who can give up essential
liberty to obtain a little temporary
safety, deserve neither liberty
-- Benjamin Franklin
"All governments lie and nothing
say should be believed."
"Power tends to corrupt, and
absolute power corrupts
absolutely. Great men
almost always bad men."
1. How the
banks ignored the lessons of the crash
2. U.S. Bombs Somehow Keep
Falling in the Places Where
Obama “Ended Two Wars”
3. Wide range of cars emit
more pollution in realistic driving
tests, data shows
4. IMF chief warns of
weaker global economic growth
5. Robert Reich interview
This is a Nederlog
of Thursday, October 1, 2015.
This is a crisis
blog. There are 5 items with 5 dotted links: Item 1
is about a "long read" on The Guardian on bankmanagers, which is
somewhat interesting; item 2 is about an article by
Glenn Greenwald who complains about - yet another - opposition between
Obama's words and Obama's acts; item 3
is a rather
puzzling bit that says that "new tests" have showed that many more than
Volkswagen's cars emit far more pollution than was stated: my
is that either the previous tests were mainly bullshit or Volkswagen is
not the only car company to install fraudulent software; item
4 is about an
article in which the chief of the IMF promised "less growth" in the
coming years; and item 5 is a good interview with
Robert Reich, although I don't agree with everything he says.
the banks ignored the lessons of the crash
item today is an article by Joris Luyendijk on The Guardian:
Joris Luyendijk is a
Dutch journalist who recently wrote "Swimming With Sharks", about the banks, the bankmanagers
and the crisis - that in my opinion has been ongoing
since 2008, and still goes on, at least for everyone who does not
belong to the 1% of the rich, very rich and extremely rich.
This seems to be
based on that book. Here is the setting:
I spent two years, from
2011 to 2013, interviewing about 200 bankers and financial workers as
part of an investigation into banking culture in the City of London
after the crash. Not everyone I spoke to had been so terrified in the
days and weeks after Lehman collapsed. But the ones who had phoned
their families in panic explained to me that what they were afraid of
was the domino effect. The collapse of a global megabank such as Lehman
could cause the financial system to come to a halt, seize up and then
implode. Not only would this mean that we could no longer withdraw our
money from banks, it would also mean that lines of credit would stop.
These were the dominos threatening to fall in 2008. The next tile would
be hundreds of millions of people worldwide all learning at the same
time that they had lost access to their bank accounts and that supplies
to their supermarkets, pharmacies and petrol stations had frozen.
In fact, that didn't
happen. But people were far closer to it than most realized,
and indeed the vast majority of those who might have been hit in that
way - which, after the fact, might have been better, simply
because then the big banks would have failed and get
bankrupted, and the banking industry
would have had to be radically changed - never realized this.
There is this on how the bankers
radically changed from 1980 onwards:
The British stereotype of
the boring banker began to change in the 80s when finance was
deregulated. Following Ronald Reagan’s dictum, “Government is not the
solution to the problem, it is the problem”, banks were
allowed to unite under one roof activities that regulation had
previously required to be divided between separate firms and banks.
They were able to grow to sizes many times bigger than a country’s GDP
– the assumption being that the market would be self-regulating. The
changes also meant that bankers became immensely powerful.
In fact, government
is the problem mostly for the greedy rich, but they got all they wanted
plus a lot more out of deregulation.
Here is what happened
and what nearly happened:
In the end, it was only
through a combination of pure luck, extremely expensive
nationalisations and bailouts, the lowest interest rates in recorded
history plus an ongoing experiment in mass money printing, that total
meltdown was averted.
And the banks got
more powerful, simply because they were saved by money from the
Here is part of an
opinion Luyendijk heard many times from those he interviewed:
If there is one recurring
theme in the many conversations I had with City insiders, it was the
need for structural rather than cultural change; not so much different
bankers, but a different system.
I'll arrive later at
the other part of the opinion.
First, there is this
about who really run risks in modern banks: Not the
banks, not the bankmanagers, but those who use the banks
and the taxpayers, who have to foot the bill if things go wrong
in a major way:
The problem with the way
banks are now organised is not that they take risks – that is their
job. The problem with today’s banks is that those who accept the risks
are no longer those who get stuck with the bill.
