Global Financial Meltdown
Monday, October 20, 2008
Posted in Commentary | Tagged Commentary
The following text reviews, in a historical context, the 1987, 1997 and 1998 stock market meltdowns. The article was written nine years ago in November 1999, following the adoption of the 1999 Financial Services Modernization Act. It was subsequently published as a chapter in the Second Edition of The Globalization of Poverty and the New World Order, Global Research, Montreal, 2003. The financial sector reforms of the late 1999s had set the stage for the current financial crisis.
“The 1999 legislation had repealed the Glass-Steagall Act of 1933, a pillar of President Roosevelt’s “New Deal” which was put in place in response to the climate of corruption, financial manipulation and “insider trading” which led to more than 5,000 bank failures in the years following the 1929 Wall Street crash. Effective control over the entire US financial services industry (including insurance companies, pension funds, securities companies, etc.) had been transferred to a handful of financial conglomerates - which are also the creditors and shareholders of high tech companies, the defense industry, major oil and mining consortia, etc. Moreover, as underwriters of the public debt at federal, state and municipal levels, the financial giants have also reinforced their stranglehold on politicians, as well as their command over the conduct of public policy.
Rather than taming financial markets in the wake of the storm, Washington was busy pushing through the US Senate legislation, which was to significantly increase the powers of the financial services giants and their associated hedge funds. Under the Financial Modernization Act adopted in November 1999, US lawmakers had set the stage for a sweeping deregulation of the US banking system.
In the wake of lengthy negotiations, all regulatory restraints on Wall Street’s powerful banking conglomerates were revoked “with a stroke of the pen”. Under the new rules - ratified by the US Senate and approved by President Clinton - commercial banks, brokerage firms, hedge funds, institutional investors, pension funds and insurance companies can freely invest in each others businesses as well as fully integrate their financial operations.
The legislation had repealed the Glass-Steagall Act of 1933, a pillar of President Roosevelt’s “New Deal” which was put in place in response to the climate of corruption, financial manipulation and “insider trading” which led to more than 5,000 bank failures in the years following the 1929 Wall Street crash. Effective control over the entire US financial services industry (including insurance companies, pension funds, securities companies, etc.) had been transferred to a handful of financial conglomerates - which are also the creditors and shareholders of high tech companies, the defense industry, major oil and mining consortia, etc. Moreover, as underwriters of the public debt at federal, state and municipal levels, the financial giants have also reinforced their stranglehold on politicians, as well as their command over the conduct of public policy.
The “global financial supermarket” is to be overseen by the Wall Street giants; competing banking institutions are to be removed from the financial landscape. State level banks across America will be displaced or bought up, leading to a deadly string of bank failures. In turn, the supervisory powers of the Federal Reserve Board (which are increasingly under the direct dominion of Wall Street) have been significantly weakened.”
Michel Chossudovsky, October 17, 2008
See complete text below
A new global financial environment has unfolded in several stages since the collapse of the Bretton Woods system of fixed exchange rates in 1971. The debt crisis of the early 1980s (broadly coinciding with the Reagan-Thatcher era) had unleashed a wave of corporate mergers, buy-outs and bankruptcies. These changes have, in turn, paved the way for the consolidation of a new generation of financiers clustered around the merchant banks, the institutional investors, stock brokerage firms, large insurance companies, etc. In this process, commercial banking functions have coalesced with those of the investment banks and stock brokers.1
While these “money managers” play a powerful role on financial markets, they are, however, increasingly removed from entrepreneurial functions in the real economy. Their activities (which often escape state regulation) include speculative transactions in commodity futures and derivatives, and the manipulation of currency markets. Major financial actors are routinely involved in “hot money deposits” in “the emerging markets” of Latin America and Southeast Asia, not to mention money laundering and the development of (specialized) “private banks” (”which advise wealthy clients”) in the many offshore banking havens. Within this global financial web, money transits at high speed from one banking haven to the next in the intangible form of electronic transfers. “Legal” and “illegal” business activities have become increasingly intertwined, vast amounts of unreported private wealth have been accumulated. Favoured by financial deregulation, the criminal mafias have also expanded their role in the spheres of international banking.2
The 1987 Wall Street Crash
Black Monday October 19, 1987 was the largest one-day drop in the history of the New York Stock Exchange overshooting the collapse of October 28, 1929, which prompted the Wall Street crash and the beginning of the Great Depression. In the 1987 meltdown, 22.6 percent of the value of US stocks was wiped out largely during the first hour of trading on Monday morning. The plunge on Wall Street sent a cold shiver through the entire financial system leading to the tumble of the European and Asian stock markets…
The Institutional Speculator
The 1987 Wall Street crash served to “clearing the decks” so that only the “fittest” survive. In the wake of crisis, a massive concentration of financial power has taken place. From these transformations, the “institutional speculator” emerged as a powerful actor overshadowing and often undermining bona fide business interests. Using a variety of instruments, these institutional actors appropriate wealth from the real economy. They often dictate the fate of companies listed on the New York Stock Exchange. Totally removed from entrepreneurial functions in the real economy, they have the power of precipitating large industrial corporations into bankruptcy.
In 1993, a report of Germany’s Bundesbank had already warned that trade in derivatives could potentially “trigger chain reactions and endanger the financial system as a whole”.3 While committed to financial deregulation, the Chairman of the US Federal Reserve Board Mr. Alan Greenspan had warned that: “Legislation is not enough to prevent a repeat of the Barings crisis in a high tech World where transactions are carried out at the push of the button”.4 According to Greenspan “the efficiency of global financial markets, has the capability of transmitting mistakes at a far faster pace throughout the financial system in ways which were unknown a generation ago…”5 What was not revealed to public opinion was that “these mistakes”, resulting from large-scale speculative transactions, were the source of unprecedented accumulation of private wealth.
By 1995, the daily turnover of foreign exchange transactions (US$ 1300 billion) had exceeded the world’s official foreign exchange reserves estimated at US$ 1202 billion.6 The command over privately-held foreign exchange reserves in the hands of “institutional speculators” far exceeds the limited capabilities of central banks, - i.e. the latter acting individually or collectively are unable to fight the tide speculative activity.
The 1997 Financial Meltdown
The 1987 crisis had occurred in October. Almost to the day, ten years later (also in October) on Monday the 27th, 1997, stock markets around the world plummeted in turbulent trading. The Dow Jones average nose-dived by 554 points, a 7.2 percent decline of its value, its 12th-worst one-day fall in the history of the New York Stock Exchange.
Major exchanges around the world are interconnected “around the clock” through instant computer link-up: volatile trading on Wall Street “spilled over” into the European and Asian stock markets thereby rapidly permeating the entire financial system. European stock markets were in disarray with heavy losses recorded on the Frankfurt, Paris and London exchanges. The Hong Kong stock exchange had crashed by 10.41 percent on the previous Thursday (”Black Thursday” October 24th) as mutual fund managers and pension funds swiftly dumped large amounts of Hong Kong blue chip stocks. The slide at Hong Kong’s Exchange Square continued unabated at the opening of trade on Monday morning: a 6.7 percent drop on Monday the 27th followed by a 13.7 percent fall on Tuesday (Hong Kong’s biggest point loss ever)…
Table 1
New York Stock Exchange: Worst Single-Day Declines (Dow Jones Industrial Average, percentage change)
Percentage Date Decline [1929-1998]
October 19, 1987 - 22.6%
October 28, 1929 - 12.8%
October 29, 1929 - 11.7%
November 6, 1929 - 9.9%
August 12, 1932 - 8.4%
October 26, 1987 - 8.0%
July 21, 1933 - 7.8%
October 18, 1937 - 7.6%
October 27, 1997 - 7.2%
October 5, 1932 - 7.2%
September 24, 1931 - 7.1%
August 31, 1998 - 6.4%
Source: New York Stock Exchange
The 1997 meltdown of financial markets had been heightened by computerized trading and the absence of state regulation. The NYSE’s Superdot electronic order-routing system was able to handle (without queuing) more than 300,000 orders per day (an average of 375 orders per second), representing a daily capacity of more than two billion shares. While its speed and volume had increased tenfold since 1987, the risks of financial instability were significantly greater.
