Bank criminals sail away on their yachts

Over the next few days I will be involved in transferring some of the major IT infrastructure for my research centre from our Newcastle office to our Melbourne office. This is the first stage of our plan to virtualise our server capacity – reducing costs, making it easier to manage, and giving us more independence in our new multi-campus structure. Sounds like fun doesn’t it. Not! It also wasn’t much fun reading the documents published by the UK Financial Services Authority (FSA) and the US Department of Justice last week concerning their investigations into the UBS LIBOR manipulation scandal. We read of widespread criminality and a total disregard for ethics and values. The authorities have, however, seen fit to go soft on the bank and will prosecute only a few it seems when many were involved. The point is that this is not the isolated act of a rogue trader or two. Criminality and greed is embedded in the culture of the financial sector and only major reform will get rid of it. That reform should start with the withdrawal of the license of USB to operate and then progressively the outlawing of the derivatives market and the scaling back of what banks can legally be involved in. Such major reform will not happen but until we get close to it the bad boys will continue to run loose.

The title of today’s blog is in reference to an exchange between a UBS trader and a broker as reported in the – UBS Statement of Facts – issued by the US Justice Department:

mate yur getting bloody good at this libor game . . . think of me when yur on yur yacht in monaco wont yu

Last week (December 20, 2012), the Australian Institute of Health and Welfare (a Federal government research agency) published a report – Juvenile detention population in Australia 2012 – which showed that in the June-quarter 2012 “just over half (53%) of all those in detention were Indigenous”.

These are young people aged between 10 and 17 years. Our indigenous population overall is about 2 per cent of the total general population.

The AIHW Report also found that “Over the 4-year period (June quarter 2008 to June quarter 2012)” the:

… numbers of young people in detention on an average night were stable … [but] … the Indigenous to non-Indigenous rate ratio increased from 27 to 31 times, with most of the change occurring in the most recent year …

The imprisonment rates for indigenous adult in Australia is also highly disproportionate and the sentences for similar offences appear to be harsher for indigenous offenders.

For example, in the past month I have had meetings with government officials in the Northern Territory (Darwin) about various projects. One of the issues that arises is that the remote indigenous communities are poorly serviced in terms of basic governmental services. An example, is that in some areas it is hard to acquire a driving license without travelling hundreds of kilometres (on poor roads which are often impassable in the wet season) to some larger centre.

Result – the temptation to drive without a license increases especially given the distances that are required to be transacted in remote areas for basic activities.

A recent study by the NSW Aboriginal Legal Service found that:

ABORIGINAL offenders convicted of driving while disqualified in remote and regional NSW are being sentenced to jail at three times the state average … The study … showed that not only were jail sentences for indigenous people handed out more often, but they were also for longer than the state average … A large number of Aborigines , who are grossly over-represented in the prison system, are serving sentences for petty offences or what the ALS describes as “poverty offences” such as driving while disqualified.


This is a common problem right across remote Australia.

In my spare time, I also have been watching some of the documentaries produced by Louis Theroux about prison systems in the US. The excellent – ABC i-view service – allows characters like me to defer our consumption of TV to times that are suitable (like early mornings).

The two-part program on the Miami penal system was horrifying to say the least. It suggests that once you fall foul of the law in that jurisdiction you enter a system that virtually ensures you remain in it. The prisons (even the remand centres) were portrayed as highly effective training centres for criminal skill development.

The same is the case everywhere in the world – more or less. The disadvantaged become locked into a spiral that is hard to exit.

The US – Three Strikes Law – entraps criminals who commit felonies into a life of imprisonment with very little room for salvation.

But as we know, the application of the law is very uneven across income and wealth cohorts in most nations. This is clearly evident in the way the US and UK governments have handled the UBS scandal.

The US Department of Justice announced last week that the bank (its Japanese subsidiary) would plead guilty – NOTICE – to felonious behaviour where they manipulated – London Interbank Offered Rate (LIBOR) – benchmark interest rates over many years.

