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Posted by: - 11-22-2009, 10:17 AM - Forum: Multimedia - No Replies

November 20, 2009

Sony Kapoor is the Managing Director of Re-Define (Rethinking Development, Finance & Environment), an international Think Tank promoting financial system reform. A prominent expert on international finance and development, he started his career in investment banking and derivative trading. In 2003 he quit to work on reforming the financial system and promoting international development. Kapoor has been a leading advocate for debt cancellation, action against tax havens, and promoting innovative sources of financing. He is a key adviser to several governments, international agencies, political parties, unions, and NGOs on helping shape a more progressive society. Kapoor has worked in a policy advisory and strategy consulting capacity for international organizations such as the World Bank, UN, and UNDP, international NGOs such as Oxfam, and Christian Aid, financial institutions such as the Industrial Credit and Investment Corporation of India, and Lehman Brothers, and governments including that of Norway. He has studied at the prestigious Indian Institute of Technology, University of Delhi and the London School of Economics.

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay, coming to you today from Washington. Ignacio Ramonet, the editor of the French magazine Le Monde Diplomatique, wrote these words: "The globalization of investment capital is causing universal insecurity. It makes a mockery of national boundaries and diminishes the power of states to uphold democracy and guarantee the wealth and prosperity of their peoples." He went on to recommend this: "The time has surely come to put a stop to these destructive movements of capital. There are three ways to tackle the problem: close down the 'tax havens', increase tax on unearned income, and levy a tax on financial transactions." These proposals aren't, I don't think, original from Ramonet, but it's very interesting that these recommendations of Ramonet were written in 1997. Of course, they could have been written yesterday. Now joining us in Washington is Sony Kapoor. Sony is the managing director of Re-Define, Rethinking Development, Finance & Environment, an international think tank promoting financial system reform, and he used to be an inmate of Lehman Brothers and worked on Wall Street in some of the other institutions. Thanks for joining us, Sony.


JAY: And congratulations for escaping the asylum. Sony, the NGO you work for is fighting for reforms more or less precisely like these. Ramonet talks about this in 1997, as did others. Tell us about why these proposals are important.

KAPOOR: The financial crisis has had several strong impacts. And we know we see unemployment as a very visible aspect, etc. But the biggest impact is around distribution, which is that every time a crisis happens, those who already do not have enough, who are at the margins of society, suffer disproportionately and suffer the most. And as we are seeing, for example, in the case of Goldman Sachs and bonuses, those who have benefited from the booms are actually less likely to lose from the busts. And what a crisis like the current one we are having does is it reinforces inequality. And, of course, those who miss out and lose out during the crisis, those lives in the developing world that get lost, those people are not going to come back alive. The people who get fired and lose their jobs are going to get traumatized. The people who are having physiological, psychological impacts because of the crisis and the insecurities are going to bear them out for the rest of their lives. So think of it as strong policy needs from a social perspective. The first idea around the Tobin tax, or financial transaction tax, is extremely important for three reasons. The first is that the crisis has imposed thousands of dollars of debt and taxpayer liabilities on all of us, most of us who actually were not complicit in the crisis. And a very critical need, to get out of the crisis and to make sure it doesn't happen again, is to make sure that the costs of the crisis are recovered, at least in part, from the finance sector and imposing a tax on financial transactions, which is an extension, a broadening of the Tobin tax idea, which was only taxes on currency markets. But extending it to taxes on bond transactions and derivatives transactions and share transactions is a very important way of trying to raise money to recover some of the costs of the crisis from those who have actually brought us here, which is the finance industry.

JAY: In an interview series we just are publishing with Jane D'Arista, she explained one of the forms this speculation takes place, which was, for example, you could go and buy yen for one point and come to the United States and buy T-bills and earn three or four points on what you had just turned around and borrowed. And I assume one of the reasons for the Tobin tax is, if you could tax that kind of speculation, you could almost tax it out of existence in the sense if you tax it enough, you could stop this kind of currency speculation.

KAPOOR: That is theoretically possible, of course. And Brazil has just imposed 2 percent tax on investment flows going into Brazil, because it is finding that the currency is being inflated and its trade is suffering exactly because people are borrowing at a low cost in the dollar and trying to invest in these assets. This is the so-called carry trade. But the level of tax that is being discussed in general, for example, as proposed by Prime Minister Brown of the United Kingdom, is a much lower one, and its impact would be to discourage this kind of carry trade or speculation, but it will not actually wipe it out. And so there is different reasons for trying to implement such a tax. If your primary objective is to kill this carry trade, you need to implement a much higher rate of tax, of the order of 1 or 2 or even 3 percent or something.

JAY: This would give states at least a mechanism—even if it started low, you would have—at least the instrument would be there to raise it if they found it necessary, which is, I suppose, why the finance sector doesn't want it at all.

KAPOOR: That is a very strong reason. People think that there is an idea that policymakers want to go in under the radar screen, and that gives them an additional policy tool, at a time when, for example, a currency is under attack or there is this carry trade happening, to try and increase the rate. It is much simpler to do that once you have the infrastructure in place. So even if you had a tax of 0.01 percent, which is one of the numbers that is being talked about, it's much easier to increase it to 1 or 2 percent if there is a potential problem.

