of gambling.

Only by doing these things will real businesses start to thrive and the UK economy start to flourish. Unfortunately Cable doesn't understand this, and the Labour party doesn't either (given their parallel announcements today)! 

No wonder Cameron and Osborne were desperate to stop a wide ranging judicial review ... as it would have started to expose/explain everything to them!

Corrupt Capitalism ... Triumphs over Democracy

When potential collusion/corruption became apparent within the media, police and government ... MP's were quick (and right) to conclude that the only course of action possible was a public judicial inquiry (Leveson) - with an independent judge able to go wherever the evidence takes them.

However when it came to corruption/fraud within banks (and possible collusion with politicians/regulators), Cameron and Osborne fought tooth and nail to avoid an independent public judicial inquiry.

Osborne, like a typical 'out of touch' posh boy, ignored any discussion/debate and chose to immediately go on the offensive ... with disgraceful and unprecedented personal attacks (targeted at the shadow chancellor) ... and amazingly trying to claim that those demanding the forensic inquiry were the ones trying to cover things up! ... you couldn't make this stuff up (again)!

... and why did Cameron and Osborne pull rank, and 'whip' their MP's to vote how THEY wanted ... because THEY wanted to cover things up!!!

If a full judicial inquiry had been instigated then they would have found it very difficult to control (in terms of its scope and level of scrutiny) ... and they would have quickly seen a full/frank exposure of how private banks control politicians - e.g. through vested interests, lobbying and party funding (i.e. Conservative party funding).

A judicial inquiry would have also exposed/questioned the mass counterfeiting of money by private banks, which the Government still allows because of the 'illusion of growth' it creates (e.g. inflated asset prices, artificial 'house price booms' and money for speculation).

The printing of 'paper money' is limited to the 'Bank of England', but 'electronic money' is not ... and private banks 'create' electronic money by simply placing a number in a spreadsheet ... and then demanding 'interest' on it (real 'money for nothing')!

Private banks also channel the money (i.e. and hence the 'means of production') to wherever they want it to go ... thus bankers control the economy, and the areas within the economy allowed to grow (i.e. this is not carried out by representatives of the people, for the people)!

Manufacturing collapsed, with little/no interest paid by politicians, as those in control of money supply (i.e. the private banks!) chose to channel all the money into 'money for nothing' schemes instead e.g. fuelling asset prices and gambling on currencies/derivatives/financial 'products', instead of supporting the creation of real assets (e.g. new houses, new/real products we could sell/export)!

Banks poured money into these 'schemes' in pursuit of short term profit and 'greater returns' - with investment in real businesses sidelined and/or frowned upon (as these require time, effort and resources). 

With the apparent 'illusion of growth' the Government (and the Bank of England) were not only complicit, they were more than happy to help! ... e.g. by agreeing to remove house prices from the inflation figures (which would have otherwise kept house prices in check)!

Politicians are currently controlled by the banks (e.g. lobbying, threats to growth and/or moving abroad) and/or in the pockets of banks (party funding, ex bankers, future bankers ... just look at Tony Blair who is now getting $2m+/year from J P Morgan) ... 

... and politicians such as Cameron and Osborne are the worst kind ... as they are not only controlled by the banks ... they are also in the pockets of them too (nb they bankroll the Conservative Party, and Cameron's family wealth, and Eton education, were a direct result of banking too).

Labour would be quite rightly accused of being controlled/ manipulated by the banks, but they would not be accused of being in the pockets of them (except for Tony Blair). One cannot say the same for the corrupt Conservatives however, who refused to give the British people a proper inquiry (and justice) by minimising its scope, independence and level of scrutiny (n.b. they now control the scope, chairmanship, and membership of the committee of MP's who will investigate them)!

Cameron and Osborne will go down in history for their abject failure to protect the British economy against corrupt bankers, and when the next crash happens (which it undoubtedly will, as they have still done nothing to fix it!) they should be arrested, have any/all their assets confiscated ... and they should then be tried for treason!

An independent forensic investigation would have uncovered the scale of corruption involved ... and would have resulted in the 'control of money supply' being taken away from private banks and returned to representatives of the people ... it would have also re-enforced the need for a full separation of casino banking from retail banking (i.e. a "Glass-Steagall" type act, and not just 'ring-fencing') ... as earlier reports recommended (but were subsequently watered down/ignored, due to heavy pressure and lobbying by the banks)!

Corrupt capitalism has triumphed over Democracy ... and made a mockery of our 'democracy' once again!

"When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes... Money has no motherland; financiers are without patriotism and without decency; their sole object is gain."

Napoleon Bonaparte, 1815

Partners in Crime ... Debt Slavery and Wage Slavery

It is well known that greed, self-interest and the reckless gambling of bankers caused the current crisis, as Governments were forced to bail out banks in order to stop ordinary hard-working people from losing their savings.

Government debt resulting from this subsequently saddled their nation (i.e. people) with massive interest payments (to service these debts), whilst bankers continued to reward themselves with massive bonuses (at taxpayers expense again)!

Banks are still legally allowed to counterfeit money too, by printing 'electronic money' and lending it to others at interest ... a real 'money for nothing' scam of epic proportions (which is why 'runs on banks' were possible in the first place ... as they never had the money/capital they were lending out)!

This process is very important to those in power, because when people are in huge debt they are more easy to control, manipulate and abuse (by the process often termed 'Debt Slavery'). Fictitious money can also create fictitious booms in an economy (e.g. housing market), which is why successive Governments have pandered to banks and not done anything to stop it (n.b. in the US J F Kennedy was assassinated when he started to challenge debt slavery ... and as a result no President or political leader has attempted to do so since).

