• Crash as Cash Can – Crises, Bubbles, Speculators – 1929 and Today

  • By Fritz Weber | 27 Oct 11 | Posted under: History , Theory
  • In autumn 2008 the world experienced a financial crash, which brought the financial markets to the outer edge of collapse. Then peace returned (or more accurately: organised pacification), until another issue gave new cause for worry. Now it was the nation-states – because they (allegedly or really) “had lived beyond their means” and gotten into debt – that were in the dock. The market has been let off with probation. It will be left unimpeded as it busies itself with new fields of speculation, raw materials and food. However, the bill must and will be paid by others – as is so often the case.

    In this problem there is nothing new: In the last 400 years a financial crisis has broken out about every ten years.1 Also in the 20th century such disturbances were part of normality – except for the period of 1945 – 1971. At that time financial markets were strictly regulated worldwide.2 Starting in the 1980s, the dikes were removed.3

    The result is hardly surprising: According to IMF research, in the two decades after 1975 there were 158 currency, and 54 bank, crises (mostly in the developing or emerging countries), which entailed economic damage at the level of more than 8 % of GDP, and in the case of bank crises even 11.5 %,4 in the USA, in Japan and elsewhere. “On a worldwide level”, the German economic historian Werner Plumpe writes, “currency turbulence has increased since the 1980s (…). The picture, well-known from the 19th century, of a many-sided crisis occurrence – of conjunctural crises, speculative exaggerations as well as currency and debt crises …, has returned”.5

    Parallels to 1929?

    It is often asked whether there are parallels between the world economic crisis of 1929 and today. Statistical evidence speaks just as much against this as does research into the causes.

    In speaking of this year, most people think of the October 1929 stock-market crash on Wall Street. The bursting of the speculative stock bubble, however, was only the trigger of the worldwide depression. Its causes must be sought in a myriad of structural dislocations of the global economy, which in part have to do with World War I. Only in the USA was there a boom before 1929; in Europe the 1920s were less “golden”.

    The outbreak of the world economic crisis also brought the hidden problems of European banks into the light of day. This culminated in an acute financial crisis, whose point of departure was the collapse of the Österreichische Credit-Anstalt in May 1931, which rapidly overtook Germany and Great Britain and further aggravated the crisis of industry.

    In contrast to 2008, the problems of the banks at that time were not the cause but the consequence of the problems of industry. And the power of financial capital rested on the close connection with industry, not – as is the case today – on the conscious separation between the two.

    What happened in 2008 was, in the words of the by now much vilified British Prime Minister Gordon Brown, the result of a three-decades-long development, which can be identified with the economic-policy dominance of neoliberalism.6 This era of blind trust in the market is far from over. The struggle for economic-policy hegemony has, on the contrary, just begun; it has merely changed theme. In the meanwhile, there is no more talk of the failure of the financial markets and the reckless crimes of the banks and their managers, rather the talk is of the fault of the politicians and of getting into national debt – see the examples of Greece, Ireland, Portugal, Spain, Italy and perhaps soon also France. But we cannot be made to forget the excesses of a casino capitalism, which invented securities and moved them through the financial ether, the danger of which was hardly understood by anyone. They are the true causes of the problems of national debts.

    While today one part of the herd of speculators is throwing itself into raw materials, precious metals and food and accumulating a dangerous potential for new bubbles, the other part is concentrating on isolating and pursuing financial “rogue states” declared to be unworthy of credit. The same rating agencies who frivolously or criminally gave triple A ratings to the legendary subprime mortgages from which the last financial crash arose, are now downgrading state bonds to the category of junk bonds, and are doing the groundwork for the same bonus hunters who previously talked the Greek government into reckless financial high-wire acts, and today, through their bad advice, want to see the country restructured to death.

    The ostensible “rescue” of the countries is a deeply ideological project, which in the end only serves to rescue the creditor banks. This used to be called “socialising the losses”. This procedure can, in extreme situations be systemically rational, because acute financial crises have their own dynamic and once unleashed are hard to get under control. Nevertheless it is noteworthy that the finance sharks have become so powerful that for a year now they have been able to drive the procrastinative EU like cattle.

