The Nuclear and the Financial industries are both supposed to be carefully regulated. Their potential for causing systemic and widespread harm was supposed to be reflected in the fact that they both have not only ‘powerful’ national regulators but also international ones as well. The shoe industry doesn’t have its own regulator with its own building. Neither does the hat industry or pipe industry.
The Nuclear and the Financial Industries have a veritable acronym soup of regulators and watchdogs, The FDIC, SEC, FED, BoE, ECB, Eurostat, FSA, IMF, World Bank, BIS, to name but a few. The Nuclear industry has the IAEA and the WHO at the international level plus in the US the NRC, in the UK the NRPB plus an equivalent in every nation that has nuclear power. Every nation which has nuclear power has its own regulator and attendant experts. And they are not small organizations without some serious power and access to publicity. For example the IAEA’s budget for 2010 is €315 million. While the SEC (Securities and Exchange Commission ), America’s main financial watchdog’s budget is $1 billion this year. And what do we get for this serious support?
For our money, and by ‘our’ I mean, us assorted tax payers in our various countries, got financial watchdogs and regulators who did nothing to halt the insanely unstable, supersize-me leveraging of financial firms in the build up to the financial crisis. We got regulators who did nothing to regulate or even agitate for regulation of naked shorting or Over the Counter Derivatives. Who did not follow up on serious concerns about the state of the securities and derivatives markets from 07 onwards even though very serious concerns and warnings were voiced by market insiders such as Janet Tavakoli of Structured Finance. And who have done almost nothing so far to bring anybody to court for their role in the securitization and foreclosures fraud which has been rampant in America.
Remember AIG the US insurer that has required $185 billion in bail outs? In 2009 the SEC ‘investigated AIG and,
investigators found that the company had flouted accounting rules by misusing reinsurance contracts to hid insurance losses, inflating its investment income and incorrectly using profits to boost the company’s value.
Specifically they decided to get tough on Mr Greenberg who ran AIG for 37 years until the moment it blew up. The SEC was clear that he was the controlling person and had been fully aware of the illegal transactions and accounting frauds. In the end the SEC sold us out almost completely,
Mr Greenberg agreed to pay $15 million and Mr Smith $1.5 million to settle the accusations without admitting or denying wrongdoing.
IN 2001 Forbes magazine put Mr Greenberg’s personal fortune at $3.9 billion. What it was by 2009 only God and his accountants would really know. He claimed to have lost $2 billion as a result of AIG’s collapse. Even if I believed that, the fine would be chump change in comparison with the profits he personally made from the actions he undertook and oversaw.
The financial regulators in Iceland, the UK, Ireland, the US and everywhere else, were all asleep at the wheel having been wined and dined into stupefaction and offered jobs by those they were supposed to be regulating.
So what did those regulators do for us? Remind me.
The nuclear industry’s regulators are no better. The Japanese reactors that recently caught fire and suffered explosions and then vented radioactive gases and liquids into the surrounding countryside, were designed by US corporate giant GE back in the 1970’s. Operated in many countire, including the US for 30 years, you might hope they would be safe and sound. However, some of GE’s own engineers resigned very publically over grave concerns they had about the design and its safety.
Back in the 1970’s a GE inspector called Mr Sugaoka, was one of the GE inspectors for the Fukushima reactors. He would climb inside them to inspect their integrity and safety when they were off-line. Over the years found and reported a number of serious safety problems. He reported them to GE and so far as he could see nothing was done by either GE or TEPCO. After he was laid off by GE and lost a suit for discrimination Mr Sugaoka, in 2000, sent his findings direct to the Japanese regulators, who then took action and a few people lost their jobs. But since then Tepco has had a litany of other leaks, safety breaches and rebukes none of which have ever resulted in any serious set backs for TEPCO, which have led to claims it has a cosy relationship with the regulator and the political elite. (A good summary of TEPCO, its reactors and events so far is here. Please note, none of these are industry or ‘regulator’ sources).
