If you’re in the U.S., you may be justified in blaming your banking industry (you definitely are), but just make sure that you know you’re talking specifically about U.S. banks. Not all banks around the world screwed everyone over.
Let me remind you that banking cultures are very different around the world. They don’t all set out to screw people over and take reckless risks. I bet there are still many Americans who have no clue that not a single Canadian financial institution (insurance company, brokerage, retail bank) needed, asked for, or received any bailouts. None! At least some U.S. news commentators are starting to pay more recognition to this fact.
It’s not just Canada, either. Spain’s banking system was also a notable pocket of health throughout the heart of the financial crisis (it’s too bad they haven’t been getting their share of recognition for this with all the new attention on the so-called “PIGS” of Europe).
More Reward For Same Amount of Risk?
What’s really bothering me is that American-led “financial innovation” has screwed the rest of the world over due to the confluence of the domestic role of the USD with the international reserve currency status of the USD. I’ve explained these connections before, so I won’t go into all of that again – just read my previous posts.
By taking toxic assets, slicing them up and repackaging them in the midst of more regular assets (and then giving them an AAA rating) – and at first succeeding (or seeming to) – Wall Street created a wave of demand for similar opportunities for reaping more reward for the supposedly same amount of risk. This new Wall-Street-led demand in synthetic CDO’s, etc. is what created the subsequent innovation in sub-prime mortgages. I’m currently reading a book on this new angle – I’ll post a review shortly, probably.
Canada has a sub-prime mortgage market too, but again, don’t be fooled by labels. You need a downpayment in Canada. You need a job. There are no NINJA mortgages, and for good reason.
The latest debacle with Greece is problematic because we still don’t know what Goldman Sachs was doing in their balance sheets – disguising debt, etc. Why? What interest does Goldman Sachs have in sweeping Greece’s problems under the carpet? Kind of interesting that S&P finally downgraded Greece’s rating – by three notches, not just one – on the same day as the Goldman Sachs investigation – creating a nice little sideshow and by implication keeping the two issues seeming unrelated.
Interesting lateral comparison: Goldman Sach’s total assets are about $849 billion USD – compare that with Greece’s GDP, valued at $349 billion (2008 est.). So Goldman Sachs’ net worth is at least twice the size of Greece GDP.
Even though the US has more debt in absolute dollars than Greece does, the USD is still considered (or is said to be considered) the so-called “safe haven.” We know this is a highly contingent moniker, though – it depends on (1) the amount of actual dollars in circulation (big enough pool to absorb other currencies) and (2) that it has been taken to be the world reserve currency since 1944 (another highly contingent and not necessary agreement).
For justice, we need to decouple the USD from the “world reserve currency” status (this doesn’t change its domestic use and this doesn’t imply the adoption of a “single global currency.”). This is why the domestic debt problems of the U.S. and its citizens are spreading out like cancer into the world system.
Global Bank Tax Bulls***
If you want regulation, then regulate your own banks. And you should have done it three, four, five, ten years ago already. Don’t penalize the banks that didn’t f* over their citizens and customers. I shouldn’t have to pay for your mistakes. You can’t condemn regulation when it suits you not to have it, and then impose regulations where it suits you – and impose it on other countries who had no hand in your reckless financial machinations.
For those who have actually read this far, I apologize for the rant here, it’s not my usual style. But these events are increasingly upsetting. The US financial system appears to have become a vaccuum for the world’s wealth and it is not clear what it is providing in return – military operations? Ultimate space gun, shoot anywhere in the world in under an hour? Missions to Mars? This can’t be happening.
In the meantime, Greek citizens are apparently ill-informed as they hurt only themselves by striking and disrupting their own day to day livelihoods. Portugal is already the poorest EU nation and looks to be on the path to punishment as well. Meanwhile, the US sucks in foreign money because of the USD reserve currency status, and blows it on financial risk taking and space guns. Why do the poor have to suffer? Why is anyone trying to build a space gun when there are greater problems at home? When will ethics (or — gasp! — regulation) become important?
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