Hardly taken any measures to secure private property

Hardly taken any measures to secure private property

Pro memoria: Start of the financial crisis 10 years ago

rt. Ten years ago, a global financial crisis was looming caused by problems on the US mortgage market. Thousands of US citizens lost labor and home. This was the beginning of the financial crisis in 2008. As a result, one of the world’s largest banks, Lehman Brothers Bank, disappeared from the scene. It could no longer meet the outstanding liabilities. Other global player banks, in Europe as well, were now facing bankruptcy. All over the world they were “supported” by the concerned governments in unprecedented actions to bail out the global economy from a crisis like the one of the thirties.
In unprecedented dimensions, Central banks, such as the US Federal Reserve Bank Fed FED, or the European Central Bank ECB, began buying up shares or sovereign bonds with “self-made” money for injecting “liquidity into the market” as it is called in the financial world’s downplaying language – in order to “boost” the economy. This led subsequently to a flight into the safe haven currency Swiss franc, because the citizens in the surrounding euro countries feared inflation. The Swiss National Bank SNB as well was forced to work with fiat money to buy foreign currencies (mainly euro), so that the exchange rate remained stable and the export industry remained competitive on the international market.
The gigantic amount of inflationary token money, having emerged and still emerging, became and becomes bigger and bigger and for almost 10 years, it is hanging over us like the Sword of Damocles. “In the future”, after economic recovery, the money supply was to be “withdrawn” from the market. How and when exactly this should happen, remains a mystery even for the experts.
In the meantime, for the prevention of future financial crises useful measures have been suggested and reflected on their implementation:

  • One of the most important but not yet delivered projects is the separation between business and investment banks. As a consequence of the global economic crisis in 1929 (Black Friday), this separation had been made in the US and was valid until 1998. For allowing the US banking world greater speculative investments, Bill Clinton lifted the Glass-Steagall-Act, being in force since 1932. The 2008 crisis can be seen as a result of this measure. Also in Switzerland, a division between business and investment banks has been discussed, but in favour of the big banks it has been dropped by the councils.
  • Another project is a distinctive increase of the banks’ own funds. Something has happened here, although the banks’ capabilities are exceeded to a large extent by the amount of lent money.
  • How the citizens’ property is to be protected, if international banking groups are simultaneously declared “system-relevant” and are to be “saved” by the state (i.e. taxpayers and citizens), that also belongs to the secrets of financial legislation. Unfortunately, the fact was hardly discussed that, in the meaning of legislation against monopolies, large banks could be divided into smaller units, which then are no longer “system-relevant” and in case of bankruptcy cannot cause any major damage.
  • Instead, solid small banks, that thriftily manage the money entrusted to them, are driven further and further into a corner by the financial legislation of the past years (Basel II). They cannot afford a greater administrative overhead, like the big banks. Precisely these regionally based banks, such as banks committed to the Raiff­eisen idea, could be an assurance against speculation. (Whether this still applies to today’s Raiffeisen banks, which are increasingly spreading in the speculative investment sector, would have to be discussed separately.)
  • Various models were discussed of how to revise monetary policy. With the positive money initiative (“Vollgeld-Initiative”) one proposal is ready for voting.
  • Further safeguards against a crisis are the following: balanced state budget, high level of self-sufficiency in essential goods, strict criteria for issuing mortgages and for all debts.

Today, a quick look in the world of money tells us that barely one specification was seriously implemented and that the central banks continue to produce fiat money. Exercising restraint for thinking about the ethical foundation has only partially found its way into practice.
In the short and long term, it is important to take precautions locally as also globally, and to take a “surprising” economic crisis into one’s own and into general considerations.     •

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