Two industries, both with clearly recognized power to cause devastation and suffering. Both with huge amounts of money at their disposal and equally huge influence at the highest levels of government. When we look at their actions, are we justified in asking who the regulators really work for? Is it us, the people who pay them, or the industries who pay off our politicians? What kind of regulation can we expect when, particularly among the financial regulators, most of the regulators are people who have been seconded from industry and who return to it? Is this recruiting the best qualified and drawing on the expertise of indutry , or is it industry making sure it has its own people making sure that nothing is done that they don’t approve of? What does the evidnce suggest?
What do the regulators actually do? How do they see their job? Is it to hold their industry to account for wrong doing? Or is it to regulate what the public is told, what spin is put on events, and to help decide what is withheld as ‘confidential’?
I suggest regulators have been largely there to ‘regulate’ public opinion not corporate malfeasance. I think, all too often, particularly at the top of the organization, where the move to lucrative jobs in industry is that much closer, ‘regulators’ see their job as helping to keep the industry and its relationship with the public running smoothly. They are there to regulate what we are told, what we think, to re-assure us in times when the industry feels itself under attack and be the lubricant that keeps the wheels of the industry well greased.
What have the regulators done for us. I think the evidence is clear – they have screwed us for a fee.
I love this blog because at least someone is trying to tell me the truth. I am also fascinated as to what regulators are for. In the UK you can expand this to include water,utilities and telecoms.
No-one is ever ever accountable, in fact there is a linear relationship between the amount of damage you can cause and the amount of accountability tou are liable to.
It won't change.
I think you have a talent for asking good questions. I think you are right about the cosy relationship that has developed between regulated and regulators but I doubt if it is unique. I personally think we are faced with a crisis of how we control technology. The rapid pace of change of technology has made it near impossible to regulate for real, without being accused of hindering development. So the various authorities just keep spending to maintain a pretence of controlled and considered change.
I am not very optimistic that the process can be brought under control. For one, rapid change places huge demands on social services, such as education or support as skills are made obsolete at ever greater rate. We are seeing the rapid erosion of these services at this moment.
For what it is worth-public education is being reduced to a skeleton of its former self. It is becoming institutionally adapted to creating failure because there is no place to put 'success', so we now see a nakedly darwinian social selection process going on within education.
this is good and drawing the parallels between the finance industry and the nuclear industry is spot on
@ MacPuddock
Are you familiar with ideas of Ivan Illich? Writing back in the 70'S – argued against institutionalisation of medicine, education, proliferation of 'experts' & technocrats, our dependence on technology, proposed that we should "invert the present deep structure of tools" in order to "give people tools that guarantee their right to work with independent efficiency."
As well as being there to regulate public opinion, another role of industry regulators is to reduce competition in favour of large corporations
Regulatory compliance has become a significant burden on many small businesses which do not have the resources or economies of scale to employ people just to fill in forms or engage in pointless procedures all day
You could debate whether this is deliberate or not but the impact is just the same, either way
If banks were restricted to being unlimited partnerships or else state run entities, this would not be necessary. The kleptocracy ensures drugs are illegal so that there is profit in it. Likewise, banks are monopolies masquerading as capitalists. The mask slips but the sheep care not!
Baaaaa!
Golem,
This may seem a non sequitur but, do you think it would be worthwhile to engage in a thought experiment to brainstorm as to the pros and cons and likely ramifications of cutting the banks out of the monetary and political systems?
guidoromero,
I'm already interested to hear what you mean by cutting the banks our of the monetary system. I can certainly see cutting the banks from their present tick-like grip on the political system but I haven't thought about cutting them completely out of the financial system.
I am all for us chewing over 'unthinkable' options just to see if they really are as impossible as we've been led to believe.
Guidoromero
There is a talk tonight (21st March) in central London by the New Economics Foundation on how to tame banks:
http://www.neweconomics.org/events/2011/01/17/dangerous-banks-can-we-tame-them
I'll certainly be there, championing my own little "hobby horse" which is the dangers of Securitisation (a.k.a. Originate-to-Distribute loan creation). Here's my submission to the ICB last November, which surprisingly is being echoed by both the ICB and Mervyn King.
The event is only £3 and includes a glass wine!
Golem et al
Just taking a quick look at the Stephanomics blog this morning does show that although our "esteemed" journalists are still peddling vacuous twaddle, the vast majority of commenters do GET IT:
http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/2011/03/the_shrinking_pound_in_your_po.html
The regulars on Paul Mason (of which I count myself) have often been pretty much on the right track for years now, but certainly the last year or so has seen a noticeable awakening on Peston and Flanders' sites.
