In the short-story “The Writing of the God” by Borges, God writes a magical formula to ward off a big calamity which would befall humanity in the future. The formula is stored secretly in perpetuity and would eventually be accessed by a chosen one.

Maltese political parties don’t need this magical formula. They have TV stations to ward off big calamities. Highly-calibrated machines oiled by construction money which will constantly pump a tirade of bollocks to their viewers presented as news, information and political commentary. If you want a political career, you don’t need principles, back-bone, education, and some real life-experiences which provide you with enough wisdom to lead the people’s interest in parliament – you can just go and shill yourself on your party’s TV station pretending to give a damn, and eventually you will get an advantage over the ones whose physical appearance disqualifies them from being TV presenters by the station’s board-rooms. Lovin Malta objects. They have filed a constitutional case arguing TV stations go against impartiality rules as prescribed in the constitution article 119.

Chris Peregin, the young stalwart who launched a successful online news portal while the traditional media houses were running into big financial challenges, has picked up a gargantuan fight against party-TV stations, namely ONE and NET which are owned by the Labour Party and the Nationalist Party respectively.

I’m compelled to write about this because I have authored various Maltese laws on free speech and have been vociferous on this cause for some time. Some of my friends want to know what I think about all of this, so, now they may know.

First of all, sorry Chris, but fat chance party TV-stations will close down or stop serving as propaganda machines. The Constitution is not a Godly-secret magical-formula – it is a malleable document and political parties will get together to change it if it transpires that it may not serve their interests. So even if the case is won, I don’t see any way party TV-stations would ever start being impartial. In addition, political parties will retain their right to free speech even if their speech is impartially-bullocks and they will fight for their right to propagate it in any way possible.

But, and this is a big but, the case does put a dent into the political status quo which currently incentivises corruption and outright nepotism. The problem with party TV-stations is not an issue about free-speech and convoluting the issue on these grounds will make us miss the woods for the trees.

Chris is right in arguing that ONE and NET incentivise corruption in politics because they are bankrupt and depend on construction money. The only way Karl Stagno-Navarra gets to go on ONE to ingratiate with corrupt politicians and defend their antics is because someone like Sandro Chetcuti is willing to go to the Labour Party headquarters and hand over wads of cash. Of course, the Sandro Chetcutis who do this are only doing so because they want something in return from the Government.

So, the more bankrupt ONE and NET are, the more entangled will the political parties become with the corrupt construction industry. Things took a slippery slope when the Panama scandal broke out. ONE turned into a festival of corruption-apologetics where corruption and grave political misconduct were justified on a daily basis and cheered on by the likes of Karl Stagno Navarra to the amusement of die-hard Party supporters. Thanks to ONE, there can never be a bad Labourite politician. Even during the November-December political-crisis of 2019, top ONE executives like Jason Micallef had no shame in allowing these apologetics to continue still. And guess who was a main fixture at ONE during those trying times, when the good men and women of Labour were screaming and hitting at Joseph Muscat to resign immediately – the darling of the construction industry Robert Musumeci who wrote a construction policy so friendly to the industry that it allowed it to destroy people’s homes with impunity. Of course, Musumeci made money out of the self-serving fabricated rules he himself helped create.

Imagine Mintoff coming back to life just to see all the PN-rejects conglomerating on ONE to defend the corruption of their fellow Labour political masters. Houston we have a problem – things really look messed up. Apparently, the new Deputy-Leader of the Labour Party, Daniel Micallef, is very happy about this situation. Let’s show them. We’re here to stay, he said. What’s staying Daniel? All the corrupt Nationalists who joined Labour because they saw in Joseph Muscat a corrupt master who could give them what Gonzi didn’t?

It’s about time we realise that party TV-stations are a serious and structural problem in our political status quo. No, I’m not saying that the party should not do propaganda. I’m neither saying that a party should not have its own TV station. But clearly, the situation is gravely messed up and if you are proud of this situation you may as well be totally dumb. It is clearly not in the interest of the Labour Party nor of the Government nor of the general public to have a publicly-funded party TV station which is compromised by corrupt money. Something here has to give. Otherwise, we’ll keep celebrating the trash-fest ONE has become with all its PN rejects lining up to its studio to show their faces and make sure their ingratiation is delivered and broadcasted wide and clear for the assurance of their new political masters.

