Actually, the poor did cause it

Caroline Lucas: demon.

It is raining hard right now, and this makes me happy.

Why?

Because it will hopefully ensure that the "tens of thousands" of people marching against "austerity" have a thoroughly miserable time.

The protest is expected to draw 75,000 people according to its organisers who are a broad coalition of left-wing political groups.

It began outside the Bank of England at noon followed by a march to Parliament Square where a rally is expected to take place from 2:30pm until 5:30pm.

Damn. It looks like all of these brave Social Justice Warriors will have already been in the pub, drinking expensive cider before the rain really hit. So, it seems that your humble Devil will have to derive his satisfaction by sitting here (armchair warrior that I am) and mocking them instead.

So, no doubt a number of publicity-seeking slebs will be there—who has deigned to walk with the great unwashed, I wonder?

Among those better known faces attending are comedian and activist Russell Brand, Guardian journalist Owen Jones, singer Charlotte Church, Unite general secretary Len McCluskey, Green MP Caroline Lucas, and Labour leadership contender Jeremy Corbyn.

Charlotte Church? Marching with an estimated 75,000 people? Gosh.

A couple of weeks back, on Facebook, I urged Charlotte to heed her own advice and pay more tax.

Dear Charlotte Church,

I think that it's lovely that you would be happy to pay 70% tax (albeit with provisos). However, I suggest that you make the first move, and send all of the extra tax to:

The Treasury,
1 Horseguards Road,
London.

You can tell those nice mandarins what budget you'd like the money to go to, and we can see how generous you've been.

Further, I am very much looking forward to the Treasury's coffers being boosted by the similarly generous contributions of all of the people who will be joining you on the anti-austerity march.

If they all follow your example and pay tax at 70% for the rest of their lives, I am sure that the government will be able to support poor people much more generously.

Thank you in advance—you are a true philanthropist.

Regards,

c

Alas, Ms Church back-tracked somewhat—she said that, even if she did pay extra, it really wouldn't sort anything out. Rich though she might be, her donation would be barely enough to keep the government running for more than 5 minutes.

But, just think, Charlotte: if only you were to stand up at this march and urge these kind socialist souls to join you in paying more—perhaps you and the 75,000 could raise meaningful amounts of money, year after year. A few days later, the Spectator embraced the suggestion—even being considerate enough to urge the Treasury to make it easier for these rich people to donate their cash.

At the end of our tax returns, we declare how much tax we owe. Osborne can introduce a new line in the tax return saying: if you think this isn’t enough, how much extra would you like to pay? People like Ms Toynbee and Ms Church can then fill in the extra so they can pay 50 per cent, or even 70 per cent, if they like.

This ‘nudge’ tax reform would be consistent with the liberal principles of a Conservative government while allowing left-wingers to act along with their conscience and hand over more of their income to the government.

So next time, rather than complain that they would be happy to pay 70 per cent tax, such people can proudly claim that they do pay 70 per cent tax. And they will have the tax return to prove it.

The Speccie even has the decency to address Charlotte's complaint that paying more tax would make little difference.

Those saying that this voluntary tax would not make much difference are mistaken. The US runs this a similar (here) and under Osborne a huge share of the tax is drawn from tiny number of people. The best-paid 1pc now contribute 27pc of all income tax. The top 0.01pc pay 4.7pc (an average £2.6m each). The Charlotte Churches of our country – the 1 per cent, if you will – have never shouldered a greater share of the burden. So if she volunteered to shoulder an even larger share, it really would help bring an earlier end to austerity.

This change, alongside Charlotte Church's fine example, really could make a difference—at least 75,000 people putting their money where their mouth is, and actually paying more tax. How heart-warming.

Of course, all of this does rather assume that these protesters are paying any tax at all. I would bet that a pretty hefty chunk of them are, in fact, nett beneficiaries of the state. Apart from anything else, a great many of them are almost certainly students, complaining that "austerity" is restricting the frequency of their ski holidays or something...

But hist! Who is this grinning loon, her evil shark-like eyes darting amongst the crowd? Why!—it is that bastion of barminess, Dr Caroline Lucas MP! Hooray for the good doctor (of Elizabethan literature)—lang may her lum reek, as they say in Scotland (apparently). I wonder what words of wisdom will drop from her lips...

Green MP Ms Lucas, who held onto her Brighton seat at the last general election, has spoken to packed crowds in Parliament Sqaure: "This Government is continuing to punish the poor for an economic crisis they didn't cause.”

Well, this is a bit of a problem, isn't it? I mean, I don't want to be indelicate, but it is precisely the poor who have caused this "economic crisis".

After all, the trigger for the banking crisis was people who walked away from mortgages that they couldn't afford to pay. A great many of these people were... well... "the poor". (Especially at the point that they couldn't afford to pay their mortgage.)

For sure, this was exacerbated by over-leveraged banks trading mixed assets and, yes, in the UK we did bail out the banks. But we did, at least, bail them out by buying shares: and selling these shares (and sundry others charges to the state) will, in fact, make an estimated £14 billion profit for the British taxpayer. In fact, the government has been profitably selling Lloyds Bank shares for some months now.

But the "economic crisis" was exacerbated in the UK by the fact that the government was already running a pretty hefty structural deficit all through the boom years. And what was the largest part of this spending? Why—supporting "the poor", of course.

And, of course, the Coalition and, now, Tory government has also been massively over-spending too. And who are the main recipients of this money? I'll give you a clue, Caro—it's not "the rich" because they don't need it.

What? Yes, that's right, the main recipient's of this cash are "the poor"—'cos that's how redistributive welfare works, y'see.

When looked at it that way, Caroline, the poor are, in fact, the primary cause of this particular economic crisis. I know it sounds harsh but it is, from this perspective, actually true.

So, I'm sorry, Caroline: on this—as on every other topic on which you offer your utterly valueless opinions—you are wrong.

Bad show—better luck next time, old girl.

Now don't let the door hit your scrawny arse on the way out, will you?

UPDATE: Obo the Clown highlights some more rampant stupidity from "doctor" Lucas.

76% didn't vote for this Govt - Osborne has no mandate for austerity. He wants to shrink state not cut deficit #EndAusterityNow #JuneDemo - Caroline Mucus

That's lovely, Cazza, but as was immediately pointed out to her, 71% of the people in Brighton Pavilion didn't vote for her, so is she going to resign out of principle?

She really isn't very bright, is she?

UPDATE AGAIN: Longrider's final comment might be the most pithily offensive I've seen today.

Hundreds have gathered with placards reading “No cuts” and “Stop Union Busting” and celebrities such as Russell Brand and Charlotte Church have joined protesters on the street.

Oh, right, Britain’s finest brains, then.

Heh.

And so it goes on...

As the laziness of the festive season has started to wear thin, your humble Devil has woken up and noticed that the Coalition have quietly pledged to implement some spectacularly stupid policies.

The first of these is the Vickers Report which, amongst other pointless remedies, suggests splitting the retail and investment arms of banks. Despite the fact that this ignores the fact that the collapse started amongst the government-guaranteed retail arms of said banks, the government has said that it will press ahead with the recommendations in full.

The second piece of colossal stupidity is Cameron's reported commandment to implement minimum alcohol pricing: this suggestion really grips my shit for a number of reasons—not least that it won't work, that it will be illegal under EU law, that there is no drinking problem in this country, and that the massively-foreheaded twat has finally shown his true colours.

