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For a Civic and Constitutional Republic 


Issue No 80 Sunday 25 September 2011

This Week

  • Republican Party Meeting. Saturday, 1st October 2011

  • Greece: Whether the Default is Orderly or Disorderly, it is the People Who Will Pay

  • The Tony Blair Story: or How Banks Reward Their Own

News Stories

Highlighting news stories important to the Civic Republican view, particularly those that are overlooked or little covered in the main media.


Fellow Republicans!
We need you there!



"A Vision of a Republican Party"
- Address by Peter Kellow

2pm . Saturday . 1st October 2011
Conway Hall
25 Red Lion Square
London WC1R 4RL
(Nearest Tube . Holborn)


The address will be followed by a general discussion and the setting up of a Steering Committee to initiate the Republican Party

Register that you intend to attend here

Or just turn up!!


  • Greece: Whether the Default is Orderly or Disorderly, It Is the People Who Will Pay

Peter Kellow writes

Once again the financial crisis overshadows practically everything else. The Observer reports today how the IMF in Washington has insisted that the EU put in place enough funds to contain the Greek debt crisis. As stated in the Republican Party Newsletter No 71 of 24 June 2011, the Greeks will default. The EU is supposed to be run by the EU Commission and the Council of Ministers but everyone can see the key players in the eurozone crisis are President Sarkozy and Chancellor Merkel and these two are trying desperately to rearrange the Titanic's deckchairs to create some order in the panic. Even they are, in effect, now admitting that Greece will default and they attempting to make this an “orderly” process.

An orderly default?

The IMF is now pushing them hard in this direction. The key to understanding why the IMF is so worried is that, if the default is not managed “properly”, the banks, who lent the Greeks the money they now owe, risk going bust and if that happens they will drag down other banks worldwide.

But let us be clear what this “orderly default” will mean and how it is different from a “disorderly default”. Put simply with an orderly default, it is the governments (and so the tax payers) who will pay for the banks losses. With a “disorderly default”, the banks, their shareholders and directors will take the losses. This would entail a further bailout by government and so the end result would be the same – the tax payers will pay. The only real difference is that it would be messier and create more and bigger headlines.

The unfolding crisis makes clear just how the banks have succeeded, following the great crisis of 2008, in enmeshing governments even further in their operations, so that it is always the tax payer who stands at the end of the line as final guarantor of any losses banks make.

The private speculative banks did not have to make loans to Greece. It would have been clear to them that ultimately Greece was far too overstretched to pay them back. So why did they make the loans? Was it not a bad business proposition? No, it was an excellent one and one that carried negligible risk.

The reasons for this are political not financial. The banks well understood that the EU could not let Greece fail. They also knew, from their experience of being bailed out in 2008, that they would not be allowed to fail. So when the inevitable crisis arose it was a certainty that they would be protected by the EU governments. The IMF is involved as well because banking failures in Europe would lead to failures elsewhere engulfing the world in a further crisis just a mere three years after the last one – except of course it is really a continuation of the last one.

Thus the current manoeuvring demonstrates just how well the speculative banks now are totally integrated into government affairs. And when they make loans to states that are part of the international community, like Greece, they are on to a win-win situation.

If you stand back for a moment and take a longer perspective of the way the world economy is, there are just three really big players: multinational speculative banks, multinational corporations and governments. No one else comes close. Hedge funds nominally have big enough sums to join this elite group except that their funds are so highly leveraged by the banks that it is effectively bank money they are playing with.

Leaving aside the multinational corporations (which in many ways operate like banks due to their worldwide capital holdings) the banks stand alongside governments as their equals in power and size. Throughout the nineties and noughties, the banks created vast amounts of money and correspondingly massive debts. These were and are held by governments, private businesses and individuals. In the old days it was a cardinal rule of banking that when a bank made a loan it had to assess the risk for if the debtor defaulted and went bankrupt the bank would take the loss.

But this principle no longer always applies. The private speculative banks do not except to take the risk with dodgy loans to states that are part of the international financial community. In this the invention of the euro was an unimaginable gift to speculative finance. No matter how much money they poured into a country, no matter how weak its economy, as long as that country was in the eurozone banks were sure to by paid back the majority of their “investment”.

This understanding of the interrelation between speculative finance and tax payers is the clue to understanding the processes that are about to unfold. The IMF and the EU are engaged in creating a structure whereby the bad debts that the banks hold can be transferred onto the shoulders of the tax payers in an “orderly” fashion. By orderly, they mean there will be no scenes evocative of the Leaman Brothers bankruptcy. Debts will, as quietly as possible, be assumed by governments throughout Europe (not just the eurozone), including the Kingdom. This will put state finances in an even worse situation than as present.

In truth at that stage nearly all European governments will become "PIIGS" (the USA already is one except in name), that is to say, the debts will become so enormous that the states will not be able to service the debt interest leave alone repay the capital. What will follow? What should follow is a radical reform of banking as proposed by the Republican Party and other groups such as Positive Money.

What will actually happen is that the current failed orthodox economic model will be looked to for answers. For countries with a major currency like the USA, Britain and the eurozone there is recourse – devalue the debt. The debt will be largely held in your own currency and so the aim will be to create inflation to send the currency down the pan so wiping out a lot of debt. This is clearly the strategy of the American Federal Reserve at the moment.

The effects of this on ordinary men and woman and on real productive business are difficult to chart accurately but we know it will be dire. One thing is sure, without a drastic revision of the economic model we work under, it is the banks that will come out on top.

Yes, I seem to remember a phrase coined in the nineties to describe the speculative banks that somehow summed it up. How did it go again? Ah, yes, I’ve got it – “Masters of the Universe”. That would be it!


  • The Tony Blair Story: or How Banks Reward Their Own


I have often commented in these Newsletters (including the main article in this one) about the compact that exist between our democratically elected leaders and multinational corporate finance. The problem arises from the way our political system allows and even encourages politicians once elected to get into bed with big finance. The reason why this happens is easy to see. A politician once they have their hands on the levers of power will incline to ask themselves:

“What shall I do with all this power? Shall I use it to serve the people who elected me who then might (only might) reward me with another round of the same thing – committee meetings, constituency surgeries, late night divisions and little family life? Or shall I listen to these people knocking on my door offering untold riches during, and especially after, my political career is finished?

"All I have to do is make a moves that 'respectable' voices in the City of London and orthodox economists approve of, and that no one that matters will object to.

“Yes, I recall my early idealism which made me go into politics in the first place, but, in our society as it is, it is money and wealth that are highly praised. I think I see where my future lies.”

This is where the sickness at the heart of our “democracy” lies. It explains why our “democracy” seems to be letting us down so badly. If we are ever to be governed in the interests of the people and not the banks we have to break the compact between politicians and finance.

Read this article in the Observer and watch Dispatches on Channel 4 on Monday, 26 September, to see how Tony Blair’s career has boomed off the back of his role as British Prime Minister.

8pm Monday 26 September, Channel 4

Since resigning in June 2007 Tony Blair has financially enriched himself more than any ex-Prime Minister ever. Dispatches reveals some of the sources of his new-found wealth.


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