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"Politics prepared the ground for financial war"
The current economic crisis is a product of political mistakes, economic incompetence and criminal energy. The actors on the financial market seem to be waging a kind of war against those who kept themselves alive through hard honest work. What is central is the business model...Social peace is endangered by tax evasion and by this business model for the way we make money. We have gradually lost a realistic relation to money. Politics bungled deregulation. The wisdom of the market never existed even if it was often invoked.
“POLITICS PREPARED THE GROUND FOR FINANCIAL WAR”
Interview with Wolfgang Hetzer
[This interview published on May 21, 2013 is translated from the German on the Internet, http://derstandard.at. Protest on the agenda in Greece is not always peaceful.]
[In the past he was a corruption-fighter. Now Wolfgang Hetzer rails against capitalism and warns of the loss of social peace. The world is at war, a financial war. Wolfgang Hetzer is convinced of this. Up to 2011 he was active in the European Office for Combating Corruption. For the lawyer, there could only be one conclusion to what he experienced there: “Capitalism is a declaration of war on the civil world.” In his first book “Financial Mafia,” Hetzer wrote about “corruption as a leading culture.” The current economic crisis is a product of political mistakes, economic incompetence and criminal energy. In the interview with the Austrian derStandard.at, Hetzer explains why we are in a financial war, why war is the right term, how we must come out of the battle and why we must not be a herd of lambs.]
derstandard.at: Your new book is titled “Financial War.” Who instigated this war?
Wolfgang Hetzer: It is hard to say who engineered this war. There were political decisions like those of the US government to abandon the gold backing in the 1970s, to carry out the deregulation of the financial markets, the approval of certain financial instruments and the uncontrolled trade with derivatives later described by Warren Buffet as “weapons of mass destruction.” Under Thatcher and Reagan, deregulation accelerated. Even the German Red-Green government approved hedge funds in Germany with the 2003/04 Investment Modernization Law.
derStandard.at: What is wrong with hedge funds?
Hetzer: Hedge funds are part of the shadow banking system that evades the classical orthodox rules of the world of banking and obviously is a source of risks. Governments prepared the ground for these “belligerent” confrontations on the financial markets where everyone wanted to conquer foreign terrain without regard for losses. This authorizes the use of the term war.
derStandard.at” But war sounds very martial.
Hetzer: First of all, the term runs into resistance since people associate war with rolling tanks and destroyed cities. The forms of war have changed. One speaks of economic war, trade war and currency war. That must set us thinking. The essence of a war is attack and defense, massive damage, war tricks, war plans and collateral damage to the civilian population who have absolutely nothing to do with that. Thus the population has nothing to do with the losses on the financial markets but must take responsibility for what happens there. That seems to be a principle – the uncoupling of conduct, responsibility and liability – just as benefit and work are not connected as in the past.
derStandard.at: What must be done?
Hetzer: The purpose of “innovative” financial products must be scrutinized and their effects on the general well-being discussed. The question must be raised who pays when everything ultimatelyy goes wrong and the fine Latin question cui bono, who benefits from all this. When you see certain connections between politics and the economy, the question can be posed whether these so-called elites and classes are really interested in the public interest or in something else, for example their own interest.
derStandard.at: What are they interested in?
Hetzer: My interest in politics and the economy is clear. In my books I describe the linkage of economic ignorance and political ambition and what outcomes have resulted...
derStandard.at: You do not only apply the term war as a picture but also warn of a genuine civil war.
Hetzer: There is not only the famous writing on the wall. There are real events that have a very physical and violent character. When you think of situations in Athens – I was there at the beginning of May 2010 – where people were killed in the course of an arson at a bank branch. Protests are also not always peaceful in Nepal, Madrid and Spain.
derStandard.at: The worst case scenario of social unrest accompanied us in the last years. Why do you believe a radicalization will occur?
Hetzer: What recently happened in Cyprus for example, the idea of attacking the assets of savers, could have been a trigger for greater confrontations. Existential anxiety is created when people have the feeling the money they brought to the bank is misused as a liability guarantee... The consequences of austerity policy extend from Greece to France where austerity plans are not amusing any more. Trust in Europe as a project has also drastically faded.
derStandard.at: Let us focus on the example of Cyprus. A run on the banks in Spain and Italy was feared but nothing happened. Isn't that simply a pessimistic view?
Hetzer: This process is occurring insidiously. It would obviously be easier for the public to understand if indignation spread explosively here and there. The author Stephane Hessel urges “Be Indignant.” This means “act,” “become active” and “set clear signs.” But that is not happening. Voter turnout in Europe's elections is very low. A turning away is taking place. One flees in social niches and seeks the happiness of home sweet home. Still this resignation is not eternal. When pressure rises so intensely that this explodes some time or other, then we have genuine problems – in the form of threats to social peace.
derStandard.at: Do you see this threat in Germany or Austria?
Hetzer: Compared to other countries, there is no simultaneity of crisis and conflict in Germany or Austria. We have crisis; we have alarming data about the indebtedness and the extent of money in the bailout umbrella. There are systemic risks for which there are no solutions. That is the situation producing existential anxiety. On the other side, there is the psychological dimension. 26 million Europeans have no work. The high share of young, well-educated workers without a job in Southern Europe is very worrying. A critical European political public is lacking. Several examples of common development are before us. We must learn to think beyond our national borders.
derStandard.at: How can this change as long as countries and living conditions are so different?
