The Credit Crunch

[rynner2]

Friction is now between global financial elite and the rest of us
Robert Reich
The anger and frustration felt by hard-working people who have seen their wages and job security steadily diminish is fuelling a populist revolt against the political establishment

http://www.theguardian.com/commentisfree/2015/nov/11/us-uk-politics-economics

The latest post on March of Technology covers similar ground:

http://forum.forteantimes.com/index.php?threads/the-march-of-technology.36425/page-36#post-1545778

Seems I was right to call it a hot topic!

 

[ramonmercado]

Talk by Robert Reich author of "Saving Capitalism: For the Many, Not the Few" recorded October 19, 2015 at Town Hall Seattle.

 

[ramonmercado]

The impending global recession
Blaming China is a diversion, argues Michael Roberts. The USA is still key

As I write, the US Federal Reserve Bank’s monetary policy committee (FOMC) is meeting to review its policy interest rate. This sets the floor for all interest rates (mortgages, government bonds, foreign loans, etc) in the US and overseas, and last month the FOMC raised it from near zero to 0.5%. That was the first hike in nearly 10 years - the last was when the US and world economy was motoring along in a property and bond boom, before the global financial crash and the great recession ensued.

At the December meeting, Janet Yellen, the Fed’s chief, explained that the hike in rates was appropriate, because the US economy “is on a path of sustainable improvement.” And “we are confident in the US economy”, even if borrowing rates rise.1So it was best to start a series of planned hikes before ‘full employment’ was reached, to stop wages rising too fast and causing inflation.

Well, as the Fed meets now, it appears to have a large amount of egg on its face. Even before its meeting last December, there were clear signs that the US economy, already decidedly sluggish in its recovery since the end of the great recession in 2009, was now slowing down again. And just before the Fed hiked its interest rate, the figures for US industrial production in November came up and they showed the worst fall since December 2009 at the end of the great recession. Since then, we have had further poor data, suggesting that US real GDP growth in the last quarter of 2015 was likely to be under 1%. Indeed, the latest Atlanta Fed estimate for US real GDP growth in the last quarter of 2015 is just a 0.7% annual rate.

If that turns out to be right (the first official estimate is out this week), then the US economy will have grown (after inflation) by just 1.8% in 2015 - down from 2.4% in 2014. In addition, both industrial production and manufacturing output have slowed to a trickle and retail sales - a measure of how much is being bought in the shops - has also slowed markedly. ...

http://weeklyworker.co.uk/worker/1091/the-impending-global-recession/

 

[ramonmercado]

The Market's Troubling Message
By Ashoka Mody

Amid one of the worst market routs on record, a chorus of reassuring economic commentators insists that global fundamentals are sound and investors are overreacting, behaving like a panicked herd. Don’t be so sure.

Consider how wrong economists have been about the effects of the 2008 financial debacle. In April 2010, the International Monetary Fund declared the crisis over and projected annualized global growth of 4.6 percent by 2015. By April 2015, the forecast had declined to 3.4 percent. When the weak last quarter’s results are released, the reality will probably be 3 percent or less.

Economists are used to linear models, in which changes follow a relatively gradual and predictable path. But thanks in part to the political and economic shocks of recent years, we live in a highly non-linear world. The late Danish physicist Per Bak explained that after long absences, earthquakes come in quick succession. A breached fault line sends shock waves that weaken other fault lines, spreading the vulnerabilities.

The subprime crisis of 2007 breached the initial fault line. It damaged U.S. and European banks that had indulged in its excesses. The Americans responded and controlled the damage. Euro-area authorities did not, making them even more susceptible to the Greek earthquake that hit in late-2009. Europeans kept building temporary shelters as the banking and sovereign debt crisis gathered force, never constructing anything that would hold as new fault lines opened. ...

http://www.bloombergview.com/articles/2016-01-27/the-market-s-troubling-message

 

[Analis]

Following a recent revelation from Wikileaks, an article explores the possibility that some financial crisis could be deliberately provoked by the world financial institutions :

http://www.zerohedge.com/news/2016-04-20/government-officials-admit-economic-false-flag-operations

Government Officials Admit to ECONOMIC False Flag Operations

Submitted by George Washington on 20/04/2016 00:36 -0400

False flag attacks don’t just involve physical deaths and wars …
They also involve faked economic events and financial casualties.

