Bankers: Masters of your universe.

The banks own you, so who owns the banks?

Australian banks make “super profits” primarily from the labours of the Australian people.  Banks are in a privileged position.  They can create credit, with a single stroke of the pen, that facilitates business to create wealth.  They provide an essential service, true.  A service which is so essential that the power they can wield through it can even usurp that of governments.  However, with banks this power lies in the hands of a non-transparent, unelected few.  In addition, in a striving egalitarian society, should the bankers be blatantly so much more wealthy than the wealth producers themselves?  It is we, their clients, that convert their paper credit into real value.  In addition, out of interest, where do the banks’ “super profits” go?

Who owns the “4 pillars” of Australian banking?

The British and Americans do.

Well, let’s qualify that, the British (under the guise of HSBC Nominees and National Nominees) and the Americans (under J P Morgan Nominees, National Nominees and Citicorp Nominees) control the banks.  It’s true that not only rich, private individuals but also public companies and Hedge Funds from all over the world can invest in these financial vehicles.   However, they are managed and controlled primarily by the New and Old World Anglo, individuals.

Banks are vital and should be run efficiently, which means as a corporation, not by governmental bureaucrats.  They are integral to modern society and provide the credit required by business to invest in opportunity and enable wealth creation.  It was goldsmith families like the Medicis of Italy that were the progenitors of modern, Western-style banking.  The huge demand for credit during European, imperial expansion through maritime trade lead us away from the constraints of a gold based currency to a fiat currency based on the fractional reserve banking model.  In a nutshell, this means that small amounts of deposits can be leveraged to large amounts of credit (ie money).  Fiat money is money that has value only because of government regulation or law, it is not based on an underlying commodity, such as gold.  As long as everybody doesn’t ask for their deposits at once (ie a run on the bank), then the lines of credit can be deemed as a legitimate, trustworthy currency.

The Australian financial industry began to deregulate in 1983, following the Campbell Inquiry, under Prime Minister Bob Hawke.  Previously, foreign banks were effectively barred from Australia and local banks were divided into two distinct categories; “savings” and “trading” banks.  “Savings” banks paid virtually no interest to their depositors and their lending activities were restricted to providing mortgages. “Trading” banks, however, were essentially merchant banks, which did not provide services to the general public.

Now, the deregulated, Australian, banking sector is dominated by four major banks: Australia and New Zealand Banking Group, Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corporation.  These are the “4 pillars” that are the primary providers of banking services in Australia.   As any sturdy pillar should be, they are solid and immovable and thus can not be merged.  There were originally 6 pillars (with AMP and National Mutual), but in 1997 Prime Minister John Howard reduced it to just four.  Many Game Theory proponents believe that four was the preferred number that provided adequate competition in Australia’s relatively small market.   Many consumer groups would beg to differ, however.  The Australian banks are extremely profitable and some claim these “super profits”, resulting from lack of competition, should be at least passed back more to those who create them, the People themselves.

Banks have great power, they create money out of thin air.  Strange perhaps, but true.  Check out Paul Grignon’s excellent animation for a fuller picture, Money as Debt (47min).

Essentially, new money enters the economy through the indebtedness of borrowers.  Credit is created and leveraged from a small (say 10%) reserve and a loan agreement puts the bank’s counterparty in debt to the bank, which does not actually hold that value of the loan in tangible assets.  This one-sided contract, which some say is unconstitutional in America,  generates very little risk for the bank and the onus is all on the borrower to give value to the new money.  The bank has the right to recall the loan and has a 10% buffer on collateral depreciation.  The borrower, however, has to pay the loan back at interest generated through his/hers hard labour.  The banks are onto a great gig here.  They are in a very privileged and powerful position.  They can decide when, and for whom, to create money and their risks are relatively low (assuming a reasonable level of governance on their part – GFC anyone?).  It begs the question then, should the fruits of this fractional reserve banking system be enjoyed at least partly by the stakeholders?  Is the partial (36%) nationalisation of Citigroup, as part of the GFC governmental bailout,  a step in the right socialist direction?  The borrowers service that debt and turn a paper fabrication into something of value.  Shouldn’t they benefit from this money-making scheme?  Should the “4 pillars” be making “super profits” (i.e. unreasonably large profits) off the backs of the Australian people and the stifling mortgages they service?  Where do these profits go?  If not the Australian people, who owns the Australian banks and is thus the real winners from the instigation of the “free trade” and deregulation of Australian, financial markets in 1983?

