Just in case you want to see some of what I got up to in Ireland.
Below is the link to the Vincent Browne show where I had a small run in with the Irish Minister, Brian Hayes. If it comes up with a choice of dates I was on Oct 20th. There is a bit of news and adverts at the start. But after that you get to enjoy Mr Hayes telling you Ireland has no sovereignty but everything is getting better anyway.
And below are the links to the two parts of the talk that I gave.
Thanks again to Seanán Kerr who arranged the talk and the Vincent Browne show appearance.
http://www.irishtimes.com/newspaper/ireland/2011/1104/1224307039645.html
No comment needed.
““I have served this country as diligently as I can during the best and worst of times . . . My record is very solid and very strong.”
http://youtu.be/ob1rYlCpOnM?t=59s
As is my bank account and investment portfolio!
Neil & Charles.
It’s especially sickening when someone like whistleblowerIRL is threatened with incarceration for trying to do his job properly.
I posted this on an earlier article, more muck from the corridors of power in Ireland. I don’t understand the significance of it, perhaps some bright spark could explain.
http://trueeconomics.blogspot.com/2011/11/02112011-doff-note-on-anglo-bonds.html
steviefinn,
It is sickening indeed. However, watch this space. The opera is not over yet.Official Dublin has been visiting my blog quite a lot recently. Someone seems to be worried, and so they should be.
As for explaining the rationale behind the actions of the Irish government, there does not seem to be one. At least not one that has anything to do with the ‘good of the people’ – the favoured term of one of our senior politicians.
“TODAY we pay €700,623,555 to unsecured Anglo bondholders. This is a travesty because the Irish people do not have to pay this money under any circumstances. It is not covered in the EU/IMF deal.
The so-called investors have taken a punt and can’t quite believe their luck that they are being paid. Anglo is not a bank. It has no deposits. It does not do any new business. It would not make any difference whether we pay or not. Events have overtaken us.
Before we talk about how the world has changed in the past day or two, let us just focus on the nonsense that is being peddled by certain people, the Government included, about paying the Anglo bondholders. Certain people suggest that if we did not pay this money to people who cannot be named, that there would be negative ramifications. What ramifications? We are paying back “professional” investors who gambled. What part of ‘risk’ do they not understand?”
David McWilliams, http://goo.gl/MiDOZ
Michael Lewis makes a similar point in Boomerang, making a distinction between depositors and bondholders – who had no right to be bailed out by the Irish government. He recounts how a Merrill Lynch trader who’d tried to sell of his holding for 50 cents on the dollar woke up to find he’d been bailed out at 100%: ”Across the financial markets this episode repeated itself. People who had made a private bet that had gone wrong and didn’t expect to be repaid in full were handed their money back – from the Irish taxpayer. In retrospect … the decision appears not merely odd but suicidal.” Private debts were being repaid as if they were an obligation of the state.
Loans are repaid with interest – a reward for the risk that the loan might not be repaid. And yet, repayment – with interest – is being guaranteed by the taxpayer as public services are slashed.
David,
I watched the entire Browne program. The panel was reduced to a mere audience for he and Hayes.
But when you got your moment you scored well. Your advice to the Irish Government was perfect. Making common cause with other debtor nations is the best strategy, as opposed to the current servile strategy of the Irish Government.
What fascinates me is how politicians become infected the moment they get into the corridors of power. Even Labour’s Joan Burton is singing the same sad defeatist song as Fine Gael’s Brian Hayes. I am trying to understand how this happens.
Is the influence of the civil service bureaucracy so immense that the politicians don’t even put up a fight? They immediately become spokespeople for departmental policy, mere PR people for the permanent bureaucracy.
Now that the civil service has worked on him, Brian Hayes is utterly convinced he is right. So is Joan Burton, despite the fact that she held a view more akin to yours only a few months ago, before coming under the influence of the civil servants.
I wonder if we should not be looking beyond our politicians to our civil servants for accountability. Sending politicians into “government” seems to be like sending doctors unprotected into fever hospitals, they immediately become infected and part of the problem.
“Yes Minister” was funny but it was deadly serious in giving us a glimpse into how “government” really works. Anthony Jay knew it well by having been there.
Pat
Heaven help us if we are are depending on the likes of Brian Hayes to stand up to our overlords. He is just another of those who have had their snouts in the trough which is Irish politics, for far too long, and are completely out of touch with reality and the affects their “austerity” measures are having on the Irish people. But as long as his mega inflated salary and gold plated pension are in his back pocket, he could care less. Its all just a game to the politicians and we are the ones left to carry the can. I wonder how much we could save as a country in just 1 year, if all politicians and senior civil servants, judges etc,(both serving and retired,) salaries,expenses and pensions were slashed by 50%,and i’m being very generous by only suggesting 50%.
On a completely different note, what with not being a very well educated person ,could anyone here explain to me in plain language,that when countries like the U.S. and U.K. print money and call it quantative easing,its fine, but when any other state has tried this in the past it has been derided and ridiculed.
Off-topic? Perhaps, perhaps not…
Fall Of The House Of Money: Artemis Capital On How €entral Banking Took Over Capital Markets… And The World
http://www.zerohedge.com/news/fall-house-money-artemis-capital-how-%E2%82%ACentral-banking-took-over-capital-markets-and-world
The current Government seems to have an obsession with public sector debt. It is patently obvious the economy needs stimulating and the Governments only excuse for £120 billion of fiscal tightening in the teeth of a stalled economy is that There Is No Alternative.
The crazy thing is that there obviously is an alternative. Sitting in a wholly publicly owned subsidiary of the Bank Of England called the Asset Purchase Facility (APF) is £200 billion – over a third – of the UK Governments outstanding debt.
Cancelling the debts would be straightforward. The APF just retires the Government debts it is holding by communicating that the gilts no longer exists. Job done. No effect on the UK money supply. No raised inflation. No effect on investor confidence. You and I, the tax payer, just don’t have to suffer another £200 billion of “austerity”.
The only way not to monetise the debt is for the APF to opt to sell the gilts it is sitting on back into the private sector at some point in the future. And here is the kicker – to then cancel the cash it receives for selling the debt by ripping up the money paid to it. This would nullify the £200 billion of QE lent to it from the Bank of England to buy the gilts in the first place but is obviously an act of treason and total insanity. What kind of people contemplate ripping up £200 billion of publicly owned money?
The Bank of course emphasises that as a principle it will not monetise the gilts the APF owns. Again and again the Gov’nor pleads that he is not being forced to create money in order to cover the gap between the government’s tax income and its spending commitments. Very sensible of the Bank to emphasise this as if this was what was happening, it would be a violation of Article 123 of the Treaty on the Functioning of the European Union. Rather, the Bank promises us that it is undertaking quantitative easing in order to meet its inflation target and will sell the government debt back to the private sector once the economy recovers, thus unwinding the original increase in the money supply.
Apart from this being treasonous and insane the flaw in this argument is that there is absolutely no prospect of the Bank selling the gilts in the APF in the future.
Leaving aside that the Bank is currently trying to widen the money supply be BUYING gilts rather than narrow the money supply by SELLING them, how on earth could the Government fund its future normal gilt issues when the Bank was simultaneously dumping an additional £200 billion worth of gilts from the APF onto the market? Leaving aside the nonsense that Governments can run surpluses as a routine policy, the APF certainly won’t be able to dump its stock of bought up gilts whilst the UK Government is running a deficit.
So if the unwinding of QE can’t happen whilst the UK Government will still need to borrow, can it happen in a hypothetical future when the deficit is paid off? In this impossible future the private banking sector will have to be creating enough lending to allow the money supply to widen at its normal rate. Dumping an additional £200 billion of interest bearing gilts out on the market is at best futile and at worst could be either inflationary or restrict growth if timed badly .
So for now we are left with a ridiculous situation where the Government is moaning about the huge and “unaffordable” government credit card bills. At the same time over a third of the debt they are moaning about is stuck in the Government owned Bank of England with no hope of it ever being anything other than cancelled and retired. To add to the hilarity the Treasury, through a wholly government owned agency called the Debt Management Office pays interest on the £200 billion in the APF to the wholly government owned APF.
This money is just building up and will eventually (as all profits for the Bank are) be returned to the taxpayer. You couldn’t make this up.
There is a simple alternative to this madness – where the Bank sells Government debt back to the private sector at some point in the future, causing excess inflation, and then simply rips up any cash it receives in order to demonstrate a point of principle.
It’s not as if anyone would advocate doing QE to allow higher Government spending as a matter of routine. But if, as we are being told, QE has been undertaken only in the extremis of a liquidity trap in order to ensure growth, shouldn’t the QE be used to some advantage – clearing government debt by “magic” and thereby allowing fiscal loosening to stimulate demand?
David,
you now see how television ‘debate’ is handled by senior political journalists in Ireland. The presenter, in this case Vincent Browne and the minister (Brian Hayes) get 90% of the air time and take over the ‘debate’ while other invited guests are marginalized.I estimate you spoke for about 20 seconds allowing for interruptions.
Vincent Browne is one of the great ‘prima donna’ journalists of Ireland’s media world, who, when ostensibly interviewing a guest, use the opportunity to ‘interview’ themselves, to expound their own views on any given subject.
When dealing with reactionary ultra-conservative Irish politicians like Brian Hayes (remember his party supported the previous Fianna Fail administration in bailing out all the banks and property developers that created the crisis in Ireland) never address your comments to the minister, because he/she will be allowed to speak till nausea has set in without ever delivering one coherent thought. Rather give to him/her right between the eyes, metaphorically speaking. I do not mean to be
racist but I think your natural polite Englishness was in this respect a handicap.
The non linear aspects of mathematics can, as Poincaré noted, have an unpredictable trajectory,particularly where there is the opportunity for chaotic feedback mechanisms.
The assessment of risk by virtue of linear models, eg : Black-Scholes etc, is fraught with danger as attested by Ed Peters in his 1994 classic “Fractal Market Analysis. The systemic level of interconnectedness of the various financial networks has served to amplify the appalling consequences of the GFC . This is shown in the Nature article entitled “Systemic risk in banking ecosystems.”
The thing that has always amazed me since the return to neoliberalism under Thatcher and Reagan, is that the neither side of politics was able to see that in progressively impovishering workers they were effectively reducing the capacity of the economy to consume. According to David Harvey in “The Enigma of Capital” as the fruits of production and increased productivity were progressively shifted away from workers towards capitalists, demand began to dry up. As workers conditions of employment were reduced and as unemployment was used as a tool to “discipline” workers demands, capitalists needed to enable workers a path to maintain their standard of living. That path was debt. Thus workers exchanged gradually expanding standard of living funded by a share in increased productivity, for what was effectively a credit card.