JAY: As we go through these different proposals, I think it's going to be rather obvious these are kind of no-brainers. They're so obvious it would be good for the majority of people. I guess it all comes back down to what the real political power is and the dynamics of trying to get something in the public interest passed. But let's go further. Let's go on to one of the other recommendations in the importance—. Tax havens is something you've been working on. And how big a problem is that?

KAPOOR: It's very serious, not just in terms of the distribution, where the people who are at the margins of society, the people who get salaries, the workers, are forced to pay their fair share of tax, whereas those who actually—.

JAY: That's because it's taken right out of their paycheck through source deductions.

KAPOOR: Exactly. So they have no choice but to pay their full share, whereas those who can make most of their money through capital gains, the unearned incomes, those who make most of their money through corporate income, etc., are much—and those who earn a lot of money have tools at their disposal which allows them to use tax havens and international finance arbitrage to avoid most of their tax burden. So what it does is the existence of tax havens significantly makes the tax system far less equal, far less fair than it would otherwise be.

JAY: We've heard some people suggest that it could be as much as a third of the world economy or capital flows are actually offshore, unregulated, going through these tax havens. Do you think it's that big a number?

KAPOOR: I think that's about a fair estimate of that kind of flows. Yes, absolutely, I think that's an accurate number.

JAY: We know from people that have worked on Wall Street that many of them, when they get started there, they're actually recommended by their firms to open up bank accounts in the Cayman Islands, and that this offshore banking is just a part of the culture of Wall Street. Is that true?

KAPOOR: Absolutely. And there have been several instances in the past where, for example, bonuses have been paid in the form of vintage wine bottles or in the form of shares in offshore companies or loans in fast-depreciating currencies like the Turkish lira, low-interest loans in those currencies, which are all ways of using tax havens to avoid the taxation on bonuses. So it's not just that they get these inflated, massive bonuses which pose a risk to the rest of society, but also that they don't even then pay their fair share of tax on those bonuses. So it's a double problem. But the biggest problem with tax havens is not the taxes that people are able to avoid at an individual level; it's what it does to the structure of financial institutions. So if you look at Citicorp and if you look at some of the other large banks and financial institutions, they have hundreds of subsidiaries. Citicorp has something like 2,400, and many more special purpose vehicles, so-called special-purpose vehicles, which are all located more or less in tax havens. And the reason is that these are not just tax havens; they're also regulatory havens. It's not just that the tax rate is low or nonexistent, but also that the regulation—financial regulation, capital adequacy, etc.—requirements are much weaker.

JAY: We have an example of that in—McClatchy Newspapers did an investigative piece on Goldman Sachs and the real estate boondoggles, and they broke down one deal that Goldman ran through the Cayman Islands at essentially $2 billion packages of mortgages, which go not just, as you say, untaxed, but there's—not that there was much regulation in the US anyway, but there was zero regulation in the Cayman Islands when it came to what really made up that mortgage package.

KAPOOR: Absolutely. So it's extremely critical, this issue of tax havens, not just from a fairness perspective, not just from the perspective of trying to balance the books of the United States government and not have a massive fiscal deficit, but extremely crucial to the whole discussion on financial stability. The existence of these tax and regulatory havens allows risks to build up unseen and allows financial institutions to have too little capital and earn inflated profits, while at the same time imposing risks of potential failure on the rest of society. And, again, when trouble happens, as it has now with the financial crisis, the taxpayers, the small, little people who actually get their taxes deducted when they get their salary checks, are the ones who are liable. So this tax-haven discussion is crucial to the whole regulatory agenda.

JAY: It's an excellent gamble the finance sector plays: heads we win; tails you lose. The issue of the rate of taxation is also something Ramonet raises, that unearned income does not get taxed at the same level of earned income. So not only do ordinary people get taxed at source at a relatively higher rate for earned income, but people making these kinds of speculations actually have a lower tax rate on the consequences of it. Can you talk a bit about that?

KAPOOR: Absolutely. There has been a big discussion, for example, in the field of private equity where, if I remember right, both private equity chief in the United Kingdom as well as Warren Buffett have said something to the effect of, in a world where the cleaners in the office or the office assistant pays a higher rate of tax than I do, that world is not sustainable. And that goes right to the heart of the problem. What you have is society somehow, by having capital gains taxes much lower than income taxes, is passing a judgment that it's much better to sit on your proverbial butt and have inherited wealth or invest passively, and then you only pay a 10, 15 percent tax, than if you are slogging it day in, day out, in a car, factory floor, working, sweating it out, working eight-, ten-hour days, earning very little money, in which case your tax rate effectively is much higher. There is also a financial stability element to this, which is one very large part of banking business has been trying to convert income into capital gains so as to lower the rate of taxation. And what this does is it creates a very strong incentive for banks to put more money into assets, which inflates asset prices, for example the property bubble, etc. And if you sell your house, the tax rate that you pay on the profit is much lower than if you earn the same amount of money if you were working on a factory floor. And what that does is it causes a very strong asset price bubble, which actually leads to financial instability.

