Tag Archives: Gordon Brown

Sarkozy, Brown Fails To Agree On Hedge Fund Rules

A meeting between French President Nicolas Sarkozy and UK Prime Minister Gordon Brown on Friday has failed to clinch a breakthrough on hedge fund and private equity regulation, as EU talks approach their endgame.

“Its Cayman rules that apply, and Cayman judges.”

french diplomat


Both sides said they were confident a deal could be struck in the coming days however, with the Spanish EU presidency keen to secure a common member-state position when finance ministers meet in Brussels next Monday and Tuesday, the EUobserver report.

“We’ve had good talks on this and I’m pretty confident that we can get a very satisfactory outcome in our discussions over the next few days,” Mr. Brown said in a joint press conference with the French leader after their meeting in London.

At the heart of the current debate are so-called ‘third country’ measures: If the latest Spanish text is agreed by qualified majority on Tuesday, non-EU domiciled funds will need individual member-state permission before they can market their products to investors in that country.

The UK and US are in favor of a European hedge fund ‘passport’ however, an idea contained in the original legislative proposals put forward by the European Commission last April, but subsequently removed.

Under the a ‘Schengen-type’ concept, permission from one national regulator, for example the Financial Services Authority in London, would be sufficient to give a foreign-domiciled fund access to Europe’s 500 million citizens, without the need to apply in each separate EU capital.

London is home to roughly 70 percent of the EU’s hedge fund and 80 percent of private equity industry. However, a majority of the UK firms are actually domiciled overseas, in particular in the Cayman Islands.

“But what happens if a Cayman fund fails,” said one French diplomat on Friday, indicating his country’s objections to the passport idea. “Its Cayman rules that apply, and Cayman judges.”

Spanish diplomats say the UK has failed to muster a blocking majority for Tuesday’s finance minister discussion, and while their “objective is to find the largest consensus possible,” they would not rule out the possibility of a sealing a deal against UK wishes.

A member state common position – known as a ‘general approach’ in Brussels legalese – is necessary before negotiations can begin with the European Parliament, a co-legislator in the area.

Also high up on the finance minsters’ agenda is the question of Greece. Following fresh austerity measures announced by Athens last week, a commission report is expected to say enough has been done to bring the country’s deficit down by the promised four percent this year, with implementation now the key.

Whether there will be a further announcement on the financial support plan being prepared for Greece, in case Athens runs into debt refinancing difficulties in the coming months, is a topic of much discussion in economic circles.

One senior Greek source told EUobserver this week that “there could be a clear message” that would go beyond the ‘solidarity’ pledge given by EU leaders in February.

Bloomberg was reporting on Friday that ministers would discuss whether a Greek bailout should be funded by EU bonds guaranteed by euro region governments.

Original article at EUobserver.com

Related by the Econotwist:

Geithner Warns E.U.

E.U. To Reform Economic Policy

Beginning Of The End For The European Union?

European Commission Warns Of “Lost Decade”

Wave Of Protests To Hit Troubled E.U. States

E.U. Parliament Spending Out Of Control?

Naked self-interest

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Wild-West Capitalism (Don't Blame The Baby Boomers)

Despite much boasting to the contrary—by Gordon Brown amongst others—-the Anglo-Saxon countries like Britain and The U.S. – provide a poor development model, a model of unregulated wild-west capitalism with the least equal distribution of income and wealth in the OECD, professor George Irvin writes in a new blog post.

“Above all, we must stop playing this silly game of inter-generational finger-pointing.”

George Irvin


These days, inter-generational war seems to be all the rage. “It’s all the fault of the baby boomers” —those born in the decade after the war—is the new conservative rallying cry, professor George Irvin writes.

Not that the cry is new. In France before the last presidential election, politicians pinned our troubled times on the lax moral standards and anti-patriotic slogans of “les soixante huitards”. Before the German elections last year, the Finance

Minister Peer Steinbrueck railed against raising Keynesian-style public borrowing on the grounds that it would saddle the our children and grandchildren with a mountain of debt for which they would never forgive us.

