MSM: Laughing all the way to the bank

July 10th, 2009

(aljazeera) – Wall Street and the City of London – the world’s two major financial centres – declare it is “business as usual” again… They are hiring, poaching each other’s staff and their profits are soaring.

“Even the Bank of America’s investment banking arm, which includes the once very sick Merrill Lynch, is expected to make good money this year,” reports the Wall Street Journal this week.

And, of course, bonuses are back. Even at the supposedly UK government-controlled Royal Bank of Scotland; the bonus is back with a vengeance.

Stephen Hester, chief executive since November, is believed to be getting $16 million per year alone. And that is in a government quasi-nationalised institution – imagine what is happening elsewhere. Is this not the pre-crisis era all over again?

Actually, let me answer this. It isn’t the pre-crisis era. It’s WAY better than that for banks.

This is “back to business as usual” with bells on. The financial crisis has been the best thing that could happen for these banks. Yes, even I can’t believe it.

Our watershed moment to change the world economic system has not just been squandered, we have inadvertently reinforced the same structures and institutions that have created the mess in the first place.

Firstly, in our rush to regulate our financial system we have created a system that is much worse than before.


Well, we rewarded the ‘zombie’ banks by making them too dead to die… oops, sorry, too big too fail. The new regulations give them legitimacy and protection, as well as failing to curb just how much debt they can take on relative to their assets.

Taxpayers’ cash

As Robert Hunter Wade, professor at the London School of Economics, told me this week; regulation is now coming into play that will allow banks to become even more reckless with taxpayers’ money, because they have become too big for any government to allow them to fail.

There were 15 big global banks before the financial crisis hit. During the crisis, however, the collapse of Lehman Brothers led governments to encourage other banks – by means of large amounts of taxpayers’ cash – to buy up the not-so-well banks.

The Bank of America’s purchase of Merrill Lynch is a case in point.

So we went from having 15 banks to having around six. And these remaining banks have more power as their importance is now set in regulatory stone – and they know it.

Instead of bringing the banking sector to heel – we have given it a kiss of life and pumped it with steroids. And these steroids are financed by the taxpayer.

Secondly, we have strengthened that other financial institution that directly affects almost every home and every individual in the developing world – the International Monetary Fund (IMF).

G20 consensus

During the G20 meeting held in London in April, the one consensus all the countries could reach, beside agreeing on regulation that led to the “too big to fail” disaster, was to provide a lifeline to the IMF that it didn’t deserve.

We bolstered IMF funds by something close to $1 trillion. This call for fortifying the role of the IMF will be repeated in this week’s G8 summit.

The IMF was used to force neoliberalism – that poisonous cocktail of financial deregulation, free markets, privatisation and the rolling back of the state – on developing countries.

IMF policies have been, despite the heartache, the wrecked lives, the savaging of countries’ agriculture, education and institutions, granted legitimacy during this crisis.

So, all in all, our leaders multilateral solutions to the crisis have been about entrenching the existing world economic order rather than changing it.

But where does this leave us? You know, us in the real economy.

Well, the banks haven’t yet started lending. All the money, as you will see from my previous posts, remains constipated within the new banking behemoths.

The level of toxic debt on their balance sheets is still unknown and, because of that, we will never get a recovery.

Prolonged recession

It is becoming obvious that this is going to be a prolonged recession, as indicated by last week’s US employment report.

Half a million Americans lost their jobs in the month of June alone. This was much worse than anticipated.

Manufacturing output is still dropping in America, Britain and elsewhere. And please disregard those people who are high on the idea of economic “green shoots” – mostly bankers and their spokespeople, aka the governments of the world’s G8 these days.

They are seeking to convince you that unemployment is a “lagging indicator” – meaning its takes a longer to catch up with the good news that the economy is actually rebounding.

No. Unemployment levels are not the party poopers here, serving only to rain on the financial sectors’ good news and our leaders’ attempts to inspire “confidence”.

