Travis Kelly Free Press 28 September 2012
According to the conventional wisdom universally voiced a few years ago, Iceland should have sunk into the ocean by now, an economic Titanic beyond hope of redemption. Because, unlike the U.S. and most of Europe, Iceland refused to bail out its nest of banksters, who had run up liabilities 11 times the size of the nation's whole economy.
Instead, Icelanders let the free market system operate as it is supposed to do; the banks failed and suffered the appropriate consequence for these bad decisions. No socialism for the investor class.
And an amazing thing happened. Iceland did not sink into the ocean.
According to Bloomberg News: “Iceland holds some key lessons for nations trying to survive bailouts after the island's approach to its rescue led to a ‘surprisingly' strong recovery, the International Monetary Fund's mission chief to the country said.” IMF chief Christine Lagarde hailed Iceland's recovery as “impressive.”
Another thing Iceland did that we did not do: Arrest and prosecute the pirates responsible for all this misery. Several bank CEOs and the prime minister in Iceland were indicted for fraud and market manipulation. That move restored trust in the system, and set a precedent to deter future shenanigans that could plunge the whole nation into crisis again. Rather then Hoover up the whole country's wealth into the hands of Wall Street and other foreign investors, Iceland kept the wealth in the general public's hands, stimulating demand for products and services, and the economy is now booming.
Several thousand miles away, another country suffered a financial scandal recently, although not as large as the tsunamis that struck Western nations in 2008. Four of the fraudsters were sentenced to hang, two got life sentences, and others — 39 in total — received jail sentences up to 25 years. The former head of the country's largest bank evaded punishment by seeking refuge in his $3 million home in Canada. Yes, North America loves it “banksters” (banker + gangster = bankster)!
The country was Iran, and the scandal totaled a paltry $2.6 billion.
Meanwhile, in the world Capital of Capitalism, our Justice Dept. recently announced that it would not prosecute Goldman-Sachs for selling investors mortgage-backed securities as AAA investments that it knew were junk because Goldman was secretly betting against these investments. This massive fraud, metastasized in the derivatives bubble, is what cratered the global economy in 2008.
Goldman-Sachs and other Wall Street firms have also been implicated in speculation that has driven global food prices through the roof since deregulation of the agricultural commodities market in 2000, triggering riots and revolution in much of the Middle East. In 2009, when the price of oil doubled to nearly $150 per barrel, causing more economic devastation, it was mostly due not to normal supply vs. demand, but to speculation by bankers. As journalist Matt Taibbi famously wrote, Goldman-Sachs is a “great vampire squid wrapped around the face of humanity.”
The banks paid a few fines — a drop in the bucket, just the very affordable cost of doing shady business. But not a single one has suffered so much as a slap on the wrist from our regulators and Congress critters, most of whom have been simply bought off with the bailout money the taxpayers provided. It's a sweet racket, if you've got the right computer algorithm to spin fool's gold out of straw, with your lackeys in the media and Washington convincing Joe Sixpack that it's really all about “job creation.”
I am not advocating that we hang a Wall Street bankster or two. That would be cruel and unusual punishment — but not cruel and unusual enough!
If not a single one of our banksters is to spend so much as a day behind bars, could we at least bring back the pillory? Public humiliation? I suggest a location in Central Park, with the perp-Lloyd Blankfein, say — stripped naked with his butt facing the thick traffic on Fifth Avenue. I would show up with my airsoft pistol to raise money for some of the homeless victims of this fraud (middle-class wealth has plunged 40% as a result): $50 to shoot a 10-pellet clip! Hit the target 60% of the time, and you get another go free!
If we've learned anything from the last 20 years of scandals, from the Savings & Loan bailouts through Enron and the LIBOR scandal, it's this: Completely deregulated capitalism, like a football game with no rules, inevitably degenerates into anarchy, white-collar crime flourishes, and you, dear taxpayer, are left with the bills and bankruptcy.
Travis Kelly is a web/graphic designer, writer and cartoonist in Grand Junction. See his work or contact him at www.traviskelly.com.