More thoughts about transparency and corruption


Sounds good, doesn’t it?

Once again, I have cause to be proud of my homeland. New Zealand has finally overtaken Denmark to win the title of least corrupt country in the world, according to the organisation Transparency International.

Of course, I was keen to check out the full list of 180, and I have to tell you, I found some surprises. There was a certain predictability about the bottom placings: Iraq and Venezuela tied at 169, North Korea and Libya at 171, Yemen, Afghanistan and Syria ranking 175th, 177th and 178th respectively – which may be a true reflection of life in those countries, or a clear message that it doesn’t pay to rile up Uncle Sam. But I’m not here to debate that point.

Zimbabwe has risen to 157th=, after its armed forces staged a coup to overthrow dictator of 37 years, Robert Mugabe last year. Despite the country’s vast mineral wealth, including gold, diamonds and chromite, 80% of the population falls below the poverty line. Zimbabwe holds the world record for annual inflation, achieving the staggering rate of 89.7 sextillion percent in 2008 (I didn’t know there was such a number – but I learned that it’s 1 followed by 21 zeroes!), although the economic wizards in the military junta have reportedly reduced that to a relatively respectable 348%. So they must be pleased to find themselves climbing up the rankings.

Russia, on the other hand, won’t be proud of their placing at 135, especially since that puts them five spots behind Myanmar, currently making headlines around the world for ethnically cleansing their Muslim Rohingya citizens.

myanmar genocide

At least they’re open about it

“The U.N. special envoy on human rights in Myanmar said Thursday that the Myanmar military’s violent operations against Rohingya Muslims bear “the hallmarks of a genocide.” Nearly 700,000 Rohingya have fled their villages into Bangladesh since the Myanmar military’s crackdown following Aug. 25 attacks by Rohingya insurgents.” But I guess they’re being quite open about what they’re doing, so it doesn’t really count as corruption.

It’s not surprising, then, that the Maldive Islands, playground of the world’s glitterati, managed a ranking of 112, despite the ongoing state of emergency imposed by President Abdulla Yameen

“Yameen had cited threats to national security after the Supreme Court overturned criminal convictions against nine of his opponents and ordered their release.

He sent the army to storm the Supreme Court building and arrest the island nation’s chief justice and another judge on the top court’s bench. His estranged half-brother, former President Maumoon Abdul Gayoom, who has sided with the opposition, was also arrested. The three remaining judges on the Supreme Court then reversed part of their verdict on the release of Yameen’s opponents.”

At least Turkey managed to beat that lot – though President Erdoğan may feel his country deserves to be a little higher than 81st on the list; especially since China slotted in at 77, and South Africa at 71. Cape Town, as you may know, is currently getting unfavourable publicity, poised to become the first major world city to run out of water – although the crisis seems to be less of a problem for citizens with money.

Cuba was a surprise for me, coming in at 62, and Cyprus managed a commendable 42, my favourite number – though of course that’s “Greek” Cyprus, and needless to say, the Turkish enclave didn’t get a mention.

tax havens 2

And check their TI rankings!

By the time I’d got up to the 30s, my cynicism was starting to really kick in . . . so when I saw Costa Rica, tax-haven for the world’s mega-rich at No. 38, I wasn’t too surprised. Still, who’d have expected to see Botswana up there at 34, just behind Israel at 32, whose government has for years been ignoring UN requests to stop massacring Palestinians and invading their lands? Still, they’re pretty up-front about that too.

Which brought me to the 20s – and there was/were the United Arab Emirates, up with the elite of the world’s squeaky-clean at No 21!

“The UAE is the most densely migrant-populated country in the world. About 90 percent of the UAE’s 9 million people are foreign-born, most working on temporary employment contracts in a range of white-collar, blue-collar and service industry jobs. Only a handful of migrants have been granted citizenship since the country gained independence in 1971. Amnesty International and other humanitarian agencies have put a spotlight on the hardships migrant workers have faced, including exploitation of construction workers and unequal protection of women and domestic workers.”

Soooo . . . What do you make of all that? At the very least, you’d want to take a closer look at the criteria those “Transparency” people are using to make their assessments.

New Zealand was awarded No 1 spot, in spite of the following well-publicised facts:

  • * “Hundreds of drivers have had their licenses cancelled after a fraudulent licensing scam was uncovered; revealing [Ministry of Transport] staff had accepted bribes of up to $600 in exchange for a licence.”
  • A new plan has been put forward for the America’s Cup bases in Auckland by a company owned by some of the country’s richest businessmen who own 20 hectares of land at Wynyard Quarter and the Viaduct Harbour.” Some less wealthy citizens believe the plan will further develop Auckland’s downtown as an exclusive playground for the super-rich. I’ll be following that one with interest.
  • “Immigration NZ has completed an investigation [but not releasing their findings] into whether Kim Dotcom can be deported from New Zealand for failing to declare a dangerous driving conviction – but it’s refusing to say what the outcome is.

[Dotcom] entered the country on a special scheme intended to attract wealthy foreigners, giving three-years residency and a fast-track to citizenship to those who invested $10 million or more in New Zealand.

Documents obtained by the Herald through the Official Information Act showed NZSIS staff tried to block the residency application but dropped its objection after being told there was “political pressure” to let the tycoon into New Zealand.