Most irritating of all, of course, is that we know that Tory aides read many blogs voraciously—and that, therefore, CCHQ are aware of all of the above. And they know that we know that they know. As such, they are pissing into our open mouths.

As such, I feel that some of these issues need to be addressed by your humble Devil—if only for my own catharsis. But, it is late, and so this post is a bookmark, an aide memoire for myself and a menu of things to come for my remaining readers...

Coming home to roost...

Apparently, a recent report from Germany's Bundesbank questions the legality of the EU bail-outs. [Emphasis mine.]

Germany's Bundesbank has issued a blistering critique of EU bail-out policies, warning that the eurozone is drifting towards a debt union without "democratic legitimacy" or treaty backing.

"The latest agreements mean that far-reaching extra risks will be shifted to those countries providing help and to their taxpayers, and entail a large step towards a pooling of risks from particular EMU states with unsound public finances," said the bank's August report. It said an EU summit deal in late July threatens the principle that elected parliaments should control budgets. The Bundesbank said the scheme leaves creditor states with escalating "risks and burdens" yet no means of enforcing fiscal discipline to make this workable.

No shit. Those Germans really are fiscal geniuses after all.

Still, at least Dan Hannan can say "I told you so".

More to the point, the whole scheme is against the rules. The only reason that Germany and the other net contributor states agreed to the single currency in the first place was that a clause was written into the treaties prohibiting EU-backed loans to indebted governments. The treaties are now being rewritten to remove that clause. In the mean time, though, no one in Brussels is trying to pretend that the bailout is legal.

As for Germany's political and banking institutions, well...

You made your bed—it's a bit late to stop telling lies in it.

UPDATE: England Expects has discovered the EU Commission's infallible solution to the financial crisis!

In the face of a constant rolling crisis in the Eurozone finally the European Commission has been moved to act.

European Commission proposes to make 2013 the "European Year of Citizens"

As Mrs Reding, the Commissioner puts it,

It will be a good opportunity to remind people what the European Union can do for every one of us.

We are saved!

Not.

Banking on the government

Don't. But that's not what this is about: it's about the fact that MPs are intending to give Bob Diamond, boss of Barclays bank, a bit of a hard time.

Britain's best-paid banking boss, the Barclays chief executive Bob Diamond, will face intense pressure from MPs to waive his multimillion-pound bonus this week in recognition of the austere economic conditions and public intolerance of outsized City pay cheques.

An appearance by Diamond in front of the Treasury select committee on Tuesday is set to become a key clash between Westminster and the City as the coalition's efforts to tame bankers' pay falter.

Last night MP John Mann, a Labour member of the committee, said he and others would call on Diamond to forgo any bonus for 2010, when he was head of Barclays' investment banking arm.

"He will be asked not to take any bonus at all," said Mann. "We will want to know exactly how much these executives are getting in bonuses and other payments and why. There will be some tough questions."

So, here's what I think: MPs should shut the fuck up.

No, really.

Timmy deal with this whole affair in a rather more nuanced fashion, naturally, but the gist of the argument is this: Barclays was one of the few banks that did not go bankrupt in the crash; where they needed to shore up their capital, they found private investors willing to give them the loans. The simple fact is that Barclays took no taxpayer bail-out and, as such, it is none of our business—nor the government's—how the bank runs its business.

So, what the fuck do MPs think that they are doing in attempting to force the head of a private business to forego some of his renumeration? I mean, how fucking arrogant can you get?

In the meantime, the banks that the government does own are languishing in the realm of shit share prices and no dividends—perhaps our oh-so-wise MPs might turn their attention to the fact that those banks still aren't delivering any return for taxpayers, rather than sticking their fat, alcohol-bloated noses into affairs that simply don't concern them.

So, my suggestion to Bob Diamond is that he tells the Treasury select committee to go fuck itself.

Simples.

Bank protest fail

Nice try, boys...

I saw this in the print edition of The Telegraph, but there doesn't seem to be an online version—as such, I am forced to use The Mail's version of the story.

When Cameron Hope tried to get a loan to help his business grow he felt as if he were talking to a brick wall.

In fact, he became so angry with the banks’ refusal to lend that he decided to give them a taste of their own medicine.
...

In an action likely to strike a chord with businesses unable to secure loans across the country, Mr Hope and other protesters built an 8ft by 4ft wall of breeze blocks outside the entrance of [a bank branch] in Westbourne, Bournemouth, Dorset.

He was joined by other local business owners who have had trouble getting loans. They plastered the wall with placards proclaiming ‘Robbed by the banks we own’ and ‘Make the banks lend’.

"Robbed by the banks we own"—that's a powerful phrase, eh? A rallying cry for all those ordinary people who have been forced to bail out these greedy bankers and now find that these bastards are failing to lend at anything other than exorbitant rates—if at all.

It's a bit of a pity, therefore, that the bank that Mr Hope bricked up was a branch of Barclays—one of the few banks that the taxpayer did not, in fact, bail out...

Banking on your savings...

Blog mascot Steve Baker MP appears to be earning his salary...

There has been an awful lot of rubbish talked about banking over the last few years, including the idea that banks should be split into the nice, solid, reliable "High Street banks" and evil, risk-taking, "casino" banks.

Fair enough.

Except that the evidence simply doesn't bear out this analysis, as A Very British Dude points out very succinctly.

Nowhere did investment banking losses pull a retail bank down, or requrire one to take government bail-out money: let's look at the UK banking sector:

• Lloyds TSB: Safe, solvent, straighthforward Retail bank, until it was persuaded to buy HBoS by Economic Jonah, Gordon Brown.


• HBoS (Halifax, Bank of Scotland): mainly retail, Large Mortgage Business, which went belly-up and took Lloyds TSB with it too.
  
• Royal Bank of Scotland, very small investment bank, Largest UK retail operation, big Corporate loan book, whose purchase of ING ABN Amro strained its balance sheet to breaking point. It's failure was hubris, not Investment banking.


• HSBC: Universal Bank, large global retail and investment banking operations, now trading at the same shareprice it was before the crisis, and is still paying dividends.


• Barclays: Large UK retail bank, overseas operations, buccaneering and ambitious investment bank, who were raised funds from private investors and just managed to keep out of Government hands.


• Standard Chartered: International corporate and retail bank, mainly Asia and Africa - no problem at all.


• Northern Rock: Ex Building society turned Mortgage and Retail, bailed out by a Labour government because they couldn't bear to see anyone make money and wanted to save jobs in key marginals.


• Bradford & Bingley: See Northern Rock. Eventually bought by Spanish banking group, Santander.

Let's look at the evidence: Of the two "universal banks" listed in the UK, neither had to touch the UK taxpayer for money. HSBC was able to cope with the crash on it's own resources and Barclays was able to use its contacts from the investment bank to touch sovereign wealth investors, who have now been paid back. The banks which had got into trouble were either Mortgage banks without a large retail business from which the Mortgages were funded: Northern Rock and Bradford and Bingley, or they were banks who sailed close to the minimum Capital adequacy ratio like Royal Bank of Scotland. Or, like HBoS, Both.

So, the conventional wisdom simply isn't on the money.

However, that doesn't mean that there are not problems with the banking industry—there are. And one of the most fundamental wrongs is the fact that once you put your money in a bank, it no longer belongs to you.

No, really.

The Cobden Centre outlines the background.

