The news that Philip Green systematically asset stripped British Home Stores of hundreds of millions of pounds, and that these were paid to his wife in Monaco so there was no tax, is simply an everyday story of the society we live in. Not only will there probably be 10,000 redundancies, a much larger number will see their company pensions disappear due to the unexplained hollowing out of the company pension fund. Meantime Green is buying a new £100 million luxury yacht.
I am willing to predict that Cameron, Blair and Clinton all find their way on to Philip Green’s new yacht. I am willing to bet that no ex-employee of BHS ever does.
Green’s New Yacht Lionheart – He Already Has Two Others
Outrage is muted because we are just so used to it. Modern capitalism makes Gordon Gekko look like a philanthropist. The bankers’ bailout used the state to effect a mass transfer of wealth from us all to the super rich on an unprecedented scale. But the entire system is skewed to facilitate, every second, the sucking of wealth into the hands of the “elite”. The finance industry is deregulated and extraordinarily lightly taxed, when other areas of activity are heavily taxed. The large majority of transactions ordinary people undertake are subjected to major sales tax – VAT within the EU – while the financial juggling of Mr Green is not taxed at any stage. State activity which involves spending is now channelled through private providers, or involves totally unnecessary layers of financial intermediaries, in order to divert yet more money from the people to the rich. Concentration of capital and deregulation of labour markets have all tipped the balance of economic power decisively away from ordinary people.
The greatest growth in history of wealth inequality in has occurred these last three decades and it is not an accidental occurrence. It is a result of these policies designed to achieve that effect. When first initiated by Reagan and Thatcher, there was no attempt to deny these policies boosted the super-rich. It was rather claimed crumbs would accrue to everyone through trickledown. Nobody believes that any more.
President Obama held a meeting with young people in London last week and sold them his big lie, that change is possible within the present system. He told them not to be “pessimistic”.
The truth is that there is very little hope for young people in the UK. They are saddled with massive tuition fee debt as they leave a commoditised education system in which University Principals are paid £300,000 a year plus. They move in to a market which does not provide nearly enough graduate level jobs for the number of graduates produced. Work they do find leaves them at the mercy of their employers with very few rights or benefits. They will normally live most of their lives in private sector rental, where each will be a small part of the astonishing 9 billion pounds per year the taxpayer gives to private landlords in housing benefit – yet another direct transfer by the state from ordinary people to the rich. Indeed, for a great many tenants, every penny they pay in tax goes in effect to their landlord in housing benefit.
The value of derivatives bets in the City of London I have seen estimated at anything from 30 to 100 times the annual GDP of the United Kingdom. Real economic activity – buying and selling actual goods and visible services – has become almost irrelevant to money and its ownership.
Obama is wrong. There is no hope within the existing system. The extent of social and economic change which is needed is as revolutionary as that undertaken by the Russian and French revolutions. That does not mean to say it needs to be as bloody. The world has changed. When children were executed for stealing handkerchiefs, executing those who had battened off the poor did not seem such a big thing. We are more civilised now and I don’t advocate killing Philip Green.
But we do need a revolutionary mindset when it comes to certainty of the justice of the cause. I upset people by my urging us to disrespect Tories, including ordinary Tories, in my last article. But I fear this is necessary. Society is so obviously broken to the disadvantage of the many, that to indulge those who, from self-interest or media brainwashing or nostalgia, support the status quo is not helpful. People have to be shocked out of their complacency and made to see the ugly truth behind the mass propaganda. Unionists, Blairites, Tories, we should stop according them all respect. It is uncomfortable of course, but otherwise nothing will change.
Voltaire put it best when her wrote “it is difficult to free fools from the chains they revere.” I would contend that the best way is to call out in public “Look at that f***ing fool! They’re wearing a chain!”.
Who are those other two characters sitting next to Blair and Green in the photo?
Ah – one of them appears to be Stuart Rose. But the other?
Marc Bolland
Marc Bolland, having failed to turn M&S round ( the upmarket BHS), re-enters the revolving door:
http://www.cityam.com/239675/former-marks-spencer-boss-marc-bolland-tipped-to-take-up-director-role-at-british-airways-owner-iag
Generous Marc Bolland:
http://www.theguardian.com/society/2015/sep/19/marks-and-spencer-marc-bolland-london-living-wage
Thx.
The other guy in the smaller photo is Richard Caring, another member of the unstruggling classes:
http://www.dailymail.co.uk/news/article-2946748/Swiss-bank-secrets-Nightclub-tycoon-Shop-chief-s-wife-2million-wad-cash.html
He looks a bit like Blair there, but in reality he resembles Graham Norton. Better shot, with his wife:
http://i.dailymail.co.uk/i/pix/2015/02/10/257BC94600000578-2946748-image-m-2_1423530624325.jpg
It’s not often they come right out with their Versailles fantasy, but there it is.
Baal.
At first glance I thought it was Tony Blair, dressed in hippy gear with long hair. ?
I endorse them sentiments, Craig. We’ve got a bad case of Marie Antoinette Syndrome going on here, and diminishing supplies of cake.
I note, incidentally to your remarks on housing benefit, that Cherie Blair’s Omnia Strategy law/advice to dictators outfit is currently fighting even the weak proposals of the chancellor to tax buy-to-let landlords fairly:
http://www.telegraph.co.uk/investing/buy-to-let/landlords-step-up-challenge-to-buy-to-let-tax—as-cherie-blair/
The wealth of a nation is what it can produce and sell through its (skilled) labour. This country has suffered from a short term profit seeking, asset stripping mentality and we have lost our wealth. We were famous once and one of our biggest exports was our skilled labour. Now we have nothing left to export no skills no products.
I should stop listening to the BBC as it is so shamlessly bigoted. Take for example their business correspondent @bbcSimonJack explaining on R4 Today that Philip Green is “not a vulture capitalist” 2h50m into http://www.bbc.co.uk/programmes/b078hjfg which is curiously unavailable beyond 2h31m at the moment!
Simon Jack is actually right, this is not vulture capitalism. It is in fact maggot capitalism, eating away at living organisms and undermining other people’s hard work whilst destroying their savings. Has led to rather unpleasant consequences in the past.
Agree with all of this article.
However, it neglects to mention the role that the monetary system itself plays in redistributing wealth upwards.
http://positivemoney.org/issues/inequality/
If there is one issue that needs to be addressed as a prerequisite to fundamental (‘revolutionary’) change, it is the way that our monetary system has been quietly and steadily privatised beyond the awareness or comprehension of most social commentators.
Young people need to get on board with this, they must choose between debt and democracy:
https://plutopress.wordpress.com/tag/debt-or-democracy/
Hail the Revolution! Outlaw money so that no one will have more money than someone else!
Thanks for the excellent links.
‘We are more civilised now and I don’t advocate killing Philip Green.’
But maybe he will go the way of Robert Maxwell on his yacht.
Always did wonder about that one. Plundered the pension fund and fell off his yacht. I hope there’s cause and effect there.
