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?".

Wednesday, 7 July 2010

What a strange world…

Back in September 2008 the financial system came to a halt and nearly collapsed because the financiers were unable to manage it properly. With all the financial tools at their disposal (spreads, CDS', ratings, etc) they led the system into a catastrophic failure. This was unprecedented event, not a situation that may happen. Therefore the financiers proved conclusively that for one reason, gross incompetence, or another, downright fraud, or both, they are not a suitable profession to judge the credit risk or any aspect of the financial probity and good management.

To prevent the financial meltdown governments stepped in and rescued the banks. Now the same financiers, the same people, are judging the credit risk of the governments, quite often on the debt incurred to avert the banks from going under. They undermine their saviours by speculating with the very same money that governments pumped in. Never mind that these financiers proved in 2007 and 2008 in the most spectacular way that they were incapable of assessing financial risks properly, governments are following the financiers "suggestions", saying that they react to the financial markets' behaviour. The recent cuts in public spending by the British government is a good example of such perversion. Yet neither mainstream media nor politicians pointed to such truly bizarre arrangement: incompetents or fraudsters are effectively telling governments, who rescued them, what to do.

Who on Earth with a sound mind, in any profession, would have followed someone who discredited himself (or, not to be sexist, herself) in the most spectacular possible way (i.e. catastrophic failure) by demonstrating to have been incompetent or a downright fraud? However this is a norm for governments in dealings with the financial world. On one side politicians complain about greedy and irresponsible bankers but on the other they just dance to their music.

It is clear that the politicians are grossly incompetent or corrupt. They either mistake the rules of free markets economy and capitalism in general with the gross incompetence and fraud of the financial world (in which case they are themselves incompetent) or they deliberately conspire with the financial world in fleecing the taxpayers. The revolving doors between the financial world and governments make the latter supposition very plausible indeed. This is not an emotive statement as one might think. This is a reasonable professional assessment reached by any competent fraud investigator.

However the fact that we elect these politicians democratically makes it all damning on us. In democracy we have to acknowledge: "we got what we deserve".


PS. For the British taxpayers: this article is not arguing that the British government should not have cut its public spending. This is a more complex subject dealt with in "Prime Minister, sort out this mess, please". It simply demonstrates that the politicians' justification that they had to do so in response to "financial market pressures", to preserve the ratings, etc, is devoid of any logic or honest rationale.


  1. When I plod my way, yet again, to the polls, I find that my choices are usually limited to "Really Bad" and "Even Worse". "Quality Candidate" was eliminated by the political machine very early in the process, if they ever got invited--oops!--to the party in the first place.

    Government is the means for perpetrating evil, not the origin.

  2. One can resolve the quandry of sexist reference, himself, herself, by using the term themselves. Works quite well :)

    History does give us one legal precedent for dealing with banking excesses. In 1307 the Knights Templar were the leading international bankers. King Phillip IV, considering their practices inappropriate and being deeply in debt to them, accused them of apostasy, idolatry, heresy, obscene rituals and homosexuality, financial corruption and fraud, and secrecy, many of which would probably stick to modern day bankers. Of those who survived examination, many were incarcerated but many were burnt at the stake, including senior management. Fortuitously, the Kings debts went up in smoke to. This may well have mitigated some of the burden of future taxation also? Of course, it's a French legal precedent but, as the present crisis is global? Are there any scheduled meetings of associations of senior bankers due in France?

    Special note for any who can't read between the lines : I AM JOKING!

  3. @crackersjv: ... yet sometimes history repeats itself