World Financial Crisis (and fallout) Part 4

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World Financial Crisis (and fallout) Part 4

An interesting talk from Lord Turner of the UK Financial Services Authority on the financial crisis and what it means for economics today.

Issues Pages: 
epaulo13 epaulo13's picture

Britain’s Liberal Democrats warn of “Greek-style” unrest

With opinion polls predicting that neither Labour nor the Conservatives will win an outright majority, Clegg warned that a minority government formed by either party would face a crisis of legitimacy. This could result in “serious social strife” on the streets, he said, as the administration attempted to impose draconian public spending cuts in order to tackle Britain’s £160 billion-plus state deficit.

The massive debt is largely the consequence of Labour’s bailout of the banks, which has seen up to £1 trillion made available in various stimulus packages in response to the economic crisis precipitated by the crash of Lehman Brothers in 2008.

N.Beltov N.Beltov's picture


I found this over at Nina Power's blog. She was writing about the upcoming London Historical Materialism Conference.


Some really interesting and bold proposals coming from the Green Party in the UK. 

Green Manifesto in UK Adds 'Radical Change' to Message of 'Hope' - 'Robin Hood' tax policies put redistribution on equal footing with saving planet

 The party that for the past 20 years has put the planet first has found a fierce new focus to sit alongside its environmental concern: social justice and inequality. Yesterday it set out an eye-popping programme of redistributive taxation that would have been considered radical even by Old Labour at its most extreme period in the early Eighties.

To pay for a wide range of benefits for people on lower incomes, the Greens in government would seek to raise £73bn in new taxation right away, rising to £112bn in 2013, and increasing the tax take as a share of national income by 25 per cent in just four years. This would come from large hikes in income tax, capital gains tax, corporation tax, financial transaction tax and a permanent tax on bankers' bonuses. The Greens would also increase taxes on motoring, flying, cigarettes and alcohol.



epaulo13 epaulo13's picture

Polunatic2 wrote:

Some really interesting and bold proposals coming from the Green Party in the UK. 

Green Manifesto in UK Adds 'Radical Change' to Message of 'Hope' - 'Robin Hood' tax policies put redistribution on equal footing with saving planet

 The party that for the past 20 years has put the planet first has found a fierce new focus to sit alongside its environmental concern: social justice and inequality. Yesterday it set out an eye-popping programme of redistributive taxation that would have been considered radical even by Old Labour at its most extreme period in the early Eighties.

To pay for a wide range of benefits for people on lower incomes, the Greens in government would seek to raise £73bn in new taxation right away, rising to £112bn in 2013, and increasing the tax take as a share of national income by 25 per cent in just four years. This would come from large hikes in income tax, capital gains tax, corporation tax, financial transaction tax and a permanent tax on bankers' bonuses. The Greens would also increase taxes on motoring, flying, cigarettes and alcohol.


..this should pull the campaign to the left. where are the movements?




[link to thread three ]

just wanted to note that on Friday, Apr 15, Barney Frank chair of U.S. House Financial Services Ctte said of the demise of Fannie and Freddie that 'consensus' was emerging that they shouldn't be wound down until a replacement was found, and that " this replacement needs to be limited in scope, regulated, and have a much larger role for the private sector. "

What's wrong with these people !!!???

The same day that a major private financier involved in subprime fraud is charged by the SEC, the Chair of Financial Services says the private sector needs a larger role in housing finance !!!!

Financiers and their political props are using the crisis to get more power and squeeze residents and taxpayers more, when they should all be in jail.

Public institutions failed because of the shenanigans of private leveraging, and derivatives betting in the private casino. 

'Regulation' so far has involved giving the private Federal Reserve bankers more power, and still there are no public audits of private financial transactions, just interception of emails after the fact, even after the fact of a global financial crisis.  There is still no ban on derivatives, no break-up of the huge inscrutable private institutions that caused the crisis.  Instead they're given more power and its called 'regulation'.

The private casino should be shut down.  Finance needs to be a fully public and direct service of Congress, of Parliament here, fully transparent to the people, not just committee members.

It's the people who are paying, in interest to private bankers when they could provide public services at less cost directly, in slashed social services, in loss of jobs, in bailouts, and in an earth destroyed by financiers exploring and mining more fossil fuels, carcinogenic uranium, betting on the earth's demise for as long as we let them.



Unfortunately that's never gonna happen, as this white collar crime is too good of a cash cow, and there are too many influential pigs at the trough.


I'm trying to understand what happened in Poland.

The language in the article below is confusing, but it seems that there was opportunity for Poland to use its central bank for the public interest, and to avoid indebting itself to the Washington-controlled IMF.

