ZAIBATSU GLOBALIZATION ‘VOODOO ECONOMICS’ BOWING OUT

Erle Frayne Argonza

Magandang hapon! Good afternoon!

 

Let me share to you at this moment some notes regarding the ‘globalization’ experiment and the flawed policies that sustained it. There has been much ballyhoo about the global economy’s integration, over the last three (3) decades, as having been carved out supposedly by the Anglo-Saxon policy architects, using Thatcher & Reagan as the face for the ‘neo-liberal’ policy regime they installed.

 

Little do peoples across the globe, including experts who are so mired in their own parochial perspectives, know that the liberalization of country economies has a great deal to do with the Zaibatsu offensive. The West should better accept the facts: that their technocrats and policy shapers have run out of fresh ideas since the 1970s onwards (i.e. mentally bankrupt), a gap that they filled up by looking up to Japan and the NICs (newly industrializing countries) for copycat purposes.

 

Reaganomics, as neo-liberal policies of ‘privatization’ was dubbed (Thatcher of the UK preceded Reagan by a year), is as voodoo as one can get, seductive as any enchanting mantra-resonating principle can be, and was indeed potent in erasing the vestiges of the Regulated Economics doctrines that preceded the era. In the emerging markets, they were dubbed as ‘structural adjustment policies’ or SAPs, were imposed by the IMF-World Bank Group on debtor nations, and can be summed up as follows:

 

·        Core principles: Privatization, Liberalization, Deregulation

·        Subsidiary Principles: Tax reforms, trade liberalization, free floating exchange rates, diminished state subsidies for welfare, increased utility prices (revenue generation)

·        Governance Principle: Decentralization (local government autonomy)

 

Such policy reform measures, as far as developing countries or DCs were concerned, came in as very harsh, cruel ‘austerity measures’ imposed by the IMF. We citizens from the ‘margins’ can never forget these measures, the pauperization that they effected, the dislocation of marginal producers, the decline of health services and rise of morbidity rates, and so on. In the Philippines, our very own capital goods industries were either delayed or un-implementable (such as integrated steel), as the money allocated for their purposes simply dried as dictated by the World Bank.

 

But there’s another set of policy architecture that wasn’t Anglo-Saxon, and didn’t receive their inspiration from the classicists (Smith, Ricardo) and the monetarists (Friedman, Hayek). This set of liberalization policies came from Zaibatsu country, and were crafted by Japanese technocrats. Not only policies, but also institutions were addressed by them, giving rise to the globalized economy that we have today.

Chief among those technocrats was Kenichi Ohmae, who in the 1980s was a think-tank executive. Further down the line were many other technocrats, who were organically linked to the Zaibatsus (landlord-industrialist-financier oligarchs), taking up cudgels for Ohmae.

Globalization, as one better realize, was never meant as any ‘win/win’ formula for nation-states in the arena of international trade as the liberal thinkers came to defend it later. It was outright a strategy to pre-position Zaibatsu corporate interests outside of Japan, notably the U.S. and European markets.  

At that time of conceptualization, Zaibatsus have already efficaciously penetrated the Asian markets, and had leveraged their investments’ entry via aid and technical knowledge diffusion (including sponsoring Developing Country scholars in Japanese universities & special institutes). The old doctrine of ‘Asia Co-prosperity sphere’ was finally won, without firing a shot this time (unlike Imperial Japan era expansionism).

In the 1980s, the clamor for mooring investments and trade in the Western markets became ever stronger. The offensive tactic adapted was rather two-pronged, which made the new voodoo mantra even more potent:

·        On the micro-level, permeate other markets with new concepts such as ‘Theory Z’ (decentralized authority, see W. Ouichi), total quality management or TQM, new tools for strategic planning, mergers and de-mergers. Till these days, the tools are considered sacrosanct in all sectors of society, including the Catholic Church that now uses ‘bottom-up’ planning added to strategic planning (my observations done in 2001-02 in a California diocese).

 

·        On the macro-level, blend  the Reagan-Thatcher ‘structural adjustments’ with the ‘globalization’ doctrine. The Zaibatsu technocrats fanned out across the globe, some of whom were positioned inside international bodies, and sweetened liberalization via a supposedly ‘win/win’ growth strategy for participating countries. This brilliant blending, which Western thinkers didn’t perceive at all as any subtle tactic by a predatory class (Zaibatsu), soon caught up fire and became buzz word for nigh three decades.  

Before long, the Japan Inc. was being bandied across the globe as worth any country’s emulation. Southeast Asia and Korea went for it. Even the former presidents of the USA admired the Japanese Inc. doctrine of renewed private initiatives and shift from macro- to micro-economics as stabilization and growth measure. Bill Clinton of the USA spoke so fondly of ‘globalization’ like some captive fan of an economic icon, and moved to negotiate the NAFTA.

Little do unsuspecting, gullible peoples across the planet, more so the policy experts of the West, realize that the Japanese voodoo economics was largely intended to permit Zaibatsu investments to breed and morph inside their economies. Using merger and buy-in tactics, the Zaibatsu agents made it appear that their sponsors came in for benign purposes or so. If there is any group in the world today that is enjoying its last laugh, it is the Japanese militarists of the past, who finally saw the success of their nation’s offensives and the decline of the West via ‘organized chaos’.

Around 1994, the magic of the Japan Inc. began to cramble. Recession came, and before long many banks and investment houses were catching fire. That was the origin of the bankrupt and immoral Bush-Paulson ‘bailout’, which began with the ‘crisis management’ tactic in Japan to save ailing banks and financial institutions. Eventually, Zaibatsu technocrats were forced to revive the Western tool of ‘interest rates’ intervention, to the extent of bringing down interest rates to zero percent and sustaining it there for many years.

