Recent interventions by central banks to flush liquidity into panic-stricken financial markets have demonstrated again the wistful make-believe of the corporate “free market” fairy tale. It has no happy ending. Free markets exist no more than fairies do. On the other hand, big bad transnational wolves and carnivorous fee-fi-fo-fum financial giants abound and rig markets to catch as many victims as they can.
Industries like financial services, pharmaceuticals, agri-business, oil and petrochemicals, mining, armaments production, media and communications are dominated by a handful of companies. Nothing is free about a market dominated by the few dozen corporations that together control such vast areas of the global economy. Likewise, the grotesque equation “free markets = democracy” touted so glibly by corporate-owned media and corporate-owned politicians amounts to a terminal corruption of language.
An underlying connection exists between the fraudulent verbal currency used by corporate media to misrepresent the conflicts in
It was Czar Alexander and Talleyrand who with much satisfaction agreed they could change the meaning of words from one 19th Century G-8 meeting to the next. In those days, they called it the Congress System. Then, European despots ran the system to enrich themselves and their loyal elites, to sacrifice masses of their people to savage industrialization and to effect their colonialist genocides around the globe. In North America, their
Politically, they have exploited their peoples’ fear of terrorism. Offering security, they have removed fundamental liberties and executed foreign policies violating the UN Charter and humanitarian and human rights law in a way bound to provoke terrorist retaliation. Economically, they have offered prosperity by deliberately fomenting an extended, unsustainable credit boom. Now they try to cover up the bust while still pursuing unsustainable policies that promote inequality at home and abroad. It is impossible to overstate the greed and cynicism of the global elites.
G-8 – an anti-democratic global mob
The G-8 latter-day Congress System is for all practical purposes a squalid cartel. These powerful countries use the G-8 process to work out how best to share quotas of power and to manage their respective spheres of influence. As an institution the G-8 process effectively sidelines the UN. The UN Security Council serves mainly to offer spurious legitimacy to decisions taken elsewhere by the G-8.
The G-8 gatherings began in 1975 at the instigation of French President Giscard D’Estaing. In those days the members were six, the
So this modern Congress System is in fact an imperialist Thing with far more tentacles than might appear from the economical-with-the-truth G-8 moniker. Although the summits happen once a year they are the annual culmination of constant coordination on many policy areas by government functionaries. Quarterly meetings by a group known as the Sherpas, aides of government leaders, prepare for the summits on the basis of information from other groups, like finance ministers and the other ministries of which most governments are composed, Foreign Ministries, Interior and Justice Ministries, Health Ministries, Environment Ministries and so on.
Terror – factitious bait
Working groups of various kinds also contribute to the preparations for each summit. Currently organized are the High Level Group on Non-Proliferation, the Rome/Lyons Group on terrorism and organized crime, the Counter-Terrorism Expert Group among various others. An extraordinary amount of work and organization – as many as 80 meetings a year – by many bright, talented people goes into dressing up the avowed aims of the summit declarations. They make a fine public relations mulch for corporate media to cover up the genocidal colonialist roots of the bloody fi-fi-fo-fum G-8 imperialist beanstalk.
In matters of trade and finance, governments and central banks coordinate policy in partnership with the world’s major financial houses and monopolistic transnationals. International relations reflect their fundamental gangsterism – “do what we want, or else” – rendering irrelevant established international humanitarian and human rights law because those basic norms impede the imperialist globalizing project. Even by the standards of consummate humbugs like George W. Bush and Tony Blair, the hypocrisy of G-8 summit declaration-speak is extravagant.
The declaration on terrorism from this year’s summit in
“We reaffirm that the promotion and protection of human rights for all and the rule of law is essential to all counter terrorism efforts, and we recognize that effective counter-terrorism measures and the protection of human rights are not conflicting goals, but complementary and mutually reinforcing. We call on all States to ensure that any measures taken to combat terrorism comply with their obligations under international law, in particular human rights law, refugee law and international humanitarian law.” (1)
Consider the unimaginable horror and suffering undergone by millions of Iraqis, brought about by these powerful leaders. Apart from the dead and wounded civilians – well over a million by now – several millions of refugees have fled the chaos provoked by the Bush regime and its allies. In
And yet earlier in that same declaration these people stated, “We, the leaders of the G8, are united in condemning in the strongest terms all acts of terrorism and reaffirm that there can be no justification for such acts which constitute one of the most serious threats to international peace and security, and to life and the enjoyment of human rights. We remain resolute in our shared commitment to counter terrorism while promoting freedom, democracy, human rights, and economic growth and opportunity. Our sympathies belong to all victims of terrorist acts, wherever they occur and by whomever they are committed.”