Look. I’m just bringing up the PN-rejects as an example. The problem here is twofold: a non-commercially viable entity which depends on corrupt money for its existence and thus compromises its political owners, and secondly, the fact that both ONE and NET have no compunction in using their arsenal to further incentivise corruption by defending their corrupt politicians.

But ONE is also reflective of the state of the Labour Party itself. By now, all the failed PN rejects have joined in and have become regular fixtures on ONE: Jeffrey Pullicino Orlando, Ian Castaldi Paris, Robert Musumeci, Jean-Claude Micallef and more. No surprises here why Musumeci was so adamant to defend Joseph Muscat during the Nov-Dec crisis. These people have no principles – they are opportunists and morally corrupt and Labour is having too much of them. ONE gives them a platform.

Meanwhile, as ONE sucks all the money from the Labour Party’s coffers, I can’t get party top-brass to continue investing in the Party Library and archives, an investment which was cut-off as soon as Gino Cauchi stopped being Party CEO. My lament is finally recorded but it is only one of the many deficits of Labour Party. Too much attention, energy and money is wasted to keep ONE running while the Party is left abandoned only to be wrecked and invaded by the PN rejects looking for some silver.

Clearly, the situation needs change. If political parties are immature enough to refuse change, there’s nothing wrong in forcing change from without. So, although I don’t agree with Chris’ view on the case he instituted, I still bid him Godspeed and good luck. If the case doesn’t serve its purpose, it will at least threaten an institution which is actually harmful to our society.

After reading Magistrate’s Rachelle Montebello’s sentence on Pia Zammit vs It-Torċa, I have some remarks to make.

The Court found It-Torċa’s editor, Victor Vella, not guilty of libel for a front-page story implying that Pia Żammit, an actress, was a Nazi sympathiser. The implication was made with a picture of her wearing a Nazi-uniform on the front-page of the newspaper and an ensuing article complaining that the actress was making a light-hearted and funny gesture with a Nazi-uniform without mentioning the fact that the actress was wearing the uniform specifically for a play.

Basically, what the magistrate concluded was that the newspaper made a legitimate value-judgement instead of publishing an explicit defamatory statement which is conveyed as a state of fact.

Now, the magistrate may have some very good reasons why the Media and Defamation Act may have not been able to provide the tools for a guilty judgement. The judgment may also be advantageous to the press in general. After all, the advantages of having a liberal-libel regime greatly offsets the disadvantages of having a tight-legal regime which can easily find its defendants guilty. So, in actual fact, and admittedly, the magistrate may have, unwittingly, made a favour to the media in general.

However, there are problems with the magistrate’s sentence and I would not have interpreted the case like her. The judge considered It-Torċa’s piece as a value-judgment and an honest opinion in contrast to a state of fact. The problem with this distinction here is that It-Torċa had clearly implied, even explicitly I would say, despite the editor’s acrobatic manner of delivering it, that the author is a Nazi. Therefore, the newspaper tried to sell the fact that the actress is a Nazi. After all, it is also a state of fact that It-Torċa made reference to an actress as a Nazi without alluding to her acting role. And surely, this was not an honest opinion given that the author knew very well that the actress was wearing the Nazi-uniform for a play, while deliberately not mentioning this fact. It is a deceitful opinion with the intention to deceive and libel on misconstrued facts. I can make many value-judgements which can be relative to the case of affairs, context, philosophies and ideas too. Back in my university-days, when I published the fictional-story, “Li Tkisser Sewwi”, the Nationalists were accusing me and the author of promoting pedophilia. We didn’t sue. We told them to fuck off, but you get my point.

