After Vodafone - the World and its Tax Havens.

OK, so yesterday we had fun closing down 21 Vofafone stores in protest at their avoidance of between £1 billion and £6 billion of UK tax - avoidance which the HMRC connived in.

The media gave the protests a pretty comprehensive ignoral, with a few honourable exceptions.
After 40 years of participation in demonstrations, I am totally used to this. The basic rule is, if you want to get a demonstration noticed by the media, break windows. They will then associate your cause with vandalism and criminality.

David Mitchell did notice the demos in the Observer, but disses it, arguing that Vodafone was only doing what a corporation is expected to do, looking after No 1. He says the rules need to be changed. Fair enough David. I hope you will assist us in the gargantuan task of changing said rules.

Where do we go from here? We can continue to toy with Vodafone, but they are only a blatant example of the way big corporations use tax loopholes to avoid paying tax. The UK loses up to £120 billion per year through these loopholes. Approximately £40 billion more than the deficit that Osbore assures us must be addressed through his cuts. So if we can reclaim 2/3rds of this tax, we will be sorted.

We need to sort out this matter of tax evasion and avoidance - on a global basis. It has to be global, because if one country goes it alone, the argument is that the corporations will withdraw from that country, leaving it wallowing in the pit of self-inflicted poverty. We may not necessarily buy that argument, but it does carry weight in the mainstream media, who will use it ad infinitum to make sure that unilateral tax clampdowns do not run.

In any case, the whole world needs a more sensible financial system, one where money is shared sensibly and well between richer and less rich, to do real things like protecting biodiversity and decarbonising the terran energy system.

"Think global, act local" runs the old green slogan. It is a good slogan, but not too good if we end up restricted to doing Big Society litter picks while the oligarchs asset strip the planet on the back of their "Think Big, act Global" slogan.

We need global activity to bring corporations into the field of reality.  It looks as if the IMF is beginning to be exercised over the activities of the banks, but is chuntering about reform taking years or decades.

It should not take years or decades. What it needs is political will. Politically, this is a massive problem, because political parties (Except the Greens and a few others) are funded by the corporations who would not smile on plans to stop their little loopholes.
So, sorry David, we are going to have to continue with demonstrations, since demos are what hurry things along, politically. Do come and join us.

But in paralell with demos, we need a clear and solid plan on what to do. This should not be difficult.

In essence, we need to

Close Down the Bleeding Tax Havens!!

Having said that, though, there is more detail to be added. I am going to ask Richard Murphy, because he is the all-knowing mild mannered guru superhero of all matters relating to tax policy.

He will know.

The Global Green Co-ordination should also take an interest in this matter. I will take it to them, and let you know how I get on.

Should Airlines get compensation for volcanic ash airspace closures?

Branson's Rash Bash at Cash for Ash will not Wash.

"Sir" Richard Branson demands compensation from the taxpayer for the losses caused by the Eyja&c volcano. Well, he can stuff his demands right up his exhaust vent. The airlines have only themselves to blame for the blanket ban, because they have had nearly 30 years to work out tolerable levels of volcanic ash, and they have failed to do so.

The Civil Aviation Authority has a review paper on volcanic ash. In it we learn that in the last 12 years, there have been 60 close encounters with volcaninc ash, resulting in 7 engine failures. All cases restarted when the plane dropped below the ash cloud, but this happy outcome requires that the failure occurs at height. It's only a matter of time.

In 1982 the International Civil Aviation Authority set up a Volcanic Ash Warnings Group. There was a Symposium on Volcanic Ash and Airline Safety in Seattle in July 1991.  How come standards of ash tolerability were not set up by these groups? Did none of the highly-paid and knowledgeable  experts there think to consider what levels of ash were flyable and what were not? Clearly, the assembled company decided against setting up a regulation level, and we can reasonably suppose that this is due to a free market, low-regulation mindset on the part of the industry.

Levels of ash must be set with a wide margin of error. Within areas that have been declared within the limits of toleration, there will be areas of higher density, and an aircraft with the misfortune of hitting such a stratum might exceed tolerable levels. Present in-flight radar cannot detect such layers. So it would seem sensible to design and fit a small device, maybe using laser-back-scatter, as an ash density detector on all aircraft in these troubled times.

There is a striking parallel with what is happening at the Deepwater rig right now. Oil companies know that blowouts occur, but they treat each new blow-out as a one-off surprise. "Blimey! We're leaking! Quick, someone design a coffer dam to try to cope with it. No, damn, that doesn't work. Let's put a pipe in and suck it out!"