The key case is Carr v Carr 1811 (reported in Merivale (541 n) 1815 – 17). A testator in making his bequest said “whatever debts might be due to him…at the time of his death”, the key question in this case being whether “a cash balance due to him on his banker’s account” passed by this bequest. The Master of the Rolls, Sir William Grant held that it did. He reasoned that it was not a depositum; a sealed bag of money could be, but this generally deposited money could not possibly have an ‘earmark’. Grant concluded on this point, “when money is paid into a banker’s, he always opens a debtor and creditor account with the payor. The banker employs the money himself, and is liable merely to answer the drafts of his customers to that amount.” For the legal scholars among you, Vaisey v Reynolds 1828 and Parker v Merchant 1843 both affirmed this position.

In Davaynes v Noble 1816 it was argued in front of Grant that a banker is a bailee rather than a debtor. Rejecting that argument, Grant said “money paid into a banker’s becomes immediately a part of his general assets; and he is merely a debtor for the amount.”

In Sims v Bond 1833 the Chief Justice of the Queens Bench Division affirmed in judgement “sums which are paid to the credit of a customer with a banker, though usually called deposits, are, in truth, loans by the customer to the banker.”

The House of Lords, then the highest court in the land, had its say on the matter in Foley v Hill and Others 1848, duly reported in the Clerk’s Reports, House of Lords 1847-66 (pages 28 and 36-7). In summary, the appellant in 1829 opened a bank account with the respondent bankers. Two further deposits we added in 1830 and in 1831 interest was still added. In 1838 the appellant brought proceedings against the respondent bankers seeking recovery of both the principle and interest. The counsel cleverly tried to argue that it was the duty of the respondent bankers to keep all the accounts up to date at all times and thus there was more to this relationship than that of debtor and creditor.

The Lord Chancellor Cottenham said the following in judgement

Money, when paid into a bank, ceases altogether to be the money of the principal; it is by then the money of the banker, who is bound to return an equivalent by paying a similar sum to that deposited with him when he is asked for it. The money paid into a banker’s is money known by the principal to be placed there for the purpose of being under the control of the banker; it is then the banker’s money; he is known to deal with it as his own; he makes what profit of it he can, which profit he retains to himself, paying back only the principal, according to the custom of bankers in some places, or the principal and a small rate of interest, according to the custom of bankers in other places. The money placed in custody of a banker is, to all intents and purposes, the money of the banker, to do with it as he pleases; he is guilty of no breach of trust in employing it; he is not answerable to the principal if he puts it into jeopardy, if he engages in a hazardous speculation; he is not bound to keep it or deal with it as the property of his principal; but he is, of course, answerable for the amount, because he has contracted, having received that money, to repay to the principal, when demanded, a sum equivalent to that paid into his hands.

That has been the subject of discussion in various cases, and that has been established to be the relative situation of banker and customer. That being established to be the relative situations of banker and customer, the banker is not an agent or factor, but he is a debtor.

Thus the settled position of the law is that when you deposit, the bank becomes the owner of the money deposited and you become a creditor to the bank.

This is, of course, not an entirely satisfactory state of affairs: what should happen is that when you deposit your money, you retain ownership. If one chose, one could loan the money to the bank (in return for a higher rate of interest, for instance) but it should be a choice by the customer.

Douglas Carswell: making a nuisance of himself—in a good way...

The increasingly busy Douglas Carswell, supported by this blog's mascot—the thoroughly excellent Steve Baker—is tabling a Ten Minute Bill that proposes precisely this. Douglas lays out the BIll's proposition succinctly on his own blog.

To be clear, this Bill does not stop banks from treating your deposit as a loan. You just have to make clear that you give them permission to do so. There would, in effect, be two types of bank account; one where it was made clear that you owned the money (and probably paid for banking services in fees), and one where the bank was free to lend on your money like they owned it.

And Steve Baker outlines the motivations and consequences in a Centre Right column, correctly pointing out that—whatever your opinion on the benefits or otherwise of fractional reserve banking—this is not only an attempt to stop the distortion of capitalism, but also an issue of property rights...

While banks maintain clear property rights in securities on deposit, the same cannot be said of monetary deposits. Thanks to a base of judicial decisions, when you deposit your money on demand at the bank, ready for immediate withdrawal without penalty, it is not your property, but the bank's. Banks can lend money held on demand and of course they do so.

This is fractional reserve banking and it may not be the good thing most bankers think it is.

Fractional reserves on demand deposits allow banks to extend credit in excess of real savings. That leads to the creation and destruction of fiduciary media: claims on money for which there is insufficient money to meet all claims. It is what makes bank runs possible. It means that, as the great economist Irving Fisher wrote in 1935,

our national circulating medium is now at the mercy of loan transactions of banks; and our thousands of checking banks are, in effect, so many irresponsible private mints.

As I explained in my maiden speech:

Unlike the situation in respect of any other commodity, in the case of money, price controls do not drive the product off the market. Artificially lowered interest rates increase the demand for credit, and decrease the supply of savings, but the legal privilege granted to banks means that they can meet demand by extending credit that is unbacked by real savings. There is a good argument to say that that causes the boom-and-bust cycle, the misdirection of resources in the capital structure of production, and over-consumption by consumers.

And since the money supply contracts when banks lend less, we find central banks injecting new money through QE, further distorting an economy already distended by excess credit expansion, in an attempt to cope with the anarchy of money creation and destruction caused by fractional reserve banking.

To repeat: demand deposits of money are not subject to the same principles of property and contract as any other commodity. Banks enjoy the legal privilege of open access to money which they are liable to return on demand. In concert with the central planning of interest rates and a range of government interventions, this is what is wrong with capitalism.

Whilst—as Brian at Samizdata points out—a Ten Minute Bill is unlikely to succeed in passing, it does show a fundamentally sensible way to approach this patent injustice, and deliver a more morally and economically sound banking and capitalist system.

Ten Minute Bills seldom pass. But they are a chance to fly a kite, put an idea on the map, run something up the flagpole, shoot a shot across the bows (see above) of some wicked and dangerous vessel or other, etc. etc., mix in further metaphors to taste. Were this particular kite actually to be nailed legally onto the map (which it will not be for the immediately foreseeable future) it would somewhat alter the legal relationship between banks and depositors.

Quite. But it is more than that...

Attendance for and voting on this Bill will show us just how determined Our New Coalition Overlords™ are to serve our interests. It is our money; and if the consequences of this Bill would be both to enshrine that in law and to provide more stability to the banking system—which they are—then a low attendance and votes against would show us that the Coalition care more for the comfort of the bankers than for the property rights of the people that they purport to represent.

We, the people, could sharpen our scythe blades—secure in the knowledge that this government is just another collection of corporatist scum who couldn't give a shit about property rights. And sharpening our scythes would be a worthy past-time because, if the above is the case, then we would be better killing the lot of them than enabling their apathy and wallet-books to undermine that which has made our economy and society successful...

MPs should be paid less—proved!

The Appalling Strangeness is discussing MPs' salaries and comes to a conclusion that I can entirely agree with.

For £65,000 a year I really do expect our elected officials to do something other than bray like a rabid mob at PMQ's, and traipse through the correct lobby on the instructions of a whip.

£65k a year for what we've got; I honestly believe we could have much better for far less.

And, do you know what? I can prove this theory by means of a simple logical argument...