While we need to need to deal with the moral bankruptcy of the financial elites via much more rigorous regulation, particularly in regard to the level of financial interconnectedness, it is also vital that any mass movements(eg : “occupy Wall St” etc ) have a clear idea as to what system will inevitably replace our flawed economic system.
We need to understand how our economy came to be ruled by a class that should have only served to facilitate the “real” economy.
History shows us that lack of confidence in Keynesianism in the 1970’s led us to abandon fiscal means to regulate the economy in favour of the now discredited ideas of Neoliberalism,
Since most governments (notable exceptions nations on the Euro) are monopoly issuers of a non convertible fiat currency whose value is maintained as it being the only way in which citizens can pay their taxes, the government can maintain production in the economy at an optimum level by simply fiscal means. The possible inflationary aspects of this policy can be managed, once optimum deployment of resources(capital and labour) by the modification of the levels of spending and the level of taxation.
Such as methodology has a number of advantages:
(i) removes the “need” to discipline workers expectations and attack inflation though ongoing unemployment.
(ii) removes the self interested hand of capital from the levers of economic policy and returns a higher level of democracy
(iii) reduces the social cost of unemployment by the use of fiscally financed temporary jobs with the government as ” Employer of Last Resort”
(iv) it will advantage both workers and the businesses they buy from by allowing workers to consume without going into debt, and in the bargain cut out some of the banks ‘ footprint in the real economy
For those worrying about “printing money” and hyperinflation ,remember there are two sides to inflation , ie : “Too much money chasing too few goods”, thus yes you can issue too much fiat currency but equally you can produce too few goods. Either way, in reality your fiat currency is, and has always been, only ever a claim on the goods and services produced in an economy at a particular time.
There’s an interesting review of Harvey’s work here: http://goo.gl/NgHgV
“Whether or not high wages had undermined profitability, a subsequent effort to curb wages, carried out at gunpoint in the Southern Cone in the mid-1970s, and achieved by ballot under Thatcher and Reagan before spreading to other wealthy countries, eventually resulted in a systemic shortage of demand. In this way, capital’s victory over labour set the stage for a later reversal. In The Enigma of Capital, Harvey charts the dialectical switch in the blunt style he now favours:
Labour availability is no problem now for capital, and it has not been for the last 25 years. But disempowered labour means low wages, and impoverished workers do not constitute a vibrant market. Persistent wage repression therefore poses the problem of lack of demand for the expanding output of capitalist corporations. One barrier to capital accumulation – the labour question – is overcome at the expense of creating another – lack of a market. So how could this second barrier be circumvented?
The lack of demand was of course appeased by recourse to fictitious capital: ‘The gap between what labour was earning and what it could spend was covered by the rise of the credit card industry and increasing indebtedness.’ It was not only consumers who indentured themselves. As Bellamy Foster and Magdoff point out in The Great Financial Crisis, total US debt, owed by government, corporations and individuals, equalled approximately 125% of American GDP during the 1970s. By the mid-1980s the proportion had increased to two to one, and by 2005 stood at almost three and a half to one. Much of the cheap credit, originating in East Asia and flowing through the Federal Reserve, came to promote a property bubble of historic dimensions. ‘The demand problem,’ Harvey writes, ‘was temporarily bridged with respect to housing by debt-financing the developers as well as the buyers. The financial institutions collectively controlled both the supply of, and demand for, housing!’
Well I never knew this:
“The brother of former UK prime minster Tony Blair has been appointed to sit on the board of appeal that oversees the three newly created European financial supervisory bodies.
William Blair, a high court judge and leading QC in banking law, has been appointed to the Joint Board of Appeal of the European Banking Authority, the European Securities and Markets Authority, and the European Insurance and Occupational Pensions Authority.
Blair has been a visiting professor of law at the London School of Economics since 1994 and has edited several books on law, banking and finance.”
http://www.efinancialnews.com/story/2011-11-04/tony-blairs-brother-appointed-to-eu-regulatory-body
So a Blair brother who writes about banking and finance law in the greatest era of the complete failure of law enforcement in the history of the planet. Hmmmmm.
If there’s still anyone out there who thinks that Tony Blair was a “socialist” PM then this should be the final proof that he was little more than a bank lobbyist. Seems it runs in the family.
David, thank you for those links, your Dublin talk was inspiring. I have been following this blog for the past year or so and, while I cannot pretend to understand some of the more technical economic arguments, I value your own and other contributors’ words as a source of clarity and illumination amid the general obfuscation in the mainstream media.
Telegraph:
“Bankruptcy is “no longer an abstract word” for France, Prime Minister Francois Fillon has warned, following Britain with plans to cut public spending.
Mr Fillon has announced “savings” of 100 billion euros to wipe out the budget deficit by 2016. He said the country’s “financial, economic and social sovereignty” required “prolonged collective efforts and even some sacrifices.”
Updated: Fillon says government salaries will be frozen under a “strict balancing of public finances and called on businesses in the CAC 40, the Paris blue chip share index, to do the same, saying some executive pay is “frankly indecent”.
After being elected in 2007, Sarkozy awarded himself a pay rise of 170pc to 19,000 euros a month.”
Many rumours that Berlusconi is about to resign, having said earlier that Italy’s problem is one of liquidity, not solvency (now where have we heard that before?)
Hi,
can anyone send me some cast iron data about RBS and its fraud and recklessness?
There is a branch in my city which is crying out for a protest at today’s announcement of £500million in bonuses.
With thanks
Excellent points made in the interview David, though as others have said it was hardly a free and fair debate. Its eyeful to see politicians squirm as they try to defend the indefensible. In my view the elites have become so convinced by the power of the media (which did have considerable influence) that they believe they can behave in the most appalling way and get away with it.
The phrase “can’t fool all of the people all of the time”springs to mind though here. As with all gamblers and risk takers eventually they lose. I think the elites have underestimated the publics disillusion with main stream tv media (which I think is akin now to the way people lost faith in the print and tabloid media). Spin and deceit will not be enough to get them out of this now.
There’s a good article by George Monboit detailing the huge growth in income disparity here
http://m.guardian.co.uk/commentisfree/2011/nov/07/one-per-cent-wealth-destroyers?cat=commentisfree&type=article
Golem – very much enjoyed your Dublin talk and your responses to the audience questions. You made some excellent points re sovereign nations and the power that they could have if they joined together (Ireland, Greece, Italy, Portugal).
Your point about the banks taking the debt to Ireland vs. the Cayman Islands (because when things went south you’d have no one to bail you out there) was very interesting. Difficult to get out in front of thieves, especially when you don’t think like them.
It makes sense you are a scientist and interested in non-linear mathematics. You step out to grasp the big picture, and then put the pieces in place. You are a truth seeker.
Keep up the great work. You ARE succeeding in getting through. Thank you.
What a Fuk-up:
http://www.economic-undertow.com/2011/11/07/non-battle-of-fukushima/
Seems that creating a reactor core shaped like a funnel isn’t especially helpful in near-meltdown situations.
Ah c’mon Hawkeye, this is old news, the BBC’s chosen expert Malcolm Grimston said it’s all perfectly under control & like Chernobyl, it would be a picnic, also some Japanese politician was filmed glugging water from the site, so everything must be OK. We can surely trust Tepco to do the right thing, they are bound to put the safety of life & limb before profit considerations & there’s no point in getting a bunch of know it all nuclear physicists involved, just over complicates everything, it’s fine, nothing to see here folks.
Mind you, I remember Grimston saying on the day of the tsunami, something like. ” The Japanese nuclear industry is very modern & will withstand the quake & tsunami, no probs “
Michio Kaku theoretical physicist was trying to highlight the mess, back in June. It seems to be that the use of sticking plaster has become the authorities preferred modus operandi in all fields.
http://www.huffingtonpost.com/2011/06/22/fukushima-nuclear-plant-ticking-time-bomb-japan-disaster-michio-kaku-_n_882166.html
Stevie
The time bomb isn’t ticking. Seems like it’s slithering to the bedrock!
The Japanese response is completely different to that of the Chernobyl cleanup:
http://en.wikipedia.org/wiki/Chernobyl_disaster#Debris_removal
Quarter of a million “bio-robots” used to shovel radioactive debris to prevent a further explosion.
Yes I read that, it’s the usual short termism that seems to be applied to everything. I thought back in June that someone with the profile of Michio Kaku might have been listened to ( he has presented some good documentaries on physics, that’s how I know of him ) but as in economics, people like him are sidelined & the opinions of the ” Nothing to see here ” folks are championed.
Compass has launched a Plan B campaign for the economy: http://www.scribd.com/doc/71928938/Plan-B-What-is-it .
Petition if you want to support it here: http://action.compassonline.org.uk/page/s/plan-b—sign-the-petition .
Though Bill Mitchell offers some caveats: http://bilbo.economicoutlook.net/blog/?p=16719
“I am not attacking the ideals or the motivation of the Compass Organisation. I suspect that there is a high degree of overlap with my own ideals and motivations. But when organisations step into the economic debate and present what are incorrect logical or conceptual arguments which are in no way different to the essential underpinnings of the stereotypical neo-liberal myths then I think they do the progressive side of the argument a disservice – no matter how well-intentioned the authors may be.
. . . These self-styled progressive left agendas are based on faulty understandings of the way the monetary system operates and deny the opportunities that a sovereign government has to advance well-being.
Progressives today seem to be falling for the myth that the financial markets are now the de facto governments of our nations. It becomes a self-reinforcing perspective and will only deepen the malaise facing the world.
… I [argue] that progressives have to come to terms with the fact that currency-issuing government sector has to be at the apex of the monetary system if they want to achieved goals such as full employment and equity (recognising broadly defined concepts of productive employment).
The challenge is to ensure the citizens control the government they elect not the financial and corporate elites. The elite capture of our governments is the problem not the existence of government as a monopoly issuer of our currency.
… the principle issue is that the economic argument is clothed in the same erroneous monetary constructs that neo-liberals use to attack government. As an educational device the Report – therefore – becomes part of the problem!
Once again, ‘progressives’ have been cowed into operating within a neo-liberal framework which consistently misrepresents how the economy works in the real world.
I anticipated that there would be an MMT response to the Compass initiative, and almost said so when I posted it.
Me, I’m not qualified to judge.
But I do know this – both Compass and MMT theorists are (to be brutally realistic) p*ssing in the wind unless they can either:
(a) persuade those in power or those likely to come into power (i.e. mainstream opposition parties) to adopt their ideas; or
(b) persuade enough people outside mainstream politics to make it possible for a new party to credibly offer their ideas as part of its policy – which party would then have to get elected.
(I discount the non-democratic alternatives.)
At the end of the day it’s about power and persuasion (a long, uphill struggle).
