Loss of income caused by banks as bad as a ‘world war’

							Loss of income caused by banks as bad as a
‘world war’
Philip Aldrick
telegraph.co.uk
December 3, 2012

The financial crisis has been as economically devastating as a world war and may still be a
burden on “our grandchildren”, a
top Bank of England official has
said.
Andy Haldane, the Bank’s executive
director for financial stability, added
that public anger at the banks was
fully justified and that pay in the
industry remained too high.
“In terms of the loss of incomes and
outputs, this is as bad as a world war,”
he said. “It would be astonishing if
people weren’t asking big questions
about where finance has gone wrong.
“If we are fortunate, the cost of the
crisis will be paid for by our children.
More likely it will still be being paid
for by our grandchildren. There is
every reason why the general public
ought to be deeply upset by what has
happened – and angry.”
Four years since the crisis struck, the
economy is still 3pc smaller than at its
peak. The scale of the problems will be
exposed again on Wednesday when the Chancellor updates the country on the economic outlook and
his austerity plans.
To boost “growth, job creation, exports, investment, and business confidence”, George Osborne needs
to be “bold” in his mini-Budget, the British Chambers of Commerce said as it downgraded its growth
forecasts for next year and 2014.
The business group cut its 2013 forecast from 1.2pc to 1pc and from 2.2pc to 1.8pc in 2014,
blaming the deteriorating global economy and the prospect of more austerity as the Chancellor
responds to the worsening public finances. However, it raised its forecast for this year from a
contraction of 0.4pc to a contraction of just 0.1pc.
Manufacturers offered Mr Osborne some respite ahead of Wednesday, though, after factory output in
November turned out to be better than expected. Activity contracted in the month, but it was the
smallest decline since August and less than had been predicted.
According to the Markit/CIPS Purchasing Managers’ Index, manufacturing activity jumped to 49.1 in
                                                                             November from
                                                                             October’s downwardly
                                                                             revised 47.3, beating the
                                                                             consensus of 48. A
                                                                             reading below 50
                                                                             indicates contraction. The
                                                                             survey found that demand
                                                                             remains weak and new
                                                                             export orders are down.
                                                                             Mr Haldane told BBC
                                                                             Radio 4’s The World at
                                                                             One that banks remained
                                                                             one of the major
                                                                             impediments to the
                                                                             recovery because they
                                                                             need to own up to their
                                                                             bad debts to restore
                                                                             confidence and get credit
flowing again. Failure to come clean would mean “the fog will persist”, he said.
“Investors will be much less willing to put their money into the banking system. They will lack
confidence in the banking system and will either charge very high rates for lending that money to banks
or will just withdraw their money entirely,” he said.
“More could and should be done to get lending moving as a springboard to getting the economy
moving.”
He added that bankers pay had been “ratcheting down” but that there was “still some way to travel”.
“Back in 1980, your average investment banker was paid the same as your average lawyer or doctor.
By the time we got to 2006, they were being paid four times as much,” he said.
“Have we got further to travel south? I suspect probably yes.”
He also admitted that “with 20-20 hindsight” the Bank should have done more to deflate the bubble
ahead of recession.

Dollar-Less Iranians Discover Bitcoin
Virtual Currency
Max Raskin
Bloomberg
December 3, 2012

Under sanctions imposed by the U.S. and its allies,
dollars are hard to come by in Iran. The rial fell from
20,160 against the greenback on the street market in
August to 36,500 rials to the dollar in October. It’s
settled, for now, around 27,000. The central bank’s
fixed official rate is 12,260. Yet there’s one currency in
Iran that has kept its value and can be used to purchase goods from abroad: bitcoins, the online-
only currency.
                                  Created in 2009 by a mysterious programmer named Satoshi
                                  Nakamoto, bitcoins behave a lot like any currency. Their value is
                                  determined by demand, and they can be used to buy stuff. Bitcoin
                                  transactions are encrypted and handled by a decentralized global
                                  network of tens of thousands of personal computers. Merchants around
                                  the world accept the currency, from a bakery in San Francisco to a
                                  dentist in Finland. Individuals who own bitcoins and wish to exchange
                                  them for physical currencies like euros or dollars can use exchange
                                  sites such as localbitcoins.com, a Finland-based site founded by
                                  Jeremias Kangas. “I believe that bitcoin is, or will be in the future, a
                                  very effective tool for individuals who want to avoid sanctions,
                                  currency restrictions, and high inflation in countries such as Iran,”
                                  Kangas wrote in an e-mail.
                              The advantage for Iranians is that bitcoins can be swapped for dollars
                              that can then be kept outside the country. Another plus: Regulators
                              can’t easily track the transactions, since bitcoins aren’t issued from a
                              central server. Bitcoin users can conduct business on virtual private
networks, which hide customers’ identities.
At online store coinDL.com, shoppers can use bitcoins to buy Beyond Matter, the latest album from
Iranian artist Mohammad Rafigh. Anyone in the U.S. downloading songs, which fetch .039 bitcoins or
45¢ each, risks violating U.S. sanctions. That doesn’t bother Rafigh, who’s studying computer
engineering as well as playing music. “Bitcoin is so interesting for me,” Rafigh wrote in an e-mail. “I
wish the culture of using digital money spreads all over the world, because it does not have any
dependency on anything like politics.” Rafigh has translated some bitcoin software into Farsi for his
friends. “I love Iran, and if bitcoin is good for me, it can be good for more Iranians like me.”
Iranian-American bitcoin consultant Farzad
Hashemi recently traveled to Tehran and
talked up bitcoin to his friends. “They are
instantly fascinated by it,” he says. “It’s a
flash for them when they realize how it can
solve their problems.” Iranians working or
living abroad can send bitcoins to their
families, who can use one of the online
currency matchmaking services to find
someone willing to exchange bitcoins for
euros, rials, or dollars. Bitcoins are useful to
Iranians wishing to move their money
abroad, either to children studying in Europe
or America or simply to stash cash in a safe
place.
As the value of the rial plunges, many
Iranians are trying to acquire foreign
currencies. “We have no idea what will
happen,” says Amir-Hossein Madani, who
says he’s traded tens of millions of street
market dollars in Tehran over the past two years. “These days prices change every 10 minutes.”
The uncertainty has led some Iranian software developers to ask clients to pay them in bitcoins.
“Anyone with a computer is able to own, send, and receive them. You can be at an Internet cafe in Iran
and managing a bitcoin account,” says Jon Matonis, a founding board member of the Bitcoin
Foundation, a Seattle nonprofit that promotes the currency. The exchange rate in Iran is 332,910 rials
per bitcoin. It isn’t known how many Iranians use bitcoins to skirt sanctions. According to
localbitcoins’ Kangas, 32 people in Iran have contacted each other through his site.
An internal FBI report in April expressed concern over the online currency. The report was leaked to
Wired and Betabeat. “Since Bitcoin does not have a centralized authority, law enforcement faces
difficulties detecting suspicious activity, identifying users, and obtaining transaction records—problems
that might attract malicious actors to Bitcoin,” says the report. For now, Iranians are using bitcoins to
maintain a fragile connection to the outside world.
The bottom line: Iranians are resorting to virtual currency to move money into and out of the country
in a way that Western authorities find hard to detect.

The Money Masters a History of Money VIDEO BELOW
http://www.youtube.com/watch?v=iDtBSiI13fE

The Secret of Oz A History of Money VIDEO BELOW
http://www.youtube.com/watch?v=swkq2E8mswI

Money, Banking and the Federal Reserve VIDEO BELOW
http://www.youtube.com/watch?v=YLYL_NVU1bg


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