The top FOUR shareholders in the Australian Banks:

Looking at this chart, it becomes apparent, one thing is for sure, Australian Banks are not majority owned by Australians.  All “4 pillars” are owned by 4 foreign-controlled Nominees trusts. It’s very hard to unravel the web of constantly changing and incestuous, inter-ownership between the leading, global financial institutions.  There is often an air of secrecy in the private institutions, and I don’t blame them, information is power.  A prime example of elusiveness is the infamous Cede and Co a US$6.1 trillion (and rising), anonymous fund for trustees such as Time Warner, CBS, Bankers Trust New York, Hewlett Packard.  The list of members is a closely guarded secret.  Consequently, it is apparent that the Australian banks are largely managed by foreign nominee companies.  The faces behind their parent banks can be somewhat enigmatic, though do include, among others, the usual suspects in the global corporatocracy, the Rotchschilds and Rockefellers.  The latter being the family behind Citibank (and Chase Manhattan as it happens).

Surely foreign investment is good for the local economy?

The relative merits, or demerits, that was Australian banking deregulation are debateable indeed.  In many ways, it comes down to the clichéd, fundamental, ideological debate between state ownership and private ownership.  I, personally, do believe in the principle of the “free enterprise” model.  Essentially, the logic is simple in my favour for this: anyone who is investing their own money for themselves (privately) will always do it more diligently than some investing somebody elses money in favour of somebody else again (publicly).  It’s human nature.  But, deregulation does come at a cost.  With market deregulation, came massive foreign buy ups of Australian assets.  It’s interesting to note that it’s the same names appearing again and again when it comes to Australian asset ownership (not just the “4 pillars”).  J P Morgan, HSBC, National Nominees and Citicorp are not only the major shareholders in the banks, but also in many other significant, powerful institutions such as Qantas, Fairfax Media, and BHP Billiton.

The major shareholders of Qantas, Fairfax Media, and BHP Billiton:

Does it matter that the J P Morgans, HSBCs, National Nominees and Citicorps own controlling shares in so many assets?  Is it just zenophobia, or is there a foundation for this “fear”?  It’s true, these assets are the owned by, not only, rich individuals, but also, the People.  That’s where much of our insurance, health and pension funds lie.  The point is, however, that the super-rich, few, private individuals control these companies.  They run them, and wield their combined influence, largely without any gainsay from the rest of the silent investors.  Let’s hope they are altruistic individuals with the best interests of both the shareholders and community at heart?  Because if not, their accountability is often very low, and we’re not often going to here about what’s going on behind closed doors.

“Let me issue and control a Nation’s money and I care not who makes its laws”. Amschel Rothschild, 1838.

Thes are bold words indeed, but when you have the power to fund or prevent wars such as the decisive Battle of Waterloo, then perhaps there really was some sting in the banker’s tail.

The owners and top executives of the largest companies make decisions every day that affect the lives of millions of Australians.  Capitalists decide what to produce, how to produce it, where and when to produce it and whether to continue to produce it.  They close factories, for instance, and throw thousands of workers out of work, replacing them with new technology to maximise shareholder value.  They often knowingly use industrial processes that unnecessarily pollute the environment and poison workers (Lihir Gold in Papua New Guinea being a prime example).  The only criterion for such decisions is whether it boosts profits.  The majority have little power to make this controlling minority accountable for their actions.  Lack of public accountability and an easy disregard to personal morality is magnified with foreign ownership.  The sense of responsibility to be ethical in the treatment of locals and their environment is reduced if you don’t belong to the community.  It’s easy to dump on people you don’t know or care about.

