At universities from Glasgow to Kolkata, economics students are fighting their tutors over how to teach the subject in the wake of the crash. The Guardian's senior economics commentator, Aditya Chakrabortty, reports from the frontline of this most unusual and important academic war.
The banking crash plunged economies around the world into crisis - but it also created questions for economics itself. Even the Queen asked why hardly any economists saw the meltdown coming. Yet economics graduates still roll out of exam halls and off to government departments or the City with much the same toolkit that, just five years ago, produced a massive crash.
Now economics students around the world are demanding a radical change of course. In a manifesto signed by 65 university economics associations from over 30 different countries, students decry a 'dramatic narrowing of the curriculum' that they say prefers algebra to the real world and teaches them there's only one way to run an economy.
As fights go, this one is desperately ill-matched - in one corner, young people fighting to change what they're taught; in the other, the academics who've built careers researching and teaching the subject. Yet the outcome matters to all of us, as it is a battle over the ideas that underpin how we run our economies.
Aditya meets the students leading arguing for a rethink of economics. He also talks to major figures from the worlds of economics and finance, including George Soros, the Bank of England's chief economist Andy Haldane, and Cambridge author Ha-Joon Chang.
Produced by Eve Streeter
A Greenpoint production for BBC Radio 4.
Dr Ha-Joon Chang
• Herbert Simon: Reasons in Human Affairs (Stanford University Press 1983)
• Phyllis Deane: The State and the Economic System: An Introduction to the History of Political Economy (Opus 1989)
Rob Johnson
• Frank Knight: Risk Uncertainty and Profit (1921) ; On the History and Methods of Economics (1956)
• John Maynard Keynes: General Theory (1936); A Treatise on Probability (1921)
• Rajani Kanth: Breaking with the Enlightenment (NJ Humanities Press 1997)
• Stuart Ewen: PR!: The Social History of Spin (Basic Books 1998)
Professor Steve Keen
• Hyman Minsky: Can "It" Happen Again? (Routledge 1982)
• John Blatt: Dynamic Economic Systems (Routledge 1983)
• Karl Marx: Grundrisse (1939)
Professor Diane Coyle
• John McMillan: Reinventing the Bazaar - A Natural History of Markets (Norton 2003)
• Thomas Schelling: Micromotives and Macrobehaviour (Norton 1978)
Dr Victoria Bateman
• John Maynard Keynes: The General Theory of Employment, Interest and Money (chapter 12)
• Avner Offer: The Challenge of Affluence (OUP 2006)
• Mariana Mazzucato: The Entrepreneurial State: Debunking Public vs Private Sector Myths (Anthem Press 2013)
Professor Wendy Carlin
• David Soskice and Peter Hall (ed): Varieties of Capitalism (OUP 2001)
• Paul Seabright: The Company of Strangers: a Natural History of Economic Life (PUP 2004)
Professor Philip Mirowski
nakedcapitalism.com or larspsyll.wordpress.com
Lord Robert Skidelsky
• Josh Ryan-Collins, Tony Greenham, Richard Werner and Andrew Jackson: Where Does Money Come From? A Guide to the UK Monetary and Banking System (New Economics Foundation 2014)
• Anat Admati and Martin Hellwig: The Bankers' New Clothes: What's Wrong with Banking and What to Do About It (Princeton University Press 2013)
• Erik Brynjolfsson and Andrew McAfee: The Second Machine Age: Work Progress, and Prosperity in a Time of Brilliant Technologies (WW Norton 2014)
Dr Devrim Yilmaz
• Karl Polanyi: The Great Transformation (1944)
Professor Danny Quah
• Edward Tufte: The Visual Display of Quantitative Information (Graphics Press 2001)
• Paul Kennedy: The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000 (Random House 1989)
• Jared Diamond: Guns, Germs, and Steel: A Short History of Everybody for the Last 13,000 Years (Vintage 1998)
Yuan Yang, Rethinking Economics
• Tony Lawson: Economics and Reality (Routledge 1997)
Joe Earle, Post-Crash Economics Society
• George Packer: The Unwinding (Faber 2014)
• Rod Hill and Tony Myatt: The Economics Anti-Textbook: A Critical Thinker's Guide to Economics (Zed 2010)
The Intelligent Person's Guide to Economics
###########################################
There are at least 9 different schools of economics but neoclassical free-market
ideology continues to dominate academia, even after massive failures
Prof Peter Saunders
Introduction
Ha-Joon Chang’s latest book, Economics: The User’s Guide [1], is true to its
title. It starts from the premise that most people have two mistaken views about economics. The first, which is also believed by the majority of economists, is
that it is a science like physics or chemistry and that consequently there is
only one correct answer to any question and we can rely on the professionals to
find it. The second is that the subject is far too difficult for any ordinary
person to grasp; we just have to accept the experts’ word for how things are.