Because, you see, everyone—including our useless fucking politicos—has been banging on about how bankers have fucked up, right? The conventional wisdom is that these bankers have screwed their employers, and comprehensively fucked the economy, yes? That these bankers were, in fact, utterly fucking useless at their jobs.

Further, there have been howls of protest—not least from our idiot MPs—about the vast salaries and bonuses paid to these bankers. And the bankers do not deserve such vast renumeration because they have totally buggered the economy.

So...

Bankers were possibly the most massively paid people in the country and yet they were fucking crap, right? Therefore, not only do you not get the best by paying massive salaries, you actually get people who are utterly disastrous.

So, this argument that we should pay MPs lots of cash in order to command the best talent is demonstrably false. And, as such, if we want the very best legislators, the amount that we should pay these cunts is only slightly more than fuck all.

Quod erat demonstrandum.

Reading City AM this morning...

... and I was wondering—is Nick Clegg the stupidest man on the face of the planet?

In announcing a whole raft of "ideas" that are designed to punish bankers—but will, in actualité, punish anyone vaguely successful—this parasitical non-entity has spelled out just what a pathetic, vicious little cunt he is.

Your humble Devil has concentrated most of his fire on Labour and the Tories because they are the two largest collections of shits in the country.

This may have been unfair to the LibDims who might be, after all, kingmakers in hung Parliament.

I used to think that these cints were a harmless but mildly amusing irritant. But no more—it is ever more obvious that Clegg's LibDims are vicious, stupid, economically illiterate morons whose intentions and actions are just as evil and crap as those of NuLabour.

It's time to fuck the LibDims into the irrelevance that they so richly deserve.

Oh look...

... no one could have seen this one coming, eh?

More than 1,000 investment bankers have quit Royal Bank of Scotland to join rival firms for guaranteed cash bonuses and big salary increases, according to banking sources.

The staff exodus, which has cut a swathe through the senior ranks of RBS, has been gathering pace since the government first ordered it to clamp down on bonuses this year.

Although they account for less than 5% of staff in RBS’s investment division, the traders and corporate financiers who have been lured away are estimated to have earned it between £600m and £700m last year — almost 8% of its 2008 income.

I believe that this was foreseen by those of us who are not complete and utter morons, i.e. by anyone who is not a politician.

Fucking hellski.

A Quick Reminder: The Government are Cunts

[NOTE: I'm not The Devil, and I know I'm late to the party on this, but fuck it. You can't have too many reminders.]

OK. We had an "asset bubble." Lots of things were overpriced. That house you bought for £200,000 was actually only worth £150,000. Share in a company were priced at £3.30 but were actually only worth £2.50.

These things happen. Sometimes speculators drive the estimated value of things up higher than they should be. Whether tulips, south sea trading rights or housing this stuff has been going since year dot and will happen from time to time pretty much forever.

When senses return and the bubble bursts, a load of people are left with assets that are worth less than they paid for them. In today's case, the 'victims are the banks'. Northern Rock doled out billions on pounds to people who couldn't afford to repay it, on the basis of properties that weren't worth their valuation. In order to "save the world", resident genius G. Brown stepped in with colossal quantities of cash to help the bank stay afloat.

As more institutions realised they were in the same fucking hole, so they turned to us—via our representatives—for help. Which would be great, except for the small detail that we can't afford the losses either. Consequently, no-one dares to lend money to anyone else all of a sudden. And when your economy is largely based on credit (who buys a sofa for cash these days?) that spells trouble. Anyway, because we "can't let these institutions fail" we're the ones stuck with all this shit.

So now, the Government is encouraging the printing of money. £200 billion of it thus far. This is supposed to be used so that the banks will start giving credit to people and they can spend it on stuff and then we'll all be happy and somehow one day we'll be able to pay the £200 billion back.

Only here's the rub: interest rates are 0.5%. That means if I lend you a hundred quid, you only have to give me £105 back in a year's time (or something, who the fuck knows how it works—read the small print and get back to me). That's not much return on my investment. On the other hand, stock markets were sent artificially low by the banking crises. So my £100 is going straight into shares instead because I can make more money there because I'm not a moron. So while every economic indicator from GDP to retail sales to employment continues to tank, the stock markets head in the opposite direction.

This is why the money the government is printing isn't reaching the 'real economy'. Instead it is feeding a stock market rally. We're creating another fucking asset bubble. Meanwhile, businesses and people are going to the wall because they still can't get credit. Worse, eventually we're going to have to deal with this £200 billion that has been created somehow.

Are we going to tax it back from corporate institutions who have benefited from our largesse? Pfft. The only answer is to accept that everything is going to get more expensive. With that much easy money floating around in the economy, that's what inevitably will happen.

For proof, you only have to look at Germany's Weimar Republic or modern-day Zimbabwe to see what happens. When there's a lot of cash, prices shoot up because money itself becomes cheap. It's a problem with modern economies that have decoupled their monetary systems from something tangible like gold. As our money itself becomes worth less, so people demand more of it in exchange for their goods. This is inflation, and it is a bitch. Because if your £15,000 a year is barely enough to live on now, how will you feel when the price of everything shoots up 10% in the course of a year?

Now to me, a no-mark in the middle of nowhere, knowing fuck all about nothing, it is baffling how the rich, mighty, connected and intellectually powerful people who claim to run this country can't see this. But then there's a lot of things I don't understand about them. Frankly, we'd be better if they went off to do something more productive. Like fucking stoats. In Iceland. Without condoms.

Gordon and Darling: insane bastards

The BBC—even the BBC—is reporting that the latest stupid idea from Brown and Darling has received a "lukewarm reaction".

Prime Minister Gordon Brown's idea of a financial transactions tax has received a lukewarm response from G20 countries.

The proposal, which took delegates by surprise at the meeting in St Andrew's overshadowed other items on the agenda.

Naturally. Gordon's idea of being "statemanlike" is just throwing in ideas that are not on the agenda. This one-eyed Scots idiot seems to equate lobbing in stuff that no one has prepared for to being "radical". It's this silly fucker's standard tactic.

The US said it would "not support" a transaction tax and Canada added it was "not an idea we would look at".

The Conservatives said that Downing Street had previously "poured cold water on this proposal" and that the Treasury had called it "unworkable".

But what is the standard protocol for by-passing silly little local governments...?

Chancellor Alistair Darling said the leaders had agreed the International Monetary Fund should now consider the possibility of introducing an international transactions tax, which would be used to create a fund for bank bailouts.

That's right: you submit it to a supranational body who will attempt to enforce it on everyone anyway (remember Blair trying to get the EU to force ID Cards on us?).

He said governments should consider whether it would be possible to develop a tax that would be universal, comprehensive in scope and compatible with financial stability, as well as fair and which would not "distort things".

Taxes always distort things, you stupid fuck.

He described the idea as "clearly work in progress, it will take time to develop but it is, I believe, an important piece of work".

Yes, yes it is an important piece of work—if, by "important", you actually mean "completely fucking insane".

Look, the government now owns most of our banks; it has a duty to ensure that they can make a decent profit so that we taxpayers—those of us who pay for our government's profligacy—can get some of the money back. This Tobin tax would, quite obviously, make that long climb back to profitability considerably longer and harder.

Now, I am no economist, quite obviously, but some people do have the relevant training. So, first up, Timmy discusses the reasons why Tobin suggested such a tax—to "throw “sand in the wheels” of turbo-charged capitalism" in a world of fixed exchange rates (which ours is not. Until the world currency anyway)—and how it would have unintended consequences (surprise sur-fucking-prise) in penalising those who are not eeeeevil bankers.

