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Gordon Brown: Yesterday's Zero...Today's Euro.

Discussion in 'European Politics' started by khothla, Oct 16, 2008.

  1. khothla

    khothla New Member

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    If you asked Gordon Brown about the future of his political career 60 days ago, an honest answer could be nothing but a tempest-ridden one. Today, Brown, the British premier is surfing a wave of acclaim on the back of a teetering financial markets.

    The change in the fortunes of Gordon Brown lie in the steps his administration has taken to bail out failing banks by nationalising them whether in part or wholesale. This is not happening in Venezuela, or Cuba or some Central Asian republic regressing to the discredited old communist school. This is happening in the heartland of the capitalist world: London, New York, Paris, Berlin, etc.

    Gordon Brown, a zero yesterday, is today’s Euro-superhero. As free market ideologues cut from the Reaganomics cloth shudder, the reality facing them is to accept the fact that unbridled self-interest driven by ‘animal-spirits’ alone has seeds of its own destruction which have to be tethered by an active participation of government in business.

    Whether they call it monitoring or supervision... all these are but euphemisms that mask the return of state-control on the menu of government policy.

    At the end of the day, markets, left alone, do fail. And when they fail as they have, you just need control. If prevention is better than cure, why not admit that unqualified capitalism is doomed to fail.
     
  2. BigRob

    BigRob Well-Known Member

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    What market and where has ever been totally "left alone"?
     
  3. 9sublime

    9sublime Active Member

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    It seems to me, in a very simplified view, markets don't fail when left alone, they go through cycles of prosperity and collapse. Controlled markets go through the same cycles, but to a lesser extent.
     
  4. khothla

    khothla New Member

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    Banks dictate conditions of US financial bailout
    Alex Lantier

    Source to Article


    14 October 2008

    The 936 point rise on the US stock market yesterday ( Monday 13th) was the American ruling elite’s initial verdict on the extraordinarily favorable terms the government is granting to financial firms in the $700 billion bailout passed by Congress on October 3. Far from heralding improving economic conditions for working people, the Wall Street surge reflects the financial establishment’s success in extorting massive sums of money from taxpayers.

    Several factors played important roles in the market’s rise. A technical correction was likely after the massive falls of last week, when the Dow Jones Industrial Average fell 2,236 points, or 21.33 percent, to 8451.19. The announcement of bank bailouts in Europe totaling trillions of dollars—under conditions where national governments are competing to rescue their respective banks—contributed to expectations that Washington would continue to bail out its own banks. Another major factor was undoubtedly a series of announcements by US officials underscoring that US banks would essentially dictate the terms of the bailout.

    Late yesterday morning, news broke that the CEOs of the largest US banks would meet with US Treasury Secretary Henry Paulson, the former CEO of Goldman Sachs, to discuss the terms of the bailout. The Wall Street Journal wrote, "Expected to attend were banking executives including Ken Lewis, CEO of Bank of America; Jamie Dimon, CEO of JPMorgan Chase; Lloyd Blankfein, CEO of Goldman Sachs Group; John Mack, CEO of Morgan Stanley; and Robert P. Kelly, CEO of Bank of New York Mellon."

    A Treasury spokeswoman said, "Treasury and [the Federal Reserve] are meeting today with leading financial market participants to finalize details on a financial market stabilization initiative." The Journal wrote, "One person familiar with the matter said Mr. Paulson is expected to discuss details of his new plan to take equity stakes in financial firms, among other points."

    The meeting’s roster underscores the social character of the bailout. A handful of current and former top banking executives gathered for a meeting, publicly announced a few hours before it took place and closed to the public, to discuss the conditions under which they will receive hundreds of billions of dollars in public funds. The fact that, in a healthier political climate, these executives would face investigation and prosecution for overseeing the predatory lending practices that led to the housing and credit crises was simply ignored.

    In this meeting of the godfathers of American finance, no one was present who represented the overwhelming majority of the American population. Indeed, the participants live in a world of wealth and power that has no resemblance to the existence of ordinary working people.

    One could start with Paulson himself, whose former bank stands to benefit handsomely from the bailout which he has authored. While at Goldman Sachs, Paulson amassed a personal fortune of $700 million.

    The list continues:

    According to Forbes magazine, Ken Lewis last year brought in a salary of $20.13 million, and his holdings of Bank of America stock are worth an estimated $112 million.

    Jamie Dimon received a 2007 Christmas bonus of $14.5 million and holds $190 million in JPMorgan stock.

    Lloyd Blankfein received a Christmas bonus of $68 million and his holdings of Goldman Sachs stock were worth $414.5 million last year.

    Vikram Pandit received a $165 million signing bonus from Citigroup last year, together with a $2.7 million salary for a few months of work and $48 million in stock options.

    John Mack received $41.8 million in compensation last year, and his 2007 holdings in Morgan Stanley stock were worth $220 million.

    These firms’ stock, and particularly that of Goldman Sachs and Morgan Stanley, rose rapidly on news of the meeting with Paulson. Goldman stock rose 25 percent to $111 a share, and Morgan Stanley stock rose 87 percent to $18.10 per share.

    Other financial stocks also rose significantly. Citigroup rose 13.25 percent to $15.98, Bank of New York Mellon rose 15.77 percent to $30.68, and Bank of America rose 9.2 percent to $22.79. JPMorgan stock fell in initial trading on fears of further write-downs, but after the meeting announcement it rose from just over $40 per share to close at $41.64.