Industry has got to learn to think ahead, and it will only do that if it learns some painful lessons. I like anyone who smiles a lot, and Richard Branson has a ready smile. I believe he has a genuine if rudimentary concern about the environment, but he is mad to expect any compensation for the no-fly rule.  "Lord" Adonis, the Labour transport man, said at the height of his powers that he would be inclined to compensate. Let's hope this is one Labour spending decision that falls to the cutting room floor. It will be a test of the new Government's commitment to fiscal prudence to see whether they can resist the temptation to rob from the poor and give to the Rich.

Dubai Government seeks to avoid its responsibilities

Interesting passage in the Observer's piece on Dubai.

The Dubai government," it said, "is under no obligation to extend support to any government-related entity". In other words, these companies, led by the largest, Dubai World, which benefited from implicit government guarantees when they were raising huge amounts of debt from western banks, were already being cut adrift.

This is an common trick used by mega-capitalists. They seek to benefit from profits made by their subsidiaries, and cut themselves off from losses. They seek rights, but avoid responsibilities.

Multinational corporations use this mechanism as a stock in trade. Trafigura set up Compagnie Tommee to dispose of the toxic waste on the Probo Koala. The directors of Tommee are in jail, while Trafigura directives are free (although they did spend time in Cote d'Ivoire jails, where they were beaten up. They were released when Trafigura paid the government of cote d'Ivoire $198million for a clean up operation).

The law needs to be changed so that companies bear full responsibility for the operations of sub-contractors and subsidiaries.

Tobin Tax: Will Hutton backs it, idiots disagree

The sheer natural justice of the Tobin tax makes it a no-brainer to all except the greedy banksters who stand to lose an infinitesimal percentage.

Advantages:

1. All should pay tax including bankers.
2. Tax from the very richest should go to the very poorest. Anglo-capitalism is inherently divergent. This corrects the divergence.
3. Some of the tax can go to insure against the next Credit Crunch.
4. Will Hutton agrees so it must be right.
   

This was the tail end of a piece where I collected the arguments against Tobin, but it seems to have got lost somewhere in the ether...

Gordon does Something Right (Tobin Tax) ; give positive reinforcement

Image : hat tip to Banksy

SHOCK NEWS, HOLD THE FRONT PAGE:

Gordon is saying the right thing for once.
He is calling for a Tobin Tax on financial dealings, the proceeds to go to help poorer countries and to fund future bank bailouts.

Telegraph: Predictable opposition coming from the expected quarters. Timothy Geithner, the US Treasury Secretary, said: "That's not something that we're prepared to support." Canada's finance minister, Jim Flaherty, said: "It is not something we would be interested in in Canada. We are not in the business of raising taxes, we are in the business of lowering taxes in Canada. It is not an idea we would look at." Dominique Strauss-Khan, head of the International Monetary Fund (IMF), also poured cold water on the plan. “I don’t believe it will be a transaction tax because transactions are very difficult to measure and so it’s very easy to avoid a transaction tax".

On Monday there will be a queue of financiers waiting for their turn at the microphone to condemn the proposal as a threat that will pull down the entire fabric of society, with gullible interviewers drinking in every word, and asking no tough questions about the finance markets and the impact of poverty on human beings.

The Green Party is among the many peoples' organizations to call for the Tobin Tax.
Sarkozy is on our side.


I have put a petition up the No. 10 website:

We the undersigned petition the Prime Minister to persist with his praiseworthy plan to persuade the G20 to place a Tobin Tax on financial transactions, designed to aid poorer countries and increase financial stability.

Submitted by Richard Lawson – Deadline to sign up by: 8 December 2009

Category: Economics and finance

More details:

The PM has put forward the idea of a Tobin Tax at the G20 meeting in November. This is a tax on financial transactions, which will be hypothecated to poor countries, to which the PM has not unreasonably added a clause to put some to meeting the cost of the next bank bailout. The US and Canada have already talked sown the idea, but many poorer countries and nearly all NGOs will welcome it, and we encourage our PM to persist against all odds.

Please sign the petition, and even more, please, send it on to your contacts.

We should give bouquets as well as brickbats, to encourage Gordon to stick with it.

Every decision is multifactorial, and there is that of good in everyone. Gordon while Chancellor listened to Jubilee 2000, and took it on board. Maybe part of him has Finally Got It, and maybe also he realises that this is part of the electorate that he should be courting. Which is cool.