Ten years earlier, in the wake of the 1987 meltdown, the US Treasury was advised by Wall Street not to meddle in financial markets. Free of government encroachment, the New York and Chicago exchanges were invited to establish their own regulatory procedures. The latter largely consisted in freezing computerized programme trading through the use of so-called “circuit-breakers”.7
In 1997, the circuit breakers proved to be totally ineffective in averting a meltdown. On Monday the 27th of October 1997, a first circuit breaker halted trading for 30 minutes after a 350 point plunge of the Dow Jones. After the 30 minute trading halt, an aura of panic and confusion was installed: brokers started dumping large quantities of stocks which contributed to accelerating the collapse in market values. In the course of the next 25 minutes, the Dow plunged by a further 200 points, triggering a second “circuit breaker” which served to end the trading day on Wall Street.
Text Box
Replicating the Policy Failures of the late 1920s
Wall Street was swerving dangerously in volatile trading in the months preceding the Wall Street crash on October 29, 1929. Laissez-faire, under the Coolidge and Hoover administrations, was the order of the day. The possibility of a financial meltdown had never been seriously contemplated. Professor Irving Fisher of Yale University had stated authoritatively in 1928 that “nothing resembling a crash can occur”. The illusion of economic prosperity persisted several years after the Wall Street crash of October 1929. In 1930, Irving Fisher stated confidently that “for the immediate future, at least, the perspective is brilliant”. According to the prestigious Harvard Economic Society: “manufacturing activity [in 1930]… was definitely on the road to recovery” (quoted in John Kenneth Galbraith, The Great Crash, 1929, Penguin, London).
Mainstream Economics Upholds Financial Deregulation
Sounds familiar? In the wake of the 1997 crash, the same complacency prevailed as during the frenzy of the late 1920s. Echoing almost verbatim the economic slogans of Irving Fisher, today’s economics orthodoxy not only refutes the existence of an economic crisis, it denies outright the possibility of a financial meltdown. According to Nobel Laureate Robert Lucas of the University of Chicago, the decisions of economic agents are based on so-called “rational expectations”, ruling out the possibility of “systematic errors” which might lead the stock market in the wrong direction… It is ironic that precisely at a time when financial markets were in turmoil, the Royal Swedish Academy announced the granting of the 1997 Nobel Prize in Economics to two American economists for their “pioneering formula for the valuation of stock options [and derivatives] used by thousands of traders and investors” (meaning an “algebraic formula” which is routinely used by hedge funds stock market speculators). (See Greg Burns, “Two Americans Share Nobel in Economics”, Chicago Tribune, October 15, 1997).
The Asian Crisis
When viewed historically, the 1997 financial crisis was far more devastating and destructive than previous financial meltdowns. Both the stock market and currency markets were affected. In the 1987 crisis, national currencies remained relatively stable. In contrast to both the crashes of 1929 and 1987, the 1997-98 financial crisis was marked by the concurrent collapse of currencies and stock markets. An almost symbiotic relationship between the stock exchange and the foreign currency market had unfolded: “institutional speculators” were not only involved in manipulating stock prices, they also had the ability to plunder central banks’ foreign exchange reserves, undermining sovereign governments and destabilizing entire national economies.
In the course of 1997, currency speculation in Thailand, Indonesia, Malaysia and the Philippines was conducive to the transfer of billions of dollars of central bank reserves into private financial hands. Several observers have pointed to the deliberate manipulation of equity and currency markets by investment banks and brokerage firms.8 Ironically, the same Western financial institutions which looted developing countries’ central banks, have also offered “to come to the rescue” of Southeast Asia’s monetary authorities. ING Baring, for instance, well known for its speculative undertakings, generously offered to underwrite a one-billion dollar loan to the Central Bank of the Philippines (CBP) in July 1997. In the months which followed, most of these borrowed foreign currency reserves were reappropriated by international speculators when the CBP sold large amounts of dollars on the forward market in a desperate attempt to prop up the Peso.
“Economic Contagion”
Business forecasters and academic economists alike had disregarded the dangers of a global financial meltdown alluding to “strong economic fundamentals”; G7 leaders were afraid to say anything or act in a way, which might give the “wrong signals”… Wall Street analysts continue to bungle on issues of “market correction” with little understanding of the broader economic picture.
The plunge on the New York Stock Exchange on October 27th 1997 was casually blamed on the “structurally weak economies” of Southeast Asia, until recently heralded as upcoming tigers, now depicted as “lame ducks”. The seriousness of the financial crisis was trivialized: Alan Greenspan, Chairman of the Federal Reserve Board, reassured Wall Street pointing authoritatively to “the contagious character of national economies, spreading weaknesses from country to country”. Following Greenspan’s verdict (October 28th), the “consensus” among Manhattan brokers and US academics (with debate or analysis) was that “Wall Street had caught the Hong Kong flu”…
The 1998 Stock Market Meltdown
In the uncertain wake of Wall Street’s recovery from the 1997 “Asian flu” - largely spurred by panic flight out of Japanese stocks - financial markets backslided a few months later to reach a new dramatic turning-point in August 1998 with the spectacular nose-dive of the Russian ruble. The Dow Jones plunged by 554 points on August 31, 1998 (its second largest decline in the history of the New York stock exchange) leading, in the course of September, to the dramatic meltdown of stock markets around the World. In a matter of a few weeks, 2300 billion dollars of “paper profits” had evaporated from the U.S. stock market.
The ruble’s August 1998 free-fall had spurred Moscow’s largest commercial banks into bankruptcy leading to the potential take-over of Russia’s financial system by a handful of Western banks and brokerage houses. In turn, the crisis had created the danger of massive debt default to Moscow’s Western creditors, including the Deutsche and Dresdner banks. Since the outset of Russia’s macro-economic reforms, following the first injection of IMF “shock therapy” in 1992, some 500 billion dollars worth of Russian assets - including plants of the military industrial complex, infrastructure and natural resources - have been confiscated (through the privatization programs and forced bankruptcies) and transferred into the hands of Western capitalists. In the brutal aftermath of the Cold War, an entire economic and social system was being dismantled.
Financial Deregulation
Rather than taming financial markets in the wake of the storm, Washington was busy pushing through the US Senate legislation, which was to significantly increase the powers of the financial services giants and their associated hedge funds. Under the Financial Modernization Act adopted in November 1999 - barely a week before the historic Seattle Millenium Summit of the World Trade Organization (WTO) - US lawmakers had set the stage for a sweeping deregulation of the US banking system.
In the wake of lengthy negotiations, all regulatory restraints on Wall Street’s powerful banking conglomerates were revoked “with a stroke of the pen”. Under the new rules - ratified by the US Senate and approved by President Clinton - commercial banks, brokerage firms, hedge funds, institutional investors, pension funds and insurance companies can freely invest in each others businesses as well as fully integrate their financial operations.
