Ice wars

The Arctic is home to unique human communities whose livelihoods and communities are increasingly challenged by the effects of climate change. Melting ice, stronger storms, growing erosion, thawing permafrost, more unpredictable weather and other direct effects of climate change are already impacting indigenous communities. But warming temperatures and melting ice are also making possible more commercial, transport and military initiatives in the region. New sea routes are being opened, new enterprises are being planned, new drilling and mining licenses are being issued and new tourist destinations are opening up. The movement of more people to the Arctic region will have significant effects on indigenous populations, cultures and livelihoods.

The Arctic is inhabited by approximately 4 million people of whom 400,000 are considered indigenous. Approximately two-thirds of the total population in the Arctic lives in relatively large settlements, although indigenous peoples living in circumpolar countries is characterized by small, widely separated communities. With “longer ice-free periods now available to explore for hydrocarbons, a new scramble for oil and gas could occur” especially if the price of oil and gas increase and new technological developments take place. In 2009, 15 percent of petroleum production came from onshore Arctic production. But 30 percent of the world’s undiscovered gas and 13 percent of world’s undiscovered oil is in the Arctic. New maritime routes in the Arctic raise new issues about sovereignty and offer expanded opportunities for military operations. The stakes are getting higher for control of territory in the Arctic. Greenland is thought to sit on vast mineral deposits but previous efforts at large-scale mining were unsuccessful because of the expense of working in the bitterly cold climate.

The question is who in the Arctic will make these choices.

The UN estimates that there are about 5000 different indigenous peoples, with a population of about 370 million and occupy 20 percent of the world’s territory. The Arctic peoples make up 2%. Like other nomadic peoples, mobility has long been recognized as characteristic of Arctic communities as they have traditionally moved in response to seasonal changes and to support of livelihoods, whether hunting, reindeer herding, fishing or foraging. Also like nomadic peoples in other parts of the world, there have been increasing pressures on Arctic indigenous communities to settle in villages rather than to move continually.

Inuit Circumpolar Council which represents the Inuit of Denmark, Canada, the US and Russia launched its Circumpolar Inuit Declaration on Arctic Sovereignty on 28 April 2009, stating “it is our right to freely determine our political status, freely pursue our economic, social, cultural and linguistic development, and freely dispose of our natural wealth and resources.” The ICC represents all 155,000 Inuit – from Russia to Greenland -- on matters of international concern.  In fact, article 26 of the UN Declaration on the Rights of Indigenous Peoples enshrines their right to own, use, develop and control the lands they have traditionally occupied.

Trade Wars

The Pacific War against Japan was never a contest between democracy and fascism, as we have been taught. Neither the British nor the U.S. or the Dutch had ever entertained democracy for Asian peoples. Chiang Kai-shek remained a U.S. ally throughout the war and British historian Christopher Thorne has commented that, “if the term ‘fascist’ is to be employed in a non-European context for the 1930s, to no regime is it more appropriate to attach it than that of the Kuomintang in China.”

Leaving aside the conspiracy theory that the American government knew of the Pearl Harbor attack would take place and chose to allow it to happen, there is no question that an attack from Japan was probable. Contrary to U.S. political folklore, Japan’s subsequent attack was launched on a U.S. naval colony in Polynesia not U.S. territory (Hawaii only became a US state in 1959). And it cannot properly be described as a surprise.

In 1932, the Ottawa Conference cut off Japanese trade with the British Commonwealth, including India. Three years later Japan was forced to curtail shipments of cotton textiles to the Philippines while U.S. imports there remained duty free. (At the same time, U.S. tariffs on many Japanese goods surpassed 100%.) Japan protested about American, British, Chinese, and Dutch encirclement strangling its economy. So in 1937 Tokyo began its conquest of China in earnest, wiping out 140,000 Chinese civilians at Nanking while proclaiming a desire to promote economic development and prevent Communist domination of Asia.

Four years later negotiations between Admiral Nomura and Secretary of State Cordell Hull broke down over the Japanese request for equal trading rights in Latin America in return for allowing U.S. capital penetration of China.

