Predatory finances – the shape of things to come

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I know one or two who work in the financial sector and rather than “hot stock tips” what I tend to get instead are “whatever you do, don’t give your money to this bunch of fe*kin thieving gits”. Well one of those I was warned about was a firm called London Capital and Finance (LCF). And unsurprisingly, that firm recently collapsed, wiping out the life savings of many thousands of people in the process, with it considered very unlikely any of them will get their money back.

The firm, led by Paul Careless (I’m not making that up, wonder what his middle name is? Truthless? Brainless? Heartless?), is now mired in allegations of malpractice. Both in how the firm enticed people into investing, often by mis-selling them high interest bonds without explaining the risks associated with these sorts of investments. Or the fact that it has been technically insolvent since 2017, yet still continued to operate and take people’s money.

This is unfortunately a sign of things to come, for LCF are merely one of a number of similar firms that have popped up under the Tories. Given that the government have basically stopped providing public finance for local infrastructure projects, councils are often forced to look to the private sector (to build, operate and finance these projects). So rather than issue bonds and take advantage of low interest rates, instead they are forced into lending arrangements that are overly expensive (so called LOBO loans), which has stretched the finances of many UK councils (or NHS trusts) to breaking point.

And with interest rates so low, pensioners and savers have been putting their money into firms like this as they are only thing offering a decent return, something that Tory changes to the pension system have promoted (encouraging them to play the stock market and take what could be considered excessive risks).

So the end result is bankrupt councils with no money, private sector firms building or operating public services which go to the wall (which the government is forced to pick up the tab for), some +300 billion of PFI debts, plus pensioners and savers who get stiffed when these predatory finance firms collapse. The only beneficiaries? Well unsurprisingly the wealthy investors who bankroll the Tory party (and through their off shore status don’t pay any tax). I’d call it African dictator levels of corruption, but that would be unfair to African dictators. I mean why do you think they wanted out of the EU? Because they know sooner or later Brussels would shut them down.

And the scary thing is that this is the shame of things to come, for such predatory financial firms are much more common the other side of the Atlantic. Watch local US TV and you’ll see all sorts of ads offering loans to people who can’t afford to pay them back. Or cold called by someone running a sleazy investment scam. Or we’ve got MLM’s that are little more that a ponzi scheme masquerading as a cult. And that’s before we even talk about predatory TV evangelists trying to con people into paying for their private jets.

And least we forget, the financial crisis didn’t start in the big banks of financial firms. It started in lots of small local mortgage brokerages across America, who began offering so-called “Ninja loans” at high interest rates to people who couldn’t afford them. While this doesn’t absolve the major banks of any blame (they had to have known what was going on, so either they were criminally incompetent or criminally complicit), it does highlight that simply cracking down on the big wall street firms (as Bernie or Corbyn propose) won’t really achieve anything. Its the smaller investment firms you want to watch as much as the big boys.

And the impact of America’s predatory finance are all too obvious. For example in how rural America has been destroyed by US corporations, turning many in the countryside into little more than modern day serfs. Those not driven off their land by mounting debts are often no longer in control of their own farms. They are completely dependant on large corporations, for production contracts, who own their produce (the birds, the seeds they sow, etc.) and control their farming methods. And they can face the demand for expensive changes at short notice, which the farmers/serf’s have to pay for (putting themselves in debt in the process, often via the aforementioned predatory lenders). And needless to say, its gotten worse under Trump.

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Rural America is dotted with the abandoned farms of those driven to bankruptcy

America in short is the land of the free….free to exploit people and get away with it that is. Hell, take the recent college admissions scandal in the US, in which rich parents have been paying middle men to get their kids into university. Yet the response to this in the US, notably from academia itself seems to be muted and more about damage limitation, firing those implicated (for being caught rather than what they did). Nobody is talking about changes to the admissions system (such as adopting the systems used in EU nations, where applications often processed anonymously by a central authority rather than the universities, with places awarded solely on merit). I mean I’m critical of the UK admissions system, which tends to favour those who go to the right school, but at its worst its still way better than the US system.

Well this is all coming to the UK’s way post brexit. Why after all do you think the Tories are so keen to throw the farmers under the bus post-brexit and make everyone eat growth hormone beef and chlorinated chicken. The real purpose of this free trade deal is to allow UK predatory finance firms to fish in the US market for suckers investors and visa versa. Of course, once they get caught, they’ll be much more capable of escaping justice. Not that bankers ever go to jail anyway. In short, what both brexiters and Trump supporters seek is a mutually beneficial oligarchy. If you voted for either, then that this is effectively what you voted for.

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One thought on “Predatory finances – the shape of things to come

  1. Pingback: Rural America under threat from capitalism, climate change and the GOP | daryanenergyblog

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