That’s true.
Whether or not MMT holds, if policy makers continue to misundertsand/misrepresent monetary policy we’re stuffed.
Which presents a conundrum: perhaps there can be no paradigm change until the current system collapses (after all FDR, notwithstanding a short period of New Deal experimentation, was still clinging to orthodox ‘remedies’ – i.e. the balanced budget – up to 1938 and was only forced to change course under threat of global warfare.
Those in control still have too much to lose to change course – in fact, they’re making hay while the sun shines because of the thunderclouds on the horizon.
It might help if MMT and other non-mainstream economists entered into a genuine dialogue with potential allies, rather than condemning them as just as bad as neo-liberals because they haven’t seen the light.
Otherwise there’s a danger of People’s Front of Judea/Judean People’s Front syndrome.
“If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.”
Keynes, “The Future” Ch. 5, Essays in Persuasion (1931)
On the day Lloyds Banking Group reported a £3.9bn nine-month loss, they were the top performer on the stock market, with their shares up 4.37%. Societe Generale was the top winner on the Paris bourse, up 7.26%.
Meanwhile Greek central bank emergency liquidity assistance to banks rose to €26.56bn in September from €6.42bn in August.
Those whom the gods wish to destroy, they first drive mad…
Speaking of madness Neil, this article recounts the findings of a Nobel Prize winning psychologist about the ‘1%’ (or 0.1%)
http://www.monbiot.com/2011/11/07/the-self-attribution-fallacy/
Intelligence? Talent? No, the ultra-rich got to where they are through luck and brutality.
By George Monbiot. Published in the Guardian 8th November 2011
If wealth was the inevitable result of hard work and enterprise, every woman in Africa would be a millionaire. The claims that the ultra-rich 1% make for themselves – that they are possessed of unique intelligence or creativity or drive – are examples of the self-attribution fallacy. This means crediting yourself with outcomes for which you weren’t responsible. Many of those who are rich today got there because they were able to capture certain jobs. This capture owes less to talent and intelligence than to a combination of the ruthless exploitation of others and accidents of birth, as such jobs are taken disproportionately by people born in certain places and into certain classes.
The findings of the psychologist Daniel Kahneman, winner of a Nobel economics prize, are devastating to the beliefs that financial high-fliers entertain about themselves(1). He discovered that their apparent success is a cognitive illusion. For example, he studied the results achieved by 25 wealth advisers, across eight years. He found that the consistency of their performance was zero. “The results resembled what you would expect from a dice-rolling contest, not a game of skill.” Those who received the biggest bonuses had simply got lucky.
Such results have been widely replicated. They show that traders and fund managers across Wall Street receive their massive remuneration for doing no better than would a chimpanzee flipping a coin. When Kahneman tried to point this out they blanked him. “The illusion of skill … is deeply ingrained in their culture.”(2)
So much for the financial sector and its super-educated analysts. As for other kinds of business, you tell me. Is your boss possessed of judgement, vision and management skills superior to those of anyone else in the firm, or did he or she get there through bluff, bullshit and bullying?
In a study published by the journal Psychology, Crime and Law, Belinda Board and Katarina Fritzon tested 39 senior managers and chief executives from leading British businesses(3). They compared the results to the same tests on patients at Broadmoor special hospital, where people who have been convicted of serious crimes are incarcerated. On certain indicators of psychopathy, the bosses’s scores either matched or exceeded those of the patients. In fact on these criteria they beat even the subset of patients who had been diagnosed with psychopathic personality disorders.
The psychopathic traits on which the bosses scored so highly, Board and Fritzon point out, closely resemble the characteristics that companies look for. Those who have these traits often possess great skill in flattering and manipulating powerful people. Egocentricity, a strong sense of entitlement, a readiness to exploit others and a lack of empathy and conscience are also unlikely to damage their prospects in many corporations.
In their book Snakes in Suits, Paul Babiak and Robert Hare point out that as the old corporate bureaucracies have been replaced by flexible, ever-changing structures, and as team players are deemed less valuable than competitive risk-takers, psychopathic traits are more likely to be selected and rewarded(4). Reading their work, it seems to me that if you have psychopathic tendencies and are born to a poor family you’re likely to go to prison. If you have psychopathic tendencies and are born to a rich family you’re likely to go to business school.
This is not to suggest that all executives are psychopaths. It is to suggest that the economy has been rewarding the wrong skills. As the bosses have shaken off the trade unions and captured both regulators and tax authorities, the distinction between the productive and rentier upper classes has broken down. CEOs now behave like dukes, extracting from their financial estates sums out of all proportion to the work they do or the value they generate, sums that sometimes exhaust the businesses they parasitise. They are no more deserving of the share of wealth they’ve captured than oil sheikhs.
The rest of us are invited, by governments and by fawning interviews in the press, to subscribe to their myth of election: the belief that they are the chosen ones, possessed of superhuman talents. The very rich are often described as wealth creators. But they have preyed upon the earth’s natural wealth and their workers’ labour and creativity, impoverishing both people and planet. Now they have almost bankrupted us. The wealth creators of neoliberal mythology are some of the most effective wealth destroyers the world has ever seen.
What has happened over the past 30 years is the capture of the world’s common treasury by a handful of people, assisted by neoliberal policies which were first imposed on rich nations by Thatcher and Reagan. I am now going to bombard you with figures. I’m sorry about that, but these numbers need to be tattoed on our minds. Between 1947 and 1979, productivity in the US rose by 119%, while the income of the bottom fifth of the population rose by 122%. But between 1979 and 2009, productivity rose by 80% , while the income of the bottom fifth fell by 4%(5). In roughly the same period, the income of the top 1% rose by 270%(6).
In the UK, the money earned by the poorest tenth fell by 12% between 1999 and 2009, while the money made by the richest 10th rose by 37%(7). The Gini coefficient, which measures income inequality, climbed in this country from 26 in 1979 to 40 in 2009(8).
In his book The Haves and the Have Nots, Branko Milanovic tries to discover who was the richest person who has ever lived(9). Beginning with the loaded Roman triumvir Marcus Crassus, he measures wealth according to the quantity of his compatriots’ labour a rich man could buy. It appears that the richest man to have lived in the past 2000 years is alive today. Carlos Slim could buy the labour of 440,000 average Mexicans. This makes him 14 times as rich as Crassus, nine times as rich as Carnegie and four times as rich as Rockefeller.
Until recently, we were mesmerised by the bosses’ self-attribution. Their acolytes, in academia, the media, think tanks and government, created an extensive infrastructure of junk economics and flattery to justify their seizure of other people’s wealth. So immersed in this nonsense did we become that we seldom challenged its veracity.
This is now changing. On Sunday evening I witnessed a remarkable thing: a debate on the steps of St Paul’s Cathedral between Stuart Fraser, chairman of the Corporation of the City of London, another official from the Corporation, the turbulent priest Father William Taylor, John Christensen of the Tax Justice Network and the people of Occupy London(10). It had something of the flavour of the Putney debates of 1647. For the first time in decades – and all credit to the Corporation officials for turning up – financial power was obliged to answer directly to the people.
It felt like history being made. The undeserving rich are now in the frame, and the rest of us want our money back.
Thanks Phil, and good on George. What I’ve often thought (as the ideology of the supposedly self-made), but ne’er so well expressed.
Note the debate he refers to was organized by http://www.reclaimthecity.org/ .
“Restore Democracy to the Square Mile
Anti-cuts activists have focused on banker greed and tax dodgers (the symptoms). Now it’s time to focus on The City itself (the disease). Join us at the Lord Mayor’s Show 12th November, as we lay out three concrete demands for democratic reform of the Corporation of London. We will then have an alternative Lord Mayor’s Parade to the Occupation at St. Paul’s, where we will acclaim an alternative Lord Mayor for the People.”
(A good follow-up to what Monbiot himself wrote about the anachronistic and anti-democratic traditions of the City not so long ago.)
Good stuff mate. I’m in London the next two Fridays so I’m going to try to get over to St Pauls.
Misha Glenny on Greece, monday’s FT—
The real Greek tragedy – its rapacious oligarchs
http://www.ft.com/cms/s/0/618e57d6-0937-11e1-a20c-00144feabdc0.html#axzz1dCOYQFFo
Worth taking the time to free-register just for this one.
It follows neatly the adam curtis BBC blog post 3 nov, the Curse of the Colonels .
http://www.bbc.co.uk/blogs/adamcurtis/
Meanwhile in Ireland, Enda Kenny says he has not prepared any legislation to compel banks to pass on interest-rate cuts to their customers because the financial regulator, Matthew Elderfield, has not requested it.
http://www.irishexaminer.com/ireland/kenny-yet-to-act-on-rate-cut-failure-173331.html
“Mr Elderfield said some time ago that if he was having difficulty with the banks in their passing on interest rate reductions, he might well seek support from the Government. I haven’t had contact with Mr Elderfield since.”
This is part of an introduction to a book I read in 2007 called Humanity, an emotional history written by Stuart Wilson. At the time I thought this anecdote was something that belonged to the past, at least in the western world.
In April 1732, in London, a bankrupt bookbinder named Richard Smith decided to end it all His business had crashed to ruin amid a trail of unpaid invoices, leaving him with no prospects of relief. With a wife & a child to support, his responsibility was not only to himself. After having apparently discussed the matter with Mrs. Smith, they smothered their small daughter & hanged themselves, leaving behind a short letter to their landlord, containing an entreaty to make provision for the dog & cat whose lives they had spared, & money for a porter to make delivery of two further documents. One of these was to an associate, formally thanking for his sustaining friendship, & expressing indignation at the opposite treatment had received from another party. The second document had been signed jointly by husband & wife, & constituted the couples suicide note.
The Smiths provided a painstaking explanation of the reasons for their actions, in terms wholly free of rancour or accusation. Tobias Smollet, in whose panoramic “History Of England”, written in the 1750’s, this story is retailed, comments that the suicide letter was ” altogether surprising for the calm resolution, the good humour, & the propriety, with which it was written “. In so ending their lives, the Smiths wrote, they were releasing themselves from a worse & otherwise unavoidable fate, that of poverty & rags. They prayed that their immediate neighbours, who would be able to attest to the conscientious efforts they had made to earn an honest living. As to the ghastly business of taking the life of an infant, they argued that, cruel as the act may seem, it constituted a far less callous recourse than leaving her alone & unprovided for in a life of ignorance & misery, & while they were aware, God-fearingas they were, that suicide was against the holy canon, they refused to believe that almighty God, in whom they still placed their utmost trust, would visit any needless suffering on his creatures. They expressed their confidence that they could entrust their souls to him for whatever arrangements he might make for them after their deaths. Smollet concludes by noting that, far from being a pair of reckless chancers, living on their criminal wits as so many in Georgian London did, the Smiths ” had always been industrious & frugal, invincibly honest, & remarkable for conjugal affection.