The horrific results of G-8 leaders’ foreign policies have provoked terrorist retaliation against their peoples. The obvious best protection against terrorism is a genuine commitment to uphold existing, painstakingly established international law, not the ad hoc improvised G-8 counter-terrorism charade. G-8 leaders’ insincerity is self-evident from the way their governments use anti-terror legislation to suppress legitimate dissent on contentious policy issues that have nothing to do with terrorism. Bait and switch.
From boom to bust – the “free market” switch
It can hardly be a coincidence that domestic repression via the abuse of anti-terror legislation, as in the US with Patriot Acts 1 and 2, the Military Commissions Act and recent legislation authorizing unlimited surveillance of ordinary citizens, accompanies looming recession in the US. Mainstream human rights outfit Amnesty International has this to say in the case of the Bush regime.
“The past five years have seen the
The past five years noted by Amnesty happen to coincide with the decline and fall of Alan Greenspan’s long credit boom engineered atop the imperialist beanstalk by non-governmental financial giant, the Federal Reserve. The Federal Reserve sells money that appears out of nowhere, like golden eggs rolling off the back of a truck parked somewhere up the beanstalk, entirely in tune with the overall G-8 ethos, a showbiz mixture of pantomime and gangsterism. Here’s the fairground barker spiel the G-8 woofed out earlier this year on economic stability.
“We note that the world economy is in good condition and economic developments are now more conducive to an adjustment than in the past, not least because we have made progress in implementing our joint strategy. However, further efforts will be required to better re-balance global demand. Global imbalances took a long time to build. Likewise, their unwinding is likely to be a gradual process, entailing a medium-term re-balancing of demand growth across countries……Continued reforms to re-balance growth towards domestic demand, thus enhancing its sustainability, are key to reducing imbalances while sustaining the robust global expansion. In emerging economies with large and growing current account surpluses, it is crucial that their effective exchange rates move so that necessary adjustments will occur. Oil-producing countries should continue accelerating investment in capacity and economic diversification.”
Translation : “Our major transnationals are doing great thanks to the global cartel-rigged economy we governments facilitate in partnership with central banks and the major financial houses. Things look a bit bad right now because people have been too greedy. But we all did well playing the markets we rigged on the way up. Now let’s help our mates make a pile of money profit-taking as they go down. We can sustain big bucks for the corporate elites we serve so long as we strictly control redistribution of national income for the dumb majority. We just need China to revalue its currency – oh yeah, and keep that oil coming.”
Here’s what they said about hedge-funds:
“We discussed recent developments in global financial markets, including hedge funds, which, along with the emergence of advanced financial techniques and products, such as credit derivatives, have contributed significantly to the efficiency of the financial system. Nevertheless, the assessment of potential systemic and operational risks associated with these activities has become more complex and challenging. Given the strong growth of the hedge fund industry and the increasing complexity of the instruments they trade, we reaffirm the need to be vigilant.”
Translation: “We haven’t a clue about financial derivatives and hedge funds. Cross your fingers and hope for the best.”
Plenty of signs now point to the worst. The “efficiency of the financial system” turns out to mean the insatiable greed inherent in capitalism’s fundamentally anti-humanitarian dynamic. G-8 showbiz duplicity may well dump the world’s economy into recession. Discontent at falling living standards will be exacerbated as climate change puts more stress on national economies. Military spending and support for repressive regimes like Israel, Colombia, Egypt and Pakistan will become problematic.
Public sector spending will be too over-stretched to meet the demands of the resulting mess. Governments unable to justify expenditure on foreign wars and interventions will repress legitimate dissent. This will happen at a time when dollar zone economies are battling to manage inflation and falling living standards provoked by a decline in the worth-less-and-less dollar. The G-8 governments just happen to have in place the repressive “counter terrorist” legislation necessary to manage widespread popular discontent.
