SPIV ECONOMICS
These are trying times for Labour, as their economic policy unravels along with the banks. Gordon Brown has been very adept at trying to avoid responsibility. Even so, the appointment of Sir David Walker to investigate the bank bonuses and report at the end of this year has demonstrated Labour’s determination to cover-up.
Sir David, who was nicknamed Mr Whitewash following his involvement in two previous enquiries, has been adept at pocketing bonuses himself as chairman of Morgan Stanley International. Vince Cable MP said:
The Treasury is citing human rights as a reason for not preventing the bank bonuses. A Treasury source said:
This comes at a time when unemployment is nudging 2million and is expected to reach 3million by 2010, and when the Bank of England is forecasting that the economy will shrink by as much as 6%. This fall is at a time when the value of sterling has fallen sharply, which should help output as exports are cheaper and imported goods more expensive.
The evidence to the Treasury select committee by the bankers Lord Stevenson, Andy Hornby, Sir Fred Goodwin and Sir Tom McKillop led to the exposure of the sacking of Paul Moore, because he had advised that HBOS had exposed itself to too much risk with its aggressive expansion. He had been sacked by the then chief executive of HBOS, Sir James Crosby, who subsequently was appointed as deputy chairman of the Financial Services Authority [which is now lining up substantial pay and bonus increases for its employees] which is supposed to oversee the banks. Sir James has now resigned.
It was revealed that the acting chairman of UK Financial Investments Ltd, Glen Moreno, has been involved in a tax avoidance scheme involving a bank in Liechtenstein. He too has been jettisoned as Labour belatedly tries to distance itself from their banking chums.
It is now revealed that the Lloyds chief executive, Eric Daniels, who had told the Treasury select committee that his £1million a year salary was modest, and who said he would not be taking a bonus for 2008, is in line for a pay and bonus package of up to £7million in 2009. He did not tell the Treasury select committee that HBOS, with which Lloyds is merging, is about to announce a loss of a staggering £10billion. This merger was, to quote one disgruntled Lloyds shareholder, ‘cooked up at a cocktail party’, at which Mr Brown personally brokered the merger in a discussion with Sir Victor Blank, the Lloyds Bank chairman. Sir Victor has been acting as a Downing Street ‘business ambassador. The Lloyds share price has now fallen rapidly. It has now been forecast that Lloyds will need more taxpayers’ money and may well be fully nationalized.
Labour are shovelling taxpayers’ money at a useless bunch of greedy bankers who have not only wrecked their own banks, but the entire British economy too. And they do not give a damn other than their own personal embarrassment.
In the real economy, Labour have just announced that a £7.5billion contract for new trains is to go to a consortium involving the Japanese, in preference to a British company. Presumably, this is to show that Labour are committed to globalization and not nasty protectionism. Labour’s claims as to the number of jobs either created or safeguarded have been met with derision. 30% of the value of the contract will be spent overseas and the first 70 trains will be built entirely in Japan. This can only be at the expense of British jobs.
A third of the workers employed at the Olympic site in London are immigrants. Only 63% are British and 8% are Irish. Some jobs offering salaries of up to £65,000 are being advertised abroad. Recently it was revealed that 136 illegal immigrants were working on the site.
Just before Christmas, BAE Systems warned that it was in danger of having to close its Land Systems business, which is Britain’s only remaining tank maker. This follows a decision to cancel a £16billion order for armoured vehicles. Obviously such a closure would mean that we would be dependent upon foreign tanks to equip the army, and the order cancellation is against the backdrop of casualties in Afghanistan and Iraq due to the army still having to rely on Land Rovers rather than armoured vehicles. Then there is the matter of the much promised aircraft carriers [see the English Rights Campaign item dated the 16 December 2008].
None of this is consistent with the spin that Labour is resorting to Keynesian policies to try and get the economy moving again. That would have involved tax cuts or extra public expenditure to put people into jobs and pump demand into the economy. All Labour are doing is using taxpayers’ money to bail out the current banking cartel. This is not due to a global downturn, it is due to Labour’s economic policy.
Mr Brown commented recently that the British economy was being held back by foreign banks not lending here and further reiterated his commitment to globalization:
Mr Brown went on to condemn the retreat of foreign banks to their own national markets and away from international banking:
This is hogwash. Mr Brown is trying to demonise protectionism as a means of frightening people away from reality. The reality is that export markets are always more risky for a variety of factors [eg a different culture and language, increased costs of transportation, local preference for local products, movements in exchange rate, unstable local governments, etc]. In a recession firms have to retrench to their home markets. This is a natural process.
