The London Disease
7.26.2012 Leave a comment
The phrase just rolls off the tongue, doesn’t it! One even expects it to make sense. What, then, is the London Disease? Well,
Which brings us to an issue that is fast troubling global financial regulators: the so-called ‘London disease’. It has not gone unnoticed that many of the financial scandals in recent years have a Square Mile connection. Never mind Libor, it was the London offices of AIG, Lehman Brothers and Bernie Madoff that helped destroy them. The JP Morgan and UBS rogue traders who lost billions were both London based.
The UK is also arguably the centre of the offshore world. It is one of the biggest private bank centres and Britain’s non-domicile tax rules allow the global super-rich to legally avoid taxes on their overseas income while residing here. In addition, many of the UK’s overseas territories and crown dependencies such as Jersey, Isle of Man, the Cayman Islands and the British Virgin Islands are major offshore centres. This perhaps explains why the British government, for all its rhetoric, has failed to clamp down on the shadow financial system.
What is the “offshore world”? It is a place that mostly lacks legal and political accountability, where the oligarchy parks its money, where loyalty can be bought. The London Disease exists because casino capitalism exists, because The City is a place where the world’s oligarchs like to do business and because the British political system is intrinsically corrupt. The London Disease thus refers to a place where the morbidity of contemporary capitalism manifests itself with clarity. Wall Street is also such a place. Both have more in common with the “offshore world” than they do with Great Britain and the United States. Their autonomy is a political catastrophe without an identifiable conclusion.
Good question
12.29.2012 Leave a comment
Michael Hudson asks:
The answer to these questions: Banks and other financial institutions want to keep as much of their income as they can. Transaction fees, regulations, oversight, taxes, etc. — these consume profits. America’s banks want to transfer these costs to others, namely, to those individuals who lack the political power to defend their standard of living. This cost transfer project amounts to a hidden and sometimes obvious tax the government levies on the 99%. When coupled to a system of risky and fraudulent financial transactions, elite looting and private debt creation, this cost transfer project amounts to little more than a predatory political economy.
The ridiculous fiscal cliff debate which now dominates America’s public life is but a crude expression of this predatory political economy.
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Filed under Commentary Tagged with Austerity Politics, Casino Capitalism, Class Conflict, Declining Standard of Living, Economic Predation, Exploitation, Federal government of the United States, Fiscal Cliff Debate, Government Deficits, Late-2000s financial crisis, Michael Hudson, Neoliberalism, Occupy Wall Street, Party Duopoly, Politics, Social Security, Superexploitation, United States, Wall Street