Tuesday, 13 December 2011

Banks are lawless dictators? Whose side are the police on?

First, hat tip to Barry Ritholtz for the articles linked here. I read two of the articles, written on opposite sides of the planet, one after another, and suddenly the dangers confronting us in political instability were much clearer.

Back in June I wrote:

It used to be that the role of the state in financial market regulation was to ensure efficient market operations, promote transparency of prices and liquidity, protect consumers from abusive practices, and to resolve failed companies according to principles of equitable distribution of assets among like classes of creditors. If the role of the state now is to shield HFT, dark pool and OTC markets from transparency, provide liquidity where the market fails, oversee the orderly fleecing of consumers, and to ensure that some creditors of failing firms always win while others always lose, then we no longer have a market economy. And as virtually all these regulatory policies have evolved in the absence of public debate and legislative scrutiny, we also no longer have democratic governance of markets.

The deficit that worries me most in terms of the future of our civilisation is the legal accountability deficit - or anomie as I use it here. This deficit is huge and still growing rapidly as decisions are taken behind closed doors to shield lawless bankers from taxes or criminal sanctions and dedicate more and more public funds and/or monetary expansion to the same lawless bankers with too little public accounting, scrutiny or recourse.

This morning a commentary by Robert Fisk crystalised this concern as a political crisis in the offing: Bankers are the dictators of the West.

Let's kick off with the "Arab Spring" – in itself a grotesque verbal distortion of the great Arab/Muslim awakening which is shaking the Middle East – and the trashy parallels with the social protests in Western capitals. We've been deluged with reports of how the poor or the disadvantaged in the West have "taken a leaf" out of the "Arab spring" book, how demonstrators in America, Canada, Britain, Spain and Greece have been "inspired" by the huge demonstrations that brought down the regimes in Egypt, Tunisia and – up to a point – Libya. But this is nonsense.

The real comparison, needless to say, has been dodged by Western reporters, so keen to extol the anti-dictator rebellions of the Arabs, so anxious to ignore protests against "democratic" Western governments, so desperate to disparage these demonstrations, to suggest that they are merely picking up on the latest fad in the Arab world. The truth is somewhat different. What drove the Arabs in their tens of thousands and then their millions on to the streets of Middle East capitals was a demand for dignity and a refusal to accept that the local family-ruled dictators actually owned their countries. The Mubaraks and the Ben Alis and the Gaddafis and the kings and emirs of the Gulf (and Jordan) and the Assads all believed that they had property rights to their entire nations. Egypt belonged to Mubarak Inc, Tunisia to Ben Ali Inc (and the Traboulsi family), Libya to Gaddafi Inc. And so on. The Arab martyrs against dictatorship died to prove that their countries belonged to their own people.

And that is the true parallel in the West. The protest movements are indeed against Big Business – a perfectly justified cause – and against "governments". What they have really divined, however, albeit a bit late in the day, is that they have for decades bought into a fraudulent democracy: they dutifully vote for political parties – which then hand their democratic mandate and people's power to the banks and the derivative traders and the rating agencies, all three backed up by the slovenly and dishonest coterie of "experts" from America's top universities and "think tanks", who maintain the fiction that this is a crisis of globalisation rather than a massive financial con trick foisted on the voters.

The banks and the rating agencies have become the dictators of the West.

The banks as dictators makes sense to me. In thinking about my dissatisfaction with financial regulation for much of the past decade, I see that a great deal of it is attributable to who the regulators see as their polity. Their idea of consultation on regulations is to ask the bankers, traders and rating agencies whether they approve. The idea of making public policy in the public interest if the bankers disapprove is unimaginable to them. And so the banks get the regulations they prefer - or at least did so until the crisis.

And my queasiness about David Cameron's behaviour in Brussels on Friday stems from the same concern. He threw his toys out of the pram and turned his back on the EU because they wouldn't guarantee to preserve the City from further taxation, regulation and scrutiny. It's very clear that the polity he was serving was not the United Kingdom's 62,300,000 people - but the one per cent that make their living in the City of London.

