Tag Archives: Gordon Brown

Gold Diggers of 2013

We are now in the midst of what can only be described as a gold rush. Of course some countries, China being the shining example, have been rapidly expanding their gold reserves for many years – the full amount of Chinese gold being a closely guarded secret although most analysts anticipate a full disclosure of Chinese gold reserves in the relatively near future, and based on an accumulation rate of slightly less than 1,000 tons per year, it is widely believed that China may already be the second largest holder in the world, which, as zerohedge noted back in November, means “surpassing Germany’s 3,395 tons and [becoming] second only to the US.”

Meanwhile, other countries are suddenly asking for the repossession of their own physical reserves that have been stored in vaults around the world during many decades. About a year ago I reported on Hugo Chavez’s retrieval of Venezuela’s physical gold reserves, and more recently we hear how, for instance, the Dutch and German governments are increasingly eager to get their hands on their own gold. Here is part of a report from Dutch News published in late November:

Questions have been asked in parliament about the location and value of the country’s gold reserves, most of which is said to be in foreign vaults, news agency ANP reports on Wednesday [Nov 28th].

The Netherlands is said to have 612 tonnes of gold, with a value of some €24bn. Just 10% of it is held at the central bank headquarters in Amsterdam. The rest is in bank vaults in the US, Canada and Britain.

Socialist and Christian Democrat MPs are now asking if it is sensible to keep the gold abroad and want to know how pure the gold bars actually are. 1

Anyone would think they don’t trust us or something – although when I mean us, I actually mean our central bankers obviously, and frankly who does trust them? Indeed, it turns out that the Germans had started repatriating their own reserves shortly after the launch of the euro and around the time of Brown’s Bottom, which was more then a decade ago:

The report [I’ll come back to this in a moment] claimed that the Bundesbank had slashed its holdings in London from 1,440 tons to 500 tons in 2000 and 2001, allegedly because storage costs were too high. The metal was flown to Frankfurt by air freight.

The revelation has baffled gold veterans. The shift came as the euro was at its weakest, slumping to $0.84 against the dollar. But it also came as the Bank of England was selling off most of Britain’s gold reserves – at market lows – on orders from Gordon Brown. 2

Click here to read the full article in the Telegraph.

The report in question, which had been produced by the German court of auditors (Bundesrechnungshof), is now demanding a complete audit of the nation’s gold reserves:

Germany’s gold bars, stored in the United States, Britain and France “have never been physically checked by the Bundesbank itself, or other independent auditors, regarding their authenticity or weight,” reveals a report prepared by the Federal Auditors’ Office. Instead, the Bundesbank relies on a “written confirmation by the storage sites.” […]

Concerns about Germany’s gold reserves arose this year after a group of German federal lawmakers wanted to check gold bars stored at the Banque de France in Paris. But they were turned away by local officials who said there were no facilities to visit the vaults, Deutsche Welle reported. […]

The Bundesbank has reportedly decided to ship 150 tons of gold from the New York Federal Reserve to Germany, according to German daily Bild. After returning to Germany the gold will be melted down to test the overall purity of each consignment before being re-cast into standard gold bars. 3

Click here to read the full report published by Russia Today in late October.

So why this accelerating rush to acquire gold, as in the case of China, or, as in the cases of Germany and Holland, to repatriate their gold reserves? What can it all portend…?

An article simply entitled “Are Fiat Currencies Headed for a Collapse?” published by CNBC back in July 2012 offers a concise assessment of the situation:

A fiat currency derives its worth from the issuing government – it is not fixed in value to any objective standard. That means central banks can print as much money as they want. If an economy is struggling, injecting more notes into the system juices activity but lowers the value of the currency in question.

With major central banks all desperate to stimulate their economies, some say currencies have entered a dangerous new phase often described as a race to the bottom.

Mark Mobius, Executive Chairman of Templeton Emerging Markets Group, says investors will soon start to demand fiat currencies be backed by gold or other hard assets.

“It’s already happening, you’re beginning to see that trend with central banks stocking up on gold. The estimate is that at least half of the buying is central bank buying. They are looking to the day when they can say okay, our currency is backed by gold and therefore we’re a strong country,” Mobius told CNBC Asia. 4

Of course, such rumours of widespread currency collapse have been with us ever since the financial panic of 2007/8 – rumours that were quickly given extra legs thanks to the enormous bank bailouts and the multiple rounds of quantitative easing (QE) both in the US and in Europe – all this money printing being the immediate way that the derivatives Ponzi scheme, the original cause and the deep root of the crisis, could be propped up. Yet, in spite of such vast injections of new money, the more serious catastrophe predicted by many has not (as yet) come about. So does this mean, as our governments wish to persuade us, that the crisis has been brought under control, or does it simply mean that they’ve managed to kick the can just a little further down the road than most of the economic pessimists could have imagined?

Undoubtedly such rampant money printing without anything like commensurate economic growth does mean, and however cunningly it may be have been disguised, that the money we hold has undergone and continues to undergo a rapid devaluation. So prices in the longer term must be expected to rise since inflation is already baked into the quantitatively-eased cake: the only legitimate questions being not if, but when, and importantly, how sharp the eventual decline in our purchasing power turns out to be.

In Britain, for instance, prices of goods and services are certainly rising quickly, and well above the skillfully massaged Consumer Price Index (CPI) figure of less than 3%, whilst at the same time wages remain flat (falling in real terms and thereby magnifying the impact of inflation for most people), but, on the face of it at least, there is little indication of any kind of hyperinflationary collapse coming around the corner. However, there is one outstanding factor to be considered here: that the newly printed money has largely been hoarded by the banks that received it, and for so long as the banks are reluctant to lend, little to none of this issuance flows back out into the money supply. For this reason, most of the coming inflation remains as yet in the pipeline.

So are we about to see a protracted devaluation of our currencies involving many decades of relatively low inflation at survivable rates (although perhaps as high as ten or twenty percent), or ought we to expect a sudden leap to genuine hyperinflationary levels? Put differently, are the western economies going to continue to more slowly but inexorably sink or, alternatively, is the genuine ‘fiscal cliff’ of a currency collapse nearing? The simple answer is that I don’t know – I’m not an economist and I don’t pretend to understand the deeper complexity here; and when it comes to economics, pretending to understand and then making lousy predictions is far better left to the professionals! What is clear is that so long as the imposed ‘solution’ to this still deepening financial crisis relies upon the deadly cocktail of “austerity measures” mixed with money printing, the prospect of eventual hyperinflation looms not merely as a worst-case scenario, but a worst-case that appears increasingly likely.

Why do I say this? Well, because at the same time as “austerity” is destroying growth, the endless rounds of QE are effectively reducing the value of our money by repeatedly diluting it. So maintaining this combination of imposed “austerity” and sustained money printing is just about the most perfect recipe for creating not mere inflation, but stagflation – which is precisely what we are already seeing.

But then outright hyperinflation is always a result of political choices, rather than simply an outcome of economic failures. It happens whenever a government decides (or, very often, feels coerced) to flood the economy with currency in an increasingly desperate attempt to keep up with repayments on unsustainable debts and so to survive. And for dramatic effects, this tail-chasing exercise has to go on and on and on…

So here’s what I think we can most certainly expect in the immediate future – even given a best-case scenario. Undoubtedly our economies will continue to shrivel away under the imposed “austerity measures”, bringing mass unemployment in the wake of economic decline, and that rise in joblessness, in turn, generating a frenzied competition for the remaining jobs, and forcing down ordinary wages still further (when wages have already, certainly in real terms, substantially fallen since the crisis began).

