The Free Market ideology of Friedman and his like became enshrined in international agreement in 1995 when government’s signed the Uruguay round of GATT (the General Agreement on Trade and Tariffs). In most countries the agreement was signed without any public debate or even awareness of what was being signed and decided. In the UK there was virtually no parliamentary debate. And yet this agreement created the World Trade Organization as a power above Nations and set the principles of Free Trade on a par with the idea of Justice – in that, like Justice, nations were held to be subservient to the ideals and regulations of Free Trade.
I put ‘Free’ in quotes because talking of trade in terms of it being ‘Free’ makes it sound like it’s a heart warming tale of oppressed trade that has escaped from tyranny; from the tyranny of centrally planned, protectionist, ‘reds under the bed’ to the freedom of the ‘free’ market. Hurrah! Except its not that kind of freedom at all. It’s freedom in the sense of free from regulation and moral care. Which, when you’ve just had a several trillion dollar melt down as a result of capital that had ‘freed’ itself from regulation.doesn’t sound nearly so Red,White and Blue.
We all knew at the time, whether we approved of it or not, that the free Market ideology was founded on a fundamentalist’s faith in ‘self’ or ‘light touch’ regulation, open markets and globalization. What we did not realize was that there was, it now turns out, a clause buried down in the small print, which said that in case of an extreme financial crisis, there was to be a complete transfer of private debts to the public purse so that those who had caused the crisis and were now in danger of being goaled for fraud or declared bankrupt would instead be guaranteed immunity from any loss or prosecution.
Today those who got us in to this catastrophe remain in their positions of power and wealth, so they can now dictate the policies for getting us out. There was a moment when it looked like maybe the towers of wealth and power were teetering. But they did not fall. Neither the bankers nor our political class have felt it necessary to learn a thing and are in fact intent on re-building essentially the same system, based on the same failed ideology, that caused the crisis in the first place.
We are at war. In America, Jamie Dimon the CEO of the mighty, JP Morgan Chase, threatened US regulators that if they tried to tighten regulations they would put US banks at a disadvantage relative to Europe’s banks. While in Europe Douglas Flint, Chairman of HSBC, was making a parallel attack on UK regulators. HSBC, he said, worried “a lot” that any new regulation would mean UK banking would lose business. And UBS, the giant Swiss bank weighted in on the regulatory restraints being applied to bonuses, at Barclays in particular , “
“Concern over ‘too big to fail’ dominates the UK regulatory agenda but rather than Barclays being too big, it may well be that the UK is too small,” said UBS.
There is a growing confidence and cold arrogance re-asserting itself in the towers of finance. A House of Lord investigation into the role and conduct of Auditors and Accountants in the Financial Crisis found they had completely failed in their duty. At the centre of their investigation and report is the fact, which the accountancy firms do not deny, that, they gave banks who were essentially insolvent and collapsing, a clean bill of health as going concerns several times in the run up to their eventual collapse.
How could this possibly be? The Accountants simply said, when they evaluated the bank’s health, they considered the likelihood of government bail outs and when they realized the government would pour public money in to cover all the bad debts, this meant the banks would be fine. Thus they signed off that the banks were ‘going concerns’.
But this isn’t the astonishing part. The astonishing part is that the big Accountancy firms involved, PriceWaterhouseCoopers (PwC) etc cannot see the problem. The Lords said in their report that the Accountants had ‘failed in their moral duty’. To which the accountants said, ‘Our whaty what?’
PwC senior partner Ian Powell said: “I am surprised by the committee’s claim that there was a ‘dereliction of duty’ given their stated view that auditors fulfilled their legal duties.”
While in an article on the Lord’s report in Accountancy Age magazine, Head of the Institute of Chartered Accountants in England and Wales (ICAEW), Mr Michael Izza simply said,
“We do not accept that auditors contributed to the severity of the financial crisis.”
“We do not accept…” That tells you were the power and the arrogance lies.
We have two worlds at war. One in which there are moral concerns and duties and reponsabilities. The one in which you and I live. And then there is the world of the financial class in which there is no moral code, there is only the letter of the law, which is no more than a box to be ticked as you ignore its intent and take whatever you want.
The Global Financial class and the system in which their power and wealth is vested, is at war with ordinary people. No less a person than Warren Buffett was clear that indeed there is a war,
“there’s class warfare, all right. But it’s my class, the rich class, that’s making war, and we’re winning.”