It is still a small underground awakening, in the grand scheme of things, but there is hope that many people are starting to GET IT.
Surely, the regulators' job is merely to enforce low level rules decreed by someone else; they cannot be held responsible for 'systemic' problems that develop despite the enforcement of those rules.
I am convinced that it is this faith in what are, in reality, just 'rules of thumb' that has got us where we are today.
dustysurfce,
I quite agree that the ultimate failure has been and continues to be at the level of political leadership. If our leaders do not see fit to pass adaquate regulations and laws, and avoid damaging international agreements, then teh regulators cannot be held responsible.
BUT teh regulators have not even bothered to enforce and uphold those rules and regulations that are in place. They chose and choose to not see, not publish and not take action. For that, I think we should hold THEM morally and criminally responsible.
For anyone who wants to understand the politicisation of regulation, then look no further than PBS's "The Warning":
http://www.pbs.org/wgbh/pages/frontline/warning/etc/synopsis.html
The US's arch de-regulators are clearly identified as Rubin, Greenspan and Summers. As for the UK equivalent we need look no further than Ed Balls (dubbed the 'most powerful unelected person in Britain') chief architect of Gordon Brown's de-regulation in the late 1990s:
http://en.wikipedia.org/wiki/Ed_Balls#Economist
Oh, and former student of Larry Summers:
http://www.economist.com/node/105528
Perhaps this is old hat & I am getting off the point again, but I have just watched this video based on Naomi Klein's book " The Shock Doctrine ". It's certainly shocked me, I think I am getting a grasp on the financial side of things due to this blog etc, but this video sickened me as it explained the collusion between government & the Friedman economic philosophy, that starting with Chile has had a truly disgusting effect on this planet.
If possible I would like a much more learned opinion than my own on this. I have always had a deep cynicism towards the likes of Thatcher, Reagan Bush, " The war on terror " etc, but if this video is valid, I now feel a deep hatred for these absolute turds.
I hope this doesn't turn out to be another dodgy video. My only excuse is that, I am new to this.
http://www.youtube.com/watch?v=NWC13S_vF1U&feature=player_detailpage
Stevie
Your point is very much on topic, I would say. There are other writers / theorists who share this view. David Harvey’s History of Neoliberalism is a good overview:
http://www.amazon.co.uk/Brief-History-Neoliberalism-David-Harvey/dp/0199283273
De-regulation is the Modus Operandi of the Neoliberal project:
“ Margaret Thatcher, Ronald Reagan, Augusto Pinochet – these are the famous faces of neoliberalism, the economic (and, to some extent, philosophical) doctrine that advocates unregulated capitalism, free trade, small government (and hence low taxation) and the marketization of virtually every aspect of life.
Harvey is good at tracing the way neoliberalism built up support (or, at least, tolerance) among the public. The concept of 'freedom' was the keystone, he argues. Neoliberals in governments, think tanks, universities etc. argued that freedom from outside interference was the greatest form of freedom. Hence, all forms of interference with the individual citizen (say, high taxation to finance a generous welfare state) were presented as illegitimate and tyrannical.”
Here is an audio of Harvey summarising the book on Youtube:
http://www.youtube.com/watch?v=PkWWMOzNNrQ
Thanks Hawkeye
The youtube link is unavailable unfortunately, but I will try & get hold of the book.
I am shocked by the total lack of morality & empathy that these people share. I have read that an estimated 1% of the population are psychopaths & only something like 17% are in prison, perhaps this explains it.
Must get some work done.
@David – Really great article, and very interesting links on TEPCO
@Hawkeye – I just wish Mason/ Flanders and Peston were more honest – and talk on BBC about the wealth transfer that has been engineered, from the poor and middle classes to the rich, and facilitated by government. They still seem to be carried along with the "the Labour govt left us in this terrible mess" lie which is used to justify the austerity cuts.
I think the standard of BBC journalism generally re the financial crisis has been sloppy and misleading. When will they say it like it is – like David does here?
