HSBC and the Upside-Down World of Austerity Politics

[polly7]

By Jérôme Roos
Source: teleSUR English
February 13, 2015

“What is rewarded above is punished below … Profits are privatized, losses are socialized.”

~ Eduardo Galeano, Upside Down: A Primer for the Looking-Glass World (2001)

This week it was revealed that HSBC – Europe’s biggest bank – has been running a massive tax evasion scheme through its Swiss subsidiary, allowing some of its wealthiest international clients to hide over $120bn in undeclared assets in 30,000 secret bank accounts. Leading British regulators, MPs and government officials were aware of the malpractices and the names of potential tax evaders (including movie stars, drug lords and heads of state), but never pressed criminal charges.

Instead, the UK – like the rest of Europe – ushered in an age of austerity. Where the billions of the rich escaped to Switzerland and the Caymans, the benefits of the poor were cut “to balance the budget.” Last year, David Cameron pledged to slash “wasteful” government spending for another decade, citing as reason that it “comes out of the pockets of the same taxpayers whose living standards we want to see improve.” The irony of the Prime Minister speaking from a golden throne was hardly lost on anyone. Welcome to the topsy-turvy reality of austerity politics.

Of course the diligent observer will not have been very surprised by the news of HSBC’s umpteenth mega-scandal. Already back in 2012, financial journalist Matt Taibbi made it clear that the bank had been engaged in “more or less the worst behavior that any bank can possibly be guilty of.” So far, HSBC has managed to evade prosecution despite laundering billions of dollars for some of the most notorious Mexican drug cartels, cutting illegal deals with a Saudi bank linked to Al Qaeda, and systematically rigging interbank interest rates, reaping lavish profits in the infamous LIBOR scandal.

The financial privileges obtained through this process, referred to by David Harvey as “accumulation by dispossession“, stand in direct relation to the fiscal deprivation at the bottom. Ultimately, major scandals like HSBC’s Swiss tax evasion scheme are merely flash points offering us a clearer view of the hidden dynamics at work in the world economy: what is taken from one side shows up at the other. In a word, there is no such thing as austerity; there is only a highly skewed redistribution of scarce resources. In this upside-down world of financialized capitalism, money simply tends to flow upwards.

The result is a stable set of outcomes in which profits are perennially privatized and losses are systematically socialized. Those who question this state of affairs are told that “there is no alternative,” and those who actively resist – like the social movements and progressive governments in Latin America and Southern Europe – are ruthlessly punished for it. First the cops will beat ordinary citizens over the head when they protest, then investors will beat popular governments over the head when they do the same. Foreign capital is withdrawn, bond yields spike up, stock markets collapse. Where the bankers above are rewarded for criminal behavior, those who struggle for justice from below find themselves imprisoned within the narrowing perimeters of the permissible.

Full article: https://zcomm.org/zcommentary/hsbc-and-the-upside-down-world-of-austerity-politics/

[fasttense]

1. To add insult to injury

Countries are forced to borrow because they can't get the taxes they are owed from the uber rich. So, they turn around and borrow the money from the uber rich and pay them interest on the loans. So, not only do the uber rich get away without paying their fair share of taxes but by forcing countries to borrow, by keep nations short of revenue they need to function, they get paid interest on money they should have paid out in taxes.

It's a win win for the uber rich and a losing proposition for all the rest of us.