Banksters, Banking Gangsters

There has been a vast amount of propaganda directed at FIFA this year for corruption, said by the Americans to amounts to $150 million. Yet the media do not extend the same degree of opprobrium to the financial institutions that a few years ago walked off with the contents of the Exchequer and continue to purloin money from ordinary people in manifest acts of criminality. For example, British bank HSBC was caught running tax evasion, money-laundering for drug cartels and other illicit schemes estimated at $180 billion--more than a thousand-fold the level of criminality alleged at FIFA.

Wall Street banks, like JP Morgan, systematically rigged gold price markets a shady bid to shield the US dollar value, affecting the price of basic commodities and livelihoods for billions of people worldwide, and estimated to be of the order of trillions of dollars—a thousand thousand-fold the FIFA fraud.

These banks, with Citibank, Bank of America, Goldman Sachs, Barclays, Deutsche Bank, Credit Agricole among many others, all promoted the toxic financial derivatives that made their executives multimillionaires but which led to the global financial and economic meltdown in 2008, and the robbing of the world national treasuries. Millions of lives have ruined from unemployment and the collapse of pensions and savings funds to feed the greed of the banking and financial executives and the ensuing austerity imposed on the public to pay for the financial catastrophe, deliberately and recklessly engineered by the major banks, hedge funds and other capitalist investment agencies.

The meltdown of financial markets in 2008-2009 was the result of institutionalised fraud and financial manipulation. The ‘bank bailouts’ were implemented on the instruction of Wall Street, leading to the largest transfer of money wealth in recorded history, while simultaneously creating an unsurmountable public debt.

Michel Chossudovsky, The Global Economic Crisis

Generations of children to come will be forced to pay for the trillions of dollars of debt created by the banks. Thousands of people have already died from the austerity governments imposed on their public to pay for the massive corporate fraud, tax evasion, fixing and embezzlement that has occurred.

Yet not one board member or executive from the major banks involved has been charged, let alone prosecuted or imprisoned, and the baks have rewarded their political puppets, Barack Obama and David Cameron by donating cash to help to re-elect them.

Source, Finian Cunningham, Strategic Culture Foundation

Resisting the Financial Oligarchy and Globalisation

Using data from over 1,800 policy initiatives from 1981 to 2002, researchers, Martin Gilens and Benjamin Page, concluded that the rich on the political scene now steer the direction of the country, regardless of—or even against—the will of most voters. America has transformed from a democracy into an oligarchy—power is wielded by wealthy elites.

It takes big money just to put on the mass media campaigns required to win an election involving 240 million people of voting age. The stages of the capture of democracy by big money are traced in a paper called The Collapse of Democratic Nation States by Dr John Cobb.

He points to the rise of private banks, several centuries back, when they usurped the power to create money from governments. Banks are able to create money and so to lend amounts far in excess of their actual wealth. That tradition goes back to the 17th century, when the privately-owned Bank of England, the mother of all central banks, negotiated the right to print England's money after Parliament stripped that power from the Crown.

Similarly, the US colonies won their revolution but lost the power to create their own money supply when they opted for gold rather than paper money as their official means of exchange. Gold was in limited supply and was controlled by the bankers, who surreptitiously expanded the money supply by issuing multiple banknotes against a limited supply of gold. This was the system euphemistically called “fractional reserve” banking, meaning only a fraction of the gold necessary to back the banks' privately-issued notes was actually held in their vaults.

President Abraham Lincoln revived the colonists' paper money system when he issued the Treasury notes called “Greenbacks” that helped the Union win the Civil War. When Lincoln was assassinated, Greenback issues were discontinued. Presidential elections from 1872 to 1896 always had a third national party running on a platform of financial reform. Organized by labour or farmer organizations, they were parties of the people not bankers like the Populist Party, the Labor Reform Party, and the Union Labor Party. They advocated expanding the national currency to meet the needs of trade, reforming the banking system, and democratically controlling the financial system. Financial historian, Murray Rothbard, says politics after the turn of the century was a struggle between competing banking giants, the Morgans and the Rockefellers. Parties sometimes changed hands, but always pulling the strings was one of these two bankers.

The US Populist movement of the 1890s was the last serious challenge to the bankers' monopoly over the right to create the nation's money. No popular third party candidates have a real chance of prevailing, because they have to compete with two entrenched parties funded by these massively powerful Wall Street banks. Control of the media and financial leverage over elected officials then allowed the other curbs on democracy we know today, including high barriers to ballot placement for third parties and their elimination from presidential debates, vote suppression, registration restrictions, identification laws, voter roll purges, gerrymandering, computer voting, and secrecy in government. Dr Cobb says globalization is the final blow to democracy by overriding national interests:

Today’s global economy is fully transnational. The money power is not much interested in boundaries between states and generally works to reduce their influence on markets and investments… Thus transnational corporations inherently work to undermine nation states, whether they are democratic or not. The money power is not much interested in boundaries between states and generally works to reduce their influence on markets and investments.

The awful TTIP and its accompanying legal structure, the ISDS, show exactly how serious this threat is.

So, if people wish to re-establish their sovereign powers, they should start by reclaiming the power to create money, usurped by private interests while people were gloating over their achievements so far! State and local governments cannot print their own currencies, but they can own banks, and all depository banks create money when they make loans, as the Bank of England has acknowledged.

A people's government could take back the power to create the national money supply by issuing its own treasury notes, as Abraham Lincoln did. Or it could nationalize the central bank and use quantitative easing to fund infrastructure, education, job creation, and social services, responding to the needs of the people rather than the banks.

The left has always known that freedom to vote carries little weight without economic freedom—the freedom to work and to have food, housing, education, medical care and a decent retirement.

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Abbreviated from How America Became an Oligarchy by Ellen Brown in Counterpunch.

Where Did All the Money Go?

The treasuries of the world's capitalist countries have been turned over to the banks by our corrupt political caste of morally deficient opportunists. The banks are keeping the accounts of the rich minority topped up because of their losses through junk bonds. The bankers and bond traders have lost their rich masters' money through their excessive risk taking, believing assets would continuously grow in value. They didn't. Many banks should have been declared bankrupt according to capitalist theory, but were not. Governmental lackeys bailed them out with our taxes, and now governments have to recoup the tax money out of us! Of course it suited the capitalists because they want government to be minimal, merely to serve their own purposes and not the needs of the people, whence the cuts in public benefits and services, and the refusal to tax the rich, whose greed caused it in the first place.

"In 2001 there were 497 dollar billionaires with combined assets totalling $1.5 trillion. In 2010 there were 1,210 of these super-rich with assets totalling $4.5trn—more than the gross domestic product of Germany"

“Too Central to Fail?” Then Robin Hood Tax ’em!

Sheer size is not the only indicator of importance for a financial system. Banks become “too big to fail” when their services are considered economically essential, so that the cost of their insolvency would be more than that of their rescue by the government. Even small banks closely networked with other financial institutions can pose the same level of risk as the big ones, though it is not so obvious. For this reason, the European Commission launched the scientific project Forecasting Financial Crisis (FOC). Its aim is to understand and forecast systemic risk and global financial instabilities.

A paper by four economics researchers, Stefano Battiston, Michelangelo Puliga, Rahul Kaushik and Paolo Tasca at the ETH Zurich Chair of Systems Design, together with Guido Caldarelli of IMT Lucca (Italy), under FOC auspices, went beyond evaluating how banks can be “too big to fail” by developing a “too central to fail” approach.

They analysed Federal Reserve data using a new “network research” method. The data originate from the “emergency loan program” from 2007 to 2010, through which the Fed provided “cheap” (ie free! our! public!) money to financial institutions in the USA that were acutely at risk of defaults. The Federal Reserve only published the figures after the US Supreme Court granted the Bloomberg business, financial information and news company the right to inspect the data, since the American financial system had, after all, been restructured using public funds. The data sets from the Federal Reserve, and Bloomberg, document the residual outstanding debts and the market capitalisation of a total of 407 financial institutions that borrowed emergency “loans” from the Fed. The size of the “loans” indicates a bank’s individual debt to equity ratio, and of any potential distress or defaults.

At the height of the crisis, the total amount of “loans” granted climbed to US$1.2 trillion! The assessment of the Federal Reserve data showed that, although the various banks got into difficulties at different times, around 30 banks reached their peak instability simultaneously at the height of the crisis. Over the duration of the emergency loan program, the number of top borrowers at any given moment was around 20.

