Political Economy

On the 27th September 2009 I made a speech to the English Democrats AGM and autumn conference entitled “  The ABC of Banking Regulation” (http://bit.ly/u2vCYM). I made the speech because as I said, “It [the bank crisis] happened because we had the lightest touch, and probably the most dysfunctional, bank regulatory scheme going”. The recent report on the Royal Bank of Scotland failure (the RBSR) by the Financial Services Authority, who were responsible for regulation, appears to agree with me.

Overall I am happy with the progress to date. Some of the matters I suggested have turned up as proposals or have been enacted. But we still face tough times and there will have to be a greater degree of  implementation of these ideas if we are to build a stable base for the future.

My A was accountability. I suggested that in order to achieve this we should have something akin to the Sarbanes-Oxley Act in the USA. The difference would be that bankers, the directors and senior managers, would go to prison for 5 years and suffer a £5,000,000 fine if their bank needed saving by the authorities. I still think that this is the one regulatory change that would ensure compliance with prudential banking practices. The RBSR is suggesting fines and exclusion from working in banks again for those who transgress. This is far from enough.

I had two Bs, both of which have been taken up by the coalition government. First was to put the Bank of England in charge of the regulation of banks and other depositary institutions. The second was based on a law in cybernetics called “Ashby’s Law of Requisite Variety”. Put simply this states that any regulator must have as wide a range of control measures available to it as there are ways of change in the system. The economic system is, and always will be, subject to wide gyrations that we call “boom and bust” caused by a variety of events. The regulatory authority must have a similar wide range of responses available and not just, as in the Bank’s case, the ability to raise or lower interest rates to control inflation. The coalition’s response to this suggestion has been the “Financial Policy Committee” which has wider powers of intervention.

I had three Cs; clarity, capital and compensation.

Clarity referred to stopping the ability of banks to create opaque, multilayered derivative product that are sold “over the counter” and thus in secret. The dangers are self-evident. The opaque nature of the the security makes it much more likely that that collapse will occur and the secret nature of the transaction means that banks do not know who holds this toxic junk and so will stop lending to other banks, the so-called “contagion” effect. The Frank-Dodds Act in the USA is in the process of moving these transactions to open exchanges where much greater clarity exists. The final report of the Independent Commission on Banking (The Vickers Report) has proposed the banning of dealing in derivatives by the ring-fenced commercial arms of banks whilst the investment banking arms going through a process to improve clarity, somewhat.

It became clear that banks relied too much on borrowing and not enough on their own capital as well as having a deficient method of risk calculation, which would in itself lead to too little capital. I was being far too optimistic. The RBSR infers that there may not have been any risk calculation on occasions.

The new rules under Basel III will increase capital levels and the UK wants to increase the levels of capital held by larger banks even more (the EU on the other hands wants to reduce the levels of capital proposed). It was clear that increasing the levels of capital would result in lower level of lending and liquidity in the banking system. This is very evident in eurozone banks, where the appalling level of management of the system, has meant European banks withdrawing cash from the international system where its effect will be felt not just in the EU but in developing countries as well as elsewhere in the world.

I suggested that some of the problems of increasing capital could be overcome by requiring (investment) banks to insure against sudden, but infrequent, requirements for increased capital. This could be done by a mixture of government and private sector insurers, provided that the premiums that go to the government are deposited in a ring-fenced fund to keep off the sticky fingers of politicians who, when it comes to giving goodies to voters using someone elses money, can show a degree of “stickiness” that far exceeds that of your average banker!

The third C is compensation. I suggested that commercial banks could be subject to a significant regulation including control of compensation. In return directors and senior managers would not be subject to custodial sentences if the banks needed saving. The RBSR suggestions concur with my mine on this matter.  The question of excessive compensation is still an issue and solutions are still being discussed. There is no sign yet of criminal penalties, a situation that needs to be speedily changed.

My D was for division. I felt then, and still feel, that investment banks and commercial banks must be split. The Vickers report is recommending a half-way house of strict firewalls. I hope this succeeds but fear it will not. We should remember that investment bank are by nature risk taking and piratical institutions. If they were not they would not be successful.  Whilst a group of greedy investment bankers have within their line of sight a pile of someone elses money sitting in deposits they will move heaven and earth to get their hands on it. The subterfuges they will employ will often not be discovered by the regulators who will end up being powerless to stop it. Only the strong threat of a prison sentence could have any hope of stopping this behaviour.