I am not saying he has seen the Light, but I am saying that, like good parents, we should reward good behaviour, as well as criticising the bad behaviour. We do the criticism 24/7, so he takes no notice of criticism.

Our praise and support will be so unusual that he will take notice. So this is one important petition. He is going to get a lot of flak for this from the US, Canada, ? Australia, and a lot of stick from the corporate media here, and from the Tories; so an impressive big petition of support for the Tobin Tax would be very influential.

[Update: the petition has just gone up, 9 days after I submitted it. Presumably they were so unused to getting support and praise that they thought it was some kind of Trojan Horse].

Money Matters - Book review

This is a great little book. Great, because it reveals the mystery of money to any intelligent person that wants to understand the supreme power in charge of our planet. Little, because it is an easy read. It has no graphs, no jargon, no formulae and no incomprehensibly long sentences.

It demystifies the dismal science of economics, handing its understanding back to the ordinary person. The sub-title reads "putting the eco into economics". This is the key realisation that ecology - the study of the inter-relatedness of an organism (that's us) with its surroundings - is the bedrock of real economics. This realisation is a revolutionary insight, that is set to transform economics in the 21st century in a way comparable to the Enlightenment of the 18th century.

David Boyle is an environmental journalist, which enables him to write in a simple, unchallenging way. His chapters are typically two or three pages long. He writes a series of stories, short anecdotes of the many perverse things that money has done and is doing to people and environment - and the beneficial things that a well-designed monetary system could do.

These stories carry the central message that money is a human invention that is usually designed to serve the needs of the rich and powerful, while in the process, it usually succeeds in making life more difficult for the poor and disempowered. The most important conclusion is that things do not have to be like this, and that there are forms of money that are more fit for the purpose of benefiting regular human beings as well as for the biosphere.

There are eight sections each devoted to one aspect of money:
· metal
· information
· Measurement
· debt
· Mad
· local
· DIY
· Spiritual

Boyle understands the central truth about the present form of money: it is created by the banks out of thin air in the act of creating an interest-bearing debt. This truth is denied and obscured by accountants, financiers and their dupes as vigorously as climate change is denied by Exxon Mobil and their dupes. But it is undeniable, because the amount of money in the world has been doubling every ten years, so somebody is creating it, and it ain't the Government because they only get to create the metal and paper money, about 3% of the total. All the rest is created by the banks through loans. End of argument. Period.

The resultant unstable, towering, inverted pyramid is founded on the belief that the debts will be paid. When this belief turns out to be ill-founded, the result is a crash, such as the one which the world is currently passing through.

The book is a sustained fountain of killer facts: for instance, two thirds of new money is created as mortgage loans, and mortgages eat up one third of our working life. Pensions have been ripped off. Crime pays. A corporate takeover of the whole world is under way.

Some of the facts offered in passing beggar belief; for instance, is it truly the case that the UK is still paying to Germany the ransom money for Richard the Lionheart incurred in 1193? (p 89) I think we should be told.

Boyle's case is a detailed exposition of the Cockney song, "It's the same the whole world over, It's the poor what get the blame, It's the rich what gets the pleasure, Ain't it all a bleeding shame?" He shows how money multiplies in the hands of those who hold it, and debt multiplies for those who do not hold it. A continuous theme is the amount of human work, real, creative, life-sustaining work such as parenting and caring, that is currently done for no money.

Most importantly, he offers solutions. He gives an array of instances where money has successfully been created by local people for local needs, often at times when the internal contradictions of official money has caused it to become unfit for purpose. We may be entering one of those periods in the next few months, and this book could prove to be a handy manual for getting a new money started at local level.

Nothing is perfect. Boyle sometimes is too brief, referring to events which could do with a bit more explanation. There is no index, though there is a rich bibliography, and a page of web references, which is a first as far as I know.

In conclusion, Money Matters is an easy-to-read introduction to finance and alternative finance to anyone who finds money a mysterious business. As such, it should find a readership approaching six billion on this planet alone.

Money Matters, ISBN 978-1-906136-20-8 David Boyle, Alastair Sawday Publishing, 2009. 220pp, £7.99

George Osborne, Monetary Reformer? Or not.

George Osborne, the Tory Shadow Chancellor, has made a very interesting statement about debt.
"We need a new model of growth. We need to change from an economy built on debt to an economy powered by savings and real returns on effort".