Marie Antoinette moment:
http://www.telegraph.co.uk/news/uknews/1490030/Philip-Green-gives-4-million-party-for-his-sons-bar-mitzvah-but-no-present.html
Be careful what you wish for – all revolutions are bloody, and as a revolutionary once remarked “today’s revolutionary is tomorrows conservative”
People are not interested in revolution and will endure much inequality and much hardship in order to demonstrate their disinterest in revolution. At some point revolution will be thrust upon them and it will be bloody, cruel, chaotic and uncontrollable. At the moment the most likely triggers would appear to be either a collapse in the monetary system or sufficient numbers of poor people being overwhelmed by migrants.
There appears to be a bloodless revolution happening in Scotland. 🙂
Cameron.
Yes it’s moving in the right direction, a majority in a second indy ref, would help speed it up a wee bit.
Small typo: “Indeed, for a great many tenants, ever penny they pay in tax goes in effect to their landlord in housing benefit.” – should be every.
Not nit-picking, just showing that I was paying attention.
Great article. Green did the same to Top Shop, when he made that company take out a loan for £1 Billion, and simply pocketed it (oversees, naturally). The analysts were talking about how Top Shop should be able to service the debt and so on, but the notion that surely this is embezzlement never came into it.
Hedge fund outfits buy out businesses, then saddle that company as a debt with the cost involved in the purchase, and more besides. Fund themselves with huge salaries, then proceed to asset strip and lay off workers. It’s quite incredible. It’s happened to a number of newspapers in the US, for instance, and this is what’s killing them, not the Internet.
Future generations might look back, and wonder why on earth we put up with it.
Because it’s the best way to make sure fat cat managers don’t sit on their backsides doing whatever they like?
https://en.wikipedia.org/wiki/Market_for_corporate_control
Something that I’m unclear about is how employers became enabled to help themselves to employee pension funds. While it became a widespread practice in the years following Thatcher, I’d have thought the legal firewall – if any – around the funds would have been based on a contractual obligation, and also that someone at least by now could and would have sued a robber baron for fraud. Explanations welcome.
Question(s) seconded.
They just don’t make the contributions due and often (but often not as much or as quickly as required) required by the Pensions Regulator – I very much doubt that they can actually take the funds out or invest the funds back into the sponsoring company unless you have a bent trustee.
Does anyone know exactly how Maxwell robbed the pension fund? I mean, what did he do?
Hush, don’t let such details get in the way of everybody’s outrage!
Don’t understand you there, Martinned.
Martinned regards such sharp practice as a bit of a joke.
Some people make their livings doing such things as raiding pension funds. In many cultures, before the coming of monotheistic religions with their ideas of equality, those who performed unclean functions, from latrine cleaners to butchers, were shunned and regarded as unclean themselves.
A horrible business really but one can understand why- no doubt it is one of the reasons one rarely sees the Blairs and Greens of this world on public transport.
“Don’t understand you there, Martinned”
_________________
Habb
I don’t think Martinned is understood by anybody, his first couple of comments are nonsense. ?
As far as I know Google is still working.
Maxwell used money from the pension fund to buy shares in Mirror Group Newspapers (MGN) so as to shore up its share price. The pension fund had to be invested somewhere – so why not in MGN.
He was almost certainly using MGN shares as collateral for loans – so the higher the MGN share price the more loans he could acquire
Because Maxwell owned MGN he knew that it was not a viable investment vehicle, and he only wanted the pension fund to invest in MGN in an attempt to “paper over the cracks”
Just like with current monetary policy “extend and pretend” was viable for a while but in the end was doomed to failure and exposure for the simple reason that MGN (under his stewardship) was insolvent
Thx Loony.
‘Does anyone know exactly how Maxwell robbed the pension fund? I mean, what did he do?’
By pissing on people from a great height:
http://www.telegraph.co.uk/culture/tvandradio/3664778/Maxwell-was-a-monster-but-much-more-too.html
Maxwell used pension fund contributions to buy shares in companies owned by Maxwell. He was able to do this because his sons, who were acquitted of any wrongdoing (!), were officers of the companies and the funds and they signed it all off. The shares were, of course, worth much less than the pension fund paid for them…………..etc etc…..it was a sort of Ponzi scheme….Maxwell then received something like a mini State funeral in Israel; which always baffled me
According to Gordon Thomas’s book Robert Maxwell, Israel’s Superspy: The Life and Murder of a Media Mogul, Robert Maxwell was an intelligence agent for Israel and was killed by the Mossad when he tried to blackmail Israel into paying off his debts.
Wow, I can’t believe it took almost five whole hours before someone blamed Israel for the problem discussed in the OP.
There’s a new 2015 edition of Gordon Thomas’s history of the Mossad, Gideon’s Spies: The Secret History of the Mossad, which I have just ordered for my Kindle, even though I read the earlier edition years ago. Thomas is clearly an expert on the history of Mossad, with lots of highly-placed contacts. (Which is why I paid good money for the new edition even though I already read the earlier one.)
Maxwell put the pension money in overdrawn accounts and the subsequent tracing claim failed.
Maxwell personally robbed my Fathers pension fund. Now, as a result he still has to work, even though he has stage two renal cancer. Some were repaid by the state but not his.
So you can witter on about it all you like but that man devastated the lives of hundreds of thousands
Or a bent administrator. Who might be doing it for you, or for himself. It happens, RD. The Blair regime helped itself, too.
http://www.dailymail.co.uk/news/article-1266662/The-man-stole-old-age-How-Gordon-Brown-secretly-imposed-ruinous-tax-wrecked-retirements-millions.html
Still going on:
http://www.mirror.co.uk/news/uk-news/police-probe-3million-steel-workers-6744547
Giving less tax relief, or equalising to the level enjoyed by everyone else, for those who invest in pension schemes is hardly theft except in the eyes of the Daily Mail. Remember that 40% tax payers still get more relief than ordinary rate tax payers.
Granted, but I felt it needed mentioning. The article is certainly heavily spun. However, you will see in the article that it was tax relief on the fund itself which was to be cut, which would have affected all beneficiaries of the pension without regard to the rate they were paying personally. Should the government prop up the national finances from money invested for the specific purpose of providing for the retirement of private employees? Doesn’t seem right to me, but feel free to differ.
Most companies used to offer a final salary or defined benefits pension. The amount of money paid out under such schemes is a function of mortality. Life expectancy has been rising hence the amount being paid out by such pensions has been rising.
The amount needed to go into such pension schemes is a function of various assumptions regarding long term investment returns. Not so long ago very few investment analysts would have predicted a zero rate of return. Even today central banks say that ZIRP is “an emergency measure,”
In addition to this problem I think the British Labour government acted to undermine the integrity of pension funds. It was these political actions that caused substantially all defined benefits schemes to be closed to new members. The only exception to this being the pension schemes of the public sector.
The problem now is that people are retiring on defined benefit schemes and there is a funding shortfall – as there must be if you have zero or negative interest rates.
This problem will go away as in the future more people will be relying on money purchase schemes – and if their money will not purchase anything then they will have no pension. The current government has anticipated this problem by allowing people to access their pensions very much like a bank account.
The fraud that you refer to has been perpetrated by the state against the people. It has very little to do with individual robber barons.
