Publisher's Synopsis
Five years ago Jonas Cleary asked me to write a foreword for "Brothers,sisters.. with a focus on the socio-economic aspects of the book. As"Brothers, sisters.. is now republished as a trilogy, he has asked me for anew, revised foreword to the book or better, an updated one mirroring theprevailing socio-economic environment relative to what he has written. In that original foreword I had not only outlined how the then economicfactors determining the world's financial system would inevitably lead to itscollapse, but could do so in a frighteningly short space of time. I mentioned that seemingly bedrock behemoths from General Motors tothe House of Saud would be swept away in the wake of such a breakdown. That the only beneficiaries of the AAA rated bonds, then flooding thefinancial markets, were bankers skimming fat fees from peddling them, butotherwise, they were worthless 'paper' puffed up with 'air money'. These years later, the world's financial system has narrowly escaped - yetagain - from implosion. Those supposedly secure bonds have indeed beenfound to be worthless, and General Motors swept into insolvency, as havemany financial institutions, whose gluttony for ever higher profits werelargely responsible for bringing about this latest financial crisis. However, theprediction I made, and has not - as yet - materialised is fall of the House ofSaud (although it too, is now being buffeted by the storms, unleashed byjobless graduates, sweeping through the Middle East). Finance ministers across the world believe that their immediateintervention in, and assistance to, the financial markets staved off thisimpending breakdown. In this they are deluded. It was money, more than$13 trillion of it - equal to the US's GDP - high-handedly taken fromordinary peoples' tax payments by those ministers' governments, andrushed to the outstretched hands of the then desperate, near as destitutebanks, which prevented a worldwide economic collapse. None of these ministers have acknowledged that their administrations' -individually and collectively - lax monetary policies and laissez faire attitudestowards the financial markets were largely responsible for precipitating thecrisis. Nor has there been admission from a single financial institution thattheir irresponsible wagering and employees' greed for ever higherremuneration were also responsible for the near collapse of financial markets. Since the near breakdown in 2008, and despite politicians' and bankers'pronouncements to the contrary, nothing of substance has changed. Thesole product of the much vaunted inter-government regulatory oversight ofthe banks is the 'Basel III Accord'. This Accord called on banks to increase their capital reserves and cleanup accounting procedures. Basel III is a beefed-up successor to Basel II,which banks cheerfully ignored and was itself created in an attempt to stopbanks avoiding the similar tenets of Basel I. Gallingly for governments, most major banks neglected to comply withBasel III. Moreover, many of them, or so it appears, also quickly found waysof circumventing it. Having handed over so much of their taxpayers' money too bail out thebanks, many governments' treasury cupboards are bare. In increasinglydesperate bids to stave off the consequences of their own wastrel ways, theyhave been forced to borrow from the money (bond) markets. While much of the finance provided by these markets is usually puffedupleveraged 'air money', interest on the bonds is paid with [taxpayers'] realmoney. However, increasing amounts of the sums governments borrow isnot for the benefit of their countries' economies but is spent on paying backtheir earlier bond borrowings. Because most governments are for all intents insolvent, bond markets,led by banks and rating agencies, exact ever harsher terms on the moneylent. In so doing these markets exercise ever greater power over countries'economies than do their governments. Also unchanged by