JAY: So three recommendations are pretty straightforward: tax these international speculative transactions; two, tax unearned income, at the very least at the level of earned income; three, close down tax havens. Now, it all seems rather obvious. So in the next segment of our interview, let's talk about why it's not being done. Please join us for the second segment of our interview with Sony Kapoor.

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Posted by: - 09-15-2009, 03:45 PM - Forum: Multimedia - No Replies



It has been 365 days since Lehman Brothers collapsed, triggering a global economic crisis whose effects are only now being truly felt. The events set off an unprecedented set of actions by the US government, but these actions have still yet to see any new regulations for Wall St. Reports indicate that banks are back to major profits, but economist James K. Galbraith points out that this is not the same kind of profits as banks were making before the crisis. With the collapse of the inflated home market, banks are now reaping profits through public money that is being offered to them at little to no interest through the Federal Reserve, money that they turn around and invest in government bonds, creating a public money machine for the banking sector. Despite all this public funding, says Galbraith, banks are continuing to avoid lending in the public's interest.

James K. Galbraith teaches economics at the University of Texas where he is a Senior Scholar of the Levy Economics Institute and the Chair of the Board of Economists for Peace and Security. The son of renowned economist, the late, John Kenneth Galbraith, he writes a column called "Econoclast" for Mother Jones, and occasional commentary in many other publications, including The Texas Observer, The American Prospect, and The Nation. He is an occasional commentator for Public Radio International's Marketplace.He directs the University of Texas Inequality Project, an informal research group based at the LBJ School.

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dart 2009-09-15

Overall this interview is drivel.JK gives a wish list for revival and the interviewer asks how that can be acheived. The answer: `that`s good question.`He knows he`s dealing with a lightweight.There is no option but for continuing financial bubbles and fudging any publicy announced regulatory market reforms. This has been the pattern since 1971.He cited `increased productivity` but failed to mention falling wages.He ommits the fight against deflation and the long term implications of printing dollars,potential inflation and the demise of the dollar.The US is in a trap from which escape is impossible until the problems are correctly identifiad.Like pre WW1 Britain the US is hoping for wide scale war and imperial expansion as advised by the nice folks at the Rand Corporation.Dont` expect TRNN to examine these issues.
dart 2009-09-15

Galbraith is part of the shadow government`s establishment controlled by the FED.He`s dependant on an academic position whose members stay on message if they want to survive and prosper. He will not attack the monetary system.He underinforms on the 700 bn. bailout-yes preferred equity was taken by the FED but look at this article to learn how banks are refueling usurious credit card,student loan and bridging credit lines to the mugs or US citizens.

http://www.vanityfair.com/politics/featu...0910//TRNN are well behind the curve on economic issues and are merely repeating MSM propaganda.(Read Bob Chapman on the implications of China reneging on commodity derivatives).
sonobono 2009-09-15

You need to interview people who have something real to say; try Stiglitz or Roubini or even Chomsky.


Kevin G. Hall, the former South America correspondent, is now the bureau's national economics reporter. During his career he has reported from Mexico City, Saudi Arabia, Miami, Los Angeles and Washington, D.C., for the Journal of Commerce and United Press International. He speaks Spanish and Portuguese.

JESSE FREESTON, PRODUCER, TRNN: Welcome to The Real News Network. I'm Jesse Freeston in our Washington, DC, studio, coming to you one year after Lehman Brothers collapsed, igniting or exacerbating a financial crisis in the United States that has now spread throughout the world and into a broader economics crisis. President Barack Obama chose this moment to deliver a talk to Wall Street. The talk came at a time where reports indicate that the five major banks that have come out as winners of the financial crisis are reporting profits of a total of $13 billion over the last quarter. And joining us to talk about this is Kevin G. Hall, McClatchy Newspapers' national economics correspondent. Welcome, Kevin.


FREESTON: So, Kevin, tell us a little bit about these profits. Where are they coming from?

HALL: Well, the biggest driver of the profits is the cheap money. The Federal Reserve has interest rates at almost zero, and has been there for quite some time, and it'll be there for quite some time. It's allowing banks to recapitalize. They're not lending a lot. The consumer's in the dumps, businesses are in the dumps with the economy contracting. Now it looks like we're in an expansion, but we're still going to probably go over 10 percent on unemployment, so that that's not the environment to be lending. And they're investing in fairly risk-free things, but largely, basically, getting free money and able to pad the balance sheet.

FREESTON: Now, President Obama mentioned in his speech that some of the same practices that went on before Lehman Brothers collapsed in 2008, that those banks are back to doing some of the similar practices.


PRES. BARACK OBAMA: Unfortunately, there are some in the financial industry who are misreading this moment. Instead of learning the lessons of Lehman and the crisis from which we're still recovering, they're choosing to ignore those lessons. I am convinced they do so not just at their own peril but at our nation's.


FREESTON: What sort of tactics was he referring to here?

HALL: Well, that was a reference to the executive compensation practices on Wall Street. Soon after the crisis began to ebb, immediately they began poaching each other's staff and trying to offer incentive-driven packages. It was that compensation, that incentive-driven compensation, that led to the excessive risk-taking, and they're right back into that environment where the bigger the risk, the bigger the reward, the potential reward. And when you're playing with other people's money, that's kind of what what got us in this mess.

