Archive for October 13th, 2008
Note: this is the third article on the causes of the crash of Wall Street.
What resolutions in the aftermath of the crash of Wall Street?! (October 7, 2008)
Many contradictory economics school of sciences that earned Nobel Prices such as the School of Chicago, the School of Vienna and even Amartya Sen tried to interpret a few of Adam Smith’s economic principles and his metaphor of the invisible hand guiding prosperous Nations’ economies. Capitalists have usurped Adam Smith’s economic principles as their system guideline to cheat out their countrymen of their life savings.
Let us revisit briefly Adam Smith who published in 1776 “Investigation on the nature and causes of the wealth of Nations”. He stated that individuals have the tendencies to invest whatever capital they own within the areas of their residence so that they could have better control over their business because they know the people they can trust and the environment that can use their skills and products and the functioning of the legal system. This process of increasing the added value of their businesses in the local commerce or inner commerce is like “an invisible hand” at work for increasing the wealth of the whole economy. When the State risks to orient or guide an individual or moms and pops family businesses in the manner of investing his capital it is meddling in pointless exercises since the investor is better positioned to know the kinds of activities he is fit to undertake. Smith relied heavily on the liberal scientific economic principles of the French School of the Physiocrates; then three economic revolutions carried his manuscript as their Bible: mainly, the French Revolution in the political debates, the industrial revolution seeking justifications for their capitalist system and lastly the scientific revolution. Smith warned against freight commerce where the capital of an investor is divided among foreign countries and never under his control (does the stock market correspond to freight commerce?). Thus, a businessman prefers to deal within the inner commerce over external commerce and by far over freight commerce. How Smith’s explanations for a strong economy could ever be matched with the principles of these mega businesses that nobody even know the behind the scene power manipulators?
In order to keep in the spirit of Adam Smith the commercial banks and even the investment banks under stricter regulations and accounting should get to know the businesses they are lending to, the people, the environment and the legal system of the States they are doing business in. Hiring just banking and finance graduates would not cut it: knowing the businesses that add values requires various experts on the field. For example, it is not specific enough for a bank to be specialized in the agriculture domain; it has to state in which products it is specialized in. Knowing the business unit of a borrower in and out is the main guide to adding value to national economies. The smaller, more localized and specialized the commercial banks the more secure are the investments. This free world finance investment scheme is caput and makes no sense; it needed only a decade to prove its embezzlement objectives.
Maybe the immediate problems of climatic changes would usurp the primordial rank of the fall of Wall Street for dire consequences in the next decade; and maybe the next US Administration might decides to lead the environmental remedies in a political gimmick to redirecting the attention of its public away from this major handicap. The focus on the environment might generate the necessary good will for behavioral change and away from this “stupid consumerism growth” ideology. Are you hopeful that the temporary fall of greedy capitalism might enhance a revival for the environment? Don’t count on it. Only a serious movement to restructure the actual US political system with serious independent institutions invested with the authorities to control and monitor and investigate the so-called check and balance porous institutions might offer a glimpse to the light at the end of the tunnel. Once this mass movement is on the march then the rest of the world will back it with all its might to save this one Earth and its 8 billions inhabitants.
I sincerely expect the Chinese people to revisit their economic policies and the untenable export growth trend. I expect the huge continents of India, Brazil, Russia and the European Union to get the message of the pitfalls of an uncontrolled capitalist system and sever the cozy relations between their political structure and financial institutions.
Note: this is the second in a series of three articles targeted intended to simplifying the explanation of the causes (not the mechanisms) of the financial crash of Wall Street and offering an alternative resolution.
The American Manifesto of the 21st century (October 6, 2008)
We all know by now that the September 11, 2001 attack on the Twin Towers and its consequences in Iraq, Afghanistan and the Moslem World, in general, were the events of the decade. We do feel deep in our guts that the fall of Wall Street and its results would be the events of the century. The fall of the last bastion of unbridled capitalism is shaking the World economy and sending strong Tsunami waves to global finance and investment institutions all around.
The US Federal government is nationalizing the major failing commercial banks and a few investment banks, which are the foundation and symbol of greedy capitalism. For the time being the Federal government has bailed out AIG and then nationalized Goldman & Sacks and G.P. Morgan who would have the task of purchasing the remaining failing financial institutions. Since when you could conceive the two relatively puny institutions of G&S and G.P. Morgan to purchase Washington Mutual and other giants for a nickel? What organizations are behind Goldman & Sacks and G.P. Morgan to obtain formal nomination of the US Federal government for the nationalization process?
It is well documented that minor cataclysms generate abundance of investigation and then public coverage but the coverage of seismic cataclysms that are financial in nature are relegated to professional manuscripts that the general public would not touch with a long pole. Did anyone read any serious coverage of the financial repercussions of the September 11 nightmare or the bankruptcy of the energy giant ENRON? If anyone, so far, comprehend the causes of the fall of Wall Street then please disseminate your knowledge profusely and immediately.
