Yesterday’s Press Editorial welcomed the PM’s announcement on the beginning of National’s privitisation programme for our country’s assets with the words “John Key was able to demonstrate…the value of his background in the financial industry”. Excuse me? Did the Press miss the Global Financial Crisis, where “the over-paid heroes of Wall Street and the City worshipped the gods of globalisation, financialisation and speculation”? The quote is a teaser for the best of the five books I read over the summer break: “The Gods that Failed: How the Financial Elite Have Gambled Away our Futures” by Larry Elliott and Dan Atkinson. The first edition of the book was subtitled: “How Blind Faith in Markets Has Cost us our Future”. The second edition (published in 2009) has an extra chapter, which as one reviewer said could have been titled: We Told You So. The authors of this book are economics editors, Elliott with the Guardian and Atkinson, the Mail on Sunday.
The metaphor that drives the narrative is inspired by the twelve gods of ancient Greece that lived on Mount Olympus. Elliott & Atkinson have styled the super-financiers and the international organisations, (central banks, IMF, World Bank, WTO), the “New Olympians” and the twelve gods of the modern Mount Olympus: globalisation, communication, liberalisation, privatisation, competition, financialisation, speculation, recklessness, greed, arrogance, oligarchy & excess.
“Greek mythology provides plenty of raw material for a book about the failings of modern financial markets. There is the story of King Midas, who found the ability to turn all he touched into gold a curse. The tendency of markets to veer between the wild optimism of booms and the manic depression busts is akin to the life led by poor Persephone, condemned to live every six months of every year in Hades. But Pandora – a gift from the gods whose beauty belied her baleful influence on the lives of mortals – makes the best metaphor.”
As they said August 9 2007 was the moment the lid came off the modern version of Pandora’s box. And the rest is history, which is why I believe this book must be read, because unless we learn the lessons of history, we condemn ourselves to repeating it.
This book is well-researched and easy to read. It contains a chapter called ‘Last Tango on Wall Street” which has a very simple explanation of how the New Olympians (our Prime Minister’s background the Press values so highly) found ways to make money out of nothing – creating securitised financial products like “collateralised debt obligations” out of the subprime market and then hiding the risks behind AAA rated institutions. The New Olympians made personal fortunes with bonuses they never had to repay when it all turned to custard. And they were happy to see the taxpayers pick up the tab for their trillion dollar insanity.
I conclude with this quote: ‘Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation’. That was John Maynard Keynes in 1936. When will we ever learn?
What ever happened to “axe the tax”? Is that no longer Labour policy? I’m not trolling, ita a genuine question. If it was important enough to get on a bus a travel the country talking about how awful it was, why haven’t we heard the definite policy that it will be back to 12.5% if Labour wins? Or is the truth that we can’t afford to drop it, and it is, an “inconvenient truth” (apologies to A. Gore).
Actually the National government have restructured the tax system’ and are restructuring the. Economy for the benefit of the many.
They have not, if they were serious about restructing the economy they would have included
1) a capital gains tax
2) Created a tax free threshhold
3) Reviewed the Reserve Bank Act
But oops Labour and the Greens are rolling out these transforming policies that will change our economy for the good of all.
National are stuck in the economic and ideology of the past or as Paul Krugman puts is zombie ideas.
http://www.nytimes.com/2010/12/20/opinion/20krugman.html
No rich that is what a labour government would do. National likes to let people who earn the money retain as much as possible and hopefully grow the pie, not cut it up into smaller and smaller peices
Yes Labour will grow the pie and share it around.
National have no clue on transforming our economy because they are hog tied by their ideology of small government and no intervention.
Smart state intervention, like we see in OZ and Singapore creates new wealth for everyone; not just those at the top of the pyriamid.
That is exactly how most Kiwis are feeling about these asset sales; it is just a big pyramid scheme designed to take the wealth of the nation and concerntrate in fewer hands.
It is hurting President Key’s brand, I predict a slip in Nationals rating in the next big poll.
I love it how the left has tried to turn the word “elite” into a bad things, to use a quote,
“If I need surgery, I want an elite doctor”…
Like how “liberal” now refers to socialists instead of believers in freedom like it used to…
And I’m sure there are more than a few that voted for key last time that will remember how he broke his promises and is nothing more than a fraud.
I love it how the right has tried to place the disproportionately better off and greedy on the same level as elite doctors.
If I need a fair, balanced tax system, I don’t want a nat government.
Thanks everyone for your comments – a lively debate. I really must post more often. I do recommend that people read the book. @sofstarter – yes the book does detail the role of governments and is scathing about the effects of the deregulation over the years.@Huginn – I read the Open Letter from Brian Gaynor at the time and met with him to discuss it. My point was that Labour had inherited a regulatory wasteland when we became government in 1999. We had a Takeovers Panel whose annual report was a statement of the membership of the panel on an otherwise blank piece of paper – they didn’t have a Code to enforce. That left minority shareholders – the mum and dad investors that National pretend they are interested in – without the same rights as the majority shareholders. We regulated the financial markets step by step… including securities markets legislation with provision for registered exchanges (a co-regulatory model between the NZX & Securities Commission, insider trading, market manipulation…the list goes on. (The $20M Tranzrail settlement the Securities Commission negotiated would not have been possible before our changes). The Review of Financial Products & Providers was a major task (9 discussion documents involved) – launched in 2006 and decisions announced in June 2007 – within weeks of the announcements Bridgecorp fell and the rest is history. We were regulating as fast as we could – but for those who lost their life savings, it was never going to be fast enough because the die was already cast.
I really do recommend you all read this book. It is a “when will we ever learn” message. The ‘financial elite’ referred to in the book do not create wealth. There’s an old saying ‘to make real money, you need to make real things’. The book does not advocate the end of capitalism – the book says that a mixed economy produces a much better result for countries than the neoliberal agenda, which includes privatisation, and which is being forced on country after country by the IMF & the World Bank, despite the impact it has had.
I reckon making 70 odd million a year, controlling portifolios in the 100 of Billions dollars puts you in the elite.
Having the ability to manipulate nations currency, bond markets and having unrivalled polital access (Davos) puts in in the stratosphere.
Not like any of these blokes is my local kiwi bank manager like your suggesting with your doctor example.
Not really a left term, probably just descripitive in this case.
Updated editorial now available at:
http://www.stuff.co.nz/the-press/opinion/editorials/4616688/Bold-steps-by-PM