The subprime turmoil
How many simple ideas we hear these days in France about the financial crisis! Newspapers and politicians are outdoing it to denounce “the absence of regulation”, demand “the return of the State” and denounce the harmful role of tax havens. Problem: none of this holds water. Absence of regulation: nay! The financial sector is one of the most regulated in the world. The problem is not the non-existence of regulation, but its quality. Sarbanes-Oxley accounting rules, developed to prevent another Enron-style scandal, did not prevent Americans from over-indebted to buy homes that are no longer worth much today. Apart from finance, sectors such as food, chemicals, energy or public works are massively regulated (…). You have to have read too many ATTAC brochures, or Sarkozy speeches, to believe that the “crazy market” is not subject to any control. The “return of the State” requested by Nicolas Sarkozy or François Hollande is therefore an absurdity… because it never left! The liberal ideology of a Reagan or a Balladur did not prevent them from bailing out banks in their time (Savings and Loans and Crédit Lyonnais). The question is rather which bank to save, which financial sharks to let go, and how to prevent the kind of industrial accident we are witnessing today. And tax havens? Hitting them is fair game, but years of work by various international institutions have failed to demonstrate that they play a central role in the event of a financial crisis. Subprime loans and the banks which financed them are not found in Liechtenstein or Monaco but in the United States, Great Britain… or France. (Blog “L’Air de Paris” from the Journal “Le Temps”, 09/30/2008)
We can only subscribe to this analysis entitled “Torrent of nonsense about the financial crisis”. The fact is that some are trying to take advantage of the large-scale crisis which began to develop in the United States from August 2007 due to an overabundance of speculative real estate loans and which rebounded in September 2008 in the United States. United again, but also in Belgium, France, Germany, Great Britain, Iceland, and others. To do what? Push their business base which is state intervention. Make people forget their powerlessness to resolve the crisis. Evade their responsibilities in triggering it. Reassure in order to influence. Get more power. Politicians and bureaucrats from the right and the left come together to demand with great unity the extension of their prerogatives, and, moreover, to appear as enlightened and progressive.
This forgets that the so-called “market” economy, like society as a whole, is today massively regulated and surreptitiously directed by governments. We are sick of this constant intervention. It is also forgetting that it is often the same people who trigger the difficulties and who claim to repair them. Thus in the case of Dexia, one of the directors of the bank implicated and who carried out a disastrous purchasing policy without the approval of the reference shareholders was indeed the Frenchman Pierre Richard, a polytechnician linked to the Caisse des Dépôts et Consignations, which is an emanation of the French State. And in the case of Crédit Lyonnais, the chief person responsible for the disaster was indeed Jean-Yves Haberer, an apparatchik from the Finance Inspectorate appointed – not to say boosted – by the French state. As for ATTAC, his speech is only the resurgence of an old Jacobin schema: it would be “enough”, for everything to go better, to regulate and tax capital movements, THEREFORE to establish an embryonic international state. Hell of course…
This type of idea will always be easier to pass in circumstances of acute crisis, where demagogues present themselves as saviors thanks to the effects of voluntarist rhetoric. This is the case with the old authoritarian idea of economic government of Europe, even nationalization of key industries (we are saved!), or even with the unleashing for fiscal reasons of the French and German governments against Switzerland and Luxembourg – an attitude which is not new and cannot be explained by the financial crisis, which it simply uses as a pretext.
We can wonder to what extent the haste of governments announcing ever more disproportionate measures has not largely contributed to the panic of the stock markets.
The question is not to choose between the free market and the regulated market. This old swing is simplistic. It locks us into a false alternative: either a false liberalism for the benefit of privileged groups, or a false socialism in bureaucratic fashion.
The social market economy constitutes a third way. It consists of raising the level of social capital so as to make possible increasing self-regulation of socio-economic actors.