The same theme is being peddled strongly in Britain where conservatives argue that the profligacy of the baby boomers has robbed the current generation of 30 years olds of decent jobs and pensions.

David Willetts, the Conservative Shadow Secretary of State for Universities, has written a book called The Pinch arguing that the baby boomers took the money and ran, leaving the younger generation with nothing.

High-on-the Hog

As the journalist Richard Lander recently put it on CityWire; “the baby boomers lived high on the hog enjoying decades of sex, drugs and a huge increase in higher education all paid for by the taxpayer. They bought massive houses for next to nothing and watched their value soar; they retire on gold-plated index linked final salary pensions and enjoy free travel and other perks. …all this has contributed to a massive increase in corporate and national debt which today’s young generation has to pay for with university fees and higher taxes, particularly as a smaller workforce will be supporting a growing cohort of retirees.”

The Daly Mail columnist, Melanie Phillips, goes even further:

“It is a general source of bewilderment that so many socially destructive, even nihilistic attitudes—the onslaught on the family, the dismantling of national identity, the promotion of ‘victim culture’ and the way punishment has been turned into a dirty word—have been promoted by judges, police officers, civil servants and others at the heart of the establishment. The reason is simply that the baby-boomers are now in control.”

Melanie Phillips can easily be dismissed as a ranting right-winger. What is true, of course, is that the baby boomers’ kids are having a bad time, and things are unlikely to improve much in the next few years.

But is the real argument about inter-generational equity?

The True Conflict

Clearly not. The right peddles inter-generational conflict as a way of diverting attention from the gross inequalities which have plagued Anglo-Saxon countries—and to a lesser extent other advanced economies— in the past 30 years. If boomers in Britain went to university in the 1960’s at taxpayers’ expense, it was because only 4% of the cohort attended university; today’s figure is 40%.

If houses could be bought relatively cheaply, it was in part because local authorities provided “social housing”, the supply of which is now drying up, and mainly because the deregulated banking system helped fuel a massive house-price boom which has now collapsed.

Final salary-linked pensions have virtually disappeared in the UK because Mrs Thatcher handed pensions to the City where fund managers made millions from investing them in stocks and shares.

When the market collapsed, so did “funded pensions”.

Yes of course there is a demographic problem, but most other EU countries have made reasonable provision for topping up their pay-as-you-go schemes.

Wild-West Capitalism

Despite much boasting to the contrary—by Gordon Brown amongst others—-the Anglo-Saxon countries (ie, Britain and the US) provide a poor development model, a model of unregulated wild-west capitalism with the least equal distribution of income and wealth in the OECD.

Much of Britain’s welfare state has been dismantled and privatised. Britain’s over-reliance on its large financial services sector has made it particularly vulnerable to the current recession.

The Unequal Generation

George Irvin is a retired professor of economics and for many years was at ISS in The Hague. He is now honorary Professorial Research Fellow in Development Studies at the University of London, SOAS.

A privileged minority may have lived high-on-the-hog and owned nice houses, but most workers in Britain have experienced 30 years of stagnating real wages. With real wages lagging labour productivity, much of Britain’s increased national income over this same period has been absorbed by the top 10%.

Even today, the median yearly income is £22,000 (€25,000)—half the population lives on less than this, including most pensioners of the boomer generation!

Governments throughout the EU are calling for spending cuts in order to maintain budget balance. In truth, cutting public spending at this stage in the downturn will make things worse, and Europe’s rich—whether individuals or member-states—will ensure that the burden of these cuts falls on those who can least afford lower wages.

To be sure there are exceptions like Finance Minister Christiane Largarde in France. But in truth, spending cutswill lead to higher unemployment, particularly amongst youth.

Oddly, the same people who blame the boomers are those calling most ardently for cuts.

Above all, we must stop playing this silly game of inter-generational finger-pointing. Most boomers have never belonged to the class of rich and privileged.

By George Irvin

Related by the Econotwist:

Socialism For The Rich – Capitalism For The Poor?

E.U. To Reform Economic Policy

Beginning Of The End For The European Union?

European Commission Warns Of “Lost Decade”

Ukraine Dropping E.U. Membership?

