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Why Bob Diamond should resign from Barclays

(Update) It’s not the falling share price that should force Diamond out. It’s what this Libor scandal says about him and his bank.

 
Why Bob Diamond should resign from Barclays

(Update) Surely not even Bob Diamond can survive in his job as chief executive of Barclays (BARC.L) for much longer?

The bank’s share price is tumbling as public outrage grows at its role in manipulating the Libor interbank lending rate during the financial crisis.

The political heat is growing too. Lord Oakeshott, the Lib Dem peer, was swift in demanding yesterday that Diamond should go.

With both the prime minister and the chancellor demanding answers from Diamond, and the chairman of the House of Commons Treasury Select Committee summoning him to explain himself, Diamond is once again in the firing line. He won't be able to use that line about making bankers 'cuddly' after what we learned yesterday.

With the Serious Fraud Office in discussions with the FSA over the scandal and the chancellor referring to the possibility of criminal prosecutions against indviduals over the market abuse, the sense of crisis at Barclays can only increase.

Also hitting the share price - now down 10% - will be fears of further litigation. Yesterday’s record set of fines of £291 million will dent the bank’s half-year profits, but they do mark a settlement with UK and US authorities.

However, there is no such agreement with investors and corporate clients, who have already launched a class-action lawsuit against Barclays in the US over the Libor scandal. The FSA’s summary of the case with its incriminating emails and messages from Barclays traders celebrating the money they were making from fixing Libor will give their lawyers plenty of ammunition to pursue their action.

Stockbroker Cenkos Securities says the total cost of litigation could ‘dwarf’ the size of the fines. Homeowners with mortgages linked to Libor that may have been more expensive than they should have been may also be tempted to join in the bun fight.

Meanwhile, the ongoing eurozone crisis makes matters worse as it weakens all financial shares.

But it’s not the falling share price that should force Diamond out. It’s what this scandal says about him and his bank that is so damning.

Once again we have seen bankers put their profits and self-interest ahead of the public. We are preparing a Q&A to explain what Libor is and how it works. But the short answer is that it is the rate of interest that banks use to lend to one another. It is a vital benchmark used to price transactions in the multi-trillion-pound markets in currencies, bonds and loans.

It is simply a fundamental matter of trust. Can we trust our big banks to be the guardian of the financial system that we need to live our daily lives and for the economy to function properly?

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53 comments so far. Why not have your say?

Rustie

Jun 28, 2012 at 12:50

What do we say to the increasing number of observers that would like to see usurers and spivs like Bob Diamond dragged from behind their mahogany desks and strung up with piano wire?

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The cynic

Jun 28, 2012 at 13:12

I'm not defending Barclays but is there really much of a difference between them trying to keep there borrowing costs down and what the UK Government is doing? With Quantative Easing the B of E buys Gilts with virtual cash. That increases the value of the Gilt and reduces the yield. Investors flood in and buy Gilts increasing in value and the Govt. borrowing rate remains artificially low. There is no substance behind the virtual cash so is that strictly legal?

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Anonymous 1 needed this 'off the record'

Jun 28, 2012 at 13:13

As a bona fide spiv I take offence at being associated with the likes of Bob Diamond

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Rustie

Jun 28, 2012 at 13:22

Nice one Anonymous1 !!

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Rustie

Jun 28, 2012 at 13:27

To The Cynic:

You really haven't got a clue have you? The "retail" arm have been fudging LIBOR rates to their derivatives spiv colleagues in the "investment (aka Casino) divisions. This has enabled the trader wide boys to earn colossal bonuses on each-way bets.....its got nothing to do with investment banking per-se....its just fraudulent, rigged gambling....priobably as near to a mafia style sting as its possible to get without the risk of being shot.

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The cynic

Jun 28, 2012 at 13:40

Thanks for that Rustie. As I said I'm not defending Barclays. Actually I don't really think I am clueless. I'm sure you know far more about baking than I do. I am merely comparing the actions of the accusers of Barclays with action Barclays are being accused of

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Michael Peters Fenwicks

Jun 28, 2012 at 13:54

Management Failure I Say - Bob failed to supervise his wives/family of executives in the most simplistic form.