At the time, the new residency scheme was having little success and – documents show – [Immigration Minister] Coleman was eager to get “high rollers” into the country.”

banks dotcom

ex-mayor Banks, Kim Dotcom and former PM John Key

Dotcom, as you may know, made wagonloads of money from various online businesses including his file-sharing website, Megaupload, arousing the ire of powerful figures in the United States. The US government then pressured their NZ counterparts to have him extradited, despite the fact that he is a citizen of Germany. Although known to have criminal convictions in Hong Kong and Germany, and to have served prison time in his own country, Dotcom was granted fast track residence in New Zealand in 2010. At the time of his application, he made several substantial “charitable” donations, one of which was a $50,000 contribution to the election campaign of former Auckland Mayor and Member of Parliament, John Banks.

Mr Banks faced criminal charges as a result, but claimed not to remember Dotcom’s financial assistance. Nevertheless, he was convicted in 2014 of filing a false electoral return. The conviction was subsequently overturned after Banks brought a witness from the USA to support his story (of amnesia?). However, it seems his righteous indignation went a little too far when he sought to get $190,000 legal costs awarded against Dotcom. In a recent Court of Appeal decision, the judge ruled that, although the original conviction had been reversed on a legal technicality, the court had stopped short of declaring Banks innocent – so no payment of costs was justifiable. Incidentally, after arriving in New Zealand, Dotcom had taken out a lease on one of the country’s most expensive houses, by coincidence no doubt, in the electorate of John Key, NZ’s Prime Minister at the time, and leader of the government which included John Banks.

  • The latest scandal rocking New Zealand’s ruling elite involves the venerable law firm, Russell McVeagh, among the country’s largest and most reputable. After some prevaricating, the partners have admitted that there had been shenanigans in the past involving some of their colleagues and young summer interns from the University of Auckland Law Faculty. There has been talk of interns selected for their physical attributes, required to sign confidentiality agreements, and engaging in sex acts on the boardroom table.

Complaints had apparently been laid by Auckland University on behalf of some of the students concerned, none of whom, however, want their names to be known for fear of retribution from their powerful assailants. Nothing corrupt about all that, of course. The interns were, after all, willing participants, I guess.

Nevertheless, it does make you wonder about Transparency International, and how they go about comparing and assessing levels of transparency and corruption in those 180 countries.

The TI organisation was apparently founded in Germany in 1993 by an interesting coterie of high-flyers including a former director of the World Bank, a lawyer for General Electric, a member of the US military intelligence establishment, and several high-ups in corporate banking and industry (Source: Wikipedia).

In spite of being clearly dependent on information from whistle-blowers, TI recently specifically refused support for Edward Snowden, one of the key informants for WikiLeaks. There has also been some discomfort expressed over how TI can maintain objectivity when it accepts large donations from large corporations (such as the $3 million paid over by Siemens Corp in 2008). The American chapter of Transparency International, TI-USA, was censured by its parent body after presenting Hilary Clinton with its Integrity Award in 2012. There has also apparently been some conflict with the TI people in New Zealand, though I haven’t been able to learn the exact details.

Well, ok, maybe the central powers at TI do seek to supervise the moral integrity of their branches abroad – but I read of another case involving a TI employee, Anna Buzzoni, having to leave the organisation after blowing the whistle on “questionable financial dealings” at TI’s Water Integrity Network.


Settled out of court in a case accusing them of deceiving investors and contributing to the 2008 world financial crisis

Who can you trust these days?

Certainly not the rankings provided by the world’s major credit rating agencies. The latest list published by Standard and Poors assesses New Zealand, with no manufacturing industry to speak of, and a tiny population, as AA,  a “High Grade” investment; and Turkey, with its booming economy and large manufacturing sector, as BB, “non-investment grade, speculative”. Still, maybe you’re better off not getting a good grade from those crooks:

In the spring of 2013, Moody’s and Standard & Poor’s settled two “long-running” lawsuits “seeking to hold them responsible for misleading investors about the safety of risky debt vehicles that they had rated”. The suits were filed in 2008 and had sought more than $700 million of damages. Settlement terms were not disclosed in both cases, and the lawsuits were dismissed “with prejudice”, meaning they cannot be brought again.

In the end, S&P settled for $1.5 billion – possibly feeling it was worth the money to avoid further negative publicity. Now it seems they are back dispensing credit ratings, and investors are happy to trust them again. Really?


Where did the money go?

There will always be prophets of doom, I guess, forecasting the end of the world. The care-taker at the school where I work insists that the Koran tells of a war-to-end-all -wars in the Middle East, followed by the final Day of Judgment. Who knows? Turkey and the United States look to be on a collision course right now. Who’ll blink first, I wonder? Or will they actually come to blows?

But getting back to the economy, that is no doubt the biggest danger. Wars are generally a side effect of the uber-rich seeking new ways of grasping more of the world’s wealth to themselves and ensuring that the rest of us are kept in our place.

Dropped wallet

Bill Gates lost $2.25 billion!

Last Monday the US Dow Jones Industrial Average dropped more than 1,500 points, and I read that the fortunes of the world’s 500 richest people, including Warren Buffett, Mark Zuckerberg and Jeff Bezos, fell by $114 billion.

“Berkshire Hathaway Inc. chairman Warren Buffett, the world’s third-richest person, was hardest hit, losing $5.1 billion, according to the Bloomberg Billionaires Index.

“Facebook Inc. Chief executive officer Mark Zuckerberg’s fortune tumbled by $3.6 billion, the second-biggest decline.

“Even Inc. chief executive officer Jeff Bezos, the world’s richest person, wasn’t immune to the carnage. His fortune slipped $3.3 billion to $116.4 billion. Alphabet Inc.’s Larry Page and Sergey Brin each took hits of about $2.3 billion.”


