What matters in the lead-up to the world environmental summit in Paris in December is the internal dialogue between the US and China as to how much they are prepared to concede in combating climate change compatibly with not losing out to their global economic rival. Meanwhile lesser countries like the UK make their own bargains, and here oil realpolitik rules. The government gave its official blessing to BP, perpetrator of one of the world’s worst environmental disasters in the Gulf of Mexico, in securing a deal with the Russian energy firm Rosneft to exploit the huge oil and gas reserves in the Russian Arctic. There were several considerations here for the government – fuelling Europe and the UK, the fact that 19% of UK pension fund annual income comes from BP and Shell, and perhaps most prominent of all the damage done to BP’s survival by its exposure to the colossal $40bn bill for the Gulf disaster. Fears over the climate change impact of starting oil exploration in the pristine Arctic wilderness came well down the list, if indeed they featured at all.
Read more “Oil companies bank on 4C climate catastrophe – with Cameron’s support” »
Six global banks, two them British, have just been fined £5.6bn in what the FBI has called ‘massive scale’ criminality, yet no individual executive has been prosecuted and no bank has been deprived of its licence to practise which would have happened in any other sector given such monumental wrongdoing. Indeed State regulators have gone out of their way to protect them from any such consequences. None of the charges in respect of any of the banks has been brought to trial so that the full scale and nature of these criminal activities will never be publicly disclosed. Two of the banks did not admit to any crimes related to this abuse, though they still paid up, but the other 4 who did were then given waivers shielding them from the consequences that would normally follow – the loss of the all-important banking licence. The banks have an armlock around the neck of the State.
How did this arise? Under the current financialised capitalism, the most extreme form of market fundamentalism, the UK State is effectively run by a political-financial nexus between No.10/Treasury and the Big 4 banks which implicitly guarantees protection for these banks against all eventualities. This pattern was first apparent in the banks being ‘too big to fail (or jail)’ after the enormous financial 2008-9 crash which they largely caused, then in the leniency and no prosecutions after the Libor rigging scandal, and now again after the equally colossal Forex market rigging scandal. It is also astonishing how listless has been the political response to all this monumental criminality.
Negotiated settlements are no substitute for criminal proceedings. Worse, it is clear that this velvet glove system of penalties has not led to any change of behaviour among the offending banks. Global banks have now been made to pay more than $10bn in relation to the Forex scandal despite previously being charged $9bn over the Libor rigging revelations. Many have responded, not by altering their culture, but by hiring former prosecutors and regulators. Two banks, Barclays and UBS, have explicitly been penalised for breaching existing deals with US prosecutors not to break any more criminal laws after settling Libor-rigging charges in 2012. And, so far from being chastened, Wall Street and the City of London are now looking to revive the niche single-name credit default swaps (derivative contracts that track the risk of default by a company that sells bonds) which were widely blamed for helping to inflate the credit bubble prior to the 2008-9 crisis.
Nevertheless, in the face of all evidence to the contrary, the UK Financial Conduct Authority has been claiming that the fines are working. That has probably more to do with Martin Wheatley, head of the FCA, seeking to salvage his reputation after his serious mishandling of the investigation into the insurance industry a year ago. Pace Wheatley, it is patently clear that only individual prosecutions and deterrent custodial sentences,
Read more “Banks have taken over the State and got away with it” »
According to the official Office of National Statistics’ latest report 19.3 million persons in the UK had an income below 60% of the national median at some point during 2010-13. That is nearly a third of the entire population, and a higher proportion than for the EU as a whole. The UK figures are even higher for pensioners (40%) and single-parent households (60%). These statistics are awful for the sixth largest economy in the world, but there is a deeper hypocrisy behind them. At the general election the Tory manifesto and Cameron’s speeches resonated with calls for aspiration for everyone. So what are the aspirational chances for the 20 million people at the bottom of the pile when Osborne’s first act in the new government is to target them? It has equally to be admitted that among Labour’s leadership contestants the air has been thick with expostulations of aspiration for all. How is that compatible with continued support for austerity which hits the poorest hardest?
Read more “With everyone spouting aspiration, what’s in it for the 20 million in poverty?” »
Osborne is telling another of his wheezing yarns which he’s much better at than solving real problems. His first yarn in 2010 was that he would eliminate the structural deficit by 2010; it turns out that it is currently £92bn. His next yarn today is that he will now eliminate it by 2017-8. Fat chance. His own figures tell an utterly different tale. The Treasury Red Book accompanying his April 2015 budget states (p. 22) that public sector net borrowing was £97.3bn in 2013-4 and only reduced by £7bn to £90.2bn in 2014-5. The same table is now predicting that it will fall by £15bn this year, then by £36bn the next year, then by another £27bn the following year, and by a further £17bn the year after that. Does anyone seriously believe this?