One may debate the distinction between values and facts, but value-free judgments are also hard to come by, and values may be attributable to state of facts with clear implications. The value of being a Nazi comes with a proven and commonly-known criteria of beliefs which have direct and real impacts on society. But, and maybe, the problem here is neither with the law nor with the magistrate, but the entity which is abusing the law’s emphasis on objectivity by circumventing it with not so much ambiguous implications. It’s like stealth libel or what is recently called “fake news”.

The context of the medium should also be considered. It-Torċa is not a newspaper or journal: it is PR-machine for the bad elements of government masquerading as the General Workers’ Union’s independent newspaper. It’s more of a cesspit of fascist diatribes and authoritarian threats than a newspaper. Apart from defending on a consistent basis corrupt government ministers, It-Torċa has, also, on a consistent basis, defamed and libeled artists, journalists and activists in the most vindictive manner possible and many of these people aren’t even public persons. To add insult to injury, It-Torċa, is fully subsidised by the government. Government bank-rolled the Union in 2013 by renting its premises in Paola while the Union supports its press with its resources and personnel. Add up the government-sponsored adverts and you end up with a PR machine which is fully-subsidised by the government.

I write this with sadness, of course, because I had a very good relationship with Union Press. I used to sell my stuff to It-Torċa during my years as a free-lance writer. I was also a regular client at their printing press and also brought them many other clients. I was good money for them and I used to be happy with that knowing I am supporting a workers’ press. All of this changed when Labour entered office in 2013 and editors, Union officials, and people like me who actually brought value at the Union and its press moved on to government-jobs. We were not replaced with younger stalwarts, (Sandro Mangion made a brief stint and left soon after), but with Labour Party and government cronies without any values and principles who were ready to publish anything they were fed. Victor Vella, the current editor is one of these mercenaries. He is the kind of person who will prostrate in front of the powerful-all-to-be because that’s the only thing he knows. At L-Orizzont, Josef Caruana had already degenerated into a fascist-punk bullying other journalists for covering government-corruption. I don’t think the Union Press will change its ways either because its editors today don’t know any better and Union leaders also don’t have the will to use their means of communication in the interests of their members and workers in general. Artists, journalists and writers have always been associated with workers in their daily-economic struggles and the Union should strive to fight for their interests too.

It always better to err on the side of caution, so once again the magistrate may have done the media a favour by delivering this verdict. On the other hand, I’m also convinced the law does provide the necessary tools to define the matter of this case as libelous. It is an untruth to describe an artist as the character he or she is trying to portray. Imagine an author writing a first-person fictional account of a guy who kills the Prime Minister. In his role as servant to the ultimate master, Victor Vella would probably launch a tirade on how an author is planning to kill the Prime Minister. Is that libelous? Maybe not. Is taking the artist’s work literally and implying it as a state of fact libelous? Is a man a pedophile for playing the act of a pedophile in a play? I think that may be more libelous than not.

Everything we have done at the National Book Council since 2013 has gravitated around one single and main objective: to boost the revenue streams of the publishing industry stakeholders, giving priority to publishers and authors.

In order to achieve this, we had to develop a roadmap which first of all involved rebuilding the entity itself. From a starting budget of €50,000 a year and one employee, we developed to a team of seven employees and an annual budget of €1 million a year, excluding salaries and capital expenditure.

The most obvious and immediate challenge was to renovate the annual book fair, which we rebranded into the Malta Book Festival. This was an outstanding success, as year after year the Festival went on to consistently hit all-time record sales.

Meanwhile, we started building a legal framework on par with EU standards, which was also meant to increase revenue streams. We introduced Public Lending Rights at our public libraries, and we are currently lobbying the University of Malta to adopt the same legal framework to introduce a PLR scheme at its Melitensia section. We are positive that an agreement will be found with the University of Malta and that they will comply with EU law under our direction.

Having built the entity’s financial and adminitrative foundations, we then started a legal process to reform the book industry and bring it into line with EU standards. We introduced a legal notice to formally regulate the National Book Council. This was only the start, as in 2018 we initiated a very long consultation process with our stakeholders meant to implement the necessary legal reforms.