For example, two officials of the International Monetary Fund said last month that they needed the threat of an imminent financial catastrophe to force other players into accepting its measures such as cutting Greek pensions and working conditions, and – as the Greek government put it (via Bloomberg) – the IMF was “considering a plan to cause a credit event in Greece and destabilize Europe.”

High-level officials also admitted to intentionally destroying their own nations’ economies in order to “justify” structural economic reforms.

For example, Japanese Prime Minister Junichiro Koizumi and Japanese central bank officials admitted that they kept Japan’s economy in a deflationary crisis to promote “structural reform” which would allow the Japanese economy to be looted by foreign interests. Japanese central bank officials admitted the same thing.

Japan Times noted in 2003:

Official statements by BOJ executives [reveal]: The BOJ can be helpful by not being helpful. The princes recognized that such structural change was so opposed to the special and general interests of most Japanese — citizens, businessmen, bureaucrats and politicians — that it could be achieved only by crippling the economy and preventing its recovery.

Something similar happened in Thailand and the EU.

Indeed, the former head of the Bank of England said last month that the depression in the EU was more or less a “deliberate” policy choice.

And an economist at insurance giant AIG – and former head of the European Commission’s unit responsible for the European Monetary System and monetary policies – said in 2008 that what European leaders wanted was to create a crisis to force introduction of “European economic government.”

Indeed, Greece (more), Italy, Ireland (and here) and other European countries have all lost their national sovereignty to the ECB and the other members of the Troika.

What some of the sources say :
https://medium.com/mosquito-ridge/imf-plots-new-credit-event-for-greece-534b4b300318#.wxlenid1v

Paul Mason
Apr 23 min read
IMF plots new “credit event” for Greece
Neoliberalism does not give a shit, Part II

The International Monetary Fund has been caught, red handed, plotting to stage a “credit event” that forces Greece to the edge of bankruptcy, using the pretext of the Brexit referendum.
No, this is not the plot of the next Bond movie. It is the transcript of a teleconference between the IMF’s chief negotiator, Poul Thomsen and Delia Velculescu, head of the IMF mission to Greece.
Released by Wikileaks, the discussion took place in Athens just before the IMF walked out of talks aimed at giving Greece the green light for the next stage of its bailout.
The situation is: the IMF does not believe the numbers being used by both Greece and Europe to do the next stage of the deal. It does not want to take part in the bailout. Meanwhile the EU cannot do the deal without the IMF because the German parliament won’t allow it.
As they bicker about the numbers, Thomsen and Velculescu are heard mulling whether to suppress the IMF’s next report on whether Greek debt is sustainable. Thats important because the IMF will only sign up to a deal that involves debt relief, and the Germans will not.
Then Thomsen drops the bombshell:
THOMSEN: What is going to bring it all to a decision point? In the past there has been only one time when the decision has been made and then that was when they were about to run out of money seriously and to default. Right?
VELCULESCU: Right!
THOMSEN: And possibly this is what is going to happen again. In that case, it drags on until July, and clearly the Europeans are not going to have any discussions for a month before the Brexits and so, at some stage they will want to take a break and then they want to start again after the European referendum.
Velculescu says they should try and do something in April. Thomsen replies:
THOMSEN: But that is not an event. That is not going to cause them to… That discussion can go on for a long time. And they are just leading them down the road… why are they leading them down the road? Because they are not close to the event, whatever it is.
VELCULESCU: I agree that we need an event, but I don’t know what that will be.

So let me decode. An “event” is a financial crisis bringing Greece close to default. Just like last year, when the banks closed, millions of people faced economic and psychological catastrophe.

