The financial-political system is dysfunctional, entrenched, and abusive: Luyendijk

joris 2 luyendijkJoris Luyendijk writes the Guardian’s experimental Banking Blog, which looks at the world of finance from an anthropological perspective. He is a Dutch non-fiction author, who has worked as a Middle East journalist based in Egypt, Lebanon and the Palestinian territories. He also reported on the Second Gulf War in Iraq. His latest Guardian blog, recommended by a Dutch reader, is headed:

“Our banks are not merely out of control. They’re beyond control: Jailing reckless bankers is a dangerously incomplete solution. The market is bust. Institutions that are too big to fail are too big to exist.”

To summarise:

He sees global high finance – big banks, credit rating agencies and accountancy firms – as a set of interlocking cartels that divide the market among themselves and use their advantages to keep out competitors: “there just four major accountancy firms, they are also financially dependent on the very banks they are supposed to audit critically. It’s the same with the three credit-rating agencies dominating the market”.

Cartels spend profits on:

  • huge PR efforts;
  • a permanent recruiting circus drawing in top academic talent;
  • clever sponsoring of, say, an ambitious politician’s cycling scheme;
  • vast lobbying efforts behind the scenes;
  • highly lucrative second careers for ex-politicians;
  • offering talented regulators three or four times their salary.

Luyendijk proposes to restore market forces in a financial sector which would have smaller banks, smaller, independent accountancy firms and credit-rating agencies, simpler financial products and much higher capital requirements.

Before studying bankers he had reassuring images in his mind of well-dressed bankers and their lobbyists but now is “deeply pessimistic and genuinely terrified”, asking: “Surely at some basic level these people knew what they were doing?”

He concludes: “This system is highly dysfunctional, deeply entrenched, and enormously abusive, both to its own workers and the society it operates in. The problem really is exactly as bad as the ‘banker bashers’ believe”.

 

Read his article here.

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Posted on June 22, 2013, in Banking and finance, Civil servants, Corporate political nexus, Democracy undermined, Government, Lobbying, Planning, Vested interests and tagged , , , , , . Bookmark the permalink. Leave a comment.

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