FREESTON: And so the administration has put forward its proposals for regulatory reform, and now we've seen movement in the House and the Senate towards their idea of regulatory reform. Is that specific issue taken up in meetings?

HALL: The House has already moved on executive compensation. The Senate is moving in that direction as well. That is one that's probably going to have an easier go. The administration's approach has been to let shareholders have a greater say in the compensation package, try to have broad parameters on what's expected, not try to force it, but try to create an environment where shareholders and transparency will allow this to be clearer, and that pressure, that public pressure, will try to prevent that kind of widespread or outsized compensation. In fact, the head of Goldman Sachs, the CEO, Lloyd Blankfein, Lloyd Blankfein said recently that he agreed that it is necessary and that there had been tremendously outsized compensation.

FREESTON: How is that different from before the crisis, that the shareholders would be the ones determining compensation?

HALL: Well, there's been a push to have more shareholder say and a broader vote on things like compensation. The rules have worked against individual shareholders and kind of favored the people who have the bigger stake in the company and that sometimes are people who've been stacked by, you know, a friendly board of directors, so to speak.

FREESTON: What other changes to the national regulatory system are being proposed by the administration or are we seeing in the Congress?

HALL: The administration's offered a really wide-ranging reform plan, a revamp plan. It's looking at giving the Federal Reserve greater powers. It wants to strip away from all the hodgepodge of regulators the protection of the consumer. That's the biggest failure was protecting the consumer. He wants a new entity, a new agency called the Consumer Financial Protection Agency, which will be charged with a single, sole mission: protect the consumer. Banks are fighting this furiously. They put out a statement opposing this almost immediately after Obama spoke. They want to see consumer protection stay with the variety of bank regulators. The problem with that is we had what was called forum shopping, where they looked for the regulator of least regulation, and it was kind of a race to the bottom. And that's why the administration feels it's necessary to pull that out, keep it separate, protect the consumer on credit cards, on home loans, on a range of financial products, credit products that affect the consumer. The House of Representatives is behind this, has pushed this through their legislation. It's fighting more resistance in the Senate. So it will be interesting to see how that plays out.

FREESTON: What about this issue of too big to fail? This is an idea that was thrown around that was used as the justification for the major bank bailouts, for the moves that the Federal Reserve has made since. Has there been any action to sort of curb that? 'Cause it appears that the banks that have come out on top are now bigger than they were before the crisis, and perhaps even more pertinent to the system.

HALL: It is. One of the biggest challenges in this revamp is how to address this too-big-to-fail, and how to define it, for that matter. What the administration has gradually come around to—. They first wanted higher capital reserve requirements, higher loan cash requirements—liquidity requirements is the technical term—for transactions. Now they're finding that that may not be enough, and what they're now looking at is a sliding scale. So it's a disproportionate jump: the bigger you get, the more you have to set aside, not commensurate to your size, but disproportionately commensurate to your size. And that creates a disincentive to get too big. But too-big-to-fail also means too interconnected to fail. And the biggest impact of the crisis was these people who had tentacles all over the world and credit default swaps and a bunch of other opaque financial instruments that nobody was quite sure who owed what to whom. So that is another—that's the challenge that creating a systemic risk regulator who's going to look across the financial spectrum to try to regulate that or gage how big someone is in terms of their exposure. But that's going to be a big challenge.

FREESTON: And this was sort of the role that the Federal Reserve was supposed to be playing before the crisis as the overarching systemic-risk evaluator and really failed at that. And a lot of people have pointed to the Federal Reserve's structure, the fact that it's made up of banks and bank people. We see a bill on the table to audit the Fed that has a lot of support in the House. Is there anything on the table to maybe look at how the Fed is structured, if it's going to play such an important role as regulator? That maybe perhaps it shouldn't be made up by bank people?

HALL: Well, I think that's on the table. One certainty in this crisis is the Fed as we knew it will not be the Fed as we know it. It's going to be a different entity. And that's all in play. The administration wants to empower the Fed even further, and it's—a big debate in Congress will be coming on this as to whether the Fed needs to be bigger. And if it is bigger and more muscular, what is the transparency, what sort of checks and balances? Right now its balance sheet has grown to over $2 trillion, and there's very little public input in this. It has reported—it does have transparency on what it does, but the ability to question and the rationale often won't be known for five years, because what goes on in meetings is often private for five years.

FREESTON: Thank you, Kevin.

HALL: Thanks.

FREESTON: And thank you for watching The Real News Network.

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Posted by: - 07-27-2009, 09:38 PM - Forum: Multimedia - No Replies


Daniel Tencer
July 26, 2009 "Raw Story"

The Federal Reserve — the quasi-autonomous body that controls the US’s money supply — is a “Ponzi scheme” that created “bubble after bubble” in the US economy and needs to be held accountable for its actions, says Eliot Spitzer, the former governor and attorney-general of New York.

In a wide-ranging discussion of the bank bailouts on MSNBC’s Morning Meeting, host Dylan Ratigan described the process by which the Federal Reserve exchanged $13.9 trillion of bad bank debt for cash that it gave to the struggling banks.