From PageRank to DebtRank

Between 2008 and 2010 a total of 22 banks formed the innermost circle of the financial crisis. They were so intensely connected with each other through credit relationships, mutual equity investments and financial dependencies that the distress of any single one of them could endanger the entire financial system. The ETH Zurich researchers therefore turned their focus towards the 22 institutions that had received more than US$5 billion in emergency “loans” over the crisis period. The top borrowers from the Federal Reserve included the US branches of the two major Swiss banks, UBS and Credit Suisse, which had outstanding debts to the Fed amounting to US$13.89 billion (UBS) and US$13.29 billion (CS) between 2008 and 2010. This put them in 6th and 7th places among the top borrowers.

The main new feature in the ETH Zurich economists’ approach was their methodology. To discover how the distress of a tightly networked financial institution impacts on other banks and spreads through the network, they combined the finance notion of balance sheet contagion with methods from network science, including the principle behind the well known “PageRank” algorithm at the heart of the internet search engine Google. The score of a webpage depends, recursively, on how many other important webpages point to that webpage.

The ETH Zurich researchers introduced the “DebtRank” as a measure of the systemic importance of an institution, it being higher when its distress affects other important institutions. DebtRank serves as a recursive indicator of a bank’s level of networking and thus its systemic importance. This recursivity can be solved mathematically yielding a number measuring the fraction of the total economic value in the network that could be affected by the default of an institution.It allows an estimation of how central a bank’s position is within the financial system, and what risk it poses. Stefano Battiston explains:

Many economists regard today financial systems as complex networks, in which the financial institutions constitute the nodes and the links between the nodes represent the banks’ financial dependencies.

The results of the methodology in the interval studied can be seen interactively at http://ethz.focproject.net:8080/widget.

In November 2008, the emergency loans granted to just these 22 banks by the American Federal Reserve to protect the American financial system from collapse amounted to a total of US$804 billion. The interdependencies among these banks were so strong that a small shock to the system as whole could get amplified into a systemic default. Thus the US Federal Reserve could not have allowed them to fail without creating serious consequences for the economy. Over a $trillion in loans saved them and the others left out of the study, and according to these theories or excuses, “us”, from financial meltdown, but when do “we” get our money back from these mega rich who can bankrupt whole countries rather than lose their bad investments? What these researchers have shown is the network of futile transactions that generate money for the bankers out of electric current and electromagnetic waves! These transactions generate money for the rich even though the world is in a deep depression. These interbank networks need to be taxed. A “Robin Hood tax” on these transactions even at a minute level can generate for the federal treasury all the money it has given away, with no one suffering or even noticing except the bankers and other financial manipulators. Robin Hood tax ’em! Now! Demand it.

Necessity Makes People Entrepreneurial, but Where is the Start Up Cash?

There are two main incentives for entrepreneurship:

1. opportunity—a perceived business opportunity
2. necessity—a need to get more income due to job loss or pay cuts.

Examining data from the Global Entrepreneurship Monitor survey and matching that data with locations across the USA, researchers from the University of Missouri Truman School of Public Affairs found that from 2007-2010, the amount of necessity entrepreneurship rose from 16 to 28 percent of total entrepreneurship in the US. So the number of Americans engaging in entrepreneurship has risen significantly, even though the country was entering a depression similar to that of the 1930s. Thomas Johnson, a professor in the MU Truman School of Public Affairs, and co-author of the study, said:

From economic stress, great ideas are born. Many large, profitable businesses have been created due to entrepreneurship during economic downturns. Hopefully that will be the case for this period as well.

Maria Figueroa-Armijos, whose doctoral work comprised the study, agrees:

We’ve seen similar trends occur in past economically slow periods that have led to economic booms. The doldrums in the 1980s led to increased entrepreneurship and the economic growth in the 1990s.

So the trend has potential positives but they can only come to fruition when this increase of necessity driven entrepreneurship is matched by increased support of the entrepreneurs:

Currently, there is much more economic support for opportunity entrepreneurs than for people starting their own businesses out of necessity. With the rise of necessity entrepreneurs during the recession there is obviously a need for more help from lenders and policy makers. These necessity entrepreneurs could create jobs and economic growth for long-term economic prosperity.

Banks at present are hanging on to our money because they can in some magical way make more money by keeping it for dodgy trading than lending it to businesses as they used to. Naked Capitalism reports from the Telegraph that Professor Tim Congdon of International Monetary Research said US bank loans have fallen at an annual pace of almost 14pc in the three months to August—from $7,147bn to $6,886bn.

There has been nothing like this in the USA since the 1930s. The rapid destruction of money balances is madness.

The MU study also found an increase in entrepreneurship among African Americans, and it is certain that upper middle class white bankers will be even more reluctant to lend to descendents of their former slaves than they are to some redneck tea party goer.

Figueroa-Armijos also found that rural entrepreneurship levels have not decreased during the recession, despite previous research showing that rural areas lack the necessary resources for successful entrepreneurism:

These findings offer policy makers an opportunity to permanently increase entrepreneurial involvement of historically under represented groups. Considering the decline of rural populations, rural development strategies must be re-examined. Increased support for “necessity driven” self-employment not only offers a way of improving the incomes of rural residents, but also provides an opportunity to create more overall entrepreneurial activity following the recession.

The federal administration gave the banks trillions of US tax dollars to stop them from failing, so it is time it introduced legally binding obligations for banks to do what entrepreneurial bankers originally conceived them for—to lend money deposited with them to embryonic businesses at interest to get money in circulation again, and not kept for the banksters’ own nefarious purposes. To encourage them, the Fed ought to tax every wired deal—a Robin Hood tax set at a level to make it more profitable for the Banksters to lend money rather than trade it. Naturally, the redneck tea party goer will get what little money is going because he would not want to receive any such “socialist” money. The capitalist banksters like such ironies, and will take every opportunity to kick sand in the faces of those who could do with a little help.

Market Manipulation “Bear Raid” Contributed to the 2007 Financial Crisis

Professor Yaneer Bar-Yam, President of New England Complex Systems Institute (NECSI), and his team of analysts support suspicions that a type of market manipulation called bear raids played a role in the market crash at the beginning of the financial crisis in November 2007. Any bear raid would have been prevented by a regulation that was repealed by the Securities and Exchange Commission (SEC) in July 2007. The regulation, known as the price test or the “uptick rule”, meant to prevent manipulation and promote stability was in force from 1938 as part of the government response to the 1928 market crash and its consequences.

At a critical point in the financial crisis, the stock of Citigroup was attacked by the bear raid—traders sold stock they did not own (so called “borrowed shares”) with the expectation of buying the stock cheaper when the price fell (“short-selling”) thereby getting a profit from trading in a falling market. If enough rich do this in cahoots, the glut of lower priced stock actually causes the price to fall, inducing panic selling by other price watching traders—or their price watching robots! Thus the risk can be totally eliminated by coordinated trading like this. Of course, if a single trader is wealthy enough, it might be that no co-ordination is needed!

Through its analysis of stock market data not generally available to the public, namely the “borrowing” of shares, NECSI reconstructs the chain of events. On November 1, 2007, Citigroup experienced an unusual increase in trading volume and decrease in price. This decline coincided with an anomalous increase in “borrowed shares” by 100 million shares, valued at almost $6 billion, the selling of which was a large fraction of the total trading volume. The trading on November 1 was almost four times the usual volume. The newly borrowed shares represented over three-quarters of the volume on that day, driving prices down by almost 7 percent. The selling of borrowed shares cannot be explained by news events as there is no corresponding increase in selling by share owners. A similar number of shares were returned on a single day six days later. By the time the shares were returned, it had dropped nearly 20 percent. The magnitude and coincidence of borrowing and returning of shares is evidence of a concerted effort to drive down Citigroup’s stock price and achieve a profit, ie, a bear raid.

This was no coincidence. Professor Yaneer Bar-Yam maintains:

When 100 million shares are borrowed on a single day and then returned on a single day, the evidence that this is a concerted action is hard to refute. The likelihood of such an event happening by coincidence is one in a trillion.

