This video from the USA is called Crony Capitalism: After Lobbying Against New Financial Laws, JPMorgan Loses $2B in Risky Bet.
JP Morgan’s nostalgia for fascism
Thursday 18 July 2013
The world’s second-largest bank JP Morgan thinks it knows why Europe is in economic trouble.
According to JP Morgan, the problem is that southern European countries strayed too far from fascism.
JP Morgan says European countries that ousted vile dictatorships ended up with too many rights for workers and too much right to protest.
The bank’s London economists put out an analysis of the euro crisis in May – a paper I became aware of thanks to journalist Leigh Phillips highlighting the nasty side of the bankers’ diagnosis.
JP Morgan’s report says it wants more “sovereign deleveraging,” “competitiveness adjustments,” “structural reform” and “national political reform.”
These are bankers’ words for cutting government spending, welfare and workers’ rights, especially across southern Europe. They think “integration” around a European Central Bank will force through these cuts.
But there is a block to their plan.
As JP Morgan says, “The constitutions and political settlements in the southern periphery, put in place in the aftermath of the fall of fascism, have a number of features which appear to be unsuited to further integration in the region.”
European fascism did not end in 1945. Dictatorship had a strong grip on much of Europe into the 1970s.
Older readers may remember when a holiday in the southern European sun meant fun in a fascist dictatorship.
Greece was run by the sinister colonels. Portugal was under the thumb of Salazar who suppressed the population with his vicious secret police the PIDE. And General Franco still reigned in Spain.
These were countries run by dictators with torture chambers.
The Portuguese regime was so rotten that when Salazar had a brain haemorrhage it installed the new dictator, Marcelo Caetano.
However, officials were still so scared of Salazar, even in his decrepit state, that they didn’t dare tell him he had been replaced. So Caetano ordered the real secret police around, while Salazar was allowed to believe he was still dictator, issuing pointless fascist commands to flunkies.
The Greek colonels and Caetano were overthrown by revolutions in 1974 and 1975. Franco died in 1975.
The dead Generalissimo’s supporters saw where the wind was blowing.
Even after years of Francoism there were still brave underground fighters who could lead a Portuguese or Greek-style revolution, so the Francoistas arranged a transition to democracy.
But according to JP Morgan, all these anti-fascist shifts went too far.
The bank’s eurozone commentary says: “The political systems in the periphery were established in the aftermath of dictatorship, and were defined by that experience. Constitutions tend to show a strong socialist influence, reflecting the political strength that left-wing parties gained after the defeat of fascism.”
The bankers complain that countries which overthrew fascism have “constitutional protection of labour rights” and “the right to protest if unwelcome changes are made to the status quo.”
JP Morgan also worried that fascism was replaced by “weak central states relative to regions” and “consensus-building systems.”
Not enough fascism, too many workers’ rights and too much consensus – how are bankers supposed to squeeze money from the masses in these outrageous conditions?
For JP Morgan, the “shortcomings of this political legacy” – the legacy of overthrowing fascism – is in the way of “fiscal and economic reform.”
Sometimes people argue that capitalism tends towards democracy – well the capitalists of JP Morgan don’t believe that.
So who would spend any time breaking bread with the fascist-nostalgic bankers?
Step forward Alistair Darling. Many Labour supporters in the media say Darling should be drafted in to replace Ed Balls. They think he is a nice avuncular Scot. But Darling is far more popular with bankers who know how much they owe him for bailing out their system with huge amounts of ordinary folks’ cash.
Darling has a very lucrative part-time job doing after-dinner talks for the bankers who caused the financial crisis.
In the current register of MPs’ interests Darling says this includes £15,300 for doing a turn for JP Morgan in May. Darling says the talk only took four hours, including preparation time.
Maybe Darling didn’t know about JP Morgan’s yearning for fascist values.
But there were still plenty of reasons not to turn tricks for the bank.
In 2012 JP Morgan lost around $6 billion through absurd, risky deals made by a British-based trader known as the “London Whale.”
This sent shockwaves through the financial sector because it showed that even after the crash banks were risking the financial system.
JP Morgan made the problem worse by attempting to cover up the scale of its screw-up.
Earlier this year US Senator John McCain issued a highly critical report, saying JP Morgan had “gambled away billions of dollars through risky and exotic trades, then intentionally hid its losses from investors and the public, showing complete disregard for risk management procedures and regulatory oversight.”
So a leading US Republican like McCain can tell it like it is about JP Morgan, but Darling prefers being its paid pal. Darling has already earned around £64k this year doing gigs for financial firms.
He is in suitably bad company with JP Morgan. Tony Blair’s biggest post-prime ministerial gig is working for JP Morgan, widely seen as his reward for the contracts they got in postwar Iraq.
Just to bring things full circle, Blair, like his new employer, doesn’t think capitalism and democracy always mix. In an Observer article Blair backed the Egyptian army’s coup – not least because of tensions between capitalism and democracy.
Blair was worried when he spoke to Egyptians after they overthrew Mubarak and found: “In so far as they had an economic idea, it was well to the old left of anything that had a chance of working.” Blair wants to “help the new government” – the military one – “make the changes necessary, especially on the economy,” which will be “tough, even unpopular decisions.” Unpopular with Egyptian people, but presumably popular with JP Morgan.