Chang points out that what is widely accepted as the theory of economics, the
so-called neo-classical school, is actually only one of many different kinds of
economic theory. He describes nine of them in terms that you can follow and with
enough background and detail to give you a reasonable grasp of the differences
among them and an understanding of why he believes that the current dominance of
neo-classical economics is harmful. By the time you have finished the book, you
will probably agree with him. Or if you do not, at least you will have a better
understanding of what you do believe.
The dominance of free market economics
For a long time now, the idea of the free market has dominated politics and
commerce in most of the world. The market, we are told, is better than any other
conceivable mechanism for delivering the right goods and services to the right
people at the right costs [2], and this must make it the best basis for
understanding and managing an economy.
As long as we resist the temptation to interfere, the market will achieve the
best possible outcome. Above all, we must not complain if a small number of
people are doing far better out of this than we are; that is part and parcel of
the deal. If we try to share the cake more fairly, we will inevitably reduce the
amount to be shared and we will all end up with less.
This is the dogma that led to the big bang of the 1980s, the 1999 repeal of the
Glass-Steagall Act, which was passed in the middle of the last major depression
and separated main street banks from investment banks in the US; the Commodity
Futures Modernization Act of 2000, which stopped the US government from
regulating derivatives; and the policy of “light touch” regulation in the UK.
There was also widespread privatisation, justified by the claim that anything –
utilities such as energy and water, railways, schools, whatever – is bound to be
more efficient and more effective if it is governed by a market. If there isn’t
a natural market, then we must create an artificial one, with hospitals
competing for patients and primary schools competing for pupils. (Ironically,
privatised companies like railways and energy now negotiate targets and prices
with the government, which is disturbingly similar to the system that was used
in the Soviet Union until its economy collapsed.)
Clearly this has worked well for the better off. They gain the most from lower
income and capital gains taxes and a relaxed attitude towards tax avoidance.
(The one tax that UK governments have felt able to increase is VAT, which hits
the poor more than the rich because they spend a larger proportion of their
income on goods that are subject to it.) If the market turns out in the end not
to be the best way of running schools and hospitals, that doesn’t matter to the
rich because they don’t use the state system.
When industries and utilities are privatised, the prices are deliberately set
low to make sure that the shares are sold, but it is only people with money to
spare who can take advantage of this. Soft touch regulation allowed people in
the City and on Wall Street to make eye-watering amounts of money through
activities that contributed nothing to the country and left massive bills for
everyone else to pick up when the bubble burst.
Less clear is what all this was doing for those not so well off, which is most
of us. Inequality, which had fallen in developed countries from about 1910,
began to rise again in the 1980s and the gap between rich and poor continues to
widen [3], [4] (Capitalism and the Inexorable Rise of Inequality, SiS 63). But
as long as things appeared to be going well, the majority of economists and
politicians did not consider this a matter for concern. The tide was rising;
sooner or later all the boats would be lifted.
After the Crash
There have always been some who doubted that the so called neo-classical theory
of economics really is the best foundation for economic and social policy.
Leaving everything to supply and demand may be an effective way of running
corner stores and restaurants and automobile companies, but does that make it
suitable for taking major decisions at a national or international level? And
even car manufacturers benefit from subsidies, tariffs, and the shelter of
government assistance when things are bad.
Until recently these voices were drowned out by the conventional wisdom. We were
told that the ‘science’ of economics had proven this was the only sensible way
of running an economy. The free market was responsible for the prosperity of the
West [2] and it is through the free market that it and the rest of the world
will continue to prosper.