I was reading about Raegan's legacy recently. Also an interesting take on TEPCO
People not in the US possibly don't understand the myth that has been conconcted about Raegan. The depth of this risible personality cult is on the same scale of deception of that of the Soviet Union's offences against rationality. The palpable dishonesty about Raegan raises some very peculiar questions about just how we arrived at the place where we are now (thinking of the two bushes.
Tepco and Raegan here
keep scrolling to see the Reagan comment.
Reagan comment here
Finally here is an assessment from 1989 from an unusual libertarian perspective-the Austrian school of economics
Reagan 1989 comment here
@ Stevie Finn
Naomi Klein's "Shock Doctrine", certainly draws alot of strands of the web together and I feel explains it more accessibly than say NOam Chomsky.
Re your reference to psychopaths, have you checked out "The Corporation" – another excellent primer on the inherent failings of our globalised system.
Anyone here read Nicholas Shaxsons, "Treasure Islands – Tax Havens & the Men who Stole the World" yet? I've seen a couple of excellent reviews.
http://treasureislands.org/the-book/
I would have been keen on that nef event – completely passed me by. I guess the talk would have been Greenham laying out the proposals in this recommendation to the ICB? (Which I think is great. I always thought that nef were too softly-softly but championing a switch to full reserve banking gets full marks from me.)
I'd love to hear how it went and your impressions Hawkeye.
I second that Hawkeye. If you felt up to it.
Hawkeye, I found the David Harvey vid, thanks again.
Ahimsa, I will watch " The Corporation " tommorrow, luckily I can do it while I am working. Thanks for that.
Some of you might find this interesting :-
http://www.atimes.com/atimes/Japan/MC18Dh01.htmlow,
Re: NEF Talk with Tony Greenham
Just got back from this event, which was very enjoyable. Broadly on the same line of thought as this blog and other critics of the banking oligarchy. The venue was intimate and seating about 40-50 people.
Key points raised:
– Distinction between debt for consumption / speculation as opposed to debt for productive capacity improvement (genuine investment)
– Commodity speculation as out and out profiteering
– Assertion that markets make great servants but poor masters
– Proposing a formal dual banking system: Full reserve Banking for main retail operation, and non-guaranteed savings / investments for those wishing to take risks (to avoid moral hazard etc.)
There was a very good Q&A which was broad in scope and covered more subjects than I can remember. He did mention Nicholas Shaxson’s Treasure Islands, which is now on my Amazon Wish List!
When asked about what can or will be done to seriously reform the system, he wasn’t overly optimistic given that he has had many (fruitless) visits to Horseguards Road trying to get the message across. He suspects that the main hope for serious reform is when another crisis happens. He wasn’t making any timing predictions, but he was certain that (further) trouble lies ahead…..
All in all, he was somewhat preaching to the converted, which isn’t in itself a bad thing, just that we need to get the message to a wider (mainstream) audience. I know Paul Mason has included NEF interviews in a few Newsnight pieces over the past year or so.
Here’s hoping we hear more from them in 2011.
Is there any other way we can communicate? Your blog shuts me out so often that it is impossible to expound any sort of involved thought
The tick-like grip banks have on the political system is only due to the fact our governments have adopted this particular variety of monetary system.
All the grievances people are reporting in these pages, can all be addressed by changing the monetary system.
The monetary system is the ultimate and prime driver of all human actions and decisions. Every single human political/economic construct evolves within the framework of the monetary system. There is nothing upstream of the monetary system. It frames all.
Some here have mentioned Prof. Harvey whom last time I checked was blaming "capitalism" for all of society's ills. Prof. Harvey thoroughly omits to even mention the monetary system. So, either Prof Harvey is genuinely unaware or he is misguided or, unlikely, he has an agenda.
Hawkeye has been to the NEF talk where amongst other things speculation in commodities was condemned. But hold on. I am a speculator too. I don't want to be but considering our government's deliberately destructive policies, I have to be. Too, I understand that our governments must implement deliberately destructive policies because their actions are dictated by the logic imposed by the monetary system. So I am a speculator by necessity. Had I not speculated in commodities, today my meager savings would have vaporized along with the reset of the main stream market.
hhhhaarrrrrrrggggghhhh… been locked out again!!1
The banks own the political system simply because the politicians have acquiesced to impose on society a monetary system that gives a restricted group of banks the privilege to create the currency.