After lengthy consultations with publishers, in 2019, the National Book Council convened the first ever National Congress of Authors, where more than 150 authors had showed their support to the bills being proposed. It is the first time in our history that book industry stakeholders mediated between each other to find a common ground and adopt a coherent policy on their legal and financial affairs.

This process was concluded in August 2020, when two bills have been drawn up and published: a bill which which would give the National Book Council the autonomy it deserves, and the copyright reform bill which will transpose the EU Copyright Directive on the Digital Single Market. The former bill is a consolidation of the already existing legal notice, while the latter will introduce new legal rights for publishers, authors and also press publishers.

Simultaneously, we drew up a legal notice, which has been approved by the Ministry of Finance, to introduce tax incentives for publishers and authors. This financial reform will give publishers a 100% tax break on all royalties paid to authors, while simultaneously make authors’ royalty payments tax free. The long-term plan is to eventually create a publishing tax-free industry, which would not only alleviate the local industry, but hopefully also attract foreign publishers to set up house in Malta and bring in foreign direct investment into our industry and our country.

As of now, the new post-Muscat government administration has refused to acknowledge the parliamentary bills. It is surprising how the government has taken this position notwithstanding the huge support of the industry’s stakeholders. The government should be reminded that it is the National Book Council’s legal obligation to adopt such positions publicly and push for the Government to act.

Additionally, the Ministry of Economy is not only ignoring the National Book Council’s position and requests (through which we represent the publishing industry stakeholders), but it is also forging ahead to arbitrarily impose the transposition of the EU Copyright Directive without our consultation.

Our position on this matter is clear. The Ministry for the Economy, with its politically appointed copyright board, does not have the legitimacy nor the expertise to arbitrarily impose any legal reforms on the publishing industry.

Instead, what should happen for the sake of the industry and the arts industry in general is very clear: the copyright board should be disbanded and the National Book Council should take the lead in transposing the EU Copyright Directive.

This is the only way to create the appropriate structures for the Directive to be implemented through our bureaucratic system.

It would be wise to avoid an approach similar to the conservative government in the UK where the art industries are treated with an unrealistic and detached approach. The government should be aware that the publishing industry is not only providing a net contribution to the economy, but it is crucial for the educational, intellectual and cultural development of our society.

Allowing legal reforms to be implemented by bureaucrats who have no expertise in the field will spell disaster not only for our industry, but ultimately for our society.

I sincerely hope the government comes to term with the necessity of taking the matter at hand with the serious approach it deserves.

We have made our demands in a diplomatic and amicable manner, so the government has no excuses or claims of being under fire by our industry. It is actually us who are currently under fire, without the government’s support and with no recognition whatsoever during the hardest-ever economic crisis in our industry’s history.

https://www.maltatoday.com.mt/comment/blogs/105385/reforming_the_book_industry_during_the_hardestever_economic_crisis_in_history#.X46_bNAzaDI

We are going through a wide-systematic reset where the current capitalist system is changing to the extent that a new world-order will be formed. Unfortunately, this won’t be like the previous resets in history. Previous systematic changes to the political-economic structure of the world were of great benefit to common people. When feudalism started collapsing in the 14th century, serfs were getting freed and the right to private property began to be shared by an increasing number of people. Capitalism had brought riches and opportunities, but eventually common people challenged the system once again to usher in socialism and build a society which is more just to them. We have seen since the Second World War in Western Europe the rise of socialist policies which had subdued the excesses of capitalism and created a fairer society thanks to free healthcare, free education, meritocracy, social mobility, decent working conditions, anti-rent-seeking measures etc…. Today we are experiencing a historical phenomenon in the other direction, that is a reset which will benefit the elite rather than the common people. This reset is effecting one of the greatest wealth transfer events from poor to rich in recorded history.