The NECSI scholars are concerned that the incident was allowed to happen. Selling shares to deliberately cause a price drop, to induce others to buy or sell is illegal. Interpretations and analyses of financial markets should consider the possibility that the intentional actions of individual actors or coordinated groups can impact market behavior. Markets are not sufficiently transparent to reveal even major market manipulation events. Regulations are needed to prevent intentional actions that cause markets to deviate from equilibrium and contribute to crashes. Bar-Yam said:

There used to be a rule that prevented it from happening by forbidding borrowed shares from being sold in large blocks that drive the price down. Last year, the authors of the report sent preliminary results of their study to the financial services committee of Congress, and Congressmen Barney Frank and Ed Perlmutter sent it to the SEC.

Unfortunately, the SEC has not acted to identify or prosecute those responsible or to prevent its occurring in the future. Enforcing the law after it is violated is much less effective than preventing it from happening in the first place. Enforcement actions cannot reverse severe damage to the economic system. Prevention may be achieved through improved availability of market data and the original uptick rule or other transaction limitations.

After the market crash, the SEC received thousands of requests from the public to reinstate the price test rule. Hedge funds that invest the money of wealthy individuals opposed its reinstatement. Eventually, the SEC put into place an “alternative” rule that only applies a price test when the price of a share drops more than 10 percent, but that is insufficient. Professor Bar-Yam points out:

This watered-down rule would not have stopped the bear raid on Citigroup on November 1, 2007. This is only one example of the deleterious effects of the weakened rule. The overall effect of unregulated selling of borrowed shares is surely much larger and continues today.

The 30 Year War Against The American Dream: Henry Schoenberger

Henry Schoenberger, the author of How We Got Swindled By Wall Street Godfathers, Greed and Financial Darwinism, subtitled The 30 Year War Against The American Dream, points out that the OWS protests simply display the plethora of anger around in the USA. The level of poverty is now at its highest level ever—the poor are angry. The successful elderly planning on retirement after a lifetime of hard work are being hit—elderly retirers are angry. Young entrepreneurs, the foundation of our future economy, and those in their prime, whose enterprise should be creating new jobs to give a living to ordinary folk and a first step to the young—even many of those are angry.

Capitalism, as an economic philosophy, is only 200 years old, based as it is on the book by Adam Smith (1723-1790), the title of which is always given now as The Wealth of Nations, published in 1776. The United States declared its independence that same year.

Since then, the abuse and misuse of Capitalism has paralleled the use and abuse of Democracy.

Henry Schoenberger

Smith is often presented by right wing libertarians, Republicans, neoliberals, and assorted conservatives as the model entrepreneurial hero. Yet, he first held the chair of logic at Glasgow University, and then in 1752 became its chair of moral philosophy. So he was really one of those timeserving wasters lolling around a university with students and living off someone else's hard earned income! That, at least is how the right wing regard university teachers and research workers.

In 1759, he wrote the Theory of Moral Sentiments about the standards of conduct that hold society together, explaining how benevolent human motives and activities lead to a society beneficial for all, and thereafter a virtuous circle. Adam Smith had a lifelong interest in the value of morality for the public good. In his book, The Wealth of Nations, he expressed a belief that allowing the entrepreneur to pursue his own interest essentially unfettered would lead to the betterment of all because it would lead to the better use of resources, including time. He never imagined that his theories could be so distorted by the ultra rich cornering one particular resource to the detriment of most of the rest of us—money!

Darwin published his book on the Origin of Species 85 years after The Wealth of Nations, and, although most Protestant pastors in the USA and their theologians who run the Republican Party cannot now abide the thought of evolution, for the first century of so they loved it. The survival of the fittest was a perfect expression of capitalism. So Darwin's theory applied even within human society. It was not restricted only to the wild.

This extension of Darwinism into society was dubbed “Social Darwinism”. It even made it respectable for the protestant churches to abandon Christianity—Christ blessed the poor and damned the rich—but now Social Darwinism made it clear, they thought, that God meant the rich were blessed and the poor were damned! It was a creed that was soon attacked by social scientists, and began to fall into disrepute. Reaganomics and deregulation revived it.

We all need to know a little about economic theories to understand the fallacious arguments advanced today for unfettered greed. For thirty years after WWII, the rate of growth of the incomes of rich and poor were broadly the same. John Maynard Keynes, before the War had shown how economies can be controlled by regulation, such as using taxation to slow down growth when the economy was overheating, and feeding back into feeble economies some of the tax take to boost spending during recessions. It worked wonderfully well.

Controlling self interest worked for decades in the aftermath of the Great Depression. The top tax bracket went up to 90% and still the ultra rich survived, but so did our middle class and our society was not demoralized. There was enough concern on both sides of the aisle to pass Civil Rights legislation and CEOs did not earn more than 40 times the average wage in their industry.

Henry Schoenberger

Interestingly, it was a closer match to Adam Smith's teaching than libertarian capitalists like to admit. Smith knew that regulation was sometimes necessary, and did not pretend otherwise. He believed that once the boundaries were suitably set, and the operators accepted them, then they would work to better themselves and society as a whole through the so called “invisible hand”. The trouble is, when things work well, smug, greedy people always want to try their luck at extending the conditions to their advantage.

That is what Reagan in the USA and Thatcher in the UK tried in the 1980s. In what was imagined as an economic “Big Bang”, a bonfire of the regulations was arranged on both sides of the Atlantic, neoliberalism became the watchword, and Social Darwinism was born again. Survival of the fittest became survival of the richest. In the last thirty years, the workers and even some middle class have lost income, the better off middle classes have maintained theirs, and the rich have multiplied their riches several fold!

In 1776, Adam Smith could not have seen that unregulated Wall Street financiers enjoying tariff free transfer of money anywhere in the world could manipulate markets and the rewards they had from them to the advantage of themselves as a new Brahman class in the supposedly classless western societies. Greed became endemic. Like the living dead they sucked the economic life blood—money—from the middle and working classes. The insatiable greed and selfishness of the rich has killed millions and millions of jobs, people's savings, their livelihoods and increasingly their lives, quite contrary to the ideas of the capitalists' holy book, The Wealth of Nations, by their innocent prophet, Adam Smith. Henry Schoenberger sums up:

Wall Street is a problem because for 30 years it has practiced innovative financial investment at the expense of our economy. Wall Street has turned away from real investment based on innovation for capital formation to create jobs to benefit our economy. Wall Street Trojan megabanks are a major part of the problem.

Government ought not to be the problem because it is the role of government to regulate, to ensure that the balance of society and its economy are right. Our governments neither guard the public good nor the public. The politicians lack all morality themselves, themselves infected with the zombie infection endemic among the rich and aspirants to riches, with the taste for more and more blood, salivating at the thought of more victims, us, and more dollars, ours.

Schoenberger points out that Goldman has inveigled the government at the highest level for three decades. The OWS movement should demand the removal of any Wall Street executive from any important government post, and equally that government servants should be banned from transferring their allegiance to Wall Street until 10 years after leaving government. Consulting and “Atlantic Bridge” style “charities” and think tanks should be illegal as soon as they get near to government in any direct way, or even indirectly, if the influence can amount to bribery, or any similar illegal approach. That applies too to lobbying, nothing more than approved bribery.

High Street deposit banks must be severed from the high risk investment banks. Bonuses should be illegal. As compensation they must be treated as pay and seriously taxed. Taxes must reflect the reality that 1 percent has 40 percent, so that taxation is at least fair by percentage, and preferably progressive, so that richer people should pay a higher percentage. If a rich man faced with a 60% tax rate gets a rise of $1 million, are we seriously to believe he would refuse to work rather than receive $400,000 after tax.

Schoenberger concludes it “is the time for a movement to kick out all members of congress who vote against jobs! And stop wall street godfathers from taking advantage of the 99% who do not practice unbridled greed!”

A Systemic Concentration of Power and Wealth

In 1906, an Economist named Vilfredo Pareto discovered that around 20 per cent of the population in his native Italy controlled around 80 per cent of the land. This observation has come to be known as Pareto’s Principle. He also found that, while ratios of wealth and control varied in detail from country to country, the broad distribution is always the same—wealth, regardless of human effort, tends to accumulate. That accumulation is also called wealth condensation, by analogy with the condensation of a gas. The popular expression is “money makes money”.

Now the New Scientist reports on a study of 43,000 transnational corporations and the share ownership which connected them. The Swiss Institute of Technology in Zurich used for the study a 2007 Orbis database of 37 million companies and investors spanning the globe.

