The revolutionary spark

There is, as they say, little that is new under the sun, although nature’s love of chaos perennially conjures variety. Despite the changing times, when viewed from the distance of history, almost rhythmical patterns emerge in its rich tapestry. Politicians, ever anxious to please and appease their public, routinely lapse from heartfelt promises into populist economic ways to buy votes and gain re-election, safe in the knowledge that every dollar a government borrows will never be paid back in full, at least not by them or in their professional lifetime. Although the Western governments have borrowed trillions to finance wars to fend off the rise of Islam and the Eastern dragons, the billions that have been consumed by conflict and falling credit ratings have forced them to confront the inevitable.

Nature is nothing if not cyclical, and our interactions with our resources and environment also follow the inalienable laws of the natural world, even though we prefer to use the term economics to describe what is in essence a biological system. Like all biological systems, changes in food supply and climate exert pressures upon populations which themselves rise and fall over time, creating conflict between individuals, tribes, and even species. The inappropriately named Homo sapiens, perhaps better named Homo vastans, depletes ‘his’ environment and moves on, making us a migratory and nomadic species that is fast running out of resources to exploit. As a quick fix, we have attempted to create fresh commodities in the form of IT, but despite the advent of our 'virtual' economy, the staple resources of human slaves, food and energy remain at the core of our economic activity. Two of these are being rapidly depleted and the sustainability of the third resource, namely human slaves (whether for production, farming or sexual services), depends upon the availability of the other two.

There will always be the generation and demise of pioneering ideas, technologies and nations, although the future of human expansion depends upon the continuing growth of available resources. Regrettably human evolution has rewarded those genes that have conquered, created and assimilated material wealth, while the genes which favor conservation, co-operation and altruism have been pushed into the biological backwaters of our service industries such as nursing, ecology and charity work. Our economic history has thus reflected a pattern of the strong enslaving the weak, and the genes of exploitation and short-term gain, currently manifested in hedge funds and corporate industry, continue to rule the roost. How can homo vastans truly evolve into homo sapiens as long as the genes of exploitation dominate the collective processes of our decision making, where no program of development or renewal can hope to succeed without a profit motive or 'return'?

Patterns of economic boom and bust are as inevitable and predictable as the seasons, even though they have a periodicity of twenty to thirty years rather than a single revolution around the sun. Beyond the ‘academic picture’, we are currently surrounded by the symptoms of decline such as social disintegration, conflicts over resources, and global financial stagnation. These are the economic seeds of revolution, war and destitution. History, as ever, is due to repeat itself, and the best way to predict the future is to study the past.

The most troublesome aspect of growth is not its creation, but rather taming it. Like an explosion, when all the necessary elements are in place and the chain reaction is set in motion, the rapid expansion can be difficult to control. Whether we consider Alexander’s all-conquering phalanx, or Hitler’s blitzkrieg against the Soviets, in an explosive thrust resources are quickly consumed as marching armies lay waste to a country’s productivity. Acquired territories remain to be consolidated, supply lines soon become over-stretched and collapse becomes inevitable. The empires of the Macedonians, Romans, British & Soviets all eventually imploded, as the costs of empire ultimately dwarfed its returns. The same rule holds true for rampant economic growth, in which the occupation of a new economic sector by investors and prospectors soon overwhelms the resources which are actually available, and ultimately jobs and paper fortunes disappear even more quickly than they appeared. There have been many such economic bubbles, most of which, like the Dutch Tulip mania of 1637, and the South Sea & Mississippi Companies of 1720, have long since faded from memory. Others, like the 1920s stock market bubble, the dot.com crash of 2000, and the 2007 sub-prime crisis are still painfully etched within the public psyche. One thing remains true, regardless of the age: such economic bubbles are frequently antecedents of political implosions and explosions which we refer to as revolutions and wars.

Classically governments seek popularity through grand public building programs and the distribution of subsidized food, entertainments and gifts the masses. Take for example the miraculous resurrection and rebuilding of Rome by Vespasian at the end of the 1st Century following decades of civil war; the glorious rise of the Third Reich; or indeed the massive Federal construction programs of the US governments of the 20s and 30s. All such fervent expansions were funded by staggering levels of government borrowing and underpinned by vast military spending; shifts in popular momentum that were powered by euphoric optimism that was in turn cultivated by social propaganda (e.g. the 'glory of Rome', ‘National Socialism’ and the ‘New Deal’). The inevitable consequences of these unsustainable surges were the conquest and plunder of mineral rich Dacia (modern day Romania) by Vespasian’s successor Trajan to refloat the public coffers with gold; the invasion and annexation of Czechoslovakia and Poland by Hitler to seize foreign assets to address his stuttering cash flow, and of course World War II. To the victor the short-term spoils of fresh slaves, produce, gold, and taxes.

Economic collapses do not just precipitate opportunistic invasions, but also civil wars, and nothing triggers revolutionary fervor quite like economic hardship and a government reeling from a bursting economic bubble or the failure of a costly military campaign. Cromwell followed up his exhausting victory in the English Civil War with the invasion of Ireland; the dot.com crash of 2000 precipitated the invasion of Iraq and Afghanistan for oil, an estimated $1 trillion in untapped mineral resources, and of course opium (using the pretext of the attacks of the 9th September 2001). A massive financial crisis followed France’s opportunistic participation in the Seven Years War and the American Revolution, triggering national bankruptcy, widespread starvation, and ultimately the French Revolution of 1789. Russia’s catastrophic failure in its war with Germany in 1917 heralded economic collapse, revolution and the rise of the Communist manifesto.

Yet there has never been an economic collapse as great, as truly global, or as deep as that which arose from the failure of the newly deregulated economic practices of exotic financial instruments, debts bundled into ‘cdo’s, and subprime lending on an unprecedented scale. This highly combustible mix was itself originally fuelled by the wholesale printing (known by the euphemism of quantitative easing) of cheap money at interest rates as low as 0.5% after 9/11 by the then chairman of the Federal Reserve Alan Greenspan, a practice that was revisited by his protégé Ben Bernanke after the Wall Street collapse in 2008. The Western governments’ collective solution to this crisis has been to borrow trillions more from China and the Middle East to finance bailout packages whose grandiosity has only been exceeded by their lack of oversight. Congress is now apparently unable to account for the whereabouts of the borrowed billions in handouts to bloated banks, insurance companies, and declining industries. Worse still, governments appear to unable or unwilling to prevent billions more being thrown to the wind in the form of gold-plated pensions and super bonuses to employees within the financial sector. By design rather than accident, this has resulted in an unprecedented redistribution and polarization of wealth, as the proportion of global resources, measured in terms of assets and dollars, rapidly approaches the point where 1% of the population effectively holds 99% of all measurable wealth in the Western hemisphere. As governments continue to print and borrow trillions to pump into the economy at low interest rates in an effort to refinance the financial sector, little of this tidal wave of capital has thus far managed to percolate through into the private sector. This has resulted in an effective and deliberate cull of small businesses, as banks have steadfastly refused to lend to many profitable small ventures. This is no accident of oversight. The resulting rise in small business failures and repossessions provides banks and investors with a Smörgåsbord of tasty morsels to snap up at bargain basement prices. After all, if investors were not able to buy at rock bottom after a crash and then to sell them on at the height of the next boom, then great fortunes could not be amassed within a single lifetime.

However, on this occasion they have made a massive miscalculation. With mandatory cuts in government programs and the austerity measures which must follow a splurge of public spending amidst falling tax revenues, the increasing cost of living that inevitably accompanies dwindling resources and living space will become superimposed upon a tsunami of job losses and rising welfare payments, leading inexorably to a social meltdown. In this age of the Internet and mobile communications, information and ideas travel faster than the speed of sound, and conspiracy theories and angst are being shared within increasingly audible murmurs of rising discontent. Unions and populist leaders refuse to accept that the present economic chaos was inevitable and without individual culpability, and the destroyers of prosperity are ever more conspicuous in their consumption and apathy to the plight of the swelling masses of the poor which they have created in their wake. Although Marie Antoinette’s alleged faux pas ‘Let them eat cake’ may in fact have been a colorful invention of revolutionary propaganda, there can be little doubt that this seems to be the prevailing attitude of an increasingly affluent and exclusive elite. As the rising disparity between relative incomes and bonuses become matched by declining costs of living and wages, so we are rapidly returning to our formal past of masters and servants. However, unlike the Roman patrons who openly competed to be seen to treat their slaves well, lavishing them with pocket money, accommodations, favors, and even freedom, the new elite shows little such grace or favor, as arrogance and opulence overwhelm any latent sense of humanity. The Senate of Rome spent vast fortunes on aqueducts to carry fresh water from the Seven Hills of Rome to the populace, and fell over themselves to be seen to lavish bread, popular entertainments and even gold upon the poor. Indeed it was considered a rite of passage for every aspiring Roman patron to make the costly gesture of financing games and gifts to the local populace. The rich and poor of the Roman world even bathed together in public baths, and a master’s slaves did not usually want for food or suffer the exhaustion of long hours. Brutal as ancient Rome undoubtedly was, it had the wisdom to understand that a tiny elite are no match for an angry mob. Perhaps this is why Rome survived almost ten centuries of plague, insurrection and war in a world in which 'Rome' was greater than any individual man, and the urban classes mixed freely within the Capitol. Today's elite prefer exclusive resorts, hotels, suburbs and residences, and travel to and from their ivory towers in the sanctuary of luxury cars, cruise liners, private jets and first class travel lounges. The privileged few now encounter only those poor employed in their direct service; namely those who are bred for domesticity and service. Until the late 20th Century, both rich and poor lived side-by-side in the valleys of the skyscrapers, although now the island has increasingly become the preserve of the rich, with impoverished service sector workers forced to commute from the outlying boroughs on subsidized public transport.

