Dignity and Democracy: Escaping the Clutches of the Financial Markets

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Would it be erroneous to say that those who are now at the top are the ones who caused the whole disaster in the first place? That would include Deutsche Bank, whose CEO, Josef Ackermann, has just announced such magnificent financial figures. When Ackermann was asked how concrete the bank's willingness is to contribute to solving the crisis, a November article in the German financial daily Handelsblatt says he replied by saying the issue is taking a "very unfortunate turn at the moment." The markets, Ackermann added, have reacted negatively to this debate. His remarks could be seen as a threat: Those who make demands will quickly find themselves up against the banks.

At Deutsche Bank's annual meeting last Thursday, Ackermann crowed that the bank was in the process of "bringing in the harvest." But the harvest of what? And from what seed? Investment banking alone is expected to contribute €6 billion to the anticipated €10 billion in annual profits. Have we already forgotten that excessively greedy investment banking triggered the financial crisis in the first place?

Deutsche Bank played a key role in that process. The United States government is suing a subsidiary of Deutsche Bank, accusing it of pursuing "reckless mortgage lending practices." Yet Ackermann continues to shape policy worldwide. As one of the major players on the financial markets, he is partly responsible for determining whether and under what conditions nations can borrow money.

The rating agencies also continue to participate in world politics, seemingly unperturbed as they issue credit ratings on which the fate of entire nations hinge because they determine the interest rates for government bonds. Belgium is in danger of losing its AA+ rating, and Fitch Ratings has just revised its outlook on Belgium from "stable" to "negative." Have we already forgotten that the big rating agencies were partly responsible for the financial crisis because of their positive valuations of bundles of assets that contained toxic securities?

Blame and Brazenness

So this is what the new masters look like. They were substantially to blame for part one of the financial crisis and is being brazen in part two. They are extremely jumpy, greedy and only interested in numbers. Those numbers inform the way they control and drive politics.

But why do politicians allow themselves to be controlled and driven? Why don't they simply shake off the unforgiving dominance of the financial markets? The answer is that they can't because the political world is dependent on the banks, and it has only itself to blame. Greece would not have fallen into the maelstrom of the financial crisis if it hadn't been deeply in debt. Greece has borrowed more money than it can handle, and it constantly needs to borrow even more. It has become addicted to credit because of its own dissolute lifestyle. As a result, the country has become a pawn of rating agencies, interest rates and the calculations of men like Ackermann.

In principle, this applies to all countries in the euro zone, including Germany. Although the German finance minister can easily service all loans, he too is dependent on ratings, interest rates and Ackermann's calculations. Through the euro, Germany is entangled with Greece, Ireland and Portugal, and its own financial situation isn't spectacular enough to eliminate all concerns. The German government cannot simply do what it thinks best. It must constantly take pains to avoid being pulled into the maelstrom itself.

The Clutches of the Markets

Now, policies of immoderation -- the urge to impose as few burdens as necessary on citizens while giving them as much as possible -- is coming home to roost. Such policies gave us a high standard of living; but now, partly as a result of the euro, it has delivered us into the clutches of the financial markets.

As such, it isn't just the banks that are at fault for the current disaster. Politicians also deserve their share of the blame. But that isn't the whole story either. We, the citizens, are also culpable. Don't we expect high returns from financial institutions, and don't we expect a smaller tax burden from the government while receiving generous subsidies and social benefits?

In other words, the financial and euro crisis are a reflection of our own wishes. We play a role in the behavior of banks and politicians because they also seek to fulfill our wishes so that they can win us over as customers or voters.

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• Part 1: Escaping the Clutches of the Financial Markets
• Part 2: The Reasons: Greed and a Dissolute Lifestyle
• Part 3: Consequences: Dangers to Democracy
• Part 4: Solutions: Humility and Dignity