Posted tagged ‘global finance’

‘LATE’ CAPITALISM CRASHING DOWN ITS DEATH BED

September 25, 2015

‘LATE’ CAPITALISM CRASHING DOWN ITS DEATH BED

 

Erle Frayne D. Argonza

 

Good evening!

The events in the Eurozone are now getting to be more alarming. Forecasters are now claiming that another round of recession is in the offing, as the bubble burst that began in Greece will spread to Spain, Ireland, and other member-states of the EU.

Will liberal capitalism continue to live a life that seems to hang in the balance? Or will capitalism need to restore itself through totalitarian means? What’s so wrong with the system that it just can’t be sustained enough?

Let me share to you past blog writings about the subject: ‘mad economics’ and the ‘demise of liberal capitalism.’

[Philippines, 23 May 2010]

‘LATE’ CAPITALISM ENDS IN CRASHING BLOW POST-‘MAD ECONOMICS’

 

Erle Frayne Argonza

Good afternoon!

At this moment, I’m sipping coffee contained in a pack that is sold for worth P130, or $3.00. The pack is one of the domestic brands of brewed coffee blends, ready for the drip coffee maker, of the Arabica and/or Robusta varieties. In economic parlance, this coffee is a commodity because (a) it was intended for exchange and not for the coffee producer’s consumption alone, and (b) money was used to acquire (purchase) it.

I have such deep fondness for coffee, as I acquired my coffee-drinking behavior as a childhood habit yet. In my hometown of Tuguegarao (city), Cagayan province (North Philippines), coffee beans were grounded into powder form and sold right inside the ‘wet’ market, was brewed using the local decoction techniques, and was consumed by people of all ages from pre-school to senior’s age. That was then, and that was how I learned to drink this beverage at age 5 more or less. I was hooked to the habit since then, even as I continued to drink milk that I still do till now.
Both coffee and milk are among my health formulas, and both are commodities.

The question I’m asking now is, will commodity-based economics survive the times ahead? Both coffee and milk will survive for sure, but will the money economy that underpins them survive as well? As to the broader world system of capitalism, will it survive too or is it in fact on its death knell today?

Capitalism was the last of the world systems that embodied the ‘money economy’ to which it properly belongs. With the opening of the 20th century, the socialist world system appeared on the social landscape and attempted to serve as an alternative to capitalism, but this experienced its early demise as its implementers found out that it cannot be sustained after all. Both capitalism and socialism are embodiments of the ‘money economy’ as it later turned out to be, they are just but two sides of the same coin: the ‘money economy’.

Socialism is gone, and no matter what attempts there may arrive to survive it in some other forms, this variant of the ‘money economy’ is gone. Now capitalism is all alone, and it is getting more real than virtual that it too is bound to crash a catastrophic end, and with its demise, the “last of the (economic) Mojicans” is bound to disappear (my apologies to Mojicans if my note sounds ethnically incorrect). And with capitalism’s demise, the whole of the ‘money economy’ folds up like unto a book that had reached its last chapter, and deserves more to be consigned to the archives of history.

The Frankfurt school thinkers, notably Jurgen Habermas, cogitated that capitalism’s life span was extended somehow, and was dubbed as ‘late’ capitalism in this last phase of the world system. In this phase, state planning and interventionism were infused into the system to extend its life. Before ‘late’ capital came the mercantile, free enterprise, and monopoly phases of this world system. Will there be another phase to capitalism after ‘late’ capital?

Before I answer that extension of life span, let me stress that ‘late’ capitalism shall end in the following process and manner:

· The re-introduction of liberalization—of free market and free trade principles—into ‘late’ capital shifted engagements away from production, the real foundation of the economy, to the sphere of predatory finance, thus producing the gargantuan ‘bubble economy’. The ‘physical economy’ of production transmogrified into the ‘virtual economy’ that produces no real value other than imaginary or delusional values. It is ‘mad economics’ in operation, no longer the ‘rational economics’ of mercantilists, classicists and neo-classicists.

· The ‘mad economics’ led to the yawning gap between actually produced values and the aggregates of financial derivatives and debts combined, to the extent that the former shrinks at a rapid rate relative to the latter. As bubbles burst from one commodity sector to another, leading eventually to a crisis of gargantuan proportion, all the more will production shrink, unable to produce values that can input into the demand functions for fresh money to pay for aggregate credits, primary debts, secondary debt obligations, and so on.