Immediately after reading the Fisk piece, I read the moving statement of Patrick Meighan, My Occupy LA Arrest.

My name is Patrick Meighan, and I’m a husband, a father, a writer on the Fox animated sitcom “Family Guy”, and a member of the Unitarian Universalist Community Church of Santa Monica.

I was arrested at about 1 a.m. Wednesday morning with 291 other people at Occupy LA. I was sitting in City Hall Park with a pillow, a blanket, and a copy of Thich Nhat Hanh’s “Being Peace” when 1,400 heavily-armed LAPD officers in paramilitary SWAT gear streamed in. I was in a group of about 50 peaceful protestors who sat Indian-style, arms interlocked, around a tent (the symbolic image of the Occupy movement). The LAPD officers encircled us, weapons drawn, while we chanted “We Are Peaceful” and “We Are Nonviolent” and “Join Us.”

As we sat there, encircled, a separate team of LAPD officers used knives to slice open every personal tent in the park. They forcibly removed anyone sleeping inside, and then yanked out and destroyed any personal property inside those tents, scattering the contents across the park. They then did the same with the communal property of the Occupy LA movement. For example, I watched as the LAPD destroyed a pop-up canopy tent that, until that moment, had been serving as Occupy LA’s First Aid and Wellness tent, in which volunteer health professionals gave free medical care to absolutely anyone who requested it. As it happens, my family had personally contributed that exact canopy tent to Occupy LA, at a cost of several hundred of my family’s dollars. As I watched, the LAPD sliced that canopy tent to shreds, broke the telescoping poles into pieces and scattered the detritus across the park. Note that these were the objects described in subsequent mainstream press reports as “30 tons of garbage” that was “abandoned” by Occupy LA: personal property forcibly stolen from us, destroyed in front of our eyes and then left for maintenance workers to dispose of while we were sent to prison.

When the LAPD finally began arresting those of us interlocked around the symbolic tent, we were all ordered by the LAPD to unlink from each other (in order to facilitate the arrests). Each seated, nonviolent protester beside me who refused to cooperate by unlinking his arms had the following done to him: an LAPD officer would forcibly extend the protestor’s legs, grab his left foot, twist it all the way around and then stomp his boot on the insole, pinning the protestor’s left foot to the pavement, twisted backwards. Then the LAPD officer would grab the protestor’s right foot and twist it all the way the other direction until the non-violent protestor, in incredible agony, would shriek in pain and unlink from his neighbor.

It was horrible to watch, and apparently designed to terrorize the rest of us. At least I was sufficiently terrorized. I unlinked my arms voluntarily and informed the LAPD officers that I would go peacefully and cooperatively. I stood as instructed, and then I had my arms wrenched behind my back, and an officer hyperextended my wrists into my inner arms. It was super violent, it hurt really really bad, and he was doing it on purpose. When I involuntarily recoiled from the pain, the LAPD officer threw me face-first to the pavement. He had my hands behind my back, so I landed right on my face. The officer dropped with his knee on my back and ground my face into the pavement. It really, really hurt and my face started bleeding and I was very scared. I begged for mercy and I promised that I was honestly not resisting and would not resist.

My hands were then zipcuffed very tightly behind my back, where they turned blue. I am now suffering nerve damage in my right thumb and palm.

I was put on a paddywagon with other nonviolent protestors and taken to a parking garage in Parker Center. They forced us to kneel (and sit--SEE UPDATE) on the hard pavement of that parking garage for seven straight hours with our hands still tightly zipcuffed behind our backs. Some began to pass out. One man rolled to the ground and vomited for a long, long time before falling unconscious. The LAPD officers watched and did nothing.

This account turned my stomach, as it demonstrates all too clearly that the sympathies of the state are with lawbreaking bankers and not the victimised masses bailing them out.

So that’s what happened to the 292 women and men were arrested last Wednesday. Now let’s talk about a man who was not arrested last Wednesday. He is former Citigroup CEO Charles Prince. Under Charles Prince, Citigroup was guilty of massive, coordinated securities fraud.

