Adonis Diaries

Any reforms applied to the capitalist financial institutions?

Almost 3 years to the onset of the financial crash of the century and we have the firm conviction that no reforms to the financial institutions have been applied so far.

The International Regulatory Bank has issued a report in June 2010 and proposed a “moderate” attitude to reforms stating: “Instead of attempting to eradicate financial crisis, which is impossible, we have to reduce the frequency and severity of crisis.”

What that means?

How frequently must crisis take place for mankind to suffer and support; and how level of severity is quantified?

Are there any indicators and measuring sticks to appropriate number of crisis and corresponding severity?

Who is supposed to be bearing the brunt of the impending crisis?

Barack Obama wanted to downsize  multinational financial institutions that are “too big to allow them to fail” so that the tax payers should not be obligated to maintain systemic dangerous institutions.

Congress was not pleased with the suggested reforms:  The financial lobby engaged over 1,500 professionals (lawyers, financiers, and politicians) and spent $350 million to “redirect” the project law under discussion.

That amount earmarked for lobbying congress represents less than one per thousand of the 400 billion profit generated in the last semester of 2009. This profit accounts for 38% of the total profit of the USA in that semester.

Let us put things in perspective:

1. First, the four largest banks in the US has 42% of all the assets in 2009 and held 96% of the 300 billion of the derivative products.

2.Second, every day witnesses financial transactions amounting to 5 trillion while the total saving for all the nations is less than 4 trillion per year.

Nobel laureate Joseph Stieglitz reminded us that

“Larry Summers and Timothy Geithner (finance minister) were the same individuals who impose deregulation during Clinton and prohibited any interventions in regulating market derivative products.  It is the multinational financial institutions that are “lending” their experts to governments:  Government is claiming to being helpless faced with the shortage of financial experts willing to working for the government”

Paul Krugman, another laureate, wrote: “The ratio of finance profit to the GNP jumped from 4% to 8% in the last two decades, but the resulted in no economic real growth.  The economy was rendered less stable and less performing due to financial deregulation.”

Paul Volcker, ex-chief of the Federal Reserves during Reagan, said: “You don’t find a single American graduating with superior diploma in engineering, math, or physics.  Wall Street has drained all the bright minds into the financial world.”

Paul Volcker is the same guy who predicted that his financial policies during Reagan will let “blood flow knee-deep” in Latin America.  Indeed, most of the Latin States were ravaged by civil wars and internal unrest and upheaval for two decades.

You might think that the financial crisis and its everyday repercussions on unemployment and lower standard of living has dissipated the illusion that “increased financial transactions can be counted as increase in internal market trade“;  this illusion is still maintained by the media at the sold of the multinationals.

There was no real economic growth in the US and Europe in the last 10 years:  Just a big bubble of the illusion of growth.