Your Friends For Life

Today’s headlines on the BBC made my thinning blood boil.

Five banks have been collectively fined £2bn by UK and US regulators for traders’ attempted manipulation of foreign exchange rates. HSBC, Royal Bank of Scotland, Swiss bank UBS and US banks JP Morgan Chase and Citibank have all been fined. A separate probe into Barclays is continuing.

349993186

To most of us this is unknowable corporate chaff that members of some satanic sect make up to entertain themselves. Bankers might as well be alien lizards secretly destroying our planet. They are not of our race.

And as scandal crashes over scandal – Libor fixing, sub prime, PPI, terrorist financing, bonuses, Goodwin’s risk-taking, tax avoidance – the story changes from Why Does It happen to Why Do We Have Banks?

If, as is now indisputable, the banking sector and related financial institutions are proven to be crooked, anti-social, economically destructive entities, why do we allow them to carry on? The Tax Justice Network estimates up to £20trillion is hidden from the world’s tax authorities in offshore banks alone.

In the case of the much smaller but equally insidious payday lenders, there have been Commons debates and quickly-organised fixes limiting how much interest they can charge. The result is that most are likely to go out of business. Yet when we compare the degrading effect of banks’ behaviour on our lives, we see they have been massively more harmful and but carry on with the blessing of the political classes, stacking up profits where possible, shoveling millions in bonuses to investment staff and, with the aid of the government, campaigning against EU limits on bonuses.

images

This is a sacrosanct regime, forgiven its excesses through pathological reliance on its activities.

One answer is to nationalise the banks but in a better-regulated and well-organized system isn’t the competition between institutions potentially a good thing? Might not a better idea be to bring into public ownership the money supply? I’ve been reading the thoughts of James Robertson, a former senior civil servant, now writer and co-founder of the New Economics Foundation http://www.neweconomics.org. His website is here www.jamesrobertson.com

He gave evidence to the Treasury Select committee inquiry into the banking crisis in 2009. He writes:

‘Money and finance now constitute a worldwide system. As it works today, it results in systemic inefficiency and injustice in almost every sphere. It imposes a perverse calculus of values, compelling or encouraging almost everyone in the world to compete against one another for a greater share of planetary resources and, in doing so, to turn planetary resources into waste.

Money is the foundation of national and international monetary and financial systems. How the supply of money is created and issued, who by, and in what form (as debt or debt-free, in one currency or another), goes far to determine whether a money system is stable. If money continues to be supplied for national economies and the international economy as it is today, they will inevitably continue to suffer damaging crises of financial instability.

The public money supply is at present created as follows. Less than 5% of the estimated UK national money supply is created and issued as banknotes and coins by agencies of the state. Most of the remaining 95% is created and put into circulation by commercial banks and building societies as loans to their customers in the form of bank-account money (still often called credit as if distinct from money).

If that were not the status quo and we were starting from scratch, nobody would seriously suggest that the same businesses and procedures should combine the two conflicting functions – putting 95% of the public money supply into circulation efficiently and fairly on behalf of society as a whole, and competing for profit in the market for lending and borrowing. It would be obvious that to mix them up together would reduce the efficiency and reliability of both functions.

need-bank-account-1

The proposal is that the operationally independent central bank should continue to implement monetary policy objectives published by the elected government. But it will no longer implement them indirectly by managing interest rates to influence the amount of new money created by banks as loans. It will itself decide at intervals how much new money needs to be added to the money supply, create it and transmit it as public revenue to the government. The government will then put it into circulation by spending it on public purposes along with other public revenue, as decided through normal parliamentary budgeting procedures. Only in exceptional monetary crises like the current one, which will then arise less often, will the central bank play a part in deciding how the money is to be spent that it creates to meet monetary policy objectives.’

He wants to take commercial banks out of the monetary system and make them mere companies reliant like everyone else on public policy and accountable institutions. As he says: ‘It will prohibit anyone else, including commercial banks, from creating bank account money out of thin air – just as forging metal coins and counterfeiting paper banknotes are criminal offences.’

Meantime, can we criminalise the behaviour of these crooks and start jailing the bankers?

