by Ambrose Evans-Pritchard
22 December 2009
from Telegraph.co.uk
Société Générale has advised clients to be ready for a possible "global economic collapse" over the next two years, mapping a strategy of defensive investments to avoid wealth destruction.
In a report entitled "Worst-case debt scenario", the bank's asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems.
Overall debt is still far too high in almost all rich economies as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of "deleveraging", for years.
"As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse," said the 68-page report, headed by asset chief Daniel Fermon. It is an exploration of the dangers, not a forecast.
Under the French bank's "Bear Case" scenario (the gloomiest of three possible outcomes), the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 in 2010.
Governments have already shot their fiscal bolts. Even without fresh spending, public debt would explode within two years to 105pc of GDP in the UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade.
(UK figures look low because debt started from a low base. Mr Ferman said the UK would converge with Europe at 130pc of GDP by 2015 under the bear case).
The underlying debt burden is greater than it was after the Second World War, when nominal levels looked similar. Ageing populations will make it harder to erode debt through growth. "High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt," it said.
Inflating debt away might be seen by some governments as a lesser of evils.
If so, gold would go "up, and up, and up" as the only safe haven from fiat paper money. Private debt is also crippling. Even if the US savings rate stabilises at 7pc, and all of it is used to pay down debt, it will still take nine years for households to reduce debt/income ratios to the safe levels of the 1980s.
The bank said the current crisis displays "compelling similarities" with Japan during its Lost Decade (or two), with a big difference: Japan was able to stay afloat by exporting into a robust global economy and by letting the yen fall. It is not possible for half the world to pursue this strategy at the same time.
SocGen advises bears to sell the dollar and to "short" cyclical equities such as technology, auto, and travel to avoid being caught in the "inherent deflationary spiral". Emerging markets would not be spared. Paradoxically, they are more leveraged to the US growth than Wall Street itself. Farm commodities would hold up well, led by sugar.
Mr Fermon said junk bonds would lose 31pc of their value in 2010 alone. However, sovereign bonds would "generate turbo-charged returns" mimicking the secular slide in yields seen in Japan as the slump ground on. At one point Japan's 10-year yield dropped to 0.40pc. The Fed would hold down yields by purchasing more bonds. The European Central Bank would do less, for political reasons.
SocGen's case for buying sovereign bonds is controversial. A number of funds doubt whether the Japan scenario will be repeated, not least because Tokyo itself may be on the cusp of a debt compound crisis.
Mr Fermon said his report had electrified clients on both sides of the Atlantic. "Everybody wants to know what the impact will be. A lot of hedge funds and bankers are worried," he said.
Showing posts with label banks. Show all posts
Showing posts with label banks. Show all posts
24.9.09
BAD BANKS: Targeting late capitalism's exploitation of labour and nature
by GRANT MORGAN
Socialist Worker-New Zealand
World capitalism's boosters, led by US Federal Reserve chair Ben Bernanke, are welcoming economic "green shoots" and proclaiming "the end of recession".
Nobody has a crystal ball, and yes, at some stage the global economy will start to recover, even if only partially and temporarily. But we need to look at the bigger picture if we are to have any idea of what might lie ahead.
SHARE MARKET BUBBLE
At present, the economic "recovery" is first and foremost a recovery in share market prices, while global unemployment continues to rise and real wages are being driven down.
The levels of unemployment and wages are a much safer way to assess the real state of the real economy than share market fluctuations. What we are now seeing is a share market bubble disconnected from rising unemployment and falling real wages.
Late capitalism increasingly depends on financial and asset bubbles which are disconnected from the real economy.
PROFITABILITY CRISIS
Obviously, that means financial and economic instability is going to be not only more endemic than during early or middle capitalism, but also more catastrophic in its effects. That we saw during the Great Implosion of September 2008 which came close to collapsing the world system's financial structures.
Late capitalism's increasing dependency on financial and asset bubbles is a key symptom of something deeper. The world system is finding it much harder to translate the mega-accumulation of capital into the maximised profit margins which alone can sustain the global rule of ever fewer monopolists.
