Should We Worry About French Banks?




As the Euroland disaster powers along thanks to electorally hamstrung European leaders, should we be worrying about French banks? Look at the clip below from a much larger datapoint graph in the New York Times, highlighting interlinked Eurozone weaknesses.

From the New York Times

French banks should worry about Italy even more than their exposure to Greece

The NYT seems to suggest French banks should be watching their exposure to Italy even more closely than their large exposure to Greece.

As Euroland leaders jaw-jaw the markets seem bent on war-war and there are few signs the defenders have yet found an elegant path to the peace table, indeed they way we are headed may just make an already humongous conflict, worse.

This is a point not lost on at least one American investment strategist, who is betting that France could soon face a Lehman Bros-style event. Keith Fitz-Gerald, Chief Investment Strategist at Money Morning reckons that France is home to two banks that could be the next Lehman Bros (shorthand for an soon-to-fail institution that provokes a systemic earthquake in the process). The French have long had a love-hate relationship with their banks as we have reported elsewhere. Another moment of huge distress may be looming.

UPDATE POST THE MAKE-OR-BREAK EURO SUMMIT: Bank of France has issued a statement on the funding needs of French banks here:  “For the four French banks – BNPParibas, Group BPCE, Group Crédit Agricole and Société Générale – which represent 80% of the French banking sector – the total capital shortfall identified is 8,8 billion euros…”

  • Meanwhile below is a reader’s comment on a story published in the UK’s Daily Telegraph setting out, in probably too much detail for most, a point of view that tickled our fancy. Read on for Why the West is Going Broke by Walter James O’Brien, a US-based industrial cost analyst

The comment by Mr O’Brien appeared on a story in the London-based Telegraph finance blog and is reproduced here with grateful acknowledgement.

“Here’s why the West is going broke in short form.  I have never seen an economist except for government statisticians working for the Bureau of Labour Statistics in the States and union econometrists deal with this.  The AFL-CIO’s apparatchik for contingent labour issues said they would do nothing about commodified “leased or rented”  labour as they themselves use the high rental rates as a negotiating point for new contracts LOL

It is amusing the Occupied Doing Nothing on Wall Street has put them in the position of having to do .XLS spreadsheets of the work breakdown structures and costs of every industrial enterprise, both goods and services, so they may have adequate data to define what is and what is not an “equitable and socially responsible” deal between worker and capitalist. They will not do the work, though to do so was a pleasure and an honour for the “Roosevelt Reds” who worked with American industry and for Forrestal’s Industrial War Board to sort out both how to win WW II through superior manufacturing and services expertise while designing the workplace for the post-war USA.

Hm. Where to start. The good folks at http://www.dcma.mil The Defence Contract Management Agency does exactly what the Occupytards are to lazy to do every single day. They have in various forms since before WW I. They have formats, equations, spreadsheet accounting procedures, and formal definitions enshrined in law for what constitutes an equitable worker/management deal which is cost effective while returning value to the shareholder. Go to the site’s search engine and use the following terms, and they are good to go: “work breakdown structure” “pro forma manufacturing format” “labor to management cost ratios” “cost ratios” “proposal cost breakdown appendix” Those should get you down the runway.

The formal relationship between the Federal government and the workforce became a critical issue at exactly the same time as the Russian Revolution occurred, so there is a plenitude of “how to’s” on acceptable labour-capitalist conduct enforced by the good folks at the Bureau for Industrial Security” who manage our standby wartime capacity for production and services delivery.
http://www.bis.doc.gov/ They are pretty good at catching spies, too, heh, heh. PLEASE be communists on Red Chinese payroll, you little street-sh*tting late Sixties leftovers.

Anyway, all the forms, procedures and technical expertise are to be had from them. A few courses in cost estimation of manufacturing line setup and op’s and for service delivery operations wouldn’t hurt either.

Sorry about going into IggyJack mode on this. From my standpoint, this is simply fulfilling a “paper of record” obligation of notice.

Why the U.S. Economy Cyclically Fluctuates:
A question of misappropriation of the taxation of labour

By:
Walter James O’Brien

29 June 2010:  The following is a partially detailed and general explanation of two things: why the USA is in perpetual economic turmoil after decades of relative tranquility, and also why the commodification of labour is a crime against humanity through example.

American labour leaders and government labour statisticians saw 2010 coming in 1971. That was the year Nixon killed the Prevailing Wage Act which so many had fought to be made into law for many decades, and came into force in 1948 or so as a trade-off for getting the unions to back off from opposing the Taft-Hartley Act.

The principle is simple, at least for the numerate who have ever had an hourly job: for labour peace and tranquility to reign, you index the rate of pay to actual cost of living indeces, not today’s types of cost-of-living index, which are used to find out what the market will pay plus 10%, but rather what the consumer can actually afford to buy, in the way of housing, food, etc. This index still exists for Federal construction jobs (called the Davis-Bacon Act) and the USA would be a WASP Guatemala without it, but it used to apply to manufacturing and service sector workers, too.