On July 2, 1941 the Japanese decided to move troops into southern Indochina. Washington, having broken Tokyo’s purple code, immediately knew of the decision. On July 21, 1941 Japan signed a preliminary agreement with the Vichy government of Marshal Henri Petain, leading to Japanese occupation of airfields and naval bases in Indochina. Almost immediately, the U.S. and Britain froze all Japanese assets in their countries. Radhabinod Pal, one of the judges in the post-war Tokyo War Crimes Tribunal, later noted that the U.S. embargo presented a “clear and potent threat to Japan’s very existence.”

On July 24, 1941 FDR informed the Japanese Ambassador that if Japan would refrain from putting troops in southern Indochina Roosevelt would use his influence to have Indochina neutralized. But this message failed to reach the Japanese Foreign Ministry until July 27.

On July 26, 1941 Tokyo disclosed its intention to move troops into southern Indochina. The U.S. promptly froze all Japanese assets in the U.S. With Japan importing 90% of its oil, half of that from the United States, Admiral Richmond Turner, Director of the War Plans Division of the Navy Department, stated that it was “generally believed that shutting off the American supply petroleum [to Japan] will lead promptly to an invasion [by Japan] of the Netherlands East Indies.” FDR publicly stated that this reaction would be a justification for war. The New York Times characterized the U.S. move as “the most drastic blow short of war.”

For the Japanese military, it was “now or never.” The Western powers controlled and were choking off access to the raw materials on which Japan's national existence depended. With Washington refusing to lift its embargo unless Tokyo surrendered Chinese territory it had fought for years to conquer (Note: Washington objected to being shut out of the China market, not Tokyo's atrocities there), Japan was left to choose between submitting to U.S. demands or going to war to obtain the oil and other vital raw materials available in the East Indies and Southeast Asia.

YOU LUCKY WORKERS

Capitalism is a complex society with apparently inexplicable booms and slumps, so it is good that we have experts like the following genius in charge. Lord Lipsey, a Labour member of the House of Lords economic affairs committee recently came up with this gem. 'The employment figures mean that, whether or not the recession is working, it is not really hurting — at least not really hurting the people who still have jobs and don't claim benefits," he said. "An unemployment-lite recession has nothing like the social impact of a job-crushing one." He said it is much better to be poor with a job than without one.' (Daily Telegraph, 22 February) Better with a job than on the dole? Wow, we wonder what years of economic study lie behind that profundity.RD

Talking socialism

Cde Donnelly will open the March 20th Branch talk with the subject The Rise of Chinese Capitalism

Cde Cumming will open the April 17th Branch talk with the subject The Curse of Capitalism

The proposed Day School programme
Saturday, 11th May

 POLITICS TODAY

1pm to 2.15pm The Rise of Scottish Nationalism Vic Vanni
2.15pm to 3.30pm The Occupy Movement John Cumming
3,45pm to 5pm The Threat of War Brian Gardner

Patriotism? No thanks!

“Yet some can be patriotic who have no self-respect, and sacrifice the greater to the less. They love the soil which makes their graves, but have no sympathy with the spirit which may still animate their clay. Patriotism is a maggot in their heads.” - Henry David Thoreau

Nation-states have a logic of their own. So insidiously is the logic purveyed through the state’s institutions that it becomes common-sense. Like religion, it encourages devotion to a vague and ill-defined abstraction. Even in its most innocuous forms, patriotism is irrational. The World Cup and the Olympics are known for their unabashed displays of nationalism. Flags, patriotic chants, and cross-national rivalries are the order of the day. Football is the quintessential illustration of sociologist Benedict Anderson’s argument that nationhood itself represents an “imagined community”  –  an affinity between strangers who will never meet or hear of one another, but are bound by a mental image of shared history, often mythologized, and of common destiny. Nowhere is that community imagined more fiercely than in the football stadium, and among the hundreds of thousands gathered in pubs and living rooms across the country communing with those in the stadium urging their national team forward against those of other countries. Do hundreds of thousands of Scots gather in front of their TV sets on St Andrews Day to celebrate their nation by singing “Flower of Scotland”? No chance. But that’s exactly what happens when Scotland takes the field in a World Cup or Euro match. However, so eroded are national boundaries in the modern game that it mocks the very idea of a flag, anthem and passport that distinguishes between “us” and “them.” FIFA, recognizing the reality of massive and constant migration accelerated by economic globalization, allows a player to effectively “choose” a country to represent at senior level, even if they’d played for a different one all the way up to Under-21 level. The  cosmopolitan make-up of today’s football teams also negates the idea of a shared history lionized in national flags and anthems.*