Who would have thought - reckless share price says it all but then I think we need a change in management as for the last five years Barclays as a company has jumped from disaster to disaster.

I say Bob sack/think of replacing the management or you will be handed your suitcase - oldboy.

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AJMcG

Jun 28, 2012 at 14:03

I would not have bought Barclays shares when I did if I had known that the management were colluding to give the impression that Barclays was doing okay. I have therefore been conned by senior management while they have picked up bonuses based on a performance which we now know to be false. I look forward to seeing the crooks being forced to repay their bonuses before they go to jail. I also expect to get compensation for being conned.

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Rustie

Jun 28, 2012 at 14:29

" I am merely comparing the actions of the accusers of Barclays with action Barclays are being accused of "

To The Cynic : Any chance of clarification on that?

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lionel davis

Jun 28, 2012 at 14:34

Now the SFO and the FSA are investigating! HELP.

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The cynic

Jun 28, 2012 at 14:44

Sure Rustie. The British Government (the accusers) has fined Barclays for manipulating interest rates to reduce their borrowing costs. Now of course they beleive this has been done illegally. But the British Government is also manipulating the interest rate at which they borrow through quantitative easing by buying their own Government debt (i.e. acting in a similar way). Now this may not be illegal but is it not a similar action? This is my only point.

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Rustie

Jun 28, 2012 at 14:50

To The Cynic:

But Barclays are fudging LIBOR rates to help their derivatives traders.

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The cynic

Jun 28, 2012 at 14:59

Yeah I know that, but isn't the Bank of England fudging the Gilt values by buying them to help the UK Government borrowing interest rate a similar thing?

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Rustie

Jun 28, 2012 at 15:05

Erm, no...............Bank of England staff don't trade derivatives and aren't paid astronomic bonuses.

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mikest

Jun 28, 2012 at 15:10

I sold 40% of my Lloyds holding last week, having decided, after 4 years patiently buying on ‘dips’, that the price was volatile enough to justify day trading. Whether through the effects of High Frequency Trading or ‘manipulation’ by hedge funds, LLOY and BARC often move up or down by 5 or more percent in a day. How long this situation will persist, I cannot say but I am fed up with sitting on the sidelines and have decided to have a little ‘fun’. Today, I’m betting on BARC moving up faster than LLOY…… As for slapping wrists, I would far rather a competent CEO like Bob Diamond was hurt in the pocket rather than see the bank managed by a lesser being.

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mikest

Jun 28, 2012 at 15:11

Anyone who thinks Barclays are the only ‘villains’ is deluded. I suspect this whole culture of manipulation was imported with the Lehman Bros carcass. If the object of the exercise is to set an example, I would be happier if Lloyd Blankfein of Goldman Sachs were top of the list.

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The cynic

Jun 28, 2012 at 15:13

I'm not saying they do or are but both are manipulating interest rates or are they not? Forget the bonuses and derivatives bit - that's just getting in the way. My fundamental argument is that the Govt are hypocritical so in so's.

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Rustie

Jun 28, 2012 at 15:35

To Mike O'Neill:

So you're happy for "competent" Bob Diamond to continue as a dishonest wide boy are you......good old Barabbas eh

To The Cynic:

If you twist the argument sufficiently you might just end up proving yourself right.

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Hicky

Jun 28, 2012 at 15:36

" I would far rather a competent CEO like Bob Diamond was hurt in the pocket rather than see the bank managed by a lesser being."

As long as this type of drivel is believed, what chance is there.

Mike you need to look up the meaning of competent,

"Having sufficient skill, knowledge, capable"

Bob Diamond, I think not.

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Moylando

Jun 28, 2012 at 15:45

The Cynic -

Yes,we can see what you're saying but it is a poor comparison. The government ( like 'em or not) are doing what they're doing in what they see as the national interest and are doing so transparently and are accountable to parliament.

Barclays on the other hand have been unscrupulous. If you have ever worked in banking, especially investment banking you would know that these people are detached from reality. That our society has depended on them is an obscene irony.

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mikest

Jun 28, 2012 at 15:50

When did this ‘manipulation’ take place? When was it first ‘discovered’? Bob Diamond took over from John Varley in January 2011. Previously, he ran the investment side of the bank. John Varley is now a contender for Governor of the Bank of England. I think all of us, politicians included, would do far better waiting for the full details to emerge.

