Financial crisis : Fear is gobbling up politics
20 October 2011
Out of fear and ignorance, the politicians have been trying since the beginning of the financial crisis to beat the financial markets with their own weapons – and they can still flourish many trillions of euros more. But if they can’t remember to go back to playing by the rules of politics, they are bound to lose the arm-wrestle.
Since the great financial crisis started several years back with the bankruptcy of the relatively small Lehman Brothers Bank, politicians have been living in fear: fear of an enemy they do not know and whose rules they are not familiar with. Since the crisis began, they’ve been trying to understand those rules that the banks, the hedge funds, the stock markets and the speculators play by. But not just that. Ever since the start of the crisis they’ve been trying to beat the banks and markets with their own weapons.
That’s how the disaster got underway. Not that there hadn’t been similar crises before, like the tulip bubble in the 16th Century, when the speculation in perishable bulbs ruined a whole nation. In the Middle Ages, countries went bankrupt, and dynasties – the Welsers, the Fuggers, the Medicis – gave themselves up to the big banks. In the 1930s the Great Depression unleashed destructive forces around the world. In 2011, we do not know yet where the financial crisis is leading us.
We know only – no, we feel – that the politicians are at a loss, that they’re as clueless as we are. We see politicians, economists and supposed experts asserting their convictions and handing out the answers, and yet all the while a sense of helplessness is written over their faces. And the simpler their answers get, and the fewer the doubts they express about the correctness of one or another path, all the greater is the sense of mendacity hanging over whatever it is that is being proposed.
Politicians seem to be powerless. Well, they are. They are powerless because they are playing by the rules of their opponent. Democracy thrives on transparency and openness, lives by its convictions and by citizens being enlightened about what their democratically elected representatives are up to, even if they do not agree with it. But the politicians today have pushed democracy to one side. They are behaving as if they were a player in the anarchic international financial markets, which obey only the logic of making money. The politicians have embarked on a trial of strength they are bound to lose.
Why is the bailout getting bigger every day? Because the politicians believe that only a gigantic, completely overshadowing "shield" can deter speculators from pulling currencies and states into a war. Why do the leaders of Europe only meet on days when the stock markets are closed? Because they fear the markets and the equity prices. Why is Germany’s Bundestag almost systematically excluded from decisions on the bailout? Because the politicians at the top are not even sure that they can convince Germany’s parliamentarians. The politicians are not even thinking of the citizens any more.
What we are observing is political suicide. Politicians are no longer making policy. What does that mean, ‘make policy’? In the first place, it means to draw up rules and make and enforce laws. It means stopping speculators from speculating. It does not mean that the state should become a speculator too and start betting against the real speculators. Yet the bailout is nothing else: it’s is a defensive shield against speculators that, the bigger the assumed risk of speculation, will always have to grow bigger yet. Perhaps two trillion are too little? Perhaps at the new EU summit in a month we’ll be talking about four trillion? Perhaps a way will be found to increase the so-called leverage? The logic is absurd.
Currency speculator wolves
We are observing at this very moment just how a highly vulnerable, unstable, world-wide web of financial relationships is threatening to tear apart. And how Europe is trying with all its strength to immunise itself against the consequences. “Europe”? Far from it. There is not even an agreement with Great Britain over the introduction of a financial transaction tax, nor is there consensus on the participation of banks in the crisis.
There is no awareness on the part of the states that, with their high debts, they themselves have thrown themselves to the currency speculator wolves. And it is far from clear to all of us how we, through our desire to please let our money grow – just not by the work of our own hands, but somehow all by itself – have contributed, and continue to contribute, to our being held hostage.
He who takes a risk must live with the consequences: plenty of us would sign on to this principle. Not the politicians, though. They’re acting on the principle that he who takes risks must be sheltered from those risks. And so states shall be rescued and banks propped up, and so too the citizens who aren’t averse to risk. Only those who stay away from the perils of financial and political adventures shoulder the full burden. And we’re supposed to go along with that?
Translated from the German by Anton Baer