The world moves on and nationalism is becoming less and less relevant in face of increasing globalisation. National differences and antagonisms between peoples are daily more and more vanishing owing to the development of the bourgeoisie, to freedom of commerce, to the world market, to uniformity in the mode of production and in the conditions of life.

 Many a good Scot do not consider themselves as nationalist, instead they much  prefer the more noble label ‘Scottish patriot’. A patriot, so the idea goes, does not look down on other nations, but ‘instead only’ loves his own. The "Scottish nation" is meaningless: all "nations" are mongrel, a mixture of so many immigrations and mixings of peoples over time that the idea of a Scot is largely comical. Nation-hood is not the same as culture. There are many varied cultures within Scotland which is not some homogenised whole but like most countries, is a diverse and complex tapestry. If you take a person from Berwickshire and someone from Northumberland, separated by only a few miles and introduce them to a German, he's not going to be able to tell the difference, by looks, by dress, by accent, by mannerisms. Take somebody from Glasgow and Thurso and i am sure the German will recognise a difference in at least the accents.

Nationalism is the egg that hatches fascism it has been said. And patriotism is but the begetter of nationalism. Patriotism is highly toxic. When ingested, it corrodes the rational faculties. It gulls people into believing their leaders. It’s  wheeled out whenever a leader needs to improve his ratings. It masks those who benefit most from state policy. And it destroys the ability of people to come together across boundaries, to take on those with the most power: the multinationals.

All borders are fabricated myths, and with them the false concepts of immigration, emigration, nationality, national pride and patriotism. It is not the rich who ascribe topatriotism. They are perfectly at home in every land. Russian and Indian oligarchs living the high life in London. Celebrated Scots like Sean Connery and Jackie Stewart take up residence in foreign climes. Patriotism is not for the likes of wealthy.

The lottery of place of birth should not be used to cloud judgement. One cannot feel pride for being born Scottish, that was just the luck of the draw, you might well have been born Welsh. Patriotism is a fraud whereby would-be rulers "self-determine" to impose their vision of nationhood on an entire community. Nationalism is an ideology of separation, of hatred for the ‘other.’ It is a creed of oppression. What is necessary is to develop human solidarity, the instincts of mutual aid that enable us to survive and which have fueled all human progres. Throughout history, governments incessantly brainwash the minds of men, women and children with the evils of past foreign masters. The struggle against alienation is inherently a struggle against patriotism.

The Socialist Party doesn’t believe in patriotism. Our critics can call us unpatriotic but we will take pride in being unpatriotic. We never identify ourselves as Scots (or British) first and foremost, instead we define ourselves in terms of our socialist politics. Patriotism was born with the one and sole purpose: to control the masses; and so far it had done a very fine job.The process of creating the "Scotland" was awash in the blood of Scot slaughtering Scot. Nation-states can only be authoritarian and geared to the interests of a tiny elite. The working class is manipulated into identifying their well-being with the aims and ambitions of the ruling class. As classes within the nation disappear, the hostility of one nation to another will also come to an end.  Socialists work for the day "patriotism" will simply means being proud to be part of humanity. Or to perhaps adopt Eloise Bell's word, socialists are "matriots" those who loves Mother Earth.

"Conceit, arrogance, and egotism are the essentials of patriotism. Let me illustrate. Patriotism assumes that our globe is divided into little spots, each one surrounded by an iron gate. Those who have had the fortune of being born on some particular spot, consider themselves better, nobler, grander, more intelligent than the living beings inhabiting any other spot." -  Emma Goldman. 