According to the Bank of International Settlements (BIS) the “notional amount of over-the-counter interest rate derivative contracts was valued at approximately $450 trillion” in the last 6 months of 2009. The LIBOR is the “benchmark interest rate” for settlement of these contracts. Futher, the LIBOR is often used as the reference rate for “mortgages, credit cards, student loans, and other consumer lending products”.

For those not familiar with the LIBOR, it is published by the – British Bankers’ Association – which is “the leading trade association for the UK banking and financial services sector” with “over 200 member banks from 60 countries”.

Its board is made up of senior executives from the big banks and it aims to “engage with government, devolved administrations and Europe as well as the media and other key stakeholders to ensure the industry’s voice is heard”. In other words it is a lobbying organisation and has been a force in the deregulation of the financial sector in Britain.

The – LIBOR – is defined as:

The rate at which an individual contributor panel bank could borrow funds, were it to do so by asking for and then accepting interbank offers in reasonable market size, just prior to 11.00am London time.

The rate is “an indication of the average rate at which a LIBOR contributor bank can obtain unsecured funding in the London interbank market for a given period, in a given currency” and is computed after “submissions from LIBOR contributor banks, which are then averaged under a “trimmed mean” methodology”.

So every “contributor bank is asked”:

At what rate could you borrow funds, were you to do so by asking for and then accepting inter-bank offers in a reasonable market size just prior to 11 am?

The BBA note that the LIBOR is “not necessarily based on actual transactions, as not all banks will require funds in marketable size each day in each of the currencies/ maturities they quote and so it would not be feasible to create a full suite of LIBOR rates if this was a requirement”.

Now we know that there is an additional reason why the LIBOR is not based on actual transactions or market conditions.

The – UBS Statement of Facts – issued by the US government is a sorry tale indeed.

The scandal also extends to the Euro Interbank Offered Rate (Euribor) – the reference rate overseen by the European Banking Federation – and the Euroyen Tokyo Interbank Offered Rate (TIBOR), which is the reference rate overseen by the Japanese Bankers Association.

The US Justice Department said that these benchmark rates “play a fundamentally important role in financial systems around the world”.

We now know that:

Beginning in 2006, in Zurich, Tokyo, and elsewhere, several UBS employees engaged in sustained, wide-ranging, and systematic efforts to manipulate Yen LIBOR and, to a lesser extent, Euroyen TIBOR, to benefit UBS’s trading positions. This conduct encompassed hundreds of instances in which UBS employees sought to influence benchmark rates; during some periods, UBS employees engaged in this activity on nearly a daily basis.

The official inquiry documents are full of lurid conversations and E-mail interchanges between the various criminals – which not only record their conspiracy but also demonstrate that these characters are rather primal (uncouth) and are seriously tested by basic English spelling skills.

There were multiple trading techniques used to manipulate the market illegally to the benefit of the bank and those within it who were receiving tens of thousands of dollars in commissions each month.

The US Justice Department estimate that the US government housing agencies – Fannie Mae and Freddie Mac – are among those damaged by the manipulation. The estimate is that they lost more than $3 billion because of the criminal behaviour of UBS and others.

The list of victims will expand. But who benefited? A narrow group of over-paid traders and managers in the banks concerned. The US Attorney General said that behaviour “defrauded the company’s counterparties of millions of dollars. And they did so primarily to reap increased profits, and secure bigger bonuses, for themselves”.

There are so many lurid exchanges documented. The one getting most attention is a transcript of a telephone conversation on September 18, 2008 between a trader and a broker. It related to what the British FSA called a “wash trade … i.e. risk free trades that cancelled each other out and which had no legitimate commercial rationale” (Source: Final Notice for UBS AG):

… if you keep 6s [i.e. the six month JPY LIBOR rate] unchanged today … I will fucking do one humongous deal with you … Like a 50,000 buck deal, whatever … I need you to keep it as low as possible … if you do that …. I’ll pay you, you know, 50,000 dollars, 100,000 dollars… whatever you want … I’m a man of my word …

In their – Final Notice for UBS AG – we learn that UBS was making “corrupt payments of £15,000 per quarter to Brokers to reward them for their assistance”.