Most private companies stopped their final benefit schemes because of the cost which increase when equity markets stopped growing – it really wasn’t all down to state action. It is worth remembering that at the same time as taking away tax relief on dividends that Gordon Brown made a substantial reduction to Corporation Tax rates that in part compensated for the loss of the relief.
I expect at one time some well meaning pension fund manager tied a lot of funds up in BP thinking it was safe.
Probably tied up more in Gilts which have yields far less than BP
O/T but interesting.
BBC Radio 4, in its short noon news bulletin, announces along the following lines : “The investigation into the disappearance of Madeleine McCann may be drawing to a close. Police say they are currently pursuing one final line of enquiry”.
??
Didn’t they say that about the Hillsborough tragedy, which has now taken 27 years to finalise, scope yet for the Chilcot Report.
The inquest concluded that 96 people were unlawfully killed, the police chief in charge has been blamed.
“The value of derivatives bets in the City of London I have seen estimated at anything from 30 to 100 times the annual GDP of the United Kingdom.”
This is not factually correct – the figure being referred to is the underlying principal for derivative contracts – that is not the value of the “bet”.
Sounds like the bit we had recently on the Deutsche Bank’s derivative liabilities being several times the entire German GDP – same thing?
Same issue: the upward mobility of wealth from the producer to the parasite. The numbers are large, however you cut them.
So insurance = parasite?
Legitimate question, but ‘insurance’ isn’t a very wealthy individual who has amassed his wealth by chicanery. Though he may well head an insurance company. (Although ‘insurance’ is requierd in every part of a supply chain, it is the customer, who is not insured, who pays.)
Derivatives are tools to trade risk, placing it with the person or persons who can hold it most cheaply. (Because of portfolio effects or risk appetite.) Insuring against your house catching fire is not inherently different from insuring against a rise in LIBOR.
Martinned – If you think about it then it cannot be possible that $1.2 quadrillion in derivatives can be insuring against anything. It is speculation and it can be nothing else.
The probability of this all blowing up is 1. It is a cast iron certainty. It has already blown up, firstly in the case of AIG and secondly Greece. On both occasions governments were co-opted into papering over the cracks.
At some point something else will blow up. At the moment it looks like it may well be Deutsche Bank. Deutsche Bank will likely be too big to paper over. What happens in such a circumstance is anyone’s guess. Most Germans do not understand just how reckless DB are, and just how comprehensively DB can smash the German economy. Added to this you have growing social tensions within Germany as a consequence of importing large numbers of asylum/benefit seekers.
Wait, how did we get from derivatives to Greece and Deutsche Bank?
As for the $1.2 quadrillion number, you will note that that is the gross number, not the net. Because OTC derivatives are, well, over the counter, they aren’t resold (as exchange-traded options and futures are, for example). Instead, if an organisation wants to close its position, it just enters into an opposite position. If you agree to insure my house, and then a month later you buy insurance on my house from Munich Re, the net amount of insurance outstanding is equal to the value of my house, but the gross value is twice that. Whether the gross amount matters depends on how credit worthy you are. (Either way, it’s an argument for standardising and exchange trading derivatives, forcing market participants to rely less on OTC derivatives.)
Martinned
April 26, 2016 at 13:00
Derivatives are tools to trade risk, placing it with the person or persons who can hold it most cheaply. (Because of portfolio effects or risk appetite.) Insuring against your house catching fire is not inherently different from insuring against a rise in LIBOR.
******
there are differences:
You have to have an insurable interest to insure, which you would have with regard to your own house but not with regard to a stranger’s house. The reason for that is because the insurance company is prepared to take the risk that you won’t usually burn down your own house, but you might burn down the strangers’.
A derivative does not have to have any real connection to the underlying asset, i.e. it can be pure moonshine. That is why they were tightly regulated and prohibited. If you read Reminisces of a Stock Operator you will note that the (19 and early (20 bucket shops that offered margin trading were often illegal or quasi illegal operators.
There have been some who have argued that derivatives are still not lawful in America, but if they are right then its strictly theoretical only. I am not sure of the position now but it certainly was the case that naked short trading was outlawed on the NYSE. The City in London has been the trail blazing wild west – much more open that the US. It would be interesting to learn more about Shanghai quant hedgies and their strategies, but I guess they keep their heads down.
” Insuring against your house catching fire is not inherently different from insuring against a rise in LIBOR.”
Except, apart from the odd case of arson, home insurance is not rigged or manipulated like LIBOR.
…and when it is, people go to jail.
Yep – those that make that mistake just betray that they don’t understand how derivatives work and why they are not well placed to advise on the regulation of markets that really do need more regulation. One of the reforms currently being developed (perhaps too slowly) is the requirement for more derivative transactions to go through exchanges and be covered by margins – which will increase the cost of speculative transactions and will probably do more to reduce their existence than anything else. The real problem is that bets on derivatives actually require very little in the way of an upfront stake The Tobin tax is another possible method which I would support – and unlike many of its advocates would have some idea as to how it might be imposed – which probably makes me a rather more dangerous revolutionary than some of the toy town types.
One mistake that people make revolves around a failure of comprehension of the English language.
I have previously pointed out that “in theory derivatives will net to zero – in practice they will not”
Your speculations regarding exchange traded vs OTC derivatives are somewhat undermined by the fact that the UK is the only jurisdiction in the world that allows unlimited or infinite rehypothecation. Thus if anyone was really interested in any of your speculations unwinding this anomaly would be a fairly straightforward and non controversial first step. The fact that there is no intention to do is informative
I would have thought that the UK government was the only one that allowed unlimited rehypothecation (of collateral) ( it isn’t actually btw ) would actually support the view that Regulators (apart from those in the UK) were trying to get a grip on the volume of speculation. Anyway rehypothecation of capital will become more difficult when the new proposals for many more derivatives to go through an exchange with regular margining with a central authority come into force.
Thank you Res Diss, for your kind uplift of the enlightened masses regarding derivatives. Perhaps, after all you’ve done to educate us, you could be so graciously benignant as to educate us regarding why the Gaussian copula model failed so catastrophically to reduce risk in the case of CDOs – and why we should expect reductive interpolation models based on Black-Scholes to function in markets distorted by pervasive fraud.
Little Nell
There was nothing wrong with the mathematical models per se it was more a case of people not understanding or more likely not understanding the assumptions that went into the models and their limitations. I favour the theories that are more to do with anthropology than mathematical models – Gillian Tett’s book on the subject is excellent.
Well, if the models didn’t work the last time, why should we think they will work the next time?
Thank you, Res Diss, for your kind reply. Doubtless the reason you didn’t answer my questions is that we poor benighted souls would fail to understand the intricacies of the relevant theories. It is ever so enlightening to note that you are comfortable with a closed-form model based on assumptions that can accommodate volatility but not skew. How did you yourself accommodate that skew with your hard-won know-how? In your extensive hands-on experience, did it ever make you nervous to see the models being overridden with tabulated distributions of dubious statistical validity? How do you handle the problem with your own money, in your personal brokerage options account?
I do not know what is meant by “the underlying principal for derivatives contracts”
Total derivatives outstanding on a global basis are estimated as being in excess of $1.2 quadrillion, and exposure is heavily concentrated among the “too big to fail” banks.