Many analysts have pointed to the increasing disconnect between rising labour productivity and falling consumer demand, leaving the world economy awash with unwanted consumer goods and excess productive capacity. That is an obvious driver of the world system's profitability crisis.
REVENGE OF NATURE
But there are other drivers as well. Hand-in-hand with the exploitation of labour, the exploitation of nature is creating an existential gulf between human sustainability and corporate profitability.
Since its birth 500 years ago, capitalism has been dependent on the free lunches provided by labour and nature. Without the state-sanctioned looting of nature, the world system could not meet its profit needs, any more than it could without the state-sanctioned wage slavery of workers.
Now we are seeing the revenge of nature, most notably in the rising tides of global warming, but also in the resource depletion and chain-reaction pollution which will intersect with climate change in dangerously unpredictable ways.
TERMINAL CANCERS
Unless checked by a global mobilisation, climate change will kill millions and perhaps billions of people on the planet, unleashing a mega-crisis which kills capitalism. Yet any such global mobilisation will fatally undermine corporate profitability and thus kill capitalism anyway, maybe even quicker.
Late capitalism is being eaten away by terminal cancers.
Yet we cannot simply stand by and wait for something better. The elites who run late capitalism will stop at nothing to transfer their power and privileges to a post-capitalist world which is almost certain to be even more barbaric. That is the road to a mass die-back of humanity and other life forms.
MANY GOOD CAUSES
So the question is: what can we do, right here and right now, to prepare the ground for a post-capitalist world which is more democratic, more equitable and more ecological than the present system.
There is no single or simple answer to that question. The struggles of many leftists in many countries around many causes all help, cumulatively, to make the grassroots stronger and the elites weaker.
Among the good causes that New Zealand leftists are currently promoting are the living wage, climate justice and pro-MMP campaigns.
ASYMMETRIC WARFARE
There exists a vital need to shape all such campaigns into a sharper challenge to the world system which creates the evils that necessitate the campaigns in the first place. Otherwise we are forever fighting the symptoms, leaving the system's elites far too much leeway to perpetuate themselves.
Yet any call to "fight capitalism" would lack mass appeal because it's too distant from most people's consciousness and capabilities.
How then can we proceed? The fundamental principle of asymmetric warfare, where the weak confront the strong, is to strike wherever the enemy is most exposed and wherever the most damage can be inflicted.
WIDESPREAD PUBLIC HOSTILITY
The big banks, whose colossal investments shape the very structures of all economies and, therefore, their governing politics and ideologies, are already the object of widespread public hostility.
If we direct our fire against the big banks, and get a good public response, then late capitalism will be weakened at an increasingly vulnerable yet important spot: the financialisation of the world system.
That is the strategic objective of Socialist Worker's Bad Banks campaign, launched in Auckland not long ago. It is an objective in harmony with the fundamental principle of asymmetric warfare.
WIDESPREAD PUBLIC SUPPORT
The Bad Banks campaign targets the key investment drivers who are responsible for rising unemployment, falling real wages, climate change and other evils flowing from capitalism's exploitation of labour and nature.
It is therefore a campaign which fingers the causes as well as the consequences of the evils of late capitalism. And going by early results at Bad Banks street stalls, there is widespread public support for the campaign.
To help out at a Bad Banks stall, email socialist-worker@pl.net.
Socialist Worker-New Zealand
World capitalism's boosters, led by US Federal Reserve chair Ben Bernanke, are welcoming economic "green shoots" and proclaiming "the end of recession".
Nobody has a crystal ball, and yes, at some stage the global economy will start to recover, even if only partially and temporarily. But we need to look at the bigger picture if we are to have any idea of what might lie ahead.
SHARE MARKET BUBBLE
At present, the economic "recovery" is first and foremost a recovery in share market prices, while global unemployment continues to rise and real wages are being driven down.