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The cynic

Jun 28, 2012 at 15:55

I guess that's an honourable draw then Rustie!!

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Rustie

Jun 28, 2012 at 16:02

To the Cynic:

If it makes you feel better.

(This above all, to thine own self be true. R. Kipling)

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Thoughtfull

Jun 28, 2012 at 16:27

Whatever other other comparisons may or may not apply; if the executives of Barclays have broken the law, in particular as related to Company management, then they MUST be punished to the appropriate extent of the law. In the case it would appear to me reasonable that they be prevented from being Company Directors, as required by the law.

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Brian Richards

Jun 28, 2012 at 16:28

How much longer can their madness be tolerated? they are destroying us.

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Keith Snell

Jun 28, 2012 at 16:55

I have been saying that the on-existent ethics exhibited by the banks from well before 2008 should have given rise to actions against them for fraud. This latest scandal only goes to demonstrate that neither parties government, the BOE and the FSA are either incompetent or turned a blind eye. Hopefully we may now see a change in regulation and the imprisonment of the likes of Mr Diamond for corperate negligence and criminal fraud, they might then have some excuse to be paid at least a small percentage of their present outrageous earnings.

Of course the same is true of other banks it is an industry wide problem.

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Anthony Palmer

Jun 28, 2012 at 18:32

BD is one of those blokes who falls into a bucket of s...t and comes out not only smelling of roses but still with his cocky grin and still laughing all the way to the bank.

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Anonymous 2 needed this 'off the record'

Jun 28, 2012 at 18:47

Why is this described as a civil offence?

I would have thought it was 'criminal'.

The Singapore Authorities thought Nick Leeson had committed a 'criminal' offence.

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Dennis .

Jun 28, 2012 at 19:35

In understand that the effect on LIBOR was about half a basis point ie 1/200 of a percent. This might have a big effect on mega currency deals but I wonder if it really affects mortgage and borrowing rates for the man in the street?

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Dennis .

Jun 28, 2012 at 19:41

So OK bad things have happened, but as investors we should be looking beyond the emotion. Is this the Barclays BP oil spill moment and therefore a buying opportunity?

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William Phillips

Jun 28, 2012 at 21:10

"(This above all, to thine own self be true. R. Kipling)"

Hamlet.

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Thoughtfull

Jun 28, 2012 at 21:36

Dennis

Is then a small thief not a thief because he has only been caught with his sticky fingers in a relativly small pie?

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Moylando

Jun 28, 2012 at 21:48

Polonius actually.

Back to the point. I'm starting to wonder whether there is a huge over reaction here. A few guys tried to cover their arses That was wrong and they've been sacked. Whether the higher ups knew or condoned is unlikely and we'll find out.

Its even doubtful whether any criminal law was broken. The practice happened at other banks well and we'll find out that others will be sacked. A couple of top guys may cave in to the pressure and resign.

What should we do about the banks and their top management ? Get rid of them ? Don't think so

I think this is all a distraction now lunged on by our rabid media. Our economy is weak and politicians are struggling. The last thing we should be worrying about is a few grubby traders.Let's move on. and if I hear Milliband and Balls get on one they need to have the fact that they let this happen when they allowed the city free rein rammed somewhere tight.

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TFG

Jun 28, 2012 at 22:04

This site is full of Barclays communications department employees. They probably wont respond until back at work tomorrow.

Bob should be sacked, You cant say he is worth anything. Only one of the worse share performances in the ftse over the last 5 years and he has one of the highest rumeneration package in the ftse.

There is no comparison between bankers robbing you and me, by manipulating the system for their own fat bonuses and the BOE monetary policies.

The government needs to hit them where it hurts, prosecute like hell, otherwise the proletariate will rebel and kick this government out for a generation.

How many more scandals can we stomach from these bankers.

If you agree please move your money out of Barclays. Current accounts may be like moving from one scumbank to another but you could move unit trusts etc. to a more ethical, lower cost investment trust or ETF, otherwise your helping fund the next fat cat bonus.

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Anonymous 3 needed this 'off the record'

Jun 28, 2012 at 23:40

I agree with Dennis - too many emotive responses here, the issue for us is whether this is now a good time to invest in Barclays? Or should we just carry on with the Daily Mail level discussion?