    Is the crisis already over?

    The financial crisis, which only at the last moment was fielded by the aligned interventions of banks of issue and governments in Europe and the USA, is still not over. As in 1929, the improvement of the economic situation is potentially endangered by the overreactions of the so-called “markets” and of the governments. A new aggravation of the crisis is – despite all the differences with 1929 – basically possible. It is only the sequence of the crisis which differs: In 1929 the crisis broke out in the real sector (in agriculture and industry), spread two years later, in 1931, to the financial sector and from there retroacted through wrong economic-policy decisions on the real economy.

    Such a danger also essentially exists today when all countries prematurely and in dogmatic zeal rapidly reduce the deficits (keyword “deficit brake”) that arose from socialising the losses. On the other hand, there are crisis-softening factors such as the still unbroken dynamic of growth in the big emerging countries like China, India and Brazil.7

    Before the First World War Marxist thinkers like Rudolf Hilferding analysed the beginnings of the dominion of “finance capital”. But it is only in the last twenty years that the financial sector has emphatically appointed itself masters of the world: The banks and “shadow banks” (funds) freed of all regulatory fetters have played for the world a melody that has now really made the financial markets and the global real economy dance: in 1980 the gross world product (GWP) was 12 billion dollars and thus higher than world financial assets (10.1 billion). Sixteen years later the GWP was 48.3 billion dollars, but financial assets amounted to 167 billion dollars, of which 100 billion represented private assets.8

    In 2010 the GWP was 63 billion dollars. The volume of worldwide traded stocks and bonds was higher: 87 billion dollars. In the same year the estimated global nominal volume of the financial derivatives traded off-market (over-the-counter) amounted to 601 billion, the volume of currency transactions (projected on the basis of April 2010 turnovers) reached the fabulous level of 955 billion dollars, that is, almost 15-fold the GWP. So much for illusions of the potential for intervention of countries and banks of issue in the case of a global financial panic!

    The dance of the financial protagonists is still not over. However, one chimera has at least served its time: the idea that the inflating of the financial sector could lastingly create social wealth, growth and jobs, without the banks having to fulfil their traditional function, the financing of the real sector. In reality, the huge growth of added value in the financial sector rested on the systematic underestimation of the risks and the piling up of phantom profits.9

    A bank is not just a bank

    Above all the bloated financial sector has to be reduced in size. However, in the financial sector one has to distinguish between two types of banks: those whose main business then and now consists in making credit available to the productive sector and those who carry on speculative activities, up to and including the so-called “shadow banks”, which are mainly hedge funds. The commercial banks mainly felt the secondary wave of the 2008 shock as the crisis began to spread to the real sector and broadened into a worldwide crisis of credit and trust in whose wake the refinancing channels threatened to dry up.

    To a great extent (especially in the financial sector), the economy is psychology, and has to do with trust and optimistic expectations for the future. Each financial crisis is the transformation of euphoria into an acute panic neurosis. At the end of 2008 the mistrust of the banks among themselves reached a point at which they were about to cripple the loan market.

    Since the commercial banks did not want to lend any more money to each other, the banks of issue and governments stepped into the breach. The governor of Spain’s central bank described this dangerous situation with these drastic words:

    “Inter-bank traffic does not work, and it sets in motion a vicious cycle: The consumers don’t buy, the entrepreneurs don’t hire, investors don’t invest and the banks don’t lend. We are facing a near total paralysis…”10

    This is in fact the worst-case scenario, out of which depressions – it is no coincidence that this word comes from psychiatry – are made. And in reality markets and stock exchanges know only two conditions: manic and depressive. If one gives in to illness, the result is what is now occurring.

    One can of course believe that the speculating banks must have learned from their mistakes – if it really were a casino, as many think! But it is a veritable financial industry, which – driven by the hunt for quick money – has carried on just as it had before 2008 (or nearly so). Look at the UBS in which the bank directors let a young gambler play with proprietary trading, as long as everything goes well. If things turn out badly, just have him arrested.

