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Wed Apr 27, 2016, 08:53 PM

Socialize the Banks

So as the banks have a field day, where is the Left? Seemingly nowhere to be found. In the core capitalist countries, the Left has repeatedly failed to crawl out from its defensive trenches and seize the opportunity that the crisis opened.

Socialize the Banks

Breaking up the banks won’t do. They should be publicly owned and democratically controlled.
by Nuno Teles 4/27/16

These days observers worry about banks — European institutions like Germany’s Deutsche Bank, France’s Societé Generale, and Italy’s Monte di Pascoale, not to mention the zombie banks that populate the austerity-ridden eurozone periphery in Greece, Portugal, and Spain. These big banks are widely seen as global capitalism’s next weak link, capable of causing massive financial instability if they go bust. Such concern isn’t particularly surprising — banks were at the center of the latest crisis from the beginning. Indeed, it wasn’t subprime market defaults that unleashed the destructive financial turmoil of 2007–8, but their ruinous impact on a major investment bank, Lehman Brothers. Lehman’s failure — and the state’s subsequent refusal to bail out the bank — created a credit crunch that sent the entire financial sector, as well as the world economy, into a tailspin.

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Europe’s major banks, already troubled by their souring US investments (among other things) faced collapse. Only the quick substitution of bank-held debt for official debt — taken on from the troika of European lenders and the IMF in return for punitive fiscal austerity — saved them. Yet here we are today, facing another potential wave of failing banks. The lingering instability highlights the hollowness of the G-20 countries’ pledges to reform the financial sector in 2008-09. Promises to “extend regulatory oversight and registration to Credit Rating Agencies,” “take action against non-cooperative jurisdictions, including tax havens,” and “prevent excessive leverage and require buffers of resources to be built up in good times” have yielded little substantive change ..

Much more here: https://www.jacobinmag.com/2016/04/banks-credit-recession-finance-socialism/

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