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finance capital rules « Previous | |Next »
September 29, 2009

In Australia the recession has been announced as more or less over by the Reserve Bank of Australia (RBA). Various conservative voices are calling loudly for an exit strategy (freezing the stimulus, beginning a programme of retrenchment of government spending to allow the private sector to resume its starring role, and averting any mild danger of inflation) whilst defending the bonus culture of finance capitalism.

The good ole days are back and the spectre of socialism recedes into the background:


So what have we learned from the global financial and economic crisis that is still continuing in the form of massive simultaneous economic contraction across the industrialised west?

Will Hutton says not much:

Western governments took unprecedented and extraordinary action to avoid what undoubtedly would have been a global slump. The good news is that they have succeeded. The bad news is that what caused the crisis – the stranglehold of a new financial oligarchy upon public policy – has hardly been touched.. Governments have got to reform the entire structure of western finance –bonuses, credit rating agencies, capital adequacy requirements, banks that are too big to fail, the use of offshore tax havens, the role of derivatives – from top to bottom.

Governments aren't and they won't. Finance capital is too powerful. The G20 is just a forum where the heads of state of 20 economies discuss some important economic issues. Team Obama derailed serious proposals regarding financial reform for Wall Street at the G20 meeting.

So we are left with markets trampling over values that society holds dear, the need is for the profit motive always to triumph, financial markets must be allowed their freedoms, and equality must be subordinated to individual freedom. The casino of finance is the way things are and the governments role is to bail the bankers out when things go wrong, not reforming the financial system.

The big banks have gotten bigger and bigger --- we have an oligopoly of banks and “the oligopoly has tightened” --- and their very size distorts the markets and limits the growth of smaller banks. However, the Rudd government shows little interest in decentralize power and deposits and increasing the variety of banking models, to create a healthier financial system. The RBA is saying naught about breaking up the big four banks.

| Posted by Gary Sauer-Thompson at 5:07 PM | | Comments (1)


Remember that Hayek won the Nobel prize in 1974 partly for arguing that artificially low interest rates lead to the misallocation of capital and to bubbles, which in turn lead to busts