A core of companies, mostly banks, has excessive power over the global economy. 1,318 companies with intertwined ownership structures, representing 20 per cent of global operating revenues, were on average connected to 20 other companies. This group of 1,318 controls most of the largest blue chip and manufacturing firms—the real economy—taking in 60 per cent of global revenues from goods and services. This group included a “super entity” of 147 companies that controls 40 per cent of the network’s wealth, several of the top 25 of which have familiar names:

1. Bank of America Corporation
2. Morgan Stanley
3. Goldman Sachs Group Inc
4. Merrill Lynch & Co Inc
5. JP Morgan Chase & Co…

The 147 of the surveyed companies controlling 40 per cent of the network have condensed—concentrated—a vast level of wealth into their coffers, just as Pareto would have predicted.

Bonuses and Distribution of Wealth in the UK

UK society, like the US, is skewed horribly in favour of the rich and against the poor. Some 53 of the UK’s richest 1,000 are billionaires. The wealth of these 1000 people has increased from £98.99 billion in 1997 to £335.5 billion today. Over the past 12 months, they got richer by an incredible 29 per cent. Despite the worsening economic situation, this is the largest annual increase in the wealth of this rich minority. What these figures show is an increasingly unequal society that has enriched the already megarich at our expense. The amount of gross domestic product (GDP, annual national production) dedicated to wages and salaries has declined over the past three decades. There is no way that such a distribution of wealth can be said to favour the common good.

The injustice of wealth distribution is in need of urgent debate. Why is the argument for higher taxation on the highest earners continually rejected out of hand? If the country wants better services then they have to be paid for. It is not possible to have something for nothing. And those who earn the most—and usually have got most out of the system—should pay more tax. Justice should be applied to the economic system by restoring higher levels of tax on those most able to pay. If they want to leave the country, then the country can put an even higher tax on any wealth they propose to take with them? Then we can say good riddance to bad rubbish, and let our youth have the chances they are now being denied.

In 1976, wages and salaries accounted for 65.1 per cent of GDP, this had reduced to 52.6 per cent by 1996, a time when the wealth of the richest 1,000 increased threefold. But society took a fairer proportion of that wealth increase. Levels of taxation were far higher on the rich. Tax rates above 80 per cent on those earning the most were not uncommon. Society was more equal and cohesive as a result. Reagan’s pandering to the megarich demands for tax cutting spread to his lapbitch, Margaret Thatcher, then to Bush’s lapbitch, Tony Blair, leading to today’s gross inequality and unfairness, in imitation of the USA.

Top FTSE 100 chief executives earned 47 times median earnings in 2000 and 88 times in 2010. In the public sector the ratio is far lower, more like 12 to one. Even so, the top 1% of public officials earned an average of £120,000. Why does a senior executive need a financial incentive, when every other worker does not get them and makes do with an agree wage? Would executives refuse to work? Would a hospital director let people die if not awarded a bonus?

The Big Society is an austerity program. The coalition government cynically chants its slogan “we’re all in it together” in reducing the deficit. Yet the policy implemented cuts public services, freezes public sector workers pay, cuts jobs and reduces pension rights, while inviting billionaires from everywhere to live here untaxed! When we discover that 1,000 people in Britain now have over £300 million each, we should be seriously complaining that the entire cost of deficit reduction is falling on the poor 65 million of us. At present it is the poorest who continue to pay for the deficit while the megarich grow ever wealthier. This cannot be right.

It has been suggested that there would be no deficit at all, if the treasury recooped some of the wealth the rich have robbed us of in the last thirty of forty years. MP Austin Mitchell thinks this 1,000 people with the most wealth could yield 25 per cent of it for the sake of the economy upon which the rich depend for future wealth. It would clear £84 billion from the deficit. Another suggestion was that the top 1 percent of the richest people, about 650,000 in the UK, could give up 20 percent of their accumulated wealth, clearing the deficit all together. Note that these megarich people would still be megarich under either scheme. They would still have 75 to 80 percent of their amassed riches.

The proposals are all the more attractive because of the neglible tax that most of these people pay and have ever paid, through their use of corporate lawyers to exploit taxation loopholes, and simply defraud the exchequer. Strict taxation on the rich is a basic justice that should be implemented now. The complaint of ordinary middle class people in the late Roman empire was that their megarich paid no taxes, or simply increased rents to cover any they had to pay. Soon after, the western empire collapsed. The people preferred barbarians to their own rulers.

A recent government inquiry considered that there should be a maximum pay ratio of 20:1 between top and bottom. It was meant to be only in the public sector, but, if it was considered just, why not overall? It was a hostage to fortune even to suggest it, so it disappeared in the final report. Instead, it recommended bonuses as being fair! CEOs should have a marginal element of their pay “at risk”, subject to meeting agreed objectives. Then public services would not be offering rewards for failure.

No research has shown that bonuses improve performance, nor do firms paying them do better. Paying students to get better passes did not work. The ones who did well, did it because they enjoyed what they were doing. The same should be applied to bankers and CEOs. If they don’t like it, then let them quit and join the oridnary Joes who have to like it or survive in frugality on benefits. In any case, who would judge the CEO’s performance? A team of bureaucrats?

Schemes like this are bogus, even where performance can be measured. Sir Fred Goodwin of RBS was awarded a discretionary £16m pension pot, while he wrecked the biggest bank in the world. The package was approved by the bank’s remunerators and non-executives, his friends and associates. Directors rip off shareholders with the collusion of institutions, so they get bonuses whether good or useless. Bankers’ bonuses are the biggest because the City is a massive gang of monkeys scratching each others’ backs furiously.

Bonuses are not incentives. They are measures of greed and selfishness, and are possible because corporate leadership is no longer properly accountable. Such schemes were thought up in the 1980s to let top earners take ever larger sums of money from their companies. It was unfair, dishonest, and, for the banks, disastrous. Top executives are paid above the average to work harder and more successfully than the rest of us. If they fail, they should be fired, with no golden handshakes.

Pay should be fixed and pay scales fairly flat. The bonus anyone should get is acclaim by peers and the public for doing a good job.

Reporting from the UK Morning Star and the UK Guardian.

Who are the “Mindless” Ones?

UK Students Protest Vigorously Over Political Liars

Yesterday the Liberal Democrats in the UK’s Con-Dem coalition government voted to increase university tuition fees by 100 to 200 percent. Some did vote against and a few abstained, and even a few Tories voted against the outrageous measure, but sufficient members voted for it to ensure a government majority of 21 in the House of Commons. The Tory House of Lords, newly packed by Tory leader, David Cameron, with a load of Tory time servers, will back the motion.

Students are so outraged at this that they have started a campaign to register their utter disapproval by confronting the state, and particularly, that section of the coalition, the Liberals who solemnly pledged before the election that they would not support the Tory proposals for higher university fees under any circumstances. Liberal leader, Nick Clegg, says the pledge was a mistake because the Treasury is worse off than he and his party had reckoned. It therefore cannot be honored.

Indeed, there can be no honor among thieves and Clegg had his own excellent education because he is from a long line of them. His family are among the country’s rich, he had a private education at Westminster school, and went to one of the UK’s best universities, Cambridge, because his father was a banker, and his varied family background includes Ukrainian nobility. He is, in short, not without a few quid to his name.

Now, having joined the coalition government led by another rich Tory, David Cameron, he has decided that the country can no longer afford free, or even cheap, university education because the Treasury is deep in debt, and the country has to fill it and meanwhile service its borrowing requirements—we have to borrow from the banks to pay the interest on our debts, and so we cannot afford public services like free education any more!

The Banks—Robbers!

The students, however, unlike many trades unionists and Labour Party supporters are intelligent enough to realize the public purse is empty because we have given all our money and more to the banks to bail them out of insolvency when they were on the verge of collapse two years ago through speculative investments meant to further enrich already super rich financiers, and line the pockets of their agents the bankers simultaneously, through the enormous bonuses they paid themselves for robbing the rest of us.

All of this done under the innocent and admiring gaze of the pathetic supporters of the criminal New Labour Party of one T Blair, otherwise known as T Bliar, who is now coining it for his neoconservative takeover of the British traditional trades union and socialist party on behalf of the big criminals who bribed him to support the US Bush administration in its greedy adventures, and are now faithfully rewarding him with their spare change.