Does he not realise that 97% of all the new money that flows into the UK economy is created by banks creating debt?
If he does not, this is evidence of massive ignorance about the fundamentals of the grey financial system.
If, on the other hand, he does, this is an exciting departure of the Conservative Party from the debt-interest system of money creation, and commits his party to Monetary Reform, with the Bank of England taking over responsibility for issue of new money. Conservatives in the Green Party have fought long and hard against green Monetary Reformers over the last 12 months. Now the real Conservatives seem to be joining the reformers.

Unless George is just in a bit of a muddle. Which is more likely.

The recession: is it Gordon's fault?

Well, is it? The Tories are pointing out that Gordon Brown was Chancellor when it was all brewing; but he stresses it is a global phenomenon.

What is the truth in this political ding-dong?

There are three factors; the business cycle, house prices, and the financial markets.

The capitalist economy has a natural rhythm of expansion and contraction. Gordon unwisely said he had "abolished boom and bust"; clearly he was wrong. Maybe he thought he had avoided the extremes of the business cycle, but that shows he was ignorant of what was really going on.

He could not have been unaware of the growth of house prices, but he did nothing about it, despite the clear recent example of the house price crash of the 1990s. He left it to the market. Had he intervened, by, say, taxing the increase in the house prices, and capping the amount of commission the estate agents were getting (clearly one of the drivers of house price inflation), or requiring the buyer to have a certain amount of deposit to put on a house, and regulating the ratio of income to mortgage loan, or had he used any other such device that are in use in other European countries, he could have avoided the house price boom. He did not, so he is culpable, but we can be sure and certain that his Tory critics would have screamed blue murder if he had intervened in the precious free market. We can also be sure that the Tories would have done exactly the same thing.

Now. The financial markets. The basic position is that new money is created almost exclusively by private corporations making loans at compound interest for private profit. This is not a promising start, since the money system is predicated on debt, which is a power relationship between lender and borrower. Having made some ill-considered loans to people who did not have a good chance of paying them back, money lenders must have had an ely that they were at risk. In response, they bundled the loans up into packages, and sold them on to hedge funds, as a kind of insurance against the risk of default. Ironically, in doing so, they increased the risk to the system many times over. The unregulated hedge funds re-packaged them up into yet more complex bundles, and at each stage, the debt was multiplied, until we reached the point that the "value" of these instruments ballooned to ten times as much as the GDP of the whole world.

This is an irrational situation, psychotic in the sense that it is detached from reality. It arose from treating money, which is a social construct as if it were a commodity. Ann Pettifor has explained this very clearly. The unreality of the financial markets is even expressed in the language that commentators use, when they talk about the "real economy" - real work done by real people - as opposed to the "financial markets" - activity carried out by people who do Something in the City.

So is Gordon to blame? Yes, he is, along with every other politician and commentator who accepted as gospel that the economy must grow infinitely, despite the fact that we live on a finite planet, who accepted that it is OK to make money by buying and selling money as if it were a commodity, and who accept that Free Market Fundamentalism is Absolute Truth.

The Tories are right to blame Gordon Brown; but they would have done exactly the same. In making political capital out of their criticism, they are increasing their opinion poll standing. But Dave Cameron has been captured by the anti-Keynesians in his party, and is therefore foolishly prepared to repeat the mistakes of the 1930s, by trying to balance the books in the course of a recession. If the Tories get in, their policies will make the recession many times worse. Brown is bumbling about, throwing good money after bad, trying to pour money into the black hole of debt that is the financial system, rather than concentrating on putting it into the real economy in a Green New Deal, but at least he understands that the Government has to invest in the economy. Dave Cameron does not understand this, and therefore he must be kept out of office at all costs.

As things stand, the Tories are heading for a victory in the next General Election. There is one change that could keep them out, or at least make sure that they do not have an outright majority. We need Proportional Representation. We must create an alliance with the LibDems, Labour democrats, all Labour MPs who have enough political intelligence to know on which side their bread is buttered, we need all democratic and environmental NGOs to short sharp campaign to get the Government to get a PR bill in place before the next election.

There is unprecedented enthusiasm for this on the Policy email discussion list of the Green Party (3 in favour, one doubtful).

So that's agreed then. Let's go; Here's the campaign chant:

What do we want?
Proportional Representation, preferably AMS, but anything is better than FPTP!
When do we want it?
Before the next General Election if time can be found on the Parliamentary timetable!

Hedge fun news

The hedge fund industry held £1.93 trillion in mid-2008. It now holds £1.4 trillion, according to a report in the paper edition of the Grauniad which I cannot find on-line.

