Storyville: Inside Lehman Brothers, BB4, BBC IPlayer, Director Jennifer Deschamps.

https://www.bbc.co.uk/iplayer/episode/m0009tpx/storyville-inside-lehman-brothers-the-whistleblowers

Lehman Brothers was one of the first dominoes to fall in the 2008 crash which brought down the world’s financial systems. Debts for Lehman Brothers were around $630 billion. Take a little time to think about that. It’s like the idea of infinity. Your mind shies away from how much money that is. Physicists like to simplify things. If your typical hospital, such as the one in Glasgow or Edinburgh cost £100 million, how many hospitals could you build? Boris Johnson proposes 26 new hospital, but he wasn’t very good at sums, someone quietly mentioned that he really meant six, which doesn’t have the same oomph, but he did throw in 20 000 new police officers in a great big tax giveaway before the next election.  Think of the Laurel and Hardy of British politics, Cameron and Osborne, forever telling us there was no money, while quietly shifting money from the poor to the rich. The United Kingdom and London, in particular, the money-laundering capital of the world.  Lehman Brothers isn’t the rogue bank, the cautionary tale that taught us a valuable lesson. As the billions of pounds and dollars levelled in fines show, all the banks were at it. Lehman brothers were offered up to the gods of finance because they were small enough to go under.

Winners and losers. Richard S. Fuld Jr, who was essentially Lehman Brothers, in all but corporate name and whose pitiful salary in 2007 was around $22 million and after appearing before a Congressional Committee and declaring it was a bull market and it ‘wasn’t me’. A common cry from uncommonly wealthy men.  Fuld walks away with $406 million in bonuses and is exonerated.

The sheriff’s department in finance, The Security and Exchange Commission, (SEC) which is meant to step in when financial irregularities occur, in theory, self regulates. What that means in practice is a representative from Morgan Stanley, for example, investigates Lehmann Brothers. Whistle blower at executive level, Matthew Lee, for example, informed the SEC that Lehmann Brothers were running a carousel in which they took around $50 billion off the audited books in America and sent them to Lehmann Brothers in London, then brought the money back, after the audit had taken place, to hide the subprime losses they were making. Trading followed a very basic principle if it wasn’t illegal, do it. If it was illegal still do it, as long as you make money, but don’t get caught. Lee had handed the SEC a smoking gun in a file called ‘Repo 105’.

After six months the SEC hadn’t got back to Matthew Lee but he had been fired by Lehman Brothers.

Self-regulation of the SEC was, in essence, like sending Harvey Weinstein to investigate Jeffrey Epstein.   

In 2018, the moron’s moron, Vietnam dodger, multiple bankrupt and other well-known sex pest, who also happens to be President of the United States, repealed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was set up after the financial crash 2008. Like the Glass-Steagall legislation it was seen as being overly bureaucratic, making the United States less competitive than its counterparts. In other words, let’s fill our boots again and don’t worry about consequences because little people don’t count.

Not only are banks and regulatory bodies for sale, as we’ve seen the position of President of the United States is too. Gearing up for the next election, Mark Zuckerberg, who did so much to get Trump elected has changed Facebook policy to allow politicians to publish alternative truth, ‘deceptive, false, or misleading content’.

Donald Trump was of course elected to ‘drain the swamp’. In 2017 there’s another bull market and bonuses once again reach 2007 level, running around $30 billion for traders. Algorithmic trading follow the crowd meaning a Lehman type crash will happen faster with greater fallout.

When we’re talking about money, put a face to it. There’s not all them here, not all of them are buffoons, but all of them are millionaires, some of them billionaires. Can another Lehman Brother’s crash happen?  Absolutely.