The levels of unemployment and wages are a much safer way to assess the real state of the real economy than share market fluctuations. What we are now seeing is a share market bubble disconnected from rising unemployment and falling real wages.
Late capitalism increasingly depends on financial and asset bubbles which are disconnected from the real economy.
PROFITABILITY CRISIS
Obviously, that means financial and economic instability is going to be not only more endemic than during early or middle capitalism, but also more catastrophic in its effects. That we saw during the Great Implosion of September 2008 which came close to collapsing the world system's financial structures.
Late capitalism's increasing dependency on financial and asset bubbles is a key symptom of something deeper. The world system is finding it much harder to translate the mega-accumulation of capital into the maximised profit margins which alone can sustain the global rule of ever fewer monopolists.
Many analysts have pointed to the increasing disconnect between rising labour productivity and falling consumer demand, leaving the world economy awash with unwanted consumer goods and excess productive capacity. That is an obvious driver of the world system's profitability crisis.
REVENGE OF NATURE
But there are other drivers as well. Hand-in-hand with the exploitation of labour, the exploitation of nature is creating an existential gulf between human sustainability and corporate profitability.
Since its birth 500 years ago, capitalism has been dependent on the free lunches provided by labour and nature. Without the state-sanctioned looting of nature, the world system could not meet its profit needs, any more than it could without the state-sanctioned wage slavery of workers.
Now we are seeing the revenge of nature, most notably in the rising tides of global warming, but also in the resource depletion and chain-reaction pollution which will intersect with climate change in dangerously unpredictable ways.
TERMINAL CANCERS
Unless checked by a global mobilisation, climate change will kill millions and perhaps billions of people on the planet, unleashing a mega-crisis which kills capitalism. Yet any such global mobilisation will fatally undermine corporate profitability and thus kill capitalism anyway, maybe even quicker.
Late capitalism is being eaten away by terminal cancers.
Yet we cannot simply stand by and wait for something better. The elites who run late capitalism will stop at nothing to transfer their power and privileges to a post-capitalist world which is almost certain to be even more barbaric. That is the road to a mass die-back of humanity and other life forms.
MANY GOOD CAUSES
So the question is: what can we do, right here and right now, to prepare the ground for a post-capitalist world which is more democratic, more equitable and more ecological than the present system.
There is no single or simple answer to that question. The struggles of many leftists in many countries around many causes all help, cumulatively, to make the grassroots stronger and the elites weaker.
Among the good causes that New Zealand leftists are currently promoting are the living wage, climate justice and pro-MMP campaigns.
ASYMMETRIC WARFARE
There exists a vital need to shape all such campaigns into a sharper challenge to the world system which creates the evils that necessitate the campaigns in the first place. Otherwise we are forever fighting the symptoms, leaving the system's elites far too much leeway to perpetuate themselves.
Yet any call to "fight capitalism" would lack mass appeal because it's too distant from most people's consciousness and capabilities.
How then can we proceed? The fundamental principle of asymmetric warfare, where the weak confront the strong, is to strike wherever the enemy is most exposed and wherever the most damage can be inflicted.
WIDESPREAD PUBLIC HOSTILITY
The big banks, whose colossal investments shape the very structures of all economies and, therefore, their governing politics and ideologies, are already the object of widespread public hostility.
If we direct our fire against the big banks, and get a good public response, then late capitalism will be weakened at an increasingly vulnerable yet important spot: the financialisation of the world system.
That is the strategic objective of Socialist Worker's Bad Banks campaign, launched in Auckland not long ago. It is an objective in harmony with the fundamental principle of asymmetric warfare.
WIDESPREAD PUBLIC SUPPORT
The Bad Banks campaign targets the key investment drivers who are responsible for rising unemployment, falling real wages, climate change and other evils flowing from capitalism's exploitation of labour and nature.
It is therefore a campaign which fingers the causes as well as the consequences of the evils of late capitalism. And going by early results at Bad Banks street stalls, there is widespread public support for the campaign.
