Opinion Sur
2023 marked fifteen years since the bankruptcy of the financial company Lehman Brothers. Had the Federal Reserve not existed as lender of last resort, no one dares to imagine what would have happened.
This 2023 marked fifteen years since the bankruptcy of the financial company Lehman Brothers, on September 15, 2008. A moment that should be remembered in these times when some want to eliminate the Central Bank (BCRA) because, if the Federal Reserve had not existed as a lender of last resort (the North American equivalent of the Central Bank), no one dares to imagine what would have happened.
Unfortunately, this bankruptcy, which is valued at 630 billion dollars, that is, almost one and a half times the Argentine Gross Domestic Product (GDP), is the only thing that the financiers and commentators of the hegemonic media remember. However, this colossal sum is only a small part of the cost of the Great Recession, the name of the most significant financial and economic crisis that occurred since the Great Depression of the 1930s.
During the crisis of the 1930s, the Argentine generals realized that the massive malnutrition caused by the liberal economic policies practiced by the conservatives during the Infamous Decade was so significant that hunger was rampant. So massive was this situation that many young men were rejected as conscripts because they did not pass the medical examination at the time of military service.
The Great Disappointment
The Great Recession was a great disappointment for those who had succumbed to the spell of the spectacle of academic histrionics expounding orthodox economic policies that suited concentrated and financial capital and would have reassured conservative politicians that all was well.
This was so clear that the Queen of England dared to naively ask during a visit to the London School of Economics (LSE) in 2008: How is it possible that no one noticed what was happening? The elusive and belated response of those responsible for the orthodox teaching of that prestigious school, indirect accomplices of the disaster, babbled about the naivety of brilliant spirits who had succumbed to the certainties of the moment.
Orthodox economists propose imaginary principles and hypotheses disconnected from economic reality expressed in mathematical equations, expounded in curricular articles. But they manifest a profound leniency with respect to ethics, given the dire consequences for the majority of the population of the implementation of neoliberal economic policies. Poverty, slowed economic growth, unemployment and unequal income distribution are the result of the neoliberal economic policies they advocate that take advantage of monopoly capital.
The orthodox economists, the faithful spokesmen of monopoly capital, had convinced themselves that by saying the same thing and repeating it over and over they could make it happen as they said it should be. In 2003, Robert Lucas of the University of Chicago, a Nobel laureate and considered the most influential macroeconomist of the late 20th century, explained to his colleagues at the Association of American Economists over which he chaired: “The crucial problem of crisis prevention, to put it simply, has been solved for the present and for the coming decades.” The mistake is to confuse economic reality with a system of equations.
The Beginning of the End
With the crisis of 2008 came the beginning of the breakdown of economic globalization driven by the profiteers of neoliberalism. It was also the beginning of the end of neoliberal globalization, which is manifested by an increase in tariff protection in the countries of the capitalist center, as well as the new regulations of international finance.
A fact that seemed impossible, the rebirth of industrial policies in countries that, having relocated and outsourced the processes of production of wage goods, are repatriating them. It happens in many sectors to a greater or lesser extent: the pharmaceutical industry, microprocessor electronics, a part of textiles, among others. This is accompanied by an increase in import tariffs.
The trivialization of the extreme right’s proposals for economic measures, which translate into the suppression and elimination of all or most economic regulations, was what led the speculators, with the complicity of the private banks, to constitute huge speculative bets that at the time reached an amount of one billion dollars of gray finance and finally produced the crisis of 2008.
The economic policies that led to the exit from the Great Recession partially and temporarily abandoned the monetarist policies of monetary restriction, but this has been gradually reversed with rising interest rates under pressure from speculators and inflation from sellers who obtain an inflationary rent.
Published in CASH December 24, 2023
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