That's nearly $500 billion gone, or 27% of the total capital.

All together now:

Money, money, money
Must be funny
In the rich mans world
Money, money, money
Always sunny
In the rich mans world
Aha-ahaaa

Aha-ahaaa indeed.

Barclays John Varley backs monetary reform shock

Barclays Bank Boss John Varley says bankers should apologise for comprehensively fecking up the world's economy, putting millions our of work and out of a house, causing poverty, starvation, increasing community tensions and putting us all at risk of war, as politicians seek to divert attention from peoples' financial woes. And so they should. So far, so unremarkable.

What is astonishing is that Varley says: "a reduction in the overall quantity of debt in the economy was necessary".

Well, hello? Not to say, Duh?

The entire world financial system is based on debt. Debt is how banks make money. You go to the bank manager, asking for a loan. He looks at your shoes, notes that they are shiny, and decides therefore that you are a good risk. He writes some figures into your account. You go away and slave for years to pay back the loan and interest.

For instance, if you have a $100,000 mortgage at 5% for 20 years, you will pay back about $250,000, so $150,000 of that is new money introduced into the economy. Read all about it here.

So the whole world is swimming in debt. Here is one example.

Wikipedia's List of countries by External (=foreign) debt is worth a browse. You would think that 50% of countries would be debtors and 50% would be creditors, wouldn't you? You would be wrong. The only countries without foreign debt are Brunei, Leichtenstein, Macau and Palau.

So the foreign debt is all owed, not to other states, but to private finance corporations.

There is no intrinsic reason that banksters should have a monopoly on the creation of new monsy. In the UK in 1946, they only created half of it. The State created the other half, and it can do that on behalf of the people by issuing grants, which are debt free money.

This video is an excellent introduction to the topic.

Brian Leslie's website is a good resource.

I still find it extraordinary that the Green Left is a staunch supporter of the right of private financial corporations to have a monopoly on money creation, a position that adopt (I have to guess here, as none of them have taken the trouble to defend their position) because the some monetary reformers were fascists, an example of the Guilt by Association fallacy.

So if John Varley holds that a reduction of the amount of debt in the economy is necessary before the economy picks up, it follows logically that the Boss of Barclays Bank has joined the ranks of the Monetary Reform Movement. Welcome aboard, John. Be prepared to be sidelined, misunderstood and misreported.

BBC licks boots of Cato Institute evangelist Dan Mitchell

BBC News 24 has just treated us to an audience with a Mr Daniel J Mitchell, a "tax expert" at the Cato Institute. "The mission of the Cato Institute is to increase the understanding of public policies based on the principles of limited government, free markets, individual liberty, and peace (sic)".

"Good to talk to you", said the BBC man at the end.
No it was not good.

Here is a man whose chums have just pocketed $700,000,000,000 of US taxpayers' hard earned, complaining about Government intervention in the economy. Did the BBC press him on this? Does a bear sh*t in a gold plated water closet with hot and cold running water and an automatic lavender scented spray directed at its perineum after the act of defecation is successfully completed? No. And no, the BBC did not press Mitchell on his monstrous arrogance. The BBC just gave him 3 minutes to preach the failed gospel of the free market, limited government, liberty for the individuals who earn in a second more than some ordinary mortals earn in a year, and war without end for ever and ever, Amen.

The Cato Institute has a sceptical view on anthropogenic (man-made) global warming.
Need I say more?

I am getting seriously worried about the BBC. Not so much on account of keeping Jonathan Ross in the manner to which he is accustomed, but because of the complaisant way that it gives right wingers a platform. I caught a bit of BBC Radio a couple of weeks ago, dong a spot on the BNP. Was there incisive questioning, like "I thought we settled the matter of your political philosophy in 1946?". Not a bit of it. Just a three minute party political broadcast by the Civil Strife Party, free of charge, courtesy of the license payer.

I'm going to ask here for them to rebalance the piece with an interview with someone from the Green New Deal group.

You can too if you like. Copy amend, and paste this wot I wrote:

I object to the deferential interview on BBC News 24 about 9.15 pm with Daniel J Mitchell of the Cato Institute. Here is a man whose chums have just pocketed $700,000,000,000 of US taxpayers' hard earned money, complaining about Government intervention in the economy. The interviewer (sorry, I cannot find his name) did not press him on this.

