"Any economy relies on a credit system, that means on the erroneous assumption that the other will return borrowed money. If he doesn't, there will be a 'support
action' in which everybody but the state earns well. You will recognise such bankruptcies by the fact that the population is asked to have confidence. Usually, it has not much more left than that anyhow." Kurt Tucholsky (1931)

Wall Street is in shambles. The once so mighty US American investment banks are no longer; they were sold, went bankrupt or were transformed into commercial banks. The market failure became obvious in summer 2007, when by interbank trade, there was hit an important nerve of the global financial system. Since then, banks around the globe have been fighting with enormous losses which threatened to eat up their basic capital. And since then, "rescue packages have been fastened" around the globe – for the banks. After it had been told for many years that there was no money for hospitals, schools or an increase in unemployment allowance, it shows itself now that record sums can be mobilized within the briefest period for the support of big banks. [...]

Although since the failure of Lehman Brothers, three trillion Euros have been mobilized all over Europe for "saving" banks, none of these goals were reached. Credit issue did not get under steam, because banks are still sitting on mountains of foul assets. Production and trade have collapsed world-wide; unemployment and poverty are sky-rocketing. For a long time, the crisis has no longer been limited to the financial system. Production enterprises such as Opel or Schaeffler also ask the state for help; the number of firms pushed into insolvency by the reduction in orders at simultaneously rising credit costs has been increasing dramatically.

Of course, in the meantime, also governmental representatives are angry about all too eager bank managers and make great speeches about the need for a basic reform of international financial architecture. This is also necessary in order to appease the public that as a rule does not see why the same financial sharks that have driven others and themselves into bankruptcy should now still be honoured with tax-financed dream salaries and bonus payment. And lest nobody get the idea that the state might also use the tax revenues for comprehensive public investment, for the creation of jobs and the strengthening of mass purchasing power, they include "debt brakes" into the German constitution as a precautionary measure. You need little imagination to see how in the future debt reduction orgies shall be legitimized by referring to these self-created material and savings constraints.

If it were not possible to correct the course of crisis management, the wage dependent shall have to pay double or triple for the crisis. Not only that in the course of the crisis all over Europe at least four million jobs shall be destroyed. Not only that the working people are asked already now to make wage sacrifices and that they follow this cheaky demand all too often in the desperate hope to be able to save their own jobs by making concessions. Beyond that, the tax billions that are now handed out to buy free the biggest cheaters will have to be paid back in a couple of years to the creditors of the state (that is the greatest financial companies) which might bring higher taxes and/or drastic cuts in social benefits in its wake.

Who are the crisis managers?

Regardless of where one looks: The same elites who are responsible by their deregulation policy for the crisis, who have pushed ahead privatizations world-wide and driven the liberalization of capital traffic are now acting as supreme crisis managers. Of course, the international relationship of forces by the crisis has shifted in such a way that it is now tried increasingly to involve the elites of influential emerging countries into "global governance". However, a basic policy change is not linked to the enlargement of the G7 into the G20. He who had thought that in view of the crisis there would now really be negotiations on a new Bretton Woods by which historically currency exchange rates were regulated at the world level, in the meantime is likely to know better. Global disequilibria such as they exist between the USA on the one hand, and export nations such as China, Germany and Japan, were no topic at the summit meeting; demands by China and Russia for a new order of the world currency system were rejected just as the original demand of the USA for additional recovery programmes. Instead they agreed to increase the financial means of the International Monetary Funds(IMF) and the World Bank by more than a trillion US-Dollar. That way, the G20 empowered of all institutions just the one that already for decades has been active as cruel debt collector and forceful executor in the interests of the big banks and by way of its neoliberal "structural adjustment programmes" has already pushed millions of people into poverty.

Former mangers of IMF and Big private Banks are also re-encountered in Europe at influential posts – let there be named as an example the high-ranking expert group that was charged by the EU Commission with working out proposals for the reform of European financial supervision. This group of the so-called "financial wise men" is led by Jacques de Larosière, formerly expert of BNP Paribas and president of IMF who still in January 2008 defended the opinion that so-called "financial innovations" should by no means by limited, since they made up the "heart of our industry". The majority of the Larosière group is likely to agree with him, because with former advisors or managers of Citigroup, Lehman Brothers and Goldman Sachs, the expert group is staffed by yet three additional representatives of Big Banks who have especially actively promoted the trade with highly complex financial scrap. [...]

