Category Archives: Financial Crisis

Planned £12bn Tory welfare cuts will lead to two million a year using food banks, says study

Jane Merrick reports for The Independent:

The number of people using food banks will double to more than two million a year under the Conservatives’ plans for £12bn of welfare cuts, an academic study by Oxford University suggests.

The research was seized on by Labour as evidence that David Cameron’s welfare cuts will have far-reaching consequences for family budgets, including eating into in-work benefits, if the Conservatives get back into power next week. On the Question Time leaders’ debate on Thursday, Mr Cameron said he did not want or had no plans to cut child benefit further – but Labour claims this does not mean he has ruled it out. The Prime Minister, asked about child benefit cuts on BBC Breakfast yesterday, again refused to rule it out.

Labour’s spokesperson on work and pensions, Rachel Reeves, told The Independent on Sunday that the Oxford University study was extremely worrying for families on low incomes, and claimed that Mr Cameron’s failure to rule out child benefit cuts suggested that they were on the table.

Last month, the Trussell Trust, the charity that provides parcels to food banks, revealed that visits had risen to over one million a year for the first time.’

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Austerity is a con

From Another Angry Voice:

The Tory austerity narrative is a simple and oft repeated one. It doesn’t matter that “we’ve got to cut our way to growth” is nonsensical from a macroeconomic perspective, it’s been repeated so often now that millions of people accept it as fact.

Some people (myself included) have maintained all along that it was always a simple con designed to give the Tories an excuse to continue their agenda of transferring ever more wealth to the tiny super-rich minority under the guise of bringing the national debt under control.

There is bountiful evidence that the austerity narrative is a misleading one, especially the myriad of counter-factual Tory slogans used to support it. They claimed that we’re all in this together while handing the UK’s income millionaires an average £100,000 per year tax cut and trying to defend 200%+ bankers’s bonuses from new EU rules. They claimed they were making work pay whilst overseeing the longest sustained decline in average earnings since records began, and slashing in-work social security; and they claimed over and again that Labour bankrupted Britain when it was George Osborne that lost the UK’s AAA credit ratings for the first time since the 1970s.

Now that their government is over we can look at what ideological austerity has actually achieved.’

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The austerity delusion: The case for cuts was a lie. Why does Britain still believe it?

Paul Krugman writes for The Guardian:

[…] It is rare, in the history of economic thought, for debates to get resolved this decisively. The austerian ideology that dominated elite discourse five years ago has collapsed, to the point where hardly anyone still believes it. Hardly anyone, that is, except the coalition that still rules Britain – and most of the British media.

I don’t know how many Britons realise the extent to which their economic debate has diverged from the rest of the western world – the extent to which the UK seems stuck on obsessions that have been mainly laughed out of the discourse elsewhere. George Osborne and David Cameron boast that their policies saved Britain from a Greek-style crisis of soaring interest rates, apparently oblivious to the fact that interest rates are at historic lows all across the western world. The press seizes on Ed Miliband’s failure to mention the budget deficit in a speech as a huge gaffe, a supposed revelation of irresponsibility; meanwhile, Hillary Clinton is talking, seriously, not about budget deficits but about the “fun deficit” facing America’s children.

Is there some good reason why deficit obsession should still rule in Britain, even as it fades away everywhere else? No. This country is not different. The economics of austerity are the same – and the intellectual case as bankrupt – in Britain as everywhere else.’

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The big lie of economic success may still not save the Tories

Seumas Milne writes for The Guardian:

‘The warning couldn’t have been more timely. When all else is failing, David Cameron and George Osborne have always banked on the economy to see them through. We can expect to hear of little else for the next week. “The long-term plan is working,” they insist; don’t let Labour ruin it. Boris Johnson, the man waiting to take Cameron’s job, even claimed last weekend that “the economy is going gangbusters”.

Presumably he was relying on the fact that even if it’s scarcely booming, the British economy has at least been growing after years of slump and stagnation. But the signs are it’s all starting to fall apart again. Quarterly growth has now been revealed to have halved to 0.3% in the first three months of the year. Production is down, construction is down.

City commentators have tried to dismiss it as a blip. But on Monday, the Confederation of British Industry reported slowing manufacturing output and mothballed investment. Without the dramatic fall in oil prices, Britain might even be heading back into recession on the eve of a general election.’