"The government is counting on tapping the central bank’s profit, 95 percent of which has to be transferred to the state budget by the middle of May. The bank’s management already calculated the profit at 4.2 billion zloty, though six of 10 members of the Monetary Policy Council this week passed a new regulation allowing changes in the way the profit is calculated, Elzbieta Chojna-Duch, a member of the council, said today in an interview on TVN CNBC Biznes.

The budget needs “special protection” while recovering from the effects of the global financial crisis, she said.

Skrzypek, who chairs the rate-setting council and the central bank’s management board, objected to the change.

He was voted in as the central bank’s governor three years ago by the Law & Justice party, whose chairman, Jaroslaw Kaczynski, is twin brother of President Lech Kaczynski. Skrzypek has three years before the end of his term."

The same day it was reported that Poland was in a position to require financiers to locate in Warsaw if they wanted business.

(Not that privatizations and financing of such should happen at all.  It reveals how hopelessly off track the world is, when cities and states are vying to become 'financial centres' to perhaps collect a few crumbs from the table in the brave new economy.)

Anyway, now that President Kaczynski and Skrzypek are both dead, Poland's interim leader has entered discussions with the IMF for a credit 'arrangement' of 20.5 billion to 'increase bank reserves' . It's not clear which bank reserves, nor who will have access, but it's clear the public will be paying the interest.

There are many people writing on the internet that the crash was engineered, like JFK's assassination, when there was an effort to use the public domestic purse instead of private bankers.  However the dead Polish President was going to use private financiers to arrange privatizations of some state assets.  He may have retained more power than with IMF conditionalities though, which require opening of a country across the board to global financiers.

Generally I am not a fan of conspiracy theories, but the questions have to be asked.  Ultimately the process of investigating a situation, along with knowledge gained, is most important.  As here, its clear that neither piece-by-piece private financier privatizations nor the IMF wholesale sell-off are useful outcomes. 

The public, not just in Poland, needs to exercise its rights and choices to use the public purse for the public interest. 

If the people together understand that use of public domestic funding is better than private foreign control then the people will demand it of all their representatives.



epaulo13 epaulo13's picture

Layoff notices sent to thousands of US teachers
By Andrea Peters
22 April 2010

Hundreds of thousands of public school teachers across the United States are facing possible layoffs this coming academic year.....

N.Beltov N.Beltov's picture

Capitalism - Finally! Light at the End of the Tunnel!


Good one, N.B. Uh? And I see there's a new flash cartoon from [url=]Kaptain Kapitalism[/url] "Culture Clubbing"

epaulo13 epaulo13's picture

German chancellor steps up pressure on Greece
28 April 2010

Merkel's priority is not Greece, but Germany and Europe as a whole. Greece serves as a test case. It is a proving ground to see how the working class can be made to pay for the huge deficits in the budgets of all countries arising from the international financial crisis and the rescue packages to save the banks.

Dramatic cuts in wages, pensions and public spending such as those currently being imposed by Papandreou on the Greek population are also planned for Ireland, Portugal, Spain, Italy, Britain, France and Germany itself. Greece is being closely monitored to see how far Papandreou can go without provoking a popular revolt.......

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New Jersey students punished for participating in school walkout

By Sandy English

30 April 2010

Many of the tens of thousands of students who walked out from their high schools on Tuesday to protest draconian cuts to education now face disciplinary action from school authorities.

The walkout, which was organized largely through Facebook, was called to protest the mass layoffs of teachers and steep budget cuts in school programs enacted by New Jersey’s Republican Governor Chris Christie. School districts will lose an average of 11 percent funding.


[url=,2933,585666,00.html]Glenn Beck: Is U.S. Doomed to Follow Greece Into Crisis?[/url]

FERGUSON: Well, my message, Glenn, is that PIGS are us. In other words, we very quickly could find ourselves in a similar situation to Greece.

I looked the other day at some International Monetary Fund data which startled me because I realize that, in fact, the United States is almost as bad fiscal position as Greece. There's hardly any difference when you actually look at what the U.S. would have to do to bring its budget back into balance...

Harvard historian Niall Ferguson on the debt crisis.

N.Beltov N.Beltov's picture

ugh. What are doing quoting FoxNews? Aren't you worried that you'll get some on you?



