(THIS ARTICLE IS MACHINE TRANSLATED by Google from Norwegian)
Let me hint at this with Charlie Chaplin – as he sees two ways to film the joke with the banana peel: The first shows a well-dressed man walking down Fifth Avenue in New York. The camera then goes to the close-up of the banana peel itself, cuts to the foot that slips, and then a zoom-out with the man landing on his back. Ha ha ha. But the second scene, Chaplin explains, begins as the first, but then the man sees the banana peel, and smiles when he discovers the hidden film camera, and then quickly steps aside – but blind as he is for the open manhole cover, he falls into the hole.
Berliner Joseph Vogl stands behind the bestseller The Ghost of the Capital – recently published in Norwegian as The ghost of capital (Publisher H // O // F, 2019, translated by Eirik Høyer Leivestad). The main point as I read the book is the irrational and unpredictable future of the financial market – despite the fact that economists still seem to believe in the market as fair and balancing. Vogl refers to Adam Smith's "invisible hand" as the market liberalists' somewhat religious belief in a rationality behind what works. At the launch in Oslo in January, Ebba Boye, in the conversation with Vogl, also pointed out that the economy now needs new textbooks, for the market is not a "perfect" mechanism in which the crises arise for completely different reasons.
financialization
Boye and Vogl refer to today's new ideology as "financialization", where the emphasis has shifted away from the real economy. Financiers are degrading the real economy for accumulated values, as they are more concerned with the sales value of companies than with production itself. This financialization is also creeping into ever-increasing areas of life, where money has become the goal and scale of society.
Boye mentions the car manufacturer Ford, which today makes more from the profits from sales car loans than on the actual car sale. And that business owners are increasingly more interested in the sales value of their shares than in the company reinvesting profits in operations. Substantial profits therefore go into acquiring shares rather than reinvesting in jobs or production.
Here we can add that the financier is also driven by so-called leveraged loans – speculative loans with high risk. The International Monetary Fund writes that these loans are used for acquisitions and mergers, payment of dividends and share repurchases. The loans do not go to the necessary long-term investment in production, but rather express a desire for short-term gain. And such stock values can suddenly fall if expectations of returns become poor, such as a company that Apple has recently "lost" stock values for more than $ 3000 billion (due to poor China sales) or as the airline Norwegian's share value has halved since May. last year (due to weakening result).
Crazy summer
According to Vogl and Boye, the financial market is now – as it largely consists of derivatives and the like – at around 10 kroner, or almost 000 oil funds, if I have kept track of all the zeros. This is virtual money, financial products and speculative investments outside the real economy. Derivatives are explained as being able to insure against the price of, for example, grain falling – before the season – if you are a farmer. On the other hand, bread bakers can make sure that grain prices go up. This may have been a good idea once, but today it is mostly raw speculation in exchange rates, risk stocks, subprime loans, interest rates, inflation and possible trades or political events. This "virtual" turnover is now around 15 times what the whole world actually produces and sells for annually – that is, the world's total gross national product (GDP).
How have such "pyramid games" become possible? I would say that along the way, at least central banks – such as the US Federal Reserve, European Central Bank or Norges Bank – have "printed" money that they lend to banks, which in turn lend these to businesses and individuals. The banks also often go for several rounds of money, which are recycled to several borrowers. And when there are times of crisis, state banks provide so-called quantitative easing, where more money is pushed up and sprinkled around to prevent recession. Economic growth is our first priority.
We other people who earn our money from wages from normal work will also lose relatively if our "savings" become an ever smaller share of increasing money holdings. And if the central banks' banknotes "get hot, you have poor national prospects, where you face skepticism about the foreign currency – for example, the currency in Venezuela has fallen below one hundred compared to the dollar in the past.
Back to Vogl
He writes that predicting the point where financial and debt bubbles can burst lies somewhere "between (calculable) risk and (erratic) uncertainty". Vogl describes the gigantic speculation of our time as "present risk is offset with future risk, which in turn is offset by future risk." For contemporary "markets are governed by an endless series of anticipations". So the bills are shifted into the future. Here, "the future, that is, time, is assumed to be an infinite and inexhaustible resource".
"Current risk is offset by future risk, which in turn is offset by future risk."
Let me add that the state is probably not much better than the financial speculators – where the state banks take out loans they are unlikely to repay, ie pay back immediately. The principle of traditionally servicing loans with future taxation or other government production revenues seems abandoned. Well, in Norway you have wealth, so far – the oil fund is mainly invested in securities for returns rather than in real estate.
In the US, they raised loans for around NOK 2800 billion last quarter, in fact, just as much as the government's loans in the whole of 2006. It is said that they are directly ahead of the recession when the national debt exceeds 90 percent of gross domestic product. But, interestingly enough, according to The Economist, government debt in Japan is now at as much as 230 percent of GDP – and yet one is investing eagerly there. Such strong players obviously have more credit than others.
options
If you, like us, do not believe that this only grows into the sky, the question is how to make yourself less dependent on the financial bubbles. In addition to spending money to own real things, I can, like others, suggest some values on the side of the runaway world of financial money: as the acquisition of knowledge and experience; maintaining good health; human togetherness and long-term friendship; or the joy of what nature has to offer. Enjoying the afternoon sun still costs nothing.
New financial crises occur periodically, and the next one can be catastrophic – like the story of the banana peel.
So I end here with David Bowie's song "Where Are We Now»(2013, see video) – reportedly a consideration from when the wall fell, to today's Berlin. For only when the moment occurs – "the moment you know, you know you know" – then the future is here.
Feel free to watch the video http://youtube.com/watch?v=QWtsV50_-p4
or the article Over-matured economy.