Within the melting pots of London and Paris the rich and poor still mingle, but seldom meet, and there is a rising tide of anger as food, rent and public transport consume an ever greater proportion of meager service sector incomes. The city’s undergrowth is tinder dry, and now a bolt of lightning or a spark of inhumanity is all that is required to ignite unrest. The Western governments are left with only two apparent options to avoid civil unrest and revolution, namely a dramatic redistribution of wealth or a general mobilization to attack some imaginary foreign foe. Both seem unlikely. The former will not come to pass as our politicians sit firmly in the pockets of a hidden elite, and the latter has now become almost impossible given that our governments have already engaged in costly foreign wars and have no money left in their coffers to fund a major new military campaign, save already being in a geographical position to attack Iran. So, unless the US and UK decide to launch a suicidal attack on an increasingly powerful Iran, or else we are unexpectedly invaded by a foreign power, history would suggest that bloody revolution is very nigh…

The Fall of Eternia

The king of Eternia decided to institute a free market economy to give his subjects some incentive to increase growth & productivity. He increased taxes to create a fiscal stimulus, promoted all his knights to senior positions on the board, and increased the daily hours his peasants toiled to 12 to cover all the salaries and lifestyles of his board members. The knights took the daughters & wives of their subjects as mistresses, deserving as they were, and the people rejoiced as their women were blessed by the noble union. The peasants, trusting & believing in the altruism of their noble lords, worked for ten long years to build the new kingdom. After their toil was done they asked for their promised pensions, salary increases and a hospital for their sick & injured. The knights replied that they had endured a long overseas war for oil to provide splendid illumination for their castles and had spent the peasants’ pension funds in waging war. The knights returned the peasants’ women, as they had grown old and tired and, instead of increasing the peasants pay, they increased their taxes and borrowed from their future earnings to replenish the war chests and refurbish their castles. And lo, the peasants put down their tools and wandered off into the woods. The kingdom of Eternia fell into ruin and was conquered by the people of the oil rich nations. However, the knights of Eternia would not fight off the invaders as they had grown fat & lazy, and instead were reduced to slaves. The knights refused to endure hard work because they had never known toil, and so some starved and others were executed. The once proud knights did mourn and weep for their lost kingdom and riches. After the knights had passed away, the peasants returned to till their soils and live comfortably off their land happily ever after...

A tale of two airports – a dark portent

The lives of every person on the planet were transformed by the shockwaves and repercussions of 9/11. Whether by accident or design events such as 9/11, cataclysmic recessions or both, afford governments the opportunity to enforce sweeping changes. Just as Hitler used the incendiary destruction of the Reichstag in 1933 to blame the communists and thus instigate a ruthless persecution of political opponents and the suspension of civil liberties, so 9/11 has been used as a pretext to invade oil rich Iraq and establish a surveillance society who sworn intention it is to root terrorists from our midst. Whether Big Brother is actually more concerned with terrorists being at large or its subjects being at liberty is a more vexing question. Until the Utopian day dawns when the rich have robots that clean, cook, solve complex problems and provide them with sensuous sexual service, the stressed masses will remain their economic slaves and will face restrictions on their movement between countries, a situation which will only become worse with the advent of biometric passports, image recognition software and every conceivable tracking device from GPS implants and mobile phones to CCTV cameras. Such devices have already been placed in every carriage and on every street corner (there are already over 10 million active CCTV cameras in the UK alone).

Perhaps nowhere is the impact of such changes upon our lives more apparent than at the airport. In the nineties flying was still a fairly stressful affair, although there were attractive airline hostesses at hand to smile and to assure us, complementary glasses of wine to relax us, and on board entertainment to distract us from fearful possibilities. Airlines showed great flexibility in rescheduling missed flights and were less religious about time and space. Once in 1994 I recall that we were late for a flight from Miami and arrived relaxed at the entrance to the airport only half an hour before departure to New York. We calmly walked straight through all levels of airport security untroubled to the departure gate, and the only check we encountered was of our boarding passes as we took our seats five minutes before take off. In those days the longest element of air travel was the flight itself, but now of course it is mandatory (in the UK at least) to arrive at check in two hours before a one hour flight to another European country. With several hours to the airport, two hours waiting and an hour actually in flight, the crow suddenly seems to be the only aviator with the right idea.

BAA, the British cartel which retains financial control over the world’s busiest airport hub Heathrow, has recently been forced to sell Gatwick airport for £1.5 billion in a deal which revealed just how lucrative the ownership of an airport really is. A trip to Gatwick, for those who are not of City airport or Heathrow ‘class’, reveals just how bad things have become. After 9/11 most Western airports saw fit to institute a humiliating and intrusive series of queues and indignities upon their ‘customers’, from the tail back at check in, to the anxiety of personal scanners and the indignity of a personal body search and a partial striptease at the security gate. But don’t worry - any personal hygiene products over 100ml in size which are confiscated can be repurchased at inflated prices during your two hour visit to the shopping mall/waiting lounge, where constant reminders that you may inadvertently have forgotten to buy a present, book or entertainment device are illuminated before you in broad daylight. Of course by now, after hours of exhausting travel to the airport and ‘processing’ by check in and security staff, you must be thirsty, if not actually hungry. There is no need to fret as there are of course plenty of overpriced food and drink outlets to make the ordeal of holiday and business travel even more expensive than it already is.

Of course there is also the clinching million dollar question as to whether someone could theoretically have interfered with your baggage at some point between packing them and your arrival at the airport, to which the answer most logically and inevitably must be yes, possibly... This leaves many of us with the dreaded dilemma of deciding whether to risk losing another hour to the baggage carousel at the destination airport, or the nightmare possibility of having been used as an unwitting mule for drugs or worse. If some playful soul had slipped a small package or incriminating USB data key into your bag on the train, bus or taxi at some moment during which you were not staring attentively at your luggage, the task of explaining any illicit contraband away could be somewhat difficult. Ah well nevermind, it’s all just part of the fun and games of 21st Century air travel.

Gatwick is possibly the least aesthetically pleasing and least glamorous of the UK’s proliferation of ‘international’ airports (some twenty at the last count), and obtaining planning permission for yet another new airport seems largely to be a question of obtaining expensive planning permission rather than justifying a need or environmental impact. I strongly suspect that flights to and from City (London), Leicester and Coventry airports (which flies to Jersey) have more to do with the proliferation of private business jets than any need for convenient mass transportation. Such ‘private’ airports often have only token security measures.

Gatwick appears to need two separate security screens rather than one, doubtless for the gratification of the sexual fetishists who must naturally be drawn to a job which affords endless opportunities to grope, frisk and examine every firm bulge and contour of the endless queues of partially stripped travelers that await. I wonder, statistically speaking, if middle aged men get ‘frisked’ as often as young men and women in their sexual prime?

The departures lounge at most major airports is a giant mall, naturally making it more attractive than the rest of the airport, although that wouldn’t be difficult, especially in the case of Gatwick. At this gateway to Hell passengers are, for some curious reason, forced to wander like zombies without a destination for hours, anxiously waiting and incessantly checking for their departure gate to be announced on the board. I suspect that many of us spend the endless hours of waiting wandering around in a futile attempt not to any spend money. After five hours of travel, queuing and waiting most of us inevitably succumb to the temptation to buy coffee, a snack, something to read and a bottle of mouthwash. Would arriving at check in an hour before departure really threaten airline security or just the profits from the mall?

Finally, often only ten minutes before departure, the departure gate is lit up on the vast departure data board. Then begins the mad dash to navigate the half mile to the final processing point. At last, after a day of packing, travel to the airport, waiting, queuing and fretting, you are ready to board your short haul flight to Europe. It is a shame that the once generous hospitality the airlines exhibited has been replaced by a culture of thrift and an obsession with margin. Ryan air now charge for passengers to use the toilet, EasyJet charge £4 for a bottle of water on a return flight from a hot climate, and a small bottle of wine is another dip into the pocket. We are of course expected to blame the terrorists for our stress and inconvenience, although not all of us are that stupid. Personally I would rather face an additional one in a million chance of being blown up in mid air or by a car bomb than suffer the stress and indignity of modern air travel. Let’s face it - you’re going to need a holiday when you get there.

