The capture of tax haven Ireland: "the bankers, hedge funds got virtually everything they wanted"

The capture of tax haven Ireland: "the bankers, hedge funds got virtually everything they wanted"

Cross-posted from the Treasure Islands blog

‘The Financial Times is carrying an important and fascinating story about the tax haven of Ireland. It focuses on a particular issue which is dear to my heart, and the subject of a whole chapter of Treasure Islands.

This is, at heart, a story about how small financial centres become entirely 'captured' by financial services interests, with the deliberate removal of democratic checks and balances and carte blanche given to financial services interests to write laws in secret. This is exactly why I call offshore the 'smoke-filled room,' where gentleman arrange the world's financial affairs over cognac and cigars....

“The bankers and hedge fund industry got virtually everything they asked for while the public got hit with a number of austerity measures”.

There you have it...The last sentence epitomises the captured financial state. ...

Now take a look at what happened in Cyprus. The very same phenomenon, in different form. It's just the same in Jersey. And in Delaware. And the same, in more diluted forms, in Switzerland, the United States, and the UK.

This is what's happening, all over the world. Anyone wanting to understand the offshore phenomenon needs to understand: this is what it is all about.’

Posted in Tax Justice Network.

The power of bankers and hedge funds to control financial centres is not new. They have even controlled the operations of stock markets around the world. They determine how stock markets should be run, the rules and operating systems.

Stock markets that are modelled around New York Exchange have similar features that were dictated by the bankers and hedge funds to give them undue and unfair advantages over the innocent investors.

The main features that change the game plan of stock markets are as follows:

1. They demanded the Exchanges to allow them to plug in their super computers to the Exchange’s trading system to have privy information of the ‘buys and sells’ in the market and use their computers to compute and take the best positions against other innocent traders.

2. They insisted that the trading bits be downsized to the smallest unit possible to enable them to trade in big volumes and ensure profits by simply scalping the system.

3. They insisted that commission will be neglible for them to make profits while normal traders could not do so. They mostly trade at minimal charges or no charges at all.

4. They made Exchanges to invest in high speed super computers to match their super computers while normal traders were trading manually at snail pace.

5. They made Exchanges to provide large scrip lending facilities for them to cover their big short positions when they sell down the market for profits.

6. They made exchanges run continuously without lunch breaks to facilitate their computer trading.

7. They made HFT legal when it is illegal, HFT is basically front running.

8. Above all, they made unfair trading activities legal when they are against the laws of securities trading.

9. And together with bankers, they create high risk and toxic products in derivatives and made them legal for sale and tradings. Derivatives are a big financial nuclear bomb that is waiting to blow up the western financial system.



Charlie Munger, the right hand man of Warren Buffett, has openly denounced the bankers as cheats, cannot be trusted, and needed to be reined in before they blow the whole financial system up. And while all the Exchanges were coerced to allow HFT knowing that it is illegal, it needs a brave man like Munger to call a spade a spade, that HFT is illegal. And this is not the only thing that is illegal in the finance and securities industry. When the bandits or robbers are dictating the law, dictating how the system should be played, and the law is either on their side or simply helpless to touch them, the exploitation will continue till it blows up on its own face.

How and what should govts do to bring an end to such criminal activities in the finance and securities industry? Not doing anything will make govts accomplices to these horrendous crimes against the innocent traders and investors. Who is robbing the people? Would the Americans start to clean up their house and set the standard for the rest of the world? If the Americans continue to allow the bankers and hedge funds to cheat the main street, the rest of the world will just follow this fraudulent system blindling, thinking that since the Americans are doing it, it must be ok.

Khaw Boon Wan discourages ITE and polytechnic graduates from pursuing university degree

Finally some wisdom and hard truths from Boon Wan. Our university education is anything but cheap, and 3 to 4 years to waste. So what if our universities are among the best, among the highest ranked, when the graduates have difficulties finding jobs or uncompetitive to third world graduates? The reality is that the piece of paper must be useful and wanted. There is no point even if one gets a degree from Harvard or Cambridge if the employers prefer one from Sungei Road University.