The legislation had repealed the Glass-Steagall Act of 1933, a pillar of President Roosevelt’s “New Deal” which was put in place in response to the climate of corruption, financial manipulation and “insider trading” which led to more than 5,000 bank failures in the years following the 1929 Wall Street crash.9 Effective control over the entire US financial services industry (including insurance companies, pension funds, securities companies, etc.) had been transferred to a handful of financial conglomerates - which are also the creditors and shareholders of high tech companies, the defense industry, major oil and mining consortia, etc. Moreover, as underwriters of the public debt at federal, state and municipal levels, the financial giants have also reinforced their stranglehold on politicians, as well as their command over the conduct of public policy.
The “global financial supermarket” is to be overseen by the Wall Street giants; competing banking institutions are to be removed from the financial landscape. State level banks across America will be displaced or bought up, leading to a deadly string of bank failures. In turn, the supervisory powers of the Federal Reserve Board (which are increasingly under the direct dominion of Wall Street) have been significantly weakened .
Free from government regulation, the financial giants have the ability to strangle local-level businesses in the US and overshadow the real economy. In fact, due to the lack of competition, the legislation also entitles the financial services giants (bypassing the Federal Reserve Board and acting in tacit collusion with one another) to set interest rates as they please.
The Merger Frenzy
A new era of intense financial rivalry has unfolded. The New World Order - largely under the dominion of American finance capital - was eventually intent on dwarfing rival banking conglomerates in Western Europe and Japan, as well as sealing strategic alliances with a “select club” of German- and British-based banking giants.
Several mammoth bank mergers (including NationsBank with BankAmerica, and Citibank with Travelers Group) had, in fact, already been implemented and rubber-stamped by the Federal Reserve Board (in violation of the pre-existing legislation) prior to the adoption of the 1999 Financial Modernization Act. Citibank, the largest Wall Street bank, and Travelers Group Inc., the financial services and insurance conglomerate (which also owns Solomon Smith Barney a major brokerage firm) combined their operations in 1998 in a 72 billion dollar merger.10
Strategic mergers between American and European banks had also been negotiated bringing into the heart of the US financial landscape some of Europe’s key financial players including Deutsche Bank AG (linked up with Banker’s Trust) and Credit Suisse (linked up with First Boston). The Hong Kong Shanghai Banking Corporation (HSBC), the UK based banking conglomerate - which had already sealed a partnership with Wells Fargo and Wachovia Corporation - had acquired the late Edmond Safra’s Republic New York Bank in a 9 billion dollar deal.11
In the meantime, rival European banks excluded from Wall Street’s inner circle, were scrambling to compete in an increasingly “unfriendly” global financial environment. Banque Nationale de Paris (BNP) had acquired Société Générale de Banque and Paribas to form one of the World’s largest banks. BNP eventually aspires “to move into North America in a bigger way”.12
Financial Deregulation at a Global Level
While the 1999 US Financial Services Act does not in itself break down remaining barriers to the free movement of capital, in practice, it empowers Wall Street’s key players, including Merrill Lynch, Citigroup, J.P. Morgan, Lehman Brothers, etc., to develop a hegemonic position in global banking, overshadowing and ultimately destabilizing financial systems in Asia, Latin America and Eastern Europe…
Financial deregulation in the US has created an environment which favors an unprecedented concentration of global financial power. In turn, it has set the pace of global financial and trade reform under the auspices of the IMF and the World Trade Organization (WTO). The provisions of both the WTO General Agreement on Trade in Services (GATS) and of the Financial Services Agreement (FTA) imply the breaking down of remaining impediments to the movement of finance capital meaning that Merrill Lynch, Citigroup or Deutsche-Bankers Trust can go wherever they please, triggering the bankruptcy of national banks and financial institutions.
In practice, this process has already happened in a large number of developing countries under bankruptcy and privatization programs imposed on an hoc basis by the Bretton Woods institutions. The mega-banks have penetrated the financial landscape of developing countries, taking control of banking institutions and financial services. In this process, the financial giants have been granted de facto “national treatment”: without recourse to the provisions of the Financial Services Agreement (FTA) of the WTO, Wall Streets banks, for instance, in Korea, Pakistan, Argentina or Brazil have become bona fide “national banks” operating as domestic institutions and governed by domestic laws which are being remolded under IMF-World Bank jurisdiction. (See Chapters 21 and 22.)
In practice the large US and European financial services giants do not require the formal adoption of the GATS to be able to dominate banking institutions worldwide, as well as overshadow national governments. The process of global financial deregulation is, in many regards, a fait accompli. Wall Street has routinely invaded country after country. The domestic banking system has been put on the auction block and reorganized under the surveillance of external creditors. National financial institutions are routinely destabilized and driven out of business; mass unemployment and poverty are the invariable results. Assisted by the IMF - which routinely obliges countries to open up their domestic banking sector to foreign investment - retail banking, stock brokerage firms and insurance companies are taken over by foreign capital and reorganized. Citigroup, among other Wall Street majors, has gone on a global shopping spree buying up banks and financial institutions at bargain prices in Asia, Latin America and Eastern Europe. In one fell swoop, Citigroup acquired the 106 branch network of Banco Mayo Cooperativo Ltda., becoming Argentina’s second largest bank.
Endnotes
- In the US, the division between commercial and investment banking is regulated by the Glass Steagall Act enacted in 1933 during the Great Depression to ensure the separation of securities underwriting from lending, to avoid conflicts of interest and prevent the collapse of commercial banks. The Banking Association has recently pointed to the importance of amending the Glass Steagall act to allow for the full integration of commercial and investment banking. See American Banking Association President’s Position, “New Ball Game in Washington“, ABA Banking Journal, January 1995, p. 17.
- For detailed analysis on the role of criminal organizations in banking and finance, see Alain Labrousse and Alain Wallon (editors), “La planète des drogues”, Editions du Seuil, Paris, 1993 and Observatoire géopolitique des drogues, La drogue, nouveau désordre mondial, Hachette, coll. pluriel-Intervention, Paris, 1993.
- Quoted in Martin Khor, ” Baring and the Search for a Rogue Culprit, Third World Economics, No. 108, 1-15 March 1995, p. 10.
- Ibid.
- Bank for International Settlements Review, No. 46, 1997.
- Martin Khor, SEA Currency Turmoil Renews Concern on Financial Speculation, Third World Resurgence, No. 86, October 1997, pp. 14-15.
- “Five Years On, the Crash Still Echoes”, The Financial Times, October 19, 1992.
- Philip Wong, member of the Beijing appointed Legislative Assembly accused the Manhattan Brokerage firm Morgan Stanley of “short-selling the market”. See “Broker Cleared of Manipulation”, Hong Kong Standard, 1 November 1997.
- See Martin McLaughlin, Clinton Republicans agree to Deregulation of US Banking System, World Socialist website, http://www.wsws.org/index.shtml, 1 November 1999.
- Ibid
- See Financial Times, November 9, 1999, p. 21.
- Jocelyn Noveck, “Deal would create largest bank”, http://sun-sentinel.com/, March 9 1999.
