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Tuesday, February 15, 2011

George Monbiot on how modern British politics works

If you haven’t seen it already there’s a quite wonderful piece by George Monbiot in today’s Guardian, on why the British government won’t be condemning short-selling.

To understand its position, you must first understand that the government is not managing the economy for the people of this nation. It is managing it for a tiny transnational elite, a kind of global gated community. To the people inside the gates, who fund the Conservative party, who own our politics, the media and the banks, the rest of us are an inconvenience, to be bribed, threatened or fooled.

The politicians who get to the top in these circumstances don't just present no threat to the gated community, they actively do its bidding. That is why Tony Blair succeeded where his Labour predecessors failed.

And in another story about the Tories and their City pals, here’s the Daily Mail.

David Cameron was accused of ‘gross insensitivity’ last night after it was revealed that internships with City hedge funds were sold to wealthy Tories’ children for thousands of pounds to raise cash for the party.

At the Conservatives’ Black and White Party, millionaire Tory supporters paid around £3,000 each for their children to have the golden chance of spending a week or two with a number of top finance companies and banks. If they do well and win a full-time job, they could join the ranks of City tycoons who earn multi-million pound bonuses.


jock mctrousers said...

Yes, Monbiot is doing some sterling work. His last piece on the new corporate tax breaks is really disturbing. Possibly the most disturbing thing is that you're the first left writer I've found to mention it ( no, the WSWS did too, but still....).

In this vein, please read this interview with Nicholas Shaxson:

author of what looks likely to be the book of the year:

Treasure Islands: Tax Havens and the Men who Stole the World

Here's a taster from the interview:

" this entity, the City of London Corporation, is no ordinary municipal authority. It is an authority that has managed to carve itself out of many of the laws and regulations that apply to the rest of the United Kingdom, in a process that has lasted for centuries. It is an island of special privileges. One colourful marker of the discontinuity between the City of London Corporation and the rest of the country is that the Queen, when she crosses into the City, does this strange ceremony where she is met by the Lord Mayor and the City police raise a red rope and the Queen crosses, and there’s the Lord Mayor’s sword, etc. There is this whole colourful ceremony, and it’s treated now as just a ceremonial thing for tourists, but it is a marker of the fact that the City is politically and constitutionally a different entity that has, through the power of finance, been able to carve itself out a separate jurisdiction.

Another example is the voting rights in the City. The City is composed of 25 wards and when ward elections are held for the Common Council, which is the main decision making body, not only do the residents get a vote but the corporations within the City get to vote as well. This is not the workforces of those corporations but the corporate management. So you have Goldman Sachs voting in a British election. It is completely bizarre. There are all sorts of historical reasons behind this but the fact is that the City is a very different constitutional and political entity within the United Kingdom, and in a sense not only is it the centre of this offshore spider web but is also an offshore island in its own right. The City of London has a Lord Mayor but London has a Mayor as well, so this is really a tale of two cities. "

neil craig said...

Moonbat is a corrupt genocide supporting fascist, paid by the civil service funded Guardian to tell any lie scare stories to try and convince decent people that we need to give power and money to the eco-nazi parasites.

Anonymous said...

A minor pedantic moment, Neil.

Monbiot correctly calls it "naked short selling". You wrote "short selling". It's important to distinguish between the two. Naked short selling is the bad one. Monbiot says short selling as a whole is controversial but he is channeling a hive mind opinion that isn't correct. Short-selling is crucial to a working market.

In naked short selling players bet on an given equity losing value, and sell equities they don't have without knowing where they will get said stock to sell. The practice can be predatory for equity values.

Short selling in its decent form is a bit weird to understand but very necessary. It's not naked in the sense that before selling stock you don't own you secure it on a loan.

The need for short selling is that just as a minority of traders can find themselves losing money on a bullish trend, so must a minority of traders find ways to profit on a bear trend. This goes for both individual stocks and market trends.

The difference is that people who lose money on a bullish rally are called chumps and nobody envies them or cares about their plight. On the other hand, people who make money on a bearish market are envied and thus accused of sabotage. It's mob mentality. In truth, without short selling markets would easily implode at the sight of the first cyclical bear. Nobody denounces short selling when the market is going up; we only hate it when the other guy makes a profit out of our bad calls.

Banning short selling would mean stocks would only yield profits for traders when they go up. This would create more market bubbles than we get now. And once bubbles burst or stocks start to go down people would have no way of making a profit. Without the incentive to trade and sagging demand the stocks would likely continue to fall. Pop.

Short selling means that you can be either right or wrong both when the market is bearish and bullish.

Naked short selling: yeah, no justifiable reason to have that.

David Lindsay said...

The more attention paid to internships and the like, the better. Access to things like politics and the media is now restricted to those who can work for little or no pay after university, and often during the university vacations as well.

Britain has now descended into self-parody, in which everyone who is anyone has known each other since they were 19 at the oldest, and routinely a great deal younger than that. Any figure or movement that emerges from outside the Golden Circle is completely ignored, and thus killed off.

Even David Miliband or George Osborne can expect to be treated as a serious figure, something completely unimaginable when there was proper competition.

Neil Clark said...

hi jock- thanks v. much for the links.

anonymous- thanks- though you still haven't convinced me that short-selling shouldn't be banned too! but at least all of us can agree that naked short-selling should be banned- everyone except the British govt and Tory MEPs that is.

david- totally agreed. In the 40s, 50s, 60s and 70s, Dave M and George O would never have got as far as they have done.
there were some politicians of real quality and intellectual depth around then.