It is time to cleanse this den of robbers

Something must be done and done quickly; everyone agrees that the economies of the developed world must be stopped from tumbling back into recession. Something must be done but no one really knows what to do. If you pay back your debts you are accused of bringing “austerity” into the world. If you allow the normal capitalist process of bankruptcy to apply to a nation you are accused of wrecking the economy of a significant part of the developed world. It is an odd world.

The experts do not agree on how it is that we reached this economic state of affairs. Some blame the banks, other blame lack of regulation, other blame spendthrift governments buying votes. Most likely that all of these things have helped propel our economies where they are today.

However, and there is always a however, all the experts have overlooked one thing which I think has enabled the banks to make poor investments and governments to be spendthrift and encouraged lack of regulation: since the “big bang” our economies have become dependent upon gambling, as opposed to trading.

Traders now have “positions” and do not make investments. They gambling on one thing and lay off the potential loss by betting with other gamblers. They are all looking for the card that is so high and wild that they will never need to deal another and in doing so play with our savings and pensions. Win or lose it seems these gamblers cream off the top slice of money, and inevitably this makes the few gamblers very rich and all of us who are not gamblers very poor. That is what drives economies into recession.

We have created a banking and investment system in the past fifteen years which works like a casino the membership of which is only open to those who control the savings of others. Those who are not members, the vast majority of folk, give their money to the members who may with it and year after year slice after slice is pushed on to the plates of the members, win or lose.

We have created devices which arrange and allowing speculators to trade stocks, bonds, commodities and currencies dozens of times a second – faster than any investor could act or think. The daily value of trades in commodities exceeds the annual production of those commodities. Four trillion US dollars of foreign exchange are traded every day. That is $4,000,000,000,000,000 every day. The gross domestic product of theUSA is only $14.2 trillion a year.

Now gambling may or may not be a good thing, according to your beliefs, but gambling with other people’s money would be regarded by most as criminal conduct, and yet the banks and institutions do this every day on a barely credible scale. Yet we honour these gamblers. We give them the best seats in the house, the pickings of the feast even though their actions devour the houses of poor folk.

If we are to fix the economy we must start by putting an end to this reckless gambling; it may appear to be a successful business model employing many people but it has created the means of the destruction of our economies.

It is time to cleanse this den of robbers.

 

3 Responses

  1. Are you reading this Emilio Botin CEO of Santander !

  2. Yes indeed.
    I like the Leonard Cohen quote. It has an added relevance consequent to “The Stranger Song” being part of the sound track to the 1971 Robert Altman film “Mcabe and Mrs Miller” which presents an allagorical representation of US capitalism; in much the same vein as the more recent “Deadwood”.
    The “bottom line” is the reality that the vast majority of economists and politicians refuse to grasp the distinctions between free enterprise and capitalism.
    It might also be noted that the same people fail to grasp the similarities between Communism and Fascism (cf. corporatism), both of which vindicate Adam Smith’s concern that government that gets too close to business interests is “the worst of all governments for any country whatsoever”.

  3. Q E easily explained.

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