    As in the world economic crisis of the 1930s, new strict rules, as a minimal programme, are essential – if one indeed cannot immediately or directly abolish capitalism as a whole. At that time bank legislation was reformed throughout the whole world. In the USA the 1933 Glass-Steagall Act drew a sharp line between investment banking and the “normal” commercial-bank sector. The repeal of this law under Bill Clinton decisively contributed to the gravity of the 2008 crisis.

    This gigantically swollen financial sector is embedded in a new capitalist system, in which the industrial sector is avoided because financial investments generate much higher returns. For the real sector new “theories” were invented, such as shareholder value, which has made into the highest principle that of quick profit at any cost. Those who have profited from it are once again mainly institutional financial investors (banks, funds, insurance).

    In the industrialised countries, all of this led to the reduction of the share of national income accounted for by wages. The gap between rich and poor, as even the Neue Zürcher Zeitung (NZZ) writes, in the USA has “in the meanwhile become bigger than in the traditional banana republics”. 1% of the US’s population (as of 2007) now receives more than 18 % of the national income. High earners make 531 times more than an average worker. In 1980 this proportion was 1:41.11 Interestingly, in 1929 there was a similarly extreme proportion: The top 1 % made 18.4 % of all income; in 2007 the percentage was 18.3 %.12 Whether such a constellation implies a disposition to the formation of speculative bubbles would be an interesting question for research into the causes of financial crises.

    In a closed economy this would inevitably provoke a crisis of under-consumption. Neoliberalism solved the problem “creatively”: by displacing production into low-wage zones a room for manoeuvre for the reduction of real wages in the rich economies opened up, which allowed the securing and expansion of traditional consumption behaviour. As just one example: In the US’s textile industry the hourly wages in 2002 were $15.10, while in Mexico it amounted to $2.30, in India to $0.40 and Bangladesh $0.25.13 It is for good reason that our t-shirts do not come from the USA.

    New old dangers

    What is dangerous about the crises in the financial sector is that they spread to the actually productive sector and thus set in motion a chain reaction toward the bottom. Whether this occurs also – and mainly – depends on the reaction of economic policy. The danger is that the first, reasonable quasi-Keynesian crisis reaction of 2009 will be followed by a long period of financial-policy orthodoxy that – as after 1929 – will aggravate the crisis in the real sector and in the end still have to be corrected in an interventionist way. The textbook example of this would be the US: After the New Deal, under pressure of so-called “public opinion” the Roosevelt Administration in 1937 was ambushed into returning to a balanced budget. The result was a new economic downturn, which was only overcome through the arms build-up as a result of World War II.

    Today deficit reduction is once again being demanded at any price (“debt limit”, “debt brake”). What would happen if, for example, all Euro countries were to pursue a restrictive course we don’t even have to bother describing. One can even read what would happen in a NZZ report on Ireland:

    According to Moody’s … due to the austerity programme it is uncertain how quickly the Irish economy can recover … The statement implies that the country’s strong austerity course could lead to a downward spiral. In so doing the job-cutting in the public sector can lead to more unemployment, decreasing demand and falling tax revenues, which in turn would make further budget cuts necessary. The Irish government’s hope, however, is that the austerity course will in the middle term lend the country more credibility in the financial markets, allow a recovery of state finances and lead to the recovery of the economy. In this scenario a major role is assigned to exports.14

    Purchasing power is always supposed to come from somewhere else. But when everyone does the same thing the sum is zero. That the Irish budget deficit has to be reduced due to the reckless policies of the past is beyond doubt. In 2010 it amounted to 12 % of GDP; if one includes state bank aid in the calculations, it comes to 32 %.15

    If, in the place of Ireland, one considers Austria, and shifts the scene to the 1930s and writes “deflationary policy” instead of “austerity”, one gets – also in regard to the distribution of the crisis’s burdens – a disquietingly perfect parallel to the period of the world economic crisis.16

