Roubini who must have read a little Marx but clearly not enough
has said some things and his latest mantras are identical to what is
said about the Euro.
Full integration is presented as the issue to keep the Euro alive as
if the issue is a monetary one
not a working class one ie without consumers with enough money to
spend, there is no solution to anything anyway.
By dumping all the bonds of each nation into a central dumping bond
getting rid of national economic ministries they assume
they can resolve the issue of production and consumption by playing
with ....bonds.
They cant. Without work that pays there is no market. Simple.
No market is a byproduct of no work.
Currently yanks pay around $120 in food stamps for those who are
homeless as well.
What can this type of consumer spend? Fxxx all.
Either capitalism produces for need and what is produced is used or it
will rot on the shelf.
Roubini understands that, but cant state it.
Reality will.
Ger ready for the Big Bang.
Max Keiser found an article and showed it on RT that the Germans believe there GDP will crash by 20% if the Euro collapses...
Watch this space. Greece is informally in collapse. A formal announcement will cause meltdown that is why they have pegged the Swiss franc to the Euro so the collapse doesn't get much bigger.
World stock markets tumbled after the shock resignation of Jurgen Stark, a key member of the European Central Bank (ECB), provided an unwelcome backdrop to the crucial G7 meeting in Marseilles.
Greece on verge of default as doubt grows over €8bn bailout
Greek prime minister George Papandreou under fire amid rumours that creditors are about to pull the plug
Helena Smith and Heather Stewart
guardian.co.uk, Saturday 10 September 2011 19.33 BST
A Greek protester holds a poster depicting prime minister George Papandreou during a demonstration in Thessaloniki on Saturday. The poster reads: "Wanted by the Greek people." Photograph: Yannis Behrakis/Reuters
Greece's embattled prime minister, George Papandreou, has moved to counter growing fears that Athens is about to default on its debts, saying there was a clear route back to economic health.
Speaking amid high security as protesters converged on the northern city of Thessaloniki for its annual international trade fair on Saturday, the socialist leader said: "There are two paths. One is the path of major change that will lead to a productive and creative Greece.
"The other path, the supposedly easier one, does not look problems straight in the eye and leads to disaster. We insist on the path of change."
Despite strong denials that the country is heading for a default, rumours have grown that the end game is approaching. Wolfgang Schäuble, the German finance minister, has insisted that a sixth, €8bn (£6.8bn) instalment of aid will not be released unless Greece enacts corrective measures to kickstart its economy and improve competitiveness. Experts from Washington and Brussels will fly into Athens this week to assess whether Greece is sticking to its programme of drastic spending cuts and tax rises, amid fears that its creditors could be ready to pull the plug.
Share prices plunged on both sides of the Atlantic on Friday, as Athens was forced to deny that it would default, perhaps as soon as this week. The Dow Jones closed more than 300 points down, while in London the FTSE100 lost more than 2% of its value.
A team from the so-called "troika" of the IMF, the European commission and the European Central Bank, which bankrolled the Greek rescue deal last May, are due to rule by the end of the month whether it should receive the latest €8bn tranche of the bailout.
The troika left Athens at the start of this month after talks with the government broke down. Papandreou has faced down riots on the streets to pass a series of austerity bills, but the country's creditors accuse him of dragging his feet over job cuts in the civil service and the privatisation of €50bn-worth of state assets. Greece's plans have also been blown off course by the worse-than-expected performance of its recession-hit economy, which is now expected to shrink by up to 7% this year.
Without the €8bn, Athens will be unable to meet repayments due on its bonds. At the same time, Europe's finance ministers, who gathered with their G7 counterparts in Marseille on Saturday, are still wrangling over the details of a second, €109bn rescue package for the embattled country.
The ministers sought to calm world markets by repeating their pledge to do everything necessary to secure recovery, but there were no new details of concrete measures.
"There is now a clear slowdown in global growth. We are committed to a strong and co-ordinated international response to these challenges," they said.
As the euro plunged to its weakest level in six months on Friday, Athens issued a statement describing the latest rumours as "a game of very bad taste, an orchestrated speculation that is targeting the euro and the euro area as a whole".
The latest sell-off in financial markets came after a rumour emerged that Germany was drawing up plans to protect its banking sector in the event of a Greek default. A series of other key measures, such as new powers for the eurozone-wide rescue fund, are awaiting approval by national parliaments. But insiders say both IMF boss Christine Lagarde and German chancellor Angela Merkel are coming round to the view that Greece must be allowed to go bust. The IMF, in particular, is said to have become convinced that Greece's debts are unsustainable.
If it passes this week's test, Greece faces another progress check in December. "My understanding is that in December it's much more likely the plug will be pulled," said a source close to the troika.
That could prompt other struggling euro members, including Portugal and Ireland, to demand reductions in their own debt burdens, and increase fears that the single currency area is close to collapse. Friday's anxious mood was exacerbated by news that ECB director Jürgen Stark, who had been sceptical about its policy of buying up Italian and Spanish bonds to restore calm to international debt markets, had resigned.
Stark, with Bundesbank boss Jens Weidmann, had toured German media outlets criticising the bank's policy. A furious outburst from ECB president Jean-Claude Trichet on Thursday, in which he said Germany should be grateful for the low inflation it had achieved through euro-membership, was seen by many observers as an attack on Stark.
"Overall, Mr Stark's departure could be seen by financial markets as another indication of growing disenchantment in Germany towards the euro," said Julian Callow, of Barclays Capital.
But Erik Britton, of City consultancy Fathom, said it was good news if Germany was preparing its banks for the debt restructuring which a growing number of observers see as inevitable.
"If they are drawing up a plan to protect the banks, it's not before time," he said. "[Greece] will default, it's just a matter of time – but the bad scenario would be if we got a messy default."
French banks downgraded as Europe's debt crisis deepens - LIVE www.guardian.co.uk
Moody's has cut Société Générale and Credit Agricole's credit ratings – just hours ahead of crucial talks between Germany, France and Greece
Bank of America is in a heap of trouble. CEO Brian Moynihan is taking a knife to the company slashing 30,000 jobs.
It's the largest single job reduction by a U.S. company this year. BOA vows to eliminate $5 billion in costs annually by 2014. The nation's largest bank is sobering up to the grim reality that it's strapped for cash. Some experts estimate the bank will need to raise about $50 billion in coming years to meet new global capital requirements. While it's premature, John Berlau of the Competitive Enterprise Institute says, the worse case scenario is possible for BOA down the road. .
The investment bank it acquired; or that Countrywide, the subprime mortgage lender BOA picked up with it's porfolio of bad loans will go bankrupt. Countrywide is often pointed to as the biggest drag on BOA's performance. Berlau says if Bank of America fails, the U.S. government will bear a good chunk of the blame for creating the shotgun marriage between the financial institutions.