Students know it, and are young enough and angry enough to want to do something about it, unlike most of the British working class who are gulled into a zombic stupor by a media controlled by the same class of megarich criminals feeding them mindless reality TV, soap operas and a “get rich quick” celebrity culture that blurs the distinction between fantasy and reality for many. The students, after sleeping for almost fifty years, are now waking up to the state of the nation. We are not broke, but we have been robbed in a blatant scam, and the students of the future are among the ones who will have to pay for the heist.

Note thet these mindless students are not protesting for themselves. Most of them will have graduated before the measures are brought in, but the university under-graduates have been supported by many school pupils and students of pre-university sixth form colleges, who know they will be affected by the government class-laden legislation. Class-laden? Young people from poor families will hesitate getting into massive debt before they even start on their adult careers, and the assurances of grants and special measures for the poorest does not impress them. They are sops to get the measures passed, and need be worth nothing more than the Liberal “pledge” to oppose such acts. That was plainly worthless!

Mindless MPs

Yesterday’s demonstrations ended up chaotic, and the culprits are being called names by the media—“mindless” and “thugs”. It is the media pundits who are mindless, and the idiotic MPs who think they can gull the people forever. The students are showing that is not the case. Unjust societies fall apart because people will not put up with it, and the British are beginning to realize how they have been tricked. It is simply that they have lost the will or the courage to publicly demonstrate their diaproval, but students are leading the way.

The students are not “mindless”, it is liberal MPs like the local empty-headed idiot, Don Foster, who represents the rather posh city of Bath. Someone threw a rock through his window, and Mr Foster responded that he did not enter politics to win a popularity contest but to change things. He seemed quite oblivious to the fact that he actually stood as an MP in a popularity contest—it is called democracy! MPs are elected when they gain the popularity of the electorate, and that popularity is based on what they promise to do.

The half witted Foster, reneged on his promise and merely had a brick through his window. Next time, if the electorate are learning anything, he will be evicted. The local MP for this constituency of Somerton and Frome, David heath, a Liberal Democrat, who has had a narrow majority for several elections can hardly expect to remain in his seat in parliament now that he too has voted against the students’ and the country’s best interests. These two and their fellow opportunists will doubtless by then have abandoned all pretence of being Liberals and will have joined the Tories.

Mindless Media

Media pundist are never “mindless”. They write their columns and usually have sufficient ego not to want to humble themselves even when proved to be wrong. One of them, on Murdoch’s TV tried to bombast an NUS spokesman into condemning the NUS organized demonstrations, but the young man admirably stood his ground despite the anchor man speaking over him, and attempting to harass him into slipping up. The demonstrations had been taken over by “anarchists”! It is a general assertion made by media pundits trying to make out that demonstrations are fundamentally vehicles for what they also like to call “rent a crowd”, professional rioters. Quite where these professionals hide or make aliving when there are no riots to lead, is hard to figure, but they always emerge mysteriously when a demonstration gets out of hand. No one ever seems to figure that it is frustration and anger at being duped by professional careerists called policemen and politicians.

No one ever considers either that, it being in the interest of the state apparatus to discredit demonstrations by introducing petty but violent acts, they have undercover agents provocateurs actually causing and inciting trouble. Any self respecting professional rioter, having broken into Millbank or the Treasury building would have set them both on fire, but these professional anarchists only set fire to a few placards and wooden staves in the streets. These professionals could hardly expect to get employed again, could they?

Mindless Police

Certainly the police professionally anger crowds by their so-called “crowd control” techniques. They “kettle” crowds or sections of a large crowd—confine them by force—into a narrow space and refuse to allow them to pass. This naturally causes immense frustration when people want to relieve themselves or to go for food or drink. Yesterday, a section of the crowd were induced to cross Westminster Bridge to escape the kettle, but then were stopped half way across and confined for hours in the narrow space of the bridge. The police are meant to be the guardians of the right of lawful citizens to move along the Queen’s highways, but they wilfully break the law themselves, with the result that violence is the only way to escape. Innocent people have died in these kettles, and a young man needed a three hour brain operation yesterday after a baton attack. It goes without saying that any rogue policeman will be innocent.

The police too are “mindless” because the media are forever highlighting violent protests but ignore peaceful ones. A peaceful “candle lit” vigil across the bridge in the South Bank was hardly mentioned by press or TV. So the provocation of the police and their plain clothes agents might actually be giving the publicity that will arouse the sleeping giant of the British public and their generally compliant trades unions from their slumbers.

The Effective Tactic—Destabilization

If Parliament relies on demonstrations being forever peaceful, and therefore of no consequence so it can simply ignore them, it is making a big error, one it has often made before. The present situation is plain to anyone who thinks just a little. The rich get richer even when the country is, they tell us, broke. Only last week, Ireland had to go cap in hand for a large multibillion Euro loan to bail out its own banks. This week the Irish banks are handing out tens of millions in bonuses, just as British and US banks have done. The banks and their employers, the super rich financiers, gleefully put up two fingers to the world, while the people have to scratch about to pay their mortgages and rents, aye and taxes, if they can. That is why the students are angry, and why we all should be angry too. It is why we should support them and ignore the whingeing special pleading of the press and the broadcast media.

Listen! The richest 1 percent of the world’s population owns over $200 trillion. No need to guess where most of the 1 percent live. Maybe as little as 5 percent of this largess would solve the world’s economic problems, but Obama has just caved in to the rich man’s lobby in the US called the Republican Party, and most of the world’s leading developed countries have bailed out their banks while putting the burden of their empty treasuries on the people, not where it should be, on the minority who own as much as the rest put together. Governments ought to be joining together to ensure the rich are taxed and pay it.

Curiously many, the most intelligent among the rich, do not mind it as a temporary burden! Those rich people not among the “mindless” realize that their riches are most secure in a stable world, and corporate and financial greed is now destabilizing the world. That they do not like. It follows in all logic that the best way to get the rich to pay their fair share towards economic stability is to threaten instability. That is what “mindless” students are doing.

How Does Mixing Business with Politics Differ from Corruption and Bribery?

Most people would disapprove of corruption. It is one of those things people think are bad. Yet few of these same people realize that politically connected firms get massive benefits from their sponsoring of favored candidates in elections, once their favorites get into government. The bailouts of the banks deemed “too big to fail” are the latest and most obvious example.

A study by Russell Crook and David Woehr of the University of Tennessee, Knoxville, found that when firms engage in corporate political activities, such as lobbying and making campaign contributions, they get roughly 20 percent higher profits. So, to fatten your company’s profits, donate to a political campaign!

The analysis of 7,000 firms over various time periods, showed what led them into corporate political activity. The larger the firm, the more likely it was to be politically active, and politicians closer to power, more able to influence policy and legislation, were more likely to receive corporate donations. Incumbents more often got money than new candidates.

Yet in January 2010, the US Supreme Court in Citizens United v Federal Election Commission overturned an old ruling limiting corporate donations to politicians. It gave the nod to higher levels of corporate political influence. Consequently, corporate political donations will be subject to less scrutiny and transparency, and it will be all the harder to know who is sponsoring whom, and to what amount. Crook said:

Given this, we think that the Supreme Court ruling means that corporations and politicians will develop closer relationships than ever before.

In fact, corporations have already donated more money to politicians in the recent elections than ever before, despite the parlous state of the US economy. It reflects the money that big political donors seem to find quite readily to support supposedly grass roots Tea Parties, despite the country allegedly being on its uppers. Plainly the rich donors are not on their uppers.

Why then do corporate political donations lead to fatter profit margins? The corporate bosses do not like throwing money away to no purpose, so political corporate spending has a purpose, obviously. It is to get favorable legislation enacted. The donations are actually bribes! Besides the bank bailouts, another example was the “Copyright Term Extension Act”, sarcastically called, the “Mickey Mouse Protection Act”, in which Disney successfully lobbied to extend US copyrights by 20 years.

Though Crook and Woehr are careful not to say these practices are corrupt, they plainly think they are a cause for concern to citizens. Sticking with the market model, Crook said:

We do not believe that this activity is illegal, but this activity constrains natural market forces and is thus undesirable. And with the new Supreme Court ruling, it is only going to get worse.

The journal, Financial Management, has also revealed that corruption is widespread in the corporate world, and has confirmed successful corporations are often the ones with the most extensive political connections.

