Facebook riches show how obscene the system is
As people wander the towns and cities of Greece and Spain today looking for work, food and simply the means of survival, in California a company that makes no profits at all will sell its shares for over $100 billion.
Mark Zuckerberg and the other people behind Facebook will be richer beyond their wildest dreams, billionaires many times over, by close of business as the corporation goes from a private enterprise to a public one by selling shares on the stock exchange.
While the Greek Olympic Committee humiliatingly had to find sponsorship from a German car firm to stage the torch handover yesterday because the country is bankrupt, Zuckerberg and his friends are laughing all the way to the bank.
The contrasts between Facebook and the rest of us don’t just border on the obscene – they are way beyond that. In the United States itself, the real unemployment rate is said by experts to be closer to 14% than the 8% cited by official figures. Hundreds of thousands are homeless and many millions below the poverty line.
The Facebook “flotation” is also another prime example of fantasy finance, the same stuff that drove the debt-laden boom of the first years of the century and eventually helped to bring the global economy down.
Millions of small investors, drawn by the prospect of easy money are, however, likely to get their fingers burnt as the major financiers move in.
With the global economy on a knife-edge the unreality persists. Still the bankers are paid in telephone numbers (on top of their bonuses) while 25% are out of work in Spain and the Greek standard of living has fallen off a cliff as a result of austerity demanded in exchange for loans.
The eurozone crisis is intractable. It’s not a matter of if but when Greece either leaves or is ousted from the single currency. Fresh elections next month seem certain to propel the left-wing Syriza into government. Its leaders have pledged to renegotiate the bail-out terms with the EU and European Central Bank but stay in the euro. They can dream on.
As in Spain, where 16 banks were downgraded overnight, people in Greece are beginning to take their money out of the banks just in case they wake up one Monday and find their euros have been replaced by the New Drachma or the New Peseta at much lower values.
Judging by the near hysteria from prime minister Cameron in London, the impending break-up of the euro will precipitate an economic slump as well as a banking crash that according to the BBC’s Robert Peston was only narrowly avoided at the end of last year.
Martin Wolf, the Financial Times’ leading analyst, confirms this. He wrote last night:
These perils are not of concern to the eurozone alone. Taken as a whole, this is the world’s second-largest economy, with the largest banking system. The risk that a bigger eurozone upheaval would cause a global crisis is real. As frightening is the likelihood that eurozone crises would become permanent features of the world economy.
There is no future for the majority along this road. The capitalist system is actually broken and beyond repair. There is no choice but to think along the lines of reconstructing the economy along lines of co-operation, mutuality and not-for-profit, democratically-owned enterprises.
That would involve cancelling all sovereign debt. Bond markets that are presently holding countries to ransom would be shut down, along with the stock markets. Investment bank speculation would become a thing of the past. All the expertise in the financial industry would be put towards creating new, equitable monetary arrangements between countries.
This scenario undoubtedly seems a long way away to most people. But with the crisis reaching a tipping point, these are the sorts of considerations we will have to apply ourselves too in the near future.
18 May 2012