Citigroup spent years intentionally buying up every bad mortgage loan it could find, creating bad securities out of those bad loans and then selling shares in those bad securities to duped investors. And then they sometimes secretly bet *against* their *own* bad securities to make even more money. For one such bad Citigroup security, Citigroup executives were internally calling it, quote, “a collection of dogshit”. To investors, however, they called it, quote, “an attractive investment rigorously selected by an independent investment adviser”.

This is fraud, and it’s a felony, and the Charles Princes of the world spent several years doing it again and again: knowingly writing bad mortgages, and then packaging them into fraudulent securities which they then sold to suckers and then repeating the process. This is a big part of why your property values went up so fast. But then the bubble burst, and that’s why our economy is now shattered for a generation, and it’s also why your home is now underwater. Or at least mine is.

Anyway, if your retirement fund lost a decade’s-worth of gains overnight, this is why.

If your son’s middle school has added furlough days because the school district can’t afford to keep its doors open for a full school year, this is why.

If your daughter has come out of college with a degree only to discover that there are no jobs for her, this is why.

But back to Charles Prince. For his four years of in charge of massive, repeated fraud at Citigroup, he received fifty-three million dollars in salary and also received another ninety-four million dollars in stock holdings. What Charles Prince has *not* received is a pair of zipcuffs. The nerves in his thumb are fine. No cop has thrown Charles Prince into the pavement, face-first. Each and every peaceful, nonviolent Occupy LA protester arrested last week has has spent more time sleeping on a jail floor than every single Charles Prince on Wall Street, combined.

A deflationary collapse will lead to political instability. It always does, because deflation destroys the value of paper assets which are mostly held by the most wealthy - the 1 per cent. And when deflation destroys their assets, it destroys their power and creates a vacuum. We need to be very clear in such a case that the enemy of the people is not the state, because if the state uses its police powers to protect the guilty and punish the innocent, then popular resistance and revolt become all too probable.

In Europe, the politicians know this. Even the police know this. No matter what I think of any British government, the conduct of the LA Police would be inconceivable here. The police killing just one career criminal this summer sparked nationwide riots. Brutalising non-violent protestors would have all of us on the streets.

There are values which are independent of financial assets. Those of us concerned to retain those values as a legacy for our children need to be vigilant as the bankers are only concerned with the values they can cash short term.

Thomas Jefferson wrote, "When the people fear their government, there is tyranny; when the government fears the people, there is liberty."

Fisk and Meighan remind us that the people are sovereign. The protests are because our sovereignty is undermined when it is disrespected by bankers buying lawlessness or by the police or financial regulators using state powers against the public interest. We have a right as a free people to self-governance under the rule of law. We as a free people have a right to regulate financial services to ensure that it serves a socially constructive function in the economy. Applying the rule of law to bankers reinforces the principles of justice essential to capitalism and the preservation of private property. The banks are not sovereign, and do not have a right to laws, regulators and police that protect them and them alone. There's some work to do here, of course, but having the issue crystallised helps a lot.

33 comments:

dearieme said...

You were persuading me until you quoted Jefferson. He was the Goebbels of the Founding Fathers: a slick, mendacious advertising man with a hobby of underage slave-shagging. Couldn't you find a more impressive quotee? Lord Acton, for example, is usually pretty good value.

London Banker said...

@ dearieme
Jefferson did more to advance rational government than almost anyone else who has ever attempted the task. I choose to admire his contribution to the theory of limited government and sovereignty of the people, both principles of great current relevance worldwide.

His personal conduct may be a blemish on his character, but was not extreme by standards of the day. In the words of L.P. Hartley, "The past is a foreign country: they do things differently there."

dearieme said...

One key reason that the US Constitution is so impressive is that it was put together while Jefferson was away in Paris with "Black Sal". Lord knows what twaddle it might have been if he'd still been in North America.

Crinkly & Ragged Arsed Philosophers said...

Only just found your blog, mainly due to browsing around to see if I could get any insight in the enemy camp's mindset and -if any - their rational?

