Comments by "Xyz Same" (@xyzsame4081) on "Stephen Harper: ‘Bernie and Corbyn Frighten Me More Than Trump’" video.
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* subprime loans aggressively sold in the U.S., repackaged and sold to other banks. So the U.S. banks had the bad loans out of their books, got immediate revenue (loan volume minus a discount) - and could repeat the game. Other large international banks that could not directly sell loans to consumers in that reckless manner (for instance in Germany) were pleased to participate in loan business that they could not pull off in their own country for legal reasons.
And then everyone and their dog started to bet on these loan packages - on their default risk.
The one wanted to hedge the risk - just in case the loans were not quite as good as certified (they had an inkling that was the case, the certificates provided by the U.S. banks gave them plausible deniability. Of course the international banks KNEW).
The other partners in such bets liked the fees and small profits. And the banks were pleased to facilitate the transactions, they got fees as well.
Selling off bad loans only SHIFTS the risks in case of a default. It is passing on the hot potatoe.
With betting on the default risk the financial claims resulting from a default multiplied.
When owners of loans engaged in such bets then the payment they ecpected to get in case the risk manifested would compensate them for their losses.
But like with most bets in the Big Casino - most have nothing to do with underlying transaction (in that case the loans given to U.S. owners of real estate)
When many others with no stake placed bets on whether loans would default or not (Credit default swap) and then loans for let's say 10 million defaulted - it could be that the resulting financial claims were 20, 50, 100 million. And the actors who had accepted the bets and cashed in on the fees (they won the bets for some time until the loans started defaulting) - now all of a sudden had to pay - pay large amounts.
The bets were highly leveraged: of course there was not nearly enough money in the system. They had claims against each other.
If the regular banks had never been allowed to engage in those bets - there would have been a lot of crashes of investment banks the regular citizens would not even know by name. They would have tried to settle the claims against each other - of course only a fraction being satisfied - and vanished from the scene. Taking the money of rich people with them. or wealthy people who wanted too much.
The U.S. parties would miss out on donations, that would impact the election circus, and mainstream media would lose ad revenue (they are bribed to sing the praised of Wall Street and the financial markets).
There was of course still a massive real estate bubble. But that was at least backe up with something of value (even when the prices were inflated). That could have been handled.
Another aspect: the bets (not only the Credit Default Swaps) are highly leveraged. If consumers engage in bets (insurance policy, gambling in the casino or buying a lottery ticket) they have to pay in advance and the full amount. The gamblers on Wall Street and in the derivatives "markets" get credit. The deposit is 15 % at most, zero for large players.
When the speculators can engage in bets and then it comes out there is not enough money in the system to satisfy the claims, they are obviously highly leveraged. Because they the legal system ! allows them to make the bets with (almost) no deposit.
With a bet usually money changes hands. There is not more or less money in the system. But with betting on credit leverage - and spectacular crashes - are possible.
Banks have the legal privilege to CREATE MONEY (Fiat money) they do so every time they give out loans. Which is not necessarly a bad thing when they finance the productive economy or reasonable prices houses for people to live in.
Not when they use that privilege and status to enable highly leveraged speculation. If the deposit would be 50 or 70 %' - the speculation would end. Citzens would not notice btw. or not much, people employed for high wages in the "industry" would riot of course. They spend money in restaurants, boutiques, cars, on homes. So there would be an impact in New York or London.
But they (receiving high wages which they exchange for goods) are leeching off the productive economy (even if they work 80 hours per week and work incredibly hard - working in Big Finance is still unproductive and on top a danger for the real economy). These jobs needed to be replaced with productive jobs.
The lottery is not going bankrupt. The cash in first, and then the money is redistributed.
Credit ! allows the gamblers to speculate against currencies when they agree on a trend. The do not need to have the money with which they speculate. and banks are allowed to give them the credit. Or banks became the players themselves.
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in the 1930s the U.S. had FDR which reacted to the massive left pressure. In the U.S. the masses organized, the unions bounced back after they had been curshed in eht 1920s. Enough of the "elites" remembered the Russian Revolution of 1917 to be scared. In 1932 veterans marched with families to demand their benefits or pay. The army ! was used to brutally disrupt that big march, teargas, people were shot to death.
1 million people (in a country with then 89 - 90 millionpeople) signed up for the unions (workforce was less, women did have less jobs and many children around, so an addition 1 million meant something. Strikes and demonstrations were common). And FDR ran for president.
He was decisive enough, meant to make good on the promises, strongarmed the unwilling representatives of his own party. And the Dems had a supermajority. Still he had to help some to detect their inner populist.
He also threatened to pack the Supreme court with more judges (of his choosing). There was for instance a battle if the minimum wage was constitutional. But maybe other parts of the New Deal were also challenged.
In Germany the Nazis got 45 % of the vote in summer 1932 (of approx. 6 parties, so the vote was quite fractured). No government with a majority was formed, the election had to be repeated, turnout was low and then the Nazis got 35 % - many people noticed that with a sigh of relief.
This time the Nazis were tasked to try and form a government, usually the party with the most votes were the first that got the chance, Hindenburg could have given the task to another party (but I think since the rest of the vote was very fractured, it might have required a 3 party coalition).
President Hindenburg expected them to fail, he was a staunch conservative but did not like the Nazis or Hitler. They unexpectedly formed a 35 % minority government, and the leader of the governing party - Hitler - became Chancellor.
