Debt, The Big Issue

james armstrong james36armstrong at
Wed Oct 6 19:41:46 BST 2010

A distorting  mirror.

I  met a young pal ,
call him an investment banker, at King’s Cross this week. 

Wilson works in
‘the City’- in Gresham Street
, EC2. Have you ever wondered what these guys 
do?   I have, so I asked him.

“I’m opening up packages of 
assets which Lloyds Bank acquired during the  bubble, to try to assess what they consist of
and what their value is.”

“What did you find?”

“Some of them are virtually valueless”

“That means that until now no one knew what was in these
‘assets’, these ‘packages’?

“That’s right”


“Then they were sold under false pretences for hundreds of
thousands of pounds ?............ 


That’s big time fraud!


“But nobody’s been prosecuted! ?  That’s astonishing!  Why?”

“You’re right.  The
difficulty is this,  each person just
does his own little job in constructing these ‘assets’ and ‘packaging’ them and
‘trading’ them, and selling them on.  (Wilson advanced his thumb and forefinger in a
pinching gesture) “How do you decide who it is that is being fraudulent?”


I know Wilson’s
take home pay is sufficiently over £40,000 to make him furious at the tax
system which then takes 40 per cent of his earnings, he says (boasts).

Wilson  and Julia
(another youngster doing the same job for similar remuneration), are not what is termed “City  high flyers”. Until the ‘crash’ their job was
working with a team in what they called “The middle office”  constructing virtual investment portfolios.
Several teams in one bank worked in competition allowing the traders to compare  the different virtual portfolios and adopt
one (or not) to  run with.

Julia worked incredibly long hours for Morgan Stanley, (just
before the crash she took her bonus and resigned). Now she works for JP Morgan.
revealed the source of the  funds  which  the Hedge Funds invest. “You don’t
qualify as an investor with a Hedge Fund  unless you have £1million to invest.  Sometimes
the  entry fee is higher ”.

This explains another phenomenon.

Why are such huge pensions, salaries and bonuses paid to
CEO’s etc?

The conventional ,but implausible excuse is that it needs high rewards  to attract the best brains.

This gives an alternative explanation. 

A reward packages running into many hundreds of thousands, or a
million  pounds is the entry fee into the
exclusive club- The Casino Economy.

“A Distant Mirror” , by Barbara Tuchman is an excellent book
on the  calamitous history of the 14th

The Casino Economy  in
the City of London, (think of
finance as the mirror economy where values and reality are  reversed ) threatens the real economy of
manufacture, agriculture, trade and commerce by which the rest of the world
lives. This casino economy screws up the world of housing and land and now threatens 'sovereign funds' - the total reserves of nation states.  …… and HM Government thinks it can rely on
casino earnings – “The City” …. to fund the national debt  which, William Hague informs us this morning
on BBC Radio Four, pays (largely to the same City casino),  £44 billion per annum in interest.  Time for change? James 






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