Circumstances are different in this case, but suicide rates are rising rapidly. Nothing to do with the situation caused by the banksters & their friends of course.
http://www.telegraph.co.uk/news/uknews/8878543/Poverty-suicide-couple-had-warned-of-hopeless-situation.html
Sorry for being off topic & hogging the blog,
What a beautiful post. Thank you Steve!
A very sad story, and one that is likely to be repeated as the welfare ‘reforms’ start to bite. Many people are simply unaware of how draconian the cuts will be, assuming they are simply designed to prevent fraud. But the government know that, notwithstanding the tabloid hysteria over benefit cheats, in reality not much can be saved by eradicating fraud. The real savings are to be made by simply removing people from eligibility regardless of their ability to work. Hence, the new Employment and Support Allowance (EMA) introduced to replace incapacity benefit will have a time-limit of 12 months – after that period anybody with a working partner will be ineligible irrespective of their assessed abilities, whether paralysed from the neck down, suffering from cancer, whatever. Thus, many severely disabled people will lose around £90 a week – that’s quite tough to overcome given that they have no chance of finding employment, and that their partners are often constrained from working full-time precisely because they are caring for a disabled partner. This is the kind of Catch-22 up to a million disabled people will face when the new regulations (which have received scant attention in the mainstream media) are passed.
It’s actually Stuart Walton, a good read.
Is it also called “A natural history of human emotions”? I can only find that title in the Library. Not “Humanity”.
You’re right Patricia, it was published under that title in the US.
http://www.amazon.co.uk/Stuart-Walton/e/B001H6SUAI/ref=ntt_dp_epwbk_0
Just in case we thought that the dismantling of democracy in EU countries was a devious plot that the technocrats were trying to effect without anyone’s noticing, Angela Merkel has apparently come out and stated publicly that national sovereignty is no longer possible:
“What we got in Cannes [where the European Summit was held] was the feeling that there is no such thing any more as domestic policy making,” Dr Merkel was cited as saying in an interview today.
“Domestic is what’s inside the currency area. Greece can no longer decide all by itself the issue of whether it should hold a referendum or not.”
(From today’s Irish Times – http://www.irishtimes.com/newspaper/breaking/2011/1109/breaking38.html)
All we have to do now is abolish our parliaments and stop holding those quaint and anachronistic election ceremonies.
David, you and this guy should talk!
If you have 15 mins to spare, try this for a summation (non-technical) of where we are at, and where it might lead. Powerful and inspiring stuff, imho. For the full effect, read the piece from 2009 too (Rent-Seeking Parasites)
http://theendisalwaysnear.blogspot.com/2011/11/crack-in-curtain.html
http://theendisalwaysnear.blogspot.com/2009/10/rent-seeking-parasites.html
Brilliant.
I particularly liked this quote:
“An economist is someone who sees something working in practice and asks whether it would work in principle.” – Stephen M. Goldfeld
An excerpt from Wynne Godley’s ruminations on the half-way-house Euro from 1992:
“If there were an economic and monetary union, in which the power to act independently had actually been abolished, ‘co-ordinated’ reflation of the kind which is so urgently needed now could only be undertaken by a federal European government. Without such an institution, EMU would prevent effective action by individual countries and put nothing in its place.
Another important role which any central government must perform is to put a safety net under the livelihood of component regions which are in distress for structural reasons – because of the decline of some industry, say, or because of some economically-adverse demographic change. At present this happens in the natural course of events, without anyone really noticing, because common standards of public provision (for instance, health, education, pensions and rates of unemployment benefit) and a common (it is to be hoped, progressive) burden of taxation are both generally instituted throughout individual realms. As a consequence, if one region suffers an unusual degree of structural decline, the fiscal system automatically generates net transfers in favour of it. In extremis, a region which could produce nothing at all would not starve because it would be in receipt of pensions, unemployment benefit and the incomes of public servants.
What happens if a whole country – a potential ‘region’ in a fully integrated community – suffers a structural setback? So long as it is a sovereign state, it can devalue its currency. It can then trade successfully at full employment provided its people accept the necessary cut in their real incomes. With an economic and monetary union, this recourse is obviously barred, and its prospect is grave indeed unless federal budgeting arrangements are made which fulfil a redistributive role. As was clearly recognised in the MacDougall Report which was published in 1977, there has to be a quid pro quo for giving up the devaluation option in the form of fiscal redistribution. Some writers (such as Samuel Brittan and Sir Douglas Hague) have seriously suggested that EMU, by abolishing the balance of payments problem in its present form, would indeed abolish the problem, where it exists, of persistent failure to compete successfully in world markets. But as Professor Martin Feldstein pointed out in a major article in theEconomist (13 June), this argument is very dangerously mistaken. If a country or region has no power to devalue, and if it is not the beneficiary of a system of fiscal equalisation, then there is nothing to stop it suffering a process of cumulative and terminal decline leading, in the end, to emigration as the only alternative to poverty or starvation. I sympathise with the position of those (like Margaret Thatcher) who, faced with the loss of sovereignty, wish to get off the EMU train altogether. I also sympathise with those who seek integration under the jurisdiction of some kind of federal constitution with a federal budget very much larger than that of the Community budget. What I find totally baffling is the position of those who are aiming for economic and monetary union without the creation of new political institutions (apart from a new central bank), and who raise their hands in horror at the words ‘federal’ or ‘federalism’. This is the position currently adopted by the Government and by most of those who take part in the public discussion.
See: http://goo.gl/o9TMb
“If Germany had its own currency, the New Deutschmark would be like the Swiss Franc on steroids. It would appreciate dramatically and force German industry to contract. As things are, German industry has gained a huge market – the rest of Europe – at an exchange rate that makes its goods tolerably priced, so it’s “quids in” for the Germans. The surplus Germany gets from all these exports finds its way back to German banks. These banks need to lend this money to someone and, more crucially, German industry needs its banks to lend to the likes of us and the Spaniards and Italians etc, so that we can have the money to buy the German cars – because, if we don’t buy them, who will?
That’s the game, and every so often when the Germans come looking for their money back, it isn’t there. It has been spent. Once this happens, the present policy is to impose austerity in order to increase the likelihood that the Germans will be paid back. But austerity doesn’t increase the likelihood that the money will be paid back, it decreases the likelihood. This is the inconsistency at the heart of the euro, and the only way out of it is if we all become better at making things than the Germans are. In fact, the rest of us don’t have to become more German, we have to become better Germans than the Germans themselves, and this is not going to happen – nor should it.
So if nations are not going to change their behaviour and the Germans need to lend enormously to us to buy their goods, of course there are going to be defaults. The only alternative to this is a return to national currencies. National currencies allow us to devalue to compensate for the idea that we might not be as productive as the Germans because we value other things in life. After all, there is more to life than economics. If this adjustment is not allowed to happen, the rest of Europe – in the euro – simply can’t keep up with Germany.
The best way to understand this dilemma is to consider that, when we had the punt linked to the deutschmark, we devalued six times in 13 years just to try to keep up competitively. Conversely, when we joined the euro and could no longer devalue, we lost 30 per cent competitiveness against Germany. It could not be clearer.
All Papandreou was doing was recognising this for Greece. Without the drachma, Greece can’t work. Europe with all this debt can’t work. You can’t shunt the debt of some people on to others indefinitely. The people will say no, and democracy threatens nobody. The sooner we all see this the better.
David McWilliams http://goo.gl/gfT2X
http://www.telegraph.co.uk/news/uknews/8878543/Poverty-suicide-couple-had-warned-of-hopeless-situation.html
Nuneaton and Bedworth Borough Council said they were “saddened” at the deaths of Mark and Helen Mullins.
And there you have it. Being “saddened ” makes it all o.k.
Do these nameless,faceless, bureauocrats have no souls. Shame Shame Shame.
Well done Steve, on highlighting this monstrous outrage perpetrated on this tragic couple.
We’ve just discovered that in Ireland,even though we’re broke, that we can still afford to pay 10 million Euros a year in pension payments to 108 current and serving members of our political establishment. This includes a hefty 80 thousand to our present minister of finance (on top of his salary) who is readying himself to inflict more misery on the population with another “austerity” budget.
These people are living on a different planet. I wonder how much it costs to pay all of the pensions of all the European partners, as well as the European parliament gravy train passengers/freeloaders. All cuts should start with those who can easiest afford them and in the current European context, this should mean the political establishment.And those cuts should be in the region of 60 – 70 %. Easier for us then to accept our lot ,when we can see those responsible for the mess, doing their fair share, as well.
Thank You Timothy Geithner
Possibly Related: Autism, Bonds, Budget 2012, Education, Special Needs Assistance
Originally posted on the 17th of October on The Anti Room. An edited version appeared in the Irish Times. The author wishes to remain anonymous.
I participated in the recent protest in Dublin about cutbacks to Special Needs Assistants (SNAs) in schools, bringing with me half a dozen eggs with the intention of lobbing them at the front door of the Central Bank on Dame Street. In the event it didn’t seem right to do that in front of the many children who had come along, so I left them instead in the lodge at Leinster House with a request to a gateman that they be given to Enda Kenny with the message that he should consider himself thoroughly, if symbolically, egged.
The other day on twitter the finance and economics expert Paul Sommerville tweeted a post by the Ballyhea Bondwatch site which gave details of a further ‘tranche’ of billions of Irish citizens’ money being handed over to the dead bank, Anglo Irish. Meanwhile we continue to read stern editorials and commentary admonishing us, untruthfully, that in order to save small fractions of the amounts being paid even to unsecured bond-holders (thank you Timothy Geithner) on a weekly basis, we must obediently suffer any amount of impoverishing and dehumanising ‘austerity’ the government might impose for years to come. To make the books add up. We are also being told that these two things are unrelated.
Bullshit.
My 15-year-old son has autism, exacerbated by verbal dyspraxia, severe receptive language difficulty and an IQ of 69 – just inside the level that means he is officially intellectually disabled. He cannot functionally read or write above the level of a four-year old, tie his shoelaces or play team games – he finds it difficult to follow complex instructions like game rules. Besides, he also has motor problems – major and minor – and does not understand many of the norms of social interaction.
On entering secondary school he was allocated a full-time SNA and five hours of one-to-one sessions with a resource teacher working on literacy and numeracy skills. The rest of the time he would have his SNA with him to help him follow whatever was happening in mainstream classes as best he could. He had to abandon language and other subjects because of the impossibility of being able to participate meaningfully. In all except for three subjects in which he did well at a modified level, he rubbed along for two years clearly unable to keep up with his peers, making limited but worthwhile educational progress with the vital support of an attentive and conscientious SNA.
