We’ve lived so long under the spell of hierarchy—from god-kings to feudal lords to party bosses—that only recently have we awakened to see not only that “regular” citizens have the capacity for self-governance, but that without their engagement our huge global crises cannot be addressed. The changes needed for human society simply to survive, let alone thrive, are so profound that the only way we will move toward them is if we ourselves, regular citizens, feel meaningful ownership of solutions through direct engagement. Our problems are too big, interrelated, and pervasive to yield to directives from on high.
—Frances Moore Lappé, excerpt from Time for Progressives to Grow Up

Saturday, June 23, 2012

Dear Mr. Dimon, Is Your Bank Getting Corporate Welfare?

Click here to access article by the editors of Bloomberg News.

Even the editors of this premier international capitalist media source are getting a bit worried about corporate welfare to the bondholders and banks in the form of below market interest loans along with other loan cost reductions. Thus, banks use leveraged government debt-money to make highly risky bets in capitalist casinos without worrying much about the outcomes. When the bets go bad citizens of various countries are left with a wrecked economy in hock to the bondholders who bought government bonds. Bloomberg editors are perfectly aware that people participating in such scams are threatening the very foundations of capitalism--the goose that lays their golden eggs.
In recent decades, governments and central banks around the world have developed a consistent pattern of behavior when trouble strikes banks that are large or interconnected enough to threaten the broader economy: They step in to ensure that all the bank’s creditors, not just depositors, are paid in full. Although typically necessary to prevent permanent economic damage, such bailouts encourage a reckless confidence among creditors. They assume the government will always make them whole, so they become willing to lend at lower rates, particularly to systemically important banks.
This and the whole sovereign debt crisis is explained by Matt Taibbi and Yves Smith in this excellent 26:58m video interview with Bill Moyers. (This will be broadcast tomorrow on the Bill Moyers program on most PBS stations.)