In the meantime, attacks of QE are continually eating into our earnings and savings, and in terms of devaluation, it hardly matters whether one decides to stuff their money under the mattress or deposit it in a savings scheme, given the poor rates of return on offer. But let’s also keep in mind that all of this is being done merely to serve and protect the interests of the major banks: the ones long-since deemed “too big too fail”. Institutions not only operating outside of the law, but tacitly encouraged to carry on doing so (as the lack of prosecutions following the fixing of Libor and the more extraordinary scandal involving HSBC goes to show).

And now the increasing desire shown by governments and central banks (not to mention many of the richest individuals) to suddenly acquire gold and, perhaps even more importantly, to hold on to it, offers clues beyond the competing economic theories as to what the “money masters” themselves are actually anticipating. Needless to say, it does not bode well for the majority of us.

The steadily rising price of gold is at the same time, of course, a key indicator (alongside the rising price of other commodities like silver and copper) of how much our currencies have already been debased. During the past five years, both gold and silver have approximately doubled in their value, equivalent to an annual inflation rate of slightly less than 15% (which is obviously far higher than the CPI’s paltry 3%) – I offer a more detailed analysis of these trends as a footnote.5 And these rises have happened in spite of the fact that the price of gold and silver, like everything else in our supposedly ‘free market’ system, is subject to manipulation by the major financial players, who, having “invested” so heavily in varieties of paper, have a clear interest in keeping the value of precious metals down – and the Ponzi scheme up and running.

Meanwhile, the continued appliance of tough “austerity measures” in spite of so much damning evidence of ineffectiveness in rescuing any ailing economies, anywhere, ever (either during this crisis – to judge by the effects on Greece, Spain and elsewhere – or earlier ‘interventions’ in Latin America, Africa and in the aftermath of the break-up of the Soviet Union) proves only that there is still very much a political will to enforce such neo-liberal “shock therapy”.

“Austerity” kills the poor and the weak and is already doing precisely this in places like Greece. It cannot provide any cure for what is an intrinsically systemic failure. Instead, such tight restrictions on government investment in welfare and infrastructure during a depression is like telling a starving person that it might help if they were to eat their own stomach. A brutal approach that is nothing short of criminal lunacy. And the same goes for the bailouts – the banks are fundamentally broken, indeed the entire financial system is in a state of ruin, and repeatedly bailing them out means simply throwing good money after bad… ad infinitum.

During the depression years of 1930s, there was another famous rush for gold. It eventually led to US President Franklin Roosevelt signing the notorious Executive Order 6102 in April 1933, “forbidding the hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States”. An order that was supposed to apply to every individual, partnership, association and corporation, and making possession “of gold or silver coin or bullion or currency” a criminal offence. It was the same year that Warner Bros. released the first of a string of popular musicals: Gold Diggers of 1933; quickly followed up with Gold Diggers of 1935 and … of 1937. These sugary confections, mostly remembered now for their lavish and dreamy choreographed sequences put together by the great Busby Berkeley, are ‘rags to riches’ tales with guaranteed happy endings that had helped to keep the public’s pecker up.

This time around we are perhaps still a long way off any equivalent to FDR’s Executive Order, though it is always wise to keep history in mind. Back on the entertainment front, and with the depression looking set to move up through the gears once more, we are offered the rather grittier and altogether more worthy distraction of a big screen release for Victor Hugo’s grand epic turned Broadway musical, Les Misérables – Surely the producers aren’t trying to plant the seeds for revolution?!!!

I can think of no better way to finish such a gloomy article than with a song. And what better than Noël Coward’s wonderfully sardonic ditty “There Are Bad Times Just Around The Corner” (albeit written during the rather more solvent 1950s). Here’s a chorus:

There are bad times just around the corner
The horizon is gloomy as can be
There are black birds over
The greyish cliffs of Dover
And the rats are preparing to leave the BBC
We’re an unhappy breed and very bored indeed
When reminded of something that Nelson said
And while the press and the politicians nag, nag, nag
We’ll wait until we drop down dead

You can enjoy a complete performance embedded below – Is there any better national anthem for these turbulent times?

*

Update:

It seems that the story had already moved forward before I released the post – so here’s the part I missed: “Germany bring home gold stored in US, France,” released by Associated Press (published by The Wall Street Journal on Wednesday Jan 16th):

In what sounds like the setup for a stylish Hollywood heist movie, Germany is transferring nearly 700 tons of gold bars worth $36 billion from Paris and New York to its vaults in Frankfurt.

The move is part of an effort by Germany’s central bank to bring much of its gold home after keeping big reserves outside the country for safekeeping during the Cold War.

Click here to read the full story.

*

1 From an article entitled “Are the Netherlands’ gold reserves real? MPs want answers” published by Dutch News on November 28, 2012. http://www.dutchnews.nl/news/archives/2012/11/are_the_netherlands_gold_reser.php

2 From an article entitled “Bundesbank slashed London gold holdings in mystery move” written by Ambrose Evans-Pritchard, International business editor, published by the Telegraph on October 24, 2012. http://www.telegraph.co.uk/finance/financialcrisis/9631962/Bundesbank-slashed-London-gold-holdings-in-mystery-move.html

3 From an article entitled “Germany orders a check on its gold reserves” published by Russia Today on October 29, 2012. http://rt.com/business/news/germany-gold-reserves-check-472/

4 From an article entitled “Are Fiat Currencies Headed for a Collapse?” written by Lisa Oake, published by CNBC on July 27, 2012. http://www.cnbc.com/id/48349503/Are_Fiat_Currencies_Headed_for_a_Collapse

5 As I write, the price of gold is $1687 per oz and silver stands at $31.7 per oz. Over the last five years this compares to lows and highs of $709 and $1900 for gold and ranging between $8.92 and $48.5 for silver. In other words, the current values are still below the high peaks that were reached in 2011. However, if you judge from the trend rather than from spot values then both graphs are very clearly climbing throughout the 5 years – and in that period (a period which approximately coincides with the length of the current crisis) gold has almost doubled in value (being around $900 in January 2008) and silver likewise (from just over $15 in January 2008). A doubling of prices over five years would equate to an inflation rate of very slightly under 15%. Click on the links to see price charts over 5 years for gold and silver.

Copper is a little different. The price of copper as I write is $3.6 per pound. If you study the price over the last 5 years then there has been a more modest rise compared to gold and silver (beginning with a price already a little over $3 in January 2008, before sharply falling by December 2008 and then recovering again in late 2010). But the trend for copper is very much more interesting when considered over ten years. Back in 2003, silver was still in a dip at around $0.7 but in early 2004 it sudden began to rise spectacularly, reaching $3.5 by mid 2006 – an incredible five-fold increase. It has more or less maintained this high price ever since, flattening off in recent years, although as the chart below shows, the overall trend remains modestly upward:

Historical Copper Prices - Copper Price History Chart

2 Comments

Filed under analysis & opinion, austerity measures, China, Germany, Netherlands, Venezuela

the decline and fall of the Labour Party

I was recently recommended the excellent four-part BBC documentary series “Labour – The Wilderness Years”, which offers an analysis of the causes underlying the decline of the British Labour Party, beginning with the catastrophic 1979 general election, and following events up until the sudden and tragic loss of party leader John Smith in 1994, and a little beyond.