Who cares if a few foreign institutions have a large control over our local money supply?  This is how the global economy works.  Institutions diversify their investment portfolios to minimise and share the risk, often by investing abroad.  Indeed, purest, economic theorists would claim this is a bed of roses.  However, reality is different.  Policy control by our major corporations, in many instances, can usurp sovereign power.  In addition, when a “rival” sovereign power owns the foreign investment fund, then you have a finger in your pie you probably would prefer not to have.  Economic drivers, primarily to maximise the profits of shareholders, can play second fiddle to geo-political ones; inter-governmental diplomacy.  If we sell off the profitable Australian corporations including our public assets, we are selling off the future, generated income for a one-off bonus that soon dissipates.  Ah, “but all companies pay corporate tax locally”, I hear you cry.  Well, in theory, yes.  However, in reality, foreign owned companies can be incentivised to pay minimal taxes locally and declare profits offshore.  Indeed, companies are very proficient and, pretty much as standard, hide profits wherever they want and within whichever jurisdiction they want.  If the playing field is even and our companies do the same on the away turf, which they have been known to do, as the visitors do on ours, then all’s fair, surely.  That is the game of nations, and their associated corporations, in international, “free trade”-based finance.  But, it hardly seems incentivised to protect the interests of the local, Joe Shmoe workers on the ground?

Companies are not transparent in their operation or particularly accountable to public scrutiny.  They are, in many ways, largely faceless operations.  What face we do see is a tweaked, enhanced face manipulated through sleek, marketing hands.  Their leaders are not voted in, or can be voted out, by the public.  When was the last time Rockefeller was voted off the board of his own company?  However, this may be deemed a good thing.  A benevolent dictator could “get the trains running on time” unlike many a relatively weak, democratic leader.  We of the Nintendo Generation are spammed by information overload.  We are jack of all trades, master of none.   Quite often, we are too busy to really open our eyes beyond the superficial tid bits thrown at us by the media (also owned by the these very same corporations) to make a truly informed decision.  For instance, the catastrophic, man-made, Global Warming farce (see my movie on it here) we’ve been spammed with for 20 years.  Up until recently, most of the public were buying into this spiel because the mass media told us to.  The world is extremely complex and we can only learn a little about a lot.  So, we have to take advice from the experts, experts who we generally trust.  Thus, the “bankers”, who are specialists in global economics and politics, should be the global policy makers?  In some ways, this makes sense.  However, this is can be a dangerous state of play.  The Rockefellers and Rothschilds and, the other leading, global families, make governments.  They largely provide the electoral, campaign funds, they control the media and their companies provide the jobs.  Thus, their lobbying power is considerable.  Where did Obama come from?  He came out of nowhere, never properly administered a state and had a meteoric rise to the Presidency from complete obscurity.  It’s a fairy tale ascendancy to power.   Perhaps, just a little bit too good to be true to be by pure chance.  It’s very likely that he was sponsored and chosen by the “money men”, the global corporatocracists, to be there.  They made him, thus they own him.  President Bush and his fairy tale, rags to riches tale is even more transparent.  He never was in rags.  His oil-rich family is one of the leading, “money men” families that really does pull the strings in the puppet show we live in.  Can we trust these few to have the best intentions for us many?  I hope so.  We are in their hands, as we’ve always been.  It was once kings and princes that had authoritarian rule, now the princes are bankers.  The former, at least, were visible figures.  Admittedly, at least in this day and age, theoretically, any person can rise from rags to riches – it’s the American Dream.  You no longer need a title by your name to vote ,and loans for start-up companies are relatively abundant.  In addition, perhaps, their Big Brother- style control has provided global, stability and prosperity?  Conversely, why then have Iraq, Afghanistan, and Libya, among others, blown up into civil chaos?  Well, perhaps without globalisation, it would the situation have been worse, much worse?  It’s hard to tell which is true.  Perhaps centralised power minimises chaos and helps keep the peace in the grand scheme of things?  Tough call.  Alternatively, whilst minor conflicts could be beneficial for parasitic corporations, since they open up markets, big conflicts could be bad for global trade and thus business.

