Het Neoliberale Geloof 506

Next financial crisis is in public services
Too big to fail
by Serge Halimi

States rescued the banks in country after country, neither asking nor getting anything in return. The banks are now using their newfound strength against the state, threatening to reveal the accounting tricks the banks themselves had recommended to hide some of the debt. After all, interest rates on loans are higher when the financial reputation of the state is in question.

So Goldman Sachs first helped Greece to borrow billions of euros in secret, and then told it how to get round the European restrictions on public debt. The bill for this groundbreaking financial advice was subsequently added to the huge Greek deficit (1). And the winners and losers? Lloyd Craig Blankfein, CEO and chairman of Goldman Sachs, received a $9m bonus; Greek civil servants will lose the equivalent of a month’s salary each year.

A country, like a bank, is “too big to fail”. So Greece will be rescued – at a price. The European Central Bank claims to know all about Wall Street’s game, and ECB president Jean-Claude Trichet is taking a very hard line with the Greek government, warning that Greece will have to take “vigorous steps” to mend its ways, “under close and constant EU supervision”. In other words, hand over control of its economic affairs and reduce its 2009 deficit – 12.7% of GDP – to 3% by 2012. To cut the deficit by almost 10%, particularly in an area of weak growth, is an almost impossible task, requiring major surgery rather than “discipline”. Oddly enough, the aim of the exercise is to strengthen the euro at the very time when the US and China are devaluing their currencies in order to consolidate the process of recovery (2).

Angela Merkel considered that “it would be a disgrace if it turned out to be true that banks that already pushed us to the edge of the abyss were also party to falsifying Greek statistics”. Goldman Sachs is unlikely to be moved by this tirade. Barack Obama’s comment on Blankfein’s bonus was anodyne: “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free-market system.” As we all know, that wealth serves the whole community: after all, Goldman Sachs paid 0.6% tax (3) on its profits last year, didn’t it?

http://mondediplo.com/2010/03/01banks