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Sunday Times Rich List: Britain’s richest double their wealth in 10 years

Press Association reports:

The collective wealth of Britain’s richest people has more than doubled in the last 10 years, according to the Sunday Times Rich List.

This year’s list found the wealthiest 1,000 individuals and families now have a combined fortune of just over £547bn – or £547m each on average.

The figure has more than doubled since a total of just under £250bn was recorded in 2005, despite the world economy being gripped by a punishing recession over much of the last decade.

Plain old millionaires increasingly struggle to count themselves among the mega-rich, with a fortune of £100m now required to make it into the top 1,000. That is £15m higher than last year’s minimum.’

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The Volatility / Quantitative Easing Dance of Doom

Nomi Prins, author of All The Presidents’ Bankers, writes:

The battle between the ‘haves’ and ‘have-nots’ of global financial policy is escalating to the point where the ‘haves’ might start to sweat – a tiny little. This phase of heightened volatility in the markets is a harbinger of the inevitable meltdown that will follow the grand plastering-over of a systemically fraudulent global financial system. It’s like a sputtering gas tank signaling an approach to ‘empty’.

Obscene amounts of central bank liquidity applauded by government leaders that have protected the political-financial establishment with failed oversight and lack of foresight, have coalesced to form one of the most unequal, unstable economic environments in modern history. The ongoing availability of cheap capital for big bank solvency, growth and leverage purposes, as well as stock and bond market propulsion has fostered a false sense of economic security that bears little resemblance to most personal realities.

We are entering the seventh year of US initiated zero-interest-rate policy. Biblically, Joseph only gathered wheat for seven years before seven years of famine. Quantitative easing, or central bank bond buying from banks and the governments that sustain them, has enjoyed its longest period of existence ever. If these policies were about fortifying economic conditions from the ground up, fostering equality as a force for future stability, they would have worked by now. We would have moved on from them sooner.

But they aren’t. Never were. Never will be. They were designed to aid big banks and capital markets, to provide cover to feeble leadership. They are policies of capital creation, dispersion and global reallocation.  The markets have acted accordingly.’

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CEO Raises Workers’ Minimum Salary To $70,000, Takes 90% Pay Cut

‘Money can’t buy happiness, but Gravity Payments CEO Dan Price doesn’t believe in that philosophy. The boss announced a big raise for many of his employees and took a big pay cut. Anthony Mason reports.’ (CBS This Morning)

America’s Shame: Trillions in New Wealth, Millions of Children in Poverty

Paul Buchheit writes for Buzzflash:

2015.13.4 BF BuchheitAmerica’s wealth grew by 60 percent in the past six years, by over $30 trillion. In approximately the same time, the number of homeless children has also grown by 60 percent.

Financier and CEO Peter Schiff said, “People don’t go hungry in a capitalist economy.” The 16 million kids on food stamps know what it’s like to go hungry. Perhaps, some in Congress would say, those children should be working. “There is no such thing as a free lunch,” insisted Georgia Representative Jack Kingston, even for schoolkids, who should be required to “sweep the floor of the cafeteria” (as they actually do at a charter school in Texas).

The callousness of US political and business leaders is disturbing, shocking. Hunger is just one of the problems of our children. Teacher Sonya Romero-Smith told about the two little homeless girls she adopted: “Getting rid of bedbugs, that took us a while. Night terrors, that took a little while. Hoarding food..”‘

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How America Became an Oligarchy

Ellen Brown writes for Web of Debt:

According to a new study from Princeton University, American democracy no longer exists. Using data from over 1,800 policy initiatives from 1981 to 2002, researchers Martin Gilens and Benjamin Page concluded that rich, well-connected individuals on the political scene now steer the direction of the country, regardless of – or even against – the will of the majority of voters. America’s political system has transformed from a democracy into an oligarchy, where power is wielded by wealthy elites.

“Making the world safe for democracy” was President Woodrow Wilson’s rationale for World War I, and it has been used to justify American military intervention ever since. Can we justify sending troops into other countries to spread a political system we cannot maintain at home?

The Magna Carta, considered the first Bill of Rights in the Western world, established the rights of nobles as against the king. But the doctrine that “all men are created equal” – that all people have “certain inalienable rights,” including “life, liberty and the pursuit of happiness” – is an American original. And those rights, supposedly insured by the Bill of Rights, have the right to vote at their core. We have the right to vote but the voters’ collective will no longer prevails.’