One hint though; follows the money trails and you will catch the head criminals. Astute Warren Buffet has already invested 5 billions in Goldman & Sacks or 10% of the shares; thus, this is a strong lead to follow. The most direct way for grabbing significant threads is by investigating Vice President Cheney and his inner circle; they were fundamentally following orders of the malefic financial giant organizations that are behind the turmoil of this decade.
I wonder though why the fall of Wall Street happened when the last bastions of communism (China) definitely shifted gears to participate in the new world economic order! The fall of Wall Street should have taken place shortly after September 11, 2001. The invasion of poor Afghanistan was not credible to infuse over 3 trillion dollars into the already failing financial institutions in the USA through fraud and the scapegoat of a major war against “terrorism”. The Bush Administration, and the behind the scene nefarious financial organizations, needed to invade rich Iraq and blackmail the neighboring tiny Arab Emirate States to redirect the swindle on the largest scale through front re-construction companies such as Bechtel and Halliburton and others private security companies. The Iraqi war could not cost that much money and certainly the Iraqi people didn’t notice any beneficial change in their daily lives for six years and they are much worse everyday.
This gimmick of infusing another 700 billion dollars from the US citizens taxes is basically one of the last payments of the Federal government to the financial mega mafias. For a year, those malefic financial mafias might lie low to ride off the anger of the US people and then the same cohabitation and capitalist schemes will resume under laws riddled with loopholes as large as elephants.
They say that everything is politics; but in capitalist systems, where political structures are fundamentally legal front for the mega financial mafias to bleed dry the citizens then, capitalism is what defines politics. If you want to investigate any political decision then, your best bet is to follow the financial traces. I urge the US citizens not to wait and see! If you do not do your homework now, and before the 700 billions are issued, and then actively revisit the US political structures then the same cycle would recur at a nastier magnitude.
Wall Street Multinationals milking the cows (October 11, 2008)
Note: The talking heads in host shows would like you to believe that by explaining the mechanism of the crash of Wall Street then that should be an excellent alternative to avoiding telling their version of main cause of the crush; or at best, they expect you to draw your own conclusion so that the main cause becomes essentially an individual deductive prowess. The three following articles are meant to stating simply the main cause of the financial crash of the century and then to offering a well tested resolution that add real values to the economy.
The American multinationals and many in Europe affiliated to them saw the financial crash coming in the speed of a bullet train since before September 11, 2001. Do you remember that in 1999 the US government and Congress passed a revised law of 1933 (that was meant to regulate the stock market after the crush of 1929) that allowed commercial banks to switch to investment banking with much looser accounting and regulatory rules? Well, many multinational commercial banks jumped to the opportunity that suited their pleasures according to the development of the markets worldwide under the code name “Free Trade Agreement”. It is then that the US multinationals, in tandem with the US Administration, knew that in order to conquer the world financially they would ultimately pay a price but it won’t be that expensive financially to the US treasury since all the stock markets would be linked and sharing in the risks; though the multinationals opted not to analyze seriously or didn’t pay much attention to the angry political backlash and an eventual change in the capitalist system.
The multinationals foresaw the catastrophe but they wanted first to milk the cows in the Asian markets and the petrodollar sovereign funds of the oil producing countries. They figured that, in due time, when the free non-regulated financial system fails then the other developed and rich States would participate in the bail out. Fundamentally, if you do the math then you will discover that the swindled profit that the multinationals generated during a decade correspond to the long term bail out funds that Europe, Asia and the petrodollars countries would pay from their citizens tax money to bail out their failing institution in order to stabilize the markets that should take quite a long time. I suggest that you start adding all the money shelled out by the world States and also include what the US government contributed since 1999 and you would get the general figure of the astronomical super highway robbery of the century.
It is this vast pool of middle class investors worldwide in stock markets that accounts for the biggest financial loss. If you are not in the board of directors for at least one multinational company then you should not play Russian roulette with stock market. Casual, naïve and smart ass investors in stocks remind me of a story involving chimpanzees. A white colonizer paid $10 for every chimpanzee caught; the natives were glad and worked hard to satisfy the demand of the purchaser. By and by as the number of chimpanzees dwindled and the commercial minds on both sides settled for a higher price of say $40 per chimpanzee then the manager of the colonizer convinced the natives to buy back the whole lot of chimpanzees for $30 apiece on the ground that when his boss returns then the natives would resell the chimpanzees to him for $50 apiece. The natives shared their funds and did the deal. The trick is that the white boss never returned!
Congress passed a monstrous bailout package where the white bosses are not to be prosecuted! Everyone is a sucker once in his life but in capitalist America the odds of repeat “suckered ness” is very high and the plain American citizen is the most prone to fall frequently in these easy to play games of stock gimmicks. Well, all you need is a computer hooked to internet and plenty of happy satisfied greed stories propagated in all the media! If you have noticed that the most recurring remedy of the talking heads is to regain “trust” in the financial market system! Yes, trusting multinational professional embezzlers is a sure way to stabilize your life saving balance to zero dollars.
Now the US government wants the world citizens of tax payers to share in the resolution of world financial stability! Why? Is it so that the few hundreds of billionaires and the select classes of capitalists around the world may maintain their high life style? Have we reached a new phase of world class capitalism versus the other hard working nationals?
Adonis Diaries 