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“The world is what happens to be the case”, the philosopher Wittgenstein taught us. The world is no more than what each of us sees from his or her own perceptions. The world only changes if you look at it differently....
Banking for dummies
In the present economic crisis trillions of dollars, euros etc. are sloshing in the holds of the ship of the world economy, as money has no boundaries. The ship is swaying from side to side at the push of computer buttons. This moment it seems to capsize on the European side. Next week it will probably sway to the American side, as Republicans and Democrats cannot agree on economic measures.
There is no debt crisis, there is no Euro crisis, there is still the same economic crisis which started with failing reckless American banks in 2008, pulling reckless Europeans banks in their wake. The Federal Reserve of the USA printed trillions of dollars to compensate surviving banks for their losses.
But there is no Central European Bank that can print money, the ECB is not allowed to. So the governments of the different countries had to borrow the money to save their failing banks. Some of the local banks are almost too big to be able to be supported by small countries like the Netherlands and Belgium.
The losses of these reckless banks are now part of the national debt of the European countries. Now the international financial sector pressures all the 27 Euro countries to quickly decrease their debt, by tax increases and spending cuts, to be paid by their citizens. In a small and poor country like Greece citizens have to give up 30% of their income… Spain pays for the banking losses with a youth unemployment rate of 40%.
This weekend a Dutch newspaper reported that American banks have at this time paid 11.500 billion dollars in gambling premiums (credit default swaps) against failing European states. Only already Goldman Sachs speculates with 127 billion dollars on European defaults. No European rescue funds can ever guarantee those kind of amounts.
Unless the international community brings this crazy runaway banking sector under control, like the American president Roosevelt did in the thirties, European or even National governments will have to do this.
This is the first of a series of mini-
Jack Pheifer
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