In theory derivatives will net to zero – in practice they will not. This is because of the basis risk inherent in all derivatives. In all probability people have sought to cover basis risk with yet more derivatives – this may or may not work on an individual basis, but on a global basis likely actually increases aggregate basis risk.
The other problem is in the case of default. Clearly in such a case derivatives serve to leverage risk as opposed to manage risk. It was the fear of this risk that prompted the bailout of AIG and is a major reason why Greece is being forced to endure economic torture.
Whilst it may be possible to delay the inevitable, it is not possible to prevent it. At some point there will be a default and this will likely lead to contagion. Take a look at Deutsche Bank – and you absolutely know that there is something seriously awry there.
Any exact statement that anyone makes with regard to derivatives is open to question for the simple reason that the human mind cannot compute what is meant by $1.2 quadrillion – and therein lies the fatal danger
If you’re talking about the market for house fire insurance, what is more important, the value of all the houses insured or the value of the premiums? Surely they’re both relevant, but equating the size of the market with the total value of all the houses insured seems like a bit of a stretch.
“If you’re talking about the market for house fire insurance”
I wasn’t. But if I were, I’d be concentrating on the staggering difference in reward between the CEO and directors of many insurance companies and their employees and agents – plucking one at random from Google, and the USA (think things are different here?
http://www.bostonglobe.com/metro/2012/05/10/liberty-mutual-your-premiums-his-premium-office/KCBs1sGY6krd5No3t06WDI/story.html
Unless you’re a shareholder of that company, why would you care?
There, I feel, lies an insuperable difference of perception between us. Perhaps you are the CEO of an insurance company? Otherwise, why would you care why I care?
Distractor. Habbabreak.
As in any conversation, my interest in what you’re interested in is presumed. Otherwise, I might as well go and read Buzzfeed top 10 lists.
Martinned
“Unless you’re a shareholder of that company, why would you care?”
_____________________
I think one would – should – care for reasons of a certain amount of equity and social justice.
Why should the distribution of that part of a company’s profits which is not re-invested be skewed so heavily towards its directors and shareholders?
That money is the shareholders’, to do with as they please. They can give it to the directors, put it in a big pile and set it on fire, or anything else they please. If I were a shareholder, I’d be unlikely to vote for a pay rise for the board, absent highly unusual circumstances, but when I’m not, it doesn’t bother me in the slightest.
Income inequality, in general, might be an issue worth worrying about, but then you’re talking different problem and different solutions.
Not really. If all insured houses burnt down at the same time then the premiums would be insufficient to cover the liabilities. Insurance companies would go bankrupt and many people who thought they were insured would in effect not be insured since their claims could not be met, hence they would suffer consequential losses which they may or may not be able to cover.
Indeed, that’s how insurance works. So the question is: what are the odds of that happening?
The odds of that happening are unacceptably high if the different risks are all interrelated, so that, if one insured event happens, all the other insured events are all too likely to happen. Not too likely to happen with houses. Happened with credit default swaps and related derivatives in 2008.
Indeed. Hence the need for adequate capital adequacy regulations and bank wind-up rules.
“I do not know what is meant by “the underlying principal for derivatives contracts”
Then best not to pontificate on the subject about which you know relatively little – if you enter into a fixed to floating interest rate swap on an underlying principal of £100m then you exchange fixed and floating interest rate amounts calculated on that £100m for a specified period. The liability/asset (yes they have to match) under the swap is not £100m but the difference between the value of the interest flows.
Yes anyone using derivatives for hedging is likely to be exposed to some form of basis risk, and yes the danger exists of the derivative counterparty defaulting – but it is otiose to then argue that these risks are greater than the interest rate and foreign exchange risks that those using the derivatives is exposed. Real people have lost their jobs because companies failed to hedge against these risks properly. The issue about derivative markets is not about genuine hedging which is a good thing, but regarding the speculative/leveraged activity – and what it does for real prices (interest, exchange rates and commodities) rather than basis risk between two similar prices (e.g. bank base rate and LIBOR) which really is of secondary importance and then the credit/default risks that can arise as a result. If you cannot distinguish what is good and potentially bad about derivatives (which have been around for centuries – look at commodity and fx forwards) then you really are not in a position to offer sensible thoughts about their regulation.
Maybe I know relatively little, but one thing I do know is that what you have explained in not ordinarily referred to as “the underlying principle.”
The liability/asset does not have to match – hence basis risk which you acknowledge can exist. Clearly it cannot exist in the event that it does not exist (which it would not in the case of a perfect hedge).
Much of what you claim to be otiose is merely your using unusual words in an attempt to mask the fact that you are engaging in speculation to support your pre-existing position. People have lost their jobs for lots of reasons – including the fact that employers were brought low by reliance on a labyrinthine network of poorly understood derivatives, which, in some cases, have been deployed solely in an attempt to make fraud harder to detect.
The entire point is that no-one is in a position to distinguish what is good and what is bad with regard to derivatives as they are currently used.
Catastrophic collapse is inevitable, all it takes is for the collapse of one counter party that is too big to rescue.
I did not learn “relatively little” from a text book and I know exactly what is meant by the phrase to “rip a clients face off” Think about what this means and then ask yourself whether this is sustainable.
No it is the underlying principal also known as the notional amount or notional principal
The asset/liability in an individual derivative contract do have to match. Basis risk usually arises when you have a mismatch between the terms of a hedged position and the hedging contract or two speculative contracts which are not quite matched.
The example I gave was not speculating – how can fixing your revenues/costs be speculative it is giving more certainty about results not less. Yes derivatives can be misused and over speculation can lead to all sorts of problems – that doesn’t mean that the risks are unmanageable per se or that derivatives cannot be used to reduce and manage risks as well. Foreign trade and commodities markets would collapse without forward fx and forward commodities contracts – which is of course what I expect you would like to see. Not everyone engaged in real banking rather than the casino version wants to rip a clients face off – there are still those who believe that they can get an honest turn by helping their clients manage and reduce their risks.
“The entire point is that no-one is in a position to distinguish what is good and what is bad with regard to derivatives as they are currently used” – by no one you are of course speaking for yourself.
It is also worth bearing in mind that its not possible to properly price all derivatives.
It isn’t?
“…the figure being referred to is the underlying principal for derivative contracts…”
OK. Let’s go with that. So you are telling us that the “underlying principal” is, as Craig put it, “from 30 to 100 times the annual GDP of the United Kingdom”.
Where did all that money suddenly appear from? Does it actually exist in any meaningful sense? And why are people allowed to play these silly games with the stuff (money) that we all depend on to save the proceeds of our labour and obtain the necessities of life?
See above the underlying principal is a notional amount – it doesn’t actually exist. You have to understand how derivatives work before you can enter into a sensible discussion as to what are good and bad derivatives.
If you are selling goods abroad for foreign currency while all you costs are in £ you should enter into a derivative ( e,g, a forward fx contract) to sell the foreign currency in return for £ – otherwise you may not have enough revenue to pay your workers and heaven forbid make a profit. Would you really want to stop such derivatives because derivatives are a silly game? Can we start to deal with the real world.