We now have the Austrian Government making the decision about whether my trades on the currency markets are necessary or not? As just a very minor example, my income is variously in $, £ and €. My expenditures are similarly, variously in $, £ and €. Incomes in one corrency rarely match with outgoings in that same currency so there’s a certain amount of shufling things around month by month. But according to the Austrian Government I should be taxed because, umm, well, apparently I’m some bastard international bank who deserves to be screwed.
...

You can levy a tax wherever you like. But just because you levy it somewhere doesn’t mean that that’s where it stays: there is this thing called tax incidence.

And as the report says, we do have a transaction tax on financial transactions in the UK: Stamp Duty on share transactions. And who actually bears the economic burden of that tax? The wheelers and dealers? Actually, no: a report back in 2002 pointed out that it was individual’s pension funds that bore part of the brunt, the other major effect being a rise in the cost of equity capital to UK based firms. And as we know, a rise in the cost of capital shows up in the workers’ paycheques as a reduction in them.

So far from a Tobin Tax screwing the bankers, it, once again, screws the workers.

And Chris Dillow expands on all of this, helpfully pointing out that the bastard tax wouldn't bloody work anyway—and, just to ram home how fucking nuts this is, outines why it wouldn't even have stopped the current problems.

1. It would have done nothing to have stopped this financial crisis, and might even have made things worse. The two markets upon which a tax would impinge most - FX and stock markets - played little role in this crisis; they were, as near as dammit, innocent bystanders. The tax would not have stopped RBS overpaying for ABN-Amro, would not have stopped HBOS making bad loans, and probably wouldn’t have stopped Northern Rock funding its mortgage lending by borrowing in wholesale markets.
   What the tax might have done, though, is reduce the liquidity of mortgage derivatives. But this was, for many banks, precisely the problem. As Alistair Milne describes in The Fall of the House of Credit, the problem with many “toxic assets” is not so much that they were devalued by defaults, but rather that they became illiquid, untradeable. A transactions tax might have exacerbated this problem.

...


2. A transactions tax does not necessarily stabilize markets. It might do the opposite. As Andrea Terzi points out (pdf), such a tax doesn’t so much reduce short-term trades as trades with low expected gains. However, these trades are often stabilizing trades - those done by arbitrageurs hovering up pennies.
   If the tax bears more heavily upon these than it does upon noise traders, then it might make bubbles more likely, not less.

Which all goes to show that Gordon Brown—a Labour historian^*, by the way, not a fucking economist—and Alistair Darling (a total fucking ignoramous Trotskyite cunt of a lawyer) know less than fuck all about economics, and that the pair of them are barkingly insane.

Unless, of course, all that they are interested in is taking control of the entire money supply and thus ensuring complete control over the British nation—in which case, they might just be evil genuises.

UPDATE: Capitalists@Work have dubbed this The Worst Policy of New Labour, Ever.

What really staggers me though is that Badger and Brownstuff could promote this idea in the very week in which they confirm the UK taxpayer is to own the largest international bank in the world by assets and 43% of another top 20 bank.

So the UK government now owns banks and is advocating a policy which will cripple their recovery. This is beyond stupidity, it really is.

In years to come the political world will have a new lexicon for all this Government;

'as stupid as a Brown plan'—for a truly appalling policy announcement

'even Brown would not have done that'—for a real turkey of an idea

ad infinitum.

Doesn't everyone already use these phrases...?

^*The title of his PhD thesis—which took him ten years to complete—was The Labour Party and Political Change in Scotland 1918–29. The man is a fucking twat who knows bollocks-all about most history that isn't couched in Labour Party terms.

The Trouble with Capitalism

The Trouble with Capitalism is, apparently, everything that governments do to try to mitigate the trouble with capitalism, according to Harry Shutt.

It all starts with boom-and-bust, something economists assure us is a natural feature of the capitalist paradigm. In the nineteenth century, all of this capital floating around was ploughed into industrial ventures in the expectation of its generating stuff (good) and more capital (also good), which could then be ploughed further into more ventures, etc. This snowballing of prosperity was occasionally punctuated by hideous crashes, such as the stock market crash of 1873, when invested capital failed to produce more stuff or more capital, either through failures in the level of demand or because the prospective stuff had been over-valued in the first place.

All well and good, except for all those people adversely affected by the busts, who also tended to be the same people who accrued the least advantage during the booms. This was all quite scary; and then two world wars came along, which were also very scary - so frightening in their death toll and genocide and nationalism that the obvious response was to entrench

...the inescapable responsibility of the state for the maintenance of minimum economic security for all citizens.

Shutt says some stuff here that suggests the reasoning behind this was that the disaster that was World War II was caused, in part, by the economic suffering of the common people in the fascist countries, who turned to nationalism/fascism because it promised to protect them from boom-and-bust. Keynes's The Economic Consequences of the Peace suggests differently, but I'm getting away from the point, which is that, for whatever reasons, insulating people against the crappy part of the capitalist cycle became a priority for Western governments.

So what did those governments do?

...in order to maintain full employment governments could and should 'adopt a compensatory fiscal policy to offset the irreducible fluctuations in the private sector of the market'...

...which they did...

...by using the tools of demand management (monetary as well as fiscal policy) to manipulate the level of economic activity so as to keep unemployment below the level at which the fiscal costs of the welfare and social-security budgets would become too burdensome.

They also:

...became significant promoters of investment, whether through state subsidies or incentives to private investment, or else through direct state equity participation in enterprise.

And this all trundled along quite nicely, because in the couple of decades post-war, Western economies enjoyed such a massive growth spurt that unemployment was almost non-existent and even many of the poorest in society experienced an unprecedented increase in their quality of life.

But then the 1970s happened. Growth slowed dramatically; saturation had occurred in many markets, especially that of consumer durables; the need for non-durables was fairly static; and essentially demand grew in line with population growth, governed by replacement rather than first-time purchases. Companies diversified; new markets were sought. Universal employment and social welfare turned out to be government policies that could only really be practical as long as the economy continued to grow at a quite high rate. When growth slowed, unemployment grew, as did the demands on the welfare state.

Government response was, inevitably, fiscal and monetary stimulus.

And therein lies the problem Shutt identifies: rather than adjusting to lower rates of growth, and attempting to define a new understanding of prosperity in the absence of tremendous growth, governments adopted policies that merely put off the day of reckoning whilst at the same time ensuring that when the reckoning did occur, it would be infinitely worse due to that delay.

There was now, on the one hand, an excess of labour: reduction in demand and production meant that not only could there now not be full employment, but the price of labour shrank as well.

More worryingly, however, there was now an excess of capital. Monetary stimulus had created a lot of money that had to be invested somewhere, and traditional avenues for investment were now not as profitable as they had once been; gone were the days of a 12-15% return. New markets were slow to open up; where, then, could all this money go?

The answer turned out to be riskier investments; the possibility of collapse was high, but if successful, the returns would also be correspondingly huge. Property, for example, futures, derivatves, junk bonds: this is where the money flowed, even as people understood, as time went on, that the assets backing them might be tremendously over-valued.