In the UK the Government is continuing to help banks drive people into debt slavery, by pushing graduates to immediately take on debt by tripling tuition fees (and trying to stop them paying debts off early), before they even have a job and prior to going into massive debt in order try to put a roof over their head (n.b. inflating house prices is also part of the scam)!

And we can now see the next scam ... Wage slavery. The Government has been working hard to deflect blame away from bankers and onto those who can't find a job ... so they can use this environment to bypass the minimum wage (£6/hr) and allow big business to boost their profits by getting job-seekers to work for them for free (and at tax payers expense).

With the slashing of public sector jobs, and the private sector struggling due to the global crisis, we currently face the worst conditions for generations in terms of jobs and these changes will only make things worse. The few new jobs created by the private sector have mostly been part-time low paid jobs, with massive competition for positions and extra hours difficult to come by. With big business now able to get people to effectively work for free now too, the negative effect on jobs growth (be it part time and low paid) and on overtime available will only be made worse!

Governments have for a long time pandered to big business, and actively allowed a massive influx of people into the country to keep pay/salaries down. The massive amount of immigration that has occurred has also pushed up housing demand and house prices ... to the delight again of the bankers and politicians reliant on more 'debt slavery'.

The Government has 'spun' this new scheme as giving people the chance to 'get work experience', but when it displaces additional part-time jobs (and overtime) that would otherwise have been created ... the smoke-screen, just like all the others, quickly evaporates.

Debt Slavery and Wage slavery are partners in crime ... and underpin a cruel and immoral strategy best described as 'the economics of exploitation'. So how come the Government is getting away with this?

Ignorance, Apathy and/or 'Clever Collusion' of those in Power (including the media)?

NB and the next scam after this? ... these same people are now starting to argue the need for 'trickle down economics' again ... and the need to reduce the top rate of tax for the ultra-rich (e.g. bankers, executives) ... to try to stop them avoiding tax and for money to 'trickle down' to the poor ... you couldn't make this stuff up!

Moral capitalism - where the purpose of banks is to support industry, not gamble

An interesting article from the Guardian ...

"To convert the business man into the profiteer is to strike a blow at capitalism … The business man is only tolerable so long as his gains can be held to bear some relation to what, roughly and in some sense, his activities have contributed to society."

Can we create a morally acceptable form of capitalism; and if so, what would it look like? Faced with a decade of hardship apparently caused by the greed of a few, people are asking whether bankers are no more than profiteers, and whether inequality has risen too far. Even the former US treasury secretary, Lawrence Summers, and former head of the CBI Richard Lambert, have said we need to do better on inequality.

The quote above, however, comes not from anyone today but from John Maynard Keynes, in 1923, during the postwar turmoil in the financial markets. There was hyperinflation in Germany, a collapse of the Mark, chaos on the foreign exchanges as prices had gone up and down, and violent fluctuations in employment.

Like many of those who turned to communism and fascism, Keynes had strong moral objections to capitalism – but he consistently repudiated socialism, communism, and fascism, for he believed that capitalism was essential both to create high standards of living and to guarantee personal liberty. In effect he sought a capitalist revolution.

For Keynes, the sustainability of capitalism was not only a technical question but a moral question – because if capitalism is to survive, people have to believe it is a system worth supporting. His priority was to eliminate unemployment. It was also a moral priority to design an international monetary system that would reduce the chances of capitalism descending into chaos again. And to do that, economists had to grapple with difficult technical details, but their motivation was a vision of a better capitalism.

We face the same challenge today – to develop a morally acceptable form of capitalism. As Keynes feared might happen, much business is now seen as no more than profiteering. Many people object to the bonus culture of the banking system because they don't believe those bonuses are earned. We have also learned that inequality not only undermines the legitimacy of capitalism (that was Keynes's concern) but it has corrosive effects: unequal societies are unhappier, less healthy, and have more crime.

We cannot wind the clock back, but we should not be afraid to look to the past for ideas. It is hard to make a clear distinction between profiteering and legitimate business activity and yet, throughout history, there have always been limits on what can be bought and sold in the market. Perhaps the boundaries between legal and illegal activities need to be reconsidered; perhaps derivatives need to be better regulated – or simply banned from banks' portfolios. Creating a more stable banking system so that banks do not need bailouts would help maintain high employment and tackle inequality.

We can also look abroad. A decade ago it was common to look to Scandinavia or Germany and to compare their institutions with ours. Now "Anglo-Saxon" capitalism has lost its shine, perhaps we should reconsider whether we can learn, for instance, from Germany, with its system of industrial democracy and a banking system geared up to support industry, or try to find out why the gap between rich and poor is much narrower in most of Europe.

One reason for the problems we face today is that we have stopped seeing taxes as an essential institution in a capitalist economy for if taxes could be raised, especially on those who can most afford to pay them, public services would not have to be cut. We should see taxes as an integral part of a moral capitalist economy, providing health, education and social care outside the market. People should not be afraid to join Warren Buffett in saying the rich should pay more tax. The "Tobin tax" on financial transactions should not be seen as a way to raise funds for the euro, but as a tax that could help stabilise the financial system and as a "Robin Hood" tax.

Such changes need to be analysed carefully, for technical details do matter, but they need to be on the agenda: if we are to save capitalism, as we must if we want prosperity and liberty, we must face up to its moral failings. Unless we do this, we will be unable to imagine a better future, let alone work out how to achieve it.

... and IMHO with the collective actions of UK bankers summarised as legalized counterfeiting, robbery, extortion and gambling ... coupled with their continual threats and heavy handed lobbying/bribery of politicians, it is going to take a sea-change for any morality to enter Britain's banks ... German leaders do not stand for it (and look at how they are prospering, despite having to prop up the rest of Europe!) so why do we? Well I guess the answer to this revolves around the fact that these legalized 'muggers' can only mug 'mugs'!

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.

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).