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, 24 December 2009

Is the pyramid collapse about to resume?

Not unexpectedly for the author (and hopefully the readers, e.g. "Is another loot going on now?") of this blog the media are full of warnings of the double dip recession. After Joseph Stiglitz Nariman Behravesh gave similar warning.

It appears that it will not be a double dip recession but a continued recession. Readers are invited to revisit the first article on the blog "The largest heist in history".

In a nutshell, in 2007 the global pyramid scheme which is the root of the current crisis started collapsing reaching its peak at the end of 2008. The governments stepped in and pumped in trillions of dollars of taxpayers' money, so-called stimulus packages, into the financial system and stopped the collapse. It appears to have been a temporary reprieve and indeed a massive waste of taxpayers' money. The size of the financial pyramid is so massive that as soon as these stimuli are exhausted, the inevitable financial pyramid collapse will resume.

So let us relax and watch undoubtedly exciting events coming. Happy New Year 2010.

Will extra tax levy on the bankers' bonuses really "damage" the City?

Last August the author of this, being no self publicist, published anonymously, in extenso, a letter that he received from the CEO of one of the largest and best known banks in the world together with the blog's author commentary. The title of the post was: "Liquidity risk".

Although the CEO did not request or implied confidentiality, it was intended that the CEO's identity would be kept secret. It is the intention of the author of this blog to keep the discussion on its merits without undue personal self-publicity. However the above mentioned CEO recently publicly criticised planned extra 50% company tax levy on top bankers' bonuses (over £25,000). In the circumstances the author of this blog decided that it was in the public interest to disclose the said CEO’s identity. The CEO's concern was that "Banks are competing globally - this bank, Barclays, competes with banks all around the world and we have to be able to compete on a level playing field," Mr Varley told the BBC."

The readers are invited to assess the articles "Liquidity risk", "Loan to deposit ratio and banks liquidity" and "Commentary to an article 'Loan to deposit ratio and banks liquidity" and the exchange of arguments, and decide for themselves whether it would "damage" the City and the financial industry in general if such talents as Mr Varley's (who is frequently referred to as one of the very top bankers) were eradicated.

Of course, any discussion – on the merits - from Mr Varley (and indeed anyone from Barclays) are welcome and will be published on this blog.

Tuesday, 22 December 2009

Banks are behaving like loan-sharks

The recent comments of Joseph Stiglitz confirmed what the author of this blog has been writing from months: the banking business model degenerated into the same relationship as loan-sharks have with their victims.

Stiglitz told reporters in Singapore: "The likelihood of this slowdown is very, very high, There is a significant chance that the number will be in the negative range." He called on Washington to make more funds available to state governments who face a drop in tax revenue.

It appears that unless the taxpayers keep pumping up ever more money into economy, it will come to halt again. As this crisis is the direct effect of the collapse of the giant pyramid scheme engineered by the financial industry, more financial stimulai would be a classic example of an attempt to stop its collapse. In this process the financial industry is extracting taxpayers paid maney as profits, bonuses and dividends as the system operates resembling loan-sharks "business model".

It is very disconcerting that politicians, our democratically elected representatives, simply ignore such criminal arrangements.