It’s education – stupid!

old etonian

School Swap – The Class Divide. ITV 9pm

I like Nicola Sturgeon, and I did vote for the Nats, knowing well that we’d get Cameron and Osborne, the Oxbridge educated elite whose scare tactics worked a treat in getting enough people on their side to elect them. One of the refreshing aspects of watching the 56 SNP members of Parliament filling their seats in the House of Commons is that some of them actually are common and none of them (as far as I’m aware) have had the merits of an Oxbridge education. Equality of opportunity in education. As Gradgrind says in Charles Dicken’s Hard Times “Now, what I want is Facts. Teach these boys and girls nothing but Facts. Facts alone are wanted in life. Plant nothing else, and root out everything else. You can only form the minds of reasoning animals upon Facts; nothing else will ever be of any service to them.”

But don’t let facts get in the way of a good story. Mr Tulliver in The Mill in The Floss wanted to have his bread and eat it by having his son educated in an academy so that he wouldn’t have any bright notions of pushing him out of the mill, when he was older. The fact that his daughter Maggie (I’d guess based on George Elliot herself) was the one that took to book learning like a duck to water, whilst poor Tom struggled to stay upright, was of no concern. Education was wasted on girls. Fifty percent of the population excluded at a stroke. Fact. People keep having the wrong kind of children. Many of them are poor. In fact most of them are poor. And like their mothers and fathers they are likely to remain poor and uneducated.

The Joseph Rowntree Report in Scotland for example in 2014 stated: ‘There is clear evidence of a persistent gap in attainment between pupils in the richest and poorest households in Scotland. The gap starts in pre-school years and continues throughout primary and secondary school. In most cases it widens as pupils progress through the school years. Most importantly, the poverty attainment gap has a direct impact on school leavers’ destinations…’ Poverty equals poverty and it runs through those from the poorest areas like the lettering through Rothesay rock. It’s education stupid!

But we’ve already had this debate. In nineteen thirties Britain, for example, George Orwell in Down and Out in Paris and London thought he’d be picked on when he went to the spikes to get his ration of bread and sweet tea to survive another night. He was largely ignored, fitting in with the other of society’s drop-outs, but when he was singled out, usually because of his accent, he was seen as a gentleman down on his luck and treated better. The others, in contrast, were seen as part of a diseased body that had to be inoculated against. Fools that had fallen into bad ways. In Britain then only 1 in 1000 had a university education, far less than the ratio in France of even Nazis Germany.

Post-war we had a chance to make lasting changes in education. Private education, paradoxically, of public school boys was on its knees. It needed massive injections of government cash.  Masters of Wellington, like T.C. Worsley made the case quite plainly: ‘we are what we are, and shall be what we shall be, owing largely, if not wholly, to the privileged education, which the ruling class has received in the last forty years.’ In other words, pay up and shut up and we’ll give you the prime minister, government, judges and judiciary,  the privileged land-owning class and captains of industry. Butler blinked and we have it, no foolish taxes, such as VAT, on private education and they retain charitable status. Even Charles Dickens couldn’t have made that one up.  The public and private badge of privilege worn by Cameron and his cronies opens doors to the very select few and excludes the wrong kind of child.

It’s all about standards the privileged like Worsley say, buttressed by that old chimera from the Black Report (and, for no reason, Auden’s ‘seven stars go squawking/ Like geese across the sky’)—falling grades. Scare stories from the nineteen seventies like Panorama’s that focussed on educational fads like child-centred education, indiscipline and chaos of comprehensives such as Farday High, a kind Grange Hill for older folk, but without the merits of Tucker Jenkins.

I shouldn’t really watch programmes like Class Divide ITV 1.  It doesn’t teach me anything and is bad for my health. These are testing time and the Rowntree Report shows that in Scotland only 28% of children from the poorest families, such as those that attend Drumchapel High up the road, perform well in numeracy, compared to the cohort from more privileged schools in our fair cities West end.  In my childhood years I fell into that convenient stereotype, white, working class and male; sure to fail. I wasn’t particularly good at school. The old Scottish adage; they pretended to teach us and we pretended to learn just about sums it up. If I’d really stuck in at school I could have got a degree and became a history teacher and worked my way up to become head teacher of Warminster public school, featured in Class Divide, where annual boarding fees are around £27 000 (fling in a few extras, hey, who’s counting?) or I could have become an astronaut or became Sean Connery.

