The Broken Pact with the People
By Dirk Kurbjuweit
Trust capitalism and shun government interference we were told. But irresponsible bankers saw a chance to get rich quick and went for it. Their failure has become ours -- and the promise of a common good has evaporated along with faith in democratic capitalism.
"One thing is clear: The world seems to be teetering on the brink of disaster because a few people have been on a big-time gambling binge. They have lost their stake on bad loans and now banks are collapsing, companies are facing a liquidity crunch, investors are losing their savings and a recession is looming.
This time around, though, there is more hanging in the balance than just the cyclical ups and downs of the economy. This time fundamental issues are at stake. Is a market economy nothing more than an invitation to engage in excessive gambling? And what about the democratic principles that are so closely linked with the market economy, a concept that was used by the West to achieve dominance over the world? This vision of democracy is also at risk.
Suddenly, everything seems possible. Nobody knows which banks will suffer a meltdown and what will be the consequences for the real economy. Nobody knows how big a risk the Wall Street gamblers have taken. That’s what makes the situation so frightening. It’s as if we were riding in a small dinghy on an African lake. The passengers know that crocodiles are lurking in the water, but they don’t know how many there are, nor can they determine the size of the beasts."
"In the German press, the word "American" became shorthand for greed. Many managers demanded “American” salaries of over $10 million (€7.25 million) a year. They targeted “American” earnings for their companies. Ackermann aimed for profits of 25 percent. German savers were recommended to take an “American” approach to their investments. Saving accounts and government bonds were passé and investing and gambling with stocks was all the rage because it held out the promise of higher returns."
"German bankers became gamblers. They joined the investment game that had begun in America. They bought securities that had long since lost any connection to economic realities. They flourished in their own world, a virtual world of numbers that continuously grew and created a gigantic bubble."
"While we teeter on the brink of disaster we might reflect on the fact that for politicians, bankers, business people and the media, there is a second challenge more important than that of rising up the career ladder: We also need to secure democracy and the free market economy.
Bringing the state and the world of business and finance into balance with the right amount of control and freedom would be an important step toward attaining this objective. But none of this is possible without a word that is not particularly exciting, and even a bit old-fashioned: seriousness."
CAPITALISM IN CRISIS
The Broken Pact with the People
Der Spiegel
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