* List of Scotland international players not born in Scotland 
http://en.wikipedia.org/wiki/List_of_Scotland_international_footballers_born_outside_Scotland
2009 data-list of foreign born players in the SPL
http://en.wikipedia.org/wiki/List_of_foreign_Scottish_Premier_League_players
2011-12 season data list of 603 foreign SPL players
http://www.myfootballfacts.com/SPL_Foreign_Players_by_Club_and_Country.html

DESPERATE FOR A JOB

Some politicians have a twisted way of defending capitalism. If unemployment grows it is not because of the slumps and booms of the system but because of the "workshy" unemployed. The following news item seems to contradict that view. 'But when Costa Coffee advertised for three full-time and five part-time baristas to staff a new shop in the Mapperley area of the city, the company never could have imagined it would get 1,701 applicants in two months, some with 10 to 15 years' experience in retail behind them.' (Guardian, 20 February) Serving coffee in a Costa Coffee shop is hardly a wonderful job but 1,701 desperate workers showed that they were not workshy. RD

The UN at the North Pole

The U.S. Geological Survey estimates that 30 percent of the world's undiscovered natural gas and 15 percent of oil is in the Arctic. Several companies, including Russia's Rosneft, Norway's Statoil and U.S.-based Exxon Mobil are getting ready to drill in areas of melting sea ice, despite the risks, technological difficulties and costs. Some countries have estimated that the Northern Sea Route would be turned into a shipping highway, with a 40-fold increase in shipping by 2020. There is also likely to be a boom in fisheries. A widely predicted northward shift in sub-arctic fish species, including Atlantic and Pacific cod, is now being detected. It is estimated that fish catches in the high latitudes, including the Arctic, could increase by 30 to 70 percent by 2055.

Last September, Arctic sea ice reached its lowest level in the satellite record, which dates back to 1979, and scientists say there could be an ice-free summer by 2030-2040. The Greenland ice cap has also been melting, permafrost on the tundra has thawed and there is less snow on land and on glaciers. As ice and snow retreats, more shipping routes are opened and access is easier for oil and gas exploration and mining companies.

"What we are seeing is that the melting of ice is prompting a rush for exactly the fossil fuel resources that fuelled the melt in the first place," said Achim Steiner, U.N. Under-Secretary-General and  United Nations' Environment Programme (UNEP) Executive Director.

The U.N. body advises that no steps to exploit the Arctic environment are taken without first assessing how activities would affect ecosystems and populations.

China at the South Pole

China is boosting its presence in Antarctica with an eye on the icy continent’s vast untapped resources, even though it could take 35 years to start exploiting them. Antarctic Treaty members, which include China, have agreed not to exploit Antarctic resources until 2048, but there is nothing to stop them doing geographical surveys.  China already has as many permanent research stations as the U.S. in Antarctica — including the Great Wall Station on King George Island off the Antarctic Peninsula, Zhongshan (Sun Yat-Sen) Station in the east and Kunlun Station in the interior. Now the Chinese appear poised to start work on a fourth station close to the main U.S. base — McMurdo Station — in a part of Antarctica known as the Ross Dependency that is administered by New Zealand.

 Anne-Marie Brady, a political science professor at New Zealand’s Canterbury University and editor of The Polar Journal, wrote in a recently published research paper that China is clearly interested in Antarctic resources, which range from minerals to meteorites, intellectual property from bio-prospecting, locations for scientific bases, fisheries and tourism access. “As an energy-hungry nation, China is extremely interested in the resources of Antarctica (and the Arctic) and any possibilities for their exploitation,” Brady wrote. Chinese-language polar social science discussions are dominated by debates about Antarctic resources and how China might gain its share, she wrote. “Such discussions are virtually taboo in the scholarly research of more established Antarctic powers,” she wrote. Numerous newspaper reports in Chinese have alleged that some countries are already prospecting in Antarctica under the cover of scientific research, Brady said. In Chinese-language debates, scholars, government officials and journalists appear to agree that the exploitation of Antarctica is only a matter of time and that China be ready, she said.

Texas A&M University oceanographer and Antarctic researcher Chuck Kennicutt II said it would be expensive to recover oil and gas from Antarctica but that a spike in oil prices could make it economically viable.

