Trump the African Dictator

We were warned by Trevor Noah, prior to the election, that Trump sounded a lot like an African dictator. Unfortunately, every day he and his regime are becoming ever more like one. The constant posturing for the sake of his ego, the lavish personal spending, the inability to accept criticism and of course the massive levels of corruption.

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Your tax dollars hard at work….

Trump promised to “drain the swamp” but instead, he’s done the opposite, with his cronies and family members increasingly using the assets of state for as their personal play things, be it to go shopping in Europe, holidays, or business trips abroad. The Secret service is at risk of going bankrupt given the huge bill its run up guarding Trump during his trips to Florida every weekend (where the state pays the cost of putting him up in his own hotel) or protecting and providing transport for his relatives on business trips to sign deals abroad, something that is in clear violation of the constitution.

Again, this is all reminiscent of the sort of corruption African autocrats are famous for. However, there is another aspect of African autocracies that Trump demonstrates – his supporters. African dictators maintain their hold on power through violence and intimidation of voters (which least we forget, Trump supporters also engaged in last election), but that only goes so far. A key feature of their rule is the fact that they have a core group of supporters, typically 20-33% of the population who will back them no matter what.

Make no mistake, the supporters of African dictators such as Mugabe or Obiang Nguema are well aware of the corruption and abuse of power that goes on. But they back such dictators regardless of this, because they are a member of the same tribe. Indeed, some even see a silver lining to such corruption as they expect the dictator to “share the cake. They look the other way to him embezzling billions in state funds in the hope that a few crumbs fall from the table which they can scoop up. Indeed, a candidate who actually ran on a promise to “drain the swamp” would probably lose votes.

And this is the role many in the Republican party have now fallen into. Many still back Trump not because they are unaware of the corruption allegations, or because they don’t understand just how serious his abuse of office is. Actually quite the opposite. The GOP is now a tribe, a cargo cult and they see it as necessary that they back their leader regardless of how bad he gets or how big a cliff he dives the country off.

This in of itself suggests that the conventional wisdom, that we must merely wait for investigations against Trump to conclude and see him impeached, or wait for the next election and see the GOP devastated in polls, might not work. If he’s this bad now and a hard core of the GOP are still backing up, its not going to be that straight forward to unseat him. And don’t expect future elections in the US to be free and fair.

Instead, we need to start treating Trump the same way that any African autocrat is treated if he is to be removed from power. And that means recognising that the checks and balances aren’t going to work. It means refusing to recognise his office and refusing to do business with any firm that does business with him or his companies (a list here, TK Maxx and Amazon being the key ones in the UK, along with Uber of course).

Indeed a boycott of US industry as a whole (encouraging firms to re-register themselves abroad and thus threatening a collapse in tax revenue) is really the only way forward. Its exactly how they brought down the apartheid regime in South Africa.

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The Panama files

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The revelations from the Panama files of the law firm Mossack Fonseca have been on the one hand shocking, yet on the other oh so predictable. It is a well known fact that a large chunk of the world’s capital exists in a sort of “dark matter” like state. We know its there, we can see its effects when the rich flaunt their wealth, but nobody can pin down where it is, so its widely assumed to be tied up in tax havens.

gfi - us assets in tax havens

Note the data above based on a 2008 estimate, actual numbers may be much higher now.

Details are sketchy, but the estimate is that between $11.5 trillion and $20 trillion dollars is squirrelled away in tax havens, about 15% to 25% of the entire net worth of the global economy. That equals (or exceeds) the annual economic output of China. Its estimated that global governments lose out to the tune of between $100 billion to $255 billion in unpaid tax. And quite a lot of this money represents the proceeds of crime, or funds looted by corrupt regimes from the state coffers. At least $6.2 trillion of that money comes from developing nations (i.e. nearly half of the total, even though developing nations represent only about a quarter of the global economy).

What Mossack Fonseca were in the business of doing was acting as the intermediaries for transactions that allowed money to be spirited away, cached offshore in shell companies and then laundered back, often through the purchase of assets such as property in London for example. And as the BBC’s panorama reveals 95% of this company’s business was devoted to this kind of activity.

When most of us think of money laundering or offshore banking, we envisage some guy in a small office in the Cayman Islands wearing a Panama hat and Bermuda shorts with a safe in the back of the office. But no, Mossack Fonseca employs thousands of people and have many times this number in offices worldwide whom they will hire out to act as stool pigeons for dodgy deals. This is tax evasion and money laundering on literally an industrial scale. And the banks are clearly aware of this and compliant in such transactions.

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The top ten banks linked to the Panama papers

One of the methods that David Cameron’s dad employed, which was also used by the Brinks Matt robbers was “bearer bonds”. You’ve probably heard of these in a Hollywood film, where thieves break into a bank or an armoured car to steal a small suitcase which is somehow worth tens of millions because it contains “bearer bonds”. Well in truth bearer bonds have been largely banned in most of the world, given the obvious means by which they can be abused by criminals (or terrorists) to circumvent tax or money laundering legislation. However, it would seem that they are still in use, which is both shocking and on the other hand, not a surprise.