It’s all in the banks

The European Central Bank is following in the footsteps of the Federal Reserve in handling the economic crisis: quantitative easing. It’s the magical solution. Just like an intern in her first days of work, the European central banker, clueless, bewildered, and overwhelmed with the juggernaut of history, opted for the quick, copy and paste solution of the big boss. It’s what everyone does in the first days of a job after all. When in doubt, do the same thing your peers are doing. Then Merkel and Macron came up with their 750 billion Euro bazooka and the Euro broke its years-long downward trend and is now shooting up as if the sky is the limit. At face-value, everything seems to be working. Europe has made it.

But we know how this story ends because we’ve been here already. With the previous quantitative easing programmes initiated by Draghi “whatever it takes to save the Euro”, Europe did not lurch back into economic growth, on the contrary, the economic cycle upwards quickly ran out of steam and as of last year we were wondering whether Germany will remain an economic power-hub as its industry faltered and economic growth in Europe subsided. The peripheral countries such as Greece, Italy and Spain remained loaded in debt and austerity and their youths fled to other countries  scrambling for jobs. Only Eastern Europe which most of it had not yet joined the Euro was picking up some steam as factories and manufactures rushed there for the cheaper labour. Now, we add to the debt and artificially inflate stock prices higher while hoping that economic growth will surge organically given an increased money supply and higher liquidity in the financial system. The only thing missing from this equation is reality itself. If we would have had some empirical evidence which showed a strong correlation between job creation and quantitative easing then it would have been easier. But we will have the new Green Deal for that. Ok. So the jobs are coming with investments in energy and infrastructure which we will fund with more debt, and which we would then have to pay for with more jobs that are created by the multiplier effect. It’s like playing a poker game which never ends, given you can buy-in again every time you lose your money, hoping that one day you’ll get a royal flush and go home a total winner. Debts cancelled and austerity ended. We’ve won. The only snag in this game plan is that poker players who keep losing will probably keep losing even more.

Put it simply, Italy, Greece and Spain will not pay their debt. So if we can get a free buy-in, why can’t we take the money and stop playing, instead? This is exactly what private banks, central bankers, big corporations want to avoid. You’ve got to play the game with their rules. Small manufacturers who had their cash-flow dried up are getting 2.5% interest on their emergency loans delaying by default, any capital investment they would do in the future. Small businesses are stuck in a rut while the big boys get to play with free money. Subsidising a failed European banking system to keep a dysfunctional system afloat. Why would central bankers and government officials change the game-plan if there are no riots in the streets and everyone seems to be happy in the Euro’s gilded prison?

But at the end of the day, we Europeans will get the thinner end of the stick. Amazon has devoured the retail space and crushed the profit-margins of many. Google, and Facebook suck up the advertising revenue and the culture and press-publishing industry is decimated. Will manufacturing make a comeback? Maybe, but if the whole world is in tatters and their currencies are debased who will buy our stuff? But maybe we are asking the wrong questions because the problems are innate in a system. From seeking to build meritocracy and social mobility as prescribed in in the European Social charter of the 1960s, the system now feeds money to the rich and locks the masses in austerity and a jobless economy. So much for the overblown balance sheet of the Central Bank: small businesses still have no cash-flow. There’s no rabbit coming out of the hat. If we want an economy which creates jobs we have to make cheap capital available to small businesses, but we’re not doing that. Lower-interest rates come only if you are big enough and then we put all the risk on the ordinary mortals eventually suffering mos of the consequences of austerity and a slow-growth economy. So why don’t we change the game then?  Let’s play chess instead of poker. Drop the quantitative easing textbook, restructure the debt-spaghetti monster and unlock capital for a productive economy with 0.1% interest rate to small businesses and households.

Who will change the system?  

The left in Europe was mostly represented in the international media by Jeremy Corbyn. The new wave of millennials who were dejected by the capitalist machine with university fees and property prices too expensive to own and live in. Sadly, the millennials will not get a break. Corbyn’s project was a rotten failure and was as bad as to lose votes from core Labour constituents who had voted Labour on a generational basis. What a fucking mess. We knew how it would end up, but we were too hopeful and high on idealism to admit it. Corbyn was the left’s biggest disappointment after Tsipras. But the British left seems to have learnt nothing at all from this experience and remains stuck in this fantasy-reality of 1970s anti-US imperialism. So, now they’ve got Keir Starmer and they hate him because he is not an Israeli-basher. We’ll see how this plays out.

