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Hungry Banks









Fernando García Izquierdo






                 Are banks really so necessary, so essential for our wellbeing, nay, for our very existence, the life and happiness of our species in the planet, that we must constantly hear polticians and financiers alike say there is no money for our everyday needs because they must first and foremost refurbish the banks?


                 It seems that in this country, Spain, there is no money but for refilling the banks’ coffers.  In a few days, months, one year the people may be starving, and what will the government do?  A little charity, maybe food, bits of clothing and so on freely supplied by the parishes and people’s assembly halls.


              And the mountebanks will go on vomiting their venom, those strange theories, the most stupid nonsense ever to come out of human mouths.  Mario Draghi, for instance, president of the European Central Bank and, for all I know, another politician (it is difficult to tell nowadays), was saying a few days ago (EL PAÍS, June 16, 2012) that all the banks in need will receive the liquidity they may ask for.  This is madness.  Draghi is a very nice man, bespectacled, blackhaired, intelligent eyes.  He certainly does not look mad.  But when you hear a respectable man say what he said, you get worried.  In my opinion, there is nothing in what he says that makes sense.  Never mind, I should not forget that in the realm of Capitalism there is nothing which is not a great lie, if not utterly evil.


              How can anyone contemplate, least of all a responsible politician, a decider as they say, that Spanish banks may ask for as much liquidity as they wish?  Does he mean the cajas de ahorro, too?  And are the central bank officials going to set about looking for the needed billions, borrowing somewhere, or is Draghi planning to ask the Commission’s printing-press to produce the necessary paper-money?


                I Iearned at school that capitalist production entailed risk, and banks are capitalistic enterprises, the quintessence of capitalism (the bankers nowadays talk of offering you this or that “product”.)  From where comes the idea, then, that banks and cajas de ahorro and other speculative-funds joints must be compensated if they lose?


                 At the other end of the social ladder there are people, the workers, who are suffering.  Anyone who moves about with his (her) eyes wide open can see this; and they are not guilty of any of these crimes (I mean, speculation on a great scale.)  And are the people now going to pay for the risks incurred (losses suffered) by the banks?  Why, speculation means just that, sometimes it brings profits, sometimes  losses. 


                 Moreover, we all know that other capitalist enterprises (motorcar industry, pharmaceuticals, etc.) are going to obtain guarantees (they too) from their governments that their eventual losses will be paid by the public revenue (it has been done already, General Motors, for instance.)  It happened in 2009!  And as an international lawyer I know that many multinationals devoted at least part of their capital to speculation rather than production.  Does this all mean that twenty-first century capitalism is banditry, purely and simply?  Are the culprits going to get hundred-per-cent guarantee that, whatever they do, it will be the public revenue that will ultimately pay for their losses?  These are important questions which require urgent answers.    


                 The title of the newspaper article I am referring to is:  “EI BCE garantiza toda la liquidez necesaria ante las elecciones griegas.”  In other words, there is more to it than a mere financial calculation.  Elections!  It was urgent for capitalism, these days, to stop the Greeks from voting for the Left (the article is prior to the June 17 election).  And “el Banco Central Europeo, el emisor del euro,” I read, “se está preparando para actuar.”  I’ll try to translate this into English: “We, the European Central Bank, printers of the euro, are ready to stop the Greeks from electing the government they prefer”, the Left.  Indeed, the paper says, “preparando para actuar.”  That is to say, intervention including ultimately war.  That is what “actuar” means.  Of course, Mario Draghi does not say that in as many words.  Perhaps we are going to invade Greece if the left wins the elections.  I know I’m exaggerating.  Nor do I have the original text.  Anyhow, how much Draghi and his bank were “prepared to act (actuar)” we shall never know, for the Left did not win the election. Another thing,  Draghi seems to encourage the banks to mention a figure.  “All they need,” he says.      


                 When I finished reading the article, an image came to my mind.  That of Winston Churchill, former prime minister of the United Kingdom. He too wanted to stop the Greeks from voluntarily choosing Communism.  Churchill was all his life a military officer and the scion of one of the aristocratic families of Britain.  Not surprisingly, he feared communism.  During World War II, when the countries of the West were still allied to the Soviet Union, Churchill, then supreme UK leader, did all he could to convince the US high command to disembark in Greece instead of in the south of Italy. He thought that if they disembarked in the Pelopponese they would “save” Greece from communism and, besides, British and American troops would push north straight away, so as to stop the Soviets from arriving first in Berlin.  The US high command didn’t follow the advice and the troops disembarked in Sicily, as is well known.  But Churchill was a very stubborn man, and when World War II was over, British troops were sent to Greece to try to stop the Greeks from choosing their own system of society.  Like the European Central Bank today.     


                 Coming back to the article in EL PAÍS, today we are talking of printing paper-money, not war.  And the ECB, whose task it is to issue euros (“emisor del euro”) is getting ready to act printing millions, then billions, and tomorrow perhaps trillions. “As many as may be needed,” I read.  “El BCE garantiza toda la liquidez.”  We shall print as much paper-money as the banks demand.  Or perhaps it is all virtual, and there is no printing at all, all palaver, words, theatre, fibs.  There have been so many conferences lately, mentioning figures, talking of bailouts, trying to show to us that the “rescate” is only financial, “not sovereign” and all that incomprehensible rubbish… one gets lost!