Spitzer — who built a reputation as “the Sheriff of Wall Street” for his zealous prosecutions of corporate crime as New York’s attorney-general and then resigned as the state’s governor over revelations he had paid for prostitutes — seemed to agree with Ratigan that the bank bailout amounts to “America’s greatest theft and cover-up ever.”

Advocating in favor of a House bill to audit the Federal Reserve, Spitzer said: “The Federal Reserve has benefited for decades from the notion that it is quasi-autonomous, it’s supposed to be independent. Let me tell you a dirty secret: The Fed has done an absolutely disastrous job since [former Fed Chairman] Paul Volcker left.

“The reality is the Fed has blown it. Time and time again, they blew it. Bubble after bubble, they failed to understand what they were doing to the economy.

“The most poignant example for me is the AIG bailout, where they gave tens of billions of dollars that went right through — conduit payments — to the investment banks that are now solvent. We [taxpayers] didn’t get stock in those banks, they didn’t ask what was going on — this begs and cries out for hard, tough examination.

“You look at the governing structure of the New York [Federal Reserve], it was run by the very banks that got the money. This is a Ponzi scheme, an inside job. It is outrageous, it is time for Congress to say enough of this. And to give them more power now is crazy.

“The Fed needs to be examined carefully.”

Spitzer resigned as governor of New York in March, 2008, after news reports stated he had paid for a $1,000-an-hour New York City call girl.

At the time, Spitzer had been raising the alarm about sub-prime mortgages. In the wake of the economic meltdown triggered last fall by sub-prime loans, some observers have suggested that Spitzer may have been targeted by law enforcement because of his high-profile opposition to Wall Street financial policies.

Investigative reporter Greg Palast wrote that federal agents’ revealing of Spitzer’s identity as a call-girl customer was no coincidence.

Palast wrote that the principle of “prosecutorial discretion” is often used to keep the names of high-profile persons out of the media when they are tangentially linked to a criminal investigation. In the case of Spitzer, the Justice Department chose not to invoke prosecutorial discretion.

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.

Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.

Spitzer recently told Bloomberg News that President Obama’s regulatory reforms of the financial sector are “irrelevant” because regulatory agencies have not been enforcing corporate laws to begin with.

“Regulatory agencies already had the power to do everything they needed to do,” he said. “They just affirmatively chose not to do it.”

The following video was broadcast on MSNBC’s Morning Meeting, Friday, July 24, 2009:

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Posted by: - 07-25-2009, 11:53 PM - Forum: Multimedia - No Replies


Ron Paul


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Posted by: - 06-13-2009, 10:32 PM - Forum: Multimedia - No Replies

Peter Rothberg

June 05, 2009 "The Nation" -- Last April, I wrote about A New Way Forward, a new and growing movement organized via the web and founded by young people who want to take back the power of the ordinary citizen to affect our economic structure. The organization's coming-out party took place last April 11 with more than sixty coordinated events coast to coast all making the case for alternative bailout plans based on the public's interest.

This new video, which neatly breaks down the causes and effects of the economic crisis, is the basis for the next day of action staged by A New Way Forward.

Next week on June 10, at small and large events nationwide, there'll be numerous screenings of the video along with panels, workshops, teach-ins, protests and rallies. As the banking industry continues its secret lobbying in DC, A New Way Forward advocates using antitrust laws and competition to limit the influence of big banks and shed light on the shadow banking sector. These events are part of a continuing effort to forge a serious grassroots discussion of the economy ad how to leverage antitrust law toward a more populist bailout. Find an event near you. If there's nothing near you, click here for tips on how to host your own event.

Organizers are planning many different events, from small group house parties to large group public gatherings. In Washington DC, Former Chief Economist of the IMF Simon Johnson will be keynoting what's expected to be a large event in the Gold Room of the Rayburn House Building. The organizers hope to attract citizens with a disparate range of views who will hold one idea in common: our current economic trends must be reversed. Join ANWF's Facebook group for updates, and learn more about the plan for structural change and what we can achieve.

Peter Rothberg writes the ActNow column for the The Nation. ActNow aims to put readers in touch with creative ways to register informed dissent. Whether it's a grassroots political campaign, a progressive film festival, an antiwar candidate, a street march, a Congressional bill needing popular support or a global petition, ActNow will highlight the outpouring of cultural, political and anti-corporate activism sweeping the planet.

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Posted by: - 05-04-2009, 10:21 AM - Forum: Multimedia - No Replies

Hizb ut-Tahrir, convened two press conferences in Beirut and London on Friday 3rd April 2009, a day after the London G20 summit, where it launched its new book "Towards a Tranquil Safe World under the Shade of the Economic System of Islam".

The book examines the global economic crisis, explains its reality, critically examines its symptoms and exposes the flaws in the solutions proposed by the flagbearers of Capitalism. The book concludes by illustrating the correct solutions to the economic crisis from Islam – solutions that are from the Creator of the universe and the Creator of mankind, who knows what is best for His creation.

On the panel in London were Dr Imran Waheed, Hasan al-Hasan, and Taji Mustafa. The event was chaired by Sajjad Khan.

After speeches in English and Arabic, a lively question and answer session followed with questions from the audience and others around the world who were watching the live webcast.

