Umair Haque / Bubblegeneration

Tuesday, November 24, 2009

Are Banks Terrorists?

Whoa - what a deliberately incendiary title. Or is it?

Consider, for a moment, what was revealed today. The Bank of England extended £62 billion in "undisclosed support" to RBS and Halifax two weeks after Lehman imploded.

From an ethical, economic, and managerial perspective, it's not just questionable - that's outrageous.

Here's why.

The logic of terrorism is simple. To intimidate a state into action or inaction. If you don't give us what we want, we'll blow something up. Do it - or else.

Exactly the same logic has been at work throughout the financial crisis. The state has been terrorized into action - and inaction. Too big to fail is a weapon of economic intimidation - just like a bomb threat. If you don’t give us a bailout, the financial system will fail. If you disclose it, the financial system will fail. You have no option but to give us exactly what we want - cash, now, on our terms.

The goal of terrorism is this. To coerce a state into fundamentally betraying it's foundational principles - thus, creating a contradiction within the system itself, causing citizens to lose confidence in their own basic institutions.

And by that logic, banks won. Not only did they get trillions in bailouts, now, it turns out, they got secret bailouts.

See the irony?

The point of financial regulators is to enforce transparency. Without good information, markets can't work. But regulators hid information from the public instead. Like any good terrorist, banks actually turned the system against itself.

Now, we must all ask: can we trust our regulators? Or will they continue to leave our society at the mercy of the economic equivalent of roadside bombs?

This is a challenging post, and I don’t mean to minimize the damage terrorism does. If anything, I want to highlight just how deep the problems with orthodox capitalism are.

20th century capitalism isn't fit for 21st century economics. It's time to reboot this broken machine. There can be no clearer example why: the very machinery built to protect society spun on its axis, and was forced to protect those who harm society instead.

-- umair // 6:27 PM // 1 comments

Comments:

whoah... you´re dangerously sounding a lot like the economist version of derrick jensen. watch out.

: )

# //

Renata Lemoz // 11:35 PM