Colin's Cornucopia

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I don't believe it

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To all the leaders of the Western World

I am stunned by the news today. A chairman of a New York stock exchange has admitted a multi billion-dollar fraud. I wish I did not believe it. The Western World has been on trial since 9 -11 but at this rate Osama Bin Laden will not need to attack us at all. We are destroying our own civilisation from within.

I had a birthday last week and am only one year short of my three score and ten, which gives me the authority to both know and criticise. I have been there, done that, got the tee shirt - a cupboard full of tee shirts. I have seen the Western World go through a dozen crises but there has never been anything like this in my life before. Indeed, I do not think there has been anything like this in the history of capitalism.

You will please indulge my memories for a while. My first recollection is of the air black with planes on D Day - despite being 200 miles behind the front: Vast convoys of American GI’s filling the main road with tanks and steel on their way to the beaches: My first understanding of what it meant to take a Lancaster or Flying Fortress to Berlin: The bonfires and parties on VE day and VJ day.

The majestic horror of Bikini. The horror of a cold and distant war in Korea. The ignominy of Suez. The quiet terror of watching President Kennedy on TV in the Cuban missile crisis. A life spent building a huge range of weapons for the cold war, the vast majority of which were never used. The futility of Viet Nam and the stupidity of the Falklands conflict. The almost surprising technology of the Gulf War. The horrible shock of 9 -11. It is far too soon to put adjectives to Iraq and Afghanistan.

Great Britain was bankrupt by 1945. The US and Canada lent it 4.5 Billion dollars which was a huge sum at the time – and was not repaid until the new millennium. Later the Marshall plan helped put Europe back on its feet. Post war Britain was a worse place to live than wartime Britain had been. It took twenty years to recover. The US had thrived on its new found confidence and rejuvenated industrial prowess.

Keyensian Economics fought a battle with Nazism, Communism, Socialism and dictatorships of many kinds and eventually won hands down. The expansion of the system saw “smokestack” industries move eastwards and slowly manufacturing in the western countries died. The new economics insisted that only high value added functions should be performed at home and all others outsourced. Eventually this meant that very little was made at home and the UK depended for its income on North Sea Oil and the machinations of the stock markets.

As the 20th century drew to a close we began to realise the old generations now dying off had been severely traumatised by the two world wars of the first half of the century. Only now was it becoming apparent just how bad their lives had been. I have often given thanks that I had the best years of that century. I never had to fire a shot and was never unemployed. I never had to cower in a bomb shelter or a filthy dug out and carry dead bodies away in the morning. Compared to those before me I had a very good life. Then around 1990 things began to go wrong.

As a manufacturer I first got an inkling that something was wrong when I discovered I could go down to my local hardware store and buy a complete Pillar Drill – a small machine tool – for less than the local cost of its electric motor. Other examples came thick and fast.

That was when I first saw Alan Greenspan on TV in the UK – explaining why we would all get richer if we bought our goods from Taiwan or China – and our own manufacturers went bankrupt and closed down together with all the jobs they had provided. Then the supplier that had helped keep my company in business for many years moved production eastwards and I went bankrupt after 80 years of family business.

I had come across Alan Greenspan many years before when I came to believe that Ayn Rand was the finest philosopher I had ever read. I still believe that – and her concept of capitalism – but I do not think she and Alan Greenspan would any longer find much common ground. Ayn Rand’s philosophy was about creating wealth by the only means possible – taking materials from the Earth and converting them to usable products that may be freely sold to others. The place of the financial system in this scheme is to finance production – and take some appropriate profits for investors.

The system we have now has destroyed production at home and concentrated on prestidigitation to make obscene profits for a very small number of people. They have got obscenely rich and wield massive power and have virtually every Government in the world in their power. This is a recipe for revolution. Those of us who have worked damned hard all our lives and created vast amounts of wealth, mostly for the benefit of others, are exceedingly angry at this betrayal of our trust.

I managed to salvage a very modest pension from the ruins of my small, and hard won, industrial empire and in accordance with the Chancellor’s rules on pensions I had to invest it in the Stock Market. I took the best advice available and have so far, after eight years, taken much less from my fund than my advisors – and now I have a very meagre fund indeed. I took no risks. I just did what the Government wanted me to do – and I have been almost wiped out – by greed, incompetence and plain criminal behaviour of the people the Government licensed to manage my affairs. Now we find the Chair of the NASDAQ exchange appears to be outright crook. Just what the hell is going on?

I wonder if this is to be the future? Is the present diabolical crisis to be funded by inflation – and the destruction of all savings and pensions? I bet it is. The responsible people are going to have to fund the indolent, spendthrift and criminal – again. The British and US governments have already pledged several hundred billion dollars to rescue impecunious banks. This is taxpayer’s money and both nations are already in hock up to their necks. The resulting upheaval has led to even the largest manufacturing companies having to beg for handouts. The prodigal sons have had their fabulous party and have now come home with cap in hand. Let them do things our way from now on. They are not welcome on their terms.