Luyendijk spoke to believed changes were easy, in principle:
How hard would it be to
change those incentives? From the viewpoint of those I interviewed, not
hard at all. First of all, banks could be chopped up into units that
can safely go bust – meaning they could never blackmail us again.
did they not happen? Because that would have made bankmanagers
less powerful. Besides, a very important role was played by
Eric Holder and Barack Obama, who decided not to prosecute any
bankmanagers after the near total collapse that they caused. 
The banks were saved by the taxpayers' money, and went on just as they
did before the near total collapse, and because apart from Lehman
Brothers and a few other banks there were not many bankruptcies.
But because the general
public was left in the dark, there was never enough political capital
to take on the banks. Compare this to the 1930s in the US, when the
crash was allowed to play out, giving Franklin D Roosevelt the chance
to bring in simple and strong new laws that kept the financial sector
healthy for many decades – until Reagan and Thatcher undid one part,
and Clinton and Blair the other.
Precisely, and they
were helped again by Obama and Holder.
Finally, here is the
other part of the opinion Luyendijk heard many times:
The European commission
president, Jean-Claude Juncker, memorably said in 2013 that European
politicians know very well what needs to be done to save the economy.
They just don’t know how to get elected after doing it. A similar point
could be made about the major parties in this country: they know very
well what needs to be done to make finance safe again. They just don’t
know where their campaign donations and second careers are going to
come from once they have done it.
Which is to say: The
European politicians all are corrupt and only
their own financial well-being: They are fascists with the
fascists, catholics with the catholics, socialists with the socialists,
liberals with the liberals, all for the benefits of being in power.
None has the character to stand up and try to do something for others.
All are greedy egoists, and most are proud of it as well.
I think that is basically
correct: The present-day politicians have for the most part been
corrupted by the money they make, legally and illegally, and that is
true of the left and the middle as well as the right - always with a
few exceptions, but these are exceptions only, and usually they
little or no real power.
Bombs Somehow Keep Falling in the Places Where Obama
“Ended Two Wars”
article today is
by Glenn Greenwald on The Intercept:
This starts with a number of
quotes in which Obama and others claim he ended two wars (in Iraq and
Afghanistan), where American troops are still fighting and
killing and bombing and droning.
This gives rise to the following quite legitimate question + answer by
Quite so. As Greenwald also
indicates, there is a small difference with how things are done in
How do you know when
you’re an out-of-control empire? When you keep bombing and deploying
soldiers in places where you boast that you’ve ended wars. How do
you know you have a hackish propagandist for a president?
When you celebrate him for “ending two wars” in the very same places
that he keeps bombing.
All of this, just by the
way, is being done without any Congressional approval, at least with
regard to Iraq and Syria.
announced that its upper Parliament approved its own imperialistic
intervention and bombing campaign inside Syria, and that legislative
body was widely (and not inaccurately) derided by U.S.
commentators for being what the New York Times called
a “rubber stamp.” The Obama administration, by contrast, does not even
bother with the empty ritual of Congressional approval for its
bombing campaigns; the president proved he is even willing to bomb a
country after Congress rejected his authorization to do so, as
happened in Libya.
Whatever else one
wants to say about Iraq and Afghanistan, one cannot honestly say that
Obama ended the wars in those countries. The U.S. continues to
drop bombs on both, deploys soldiers in both, kills civilians in both,
and engages in a wide range of overt and covert force, all without a
shred of Congressional approval.
Yes, indeed. And this is a recommended
range of cars emit more pollution in realistic
driving tests, data shows
next article today is
by Damian Carrington on The Guardian:
This starts as follows
Actually, I find that a bit
New diesel cars from Renault, Nissan, Hyundai, Citroen, Fiat, Volvo
and other manufacturers have been found to emit substantially higher
levels of pollution when tested in more realistic driving conditions,
according to new data seen by the Guardian.
Research compiled by Adac, Europe’s
largest motoring organisation, shows that some of the diesel cars it
examined released over 10 times more NOx than revealed by existing EU
tests, using an alternative standard due to be introduced later this
Adac put the diesel cars
through the EU’s existing lab-based regulatory test (NEDC) and then compared the results with a
second, UN-developed test (WLTC) which, while still lab-based, is longer
and is believed to better represent real driving conditions. The WLTC
is currently due to be introduced by the EU in 2017.