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Crippling PFI deals leave Britain £222bn in debt

Jonathan Owen reports for The Independent:

Every man, woman and child in Britain is more than £3,400 in debt – without knowing it and without borrowing a single penny – thanks to the proliferation of controversial deals used to pay for infrastructure such as schools and hospitals.

The UK owes more than £222bn to banks and businesses as a result of Private Finance Initiatives (PFIs) – “buy now, pay later” agreements between the government and private companies on major projects. The startling figure – described by experts as a “financial disaster” – has been calculated as part of an Independent on Sunday analysis of Treasury data on more than 720 PFIs. The analysis has been verified by the National Audit Office (NAO).’

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British banking scandals have wiped out 60% of profits since 2011

Lianna Brinded reports for Business Insider:

Financial scandals wiped out 60% of Britain’s biggest five banks’ profits since 2011.

According to the accountancy giant KPMG’s latest report, entitled “A Paradox of Forces,” the Royal Bank of Scotland, Lloyds Banking Group, HSBC, Barclays and Standard Chartered forked out £38.7 billion ($57.6 billion) in customer remediation, conduct failings and fines since 2011.

KPMG warned that while conduct costs fell by 8% last year to £9.9bn, banking scandals “continue to be a major issue.”

It said that half of the costs related to financial scandal remediation went towards the compensating victims of the mis-selling of Payment Protection Insurance (PPI) and interest rate hedging products.’

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George Osborne has created more debt than every Labour government in history

Another Angry Voice writes:

Over the years I’ve presented a lot of facts and statistics to demonstrate that George Osborne has been doing a terrible job as Chancellor of the Exchequer, and that his ideological austerity agenda is spectacularly failing to achieve what he claimed it was going to when he came to power in 2010.

One of the main problems I’ve faced is that the facts and statistics I’ve presented contradict the almost ubiquitous mainstream media narratives that “George Osborne is doing a good job under difficult circumstances” and that“there is no alternative” to his ideological austerity agenda.

People find it difficult to accept the evidence that I’m presenting because it conflicts so badly with the narratives they’ve been conditioned to accept as true through their endless repetition in the mainstream media.

One of the assertions that people really struggle to accept is that George Osborne has created more new debt than every Labour government in history combined. This one is particularly hard for people to come to terms with because it conflicts with the (totally inaccurate) “folk wisdom” that Labour always spend loads of money, then the Tories have to tidy up the mess“. Further confusion is added by the way that Tory politicians (including the Prime Minister David Cameron) try to conflate the meanings of “the debt” and “the deficit” which are economic terms with completely different meanings.’

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Let’s not fool ourselves. We may not bribe, but corruption is rife in Britain

George Monbiot writes for The Guardian:

Andrzej Krauze on Transparency International's corruption indexIt just doesn’t compute. Almost every day the news is filled with stories that look to me like corruption. Yet on Transparency International’s corruption index Britain is ranked 14th out of 177 nations, suggesting that it’s one of the best-run nations on Earth. Either all but 13 countries are spectacularly corrupt or there’s something wrong with the index.

Yes, it’s the index. The definitions of corruption on which it draws are narrow and selective. Common practices in the rich nations that could reasonably be labelled corrupt are excluded; common practices in the poor nations are emphasised.

This week a ground-changing book called How Corrupt is Britain?, edited by David Whyte, is published. It should be read by anyone who believes this country merits its position on the index.’

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Flat CO2 Emissions Not Enough to Curb Climate Change, Experts Say

Shannon Hall reports for Live Science:

‘Global emissions of carbon dioxide — one of the leading causes of global warming — stalled in 2014, marking the first time in 40 years that there was no climb in CO2 emissions during a time of economic growth. The results suggest that efforts to reduce emissions may be on the upswing, but experts say the situation is not so simple.

In fact, some scientists say that the findings, announced last week by the International Energy Agency (IEA), represents only one data point and that the overall trend in carbon dioxide emissions is continuing upward.’

