We have seen in recent years the increasing pace of growth of the divide between “rich” and “poor”. By this I mean in an asset sense, those with particular assets have been leveraging them at ferocious rates to increase their wealth on paper, sucking value generating wealth from our economies.
This acceleration of asset acquisition has quickened the pace in which the gap between rich and poor widens massively and is set to increase more with the bailout of banks across Europe by their nation’s tax payers. This is the new economic reality of a polarized economy, where you are either very rich or very poor with little in between. This was dubbed the plutonomy in a 2003 Citi Bank memo to its top private investors.
We need to take action now and refuse as citizens and tax payers to shoulder the burden of debt which was amassed by irresponsible financial institutions. We could go further and force banks to re-negotiate domestic mortgages to levels which reflect current market values as opposed to the hugely inflated prices which ordinary people paid for houses as a result of the cheap money being given to banks and the resultant profit taking actions the banks took. The banking system is inherently broken. Without resetting it to sustainable values and forcing those responsible to take the loss we will never have an economy where ordinary citizens feel they have a contribution to make. Instead we will create a selfish society, devoid of integrity where the example of success through greed will pervade and we will face systemic criminality and corruption.
By coming to terms with the fact that the recent model of unregulated financial markets has failed and taking action to put us back on a sustainable footing we can allow real market forces to flourish without greedy short-termism and non-value based wealth generation. Those who were party to the failed model should take the hit so we can move on with lessons learned to a more equitable market based economy.