A Glass-Steagall split needs to happen

[Michael Grove]

 and someone needs to get it done.

 THERE REALLY IS NO ALTERNATIVE

So went the strap line to Liam Halligan's article in todays Daily Telegraph entitled "Liborgate" could trigger crucial banking reform - in which he started off with the following statement -

Finally, the British political classes are starting to get it. Finally, a head of steam is building. Over the past week, calls to impose a proper division between investment and commercial banking have become louder, more authoritative and part of mainstream debate. Pressure for the introduction – or reintroduction – of this crucial split could soon become irresistible, however much the politicians wiggle and the investment bankers deceive.

Until now, it’s been mainly nerds like me who have advocated a full Glass-Steagall separation. Given the vested interests that would lose from this change, we’ve been lampooned for our “hot-headed” views.

Yes, our message is awkward. Life would become difficult (and less lucrative) for a lot of powerful people, were we to prevail. Yet we “Glass-Steagallers” are right. We have history, logic and common sense on our side. And now – thanks to Barclays’ ex-CEO Bob Diamond, and “Liborgate” – we also have political momentum.

To which from america responded -

Were talking about "CRIME."

What Diamond and many other people did to LIBOR rates was a crime.  

What American banks did to municipal bond interest rates was a crime.

It was also based upon collusion... American banks fixed bond interest rates on the money float. Phone calls were made between American and EU Banks who fixed interest rates on money held until projects were completed. The low interest rates robbed hard working Americans of tax money... robbed their states, cities, counties, school districts, colleges and other public projects of hundreds of billions of dollars.

The perpetrator of these crimes fixed bond interest rates... for years.... the same way they fixed LIBOR rates Worldwide….

"FOR YEARS."

What the heck is wrong with governments in America and England?

They slap wrists and levy small fines on instigators of this type of racketeering? 

The mafia couldn't get away with it... but CEO's can? 

Both countries routinely send people to prison for 5,10 or 20 years when they rob automated teller machines… yet let bankers, CEO’s, traders and corporations off…. after “they stole billions.”     

To stop any crime... the punishment must fit “the crime”.... not the social status of the individual that commits the crime.

I would think people who knowingly stole tens of billions… or hundreds of billions… or indirectly aided in the theft of trillions of dollars....   and people who buy polticians… and people who change existing law to make their crimes legal… all need jail time.... "lots of it!"  

Even the American Supreme Court Justices who signed off on a bizarre ruling called "Citizens United" need to be impeached... and given jail time.  

What is wrong with the moral fiber of America and England? 

Where is a voice of reason protesting and screaming... “What the heck is going on?” and “We want equal Justice... for all!”

Governments need to do four things to "corral” criminal activity on Wall Street, big banks and in the London financial district---

#1.   Bring back the Glass-Steagall Act.

Have Paul Volcker update the new regulations and include derivatives.  No lobbyists involved... or 1000 page bill based upon political arm twisting… laced with dozens of amendments containing loop holes catering to Wall Street, big banks, hedge funds and corporations.... effectively neutralizing all regulations.

Just a simple 4 or 5 page bill... single lined spaced with wide margins... keep it simple.

#2.   Add a 1/3% tax on all financial speculation (include $900 trillion worth of derivatives). 

This would help control derivative trading and/or point shaving on Wall Street and London financial districts trillion dollar flow of money. 

The billions created could be used to pay for real regulation (Glass-Steagall Act / Paul Volcker style), finance public works programs, social programs, extend unemployment benefits, support “free” single payer healthcare (Canadian or French style), bailout people with mortgage problems and give housing a boost with another government rebate program for all home buyers. 

In other words spend the money doing something for the other 99%.... put them to work... in good paying jobs with benefits and pensions.

Both government and corporations by now should understand... if middleclass doesn’t prosper the World economy goes in the toilet.  

Soooo…. screw the elite, screw Wall Street, screw the London financial district and screw the big banks... “let them go under.”  The world will not end… as regional businesses and banks will pick up the pieces... they always have in the past.

#3.   Governments must prosecute white collar crime... "hard." 

The new mafia... "criminals".... are CEO's, lobbyists, traders, bankers and Congressmen... governments should prosecute them for crimes they have committed... not aid them in commiting more. 

It seems Wall Street and big bank CEO’s have lobbied politicians with the promise of private sector jobs and political contributions.  All to change existing law… making Wall Street and big bank crime legal… and that in itself is inherently wrong.

“Prosecute them”....

CEO’s and politicians need to spend 10, 20 or 30 years rooming with a guy named “big Bubba” on Rikers Island... or in some rat hole London prison... playing drop the soap in the shower every day.... to develop much needed character.