Berlau describes actions taken by former Treasury Secretary Hank Paulson and Federal Reserve Chair Ben Bernanke as extraordinary and illegal.
BOA's outlook is bleak. The bank is facing huge liabilities over soured mortgage investments. So far, just in the first half of the year the bank paid out nearly 13 billion to settle claims from investors that it sold them securities backed by faulty mortgages.
More legal action is underway including lawsuits filed by the federal government and insurance giant A.I.G. . Both are looking to recover tens of billions of dollars in losses from BOA and other big banks.
_________________ 'Come and see the violence inherent in the system.
Help, help, I'm being repressed!'
“The more you tighten your grip, the more Star Systems will slip through your fingers.”
When banksters became DIY enthusiasts and turned banking into a massive looting spree paying themselves hundreds of millions in salaries in non-existent financial trades..
$149billion paid to banking executives in 2011.
From Lobster Sep 2011
‘Essentially, high retThe red old lady of Threadneedle Street Meanwhile those notorious radicals at the Bank of England continue with their subversive analyses. Andy Haldane, Executive Director, Financial Stability, has been looking at the
history of bubbles and the rise of the financial sector and in a
lecture, ‘The Contribution of the Financial Sector: Miracle or Mirage?’ 17 he made the following comments (the italicised sections in parentheses are mine):
‘Risk illusion (gambling), rather than a productivity miracle, appears to have driven high returns to finance. The recent history of banking appears to be as much mirage as miracle....
Philippon and Reshef (2009) have undertaken a careful study of “excess” wages in the US financial industry since the start of the previous century, relative to a benchmark wage.....This shows a dramatic spike upwards which commenced in the early 1980s, but which exploded from the 1990s onwards. The only equivalent wage spike was in the run-up to the Great Crash in 1929. Philippon and Reshef attribute both of
these wage spikes to financial deregulation......’ (emphasis
added)
returns to finance may have been driven by banks assuming higher risk (gambling). Banks’ profits, like their contribution to GDP, may have been flattered by the mis-measurement of risk..... this
increase in risk was to some extent hidden by the opacity of accounting disclosures (Enron accounting; lying) or the complexity of the products involved.....
‘.....because banks are in the risk business it should be no surprise that the run-up to crisis was hallmarked by imaginative ways of manufacturing this commodity (gambling), with a view to boosting returns to labour and capital. Risk illusion is no accident; it is there by design. It is in bank managers’ interest to make mirages seem like miracles.’
Even more striking, the Governor, Mervyn King, in a lecture in
October 2010:
‘.....it is hard to see why institutions whose failure cannot be contemplated should be in the private sector in the first place.’ 18
When one knows the writing is on the wall. In the olden days they jumped out of the skyscrapers now they find more ingenious ways of going....
Escort girls 'left bank chief to hang in mock execution'
Paul Cheston, Courts Correspondent
16 Sep 2011
A bank chief died in a hanging after paying two escort girls to take part in an "execution role play" to punish him for being a "loser".
Colin Birch, 44, the former assistant vice-president of Deutsche Bank, had ordered the escorts to kick away a step ladder on which he was standing with a noose round his neck tied to a tree.
The married father of two had reassured the women he was wearing a safety harness that would save his life, an inquest heard today.
On his orders, the pair walked away laughing without looking back.
Concerned for his safety, one of the escorts returned and found him turning blue. She and an escort agency driver cut Mr Birch down and tried to resuscitate him but he died at the scene. The inquest, at Gravesend, heard Mr Birch had been made redundant in September 2009 and had not been able to find a new job.
On July 30, the day of his death, he heard that he had not been given a job for which he had a second interview.
Louise Howard, who ran escort agency Katie's Lovely Escorts, told the hearing Mr Birch, who had previously had seven of its girls "attend to him" called and asked for two to meet him on Dartford Heath to perform "an execution".
Ms Howard told the hearing she was "somewhat apprehensive" and had trouble getting the girls to agree but eventually arranged for two escorts, Alex Sturley and Marie Laurent, to attend the scene.
Miss Sturley cried as she told the court she and Ms Laurent had arrived with the driver at about 7pm and they followed Mr Birch into the woods.
When she saw the noose hanging from a tree she asked Mr Birch to see his safety harness and he showed her a clip coming out the back of his jumper.
As Ms Sturley climbed the steps and gave him a kiss on the cheek, Miss Laurent said she could see "tears in his eyes as if he was getting overwhelmed".
Although Miss Sturley said it "didn't feel right" she kicked the ladder away and she "laughed loudly" as she had been ordered as she and Ms Laurent left.
Det Sgt Lee Neiles told the court there were two possible conclusions, that Mr Birch had tried to commit suicide or that he had "manufactured a situation intending that it be a role play scenario and had miscalculated it".
The coroner Roger Hatch, recorded an open verdict, saying: "I am satisfied having heard the evidence that there was nothing to suggest Mr Birch intended to take his own life.
Even the paid media fake jounralists know now what everyone else has been saying for some time. The end is coming.
The ailing euro is part of a wider crisis. Our capitalist system is near meltdown
A 1930s-style crash threatens us and our financial partners. Collective action is the only solution
reddit this
Comments (322)
Will Hutton
The Observer, Sunday 18 September 2011
Article history
Eighty years ago, faced with today's economic events, nobody would have been in any doubt: we would obviously be living through a crisis in capitalism. Instead, there is a collective unwillingness to call a spade a spade. This is variously a crisis of the European Union, a crisis of the euro, a debt crisis or a crisis of political will. It is all those things, but they are subplots of a much bigger story: the way capitalism has been conceived and practised for the last 30 years has hit the buffers. Unless and until that is recognised, western economies will be locked in stagnation which could even transmute into a major economic disaster.
Simply put, the world has trillions upon trillions of excessive private debt financed by too many different currencies whose risk is allegedly mitigated by even more trillions of financial bets which in aggregate do not minimise the systemic risk one iota. This entire financial edifice, underwritten by tiny amounts of capital, has been created over three decades backed by the theory that markets do not make mistakes. Capitalism is best conceived and practised, runs the theory, by hunter-gatherer bankers and entrepreneurs owing no allegiance to the state or society.
This is nonsense. Business and the state co-generate wealth in a system of complex mutual dependence. Markets are beset by mood swings and uncertainty which, if not offset by government action, lead to violent oscillations. Capitalism without responsibility or proportionality degrades into racketeering and exploitation. The prospect of limitless pay is an open invitation to bad, or even criminal, behaviour. Good capitalism cannot happen without referees to blow the whistle or robust frameworks in which markets can function; neither is reliably created by capitalism itself, hence the role of democratic government. Yet the world is trying to solve the legacy of the last 30 years as if none of this were true and, instead, that the practice and theories that created the mess are still valid.
