EUROZONE’S BURNING, CONVENE GLOBAL FINANCIAL CONFERENCE!

EUROZONE’S BURNING, CONVENE GLOBAL FINANCIAL CONFERENCE!

 

Erle Frayne D. Argonza

 

Magandang gabi! Good evening!

Eurozone is burning. Before the flames would reach infernal levels, the contagion effects thereof burning the other regions of the globe, a global financial conference should be convened most urgently.

The purpose of the conference would be to configure a new financial architecture. Such a policy architecture would then as guidepost to all nation-states and regional alliances (EU, trade regimes such as ASEAN, NAFTA, Mercosur, others) to follow.

In the absence of such a policy architecture, palliatives can only emerge from the board rooms of incompetent bureaucrats. Among such palliatives now arising are: (a) Merkel’s solution to regulate hedge funds operations (financial derivatives); and, (b) Obama & US Congress’ regulations of speculative excesses of its stock markets.

Such palliatives are merely piecemeal solutions, even as they are too partial and parochial. They weren’t derived from a comprehensive paradigm that could have generated clear explications of the financial/economic crises of our times. They are reactive rather than responsive. Absent a policy architecture, and the piecemeal solutions will only have short-run impacts, and will be folded up when “things will get better.”

The top agenda that must be taken up are:

• Criminalize speculative excesses. Speculation has fueled bubble economies worldwide. Financial predators have emerged from the oligarchic quarters up North, who have played havoc on the equities and currency markets. If it will turn out beneficial to ban and criminalize hedge funds operations later, then so be it. Such vulture funds have no place in a civilized world where we witness poverty and hunger rising.

• Tobin Tax cross-border transactions. In no way should unbridled cross-border transactions be allowed without taxation. A minimum Tobin Tax of 0.75% on all such transactions should be imposed. Higher tax on derivatives and commodities futures of 1.5% can also be agreed upon. The accruing tax revenues will then be turned over to the United Nations and attached agencies for their operations & maintenance budgets.

 

• Condone fraudulent/usurious debts. Debts that are fraudulent or too usurious, notably those lent to developing economies, should be completely condoned. The same economies can then have a fresh start and breathing space for anti-poverty, jobs, and related social development efforts.

• Abolish the Jurassic Fund (IMF). It is now time to re-assess the International Monetary Fund, leading to its abolition. It does not represent the interest of the member-states, but is rather a middle man peddling the interests of global financial cartels. Its top executives come from the ranks of the same cartels. It had imposed austerity measures on many developing economies, causing more hunger, poverty, low wages, and unemployment. This Jurassic Fund (to borrow from Walden Bello) must go!

 

• Identify financial ‘White knights’. Authentic financial ‘white knights’ from among the emerging markets should be properly identified and urged to expand their operations. These financial groups can offer long-term financing at very low interest rates. The end-users should be authentic market players that are engaged in the productive sectors, which will end the practice of ‘white knight’ financing (such as the Yen Initiative Package) that lent money to financial cartels which in turn re-lent them at higher interest rates.

• Ban banks from speculative pursuits. Commercial banks and development banks, or all banks for that matter, must be banned from engaging in speculative pursuits such as hedge funds, commodities, and ‘hot money’ operations. Banks must service the productive sectors and must infuse moral philosophy in their organizational cultures.

 

• Abolish stock markets. Stock markets have never been instruments for wealth redistribution. They are filled with dirty operators. It’s now time to abolish them. In their stead should be instituted a direct link between investors and market players in need of fresh money, thus abolishing the stock trader as ‘middleman’. Reforming the stock markets isn’t the answer, but rather their abolition.

 

• Institute gold reserve standard. The gold standard of the past was abolished, in order that gold be hoarded by a few cartels up North. It is time to institute a new form of gold standard serving as stabilizer and securitization instrument for currencies. The standard will eventually lead to a re-institution of currency control policy which redounds to a more stable global economy in the long run.

 

Let it be reiterated, that should the present situation be allowed to go on, with piecemeal parochial solutions carved out at best, a bigger global catastrophe will be in the offing. A more colossal nightmare is now unfolding, which we hope the Northern countries’ incompetent bureaucrats can see at all.

[22 May 2010]

[See: IKONOKLAST: http://erleargonza.blogspot.com,

UNLADTAU: https://unladtau.wordpress.com,

COSMICBUHAY: http://cosmicbuhay.blogspot.com,

BRIGHTWORLD: http://erlefraynebrightworld.wordpress.com, ARTBLOG: http://erleargonza.wordpress.com,

ARGONZAPOEM: http://argonzapoem.blogspot.com]

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Reform the international financial system

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Reform the international financial system

 

Erle Frayne D. Argonza

 

The global financial system is indubitably a homestead of predatory financiers. Usury and global speculation, the masterpieces of financiers, are the enemies of nations. Usury in international finance is at an all-time high, raising questions about the legality and moral propriety of   current lending practices. Incidentally, the said financiers are the ones who exercise the clout within the International Monetary Fund and the World Bank, whose chiefs have always been CEOs from the bank headquarters of the financiers. The said banks have always acted out as the marketing agents of financial cartels, even as many nations that have followed the austere ‘structural adjustments’ imposed by them have been reduced to paupers.

 

It is high time for ‘white knights’ to appear in global finance, lending money accordingly for developmental and investment purposes at very low interest rates (lower than 1.5% annually) and at very long-term payments (25-50 years). Such institutions are now beginning to appear, but creditors remain cautious about their moves. Such institutions are autonomous from the power orbits of the Western financial cartels, are well niched in Asia (e.g. China), and appear to be creditor-friendly.

The reform though should go beyond the ‘white knight’ route. We must actively participate in Asia’s establishment of its own monetary fund and a single-currency regime, and take a leading role if opportunities allow. It may prove beneficial yet to re-institute a regime of gold reserve standard, which should back up the Asian currency. This same monetary fund will then serve as the regional ‘white knight’ that will provide credit to nations in need in the region and continent. The actions will also accelerate the economic cum political integration of the ASEAN and the economic integration for the entire East Asia, steps that will further stabilize the national economies and continuously sustain their respective growth. Meanwhile, a regional currency can stabilize soon enough upon its launching, that it would be a difficult job for criminal financiers to manipulate it, such as the success of the ‘Euro’ now exhibits to the globe.

 

Still another key intervention measure is the control of predatory speculation through a ‘Tobin tax’ on cross-border currency and related purchases (J. Tobin’s proposal in the early 70s). A tax of 0.75% alone on the current cross-border exchanges, which amounts to $300 Trillions annually, would generate $2.25 Trillions. The said money will then be used to fund the operations of international organizations such as the United Nations, UNDP and authentic international NGOs for social development purposes. The money can also be used by ‘white knight’ financing institutions of international scale. This set of actions will then induce reforms in the other institutions, with chain reaction effects leading to declining speculation in the long run, as the oligarchic bankers/financiers adjust their rates to more competitive rates in the face of challenges coming from global ‘white knights’.

[From: Erle Frayne D. Argonza, “New Nationalism: Grandeur and Glory at Work!”. August 2004. For the Office of External Affairs – Political Cabinet Cluster, Office of the President, Malacaňan Palace.]

EUROPE’S BURNING!

Erle Frayne D. Argonza

Europe is on fire. Save for those who choose to be blind, the Union is going through an incendiary economic burn. How far will the economic burning go, whether it will spread to a larger continental inferno, no one can tell for now.

Before the EU’s creation, welfare policies were prevalent from east to west of the continent. Liberal reforms then arose, commencing with the Tory’s (Thatcher era) wholesale adoption and social marketing of the same, and copied by the conservatives and liberals of the continent alike.

