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A short history of banks and democracy


The unfinished European crisis


Five long years into its worst economic slump since the 1930s, the European region now resembles a boiling pot of contradictory political trends, most of them traceable to the past misconduct of banks and bitter fights over their future. From a distance, it’s hard to grasp the scale and intensity of this worsening crisis, or the deep public disaffection now directed against banking and credit institutions and their government protectors.


The shock and anger among citizens is palpable, for instance in Cyprus, whose offshore banking system has effectively been terminated by an EU bailout deal, for which not one member of the local parliament voted. In Greece, criminal charges have been brought against Andreas Georgiou and other officials responsible for overstating the country’s debt, so contributing to the implosion of local markets and compounding the public misery caused by enforced austerity. Deutsche Bank, Germany's largest bank, is subject to a new investigation of claims that it falsely valued credit derivatives so as to avoid a government bailout by concealing losses as large as $12 billion. In Spain, the cajas (savings banks) have all but disappeared and their consortium replacement, known as Bankia, has crashed, leaving behind a trail of wreckage. In Britain, uproar has greeted revelations that nearly 100 top executives of the Royal Bank of Scotland, which is 83% owned by taxpayers, were last year awarded pay rises of a million pounds, despite the fact that its quality of service is poor and its internal computer systems have suffered from prolonged collapse. Public disaffection with the state-owned bank has been compounded by its conviction (by the British state!) for fiddling the bank inter-lending rate (LIBOR), and by the sizeable fine it has been forced to pay, at taxpayers’ expense.


Given such obscenities, for that’s what they are, it comes as no surprise that the quaint old reputation of bankers as uncorrupted local men prone to dapper eccentricity, but fair-minded in their disbursement of money, has been blown apart. In more than a few European countries, the neologism ‘bankster’ is now a popular term of abuse. It was probably first used in Italy, where the oldest bank in the world (Monte dei Paschi di Siena) has been bailed out with state funds (4 billion euros) paid for by taxpayers. ‘Once there used to be gangsters’, joked BeppeGrillo, well before the onset of the present banking crisis, and his recent stunning electoral success. ‘Today, we have banksters’. Since then (1998) he’s regularly hurled jokes at thieving bankers, often comparing them to dogs, who at least can be trained to return things honestly.

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