Tom – Suppose you buy a luxury car for say $100,000. You can borrow cash using the car as collateral. If you are in the finance industry in London you can borrow from as many people as you want always using the car as collateral.
In theory you could borrow $50,000 from 10 separate lenders. This would give you $500k in cash plus your car. Because lenders know that you may have pledged your car multiple times over they may worry about getting repaid and so they will buy Credit Default Swaps *CDS;s). These contracts will pay out in the event that you default. Assuming a perfect hedge you have now created $500k of CDS derivatives.
Because no-one knows how many times, and to who, you have pledged your car no-one can be certain that the sellers of CDS’s are not also the same people that have loaned you money.
Suppose you take your car and your cash down Vegas way. Suppose that you have been advised to do this by Goldman who also happen to own the Casino. They may form the view that, in their parlance, you are a muppet. There is nothing to stop them taking out $ millions of CDS protection against you – which they may well do if they know you are about to lose all your money and trigger a default under the terms of the CDS contracts.
Maybe you have now created say $2.5 million of CDS derivatives. (Remember all this only ever started with one car – a car that soon will no longer exist!)
Suppose you lose in Vegas, get drunk thus invalidating the car insurance, and then crash your car. Where does this leave everyone?
No-one can access the pledged collateral of the car since it no longer exists, No-one can get repaid the money they have lent you since you no longer have any money. Therefore they have to seek to recoup losses through the CDS contracts. Some of the issuers of the CDS’s may be the same people that had lent you money in the first place. So they are now faced with a double loss. In addition you have a predatory party looking to hoover up $2 million from someone. You now run the very real risk of triggering a cascade of defaults.
When you are dealing with a global derivatives book of around $1.2 quadrillion something like that described above, but on a massive scale that is too big to cover up, is certain to happen. The only question is when
Could you put me in touch with all those guys willing to lend 50k? I’ve got a bridge they might want to buy.
“If you are in the finance industry in London you can borrow from as many people as you want always using the car as collateral.”
Don’t be stupid – you have no understanding of how credit referencing or collateral works in this country,
There is of course much recent history of banks lending on the strength of inadequate collateral – and a lot is being done by Regulators to address this. But if you stopped banks getting cross guarantees from other banks (which is of course what a CDS is) who know the borrower better in your willingness to stop all derivatives then my guess is that it would become an awful lot more difficult for ordinary people to borrow and you would make genuine banking activity which matches up savings and investment a lot more difficult to undertake – which I guess is what you would like to see.
Speaking of stupid – perhaps you would like to let everyone know why MF Global AIG, the JP Morgan (London Whale) all chose to execute and transact their infinitely rehypothecated deals through London. Could it possible be that because the UK is the only jurisdiction in the world where this is legal.
Not that you appear to have any interest in letting reality intrude into your fantasy view of life, but just in case I am wrong here are some facts
http://taxjustice.blogspot.co.uk/2010/07/offshore-city-of-london-puffed-up.html
Could it possible be that because the UK is the only jurisdiction in the world where this is legal. No it was because it was the biggest and most liquid market where it was legal,
Given you leak is to an article that is nearly six years old might I suggest you upate yourself on what has happened/going to happen to OTC derivative clearing since then – it becomes rather more difficult to rehypothecate collateral which is paid into a central exchange rather than to the derivative counterparty.
Martinned evidently learned about derivatives from reading the Economist by the warmth of his imaginary ancestral hearth-fire. He doesn’t seem to grasp how changes to netting and closeout rules let insiders end-run bankruptcy courts and loot collapsing institutions.
I upset people by my urging us to disrespect Tories, including ordinary Tories, in my last article. But I fear this is necessary. Society is so obviously broken to the disadvantage of the many, that to indulge those who, from self-interest or media brainwashing or nostalgia, support the status quo is not helpful. People have to be shocked out of their complacency and made to see the ugly truth behind the mass propaganda.
Complacency is the kicker – a sense of security is not helpful. Listen up – Tory legislation waits in the wings. Those wearing the chains will codify anonymity first, under the guise of reducing threats. The prescription will move on to “conspiracy theorist” websites that “offer up hate speech” by attacking governments. Or “racists” who criticize Europe or refugee policies. Critics of Israel are ruled “antisemites”, critics of Hillary Clinton will be “misogynist”, critics of Saudi Arabia will be “Islamophobes” and anyone who dares side against the press consensus on Syria or Ukraine will be “apologizing for war crimes” or “spreading Russian propaganda”.
They are trying to make the web they want. It’s imperative and meaningful we don’t let them. Time I believe to emerge from the crib of stagnation as bloody serious towards crucifying privilege and the venomous, exploited power of our so called representatives, the zombies in empty suits..
..the zombies in empty suits who use the filthy lucre we pay them to build their ‘base’ of elites, curry favors to bankers, bootlick captains of the MIC, add fuel to the dominion fire by legislation and ensure any peasant that puts a brain, heart and mind above the bastion as messenger gets chopped down and disappeared.
The only peasants I can recall being chopped down and disappeared in significant numbers in recent times were those in the Soviet Union and the PRC.
Of course you can’t actually “recall” any of this. The kulaks went of the way of our own native yeomanry in the mid thirties-when you were what? Not born?- the peasantry in China is still there, as large as ever though diminished as a proportion of the population.
What you recall are propaganda tracts, regurgitated in the form of popular literature or ‘news’ articles in the periodical press or TV. And that is not ‘recall’ at all but repetition of falsehoods maliciously intended.
I suspect that goes for the missus too.
My recall is based on history books from respectable historians supplemented by my wife’s family history, one of her grandparents was deported from near Smolensk to Siberia where he died in a camp. So the suppression of the kulaks was a “falsehood maliciously intended” – you really are a creature.
I should have said great grandparent – not that Bevin is likely to care a jot.
You are a vile specimen, Bevin.
The Massacre of the Peasants.
Replies Bevin:
“the peasantry in China is still there, as large as ever ”
D’you know, that’s what I tell say about the Palestinians when Bevin & Co. rabbit on about Israeli “genocide”.
Glad to note that my argument appears to have been accepted. 🙂
The Nationalists in the Spanish Civil War killed quite a few peasants.
The U.S.-supported military regimes in Central America have killed quite a few peasants.
I am not denying it – but they were not the only ones and you forget where the debate started.
This is just the tip of the public and private economic systems icebergs where any massed assets are available to a very few to pick over whatever they want.
It’s called modern capitalism which demands profits to those very few, no matter who and how it is being amassed, and no matter what the consequences to those effected. And the political systems just to their bidding too.
Just think of Social Security propping up the outrageous US debt.
Or Juan Mata, a very good footballer, speaking out about the outrageous salary he receives.
Our assorted shit holes need to be forcibly changed from top to bottom.
Who do you think own the banks/hedge funds/whatever that were allegedly guilt of all those crimes?
Try people like David Tepper, Ray Dalio and John Paulson.
How about these guys?
https://www.calpers.ca.gov/docs/total-fund-investment-policy.pdf
They are a pension fund. You asked about banks and hedge funds. I answered on the basis of your question. If you have a question about Californian pensions then I can consider answering that.