· The crisis will then move on to the further shrinking of production, tightening of credit sources, and hyperinflationary situation in utilities (notably gas & power), food, base metals and other vital commodities. Total economic collapse results from the foregoing.

· The economic collapse then leads to social unrests, turmoil, upheavals, civil wars, food wars, water wars, and possibly intercontinental wars such as another 3rd world war. The clash of world powers and their surrogate emerging markets will become the flames of a possible long war akin to the 30 Years War (c.1618-48).

Let me now end at that instance. Suffice me to proclaim that the death knell of ‘late’ capitalism and the whole of the ‘money economy’ of the last 2000 years or so are ending. The ‘non-cognitive economics’ of the Roman to feudal era, the ‘rational economics’ of the Renaissance to monopoly capital era, and the ‘mad economics’ of ‘late’ capital were markedly the underpinning mediation processes of that entire 2000-year epoch. The epoch and its last phase of capitalism is rapidly drawing to a close.

[Writ 22 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 ‘2nd 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 ‘3rd 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.]

EUROZONE’S BURNING, CONVENE GLOBAL FINANCIAL CONFERENCE!

September 15, 2015

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

May 5, 2015

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.]

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Strengthen national banking and the monetary system

April 25, 2015

NEO-NATIONALISM’S PREMISES & CONTENTIONS / Strengthen national banking and the monetary system

 

Erle Frayne D. Argonza

 

 

Economic stability at all levels demands the strengthening of a national banking system, and concomitantly the strengthening of monetary system with sovereignty-backed parameters and rules. First and foremost of monetary missions is the re-assertion of the powers of the Constitution of the Republic over the Bangko Sentral ng Pilipinas. Needless to say, the country today faces a weak national bank, and necessarily a weak monetary system engendered by it. Sovereignty questions impede the effective operations of national banking in the country, as indicated by the excessive meddling of the International Monetary Fund, acting as agent of the global financial cartels, in the Bangko Sentral’s operations. The first step should be a thorough investigation by the Congress of the Republic to determine precisely who owns and controls the Bangko Sentral, and conduct related oversight functions to assess the entire consolidated assets of the said bank inclusive of unaccounted precious metals.

Should there be a need to institute maximum monetary controls, the national bank should be mandated by the Congress precisely to exercise such controls through a regime of currency controls, where found warranted. In no way should our national currency be subjected to attacks by predatory financier speculators, as what the latter have been doing from the mid-1997 onwards. Money is the lifeblood of the economy, and rendering our money under a regime of free exchange rates and free trade leaves us extremely vulnerable to the machinations of such greedy forces, further weakening our national economy. Monetary controls are the best antidotes to the ailment of a weak currency. Were it possible to revive a system of gold reserve standard, then let such a strategy be studied and enforced, to ensure stability in monetary concerns and the currency markets.

The interest rate controls should likewise continue, but the state must see to it that the rate regimes are within the bounds of sovereignty parameters, representing thereof the national interest and the subsidiary interests of the various social sectors. And, should conditions warrant, our national bank should be among the key initiators for constituting new supra-national institutions, such as an Asian Monetary Fund, thus signaling our participation in reforming the entire financial & monetary system (see below). Our involvement in an Asian Monetary Fund could be a fitful strategy to finally exit from the International Monetary Fund, further strengthening our national banking and monetary system.

 

[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.]

2009 ECONOMIC FORECASTS: DEPRESSION, INTERVENTIONISM, REVERSAL

January 26, 2009

Erle Frayne Argonza

Magandang hapon! Good afternoon!

2009 will be another bleak year economically, more so for the North (USA, EU, Japan are topmost). The recession that began with the subprime mortgage bubble burst in America in 07, will ensue with even mightier turbulence, as there are no coherent policy solutions of a strategic nature that can salve the economic ailment on a global scale.

As already articulated by this economist/analyst in various articles, the policy environment must be changed and regulatory mechanisms strengthened to immediately gain business confidence and reverse the tide of catastrophe. On the domestic front, the solution begins by following a New Deal type of policy set, which will bring back the fervor of production-driven growth and full employment. On the international/global front, a new financial architecture must be agreed upon via a global summit called for the purpose, akin to a New Bretton Woods.