US dollar water torture or one big waste-pipe sloosh?
Watching G-8 leaders perform on television one can hardly help thinking “my, what big teeth they have”. Perhaps the most interesting question about the developing economic crisis is how far the G-8 leaders and their corporate accomplices can control the developing wreck the G-8 Congress System has set in train. Thanks to their persistent determination to prioritize corporate needs and perverse foreign policy priorities over their own peoples’ fundamental interests, successive United States governments and their European and Pacific allies have themselves generated the current global political and economic crisis.
A principal tool of their failure has been faithless manipulation of interest rates and money supply. In 2004, established financial opinion in the US argued that the US could get by all right if China revalued its currency by about 20% at then current prices. But China has insisted on a gradual appreciation of its currency by no more than 5% a year. In the hall of mirrors of relative currency values since then, what the G-8 statement above calls “necessary adjustments”, in relation to emerging markets’ currencies, is a revaluation by China pretty much the same now as the one required back in 2004. Presumably that is why the G-8 declaration mentions it at all, albeit in dainty diplomatic language.
The dollar has declined against major currencies like the yen and the euro by 25% or more since 2003. Most commentators before last week’s market chaos reckoned that the dollar would drop to about 1.38 or so against the euro by the end of this year, 2007. Perhaps the cartel of central banks and major financial houses managing that decline had not expected last week’s sudden-death liquidity scare. The dollar had dropped from around 1.32 against the euro in January to 1.38 on July 20th. In a few days this August it rallied to 1.34.
A likely explanation might be that people anxious to settle dollar IOUs they were unlikely to be able to sucker other speculators into buying before available credit dried up, rushed to buy dollars. Dollar speculators who had bought dollars cheap, sold dear and took their profit. With insufficient cash available to meet demand, central banks flooded money into the markets and have made clear they will do whatever is necessary to keep markets liquid. Presumably all those golden egg dollars came rolling off the back of that Federal Reserve truck. No wonder the US authorities no longer publish complete money supply figures.
For the moment the dollar’s level will probably continue to sink, drip by drip, permitting regular profit-taking by institutions and individuals able to get cheap credit so as to bet against the dollar in other currencies like the yen. Inflationary effects in the US economy creep up quietly on consumers, wiping out their wealth cent by cent. This progressive devaluation is presumably meant to accompany the G-8 declared commitment of eliminating the US budget deficit by 2012. Somehow that commitment has not stopped US Congress voting increased hundreds of billions on military spending.
When Britain devalued sterling by 14% in 1967, Prime Minister Harold Wilson famously declared that “It does not mean, of course, that the pound here in Britain, in your pocket or purse or in your bank, has been devalued.” Subsequently, from at least 1970 onwards official bank rates in the UK never dropped below 6% for over 20 years. It has been pointed out (3) that the US government has lost effective control over interest rates. Those are a hostage to fortune now just like the money supply. Maybe China’s dollar leverage is all that is preventing an attack on Iran, one of China’s most important energy suppliers.
No one knows the full extent to which the Federal Reserve moonshine-men have been slooshing bootleg dollars into the markets from their fabulous stash of golden eggs. Nor does anyone know exactly how much funny money foreign creditors like China will go on buying before they kick the habit. Away up in their Eccles Building, Washington beanstalk, the Federal Reserve fi-fi-fo-fum giants put their faith in global aversion to dollar cold turkey.
Over in the Pentagon, the bankers’ high quality muscle wait as ever for orders to attack whoever may be next on the Bush regime hit-list. Out in the Homeland, the FBI spies on dissenters. Their G-8 government counterparts ape them loyally. They all mix the motifs of terrorism and globalization so as to strip away fundamental freedoms and protect the wealth and power of entrenched corporate elites against the interests of their peoples.
toni solo is based in Central America – contact via toni.tortillaconsal.com
1. G8 Summit Statement on Counter Terrorism : Security in the Era of Globalization
3. “China’s Threat to the Dollar is Real”, Paul Craig Roberts, Counterpunch, August 9th 2007