When I was forcibly retired I did a lot of work in the local community and chaired what rapidly became the most powerful non-aligned political body in our city. I eventually resigned and a man from a nearby estate, that is very small but one of the most deprived in Britain, took my position. This good man was pushed beyond his level of competence and gave in to temptation. He served a year in jail for embezzling £1200.

Just what sort of punishment should we give to a thug who - from a very privileged position - embezzles $50 billion and puts at risk numerous banks, the savings and pensions of thousands of people and the whole economic system of the World? He has also sold us down the river to Osama who must be laughing all the way to the back of his cave. I really think that public whipping and hanging of this thug would be far too lenient – he has caused vastly more damage to our society than did 9 -11.

Just what the hell do you think you are doing? I ask this question of every politician who thinks you can earn your living without producing. I ask it of every politician and administrator who is supposed to regulate the affairs of men. I ask this of every man who thinks he can make more money manipulating the markets than creating genuine wealth. I ask it of the regulators who are supposed to check the complex regulations and ensure that the risk we investors take is not unreasonable. I ask it of every man who is a victim of this fiasco. Why have you allowed these incompetents to rule the roost? I ask this of all those who think that rights belong equally to all men and the law should not offer favour to a small minority in order to make them exceedingly rich.

Chairing the Stock Exchange is a privilege, not a right, and has been grossly abused. So have many other positions of trust. Those who administer our society have been found wanting. They are not fit for purpose. They are not worthy of our trust. They have snarled for decades that they will go elsewhere if they do not have their fat salaries. Let them go. They are a liability. They have failed spectacularly.

Those who claim to be able to rule us have shown themselves to be grossly incompetent. Those who run our financial institutions have been shown to be grossly avaricious as well as incompetent. There is no one who is going to come out of this without egg on his face. When societies in the past have reached a state like this they have often been subjected to revolution. The governments of the West will correctly identify and correct the problems or they, too, will face revolution.

The worst thing is that this will threaten to undermine the West at a time that it has to face up to the four biggest threats for a millennium. We are approaching peak oil, we may be approaching peak carbon, we may be approaching peak population, and we have a very determined political enemy set on destroying us from within. Any one of these threats is a major challenge. All four together are a mountain we might not scale. The future is full of foreboding and potential catastrophes and we are willingly destroying, from within, our finest life support system. This is without even beginning to consider the looming competition problems of Russia, China, India and Pakistan. This is not good.

To the Presidents and Prime Ministers of all western countries I offer this advice. Get your act together and regulate our financial system or face revolution. Mark my words very carefully. We have got used to living in democracies and we are not going to allow a few rich thugs to take them from us. I created a manufacturing company that paid millions in taxes and wages over three decades and when some Mogul decided he could make an extra one percent on his billions by moving production to the East he effectively bankrupted me. My annual income in retirement is less than the small change from one of his dinner parties. I know many other good honest people who are in a similar situation. We are not happy to find out that these exceedingly rich power brokers are plain thugs, robbers and incompetents.

We in The West showed the world how to get rid of the Nazi and Communist thugs and made the world a better place – or so it seemed. Now we have become fat and greedy and lazy. China – not long ago a third world country - is now probably the biggest creditor nation on earth. I suggest that it is no coincidence that China has wrought this transformation in its finances along with the massive growth in its manufacturing. Manufacturing makes money. I note the Chinese ambassador has told Uncle Sam to get his act together and the German ambassador has said the same to Britain. My - how the mighty have fallen – and all to greed and shiftlessness. The people who have orchestrated this will do anything except the one thing that makes civilisation work - work. By contrast the thug in New York has secured $50 billion to himself by shovelling paper wealth around the world but has not created one single penny.

There are two things we need to get absolutely clear here. Firstly there is only one way to create wealth. You take the products of the Earth and convert them into saleable commodities. You can do this by hunting, gathering, farming or mining and then manufacturing. Nothing else creates wealth – and the creation of wealth is the way a civilisation survives. Financial services do not create wealth – they are supposed to lubricate the creation process. There are a million functions necessary to the success of a civilisation - but mostly they do not create wealth – they are an on-cost.

The second thing is security. When I have produced my wealth I need a place to store it against bad times. This is a universal and well-established need – without security, civilisation is impossible. The place I store my wealth is called a bank. The bank has a safe in which it stores my money. The noun safe is not a coincidence. That is exactly what it means – Safe. I want my money to be safe. I do not expect the bank manager to use my money to speculate and make himself an obscene fortune while offsetting all the risks to my savings and pension money. I expect the government that I elect to ensure these things are right. They are the regulatory agents.

I am aware this is an idealised token of the real world but his is how I, once a massive producer of wealth, need the system to be. So, I believe, do most other ordinary people. That you should have produced a system that allows these multiple blatant thefts is an obscenity of the first magnitude. Put it right quickly – or suffer the consequences.

15th December 2008

Colin Walker

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