Actually that’s not what history tells us. One of Chang’s chief criticisms of
economists is that they generally ignore history, presumably because they
believe that a theory that is so self-evidently true needs no empirical
verification. In fact, both the UK and the US developed their economies by
shielding their industries from the operation of the market. Britain had an
empire to ensure a monopoly of trade. America built up its economy behind a high
tariff wall: the very policy that it prevents developing countries from adopting
today. Chang also reminds us that the advanced capitalist economies grew fastest
between the 1950s and the 1970s when there were more regulations and higher
taxes than in the period that began with Ronald Reagan and Margaret Thatcher.
Greece has been in the news with the left socialist Syriza Party caving (predictably) to the IMF’s economic terrorism, resulting in bank runs and capital controls.
Echoing the previous two bail outs back to 2009 and 2010, the new “plan” will undoubtedly result in more collateral seizure of Greek assets for the engineered debt crisis shock doctrine that controls virtually all nations.
Nothing new here, but it is illustrative for understanding the global banking structure that emerged from World War II at the Bretton Woods Conference in 1944. However, as we will see, the real structure extends further back into the shadows of World War I.
Originally Bretton Woods plan tied to the U.S. dollar-backed by gold, in 1971, the dollar became fiat (Nixon shock), resulting in a global fiat system centered around command and control large-scale economic planning and fixed exchange rates. Under he guise of economic stability, the ruse was sold that this system would provide “security” and prevent rampant speculators from wrecking economies due to tying them to central banks.
While there is some truth to this position of regulation limiting rampant speculation, the limitations of central banks only works if central banks are independent and national, printing their own currency.
Of course, they are not, and the ability of the megabanks to own national economies through bailouts and being “too big to fail” shows however well-intentioned or effective that may have been in the past, it is no longer the case.
The Marshall Plan was an aspect of this Bretton Woods restructuring for Europe, and in regards to the incorrect myth of western conservatives concerning the ridiculous notion that the U.N. was a “Soviet Plot” (when the land was donated by the Rockefellers), Dr. Kerry Bolton cites Carroll Quigley:
“The eminent American historian Carroll Quigley, Foreign Services School, Georgetown University, Harvard and Princeton, describes the post-war situation leading to the Cold War, stating that the immediate policy of the USA rested on free trade and aid via the Marshall Plan which would have included assistance for economic recovery to the Soviet bloc. However the USSR saw this as a means for the USA to establish its pre-eminence in the post war era. Quigley, a liberal globalist who saw the “hope” of the world being through a world government, wrote:
On the whole, if blame must be allotted, it may be placed at the door of Stalin’s office in the Kremlin. American willingness to co-operate continued until 1947, as is evident from the fact that the Marshall Plan offer of American aid for a co-operative Europe recovery effort was opened to the Soviet Union, but it now seems clear that Stalin had decided to close the door on co-operation and adopted a unilateral policy of limited aggression about February or March of 1946. The beginning of the Cold War may be placed at the date of this inferred decision or may be placed at the later and more obvious date of the Soviet refusal to accept Marshall Aid in July 1947.[14]”
Quigley refers to the American initiative for atomic energy “internationalization” and how this arguably very dangerous scenario for world domination was again scotched by Stalin:
“The most critical example of the Soviet refusal to co-operate and of its insistence on relapsing into isolation, secrecy, and terrorism is to be found in its refusal to join in American efforts to harness the dangerous powers of nuclear fission.[15]”
This was the reason for the Cold War, and while the dialectic was in a sense managed, in another sense it was not. The atomic race is connected to this, as the Baruch Plan was rejected by the USSR, as the U.S. sought to use energy dominance as a means of overt control.
Aside from these matters, the Cold War was also fueled economically as a race to further hedge control on the part of the Anglo-American Atlanticists through shadow banking power. Targeting Russia as the continual “Great Game” foe, the Atlanticists’ global economic structure allowed the West to establish the means of economic terrorism through the IMF and other entities, as I have highlighted with Yeltsin and Russia in the 90s, and the Ukraine coup more recently.