The arrogance of those involved is captured by the names they gave themselves (as reported by the FSA):

“the three muscateers [sic]”, “SUPERMAN”, “BE A HERO TODAY” and “captain caos [sic]” …

The criminals also guided so-called “honest banks” to move submissions in a certain direction. They said “hopefully the sheep will just copy”. The disdain is evident in their terminology.

The evidence is now clear – the Bank had clearly indulged in criminal behaviour. However, according to the – UBS Non-Prosecution Agreement – the:

… the United States Department of Justice, Criminal Division, Fraud Section (“Fraud Section”) will not criminally prosecute UBS AG and its subsidiaries and affiliates (collectively, “UBS”) … for any crimes … related to UBS’s submissions of benchmark interest rates, including the London InterBank Offered Rate (known as LIBOR), the Euro Interbank Offered Rate (known as EURIBOR), and the Tokyo InterBank Offered Rate (known as TIBOR) …

Why? Apparently, UBS has been a cooperative criminal and promises not to do it again. The US Justice Department also claimed that imposing criminal charges on the Bank would endanger financial stability.

A few individuals are being prosecuted only. The authorities could withdraw the license to operate from UBS and there would be no danger to financial stability. There could also be safeguards on the deposits put in place without any issue.

In the “Deferred Prosecution Agreement” we learn that:

UBS executives knew that UBS’s cross-border business violated the law … They refused to stop this activity, however, and in fact instructed their bankers to grow the business. The reason was money — the business was too profitable to give up. This was not a mere compliance oversight, but rather a knowing crime motivated by greed and disrespect of the law.

Across the Atlantic, the British Financial Services Authority (FSA) issued a press release on December 19, 2012 – UBS fined £160 million for significant failings in relation to LIBOR and EURIBOR – which relates to the same LIBOR manipulation in the UK jurisdiction.

The FSA concluded that the UBS “misconduct was extensive and widespread” and involved “traders, managers and senior managers”. They join Barclays among those already outed but the list of major global banks that are implicated in the criminality will expand.

Several things need to be understood here.

First, the vast proportion of the transactions (“trades”) that are involved here are unproductive – in the sense they add nothing to our real standard of living.

Please read my blog – Financial markets are mostly unproductive – for more discussion on this point.

Financial markets are, in the most part, unproductive and produce very little of any value to the broader community. That is at the best of times. But the recent crisis has demonstrated that when they over-extend they have lethal consequences for the real economy.

People and nations now suffering unemployment, poverty, and, in some cases, starvation, had nothing to do with the development of all the shady products that the geniuses on Wall Street invented and pushed often fraudulently, onto ignorant investors.

Further, if private cost-benefit is to be the arbiter of where activity is best focused then a significant number of projects that obviously generate social wealth would never be funded. Society would be much worse off as a consequence. I can think of countless examples where the private markets would never have provided a socially-beneficial activity or resource.

In other words, there is a serious flaw in the proposition that financial markets are the best judges of social costs and benefits. Even mainstream microeconomics textbook have sections (if you can find them) on the divergence between social and private calculations and the need for non-market interventions to resolve the differences.

A study from WIFO (Austrian Institute for Economic Research) – A General Financial Transaction Tax: A Short Cut of the Pros, the Cons and a Proposal – traced the explosion of global financial flows and derivative markets in the period leading up to the financial crisis.

WIFO made two general observations:

  • The volume of financial transactions in the global economy is 73.5 times higher than nominal world GDP, in 1990 this ratio amounted to “only” 15.3. Spot transactions of stocks, bonds and foreign exchange have expanded roughly in tandem with nominal world GDP. Hence, the overall increase in financial trading is exclusively due to the spectacular boom of the derivatives markets …
  • Futures and options trading on exchanges has expanded much stronger since 2000 than OTC transactions (the latter are the exclusive domain of professionals). In 2007, transaction volume of exchange-traded derivatives was 42.1 times higher than world GDP, the respective ratio of OTC transactions was 23.5% …

In other words, most of the financial flows comprise wealth-shuffling speculation, transactions which have nothing to do with the facilitation of trade in real goods and services across national boundaries.

