Interview Ad Broere - Ending the Global Casino

According to some economists, the extent and persistence of the financial and economic crisis to which the world is still exposed indicate that the sustainability of the global financial system has expired. They argue that it is necessary for us to act.

Ad Broere, a former banker and now independent business consultant, lecturer, and author of the titles A Humane Economy (Dutch) and Ending the Global Casino?, shares this opinion.

In Ending the Global Casino Ad Broere explains that financial crises, scarcity, debts, and interest are not Nature's Way, and that the present monetary system is not the only choice we have. We can say goodbye to this global casino, and opt for a solution in which money plays a subservient role. We can choose for an economy that invests in a better future for the planet and all its living creatures. Our reward may be a high and sustainable quality of life for us and for our children. However, this will require a completely different attitude towards money and economy. The famous Dutch cartoonist Jos Collignon has illustrated the book with to-the-point and humoristic cartoons.

Interview:

Despite the airy approach in your books, your message is not very cheerful.

I try to clarify in an accessible way how our economy and our monetary system work. The famous cartoonists Jos Collignon and Karl Wimer gave me permission to add a number of their brilliant cartoons to the books. In regard to the message, the main conclusion is that the monetary system has become dominant over the real economy. Therefore it is an imminent danger to us all. The financial system is a world all its own, with 99% of the financial transactions being purely speculative and I am talking about the multitude of derivatives, such as collateralized debt obligations, credit default swaps, and interest swaps. In addition, the short-term profit goals of big investors in shares are a disturbing factor for the well-being of the real economy. In 2007, 40% of the U.S. gross domestic product was based on financial transactions. It is not just the risks that these speculative transactions cause, but also the enormous amounts of money being withheld from the real economy. Consequently, investments necessary for developing new and sustainable technology, for example, cannot be done because there is no money available. 

 Financial products such as derivatives have been developed by banks. Are they responsible for this development?

The bank managers are certainly responsible for the over-the-top speculative activities. It is their task to manage risks, but big bonuses were more attractive than good stewardship. However, banks serve their shareholders. Shareholder value is the main focus of virtually all big companies, including banks. During the recent economic upswing, banks have taken big risks to make big returns. Shareholders have benefited from this. When the crisis hit the financial world, all those risks were taken well beyond their limits, which became visible. "Suddenly there were the toxic assets. Governments in many countries held the opinion that the banking industry should be rescued. We all know how they did it: at the taxpayers expense. Bank profits are privatized, losses are socialized. The return to business as usual after the bailout makes me deeply worried about what will come next in the near future. Most countries treasuries are exhausted; a second bailout is impossible, even if politicians would be that stupid to want this.

What is your opinion about the measures taken to prevent future crises, such as Basel III?

They are insufficient and also unrealistic. Ben Bernanke, the chairman of the American system of central banks, called for an increase in financial buffers that banks must maintain. He stated correctly that a lack of liquidity is a major risk factor. Recently the Basel III guidelines were accepted by the G20. Banks should increase their risk-bearing capital to a at least 7% by 2019. Currently, the levels for the majority of banks are below 4% and in many cases barely reach 3%. For a large bank such as HSBC, an increase in equity of just 1% equals 26 billion U.S. dollars. Banks should be avoiding risk. However, the lower the risk, the lower the return. Most banks will have a hard time strengthening their equity. What is worse, the toxic assets have not been disposed of. Like nuclear waste, they are still waiting somewhere offshore for their owners to really clean up the mess. No, I do not think the banking industry will be able to survive the coming events in their present shape. In Ending the Global Casino? I explain that we should not be mournful about this when it happens. This present monetary system shows a number of serious flaws that cannot be solved simply by patching it up. One such flaw is the fractional reserve held by banks. The extremely low solvency makes banks very vulnerable, which was recently proven to be true.

 In your opinion, is a downfall of the present monetary system unavoidable?

Unfortunately, yes. Therefore, it is important that as many people as possible are aware of this unhappy event before it happens, because the solution begins with awareness. I am certain that we are in the middle of a transition to an era in which hierarchy and hierarchical thinking come to an end. We should stop blaming each other for everything that is wrong in our lives. The starting point of a better world is ourselves. There are many initiatives all over the world highlighting how people are responding to that new era.

If you have money available, you can invest in SMEs led by integer people who contribute to a better world by developing new sustainable products and technologies to clean and preserve the environment. Forget about the short-term big profits. Really good developments need time to mature. In Sweden, the JAK Bank is active. This is an interest-free bank. No interest is charged on loans, and no interest is paid on savings deposits. If there were no interest, prices of all products could be reduced by at least 40%. Houses would be more affordable for the younger generation. At present, young people are often heavily in debt because of the sky-high mortgages they have to pay off, including interest. Depositing (part of) your savings in an interest-free bank implies a substantial contribution to our common prosperity.

If you have a company, open your mind to other ways to finance the business, such as by participating in a complementary currency organization. If the traditional currencies become scarce, complementary money can help to keep the (regional) economy going. In Ending the Global Casino? I clarify this opinion in more depth. Switzerlands complementary currency has been successful for more than 75 years.

If you hold all the shares in your company, consider what Ernest Bader did in 1951. All his and his wife's shares of the company Scott Bader were put into a trust owned by the collectivity of the employees. He named it a commonwealth—the correct name because shareholder value became all employees value.

In our role as consumers, we can opt to end our consumerism attitude. We can stop listening to the luring voice of marketers. We can stop thinking that more possessions mean more happiness. We make our own decisions and buy sustainable, biodegradable products, renewable energy, etc. Indeed, 95% of all goods we buy become waste within five years. The immense mountain of waste causes great trouble, mainly because of the wide variety of toxic substances in it. This problem is exported to the third world.

Are you optimistic or pessimistic about the future?

I am neither an optimist nor a pessimist. I am well aware that our future depends on the number of people who will awake from their almost hypnotic sleep. I sincerely hope that in the near future many will share the conviction that humanity can only survive if we say goodbye to selfishness, greed, and the race for ever-more possessions to stop allowing a system that stimulates those old values to rule over our lives anymore. In my opinion, it is crucial that we let love guide us in all our actions. I know that love is an often misused and misinterpreted word. Some regard those who speak about love as weak, especially those who fear its power. In my opinion, it is the unlimited creative, live-giving energy. We need it to create a better future for the world and all living creatures. Anything that comes into being inspired by love serves that goal. My deepest hope is that we are able to say ”truthfully in the near future: Yes, we can! May millions of roses bloom.

Review form the book:

"Ending the Global Casino? offers the reader a shocking view behind the scenes of the ''dim" global banking world. I have read the book as if it were a detective novel. Once started, I wanted to know all about it, and read the book in the same breath. This book turned my view on money and banking completely upside down." Albert de Booy, CEO  Speakers Academy