Via Atrios, we see how the European Central Bank is “saving” the EU – nearly free money.
Gee, where have we heard this one before?
In his piece for our sister publication Foreign Policy, Karl Smith projected that saving the Eurozone would essentially entail shoveling an unbelievable some of cheap money at banks. And today we see that operation shovel cheap monet at banks is well underway with the ECB doling out “489.2 billion euros, or $644 billion, to 523 institutions, through what are known as long-term repurchasing operations,” much more than the 300 billion euros that analysts had been projecting.
This money comes in the form of three-year loans that only charge a one percent interest rate and the ECB “also broadened the collateral it agreed to accept in return for the loans.” This seems to operate as something of a backdoor bailout of European sovereigns since banks can now profitably invest the money they’ve been lent in buying government debt.
Boy, I bet if you ever ran a business, you never had such a thing as guaranteed profits.
But then, you weren’t a bankster – “systemically important” and all that.
Matt Y. suggests that all this amounts to “saving” capitalism by destroying it:
It seems to me that we’re continuing to see a breakdown of the basic evolutionary mechanism of capitalism, which ensures that “unfit” firms go out of business thus invisibly selecting the most functional business models as the most widespread. If dominant banks never go out of business, then they’ll never be replaced by better-run banks.
Right. And the banksters themselves have perpetually-guaranteed jobs.
You? Not so much.
Consider how this need to “save” those who did so much to damage the system impoverishes you, the average citizen. Governments enact austerity measures, whcih translate into cuts for average citizens, at the same time they fire the money bazooka at the big banks, ensuring that those executives remain in place, keep their ludicrous compensation packages, and get to keep right on gambling.
And “saving” the system this way makes the markets go up – good for you, if you have a 401(k). Much better for the truly wealthy, who reap an astronomical portion of the capital gains in this country, much of it from markets.
So what we are doing by “saving the system,” primarily, is saving the wealthy. And in order to accomplish this, the non-wealthy are the ones who must sacrifice.
The crisis, in other words, has permitted the truly wealthy to consolidate and solidify their grip on power. Robert Reich adds a few additional cents:
Wall Street got bailed out but homeowners caught in the fierce downdraft caused by the Street’s excesses have got almost nothing.
Big agribusiness continues to rake in hundreds of billions in price supports and ethanol subsidies. Big Pharma gets extended patent protection that drives up everyone’s drug prices. Big oil gets its own federal subsidy. But small businesses on the Main Streets of America are barely making it.
American Airlines uses bankruptcy to ward off debtors and renegotiate labor contracts. Donald Trump’s businesses go bankrupt without impinging on Trump’s own personal fortune. But the law won’t allow you to use personal bankruptcy to renegotiate your home mortgage.
If you run a giant bank that defrauds millions of small investors of their life savings, the bank might pay a small fine but you won’t go to prison. Not a single top Wall Street executive has been prosecuted for Wall Street’s mega-fraud. But if you sell an ounce of marijuana you could be put away for a long time.
Not a day goes by without Republicans decrying the budget deficit. But the biggest single reason for the yawning deficit is big money’s corruption of Washington.
Reich, ever the optimist, thinks the upcoming election is a stark choice between those who think big government is the problem, and those who think “corporate control over our political system” is.
But it’s both. Isn’t it? Government has grown in tandem with the increase in corporate control of government. Regulators get captured; regulators are always going to get captured in a system where money talks and the rest walks. That’s just the way it’s going to be.
The Big Men have gamed the system to protect and perpetuate their girth. The Little Guys get ever littler; and of course we fight like dogs over the dwindling crumbs tossed our way. The Big Men count on that, and we never fail to live down to their expectations.
I live for the day your average Fox News viewer finally understands that the real problems aren’t with the “lazy poor,” but the bank executive guaranteed a job and a rich compensation package even if he, or she, has been a complete failure.
I don’t ever expect I’ll see that day. But it would be a nice Christmas present.