 The increased Antarctic research activity by developing nations is partly driven by interest in the Arctic, which could soon be ice-free in summer, Kennicutt said. Many nations, not just those with northern territories, are interested in the economic and security potential of northeast and northwest passages, he said. “It is not just economic but also in regard to the whole balance of power and the military implications in terms of national security and homeland security,” he said.

In January, The Associated Press reported that the icebreaker Xuelong (Snow Dragon) had become the first Chinese vessel to cross the Arctic Ocean. According to the state-controlled China Daily newspaper, China will launch its second icebreaker in 2014. In summer, Arctic shipping routes between China and Europe are 40 percent faster than those through the Indian Ocean, Suez Canal and Mediterranean Sea.

A crazy world

There are 870 million hungry people in the world today, experts estimate, yet around the world 1.3 billion tons of food is wasted every year.

Millions of tons of food, particularly perishable fresh produce, also go to waste in the developing world as a result of poor transport networks or lack of markets, storage facilities, and processing equipment.

“I have witnessed people throwing away tomatoes, vegetables, and fruits, among other produce, simply because they did not find a market for it, and they have nowhere to keep it,” said Jane Kathure Biashara, a Kenyan community development expert

HARD TIMES?

 

The idea that the present economic downturn is affecting everyone from the richest to the poorest was recently given credence by this report. 'Britain's richest man took a small cut in pay last year. Lakshmi Mittal, chairman and chief executive of Arcelor Mittal, banked $3.87m (£2.49) in pay and perks from the steel giant, down from $4m previously. .... Lakshmi Mittal's 40% stake in Arcelor Mittal is worth $10.3bn (£6.6bn). The Sunday Times Rich List estimates his fortune at £12.7 bn.' (Sunday Times, 17 February) Wow, a fall from $4m to a mere $3.87m. It's tough at the top! RD

Weans in need

One in five children is living in poverty in parts of almost every local council area in Scotland. Nearly all of Scotland’s local authorities – 27 out of 32 – have council wards where more than 20 per cent of their children live in poverty, according to the Campaign to End Child Poverty. Children were classed as being in poverty if their family is forced to live on 60 per cent or less of median UK income.

Children in the Glasgow North East constituency have 43 per cent classed as poor. A third of children live in poverty in Scotland’s biggest city of Glasgow, while Dundee had more than a quarter classed as poor. Edinburgh had almost one in five children in poverty, with a similar figure for Fife, East Ayrshire and North Lanarkshire.

 Recent forecasts indicate that at least 65,000 more children in Scotland will be living below the breadline by the end of the decade – a far cry from promises made in 1999 to end child poverty by 2020.


Percentage of children living in poverty
By local authority
Aberdeenshire 9%
Angus 14%
Argyll & Bute 14%
Clackmannanshire 23%
Dumfries & Galloway 17%
Dundee City 26%
East Ayrshire 22%
East Dunbartonshire 10%
East Lothian 14%
East Renfrewshire 10%
Edinburgh, City of 19%
Western Isles 11%
Falkirk 17%
Fife 20%
Glasgow City 33%
Highland 15%
Inverclyde 24%
Midlothian 18%
Moray 12%
North Ayrshire 25%
North Lanarkshire 21%
Orkney Islands 8%

Socialism is the antidote

Some say the world is divided into independent, territorially-based states representing and pursuing the interests of capitalists from within their borders, and that the world economy is characterised by competing separate national capitals only. Others view the capitalist system as a single economy, even if divided politically and geographically, into separate “nation states”, and that the recent globalisation represents the emergence of a global capitalist class not tied to a particular national state. Those holding the latter idea fully understand that national states have not disappeared and are still powerful players in the capitalist economy but argue that the transnational capitalist class uses them, through favourable politicians and governments, to pursue its transnational interests (rather than them being used by a national capitalist class to pursue its national interests).

However, any transnational capitalist class would only be a section of the capitalist class of the world. There are still plenty of national capitalists, actual and would-be, whose interests are not the same as those of the transnational section. So, although political power in the advanced capitalist countries, may be in the hands of politicians favourable to transnational capitalists, there is still opposition to them. From the point of view of the transnational corporations, states no longer have important policy-making functions. It is enough if they enforce property rights and maintain basic infrastructure in areas important for business. Small states can do these jobs as well as large ones. In fact, they have definite advantages. They are more easily controlled, less likely to develop the will or capacity to challenge the prerogatives of global capital.

