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Monday, October 17, 2011

Taking a stand

A friend of a friend, a chap I've know for a few years, is a bankster: that is, he works at a bank that is "too big to fail". To be precise, he works on the fixed income desk for one of the big banks in the UK. His job, for many years, has been arranging syndicate loans for, primarily, PIGS. Basically, the governments run out of money, come to a bank for a few billion euros, that bank arranges a syndicate who each put up a few hundred million. The lead bank gets a few extra points for arranging the syndicate. This adds up. The bank makes a ton of money, my friend makes a ton of money -- enough to buy a very big house in the country near Woking and to send both of his kids to one of the most expensive private schools in the country -- and UK plc gets tax revenue.

Germany is pushing behind the scenes for a "hard" default in Greece with losses of up to 60pc for banks and pension funds

[From German push for Greek default risks EMU-wide 'snowball' - Telegraph]

So here's my question. Since the loans that my bankster friend arranged are about to go tits up, will he have to pay back 60% of the cash he earned? No, of course, not. And if his bank is going to go tits up because it was stupid enough to loan the money itself instead of palming the dodgy deals off on to syndicate partners, then the bank will go bankrupt, but my friend will still keep his cash. And of course, since the government won't let the bank to go down, the taxpayer (i.e., me) will end up paying.

Now, as a capitalist, I used to think that my friend deserved his bank balance because he was smarter than me or worked harder than me. But now I understand the actual dynamic --- which is that he was simply a lottery winner, having almost randomly chosen that line of work -- I'm outraged and my faith in "the system" is undermined. I've a good mind to go an join the Occupy Wall Street chaps, but unlike them, I know what I want. My demands will be for some actual capitalism in the city instead of the debased corporatism that has allowed the few to loot from the many.

And as I have previously noted, radical concentration of wealth actually destroys capitalism, turning it instead into socialism for the rich.

[From Guest Post: Extreme Inequality Helped Cause Both the Great Depression and the Current Economic Crisis « naked capitalism]

We need to stand firm against all forms of socialism, whether National (as in Germany), International (as in the Soviet Union), Bonkers (as in North Korea) or Tailored (as in Wall Street).

In the future, everyone will be famous to fifteen people.
[posted with ecto]

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