To help out at a Bad Banks stall, email socialist-worker@pl.net.
25.8.09
Why we need to battle the banks
by Vaughan Gunson
The recession is taking grip in New Zealand. People are losing their jobs. In some grassroots communities unemployment is already turning into a social crisis.
138,000 people are officially unemployed. Thousands more will be desperately looking for work. And the situation is going to get grimmer as the economy slumps further.
Job losses and income cuts are putting many homeowners in a terrible situation. They can’t meet their mortgage payments. The banks are knocking at the door.
And with property values falling some people are left owing more money to the banks than their home is worth. They face financial ruin.
For grassroots people, this is all very frightening and unfair.
Grassroots mood against the banks
Jobs and homes are gut issues for people. Rising concern about these gut issues is intersecting with a mass mood against the banks.
Last year, RAM activists took a survey out on to the streets, which questioned people about the operations of the banks in this country. Over 90% of people thought the banks were doing no good.
That sentiment has probably hardened. It can be picked up in everyday conversations. It’s reflected in the stories being carried in the media.
You know there’s a mass mood on an issue in New Zealand when two things happen. The first is when it becomes a storyline on Shortland Street. Scotty and Shanti are in trouble with the bank, owing more than their house is worth.
The second indicator of a mass mood is when you start hearing calls for a public enquiry.
This is what the Green, Labour and Progressive parties have been voicing. They want an independent public enquiry into the banks. They’ve sensed the mood and the political opportunities that it presents.
Not right
In the eyes of grassroots people it’s not right that in these times of increasing hardship the banks are continuing their profit run.
The Big Four Australian-owned banks, ANZ National Bank, BNZ, Westpac and ASB, control 90% of the banking industry in New Zealand, putting them in a near-monopoly position.
With so much market control, there’s no pressure to lower interest rates. In 2008, the income the Big Four banks received from loan interest went up a whopping $4.6 million.
As a result the profits of these Aussie-owned banks totalled over $3 billion in 2008, up 3.7% on the year before.
To add fuel to the fire, the Big Four are trying to avoid paying a tax bill of $2.25 billion. BNZ has been convicted by the High Court and told to pay up. Undaunted, the banks are using their extreme wealth to hire teams of lawyers to fight the ruling.
The feelings people have towards the banks has been heading South for sometime. This was before the banks started turfing people out of their homes.
To maintain their own equity position the banks are getting tough and forcing mortgage sales in rapidly increasing numbers. In April this year, there were 250 foreclosures. The numbers are only going to escalate as mortgage pressures worsen with further waves of job losses.
The banks are the bad guys. They could become public enemy number one.
A Bad Banks campaign
In isolation grassroots people have no power against the banks and the laws written to protect the money men. But mass feelings are strong.
It is the job of mass Marxists to tap into those mass feelings. That’s why Socialist Worker is launching a “Bad Banks” campaign.
We believe the Aussie banks are vulnerable to a broad and inclusive campaign that connects with the anger ordinary people feel towards these mega-rich interest gauges.
A campaign to expose and shame the banks must be out on the streets. We’ll produce mass leaflets and posters. There will be street stalls. We can build towards publicity pickets outside targeted banks.
We will organise public meetings. Send out media releases, write submissions. We will liaise with others on the left about organising jointly hosted campaign conventions.
The campaign will have a web presence (www.badbanks.co.nz). A Bad Banks Facebook group is up and running (log into Facebook and search for “Bad Banks”).
We will pursue multiple publicity strands that aim to connect with masses of grassroots people.
The first stage of the campaign will be educative. We’ll tell people what the banks are up to. We’ll even explain in popular language “fractional reserve lending”, the credit creation mechanism which literally allows the banks to make money out of thin air.
Our leaflets and other publicity will connect the operations of the banks to the Great Implosion. Explaining what’s happening globally and pointing the finger at who’s responsible. Knowledge, as they say, is the first step to empowerment.