By the turn of the century, upon the commencement of the Euro, liberal reforms already saw the uncontrollable ascent of predatory finance worldwide. Liberalized financial-capital markets paved the way for their immanence.

Among those instruments created by the predators was financial derivatives. To recall, a decade back the derivatives markets were already awash with exposures totaling over $150 Trillion, with 36% of these in the hands of British financiers while 15% were in Americans’ hands.

By 2001, the alarming projection was leaked out that derivatives will be inflated to exceed $350 Trillions within the new decade. At a time when the global economy was producing past the $40 Trillion in Gross World Product or GWP, it was sheer madness to consider debt papers of past $350 that could meltdown the globe in case of a gigantic bubble burst.

Europe was already flat on its back for a straight two (2) decades since after the collapse of the Soviet Union. Periodic stagflations and recessions have seen the rise of poverty incidence and, consequently, the re-emergence of neo-fascist movements.

Being strongly tied up to the U.S. economy, it was not surprising to realize that a contagion of the U.S. recession will surely hit Europe, which did happen. The ugly side of the formula was the aiding of ailing banks that were badly affected by the crisis, an intervention that was flawed and immoral as it entails using taxpayers’ money to aid criminal bank speculators.

Barely out of the U.S. contagion effect, Brussels was shocked to see that a new fire had started within the Eurozone— Greece to be exact. As this was happening, Spain also began to sneeze & cough, as some of its own banks (notably Santander) spiraled down bankruptcy scale. Other member-economies were also having their own financial crucifixions going by the early part of this current year.

If we diagnose what’s going on in the financial sectors of member states, we can easily pinpoint banks as hotspot fire sources. They were heavily into speculative pursuits, with enormous exposures to derivative operations.

Just exactly how that happened can be traceable to certain acts in the North by the mid-80s. Commodities markets have sprung up on that decade, even as a global recession took place then, threatening OECD economies. Liberal reforms were already permeating diverse sectors, and within the backdrop of liberalization, financial derivatives and equivalent portfolios were launched in mass scales.

Banks shed off their previous stance of inhibiting themselves from speculative pursuits. Soon they’d find themselves investing into every speculative games they could lay their hands into, inclusive of hedge funds operations.

Now, to fast track to the present, economists estimate that EU’s aggregate derivatives are within the range of $180-$200 Trillions, estimates that seem conservative. Measure this against the gross domestic product of EU at $13 Trillions, and you would be driven to ask: just exactly where will Europe get the funds to pay the hedged financials in case of bursts and massive bankruptcies?

If all of the hedge funds investors would ask for a forced payment of their total of, say, $200 Trillions more or less, who would pay for such debts? Where will the money come from? Is it morally right to extract taxes from European workers to pay up for the dirty debt papers in case? Is it likewise morally right to impose wage cuts on workers who were not the culprits in the virtual economy game in the first place?

Concerned Europeans should better rethink the Euro and ask whether the new currency really worked for their welfare. It is now clearer that the Euro was a sell-out idea and project, that it was launched to satiate the insatiable pockets of greedy financiers represented by the top financial houses there.

And Europeans better see how silly it is to allocate taxpayers’ money worth $1 Trillion to bail out ailing banks and industries hit by the rising meltdown. For measured against total debt papers of $180-200 Trillions, $1 Trillion would be ridiculously paltry.

Yet another ridiculous intervention is the austerity measure imposed by the IMF on Greece. We’ve had so many precedents of the deleterious effects of such measures on developing economies that aimed at eventually graduating from IMF programs as a salvation measure in the short run. While emerging markets are getting out of a burning house (IMF & austerity measures), Greece voluntarily entered this house. Unbelievable!

As per reports reaching my focals, Germany had the greatest exposures to Greece’s banking sector, with exposures running to hundreds of billions of euros. British financiers, on the other hand, have their hands full in Spain’s banks.

It isn’t difficult to forecast that the fire in Greece could spread to other eurozone economies. Not even the UK, which decided to stay out of the eurozone, will be spared from the bonfire. Spain is almost there now, and who knows what country will be next.

If banks and industrial conglomerates will simultaneously burn in all of the member-states of the eurozone, with total aid claims of past the GDP of $13 Trillions, then Europe will be on the brink of a continental inferno.

Concerned readers better think for yourself whether Brussels and the bureaucrats do have the right answers to the raging problems of Europe. Poverty incidences are now hitting past the 20% mark in member countries, while massive lootings of the financial and currency markets by predatory financiers take place every day in the continent.

Well, let’s all wait and see for what happens. Let us hope that a mad Nero bureaucrat wouldn’t appear to orchestrate the burning farther to infernal scale. That would bring a new nightmare to the whole planet if it happens.

[Philippines, 20 May 2010]

[See: IKONOKLAST: http://erleargonza.blogspot.com,

UNLADTAU: https://unladtau.wordpress.com,

COSMICBUHAY: http://cosmicbuhay.blogspot.com,

BRIGHTWORLD: http://erlefraynebrightworld.wordpress.com, ARTBLOG: http://erleargonza.wordpress.com,

ARGONZAPOEM: http://argonzapoem.blogspot.com]

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]

IMMORAL U.S. BAILOUT ECHOES JAPAN’S 1990s ‘CRISIS MANAGEMENT’ FLAWS

Erle Frayne Argonza

Magandang hapon! Good afternoon!

It’s been some couples of weeks now since the financial downspin in the USA took a further plunge as mega-banks sought help from federal government for rescue. The closure of the Lehman Brothers and the S.O.S. by other big banks that are now in the red rocked the global stock markets to a new round of instabilities and volatilities, even as the US economy is in danger of another Great Depression.

As I’ve already expressed in many articles of mine, the US financial collapse, an event that economists in many parts of the world forecast as early as the 1990s yet, is bound to happen, on account of many factors. The key factor, as this analyst and fellow ‘nationalist economists’ have been saying since 1998 yet (when I was actively involved with a group of economists in Manila called the Independent Review circle), is the widening gap between the (a) ‘virtual economy’ based on predatory finance that produces mere fictitious values and the (b) ‘real economy’ or ‘physical economy’ that produces real values.

The serial liberal economic reforms that began in 1971 yet, which saw the collapse of the gold standard and the dropping of fixed exchange rate (FER) in favor of ‘floating rate’, and onwards through the liberalization-privatization-deregulation-decentralization (structural adjustment policies or SAPs) of the 1980s, and onwards to the GATT-Uruguay Rounds that created the WTO in 1994, took its catastrophic toll on the economies of the planet, but most specially the USA’s.

The Nixon-era financial-monetary reforms and the Reaganomics (SAPs) were the policy culprits of America. They dealt the final death blows on the dirigist policies of New Deal, initiated by Franklin Roosevelt but which was inspired by dirigist policies of earlier luminaries (i.e. Alexander Hamilton, Abraham Lincoln, Friedrich von List), provided the impetus that created the strong, gigantic ‘physical economy’  of the country, and transformed it into a world power economically, politically and culturally. Without dirigist economics (interventionist) and the New Deal, Middle Class America wouldn’t have been possible. The neo-liberal reforms simply wiped out whatever was left of the New Deal by the 1980s, and with the liberalization of the financial –capital-monetary markets, the predatory financiers had their field day of looting the middle class purses under the rubric of portfolio capital and derivatives operations.

Had the US policy makers just labored a bit and assigned their staff to scour the world for some related experience of bank-financial collapse, their researchers could have easily ‘discovered’ the experiences of Japan in the 1990s. By the early 1980s, when Japan clearly demonstrated its sterling industrial and technological capabilities as the base for its wealth production, the Zaibatsus and the policy makers decided to go the liberalization way, confident as they were that the fruits of decades-old ‘physical economy’ build up can’t just be easily wiped out by predatory financier operators.