[url= Winner Stiglitz Calls Fed Corrupt[/url]


[url=]The Canadian Economic Austerity Model[/url] by Andrew Jackson


[b]Death of Social Programs[/b] Martin's cuts stopped the Liberal government from implementing their promise to introduce a national child care and early learning program, leaving working families pretty much on their own in seeking care arrangements. Worse, his fiscal revolution and abdication of federal leadership in social policy made Canada a much more market-dependent society, moving it much closer to the U.S. model. Between 1993 and 2002, the difference between the level of non defence program spending in Canada and the U.S. fell from a huge 15.2 percentage points of GDP to just 5.7 percentage points

Martin and others argue that Canada was in such a fiscal mess in the mid 1990s that there was no alternative to deep cuts. However, as argued at the time by the labour movement and leading Canadian macro-economists such as Lars Osberg and Pierre Fortin (both past Presidents of the Canadian Economics Association), rising debt was not the result of over-spending but of a very deep recession, 1989 to 1991, exacerbated by the exceptionally high real interest rates inflicted by Bank of Canada governor John Crow in his search for the holy grail of zero inflation

Something to keep in mind when we hear people blaming provincial NDP governments for their inability to create socialist utopia in one province.

N.Beltov N.Beltov's picture

The Financial Power Elite _ John Bellamy Foster & Hannah Holleman

We will argue that the financialization of U.S. capitalism over the last four decades has been accompanied by a dramatic and probably long-lasting shift in the location of the capitalist class, a growing proportion of which now derives its wealth from finance as opposed to production. This growing dominance of finance can be seen today in the inner corridors of state power.

...the historically unprecedented increase in the share of financial profits (i.e., the profits of financial corporations), rising from 17 percent of total domestic corporate profits in 1960, to a peak of 44 percent in 2002. Although the share of financial profits fell to 27 percent by 2007, on the brink of the Great Financial Crisis of 2007-2009 (partly due to gains in industrial profits in this period), it remained steady as the crisis deepened, and rebounded in the first three quarters of 2009 to 31 percent, well above its pre-crisis level-thanks to the federal bailout (and due to the fact that industrial profits remained mired in recession). (See Chart 1).



When you are part of the ruling class in today's world, the increase of your wealth is guaranteed.

... today's massive secular shift toward increased financial profits, lasting over decades, is historically unprecedented.15 This represents an inversion of the capitalist economy-what Paul Sweezy referred to in 1997 as "the financialization of the capital accumulation process." In previous periods of capitalist development, financial bubbles occurred at the peak of the business cycle, reflecting what Marx called the "plethora of money capital" at the height of speculation just preceding a crash. Today, however, financial bubbles are better seen as manifestations of a secular process of financialization, feeding on stagnation rather than prosperity.

Foster concludes: "John Maynard Keynes's oft-quoted fear that "enterprise" might someday become "the bubble on a whirlpool of speculation" is now a systemic reality."

The remedy, of course, is an economic system that puts human need ahead of the endless pursuit of monetary wealth - most of which goes to the rich and the super-rich in any case.



Europe - IMF Bailout, Social Cuts Announced in Greece

"the current cuts were worked out in consultation with 'senior labor union officials'"



The Global Economic Crisis

"We are not dealing with a narrowly defined economic crisis or recession. The global financial architecture sustains strategic and national security objectives. In turn, the US-NATO military agenda serves to endorse a powerful business elite which relentlessly overshadows and undermines the function of civilian government...humanity is at a crossroads.."


"The finance ministers of all 27 EU member states will hold another emergency meeting tomorrow to draw up further detail of the anti-speculation plan, which will also include the European Central Bank."

so far they've only suggested a financial tax.  without killing 'free' trade financier rights deals a financial tax will not happen because the deals enshrine banker privacy and secrecy (no access to transaction records to tax them unless bankers agree its 'necessary'), and prevent restrictions on banker trading behaviour.

more rhetoric likely

but at least the guardian, unlike the CBC, retained statements targetting currency speculators as cause of Greece's difficulties.

EU states at best will only let their 'own' speculators ruin the rest of the EU, not US financiers.

trade wars between bankers. yikes. 

one would think their infighting would create space for alternatives, in civilian alternatives to the G20.




Fears Over Greek Crisis Continue to Drive Down GLobal Markets

"Serious analysts could not obscure the obvious, however. The sell-off on the international markets was the result of a growing panic among the world's ruling elites over the events in Greece.."


The CBC Radio news at 8 pm mentioned currency speculation as a contribution to Greece's woes.

However the reporter finished by blaming Greek deficits.

Commentators should know that speculation didn't only occur in recent months.  Greece accrued debt over a long period by

a) like all states, borrowing from private bankers and

b) like all states, allowing these creditors to game in the casino with the public money.

