With impeccable timing, Jeroan Dijsselbleom resigned as a Dutch MP yesterday, and will leave the infamous eurogroupe dominated by his mentor Wolfgang Schäuble in January. Few institutions have bent, misrepresented and hidden more data than the unholy trinity of the EC, ECB and eurogroupe. But they are from being alone – any more than Dijsselbleom is a lone rogue giraffe doing the brainless bidding of a globally privileged class. Today, a special Slog series begins what will – I think, for the first time – offer a compilation of how the citizens of four continents have been the innocent victims of economc, fiscal and financial data mendacity.
If you’ve ever seen a movie called The Big Short, you will know just how brazenly beyond the reach of the law Western neoliberal financialised capitalism is. This is not a matter of suspending disbelief about the plot, pretty much all of which is closely based on real events: just read the script. It is chock-full of real names like Morgan Stanley, Goldman Sachs, Bear Stearns, Standard & Poor and most of the other crooks…all of it accusing them directly of major-league fraud or complicity therein. Not one of them has sued the filmmakers or studios involved. That tells you all you need to know: they were guilty as not charged.
Not only were they not charged, they didn’t pay a cent towards their own short-term reconstruction: we, the British, EU and American taxpayers did. Or rather, we got loaded with debt even our grandchildren will never be able to pay off; and suffered social welfare austerity of a nature more vicious than anything experienced by 99% of people alive today.
In the immediate term, almost exactly $1.8 trillion was required to stop the US/UK banking systems from imploding. Before the dust finally settled on the medium term, $24 trillion was thrown at immediate “asset” (aka packaged excrement labeled triple-A) purchasing by central banks aka taxpayers. Nobody knows for sure, now the longterm has passed, how much the global combined total of Zirp, QE, shoring-up bad shares and buying toxic swaps and oblgations has cost China, Japan, Brussels, Arabia and every lifetime pension saver across the World.
The last estimate I saw in late 2016 said over $37trillion, but that feels low to me….and anyway, the numbers no longer mean anything: in order to pull off this scam, the bankers, ratings agencies and their sovereign trick-turners shattered the dreams of billions, along with every accepted sane notion of share valuation, commodity price, interest rate or other fundamental analysis of norms on the bourses.
These are the same bourses that are supposed to feed “real” capitalism with “cheap” money to stimulate profits, investment, and citizen employment. But sadly, the same bourses who obviously don’t do that any more, preferring rather to encourage destructive, asset-stripping mergers, sell packaged garbage to greedy saps, leverage the value of worthless paper, let their members cheat each other, and pay their employees obscene bonuses in return for being antisocial 24/7/365.
Today, almost a decade on, the ratings agencies, the bourses, the governments and all the biggest crooks are – staggering, but true – still held in awe by millions of otherwise intelligent people. Gary Cohn of Goldman Sachs is the White House advisor on Economic affairs, and his colleague Lloyd Blankfein is financial royalty. Hank Paulson – who lied to screw $768billion out of Congress – is a wise eminence. Alan Greenspan is close to being a national treasure. Baron Green of HSBC was a close confidant of David Cameron, and a powerful voice at the BBC. Michael Fallon (a man at the centre of the Libor scandal) is still a senior member of Theresa May’s Cabinet, and considered by many to be “unfireable”. Standard & Poor – one of the more industrial-scale liars about asset quality – still issue lofty opinions about whether this or that sovereign nation is AAab, unstable in outlook, or BBb(c) and heading towards junk.
At even the most superficial level of analysis, it is obvious to every financially literate commentator from Ambrose Evans-Pritchard to Nick Ferrari that the vast majority of top banking management, regulators, intermediaries, bureaucrats and senior politicians were complicit in this, the most widespread financial fraud in modern history. But beyond that relatively sophisticated group, there is only limited understanding of five key factors that make the future look far less rosey than the spin-merchants would have us believe.
First, almost all meaningful reform of the overall systemic failures has been successfully resisted by the community who caused them. Second, product unreliability today is worse (and on a far bigger scale) than it was ten years ago. Third, every last fragmented part of economic growth is underwritten by a level of household debt far greater than it was in 2007. Fourth, monetarist solutions to the collapse have trebled global sovereign debt, disguised the levels of professional market debt, overvalued shares by approaching 60% on average, and created asset bubbles in dozens of property sectors on every continent. And finally, the number of genuine regional unknowns has increased….to the point where Japan, China, Africa and the Eurozone must now be classed as potential basket cases.
Even beyond those five further apocalyptic horsemen (the days of just four are long-gone) there is stuff of which almost nobody is aware. Some of it has been cooking for several decades, most of of it has been misleading the citizens of the developed world since around 1990. The scale of this is so enormous, only a revolutionary approach to Rule of Law reform (and a genuine return to democratic sovereignty) stands even a chance of either solving the problems or bringing those responsible to justice.
The issue this time goes beyond rigged commodity prices, currency values, financial, ratings and regulatory fraud. It concerns the systematic, long-term misrepresentation of data. Data about inflation, wage levels, employment rates, tax evasion, capitalisation, liquidity and even economic performance overall.
The scale and longevity of it will shock everyone still in possession of discernment, ethics, and an open mind. Or put another way, a relatively small proportion of internauts out there. But that’s my audience, and that’s why I still write this stuff.