And this is where, the reader begins to feel, Shutt is getting pretty fucking angry. Because this whole process of crazy investment with the capital glut has been going on since the late 1970s. And every time the risks don't pay off, government response has been to 'mitigate' the problem with further stimulus—thereby worsening the capital glut, which was the original problem. And of course, in the process, creating a tremendous deficit burden.

Of course, stimulus has not been the only response, just the worst one. Governments have also tried to open up new avenues for investment: new geographical markets, privatisation of state services, corporate subsidies, etc. All of these good intentions have resulted in corresponding problems: exploitation in the third world, fraud, corruption, organised crime, corporatism.

All of these 'solutions,' Shutt claims, are understood to be empirically imperfect; they are all predicated on the belief that, one day, growth will return to its post-war levels, sucking up excess capital and labour once again and freeing the government from the penalties of its Keynesian overspending. Except that this return to huge growth keeps not happening.

Shutt wrote The Trouble with Capitalism in 1998, perfectly predicting the bust that has been occurring in the past two years. You can see why he's irritable:

The resulting financial and economic collapse [of 2007-2008], which is by now perceived as the most serious crisis of global capitalism since the Great Depression of the 1930s (if not in its entire history), is clearly in line with the predictions made in the book. Yet, while to that extent it may appear to have been vindicated, its analysis of the causes of the crisis is still very far from being generally accepted. Indeed mainstream analysts have devised some bizarre explanations for the onset of the crisis, while steadfastly ignoring its long-term, fundamental causes.

If he's right, then his frustration is wholly justified, because governments' response to this bust has been to do exactly what he claims will exacerbate the problem further.

Such deliberate distortions of reality reflect a more general, and all too understandable, tendency on the part of the global establishment to try to ignore the longer-term factors behind the crisis. In particular they seek to divert attention from the chronic relative stagnation of the world economy since the 1970s, which has made it increasingly impossible to find sufficient outlets for reinvestment of inexorably accumulating corporate profits—not to mention the artificially stimulated flows of capital into pension funds and other savings vehicles—in productive assets, as opposed to unproductive and highly risky speculation. The central theme of the book...is how the would-be saviours of the capitalist profits system have since the 1970s resorted to ever more ingenious methods to overcome this inescapable tendency—the essence of the business cycle, familiar from the earlier history of capitalism since the nineteenth century.

His thesis - and this makes a lot of sense—is that the way to mitigate the more destructive parts of the cycle of profit-motivated capitalism is not to encourage further that profit motive by creating more capital and more risky ways of generating profit. And if it is true, as Shutt claims, that growth has forever stagnated, then it is true that we need to redefine some way of measuring value besides the accumulation of profit:

It is self-evident that free-market, profit-maximising capitalism is incompatible with a low-growth or no-growth economy, since to survive it requires the possibility of perpetual accumulation of profits and expansion of shareholders' funds. From this it must follow that the untrammelled pursuit of profit maximisation by corporations can no longer be accepted as their primary objective, at least as long as they enjoy the privilege of state protection or subsidy.

What, then, can we put in its place? This is where Shutt's work falls: 'How can we measure value apart from profit?' 'I dunno, let the people decide':

Any criteria used as alternatives to the supposedly impersonal one of profit maximisation would need to be derived from conscious political choices....it must be the presumption under a democracy that the purpose of any economic system is, broadly speaking, to provide the mass of people with what they want - or, ideally, what they would want if they had full knowledge of the choices open to them. Handing responsibility for deciding this to bureaucrats or politicians is never likely to provide durably satisfying results. Mechanisms will therefore need to be devised to enable the wishes of citizens to be reflected in the determination of priorities in resource allocation.

Some of what he suggests is stuff we need anyway: more frequent consultation of the electorate (including referenda), decentralisation, limits on political funding, greater transparency in government and greater scrutiny of public officials, a more critical media, and greater accountability. He also warns against protectionism and advocates a more globalist approach.

The rest? Redistribution of wealth and resources from rich to poor, equality of outcome, and the European Union.

Thus the book ends on a most unsatisfying note; quite apart from that fact that there are many who would assert that growth can recover and markets can expand, either through the advancement of technology or geographically if we stopped stifling growing economies with 'development aid' that props up their corrupt governments (to be fair, Shutt does address this as a problem), democratic redistribution of wealth and goods does not really seem like a very holistic replacement for the profit motive—ignoring, as it does, the question of incentives. At the moment, the desire for profit is what drives innovation, expansion, and pretty much every other economic action. Is he suggesting, as so many people do these days, that we should be satisfied with the wealth we have so far created, and merely shuffle it hither and thither until everybody has a decent share? Let us not forget that, even now, what most people do with their days is produce stuff; what is the point of producing stuff if not in the expectation of getting other, or better, stuff in return?

Harriet Harperson—bigoted and wrong

A few days ago, Harridan Harperson—the Worst Person on the Planet™—decided that the whole banking crisis had been caused by too many men in the banking system.

Asked whether the financial crisis would have arisen if more women had been in senior positions, Ms Harman referred to the US bank that collapsed and prompted international turmoil.

"Somebody did say... that if it had been Lehman sisters rather than Lehman Brothers then there may not have been as much," she told GMTV.

Riiiight. So, can I look forward to this fucking evil little witch eating her own words?

"What?" I hear you cry.

As you may know, one of the very dodgy financial instruments that brought the whole banking system crashing down was the Credit Default Swap (and these have made it particularly difficult for the banks to assess precisely how much debt they are holding, and the quality of that debt).

And now, via @gareth_e_clark, it seems that it was a woman who invented these jolly little bundles of fun.

You won't find her on Fortune's list of the 50 Most Powerful Women in Business but Blythe Masters may go down in history as the woman who is responsible for the 2008 collapse of global financial markets. You can't get more powerful than that.

When I started researching credit default swaps --the financial vehicle that Blythe Masters is credited/blamed for inventing and which Warren Buffet described in 2003 in his annual letter to shareholders as "financial weapons of mass destruction", my image of its originator was definitely not pink.

So sure was I that the culprits were testosterone-driven venture capital types that before I had the facts I had already begun my mental argument of why a woman would never have come up with a scheme that could bring global markets to their knees.

So much for fact-less based arguments.
...

As recently as September, Ms. Masters was defending the credit default swaps in an email exchange with The Guardian.

"I do believe CDSs [credit default swaps] have been miscast, much as poor workmen tend to blame their tools."

NC Painter has a short article written by Blythe Masters in 1997 where she describes how the credit default swaps will revolutionize banking. NC Painter added the bold italics.

By enhancing liquidity, credit derivatives achieve the financial equivalent of a free lunch, whereby both buyers and sellers of risk benefit from the associated efficiency gains."

Ms. Masters obviously isn't a devotee of TANSTAAL—"There Ain't No Such Thing As A Free Lunch,"—an acronym made popular in the 1966 novel The Moon Is a Harsh Mistress, which, according to Wikipedia, discusses the problems caused by not considering the eventual outcome of an unbalanced economy.

Oh dear. It looks like Harridan Harperson needs to shut the fuck up and crawl under a rock somewhere and die. I mean, obviously I thought that was the case before I stumbled across this little gem, but this has merely strengthened that feeling.

Bugger off, Harperson, you bigoted, sodding loon.

P.S. HowStuffWorks has a rather interesting way of describing how Credit Default Swaps work. Or, rather, what happens when they don't.