In the first programme we have headmaster Mark Mortimer accompanying Xander, Katy and Jon to Bemrose. The kids are pleasantly surprised. Xander sums it up. ‘It’s not as bad as he thought it would be’. All three test with ten other new starts. The private school pupil’s reading age is assessed as that of an eighteen-year old. The average pupil at Bemrose reading age is that of a seven-year old, but remember English is often a second language. But it’s more than that. Look at Xander, he’s physically bigger and more mature than his peers. It’s a throwback to reports of malnutrition in the troop intakes and an inability to perform simple tasks that continued up until the Second World War. Xander seems like a nice young Tory peer and I’m sure he’ll look back at his time with poor people with some fondness as he subjects them to yet more government cuts so people like him don’t suffer.  Bemrose as a school shows well. But a dory can’t compete with an educational frigate, nor should it be compared to such. The lessons learned don’t add up.

Education is one part of life’s equation. Educational and economic opportunity is the larger part. As studies such as Robert D. Putnam’s show Our Kids are taking a hell of a beating. Life chances are they’ll end up like their ma and pa. The rich such as those attending Warminster School will go on to one of the top five universities. They will get an internship (bidding starts at £16 000 for the type that mummy and daddy don’t mind paying for) and will go on to have a well-paid career.  That’s what private education gets for you. It offer social connections and wealth offers a buffer against economic and individual shocks. For example, allegations of a leak of where and when Ofsted school inspections would occur were linked to Ms De Sousa and a chain of academy schools, giving them time to prepare their best face, gain a favourable report and boost their league status. You couldn’t imagine Jo Ward, head teacher of 700-pupil secondary comprehensive–and counting they have a statutory duty to take children, many of them immigrants with English as their second language – Bemrose High in Derby, being in the loop and forewarned of an Ofsted inspection. Nor the head teacher of Drumchapel High. And the question needs to be asked, would it really matter?

We live in a more-it-tocracy in which the rich get richer, demand more through their monopoly of the key institutions and get it and the poor get poorer. Both are in the same sea of education, but Bemrose is a dory plucking kids from the waves and Warminster is a frigate intent on getting its charges from A to B and completing its mission.

It’s disappointing to hear Sturgeon talking of failing schools and their pupils needing more tests, starting with those in primary schools.  What we need to do is stop subsidising the rich and privileged. We need to take away their charitable status. We need to stop paying for Catholic and Protestant schools. We should merge them and offer no government support for those that want to set up their own schools. We should offer a clear path and grants for those from the less privileged schools in return for a fixed number of years in the educational districts in which they were educated. What we don’t need Ms Sturgeon is more tests. I thought you were smart enough to know that. D grade.

Quote

William Keegan (2014) Mr Osborne’s Economic Experiment. Austerity 1945-51 and 2010 –

rich man poor menIn response to The Daily Post’s writing prompt: “We Can Be Taught!.”

William Keegan (2014) Mr Osborne’s Economic Experiment. Austerity 1945-51 and 2010 –

The first question when purchasing a book about economics is it worth the money? Let’s look at the evidence. The book costs £10 or thereabouts. This includes delivery. Not bad. But it is very short—or concise—depending on your definition. Large borders on the page. Empty spaces. Empty pages to seem more value for your buck, or pound sterling. Notes. Index. I’d guess less than 50 000 words. You can read it in one sitting. And there is a tendency to repeat the same story or telling phrase twice or thrice in different parts. ‘Pushing on a piece of string’ to describe monetary policy or ‘sadomonetarism’ for the government’s reliance on this as a tool to adjust consumer activity is a favourite.

William Keegan writes for the Observer. Anyone familiar with his work knows that he is an advocate of Keynesian expansion during times of economic contraction in the economy. He does not shirk from using words like Depression.   In the aftermath of the banking crisis of 2007-8 and its aftermath when our then Prime Minister Gordon Brown ‘saved the world’ by galvanising world-wide support for government intervention and injecting government money into banks to keep them afloat and save economies going into free-fall, as they did in the 1930s, there was little or no talk of austerity—not even from the Conservative frontbenches.