Conclusion

So, back to the original paradigm: “The Banks own you (as we are indebted to them through our mortgages), so who owns the banks?”  Well, the Australian banks are owned by Nominees’ funds that are largely controlled by British and American interests.  These funds contain wealth from massively wealthy, international, private individuals and companies.  But also the wealth of local Australians, for instance through our pension funds.  Therefore, with this in mind, many would say the system is fair.  We locals do have a stake in the “super profits” that the banks generate.  So, what goes around does come around.  However, how big is that stake really?  Where does the corporate tax go, for instance, locally or internationally?  How much of the profit goes overseas instead of staying locally as it use to until 1983?  Why shouldn’t we keep all the profit, not just some of it.  Conversely, you could say that this is just a fair, 2-way, trade system where Australian banks also profit overseas, which they do.  You could also say that suggesting we now experience a net export of Australian profit due to foreign ownership is misleading.  The whole story should not that the foreign investment and foreign credit that swept into Australia because of deregulation lead to a vibrant expansion of the economy.  This means that the local slice of pie may be smaller than before, but the pie is now bigger, and there is a net gain in local wealth?

Should the banks be allowed to own us? Don’t get me wrong, I’m not against economic globalisation per se.  I believe it has enabled Man to raise our standard of living to truly impressive heights, often against the odds of impending chaos and self-destruction.  However, has it come to the time when those who really pull the strings, the “money men”, divest some of that power to the rest of us?  Should we still be treated like the playthings of the rich and powerful?  For instance, the mass media (which happens to be owned by the “money men”) has been a driving force, for over 20 years, to convincing both our politicians and us of impending, catastrophic, man-made Global Warming.  Why are they doing this when the science is highly questionable.  It’s all about money, and very little about science.  They want to foist a European Union style Carbon Tax on us.  Should we have to fork out even more in tax than we already do, for no reasonable just cause?  They already have a huge slice of the pie and power base.  I don’t actually begrudge them that much.  Somebody has to be at the top.  That is the ultimate carrot provided by the “free enterprise” system.  Someone gets to be the winner.  But, there are limits to everything.  When they play their hand a little too far and their greed extends beyond reasonable bounds should we have to put up with that?  Lies can be little, white ones when the ends truly justify the means.  But it seems that they’re taking us productive masses for too much of a ride these days?  The herd no longer needs the “benevolent” shepherd to husband it, the herd has come of age and demands a Fair Deal.

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6 Responses to Bankers: Masters of your universe.

  1. SamJ007 says:

    Check this excellent video:

    It’s all “Just a little bit of history repeating” (thanks Propellerheads).

    The fight to “Make Mine Freedom (1948)” is still the same today as it was then and, probably, will always be, in the future. Without a good, olde fight for our rights life would be pretty boring… hmm, but boring is lovely, I might go for that…?

    Capitalism is great. The Occupy movement are confusing our current state of government, which is not true capitalism, but interventionism, with true meritocratic Capitalism (as shown in the vid).

    Freedoms are being eroded currently, but, all-in-all, life has never been better in human history. We’ll get there.

  2. FrankT says:

    ‘owned’ is a little strong….major shareholder yes but not owned!

  3. LeRoy says:

    I’m with FrankT on this one – the idea all the banks are controlled by a tiny cartel is a bridge too far for me.

    Banks are required to hold asset backing – where do they invest on a diversified basis if not including other banks? Government bonds are certainly causing a lot of grief – and when Western sovereigns are risky, there isn’t much else that is safe. Banks are something they understand.

  4. Kay says:

    I agree with LeRoy’s observation. But then I have a dilemma (or two):

    Contemporary history of Australia and other such countries is not too dissimilar to what happens in the movie ‘Avatar’.

    A foreign power arrives, gets its hands on the ‘Unobtainium’ of the land (and does what is necessary to get it). This power does not pay the people their fair share (open to debate itself! What is a fair share after all?) but what little is given back to the people is still big enough to allow them to build schools and hospitals and have a ‘booming economy’ that they would otherwise not have had.

