In case you hadn't heard, this isn't the first time financiers have crashed an economy. It isn't even the tenth. Or the hundredth. From the Japanese crisis to the Argentine crisis to the S&L scandal to the City crisis to the Great Depression to the Long Depression, they've had a hand in causing them all – meaning, today's crisis, despite what some people keep saying, isn't an abnormal state of affairs. No, this is what finance do.
Previous to the Great Depression, banks failed all of the time. And when they failed, depositors lost everything. There were no guarantees.
"Bankster" is not at all a new word. It required a bit of dusting off before it was recently brought back into vogue, but it's been around for a very long time.
And not just because of people losing all of their deposited savings. There were the usurious loans, the calling in of debts in moments of bank crisis, predatory loans the confiscation of property through repossession, and many, many false promises.
On top of that, the economy would crash regularly - in part because of the financiers. It would crash so regularly, in fact, that it was given a term – the Boom & Bust Cycle. Because when it was booming (blowing up the balloon) it boomed big, and when it busted it busted to nothing.
And that's how things were.
But, the Long Depression followed so soon after by the Great Depression changed everything. Regulations were put into place denying banks and finance houses the ability to implement the more "creative" investment vehicles which had precipitated so many crises. Bank accounts were insured, so that depositors no longer stood to lose everything. And banks were organized around a federal institution, standing ready to bail them out when they messed up, ready to do so so that another "banking crisis" did not arise and once again threaten the economy.
And added to that was a mentality of "safety and security" that pervaded the time. So, for a generation there was stability.
But stability bred complacency. The financiers convinced enough people that they were better now, wiser, with enough internal safeguards that they would no longer repeat the crises of the past.
That notion mixed easily and headily with the neo-liberal belief that the financiers understood finance far better than any government could, and therefore the financiers should be allowed to run their businesses as they - being the most fittest - thought best. Essentially declaring that the financiers needed a free hand so that they could make everyone a lot more money.
So, after thirty years of safety, the government began stripping away the regulations, and the financiers immediately started exploding bubble economies again, with the inevitably resultant bank failures and government bailouts. The first of these to be seriously noticed (but by far not the first) being the S&L Crisis.
Why?
Because it's what they do.
All of the various new investment vehicles aren't actually "new." They're old, warmed over rehashes from the pre-Depression days brought to the modern era. All the old financier favorites, everything they wanted brought back from the "good old days."
And with them came the Boom and Bust Cycle.
It was inevitable. After all, if you set out to return to a Victorian-style economic regulatory system, then you get a Victorian-style economy.
Right now, we're in the Bust, and it's sad and trying and entirely predictable.