This September, faced with cuts in special needs provision Andrew returned to school to find that the Principal, in reallocating reduced SNA provision, had decided he was ‘over-resourced’ and had slashed his SNA support to 25% of what it had been. He had to spend much of his time in mainstream classes trying to follow what was being taught without the help he had before. He was unable to take down instructions from the blackboard or to use any printed sheets or textbooks, for instance. His needs had been extensively and professionally documented on entering the school. He was bewildered by what was happening to him. In this state of educational isolation, he also began to feel more keenly how none of the mainstream children wanted to talk or play with him at break times. He was accused of being lazy by other pupils following what we were told was ‘a bust-up’ between him and some of his classmates who resented that Andrew did not do as much school work as they did. Within four weeks he had become worryingly depressed. He was troubled about his disability and painfully hurt by the lack of social warmth from the other pupils, whom he desperately wanted to accept him.
The teacher we attempted to discuss the situation with was uncomfortable and defensive, casting around for explanations other than the obvious one: his much needed support had been taken from him. It began to be hinted that his problems were behavioural rather than actual. Spiteful, untrue gossip about him by other pupils was repeated back to us by a teacher, for what purpose we’re unsure. On the way to school on his last morning there he said to his Dad ‘it would be better if I didn’t exist – I’m too much trouble for everyone at school’. He couldn’t stay in that environment a single day longer. We went to the school with flowers and thank-yous for the support Andrew had had before from his SNA and other teachers, determined to finish his school days on as pleasant a note as possible in spite of the circumstances. When we described how Andrew was feeling and what he had said, the Principal declared icily ‘that’s not an educational issue’ – which in itself went a long way to explaining why Andrew had been so much abandoned by his school. Stunned by that, we agreed afterwards that our decision to home educate him was in fact an imperative rather than a choice. So much for cherishing the children of the nation equally. We are faced with an enormous undertaking, we realise, but the many sacrifices we will have to make will be more than worth it if we can do for our son what the Irish education system has effectively put beyond his reach.
But credit where it’s due. Well done Timothy Geithner, Goldman Sachs, Christine Lagarde, Jean-Claude Trichet and all the rest. You’ve taught our son a good lesson: divide and rule is a tried and trusted strategy. It allows you to slink out the door with all the world’s wealth while ever-willing, ingratiating foot-soldiers at the coalface get on with finishing your dirty work for you. (Funny how those foot soldiers are never in short supply, isn’t it?)
There are thousands of children having similar experiences in Ireland this autumn because of the decision of the Labour/Fine Gael government to implement serious cuts in special needs education, defended and rationalised with a lot of faux hand-wringing. What is happening to our country is not economically necessary in many respects. It is, rather, a vicious exploitation of the banker-caused and privately owned recession of the very richest people – used as an excuse to entrench the same ideology that got them into trouble in the first place while ruthlessly landing us with the bill. It’s very lucrative and risk-free for them, this ‘socialising the debt’. They are intentionally destroying much of what is left of our civil societies, the better to monopolise our wealth and resources in future. The recessions they create are also their gold and silver-lined clouds of opportunity. I read about that in an IMF document: it said the crises they cause are a chance to push through ‘reforms’ they couldn’t get away with at other times, under the guise of pretending they are unavoidable. It was down there in black and white, I tell you. I wonder does the SNA who wrote in the Irish Times that ‘we all accept these cuts have to happen’ realise any of this? Are we going to continue submissively to accept that we should give all of our wealth to these people for generations to come? Are these talentless talents, who stamp their feet and demand huge salaries and bonuses for the privilege of doing this to us, really worth the lost futures of our children, destroyed health care, massive unemployment, social breakdown, suicides, stuffed prisons, families broken up by emigration, needlessly ruined small businesses, a devastated voluntary sector and a myriad other assaults on our way of life?
If we want our country back from international finance and banking, we will have to take it back ourselves by whatever non-violent means are available to us. The three main political parties who typically make up our governments have proved beyond any doubt not just that they are one and the same in all but name, but that they are not our representatives in the world but rather the powerful bankers’ here at home.
This is what happens in the real world and if we do not start to re-act soon it will be too late to reclaim our world.
I think every country in Europe is queued up for the same treatment – being picked off one by one. It’s classic Shock Doctrine territory:
“The shock doctrine is the use of fear to push the public into allowing policies that they would not normally accept.” Naomi Klein; The Shock Doctrine: The Rise of Disaster Capitalism
“There are no conditions of life to which a man cannot get accustomed, especially if he sees them accepted by everyone around him.” Tolstoy – 1877
see: http://theendisalwaysnear.blogspot.com/2011/11/crack-in-curtain.html
and:
http://youtu.be/tIiH4RwM5pk?t=13m
Confirmation from David Cameron’s speech at London’s Imax today:
“We need to get private sector investment in areas which are overly dependent on the public sector. Over the coming weeks we’re going to look at a range of options to improve access to funding for business. We need to show real aggression about pursuing Britain’s interests in the world.”
For “Britain’s interests”, obviously, read “the interests of British business”.
And of course the announcement today that Circle will be taking over the management of Hinchingbrooke Hospital in Cambridge in a £1 billion deal: http://www.bbc.co.uk/news/health-15436685 .
Private good, public bad – the spirit of Thatcher & Reagan returns, if it ever went away.
Neil
Strictly speaking privatising public services is NOT even true Capitalism:
“It is a form of Crony Capitalism, and a slipperly route back to the retrograde structure of Feudalism. It is what James K Galbraith calls a Predator State. The state as monopoly collector of taxes and corrupt distributor of the spoils to the private sector. This is not the free market vision of Adam Smith.
Yes we have a mixed economy, but one that is instead the worst of both worlds; privatised profits and yet socialised losses.”
http://forensicstatistician.wordpress.com/2011/05/23/a-predator-state-the-worst-bits-of-capitalism-communism-and-feudalism/
Agreed. Once in government, parties just happen to ensure that government contracts are awarded to businesses that donate to them, and peerages to individual donors. Pure coincidence, of course.
Eg Capita’s links with New Labour: http://www.telegraph.co.uk/finance/2935243/MP-puts-Blair-on-spot-about-Capitas-Labour-links.html .
And of course there was/is the Bernie Ecclestone affair…
William Hague, the Foreign Secretary, is facing questions over his role in a controversial oil deal in Libya involving a company run by a Conservative donor: http://www.telegraph.co.uk/news/politics/8882816/Hague-facing-questions-over-Libya-deal.html .
And talking of Bernie Ecclestone, Chateau Petrus, banking fraud and offshore stuff:
“Mr Ecclestone, who is estimated to be worth about £2.5billion, gave a rare insight into his family’s billionaire lifestyle when he told a German court of the wedding bill.
He explained that he had no idea what the cost was be until after his daughter Petra’s wedding because he had argued with his former wife Slavica Ecclestone over the cost shortly before the ceremony.
He said although he had offered, as the father of the bride, to pay, he had fallen out with Mrs Ecclestone over the proposed cost of the drinks, which are said to have included Chateau Petrus wine at £4,000 a bottle.
As a result, his ex-wife, who with a fortune of £750 million is one of the country’s wealthiest millionaires as the result of a divorce, ran up the huge bill without telling him.
Mr Ecclestone was giving evidence at the trial of Germany’s biggest post-war fraud trial against a German banker.
[…] Trying to show that he did not break the terms of an off-shore family trust, Mr Ecclestone, 81, explained his complex financial set up.
[…] Mr Ecclestone is currently being investigated by the German authorities. HM Revenue & Customs are also said to be looking into his affairs and he told the German court that they could demand a tax bill of £2 billion if it is found that he misused the trust set up to avoid inheritance tax for his ex-wife and daughters.
Mr Ecclestone was giving evidence at the trial of Gerhard Gribkowsky, a German banker charged with tax evasion and receiving bribes worth $44 million from Mr Ecclestone and the family trust, called Bambino.
At the centre of the case are payments Mr Ecclestone made to Mr Gribkowsky.
The Prosecution claims that the money was paid to ensure that Mr Ecclestone remained in charge of Formula One after its sale by Mr Gribkowsky’s bank to its new owners in 2006.”
http://www.telegraph.co.uk/sport/motorsport/formulaone/f1news/8882383/Ecclestons-ex-wife-spent-12-million-on-daughters-wedding.html
A story that sums up our times…
Meanwhile:
“In a letter to the Chancellor, more than 30 of the City’s top figures agree that the “current turmoil in southern Europe” means that the Government must take “immediate actions” to boost confidence. They call for the immediate scrapping of the 50p rate to attract entrepreneurs to Britain and a £1,000 increase in the tax-free personal allowance.”
http://www.telegraph.co.uk/news/worldnews/europe/eu/8882655/Debt-crisis-axe-the-50p-tax-rate-now-to-save-the-economy.html
The taxman was yesterday accused of letting Britain’s biggest phone company off paying up to £8 billion in a “sweetheart” deal not available to ordinary people.
http://www.telegraph.co.uk/news/8875360/Taxman-accused-of-letting-Vodafone-off-8-billion.html
(deleted due to duplication)
Unprovoked police brutality:
http://www.zerohedge.com/contributed/police-bludgeon-peaceful-occupy-uc-berkeley-protesters-batons
Coming to a peace loving “democracy” near you???
God bless America!
Hawkeye – that zerohedge link actually from georgewashington’s blog , a front-runner for a long time now on many fronts.
http://www.washingtonsblog.com/
Scrolling down to yesterday to see how the big US banks are hurting with the number of people closing their accounts and moving over to Credit Unions .
They don’t like it up ’em !
All the best to you, still a free man I see .
frog2
Hi Dave
Well, the Thought Police haven’t locked me up, yet!
Incidentally, I’ve just opened up an account with Smile. About to switch over from Lloyds TSB in the next week or so. Let’s see how that goes.
Looking forward to explaining to Lloyds why I moved after being so docile for the last 25 years:
1. They keep “forgetting” to remove me from their marketing lists – so constantly spam me with “pre-approved” loans
2. They keep upping the monthly account charge
3. Although not the worst in the world, they are part of the “Too big to fail” problem.
I’m sure this conduct will get added to my MI5 dossier!
The Westminster establishment is well in the bed of privatisation.
It is in fact a measure of their conservative incompetence. In as much, if you cannot devise a dynamic creative and productive economy filch all you can from the house keeping. By socialising costs and privatising profit – the Mecca of mediocrity.
In the present so called financial crises Westminster has every appendage crossed that it won’t be next to fall to the insidious virus now attacking Italy.
How long before the 7% interest in sovereign bonds starts to increase the interest rates on so called ‘solvent’ countries, or in the UK’s case the £1.3 trillion it has borrowed to finance the bank bailout?
