The City of London, Britain’s Second Empire

The City of London, Britain’s Second Empire

A film co-produced late last year by Tax Justice Network founder John Christensen and Michael Oswald, The Spider’s Web: Britain’s Second Empire , lays bare the tremendous damage the City of London and its banks have done to the world economy since the 1960s. It proves wrong both those who believe Britain long since ceased to be an empire and has become an appendix of the powerful United  States., and those who think Britain’s offshore banking havens represent  a  manageable problem such as Swiss banking secrecy. The film is based in part on a 2011 book, Treasure Islands , by expert on British offshore havens Nicholas Shaxson, who is interviewed in the film. The workings of the U.K.’s dependent territories – such as the financial havens of Jersey, Guernsey, British Virgin Islands, Cayman Islands, Gibraltar, formerly Bahamas, etc. -- have been notorious for years. But The Spider’s Web makes a new case, showing that those havens, run directly by the Bank of England and the City of London, have drawn the world’s assets to London banks for 50 years, making the City again the world’s

dominant financial center, able to loot the developing countries and drive the U.S. economy toward “financialization,” speculation over lending, and deregulation of Wall Street. Moreover, by establishing tax evasion sinks and rules enabling financial corporations and multinationals to pay minimal taxes and wealthy individuals to pay none at all, London has driven wealth inequality to unprecedented levels, with fabulous rewards for non-productive investment, and the growth of populism in opposition. In short, London has driven down growth, productivity, and productive lending and investment in economies throughout the world. A few examples: * 25% of all financial activity in the world takes place on British territory; *Capital flight from developing countries is $1 trillion a year and half of it goes to British financial centers, from which it is conduited to London banks; *Beginning with Chase Manhattan about 1970, London has cut U.S.-based major banks in on the flows, thereby contributing to American deindustrialization and bank deregulation (repeal of Glass-Steagall) as well; * Perhaps $50 trillion of global assets of all kinds “are owned by no one,” to quote co-producer John Christensen, an expert who became an “offshore haven double-agent” for more than a decade. The beneficial ownership of these assets has been rendered virtually impossible to determine, and of course no tax is paid on them; * Of the dozen top tax-evasion law firms in the world, Mossack Fonseca (Panama) is the only one not located in a British possession; * Three-quarters of the world’s hedge funds are headquartered in the Cayman Islands alone; * Starting with the Bank of Credit and Commerce International, or BCCI, in 1972, the Bank of England has harbored and protected banks funding terrorism and drugs.