That came with Osborne and his crony crew of Cameron and Boris Johnson that run government for the rich. Post-second-world- war London like the rest of the nation suffered from shortages of just about everything. ‘Economists calculated that, in order to balance the books, exports would need to rise not only to pre-war levels, but to 75% above those levels.’ In addition to this the flow of cash that supported the British economy, the Land Lease agreement, running at ‘£2 billion a year’ (multiply that by 100 for nowadays) was, with the war ended, abruptly terminated.  The winter of 1946-7 was one of the coldest on record. Nationwide power cuts. A debt ratio of around 148% more than can be produced by all the goods and service that Britain could produce in any one year.

Osborne’s great con trick was a debt ratio inherited from Gordon Brown and Labour of around 7% and making most observers believe that this was insufferable and like Greece, the road to bankruptcy. As Keegan shows John Major’s government ran a greater debt to GDP ratio. And it’s worth noting if the Greek government went to the troika that issued their loans and were asked to pay it back in fourteen years, bond renewal, as the current government has, and not six months then most governments, of whatever political persuasion, would hardly constitute it as a crisis.

Lots can happen in that time. Even a rudderless ship eventually hits shore. With a growing population and expansion from a low starting point in the economy grass roots of economic expansion have begun to appear. Osborne claims credit for this. Austerity works, even when it doesn’t. His failure to use fiscal policy, build a nation for the future when money literally costs virtually nothing is short-sighted and stupid. By measuring Britain’s progress prior to the shock of 2008 Osborne by IMF projection has set back the county by several years.

Listen, who cares? The problem with Keegan’s polemic is those reading it are already aware of this. Just as they are aware of Tory government’s attack on welfare abuse as a Trojan horse to dismantle the welfare state and increase the flow of money to crony capitalists like themselves.

Those who believe all is light in the world of Tory finance and the government is doing a grand job would not pay for Keegan’s book. The problem isn’t preaching to the converted. The problem comes when the Conservatives win the next election and begin in earnest to dismantle the welfare state. What is to be done?

It’s A Wonderful Life – living in Osborneville.

osborne and clarence

Yeh, I know, it’s that time of year when they show old films and wheel out stories about the Angel of Mons, and of our boys in the trenches singing Kristlenacht with the Huns, and kicking a ball about no man’s land. Or that old Capra favourite It’s A Wonderful Life in which George Bailey (Henry Ford) wishes he’d never been born. I’m from Clydebank, so I know how he feels. One of the key scenes which establishes George Bailey’s creditability is when he uses the money set aside for his long awaited honeymoon to bail out the Savings and Loan. George is down to his last dollar. He holds it up in the air, kisses it and whoops as they shut the door to bankruptcy, and him being charged with a criminal offence, going to jail, but most of all he whoops at not being duped into buying into Old Man Potter’s vision of a town dominated by a man with the most money, a plutocrat who isn’t scared to use any means to get what he wants. As George explained when people were busting the door down to take out their money from the Saving and Loan, it’s not here. ‘You’re money Mary is in Bert’s house and Bert your money is in—’ well, we know how he saved the day.

Clarence the angel showed George what would have happened if he hadn’t be born. This was Second World War American angst. Troops would come home. They’d work hard all their life, but no matter what they did men like Potter were always was one step ahead, and all the money and power went to these pre-war profiteers.

The houses Potter built compared to the houses the Savings and Loan were small fry, built with the defects of, in English estate-agent language: spacious detached residencies, rent or buy, reasonable terms. No Angels allowed! Jesus where to I sign the lease? For of course, this is heaven, a time when Reagan played second fiddle to, and picked up a few tricks from Bonzo, which he used later to great effect. We don’t, of course, live in Pottersville, we live in Osborneville. We never had it so good. If you believe that you’ll believe an angel will come to save us. I vote for the next fucking Bonzo that will stand up to these idiots. Where’s a monkey when you need him?