Read more “Osborne has as much chance of a budget surplus in 2018 as of the Titanic resurfacing” »
The implications of the latest survey of the Ciry of London’s culture are stunning. The study by University of Notre Dame and a law firm revealed that nearly a fifth of respondents believed that “financial service personnel must sometimes engage in unethical or illegal activity to be successful in the current financial environment”. It found that there had been a ‘marked decline’ in ethics over the last 2 years and, most worryingly of all, that half the respondents regarded law enforcement and regulatory authorities as ineffective in detecting, investigating and prosecuting securities violations. In the US the survey findings were even more disturbing: a quarter of US respondents admitted they would use insider trading to make a guaranteed $10m if they believed they could get away with it. So since regulation has patently failed, what should now be done?
Read more “City’s culture is hotbed of lawbreaking where regulation is rubbished – survey” »
The ECHR will be central to Tory planning for the EU referendum. The Tory manifesto gave a clear commitment to scrap the 1998 Human Right Act and curtail the role of the European Court of Human Rights. It seems likely that there will be a measure paving the way to the Act’s replacement with a British Bill of Rights in the first year of this new government. This is a key part of Cameron’s plan to manage the EU Referendum which he unwisely conceded in order to appease his unruly right wing. He has been told for some time now that the EU is in no hurry to make any treaty changes and it has also been made clear to him that the EU will not amend its core freedoms (in particular freedom of movement for labour) or its acquis (the body of acquired EU law). Scrapping the HRA and even withdrawing from the ECHR are then to be the red meat he can offer to his rebellious back-benchers if he cannot achieve the treaty changes or opt-outs from the EU fundamentals.
Read more “The ECHR will expose the myth of Tory imperium” »
It’s well understood now that a major reason for Labour’s heavy defeat was its abject failure to throw back into the Tories’ face their preposterous rewriting of history that Labour was responsible for the financial/economic crash triggered by the bankers and the international recession. But that is only part of the story. A reformist party bent on transformational change can only succeed if inextricably linked with a powerful social movement to drive through its aspirations. Focus groups, spin doctors, and central direction with demands to stay on message won’t do it. Until the 1980s the Labour party had a mass movement centred round a systematic programme of political education and democratic decision-making focused around the annual conference.
Read more “What Labour really needs is a powerful social movement to carry its vision across the country” »
The astonishing general election result in Scotland, where the SNP won 56 of the 59 seats, has suggested there is now an irresistible tide of support for independence. There are very good reasons however for believing this will not materialise when even now, when the SNP is at the height of their power, only half of the Scottish population actually voted for the party. Expressing nationalist sentiment and shaking a fist at Westminster in a general election is one thing – a way of expressing emotion free of risk; voting for independence is quite another when it would raise as it did in September’s referendum awkward questions about currency unions and tax revenues.
Read more “Why Scotland will stay part of the union” »
It really is distinctly premature to hold the first leadership hustings, with the usual banalities of a beauty competition, just 8 days after the heavy defeat when there has been next to no analysis of what went wrong, how it should be put right, what direction the country should now be taken, and why. Since fundamentally Labour did not have a credible economic policy of their own, but rather a highly meretricious one gleefully wished on them by the Tories, each of the contestants should be asked their views on austerity and the Tories’ deepening programme of cuts. Do they agree the Tories’ yarn about ‘Labour’s Great Recession’ as though the banks and the international downturn had nothing to do with it? Do they think the Tories’ austerity policies are working? Do they think Labour’s commitment to cut the deficit every year and impose a budget responsibility lock is (a) credible, (b) merely a pale imitation of Tory policy, (c) likely to cut the deficit currently standing at £92bn by any significant amount within 5 years, and (d) sellable to a large majority of Labour’s supporters? If not, what alternative do they offer?
The attitude to austerity should be the key to this leadership contest. It crippled Osborne’s hopes for growth: for nearly 3 years after his 2010 deficit-cutting budget, the British economy stagnated. He forecast growth of 2.7% between 2011-13, but it turned out at 1.3%. The OBR estimated that austerity was what caused GDP growth to reduce by 1% in 2010-11, and then by a further 1% in in 2011-12, that is a permanent loss of £30bn to the British economy in 2 years. Extrapolating those OBR figures puts the cumulative cost of austerity since 2010 at 5% of GDP – a colossal £75bn, almost equal to the current deficit. The main reason that Osborne secured his mini-surge in the 18 months from the start of 2013 was because he quietly slowed down the pace of his cuts, and that is equally why he is now demanding cuts of a further £35bn which had to be postponed to this Parliament.
The question is: which leadership candidates agree with this strategy? Since mid-2014 growth has again collapsed from 0.9% in the 3rd quarter of last year to just 0.3% in the first quarter of this year – hardly a platform for a further £35bn cuts which will cripple growth again. That is despite the fact that the Bank of England injected a further £175bn into the economy via quantitative easing between October 2011 and July 2012 whilst at the same time Osborne engineered a house price bubble via Help to Buy.
Labour needs desperately to recapture the narrative about Osborne’s disastrous economic policy. Do any of the candidates agree with continued austerity? If not, what precise alternative are they offering to getting the deficit reduced?