Please can someone who understands these things answer a couple of questions for me (and pardon my ignorance):
1. Why is it better to put your money into a credit union, since as far as I know the credit unions themselves keep the money in a bank – e.g. I know that the CU where I keep my modest savings banks with AIB, so isn’t it still helping to prop up a zombie bank?
2. If Ireland were to be kicked out of the eurozone next week/month/year (if there remains a eurozone to be kicked out of…), my savings in euro would be magically turned into punts and devalued, as far as I understand (given that most of the major items I have to buy are inevitably imported). If I have outstanding loans with an Irish CU or bank when this happens, will the amount I owe shrink or increase or neither? Just wondering whether I ought to withdraw (some of) the few thousand euros I’ve carefully saved over the years and keep it in cash against the day…
According to Stephanie Flanders (and George Soros), you should think about buying Euros, paradoxical though it may seem: http://www.bbc.co.uk/news/15676704 .
Pat – the banks don’t keep money they invest it at a ratio of damn near 14 to 1 in markets CU don’t/couldn’t look at.
Instead the CUs ‘invest’ in their communities. In other words a market the banks wouldn’t look at.
In effect, if the banks renaged on CU accounts they would renage on all deposits and as a consequence be finished.
As to any devaluation of the punt/euro you could still choose the category you keep them in. But much depends on the relevant circumstances prevailing at the time.
In the present toxic quagmire you might be well advised to invest in wheel barrows and a few cases of Petrus.
That’s Chateau Petrus, one of the world’s most expensive Bordeaux wines, in case you didn’t know. Never drunk any myself…
Hong Kong Phooey! Number one superstar!
http://www.zerohedge.com/news/bottomless-import-hail-mary-black-hole-uncovered-it-hong-kong
(Seem to recall some chatter on here a while back about Hong kong and it’s dubious off-shore shenanigans….)
“It was easy to see that there was a bubble, that it would burst, and that it would be a huge hit to the economy when it did, since there is nothing to quickly make up a loss of demand of 6-7 percent of GDP (which translates to $900bn to $1,050bn). It would be embarrassing for economists to say that they missed something that was right in front of their eyes, so rather than talk about the bubble, we hear discussions of the financial crisis. Of course collaterized debt obligations (CDOs) and credit default swaps (CDSs) can get very complicated. So, we get that it was all a very confusing picture and no one knew what was where, and then it all blew up. This gives the blanket “Who could have known?” amnesty to all the people who absolutely should have known.
While the financial crisis part of the story is of course true, it is secondary. There are countries that had relatively well-regulated financial systems, most obviously Spain, that are suffering every bit as much as the US. Spain’s problem was that it had a massive housing bubble driving its economy just like the US at the time.
The other part of the story is that no one wants to talk about the real imbalances that underlie the bubble economy. In the US it was a story of both weak wage growth, which limited consumption demand that was not induced by bubble wealth, and also a massive trade deficit. As a simple matter of income accounting, as long as the US has a trade deficit it must have either budget deficits or negative private savings, or some combination.
…
For this reason, we get a focus on finance and then lots of surprised economists who cannot understand why the economy is not recovering. In many cases we get almost a mystical story that financial crises doom economies to slow growth, as though there is some curse of a financial crisis that over-rides the basics of economics. Of course there is no such thing – there is just political opposition to pursuing the policies that would boost growth.
Dean Baker http://goo.gl/Esfhw
I am just waiting for them to pull another ghastly doomed rabbit out of the hat.
“If ever modern Europe needed brave, charismatic leaders to carry their nation through turbulent times, it would seem to be now. Instead, it is as if the crew of the Starship Enterprise had concluded that Captain Jean-Luc Picard is no longer the man for the job and that it is time to send for the Borg. Efficient, calculating machines driving through unpopular measures across the eurozone with the battle cry “resistance is futile” are apparently the order of the day. Faced with a deep crisis, once-proud European nations are essentially preparing to hand over power to Ernst & Young.
The premise that grave times call for experts rather than politicians is not entirely borne out by history . . . Their achievements included guiding the country into the euro. The euro itself was a technocratic creation, one where the member states did not get round to reading the manual. The definition of technocracy is rule by experts – in particular the scientists and engineers. In this case it means the financial engineers and political scientists; brilliant but bloodless functionaries making decisions based on empirical evidence without worrying about carrying the citizenry with them.
Doubtless the current crop are talented men but there is a reason why successful political leaders do not tend to begin their speeches with words like “liquidity facility”. The one area of expertise technocrats lack is political, since they tend to have avoided traditional paths to power. But not to worry; Olli Rehn speaks highly of them. The premise is that only such men will take the necessary decisions that cowardly political parties are unable or unwilling to make. Great, brave politicians may be preferred but alas, – it may be noted – they do not seem to be in plentiful supply. The return of the technocrats represents the failure of the political class.
FT http://goo.gl/aAOqx
But none of our politicians believe in government, which has rendered them rudderless.
Telegraph:
“The head of Slovenia’s central bank, Marko Kranjec, has seen the yield on 10-year bonds hit 6.77pc today – the highest since it entered the eurozone in 2007.
“We’ve seen in all the eurozone countries in trouble that the markets do not calm until the state has prepared a credible stabilisation programme.”
But Slovenia is having trouble with stability, and faces elections in December after a confidence vote last month brought down the government. ”
“The spread between German and French 10-year bond rates reached a record high of 170 basis points this afternoon. ”
Will a banker replace Berlusconi, just as a banker replaced Papandreou in Greece?
Monti Python ?
http://www.marketwatch.com/story/momentum-for-monti-as-italy-scrambles-2011-11-10?dist=afterbell
If a banker isn’t available, an economist will do just as well. Our politicians seem to be in thrall to bankers, eurocrats, the markets and global capital anyway, so why not dispense with the illusion of democracy?
See Marshall Auerback on the ‘financial coup d’etat’
http://goo.gl/KgDHd
————————–
“It is said that the European Union is a remarkably inefficient organization in terms of organizing economic rescue packages, but when it comes to subverting democracy, they are as ruthless and efficient as a well-oiled crime syndicate.
Consider the following: in the space of less than 2 weeks, the eurocrats have managed to eliminate two troublesome elected leaders, whose actions dared to interfere with their broader objectives of finalizing the “European Project” – a project which, to put it bluntly, is looking more and more like a financial coup d’etat.
First, Greece, which has in a sense provided the template: Prime Minister George Papandreou, had the audacity to seek the consent of his own people to decisions that would shape their lives via referendum. Well, judging from the petulant reactions of German Chancellor Angela Merkel and French President Nicolas Sarkozy, this clearly wouldn’t do. Blatantly interfering with the internal affairs of a fellow democracy (and an ostensible ally), both lobbied (and threatened) the Greek government, the end result being that Mr. Papandreou was duly shoved aside after backtracking.
… What is taking place is nothing less than a financial coup d’etat by the Eurozone’s rentier class.”
So, a banker has taken over the premiership of Greece….
I’ve long considered a ‘conspiracy’ at the highest levels of a financial (banking) elite pefectly possible, perhaps even probable. New ECB head Draghi is both an ex Goldman Sacks alumni & Bilderberger….& there’s plenty of those around blurring the distinction between banking & politics.
However, a conspiracy is hardly needed as the strategy of common interests among the uber rich has simply been so obvious nobody at that level could be unaware of it.
A couple of links from a comment at Naked Capitalism explain this as succinctly as I’ve ever seen.
http://www.counterpunch.org/2010/12/10/the-rise-of-the-wall-street-ruling-class/
http://csper.wordpress.com/2010/08/12/monopoly-money-and-the-international-banking-cartel/
From the 1st link:
“In a widely ignored 2000 book, Wall Street Capitalism: A Theory of the Bondholding Class, economist E. Ray Canterbery explains what happened. The tax cuts drastically increased the incomes of the rich and they used their newfound money from the tax cuts to buy the Treasury bonds, notes, and bills that the Treasury Department had to issue in order to finance Reagan’s deficits. The combination of monetarism (high interest rates), supply-side tax cuts, and the phantom Soviet threat created the bondholding class. In essence, a Wall Street Welfare institution known as the bond market came to dominate politics in the United States. Instead of using taxes to fund the federal government (and increasingly state and municipal governments), taxes on the rich were cut and they were handed an “investment opportunity” so that working and middle-class taxpayers now pay a “bondholder’s tax” to firms like Goldman Sachs and JP Morgan Chase (as well as Japan and China). The domination had become quite apparent in early 1993 when President-elect Bill Clinton remarked “You mean to tell me that the success of the economic program and my re-election hinges on the Federal Reserve and a bunch of fucking bond traders?” Clinton ditched his 1992 campaign promises to the whims of the Wall Street Ruling Class and the Federal Reserve Bank.
Treasury securities come in maturities of 1 month, 3 months, 3 years, 7 years, 10 years, and 30 years. But rarely does the bondholding class hold their securities to maturity. Instead, they are circulated through high-volume secondary markets. In October of 2010, for instance, the average daily trading volume of Treasury bonds was $558 billion. Treasury, State, and Municipal bonds are highly concentrated among the rich. In the 2007 Survey of Consumer Finances, the Top 5 percent (ranked by net worth) held about 93.6 per cent of all bonds (this does not include the savings bonds that the working and middle classes are familiar with). Likewise, the Top 5 percent owned 82.4 per cent of all stocks. The bondholding class oscillates between bonds and stocks as market conditions dictate. The Wall Street Ruling Class manipulates the supply of bonds, bills, and notes of differing maturities through its “Treasury Borrowing Advisory Committee” to maximize the economic gains of the bondholding class. The current Chairman and Vice Chairman are from JP Morgan Chase and Goldman Sachs, respectively.
By implementing what Canterbery calls a “bondholding class strategy,” the Federal Reserve Bank managed interest rates so as to optimize returns for the bond and stock market. Studies indicate that bond prices and the stock market generally react negatively to what is good news for most Americans: strong employment growth, a decline in jobless claims, an increase in wages, or an uptick of inflation sends bond and stock prices falling. When news reports of slower housing starts, slower than expected employment growth, an increase in unemployment or jobless claims are released, the bond and stock markets rally. This is a major difference in the class interests between the vast majority of Americans whose primary income is from wages and salaries and the minority of rich asset holders. When the economy grows too fast, the ideology of the bondholding class dictates that the Federal Reserve Bank should raise interest rates (which increases the unemployment rate and reduces wages). Keep wage and commodity inflation in check by all means necessary while allowing for stock market and home mortgage inflation.