Only this time, the IMF wants to inflict that catastrophe on a nation holding tens of thousands of refugees and tasked with one of the most complex and legally dubious international border policing missions in modern history.

http://www.washingtonsblog.com/2016...ral-reforms-allow-foreign-interests-loot.html

Central Banks Intentionally Impoverish Their Host Countries to Effect Structural Reforms … Which Allow Foreign Interests to Loot
Posted on February 8, 2016 by WashingtonsBlog

In his role as a government advisor, visiting scholar, and head economist for a Japanese investment house, economics professor Richard Werner had unprecedented access to the Bank of Japan. He also spoke with insiders at other Asian central banks.
Werner found that the Bank of Japan – and other central banks – intentionally impoverished their host countries – first by blowing massive bubbles, then by deflating them so that the economy crashes – so as to justify major structural reforms which allow looting by the powers-that-be.
In essence, these central banks carried out false flag attacks on their own economies in order to justify the implementation of draconian policies.

The interpretation of Mervyn King's (former head of the Bank of England) words are ambiguous. But the meaning of the word 'event' by Thomsen and Velculescu is not. And given that there appears to have been some precedents of financial and governmental institutions meddling to favour the implementation of austerity measures and the dismantling of social security systems, that they are seeing favourably the prospect of helping the advent of a new collapse is not so far-fetched. The shock doctrine, as defined by Naomi Klein, is no more no less the 'starving the beast' strategy advocated by ultra-conservatives.

 

[Mythopoeika]

I have long held this view that many economic crises are manufactured, and this looks like confirmation.

 

[ramonmercado]

I think this fits here given the topic. The idea of a Guaranteed/Universal Basic Income has been around for a long time. I attended a week long ETUC seminar/training course on the issue in 1988. It means different things to different people: some see as the way to ultimate privatisation; you get your G/UBI and buy social services from the private sector.

Heres a contribution to the debate.

Why The Universal Basic Income Is Not The Best Public Intervention To Reduce Poverty Or Income Inequality
by Vicente Navarro on 24 May 2016

There is no uniform interpretation of Universal Basic Income (UBI). The simplest definition may be that UBI is a public program in which the state (at any level—national, regional, or local) transfers to everyone the same amount of money (usually similar to the level of income that defines a country’s poverty line).

Among the earliest supporters of public money transfers to everyone (although they did not use the exact terminology) were thinkers belonging to the liberal tradition. They were on the opposite side to those from political traditions based on labor movements, such as social democratic parties. These thinkers supported the establishment of public income transfers (pensions, unemployment insurance, family transfers, and the like) and public services (medical care, education, child care, home care, social services, and public housing). The former group, the liberals, proposed giving money to individuals and letting them take care of themselves through market forces: on the principle of supporting personal freedom, opposing state interference in that freedom. (Actually, the recent proposal by the Finnish government–an alliance of conservative and liberal persuasion–to provide income to everyone, seems to have gone in that liberal direction).

Is UBI Needed Because There Will Not Be Enough Jobs?
More recently, there has been a demand for a universal transfer to everyone because of the fear that technological developments (robots and similar advances) will dramatically reduce the number of jobs available. “The future without work” seems to justify the need to substitute work with basic income because there simply will not be sufficient jobs.

This thesis, however, seems to ignore that historically, there has never been a relationship between technology, productivity, and jobs available. The enormous growth of productivity that has occurred since Keynes’s time has not reduced the number of jobs being produced nor the number of hours that each laborer works. Keynes’s prediction is well-known; he held that, owing to increments in labor productivity, the working week at the beginning of the 21st century would be only two days rather than five. And yet, it is still five. The potential was and continues to be there for reductions of jobs and working time. But it has not happened. ...

https://www.socialeurope.eu/2016/05...ntion-to-reduce-poverty-or-income-inequality/

 

[Mythopoeika]

I think it's a lovely, warm, fuzzy socialist idea. I love it!
However, there's a big 'but'...who's going to pay for it?

 

[ramonmercado]

I think it's a lovely, warm, fuzzy socialist idea. I love it!
However, there's a big 'but'...who's going to pay for it?

Oh it might work but it would mean that a lot of other social supports might have to go.

Its an idea though for the self-employed. Some small businesses or/and sole traders will never generate a living wage. Better to have people economically active.

Of course there would have to be safeguards to ensure such recipients were not undermining wage levels!

But self-employment can also cover being active in the Community and the Arts: the Social Economy.

