Shane Greer attacks the politics of envy and in terms of the politics of socialism which attacks anyone who has more, I’d agree with him. If a person with drive and incentive makes some money for himself and his family by his hard work and by the salaried agreement of those who work for him, what’s the problem?
Where I can’t agree is where he defends the obscene pay increases for top employees in top companies. It’s not a new thing – even before Labour, the Independent scrutinized the white paper on top salaries:
The White Paper attacks greed in the boardroom, and says rewards must go down as well as up. But it stops short of recommending direct government action to slow the pay spiral.
And so to today:
Full and part-time directors of Britain’s FTSE 100 companies, the top firms in the country, shared pay of more than £1billion despite their companies losing almost a third of their value. And the hike in director’s pay came as many of the staff in their companies had their wages frozen or faced huge redundancy schemes in a bid to cut costs.
The ten most highly paid executives earned a combined £170million last year – an increase of £30million from the £140million earned in 2007.
Peter Sissons weighs in:
“I have been watching colleagues under huge pressure in the factory that has become the BBC newsroom. Poor kids, worn out, working gruelling shifts, paid not a lot of money but with big responsibilities, directing, producing. And then there are these panjandrums on huge numbers. If you tried to devise a way of undermining morale, you couldn’t find a better way.
This is not just a British phenomenon. Take your pick at random – I found this analysis of Canada:
Deputy health minister Ron Sapsford earns a salary of $433,611.55 plus $64,781.35 in taxable benefits through the Hamilton Health Sciences Centre. Gail Paech, an associate deputy minister of economic development and trade and a former senior health bureaucrat, was paid $291,997.20 by University Health Network last year.
The salaries are well above the maximum $220,150 recommended for deputy ministers and the range of $146,700 to $188,950 for associate and assistant deputies.
What we’re seeing is a sustained global tendency to pay highest paid officers what amounts to unjustifiable levels of money and what follows is the crux – while those very organizations are failing to deliver, something they like to put down to global factors, everyone else below is either taking pay cuts, going on furlough, losing his/her job or just plain fretting about what is going to happen.
You couldn’t write a better script for a socialist dismemberment of the free enterprise system. What we have here is either foreknowledge of what is actually going to happen with the double dip and so execs are grabbing whatever they can, while they can or else it is a cynical ploy to present free enterprise in the worst possible light to the public.
Bretton Woods 2
Bretton Woods 1 was the agreement forced on a derelict, post-war Europe and other nations, in which the U.S. played hardball and turned the dollar into the international reserve currency, whereas Keynes had wanted a genuinely international reserve – the bancor. Huge outflow of dollars from the U.S. eventually caused the system to collapse and as of now, there is an unofficial Bretton Woods 2 which sees the new focus in Asia but with European nations no longer willing to service the dollar.
This pdf from 2004 argued that Bretton Woods 2 was soon to collapse.
Gordon Brown came out with a call for an overhaul – it would not be a Bretton Woods 2 but a BW3, with five key components:
1. New international institutions which woud reduce the U.S. hegemony;
2. Vastly more global regulation of finance, who holds it and what it is tied to;
3. Recapitalization of banks through a shares system, based on new bodies set up by the CBs;
4. Fiscal/monetary policy on a coordinated gobal scale;
5. New world order of a shifted power base with Europe and China playing larger roles.
What it means is this. All things being equal, a downturn in the U.S. in 2007 should not have had any effect on Britain, it being a separate sovereign nation - Britain should have just gone along merrily on its inefficient course.
However, all things are not equal and that’s not how the world finance is structured. Bretton Woods and other agreements, along with the BIS and other bodies, have, in effect, removed sovereign wealth and put it in the hand of foreign entities and those entities, in collaboration with the world’s central banks, ensured that the meltdown would be global.
In short, there is no such thing as a nation’s economy any more – there is ony the nation in relation to the cartel of CBs and financial institutions.
Some might argue that this gives the world economy stabiity and this is what the revamped Bretton Woods argues but while it gives stability when it suits its agenda, as it will in the second half of 2010, this support can be withdrawn and instability induced when the next step towards global governance requires the acquiescence of the citizens to implement its plan unfettered.
In short again, it hands over even further control to the very institutions which induced the crisis in the first place, made a killing for their fellow cabalists, e.g. GS and JPM and illustrated the need for further global control on the greedy capitalists they were apparently unabe to rein in because their powers were so weak.
Insiders know that this scenario is plain bunkum. The CBs have had for a long time the power to induce crises when combined with the big players, both enjoying an incestuous relationship, as has been shown over and over in the artices of financial pundits.
The key, the critical issue is that you will not see the global crisis as in any way “induced”, that it was a complete accident or down to the irresponsibility of small banks and hedge fund operators, for example.
The Big One
Scrutiny by respected pundits says that the big one is still coming. It will take a global meltdown to force through these financial proposals so is one coming?
Courtesy Xxxl, this translation:
At the same time, the general context of the bankruptcy of an increasing number of states and other authorities (regions, provinces, federal states) will entail a double paradoxical event of increasing interest rates and the flight out of currencies towards gold.
In the absence of an organised alternative to a weakening US Dollar and in order to find an alternative to the loss in value of treasury bonds (in particular US ones) all central banks will have, in part, to « reconvert to gold », the old enemy of the US Federal Reserve, without being able to state the fact officially.
