by Ralph T. Niemeyer
Conservatives usually uphold tradition, culture and values but, if Humanism and Classicism are really in their hearts, why could they allow such mega-scams run our economies and eventually drive us all over the cliff?
Johann Wolfgang von Goethe prophesised the threat to culture, civilisation and humanity that resulted from an entirely commercialised society and he strictly opposed an economic system in which human dignity had to be justified by economic feasibility.
Nevertheless, Goethe saw the enormous productive capacities of a profit-orientated economy and its benefits but he was wise enough to think of a post-capitalistic society while capitalism was still seeking to establish itself.
In sharp contrast to that philosophy, the European Commission and Council still refuse to tackle the underlying problem. We are not living through a financial crisis, this is only the symptom of the wrong priorities being put forward by the institutions as well as member-state governments.
It was our elected leaders who for decades have deregulated and liberalised not only the financial markets but the entire economy.
The Markets in Financial Services Directive (MIFID) that was expected to bring about a common good standard for all of the EU has been the greatest failure in the Brussel’s lobby culture, as it was introduced just months before the first chokes of the financial motor could be heard on 11 August 2007.
It was the will of the Commission as well as a majority of MEPs to introduce this directive despite the malignant effects that its critiques cited it would have on the financial markets. Its introduction ended in disaster and most of deregulations that were to come with it are now either revoked or simply obsolete as time has passed on.
But, although the Brussels lobby-machinery had suffered somewhat with this setback, it is not even considering giving up pushing for a continuation of the ‘snowball system’ that the world’s economy is resting on.
The OECD warned recently that a major recession was at hand, but nobody seems to understand that in order to avoid what would in fact be a depression, the snowball system must be finished with, once and for all.
The US’s sub-prime mortgage market, from its very beginnings, relied on the repayment abilities of people who were drowning in debt and who could only keep up payments on principal and interest if they were handed new lines of credit.
Also, there wouldn’t be any state becoming insolvent if the refinancing of old loans was serviced by credit lines, and the same applies to virtually all financial institutions, even Bank of America and Deutsche Bank AG.
Today’s global financial market is nothing but a gigantic snowball system. What makes it worse is the fact that all measurements taken since the beginning of the crisis by politians and central banks have been governed by a single goal, namely to keep the banks’ money-printing machinery of the banks going.
As long as this is achieved the system is alive and kicking, but sooner or later the snowball becomes an avalanche and takes up speed. The reason why this has not happened earlier is the fact that the generating of virtual funds nowadays is not countered by any objective limits, which is also thanks to MiFID and other deregulations that our democratically elected leaders, the Commission and majority of MEPs have pushed through over the past two decades.
Money that evaporates from the virtual Off of hard-drives doesn’t require any real economic growth in order to grow as there is no underlying economic activity, such as the buying or selling of a real-life good or service, but only a mouse-click by an ‘investment’ banker.
That’s why it can grow much faster than the turnover of manufacturing industries. Nevertheless, these virtual funds do have an effect on the real economy. The volume of global financial transactions today is 73.5 times higher than the world’s manufacturing GDP – since 1990, this relation has been logged in 15.3 times.
Since unimaginably more virtual dollars and euro are vagabonding over financial markets than would be needed for conducting world trade, it is no longer a country’s trade in goods and services that determines the development of a country’s exchange rate, but decisions made by currency traders.
It is only because of its omnipotent money-printing machinery that the financial industry can supply the tools for the merger and takeover battles of major global real economy industries.
At the beginning of the 1980s, it would have been unthinkable to have seen such a takeover ,simply because nobody would have had such incredible amounts of money available in order to swallow Mannesmann or Chrysler.
Whoever can move hundreds of billions with a mouse-click is of course also able to manipulate the corn or wheat or rice prices on world markets. Institutional investors had raised profits by INDEX Trading and Futures in the elementary food segment of $13 billion in 2003 to $260bn in 2008.
It is as if a rich speculator passed by a grocery store in front of which a queue of hungry people were lining up to buy rice and the nbought up all rice available, to resell it at a 50% higher price, making a very tidy profit as the would people have to buy it anyway, at whatever price.
Speculation has always existed, but it was mainly with commercial papers and there have never been so few players who could move such huge amounts just by themselves and thus push the market in one direction or the other. In other words, there has never been a single speculator who was able to buy up the entire grocery store.
Goethe’s Faust dealt with the threat that capitalism posed to the old structures, both destructively and progressively – singularly destructive was the paper money by which Mephisto pleases the emperor of the rotten Reich, but which eventually declines rapidly because no investments are being made while only the decadent luxury of the upper-classes is financed by such artificially created wealth. Who would not draw a parallel with our present casino capitalism?
But Faust is also progressive in that as he acquires land that he makes useable by machines and modern technology, he advances as an entrepreneur par excellence, but also as a barbarian who cannot control his desire to accumulate ever-more wealth.
As an economic pariah, Faust doesn’t need Mephisto any longer as his brutality is driven by greed and not productivity. Goethe had understood long before Karl Marx that capitalism is not only about trade in a free market but always comes with greed, barbarism, war and piracy.
There is no doubt that Johann Wolfgang von Goethe would be disgusted with our present economic system, in which more and more productivity is pushed aside and where creativity and innovation are replaced by profit maximisation, greed and useless financial transactions that degrade democratically elected politicians into instruments in a system that ultimately destroys wealth and society.
Today’s society is behaving exactly as described in the first Act of Faust, in which everybody fights everybody else while Mephisto miraculously creates the paper-money scam. Goethe never accepted that we human beings were bound to neglect our most honourable attributes such as love, dignity and beauty while enhancing our darkest sides from greed to egoism and social ignorance.
Whoever read and understood Goethe has to feel that the system cannot remain as it is and that although a different world may not be possible, a different economic system would be.