The ideology of national capitalism, reflecting the interests of small-scale capitalists, is still strong and finds support both from the “right” and the “left” who beat the same nationalist drum during the referendum debate. Being against capitalist globalisation is not the same as being against capitalism in general. We have ample past experience of a world of competing national capitalisms – quite enough to demonstrate that there is no good reason for preferring such a world to a world under the sway of global capital. Leftists such as the SSP in effect argue that workers should support national as opposed to transnational capitalism. Socialists, on the other hand, don’t take sides in this conflict between different sections of the capitalist class. Socialism will do away with all national oppression, because it removes the class interests that furnish the driving force of such oppression. Nor do we have any reason to assume that the nation, in socialist society, will form the basic politico-economic unit.

The Socialist Party is part of the World Socialist Movement which didn't get its name for nothing. Unique amongst all political parties left and right we have no national axe to grind. We side with no particular state, no government. We have no time for border controls. The world over, workers must do what they can to survive and resist capitalism. In many parts of the world that means escaping the tyranny of political terror or economic poverty. Workers should resist taking sides in the battles of the economic entities named on your passport.

One World Socialists

The Greeks in the 4th Century BCE  coined the term “cosmopolitan” – meaning citizen of the world and that all human ethnic groups belong to a single community.   Diogenes it is said was asked where he came from and he answered: "'I am a citizen of the world". Eugene Debs of the American Socialist Party at the turn of the 20th Century said "I have no country to fight for; my country is the Earth, and I am a citizen of the World."

The importance of local democracy has to be seen in the context of the modern world. People aren't just concerned about whether a piece of local land should be used for housing, growing food, a cricket pitch or left as it is. People are engaged with issues affecting them which extend far beyond their local areas. So, as well as being citizens of their parish or district they would also be citizens of the world with all the opportunities for, and responsibilities of decision making and action in every sphere of life. Some of the problems which face mankind are "whole-world" problems. People are beginning to think in world terms. More and more people are coming to appreciate world music and world theatre. Millions more follow world sporting events, and there is a growing consciousness that all humans are part of one world, that we share a common planet. As more than one astronaut has remarked, when looking down on the Earth you can't see any frontiers. Millions of people throughout the world are concerned about world poverty and world hunger and problems such as global warming and tropical deforestation.Think globally, act locally.

We are all one species. Our world is the only one we've got and we must share it with everybody. Socialists do not stand for world government because we are opposed to governments everywhere. One World represents an entirely different vision of the future to the "United Nations" or "Internationalism" which, as their names imply, are attempts to improvise a patchwork from the fragments which capitalism makes of the world. We are for the planned production and distribution of wealth on a world scale to meet human needs. To move forward the dispossessed of the world must now look beyond the artificial barriers of nation-states and regional blocs, to perceive a common identity and purpose. We seek a global community with no private property beyond immediate possessions, no need for money, no racism or sexism, no enslavement of children, no profit motive to drive the oppression of working people, no battles over personal interpretations of spirituality, and no disrespect for the 'other'.

The socialist aim is a world where we peacefully cohabit our home planet. There never has been, and never can be, socialism in just one country. No longer will there be governments and their state machinery, or national frontiers. Instead of government over people there would be various levels of democratic administration, from the local up to regional and world levels, with responsibility being delegated if necessary to groups or individuals. A united humanity, sharing a world of common interests, would also share world administration. It is sometimes said that world administration would mean power of central control over local democracy. We, however, envisage an integrated system that would be adaptable and could be used for decision-making and action on any scale between the local and the world. In socialism, for the first time, local communities will be free to make decisions about the development of their areas. These would be decisions about local services such as health, education and transport; public facilities such as parks, libraries, leisure centres and sports grounds; local housing, the siting of production units, management of farming, care of the local environment, cultural events, and so on. The principle of local democracy would be that decisions affecting just local populations would be made by them and not for them by any larger or outside body. Local communities, nevertheless, cannot be completely independent or self-reliant as far as meeting their material needs goes; they are interdependent. People in small communities aren't able to produce all they need, or anything like it. The final stage of the production of a range of goods for everyday use could be done locally -- food, clothes, shoes, furniture -- as well as repairs but most of the raw materials cannot be produced locally. It is a question of them being interlinked in a single network of production which in the end embraces the whole world.