I'm aware since the late 70s when Thatcher climbed into bed with Reagan, democracy in the UK has been founded on mutual contempt -contempt by the public of the politicians and contempt by the politicians on the people they supposedly are obliged to serve - surely a fairly damning indictment of any democratic system and, unless charted by some grand design, a shoogly peg to hang any administration on?

I suppose the question I'm asking is; were our politicians dumb jobsworths or conniving carpet baggers?

And what about the big four auditors; were they dupes or instigators?

Assuming there were instances when the same firm of accountants both audited and charged the banks for advice on tax avoidance schemes doesn't this create a sort of self fulfilling provenance scheme for evasion?

Richard said...

LB,

You have just put out one of the finest descriptions of Wall Street's Opacity Protection Team that I have seen when you described how regulation is created.

I had this very experience with the Committee of European Bank Supervisors. They asked for comment on Capital Requirement Directive Article 122a. My response was the only non-sell side response (this includes their lobbyists).

For those who do not know what Article 122a is it is a requirement that financial institutions know what they own when it comes to structured finance securities.

By the time the Opacity Protection Team was done with the regulators, the regulators were agreeing that the opaque toxic subprime securities did in fact offer sufficient disclosure to know what you own.

If the EU policymakers thought this was true, they never would have passed Article 122a to begin with.

You are welcome to read more about the Opacity Protection Team on my blog (www.tyillc.blogspot.com).

Great post.

Charles Butler said...

LB,

It's pretty obvious that what is taking place is a slow motion coup d'etat at the behest of money - particularly in several Anglo-Saxon countries. The Toronto G20 was an incredible display of brute police force in a city that has zero tradition of that sort of thing.

Great piece. How are you going to clean off the keyboard now that you've bled all over it?

Ian Fraser said...

I am surprised that you did not mention the FSA's £10m report into the failure RBS. As far as I am aware, RBS was doing exactly what Citi was doing (minus the shorting - they weren't quite thatclever) yet the FSA has been unable to find any evidence of wrongdoing! The section of the repackaging of RMBS by RBS Greenwich Capital is noteworthy for what it leaves out. You might also be interested in reading some pieces along similar lines, written by me and others. Bill Black on the "tyranny of the bankers" - http://bit.ly/b2Snwn . Me on Occupy Wall Street - http://bit.ly/tCxCZY . John Fullerton on Occupy Wall Street -http://bit.ly/twA26d Me on "Democracy for sale" http://bit.ly/pfrJvy

Blissex said...

«knowingly writing bad mortgages, and then packaging them into fraudulent securities which they then sold to suckers and then repeating the process. This is a big part of why your property values went up so fast. But then the bubble burst, and that’s why our economy is now shattered for a generation, and it’s also why your home is now underwater. Or at least mine is.
Anyway, if your retirement fund lost a decade’s-worth of gains overnight, this is why.
»

But here you point the finger at the big problem that since you seem to be an idealist you seem unable to see: those frauds were massively popular because the banksters and their political allies were clever enough to turn the vast majority of voters into petty rentiers, both in the USA and in the UK and in other bubble-mad economies like Ireland and Spain.

«Fisk and Meighan remind us that the people are sovereign. The protests are because our sovereignty is undermined when it is disrespected by bankers buying lawlessness or by the police or financial regulators using state powers against the public interest. We have a right as a free people to self-governance under the rule of law. We as a free people have a right to regulate financial services to ensure that it serves a socially constructive function in the economy.»

Indeed the people (or more precisely voters) are sovereign, and they have massively re-elected all the representative that have enacted the PATRIOT and TARP acts, and everything else that idealists like you object to.

The Occupy Wall Street protesters are being handled with the ferocity that voters demand against those who in the perception of most voters threaten their house and stock prices. Charles Prince is being admiringly rewarded for being one of the heroes who drove up house and stock prices as much as possible, and would do it again if only had a chance.