    As in Ireland, so also in Spain: A recent OECD study recommends tax hikes in Spain (in the event that the government’s plan is at all realised of reducing the budget deficit from 11.1% in 2009 to 6% in 2010), through raising the added value tax, as in Austria in 1931, among other things. The study rants at the “excessive protection of the permanent employees” and suggests pension cuts by way of a lengthening of the recalculation times from the present 15 years to the whole working life.17

    An end to such a policy is not in sight. Greece is the showcase for what extreme cuts can mean: According to the government’s plans, in 2011 the budget deficit was to be reduced by 14 million Euros compared to 2010 and thus to fall from 15.4% of GDP in 2009 to 7.4% in 2011. Since then there has been no more talk of this. The budget deficit will be at 9.5%; and the GDP will drop an additional 5.5% in 2011, in 2012 again by more than 2%. According to the most recent announcements, in the future public employees will earn a further 40% less, and pensions will be reduced still again.18 Already in 2010 private consumption plummeted by 40 % from the previous year’s level as a result of the austerity policy; unemployment has doubled.19 In Spain, too, the rate of unemployment, 20%, has never been so high. In Andalusia it was almost 30% in 2010; more than 40% of those under 25 are without employment.20

    Apart from the consequence in the real sector, the financial crisis too is nowhere near having been played out, also not in the USA. There, when the next (commercial) property bubble bursts, almost half of banks could slide into bankruptcy.21 The European banks are endangered not only – as one would have us believe – by national debts but generally by bad loans, by low equity ratios – a problem that also existed in 1929 –, and by the brazenly outsourced money-losing businesses, which do not appear in the balance sheets of the banks themselves.

    If one did not know that more is called for, one could cry out: bank reform is essential! The true dimension of the problem raised by the 2008 crash has been described by the US economist Kenneth Rogoff: “They (the politicians – F.W.) have guaranteed practically any credit in the world and have throw a net over the world financial system”. This has, he explained, certainly “stopped the panic”, but at the same time “a monster” was created, a system in which the tax payer bears the risk. Now, he said, it is necessary “to subdue” this monster”.22

    However, there is certainly no subduing occurring. To recognise this one does not only have to think of the newest scandal with the Swiss UBS; in general the banks and “shadow banks” – especially the US banks – are carrying out transactions just as risky as those before 2008. The subduing appears relatively simple where banks have driven whole countries to the edge of ruin and are extremely beleaguered, as in Iceland or Ireland. In the USA and in Great Britain, on the other hand, financial capital is meeting the attempt to introduce new rules with tough resistance. To call to memory a useful older concept: a struggle for “hegemony” in economic-policy questions has broken out.

    The neoliberals’ biggest marketing trick now, however, is the worry over national deficits and monetary stability. In the value-neutral language of the NZZ: “In the view of many market participants … the measures up to now taken in the Euro zone do not represent sustainable solutions”. For the first time since the end of the 1940s, the article continues, “there is the risk in the economically developed countries that single countries may not completely be able to meet their debt obligations. The danger is greatest in the Euro periphery, but it will soon also spread to other countries, including Japan and the USA”.23As often occurs in closed systems of thought, this amounts to a self-fulfilling prophecy. But this is only a half (speculator) truth: Since the months of the burnt bank fingers in Fall 2008 huge masses of profit-hungry capital are wandering about in all markets in which quick money is to be made with speculative dealings, whether these be in metals, grains or credits to precisely those countries that have been maligned and for which the EU now the garantor.

    And when all budgets are balanced, what then? The big boom or – as after 1929 – a fall into the depression spiral? What is happening three years after the crash: Also in 1930 rosy prospects were painted for the future of the world economy until in 1931 the financial crisis broke out in full fury throughout the whole world and aggravated the economic crisis. It is no accident that the financial crisis originated in those banks – like the Österreichische Credit-Anstalt für Handel und Gewerbe – which, trusting in a (never arriving) boom had for years carried out an over-optimistic, highly expansive credit policy.24

