Do banks rule the world?

In a controversial interview with the BBC Alessio Rastani, and independent trader, stated that banks and not governments rule the world. Devote 4 minutes to watching Kristine Frazao investigate what he said:

Now with markets moving on Italy and other countries with sovereign debts, it’s a good time to contemplate who really decides what happens in the world economy. Is it more important that traders make profit than what happens to, say, the entire population of Italy? Not to mention the whole world with the recession in Europe getting worse, or at least being prolonged. What can governments do to really counteract what speculators are doing?

Do you agree with Rastani that if we wait for governments to sort out the problems in the world economy we will wait a long time? Are the banks controlling what happens? Is he correct when he says that traders welcome a recession because it enables them to make money faster? Do you agree that it’s easier to make money in a downward market? Will the problems in the world economy go on indefinitely if we expect governments to sort things out? Do you agree with Rastani that the world economy will collapse again? Or do you believe governments will manage to make the global economy work and grow again?

Video: RTAmerica – You Tube

41 thoughts on “Do banks rule the world?

  1. For the most part, the banks finance the election campaigns of politicians in the US, so the elected officials are not going to bite the hand that feeds them when things go bad.

  2. •Government no longer rule countries, as they should/could, since they are strongly lobbied by powerful organisations representing the interests of major business groups (weapons, oil, pharma, etc) ; and too many government members are to deal with conflict of interests, as they hold a huge number of shares in those groups, directly or indirectly. Besides para-governmental organisations (UN, WTO, IMF, Davos) are also influencing national politics.

    • Knowing the banks from the inside I think banks have become all powerful within our society, and their interests are not the one of the people; so in the absence of a true and wise leadership, without conflict of interests, banks will be disconnecting even more from the public in the future. People are charged to use their own money. Does anyone think it makes sense? Governments have the power to control banks procedures and politics, and could easily create a co-steering committee to make sure people's interests are not at stake. Unfortunately I don't think that people's happiness and fulfilment are at the heart of any bank or government's mission.

    •Politicians have lost the sense of their mission and got entangled in too many scandals all over the planet, they're losing the trust of people very quickly and most of them try to ignore this fact, playing the same game, thinking they'll be able to trick and manipulate people for a long time. The US Congress 's plan to control (censorship) the Internet is part of their strategy to counter fluxes of information that allow people to get more acquainted with what is really going on. Some of my friend in China do not even have access to worldwide famous petition sites as Avaaz anymore. Politicians do not lead anymore, they try to manage countries on a daily basis by extinguishing fires and providing quick fix solutions.

    •Corruption is everywhere: police, finance, markets, administration, politics. I have been working with two ministries in Canada, have friends and relatives at CEO levels and within governments, I have never heard anyone who was able to state that corruption was a product of our imagination. The bigger it gets the smarter and scarier the cover up technics are, leading to murders when needed.

    •The public is relying too much on information conveyed by the media, which are part of the problems (corruption, political alliances, biased information, brain manipulation, communication deceptive technics, etc) and has to conduct its own research and communicate via web based platforms and community based organisation to really get to know what is going on. The movement is growing internationally and will be hard to dismantle. Governments are and will keep spying, and try media or PR experts paid by governments and corporate organisations will interfere to discredit the leaders and counter their efforts by releasing false information. How many research have already paid and conducted by governments paid agencies to manipulate people's opinion in favor of a corporate organisation (e.g. GMO's, pharmaceuticals, military)?

    • Our societies do not have long term visions anymore, and this is missing, the spiritual side of our existence is getting lost in a materialistic approach. We need leaders who are philosophers and understand what human life is all about, and take the right decisions accordingly for the good of all mankind. The last thing we need is leaders playing games with our lives to increase profits, margins or greed satisfaction levels of a few. I think we are going to reach a point of our civilisation where leaders will have to make radical changes or face an inevitable rebellion. A lot of facts are showing that the way governments have led for the past decades is no longer an option. People are learning fast, they are less naive and they will require actions, no talks and promises showing their leaders have acknowledged their wishes. It may take many more decades, but I think we are about to witness an important new chapter or our civilisation.