Imagine that you could purchase your friend Jimmy's health insurance policy from the company that issued it. Everything's going smoothly; you're raking in the dough as Jimmy makes his monthly payments. But things take a sudden turn for the worse after Jimmy's legs are crushed in a car wreck. Jimmy can't afford the healthcare costs, but luckily he's insured—by you.

You find nothing but cobwebs in your savings account and realize that you can't pay for Jimmy's health care. Jimmy's still insured (he's faithfully made his premium payments), so who pays the hospital bills? The insurance company sold the policy to you, and you owned it when Jimmy's accident happened. You were caught with the hot potato.

Jimmy's hospital realizes his insurer won't cover his costs and releases him, but he still requires care. So Jimmy sues you to pay up, but you just blew all of your money completing your collection of Pat Boone albums, which suddenly doesn't seem like such a good investment. Even worse, a trove of Boone's albums was discovered in the estates of some recently deceased collectors, and the market value of your collection plummets. You sell the collection for half of what you paid for it and put it toward Jimmy's health care costs, but it's a drop in the bucket. Ultimately, you're forced to declare bankruptcy.

Yup, that's as clear an explanation as I've seen.

Barclays tax avoidance

Here is a big pile of crap from the usually sensible Tygerland (so glad that you have decided not to give up this blogging lark, by the way).

The documents expose Barclays “tax-avoidance” measures—scamming tax-payers out of over £1bn.*

Or, to put it another way, the documents expose the fact that Barclays bank is using perfectly legal measures in order to maximise returns for shareholders.

Of course, if the directors did not take advantage of these perfectly legal measures then they could, ironically, be sued for failing to uphold their fiduciary duty to said shareholders and to depositors.

And Barclays are not "scamming tax-payers out of over £1bn": they are using (all together now!) perfectly legal measures, drawn up by the NuLabour government, in order to deny money to said government. And if you think that the NuLabour government are in any way the same as "the tax-payers" then you are a fucking moron.

Apparently, Barclays have gagged the Grauniad from publishing said memos as part of their tedious and deeply hypocritical moralising about perfectly legal corporate tax avoidance—good.

Let us remind ourselves that the Guardian Media Group, despite making £304 million profit last year, not only avoided paying any tax, it actually arranged its affairs such that it got an £800,000 rebate. And let's not even mention the GMG's use of a network of tax haven-based companies in order to avoid Stamp Duty in its deal with eMap... Oh, whoops!

I have to say that I am with John Band on this.

1. Barclays has done nothing illegal


2. Barclays hasn’t receieved any aid from the UK taxpayer.

… so this isn’t an issue.

Should Barclays request aid from the UK taxpayer at any point, its activities should, obviously, be taken into account when deciding how much of a haircut its shareholders deserve to be given. But at the moment, it’s trying to stop the UK taxpayer from making it take ‘aid’, which is kind-of the opposite…

Quite. Anyone who thinks that any company that tries to stop this disgustingly wasteful government from taking money from it unnecessarily, through the use of (say it again!) perfectly legal measures, is a fucking idiot.

And anyone who backs the Grauniad's position is not only a fucking idiot, but a stinking hypocrite—and a supporter of even bigger stinking hypocrites—and you forfeit any right to pass any kind of moral judgement whatso-fucking-ever. On anything. Ever.

UPDATE: a thought has just occurred... Do you think that those Lefties who view paying tax as a moral duty have ever stopped to think about what the government does with the money that they pay? One could argue that all these Lefties paying their taxes made it possible for the government to invade Iraq.

So, paying taxes is a moral duty that allows the government to immorally (and illegally) invade a sovereign country; but not paying tax and thus, potentially, stopping the government from invading a sovereign country is, in fact, immoral.

Is that the sound of Lefties' heads popping? I think it might be...

* Normally, I would always include the links in quoted passages but, given that that twit, Sunny Hundal, is spearheading this campaign, I am more than happy deliberately not to take part.

Now we are really fucked

It seems that the last vestiges of our freedom are to be handed over to the EU.

European leaders, including Gordon Brown, agreed yesterday that a new regime to tame the excesses of capitalism and regulate the markets should be based on the proposals of a former French central banker, ceding the European Central Bank some authority over the City of London for the first time.

An EU summit devoted to the economic and financial crisis called for new European laws to be enacted before the end of the year establishing a new regulatory system for financial markets, banks, hedge funds and private equity groups.

Reflecting the views of the German and French leaders, Angela Merkel and Nicolas Sarkozy, the summit unanimously declared that the new regime be based on the recent recommendations of a group chaired by Jacques de Larosière, a former French central bank chief, which calls for a "European Systemic Risk Council" with ultimate authority over all financial markets in the EU.
...

While the British agreed that the French economist's report represented an acceptable basis for drawing up a new system, Gordon Brown stressed "we also need to ensure that supervision is done at a national level".

You fucking delusional moron: do you seriously think that, once the EU has got its hands on The City of London, that it is ever going to release its grip?

The EU has been trying to take control of Frankfurt's only major competitor for fucking decades and now you—you fat incompetent fool—you are about to hand it to them on a plate.

Ahead of the G20 summit being hosted in London by Brown on 2 April, the divergence in views over how to regulate the markets is shifting towards convergence, European leaders made clear.

I am reminded of that Adam Smith quote:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

I think that we can designate politicians as trademen of the most lazy, capricious and disgusting kind, can we not?

"Markets must be free, but they cannot be values-free," said Brown.

You fucking moron. As I said a little while ago, when you were wittering on in the same vein...

Markets don't have morals, you fucknuts. A market is simply what happens when a collection of entities come together to trade—they do not have morals any more than a coven has morals. The only morals that a market has are the morals of those individuals participating in that market—and they are not homogenous, even though you stinking, corrupt, brain-washing, bastard politicians have been trying to achieve that aim for some time.

You stupid, stupid, stupid cunt.

Define democracy...

I really do think that it's about time that this bunch of clowns changed their name.

Scottish Liberal Democrat leader Tavish Scott is to demand the Scottish Government ditches its planned independence referendum.

Mr Scott will tell his party's conference that Holyrood ministers should focus on tackling the recession.

He will say debating the minority SNP government's Referendum Bill is a waste of taxpayers' cash.

It has been said many, many times: the Liberal Democrats are fans of neither liberalism nor democracy—surely we can sue them under Trading Standards laws?

Me? I hope that Scotland has their referendum, and I hope that the Scots vote for independence. And then we can ditch the first fucking millstone—these five million looters—from around our necks and get on with being productive.

Because it is instructive to remember that we have been bailing out Scotland for as long as the Union has been in place; we have been bailing that country out ever since its bankruptcy—as a result of the ill-fated Darien scheme—and it is time to fucking stop.

Don't get me wrong: I believe that the Union has served us well, and there is no doubt that Britain benefited from, for instance, the Scottish Enlightenment. But that is long gone, and the Scots are nothing now but looters and parasites upon the productive. Furthermore, their arrogance and intractable stupidity—and, having lived in Edinburgh for a decade, I know of what I speak—ensures that all too many Scots are utterly unaware of just how much they owe to England.

Fine. Cut them loose and then, when they are bankrupt (again) and come crawling to England for a bailout (again), we can decide whether or not we wish to take them on (again). Although I cannot imagine why, in all sanity, we would do so.

Scotland is a busted flush: it produces nothing of any value—even its banks are shit and have been bailed out by the English (again).

It's time to stop.

Hypocrisy, stupidity and the rewriting of history...

