Financial fuckery thread

[Cain]

Mr Cameron said it was not in Britain's interest "so I didn't sign up to it".

Cameron is not defending Britain. He is defending the financial sector that owns his party.

I understand that this must be the case. It's the same financial sector cover-your-ass politics that got us here, about which I thought the cards were sort of on the table now, but not yet entirely it seems? Aren't there any groups or organisations in Britain that would love to talk about this "little" fact in the medias far and wide? I mean basically, this sort of thing, "selling out the 99%", is what everybody should be keeping a damn close eye on, if we want to minimize the amount of them-getting-away-with-it. Is this sort of thing perhaps also stronger in Britain because of the class society?

The media narrative is that it is the fault of individuals taking huge amounts of overdraft and mortgages they can't afford which has dumped us in the mess; not the irresponsible banking practices and fraud which is really at the root of it.

There's some documentaries I've seen which break this narrative, but by and large people on the news always seem to talk about how it is 'our' fault and shift the blame to the poor. There's a lot of anger directed towards bankers, but this largely seems to be based on the fact they keep getting their bonuses when their businesses are collapsing, not because they committed criminal acts which destroyed the economy.

Also New Labour.  They spent all our money on immigrants and terrorists and minorities and the poor, which left nothing for anyone else.

[Triple Zero]

Mr Cameron said it was not in Britain's interest "so I didn't sign up to it".

Cameron is not defending Britain. He is defending the financial sector that owns his party.

I understand that this must be the case. It's the same financial sector cover-your-ass politics that got us here, about which I thought the cards were sort of on the table now, but not yet entirely it seems? Aren't there any groups or organisations in Britain that would love to talk about this "little" fact in the medias far and wide? I mean basically, this sort of thing, "selling out the 99%", is what everybody should be keeping a damn close eye on, if we want to minimize the amount of them-getting-away-with-it. Is this sort of thing perhaps also stronger in Britain because of the class society?

The media narrative is that it is the fault of individuals taking huge amounts of overdraft and mortgages they can't afford which has dumped us in the mess; not the irresponsible banking practices and fraud which is really at the root of it.

Yeah okay, but what I meant is actually separate from the "whose fault is it" debate, but rather at the solutions/damage control end:

Namely, Cameron "not signing up for it" claiming that it's not in Britain's interest, when it actually is. When he's at the EU negotiations he's supposed to represent Britain, not just the financial sector that owns his party. That should be a pretty big deal.
In the Netherlands there's currently all sorts of shit going on with politicians and financial people being questioned about whether they might have bailed banks out too much a few years ago, even though I kind of have the idea that they're barking up the wrong tree.

[Scribbly]

Mr Cameron said it was not in Britain's interest "so I didn't sign up to it".

Cameron is not defending Britain. He is defending the financial sector that owns his party.

I understand that this must be the case. It's the same financial sector cover-your-ass politics that got us here, about which I thought the cards were sort of on the table now, but not yet entirely it seems? Aren't there any groups or organisations in Britain that would love to talk about this "little" fact in the medias far and wide? I mean basically, this sort of thing, "selling out the 99%", is what everybody should be keeping a damn close eye on, if we want to minimize the amount of them-getting-away-with-it. Is this sort of thing perhaps also stronger in Britain because of the class society?

The media narrative is that it is the fault of individuals taking huge amounts of overdraft and mortgages they can't afford which has dumped us in the mess; not the irresponsible banking practices and fraud which is really at the root of it.

Yeah okay, but what I meant is actually separate from the "whose fault is it" debate, but rather at the solutions/damage control end:

Namely, Cameron "not signing up for it" claiming that it's not in Britain's interest, when it actually is. When he's at the EU negotiations he's supposed to represent Britain, not just the financial sector that owns his party. That should be a pretty big deal.
In the Netherlands there's currently all sorts of shit going on with politicians and financial people being questioned about whether they might have bailed banks out too much a few years ago, even though I kind of have the idea that they're barking up the wrong tree.

Oh, the argument there is pretty simple.

The UK still has a strong financial services industry; in fact, it is about the only industry we've got that performs well competitively on an international stage. The argument therefore continues that we can't allow major reforms, because they'll flee to other countries instead. If we had a transactions tax and the US didn't, for instance, they might just go to America instead.

Cameron HAS said that we need to diversify our economy, which is true. Unfortunately, his initiatives for doing this are lackluster at best. We've got a Green Bank coming in next year to provide loans to the green energy sector (good, but that is a very small sector still), and we've got Enterprise Zones. These are nebulous areas where tax incentives (which vary from zone to zone) are put in place to encourage investors to go and build facilities there.

