The crisis of capitalism

Brian CLOUGHLEY

 

Capitalism is wonderful, or so we are told by those who prosper mightily by using other people’s money to gamble in financial markets to make immense profits. But capitalism hasn’t been working so well of late, and countless thousands of ordinary people are poorer or even ruined because they were sucked into disaster by sleek, fast-talking con-men.

Appropriate words

In the film Trading Places, one of the leading characters tells a pair of self-satisfied, pompous, scheming, amoral money-manipulators that “you’re nothing but a couple of bookies”, and rarely have more appropriate words been uttered to describe the frantic antics of those whom Tom Wolfe so ironically dubbed ‘Masters of the Universe’. You and I would call them squalid spivs - those who, according to the dictionary, “make a living by underhand dealings or swindling”.

The collapse of the American investment bank Lehman Brothers in mid-September caused concern among the rich and utter despair among countless thousands of ordinary people. It appeared amazing that such an enormous bank could suddenly go under, although to insiders it was no surprise because the avaricious guttersnipes running it had been out of control for years.

But not so out of control that just before it went bust, the greed-heads awarded themselves a nice little present. It was reported that “staff [in New York]...of the bankrupt bank Lehman Brothers will share a bonus pool set aside for them that is worth $2.5 billion.” So capitalism worked well for those who helped create the crisis - but it was catastrophic for those who had invested in their putrid schemes.

The head of Lehman Brothers, one Richard S Fuld, received a package of over $40 million in 2007. He bought one of his houses, the one on the oceanfront in Florida, for $13 million four years ago. No mortgage, of course, unlike the poor suckers suffering from the financial disaster caused by Fuld and people like him. And one of the former biggies of Lehman, the unlovely Joe Gregory, wants to sell his house in New York. Anyone got 32 million dollars to spare?

The repulsive farce of Lehman Brothers is only one example of how rapacious high mucky-mucks rip off the ordinary citizen, the defenceless majority.

As the New York Times put it: “Bankers’ excessive risk-taking is a significant cause of this financial crisis...Mortgage lenders blithely lent enormous sums to those who could not afford to pay them back, dicing the loans and selling them off to the next financial institution along the chain.” A bunch of bookies, indeed. Crooked bookies, in fact.

And it was the bookies, the slick spivs and charlatans with their yachts and helicopters, who invented the licence to print money they called ‘Credit Default Swaps’.

Debts of companies

This grubby little wheeze was supposed to guarantee the debts of companies. Contracts whizzed round the world and thousands of rich people made enormous sums. But when the mortgage market went belly-up, so did all these gilded ‘investment banks’ which were shown to be tawdry casinos, only not so well run.

And this is where capitalism met the crunch of greed, because although the great American belief is that the state should not interfere in money-making enterprises by supporting failure or imposing such awkward things as rules and regulations, there was a sudden change of heart when it came to the insurance giant AIG, which was about to collapse.

AIG had to be bailed out with vast sums of taxpayers’ money because if it had been allowed to crash there might have been appalling knock-on effects, not only in America but globally.

So Washington and Wall Street, that alliance of revolving-door, ‘you scratch my back, I’ll scratch yours’ chumminess, capitulated to pragmatism - what they would call socialism - and national control was assumed of the shambles that is the world’s largest and worst-run insurance company.

The so-called ‘free market’ had for years lined many pockets and benefited yacht-builders and auction houses selling obscenely-priced baubles and pictures to people with more money than morality, and it was proved to be grotesquely incompetent.

But the ‘Masters of the Universe’ did very well themselves, because, as London’s Financial Times recorded, the pay and benefits of those running “the seven largest US banks totalled $95 billion over the past three years, even as the banks recorded $500 billion in losses.” The guiding principle was to get in there and rip off the public.

kind to big business

Washington is kind to big business, which is not surprising when you consider that the president and Dick Cheney, along with hundreds of members of the administration, are beholden to business interests for their wealth and their election or selection for high posts. So we should not be surprised when gross violations of law and morality are dealt with by wrist-slaps of touching delicacy.

fraud

Take Halliburton, Cheney’s old firm, whose subsidiary KBR, “agreed to pay” 8 million dollars for ripping off the taxpayer by over-billing on contracts.

This was criminal. If you or I did anything approaching such fraud, we would be in the slammer before you could say “Cheney’s a liar”.

But not in Big Business, whose fat rats Bush refers to as “my base”, and the “haves and the have-mores”. We all got the message: if you have money, we’ll protect you; if you are vulnerable, tough luck. And that is the way corporate and political America wants the entire world to be run. Capitalism is in crisis, courtesy of greedy amoral American bookies and their evil associates around the world. Let them be the ones to be penalised. Why the blazes should anyone else suffer ?

The writer is a commentator on South Asian political and military affairs. His upcoming book, War, Coups and Terror, will be released on October 16 by Pen & Sword Books (UK)