US treasury secretary Tim Geithner, joining EU finance ministers in Poland as again they pondered how best to end the ongoing euro crisis, was at least recognising today's interdependencies between countries when he urged his fellow ministers to stop bickering because the markets were terrified by the threat of a catastrophic event – with all the risk that posed the US.
George Osborne was also right to declare that a strong euro was in Britain's interests. But worrying about how a failed euro might impact on yourself is old speak. What the markets need to hear is that western politicians – whether in the eurozone or not – see the euro as part of the potential solution to capitalism's current crisis, not its cause, and that they are prepared to do all in their power to support the reforms necessary to make the euro survive and take other measures vital to make the world financial system functional again. Geithner and Osborne must put some money where their mouths are.
The euro's critics, endlessly emphasising that it is a monetary straitjacket and that the best reform now would be its break-up, miss the point. It was not this so-called straitjacket that is the cause of today's euro crisis. It is the interaction of the euro system with a once-in-a-century crisis of capitalism that its designers and supporters, like its critics, never anticipated. Yes, what the crisis has exposed is that the eurozone needed a ¤1trillion-plus fund to recapitalise bust banks and underwrite sovereign debt write-downs; this was not written into the original treaty. And that the investment and retail banking arms of the EU's universal banks need to be ringfenced or formally separated, as Sir John Vickers's banking commission proposes for Britain –if they are to be remotely safe. But neither notion was a battle cry of the eurosceptics over the last 10 years.
In fact, the existence of the euro has, until now, been a bulwark against disaster. Suppose it had not been created and that the financial crisis in 2008 had broken over a Europe with multiple floating exchange rates and no European central bank – the eurosceptic utopia. The Irish, Portuguese, Greek, Spanish, Italian and French banking systems would have stood alone and they would have collapsed in a domino effect, interacting with the mega-crisis in Britain and the US. Even some German banks would not have been immune. There would have been a 1930s-scale slump, the break up of the EU and a rise in beggar-my-neighbour devaluations and trade protection.
We have not yet escaped that prospect. If the euro breaks up, the cascade of subsequent bank failures and debt write-downs will be no less threatening and Britain will be pulled into the vortex. The EU has created a "financial stabilisation facility" to try to hold the line. But there is no urgency in launching it; it is still not a proper fund but, rather, a stop-gap provider of borrowing facilities and it is too small. As bad, the German and French governments are wedded to collective European austerity; they want to impose long-term balanced budgets not only on themselves but chilling austerity on the unfortunate states which have to borrow to support their banks and bond markets.
An entire continent is to be blighted by lack of demand in the midst of a capitalist crisis, compounded by Britain's scorched earth, deficit-reduction plans. Already, many European banks are technically insolvent, recognised by Christine Lagarde, the IMF's new managing director, if not by the banks themselves.
Last week, the Bank of England joined the US Federal Reserve, the Bank of Japan and the Swiss central bank in promising Europe's banks vital liquidity in dollars, easing the crisis for a while. Time has been bought; we are pitching in to save ourselves. But the outside world needs to go much further. Europe's stabilisation facility must become a fund with a capacity to lend and intervene to see off speculators: Britain, the US, Switzerland and Japan, along with China and oil-rich Arab states, need to contribute alongside Germany.
In return for coming to the relief of the German taxpayer, we should demand two key concessions: one, that Europe sets about ringfencing its universal banks' investment banking operations to make them less vulnerable; and second, that no international cash is forthcoming unless the EU commits to a formal plan for growth in which its stronger countries, notably Germany, promise to stimulate their economies. As part of the package, Britain should agree to defer its own deficit- reduction plans and to issue bonds denominated in euros to contribute to the new euro fund.
We are living through the most dangerous confluence of economic circumstances in modern times. Trying to pretend the interdependencies do not exist or that the collapse of the euro is the answer can only make matters worse. It is a straight choice: we do all we can to help each other or risk going down in what could be the worst economic contraction for a century.
ere we go again. Will Hutton acting as agent for the global financial elite who want to impose global government on us all - with the banksters in control. Hence his approval of banking reforms that won't be introduced for EIGHT years in this country, when he could and should have argued for their immediate introduction. Can he really expect to be taken seriously after this? I would really like to see him deign to come down here below the line and justify his position. Until such time, I deem him to be an impostor...
Comment by a poster on Will Hutton.
Sums up all journalists in the media.
They say anything, mean nothing and banksters are ALWAYS LET OFF THE HOOK
Looks like it may happen this week....................................
From Peter Tchir of TF Market Advisors
Is September 20 Greek Default Day?
If Greece is going to default, September 20th seems to be as good a day as any. Actually, it is far better than most to be GD-Day.
Two big bonds, the 4.5% of 2037 and the 4.6% of 2040 both have coupon payments due that day, totalling 769 Million Euro. So if the IMF wanted to avoid letting another billion euro go down the drain, September 20th would be a good day to do it. The IMF seems to have delayed approving another tranche for now, so Greece must already have the money for this payment?
The Fed Scheduled their meeting for 2 days. It now starts on September 20th. Maybe a co-incidence, but what better way to be prepared for new emergency policies?
CDS "rolls" on the 20th. On the 21st, all Sept 2011 CDS will have expired. My guess is that banks own more protection than they sold to the September 20th date, so defaulting while those contracts are still valid would be a net benefit to the banking system. As a whole, triggering CDS will likely benefit banks as I can find banks that say they own protection against positions, but find more hedge funds are uninvolved or have sold protection to fund shorts in other sovereigns.
We just finished the big finance minister meeting. They can all return home, brief their staff and be prepared for Tuesday. Prior to D-Day there were lots of last minute preparations to make sure everyone was on the same page and as prepared as possible. Why not before GD-Day?
Papandreou cancelled a trip to the U.S. And Venizelos mentioned that Papandreou had to be in Athens for "Initiatives". If you ever wanted some hand holding from your leader, it would be at a time of default. He would have to be in country to calm things and mention all the deals he put in place last week on the conference call.
None of the headlines from Poland or comments from the IMF seem particularly positive. I can't even find the customary all is good, we are working together, this was a time of great progress, boiler plate statement having been released. Maybe they are waiting for Monday to let the world in on all the joyous progress. I suspect they are more likely to wait on bad news than good news. They have often tried to control bad news over the weekend. Maybe they have decided it would be better to deal with it real time.
There is still a chance we see some bold new initiative or plan, but as I wrote last week, every step and virtually every comment made, for the past 8 days, is consistent with preparing for a default.
