By Michael Meurer
Friday, 12 October 2012
The neoliberal utopianism that caused the financial crisis has been repackaged for the 2012 election, where it masks a giant swindle that transfers wealth from low- and middle-income citizens to bankers, defense contractors, real estate speculators and the wealthiest 1%.
In the endless swirl of headlines about the current global financial crisis, the dominant narrative, which is also driving the 2012 US presidential election, is that crippling amounts of public debt run up by profligate government spending have brought us to the brink of financial ruin and must be offset by deep cuts in social services and “entitlements.”
It is a false narrative that masks the largest ongoing financial swindle in human history, a swindle being carried out at public expense by a small class of elite financial speculators. This speculative class has been unleashed over the past three decades by a Utopian neoliberal political project now embodied in its most virulent form in the Republican presidential ticket of Mitt Romney and Paul Ryan.
Let’s start with the depth and size of the underlying financial crisis, which is almost in the realm of hyper-reality. In 1997, for example, the total value of annual financial transactions worldwide was an already-staggering 15 times greater than global GDP. Today, it is 70 times greater. (1) In 1995, the six largest US banks controlled assets worth 17 percent of annual GDP. Today, the figure is 64 percent. (2) Again in 1995, the global total of outstanding derivative debt obligations was $17.7 trillion. By 2010, at nearly $470 trillion, outstanding derivatives were 741 percent of global GDP. (3)
This wholesale financialization of the US-led global economy has burdened the public sector with the task of propping up unregulated speculative debt in the private sector that is 7.4 times our annual productive capacity. Add US deficit spending for three wars since 9/11, and major cuts in the top tax rates, and the burden becomes unsustainable. The difference is being made up in the guise of austerity, as everything we own is liquidated, from personal and retirement savings, to homes and public-sector assets that have been built up over generations.