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The following text reviews, in a historical context, the 1987, 1997 and 1998 stock market meltdowns. It was subsequently published as a chapter in the Second Edition of The Globalization of Poverty and the New World Order, Global Research, Montreal, 2003. The financial sector reforms of the late 1999s had set the stage for the current financial crisis. “The 1999 legislation had repealed the Glass-Steagall Act of 1933, a pillar of President Roosevelt’s “New Deal” which was put in place in response to the climate of corruption, financial manipulation and “insider trading” which led to more than 5,000 bank failures in the years following the 1929 Wall Street crash. Effective control over the entire US financial services industry (including insurance companies, pension funds, securities companies, etc.) had been transferred to a handful of financial conglomerates - which are also the creditors and shareholders of high tech companies, the defense industry, major oil and mining consortia, etc. Moreover, as underwriters of the public debt at federal, state and municipal levels, the financial giants have also reinforced their stranglehold on politicians, as well as their command over the conduct of public policy. Rather than taming financial markets in the wake of the storm, Washington was busy pushing through the US Senate legislation, which was to significantly increase the powers of the financial services giants and their associated hedge funds. Under the Financial Modernization Act adopted in November 1999, US lawmakers had set the stage for a sweeping deregulation of the US banking system. In the wake of lengthy negotiations, all regulatory restraints on Wall Street’s powerful banking conglomerates were revoked “with a stroke of the pen”. Under the new rules - ratified by the US Senate and approved by President Clinton - commercial banks, brokerage firms, hedge funds, institutional investors, pension funds and insurance companies can freely invest in each others businesses as well as fully integrate their financial operations. The legislation had repealed the Glass-Steagall Act of 1933, a pillar of President Roosevelt’s “New Deal” which was put in place in response to the climate of corruption, financial manipulation and “insider trading” which led to more than 5,000 bank failures in the years following the 1929 Wall Street crash. Effective control over the entire US financial services industry (including insurance companies, pension funds, securities companies, etc.) had been transferred to a handful of financial conglomerates - which are also the creditors and shareholders of high tech companies, the defense industry, major oil and mining consortia, etc. Moreover, as underwriters of the public debt at federal, state and municipal levels, the financial giants have also reinforced their stranglehold on politicians, as well as their command over the conduct of public policy. The “global financial supermarket” is to be overseen by the Wall Street giants; competing banking institutions are to be removed from the financial landscape. State level banks across America will be displaced or bought up, leading to a deadly string of bank failures. In turn, the supervisory powers of the Federal Reserve Board (which are increasingly under the direct dominion of Wall Street) have been significantly weakened.” Michel Chossudovsky, October 17, 2008 See complete text below A new global financial environment has unfolded in several stages since the collapse of the Bretton Woods system of fixed exchange rates in 1971. The debt crisis of the early 1980s (broadly coinciding with the Reagan-Thatcher era) had unleashed a wave of corporate mergers, buy-outs and bankruptcies. These changes have, in turn, paved the way for the consolidation of a new generation of financiers clustered around the merchant banks, the institutional investors, stock brokerage firms, large insurance companies, etc. In this process, commercial banking functions have coalesced with those of the investment banks and stock brokers.1 While these “money managers” play a powerful role on financial markets, they are, however, increasingly removed from entrepreneurial functions in the real economy. Their activities (which often escape state regulation) include speculative transactions in commodity futures and derivatives, and the manipulation of currency markets. Major financial actors are routinely involved in “hot money deposits” in “the emerging markets” of Latin America and Southeast Asia, not to mention money laundering and the development of (specialized) “private banks” (”which advise wealthy clients”) in the many offshore banking havens. Within this global financial web, money transits at high speed from one banking haven to the next in the intangible form of electronic transfers. “Legal” and “illegal” business activities have become increasingly intertwined, vast amounts of unreported private wealth have been accumulated. Favoured by financial deregulation, the criminal mafias have also expanded their role in the spheres of international banking.2 The 1987 Wall Street Crash Black Monday October 19, 1987 was the largest one-day drop in the history of the New York Stock Exchange overshooting the collapse of October 28, 1929, which prompted the Wall Street crash and the beginning of the Great Depression. In the 1987 meltdown, 22.6 percent of the value of US stocks was wiped out largely during the first hour of trading on Monday morning. The plunge on Wall Street sent a cold shiver through the entire financial system leading to the tumble of the European and Asian stock markets… The Institutional Speculator The 1987 Wall Street crash served to “clearing the decks” so that only the “fittest” survive. In the wake of crisis, a massive concentration of financial power has taken place. From these transformations, the “institutional speculator” emerged as a powerful actor overshadowing and often undermining bona fide business interests. Using a variety of instruments, these institutional actors appropriate wealth from the real economy. They often dictate the fate of companies listed on the New York Stock Exchange. Totally removed from entrepreneurial functions in the real economy, they have the power of precipitating large industrial corporations into bankruptcy. In 1993, a report of Germany’s Bundesbank had already warned that trade in derivatives could potentially “trigger chain reactions and endanger the financial system as a whole”.3 While committed to financial deregulation, the Chairman of the US Federal Reserve Board Mr. Alan Greenspan had warned that: “Legislation is not enough to prevent a repeat of the Barings crisis in a high tech World where transactions are carried out at the push of the button”.4 According to Greenspan “the efficiency of global financial markets, has the capability of transmitting mistakes at a far faster pace throughout the financial system in ways which were unknown a generation ago…”5 What was not revealed to public opinion was that “these mistakes”, resulting from large-scale speculative transactions, were the source of unprecedented accumulation of private wealth. By 1995, the daily turnover of foreign exchange transactions (US$ 1300 billion) had exceeded the world’s official foreign exchange reserves estimated at US$ 1202 billion.6 The command over privately-held foreign exchange reserves in the hands of “institutional speculators” far exceeds the limited capabilities of central banks, - i.e. the latter acting individually or collectively are unable to fight the tide speculative activity. The 1997 Financial Meltdown The 1987 crisis had occurred in October. Almost to the day, ten years later (also in October) on Monday the 27th, 1997, stock markets around the world plummeted in turbulent trading. The Dow Jones average nose-dived by 554 points, a 7.2 percent decline of its value, its 12th-worst one-day fall in the history of the New York Stock Exchange. Major exchanges around the world are interconnected “around the clock” through instant computer link-up: volatile trading on Wall Street “spilled over” into the European and Asian stock markets thereby rapidly permeating the entire financial system. European stock markets were in disarray with heavy losses recorded on the Frankfurt, Paris and London exchanges. The Hong Kong stock exchange had crashed by 10.41 percent on the previous Thursday (”Black Thursday” October 24th) as mutual fund managers and pension funds swiftly dumped large amounts of Hong Kong blue chip stocks. The slide at Hong Kong’s Exchange Square continued unabated at the opening of trade on Monday morning: a 6.7 percent drop on Monday the 27th followed by a 13.7 percent fall on Tuesday (Hong Kong’s biggest point loss ever)…
New York Stock Exchange: Worst Single-Day Declines (Dow Jones Industrial Average, percentage change) Percentage Date Decline [1929-1998] October 19, 1987 - 22.6% October 28, 1929 - 12.8% October 29, 1929 - 11.7% November 6, 1929 - 9.9% August 12, 1932 - 8.4% October 26, 1987 - 8.0% July 21, 1933 - 7.8% October 18, 1937 - 7.6% October 27, 1997 - 7.2% October 5, 1932 - 7.2% September 24, 1931 - 7.1% August 31, 1998 - 6.4% Source: New York Stock Exchange The 1997 meltdown of financial markets had been heightened by computerized trading and the absence of state regulation. The NYSE’s Superdot electronic order-routing system was able to handle (without queuing) more than 300,000 orders per day (an average of 375 orders per second), representing a daily capacity of more than two billion shares. While its speed and volume had increased tenfold since 1987, the risks of financial instability were significantly greater. Ten years earlier, in the wake of the 1987 meltdown, the US Treasury was advised by Wall Street not to meddle in financial markets. Free of government encroachment, the New York and Chicago exchanges were invited to establish their own regulatory procedures. The latter largely consisted in freezing computerized programme trading through the use of so-called “circuit-breakers”.7 In 1997, the circuit breakers proved to be totally ineffective in averting a meltdown. On Monday the 27th of October 1997, a first circuit breaker halted trading for 30 minutes after a 350 point plunge of the Dow Jones. After the 30 minute trading halt, an aura of panic and confusion was installed: brokers started dumping large quantities of stocks which contributed to accelerating the collapse in market values. In the course of the next 25 minutes, the Dow plunged by a further 200 points, triggering a second “circuit breaker” which served to end the trading day on Wall Street.