Mara Faccio studied several thousand firms and found:

Politically connected firms have higher leverage in the form of preferential loans, pay lower taxes, have regulatory protection, are made eligible for government aid, and have stronger market power. They differ more dramatically from their peers when their political links are stronger, and in more corrupt countries, although these characteristics can be observed worldwide.

She alleges that connected firms appear to enjoy substantial favors from governments, distorting the allocation of public resources. “Firms with no political ties appear to be at a disadvantage”, so, it seems, the pressure is on for all firms to corrupt government! Her study was not restricted to the USA. She looked at 47 countries all together, but political influence by companies was common in both emerging and developed countries, although the methods of political influence varied somewhat.

These studies show that the ordinary voter is oblivious to the way that democracy is commonly swindled by political bribery and corruption, in the USA and in most other capitalist countries, whether advanced or developing. People consider corruption as wrong, but show no curiosity that it is happening daily, and the one who suffers in the end is Joe and Jane Doe, the common man and woman, you and me.

It is time this corrupt system was ended, and it is certain that right wingers dressing up as Captain America and in tricorn hats—led by the nose by private sponsors from among the rich—will not do it. A genuine grass roots movement is needed, and it will probably be led, as it is in France and latterly in Britain, by serious students and angry unemployed young people.

Darwinian Leadership and Human Society

Professor of business, Paul Lawrence, says he has discovered a new idea he calls “Renewed Darwinian” theory. He tells us it addresses questions that have “been amazingly ignored by the academics”, but have “been on the minds of humans since we have had history”. It is a renewed version of Darwin! The common idea is that Darwin is all about the survival of the meanest and the fittest. The most ruthless survive. But Lawrence thinks there is more to it than just being mean fit and ruthless.

It is curious that anyone nowadays should think, like a Christian fundamentalist, that Darwin’s notion expressed as survival of the fittest means that the physically fittest, or the meanest, are the ones who survive the struggle for existence. Evolutionary theory says there are more ways to be fit besides having big muscles, big teeth or claws, and a disregard for anything other than self. And nor have these other methods been ignored by the academics, unless Lawrence is talking about academics like himself, academics in fields other than biology. The academic experts in biology and evolution never doubted that there are many ways of being fit to survive, from being very small to being very big, from being very fast to being very slow, from having unusual senses like echo location to having other peculiar qualities like intelligence, and so on.

Professor Lawrence seems amazed by some of Darwin’s views expressed in his book The Descent of Man:

Any creature, whatsoever, that has the social instincts comparable to those of humans and the intellectual capacities close to those of humans would inevitably develop a moral sense of conscience.

Lawrence explains:

Now, what he’s saying here is that if humans—any creature—had the drive to bond, a social instinct, and a drive to intellectual drives like to comprehend, would have the conscience to help them fulfil those two drives because without conscience you could not fulfil those two drives.

In attempting to explain it further, he tells us a great deal about the mentality of many modern Americans, the people of the “Christian Nation”. He says:

We’ve all heard of the Golden Rule: “Do unto other as you would have them do unto you”, But, we’re not quite sure what it means!

Despite all that Christianity, Americans and, it seems, especially American corporate and political bosses, do not know what the Golden Rule means. That is quite staggering but explains a great deal that has utterly baffled us foreigners, who have admired aspects of American life, but been bemused by American mass selfishness, lack of empathy for others, and readiness to kill everyone they meet in the world to get their own way.

It also confirms a Pew Poll that showed us that, though maybe 90 percent of Americans might claim to be Christians, three quarters of them do not know enough about Christianity or relevant aspects of their own constitution to be able to honestly claim they actually are Christians. Let is not assume that all of them are sociopaths, but simply that the US is not the freedom loving place they like to propagate for the good of the rest of us. Most Americans bend to the pressure of their peers because they are afraid of becoming the butt of their peers’ humor, or worse in a country with more guns than people, put up with their disdain and anger.

People have a natural social need or drive to bond with others, and a desire to be liked and respected. They are indeed aspects of evolution because humanity is a social species. We have evolved to live together, and for that to have happened, we have to have certain instincts or traits like the ones that Lawrence has just discovered, albeit late by over a century. For all that, it is to be hoped that Lawrence will continue to carry forward his ideas into the territories where they are anathema, into the US in general, and management there and in many other countries too.

Four Drives

So has Professor of business studies Lawrence actually understood Darwinism to come up with something novel? Well, he says that humans beings have other drives besides the drive to gain resources. He says we are born with four drives, essential for our basic survival. They are necessary for our species to thrive as a whole species and they are encoded in our DNA and we sense them and feel them mostly by the emotional messages we get from our subconscious as we witness the world around us.

These four drives are:

1. to acquire, to possess, to own things that are necessary for our survival and to enhance our status as individuals
2. to defend our resources from hazards, not only ourselves, our loved ones and our possessions, but our beliefs
3. to bond in long term, mutually caring relationships with other humans
4. to make sense out of the world, to build knowledge that lets us get on with with our everyday lives.

Well, there is not much there that the academics did not know, though it might indeed be new to financiers and business men who always behave as if the whole purpose of life is to grab as much as you can, even though you have no idea how to use it all when you have it.

Lawrence seems to believe that these principles he thinks he has newly discovered go beyond the preservation of particular genes, but he has not so far shown that these traits he describes are not conditioned by genes. But, now perhaps he gets to do his job when he tells us that good leaders take into account all four drives, not just the desire to acquire. He asks us to note that we all have these drives as human beings, and the good leader recognizes it, and ought not put all the emphasis on greed. In practical terms, it means, Lawrence says:

• the drive to bond—treat people honestly, do not lie to them, and keep your promises to them
• the drive to comprehend—tell people the truth not lies, and not spread misinformation
• the drive to defend—be there when the going gets tough, to back up your staff, friends and anyone you have relied on to do work you asked them to do.

These are the ways to have strong long term relationships, and they are natural ways for humans to behave. It is natural too for huimans to look to a leader, but you have to have and keep their respect by helping them understand, acquire and develop basic human drives for themselves. It is having a good conscience, because the Golden Rule in application makes the helper and the receiver feel good, and ready to reciprocate the assistance in future.

Lawrence rightly equates good leadership with good moral leadership. Leaders without any conscience, or one only poorly developed, simply cannot have any fellow feeling:

They do not know what compassion is, they do not know what empathy is, they do not know even what love is. That is something they are never going to experience in their life because they don’t have that feature in their brain when they are born.

If we try to figure out how do we respond to fulfil those drives for ourselves, and are successful in doing so, people will begin to pay attention to us, and maybe think they’ll trust us to leadership. Leadership grows out of one’s own success in leading one’s own life. But, though we mostly have the necessary abilities, we have to refine them, practice them, train our minds to be more effective in ourselves and leading others. So, experience is also needed.

An example is that the world has a lot of organizations loaded with distrust. People do not trust enough in each other to cooperate properly. They think they are going to be undercut some way. The good leader can use the skills inherent in humanity to encourage cooperation, but people have to feel secure enough.

Our Sociopathic Leaders

It is refreshing to hear him say that a disproportionate number of leaders are sociopaths, who lack the drive to bond with others. It is a problem for less than 4 percent of the population, but Lawrence guesses that 10% of people in positions of power may be sociopaths. Like Tony Blair, the former PM of the UK, and in many people’s opinion an archetypal sociopath, they are often charming, and use their charm and lack of scruples about others to climb to positions of power.

A lot of history records the fact that such people have gotten into important positions. The Renaissance was an effort to move away from a sociopathic kind of leadership. The Constitution of the United States was a effort to create a government able to keep free of such leadership. Balancing the power, and not getting power concentrated in any one office are ways of avoiding that kind of leadership.

Some prominent leaders in business are highly suspect of being sociopathic. Lawrence suggests the recent Wall Street crisis, with the crash in the market and the resulting worldwide depression, illustrates sociopaths at work. Some in the big banks saw that by buying subprime mortgages—granted with little regard whether they could be repaid and so subject to foreclosure—they could sell them to Wall Street banks which could dice them up into derivatives and sell them as Triple-A bonds to people who were trustees of pension funds and endowments, and collect 100 percent on the dollar for them. The bonds were phony, worth maybe half of their face value when they bought them.

And that was the con, the absolute fraud that was pulled off. And we still don’t have a clear understanding by the public or even by the Department of Justice that that is what happened, and we should be prosecuting those people and getting the evidence out that will prove that those are criminal actions.

Conclusion: Is “Renewed Darwinian” New?