Your initial argument is that Wall Street and their regulators are fully corrupt, that's because their regulators are Congress and Congress read their mailbags and polls very closely, and are fanatically attentive to the wishes of their donors, and these are by and large voters vested in property on which they want endless bubble driven capital gains.

I'll add some of my usual quotes in a further comment.

Blissex said...

Some of my usual quotes, the first two from Norquist and Gingrich:

http://www.prospect.org/web/page.ww?section=root&name=ViewWeb&articleId=11699
«The 1930s rhetoric was bash business — only a handful of bankers thought that meant them. Now if you say we’re going to smash the big corporations, 60-plus percent of voters say “That’s my retirement you’re messing with. I don’t appreciate that”. And the Democrats have spent 50 years explaining that Republicans will pollute the earth and kill baby seals to get market caps higher. And in 2002, voters said, “We’re sorry about the seals and everything but we really got to get the stock market up.»

http://classwebs.SPEA.Indiana.edu/bakerr/v600/a_new_look_at_environmental_poli.htm
«For most Americans speed limit is a benchmark of opportunity. This is not a light insight.

If you have a society where almost every middle class person routinely fudges the law, that’s telling us something. We have laws that matter-murder, rape, and we have laws that don’t matter. Speed limits are an example. Why would you think that a regulatory, process-oriented bureaucratic model would work?

The first thing that every good American says each morning is “What’s the angle?” “How can I get around it?” “What does my lawyer think?” “There must be a loophole!”

Then he proceeds to work the angle, and the bureaucracy spends its time chasing that and writing new regs to stop him.

America is the most incentive-driven society on the planet.»

Blissex said...

From J. K. Galbraith, "The Great Crash 1929".

The first one is from a description of what happened in 1955 when Galbraith was called to testify on his impression of the state of the economy before a random congressional committee, and since he was not optimistic, his testimony caused a minor dip in share prices:

page 17: «A few wanted to know if I was likely to say anything hat would affect the market in the near future. I promised them silence. The rest merely wished to denounce me for destroying their dream.

The telephone calls were supplemented, beginning the morning after the testimony, by a mountain of mail. All was unfavourable. Some was denunciatory; more were belligerent; much was prayerful.

The belligerent threatened various forms of physical violence. My wife professed particular concern over five communications from a man in Florida announcing that he was on his way north to kill me. Her alarm subsided when I pointed out (having thoughtfully checked the point myself) that all were postmarked Palm Beach.

The prayerful all said they were beseeching their God to have me meet with a bad accident -- some were asking that I be deprived of life, some of limb, and the minimum request was that I lose all ability to open my mouth.»

Further on popular attitudes to the Great Bubble of 1929:

page 28: «Since 1929 we have enacted numerous laws designed to make securities speculation more honest and, it is hoped, more readily restrained. None of these is a perfect safeguard. The signal feature of the mass escape from reality that occurred in 1929 and before -- and which has characterized every previous speculative outburst from the South Sea Bubble to the Florida land boom -- was that it carried Authority with it. Governments were either bemused as the speculators or they deemed it unwise to be sane at a time when sanity exposed one to ridicule, condemnation for spoiling the game, or the threat of severe political retribution.»

page 32: «One thing in the twenties should have been visible even to Coolidge. It concerned the American people of whose character he had spoken so well. Along with the sterling qualities he praised, there also displaying an inordinate desire to get rich quickly with a minimum of physical effort.»

page 35: «The Florida boom was the first indication of the mood of the twenties and the conviction that God has intended the American middle class to be rich.

But that this mood survived the Florida collapse is still more remarkable. It was widely understood that things had gone to pieces in Florida. While the number of speculators was almost certainly small compared with the subsequent speculation in the stock market, nearly every community contained a man who was known to have taken "quite a beating" in Florida. For a century after the collapse of the South Sea Bubble, Englishmen regarded the most reputable joint stock companies with some suspicion.

Even as the Florida boom collapsed, the faith of Americans in quick, effortless enrichment in the stock market was becoming every day more evident.»

page 68: «For now, free at last from all threat of government reaction or retribution, the market sailed off into the wild blue yonder. Especially after 1 June all hesitation disappeared.

