hms iron duke

hms iron duke

Monday, 19 September 2011

Rotten Eggs and Stinking Onions

“…what one finds is that aristocracy seems to emerge from the very midst of democracy as the result of a natural effort”.

Alexis de Tocqueville

Alphen, the Netherlands. 19 September. Watching former International Monetary Fund chief Dominique Strauss-Kahn bear his soul to the French people was painful. His dalliance with a chambermaid in a New York hotel was explained away as a ‘moral failing’. Strauss-Kahn’s ‘confession’ followed a now well-trodden path of false humility from a cynical member of Europe’s über-class. And yet, the very people who caused the banking and Euro disasters, of whom he is one are asking for even more power to fix their crises.

It is the European Onion which created the new Euro-Aristocracy born of political and bureaucratic patronage and the Bankokleptocracy that supports them. They have skilfully exploited the democratic and sovereignty deficit at the Onion’s core. What a strange place Europe has become when no-one quite knows who controls what and what a dangerous moment this is for European democracy. It is as though the twin crises are inadvertently recreating the l’ancien regime swept away by the French Revolution in 1789, albeit a la l’Europe.

The 2008 banking crisis is not over. We are merely at half-time. 60% of economic output will be lost by the time the banking crisis and the Euro meltdown are eventually resolved. Indeed, our children will be paying for the consequences of banker’s greed and political insanity for many years to come. The casino banking which caused the crash is alive and well. None of the fraudsters who robbed millions of us of income and interest have been jailed. They continue with their champagne life-styles and their bogus bonuses whilst governments cut public services and contracts to sweep fraud under our carpets.

Last week a 31 year old Ghanaian, Kweku Adoboli, was arrested in London for allegedly gambling away some 1.5 billion Euros whilst working for Swiss bank UBS. Who will be in charge of the internal UBS investigation? It will be a certain Mr David Sidwell, the former Chief Financial Officer of JP Morgan bank, who were at the forefront of the so-called ‘forward setting’ that led to the 2008 crash.

The British Government said it would support the findings of a review that called for retail banking (the bit you and I use) to be separated from casino banking. But, of course, nothing is to happen until 2019. The over-mighty subjects in the banks pretend to complain but they know all too well it is mere theatre. They are above and beyond the control of any and all governments and in any case deals have been done behind the scenes in today’s health and safety equivalents of dark, smoke-filled rooms...and well beyond the public gaze.

Of course, Mr Adoboli, if found guilty will be hung out to dry. He will face an exemplary sentence. There will be much talk of him being a rotten egg in an otherwise sound basket of financial services. Nothing could be further from the truth. He was able to inflict such damage precisely because the entire edifice is rotten to the core with rotten eggs integral to a system that lacks any moral compass.

And then we have the Euro-crisis. I now await the day when it is announced that a super-tax is to be imposed upon me to pay for the Greeks and their southern neighbours who can no longer be bothered to work or pay taxes; and to do so the value of my Euro savings has been slashed. Which brings me to the most galling aspect of this crisis; at last week’s meeting in Poland our wining, dining leaders once again tried to wish the disaster away. No decision action was taken, no finger-prints could thus be found at the scene of the crime.

Instead, having created this appalling mess our Dear Leaders are now claiming that the only way forward is fiscal union. Now, if I was a real cynic I would suggest that the crisis was built into the Euro from Day One precisely so that the über-class could at some point by-pass democratic oversight. Fiscal union is but one short step from political union and with it a huge increase in the role and cost of the Onion in our daily lives.

The European Parliament? It is incapable of providing effective political oversight. Indeed, the only difference between it and a travelling circus is that the latter at least provides entertainment, even if most of the clowns are to be found in Parliament.

It is time therefore to go back to first principles. First, the banks must be brought under proper legislative control and that means national parliaments working together. If they threaten to leave Europe as a result then those banks must be denied the right to trade in Europe and thus forced to sell their European operations to European banks under proper control. Second, if Greece (or any other) fails to bring its budget deficit down to a level commensurate with its treaty obligations it must be forced to leave the Euro. A time limit must also be established for that to be achieved. Third, no new treaty can be agreed by the Euro-Aristocracy that passes more power to the Onion without a referendum in each member-state. Fourth, planning must now begin for the orderly replacing of the Euro, either with national currencies or with a Euro focussed on an inner-core to which other currencies are pegged.

I know I am going to pay a price for this mess but I want to know now what it is and be assured that what emerges is transparent and effective.

The bankokleptocracy is full of rotten eggs; aided and abetted by a Euro-Aristocracy that has hijacked a once noble idea for narrow gain – the Onion. When are we ever going to learn?

Julian Lindley-French

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