Friday, 12 December 2014

Who Regulates The Regulators?

The Ponzi pyramid of self-justification that underpins all free market structures is always a part of the problem rather than a part of the cure.

Who guards the guardians?
Who governs the governors?
Who moderates the moderators?
Who regulates the regulators?

The Financial Conduct Authority (FCA) is not fit for purpose.
Nine out of 12 board members were simply parachuted across from the board of the disbanded FSA - that's the FSA that failed to suitably regulate the banks prior to and during the 2007/08 crash.
The FSA's regulatory style was so light touch as to be reiki.
Reiki regulation!

The FSA was a prime example of regulatory capture - a form of political corruption that occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or special concerns of interest groups that dominate the industry or sector it is charged with regulating.

In response, the FCA must be seen to be regulating with the utmost integrity.
Some hope.
Bizarrely, the FCA created a false market in major insurers' shares after botching a press briefing - the share prices of major insurers plunged after the Telegraph published the story.
A 225 page report released this week goes further: "The strategy and manner in which [the media strategy] was pursued was... high risk, poorly supervised and inadequately controlled. When it went wrong, the FCA's reaction was seriously inadequate and fell short of the standards expected of those it regulates."
The regulator tilted the markets!

And the FCA response is to repay some executive bonuses received in an extended window of self-justification and to immediately rush out a long delayed report into the mis-selling of annuities in a blatant display of exactly the sort of public relations and branding that regulatory bodies should not be in business of needing to undertake.

But this is the norm - other recent examples include OFWAT mistakenly overestimating water companies' capital costs when setting price levels and then refusing to impose London Stock Exchange disclosure requirements on non-stock market listed companies, or PricewaterhouseCoopers selling tax avoidance on an industrial scale with the strategy only coming to public knowledge via internal leaks.

Why is it nearly always whistleblowers and (Wiki)leakers but very rarely regulatory bodies and institutional self-policing that reveal the financial miscreants?.

The big picture is one of pure Randian psychopathy - there's minimal red tape to act as an obstacle for the steady flow of sociopathic outsiders to join the psychopathic insiders as cowboy capitalism races to the bottom of its barrel...
... but in the world of football, the situation is worse - neo-Randian!.

Nothing is regulated on any primary level of operation and there are supportive and corrupted flow networks integrated globally to prevent any hope of integrity rearing its head.

All six of the primary bodies allegedly looking into football integrity and matchfixing are compromised in their purpose via their ownership.
Indeed, in certain cases, a more motley crew of interested parties could not have been created even if one had set out explicitly with such purpose!
Fragmented cartels of corruption!

Football governance verges on the non-existent and, even at best, is merely a branding and self-justification process.

Certain entities and structures are systemically corrupt...
... in fact, I'll rewrite that sentence - there are very few bodies and networks in global football that are not systemically corrupt!
Regulation is invisible or malleable self-regulation that equates to no regulation at all - agents, dark pools, betting markets, insider trading, matchfixing, money laundering, third party ownership, mainstream media compliance in a restricted narrative while, once again, whistleblowers and (Wiki)leakers expose, bottom-up, what any decent system would implement top-down.

Inversion capitalism - asset stripping and financial profiteeering from the monetising of a brand, tax avoidance and evasion, antisocial competition practices with minimal regulation (for self-justification), alongside state punishment for 5th Estate types who get in the way - the Obama administration has started more prosecutions against whistleblowers than all presidents combined over the last century.
20 whistleblowers have been murdered in India in the last five years.

And the corrupt operations in the distorted infrastructures attract disproportionate investment as investors understand that increased returns are gained by psychopathic control in a lightly regulated marketplace, compounding up the cycles of corruption over time.

FIFA, the FCA, UEFA, PwC, the Premier League, Barclays, the Glazers, the FA Sports Betting Integrity Unit, Gestifute, Goldman Sachs, all these oil companies from interesting geopolitical locations that are buying up British football teams, private equity, dark pools, the control of whistleblowing bodies by those who should be whistleblown, derivatives markets, offshore financial centres and markets, NGO-lite structures etc - pure neo-Bayesian corruption entities beyond the reach of any economic theory as such theory may only be reactive to this juggernaut of inversion free-marketry where there are no rules.