"No more country club prisons for the criminal elite"....

Let them all know…. “white collar crime equals 30 years with a personal trainer named big Bubba, a shower cap and a bar of soap.”

#4.   Governments should stop token million/billion dollar fines placed on USA, England and European bank fraud.

They need to confiscate all profit made from any illegal act… for the entire length of that crime... just like they do with drug dealers and ATM robbers.   It’s no different... crime is crime. Take CEO’s, bankers, traders and politicians ill gotten gains... all of it.  Confiscate their businesses, salaries, bonuses, houses, cars, planes, boats and furniture etc ... "all gains made from all illegal transactions."  

Governments will instantly be in the bank, trading, hedge fund, property and auction businesses… until the newly acquired companies can be broken up and sold.

To stop any crime... the punishment must fit “the crime”.... not the social status of the individual that commits the crime.

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If you agree with what I've written... please cut and paste my comments... and send to your friends, congressman... and post on other web sites and newspaper comment sections.... link it to every site you can... ASAP!

Thanks-
FA

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To put ALL of this into further perspective would equally require us to read, learn and inwardly digest - as understanding - the core principles which Andrew Lilico has raised in his Telegraph Viewpoint article - in which he concludes - 

Whilst banks continue to use funds regarded as riskless (deposits) for risky activities (e.g. mortgages or commercial loans), banking will be unstable and socially damaging. For a healthy banking system in the long run, we will need to separate out true savings from investment depositing, and expose investment depositors to genuine risk of loss.

"Families who knew the truth had been dismissed over the years as conspiracy theorists – grief had obscured reason, was the suggestion. Those who seek to protect their hides or simply profit at the expense of others need to be brought to book." 

 

In the context of Peak Oil the Transitions Towns initiative and the Evolution of LIFE in the UNIVERSE just take cognisance of this very succinct summary of Benjamin Bratton ...

 

"Consider the Greek plastikos, Latin plasticus, and in 1630’s the English, plastic, and then finally Leo Baekland’s “plastic,” a hard light-weight material synthesized in 1909. The concept of plastiticty predates the industrial-era invention of plastic and its epidemic standardisation of the chemical phylum. Now the massive scale oil extraction and distribution that most differentiates the 20th century as the time of the Anthropocene has made possible the ongoing replacement of the things of world by their plastic versions.

But plastic is not only mutability and mimesis, it is mutation, a speciation of objects.

 And that is oil’s own career as a terrestrial process. For Earth, the rendering of organic life on the surface of its crust into subterranean mineral fossil fuels is a core vascular labor. As oil, plastic is life re-recycled. So that the plasticity of plastic - the real compression-deformation effect of oil as the ultimate fate of the living thing - long predates the physical possibility of its composition by animals (humans) as the chemicals we call “plastics.” That futurity is ancient. This transmutation from some things and toward other things, the recycling churn of geotrauma and geodesign, translates the situated flux of planetary molecular recombinancy into the generic assemblages we recognize as cities, civilizations, languages, and discursive registers of authority and knowledge."

 

 

"IF we really want transformation, we have to slog through the hard stuff (history, economics, philosophy, art, ambiguities, contradictions). Bracketing it off to the side to focus just on technology, or just on innovation, actually prevents transformation"

                                                                            Benjamin Bratton.

 

 

WE have a responsibility to not sit idly by. We all need to stand up.

 

 

[Michael Grove]

The global financial system rests on self-created quicksand. When banks lend to other banks or financial institutions, those funds are used as a basis for further lending, and each transaction is larger than the one before. Interest has its own interest, and money breeds money. The greater the amounts and quicker the transactions, the more money is created. The amount of money in the system has grown exponentially. Computers decide in milliseconds the buying and selling of millions and billions of dollars worth of financial instruments. With so much money available, and with the ease and speed of global transactions, trade in derivates and other forms of financial gambling has progressively detached the financial system from economic and social reality.

Ervin Laszlo

[Michael Grove]

BRITAIN is part of a debtor nation "ring of fire" - due to debt - and bondholders are at

risk of being "burned to a crisp" the head of the world's biggest bond house has warned -

and as Allan Massie has said in his article for The Telegraph-

"A good society seeks and achieves a balance between individual and social action. The excesses of the money markets show the dangers of rampant individualism and of the belief that greed is good; the somnolence of an unenterprising culture is the consequence of relying too heavily on the state and the public sector, and lands people and communities in the dependency trap. Ruth Davidson exaggerates, but she is right to draw attention to the absence of vigour and self-belief in much of Scotland, where the balance between individual and social action has been tilted away from the former."