 

[ramonmercado]

Fighting The Next Global Financial Crisis
by Robert Shiller on 24 May 2016 @RobertJShiller

What do people mean when they criticize generals for “fighting the last war”? It’s not that generals ever think they will face the same weapon systems and the same battlefields. They certainly know better. The error, to the extent that the generals make it, must operate at a more subtle level. Generals are sometimes slow to get around to developing plans and ordnance for those new weapon systems and battlefields. And just as important, they sometimes assume that the public psychology, and the narratives that influence the morale that is so important in achieving victory, is the same as in the last war.

That is also true for regulators whose job is to prevent financial crises. For the same reasons, they may be slow to change in response to new situations. They tend to be slow to adapt to changing public psychology. The need for regulation depends on public perceptions of the last crisis, and, as George Akerlof and I argued in Animal Spirits, these perceptions depend heavily on changing popular narratives.

The latest progress reports from the Financial Stability Board (FSB) in Basel outline definite improvements in stability-enhancing financial regulations in 24 of the world’s largest economies. Their “Dashboard” tabulates progress in 14 different regulatory areas. For example, the FSB gives high marks for all 24 countries in implementing the Basel III risk-based capital requirements.

But the situation is not altogether reassuring. These risk-based capital requirements may not be high enough, as Anat Admati and Martin Hellwig argued in their influential book The Bankers New Clothes. And there has been much less progress in a dozen other regulatory areas that the FSB tabulates. ...

https://www.socialeurope.eu/2016/05/fighting-next-global-financial-crisis/

 

[Mythopoeika]

We did try such an experiment with self employed people back in the 80s.
There was a scheme to offer unemployment benefit (or whatever they were calling it back then) to people who were moving from long term unemployment to being self employed.
It worked (up to a point).
However, successive governments removed this scheme.
I believe the people who started Viz magazine were on this scheme.

 

[ramonmercado]

We did try such an experiment with self employed people back in the 80s.
There was a scheme to offer unemployment benefit (or whatever they were calling it back then) to people who were moving from long term unemployment to being self employed.
It worked (up to a point).
However, successive governments removed this scheme.
I believe the people who started Viz magazine were on this scheme.

It should be thought of as a very long term scheme in some cases. An allowance to keep people economically active but accepting that they are not going to become entrepreneurs.

 

[Mythopoeika]

I actually agree with that.
God, I sound like such a Marxist!

 

[David Plankton]

 

[Mythopoeika]

 

[ramonmercado]

I actually agree with that.
God, I sound like such a Marxist!

Its just common sense!

Not left or right!

 

[Mythopoeika]

Here we go:

https://en.wikipedia.org/wiki/Enterprise_Allowance_Scheme

At the time, what I didn't like about it was that you had to be unemployed for a looong time before you could qualify.
Of course, that would mean you would burn through any savings you might have had.
Some people did well out of it, though.
A lot of people don't know this, but Iain Duncan Smith tried to revive it recently.

 

[ramonmercado]

The BIG Library: Books About Basic Income

Somewhere along the way people started considering me somewhat of an expert on the topic of basic income and so I’m frequently asked for book recommendations. Because of that, I put together a Listmania list, but Listmania no longer exists so I’ve decided to put together a new more comprehensive list here on Medium which I will make a point of updating as new books are released. If you don’t see a book here and think it should be listed, please let me know so I can add it.

Optionally, if you wish to purchase one of these books, please consider using Amazon Smile which you can do by changing www.amazon.com in the url to smile.amazon.com. This will give a portion of the purchase to charity, and the charity I recommend is GiveDirectly because that will help support their historic 10–15 year long universal basic income experiment in West Africa.

Also, due to popular request, books of fiction that include basic income can be found at the end of this list. And if you’re looking for academic papers to read instead, here’s a great list on basicincome.org.

