From the author:
The shaft starts driving
It started with the events around Bankers Trust and Andy Krieger in January 1988. An internal bank audit showed that option trader Andy Krieger creatively embellished his trading results. In order to avoid a public scandal, the events were concealed and the books manipulated with the help of the international auditing firm Ernst and Young.
Although only a few were affected and no one was harmed, it should prove a big mistake that the wave was not stopped here. Since the case was too complex for the prosecutor, there was no charge. This would send a clear signal to the capital market - the manipulation of books pays off! And the wave could take full swing.
The wave calls for their first victims
Not five years later, the wave caught its first innocent victims - in December 1994 had due to complex interest speculation Orange County, a district in the state of California, bankruptcy. Treasurer Robert L. Citron at the time speculated on interest rates for innovative bond products developed by Salomon Brothers and Credit Suisse First Boston.
At the same time, he completely overlooked the risk that the interest rate landscape could change from one day to the next. As a result, Orange County had to file for bankruptcy and the citizens of Orange County had to accept substantial reductions in government services as well as higher taxes. For the first time the wave had picked up voters, who, although they were not involved in the speculations, were asked to pay
The wave threatens the USA
Now it shouldn't even be four years before the wave threatened to overturn the entire US financial system. What happened? - Long-Term Capital Management ”(LTCM) was a hedge fund founded in 1994 by John Meriwether (former vice president and head of bond trading at Salomon Brothers). In 1998 the Russian government suspended payment on bonds and massively devalued the ruble.
LTCM lost a fortune overnight and could only be rescued by the intervention of the US Federal Reserve, led by Alan Greenspan. In April 1999, President Bill Clinton had to publish a report on the financial crisis.
The US banking system from collapse?
For the first time, the entire banking system in the United States of America was on the brink of collapse and millions of citizens would have been saved for their savings.
It was only thanks to the rapid intervention of the central bank and the President of the USA that the worst could be prevented. But the wave was not stopped, but spread undisturbed.
The wave unfolds its full destructive power
After the wave was not absorbed in the US, she was able to expand herself undisturbed and with full force to Europe. What we now call the beginning of the financial crisis in hindsight is, in reality, its continuation! Richard Fuld, the CEO of one of the largest investment banks in the Americas, made the big deal with the resale of real estate loans to European banks.
But what initially appeared to be a safe investment soon broke into smoke and sound. Due to the high losses and write-downs of the credit portfolio, Lehman Brothers had to take part in the 15. September 2008 filed for bankruptcy and thus initiated the most severe global economic crisis since the 20 years.
A nationalization wave begins, as a desperate attempt by the politicians to save the financial system and thus the real economy. However, in vain. More and more banks must be forced to state and taxpayments are being pumped out of the financial system.
Now all citizens of the old and new world are really affected. State budgets are reduced, millions of jobs are destroyed and social unrest is created. The wave has reached its climax and an end is not yet in sight
What to do? The wave draws ever larger circles
What we learn from these examples is that they are all interconnected, showing that the wave is ever-widening, capturing more and more people worldwide with their destructive power. Whereas at the beginning of the 90 years only a few were indirectly affected by the wave, nowadays we are all directly or indirectly exposed to the destructive forces of the wave!
How can we all do something against the wave undertake? That is the question that arises here urgently. Or more precisely, what needs to be done in the future, what to do to avoid a renewed tsunami disaster? Can each one of us contribute to it?
The tsunami model shows very clearly that the previous procedure does not make sense. Instead of tackling the problem at the root and stopping the wave. More and more money is being added to the system, further expanding the wave.
The first and most important step would therefore be to take money out of the system and not to bring it new. This means that the interest has to be raised, so that the money becomes more expensive.
Detach us from the drug of cheap money
We all are currently dependent on the drug of cheap money. In theory, private consumption and investment in jobs are to be promoted. Unfortunately, the money is not used for jobs and long-term investments, but primarily to serve creditors.
In my opinion, we have to change this idea. We must turn to the interest rate and thus return to a healthy ratio of debt and consumption.
Break with the idea of "healthy saving"
Just as wrong as the idea with debts to combat the crisis is the second approach to saving itself healthy. To rehabilitate public budgets in the short term by reducing the expenditure side radically and bolstering the revenue side has never worked so far.
The state budget can only be sustained through innovation and growth. As we learn from history and now clearly visible through Greece, a compulsory eradication of the state expenditure leads to social unrest and is therefore not in any cost-benefit relation.
Invest in long-term, value-creating projects
Rather, it makes sense to change the distribution of resources and to invest in long-term value-creating projects and to stop wasting. However, this requires a great deal of visibility and behavior from the politicians and interest groups.
In a networked world, it is quite reasonable that every one of us assumes more responsibility and directly or indirectly influences the use of the control means.
We need more say
A fatal error, which currently affects all politicians and banks in Europe, is the thesis that it is necessary to support system-relevant banks so that the crisis does not spread further. This is clearly the wrong way.
The fact that banks and financial service providers, who no longer have a healthy business model, will artificially keep billions of taxpayers' money keeps the crisis going.
To send banks into orderly bankruptcy
The politicians and regulators urgently need to create ways to send banks into orderly bankruptcy and stop giving in to our good money. The savings balances of the citizens are to be secured and the speculative debts of a bank are simply canceled.
Thus, those institutions and banks that have so far earned a great deal with the sale of structured products would now also have to stand up for the risk.
Citizens, fight back against taxpayer waste
As courageous citizens, we must finally refuse the wrong use of our tax money by demanding more say in the use of our taxpayers' money.
In the future, as proposed by the Minister of Finance in Austria, there should be specific levies that will strengthen competition and create new jobs in the medium term.
Taxpayers who themselves decide on the use of their duties
Each taxpayer should have the right to decide on the use of part of his duties. This may sound utopian, but we have already discussed in detail in Austria and should be implemented in my opinion.
Only if we can change the financial system from scratch by putting a stop to greed and the negative sides of innovation, breaking with existing paradigms such as "indebtedness" and "saving health" and advocating sustainable use of tax resources, we will emerge stronger from this crisis. It is - also - in our hands!
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German edition: ISBN 9783965962002
English version: ISBN 9783965962019 (Translation notice)
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