I'm Susan George. I'm the Honorary President of ATT&CK France, and I've been a member since
the very beginning of ATT&CK. I was extremely pleased by the concept. Otherwise, I am the
Board President of the Transnational Institute, which is a worldwide fellowship of scholar
activists of people who are researchers and writers, but they are also active in the social
movements of their respective countries. And I'm a writer. That's my main occupation.
The causes started a long time ago. The whole neoliberal doctrine, which says you have to
privatize everything, and you have to trust to the private sector, and you can borrow
because the market will always go up, and that you must reduce the capacity of the state
to intervene. All of these things that the market will self-regulate because the market
is all-knowing and all-seeing, and it will be in a state of equilibrium no matter what
happens. All of this being complete rubbish, of course. But this doctrine was accepted,
and it has created a huge number of inequalities, but it has also given enormous power to the
financial sector, which now runs the world, basically. I like to describe this as a series
of concentric spheres. I see finance on the outside as being the driving force. It's
driving the real economy, and it is telling that real economy which direction it has to
go. Then those two together are telling society what it must do, and at last, and least important
today, is the environment which is simply treated by the economy and by finance as
a place where we get our natural resources and where we can throw away our wastes. What
is the more recent cause of the financial crisis? In one word, it's debt. In one word,
it is the fact that both private and public entities have built up a great deal of debt.
It is the fact that the banks in the United States took different kinds of debt. They
put them together in a big financial cauldron, in a big financial marmite, and they stirred
them together. There were in that marmite, in that cauldron, there were student loans
and automobile loans and credit card loans, and above all, there were housing loans, mortgages.
They acted as a backup for securities that were created by these banks. They put all
these debts together, they mix them in this big cauldron, they take out the mixture, they
chop it up, and in slices of sausage like that, and they sell them on to other customers
saying you will be paid back, you will get a return of X percent. It was debt and using
debt as the backup for all these toxic securities, these toxic slices of sausage based only on
debt called collateralized debt obligations. That's the fancy name for them because the
collateral was supposed to be all of these debts packaged together. Beyond a certain
point, you can't base an economy on debt. There always has to be a relationship with
the real economy, with how much people are actually making, with what is the distribution
of that money. If you've spent 30 years putting all the money way up in the stratosphere
where the richest people live, you don't leave much for the rest of the society and
you have a lot of people who are extremely borderline and who cannot keep up their payments
under any circumstances. That's why they're called subprime mortgages. The prime mortgage
is for the middle or upper class who can afford to make a payment every month. The subprime
is under the prime and they were simply unable to pay. Even throughout the 60s, there were
regulatory agencies or there were semi-public companies like the mortgage companies, Fannie
May and Freddie Mac, which you've probably seen their names in the papers. There were
public enterprises that were supposed to keep all of this ticking over and not get out of
hand. But the banks spent a lot of money. The best calculation I've seen is they spent
about five billion dollars over the years getting rid of this legislation. They got
rid of 12 major barriers to their full expansion. Of course, the politicians like Bush put people
in the regulatory agencies that didn't think regulation was a good thing, so they sat on
their hands. They didn't do anything. Maybe the worst in terms of the world situation is
that they got rid of a law which regulated the commodities markets, in particular the
wheat, corn, soya, all those crop markets. When the big speculators, the hedge funds,
the banks, all of the people with a lot of spare cash, figure out that the subprime market
is going to crash. They get out of that market and they go into commodities and they buy
huge numbers of wheat or soya or corn contracts. They don't have any intention of ever taking
delivery on all that wheat, but they think that they can make a fast dollar out of it.
For example, one day in 2008, the price of wheat went up by 31% in one day. Now, this
is not a question of supply and demand. This has nothing to do with the underlying commodity,
and this was a tragedy because that meant that there were hundreds of thousands, millions
of people in the world who were having to pay suddenly twice or three times as much
for their staple food because the United States dominates the market and it fixes the world
price, basically. This was a tragedy, but it was also because the so-called Commodities
Markets Modernization Act, whenever they want to deregulate, they call it modernization
or reform, just deregulated the whole industry.
The case of Iceland was one in which a private bank, two major private banks, were selling
a lot of securities saying that they were going to give high percentages and they marketed
these things, particularly in Britain and in Holland, and some gullible people just put
a whole lot of savings into them. It was a pyramid scheme. They would pay back their
first customers with what they got coming in regularly. Once again, the main word to
remember is debt. They created debts for themselves, which they said they would reimburse them
at fantastic interest rates. The naive investor put money into that, and then, of course,
there's a point when those banks collapse. The Icelandic people were very wise to reject
paying back to the British or the Dutch or to anyone else the fact that these banks had
behaved in a totally irresponsible manner.
Goldman Sachs is accused of fraud on the Greek case, that they bet against the Greek bonds,
complicated financial mechanism, but it came down to the following. Let's say that I can
buy an insurance policy on my neighbor's house, and then I burn down that house, and
then I get the money from the insurance company. Well, that's illegal, of course, but it's
not illegal in the financial world. The banks have been betting, and Goldman undoubtedly
did this. They're saying, no, not at all. We are doing the Lord's work. We are totally
honorable citizens, but it's clear that they were betting against the Greek debt, and they
were in the position to take out insurance that the Greek debt would go down, and they
was like a self-realizing prophecy. When the Greek debt exploded, they made a lot of money.
They burnt down the house, and they collected the money.
It's hurting people's lives. It's reducing the quality and the quantity of public services.
The government cannot continue to pay for the banks, but also provide for a welfare
state. Of course, it's the people who are paying. It's always the people who pay. It's
always the weakest link. It's not the minority with power. It's always the weakest part of
the society, unfortunately, until citizens get organized and get mad and get mad together
and put pressure on their governments. They will do as little as possible. Let's not forget
that our governments are also very close to the banks. Certainly, the German government
and the French government are much more interested in what happens to the banks than they are
in what happens to ordinary citizens, unfortunately, but that's the reality of politics today.
We don't have to solve the banking crisis in this way. What I propose is that any bank
which has received public money is socialized totally or partially and that there is a mandate
that they must henceforward devote x percent of their portfolios to loans to small and
medium businesses and to people who have an ecological project, because we know from
several reports that it is the green economy that will provide the solution to the unemployment
crisis. I think unless we can get the banks under control, but we're a long way from
that, that we will continue to let them run amok. They will make their own laws, which
is what they have been doing for the last 15 years. You know what? They're already
selling the banks. They're buying up insurance policies of terminally ill people or people
who are old and really sick. Statistically, what they're counting on is that these people
will die quite early and they will make enormous profits. They are now selling these things,
the way they sold collateralized debt obligations on subprimes or on whatever other kind of
debt. They will continue to invent these exotic products and they will continue to find ways
to commodify everything. I think commodifying sickness and death is going pretty far. Unless
you get that sort of thing under control, unless you say that credit default swaps are
illegal, unless you say you can't buy the equivalent of an insurance policy on your
neighbor's house, burn down the house and collect the money, unless you can do all of
that, they will continue to invent ways of enriching themselves. If you open the door
and you let the children into the candy store and say, you know, stay here and eat as much
as you want, that's what they'll do. Already last year, Goldman Sachs, which is now the
bank everybody loves to hate, but last year, there were 131 working days where they made
over $100 million during the day. So, I mean, you can either say, okay, Goldman, you can
go on doing that, or you can say an enormous number of these products have no social value
whatsoever, on the contrary, and you can get them under control. But I see very few signs
that the G20 is taking any of this very seriously. They will regulate around the edges because
people are angry, but they're not going to do anything basic. So, we'll come to another
video crisis sooner or later.
