Monthly Archives: June 2012

No Conspiracy, Just a Malignant Web of Influence.

So, only in the last week we’ve seen the mis-selling of interest rate swap derivatives hit the headlines after the FSA had said they were investigating the issue further [ congratulations Telegraph], at the very least, one major bank, Barclays, fined £290 million by the FSA and US CFTC for manipulating the Libor rate over the last five years, [Barclays settled another 19 banks are named as defendents, so watch this one], and we learnt that South London Healthcare Trust is going into administration after being financially crippled by a usurious PFI [watch this one too as over £56 billion of capital has been invested through PFI into the public sector, schools and more hospitals could be at risk].

During the week I posted an article directed at those people who spend their time surfing the internet looking for pictures of cute cats, my tongue was in my cheek a little, but the point I was trying to make was a serious one. Nevertheless, after rereading that short piece again I realised it all looked a little fanatical, perhaps even conspiracy-ish, especially the line; “You are being exploited by a powerful elite who will lie while stealing everything you own.”, and I realised that I should try and get down something a little more comprehensive rather than shorthand that could look like conspiracy theory mantra which can easily be dismissed as somewhat unhinged.

So, here it is; Very broadly speaking our society can normally be divided into three groups, the top 5%, the bottom 5%, and everyone in between. The top 5% are not only the most wealthy, but also the most powerful and the most influential. They include politicians, bankers, businessmen, and those involved in the media, including journalists. They are senior civil servants, senior police officers, senior military officers, and the judiciary. These are the people who run our country and who influence how you think far more than you could ever imagine.

But there is no conspiracy, this 5%, or 1%, or even a representative group of the 1%, do not meet somewhere and agree between themselves how to exploit the majority. There is no conspiracy because there just doesn’t need to be one. Each individual has a job to do, or role to play, and their own personal interests, and they instinctively recognise the power and influence of the others within that top 5% group and they understand that it is in their interests to work within that group and not to try and undermine it. This is by necessity a generalisation, I have no doubt that there very many honourable individuals within this group.

And so instead of a giant conspiracy we end up with a web of influence. Some areas within the group like the judiciary have great power but, because of the necessarily independent nature of their role, less contact. Police ‘need’ to talk with journalists, the industrial/military complex ‘need’ to talk with the military, politicians ‘need’ to talk with bankers, and so on. They meet through their work and they network in their social life. In theory there should be nothing wrong with this but the problems arise when the ‘you scratch my back, I’ll scratch yours’ arrangements are not in the public interest as a whole but just to consolodate the wealth and position of that 5%.

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty or justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary. – Adam Smith

Swap ‘same trade’ for ‘establishment’ in the above and it is just as applicable today as ever it was.

Once again I must generalise, the second group are the bottom 5%, the poor and the voiceless, and often, but not always, poorly educated. Fast food and X factor are the modern equivalents of ‘Bread and Circuses’, if things get too bad some will turn to crime.

The big problem for the status quo is the 90% between these two extremes, they can not be easily generalised. They range from the aspirational knocking on the door of the top 5% to those who are worried about joining the bottom 5% in poverty. Fewer and fewer are getting the opportunity of climbing the ladder, more and more are concerned about their futures. The young, who are increasingly university educated but increasingly without a job, pensioners who are watching their savings swallowed by inflation and low interest rates, head of families who have lost their jobs and risk losing their homes, repossessed by the same banks which precipitated the problems they are now facing.

They are becoming discontent and what do they see ? They finally see, that for atleast 15 years, probably far longer, a small group of people have been enriching themselves at their expense. They have always prided themselves on paying their taxes and abiding by the law but now they realised that they’ve been taken for mugs. Those laws constrain them but not the top 5%, those taxes are paid by them but not those who can afford a creative accountant.

All those in the top 5% are desperate to mend the broken system but many others are now asking themselves whether it is a system they really want to repair. The top 5% want to draw a line under everything that has happened, in this way retaining their position atop of society but others are questioning whether it is right that those who have enriched themselves for over a decade, while exploiting the law abiding and taxpaying majority, should be left with the wealth which will ensure their continued power.