Danny Alexanders recent announcement that 2,000 tax inspectors would be recruited to cahse large tax evaders is a con.
A classic but it will become more relevant as bank defaults and govt defaults become more and more common...
The banks, as we know, are centres of modern economic life, the principal nerve centres of the whole capitalist economic system. To talk about "regulating economic life" and yet evade the question of the nationalisation of the banks means either betraying the most profound ignorance or deceiving the "common people" by florid words and grandiloquent promises with the deliberate intention of not fulfilling these promises.
It is absurd to control and regulate deliveries of grain, or the production and distribution of goods generally, without controlling and regulating bank operations. It is like trying to snatch at odd kopeks and closing one’s eyes to millions of rubles. Banks nowadays are so closely and intimately bound up with trade (in grain and everything else) and with industry that without "laying hands" on the banks nothing of any value, nothing “revolutionary-democratic”, can be accomplished.
But perhaps for the state to "lay hands" on the banks is a very difficult and complicated operation? They usually try to scare philistines with this very idea—that is, the capitalists and their defenders try it, because it is to their advantage to do so.
In reality, however, nationalisation of the banks, which would not deprive any “owner” of a single kopek, presents absolutely no technical or cultural difficulties, and is being delayed exclusively because of the vile greed of an insignificant handful of rich people. If nationalisation of the banks is so often confused with the confiscation of private property, it is the bourgeois press, which has an interest in deceiving the public, that is to blame for this widespread confusion.
The ownership of the capital wielded by and concentrated in the banks is certified by printed and written certificates called shares, bonds, bills, receipts, etc. Not a single one of these certificates would be invalidated or altered if the banks were nationalised, i.e., if all the banks were amalgamated into a single state bank. Whoever owned fifteen rubles on a savings account would continue to be the owner of fifteen rubles after the nationalisation of the banks; and whoever had fifteen million rubles would continue after the nationalisation of the banks to have fifteen million rubles in the form of shares, bonds, bills, commercial certificates and so on.
What, then, is the significance of nationalisation of the banks?
It is that no effective control of any kind over the individual banks and their operations is possible (even if commercial secrecy, etc., were abolished) because it is impossible to keep track of the extremely complex, involved and wily tricks that are used in drawing up balance sheets. founding fictitious enterprises and subsidiaries, enlisting the services of figureheads, and so on, and so forth. Only the amalgamation of all banks into one, which in itself would imply no change whatever in respect of ownership. and which, we repeat, would not deprive any owner of a single kopek, would make it possible to exercise real control—provided, of course, all the other measures indicated above were carried out. Only by nationalising the banks can the state put itself in a position to know where and how, whence and when, millions and billions of rubles flow. And only control over the banks, over the centre, over the pivot and chief mechanism of capitalist circulation, would make it possible to organise real and not fictitious control over all economic life, over the production and distribution of staple goods, and organise that "regulation of economic life" which otherwise is inevitably doomed to remain a ministerial phrase designed to fool the common people. Only control over banking operations, provided they were concentrated in a single state bank, would make it possible, if certain other easily-practicable measures were adopted, to organise the effective collection of income tax in such a way as to prevent the concealment of property and incomes; for at present the income tax is very largely a fiction.
Nationalisation of the banks has only to be decreed and it would be carried out by the directors and employees themselves. No special machinery, no special preparatory steps on the part of the state would be required, for this is a measure that can be effected by a single decree, "at a single stroke". It was made economically feasible by capitalism itself once it had developed to the stage of bills, shares, bonds and so on. All that is required is to unify accountancy. And if the revolutionary-democratic government were to decide that immediately, by telegraph, meetings of managers and employees should be called in every city, and conferences in every region and in the country as a whole, for the immediate amalgamation of all banks into a single state bank, this reform would be carried out in a few weeks. Of course, it would be the managers and the higher bank officials who would offer resistance, who would try to deceive the state, delay matters, and so on, for these gentlemen would lose their highly remunerative posts and the opportunity of performing highly profitable fraudulent operations. That is the heart of the matter. But there is not the slightest technical difficulty in the way of the amalgamation of the banks; and if the state power were revolutionary not only in word (i.e., if it did not fear to do away with inertia and routine), if it were democratic not only in word (i.e., if it acted in the interests of the majority of the people and not of a handful of rich men), it would be enough to decree confiscation of property and imprisonment as the penalty for managers, board members and big shareholders for the slightest delay or for attempting to conceal documents and accounts. It would be enough, for example, to organise the poorer employees separately and to reward them for detecting fraud and delay on the part of the rich for nationalisation of the banks to be effected as smoothly and rapidly as can be.
The advantages accruing to the whole people from nationalisation of the banks—not to the workers especially (for the workers have little to do with banks) but to the mass of peasants and small industrialists—would be enormous. The saving in labour would be gigantic, and, assuming that the state would retain the former number of bank employees, nationalisation would be a highly important step towards making the use of the banks universal, towards increasing the number of their branches, putting their operations within easier reach, etc., etc. The availability of credit on easy terms for the small owners, for the peasants, would increase immensely. As to the state, it would for the first time be in a position first to review all the chief monetary operations, which would be unconcealed, then to control them, then to regulate economic life, and finally to obtain millions and billions for major state transactions, without paying the capitalist gentlemen sky-high “commissions” for their “services”. That is the reason—and the only reason—why all the capitalists, all the bourgeois professors, all the bourgeoisie, and all the Plekhanovs, Potresovs and Co., who serve them, are prepared to fight tooth and nail against nationalisation of the banks and invent thousands of excuses to prevent the adoption of this very easy and very pressing measure, although even from the standpoint of the “defence” of the country, i.e., from the military standpoint, this measure would provide a gigantic advantage and would tremendously enhance the "military might" of the country.
The following objection might be raised: why do such advanced states as Germany and the U.S.A. "regulate economic life" so magnificently without even thinking of nationalising the banks?
Because, we reply, both these states are not merely capitalist, but also imperialist states, although one of them is a monarchy and the other a republic. As such, they carry out the reforms they need by reactionary-bureaucratic methods, whereas we are speaking here of revolutionary-democratic methods.
This "little difference" is of major importance. In most cases it is "not the custom" to think of it. The term "revolutionary democracy" has become with us (especially among the Socialist-Revolutionaries and Mensheviks) almost a conventional phrase, like the expression "thank God", which is also used by people who are not so ignorant as to believe in God; or like the expression "honourable citizen", which is sometimes used even in addressing staff members of Dyen or Yedinstvo, although nearly everybody guesses that these newspapers have been founded and are maintained by the capitalists in the interests of the capitalists, and that there is therefore very little “honourable” about the pseudo-socialists contributing to these newspapers.