In a recent press conference, Mr Brown let slip the truth:
This was confirmed by the chancellor, Alistair Darling, who told the House of Commons:
Mr Darling also said:
A further problem is that British banks have been relying on the international money markets for their funding. They have not been lending to the home market, nor relying on locally funded savings and deposits for their funding. 80% of the lending of major British banks, including RBS, HSBC and Barlcays, has been overseas. Only 20% of their balance sheets are made up of traditional loans to British households and firms. Some of the worst debts the banks have are these overseas mortgages and commercial lending, including the US sub-prime mortgages. The Russian oligarch, Oleg Deripaska, on whose yacht Lord Mandelson and George Osborne had their afternoon cocktails off Corfu last summer, obtained a £2.8billion loan from a consortium of banks including RBS.
The taxpayer is now having to bail out the banks for these defaulting foreign loans. But the central issue is that the British banks cannot fund the domestic market and have relied on foreign sources to fund themselves. The growth of the British economy has been dependent upon foreign funds rather than domestic savings.
One of the major acts for which Mr Brown is directly responsible is the collapse in the pension funds due to the £5billion per year tax raid he made on them when he became chancellor in 1997. This act depressed the source of funding for British banks and the British economy. This has had a cumulative effect as had the unregulated scale of bonus payments [see the English Rights Campaign item dated 16 October 2008 and 20 January 2009]. The fact is that Mr Brown is directly responsible for the financial collapse with which we are now confronted. He is directly responsible for the slump.
He has not embarked on a Keynesian economics to get us out of this slump. He is not reflating the real economy, he is simply bailing out the current banking cartel. This is spiv economics.
Sir David, who was nicknamed Mr Whitewash following his involvement in two previous enquiries, has been adept at pocketing bonuses himself as chairman of Morgan Stanley International. Vince Cable MP said:
‘Instead of dealing decisively with the problem, as President Obama, the Swiss and others have done, the Government is clearly playing for time in order to avoid doing anything to upset the bankers.’
The Treasury is citing human rights as a reason for not preventing the bank bonuses. A Treasury source said:
‘It wouldn’t stand up in the European Court of Human Rights. We can’t come along and say we’re legislating to override someone’s employment rights.’
This comes at a time when unemployment is nudging 2million and is expected to reach 3million by 2010, and when the Bank of England is forecasting that the economy will shrink by as much as 6%. This fall is at a time when the value of sterling has fallen sharply, which should help output as exports are cheaper and imported goods more expensive.
The evidence to the Treasury select committee by the bankers Lord Stevenson, Andy Hornby, Sir Fred Goodwin and Sir Tom McKillop led to the exposure of the sacking of Paul Moore, because he had advised that HBOS had exposed itself to too much risk with its aggressive expansion. He had been sacked by the then chief executive of HBOS, Sir James Crosby, who subsequently was appointed as deputy chairman of the Financial Services Authority [which is now lining up substantial pay and bonus increases for its employees] which is supposed to oversee the banks. Sir James has now resigned.
It was revealed that the acting chairman of UK Financial Investments Ltd, Glen Moreno, has been involved in a tax avoidance scheme involving a bank in Liechtenstein. He too has been jettisoned as Labour belatedly tries to distance itself from their banking chums.
It is now revealed that the Lloyds chief executive, Eric Daniels, who had told the Treasury select committee that his £1million a year salary was modest, and who said he would not be taking a bonus for 2008, is in line for a pay and bonus package of up to £7million in 2009. He did not tell the Treasury select committee that HBOS, with which Lloyds is merging, is about to announce a loss of a staggering £10billion. This merger was, to quote one disgruntled Lloyds shareholder, ‘cooked up at a cocktail party’, at which Mr Brown personally brokered the merger in a discussion with Sir Victor Blank, the Lloyds Bank chairman. Sir Victor has been acting as a Downing Street ‘business ambassador. The Lloyds share price has now fallen rapidly. It has now been forecast that Lloyds will need more taxpayers’ money and may well be fully nationalized.
Labour are shovelling taxpayers’ money at a useless bunch of greedy bankers who have not only wrecked their own banks, but the entire British economy too. And they do not give a damn other than their own personal embarrassment.
In the real economy, Labour have just announced that a £7.5billion contract for new trains is to go to a consortium involving the Japanese, in preference to a British company. Presumably, this is to show that Labour are committed to globalization and not nasty protectionism. Labour’s claims as to the number of jobs either created or safeguarded have been met with derision. 30% of the value of the contract will be spent overseas and the first 70 trains will be built entirely in Japan. This can only be at the expense of British jobs.