Notice that Deutschebank did buy Goldman Sachs/Paulson bundled derivatives.  Deutschebank also holds Greek debt.

EU banks game in the casino with public money as others have for a long time, in interest rates, currencies, commodities, hedge funds, swaps, and other derivatives.

All financiers gamed in the casino- that's why the crash in 08 was global.  They took public debt, leveraged it to excess levels, and traded it, in the process indebting themselves at exponentially higher levels.

Private financiers are in even greater debt than their public sources.  They are dependent on the continued transfusion.

Continued and increasing transfer of public funds to private bankers, domestic or otherwise, is accomplished through cuts and privatization of public services.

That is why Greece, and all states, are being attacked- not because states actually have a spending problem. 

States have a borrowing problem: 

1) They borrow from private bankers in the first place when they should just spend public money directly using public collateral.

2) We all let financiers proceed to game further with our money and control the financial system.





N.Beltov wrote:
Foster concludes: "John Maynard Keynes's oft-quoted fear that "enterprise" might someday become "the bubble on a whirlpool of speculation" is now a systemic reality."

The remedy, of course, is an economic system that puts human need ahead of the endless pursuit of monetary wealth - most of which goes to the rich and the super-rich in any case.

Yes, and as Chossudovsky and Marshall say in the preface to their book(see NDPP's link above), this is not the result of just a real estate bubble sourced in a few countries. There are several bubbles, all of which dwarf the housing bubble burst in 2008. Sounds like a good book with comments from JB Foster, Fred Magdoff and a few other notables, and especially the comments of a former insider who has unique hands on experience from a Wall Street analyst's point of view,  economist Michael Hudson. Hudson wrote previously that the foundations of the capitalist system are weaker today than even Marx predicted.


It's very difficult to get clear news here about the EU finance ministers meeting today.

The UK Guardian says Merkel is trying to regulate hedge funds, specifically requiring non-EU based financiers (in the UK and US) to get a 'passport' to trade in Europe, which they can only get if a financier's host nation uses the same rules as the EU.

It would make sense if this requirement extended to all derivatives trading.  Even then, it appears the 'passports' would still not regulate against derivatives gaming or other speculation within the EU.

Al Jazeera says the EU is talking about pulling together a cash fund to help any indebted state with base capital to enable that state to borrow more on the bond market.

Both options of speculator 'passports' and seed money for more private borrowing extend public debt in relation to private bond market financiers. Neither are real solutions. Funny how public debt is condemned then 'solutions' are provided of increasing the public debt.

Whether states are increasingly indebted to domestic bankers or foreign bankers, all financiers demand cuts to public services and privatizations at the expense of residents and nature. 

The only approach which would actually help people and planet is to eliminate the use of private bankers for public needs.

By eliminating the profiteering banking middlemen the public can itself create needed money and services directly, recycled through residents use of those services.  No waste is involved, nor subjection.

The CBC could provide useful perspective in coverage of the financial crisis and debt by interviewing and including comments from the Committee on Monetary and Economic Reform, or from CCPA writers who are willing to talk about monetary reform.


That's a great idea - tell the banks to sink or swim and offer them nothing in the way of bailout money. There are some saying that the whole thing should be put through bankruptcy. Even the bible says there should be a debt jubilee every 50 years or so. Who do they think they're kidding with all of this fictitious debt floating around the world? Banksters have come to believe that taxpayers owe them not just a living but life-long guarantees and permanent personal fortunes insulated from market forces. It was time to get the rich off welfare decades ago.

epaulo13 epaulo13's picture

Aid for Greece Hasn't Stopped Euro's Slide

By Michael Kröger

Greece's financial difficulties are beginning to spread to other countries in the euro zone.

Despite the 110 billion euro aid package offered to Greece over the weekend, investors still don't believe the country can solve its financial woes. The euro continues to slide and the European Central Bank doesn't have many arrows left in its quiver.

Jose Luis Rodriguez Zapatero is not generally considered to be a firebrand. The Spanish prime minister seldom loses his temper. But on Tuesday, he was clearly perturbed as he stepped before reporters' microphones in Brussels. Rumors have been circulating on the financial markets that Spain will soon be making a request to euro-zone countries for aid similar to the kind recently offered Greece. "That is complete madness," Zapatero hissed.

But Zapatero's eruption did little to calm the markets -- indeed it may actually have fanned the flames of mistrust. Even the confirmation by the ratings agency Fitch that it was not downgrading Spanish debt did little to calm investors. In just a few hours of trading, risk premiums on credit default swaps for Spanish bonds jumped by 18 percent.