Wave Of Protests To Hit Troubled E.U. States

E.U. Parliament Spending Out Of Control?


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Drug Money Saved Banks from Collaps

According to the chief of UN’s office for drugs and crime, Antonio Maria Costa, several banks survived the financial crises in 2008 because of inflow of money from organized crime. About  USD 352 billion was effectivly washed and is now a part of the official financial system, he says.

“In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor,”

Antoino Maria Costa

(Article in Norwegian, link to original article in English)

En rekke banker har overlevd finanskrisen ved hjelp av penger fra internasjonale narkotikakarteller, hevder lederen for FNs kontor for narkotika og kriminalitet.


Ifølge Sjefen for FNs kontor for narkotika og kriminalitet, Antonio Marian Costa, har det internasjonale finansinstitusjoner effektivt hvitvasket 352 milliarder dollar ( 2022 milliarder kroner) i overskudd fra narkohandel under finanskrisen.

– Milliarder av narkorelaterte dollar var det som holdt finanssystemet flytende da krisen herjet som verst, sier Costa til avisen The Observer.
FNs narkosjef sier han har bevis for at utbytte fra organisert kriminalitet var den eneste “likvide investeringskapital” tilgjengelig for noen av bankene som var på randen av kollaps i fjor.

Resultatet er at det meste av 352 milliarder i overskudd fra narkotikahandel ble absorbert av det økonomiske systemet i fjor og dermed effektivt hvitvasket.

The Observer skriver at dette reiser spørsmål om den kriminelle virksomhetens innflytelse på økonomien i krisetider.
Det vil også føre til ytterligere undersøkelser av banksektoren ettersom verdens ledere, inkludert Barack Obama og Gordon Brown, har foreslått nye forskrifter for det internasjonale pengefondet, IMF.

Antoinio Maria Costa forteller fra sitt kontor i Wien at han først ble oppmerksom på at illegale penger ble sluset inn i finanssystemet for cirka 18 måneder siden av etterretningstjenester og advokater.

Antonio Maria Costa, UN Official.

“In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor.”

Noen av bevisene indikerer at penger fra kriminelle bander ble brukt til å redde enkelte banker fra kollaps da intebankmarkedet tørket opp, ifølge Costa.

– Interbanklån ble finansiert med penger som stammet fra narkotikahandel og andre ulovlige aktiviteter. Det er tegn på at noen banker ble reddet på den måten, sier han.

Costa vil ikke identifisere land eller banker som kan har mottatt narkopenger, og sier det ville være upassende fordi hans kontor er ment å løse problemet, ikke fordele skyld. Han legger til at pengene er nå en del av den offisielle systemet.
– På det aktuelle tidspuktet finanssystem i utgangspunktet handlingslammet på grunn av bankenes uvilje mot å låne penger til hverandre. Den gradvise likvidasjonen i systemet og den progressiv forbedringen av enkelte bankers aksjeverdi har medført at problemet med ulovlige penger har blitt langt mindre alvorlig enn det var, påpeker FN-lederen.
IMF anslår at store amerikanske og europeiske banker tapt mer enn 1000 milliarder dollar på “råtne” verdipapirer fra januar 2007 til september 2009, og mer enn 200 långivere har gått konkurs.

Mange store institusjoner er enten blitt kjøpt opp under press, eller overtatt av offentlig myndigheter.

FN anslå at organisert kriminalitet hadde en fortjeneste på 352 milliarder dollar i 2008 – det aller meste fra narkotikahandel. De vanligvis holdt store mengder kontanter eller flyttet dem til såkalte “offshore banking systems” for å skjule pengene fra myndighetene.

Det antas at bevis for at narkopengene har strømmet inn i bankene kom fra tjenestemenn i Storbritannia, Sveits, Italia og USA, skriver The Observer.
Britiske bankfolk ber Costa legge frem bevisene for sine påstander.

En talsmann for The British Bankers’ Association sier at de ikke har deltatt i noen samtaler som støtter en teori av denne typen.

(Norsk Google-oversettelse av artikkelen i The Observer )

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