This is the key to understanding our predicament.
In allowing banks to create the currency, politicians have taken banks out of the system where they stand alone.
Imagine drawing two circles on a piece of paper. One circle is much larger than the second.
The larger circle represents society. The smaller circle represents the banks.
If you picture government and society as a whole system, banks alone stand outside of this system. Banks have the privilege to inject the system with something that has no intrinsic cost of production for which the system pledges to pay back the same amount plus a certain percentage more called interest.
In this example, the smaller circle has a vested interest in injecting ever greater quantities of their product into the bigger circle. As they do so, the bigger circle undertakes to pay it all back plus more.
You do this often enough and the larger circle is going to empty out at some point. This is a mathematical truism.
Our predicament is the monetary system.
Reforming the monetary system is no use. We must change it. Money is a vital concept to the development of society BUT crucially, money must stay within society.
Our politicians have been coopted in subcontracting the management of the system because the banks have promised them unlimited spending power. Hence the reason for inflation.
Our role here should be to start a movement that will drive towards taking the monetary system away from the banks thus cutting the banks out of government.
It can be done and it is easier than people think. There are sacrifices to be made of course. But at least it is legal and, most importantly, bloodless.
Because it is a mathematical certainty that as was the case in 1929 and 1971 the efficiency of the monetary system has once again reached its limit.
1929 eventually resulted in WWII. 1971 was apparently less tragic resulting in the abrogation of Bretton Woods and, most importantly, it resulted in globalization through which the gargantuan amount of US Dollars that had been created since 1940 and that had caused the bankruptcy of the USA in 1971, could now be unleashed upon world markets and into world currencies. This last stratagem has again reached its useful limit.
What now?
If we don't take the monetary system away from banks now, the only way it can be reset in its present form is by obliterating global industrial capacity…. i.e. a global conflict.
We must discuss the monetary system and we must discuss the likely implications of cutting banks out of the monetary system (ergo the political system).
And as a by the by.
Capitalism does not exist to any significant degree.
Once the cost of money is managed arbitrarily and unilaterally then, by definition, capitalism does not exist or, at best, is severely restricted.
And since we know that our monetary system is predicated on inflation and inflation conforms to the law a diminishing marginal utility, then it follows that though we may have enjoyed a greater degree of capitalism at the outset of this monetary system, capitalism is necessarily curtailed as time goes by.
Today, in an aberrant and skewed political and economic landscape, capitalism is teetering on the brink of extinction.
glossary of terms for regulators
There is no evidence- We have destroyed the evidence.
There are no short term health implications- The long term health implications would give a sane person nightmares.
Thats commercially sensitive information- Oops we haven't destoyed all the evidence.
No one could have forseen this- The grunts farts and belches coming from the trough was totally fascinating.
It will be impossible to pick out the health effects of this disaster from the background.- There are so many toxins in the environment that no one will be able to make a credible legal case against us.
I believed what I was saying at the time.- I'm clearly mad
http://www.heraldsun.com.au/news/breaking-news/radiation-levels-20km-from-fukushima-nuclear-plant-1600-times-higher-than-normal/story-e6frf7jx-1226026021467
Radiation levels are now stable- Nothing to see here move along
GuidoRomero,
Sorry about the system. It's ruled and set by Google. Perhaps I am coming to the point where I need to move to some more flexible platform like WordPress?
Anyway, please email me using the address in my profile and we can sort out a better way for you to communicate.
Ahimsa
" The Corporation " another eye opener for me, I liked how Michael Moore ended it, thanks again.
Guido Romero
I have had to become a business man, something I never thought i would end up doing just so I can survive, this is mainly due to globalisation etc. It is a great thing that someone like yourself can contribute to this blog with your obvious knowledge of the system. I know a few people who are being forced through necessity to undertake work that they would rather not, it's not their fault, they are victims of the present situation & I suspect there will be thousands more in the near future.
I was just wondering what everyone's take is on this Libya mess… Who's "right"? I can't help but feel that the rebels need western support but I'm very concerned (with good cause) that any wester influence into their civil unrest/war will result in a new leader/cronie handpicked by Washington et al. I missing something in this case or is this falling right in line with every other similar "event".