Who regulates the regulators?

Friday, 15 August 2014

The New Global Finance Capital Elite - by Dr Jack Rasmus

A practice and loophole that emerged around 2008, US corporate tax ‘inversions’—the latest version in a long list of US transnational corporation tax scams—have taken off in 2014. A tax inversion is set in motion when a US based corporation buys another company offshore and then manipulates the tax codes of both countries to extract the greatest net tax reduction. The United Kingdom, Ireland, Switzerland and others are favorite locales for ‘inversions’ of late.  And US corporations and industries at the forefront of this new wave are typically pharmaceutical, technology, cable tv, entertainment, medical equipment, finance, and related retail companies—with many others waiting in the wings as well.
Briefly, here’s how it works: After purchasing an offshore company, the US company then designates its global headquarters as located in the new country of its purchase. With its headquarters now outside the US, the company can now transfer profits made in the USA, via various ‘intra-company price transfer’ tricks, to the foreign based headquarters and country where effective tax rates are lower and where various US tax code offshore loopholes are available to US transnational corporations.  The US purchasing company can also transfer its offshore debt from the purchased company to its US operations in turn. The higher debt and resulting higher interest payments on that debt are deductible from US corporate taxes, according to US tax law. The ‘inversion’ deal thus provides a double tax cut advantage to the US corporation. But that’s only the beginning.
The gains to be realized are not only from US tax code manipulation by the purchasing non-financial corporation. Shadow bankers and their financial speculators (i.e. hedge funds, private equity firms, investment banks, insurance companies, etc.) are also big beneficiaries of the Merger & Acquisition process at the heart of what appears on the surface, in the case of the tax inversion, as ‘just’ another transnational US corporate tax scam.
Lower taxes for the US corporation from the inversion means more retained corporate cash on hand, and the prospect of more future earnings as well, all of which in turn drives up the company’s stock price. That makes the company even more attractive to investors like hedge funds and equity firms, which buy up big blocks of both the purchasing and purchased companies’ stock. Banks and shadow bankers that jump into the process at the outset, buying up company stock in the process, also provide original funding for the company’s purchase. Others jump into the stock as the acquisition deal proceeds. Once concluded, early and latecomers both then reap a nice capital gain from the eventual stock price appreciation that almost always follows the deal.
So the profits gained are not just from tax reduction for the US purchasing company, but are financial and related to asset price speculation associated with the ‘tax inversion’ process and acquisition itself.
The practice of inversions gained public attention earlier this year with the US drug giant, Pfizer, attempting to purchase the UK drug firm, Astrazeneca. Pfizer offered more than $69 billion to purchase Astrazeneca, but was rebuffed by the latter’s shareholders, who wanted even more.
The key role of hedge funds and shadow bankers in the Pfizer-Astrazeneca deal was clearly evident from the start, since Pfizer did not put up the lion’s share of its $69 billion offer for Astrazeneca from its own retained cash. The big block of financing was to come from its hedge funds and other shadow banker partners and outside investors.
In many cases hedge funds (aka Vulture Funds) and other shadow bankers are the initiators and instigators behind the acquisition. They are at the forefront, prodding US corporation managements to ‘invert’.  A good example is the recent case of Walgreen, the US drug retailer.  Its major investor, the hedge fund, Jana Partners LLC, pushed hard for Walgreen to move its headquarters to Switzerland or the UK. This kind of pressure from funds like Jana Partners makes it difficult for corporate CEOs to resist, since the hedge fund can always turn to the company’s stockholders and have them put pressure on the management to do the deal, if they don’t want to deal with a stockholder ‘revolt’ and want to keep their corporate jobs.  Major stockholders see the opportunity for significant capital gains from stock appreciation in tax inversion deals, and together with the Hedge Funds demand that management undertake the corporate purchase and headquarters relocation.
In other words, while it appears that corporations gain at the public taxpayer expense through corporate tax reduction—which they clearly do—even greater gains come from financial speculation that benefit investors, big shareholders, and senior management of the purchasing company as well.
In the Walgreen case, last week it was announced that Walgreen was backing off the purchase—for now. The timing was not right, apparently, coming just before a midterm election in the US for a company dependent on US government subsidies to its customers with which to buy its drugs. But the hesitation by Walgreen is probably temporary, to resume after the November elections when the ‘tax inversion’ loophole gets addressed in comprehensive US corporate tax revision legislation that US corporations have been demanding of the Obama administration and Congress for several years now.