In some cases, transactions that involve hedging and speculation are beneficial if they facilitate trade flows and provides security to a trading company. When we talk about hedging in this context we are referring to a strategy to avoid foreign exchange risk (sometimes called covering an open position).

Please read my blog – A global financial tax? – for more discussion on this point.

The important point is that the risk is transferred to the speculator and it is likely that arrangements like this increase the volume of international trade because the trading firm bears none of the risk of the exchange rate exposure involved in the cross-border transactions. In this context, the speculative behaviour helps to facilitate trade in real goods and services which improves material standards of living (in general).

But that sort of transaction is a very small proportion of the total volume of financial transactions that occur on any single day.

The Over the Counter (OTC) derivatives market has long been a source of contention. In the US, regulators who sought to regulate the growing and secretive OTC derivatives market were met with great resistance from the likes of Robert Rubin, Alan Greenspan and Larry Summers. The latter three were touted as the “Committee that Saved the World” by Time Magazine on February 15, 1999.

Please read my blog – Being shamed and disgraced is not enough – for more discussion on this point.

Similarly, the British labour government coined the term “soft regulation” which mean virtually none and what there was left would be applied loosely. The result – the banking disasters we have witnessed.

The other point to note is that the funds that the wealth-shufflers are playing with and cheating each other have ultimately come from major redistributions in real income to profits and away from wages.

A characteristic of the neo-liberal era has been the concerted effort by capital to suppress real wages growth and allow the gap between it and productivity growth to widen, thus redistributing real national income away from wages.

While this presented a realisation problem – who would consume the increasing production – the answer was found in the rise of “financial engineering” which pushed ever increasing debt onto the household sector. The capitalists found that they could sustain purchasing power and receive a bonus along the way in the form of interest payments.

This seemed to be a much better strategy than paying higher real wages. The household sector, already squeezed for liquidity by the move to build increasing federal surpluses were enticed by the lower interest rates and the vehement marketing strategies of the financial engineers. T

he financial planning industry fell prey to the urgency of capital to push as much debt as possible to as many people as possible to ensure the “profit gap” grew and the output was sold.

And greed got the better of the industry as they sought to broaden the debt base. Riskier loans were created and eventually the relationship between capacity to pay and the size of the loan was stretched beyond any reasonable limit. This is the origins of the sub-prime crisis.

The largesse also allowed these investment banks (a misnomer if there ever was one) to garner the kitties they required to engage in their derivative trading.

Then the criminal greed took over and we have the sort of behaviour that has been revealed in the most recent UBS reports.

Please read my blog – The origins of the economic crisis – for more discussion on this point.

We often hear of the term “rogue trader” as the characterisation of the problem. In the decade or so before the financial crisis, as the financial sector was growing rapidly as governments relaxed regulations and watered down the oversight functions, there were scandals but these were typically dismissed with the “rogue trader” defense.

What we now know is that there is a culture of deceit and criminality that permeates the sector as a whole. There are many rogues.

Given that most of this behaviour is of no consequence to the material standards of living of most of us on a daily basis but can cause severe damage to those standards when a crisis emerges, I prefer the line of argument that was outlined in this Bloomberg Op Ed (December 24, 2012) – UBS Libor Manipulation Deserves the Death Penalty – which concludes that:

There is no point in mincing words: UBS AG (UBSN), the Swiss global bank, has been disgracing the banking profession for years and needs to be shut down … an even more emphatic message needs to be sent to UBS by its prudential regulator in the U.S.: You are finished in this country. We are padlocking your Stamford, Connecticut, and Manhattan offices. You need to pack up and leave. Now.

