Tuesday, 21 October 2008

Who is blamed for the financial crisis?

The Financial Times on 20 October published an interesting poll on who the public in a number of countries blame for the international financial crisis. Given that this is a socialist economic bulletin we would be pleased to report that the public blamed the crisis on capitalism but it would not be accurate. Asked the question 'Would you say that the current global financial crisis has been caused more by the "abuses of capitalism" or by the "failure of capitalism" itself', those believing that the problem was capitalism itself were about 7 per cent in the US, 10 per cent in Italy, 12 per cent in the UK, 14 per cent in Spain, and 17 per cent in France. Only in Germany, of the countries polled, was there evidence that a very substantial of the population were blaming capitalism as a whole - 30 per cent believing the crisis was due to capitalism itself.
In contrast those believing that the crisis was caused by 'abuses of capitalism' were 46 per cent in Germany, 51 per cent in the UK, 61 per cent in Spain, 63 per cent in Italy, 65 per cent in the US, and 67 per cent in France. Those groups or institutions who were believed to have 'complete responsibility' or a 'lot of responsibility' for the crisis among the population of the European Union countries were bankers (80 per cent), Central Banks (70 per cent) and short sellers (64 per cent).
These results give no comfort to the idea that the population of any advanced country is chomping at the bit for socialism as yet. But they do show that very large sections of the population blame important capitalist institutions for the current events. It gives an interesting base line for assessing the situation. The full and detailed results of the poll can be found here.

5 comments:

Toronto realtor said...

I am surprised! 70% of EU citizens believes Central Banks are to be blamed?? They are presented like knights in shining armor fighting the crisis dragon in media, so I consider it really surprising so many people blamed them. (I blame them too, at least a bit...)
Generally, thank you very much for this post and link, I had a completely different picture of European citizens' opinions in my mind...
Take care
Julie

Alun Griffiths said...

When you have a French someone like Strauss Kahn, with his eye off the ball carrying on an affair with a subordinate at the I.M.F. while the World Economy is burning it's not surprising that people have such a low opinion of bankers (and politicians, did the poll question this group?)

We've just having one of these in Marseille. The ex President of the Caisse d'Epargne who resigned on Sunday after €600 million losses at the Bank has been a Municipal Councillor in Marseille on the Right wing UMP and Opus Deii member J.P. Gaudin's list.
The ex Managing Director has been allowed to move sideways to be MD of the bank Credit Foncier.
he got married 2 weeks ago in Marseille (he lives in Paris)
Funny Old World isn't it

martin said...

Toronto realtor - I think the public are more aware and interested than the mainstream media often gives them credit for.

Martin Slavin said...

I came across the following well researched piece in the Washington Post via the blog at 'Dollars and Sense,the magazine of economic justice':

"What Went Wrong, How did the world's markets come to the brink of collapse? Some say regulators failed. Others claim deregulation left them handcuffed. Who's right? Both are. This is the story of how Washington didn't catch up to Wall Street.

By Anthony Faiola, Ellen Nakashima and Jill Drew, Washington Post Staff Writers
Wednesday, October 15, 2008; A01
A decade ago, long before the financial calamity now sweeping the world, the federal government's economic brain trust heard a clarion warning and declared in unison: You're wrong.

The meeting of the President's Working Group on Financial Markets on an April day in 1998 brought together Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert E. Rubin and Securities and Exchange Commission Chairman Arthur Levitt Jr. -- all Wall Street legends, all opponents to varying degrees of tighter regulation of the financial system that had earned them wealth and power.

Their adversary, although also a member of the Working Group, did not belong to their club. Brooksley E. Born, the 57-year-old head of the Commodity Futures Trading Commission, had earned a reputation as a steely, formidable litigator at a high-powered Washington law firm. She had grown used to being the only woman in a room full of men. She didn't like to be pushed around.

Now, in the Treasury Department's stately, wood-paneled conference room, she was being pushed hard. Greenspan, Rubin and Levitt had reacted with alarm at Born's persistent interest in a fast-growing corner of the financial markets known as derivatives, so called because they derive their value from something else, such as bonds or currency rates. Setting the jargon aside, derivatives are both a cushion and a gamble -- deals that investment companies and banks arrange to manage the risk of their holdings, while trying to turn a profit at the same time.

Unlike the commodity futures regulated by Born's agency, many newer derivatives weren't traded on an exchange, constituting what some traders call the "dark markets." There were now millions of such private contracts, involving many of Wall Street's top firms. But there was no clearinghouse holding collateral to settle a deal gone bad, no transparent records of who was trading what.

Born wanted to shine a light into the dark. She had offered no specific oversight plan, but after months of making noise about the dangers that this enormous market posed to the financial system, she now wanted to open a formal discussion about whether to regulate them -- and if so, how.

Greenspan, Rubin and Levitt were determined to derail her effort. Privately, Rubin had expressed concern about derivatives' unruly growth. But he agreed with Greenspan and Levitt that these newer contracts, often called "swaps," weren't exactly futures. Born's agency did not have legal authority to regulate swaps, the three men believed, and her call for a discussion had real-world consequences: It would cast doubt over the legality of trillions of dollars in existing contracts and create uncertainty over how to operate in the market.

At the April meeting, the trio's message was clear: Back off, Born."

More at: http://tiny.cc/R1Lnz

Martin Slavin said...

Washington Post Registration

Having checked the link I now realise that WP require about 8 items of personal information to register in order to read the whole article. However it is possible to enter 'other' in four of them and there is an opt in tickbox about receiving ads. So no problem there.