The absurdity of ‘heightened security’ at UK and US airports becomes clearer before the return flight. Most international European airports are clean, light, modern, well ventilated and have inspired architecture. Once again air travel becomes a pleasure. The more liberal Dutch are masters of the art of relaxed travel, with a minimum of security, helpful services, and a free art gallery available at Schiphol airport for those who make the mistake of arriving too early for their flight. You wander in to the airport, check in electronically at your leisure and then head to the departures lounge with only the customary flash of a passport and boarding ticket. A casual migration past bookstores, massage stools and art exhibits follows, and you can elect to head to the departure lounge at any time you choose because the departure gate is displayed some 3 to 5 hours before take off. Surprisingly, I haven’t heard of any planes being blown up in mid air after leaving Schiphol, and one feels surprisingly free from the menace of armed security guards carrying machine guns. What a relaxing return from Amsterdam it was. Alas all good things must come to an end, and it was only a shame that the departure gate was manned by British airways staff armed with their own personal scanners and two, yes two check in points within five yards of one another. Clearly the lady who had checked the boarding cards and passports at the first check in point must have been visually impaired. Still there was enough time to confiscate my carry on bag which had comfortably fitted into the overhead storage compartments on the way over and condemn me to yet another hour in front of the baggage carousel at Gatwick…

Tommy Lucchese - Father of the Modern Corporation

There is a man who possibly had more impact upon the 20th Century than any other and arguably shaped the corporate world of the 21st Century. The ‘Father of the Modern Corporation’ is perhaps not widely known, and unlike many of his contemporaries, the name Tommy Lucchese does not immediately spring to mind. Tommy, or Gaetano ‘Tommy Gunn’, Lucchese was inauspiciously born in Palermo in December 1999 at the turn of the 20th Century, a Century he was to profoundly shape and influence. Tommy Lucchese rose to become the co-founder of the New York Lucchese crime family.

After losing a finger to an industrial accident in 1915 he earned his police nickname of ‘Three Fingers’. Soon Lucchese tired of his impoverished background and learned the secrets of effective ‘commerce’ when he started his own window cleaning company at the age of 18. He charged local businesses $50 to clean their windows or the option of paying $100 to repair the broken glass. His youthful crime spree led to arrests on many charges, including homicide, although his only conviction was for the relatively minor crime of stealing a car.

Tommy Lucchese joined the Reina Gang of the Bronx during World War I. Gaetano Reina had engineered a controlling interest over ice distribution through the Bronx and upper Manhattan, a critical market in the long, hot New York summers before air conditioning. As one of his leading lieutenants Tommy Lucchese ran his own ‘107 Street’ crew in East Harlem which later became a major player in the ‘French Connection’.

Lucchese soon graduated to the Young Turks, a gang of headstrong young Italian and Jewish gangsters who ran bootlegging, robbery & illegal gambling rackets in the 1920s. The illustrious gang, led by Charlie ‘Lucky’ Luciano, included such notorious underworld figures as Frank Costello, Vito Genovese & Bugsy Siegel. This group was to redefine the order of the mafia at the conclusion of the Castellammarese War of the 1930s, a war that was precipitated by the leaner pickings on offer at the end of Prohibition.

The so called Castellammarese War was fought between rival crime bosses Giuseppe Masseria and Salvatore Maranzano. Lucchese, a lieutenant of Reina was thus naturally aligned with Masseria. However Reina switched allegiances to Maranzano after Masseria demanded a cut from his ice distribution racket. An associate of Lucchese, Gaetano Gagliano informed Masseria about Reina’s imminent betrayal leading to Reina being gunned down by Vito Genovese. Masseria then replaced Reina with Joseph Pinzolo, enraging the ambitious Gagliano and Lucchese. The two conspired to form their own splinter faction, gunning down the generally unpopular Pinzolo in 1930, passing it off as the machinations of Maranzano. The tide of war began to swing against Masseria, and the business-minded Lucky Luciano and Lucchese began secret negotiations with Maranzano. To successfully convince Maranzano of their changed allegiance they assisted in the killing of the head of the Gambino crime family and Lucchese became one of ‘Lucky’ Luciano's favorite hit men after his involvement in over 30 successful murders. The War finally concluded after Luciano lured Masseria to his assassination at a restaurant in Coney Island, leaving Maranzano the ruling crime lord of the United States.

Maranzano set up a new criminal network that incorporated all the Italian and Sicilian crime families in America, positioning himself as the ‘Boss of Bosses’. Gagliano acquired the new Reina family, appointing Tommy Lucchese as his underboss. This new dawn of peace and reconciliation did not last for long, as Maranzano became resentful of ‘Lucky’ Luciano and Vito Genovese's growing influence and commissioned their murders. Luciano, discovering the plot, beat Maranzano to the punch. Lucchese visited his office in 1931 and pointed Maranzano out to Jewish hit men who were disguised as police men and IRS agents. Luciano then replaced direct rule with a ‘Commission’ of representatives of all the families.

After Luciano was arrested in 1936, Gagliano’s crime family, later to become the Lucchese Crime Family, kept the peace during the great recession, during which the gang ran black market operations in sugar, gasoline rations, stamps and meat. After Gagliano died of natural causes in 1953 Lucchese assumed control of the family. A popular boss, Tommy Lucchese valued his soldiers' welfare and 'curried favours' from New York City mayors William O'Dwyer and Vincent Impellitteri with whom he often dined. His status within the Cosa Nostra grew because he was as low key as he was effective in generating profits. In fact the Federal authorities did not believe that Lucchese was a senior figure in the Mafia despite numerous reports.

Engineering markets and cultivating powerful political alliances, Lucchese first monopolized the Kosher Jewish chicken trade, a truly lucrative & captive market. Lucchese then used his growing influence within the unions first to infiltrate and control Manhattan's Garment District, capital of American high fashion, and then the affiliated trucking industry, by subverting key union officials and trade associations. Such economic and political control, combined with his almost invisible presence, gave Lucchese a vice like grip over New York’s commercial and political heart.

Lucchese soon diversified into heroine smuggling through his 107 Street Crew, generating millions and culminating in a major police corruption scandal in which rogue officers allowed his associates access to NYPD evidence rooms containing some $70 million in heroin, replacing the narcotics with baking flour. More interested in making money than waging war, Lucchese teamed up with Gambino and Vito Genovese to expand his influence. Genovese removed family rivals Costello and Anastasia with Lucchese’s tacit support, although by 1957 a new alliance of Charlie Luciano, Frank Costello, Meyer Lansky, Carlo Gambino and Tommy Lucchese finally decided to depose the despotic Vito Genovese. When Genovese called the Apalachin Meeting in upstate New York on November 14, 1957, Luciano, Costello, and Lansky tipped off the police about the meeting. However, Tommy Lucchese was on his way when the police raid occurred, although his consigliere (advisor) Vincenzo Rao, Carlo Gambino and Vito Genovese were arrested. Vito Genovese lost face and ultimately the cold war in 1959 when he was arrested overseeing a shipment of heroin in Atlanta. Vito Genovese was sentenced to 15 years effectively leaving Carlo Gambino as head of the Commission.

Lucchese’s security was sealed in 1962 when Carlo Gambino's eldest son married his daughter. Gambino gave Lucchese a $30,000 gift as a wedding present and in return Tommy Lucchese gave Gambino a slice of his airport rackets. By this time Tommy Lucchese effectively controlled JFK international airport at all levels, including the unions, management and security, allowing him uninterrupted smuggling opportunities. Together Lucchese and Gambino effectively ran the Commission and New York City.

Tommy Lucchese thus fathered the first global commercial network aimed at creating monopolies through a tiered organization, trade and corruption. His corporate operations spanned textiles, transportation and narcotics, and Lucchese was so subtle and successful that even the FBI did not believe that he ran the New York crime syndicate. Today’s corporations operate in much the same way as Lucchese’s crime network, subverting local officials, obtaining planning permission through bribes, destroying local competition and seizing absolute control over supply and distribution through the infiltration of unions and officials. It would appear that the invisible man really was the father & the inspiration of the modern corporation.

The Rise, Fall & Ultimate Victory of the Banks

As is often the case, it is history that proves our most useful crystal ball. At times of great anxiety and uncertainty we seek clairvoyance, and in this day and age it is the prospect of systemic collapse or decades of unending debt that fuels the public angst.

After the 1929 Wall Street Crash the prevailing powers declared that it could and would never happen again. Banks were restricted, capped and ultimately placed under the jurisdiction of the U.S. Securities and Exchange Commission (SEC) by Franklin D. Roosevelt in 1932. President Kennedy’s father Joe was appointed as the SEC’s first Chairman, despite his widely accepted involvement in the importing of alcohol during the prohibition era. When President Roosevelt was asked why he had appointed his campaign fundraiser and a man of such questionable reputation to the office, he replied that it ‘Takes one to catch one’. Well so much for good intentions. Since the raft of tighter regulations were introduced some 75 years ago the Republicans have given the banks ever greater freedoms in return for their political support, not that cash has had any bearing on the issue… In Britain, the former Chancellor and now Prime Minister, Gordon Brown made great strides towards the deregulation of the financial sector as part of what many insiders viewed as a Faustian Pact to pave his passage to the golden keys of No. 10 Downing Street.

If we are to be honest with ourselves, the creeping deregulation of the banking sector in effect allowed investors and bankers to regulate themselves. This is akin to releasing an insatiable fox into a hen house and asking the predator to be prudent. When money is the goal and there is no referee, chaos ensues and no one can keep score.