Never before or since have so many become so wondrously, so effortlessly, and so quickly rich.

Perhaps Messrs Hoover and Mellon and the Federal Reserve were right in keeping their hands off. Perhaps it was worth being poor for a long time to be so rich for just a little while.»

and I'll stop here, but there are many others (e.g. on regulatory capture).

Jesse said...

"A deflationary collapse will lead to political instability. It always does, because deflation destroys the value of paper assets which are mostly held by the most wealthy - the 1 per cent. And when deflation destroys their assets, it destroys their power and creates a vacuum."

I am struggling a little with this one. I am under the general impression that deflation is generally more painful for those on fixed incomes and the unemployed, with rising prices, but not particularly to those holding paper which increases in value. But I am thinking in terms of monetary deflation and perhaps misconstrue what you are saying.

In the 1930's for example, the poor and middle class suffered greatly but the wealthy were largely unaffected, and were actually able to pick up productive assets on the cheap and enhance their income.

Thank you for your blog.

London Banker said...

@ Crinkly
I believe most politicians bought into the idea that what was good for Wall Street was good for the economy. They ignored that jobs were being destroyed as long as profits gained. They ignored increasing deficits as long as profits gained. They ignored stagnant wages as long as profits gained. That Wall Street was hollowing out OECD economies was hidden by the maturity transformation that allowed profits to be booked today while unemployment benefits, pension underperformance and fiscal deficits would be problems of tomorrow.

Our problem is that tomorrow is here now, and the same bankers and politicians are still trying to impose more debt to be funded by future workers, pensioners and taxpayers.

@ Richard
I like the idea of an Opacity Protection Team. Regulation in general and complex regulation in particular always benefits incumbents. The more complex the regulations, the greater benefit to bigger incumbents.

@ Charles
I'm not bleeding yet, but then I've not been arrested yet.

@ Ian
I haven't had leisure to absorb the RBS report yet. I agree it merits a closer look.

@ Blissex
There is a lot of truth in what you say about popular support for the system, no matter how unfair. That is why I see political instability following deflation. Once the crash has wiped out the house values, pension assets and job prospects of the middle class, they will be more questioning of their support for the powers that be.

@ Jesse
I think maybe you are confusing inflation and deflation? Inflation arises from an increase in money supply or credit and/or velocity. Inflation raises prices so wages and fixed incomes do not buy as much, while income producing financial and capital assets increase in value (except fixed rate bonds).

Deflation arises from a contraction in money supply or credit and/or a decrease in monetary velocity. Debt gets destroyed as creditors refuse to refinance or debtors default. Deflation driven by tighter credit brings asset prices down, but also may reduce the costs of things consumers buy as well. House prices and rents come down. Shop prices come down. Workers and those on fixed incomes can buy more with their incomes.

Marriner Eccles wrote that the only security for someone in deflation was income from wages, and that's why he strongly supported job creation by the government at the time.

Many wealthy people lost everything in the 1930s, most of them buying the market on the way down, thinking every fall was a bottom. There certainly were opportunities for those who had cash or credit, but increasingly fewer people had cash or credit as the Depression lengthened.

Raimo said...

I am from Finland. I've read many historical events from old sources only, never heard these things from school or lectures of university:
http://syys.weebly.com/

In Lohja and Espoo near Helsinki, the Swedes fenced off the school building with barbed wire, in order to ban children the access to a school established with the private funds of the Finns.


Censorship in the mainstream media makes Sweden, Finland and Norway dictatorships, ruled by the political and economic elite.

Corrupt countries of Scandinavia:
In Finland, Sweden and Norway the political and economic elite controls the media. No one can criticize the elite in the mainstream media. If a state or municipal employee criticizes leading politicians, will he or she lose his or her job.

In Finland, Norway and Sweden nobody can have a public post without being a member of a certain political party. In Finland all high-ranking officials, who earn 5000 euros a month or more, are members of political parties.