Note: List is ordered by release date chronological order

2016
Raising the Floor: How a Universal Basic Income Can Renew Our Economy and Rebuild the American Dream
by Andy Stern (June 14, 2016)

Saving Capitalism: For the Many, Not the Few
by Robert Reich

Alternatives to Capitalism: Proposals for a Democratic Economy
by Robin Hahnel and Erik Olin Wright
...


https://medium.com/basic-income/the-big-library-books-about-basic-income-b9763071b987#.ea246cvas
http://amzn.to/1OVvh3O

 

[ramonmercado]

The Worldwide March To Basic Income: Thank You Switzerland!
by Philippe van Parijs

June 5, 2016 will be remembered as an important landmark in the worldwide march towards the implementation of unconditional basic income (UBI) schemes. All Swiss citizens were asked that day to express their approval of or opposition to the following proposal:

1. The Confederation introduces an unconditional basic income.
2. The basic income must enable the whole population to live a dignified life and to participate in public life.
3. The law will determine the funding and level of the basic income.

The proposal was rejected, with 76.9% of the voters against, 23.1% in favour. Why was this rejection predictable? And why is it such an important step forward?

From 0 To 23%
To answer these questions, a brief historical overview is in order. In 2008, the German film maker Enno Schmidt and the Swiss entrepreneur Daniel Häni, both based in Basle, producedGrundeinkommen: ein Kulturimpuls (Basic income: a cultural impulse) a “film essay” that gave a simple and attractive picture of basic income. The dissemination of this film through the Internet helped prepare the ground for a popular initiative launched in April 2012 in favor of the above proposal. Another popular initiative proposing a UBI funded specifically by a tax on non-renewable energy was launched in May 2010 but failed to gather the required number of signatures.

The initiators of the 2012 initiative first thought of specifying that the basic income should be funded via VAT, as was suggested in the film, but they dropped the idea for fear of losing support for the proposal. They also chose not to stipulate a precise amount in the text itself. But their website did mention a monthly amount of Sfr2500 per adult and Sfr625 per child as the best interpretation of what was required, in Switzerland, “to live a dignified life and to participate in public life”. If an initiative gathers over 100,000 validated signatures in 18 months, the Federal Council, Switzerland’s national government, is obliged to organize a country-wide referendum within three years either on the exact text of the initiative or on a counter-proposal to be negotiated with the initiators. ...

https://www.socialeurope.eu/2016/06/worldwide-march-basic-income-thank-switzerland/

 

[ramonmercado]

This time an argument against Basic Income.

Simple Arithmetic Shows Why Basic Income Schemes Cannot Work
by John Kay on 8 June 2016 @JohnKayFT

Swiss voters decided in a referendum on June 5 whether to introduce a “basic income”. In proposed reforms to the social welfare system, all residents would be entitled to a guaranteed income of SFr30,000 ($30,275) a year from the state — unconditionally.

The concept of basic income has been discussed for decades. It has attractions for people at both ends of the political spectrum. For the left, it offers a simple and comprehensive answer to concerns about poverty and inequality. For those on the right, the plan discharges social obligation with minimum intrusion into personal affairs.

The renewed popularity of this idea is part of the general revulsion against mainstream politics that is sweeping the west. Bernie Sanders, a candidate for the Democratic presidential nomination, has expressed sympathy for basic income while stopping short of endorsement. Yanis Varoufakis, the former finance minister of Greece, is a proponent. The scheme gains credibility from loose association with Brazil’s widely praised, but wholly different, bolsa família, which transfers cash to poor families with children in return for a commitment to keep their offspring in school.

Yet simple arithmetic shows why these schemes cannot work. Decide what proportion of average income per head would be appropriate for basic income. Thirty per cent seems mean; perhaps 50 per cent is more reasonable?

The figure you write down is the share of national income that would be absorbed by public expenditure on basic income. The Swiss government reckoned spending on social welfare would approximately double. ...

https://www.socialeurope.eu/2016/06/simple-arithmetic-shows-basic-income-schemes-cannot-work/

 

[Mythopoeika]

At the end of all the maths is - who pays for it?

 

[Xanatic*]

Evil companies. I know a few advocates of basic income, I don't get the impression any of them would work a day again, if it actually happened.

 

[Mythopoeika]

Evil companies. I know a few advocates of basic income, I don't get the impression any of them would work a day again, if it actually happened.

Evil corporations do everything they can to avoid paying tax, as we all know.
They have the power to lobby and bribe MPs.

 

[Xanatic*]

I think part of the idea is that basic income will be cheaper, as the goverment can cut down on disability checks, prisons and general administration. So it will pay for itself.

