As Prime Minister David Cameron announces the threat driving the never ending war on terror could last decades, the battleground spreads from the Middle East to North Africa. However, if we want to hold a real war on terror, we need to start taking on the financial terrorists who are truly undermining freedom and democracy in the world. The real war on terror would see drones flying over the City of London, not Timbuktu.
A point perpetually glossed over by residual fans of this apparent free market we live in, is that the banks failed. Their model of profiting by generating balance sheets full of toxic assets selling them on and insuring themselves against the losses – it failed. It failed spectacularly and overnight. However, instead of failing with dignity like so many businesses in the consequently defunct economy – the Banks held the governments to ransom.
“Save us, or you are coming down with us. We are too big to fail.”
This was the message hammered into political leaders across the globe by advisors who were in fact, former and future heads of the very same Banks. United States Secretary of the Treasury Hank Paulson, who authored the first US bailout bill, was the former Chief Executive Officer of Goldman Sachs during the period it inflicted the financial crimes responsible for the crisis. In order to push through unpopular measures to provide bailout deals to banks in Greece and Europe, the democratic leaders were removed and replaced with bankers and technocrats. Italy installed former banker and economist Mario Monti. Greece installed Lucas Papdemos, who was the serving Governor of the Bank of Greece and later of the European Central Bank during the period that Greece’s banks were working with Goldman Sachs to fluff the budget numbers to gain entry to the EU and their eventual collapse. This meant the people responsible for causing the crisis, were put in charge of the governments trying to solve it; and they naturally handed the bill to the tax payer, not the trader.
In the UK, the government bought or became a significant or majority stakeholder in almost every high street bank (Lloyds Banking Group, Northern Rock, Royal Bank of Scotland to name a few) and used almost £2 trillion of tax payer money to do so. This equates to over three times the total annual spend of the UK government. Considering the enormous and life saving contribution the tax payer has made to the Banks, one might expect some humility or reward. Not a chance.
They Rigged the Rates
While the banks were approaching the taxpayer with a begging bowl, they were simultaneously rigging the basic rate of interest, in order that they could make profit from debt, whilst pensions and savings suffered losses.
To give you some sense of scale, it is estimated that the rigging of LIBOR saw lost income from its victims of over $850 trillion. This is the total UK state budget for 760 years.
This is also not a victimless crime. While some say, consumers benefitted from their loans and mortgages being slightly lower due to the LIBOR rate rigging. However, these small short term gains were outweighed as simultaneously their pension values were also linked to the same rate, so being devalued. Those with investments and savings (largely linked to the LIBOR rate) also saw massive losses.
Serious questions about the rigging of the LIBOR rate have been around since 2005. In June 2012, Barclays was found guilty by the FSA of rigging the rate and given a fine of just £290m by UK and US regulators. None of the traders who profited for perhaps a decade from breaking the law were taken to court, or put in jail, or had their personal fortunes diminished.
By August 2012 it was announced that seven banks were to face legal questioning in the US. This week RBS, a bank now 81% owned by the British tax payer, has agreed to pay a £500m fine to settle the issue with US and UK regulators. However, this effectively makes the British tax payer (the victims of the RBS fraud) the bill payer for the criminal activity of RBS.
Chancellor George Osborne ia making strident comments that the bankers would need to pay the fine from their bonuses, but after a strong of U Turns on policies designed to tighten banking regulations and break up banks, one would have to an optimist of the highest order to place any faith in such sops to the masses.
How it works: Bank commits financial terrorism; bank gets caught committing financial terrorism; tax payer pays for bank to commit financial terrorism.
They Sponsor Terror and Drugs
The rap sheet for banks funding and colluding with the criminals of the world is a long and sad affair. Most recent in the dock was HSBC, the world’s bank. HSBC appeared to take its own branding literally at its word at include in its duties the laundering of money for Mexican drug cartels, the breaking of sanctions with so called pariah states, and funding the very same ‘terrorists’ the UK government is sending troops and weapons across the globe to defeat.
This is not a conspiracy theory. HSBC were found guilty in a court of law of funnelling the proceeds of crime through their books knowingly and deliberately. This was not the act of some rogue trader.
HSBC set up a subsidiary firm with the specific intention of using it to launder the money of Mexican drug barons. It spirited over $7bn of the stuff between 2001 and 2007.
HSBC deliberately concealed transactions between 2001 and 2007 worth $19.7bn which mostly involved Iran. These trades were illegal under US trade restrictions. HSBC Europe and HSBC Middle East repeatedly removed information from transactions to conceal that they were dealings with Iran.
HSBC also pressured its US subsidiary to rekindle its relationship with Saudi Arabia’s Al Rahji banks which was found after 9/11 to have relationships with terrorist organisations.
Finally, HSBC’s US subsidiary happily cashed over £290m in dodgy travellers cheques used to launder Russian money without taking due diligence procedures.
The penalty HSBC will face for such rampant criminal behaviour? A fine equivalent to just 14% of the profits posted by the bank for one year. No one is held personal responsible; no one goes to jail; no one’s personal fortune is diminished.
They Gamble on Whether People Eat or Starve
Last year Goldman Sachs made £250m speculating on staple foods. While the UN was warning of a global food crisis in 2013 due to poor harvests in the US and Ukraine, Goldman’s traders were gambling on the crisis raising the cost in items such as wheat and rice, and placing bets. The starvation of the many contributed to a 68% rise in the profits of the bank that year and a rise to £250,000 per year salary for each of the banks employees.
One might argue dispassionately that it doesn’t make it morally wrong for someone to profit from a catastrophe so long as they played no part in causing it. However, this assumes that the mass speculation does not impact the price, which it patently does. The droughts and poor harvests combined with mass speculations hiked up food prices by 40% over 7 years . By betting on starvation, Goldman drives up the price of food not just on a market ticker screen, but in the real world. In the real world those high prices have resulted in real people starving to death.
None of the traders involved have been taken to court, none of them have had their profits from starvation rescinded, and no one has gone to jail.
Enough is Enough
Instead of flying drones over Threadneedle Street and Wall Street after the financial terrorists, the UK and US governments are treating the victims of financial terrorism as ‘domestic extremists’. The Occupy Wall Street movement in the US was the target of a joint FBI and Banking Sector response team called the Domestic Security Alliance council infiltrated Occupy’s peaceful protest working groups with spies, surveilled Occupiers and even drew up an assassination list.
Meanwhile in London, the very banks committing the crimes and being grilled by the Public Account Committee for their failure to pay their due in Corporation tax are invited by government to draft their own, ever more lenient corporate tax laws.
The government is treating a criminal banking sector like an honoured friend and the critical citizen as a terrorist threat. It simply has to stop. If we want to go to war to defend our freedom and our democracy, we need to take on banksters in Mayfair, not goat herders in Mali.
Move Your Money – from criminal banks to ethical banks and credit unions.