The article documents a litany of UBS-related scandals over a number of years that are separate from the LIBOR manipulation. For example, on February 18, 2009, we learned that – UBS Enters into Deferred Prosecution Agreement – which related to the Bank laundering money for US citizens so that they could avoid their tax obligations.

From an Modern Monetary Theory (MMT) perspective, the only useful thing a bank should do is to facilitate a payments system and provide loans to credit-worthy customers. Attention should always be focused on what is a reasonable credit risk. In that regard, here is a sketch of what I would do with the commercial banks by way of regulation.

Banks should only be permitted to lend directly to borrowers. All loans would have to be shown and kept on their balance sheets. This would stop all third-party commission deals which might involve banks acting as “brokers” and on-selling loans or other financial assets for profit. It is in this area of banking that the current financial crisis has emerged and it is costly and difficult to regulate. Banks should go back to what they were.

Banks should not be allowed to accept any financial asset as collateral to support loans. The collateral should be the estimated value of the income stream on the asset for which the loan is being advanced. This will force banks to appraise the credit risk more fully.

Banks should be prevented from having “off-balance sheet” assets, such as finance company arms which can evade regulation.

Banks should never be allowed to trade in credit default insurance. This is related to whom should price risk.

Banks should be restricted to the facilitation of loans and not engage in any other commercial activity.

In other words, closing the OTC markets would be a preferable step.


As is clear – the white collar criminals typically get away with it while the most disadvantaged among us pay for every little misdemeanour. The system is stacked against those with the least.

The bad boys in the financial sector tend to get away with their criminality.

Now to matters IT.

That is enough for today!

(c) Copyright 2012 Bill Mitchell. All Rights Reserved.

This Post Has 16 Comments

  1. Happy Christmas bill from your Irish fans keep up your great work you have entertained and educated us all year.

  2. I have no doubt that the crime rate in the financial sector is quite astounding.Given the clouds of smoke around then there has to be a lot of fire somewhere.Is there likely to be much serious prosecution of this crime? No,because white collar crime is traditionally given a light touch by the justice system.More importantly, this type of crime is perpetrated by the haves. We can’t have them being locked up now,can we? Because the haves run the show.

    As for Aboriginal incarceration rates – the basic principal is (or should be) Do the crime,Do the time.This also applies to whites of the lower classes. The basic reason why there are more Aborigines in the pen is because they are doing the crime.
    I’ve had some experience with Aborigines and Aboriginal communities over many years.It has been my observation that a lot of crime in these communities goes unreported and when it is reported the case is not pursued. This is due to a number of factors.
    Police lack of interest due to the difficulty of getting witnesses into court to testify against the accused.
    A legal system which is slanted to give the Aborigine a “break”.
    The legal aid system for Aborigines (funded by government)is much more easily accessed.

    So,Bill,what you are seeing regarding Aboriginal crime is really only the tip of the iceberg.

    As for the reasons for the high rate of Aboriginal crime,that is an extremely complex question. and it is certainly not ammenable to broad brush approaches like the recent “intervention” courtesy of the Howard government and still not disowned by Rudd or Gillard.The driving force behind this charade was Mal(Barking Mad) Brough who is possibly one of the most toxic MHRs ever to pollute the political scene.

    I don’t know what the solution is and I suspect that most of the people mouthing off about it,black,white or brindle,wouldn’t have a clue either.

  3. Bill,

    It isn’t merely that the banks are stuffed full of criminals, it’s worse than that. as reported in the UKs’ Daily Telegraph. A commission reporting on bank seperation vs the ringfence state baldly that a ringfence would fail because the banks will “game any system”. There it is in black and white. The criminality is so deeply ingrained in the system that it is taken as given that the banks consider themselves above the law.

    Earlier this year in the UK we had riots. around 840 business were adversely affected and these offences garnered Three Thousand jail sentences within a month.

    LIBOR manipulation involving just about every major bank and broker on the planet with untold millions gained not a single jail sentence in seven years. The only conclusion to draw is that the system in broken.