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In the wake of the Panama papers Putin searches for places he can hide away his millions in ill-gotten gains

And as noted many of the rich and powerful have been left with awkward questions to answer. A lot of the time its not what they have been saying, but what they’ve not been saying that counts. Osborne refused to answer any questions (then terminated the interview) on the issue of his offshore dealings. Parallels could be drawn with the same reaction from the Icelandic PM who has now resigned.

Cameron released a series of increasingly carefully worded statements which all but admitted that he had benefited from these offshore tax haven funds set up by his father. Indeed at the time of writing he’s actually now admitted that he had a stake. Now you’d expect Boris Johnson to use this as an opportunity to knife Cameron nice and quietly. Instead he’s been defending the PM, all but confirming that he too has had his hand in offshore deals like this. Oh, and search the Fox News site for “Panama files” brings up no hits (guess where Murdoch keeps his millions….).

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Cameron’s attempt to draw a line under all of this tonight, still leaves a lot of questions. Why would you set up a firm in the Bahamas, whose main beneficiaries (those that weren’t clearly front men….one was a local bishop) were all based in the UK, other than to avoid tax? He claims it was so they could trade in shares in dollars….then why not set up in New York or Delaware? And, given how many of these offshore shell companies often use property deals to re-shore funds, that raises questions as to how Cameron afforded a multi-million pound house in London. And it has also been revealed that while publicly talking tough about cracking down on offshore finance, Cameron has in private opposed efforts by the EU to crack down on tax havens.

And this brings us back to the EU referendum. The EU has been pushing quite heavily to end the “phantom zone” of offshore tax havens….which probably explains why so many of Farage’s hedge fund buddies favour Brexit  (Farage has been previously forced to admit he used tax havens). You can draw a direct correlation between EU efforts to crack down on tax havens and funds flowing the way of UKIP. The UK is a key hub around which many of these tax havens orbit. If the UK ceased to support them (Corbyn proposed direct rule be imposed on them) the system would start to break down.

And again, to be clear this is not a victimless crime. When Ian Cameron (or Farage) avoided paying tax, you paid the tax for them. Yes, Farage and Cameron as good as went around to every taxpayer in the UK and picked their pockets. And one of the facts that the Panama papers revealed is the degree to which the London property market is dominated by offshore dealings (Private Eye have a handy map tool available here). After all, the next best thing to a bearer bond, is the title deeds to a London flat. Of course the end result is British being priced out of the housing market by wealthy foreign billionaires using UK property (which they often leave empty) as gambling chips in a casino. Meanwhile Farage gets to blame foreigners for London being overcrowded.

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UK citizens now make up a minority of London property buyers…oh and the EU are just 4.7%

The company at the heart of this whole debacle have responded by pointing out that the only crime committed was by the person who leaked all this information. They also made some flippant statement about their e-mail being hacked. But its doubtful that anyone could access Terabits worth of data via e-mail (if they can what kind of an outfit are these jokers running!). No, I suspect an internal mole is involved. But unfortunately, they are almost certainly right, the only crime here was whoever leaked all this data, which perhaps highlights everything that is wrong with offshore banking.

Suffice to say action needs to be taken. Withdrawal from the EU will play right into the hands of those who want to turn the UK into essentially a giant tax haven (keep in mind that tax havens still need to be financed, typically through higher VAT rather than income tax, so those living in the country still end up paying quite a lot of tax). While I suspect Corbyn is going a bit far when he talks of imposing direct rule, some economic sanctions launched by Britain and the EU (block all trade, forbid anyone UK/EU citizen from owning shares in offshore funds, freeze all assets of said companies, travel bans, etc.) would have the desired effect.

However, perhaps the most obvious measure is to apply the blinding light of transparency. Make all companies that do any form of business in the EU, regardless of where they are based, declare all of their shareholders as well as the pay and earnings of senior company officials. Like vampires, these blood suckers prefer dark places, force them into the light and they’ll explode.

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Cameron’s Panamanian lawyer makes the mistake of opening the curtains

Unfortunately, neither the current PM, nor anyone else in the cabinet, are credible candidates to lead such an effort.

Bankers? LIBOR? Should they resign? No! Lock’em up!

This week’s big story was that of Barclays being found guilty of manipulating the LIBOR banking rate by the FSA and US CFTC and fined a record £290 million. Other banks are also in the firing line and due to face questions in the next few months, RBS just sacked a couple of staff as part of its damage limitation exercise. And Bob Diamond (geezer) has been left with some awkward questions to answer.

One particular question for Bob Diamond(geezer) is whether or not he is going to resign, and if he refuses to go, will the Barclay’s board sack him? He was after all, head of the very division of Barclays guilty of misconduct, when the Libor manipulation was going on. He is of course trying to apply what I’d call the “Nuremberg defence”, blaming hapless lowly employees for doing it all behind his back (with them resorting no doubt to the “just obeying orders” gambit).