Replicating the Policy Failures of the late 1920s Wall Street was swerving dangerously in volatile trading in the months preceding the Wall Street crash on October 29, 1929. Laissez-faire, under the Coolidge and Hoover administrations, was the order of the day. The possibility of a financial meltdown had never been seriously contemplated. Professor Irving Fisher of Yale University had stated authoritatively in 1928 that “nothing resembling a crash can occur”. The illusion of economic prosperity persisted several years after the Wall Street crash of October 1929. In 1930, Irving Fisher stated confidently that “for the immediate future, at least, the perspective is brilliant”. According to the prestigious Harvard Economic Society: “manufacturing activity [in 1930]… was definitely on the road to recovery” (quoted in John Kenneth Galbraith, The Great Crash, 1929, Penguin, London). Mainstream Economics Upholds Financial Deregulation Sounds familiar? In the wake of the 1997 crash, the same complacency prevailed as during the frenzy of the late 1920s. Echoing almost verbatim the economic slogans of Irving Fisher, today’s economics orthodoxy not only refutes the existence of an economic crisis, it denies outright the possibility of a financial meltdown. According to Nobel Laureate Robert Lucas of the University of Chicago, the decisions of economic agents are based on so-called “rational expectations”, ruling out the possibility of “systematic errors” which might lead the stock market in the wrong direction… It is ironic that precisely at a time when financial markets were in turmoil, the Royal Swedish Academy announced the granting of the 1997 Nobel Prize in Economics to two American economists for their “pioneering formula for the valuation of stock options [and derivatives] used by thousands of traders and investors” (meaning an “algebraic formula” which is routinely used by hedge funds stock market speculators). (See Greg Burns, “Two Americans Share Nobel in Economics”, Chicago Tribune, October 15, 1997).
When viewed historically, the 1997 financial crisis was far more devastating and destructive than previous financial meltdowns. Both the stock market and currency markets were affected. In the 1987 crisis, national currencies remained relatively stable. In contrast to both the crashes of 1929 and 1987, the 1997-98 financial crisis was marked by the concurrent collapse of currencies and stock markets. An almost symbiotic relationship between the stock exchange and the foreign currency market had unfolded: “institutional speculators” were not only involved in manipulating stock prices, they also had the ability to plunder central banks’ foreign exchange reserves, undermining sovereign governments and destabilizing entire national economies. In the course of 1997, currency speculation in Thailand, Indonesia, Malaysia and the Philippines was conducive to the transfer of billions of dollars of central bank reserves into private financial hands. Several observers have pointed to the deliberate manipulation of equity and currency markets by investment banks and brokerage firms.8 Ironically, the same Western financial institutions which looted developing countries’ central banks, have also offered “to come to the rescue” of Southeast Asia’s monetary authorities. ING Baring, for instance, well known for its speculative undertakings, generously offered to underwrite a one-billion dollar loan to the Central Bank of the Philippines (CBP) in July 1997. In the months which followed, most of these borrowed foreign currency reserves were reappropriated by international speculators when the CBP sold large amounts of dollars on the forward market in a desperate attempt to prop up the Peso. “Economic Contagion” Business forecasters and academic economists alike had disregarded the dangers of a global financial meltdown alluding to “strong economic fundamentals”; G7 leaders were afraid to say anything or act in a way, which might give the “wrong signals”… Wall Street analysts continue to bungle on issues of “market correction” with little understanding of the broader economic picture. The plunge on the New York Stock Exchange on October 27th 1997 was casually blamed on the “structurally weak economies” of Southeast Asia, until recently heralded as upcoming tigers, now depicted as “lame ducks”. The seriousness of the financial crisis was trivialized: Alan Greenspan, Chairman of the Federal Reserve Board, reassured Wall Street pointing authoritatively to “the contagious character of national economies, spreading weaknesses from country to country”. Following Greenspan’s verdict (October 28th), the “consensus” among Manhattan brokers and US academics (with debate or analysis) was that “Wall Street had caught the Hong Kong flu”… The 1998 Stock Market Meltdown In the uncertain wake of Wall Street’s recovery from the 1997 “Asian flu” - largely spurred by panic flight out of Japanese stocks - financial markets backslided a few months later to reach a new dramatic turning-point in August 1998 with the spectacular nose-dive of the Russian ruble. The Dow Jones plunged by 554 points on August 31, 1998 (its second largest decline in the history of the New York stock exchange) leading, in the course of September, to the dramatic meltdown of stock markets around the World. In a matter of a few weeks, 2300 billion dollars of “paper profits” had evaporated from the U.S. stock market. The ruble’s August 1998 free-fall had spurred Moscow’s largest commercial banks into bankruptcy leading to the potential take-over of Russia’s financial system by a handful of Western banks and brokerage houses. In turn, the crisis had created the danger of massive debt default to Moscow’s Western creditors, including the Deutsche and Dresdner banks. Since the outset of Russia’s macro-economic reforms, following the first injection of IMF “shock therapy” in 1992, some 500 billion dollars worth of Russian assets - including plants of the military industrial complex, infrastructure and natural resources - have been confiscated (through the privatization programs and forced bankruptcies) and transferred into the hands of Western capitalists. In the brutal aftermath of the Cold War, an entire economic and social system was being dismantled. Financial Deregulation Rather than taming financial markets in the wake of the storm, Washington was busy pushing through the US Senate legislation, which was to significantly increase the powers of the financial services giants and their associated hedge funds. Under the Financial Modernization Act adopted in November 1999 - barely a week before the historic Seattle Millenium Summit of the World Trade Organization (WTO) - US lawmakers had set the stage for a sweeping deregulation of the US banking system. In the wake of lengthy negotiations, all regulatory restraints on Wall Street’s powerful banking conglomerates were revoked “with a stroke of the pen”. Under the new rules - ratified by the US Senate and approved by President Clinton - commercial banks, brokerage firms, hedge funds, institutional investors, pension funds and insurance companies can freely invest in each others businesses as well as fully integrate their financial operations. The legislation had repealed the Glass-Steagall Act of 1933, a pillar of President Roosevelt’s “New Deal” which was put in place in response to the climate of corruption, financial manipulation and “insider trading” which led to more than 5,000 bank failures in the years following the 1929 Wall Street crash.9 Effective control over the entire US financial services industry (including insurance companies, pension funds, securities companies, etc.) had been transferred to a handful of financial conglomerates - which are also the creditors and shareholders of high tech companies, the defense industry, major oil and mining consortia, etc. Moreover, as underwriters of the public debt at federal, state and municipal levels, the financial giants have also reinforced their stranglehold on politicians, as well as their command over the conduct of public policy. The “global financial supermarket” is to be overseen by the Wall Street giants; competing banking institutions are to be removed from the financial landscape. State level banks across America will be displaced or bought up, leading to a deadly string of bank failures. In turn, the supervisory powers of the Federal Reserve Board (which are increasingly under the direct dominion of Wall Street) have been significantly weakened . Free from government regulation, the financial giants have the ability to strangle local-level businesses in the US and overshadow the real economy. In fact, due to the lack of competition, the legislation also entitles the financial services giants (bypassing the Federal Reserve Board and acting in tacit collusion with one another) to set interest rates as they please. The Merger Frenzy A new era of intense financial rivalry has unfolded. The New World Order - largely under the dominion of American finance