Alternative View
By Lance Crossley
Shakespeare once wisely wrote: “Neither a borrower not a lender be”.
But in 2009, it’s clear that it is better to be a lender. If there is one thing the global economic crisis has shown, it is that the world is run by creditors. The reality is so obscene that it is a wonder why incidents that happened at the G20 summit in London, where protesters stormed the banks, are not happening more often. Instead of paying for their crimes – promoting predatory loans and exotic securities that fueled the housing bubble and subsequent economic collapse – banks are cashing in on the current crisis on the backs of taxpayers.
In the United States, the government recently announced a so-called “public-private” partnership to rid the banks of the toxic assets they created. Under this plan, the government will lend investors 92 per cent of the money to buy these worthless pieces of paper. Investors only have to put up eight per cent of the costs. If the assets end up losing money (which they probably will), the 92 per cent “loan” is guaranteed by the taxpayer. If they miraculously gain money, the public gets only 50 per cent of the gains. The financial elite have everything to gain and nothing to lose: banks rid themselves of toxic assets and way above market price, investors risk nothing, and the tab is picked up by your average hard-working citizen.
In Canada, the Harper government bailed-out our banks to the tune of $75 billion in the fall, supposedly to get the banks lending again. That much money could have fixed healthcare, poverty, and raised the standard of living for First Nations in one fell swoop. The government framed it as a “market transaction”, not a bailout, so it was barely covered by the press. If our banks are the healthiest in the world, as Harper is so fond of saying, why do our banks require a cash injection that, on a per capita basis, is equal to the $700 billion dollar bailout in the U.S. that caused so much controversy? Another steal for the banks.
The same power dynamics are taking place on the world stage. Take Iceland, for example, which is on the verge of becoming a third-world country thanks to the current crisis. International creditors knowingly loaded Iceland with debts they knew could never be repaid. The idea is to keep collecting on the interest until the country is tapped and then forced – by institutions like the IMF and World Bank – to start stripping its public assets. Sell off the country bit by bit to the private sector and create a whole new slew of borrowers for the banks. The problem is that this is leaving the country in ruin. This is familiar story to the developing world, but a new one for a country like Iceland.
Today, we live in a world where the only wealth being generated is through the extraction of debt.
It’s a world where only a privileged few are benefiting and an awful lot are suffering.