Sheldon Adelson lost $1.21 billion!

Time Magazine reported that nineteen people in the world managed to lose $1 billion or more each. See the list here.

Since, then, things seem to have settled down, and economist lackeys of the capitalist world are reassuring us that “what happened to the markets amounts to a correction rather than a crash.”

On the other hand, an aristocratic-sounding fellow writing in the UK’s Daily Telegraph, Ambrose Evans-Pritchard, says “The Fed and fellow central banks have stimulated a titanic expansion of debt over the last quarter century: an asymmetric policy of letting booms run their course while always intervening to prevent busts, culminating in the final throw of QE.

This has driven down the natural Wicksellian rate of interest and led to grievous intertemporal distortions. It has lifted the world debt ratio by 51 per cent of GDP to 327 per cent since the pre-Lehman peak, and led to a synchronised “everything bubble”, from bonds, equities, property, to art and Bitcoin.”

I confess I got lost with some of the jargon. The “natural Wicksellian rate of interest” and “intertemporal distortions” sound like things Douglas Adams might have invented, but Mr E-P does sound a little worried, doesn’t he! In fact, he began his analysis with the words, “Say your prayers”.

Well, I guess if you have $120 billion to start with, losing a paltry $3 billion is not going to worry you unduly. I’m wondering, however, if there weren’t a few people in the USA, outside the billionaire bracket, who took losses they couldn’t afford. I haven’t read anything about them, however, so I’m purely speculating.

But the real issue that concerns me here is not the small change of a few filthy rich planet-rapers, nor even ma and pa investor in homeland USA.

The question I want an answer to is: Where did that money go? It’s not as though young Mr Bezos left his wallet on the bus with $3.3 billion in it, and some lucky guy found it; or Warren B had an envelope stuffed with $5.1 billion in his back pocket, and someone snatched it. That I can understand. I lose money, you find it, lucky you.


Just have faith, people, and everything will be fine!

But this money, as far as I understand, actually disappeared into thin air. No one is any better off as a result. How can this be? What does that say about what money actually is if it can just vanish without trace? And that, of course, begs the question, where did it come from in the first place?

Until we all start to focus on demanding answers to these questions, or maybe seeing the answer that is under our nose, instead of allowing ourselves to be distracted by red herring minority interest social issues, our world is surely on the road to Armageddon – and those uber-wealthy zillionaires and their lapdog economist experts are running out of Band-Aid solutions.

Thoughts on rioting

We had a work party last Friday evening. It was a fairly restrained affair, as festive season work parties go. We were a mixture of ages – but as the evening progressed, oldies began to dominate the music selection.  At one stage, we found ourselves listening to “House of the Rising Sun “a big hit in 1964 for the British band, The Animals.

Well, would you believe it? It emerged that one of our number had gone to school with Eric Burdon! And that her gran and Alan Price’s gran had been friends, in Newcastle, way back when! For those too young to know, Burdon became synonymous with The Animals, but Price had been the original founder, later leaving to start another band, more conventionally, if less modestly, named The Alan Price Set.

My memory of the latter band was limited to a couple of strangely memorable tracks, “Simon Smith and the Amazing Dancing Bear”, and “The House that Jack Built”. Our Geordie friends, however, were insistent that, in their part of the world, Price is better known for his 1974 ballad, “The Jarrow Song” – so I had to check it out.alan-price-jarrow-song-warner-bros-3

It’s not great music, I’m sorry to say – but its cheery tune contrasts somewhat incongruously with its subject: an event that took place in October 1936 during the Great Depression, when two hundred men from Jarrow in the north-east of England, marched 500 km to London to draw attention to the plight of their families and fellow citizens in a town where unemployment had reached 70%.

Ellen Wilkinson, the local MP, later wrote that Jarrow at that time was:

“… utterly stagnant. There was no work. No one had a job except a few railwaymen, officials, the workers in the co-operative stores, and a few workmen who went out of the town… the plain fact [is] that if people have to live and bear and bring up their children in bad houses on too little food, their resistance to disease is lowered and they die before they should.’” (The Town that was Murdered, 1939)

The Jarrow marchers, in a gesture remarkably peaceful given the circumstances, presented a petition to the British Parliament – who more or less ignored it, possibly demonstrating that peaceful protests rarely achieve much in the way of meaningful change. Perhaps more surprisingly, the British Labour Party at the time refused to support the march for fear of being branded as Communist-sympathisers. Clearly, attempting to bring about change by working through the system has its limitations too.

BBC History writes that, “In Jarrow, a ship-breaking yard and engineering works were established in 1938 and the Consett Iron Company started a steelworks in 1939. However, in areas such as Jarrow the depression continued until World War Two, when industry prospered as a result of the country’s need for rearmament.”

Which exemplifies an important but often overlooked benefit of war in a capitalist economy.

Battle of Cable Street

London bobbies protecting pre-Fascist demonstrators, Cable Street, October, 1936

While doing a little background research on the Jarrow march, I came across a contemporaneous event: the Battle of Cable Street. Sir Oswald Mosley, a former Conservative MP in the British Parliament – later switching allegiance to the Labour Party – was an enthusiastic supporter of Benito Mussolini and Adolf Hitler, and apparently saw Fascism as the way forward for Britain. He founded and financially supported a para-military group, the Blackshirts, modelled on similar groups in Italy and Germany.