If we are to have a strong banking regulation system in a sea of lighter touch regulation it will be all too easy for the banks in the later environment to undercut UK regulated banks in their product and service pricing hence leading to a decline in English banking. To do this we need to take powers to tax companies, fairly, that have used foreign products that are cheaper due to easier regulation. This should not extend to taxing solely on the basis of cheapness, some of which is due to efficiencies. There is no sign of this yet. This was my F

My L was for government to stop being lead by the nose by bankers and to start leading themselves. This, at least in the UK, but not it would appear in the EU, is starting to happen.

The score to date is zero for A, two for B, two halves for C, a half for D, a zero for F and one point for L, a total of four and a half out of nine suggestions or 50%. We still have a long way to go. It will be interesting to see what emerges.

 

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The Financial Times reported today that 35% of City professionals were dissatisfied by the size of their bonus!

Apparently some 79% of them got a bonus this year, paid out of a bonus pool of £7 billion which was much the same as the previous year.

Things look good in all directions in the City with job opportunities up by 6,426, the highest since August 2008 whilst the average salary of those who found new jobs in March was £54,445. Overall 89% had salaries that were higher or the same as last year.

This dissatisfaction with bonuses is despite the fact that earnings in the City rose by 5.4% in the three months to February. This is more than twice the level of everyone else whose pay rose, on average, by 2.2%.

Some 79% of City professionals earned a bonus this year; 38% got more, 43% about the same and 19% got less. The fact that some 35% of them appear to be unhappy with their lot begs the question about why we should be happy with them. There are many words that rhyme with “banker”, some are rude but many would say that they describe the City professional perfectly.

This month the Royal Free hospital in Hampstead said it would loose 450 jobs, many of them clinical in order to save £40 million. At this rate the £7 billion of bonuses is equivalent to over 78,000 jobs in the NHS.

Recently a senior City regulator said that he could discern little that was socially worthwhile in what the City did. Was he correct? What do you think?

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Mr Cameron will be the second leader of an EU country to say that multiculturalism is dead. The first was Angela Merkel.

Why is that? After all it has been the bedrock of government policy for 30 years. The reasons are simple and straightforward.

First, multi-culturalism means that for political purposes no culture is any better than any other. Whilst this may be true to an anthropologist it has never been true in political terms. A country that cannot point unequivocally to the values, history and beliefs that are the values, history and beliefs that guide it, is no country at all, merely a collection of disparate cultures.

In a society that collects cultures everyone will assume that the most important culture  is their own private culture and act accordingly. This means teenage white boys wearing an England shirt will be excluded from the corner store when they want to by sweets, as happens in parts of Luton. It means that arrogance holds sway and some groups will speak and act disrespectively about the host culture whilst reacting violently against similar action against their own.

In such societies no one know what is the correct action to take and this has led to tragedies in certain child protection cases. It has also led to the drugging, abduction, abuse and rape of, mainly, white girls because these girls come from a different culture to theirs, a culture that the men carrying out the attacks neither respect nor value.

But there are other problems. Without a clear distinction between public and private cultures public bodies spend endlessly on useless actions employing people in posts such as “Diversity Coordinator” or “Equalities Coordinator” or engaging in programmes such a “Luton in Harmony” – to name but one. None of these expenditures are worthwhile because they are aimed at propping up the indefensible and broken polemic of multiculturalism.

Multiculturalism has caused divisions in England where there should have been none. They have stopped all sorts of groups as being identified as English, which is how they should be identified after all these years. It means that the natural description of the people of England is still, wrongly, an ethnically based one with only one ethnicity being banned – English! It has led to a great deal of dissatisfaction as the English culture has been systematically downgraded, insulted and abused, despite the fact English culture, not Scottish or Welsh or Irish or British, is responsible for parliamentary democracy, the rule of law, toleration and (still) respect for peoples’ private lives and beliefs. It has led to the misallocation of large amounts of public money and the acceptance of many violent crimes, because to point them out would somehow insult a culture and that the many people physically and mentally harmed by this attitude are just going to have to suck it up and the rule of law be dammed. Notably the values of Political Correctness  means that this acceptance does not apply to the English culture

How then we should handle the errors and problems that multiple cultures bring? Well, very simply, by adopting a policy of multiple cultures. That is to say that the everyone must adhere to and accept the public culture of England, which is the English culture, in their public life. What they do in their private life, provided it does not break any law, is up to them. This immediately simplifies decision making, public expenditure, public services such as education, the maintenance of law and order and the emotional and political life of England.

