Articles with the Tag Credit Crunch

Blame Wouter Bos

Dutch politics, economic crisis
Published on

John Lanchester has written yet another brilliant article on the financial crisis for the London Review of Books. Much of the article deals with the RBS and how its takeover of ABN Amro led to disaster:

The consortium’s plan was to split ABN Amro up, with RBS getting the Anglo-American and wholesale parts of the business, Fortis the Belgo-Dutch, and Banco Santander the South American. It wasn’t in principle a ridiculous scheme, but the problem was the price. Most of what has been written about the financial crisis is pure hindsight, but not this: many observers thought that the winning consortium had overpaid. The consortium won their takeover on 10 October 2007; by April 2008, RBS was going to the markets to raise more capital, to cover losses from the deal; by July 2008, Fortis had lost two-thirds of its value and its CEO, Jean-Paul Votron, had resigned; on 28 September, Fortis was part-nationalised by the Dutch, Belgian and Luxembourgeois governments. We’ve already read what happened to RBS. So within months, the ABN Amro takeover destroyed RBS and Fortis and what was left of ABN Amro itself. Along with the AOL-Time Warner merger and the Daimler-Chrysler merger, the ABN Amro takeover is one of the biggest flops in corporate history.

There’s one person who could’ve avoided this mess, but didn’t, whose role in the whole debacle has never been fully acknowledged, not by the media and certainly not by him: the Dutch finance minister, Wouter Bos. Had he vetoed the takeover, or the earlier Barclays bid, ABN Amro, Fortis, Barclays and RBS would’ve been in much better shape now, perhaps not have needed the Dutch and British state to bail them out.

Dutch Finance minister attacks shareholders

Dutch politics, economic crisis, Life under Capitalism
Published on

It’s a bit late, considering even I already argued this same point four months ago. Bos also ignores the role his own ministry has played in fermenting this crisis. After all it’s the ministry of finance, through the various insitutions it controls that’s supposed to safeguard the financial markets and which failed miserably. They completely missed the problems with the Icelandic banks for example, gave their blessing to the takeover of ABN Amro which destroyed four banks and counting and in general stayed true to the neoliberal partyline of minimal interference as the market knew best.

The anger at the bankes is understandable, but it was the whole system that failed. The recession isn’t caused by a few too greedy CEOs, but because capitalism always encourages short term greed no matter the consequences and the measures and safeguards that were put in place after the last Great Depression were deliberately dismantled from the seventies onwards. Something in which succesive finance ministers actively colluded. The Netherlands should become more American in its approach towards the markets, with less state control and more freedom for business. The current recession is the logical end result.

And then the crisis hit the real economy…

Dutch politics, economic crisis
Published on

A government short time working scheme set up to help companies that saw their monthly turnover and orders plummet since October reduce salary costs without redundancies was opened this Sunday and already has 64 companies applying, including the steel manufacturing giant Corus. Under the scheme a company introduces mandatory worktime reductions for its staff, with the shortfall in salary paid for by unemployment benefits. For any company hit hard by the growing recession but still viable it’s a good way to cut salary costs without compulsory redundancies of employees it might very well be hardpressed to replace if the crisis proves to be only temporarily, as economists are predicting for the Netherlands.

Unfortunately however the scheme is strictly limited in both duration and resources. It ends on the first of January and it only has a budget for 200 million euros. What’s more, to be eligible for the scheme a company has to have had a thirty percent loss of turnover for at least two months, leaving a lot of other struggling companies out in the cold. Compared to the lavish treatment the banks got in the last few months, billions spent with little oversight, this seems remarkable stingy. Yes, you need banks to keep the rest of the economy in capital, but that doesn’t mean we can let other parts of the economy go to waste.

Capital, it fails us now

economic crisis, Life under Capitalism
Published on



This crisis has been a real eye opener, hasn’t it, in that it made visible how much of the world economy was based on credit driven overconsumption, both on a consumer level as in the more rarified air of Wall Street. Ever since “communism” was “defeated” we’ve forgotten how wasteful capitalism is. we’ve been conned into believing there was no alternative, that we could not control its destructive tendencies and at best we could hope to only migitate some of its worst excesses, but that ultimately we were locked in a race to the bottom that would however somehow bring us untold riches someday, if we followed the rules of the free market. The fall of the Berlin Wall spelled the death knell for the perverted version of “communism” practised in the USSR, could this recession bring the same for thriumphant capitalism?

Because one thing is certain. We do have the resources, the abibilty and the ingenuity to make everybody in the world rich without destroying the planet and without engaging in the dance of mutal assured destruction that is free market capitalism. But it would mean the end of the priviledged classes and they’ve never given up their power without struggle. One good suggestion to start the struggle comes from Ian Welsh, on how to stop the obscene bonuses and salaries managers and CEOS have awarded themselves over the years:

The simplest thing is to just count all income equally, tax it all at the same rate, don’t allow deductions beyond a certain level (50K or so) and tax all income above, say 1 million at 90%, 95% for all income above 5 million. Don’t allow too much income deferral and there you go. Slap on some “in kind” rules for corporations (yes, if your corporation pays for your car, that’s salary) and while there will always be loopholes, you’ll still rein in the worst excesses.

This of course presupposes a government anywhere in the western world on the side of the workers, rather than the rich, which might be a problem…

A policy initiative that should’ve been proposed on September 19th

economic crisis
Published on

Jamie has a modest proposal on how to reclaim much of the public money ownded by tax dodgers:

Tell me, is there any practical reason why we can’t just invade Jersey and the Isle of Man, sequester the money in the various tax evasion accounts and filter it through the appropriate regulations, disbursing the remainder to its owners once tax at mainland levels had been excised – obviously relating only to those funds liable to British taxation.

I know money can be transferred at “a touch of a button” but I’m not talking about a full dress Operation Overlord here. Get a couple of battalions of Royal Marines, stage a nocturnal amphibious landing in conditions of absolute secrecy, secure the relevant premises, isolate key personnel – or rather concentrate them in school halls and the like with no access to communications devices – secure the account passwords and there you go.

With Dutch marines already stationed near or in our own tax havens (Aruba and the Dutcdh Antilles) I could see this picked up by our own politicians easily if Britain gave the right example. Especially if you can sell it to the PVV (Party of Freedom for those people not too brown coloured) as sticking it to the “Antillians”, their second favourite target after “Moroccans”.