A rumor of unknown provenance, a nervous denial from a head of government -- it doesn't take much these days to stir up the financial markets. To make matters worse, the US ratings agency Moody's announced that it may downgrade Portuguese debt yet again.....,1518,693352,00.html


Today the news is that the German central bank- Deutsche Bundesbank (as opposed to the private Deutsche Bank) is buying up european public debt. eg.

From the point of view of a resident of the planet who wants some sanity and peace, this appears to be a useful step.

It could be useful because the German central bank, like the Canadian central bank, is fully owned by the German public:

Possibility exists for the public via parliament to control it. Part 1,p.2. (March 2010 update in german language only at

However, the German (and Canadian) central banks' statutes allow them to game in the open market.

The German central bank may "grant loans backed by collateral and trade in the open market by buying and selling claims, marketable securities and precious metals outright (spot or forward) or under repurchase agreements". Part V 19.1.

Look to the Progressive Economics Forum under Bank of Canada, or for Harper's changes allowing similar irresponsibility.

The US Fed structure is even worse, it is directly owned by member private banks and private shareholders, all gaming at the expense of the public.

Further, the German central bank is a member of the Bank of International Settlements, owned by private shareholders.  The BIS is made up of many central banks including the private banks of the US Fed. (pp.7,9)

Additional public money for gaming is given to the BIS by the IMF: p.8.

So central banks can still take their own public's money, or others', and game via the BIS, and/or on the open market. 

No residents of any country are on solid ground until there is international public control of private central banks like the US Fed, and the open financial markets.

Current US/Canadian/provincial directions for financier self-regulation are not sensible.

Central banks should be restricted from gaming/trading in financial markets, and the speculative markets themselves brought under sensible rules or scrapped.

And Wall Street is indeed joining the bandwagon, .

Thus the public's money will be leveraged, gamed, and inflated again to untold degrees, prices will continue to rise, public services and good jobs lost, the environment ravaged, while speculators extend their power over people and planet.


Barclay's Capital said, "The key problem for the currency remains the solvency issues"

Portugal's central banker said Portugal would have "to adopt new measures that reduce the budget deficit this year and next in a convincing way."

Private financiers are going to keep calling for public cuts until there is nothing else to cut.  Then there will be a really bad crash because the bankers will have no more transfusions to play with.

The most sensible cut would be to reduce the budget deficit by cutting off parasitic private finance now rather than later.

It will have to happen at some point.



It's a big-ass report on Canadian household debt, but to summarise, it's not good. Household debt is continuing to increase, borrowing for consumption rather than to buy assets has continued to become more common and Canadians feel they aren't able to save.


Governor Schwarzenegger's 2010 budget proposal terminates social assistance in California, among numerous other cuts


Schwarzenegger proposed ending the entire state welfare program along with most state-subsidized child care, cutting mental health services by 60 percent and considerably slashing in-home care services for elderly, sick and disabled people. Those cuts, along with others, would save the state an estimated $12 billion in the year starting July 1.



N.Beltov N.Beltov's picture

But the Republican governor refused to suspend the implementation of corporate tax breaks that will cost the state $2.1 billion.

That stance infuriated Democrats. Sen. Denise Moreno Ducheny, D-San Diego, the chairwoman of the Senate Budget Committee, said the decision shows the governor believes "corporate tax breaks that do not exist today have more value than the children of California."

This is state-sanctioned class war of the rich on the poor. Most forms of class warfare by the poor on the rich are ... illegal. And that's capitalism in a nutshell. This is an excellent example on the dire and urgent necessity of an alternative - such as socialism - to capitalism as a way of organizing society.



The Specter of Catastrophe Returns

"In the late evening of Friday, May 7, 2010, an extraordinary scene unfolded in Brussels at a meeting of the leaders of the 16 eurozone countries.."


An Updated List of Goldman Sachs Tied to the Obama Government

"This essay shows the pervasive influence of Goldman Sachs and its units in the Obama government.."

'conspiracy' = persons aligned in interest - the perfect crime..

epaulo13 epaulo13's picture

Portugal’s Socialist Party government imposes new round of austerity
By Paul Mitchell
18 May 2010

The latest package came after Standard & Poor’s cut Portugal’s credit rating early last week and the EU insisted that austerity measures be speeded up in the wake of its adoption of a €750 billion emergency plan to defend the euro. Prime Minister José Sócrates declared, “These measures are necessary to obtain what’s essential, the financing of the Portuguese economy, but also to defend the euro.”

Asked why he had broken a promise not to increase taxes, Sócrates added, “The world has changed, and how, in the past two weeks.”