A third of the workers employed at the Olympic site in London are immigrants. Only 63% are British and 8% are Irish. Some jobs offering salaries of up to £65,000 are being advertised abroad. Recently it was revealed that 136 illegal immigrants were working on the site.
Just before Christmas, BAE Systems warned that it was in danger of having to close its Land Systems business, which is Britain’s only remaining tank maker. This follows a decision to cancel a £16billion order for armoured vehicles. Obviously such a closure would mean that we would be dependent upon foreign tanks to equip the army, and the order cancellation is against the backdrop of casualties in Afghanistan and Iraq due to the army still having to rely on Land Rovers rather than armoured vehicles. Then there is the matter of the much promised aircraft carriers [see the English Rights Campaign item dated the 16 December 2008].
None of this is consistent with the spin that Labour is resorting to Keynesian policies to try and get the economy moving again. That would have involved tax cuts or extra public expenditure to put people into jobs and pump demand into the economy. All Labour are doing is using taxpayers’ money to bail out the current banking cartel. This is not due to a global downturn, it is due to Labour’s economic policy.
Mr Brown commented recently that the British economy was being held back by foreign banks not lending here and further reiterated his commitment to globalization:
‘Protectionism protects nobody. This is a time not just for individual, national measures to deal with the global financial crisis. This is the time for the world to come together as one.’
Mr Brown went on to condemn the retreat of foreign banks to their own national markets and away from international banking:
‘This financial mercantilism - which is foreign banks retreating to their home base - will, if we do nothing, lead to a new form of protectionism. Indeed, a de-globalisation which would lead to a reduction in trade and cross-border business activity, which would be followed by the old trade protectionism of the past.’
This is hogwash. Mr Brown is trying to demonise protectionism as a means of frightening people away from reality. The reality is that export markets are always more risky for a variety of factors [eg a different culture and language, increased costs of transportation, local preference for local products, movements in exchange rate, unstable local governments, etc]. In a recession firms have to retrench to their home markets. This is a natural process.
In a recent press conference, Mr Brown let slip the truth:
‘A principal reason for this is the reduced availability of credit across the economy because of the retrenchment of many overseas banks back to their home markets and the withdrawal of non-banking financial institutions from funding. This is a major loss of lending capacity, happening in all economies and happening in ours. So even as UK banks might seek to meet their commitments to existing customers, overall credit availability in the economy remains inadequate to support growth and recovery. To put this into perspective, over half of new corporate loans in Britain and 40% of new mortgages over the last decade came from foreign banks and non-bank institutions.’
This was confirmed by the chancellor, Alistair Darling, who told the House of Commons:
‘Over the last ten years, lending by foreign banks and non-bank institutions accounted for over half of new corporate loans and 45% of new mortgages here.’
Mr Darling also said:
‘We must not give way to financial protectionism - which could be every bit as damaging now as it was to trade in the 1930s.’
A further problem is that British banks have been relying on the international money markets for their funding. They have not been lending to the home market, nor relying on locally funded savings and deposits for their funding. 80% of the lending of major British banks, including RBS, HSBC and Barlcays, has been overseas. Only 20% of their balance sheets are made up of traditional loans to British households and firms. Some of the worst debts the banks have are these overseas mortgages and commercial lending, including the US sub-prime mortgages. The Russian oligarch, Oleg Deripaska, on whose yacht Lord Mandelson and George Osborne had their afternoon cocktails off Corfu last summer, obtained a £2.8billion loan from a consortium of banks including RBS.
The taxpayer is now having to bail out the banks for these defaulting foreign loans. But the central issue is that the British banks cannot fund the domestic market and have relied on foreign sources to fund themselves. The growth of the British economy has been dependent upon foreign funds rather than domestic savings.
One of the major acts for which Mr Brown is directly responsible is the collapse in the pension funds due to the £5billion per year tax raid he made on them when he became chancellor in 1997. This act depressed the source of funding for British banks and the British economy. This has had a cumulative effect as had the unregulated scale of bonus payments [see the English Rights Campaign item dated 16 October 2008 and 20 January 2009]. The fact is that Mr Brown is directly responsible for the financial collapse with which we are now confronted. He is directly responsible for the slump.
He has not embarked on a Keynesian economics to get us out of this slump. He is not reflating the real economy, he is simply bailing out the current banking cartel. This is spiv economics.
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