If we do not employ the phrase "revolutionary democracy" as a stereotyped ceremonial phrase, as a conventional epithet, but reflect on its meaning, we find that to be a democrat means reckoning in reality with the interests of the majority of the people and not the minority, and that to be a revolutionary means destroying everything harmful and obsolete in the most resolute and ruthless manner.
Neither in America nor in Germany, as far as we know, is any claim laid by either the government or the ruling classes to the name "revolutionary democrats", to which our Socialist-Revolutionaries and Mensheviks lay claim (and which they prostitute).
In Germany there are only four very large private banks of national importance. In America there are only two. It is easier, more convenient, more profitable for the financial magnates of those banks to unite privately, surreptitiously, in a reactionary and not a revolutionary way, in a bureaucratic and not a democratic way, bribing government officials (this is the general rule both in America and in Germany), and preserving the private character of the banks in order to preserve secrecy of operations, to milk the state of millions upon millions in “super-profits”, and to make financial frauds possible.
Both America and Germany "regulate economic life" in such a way as to create conditions of war-time penal servitude for the workers (and partly for the peasants) and a paradise for the bankers and capitalists. Their regulation consists in “squeezing” the workers to the point of starvation, while the capitalists are guaranteed (surreptitiously, in a reactionary-bureaucratic fashion) profits higher than before the war.
Such a course is quite possible in republican-imperialist Russia too. Indeed, it is the course being followed not only by the Milyukovs and Shingaryovs, but also by Kerensky in partnership with Tereshchenko, Nekrasov, Bernatsky, Prokopovich and Co., who also uphold, in a reactionary-bureaucratic manner, the “inviolability” of the banks and their sacred right to fabulous profits. So let us better tell the truth, namely, that in republican Russia they want to regulate economic life in a reactionary-bureaucratic manner, but “often” find it difficult to do so owing to the existence of the “Soviets”, which Kornilov No. 1 did not manage to disband, but which Kornilov No. 2 will try to disband.
That would be the truth. And this simple if bitter truth is more useful for the enlightenment of the people than the honeyed lies about “our”, “great”, “revolutionary” democracy.
* *
*
Nationalisation of the banks would greatly facilitate the simultaneous nationalisation of the insurance business, i.e., the amalgamation of all the insurance companies into one, the centralisation of their operations, and state control over them. Here, too, congresses of insurance company employees could carry out this amalgamation immediately and without any great effort, provided a revolutionary-democratic government decreed this and ordered directors and big shareholders to effect the amalgamation without the slightest delay and held every one of them strictly accountable for it. The capitalists have invested hundreds of millions of rubles in the insurance business; the work is all done by the employees. The amalgamation of this business would lead to lower insurance premiums, would provide a host of facilities and conveniences for the insured and would make it possible to increase their number without increasing expenditure of effort and funds. Absolutely nothing but the inertia, routine and self-interest of a handful of holders of remunerative jobs are delaying this reform, which, among other things, would enhance the country’s defence potential by economising national labour and creating a number of highly important opportunities to "regulate economic life" not in word, but in deed
Joined: 30 Jul 2006 Posts: 6060 Location: East London
Posted: Sun Sep 25, 2011 9:13 am Post subject:
This has almost certainly been posted before, but it seems useful to remind folks:
Henry Ford I said it well: “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” _________________ 'And he (the devil) said to him: To thee will I give all this power, and the glory of them; for to me they are delivered, and to whom I will, I give them'. Luke IV 5-7.
Saturday, September 24, 2011
Will the Real Culprits of Euro Doom Stand Up?
The Daily Bell, Anthony Wile
The Telegraph has carried an article entitled "The Great Euro Swindle" by Peter Oborne and Frances Weaver who have written a book on the subject (Guilty Men) from which the article is excerpted. They ask a good question, which is why those who have backed the unraveling euro – especially Europe's and Britain's leaders – are not exposed to more criticism and professional and personal ramifications from what has occurred.
One might think, given the extent of the disaster and the chaos it is causing, that there would more of an outcry to examine who was really behind the thing. In fact, as the euro and perhaps the EU continue to crumble, there will be attempts made to hold people accountable. But I will state for the record that these attempts will not be complete. Somebody, or perhaps several, will "take the fall" for everyone else. Oborne and Weaver, despite their evident sincerity, are seemingly feeding into this meme.
Unfortunately, from what I can tell, as furious as they apparently are, they are not willing to extend the blame to those who truly need to be held accountable. Instead, they are focused on what might be termed the "enablers" – those who carried out EU and euro policies and backed them but were not responsible for the concept itself, or its realization.
This is an old game. The Anglosphere power elite – a group of impossibly wealthy families that controls the world's central banks – is evidently and obviously responsible for much of what has gone wrong. But as the Euro project continues its decline, we will no doubt find blame is being laid elsewhere ... on highly placed functionaries. Of course, it's important, nonetheless, and a contribution to how things work. So let's review them before returning to our main thesis.
The first example is the Financial Times. Oborne and Weaver state that something went wrong with this prestigious mainstream newspaper about 25 years ago when it was captured by a "clique of left-wing journalists." As a result, the FT "has been wrong on every single major economic judgment over the past quarter century."
The biggest error was the support of the EU project itself, support that Oborne and Weaver call "religious." They cite the paper's Lex column, circa January 2001, as an example of how wrongheaded the paper could be. "With Greece now trading in euros, few will mourn the death of the drachma. Membership of the eurozone offers the prospect of long-term economic stability."
The paper also attacked euro-skeptics directly, claiming that those who differed with the paper were "immature." When the euro and the EU began to become undone in 2008, and countries like Ireland were suddenly exposed as failing, the FT continued its defense of the union. "European monetary union is a bumble bee that has taken flight," asserted the newspaper's leader column. "However improbable the celestial design, it has succeeded in real life."
What's the verdict, according to Oborne and Weaver? "For a paper with pretensions to authority in financial matters, its coverage of the single currency can be regarded as nothing short of a disaster."
Then there's the high-profile lobbying group, the Confederation of British Industry (CBI), the mission of which is to help create and sustain the conditions in which businesses in the United Kingdom can compete and prosper for the benefit of all.
The CBI claims to represent a broad cross-section of businesses. But according to the article, "by the mid-1990s a small clique of large corporations were firmly in control, and they had the director general they wanted in Adair (now Lord) Turner, later to become chairman of the disastrous Financial Services Authority (FSA). [This clique] claimed an overwhelming majority of British businessmen backed the single currency – a vital propaganda tool for pro-euro campaigners."
The CBI lobbied hard for Britain to join the single currency, even though it soon became obvious that most of its smaller, entrepreneurial business members were opposed to the CBI's position on the euro. Apparently, not representing the majority of its members on the EU issue did not deter the CBI leadership.
