Speaking of self-serving credulity …

17 Mar

I’ve been using that term so often of late I’m tempted to give it in abbreviated form. Trouble is, SSC is too close to this site’s SCS for comfort. But a shortened form is required, given that self-serving credulity is at pandemic levels within our media and political castes.

As Upton Sinclair long ago put it:

It’s hard to get a man to see a truth his salary depends on him not seeing.

Or a woman. Here’s how Editor-in-C. Zanny Minton Beddoes opens her Economist This Week  round up of March 17:

This week I was struck by a sense of déjà vu. I was living in Washington, DC during the financial crisis of 2007-09, overseeing The Economist’s global economics coverage. And I once again happened to be in America for another banking collapse as Silicon Valley Bank went bust, sending shock waves through markets. The scale is different, as is the cause. This time rising interest rates have left the banks exposed. But much of what unfolded over the past week was familiar: the sense of uncertainty, the panicked wait ahead of the authorities’ intervention—and a situation that is worse than initially imagined. Banking crises are always frightening. Our cover leader in most of the world this week explains what went wrong and offers suggestions for how the financial system can be made safer. 1

I’ll keep my response short. First, the only people not “struck by a sense of déjà vu”  this week would have to have been held in solitary on Guantanamo Bay, else suffering chronic amnesia. The West’s hyper-financialised forms of capitalism now lurch with accelerating frequency from crisis to crisis, each ‘solution’ sowing the seeds of the next and more severe collapse.

Them’s dialectics for you!

That’s because each ‘solution’ is constrained by a sacred axiom. It must not challenge the rights of a tiny elite to grow absurdly and obscenely rich regardless of the consequences for peace, environmental sanity or social justice and stability. It must not, for instance, use QE to write down student debt or place money in the hands of ordinary people who have no choice but to spend it in and thereby boost the real economy. Nor – duh! – must it take banking into public ownership …

But since I promised to keep this brief, I’ll confine myself to laying down two markers for future posts:

  • Western capitalism in crisis, war in the Ukraine and escalations in the South Pacific/South China Sea are not randomly coincidental. They are deeply connected, though no wing of corporate media is capable of saying so.
  • Francis Fukuyama – end of history, thy name is neoliberalism! – and Gordon Brown – we have ended boom and bust! – were neither idiots nor (on this question at least) liars. Just high profile victims of SSC.

So when Zanny Minton Beddoes tells me The Economist’s “cover leader … explains what went wrong”  I expect half-truths at best. And you know – Telling a Martian what hospitals do – my views on those.

And when the same sentence heralds “suggestions for how the financial system can be made safer”,  I know I’m in the presence of self-serving credulity on steroids.

Give that Economist leader a read by all means. (I’ve been watching The Economist’s descent into self parody since the run up to February 24 last year, but that doesn’t stop me keeping tabs on its wilful idiocies.) But if you want to understand (a) what really went wrong at Silicon Valley Bank and Credit Suisse, (b) why these aren’t isolated failures but falling dominoes and (c) the drastic measures needed – assuming, as with Mass Extinction Event No.6, we haven’t passed the point of no return – try the three pieces hosted in yesterday’s post.

* * *

  1. Sorry, can’t supply a hyperlink. I get regular e-alerts for The Economist which feature the Minton Beddoes editorial round-ups as teasers I can’t find on the site itself.

4 Replies to “Speaking of self-serving credulity …

  1. Did some reading first thing this morning and it was provided by an unexpected source:

    Banking Crisis Worsens: Swiss Bank is First “Too Big to Fail” Bank to be Bailed Out as Saudis Withdraw Support. March 16, 2023

    https://healthimpactnews.com/wp-content/uploads/sites/2/2023/03/Swiss-Bank-Bailed-Out. by Brian Shilhavy. Editor, Health Impact News

    Switzerland’s second largest bank, Credit Suisse, which has been experiencing bank runs and plummeting stock valuations since the end of 2022, became the first SIFI (systemically important financial institution), or “too big to fail” bank, to crash today forcing regulators to step in and ensure a bailout.

    The Saudis almost single-handedly crashed the U.S. Stock Market (and stock markets around the world) this morning when they announced that they were not going to put any more money into the failed Swiss bank.

    Problems at Switzerland’s second-biggest lender are causing stocks around the world to falter—and reigniting fears for the banking sector.

    On Wednesday, Credit Suisse ‘s top shareholder said in a Bloomberg interview that it wouldn’t invest additional money in the Swiss bank. Saudi National Bank Chairman Ammar Al Khudairy told the media outlet that taking a stake of more than 10% in Credit Suisse would trigger regulatory complications.

    That pushed shares of Credit Suisse to a new low on Wednesday. The stock closed down 24% in Zurich and its American depositary receipts (CS) were down 25% in U.S. trading.

    While the U.S. Stock Market did end lower today, it most assuredly would have been a blood bath if Swiss Regulators had not stepped in to ensure the world that it was going to bail out their troubled bank. This was after European markets had closed, however, and European banks’ stock values lost 7% at end of trading in Europe today.