  4. Dear Podargus,
    “Police lack of interest due to the difficulty of getting witnesses into court to testify against the accused.
    A legal system which is slanted to give the Aborigine a “break”.
    The legal aid system for Aborigines (funded by government)is much more easily accessed.”

    How about offering the evidence for the above three assertions? What is your source of this “information”?

    Also I had left the following request in the comments section of Tuesdays posting.
    Dear Podargus,
    “The great majority of them are economic “refugees” of which the world has an inexhaustable supply.”

    Can you tell me the source of your information, please? I would like to know how you seem to know that the great majority of those coming to Australia are economic “refugees”.

    Best wishes

    Graham Wrightson

  5. Dear Podargus,
    The views you express are racist and offensive. They do not have a place on this blog. Please desist.

  6. @Wrightson and Nell:

    you contradict each other in your objections to Podargus and his alleged \”racism\”.
    Wrightson calls for evidence that there is lack of police interest in prosecution; that the Aust. legal system discriminates in favour of Aborigines; that legal aid for Aborigines is more easily accessed by them (than aid for whites by whites? )

    Hence Wrightson views Podargus as making statements capable of refutation by appeal to facts.

    Nell however alleges that Podargus is \”racist and offensive\” and that this is sufficient grounds for him to desist. Or for Prof Mitchell to ban him?

    But the word \”racist\” has lost all meaning since ca. 1980, when it used to mean attributing perceived psychological traits to all members of visually-identifiable ethnic groups. It is now e.g.used by US white neocon shock jocks to smear anybody questioning any black US Army spokesman who is propounding some aspect of US foreign aggression.

    Nell is thus apparently moving to delegitimate Podargus\’ proposal of a higher indigenous crime rate, a statement capable of statistical proof/disproof, by attacking his assumed ethics/morals. Is she possibly equating \”higher crime rate\” with the statement \”all Indigenous are criminal\”, which Podargus never wrote?

    Further, she avails herself of the threadbare allegation of \”offensiveness\”. In this, it seems that she can rely on current Australian legal rulings e.g. that by Judge Mordecai Bromberg in the recent Andrew Bolt case, and on pending Federal legislation which if enacted will likely farewell Australia from Western law on freedom of speech.

  7. Graham Wrightson,if you need me to give you evidence of the issues you mention then you obviously are not paying attention to your environment,probably because of an ideologically induced deterioration of your senses.

    Nell,the use of the R word as a catchall is a symptom of moral and intellectual bankruptcy.

  8. Dear Podargus, Neil and Graham

    The discussion is sailing close to where it will not go any further (that is, I will delete it).

    I definitely don’t want to harbour views that have no evidence-base and rely on ethnic or cultural stereotypes. I also don’t want a tit-for-tat exchange that invokes personal insults.

    better we move on.

    best wishes

  9. Bill –

    People and nations now suffering unemployment, poverty, and, in some cases, starvation, had nothing to do with the development of all the shady products that the geniuses on Wall Street invented and pushed often fraudulently, onto ignorant investors.

    But how much did the shady products csuse thhe suffering? They caused the crash, but if they didn’t then it’s likely something else eventually would have. They’re not to blame for the subsequent government action/inaction.

    Banks should not be allowed to accept any financial asset as collateral to support loans. The collateral should be the estimated value of the income stream on the asset for which the loan is being advanced. This will force banks to appraise the credit risk more fully.

    So the opinions of bankers would hold even more sway? I disagree – they should make decisons based on the risk to the bank, not their opinion of the risk to the customer.

  10. Hi
    I’ve been following the LIBOR scandal with an eye to understanding how we in New Zealand and Australia are effected. New Zealand banks are heavily in debt to foreign banks – credit re-loaned perhaps in New Zealand’s housing bubble. Our banks’ foreign indebtedness has been quietly pointed out for some time by the NZ reserve bank. Here’s a link to their latest financial stability report in which they discuss LIBOR (page 11). RBNZ describe the New Zealand ‘LIBOR’ – the Bank Bill Market (BKBM) rate, which is overseen by the New Zealand Financial Markets Association (NZFMA). I guess it’s an open question as to how well the RBNZ supervises the NZFMA. There is a similar scheme operating in Australia I understand.

