do the G20 really want to solve the financial crisis?

I'm finally happy to see the acceptation by the most major governments that this neo-liberalism
claiming for a sustained growth and spontaneous auto-regulation is a complete absurdity in an finite planet। Of course, if money is becoming an abstraction, producing money is then free lunch.

Sometimes, I think money really became an abstraction: when you see the amount of money governments claim to have provided to the market to solve the crisis coming from the "sub primes". Let's make some back-envelop computation on the sub primes:
1) 7 Mio US families were involved from which 2 Mio are now on street
2) average cost of a house: 350,000$ (rather high as average)
3) probably the banks don't completely deliver the required money to all (we will ignore this)
4) the 2 Mio families now on street paid back a small part of their loan (also ignored) but the banks recover that house (let's also ignore the unfinished houses) and now are trying to sell them
with an expected lost.
5) banks package these credits with other assets and sell that to other investors (banks mostly)
(we will ignore that because this money remains in the financial world except an unknown part)

The maximum maximorum lost value (number of families on street * house price)is thus 700 Bio $ (that will probably be recovered by the banks in the next 5 years at 75%). The only money that will finally vanish from the financial world is thus the depreciation's of these houses.

Globally, the governments have already promised to the banks more than 4,000 Bio$ (on the news at 2009/04/22) and at least 7 Mio people have lost their jobs (not the bank managers, they form a very big "family" where solidarity is real (the price of silence, maybe!)).

Where is going the profit (3,300 Bio$) of the crime? It is easy to understand why the banks managers get so high bonus।

Other explanations are:
1) banks overestimate the toxic assets they kept (actually, they don't know how much toxic they have because the complexity of tracking all of them to finally estimate the risks without common practice in that matter(I presume!) )
2) this is the bank's interest to augment the risks (more money from state, lower interest rate they have to pay to the central banks and to us, good pretext to not distribute dividend without taking the responsibility)
3) they are other affairs which have been accumulated and not coming from the sub-primes (fraud,..)

... and sorry I'm not going to search them... meaning that this last critic is not sustainable but it remains my conviction that my analysis is correct.


Are the banks now helping with that money the economical players as intended by the governments? Not really! The banks were the first to realize (15 years ago) that there is much less risk in the mass market (consumer market) than in sustaining technology investment in economy. ING recently communicates it will sell some of its assets to focus on credit to consumption and life insurances (however, this might be my filter applied on their real communication). Are the banks going to change their mind? surely not at short term because now they have the financial crisis as pretext.

Is it possible that all people of all governments are unaware of that? No way! Actually, they reveal their understanding by claiming that finance has to be regulated.
But do they understand they give money just to cover the eventual short term liquidity needs of long term winners? Probably as much as the bank managers know really what is their situation! No thus.
Is it more than a panic from unaware people? Probably not. (a possible solution is stopping to put unaware people at the leading of companies and countries!)
But we are in a democracy, isn't it? Thus while respecting the laws, we are all free. So, why then unaware people could choose in favor of what aware people are saying while they better understand what other unaware people are advising them to do? We might avoid that by (permanent) education! But education is also declining, and not by hazard!). But then, obligatory education to hope reducing the lack of awareness of all our empowered managers!

Fortunately, now the value of the $ is not covered by the value of the gold anymore but the $ is covering the value of all other moneys (sic!). (As an exercise, try to understand why USA is not bankrupted and why when Wall Street gets a cold, the world is out of breath!)

Money is thus really a pure abstraction with a culturally enforced value, mainly due to the media (with broadcast in 1st position by far (see M Mc Luhan)) , living from advertising and government subventions. And Finance is the only truly globalized activity (there is more money exchange by computed network in one day than they are money in the world! Reason why President Bush pushes the firemen, without breathing protection, to erase the effects of 11 September by restoring ASAP the Wall Street operations?).

All people having ever organized something know that there are prerequisites to every organization: Tasks are defined and assigned to functions, internal and mainly information flows are needed for Task being executed, people are designated to fulfill these functions and executing their tasks; for the external information flows, laws are needed because nobody will spontaneously give away his information for being controlled.

Do our government know that? Of course, they know! Probably, not all politician, but at that level, they know, for sure.

But did you hear a single world on how they want to regulate the finance?

Oh yes, they designated the fiscal paradises... but a few of them located in USA (Delaware,...) and UK (New Jersey,..) : a good start indeed! The "protestant" based government probably obtain that compensation in exchange of a promise of regulation of finance.

The banks (and insurances, which differences between them today? also something to regulate!) are designated as the devils. Not a single word on the role played by the stock exchanges!

But why the companies are out of controls?
1) by nature, a multinational firm escapes any government regulation
2) where is the authority performing a larger scale regulation?..??...???
3) if there are international regulations, who is controlling their respects? what are the penalties?
(it is the reason why Belgium is one of the greatest fiscal paradise: there is a regulation and an authority forbidding the control of the regulation for international companies)
4) US accounting is not used for taxation so that why not booking in your year results, result expectations of next years, Fe? Also a topic for worldwide regulation!
5) once a firm is noted on the stock exchange, its focus becomes communication for the finance consumers while their core business is becoming a background issue; from there a growing irresponsibility from the top managers of noted companies.
6) when a company is not in the financial sector, their board is mostly composed of financial people, chiefly when noted but not only, because a) the focus is put on the consumption market which live from credit and b) production & distribution must follow and new investment are required.

The growing irresponsibility of the top managers and the cultural proliferation of tolerating irresponsibility and impunity are making of humanity (because this model is the short term winner) a specie in danger.

Liberalism sustaining that economical growth is the way to go is unbelievably stupid, even children understand that they can't drink more water from their glass than their glass contains water unless you filled it again; the earth is finite and nobody will add resources to it when it will be exhausted. And Financial people want to know before investing that the project requiring investment will have a significant ROI (as good as the one they obtain by letting money making money). This is a consequence of the simplification of the science of Newton (17th century) where everything was deterministic and reversible and the linear systems (close to equilibrium) solvable, current science is exploring system far from equilibrium, non-linear, irreversible and unpredictable with the exception of qualitative changes (without knowing when , nor where). By invariance of scale, living systems participate to process where evolution is at work and by definitions unpredictable. Living is liking the unknown, without going ahead a step at a time, we will die but the next state may be less pleasant than the current one; it is only by going on that from time to time a better state will be reached.


Of course, liberalism can become auto-regulate but therefore it must follow the laws of evolution and unfortunately, liberalism does its best to block evolution: to be convinced, it suffices to observe if there is a growing diversity of products or a declining one (behind the various packaging, IE, the images).
My bank was less performing than I was in predicting what was happening on the financial market; the best deals I made on the stock-exchange were however made on basis of revealed confidential information; as a normal citizen, it is like with lottery: it is made for statistically loosing money. I claim that the stock-exchange is a kind of privatization of the profits for initiated members of some clubs paid by he widely spread out social distribution of the losses by the middle-class.

Now can we answer the initial questions? Do they really want to solve that financial mess, and now cascading to an economical and social mess? I doubt (since USA and UK did not publish their own fiscal paradises) but I can't refrain seeing Obama as a new messiah and I know he has to compromise and that he is really walking on the sharp of a razor; if it is true, he may also be crucified! Can they succeed? I'm afraid of no, I think we are at the end of a "civilization" and we need more radical departure: the return to growth is an illusion, an imposture; maybe , new growth waves will arrive but they will be shorter & more frequent until the latest one; and more we wait, more terrific might be the effects of collapse.