But. Said Wednesday evening anyway Dr. Ernst Josef Pauw, banker at the private bank Lampe and member of the board of the Hamburger Kunstverein ibenda – as readymate of the NoRoomGallery so to speak: "Every crisis is a chance."In high competence and some optimism (one hardly believes it) he lectured and explained the connections which I will now try to reproduce: Cause of all evil is of course Georgie W. Bush (who else?) and the Iraq war, which, who would have thought it, costs 500 billion a year. (Small side note: every world empire is apparently perishing on its military budget, the Romans, the British, the Russians and now just the Yanks). And then? Needed urgently fresh money, whereby the American consumer, which hardly anyone knows, is responsible for 2/3 of the American gross national product. And now has an average of 15 credit cards, at a monstrous 20 percent interest, with which he juggles his debts. And then Alan Greenspan came along and lowered the prime rate, making credit cheaper than ever, and the housing boom lulled homeowners – in America, people don't rent, they buy – into the false sense of security that the property they bought would double in value pretty quickly. So you could earn your money in your sleep. Banks offered real estate financing loans at 5 percent interest without checking the borrower's creditworthiness. At some point, the unemployed were able to buy homes because the banks got so greedy and only saw growth rates to increase money in the needy and destitute. At some point, lending institutions bundled loans into so-called securitizations, i.e., they sold loan packages of which no one knew where the credit risks would ultimately end up – and certainly not the customers. And the press, so Dr. Pauw "only wrote and writes fairy tales".
Performance of the Landesbanken. They saw an opportunity to make 8 percent profit in the U.S. on bonds that they only had to pay 3 percent interest on in Germany – a license to print money. And then there was greed.
Eventually, Greenspan's interest rates rose again, and homeowners got into trouble because their mortgage contracts did not have the interest rate lock-in that is common in Europe. Money suddenly became scarce, there was a panic. "It's all about," the presenter said, almost evocatively, "finance is all about trust." That was now gone. Pulverized. And the regulators did not react because they were busy with the war in Iraq. The doom and gloom is now picking up steam.
Banks were suddenly stranded, no longer lending money to each other. A fatal situation. Britain's Northern Rock had made its business on short-term bonds and is now the first ever fully nationalized bank after the crash. And the fact that the U.S. government let Lehman Brothers go bust, "an incredible oversight by the Treasury Secretary," was the beginning of the end. "We're talking about incredible sums of money here, I've seen a few crises in the decades I've been in business, but this tops it all. Capitalism eats its mothers." the $700 billion bailout package hastily rushed through by the Bush administration is primarily to prevent another systemic bank from crashing. In fact, the German government, on the other hand, would also possibly get a good deal on the government guarantees of 300 billion euros, and these measures would already have a calming effect: overnight credits would be granted again and the DAX rose by 10 percent on the day of the presentation. Nevertheless 28 trillion dollars are gone, the financial crisis becomes a recession and the spectre of deflation is just around the corner, a "phenomenon that does not even have its own theory". But how it continues? "This", according to Dr. Pauw, a little messianic in front of packed listeners, "I can't tell you either". Let's wait and see.