  3. Government(s) can't find a solution, because they are the problem! Looking at unemployment levels and incomes it would be in the best interests of Governments and Banks to get more money in the hands of the private sector working class and private sector middle class…This should drive net new economic activity! When the majority of private sector people are feeling good about their financial situation -they spend money.

    In EMEA and the US there are +/- 60 Million people unemployed and about +/- 600 million consumers… I suspect if we all dig deeper -we might discover the 60 million out of work are from the private sector. The total number of consumers will begin to show large segments of part-time workers and a large segment are public service employees. When the majority of private sector people do not spending money -less taxes for governemnt and the governments don't reduce their headcounts they seem to take on more debt and find new ways to spend money! Over the last 100 years Governments have taken million dollar problems and turned them into TRILLION DOLLAR problems.

  4. I've been thinking that there is something behind world bank, imf, swiss bank and that kind of banks. I agree with this man that banks rule the world as they can form a government.

  5. As far as money has power (so much power that it even decides and forms the government), I’m sure banks and government go hand in hand!

  6. I'm with Ferdinand Braudel who posited a tri-partite structure to the world: at the base is everyday life and at the top is real capitalism, both of which are mediated by markets. The problem, of course, is defining real capitalism…about which there is little agreement. Is it epitomised by Warren Buffet or is it a more anonymous process of wealth and power accumulation that is timeless? That said, commerce (however construed) is the real world ruler, the creative driving force throughout history in reshaping the existing order of things.

  7. I think that the banks are watching out for their own interests and that the governments give them a lot of what they want. They don't rule the world but they do have a lot of power, especially given that politicians give into the big contributors.

  8. what is interesting about the question is to see how government will react
    My beleive is we are living an important moment in the battle between government and finance.
    Who will win ?
    Goverment have the instruments to control and oblige finance to respect certain rules.
    the turning point will be when the rating companies like SP be under public controle.
    after the 2007/8 economic and financial crisis , government have bailed out the biggest compagnies but have stopped from acting deeper
    let see if this time round things will change

  9. There's an easy way for governments to unchain themselves from the control of banks: STOP SELLING THEM BONDS. When a government sells a bond, they are basically taking out a loan from the buyer. Many governments have become so dependent on such financing that even a small bump in the interest rate bond buyers (i.e. lenders) demand can wreck their budgets.

    I pay my credit card bills in full every month. My car is paid off. The only loan I intend to take out in the future will be if I buy a home.

    It would be nice if governments would be as fiscally responsible. And of course they should also make sure the rich pay their fair share of taxes. (What's fair? Well, that's certainly open to debate.) The problem, at least in the U.S., is that voters and politicians alike are all for fixing the government's finances except when that means reducing tax breaks or programs that benefit them.

  10. Thank you for your opinion Lesa. Do however keep in mind that the power banks currently have is because the markets were un-regulated. They were not able to do what they do today until that happened.

  11. To be honest, I'm not sure. I'm in the UK and things are slightly different here, I wouldn't be surprised if they did though!!

  12. Another excellent post Catarina. When I first saw this on television a few weeks ago I thought he was joking. I am not sure banks are controlling it is just they are doing their own thing and governments are letting them. For what reason I do not know.

    I know here there was an uproar when our banks last year raised interest rates higher than the reserve bank. The government put measures in place that made it easier to move without fees and competition started between the big 4. What was interesting when interest rates were just cut 2 of the banks immediately matched the cut.

    1. Thank you Susan. Don't you think the fact that governments are letting banks behave the way they do gives them the upper hand? Good to hear there are positive developments in Australia.