Bolton again comments on Bertrand Russell and the Fabian Atlanticists genocidal attitude towards CIA and NGO operations against Russia, even in the Stalinist regime:
“Pacifist guru Bertrand Russell wrote in 1946 in the Bulletin of Atomic Scientists, expressing frankly the liberal internationalist attitude towards the USSR, which was anything but benign. Russell, who was to play a key role along with many other eminent liberals and leftists as Stalin-hating Cold Warriors in the CIA founded Congress for Cultural Freedom,[26] makes it plain that the atomic bomb represented the ace card to the forcible establishment of a world state:
The American and British governments… should make it clear that genuine international co-operation is what they most desire. But although peace should be their goal, they should not let it appear that they are for peace at any price. At a certain stage, when their plans for an international government are ripe, they should offer them to the world… If Russia acquiesced willingly, all would be well. If not, it would be necessary to bring pressure to bear, even to the extent of risking war.[27]”
‘Euro Sharks’ – Greek prime minister Alexis Tsipras, will there be a ‘Grexit’ or an IMF deal? (Photo link swissinfo.ch)
Seen in this context, the 2009-2015 Greek financial crisis can be understood as a maintenance of the Greek participation in the EU, as well as making sure Greece does not pivot towards Russia.
Syriza’s leftist socialism even appears to play into the oligarchical cabal by putting on a front of opposition to the IMF’s shock therapy, while caving within no time in surrendering a platform that was all centered around further IMF loan sharking.
This is why the banking oligarchs have perpetually funded and supported leftist, socialist and internationalist movements, as they have a common universalist impetus – the so-called humanitarian human rights initiative.
As Plato noted, democracy leads to tyranny and mob-ocracy, run by oligarchs. Why might this be?
“Democracy” is premised on the lowest common denominator as a cult of conformity. Built within it are the seeds of its own self-consuming destruction, as the bar for universalist “unity” is continually lowered and mass marketed based on the appeal to baser and baser appetite fulfillment of the utilitarian “happiness” principle.
Of necessity, it must politically force the false equalitarian conformism it’s based on universally, leaving total destruction in its path. This is why the mega-banks and their NGOs, think tanks, shell companies, intelligence agencies and social engineers constantly foist endless color revolutions, terror groups, hashtag revolutions, terror groups, etc., because the wrecking ball power these destabilizing groups have are tremendously advantageous to centralized (banking) interests seeking consolidation of national assets, economies and pensions (as well as running black markets!).
At the apex of this public structure is the Bank for International Settlements, the central bank of central banks.
Ironically, the BIS issues reports that are at times accurate, warning the policies of their dozens of member banks are rather destructive, even mentioning the toxic nature of public-private debt mixing scams. Admitting the perpetual debt-based hole is unsustainable, the banker members don’t seem to pay much attention to these “warnings” – in other words, reading a little between these lines, the policies parasitically wreck and loot the host nations.
A bankster-dominated speculative economy that is government-backed by the collateral of the people’s savings and wealth quickly devolves from a production-based economy to a financial gambler’s speculative economy.
As we read concerning the BIS’ own statement, it becomes evident the global government was in the process of consolidation at the time of even World War I through the Young Plan and the BIS as a management of reparations (a World War prior to Bretton Woods, the IMF and World Bank). The real reason it was established was a secretive CIA-Swiss enclave for world management where the Swiss government has no jurisdiction.
Throughout the Cold War, this oligarchy was emboldened to expand into international control through the continual looting of Russia or any of its potential allies:
“Established on 17 May 1930, the Bank for International Settlements (BIS) is the world’s oldest international financial organisation. The BIS has 60 member central banks, representing countries from around the world that together make up about 95% of world GDP.
The head office is in Basel, Switzerland and there are two representative offices: in the Hong Kong Special Administrative Region of the People’s Republic of China and in Mexico City.
The mission of the BIS is to serve central banks in their pursuit of monetary and financial stability, to foster international cooperation in those areas and to act as a bank for central banks.”
21WIRE contributor and author Jay Dyer is commentator on media, art, philosophy and culture. This article, along many other articles, and Jay’s podcast archive can be found on his blog Jay’s Analysis.
Crash imminent for last 9 years but regulation is still 'anytime' & 'light touch'.
