1970s relic John McDonnell’s aspirations of damaging London’s institutional FX sector will be dashed as City speaks out
Finally, the City of London Corporation has stepped in to attempt to stem Shadow Chancellor John McDonnell’s absurd crusade against London’s financial sector. His political urge to bring the world’s financial epicenter to its knees, strip major business leaders of their knighthoods, apply the Tobin Tax and bring in capital controls are the bete noire of any sensible leader.
For those of us old (or experienced!) enough to remember James Callaghan’s ‘Winter of Discontent’ which took place at the nadir of socialist Britain as the frost bit during late 1978 and early 1979, the ideology of Britain’s Shadow Chancellor, John McDonnell will likely be all too familiar.
A hard line trade unionist firebrand, Mr McDonnell holds the very onerous position of being handed the national purse strings should the opposition party ever gain any modicum of power, a notion which is likely to strike fear into the hearts and minds of any sensible professional within London’s institutional and retail electronic trading powerhouse.
Finally, the hand wringing from the central government and its local authorities within which the world’s largest and most highly respected financial center resides, has stopped.
Catherine McGuinness, Policy Chairman at the City of London Corportation, which is the division of London’s metropolitan authority that provides local government and policing services for the financial and commercial heart of Britain, the ‘Square Mile’, has stood in favor of London’s commercial standing and warned the opposition party about the ramifications of its intent to implement the Tobin Tax, which is part of Mr McDonnell’s self-declared war on the financial services industry.
“Anything which does that could result in the City losing its number one financial centre status, putting jobs at risk. In addition, any significant changes to financial regulation would inevitably see costs passed onto the consumer” said Ms McGuinness today.
Stating categorically that a tax on financial transactions would likely harm London’s economy, something that Mr McDonnell and his comrade, the equally staunch socialist Labour Party leader Jeremy Corbyn wish to carry out as a matter of course.
“At a time of great uncertainty for UK firms, they need policies which don’t undermine their competitiveness on the global stage,” she said.
The extreme anti-capitalist stance held by Britain’s Labour Party is well known and understood, such is the vocal stance of many of its firebrand Shadow Cabinet ministers whose careers as lifelong politicians (ie those who have never performed a day’s work outside of unaccountable public sector anonymity) began during the dark days of the 1970s in which the entire country was brought to its knees by militant trade union disobedience and blank-check spending on white elephant projects.
In July this year, during the negotiation period for Britain’s exit from the European Union which is currently taking place between the European Commission and Britain’s incumbent government led by the Conservative Party under Prime Minister Theresa May, the Labour Party’s staunch socialist leaders were touring London’s Square Mile.
So ingrained is their distaste for the very industry that remains the crown jewels of British industry, that being London’s financial sector, which is not only the largest and most highly developed in the world, but is responsible for £176 million in revenues for the British economy, and has a vast surplus each year.
Just one square mile employs 0.0009% of the European Union’s workforce, yet produces 16.7% of all tax receipts to the European Union, which is a statistic that demonstrates that not only does London’s financial sector power the entire British economy, but actually sponsors the European Union’s economic delinquency.
The financial sector, including the electronic trading industry’s global Tier 1 interbank business which handles 49% of all FX order flow from London, and the non-bank ECN sector plus all of the large OTC derivatives companies whose institutional and retail platforms represent some of the largest in the world, is the focus of every market participant in the entire world, and is the commercial crown jewels of Britain’s highly advanced, technologically futuristic financial markets business, standing London in pole position in the mind of every executive of every large company globally.
Just one square mile, combined with the banks of the docks at Canary Wharf, produces £176 billion in revenues, and is so efficient that it has a trade surplus of £75 billion per year.
Labour Party leader Jeremy Corbyn, himself an avid advocate of former Venezuelan communist dictator Hugo Chavez who turned his country into a social and economic basket case, visited London’s square mile along with equally staunch socialist shadow Chancellor of the Exchequer John McDonnell.
During their visit to the City in the summer, Mssrs Corbyn and McDonnell raised the point that it is included in the Labour Party’s manifesto pledge to introduce a financial transaction tax should leader Jeremy Corbyn ever gain power.
The Tobin tax, which would apply to derivatives and bonds, has been fiercely opposed by UK officials and politicians in recent years. It was originally proposed to target the FX market when it was orchestrated by James Tobin in the 1970s, and whilst Britain has managed to remain free from it’s burden until now, Jeremy Corbyn is a staunch advocate of implementing it.