Hetzer: That is an important point. Increasing common interests will not automatically be conflict-free. We know this from personal relations. The better one knows this, the more one can understand. Oppositions can also collide more severely and more undisguised. Dealing with money, the question of social security and individual ideas of happiness – all this flows in this great structure covering nearly a half billion people. There is no uniform concept there. In the economic and political realm, the basic idea is that Europe attains an equality of living conditions as a peace-making and peace-preserving measure. In the ideal case, a form of social justice is also found there.
derStandard.at: Individual interests predominate.
Hetzer: That does not change the political will to equalization. There are obviously effects that are disturbing. Consider the tax policy in Ireland. Businesses come when you offer a corporation tax rate of 12.5%, infrastructure and so on. However businesses only remain as long as it is favorable. Thus competition rightly occurs between the countries. That cannot be criticized. But this competition cannot be unjust and may not lead to unfounded material and economic privileges. Even Luxemburg reflects over a long tradition whether its own economic output and the practices of its banks are in a rational relation. A movement is clear.
derStandard.at: In your book you urge the 500 million citizens of the EU to take charge of their fate and not leave it to a few hundred politicians. What does this “taking charge of their fate” look like?
Hetzer: This means critically scrutinizing every fact as to its accuracy and legitimation aspects. The supposed authority of politics should be thematicized. The state in the course of privatization leaves old age provisions to the citizens for example. There is also movement here. There are forms of self-organization in a so-called civil society where the customary rituals of representative politics are replaced by a greater nearness to the things immediately affecting persons. IN energy supply, people increasingly mount solar cells on their roofs and join forces to escape the superior strength of the mammoth electricity conglomerates. Kindergartens, school buses, car sharing and commuters organize differently.
derStandard.at: Is there an inner change of the system?
Hetzer: My goal is not revolution but that people understand they need not be a herd of lambs, they need not fear the evil wolf and the good shepherd is not always good. People can develop so much collective reason that they find the right way.
Wolfgang Hetzer was a director in the European Office for Combating Fraud (OLAF) in Brussels up to 2011. His latest book “Finanzkrieg: Financial War: Attack on Europe's Social Peace” was published in March 2013 by Westend publishers.
“THE WISDOM OF THE MARKETS NEVER EXISTED”
Corruption-expert on finance capitalism's “declaration of war” on honest work
Interview with Wolfgang Hetzer
[This interview published on 4/29/2013 is translated from the German on the Internet.]
Individual tax scandals “damage society and are annoying” but the real problems are the financial markets and the “money disaster” that endanger the social peace.
Wolfgang Hetzer: We must limit ourselves to what capitalism has become nowadays. Capitalism only exists in the plural. Finance capitalism – some say information capitalism – is now in style. The actors on the financial market seem to be waging a kind of war against those who kept themselves alive through hard and honest work...
What is central is the business model. The case of Hoeness is one of 130,000 persons in 170 countries and involves banal tax evasion. This is harmful to society, annoying and asocial in a certain way but does not touch the central problem. We must talk about money, the money system and the money disaster, the way it is earned and how it is used. The question of taxation is always important. Capitalism altogether has become a declaration of war...
Social peace is endangered by tax evasion and by this business model for the way we make money. From the European Central Bank to the so-called innovative financial products, we have gradually lost a realistic relation to money.
Question: How can the speculative in the financial system be pushed back?
Hetzer: Politics has bungled deregulation beginning in the early 1970s and the abandonment of gold backing, then with the joint work of Ms. Thatcher and Mr. Reagan, continued through the German Red-Green government, through the Investment Modernization Law by allowing back or attempting a re-regulation...
In the sub prime crisis, conduits without assets participated in trade with dubious packages...
Question: What is your opinion about the much-invoked wisdom of the market directing all things?
Hetzer: The wisdom of the market never existed even if it was often invoked. The notions of markets that fulfill the postulates of reasonableness and efficiency have always been wrong. Markets are a place where an uncontrollable chaos takes place. These efficient market hypotheses that exist everywhere have their own mathematics. However the reality contradicts the notion that markets could be a place of social justice. Rather the financial markets in particular are a scene of the crime.
Question: Social justice has decayed to a high pathos. DIE LINKE (Left party) is not the only party that has recognized the problem that social justice is obviously lost. How do we come to more social justice? What is the way out of the dilemma that you describe in your book?
Hetzer: Yes, we must recall the fundamental categories of our economic system. Once we had a social market economy. We had work, human work as a starting point. We had a performance ethos and the middle class society did a great service. Then financial capitalism arose. From then on, its own laws ruled that had nothing to do with work, performance and value.
Question: But life is comparatively good in Germany. The unemployment numbers are low. Traineeships are sought.
Hetzer: Let me share the following piece of news with you: Germany is a member of the European Union. In this Union, there has been an increase of ten million unemployed. We now have 26 million unemployed in the European Union.
Question: That is an all-time record high. Do you think this development will haunt Germany?
Hetzer: At the moment we have gained a small budget surplus but we are a member of a community. That means we cannot do economics selfishly for ourselves but must fulfill our obligations and practice solidarity. When you see the worry lines in the auto industry, it is not a natural law that the German export economy will always continue developing without regard to development in the world or in the neighborhood.
Thanks for the conversation.
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