Much of the heated political debate in the UK at the moment revolves around benefits and the welfare state – specifically poor people who are labelled as everything from ‘scroungers’ to ‘scum’ and worse. Particular vitriol is hurled at the small section of claimants who are unemployed, often temporarily and through no fault of their own.
Payments to the unemployed poor in the UK make up less than 2% of the overall welfare budget but people out of work are regularly pilloried in the tory right wing press as not only responsible for the mistakes of the governments and bankers that have impoverished them, but also responsible for austerity and for blocking future prosperity.
That the Daily Mail et al implies that the working and unemployed poor have more influence and agency than the banking cartels and the political establishment is absurd, yet this propaganda acts as camouflage for the true story.
The truth has been laid bare in recent developments in the EU in response to the calamitous financial crash of 2007/8.
The European Commission proposed a few days ago new rules for the regulation of the EU’s powerful banks, suggesting a ban on the risky activity of proprietary trading and the separation of other trading activities.
The aims were to curtail speculative banking activities, separate retail and commercial banking and avoid the “too-big-to-fail, too-complex-to-unravel” scenario that left taxpayers picking up the tab for the debts of private banks back in 2008.
However, the big European banks have stamped their feet and the EU has already crumpled, they are now proposing what EU Commissioner Barnier calls a new “point of balance,”.
The Haze can translate this compromise easily; it will have no effect on the banking sector apart from adding additional bureaucracy.
Its not hard to see why the banking establishment moved so quickly to defend the status quo – they are BY FAR the biggest benefits scroungers of Europe and on an enormous scale.
A study commissioned by the Green Party in the European Parliament identifies a cash equivalent transfer from taxpayers to the financial sector of (wait for it) € 1,839.5 billion over a five year period (2008-2012). How is this possible? Its a complex subject but four implicit subsidies stand out:
(a) Banks operate in a market heavily distorted in their favour and benefit enormously from the implicit (and free) guarantee that states will bail out the big banks if their very risky trading goes bad.
( b) The banks also make big profits via the manipulation of interest rates on sovereign government bonds which raises the cost of government debt and bites huge chunks out of the hands that feed them.
(c) In the modern era banks also deprive taxpayers of the value of seignorage (the difference between the cost of printing money and its value)
(d) Banks today have the spectacular privilege of being allowed to create the vast majority of our money supply as debt and then charge us interest on it.
The Liikanen report, produced by a group of experts and chaired by the Govenor of the Bank of Finland Erkki Liikanen laid the ground for the legislative proposal that the European Commission has already retreated from.
The Greens are in no doubt about what the new “point of compromise” really means.
“The current proposal looks like a purely symbolic political act that allows Commissioner Barnier to claim that he followed the Liikanen Group’s suggestions without, in fact harming the large French or German banks,”
quelle surprise – aye readers?
Banks will not want the Liikanen report implemented, for fear of losing the implicit subsidies that the status quo affords them.
Only breath-taking distortion and outright lying is allowing the financial elites of Europe to get away with being benefit scroungers on such an enormous scale.
Somebody (else) had to be blamed for the financial crash of 2007/8 and while the innocent poor across Europe have been scapegoated, the real culprits have remained free of scrutiny, out of jail – and they are still at it.
Want to see the real ‘benefits street’ ? Head down to Canary Wharf and The City of London.
With European legislation to reign in the banks already defeated, we are now being set up for the long con, expect another round of bank failures, taxpayer funded bailouts and earnest hand wringing soon enough.
In the UK, the coalition government is blowing up another property bubble with thinly disguised delight – those who expect a different outcome from 2008 are deluding themselves.
Real wages show the longest decline in 50 years and with private debt racing back to the same levels seen in 2008 things can only end one way – another bust.
Effective reform of the monetary and banking systems are beyond the scope of this article but one thing is certain – no political will for reform will emerge until the vast implicit subsidies doled out to wealthy financial institutions are exposed.
Then we can start reforming the banking system so that it works for and not against us. Perhaps then we can also stop harassing the innocent working class victims of their sociopathic greed and fecklessness.
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Arrived here from a link from The Guardian.
Excellent article and absolutely true. The rich just get richer in the UK, and better protected, while the rest of the country sees declining wages, declining purchasing power and declining well-being every year.
A new report now shows the UK has the worst living standards in more than 50 years, and Gideon and Cam-moron keep talking about economic ‘growth’. Only for the bankers and the rich.
Have you bookmarked, as you’re saying what many of us already know is true 🙂