Japanese technocrats (both in Japan and overseas) also theorized that the key to producing a sound, healthy, mighty Japanese economy was in the realm of micro-economics more than public policy. Never mind if the policy environment will shift from the protectionist-dirigist policies of the post-war decades to liberal policies, provided that at the level of production and organization, capacity and internal potency can be demonstrated. The likes of William Ouichi’s ‘theory z’ comes to mind, or ideas that spawned strategies and tools dovetailing on quality control, team building, and decentralized operations. The world was so awe-inspired by the ‘Japan Incorporated’ model that was based precisely on the micro-economic route, and was extolling the Japanese corporate firm to the hilt as the new champion of the globalizing economy.

The USA that had demonstrated its strength on macro-economics—In the terrain of public policy—as the route to economic might, must have been seduced by the Japanese ideological onslaught at one point, that it so sonorously echoed the Japanese technocratic jargon of ‘globalization’. But when Japan’s financial system began to buckle down in 1994, which then impacted on the rest of the economic sectors, the US politicians and technocrats simply didn’t pay attention, fixated as they were to the seductive results of the ‘virtual economy’ (bubble operations) on the GDP of America.

To recall, Japan suffered miserably for the bailout mistake it pursued. Dabbed as ‘crisis management’, the state went on a binge of saving ailing banks and financial houses, the very same measures that the Bush-Paulson team is now embarking on. Alarmed at those events than in Japan, which led to a 10-year recession & almost zero growth, I began to raise howl about the ballooning portfolio investments in the Philippines by 94-95, and was among those experts who forewarned the state officials that Japan’s ‘crisis management’ was seriously flawed, was tantamount to giving incentives to looters instead of criminalizing, them, and should never be enforced in the Philippines or ASEAN in case that the portfolio bubble will burst in Manila and the region (the bubble burst in 1997).

To repeat: Japan suffered miserably from that fiasco. Recession howled like unstoppable forest fires for ten (10) years, and were it not for the high growth of East Asian markets, Japan couldn’t have risen back to appreciable growth by 2005. Interest rate was compelled to be brought down to zero percent, a precedent that many countries affected by financial meltdowns were aloof to emulating. Bankruptcies,  corporate closures and downsizing led to dislocations and unemployment. For the first time in many decades, former decent Japanese executives and employees who lose their jobs and had their remaining mortgaged properties confiscated, were rendered homeless and starving, and forced to reside in the streets as paupers and vagabonds..   

Sitting with my fellows in the Independent Review circle from 1997-onwards, we took turns in exposing the maladies of the neo-liberal reforms, spoke in diverse media (TV, radio) to forewarn the public of the imminent financial collapse in East Asia (the meltdown took place beginning in June of ’97), and by 98 were of the consensus that the USA was next in line for a meltdown of even catastrophic proportions than either Japan’s or South East Asia’s (97 meltdown). The very destructive effects of predatory finance saw the decline of industry (de-industrialization), agriculture (land use conversions, decay), infrastructures (some huge infra were even privatized), S & T (low priority in budgets & education), and transport & communications in the USA. If the neglect of the ‘physical economy’ will continue for another ten (10) years, it will be too late for salving the US economy as a whole. Any catastrophic bubble burst and financial-monetary meltdown could bring the economic house down, collapse consumption, and render the US economy much like unto a Latin American economy past 2010.

 As I recall then, we experts from the Independent Review circle strongly opined that the ‘crisis management’ tactic was immoral and extremely perverted. How in the world could the state ever reward criminals at all? The bankers and financiers looted the Japanese purse by probably worth trillions of dollars, they should have been criminalized for their sordid crimes, and yet they were even rewarded! Unbelievable! This is one excellent narrative for the Ripley’s Believe It Or Not!

Fortunately for the Philippines, there was no large-scale bailout of any bank as a result of the 1997 Asian meltdown. Those realty and construction companies affected by the crisis, affected precisely because they over-exposed themselves to ‘hot money’ foreign portfolios that simply dried up as the same portfolios were pulled during the first month of the meltdown, were immediately able to cope up by retooling and re-engineering their strategies and tools. Interest rates were lowered, excess liquidities were flashed out in well managed manner that deserve our central bank accolades from the Bank of International Settlements. In less than a year after the meltdown began, we were back to consumption patterns like there was no recession at all. We didn’t take the Japan route, luckily. By 2001 and onwards our growth patterns were back to appreciable growth, and the local bourse moved up as well.

Today, all over the ASEAN + China-India-Korea (minus Japan), the Asian meltdown seems like an ancient event down memory lane as things have been moving fast. We just can’t believe that our mighty economic partner, the USA, didn’t learn its lessons from the 2001 recession there and from the flaws of the Japanese bailout. ‘Bailing out the rich’ isn’t the issue here, but rather ‘bailing out the criminals’ which is a gross disincentive for the legitimate SMEs and other market players that didn’t receive the same favor.

If we were to seriously search for appropriate short-term tactic for salving ailing financial institutions, the answer lies in a proven approach to corporate ailments: bankruptcy reorganization. The economists Robert Reich (former US secretary of Labor) and Lyndon LaRouche (Executive Intelligence Review) have been airing this solution very strongly, and I am myself bent on accepting this micro-economic short-term solution as an exemplar for the rest of the world. I would not be surprised if the eminent economists Joseph Stiglitz and Paul Krugman would air a similar advisory, and they should better air their counsel strongly.

The entire planet today is watching the horrific bailout in the USA, almost forgetting that this copycat bailout already flattened Japan for a decade at least before. Each one of us should look at our own backyards and make sure that our respective states won’t emulate the rather devious and insane bailout of Japan Incorporated and the Bush-Paulson team.

[Writ 04 October 2008, Quezon City, MetroManila.]

GLOBAL TOTALITARIAN POLICE-STATE & TECHNOTRONIC SOCIETY: EXTENDING CAPITALIST LIFE

Erle Frayne Argonza

Let me go back to the question of what lies ahead of us—when ‘late’ capitalism dies and yet capitalism will be extended.  I am not discounting the possibility that capitalism’s life span will be extended, but this will no longer be ‘late’ capital, just to remind everyone.

You better fasten your seat belts, as the stormy days ahead will come for sure, and as this heraldry from me will sound as stormy already as those times ahead. Stormy heraldry, because (a) you will not come to like it and that (b) its impact will be so nauseating and revolting that you’d rather sedate yourself most quickly with wine, liquor, pot or anything that can reduce that revulsion. I forgot, for the fundamentalists, you’d pray for hours to allay your fears.

By the time ‘late’ capital arrived up to the current juncture, or roughly the whole of the post-Great Depression era, the following developments have come about:

·        State intervention/planning was infused into the system. Post-war former colonies proceeded on their industrial development tracks along this dirigist market model. The USA and Europe were saved from collapsing, emerging markets appeared.

 

·        Market reforms were later introduced, bringing back free market and free trade principles. Centrally planned economies China and Vietnam infused market reforms to construct a ‘social market’ model, while former socialist states folded up in Eastern Europe and 3^rd world states.

 

·        The era of ‘mad economics’ resulted from the system integration efforts of ‘instrumental reason’. The dividing line between the rational and the mad in decision-making and system maintenance was effectively deconstructed and erased. In esoteric-mystical argot, this era is the period of the Demonic Mind, the era of Anti-Christ.