The series, first broadcast in December 1995, is a example of just how good television really can be . Without the need for repeating video loops, and endless recaps on what’s just gone. Without eye-candy graphics, emotive music and an overbearing narrative commentary. Just relevant archive footage, alongside in-depth interviews with those most closely involved in the events.

Although suspicious of much that purports to be politically neutral, on this occasion there is also a sense of genuine impartiality. The film-makers allowing arguments from all sides to be voiced, and thus leaving the viewer free to draw their own conclusions.

All four episodes have been uploaded (sliced into six 10 minute segments for each) on youtube and so I provide links for the complete lists of the parts that make up each of the episodes. Alongside those links, you can also read my own rather less neutral précis.

The four parts were named and aired as below:

1. Cast Into The Wilderness (3rd December 1995)

The fierce war between the left and the right wings of the party begins at the 1980 party conference. Tony Benn, who is already expressing concerns that Britain may be sliding into a police state, sets out to democratise the party. He is roundly condemned by those on the right, but thanks to union retaliation against the hopeless and recently defeated Jim Callaghan, leads the left to a bitter victory at the party conference.

To heal the developing schism between left and right, the party then elects the erudite and compassionate Michael Foot over the more bruising but worldly “old flamethrower” Denis Healey. But Foot’s efforts to pour oil on troubled waters is quickly undone as the treacherous “Gang of Four”, led by former Home Secretary and then-President of the European Commission, Roy Jenkins, with Shirley Williams, Bill Rodgers and the ever-so-dashing David Owen in tow, all running off to form their own shambolic party, the quickly defunct SDP. The longer-term consequence being that the Labour vote is split for many years to come.

Click here to watch on youtube.

2. Comrades At War (10th December 1995)

Tony Benn vs. Denis Healey in the race for deputy leader and a fight for the soul of the party, as support for Thatcher’s new Tory government wanes and as riots break out across the country. With Michael Foot still trying to steady the ship, Benn’s battle for democracy and socialism comes to blows against the ‘establishment left’ and their popular heavyweight Denis Healey. Meanwhile, the ambitious Neil Kinnock also begins to push his weight around, and very publicly withdraws his own support from Tony Benn’s campaign by abstaining from the vote. Healey narrowly wins by virtue of Kinnock’s abstention.

Michael Foot is then hauled over the coals by the right-wing press for turning up in an inappropriate coat on Remembrance Day. Whilst Foot, in turn, fails to support prospective Labour candidate Peter Tatchell, as he is grilled by the same right-wing media, and ridiculed principally on the grounds that he is candid about his own homosexuality. Finally, and on the basis that they are facing almost certain defeat in the forthcoming general election, the right-wing of the party decide to put together an extreme Bennite-style manifesto purely in order to discredit the policies of the left once and for all.

With the nation still rallying around the flag after victory in the Falklands, Michael Foot misjudges the mood again, placing his main emphasis on promoting the manifesto promise of unilateral nuclear disarmament. Rupert Murdoch’s press, Kenny Everett and Satan’s little helpers, Saatchi & Saatchi, also work tirelessly to secure Thatcher’s second term in office. Aside from ensuring an election disaster, the manifesto, which becomes popularly known as “the longest suicide note in history”, also effectively sets the seal on the Labour Party’s steady march towards the right.

Click here to watch on youtube.

3. Enter The Rose (17th December 1995)

The ambitious Neil Kinnock becomes leader and immediately shows his true colours by choosing to sit on the fence as the Thatcher government crushes the miners’ strike. He then begins “modernising” the party, by, most significantly, expunging the Trotskyist parasite ‘Militant tendency’.

During the years of 1985 and 1986, Labour’s National Executive Committee sit through hours of McCarthyite hearings: Kinnock’s inquisition leading to the expulsion of more than 200 members, including, most justifiably, the egotistical popinjay Derek Hatton. But corrupt as ‘Militant tendency’ were, many good and previously loyal party members are also forced out during this protracted witch hunt.

In late 1985, Kinnock appoints Peter Mandelson, a former television producer, to work as Director of Communications. At first, Mandelson’s “Red Rose Revolution” means mainly that message plays second fiddle to the party image. New logo, new sets, new emphasis on style over substance… the conception, if not yet the birth, of New Labour. Yet in spite of all the razzamatazz, which includes some surprisingly nifty swing dancing with wife Glenys, “the Welsh windbag” still fails to impress the electorate.

Click here to watch on youtube.

4. The Pursuit Of Power (18th December 1995)

Kinnock decides to sell-out absolutely, surrendering many more of his and the party’s remaining leftist principles in deliberate efforts to fall into line with the prevailing Thatcherite neoliberal hegemony. As his ‘revolution’ progresses, Kinnock ruthlessly puts down any dissent coming from within the shadow cabinet, whilst meanwhile instituting a nationwide “Labour Listens” polling campaign, the results of which will provide convenient populist cover for justifying the party’s ideological U-turn.

Peter Mandelson, now Labour’s spin doctor, helps Kinnock to promote the ‘policy review’ and to limit the damage caused by those who still oppose the changes. This includes briefing the media against other high-ranking Labour politicians. Michael Meacher, who was one of the victims of Mandelson’s many smear campaigns, is replaced by Tony Blair as Employment Spokesman, and, as they say… the rest is history!

Kinnock’s suits are sharpened up, and we have the debacle of the “Jennifer’s Ear” party political broadcast; a mere prelude to the jaw-dropping Hollywood-style Sheffield Rally that marks the eve of the general election. Watch it and weep:

Click here to see the remaining episodes on youtube.

Following John Smith’s untimely death, the party comes more directly under the centralised control of ‘modernisers’ like Mandelson, Blair and Brown, although the first prominent party member to publicly endorse Tony Blair as the next leader is actually Denis Healey. Whilst Blair’s closest rival, Gordon Brown, conveniently steps aside. With “the Prince of Darkness” Mandelson finally ruling the roost, Labour now drop all remaining pretence to socialism, and also betray their commitments to human rights and the rule of international law.

Margaret Thatcher once asked: “If they would abandon their most cherished policies in opposition, what will they do with their promises in government”.

A decade of New Labour rule provided us with a very sorry answer. In its wake, we live in a country riven by greater disparities in wealth than ever, and indebted thanks chiefly to market deregulation which Blair and Brown had very much permitted and encouraged. We also have a national health service made ready for privatisation, along with the prisons and our schools. And capping everything, we are mired in an unwinnable war (having already abandoned a second war, fought at the cost of countless lives, and entirely without legal or other justification). So the short answer to Thatcher’s albeit rhetorical question: that in the pursuit of power, Blair, Brown, Mandelson and the rest of the New Labour crew would happily sell their own grandmothers.

*

This is an appropriate juncture to also mention two very intelligent and well produced dramas that tackle similar issues from around the same period.

