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?".

Friday 10 December 2010

UK's 21st century democracy


Today we could read in London's Metro that a gym fan was tried for 2p (two pence) fraud. He used his friend's pass to gain access to the gym and do some exercises.

Only several days ago we could have read that the inquiry into the former Royal Bank of Scotland CEO, Sir Fred Goodwin's behaviour who was ones of those who caused the current financial crisis was dropped by the Financial Services Authority. Little surprise, as expected, since the FSA was at best effectively complicit to the bankers' behaviour.

The ongoing financial crisis is a result of primitive and conspicuous fraudulent practices of the financial industry, regulators and some politicians either by direct involvement or by allowing such a primitive and conspicuous fraud to run for years. The type of this fraud has been well-known for centuries. It is a pyramid scheme. How the pyramid method was implemented by the financial industry in the context of this crisis was described in detail in the first article on this blog: "The largest heist in history". It is nevertheless ironic that for years the crudest of financial crimes has been described by the pundits and the mainstream media as "sophistication of the modern financial industry". This has been public deception on a par with 17th century Dutch tulip mania. This is how historians will judge it in the future.

Thus far the crisis resulted in massive global economic downturn and economic near-collapse of some countries. In Britain it led to massive public spending cuts, increase of taxes and payment obligations by the public (such as the current tripling of the university tuition fees), demolition of traditional pensions schemes and, in fact, savings. And much more is still to come. Don't jump over yet, it will get worse.

Coming back to 2p gym fan's fraud story: if we contrast it with the financiers, regulators and some politicians multi-trillion pound fraud, we have to ask a question: is this what the 21st century British rule of law and democracy is all about? (Ask your local MP.)
Posted by Greg Pytel at 21:23
Labels: , ,

13 comments:

  1. Caratacus11 December 2010 at 08:30

    "The law doth punish man or woman
    Who stealeth the goose from the common;
    But lets the greater felon loose
    Who steals the common from the goose"

    T'was ever thus Greg... the robber barons may have changed their clothes and put away their swords but in most other respects the modern versions are all but indistinguishable from the historical ones.

    ReplyDelete
  2. Greg Pytel11 December 2010 at 10:28

    Hi Caratacus

    Thanks for your comment. The beauty of the British democracy is that WE elect our representatives directly. So WE have a vote and decide who is in Parliament.

    If your words are to be taken seriously then we should ignore the election process (and do not turn up to vote. But since WE elect our representatives directly, we can only blame ourselves.

    Best

    Greg

    ReplyDelete
  3. Caratacus11 December 2010 at 11:41

    Thanks for that Greg.
    So many things spring to mind and fight for attention...

    In no particular order: I am not convinced that 'democracy' as represented by various western electoral processes is the best way of being governed. In my more cynical moments I say (to the unwise people who bother to listen) that democracy is a staging post some way down the slippery slope of decline from the zenith of civilisation - a benevolent dictatorship.

    We do not really elect our representatives. Various people are chosen by activists of one stripe or another to articulate their prejudices once elected. All women selection panels? Anyone may stand for election to parliament (as long as they have bumps in the front and dance backwards. And those are my wife's words, not mine!). Have you ever seen what passes for a selection process for a conservative candidacy? If it wasn't such a travesty it would be mildly amusing. So these people who have been 'elected' - often by a minority of people in their constituency - then arrive in Westminster where they spend the next few years totally ignoring the people who elected them. They keep their noses clean in the (often vain) hope of preferment, gifted by the leaders/robber-barons and advancement in their political careers. Since when did Politics become a career choice anyway? The days when someone who had made a few bob and had a few hours to spare in order to guide the affairs of the nation UNPAID seem to me to be a far superior way forward.

    The opportunity - graciously extended to me every five years - to scrawl a pencilled cross in a hessian sacked booth does not accord with my definition of Demo-cracy!

    Please don't think I am having a rant at you Greg, far from it; yours is one of the few remaining blogs I bother to read these days.
    My anger is that the Robber Barons are, like the poor, always with us. Leeching away the effort, toil and productivity of those who fulfil the more ignoble offices and are more honest in their daily lives than the RBs have ever been in all their varied incarnations.

    Quite what the answer is I don't know. (For myself I just try to ensure that they get as little from me as possible, be it either money, or information). But I am certain that the current definition of democracy as applied isn't going to improve matters.