 

·        ‘Virtual economy’ based on predatory financial practices of creating values from out of money flows (rather than from concrete production) was exemplified by ‘bubble economies’. Bubble bursts were followed by destructive, catastrophic crises and shrinkages of affected economies.

 

·        Nation-states’ economies came to be integrated into a single economy, via globalization. A planetary economy was already institutionalized, yet no planetary state exists to regulate conduct of commerce and business at a global level. The contradiction between the norms of the planetary economy and the interests of the nation-state has led in no small measure to the fragmentation of nation-states and  emergence of mini-states. Globalization has been undermining the nation-state in general.

 

·        All of such developments will hyper-converge in the months ahead in a general system crisis characterized by hyper-inflation, great depression, and total system collapse. As the economist Lyndon LaRouche correctly perceived, that collapse phase is now taking place at a rapid rate.

 

·        Wars and hostilities are intensifying across the globe. Surrogate wars of world powers have also been rehearsed, such as the Georgia-Russia conflict. All of these conflicts will hyper-converge in a World War III or intercontinental war, the duration of which no one can forecast so easily.

 

So, going back to the issue, if the ‘virtual economy’ cannot be sustained and its collapse will bring the final death blow on ‘late’ capital, is it possible to extend capitalism’s life span? Yes, the possibility is very likely. But the context emerging from the resolution of the general global crisis will hardly resemble what you’ve ever seen before nor imagine.

First of all, the consolidation of the system and attempts to prolong it can never take place without draconian police state tactics. As Lenin correctly emphasized, the dividing line between liberalism and fascism is a superficial one. Neo-fascism will become the political modality in order to save capitalism and bring it to its next phase. State terror heretofore untold will unravel the old order of things and bring the ‘new world order’ into place, resulting to pogroms that will dwarf both Hitler’s ‘final solution’ and Stalin’s ‘purges’ combined.

The possibility of a global state will finally become granite rock, with the United Nations most likely the base for creating that global regulatory mechanism governed by a demonic ‘world rule of law’. This global state will have its own military and police forces, and will have no qualms in quelling dissent and enforcing global fiats in order to bring forth the ‘new world order’.

The global corporations of the moment, whose assets and revenues are already so huge that they dwarf those of nation-states’, will all the more become gigantic. The same corporations will then declare their respective turfs among region-states and city-states that will be created from the dismantled nations. Each mega-corporation will be endowed with its own private army, akin to the British East India Company or BEIC of old, of professional mercenaries beholden to no state but to the corporation, but which can be mandated by the global state to engage hostile forces in other regions and cities.

The era of New Feudalism will then ensue from the social and urban-ecological arrangements emerging. The era of ancient Florence, Venice, or city-states with their own respective armies and ruled by powerful commercial families, will come back though in more sophisticated vogue. The competing powerful & wealthy city-states will then give rise to new conflicts in the form of ‘wars of the cities’, much akin to the ancient Greek city-states’ conflicts. Before this century’s end, no more nations shall exist, but rather a world of cities and regions integrated largely through the mediative and regulative planetary state. Weaker cities and regions will become the vassals of powerful cities and corporate groups, at a time when technology will even be more revolutionary. The New Feudalism will be based on an integration of capital and information, contrasted to the Old Feudalism that was based on land.  

As soon as 3^rd phase cybernetics will conclude, and probably a 4^th phase will begin, which will all the more erase the barrier between human and machine, the envisioned Technotronic Society will become the manifest order. Cyborgs and machines will then become perfected and endowed with quasi-human intelligence, while those humans with weak minds will be totally controlled via perfected chips, mega-computers, and new cybernetic systems. Large numbers of subhuman ‘Manchurian candidates’ or MCs will become the docile slave labor of the day, well fed and provided for, but whose behavior will be totally programmed and re-programmable.

That technoronic society of the neo-feudal capitalist ‘new world order’, or simply Technotronic capitalism, was fitfully described and forecast in the film series Matrix and Terminator. As 3^rd phase cybernetics is advancing today in laboratory incubators of the North, cybernetics that will dismantle the barrier between human and machine, the possibility of an early arrival of that dreaded machine-controlled ‘new world order’ has become concrete. The question is no longer ‘will technotronics come’, but rather ‘when will it come’? Matrix and Terminator are no film fantasies but are rather scientific extrapolations based on existing and developing cybernetic principles.

So, fellows out there, would you count yourself among the fanatical supporters of ‘capitalist life-span extension’, or would you rather opt for a new economy & society other than the ‘new world order’ that has been engineered by the global oligarchy? Or, would you rather be silent about the matter, as the ‘silence of the lambs’ means the Keynesian “In the long run, all of us will be dead!” Caput!

Let me now end here. Suffice that I shared my notes about the possible extension of the favorite economy of the pro-capitalists or the most abhorred society by capitalism’s detractors. At least I didn’t fail to show you the possibilities, I being a sociologist and economist who learned from my thinker mentors the craft of social forecasting or ‘futurology’.

Till next writing! Adios! Adieu! Paalam! Farewell! 

[23 August 2008, Quezon City, MetroManila.]

CAPITALISM’S DEMISE: WHAT WENT WRONG?

Erle Frayne Argonza

To all fellow men and women out there who may have deep fondness for the liberal capitalist model of economic adaptation, I hope that you can make some adjustments in your cognitive banks. Capitalism is not a permanent facet of human life, but merely one among various epochs that will come to pass. Only impermanence is sacrosanct in the cosmos, so please refrain from singing hallelujah to a world system that is on its death knell as I articulated in a previous article.

And please refrain from swallowing hook-line-&-sinker the contentious propaganda of Francis Fukuyama about the ‘end of history’, that accordingly history had concluded with the galvanization of liberal capitalism, that history makes no more sense. Fukuyama’s theory is a slapstick narrative of hyper-valuation of the ‘mad economics’ of late capitalism and hypo-statization of reality that has no relation at all to the real in the world out there. Fukuyama had taken as ‘real’ what is actually ‘virtual’, and froze time much like unto a fairy tale of timelessness, of history-less Nietzschean moment that is fit more for infants than for adult humans.  

Fukuyama epitomizes the ‘mad economics’ of all those Pied Pipers of the global oligarchy for whom he works, and his discourse is akin to the ‘mad discourse’ so described by the late Michel Foucault. The ‘mad economics’ of Friedman, Hayek, Fukuyama, and all those technocrats who serve as processors and bagmen for the global oligarchy, is precisely symptomatic of that colossal ailment of a world system, and as we all know, madness can never salve ailments but rather hasten the system’s death. Caput! Blow your horns, prepare dirges to this Dead One!

Unless that you yourselves have become maddened by the seemingly infinite monies flowing unto your purses as you are among the beneficiaries of ‘late’ capital, unless that you are indeed now suffering from combined maladies of sociopathy and schizophrenia, unless that sanity had departed from thee forever, please heed the last plea of your own conscience where sanity had retreated: CAPITALISM IS DEAD! No amount of propagandizing, of contorted interpretations, can ever change the course of history at this juncture, as we are all headed for a TOTAL SYSTEM COLLAPSE in the months ahead. Read that please: MONTHS AHEAD, not years ahead.

What went wrong with capitalism? I’m sure all of you fellows knew what went wrong, do I even need to answer that? Your previous thinker mentors, among economists and sociologists, forewarned you all of the forthcoming demise of capitalism, but you paid nary an attention to those brilliant minds as you were so engrossed in your ‘conspicuous consumption’, behaving more like some infantile EATERS or as anthropoids rather than as thinking and spiritually evolving humans. You are all very much human, so please consistently behave like one, and begin by listening to the Inner Voice of your conscience, for that voice is your soul’s.