A Very British Coup (Channel 4, 1988) offers a glimpse of how a left-wing Labour government might have tackled the problems facing Britain back in the 1980s. Ray McAnally is wonderful as the down-to-earth leader and MP for Sheffield Central, Harry Perkins, who takes on the ruling establishment, attempts to break the newspaper monopolies, and more generally to bring to heel the military-industrial complex. Hardly surprisingly, Perkins is met with stiff resistance and dirty tricks of every kind. The three-part television series, first screened on Channel 4, won Bafta and Emmy awards. It was based on a 1982 novel by British politician Chris Mullin, who also gives interviews throughout in “Labour – the wilderness years”. The novel was adapted for television, with a screenplay by Alan Plater, and directed by Mick Jackson.

Click here to watch on 4OD.

GBH (Channel 4, 1991) is a gritty seven-part drama written by Alan Bleasdale, starring Robert Lindsay as Michael Murray, the Militant tendency Labour leader of an unspecified British northern city. The parallels with Derek Hatton are obvious enough. Michael Palin co-stars as the principled school teacher, Jim Nelson, who inadvertently finds himself fighting against corruption and intimidation. As the plots steadily build, we discover that all is not quite as it first appears. The series was produced by David W. Jones.

Click here to watch on 4OD.

Leave a comment

Filed under Britain, did you see?, neo-liberalism, Uncategorized

lessons from Iceland – the new IMF poster-child

In 2008, Iceland suffered the third largest financial meltdown in history. It was a crisis that had been triggered when some of Iceland’s leading bankers were caught running a Ponzi scheme, and as a consequence, Gordon Brown’s government actually applied anti-terrorist legislation to freeze Icelandic bank assets in Britain:

“We’re still on the list — in the wonderful company of al-Qaeda, the Taliban, Sudan, North Korea, Iran and a number of other entities — where we do not belong,” Iceland’s Prime Minister, Geir Haarde, said in an interview with TIME, referring to the British government’s website listing of regimes subject to financial sanctions. “The application of the antiterrorist legislation has created a lot of ill will here,” said Haarde — particularly in combination with London’s demand that the Icelandic government recompense British depositors in a subsidiary of the failed Icelandic bank Landsbanki to the tune of $5 billion, or “roughly half of Iceland’s GDP,” Haarde added. “Our parliament will never agree to accepting that kind of debt burden. It’s unsustainable.”1

So you might very reasonably suppose that some of these ‘financial terrorists’ would by now have been put away behind bars, but think again. Instead, this same criminal elite is not only at large, but still very much in the business of financial speculation. Meanwhile, and in time-honoured tradition, it’s the people of Iceland who are being punished for these crimes; with the country already in ruins and their government having to run into the arms of the IMF to secure a $2 billion loan, which it may or may not have spent (this apparently remains unclear), but which has certainly not as yet been repaid.

On Wednesday [Nov 2nd], Birgitta Jónsdóttir, who is a member of the Icelandic parliament (Althing), formerly representing the Citizen’s Movement, but now one of three Icelandic MPs representing The Movement (Hreyfingin), spoke with Max Keiser on Russia Today‘s Keiser Report. She told him:

“The interesting thing is that the IMF has now decided to use Iceland as a promotional kick for them being the new cuddly and soft IMF. I had to remind the people from the IMF, at the conference in Iceland last week, about their policy in Greece, and their policy and programme in Lithuania, where they indeed have not changed anything from the previous disasters in Asia. But they’re still trying to market the IMF as if it has changed. And I think it’s dangerous. Many economists who looked at the Icelandic example have proved that the IMF has changed. Now, hear my warning, they have not!”

Of course, ‘help’ from the IMF always comes with strings attached; a set of ‘conditionalities’ that demand the fire sale of national assets and the weakening of welfare systems, which is precisely what’s happening to Iceland right now:

“We had an IMF deputy managing director speaking at this conference in a panel. She said that the IMF had helped strengthen the welfare system. Which is, of course, a ludicrous lie… We are having an exodus out of Iceland. We don’t even have properly staffed hospitals. And all the hospitals have been slashed so badly that we’ve been getting letters from all of them – the parliamentarians in Iceland – just basically saying that they can’t cut any more unless we will have health hazards. The same applies to the educational system.”

Yet in spite of such IMF involvement, Jónsdóttir says that there’s still no transparency in the Icelandic banking system:

“I think that we have to bear in mind that most politicians, or you know, people in power are puppets. They’re puppets for the financial sector. And we just have to face it. And it is really time that we looked beyond the traditional politics, because let’s face it, our democracies, they are dictatorships with many heads. Because we, the people, we do not have access to decision-making, or to making sure that they are doing their jobs in favour of our needs, and the needs of the great many, but only the few.”

But in a way, Iceland have escaped lightly, because at least their banks were allowed to fail, which means no more bail-outs, and so, unlike with the situation in Greece, there has been no descent into such a bottomless debt spiral. And unlike the Greeks, the people of Iceland were granted not one, but two referenda (March 2010 and April 2011) and, on both occasions, very sensibly voted against a bailout. Although, as Jónsdóttir explains, there were also more practical reasons for the Icelandic default and the collapse of their banks:

“It was not because the Icelandic government was so smart that they decided to let the banks fail. They just couldn’t get the money to save them. Everybody thought that was really bad, but that actually has turned out to be a great blessing for us. That the three banks were actually allowed to fail.”

Jónsdóttir says that she doesn’t believe the IMF will ever change because “we all know what the function of the IMF is. And that is not to look after the people but to look after the people that have the power. So they’re looking after the 1%, not the 99%.”

However, during the recent IMF conference in Iceland, a surprise suggestion did apparently come from the chief economist of Citigroup, Willem Buiter, who said that there should be a debt jubilee for Iceland.

Jónsdóttir adds that:

“Maybe that time has come everywhere. Maybe it’s time that we start anew. And I think that what I’ve been hearing everywhere is that people don’t trust in the system – any aspect of the system, because the system is self-serving; it doesn’t matter if it’s the financial system or other systems. So yeah, why don’t we take this good man’s advice and have debt jubilee everywhere.”

1 From an article entitled “Iceland to Britain: ‘We’re no terrorists’”, written by Jonas Moody, published by Time on November 3, 2008. http://www.time.com/time/world/article/0,8599,1855901,00.html

1 Comment

Filed under austerity measures, Britain, debt cancellation, Greece, Iceland, Max Keiser

Brown, Bernanke, Chavez and the price of gold

They say that a fool and his gold are soon parted, and it turns out that was certainly the case when it came to Gordon Brown; squandering not his own reserves, but the nation’s:

Between 1999 and 2002, Mr Brown ordered the sale of almost 400 tons of the gold reserves when the price was at a 20-year low. Since then, the price has more than quadrupled, meaning the decision cost taxpayers an estimated £7 billion, according to Mike Warburton of the accountants Grant Thornton.1

Having settled for such a poor return on our national savings — a decision described in the article as “one of the Treasury’s worst mistakes” (which is putting things mildly) — we also learn (in the same article) that Brown and the Treasury “have repeatedly refused to disclose information about the gold sale amid allegations that warnings were ignored.”

Here is financial journalist Max Keiser trying to get to the bottom of what’s become known as, ah-hum, “Brown’s Bottom”:

Meanwhile, in another part of the world, Hugo Chavez sat tight on his own country’s gold reserves – and now he’s asking for them back:

Venezuela plans to transfer billions of dollars in cash reserves from abroad to banks in Russia, China and Brazil and tons of gold from European banks to its central bank vaults, according to documents reviewed Tuesday by The Wall Street Journal.