AS Europe and Britain are sinking under the weight of welfare costs - and "Recent projections aired by Fabio Pammolli, professor of economics at the IMT Institute for Advanced Studies, show quite shocking levels of exposure." - Jeremy Warner goes on to say "If there wasn’t already enough to worry about in Europe’s fiscal meltdown, these forecasts point to destruction of the very foundations of the European social market economy. Taking into account the expected decrease in fertility and mortality rates, the burden on active workers of healthcare and pensions spending is expected to grow over the next 20 years to 63.5pc of GDP per capita in Italy, 61.6pc in France, and 53.3pc in Germany.

Favourable demographics mean that by comparison, the projected UK burden is relatively small at just 38.7pc. Yet it is still quite high enough.

As is only too apparent, much of Europe is incapable of supporting its present pensions and healthcare promise. Herb Stein, one time economic adviser to President Nixon, famously remarked that if something cannot go on for ever, it will stop.

In Europe, stopping is going to make the present outbreak of economic, social and political instability over deficit reduction look like a stroll in the park. We are only in the very early stages of Europe’s wider fiscal crisis. There is still much worse to come, regardless of whether the euro survives or not."

[Michael Grove]

Linnie & I have today signed the following petition in the forlorn hope that somebody out there might first start to listen to THE FACT that 1+10 does NOT equal 20 - and that the consequences for WE the PEOPLE - the "goose" that lays the golden egg - are just as important as ALL of those involved in providing - the capital that feeds the goose -

ONE is NOT a pre-requisite of the other - they BOTH CO-EXIST -

STOP THE STRASBOURG CIRCUS

Responsible department: Foreign and Commonwealth Office

We the undersigned believe that the €200 million spent every year moving the European Parliament between Brussels and Strasbourg is a waste of taxpayers’ money. We are further concerned that the travelling circus generates 20,000 tonnes of CO₂ at a time when all countries are supposed to be cutting their levels of pollution. We want the British Government to support the ‘One Seat Campaign’ and lobby for the end of the Strasbourg Circus.

We request that the Prime Minister submits a proposal in support of the ‘One Seat Campaign’ to the European Council demanding a change in European law so that the European Parliament need only meet in one place.

[Michael Grove]

Major banks should be forced to split their retail and investment arms to end the era of extortionate fees and big bonuses, according to a think tank.

The Institute for Public Policy Research (IPPR) said the Government must take dramatic action to reform the banking industry, saying its current policy was “too timid”.

In a report titled "Don’t bank on it: the Financialisation of the UK economy” the IPPR argues today that, despite a wave of new regulation, customers still pay too much in fees to banks and that pay levels within the organisations remain too high.

“Where very little has been done is on the issue of rent extraction. The culture of the City, its governance and compensation practices, all need to change,” said Tony Dolphin, chief economist at IPPR.

Mr Dolphin said that - even the recent proposals of the Commission on Banking Standards to “electrify” the ring-fence between retail and investment banking businesses would not solve the problems with banks.

[Michael Grove]

Inadequate boards to blame for banking crisis - Telegraph Letters to the Head of Business

SIR - Thomas Pascoe (Telegraph Finance Blogs, February 4) writes that George Osbourne misses the point by saying that retail banks should be "ring-fenced" and argues that retail banks, not investment banks caused the financial crisis. 

Sadly they both miss the point. Almost all the banks have been very badly managed, not just over the past decade but for many decades. The management and the boards have not been up to the task. Northern Rock was "only a retail bank" but it grew too fast and was too complicated for its very weak board and executives. Lehman's was "only a (sort of) investment bank" but that was too complex for its board.

Any bank (or any business) needs to be no bigger or complex than its board and executives can manage. No chief executive, finance director, chairman or directors can have all the expertise to cover activities as different as lending and financial trading. That is why the so called universal banks must be broken up and why ring-fencing will NOT work. 

                                                                                              Tony Shearer W14 8LQ   

Osbourne has it all wrong

SIR - The three principal causes of the banking crisis were unwise mortgage lending by Northern Rock, an indulgent display of braggadocio by RBS in overpaying for a little-known Dutch bank just to show it could outbid Barclays, and the purchase by Lloyds of HBOS, without any proper due diligence of its loan book. Nothing whatsoever to do with investment banking. What does George Osbourne think he's doing?

                                                                                              David Langfield, Surrey

Presumably Mr. Osbourne continues in the same vain as every other Chancellor before him, for the last several decades - in complete denial of the need for any understanding of the consequences of consequences of complex systems.

[Michael Grove]

  From austerity to zzzzz, here’s a list that should make politicians hang their heads in shame.