Two tasters to start the proceedings.
The September US payrolls report recently produced by the Bureau of Labor Statistics (BLS) “showed” a large annual increase in Average Weekly Earnings at 2.9% – well above the 2.5% reported for August.
Both the BLS measure and rate of annual growth strongly indicated accelerating incomes, and thus ‘things returning to normal’. In fact, it purported to be the highest since the financial crisis.
But sharp-eyed Andrew Zatlin of South Bay Research noted that, while the Total Private Average Weekly Earnings line for August had posted an increase of 0.2% month over month, the component parts didn’t add up to the total. Thus, Component 1 (Goods-Producing Weekly Earnings) declined -0.8% from $1,118.68 to $1,109.92; and Component 2 (Private Service-Providing Weekly Earnings° declined -0.1% from $868.80 to $868.18.
But spookily, the addition of the two (Total Private Hourly Earnings) rose 0.2% from $907.82 to %909.19. In the mathematical universe we inhabit, -0.8 + -0.1 = +0.2 is marked “wrong”. However, when viewed in the light of a Fed Reserve looking for more reasons to up interest rates, it would be marked “right”.
More bizarre still, the new BLS September data shows the August number as the same as July (zero increase) thus making the September number look more impressive.
Could it be, we wonder, that BLS is an abbreviation of BulLShit?
I do not doubt that the Bureau will dismiss this as human error. But that won’t make the projections now being used by commercial folk right; and as we shall see in the next instalment of this epic, government statistics have long-term form in this regard.
The global trend when it comes to all government numbers can be summed up as good news inflation alongside bad news deflation. Imagine that. If the BLS stats employ inflation, then the tax evasion numbers deflate the disgraceful reality.
The UK Treasury four years ago estimated a total offshore evasion number for individuals of $10 trillion. An enormous total – with global gdp in 2013 at $77 trillion, that’s 15% – but it’s hard to know how Whitehall arrived at that nice round number. In 2010 the IMF recorded that the small offshore havens alone account for $18 trillion, and it seems unlikely that during the ensuing three year period there was a massive attack of honesty.
The estimate looks even more sick when you notice that, in adddition to the personal crooks, The US Government Accountability Office reported in 2008 that 83 of the USA’s biggest 100 corporations had subsidiaries in tax havens. Why is that you might ask…until you recall that only last week, Amazon was ordered by Brussels to repay £220m in illegal tax breaks they’d given to employees.
In 2013, George Osborne was keen to look tough on tax evasion, while at the same time equally keen to spread his legs for the multinational companies he wished would see Britain as a crypto tax haven. Hence the focus on a personal, small number hiding the real Tsunami of corporate evasion going on….a number he hoped would show “success” for the boys at the HMRC when it came to nicking tax villains.
Chancellor Osborne began, within days of the 2010 election stalemate being resolved, to dismantle, reconstruct and manipulate all the critieria used by the Government to calculate gdp figures, inflation rates, and tax intake. On two separate Budget Days, he lied to the House of Commons, specifically asserting that “Britain is paying off its debts” when even the data he’d fiddled showed Britain was actually sinking deeper and deeper into a level of national debt that would be (in a normal interest rate world) unsustainable.
None of this is new. In April 2015, the Italian economic data showed an encouraging blip in growth just when a desperate eurogroupe needed it. It turned out to be a complete falsification….as indeed was the inflated level of Greek debt reported in 2011, on the orders of Wolfgang Schauble. In 2008, UK Home Secretary Jacqui Smith told the House of Commons that she had only given permission for a small pilot study of mass surveillance. In fact, GCHQ had already been given the full £13billion, and was busy using it.
The job of data, in the age of the unelected Corporate-Bureaucracy-Surveillance-Military Alt State, is to dictate a narrative.
Since the rise of neoliberal corporate power driving neocon foreign policy in the early 1980s, history revision has been systematically thrust into the collective mind of our populations….a history written by the victors to suggest that mixed economies produced minimal growth, but that miraculously, the growth exploded once Ronald Reagan and Margaret Thatcher introduced their heroic reforms.
This is complete nonsense, and risibly easy to dismiss: as I have stated many times over the last forty years, from 1950 to 1973, annual growth rates averaged 4% in America and 4.6%in Europe. But once evasion detection began to ease after 1980 – and as tax rates fell and offshore havens boomed – growth rates fell sharply. So too began the process of accelerating wealth disparities in developed economies – reflected later in the developing world – and the destruction of real employee/family spending power.
Without many decades since of easy access to credit, the monetarist-neoliberal-Friedmanite lying machine would’ve been found out by, at the very latest, 1995. So-called “growth” was maintained only by near 100% credit dependence…and then, after the 2008 disaster, QE and Zirp used our own money to persuade us that the recession was over.
As we shall see in Part Two of this Slog Special, the levels of wage destruction and real unemployment have been deliberately understated, while the “growth” has been flagrantly exaggerated.
The Slog recognises and appreciates the help and guidance of more than a dozen skilled advisors and over twenty data sources in putting together this series. I would particularly like to thank Dr Christopher Quigley, Clive Hale, Herb Drnc and the UK’s Office of National Statistics for their input.