by Tarquin O’Flaherty
It is Milton Friedman’s opinion that the post 1929 banking collapse was the principal cause of the Depression. This is undoubtedly true but what this glaringly ignores is why the banks collapsed. Friedman’s conclusion appears to treat the collapse as if it were an isolated event, as if ’29 hadn’t occurred. It is my opinion that the short term irresponsible activities of the banks almost single-handedly brought about both the ’29 collapse, the banking collapse and the consequent Depression. It was not the collapse of the banking system but what caused that collapse that brought about the Depression.
Friedman et al advised that in the event of a re-run of the 1929 crash, we must not allow the banks to fail again. Well, in 2008, 1929 happened again, the banks failed spectacularly again, but this time they were rescued with massive amounts of government money. Well, Glory Hallellujah… Despite this rescue there has been, for years now, massive unemployment in both the US and Europe, millions of mortgage repossessions, and millions more small businesses have gone bankrupt. Walk down Main Street anywhere and half the shops are boarded up. People everywhere are quietly, desperately, scratching for a living.
Meanwhile, Britain’s billionaires (London has at least eighty) have seen their net worth double since the recession, with the richest I,000 families controlling 547 billion pounds (827 billion dollars) These families have at their disposal more money than the poorest 40% of British households combined. In the last year alone (2014) their wealth increased by a staggering 77million pounds a day. (Guardian Weekly (1.05.15)
Bank shareholders, the Dow Jones and share markets around the world nowadays get the jitters if bank quarterly profits, measured, not in millions but in billions, shift even slightly up or down.
Following the crash of 2008, the US banks were on their knees to President Obama, begging to be rescued. The US administration, with the banks at their mercy, had an unprecedented opportunity to utterly reform the banking system. Criminally they failed in this responsibility. They did nothing of the kind. Instead they simply shovelled money into the bank’s coffers and told them to carry on. Obama and his Democrats could have changed the world and written their names large in American history. Instead and almost inexplicably, they have contributed to making the world an infinitely less equal place. This was an astonishingly spineless betrayal of the American people which stupefyingly, leaves the banks reassuringly aware that if they blow it all over again, if they create another Depression, they will be rescued.
In 1789, the French, sick to death of inequality, the serfdom involved in the feudal system, the excesses of both the clergy and the aristocracy, and the demented extravagance of their king, Louis XV1, stormed the Bastille, set up Madame La Guillotine, bumped off the aristocracy and in 1793, beheaded Louis, their king.
In 1830, the British, who had already experienced mass revolts and riots up and down the country, and terrified of a repeat performance of the French experience, granted the vote to men of what was essentially the new and burgeoning, monied middle class. The working class and the women would come later.
Much later, but for precisely the same unequal reasons, (feudalism, massive inequality and excess) the Russian people, in 1917, took the Royal Romanovs out and shot them.
Considering the gaping and growing inequalities in our present societies, I wonder if governments will be astute enough, and quick enough to remember the past and do that work essential to redressing this dangerous situation. Otherwise, if things remain as they are, we will, undoubtedly be tediously required to go through death, famine and war before the greed of the new aristocracy is curtailed either by government, or by other means.
Tomorrow: Relationships by Cecil Poole