The planned moves would include transferring $6.3 billion in cash reserves, most of which Venezuela now keeps in banks such as the Bank for International Settlements in Basel, Switzerland, and Barclays Bank in London to unnamed Russian, Chinese and Brazilian banks, one document said.

Venezuela also plans to move 211 tons of gold it keeps abroad and values at $11 billion to the vaults of the Venezuelan Central Bank in Caracas where the government keeps its remaining 154 tons of bullion, the document says.2

As Venezuela demands its gold back, some commentators are feigning incomprehension. Why on earth would anyone want their gold back at a time like this…? But perhaps the question they should really be asking is this: what if Chavez is refused?

Keiser, a former equities broker, runs a campaign that encourages people to buy up physical silver in an effort to crash JP Morgan; an organisation that he describes as “the biggest financial terrorist on Wall Street”. He says that Chavez’s demands for the return of Venezuelan gold could have a similar effect on JPM:

The fun begins if Chavez demands physical delivery of more than 10.6 tons of physical because as today’s CME update of metal depository statistics, JPM only has 338,303 ounces of registered gold in storage. Or roughly 10.6 tons. A modest deposit of this size would cause some serious white hair at JPM as the bank scrambles to find the replacement gold, which has already been pledged about 100 times across the various paper markets.

Posted at maxkeiser.com on 17th August.

The price of gold has skyrocketed during the last few weeks, but this doesn’t automatically mean we are witnessing a bubble, at least not in the usual sense. If you look over the longer term, you’ll see that the price of gold has actually been rising steadily for around a decade (about the same time when Gordon Brown decided to sell). That same trend is true for silver, as well as other “physicals”. So is it that the value of gold and silver are rising, or is it that paper currencies (most significantly the dollar) have been devalued?

About a month ago, when the price of an ounce of gold was a mere $1,500, Congressman Ron Paul confronted Federal Reserve Chairman Ben Bernanke in a U.S. House Financial Services Committee. Paul asked Bernanke directly: “do you think gold is money?” Bernanke’s answer: “No”.

But if gold isn’t money, then just what is? The ever increasing supply of virtual ones and zeros orbiting the global markets, or those tattered pieces of paper in your wallet which declare: “I promise to pay the bearer on demand the sum of five pounds” – five pounds, ten pounds, twenty pounds, but pounds of what exactly? Hugo Chavez isn’t waiting to find out, and he’s not alone.

1 From an article entitled “Explain why you sold Britain’s gold, Gordon Brown told”, by Holly Watt and Robert Winnett, published March 24, 2010. http://www.telegraph.co.uk/finance/personalfinance/investing/gold/7511589/Explain-why-you-sold-Britains-gold-Gordon-Brown-told.html

2 From an article entitled “Venezuela Plans to Move Reserve Funds” by Jose De Cordoba and Ezequiel Minaya, published in The Wall Street Journal on August 17, 2011. http://online.wsj.com/article/SB10001424053111903392904576512961180570694.html

Leave a comment

Filed under Britain, Max Keiser, Uncategorized, Venezuela

the answer to TINA… is TRISH!

Let’s start with TINA…

There is no alternative (shortened as TINA) was one of Margaret Thatcher’s favourite slogans. Those who repeat this slogan today, do so in defence of the same neoliberal agenda that Thatcher’s policies first helped to establish during the 1980s. They believe that only the  “freedom of the markets” is sacrosanct, and oblivious to the hardship and brutal oppression which such policies have brought to so many countries around the world, they stand firm in their conviction that we are living under the best of all possible economic orders. In this sense, they are fundamentalists. Whilst those who use it to defend calls for the latest round of “austerity measures” are also saying that making savage cuts to government spending is the only way to rescue ourselves in these times of economic crisis. That we must sacrifice everything in order to satisfy the market. Yet all of this is dependent upon accepting an ideology that refuses to admit it is an ideology, and all of this is socioeconomic nonsense.

A background to austerity

Inter-governmental institutions, such as the International Monetary Fund (IMF), have for many years demanded a commitment from governments of impoverished nations to accept the imposition of austerity measures in exchange for functioning as a lender of last resort. The terms for such IMF bailouts are technically known as “conditionalities”.

Conditionalities generally involve a number of requirements and some of these may indeed be beneficial. The IMF may, for example, insist upon anti-corruption measures. But mostly the IMF will insist upon “free market reforms”, which means, in short, a tough austerity package to dismantle the nation’s welfare system, with the forced privatisation of key public services, along with the imposition of “trade liberalisation” and deregulation. Under such a programme, with the country being required, in effect, to give up it economic sovereignty, it is suddenly open to vulture capitalism, and ready to be asset-stripped by global corporations.

This package of conditionalities, or “market-friendly policies”, was known as the Washington Consensus, although it might more aptly have been renamed the “Chicago Concensus” given that these rules for “economic reform” were predicated on the hardline neoliberal dogma developed by the Chicago School, and then first tested by the so-called Chicago Boys, who imposed them as economic “Shock Therapy” during the terrible years of the Pinochet dictatorship in Chile. In any case, the name Washington Consensus became so sullied that the IMF have dropped it altogether. But only the tone of the IMF has been softened, as the demands being made of Greece and Portugal now show. They are still in the business of dismantling welfare systems and the wholesale privatisation of nations.

The results of austerity

“The experience of austerity measures imposed on developing countries should sound alarm bells for us all. These measures are not a new innovation; they were cooked up by Thatcher and Reagan in the 1980s and forced onto developing countries by the IMF and World Bank. The effects were devastating: inequality, poverty and injustice increased as public services and welfare spending were slashed.

“Recently, such policies have been completely discredited; even the World Bank and IMF held their hands up and said they got it wrong. Countries, like Malaysia and Vietnam, that resisted the austerity measures remained far less vulnerable than those that had to succumb to these failed economic prescriptions. If we don’t resist this illogical thinking, the outcome will lead to a truly broken Britain.”

says Deborah Doane, director of the World Development Movement.

In the same article, which is entitled “Neoliberal policies have no place in the post-crash world”, Doane also gives a concise and well-informed overview of the effects of imposed austerity on the basis of recent historical cases.1

Why austerity cannot help us

“The deficit isn’t caused by profligate government spending to support an over-bloated welfare state, but by a massive bank bailout, shrinking government revenues, and a decline in corporate taxation. As in the developing world, maintaining public spending is what we need for long-term support to our economy, and to our populations.”

says Deborah Doane in the same article.

The maths is actually quite simple here. If you cut government spending, especially during times when the private sector economy is also struggling, then the knock-on effect is that tax revenues are reduced, and this then increases the deficit. The outcome being precisely the opposite to that demanded. But austerity isn’t simply doomed to failure, it is doomed to devastating failure. It leaves the country concerned with nothing but mass unemployment and even greater debts to repay.

Why we must fight this together

“For decades, Europe has been held up as a paragon for how social democracy can work, by providing free healthcare or education, and ensuring people have a high quality of life at the same time. The legacy of the Chicago School is invading this last battleground for social justice. Fighting the austerity agenda at home is a truly globally relevant campaign.”

says Deborah Doane in the same article.

It took a century for the people of Europe to win our economic rights, but we are now on the verge of throwing that inheritance away. People all around the world aspire to enjoy the same rights. We should not let them down.

