Dec 02 2011

On Big Finance and nuclear weapons

Posted by: Nick Shaxson in: Thoughts

From the Financial Times, an article by Roger Altman, former U.S. Deputy Treasury Secretary under Bill Clinton:

The succession of political dramas in Europe, most recently the end of Socialist dominance in Spain, again shows the financial markets acting like a global supra-government. They oust entrenched regimes where normal political processes could not do so. They force austerity, banking bail-outs and other major policy changes. Their influence dwarfs multilateral institutions such as the International Monetary Fund. Indeed, leaving aside unusable nuclear weapons, they have become the most powerful force on earth.

Apocalyptic stuff. And all too true. And it gets more so:

Whether this power is healthy or not is beside the point. It is permanent. Even a resumption of traditional patterns in global capital flows would not change it.

Altman then goes off to opine that this isn’t necessarily a bad thing. Finance can topple bad governments as well as good ones, he says.

Well, I would like to disagree. The dominance of Big Finance doe not just cause bad governments to fall – it causes them to be bad in the first place. Read Treasure Islands if you have any doubt at all about that. The evisceration of democracy that Altman accurately describes is an appalling development in its own right. A stranglehold of finance means inevitably soaring inequality. It means taxpayers coughing up to subsidise the one percent. This is not trickle down but, as the tax writer David Cay Johnston puts it, “Niagara up.”

All this money sluicing upwards beats a path, inevitably, to plutocracy.

We must fight this growing dominance of finance with everything we have.

3 comments so far

Demetrius 12nd December, 2011 5.48 pm

Re London property, you might like my post of today 2 December called “Hide And Seek”.

IHShim 12rd December, 2011 8.47 pm

The bond market performs a valuable and necessary function. It’s only natural that the market demands higher rates if the borrower is considered risky. Money is like a drug. If consumed in an irresponsible manner can lead to poor health. The patient then wants more drugs to fix his drug habit.

Nick Shaxson 12th December, 2011 8.48 am

The standard financers’ response. It’s all the borrowers’ fault. They are greedy and irresponsible. We just lend to them, we’re innocent, is the implication. The fact is, finance needs to be constrained in the interests of all (except the financiers).

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