capital - was eventually intent on dwarfing rival banking conglomerates in Western Europe and Japan, as well as sealing strategic alliances with a “select club” of German- and British-based banking giants. Several mammoth bank mergers (including NationsBank with BankAmerica, and Citibank with Travelers Group) had, in fact, already been implemented and rubber-stamped by the Federal Reserve Board (in violation of the pre-existing legislation) prior to the adoption of the 1999 Financial Modernization Act. Citibank, the largest Wall Street bank, and Travelers Group Inc., the financial services and insurance conglomerate (which also owns Solomon Smith Barney a major brokerage firm) combined their operations in 1998 in a 72 billion dollar merger.10 Strategic mergers between American and European banks had also been negotiated bringing into the heart of the US financial landscape some of Europe’s key financial players including Deutsche Bank AG (linked up with Banker’s Trust) and Credit Suisse (linked up with First Boston). The Hong Kong Shanghai Banking Corporation (HSBC), the UK based banking conglomerate - which had already sealed a partnership with Wells Fargo and Wachovia Corporation - had acquired the late Edmond Safra’s Republic New York Bank in a 9 billion dollar deal.11 In the meantime, rival European banks excluded from Wall Street’s inner circle, were scrambling to compete in an increasingly “unfriendly” global financial environment. Banque Nationale de Paris (BNP) had acquired Société Générale de Banque and Paribas to form one of the World’s largest banks. BNP eventually aspires “to move into North America in a bigger way”.12 Financial Deregulation at a Global Level While the 1999 US Financial Services Act does not in itself break down remaining barriers to the free movement of capital, in practice, it empowers Wall Street’s key players, including Merrill Lynch, Citigroup, J.P. Morgan, Lehman Brothers, etc., to develop a hegemonic position in global banking, overshadowing and ultimately destabilizing financial systems in Asia, Latin America and Eastern Europe… Financial deregulation in the US has created an environment which favors an unprecedented concentration of global financial power. In turn, it has set the pace of global financial and trade reform under the auspices of the IMF and the World Trade Organization (WTO). The provisions of both the WTO General Agreement on Trade in Services (GATS) and of the Financial Services Agreement (FTA) imply the breaking down of remaining impediments to the movement of finance capital meaning that Merrill Lynch, Citigroup or Deutsche-Bankers Trust can go wherever they please, triggering the bankruptcy of national banks and financial institutions. In practice, this process has already happened in a large number of developing countries under bankruptcy and privatization programs imposed on an hoc basis by the Bretton Woods institutions. The mega-banks have penetrated the financial landscape of developing countries, taking control of banking institutions and financial services. In this process, the financial giants have been granted de facto “national treatment”: without recourse to the provisions of the Financial Services Agreement (FTA) of the WTO, Wall Streets banks, for instance, in Korea, Pakistan, Argentina or Brazil have become bona fide “national banks” operating as domestic institutions and governed by domestic laws which are being remolded under IMF-World Bank jurisdiction. (See Chapters 21 and 22.) In practice the large US and European financial services giants do not require the formal adoption of the GATS to be able to dominate banking institutions worldwide, as well as overshadow national governments. The process of global financial deregulation is, in many regards, a fait accompli. Wall Street has routinely invaded country after country. The domestic banking system has been put on the auction block and reorganized under the surveillance of external creditors. National financial institutions are routinely destabilized and driven out of business; mass unemployment and poverty are the invariable results. Assisted by the IMF - which routinely obliges countries to open up their domestic banking sector to foreign investment - retail banking, stock brokerage firms and insurance companies are taken over by foreign capital and reorganized. Citigroup, among other Wall Street majors, has gone on a global shopping spree buying up banks and financial institutions at bargain prices in Asia, Latin America and Eastern Europe. In one fell swoop, Citigroup acquired the 106 branch network of Banco Mayo Cooperativo Ltda., becoming Argentina’s second largest bank.
The above text is contained in Chapter 20 of Michel Chossudovsky’s book The Globalization of Poverty and the New World Order by Michel Chossudovsky In this new and expanded edition of Chossudovsky’s international best-seller, the author outlines the contours of a New World Order which feeds on human poverty and the destruction of the environment, generates social apartheid, encourages racism and ethnic strife and undermines the rights of women. The result as his detailed examples from all parts of the world show so convincingly, is a globalization of poverty. This book is a skilful combination of lucid explanation and cogently argued critique of the fundamental directions in which our world is moving financially and economically. In this new enlarged edition -which includes ten new chapters and a new introduction– the author reviews the causes and consequences of famine in Sub-Saharan Africa, the dramatic meltdown of financial markets, the demise of State social programs and the devastation resulting from corporate downsizing and trade liberalisation. Michel Chossudovsky is Professor of Economics at the University of Ottawa and Director of the Centre for Research on Globalization (CRG), which hosts the critically acclaimed website www.globalresearch.ca . He is a contributor to the Encyclopedia Britannica. His writings have been translated into more than 20 languages.
Published in 12 languages. More than 150,000 copies sold Worldwide. |
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| Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the Centre for Research on Globalization. The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible or liable for any inaccurate or incorrect statements contained in this article.
To become a Member of Global Research The CRG grants permission to cross-post original Global Research articles on community internet sites as long as the text & title are not modified. The source and the author’s copyright must be displayed. For publication of Global Research articles in print or other forms including commercial internet sites, contact: crgeditor@yahoo.com www.globalresearch.ca contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available to our readers under the provisions of “fair use” in an effort to advance a better understanding of political, economic and social issues. The material on this site is distributed without profit to those who have expressed a prior interest in receiving it for research and educational purposes. If you wish to use copyrighted material for purposes other than “fair use” you must request permission from the copyright owner. For media inquiries: crgeditor@yahoo.com © Copyright Michel Chossudovsky, Global Research, 2008 The url address of this article is: www.globalresearch.ca/index.php?context=va&aid=10588 |
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Comments RSS 2.0Epochal Transformation Accelerates
As Global Financial Matrix Disintegrates
Now that the genie is out of the bottle, worldwide economic, political and social events will proceed with the inexorable force of destiny. The forthcoming changes, shifts and breaks with the past that are delineated below do concern the unsavory business of WHAT, positively, will not be brought into the future. This is of critical importance. Why? Because those who do not know, and understand, and heed history, are always, always forced to repeat it.
I. As we all sat back and waited for this year’s October Surprise, please know that it came a little bit early this year on September 15th which will forever be known as PITCH BLACK MONDAY. Actually, the entire month of October was set up to be a series of Black Monday’s, as well as every other day of the week shaped up to be. It’s really a good time to brace your self since this year’s election cycle, and beyond, will bring with it a whole new season of surprises. Things like the beginning of the end of FIAT money – the real root cause of all our financial problems and economic ills. This foundational flaw, together with all of the multi-layered financial/economic/accounting mechanisms and schemes that have insidiously crept into the system, are the ‘not talked about’ institutionalized culprits and structural deformities that really need to go. Without them, the perps wouldn’t be so tempted to stack the deck against us all the time.