That agreement was nothing less than a declaration of soveriegnty by the international business elite, and an abdication of same, and acceptence of subservience by the 'elite' political class, who's task now became to deliver the compliance of their respective nations, with a clause denying the right to ever withdraw from WTO jurisdiction. For this compliant politicians live in expectation of 'jobs' like TBlairs.
John,
That is exactly how I see it too. We have been delivered naked, in cattle trucks.
Hi G,
As you say, it's a war but a war like know other. In a conventional war there is a clear cut us against a common enemy, at least that is the way it is presented by the propaganda ministry, all the better to ensure we continue to suffer the privations of a war footing.
The problem with this war is that it is as though 'our' politicians and mainstream media are a fifth column undermining us from within. Where we need a Churchill we are lumbered with a Chamberlain – loads of 'em.
Seems to me that regulators should have a similar constitution as the Debt Commission mentioned earlier, but that would be far to real and sensible wouldnt it!
"…had 'failed in their moral duty'. To which the accountants said, 'Our whaty what?' "
The classic humour that makes this blog so good!
Golem
I've been banging on about the WTO and GATS for years but have been met with total incomprehension. All the governments of the last 25y have been working on the agenda of stealth privatisation without any public consultation or mandate. The coalition government in the UK is simply a more ramped up version of New Labour's programme and presumably one of the reasons for their haste is to get as much in place to protect big business the banks and the super rich like themselves before the next financial crash.
As you say this is war… class war … the problem is one side is fed a diet of sport and celebrity and they are only just beginning to notice…. and there is no Lenin to galvanise them.
Golem – If we simply gave you £10 Million would you just quit this futile endeavor and roll this web-site up once and for all? You’re giving the natives too much information – dammit. Isn't having Dmitry Orlov running around enough?!?
Don't need Lenin bro.
We have the Zombie Bank Death Squad
All you need to do is help me spam the world with propaganda videos.
The first and possibly the best thanks to all the people that turned up and made my day is What You Gonna Do?
It's my first ever attempt at making a music video so be forgiving but I'm sure you'll like it. But ZBDS need the G squad to tell everyone they know about it and their nans and sisters and neighbours and neighbours neighbours. And their nans and their nans neighbours. If you go on a forum post the link or register somewhere and post the link. Phone up talk radio and mention the video. Go streaking with the link address on your bum. Whatever, however just get it done, no excuses, if, buts, coulda, woulda, shoulda. None of that stuff anymore. That was the past. Today is the day when the Zombie Bank Death Squad wakes up from slumber because the thing is, You are the Zombie Bank Death Squad. We are the Zombie Bank Death Sqaud.
Just keep saying it, promoting it and ZBDS will become common knowledge. I'll say it again, Zombie Bank Death Squad will become commom knowledge. Four words with so much meaning.
All the songs are free to download, profit is not the aim. Although if I got famous promoting ZBDS is that bad? Who do you want, Cheryl Cole or Zombie Bank Death Squad on the radio?
Exactly, Cheryl Cole anyday, although I look that good with waxed legs and fake hair too, if not better. What was the link again?
WHAT YOU GONNA DO?
I even convinced G to add a few words at the end so it's gotta be worth a go. Aint that right G?
Much Love ZBDS
Golem, you wrote: "What we did not realize was that there was, it now turns out, a clause buried down in the small print, which said that in case of an extreme financial crisis, there was to be a complete transfer of private debts to the public purse …".
I have tried to find that clause in the extensive documentation on the WTO site without success. Could you help me out?
It was in invisible ink AND you need special security clearance to be allowed to know on what page it's hidden. But it must be there since because they wouldn't do anything illegal would they?
Go Pug,
No, I wouldn't stop. But I'd make a bigger we site and pay some clever people to dig a lot deeper!
Bill Gross: The US will default
Gross, who runs a $252.2bn bond fund has completely sold out of his US treasury holdings in favour of cash because he believes they have little value in the context of the $75 trillion debt burden. It is the first time since early 2008 Gross has cut all exposure to US government-related debt.
"And then there is the world of the financial class in which there is no moral code, there is only the letter of the law, which is no more than a box to be ticked as you ignore its intent and take whatever you want"
Excellent line from a superb article. I got this feeling when talking to a lawyer about the injustices of Peter Green's tax evasion, at this time of punitive cuts on public services, and his response was that "it's legal so what's the problem?"
sorry I meant Philip Green, the feller who owns Top Shop – not the legendary guitarist from Fleetwood Mac!
