Seven Billion Lost in Financial Roulette

Feb 4, 2008

The following article appeared as the editorial in the January 31 edition of Lutte Ouvrière (Workers Struggle), the paper of the revolutionary workers group active in France.

Fifty billion Euros played (or 75 billion dollars), 7.5 billion dollars lost in speculative operations by a single individual, without a bank even realizing it! The 75 billion dollars played with by this one trader in a French bank represents one-fifth of the entire state budget of France and the annual salary of some four million workers paid at minimum wage. And still, the directors of Société Generale repeat in order to assure its stockholders that, despite the 7.5 billion lost and another 3 billion that disappeared in other speculative maneuvers, the bank continues to make a profit. The proof: It just bought up a Russian bank!

The trader of the bank who succeeded in his coup by avoiding all the bank’s systems of control is perhaps a computer genius. But the economic system in which this is possible is still the same crazy system.

In the enterprises where products and real wealth are created, speed-up is imposed more and more in order to gain a couple of seconds; restructurings are carried out in order to reduce the number of workers on the job; wages are frozen even while prices continue to rise; the exploitation worsens with the claim that we have to go through this is order to stand up to the competition and to globalization. And all this, so that the profits that result can be used in financial speculation where billions can go up in smoke!

As a result, even the government ministers begin to speak about the need for controls and making corporate operations less secretive. But all this business affair demonstrates is that their internal controls or those by the so-called specialists amount to nothing. And yes, the first necessary step would be to reveal all the secret affairs and the bank secrets. It would be to allow the employees of the bank, the unions, and the population to control all the ways by which these funds transfer, accumulate or are squandered!

As it appears, by hurriedly selling off the rotten stocks purchased by the trader, Société Generale could have amplified the stock market crash that took place. If that was of concern only to the stockholders, one could ignore it or even rejoice in it. But the financial crisis could at any time develop into a grave crisis of the economy and of material production itself, despite all the blabber of President Sarkozy or Finance Minister Lagarde, who swear that all is well in France.

An economic crisis means the closing down of companies, massive layoffs and growing misery for those who work. And even if we escape such a crisis again this time, it will be because the government is bailing these banks out with new subsidies and other forms of aid.

When the current financial crisis hit last summer, the central banks, that is to say the governments, had already turned over several hundreds of billions to the financial speculators in order to stop them from going bankrupt. And again, and as always, it is the popular classes and especially the workers, who are being forced by government leaders to foot the bill.

There is no potion that can treat the craziness of this system. The capitalist economy is not only profoundly unjust because it is based on exploitation and designed to enrich the wealthy by impoverishing the poor. It is also an unpredictable economy, ungovernable even by those who profit by it.

That is why in the past, when the Communist Party was really communist, and even before that, when the Socialist Party was really socialist, these two parties stood for the overthrow of the capitalist organization of society. This objective is fully on the order of the day even if these two parties have long ago abandoned that objective.