On October 4, 1936, he organised an event of his own, gathering 5,000 uniformed Blackshirts to march from the Tower of London to the poorer districts in the East End. Al-Jazeera writes that, On the day of the march, the response was the mobilisation of the immigrant communities of the East End, together with British trade unionists and leftists, to stand against Mosley with barricades, bottles, bricks and fists.”

They were met by “thousands of policemen, including many on horseback, swinging batons as they charged the crowds” since Mosley “had official permission to stage his demonstration.”

Daniel Tilles, a historian and specialist on British fascism in the 1930s, has written that “On the day itself, it was a great victory for the anti-fascists, who greatly outnumbered the Blackshirts and stopped them from marching through the East End of London.

“But Mosley’s deliberate aim had been to provoke counter-violence to what was a lawful demonstration. In a way, he got exactly what he wanted. It allowed him to portray what happened as immigrants, aliens, violent communists stopping British citizens from exercising their lawful right to demonstrate.

“In the months after Cable Street, British Jews suffered far greater violence, intimidation and abuse than they had beforehand, So Cable Street unleashed this wave of anti-Jewish violence and abuse and gave the fascists a boost in popularity.”

A well-tried technique of those in power: provoke a violent incident, then use it as a reason for forcefully suppressing groups expressing dissenting views.

Similar occurrences took place in New Zealand during the 1930s, although the Labour Government there, elected in 1935, still retained some remnants of a commitment to relieving the suffering of the poor and unemployed.

soup kitchen

A soup kitchen feeding unemployed men during the Great Depression in NZ

Predominantly a farming economy in those days, New Zealand was badly hit by the Great Depression, and its effects perhaps struck sooner than in industrialised countries. There were major riots in the main cities in 1932, the worst happening in April when a large crowd of unemployed relief workers joined Post and Telegraph Association members marching to a Town Hall meeting, swelling their numbers to around 15,000. Angry at being turned away from the overflowing hall, some demonstrators scuffled with the police barring the entrance. When a leader of the unemployed, Jim Edwards, rose to speak – apparently to urge calm – a policeman struck him down. The crowd erupted and surged down Queen St. Armed with fence palings and stones . . . they smashed hundreds of shop windows and looted jewellery, liquor, clothing and tobacco.“

Conventional reports of the incident tend to focus on the looting and window-smashing, while soft-pedalling on the poverty and misery caused by widespread unemployment; and implying that the felling of Jim Edwards may have been accidental. However, the presence of navy sailors and Territorial Army troops with rifles and bayonets, and a thousand mounted volunteer “special” constables” armed with clubs, suggest that the government was all-too-ready to meet protest with deterrent violence.

Several leading lights in New Zealand literature focused on the Depression and its attendant human suffering: among them, novelist John Mulgan, playwright Bruce Mason, and poets Denis Glover and ARD Fairburn. Glover’s poem, “The Magpies”, uses the call of the magpie to represent the heartlessness of an economic system that drives a hard-working couple to bankruptcy, insanity and death. Fairburn’s “Down on my Luck” pursues a similar theme of a man who loses job, woman and possessions as he struggles his way “to the end of his tether” and probably suicide.


Still going round in circles on the “tax, borrow and hope” road.

Unfortunately, attempts to perpetuate the memory of those days have been gradually forgotten, assisted on the road to oblivion by the capitalist propaganda machine that distorts and discredits their true significance.

Bruce Mason’s dramatic monologue, “The End of the Golden Weather”, was adapted to an award-winning film in 1991 – unfortunately omitting the act that described the Night of the Riots in Central Auckland. The financial strategy of CH Douglas, expounding a middle road between communism and capitalism, was undermined by JM Keynes’s legitimisation of deficit budgeting, and the financial “stimulus” of the Second World War.

As Alan Price sang, back in 1974:

“Well I can hear them an’ I can feel them
An’ it’s as just as if they were here today
I can see them, I can feel them
An’ I’m thinking nothing’s changed much today.”


What is money, and where does it come from?

One thing I can tell you for sure – it doesn’t grow on trees! But that doesn’t really answer the question. An article in the New Zealand Herald today caught my eye:

Show me the money: Reserve Bank reveals the ins and outs of printing cash

There is about five and a half billion New Zealand dollars circulating at the moment – in the country and offshore – and hundreds of thousands of notes being destroyed every week.

In 2016, the Reserve Bank destroyed 43 million notes, with a value around $1 billion.

The money is “granulated” down into “very small sort of confetti-sized bits of bank notes” then sent away to a specialised company that recycles them into plastic items one might find at home.

All this money being transformed into plastic on a weekly basis must be replaced.

print money

Thank God for Canada!

New Zealand money is printed much less frequently than it is destroyed, and it’s done overseas.

The notes are printed in Canada because it is not financially viable to run a printing factory in New Zealand. With money only ordered once a year at most, such a factory would lie unused much of the time.

Despite the increased use of Eftpos cards and online banking, the amount of New Zealand cash circulating here and overseas is growing, something that “around the currency world gets discussed a fair bit”.

There are a few “industry theories” on why the around $5.5b in cash is growing. One is that low interest rates means it doesn’t “hurt as much” to hold on to cash.

“You’re not losing interest revenue by holding it to any extent.”

Other reasons could include that New Zealand money was popular overseas, people using cash to avoid taxation, and using cash in the “dark economy” for illegal dealings.

But another thought was simply that increased spending led to increased needs for cash.

One way or another, the Reserve Bank has so far always had enough to circulate, and didn’t have “masses of unused notes sitting around”.