Here is Norwegian tv anchors:
http://www.thoughts.com/aabee/norsu

Lifeafterdebt said...

Great post. I too have been blogging about the financial crisis from my perspective as a retired financial services worker who has lost my home, my livelihood and my financial future due to the actions of greed driven banksters. See link below.
http://lifeafterdebts.blogspot.com/2011/11/rot-and-romans.html

lifeafterdebt said...
This comment has been removed by the author.
Anonymous said...

Always pleased to see a new posting of yours. Always learn; always something to think about. Like an oasis in a sea of insanity. A reminder that oases are forever....Thank you.

Alan von Altendorf said...

I, too, thank you for reactivating your blog, which I followed years ago (h/t to Jesse for linking to today's London Banker post).

Re Jefferson, I concur completely that he made pivotal contributions to American constitutional theory (separation of church and state, opposition to Hamilton's doctrine of 'implied powers') and practical guidance of the young Republic.

Resentment of British readers to colonial traitors like Jefferson is an old quarrel. Some wounds never heal.

tunc k. said...

kill the banks, buy gold!

tunc k. said...

kill the banks, buy gold!

Knute Rife said...

1. I'm no, big Jefferson fan, but dearieme, that's bollocks. Jefferson and his allies played a major role in the ratification debates, hence a little thing called The Bill of Rights.

2. I agree with the bulk of this, LB, but I must take issue with the effect of deflation on the Ueberklass. A deflationary collapse, of itself, has never dislodged a ruling class. It's always taken more. Roman Emperor? Barbarians streaming through the gates. Feudalism? Black Plague. French Monarchy? War mismanagement and famine. Russian Monarchy? War mismanagement and famine (Hmm.). Yes, a few financial barons lost their shirts in 1929, but the vast bulk steamed right through.

3. Yes, the PM made rather an arse of himself, which we really didn't need, given how badly Merkel is floundering. He violated a cardinal rule of diplomacy the UK has observed meticulously for about forever: No Surprises. The only question now is whether he's in the shower singing "All by Myself" or "One is the Loneliest Number."

4. Marriner Eccles is one of those ironies of history. If you think you can find anyone in authority in the LDS Church taking those positions today (instead of an absolutely polar position), you obviously didn't hear the announcement warning against taking the brown acid.

5. Anyone who is surprised by the behavior of the cops hasn't been paying attention.

Bukko Canukko said...

Mr. London Banker, sir, all due respect to your erudite writing, but you should also have some respect for Monsieur Jesse there, who is an astute economics blogger in his own right. Jesse don't need no schoolin' 'bout inflation!

Bukko Canukko said...

On to what I really wanted to say before leaping to the defence of one of my favourite econobloggers. The reason that U.S. authorities can crack down so viciously on anti-bankster protesters there, whereas in Europe the authorities have better sense, is due to the peculiar nature of American society.

The U.S. police have by and large turned into paramilitary thugs who regard "civilians" as the enemy. That's partly due to the rampant criminality in gun-toting American society. Anyone at a speeding ticket stop might turn out to be an armed attempted murderer, so everyone is treated as such. Protesters would not be dealt with with such gleeful brutality in jurisdictions everywhere unless the "we're just following orders" men in uniform really ENJOYED that sort of thing. It will get worse as more U.S. military men and women are demobilized from their human-killing missions overseas and return to enforcer jobs where they can employ their torture techniques on their fellow citizens.

There's also the servile and un-civic-minded nature of the American populace. On one hand, Americans are fractious scammers as your loquacious commenter Blissex points out. But they don't have enough conception of what should be the role of the citizenry within the state, as Europeans seem to be clearer about. Americans are just fcuking stupid, and will obey the propaganda put out by their leaders who control the media.

Brutal cops, herdable sheople. They'll stand for a lot more pushing around before they stampede, and by the time that happens, they'll be so weak or close to the slaughterhouse that it will be no trouble for the overseers to cull them. Peak Oil, Peak Credit, Peak EVERYTHING means a lot fewer average folks will be needed to support the lifestyles of the rich and avaricious.