As someone who has had to try and get to grips with the Enterprise Zone scheme, it really is a horrible mess. There's no oversight, even the regional development agencies (who administer the zones) often aren't clear on what they are actually going to mean, or how quickly they might be established. It is also an incentive based on tax cuts, which isn't going to do a lot to bolster waning manufacturing or industrial sectors; there's no demand in the economy, so it isn't a good time to be looking at building a factory.

So whilst he accepts this is something he needs to change, what it basically can be summed up as is; the financial services sector has us by the balls. At least he's acknowledging that, but he couches it in language which tends to obscure the point. Instead, he talks about competitiveness and best interests. To some extent he may be right; if the UK doesn't have this tax, we may get a flood of investment bankers and hedge fund managers from the continent eager to continue their dodgy practices here and avoid EU taxes.

Because that's exactly what we want, right?

... Right?

[Cain]

I personally find the bank threat to move overseas hilarious.  Especially in this case, because if a full Eurozone agreement goes into effect, then to do business in the Eurozone they're going to have to pay the tax anyway.  It's not like the banks could flee to Greece or Italy, because they would be bound by the same rules.

This is, of course, why we have international agreements in the first place, to prevent beggar thy neighbour economic policies by providing a fairly level international playing field in the area of regulation.  We just chose to forget that, because we've spent the last 40 years ripping up those treaties in order to...well, carry out those very same policies the original drafters were aiming to prevent.

[Cain]

http://www.ft.com/intl/cms/s/0/6cf8ce18-2042-11e1-9878-00144feabdc0.html#axzz1fxjOZ9no

Disorderly sovereign defaults and eurozone exits by all five periphery states would drag down not just the European banking system but also the north Atlantic financial system and the internationally exposed parts of the rest of the global banking system. The resulting financial crisis would trigger a global depression that would last for years, with GDP likely falling by more than 10 per cent and unemployment in the West reaching 20 per cent or more. Emerging markets would be dragged down too.

Apparently, Cameron is cool with this, going by his recent activities.

[Triple Zero]

Just read this on Facebook:

Kick Britain out of the European Union! Ideal situation for Europe? Britain remaining in the European Economic Area (Common Market), like Norway and Iceland, but also losing its voice and voting rights, like Norway and Iceland. Then Europe can move forward without dragging the British by their feet. I'm sure the British would be utterly convinced they had somehow gained from it too.

Could this actually work?

That would actually be probably the best way of dealing with the UK.

The only two major losers in such a situation would be the UK hard right (for whom the EU is an excellent foil) and the USA (who uses the UK as a proxy within the EU to prevent closer integration).  Without the EU to struggle against, the entire UKIP group would dissolve overnight, and the Tory right would have to go back to bitching about bringing back capital death and banning gays and allowing teachers to eviscerate truant pupils and so on.

So did this sort of start to happen tonight? I saw on the news that there was this negotiation and Sarkozy and Merkel said they'd go on without Britain because Cameron was being so exceedingly difficult. Didn't quite catch the details, it was about stricter regulations on national debt.

[Cain]

As with everything to do with the EU, it is not entirely clear.

This represents a quite unprecedented shift, the EU is doing something despite a lack of complete consensus.  It looks like the EU is going to go ahead with the deal, with the UK staying as it is, outside of the agreement.  But UKIP are arguing that is not necessarily the case, and that Cameron's refusal to negotiate has left the City less well-defended than had he actually sought some agreement with Berlin and Paris.  Meanwhile, Labour are taking a longer view version of the same argument, suggesting Cameron's petulant display meant he did not get the best possible deal for Britain and that the UK will likely excluded in everything but name from future EU negotiations.

[Cain]

On HIGNFY last night, Ian Hislop repeated the rumour that Germany is printing the mark again, as an "emergency measure".

[Scribbly]

Is it just me, or are there a lot of 'how did we get into this mess?' documentaries around at the moment? It feels like there's been one or two a week for the past month now.

What boggles my mind is that some of them clearly identify the problem and then flub the analysis. Peston's 'The Party's Over: How the West Went Bust' was particularly dumb.

Peston identifies that one of the problems is that the UK is a consumer economy that has grown largely based on spending, and that we can't keep spending when we're borrowing to do so. Okay. He then argues that we need to transform to a German model where we become net exporters and sell to the world...