Corporate managers as well as hedge fund speculators benefit nicely from tax inversions. They are typically offered a ‘sweet incentive’ by their hedge fund investors and other big shareholders to do an inversion deal. So it’s not just the possible threat of a stockholder revolt, instigated by the company’s in house big fund investors, that incentivizes more corporate managers to jump on the tax inversion bandwagon. Senior managers stand to gain greatly as well from stock price appreciation in the wake of the deals.  Often their personal income tax bill from selling their own personal stock holdings after the company’s stock price rises from the deal is covered by their companies. Their own personal capital gains from the deals is often ‘grossed up’ by their company (i.e. paid for out of the company’s earnings) as part of the deal.
So all levels of financial speculators benefit from these ‘inversion’ deals—shadow bank investors, hedge fund managers, big stockholders, and top corporate managers with significant stock holdings and compensation—all realize big capital gains from stock price manipulation that is at the core of tax inversion deals. Again, it is not just about tax avoidance; it is about stock price manipulation and huge capital gains. Long term the benefits for the company may be from corporate tax reduction; but short term the big speculative profits rip-off is from engineering stock speculation and other forms of financial manipulation.
In the past year there has emerged a veritable ‘wave’ of corporate inversion deals erupting.  And the potential loss to US corporate tax revenue, should the trend continue, is considered significant by many estimates.  The Obama administration this past summer raised the possibility it may support legislation to curb the practice.  But the political outlook of such before the midterm elections in November 2014 is practically nil, so far as passage of legislation to check the trend is concerned.  While bills have been introduced earlier this year by a few liberal Senators, the Obama administration so far has been mostly just talking about supporting such legislation, or offering proposals tweaking the requirements for allowing inversions, not actually preventing them.  What’s going on politically in the administration and Congress is therefore just ‘grandstanding’ to make it appear they are concerned. Nothing will happen before the November midterm elections.
Political elements of both parties in the USA are eyeing the period after the election, during which the US tax code and general corporate tax revisions and cuts will be taken up.  An institutionalizing of rules governing corporate tax inversions going forward will undoubtedly be part of that comprehensive corporate tax revision. Tax inversions are not going away; they have only just begun.
The ‘inversion’ trend is another example of the growing dominance of the global finance capitalist elite, who are deeply entrenched in the USA and UK in particular, but worldwide growing in terms of numbers and absolute wealth as well.
This elite is deepening its control of nonfinancial companies and are increasingly directing those companies increasingly toward profits growth from financial manipulation as the primary corporate activity—in this case ‘inversions’ and corporate mergers and acquisitions activity.
Instead of making profits by making real things that require real investment and the employ real people, the focus of global capitalism is increasingly toward more financial asset investment—i.e. investment that produces even quicker, more lucrative profits growth than old fashioned ‘real’ investment that makes things that creates jobs and income for people to buy the things.
Global capitalism is growing progressively less interested in making things for profit than it is in generating forms of money capital as profit. Those engaged in financial asset investment (i.e. financial elite) are therefore accruing an ever larger share of global income and wealth for themselves, while those who were once participating in investment producing goods are finding their share of income in steady relative decline.
Global shadow banks now control more than $70 trillion in investible assets, according to such ‘radical’ sources as the Financial Times global periodical. And very high net worth investors, about 200,000 individuals worldwide with annual income flows of $30 million or more from existing assets—i.e. the new global finance capital elite—now own close to half of that $70 trillion in investible assets. And their assets are projected to rise another $10 trillion by 2017.
Inversions’ and related M&A activity are but one example of a growing emphasis of global capitalism on financial forms of speculative ‘investment’ in the 21st century. Inversions are but the latest example of this global relative shift toward financial speculative investing.
The growing shift by non-financial corporations toward ‘portfolio’ investing; the growing trend toward speculating in M&A, derivatives, old and new forms of bonds, dark pools of stocks, and other proliferating forms of securitized financial securities; the explosive growth of shadow banking institutions worldwide; the spread of liquid financial markets in which to speculate; and the accelerating ranks and assets of very high net worth investors worldwide—two third of whom are located in the US and Europe—are all examples of the new trends in 21st century global capitalism as it shifts toward greater reliance on financial profit making.
US politicians will not only fail to stop inversions, but following the November 2014 midterm elections, watch for both wings of the US Corporate Party in the USA to come together and legislate a new comprehensive corporate tax cut.  Included in that new code will be new terms governing future global corporate tax inversions—as well as a likely major reduction in the official US corporate tax rate to 28% or less that has been promised by both Obama and the Republicans for the past two years but has been postponed until the coming November midterm elections.

