Posts Tagged ‘financial meltdown’

The Hypocrisy of The West

February 7, 2009

by Ben Cohen | Huffington Post, Feb 6, 2009

With the financial meltdown in full swing, western governments are swinging into action to revive their economies with massive stimulus bills and spending programs. Financial institutions too big to fail are receiving bucket loads of cash, while a multitude of industries wait for their piece of the pie. Obama is proposing huge investments in infrastructure and green jobs, while Gordon Brown and the EU promise much the same.

The West responds to economic crises with swift government intervention, while it tells Third World Nations to do the opposite. ‘Structural Adjustment’ was the phrase coined by the IMF and World Bank — a technocratic word to describe the gutting of public institutions in the countries they were supposed to help. Third World countries were ordered to cut government spending, allow private companies to take over state functions (like providing water, electricity and education), and borrow at extremely high interest rates. The results were catastrophic, and countries like Brazil, Chile, and Nicaragua were plunged into economic hell. Hyperinflation, mass unemployment, poverty and food insecurity soared while deficits multiplied exponentially.

The West insisted this was the best road to economic prosperity, ignoring the inconvenient truth — that they had not taken their own advice.

Central planning, protectionism and corporate welfare created the societies we live in today — the power of capitalism to create wealth by itself was nothing more than a myth, a weapon the rich would use to lecture the poor. You live in the jungle of savage capitalism while we use the state to build our businesses and solidify our wealth.

The ideologues insisted that neo liberalism worked, ramming it down the throats of their own countries with the same religious fervor. Wealth was created, but only at the top, while the rest of the country crumbled. The financial tsunami that wrecked Latin America in the 1980’s had finally landed in the North, culminating in the spectacular meltdown of giant institutions deemed invincible 6 months before.

And our response? To use the same measures we always have in creating wealth and stability. We used the power of the government to regulate, protect and subsidize.

We may pull out of this awful mess in the coming months if our governments react to the will of the people. Wall Street must pay, jobs must be created, and the wealth must be spread around. We know this, and our governments know it too.

Yet the Third World is trapped in a spiral of debt, privatization and deep, persistent poverty. They exist in a precarious state of neo colonial dependency and cannot follow our path out of economic disaster because we insist they don’t. We may believe colonialism is dead, but our treatment of the Third World reveals otherwise. We may not govern their countries directly, but the results are tragically similar. It is only the methods that differ.

Perhaps the almighty shock we have received will sway power back towards the disenfranchised, and perhaps we will have more sympathy for their plight. We can mourn the death of capitalism, but know that it never really existed — not here at least.

Ben Cohen is the Editor of The Daily

Behind the Panic: Financial Warfare and the Future of Global Bank Power

October 15, 2008

By F. William Engdahl | AxisofLogic, Oct 10, 2008, 11:28

What’s clear from the behavior of European financial markets over the past two weeks is that the dramatic stories of financial meltdown and panic are deliberately being used by certain influential factions in and outside the EU to shape the future face of global banking in the wake of the US sub-prime and Asset-Backed Security (ABS) debacle. The most interesting development in recent days has been the unified and strong position of the German Chancellor, Finance Minister, Bundesbank and coalition Government, all opposing an American-style EU Superfund bank bailout. Meanwhile Treasury Secretary Henry Paulson pursues his Crony Capitalism to the detriment of the nation and benefit of his cronies in the financial world. It’s an explosive cocktail that need not have been.

“There is serious ground to believe that [Henry Paulson] is actually moving according to a well-thought-out long-term strategy.”

Stock market falls of 7 to 10% a day make for dramatic news headlines and serve to foster a broad sense of unease bordering on panic among ordinary citizens. The events of the last two weeks among EU banks since the dramatic state rescues of Hypo Real Estate, Dexia and Fortis banks, and the announcement by UK Chancellor of the Exchequer, Alistair Darling of a radical shift in policy in dealing with troubled UK banks, have begun to reveal the outline of a distinctly different European response to what in effect is a crisis ‘Made in USA.’

There is serious ground to believe that US Goldman Sachs ex CEO Henry Paulson, as Treasury Secretary, is not stupid. There is also serious ground to believe that he is actually moving according to a well-thought-out long-term strategy. Events as they are now unfolding in the EU tend to confirm that. As one senior European banker put it to me in private discussion, ‘There is an all-out war going on between the United States and the EU to define the future face of European banking.’

In this banker’s view, the ongoing attempt of Italian Prime Minister Silvio Berlusconi and France’s Nicholas Sarkosy to get an EU common ‘fund’, with perhaps upwards of $300 billion to rescue troubled banks, would de facto play directly into Paulson and the US establishment’s long-term strategy, by in effect weakening the banks and repaying US-originated Asset Backed Securities held by EU banks.

Using panic to centralize power

As I document in my forthcoming book, Power of Money: The Rise and Decline of the American Century, in every major US financial panic since at least the Panic of 1835, the titans of Wall Street—most especially until 1929, the House of JP Morgan—have deliberately triggered bank panics behind the scenes in order to consolidate their grip on US banking. The private banks used the panics to control Washington policy including the exact definition of the private ownership of the new Federal Reserve in 1913, and to consolidate their control over industry such as US Steel, Caterpillar, Westinghouse and the like. They are, in short, old hands at such financial warfare to increase their power.

Now they must do something similar on a global scale to be able to continue to dominate global finance, the heart of the power of the American Century.

That process of using panics to centralize their private power created an extremely powerful, concentration of financial and economic power in a few private hands, the same hands which created the influential US foreign policy think-tank, the New York Council on Foreign Relations in 1919 to guide the ascent of the American Century, as Time founder Henry Luce called it in a pivotal 1941 essay.

It’s becoming increasingly obvious that people like Henry Paulson, who by the way was one of the most aggressive practitioners of the ABS revolution on Wall Street before becoming Treasury Secretary, are operating on motives beyond their over-proportional sense of greed. Paulson’s own background is interesting in that context. Back in the early 1970’s Paulson started his career working for a rather notorious man named John Erlichman, Nixon’s ruthless adviser who created the Plumbers’ Unit during the Watergate era to silence opponents of the President, and was left by Nixon to ‘twist in the wind’ for it in prison.

Paulson seems to have learned from his White House mentor. As co-chairman of Goldman Sachs according to a New York Times account, in 1998 he forced out his co-chairman, Jon Corzine ‘in what amounted to a coup’ according to the Times.

Continued . . .

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