EVERYBODY KNOWS THE DEAL IS ROTTEN . . .

It's Friday. It's financial. It's Friday Financial with JULIAN SAYER.

They're not bankers, they're gamblers and they are playing with a rigged deck of cards. Worse still they're playing with our money. Read on for the low down on how the banksters are fixing everything.

LOADED DICE IN THE WORLD CASINO!

As I have explained previously, banking and finance is at the very heart of this system we live in. It promotes economic growth and allows companies to conduct their business around the world, in a fair and honest way. Or so the story goes? Well that's alright then isn't it? But what if I told you that the whole system is rigged?

The entire financial world is governed by the central banks who oversee the large investment banks that make the markets of finance and commodities. There has always been rumours of rigging within the financial markets, but it is only just becoming clear what a toxic industry it is. It seems whatever the market is, they will fix it.

Conspiracy theorists of the world, we sceptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything.

Currency trading is the latest addition to the "rigged" column, here is a summary of the known market manipulation scandals (because it can be problematic keeping track of them all by now)

Libor - interest rates

ISDAfix - swaps

Platts - oil prices

WM/Reuters - FX

High-Frequency Trading - equities

Aluminium

Energy.

The latest to hit the headlines is the foreign exchange markets and this one is particularly troublesome because the Bank of England seems to have known about it for some time. A fair review of the foreign exchange scandal can be found here

http://www.bbc.co.uk/news/business-26523995

The principal charges in this allege that currency traders at some banks made rigged trades designed to lose money — then took cash kickbacks from co-conspirators who made money on the deals. Yes, it's very easy to understand.  There's a lot of money involved and very, very few consequences.  If power corrupts then absolute power corrupts absolutely.

THE GREATEST DECEPTION OF ALL

Quantitative Easing: State sponsored theft on a larger-than-industrial scale from the working and middle classes to the mega rich. In addition to denuding the mass of the population of their meagre resources, employment and welfare, the proud cultural heritage of countries such as the United Kingdom is also being ruthlessly plundered.

It's Friday. It's Financial. It must be FRIDAY FINANCIAL

with the blog's money and banking expert JULIAN SAYER.

This week Julian takes a look at how RBS has managed to take billions of taxpayers’ money and, err, piss it against the wall.

MUCH to the dismay of the British taxpayer, the Royal Bank of Scotland (RBS) announced their latest financial results this week. Only another £8.2 billion pound loss, bringing the staggering total of losses since 2008 to £46 billion.

http://uk.reuters.com/article/2014/02/27/uk-rbs-earnings-idUKBREA1Q0ED20140227

This raises a lot of questions, but the one I want to illustrate today is how does a bank survive these losses, and continue to operate in the financial world. The very simple explanation is Quantitive Easing (QE.)

Quantitive Easing is simply the art of creating money out of thin air via central banks, in our case The Bank of England. That money is then given to commercial banks such as RBS, in exchange for huge chunks of toxic debts that the bank has on its balance sheet, and are effectively worthless. The commercial banks are then meant to use these magically created new funds to start lending to the economy and everything in the economy will be hunky dory.

However, that hasn't happened. So what has happened since the financial crisis broke in 2007? Well, first off, the banks moved the goal posts on lending. Fearing more losses they reduced the criteria on which they lent, cut the amount of mortgages they issued, reduced the overdrafts they lent, and cut new lending almost overnight. This in turn had a disastrous effect on the real economy, businesses cut back, many went to the wall and unemployment soared. Hundreds of thousands of businesses have gone to the wall over the last few years. So if the banks weren't lending this new money, what did they do with it?