    Swiss National Bank Issues Statement: “Will Provide Liquidity If Necessary”


    Saudis fold – refuse to throw any more money at Credit Suisse
    Credit Suisse stock hits record low
    Credit Suisse 1Y CDS explodes as counterparty risk hedging soars
    Credit Suisse execs urged a “show of confidence” from the Swiss National Bank
    ECB quantifying exposures to Credit Suisse
    US Treasury monitoring situation, talking with other regulators
    Fed working with UST to quantify exposures
    One major govt is pressuring Swiss to intervene
    Systemic risk threat spreads globally
    Swiss authorities seeking to stabilize bank
    Swiss National Bank and Finma issue statement of support

    The Swiss National Bank and the country’s regulator said Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks and that the SNB will provide the bank with liquidity if necessary, in a statement.

    Since a simple statement made by Saudi National Bank Chairman Ammar Al Khudairy almost crashed the entire world’s financial system today, what does that tell you about the frailty of the current banking system? […]

    See also: https://www.marketwatch.com/articles/credit-suisse-bank-stock-price-news-26868dbd

    List of SIFI’s also adds the US G sibs [Global Systemically Important Banks] introduced by the US FRB which imposed special tests and capital requirements adopted in Europe. In November 2021, the FSB updated the list of G-SIBs, and the following banks were included: Agricultural Bank of China, Banco Bilbao Vizcaya Argentaria, S.A., Banco Santander, S.A., Bank of America, Bank of China, Bank of New York Mellon, Barclays, BNP Paribas, China Construction Bank, Citigroup, Crédit Agricole Group, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs, Groupe BPCE, HSBC Holdings plc, Industrial and Commercial Bank of China Limited, ING Bank, JPMorgan Chase, Mitsubishi UFJ Financial Group, Inc, Mizuho Financial Group, Inc., Morgan Stanley, Nordea Bank Abp, Royal Bank of Canada, NatWest Group, Société Générale S.A., Standard Chartered plc, State Street, Sumitomo Mitsui Banking Corporation Group, UBS Group AG, UniCredit S.p.A., Wells Fargo.

    Compared with the group of G-SIBs published in 2011, three banks have been added: Banco Bilbao Vizcaya Argentaria, S.A., Standard Chartered plc, and Industrial and Commercial Bank of China Limited; and three banks removed: Dexia N.V./S.A., as it is undergoing an orderly resolution process, and Commerzbank AG and Lloyds Banking Group plc, as a result of a decline in their global systemic importance.

    I’m still pouring through all the banking rules and stress tests so don’t know much more than what I have already learned. I’ll have to wait until someone blogs a plain English & much more concise explanation of the worlds banking systems to be able to follow what is really going on. I do know that more than a few people with mega bucks are getting their money out of some banks to hide their wealth in safer options. My “mega bucks” will fit easily under my pillow, never mind the mattress and is unlikely to cause a run on the banks.

    Look forward to your next blogs on this matter.


    • Thank you for that link Susan. Apart from being a good read it also included some useful links.

      Like this piece from Zerohedge:


      “In Vancouver, Canada, a man who owned a Tesla opened the door of a Model 3 parked in a supermarket lot with his smartphone app. He got into the car and drove to a nearby school to pick up his kids. However, he later realized he had accidentally taken someone else’s Model 3.”

      Which, upon reading, generated the following thought:

      One of the very early memes when computers first started to become widespread in the workplace and at home was GIGO – Garbage In, Garbage Out.

      Somewhere out there is a similar meme waiting to be formed which describes the situation in which so called AI – Artificial Intelligence – gets created by DI – Dumb* Intelligence and as a result ceases to be intelligent at all.

      The West: From AI to DI in twenty years.

      *or, if you prefer Dunce Intelligence.

    • Thanks Susan. No quarrel with what the author (a Christian since a Damascene moment in his car) says in the extract. He does, however, follow the passage you cite with this:

      Others are now waking up to the fact that this financial crash is related to Big Tech failing, something I have been saying since last year.

      What does he mean, “related to”? Big Money has long been inseparable from Big Tech. (What is money if not information?) In that regard the statement is near tautological. But the roots of crisis rest assuredly in what I keep calling the West’s hyper-financialisation. The chimera of endless “growth” and “value” in its FIRE economies (finance, insurance, real estate) turn heads in Wall Street, Washington, the Fed and their equivalents in London, Frankfurt, Zurich etc.

      Fast and easy profits have a knack of doing that, whether the heads being turned have IQs in the stratosphere or are thick as two short planks. (SSC again, and heads not turned get stomped in the stampede.) Minton Beddoes and chums have to be smoking some damn strong stuff to think they can roll up with a list of ‘suggestions’ to ward off future crises. Do they seriously think they can come up with something no one since 1929 and before ever thought of? That’s another thing about SSC. It can beget hubris. Ask Gordon!

      The problem with all those masters of the universe walking the tightrope of what Dave Hansell calls the Ponzi Scheme of hyper-financialisation comes the moment somebody makes the mistake of looking down.

      • I’m not a genius and so, concentrating as I was on following the more complex nuances of International Banking, I totally missed this somewhat naive comment he made. Trying to keep up with something I have no formal qualifications in is taxing enough without catching on to silly observations.
        It’s alright for you, your brain works, mine is just a bit iffy, OK it’s a lot iffy. But I am trying(very trying).
        Hope to see more of this from your blog as I tend to rely on it a lot.

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