Basel further reins in banks' use of capital models
Thu Mar 24, 2016 3:00pm GMT
* Basel maps out new curbs on how banks tot up risks
* No date fixed for start of new rules
* Basel says changes won't significantly bump up capital
By Huw Jones
http://www.reuters.com/article/idUKL5N16W1IQ?irpc=932
LONDON, March 24 (Reuters) - The world's largest banks will have less discretion over how much capital to hold against loans turning sour, global regulators proposed on Thursday.
Regulators want to cut complexity and inconsistency in capital requirements among big banks that use their own models, as opposed to methods set out by regulators, to add up credit risks.
Models typically point to lower capital requirements, a big advantage as credit risk accounts for 70 percent of a bank's capital buffer. Regulators suspect big banks of using models to make capital ratios appear stronger than they are.
The proposals from the Basel Committee of banking supervisors, whose rules are applied in all the world's main financial centres, mark a further erosion in the use of models.
Banks fear a "Basel IV" or step change in capital requirements compared with Basel III, which was introduced after the 2007-09 financial crisis.
Basel said the proposed rules wouldn't significantly increase overall capital requirements, and stopped short of the complete ban on models some Basel members had wanted since the crisis.
"The measures announced today largely retain the use of internal models for the determination of credit risk weighted assets, but with important safeguards that will promote sound levels of capital and comparability across banks," the committee's chairman Stefan Ingves said.
Basel is proposing to scrap models for loans to other banks and financial institutions, for equities holdings, and for loans to companies with total assets of more than 50 billion euros, a threshold that would capture about 200 companies.
Instead, banks would have to use the more conservative standard approach set by regulators.
Basel is also proposing a floor, meaning banks using models cannot hold less than 60-90 percent of the capital the standard approach recommends for credit risk.
The committee aims to finalise the rules by the end of this year.
It offered further incentives to rein back model use.
Basel said it was reviewing a rule that requires banks using models to apply them to all calculations where models are allowed. This rule was aimed at stopping banks from using a mix of models or standard approach, depending on which came up with the lower capital requirement.
Furthermore, big banks that are allowed to use models could instead use the standard approach for all their capital calculations and still be deemed to comply with Basel's rules. (Reporting by Huw Jones; Editing by Mark Potter) _________________ --
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com http://aanirfan.blogspot.com
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
On Tuesday, in a newly digitally published history, the Bank revealed that it had helped the Nazis sell gold looted from Czechoslovakia in March 1939. The documents put Norman right at the heart of the decision, raising fresh questions about his suspected Nazi sympathies.
According to the documents, the gold was being held in the Bank’s vaults on behalf of the Bank for International Settlements (BIS) – the central bank for central banks. On March 21 1939, BIS requested the Bank transfer £5.6m of gold – £735m in today’s prices – from “Number 2 Account to Number 17 Account”.
The Bank was “fairly sure” the transfer was from the National Bank of Czechoslovakia to Germany’s Reichsbank, the record states. But, regardless of its suspicions, the transfer was made that very same day. Over the following 10 days, the Reichsbank sold £4m of the gold, with the proceeds poured into Germany’s ongoing rearmament.
There is little doubt the Bank was aware of the significance of its decision. The request came just days after Hitler had invaded Czechoslovakia, in direct breach of the Treaty of Munich of September 1938, when Germany was given the Sudetenland in exchange for peace.
Moreover, the request came from the then BIS president, J W Beyen, a Dutchman. The Czech central bank, under threat from its new Nazi bosses, had instructed Beyen to make the transfer. The Netherlands at the time was feeling extremely vulnerable to invasion and desperately trying to demonstrate its neutrality, so Beyen was in no position to object.
Secret war documents may reveal that Germany had staunch allies at the Bank of England
Chris Blackhurst @c_blackhurst Sunday 30 March 1997
In a vault in Basle, Switzerland, lie some of the most politically sensitive documents of the Second World War.
Historians uncovering the story of the gold trade that financed the Nazi war machine would love to have sight of them - not because they will provide further evidence of Swiss guilt in the trade but because they could expose other countries involved, including Britain.