Here is the problem: Volkswagen frauded with software that hid
that their cars were emitting 10 or more times as much pollution as
they were said to do. Now a testing agency finds similar
problems with cars "from Renault, Nissan, Hyundai, Citroen, Fiat,
Volvo and other manufacturers"
- but they are not suspected of fraud, and the discovery is due
to a new testing schema. But the new testing schema is supposed
to have established that some cars produce "over 10 times more NOx than revealed by existing EU
I am sorry, but this suggests to me that either the other cars
were somehow tricked when they were tested, or else that the
EU tests" are totally useless, which makes Volkswagen's
fraudulent software pretty useless.
And I suspect that it is a bit of both: The EU tests were very, very
friendly to the makers of cars, and some of the other makers of cars
probably also frauded somehow.
Here is the problem for the European population:
The failure of the
regulatory tests is the main cause of illegal levels of NO2 in many
cities, according to a recent UK government document. “It has had an
absolutely enormous effect,” said Prof Alistair Lewis, an air pollution
expert at the University of York. “The costs will be in thousands of
deaths and billions of pounds, all passed on to the taxpayer.”
IMF chief warns of weaker global economic growth
The next article is
by Larry Elliott on The Guardian:
This starts as follows -
and I can't resist relaying the news that the Dutch PM Rutten declared yesterday that everything is economically rosy:
I believe her (much
rather than the Dutch PM). She also said:
A marked slowdown in big
emerging market countries will cut global growth to its lowest level
since the deep recession of 2009, the head of the International
Monetary Fund has warned.
Christine Lagarde, the IMF’s managing
director, said forecasts to be published by her organisation next week
would show activity expanded by less than the 3.4% recorded in 2014 –
the joint weakest since the world economy came to a standstill six
Speaking in Washington,
Lagarde said “global growth will likely be weaker this year than last,
with only a modest acceleration expected in 2016”.
Lagarde said she was
“concerned about the state of global affairs”, highlighting the refugee
crisis in Europe, the prospect of 2015 being the hottest year on record
and the state of the global economy.
financial stability had not yet been assured despite progress in recent
years to make the system safer. “If we put all this together, we see
global growth that is disappointing and uneven,” she said. “In
addition, medium-term growth prospects have become weaker. The ‘new
mediocre’ of which I warned exactly a year ago – the risk of low growth
for a long time – looms closer.
I do not
believe there was much "progress
in recent years to make the system safer" (and see item 1 and item 5).
But OK - the news is
that for almost everyone (other than the very rich) the situation will
be dire for the eighth successive year in 2016, with no
The next article is
by Amy Goodman and Juan González on Democracy Now!:
This is a
good interview. To start with, here is Reich on the changes he thinks
ROBERT REICH: I mean, we do have to substantially increase
taxes at the top, if we’re
going to have enough money to do everything that needs to be done with
regard to investing in education, infrastructure, do a lot of things
that, despite President Obama’s efforts, have still not been done. But
I think we even have to go beyond that and really change the way the
market is organized. I mean, if you look at antitrust law, for example,
you’ve got huge combinations now in health insurance, in airlines, in
banking, in food. That means Americans are spending much more than
otherwise for all of these basic necessities—airlines may not be a
necessity, but certainly the others are necessities—and that’s a
In brief: Higher taxes on the
rich, and a reorganization of ther market, where especially the trusts
have to be broken down. I agree, but I have the remark I
often made when reading about Reich's proposals, that I think usually
Yes - but who is going to realize these
changes? With the press for the largest part in the hands of the rich;
the government for a large part run by past and future bankmanagers;
and most members of Congress corrupted by lobbyists who work for the
Here is another such proposal:
agree - but again: Who is to do it? Bernie Sanders, if elected
- but while I am a fairly strong proponent of Sanders (I think he is
the only mostly honest somewhat prominent politician in the US)
not think the chance that he will get elected is large. If not,
REICH: Bernie Sanders is
right: We’ve got to re-establish Glass-Steagall. Repealing it—
GOODMAN: And explain why
it’s so important.