The last thirty years of the class war waged by the Wall Street Ruling Class and the Federal Reserve Bank has been about reducing wages and goods inflation while sustaining financial asset inflation to increase the enrichment of the bond and stock holders. Net interest payments on Treasury securities are welfare payments to the Wall Street Ruling Class. One of the propaganda functions of the highly concentrated (by ownership) mass media is to keep the masses confused about this great source of power. From the perspective of the elite, it is better to inflame and encourage hatred for Mexican immigrants, welfare recipients, and Muslims. But Mexican immigrants and Muslims, generally speaking do not run the country. Instead, the simple answer is: follow the money. By following the money you will be led to a street with a river at one end and a graveyard at the other. In fact, it is for whom the firms located on this street received the largest welfare check ever written. As the chorus of Ron Paul supporters, Tea Party activists and white supremacists continues rising and violence escalates, the question arises: Is there socialism in the United States? The answer is a resounding Yes! Socialism for the rich. ”
This perfectly explains the strategy in Europe too imo.
‘cspr’s final blog post in Jan 11 is depressing reading, but hard to argue with.
http://csper.wordpress.com/2011/01/08/in-conclusion/
Getting near end-game I think. Either real democracy (probably for the first time) asserts itself (over banking oligarchy) via a majority enlightened citizenry, or….it’s over.
Mike
A good article. This just re-affirms that the bond-holding class (the 1%) are indeed pulling all the strings.
Unfortunately they have conditioned the masses to accept the mantra that we “must pay our dues” to these bond holders. As the Vincent Browne interview attests.
This is their modus operandi – to make sure that we “pay up”.
The key message to spread to everyone is about the incompetent and irresponsible lending:
https://www.golemxiv.co.uk/2011/06/guest-post-by-hawkeye-irresponsible-borrowing-and-irresponsible-lending/
The bond holders must not be allowed to call the shots.
Totally agree Hawkeye.
In respect of Ireland, I’ve mentioned this before:
http://www.2nd-republic.ie/site/
The proposal for a citizens’ assembly process for fundamental reform:
http://www.2nd-republic.ie/files/citizens_assembly.pdf
was recently launched & a copy sent to every Irish TD (member of parliament). TD Claire Doyle has said she will raise the matter in the Dail (parliament).
Both of the current coalition parties Fine Gael & Labour had commitments on reform in their manifestos. They are already trying to walk away from this.
I urge every Irish citizen to contact their TD & press them to support the process proposed by 2nd-Republic.
I urge people in other countries, & the ‘Occupy’ movements, to adopt a similar campaign.
A large part of the process is an initial educative period led (as is all) by citizens themselves. It is expected that this would open up debate on fundamental issues throughout the population as a whole.
As with most evenings, I watched Newsnight last night:
http://www.bbc.co.uk/blogs/newsnight/fromthewebteam/2011/11/thursday_10_november_2011.html
It seems that a studio full of economists and financial commentators can all agree (with a complete straight face mind you) that “the markets” are seeking certainty, clarity and strong Gvt leadership.
In other words, “the markets” DEMAND central planning, and will hop up and down in fits of madness until they get their way.
In fact, “the markets” are demanding Fiscally Technocratic Dictatorships!
Yet everyone seems to nod as if this is all perfectly sane.
Let me get this straight, they are expecting Italy to put in place austerity measures that will reassure the markets & therefore stop a European meltdown. Never mind Baldrick, these people are like first world war generals on all sides, austerity measures being as effective as going over the top, holding your riflle in the air & walking at a nice easy pace until the machine guns open up.
Well it is the 11.11.11. & the so called elites are still prepared to use a mincer.
http://www.telegraph.co.uk/finance/financialcrisis/8882970/EU-bailout-fund-chief-Klaus-Regling-calls-on-Italy-to-act-fast-to-reassure-markets.html
It would seem politicians of any hue or nationality all suffer from the lack of backbone.
With reference to the welfare of the wealthy, here’s an article I published some time back.
The Psychopaths of Capitalism.
The present aim of capitalism is quite simply to socialise the costs while being allowed to maximise and privatise the profits.
In a nutshell, its capitalism without moral or social responsibility.
In another article I called the players psychopaths. I used that pejorative term factually, not as a knee jerk reaction, but in the considered view of neuroscience and its application to the criminal traits of serial killers and their like.
The majority of psychopaths know the law, are often astute in its application and are aware of the moral values deemed as normal benchmarks by society.
Where their flaw becomes apparent is their indifference to the values placed by both the law and normal society on such dispirit issues as the minor offence of littering or the gravest offence of killing. They treat both with the same casual, if any, remorse.
The same attitude has been adopted by all the players in this game, including those who are supposedly in the business of representing us and looking after our interests.
Both, however, hide behind the façades of institutions; institutions which by design and practice have removed conscience from their covenants because applying it would increase costs at the expense of profits. They don’t see such an attitude as corrupt they just see it as the normal game of global business – the world of dog eat dog and eat what you kill.
This explains their hubris and lack of remorse and appreciation of being saved from the stupidity of their own making; and their utter lack of conscience. To the extent they not only deem they had a right to be saved, they want to exploit the recovery by tilting the ballpark and reducing the rules all in their favour.
They even have the audacity to threaten if they don’t get what they want they’ll take the huff and their ball and find a better pitch. Which would be laughable, if we had a competent government with a backbone who said – Go, but before you do, it’s our ball, our pitch, our rules and our clothes you’re wearing. So strip off and piss off as far as that big van that’s waiting for you by the touchline.
Unfortunately there doesn’t seem to be a government (apart from possibly Iceland) any where in the world that has this biological necessity of backbone that, supposedly, separates man from mollusc.
However, whatever the cost, – and I suspect to the normal citizen, if done fairly and in a forensic manner, they would be less than the approach presently adopted – their failures and the surreal fantasy of their values have been exposed, and we have had an expensive education in the worthless alchemy of their beliefs and the vacuous lexicon of their inner temples.
So, in the immortal words (except for Bush): Fool us once; shame on you – Fool us twice; shame on us.
But this is exactly what they are presently doing, with the connivance of governments.
Why is our government conniving with them? Well it may be panic which has undermined their competence and confidence. That may be regrettable but excusable.
But, with twenty two millionaires in the cabinet and a party bankrolled by big business that confidence has to be allied with trick – a confidence trick designed to protect the value of their investments and portfolios and those of their backers by passing the bucks to the bewildered herd under the guise of austerity.
Austerity doesn’t feature in the concerns of the rich; it needs to be seismic, in the realms of catastrophe, before they feel the pinch. Meanwhile they hope the collateral damage inflicted by the shock and awe of their austerity measures will subdue the herd into stupefied subjection of stress, anguish and the chilling vice of penury.
That is the price paid by millions to support the avarice of a few psychopaths.
Think I’m being too harsh on them? Look for the remorse.
John Souter
16/05/2010
Hi John
I believe that Monbiot tackles this subject recently too.
I looked up the key characteristics of a Psychopath:
– Lack of empathy
– Shallow emotions
– Lying and manipulation
– Irresponsibility
– Remorselessness
– Egocentricity
This sort of conduct is not only anti-social, but fundamentally detri-social. In other words not just against civil society, but their rapaciousness risks actually damaging the rest of us quite severely.
Hare describes psychopaths as “intraspecies predators”. There is no more an apt description of our current banking oligarchy than this.
To them, then, we are just prey.
Hawkeye;
Further tests and analysis has been done on CEO’s and others who have these tendencies. -can’t find the bloody thing; but when I do I’ll post it.
But what the test shows was that those with these tendencies when measured against others without these tendencies the results of their ‘executive’ abilities were mediocre. In concise terms they could talk the talk but not walk the walk.
The same research indicated that nurture can either eliminate or enhance these tendencies. Unfortunately our present values in society has opted to place a high value on these characteristics.
Perhaps we’re just beginning to recognise that sometimes the devils you know are worse than the devils you don’t.
Today’s headline in the Independent: ‘New blow for eurozone as EU cuts growth forecasts: Drastic reduction in 2012 predictions dashes hope of early end to debt crisis’
Austerity=slowdown in growth – blow me down with a feather.
How much longer can this fake innocence be maintained by the mainstream?
Charles – I suspect; until their advertising revenue runs out.
That is for those that are not the tools of government or act as loss leaders for the conglomerate moguls.
Iceland as a dress rehearsal?:
”After the September 2008 crash, Iceland’s government took over the old, collapsed, banks and created new ones in their place. Original bondholders of the old banks off-loaded the Icelandic bank bonds in the market for pennies on the dollar. The buyers were vulture funds. These bondholders became the owners of the old banks, as all shareholders were wiped out. In October, the government’s monetary authority appointed new boards to control the banks. Three new banks were set up, and all the deposits, mortgages and other bank loans were transferred to these new, healthier banks – at a steep discount. These new banks received 80 percent of the assets, the old banks 20 percent.
Then, owners of the old banks were given control over two of the new banks (87% and 95% respectively). The owners of these new banks were called vultures not only because of the steep discount at which the financial assets and claims of the old banks were transferred, but mainly because they already had bought control of the old banks at pennies on the dollar.
The result is that instead of the government keeping the banks and simply wiping them out in bankruptcy, the government kept aside and let vulture investors reap a giant windfall – that now threatens to plunge Iceland’s economy into chronic financial austerity. In retrospect, none of this was necessary. The question is, what can the government do to clean up the mess that it has created by so gullibly taking bad IMF advice?
…
Is this the future of Europe as well? If so, the present financial crisis will become the great windfall for vulture banks, and for banks in general. Whereas the past few centuries have seen financial crashes wipe out the savings and creditor claims (bonds, bank loans, etc.) that are the counterpart to bad debts, today we are seeing the bad debts kept on the books, but the banks and bondholders that provided the bad loans being made whole at taxpayer expense.
This is not how economic democracy was expected to work during the 19th-century drive for Parliamentary reform. And by the early 20th century, social democratic and labor parties were supposed to take the lead in moving banking and credit along with other basic infrastructure into the public domain. But today, from Greece to Iceland, governments are acting as enforcers or even as collection agents on behalf of the financial sector – as the Occupy Wall Street movement expresses it, the top “1%,” not the bottom 99%.
Iceland stands as a dress rehearsal for this power grab. The IMF and Iceland’s government held a conference in Reykjavik on October 27 to celebrate the ostensible success in their reconstruction of Iceland’s economy and banking system.