    Also not accidentally, the main institutional victims of the financial crisis that broke out in 2008 were those banks and governments that in their belief in an eternal upward trend had most exposed themselves. Institutions in the financial sector – and also in the area of state finances – which in “normal” times dare to go to the edge do so in blind trust of a fairytale growth. At the first endurance test they get into trouble. This leads to the question of what banks and politicians learn from history. Before 2008 there were – just as before 1929 – enough alarm signals for the formation of a bubble. John Kenneth Galbraith writes in his famous book on the Great Crash of 1929 that the Americans had at the time developed “a veritable obsession” with “becoming rich quickly and doing so with a minimum of authentic effort”.25 Like today. Galbraith also describes the disastrous role played by the so-called “investment trusts”, that is of funds that managed stocks. Not accidentally, it was in this connection that the expression “leverage” first turned up: using the minimal possible resources to “move” the greatest amount”. 26 Like today.

    Before 1929 speculation was concentrated in the New York Stock Exchange. It was there that on October 24, 1929 the famous “Black Thursday” occurred. In the end, American stocks lost 85 % of their value between 1929 and 1932. In 1933 the US’s GDP was about a third lower than it was in 1929. Almost 13 million people were without work in that year; this corresponded to a rate of unemployment of ca. 25 %.27 Only then did the economic-policy counter measure begin to take effect.

    This time – 2008 and afterwards –things went better to the extent that the reaction to the impending financial meltdown was quick and decisive – thanks to the unorthodox measures of the banks of issue and of the politicians who, after years in which they had preached neoliberal water, poured Keynesian wine into the porous financial channels. However, the danger of a plunge into depression is far from over, even if the big western countries will for the time being be saved by the emerging markets in Asia and Latin America. Estimates assume that these countries will in the next 5 years contribute more than 50 % to global growth. Or in other words: The global redistribution away from the “old” economies will continue.

    Political dangers

    No wonder then that parts of the US and European populations fear for the future and are turning to right-wing populist and radical parties.28 But this is not the only right twist that is looming. There are dangerous discourses about democracy, to which we need to be sensitive: In the 1930s democracy in Austria was not only destroyed by Dollfuß and his consortium, but also by the financial experts of the League of Nations, who saw tedious parliamentary decision-making processes as impeding the rapid rehabilitation of state finances.

    There are also such voices today: “Democracy”, the social philosopher Rudolf Burger warned almost a year ago, “is above all a question of form. It consists in the first place of the observance of laws (…) On May 9 (2010 – F.W.) the Euro bailout package was passed in a special European Council meeting – over night. In a single stroke this meant the disenfranchisement of 27 parliaments! Without an outcry. I would not like to evaluate the bailout package substantively. But it really struck me as being equal to March 24, 1933, the day of the Nazis’ Enabling Act, of the suppression of parliament in Germany. At that time it was also a matter of ‘preventing harm to the people and the Reich’. (…) I am expecting a crisis of erosion in all of Europe. No overthrow, no coup d’état, but a growing erosion of the legitimacy of political rule and political structures”.29

    Still more obvious is the authoritarian logic of the “bailout action” in the Irish example, in the Treaty (“Memorandum of Understanding”) between the Irish government, the IMF, the ECB and the EU Commission. Here is how the Neue Zürcher Zeitung sees it:

    The agreement confirms the planned correction of 15 billion Euros or 9% of GDP in the fiscal position until the end of 2013 … Of this, 6 billion Euros alone are cancelled from social welfare. (…) The Irish government has to report weekly to the international money lenders on the status of state budget. (…) On a quarterly basis the state has to report on the number of its personnel and the state payroll. Ominously, the report determines that additional lay-offs will be prescribed as long as the targeted efficiency increases in the government are not achieved.30

    The commentary in the Irish Times: “We have arrived at a humiliating point without parallel”.31 For months now on a daily basis we can read similar comments in Greek newspapers. Still, all of this only paraphrases what Austrian newspapers wrote at the beginning of the 1930s on the demands of the League of Nations, which were constituted approximately like those which are now directed at Ireland, Portugal, Spain and Greece.