On the other hand, Macron represents the European’s left compromised status-quo version. France with its overly-bloated government-spending system can keep its population afloat in this very difficult economic period, the question is for how long? Macron has no interest to change the system as long as France will have its cake and eat it. Then there is Sanchez who is too busy wheeling and dealing the internal divisive shenanigans of Spanish politics and has little time on his hands to even think about broad change in Europe. So, there’s no one out there fighting to change the system, and the dejected Southerners are turning to the far-right and populist politicians. They want to change the system themselves and the left is nowhere to be found.  Fascism rears its ugly head once again.

The left needs to remake itself. The fact that there is no progressive force in Europe mobilising and fighting for the plight of the ordinary and the dejected is terrifying. After-all we’ve seen this happening in the US already. The Democrats failed to relate to the working-class and here comes Trump – the real-estate moghul who can speak to the working-class. Bring back jobs. Open those oil and gas taps and pump it full-speed ahead. People don’t want to think what is going to happen to the environment and to the world in ten or twenty years time, for fuck’s sake they need to pay their mortgage in thirty days. Get those jobs running. And the left keeps hounding on universal basic income as if that was going to be relatable to the working-class. Basic income you say? Sure. Let’s automate all the jobs, and ship the rest to India and give to the dejected a universal basic income doing an unproductive job. No wonder make America great again. The left is speaking discourse of the socialism of the early nineteenth century and Marx has become a mere symbol. Forget about complex economics and finance. And what happened to the philosophy of economy? Fundamentals, fundamentals and fundamentals. The main fundamental philosophical and economic point of Marx in all of his work was that humanity is intelligent enough to distribute natural resources in a way in which everyone can work and earn value for their work in a meritocratic manner. Isn’t this the European Social Charter speaking? Everyone should have the right to achieve one’s ambitions, to eventually work the job they desire and earn a just and decent amount of money for that job. And the social-mobility? Where is that? No, now, we have universal basic income. The economy is too broken to fix. People’s hopes are being diminished and they feel that their previous lucrative jobs are not coming back again. Then go to these people and explain about the privilege and importance of staying in the EU.

 Trump was right 

Trump reduced taxes to the rich and bloated government debt to astronomical proportions. The US has become the epicentre of quantitative easing, pulling all other central banks into its orbit. The fact that global trade is transacted in Dollars, gives the US carte-blanche to print as many Dollars as they like. Trump did in fact make America great again, but of course, it’s not ordinary Americans who are benefiting from the largess of the Federal Reserve. More automation, universal-basic income cheques, and low-paying jobs coming your way. The US has now become the unstoppable Dollar printing-machine sucking in all the foreign currencies into its fold and creating immense amount of wealth to a very small number of people. Outside the US, those who don’t have Dollars or at least Euros, will lose the game. China has lost the new Cold War before it even had the opportunity to rev-up its engine. Now, its bullishness and excessive authoritarian behaviour will only make China’s fate even worse. The debate now is not who will out-run the US, but who will out-run China. It seems that India has a very good chance to do this, but in a longer-time-frame, I think Mexico has also a very good chance of catching up.

So, Trump did actually fulfill his promise. He made America great again and broke China’s back. There was only one big snag in the whole plan – it ignored the basic fundamental economic reality and Trump now risks losing the votes of his constituent working-class base. Are the George Floyd riots a turning-point? Maybe, but literally no one knows what is going to happen and what comes next may be even worse than what we already have. I find Zizek’s theory of inertia quite irresponsible and reality shows this. Trump hasn’t opened the gates for progressive radical change in the US on the contrary – he has created an unequal society at home which is more solidified than before and internationally he has brought the whole world into an uncharted-territory which we Europeans tried to avoid for many years by creating stability mechanisms, single-currency, multi-national political institution promoting world peace etc… etc…. Now we are in the abyss of uncertainty and there are no leaders to look up to. Make America Great Again has come at the price of the whole international financial system.

