Tag Archives: Money Laundering

Bankers the unruly and uncontrollable children in the family

Politicians seem to think that as they can manage their own family budgets, they have all the knowledge necessary to manage the economy. This results in statements such as the government needs to balance its books or that the country has maxed out its credit cards. Such statements demonstrate an appalling ignorance of the economy and how it works. However there is a competence that is lacking at the most elementary of levels,  as too many MPs are appalling at managing their own finances. Disraeli one of the greatest leaders of the conservative party was always on the verge of bankruptcy because of his extravagant lifestyle. Fortunately he had a rich wife and friends ready to bail him out. Politicians are as likely to follow his example as they are that of his prudent rival Gladstone. The recent expenses scandal when it was demonstrated that most MPs used their expense account to finance their comfortable lifestyle. People still remember the MP who used his expense account to pay for a duck house. If financial rectitude is not characteristic of many MPs This should give pause to any claim that they are capable of managing the economy.

If the analogy of family finances is to be made it should be said that the government resembles the nominal head of an unruly family, whose views are largely disregarded by the family members. The unruly children in the family take little notice of the head of the family, only listening to them and accepting their authority when they get into trouble. The banks are the obvious example as they pay minimal heed to the authority of the government except in times of crisis such as during the financial crisis of 2008.Once the crisis passed the banks forgot their need for government support and showed a lack of gratitude to the governments actions for bailing them out during the crisis. They successfully prevented the government from introducing a reform which would have separated their retail banking activities from those of investment banking. If a bank fails  in future the government is still on the hook, as it can’t protect the individual customers of the bank without bailing it out for the much larger losses incurred by its speculative investment banking arm.

This is no small matter as the combined assets of the banks are in total ten times the value of our national GDP.    Our national GDP is the country’s national income. There are four large banks in the UK and it is not unreasonable to suggest that the assets of each is in total a sum near to, equal to our GDP or greater than it. In the event of a failure of one of the large banks the government could be called on to raise a sum equivalent to our national income to bail them out. At one time during the crisis of 2008/9 the government of Gordon Brown had to pledge a similar figure to our banks creditors to prevent a run on their finances. Fortunately the banks creditors did not call on our government to make good this pledge, they were satisfied with the the pledge alone. When the next crisis occurs the country may be less fortunate.

When I describe the banks as unruly children over whose actions their parent has little control, there are numerous examples I can cite of such behaviour. Britains biggest bank is HSBC and Standard Chartered is its branch in the US. This bank almost lost its licence to conduct banking in the USA because of its money laundering activities. Only the pleas of the British Chancellor of the Exchequer prevented the American financial authorities from withdrawing its banking licence. It had lost its licence to bank in the USA, its parent bank HSBC would have been in serious financial trouble and it would have had to ask the British government for financial support to enable it to cope with the crisis.

The family finance analogy of which so many politicians are so fond of using describes so well the activities of the banks. The banks are the prodigal children who can behave as badly and irresponsibly as they wish as they know that their parent the British government will always come to their aid no matter how badly they behave.

In Britain as in most countries the politicians are content to remain in ignorance of these unpleasant truths. They believe that their homespun economics all they need, or they are ideologues who believe that the great prophets of economics Hayek, Friedman and Rand said all there is to be said about economics and the managing of the economy. This last group believes that all the answers to matters economic are to be found in books such as ‘The Road to Serfdom” (Hayek) or ‘Atlas Unchained’ (Rand).

There are a small group of politicians who understand the problems of which I have written, but they are only too willing to pretend that all is well in return for government office or employment as well paid lobbyists for the financial sector. Money is incredibly effective balm for soothing fear.

I am not the first person to express concern about the appalling ignorance of our politicians. Leo Amery looking around at his fellow politicians in the 1920’s said that the country would be better served, if there was  separate parliament consisting of industrialist and trade unionists to manage the economy and industrial policy.

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Stoicism and epicureanism philosophies for today

Recently on radio there was a programme about the Roman philosopher and politician Seneca. What occurred to me was the similarities between the world in which Seneca lived and the one in which I live today. He witnessed the decay of the old Roman Republic into an authoritarian state which was at first ruled by the rich oligarchs, a rule which evolved into the rule of one man the Caesar. Several books I have read suggest that we are living in the last days of liberal democracy and that our political system is being subverted by the rich oligarchs who are turning our society into one that bears strong resemblances to the Rome of the last days of the Republic.