    The Salzburger Nachrichten pinpointed the problem – in the context of Portugal – in June of this year: “However the new government looks – it has to do what the EU and the IMF decide”.32

    The journal mitbestimmung said much the same thing.33 EU Commission President José Manuel Barroso, the journal writes, in a meeting with trade-union representatives in June 2010, warned of the political consequences of social protests in southern Europe and did not exclude an end to parliamentary democracies in these countries. He said, the journal reported, “that these countries, with their democratic structures, as we know them, could disappear”. Greek Prime Minister Giorgos Papandreou seems to have considered this, when he publicly said, alluding to the military dictatorship of 1967-1974, that the protests against the austerity course of his government could destroy democracy.34

    A de facto disenfranchisement means submission to the dictates of the financial markets, the IMF and the EU financial experts in any case. It does not have to take such a bad turn as in Austria in the 1930s, when with the assent of the League of Nations’ advisor democracy was dismantled because it stood in the way of “the work of reconstruction”35 and the rehabilitation of state finances.

    Also after 1929, the discussion turned around social cuts, saving on state officials, the limiting of the “power” of unions and – not least – around a “regime” with “expanded powers” on the model of the Brüning government in Germany.

    Today this is still creeping up light-footedly. The publishing house of the Frankfurter Allgemeine Zeitung recently put out a book with the title Dare Less Democracy, in which the “debilitating influence of the ‘voice of the people’ … and of the emancipatory zeitgeist that doubts everything” is bemoaned and a cutback in democratic participation is demanded.37 Already last year it was possible to read in a German periodical in a piece with similar outlook, in which the clumsiness of democratic decision-making processes is criticised, of a “wish for a little bit of dictatorship”, for a “commissarial dictator” in the sense of Nazi jurist Carl Schmitt.38

    In this we have still not received the bill for economic rehabilitation. Today, however, it is not only a question of the redistribution of the burdens of socialisation of losses but – in the sense of a minimal programme – of calling for crisis prevention for the future: stricter rules for the financial system, reinforcement of bank and financial-market oversight, taxes on transactions (with its ur-model the Tobin Tax), etc. Still, even the IMF – and this already a dozen years ago – proposed in an enlightened moment a “judicious regulation to limit short-term capital flows”.39

    Meanwhile, the bustle in the money and capital markets goes cheerfully on. No less than the Chair of the Board of Directors of Deutsche Bank, Josef Ackermann, has recently compared the mood in the financial markets to that before the crash of Lehman Brothers. The banks distrust each other; only the ECB keeps the money market afloat. The markets are, in the jargon of neoliberalism, “extremely nervous”. Every little rumour makes stock-market trends fall. This time the game is about state bankruptcies, “haircuts”, and “credit default swaps”, about betting on the collectability or non-collectability of state loans. “Credit default swaps” have already played a crisis-and panic-reinforcing role in the subprime crisis. It will not be the endgame, but who will pay the bill is – in today’s relation of forces – already clear. Unless those who are asked to pay up decline to play the game.

     

     

