So the Tories (sort of) have got into power the the mantra of the coalition government is cuts, cuts, cuts. What is hard about all this is that there are so many factors at play and so many issues that are woven into the issue that it is hard to unpick what is what.
Its also why we're all looking for easy stories that explain it and easy fixes that will solve the our woes. Problem is, that I suspect there are none. The whole thing is a monstrous fuckup that is getting more fucketyuped day by day.
I'm been trying to make sense of it all myself - and in trying to make it touches on other political beliefs that I hold - which also need to be re-examined, that the whole thing becomes a mess in my head. In short, I'm getting nowhere trying to understand the whole and what we should do about it. So this article is an attempt to make sense of it.
So I'm going to start with some of the basics...
What the fuck happened? Here is my understanding of it: Back in 2006 everything seemed business as usual with the leviathan global economy. However what most of us did not know then was that a series of complex financial products that were being brought and sold for many years, where in fact highly unstable investments. Investments that many mainstream banks had put lots of cash into. Once conditions in the global economy ceased to favour these risky investments (mainly due to a loss of liquidity) then they started to explode in the faces of whoever held them at that point. This in turn triggered a series of other conditions that in turn triggered other mini-crises and so on and so forth until it became a huge financial crisis. Faced with a meltdown of the underlying baking system, most governments responded with bailouts . Pouring billions into the mainstream banks fearful that if they did not the wave of triggering crisis would go on and on.
However this is where the complexities start to mount. Many cited the lack of regulation of the financial markets as the problem. Other claimed too much regulation was the problem. Some claim that without the bailouts, it would be much worse. Others claim that the bailout are perpetuating a rotten system and we should have let the banks fail. I have no idea as to the correct answer. Try to get your head around all the variables that you would need to understand to get a clear answer and the scale of the problem of understanding becomes apparent; regulation, speculation, the shadow banking systems, trade deficits, exchange rates, commodity prices, GDP, interest rates and more - and for each country that was a player in the drama - the US, China, UK, Germany, Greece, Japan and so on... That's just the stuff we know about - what was the impact of the costs of all the wars (Afghanistan, Iraq, Congo, Colombia, Palestine etc...) ongoing in this? Where is the role of peaking oil supplies in all this? Climate change? Shifts in global power? Technological change? Ecological damage? Human population growth?
Its a quantum mechanics of an equation to try and understand it. Put simply, us humans tend to only be able to follow a few threads of a story. We seek to find a simplified way to understand it all then relegate those bits we can't have the space brain-space for as minor variables in the whole. This is not because the evidence suggests that this is what we should do but because we don't like to think that we are wilfully ignoring something important, so we just find a way to rationalise ignoring it. "The real issue in all this is..." "What most people don't get is..." "The important factors in this crisis are..."
Just because something has not featured in our analysis of events, does not mean it was not significant. Indeed, each of us (me included) carries a set of cognitive filters in our own head (called
Selection Bias) that means we tend to pick things as important not based on the evidence set before us, but because of pre-existing prejudices, political views and emotions.
So the bankers are unlikely to fully consider
a Marxist view of what happened and why. But an anarchist is unlikely to consider the evidence that
if the state had not bailed the banks out, it would be much, much worse now than it is. Capitalists are going to wave the free market around as a solution to all the problems and anarchists will point to mutual aid as the only way out. Given the number of variables and variable-variables, how could any of us know? Who'd be willing to risk finding out?
Here's how I understand it... The UK government debt
is about £1000 billion and the state borrows about £160 billion per year. Officially we spent
about £850 billion bailing banks and the like out. Unofficially this figure may be higher; possibly
over £1000 billion. It is more complex than this - we now own big chunks of banks and we have had some of the money paid back...
Either way, the figures seem to suggest that if we had not have to bail the banks out, we'd not be in the mess we are. So why don't we hear much (if anything) about the financial sector doing anything to help us out of the mess they so clearly contributed towards?