Well, I don’t know about you, but for me, this article raised more questions than it answered.


Everyone needs something to believe in

First of all, millions of dollars in “legal tender” are created and destroyed every year – so clearly those paper notes have no intrinsic value. In fact, they’re not worth the paper (or plastic) they’re printed on.

Second, NZ money is printed in Canada – and if that money factory is working all year round, I guess those Canadians must be printing money for a few other countries as well, yeah?

“New Zealand money is printed much less frequently than it is destroyed, [but despite this, and] “Despite the increased use of Eftpos cards and online banking, the amount of New Zealand cash circulating here and overseas is growing.” How so? Was there more cash in the past? And are people hoarding old banknotes? But the government keeps issuing new designs and the old ones become obsolete, so that can’t be true.

The Reserve Bank doesn’t have masses of unused notes sitting around but always has enough to circulate even at Christmas time when demand increases, and the “around $5.5b in cash is growing” all the time.

Smells fishy to me! Obviously, there’s something they’re not telling us. And it could be this:

It’s been estimated that notes and coins in all the world’s currencies represents about 8% of the total world money supply. What? Yes!

If you think you know what money is, and you’re happy now that you know it comes from Canada, I’ve got bad news for you. Even the best economist brains in the world can’t agree on what money is. But one thing I’m sure they will agree on – It doesn’t come from a printing factory in Canada.

What they’ll tell you, if you insist on a definition, is that there is a mysterious algebraic thing they call “M”. There used to be three of these things, M1, M2 and M3 – but now it seems another has been added: M0. Well, actually I think that was a con, because M0 is notes and coins, and all those other “M”s have actually been moved further up into the realms of virtual reality – bank overdrafts, credit card limits, futures, toxic mortgages, quantitative easings, and other stuff we mortals earning normal wages or salaries have no concept of.


Borrow money from your friendly local banker 🙂

Let me give a simple example. Just before a big commercial shopping event like Christmas, my bank texts me to say there is $20,000 waiting for me. All I have to do is send a text reply to a four-digit number, that $20,000 will magically appear in my account, and I can get on with the business of spreading good cheer to relatives and friends.

I never ask for it – but I can’t help wondering: Is that $20,000 sitting at the bank in a bag waiting for me, or do they give it someone else? What if I change my mind later and ask for it? Do they say, “Sorry, buddy, we gave it to Joe Bloggs”?

And I also wonder, how many other people around the world got the same offer from their banks? A thousand? Ten thousand? A million? What if we all take up the offer? What if we all don’t? Will they print more? Or shred the unclaimed millions?

Then there’s the small matter of debt. The United States of America is proud possessor of the world’s largest economy. It also happens that they are the world’s largest debtor nation. According to Wikipedia, on November 7, 2016, US total gross national debt stood at $19.8 trillion (about 106% of the previous 12 months GDP). I checked the US online debt clock at 10.23 last night, and found that their figure is nearly $70 trillion. Clearly it depends who’s measuring, and how they measure it. Whichever figure you decide to run with, it’s a sizable heap of money!

Well, the next question that arises is, who do they owe it to? I asked a mate at work who seems to know a lot about politics, economics and world affairs. “China,” he asserted confidently, “and Japan.” So, I checked them out.

Turns out that China’s “national debt” as of March 2016 (the most recent figure I could find) stood at the equivalent of $4.3 trillion. The same source informed me that Japanese “public debt” in 2013 passed the quadrillion yen barrier in 2013 (about $10.5 trillion at that time).


Looks like a tricky situation – and he’s not alone.

Government debt in the UK (ie not counting private and commercial borrowings) amounted to £1.56 trillion, or 81.58% of total GDP, and the annual cost of servicing (paying the interest on) this debt amounted to around £43 billion. The Conservative government pledged in 2010 that they would eliminate the deficit by the 2015/16 financial year. However, “the target of a return to surplus at any particular time was finally abandoned by the then Chancellor of the Exchequer George Osborne in July 2016”. And sad to say, until they start running a surplus, that debt’s only going to get bigger.

Evidently none of the world’s biggest national economies is in any position to lend money to their insolvent neighbours. Fortunately, we have banks that can come to the rescue. Fractional-reserve banking is the current form of banking practised in most countries worldwide. In a nutshell, this system allows banks to lend up to 90% of the money they have in deposits.

The beauty of the system, from the banks’ point-of-view, is that they don’t have to apologise to you when you go to make a withdrawal: “Oh, sorry, we loaned your money to John Doe.” You can have yours, and he can keep his – and the bank can collect interest on the new money it created.


Happy bankers 🙂

But what if we all go and demand our deposits at the same time? Luckily every country has an LOLR – which apparently stands for “Lender of Last Resort”, not “Laughing Out Loud, Really”). This is normally the country’s central bank eg the US “Fed”, or the Bank of England, which guarantee to bail out the too-big-to-fail banks when they get caught out, as in 2008.

And since we are assured that those central banks don’t have large stocks of money in their cellars, and tax-payer dollars are already insufficient to balance their government’s books, I guess that means they have to borrow more money from the private banks.

Either that or go cap-in-hand to the money printing factory in Canada. Think about it.

Guatemala to move embassy to Jerusalem

Guatemala, the most populated country in Central America, was one of the eight countries that supported the United States in the United Nations vote to censure the USA for its recognition of Jerusalem as capital of Israel. Today we read that Guatemala will move its Israel embassy from Tel Aviv to Jerusalem – a move which apparently makes the Israeli and US governments very happy.