Lots, and lots, and lots of companies, including big banks and hedge funds, are owned by pension funds, meaning that this “workers of the world unite!” approach is a bit more awkward than people realise. We’re all capitalists now…
Oh yes we are all capitalists now! And the example you choose to evidence this point is:
California Public Employees Retirement Scheme. A pension vehicle exclusively available to employees of the state of California. A retirement scheme mired in accusations of corruption and fraud. A retirement scheme that has recorded massive losses from investments in CDO’s and high end real estate speculation. A retirement scheme that is 53% underfunded and a retirement scheme that has the ability to compel taxpayers to make up the shortfall.
I just picked the biggest one in the world. I’m still in this one, back from when I was a lowly Ph.D. fellow in the Netherlands: https://en.wikipedia.org/wiki/Stichting_Pensioenfonds_ABP
Quoting wiki: “According to information published by ABP,[citation needed] its largest US investments include ExxonMobil, JPMorgan Chase, General Electric, Goldman Sachs, Morgan Stanley, Citigroup, Boston Properties, Public Storage, Microsoft and Cisco Systems.”
So there’s me owning a tiny share in each of these companies.
Martinned
I cannot – will not – regard you as any sort of “lowly” fellow. 🙂
By the way, which universities were you at (if also Oxford, please specify the college)?
Some university students seem annoyed with the state of the state, actually making an app to test things
http://www.crawleyobserver.co.uk/news/local/secrets-revealed-by-new-spy-like-technology-1-7350675
“A student from Horsham has devised a way of using ‘snooper’s charter’ surveillance technology to pinpoint people’s lifestyles and personality.” you can download his browser plug-in and RIPA yourselves. . .
further annoyed people include a comedian doing the same thing on Utube, being a today-tory or a Blair-backer basher!
https://www.youtube.com/watch?v=szN7DlmMLYg (Olivia Lee on Liberty)
It is not possible for a system to produce positive outcomes, if environmental conditions do not allow for such outcomes to occur. The system in question is utilitarianism (pooling and sharing), and the environment in which it operates has been ‘gamed’ by the uber-elites. They are the embodiment of utility monsters, IMHO.
It all boils down to an apparent blindness to umwelt and the continuing adherence to the moral philosophy that underpinned colonialism, IMHO.
Spot on Cameron and an extension of utilitarianism is well underway with governments and NGOs adopting payment for ecosystem services (PES) polices..the commodification of nature and double resource use mechanisms. Since the UK is dominated by landed private land owners who own or control most of the provisioning and regulating services, wind energy, carbon sequestration, water, water purification and so on things are only set to get worse..Under the motto of ‘putting a price on nature to save it!’
Although monetising ‘abstract externalities’, such as air quality, will undoubtedly create an ethical minefield ripe for exploitation by the uber-elites, it may be the only means of modernising ‘capitalism’, which is unlikely to be replaced as the dominant economic model. I am ignorant of any viable alternative method of ‘valuing the environment’.
‘Valuing’ it could be said to be at the root of its destruction since this particular idiom translates to a destructive philosophy representing a collective Human arrogance that considers the environment only in terms of its usefulness to Humans. Meaning might be a more appropriate one!
Indeed. I was not suggesting placing a monetary value on the environment was desirable, simply acknowledging I couldn’t see a way around it.
This may sound a bit new-age to some but it is actually scientific reality. The relationship of humanity and the environment, is not one of being in the environment but is instead, one of being a part of the environment. Our brains are shaped by our environment, which we in turn shape in accordance with our needs/desires. The resulting umwelt subsequently influences and shapes our identities and so our needs/desires. It is mote than a philosophical proposition to suggest that we can imagine a better world. We just need an appropriate ethical framework to make it possible.
IMHO, the uber-elite are so insulated from the semiotic reality we all share, that they have simply lost their humanity.
🙂
This’ll teach him!
http://www.theguardian.com/business/2016/apr/26/bhs-collapse-sir-philip-green-must-repay-400m-pounds-or-lose-knighthood
I say that Sir Philiip Green should be drawn and quartered, but that’s only me.
(‘“Look at that f***ing fool! They’re wearing a chain!”.”
Come on! Either ‘he’s wearing a chain’ “she’s wearing a chain’ or, if you insist “They’re wearing chains.” Actually I think the latter is preferable, but in the name of commonsense let us not- in order to fend off the lowest forms of feminist whining- get into
““Look at that f***ing fool! They’re wearing a chain!”.”)
Apart from anything else it gets in the way of the observation that in this piece, including the well chosen, if pornographic photographs, you have captured the spirit of the age, which is not easily done.
It gives rise to the question however, as to how you can possibly believe that all remedies to this sort of obscenity- which runs the gamut from the greedy vulgarians at one end to the starving children and pensioner reduced to beggary at the other- without substituting social control of the means of production etc for capitalism.
RH Tawney told the Fabians that they would learn that “you cannot tame a tiger claw by claw.” That was in 1951 when the tiger in question was looking distinctly chastened and malnourished- its normal diet having been cut back to provide milk for infants, teeth for old folk and living wages for all. He proved to be a true prophet, and not just a christian gentleman, for in less than thirty years the old tiger was devouring jobs, pensions, the rations of the poor, public libraries, schools and whole industries again.
And the cycle which vomits these Greens and others upon us, was back in full operation.
And so it will be until we all decide, soberly and manfully-in the sense of shouldering the responsibilities that will fall on us when we undertake to make our own ‘weather’ and take charge of our own lives-to put an end to capitalist ownership of, not just retail outlets but our entire culture.
And, incidentally, seems fair set to guide us to a war from which if the planet survives, it will never be able to recover.
Rather well put, Bevin. Strangely, the avenue of escape seems to be illuminated by a flickering and unloved sign put there by palaeo-conservatives: Neither A Borrower Or A Lender Be.. Flush usury out of the system, and much will follow. Your opinion of that would be welcome.
Oh, and don’t buy trash you don’t actually need.
Neither a borrower or a lender be – I think Keynes identified what a disaster would be. What happens when you reach old age and their are no savings to tide you over. Where does the investment come from for future productivity if there are no lenders and you cannot borrow. If excess savings are not recycled into investment or consumption in excess of production then the result would be a massive reduction in output and living standards – those who believe in a barter economy might see this as a good thing, but I very much doubt that the 99% would.
Naturally you see objections to the principle. But if you had been a Conservative voter 60 years ago, you would have adhered to it. However, I used the old saw as indicating the direction of travel – as you would have acknowledged had you not been intent on picking nits. The fundamental evil is usury, and the correctable evil is usury at rates of interest intended to benefit unproductive (in material terms) shareholders.
Isn’t the producer worth just as much, if not more than the shareholder or hedge fund CEO? Without the producer, nothing at all happens. By all means lend money. But lend it at reasonable rates. If I’m lucky to get 1.5% on what I deposit, why do I have to pay 3.7 to 4.9% APRC for a mortgage on a house – and enjoy a further hit if I delay a year so that the price can rise with The Market ? It costs the lender fuck-all over the sum lent when the contract is signed, and repossession secures his risk completely.
