Tuesday 10 January 2012

HORSE RACING - MODERN CAPITALISM : WHICH IS MORE ABSURD ?



New Year, but all I am hearing is the same old rubbish from ‘experts’ and expressions of ‘intentions’ of doing something from our elected leaders in respect of the perverse, corrupt and destructive financial system.

In response presumably to the prospect of HMRC being found to have acted unlawfully in respect of the deal it did to excuse Goldman Sachs of some billions of pounds in tax, they are  being taken to Court by UK Uncut Legal, the Prime Minister says ’ something must be done’ about large Corporates using legal advisors to run rings around the tax man. But what, exactly ? Given the reluctance to bring in any hard and fast new laws to reign in the City and its satellite operations in far flung tax havens what real prospect is there of any change ? One of the sticking points for this Government on the recent opt out of a revised EC Treaty was that all other partners were intending to put a financial transaction tax into effect. Clearly Cameron’s friends in the City had told him this was not what they want. So even a modicum of change to the existing free for all for the traders in bonds and money that hold whole nations to ransom agreed to by other large developed Capitalist economies, who clearly take the view it is an necessity and is not going to bring their countries down in flames, has been refused because this Government is still behoven to the self interested mutterings and influence of the City.

I used to frequent race meetings, horses that is. I was a simple punter and never had any huge background knowledge of form nor any particular method of betting. I kept it very simple, read the recent form, talked to a friend that had been doing it for years, and almost always put a straightforward bet on the nose of one horse to win. Naturally they very rarely did. It began to interest me how the odds were determined, particularly the trackside odds, which would just magically start to appear before the next race. They would vary from bookie to bookie and continue varying right up until the off. It soon became apparent that they were essentially nothing more than an opinion, a well informed opinion, but no more than that. They were also set to attract money so varied according to what was being staked by the punters. It was highly volatile and clearly effected by sentiment rather than logical, as rather than bet on the horse many would bet on the perceived ‘value’ of the odds, which can be hard to resist.

The parallels with the financial trading markets is obvious. It is, at base, an imaginative projection of what may happen in the future, the big difference being that with a horse race that future is a matter of minutes away, once the race is run bets are settled and its all over, no one in their right mind bets on races years away. There are winner and losers and the biggest winners are always the bookies, otherwise they would not be there next time. It also favours the big players, again a parallel with financial markets, in that there are people called rails bookmakers who do not display their odds, the big time gamblers who stake large sums go to them and can negotiate favourable odds which then filter through to the bookies taking the £5 bets. You cannot negotiate terms with a fiver. It is not entirely transparent, but its actually a good deal more intelligible to someone coming to it cold than what the so-called markets in financial ‘instruments’ get up to. Moreover it is predicated on a real event that will take place in full view of everyone taking part in the immediate future : a bunch of horses running around a race course, one of which will come first.

In the financial market traders can borrow vast sums at preferential interest rates to then use as their stakes. This is akin to me saying to you, lend me a large wedge of money to then put on a horse, if it wins I will pay you back with interest. It’s the sort of thing that one simply does not do, and would never happen on a day to day basis in real life because most people are not that stupid. Yet it does happen on a day to day basis in the financial markets which everyone is supposed to believe are so vitally important and many thousands of ‘experts’ exist solely to facilitate and negotiate this trading. The LIBOR rate, the rate at which banks lend to each other is set each day by a bunch of people sitting in Canary Wharf, they are the equivalent of the rails bookmakers. This key figure is invented, it is a projection in a self-fulfilling prophesy. Even the more honest commentators and players in this gigantic game are now willing to admit that it has been operating completely without reference to reality, nor to any notion of social or political consequence. They have been in a parallel universe in which they stupidly believed they could largely predict the future and virtually eliminate risk. Again, if you bring it down to the race track, if you came across someone saying that they had enough information to win almost every time so give me all your money and I will make you rich, you would give them a very wide berth.

The deeply worrying thing is these are the people now being parachuted into governments, Italy and Greece for example, they are ex-Goldman Sachs, they are financial traders with no political background or vision, its like putting the bookmaker in charge of the race. The bookmaker exists to make money, he does not care about the welfare of the punters or the fairness of the race, in fact they probably care rather more than the typical Goldman Sachs executive. In this country we have a virtual puppet government who are willing to put the interests of the City before the well being of the citizens. This is now crystal clear, the opposition is impotent, afraid to upset the middle classes and deaf to the principles of Socialism on which they were founded. It is partly because of this failure of representative democracy and that the all powerful banking, financial and corporate interests sit right next door to St.Paul’s Cathedral that the rather dozy, socially conservative and equivocal Church of England has been inadvertently thrust into the frame. Thank God, not sure about one, but let in pass in the cause of continuing the case, that one or two of their number, notably the ex-Dean of St Paul’s, have stepped into the vacume  between the deaf and blind obsessive self-interest of the acolytes of the ‘market’ ( a totally inadequate and discredited term for what is a corrupt and venal system ) and their willing apologists this, and indeed the last, government.

Where we go from here is not easy to see, both Cameron and Milliband might get themselves down to the Bank of Ideas in Sun Street, because they clearly have none, but if another Commission to ‘look into the matter ’is set up with Lord Sugar in charge do not be surprised if I set light to myself at the foot of No. 1 Canada Square.