                 In the photograph which accompanies the article, we see a very sad Mario Draghi. He is biting his lips, his head droops, his eyes are closed, one would say he is weeping.  He did not look so despondent in photos taken a couple of months ago.  But he had the same ideas in mind then.  I read in another, less recent article (TIME, March 5, 2012) that he was sure that no Lehman Brothers-type collapse would take place in Europe. (It seems that Draghi too thinks that the present terrible crisis would not have occurred if the Lehman joint had not crashed in September 2008.)


I also read that already on December 21, 2011, “the European Central Bank offered to lend Europe’s banks as much money as they wanted,” the American journalist goes on: “After the Crash of 1929, people ran to the bank to pull their money out.”  This will not happen again.  Thanks to Draghi, "Europe’s banks will have access to plenty of cash.”


                We are really living in a mad world.  How can anyone think, never mind the grand deciders, that Europe can issue a guarantee to banks and similar joints  that all the money they ask for will be given to them?




                 Very briefly stated, capitalism is the form of development in human society where the production of the goods needed to satisfy our needs (and trade) follows a socialistic pattern of cooperation and planning, while the appropriation of the results of said collective work, the distribution of the goods (commodities) produced, takes an individualistic selfish line, one section of society only (the capitalist class) gets the benefit of said collective work, leaving for the rest of the community, the masses, the workers only the crumbs that fall from their tables (of said wealthy minority.)


                 The domination of the majority by a minority is as old as history; but whereas before, it was the doing of a sacerdotal caste that became rich and powerful by the trick of religion (offering eternal happiness and so on); or of a tribe, clan or family strong enough to dominate the surrounding tribes; or by a set of warriors (knights) who in turn, after much strife and blood, become the aristocracy of the land; or a monarch with his or her suite of degenerate followers and vassals; and then a bourgeoisie…, under capitalism it is accumulation of wealth in the hands of an individual which does the trick.  Riches, held sometimes anonymously, will allow the rich man (formerly a landowner) to exploit other individuals, and to appropriate for himself the benefits, first, of past work and learning by all humans, which he calls HIS capital, and then, employing a hundred or a thousand “hands” under one roof or enclosure, all at his command.


                 Whereas up to the arrival of capitalism (which started in England, with the industrial revolution) a worker was always his own man with regard to the product of his labour, and always used his own brain in order to produce (and then he sold the   product when he did not produce exclusively for himself and his family), under capitalism the worker sells from the start (not the product of his labour, but) his labour power, which becomes the property of the capitalist, who uses him as an appendage of a machine.  For this, the capitalist pays the worker as much as the latter needs for his survival and that of his family, the “prole” the capitalist needs (or needed) to employ them domestically, in agriculture, industry as well as for  sending them as sailors and soldiers to fight abroad and conquer other people’s land.


                 Yes, the capitalists have always needed wars in order to possess, conquer,  constitute Empires.  Imperialism is nothing more than the advanced phase of capitalism.  So, the great European powers conquered the world and became ever so rich! thus obtaining, among other things, gold and precious stones, raw materials and an inexhaustible supply of cheap labour; and cannon-fodder to use during the wars.


                 At Bretton Woods, in 1944, the wealthy European powers (I don’t mean the people, who were not wealthy at all, but the so-called elites) decided to pass the baton of imperialism on to the United States of America, first, agreeing to accept the dollar as the universal measure of exchange and trade, giving Washington a tool to freely print paper-money; secondly, formally naming the Pentagon as the leader of our armies in the several crusades which were about to start.  In short we became vassals of Uncle Sam for good.


                 Why did they do that, why did wealthy Europeans (I mean the rich men in France, Holland, the United Kingdom, etc.) voluntarily submit to become in effect servants to the Americans?  The answer comes from one of the four Evangelists, who explains why the powers-that-be in Palestine killed Jesus of Nazareth:  “Because they feared the people.”  


                 At the Bretton Woods Conferences also two world institutions were created, the International Monetary Fund and the World Bank.  I don’t intend to write the history of these two bodies, but I’ll say, without fear of making a mistake, that they have been instrumental in the destruction of many good things that existed or were about to commence in the poorest sections of the planet, particularly in Africa.