We should remember that the flag of England is Norman and the patron saint of England is Palestinian. England has been handling multiple cultures successfully for a thousand years! It should be allowed to get on with doing so now.

Secondly, getting rid of multiculturalism is insufficient. We also need to get rid of large swathes of political correctness or PC. PC is borne of a natural desire to be polite and considerate to people. Unfortunately the blindness of its supporters  has led to many unnatural practices carried out in its name. Chief of these came to light in the cases of rape referred to above.

Many years ago in North Hertfordshire one of the local papers carried the story of a father and son team who, possessing a van, had the bright idea to park this outside a secondary school and proposition the young female students as they came out at the end of the school day. No time was wasted on PC. The perpetrators were identified as white by the paper and as a result parents, schools and the students themselves were alerted. Had this not been done there would have been, within a few years, queues of white vans with father and son teams outside every secondary school in Hertfordshire. Instead the story is now an inconspicuous item of local history.

Apparently the northern rapes had been going on for decades. Five years ago when the MP Ann Cryer tried to get the local communities to take the lead to stop them they refused, because they saw no particular reason to stop such flagrant breeches of the law. After all did not these girls came from a corrupt culture and deserve no better? When she went public she was viciously accused of racism by the PC brigade. She is no longer in politics. Had these attacks been publicised 30 years ago with the same  lack of PC as was shown in Hertfordshire the local communities would have ensured that they stopped and these activities too would now, also, be only a minor footnote of local history.

Instead PC has ensured that an important English community has been shamed in such a way and for such outlandish breaches of the law that, sadly, it is likely that it will always be a part of English national history.

Let us at least take some good out of this sad case by learning how damaging to society PC is and by getting rid of it forever. Alternatively we could throw the whole lot of the PC brigade into court and prosecute them for what they really did – actions that led to the cover up and aid the commission of  a series of vicious crimes!

And a final message to Cameron:

THE NATIONAL IDENTITY OF ENGLAND IS ENGLISH, STUPID!

Stop stressing and get on with it!

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James Boxall reported in the 1st October 2010 Kindle edition of the Financial times that the CBI has said that the new rules restricting foreign workers from outside the EU must be reviewed. Why?

Put simply it is because the CBI’s members do not want to invest in English workers. In other words these CBI members are lazy and lacking either in vision or a desire to improve matters in England.

To do so would mean more support for English higher education, post-graduate and graduate students.

It would mean more support for local colleges and a greater investment in apprenticeships and in-house training for the English people.

It would mean funding more initiatives with our more challenged English schools.

And most importantly it would mean an open and collaborative approach to their strategic manpower planning exercises, with all their English stakeholders.

And finally these imported workers will expect the full use of the English welfare state, without them or their family having paid a penny for it.

So, yes, I do agree that the rules need to be changed to protect English workers from the lazy and greedy employers. My prescription is as follows:

1. Before making an application  to employ a foreign worker the organisation must show that it has tried really hard to develop home-grown English talent by carrying out all of the above activities for a minimum of five years. Surprisingly there will be some companies that already pass this test.
2. They must give an undertaking that they intend to continue at least this level of educational activity for the next 10 years.
3. They must show that the job requirement has a level of education (at least post-graduate from a university certified to have the same standards as an English Russell Group university), or significant experience (success at an international standard of achievement for at least five years in the same field as the job) is unobtainable from within England
4. They must deposit a sum of money with the government that will be sufficient to cover all the education and welfare costs of the worker, and their family, for his or her period of residence in the UK.
5. The worker must be paid a salary in the top 10% of national salary range for the job and must get exactly the same bonuses and benefits at other employees in a similar position.
6. Permits will be issued for a maximum of four years, renewable only once, and at the end of that period the worker and their family must leave and return to the country of origin of the foreign worker. There will be no possibility of acquiring British citizenship or of staying beyond that time.

Some might argue that this is not necessary because businesses and their employees pay taxes to the government to carry out all these duties. These are of course the same businesses that complain about the high level of taxation and about “big” government. On the other hand a 3% tax on their revenue might just possibly give enough tax revenue to solve the problem of lack of skill in the local workforce without these companies and their managers having to get out of their seats at all!

This demand from the CBI is just a big whinge, the epitome of the “moaning Pom”. It smells of greed and laziness and the people of England deserve a lot better than this shoddy mob.