But this ignores the principle of “command responsibility” as I previously discussed in relation to the Murdoch’s and phone hacking. In short, the whole reason why someone like Bob Diamond (geezer) is able to justify his ridiculous salary is by taking “command responsibility” for his company, or the division of his company that he head up. In essence he takes management responsibility (and credit) for the good things that are done (and his share of the profits), but the door swings the other way, in that he is also responsible for anything bad (or illegal) that happens.

In such situations we are forced to choose between two possibilities, firstly that he was in on it and thus as guilty as everyone else involved. Or secondly, that he was too stupid or incompetent as a manager to keep control of his own staff and prevent this from happening, in which case he is guilty of miss-conduct. Either way, there is no question that he should resign….and hand back the bonus cheques (£105 million in 2011) he’s been collecting the last few years as he heads out the door!

Why are they not in jail?
But I would argue that a few resignations and sackings aren’t enough. What we need to see is a few bankers going to prison. Let us look at the facts. Back in 2007, these same shower of c*nts brought the entire global economy to the brink of collapse and had to be bailed out by the taxpayer (see Tony Robinson’s rant on Question Time). Even after the bailout, they helped snarl up credit markets, making life tough for many small businesses. Indeed, this LIBOR manipulation cost many small businesses dearly. They’ve also been actively conspiring to bring about the collapse of the Euro, which will have serious economic repercussions for the whole world.

If you or I held up a post office, or lied on our mortgage application, or a lowly clerk in the bank spirited a few quid out of the tills, we’d all face serious fines and probably go to jail (the bank clerk would certainly be sacked…and they won’t get a golden handshake!). Barclays are now guilty of committing gross and systematic fraud over several years to the tune of many billions. How can it be that these people aren’t in jail!

Neo-Feudalism
In other parts of the world they have a word for this sort of behaviour – Corruption! The reality is that we live in a Feudal society, where the banker, traders, celeb’s, etc. are the new nobles and the rest of us the plebs. In the middle ages, while Magna Carta officially made all men equal, the reality was very different. While the peasants could face harsh justice for the slightest crime (or suspected crime), the Nobles could pretty much get away with murder (in many cases literally!). These “nobles” committed systematic corruption on a scale that would put Mugabe to shame and often sent out their forces to rape, pillage and murder villages on the land of their rival nobles. If they got caught, they could face, at worse, a slap on the wrist fine, usually paid by them giving up land (i.e. it was the peasants on that land who paid, as they ended up swapping tyrants!). The only situation where a Noble need fear, was if he acted against the king, which could cost him his head if he lost….or see him made king if he succeeded!

Similarly today, the plutocrats of the neo-nobles are beyond prosecution and essentially above the law. They have in effect a get-out-of-jail-free card. Those fines Barclays will be paying, not the traders or Bob Diamond (geezer). In other words if you’re a shareholder in Barclay’s, or a low ranking employee, or a account holder, that would be you who is paying for the crimes of others.

The Peasants revolt
This is a system that has to change, as it is not only grossly unfair, but it is a threat to democracy itself. And the plutocrats have good reason to want it to change. Another trend of Feudal states is that every now and then the Peasant’s tire of the constant shafting they are forced to endure, snap, and go on a murderous rampage otherwise known as a “Peasant’s revolt” (or “slave revolt” back in Roman times). Indeed this “tradition” stretches right the way through to modern times. One could draw parallels with the Peasant revolts of the Mediaeval world and the French revolution of the 18th century, or even the Russian revolution. Indeed, one could even draw a parallel between the current “Arab Spring” and such revolts of the past, as a large driver of these Middle East uprisings is the oppression of the current regimes and the sickening squandering of the region’s wealth by a small, and corrupt elite.

So the bad news for the Plutocrats is, if things don’t turn things around, if there isn’t more accountability of them for they’re actions, and a more even distribution of wealth, they are running the serious risk of some western states descending into the sort of anarchy we say in the past (or indeed on the streets of Syria or Greece today). All the money in the world will not save you from a lynch mob!

In case of Emergency – break glass
So where does Cameron sit with all of this? While he made all the noises we’d expect him to make, as with the Murdoch scandals, or Jimmy Carr’s tax dodging….oh! he’s shocked!…incensed even!….is he going to do anything about it?….You’re joking right!

I think it was telling that Cameron began talking this weekend of an EU referendum. Of course he was very non specific, no exact details, no timetable, etc. As I’ve previously pointed out the Tory leadership know it would be a disaster for the UK leaving the EU, and for starters the Lib dems would never agree to such a referendum, so they’d be essentially provoking a general election by trying to get one. But they also know it play’s well with certain xenophobic’s within their party and pushes the media’a buttons (in particular, the rightwing media).

In truth this is the equivalent of emergency spin doctoring. By David Cameron talking about a EU referendum, he knew that this would knock all this Barclay’s stuff off the front pages, giving time for things to settle down. You can expect more stuff about Immigrants and bashing those on welfare in the coming days as well.