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Mere fleas on the wolf that is capitalism

Sunday 12 August 2012

by Bill Benfield

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It's getting to be hard times for capitalism's erstwhile spoilt-rotten banking fraternity these days.

Not that capitalist governments are trying to abolish the financial graft that passes for a market economy in these debauched times. Far from it.

But times are tough in the world of profits and margins and when thieves fall out, we all see the results.

Although it would have been gratifying to see the money men of the markets torpedoed by a huge worldwide socialist movement, let's take dissent in the boss-class ranks as a cheerful second best.

The Standard Chartered Bank has been the latest edifice of capitalism to fill everyone - on our side of the fence at least - with pure vindictive glee.

Shares in Standard Chartered PLC dropped sharply last Tuesday, down nearly 25 per cent at one point in early trading on the London Stock Exchange.

Why? Because the New York state department of financial services alleged on Monday that Standard Chartered had schemed with the US's bete noir, the Iranian government, to launder $250 billion (£160bn) from 2001 to 2007.

The regulator ordered Standard Chartered representatives to appear in New York City on August 15 "to explain these apparent violations of law" and to demonstrate why its licence to operate in the state "should not be revoked."

The agency alleged that Standard Chartered conspired with Iranian clients to route nearly 60,000 different US-dollar payments through Standard Chartered's New York branch "after first stripping information from wire transfer messages used to identify sanctioned countries, individuals and entities."

The regulators called the bank a rogue institution and quoted one of its executives as saying: "You fucking Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians."

And so it goes on. The order accuses the bank of falsifying business records, obstructing governmental administration, failing to report misconduct to the state quickly, evading federal sanctions and other illegal acts.

The bank, naturally, denies almost everything - as it would, being an insititution which up until this week boasted of being "boring."

Now, we hold no brief for US sanctions on Iran. They are a political manoeuvre by the US in its geopolitical chess-game to control the world.

But what's happening now is, or should be, a wake-up call to those innocents who fondly believe that capitalism and democracy can exist side by side in the same society. They can't.

The battle between the bourgeois-democratic US government and the money men of big capital should prove that adequately enough. In this relatively small battle it's likely that the US regulators will win.

But it is just a small battle, despite the eye-wateringly huge sums involved.

And the banks have already proved that they are so tightly enmeshed with the capitalist infrastructure that national governments won't let them fail because if the banks fail so, ultimately, does capitalism.

But that doesn't mean that the internecine struggle between the various anarchic and mutually hostile elements of capitalism for dominance is going to be allowed to drift.

After all, capitalists' big weakness is that they don't even like each other. Their very philosophy demands that they fight like cats in a sack.

Free-market capitalism is essentially a war of each against the other as well as a fight against the poorest and most numerous class - us - so any advantage gained by a fellow capitalist is fair game for trashing, unless you can get a share of it.

Another little tale emerging this month gives us a hint of just how this all works.

For many years now, the big entrepreneurs and any cowboy trader who had the imagination rushed off to avoid tax wherever they could.

And that meant our old mates the tax havens. But capitalist governments don't like you evading their tax when they need it to give to their mates the bankers, although you can avoid all you like if it's destined for supporting the poor, the weak and the sick.

So now, when the big banks need the big bucks or they'll keel over and take the good ship capitalism with them, those tax-haven sunseekers are ceasing to be the flavour of the month in the corridors of power.

Even the Cayman Islands is - or at least was - turning on its head and seeking a bit of payback from all those tax exiles lining up to beat the Germans to the sun loungers in the mornings.

And boy, did it shock those expats.

Caymans Premier William Mc-Keeva Bush was proposing what amounts to the territory's first ever income tax.

And it would fall only on expatriate workers - at a minimal 10 per cent.

But it provoked absolute outrage in the pages of the Telegraph. Well, it would, wouldn't it?

So much so that good old Premier Bush dropped it like a hot potato last week.And as someone once said: "Well, he would, wouldn't he?"

Because the Cayman Islands has democracy the way the rest of us have piles - a right pain in the bum when it plays up.

It's a wonderful democracy in the Caymans. There's nothing else quite like it. The territory has 56,000 people on a string of little islands.

But at last count in March 2011 it had 91,712 companies registered. It had 235 banks (not branches), 758 insurance companies and assets for the registered companies totalling $1.607 trillion (£1.25tn).

So you can probably see where the power lies there. It ain't in the democratic mandate.

Anthony Travers, the chairman of the Cayman Islands Stock Exchange, described the now defunct tax plan as "probably the single greatest existential threat to the Cayman Islands in over 200 years."

Which is about as far over the top as you can imagine. In fact it's verging on the hysterically nutty, but what would you expect from a man who notoriously described socialists who wanted expats to pay their taxes as the "Tax Taliban."

For now the forces of the exile army of profiteers and tax duckers - a collective noun which encompasses all those who don't want to pay their taxes whether by avoidance or evasion - has won the skirmish.

But the day of the island tax-dodgers is nearly over because the big boys want their money and people such as Mr Travers will be simply swept to the wayside by their own.

For the likes of tax duckers, however, there will always be another scam. They are, after all just the fleas and parasites on the back of the capitalist wolf.

That's why it's the whole system of capitalism, not just its more visible pests, that is the target for us of the Tax Taliban.