Profesor Lawrence does not have anything new in scientific terms but he does something new in speaking out about the perilous state we are in through neglecting the traits of our evolved nature. The western economic system, called capitalism, requires us to act as if we were solitary creatures fending only for ourselves, and perhaps our immediate families, in a state of nature—meaning acting like savages. Humans though are not savages, not solitary, and the reason is that we have evolved to be social animals who live amicably together in groups by sacrificing a little personal freedom—the freedom to be savage towards others—so that others will work with us in a community for our mutual advantage.

As soon as someone took more than a fair share of the communal produce, human society traditionally shamed them, and if that did not work, it expelled them from the group, exiled them. They were left to fend for themselves by themselves, unless another group was willing to accept them. As most groups will have realized why some human was wandering alone, they would have been chary at admitting them into their own group.

Now we cannot expel people from society, but bad crimes are seriously punished. The bad crimes that, so far, have not been seriously punished are the banking and financial crimes, like the scam described by Professor Lawrence. It is time these criminals against humanity were properly punished, and it is time that immoral profits by the few at the expense of the many were progressively taxed and redistributed so that there is no underclass of people abandoned on the grounds that they are work shy, when there is not enough work to go round.

A society of chimpanzees will look after the ones among them that are not fully capable, and even the alpha male will show care and compassion to a defective or disabled chimpanzee. Why cannot human leaders be the same? Obviously, they can, and professor Lawrence suggests how, but society has the right and the duty to protect itself against the massively greedy, who move their money to wherever in the world it will continue to accumulate profit, irrespective of what happens to the poor and unemployed in their own country. These are the people without consciences that Lawrence describes. They are indeed criminals. Punish them!

Where is All the Money? Ask Credit Suisse Bank!

Sam Pizzigati, editor of Too Much, an online newsletter on excess and inequality, reports that the Swiss banking giant Credit Suisse has issued for the first time a Global Wealth Report based on financial data from over 200 countries. It shows that total global net worth, despite the 2008 global economic meltdown, has rocketed up 72 percent since 2000. Credit Suisse sums up:

The past decade has been especially conducive to the establishment and preservation of large fortunes.

The world has more than enough wealth to ensure no one on the planet need be potless. The study shows the world has 4.4 billion adults and the total wealth they own is $194.5 trillion. Shared out, every adult in the world could have $43,800. The fact is, though, that three billion people, almost 70 percent, have less than $10,000, and 1.1 billion, a quarter of all adults, have less than $1,000. These figures are net worth, meaning their assets less their liabilities. Half the people on earth who are 20 and older have less than 2 percent of global wealth—each less than $4,000.

The world’s richest 1 percent—adults who have at least $588,000—hold 43 percent of the world’s wealth. They constitute the ruling class, the wealthiest class, and they break down as:

• just over 1,000 billionaires, with over $1000 million each
• 80,000 more super rich people worth between $50 million and $1 billion each
• 24 million more people who are millionaires worth between $1 million and $50 million.

Those wealth differences are exacerbated by the local conditions. In uncivilized societies with poor public health care, poor quality public education, and no state pensions, then the poor are hit by ill health, a miserable old age, and ignorance because they cannot afford to pay for the absent public services. Moreover, epidemics like swine flu, natural disasters, like Katrina, and unemploment are additional shocks for which the poor do not have the reserves to survive easily. In a society with the opposite conditions, a history of civilized caring governments which have provided public services and benefits then poverty does not have the stigma and practical horrors it has in poor societies.

No other nation has as much total wealth as the United States, with only 5.2 percent of the world’s population. It has 23 percent of the world’s adults worth at least $100,000 and an even greater proportion, 41 percent, of the world’s millionaires. Yet, it is a society with inadequate social services, so its people need more personal wealth to survive than people in countries like France, Sweden and Germany which have good social services.

Canada has a national public health insurance. Credit Suisse calculates the wealth of the typical Canadian family is $94,700, double the $47,771 US average. It shows that good public services add to a nation’s wealth. Public services provide jobs, and need private business suppliers, and health and pension security means people are less risk averse, and will be more inclined to start up new businesses.

Why then have we given trillions of dollars to the banks, depleting our treasuries so much that we are told we have been living too extravagantly? It is a big lie, and we ought to be taking direct action to change it. But we can do without Tea Party economics. We do not need tax cuts for the rich, we need services for the poor, paid for by taxing the rich. They can afford it, we cannot!

Gambler’s Psychology among Bankers Demands Tight Regulations

Dr Paul Crosthwaite, an academic at Cardiff University, has found that the bankers who brought the global economy to its knees two years ago may have enjoyed the sensation of losing hundreds of billions of pounds and plunging the world into recession. He argues such catastrophic losses can give some people masochistic pleasure.

He thinks financial crises, such as the “Black Monday” crash of 19 October 1987, the bursting of the dotcom bubble in the spring of 2000, and the credit crunch that entered into its most intense phase in the autumn of 2008 with the nationalization of banks in the UK, US, and Europe, demonstrate the innate urge for self destruction that Sigmund Freud called the “death drive”. A full blown crash is a source of euphoria as much as despair. Dr Crosthwaite said:

Economists and financial policymakers must recognize that investor psychology is far more complex than their models have allowed up to now. They need to take much greater account of psychological factors such as emotion and desire, which affect how market actors behave in profound ways.

His research challenges the conventional economic thinking that investors are wholly rational, and always pursue whatever is most likely to increase their own wealth, a rarely questioned assumption that is the basis of the free, minimally regulated market of standard capitalist thinking. In fact, financial markets are disposed to crisis because participants seek excess for thrills as well as their assumed betterment. Bankers and financiers take risks not only for high returns, but to get a gambler’s high.

Dr Crosthwaite says this research strengthens the case for firm regulation of banks and other financial institutions:

To avoid a repeat of the great recession, it is vital that policy makers and regulators limit the capacity of financial professionals to engage in excessive practices by curbing the disproportionate levels of risk that we’ve seen in the financial sector in recent years.

Greg Philo: Privatize the National Debt

Britain is the sixth richest nation in the world. Total personal wealth in the UK is £9 trillion, and the richest 10% of the British people—about a million wealthy families—own £4 trillion of it, with an average per rich family of £4 million. The bottom 50% of the British people own just 9% of the wealth, the least wealthy being the bottom 10% of households who are in debt—they owe more money than they own.

Yet we are in such a crisis, having emptied the treasury to prop up the banks, and to pay the £ million bonuses the parasitic banking community take whether we like it or not, that we are all to suffer the worst cuts in public services ever! The media sing in chorus “we are all in it together”, but does it seriously sound as though we are, with such a vast inequality of wealth distribution?

The economy has already recovered sufficiently for the banks to have started making obscene profits again, and to have already returned to giving themselves financial commendations in the shape of fatter bonuses than ever, and the country is already richer than it was before the financial crisis, despite the media bleating. Maybe it is because the economy meant is that very wealth I made account of in the paragraph above. With stock markets rising, banks making profits, cash bonuses and champagne eqally profusely flowing, the sector of the economy that covers the rich are indeed looking up, and the reason is that the rest of us are having to count the cost!

There is no popular mandate for Con-Dem policies that will radically reduce growth, put up unemployment and affect the bottom 6 million people hardest—those who have no wealth at all. The Con-Dems are doing this though their popularity is already steeply in decline, and Labour has already gone ahead of the other parties according to a recent poll. The consequence of what they are doing is likely to be serious social unrest. The British people are not passive and it is a myth that they will accept policies that they see as profoundly unfair. The consequences of unfair policies is revolution—as a minimum, mass demonstrations, strikes, popular unrest and perhaps rioting.

Professor Greg Philo of the Glasgow University Media Group says the answer is plain, and he has checked it out via public opinion surveys and interviews with wealthy people. He proposes a one-off tax of just 20% on the wealthy decile. This tax of 20% on the very richest people in Britain would raise £800 billion—a fifth of the total £4 trillion they own. That is enough pay off the national debt and dramatically reduce the deficit, since interest payments on the national debt are a large part of government spending.

Nor would this rich segment of society actually have to produce the money immediately, if at all! Voodoo economics? Not at all. If the richest 10% assume liability for the £ billion national debt, it would be cleared from the governments accounts, reducing the deficit instantly to a manageable size. That would instantly relieve the pressure on markets which would soar, and the stock and bond owners, including the banks would immediately be presented with remarkable gains which would go a long way to returning to them the money they have agreed to pay out. Indeed, they can pay their 20% tax in installments out of the earnings they would be making, and even if that were not sufficient to pay off all of their 20%, they could simply agree to pay it along with their death duty.