The top 5% will do everything they can to keep this corrupt system afloat and they are. But all of their policies only reward the top 5%  while further impoverishing the majority, increasing week by week the numbers of discontent. If they continue to inflate the economy and prop up the banks, while refusing to take serious measures on growth which would reduce unemployment, and if they stand idly by while family homes are repossessed by the banks themselves, then even in this placid country discontent could turn into civil unrest. There is always a tipping point.

And then there is the big lie, that this is the only way a democracy can work, that there is nothing that can be done. This lie is streamed through our television screens, our radios, newspapers, and computers. The politicians, bankers, journalists and business leaders all retell the big lie, reinforcing the message at every opportunity, exploiting our ignorance and lack of confidence. But stop to think whether this mass of ‘independent commentators’ have any vested interest in amplifying this big lie through the media, whether the status quo empowers them, and you should then have enough doubt to atleast question the ethicacy of their repeated remonstrations.

So just to be absolutely clear, there is no conspiracy, just a malignant web of influence.


Filed under Economic Crisis

Tense Turkish/Syrian Stand Off.

It was only one week ago, Friday 22nd June, that a Turkish F-4 Phantom was shot down by the Syrian Military. Since that time the situation has escalated, even if the story is not being given the prominence in the MSM that it deserves.

In the past week Syrian forces have fired on another Turkish aircraft, NATO has met under Article 4 of their constitution and Turkish land forces have begun to amass on their border with Syria.

Now according to Gen Mustafa al-Sheikh, head of the Free Syrian Army’s military council, Syrian land forces are heading north to meet them.

Earlier in the week Recep Erdogan, the Turkish Prime Minister spoke out, “We did not receive a single warning note from Syria,”   he said. “They acted without [warning]. This is a hostile act.”

Erdogan explained that as a result Turkey’s armed forces now stood on heightened alert. “The rules of engagement of the Turkish Armed Forces have changed given this new development,” said Mr Erdogan. “Any military element that approaches the Turkish border from Syria by posing a security risk and danger will be regarded as a threat and treated as a military target.”

Some ‘insiders’claim that the Turkish forces will fire on any Syrian forces approaching the Turkish border within 5km inside Syrian territory.

Now we hear that 170 Syrian tanks are have amassed at Aleppo near the Turkish border.

The situation is precarious and potentially dangerous and if it does all go off I doubt we’ll ever get to the bottom of who fired first.

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Déjà Vu………again ?

by Nomadscot

Going by past performances – of which there have been many, today should progress like this:

1. Smiling and nodding Euromuppets announce latest breakthrough  in efforts to save the unsaveable Euro, amidst great back slapping and mutual congratulations all round.

2. Markets dance the Dead Cat Bounce, reach new highs since last solution to the crisis.

3. Euphoria gives way to caution, caution gives way to suspicion and suspicion gives way to the realisation that it’s all bollocks – again.

4. Markets settle back, and Euromuppets announce a new summit in a month’s time, to include photographs, lovely dinners and high profile press conferences.

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Filed under Economic Crisis

The ‘Deal’ is Not Done Until the Bundestag Vote

……………….and even then it won’t come into German law until the constutional court have ruled on its legality.

At around 9pm this evening the German Bundestag will vote on the ESM Bill.

Only 2 days ago Chancellor Merkel addressed the German Parliament, assuring them that there would be no further changes to the ESM [European Stability Mechanism] but if you are to believe the noises coming out of Brussels, Merkel has made concessions and the nature of the proposed ESM has changed.

So now, Frau Merkel must go back to the Bundestag tonight and explain herself.

The Bundestag will need to vote with a two thirds majority for this constitutional change. There are 622 MPs in the Bundestag, so, if everyone were to attend and vote, atleast 415 need to vote for the ESM.

In a recent test vote on the ESM, only 11 members voted against. But that was before the supposed changes. I expect it will pass with opposition MPs abstaining rather than voting against.