But we're a tiny island where space is at a premium, so manufacturing will not be as cheap as it can be in the US or China where factories have less obvious overheads, and people require less money to cover their basic bills...

... and of course, the big unspoken problem is that you need people to buy whatever you are selling, which means that quite aside from the issues where we try to force our economy to invert, and the practical problems there... someone, somewhere needs to be the consumer.

Zizek argues that the point of destruction in capitalism is where all debts are paid, and he's right. We've reached a situation where there can be no more debt because banks have lost faith that we'll ever pay it back, but the entire functioning of the global economy is based on more debt coming from somewhere and the debt continuing to roll on into the future.

The idea that we can all become net exporters in the German model and thus alleviate the debt crisis is patent nonsense, but this seems to be the underlying assumption behind 'restructuring the economy'. Has anyone actually thought this through? 

[Triple Zero]

Is it just me, or are there a lot of 'how did we get into this mess?' documentaries around at the moment? It feels like there's been one or two a week for the past month now.

What boggles my mind is that some of them clearly identify the problem and then flub the analysis.

It's to make sure that the demographic that feels they should be somewhat informed, believe the right things and won't be tempted too much to go and think about answers for themselves.

[Cain]

Where did I put my tinfoil again?  Oh right, I left it at the offices of the New York Times....

The Germans, for their part, seem almost to welcome the collapse of market confidence: without the rising pressure from markets, Silvio Berlusconi would not have resigned as prime minister of Italy. And without the incentive of fear, most European partners would have been more reluctant to give Brussels oversight authority over national budgets — and the right to impose sanctions for violators.

"The Germans had a strategic insight or advantage to let the crisis get to the threshold within the European Union necessary for France to be willing to hand over the kind of sovereignty the country has always resisted," said Jacob Funk Kirkegaard of the Peter G. Peterson Institute for International Economics in Washington. "You could say that the crisis has either been the wake-up call or the tool that Germany has used to beat them into submission."

Note: I am not saying this is crazy: I am saying this makes too much sense, and the reality detector they normally use at the NYT, to make sure too much does not get in the product, must have been not working properly that day.

[LMNO]

You're saying that Germany either caused or contributed to the eurozone collapse as a power play against France?

That's rather chilling.

[Scribbly]

It has been a claim from the Right here, that Germany failed to conquer Europe militarily so decided to do so economically, for a long time.

I doubt that Germany deliberately plotted out the course for the economic disaster... but it does make a good degree of sense that they have encouraged things along now. This isn't just a power play against France; if they force the UK out, every other country looks like they are too reliant on German money to function to go against their authority. Whether or not the peoples of Europe will allow themselves to be bound by it when push comes to shove is another question. France has already shown willingness in the past to just refuse to pay fines, and unless Germany are willing to back up their demands with military force, I suspect other countries will just ignore these limitations when it suits them too.

What Germany doesn't seem to get in this situation is that imposing austerity on their partners is going to damage their own economy significantly too. Germany is one of the few net exporters, and if they demand the stringent regulations they're setting up and that comes to pass... they're cutting into their own markets. It isn't quite cut and dry, and it'll be interesting to see how this plays out in practice rather than on paper.

[Cain]

Yup.

The German position within Europe has been insanely unhelpful and even damaging to the EU as a whole.  Germany had the largest stimulus within Europe (5% of the GDP), yet when other nations (who ran deficits with the collusion of German financial and industrial interests) asked for funding for bailouts, Germany attached specific clauses and conditions to those bailout loans - on the one hand demanding austerity measures be put in place, which caused the aforementioned economies to severely contract - and on the other making some of the conditions of loans be massive purchases from German arms manufacturers.  Unsurprisingly, Germany recovered, while at risk nations floundered and got worse, creating a systemic crisis that has near-fatally undermined confidence in the Euro and the Eurozone as a whole.

German insistence on austerity has pushed the Eurozone to the brink, and caused the passage of the current Eurozone deal, which effectively puts the entire Eurozone economy under de facto German control. 

[Cain]

I honestly don't think German financial services think in terms of absolute gain. 

Partially because there is a nasty whiff of neo-Nazi sentiment wafting out of the offices of Frankfurt nowadays, with lots of whining about Muslims and inferior races and the like.  And that kind of sentiment tends to be a very zero-sum type of personality, the "I'll fuck the world over, but damnit, I'll be the King of this pile of ashes" mentality.

It might hurt Germany in the long run, but it will hurt everyone else first, and that is what really matters.