As the Bad Banks campaign evolves we begin to put forward concrete demands and campaign goals. These will emerge through dialogue with other leftists and through listening to grassroots people themselves.
Broad left cooperation
A multi-headed campaign against the banks has the potential to bring networks of indebted homeowners, political parties, unions, community groups and grassroots activists together.
The campaign on the streets should work in tandem with the good initiative of the Green, Labour and Progressive parties to set up their own independent public enquiry into the banks. Parliamentary and street campaigning can both work to build a movement. Linking these two essential political arenas will get the best out of each.
The Bad Banks campaign (or some other campaign name that emerges through discussions with others) could become an invigorating example of broad left political cooperation in practice. This would be extremely positive.
Joint work, sharing of ideas and on-the-ground collective organisation around this “flashpoint” political issue will hopefully encourage a further coming together of broad left forces. Such political cooperation is needed if the left is to rise to the challenge of the biggest economic meltdown since the Great Depression of the 1930s.
Banks and the “bubble economy”
The role the banks and international money men have played in the Great Implosion needs to be widely exposed. The banks are at the centre of the “bubble economy” built on trillions of dollars of debt and speculation.
The floundering of the real economy since the 1970s has seen workers, business and the state increasingly reliant on the extension of credit.
Over the last four decades debt has ballooned. This has allowed the banks and other money lenders, facilitated by governments, to assume a dynamic role within late capitalism.
So entwined are industry giants, big banks and governments, that when the credit crunch hit last year, following the bursting of the worldwide housing bubble, the leaders of the world’s big economies raced to save the banks.
In January this year, Oxfam calculated that $8.424 trillion had so far been raised by governments to bailout the banks and other financial institutions. That’s a vast sum, one which could easily put an end to world poverty.
And the bailouts haven’t stopped. In the US alone, the Obama administration’s bailout commitments could reach as high as $23.7 trillion, according to an official independent report.
However, the bailouts have not prevented the economy from nose-diving, far from it. There’s a global pandemic of job losses and other social miseries. Smaller banks and other financial institutions continue to go under.
Yet some of the big banks, like Goldman Sachs, one of the main players behind the housing bubble, are now posting record profits. With trillions and trillions of government money floating around, these experts at financial manipulation are creaming it.
Helped by government insiders the really big banks are now set on dominating like never before the creation of credit, the fragile base upon which the world economy rests.
The banks left standing are profiting out of lending to cash-strapped governments at high interest rates. They’re speculating again in financial markets. It’s “win-win” for them and “lose-lose” for the rest of us.
Given all the social and environmental problems besetting the world the bailout of bankers is a crime against humanity of obscene proportions.
Debating the nature of capitalism
A system that can divert trillions of dollars to a mega-rich minority and let the majority fend for themselves in an increasingly scary world is an unjust one.
Without a doubt the global economic crisis, and the response by governments, is eroding the legitimacy of the market. And it’s happening in the so called “first world” economies of Northern America and Europe. That’s significant.
A broad campaign against the banks in this country will, if successful, begin to expose the structures of power within monopoly finance capitalism that locks in place gross inequalities globally.
A mass-based campaign against Bad Banks has the potential to stimulate a nationwide debate about the nature of capitalism and the need for a human centred economy. Socialists and leftists from a number of political traditions will want to see this happen.
Lots to learn, lots to get excited about
The Bad Banks campaign that Socialist Worker is initiating will be a long term one. We will be trying things out as we search, hopefully alongside other activists, for a connection with a mass audience.
There’s lots to learn about the operations of the banks in this country and internationally, and how to connect their operations to a system in crisis. It’s going to be a big learning curve for everyone involved.
While the Bad Banks campaign is only just hitting the streets, it’s yet to be fully tested in practice, we do know there’s great resentment towards the banks amongst ordinary Kiwis. We should have confidence that this path will bear fruit for the left in this country. That prospect should be an exciting one.
Vaughan Gunson is the publicity coordinator for the Bad Banks campaign. To contact him with feedback or offers to help, email socialist-worker@pl.net or ph/txt 021-0415 082.
