the filthy rich

The war of austerity is bogus

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It needed to be said and well done to Michael Meacher MP for saying it: the war of austerity is bogus, fake, manufactured. The solution is simple says Meacher: the filthy rich are getting filthier rich, tax them. Of course – if you’re filthy rich, you will not ever even notice being slightly less filthy rich.

Meacher’s article is well presented and appears very well researched. Meacher consistently shows competence and capablity and is willing to address the big, important issues – often even against his own party’s policies. We need far more politicians like Meacher.

 

How to kickstart the UK economy – at zero cost to 99% of us

By imposing a capital gains tax charge at 28% on the seriously rich 0.003% we could create 1.5m jobs over the next two years

Michael Meacher

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According to the annual Sunday Times Rich List, the richest 1,000 persons now sit atop of £414bn, a sum more than three times the size of the entire UK budget deficit. The richest 1% of the population, about 300,000 persons with an income of more than £3,000 a week, are estimated to possess wealth of about £1tn. The richest 10% control wealth of about £4tn. To put these figures in perspective, Britain’s total GDP is £1.45tn.

Consider first that minuscule group in the stratosphere at the top, Britain’s thousand richest. In 1997 they held assets of £99bn, but they took full advantage of New Labour’s being “intensely relaxed about people becoming filthy rich” to nearly quadruple this to £336bn by 2010. That process of gargantuan enrichment now means that in order to get access to this exclusive club, one needs personally to command assets of at least £450m to get into the top 200, £750m to get into the richest 100, and no less than £1.4bn to break into the top 50.

It’s not only that the very rich have colossal wealth, they also overwhelmingly monopolise it. The richest 1% of the population own a quarter of total UK wealth, and the richest half control no less than 94% of total wealth. Ownership of land is even more skewed: 69% of it is owned by 0.3% of the population.

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What, then, should be done? In the short term, the most feasible approach is to impose a capital gains tax charge at the current rate of 28% on the topmost layers of wealth, the £155bn gains amassed by the 0.003% over the last three years. That would yield £43bn, more than enough to generate the public investment to create 1.5 million jobs over the next two years. This could then steadily be extended to the remainder of the top 1%, which would provide the funds to widen and deepen the early recovery.

A wealth tax and land value tax, the details of which would have to be carefully drafted, should then follow in the medium term, and would achieve several purposes. They would resuscitate a public sector ravaged by the Tory ideological assault, curtail the grossest excesses of inequality that have disfigured the last three decades, and lay the foundations for an industrial and technological revival without which British living standards cannot be sustained. And all this without burdening the remaining 99% of the population.

Michael Meacher’s blog

Continue ReadingThe war of austerity is bogus

Bank of England gives yet another £50B to bankers

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“…quantitative easing – printing money by another name – is the last resort of desperate governments when all other policies have failed.”

George Osborne, speech January 9 2009

The Bank of England announced today that it intends to do a further £50billion round of Quantitative Easing. Quantitative Easing involves pumping money into the economy in an apparently futile – it hasn’t yet been shown to work – attempt to stimulate the economy. There is a problem that there is very little to show for so many billions after billions that have already been squandered on Q.E.

It appears that it’s austerity for the vast majority and rolling in lolly for the rich elite. No money for the NHS for the plebs, plenty of billions to stimulate the markets for rich multi-millionaire traders and bankers to get yet richer.

There is an argument that the poor would stimulate the economy far more – since they would have to spend the money.

 

 10/2/12:

Quantitative Easing is stimulating commodity trading, not the real economy

As the economy slides towards recession, the Bank of England today announced today it was creating a further £50bn worth of ‘quantitative easing’ (QE).

If you read articles on the topic in the media, you will see statements like “the Bank is ‘printing’ money” or the Bank  will “pump a further £50 billion in to the economy”.  Both these statements are misleading.

QE actually involves the Bank of England buying financial assets – usually government bonds – belonging to institutional investors and sitting in Banks. The Bank buys these assets with newly created central bank reserves.  These reserves can only be held by banks – they do not and cannot go to businesses the real economy.

As explained in nef’s Where Does Money Come From?, central bank reserves are used by commercial banks to settle payments with each other.

