If banks loaned money at their own risk, there would be far less reprehensible moneymaking in the world. Unfortunately, that is not the case. Convinced that banks had all the answers to the ever-increasing socio-economic problems, governments have endorsed the banking establishment to set up the rules of trade-practice.
Bankers ensured that those rules exonerate them from any social responsibility other than to make money out of nothing. This powerful super-elite sector of society has become untouchable.
The theory behind those decisions was based on the principle that if banks make profits they will lend money to companies and individuals to purchase homes, goods and services; start new businesses and develop the manufacturing industry, which subsequently will produce jobs and people can live in comfort and pay their share of taxes to the treasury.
The nation will function efficiently while people can spend the remainder of their hard-earned cash to buy consumer goods to create and generate wealth distribution. Under those terms everyone is a winner … just like magic – prosperity and security for all. It’s The Big Lie.
The result of this “free market principle” sponsored by the banking establishment has enabled banks to exercise absolute financial dominance by way of international monetary cartels and monopolization over the supply of credit and money. As Sir Josiah Stamp – Director of the Bank of England 1928-1941 and the second richest man in England – said: “If you want to continue to be slaves of the banks and pay the cost of your own slavery, then let bankers continue to create money and control credit. Take this great power away from them, for then, this world would be a better and happier world to live in.”
Those calculating cartels have blatantly abused the free market principle through sheer greed enhanced by the failure of governments to effectively regulate and hold those companies responsible for their actions. Today, banks not only control governments but have “colonized” entire continents through debts and virtual loans. They have now become supranational masters of the world.
Gone are the days when coin dealers spread their coins on banca (benches) – hence the word “banks” – to make transactions atop counters covered by green tablecloths. Everything was visible and transparent. If dealers were caught cheating they would be severely punished or lynched. In modern times, banking institutions operate quite differently.
Not only do they operate without transparency or accountability but also on the borderline of criminality. They have been known to deal with drug-money, money laundering, the financing of weapons (to both warring factions to kill one another) and other dubious transaction activities.
Their greatest financial wizardry ever conceived through deviousness could be the invention of mortgage, where citizens are enslaved until death to pay off a property loan. This word is a French law-term meaning “death contract.” It implies that the pledge ends (dies) when either the obligation is fulfilled or the property is repossessed through foreclosure. When an original amount of a loan ends, costing the consumer four or five times as much in interest payments, such a practice can only be considered a legalized extortion. Stamp warned: the terms of such a facility can only cause financial slavery.
The Rothschild Group of Bankers such as Goldman Sachs, Neuberger Bergman and others, have played an active role recently in reducing nations to near bankruptcy. Gambling with other peoples’ money has produced amazing profits for them but also sparked economic chaos across the world.
The result of this unprecedented financial crisis triggered by speculating on high-risk investments caused millions of people to lose their homes in the United Sates and in Europe. Yet, no government has ever held banks responsible for their sleight-of-hand. On the contrary, they are prepared to bail them out of trouble.
Economically starved governments borrow billions from Troika lenders (IMF, World Bank, ECB) and then hand over those billions directly back to banks, as a gift. Since the borrower needs to compensate the lender, governments in despair have no option but to accept crippling bailout preconditions specified by the Troika lenders.
They normally call for the initiation of severe austerity programs such as tax hikes; reduction of salaries and public spending; cutting social services and benefits, raiding pension funds, as well as the layoff of scores of thousands of employees. The result of those cold austere measures – which so far have proven to be ineffective – has caused the ruin of millions of lives across Europe, especially in Greece.
BUST, NOT BAILOUTS
The new catch phrase today is: Colonial Capitalism. This is achieved not through acts of war but decisions taken behind opulent desks and through virtual loans and virtual capital executed at the click of a button. Those supranational corporations have wittingly established an economic web that no economist can truly unravel – how those markets work. They have become so complicated they confuse even the brightest financial wizards.
Wealth creation is meant to be the result of real production of goods and services, and not due to the gambling speculation of freeloading investment bankers. Their influence on society cannot be underestimated and they play a pivotal role in the free market principle, but that power should not be to the detriment of everything else. It is this freedom to the right to profit through the abuse of privileged power as opposed to the right to profit within the boundaries of fairness in a society that needs to be addressed.
Cyprus has not escaped this dark financial cloud of misery that has fallen upon the nation. Through bad management, today the country is in dire straits and its credit rating has been reduced to junk status B3 making it impossible to borrow money on the international markets. Due to its negative outlook and profound economic difficulties, no lenders are prepared to come to its rescue; hence the ominous Troika invite.
Figures as high as 20 billion euros ($25.67 billion) have been circulating amongst analysts that the government must borrow to bail out the banks and itself out of the crisis. It is not the responsibility of the taxpayer to bail out failed banks; that is the responsibility of their own shareholders.
Iceland was one of those countries that ignored banking warnings of “economic doomsday scenarios” and dire straits. It refused to make the public pay the price of a bailout and the Icelandic government let the banks go bust. Nobel Prize-winner US economist Paul Krugman wrote in the New York Times: “Where everyone else was fixated on trying to placate international investors, Iceland imposed temporary controls on the movement of capital to give itself room to maneuver.” He also warned against the notion that adopting the euro can protect against economic imbalances.
Iceland’s economy and banking system today has recovered and experiences a steady growth because it controls its borders, its own krona currency and interest rates. By adopting the euro, Cyprus is trapped and does not have that luxury. One day, it may be necessary to pull out of the euro to regain its social and economic independence. The “one-size-fits-all” policy did not work for most EU member states and ruined many economies.
It would have been more prudent for Cyprus to follow the Icelandic example and allow the banks to go bust rather impose a stranglehold on the nation and taxing citizens to death. Rising taxation can only add to the crisis and stagnate growth at times where it’s desperately needed the most.
There were other measures at hand to deal with the crisis such as bank takeover or applying restrictions on the transfer of assets abroad through the imposition of capital control. Iceland, Britain and Cyprus (in the past) have done so with great success. It should have also gone after tax fraudsters, dealt with tax avoidance worth billions, collected the millions from developers owed the state and explored other measures.
Unfortunately, for political expediency the government failed to act in time and chose the easy option: to borrow billions from the Troika and force the taxpayer pay for it. The next government will inherit the biggest debt ever accrued in the history of Cyprus and it will take an economic miracle to ride out the storm.
It’s necessary to re-examine the entire banking system in Cyprus and introduce strict laws and conditions in support of consumers and not the financial institutions. No bank should have the right to gamble with their depositor’s money and solid guarantees must be put in place to protect depositors and avoid a similar situation from ever happening again. Which government has the foresight and vision to deal with the banking system – prosecute when necessary and do the right thing?