I'll be honest: except for Marxist theories about capital and exploitation, I generally eschew any discussion that covers banking and that huge, murky industry known as 'finance'. This is a weakness on my part, I'm sure: a true socialist should be well versed in the movements of capital and cash. And much as I hold the FT to have some of the best reporting about Spain that you'll find in the British press, I find it difficult to understand what its market journalists are writing about.
So it was with some dread and awe that I read this blog post concerning the state of Spain's two largest banks, Santander and BBVA.
Apparently, it's pretty obvious that these two large banks are hiding massive liabilities which, if suddenly exposed, could cause the Spanish economy to collapse. Ignore the bullshit on that blog about 'racial pressures' and you still have a coherent case that decries the secrecy behind the apparent miracle of Spain's two massive banking success stories. And it makes sense: how could it be that these banks could be 100% safe when their American and British counterparts have received billions of Euros in bailouts?
I therefore invite finance-minded readers of this blog to tell me just how precarious our situation here really is. Are we fucked? And if so, to what degree?
The Spanish government has moved to 'bail out' the first banking institution to fail in Spain during the current financial crisis.
In Spain, we have banks 'bancos de credito' and building societies 'cajas de ahorros', with the building societies being the most common place for Spaniards to keep their money. There are tons of building societies here, and the Caja Castilla La Mancha (CCM) isn't the largest by a long way (I believe that this honour falls to La Caixa d'Estalvis i Pensions de Barcelona, 'La Caixa'). In fact, CCM is apparently the newest of Spain's building societies. All the same, news of troubles at CCM suggests that the building society system here, much touted as being safer than those in other European countries, isn't quite as cast-iron as we'd been led to believe.
I bank with La Caixa (well, I have my salary paid there: I don't get involved in anything more complex than having a credit card), and I will be damned annoyed if it appears that the Barcelona bank is in trouble too. The amount they charge me for basic services....
Let's hope that this so-called bail out means that normal customers don't end up losing any of their cash. But shouldn't we be pushing for a full nationalisation of the banks? I feel a poll coming on.
An interesting story from America. It seems that the Bank of America, which essentially underwrites the firm in question has decided that its massive bailout ought not to be spent on paying wages.
As previously mentioned, the 20 largest economies meet this weekend to 'fix the world financial crisis' and 'stop it ever happening again'. With people like Gordon Brown arguing that laissez-faire free market capitalism has died a death, can we really expect anything to change as a result of the summit or will the result be more of the same, please!
The question is simple. Will the G20 Finance Summit achieve anything? Possible answers are: Yes, No, or I would rather have polls about Catalan. Vote early, vote often.
The people behind the Crisi newspaper are calling a protest against this weekend's meeting of 20 major economies. If you're interested in taking part, check for your nearest demo point here (there are 70 around the world Spain, plus a couple more in cities further afield).
Spain protests taking place:
Barcelona - Plaça Catalunya
Madrid - Puerta del Sol
Valencia - Plaça Ajuntament
Bilbao - Centro Civico de la Bolsa
Sevilla - Plaza Nueva
(and more). It's worth noting that if you do want to take part, you'd probably be better off joining the protest in the largest town you can get to (i.e. Barcelona, not Sabadell).
Spanish PM Jose Rodriguez Zapatero will attend the global financial shindig, to be held next week in Washington D.C. Spain's presence has been made possible by French President Sarkozy's offer to allow Zapatero to have one of the two seats he had to fill, in his capacity as EU President.
The last-minute success for Zapatero will be considered a real coup for the PSOE leader, who had staked his reputation on getting an invite to the summit, which President Bush had done much to prevent. Bush, in a classic display of the shallow vindictiveness that has marked his disatrous eight year presidency, seemed determined to stop Spain from attending because he and Zapatero have a strong mutual animosity, based on differing opinions on democracy and illegal war (Zapatero supports the first but opposes the second, a point of view Bush seems to find sickening).