If there was ever an illustration that history is cyclical, then surely the credit crisis and global stock market collapse of 2007 would be picture perfect. As in 1929, credit default swaps were the root cause of the malaise, there was a property bubble, and countless millions had bought shares on margin (a means of share speculation through borrowing as only a small fraction of a share’s actual value is initially deposited). Then, as now, the big fish played the small investors and most small speculators got their fingers badly burned. The rest was history, until now…

Most of us have long since become dizzy and disorientated as the rising Federal bailout fast approaches the $8 trillion mark. Almost as impossible to conceive as it is to repay, this blank cheque includes $750bn in additional aid to the banks; $1.9trn in Federal Deposit Insurance; $1.4trn in senior unsecured debt issued by banks; $1.6trn in support for mortgage & credit card markets; a $200bn loan facility to prop up consumer spending; $1.8trn worth of purchases of commercial paper; $200bn in loans to primary dealers; an additional $787bn fiscal stimulus plan, and a $700bn TARP program designed to refinance the banks & automakers, which includes a further $110bn for AIG. In addition the U.S Treasury intends to launch a public-private investment fund to buy up to $1trn in distressed bank assets, not to mention $400bn for Fannie Mae & Freddie Mac, $300bn for the Federal Housing Administration, $50bn from the Great Depression-era Exchange Stabilization Fund, or the $29bn in financing for JPMorgan Chase's buyout of Bear Stearns. If you have lost count, then you are not alone…

To cut a long balance sheet short, although the banks are still teetering on the brink of oblivion, kept alive by the pumping of fresh and artificial taxpayers' blood through their system, the general population faces years of forthcoming hardship and generations of debt repayment. The worst is not yet over, as unemployment may not peak until late 2010 and this is invariably associated with a wave of credit card defaults. So ultimately it is the people (or the tax payer in popular parlance) who have in effect ‘rescued’ the banks. The banks and hedge funds for their part have shown little remorse, and even less in the way of self-restraint as their bumper bonus and salary culture continues unabated. In the UK the politicians attempted to tether and rein in the bankers with legislation and moral opprobrium and look what happened: The banks retaliated by airing the politicians own dirty laundry in public… The poor general public, who have in effect underwritten the sins of the bankers, face record levels of unemployment, record debt repayments, tax rises and a series of massive cuts in public services to pay for it all.

Have these harsh realities stopped the champagne from flowing within the well-furnished reception halls of the banks? Well hardly. Has the financial aid that was so readily pumped into the banks trickled down through the system to help stricken small businesses, mortgage holders and the unemployed? Not really. As though part of a pre-meditated cull, otherwise healthy small businesses are being bled dry by a collapse in consumer credit and spending, while the corporations keep their powder dry for an asset fire sale… After all, without the economics of boom and bust, investors could not become obscenely wealthy within a single lifetime by selling at market peaks and buying during recessionary lows.

Ironically in 2007 the banks lay fatally wounded by their own misadventures, yet within two years they have successfully recaptured the initiative and now have absolute power over the financial life blood that courses through the veins of the world’s economies. What has in effect been achieved, either by design or default, is a massive repolarization of capital away from the general population and towards the financial institutions in the form of loans, guarantees and favorable terms of repayment. We are now forever in the debt and pockets of our banking paymasters. Only those who still have cash can be king. The banks have fallen and risen again - long live the bankers!

The blogger wishes to apologise for the long delay since the last post but the banks refused to recapitalise him... meanwhile I strongly recommend 'City Boy' by Geraint Anderson for those who seek an insider's insights

Death of an Empire

Chronicles are littered with the footnotes and forebodings of academic ‘Cassandras’, condemned to watch helplessly as their warnings were ignored and tragedies unfolded. It seems that modern historians too are consigned to spend their days learning the lessons of humanity’s greatest mistakes, and to spend their nights watching helplessly as another generation repeats them. Scholars of classical civilizations might find parallels between the Spartan-inspired Doric architecture of Western capitals and the willingness of their elected Emperors to send troops across the world to defend the far flung interests of their modern empires. However, upon deeper deliberation, they might also identify the differences that will serve to explain why the empires of China, Rome, Sparta and Britain lasted for hundreds of years while that of modern America has risen and fallen within only a Century. This brief discussion does not seek to celebrate the building of empires, or to idealize brutal conquerors and their machines of power, but the contrasts between the enduring ages of Rome or Sparta and the short span of the American empire are perhaps worthy of reflection.

America, certainly until the sunset of its empire, largely avoided the strategy of invasion, conquest and assimilation employed by past empires, notably the British and Roman, preferring instead to expand its sphere of influence through subject states that were subjugated by economic might and commercial allegiances with ‘elected’ officials or dictators. For decades military advisors were deployed to subject nations as American business and capital flowed to all corners of the globe, from the Philippines to the Gulf States, Israel, and much of Western Europe (i.e. NATO), not to mention Central and South America. As a self-declared ‘superpower’, America preferred to buy loyalty in foreign states and to reinforce its interests in these client regions by building military bases and corporate alliances. Senior political figures in these client states were offered inducements, whether elected or not, and in return corporate America had access to new markets and to a vast hinterland of raw materials and cheap labor. Such foreign interests were vigorously defended by a vast navy and a willingness to deploy forces to Korea, Cuba, Vietnam, Panama or any other nation that was threatened by internal or external conquest. At its height, towards the end of the 20th Century and prior to the failure of both its economy and military invasions of Afghanistan and Iraq, the American empire extended across the length and breadth of both American continents, through much of South-East Asia, Western Europe, Australia, the Middle East and even into parts of Africa (please see inset map).

The dawn of American empire can be traced back to the Indian wars of expansion (1789–1849), the French Louisiana Purchase of 1803, and the Mexican-American War of 1848. This continental expansion continued with the Spanish-American War of 1898 with a view to acquiring Cuba, Puerto Rico, the Philippines and Guam. By 1912 the consolidation of the central tract of the Northern American continent had been achieved with the admission of Arizona to the Union, with Alaska and Hawaii later acquired in 1959. Subsequent victory in two World Wars expanded the horizon of American interests, fuelled by massive war reparations and post-war loans, as conquest and devastation placed Japan, Britain, Germany, and many other nations deeply into America’s debt and under her spell. As with countless other empires, the United States repeated the errors of Victorian Britain, Nazi Germany, Napoleonic France and the USSR by overextending her economic and military sphere of influence. Although all conquerors are tempted to continue victorious campaigns rather than to consolidate their position, all new colonies must first be subjugated and infrastructures put into place to allow the spoils of war to be reaped in the form of trade, materials, produce and industry. Up until the Vietnam War American colonial policies appeared largely effective, curbing Chinese influence in South-East Asia, and limiting Soviet expansion into Western Europe and Cuba. This was largely achieved by supplying military aid, funding and advisors, rather than through direct military intervention per se. However this policy began to change as American confidence grew and power was transferred to a post-war generation that had never known military defeat or economic depression.

Major setbacks in Vietnam, Somalia, Afghanistan, and Iraq have since eroded the notion of American invincibility and challenged the wisdom of supporting a military-industrial complex which has made the American economy completely dependent upon foreign oil, imports and a constant procession of wars to fuel the sales of American arms manufacturers. Although popular at home until recently, such foreign policies have lost the ‘hearts and minds’ of Asians, Arabs, and Europeans alike. You only have to cast your mind back two decades towards the end of the Soviet Union to recall the sudden cataclysmic collapse of a military industrial complex which had overextended its reach and budget.

In an all too familiar fiscal maneuver, past US governments had used the rhetoric of an ‘American commercial peace’, a 20th Century version of the ‘Pax Romana’ in which conquest and economic subservience were rewarded with relative peace and moderated military expansion. As with any good protection racket, if you traded with Rome, paid your dues to the Emperor, hosted their forward bases, allowed your young men to perform military service, and swore allegiance to the emperor, then a 'peace' was maintained. However, insurrection was punished by total war, wars that led to the destruction of a million Gauls and the destructon ofJudea, Palmiera, Carthage and countless other rival nations. A loyal client state of America such as Honduras, Columbia or Panama was rewarded with ‘incentives’, military support and trade, whereas insurgencies in other nations led to ritual bombing campaigns, the funding of insurgents, and frequently direct invasion. The problem with maintaining such ‘client states’ is that they require constant vigilance, propaganda, arms supplies, and the payment of rulers and their officials, not to mention the establishment of forward bases of military advisors and elite forces.