Let me summarize the diagnostics, forewarnings and/or prophecies of our thinker mentors from the West, and I’d stress WEST because there are some other thinker mentors from the EAST and SOUTH whose peregrinations are so recondite they are not so easily digestible. Let me just stress the WEST as this is what is common to us all. So let me re-echo the thinkers and their theories:

·        Karl Marx & Friedrich Engels: The internal contradictions between the private nature of capital (ownership of means of production) and the social nature of production. The ‘crisis of overproduction’ and the ‘law of the falling rate of profit’ are attendant patterns. Social revolution results, then the alternative society will be constructed.

 

·        Max Weber: Industrial capitalism’s granite product, the bureaucracy, led to dehumanization. He never forecast though whether this dehumanizing system can be sustained—but please read between the lines. (His contemporary Emile Durkheim had a similar observation about ‘anomie’ or normless state of urban/industrial society.)

 

·        Thorsten Veblen: The end-phase of industrial capitalism is markedly pathological. ‘Conspicuous consumption’ is the disease of this phase, the toxic behavior from the ruling class that later filtered down to the emerging middle class.

 

·        Joseph Schumpeter: The internal contradiction between the desire for profit and the revolutionary character of innovation. The demise of capitalism will see the possibility of the technical class taking over society and build that alternative system later.

 

·        Daniel Bell: The ‘post-industrial’ society had already been born right inside capitalism. A distinct modality in itself, post-industrialism will eventually prevail in a system that isn’t capitalist (or money economy) but rather knowledge-based. The ‘service worker’ had arrived on the social landscape, the prototype class of the future.

 

·        Theodore Adorno, Jurgen Habermas, Herbert Marcuse: ‘Late’ capital is characterized by the pervasiveness of ‘instrumental reason’, where reason is used to justify the non-rational (‘madness’ in Foucault’s argot), where state planning/intervention was infused into a system that scorned intervention.

 

·        Alvin Toffler: Both capitalism and socialism are based on hoarding, both are variants of the same industrial society of yesteryears, both are based on ‘2^nd wave’ capital-intensive technologies and non-renewable energy sources. The ‘post-industrial’ society is altogether distinct, isn’t based on hoarding, production-consumption (‘prosumer’) is based on ‘3^rd wave’ knowledge-intensive technologies and renewable energy sources, knowledge cannot be hoarded.   

I need not articulate further, do I? They all converged on one theme: capitalism is transitory, it bred social maladies (alienation, dehumanization, anomie, conspicuous consumption,…), is systemically flawed, and will be dismantled at sometime in the future.

No matter how delimited their theories maybe, as they all proceeded from certain perspectives (they were all ‘paradigm’-based in the jargon of Thomas Kuhn), they all proclaimed—in either tacit or explicit fashion—the coming demise of the system. They weren’t as silly as Fukuyama who popularized seemingly ‘satanic verses’ (distorted precepts) about a non-changing, permanent economic landscape called ‘liberal capitalism’, but were rather so adroit at social forecasting that they saw a vision of the future as they were articulating on their empirical observations of the present society.

So, fellows out there, prepare for the months and years ahead. We are headed towards those stormy months, years, maybe even decades. How the future society will come to shape is not easy to forecast. “Something blurs the Force, darkens our sight of the future,” declared a Jedi Master in the Star Wars cinema fame. Let me end right here.

[Writ 22 August 2008, Quezon City, MetroManila.]

ANOTHER GREAT DEPRESSION COMING AS FINANCIAL SYSTEM ENDS

Erle Frayne Argonza

Is the global economy moving downward towards a devastating collapse?

If we employ a long-term Kondratieff cycle to model the world economy, we can see that the period beginning in 1935 approximately (when the big market economies US-UK-Germany moved towards another cycle of growth approximately after the Great Depression, should have ended around 1995 approximately, after which comes another great depression.

As early as 1989, ramblings of a global collapse began to murmur in the US economy. Mexico, Japan, Argentina, and other economies followed in the 1990s, while Europe went through a general low-growth trend that was the most sustainable for the continent as a whole. Then came the Asian meltdown of 1997. Then the USA again went through a recession in 2001, a pattern that has been repeated again from 2008 to the present. It seems that the pillars of the world economy couldn’t get out of a short-term crisis without having to crash back to another episode of short-term crisis altogether.

Is it really a ‘short-term’ crisis in the first place? Or is it in fact a ‘systemic crisis’, and that the financial downspin the Northern economic pillars are going through could very well be the terminal phase of a very long cycle of growth that began after the end yet of the Treaty of Westphalia (1648)? That in fact, several long-wave Kondratieff cycles have already passed over since that time, and that finally the system is DEAD in the wood?

Well, not only the financial system but the whole of CAPITALISM is already on its death throes. Those oligarchs behind the systems now dying won’t see the systems they built die down just that without “bringing down the other houses” with them, it seems. Which means that, right after the terminal phase of the system, another huge, catastrophic war will come, which will later see another Westphalian-type treaty or so that will re-carve the contours of polities into a Post-Westphalian totalitarian technotronic global order.

Below is a briefer from the Executive Intelligence Review that summarizes the issue at hand.   

[18 August 2008, Quezon City, MetroManila. Thanks to Executive Intelligence Review database news.]

End of the Line for Financial System; Bankruptcy Issue Raised

Aug. 10, 2008 (EIRNS)—The death of the financial system was the implicit subject of several articles in the financial press over the weekend, reflecting the way reality is setting in and attitudes are changing.

• “Investment banking is dying,” was the blunt statement by William Cohan, in a op-ed in today’s Washington Post entitled “The End of the Masters of the Universe?” Cohan says that the revenue streams of the investment banks are drying up, and that there is genuine fear in the corridors of power on Wall Street.
• “We have a banking crisis and an agency crisis and a mortgage crisis and a coming credit card crisis. We’ve never seen anything like that before. And it all seems to be coming home to roost at the same time. That’s never happened either,” Charles Geisst, a professor of finance at Manhattan University, told yesterday’s Washington Post. He said the Great Depression was the last time the financial markets were hammered by such a variety of factors, adding: “But we did not even have credit cards in the 1930s; there was no such thing as student loans.”
• The specter of generalized bankruptcy was raised by Yale finance professor Robert J. Shiller in an op-ed in the New York Times. Citing the failure of Bear Stearns and the government measures to bail out Fannie Mae and Freddie Mac, Shiller asks, “What if the next case is worse? No one in government seems to feel a responsibility for warning about such possibilities and formulating a detailed policy for dealing with them.” Shiller says that “Bankruptcy law is a good place to start. After all, the dreaded financial meltdown would amount to a wave of bankruptcies…. What would happen to the economy if hedge funds had to liquidate, one after another, in a financial crisis? We need to rethink the theory and practice of bankruptcy, given the new complexities.”

Shiller points to the inherent limitations in current bankruptcy laws, which were largely drawn to protect narrow financial interests, and are poorly suited to deal with systemic problems, when a “subsidized system of triage would be needed to identify which companies should be saved, with the main criterion being the possible economic impact of their liquidation.”

These comments, taken as a whole, represent the way discussions of the “unthinkable” are beginning to percolate, and converge upon the outlook of Lyndon LaRouche. Shiller’s mention of triage by bankruptcy echoes the emergency measures proposed by LaRouche, of putting the financial system itself through bankruptcy, protecting the population with a firewall, and freezing the financial paper while we determine what debts will, and won’t, be honored. Whatever Shiller may think about LaRouche’s proposals, he is implicitly admitting that the system is finished, and that we must prepare for its demise, making decisions on the basis of the interests of society, and not merely the narrow interests of financial institutions. Reality is setting in, and reality leads inexorably to the policies outlined by LaRouche. 