As a matter of interest, here are some extracts from the Wikipedia entry on Guatemala:


President Jimmy Morales – apparently a former comedian. Now in a more serious role.

“From the mid to late 19th century, Guatemala experienced chronic instability and civil strife. Beginning in the early 20th century, it was ruled by a series of dictators backed by the United Fruit Company and the United States government. In 1944, authoritarian leader Jorge Ubico was overthrown by a pro-democratic military coup, initiating a decade-long revolution that led to sweeping social and economic reforms. A U.S.-backed military coup in 1954 ended the revolution and installed a dictatorship.

From 1960 to 1996, Guatemala endured a bloody civil war fought between the US-backed government and leftist rebels, including genocidal massacres of the Maya population perpetrated by the military. Since a United Nations-negotiated peace accord, Guatemala has witnessed both economic growth and successful democratic elections [?], though it continues to struggle with high rates of poverty, crime, drug trade, and instability. As of 2014, Guatemala ranks 31st of 33 Latin American and Caribbean countries in terms of the Human Development Index.

The Great Depression began in 1929 and badly damaged the Guatemalan economy, causing a rise in unemployment, and leading to unrest among workers and laborers. Afraid of a popular revolt, the Guatemalan landed elite lent their support to Jorge Ubico, who had become well known for “efficiency and cruelty” as a provincial governor. Ubico won the election that followed in 1931, in which he was the only candidate. After his election, his policies quickly became authoritarian. He replaced the system of debt peonage with a brutally enforced vagrancy law, requiring all men of working age who did not own land to work a minimum of 100 days of hard labor. His government used unpaid Indian labor to build roads and railways. Ubico also froze wages at very low levels, and passed a law allowing land-owners complete immunity from prosecution for any action they took to defend their property, an action described by historians as legalizing murder. He greatly strengthened the police force, turning it into one of the most efficient and ruthless in Latin America. He gave them greater authority to shoot and imprison people suspected of breaking the labor laws.

Ubico continued his predecessor’s policy of making massive concessions to the United Fruit Company, often at a cost to Guatemala.

Coup and civil war (1954–1996)

us puppetsDespite their popularity within the country, the reforms of the Guatemalan Revolution were disliked by the United States government, which was predisposed by the Cold War to see it as communist, and the United Fruit Company (UFCO), whose hugely profitable business had been affected by the end to brutal labor practices. The attitude of the U.S. government was also influenced by a propaganda campaign carried out by the UFCO.

Dwight D. Eisenhower was elected U.S. President in 1952, promising to take a harder line against communism; the close links that his staff members John Foster Dulles and Allen Dulles had to the UFCO also predisposed him to act against Árbenz. Eisenhower authorized the CIA to carry out Operation PBSUCCESS in August 1953. The CIA armed, funded, and trained a force of 480 men led by Carlos Castillo Armas. The force invaded Guatemala on 18 June 1954, backed by a heavy campaign of psychological warfare, including bombings of Guatemala City and an anti-Árbenz radio station claiming to be genuine news. The invasion force fared poorly militarily, but the psychological warfare and the possibility of a U.S. invasion intimidated the Guatemalan army, which refused to fight. Árbenz resigned on 27 June.

The Guatemalan Civil War ended in 1996 with a peace accord between the guerrillas and the government, negotiated by the United Nations through intense brokerage by nations such as Norway and Spain.

Abdel Fattah el-Sisi

Israel-friendly president installed in Egypt with US assistance

Retired general Otto Pérez Molina was elected president in 2011 along with Roxana Baldetti, the first woman ever elected vice-president in Guatemala; they began their term in office on 14 January 2012. But on 16 April 2015, a United Nations (UN) anti-corruption agency report implicated several high-profile politicians. The revelations provoked more public outrage than had been seen since the presidency of General Kjell Eugenio Laugerud García. The International Commission against Impunity in Guatemala (CICIG) worked with the Guatemalan attorney-general to reveal the scam known as “La Línea”, following a year-long investigation that included wire taps.

Officials received bribes from importers in exchange for discounted import tariffs, a practice that was rooted in a long tradition of customs corruption in the country, as a fund-raising tactic of successive military governments for counterinsurgency operations during Guatemala’s 36-year-long civil war.

On 2 September 2015, Otto Pérez Molina resigned as President of Guatemala due to a corruption scandal and was replaced by Alejandro Maldonado until January 2016. Congress appointed former Universidad de San Carlos President Alfonso Fuentes Soria as the new vice president in substitution of Maldonado.

Jimmy Morales assumed office on 14 January 2016.”

I guess Mr Morales knows which side his bread is buttered on.

Beware of economists (and historians) – connecting Anzacs and Armenians

My home country, New Zealand, was privileged last week to be visited by an eminent historian from the United States. Professor Jay Winter teaches at Yale University, and is said to be an authority on the First World War,

Well he had nice but sad things to say about New Zealand’s contribution to that horrendous conflict. It seems servicemen from my country died in greater numbers relative to population than those of any other combatant nation – a dubious honour, you’d have to think. Does that make our boys braver, more stupid, or just unlucky?


Quite a few Indians were sent too, apparently, to “defend” the Empire

In the interview I read, Prof. Winter then proceeded to devote a lot of words to making a connection between New Zealand’s joining the ill-fated Gallipoli invasion, and another tragedy of the “Great” War, the deaths of thousands of Armenian civilians. The link is the date: 24 April is when Armenians remember the day in 1915 when their ancestors in SE Anatolia were rounded up by the Ottoman government and forced to “relocate” to what is now Syria, a lot of them dying on the way. On 25 April in the same year, the British Empire, following a plan championed by War Minister, Winston Churchill, landed on the beaches of the Gallipoli Peninsula in a vain attempt to take the Ottoman Empire out of the war.

