The Spider's Web: Britain's Second Empire | The Secret World of Finance
Independent POV・50 minutes read
The British Empire's decline led to London's financial transformation into a global hub with offshore structures benefiting elites and politicians, creating secrecy jurisdictions and facilitating tax evasion. London's financial power extends globally, impacting legislation and fueling capital flight, with offshore structures reinforcing the city's elite interests and the UK's status as a major tax haven.
Insights
- The decline of the British Empire led to the rise of London as a global financial hub due to light-touch regulation, secrecy, and the establishment of offshore branches in former British territories, attracting banks seeking to avoid regulations.
- Offshore jurisdictions offer services like trusts, shell companies, and secret bank accounts to create impenetrable secrecy structures, with offshore lawyers creating intricate setups to conceal asset owners, recycle wealth, and engage in illicit activities, revealing the extensive network of global financial secrecy facilitated by the UK.
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Recent questions
Why did London become a global financial hub?
Due to light-touch regulation and offshore branches.
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Summary
00:00
"Decline of British Empire, Rise of Finance"
- The British Empire, the largest in history, ruled for over 300 years, with its armies and currency proclaiming its might.
- As countries gained independence from Britain, its elites turned to finance as its new role in a changing world.
- The City of London, once the global financial hub, saw a decline as the Empire waned.
- The Suez Crisis marked the end of Britain's major power status, leading to a run on the UK pound.
- Banks in London created the London Eurodollar market to avoid regulations, leading to rapid growth.
- British overseas territories, like the Cayman Islands, became secrecy jurisdictions attracting illegal activities.
- The City of London Corporation, a unique entity, operates as a private company with its own police force and courts.
- The Bank of England, a financial regulator, attracted global banks to London, including the scandal-ridden Bank of Credit and Commerce International (BCCI).
- BCCI's collapse revealed extensive financial fraud, money laundering, and terrorist financing, with the Bank of England accused of negligence.
- London's appeal to banks was due to light-touch regulation, secrecy, and the establishment of offshore branches in former British territories.
19:50
"Offshore Trusts: Secrecy and Tax Evasion"
- Cayman Islands is the first overseas territory to sign an agreement with the UK to combat tax evasion.
- British secrecy model relies on trusts rather than banking secrecy like the Swiss.
- Trusts are fundamental to Anglo-Saxon secrecy and form the basis for complex offshore structures.
- Offshore jurisdictions offer services like trusts, shell companies, and secret bank accounts to create impenetrable secrecy structures.
- Offshore structures often involve trusts managing assets and owning shell companies in various jurisdictions.
- Offshore lawyers create intricate structures to conceal the owners of assets and recycle offshore wealth into global markets.
- The Panama Papers exposed offshore activities, but little action has been taken due to powerful beneficiaries.
- Britain controls its offshore havens, influencing legislation and foreign relations subtly through informal discussions.
- London's financial power extends globally, with the UK being a major provider of international financial services.
- Developing countries lose over a trillion dollars annually to capital flight and tax evasion, benefiting large western nations like the US and UK.
37:20
US Anti-War Protests and Financial Manipulation
- Anti-war demonstrators protest US involvement in the Vietnam War through mass marches, rallies, and demonstrations.
- President Johnson reveals that the FBI closely monitors anti-war activities.
- In the 1960s, US Economist Michael Hudson worked at Chase Manhattan bank as the balance of payments economist.
- The US balance of payments deficit in the 1960s was due to foreign military expenditure, particularly the Vietnam War.
- The US government requested Chase to establish a branch in Saigon during the Vietnam War to prevent dollars from flowing to foreign banks.
- Michael Hudson received a memo in 1967 from the State Department urging Chase to help the US become a global financial hub for flight capital.
- Offshore banking centers were organized in the Caribbean and elsewhere to channel hot money back into the US, halting the outflow of dollars.
- Britain faced a similar issue with money outflow, leading to the financialization of London and de-industrialization of the country.
- Economist John Christensen's investigation revealed illicit activities like tax evasion, market rigging, and arms trading in offshore financial centers.
- Former Jersey Senator Stuart Syvret faced suppression and persecution for leaking a report on suspected criminal activities, leading to multiple imprisonments.
53:44
"British Politicians and Offshore Financial Centers"
- Jersey is known for its saying "if you don't like it here, there's always a boat in the morning."
- Jersey Finance literature claims Jersey is an extension of the City of London.
- Appleby, a company, boasts of its staff moving into political and judicial offices in various offshore financial centers.
- British politicians are heavily involved in business, lobbying, and promoting business interests.
- Politicians in Britain sit on company boards they are supposed to regulate.
- British politicians are seen as lobbyists for the City of London.
- The UK Prime Minister David Cameron defended the tax haven label on Crown Dependencies and Overseas Territories.
- Ian Cameron, David Cameron's father, was involved in offshore funds and trusts.
- Accountants play a crucial role in facilitating offshore money shifting and tax evasion.
- The Private Finance Initiative (PFI) is a complex financial structure that leads to higher repayment costs than traditional government borrowing methods.
01:11:14
"Tax avoidance in UK PFI contracts"
- PFI contracts were promoted by advisors who aimed to help public authorities maximize benefits, potentially exploiting legislation. The HMRC's offices, owned offshore, were run by a company that borrowed money at a high interest rate, leading to tax avoidance and an inability to prove tax payments by PFI companies in the UK.
- The Africa PPP Conference protest highlighted the failure of such policies in the UK, emphasizing that financial services expansion into new markets, driven by the City of London's interests, mirrors a form of colonization. The City of London, once the financial hub of the British Empire, now operates as a global financial center with significant offshore networks, contributing to the country's status as a major tax haven serving elite interests.
