Banks are Gambling Companies

Hans (35 years old) looked very sad and bitter as he told his story to "Markt" a WDR TV show, here in Germany. He lost € 25.000 to Lehman Brothers, an investment company which has recently gone bust. "Mr. Schneider, at the City Bank in Bielefeld did everything to persuade me that Lehman Brothers was a safe and successful investment company." Hans said. "Mr. Schneider showed me great history charts of the company, and promised me a profit of at least 12%. I believed Mr. Schneider and invested all my life's savings in stocks managed by Lehman Brothers. Now the money is gone. " Hans lamented.

Personally, I also lost a lot of money in stocks over the past ten years. My savings manager, Ms. Franke at the Commerzbank also depicted me rosy pictures of profit, up to 20%. She showed me neatly designed charts which showed big profits and hence my money would surely make similar profits. I also believed Ms. Franke. I thought she was an expert and knew what she was talking about.

Later I learned that investment managers and customer advisers get their own percentages on every successful transaction; on every fish they get in their rod. They are the ones who make 20% profit, not their customers.

Twenty years ago I did not have the slightest clue what stocks or shares were. Once in one of those social gatherings I met a Canadian businessman in Kuwait where I used to teach. As we were sipping our coffee, we started talking about money and investments. Somehow I said, "My German bank gives me an interest rate of 4%." He laughed and said, "What! That is what old people still do."

My Canadian friend explained, "If you invest your money in stocks, you can get up to 20% of profit or more." I was stunned and curious. As I am ambitious and greedy like human being, I decided to invest in stocks and become a rich man. At the beginning things went fine, but later they went down the drain. I lost thousands of dollars.

My experience and those of my friends and acquaintances prove without any doubt that investing in stocks is a kind of gambling. If things go well, certainly you may make a lot of money. But more often than not, you do not.

Big companies and banks, especially in the West, do not want to have any government control over their business transactions. They reject every regulatory measures by the state. They want the government to stay off limit. When, however, they go bust they beg their governments to rescue them like we have seen in the bailout for Lehman Brothers, for instance.

Conservative governments and politicians have always preached free enterprise and zero-government intervention: the free market must be left alone. They create jobs, wealth, and prosperity. Ronald Reagan and Margaret Thatcher did that and McCain and Co. are preaching the same.

Now after the credit crunch and after so many banks and investment companies went bankrupt, these companies are desperately calling for help, and conservative politicians are rushing and competing to help them out. This contradicts their principles of free market.

Billions of dollars, of tax-payer money, have been injected in the recent financial crisis –the worst since the recession in the late 1920s - in America, Britain, and Germany in an effort to rescue bust investment companies and banks like the Lehman Brothers in the USA, the Northern Rock in the UK, and the KFW, and West LB in Germany, just to name a few.

Further, in the past and still nowadays, private enterprises in the West have enjoyed absolute transactional freedom and light taxes. Top managers in these enterprises, however, have made huge sums of personal profit.

After all this, would you trust any bank and invest in stocks? I do not.

Many American citizens who lost their savings, or cannot pay their mortgages took lately to the street and demonstrated against the Bush Administration and the financial establishment. Some of them held banners reading: "The financial industry is a big winner in the proposed bailout, but not troubled homeowners." Many others demanded, the American Congress should bail out the fifty million poor and the 20 million who have no medical insurance in the USA, not the sharks at Wall Street.

No body is questioning the positive elements of capitalism. It has been a driving force behind development and prosperity for many in the globe. But control and a social humane component must be introduced in the system, and that is in the interest of all.

Free enterprise is not a blank check. The world economy should not be left to greedy speculators to make profits at the expense of small investors like you and me.

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Banks are Gambling Companies

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