"No, no. Look, I am afraid that you're wrong: I am, in fact, this much of a cunt."

... it must be another piece of advice from Gordon fucking Brown.

"Only government can make the markets work in the public interest and not their own interest," Mr Brown told the Scottish Labour conference in Dundee.

Shut your fucking face, you devious fucking cunt: the only interest governments will force markets to work in is the interests of the politicians. And if you think that the politicians work in the public interest, you are the stupidest, most ignorant fucktard on this planet. And a twat to boot.

He added: "We believe that markets need not just money men but morals, that being fair matters far more than being laissez-faire and that banks must always serve the public, not just serve themselves."

You... You... I... Aaaaargh! Markets don't have morals, you fucknuts. A market is simply what happens when a collection of entities come together to trade—they do not have morals any more than a coven has morals. The only morals that a market has are the morals of those individuals participating in that market—and they are not homogenous, even though you stinking, corrupt, brain-washing, bastard politicians have been trying to achieve that aim for some time.

And as for banks serving the public rather than themselves... Have you never read Adam Smith, you thick cunt? Never heard of the invisible hand? Shall I quote the relevent passage to you, you pig-ignorant moron?

It is not from the benevolence of the butcher the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages.

Get it? No, I fear not. How about I bash it into your hideous, deformed, twitching fucking face with this utterly moral-free hammer?

In particular, Mr Brown wants regulators to insist that banks take a more "prudent" approach to capital reserves, setting aside more money during years of growth to protect them against possible slumps in the future.

Really. First, let me quote Timmy on what happened in the past.

Well, yes, but there’s still some small voice at the back of my head telling me that it was Brown, as Chancellor, who changed the tax laws thus discouraging the banks from "over provisioning".

Second, may I just say, "physician, heal thyself, you stinking cunt." How dare you lecture anyone—anyone!—on saving money in the good times against the bad?

Over the good years, you have taken our money—the product of our toil—and pissed it up the wall on buying votes and financing your pet projects; and now, when it has all gone tits up—something that you maintained would never happen again (not that anyone believed you then, for it was vainglorious hubris)—you have borrowed insane amounts of money—our future toil and that of our sons and daughters—to shore up your crumbling edifice and your waning popularity.

You fucking disgust me. And, also, I suspect that you are, in fact, certifiably mental; all of this stuff that you are railing against—you did this, you fuckwit! Only a madman could possibly airbrush his own history in such a way and believe that everyone else had forgotten it too.

Britain's Financial Services Authority will next month outline proposals for more "prudential regulation".

Really. Is that the sound of the bolt sliding home long after the thoroughbreds have fled into the dark night? Yes, I think it may be.

Fucking hellski...

My gob is smacked

Note: I am not Devil's Kitchen.

Every so often, something happens that I just cannot believe. Today is one of those days:

"Sir Fred should not be counting on being £650,000 a year better off as a result of this because it is not going to happen," she said.

"The Prime Minister has said it is not acceptable and therefore it will not be accepted.

"It might be enforceable in a court of law this contract, but it's not enforceable in the court of public opinion and that's where the Government steps in."

I can, quite literally, not believe what I am reading here. A senior minister of the government of the United Kingdom is brushing aside the rule of law and opening the door to the rule of the wishes of the Prime Minister and / or that of the baying mob.

I am stunned. Is this what has come of more than two thousand years of British history? A bunch of spivs have walked in, brushed aside centuries-old rights and turned us into some sort of bizarre feral tyranny ... is that really it?

Iain Dale: the state should not be bound by law

Iain Dale seems to have lost his tiny mind today...

What kind of mindset leads to someone authorising an annual pension of £650,000 for a man who has presided over one of the biggest banking failures in British history? And what does it say about Sir Fred Goodwin that he accepted such an outrageous pension? The answer is simple in both cases. It demonstrates that those who led RBS to the brink of failure have learned little from the experience and believe that it's business as usual.

Oh for fuck's sake... Where to start?

First, the pension agreement will have been made previous to the fuck-up, so it's hardly as though RBS haven't learned: it is simply that they respect the law of contract.

It may not have been a very good contract, but the business has to stick to it. Because, you see, that's the way that the law works.

As Timmy says...

Pensions are deferred compensation. This is part of the contract that he signed all those years ago.

It may not have been a very good contract, it might be that we or you or even they wish it had not been signed in the form it was, but it is indeed a contract.

And tearing up contracts, abandoning the rule of law, is really not an action or activity that is going to help us in the future.

Let us imagine that I was an investor in... ooh... let's say, an internet TV station. And let's say that I had agreed to pay Iain a salary of £50,000. OK? Then let's imagine that lots of people had fucked up (not least in failing to realise a revenue stream) and that, having poured a lot of money into the project, I had decided to close it.

Would Iain think it fair that I demand £40,000 of his salary back? Iain might argue that this wasn't in the contract, that his payment was a salary and not performance-related and that, under the terms of the contract, I had no right to demand its repayment.

What should I then do?

Sir Fred Goodwin should be shamed into renouncing this pension, and if he has no shame, then Parliament should act to take it away from him.

Translation: if Goodwin does not act in a way that accords with Iain's personal sympathies, then the state should simply over-turn the law. Essentially, Iain's personal morals should take precedence over contract law.

I have lost a good chunk of money in RBS shares—that is entirely my fault. Whilst I am very flattered that Iain wishes to fight for my honour, personally I am not so stupid as to advocate that we overturn some basic laws so that I can get revenge.

Still, it is nice to see that Iain agrees with Gordon Brown and his badger-faced sock-puppet...

Chancellor Alistair Darling urged failed banking boss Sir Fred Goodwin to give up his £650,000 pension today – threatening legal action if he fails to act voluntarily to end the controversy.

It is, after all, instructive to see how skin-deep the Tories' idea of liberty is, and what little difference there really is between the two main political parties.

And it is a very neat illustration of why personal morals should never be allowed to be involved in the making (or breaking) of laws.

So, grow up, Iain, and try to see the wider picture.

UPDATE: fair play to Iain for publishing an amendment.

I suspect I should have allowed my head to write that blogpost, rather than my heart.

I should make it clear—although fuck knows that I shouldn't need to—that I find The Shred's pension arrangements deeply fucking irritating—especially when his fuck-ups have deprived me of thousands of pounds. However, you cannot tear down the law on a whim, as that oft-quoted passage from A Man For All Seasons so eloquently states.

"What would you do? Cut a great road through the law to get after the Devil? ... And when the law was down, and the Devil turned round on you—where would you hide, Roper, the laws all being flat?

This country is planted thick with laws from coast to coast, Man's laws, not God's, and if you cut them down—and you're just the man to do it—do you really think you could stand upright in the winds that would blow then? Yes, I give the Devil benefit of law, for my own safety's sake!"

And the government in question is NuLabour: these fuckers do not need any encouragement to flatten the laws that protect us. For fuck's sake, don't give them any rope, for they won't hang themselves with it—they will hang us...

UPDATE 2: oh, Iain, you shouldn't have (yes, your humble Devil is a vain man and flattery will get you everywhere).

And I'm sure that my alma mater will be simply thrilled to have such a distinguished ambassador. Ahem...

A random thought

If I ever have children, I really want them to go to university. Why?

Because—as the bankers have taught us—taking on an enormous debt in return for a near worthless piece of paper is the best way for a total fucking moron to earn millions of pounds.