[See also ADDENDUM by Chomsky below:]

Way back long ago, during academic year 1977-78 – which comprised one-thirtieth of my life at the time (now a sixtieth) – my job was teaching teenagers how to do maths. I was certainly no whiz kid, but nor was I bad at it: I even reckon the kids used to look forward to my lessons. But supposing any of those kids I taught became investment bankers and made untold £billions for their employers who then dished-out generous bonuses, could there be an argument for me making a small claim on that? After all, some of the maths I taught - in those dull intervals between larking about - would have been key to investment banking.

Or supposing I was a surgeon and performed a routine, yet life-saving, operation on an investment banker – an appendix operation, say – then shouldn’t I be eligible to claim a chunk of any subsequent bonuses that banker receives? After all, without me (s)he’d be dead!

An investment banker's job is to invest his employer’s dough to best effect: ie, produce max-poss profit. That’s the job. His motivation to do especially well, apparently, is the promise of a BIG bonus. So if all a surgeon’s patients recover well… shouldn’t (s)he receive a BIG bonus too? (One could argue that the surgeon’s bonus ought to be far bigger than for a mere banker, regardless of how well the banker performs). And what about the guy who stacks the wine-&-spirits shelves in a supermarket? Shouldn’t he receive a case of Scotch if he does it well? Or the rubbish collectors: should they be rewarded for not spilling rubbish? Or if someone exceeds their quota on a sweet assembly-line, shouldn't they maybe take home a giant bag of sweets?

But bankers are still rewarded when they lose £billions. Why not just simply pay these crooks a normal salary and when they fail to perform to reasonable expectations then sack them – just as a surgeon who failed to save people’s lives might be sacked? The answer is obvious: bankers have our money, they run the system into which it flows, and no way are they (or their elite bosses) looking to lose their international vice-grip on it. (for ‘vice’ read both meanings)

The next interesting question: Where does all this dough originate that comprises such enormous profits and bonuses? Has anyone considered that? Answer: someone somewhere (ie, millions everywhere) are working for nothing – or for far less than the true value of their work; and someone somewhere (ie, millions everywhere) are being charged far more than they should be for what they need to buy.

Unless money can be plucked from thin air, then where else do all these untold £billions come from that normally pour into the banks year after year, decade after decade, like Niagara Falls clockwork.

Other investors? If so, they’d have thrown-in the towel decades - or centuries - ago. Why would they keep investing if they just keep losing? The fact is: nobody (or very few) ever lose. And even if, unlike brokers and bankers, they invest long-term, history shows that it’s still far more profitable than hiving money away in some deposit account.

And that’s down to the continual profit generated by industry. Unlike banks, most industry actually produces useful things. When people hear of the vast £billions made by supermarkets, oil companies, mining, aviation….  they gulp in astonishment – or used to. (Rarely do any of these outfits make a loss, and when they do it’s a mere blip and is all tax deductible.) But it’s these profits that feed everything...

And this is where we come to the most crushing fact of all: bank profits and bonuses represent a minuscule tributary of the actual torrent that constantly spills out of industry and runs through their system. It is precisely this torrent (bonanza) - managed by banks and brokers on their clients’ behalf - that keeps their elite clients in position.

There are several million estates in Britain with their mansions and various trimmings – which all has to be paid for. The landlords of these are among the key final recipients of that torrent - the real profits of industry - which dwarf the meagre bank profits and bonuses we all hear about.  

As to bad loans. Agents of the banks collected BIG commissions for making them. Now tax-payers are funding the loss. None of it even begins to threaten that endless bonanza to the power elite – because their principal arm (otherwise known as ‘government’) declares: “Society must have a viable (investment) banking system to function.”

Which may be true for the elite to continue to flourish.

Another little detail – have you ever wondered how it is that share prices fluctuate as they do each day: up-down, up-down? Colluding groups of brokers select a particular company to invest in (decided for a variety of reasons). Together, they pile in huge sums of their clients’ funds. The value of that stock rises proportionally. As it rises, other investors are attracted to buy – especially if the price began from a low-point (and if some little rumour is going around pointing up the company's prospects) – so the price will rise further. Now, the original brokers have agreed a cut-&-run point (ie, when to sell - probably determined by the profit they aim to collect). So they’ll all cash-in together, creaming a healthy sum for their clients, a substantial commission for themselves, and the share price left tumbling swiftly back to its former value.

So it goes…



from a 26.3.10 article by Chomsky (my emphasis):

...The global system is not only an interaction among states, each pursuing some "national interest" abstracted from distribution of domestic power. That has long been understood.

Adam Smith concluded that the "principal architects" of policy in England were "merchants and manufacturers," who ensured that their own interests are "most peculiarly attended to," however "grievous" the effects on others, including the people of England.

Smith's maxim still holds, though today the "principal architects" are multinational corporations and particularly the financial institutions whose share in the economy has exploded since the 1970s.

In the United States we have recently seen a dramatic illustration of the power of the financial institutions. In the last presidential election they provided the core of President Obama's funding.

Naturally they expected to be rewarded. And they were-with the TARP bailouts, and a great deal more. Take Goldman Sachs, the top dog in both the economy and the political system. The firm made a mint by selling mortgage-backed securities and more complex financial instruments.

Aware of the flimsiness of the packages they were peddling, the firm also took out bets with the insurance giant American International Group (AIG) that the offerings would fail. When the financial system collapsed, AIG went down with it.

Goldman's architects of policy not only parlayed a bailout for Goldman itself but also arranged for taxpayers to save AIG from bankruptcy, thus rescuing Goldman.

Now Goldman is making record profits and paying out fat bonuses. It, and a handful of other banks, are bigger and more powerful than ever. The public is furious. People can see that the banks that were primary agents of the crisis are making out like bandits, while the population that rescued them is facing an official unemployment rate of nearly 10 percent, as of February. The rate rises to nearly 17 percent when all Americans who wish to be fully employed are counted.

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