Prof Winter seems to think he has found something very new and exciting, as every academic dreams of doing. Possibly in his professional writing he actually does manage to make some hitherto unnoticed link that will shine the unequivocal light of day on matters that remain highly contentious. After all, says the learned prof, “Historians are in the truth business.”

Naturally, historians, jealous of their professional reputation, would like to think so – but the sad reality is that history, like economics, is a social science, lending itself to interpretation according to the particular political or ideological lens one uses to view the “facts”. Prof Winter gives a clue to his real purpose in visiting NZ when he suggests that the country’s new “Labour” government may be amenable to joining the ranks of other self-righteous nations that have officially designated the Armenian tragedy “a genocide”, for which the modern Republic of Turkey should be held responsible.


Genocidal violence with a smiley face

He may be right. Self-styled left-wing parties in the wealthy First World, bereft of ideas for actually changing anything important in the lives of the planet’s 99%, tend to offer crumbs of trendy, fashionable issues to their diminishing ranks of supporters. Barack Obama, in his original presidential campaign, wooed the Armenian lobby, but changed tack later, for reasons best known to himself.

Wiser heads may win the day in NZ too, and not simply because they fear that offending Turkey may earn their globe-trotting citizens a chillier welcome on their annual pilgrimage to Anzac Cove on 25 April.

However sincere Prof Winter may be in his search for truth, certain aspects of this interview gave me cause for concern. First, it appeared on News Hub, a NZ news service that airs on TV Three and radio stations run by MediaWorks. A little digging turned up the interesting fact that MediaWorks is a New Zealand-based television, radio and interactive media company entirely owned by Oaktree Capital Management. And Oaktree Capital Management, according to Wikipedia, “is an American global asset management firm specialising in alternative investment strategies. It is the largest distressed investor in the world, and one of the largest credit investors in the world.”

Nothing necessarily wrong with that, of course. Everyone has to make a living, and I’m sorry to hear those guys are distressed. However, the page where that interview appeared contained a link to another article praising “a young Kiwi historian” James Robins, who is apparently “grappl[ing] with the fact that no New Zealand Government has ever formally recognised the genocide of Armenians”. Mr Robins’s “grappling” is supported by a “genocide expert”, Maria Amoudian, and an American heavy metal musician Serj Tankian.


Genocidal violence with a grumpy face

In the interests of academic objectivity, we might want to also take a look at the work of researchers with less obvious connections to the Armenian diaspora.

One such is Edward J Erickson, a retired regular US Army officer at the Marine Corps University in Virginia, recognised as an authority on the Ottoman Army during the First World War. He makes some interesting points in a paper entitled “The Armenian Relocations and OttomanNational Security: Military Necessity or Excuse for Genocide?” I’m quoting a chunk from it, but you really need to read the whole document. It’s only 8 pages long.

“The historical context that led to the events of 1915 is crucial for understanding the framework within which the relocation decision was cast. There are four main historical antecedents that must be understood in order to establish this context:

  1. the activities of the Armenian revolutionary committees (particularly the Dashnaks);
  2. the activities of outside powers supporting the Armenian committees;
  3. the contemporary counter-insurgency practices used by the Great Powers; and
  4. the Ottoman counter-insurgency policies and practices in the late nineteenth and early twentieth centuries.

“Many historians view the outbreak of the First World War as the proximate cause of what some historians refer to as the Armenian Genocide, others as massacres and relocations, and still others as the Events of 1915. To this day, interpretations of this question remain hotly contested by the advocates of the opposing positions. However, both sides agree on the fact that the Ottoman approach to the problem of quelling an insurgency clearly and dramatically changed in 1915 when it shifted from a historical policy of kinetic direct action by large-scale military forces to a new policy of population relocation. The problem then becomes that of explaining how the First World War created the drivers of change that caused this fundamental policy shift. Similarly to the four elements of the historical context, there were also four principal drivers of change created by the war:

  1. the actuality of an insurrection by the Armenian revolutionary committees;
  2. the actuality of allied interventions and support;
  3. the locations of the Armenian population as an existential threat to Ottoman national security; and
  4. the inability of the Ottomans to mass large forces effectively and rapidly to quell the insurgency.

“With respect to the question of whether the relocation was necessary for reason of Ottoman national security in the First World War, the answer is clearly yes. There was a direct threat by the small but capable Armenian revolutionary committees to the lines of communications upon which the logistics of the Ottoman armies on three fronts depended. There was a real belief by the government that the consequences of failing to supply adequately its armies that were contact with the Russians, in particular, surely would lead to the defeat of the Ottoman Empire. The Ottoman high command believed it could not take that chance. Pressed by the imperative of national survival to implement an immediate counterinsurgency strategy and operational solution, and in the absence of traditionally available large-scale military forces, the Ottomans chose a strategy based on relocation— itself a highly effective practice pioneered by the Great Powers. The relocation of the Armenian population and the associated destruction of the Armenian revolutionary committees ended an immediate existential threat to the Ottoman state. Although the empire survived to fight on until late 1918 unfortunately thousands of Armenians did not survive the relocation. Correlation is not causation and the existing evidence suggests that the decisions leading to the Armenian relocations in 1915 were reflexive, escalatory, and militarily necessary, rather than simply a convenient excuse for genocide.