    However, this leaves how Australia and New Zealand have been affected by LIBOR and our shared banks borrowing on the international market. I notice that banks in both our countries have been offering financial products that pay out dependent on interest rates. I believe a Gresham’s law is no less likely to affect our countries than Europe, Japan and the US. Are banking authorities as paralysed as elsewhere in the world?

  11. The recent LIBOR and money laundering scandals are a canary in the coalmine of what appears to be an ongoing power shift within our societies. A faction has effectively been declared as above and beyond the law, given free reign to continue their depredations while many innocent people suffer the consequences. There was a time when people would be marching in the streets, but again, the lack of public outcry is a sign of the times. We are passive consumers of democracy, manipulated by compliant media to pacify any tendencies to outrage we may otherwise be wont to feel. Much of what outrage is felt is harmlessly diverted into rants on blog sites, as I am doing now.

    The financiers have now openly declared that they have crossed the Rubicon, and things will surely only deteriorate from here unless there is a dramatic change in public consciousness. Antidemocratic international agreements such as the Trans-Pacific Partnership Agreement continue to be negotiated in a manner opaque to the general public, with the Trojan Horse of ‘free trade’ being used to permit corporations to surmount regulatory obstacles and further destroy the sovereignty of nations, whether or not they are sovereign in their own currency.

    Until corporate power is somehow brought to heel, we will continue to experience our lives as if brutalised by psychopaths. Our institutions are sick, reflecting the psychopathologies of our elites, and our society is sick as a result.

  12. ParadigmShift: What I fear is that however unfair our society may become, if the majority of people are not in truly dire straights there will be no revolution.

    It may be that simple ignorance of what might be accomplished by the right political/economic structures (MMT) is significant, and knowledge would help. But, we also seem to be in a period of very bad leadership from those ‘elites’, that frankly are always there.

    When I look at China I do see an authoritarian regime, but at least a decent percentage of the top leadership seems to care about progress for the nation as a whole. Whereas in the US, for our ‘elites’ it is nearly all selfishness, to the point of sociopathy. It doesn’t help that we have a non-leader for President. Of course I voted for him, what was the alternative?

  13. SteveK9

    Yes, most people are still too comfortable to agitate for change. But an increasing number are sensing that there is something wrong with the system that they have, consciously or unconsciously, bought into. Things have been rotten for some time, and, as long as the victims of the system were out of sight in Third World countries, or an easily ignored minority in the home country, people could remain aloof to the nature of the system that supported them, and that they in turn supported.

    Now the boundary between the “net exploiters” and the “net exploited” is moving closer and closer to home, and people are beginning to see the system for what it is. But many have been cleverly co-opted via schemes such as ‘home ownership’, to become de facto debt-slaves, at which point they are more vulnerable to job insecurity and less likely to have the time or motivation to question the system. Instead, they work harder and harder to maintain the lifestyle they have been acculturated to feel they are entitled to, and in the process, reinforce the mechanisms of exploitation that they are both victims and beneficiaries of, to varying extents.

    How long can this go on for before something breaks? Your guess is as good as mine. How long does a frog have to boil for before it recognises that it is about to die? My main hope for MMT is that it will help to educate people regarding the options that have been withheld from them, and to realise that there IS an alternative. But we have decades of propaganda to overcome, and unless the power structure changes dramatically, I suspect MMT will simply be co-opted by the elites. When the powerful benefit from change, change is readily achieved. The momentum seems to be against us, and time is running short.

  14. I can certainly agree with the aspect that presently the system is full of criminal behaviour that should be dealt with in a much more serious way.

    Now, we should consider the reason for this situation. May it be the politics of unsound money that is at the core of this situation. I do certainly subscribe to such an idea because money does not simply fullfil the payment function but is related to interactions between individual actors in an economic system. Looking at money under this aspect, so the devaluation of currencies will over time have a subversive and negative result for society at large.

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