With an approach like the one above the people of England would at least have the knowledge that the businessmen of England not only had their interests at heart but were working hard to improve them.

Now wouldn’t that be a change?

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The Conservative, Labour and Liberal-Democrats do not want to give the people of England their own Parliament. The reasons they give are varied. Some, such as Straw and Prescott are quite happy to insult the English cultural identity and care not that this is a deeply racist action, under the Race Relations Act, and also offensive, confident that their position will give them protection.

Some of them mutter on about England being 80% of the population of the UK and therefore do not need a separate parliament. This argument is either based on an ignorance of Pareto’s principle or an attempt to manipulate people by misquoting it (see my blog at http://www.politicaleconomy.me.uk/2010/01/only-english-mps-voting-on-english-matters/).

None of them mention democracy. liberty, equity, dignity, rights, fairness, self-determination, birth-right, entitlement. All words one would expect a serious and committed parliamentarian to use with respect to this issue. But notice how in this election campaign they have promised “fairness for all” in order to get your vote! How dishonest can they be?

You will, therefore, probably not be surprised that the real reason why they do not want a parliament for England is quite different from the one they give, and infinitely grubbier. Yes, it concerns money, lots of your money and my money, in fact £2,000,000 of our money. Money that they do not deserve, money that they are happy to scam off you and I, just as they did with their expenses

They are trying to kid us that they have cleaned up the financial systems in Parliament, that they are squeaky clean, that it will never happen again. What is “it”? Quite simply “it” is the same greed that made them unable to tell when a rule is immoral, dishonest, or unethical. Remember that MPs caught out ‘flipping’ their houses to make untaxed capital gains off the taxpayer, or claiming repairs to their boyfriend’s house? All said “We were only following the rules” (see my blog at http://www.politicaleconomy.me.uk/2009/10/how-the-rich-and-powerful-scam-the-rules-for-their-own-benefit/ .

Well here is another big, fat, round £2,000,000 rule they are quite happy to follow even though in doing so they are taking money they have not earned, money that comes from me and you, money that they should not be getting. Not that is if they were men and women of integrity.

Many of the plum jobs as Secretary of State or Minister in the Westminster cabinet are for devolved matters. That is those that matters such as Education, Health, Justice and Transport to name a few. These matters have been devolved to national parliaments or assemblies either in part or whole. Westminster Secretaries of State basically administer only England in these matters. They should get paid the same as their equivalent in the Scottish Parliament. In the case of a secretary of state this is £44,000 less, of a minister £24,000 less if they were in an English Parliament (they would also get £7,000 less for their salary). There are around 70 of these plum jobs to be handed out after the 6th May adding up to excess pay of around £2,000,000.

Now you get “it”, the real reason why they do not want an English Parliament. Men of Honour? I do not think they know the meaning of the phrase.

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I received the following email message from Frank Roseman, the English Democrats prospective parliamentary candidate for the Cities of London and Westminster (http://www.voteenglish.org/london-candidates/). Interestingly it looks as though Gordon is a snob, always toadying up to the wealthy.

“Just a few interesting facts about Gordon Brown

1 – We used to have 6 independent regulators to regulate the different
divisions of the financial services industry, including our Banks.

(Margaret Thatcher knew what the Banks were like and in the 1988
Finance Act she bound the Banks up in regulation to prevent them from
being reckless!!!)

Then Gordon Brown became Chancellor on 6th May 1997

Gordon’s banker friends said “We want all these regulators to go. We
don’t want regulators watching everything we do”

AND GORDON SAID OK

So, Gordon announced on the 20th May 1997 (2 weeks after becoming
Chancellor) that the six regulatory bodies would be broken up and a
new Financial Services Authority would replace them. The FSA had
virtually no powers over the Banks and he also took away the powers
from the Bank of England to enforce regulation on them.

The result is the devastation we are all suffering today.

————————————–

2 – We used to have a Monopolies and Mergers Commission

Then Gordon’s banker friends said we don’t want the Monopolies and
Mergers commission telling us who we can and cant “Take Over”

AND GORDON SAID OK

So, in 1998 Gordon scrapped the Monopolies and Mergers Commission and
created a replacement called the Competition Commission, with very
much reduced powers and different ideas of what used to be regarded
as a “Monopoly”.