By ‘pumping’ more reserves in to the intra-bank clearing system the idea is that banks will feel more confident about making loans to the real economy because they will know that other banks are in a stronger position to settle with them.

In addition, by buying up ultra-safe government bonds in vast quantities and thus pushing down the yield (the interest received on holding) on these assets, the central bank hopes to encourage investors to buy higher yielding corporate bonds – which again provides money for real businesses.

QE may reduce long-term interest rates, but there is little evidence it has stimulated commercial banks to start lending more to businesses, in particular small businesses, or soften the conditions banks are attaching to loans.

In fact the most recent figures published by the Bank show that net lending – the amount of loans minus the amount repaid – to small businesses has contracted by six per cent in the year to November 2011. And this despite the banks being given small business lending targets by the government through ‘Project Merlin’.  Not much wizardry there then.

The hard truth is that commercial banks are still in a process of ‘de-leveraging’, more keen on getting their loans repaid and building up their capital base than making new loans to productive businesses in what is perceived to be a risky real economy.

Evidence suggests the additional funds provided by QE are more likely to be used by banks to create more speculative credit, not least commodity speculation,  that provides shorter term returns.  As a result, the money supply in the real economy is contracting just at the point where new investment is most needed.

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Continue ReadingBank of England gives yet another £50B to bankers

A good year for the Rich and it’s only February

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This article by Cut n Paste from http://bristol.indymedia.org.uk/article/703298

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Bristol loses 28million pounds worth of services and big business has a great month of bonuses (paid for by us) and tax breaks, while at the same time announcing  job cuts for thousands of people.

So first up we have Lord Oakeshot resigns as treasury spokesmen moves to back benches in disgust at Osborne’s farcical Project Merlin which will lead to bankers receiving huge bonuses again.

Barclays boss, Bob Diamond will get a bonus of least £8m, they are planning to cut about 4,000 jobs in its retail bank.

Stuart Gulliver of HSBC at least £9bn.

Stephen Hester, chief executive of Royal Bank of Scotland, is to take a £2.04m bonus for last year at the same time they are making plans to cut 2,300 jobs, which ironically they announced only hours after its former chief executive Sir Fred Goodwin had publicly apologised for the Edinburgh-based bank’s downfall.

Eric Daniels, his soon-to-depart counterpart at bailed-out Lloyds Banking Group, is to receive £1.45m,  while the Lloyds Banking Group is also expected to cut thousands of jobs.

As the Guardian states:

Oakeshott, a former City financier and a close ally of Cable’s, had been scathing. Speaking while still a Liberal Democrat Treasury spokesman, he laid into the Treasury’s negotiators saying: “They’ve got an awful combination of arrogance and incompetence, most of them couldn’t negotiate themselves out of a paper bag.”

Oakeshott, who was not in the government but spoke for the junior coalition partner on Treasury matters in the Lords, stood down shortly after he criticised officials working on the government’s deal with the bankers and said: “If this is robust action on bank bonuses, my name’s Bob Diamond.”

So massive bank bonuses and huge job cuts seem to be the deal of the day.

http://www.guardian.co.uk/politics/2011/feb/09/lord-oakeshott-quits-banking-deal

Then we have a change in Tax law that massively benefit the rich and means we lose out hugely in tax revenues which could fund public services and stop cuts.

As George Monbiot states in the Guardian:

“At the moment tax law ensures that companies based here, with branches in other countries, don’t get taxed twice on the same money. They have to pay only the difference between our rate and that of the other country. If, for example, Dirty Oil plc pays 10% corporation tax on its profits in Oblivia, then shifts the money over here, it should pay a further 18% in the UK, to match our rate of 28%. But under the new proposals, companies will pay nothing at all in this country on money made by their foreign branches.

Foreign means anywhere. If these proposals go ahead, the UK will be only the second country in the world to allow money that has passed through tax havens to remain untaxed when it gets here. The other is Switzerland. The exemption applies solely to “large and medium companies”: it is not available for smaller firms. The government says it expects “large financial services companies to make the greatest use of the exemption regime”. The main beneficiaries, in other words, will be the banks.