There is in reality only one world. Capitalism brought into being the one world. It is high time we reclaimed it. We have no country but have a world to win. Socialists aren't dreaming up a “perfect” or an “ideal” world. What we struggle to establish is a better world. Why we should prefer Scottish rather than British police to be used against strikes and pickets? Why we should want the government that presides over the operation of capitalism in Britain to be situated in Edinburgh rather than London? We remain unconvinced that we should take sides in the referendum debate about the political structure for running capitalism today.

A Thieves Den

"Some will rob you with a six-gun, And some with a fountain pen." - Woody Guthrie

It has been described as the biggest banking fraud in history yet no-one has been prosecuted for the Libor fixing scandal. The financial rewards of rigging rates were, and are, immense. For example RBS’s rates, currencies and commodities group — the one where Libor rigging and other forms of market manipulation are believed to be commonplace — saw its income rise by 87% in the half year to June 2008, at a time when the overall income RBS Global Banking and Markets fell 10%. Royal Bank of Scotland admitted that between 2006 and 2010 staff based in London, Singapore, Tokyo and the US conspired to manipulate the global financial benchmark, the London Interbank Offered Rate (Libor) calculated in both Swiss Francs and Japanese Yen. By pleading guilty to one count of wire fraud in its Japanese arm, RBS managed to avoid having its US operations shut down by the US Department of Justice.  Libor is a global benchmark used to price some $300 trillion of contracts, ranging from mortgages to student loans to interest-rate swaps, calculated by averaging out submissions from up to 40 global banks.  Two other global banks have reached settlements along similar lines over Libor crimes. UBS was fined $1.5 billion (£950m) in December, and Barclays was fined $451m (£287m) in June 2012. A further 20 or so global banks are have yet to reach settlements. In the UK they are thought to include Lloyds Banking Group and HSBC.

“This is the biggest scandal, the biggest anti-trust felony, in the history of the world, and it continued for years,” said Bill Black, associate professor of economics and law at the University of Missouri-Kansas City, and a world leading expert on financial crime. “Even after the investigation became public knowledge, the felony continued, and it continued with greater efforts being made to cover it up, with people being instructed to no longer to use instant messages and such like in order to make it harder for the regulators What is most stunning is that these traders and submitters were willing to say these things, knowing that there was a verbatim record being kept. What does that tell you not just about the institution itself, but also about the FSA and the Serious Fraud Office? That is the one of the most important and revealing fact that comes out of this. The perception inside the bank was ‘we don’t need to worry about those clowns’.” He added "The bank is too big to prosecute, it’s too big to run honestly... it’s created catastrophic harm to the British people. RBS holds the British economy and the British people hostage."


Since being found out by regulators, RBS’s strategy has been to blame junior and middle-ranking people for the scandal, claiming that no one at the top of the bank knew it was going on. This is surprising, given that in September 2007, the Financial Times’s Gillian Tett highlighted concerns that Libor was “a bit of a fiction” [FT 25 September 2007], and that in April 2008 the British Bankers’ Association sent a memo to ‘panel’ banks including RBS asking them to check their Libor submission processes and ensure they were “submitting honest rates” after the Wall Street Journal’s Carrick Mollenkamp highlighted “growing suspicions about Libor’s veracity” [WSJ 16 April 2008]. Some RBS traders who have been dismissed for Libor rigging argue that they are being used as scapegoats, claiming that their superiors  ‘condoned collusion’. Tan Chi Min, RBS’s ex-head of Japanese Yen interest-rate trading, declared that Libor rigging was a well-known and common practice at the bank in 2006-11. The FSA said that, in March 2011, RBS misled the regulator, indicating that it had put proper systems and controls in place when it had not.