WITH USURA
https://www.youtube.com/watch?v=xn6r2Nm0ZMo
Hi Bevin,
Extremely fair question. The problem of capital remains. My thoughts run along these lines, broadly defined:
All natural monopolies should be state owned
Other enterprises should in large part be owned by those who put their labour into them, but should compete in the market.
Something like that.
Why would you want the workers to own the company, so that they’re doubly hit if the company goes bust? As an employee, the last thing you want to do – from a sound risk diversification perspective – is invest in the company you work for.
On the role of greedy shareholders, with more on Green’s interesting career:
http://www.theguardian.com/commentisfree/2016/apr/25/bhs-shareholder-greed-high-street-retailer-divident
For many years, BHS formed part of a holding company called Taveta Investments Limited. In 2005, Taveta Investments paid a dividend of £1.3bn, although the group’s annual profit was only £253m. This dividend was mainly financed by increasing debts by nearly £1bn. The legal requirements are that companies can only pay dividends when profits are almost certain in cash or cash-equivalent terms. The company’s auditors, PricewaterhouseCoopers, gave the accounts a clean bill of health, indicating that the appropriate legal requirements had been met.
PWC too. Whod’a thunk it?
http://www.bbc.co.uk/news/business-31147276
HMG always gets the best available….
http://www.theguardian.com/politics/2010/aug/13/topshop-philip-green-review-coalition-spending-cuts
🙂 (rather than cry)
Force Green to repay all plus interest and find him on the appoint paid in Monaco.
Yes! Great piece!
A practical suggestion: how about we meet up to shower David Cameron and others with pennies at the London “Anti-Corruption Conference” that opens on 12 May?
Could such an action – one that causes no physical harm to anyone – possibly spark things off, big time? There is ever more truth in Guy Debord’s reference to “the obvious and secret necessity of revolution”.
The question is how to make the necessity possible.
Could we inspire the world? Could we give a lasting push downwards to what remains of the respect that is enjoyed by politicians and officials who are, as we all know, nothing but the lackeys of big business interests?
Such a clear and simple action could sidestep recuperation. We wouldn’t be asking for these liars to hear our point of view, or to meet with representatives of the exploited majority, or for their scribe colleagues to represent our line of criticism in their mindtwisty newspapers.
Could an explosive growth in the expression of public contempt give the ruling fuckers nowhere to run?
As contempt grows, hope must grow – and convulsively as Andre Breton would have put it. There is little hope, but there is certainly a lot of contempt. The problem is that it usually expressed in small groups, or forgotten about when people get drunk at the weekends or go on Facebook. Those who persevere with it soon find that it gets recuperated into institutionalised legalistic begging for crumbs, “expert critiques” of various kinds, as maybe they sit back as atomised listeners and listen to the safety-valve of occasional satire. But when contempt explodes, when it grabs the imagination of the masses, so can hope. Belief in our own resources. So Philip Green and David Cameron and Mark Carney have fucked off on their jets, as the country comes to a standstill? Well fuck them! We can do without them! And fuck the cashpoint machines being closed too! Let the people take over…
Ever studied Paris May 1968, Craig?
If only things were so simple! There again, the issue is quite fucking simple…
Off-topic,but also sort of on-topic:
I’ve always avoided the chemtrail conspiracy stuff. However, I find this report rather alarming…
http://truepublica.org.uk/global/australia-vaccinate-human-population-chemtrails-release-aerosolized-gmo-vaccine/
Where will the 12 May London Anti-Corruption Summit be held? And who’s attending?
Will it be in Marlborough House on Pall Mall, the same place as the “Tackling Corruption Together” summit of the previous day?
As a corporate drone I am feeling my motivation decreasing every time I read the news. It is hard to hold our management in anything other than suspicion and contempt. I think this will be a common reaction globally.
Mr Murray,
Can you name one example in history of bloodless revolution? There have been few even this century but none of them was bloodless (as far as I remember).
Calling people onto the streets is desperate but also very risky call. Once mob is out it is very difficult to predict where the anger will be turned.
And also, whereas I agree that majority of young professionals in the next 20 years will most likely end of at the mercy of private landlords, I would argue that most of the private landlords are not those rich (like Green) but those who saw the opportunity and risked their savings (and some also mortgaged their own home) but now making good money our of rental market. I am not advocating them but calling them rich is not very accurate. Following that we can call everyone who owns a house in this country rich.
The system is corrupt I agree but (in this country) there are more peaceful ways to bring change in. JUST DO NOT VOTE for Tories and New Labour. VOTE FOR GOOD independent candidates, fill Westminster with them and show to the establishment that you had enough of them and want some change.
The First Past the Post system makes it hard for third parties to win. (Much harder where I am in the U.S., where other laws also disadvantage third parties, than in the UK.)
Uzbek, the collapse of the Soviet Union, late 80s/early 90s, could be construed as a massive revolution that totally changed the entire world (incidentally, Gorbachev always said that the 1986 Chernobyl disaster was the driving force behind the collapse of the USSR). This could have easily turned into major violence, or even world war 3, but it didn’t, and was largely peaceful.
It wasn’t a revolution, and it didn’t change “the entire world”. On the latter point, the size of the military, security and intelligence sectors in the US, Britain, etc., haven’t changed much. Note that whilst the Party disappeared, the KGB basically changed its name to FSB and SVR and is still pretty much as powerful as it was, albeit of course in changed circumstances. It effectively included the Soviet-based mafia already, in the 1980s. I’m not so much quibbling over the word “revolution”. Ii’m just saying it didn’t result from a mass popular movement. Also one can give too much weight to the question of violence. In the 1990s life expectancy fell dramatically, for a time at a rate of one year per year (e.g. last year, life expectancy at birth was 63.0; this year, it’s 62.0). So make no mistake about it, the readjustments killed a lot of people. It’s important to realise that the USSR was already capitalist. There’s been some talk in the British chattering classes about the nature of money, and abolishing cash, but you can’t understand the category of money in a useful way which isn’t Marxist. A socialist revolution abolishes money. There aren’t two ways about that.
When Russia ceased to be Communist, the military, security and intelligence sectors in the US, Britain, etc., lost their justification.
We are now living in the equivalent of Brezhnev’s USSR, or the French monarchy in the years immediately preceding 1789. The governing system continues to govern, but it has lost its justification. Give the system a severe blow, and there will be a revolution.
So the fall of Communism has made a significant difference.
In other words, now that we’re at the end of history, and there is no struggle left, people go around breaking things for no other reason than that they’re bored.
I was reading about the anti-vax movement in France this morning. That has to be a metaphor for something. They were so successful at eradicating certain diseases, that they’re having trouble explaining to people why they should have their kids vaccinated against polio, measles, etc.. Institutions, from capitalism to the European Union, have solved so many problems that people take their quality of life for granted, assuming it fell like manna from heaven, and that it will last in perpetuity. So they start complaining about things that would have seemed like a trivial problem only decades ago, perfectly willing to break all the great institutions we have created and throw out the baby with the bath water.
