Today\’s Ritchies!

Whose sticky little fingers are all over mis-accounting in Greece? All the usual suspects, bar, it seems Barclays (what did they do to miss out?):

Wall Street’s role in the unfolding Greek debt crisis will be probed by  Eurostat, the EU’s statistical office, which has requested information from Athens about currency swaps. The transactions, undertaken from 2001 to 2008, may have allowed the Greek government to conceal billions of euros of new debt from regulators. Goldman Sachs, Morgan Stanley, Deutsche Bank and other investment banks arranged complex transactions that enabled Athens to raise cash for budget spending without having to classify as public debt.

Time to call the banks to account then: is there any point pretending that they serve any social function under their existing management any more?

Yup.

Government lies, cheats, conceals and deceives.

This is all the banks\’ fault. Thus government should have more power over banks.

Most importantly, what it fails to note is that accounts are always political statements. No one can pretend otherwise. Capital is treated as meritorious, for example; labour is a cost to be minimised. Spending on replacing labour with plant and machinery is treated as creating an asset of value – the labour is just a loss offset.

What?

Umm, look, when a company employs labour it does just that, employs it. Rents it. Neither the labour nor the labourers are owned by the company: if it were they would not be labourers for hire, they would be slaves.

A machine however, is indeed owned by the company.

Which is why one is treated as an asset of the company and the other not.

Try running this the other way around. We\’re going to say that the labourers are indeed an asset of the company (rather than their agreement to work for the company in return for wages being an asset). We really want our accounting system to be based on such slavery?

12 thoughts on “Today\’s Ritchies!”

  1. “This is all the banks’ fault. Thus government should have more power over banks.”

    Yes, but this is that Socialist Plural at work again: he thinks that he (and people that think like him) will be the government.

    Socialists don’t read much history. If they did, they’d realise that most of the early ones got shot for being counter-revolutionaries and thus would be a little more circumspect about calling for ultimate power in the hands of a central committee.

  2. “Capital is treated as meritorious”

    Of course it is, you dimwit, because capital undeniably is meritorious. The entire reason that banks (and any other firm you care to mention) are in business is to make money for their shareholders. That’s why they exist; other people benefit coincidentally (as Mr Smith noted). The amount of money they make indicates how well they are conducting that business.

    I’m not an economics or accountancy professional so I’m certainly missing some salient detail, but is this really so hard to understand?

  3. “This is all the banks’ fault. Thus government should have more power over banks.”

    Just to repeat the accusation – the government covered up the real position of the public debt with the aid of banks. Because of this, the government should have more power over the banks?

  4. Wait, I only just got this. Murphy wasn’t saying that national accounts are pure politics, (which I could believe, actually) but rather than the process of accountancy is a matter for political control. Heaven help us, the man’s totally lost his mind. Who on earth would hire him as an accountant?

  5. Brian, follower of Deornoth

    “national accounts are pure politics”

    The late great C. Northcote Parkinson once remarked that every year the Chancellor of the Exchequer solemnly presents accounts to the nation that would disgrace a third-rate bookmaker.

  6. Spending on replacing labour with plant and machinery is treated as creating an asset of value

    Yes, let’s take away all the shovels (not to mention JCBs) and give the labourers spoons to dig with.

  7. If ever there were an example of an ‘activity that is not socially useful’, it is ‘being Richard Murphy’. If Murphy honestly is against the substitution of capital for labour, then I’m amazed he’s smart enough to remember to breathe.

  8. Just curious: why is Murphy always going on about IOM government, holding them responsible for every evil under the sun, yet the Greek government, caught out for years on end, nary gets a slap on the wrist?

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