Thanks (from an avid reader but infrequent poster).
Who do they work for, follow the money:-( I found this whilst checking out craig murrays blog courtesy of guest, http://petras.lahaine.org/articulo.php?p=1846&more=1&c=1
Morning,
I just finished work early to organise ZBDS's propaganda assets. I asked my boss if I could go home as I'm going marching to get rid of the banksters and the Glegaron and he asked me how old I was? I told him and he said "And you still believe in Santa?"
Best line I've heard in ages. Sounds familar.
"Why don't you knock it off with those negative waves? Why don't you dig how beautiful it is out here? Why don't you say something righteous and hopeful for a change".
Word.
I've set a blog up to send pics from my phone so my peeps can see what's happening and my misses can check up on me. http://www.zbds.blogspot.com
For anybody going I'll be wearing a green, white and red Indian War Headdress and t-shirt with ZOMBIE BANK DEATH SQUAD on it. Hollah if you see us.
@ 24K
good for you!
Participation is Inspirational.
Cynics suffer from shortsightedness.
Every single action makes a difference.
Good luck tomorrow 🙂
Am reminded of thoughts of Father Daniel Berrigan an anti-war and civil rights activist who promoted civil dis-obedience..
Berrigan argues that those who seek a just society, who seek to defy war and violence, who decry the assault of globalization and degradation of the environment, who care about the plight of the poor, should stop worrying about the practical, short-term effects of their resistance.
"The good is to be done because it is good, not because it goes somewhere," he says. "I believe if it is done in that spirit it will go somewhere, but I don't know where. I don't think the Bible grants us to know where goodness goes, what direction, what force. I have never been seriously interested in the outcome. I was interested in trying to do it humanly and carefully and nonviolently and let it go.
We have not lost everything because we lost today" from a Nation interview http://www.thenation.com/article/daniel-berrigan-forty-years-after-catonsville?page=full
Yes regulatory capture and arbitrage are the problems.
Remember my analogy of nuclear power being the structured investment product of the energy world? The parallels get even more striking. Here's the latest nugget from Kyodo News today:
"the nuclear regulatory agency ordered the utility known as TEPCO to improve radiation management at the power station"
FFS! I guess now they've been told this, TEPCO will just sort it all out tomorrow and we can all stop worrying. Just like we can stop worrying about the fact that every bank in Europe is insolvent..
That's great ahimsa – positive waves!
I'll look out for you 24K!
And in the light of the on-going UK news blackout on what is actually happening in Japan, you might like
http://english.kyodonews.jp/news/japan_nuclear_crisis/
which is quite comprehensive and balanced. Regularly updated, too, with much more info than I can find in any of the european or us papers.
(El Pais is not too bad though if you read spanish or use Google translate)
Hey thanks ahimsa!
Big Up Jamie G! Hope to see ya.
24K Good luck.
The season for marching starts soon, here in Northern Ireland, unfortunately nobody will be marching to get rid of the bankers.
Thanks dude.
Season of marching…I need some more headdresses.
Watching the BBC's coverage of todays march, Matthew Sinclair from the Tax payers alliance brought in to spew out the usual garbage. A man who blames Irelands crisis on the fact they are part of the eurozone, of course it's got nothing to do with them becoming the financial tart of Europe.
My teeth are starting to gnash.
G Squad,
Just got back from the 'video shoot'. Anybody see me on sky news or bbc? I bumped into a reporter filming live. People were coming up to me saying they saw me on the telly.
The police were great and worked for no pay. Makes me wonder. No cuts march and the police work for free?
I made a cinemascope steadicam for the video that worked better than expected. It's hard though getting shots when your not exactly sure what you want. gotta practice the steadicam through crowds more and keeping distances correct so you can just flow naturally through whatever circumstance arises. Have it locked down next time.
The ZBDS propaganda machine worked well. I wish we'd taken flyers as the amount of people taking pro/amateur pics of me was strange.
My blog kept rejecting uploads from the phone but I'll put up the march steadicam shots once I've resized the files.
Unless the propaganda war is pushed by everybody you can forget about any sort of change though. London was back to normal in the early hours like it never happened.