And now over to TRISH

In an attempt to offer an alternative to TINA, I have put together this five-point alternative plan. I believe that something of this sort needs to be agreed upon by all groups who now stand opposed to the government (and IMF supported) programme of austerity measures. I would very much welcome any constructive comments, amendments, or corrections; and if you are interested in helping to take the idea further then do please get in touch.

The basic proposals can be summarised as follows: Take on the bankers, Re-regulate the markets, Increase tax revenues, Stop the wars, and Help for ourselves. Hence, TRISH:

Take on the bankers

The current crisis didn’t just happen for no reason. If it were simply a part of some kind of quasi-natural but ultimately mysterious boom and bust cycle, then we might hope to simply grit our teeth and ride it out. There is, unfortunately, no evidence that supports such a conviction.

The current crisis did not originate because of fiscal mismanagement and government overspending. The problems in Greece, for instance, did not arise simply because of their long-standing problems with tax receipts, any more than the recession in America began with subprime mortgages and the housing bubble. The individual crises of these various nation states are merely symptoms of more than two decades of unregulated greed and corruption in Wall Street and The City of London. The results of a systemic failure, which cannot be resolved therefore until the current financial system is itself overhauled.

The current crisis has happened because the speculators and financiers gathered so much power that they have taken control of our senior politicians. This is why Obama is surrounded by a coterie of advisers from Goldman Sachs. It is also why Peter Mandelson and George Osborne were found cosying up together aboard a Russian oligarch’s yacht at one of Nathan Rothschild’s lavish parties. For no dog can have two masters. To make sure they are working for us then, such obscene cronyism has to be rooted out, and, so far as it’s possible, legislated against.

Ever since the crash of 2008, the banks have been playing the suicide card. Holding us hostage with a gun pointed to their own heads. Give us your money or everything goes down with us, they threaten, and their close friends in the media and government play along, perpetuating the myth that they are simply “too big to fail”. They want us to forget about their malpractice and criminal fraud that caused the crisis, and to carry on stumping up the interest for debts so enormous they can never be repaid.

We need an investigation. We need an international debt moratorium followed by cancellation of all debt found to be odious. The endless bailouts only serve the bankers and these must end. Meanwhile private savings and pension funds need to be protected. But if Goldman Sachs closes down then so be it. We’ll pick up the pieces later.

Re-regulate the markets

This current crisis really owes its origins to the policies of Thatcher and Reagan. Everything would have been avoided if it hadn’t been for the deregulation of the markets which began back in the 1980s. Allowing the bankers to police themselves turned out to be a bad idea. We might have guessed.

The underlying cause of the current crisis is the worldwide trade in “derivatives”. It is currently estimated that in the order of a quadrillion US dollars (yes, that’s with a qu-) has been staked on derivations of various kinds. We can compare this with the entire world GDP which turns out to be a mere 60 trillion US dollars2. One quadrillion being more than twenty times larger. Or we might compare it against the estimated monetary wealth of the whole world: about $75 trillion in real estate, and a further $100 trillion in world stock and bonds. So one quadrillion is a number exceeding even the absolute monetary value of the entire world! Warren Buffett once described derivatives as “financial weapons of mass destruction”, and he should know because he trades in them.

We must place a ban, if not on all derivatives, then certainly on the most toxic varieties such as credit-default swaps. There should also be a criminal investigation that looks into the sale of so many “toxic assets” and considers the role of the credit ratings agencies which graded them triple-A. The very same rating agencies that are now downgrading countries such as Greece, Portugal and Ireland.

A separation of investment banking from depository banking would at least have protected ordinary savers from the whims of the speculators. In America such a separation had existed since the Banking Act of 1933, known as the Glass-Steagall Act, until Bill Clinton repealed the law in 1999. Legislation along the lines of Glass-Steagall needs to be brought back.

Increase tax revenues

Tax is a dirty word but if the deficit is to be redressed then government revenue will need to be increased. Politicians talk a great deal about fairness and we should hold them to this. The people who caused the crisis should now be bailing us out. There has been some talk of a Tobin tax on all transactions in the financial markets, and even at the very low rates of 0.05% being proposed by some groups, hundreds of billions of pounds would be raised annually. So why not levy a Tobin tax at a higher rate, say 1% (which is a tiny fraction when compared to any tax the rest of us pay) and then use that money to repay the national debt?

Gordon Brown came into office on the promise of closing tax loopholes but did nothing of the kind. Major corporations simply don’t pay their fair share. They move their operations offshore by taking advantage of the many tax havens available, the majority of which are British dependencies. It is estimated that tax havens drain the UK economy of around £25bn annually through their role in tax avoidance and evasion, and that hundreds of billions are lost globally each year.3 Money that should be paying for education and healthcare.

We should resist any rises in the sorts of stealth taxes on the poor and the middle class which the government are likely to propose, no matter how temptingly packaged they may appear. “Quantitative Easing”, which is a deliberately impressive and misleading term for what is simply the printing of extra money, is an inherently inflationary strategy. It is, therefore, the most insidious stealth tax of all. Let’s find the money in fairer ways, by forcing the corporations and the super-rich to pay their dues.

Stop the wars

Wars cost money, lots of money. Defence Secretary Liam Fox has recently revealed that the estimated cost for our involvement in the NATO-led Libya campaign will be in the region of £120m, assuming the conflict continues into the autumn as expected. A further £140m then being needed to replace missiles and munitions, which makes £260 million in total.4 However, less conservative estimates of costs to the British taxpayer raise the figure to as much as £1bn. 5

Meanwhile, the wars in Afghanistan and Iraq have already cost British taxpayers more than £20billion, and this does not even include the salaries of soldiers or paying for their long-term injuries and mental health care.6 Acute care for the troops most seriously injured in Afghanistan is costing the government more than £500,000 every week.7 And all for what?

Putting an end to these imperialist adventures is not only a moral imperative, it is an economic necessity.

Help for ourselves and others

Running a nation’s economy is not the same as running a household budget. Making cuts in government spending may save money, but with reduced investment there must come an inevitable kick-back. The economy will shrink and with less tax revenue available the deficit then grows. And this becomes a vicious cycle.

In order to stop such a debt spiral turning into depression, the government needs to spend rather than save. This is what the post-war Attlee government did when it expanded the welfare state and founded the National Health Service. Reinvestment in public services and infrastructure can put money in people’s pockets again. Meanwhile, investment in manufacturing and industry would help to reduce our balance of payments deficit.

During times of depression government investment becomes essential. We need investment to revive Britain’s once strong manufacturing base. This can involve tax or other incentives and will most certainly require significant cash injections to support established industries and encourage new production and innovation. In the meantime, we should roll back the privatisation of our public sector, of schools and prisons (how outrageous that companies can profit from locking people up), and most urgently, of the NHS.

In a fully privatised world, which is the dream of neoliberal economists, we all fall prey to the markets. So let’s abandon our current obsession with private enterprise and move back to a more mixed-economy, adopting a policy of dirigisme. In this spirit, we might decide to take state control of any struggling key industries, as well as re-nationalising the natural monopolies of water and energy supply.