Whether Zapatero's presence means anything for Spain other than yet another lost chance for the PP to win some political points (they don't have actual policies so they tend to thrive on mocking the PM's world standing), remains to be seen. I see little chance that the summit will come up with anything different to "more of the same", given that all the attendant parties are committed to the global capitalist system. It would have been nice if the organisers could have invited members of labour organisations but they probably wouldn't even have made it through immigration controls.
This is a brilliant story.
Basically, this guy claims to have defrauded several banks and Caixas (savings banks) of €492,000, purely in order to prove how easy it was to do. He used the money to publish 200,000 copies of his free newspaper, Crisi, which denounces the world financial system for inefficiency, dishonesty, living in a make-believe land and causing poverty and famine throughout the world. The money not spent on the Crisi newspaper project was given to charities and NGOs. And the author has also fled Spain (understandably) and will only return when his crimes have been pardoned.
The author couldn't really have timed this better as the world's financial markets are still reeling from the largest crisis since 1929, and the insurance giant AIG has just been nationalised by the US government (something they refused to do for Lehman Brothers just the other day).
Opinion is divided on who exactly is to blame for this calamitous situation. I think it's obviously the bankers' fault as they're the ones playing with imaginary money, things they don't own and other things which they invent the value of. Banking analyst, Diana Choyleva made the incredible claim on Monday's Newsnight that central banks (and therefore, by extension, governments) were to blame for the crisis because they had allowed a long period of low policy (interest) rates to occur, they allowed a situation to develop whereby bankers felt almost obliged to take more and more risks. In other words, bankers are nothing but irresponsible risk-taking children with no control over their actions, who need to be reigned in better. I'm not sure how well that will go down with her banking chums.
Actually, there have been a lot of people who put this entire crisis down to poor or ineffectual regulation. Yes, the very same regulation which was previously railed against as strangulating and diametrically opposed to the 'ethics' of neo-liberal free market capitalism. Of course, the real problem is the system of so-called free market capitalism. From inventing vast amounts of 'value' where no true capital exists, to deregulating money markets, this socio-economic ideology has done nothing more or less than place the fate of pretty much every living person under the direct control of three unelected, practically unseen organisations. The International Monetary Fund, the World Bank and the World Trade Organisation are the tripartite leadership and main proponents of this ideology, and they are all wholesale controlled by the United States government.
If we are ever to escape this inherently unstable and totally illusionary cycle of boom and bust, it will not be, as Gordon Brown thought, via the means of free market capitalism which is, after all, the name of the problem itself.
The US has recently been involved in a truly disgraceful campaign of provocation and manipulation in the republic of Bolivia. While they have been vociferous in their condemnation of Russia's occupation of South Ossetia, the American government have been actively promoting independence for the region of Pando, centre of opposition to Bolivian president Evo Morales.
Now, fresh news arises about "fascist" assaults on state infrastructure and peasant markets in Santa Cruz, Pando, as well as other towns and cities outside the region. The death toll as a result of these attacks is officially 28 but there are reports of bodies on roadsides and dumped in the country: the number of dead really isn't known.
But it's not just the US who are to blame for fanning the flames of insurrection in Bolivia: Brazil has already agreed to do business with an independent Pando, assuming they control the region's mineral reserves.
There are fears that the right-wing led disturbances migh lead to a coup d'etât in Bolivia, an event which would surely benefit Bush's government. It seems clear that strikes and martial law will do little to subdue the far-right attacks... with the support of the US, expect Pando to be a class war zone for quite some time.
"I will admit, though, that Zap's regime has not been dreadful; he hasn't tried to nationalize the banks or anything."
"...you get kicked out of the EU if you do something like pull a military coup or nationalize the banks."
"One man's speculation is another man's investment. What do they want, the government to nationalize all real estate?"
...