 

 

 

 

 

 

 

 

Facebooktwittergoogle_plusredditpinterestlinkedinmailby feather

31 thoughts on “Your Friends For Life

  1. Bugger (the Panda)

    This morning on R 4 , usual stuff about the Banks, out of control, too big to fail, poorly managed etc.

    Nauchtie, for it is he, put it to whosoever was today’s drive-by expert that why are the miscreants not being charged under criminal law?

    The answer was that, terribly difficult, not certain of a conviction and the cracker, did they actually break the law?

    Actually “break the law” I shouted at Naughtie, “of course the bloody well did!”

    What law was it, take your pick.

    They conspired to defraud their clients by rigging the exchange rate, LIBOR and anything else they wanted to, to their benefit and thus to the debit or loss of their employers clients.

    A couple of specimin charges charges should be easy to prove and then they go down for life?

    Pour encourager les autres.

  2. All these problems arose when the banks became the economy.
    They thus operate as an organ of state which makes them above and beyond the law as we Picts understand it.
    Westminster has made no effort to rebalance the economy,I suspect because they can’t,so we are stuck with debt making the world go round and bankers being beyond accountability.

  3. Everyone needs to read “Debunking Economics” by Professor Steve Keen. It is shocking that for decades, in some cases since 1926, the assumptions of neo-classical economics have been proven to lead to internal contradictions and completely wrong conclusions. Despite this, governments and banks use neo-classical models to justify everything from increasing competition, to selling off state assets and implementing austerity. If engineers behaved the same way, then all bridges would fall down, houses would collapse and there would be no transport system.

    The banks are part of the problem, but not the only part, slavish adherence to the outdated and false neo-liberal economics is at the root of this. Time for everyone to wake up and start challenging the “received wisdom” of the “experts”.

    • I agree. I have read ” Debunking Economics “. ( Well, in my case, struggled through it. ) The whole neo-liberal consensus is kept up by the promulgation of these false precepts through universities and financial institutions and the unchallenged acceptance of the media. It’s almost like medieval religious belief in which adherents were taught how to think about the world and absolute and unquestioning faith was the chief requirement.

      • I think that it would have been better if he had included the equations in the book, even as an appendix. I have a degree in maths and physics and found his wordy explanations harder going than equations.

        I’m afraid that I have known for a long time that economics is just another form of “cargo cult”, unfortunately one that has dire consequences for many of the poorer people of the world.

        I suggest that those of us who have read Debunking Economics spread the word and maybe we can call the charlatans to account at some stage.

        • I once met a Home Office economist, Oxbridge educated, who said exactly the same – that economics was a ‘cargo cult’. Though in a top position in her profession, and a recent graduate, she quickly became totally disillusioned with it as an empiric ‘science’. It was fundamentally dishonest, she said, you could make economics justify anything. She gave it all up to become a sculptor – a far more honest and objective profession, she said.

          • Bugger (the Panda)

            BC

            Thought that it was Labour which was the Cargo Cult, certainly for the MPs SMPs and aspitants.

  4. Why is there no porridge in a pail for these crooks? The Us, Iceland, Spain, etc, jail them all

  5. Yes we can. Problem – their friends in WM are too closely implicated.

  6. Bugger (the Panda)

    re “Fractional Reserve Banking,” because that is what it is called, has been outsourced to the banking monkety-mates of the politicians. That really is giving the keys of the blood banks to the vampire-tendency.

    Scotland did pretty well when we didn’t have a central bank and every bank had to balance their books in real terms, based on reserves and other liquiditable assets.

    Panama, I believe has (or had) a US Dollar denominated economy by the State which actually allowed them to have a very conservative rock solid economy. They had to have US$ deposits to cover their issued capitol.

    I believe the now have the Balboa also but at 1 to 1?

    Something to reflect upon?

    • I commented on Panama as not being the worst example of a country that does not have its own currency or central bank. It does OK. The figures on the economy as per the CIA Yearbook are, in a number of areas, very much better than the UK.

      Of course, such views were rubbished, as was my suggestion that the Royal Navy could easily buy warships made in Scotland (they buy Army trucks from Germany etc.) and the aircraft carriers are being made by Thales, a French company. See also today’s scare story in the Scotsman.

