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?".

Sunday, 3 April 2011

Bankers having a free lunch

Robert Peston published an interesting piece on his blog "Can banks dodge the break-up?". He wrote: "the Bank of England estimated this [state] implicit subsidy [of being protected by taxpayers against failure] as being worth around £100bn per annum at the peak of anxiety about the fragility of banks in 2008-9, and perhaps half that figure subsequently."

The state, taxpayers, are part of economy. Their subsidies, of whatever nature, come at the costs: they are paid for one way or another. If subsidies cost hundred of billions of pounds, these hundreds of billions of pounds must come from somewhere. For example taxpayers pay them by additional costs of government bonds or through some other transactions with the financial markets. "There ain't no such thing as a free lunch."

The City of the 2010's is strikingly similar to the British heavy industry of the 1970's. It provides no financial value to the economy and can only survive with taxpayers subsidies. Any tax receipts from the financial industry are dwarfed by the subsidies, bailouts and stimulus packages. Even City luminaries, top financiers and bankers, bear a striking resemblance in their attitude and characters to their trade union counterparts, so called "barons", of the 1970's. Will the City share the same fate as British heavy industries of the 1970's? The signs are not particularly optimistic.


  1. No bankers in court or prison, in fact, the opposite, collecting huge bonuses for their complicity in one of the biggest shakedowns in history. You really think these people can be likened to Arthur Scargill who drove around in a crappy old Jag? These people have executive jets and unlike the Trades Union bosses, they are protected by the system not persecuted or villified by it.

  2. Hi Sonia

    Thanks for your comment. I think you made a very valid point. In comparing the banking system of today with British heavy industries of the 1970's I am only showing in my article economic/systemic perspective and I think I have a point.

    As to individual bankers they, of course, do much better than ordinary workers of the 1970's. However trade union barons then (and now) were doing very well indeed but still on the scale not comparable with today's top bankers.

    Best wishes


  3. Hi Greg

    I like this entry a lot, as you imply fundamental change will occur.


    Hopeful it isn't too long away