With so many client regimes on the payroll of the former Soviet Union, its decaying and decrepit industrial base inevitably imploded, and with it the entirety of its Empire. Similarly America, with its various ‘client states’ in South and Central America, Africa, the Philippines, Israel and beyond, is experiencing the full costs of empire as it continues to expend trillions on futile wars in Iraq and Afghanistan. The United States Congress, with their private military-industrial interests in such companies as Halliburton and the Carlyle Group (ignoring oil investments for the sake of brevity), has engaged in a prolonged Middle-Eastern conflict through a level of government borrowing unseen since World War II. To add to these trillions of war dollars, the United States has since compounded the gravity of such vast national debts by borrowing trillions more in order to recapitalize the collapsing banking system and to finance a fiscal stimulus package to ‘kick start’ its ailing economy. Within five short years, the Federal Government has borrowed more in real terms than it did for both World Wars and the Great Depression combined…

As the true fiscal damage of the twin wars rises above $6 trillion, and the combined cost of the bank bailout and fiscal stimulus package is already set to exceed $3 trillion, all traditional economic prudence has clearly been abandoned, and any pretence of a ‘real currency’ has been cast to the four winds, as the appetites of the banks and corporations (GM, AIG, etc) are sated by the provision of seemingly limitless access to borrowed capital. Other than questioning the wisdom of bailing out declining industries at the beginning of a major depression that could last for many years (rather than spending that money on the creation of new ones better suited to the environment and the 21st Century global economy like renewable energy and wireless networks), the notion of giving bankrupt gamblers an extended credit line (and bonuses) would seem to contradict the old military maxim that one should never reinforce (or reward) failure.

The prognosis for the US economy is dire, and short of a general mobilization, America’s sphere of influence is set to contract violently. The new Asian tigers in the form of India and China are presently currying favor in parts of the world once dominated by American economic and military might, as a resurgent and commodity rich Russia is reasserting its economic and military muscle across Central Asia and Eastern Europe. So what then were the seeds of the rapid decline of the American Empire? How did Britain and Rome manage to sustain vast empires across expanses of space and time when America’s has lasted less than a century?

As with all cultural decline, the process of decay often begins slowly and remain unidentified and untreated until a structure becomes too rotten to support its own weight. The collapse in many cases is often dramatic, as we saw with the fall of the former Soviet Union. The slow decay of the structures of empire often relates to cultural or biological issues such as the bubonic plague (aided by vast open city sewers) or the rise of decadent behaviors which classically afflicted Rome. Such cultural decline and decadence, evident in a modern America which has long been mired by organized crime, systemic prostitution and ‘pork barrel’ budgets, have in no uncertain terms led directly to the recent global economic collapse which was itself triggered by systemic fraud and corruption.

Perhaps the two greatest and most enduring empires were constructed by the British and Roman civilizations (the Chinese empire lasted over a thousand years but was not based upon military expansion). These empires were built upon the principles of Romanization and of ‘British’ culture, in which the invading nations did more than merely conquer, they invested heavily in the infrastructure of their new dominions and brought with them architecture, technology, education and civil planning. The British introduced their industrial revolution, building bridges, railroads and factories, preferring to train, to trade and to ‘enculture’ their subject nations rather than merely to enslave them. When the British Empire finally contracted after the second world war, the vacuum was filled by a vast Commonwealth of former colonies which became strategic allies, independent nations where cricket, British institutions and architecture still survive proudly to this day. There may still be lingering resentment, but much of the culture of modern Australia, South Africa, West Indies, Canada, India and other colonies is based upon the British way of life, and there is no more sincere form of flattery than imitation.

Similarly, where the Romans conquered barbarian nations, they left aqueducts, walled cities, bridges, vineyards, paved roads, amphitheatres, forums, sewerage, running fresh water and heated public baths. When the Emperor Justinian finally reconquered North Africa from the Vandals in 533 AD, it is said that the recently Romanized Vandals wept for the loss of their treasured new way of life. This is perhaps the single most important reason why the British and Roman empires spanned centuries rather than decades. Their civilizations superimposed a greater culture upon their conquests rather than merely inflicting a smash and grab raid for slaves, materials and resources reminiscent of Viking or Mongol invaders. This is perhaps why the Soviet, Nazi and, more recently, the American empire experienced rapid decline, as culturally transformed nations are more likely to prove willing and productive vassal nations than subjugated slave colonies, and consequently require fewer resources to maintain.

The American empire was built upon a surge of economic and military might, pervasive corruption and, more recently, through debt and terror. There is however nothing remotely civilizing about a chain of McDonald's restaurants illuminating the ancient streets of the world's oldest cities, or indeed an invasion of naked glossy magazine covers or designer sunglasses. Quietly we endured as quaint British market town centers closed down in the wake of new American ‘style’ out-of-town shopping malls, junk food restaurant chains, and drive-in movie theatres. As the sun sets upon the environmentally unsustainable American empire, we are now counting the cost and a new generation is preparing to clean up the mess.

Perhaps the primary reason for the decline in global American influence was the pervading tide of corruption and decadence that infiltrated the nation’s structures and institutions, spreading to foreign regimes and economies. From humble origins in the mean streets of Chicago and New York to the polished marble of Washington and Hollywood, organized crime conquered America with the seductive appeal of easy money in a nation which is driven by the acquisition of personal wealth. America, like many empires, became addicted to the spoils and trophies of foreign conquest. When the ruling classes gain greater wealth and more servants, so their tastes and appetites become ever more expensive and expansive. The empire’s resources are then channeled inwardly to satiate an increasing demand for luxury travel (be it performance cars, yachts or private jets), vast accommodations, servants, designer clothes, objets d’art, and exotic food. Labour and resources are thus diverted to the courts of rival social dukes and CEOs, and before long the elite have siphoned off ever greater proportions of the national and imperial wealth in order to maintain their expanding courts. Sound familiar? The Rockefeller and Bush dynasties and corporate mandarins such as Bill Gates, Sheldon Adelson, and Sergey Brin accumulated vast personal fortunes and helped to forge the greatest income disparity in American history. Presently, more than 50% of all American interests are owned by fewer than 5% of its population.

Such patterns of behavior may appear sustainable during a period of imperial expansion, where new wealth is continuously acquired and pumped into the economy in order to maintain growth and meet demand. However, when the bubble eventually burst and individual lifestyles were threatened by repossessions and insolvencies, scams and schemes abounded as the elite desperately tried to keep their American ‘dream’ alive, frauds which were aided by regulatory indifference and corruption. Take, for example, the topical issue of the $400 billion sub-prime loan crisis, in effect a massive confidence fraud in which high risk loans were packaged as safe investments, or Bernard Madoff’s $50 billion Ponzi investment ‘scheme’ in which no underlying investments were ever made. We have already, in less than two years, witnessed just two schemes which between them siphoned off almost half a trillion dollars from the global economy, money that simply seems to have disappeared. Where has all this money, since written off by global banks and hedge funds, actually gone? In a ‘zero sum’ free market money cannot simply vanish from the face of the earth (although it can be ‘printed’), and all those dollar bills and digital zeroes must have gone somewhere. The simple truth is that most of it has found its way into the pockets of American criminals, never to be recovered.

Resorting to criminal frauds on such a massive scale is symptomatic of a decadent culture that has become desperate to maintain the unsustainable lifestyles of an increasingly avaricious and quixotic elite. Now that decades of borrowing have failed to sustain their lifestyles, many have now resorted to fraud, enslavement, illegal bonuses and to printing money from the Federal purse in order to maintain the 'wealth divide'. The roots of this American largesse may be traced back to the plantations of the American South, or perhaps to the rise of the mafia during the prohibition era and their subsequent expansion into Las Vegas, Columbia and the adult Internet. In America, the line that separates legitimate from illegitimate wealth has become increasingly blurred and gray, and whether you consider ‘old money' made from the slave plantations of the south or the newly acquired wealth of the moguls of Las Vegas, Hollywood and Miami, organized crime and its expensive tastes have now pervaded all levels of American society. To the American mindset, wealth represents achievement and thus commands respect, and so all Americans culturally aspire to the pursuit of wealth as a conduit to happiness, regardless of the misery that it ultimately causes. The blind pursuit of affluence without the virtues of Spartan discipline, French reserve, or British moderation inevitably causes the fat of prosperity to teeter upon the vestigial legs of privilege. In an American nation that has become one vast, unsustainable gold rush, it is hardly surprising that the pioneering and industrious values upon which America was built have been superseded by a creed of easy capital.

The only thing that remains for us to do, as we watch America implode into a mire of debt, recrimination and impotence, is to ignore the historians as they sigh and mutter that they told us so…

Domination of the species, or how bad genes prosper

For the entirety of human history we have been obsessed with marriage, genes and good breeding. Long before language was first recorded for posterity, kings fought over queens, knights rescued princesses from metaphorical dragons (to avoid dwelling upon uncomfortable sexual subjects), and whole tribes went to war over their genetic legacy. We broadly accept that certain characteristics may be bred into animals, and that specific ‘breeds’ of dogs are developed as much for desirable behaviors as for their overt physical attributes. Dobermans, Rottweilers & Pit Bull Terriers are rigorously interbred for their physical aggression and fearlessness, just as Setters and Labradors were developed for their gentle and child friendly natures. Even the simplest creatures, like insects, inherit certain behaviors. Take for instance the swarming behavior of locusts, the expansive marches of army ants, or the territorial aggression of hornets and bees. Like insects, mammals have been shown to inherit innate behaviors that are passed on without the need for parental instruction or wisdom (although this often helps…) and again, like insects, our complex social behaviors are directed by nervous, hormonal and pheromonal influences. Believe it or not, human behaviors are sublimely, yet strongly influenced by odorless scents called pheromones, and science has already uncovered distinct human pheromones which socially signal aggression, fear, sexual arousal and fertility.