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mo khan

Jun 28, 2012 at 23:52

Any one know which, University he went too?

What was learned or taught there?

Seems.to have covered the University costs several times over. (hence high bonuses for low performance, not even performance just simple low ignorance)

what a good breeding, background,and prestige the Investment gained, Business Qualifications, was for those attending it..Where were they all?

Come on Universities, put your hands up, as well as dishing out, Degrees and Titles like confetti.for cash, Why not take credit for this too, no doubt your star pupil.

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Alan's opinion via mobile

Jun 29, 2012 at 00:26

Who on earth would trust someone with a name like Bob Diamond?

To me it smacks of the name a dodgy bottom-of-the-market second hand car dealer, operating out of a caravan on a scruffy lot with plastic pennants fluttering in the breeze. Such a salesman would say things like "she's a lovely runner", "she's on the button" and claim lower than normal mileage on a banger that had been clearly "clocked".

If I were unfortunate to have inherited such a spiv's name as that, I would have changed it years ago!

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chris Townson

Jun 29, 2012 at 05:08

One con after another.Will we hear anything more about the Olympic scandal ticket sales in 6 months time? A bit like Diamond and Co-ride out the storm !

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Bhavesh Sutaria

Jun 29, 2012 at 12:47

Bob Diamond won't be sacked. He brings in the money.

I wonder - if Barclays had the balls to rig the LIBOR market, and thought it was acceptable, surely other banks must have tried it too ? Investment banks are ruthless profit making machines. Or are larger investment banks pure angels, and have a better reputation than Barclays for straight dealing ?

No acrtion will be taken. In a month, this will be history. Banks and influence of money creates very powerful political friends.

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Mug.punter

Jun 29, 2012 at 17:58

Libor fixing demonstrates there was institutionalised practice of breaching chinese walls that are supposed to exist between departments of banks to protect the integrity of markets.

Departments that are supposed to be entirely separate were colluding to influence prices each other for mutual benefit and make profit.

This culture probably extends to other areas - such as sharing client inside information with investment arms of banks.

its a rotten industry.

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Bhavesh Sutaria

Jun 29, 2012 at 19:20

The Glass Stegall Act of 1933 was designed to prevent the illegal activities between retail & investment divisions at banks, prior to Great Depression of 1930's when lots of nonesnse went on.

To protect the monetary system & public.

Obviously not much profits for bankers, so guess what ?

The Bush administration in 1990's repealed this Act, wonderful reasons were given in the name of greed. Anything could be done, and indeed was done :) - all talk of Chinese Walls is pure rubbish.

Despite proposals to re-introduce separation of retail & casion divisions, the bankers are resisting it strongly with their powerful politician friends, else their days of glory are over. So far, they are winning ...

Only economic disaster will force the public to crush these bankers, and re-introduce laws to protect the system. We are still all paying for the huge sub prime debt exported globally, which is probably the most reckless Ponzi scheme to defraud & nearly crash the system, leaving governments with huge debt, which we & our kids will pay for decades.

These bankers will never get it. And we still trust them ?? !!

The burning question is not LIBOR, but what else the bankers may have been fixing ? Will governments have the guts to investigate ?

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Keith Snell

Jun 30, 2012 at 10:03

If there are class actions starting in the US there must be a likleyhood of one starting in the UK. I sold all my UK banking shares some years ago because I believed that the total lack of ethics exhibited by them was bound to mask undisclosed fraud. I have had a few arguements with them and the sort of porblem the FSA was prepared to delve into fully was never sufficient to uncover the widescale lack of ethics which used to ensure our banking system was reasonably well managed, since Nick Leeson there has always been a warning of large risk of fraudulant traders that has been paid lip service to but in reality ignored by the Banks

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Anonymous 4 needed this 'off the record'

Jun 30, 2012 at 10:52

If only we were as keen to see bankers prosecuted for "match fixing" as we are sportsmen. It seems to me if Bob Diamond didn't know about the crooked practices going on in his bank he should be sacked for incompetence, if he did know he should be prosecuted.