The BBC, England's "progressive" monopoly media, is perhaps the largest culprit in Oborne and Weaver's view. "The BBC betrayed its charter commitment and became a partisan player in a great national debate – all the more insidious because of its pretence at neutrality. For example, in the nine weeks leading to July 21, 2000, when the argument over the euro was at its height, the Today programme featured 121 speakers on the topic. Some 87 were pro-euro compared with 34 who were anti. BBC broadcasters tended to present the pro-euro position itself as centre ground, thus defining even moderately Eurosceptic voices as extreme." Here's some more:
As Rod Liddle, then editor of the Radio 4's Today programme, said: "The whole ethos of the BBC and all the staff was that Eurosceptics were xenophobes." He recalls one meeting with a senior BBC figure over Eurosceptic complaints of bias. "Rod, the thing you have to understand is these people are mad. They are mad."
In truth the Eurosceptics were only too sane. Margaret Thatcher, John Redwood, David Owen, William Hague and Bill Cash were mocked. But they grasped the problems the euro would bring. Speaking in the House of Commons in 1936, Winston Churchill said: "The use of recriminating about the past is to enforce effective action at the present."
So what should we learn from the argument over the euro? First, we should cherish that British trait, eccentricity. Study of the public discourse at the height of the euro debate shows how often pro-euro propagandists isolated their critics by labelling them cranks. Take Observer columnist Andrew Rawnsley's column on January 31, 1999: "On the pro-euro side, a grand coalition of business, the unions and the substantial, sane, front rank political figures. On the other side, a menagerie of has-beens, never-havebeens and loony tunes."
Of course, given what's going on with the euro and the EU these days, the loony-tunes all seem to be located in Brussels, fighting a never-ending battle to save the euro from a default that is seemingly inevitable. In fact, the air of unreality is such that top euro-leaders are apparently moving ahead with a facility to allow Brussels to issue EU-wide euro bonds even though a German constitutional court in a recent ruling has made such issuance doubtful indeed.
All this is interesting but, nonetheless, the people at the very top of this flawed project are again escaping identification. The politicians, media and business leaders that want the EU to succeed are an important part of the mess, but they were not the founders.
Who were? Some have suggested the EU is an outgrowth of some sort of German/Nazi plan, but that doesn't seem very feasible. The Anglosphere elite was very evidently in charge of a post-war world, and the EU would not have come to fruition if the Anglo-American powers-that-be didn't want it to occur.
No, the EU is evidently and obviously a project of the Anglosphere power elite that seeks regional building blocks on the way to a one world government. The central banking economy initiated and implemented by this power elite is responsible for the current economic crisis; but the elite banking families have many enablers including the politicians clustered about Brussels.
If there is to be a movement aimed at holding people responsible for the euro disaster, I would hope for once that it would at least explain more fully how the pyramid of leadership actually works. The people at the very top are responsible for the ongoing economic crisis, just as in the 1930s the central banks they set up crashed the world's economy. At the time, the blame was shifted away from central banks and their controllers and toward the securities industry (Wall Street, etc.).
Now, the same meme shall be played out when it comes to the euro and the EU. Somebody will be made to pay, but it won't be the real elites, the impossibly wealthy central banking families. They never seem to get blamed.
Trader's Goldman Sachs comments spark BBC hoax claims
Alessio Rastani, who claimed on BBC News 'I dream of another recession', is not a 'Yes Man' – but he could be an honest trader
John Plunkett, Tara Conlan and Oliver Laughland
guardian.co.uk, Tuesday 27 September 2011 14.29 BST
Article history
He caused outrage with his comments on the global economic meltdown claiming "governments don't rule the world, Goldman Sachs rules the world".
But is independent stock market trader Alessio Rastani, interviewed on the BBC News channel on Monday, all he appears to be?
Twitter was alive with suggestions that Rastani was in fact one of the "Yes Men", a band of "identity correction" artists who pass themselves off as the corporations you love to hate.
When asked by the Guardian, via email, to respond to the allegation that he a member of the prank group, Rastani chose his words carefully. But the BBC's own investigation has concluded that Rastani is authentic.
The BBC has previously fallen victim to the hoaxers who, according to their website, "impersonate big-time criminals in order to publicly humiliate them". Another of their number appeared on the BBC World news channel as a representative of Dow Chemical and announced the firm would fully compensate all those injured in the 1984 Bhopal gas tragedy.
Rastani told BBC News he had been "dreaming of this moment for three years … I go to bed every night and I dream of another recession".
There is no individual registered with the Financial Services Authority under the name Alessio Rastani. But a Twitter feed, using the name Alessio Rastani, appears convincing and dates back more than a year.
Rastani has a website, leadingtrader.com. The contact page, however, did not load, repeating an error message that it "could not establish a database connection".
The Yes Men featured in a 2003 documentary The Yes Men Fix The World, the subject of this interview with one of their number, Andy Bichlbaum.
A BBC spokesman said: "We've carried out detailed investigations and can't find any evidence to suggest that the interview with Alessio Rastani was a hoax. He is an independent market trader and one of a range of voices we've had on air to talk about the recession."
The Guardian contacted Rastani and asked he if was aware of the rumours about his identity circulating online. Rastani said he knew of the allegations but declined to comment on whether they were true, adding: "Conspiracy theories, eh!"
He added that he had been following the story's development "a bit on Twitter" and was aware of the online reaction to his comments. He said before making further comment he would have to seek advice from a third party, and was in talks "with other media organisations" about writing further pieces for them.
While the Yes Men issued a statement commending Rastani for his "masterful performance", and teasingly suggested his real name was Granwyth Hulatberi, who had once appeared on CNBC MarketWrap as a hoax World Trade Organisation representative, the group distanced itself from the trader. "Just kidding. We've never heard of Rastani. Despite widespread speculation, he isn't a Yes Man. He's a real trader who is, for one reason or another, being more honest than usual.
"Who in big banking doesn't bet against the interests of the poor and find themselves massively recompensed – if not by the market, then by humongous taxpayer bailouts? Rastani's approach has been completely mainstream for several years now; we must thank him for putting a human face on it yesterday."
Confronting the Crisis -- Views from the 2011 World Bank-IMF Annual Meetings
October 4, 2011
Policymakers, academics, and other market watchers discuss how to prevent the global economy from worsening further and plunging into stagnation. _________________ 'Come and see the violence inherent in the system.
Help, help, I'm being repressed!'
“The more you tighten your grip, the more Star Systems will slip through your fingers.”
From what we can gather, according to eye witness testimony, St. Louis PD has barricaded the Bank of America building and is refusing customer access to deposits.