                 The present director of the International Monetary Fund is Christine Lagarde, a handsome talented Frenchwoman who tries to do her job the best she can, and no doubt works very hard, many hours a day.  But with all the evil around her there is little she can do that is not evil.  She is these days addresing herself mainly to the Greeks and the Spaniards.  Lately, from her choice post in Washington, she has officially declared that the Spanish leader absolutely has to reduce the salaries of civil servants, and the wages of the few workers that are still in employment must also be reduced (note that the previous nominally socialist government had already reduced the salaries of all civil servants, who now are going to see new cutbacks); that there must be more labour-market reforms (the word “reform” meaning here, cutting down workers’ rights); that indirect taxation must be raised, that is, the price of commodities mostly consumed by the poor will go up; that there must be flexibility as regards employment, that is, the workers who are still working must become more productive, work more (the “il faut travailler plus!!” of jovial Sarko.)  And it is implied in her declarations that no public money must be spent for the time being, in Spain, but for refurbishing the banks.  Of course, Madame Lagarde doesn’t waste her precious time giving a complete list of the restrictions needed.  Spain is a sovereign country, with a very right-wing government.  Rajoy and his gang will know what to do.  But the IMF gives then a hand, and it is welcome.  And the rest of Europe is thankful too.  All the governments, be they conservative or (false) socialists, agree with Christine Lagarde.


                 If the matter were not so serious, I would start laughing my guts out.  I am now looking at a colour-picture of the said Christine Lagarde, which appears in my paper (June 12.)  A cruel regard indeed, her two eyes darting out instructions in all directions (une dame tellement bien élevée); she is menacing with her pointed forefinger some invisible enemy, crying her orders out.  






                 Luckily there are in our world some people for whom to rescue the workers from indigence is at least as necessary as to bail the banks out.         I have read an article (a translation from the English original) in EL PAÍS, June 12, 2012, written by an American economist, Paul Krugman, Professor of Economics at Princeton and of course Nobel Prize.  He notes that the Spanish workers have not been producing as much as  they used to.  Spain is in recession.


                 But Professor Krugman then says: “Just to be clear, Spanish banks did indeed need a bailout.”  And he explains technically why the rescuers should come forward, and that the cash must come from Europe.  Just as I write this, ten days after the Krugman article, the rescue has indeed been granted: the possibility of cashing one hundred billion euros.  I think, but I’m not sure, that the said astronomical amount is going to come out of the European Central Bank’s coffers (or account books, if the loan is “virtual”, as my daughter likes to say.) 


                 Who could have predicted, during the boom years, the crazy eighties and nineties (with tourism, costas, drugs, sex, music and cajas de ahorro), that Spain was to sink so very low, become a beggar?  The answer, of course, is everybody who cared to see “más allá de sus narices,” as the Spaniards say, that is, half a yard beyond the tip of his (her) nose.  


                 Perhaps  the vulgar economists did not notice what was going on with the Spanish banks and then the cajas (dozens, hundreds of cajas de ahorro, entering the “construcción” business, etc., leading to a general collapse of the nation), when businesses around the Costa del Sol, Marbella and all along the Blue  Mediterranean and then the hinterland, flourished.  I shall not go so far as to talk of the  Coast of Crime, as an American journalist did years ago, I’ll take however the liberty of saying that all was dissipation, fun and dirty affairs then, or nearly all. 


                 The result, therefore, was quite predictable.   Just to be clear, should those cajas (now merged into banks, one of them a famous ruin too) now be bailed out with public money, whether from “the Spanish revenue or “from a broader European fund”?  Fiscal austerity, “which basically means cutting wages”, is that what Europe expects, in return?  And then allow Spain to demand “another bank bailout”?  This is the real problem.   Banks versus poor people.


                 We have seen the answers to these important questions given by Mario Monti and Christine Lagarde.  In my opinion a very retrograde answer. Politicians of course!  But we don’t want great economists and learned professors to come now and sustain the same ideas.  I am not an economist.  However, I can tell these two international personalities that all the measures proposed, and in fact carried out, are not only undemocratic but damaging.  Absurd!  Moreover, those measures will not work.  They are only stop-gap measures.  This has been obvious right from the very beginning of 2009.  But, since then, there have been dozens and dozens, perhaps hundreds of conferences to stop the gap, and since then, too, things have gone from bad to worse.  We are, now, on the edge of the abyss, as the professor intimates.  All the deciders and politicians of good-will should take notice, and  WE ALL should say as much, just to be clear.  


                 “What’s striking however,” Paul Krugman goes on, quite rightly, “is that even as European leaders were putting together this rescue, they were signalling strongly that they have no intention of changing the policies that have left almost a quarter of Spain’s workers (and more than half its young people) jobless.”  It could not have been better said.


                 But, so that the readers don’t think that there are, in Spain, “almost a quarter” of jobless and that the problem stops there, I shall add that those are the official figures, purposely underestimated.  I am no statistician, and care more about what I see.  And I can say that “almost all” of Spain’s workers are unemployed, or placed on five-hour schemes that substantially reduce their income, or are forced to work ten hours a day, for the same or even reduced wages; that they are fired at twenty-four hours’ notice; that they are becoming nervous, because they don’t know what will be their “mañana”...  Indeed, it is horrible, “almost a quarter of Spain’s workers are jobless” doesn’t mean anything, really.  Moreover, quite certainly, things will be worse tomorrow, and in a few months’ time the situation will be impossible to manage.  I think that everybody is aware of this, even the mountebaks who are for the time being in power.


                 In fact, the question now is, when are we all going to think and work to change  the system?  Really changing it, once and for all.  It is the only solution, really.