In the saga of Nazi gold, it is always the Swiss who are to blame; the Swiss who were prepared to accept bullion looted from the victims of German oppression to the extent that the war was prolonged longer than necessary. But if the historians are right, these papers will go to the heart of the British financial establishment and raise questions about the allegiance of one of the most powerful figures of his day, former Governor of the Bank of England, Sir Montagu "Monty" Norman. Academics believe the archive will show that the Bank, led by Sir Monty, bent over backwards to help the Nazi war machine.
In an age without television and media access, Norman's was a household name. Famed for his supercilious manner, bad temper and contempt for the political leaders of his day, he was a banker's banker, whose aim was to create a network of central bankers like himself, free of the control of governments.
That, at least, is one explanation for Norman's behaviour in the years before the Second World War. There is another: that Norman was a German sympathiser, who wanted to ensure the German economy could fuel the country's war machine and that the Nazis had an outlet for their looted gold.
So concerned were the Americans about Norman that in the summer of 1942 President Roosevelt sent a report on his activities to Sir Winston Churchill. The British Prime Minister asked Anthony Eden, his Secretary for War, to look into the American concerns, in particular the allegation that Norman had met Hjalmar Schacht, a senior German official in neutral Sweden, in May 1941.
Herr Schacht was thought to be trying to broker some sort of peace deal. Norman was his chosen conduit. Papers filed in the Eden archive at Birmingham University reveal what must have been an unprecedented exchange: Churchill's right-hand man quizzing the Governor of the Bank of England about his allegiances. Norman denied seeing Herr Schacht for over a year.
For Churchill, this was not good enough. In a memo to Eden, the Prime Minister pointed out the war was now three years old, not one year. Norman's answer, thought Churchill, was inadequate. He instructed Eden to dig deeper. But at this point, the file goes dead: what further details Eden extracted from Norman are not recorded. Typically, Churchill did not want the Americans to know of his concerns. They were sent a bland reassurance that all was well with Norman.
So what was the Governor up to? Scott Newton, lecturer in modern history at Cardiff University, says there is "nothing in the file to clear Montagu Norman of the American charge". He was rightly suspected, says Newton, of being involved in "an unsavoury peace deal behind the government's back. Bearing in mind the report came from the US President, it would have relied upon good intelligence."
Norman, says Newton, "was trying to prevent the war developing to the point where the Bank of England was in danger of losing the prestige it had built up between the wars. Norman had a view that the world ought to be run by central bankers. He was not in any sense a democrat and he was worried the war would undermine the contacts he had created." Churchill, says Newton, "could not stand him; he distrusted him enormously".
The extent of the Bank of England's involvement has still not been disclosed. Documents from the period have convinced several historians that the Bank, through its redoubtable Governor, played a pivotal role. But the records which could reveal the detail remain inaccessible to historians in the Bank of International Settlements based in Basle, Switzerland.
Established after the First World War to smooth the system of compensation by Germany to the Allies for the conflict, BIS is a bank for central banks. It is more than a mere mechanism for moving money between governments, however. The meetings of its board are talking shops for the world's most powerful financial figures, a club where they can talk without interference from politicians and government officials. One of its most influential members in the years before the Second World War was Sir Montagu Norman.
On 15 March 1939, Hitler completed his rout of Czechoslovakia, making a triumphant entrance into Prague. One of his first acts was to order the directors of the Czech national bank to hand over the country's gold reserve. For Hitler, the Czech gold was a vital replenishment of rapidly dwindling reserves. An increasingly isolated Germany needed gold to barter for raw materials.
The Czech directors told the Germans it was too late; the gold had already been deposited via BIS in the Bank of England. The Germans ordered them to retrieve it. BIS did not deal in physical transfers of money or bullion - most of them took place on paper, by central banks adjusting their accounts with each other. The Czechs called BIS, which contacted London.
Norman obliged, instructing BIS to deduct the gold's value, some $40m (pounds 24m) at 1939 prices, from the Bank of England's account in Basle. The gold went back to Czechoslovakia, and to the Reichsbank in Berlin.
News of the trade did not leak out for two months. Then, in May 1939, prompted by a tip from a journalist, George Strauss, the Labour MP, asked Neville Chamberlain, the Prime Minister, if it was true that the national treasure of Czechoslovakia was being given to Germany.