Eye witness account:
'They would not let me get past that barricade, where those three guys are. I talked to the liutenant of the St. Louis Police Department - and he said they [customers?] don't have a legal right - but he was going to try to work out something, a symbolic gesture where eight people to pull out their money, I being one of them.'
He came back later and said they [BofA] will not go along with that. You will have to withdraw your money online.'
Note that the Bank of America web site has been intermittently in and out of service for the last 72 hours, making it difficult, if not impossible for customers to access their accounts.
Uploaded by RussiaToday on Oct 7, 2011
Across the Atlantic, the global financial troubles have reached the UK, as it becomes the latest nation to feel the pinch. Rating's giant Moody's has downgraded 12 of Britain's financial firms and banks, including the Royal Bank of Scotland and Lloyds TSB. That comes after the Bank of England chief said the country's economy is at its lowest point since the 1930s if not ever. RT gets more on this from British Euro MP, Godfrey Bloom.
RT on Twitter http://twitter.com/RT_com
RT on Facebook http://www.facebook.com/RTnews
_________________ 'Come and see the violence inherent in the system.
Help, help, I'm being repressed!'
“The more you tighten your grip, the more Star Systems will slip through your fingers.”
Whilst all the bank bailouts are now going to be worth zero to the taxpayer and alongside their collapse nation states are about to go under as well, this event shows that there is still hope on the planet.
A country that knows how to deal with the banksters....
Hungary Blames the Banks
By FLOYD NORRIS
Published: September 29, 2011
Homeowners took risks in 2005 and 2006 that came to seem foolish, if not reckless, and wound up with mortgages they could not afford. Some blamed the banks for luring them into taking the risks. The banks offered some modifications, but said they believed it was the homeowner who should suffer for gambling and losing.
Enlarge This Image
Bernadett Szabo/Reuters
Prime Minister Viktor Orban said Hungary would take “suitable countermeasures” to defend its policies against critics.
So it was in the United States. To allow people to buy homes they really could not afford, banks offered mortgages with artificially low monthly payments in the early years. When home prices fell, the mortgages blew up.
So, too, it was in Hungary, where home mortgages were relatively rare until the banks made it possible for buyers to avoid high interest rates, but with a big risk.
Mortgages denominated in foreign currencies became wildly popular, because that way borrowers could get low interest rates, and thus afford to buy homes that would otherwise be out of reach. But then the local currency, the Hungarian forint, plunged in value, and homeowners faced rapidly rising monthly payments. They owed more forints than they had borrowed.
In the United States, the sanctity of contracts has generally prevailed. The banks have been forced to pay multibillion-dollar penalties for bad behavior, but that does little for the anguished homeowners.
In Hungary, the populist government has decided it is the banks — mostly foreign-owned — that should suffer. Under a new law, signed by Hungary’s president this week, persons with loans denominated in Swiss francs can pay them off using an exchange rate of 180 Hungarian forints to the franc — about a 25 percent discount to the current market rate of almost 240 forints. There are similar bargains offered on loans denominated in euros and Japanese yen.
It is not clear how much this will really help homeowners. Few of them have the money on hand to pay back their loans, and to get the money they presumably would have to borrow from banks. Andras Simor, the governor of Hungary’s central bank, estimates that only one-fifth of borrowers will be able to take part.
The move has outraged the financial establishment of Europe. It represents a serious breach to the patterns followed in much of the world since the financial crisis burst open three years ago. Banks have lost a lot of money, and been bailed out, but bank executives have done quite well. Those who lent money to banks have generally gotten all their money back. Customers by and large have been forced to bear the brunt of their behavior, whether or not there was evidence the banks had misled them.
In Hungary, the lure of foreign currency loans back in 2005 was clear. Interest rates on mortgages denominated in Swiss francs were around 4 percent, while rates on forint loans could be in the double digits. Thanks to the lower monthly payments, a buyer could qualify for a Swiss franc loan who could not hope to get a loan in local currency. Soon a vast majority of mortgage loans were made in Swiss francs.
The risk was obvious. All the borrowers had income in forints, not francs. If the forint lost value, their loan payments could multiply.
Now the government claims that banks misled borrowers. The extent to which that is true is hard to gauge. But there is no doubt that a widely voiced theory was that because Hungary was a growing economy, its currency should appreciate against the staid old currencies of Western Europe. And that is exactly what happened in the years running up to the credit crisis. Those who failed to take out mortgages in Swiss francs or euros looked foolish.
When the forint began to lose value, banks did try to ameliorate the situation. In 2009, they offered to extend loan periods, so that homeowners could make lower monthly payments that would last for more years.
Earlier this year, with the forint around 220 to the franc, the banks came up with a plan that was reminiscent of the pay-option loans that helped to create the American financial mess. Borrowers could choose to make payments as if the forint were at 180 to the franc, and continue to do that through 2014. That would leave many with manageable payments, since most of the loans were taken out at exchange rates from 140 to 180 forints to the franc.
The savings from those lower payments would, however, simply be added to the principal of the loan. It was negative amortization, likely to postpone the pain but not alleviate it.
The Hungarian government, elected in 2010, has done a lot of things that upset others in Europe. It passed a media law that seemed aimed at silencing critics. It walked away from an agreement with the International Monetary Fund, choosing to seek fiscal stimulus rather than reduce deficits, as the previous government had promised to do after it was bailed out in 2008. The prime minister, Viktor Orban, blamed the central bank for the country’s fiscal problems and cut the salary of its governor, Mr. Simor, by 75 percent.
Now it has gone after the banks.
Much of the Hungarian banking system is owned by Austrian banks, and Austria’s finance minister, Maria Fekter, is reported by the Austrian business newspaper Wirtschaftsblatt to have sent a letter to Hungarian officials saying the new law violated “all expectations an investor can have in a functioning market economy and democracy.”
Similar sentiments were voiced by Josef Christl, a former executive director of Austria’s central bank, who is now an economics professor and a consultant to banks, including Erste Bank, Austria’s largest and a major player in the Hungarian market.
“It is a serious violation of existing laws,” he told me, pointing to European laws barring discrimination against companies from other countries. But there are Hungarian-owned banks, and they seem to be treated equally badly.
Mr. Christl said the law itself had helped to depress the value of the forint by raising fears about the government’s economic policies. He said that had made the situation worse for borrowers, and he was dismissive of the country’s economic record. “Hungary is an underperformer with respect to growth and an overperformer with respect to debt,” he said.
The rating agencies voiced alarm. Fitch said the law had set a “dangerous precedent.” Moody’s called it a “worrying precedent.” In several other Eastern European countries, foreign-currency mortgages have turned into disasters.