Another article you might want to take a look at appeared in The Washington Times, in 2007, around the time Barack Obama was running hot on the Armenian issue.

“Armenian crimes against humanity and war crimes against the Ottoman Turkish and Kurdish populations of eastern and southern Anatolia during World War I and its aftermath have been forgotten amidst congressional preoccupation with placating the vocal and richly financed Armenian lobby.

“Capt. Emory Niles and Arthur Sutherland, on an official 1919 U.S. mission to eastern Anatolia, reported: “In the entire region from Bitlis through Van to Bayezit, we were informed that the damage and destruction had been done by the Armenians, who, after the Russians retired, remained in occupation of the country and who, when the Turkish army advanced, destroyed everything belonging to the Musulmans. Moreover, the Armenians are accused of having committed murder, rape, arson and horrible atrocities of every description upon the Musulman population. At first, we were most incredulous of these stories, but we finally came to believe them, since the testimony was absolutely unanimous and was corroborated by material evidence. For instance, the only quarters left at all intact in the cities of Bitlis and Van are Armenian quarters … while the Musulman quarters were completely destroyed.”

“Niles and Sutherland were fortified by American and German missionaries on the spot in Van. American Clarence Ussher reported that Armenians put the Turkish men “to death,” and, for days, “They burned and murdered.” A German missionary recalled that, “The memory of these entirely helpless Turkish women, defeated and at the mercy of the [Armenians] belongs to the saddest recollections from that time.”


and all the world will live happily ever after. No need to study history.

“A March 23, 1920, letter of Col. Charles Furlong, an Army intelligence officer and U.S. Delegate to the Paris Peace Conference, to President Woodrow Wilson elaborated: “We hear much, both truth and gross exaggeration of Turkish massacres of Armenians, but little or nothing of the Armenian massacres of Turks. … The recent so-called Marash massacres [of Armenians] have not been substantiated. In fact, in the minds of many who are familiar with the situation, there is a grave question whether it was not the Turk who suffered at the hands of the Armenian and French armed contingents which were known to be occupying that city and vicinity. … Our opportunity to gain the esteem and respect of the Muslim world … will depend much on whether America hears Turkey’s untrammeled voice and evidence which she has never succeeded in placing before the Court of Nations.”

“The United States neglected Col. Furlong’s admonition in 1920, and again last Wednesday. Nothing seems to have changed from those days, when Christian lives were more precious than the lives of the “infidels.”

Will we ever know the truth? Who knows? But one thing is for sure: if you want to stand a chance of learning it, you need to keep an open mind and do your own searching. And beware of “expert” historians (and economists).

If you don’t think there’s a conspiracy, you’re not paying attention

An interesting article I came across in Time Magazine: “Why Smart People Still Believe Conspiracy Theories”

wall street conspiracyA coterie of academic stooges set out to prove that people who believe in “conspiracy theories” are of sub-normal intelligence. Unfortunately for them, their findings did not confirm their initial hypothesis – so they had to come up with another one, ie people believe what they want to believe. Which is probably equally true of people who insist that there is no conspiracy.

The researchers’ fundamental error was to assume that people who believe there is a conspiracy have no solid evidence to support their belief. Not true, guys and girls.

  • Take a look at the Roman Catholic Church. One huge international conspiracy to keep the poor in slavery.
  • Take a look at Wall Street and the world of international banking and finance. Another monumental conspiracy to hide the truth behind global economic imperialism.
  • Take a look at the United States political system. Another major conspiracy aimed at convincing poor Americans that they actually have a say in how their government rules the country.

trumps-favorite-mcdonalds-meal-is-a-catholic-conspiracyA few extracts from the Time article:

“Millions of Americans believe in conspiracy theories — including plenty of people who you might expect would be smart enough to know better.

Despite mountains of scientific evidence to the contrary, at least 20% of Americans still believe in a link between vaccines and autism, and at least 37% think global warming is a hoax*, according to a 2015 analysis. Even more of us accept the existence of the paranormal: 42% believe in ghosts and 41% in extrasensory perception. And those numbers are stable. A 2014 study by conspiracy experts Joseph Uscinski of the University of Miami and Joseph Parent of Note Dame University surveyed 100,000 letters sent to the New York Times and the Chicago Tribune from 1890 to 2010 and found that the percentage that argued for one conspiracy theory or another had barely budged over time.

Now, a study published online in the journal Personality and Individual Differences provides new insights into why so many of us believe in things that just aren’t true: In some cases, we simply want to believe.

The second study was similar but also sought to correlate belief in conspiracy theories and the paranormal with overall cognitive ability. To determine this, the people answered a number of questions that measured their numeracy — or basic mathematical skills — and their language abilities.

us democracyWhat’s most troubling — and a little mystifying — is the fact is that so many people in the studies score high on all of the rational and intellectual metrics and yet nonetheless subscribe to disproven theories. That’s the case in the real world too, where highly educated people traffic in conspiratorial nonsense that you’d think they’d reject. In these cases, the study concluded, the reason may simply be that they’re invested—emotionally, ideologically—in believing the conspiracies, and they use their considerable cognitive skills to persuade themselves that what’s untrue is actually true. If you want to believe vaccines are dangerous or that the political party to which you don’t belong is plotting the ruination of America, you’ll build yourself a credible case.”


*Interestingly US presidents and CEOs of large corporations seem to subscribe to this one!