In the UK the media narrative is so dumb as usual. The sub-prime crisis and the financial crisis were caused in and by the USA, goes the tale. Don’t believe a word of it. Did any world leaders offer one word of complaint when the Basel 2 banking rules were concocted by supranational committee? Banks were as good as told to lend to people who would be unlikely to pay their debts, and the extra risk was to be swept away by repackaging and selling on the debts to others.
Take the commodity price boom which pushed poor people from hunger to starvation when rice was pushed beyond their means, and fuel for cooking. The fact is that there was no shortage in the spot market at any time. Rice was on the shelves all across the world right through the crisis and so too was gas (petrol) pouring out of fuel pipes just like normal all over the world. The whole thing was caused by a sickening game of chicken being played out between huge and secretive financial organisations in the futures markets. The losers like Lehman Bros are already history while the winners like Goldman Sachs are stronger than ever. It is only natural for financial behemoths to go head to head, to try to kill each other off, and seize all the territory, and the fact that they were allowed to do so is why billions or poor people had to go hungry…and for no other reason.
But why did no one in any government ever say STOP – ENOUGH IS ENOUGH. The futures traders were buying and selling forward contracts by depositing a mere 1.5% of the value of their ‘bets’. The same money spent in the spot market buying rice could buy nearly seventy times as much going forwards, and so inevitably the bidding up game started, and the player who could pick the moment to cut and run leaving his opponents holding all the bad cards would pockets billions and billions of dollars.
It was quite clearly an unnecessary, immoral and disastrous event, and yet as usually happens in all previous commodity price run-ups governments should have intervened and insisted that forward contracts have a 10% deposit levied, or 20% or 30% until the game of chicken is brought to an end. But they did nothing. With all the tens of thousands of bureaucrats in Brussels claiming endless wisdom over all subjects known to man, why did not a single one of them not say one word while the poor and the hungry were being burned?
Not only did governments not stop the fleecing of billions of poor people by a tiny number of big swinging dicks parading their egos around in the futures markets. The EU seemed to be trying to get a ride on the game for itself. They had picked this exact moment to insist that accounting rules be changed so that the previous system of valuing a company through the historic cost of its assets be replaced with ‘mark to market’.
No doubt the EU expected this would force companies to declare far higher profits. As so often markets will show a nice high price as long as no one is selling, and the futures game to begin with made everyone frightened to sell in case they missed out on the joys of the boom.
To my mind ‘mark to market’ was quite disgusting attempt by the EU and others to turn screwing the poor into a fast fund-raiser. Anyhow it didn’t work.
Once sellers are forced out of their bunkers, prices start to drop. Instead of boosting tax revenues by forcing companies to value their assets at the inflated values (apparently approved of by the EU), ‘mark to market’ had the opposite effect, forcing companies to realise the prices they were declaring to start paying taxes on their otherwise merely paper positions.
Once the selling started it never stopped, and all markets were sent crashing, forcing lower and lower valuations.
Anyone who wants to blame Americans or traders for the financial crisis, or the ever-hated term ‘speculators’, should bear in mind that it was not traders who engineered the circumstances of this catastrophe. Traders will do whatever governments permit them to do or order them to do, and it is governments who are clearly primarily at fault here. They failed to intervene and stop the bubble from growing, and then once it had grown, they were the ones who burst it by trying to suck all the juice out of it.
The world’s governments could have and should have done something to bring all these money games to an end. But they did nothing…as all the time they saw the long 16 year boom adding to their power over ordinary people who thought that easy times would go on forever, and they kept voting for more of the same.
And so what do the politicians whose folly caused the boom and bust now propose? Would you believe, they are demanding that they be permitted to nationalise all the banks, and extend their powers yet further.
The longterm objective of the EU is to bring private enterprise under the yolk. But before they finally are able to do that, first they have worked hard to bring it to a point of self destruction, so they can insist, as they are finally placing the straitjacket around it pinioning its arms to its chest, that they are coming to its rescue.
Brown is the front man for the campaign to bring all the west’s banks into political control where they can be instructed to support dead ducks like the drachma (sorry Greek Euro) or the state of Hungary. The money wasted will burn two generations to come.
It can only be hoped that the financial crimes of Gordon Brown and his fellow communistic fellow-travellers will one day be properly understood, as they twist and turn trying to impale the world’s financial system and bring it to its knees. They yearn for the day that they can get the power they crave and destroy once and for all the success of the capitalist system, and push America down from its position of world economic domination. Or is anyone seriously suggesting that such deliberate havoc can be created by accident?
To hear views expressed openly and directly that the EU and others are deliberately trying to bring the free market system to its knees, see THIS.