At a news conference, the Hungarian central bank governor, Mr. Simor, said the move would “weaken credit institutions’ ability to support economic growth by extending credit. And that in turn will lead to a deterioration in Hungary’s growth prospects and generate lower revenue for the government budget.”
It is far from clear that the Hungarian government can make the law stick. There are issues of European and Hungarian law, and there is the fact that Hungary, like many other governments, needs access to the international capital markets.
Even if the law does go into force, it would hardly be surprising to see the banks refuse to make new loans to enable borrowers to pay off old loans at a discount.
Speaking in Parliament earlier this month, the prime minister, Mr. Orban, said he “expected that international organizations will attack us in international forums.” He said that “in case of unfavorable judgments, we will react with suitable countermeasures.” He did not say what those might be.
But even if Hungary is slapped down, Mr. Orban has captured an antibank and antifinancier spirit that is much more widespread.
“It is time for the financial sector to make a contribution back to society,” said José Manuel Barroso, the European Commission president, as he proposed this week a tax on financial transactions.
The banks say that would be counterproductive and would drive trading to the United States, and they will probably prevail in the end, since the British government agrees. Do not be surprised if the debate on the proposal includes references to Jesus driving the money changers out of the temple.
When Angela Merkel, the German chancellor, met with Pope Benedict in Germany last week, she chose to highlight concerns over just where power resides.
“We spoke about the financial markets and the fact that politicians should have the power to make policy for the people and not be driven by the markets,” The Financial Times quoted her as saying after the meeting. “This is a very, very big task in today’s time of globalization.”
Floyd Norris comments on finance and the economy at nytimes.com/economix.
Joined: 25 Jul 2005 Posts: 18335 Location: St. Pauls, Bristol, England
Posted: Fri Nov 18, 2011 1:01 am Post subject:
GEAB N°59 is available! Global systemic crisis: 30,000 billion US dollars in ghost assets will disappear by early 2013 / The crisis enters a phase of widespread discounting of Western public debt
- Public announcement GEAB N°59 (November 16, 2011) -
As we come to the end of the second half of 2011, it is evident that 15,000 billion in ghost assets have gone up in smoke since last July, just as was anticipated by LEAP/E2020 (GEAB N°56 ). And, according to our team, this process figures to continue at the same rate throughout the year to come. Indeed we estimate that, with the introduction of a 50% discount on Greek government debt, the global systemic crisis has entered a new phase: that of the generalized discount on Western public debt and its corollary, the fragmentation of the global financial markets. Our team believes that 2012 will bring an average discount of 30% of total Western public debt (1), plus an equivalent amount in loss of assets from the balance sheets of worldwide financial institutions. Specifically, LEAP/E2020 anticipates the loss of 30,000 billion ghost assets by early 2013 (2), with an acceleration in 2012 of the partitioning process of the global financial market (3) into three increasingly disconnected currency areas: Dollar, Euro, and Yuan. These two phenomena feed into each other. They will also be the cause of a sharp decline of 30% on the part of US currency in 2012 (4), as we announced last April (GEAB N°54 ), which will occur amidst a sharp reduction in demand for the US dollar and the worsening of the US governmental debt crisis. The end of 2011 will therefore see, as anticipated, the trigger of the European debt crisis detonating a US bomb.
[b]When Brown bailed out the banksters to the tune of around £11trillion he said the British taxpayer would make money on the deal. Never having even run a whelk store this is now the reality.
The most profitable parts of N Rock go for a song and the taxpayer is straddled with £21billion of toxic waste (so they say) its probably x50 more...[/b]
Evening Standard London
Virgin Money chief executive Jayne-Anne Gadhia today promised a major challenge to the existing High Street banks after it won the bid battle for Northern Rock.
A consortium led by Virgin will take over the taxpayer bailed-out Northern Rock at the end of the year, paying the Government £747 million now and up to another £250 million in the future.
Virgin Money will be floated on the stock market by 2016.
The deal will see Northern Rock's 75 branches rebranded under the Virgin name early next year.
It also brings an extra one million customers into Virgin Money and adds mortgages, savings and current accounts to its existing range of services which cover credit cards, insurance and investments.
Virgin founder Sir Richard Branson said: "Banking in the UK needs some fresh ideas and an injection of new competition. Virgin has a history of entering new sectors to improve service and provide value for customers. We plan to do the same in banking."
Virgin Money has been pursuing Northern Rock for over a year. It has seen off possible bids for what had been carved out as the "good bank" from both Coventry and Yorkshire building societies, Lord Levene's NBNK putative bank vehicle and US private equity firm JC Flowers.
The taxpayer pumped £1.4 billion into Northern Rock, while the "bad bank" NRAM, which is not part of this deal, still owes the Bank of England more than £20 billion.
The Virgin bid is backed by US billionaire Wilbur Ross who also supported its bid for more than 300 RBS branches sold off last year, and an unnamed Gulf sovereign wealth fund.
Gadhia said: "Our quest to make banking better starts here.
"Retail banking in the UK has been underinvested as the big banks suffered from major structural problems.
"We will keep all 75 branches open and then hopefully grow the network," she added.
Sir David Clementi, chairman of Virgin Money, said: "It is our intention to build a significant banking competitor in the UK and to take that business to the public markets within five years through an initial public offering."
Virgin was one of the original bidders for Northern Rock shortly before it was nationalised in February 2008 after it had suffered the first run on a British bank for more than a century a few months before.
At the end of June Northern Rock had net assets of £1.1 billion.
Keith Morgan, chief executive of UKFI, which controls the taxpayer stakes in bailed-out banks, said: "Virgin's offer maximises value for taxpayers."
Comment: A bargain, but be grateful for £1 billion
Wind back to February 2008 and Virgin was the last remaining bidder for Northern Rock.
It planned to inject £1.25 billion of fresh capital from its own resources, its partners and existing shareholders. This would have given it 55% of the former building society which had been brought to its knees by reckless lending policies unmasked when wholesale money markets froze up.
That was for the whole of Northern Rock. Today Virgin Money has bought only the "good bank" part for slightly less than it offered back then. We the taxpayer still have the pleasure of owning the bad bank which in turn owes the Bank of England £20 billion.
So on the face of it Virgin has got a great bargain. The taxpayer has lost almost £500 million from the £1.4 billion it pumped into the good part of Northern Rock. Virgin gets what it wants for less than it originally offered.
But that is to ignore what has happened in the banking industry over the last three and a half years.
Undoubtedly if Chancellor Alistair Darling had accepted Virgin's 2008 bid rather than nationalising it, we the taxpayer would have been in there bailing it out again within months.
That would have cost even more and we could potentially have ended up with nothing.
Be grateful for the £1 billion.
Nick Goodway
.
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