It is high time to rebuild our infrastructure, since this is the bedrock for all social and economic progress: and examples of the sorts of projects we should consider include the long overdue upgrading of our railway system; the installation of countrywide fibre-optic broadband; the construction of new power plants including the proposed tide power barrage across the Severn estuary, which alone could supply more than 5% of our current electricity demands; and then there are more ambitious schemes, such as protecting ourselves against future water shortages by building a national water grid. We need to seize this as an opportunity to do all the things we ought to have done years ago because the future will belong to those who invested wisely – which means funneling our money into rebuilding industry, reconstructing our infrastructure, and supporting new areas of scientific research and development instead of frittering it away on banker bailouts and bonuses. Let’s build a country that’s fit and proper for the twenty-first century.

Such a New Deal programme was how Franklin Roosevelt rescued the US economy during the last Great Depression. Between 1933 and 1936, Roosevelt implemented the “3 Rs”: Relief for the unemployed and poor, Recovery of the economy to normal levels, and Reform of the financial system to prevent a repeat depression. Roosevelt’s New Deal is perhaps the best example of the kind of forward-thinking programme of economic measures that is so desperately needed today.

2 According to IMF economic database for October 2010, World GDP is $61,963.429 billion (US dollars)

Leave a comment

Filed under analysis & opinion, austerity measures, Britain, campaigns & events, Europe, financial derivatives, neo-liberalism

Bretton Woods II — running things the Soros way

George Soros is over eighty years old, but he’s certainly keeping active. For instance, just a few weeks ago, on April 4th, he made a “surprise visit to Athens” to address a closed session of Prime Minister George Papandreou’s inner cabinet:

 “According to sources privy to Soros’ surprise visit to Athens, the billionaire used the occasion of a private dinner invitation by a group of Greek businessmen on April 3 to virtually demand to speak to the government’s economic ministers for an hour the next morning.

“Soros literally summoned government ministers to the premier’s office to chastise them for the clumsy and counterproductive manner in which they have pursued blanket austerity measures that have landed the country into a deflationary debt trap,” a source told the Athens News on conditions of anonymity.

After explaining to the cabinet his position on how international investors are planning to push for debt restructuring by turning the heat on the creditworthiness of Greece, Ireland and Portugal in the coming weeks to make their borrowing costs unserviceable, Soros joined Papandreou for separate talks.”1

Then, days later, back in America, he was hosting the “Second Bretton Woods Conference” (or Bretton Woods II) organised by his very own Institute for New Economic Thinking (INET):

 “After a short stop in Greece, he is heading for the Mount Washington Hotel at Bretton Woods in New Hampshire, where from April 8 to 11 a group that the multibillionaire investor is funding will host a major economic conference.

It is the same site of the 1944 Bretton Woods Conference that established the World Bank and chose the American dollar as the backbone of international exchange. The “second Bretton Woods Conference” is organised by the Institute for New Economic Thinking with the aim of transforming “our system of regulation or our tools of policy intervention”, as stated on its website.

This conference is bringing together politicians like former UK prime minister Gordon Brown, academics like Columbia University professor Joseph Stiglitz and journalists like Martin Wolf, the chief economics commentator of the Financial Times.”2

The original Bretton Woods conference of world leaders created the global economic framework still in place today. This new conference was intended to redress the failings in the existing framework, paving the way for nothing less than a new economic order. An ambitious and prestigious occasion and yet the media hasn’t paid a great deal of attention to this gathering of financial luminaries. Perhaps there is a reason…

“Despite its eminent speakers, the conference has gained little media attention. As the Wall Street Journal reported on March 29, “the Soros Empire is silent about this new Bretton Woods conference because it isn’t just designed to change global economic rules. It also is designed to put America in its place — part of a multilateral world the way Soros wants it.”34

Here is Russia Today reporting on the conference, and speaking to Andrew Gavin Marshall from the Centre for Research on Globalization, who compares and contrasts this congregation’s conversation with the historic Bretton Woods get together of 1944 and sees it as a precursor to the G20 meeting:

If you have a little more time on your hands (and a lot of patience) then you can find out exactly what was said at the conference from the INET website.

So what is this “multilateral world the way Soros wants it”? Well, to answer that question, it may help to look a little closer into what motivates this multi-billionaire man of the people.

On his own “official website”, www.georgesoros.com, you’ll find, aside from the prominence of the word PHILANTHROPY, which features top right amongst the page index labels, whilst also accidentally captioning his amiable portrait,  this accompanying statement:

 “GEORGE SOROS has been a prominent international supporter of democratic ideals and causes for more than 30 years. His philanthropic organization, the Open Society Foundations, supports democracy and human rights in over 70 countries.”

Soros then is a philanthropist – literally “a lover of mankind” – as well as being a long-standing proponent of democracy, human rights and “the open society”. It is notable indeed that a few years ago he severely criticised the Bush neo-con administration, even making direct comparison with Stalin and the Nazis:

This video may have been disabled but you can find it here:
http://www.youtube.com/watch?v=_DuafAqAHrc?version=3

Using some of his enormous wealth (14th richest in America according to Forbes), allied with his formidable political connections, Soros helped to get Obama elected, and the image he has carefully cultivated is one that appeals to many on the New Left. So is there anything else we should know about George Soros?

These are some extracts from an article written by Neil Clark for the New Statesman, when he profiled Soros back in June 20035:

 “Soros likes to portray himself as an outsider, an independent-minded Hungarian emigre and philosopher-pundit who stands detached from the US military-industrial complex. But take a look at the board members of the NGOs he organises and finances. At Human Rights Watch, for example, there is Morton Abramowitz, US assistant secretary of state for intelligence and research from 1985-89, and now a fellow at the interventionist Council on Foreign Relations [CFR]; ex-ambassador Warren Zimmerman (whose spell in Yugoslavia coincided with the break-up of that country); and Paul Goble, director of communications at the CIA-created Radio Free Europe/Radio Liberty (which Soros also funds).”

Well, perhaps not the sort of people you’d expect to find working at a human rights organisation, though it could be worse – after all Zbigniew Brzezinski, the geopolitical strategist who helped to covertly fund and provide weapons to the Mujaheddin6, and is accused of encouraging China to support Pol Pot7, I was dismayed to learn, is a past member of the Board of Directors of Amnesty International. And Brzezinski wasn’t only a fellow at the CFR, but a director from 1972–1977.8

But back to Soros, who also happens to be a former member of the Board of Directors of the CFR in 19959, Clark continues:

 “Soros’s International Crisis Group boasts such “independent” luminaries as the former national security advisers Zbigniew Brzezinski and Richard Allen, as well as General Wesley Clark, once Nato supreme allied commander for Europe. The group’s vice-chairman is the former congressman Stephen Solarz, once described as “the Israel lobby’s chief legislative tactician on Capitol Hill” and a signatory, along with the likes of Richard Perle and Paul Wolfowitz, to a notorious letter to President Clinton in 1998 calling for a ‘comprehensive political and military strategy for bringing down Saddam and his regime’. ”

Yes, but to be fair again, Soros isn’t the only philanthropist supporting ICG. There’s also the Ford Foundation, the Bill & Melinda Gates Foundation, and the Open Society Institute… no, sorry, that is Soros.10 Clark then turns to Soros’s business dealing:

 “Take a look also at Soros’s business partners. At the Carlyle Group, where he has invested more than $100m, they include the former secretary of state James Baker and the erstwhile defence secretary Frank Carlucci, George Bush Sr and, until recently, the estranged relatives of Osama Bin Laden. Carlyle, one of the world’s largest private equity funds, makes most of its money from its work as a defence contractor.