The result is the Massive Corporations we have today who are ruling
and shaping our lives for their own benefit and profits. Not to
mention the massive Monopolies held by some of these corporations
through the forced purchases of all their competitors

————————————-

3 – We used to have pension regulations, which for many decades had
included something called “The Pensions Cap”

The pensions cap set a limit on how much pension any scheme member
(including directors) could get from an occupational pension scheme,
irrespective of how high their earnings were. It was there to protect
the ordinary members pensions, and to prevent Directors paying
themselves obscene salaries and then draining the pension funds with
huge pensions.

Then Gordon Brown’s banker friends said that they wanted the pensions
cap removing so that they could get pensions related to their obscene
earnings.

(The whole Pensions industry gave him warnings of the effects it would
have. Even the Inland revenue put forward objections)

BUT GORDON SAID OK

Because Gordon never likes to disappoint his banker friends

So Gordon took away the Pensions Cap in 2005 and then some of his
friends were able to leave their boardroom positions with huge
pensions!!!

For example Fred Goodwin [ex CEO of RBS] was apparently entitled to a
pension of over £700,000

If Gordon had left the pensions cap in place that would have been a
mere £125,000

Well done Fred and your mates!!!

(The Superannuations Division of the Inland Revenue have kept a record
of what it should be, in readiness for when we get a new chancellor
who sees fit to re-instate it. George Osborn has pledged to do that).
The record of Pensions Cap limits are available to view on the
Revenue’s website

The result of this is that along with Gordon’s “Tax Raid” on pension
funds starting July 1997, over four thousand UK company pension
scheme’s have closed their doors to new members and many of them have
had to close down altogether, leaving millions of workers without any
pension provision.

This man Gordon Brown “professes to be a socialist and “for” the working man

The working man’s main form of long term financial security had for
many years been his company pension scheme, something to look forward
to at the end of a life of hard work, his reward, light at the end of
a long dark tunnel.

Gordon has put an end to that by destroying the most valuable asset of
the average British worker.

*****************************

IT IS ONE OF THE GREATEST TRAVESTIES OF JUSTICE THAT THIS MAN WHO
PRETENDS TO BE “FOR THE WORKING MAN” HAS IN FACT BEEN HIS WORST ENEMY
FOR THE LAST THIRTEEN YEARS AND WILL LEAVE A LEGACY THAT WE WILL STILL
BE CLEARING UP FOR MANY YEARS TO COME.

THE REAL INJUSTICE IS THAT ITS ALL BEEN DONE IN AREAS WHICH ARE
TOTALLY OUT OF SIGHT TO THE GENERAL PUBLIC AND BEYOND THE
UNDERSTANDING MANY

GORDON RELIES ENTIRELY ON PEOPLES IGNORANCE TO GET AWAY WITH HIS INDISCRETIONS

GORDON’S MOTTO OF: “DENY EVERYTHING AND ADMIT NOTHING”

SEEMS TO BE WORKING QUITE WELL FOR HIM SO FAR!!!

—————————————-

4 – LASTLY, WHAT GORDON LIKES TO CALL THE “GLOBAL BANKING CRISIS”

Have you noticed that we were the first to be in it and are the last
to be out (and whether we are out is very speculative!!!)

As he has openly admitted, The Royal Bank of Scotland was the worlds
biggest bank.

So when RBS and HBOS were about to go BUST in October 2008 and they
had to be bailed out overnight so they did not take the entire country
down with them, (that by the way was almost certainly a decision made
by the hierarchy in Whitehall for which

Gordon loves to take the credit)

As the worlds leading banks now all lend money to each other on a
collosal scale, isn’t it obvious that the worlds biggest bank going
down would have a devastating effect on all the others it dealt with.

This “worlds biggest bank” had also sold bad mortgage books to other banks.

Most of the Banks in Europe which ran into crisis were dragged into it
because of the crooked dealings of our big Banks. A fact that both
Germany and France were quick to remind Gordon Brown of at the G20
emergency meeting shortly after the crisis.

There are many other of Gordon’s indiscretions, far too many to list
here, but perhaps the few biggie’s shown above will give some insight
into how Gordon operates.

By the way have you noticed how he has suddenly become interested in
Social issues now an election is looming and seems to be able to
promise the world when, as Alistair Darling put it a few days ago,
there is not a penny left in the bank!!!

Think very carefully before casting your vote for this man who is
probably the most extreme capitalist of the past century while
pretending to be
“for the working man”.

GORDON WORSHIPS THE SUPER RICH AND POWERFUL AND CANNOT SAY NO TO THEM

Please pass this on to all you can, the whole population should know
these few facts before the election.”

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