 

[Anonymous-50446]

I think part of the idea is that basic income will be cheaper, as the goverment can cut down on disability checks, prisons and general administration. So it will pay for itself.

My idea on basic income is:

Basic income should cover food and housing and utilities. That's it. No ciggies, booze, paid for TV services, leather sofas. Internet access I'd allow. If you're on 'basic' everything education related is paid for (direct to schools, so transport, trip fees etc) by the state.

The minimum wage needs to be significantly more than that or there's no incentive for anyone to go out and earn money.

Barring disabilities and real sickness, I'd make recipients of 'basic income' work for it. 35 hours a week of some community minded work, recycling sorting, litter collection, whatever. Provide transport (or expenses for it) and simply don't pay out to anyone who doesn't do the work.

No-one gets a free ride, there's an incentive to get a job in the private sector.

 

[Xanatic*]

The amount the swiss proposed does seem rather high. To be honest I work full-time and make less than that. I would also prefer if that money was given with a caveat that you do something worthwhile for humanity. Create some kind of conscription, for social work, science or what have you.

 

[Graylien]

Barring disabilities and real sickness, I'd make recipients of 'basic income' work for it. 35 hours a week of some community minded work, recycling sorting, litter collection, whatever. Provide transport (or expenses for it) and simply don't pay out to anyone who doesn't do the work.

But those are jobs people are currently being paid a proper wage to undertake. So basically, you're creating unemployment, then making the unemployed work for peanuts.

I'm sure the likes of Serco would love it.

 

[ramonmercado]

Three former bankers were in Mountjoy Prison in Dublin last night after receiving jail sentences for their roles in a €7 billion fraud committed at the height of the banking crisis in 2008.

Judge Martin Nolan said the senior executives had taken part in a “dishonest, deceitful and corrupt” scheme to make Anglo Irish Bank’s finances look stronger than they were.

Former Anglo executive Willie McAteer (65) was sentenced to 3½ years while his ex-colleague John Bowe (52) received a two-year term. Denis Casey (56), the former group chief executive of Irish Life and Permanent, was jailed for two years and nine months.

Longest trial
After the longest criminal trial in the history of the State, the three were convicted by a jury in Dublin Circuit Criminal Court last month of conspiring together and with others to mislead investors, depositors and lenders by setting up a €7.2 billion circular transaction scheme between March and September 2008 to bolster Anglo’s balance sheet.
The scheme, described by the judge as a series of “sham transactions”, involved Anglo placing massive sums with Irish Life and Permanent and receiving the money back, via a non-banking subsidiary, as customer deposits.

Anglo sentencing: ‘Honesty and integrity were sorely lacking’

• Anglo verdict: It ‘beggared belief’ accountants signed off

• Cliff Taylor: Three bankers jailed – their crime was trying to stave off banking collapse

The short-term transactions enabled the bank to disguise a heavy loss in customers’ deposits, which would have confirmed the widely held suspicion in the market that Anglo was close to collapse.

“The public is entitled to rely on the probity of blue chip firms. If we can’t rely on the probity of these banks we lose all trust in institutions,” Judge Nolan said, describing the conspiracy as a “very serious crime”.

The men did not react when the sentences were handed down. They conferred briefly with their lawyers before being led out of court. Under court rules they have 28 days to lodge a notice of intention to appeal the sentences.

Judge Nolan said he was aware that certain State authorities had turned a blind eye to “optically driven balance sheet management” which he said was a euphemism for banks entering into transactions which had little or no effect.

Lawyers for the three men argued during the trial that their motivation in authorising the deal was the “green jersey” agenda – the financial regulator’s request for Irish banks to support one another as the financial crisis worsened.

‘Beggared belief’
The judge said it “beggared belief” that Anglo’s auditors, Ernst & Young (now EY) had signed off on the bank’s end-of-year accounts. “They should have known what was occurring if they were doing their job properly.” He said he did not know whether it was a case of “blindness or wilful blindness”.
A spokeswoman for EY said the firm was not a party to the court proceedings and had co-operated with requests from the prosecution for witnesses and documentation in relation to the case.

