How a financial homeland works

Even more dangerous than tax havens are the great financial homelands. Even more dangerous than tax havens are the great financial homelands. When British Prime Minister David Cameron vetoed the European decision to make a new fiscal pact, and condemned the continent’s countries to reduce the number of participants from 27 (the community in its full extent) to 17 (the countries that use the euro as their currency) he implemented – with truly terrible diplomacy- an ancient British policy of adhering to the advantages of a common market without losing a shred of sovereignty. For quite some time now that policy earned the United Kingdom the nickname of ‘Perfidious Albion’. In this particular case, the dispute revolved around the banking sector’s regulation. Continental Eurocrats want greater control over the banks, especially an increase in capitalization, in order to avoid the reoccurrence of the financial crisis that was triggered in the United States in 2008 and affected the entire global system. The United Kingdom is for the international banks that function within it, a true ‘financial homeland’, provided they have the utmost freedom in their global transactions, with fiscal and tax benefits for both themselves and their clients, who are global as well. To submit to Continental Europe’s regulation would mean to lose several of those benefits, especially regarding competition with other similar centers – the other ‘financial homelands’: USA, Switzerland, Hong Kong or Shanghai. Curious contradiction: large banking houses are stateless when it comes to their transactions and their benefits, but quite patriotic when it comes to defending these latter. They play with other people’s money but resist using their profits in their own capitalization. They rather have these distributed among their bosses and executives, paying few taxes and leaving only a fraction of them for shareholders and depositors. When they suffer losses on account of risky or fraudulent investments, they manage so that shareholders and clients endure the burden, and in case of being at the verge of bankruptcy, they resort to central banks (whose funds come from national taxpayers) in order to obtain liquidity. In short, they privatize profits and nationalize losses: they are stateless for better and patriotic for worse. ‘Financial homelands’ are not a country, not even a city: they are neighborhoods. In the case of London, the neighborhood is the City, and in the case of New York the neighborhood is called Wall Street. When the going gets tough they turn to ‘the motherland’ to save their skins. In the late and decadent capitalism, you have the tail wagging the dog and speculation dominating production. Now Cameron’s (whose electoral venture received large contributions from the financial sector) attitude makes sense: wrapping himself in the British flag to protect the City and keeping it from emigrating from London and settling in another country, perhaps less comfortable but equally manageable and corruptible, where the most luscious ‘industry’ is outright money piracy.