Of course, for pay indexing to rational criteria one needs an Office of Price Administration to sort out honest figures for cost-of-living index development.  This we still have in the USA as a very small part of the U.S. Department of Agriculture, which as certain Russian friends know is also a very elaborate part of the American intelligence and counter-intelligence mechanism as well as an effective peace-making tool through the Food for Peace Program and the Denton Plan, which provide surplus production of agricultural and industrial goods gratis to nations in need.

The other factor killing us is the old snake swallowing its tail trick,  from the standpoint of workforce taxation of brokered temporary workers. A third of our workforce is brokered contingent labour. How we can still be competitive internationally is we have to maintain a hidden subsidy device to peg our cost of labour at less than zero.  All nations do this to a lesser or greater degree to make their export goods more competitive.  It is easy to do with pimped labour if you are a manufacturer. If you outsource all your workforce you can deduct from taxes the entire lot as an operating expense, including the labour pimp’s margin, the markup on the labour, and—this is the poverty-making machine which no government can stop except by outlawing it–deducting the taxes the workforce pays to the Feds and state governments. With direct employment of labour, you cannot pocket the taxes the workforce pays as you can when they are a leased commodity.

Since Reagan allowed for temp agencies and employee leasing firms, etc., etc., of which there are 43,000 in the USA, to deduct such provision of labour as an entire packet as a form of grease to clients of those agencies, our economy has been swallowing its tax tail. If we disallowed the deductibility of workers’ taxes under any and all circumstances, the damage would heal in less than five years.

As it stands now, the client of the temp agency gets those taxes back which the workers paid as part of their tax refund allowance. As firms like Kelly Services, Manpower, Adia and thousands of other temp firms work globally throughout Western civilization, I have no doubt this same strategy for “less-than-zero-izing” labour costs has been going on worldwide for at least as long as it has in the USA.

How many American workers are contingent, commodified workers?  This is profoundly difficult to determine, to the delight of politicians and the contingent labour contractors as well.  This condition is not altogether a product of nefarious design, and major efforts have been made to improve this situation.  Here is where one could start to compile a proper list, courtesy of the U.S. Department of Labour:

http://www.bls.gov/oco/cg/cgs0…

http://www.bls.gov/oco/cg/cgs0…

http://www.bls.gov/oco/cg/cgs0…

http://www.bls.gov/oco/cg/cgs0…

http://www.bls.gov/oco/cg/cgs0…

http://www.bls.gov/oco/cg/cgs0…

http://www.bls.gov/oco/cg/cgs0…

http://www.bls.gov/oco/cg/cgs0…

Again, it must be stated, for the above categories of employment, the level of rented-out agency provided labour as a percentage of the total can be as much as 30% of the total workforce by category.  The terms and conditions of respective fields’ employee/employer contract are not stated in detail ever in these statistics, both by design and to limit the complexity of the documents provided.

The U.S. Department of Labour once had a Contigent Labour Task Force which was disbanded in 2000, to my knowledge. In my opinion, the U.S.A. and all nations need to spend time sorting out how to construct their worker tax relationships more effectively so that the taxes the worker pays goes to the government which they elected rather than to third party private concerns.

The private sector does a much better job, as always, of tracking their own activities for the benefit of their associates and clients.  Here are two very clear but corporate candy-coated overviews of the state of temporary contingent rented out labour in the U.S.A,

http://www.clearonmoney.com/dw…

http://www.americanstaffing.ne…

The ILO came into existence to ensure the commodification of labour was treated as a crime against humanity, yet commodification of labour is now the main mode of worker employment for dozens of industries now. Does not the argument given above make clear to you why people fought against slavery so bitterly here, even if and especially if motivated on a purely business basis?

I work as a cost estimator, and I have bumped into this reality time and time again on pro forma project costing and brought it to the attention of management, sometimes to my detriment, and still do if the client looks like someone who may be sane and responsible. My association with tax reform folks on this issue in the early 1990′s got me into a little bit of trouble once, so I have kept a low profile on it, but this is where the West’s tax revenues are going, into the pockets of those management consulting firms which parasitize the industrial sector but most commonly into the pockets of the industrial concerns so they can compete more effectively overseas while reducing their net tax obligations.

Happily, all it takes to sort things out and to reinstate that lost revenue is to disallow the deduction of worker taxes from the tax bill of the employment contractors’ clients.

Let us return to the problem again and explore it in a bit more detail.  I hope this does not give the reader a headache.  If the reader does not work with spreadsheets as part of their work, it is annoying and frustrating to deal with such issues as this.

If your business concern is a client of an employment contractor which firm is brokering to your enterprise workers provided at a markup as commodified labour, how you deduct your contingent workforce’s taxes and actually get them back, leaving the government with a “net nothing” revenue-neutral tax inflow from the rented labout as an employment contractor’s client firm is when you are invoiced, and you pay your monthly bill for 100 grand of workhours from the  Smiley-Face Rent-A-Chattel Agency, that entire 100 grand is deductible in full as an operating expense from your calculated returns according to your national tax code. When the client firm of the “labour pimp” files their taxes and gets their tax refund, that gross deductibility is reflected in the size of their refund immensely.