Very depressing…
” It’s important to realise that the USSR was already capitalist”
Can you please explain your statement above? I lived in USSR at that time and my understanding of capitalism does not apply to the socio-economic system I lived in back then. Perestroika legalised small enterprises (largely to fight shortage of almost everything from clothes to food supply) but the government regulated (and owned) most of economic activities.
“and was largely peaceful.”
I would argue that it actually was not. The evening/night events in Moscow were (although 3 people have died under tanks) but if you would look at the collapse of the USSR overall it preceded with number of intraethnic violence not at least events in Andijan in 1989 (when local Uzbek population turned against Turk Meshetians) and Osh in 1990 when local Kyrgyz population (minority in that part of Kyrgyz SSR) turned against Uzbek majority.
Shortly after USSR was no longer even larger number of intraethnic conflicts arose in even larger scale. Events in Nagorny Karabakh, Georgia, Tadjikistan, Moldova all followed from collapse of USSR. Thousand people have been killed and hundreds of thousands displaced by these conflicts.
So overall collapse of USSR cannot be seen only by the events which took place in Moscow but you need to assess it on larger scale by looking at the events preceded and followed from it.
Just for your information October Revolution in Petrograd happened with no death at all (at least not officially registered) but in years and decades which followed it millions of people have been sacrificed and wiped out in the name of Bolsheviks crazy ideas.
Libya 1969.
#Facepalm
Well, if you call a coup executed by military to overthrow monarchy and grab power to be a revolution which is suggested by Mr Murray as an example I would agree with you. Again the event itself was largely peaceful but aftermath which led to the established dictatorship was not.
Portugal,1985. (off top of head)
I think you mean 1974-75.
In Portugal itself yes. But again looking at the events that followed and directly derived from the events in 1974 in Portugal we saw decades of civil war and great powers meddling in Angola and Mozambique, intervention of Indonesia in east Timor with hundreds of thousands people perishing as a result of these events in Portugal.
I think governments need to be held to account, over the likes of tax avoidance and university education.
There are some shinning example to found around the world, I watched Michael Moore’s new film, “Where to Invade Next” last night it was quite interesting, in Slovenia university education is free, even for foreign student.
The Slovenian government did try to introduce fees, but a mass protest by student unbelievably brought the government down. Imagine that scenario at Westminster? No? Nor can I.
The system appears to be geared towards aiding and abetting the rich, will it ever change? Unlikely, unless the people force change to happen, that mass urge to change the system cannot come, whilst the system divides us. We must overcome our predijuce of each other, before we can unite and change the biased system.
Even then it will not be easy, but something must be done to break this, “I’m alright Jack” tough if you’re not society we live in.
We should look North to the Scandinavian model or to Denmark or Finland, the latter, where even rich people state educate their children.
Yes in Norway they will take your children and educate them for you, they call it Barnevernet.
Didn’t the SNP say they would model Scotland on Norway? Probably what Named Person is all about.
http://www.bbc.co.uk/news/magazine-36026458
Fred.
You can mock other nations systems if you like, but, in my opinion, the likes of Finland, would be a great model for Scotland.
http://www.greatschools.org/gk/articles/finland-education/
Now Austin Reed bites the dust. And the headline tells us that “1100 jobs are at risk.”
It must be much more than that. Just as BHS must involve much more than 11,000. The entire supply chain is affected. The landlord letting employees their homes are affected, the grocers selling them food, the travel agents selling them holidays…etc.
“First they came for the miners. But I was not a miner. Then they came for the car workers. But I didn’t work making cars. Later they came for the nurses but nobody in our house was involved. Then they came for the local government employees and the postal workers.
“They came for the Trade Unionists but I was never one of them.
Did I mention that the nationalised industries were decimated? Or that clerical work was offshored..
The weird thing is that as all these jobs were lost most of us, ordinary folk, had to work harder, much longer hours, shorter holidays. …”
I asked Martinned to explain it all but he just gave me a copy of a kid’s book called ‘Atlas Shrugged’.
The truth is that there is very little hope for young people in the UK. They are saddled with massive tuition fee debt as they leave a commoditised education system …
But no mention of globalization and the off-shoring of British manufacturing.
No mention of mass immigration creating competition for what jobs remain.
And when the American election campaign turns on the questions of off-shoring of jobs and mass immigration, you, the Guardian and all the other liberal-lefties oppose the nationalist candidate for repatriation of the economy and protecting the border with howls of “fascist” and “racist.”
There have always been unpleasant, greedy rich people, so get over it and start thinking about what is actually needed to spread prosperity. The moronic crowd yelling “share de wealf” certainly won’t accomplish anything. You need jobs, relevant training for jobs actually available, and discipline, not a fucking revolution, which would end like virtually all revolutions in a bloody dictatorship.
So what stops British young people from studying in the Continent (or in Ireland), if UK tuition fees are too high? Many continental universities, including both of my Dutch alma maters, offer study programmes entirely in English, for the linguistically impaired. (Tuition fee: around £1000 per year.)
Why are they studying at university at all, if the education they receive fails to justify the investment?
Far too many people going to university for worthless degrees. That is the problem.
“Far too many people going to university for worthless degrees. That is the problem.”
No mate. That is the solution. The revolution in idiocy is gathering pace, few will be able to keep up.
And why? Because debt, that’s why. There was an opportunity. Get young people in debt from the earliest legally possible moment, as close to their 18th birthdays as possible. Tell ’em you’re “giving” them something.
I think they have started, actually. I’m told that Maastricht is awash with young Brits.
Spot on.
“No mention of mass immigration creating competition for what jobs remain.”
No-one can say everything in every sentence or should want or try to.
It is quite true to say that the left has not got to grips with the fact that employers, generally speaking, love immigration because of the downward effect on wages. Hello Taylorism.
Most of the left is middle class and for them, the poor ickle chavvy-wavvy is essentially the same as the poor impoverished immigrant. And yes, essentially the proletarian condition is the proletarian condition, the “relegation to the margin of life”, alienation from the means of production and their own labour, but that doesn’t answer the question of what’s a British building worker supposed to do about his mortgage when Polish workers come who are willing to work for a third of his wages and much longer hours.
I’ll tell you what the answer is: stronger trade unions. Give all immigrants a union card.
“You need jobs, relevant training for jobs actually available, and discipline, not a fucking revolution, which would end like virtually all revolutions in a bloody dictatorship.”
Excellent! Could not agree with you more. Exactly what I think as well. Luddism is never a good way. Opposing progress and not competing in it is a good pathway for socio-economic and cultural disaster.
As we are talking about Revolution this coming Saturday.
The Red Dagger in Bristol 30th April.
Live performance of the poem by Heathcote Williams
Wat Tyler, John Ball, Joanna Ferrour, the 1381 Peasant’s Revolt and the City of London’s weapons of mass destruction
http://www.brh.org.uk/site/events/the-red-dagger/
So the long promised revolution is not actually going to happen this weekend – your anarchist friends are just going to discuss it?
What do you suggest then? Give the Anarchist a cigarette?
@Resident Dissident
“So the long promised revolution is not actually going to happen this weekend – your anarchist friends are just going to discuss it?”
The revolution is well under way. You are constrained by your own reality construct to
to have any awareness to what is happening elsewhere in the hologram.