Mitchell shows monstrous arrogance and ingratitude. The BBC just gave him 3 minutes to preach the failed gospel of the free market, impotent government, liberty for the individuals who earn in a second more than some ordinary mortals earn in a year, all of which do not lead to peace and security.

Worse, the Cato Institute has a sceptical view on anthropogenic global warming.

I am sure that having looked at the tapes, you will agree with me that the piece needs balancing by an interview with someone from the Green New Deal group.

Government need not borrow to finance recovery

There a divide in the Green Party economics community between those who insist that the issue of new money must remain as a monopoly of private institutions in the pursuit of profit above all other considerations of the welfare of society and planetary life-support systems (and here I have to re-iterate my bewilderment that socialists in the Green Party still support this view) and those that insist that Government, acting on behalf of the people, should take over at least part of that monopoly.

It is presented as a black and white choice, but it does not have to be either-or. It can be both-and. The privilege of creating new money can be split between government and private institutions, and the proportions of the split can vary according to financial conditions.

We have reached a point (not through the triumph of monetary reform theory, but through the internal contradictions within the free market capital system itself, to coin a phrase) where the banks have all but ceased to lend, in response to the fact that they have unwisely over-lent in the past, and because they have stupidly invested in fantastical, irrational, obscure and illegal financial instruments called derivatives, especially CDSs and CDOs.

With no new money flowing into the economy, the present recession is exacerbated. The Government is rightly trying to kick-start the economy by spending, although it is spending on some irredeemably stupid things - the Trident WMD figured in the plans put out by Darling a few days ago. And it is getting the money by borrowing at interest. We are not told exactly who it is that they are borrowing from.

It is the contention of monetary reformers that instead of borrowing, it is entirely within the power of Government to act as a bank (it is after all the bankers' bank) and issue new money as investment grants, zero-interest loans, low interest loans or high interest loans, depending on the ecological value of project they are lending to. This situation is a remedy for the present inequitable situation where the profit from lending is privatised, and the risk from lending is socialised, and it offers a way of financing the Green New Deal without committing future generations to huge debt repayments.

The central objection to this proposal from supporters of the current financial system is "It Will Cause Hyperinflation!!".

The fact is that throughout history until recent times, money has been created by the government, and hyperinflation has not been a constant feature of financial history. It comes about when government is incompetent, that is, has lost control of the economy, or in specific difficulties (as in post WWI Germany). Civil war is a frequent factor in hyperinflation.

If the Govt issues the money carefully, making sure that the money in the system is matched to the goods and services in the system, just as it does now with interest rates (which is criticised as being the only club in the financial bag) inflation is not a necessary consequence of government issue of money.

Icelandic assets: Abuse of anti-terrorism laws by Government

"Iceland's prime minister Geir Haarde said the U.K. government is to blame for triggering the crisis when it used anti-terrorism laws to seize the assets of Icelandic banks in the U.K." (Bloomberg)

Another scandalous abuse of the legal process by the Labour Government, added to their catalogue of abuses at places like Heathrow and Kingsnorth

So the Government has no scruples when it comes to seeing Terrorism Act is applied to non-terrorists. How about real terrorists, do they get their assets frozen by the Government?

Faithful readers of this blog will recall the story I broke here and here and here and here of Abu Musab al-Zarqawi , the unlovely terrorist who beheaded poor Ken Bigley.

Months before they kidnapped Ken Bigley I wrote to the Foreign and Commonwealth Office (FCO) to ask how the financial component of the "war on terror" was going.

They wrote back saying, fine thanks, no problem, on top of the case, no worries.

Then when Ken was kidnapped, it was reported that the Government was taking action to freeze the assets of Abu Musab al-Zaqarwi, Ken Bigley's killer.

So the Government had not previously taken action against al-Zarqawi's group.

Logically, this was either because either
(a) they were ignorant of his existence, or
(b) they knew of his existence, but did not see fit to freeze his accounts.

I wrote via my MP 12 months ago to ask which was the case.

Baroness Symonds at the FCO replied.

"The Government always takes action to freeze the assets of any terrorist or terrorist group, whenever it is apparent that there are clear grounds on which to do so".

This is a clear indication that Government knew of the Musab al-Zaqarwi's group's existence, but did not see fit to freeze its assets.

Zarqawi had a long history of terrorist activity predating the Ken Bigley kidnapping.

Conclusion: the Government is only too ready to apply the AntiTerrorism Law to non-terrorists, but incompetent when it comes to applying similar powers against terrorists.

