Klaus Küster
Tuesday March 9th, 2010

Numbers, Please.

With every Pound Sterling they generate, investment bankers in the City of London – they earn around 1.0 million Pound Sterling – destroy seven Pounds worth of common property.

Says the British Think-tank nef.

During 20 years of his “career”, a City banker generates around 4.71 million Pounds in value. During the same time, the damage he does amounts to 33.4 million Pounds.

On a European scale, the loss due to the financial crisis during the first half of 2009 was estimated at 2 billion by the EU commission. That is an average of 4,000 Euros per capito.

The Asian Development Aid Bank said the total damages are around 40 billion Euros.

More than 5o% of the profits made by an investment bank end up with the bankers – rather than going to the shareholders or serving as risk buffer in the form of capital.

Herr Ackermann recently announced 5 billion Euros profit. For 2010, he aims at 10 billions and warns against restrictions in investment banking.

The sum of all CDS (Credit Default Swaps) –  that is what those “insurance” papers that caused the crisis and that currently are betting on the Euro getting weaker are called – has climbed to 85 billion Euros.
Greek borrowings that, incidentally, were not even in the portfolio were subjected to “insurance”.

At the same time, borrowing unlimited money from the EZB has been going on for more than a year now. Among other things, that money has been invested at 7% in Greek bonds. So far, that equals a profit of 600%.
Any more questions?

What or who exactly are we protecting by sending German soldiers to Afghanistan?

(Translated by EG)

2 Kommentare zu “Numbers, Please.”

  1. JUS (Wednesday March 10th, 2010)

    Es ist kaum zu ertragen, wie es sich die Banken auf unsere Kosten gut gehen lassen und die Politik tut nichts dagegen!
    Staaten werden durch Wetten in Krisen getrieben und das ist nicht das einzige Feld, wo uns die Politik für dumm verkauft. Wir werden durch Lobbyisten und Wirtschaftsmagnate regiert, und das immer ungenierter wie gerade (man kann fast sagen dauerhaft) durch die Presse geht:

    – Westerwelles Dienstreisegebaren
    – Lobbyisten als Staatsbedienstete
    – Stuttgart21

    Um nur einige Beispiele zu nennen.


  2. Chris Wood (Thursday March 11th, 2010)

    I find these numbers highly dubious. We need links to the original articles, to see what the numbers mean. It may well be that the market value of all “Wertpapiere” went down by the stated amount. But that is not all real destruction of value. It is mostly just a large adjustment of the previously inflated value of these papers. Some value is destroyed by the resulting “chaos”. For instance, when a family has to move home, (e.g. due to mortgage closure, “Zwangsversteigerung”), this really affects the substance of their lives. When people lose their jobs, or go on short time, they probably cannot spend their time so usefully. But the same thing is true constantly when people are pushed into retirement. (I put the word “chaos” in quotes, because real chaos seems to have been avoided).
    The individual has lost real value that he could have had if he had sold out at the right moment. But this is not true of all people taken together who had invested in some shares or fund. If they had all tried to sell out at the “right moment”, they would not have got anything like the published value.
    The estimates show that Europe has lost only 5% of the total loss caused by the crisis. But Europe has about 10% of the world population. The poor people may have lost more of their wealth per head than the Europeans, relative to what they have. But surely they have not lost more per head absolutely. So more than half of the total loss must have been suffered by the oil-sheiks! The only possible explanation is that the oil under their land has lost most of these 40 billions! Yes its market value has fallen, but it is still as useful as before the crisis. This shows how dubious the numbers are.
    Of course it is not possible to calculate how much real value a banker creates or destroys in his lifetime. We cannot know what would have happened if he had not been there, or if he had decided to invest differently. Banks have clearly helped the economy in the past by clever investment in things that are seen to be useful. Of course serious mistakes have also been made. Recently, the situation has become worse in two respects.
    Firstly, the banks employees have taken an increasing proportion of investment profits, without justifying this through cleverer investment. It is not just the investment banks. The rest have nice offices where nice ladies persuade customers to buy papers that they do not understand. This represents work that is unproductive in that it just moves wealth from elsewhere to the bankers.
    Secondly it has all become too much of a gamble (unstable). Banks sell papers guaranteed to keep their value over 7 years. Money is paid for such “insurance” and probably for re-insurance too, but of course there can be no real guarantee. Only the government can really guarantee, and that by means of a swindle. Namely, they can undermine the currency far enough to keep the guarantee without it costing too much. (For the Euro, most of the EU has to cooperate in this swindle). Besides inflation, the government has another trick for doing this; they can change the rules by initiating a special tax on such papers, as they did with “direct” life insurance. If a few people get such guarantees, as with guaranteed jobs and high pensions for state employees, this can work well for them. But if everybody has such guarantees, there are then no fools left to carry the burden when things go wrong.
    By the way, where I grew up, “nef” is local dialect, meaning “stupid”. So perhaps this think-tank is not serious.

    I recently read an interesting relevant article at:-
    This economic expert agrees with Roland that it was a mistake to support the banks. But I believe this is again professional banker optimism. He underestimates the instability of the whole system. Drastic steps must be taken to enhance bank stability. Shares have gone up over 50% in the last year. If enough people think this can continue for years, the next crash will soon come.
    Incidentally, AOL is conducting a survey about fears (mostly of Americans?) of a climate catastrophe. Only 15% have such fears!

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