I still recommend that for those who want to secure a good job with a tertiary education to send their children overseas, to India as the top designation. For those who want an easier degree, maybe the Philippines. And for those who want a degree immediate, without have to go through the mills, there are degree mills to issue the degrees.

Singaporeans must act smart, street smart, not book smart. Go and get a degree from universities that are preferred by the employers, employers who believe that those universities are really good. Forget about all the claims and rankings. There are gimmicks, academic. And of course, a polytechnic diploma is much better. At least there is lesser competition with the FTs. The PMET level of jobs are the exclusive market for FTs. Singaporeans are better advised not to compete in those levels or are likely to end up as taxi drivers, with degrees.

Enemies of the State

The second major protest Rally against the Govt’s White Paper to increase the population to 6.9m went off smoothly on May Day. The international media were there to cover the event to brief the world of the kind of democracy and freedom of expression in this First World model city with a mixed of western democracy, Confucianist mandate of Heaven and a tinge of dictatorship. I hope I would not be called up to meet Sue for mentioning the taboo word like dictatorship. But that was on a placard during the Rally. It read, ‘We need a new dicktator’.

It is good that such irritating protest is gradually being accepted by the Govt without bringing in Sue into the picture though Sue was mentioned many times in the speeches of the speakers. Sue is a famous national icon and often sent a chill down the spine of unwary Singaporeans who talked too much, the opposition politicians, the comic writers and yes, the bloggers as well. One just does not know how far one has crossed the rubicon. They called it the OB markers.

Many things happened prior to the May Day event in Hong Lim with many fearing for the safety of Gilbert, the organiser, and the cancellation of the protest Rally for some unknown reasons. There were some correspondence between Gilbert and the authority in the innocuous guardians of Parks. Though the police did not ask for anything, Gilbert received a kind reminder by the Parks minder that it would be appropriate for him to apply for a Police permit to hold the rally. Somehow, this friendly gesture became a kind of nightmare and many people read many things into it. Of course it was silly of them to do so as it was just a formality for the Parks minder to do the necessary. And Gilbert did the necessary by politely replying to the Parks’ guardians that there was no requirement to do so. It all looked so polite and friendly, but there were great tension and trepidation coming out from the exchange, of course there was nothing to it really.

Why was there an element of fear being spread around with people saying that they would not attend the Rally to avoid being troubled? And there were many discussions in the social media with the pro rally activists trying to dismiss the fear element and the opponents playing it up. Gilbert and his team were somehow seen as enemies, being watched closely be unseen eyes, and as if something nasty could happen to them. Why should it be in a democracy for the people to fear the people they elected to be their Government, to look after them and protect their interests? It is a difficult contradiction, must be.

Recently many bloggers and activists had their encounters with Sue and were sweating cold sweat instead of thinking of having a good time with her. Are they also enemies of the State? Many bloggers were openly threatened and harassed in social media by forces that assumed that they had the right to do so and acting as if they were the law, or above the law. I too was harassed and attacked daily and threatened for acts of sedition, and may have the good fortune of meeting Sue. There appears that certain groups of people are seen as enemies of the state and are living life dangerously without having to commit any crime but just because they did not agree with policies of the authority, or have different viewpoints.

Are the citizens living in fear of the dark forces in a democracy? Is there really something out there, forces that will devour citizens in the name of the State, in the name of Sue? Who are the real enemies of the State?

Ominous signs to slow down

The latest discovery in the MRT story is rail crack. Monday morning peak hour, crack was found on the North South Line causing massive jams and delays to the train service. Subsequently the speed of all trains was slowdown as a precaution. MRT quoted an incident in England that resulted in several deaths due to rail cracks.

The main cause of rail cracks is metal fatigue contributed by a combination of temperature, age and uneven wheel.  Are these the signs of an ageing system that needs either a complete overhaul, a complete change or just simply to slow down, and things will be ok again? Or we really need a change, a new system to replace the ageing system that is getting sicker by the day and there is no other option left?

