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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

a study in contrasts « Previous | |Next »
January 17, 2010

There is a clash of ideas between an angry public on Main Street angry over the fallout from the global financial crisis and the unrepentant bankers on Wall Street who have returned to business-as-usual with their runaway profits and bonuses that the bankers are achieving thanks to the support of a debt-laden taxpayer.

The contrasts deepen when the disaster and suffering in Haiti is bought into the picture:

screams.jpg Martin Rowson

But hey, this is capitalism and financial capital is very powerful. Stuff happens, according to the bankers. Capitalism has its booms and busts every six to seven years.The destruction is a way to clean out the weak. Its a way that the world works. The global financial crisis was like a hurricane that nobody could have predicted.

So there is no need for greater regulation of financial capital because the global financial crisis in order to prevent the pileup of up ever more debt, both by pushing loans on the public and by taking on ever-higher leverage within the financial industry.

As Paul Krugman says in The Guardian we need to remind ourselves what has happened so far:

the US economy is still grappling with the consequences of the worst financial crisis since the Great Depression; trillions of dollars of potential income have been lost; the lives of millions have been damaged, in some cases irreparably, by mass unemployment; millions more have seen their savings wiped out; hundreds of thousands, perhaps millions, will lose essential healthcare because of the combination of job losses and draconian cutbacks by cash-strapped state governments....And this disaster was entirely self-inflicted...This time we're in trouble entirely thanks to the dysfunctional nature of our own financial system. Everyone understands this; everyone, it seems, except the financiers themselves.

That is an effective refutation of finance capital's understanding of how the global financial system works.

Do the top executives actually believe their rhetoric about a global financial crisis being akin to a hurricane? Or are they just trying it on in front of Congress?

| Posted by Gary Sauer-Thompson at 1:52 PM | | Comments (4)


What's there to say?
The rowson cartoon says it all.
Unless you want to add Rush Scumbaugh's corollary to Pat Robertson; to not give aid to
Haiti in case Obama "steals it".

"The destruction is a way to clean out the weak. Its a way that the world works..."

Well... anyway... that's what the steely-eyed, resourceful, independent, industrious, stalwart, financial industry movers'n'shakers tell us.

Of course most of the "weak" weren't cleaned out. In fact their failure was rewarded.

No doubt this has set a precident for our banking wizards. They will not pay for their mistakes... ever. That's what the taxpayer is for.

Big financial capital reckons that governments would not dare impose higher taxes if they continued to ignore the rising public outcry about their multibillion-dollar bonus pools. The taxes are designed to force bankers to strengthen their balance sheets with money they would rather put in their own pockets.

yep governments need to address the the structural distortions that allow these institutions to rack up such huge profits. In How the big banks rigged the market in the Financial Times Philip Stephens says:

Broadly speaking, the leading players in at least three areas of investment banking – wholesale markets, underwriting and mergers and acquisitions – have been operating natural oligopolies.Their profits have been in significant part a reflection of the absence of robust competition.

The banking and finance sector in Australia has seen a rather worrying concentration of competition in the past year as the Big Four banks have moved to control more of the sector, whether it is retail deposits, superannuation, insurance, financial planning and investment management.

The Rudd Labour government has presided over the greatest contraction of competition in financial services (banking, finance, super etc) seen since the Hawke government deregulated the sector and allowed in more competition 26 years ago.It's not as if big financial capital makes a big net contribution to economic dynamism and prosperity.