Finance Minister Fernando Texeira dos Santos said he expected “violent episodes” comparable to those in Greece, but insisted that the government had no other option.

Financial analysts have made clear that more ruthless measures are needed to tackle Portugal’s low productivity, slash employment protection, and decrease its dependence on a small number of industries such as tourism. Portugal’s total debt, most of it due to the private sector, is 331 percent of GDP, compared to 224 percent for Greece.

Workers and youth in Portugal have shown their readiness to fight back against the attempt to reverse the social gains won over decades of struggle. When the SGP was first announced, over 500,000 public sector workers went on strike. Last week transport workers held a three-day strike and workers in the postal services and parliament were involved in industrial action.....

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Portugal’s Socialist Party government imposes new round of austerity

However, the trade unions have done their utmost to divide and exhaust resistance by restricting workers to fruitless protests and preventing any political challenge to the Sócrates government and its big business backers. They are working closely with the government behind the scenes.

Following the announcement of the new measures Manuel Carvalho da Silva, secretary general of the Portuguese Communist Party (PCP)-led General Confederation of Portuguese Workers (CGTP) said, “Either we come up with a very strong reaction or we will be reduced to bread and water.”

But the CGTP’s “very strong reaction” amounted to a statement for, “a big national demonstration, on May 29 in Lisbon, as a high point of opposition to these unjust and violent policies.”

..similar behaviours by left parties and unions happened/is happening in greece. none the less greek workers continued to protest which has forced some unions to offer more militant action against the austerity program, the government and capital.
..traditional structures that working people depended on for support have sided with the socialist parties who have caved to capital. it would be difficult if not impossible to beat these odds yet somehow greek workers have found leadership..from, i assume, the grassroots level.

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Another Boomerang Stuns the Venezuelan Bourgeoisie

By Ramón Santiago - Axis of Logic, May 21st 2010

At today’s meeting of the PSUV (United Socialist Party of Venezuela) President Chávez did not waste any time reminding the beleaguered Venezuelan stock brokers that he would have no problem closing them all if they did not step into line.

This sharp reminder came after trading in all government debt was suspended by the Stock Market Commission yesterday in an all out assault on speculation against the national currency, the “bolívar fuerte”. This effectively means that the only legal route of converting local currency to US dollars in order to send them out of the country, capital flight, has been blocked.

Previously, Venezuelan brokers could trade in government bonds purchased at 2.15 to the US dollar and then offload them into the parallel exchange market at a rate 3 times greater. So, just for moving a few pieces of paper or keying in numbers on to a computer screen, so-called investors could free up their bolívares and make an easy 300% profit almost overnight.....


I love this one from Willem Buiter's blogs posted on Financial Times web site(London) from Jan-Dec 2009. Buiter is anything but a Marxist. His resume includes stints as: London School of Economics professor, member of the Bank of England's Monetary Policy Committee, and now Chief Economist for Citigroup and CEPR.

[url= to take the banks into full public ownership[/url]

Right on, Willem!


i was ok with buying up the banks cheaply, as they're less than useless.

but somewhere between valuating toxic debt at zero and letting the perpetrators go without reparations, then reprivatizing again (albeit with better rules), the justice was lost.



Oh yeah, Buiter is certainly no Marxist as his resume reveals. But he seems to like the idea of slapping the banks with a new Glass-Steagal act on steroids. And he mentions that the threat of future nationalisations of banks could provide enough incentive for banksters to keep their noses clean. I can't imagine our stooges in Ottawa ever using the threat of nationalisation with any badly run private enterprise that approaches Ottawa/taxpayers with caps in hand.

As for myself, I'm with Marx on banking and finance.

epaulo13 epaulo13's picture

..i would be, first, more concerned about who paid the debt rather than who owned the bank. the irish government has been dishing out the austerity to the working class like there's no tomorrow.

epaulo13 epaulo13's picture

..the concept of onerous debt is alive and well. what is being done via the financial crisis is no different then gangsters coming to your neighbourhood and putting everyone on the arm..for the next 100 years or more. there is no honour in paying any part of this debt. beating it back with every ounce of your being brings you that.


i had to change some key parts of my note yesterday. oughtn't read when i'm tired.

anyway, i hope the message isn't lost on people:

Taxpayers will continue to pay for bankers' bad debts under the current US 'reform' and private Federal Reserve bankers will still have primary control over regulation, the ability to determine what defines 'risk to the system' and which of their competitors they should cannibalize next. 