      • Furthermore, Panama recently topped a poll as the world’s happiest people AND the province of Darien has oil. See what dire consequences befall a country not ruled by Westminster banksters.

  7. Should bankers have wrecked the economy in the middle ages they would not just have lost their liberty, they would have lost their heads. Now they get awarded Lordships or Sirs and get to continue with more money.
    Once upon a time people got paid in actual money, they paid for everything with money, now we get money paid into the bank, and pay for everything with plastic cards, no wonder people get into trouble. Not a clue how things work.

  8. Steve Asaneilean

    I have said it ad nauseum – if you are not happy withdraw your money from all banks, building societies and Government scams (e.g. Premium Bonds) and put it in Airdrie Savings Bank. It’s independent, locally owned and run and only has a handful of branches tobrun so service very personal. They do online too.

  9. Iceland jailed the bankers and the politicians responsible and are now doing very well. Sounds like a good way forward.

  10. I saw this remark from a US financial markets commentator on Twitter.

    “BREAKING: People who rob liquor stores will have their bonuses capped at 200% of whatever’s in the till.”

    Like a lot of corporate crime, it’s really hard to understand the lack of prison sentences given the massive scale (value and range) of the financial frauds in particular.

  11. I’m economically dyslexic, but I know a parasite when I see one and that is what a banker is by definition.

    noun
    1.
    an organism that lives on or in an organism of another species, known as the host, from the body of which it obtains nutriment.

  12. I recall an outcry some years ago when US demanded the extradition of three UK bankers to stand trial for fraud. While it was deemed acceptable to extradite “terrorists” and hackers, these were BANKERS and beyond reproach. I think they had to go in the end.

  13. We are all helpless passengers in the imminent train wreck.
    Sadly, the train drivers/bankers, all have ejection seats.

    It’s such a shame we didn’t get off at the last stop – Independence.

    The history of Scotland in a single word – regret.

  14. While people like me share your outrage, you’re old enough to remember Thatcher’s offer to TSB clients – to make them shareholders in a privatised bank, thereby apparently giving these individuals a handout. Overwhelmingly they took it and I’m afraid their drives were identical to stock market players ie greed and fear.

    Didn’t take Lloyds too long to gobble it up. What we need is a new Scottish TSB type bank with a written constitution which prevents the same happening ( afraid greedy people have selective memories ).

    • Bugger (the Panda)

      You may be interested in knowing that there is a blueprint for such a bank; the Swedish Handeslbanken. No sniggering there about Swedish models, at the back.

      They are expanding at a rate of knots in the Uk and especially Scotland. They are UK licenced and affer full UK banking services.

      I am thin king of returning to live in the UK and will use this bank.

      http://www.handelsbanken.co.uk/shb/inet/ICentRb.nsf/vLookUpFirstPage/Central

      They have a high ethical standard and are not in Casino Banking.

  15. Economics: The allocation of scarce resources.

    No economics isn’t a subject with finite answers contained within equations like the science subjects, engineering, chemistry, mathematics etc. But is there an alternative to inputting all the identified variables into economic modelling and then applying judgement? A bit like steering a large tanker in stormy seas. The variables vary!

    And the bigger the ship the slower to correct course. “The UK has the sixth largest economy in the world”, they declare. Aye but is it profitable? Operating a business with a large turnover but little or no profit margin isn’t commendable, nor is operating the UK economy with a endemic deficit. Just who/what are these international money market willing to lend money to a UK with a £1,5 trillion debt?

    Ian McWhirter has an easily understood article in today’s Herald – I didn’t buy it, the newspaper that is – but when canvassing I found the lack of interest by many of the public on economic matters surprising. But then during the campaign it became apparent that many politicians didn’t know their deficit from their debt.

  16. From 1981 to 1991 I worked for an old world USA bank then in 1991 we got taken over by a piece of neo-con banking shite. Please excuse the word, but not the meaning, They were only interested in quick profits and high salaries for the top guys – NOT long term share holder interests.

    I retired at the earliest opportunity (2004).

    They were, are and will be shite, make no mistake..

Leave a Reply