This is why renting of employees as a commodity at a markup was illegal for so many, many years, and still ought to be, unless, as prevailed in the days before the 1980′s, separate returns for the rented-out workforce were submitted by the employment contractor to the inland revenue folks which contained separate, direct payment with a signed affadavit which indicated the client firm did not declare the true labourers’ tax payment component of their contract as deductible.  In other words, both the “labour pimp” and their client had to provide independent assurances that the taxes paid by the subcontract labour involved were not counted into the deductible operating expenses; it is why you had to and have to still sign what are known as “yellow dog” or non-compete/non-circumvent contracts with the “labour pimp” as a subcontract worker as, if the client knows by law what you are really getting paid as chattel, they will hire you direct. That is known as short-circuiting an employment contract.

It’s really a mind-numbing bore, but there theoretically is some interest as to why the Western world is going broke, and the mechanics of it are fairly simple, so I thought I would bring it up. The problem is the exploitation of one group of people is so often the key to economic progress for another exploited group. It is yet another manifestation of a very old governmental and industrial exploitation game called “playing the peasants off against each other.”  Historically, personnel agencies have been very woman-friendly from an executive management standpoint, and thus many thousands of college educated women have made rapid progress in advancing their economic fortunes in the area of exploiting contingent labour.

This is also another instance in which the absurd and bizarre transformation of social relations by ruthless backroom digital clickety-clicks has resulted in the rendering of political classifications to a state of near-complete meaninglessness. At one time, direct versus marked-up and rented labour issues used to be a liberal concern, now it is a libertarian one. Vide the attached articles from 1992, which publication now is a kind of “Der Sturmer” to the American Left,  but it is a good article on this subject:

http://www.prospect.org/cs/art…

Here is another older work on the subject. It is not politically correct to mention this sort of exploitation anymore, as, again, employment contracting has opened so many doors to prosperity for so many subsidized-degree’d “oppressed minorities:”

http://www.soc.umn.edu/~knoke/…

Here’s how you, too, can put together your own galley of oarspersons as drumbeater which document also outlines the very tax benefits to the client firm I identified:

http://www.hci.org/lib/conting…

You must log in to access this document, as Human Capital Incorporated needs to know who is watching their shenanigans.

Here is a useful video article from “Workforce Management” Magazine on contingent labour:

http://www.workforce.com/secti…

Again, I apologize for being a bore, but this does relate directly to other frauds such as Anthropogenic Global Warming in that AGW is but another type of this sort of useless exploitation of other people’s honest labour by otherwise unemployable degreed dog turds who chisel hard cash out of people who are genuinely doing useful work in exchange for providing zero-value-added “management skills.” There is no limit to the ingenuity of the workshy, especially when they feel their degree, gender and ethnicity entitles them to the very best of the very best, and they are not shy about ruining other people’s lives to get it.

My politics are conservative. There is nothing more conservative than focusing on getting paid. The problem is, governments have not focused on collecting what they ought for thirty years, not from the “labour pimps” and their clients who have scarpered down the pike with 25-40% of the contingent workforces’ earnings in the form of indirectly pocketed tax receipts. AGW based policies add yet another dimension to the pilfering of the workforce and consumer and industry at large in exchange for zero-value-added “management and administration.” I still do not understand why the Left feels they “own” labour issues, either. Someone needs to explain that to me in detail.

Here is an over-simplified example of how this works.  I did this for 35 of 50 state directors for labor departments nationwide in the USA in thumbnail form via fax and phone over three years, 1993 through 1996. One actually responded, the nice executive director of the State of Vermont’s Department of Labour, and introduced and had implemented a Governor’s Executive Order to provide special reg’s to avoid employee leasing violations of the tax code in 1996. It is just too much work for even 10 people to try to make even a small difference to such ameliorate the effects of such widespead and “perfectly respectable” corruption, corruption as in rot.

Let us assume the USA has 160 million workers. Let us assume on the very low side their average income is $25,000 for the past 30 years. Let’s also assume that 30% of them are contingent workers, and that they each pay 25% total taxes to Federal, state and local tax authorities. If the taxes paid by these contingent workers is returned in full as a tax refund to clients of the employment contractors, the governments of the USA are missing out on:

$160,000,000 times 25,000 bucks times 30% times 25% times 30 years in equals $9,000,000,000,000. This does not include the markup on that rented out labour which is just funny money with no zero-added-value provided by the labour pimp except turning in an invoice to the client and foodling with the timecards. This markup can be anywhere from 20% to 100% of the base rate of worker pay plus bennies, if any of the latter are provided.

What difference would a net additional positive tax flow of 300 billion per year into governmental tax coffers have made to the USA’s fortunes over the past thirty years? If thirty percent of that total amount were the Fed’s that would about equal our present actual national debt on the several Federal levels on which it exists.

If 14 million people default on housing loans, we get the 2006-2007 crisis. If 43,000 employment contractors across America do the dirty deeds, sometimes in all innocence, as outlined above for 30 years, we get what?  The mess we have now.

Respectfully submitted,
Walter James O’Brien
Industrial cost analyst”

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