Natural selection is one of the simplest scientific concepts to take on board, and Darwin’s principle holds true whether a single or many underlying genetic elements are involved. Take for example the inheritance of height, a trait that involves the interplay of many genes. Although such environmental factors as food availability, nutrition and social stress all have a bearing, the children of tall parents tend to be as tall (if not taller) than their parents, and those of dwarves likewise, and the offspring of tall and short parents often display ‘blended’ inheritance, even though no single gene may be responsible. Similarly the nature and interactions of the many hundreds of genes that govern human behavior are extremely complex, as they all contribute to our sophisticated endocrine (hormonal), pheromone and neuronal systems. Such complexity however does not refute the notion that much of our inherent behavior is transmitted by genes rather than merely learned, as the blind paradigm of sexual selection works on the flawed premise that the genes of the most successful individuals are most likely to prosper and be passed on, even if they ultimately prove destructive. For instance, imagine a gene which causes more rapid muscular development and aggression in those individuals who inherit it, even though, in later life, that same gene may predispose its carriers to high blood pressure and heart disease. Herein lies nature’s flaw, as the very dominant gene that augurs precocious development and aids those individuals who carry it to compete successfully for mates at an early age, ultimately condemns its carriers to an early grave. However, the gene’s selective advantage was victorious, and a new generation of carriers arises to further its propagation. A simple illustration to serve the purposes of this topic, but love is essentially blind and sexual window shoppers may be so attracted to the goods on display that no background search into family history is usually carried out, unless of course you are trying to marry your local doctor…

So let us take the concept of the transmission of dominant and destructive genes into the world of behavior to allow us to see how certain individuals can become too successful for the good of the species, and to illustrate how genes may arise within a population that ultimately condemn the entire species to destruction. In the light of recent events, such behavioral traits have become all the more pertinent...

It would be difficult to dispute that the recent economic crisis was caused by the worst excesses of human behavior, namely greed, extravagance and gambling. After all too much of a good thing, in this case a tidal wave of easy money, cheap capital, and rising markets only encourages excess, and we all know that excess is generally not a good idea, whether it be in the form of food, sex, drink or borrowing, accompanied as it invariably is by a universal hangover…

The seven deadly sins of human socioeconomic behavior could perhaps be described as greed, promiscuity, aggression, deceit, gambling, sloth, and extravagance. The fundamental problem is that such behaviors, if perceived to be successful and therein desirable, become traits that are selectively passed on, not only through imitation, but also via inheritance. Within any society, the most successful individuals are regarded as being more sexually attractive, whether success is defined in terms of wealth or physical attributes. If high risk behaviors such as gambling on the stock market or ‘dabbling’ in property are perceived to be successful and are thus rewarded both sexually and materially, whether the success is attributed to luck, judgment or sheer exploitation, then the successful individual’s material and genetic legacies will be more likely to be passed on to the next generation.

History is alive and well in our aristocracy, for many of England’s more notable lineages were granted hereditary titles and lands for the prosperity that their forebears brought to the country from their exploits as generals, pirates, merchants or commercial slavers. It does not take too great an exercise in genealogy before the link between the ruling classes, assertive behaviors and hereditary wealth becomes apparent, a legacy that may be seen today in the House of Lords. Sir Francis Drake was a notorious pirate, and was richly rewarded by Queen Elizabeth for “Singeing the King of Spain’s Beard” and raiding his gold convoys, whilst Admiral Sir Henry Morgan was perhaps the most dangerous and bloodthirsty pirate ever to have sailed the Spanish Main. These warmongering noblemen retired to become rich, respectable and revered, although British history is littered with the legacy of many other tyrants and amoral traders whose behavior was passed on to future generations, including the Stuart dynasty, Sir John Hawkins and other principal beneficiaries of the commercial slave trade.

Before you consider that the transmission of dominant genes within a scattering of ruling families and dynasties has little bearing upon the prosperity and genetic legacy of nations (aside from taking them to war), take a moment to reflect upon the legacy of the ruthless dictator Genghis Khan who is well known to have fathered thousands of children across his empire from Mongolia to Afghanistan. So prolific was the sexual appetite of this mighty warlord, that today more than 13% of the male population in parts of central Asia are known to carry his Y chromosome. If male inheritance is transmitted through the Y chromosome, so might many other male behaviors, and it is tempting to speculate that warlike histories of Afghanistan and Pakistan may reflect the mighty Khan’s genetic legacy.

It is entirely reasonable to contend that many behaviors are transmitted both genetically and culturally by dominant individuals. Take for instance William the Conqueror who brought feudal law to Anglo-Saxon Britain, causing the loss of many personal freedoms, the fruits of the forest, and much of England’s tribal heritage. His successful Norman line instituted such legal niceties as prima nocta (a nobleman’s right to demand conjugal rights with a commoner’s wife), the Forest Law (the nobleman’s ownership of all wild forest game [1]), and the idea of feudal service in exchange for access to land, traditions which perpetuate to this day in one form or another. Thus it came to be that the ruling classes had the right to bear children by the wives of other men, and this could only enhance the spread of their genes and behaviors. The celebrated territorial aggression of Norman kings such as William the Conqueror, Richard the ‘Lion heart’ and their descendants laid the cultural foundations of the largest empire the world has known. Their behaviors gave rise to the spread of feudalism, the crusades, slavery and ultimately the corporate empires of today. Their natural tendency towards risk taking was evidently richly rewarded, and generations of expansive and territorially aggressive ‘alpha’ males have since fathered children who themselves were more likely to become leaders and aggressive risk takers in their own right. In contrast those whose natures are risk averse or impoverished are less likely to be successful, as are those who are less cunning and resourceful risk takers, and men of such traits were naturally less likely to prosper or to reproduce in their turn. However, we can hardly afford to celebrate the bio-logical consequences of a legacy of aggressive, territorial and warlike behaviors in this our crowded, resource-strained 21st Century.

Of course we can’t simply blame all of human behavior upon a handful of tyrants or regents. Most behavior is enacted by those with more modest power and resources, although the principles of cultural and genetic inheritance still apply. Greed, risk taking, promiscuity and extravagance may be viewed as discrete vices, but they are often associated behaviors and their roots lie within the mid brain where neural systems that reinforce risk taking and reward associate. The neural basis of addiction, risk taking and hedonistic (pleasure) seeking behavior is now fairly well understood, but we have only recently begun to realize that certain individuals are genetically more susceptible to addiction (including drugs, pleasure, video games, sex and other ‘vices’) than most others, and that the tendency towards risky behaviors (such as gambling, fighting and stealing) and addiction may be highly correlated in certain individuals. This is to say that some individuals will be more likely to steal, lie, cheat or gamble to obtain rewards such as money or sex. Moreover such behaviors may be reinforced and rewarded as prevailing social and legal structures such as communities and the judicial system decline and are thus no longer able or willing to prevent or punish such deviant behaviors. Thus such rogue behaviors may ultimately be reinforced in certain individuals who effectively become rewarded materially or sexually for stealing, lying, cheating or raping, encouraging the transmission of such behaviors. If these rogue behaviors are allowed to flourish under a veil of social tolerance, or even outward respectability (as Robert Louis Stephenson classically foretold in his epic tale of Dr. Jekyll and Mr. Hyde), ultimately they will be more likely passed on to offspring as ‘successful’ traits. Take, for instance, the recent spate of bank collapses caused by senior individuals, whose extreme risk taking behaviors had previously earned large profits for their employers, resulting in a corporate tolerance towards their high risk strategies. In a bull market with rising property and equity prices these individuals had enjoyed a run of success leading to a relaxation of due diligence procedures and ‘natural proportionality’ in hedging bets on stocks, shares and derivatives. In the course of a generation, the leaders of the financial services sector had prospered and gained in social power and political influence to the point where they had persuaded governments to relax banking and trading laws. They became free to gamble ever larger sums on stocks and shares without leaving their losses at the table, or even having to have the assets they were gambling on deposit. A financial house of cards duly accumulated, each debt card propped up by another until eventually assets could not be quantified, and any demand for liquidity (i.e. the removal of a single card) would (and did) lead to a collapse of the entire banking system. The result of allowing those with extreme risk taking and avaricious natures to dominate our financial system has now led to an issuing of government bonds on a scale not seen since the last world war, resulting in massive governmental debt and the prospect of daunting recession.

Like the genes which encode for risk taking, hedonistic and addictive behaviors, those genes that foster deceit and social aggression may also be preferentially passed on within modern society. For instance, psychopaths are known to have disrupted communication between their decision-making prefrontal cortex and their amygdala, a region of the brain which confers emotional or empathetic reasoning. Psychopaths thus reason without human ‘conscience’ and are often ruthless, cunning and calculating individuals, although rarely violent. Regrettably such behavior confers an advantage amid the anonymity of the modern urban jungles of the 21st Century, as those who do not adhere to the mantras of socialist, religious or law abiding behaviors are able to ‘steal’ a competitive advantage. As these individuals, estimated to represent over 1% of the population, are more likely to be successful and therefore to have the opportunity for procreation, it is more than reasonable to assume that certain psychopathic traits may be passed on to future generations.