Many believe the government and  authorities are being too soft on financial crimes, seeing mollycoddling miscreant financial institutions that it majority owns as more important than seeking justice. The fact that RBS’s share price rose on the day of its settlement suggests investors believe it got off lightly.  Neil Barofsky, former special inspector-general of the Troubled Asset Relief Programme and author of Bailout, said: "...each settlement on favourable terms reinforces the perception that, for a select group of executives and institutions, crime pays. It is only rational. They know that they will get to keep all of the ill-gotten profits if they go undetected, and on the small chance that they’re caught, most probably only the shareholders will pay – and only a relatively minor fine at that. The lack of meaningful consequences for those committing these frauds encourages future fraudulent conduct."



Adapted from here

More Food for thought

The recent news has brought forward another horrific fire at a nightclub in Brazil as you have probably heard. These fires rival those at clothing factories for highlighting the sheer stupidity or outright nastiness of the system. Allegations from this latest one include security staff stopping patrons from fleeing from the fire as they hadn't paid their tabs (apparently it is the custom there to run up a tab and pay at the end of the night); fire extinguishers that do not work; allowing pyrotechnics by the band members to create a spectacle; expired fire permits; locked doors. Some may not be true but all of these things pop up regularly in these continuing tragedies. There must be thousands of places like this one just waiting for an accident to happen. One must ask why the system allows it. Where are the inspections, the licences, the authorities responsible? Obviously to demand a safe environment and proper supervision would cost money, drive investors away, and lose a large source of tourism dollars. Some system that engenders and accepts such madness for the only sure thing is that
it will happen again!  
John Ayers

FOOD FOR THOUGHT

It is popular for politicians to pretend that workers in Britain are enjoying steadily improving living standards, but from time to time the truth leaks out. 'Food prices are rising more than three times faster than the average worker's pay package as the cost of living 'crisis' continues, official figures revealed yesterday. While the average private sector worker's pay has risen by just 1.4 per cent - and millions of State workers are subject to a pay freeze - food prices have risen by 4.5 per cent in the last year, according to the Office for National Statistics. The crippling cost of the weekly trip to the supermarket is the most striking figure in the Consumer Prices Index (CPI) for January.' (Daily Mail, 13 February) A food price rise of 4.5 per cent against a 1.4 per cent wage rise? It doesn't take a master statistician to see the flaw in the "steadily improving standard of living" argument. RD

Food for thought

The level of paranoia in the US regarding guns and bad people around every corner has spawned some crazy solutions. In a small town in Texas, the local council elected to let teachers carry concealed weapons in the school. School Superintendent Thweatt commented, " We don't have money for a security guard, but this is a better solution. A shooter could take out a guard or officer with a visible holstered weapon, but our teachers have master's degrees and are older and have extensive training. And their guns are hidden. We can protect our children."
Better still, why not arm all the children, then you would have a couple of hundred shooters ready to blast away! John Ayers

worth every penny?

Sir Philip Hampton, chairman of the Royal Bank of Scotland, asserts that its cheif executive, Stephen Hester,  is only “modestly paid” - at £7.8 million a year. “Stephen is doing one of the most difficult, demanding and challenging jobs in world business. He has been paid well below the market rate compared to others in the same job.” Hampton explained.

Hester’s £7.8m package is made up of a basic salary of £1.2m, plus a maximum annual bonus of £2.4m and a further £4.2m that can be earned through the bank’s long term incentive schemes.

Food for thought

In 1994 when South Africans voted in Nelson Mandela's government in the country's first democratic election, education was the way to raise the level of the black population. Now, as South Africa grapples with poverty, economic inequality, crime, and soaring youth unemployment (welcome to the capitalist norm), the education system, which is training for a job, hasn't done anything to change South Africa. Of the 1.1 million born since 1994, less than half have taken the Graduation Exam and the ones who take it and pass (75%) are receiving something less than valid as pass marks hover around the 30-40% range, something that probably wouldn't get them a job if any were available. This is a failure of capitalist education that is job oriented and not to develop one's knowledge and person to the fullest. John Ayers

They never learn

The Russian Foreign Minister Sergei Lavrov says the fighters France is battling in northern Mali are some of the very same ones it helped arm in Libya.

General Martin Dempsey, chairman of the United States Joint Chiefs of Staff, said he favored the idea of arming Syrian militants.