But then, that simple view doesn't take into account human greed. It doesn't take into account human genius when it comes to imagine systems that go around reality in order to further the interests of a very few individuals. So finance developped, grew and thrived around this unending greed for more money, more power, all for the same select few. Finance hired PHDs in mathematics, paid them lavishly so they'd put their brains to good use, which, in their view, they did. So, they invented financial products, and drew upon a limited well of real wealth to shape a virtual universe of limitless riches. They made bubbles. These bubbles burst, but it didn't matter, because then they came up with other bubbles, even more shiny and aluring.
In the years 2000, the Internet bubble burst with lots of noise and sound. The panic was short-lived. There were yet many other ways to magick wealth out of the very thin air of poverty. The educated and brilliant minds of the finance specialists immediately focused on the task ahead. Thus, the subprimes were born and bred, and bred, and bred again. Until that bubble burst too, because you really can't produce wealth out of debt and poverty : one day the debtor must pay you back, and if you built everything on a system in which the population's income and social rights keep shrinking and they can only resort to more loans, well, it ends up crumbling into dust at your feet. Of course, the great minds of finance had thought of that, which is why they invented the derivatives. They created bonds so complex that nobody could unravel and decipher – otherwise the fraud would have been apparent : they were litterally selling empty air at high prices. But then, Reagan and Thatcher, and Milton Friedman, had seen to it that all regulation was banned from interfering with the perfection of almighty finance. Worse, they also invented insurance against the default of a debtor. They invented the Credit Default Swaps, which rest upon a very simple and completely insane principle : « Please, do buy our extremely risky products : they give you a very high interest rate, and if the debtor can't pay, which is more and more likely, you can activate this nice CDS, and insurance companies will compensate you. It's a win-win proposition! »
So nobody saw the plunge coming, except a few economists shunned and ridiculed by so called gurus, and of course all the forces of the left, that uneducated and ignorant fools equate with the scarecrow of the old USSR. It took its time, this plunge, it unfolded within a year, from Summer 2007 to Autumn 2008. And then it hit us all, big time.
Everyone knows what ensued : the same gurus who had spat and howled against the states then begged them to intervene, to save the almighty system from disintegrating. And the states did. As they did so, and dumped trillions of Euros into the black hole finance had created for the benefit of the same select few – who, by the way, got even richer in the process, coveing potential losses by hoarding the money given by the states, our taxpayers money, to save a system rotten to its core. And of course, as they saved the financial system, the states purchased debt. A lot of debt, which it had never been in their intention to do. The result was that states' treasury got bad. State debt soared, all thanks to the financial system and private interests – not because of bad management.
That's when the little world of finance thought of a very efficient way to dump the blame from their shoulders on someone else's, while making big money in the same time. That's when the new powers-that-be, aka Rating Agencies, came into the spotlight. That's when the global attack against the states, and their « bad management » of their debt began : to be able ot make money of state debt, you need three things:
- to make sure that everyone knows it's bad debt, so the interest rates soar,
- to make sure that the country in difficulty can get help from outside of the financial system – that is the Federal Reserve for the US, or the European Central Bank,
- and of course, to have your own trusty CDS at hand, in the case when countries you loaned money to would default.
In the US, the FED can create US dollars out of thin air, and has done so for decades, thus completely cheating the system. It's only Tea Party and Republican stupidity which threaten the US. In Europe, it's not the same. The Germans, followed by some others, have sought to impose their own misguided view of how the world should be. The European Central Bank exists only to serve Germany's crazy goals, not to help growth or job creation. It's there to control inflation, to sound the alarm on debt and generally demand austerity of all.
When the financial sharks started attacking Greece – a very tricky bag of bones in its own right – Portugal – which had no debt problems until it had to save the private banking sector and has already undergone austerity programs time and again – Ireland – former champion of The One Way of Almighty Economy – well, the tapestry unraveled pretty fast. To meet the private interests' demands – the banks and the financial system they had just bled themselves dry to save – the states were ordered to cut their spending and empoverish their populations, to destroy people's rights, to raise taxes, and to lay off civil servants – which really meant simply to send them further the endless line of the jobless people. It didn't matter that those countries' governments had been elected by people to do things that had nothing to do with those demands. In an incredible denial of the most basic democratic process, the financial markets started dictating what countries policy shoudl be, and to govern the empoverishment of whole populations, to whom they were not, and are in no way accountable.
It would have been easy to put a stop to that, to call that bluff. All it would have taken, all it would take even now, would be a single word :
But then, if those threatened countries ever were to say « no », what would happen ? The private interests which first gobbled up taxpayer money to save themselves and then gambled on state debt to make even more money would lose...well, they would, unless they activated their nice, shiny CDS. And then, chaos would rush to center stage. Because, then, the insurance companies would have to pay up – when nobody in his right mind ever imagine they'd ever have to pay (that's called no-risk insurance, except that in this case, well....). And, guess where those insurance companies are? Yes! You got it! The US of A, and the UK!
Lo or, perhaps, allelujiah!
Of course, this would mean the definitive end of the financial system. It would crumble, and nothing could save it this time. And the very few, those same select few who rule the world while the rest of us good, nice sheep play make believe in democracy, would see their wealth and power destroyed. And that, of course, won't do. It won't do at all.
Which is why we're seeing now, for the first time, the truth behind the deception we call our democracies. We elect governments to do things, but it doesn't matter. When their interests are threatened, the powers-that-be ring the end of the party. Those governments we elected snap to attention, and then they obey. They enact austerity plans which will solve nothing (you can't make growth out of poverty, you need people to have money and a minimuml of security so they can buy good and make your economy work – to take all the safety nets away simply accelerates the plunge into recession and toward default), not to save themselves, their countries or their populations. Oh, no. The only goal is to save the system, to allow it to hang on, even if by the thinnest of threads.
They obey, those we elected.
They obey to the commands given by outside interests, by private interests which despise us and suck the marrow from our bones so they can keep their extravagtant and outrageous privileges. They obey, our governments, and they tell us they have no choice. They tell us that the rating agencies are as infaillible as gods, the way economists used to tell us that markets are perfect and infaillible.
What is happening now, in Greece, in Portugal, in Spain and which will happen to us all sooner or later has a name. It's war. A war waged by the powers-that-be, the ploutocrats, to preserve their dominion at all costs. It's a war without rules of engagements, without limits, without morals or ethics. Without scruples or the smallest thought of humanity, of what will happen tomorrow and why.
It's a war. No rules. No honor. Ugly. Merciless. Bloody. And they're fighting it with all they have. If we don't fight back, well, it's simple, they'll chew us, they'll swallow us, they'll suck us dry, and then they'll shit us down the sewers and sigh with contentment while doing so.
I don't know where you stand, but I know where I do.
And my answer to the ploutocrats is a very simple one: go to hell, all of you. When your eyes turn to my country, well, let it default. Oh, yeah, let's default, by all means. Then I'll watch you all squirm and portest and panic and then fall.