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Monday 21 November 2011

The problem ...

The problem to me in the current woeful state of once Great Britain lies firmly at the feet of HM Government albeit having been the legatees of some problems from the previous administration.

The latest wizard wheeze from Divvy Macaroon is to have the taxpayer back £400 million of mortgages which he believes will help the economy and the country.  Hang on just a minute, there is a touch of déja vue about this - is this not what began the slide into economic disaster only three years or so ago with the collapse of the sub-prime mortgage market in the land of the free and home of the brave?  Surely DC cannot be that naive nor short of memory to try that one again, but then he seems to think that the UK taxpayer is a bottomless pit.  History has a habit of self-repetition but never on such a short timescale as this.

Of course there is an upside to this latest idea from the asylum, his rich friends and cronies will benefit from any profits made whilst Joe Public will be mugged again should should it fail.  What a wonderfully democratic system.

Today in the media it was widely reported that Great Britain was too reliant upon financial services, it has only taken the Tories thirty years to wake up to the fact that man cannot live by financial services alone.  It seems almost heresy that they should now denounce the City Big Bang proudly trumpeted by the great Margaret Thatcher as the greatest advance ever in the UK economy, primed by Alan Walters who was unelected by the the electorate, allowing the markets to prevail.  Bah, who needs industry and manufacturing?

Unfortunately she did not realise that making products to sell creates wealth for everyone.  Instead the idea that lending money by borrowing money from others was the great way forward.  But what did that generate, nothing but more money for those that already had a surfeit of the stuff.  Instead of having almost full employment by providing jobs for many people it just need a few button pushers to trade electronically throughout the world in an instant.

Now the UK and the world in general is reaping the harvest of this article of faith 'To those that hath it shall be given' and bugger the rest.

Jon Snow of C4 News published a very profound and hard hitting article today.  This article should be commended to all politicians, business leaders, the City money makers and those making a fast buck off the backs of the citizenry of a once great country.  No apology is made for reproducing it in full, rather it is hoped that may fall on even one of those irresponsibles who are responsible for the current, deepening crisis.

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‘Who Understands The bubble’?

Don't Tax Them, Ban Them!

Monday 21 November 2011 8:38 am by Jon Snow Presenter C4 News
 
When I was a child, a gloomy portrait hung above the mantle in the dining room. My father, whenever pressed, would tell us of the sitter – Tom Snow, a banker in the City of London – our many times great, and not so great, grandfather.

Tom made a killing out of the eighteenth century South Sea Bubble. Some time in the 1960′s my father sold the last of Tom’s ill-gotten bequests, a Georgian silver salver, to fund private schooling for your blogger.
One of Tom’s unlucky investors, lured into losing his money in the South Sea Bubble, was Jonathan Swift who damned my forebear in his “The Bank Thrown Down”. Snow himself lost nothing in this City scandal in which investors poured money into supposed assets far away in the Southern seas.

Today the “Bubble” is back. Old Tom Snow survived with his wealth through activities in the City that no one fully understood. So it is today. Derivatives, algorithmic mechanisms, credit default swaps, the instruments abound.

I meet endless city operatives who tell me of the invention of still more incomprehensive mechanisms for gambling, betting, skimming, and simply making money out of moving money in nanoseconds. Much, if not most of this activity, has been facilitated by the evolving power of computing. Much of it has been classed by the Chairman of the Financial Services Authority, Lord Adair Turner, as ‘socially useless’.
We are now at a point in our global history where sovereign national wealth, corporate capital, and even the smallest domestic investment, are in play in a market the ramifications of which almost no one fully understands. Perhaps it is worse than that. Perhaps we are in a market in which absolutely no one fully understands every mechanism in play. That would include financial regulatory authorities, the police, and us. Hence the return of the Bubble, a moment in which massive fast money seems to be winnable within the law.
But should it be? Should the world’s financial systems include massive bets on failure? At least the Bubble was built on the myth that the betting was on distant success.

One of the reasons no banker has been jailed for either the 2008 crash, or the present mire, is that what they did, and what they are still doing, is perfectly legal.

Yet it has resulted in this threatening, looming, global meltdown. We have no idea of the scale of what is out there or how it will play out.

But will not history ask why we allowed interplays of dealing, betting, trading, gambling, and the rest which enriched so few at the cost of threatening the well-being of so many?

Why is there no G20 meeting, no UN debate, no international, or national debate centred on achieving a global ban of these ‘socially useless’ activities?

At least Jonathan Swift was able to understand the criminality that produced the Bubble. How many of us today can claim the same of our own very present, infinitely larger, and disastrously toxic bubble?