The Government, advised by Norman, said it was impossible to determine who was the real owner of gold that passed through BIS; that the Basle institution was heavily protected by international protocols; and that as a banker for central banks, its dealings had to remain confidential.
In fact, Norman knew all along who was the rightful owner of the gold. He had told a Whitehall committee on 22 March 1939 that he had received a call from the Governor of the Bank of France, on behalf of BIS, asking for the return of the gold. "We did absolutely nothing," says historian Scott Newton. "Here was Czechoslovakia that had been invaded, and here was Monty Norman approving the transfer of its gold to the Reichsbank."
Norman's agreement, says Newton, was no surprise. "Monty Norman and the leading merchant banks in the City were up to their necks in helping to prop up the German financial system. The Germans owed a lot of money to British banks."
The bankers did not want the Americans to emerge from the war with the upper hand, economically. Dr Neville Wylie, research fellow in Modern History at Cam- bridge University, says "there was a strain of German sympathy within the Bank and the City. The alternative - of dealing with the rampant capitalists across the Atlantic - did not appeal."
How far that sympathy went, beyond the Czechoslovakian deal, will only be revealed when the BIS records are finally opened. _________________ --
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com http://aanirfan.blogspot.com
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
Secret war documents may reveal that Germany had staunch allies at the Bank of England
Chris Blackhurst @c_blackhurst Sunday 30 March 1997
In a vault in Basle, Switzerland, lie some of the most politically sensitive documents of the Second World War.
Historians uncovering the story of the gold trade that financed the Nazi war machine would love to have sight of them - not because they will provide further evidence of Swiss guilt in the trade but because they could expose other countries involved, including Britain.
In the saga of Nazi gold, it is always the Swiss who are to blame; the Swiss who were prepared to accept bullion looted from the victims of German oppression to the extent that the war was prolonged longer than necessary. But if the historians are right, these papers will go to the heart of the British financial establishment and raise questions about the allegiance of one of the most powerful figures of his day, former Governor of the Bank of England, Sir Montagu "Monty" Norman. Academics believe the archive will show that the Bank, led by Sir Monty, bent over backwards to help the Nazi war machine.
In an age without television and media access, Norman's was a household name. Famed for his supercilious manner, bad temper and contempt for the political leaders of his day, he was a banker's banker, whose aim was to create a network of central bankers like himself, free of the control of governments.
That, at least, is one explanation for Norman's behaviour in the years before the Second World War. There is another: that Norman was a German sympathiser, who wanted to ensure the German economy could fuel the country's war machine and that the Nazis had an outlet for their looted gold.
So concerned were the Americans about Norman that in the summer of 1942 President Roosevelt sent a report on his activities to Sir Winston Churchill. The British Prime Minister asked Anthony Eden, his Secretary for War, to look into the American concerns, in particular the allegation that Norman had met Hjalmar Schacht, a senior German official in neutral Sweden, in May 1941.
Herr Schacht was thought to be trying to broker some sort of peace deal. Norman was his chosen conduit. Papers filed in the Eden archive at Birmingham University reveal what must have been an unprecedented exchange: Churchill's right-hand man quizzing the Governor of the Bank of England about his allegiances. Norman denied seeing Herr Schacht for over a year.
For Churchill, this was not good enough. In a memo to Eden, the Prime Minister pointed out the war was now three years old, not one year. Norman's answer, thought Churchill, was inadequate. He instructed Eden to dig deeper. But at this point, the file goes dead: what further details Eden extracted from Norman are not recorded. Typically, Churchill did not want the Americans to know of his concerns. They were sent a bland reassurance that all was well with Norman.
So what was the Governor up to? Scott Newton, lecturer in modern history at Cardiff University, says there is "nothing in the file to clear Montagu Norman of the American charge". He was rightly suspected, says Newton, of being involved in "an unsavoury peace deal behind the government's back. Bearing in mind the report came from the US President, it would have relied upon good intelligence."
Norman, says Newton, "was trying to prevent the war developing to the point where the Bank of England was in danger of losing the prestige it had built up between the wars. Norman had a view that the world ought to be run by central bankers. He was not in any sense a democrat and he was worried the war would undermine the contacts he had created." Churchill, says Newton, "could not stand him; he distrusted him enormously".
