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ORIGINAL FRENCH ARTICLE: La main et la claque

by Maurice Ulrich

The invisible hand and the smack across the face.

Translated Friday 1 February 2008, by Gene Zbikowski

Editorial on the Société générale scandal.

The invisible guiding hand of the market, according to the Scottish economist Adam Smith, would regulate the market without outside interference. In fact, it has just delivered a fat smack across the face that the Scottish theoretician – who, it must be admitted, lived in the 18th century – could never have imagined in his worst nightmares. Five billion euros, just like that, under the very eyes of those who are trying, as best they can, to imagine what such a sum of money means. Blown away, disintegrated by the market. Each of us can come up with a comparison. Three times the budget of the French département of Seine-Saint Denis. Twenty times the amount that French Prime Minister François Fillon yesterday promised to free up for the ill-housed and the homeless. What must the people who are living on one euro a day think of these insane sums with which the “traders” play every day on their computer screens and which figure in the hushed murmurings at the meetings of the boards of directors of the big banks? Or the people who are living on the minimum wage? Or those who work for the telethons and the NGOs, and who put their hearts and minds into collecting a few euros to help the sick, the poor, and the hungry? This five-billion-euro smack across the face is a blow to human dignity.

Now they don’t seem so proud, these regulators who aren’t regulating anything any more, and who are ready to kick themselves. Thus the European Commissioner for the Domestic Market, Charlie McCreevy, who said: “No regulation in the world could have foreseen what happened in France last week.”

And Jean-François Copé, the president of the UMP group in the French National Assembly, standing there helplessly and saying: “What happened at the Société générale, in the end, it’s a mad story of money driving people mad.” Tomorrow they’ll be blaming bad luck. Everybody is mad here, the mad hatter told Alice in Wonderland. The trader Jérôme Kerviel is mad in moneyland. The CEO of the Société générale, Daniel Bouton, who had no idea of what was going on, is mad. But in that case, just how many raving madmen are there in the world’s banks and sitting around the gaming tables of world finance, where sums that are dozens of times greater than the world’s gross domestic product are traded every day? How many madmen among the thousands of money-crazed traders who, nonetheless, are no more than cogs in the great cog-wheel of fortune, of dividends, of super profits, of products that are so sophisticated that they wind up escaping from the Dr. Frankensteins that created them?

All quite mad? But it’s the machine that is mad. The bank accuses the trader, but that scapegoat is too much of a lightweight for the sacrifice. Now the French president is accusing the CEO of the bank. Now he’s a weightier offering for the gods, who are hungry and who must be placated if the bank is to be saved. But if it is necessary to accuse the bank, then they’ll accuse the bank, because it’s their mission to save the system at any price. Capitalism has got to be saved. It’s true that the market may finally regulate this gigantic, obscene mess, until the next crisis, and at what price? How many jobs at the Société générale will go down the tubes if the bank is bought out? Just as the market will certainly be able to wipe the slate clean of the subprime crisis, in a month, in a year. The ones who’ll pay the price will be the poor. Already, 1.3 million Americans have lost their homes. In the coming months, that figure could shoot up to three or four million.

But when are we, men of good will, finally going to look the machine in the face and say to ourselves that capitalism is not the final stage of history and that dividends and easy money are not the ultimate goal of human existence. King Midas acquired the power to change everything that he touched into gold. Even his food. He almost starved to death. Making finance the be-all and end-all is suicidal. And that is what the smack in the face delivered by Adam Smith’s invisible guiding hand is also trying to teach us today.

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