The debate on Green Party economics list continues.
Someone has proposed a statement including this line:
"The way our financial system operates has caused environmental as well as economic catastrophe".
One member has doubts about this, and wants it nuanced.
We must surely all agree that our economic system is causing an environmental catastrophe.
Since the financial system lies at the heart of the economic system, I cannot see how any Green thinker can be unsure about this.
"Ruling out all injections of liquidity is a bit sweeping. That is how the BoE (like all other central banks) performs its fundamental job of lender of last resort, and we have no policy to end that. Ending it in this way would make the banking system a lot more unstable than it is, which presumably we want to avoid".
RL: Central banks are indeed the lenders of last resort. This is not to say that the BoE is a soft touch. Any lender has to decide whether the would-be borrower they see standing before them is a good risk. The banksters have made bad decisions, and are in a mess of their own making, with billions of bad debts on their books. They want us, the taxpayers, to simply take these bad debts off them, so that they can carry on as before, albeit with possibly a bit more regulation, grudgingly accepted. The green Party has a list of regulations that we are considering. Govt so far has merely suspended short selling for a few months.
There are two options:
To go along with the request (when they come up with it) of the unregulated money markets to buy the toxic "assets" (= unpayable debts) (which is in essence a free subsidy to a system that never gives out free subsidies: if it gives out money, it lends out exclusively at compound interest).
There are many questions about this request, centered on
Opportunity Costs, (money better spent in the real economy, applying the Right to Rent (GP policy) and GND.
Probability of corrupt and/or sophisticated diversion of the monies into banksters' pockets, and undue pressure being brought by lobbyists*
Quantification of these toxic assets. Nobody knows how much is actually there, given the obscurity of the hedge funds &c that have been playing around with these debts.
The only argument in favour of a Tarp-type intervention (which Congress is voting on as we speak) is the Gun To The Head argument: "Give us the money or the economy gets it."
Some in the Green Party appear to be buying into this argument.
The counter argument to the GunToTheHead is this : "Is a Tarp-type bailout guaranteed to save the patient, or is it an expensive medicine that will delay the demise of the free market in money for a period of time, maybe weeks, maybe months?"
I have not heard any pundit giving a percentage chance of the bail-out's prospect of success. Which suggests that either no-one has any idea, or that they will not be good.
So I propose that we reject the idea of a bail out for the financial markets, and that instead we draw up
* to buy up (nationalise) viable banks piecemeal, as they call for help. (Non-viable banks will have to fail: "He that lives by the free market must die by the free market")
* to use the money on the Green Party's Right to Rent policy, which will itself address the Toxic Asset problem
* to use the money on the GND.
This is a momentous decision. It means letting the financial markets swing from a rope of their own making, which will certainly bring on and intensify the present recession. But it gives us the opportunity to create a Green economy out of the ashes of the old economy, which is irrational, eco-cidal, growthist, war-mongering and divergent.
People may say that this is all theory, that we do not have a snowball's chance of influencing these great decisions. Not so. Pace the Guardian piece of yesterday, listing about 8 reasons why the City is not going to require a Paulson style bailout, the issue may well come to the UK, especially if Congress votes yes to the bailout a second time, and if it seems temporarily successful, the City may pick its time to start crying for a fix.
Thrice armed is he whose cause is just,
but nine time he who gets his blow in fust.