From the spheres of the Chilean political elite, signals are being raised announcing a world financial crisis, which will deal a hard blow to the domestic economy, which is already in the midst of a period of unstoppable rises and credits with high-interest rates, which necessarily lead debtors in the short and medium term to the situation of defaulters. Today, more than four million people in the country, which is twenty-eight percent of those over the age of eighteen, appear with unpaid debts in a study by San Sebastian University in 2022. These debts amount to nine billion, three hundred and eighty-four dollars.
The Chilean Central Bank increases the cash requirements for banks, and although it does so in technical and generic terms (to constitute more capital for 0.5% of risk-weighted assets, payable within one year), the national banking association calculates that it means an additional one and a half billion dollars to the capitalisation funds foreseen in the system, which amount to 10% of the amount of deposits. Such demands are justified as a precautionary measure in the face of the unstable situation of the US economy and its possible recession, which will affect the global situation, including the Chilean economy.
The banks predict that the measure in Chile will further increase the value of credits, decreasing loans, and unleashing a contractionary economic period.
In the same days, the Ministry of Finance socialised the Boric government’s taking of credits through the 10-year Sovereign Bond instrument, for an amount of 2.2 billion dollars, of which 57 percent were acquired by foreign financial groups and the rest by national groups. Minister Mario Marcel said that this operation is part of this year’s credit purchases totaling twelve billion dollars. With these bond placements, Chile now has 37 billion dollars in debt with ESG (environmental, social and governance mandates) investors. According to the Treasury, the banks responsible for the operation were Bank of America, Citigroup, Banco Itaú, and JP Morgan. Legal advice was provided by Linklaters and local law firm Morales y Besa.
In this context, we insist on alerting those who will listen to that private credit, which sells itself as a tool for development, has ended up being a parasitic weapon of usury. Private banking is the vanguard of an operation that shapes a kind of financial imperialism. The accumulation of wealth in fewer and fewer hands (a historical tendency of capitalism) has overflowed the channels of productive investment to inflate speculative fizzes and accelerate oligopolistic concentration. The workings of the financial system are truly complex and constitute a veritable web of theft and swindling on a planetary scale.
These swindles, which have private banks as their main visible actor, are complemented and articulated by investment funds, risk rating agencies, tax havens, law firms “specialised” in economics and finance, large international auditing firms, huge accounting firms, large accounting firms, and large international financial institutions, the huge accounting firms, the big real estate agents, the financial consultancies, the wealth management systems, the stock exchanges and their agents, the insurance and reinsurance companies, the trusts, and numerous other legal entities whose aim is to obtain an ever larger share of the profits in the economy. The fractional creation of money, the generation of bonds, commodities, derivatives, and financial securitisations, is the main technical instruments that makeup what they call “financial assets” and “financial products”; euphemisms with which they call the means they have invented, as instruments of appropriation, of what the real economy produces: that of work and capital.
The private banks also manipulate international financial organisations and have created their own global justice, through international tribunals such as ICSID, the US Federal Reserve, the IMF, the World Bank, the European Central Bank, and some not-so-well-known organisations such as the International Swaps and Derivatives Association (ISDA) and the Institute of International Finance (IFF), as well as a long list of “technical” agencies that form part of the core of the great institutional apparatuses, which are under the real domination of the world financial bourgeois elite.
The indebtedness of families, companies and governments continues its unstoppable growth and exceeded 360% of world GDP at no end in 2020, according to data provided by the International Institute of Finance (IIT).
Banking is today’s main accumulator of resources and the core of real power behind formal power. It has absurdly become the most powerful sector of Big Capital, being an area of the economy, which produces absolutely nothing and should simply have an instrumental role.
In order to open up future possibilities, citizens must become aware that there are only two main factors in the functioning of the economy: work and capital, and therefore speculation and usury are out of the question, and any nonviolent attempt by citizens to denounce and prevent this economic violence, which has been unleashed all over the world, is valid. It is necessary to organise from the territorial base a real sovereign power, with sufficient force to try to balance the relations between work and capital, and for both to provide the installation of a local bank without interest to finance their respective requirements.
Collaborators: M. Angélica Alvear Montecinos; Guillermo Garcés Parada and César Anguita Sanhueza. Public Opinion Commission