I come by my opinionation honestly, being an American citizen who escaped the crumbling empire. During my first career, I spent a decade as a newspaper reporter, much of it on the cops 'n' crime beat, where I saw first-hand the evil of "law" men. I could write a book about the dirty cops I covered, but I've already done that, 20-paragraph story by 500-word dispatch.

America -- it will raise SUCH a cloud of dust when it falls. Too bad for everyone else that that dust will be radioactive...

fried said...

The police in NYC, at the behest of Mayor Bloomberg and Police Commissioner Kelly are clearly on the side of the bankers, which they have made abundantly clear in their speeches. The NYPD is highly militarized, with its' own intelligence force, including overseas agents. Bloomberg has repeatedly declared that the city must protect Wall Street as it is the largest source of the city's tax revenues. He conveniently ignores the huge tax giveaways to banking institutions, like Goldman and Morgan, and never mentions that the capital gains tax on bankers and hedge funds stands at 15%, unlike the cleaning staff, who pay much higher tax rates on their wage income. The brutality of the NYPD is legendary, and the zest with which the white-shirted police management class attacked the OWS was notable.
What is the first amendment worth compared to the overtime the city was paying cops to protect the bankers from the peaceful Americans assembling to air their grievances.
It worth noting as well that the governor of NY, Cuomo, was attorney general and never found a single case of Wall Street corruption to prosecute. Not one. Funny that.

scandia said...

@London Banker, In one of your postings you made some comments about the quality of collateral, that it matters. I can't recall which post it was. Can you kindly direct me to it.
Thank-you for this blog.

Anonymous said...

It's curious that "the people" and the "state" must fear one or the other to have liberty or serfdom.
Being that the state comes from the people, then something else must be inducing fear. Since people are involved, it must be human nature that is to be feared.
Or accepted and dealt with.
10 commandments or bust :)

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PeterJB said...

Greetings @LB,

I am pleased to see your grasp and trend toward reality.(Grip is old Scot term)

However, what is happening is natural, for humanity must learn the lessons du jour, in order to evolve.

As I have posted in my "Delusional Economics" writing, there are numerous problems but the core Cause of global socio-economic collapse is in the consensual blind embrace of "usury" as a monetary, fiscal, and financial "system" as our common socio-economic operating and functional management system while not even putting to discovery - or even questioning just what "money" is! We (you) just don't know!

And, neither does any Economist! As you are aware, I state clearly that the economist profession (small "p") is an arrogantly imposed fraud on the public). Nobody in "leadership" cares what "economists" come up with excepting P+i and Summers, Rubin and Co. and the likes of other crackheads aka Krugman and Roubini, etc.

IOW,: The necessary common global ideographic language was to be "Economic Theory" to found the socio-economic way onwards, but it has been inconveniently (thankfully) exposed as the fraud that it is - for all to see and thus leaving the global Emperors totally naked - all of them.

Back to square one.

IOW the system of Usury has corrupted - no surprise - as few mortals can resist such temptations, and do not want to end the trip. No surprise here either so hence the etymological definition of "revolution".

Question: You have US$123 billion in personal assets - what do you do? Do you even know if you are dead or alive?

Alchemy: Turn lead into Gold is the common understanding? Think about it. Utter nonsense.

The totality of humans holistically decide "value". Question: If today's rich and influential cull the global population to 1Billion from 7Billion persons, what happens to "values"?

Define "money" intellectually and precisely, and you will arrive at an entirely different perspective of what is happening today and where we will be tomorrow, than that you hold today.

Clue: A perspective is not what you seek as such is quantitative; you seek qualitative or thought in volume.

Another Clue: there is no forward motion without "resistance" and no force results in an equal opposite force.

I am confident that you may make it yet @LB

Fungus FitzJuggler III said...

Traditionally, revolutions are rare. But under certain conditions, they are inevitable.

Destruction of the middle classes is but one component?

Jefferson was a prince among land owners. American slaves lived far longer than those left in Africa or elsewhere. Once we cease to be property, the property classes show us the door. Human nature?