The only intervention mechanisms we observe today are bailouts of failing financial and business institutions, which are toxically immoral as those criminal oligarchs are even rewarded for their sordid looting and corrupt practices. Only Russia and China have openly resorted to a New Deal type solution, in consonance with the practices of the late regime of Franklin Delano Roosevelt of the USA. As far as the international-global front is concerned, the concurrence of a new treaty that will resonate a new financial architecture is nowhere in sight.

In the absence of genuine solutions that can stabilize ailing economies on both the domestic and international fronts, the downward spirals will continue, until the economies of the North will hit rock bottom depression that will be worse than the one that crashed the USA, UK and Germany almost a century ago (USA, UK, Germany were then the world’s top industrial & military powers). In the absence of capital control policies up North, capital flight will ensue at dizzying speed, draining their respective countries of trillions of dollars and/or euros at levels far higher than the 2008 drain.
The smart money that will sneak out will find better shelters in the South (emerging markets notably East Asia + India).

The possibility of North-based companies transferring their headquarters to the South is not entirely ruled out. The other option is for the corporate owners to transfer domicile from the North to the South, leaving their ailing mother companies in the hands of trusted stewards. The era of distance remote control-type management by corporate owners could very well begin this year, which will modify corporate governance by no small means.

The positive light for the global economy is that finally the corporate and state leaders will see light at the end of the tunnel and call for a global conference to carve out a new financial architecture. Laissez faire, a cadaver doctrine before the 2nd world war that was revived by the monetarists and greedy financiers, will finally lay to rest as it gives way to dirigist or interventionist economics.
Stronger regulatory mechanisms may be charted this year too, at least on paper.

New Deal, Keynesian, and welfare state doctrines will be blended together to produce an eclectic admixture. Since New Deal has an international facet into it thus rendering it more comprehensive, as the late FDR cogitated the need for international cooperation and development for all countries to end all wars and foment lasting peace, this doctrine will more or less be followed. We will not be surprised if, after the Davos conference, the shape of the future will already be definitively of the New Deal type.

Conclusively, even if the Northern economies will flatten down to zero and/or negative growths, the downward spiral may stop by the last quarter of the year. The full effects of the intervention solutions won’t be felt this year though, as it will take some more years to get them to galvanize. So let us brace for more turbulent winds, while hoping that the storm would finally stop so we can enjoy a delightful holiday season comes December.

[26 January 2009, Quezon City, MetroManila]

HEALING GLOBAL ECONOMY VIA NEW FINANCIAL ARCHITECTURE

November 30, 2008

Erle Frayne D. Argonza

Magandang hapon! Good afternoon! Buenos tardes!

At this juncture, this economist, who is also a healer (pranic healer, soul healer, psychosocial counselor), will begin to articulate economic problems from a wellness vantage point. I will be calling the paradigm ‘healing economics’ as a fusion of wellness principles and economic analysis.

If we observe the ‘treatment’ applied by public policy experts on national economies today, we would see that the solutions to the problems are largely short-term ones that only mitigate economic collapse for a while. We can call them ‘band aid’ solutions to problems that are more of ‘cancerous’ in nature, and by common sense we know that band aid cannot cure cancer.

The economies of our nations have already been integrated over the last three (3) decades or so. This integration constituted the ‘global economy’ which is distinct from national economies and which manifest its own laws. National economies have become interstices or tissues of the global economy, and trying to cure ailing national economies without taking into consideration the wellness of the whole global economy will fail.

What is now urgently most needed, as a formula for enabling healthy national economies, is to put into place a new global ‘financial architecture’ as a beginning treatment. There is no way that economies can heal without the proper macro-policies and institutional frames that support them, and those policies cum institutions must be constructed at the global level.

Just by using that ‘global’ category as a yardstick, we can see that the solution of bank bailouts being rushed in the USA and echoed in Europe are not the long-term salvation to the ailment. That bailout route was already tried in Japan in the 1990s, it was then called ‘crisis management’, and it resulted to a 12-year recession-to-low growth catastrophe. Japan became the “sick man of Asia” for a decade, which was unbelievable for observers who knew this country’s economic might all along.

