Will Sunak’s Big Bang Bust Britain?

Will Sunak’s Big Bang Bust Britain?

Rishi Sunak, the UK’s incumbent Prime Minister has set out his ambition to emulate Thatcher’s 1986 Big Bang of financial deregulation. However, looking at the lay of the land in 2022, is sweeping deregulation the answer to Britons’ financial woes?

I like to stay out of day-to-day politics, with its bland statements which never address the real issue at hand, inflammatory language designed to evoke emotions over reason and all the while ensuring that the puppet masters are able to work away behind the scenes, calcifying their wealth and power. Yet I was drawn in recently to the economics presented by the new Prime Minister of Britain. I liken the position more to a president, or dictator, as much of UK governance is done by executive order rather than parliamentary deliberation.

In fact there is probably a question of legitimacy at the heart of this issue which provoked my ire. One basic precept of British politics is that of a mandate; the right to rule. A government, a leader and a legislature all derive their right to rule from their mandate. This is made up of a few sources of power and a couple of processes. One source of power is the monarchy, which is historically said to divine its power directly from God. Whilst we don’t know if that phone line is still connected – we do know that British monarchs are tied in with vicious dictators in Saudi Arabia, Azerbaijan as well as influential wealthy aristocrats and so wield some measure of influence in the world. Yet the monarch is viewed as more vestigial in British politics. The late queen Elizabeth spent most of her time rubber stamping legislation, to interfere would draw her huge wealth and power into controversial territory. Thus MPs and their supporters like to present the greatest source of power as ‘from the people’. The temperature of this power is now taken once every 5 years at a general election, and sometimes in-between at by-elections. These elections allow someone to claim jurisdiction over a region of the UK, a constituency, and to represent those constituents’ views in parliament. This is the foundation of representative democracy. Yet I posit that the level of abstraction that is taken to claim such authority is too large of a chasm to be effective.

I take the example of Alexander De Pfeffel (Boris) Johnson, the blue blooded former PM, who was elected as representative of Uxbridge and Ruislip. Having failed to be elected in Wales in 2001, he was parachuted to this more favourable territory whereby in 2019 he garnered about 25,000 votes. Yet he only beat out his competitor’s 18,000 votes by a small margin and gained 52% of the votes cast in the area, with two thirds of the people turning out. Thus he was allowed to become MP and then by selection from the ruling party, he was allowed to become Prime Minister, and I prefer the term, dictator, of the UK. From there he can travel the world signing the UK up to treaties, promising billions of pounds to companies and countries, striking deals with ne’er-do-wells and pushing through wide reaching national laws and lockdowns by executive order without the assent of 99.97% of the British people. Perhaps this is the rot at the core of the system which rankles me. Rishi Sunak, in his first speech after inheriting the bully pulpit, made sure to address this issue of mandate:

“And I know he [Johnson] would agree that the mandate my party earned in 2019 is not the sole property of any one individual, it is a mandate that belongs to and unites all of us.”¹

Here we can see our dear leader Sunak claiming that since some people voted for his team in 2019, he has the authority to rule in the name of the newly crowned King. No need to discuss what occurred in those 3 years. No need to hold another election, or have anybody question his authority, the mandate has been passed round the Consrvative Party like a small boy is passed round King Charles’ uncle, Lord Mountbatten’s residences.²

Yet I’m not here just for stuffy debates on the UK’s constitution, or to make cheap jibes about the Royal family’s penchant for paedophilia. There are bigger issues going on with real ramifications for the unsuspecting people of Britain – and these trends are reflected globally. Rishi Sunak’s worth is at least in the hundreds of millions. Hilariously, the UK state media was falling over itself to inform us that he wasn’t a billionaire, just a mere £730 million net worth.³ It’s his father in law that’s a multi billionaire and we shouldn’t worry about his non-domiciled wife who paid no tax in the UK for decades. Yet more pressing of an issue than raw wealth is the links and influences behind it. Before he worked for the “hard working families of Britain” Sunak worked between 2001-2004 for Goldman Sachs – a fact which he chooses to not put on his Linkedin profile.⁴ Perhaps it is because of the accusation I am about to level. That his positioning as Prime Minister is a banker takeover of the UK.