Download Report

Introduction by Chairperson - Sajjad Khan

Presentation 1 (Arabic)
Hassan al Hassan (Arab Media Representative - Hizb ut-Tahrir Britain)

Presentation 2 Part 1/2 of 2
Taji Mustafa (Media Representative - Hizb ut-Tahrir Britain)

Presentation 3
Dr Imran Wahid (Media Office Hizb ut-Tahrir)

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Posted by: - 04-11-2009, 10:33 AM - Forum: Multimedia - No Replies


2nd April 2009
House of Commons Committee Room 14
2:30 – 5:30pm Thursday 2nd April 2009

While the G20 Summit was meeting in the Excel Centre and violent demonstrations were disturbing the City of London’s banking sector, the Universal Peace Federation (UPF) was holding a conference with civil society and faith-based groups in the House of Parliament’s largest committee room, entitled, ‘New Vision Amid the Economic Crisis’. This contrasted the moral vision promoted by civil society and faith based groups with the pragmatic approach of the G20 Nations’ Summit. Many in the session echoed the ‘Put People First’ demonstration theme that this was a time for a new perspective and not just a return to ‘business as usual’. In the lead up to the G20 UPF had issued a Statement emphasising the need for ethical change:

‘If there is to be lasting change, the G-20 must acknowledge that the current financial crisis did not happen by accident, and it was by no means inevitable. The root cause of the problem has as much to do with moral, indeed spiritual failure, as governmental or financial mismanagement. For this reason, improved fiscal, economic and trade policies alone are not enough. The attitudes and behaviour of people, institutions and even entire nations must change.’

Ruth Tanner: War on Want
Lord King, a Patron of the Universal Peace Federation (UPF) – UK, warmly welcomed the conference to the Houses of Parliament. He acknowledged that there were two sections, the perception of faith groups and the analysis of the economic crisis by activist organisations.

Civil society groups representatives, such as Nick Dearden, the President of Jubilee Debt Campaign, saw this crisis as an opportunity to rethink the fairness of our economic system rather than going back to business as usual after the crisis is over. There is a $3 trillion debt owed by the poorest parts of the world to the richest parts of the world. For every £1 we give in aid, poor nations pay £5 in debt payments.

Ruth Tanner, the Campaign and Policy Officer for War on Want, saw the crisis as a result of the failure an economic system that has left 2.2 billion people live in poverty including 1.4 billion who live in extreme poverty. She added, ‘What inspires me is how people on the ground are standing up to the system and the local partners of War on Want are setting up unions for the workers to campaign for a living wage.’


Moeen Yaseen, the founding member of Global Vision 2000, said that the root of the problem is not money, but it is truth vs falsehood.  We’re living in an age of global deceit.  There needs to be a moral and cultural revolution. He saw the world economy ‘as a global casino economy where the house always wins’. He added ‘We need to clean out this city as Jesus cleaned out the Temple.’

Richard Dowden: Director, Royal African Society
Richard Dowden, the Director of the Royal African Society, said that Africa is a rich continent full of poor people because of bad governance.  The West has been complicit in this, although the prime responsibility lies in Africa.

‘A lot of corruption money from Africa goes into British tax havens and then into the city of London.  The city is committed to eradicating drug money, terror money and corruption money.  A nation’s health budget stolen as corruption money kills more than drug money and terror money put together, but the city has failed to address corruption money.’

International Secretary General of UPF, Dr Thomas Walsh, presented an overview of UPF’s activities. He emphasised the role of character education rooted in the experience of a loving family to build a stable economy within one family of humankind under God.

Rev. Dr. Chung Hwan Kwak, the International Co-Chairman of the Universal Peace Federation, reading from a prepared text, emphasised that there are many policies we need to follow to stabilise our economy or care for our environment but these will be best built upon the bedrock of loving families inspired by God. He called for a Global Service Corps of youth that could heal divisions while working to fulfil the Millennium Development Goals.

Imam Umer Ahmed Ilyasi, All India Organisation of Imams and Mosques
Imam Umer Ahmed Ilyasi, the Secretary General for the All India Imams and Mosques organisation, who represents 500,000 Imams in India, spoke on the failures of the G 20 agreements. Speaking as a representative of the largest democracy in the world, I do not see economic growth reaching to the grassroots level. Imam Ilyasi said he will launch ‘Faith in the 21st Century’ for interfaith action to solve common problems, later this year.

Frank Kantor, the Secretary for Church and Society for the United Reform Church, saw three significant roles for faith communities during this crisis: Firstly, a Prophetic role to present God’s view as we understand it to the world; Secondly, a Pastoral role to care for those who are suffering due to lack of money and jobs; and thirdly, to form partnerships with civil society.

Frank Kantor: United Reformed Church, Secretary for Church and Society
Anil Bhanot, the General Secretary of the Hindu Council – UK, stated that there is nothing wrong with money itself but with business ethics.  We need a 3-tier regulation system, covering both nation and international transactions, to prevent abuses.

Jonathan Fryer, the Chair of the Liberal International Group said that he wanted to see a ‘genuine new world order rather than a reshuffling of a pack of cards sharing wealth and decisions.  Developing the G7 to G8 and G20 is a good thing in itself, but if we are just reshuffling the pack, 172 nations are still left on the sidelines.  We need to work together with common moral principles and goals. Don’t just lobby your MP but blog, tweet and make sure your voices are heard.’