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Chartered Accountant

Jun 30, 2012 at 12:40

In response to Bhavesh Sutaria, I realise that it is "received wisdom" in certain quarters to accuse the Bush Administration of most sins, financial and otherwise, but the Glass-Steagall Act was not repealed by Bush but rather by the Gramm-Leach-Biley Act under Bill Clinton in 1999. I personally believe that some form of Glass-Steagall should be reinstated.

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Arunboy

Jun 30, 2012 at 16:06

We live in a selfish world governed by gutless, powerless figure heads. Puppets to their puppeteer masters, we their audience don’t like what we see but carry on watching and still buy the admission ticket all the same.

Whilst these thieves lead us to "Soylent Green" we allow them riches and caviar . The world is a high speed train heading full speed into oblivion.

It's about time decent people, living decent lives take control and apply the brakes.

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Bhavesh Sutaria

Jun 30, 2012 at 16:53

We have democracy & freedom , but no power ...

The Kings rule ... as they always have done :)

Become a King ... or become a Bishop or Pawn ... to be happy

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Prof Eman

Jun 30, 2012 at 18:46

About integrity, companionship, and similar.

Bob Diamond, is he not a member of David Cameron's inner circle of friends.

Not just riding horses is an issue here, but flying David's aeroplane.

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TFG

Jun 30, 2012 at 19:14

The scandal weakens the reputation of the city of London and as a consequence will encourage more money to be kept in the east rather than flowiing here. On top of this scandal we also have the misselling to small business; their version of the PPI scandal which will necessitate write downs and compensation across the banking sector.

I cant think of a reason why people are defending Bob the Diamond geezer. The share price plunge and fine alone should be enough for any shareholder to want his sacking. The share price must be a third of what it was 5 years ago and he paid himself 17 million quid last year for what he called an unacceptable year. Guess what he will say at the end of this year; another unacceptable year but give me another 17 milliion and I will go

Banking may be a valuable asset and tax contributor in the UK but if they hadnt robbed you me and countless businesses for a generation and instead worked with companies and people then maybe we would all have been better off. When the eurozone finally takes its medicine and writes off debts, as you cannot inflate away that much debt, then many banks will be nationalised across Europe if not the western world. It will only get worse before it can get better as we havent hit the bottom yet

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Prof Eman

Jun 30, 2012 at 19:23

One or two of you have asked about Bob's university and similar.

Wikipedia shows that Bob graduated in BA Economics from Colby College, Maine USA and has an MBA from the University of Connecticut Business School, graduating first in his class.

You might also find it interesting to know that he is a Republican and an advisor to the current Conservative Mayor of London.

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Bhavesh Sutaria

Jun 30, 2012 at 20:14

Its not possible for Barclays alone to have rigged LIBOR. Many parties have to cook the books to move the rates. The fun & games are just beginning. The furore will go on & on, like a sex toy powered by a Duracell battery. A proper scandal, and about time, life was getting a bit dull in the recession.

Barclays may be tempted to snitch to Headmaster & beg for mercy, if it knows who the other playground bullies were. All the naughty boys will have to lower their trousers, and are in line for a jolly good caning indeed.

But life will then Carry On, As Always .....

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mo khan

Jun 30, 2012 at 21:07

At the end of each comment, many of you, me including , have commented,.. No matter how bad banks, nothing will change, life will,go on. unquestioningly, which these people simply, exploit this fact..... isn't that the problem...?

What an apathetic lot we are......

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Bhavesh Sutaria

Jun 30, 2012 at 22:18

We can't change banks just like that. We're not apathetic.

They are too powerful. They can break a politician, with vast influence, with friends in press, media, internationally, etc. No politician will upset a bank, and be blacklisted for directorships etc, if they lose elections.

Just look at past politicians, raking in the rewards for big favours done for big industry & dodgy administrations across the pond :)

Money rules ... and so does force & spin ...

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Rose G

Jul 03, 2012 at 10:51

As sad as it makes me, I have to agree with Bhavesh - the money makers or those who dream of making money using crazy schemes, are in charge - they have brought countries close to bankruptcy but still are being protected. We cannot touch these people because they have the confidence of our politicians, who are not only on first name terms but probably sponsoring each other to more ambitious plots to own the world! Who needs millions in bonuses alone, only sickos with megalomania as their main symptom?

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