The Nazis which had polled at only below 5 % in 1928, were good in getting their people into police, civil service resp. targeting those professions. These are groups who tend to be conservative. People leaning towards being authoritarian reacted well to their message.
I think the Industrial leaders (usually connected to the centrist conservative party) who funded the Nazis must have given them some assurances *
The funding was covertly - the Nazis painted themselves as for the little poeple hence the name: National Socialists - to imitate the popular and populist left.
* or the Nazis seized the opportunity before it was gone.
The conservatives would not go into a coalition with them (considerations for the wishes of the base, nasty remarks about Jews even then made the Nazis pariahs with many conservatives).
Maybe the Big Industrial leaders influenced the party leadership of the conservative and right wing parties arranged a deal behind closed doors.
The conservative / right wing parties and their members of parliament supported ALL the measures undermining democracy, separation of powers, putting political opponents into prison or robbing them of the parliamentary seats - the Nazis went after the left so they were fine with that. The Nazis needed them, they had only 35 %.
Harper would have fit right in with the opportunistic spineless lot. While the Social Democrats and Communists (before outlawed under a pretext, incl. members of parliamnet) fought the battle - but in vain.
The veterans and the officiers of the small army (they were only allowed very limited forces by the winners of WW1) were very respected in society . Hitler could not have grabbed power if they had not fallen in line - and the conservative opinion leaders could have prevented that. They did not want to form a government with the Nazis but they thought they would to the dirty work for them (go after the Left and the unions) and eventually they could take power back.
The Nazi power grab was completed within 6 months (early summer 1933, FDR in the U.S. took over as Potus in March 1933).
A lot of the weak European democracies or quasi democracies went the fascist route then (Portugal, Spain, Austria, Italy, ..). The economy in Europe after WW1 was really bad, much more damaged by the war, and they applied austerity, Germany as the potential powerhouse that could boost all of the European economy was intentionally crippled by sanctions.
When Europe and especially Germany finally had a modest recovery they were hit again - this time by the Great Depression. That was too much.
I can see a lot of similiarties. Globally right wing governments even with fascist tendencies are on the rise. That is the economic impact of neoliberalism.
Politicians like Harper would rather get cozy with the right wingers, no doubt even with fascists, than give up some of their power and wealth.
Big biz likes authoritarian leaders. They liked Mussolini and Hitler, too (The Nazis got even money from U.S. Republican Industrial leaders who watch with envy how Europe went the fascist route - while they had to put up with FDR. They considered a coup in 1934, but asked the wrong man among the military brass (General Smedley Butler - Eisenhower and MacArthur had helped to crush the veterans in 1932, so their choices for military leadership which the population and the veterans ! trusted was limited).
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The Economic Miracle, or Golden Era, or in the U.S. Building of the middle class - the economy after WW2 functioned according to the ideas of Sanders. It was a genuine Social Democracy, capitalism that was indeed regulated.
It is important to see with what dedication and over decades the rich and powerful strove to hit back. So yes capitalism likely cannot be contained, that was for maybe 30 years. With the war machine in overdrive and ONLY for the wealthy countries. It never worked for developing countries.
Increasing productivity because of automation, PC use, ongoing immigration, women entering the workforce were bound to increase unemployment (with the 40 hour week !!! introduced in the U.S. in 1940 - so it would have been time to give the productivity increases more in reduced worktime for the same money and not in more money. between 1947 and 1970 the agerage wages adjusted for inflation had almost doubled).
The oil crises in the 1970 triggered a global downturn and for the first time unemployment rose significantly (considering what people had become used to).
The higher costs for oil drove prices for goods up and resulted in more inflation, so the governments thought they could not offer low interest rates - which was the usual recipe to boost the economy. (That assessment was wrong but cames from and understanding of money and the economy that comes fromt he 19th century, not a fit for the modern world).
The oil crises impacted the time from 1973 - 1977, in the U.S. there was the additionall impact of the debt of the Vietnam war, so there was time for the citizens to get nervous.
The ruling class used their chance to hit back. Nixon had placed a rightwing corporatist judge on the Supreme Court wo was instrumental in the 1976 decision that money equals free speech. So from then on Big Biz could buy parties and representatives, from 1980 on Reagan started the war on the New Deal. And unfortunately the world followed (enough rich bastards also in other countries who were just biding their time)
In the U.S. politics is meanwhile completely corrupted by money.
The rich in the U.S. had to live with FDR (but they could prevent Wallace from being VP when the health of FDR got worse. president Wallace instead of Truman would have changed the course of the world, he was more progressive than FDR, the rhetoric was anti-imperialistic. (Churchchill did not like him).
Corbyn is more to the left, less hawkish than Sanders (who made a nod to "Assad must go") recently. Corbyn is more openly critical of Israel and the war machine. The manifesto although solidly left is by no means revolutionary. Both are not Socialists (Corbyn takes the wishes of the party into account, the manifesto is found in conferences and meetings and not decided by the party leader).
The other hand the economic recipe after WW2 and high taxation for the rich and profitable businesses, government spending in infrastructure (helped with employment), strictly regulated finances, only somewhat free markets, after WW2 the currencies were for some time fixed against each other. THAT they called the _economic Miracle, or Golden Era
In 1960 Nixon and JFK discussed 72 % EFFECTIVE top marginal income tax for high incomes !
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