Now this is not the first banker takeover of the UK. In fact much of Britain’s global stature is borne of financialisation. We could debate if it was first through the East India Company and the establishment of the British Empire through mercantilism and pillage, or domination of global financial systems through the City of London. Yet with his new ‘Financial Services and Markets Bill’¹⁴ it is Thatcher’s Big Bang of deregulation in the 1980s that dear leader Sunak wishes to emulate, I will begin by briefly describing it.

Thatcher was a singular leader in British history, her ideological drive and use of executive power marked a change from the more deliberative methods of politics used before. She pushed hard for example for free-market ideas, at all costs. She incurred rolling blackouts and mass strikes when she destroyed the coal and steel industries in the UK through deregulation. But she would not be stopped. 1983 saw an agreement between Thatcher and the London Stock Exchange to settle an anti-trust case brought by the previous government. The anti-trust case alleged that the London Stock Exchange was not serving investors or obeying laws property, it was abusing its position as market maker to serve its own profits. Investigations had shown that the rampant old-boys networks in the City of London lead to an occluded miasma of financial operations and allowed a great deal of profiteering. The Big Bang was to break up sections of the Exchange, such as market makers and buyers, so they weren’t operating out of the same office. Ostensibly this seemed like a good idea; it was a reflection of the Glass-Stegall act in the USA which sought to separate and divide retail banking from investment and thereby protect regular savers from the vagaries of speculative investment. This dichotomy is known as the ‘moral hazard’ as bankers can risk someone else’s money without any risk to their own wealth, and if the trade goes bad, the unsuspecting saver is hit with the bill. Yet Thatcher was not working for the benefit of the little guy. The package of reforms included privatising the London Stock Exchange, which would allow foreign investors to take up shares in the exchange. It also included wide ranging deregulation of stock trading as well as a move to electronic screen based trading. All of these policies taken together created a huge boom in the UK’s financial sector, it became the center for stock trading in the world and created tumurous sky-scrapers such as Canary Wharf in the heart of London. It unleashed a new regime of free market trading onto the world. Yet looking back from the 2008/9 financial crisis, even her own chancellor Nigel Lawson would come to regret the scope of deregulation:

“I didn’t give it a great deal of thought at that time. I’d taken for granted that separation, as by custom and practice we’d had that all those years (we’d always had it), but it [the financial crisis] was a completely unforeseen consequence of the stock exchange reforms”⁵

The first Big Bang opened up UK markets to global speculation and only made the next cyclical collapse larger. Furthermore, despite trying to combat the homogenisation of banking where too much power was concentrated in one institution, the open market solution lead to the agglomeration of international financial institutions like Goldman Sachs and Lehman Brothers who became ‘too big to fail’. They had created a monster too large to kill, or let die. Rather than that, central banks decided to bail-out these failing behemoths through money printing and quantitative easing.

The Big Bang reforms included wide ranging changes to regulation in the UK. It helped create the Financial Conduct Authority, where we run into Andrew Bailey. He also works for the Bank of England, and is heralded for the aforementioned quantitative easing packages. He worked in the department charged with printing the way out of a debt hole. A policy which for a decade or so seemed successful, though some critics held the line that this was only patching up the cracks and not addressing the systemic problem at the core. Yet Bailey’s tenure at the FCA was not so lauded. He was implicated in the collapse of London Capital & Finance Investment in 2019. The Investment group offered lucrative 8% returns on products they sold, taking in over £200 million of investors’ money. Yet behind the scenes it was an unregulated mess, rather than taking a basket of low-risk investments they saw fit to pump money into a dodgy Faroese oil venture and splash out on a corporate helicopter. The company folded at a total loss after 3 years. As head of the Financial Conduct Authority, Andrew Bailey was named as one of the people at fault in a government investigation.⁶ He is also famous, rather infamous, for falling asleep during a hearing over the speculative use of pension funds which had lead to many pensions being wiped.⁷