Just three years ago, there was a substantial amount of discourse mounting in London with regard to the European Union’s predilection for the intrinsically socialist Tobin Tax on transactions that are placed in trading financial instruments.
That has now gone completely quiet, as Britain opposed it on principle and has managed to fend it off, however in 2013, eleven European Union member states, all of which were led by left-wing governments, announced their wish to move ahead with introducing a financial transactions tax.
At that time, the nations – which include France and Germany – intended to use the tax to help raise funds to tackle the debt crisis, and the tax had the backing of the European Commission which was reinforced after the 2014 election the highly unpopular Jean-Claude Juncker as President.
The other countries that wished to introduce it were Italy, Spain, Austria, Belgium, Greece, Portugal, Slovakia, Slovenia and Estonia, all nations with absolutely no place in the world’s highly advanced financial markets economy. Greece’s government accountants, when not asleep for half of the day, cannot tell the top from the bottom of their balance sheets, Italy is rife with corruption, Portugal is agrarian, Belgium has invoked outright bans of retail electronic trading instruments and Slovakia, Slovenia and Estonia have absolutely no Tier 1 bank presence.
Jeremy Corbyn’s policies echo this line of thinking.
In September 2015, Jeremy Corbyn and Shadow Chancellor and equally leftist John McDonnell made a schedule to meet four times per year with a seven-strong group comprising of economic academics (rather than business leaders) one of which was Anastasia Nesvetailova, a self-designated ‘expert’ on the international financial sector and its role in the global financial crisis of 2007-09. Ms. Nesvietailova, is an academic who spends her day in the classroom rather than the boardroom, thus is a theorist and has no practical experience. Just the type of policy advisors favored by the left.
During one particular conversation, the Labor Party’s support for the implementation of the Tobin Tax on all trading transactions was raised, as was, rather alarmingly, the potential of a Britain free of dominance of the financial sector.
Bearing this in mind, it is worth looking at John McDonnell’s credentials and viewpoint.
Mr. McDonnell is a former trade unionist who backs renationalizing banks and imposing wealth taxes. He actually lists “generally fomenting the overthrow of capitalism” as one of his interests in the Who’s Who directory of influential people. He also advocates the complete public ownership of all banks.
Mr McDonnell has served as Chair of the Socialist Campaign Group in Parliament and the Labour Representation Committee, and was the chair of the Public Services Not Private Profit Group. He is also Parliamentary Convenor of the Trade Union Co-ordinating Group of eight left-wing trade unions representing over half a million workers
The thought of Tier 1 FX desks being run by teams of ‘entitled’, unaccountable gray cardigan-wearing Caravan Club members with civil service pension plans should be enough to send the entire industry striking up prime brokerage relationships in Hong Kong, New York and Singapore.
Mr McDonnell has also said publicly that if he was able to, he would have assassinated Margaret Thatcher in the 1980s, a comment that when challenged, he retracted and said it was “a joke”.
Well, Mr McDonnell, that kind of extreme anti-business mentality combined with a will to bring the entire financial markets sector to its knees in the rebellious quest for overthrowing capitalism is not welcome.
Mr McDonnell wrote in 2012 that a financial transaction tax would halt “the frenetic, madcap speculation in the City” and raise money for infrastructure investment.
“If the City resists then let’s make it clear that capital controls would follow,” he said in a piece for Labour Briefing, a left-wing website.
He has also said he wants to take the power to set interest rates away from the Bank of England and to give it back to government. This would reverse a decision by the Blair government to let the central bank decide monetary policy.
Bearing this in mind, Mr Corbyn, who would be Prime Minister and in a position to implement his ghastly ideologies should his party ever be elected to power, and Mr McDonnell who is very public about his dislike for the financial sector, or any free enterprise for that matter, would do irreparable damage to London, and to our entire industry, and not for any purpose other than to propagate their extremely primitive aspirations toward turning the whole world back into a gray bloc of dependent automatons.
Thus, the visit by the Labour politicians should be a red flag (no pun intended) to anyone with a modicum of sensibility.
Image: During the winter of 1978, refuse piled up in Britain’s streets as socialism had finally crippled the entire nation.