The recession is taking grip in New Zealand. People are losing their jobs. In some grassroots communities unemployment is already turning into a social crisis.
138,000 people are officially unemployed. Thousands more will be desperately looking for work. And the situation is going to get grimmer as the economy slumps further.
Job losses and income cuts are putting many homeowners in a terrible situation. They can’t meet their mortgage payments. The banks are knocking at the door.
And with property values falling some people are left owing more money to the banks than their home is worth. They face financial ruin.
For grassroots people, this is all very frightening and unfair.
Grassroots mood against the banks
Jobs and homes are gut issues for people. Rising concern about these gut issues is intersecting with a mass mood against the banks.
Last year, RAM activists took a survey out on to the streets, which questioned people about the operations of the banks in this country. Over 90% of people thought the banks were doing no good.
That sentiment has probably hardened. It can be picked up in everyday conversations. It’s reflected in the stories being carried in the media.
You know there’s a mass mood on an issue in New Zealand when two things happen. The first is when it becomes a storyline on Shortland Street. Scotty and Shanti are in trouble with the bank, owing more than their house is worth.
The second indicator of a mass mood is when you start hearing calls for a public enquiry.
This is what the Green, Labour and Progressive parties have been voicing. They want an independent public enquiry into the banks. They’ve sensed the mood and the political opportunities that it presents.
Not right
In the eyes of grassroots people it’s not right that in these times of increasing hardship the banks are continuing their profit run.
The Big Four Australian-owned banks, ANZ National Bank, BNZ, Westpac and ASB, control 90% of the banking industry in New Zealand, putting them in a near-monopoly position.
With so much market control, there’s no pressure to lower interest rates. In 2008, the income the Big Four banks received from loan interest went up a whopping $4.6 million.
As a result the profits of these Aussie-owned banks totalled over $3 billion in 2008, up 3.7% on the year before.
To add fuel to the fire, the Big Four are trying to avoid paying a tax bill of $2.25 billion. BNZ has been convicted by the High Court and told to pay up. Undaunted, the banks are using their extreme wealth to hire teams of lawyers to fight the ruling.
The feelings people have towards the banks has been heading South for sometime. This was before the banks started turfing people out of their homes.
To maintain their own equity position the banks are getting tough and forcing mortgage sales in rapidly increasing numbers. In April this year, there were 250 foreclosures. The numbers are only going to escalate as mortgage pressures worsen with further waves of job losses.
The banks are the bad guys. They could become public enemy number one.
A Bad Banks campaign
In isolation grassroots people have no power against the banks and the laws written to protect the money men. But mass feelings are strong.
It is the job of mass Marxists to tap into those mass feelings. That’s why Socialist Worker is launching a “Bad Banks” campaign.
We believe the Aussie banks are vulnerable to a broad and inclusive campaign that connects with the anger ordinary people feel towards these mega-rich interest gauges.
A campaign to expose and shame the banks must be out on the streets. We’ll produce mass leaflets and posters. There will be street stalls. We can build towards publicity pickets outside targeted banks.
We will organise public meetings. Send out media releases, write submissions. We will liaise with others on the left about organising jointly hosted campaign conventions.
The campaign will have a web presence (www.badbanks.co.nz). A Bad Banks Facebook group is up and running (log into Facebook and search for “Bad Banks”).
We will pursue multiple publicity strands that aim to connect with masses of grassroots people.
The first stage of the campaign will be educative. We’ll tell people what the banks are up to. We’ll even explain in popular language “fractional reserve lending”, the credit creation mechanism which literally allows the banks to make money out of thin air.
Our leaflets and other publicity will connect the operations of the banks to the Great Implosion. Explaining what’s happening globally and pointing the finger at who’s responsible. Knowledge, as they say, is the first step to empowerment.
As the Bad Banks campaign evolves we begin to put forward concrete demands and campaign goals. These will emerge through dialogue with other leftists and through listening to grassroots people themselves.
