David Malone (2)

This book is compiled of blogposts and comments made by GolemXIV on the Guardian website over the last few years of the financial crisis from 2008-10, which sounds like an awful premise for a book but fortunately the author's insights into how the financial system works (and doesn't work) and his willingness to spend time explaining it to the layman make this well worth the read. It has also been expertly edited so the 600 posts originally on the website have been condensed to key observations as events unfold.

The author offers a lone voice in questioning the motives and results of the bank bailouts, and is often outraged at the complicity of the politicians, bankers and insurers, and 'financial experts' in the media who are all part of the same plutocracy and who all insist that bailouts are the only option. What that amounted to was the largest transfer of wealth from the public to private spheres ever, totalling trillions of dollars worldwide, with no public debate as to other possible ways forward. Through sheer greed the bankers traded and gambled and speculated, pocketing billions during the bubble, but when it burst and the debts are called in the taxpayer picks up the tab. Which now means our governments are saddled with crippling debts and are slashing funding for public services.

The key argument put forward in this book is that the financial crisis is not a question of liquidity, to be addressed by giving the banks more money, but one of solvency, where the assets owned by our banks are worth only a fraction of what they paid for and they cant afford to pay what they owe. By rights they should all go bankrupt like any other business but that would mean the super rich losing their wealth and they will do anything to prevent that at all costs.… (mais)

A powerful, shocking, stunning and crystal clear analysis and account of the crisis.

„Then, when the bust came, after an orgy of risk and idiocy to end all orgies, finally the bankers discovered the answer: too big to fail. Now there is no threat of loss at all. Now they can take any risk they want and if it goes wrong just shriek and scream that the world is going to end until they are given another bailout. Losing money is now something only taxpayers do.

The problem facing everyone, however, is that even the debts national government can incur to bail out these losses is not limitless. At some point, there won't be enough money even to give to the bankers.

And this, I believe, is where we are now. Our economy is being driven by drunken boy racers at 100 mph who have just had a massive blow-out. They are so drunk they refuse all advice to pull over or even to just slow down. They tell us they don't even need to replace the tyre. All we need to do is frantically pump in new air while we are still careering along, swinging wildly all over the road.

To me, in such a situation, there only seem to be two options: either they wreck the car and we all get hurt - a bond market dislocation – or we, the passengers, overcome our fear and fight to seize control of the car. At the moment, I think we are on course to wreck the car and then have a huge fight afterwards. The worst of both worlds.” (pages 86-87)

“The banks will tell whoever is elected that speculation is freedom, leverage is salvation and regulation is the road to perdition. In public, they will attempt to dress themselves in the garb of national saviours. In private, they will piss themselves laughing at us and our pathetic political leaders.

That's why we need to wake up to what is happening” (pages 220-221)

“The pain they have stored up for us will not go away. This means, in my opinion, there are only two futures remaining for us. One is where the pain comes quickly in which we do everything to make sure it is the financial class, and not us, who suffer the most. But there is another future, the one they have planned for us, where it happens slowly, the pain getting greater and greater with time, but where it is made to fall on us rather than the immensely rich people and institutions that caused the crisis.” (page 239)

In this RSA Animate, renowned academic David Harvey asks if it is time to look beyond capitalism towards a new social order that would allow us to live within a system that really could be responsible, just, and humane?
http://www.youtube.com/watch?v=qOP2V_np2c0

A Watson Institute video on the global trend toward Austerity budgets featuring Mark Blyth:
http://www.youtube.com/watch?v=FmsjGys-VqA

Inequality, Leverage and Crises:
http://www.imf.org/external/pubs/ft/wp/2010/wp10268.pdf

The Egyptian Tinderbox: How Banks and Investors Are Starving the Third World:
http://www.truth-out.org/the-egyptian-tinderbox-how-banks-and-investors-are-star...

This animate was adapted from a talk given at the RSA by Sir Ken Robinson, world-renowned education and creativity expert and recipient of the RSA's Benjamin Franklin award.
http://www.youtube.com/watch?v=zDZFcDGpL4U… (mais)