The financial crisis being played out

Several blog posts have already suggested that the financial crisis was intentional and planned out to effect consolidation of financial power.

This recent article analyzes what is happening with input from the recent record profits of financial institutions which just a few months ago were begging for money from the government.

http://www.wsws.org/articles/2009/jul2009/pers-j31.shtml

(this post is not an endorsement of the website which I have not seen of before and have no inkling what else it may contain)

Some key points:

* “A few years ago, the investment banks got rich on their customers’ money. When that resource became too small, they fell back on their shareholders’ money. Now they've got hold of the biggest pool the world can offer: taxpayers’ money.”

* The bailout measures adopted by national governments represent a huge safety net for the banks, enabling them to once again engage in highly speculative forms of financial trading. The levels of debt resulting from the bank bailout packages and other forms of economic stimulus have assumed gigantic dimensions and will be paid for by generations to come.

* At the same time, the rapid accumulation of debt by governments opens up vast and lucrative opportunities for the banks. Trading in government loans bound up with financial rescue packages is emerging as a central activity of the big banks.

* As the levels of debt rise across the globe, rating agencies are downgrading the lending status of individual countries, which then have to pay increased interest rates to the banks in order to service their loans. For the banks, it is a classic “win-win” situation.

* At the same time, banks are refraining from investing in businesses because, as they note euphemistically, “in the current financial climate” the prospects for ordinary companies and industrial enterprises are “too risky.” Confronted with the refusal of the banks to extend credit, industrial and commercial companies are forced to sell corporate bonds at much higher levels of interest. The banks make further profits by speculating in the trading of these bonds.

* The article in Der Spiegel comments, “It is a deep irony that the current crisis, which began in the capital markets, is now strengthening the capital markets once again.

* Presented with unprecedented possibilities for making money, the biggest banks, such as Goldman Sachs, JPMorgan Chase and Deutsche Bank, are going on the offensive and carrying out a deliberate strategy to eliminate their competitors.

* This elite of investment banking giants will constitute, according to Der Spiegel, a new financial “oligopoly,” with unprecedented access to state treasuries and the taxpayers’ purse. The banks, more than ever, dictate state policy, regardless the particular political coloration of the government. It is the bankers and their lobbyists who call the tune in Washington, Berlin and London.

* The CEOs of Goldman Sachs, JPMorgan Chase and Deutsche Bank regard the current crisis, for which they are largely responsible, as an opportunity, and they are ruthlessly exploiting it. For the working class, this means an immense intensification in the exploitation of labour and the destruction of all that remains of social gains won in more than a century of struggle.

The article goes on to endorse a planned socialist economy which I do not agree with at this point. But I find the assertions above which imply a motive for the financial crisis very compelling and confirms previous blog posts which suggest that the crisis was the equivalent of a financial 9-11.