And they are not going to let it collapse. They are going to Draghi it to whatever it takes.  And as long as they issue the UBI cheques, they will hope that the system will keep floating and people don’t take to the streets with the pitchforks.

Why Fight Club Matters 

As a historian, I see works of art in their historical context. Literary critiques give literary and aesthetic interpretations. Fight Club to me is a work of art which represents the contemporary struggle of the dejected in the times of hyper-finalised-capitalism. It’s not about the cult of Tyler Durden, but rather a struggle of the dejected who have no leaders, no ultimate plan, no ultimate end – just pull everything down and start from ground 0. Then we will see. Ins’t this the same spirit which lead people to vote for the far-right? Donald Trump is the real Tyler Durden, maybe a right-wing version of him.

So, if we are lost on a political level we have to start from ground 0 and that is why we have to start with ourselves. We have to take care of each other and build our communities. And we have to ask ourselves many questions. Do we want to live in a world where Amazon is the retail oligopoly of the world? Do we want to live in a world with UBI or with an economy which produces productive jobs and enables social mobility? Let’s cut to the chase. The left doesn’t seem to be a player in the political game. It’s either the quantitative-easing status-quo or the far-right which may bring the whole system down or make it even worse. We don’t have many options.

So, what’s next? No one knows, but it will only take a very small flame to light the huge powder-keg of social problems which we are accumulating over time. We’re not ready for that. One, new and unexpected black swan to wobble the ship once more.

So what’s next? 

I don’t know why you ask, I don’t know. I am just a slave like you. I can only write as a historian. And I may be totally wrong of course. I hope so.

What’s the point of paying taxes and interest payments on loans if the central banks can print unlimited amounts of money with supposedly no consequences at all?

When Lehman Brothers crashed in 2007, they told us that bailing out the banks was not an acceptable solution.

Then they did just that and bailed out the banks.

Then they told us that debts and deficits had to be sustainable. Quantitative easing was here only temporally and the central bank’s balance sheet would eventually contract. No one would have to be bailed-out ever again.

Then they did just what they had been warning against for many years on end and went full-on Zimbabwe with quantitative easing, this time round, even buying junk bonds of private corporations.

Small businesses are still paying their interests on their loans and ordinary workers are out of work or living on unemployment benefits.

Meanwhile private banks keep making a profit, corporations get free money, and government’s get loaded up on debt paving the way for the new austerity.

Next time round they will eventually admit that all this debt is unsustainable and can not be paid. Bonds, like oil may become a liability eventually. But, even in this hypothetical scenario, it won’t be ordinary people who would be receiving the debt-jubilees I suspect.

More than 200 years after Karl Marx’s birthday it is still outstanding to see how the financial and banking system is strongly biased towards the haves, while the have-nots are locked-out from the largesse of central banks.

There seems to be no in-depth discussion on what is actually going on with Malta’s economy, so Minister of Finance Edward Scicluna can count on the obliviousness of his cabinet colleagues to draw up schemes unilaterally.

Now, I have nothing personal against Scicluna, and this is not meant to offend him. This is simply my analysis and personal opinion of the situation. If you don’t like it, you can move on to the next thing. It should not be considered as financial advice and you should formulate your own opinion about the situation.

The biggest problem with Scicluna is that he comes from a very different world and background to my generation, the so called “millennials”.  Scicluna has lived in a world where the stock-market has always gone up, and where the gradual inter-connectedness of the global-economy increased market opportunities, capital and jobs. Back then, if you wanted to make money you could simply put unvest in a stock-market index fund like the S&P 500 and one fine day sell it at a hefty profit. The millennial generation has lived in a period where it witnessed this mega-capitalist edifice crumbling down, first with the 2008 crisis and with the current crisis today. The millennial  generation has also experienced significant challenges to get ahead in life, especially given the fact that they have been mostly excluded from the property market. So, it is obvious, that the millennial generation has a very different perspective of capitalism from Scicluna and the boomer generation. 