“Neither the prosecution nor the defence chose to call any EY witness to give evidence at the trial in front of Judge Nolan,” she said. “We will not be commenting further on this matter due to ongoing proceedings.”

In response to the sentence handed down to Denis Casey, Irish Life said the matters investigated by the court took place eight years ago when Irish Life was under a previous ownership structure, as part of Irish Life & Permanent. ..

Anglo trial: Three ex-bankers jailed over €7bn fraud

• Anglo verdict: Huge sums involved meant jail sentences always likely

• Anglo trial: White-collar cases are costly, time-consuming and essential

• Anglo verdict: Profiles of the three bankers

• Anglo verdict: Witnesses praise bankers ahead of sentencing

• http://www.irishtimes.com/news/crim...est&utm_medium=email&utm_campaign=news_digest

 

[ramonmercado]

Owen Jones meets Ha-Joon Chang | The economic argument against neoliberalism

Published on Aug 11, 2016

Ha-Joon Chang is a professor of economics at Cambridge University and a best-selling international author. I asked him to provide an argument against much of today's prevailing economic thought. Isn't austerity necessary? Do we have capitalism for the rich and socialism for the poor? Is taxation theft? Does welfare encourage laziness and fecklessness? What's wrong with inequality? And can we defeat neoliberalism?

 

[ramonmercado]

Is there a more appropriate thread for this story? It does involve a mendacious ex-banker though.

The Telegraph gets caught concocting a story to protect its mates in the banking industry

Former Royal Bank of Scotland (RBS) banker turned Telegraph business hack James Quinn invoked the wrath of many on Saturday, when he falsely suggested that RBS bosses expected “to be cleared” by regulators over allegations that the bank systematically destroyed thousands of small- and medium-sized business customers.

Quinn’s headline – “Controversial RBS unit ‘to be cleared’” – was based on comments from RBS Chief Executive Ross McEwan as the bank reported its third quarter 2016 results last Friday.

Both RBS and the Financial Conduct Authority (FCA) sought to immediately distance themselves from The Telegraph’s story.

Reacting to the article, RBS Head of Media Linda Harper told The Canary:

We didn’t say that, you can see from the quotes in the article that it was taken out of context from the Q3 results presentation by Ross McEwan to investors last Friday.

The comments made in The Telegraph, to then suggest we are expecting to be cleared is stretching things. The points made by Ross were in relation to the central allegation, which is RBS destroyed SMEs wilfully for profit. In no way are we trying to pre-judge the outcome of the FCA investigation into RBS GRG [Royal Bank of Scotland’s Global Restructuring Group].

The story’s co-author, James Quinn, worked for RBS as a Corporate Banking Relationship Manager between 1998 and 2000, raising further questions as to the origins of the story.

The Telegraph implied that RBS expected to obtain a green light from the FCA for crimes against its small business customers. In fact though, Ross McEwan’s comments only suggested that he had “seen nothing” to support the allegations that the bank was committing fraud against its own SME customers – for profit. McEwan made no comment regarding his expectations for the outcome of the FCA inquiry.

Whilst the FCA distanced itself from the claims, it cannot comment publicly on ongoing investigations, and would not want to prejudice the outcome of its ongoing RBS inquiry.

Privately, however, Andrew Bailey, the newly appointed Chief Executive of the FCA, was unimpressed.

In an email sent to Clive May, a victim of RBS GRG, on 30 October and seen by The Canary, Bailey wrote:

I can tell you for sure that there is no truth in this article whatsoever. We have not yet reached a view on the facts of GRG and until we do so it is pure speculation by other parties. There are people who seem to think it serves a purpose to fly kites like this. I don’t think it serves any purpose and I am completely unmoved by reading such articles.

May was quick to note that, for thousands of RBS victims, hopes of justice and due compensation from the bank ebb and flow with every article published by the print media. To speculate that the FCA will clear RBS causes “immeasurable stress for all victims,” said May.

Nikki Turner, who runs the SME Alliance – a support network for small businesses destroyed by the banks – described the story as “extraordinary and inflammatory”. ...

http://www.thecanary.co/2016/11/03/...cocting-story-protect-mates-banking-industry/