Inspired by our faith, armed with the experience of so many civil society groups and an unparalleled network of Ambassadors for Peace and Partner organisations the consensus seemed to be that this is a campaign worth working for and one crucial step towards one family of humanity under God.

Robin Marsh
Secretary General
Universal Peace Federation – UK    www.uk.upf.org

Daily Jang article on New Vision amid the Economic Crisis April 2nd 2009
UPF Recommendations for the G-20 Summit April 2nd – London

When the leaders of the G-20 convened in Washington DC last November, they committed themselves to “lay the foundation for reform to help ensure that a global crisis…does not happen again.”

If there is to be lasting change, the G-20 must acknowledge that the current financial crisis did not happen by accident, and it was not inevitable. The root cause of the problem has as much to do with moral, indeed spiritual failure, as governmental or financial mismanagement. For this reason, improved fiscal, economic and trade policies alone are not enough. The attitudes and behaviour of people, institutions and even entire nations must change.

The social sphere that comprises business, trade, and finance is embedded in a wider culture and ethos that, during the best of times in human history, provide the moral and spiritual framework within which we, as human beings, live day to day. Thus, the G-20 must engage in deeper reflection on the moral and spiritual infrastructure that forms the foundation of life in the world. We take an enormous risk when we either ignore or de-value that reality.

Therefore, as the G-20 gathers in London, we offer the following recommendations:

Ethical Reform: In addition to consideration of critical factors such as energy, security and climate change, food security, the rule of law, and the fight against terrorism, poverty and disease, an even greater need is for ethical reform. This call for ethical reform should be accompanied by greater transparency and fairness whether in financial markets, trade or ‘tax havens’ or in standards of good governance both in developing and developed nations.

The Importance of Social Institutions: Wealth, prosperity and human security are dependent not only on the proper functioning of governments, banks and markets, but also the proper functioning of families, communities, schools, and faith-based institutions, where character is shaped and our core values are learned.

Sustainable Growth: We call on the G-20 to promote sustainable growth for developed and developing nations.

Marriage and Family: Strong, stable, loving families are profoundly relevant to the quality of economic life. The G-20 should give consideration to the relevance of family life to wider economic realities.

Character Education: Character education, not only in the family or faith-based institution, but also in our schools, will help assure a thriving moral culture that is necessary for a robust and stable economy. Hard work, thrift, honesty, responsibility, empathy are moral virtues that are essential to a good business and a good economy.

Unselfishness: At the heart of many of the world’s greatest religious and moral worldviews is an emphasis on the universal value of unselfishness, and the control of self-centeredness. While traditionally, free markets are guided by a profit incentive, that human inclination must be balanced by higher principles such as altruism and service to others. We call upon the G-20 nations to dedicate 0.7% of Gross National Income at least by 2013 (agreed upon by developed nations in 1970 by UN General Assembly Resolution and reaffirmed on several occasions since) to support overseas development assistance and the fulfillment of the Millennium Development Goals. We would encourage developed nations to forgive debts of the poorest nations of the world especially those accumulated by despotic regimes and that are now shackling succeeding democracies. This altruism demonstrates ‘living for the sake of others’ within the human family.

We are All Members of One Human Family: Humanity is one universal family. Despite the diversity of race, nationality, ethnicity and religion, we are all human and we all derive from a common source or origin, known by many as God, Allah, Jehovah, Brahman, the ultimate reality. We call for increased emphasis upon interfaith and intercultural dialogue between and beyond the nations of the G20 to promote understanding of our common root. Let us never forget that we are one family under God.

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Muhammad Rafeeq with Daryl Bradford Smith on the French Connection show



At first sight it was extremely refreshing. A white-collar financial crook raising his hands and pleading guilty to his financial crime. This has to be almost a first. Usually financial criminals when caught in the most obvious of wrong-doing plead 'not guilty'. The criminal can be caught boarding the plane, with a suitcase containing US$100mn of someone elses cash, with his mistress holding on to his arm, he will look into the camera with his most genuine 'Tony Blair look of sincerity' and say "What we have here is a misunderstanding.... " You make up the rest of the excuse, there is a million of them.

So yes, an outright confession, "It was me, I chopped down the apple tree" is so against the current socio-political culture it was almost too good to be true. Especially given the pedigree of this perp, the CEO of one of the busiest and most prominent financial exchanges in the world. After his confession the world goes into shock, especially the Jewish world, since affluent members of this community had previously flocked to his door, seeking his world famous high returns. Since his arrest the press is full of people extolling his virtues as a decent human-being and "who would ever of believed it?". It would be so easy for this man to deny any wrongdoing because he could bring out an army of good character witnesses and he could just point at some suspect-looking goy in his hedge fund organisation to lay the blame on.