The generational perspective is probably why Scicluna genuinely believes that this economic rut is temporary and everything will get back to normal after the pandemic is over. It is also probably the reason why central bankers, most of them octogenarian males and baby boomers, keep pumping liquidity into the financial system in the form of quantitative easing genuinely believing that some day this liquidity may stick and things return to normal again. 

Scicluna has drawn up a liquidity package of bank guarantees for commercial credit, despite the fact that Maltese banks still charge high interests in a negative-rate environment. The aim of this package seems to be to provide local companies with loans to survive the economic rut. But the obvious questions is, why would companies take more loans at this stage if they don’t know when the economy will start picking up? Why would anyone want to take the risk right now, especially with Maltese banks still charging high interest rates? The biggest and obvious problem right now is that companies have no revenues, and if they have existing loans to pay, they are going to get crushed. 

I am not criticisng the liquidity-package either – it may actually be useful to many companies who need quick credit-lines to keep on going, but there seems to be one very common method shared by boomers in their solutions to economic problems: debt. Debt, debt, debt and more debt. 

The Central Banking system is incentivising and encouraging this debt with its quantitative easing and low interest-rates – governments can sell bonds easily with the easy credit provided to big banks – this system ensures that both government and banks are liquid. And who is paying for and sustaining this system? In Malta’s case, the ultimate payer is us, the companies and the working people who have to pay more than 3% over our loans. In this bizarre system, which sounds like a sophisticated Ponzi-scheme, the banks get a small profit and their shareholders get an insignificant dividend-payment as their stock price keeps crashing. Meanwhile, the Euro against the US Dollar is losing its value and some predict it may keep depreciating significantly.

Admittedly, Scicluna has to work in this environment and there seems to be very little he can do as Minister of Finance of a small EU nation-state, but that doesn’t mean we should be complacent and fail to look at the bigger picture. 

One obvious solution to our problems is to halt bank-loan payments and restructure the debt, and/or provide debt jubilees to companies and individuals excluding building companies which have been grossly irresponsible in their excessive speculation and irregular construction all over the islands. Now, this may require the government to step up its ownership in local banks and take a strategic lead. Such a strategy may be unimaginable to a baby boomer who has got so accustomed to a certain perspective on capitalism to the extent that’s an equivalent to a dogmatic and a religious approach: if we have problems in the economy, we’ll simply pump liquidity into the system by increasing debt, and which we will pay tomorrow. Another big risk we are ignoring is the exposure of the local banks to a highly-leveraged construction industry. We still don’t know the extent of bad debts our local banks have. Meanwhile, we have to think about vulnerable people and we need to quickly provide them with necessities: food and shelter. There is an unprecedented number of lay-offs going on at the moment and many workers have problems paying their loans and their bills. Instant relief in the form of debt-jubilees and direct social payments are needed to help these people. 

It is not I, an insignificant soul in a miserable rock (Napoleon’s description, not mine) that is asking for radical measures to be taken. At this point of our political process in the world, there is an inevitable discussion going on about the fundamental social and economic relationships of the economy’s participants. The Republicans have turned to socialist measures as they scurry to provide helicopter money in the form of 2,000 dollar cheques to every individual – a measure which had been derided by most of the liberal technicians and economists. So, right now, the Republicans and the Democrats have come to terms with the idea that one of the ways to help ordinary people during a time of crisis is to literally hand them over some cash to spend. 

There are many things we can do in Malta to redraw our economy to ensure that everyone is protected and build a more just economy in the process. We have to survive this pandemic and this economic lock-down, but we also run the risk of waking up tomorrow with an array of problems which would cost us even more money if the current structural problems are not addressed. Once again, it is also important to stress that it is delusional to believe things will ever be the same again. These are turbulent times of historic proportions and we will be waking up to a very different tomorrow after this pandemic is over. We still don’t know where we are heading.