If you are new to this blog, you are invited to read first “The Largest Heist in History” which was accepted as evidence and published by the British Parliament, House of Commons, Treasury Committee.

"It is typically characterised by strong, compelling, logic. I loosely use the term 'pyramid selling' to describe the activities of the City but you explain in crystal clear terms why this is so." commented Dr Vincent Cable MP to the author.

This blog demonstrates that:

- the financial system was turned into a pyramid scheme in a technical, legal sense (not just proverbial);

- the current crisis was easily predictable (without any benefit of hindsight) by any competent financier, i.e. with rudimentary knowledge of mathematics, hence avoidable.

It is up to readers to draw their own conclusions. Whether this crisis is a result of a conspiracy to defraud taxpayers, or a massive negligence, or it is just a misfortune, or maybe a Swedish count, Axel Oxenstierna, was right when he said to his son in the 17th century: "Do you not know, my son, with how little wisdom the world is governed?".

Thursday, 17 September 2009

New Labour: a cunning plan of Old Labour

On existential level this is no drama. Britain is not becoming, let's hope, another failed state like Zimbabwe where there is an outbreak of near-famine. So let's keep it in perspective. But it is so humiliating, heartbreaking and gut-wrenching.

We have to accept that only very few of us are clever. Most simply want to live ordinary lives doing socially useful jobs and earn a decent living. This is practically it. These are basic expectations of civilised part of the world that have been taken for granted for a few generations. They were brutally thrashed by the common criminality of the financial world. They robbed us using a primitive pyramid scheme method and were not even intelligent enough to cover their tracks. All these happened under New Labour watch characterised by their love of the City and their practices. For years we have had to watch rather unsavoury spectacle of New Labour elite brownnosing captains of the financial industry.

For these pyramid purveyors and their protectors it is business as usual. Not only are they not made accountable for their crimes (apart from few minor exceptions like Madoff who only ended up in trouble as he robbed rich and powerful) but they continue to enjoy stolen riches, live at the taxpayers' expense and expect that to continue. This is in startling contrast with a railway maintenance man who was made redundant living below the breadline on charity handouts.

The cynicism of pyramid purveyors and their protectors is such that they suggest as somehow free market failed and the economic system needs improvements. Politicians, regulators and financiers are busy discussing this. But the truth is simple and shocking. Free market is not faultless, however on this occasion the crisis is not a result of free market failure but of a primitive fraud called a pyramid scheme. Albanians experienced the same in the late 1990's.

Thus far it has been usually a domain of loony lefties and others of "The Socialist Workers" creed, but this time also reasonable conservative folk and family men have to wonder whether we might see soon angry pitchfork and torch bearing mobs at the gates of the Downing Street.

Alexis de Tocqueville famously observed that revolutions and social unrests do not happen amongst poor and dispossessed at the depth of misery. Third world countries are socially quite stable. Revolutions happen when ignited high expectations of ordinary people come to a crashing end. Here after over a decade of seemingly unprecedented prosperity "things only got better" and climaxed with "Cool Britannia", the current crisis could be such a tipping point.

After all it may well be the case that New Labour project was a cunning plan of Old Labour who used de Tocqueville's textbook recipe to try to spark off the revolution. And if it works, Baldric will be proud.


Pyramid scheme is an ideal mechanism for testing de Tocqueville’s recipe: as the pyramid grows and people think they become richer, and indeed many of them are but only for some time, their aspirations grow with that too. An inevitable pyramid collapse brings these aspirations to a crashing end. An Albanian pyramid crisis of 1996 – 1997 is another good example how it works.

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