Philo's group commissioned a YouGov poll of over 2,000 people to test attitudes to the tax and found it was an extremely popular proposal. 74% of the population approved (44% strongly), and agreement was spread right through social groups. Only 10% did not approve. Those in the higher income brackets were more supportive than the less well paid of the wealthy class. They were the ones who realized the measure would turn out to be beneficial for them as well as the country, not merely in the immediate returns they would get, but also in their desire to keep society on an even keel. They knew that unrest, strikes and riots would reduce confidence and profits, and that the poor are the ultimate consumers, and stripping them of the little they have will just depress markets. Even if they were unable to recover all of the 20%, they knew they were wealthy enough not to actually miss the loss.

A problem for the British and US economies is that much of the nations' resources have been directed into inflated property values, which is where many of the bonuses ended up. Extra houses is buried money. It is not liquid and is inaccessible. The tax would re-circulating some of it once the government had no need to cut services, as public spending, stimulating growth. Unemployment resulting from the proposed cuts would be avoided, extra benefits would then also be avoided, and tax revenue would not fall.

At present, we have a lot of billionaires resident in the UK who pay no tax at all. There is quite a separate call for them to pay their just taxes. If people have substantial assets, want to live here and to be British, then they will have to pay their bit. The public will have little time for non-doms, exiles or what will be seen as unacceptable attempts at avoidance. This proposal is similar, but is a mere one off necessity. The Revenue offices know who have the wealth and collecting it ought not to be a problem. The main problem indeed is likely to be the extent of privatization of revenue collection. That, most sensible Britain’s will think, should not be in private hands. Already it has led to absurd mistakes and injustices, so it should be returned fully to the civil service.

The absurdity of privatizing many of our public services is itself a symptom of the desperate need for reliable sinks for the surplus capital swilling around the world. It should be used to put people into work, not to squeeze even more unneeded capital out of them.

David Harvey on the Capitalist Crisis

David Harvey has had a series of short lectures made by RSA Animate into clever little animated movies, available at You Tube. They are educational and entertaining, and must be seen by anyone critical of our excessively bent system. Jail the Bankers!

Sounds Familiar: Aneurin Bevan in 1959

I have enough faith in my fellow creatures in Great Britain to believe that when they have got over the delirium of the television, when they realize that their new homes that they have been put into are mortgaged to the hilt, when they realize that the moneylender has been elevated to the highest position in the land, when they realize that the refinements for which they should look are not there, that it is a vulgar society of which no decent person could be proud, when they realize all those things, when the years go by and they see the challenge of modern society not being met by the Tories who can consolidate their political powers only on the basis of national mediocrity, who are unable to exploit the resources of their scientists because they are prevented by the greed of their capitalism from doing so, when they realize that the flower of our youth goes abroad today because they are not being given opportunities of using their skill and their knowledge properly at home, when they realize that all the tides of history are flowing in our direction, that we are not beaten, that we represent the future: then, when we say it and mean it, then we shall lead our people to where they deserve to be led!

Nothing much changes, or has changed, in the intervening fifty years except that Bevan’s Labour Party was sold out to Blair’s New Labour party, which more appropriately should have been called Not Labour. Blair made the Labour party into a neoconservative party, and brought about the state of affairs Bevan predicted. Now we have five neoconservatives, or at least four and an opportunist, standing for the leadership of the New Labour party. So nothing will change. Labour voters have always mostly been dupes of the Oxbridge middle classes. Maybe, it is time they trusted to a few socialists instead, or even thought about politics instead of watching the “delirium” of reality and “celebrity” TV.

The recent vast bailouts to the world's bankers certainly show that the moneylenders have taken over, and already they are making vast profits and, of course, bonuses. Why should they get bonuses for these profits? The Bank Rate is set in the UK to 0.5 percent, so anyone with money in the bank will get this meagre rate of interest. Yet the bank can lend it to businesses, not usually British ones, at anything up to 10 percent, earning an automatic profit of 9.5 percent, or at least a substantial one for doing nothing to earn it. The bank of England sets the bank rate for the benefit of the banks, and they benefit, but what have they done to merit any bonuses? It is yet another banking scam.

Meanwhile, the new British Tory government, with the help of their chums who own the media, like Rupert Murdoch, propagate the myth that the country is bankrupt, and swinging cuts must be made, notably in unemployment and other benefits for the poor. In this way, the anger of the people at being mugged by bankers is diverted to anger at the unemployed for drawing benefits! How easy it is to manipulate the masses.

No cuts would be needed at all if the government retrieved from the banks what it gave them, if it taxed the billionaire hangers on who come from places like the former Soviet Union with chests of ill-gotten cash—the so-called oligarchs, if it taxed our own British megarich more progressively, and if it legislated against the scams and loop holes that the wealthy use to multiply their wealth at the expense of the lower and middle classes.

There is nothing at all complicated about this. You do not need a degree to understand it, yet the British today claim it is all too complicated. One has to conclude on the contrary that people are too lazy to think for themselves and too ready to accept what they read in their newspapers, and see on the television news.

Bevan saw it all, and sadly, the way the Labour party got taken over by Blair and Brown, there was nothing to stand in the way of it. Resurrecting Labour will be harder than resurrecting Christ, so maybe a new left wing party is needed. The Germans seem to be heading in that direction. It needs to begin with a Clause 4. If anyone does not know what it is, maybe they should Google it!

Time for Obama to be Tough on Banksters not in Afghanistan

Afghanistan will be a sinkhole, consuming resources neither the US military nor the US government can afford to waste.

Andrew Bacevich, former US Colonel, Professor of history at Boston University

NY Times columnist, Bob Herbert, told Obama as soon as he began his new job over a year ago that “the US military is worn out from years of warfare in Iraq and Afghanistan”:

The troops are stressed from multiple deployments. Equipment is in disrepair. Budgets are beyond strained. Sending thousands of additional men and women—some to die, some to be horribly wounded—on a fool’s errand in the rural, mountainous guerrilla paradise of Afghanistan would be madness.

He thought Obama may feel he had to demonstrate his toughness, and that Afghanistan was the place to do it. It seems that is just what Obama felt. The US is still in there with more troops than ever!

Obama could show his own courage as commander in chief by quitting this absurd war. Dwight D Eisenhower, a Republican president, was not ashamed to say, “I hate war”. Eisenhower described “its brutality, its futility, its stupidity”, and could say it in defiance of his redneck supporters, having lived and breathed a proper war for four long years (1941-1945) against a real army, Hitler’s German army of well equipped and battle hardened troops. In Afghanistan, Obama wants to prove his courage against a rag, tag and bobtail army of farmers and peasants, brave but ill-equipped with largely home made weapons, whose defenseless wives and children cower in mud huts being bombed and shot at by well equipped and battle hardened soldiers, who are our own!

And what is Obama achieving? He is driving angry men into Pakistan, a nuclear power, plainly destabilizing it and threatening to make it a failed state whose natural enemy rather than natural friend would be the US, and its spineless allies in the west.

No country poses a greater potential threat to US national security—today and for the foreseeable future—than Pakistan. To risk the stability of that nuclear armed state in the vain hope of salvaging Afghanistan would be a terrible mistake.

Professor Colonel A Bacevich

It is absurd to attempt to restrict potential terrorists by occupying a large and mountainous country. It should not need the spending of countless tax dollars when we face far more dangerous crooks, robbers and terrorists at home sitting behind the desks of Goldmann Sachs executives, and those of other infallible banks. The banks have become a fetid hothouse of corruption, a haven of gangsters and weasels whose salute is the upturned palm. Kept afloat by billions of dollars in American and other foreign aid, our banks are shot through with corruption and graft. They are no longer offering a public service for which they want a fair return, but exist only for the enrichment of those who run them.

Are our soldiers putting lives on the line for the corruption of banksters, Like Richard Fuld, and political monsters like Richard Cheney?—described now as the two Dicks!

Let us kill two birds with one stone by putting the desk clerk crooks and slime bag politicians in uniform and sending them to Afghanistan. US prospects might not be so good in Afghanistan, but they will be much improved at home.