  13. As frightening as it sounds, I agree that the banks (in the US at least) are positioning themselves to have more control than our government. The recent bank bailout was supposed to help homeowners deal with the mortgage crisis. Unfortunately, our government failed to put restrictions on what the banks could and could not do with the funds. People continue to lose their homes while the banks continue to foreclose. We’re starting to see small movements here after many people were angered over Bank of America’s recent attempt to assess bank fees for the use of ATMs. More and more people are moving their accounts to credit unions and community based banks. It’s time for individuals to work together to send a strong message to banks that we have options.
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  14. Over the past forty years there have been a list of alleged villains.
    The Tri-Lateral Commission.
    The WTO.

    The targets faded faded from cite [sic] with time but that is not the only reason.

    As the alleged members of the Tri-Lateral Commission died off, having failed in their objective to control the world, a new villain was found. The WTO.

    Now, I am not accusing anyone of anything, however, since The Soviet Union is now Russia Under New Management, and Russia is a candidate for admission to the WTO, the demonstrations against the WTO have faded into the mists of time. (Russia's Admission to the WTO may or may not be a good thing. The question is simple: Is this a question of politics or of economics?)

    Now, Bankers are the villains. It would appear that they would be in much better financial shape if they ruled the word. If they are ruling the world, they are doing a poor job of it.

    As they say, Big Business and Big Government worship at the same church.


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  15. Thought provoking, Catarina, but I think the situation is far more complex than this. To try to summarise my thinking:
    •Government still rule countries as they are the only bodies that can make the laws
    •Banks have certainly been allowed to become too powerful within society, with the blending of high-risk investment activities and traditional banking creating financial giants that have been seen by governments as “too big to fail” – whether or not they really are, of course, is a different matter.
    •Politicians have been too scared to rein in the banks – even allowing them to pay themselves massive bonuses with public bailout money. This is clearly ridiculous.
    •Corruption is rife in today’s society and little is done about it. Again, perhaps due to politicians being scared of the fallout if they uncover too much – remember Clark’s government in Canada in 1979 that lasted just a few months when it started to show the levels of corruption in the Trudeau government? Trudeau was put back into power for another 4 ½ years to have a chance to clean things up.
    •The public, in the main, relies too much on sound bites from news services that are rarely unbiased, and which rely too much on the adage, “bad news sells.” Consequently, downturns are fuelled by pessimism driven by such news clips which, in turn, become self-sustaining prophecies.
    •Short-termism is rife, causing even more abrupt moves in markets – particularly downwards ones as traders take advantage of short-selling opportunities that arise. Rastani’s absolutely correct when he says that traders can make big money in down markets.
    The question is more, in my view, about what is to be done to pull things back into a more sensible line. Certainly, I believe banks needs to be split – investment activities should be separated from the traditional banking role of depositing and lending. This would not only stabilise people’s savings/deposits but ensure governments don’t need to worry about bailing out institutions that have recklessly got into trouble. Corruption at all levels needs to be rooted out and those who have made money illegally and/or immorally no longer held up as objects of envy. Governments need to really work to run the countries properly, working for the majority rather than pandering to minority swing-vote groups to ensure the next election.
    The trouble is that this is all great in theory, but we have human nature getting in the way and rampant self-interest… How do we get out of this loop?

  16. Hi Catarina, you always post such thought-provoking blogs and so many questions 🙂 i do think that the banks are controlling everything. Not a comforting thought – but I do believe money talks!
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    1. In reading these replies and what Rastani said I am amazed at how little knowledge there is out there about how banks and the economy work. Which of course is why we have such deep economic problems particularly in Europe. Currently banks do have a lot of power. That's not because they are evil and diabolic its because there is so much debt in the world both public and private. How a trader doesn't understand this is mind boggling. Where do you think all the bonds to bail out the European countries are under written Pharmacy's?
      The solution is quite simple, stop/slow the spending! Then the banks will have less power. And ton be clear, banks in the U.S. they were bailed out under TARP were not allowed to pay large bonuses. That is a fallacy.

      1. Thank you for conveying your opinion Lou. It's interestingto note that Nobel prize winners like Paul Krugman and Joseph Stieglitz are of the same opinion as the majority of commentators.

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