RE-ECHOING ROOSEVELT’S ‘PHYSICAL ECONOMY’ SOLUTIONS TO GLOBAL FINANCIAL COLLAPSE

Erle Frayne Argonza

My beloved country remembers the late Franklin Delano Roosevelt very well. It was his presidency that paved the way for preparing the Philippines as an independent state, by first granting the country the status of a commonwealth with its own constitution (1935 Constitution), and by permitting such domestic government to prepare the legislative measures and policy environment for a future independent state (granted independence in 1946).

Roosevelt’s regime also paved the way for the developmental paradigm that would propel the Philippines along the road to industrialization (we now term this as Import-Substitution Industrialization). The paradigm, based on the works of previous thinkers Alexander Hamilton, Friedrich von List, and the exemplar development policies of Abraham Lincoln, puts great stress on the ‘physical economy’ as the foundation for a prosperous and mighty economy in the long run.

Roosevelt further went on to cogitate that colonialism should fold up after the war, and that all former colonies must follow the road to development and prosperity, this being the road to genuine international peace and cooperation. The international doctrine of Roosevelt became the foundation for post-war cooperation, and buttressed the founding of the Bretton Woods agencies whose mandates were propelled precisely by the physical economy framework, the need for undertaking development in the former colonies, and the need to regulate national currencies via fixed exchange rate backed by the gold standard.

The current circumstance is now too remote from the ‘physical economy’ policy regime of the post-war era. Economic liberalization policies led to globalization and the galvanization of the ‘virtual economy’ based on predatory finance. The ‘virtual economy’ had led to de-industrialization, agricultural decay, decline of S&T, and deteriorating infrastructures in the most affected economies, and had fragmented developing states into ‘failed states’.

The global financial system created by the relentless liberalization of financial, fiscal and monetary policies across borders, had already collapsed and is beyond salvation using the present intervention tools that now seem to be burnt out tools altogether. A global conference must be convened most urgently to carve out a new financial architecture based on a ‘physical economy’ framework, and to decisively criminalize predatory finance.

Below is a press release of relevant notes on the global financial collapse, by the economist Lyndon LaRouche.

[27 July 2008, Quezon City, Metromanila. Thanks to the Executive Intelligence Review database news.]

 

LaRouche: Financial System Is Dead, Cannot Be Saved

July 13, 2008 (EIRNS)—This release was issued today by the Lyndon LaRouche Political Action Committee (LPAC).

With the U.S. and British financial press full of wild speculation about how the Bush Administration is going to intervene Monday morning, to bail out Fannie Mae and Freddie Mac, Lyndon LaRouche today issued a sharp, preemptive warning: “The financial system is already dead. It cannot be saved.”

LaRouche expanded: “If any of the reports of a planned bailout of the two big mortgage lenders, by the Treasury Department or the Federal Reserve are true, I say, ‘Forget it.’ Any such efforts to delay the funeral of the present global financial and monetary system will only make matters worse. A bailout will cause an accelerated hyperinflationary explosion, far worse than the hyperinflation that hit Weimar Germany in the autumn of 1923. Back then,” LaRouche continued, “Germany had a gun pointed to its head. The gun was called the Versailles Treaty, and Germany had no choice. Today, the United States has a choice. I spelled out the choice in numerous recent locations.”

LaRouche cited his recent call for the Federal Reserve to immediately raise interest rates to 4 percent, as a stop-gap measure to prevent a massive flight of institutional capital from the banking system. He demanded that this move be accompanied by clear statements from the Fed that there will be no more Bear Stearns-style bailouts of the speculative bubble. Instead, the Fed will protect the chartered Federal and state banks, through bankruptcy reorganization, on the model of what Franklin Roosevelt did, when he first took office in March 1933, and faced the same kind of collapse of the banking system that we face now. “Only, today’s crisis is orders of magnitude worse,” LaRouche added, “due to the massive leveraging by the banks and other financial institutions.”

LaRouche warned that Bush Administration and Fed officials, like Hank Paulson and Ben Bernanke, may be on an “ego trip—unwilling to admit that they have failed miserably. But the reality is that they, like the George W. Bush Administration, have failed, with wretched incompetence. For one thing, they failed to reverse the Alan Greenspan monster bubble, which is now blowing.”

LaRouche added that there is no way to even estimate the magnitude of the financial bubble, that has now blown. “The collapse of Fannie and Freddie means the end of the system. And that has already happened, and nothing can be done, within the rules of the current system, to solve that problem. We can keep Fannie Mae and Freddie Mac alive, but only through actions reforming the system, in terms echoing the precedents of President Franklin Roosevelt, that in ways appropiate for the actual conditions of today.

“The only alternative is to implement my three-step solution to the crisis,” LaRouche concluded. “If the so-called leadership in Washington is unwilling to do that, then this financial system, and, by extension, these United States, are finished. It may be a tough reality to swallow, but it is the only reality that there is.”

Lyndon LaRouche will be delivering an international webcast on Tuesday, July 22, 2008, at 1:00 p.m. (EDT). The webcast takes place on the first anniversary of LaRouche’s July 25, 2007 Washington, D.C. webcast address, in which he announced that the financial system had already crashed. Days later, the collapse of Countrywide, and other major mortgage lenders, and the blowout of Bear Stearns, illustrated that LaRouche was 100% correct.

US WATCH: TRANSPORT U.S. BACK TO PROSPERITY

Erle Frayne  Argonza y Delago

The final feature of the US ‘real economy’ worth featuring is transportation & communications. This is among the most productive sectors that produce real wealth, contrasted to the ‘casino economy’ of predatory finance that produces wealth from out of wealth itself, producing really nothing worth our value. Broad as it is, let me focus on the transport sector.

 

Time was when the railway industry took off, inducing growth as soon as the railways hit the West. The continental divide among the US states was bridged quickly, intra-trade exponentially increased. Soon enough, foreign trade also increased in leaps and bounds as maritime shipping grew and matured quickly, making US articles of trade be exported to all corners of the planet.

 

Trains, ships, airplanes, automotives, trucks, heavy equipment, tractors, and other state-of-the art prototypes came out of America’s workshops to propel growth not only in the US but in other countries as well. “Made in the USA” products became household words everywhere, including my Wild Wild West province of Cagayan in Northern Philippines, precisely due to the miracle of the transport sector that was broadly a facet of the ‘real economy’ of America. I was a child in the 1960s and early 70s when the “Made in the USA” was chic and almost a cult-level cliché.

 

That era now is now consigned to the dustbins of a remote past. Sure, America still produces state-of-the art transport prototypes. But look, railways have stagnated (is there a mag-lev there now?), automotives are shrinking by the day (laying off and displacing thousands of top quality industrial technicians), while the cutting edge technology for almost all prototypes, save for military transport, have already been surpassed by Asia.

 

McCain and Obama should better do their homework and understand the catastrophic future that awaits America if the transport sector remains neglected and ceaselessly ravaged inch-by-inch by the infernal fires of predatory finance. The policy makers there better salve the ailing sector quickly, and get back those laid-off topnotch industrial technicians to work before they lose every iota of motivation to even get involved in the sector they grew up with but which rejected them (how traumatic!).

 

If there’s any sector to begin with, it’s railways. Better renovate the railways, and establish maglevs in all the major continental routes of the US. And quickly take the initiative to establish cross-border maglevs with Canada and Mexico. Later, establish maglevs connecting Alaska with Russia via Siberia, thus connecting US to the Asian land mass.

