Europe Will Never Recover If Banks Are Not Brought Under Control

Gary Dymski, a professor of applied economics at the University of Leeds, was one of three international stars who, under the auspices of the Faculty of Economics and Tourism ‘Dr. Mijo Mirković’ in Pula, attempted to find an answer to the somewhat eternal question: how can the world emerge from the crisis.

Dymski distinguishes himself from most ‘mainstream’ economists by insisting that the functioning of those who triggered the avalanche of the crisis – the banks – must be completely changed. And not just any banks, but megabanks that have become stronger and larger than states. Therefore, he claims that the crisis did not appear; we summoned it. Dymski states that banks are transforming conventional, acceptable behavior into dysfunctional behavior, seeking complete deregulation, the absence of any control, without caring about the spillover effects on the rest of the world. Moreover, he warns that the crisis actually began in the 1980s when banks that were ‘too big to fail’ began to emerge again and when a wide range of derivatives started to be traded. He categorically asserts that no one can afford the existence of such banks anymore because their habit of generating enormous profits is a constant source of future crises. When asked if Basel III is the answer to his recommendation, he says it is far from it – the ‘strict’ regulatory framework has been softened several times under the influence of banking lobbies, along with extensions of the adjustment period. Full implementation is not expected until 2019. If the world survives the recession by then.

When asked if he likes banks, Dymski replied with a laugh:  I just warn that they are the source of the crisis, and if we treat them as we have so far, as if they are untouchable, and continue to pamper and protect them because they are ‘too big to fail’, the crisis will not be resolved. What banks are involved in is so broad that these activities cannot be covered by any oversight. Only a smaller, negligible part of banking activity remains core business. For years, we have been convinced that small, old-fashioned banks are dinosaurs that must disappear, but large banks have not filled that gap. Instead of building the income side of the balance sheet, they are stripping it. We cannot all pretend that this does not concern us all the time!