Poisonous Finance. Wait for the next disaster……

Banks and investment institutions are supposed used to provide support to organisations with healthy values and withdraw support from organisations that damaged the society around them.

But history is strewn with the remnants of massive financial fraud. The “South Sea Bubble” in the 18th century is an early example. Only recently, the collapse of the world banking system in 2007/8 was founded on fraud and criminal behaviour in the US housing market which spread through the whole rotten banking system.

Not much further back the collapse of the once-feted Enron Corporation was based on fraud and collusion between Investment banks, major international auditors - and the company. Arthur Anderson, once one of the biggest auditors, collapsed as a result.

Now the “Big Four” and other accounting firms are responsible for helping massively wealthy individuals and Corporations evade tax by sheltering $Trillions in offshore tax havens.

Hyman Minsky once coined the phrase “Money Manager Capitalism” to encompass violent and erratic behaviour in the financial markets not supported by solid foundations.

Watching the so-called “investment” markets is rather like watching a plastic tube full of table tennis balls being swirled by a strong wind.

The “models” espoused by Hedge Funds, Private Equity and other funds all too often include stripping out assets and replacing them with debt, harsh cost reduction and a limited term for investments before selling the assets to the highest bidder or returning the husk of the original enterprise back to the market. Other forms of “investment” include storms of cash chasing the next hot deal, such as Bitcoin.

To add to the malaise and the risk to the international financial system……

Ignoring the “rules”. Privilege and entitlement. The British Disease

Before examining the English disease, it should be mentioned that entitlement and privilege also exists in other countries. In Russia it comes from wealth and patronage from the ruler, in America from Family and wealth. However in England entitlement and privilege comes from a more subtle source….

There is a malevolent trend in Britain that regards attendance at particular privileged schools like Eton College as a free pass to ignore tiresome rules and procedures invented for the control of others. Until this aspect of the class system is dealt with, it gives permission for many in the financial markets to behave just as they wish, and dishonesty and malfeasance to be the norm in the seats of power

A remarkable recent example of such behind the scenes lobbying on a grand scale is the behaviour of ex-UK premier David Cameron and his attempts to screw £billions from the UK government for the dubious Greensill Capital, which has recently gone bust, endangering thousands of skilled jobs in the “real” economy.

Cameron’s behaviour reveals the strong sense of entitlement felt by people who attended the schools and universities previously mentioned. Such networks have been dubbed the “Chumocracy” and have been revealed as the way to gain privilege and in particular government money by a few quiet words with an old school friend or wife of a prominent politician

Excessive speculation

The demand for, and supply of, financial assets is governed largely by speculative motives – buy in anticipation of a capital gain, and sell to avoid a capital loss. Given the absence of full information about future values and risks, the behaviour of speculators is subject to what Jonn Maynard Keynes referred to as ‘animal spirits’ and the ‘herding instinct’. This means that markets can experience ‘bubbles’, with market values being driven up well beyond their ‘true’ value. Eventually, some speculators predict that the next movement in asset prices is downwards and, as a result, sell their assets to avoid a loss. This then triggers a fall in price as the ‘bubble bursts’, with the rest of the herd starting to sell.

The background to all of this is a malevolent society and finance system fuelled by speculation, lobbying and an obsession with short term gain. To players in this system, the likes of Amazon, Deliveroo, Greensill and the like are meat and drink. Meanwhile, the “real” economy is left to a few large companies, small businesses and social enterprises.

The best analogy is of a slowly growing cancer waiting to burst in the midst of society. And at last…. Professional football has fallen to the curse of excessive Monetarisation. The only Question is “When will the next financial catastrophe happen?”

Come forward President Biden, you are the only hope!!!

Until then, privileged speculators enjoy destroying the world!

How free market economies got it wrong - and what to do about it
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