Let us hope that our society is able to reorganize itself, to recognize that deviant behaviors are transmitted, and to weed out its pathological risk takers, psychopaths, and addicted hedonists before such traits lead to an apocalypse of an overcrowded human species…

[1] "It is allowed to our sovereign lord the king, in respect of his continual care, and labour, for the preservation of the whole realm, among other privileges, this prerogative, to have his places of recreation and pastime, whatsoever he will appoint. For as it is at the liberty, and the pleasure of his to the reserve the wild beast, and the game to himself, for his only delight and pleasure, so he may also at his will and pleasure, make a forest for them to abide in. A forest is a certain territory of woody grounds and fruitful pastures, privileged for wild beasts and fowls of the forest, chase, and warren, to rest and abide there in the safe protection of the King for his delight and pleasure....."1598, Manwood in his Treatise of the Laws of the Forest.

The parable of the unforgiving banker

Adapted from Matthew 18:23-35 2008

Therefore I say unto you that the Kingdom of Heaven is not unlike a certain ancient king called Gordon Brown, who wanted to reconcile accounts with his wayward subjects who had, upon his command as Lord Treasurer, gone forth and squandered the nation’s riches. When he had summoned them for reconciliation, the wickedest banker was brought unto to him who owed his Treasury the sum of ten thousand talents [a Roman talent in this context is taken to represent one million golden Scottish pounds]. But because he couldn’t pay, his lord Gordon commanded him to be sold, together with his wife, children, luxury yacht, exquisite mansion, beach homes, private jet and all his many mistresses, so that payment could be made. The CEO of the bank therefore fell down and kneeled before Gordon & his minister Alastair, saying unto them, ‘Lords, have patience with me, just give me another million of the good peoples’ talents at a lowly interest rate of only 1% and I will repay you richly, for it was not my fault that the devil had me laid all weekend and bewitched my senses with countless lines of cocaine and a dozen fresh flowers from the Samantha Bond modeling agency!’ King Gordon, being so moved by the sincere apology of his servant, did see fit to compassionately release him, forgiving him the entire debt and interest, deciding instead to throw in another seven hundred billion from the future earnings of his people to help out his old drinking associate from his days as Lord Treasurer.

The banker then issued forth from the palace in a rage of righteousness and did find one of his small businessmen who owed him the principal sum of one hundred denarii [one thousand golden pounds in today’s money], not to mention 18% compound interest and numerous banking fees which he had, in his mighty wisdom, seen fit to cast down upon the wretch. The banker grabbed him, and took him by the throat, saying, ‘Pay me what you owe you poor miserable bastard!’ So the small businessman then fell down at his feet and did beg of him, saying, ‘Have patience with me, for I have six employees, a wife, and two small children, and I will repay you when the economy recovers from the recession that your own reckless gambling hath caused!’ But the banker, being the rightful creditor, showed the small businessman no mercy and went and cast him into debtor’s prison, until he should pay back that which he was due. So when the other small businessmen had seen what was done unto their kinsman by the fat banker, they were exceedingly sorry, and came and told unto their King Gordon that the banker was refusing to redistribute the talents that the King had fronted him from the people’s bottomless treasure chest of future earnings. Then the King called in the banker, and said to him, ‘I forgave you all your debt and foolishness, as you asked me so nicely. Don’t you think that you should pass some of the low interest 1% loan of £700 billion on at 18% APR and have mercy upon your small businessmen who are suffering in this economic climate of your making, even as I had mercy on you?’ Gordon was especially angry as the banker had continued to give bonuses to his favored servants, despite their grievous losses and delivered him unto the banker’s shareholders. The shareholders then did cry with one accord, ‘for the banker he is right. Although he did lose our money and then did go to the King and ask for some more future wealth to be taken from the taxpayer, if he did give the money back to the failing people in desperate need then we would not get our dividends next year. God may care for the poor, but we have mortgages on big houses to pay as well as next spring’s ski holiday’. They then did cry with one accord for the shareholders’ bubbly and the complementary young hostesses, the fruits of the poor. And lo, here endeth the parable of the rights of rich, for if you sin and steal from the poor, thou shalt be rewardeth in this life and live longer in luxury before the next one. For thou art to remember that although the true servants of the Lord may be nicer, nice people finish last and will receiveth their shares in Heaven…

Here endeth the gospel according to St. Matthew the banker…

Champagne bankers aboard the new Titanic

It was during the fall of a long, warm sunny autumn that we started to forensically sift through the debris of the big bang, the end of Western capitalism as we knew it. We counted the British and American casualties of the failed oil wars and peered through the shutters of bankrupt small businesses, as the ranks of the homeless, the destitute and the newly unemployed steadily swelled. We were unaware of the ticking time bomb triggered by the decades of excess and post-war consumerism, as the age of state-subsided humanity drew to a close. A surreal sense of detachment surrounded us as we watched the indecipherable balance sheets of 2007 turn into the credit crunch of 2008, precipitating the collapse of the world’s banking system and stock markets in 2008, leading to the Four Year Depression of 2007-10 and the creeping tide of the third world war.

Let us not deceive ourselves. The economic crises of the early 20th Century and of 1929 led to major depressions and two world wars, as ailing superpowers dashed to preserve their dwindling global interests, to cull the rising queues of unemployed youths, and to distract from domestic economic depression. The crash of 1929 was triggered by the same debt-fuelled share purchases (margins) and hyperbolic optimism as the option- and derivative-fuelled boom of 2007. The wars that follow great depressions are perhaps inevitable and terrible economic tools which are wielded to reinvigorate the military-industrial complex, generate a virtual currency of war bonds and collapse collective wage bargaining agreements. How the capitalists crowed when the Berlin Wall fell some twenty years ago, and how those Eastern minds who declared that ‘amorality and inhumanity were the unacceptable faces of capitalism’ must be nodding sagely as the collapse of the world’s banking system continues unabated, despite the many trillions in monopoly money which the Western governments are desperately pumping in an effort to refloat confidence. The same trick was tried in 1929, and it failed miserably. Well if history offers us any silver lining, it was the rise of socialism which followed after world war as people learned once again to collaborate in communities.

An ounce of prevention is worth a ton of cure perhaps, but what purpose is to be served in bailing water out of a sinking ship before the torpedo holes have been plugged? Therein lies the problem and root of the malaise – we have created a system that is too corrupt and too large to be allowed to fail. The liquidity of the system has all but dried up, no bank knows what their true losses are or is prepared to admit them, and their share values have fallen through the floor. Bankers long reaped where they did not sow and tilled barren soils with the earnings and savings of others. This month they have turned in their hour of need to the governments of their creditors. Seeing their greedy children helpless, vulnerable and exposed, what actions have the Old Lady of Threadneedle Street and the Father of all Parliaments taken to correct their errant ways? Will they punish them and take away their privileges? No, they have offered them prospective loans of over £100bn in cash and £400bn in liquidity (a total to date in excess of £500bn in virtual imaginary money to be paid back at some infinite point in time with few strings attached). Have they demanded seats on the boards of directors and preferential share holdings? No, they prefer to trust the demonstrably corrupt directors and to secure their tax payers only non-preferential shares in return for their hard-earned money and increased public debt. Have they demanded tough new laws and regulations to ensure that banks and hedge funds can no longer be absolved from corporate and financial accountability when greedy, irresponsible investments turn sour? No, it is an attempt to restore confidence in ‘business as usual’, as bread winners are laid off and small businesses are denied capital and charged over 15% for overdrafts. Will the Bank of England charge the banks 15% interest? Of course not, they’ve just cut interest rates by another half a point to 1.5% to ease the pressure on the banking sector. Hang on a minute, wasn’t it Alan Greenspan’s panicked lowering of interest rates to 1% after 9/11 that caused this recent cycle of boom and bust fuelled by irresponsible lending? It seems that it was only when every conceivable solvent and competent borrower and home owner had accepted high interest loans from this injection of cheap money that they eventually turned their attention to sub-prime loans to maintain their bubble of artificially inflated stocks and property portfolios. Quod erat demonstrandum, if ever anything was.

