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Sandip Sen

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Will Bankers or the People dominate economic decision making? What is the Future of Democracy?

Global economic policies are being increasingly framed by Banks

Key Questions:
A) Should Banks be recapitalized repeatedly to grow bigger?
B) Can Central Banks Be Trusted To Manage The Global Economy?
C) Are Banks Competant to find solutions?
D) Will A Banker’s Solution Help The Average Citizen
E) Are Banks managing Elected Leaders?

Let us see and debate on what happened recently.

IN THE US : The Federal Reserve pumped in trillions of dollars through QE1 and QE2 in order to ensure liquidity . It enabled Wall Street banks to corner commodities, oil and metals and caused massive price hikes that further tempered global demand As per Gallup and NYS data the Fed initiative had no positive effect on economic growth or jobs and led to protest.
IN ASIA AND AFRICA : Inflation raged in the emerging world including China and India. Central Banks hiked interest rates to control inflation . The supply chain inadequacies were not addressed, but money supply squeezed. This only helped in further rising of prices and dampened growth. Sharp rise in food prices contributed to the start of the Arab Springs.
IN NORTH EUROPE : Rich north European and EU nations pumped in liquidity to prop up banks. Like in the US recapitalization of Banks were done but toxic assets not written off. The added liquidity led to futures market speculation, price rise and protests in London and Rome.
IN EUROZONE : The ECB, the IMF and IIF (the banking lobby) indirectly took over policy making of growth hit high deficit Eurozone economies, like Greece, Spain and Portugal. Severe spending cuts were imposed and growth became near zero or negative in absence of liquidity. Structural reforms like internal competitiveness deregulation and issues of high exports from Germany to Eurozone taking advantage of Euro parity were not addressed. Poverty and joblessness rose in cash starved Eurozone, as protests broke out from Athens to Madrid.

Despite the 2008 Bank crisis, it is Banks that make key decisions !!!

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    Nov 7 2011: True our economic model of today is not perfect. Changing that is not easy. However here we are not proposing a debate on the economic model, but on banks virtually taking over decision making from our elected leaders. Your opinions on the role of both bankers and borrowers within the system are also welcome, apart from your responses on the 5 key questioons proposed.
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      Nov 7 2011: You can not treat a disease by treating its symptoms. It is not just banks but almost any big corporate house (that include even elite universities) have major influence in public policy, simply because of their ability to control election campaign finance and entry of many former/present stake holders from such corporate houses into politics. For example, as the real estate and financial sector profit declined and market evaporated, many entrepreneurs (as I know) entered politics in US. In India it already has reached an alarming situation.
      "Conflict of interest" and election campaign financing need to be addressed first to make sustainable reform to make free market economy a reality. Now "free market" economy is a myth, just like "communism". It works nicely for less influential business sector (low and middle income group) but totally fail for big banks and other big corporate houses (e.g oil, pharmaceutical companies). Many reform proposals ( e.g by Obama admin in US) are effectively blocked by special interest groups. All such activities were accomplished though policy makers (irrespective of party affiliation). The same is going on in India, in many sectors.
      Without addressing this basic issue, whatever reform we propose will not get sustainable change and make national governments more accountable to its people as a whole, not just a minute section of them.

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