The public will increasingly be faced with cuts to basic services, the environment will continue to be ravaged by private bankers desperate to keep the money supply inflating and their interest profits flowing.   Until the next crash when another set of financiers and countries and ecosystems are demolished, and remaining bankers swallow proceeds and keep going. 



[edited out items that were in response to another thread]

Democracy Now had a useful interview on the Senate bill that passed. .  A Democrat who voted against the bill said the same as Wolff- that the bill wrongly allows off-exchange trading, 'proprietary trading desks'.

I read some of the parts of the bill posted at the Senate Banking committee site which includes amendments, and looks like Obama was partially helpful when said that federal funds would not be available for bailouts.  The text specifies federal funds would not be available for bailout of registered swaps entities.

  Swaps entities are defined as "any swap dealer, security-based swap dealer, major swap participant, major security-based swap participant, swap execution facility, designated contract market, national securities exchange, central counterparty, clearing house, clearing agency, or derivatives clearing organization that is registered under— (A) the Commodity Exchange Act; (B) the Securities Exchange Act of 1934; or (C) any other Federal or State law (including regulations)."p.514.

However, there are non-swap entities, and ongoing unregistered trading, particularly that of big banks' proprietary desks.  Section 1155 allows for bailout of financial institutions, not in the form of equity, but in the form of public guarantees; funds which may or may not require bailees' collateral.  Notably, these bailed institutions are defined as 'solvent' but we remember the frontline determiner of 'solvency' is the private Federal Reserve.  Within Section 1155 there is provision for Congress and Senate to resolve not to offer such a bailout, within very limited time frames for debate.

When Obama says they'll unwind failed financiers, it would be much in the way Lehman's was dealt with- Federal Reserve financiers will pick the bones of its prey-  those it defines as risky.

Therefore the largest problem remains that, inspite of oversight councils, both the House and Senate bills give the task of day-to-day ongoing regulation to the private US Federal Reserve which is a very large colony of foxes under, around, and throughout the henhouse.  Trade data remains defined as proprietary and confidential, though some summary information is collected, by overseers, 'as necessary'.

There is a segment allowing for carbon markets.

There is a segment indicating foreign financier swap wars:

"Except as provided in section 4 of the Commodity Exchange Act (as amended by section 738), if the Commodity Futures Trading Commission or the Securities and Exchange Commission determines that the regulation of swaps or security-based swaps markets in a foreign country undermines the stability of the United States financial system, either Commission, in consultation with the Secretary of the Treasury, may prohibit an entity domiciled in the foreign country from participating in the United States in any swap or security-based swap activities." Sec. 715.

The concerns noted in the thread at babble 'focus on derivatives' remain: It's all about risk to the profits of increasingly fewer financiers.  US taxpayers may still dish out trillions more through public loan backing of banks.  The banks can leverage that into hundreds of trillions more for their own interest-bearing profits.

To pay for the public backstop guarantees - effectively public insurance for banking speculators- there will be cuts to health, education, and what's left of welfare, and reduction in good jobs.  Publicly-backed bankers will have the support and power to seek increased resource extraction and offset market profits, as well as increased leveraging and hedging to increase their money supply and usurious interest incomes from their on-and-off-exchange 'innovations'.

it's simply absurd to keep these financiers going.  we need fully public/ community finance, to pay for our own needs and to keep the planet healthy.





epaulo13 epaulo13's picture

Thousands of Slovenian students protest attacks on their conditions
By Alexander Fangmann
22 May 2010

While students are the group most visible in protesting the bill, the proposed change in the law applies not only to them, but also to pensioners, the unemployed, or anyone over the age of 15. Private employment agencies will be set up to match employers with job-seekers. The likely result, according to the students, will be an increase in the number of low-paid, unstable jobs. In Germany, where such mini-jobs have already been introduced, the result has been a vast increase in the number of workers employed part-time, and the move from such positions into full-time employment is relatively rare.

In all likelihood this bill will also be accompanied by further spending cuts on top of the ones introduced last year, due to the European Union bailout of Greece. That gift to the international banks and investment funds will be taken from workers all over Europe, Slovenia being no exception. A Bloomberg report noted that Slovenia’s share in the loan pool is 384 million euros, an increase from initial estimates of 144 million euros.

epaulo13 epaulo13's picture

double post...


The Guardian on Friday framed the Senate bill as one that "restores Wall Street to its proper role as the economy's servant- and not its master."

However this perspective is incorrect given problems noted in post 37 above.

Section 1155 of the Senate bill says the regular process is to publicly insure Federal Reserve-approved bank shenanigans. 

If a member of Congress wants to prevent a public bailout, they have mere days to introduce a resolution and only a 10 hour frame for Congressional debate.