Soros may not, as some have suggested, be a fully paid-up CIA agent. But that his companies and NGOs are closely wrapped up in US expansionism cannot seriously be doubted.”

But then if Soros is such a bad egg, why was he so openly hostile to Bush and the neo-cons? And what of his ideas on an open society? His support for gay rights and the legalisation of soft drugs. Well, according to Clark, the answer is simple:

“Soros is angry not with Bush’s aims – of extending Pax Americana and making the world safe for global capitalists like himself – but with the crass and blundering way Bush is going about it. By making US ambitions so clear, the Bush gang has committed the cardinal sin of giving the game away. For years, Soros and his NGOs have gone about their work extending the boundaries of the “free world” so skilfully that hardly anyone noticed. Now a Texan redneck and a gang of overzealous neo-cons have blown it. […]

Soros knows a better way – armed with a few billion dollars, a handful of NGOs and a nod and a wink from the US State Department, it is perfectly possible to topple foreign governments that are bad for business, seize a country’s assets, and even to get thanked for your benevolence afterwards. Soros has done it. […]

But generally the sad conclusion is that for all his liberal quoting of Popper, Soros deems a society “open” not if it respects human rights and basic freedoms, but if it is “open” for him and his associates to make money. And, indeed, Soros has made money in every country he has helped to prise “open”. In Kosovo, for example, he has invested $50m in an attempt to gain control of the Trepca mine complex, where there are vast reserves of gold, silver, lead and other minerals estimated to be worth in the region of $5bn. He thus copied a pattern he has deployed to great effect over the whole of eastern Europe: of advocating “shock therapy” and “economic reform”, then swooping in with his associates to buy valuable state assets at knock-down prices.”

Soros is, when all is said and done, a speculator first and last. Indeed, he was so keen to cash in on the “super-bubble” that led to the current banking crisis that he actually came out of retirement, as he explains here during the World Economic Forum in 2009:

He wants us to believe that he benefits only from weaknesses already inherent within financial systems, such as the famous occasion when he speculated against the pound in 1992 and “broke the Bank of England”; or Black Wednesday, as it became known. He wants us to believe that if he hadn’t benefited then another speculator would have, and that, more generally, he is simply helping to burst the occasional bubble and set the markets straight again. So he would certainly like us to forget that in 2002 he was convicted in France of insider trading – a conviction that was subsequently upheld in 2006.11

But Soros the poacher has now turned gamekeeper. So he says that stricter regulation of markets is required, and he is right of course, and he should know.

More than this, and in the wake of the current economic disintegration, he sees the end of an era and an opportunity to construct nothing less than another world order. One that moves away from our system based on “self-interest” to a system founded on “common interest”. “The bubble of American Supremacy”, as he calls it, is indeed reaching its end, so what will replace it? Soros proposes direct political changes, for instance to the membership of the UN Security Council, which has obviously helped to maintain the Anglo-American post-war hegemony. And here his diagnosis is correct, as it frequently is.

Soros says that he offers a new paradigm. Not socialism, nor free market fundamentalism, “which are both false ideologies”, but the only possible non-false ideology, which just happens to be his own:

 “I think the only [non-false ideology] is the one that I’m proposing. Namely the recognition that all our ideas, all our human constructs have a flaw in it – and perfection is not attainable – and we must engage in critical thinking and correct our mistakes. That’s my ideology.”

Really? – That’s an ideology? Not simply commonsense. To hear more of Soros’s plans for our future I recommend the following interview. Reading between the lines, the bigger message becomes clear: the immediate future is bleak, he says, but if you listen to me then everything will eventually be better, although getting there “will be painful”:

Soros wants us to believe that the forms of regulation and restructuring he now vaguely outlines will lead to a fairer and more secure global economic system, even though his plans require giving still more power to central banks and the IMF (which he wants to “reconstitute”). All the problems could be fixed he says, if only “the rulers had the interests of the people really at heart.” Soros then, is looking forward to a time, not of global democracy, but of global philanthropy, in its loosest sense… to a world ruled by people like, um, let’s see, George Soros.

1 Extract from “Soros warns of debt trap”, by Dimitris Yannopoulos, published 11th April in Athens News. Click here to read full article.

2 Extract from “Soros for a new Bretton Woods”, by Costas Papachlimintzos, also published 11th April in Athens News. Click here to read full article.

3 Ibid.

4 The embedded quote was taken from an article by Dan Gainor entitled “Unreported Soros Event Aims to Remake Entire Global Economy” from The Wall Street Journal on March 29th. Click here to read full article.

5 “The billionaire trader has become eastern Europe’s uncrowned king and the prophet of ”the open society”. But open to what? George Soros profiled” by Neil Clark, published June 2nd 2003 in New Statesman. Click here to read full article.

6 From a 1997 CNN interview: “We immediately launched a twofold process when we heard that the Soviets had entered Afghanistan. The first involved direct reactions and sanctions focused on the Soviet Union, and both the State Department and the National Security Council prepared long lists of sanctions to be adopted, of steps to be taken to increase the international costs to the Soviet Union of their actions. And the second course of action led to my going to Pakistan a month or so after the Soviet invasion of Afghanistan, for the purpose of coordinating with the Pakistanis a joint response, the purpose of which would be to make the Soviets bleed for as much and as long as is possible; and we engaged in that effort in a collaborative sense with the Saudis, the Egyptians, the British, the Chinese, and we started providing weapons to the Mujaheddin, from various sources again – for example, some Soviet arms from the Egyptians and the Chinese. We even got Soviet arms from the Czechoslovak communist government, since it was obviously susceptible to material incentives; and at some point we started buying arms for the Mujaheddin from the Soviet army in Afghanistan, because that army was increasingly corrupt.” Click here to read full transcript.

7 “In 1981, President Jimmy Carter’s national security adviser, Zbigniew Brzezinski, said: “I encouraged the Chinese to support Pol Pot.” The US, he added, “winked publicly” as China sent arms to the Khmer Rouge.” From an article entitled “How Thatcher gave Pol Pot a hand” by John Pilger, published April 17th 2000 in New Statesman. Click here to read full article.

8 This is part of Brzezinski’s bio for the American Entertainment International Speakers Bureau: “His former public and political positions include serving as director of the Trilateral Commission (1973-76), member of the Policy Planning Council of the Department of State (1966- 68), and co chairman of the Bush National Security Advisory Task Force (1988). Zbigniew Brzezinski is also a past member of the Boards of Directors of Amnesty International and the Council on Foreign Relations.” Sourcewatch also lists Amnesty International as one of his affiliations.

9 from Sourcewatch

10 from Sourcewatch.

11 “The highest court in France on Wednesday rejected a bid by George Soros, the billionaire investor, to overturn a conviction for insider trading in a case dating back nearly 20 years, leaving the first blemish on his five-decade investing career.

The panel, the Cour de Cassation, upheld the conviction of Soros, 75, an American citizen, for buying and selling Société Générale shares in 1988 after receiving information about a planned corporate raid on the bank.

Ron Soffer, his lawyer, said Soros planned to take the case to the European Court of Human Rights, saying that the length of the proceedings had prevented his client from having a fair trial.” from an article in International Herald Tribune published 2006. Click here to read full article.

Leave a comment

Filed under Greece, John Pilger, Uncategorized