So a truly heartwarming confession. And it was apparently made to his 2 sons, both of whom who worked for the fund and who had absolutely no idea that this fraud was being perpetrated, until such time as this astounding confession. But then I started to look more closely at the mix of investors who have lost money. About half of them are professional investing institutions. Look at this quote from the UK's Daily Mail newspaper (online http://www.dailymail.co.uk/money/article...suits.html)

"Full details of the exact losses are yet to emerge. Hedge funds and banks have so far admitted to having around £16billion with Madoff - only half of the total that is reckoned to have been lost. Some of the biggest casualties are Swiss private banks, which have taken hits amounting to about £2.5billion. Spanish bank Santander had £2.1billion of client money with Madoff. HSBC has admitted to lending about £600million to funds who wanted to use debt to gear up their positions with Madoff. RAB capital, the hedge fund that lost huge sums on investing in Northern Rock, has revealed that it is exposed to Madoff to the tune of around £6million."

Now the confession does not look right at all. It is possible to accept the idea of a Ponzi scheme be played on members of the public, who are ignorant of how such schemes are worked, in fact the schemes are targetted specifically at such people. Yet Madoff would have us believe that he managed to convince professional investment companies to put their funds with him without any due diligence being performed. This is clearly nonsense. I have acted as a professional consultant to major EC and US financial institutions on corporate and institutional credit risk and the idea that anyone in HSBC or Santander could authorise large investment without the internal checks and controls being employed is almost impossible. To try and believe that EVERY institution that invested in Madoff circumvented their internal control procedures IS impossible.

Why is this important? Simple. If someone approaches the HSBC credit risk team, for instance, with a view to making a loan or investing a sum as large as £600m to what is ultimately a single institution (therefore a single counterparty credit exposure) a significant number hoops would have to be jumped through. Firstly there is the credit officer competence limit, which is the maximum amount that a single credit officer may be allowed to authorise. More than his/her limit must be referred up the credit approval food chain. In an institution like HSBC or Santander etc, £600m or US$1bn will have been referred to the very top of the food chain, the banks' credit committees at the board level. This is an enormous sum and no lacky is going to be able to approve this by themselves, ever.

When the credit committee are called together to review an application, everything is ready prepared for them, so they can cut to the chase . The lower levels of the credit approval process will have prepared a summary of all the application documentation, included in the meeting bundle, with the strengths, weaknesses, and other important credit risk points. This application will usually contain a set of audited accounts going back a minimum of 3 years and most likely 5 years. There will be a full credit breakdown of the investment profile of the business, Madoff's hedge fund, looking at how the fund obtains its returns; investment assets and investment methodology. After the committee is satisfied that all the issues and concerns have been addressed they will vote on the approval or otherwise.

So there is no way that Madoff could have been pulling a scam. It would have stood out as clear as day to professional financial analysts, whose only job in life is to examine the management of companies and their reports and accounts, to make sure that all is in order. Its their job, its what they do. They are the world experts in spotting anomalies. The idea that all these professionals in all these companies were all duped is absolute nonsense. It is highly improbable that one such evaluation process could have been fooled, but all of them, never. A Ponzi sc heme is easy to spot when you have the audited accounts and the full range of investment assets and investment metodologies employed.Also, this scam avoided the attention of all the funds employees; accountants, traders, auditors and the US regulators, all of whom are also financial professionals.

This again is absolute nonsense. A ny company that I have ever worked for would have known internally that such business was being done, because they are all involved. For instance, a trader goes on buying equities from the worlds stock exchanges that go down in price for 5 continuous years, but the company just keeps giving him more money to top up the trading, continues paying his salary and even annual bonus. Absolute rubbish. But assuming this actually did happen, the market risk team would have been watching these losses, as would have the accountants. It is not possible to hide things like this internally for very long, months at the most; 20+ years, NEVER.

So why plead guilty? The answer is simple. Look on the net and you will see that because this case is being labelled a fraud, it would appear that investors are going to be able to claim their investment back under the US government's financial fraud protection scheme. A judge has already given his approval in principle for compensation, without any evidence having been presented and financial fraud being demonstrated in a court of law. And it would appear that there will never be such a demonstration in a court of law. Why? It would appear that all the funds financial records are mostly "missing" (rather like Dov Zakheim's US$1.4tn) and those few records that do survive are in a terrible mess.

How ever, since the guy has pleaded guilty we do not need to demonstrate the fraud, because he says he is guilty. And look further on the net and you will see that these "victims" have also been told by the US tax authorities that they will probably also be entitled to claim back some taxes on these defrauded sums. Rather than saying this hedge fund has gone bust, due to its choice of investment assets and investment methologies, a scenario which is highly probable in the current financial paradigm, since all the professionals are predicting that at least 30% of all hedge funds are about to fail, more than 700 of them, the CEO chooses to fess up to fraud. If the CEO admits the fund has gone bust, then all those wealthy members of the Jewish community get nothing, but if the CEO admits to fraud they get their money back as compensation fro m the US tax payer, just as they are also drawing money back from the tax payers with the other hand.
And, as can be seen at the Daily Mail link above, the investors in this fund only get to litigate the fund directors against Lloyds insurers in London for even more compensation. Done properly the compensation could end up paying out far more than the original fund returns (yes this is sarcasm, it was bound to creep in eventually in yet another swindle like this). Would that I could believe that Madoff were a good guy who slipped and then became repentant. But given the facts, this simply cannot be true.

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