There also came that moment, in the late 1990s through 2006, when Zaibatsu financiers suddenly were so awash with funds (liquidities), at a time when Western economies reached low growths. The ‘yen initiative’ package was therefore conceptualized as another last-ditch voodoo tactic, which was implemented by loaning out large funds at zero or low interest, which Western financiers than re-loaned at profitable interest rates. Many such funds reached the USA& EU realty subprime mortgage markets, to recall. Again, note the seemingly benign nature of the financial gesture.

Just as when the realty markets were beginning to sneeze in America, the last voodoo measure was pulled out. The ‘crisis management’ was already folded up earlier, as Japan’s economic growth was propelled up anew by the Asian markets notably China’s. Just as when USA & EU needed the Zaibatsu loans very badly, and ditto for portfolio investments, they were pulled out, thus ensuring the crash of both economies.

Japananese voodoo economics is now bowing out, as the compass of policy initiatives at present is pointing to the reconstruction of macro-economic, New Deal type measures intended to attack problems both on short-term (bail out on productive sectors) and long-term basis (induce physical economy rather than predatory finance). But the withdrawal of the voodoo regime is not being done without witnessing its catastrophic results.

That’s surely tragic for the West or North. I wonder how Zaibatsus & technocrats perceive peoples outside their borders: whether they regard the latter as human beings worth co-partnering with, or as hungry lizards that must subsist on crumbs of investments & finance from Japan that have been buttressed by enormous tons of gold acquired through production and plunder of occupied lands, across the 2,000 years of Japan’s existence from kingdom to nation.

Honestly, I don’t know the answer. But if the Zaibatsus are receiving flaks from outside their borders, it wouldn’t be a surprise. There are no more borders for Zaibatsus by the way, just an entire planet with seamless web, cocooned in all corners by their corporate money.  

[Writ 14 November 2008, Quezon City, MetroManila]  

CONTINUING BOURSE PLUNGE DOWN NEAR DEPRESSION LEVEL

Erle Frayne Argonza

Good afternoon, Fellows of Planet Earth!

The planet’s bourses are still plunging as of yesterday (Friday), a day that was dabbed as ‘black Friday’ in Japan which saw the Nikkei plunge by 10%. ‘Bloody Friday’ may be a better term, as the word ‘black’ in ‘black Friday’ could be construed as a racial slur.

This gentleman is among the economists/social scientists in Manila who forecast, way back in the late 1980s yet, that the Western economies led by the USA will experience another horrific depression this decade. We were then following the trends of a yawning gap between the ‘financial economy’ or ‘virtual economy’ and the ‘real economy’ based on the GDP statistics. The American economist Lyndon LaRouche devised a very potent graph of the event which he termed as ‘collapse function’.

As of late 2007, debts in the USA already exceeded the GDP by four (4) times. That means that, in the event of a bubble burst (which came from the realty markets), the economy will come crashing down. It is simply impossible for a $13 Trillion GDP to pay up for debts approximating $50 Trillion last year. In the secondary debt markets, financial derivatives exposures breached the $120 Billion mark in the USA last year, and that all the more exacerbates the weakness and fragility of a $13Trillion economy that simply doesn’t have the money to pay up for ballooning private and public debts.

My own forecast is that the stock market plunge across the globe, which is now in the vogue of a ‘freefall’, will continue till next year yet. At its best, the Dow Jones index reached past 13,000 points about less than a couple of years ago. The same index had already shrunk below 10,000 points at its worst. By next year, the Dow will further shrink by as low as 8,000-8,500 points, the range that actually represents the real value of the entire US economy.

1 Point in the US bourse is equivalent to $1.5 Billion more or less, at its best. A shrunken size would deflate the value to around $1 Billion. At 13,300 points, the Dow index represents a value worth $20 Trillion, which seemingly exceeds the GDP of the entire federation. But that amount is largely speculation, the speculative value exceeding beyond 50% of the real value of the commodity lines traded.

8,500 points in the Dow index would yield, at deflated value, around $8.5 Trilion dollars. That same estimate is the real value of the US economy in GDP terms, per year, as of today. The value of $13 Trillion includes the value of speculation and fiction, on account of the predominance of the ‘virtual economy’.

As I’ve already explained in a previous article, the Bush-Paulson bailout, allocated an amount of $700 Trillion, is a faulty measure to salve the financial ailments of the USA. It follows from the flawed Japanese ‘crisis management’ bailout of huge banks that went in the red last decade, a tragic measure that flattened Japan’s growth to almost zero for around ten years at least. It is a band aid solution to a gargantuan problem that is equivalent to cancer, and everybody knows that band aid doesn’t cure cancer.

That explains the jittery situation of the post-bailout law scenario. Financial traders and investors who still recall well the Japanese fiasco just couldn’t be appeased by a repeat of the same band aid solution, this time to an economy almost three times bigger than Japan’s (in real value). For as long as no strategic solution to the global financial crash is in site, the stock markets will be jittery till next year, and before long we would see both the USA and Europe plunge back to the depression years of the mid-1920s to early 1930s.

Let’s see what will happen to the election fever in the USA. Some liquidity will be produced by the election spending there, and the optimistic pitch created by the electoral situation may somehow drive back the bourses up a bit. That is just a temporary respite from the blazing flames of the crash, rest assured.

[Writ 11 October, 2008, Quezon City, MetroManila]