The extent of the Bank of England's involvement has still not been disclosed. Documents from the period have convinced several historians that the Bank, through its redoubtable Governor, played a pivotal role. But the records which could reveal the detail remain inaccessible to historians in the Bank of International Settlements based in Basle, Switzerland.
Established after the First World War to smooth the system of compensation by Germany to the Allies for the conflict, BIS is a bank for central banks. It is more than a mere mechanism for moving money between governments, however. The meetings of its board are talking shops for the world's most powerful financial figures, a club where they can talk without interference from politicians and government officials. One of its most influential members in the years before the Second World War was Sir Montagu Norman.
On 15 March 1939, Hitler completed his rout of Czechoslovakia, making a triumphant entrance into Prague. One of his first acts was to order the directors of the Czech national bank to hand over the country's gold reserve. For Hitler, the Czech gold was a vital replenishment of rapidly dwindling reserves. An increasingly isolated Germany needed gold to barter for raw materials.
The Czech directors told the Germans it was too late; the gold had already been deposited via BIS in the Bank of England. The Germans ordered them to retrieve it. BIS did not deal in physical transfers of money or bullion - most of them took place on paper, by central banks adjusting their accounts with each other. The Czechs called BIS, which contacted London.
Norman obliged, instructing BIS to deduct the gold's value, some $40m (pounds 24m) at 1939 prices, from the Bank of England's account in Basle. The gold went back to Czechoslovakia, and to the Reichsbank in Berlin.
News of the trade did not leak out for two months. Then, in May 1939, prompted by a tip from a journalist, George Strauss, the Labour MP, asked Neville Chamberlain, the Prime Minister, if it was true that the national treasure of Czechoslovakia was being given to Germany.
The Government, advised by Norman, said it was impossible to determine who was the real owner of gold that passed through BIS; that the Basle institution was heavily protected by international protocols; and that as a banker for central banks, its dealings had to remain confidential.
In fact, Norman knew all along who was the rightful owner of the gold. He had told a Whitehall committee on 22 March 1939 that he had received a call from the Governor of the Bank of France, on behalf of BIS, asking for the return of the gold. "We did absolutely nothing," says historian Scott Newton. "Here was Czechoslovakia that had been invaded, and here was Monty Norman approving the transfer of its gold to the Reichsbank."
Norman's agreement, says Newton, was no surprise. "Monty Norman and the leading merchant banks in the City were up to their necks in helping to prop up the German financial system. The Germans owed a lot of money to British banks."
The bankers did not want the Americans to emerge from the war with the upper hand, economically. Dr Neville Wylie, research fellow in Modern History at Cam- bridge University, says "there was a strain of German sympathy within the Bank and the City. The alternative - of dealing with the rampant capitalists across the Atlantic - did not appeal."
How far that sympathy went, beyond the Czechoslovakian deal, will only be revealed when the BIS records are finally opened. _________________ --
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
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Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
Joined: 25 Jul 2005 Posts: 18335 Location: St. Pauls, Bristol, England
Posted: Sat Jun 04, 2016 7:52 pm Post subject:
In our crisis-hit capitalism it is the very technocrats in charge of the system who are slowly, reluctantly admitting that it is bust.
You hear it when the Bank of England’s Mark Carney sounds the alarm about “a low-growth, low-inflation, low-interest-rate equilibrium”. Or when the Bank of International Settlements, the central bank’s central bank, warns that “the global economy seems unable to return to sustainable and balanced growth”. And you saw it most clearly last Thursday from the IMF.
Max Keiser & John Titus: Financialized Economy Video – RT
TDC Note – Click HERE to Watch All The Plenary’s Men
Things to come’ in the financialized economy is on the agenda for Max and Stacy in this episode, and they also ask whether or not James Howard Kunstler is right in his prediction that ‘the financialized economy is entering its moment of final catastrophic phase-change.’ Max also interviews lawyer and filmmaker John Titus, of All the Plenary’s Men, about the not-so-secret and yet little-discussed Financial Stability Board authority over sovereign powers to regulate banks. Titus highlights the case of HSBC and the threat made by George Osborne to the Obama administration’s Department of Justice.
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