The only legitimate currency is that which is backed by GOLD, or some other precious commodity that is universally valued, and issued directly by the US Government, not a privately owned, organized crime syndicate like the FED. Debt driven, fractional-reserve banking – the real bane of global finance – will then be banished from the planet forever, along with the overlords of disaster capitalism, institutionalized usury & loan-sharking (e.g. World Bank & International Monetary Fund), as well as their economic hitmen. Finally, the central organizing principle of modern society, and especially Western Civilization, will no longer be: maximizing shareholders’ wealth.
The writing is on the wall: THE FED IS DEAD. And so is the Fed’s collection agency – the IRS. The FED has obviously been on extreme life support since September ’08, and the only compassionate response is to let it go peacefully into the sunset. Perhaps we should organize a simple taxpayers’ revolt, not too unlike those that occurred prior to the American Revolution, to bury this beast forever. When the people do wake up, and realize that the Federal Reserve Note that they carry in their pocket is exactly that – a note (i.e. debt, obligation, debit, commitment, instrument of indebtedness), things will start to get REEEEAL interesting !
II. Another little surprise will come in the form of an announcement that goes something like this: The USA was conceived to be a CONSTITUTIONAL REPUBLIC, not a democracy by plutocracy. The founding fathers would be absolutely horrified to see the “mob rule by the privileged elites” into which this once great nation has degenerated. Every political philosopher knows that democracy, when sufficiently dumbed down and unduly influenced by the moneyed ruling class, will always devolve into a despotic tyranny. Therefore, the wholesale exportation of our fraudulent notion of democracy, and its supposed freedoms (to buy, buy, buy after watching the boob tube hucksters), by the political and corporate classes must be reconsidered. And it will be soon, on a new channel during this “Fall” season’s new lineup! Stay tuned —
III. Another announcement will be made, in the not too distant future, about the business entity commonly known as the CORPORATION – the main huckster of this ‘brand’ of faux democracy. Surely, if the devil were to ever choose the perfect form in which to enter in order to carry out his nefarious designs, Inc. is it. Is there any other entity on earth – person or party, organization or association, government or institution, jurisdiction or bureaucracy, club or group, fraternity or sorority, etc. that can function with such impunity, as it hides behind the shield of LIMITED LIABILITY. Those two words have given complete cover for the flagrant and wanton destruction of planet Earth.
You name it – oil slicked coastlines, razed rainforests, beaches strewn with dead dolphins and whales. Not to mention the complete erosion of human, civil and national rights, wherever INC decides to set up shop.
Let’s pick a country. Let’s go to India and visit Bhopal of Union Carbide fame. Close to 8000 people died within two weeks of that December day in 1984 in what is known as the worst industrial disaster of the last century. Now that Dow Chemical owns Union Carbide, you can only imagine the veritable phalanx of attorneys who are paid unconscionable fees to ensure proper responsibility and accountability will never be assumed by their master.
Or let’s visit the Punjab and talk to the thousands of widows of farmers who committed suicide because of Monsanto’s “seedless seeds”. Or go to just about anywhere on that subcontinent where a Walmart is being protested for land theft, encroachment and despoilation. Let’s not forget about all the Coca Cola bottling plants that have become notorious for stealing the most precious commodity that every Indian cherishes and covets – WATER. Well, that takes care of land, water, air … and blood. What else in heaven’s name do these stakeholders want?!
We all know the deal. It’s the one where the individual, and his/her environment, is always trampled in favor of the corporate interest. Isn’t it time to really take stock of what our current predicament has left us with. Perhaps it’s also time to seriously think about actually re-ordering the ORDER, instead of once again rearranging the deck chairs on the titanic. Like we’ve said, “optimizing stockholder profit” will soon be history, as the cease and desist orders are not far from being issued to Corporate America. Might as well get a head start on dissolving (or re-chartering) that corporation.
IV. Termination of Globalization: The dominating and predatory form, that is. No other global initiative has been more unsuccessful at creating a framework for a more efficient transfer of goods and services around the planet. Truly, every aspect of this corporate inspired policy has failed miserably. Wherever it promoters trumpet its stated intention to make markets more streamlined, effective and resilient, it has done quite the opposite.
One only needs to look at the current debacle within the European Union concerning the banking, credit, and stock market breakdowns. Never has a response from the appropriate governing bodies been more disorganized, full of mixed messages and working at cross purposes with the member states. It’s like watching The Three Stooges (France, Germany & Italy) play musical chairs blindfolded with no clothes on. What an unprecedented spectacle, and in plain view for the entire world to watch! This will undoubtedly put the brakes on the concretizing of a North American Union and their planned currency – the Amero. Praise the Lord!
As a matter of fact, all of the financial unions and economic superstates (e.g. European Union; Southeast Asian Association for Regional Cooperation; Union of South American Nations) that have been created over the past many years will, by sheer necessity and desperation, be forced to re–organize themselves in the coming months and years. Even South America, which has two distinct camps that are constantly gummin’ up the works for each other, will abandon their current emerging model in favor of one that enjoys complete freedom from its North American taskmaster. To their credit, they have set the bar higher than it has ever been set concerning their strongly stated desire to be free of IMF and World Bank control. Only Russia has exceeded their standards, as they had already been fleeced by the Oligarchs in what may very well be the grandest larceny of national wealth/resources in history. This, of course, was preceded by a 75 year scourge of incessant rape, pillaging and plundering by the Bolsheviks and their Western financiers & handlers. Clearly Mr. Putin will not allow a repeat of any such conduct within his borders, and the international persecution that he has suffered certainly reflects their displeasure and frustration with him. No wonder Vladimir Putin is now considered a “reincarnation” of Peter the Great by his own people.
The ruinous influence of these two globalization thugs (IMF & WB) can be instantly assessed by looking at the economic calamities they caused in Argentina (1999-2002), as well as in Thailand, South Korea & Indonesia during the 1997 Asian currency crisis. Likewise, every nation in Africa that has chosen to take on their monetary yoke has only misery and war and financial oppression to show for it. Wherever these 2 scrooges show their faces, it’s quite like Ebenezer himself showing up to make a house call. You know the patient will soon find himself in a pine box after all the gold fillings and rings have been removed.
We have seen this globalization scam unfold in country after country, as a ruse to steal a nation’s resources, always taking from those who have, and giving to those who want it. In fact, an objective assessment of all the world’s current conflicts would reveal that the vast majority are directly the result of this geo-political/commercial dynamic. The privatization of water sources/bodies/supplies/rights is perhaps the most provocative and glaring, and can be found at the root of a number of these resource wars.
Clearly the verdict has been delivered: Economies are much less vulnerable, the more locally they are positioned and the less centralized their decision-making process. This arrangement affords much greater resiliency when dealing with the vicissitudes of the marketplace. And it takes the power away from those who are insulated in ivory towers, and far from the plight of the common man. It is time for everyone on the planet to “think globally; act locally”.
V. Stock market will become extinct. There is no greater tool at the disposal of those who can, and do, manipulate the various markets than the charade of “setting up” a formal system of trading, buying and selling of anything, as exemplified by the NYSE. This is where it all happens. From devastating whole national (and regional) economies, to toppling uncooperative corporate execs, to bringing 150 year old multi-billion $$$ companies to their knees within a week’s time. From triggering stockholder revolts, to propping up corporate raiders, to extorting billions from national and/or corporate treasuries. They can, and do, do it all right there on the floor.