When there are no alternatives established to the system of private banking, even if Congress wants to say 'no bailout' for individual big players, it can't say no to all of them because the financial system as it exists is dependent upon them.

The mock public input in this set-up is useless: 

Alternative mechanisms need to be immediately accessible and functional for Congress to use federal funds directly as fully public finance for public needs without speculative intermediaries.

Then Congress can step away from its role in enabling the destructive debacle without cutting off its own feet.


Even if Glass-Steagal was re-introduced, even if all non-commercial banking was eliminated completely, even if banks were prevented from any proprietary trading in securities, commercial bankers would still have the ability to loan to companies, individuals and governments.

Even if the power to create loans- to create money- was based upon 100% reserves, so that the only money creation was the interest on loans, bankers would still have the ability to decide who could get loans.  Bankers would still be the ones who decide which corporations, polluters, militarists, social initiatives, or governments succeed or fail. Bankers would still decide which 'experts' get money to write 'scientific studies' and policy advisories, which media are supported, and how many lawyers can argue for 'regulation' giving bankers greater rights.

This power has continued through the Great Depression and the 'New Deal' to the present.  Bankers enjoy a power which is itself undemocratic and which directs democratic institutions and community processes.  As long as we allow private bankers to create money they will have more power than we do.

The power to loan/create money has to be reclaimed by the public/communities if we want our rights and those of the earth to be upheld over bankers'.  Not the 'public' as in a dictatorial state, but as common ownership with decision-making by involved communities at different levels.

Railing at banks doesn't solve the problem, changing all banks to public/community ownership would.




[url=]Theology and Neoliberal Economics[/url]
The Friedman Institute Upgrades Theology to Condone Neoliberal Greed. What would Jesus Say?

by Prof. Michael Hudson

As Charles Baudelaire quipped, the devil wins at the point where the world believes that he does not exist. Paraphrasing this we may say that free lunch rentiers achieve economic victory at the point where government regulators and economists believe that their returns do not exist – and hence, do not need to be taxed, regulated or otherwise subdued. 

By “free market,” the Chicago Boys mean giving free reign to the financial sector – as opposed to the classical economists’ idea of freeing markets from rent and interest. Whereas traditional religion sought to lay down precepts for regulation, the Friedman Institute will promote deregulation. Physically replacing the theology school with a “temple of neoliberal economics” is ironic inasmuch as one tenet that all the major religions held in common at one point or other was opposition to the charging of interest. Judaism called for Clean Slates (Leviticus 25), and Christianity banned interest outright, citing the laws of Exodus and Deuteronomy.

The Chicago Boys thus have inverted traditional theology. Yet the teaching of economics as an academic discipline began as moral philosophy courses in the 18th and 19th centuries. The leading universities of most countries were founded to train students for the ministry. The moral philosophy course evolved into political economy, dealing largely with economic reform and taxation of the unearned income accruing to vested interests as a result of legal privilege. The discipline was stripped down into “economics” largely to exclude political analysis, and the distinctions between productive and unproductive investment, earned and unearned income, value and price.

The classical economists saw rent and interest as a carry-over from Europe’s feudal conquest of the land and the privatization of money and finance into an institutionally based debt and monopoly overhead. The classical economists sought to tax away such “unearned income,” to regulate natural monopolies or shift them into the public domain.


well yes, and after all those centuries of trying to reform, to simply tax, to provide jubillees to the indebted, it is clear by now that the minute the jubillee passes or whilst they're getting taxed or reformed the bankers rewrite the laws again in their favour.

Shifting banking into the public domain is the only way to stop this process.

Theoretically, following such a step, greedy politicians wanting to be bankers could try to rewrite laws again back to banker-rule, but they wouldn't have the money and power to accomplish that, because the money and thus the power would be held in common by the communities/public.

Kind of like aligning values; participatory democratic politics with public/community-owned money.

I think this is something of what Jesus was getting at when he talked about giving Caesar's coins back to Caesar- to reject that money system- that Caesar's head on the coins was idolatrous in a culture where God was supreme over all aspects of life and economy.  They were to return and not circulate the idolater's coins.

The people were to conduct all their doings in justice together, as equals in God's sight, and not to support oppression and dominance by a few monied powers.



[url=]Thirty-Two States are Now Officially Bankrupt[/url]
$37.8 Billion Borrowed From US Treasury To Fund Unemployment Insurance

[url=]What the Europe Debt Bomb Looks Like[/url] graphic

epaulo13 epaulo13's picture

..the debt bomb is awesome in a scary way.


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