In the United States, Goldman Sachs, hugely profitable out of the financial crisis, still rules the roost. According to Senator Carl Levin, chair of the senate permanent sub-committee on investigations, in the report on Wall Street and the Financial Crisis, it’s a “sordid story” of a “financial snake-pit, rife with greed, conflicts of interest and wrongdoing.” Levin said he would be recommending Goldman executives be referred for criminal prosecution. But that’s barely news. Goldman have paid for their criminality before. In the UK this startling story is hidden away in a few short paragraphs on page 26 of today’s Guardian (15th April). It hardly qualifies as news. Because everybody knows.
Former UK governments deregulated the financial sector, so the bankers (which I use as shorthand for all the investment bankers, traders, hedgers, private equity fund managers, etc, etc) could set up a desk and deal. They could deal in anything they liked. And some of the returns were extremely high. Everybody knows the government allowed them to sell dodgy mortgages to people they knew couldn’t repay. And they were allowed to wrap them up with other “securities” to sell on, hiding the risk, in fact, hiding everything, so no one knew what the real value was. So it was bought on the simple grounds that whatever it was worth today, it would be worth more tomorrow so a profit would be made.
And when the proverbial hit the fan, as was absolutely inevitable at some uncertain stage, we the people, allowed our government to bail out the bankers, at huge expense, so we are now having to face cuts in jobs, health, education, social security, pensions and so on – all the things which make for a civilised society.
The bankers, hedgers and traders etc have escaped from the fiasco with barely a mark. Some may have gone bust, but some always do – their business is risk. Everybody knows that normal trading has been resumed and the bankers are again paying themselves obscene amounts of our money, just as they were before the bubble burst. The only difference is that the vast majority of the population regard them with rather more ‘hatred, contempt and fury’ than they did before. But that needn’t bother them a great deal. They continue to justify their socially ruinous activities by reference to the neoclassical economic dogma to which governments, as well as bankers and business leaders all subscribe, and which has brought capitalism into disrepute. Everybody knows, but, so what!
The connection, between bankers bonuses and the cuts we are suffering, is direct. The bonuses derive from the trading which created the bubble we are all now paying for. Everybody knows the banks caused the cuts, but the government, like all its recent predecessors, is in their pocket, frightened to cause them upset.
Everybody knows. And nobody does anything.