Golem, you are probably right. There is so much WTO paper that just about every possible scam is legally covered. No doubt their lawyers have a clause covering every dirty trick.
As for today's news, I am extremely disappointed that the new Fine Gael Irish government has followed the Fianna Fail traitor's path – Kenny accused Cowan of economic treason then turns around and does exactly the same thing.
Hiring this guy Larry Fink (L.A. version of Finkenstein) and his Blackrock company (the Blackwater of finance) for tens of millions of Euro's to come in and do a "stress test" on the Irish banks is like hiring the biggest burglar in the world to install your home security system.
Fink invented "securitization" in America for crissake! He has gone on to control most of the funds around the world that came to rely on his "securitization" racket. He IS the so-called bond market!
I don't know if the Irish media or the Irish Cabinet know who he is but I suspect they do and are simply bending over and taking it you know where.
They must know that the Irish bank "loans" they are bailing out were not legitimate loans in the first place but massive amounts of cash funneled to Fink's securitized bond customers disguised as developer loans. And he is the one doing a "stress test" on the banks he stressed? This is unreal!
I am amazed that the Irish have no investigative reporters looking at these spurious "loans".
The truth is that they were made to foreign developers and were never backed by any real asset. The trouble with "securitization" is that you don't have to have any asset to secure. You can merely invent one. I have exposed dozens of such instances here in California both in the public and private sectors.
Unfortunately Michael Noonan, the Irish Finance Minister, hasn't got a clue about who or what he is dealing with. He is just a nice soft-spoken Irishman. And neither do the Irish media, it would appear. They live in a gated community of parochial Dublin intellectual gentility.
The truth staring them in the face, if they would dare peer outside the safety of their journalistic cocoon, is that the Irish banks could never have lent 150 billion Euros to Irish developers if they had concreted over the entire country. This money was funded to international Blackrock-style investors disguised as developers on projects that did not exist.
Will some Irish reporter PLEASE go photograph and document these so-called commercial development projects across Europe instead of filling pages with fatuous "reports" without ever leaving their desks? If they do I am sure they will find exactly the same as I found here in California – that the banks made loans to phony projects, securitized them, then got the taxpayer to bail them out. That is the role of the media not to live press release to press release, interview to interview, without ever checking out the facts on the ground.
So Golem, while the WTO may have secured government bailouts as part of their GATT agreements, nobody can legally defend the funding of phony development projects if only the lazy media would take the time to fully investigate them.
Larry Fink certainly will not.
"Excellent line from a superb article. I got this feeling when talking to a lawyer about the injustices of Peter Green's tax evasion, at this time of punitive cuts on public services, and his response was that "it's legal so what's the problem?" "
This is what it comes down to – the rule of law is the only effective way of punishing wrongdoers.
It's clear that the regulations are devised for the benefit of the banks. And even when the proclaimed laws are breached, there is no investigation, no prosecution, no punishment.
And yet the entire structure is there on the statute books. So much for the rule of law.
This is a political problem. No idea how to solve it when we keep electing crooks.
Pat,
I'd love to hear more of what you found on the ground in California. I am sure many people here, the European readers as well as the American, would love to hear some of the expamples of fake projects. I know we talked about this before. Drop me an me an email if you want to.
Golem, a good place for you and your readers to start would be here:
http://www.blogofsandiego.com/Mortgage-Crisis.htm#05/26/09
It describes how a San Diego developer bought and "developed" an existing 42 unit apartment building into 42 condominium units, "sold" each of the individual 42 units to bogus owner-occupier buyers. The scam was to generate 42 owner-occupied loans the proceeds of which all went to the "developer". There were many such fake condominium development projects in California.
I suspect that the international securitization mafia found many ways of "developing" existing European commercial and residential peoperties into munltiple ownerships the same way they did in America. The beauty of this kind of scam is that you don't have to crack open a can of paint let alone put a shovel in the ground. It is all done by lawyers juggling ownerships around. The end game was to generate loans the proceeds of which go to developers who develeloped nothing but phony loans.
I fear that the vast majority of people will always remain completely oblivious to these arguments.
At work the other day a discussion started about the 'Anti-cuts' demonstrations and riots in London last weekend. I suggested that the cuts in question were partly necessary so that the bankers could be paid their bonuses. I was surprised to find that everyone else in the room was strongly of the opinion that the UK stands to make a huge profit from the banks it bailed out, and that if a banker can be shown to earn his employers millions of pounds in profits each year, then he damn well deserves every penny he gets.