US housing crisis: Freddie and Fannie are nationalised
Some time back, I spent the best part of a year living in Australia. The majority of this temporary residence was spent living at Gun House, a military residence in Fremantle, Western Australia. I was an exceptionally lazy young man and spent most of this 'gap year' spongeing from my father and stepmother, listening to music and chatting with girls rather than finding gainful employment. I like to imagine that this is what most 19 year-olds will do, given half the chance... but I was probably worse than most.
The only job I did during my 8 months in Fremantle was a 3 1/2 month stint working as a door to door salesman for Primus, a company which offered cheaper phone calls in comparison with Telstra, the Australian national phone company. I'd like to state for the record here that we weren't selling moon dust or snake oil. There was a genuine opportunity for people to save money on their phone bills by opting for another company when phoning interstate or overseas. That said, I probably would have done the job even if it was a scam. It was one of the best, and one of the worst, times of my life. I've been thinking about it again recently, so I thought I'd try to collect my memories of the time.
Aparna, my stepmum's cousin helped me get to the interview which was somewhere near the Northbridge district of Perth. I know that as part of her task to help me settle in in Perth, she had also to try and get me employed. I turned up at the interview in baggy jeans and t-shirt and although the interview was full of warnings about hard work, commitment and so on it was pretty obvious from the start that if I could write, recite the pitch and above all, walk, then I had a job. They asked me to start immediately and so the next day, I was there in cheap trousers, cheap shirt, cheap tie and trainers. My training consisted of half an hour's orientation and then we were in the car. There was myself, Will, an ambitious Cambodian-born Australian and a couple of other guys who were just starting out.
Will was my mentor for a few days, taking me along with him as he convinced the citizens of one district after another to sign up for cheaper interstate calls. As we started our beat, he immediately criticised my tie, letting me know that it looked cheap. He was wearing a $100 suit, with a nice tie and probably some cufflinks. His shoes (every door to door salesman needs strong, easily polished, durable shoes), were sturdy but showed signs of wear. He signed about eight households up to the service, using the same pitch each time, "Good afternoon, my name's Will and we're just in the neighbourhood checking that everyone's signed up with Primus for cheaper phone calls. Oh you haven't? Well I'll tell you about the service and then we'll get the paperwork sorted". The pitch was cunningly engineered to make people think it was something that they'd almost forgotten about. Something they'd meant to do, even if they didn't realise or remember.
I can't be sure but I suppose we visited a hundred houses or so each day, of which we were expected to sign up about 12-18. Each sign-up was worth around $12 to us, on which we paid no taxes or social security ('self-employed contractors' as we were). We used the same pitch on each house, giving the person who'd answered the door little chance to speak or even think. We launched straight from the pitch into the sign-up process as an attempt to get the hapless customer to believe that they'd already agreed to the deal. Sometimes that worked and other times, we'd have to answer their questions about how much it would cost to call Adelaide, Melbourne, Sydney, England, China, India, New Zealand or Vietnam.
It wasn't hard to pick up the pitch, or the attitude you needed to use with it. Grinning, chuckling, smarmy comments and winks were, perhaps surprisingly, as useful as they are in the movies. I guess that having grown up in Devon, where very few (if any) salesmen came to the door, I was more surprised by the way the stereotype really applied than I would have been had I grown up in a big town.
Every day at about 11am, we'd leave our office near Northbridge in Perth and set off for the suburbs. We worked from Rockingham to Two Rocks, and covered much territory in between. Some areas we covered were well-to-do districts (not great for doorstep sales), some were fairly built-up (lots of flats equals lots of sales) and some were low-income outer suburbs (redback spiders above the doors). I saw it all, from swarms of bees to bored housewives, from kangaroos to gold miners (a trio of whom once insisted on giving me a bong before they signd up... I was so stoned for the rest of the day that I didn't make any more sales in the remaining two hours). I stopped at Aboriginal houses which were empty, as all life went on in the garden, and plush beach villas, most of which were empty just because it wasn't the holidays. But most of our targets were in the low-income white suburbs... these were the people who really wanted to save money, after all.