Really, the very best example of what occurs in these speculative market exchanges is the gambling casino. In Vegas, everyone knows that the house ALWAYS wins. It never loses. Even when there is the appearance of losing, it still wins. Go figure, but it’s true. Your stockbroker is not too unlike the blackjack dealer. And your financial planner is often a croupier in disguise. So, the question remains, do you honestly know what your hard earned retirement money is invested in? If not, this is a very good time to find out!!!
For those of us who have been there, we know that whether you call it an oil bourse, a commodity exchange, or a bond market, you’re still playing in a game that can go against you at any time. Wipe out your earnings in a heartbeat; devour your principal in a flash. It’s often been said that when he comes, “he comes like a thief in the night”. Do you still feel you know where your entire life savings is currently residing?
The derivatives market represents the single greatest threat to worldwide economic stability and financial security. It poses such great potential for financial abuse and economic devastation that the current institutional arrangements of this commercial realm have become completely unacceptable. The alarming proliferation of hedge funds, as well as the growing number and variety of derivative instruments, has reached a critical mass that is incompatible with living a financially sound life on planet Earth. Simply put, some of these instruments are so far from the street – economic reality – that they put into jeopardy all the hard work, which appears in the form of real goods and services, that is produced by any economy at any given time. This predicament signifies a CLEAR AND PRESENT DANGER to us all.
Remember – DERIVATIVES are the real megilla. Derivatives, by their very nature, can be highly radioactive, and can go nuclear any time circumstances conspire in just the right, or wrong, way. Those who control their destiny can, likewise, utilize their inherent threat as a means of conducting financial and economic terrorism anytime, anywhere completely under the radar screen. It’s time for them to go. And we trust it’s just a matter of execution at this point.
VI. Mass Consumerism & Perpetual Economic Growth – the Fric & Frac of our Age – are history. One need not look any further than the inside of one’s own home to see the ravages of these adopted twins. They own the bedroom, the living room, the family room and all the closets. They’ve taken over the kitchen, the den and the garage, as well. Since their middle names are Amass and Accumulate, we can only imagine what might lay hidden in the attic, the basement and the shed.
Ever since they became the twin pillars of Kali Yuga’s overarching philosophy of life, things started to really go to hell in a handbasket … or rather gilded cage. How so? What else could one expect from a political economy that demands growth, necessitates growth and extols the virtues of growth at every turn (and on every other commercial and newscast). Growth, at the expense of WHAT!! We’ll tell you what – Life!
One of the most tragic parts of this ever-unfolding tragedy has been the dramatic change in the spirit of the people with whom these twins associate. The very society loses its refinement, as the culture becomes debased. Aren’t so many things associated with Americana experienced as coarse, and crude, and crass? Likewise, the nation, which was once known as the “land of the free; home of the brave”, morphs into a country reviled for its unkindness, lack of compassion and cruelty. Before anyone realizes, the citizenry is easily being herded, and then stampeded, into wars and conflict of every sort and kind.
What else could be expected when the meme of consumerism is subliminally implanted at such a young and tender age, and relentlessly reinforced from cradle to grave? And, what does it really say about a society when all who belong to it are known as consumers. Kind of like little pac-men (and pac-women) gobbling up everything in sight. Starts out with BIG Macs and 24 oz cokes, then super-sized HUMMERS, then oil fields and gold mines and precious rainforests, and then whole countries.
Likewise, in the corporate realm, any board director, company officer, division president, regional director, department manager, production supervisor, etc. will candidly speak to the greatest pressure in their lives. More income, more sales, more profit, more production, more revenue – anything that will show an increase in year over year growth. Always gotta GROW, even though yuv been out of puberty for 20 or 30 years!?
Well, you can imagine that this state of affairs can only go on for so long. As a matter of fact, this party’s now over. And the hangover is about to begin. Perhaps it’s time to send these twins on a permanent vacation to the waterless region.
VII. War, as a means of wealth creation, is now bankrupt. War, as a means of conflict resolution, is over. As a means to any end whatsoever, war is finished. You get the picture, don’t you? War has outlived its usefulness, and has become as obsolete as the derivatives hawker. There is simply no more place for it in civil society. It’s time for the curtain to fall on this show for the last time, and for all of its bad actors to hit the stage exit.
It never was a legitimate policy for conflict resolution, as we know. Virtually all conflicts and wars were manufactured in the boardrooms of the world. And impeccably stage managed by the directors of the war studios. Isn’t the Iraq war a perfect example of this kind of terrible and awful-to-watch “B” movie?
Any deliberate, probing and unprejudiced analysis of all the major wars going back to the French Revolution will reveal an extraordinary degree of carefully calculated and coordinated events leading up to the actual conflagrations we call war. Just read the actual history that is only now beginning to surface, and you will reach this very same conclusion.
War has consistently served its masters in three ways which no longer have relevance in an enlightened civilization: (i) population control (ii) artificial creation of wealth for the plutocracy (iii) imposition of a tyrannical order in the wake of the chaos that always results from war. Population control in this context has different meanings. The number of people who are systematically genocided, wantonly annihilated and deliberately infected with disease agents serve the purpose of population reduction. Then there is the sheer terror of war and its effects on whole populations (see how easily controlled both the Germans and Japanese were after WWII). “Order out of chaos” is made easy when all concerned parties have been faced with the extraordinary distraction, mayhem and pandemonium that war always brings.
Let us once again proclaim, here and now, that: WAR HAS COME TO AN END.
VIII. There is a very profound and significant connection between the US Government sponsored and staged terrorist attacks of 9/11/01 and the PRE-PLANNED Financial & Economic 9/11 of 2008 that may be difficult for many to fully embrace. But here it goes:
The OMEN that 911 truly was, looks a little bit like THE LORD OF THE RINGS.
Remember the Twin Towers? When they came down in NYC, it was a message to humankind that the reign of the Almighty Dollar was coming to an end. As a nation’s currency goes, so goes its destiny. Her financial strength and economic prowess was on the wane, and soon to be greatly diminished. Just as the WTC (financial capital of the world) was pulverized into dust, the US Dollar would be swept into the ash heap of history. Just as we see it collapsing all around us, exactly 7 years after the original 911 apocalyptic events.
When the Ring of Power was finally destroyed, like the Pentagon (ring-shaped command center of the military-industrial complex) was mortally wounded and damaged, the message was equally clear. Her military might and superior force would be reduced to rubble in the twinkling of an eye. She would, likewise, soon see the demise of Her all-pervasive state sponsored terrorism. This, because She had lost all moral ascendancy. Besides, the empire could no longer be sustained politically, financially, practically or ethically, as the seeds of its own destruction had fully sprouted. The most fatal seed grew into that extremely corrupt and predatory form of corporate, crony capitalism which was so socially unconscious, and so environmentally unaware, it was quite doomed from the very beginning.
The GOOD NEWS is that this nation – its people – will now be compelled to beat their “swords into plowshares” and their “spears into pruning hooks”.
Just as the Phoenix rose from its ashes, so too will America ascend to even greater heights. As long as She ascends with the guidance of the highest of ideals, loftiest of principles and noblest of intentions. And She reforms, and transforms Herself, in good faith, in earnest and with haste.
As a modern day prophet said in the days immediately following September 11, 2001:
“America, Wake up ! ! ! Seize this God-given opportunity. There is no more time to dally in fear and ignorance and greed. For yours is a destiny that must serve as a beacon of Light and Hope and Peace to the world. Make haste, the time is drawing nigh!”
T. Anthony Michael
11/07/08
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