Sleepy Bailey woke up one morning in early March 2020, a pivotal month in global politics, to find that he had been inculcated as head of the Bank of England. Days later our dear leader Johnson would declare universal lockdown, strip the public of rights to protest, to walk the streets and to meet friends and family. Thus Bailey was handed the poisoned chalice of an economy in flux. 2019 had seen a year of zero growth. Central banks had been keeping interest rates at near zero to prevent the breakout of rampant inflation, which has since cracked its shackles and broken free. Bailey and the Banks’ tactic through the controlled demolition of the economy was a photocopy of the 2008/9 policy: extend and pretend. They would continue to print money, they would submit to any spending regime proposed by the executive government and they would pretend they were in control of a veering ship. Yet when the Bank of England prints up to the tune of a trillion pounds in two years, and hands it to big corporations and banks decided by politicians, there are problems. One is that the currency is diluted: the money in your pocket is worth less when the supply is increased. But they don’t care much about the paper or plastic money in your pocket, that being only a fraction of the fully diluted supply, which since the 1980s can flow in floods of bits and bytes through computers. A central bank can simply declare a bond buyback and pay off all of the junk they issued as valid bonds years ago. I would argue that this pernicious form of stealth tax is the cause of the so-called cost of living crisis. Andrew Bailey would disagree.

He, in a recent Mansion House speech, laid the blame anywhere but at his doorstep.⁸ He first mentioned the lockdowns and the “precipitous downturn in economic activity”, adding that the economy “could have been compromised by a premature withdrawal of stimulus”; that being a counterfactual statement as we don’t have a control economy with which to compare. But a post-hoc rationalisation is what financial criminals thrive on. So we have the lockdowns, which were, I re-iterate, a controlled demolition of economies worldwide, which saw billionaires make billions, whilst the poorest bore the harms. But he goes on to start banging upon the favourite button of politicians today: ‘but Russia’.

“The Russian shock is now the largest contributor to UK inflation by some way.”

Yet I think this warrants addressing. Bailey is not alone in bashing Russia, it seems everywhere you turn you will see ill-informed people blaming ‘Putin’s war of aggression’ for the economic misdemeanours worldwide. Sunak’s opening address even echoes Bailey, “Covid lingers. Putin’s war in Ukraine has destabilised energy markets and supply chains the world over.”⁹ It’s almost like they are on the same team, even though the Bank of England was made independent by our dear leader Tony Blair in 1997. That’s beside the point as we know politicians, banks and organised criminals are all in bed together. But does Russia really warrant the blame for global supply issues, and the rise in food and energy prices. I’m not so sure.

‘Global Justice’ are a group which has been working on food speculation for a decade. They have campaigned against the financialisation of the food supply. It is a nefarious process which corrupts the global food system. I’ll put it simply thusly: Food producers wish to get a loan to cover the cost of growing a crop, this is then sold as a ‘future contract’ to be paid back when the food is grown, processed and sold. All good. Yet when vulture capitalists get involved it goes awry, they don’t care whether the wheat is grown or not, they will trade these contracts, package them up with other contracts and even bet on them failing. When a crop fails somewhere in the world, there is a white collar criminal turning a profit on that credit default. This malfeasance in the food sector means that even though enough food in the world is grown each year to feed the world, much of it is squandered such that millions will starve. They give us this stark fact to contrast the blame Russia narrative:

“Corporate titans in the food and energy sectors have made nearly half a trillion dollars  in the last two years, with 62 new billionaires created  off the profits of the food industry alone, while five of the largest energy companies, including BP, Shell and Total, are making $2,600 of profit every second.”¹⁰

They also point out that food production and base cost has remained very steady over the last few years. There hasn’t been a mass collapse in farming, yet. There hasn’t been a huge boom in demand either. The real distortion in the food sector is the unregulated swamp of financial profiteers. And despite Sunak and Bailey’s claims against Russia, both corn and wheat prices have fallen back to pre-war levels¹¹. So the pain at the checkout in the supermarket is not Putin’s fault. The pain at the pump is not caused by a foreign dictator. It is a necessary product of the unaccountable political system corroborating with the unregulated financial sector to reap profit from human suffering. It seems the robber barons of yore never really went away, they just put on a suit and tie and logged onto a computer.

With that in mind we turn back to Sunak’s feeble Big Bang 2.0. A sad little policy document really, hoping to emulate the massive deregulation by Thatcher in the 1980s, but it is just more technocratic guff. They wish to harness Britain’s position of having one foot in the EU and one out to reclaim their crown as money-launderer-in-chief. Sunak wishes to use the rollback of EU regulation to open up UK markets to global financial criminals. This is not to say that overbearing regulation from the European Union is a good thing. But I would point to sections of MIFID II, a 2014 financial regulation which among other things sought to reign in the amount of food price speculation one company can partake in. This policy even irked the Bill and Melinda Gates Foundation enough to put a puff piece in the Guardian where they had the gall to say that regulating the food speculation sector could cause more hunger worldwide.¹² Sunak wishes to depart from that regime to allow London to be the capital of food speculation.