The bet on recovery having been, at this point, totally lost by governments and central banks (4), this Spring 2010 tipping point is thus going to represent the beginning of the huge transfer of 20,000 billion USD of « ghost assets » (5) in the direction of the social security systems of the countries which have accumulated them.
There has been much scrutiny of Bernanke which indicates that he is far from innocent in this whole matter. Take your pick of the pundits who have called him out for his actions and the same applies to the BofE. Try this youtube.
It’s not that no one has been warning people of these things but the problem is that the message is just not getting out to a wide enough public and with good reason of course – the media is owned. Hence the blogosphere’s role. Max Keiser called GS “scum”. How far wide of the mark is he?
The history of the CBs
If you have 3h 35m, then this is the vid for you. It starts at the beginning and traces the history of the CBs, predicting a crash of Great Depression proportions which, of course, we have now seen. The problem is the fiat currency, based only what the credit issuers decide it will be based on. Except in terms of the backing by the central banks, this paper money and these ledger entries are intrinsically valueless, worthless.
The Fed is neither federal nor has it any reserves. What it does have is the ability to make a ledger entry, to create money out of fresh air and to control every person with a dollar in his pocket and with a credit card.
Milton Friedman’s famous quote is still apt:
The stock of money, prices and output was decidedly more unstable after the establishment of the Reserve System than before. The most dramatic period of instability in output was, of course, the period between the two wars, which includes the severe [monetary] contractions of 1920-21, 1929-33, and 1937-38. No other 20-year period in American history contains as many as three such severe contractions.
The severity of each of the major contractions is directly attributable to acts of commission and omission by the Reserve authorities.Any system which gives so much power and so much discretion to a few men, [so] that mistakes – excusable or not – can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic – this is the key political argument against an independent central bank ….
This is what Brown is currently arguing for – that the control of the financial system be even more completely vested in even fewer and fewer hands and that a system of global governance should control it. Presumably he means in the hands of financial wizards such as himself.
Collusion, foreknowledge and actual criminality
Karl Denninger spoke on Paulson:
From that interview (specifically, at 3:20 in):
Paulson told this person (who is writing a biography, apparently) that he intended to use the TARP money to inject into the banks and not buy toxic assets a full ten days before he testified before Congress.
He then testified before Congress to exactly the opposite.
This is about as clear an allegation of perjury (which, by the way, we’ve heard before – remember Kashkari making essentially the same allegation in his Congressional testimony?) as I’ve seen.
Banks commit mass foreclosure fraud
There must be a lot of it if it is news that a judge actually bothers to check that the paperwork is correct:
He has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.
In short, they were coming to him ready to take people’s homes at the very moment they were being bailed out by the Fed.
The stimulus plans and their programmed failure [courtesy Xxxl]:
Despite impressive budgets, the two largest economic stimulus plans to date – those initiated by the governments of the United States and the People’s Republic of China – are doomed to fail or at best to slightly soften the worst consequences of the current crisis.
Beyond the very different characteristics of these two plans and economies, LEAP/E2020 anticipates that, in the next few months, their implementation will face an insurmountable obstacle in the short term, the “absorption capacity barrier”.
But the one I’ll leave you with is where the money for the bailouts actually came from.
Weep:
The vast majority of an estimated $352 billion in proceeds of organized crime, mostly from the drug trade, was funneled through the global banking system during the financial crisis of the past two years, and in some cases, the money rescued banks from collapse, says the head of the UN Office on Drugs and Crime.
Antonio Maria Costa told the UK Observer that intelligence agencies and prosecutors alerted him 18 months ago to evidence that drug money was being “absorbed into the financial system.”
“In many instances, the money from drugs was the only liquid investment capital,” Costa said. “In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor.”
The Observer reports:
Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, [Costa] said. “Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities … There were signs that some banks were rescued that way.”
Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered.
Gangs are now believed to make most of their profits from the drugs trade and are estimated to be worth £352bn, the UN says. They have traditionally kept proceeds in cash or moved it offshore to hide it from the authorities. It is understood that evidence that drug money has flowed into banks came from officials in Britain, Switzerland, Italy and the US.
What hope do we have?
Filed under: Politics & economics
http://jessescrossroadscafe.blogspot.com/2009/12/gold-hit-with-bear-raid-yesterday.html
I can’t see what these obscene salaries have to do with socialism. Surely they’d be the same under the Tories?
Why don’t commenters’ pics show any more?
I wish Bernanke & Co. would provide a clue by what the Fed. means when they say, “the forseeable future…” 6-months? 1-year? 2-years? My 85-YO Father is desperately struggling now due to the horrible interest rates being offered on secure FDIC insured CD accounts. Are you going to tell an 85-YO man he needs to risk his entire life-savings via the highly volatile bond/stock markets? I don’t think so…At least not my Father…My Father won’t even consider a fixed income annuity & advised me he’d be happy if he could at least lock in a 5-Year CD @ 4.00%, but there’s just no such FDIC insured institution offering such a rate. The best I’ve seen thus far is 3.63% @ DiscoverBank.Com, but even that’s for 10- vs. 5-Years. It would be ludicrous to lock his life savings in for that long, at such a dismal rate.
Welshcakes – there is a problem with the avatars and Wordpress here. Sorry.
Re insurance – I let this through because it was inventive and not quite spam, even if it is advertising.