LeftBanker

Britain’s summit price for backing treaty change was a financial services protocol packed with half-a-dozen complex, arcane regulatory fixes that left most European leaders “baffled”, according one official at the summit.

Contrary to widely believed French claims, the protocol was neither a demand for a general veto, nor a manifesto for light-touch regulation. Instead it covered more technical guarantees to address British gripes across 20 or more pieces of regulation in the Brussels pipeline.

In some areas, such as bank capital rules, Britain even wanted to be tougher than the European Commission is proposing. Other measures covered threats that had yet to even materialise.

The Robin Hood tax itself is no answer to either speculative investment or raising extra tax funds. It would merely move the gambling off shore while the tax on transactions would be passed on to the majority of us through higher charges to our pension and insurance funds (these make up about 70% of daily financial transactions).

Instead if you want to reform the system then split investment banks away from other banking and impose higher capital requirements and stricter regulatory control. Raise the tax on banks’ profits to 50% and up the tax on incomes over £100,000 to 75% while outlawing the payment of bonuses in shares which are only liable to capital gains tax.

It was more a loosening of legislation and breaking down the barriers between retail and investment banking plus central banks cutting interest rates to avoid/lessen recession at the turn of the millennium.

But the creation of credit or a pyramid of credit was a solution to the structural impasse of capitalism in the 1970s: over accumulation of capital, over production of goods and the decline in the rate of profit. You had to create more demand while cutting real wages and credit was the answer. The credit bubble grew and grew with the help of deregulation and complex derivatives until it bust. It is not banking but capitalism which is at the roots of the crisis. The long period of expansion after the early 80s was sustained by credit and more and more layers of it while production moved to the East where there is a higher rate of profit. We substituted services, finance, housing and to some extent public services built on debt for our declining manufacturing base.

The only answer for capitalism is the mass destruction of a lot of capital. This can be done by a deep recession and a survival of the fittest or though world war as happened in the 1930s. Only then can the rate of profit be restored while avoiding an over production of goods and over accumulation of capital.

The future is not about replacing a nasty banking system with a nice one but replacing a system which has within it the dynamic of periodic crisis which capitalists and their political allies try to avoid by using tools such as credit with has within it the seeds of mass wealth destruction.

We are told that what lies behind Cameron and Clegg’s £80 billion (one billion is 1,000,000,000) of cuts and £30 billion of tax rises that we face over the next three years is the fact that the money is not there to support our public services and spending? We are running up a huge debt [...]

The global stock market roller coaster ride over the last few weeks which has seen the UK stock market fall by 13% from its’ May 2011 peak tells us one thing: the world economy is heading for a recession, in effect a double dip one that has its roots in August 2007’s crisis of credit [...]

By Ralph Blake The public debt crisis that is currently at its deepest in the Eurozone has its roots in the general crisis of capitalism. To attempt to solve capitalism’s crisis of the 1970s and the dynamic path it has followed since then vast amounts of credit were made available over the last three decades. [...]

Greece will default soon: either under the coercion of the European Union; involuntary or through the will of the people It is clear to most in Europe think – both financial experts and lay people – that the punishment being inflicted on Greece is not sustainable. Only the Greek government, the European Union (EU) leaders, [...]

Public pensions face a two pronged attack form the financial markets. The attack consists of, as Danny Alexander has so publicly said, making as pay more towards our pension, wait longer for the pension and not have it linked to our final salary but to a gamble on the financial markets. He omitted to mention [...]

Spain has had an extreme property bubble before the crisis and unlike Ireland and the US, house prices have fallen moderately. They rose 106% from the start of monetary union to their peak in 2007 and have only to the end of 2010 fallen 18%. There are no artificial or natural supply constraints. There are [...]

Must be able to oversee holding of countries to ransom while slashing public spending and selling off their assets. The resignation of the Strauss Kahn as managing director of the International Monetary Fund (IMF) because of his arrest for an alleged sexual assault on a hotel chambermaid raises issues around the murky secretive world of [...]

In a year when the majority of the population are faced with a pay freeze the richest 1000 people in the country have seen their wealth rise, in 2010, by just over£60 billion (a billion is one thousand million) or 18% to a total of nearly £400 billion. This wealth which includes land, property, art, [...]