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Wednesday, October 19, 2022

Financial and war disaster: we must get a grip

From my Substack column - why not join for FREE updates?

The disaster protocol in Western democracies has several stages:
  1. ignore warnings about bad actors who threaten the public weal
  2. witness the disaster and express surprise
  3. take action to ‘make sure’ it ‘can never happen again’
Bill Clinton added a fourth in 1999:

       4. undo (3) so we can have a rerun of the calamity

He may not have drafted the new Act, but he signed it into law. Please don’t tell me he was too stupid to understand what he was doing.

I’ll come back to the Great Financial Crisis in a moment.

Now, in the UK, we have Liz Truss as PM. For how long, we don’t know, but she has already scored an entitlement to an annual pension worth half her salary. This applies to all PMs and ‘senior office holders’ no matter how short their service - including Kwasi Kwarteng, Chancellor for only 38 days. George Galloway calls Truss ‘thick as mince in a bottle’; well, we should all be so stupid.

Being a dim bulb is almost the least of our worries, as we will find out when the bright and slick ex-Goldman Sachs globalist Rishi Sunak takes the reins. He’s been pumping ads on Facebook for months like an Alan Sugar apprentice tasked with demonstrating PR skills. He wants the job so badly that it should disqualify him.

No, it’s her motives that concern me. I was curious when Truss’ first Chancellor cut the basic rate of income tax by one per cent: how much was that going to help poor people pay their hugely inflated energy bills? The five per cent cut to the top rate was bad optics at this time of growing hardship, of course; but the real puzzle was the complete removal of the ceiling on bankers’ bonuses - with which Jeremy Hunt will proceed. ‘What was all that about?’ as the saying goes.

I understood when I saw this information and analysis from Peter Oborne:

Truss isn’t working for the British people. She acts for the super-rich, the hedge fund managers and property developer types who party at 5 Hertford Street in Mayfair, London. This is where she held a ‘Fizz with Liz’ event last October (2021), paid for by Mark Birley, son of Lady Annabel Goldsmith’s first husband and attended by around a dozen Tory MPs.

The Mayfair millionaires do not require critical intelligence and moral probity in their servants, far from it. Oborne says they funnel money, not directly to the Conservative Party (which would have to be made public) but to ‘think tanks’ that then come up with policy proposals to suit their sponsors. They boasted, says Oborne, that they had ‘made Kwasi Kawarteng’s Budget for him’ - and, he says, KK went to one of their events straight after delivering his speech to the Commons.

This is the class that caused the incalculable damage of the GFC - estimates vary widely but run into the trillions. Beneath the financial cost is the human cost in the health and very lives of ordinary people.

But they can’t help themselves. C P Snow wrote of the ‘corridors of power’; these are the labradors of power, with no off-switch for their appetite. Someone has to discipline them.

In 1933 FDR allowed some banks to fail, regulated others and introduced legislation to separate deposit-takers from the casino-gambling of investment bankers. This time, when the GFC hit, there was no strong President to cleanse the stables.

Instead, the people responsible for the chaos were bailed out with unlimited cash. The clever-clogs guys at Goldman Sachs even counted the bail money as additional turnover and paid big bonuses on the strength of it.

Came the hour, came Barack Obama, and it is a tragedy that with the great popular support he initially enjoyed he could not or would not deal with the offenders. Their sense of entitlement has now grown into a kind of megalomania.

A fantasy moment: these rich are assembled at the Guildhall, London for the annual Lord Mayor’s Banquet. Full of good food and wines, they watch the PM rise to make a speech. He or she smiles and tells them that mobile communications have been jammed, the doors locked and they are all under arrest for financial terrorism. They are to be held in Belmarsh under the same conditions as Julian Assange, awaiting trial at which they will appear in cages like the Mafia whom the Italians so bravely prosecuted. They will receive swift, no-nonsense judgment from someone like Judge Judy Sheindlin, with no possibility of appeal. The innocent will be released and handsomely compensated for their inconvenience; the others will be heavily fined and incarcerated for a very long time.

Of course, in real life there will be no deus ex machina to resolve our difficulties.

Nevertheless, something has to happen. Perhaps it will be debt forgiveness or default, but we cannot let our governments be the playthings (or over-indulgent uncles) of global money-shufflers.

Oborne raises another worry: like demented Joe Biden, Truss has a finger on the nuclear button. We cannot afford the process outlined at the start of this post; Stage Three may not be a possibility.

There has to be action instead of disaster, not following it.


Paddington said...

Love your fantasy.

It might actually be better for them than what is quite likely to happen when it hits the fan. The skills to make lots of money in a democratic country are not the same as those for chaos.

Paddington said...

You continue to refer to President Biden as 'demented'. Given his recent speeches and impromptu exchanges, I would suggest that he is slowing down, but he is quite cognizant.

Sackerson said...

Biden: he's getting unpredictable 'senior moments'. Doesn't preclude him being crazy in the usual sense.

What's the odds he wins again in November, thanks to high voter participations via post (without needing jiggery-pokery)? Put a few dollars on it?

Paddington said...

I will happily put in $1,000, as I don't want to take too much of your money.

He can't possibly win election, because it isn't a presidential election year.

Sackerson said...

I meant, as you know, his party.

Paddington said...

Then, all indications are that it will be mixed results, as the abortion and other rulings have upset a lot of people.