Posts Tagged ‘crisis’

This is one of the most grabbing artworks I have seen lately and the overall best example of conceptual protest art I have seen. I am talking about Jordi Colomer’s ‘Anarchitecton’ which is a serie of videos and pictures of people protesting with buildings as a protest sign:

That makes you think in these times of economic crisis: is capitalism actually a protest against itself?

Isn’t the only way to effectively protest capitalism becoming capitalism itself? The way things are build now there’s no way to escape the system, unless you manage to climb on top of it. The same is true about our so-called ‘democracy’: it has become the most intolerant political system ever invented, far more intolerant than any dictatorship has ever been. That is an interesting paradox.

View the whole work on Jordi Colomers website

There is lots of people out there who do not understand what this crisis is all about. They have no idea what fractal reserve banking is, why banks can make billions of profits and all of a sudden be bankrupt one year later. Well, fractal reserve banking means the bank is not obliged to keep your money when you bring it to them but they can spend it. This usually means they will lend it out to someone else against a higher interest rate than they give you, and the difference is their profit.

However, when stuff got deregulated banks could not just lend out your money to someone else, they could also start to gamble with it on the stock markets. This is where things went wrong. Banks bought giant amounts of mortgage-packages that were promised to be good and they turned out to be bad mortgages that do not return any profit, at least not yet. They’re problematic. So they have spend lots and lots of our money on bad investments. This means that
the profit figures they have flaunted last years, based partly on these investments, were fake. They made it look like they were growing and growing, just to be able to cash in more money at the stock counter.

So now they’ve got called on, they have a huge cash flow problem. These bad debts are made of your money, and when too many people start asking their money back: euh, its just not there. In fractal reserve banking the bank keeps just a small amount of money inside to be able to pay direct transactions. For that reason they have put caps on daily withdrawal amounts too, too high caps would bring them into trouble.

That’s one side of the story: they wasted your money on bad loans and don’t know how to pay it back. But there is more to this crisis. The whole American economy and partly European economies and other economies are debt-based. The American national debt has risen in the last eight years from 5 trillion dollars to 10 trillion dollars. So it has doubled under the Bush administration. This is all borrowed money. It has to be paid back. And every time the amount gets higher, it gets harder to pay back because of the interest issue. So what we see here is a debt figure that has risen to such an astronomic amount it has become virtually impossible to pay it back, or maybe even to stop it from growing. This is the core phenomenon we are dealing with at the moment: Crisis which will return at accelerating speeds, like this debt money is accelerating in size all the time. The effect of this in the long term is an economy in perpetual crisis. There will no longer be good times, bad times, depressions or recessions. People who believe this is a returning pattern in our economies are right, but they forget that we already had a major crisis in this decade: this is the second one. The crisis is a circular pattern but its exponential: it will keep coming back at a faster and faster pace, because debt is an exponential phenomenon.

The American author Gore Vidal wrote a book called ‘Perpetual War for Perpetual Peace’. In it he suggests that America has to stay in a state of Perpetual war to afford their lifestyle – there is much true about that, and what we will now see is that the economy more and more will follow a Perpetual Crisis model: faster and faster will these Crisis return. Either that, or there will be a total collapse. I’m not sure which option is the worst one. In the long term a collapse might be much, much more healthy. The 700 dollar bailout plan is of course ridiculous: more debt, to keep ‘things running’.

There is no quick fix, this time around. It’s pretty hilarious to see McCain and Obama talk of nothing but tax cuts.

Martijn Benders, Dutch writer and Freelance Economist

The Lehman Bank, one of the biggest investment banks in America, files for bankruptcy today. That is a very symbolic development with huge implications. Today the biggest ensurance company of the States, AIG, lost over 60% of its value on the stock markets. I picked up an interesting comment from the BBC website’s have your say department:

The banking industry fought for 65 years to have the Glass-Steagall Act repealed (kept stock market and banking industries separate)…they won a few years ago, and major US banks immediately started buying buying brokerage houses and selling questionnable mortgages and securities at astounding profit levels. Banks did this in the 1920s and caused the Great Depression. Senate vote was 90-8…Biden voted for repeal, McCain didn’t bother to show up for the vote.

This is priceless. The ‘big Democrat’ Biden votes in favor of the corporate greed of Banks, and McCain didn’t even bother to show up for the vote. What a mess! This has ‘Great depression’ written all over it and, unfortunately, like in the 20′s it seems to be deliberately *caused* – anyone could have known that repealing the Glass-Steagall Act would have this sort of result. That Act came into place to prevent something like a new great Depression! A quote from Wikipedia:

In the nineteenth and early twentieth centuries, bankers and brokers were sometimes indistinguishable. Then, in the Great Depression after 1929, Congress examined the mixing of the �commercial� and �investment� banking industries that occurred in the 1920s. Hearings revealed conflicts of interest and fraud in some banking institutions� securities activities. A formidable barrier to the mixing of these activities was then set up by the Glass Steagall Act.

So, let’s see: we have the Democrat Vice-president voting in favour of abolishing this act, and this vote took place in 1999 so it wasn’t taken in a time of great economic prosperity but rather in the perspective of decline. This just shows what huge powers American bankers have over politics, Democrats or Republicans alike. And thanks to them, there’s this crisis now. Please, do not vote for these morons.