 

Sorry for sounding ‘interventionist’, fellows in America. We Asians are as concerned with your economy as you are, and we would want your economic leadership to again rise to the fore. If America does that, other nations will then move on, propelled by growth in the ‘real economy’ because America is doing so. Failing to do that, the economic baton will transfer to Asia, and it will crash our hearts to see our fellow Earthans of America sinking in esteem by the day, because of their collapsing prosperity.

 

We are all siblings on Earth, this is certain, that’s why we share words of wisdom about your economic conditions. May you finally have a reform-oriented President comes this coming electoral contest.

 

[Writ 07 June 2008, Quezon City, MetroManila]

US WATCH: CAN THE USA PAY ITS DEBTS?

Erle Frayne  Argonza y Delago

Just exactly at what level had the totality of US debts had reached is practically anybody’s guess. So complex is America’s financial system and the mess created by the ‘bubble economy’ over the last three (3) decades, that it takes an enormous amount of research efforts led by top economists and financial consultants to undertake.

One thing is clear though: whoever will be the USA’s next execs must never fail to measure, comprehend, and reverse the debt trends. The estimates today, using combined data from the Fed, the Bank for International Settlements or BiS, and independent researches would put the figure at $50 Trillion.

Measured against the GDP, which stood at around $12.5 Trillion more or less last year, indicates that America doesn’t have the money to pay debts at all, assuming that the bubble bursts and the economy crashes to depression level. Well, the burst began last year yet, the recession is now on, and we need to observe events more closely to determine whether a depression will be at hand.

To say that US savings will salve America’s debt problems is baloney. The savings rate is barely 1%, which accounts for the need for large doses of foreign direct investments and portfolios to cover up for the lack of investible savings. Compare this to East Asia’s average of 30% savings rate, which makes this region’s economy verdantly robust for years to come amid US-EU economic collapse.

On the other hand, to bank on gross international reserves as the source of salvation would likewise bring guffaws. America’s reserves could never exceed $90 Billion at any given time (in real value), which couldn’t even suffice to buy for 1 month’s imports. Compare this to East Asia’s reserves, which range from 4 months imports in RP’s case to at least a year’s for China’s.

So, let us repeat the question, where and how will the US source its funds for salving the debt crisis? What concrete steps will be taken to reverse the debt trap? Who among the political bigwigs in America today possesses the soundest theory and practice for solving the gargantuan debt crisis?

Those questions remain to be answered. Let us hope that the two bigwigs McCain and Obama will do their homework well. The electorates’ expectations are enormously high, and meeting those expectations using traditional, flawed approaches and practices would only endanger both the economic and political stability of this once mighty giant.

[Writ 05 June 2008, Quezon City, MetroManila]

US WATCH: THE ‘VIRTUAL ECONOMY’ WRECKED UNCLE SAM

Erle Frayne Argonza

So, fellows out there, whatever happened that the once mighty US economy—once contributing to 40% of Gross World Product (GWP)—is now drifting downwards, producing now just 22% of GWP?  That the EU would itself catch up with the USA and equally produces 22% of GWP, though EU’s money is bloodily mightier than Uncle Sam’s once mythical Dollar?

 

As a matter of realistic forecasting, if trends today would continue across the globe, Asia would overshadow both the US and EU, as follows: China will overtake each one of them by 2015; India, by 2022; ASEAN, by 2030.

 

While the US ‘real economy’ keeps on contracting (and the EU’s stagnates), the Asian economies are still expanding. 100 years ago the Western thinkers Oswald Spengler and Arnold Toynbee already forecast so sharply the ‘decline of the West’, while Daniel Bell foresaw in the 1950s-60s the rise of Asia-Pacific and its overtaking of the US 60 years hence (2005-2015 period). No one listened to them.

 

If we all recall, in the 1930s the great statesman Franklin Delano Roosevelt launched the ambitious New Deal. This program initiated gigantic growths in the ‘real economy’, solved unemployment, and led to high-growth and high-wage trends for sustained periods. By ‘real’ is meant the most productive sectors, namely: manufacturing/industry, agriculture, infrastructures, S&T, and transportation & communications.

 

By 1971, with enormous pressures from the financial cartels, the famed ‘gold standard’ was junked, the fixed exchange rate system was likewise junked in favor of ‘floating rate’, and after which serial liberalization of economic sectors and the bureaucracy went on in very radical fashion. This led eventually to the rise of the ‘virtual economy’ led by predatory finance, featuring hedge fund operations and ‘vulture funds’ to salve crisis-ridden financial enclaves more so overseas.

 

The ‘gambling economy’ based on speculation, conceit, lies, rather than based on the real value of consumable articles of trade, became the dominant modality in the USA. Debts and more debts piled up, since having no debt was moralized as bad behavior. Debs quadrupled in just a few decades, resulting to $5 Trillion worth of debts today.

 

How can an economy that churns out merely $12+ Trillion a year pay up for debts worth 4 times the GDP? It’s madness, blatant madness! The US economy is largely now a bubble, so gigantic that when it bursts, it can reveal the real flaws behind the ailments, and the weakness of the ‘real economy’ altogether.

 

The message to the next President & VP of the USA is to take down that ‘gambling economy’ or ‘virtual economy’ and quickly bring back the powerful ‘real economy’ in place. Failing to do that, Uncle Sam will be faced with many mass out-migrations beyond 2010, as true-blue Americans leave for more stable and promising jobs and businesses offshore. They’ve already began doing that in fact.

 

[Writ 05 June 2008, Quezon City, MetroManila]

GLOBAL OLIGARCHS AND THE FOOD & ENERGY PRICE HIKES

Erle Frayne Argonza

Good afternoon, Fellows on Earth!

 

As already presented by this writer/analyst in my previous notes and articles, the current state of affairs of the global economy—which featured the inflationary upswings in the food and energy sectors—have a great deal to do with the machinations of the global financiers or oligarchy.

 

Across the ideological and paradigm streams, there has been the preponderance for speculations by the same financiers and subalterns that have been the main upward driver of prices in oil and food. The very same operators were also responsible for the temporary upswing in the price of the US dollar which remains as the chief legal tender for exchanging oil.

 

Below is an article from the Executive Intelligence Review that authenticates to a large degree the positions I took so far regarding oil and food.

 

[Writ 01 July 2008, Quezon City, Manila]

LaRouche: British Are Behind Food and Energy Hyperinflation

June 22, 2008–This release was issued on June 22 by the Lyndon Larouche Political Action Committee (LPAC).

Lyndon LaRouche today forcefully denounced Prince Philip and his fellow genocidalists in the Anglo-Dutch oligarchy, for willfully promoting the food and energy hyperinflation, which threatens to kill billions of people around the globe. “You cannot understand the current hyperinflationary crisis,” LaRouche charged, “without first considering Prince Philip and the late Prince Bernhard’s stated committment to wipe out 80% of the human population, through a combination of wars, diseases and famine. If Prince Philip, and his slavish followers like Al Gore were to succeed, the population of the planet would be reduced, in the next several generations, to well-under two billion people.”

LaRouche was responding to news reports, in the past 24 hours, that the combined food and energy hyperinflation, has created a global national security crisis, threatening the survival of such leading nations as China, India, Indonesia, Malaysia, Pakistan, Zimbabwe, Morocco, and Egypt. “I warned, months ago, that the food crisis would soon emerge as the number one issue facing every government in the world,” LaRouche commented. “The combined shock of $140 a barrel oil and food hyperinflation and shortages, willfully promoted by Anglo-Dutch speculators and their oligarchical backers, has thrown the world into an immediate crisis.”

