Free Bank Shares for all?

Nick Clegg, UK deputy Prime Minister, has caused a minor stir with his idea to give away shares of the nationalised banks to voters.

There has been some opposition saying that the banks should be sold off with the proceeds going to the government to help pay off the deficit.

This argument would mean that in essence, the banks, after sucking huge amounts of taxpayers money to prop them up, would be able to buy themselves back cheap. A sort of pawnbroking deal you can get with someone really bad at pawnbroking. To add insult to injury, the proceeds are then handed by the treasury straight over to the bondholders who are mostly, the banks! Genius plan if you’re a banker!

Others, feeling that there are those among voters who are ‘undeserving‘, propose that only tax payers should be given free shares.

There is however, one teeny weeny flaw in this plan to grab more shares for the ‘deserving‘. While it’s obvious that it’s income tax payers who are the intended beneficiaries, income tax is not ring fenced. It’s thrown into a great big pot along with all the other taxes such as VAT. Taxpayers in this case would include the ‘undeserving’ and, incidentally, also include any child that has ever bought an ice cream…

Nick Clegg’s asserts that his idea would democratise the banks with the participation of legions of small investors. Experience shows with previous privatisations that this would just end with the dictatorship of the institutional investor.

My preferred option? Tempting though the offer of free money is, the caveat is that we would only get above what the government paid for the shares originally anyway. So I’d prefer a more transparent and democratic solution. Sell off the gambling arms of the banks to any mug that’ll buy them at an over-inflated price. Consolidate the rest into one single bank, rationalising the product ranges to save the costs of duplication. The management would be made up of representatives of the bank’s employees, the government and representatives from interested consumer groups. Now that would be more like a true ‘Peoples Bank’.

Pundits Prescribe 10 Years of Pain for Greece

The Greek people have found themselves assailed from all sides to pay for a crisis of someone else’s making. They have protested in their hundreds of thousands against the austerity programme of cuts, mass redundancies and the fire sale of state assets, the proceeds of which would end up in the pockets of banks and bond holders.

A line-up of pundits and economists blithely playing the role of perverse doctors, declare that the Greeks will have to take ten years of pain to pay for the crisis. They point to the corrupt hiring practices for government posts, state ownership, tax avoidance as reasons for the Greek predicament.

What they don’t explain is, why in that case did the Celtic Tiger of Ireland collapse into near bankruptcy? Neither do they explain why the austerity demands would work for Greece whereas in Ireland, those policies have lead to a destruction of the growth that would have paid for its debts. They are strangely silent on the example of Ireland, which has done everything the ECB and the IMF demanded of it. In a sign that the Irish crisis is set to deepen, the Allied Irish Banks, one of the bailed out banks, has defaulted.

The Greek crisis is poised as a Mexican standoff between the Greek masses, the bond holders and banks, the CDS market, the IMF/ECB and their proxy, Greek PM George Papandreou.

George Papandreou has won his vote of confidence today and it is likely that he will be able to get a new austerity package through parliament. This will only be the first step, but as the Greek masses have made absolutely clear, the final say rests with them.

Syria – Observations as the uprising unfolds

13th June: What seemed to have been the most probable outcome of Assad restoring the regime’s control has been thrown into doubt by the astonishing bravery of the Syrian people.

The events of the past month shows just how easy it is for dictators to miscalculate. Driven by the belief of their own infallibility, they can become too confident in the tools and methods of repression and their own judgement. The regime is now reduced to vacillating between concessions and brutal attacks on the population.

Assad offered concessions including the lifting the state of emergency and an amnesty to those arrested up to 30th May.

When the masses rejected all offers with contempt, correctly seeing them as meaningless and as a play for time, Assad switched to extreme violence.

Assad’s regime used the horrific torture of a 13 year old boy  to send a warning to mothers to discourage their children from protesting. Arbitrary and random arrests and torture are employed against the population to create an atmosphere of terror.

Villages and towns that resist are subject to the wrath of army who attack with tanks and helicopters.

Assad’s regime has turned a blind eye to protests in the Golan Heights hoping they would distract attention away from the regime. After having complained that Syria was trying to direct the ire of protesters towards it by provoking a confrontation with Syrians on the Golan Heights, Israel responded by… killing protesters! Their reaction shows the stupidity that characterises the modern Israeli elite.

Their blunder with the Golan Heights protest is just a continuation of other blunders, such as the 2006 Lebanon War. This shows that Israel’s political elite have degenerated into the one trick pony of violent re-action. Worse still, some elements such as Foreign Minister Avigdor Lieberman, wear their stupidity and brashness as a badge of honour.

The west has responded with its usual cynicism. They have limited themselves to calls to end the violence and racketing up sanctions against individuals of the regime. There is virtually no prospect of western military intervention on several grounds:

  • There is no desire from ordinary Syrians for intervention. In fact quite the opposite, they are openly hostile to the idea
  • Syria is far larger militarily than Libya, so far NATO have spent over three months trying to defeat the much more inferior and fragmented forces of Gaddafi
  • Syria, is strategically more important than Libya, it’s disintegration would risk infecting the whole region including the west’s allies
  • The west, unlike with Libya, would not get a free pass from Russia and China to intervene in Syria

The west, along with Israel, would undoubtedly welcome the fall of Assad but not at the price of instability in the region.

This explains the apparent contradiction in the west’s approach between Libya and Bahrain, Libya and Syria etc. For the west, the issue is not a moral one, but what is in their best material interest. When looked at from this view point, the policy of the west towards the Arab uprisings has been entirely consistent.

The tactics of the Syrian regime have descended to new brutal depths. The pro-democracy movement still suffers the flaws of fragmented leadership which gives an advantage to Assad’s campaign to remain in power. However, victory for the Syrian regime is still some way from being assured.

25th April: Bashir Assad in ordering the mass slaughter of protesters over the weekend has decided on a final showdown. Over a hundred have been killed in the last few days alone. All the major cities from Latakia, Baniyas, Aleppo, Homs to Damascus have been rocked by calls for the regime to fall. The epicentre of the protests Daraa, has received merciless treatment, snipers shooting at unarmed people to prevent them collecting and burying their dead. Today, 25th April, the Syrian Army has invaded cities and towns across Syria in a government crackdown against pro-democracy demonstrators.

The Syrian political and military elites, unlike their Libyan and Yemen counterparts, have suffered very little in terms of splits and defections and are still in a strong position. The protesters suffer the disadvantage of an organisation to co-ordinate nationally to counter the Assad strategy. It does seem likely that these two factors will help the Syrian authorities succeed in putting down the protests.

Though Bashir Assad may succeed in defeating the protest movement, the cost will be high. Assad’s regime will be weaker for its victory, its legitimacy will be undermined and its aura of invincibility shattered. Time may show that this is not the end of the uprising but just the first episode.

*Since the time of writing, activists have expressed doubts that Assad will be toppled, citing factors that appear to back up the analysis above.