These similarities are no more than that, Britain is not becoming a society ruled by a new class of Caesars. Violence is not employed by the rich oligarchs to destroy their enemies, no opposition politician has suffered the indignity of being murdered and having his skull converted into a wine cup by his enemies. These oligarchs to gain power have used more subtle methods. They have corrupted the legal system with their wealth so all kinds of judicial restraints have been developed to silence their opponents.  One such restraint is the super injunction whereby a powerful individual or business can prevent any reporting or discussion of their alleged wrong doing as it is claimed that it will unfairly damage their reputation. Such stories can remained suppressed for years.  The other powerful weapon wielded by the oligarchs is the destruction of their opponents reputations. This is conducted through the publication of hostile articles in the media, which they largely control. It a weapon whose power cannot be underestimated, as when the politician Nick Clegg was asked to explain why so many MPs voted against their principles and backed the government over its policy to leave Europe, he said that they were scared of ‘The Daily Mail’. While there is no equivalent of the Roman mob who could be incited to attack opponents of the oligarchs there are the internet trolls. They can be whipped up into a frenzy and encouraged to launch virulent attacks on the oligarch’s enemies.

When hearing this programme I wondered if stoics such as Seneca who lived under the cruelest of authoritarian rulers could provide evidence of how to live the good life today in a society which is becoming increasing dominated by rich unpleasant oligarchs.

Stoicism taught that the world was created by logos (the spirit) and that logos remains force which continues to direct the development of the world and humankind. The logos determines everything, so people have a choice either to ignore logos and risk being crushed under its onward movement or change their actions and behaviours to accord with the movements of logos. What stoicism taught was that history was pre-determined and wise individual was the one who accepted their lack of control over their lives, Happiness was gained attained by those who cultivated an air of indifference to those things that they could not control. A person who valued material wealth above all else would suffer great pain from its loss. This cultivation of indifference reaches its extreme limits in the writings of Epictetus. He advises the father not to kiss his son goodnight or show any kind of affection, as that son might be dead by the morning. At its simplest stoicism was a philosophy of pain management. In the Roman society of the Caesars  it was rule by Caesar a capricious individual who if he wished could tomorrow deprive you of your wealth or even your life, therefore one should not be greatly attached to either.

In a society in which social and economic inequality is increasing to such an extent that it is likely that the great majority of people will be poor, in which the poverty that characterised earlier societies will begin to characterise the Britain of tomorrow. Material riches of even the most modest kind will be denied to a majority of people, so an indifference to material wealth will help them cope with a life of relative poverty. People would not be depressed for a lack of things of this world, as they have minimised their attachment to them. However such poverty does bring real suffering and why stoicism will help with managing the discomforts and unpleasantnesses of poverty it is not an answer to pain and suffering. Poverty is not caused by the movements of the logos, but through the greed of the rich oligarchs. A more activist philosophy than stoicism is required.

Stoicism was usually a philosophy of the educated rich. These people who had ample wealth could afford to affect to be indifferent to material wealth, as even under the worst of the Caesars very few of them lost their wealth. The poor of Rome preferred the fairy tale religion of the Olympian Gods. They would turn out in their thousands to celebrate the festivals of the old Gods, as the theatre of these festivals offered them some escape from the misery of their lives.

One positive effect of adopting stoicism as a philosophy would be an ending of the cult of celebrity. All these endless talent shows would lack an audience, as people would not longer see a rags to riches story as real, as celebrity would be due not to talent but the arbitrary movement of the fate. Also a people that attached little value to material wealth would have little interest in programmes which celebrated individual talent as a means to material wealth. Celebrity culture acts as a safety value, it releases the pressure that builds up from social discontent. The poor can be pacified by the fairy tales of celebrity that claim that no matter how poor there are celebrity offers an escape from poverty. People will instead have a keen sense of reality and are less likely to taken in by stories of celebrity success.