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Cassetteboy: Emperor’s New Clothes Rap

The London Whale

Patricia Hurtado writes for Bloomberg View:

A recent history of JPMorgan's risk.The trader known as the London Whale lost at least $6.2 billion for JPMorgan Chase & Co. in 2012. That’s a lot of money until you remember that it didn’t stop the bank from earning a record profit of $21.3 billion the same year. The pain came elsewhere: Two former traders face criminal charges, the bank admitted violating securities laws and agreed to pay fines of more than $1 billion, a U.S. Senate subcommittee wrote a scathing report and the bank’s chief executive, Jamie Dimon, took a pay cut. The London Whale case drew a bigger reaction than other missteps by banks since the 2008 financial crisis, partly because of Dimon’s previous rock-star status. More importantly, it raised two worrisome questions: What if the banks are still addicted to risk? And what if regulators haven’t gotten better at spotting that?’

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‘You eat what you kill': Wall Street bonuses keep soaring as profits decline

Suzanne McGee reports for The Guardian:

‘With all the changes that have taken place on Wall Street since the financial crisis hit – the mergers, the new regulations and the lawsuits that continue to take a toll on banks’ bottom lines, not to mention the Federal Reserve’s demands that they continue to prove their health via regular “stress tests” – one thing remains unaltered.

It’s the ritual of the annual bonus check handed out to those lucky folks who have survived the job cuts and who continue to endure the Hobbesian life – nasty, brutish and short – on trading desks and in investment banking groups across Wall Street.

Given the banking industry’s reputation for ruthlessness and its emphasis on the “buyer beware” philosophy, you might expect a difficult environment to be reflected in the size of those bonuses.

Well, not so fast. This is Wall Street, after all.’

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World Bank Admits It Ignored Its Own Rules Designed To Protect The Poor

Ben Hallman, Sasha Chavkin and Mike Hudson report for the Huffington Post and the International Consortium of Investigative Journalists:

The World Bank, created to fight poverty, has admitted that it’s failed to follow its own rules for protecting the poor people swept aside by dams, roads and other big projects it bankrolls.

This conclusion, announced by the bank on Wednesday, amounts to a reversal of its previous efforts to downplay concerns raised by human rights activists and others working on behalf of the dispossessed — people evicted from their land, sometimes in violent ways, to make way for World Bank-financed initiatives.

It comes days after the International Consortium of Investigative Journalists and The Huffington Post informed bank officials that the news outlets had found “systemic gaps” in the bank’s protections for people who lose homes or jobs because of development projects.’

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How Reaganomics Changed Corporations

Thom Hartmann comments on a Roosevelt Institute report that corporations today don’t stimulate investment, growth, and wages because, additional funds are funneled to shareholders through buybacks and dividends.’ (The Thom Hartmann Program)

Death, Drugs, and HSBC: How fraudulent blood money makes the world go round

Nafeez Ahmed writes for Medium:

‘Recent reporting on illegal tax evasion by the world’s second largest bank, HSBC, opens a window onto the pivotal role of Western banks in facilitating organised crime, drug-trafficking and Islamist terrorism. Governments know this, but they are powerless to act, not just because they’ve been bought by the banks: but because criminal and terror financing is integral to global capitalism. Now one whistleblower who uncovered an estimated billion pounds worth of HSBC fraud in Britain, suppressed by the British media, is preparing a prosecution that could blow wide open the true scale of criminal corruption in the world’s finance capital.’

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The Bleak Science Bankrolled by the Pentagon

Nafeez Ahmed writes for VICE Motherboard:

Minerva Research InitiativeThe ​US military is increasingly concerned about the risk of social, political, and economic collapse due to resource stress and climate change. The Pentagon’s ​latest call for research throws light on where and how the military suspects that resource stress could fuel political grievances on a mass scale.

The call, whose deadline to receive proposals is today [Feb 19th], comes on behalf of the US Department of Defense (DoD) ‘Minerva Research Initiative,’ a multimillion dollar social science program. Minerva is designed so the Pentagon can draw on leading-edge academic expertise outside the military, on issues where it lacks sufficient internal knowledge on specific subjects or regions. By examining its areas of focus, we’re offered a rare glimpse into where and how the Pentagon fears conflict will grip the world in the future.’