    Notes

    1. Charles P. Kindlberger, Manias, Panics, and Crashes. A History of Financial Crises, 3rd edition, New York – Chichester – Brisbane – Toronto – Singapore 1996, Appendix B, pp. 203ff; see also Carmen M. Reinhardt/Kenneth S. Rogoff, This Time Is Different. Eight Centuries of Financial Folly, Princeton University Press 2009.
    2. Franklin Allen/Douglas Gale, Understanding Financial Crises, Oxford 2007.
    3. Michael Bloss et al., Von der Subprime-Krise zur Finanzkrise [From the Subprime Crisis to the Financial Crisis], Munich 2007, pp.23ff.
    4. Neue Zürcher Zeitung (NZZ), April 17, 1998.
    5. Ibid. p 102.
    6. Financial Times, December 11 and 12, 2010. See also Gordon Brown, Beyond the Crash. Overcoming the First Crisis of Globalisation, Simon & Schuster 2010.
    7. That China has enough problems of its own, like the growing indebtedness of the provincial authorities (and connected to this, a potential real-estate bubble) – see Die Presse, January 7, 2011 –, is another story.
    8. ISW Report No, 75, pp. 22ff. (ISW – Institute for Socio-ecological Economic Research, Munich, see http://www.isw-muenchen.de/
    9. On this see the extremely informative article “Mit Vorsicht zu geniessende Expansion des Bankensektors” [the banking sector’s expansion to be enjoyed with caution”] in NZZ, September 23, 2011.
    10. Quoted in the World Socialist Web Site, WSWS.org.
    11. Andrea Köhler, “Die glücklose Nation”[The Unfortunate Nation], NZZ, December 4, 2010; “The Beautiful and the Damned”, The Economist, January 22, 2011.
    12. “The Beautiful and the Damned”, The Economist, January 22, 2011.
    13. “Textile Intelligence”, cited in Salzburger Nachrichten (SN), January 8, 2005.
    14. NZZ, December 20, 2010.
    15. Die Presse, January 7, 2011.
    16. See Fritz Weber, “Sonderfall Österreich. Warum die österreichische Wirtschaftspolitik nach 1931 auf entschiedene Maßnahmen zur Bekämpfung der ökonomischen Krise verzichtete und warum dieser restriktive Kurs in eine Diktatur mündete” [The Special Case of Austria. Why post-1931 Austrian economic policy refrained from decisive measures for fighting the economic crisis and why this restrictive course ended in a dictatorship], in: Manfred Mugrauer (ed.), Wirtschafts- und Finanzkrisen im Kapitalismus. Historische und aktuelle Aspekte [Economic and Financial Crises in Capitalism. Historical and Contemporary Aspects], Vienna 2010, pp. 34-44.
    17. NZZ, December 21, 2010.
    18. NZZ, September 23, 2011.
    19. SN, December 21, 2010; NZZ, December 24, 2010.
    20. SN, January 29, 2011.
    21. Die Presse, September 23, 2011.
    22. Süddeutsche Zeitung, December 1, 2009.
    23. NZZ, December 6, 2010.
    24. See Fritz Weber, Vor dem großen Krach. Die Krise des österreichischen Bankwesens in den zwanziger Jahren, Habilschrift, Salzburg 1991 [Before the Great Crash. The Crisis of the Austria Banking System in the 1920s, Post-doctoral Professorial Dissertation, Salzburg 1991] (To be published in 2012 by Böhlau-Verlag).
    25. John Kenneth Galbraith, The Great Crash 1929, Pelican 1961 (first published in 1955); German translation: Der große Krach 1929. Die Geschichte einer Illusion, die in den Abgrund führte, Stuttgart 1963, p. 25.
    26. Ibid., pp. 85ff.
    27. Ibid., p. 233.
    28. This applies especially to Eastern Europe. In view of this danger, even the head of the Raiffeisen Bank International, Herbert Stepic, speaks of the “danger of the sprouting of nationalisms” and of a noticeable “swing to the right, in which we once again hear talk of racial superiority” (SN, December 28, 2010).
    29. “Die erbärmliche Ästhetik des Staates” [The Pitiful Aesthetic of the State], in: SN, December 28, 2010.
    30. NZZ, December 4, 2010.
    31. Quoted in NZZ, December 4, 2010.
    32. SN, June 6, 2011
    33. mitbestimmung No 4/2011.
    34. NZZ, July 3, 2011.
    35. Rost van Tonningen’s diary entry of July 30, 1934, cited in Grete Klingenstein, Die Anleihe von Lausanne. Ein Beitrag zur Geschichte der Ersten Republik 1931-1934 [The Lausanne Loan. A Contribution to the History of the First Republic 1931-1934], Vienna 1965, p. 98.
    36. Laszlo Trankovits, Weniger Demokratie wagen! Wie Politik und Wirtschaft wieder handlungsfähig werden [Dare Less Democracy! How Politics and the Economy Can Become Capable of Action Again], Frankfurt/Main 2011.
    37. “Ein klein wenig Diktatur?” [A Little Bit of Dictatorship], in: Internationale Politik

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