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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Sunday, March 24, 2013

Goldman Sachs and the Financial "Factory Bank"

As banking continues to financialize the economies of the world, we will see more and more evidence of how the power that financializtion brings will be revealed; for example, when finance becomes the major player in the economy, then everything has a "bottom line" and profits will be the key motivation and all other economic activity, especially public activity,  will take second place.

When we know the rules of finance (Profit at all Cost), then we can better understand why other things, like public art become less important.  Agriculture and manufacturing become secondary also.  All Value is reduced "either into a financial instrument or a derivative of a financial instrument."

"Workers, through a financial instrument such as a mortgage, could trade their promise of future work/wages for a home. Financialization of risk-sharing makes all insurance possible, the financialization of the U.S. Government's promises (bonds) makes all deficit spending possible. Financialization also makes economic rents possible."  (Wikipedia). . . .
  • Michael Hudson described financialization as "a lapse back into the pre-industrial usury and rent economy of European feudalism" in a 2003 interview:[3]
"only debts grew exponentially, year after year, and they do so inexorably, even when–indeed, especially when–the economy slows down and its companies and people fall below break-even levels. As their debts grow, they siphon off the economic surplus for debt service (...) The problem is that the financial sector’s receipts are not turned into fixed capital formation to increase output. They build up increasingly on the opposite side of the balance sheet, as new loans, that is, debts and new claims on society’s output and income.
[Companies] are not able to invest in new physical capital equipment or buildings because they are obliged to use their operating revenue to pay their bankers and bondholders, as well as junk-bond holders. This is what I mean when I say that the economy is becoming financialized. Its aim is not to provide tangible capital formation or rising living standards, but to generate interest, financial fees for underwriting mergers and acquisitions, and capital gains that accrue mainly to insiders, headed by upper management and large financial institutions. The upshot is that the traditional business cycle has been overshadowed by a secular increase in debt. Instead of labor earning more, hourly earnings have declined in real terms. There has been a drop in net disposable income after paying taxes and withholding "forced saving" for social Security and medical insurance, pension-fund contributions and–most serious of all–debt service on credit cards, bank loans, mortgage loans, student loans, auto loans, home insurance premiums, life insurance, private medical insurance and other FIRE-sector charges. ... This diverts spending away from goods and services. (Wikipedia)
We can see the effects that financialiation has on citizens as unemployent increases, wages and salaries decrease or stagnate and, finally, the rise of things like "factory banking" which is described below.  There will be more financial crises and disasters to come.

Goldman gets go-ahead for 'banking factory'
By James Hurley - The Telegraph

But now the investment bank has been given the go-ahead for its plan which will see existing properties demolished to make way for a new glass-fronted building on the site at Farringdon Street in the capital, around the corner from Goldman’s current headquarters in Fleet Street.
The set of nine ceramic 1960s murals by Dorothy Annan adorning the front of the building will be moved to the nearby Barbican centre.
A City of London planning officer described the new building, which has been designed by architects Kohn Pedersen Fox, as a “banking factory”.
“Let’s make no bones about it,” Peter Rees said at a planning meeting on Friday.
“If there’s an area where we’re going to accommodate groundscapers this is probably the best place,” he said, adding that work could begin “almost immediately”. 

Read the article here


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