The most vocal proponent of this view has a PhD.
The Agenda for one world government continues. "Free trade" is part of it. The idea is that the whole world deserves to participate in the wealth of the world. Bad news for rentiers, world wide! They multiply in multiple jurisdictions.
This is also bad news for the west or developed world. Their share will decline. NWO? Maybe….
Dusty Surface
A Ph.D no longer means much! The OWO promised him(?) a glittering career with glamorous lifestyle! He hopes that will eventuate…. Not likely! Magical, not logical thinking.
This depression will last decades more …..
I agree – it's bad news for most of us in the west or developed world.
If one day everyone in the world had similar costs of living then free trade could work well for the workers, until then it's win-win for the bosses. I find myself now competing with people all over the world, who will work for much less or a fraction of my rate. Take a look at some of the rates on this website, it makes me want to change career (I do design/ web): http://www.freelancer.co.uk
Dusty that was a cheap shot they hit you with there bro, future profits. If we the people put their debt on our credit card why can't they now get their own credit card and clear our debt so the actual people of this island can have public services, after all with all these future profits they'll be able to clear the balance in no time seeing as they are so clever at robbing.. sorry, making money and all that.
Thanks to the people that watched the video, I hope you liked it as much as I enjoyed making it. The urban indian will return….
I had to get the domain name ZombieBankDeathSquad.com
I need one of those voice over dudes with the deep husky voice 🙂
dustysurface, I think it's all to do with herd mentality, I would imagine there were plenty of PHDs in 1930's Germany who thought Hitler was a safe bet.
http://www.reuters.com/article/2008/09/30/us-financial-psychology-idUSTRE48T4VC20080930
While looking for places to spam my video I came across the conservatives website.
The home page reads:
Helping Incapacity claimants back to work
H Baldwin says in her blog
The structural deficit will return to balance over this Parliament, which means that the country’s debt will at least stop getting bigger by 2015.
I am also keen to see the Government resolve the problems with our banks. Japan suffered for many years because it failed to reform its banks, so the sooner we end the state’s ownership of so much of the banking sector, the better it will be for the health of the economy.
I was pleased to see relief for motorists who should already be benefitting from a one penny saving on a litre of fuel and an end to the threat of the five penny hike this month that was planned by the last Labour Government. It’s an oft used phrase, but it is true. Every little helps.
I wrote
Labour left us with a gross amount of debt thanks to their irresponsible handling of the country. The coalition have to work hard to bring the finances back into order. If we have to tighten our belts for a few years it is worth it, they are trying their best.
I made a video charting the rise of David and the fall of reckless labour here
hehehe, little things….
I understand that Nicole Foss (Stoneleigh) is doing a talk tonight in Lancaster, and tomorrow in Aberdeen:
http://theautomaticearth.blogspot.com/
(Tour dates on RHS)
No chance that I'll make it, but maybe someone out there will be able to go?
—————–
Apologies to JamieG as I couldn't make the NEF event last night.
No worries Hawkeye – though I did think you might be the actor Sam West for a minute when he walked in.
You didn't miss much really, though the turnout was encouraging. Discussion was mostly on the topic of a Robin Hood Tax, why we should have one and how to campaign effectively for it. Tax expert Richard Murphy was very good as usual.
I failed to take my chance to speak. I really need to learn to man-up in these situations.
A banker, politician, a daily mail reader & a benefit claimant are all sitting round a table on which there is a tray of 10 biscuits. The banker quickly grabs 9 & passes 2 to the politician, who then leans over & whispers in the daily mail readers ear, " Careful that scrounger wants your biscuit "
steve
a nice variation on an old joke
I'm finding the UK's government resistance to clamping down on exploitative loan companies, especially the very small short term loans (and monthly repayment stores) a case and point example of why a free market doesn't work. 1600% or more apr loans (they get allot lot higher), cases of people taking a £50 loan, them having some issues with repayment, and a decade down the line finding them selfs in hundreds of thousands of pounds worth of dept.
The free market will only work either if everyone always reads and understands every piece of small print ever or if you morally think that every person ever duped, by any level of marketing trick or bit of small print, deserves what they get for not being careful enough. Once you add in the fact that those most vulnerable to being duped are the most desperate, you can see how this moral equation doesn't equate.
That meant that, when Griffiths hit the shot, Raymond Whyte had to make his way as quickly as possible towards the goal and was running at full pelt when the ball came crashing down off the bar.
Is it just me or are we running to stand still or are these circles we are running in?