Wednesday, 11 June 2014

Savages, Barbarians, Civilized Men - The Civilized Capitalist Machine - Deleuze and Guattari (1972)

... In a certain sense, capitalist economists are not mistaken when they present the economy as being perpetually "in need of monetarization," as if it were always necessary to inject money into the economy from the outside according to a supply and a demand. In this manner the system indeed holds together and functions, and perpetually fulfills its own immanence. In this manner it is indeed the global object of an investment of desire. The wage earner's desire, the capitalist's desire, everything moves to the rhythm of one and the same desire, founded on the differential relation of flows having no assignable limit, and where capitalism reproduces its immanent limits on an ever widening and more comprehensive scale. Hence it is at the level of a generalized theory of flows that one is able to reply to the question: how does one come to desire strength while also desiring one's own impotence? How was such a social field able to be invested by desire? And how far does desire go beyond so-called objective interests, when it is a question of flows to set in motion and to break? Doubtless Marxists will remind us that the formation of money as a specific relation within capitalism depends on the mode of production that makes the economy a monetary economy. The fact remains that the apparent objective movement of capital - which is by no means a failure to recognize or an illusion of consciousness - shows that the productive essence of capitalism can itself function only in this necessarily monetary or commodity form that controls it, and whose flows and relations between flows contain the secret of the investment of desire. It is at the level of flows, the monetary flows included, and not at the level of ideology, that the integration of desire is achieved.

So what is the solution? Which is the revolutionary path? ... Is there one? - To withdraw from the world market, as Samir Amin advises Third World countries to do, in a curious revival of the fascist "economic solution"? Or might it be to go in the opposite direction? To go still further, that is, in the movement of the market, of decoding and deterritorialization? For perhaps the flows are not yet deterritorialized enough, not decoded enough, from the viewpoint of a theory and a practice of a highly schizophrenic character. Not to withdraw from the process, but to go further, to "accelerate the process," as Nietzsche put it: in this matter, the truth is that we haven't seen anything yet.

Saturday, 4 January 2014


Barclays: "You Are Football."

"And You Are A Wunch Of Bankers" chorused the fans...

If Barclays Bank were a human being living in Britain, the individual would be sectioned under the Mental Health Act for a peculiar combination of psychopathy and self-harming.

If Barclays Bank were a human being living in California, three strikes and you're out would mean that the bank would now be serving four concurrent life sentences.

Systemic and sociopathic, private and psychopathic abuses AND reputational damage are the bank's core competencies.

By constantly pushing the boundaries of legality and illegality and then some, the bank invites chaos into its world and ours.
And has done so for decades.

It all started with the support of the apartheid regime in South Africa and, in the last half decade alone, we have witnessed accusations of money laundering, the senior management bonus scandal, subprime mortgage corruptions, tax avoidance via an elaborate circuit of Cayman Islands companies, promotion of tax havens, having to make tax repayments over false claiming of tax credits, fined for conflict of interest in the Del Monte buyout, while for its part in the Libor rate-fixing scandal the bank had to pay the FSA the biggest fine it had ever imposed in its history, the bank has also been fined for attempting to manipulate and fix the US electricity market, and then there is the ongoing Qatari capital raising regulatory investigation, and the major role played by the bank in the misselling of payment protection insurance etc etc.

But the biggest self-harming reputational damage is still to come...
... when, in the window ahead, it is shown that both systemic and private match fixing dominates the world's self-styled biggest league, the Premier League, Barclay's global image will take a further battering - the bank not only rips us all off repeatedly but also profits from a brand that is destroying our sport.

Disinvest or close your accounts with this monstrosity now.

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