Stoicism can perhaps be called the philosophy of unpleasant reality and as such it will always lose out to philosophies of hope. In the Roman Empire such a philosophy of hope was Christianity.  Contemporary Britain lacks such a philosophy of hope which will act as a catalyst of change. There are many alternative philosophies in our society but they do not have the messianic appeal of Christianity with its potential for change.

There is another philosophy that was popular among the Romans of this time and that was epicureanism. This is a much misunderstood philosophy it usually thought of as the philosophy of hedonism, as Epicurus taught that the good life should be one of pleasure. However it was a very different pleasure that he had in mind. Individuals should take pleasure in the essentials of life, pleasure should be derived from enjoying a modest diet, dressing modestly, these things were sufficient to enable the individual to live a good life. If one took pleasure in the luxuries of life, life was reduced to a constant craving for more and more of sensual pleasures and this craving made life one of misery. For Epicurus only a person living a modest life could be described as happy.

Epicureans were often persecuted by the authorities because by only valuing a life lived modestly they threatened a society that valued overindulgence and sensual pleasures in all forms. At Roman meals the rich had vessels placed near the table at which guest could vomit into, so as to make room in their stomachs for more of the extravagant dishes that would be placed before them. They took pleasure in all kinds of sensual pleasures as demonstrated by the popularity of gladiatorial sports. Pleasure was gained from watching the pain and suffering of others. Epicurean philosophy through offering an alternative to the dominant philosophy of excess was seen as a threat to a society that valued excess.

If epicureanism was more widely known, there would be one major beneficial effect. The rich billionaires rather than being celebrated for their wealth, would be seen rather as slaves to it and as such to be pitied. There is one marvellous passage in Thomas More’s Utopia where it is seen as slavish behaviour to wear gold and valuable stones as jewellery or chains of office, they are seen as slaves to their possessions. If the rich billionaires who dominate contemporary society were seen to objects of pity, rather than celebrity, their malign influence on politics would be much reduced. Politicians would not seek out their company and not be so desperate to give them favours.It goes without saying that in contemporary Britain and the US the billionaires can buy policy favours, with what to them is the small change from their pockets. Unfortunately the most successful of our politicians worship wealth and despise modesty. Politics for them is a means to acquiring a substantial fortune.

In today’s papers an open secret is being exposed and that secret is that London is one of the major centres of money laundering for criminal enterprises. In this instance the police forces of Latvia and Moldavia exposed this criminal behaviour of the London banks. It was the poor underfunded police of two poor European countries that exposed this activity, not the well funded City of London police. Perhaps the relative poverty of the police and politicians there means they are of higher moral calibre than those of the UK. Only where wealth is so celebrated as the chief of virtues could such corrupt practices be sanctioned.

Billionaires by their very nature will always seek to corrupt those around them. What is the threat to our democracy is the willingness of our politicians to be corrupted by them.  An annual salary almost three times the median wage in Britain is seen as inadequate by most MPs. Too many of them seek sources of income from outside politics making them susceptible to persuasion or corruption. Now the successful politician is seen to be the one who uses their position to acquire the most wealth; the practice of politics taking second place to money making. Reform has become redefined as making changes in the law or society that benefit the MPs wealthy benefactors. Epicureanism with its emphasis on modesty if more generally accepted would give us a generation of politicians less susceptible to corruption and a political class more deserving of respect. Those few politicians uncorrupted by money are drowning amongst the swill of corruption that is contemporary politics.

Social democracy was formerly the force which ensured that the market economy worked for the benefit of the majority not the minority. Unfortunately nominally social democratic politicians have abandoned the substance of that philosophy believing that Neo-Liberalism was the philosophy of today. In the heyday of social democracy many politicians of the right subscribed to its tenets and contributed making Britain a fairer and better society. With the discrediting of social democracy it is unlikely that those moderate politicians of the right would ever subscribe again to its tenets. Epicureanism has none of the baggage associated with social democracy and could be easily adopted by those moderate politicians on the right. In a country with a political class in thrall to the philosophy of greed what is needed desperately in a philosophy of compassion and fairness to counter that extremism.

(Gauis Gracchi was the unfortuante Tribune of the people who lost his life and head.)