Why is this? My gut tells me that the banksters resist any government interference with their affairs, even when they are holding money for terrorists.

Get off me Darling, I've got a headache...

...murmur the banksters to the Chancellor, and off he dutifully moves. One year after the Northern Rock failure, the sum total of Darling's actions to reform the free market in money amounts to a pathetic 3 month moratorium on short selling. Is he going to limit the bonus system that drives some banksters into risky transactions, looking for the big hit? Not a bit of it. Darling resists any intervention there.

Here is a quick list of possible reforms of the banking system:
1. We will regulate all financial instruments firmly and permit only those that are transparent, that offer limited risk of financial destabilisation and are clearly beneficial.
2. Regulators should conduct “stress tests” on their models, and regulate according to what they discover. Regulations must focus on systemic financial functions, not on specific institutions as at present.
3. We will bring in specific regulations covering short selling.
4. We will ensure there is stricter regulation of the banks, limiting them. principally to the on-lending of customer deposits.
5. We will split retail banking from merchant banking and securities trading.
6. We will enforce appropriate fractional reserve ratios.
7. Financial institutions will be required to raise their reserves in good times, in order to cushion the bad times as proposed by Goodheart and Persaud.
8. We will require transparency in all financial trading, including that
undertaken by private funds.
9. We will clamp down on tax havens. We will break up large conglomerates, to make banks small enough to fail without wrecking the while system..
10. We will impose a Tobin tax on large-scale financial trades, the profits hypothecated to aid for less developed countries.
11. Bonuses paid to corporate CEOs on leaving their posts will be prohibited if the CEO is deemed to have failed.

Not to mention re-balancing the divide between publicly and privately issued money.

One down, nine to go Darling.


------------------------------------------------------------------------------

PS all this reminds me of the classic Punch cartoon. Old gent sharing park bench with a courting couple.

Girl: Darling
Boy: Yes darling?
Girl: Nothing darling. Only "darling", darling

(Whereupon old gent feels quite sick)

The Financial Sector drives Economic Growth: Discuss

This is a mother of a long post. So much for "brevity". I am reluctantly forced to do this as a result of a long and intense debate within the green party about monetary reform.

For those, like me, who dislike reading long slabs of text, the argument is that money supply is a reciprocal co-factor in the absurd process of seeking perpetual economic growth, which is the economic counterpart of the perpetual motion machine. It is a fantasy, because of the First Axiom of Green Economics: indefinite growth is impossible in a finite system.

Financiers operate in a competitive market, and therefore push their product (loans which attract interest) aggressively. The need for businesses to take out interest bearing loans to improve productivity is a component of the spiral. The two - businesses and finance - form a mutually-enhancing spiral of growth that results in environmental and social degredation and instability for all of us.

The major green economists are of this opinion.

The monetary conservatives in the Green Party are agreed with us that the financial sector must be more closely regulated, but do not agree that we need to look at the root cause - the near monopoly on the creation of money that the banksters have arrogated to themselves.


This is a no-brainer really, because the cure for a recession is to inject more money into the system.

In fact - that's the argument in a nutshell. So I can spare you a large slab of text.
If you disagree, the full argument is here.

Green Response to the Financial Crisis

Just put a page on the financial crisis up on the new Green Monetary wiki.

http://green-monetary-policy.wikidot.com/crash

.

The wiki has had a visitor already (thanks Stuart).

In case you are too nervous to go and look upon a wiki, or just cannot be arsed, there is what I wrote*:


The deregulated financial crisis was a neo-conservative accident waiting to happen, a 21st century version of the South Sea Bubble. From boom times, when banksters, (a neologism to cover banks and other lending institutions) were making aggresive loans to everyone, because loans meant interest meant profit. Drunk with greed, they loaned without making sound judgments about the ability of the debtor to pay, and without regard for the amounts of capital their company actually held. Obscure high falutin financial instruments were created, essentially bets on future prices. Little criticism came from the media, mainly because nobody understood what was happening, although Warren Buffet, who did, said "Derivatives are financial weapons of mass destruction". Treasury Ministers should have taken notice.

So we are now facing a financial implosion, a bursting of the easy credit bubble. It is likely to be a mother, because of globalisation of the financial markets, because of recent rises in oil and food prices, because of climate change (the cost of hurricanes come back to the insurance market, and UK plc is heavily into insurance) because of Peak Oil, and because of Cilmate change.

So this is unlikely to be a little 2-year blip.

