Why the financial scandals multiply?

Eamon Gilmore, Irish Deputy Prime Minister and Minister for Foreign Affairs and Trade, Enda Kenny,  Irish Prime Minister and José Manuel Barroso,  President of the EC  (from left to right). (EC Audiovisual Services). Inaugural meeting of the Irish Presidency of the Council of the EU. Ireland paid a dear price for the greed and carelessness of its banks.

Eamon Gilmore, Irish Deputy Prime Minister and Minister for Foreign Affairs and Trade, Enda Kenny, Irish Prime Minister and José Manuel Barroso, President of the EC (from left to right). (EC Audiovisual Services). Inaugural meeting of the Irish Presidency of the Council of the EU this semester. Ireland paid a dear price for the greed and carelessness of its banks.

Deutsche Bank discharged yesterday a number of medium ranking dealers, related to the Libor fixing ring, while along with other major European lenders Deutsche appears ready to pay fines of hundreds of millions. Yesterday the Royal Bank of Scotland, another “systemic” financial group, agreed to pay $600 million in fines to US and British authorities for its involvement in the Libor fixing. Some weeks ago UBS conceded to pay fines of $1.5 billion for the same reason.

Also this week the Italian taxpayers disbursed around €4 billion to save from its own scandals Monte dei Paschi di Siena, the third largest bank of the country. Last week the Dutch taxpayers were also obliged to spend another €4 billion, to save the bank and insurance group SNS Reaal NV. The Dutch financial firm had being spinning around the world €30 billion of depositors money.

This list contains the banking crimes of the past few days with the long catalogue been opened in 2008 by Lehman Brothers. There will be no end to this unholy affair, for as long as our political and monetary authorities do not take the courageous decision to rewrite from the beginning the banking rules and controls. Central banks are unable to stop this dangerous game. Their obligation to protect the financial system from a total collapse, forces them to continue replenishing the liquidity of sinner banks.

Consequently the banking scandals will continue, for as long as the derivatives and hedging markets are totally uncontrolled, the unbelievable leverage practices of banks’ continue unobstructed and the total freedom of capital movements in the triangle US-Japan-Europe holds well. Where is the Protestant ethics of the Anglo-Saxon world? Where is the political will to stop banks from using other people’s money in any risky placement? Where is our basic democratic principle that the liberties on one stop exactly where the liberties of the other person’s start? Why bankers are more equal than the other business people? Why we proved so naïve to believe the bankers, that their “freedoms” were our securities for democracy?

Unfortunately the drive for globalisation, initially conceived to increase the global real wealth, has ended up in the total liberalisation of the banking industry. The big lenders have managed to arrive at a position, where they can freely use the mechanics of money creation, that our paper legal tender economy gave them. The rules and controls, even the ethics investigations on bankers that Adam Smith himself, the preacher of liberal economics strongly recommended, have been totally dismantled.

As for the reasons why the mainstream media do not touch this subject, to find out one has to dig deep into the huge advertisement budgets of the banking industry. A country by country research would unveil the…miracle. If the labouring in the real economy millions of citizens knew the easiness and the ways banks use to make money, a revolution could have started.

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