On Sunday, June 22, representatives of the world’s leading oil producing and oil consuming countries will meet in Jeddah, Saudi Arabia, to consider actions to deal with the crisis. Over 40 nations around the globe have been rocked by food riots and other protests over the hyperinflationary crisis, and the worst shocks, LaRouche warned, are coming during the immediate summer months ahead. “By the time we reach October,” LaRouche warned, “the situation will be catastrophic.”

“There are remedies, even at this late date, to deal with the energy and food hyperinflation,” LaRouche continued, “but nothing is going to work unless and until we crush the power of the British oligarchy.” LaRouche asked: “Do you really think that Saudi Arabia is going to cooperate, so long as their BAE ties to London remain intact—even if the very survival of the Saudi Royal Family is at stake?”

 

ANY OLIGARCH JAILED AFTER SUBPRIME BUBBLE BURST?

Erle Frayne  Argonza

Hail the financial cartels! Hail the Grand Oligarchs of the North! Thus spoke Zarathustra.

They came, they saw, they looted…and got unpunished. This is the fact of all facts, the ‘praxiological core’ (to use a philosopher’s thesis here in Manila), of the oligarchy’s gargantuan looting of the public purse everywhere. “We are children of Zeus, reside in Olympus, and are beyond the Law,” said they.

Let’s go back to the subprime bubble in the USA, and the post-bubble burst stage. As soon as the housing bubble began in the aftermath of the recession in the USA (2001-02), I was among those analysts who were alarmed at the flawed strategy that the US state officialdom to shore up an ailing economy.

The strategy was no different from the dot.com speculation of the previous years. So much propaganda hype was done to intensify the tenor of the dot.com revolution, which led to massive financier speculation in this sector. Result: the bubble burst, almost bringing the entire US economy down with it in 2001.

Seemingly unmindful of the bad economics that took place, the fed and monetary authorities permitted the bubbling of another sector, housing this time, to ‘prime up’ the ailing economy, coupled with ‘tax cuts’. I’m sure if Franklin Delano Roosevelt were alive yet, he will be squirming at the terribly flawed strategy and would prefer to just die pronto rather than see voodoo economics destroy his nation in the short run.

Bubbles burst in due time, and so the oligarchic game is that before the burst happens, fatten your purse in as rapid a manner as possible. The derivatives market is the best purse fattener, all other instruments being secondary.

Soon enough, the bubble did burst, and banks across the Atlantic (USA, EU) squirmed the most over the bankruptcy-inducing crash from the burst. Horror of all horrors, once mighty financier groups such as Bear & Stearns got badly bankrupt overnight, was sold for cheap dirt price, and simply evaporated.

And to add horror to the horrors, no oligarch or exec was ever jailed for that crime of massive looting of the consumer purse. Holy Maria!

My God! Oligarchs are the Holiest of all Hollies! We ordinary consumers are the filthy pariahs, the Damned Outcastes who are treated as mere members of an amorphous ‘Eater class’ by the Holiest. Hail the Oligarchy!

[Writ 13 May 2008, Quezon City, MetroManila]

A NEW GLOBAL FINANCIAL ARCHITECTURE IS MOST EXIGENT

 

Erle Frayne D. Argonza

 

[Writ 23 March 2008, Quezon City, MetroManila]

 

From the early 1970s through the 1990s, the massive liberalization of the international financial system was executed with such dynamism, radically altering thus the international financial landscape. Look at the result of this gargantuan liberalization today: global economic catastrophe.

 

New Nationalism, in collaboration with old nationalists, socialists, and ideologies that articulate the interests of marginal sectors, argues for the immediate reform of the international financial system. It had to be admitted by everyone else that the system failed, it simply cannot be sustained under a regime of liberal capital, monetary and related financial policy regimes.

 

Both the USA and EU economies today are particularly affected by the failure of financial liberalization. The ‘virtual economy’ had taken over their respective domains, they were so badly de-industrialized notably the USA’s that there may no more be a semblance of once flourishing industrial economies there, their infrastructures are rotting and collapsing, and now the final death blow to their economic wellness had come as recession ravages like uncontrolled forest fire there.

 

On the international level, the problem can be addressed by convening at once the legitimate delegates of states, with market and civil society groups serving as observers. The task is to immediately reform the rotten international financial system, and concur a new global financial architecture. A ‘New Breton Woods’ would be apt as a label for this effort (to borrow from the economist Lyndon LaRouche).

 

The most urgent agenda is the re-examination of national currencies, return of the gold reserve standard or equivalent, institution of better regulatory mechanisms both of cross-border and  national levels, immediate economic recovery by provision of long-term low-interest rated financial instruments or ‘white knight’ finance, and clipping the predatory powers of greedy financiers such as hedge funds and ‘vulture funds’ operators.

 

A special topic would be the stock markets of each nation or region. It is now time to reform the stock markets, which have been used by greedy elements to loot national coffers and the public of direly needed financial resources. If the stock markets can’t be reformed, then the option for them is to face increasing ‘guerilla finance’ by groups that will seek to establish direct links between the market players who seek new capital funds and the potential investors from among the general public. In which case, if the latter succeeds, the stock market is out to die a painful dinosaur’s death, ditto for all those predatory stock traders whose role will become extinct overnight.   

 

The fundamental contention for the reform package, culled from the New Nationalism article, is reflected below.

 

Reform the international financial system.

 

The global financial system is indubitably a homestead of predatory financiers. Usury and global speculation, the masterpieces of financiers, are the enemies of nations. Usury in international finance is at an all-time high, raising questions about the legality and moral propriety of   current lending practices. Incidentally, the said financiers are the ones who exercise the clout within the International Monetary Fund and the World Bank, whose chiefs have always been CEOs from the bank headquarters of the financiers. The said banks have always acted out as the marketing agents of financial cartels, even as many nations that have followed the austere ‘structural adjustments’ imposed by them have been reduced to paupers.

 

It is high time for ‘white knights’ to appear in global finance, lending money accordingly for developmental and investment purposes at very low interest rates (lower than 1.5% annually) and at very long-term payments (25-50 years). Such institutions are now beginning to appear, but creditors remain cautious about their moves. Such institutions are autonomous from the power orbits of the Western financial cartels, are well niched in Asia (e.g. China), and appear to be creditor-friendly.

 

The reform though should go beyond the ‘white knight’ route. We must actively participate in Asia’s establishment of its own monetary fund and a single-currency regime, and take a leading role if opportunities allow. It may prove beneficial yet to re-institute a regime of gold reserve standard, which should back up the Asian currency. This same monetary fund will then serve as the regional ‘white knight’ that will provide credit to nations in need in the region and continent. The actions will also accelerate the economic cum political integration of the ASEAN and the economic integration for the entire East Asia, steps that will further stabilize the national economies and continuously sustain their respective growth. Meanwhile, a regional currency can stabilize soon enough upon its launching, that it would be a difficult job for criminal financiers to manipulate it, such as the success of the ‘Euro’ now exhibits to the globe.

 

Still another key intervention measure is the control of predatory speculation through a ‘Tobin tax’ on cross-border currency and related purchases (J. Tobin’s proposal in the early 70s). A tax of 0.75% alone on the current cross-border exchanges, which amounts to $300 Trillions annually, would generate $2.25 Trillions. The said money will then be used to fund the operations of international organizations such as the United Nations, UNDP and authentic international NGOs for social development purposes. The money can also be used by ‘white knight’ financing institutions of international scale. This set of actions will then induce reforms in the other institutions, with chain reaction effects leading to declining speculation in the long run, as the oligarchic  bankers/financiers adjust their rates to more competitive rates in the face of challenges coming from global ‘white knights’.