In the United States, the crisis that Obama Chief of Staff Rahm Emanuel celebrated as “too good to let go to waste” will be capped by scaling back Social Security and Medicare as soon as the autumn Doomsday Clock runs down and the Congressional Super-Committee of 12 (with President Obama holding the 13th vote in case of a tie) gets to agree to make the working population pay Wall Street for its bad loans. The Greek austerity plan thus serves as a dress rehearsal for the U.S. – with the Democratic Party playing the role as counterparts to Greece’s Socialist Party that is sponsoring austerity, and expelling labor union leaders from its ranks if they object to the grand double-cross.
neweconomicperspectives.blogspot.com/2011/11/financial-coup-detat-in-making.html
Back to the price system. As we can see, its roots go deep indeed. We ‘need’ it, because we have ‘discovered’ scarcity via farming and property. Because there is not enough to go around, what better way to ‘decide’ who gets what, while keeping the constant threat of a Hobbesian Warre of Each Against All at bay, what better than some ‘anonymous,’ impartial, and incorruptible system? Capitalism. Free Market. The Price System. A force of nature for harnessing our brutish forces of nature.
Cool, only atop the foundational assumption of scarcity no market can stay free. Big fish eat little fish (competition, greed, selfishness), in the twinned realms of Market and State alike, and before you know it, the biggest are writing the rules to suit themselves and their own. ‘Twas ever thus, and ever thus shall be. Until we update the Triumvirate of Evil and embrace abundance, cooperation and faith.
Back to the money system. It is the motor of state apparatus, is its core dynamic embodied in financial infrastructure. Forged in those Competition, Selfishness and Greed fires, the money system stimulates and assumes these three forces equally resolutely. It also requires, by design, perpetual economic growth. Ever-growing economic activity. An ever-expanding money realm into the non-economic realm. An ever-accelerating rat race. What was once done for free, what is ‘idly’ doing nothing—like forests and schools of fish—must be converted into either goods or services.
If it’s not working, if it’s not earning money and delivering price information, what possible value can it have? How can we measure a thing, assess it, extract it, profit from it, unless it is sucked into economic life? Look at air, that useless, ubiquitous stuff. It has a price of zero! Let’s earn money from it, put it to work somehow, make it earn its right to exist! But what happens when there’s no nature left to convert into goods and services ??? Let’s not contemplate that.
Except, the mainstream has begun to contemplate just that. We are the mainstream, even we Fringe Nutjobs. The more eloquent we become at presenting our case, the quicker and more effectively the message can spread to others. Then our imaginations can begin the work of envisioning a new system, and put ideas into practice.
Fellow travelers, through this period of upheaval, crisis and opportunity, the time of the Fringe Nutjob has come. People will be asking, in growing numbers, what the alternatives are. Sadly, the “no one knows” answer can be annoying. I suggest pointing out that the system we have is based on profound misunderstandings of the workings of reality, and, as a consequence, has become addicted to perpetual growth. We have designed a system which, were it a car, could only accelerate. Forever. Pressing on the breaks causes it to crash. Designing things differently requires, urgently, a new money system, which will further and necessarily require a redesign of pretty much everything else. All of it can only begin when we are ready to initiate the task. When we badly want something new. Right now recognition of the urgency is paramount. The ideas are there. We need safe-as-possible mechanisms and methodologies for testing them.”
http://thdrussell.blogspot.com/2011/11/crisis-of-imagination.html
“The EU today represents the triumph of managerial over democratic politics. And in this, it is a project for our times. As the broad ideological divides that characterised politics over the past two hundred years have been all but erased over the past two decades, so the political sphere has narrowed and politics has became less about competing visions of the kinds of society people than a debate about how best to manage the existing political system.
The Eurozone crisis and the Occupy movement reveal two sides of the contemporary failure to grasp the significance of democracy. In one case, political change is reduced to technocratic fiddling, in the other democracy equated with lack of political structure. This separation of politics and democracy should worry us as much as the economic crisis itself.
http://kenanmalik.wordpress.com/2011/11/11/politics-without-democracy-democracy-without-politics/
The Guardian interviews Gillian Tett FT and Paul Mason BBC
Can Europe pull back from the brink?
http://www.guardian.co.uk/commentisfree/2011/nov/11/the-conversation-eurozone-crisis
“PM: Just because the cost of breakup is so great doesn’t mean it won’t happen. I was leaked some bank research and the sliding scale of banks that went bust was so frightening I decided it was impossible to report without causing panic”
“PM: It’s inevitable Greece will default and exit. I think Ireland will be saved because there’s too much riding on it as a big version of Monaco. Portugal doesn’t really matter, it’s not systemic, and so it all comes down to Italy.”
And in a recent twitter exchange PM explains the Monaco reference:
“yes but the reason the Brits want to save Eire is its role as offshore financial centre”
Headline in Independent:
“Outbreak of political sanity calms markets – The austerity package designed to pull Italy – and the euro – back from the brink was on schedule for approval by lunchtime today …”
This is the kind of ‘sanity’ you get when the lunatics are running the asylum.
Once again, Bill Mitchell sums it up:
——————————————————————————————————
“The future is always just around the corner when “market sentiment” or “investor confidence” or “household outlooks” will improve and growth will return. The next edition wipes out the previous estimates of growth and pushes them forward again.
The pattern is very familiar to those who read these documents sequentially over time. The same ideological paradigm is imposed on the story so you don’t really get any understanding that the reality they have to acknowledge (after denying it in previous “forecasts”) is anything to do with the failure of the ideology.
…
Further, note the ideology – they wanted us to believe that under the drag of fiscal austerity and the deliberate choice by politicians to allow unemployment to keep rising, that private demand would take “over as the engine of a moderate recovery”. It was never going to do that.
And note they are silent about their much-vaunted claims that there would be an export-led recovery once the fiscal austerity deflated the domestic economies sufficiently – that is caused so much entrenched unemployment that wage cuts were easy to push through.
But then the reality has to be acknowledged – they know that the situation is deteriorating quickly and all they can say is that their “hopes were dashed”.
The whole fiscal austerity mantra is built on these “hopes”. They somehow think that if they keep saying it enough – that consumers and firms will spend and invest more despite on-going job losses, huge debt overhangs, housing market collapses, and wage and pension cuts etc – that it will happen.
Some of them who try to put some “technical” authority into this mantra talk about Ricardian Equivalence or their versions of this rather insidious notion that mainstream macroeconomics invented to justify their call for smaller government and pro-cyclical fiscal policy. Apparently, private spending was being withdrawn not because jobs were drying up and sales were falling but because the resulting deficits (via the automatic stabilisers) were signalling higher taxes in the future and everyone was madly saving to meet their future tax obligations.
The notion has never enjoyed empirical support and at the theoretical level relies on some extreme (impossible) assumptions for its consistency. It is the stuff of fantasy land. The real motivation of the economists – of-course, was to limit the size and capacity of government and provide more scope for their beloved “self regulating free market”, an oxymoron if there ever was one – to appropriate real income from the workers.
…
The triumph was that the cabal captured governments completely and so now our so-called elected officials do the bidding for small elites and use public funds to lie to us about there being no alternative.
So who is in the cabal in Europe? The UK Guardian’s Larry Elliot summarised it nicely yesterday (November 10, 2011) in this article – The emergence of the Frankfurt Group has turned back the democratic clock.
He argues that
“(e)lectorates are being bypassed as increasing austerity pushes Europe’s weaker countries into an economic death spiral … and the real decisions in Europe are now taken by the Frankfurt Group, an unelected cabal made of up eight people: Lagarde; Merkel; Sarkozy; Mario Draghi, the new president of the ECB; José Manuel Barroso, the president of the European Commission; Jean-Claude Juncker, chairman of the Eurogroup; Herman van Rompuy, the president of the European Council; and Olli Rehn, Europe’s economic and monetary affairs commissioner.
This group, which is accountable to no one, calls the shots in Europe. The cabal decides whether Greece should be allowed to hold a referendum and if and when Athens should get the next tranche of its bailout cash. What matters to this group is what the financial markets think not what voters might want. To the extent that governments had any power, it has been removed and placed in the hands of the European Commission, the European Central Bank and the IMF. It is as if the democratic clock has been turned back to the days when France was ruled by the Bourbons.
…
The Euro cabal is really incapable of resolving the problems that it faces. They are locked in an ideological warp that is in denial of the only solutions that are possible. They have too much political capital – and raw power – to protect. To acknowledge the way forward was to manage an orderly break-up of the flawed monetary system would be too much to ask.
It will take an uprising of the citizens who finally get sick of the increased hardship the cabal is inflicting on them and decide to assert their democratic rights.”
Bill Mitchell: http://goo.gl/1YVsO
Charles – according to one of the think tanks 2083 is pencilled in for the UK debt to be 60% of GDP.
That’s a pretty slow curve rather than a corner.
What was it Keynes said about the long run?
@BHomes: ““Paul Mason: I was leaked some bank research and the sliding scale of banks that went bust was so frightening I decided it was impossible to report without causing panic.”
I saw that. I can’t quite make up my mind whether PM is being responsible, thinking about the possible consequences of spilling the beans (some journalists would go for the story regardless), or withholding information that we should know. After all, the bank in question has that research, and is presumably acting on it, which people who don’t have access to it can’t.
Perhaps he’s having it both ways: not being specific, but letting the cat out of the bag in general terms. Perhaps there’s some hope of at least mitigating disaster by buying the time to prepare for relatively orderly rather than disorderly bankruptcies. Perhaps it makes no difference. Either way it’s very scary.
It’s a tightrope walk. In order to push through austerity measures government has to convince people the situation is dire – the ‘shock doctrine’, but to preserve faith in the ideology there has to be some light at the end of the tunnel – albeit a constantly receding light, in the form of optimistic, but constantly downgraded forecasts.
David,
Thanks for making an appearance on Irish television. I always wondered what would happen if more people like you were handed the microphone in this country’s media. Well, despite your great work, my hope for a positive outcome is ever-dwindling. Gauging the attitudes of the Government, and worse by multiples: the oh-so-flawed point of view of the ordinary people of this country, I am feeling utterly hopeless about our situation at this point.
All the same, your moments of simple clarity in a sea of ignorance, scapegoating and rubbish-talk was a nice breath of fresh air. I’m reminded of an Einstein quote, ““If you can’t explain it simply, you don’t understand it well enough.”
I’m tired of representational politics, of people who insist they’ll somehow do a better job when they’ve acquired the same position of privilege in a corrupt system which they themselves still believe works. It all begs for another Einstein quote, ““We can’t solve problems by using the same kind of thinking we used when we created them.”
But I’m preaching to the choir, when the rest of the country stay in to watch X-factor and parrot assertions that ‘there is no alternative’.
AndrewM,
Thanks for the kind words.
I know how hard it is to not dispair. But don’t give up hope yet. The crisis is gearing up not down. They may think they have done enough to cripple democratic dissent but I think there is a very godd chance the credit crunch is entering a new phase which they may not be ready for.
They will either fall or have to launch new and far more draconian measures than any seen so far. Hang on to your hat and don’t give up.