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Global Challenges: 12 Risks That Threaten Human Civilisation

The Global Challenges Foundation just issued a report on ’12 risks that threaten human civilisation':

12riskThis report has, to the best of the authors’ knowledge, created the first list of global risks with impacts that for all practical purposes can be called infinite. It is also the first structured overview of key events related to such risks and has tried to provide initial rough quantifications for the probabilities of these impacts.

With such a focus it may surprise some readers to find that the report’s essential aim is to inspire action and dialogue as well as an increased use of the methodologies used for risk assessment.

The real focus is not on the almost unimaginable impacts of the risks the report outlines. Its fundamental purpose is to encourage global collaboration and to use this new category of risk as a driver for innovation.

The idea that we face a number of global risks threatening the very basis of our civilisation at the beginning of the 21st century is well accepted in the scientific community, and is studied at a number of leading universities. But there is still no coordinated approach to address this group of risks and turn them into opportunities.’

READ THE FULL REPORT…

West Coast Port Dispute Threatens U.S. Economy

Greece: The True Face of Golden Dawn

Editor’s Note: This report by Channel 4 News was first published in March 2013. 

Global debt has grown by $57 trillion in seven years following the financial crisis

Ami Sedghi reports for The Guardian:

Global stockGlobal debt has grown by $57 trillion to reach $199 trillion in the seven years following the financial crisis – a 40.1% rise, according to a new report. All major economies are now recording higher levels of borrowing relative to gross domestic product (GDP) than they did in 2007.

Total debt as a share of GDP stood at 286% in the second quarter of 2014 compared with 269% in the fourth quarter of 2007.

The McKinsey and Global Institute study which analyses the evolution of debt in 47 countries, found that government debt is “unsustainably high” in some of those, with government debt growing by $25 trillion since 2007. The study found that in 10 of the countries studied, it exceeds 100% of GDP.’

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Spanish Anti-Austerity Party Rally Draws Tens Of Thousands

Greece shows what can happen when the young revolt against corrupt elites

Paul Mason writes for The Guardian:

‘[…] The fact that a party with a “central committee” even got close to power has nothing to do with a sudden swing to Marxism in the Greek psyche. It is, instead, testimony to three things: the strategic crisis of the eurozone, the determination of the Greek elite to cling to systemic corruption, and a new way of thinking among the young.

Of these, the eurozone’s crisis is easiest to understand – because its consequences can be read so easily in the macroeconomic figures. The IMF predicted Greece would grow as the result of its aid package in 2010. Instead, the economy has shrunk by 25%. Wages are down by the same amount. Youth unemployment stands at 60% – and that is among those who are still in the country.’

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Greece’s New Finance Minister: “We Are Going To Destroy The Greek Oligarchy System”

Zero Hedge reports:

Over two years ago, we first highlighted Yanis Varoufakis’ perspectives on the destruction of Greece and Europe’s bogus growth pacts. Since then he has grown in both reason and popularity as his no-nonsense discussons of the mis-design of the euro (and potential solutions) have made him the front-runner to be Syriza’s new finance minister. Never one to  mince words or play politics, Varoufakis tells Channel 4’s Paul Mason in this brief (but chilling for Brussels) interview, what his party would do if it gets into government in Greece, and admits the prospect of power in Europe is “scary”. As he sums up, “we are going to destroy the Greek oligarchy system,” and with it, we suspect, much of the narrative that holds the fragile European Union together…’

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The SYRIZA Challenge in Greece: Interview with Leo Panitch

Editor’s Note: Professor Leo Panitch is a distinguished research professor of Political Science at York University in Toronto, Canada and editor of the Socialist Register. He is also co-author of ‘The Making of Global Capitalism: The Political Economy of American Empire‘. The interview was recorded earlier last week, before the elections in Greece.

As inequality soars, the nervous super rich are already planning their escapes

Alec Hogg reports for The Guardian:

Private jet landing in the AlpsWith growing inequality and the civil unrest from Ferguson and the Occupy protests fresh in people’s mind, the world’s super rich are already preparing for the consequences. At a packed session in Davos, former hedge fund director Robert Johnson revealed that worried hedge fund managers were already planning their escapes. “I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway,” he said.

Johnson, who heads the Institute of New Economic Thinking and was previously managing director at Soros, said societies can tolerate income inequality if the income floor is high enough. But with an existing system encouraging chief executives to take decisions solely on their profitability, even in the richest countries inequality is increasing.”‘

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