    Right - my four year old granddaughter will be here soon and is looking forward to the next chapter of "Stig of the Dump"... My pleasures are simple these days!

    ReplyDelete
  4. Greg Pytel11 December 2010 at 16:31

    Hi Caratacus

    Thanks for your response. I do share many of your points. I think that democracy as we know is on the crossroads due to being heavily manipulated by various interests groups (through party funding and mainstream media). But on the other side British democracy has one strong point: people can elect directly their representatives not necessarily from the mainstream parties. Therefore the system allows for grass root democratic candidates. The answer belongs to us. You can stand for parliament (or you can convince someone who is worth it in your view to do so). Then if we, as community, really do not accept what's going on we do not have to vote for mainstream parties candidates.

    Moreover we can also put a pressure on the current MP's. If they get thousands of letters, e-mails (each of MP's, of course) they will pay attention. They know they may just lose the job next time round.

    If we do not do things like that, we can only blame ourselves.

    Best

    Greg

    ReplyDelete
  5. mr pinnion12 December 2010 at 13:05

    Hi greg. I think you should take of your rose tinted glasses.
    No one who wants to change the system is permitted to get anywhere near the corridores of power.And if by some fluke they do, well look what happened to Kennedy.
    Someone once said the power lies not with the voters, but with the people who count the votes..I agree.
    There will be no democratic solution to this.Democracy, if it ever existed is dead.

    Regards
    Ozzy

    ReplyDelete
  6. Greg Pytel12 December 2010 at 14:01

    Hi Ozzy

    Let us assume your argument is correct. Then we, as the voters, have a nuclear option: not voting at all. If at the next local (not even general) elections only a few people turn up and vote (say below 5%) the system will have to change as the elected politicians will not have an effective legitimacy. If this happens at general elections it is likely in resulting in a democratic and peaceful revolution. Another nuclear option is to boycott the banking system. Not is a massive Eric Cantona way. This is unrealistic. However if each of us got back to basics and handled a monthly budget in cash, the banks would end up under big pressure too. (By this I mean immediate withdrawing weekly/monthly wages from accounts and handling all transaction during a month in cash.)

    But your argument is a bit over the top. You can see that Scandinavian countries (Norway, Denmark, Sweden) handle their affairs very well. So as Canada and Australia. Maybe we should look there for positive examples rather than having all out criticism. (Of course, fraudsters have to be punished: this is required if we are to consider rule of law and the state as a serious social organisms.)

    It is important to have serious reflection. Crises tend to breed extremisms. And extremisms tend to lead to a sorry end.

    Best

    Greg

    ReplyDelete
  7. mr pinnion12 December 2010 at 18:14

    Hi Greg.
    Not voteing is a good idea in the sense that it would show the population had sussed out the banks own both left and right parties.But it aint going to happen.
    "If this happens at general elections it is likely in resulting in a democratic and peaceful revolution."
    Again.Rose tinted specks.If it did it would still leave us being ruled by the same bank controlled parties.After all ,just look at all the promises that have been broken by the lib/con(no pun intended) party.
    As for Erics idea... its legal, its good, it would kill the banks in a heartbeat.Then we could replace them with traditional small banks wich are not propped up by the tax payer.
    Your idea seems very similar to Erics and i think woul have the same result.

    P.S.
    On another note, did nt you predict the rating agencies would downgrade our credit rateing a notch? Has nt hapened yet...
    Regards
    Ozzy

    ReplyDelete
  8. Greg Pytel12 December 2010 at 21:57

    Hi Ozzy

    I still predict credit rating agencies downgrading Britain or some other move to squeeze money out of the British taxpayers. One concrete thing in this direction has already happened: squeezing Ireland (Britain is helping it). But I think there will be more of that in time to come. (Next year. Year after.)

    Best

    Greg

    ReplyDelete
  9. Caratacus9 January 2011 at 13:21

    Greg,

    It's been a little while now.... I trust you are well?

    ATB

    Caratacus

    ReplyDelete
  10. Greg Pytel9 January 2011 at 14:41

    Hi Caratacus

    I am OK. Happy New Year 2011 (we really need it).

    I have put a new post out today.

    Best

    Greg

    ReplyDelete
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