Luckily we have the Green New Deal to offer as a remedy for the desperate situation of unemployment, poverty and financial paralysis that is likely to ensue.

The Green Wage Subsidy should form a part of this Green Keynesianism.

Local parties can form Time Bank (LETS) groups.

So the Green Party is well placed to respond politically to this crisis, turning the danger to a opportunity.


*(there are hyperlinks on the wiki)

Financial crisis: Minsky was right...

The Guardian Leader quotes Minsky as saying that instability is not an aberration, but lies at the core of the financial system. Amen to that. The system is a huge balloon, filled with expired air from the lungs of people who have taken out loans and are slaving away to repay. All very well while they are paying back their loans. If they cannot pay back, the bubble pops, loans become scarce, so businesses cannot finance their growth, so jobs are lost, so more people cannot pay off their loans, and more lenders come running to Government begging for handouts.

Free market capitalism is staring karma in the face.

Ironic that the neo-cons should be having to nationalise the financial institutions who have convinced everyone that it is they alone, and not an agency of the state, that should have the prerogative of pumping up the money supply.

The monopoly that the private corporations have on the creation of money is the elephant in the financial room. It is a fact that conventional economists and accountants love to obfuscate, but it is an elephantine fact, as proved by the following syllogism:
1 The world money supply has (until last year) been growing with a doubling time of about 10 years.
2 Therefore some agency is making new money.
3 Governments create about 3% of new money, by issuing notes and coins.
4 Therefore the vast majority of new money is created by private corporations.
5 They do this by creating loans at compound interest.
6 This explains why there is so much debt in the world's financial system.
7 It also explains why there is economic divergence - the rich get richer and the poor get poorer.
[More on this]

The world desperately needs to change; the priority is to decarbonise the world economy, though there is much other good work that needs to be done in healing society and environment.
It is physically possible to do this.

In the end, what is physically possible must be made financially possible. Green Keynesianism through the Green New Deal, offers the only way out for us.

Please visit and participate in the Green Monetary Reform wiki.

A day of Deer and Wikis

The day began with a deer in the garden, munching our apples. That's OK, so long as he stays away from the flowers and growing tips of hazel. Later he had a bit of a doze on the lawn. Pics will follow in due course.

Rest of day devoted to making a wiki on money creation here. I already have 2 other wiklis, on the Severn Barrage, and one on Israel and Palestine.

The idea is that wiki is a better debating medium than email lists because it can branch out in different areas where details are debated, then carried back to the core argument. Only thing is, it doesn't work yet because nobody comes and looks at them, because it's new technology. Still, emails were new once, and now look at us...

Lehman brothers - an elegy

So.

Farewell then
Lehman brothers.
Once top cock
on the financial ordure heap
Now part of the compost.

Keith's mum recalls that
in 2003 you were fined $80 million in a scam involving inappropriate distinction links between your research analysts and your investment bank division.

I find it easier to view you as just another victim of the sub-prime mortgage scam,
for which read greedy banksters who thought they had found a way to turn lend into gold.

No doubt your directors will walk away with heavy burdens of gelt, but not guilt.

People are beginning to speak of closing the financial regulatory door now that the horse has bolted.

A brave few are beginning to speak again of de-privatising the money supply, but their voice is smothered in a cacophony of disbelief and incomprehension.

Company Law Reform Bill and Simultaneous Policy

Today's letter to MP.
Feel free to copy and paste.

Dear John

As you know, the Company Law Reform Bill is going through the House at the moment, and the trade justice movement is pressing for reforms designed to balance the statutory rights of corporations with some equally binding responsibilities. They are calling for amendments to the Bill so that companies:
1. must be made accountable not just to shareholders but also to stakeholders
- that is, all those persons that are affected by their operations.
2. must report on, and be legally accountable for, the environmental and social impacts of their operations.
3. are liable to be sued in the UK by people that they have harmed by their operations in a foreign country.

However, the Government is bound to turn these amendments down on the ground that if the UK brought those rules in, multinational corporations (and probably many home grown ones) would simply threaten to take their business elsewhere. These reforms need to be implemented on an international basis, and to do this the Government should employ Simultaneous Policy - the tactic of laying down a pledge to act when a set number of other governments have also laid down a similar pledge (I know that you know that, but the Minister may not).

So I would be very grateful if you would ask Margaret Hodge the Industry Minister why she will not pledge to apply the above reforms when a majority of other comparable trading nations (the size of the majority being up to her) have also made the same pledge.