Monday’s morning the East West trains were also travelling at much slower speed. Would this be the new beginning, a new trend of travelling in our MRT system, our not so rapid transport system?

Looking at the bigger picture, our rapidly maturing economy may also need to slow down to avoid overheating and heart burns. Everything is running at full steam for so long and maximized to yield results but getting marginal or diminishing returns. Even our workers, those past expiry date types, are still recycled into the job market to keep the economy going. The Dad’s Army is still kicking in the food courts and hawker centres.

And strangely, the PMETs, some very much younger, have been pulled out of the system before their expiry dates. But this is a different story altogether. Maybe they should consider themselves lucky to be able to slow down and not be squeezed dry for another few more years. We need much younger and more talented workers to drive the economy faster than the lazy and not good enough PMETs, we need to bring them in to replace the locals for a more energized economy. No losers allowed.

Our cars are retired when many were still in peak conditions and could run for another ten years or more. Our housing is being pulled down only to rebuild with more levels to increase the yield. Our land are harvested to the fullest, every inch must be made useful. We are running out of training grounds for NSmen and soon there will be no land for military camps.

We need to slow down. The symptoms being thrown out daily by the MRT are ominous signs that we cannot go at the same speed anymore or we risk more breakdowns and accidents. Heed the warning signs and avoid going over the cliff. There is no remedy to ageing.

A big stride in Singapore Malaysia relations

Since the sealing of the new land swap deal between Hsien Loong and Najib, relations between the two states have improved beyond anyone’s imagination. There wer more joint developments and more meetings and friendlier comments on both sides, patting each other’s back. This is definitely good for both countries going forward and for people to people relations. Iskandar Economic Zone now got a big boost with Singapore becoming the anchor tenant and biggest investors.

I know things are looking good and fine but did not know that it could be that fine until yesterday when Abdul Ghani, the incumbent Mentri Besar of Johore, paid a friendly visit using the second causeway from Gelang Patah.  This is not all. It was reported that it was part of his election campaign to woo Malaysians working in Singapore. And I thought Lim Kit Siang too would make the same friendly gesture. But he chickened out, did not want to give the wrong impression and be accused of as a branch of the Singapore PAP. DAP has its root in PAP during the days when Singapore was in Malaysia.

So we will miss seeing this grand old politician from across the causeway in Jurong. Let’s hope this friendliness will continue and come 2016, our ministers can visit Iskandar to campaign among the Singaporeans working or staying there. Iskander is likely to see the presence of many more Singaporeans and could justify a visit by the contesting candidates.

This is a good start for a closer Singapore Malaysia relationship. Nice. Singaporeans should not kick a row about applying for police permit to campaign in Singapore. Malaysia could also then extend the same courtesy to our politicians in the next GE. Let’s be abang adek again.

And it is good that no negative retorts were heard when Najib said that there was no Chinese school in Singapore. In the past there would be some rash reactions to a comment like that from either side of the causeway. Our relationship with Malaysia has matured to some degree.

Further improvements are hopeful. If travelling could be made more convenient, Singaporeans more warmly received, more Singaporeans would be selling their HDB flats and buy up properties in Malaysia. This would be a win win solution. Singaporeans could make a killing by selling out their million dollar HDB flats to FTs, and Malaysian developers benefiting from selling more properties to Singaporeans.

A slight drawback is that Singaporeans that sold their HDB flats would never have the chance to buy another property in Singapore again. The prices would be beyond them. They would be perpetual PRs in Malaysia, and may be better to take up Malaysian citizenship if they are welcomed to do so. Malaysia will also see a property boom but this will lead to some inflation and higher cost of living, and jams at the two crossings. With the larger land mass, these changes could easily be absorbed unlike a small island like Singapore.

Overall it would be good for Singapore with Singapore island becoming the land of rich foreigners and FTs, a great vibrant city, while Singaporeans migrate over to Malaysia. Singaporeans can also move nearer to the nursing homes in Johore as well as landed properties for after life.