Making TBTF even bigger

One of the headlines in the Swedish newspapers today is about how Finnish Sampo’s Chairman, Björn Wahlroos, is out to create a scandinavian superbank. His first target is Swedish Swedbank, which should be going pretty cheaply just now since it is the bank most at risk from shaky over-investments in the Baltic states. If Estland and Latvia decide to put the blame for their rocky economies where the bulk of it should lie, and say “screw you, Jack” to their creditors, Swedbank is quite likely to go belly up.

Not that it is that possibility that worries me. What I see is the plan to make banks that are “too big to fail” into even bigger banks that are “even too much bigger to fail” when what the world needs most is the exact opposite, big banks being turned into smaller banks that are “small enough to fail”. And small enough to give the consumer a little healthy competition.

Is there really no-one in all the governments of the world who can stand against this process of globalisation and its other face, oligopolisation, and say “enough”? Globalisation is like capitalism and, for that matter communism. They are good ideas in theory, but none of them takes account of the human factor.

Globalisation, say its proponents, is the best thing that could happen for developing countries. Bullshit. The best thing that could happen for developing countries is help to develop their own companies, based in their own countries and subject to those countries’ laws and economic needs, not gangs of capitalist vikings (sorry, Iceland!) coming in, ripping up everything that’s not tied down and some things that are, and taking it away to their longships for transport to the Netherlands Antilles where it is resold to the home office at many times the purchase price, thus reducing the actual displayed profit in the home country. After some twenty years of rampant globalisation, how much really have the developing nations been lifted from their former poverty? And how much more powerful have the global companies become? How many global companies now have an economy larger than all but the largest countries? They didn’t put all that money into the development of the developing countries.

Somehow we have to find a way to build ethics into our legal systems, both nationally and globally, so that activities such as the Icelandic banks engaged in, selling loans tied to foreign currency to their countrymen and at the same time selling the home currency short, all of which was legal but not ethical, can be punished. It would be especially nice if the punishment fitted the crime, such as confiscation of a multiple of the amount of the profit. I would like to see some university – how about my old alma mater, the University of Iceland – introduce a compulsory course in both the law and economics faculties on ethical practices and ethical legal systems.

© James Wilde 2015