Well, because after the crash of 1929, the United States set out to
prevent that kind of crazy risk taking by the banking sector that led
to the crash of 1929—we’re not talking about 2008, we’re talking about
1929. One thing we did was separate commercial banking from investment
banking, so that people’s deposits, the ordinary savings of ordinary
people, would not be used for gambling operations by the investment
banks. We ought to maintain that. I mean, that’s one of the reasons
that we got into trouble again.
We also need to bust up
the biggest banks. Bernie Sanders actually
understated the reality. I mean, the five biggest banks, they used to
have 10 percent of total banking assets back in 1990, now have 44
percent of total banking assets in this country. I mean, they are far
too big to fail. I mean, they are so large that they are—just because
of their political clout and their scale, they are gaining more and
more market share of the entire banking industry. That’s dangerous.
It’s dangerous for the economy. It’s dangerous for our political
culture, because those banks have a great deal of political power.
Reich more or less evades a question why he titled his book "Saving
Capitalism" and then says
REICH: But the most
important point is to recognize that even Denmark and
Sweden and so-called social democracies are still capitalist
fundamentally. That is, they’re based on private property and voluntary
exchange. Even China is becoming a capitalist nation.
Yes, of course
Denmark and Sweden (and Holland and Germany and France) are capitalist!
(Whether China is, is a moot question, for while there are quite a few
big capitalists, the Chinese Communist Party still has most of the
Then he says:
(..) There is no free market. And I want to state that again: There
is no free market. And the kind of battle that we’ve had between
liberals and conservatives for the past 40 years or 50 years, between
do you trust the market or do you trust government, is a fatuous and
silly battle, because you can’t have a market without government
creating the rules of that market. And it’s in those rules, exactly as
you said, Juan—and this is what the point of the book is—it’s inside
those rules that you find the most important issues that ought to be
Yes, indeed - and it
to see Reich and I agree on "the free market".
I mean, there are hundreds
and hundreds and hundreds of examples of
ways in which the deck has been stacked, the dice have been loaded, the
game has been rigged, in favor of very wealthy, very powerful people
and companies and banks.
(See under Liberalism
in the Philosophical
Dictionary for my position.)
Reich also has this to say on the moral core of the economy:
There is and should be a moral core to any economy. And whether it’s
called capitalism or any other system, if it doesn’t have that moral
core, in which we agree on basics, kind of minimum standards of
decency—we agree that we’re all in it together, we understand that
trust is critical if an economic system is going to be maintained and
sustained—then you’re in trouble. I think one of the problems in the
United States, and one of the problems with contemporary capitalism as
practiced by the American model, is that it celebrates greed as the
central principle. But that can’t possibly be the central principle,
because if it’s all about greed, then you end up spending more and more
of your resources protecting yourself from everybody else’s unvarnished
I'm sorry, but I don't believe
First, there clearly is an opposition between the rich (say, the 1%)
and everybody else: Under the system-as-is the few rich profit enormously,
and they do so by designing the rules and regulations precisely for
Second, capitalism was much more extreme from the 1830ies till
the 1930ies. I see no reason to suppose that schema of
exploitation of the poor will not be resurrected by the rich, whether
in the name of greed or whatever: Historically,
the rich have had most of the power everywhere, and for hundreds or
thousands of years, and the only ground to tame that power
somewhat was political democracy - but it seems to me that has
been mostly deregulated away as
together with most of the laws and rules that maintained it.
Here, to end this, is Reich's opinion on Sanders:
GONZÁLEZ: Well, we
only have about 30 seconds, but I’m interested—your critique dovetails
very much with a lot of the stuff that Bernie Sanders has been saying
on the campaign trail. Your sense of what he’s bringing to the debate
that’s going on now in America?
I think he’s telling the truth, and I think peopleonly
are responding with
extraordinary enthusiasm, even many conservatives and Republicans I
meet, to a truth teller.
I say. Welll... this
is an interesting and recommended interview, though I don't agree with
everything. Recommended reading!
 Incidentally, the whole argument that
the banks will fail if some of the leading bankmanagers were to end up
in jail is also false. There is no reason why a bank's health should or
can coincide with a banker's health.