In Germany as well, the ruling financial elite – as if this were natural - is granted a leading role in crisis management. Not only that Deutsche Bank chief Josef Ackermann, Commerzbank head Martin Blessing as well as the financial executive of Allianz, Paul Achleitner, were involved in the conception of the first bank rescue package that was passed in October 2008. The corresponding law draft as well was simply written for the government by Freshfields Bruckhaus Deringer – a law firm that already on countless occasions of privatization, "public private partnerships" and cross border leasing affairs has proven that it knows all the tricks, by which gains are privatized and risks and losses devolved to the community. Thus it is not likely to be a coincidence that the special funds for "Financial Market Stabilization" of 480 billion Euros (German abbreviation SoFFin) functions like a shadow bank that is 'outsourced' from the federal budget and not submitted to any parliamentary control. Instead of finally providing for more transparency and enlightening the public whom the tax money benefits in the end, negotiations are conducted in secret cliques including the representatives of Big Finance which bank will be rescued at what conditions.

Already in the rescue of the IKB that with a balance sheet of around 50 billion Euros (end of March 2008) can hardly be considered a core institute of the system, there were spent more than 10 billion in tax money so that the IKB could serve its obligations at German Bank and other large banks; subsequently, the bank was sold for a ludicrous 115 million Euros to the financial investor "Lone Star". The saving of Hypo Real Estate that has cost already more than 100 billion Euros also does not throw any good light on crisis management. It is unclear for instance, why the government waited with its support action until 29 September 2008 – knowing full well that the Hypovereinsbank from which the HRE had been separated in 2003 as a sort of "Bad Bank", could be made liable for foul assets of the HRE exactly until 28 September. Did one want to protect here the former stock holders around Munich Back Insurance? Or German Bank that in the meantime is represented in the executive of the HRE?

More than absurd is also the support of Commerical Bank. Not only that a bank should be allowed to receive more than 18 billion in state help and be allowed to destroy 9,000 jobs at the same time. Beyond that, there is the question why the state only received a majority share of 25 percent for its 18 billion, even though the entire Commerzbank could have been bought on the stock market for only four to five billion (FTD, 20 January 2009).

Why is there no large-scale nationalization?

On the whole, the crisis managaement resembles the desperate attempt to keep a moribund patient alive artificially by ever new (financial) injections. Hoever, this strategy increasingly hits limits, since in the course of the financial crisis more and more credits become foul and the banks need ever more fresh money to eliminate the toxic papers from the balance sheets. Still in Janauray 2009, the IMF estimated the volume of scrap papers at 2.2 trillion Dollars, in April there was already question of 4 trillion US Dollars. Following a report by Daily Telegraph of 11 February 2009, the EU Commission even departs from the assumption that 44 percent of the assets of all European banks that on the balance sheets are still counted at 18.3 trillion Euros, might consist of "toxic" papers (jW 19 February 2009).

However, a nationalization or socialization of banks is eschewed for ideological reasons – even though this solution would be the cheapest for the tax papers. Of course, the foul papers of the banks wouldn't disappear even after a nationalization. However, the advantage would consist in that all wealth holdings still holding any value would pass into public hands and the state would be able to recover a good part of its losses by future gains of the bank. Beyond that, the state might use its influence as owner to reorient the business policy of the banks and make sure that more reasonable investments are financed again instead of speculation – a possibility which was hardly used up to now. The question for the expropriation of banks does not arise in this respect given that you may only expropriate what still has a value. However, since the large private banks are practically bankrupt, the state can and should take them over without compensation. [...]

"Now the road must be opend quickly for additional nationalization. Because every day, where the bank is not yet under the control of the state, makes the bill even higher in the end", the German Handelsblatt wrote on March 28, 2009 with view to the ailing Hypo Real Estate. Yet why should this principle only hold in the case of this one bank? The whole financial sector should be transferred into public hands, since the supply of the economy, the public authorities and the private households with credits, deposit accounts and other financial services is a public task, and the state must vouch anyway for the stability of the financial markets (meaning the big banks and insurances) as the crisis has proven. That a financial system need not be organized according to the principles of private management and be oriented towards profit maximization in order to function well, is proven by the savings and cooperative banks. And as far as investment banks go that up to now were driven mainly by private Big Banks, but also but quite a few regional banks: You may safely renounce to the largest part of their business – from trade with and speculation in assets, over the execution of fusions and take-overs up to the supervision of privatizations, public-private partnerships or cross border leasing projects. [...]

He who appoints the arsonists of yesterday the firemen of today incurs the risk that a single fire becomes a large-scale conflagration. The tax billions that are wasted today to buy out the biggest gamblers are going to lack later when it is a matter of fighting rising mass unemployment. And if it is not possible to remove the neoliberal arsonists by massive public pressure from the most important posts in politics and the economy, it is going to be the working people, the out-of-work and the pensioners who are going to have to bleed to death for the gigantic loses of the banks and financial investors. [...]