Abuse was a fairly common thing. This ranged from the odd, simple "Fuck off!" to a man threatening that he'd "have [my] balls for breakfast", to an Asian colleague being chased down the street by a gentleman with a metal bar. Some triad boys once threatened me with knives. But I also experienced a lot of kindness. The kindness of strangers is, to misquote, oddly reliable. I was treated for sunstroke by a kindly widow, I was given a bellyful of beer by a couple of proper ockers who asked me what I thought of their wives; I was given a cuppa and a chip butty by some Yorkshire expats. In fact, kindness definitely outweighed abuse. But abuse gets to you.
What really ended up pissing me off about the job was my colleagues. Some of them were lovely: Simon, a fellow Englishman who became a good friend, for example. But then there were the wide boys, like Miguel and Jermaine. These two wanted to be gangsters (one of them probably is now, if he's not dead), and pushed my patience to superhuman levels. And my boss, Alex. This guy was getting about $16 for every sale I made. For every sale I got $12 and he got $16. A good business for him but utterly demoralising for me.
All we did with our pay was drink, party and eat fast food. We went to a karaoke bar called Seoul Karaoke and nicked bottles from the storage area by the loos. Everyone took speed and ecstasy at the weekend and many of us would start work hungover... it was a highly unhealthy lifestyle. And that's without mentioning my unpleasant experience with Rohypnol.
I'm not sure why I've written this, other than to relive an experience I'll hopefully never have to go through again. If any prospective door-to-door salesmen read this, I have one piece of advice: if you must do it, do it. But get out as soon as you can. Doorstep sales is a depressing, dehumanising job.
What's the worst job you've ever had?
Warning as HSBC profits fall 28%.
That'll teach the buggers for still insisting that I owe them money (I don't).
Those of you struggling to meet your mortgage payments, terrified of what might happen if food and fuel get even more expensive, calm down! There's a man here who'd like to show you that it's not all doom and gloom.
Donald Trump, a well known and very rich man, has just sold his 5km sq. beach-front property to another very rich man for a record breaking $95 million. Trump said of the sale:
In an age of so many people getting hurt in real estate, it shows that you can still do well in real estate. I think it's a great sign for the area, a great sign for Palm Beach and all that Palm Beach represents.
So next time you start to moan about your rent and food bills going up, or the fact that you can't take a holiday this year, just remember: maybe if you worked a little harder, you'd be in possession of a $95 million mansion in Palm Beach. Think on.
(Coming next week: I will explain why banks deserve billions of dollars of government handouts but the working poor don't. And I'm reliably informed that Iberian Notes isn't frothing at the mouth about 'nationalising the banks' which always used to be his yardstick for the end of the world and the rise of the Bolshevik terror. I guess it's OK when it's done by people with whom you share what amounts to being a kind of a political philosophy).
US investment bank Bear Stearns begs for government bailout.
Meanwhile, Bush says he's "confident that the economy will improve soon". Well of course he is. He knows absolutely nothing about how it works.
So Fidel Castro is finally stepping down this Sunday as president of the council of state, and commander in chief, of Cuba. It now looks pretty much certain that his brother, Raúl will be invited by the council of state to become president.
This move could well lead to a wide range of economic changes in Cuba, though we'll have to wait to see how far they'll go. They can't exactly adopt the China model but I reckon that Cuba can find a way to renew the revolution while improving the living conditions of its citizens. A more even-handed approach from the United States would help them with this.
In other news of Marxist-Leninist insurgency, the Northern Rock bank will finally be nationalised at some point this week. Seeing as British tax payers were guaranteeing the bank, it's pretty sad that it has taken months for Alistair Darling to follow my (well, Lenin's) advice. I remember that Iberian Notes used to use 'nationalising the banks' as an emblem of the terrible things socialist governments can do. One presumes that New Labour's nationalisation of a bank that nearly collapsed because of the instablity inherent in the capitalist system is acceptable. Business in neo-liberal societies traditionally condemns state involvement in the market, unless it's to pick up the pieces after the whole mess falls apart. And it happens again and again and again.