If there are certain realities that we must admit as having already turned into dead carcasses, they are:

·        Virtual or Bubble Economy: Economy that is founded on speculation, with values derived from out of financial values themselves and divorced from production, cannot be sustained for long. It is finally DEAD. Only fools would still think that reviving it, without regulating and/or criminalizing the economic predators that thrived on it, is the soundest healing work preferred. Nobody needs to heal a dead thing, just bury it deep below the ground, lest you create a zombie or vampire out of it.

 

·        Free Market of Currencies. Treating currencies like commodities that are tradable without sufficient regulation, is voodoo paradigm of ‘monetarism’. This is now DEAD. It can never work, it doesn’t, and will never work under any given context. Free market doctrine (laissez faire)), in the first place, was long dead. It was a doctrine that was enforced by the British Empire, through the “power of the gun,” and supported the slave trade business. To revive such a doctrine in the current context—guiding trade and exchanges in the monetary-currency markets—is plain voodoo practice, as it fattens the purses of economic predators at the expense of national economies and marginal social sectors.

The route to strategic healing, which combines ‘preventive’ with ‘curative’ treatments, is through a new ‘global financial architecture’. This can be and should be done most urgently, as the carcasses are now spreading havoc of ailments across the planet, through a global conference of all the nation-states. Through this conference, proper diagnostics can be done, with the help of top experts, including those representing marginal sectors, and proper treatment can also be conjured.  

An outline of agenda items for deep reflections in such a treaty-making conference would be as follows:

·        Shift Back to Regulated Trading of Currencies/Monies. Money is the lifeblood of the economy. As such, no private group or whatsoever should be allowed to play it like gambling toys just to fatten their already fat pockets. Private stakeholders that gamble in the currency markets are like cancerous corpuscles in the blood vessel, their operations must be well regulated and certain trading activities declared as banned.

 

·        Securitize Currencies with Precious Metals. A reconstruction of the gold standard should be done most quickly. This system was junked in 1971 yet, and look at the catastrophic result of its folding up. Not only gold, but certain other precious metals and crystals, such as diamonds, can be declared as securitization measures to guide money production within any country at any given time.

 

·        Fixed Exchange Rates. National currencies are still around. In no way should they be forcibly junked in favor of a global currency, which is too premature a measure. Within a period of transition, of say 25 years, national currencies should be the chief legal tender, exchangeable based on fixed exchange rate policy.

 

·        Tobin Tax on Cross-border Financial Transactions. All cross-border financial-monetary transactions, done as matter of business engagement, should be imposed a Tobin Tax, the amount of which will be defined in the conference. The revenues generated from such tax will then be used to fund the United Nations and its attached institutions (UNESCO, WHO, ILO, etc). Through this measure, all cross-border transactions can also be monitored, making it easier for international enforcers (e.g. Interpol) to counter-check sabotage and related criminal operations by predators.

 

·        Ban or Criminalize Excessive Speculation. Excessive speculation of currency markets and related financial transactions must be banned and declared as crime. Those engagements of ‘currency attacks’ that have wrecked many economies are on top of the agenda for criminalization. Till these days, they remain unchecked, due to free trade principles in currency and financial trading.       

 

·        Ban Banks from Derivatives Operations. Banks should operate largely in support of developmental and re-development pursuits. In no case should any country be allowed unrestrained speculative and/or derivatives operations that leave the banks vulnerable to collapse.   

 

·        End Usury One and For All. For as long as usury remains, poverty and underdevelopment will never end, while once wealthy economies can crash back into 3rd world status. Usury must be criminalized as an evil  act, thus ending once and for all a long history of predatory hoarding.

 

·        Create New Global Financial Institution. To enforce and monitor the new financial architecture put into place, a new global financial architecture or GFI should be installed as well. The international Monetary Fund is a total failure, even as it was used as a mere tool by predatory financiers to extract usurious rents and disable national economies through immoral austerity measures. In the long run, this GFI can be considered as the infrastructure for a global central bank, should cooperating states approve it in principle.    

 

Incidentally, the clamor for installing a new financial architecture is now getting stronger by the day. I am very optimistic that this will be concurred in due time, for failure to do so would prolong the agony of global economic collapse and decline. Let us cross our fingers that it will be called for very soon.

[Writ 28 November 2008, Quezon City, MetroManila]

ZAIBATSU GLOBALIZATION ‘VOODOO ECONOMICS’ BOWING OUT

November 15, 2008

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]