Other reforms include an intention to draw what money remains in British pension funds out from those pesky low-risk investments into more lucrative spheres. We can only suspect that the vultures were in the room when this policy was drafted as those pensions are in dire straits right now, and to put them into high-risk speculation is un-conscionable when you consider that their failure would put millions of pensioners into poverty. Simultaneously they have a dogged drive under the Green regime to pump money into the financialisation of nature. “The UK’s needs around infrastructure spending and the green transition more generally, are too significant to have disproportionate amount of capital locked away in lower risk assets”¹³. To meet the demands of the elite created COP/IPCC climate regime demands on carbon emissions, they have created a huge demand for carbon offset projects, yet another boondoggle for the financiers, and another insufferable cost for the poorest of the population.

Even section 22 of Sunak’s Financial Services and Markets Bill on Cryptocurrency₁₄, leaves much to be desired. The announcement initially lead to a boost in the Crypto markets who love any signal of state adoption. At first glance they could be seen to be creating a legal regime to allow cryptocurrency companies to operate. But they are actually attempting to define them as “digital settlement assets” rather than currencies. They much prefer stablecoins, which are pegged to central bank currencies, to the uncontrolled cryptocurrencies like Bitcoin. A digital currency outside of the central bank remit would be a massive threat. Yet a digital asset that central bank could pump up and distribute without such strict regulation would allow for much more of the same kind of racketeering to occur behind closed doors and behind shiny screens.

So the state of things as a new leader takes office is dark. The bones of the UK’s economy are being gleaned by vulture capitalists. Meanwhile the state media is constantly puffing up the legitimacy of this week’s dear leader, and of the much shamed monarchy. Prices are rising out of control due to financial speculation whilst the currency is being systematically eroded by central bankers. And they maintain a narrative of blaming a foreign government, and much of the supplicant population tacitly accepts this even though they can all feel that something is going very wrong. I don’t have an optimistic outlook for the British economy. Yet I do believe that outside of these nefarious systems humanity can thrive. We don’t need central banks to survive, but they do need us. We have alternative currencies that we can use, they do not. And we are wising up to their games by the day.

^{1, 9}https://www.gov.uk/government/speeches/prime-minister-rishi-sunaks-statement-25-october-2022 – Sunak’s First Statement as PM

²https://www.irishcentral.com/roots/history/lord-mountbatten-pedophile-allegations – Lord Mountbatten, King Charles’ Uncle was a paedophile

³https://www.bbc.co.uk/newsround/63373274 – Sunak is only a millionaire, not billionaire

⁴https://www.efinancialcareers.co.uk/news/2022/10/rishi-sunak-goldman-sachs – Sunak omits his job at Goldman Sachs from his CV

⁵https://www.bbc.co.uk/sounds/play/b00qbxwj – Lawson regrets deregulating LSE

⁶https://www.theguardian.com/business/2020/dec/17/uk-city-watchdog-failed-to-regulate-firm-that-wiped-out-investors-236m – Andrew Bailey implicated in LC&F collapse

⁷https://www.ft.com/content/f8f154c2-2e8c-4127-9420-dce26a760502 – Bailey falls asleep during pension hearing

⁸https://www.bankofengland.co.uk/speech/2022/july/andrew-bailey-speech-at-mansion-house-financial-and-professional-services-dinner – Bailey’s Mansion House speech

¹⁰https://www.globaljustice.org.uk/wp-content/uploads/2022/09/GJN_FinancialServicesMarketsBillBriefing_Sept2022.pdf

¹¹https://annpettifor.substack.com/p/grain-inflation-starve-the-poor-feed

¹²https://www.theguardian.com/global-development/2016/feb/23/eu-curbs-food-price-speculation-millions-hungry-commodities – Bill and Melinda Gates Foundation on MIFID II reforms

¹³https://www.dlapiper.com/en/uk/insights/publications/2022/07/the-financial-services-and-markets-bill-2022/ – Analysis of Financial Services and Markets Bill 2022-2023

¹⁴https://publications.parliament.uk/pa/bills/cbill/58-03/0146/220146.pdf – Financial Services and Markets Bill 2022-2023