Tag Archives: Banks

Banks & IMF Are Out of Control

As a species we are fallible and we recognise this in our attempts to construct laws and regulations which address human weaknesses and flaws. They are by no means complete and human fallibility continues to wreak havoc, more so when those same laws and regulations are removed or neutered by vested interest.

My regular readers will know that one of my hobby horses is the continued abuse of Greece by the Troika, something that is killing innocent Greek people through deprivation and despair. At the heart of this destruction is the IMF and its policy of ‘austerity’ that obligates countries indebted to it to cut social support programmes and hand over sovereign assets at discounted values.

“The organization’s objectives stated in the Articles of Agreement are to promote international monetary cooperation, international trade, high employment, exchange-rate stability, sustainable economic growth, and making resources available to member countries in financial difficulty.”

Further on from this, the frightening scope of its powers are clearly laid out.

Whilst the Fund can “make contracts, acquire and dispose of immovable and movable property and institute legal proceedings” from which nobody is immune, the Fund and its employees “are immune from every form of judicial process” and its assets “free from restrictions, controls and moratoria of any nature.” This includes freedom from any form of personal taxation for all 2400 employees!

With this unprecedented level of unaccountability, the Fund can do whatever it likes. In the case of Greece, it has done precisely this without seeming care or concern, in what has now been described as the ‘immolation’ of Greece. (Merriam-Webster’s dictionary defines immolation as “to kill as a sacrificial victim”, which is the stand I have personally taken over the whole violation of this country.)

This lack of accountability has now been firmly placed in the spotlight, (with similar brutality), after its own internal watchdog, the Independent Evaluation Office (IEO) submitted a report  to the board, (to whom they are solely accountable), which has roundly condemned how the Fund is being run.

Its top level staff have misled and misinformed their own board into becoming the champions of the euro project and which has led to catastrophic misjudgements on Greece. They have also failed to grasp the basic concepts of money theory that ensured they completely ignored the warning signs of an impending crisis within the EU, a ‘serious scientific and professional failure’.

EU insiders have used the fund to rescue their own pet project, with an unprecedented 80% of all available funding being used to bail out Greece, Portugal and Ireland. An ethos of misleading seniors was also extended to the IEO, in its investigations of the activities of “ad-hoc task forces”, where decisions and provision of information remained elusive.

Heads have turned to its managing director Christine Lagarde, who is now to stand trial in France over corruption charges and who has responded to this report with a statement that offers ‘qualified’ acceptance of its contents. Something I interpret as “I hear you” and no more.

This arrogance, by the boss and her organisation, has led to an era of negative interest rates that is devastating savings and the future of pension schemes, whilst ruining the banking system in its wake. Their policies continue without any recovery, or hint of recovery in sight. Here lies the true cancer created by the inbuilt lack of accountability written into the Fund’s Articles of Agreement.

It goes to the very heart of why we need regulations and accountability to guard against the horrific abuses that can occur when human fallibility is not held in check. Millions of people’s lives have been ruined by the mismanagement of this powerful organisation and its independence must surely now be put in question.

And all of this at a time when the European Banking Authority has just conducted a ‘stress test’ across the European banking sector and nobody has failed, nor has anyone passed, as there are no criteria for such assessments.

Instead a rescue package has been put together to stop Italy’s Banca Monte dei Paschi di Siena collapsing and Deutsche Bank, defined by the IMF as “the world’s most systemically risky bank” is being ‘scrutinised’.

Of the 123 lenders covered in the last stress test in 2014 less than half have been covered this time and none of Portugal or Greek banks have been included. Neither will the results of 56 other banks that have taken the tests be published.

Like the IMF, lack of accountability and secrecy reign and beg two questions. Firstly, what was the point of these tests, other than giving the appearance that some form of regulation is being carried out. Secondly, what is the true extent of the fragility of these banks, given the millions of people are dependent upon them for running their personal and business finances.

This last point is even more significant when you consider that the world banking system is a carefully controlled cartel that is not open to competition. Cartels and monopolies offer the very worst of attributes of human fallibility in the unaccountable power and control they provide and a complete immunisation from healthy regulation and governance.

Thatcher and Reagan opened up the financial markets to unlimited growth and power, which has accelerated exponentially in the last 40 years and is now bringing the world to its knees, with an impending financial collapse that will make 1929 and 2008 seem but hiccups.

Only today the man convicted of the UBS £1.4 billion fraud, the biggest in British history, said that “major banks have done little to tackle the culture which allowed him to carry out his crimes”.