But that’s not the end of it. While big business will be exempt from tax on its foreign branch earnings, it will, amazingly, still be able to claim the expense of funding its foreign branches against tax it pays in the UK. No other country does this. The new measures will, as we already know, accompany a rapid reduction in the official rate of corporation tax: from 28% to 24% by 2014. This, a Treasury minister has boasted, will be the lowest rate “of any major western economy”. By the time this government is done, we’ll be lucky if the banks and corporations pay anything at all. In the Sunday Telegraph, David Cameron said: “What I want is tax revenue from the banks into the exchequer, so we can help rebuild this economy.” He’s doing just the opposite.

So how did this happen? You don’t have to look far to find out. Almost all the members of the seven committees the government set up “to provide strategic oversight of the development of corporate tax policy” are corporate executives. Among them are representatives of Vodafone, Tesco, BP, British American Tobacco and several of the major banks: HSBC, Santander, Standard Chartered, Citigroup, Schroders, RBS and Barclays.

Reading Treasure Islands, I have realised that injustice of the kind described in this column is no perversion of the system; it is the system. Tony Blair came to power after assuring the City of his benign intentions. He then deregulated it and cut its taxes. Cameron didn’t have to assure it of anything: his party exists to turn its demands into public policy. Our ministers are not public servants. They work for the people who fund their parties, run the banks and own the newspapers, shielding them from their obligations to society, insulating them from democratic challenge.

Our political system protects and enriches a fantastically wealthy elite, much of whose money is, as a result of their interesting tax and transfer arrangements, in effect stolen from poorer countries, and poorer citizens of their own countries. Ours is a semi-criminal money-laundering economy, legitimised by the pomp of the lord mayor’s show and multiple layers of defence in government. Politically irrelevant, economically invisible, the rest of us inhabit the margins of the system. Governments ensure that we are thrown enough scraps to keep us quiet, while the ultra-rich get on with the serious business of looting the global economy and crushing attempts to hold them to account.”

http://www.guardian.co.uk/commentisfree/2011/feb/07/tax-city-heist-of-century

And finally surprise, surprise The Con Dem government is full of ex wankers oh sorry bankers as the Mirror states:

“Our investigation found that of the 498 Tory MPs and peers 134 have been or are employed in the financial sector, this includes 70 of the party’s 305 MPs. Among the 193 Conservative peers, more than a third work or have worked in finance or banking. The Tories also stand accused of introducing laws that give a full tax exemption for British companies’ tax haven branches and letting them get away with an 8% tax rate for profits diverted to havens through internal financing. Altogether there are more Tory MPs who have been on the banks’ payroll than the total number of Lib Dem politicians. Labour MP Tristram Hunt said: “The Conservative Party is as much as ever the preserve of a small elite of professions of which financial services is by far the largest.”

Among the Cabinet members with links to the City are Pay-master General Francis Maude, who has worked for Solomon Bros and Morgan Stanley; Leader of the House of Lords, Lord Strathclyde who was chair of Trafalgar Capital Management from 2001-10; Cabinet Office minister Oliver Letwin, who worked for NM Rothschild & Son from 1986-2009; International Development Secretary Andrew Mitchell, who worked for Lazard Bros from 1979-2009; and Commons Leader Sir George Young, who worked for the Samuel Hill merchant bank.

Eleven Tory MPs and peers have worked for Barclays, including Richard Bacon MP, Jesse Norman MP, former Chancellor Lord Lawson, Earl Howe and Andrea Leadsom MP. A further eight Conservatives have been at Rothschild, including John Redwood MP, Mark Garnier MP, former Chancellor Lord Lamont and Jacob Rees-Mogg MP.

And four worked for Lehman Bros, the company whose collapse sparked the financial crisis.”

http://www.mirror.co.uk/news/politics/features/2011/01/10/conservative-party-links-to-fat-cat-bankers-revealed-by-daily-mirror-investigation-115875-22838080/

So there you have it a great year so far for a corrupt regime filling its own pockets and setting themselves up for a nice chief executive / consultant job in the finance sector.

See that our ex prime minister sorry war criminal Tony Blair has a nice cushy job at JP Morgan  (only £5 million a year, must e a hard life) who were instrumental in the financial crisis and are currently destroying the world with their financial terrorism.

http://news.bbc.co.uk/1/hi/business/7186975.stm

Continue ReadingA good year for the Rich and it’s only February