    Neel Kashkari, the assistant secretary of the treasury and ex-Goldman Sachs executive who is overseeing the $700 billion bailout, confirmed in a speech yesterday that his goal—in purchasing both equity (shares of stock) and assets of financial corporations—is to concentrate money in the hands of the biggest banks.

    Kashkari told a Washington DC meeting of the Institute of International Bankers: "We are designing a standardized program to purchase equity in a broad array of financial institutions. As with the other programs [in the bailout], the equity purchase program will be voluntary and designed with attractive terms to encourage participation from healthy institutions."

    This emphasis on bailing out supposedly "healthy" banks reflects the increasingly shaky position of many of the major banks. They are jockeying for influence over the government handouts that will determine which banks profit, which suffer, and which close.

    Writing 125 years ago in the third volume of his masterwork, Capital, Marx noted, "So long as things go well, competition affects an operating fraternity of the capitalist class... But as soon as it is no longer a question of sharing profits, but of sharing losses, everyone tries to reduce his own share to a minimum and to shove it off upon another. The class, as such, must inevitably lose. How much the individual capitalist must bear of the loss, i.e., to what extent he must share it at all, is decided by strength and cunning, and competition then becomes a fight among hostile brothers. The antagonism between each individual capitalist’s interests and those of the capitalist class as a whole then comes to the surface..."

    This anti-social struggle between the various factions of the bourgeoisie is expressed in the secretive and exclusive character of the planning of the bailout.

    The Treasury has set up the bailout’s asset purchases—which are to be carried out by private firms—so that only the largest companies will be able to participate and rake in the lucrative fees the government will pay out. Kashkari said: "Our initial procurements set high capability standards: for example, securities asset managers had to have at least $100 billion of dollar-denominated fixed-income assets under management. This is critical given the magnitude of the program—up to $700 billion. Treasury believes it would not be fiscally prudent to ask a firm that only had experience managing only a few billion to manage $100 billion."

    The Treasury is reserving the other roles in the bailout for an elite group of financial and legal firms. Kashkari stated that the Treasury Department had considered only three candidates for the role of "master custodian firm," whose function, according to Kashkari, would be to "hold and track the assets we purchase as well as run and report on the auctions we use to buy the assets." The Treasury also contacted six law firms as potential consultants on the bailout’s stock-purchase program. Kashkari added, "We received two proposals, and selected [top New York law firm] Simpson Thatcher [& Bartlett] on Friday."

    The result of this bailout—a major consolidation and restructuring of the US banking industry—will be quite harmful to the interests of the population. The smaller number of surviving banks will have even more market power to set interest rates and control access to credit for working people, students and small businesses.

    While the best-connected firms will profit immensely from the bailout, the bourgeoisie and its political representatives insist there is no money for elementary social needs of the working class, such as foreclosure relief, universal health care and the right to a secure retirement. The major presidential and vice presidential candidates have uniformly called for cuts in existing, already inadequate, programs such as Social Security and Medicare.

    The stock market’s rise today is not the advent of a new era of prosperity for the American people. Rather, the bourgeoisie is celebrating the Great Heist of 2008.
     
  5. Galaxygazer

    Galaxygazer New Member

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    He is not my Euro, He is a Zero for me! All this man seems to do at the moment is borrow money and spending it, then borrowing more and charging it to the tax payers, then spending it, then somehow borrowing more!!

    There is a phrase I once learned 'You should not live beyond your means' This man clearly has not learned this! He has lived beyond his own means and now is living off everyone elses means! (so to speak):(
     
  6. The Scotsman

    The Scotsman Well-Known Member

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    ......the mans an idiot......soon he'll believe he can walk on water......hope he drowns.

    The mans' a waste of rations
     
  7. Galaxygazer

    Galaxygazer New Member

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    The thing is I actually think this guy already thinks he can walk on water! But I wont be in the queue to help him when it finally dawns on him that he can't!!!
     
  8. EuroSceptic

    EuroSceptic New Member

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    I don't know about superhero......he had more on his plate that he can handle at this time........Fatcat Bankers before the Treasury Select Commitee; not one of them had a banking qualification........then his new adviser is accused of sacking the man who blew the whistle on the banks because he warned them of impending disaster and was sacked with a gagging order; which he has now broken........the PM's man was the man; it is reported who had him sacked........now what does that tell you about the people at the top ?

    The PM; fomer Chancellor for ten years sold off the UK God reserves at a low price and borrowed and spent and squandered taxpayer's money like there was no tomorrow and failed to save for a rainy day; that rainy day has arrived and the UK; so the IMF and the Head of the Bank of England is in for the worst recession; depression of all........so much for the PM's declaration of: "No Mor Boom and Bust"........the nation is Bust........yet he and his team refuse to look in the mirror to see who contributed to this unholy mess.

    And........when they are out of office; the sooner the better. when asked about the recession; depression they will turn round and say:

    "Sorry I could not possibly comment; not in that job anymore".

    The PM also; it was reported wanted a law that prevented the public from seeing how they spent public money on their expenses; Cameron the Tory leader vetoed that and now they will have to reveal just how they spend the taxpayer's money; a gravy train it seems and rather embarrassing for some.

    Then we have the four Labour Lords........unfortunately caught out by reporters who set them up.......admitting that they take thousands of pound n bungs to help change the law for generous business people who wish to bribe them.

    All in all..........British politics is at an alltime low and has not respect from the electorat as collusions, corruption and contempt for those who gave them power continues.
     
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