The City is about to bring Britain down

I have often blogged about banker's bonuses and wages. Yet the self-serving creeps who run our finances (and organise a large part of the world's money) have often been excused or been let off by the British political and media classes because either they (a) 'create huge wealth for the country as a whole'. (It is true that this industry added gross value of £86,145 million to the UK economy in 2004 - ONS Blue Book 2006.) Or (b) 'if we attack them' it is claimed, 'then they will take their banks and finance houses and go elsewhere!' The counter argument was never allowed to surface. The urgent need for the British people to capture and control this Frankenstein before it wrecked its world, and us along with it, was never heard.

Now the argument has moved from urgent to critical. The City is going to topple. And because of the chains that British politicians have tied the rest of us to the City with - we face a serious danger of the collapse of a significant part of our economy.

First Eurozone leaders have agreed to surrender sovereign power to a European super bank with ultimate power over all the Eurozone banks - in six months. (FT 1 July.) They are about to create the biggest and the most powerful bank in the world. It will live in Frankfurt.

There are immense counter pressures against this agreement - not least in Germany itself and among its regional savings banks. And there are nerves about London ; 'London as Europe's strongest financial centre has to be included...' said Andreas Schmitz, president of the Association of German Banks.  Nevertheless this step is inevitable if the Euro is to remain an international currency.

To be in contact with the centre of the Euro both US and Asian money will need to be based primarily inside the zone. London may have 'culture' and some very nice (read lucrative) property. But Frankfurt - and maybe Paris - will have the Euro. It's a question of where you think the current crop of bankers and other international investors' hearts lie.

More important is the Libor. You can search a lot of the heavy press to find out what this means. Libor means the London InterBank Offered Rate. And what that means is that London banks set the rate, based on their own interbank lending, for $360 TRILLION of financial products world wide. And what have the naughty boys from the best schools been doing?
'We are being dishonest by definition and (we are) at risk of damaging our reputation in the market and with the regulators.' When a Barclays banker wrote this EMail on December 4, 2006 he was of course referring to Ed Balls 'light touch' regulation - so no harm done there eh! (FT 30 June and see previous blog 'Balls.)

Frankly they have blown it. Now everyone knows that all the big British banks were fiddling inter-borrowing rates to manipulate the `Libor and to 'grow' their own and their mates' fortunes thereby. At a stroke our colossi of the Finance Industry in the City, have destroyed the credibility of their own institution. The City is not only corrupt. All international financiers already knew that. It is corrupt with everybody else's money. It was given the international responsibility of creating and maintaining a flat playing field for the whole world's financial dealings, and it built a hill at one end. That's it. Too much of other peoples' dosh at stake here. International money in London will drain away.

So. 'Freeing the market'; 'unleashing the entrepreneurial energy of the City' (Margaret Thatcher, Tony Blair) is leading to ... the crash of the City.

It is no longer a case of light or even heavy touch regulation. We need to reconstruct finances, both national and international, from the ground up. And we need to freeze and seize the current holdings before they too are destroyed or squirreled away.

And then we can use money for its real purpose; to build up the productivity and social endeavors of human beings as they try to make and build the world that they need. Money, like all aspects of out economy and civilisation, in the service of human beings.  Step one would be the nationalisation of all of our banks. We need to take that step quickly, or the redevelopment of Britain's economy will become an increasingly remote fancy.