But that doesn’t mean the ESM will then pass into law. There will be legal challenges as to whether the Bill is constitutional and the German Constitutional Court has been far more ready block Eurozone initiatives than the Bundestag ever has. The court will likely not rule on the ESM until this Autumn.

By which time it may all be moot anyway…

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Filed under Economic Crisis

Barclays; One Bad Apple ?

by Catherine Carr

It’s quite odd because Libor is set by up to 20 banks depending on the currency. and is then averaged after losing the highest and lowest prices….

So how is just one bank able to influence libor ? If they are too far out of kilter then their price is ignored..

So if prices are fixed then there has to be a cartel and Barclays dealers are just part of it….

This fine that has been imposed ought to be coming down on the other banks involved pretty soon…

So for Sterling this lot would have had to be in on the act..

Abbey National plc

Bank of Tokyo-Mitsubishi UFJ Ltd

Barclays Bank plc

BNP Paribas

Citibank NA

Credit Agricole CIB

Deutsche Bank AG


JP Morgan Chase

Lloyds Banking Group

Mizuho Corporate Bank


Royal Bank of Canada

The Royal Bank of Scotland

Group Société Générale


And for Dollars this lot would have had to be in on the act..

Bank of America

Bank of Tokyo-Mitsubishi UFJ Ltd

Barclays Bank plc

BNP Paribas


NA Credit Agricole CIB

Credit Suisse

Deutsche Bank AG


JP Morgan Chase

Lloyds Banking Group

Rabobank Royal Bank of Canada

Société Générale

Sumitomo Mitsui Banking Corporation

The Norinchukin Bank

The Royal Bank of Scotland Group


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Filed under Economic Crisis

Man the Lifeboats !

Germans Women and children über alles first !

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Filed under Economic Crisis, Humour

Approaching End Game.

by sdharbinger

Last Throw of the Dice ?

This has the feeling that the end game is now about to play out.  There can be no solution or compromise as the positions have been drawn up.  Merkel by addressing her party and parliament and definitively ruling out Eurobonds in her life-time, has put herself in a position where it is impossible to cede to the demands of the Latin block.  For Spain, Italy and France it is not an ideological problem – both left and right parties want to liberate the ECB as they have no other choice.

Spain’s, Italy’s,Greece’s and France’s banks are bust, and the Spanish and Italian governments are now insolvent.  France will follow.  The problem here is that the debt situations of both their banks and states are massively understated and huge amounts of liabilities have been shipped off the books – but they are still debts and liabilities which need to be paid or defaulted on whether they are part of the official accounts or not.

Germany doesn’t have the money to save Europe especially when everyone comes clean about the real state of their accounts.

The true state of the Latin Block’s finances is starting to show now as its leaders become increasingly desperate.  100 billion is not enough to save Spain’s banks.  They have already had 200 billion in LTRO and were forced to ‘invest’ it in their own government’s bonds for a loss.  If their true needs are 350 billion, its pointless thinking that even 100 billion is going to get them out of trouble.  Where will they invest it this time to get themselves off the hook?

The reason the Eurozone lurches from crisis to crisis is that by consistently understating the size of the financial problem, the solution is always necessarily under-funded.  This sets up the requirement for the future bailout in principle as surely as night follows day.  The new model of accounting everywhere is Enronesque and fraud has permeated throughout all our government, financial and corporate institutions.

Spain, Italy, France all need to desperately get their hands on the ECB and print their way out of trouble and the only thing standing in their way is Germany and a few northern satellites (though a few of them they may not be adverse to having a Eurozone Fed to fall back on).

This situation has moved beyond politics or ideology.  It is now merely a question of economics.  Eurozone Corp is bust, yet it still retains the possibility to print its way out of trouble and the markets will celebrate.  The time to fix these problems was 5 years ago and now it is too late.  All that is left is to emulate what the UK and US have done and monetize the debts using central bank printed money.

This is the dawn of the economic Euro dead, with the virgin Germany waking up to find itself surrounded by zombie banks and zombie economies.  Angela Merkel has so far avoided their plodding and cumbersome advances, but there must surely come a point when the heroine gets on a fast motorcylce and gets the hell out of town.


Filed under Economic Crisis