Indeed, the Financial Conduct Authority dropped a long-running enquiry into the culture of banking at the beginning of the year, with suggestions that former chancellor George Osborne had exercised pressure on the industry following last year’s surprise election win.

Never has there been the need for the re-emergence of democratically supported political power to bring these financial monoliths back under control. We need regulations that have teeth and can break the conglomerates up and return us to a banking sector that supports the needs of Society and not the needs of the few.

I worry that we hear nothing about the regulation of the financial sector from those seeking political office, either at home or abroad. It was strong leadership that gave them their power and it is that self-same strong leadership that can take it away again now.

Until the next time


Thinking from his Book: Global Magna Carta. Returning Power to the 99% . . . If They Want It! By J T Coombes

Shylock Visits Greece

From the moment we invented money we have had an uneasy relationship with moneylending and usury, the practice of making profits from others misfortunes. 2000 years ago Christ, in his only recorded act of physical anger, threw the moneylenders out of the Temple.

1600 years later in the Merchant of Venice Shakespeare, the world’s greatest dramatist ever, created Shylock who demanded a pound of flesh ‘nearest the heart’ as security for a loan and then demanded it when the borrower defaulted.

In my early days in the City of London, a much respected bank manager explained to me that the difference between ‘banking’ and ‘moneylending’ lay in the third question. When asking what security was available for a loan and whether the borrower could meet the repayments a banker would also ask: “Is it necessary?”

Like moneylenders, bankers are aware that loans can prey upon our weaknesses and sought to protect us from our own irresponsibility by making us think seriously about what we were about to indebt ourselves to them for.

Greece is in seriously troubling times as a result of its politicians taking on vast debts to stay in power. Aided by the lenders, this burden was hidden from the people AND the EU, when applying for membership.

With these loans came the condition of severe belt tightening ‘Austerity’ measures, effectively hobbling economic growth as well as humiliating the Greek people. Additionally, non-elected technocrats were installed in government, (as well as Italy), to ensure that interest payments are always met over the needs of the country and its people.

The repercussions from this have resulted in Greek youth looking at a bleak future, with little chance of gainful employment during their lifetime. People who previously held responsible jobs are now reduced to scavenging through the garbage for food, or relying on charity to survive. Is it any wonder that the extent of this human tragedy has also seen a dramatic increase in the rate of suicides, caused by an environment of growing despair as lenders continue to demand their ‘pound of flesh’?

It is now clear that Greece can no longer afford these secretly made obligations, whilst lenders simply proffer more debt as the solution to meeting the repayments.

The reality is that if these payments are taken out of the county’s balance sheet Greece is in credit! Accusations have been levied at the Greek people, which in most part they accept, that they have not been responsible in paying their taxes and so they are to blame.

How credible are such accusations, when the very people who lent them the money and are now taking over the country’s public utilities at heavily discounted prices, are themselves constantly avoiding taxes? In the last few days it has been whistleblown that a subsidiary of HSBC, the 2nd largest bank in the world, is actively helping wealthy clients dodge taxes.

Unlike Greek shopkeepers, these global institutions have armies of accountants constantly looking to see where tax can be avoided or evaded. Unlike Greek shopkeepers , we are talking here about billions each year that are hidden in designer made tax havens such as The Cayman Islands, Lichtenstein and The Isle of Man, to name but a few. Pot calling the kettle black . . . You decide!

An Impassioned Plea . . .

The brave people of Greece are now in a very, very lonely place, as debt repayments they can’t meet fall due at the end of this month. Like a modern day David and Goliath, they now confront their financial oppressors whilst the rest of the world looks on.

Goliath cannot be seen to be backing down here, because it will create a precedent of unmanageable proportions for those lenders with other European countries in similar situations. I, for one, believe Greece is now fighting a battle the rest of us in the western world will have to face, if we are to relinquish our continued enslavement by debt.

Surely NOW is the time for the rest of us to express our refusal to continue with the “High Debt, low growth and unemployment” we are told by the IMF “could yet become the new normal in Europe”, by showing our support for the people of Greece on social media and elsewhere.

Mine is this simple message that will be repeated daily for the next week:

If, like me, you are convinced ‘Austerity’ only works for the lenders please support this message by hitting the RT above right here and now. Or use your own words with #GreekDebt, so our collective voice will let them know they are no longer alone.

We owe it to their bravery in making a stand . . . How can anyone look away?


Until the next time.