September 19, 2008
So Much For The Free MarketHey, maybe I can get my business underwritten by the taxpayer, too?
You can bet your bottom dollar that US workers will be paying for this bail-out for decades to come. And the UK government has also made many billions available to banks to help fill the gap left by toxic debts (by which we really mean "loans they shouldn't have given".)
Do I feel sorry for all those suddenly unemployed bankers who once stepped over the shivering homeless to get to their opulent climate-controlled offices, citing "market forces" and "survival of the fittest" to justify their obscene earnings?
Call me old-fashioned, but I struggle to muster an ounce of sympathy when I see those same people bleating for the state - that's us, folks - to bail them out when their rampant greed and irresponsible lending came back to bite them. It's like watching the wolf begging for an antacid after eating too many little pigs.
No doubt some apologists will claim that the banks must be bolstered and buffered so that the average man in the street can keep his job and rely on his savings and investments. Yeah? So why doesn't that apply to, say, software companies or fridge freezer manufacturers? Employees rely on them. So do stockholders. Here in the UK the economies of entire regions were allowed to die under the kosh of market forces. But some businesses seem to be special, and they enjoy special protection - often at taxpayer's expense. Banks are at the top of that tree of supposedly capitalist institutons who expect and enjoy the kinds of protections we normally associate with socialism. It's an extraordinary, sickening double standard that we all ought to be up in arms about.
And, yes, sure: we're all tied up in it. My job. Your job. My mortgage. Your mortgage. My pension. Your pension, if you're one of the people my age who has managed to start one yet. There's no escaping a crash in our financial institutions. This is a forest fire so potentially disastrously huge, it will take all our resources to put it out. The much cheaper solution, in the long term, would have been to let those smaller fires burn themselves out. Failing banks should have been allowed to fail.
But now, like the line in Dune says: we are joined in death. The network of debt is too interconnected now. The domino effect after all this robbing of Peter to refinance Paul means that one bank could topple after another until every nation is plunged into a major depression. We should never had let that network grow to the monstrous size it has in the first place.
The size of this bailout is a consequence of the fact that we have bailed the banks out too many times in the past. The special protection they've enjoyed has made them think they are immune to their own mistakes. Like spoiled kids, they've grown up without learning how to function in the real world where those kinds of mistakes usually burn you. The danger with this latest emergency handout is that, yet again, the finance industry will quickly forget just what a major ****-up they created in the noughties, and a decade from now it'll be business as usual and the next artificially-inflated, state-underwritten boom-and-bust cycle will be underway.
If I had any doubts that the world is run for the benefit of the super-rich, they've been well and truly dispelled this week.
Posted 11 years, 2 months ago on September 19, 2008