Once again the corporate bankers have clamored for their ship to be rescued before blame can be apportioned, simply on the grounds that they are too big and intrinsic to the fabric of the economy to be allowed to fail. Others might ask how such irresponsible risk-taking behavior can ever be corrected after these rogue giants are unconditionally restored to their former strength. Surely the gods of Westminster and Washington could have demanded that the unruly titans of the banking and investment sector were shackled by new legislation and regulation before attempting to restore them to rude health? After all, they were in no fit state to refuse anything. If the banking industry does survive the crisis, will they now listen and tamely accept new punitive legislation when they are back on their feet? I sincerely doubt it. They will soon return to their old ways of super-sized salaries, monster pensions, criminal bonuses, false inducements, and of creating new bubbles to supercede the dot.com and sub-prime fiascos of recent history. What ever will they come up with next? Perhaps they will start to sell futures in the careers of university graduates, or maybe they will formally sell data bundles of information in companies, shareholders and other populations who have been commercially stripped of their privacy. After all the UK civil service has already ‘misplaced’ the databases of the military, new mothers and health-care workers…

So what, other than sheer greed, lies at the root of this latest exodus of evil and mayhem from Pandora’s dreaded box? The seeds of this latest testosterone driven orgy of excess were sown when Alan Greenspan opted to slash interest rates to a single percentage point in an attempt to flood the capital markets with liquidity after the shock of 9/11. As any business man, Shylock or banker will quietly admit, they should never be offered a surge of cheap cash. Although credit is the fuel of the economy, it is highly flammable and has to be kept contained or it will explode. Any business opportunity or appreciating asset such as a share, house or commodity is a natural magnet for cheap credit, and what shrewd business person (or irresponsible gambler) will hesitate to borrow money at 1% when he can make 5-50% by reinvesting it in credit cards, property, or business ventures? Unsurprisingly people borrowed to invest (leveraging) or spend, and of course borrowed money is not ‘real’, but virtual, in that its value has yet to be realized or repaid. Entire companies were bought for billions based upon borrowing from companies who had themselves borrowed and soon, when there were no more underlying funds in the hands of the banks or their secured lenders, those who did not want the good times to end sought to borrow yet more by turning those on low incomes into home owners through sub-prime loans. Now, instead of entering a mild recession, the sub-prime lending strategy, tacitly encouraged by governments who are re-elected on the wave crest of prosperous times, has merely delayed and deepened the inevitable economic downturn.

The simple concept behind sub-prime loans was the encouragement oi those on low incomes to take on high interest mortgages and then to package these loans into AAA-rated bundles and sell them on at a profit. As long as property prices continued to rise there was no problem. While those on low incomes were able to maintain their high interest mortgage repayments, investors were paid off handsomely, and the properties continued to appreciate. Under these circumstances a house could be always be repossessed at a capital gain if a borrower defaulted, preserving the underlying asset value. However, the recent house price deflation and economic slow down of the past eighteen months has meant that any repossessions have yielded only a fraction of their original investment value, if indeed they could be sold at all. Investors saw their high return triple A-rated securities turn into junk bonds overnight, and banks and pension funds which had lent to the legal limit of their liquidity, suddenly became technically insolvent.

New financial vehicles and corporate structures allowed money to move faster than ever before. Banks that were more tightly regulated were superseded by hedge funds which were less constrained and more aggressive. A hedge fund is permitted to claim an annual commission of 2% on all invested monies and also a massive 20% profit on all accrued profits, while having no responsibility for any losses incurred at the roulette wheel. Hedge funds made massive profits during the credit boom as they were unlimited in the proportion of their investors’ money which they could commit. Their directors became very rich, very quickly, and mainstream bankers became extremely jealous, not only of the huge fortunes which they amassed, but also because their own investors deserted in droves to the hedge funds, reducing the leverage and liquidity of the banks. Unsurprisingly the bankers attempted to follow suit. Massive bonus incentives led to increasingly high risk strategies and piled bets, because when an investment made big money so did the hedge fund executives. Soon silly bets were being made on sub-prime loans bearing highly suspicious AAA ratings, until eventually bank stocks collapsed and the savings and pension funds of hard working citizens faced ruin. Ultimately, as ever, the aftermath of the party has to be cleared up by the tax payers, although the CEOs and chief executives of the banks and investment funds have long since departed to sunnier climes with their tax free super bonuses and very limited liabilities.

At this point let us just pause briefly to stare in disbelief at the roll call of dishonor – to wonder at the CEOs who cashed in on this zero sum game over the past three years as their investors lost billions. Angelo R. Mozilo of Countrywide pocketed $362 million before the bailout, while James Cayne of Bear Sterns grossed $42m. Richard Fuld of what was Lehman Brothers ‘trousered’ $186.5m, as Martin Sullivan of AIG, the colossal insurance group bailed out to the tune of over $85bn by the Fed, raked in a cool $25.4m. Stan O'Neal of Merrill Lynch lost his company over $10bn in toxic debt, but left with earnings of $66m. Kerry Killinger lost Washington Mutual some $19bn in the subprime mortgage bonanza, but still cashed in to the tune of $36m, while Charles Prince of Citigroup, who oversaw $57bn in write-downs, still siphoned off $41.5m from his ailing company. Where are these corporate criminals now? Are they in jail? No, these untouchables are living the high life, ensuring that they do not invest their takings in anything as stupid as subprime loans.

One might intuitively believe that now the party is finally over, providers of luxury goods, cruises and services would have hit a brick wall. Au contraire, Cartier, Gucci, Cunard, Ferrari and Fairline have never had it so good, as the rich choose to rest their capital from property portfolios and the stock markets and embark on a monumental spending spree while the dust settles. Naturally they will wait until asset prices reach rock bottom prices before they pitch their cash back into the market and reacquire yet more for less. Sudden recessions are perhaps the most powerful tool of the rich, and are much desired. For those who have the capital, recessions mean cheaper goods and services, auguring a spring of golden investment opportunities and a time to be busy. For the poor they represent only misery, dispossession and destitution.

So what can regulation can the state offer to remedy and restrict the excesses of gold-fevered minds? After all, the free market has repeatedly failed to foster adequate training and education or to champion sustainable development. Regulators could make it illegal for directors to receive bonuses in the absence of profits, and should also limit the percentage of profits which may be apportioned to such bonuses. As far as the taxation of profits is concerned, it is simply ridiculous that companies or banks can avoid paying tax on the grounds that they have borrowed money. Interest should not be tax deductable to close the loophole that encourages spurious borrowing. To quote a senior hedge fund manager, it is ‘palpably absurd’ that a corporate director pays a smaller percentage of their earnings in income tax than the maid who cleans their offices, or that Sir Phillip Green pays his wife, a non-domicile, hundreds of millions in salary to avoid paying income tax. Do the super rich really need houses with five swimming pools, a helicopter and a mooring for a luxury yacht? Our world only has finite space and resources, so if some individuals sequester more wealth, land and property then, by definition, the rest of us must share less.

Surely the weak and pitiful excuse offered by Standard & Poor’s ratings agency as to why they did not perform due diligence before assigning sub-prime loan packages AAA ratings for maximum investment security must be seen as the smoking gun in this murder-mystery? They must be punished to serve as an example to all accountants and fund managers that willful corporate negligence constitutes a crime akin to genocide, even if the mass murder is perpetrated with a pen on a luxury yacht and not with a machine gun in a killing field. The buck has to stop somewhere and, even if ‘no individual is innocent’, some are surely more guilty than others. The Chinese hang corrupt officials, and while this does not stop all corruption, it does far more to deter it than paying disgraced former CEOs hundreds of millions in severance and lost bonuses. Once upon a time banks were banks and building societies were just that, although over the last twenty years the commercial waters have been muddied considerably. Once upon a time banks were restricted to lending less than 80% of their liquid assets, although in the run up to this crisis they were lending up to 98%. Where once every penny was accounted for, now our banks are simply unable to estimate the value of their assets or write-downs, as dubious financial vehicles such as options, derivatives and ‘shorts’ have been used as a smokescreen for massaging figures and hiding toxic debts. It would take a 'state-of-the-art' supercomputer many days to crunch through all the numbers to ascertain the true scale of the crisis, even if such data were available and not constantly changing. Curiouser and curiosier, as Alice peers down the rabbit hole in the vain hope of seeing just how far it goes…

Banks should be forced to pay the government hefty insurance if they expect to be bailed out when times are bad, even though this goes against the instincts of those whose nature it is to hoard and to beg for low interest loans during hard times. After the Wall Street crash of 1929, the Federal government created some stability by ensuring that in future banks would be limited in their size and sphere of influence. Many European banks are now simply too big to fail, and with recent mergers, are getting even bigger… If the current system does survive this downturn, suddenly flooding the market with more liquidity ('cash') and slashing interest rates will only make the next boom and bust cycle even bigger.

Accountants should serve as regulators and not business buddies, held accountable for their financial oversights, and not simply permitted to write legal disclaimers on every report and set of accounts they publish. Aggressive accounting practices have become a euphemism for a lack of due diligence and ‘cooking the books'. Such practices should simply be outlawed. Banks should not be able to spend or lend more than 70% of the liquid assets which they hold, and they should have to declare their positions in terms of lendings and assets to the FSA and the Bank of England on a daily basis. In short, accountants should be made accountable, even if this does seem a contradiction in terms (to them at least).

Last, but certainly not least, the absurd notion that CEOs and directors should be able to collect their winnings and simply to walk away from the table without deficit when they lose should come to an end. In any zero sum game on the stock market or table at a casino, when you gamble you take home your winnings and leave your losses at the table. Investment banks and hedge funds aggressively risked their investors’ money and profited handsomely when their stock was rising. Now that they have lost their paymasters’ money, should the creditors not be able to knock on the doors of their luxury mansions and demand recourse? Regrettably, when the financial Titanic went down in 2008, the CEOs and bank chiefs were not aboard as they had already claimed first option on the life boats. Perhaps the most disturbing revelation of all is that most of them had already jumped ship with their takings long before the financial iceberg finally loomed into view…

‘President Gas is tap dancing, for the banker is a thief, he isn’t very honest, but he’s obvious at least’. Psychedelic Furs, President Gas