Unemployment is adding a dose of much needed reality into their very convenient delusion. And why wouldn’t they be deluded, they’re doing pretty well feasting on taxpayer’s money.

We need our governments to agree a better stimulus package to stem this unemployment haemorrhage, otherwise, as the economist Paul Krugman predicts, this global recession could turn into the Great Depression all over again.

At the same time, for people in less developed countries, the IMF is stopping them from even contemplating fiscal stimulus packages.

Armenia, Latvia, Romania and Guatemala – who are all in receipt of IMF loans – have been told to roll back the state and reduce their budget deficits.

And before you say it, I know it is the direct opposite of the advice the IMF is giving America and others.

Could these decisions that have simply reinforced the old guard, possibly lead to such a ferocious tipping point that real change in the way the IMF does business in the future is inevitable?

That depends on how much you and I – the taxpayers – are willing to stomach.

Samah El-Shahat also presents Al Jazeera’s People & Power programme.

The views expressed in the above column are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.

Source: Aljazeera

2 Responses to “MSM: Laughing all the way to the bank”

  1. Nicolae Says:

    In 1492, Chemor, chief Rabbi of Spain, wrote to the Grand Sanhedrin, which had its seat in Constantinople, for advice, when a Spanish law threatened expulsion.2 This was the reply:

    ” Beloved brethren in Moses, we have received your letter in which you tell us of the anxieties and misfortunes which you are enduring. We are pierced by as great pain to hear it as yourselves.

    The advice of the Grand Satraps and Rabbis is the following:

    1. As for what you say that the King of Spain obliges you to become Christians: do it, since you cannot do otherwise.

    2. As for what you say about the command to despoil you of your property: make your sons merchants that they may despoil, little by little, the Christians of theirs.

    3. As for what you say about making attempts on your lives: make your sons doctors and apothecaries, that they may take away Christians’ lives.

    4. As for what you say of their destroying your synagogues: make your sons canons and clerics in order that they may destroy their churches. [Emphasis mine]

    5. As for the many other vexations you complain of: arrange that your sons become advocates and lawyers, and see that they always mix in affairs of State, that by putting Christians under your yoke you may dominate the world and be avenged on them.

    6. Do not swerve from this order that we give you, because you will find by experience that, humiliated as you are, you will reach the actuality of power.


    2. The reply is found in the sixteenth century Spanish book, La Silva Curiosa, by Julio-Iniguez de Medrano (Paris, Orry, 1608), on pages 156 and 157, with the following explanation: “This letter following was found in the archives of Toledo by the Hermit of Salamanca, (while) searching the ancient records of the kingdoms of Spain; and, as it is expressive and remarkable, I wish to write it here.” — vide, photostat facing page 80.

    ~ The above was quoted from Waters Flowing Eastward by Paquita de Shishmareff, pp. 73-74

  2. Eileen Says:

    Money has been turned into something that deludes us. We have lost our common sense about it. We will do anything to make money. In some countries, that even means we, directly or indirectly, are starving, depriving, and even sometimes killing and enslaving, local populations. We feel we need to in order to have enrichment. Our economy has become tied to oppression of others. It is a sorry way to live.

    Since we have become addicted to money, it is time to become weaned from an over dependence and reliance on government or private banking systems.

    Stop encouraging people to invest, buy bonds, earned interest or earn more. Every time you think about making money, you are encouraging lack. You are feeling less. That is the sign you have an addiction. Americans and westerners in general grew up being told it was alright to obsess about riches and wealth.

    I say we have a whole lot of Karmic guilt right now.

    It is harder than anyone realizes to wake people up to the fact that they have become dependent on pieces of paper and people with fancy titles who own the rights to these piece of paper.

    We are enslaved if we do not see this addiction and it is our responsibility to see and start taking responsible steps.

    Perhaps regaining control of our own money, first by seeing that money has nothing to do with our own self worth is one way to begin this new journey of self reliance.

    You don’t need to change the outside, just look in on yourself.

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