    So has this foreign power done the right thing? Did they have the right to obtain the Unobtainium that was not in their land to begin with? If they got their hands on it because they were able to pay off a local ruler who was acting in his own interest and not the interest of all the people, then what?

    How would we judge if our fathers were beneficiaries from the above enterprise (employed and paid by the power in charge)?

    How would we judge if our fathers were the target of what is perceived to be exploitation?

    Is it even exploitation? These people are better off aren’t they? Are they better off? Do we have the right to judge an economic boom to mean being better off? What about loss of values, sovereignty, etc.?

  5. Jimbo says:

    FrankT and LeRoy have a fair comment on “ownership”, but there is a flip side…

    Like many peeps, I lost 30% of super money from the GFC and never recovered it. Where did it go?

    My super was “real” money, it was contributions from work and I, not bubble elevated value. It was a 30% extra tax on that portion of my explicit, income tax.

    The GFC was quite plausibly a manufactured crisis. The deregulation of Fannae Mae to 2% capital reserves was not negligent. Impossible. Global, inter-banking, investment accounts are never allowed beyond a loss of 10% capital reserve without a margin call. How can super-high risk, sub-prime loans be allowed a reserve of 2%? That is not “negligence”, it was “manufactured”.

    See
    a)
    Mr. Raines responded “our assets are so riskless, we could have a capital ratio of under 2%.” His claim was that Fannie’s subprime mortgage portfolio involved less risk than the typical private bank’s loan portfolio.”

    b)
    some facts about fannie mae and freddie mac

    Where did the GFC money go? Some was a false economy through the post DOT.com bubble, reinflationary policy, most was real value.

    If you are a massive financial entity such as Fidelity Fund (FMR) (controlled by a few families – Check it), which owns and controls HSBC and has a majority finger in many pies (inc. all of OZs banks), then you control more than Capitalism allows. There is no true meritocratic competition in the market. There is no true “Capitalism”. The financial cartels control all the major institutions. Even if most of the actual money in their Funds is our pensions. If you control and manage all the “competition”, it’s a farcical system. The “controllers” can quite easily: transfer funds from one entity to another, thus devaluing the source, then buy back the original cheaply – ta da, wealth creation?

    It’s all “true”, it’s in Russia’s most “loved” newspaper, Pravda.

    To me “ownership” is not about the total number of shares, but the controlling share. The Anglo-American, old families control a massive swathe of institutions Even though our pensions are invested in them as well, all the power of those institutions lays in the hands of the largest minority shareholder eg HSBC.

    True, this sort of idea is pretty leftfield and needs tons of research (a lifetime) to back it. However, the pieces of the puzzle that cross my way haven’t discounted it yet,

    Cheers,
    Jimbo

  6. tmuthiah says:

    HSBC Holdings plc

    Founded Hong Kong (1865)
    Founder Thomas Sutherland
    Headquarters London, England, UK
    Key people Stephen Green, Group Chairman
    Michael Geoghegan, Group Chief Executive
    Industry Finance and insurance
    Products Financial services

    HSBC Holdings was established in 1991 to become the parent company to The Hongkong and Shanghai Banking Corporation Limited in preparation for its purchase of the Midland Bank in Britain and in change of domicile for the transfer of sovereignty of Hong Kong. The former was established virtually simultaneously in Hong Kong and Shanghai in 1865 to finance the growing trade between China and Europe by Scotsman Thomas Sutherland, who wanted a bank operating on “sound Scottish banking principles”. Its heritage in East Asia means it is a British institution with an extensive international pedigree.

    It is also by far the largest bank in the United Kingdom and in Hong Kong, prints most of Hong Kong’s local currency in its own name, is a lender of last resort in many parts of the world] and since the end of 2005 has been the largest banking group in the world by Tier 1 capital By acquisitions and organic expansion HSBC is currently pursuing a strategy of rapid growth in booming China.[
    Source(s):
    Wikipedia

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