Broad left cooperation
A multi-headed campaign against the banks has the potential to bring networks of indebted homeowners, political parties, unions, community groups and grassroots activists together.
The campaign on the streets should work in tandem with the good initiative of the Green, Labour and Progressive parties to set up their own independent public enquiry into the banks. Parliamentary and street campaigning can both work to build a movement. Linking these two essential political arenas will get the best out of each.
The Bad Banks campaign (or some other campaign name that emerges through discussions with others) could become an invigorating example of broad left political cooperation in practice. This would be extremely positive.
Joint work, sharing of ideas and on-the-ground collective organisation around this “flashpoint” political issue will hopefully encourage a further coming together of broad left forces. Such political cooperation is needed if the left is to rise to the challenge of the biggest economic meltdown since the Great Depression of the 1930s.
Banks and the “bubble economy”
The role the banks and international money men have played in the Great Implosion needs to be widely exposed. The banks are at the centre of the “bubble economy” built on trillions of dollars of debt and speculation.
The floundering of the real economy since the 1970s has seen workers, business and the state increasingly reliant on the extension of credit.
Over the last four decades debt has ballooned. This has allowed the banks and other money lenders, facilitated by governments, to assume a dynamic role within late capitalism.
So entwined are industry giants, big banks and governments, that when the credit crunch hit last year, following the bursting of the worldwide housing bubble, the leaders of the world’s big economies raced to save the banks.
In January this year, Oxfam calculated that $8.424 trillion had so far been raised by governments to bailout the banks and other financial institutions. That’s a vast sum, one which could easily put an end to world poverty.
And the bailouts haven’t stopped. In the US alone, the Obama administration’s bailout commitments could reach as high as $23.7 trillion, according to an official independent report.
However, the bailouts have not prevented the economy from nose-diving, far from it. There’s a global pandemic of job losses and other social miseries. Smaller banks and other financial institutions continue to go under.
Yet some of the big banks, like Goldman Sachs, one of the main players behind the housing bubble, are now posting record profits. With trillions and trillions of government money floating around, these experts at financial manipulation are creaming it.
Helped by government insiders the really big banks are now set on dominating like never before the creation of credit, the fragile base upon which the world economy rests.
The banks left standing are profiting out of lending to cash-strapped governments at high interest rates. They’re speculating again in financial markets. It’s “win-win” for them and “lose-lose” for the rest of us.
Given all the social and environmental problems besetting the world the bailout of bankers is a crime against humanity of obscene proportions.
Debating the nature of capitalism
A system that can divert trillions of dollars to a mega-rich minority and let the majority fend for themselves in an increasingly scary world is an unjust one.
Without a doubt the global economic crisis, and the response by governments, is eroding the legitimacy of the market. And it’s happening in the so called “first world” economies of Northern America and Europe. That’s significant.
A broad campaign against the banks in this country will, if successful, begin to expose the structures of power within monopoly finance capitalism that locks in place gross inequalities globally.
A mass-based campaign against Bad Banks has the potential to stimulate a nationwide debate about the nature of capitalism and the need for a human centred economy. Socialists and leftists from a number of political traditions will want to see this happen.
Lots to learn, lots to get excited about
The Bad Banks campaign that Socialist Worker is initiating will be a long term one. We will be trying things out as we search, hopefully alongside other activists, for a connection with a mass audience.
There’s lots to learn about the operations of the banks in this country and internationally, and how to connect their operations to a system in crisis. It’s going to be a big learning curve for everyone involved.
While the Bad Banks campaign is only just hitting the streets, it’s yet to be fully tested in practice, we do know there’s great resentment towards the banks amongst ordinary Kiwis. We should have confidence that this path will bear fruit for the left in this country. That prospect should be an exciting one.
Vaughan Gunson is the publicity coordinator for the Bad Banks campaign. To contact him with feedback or offers to help, email socialist-worker@pl.net or ph/txt 021-0415 082.
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