Spectre of financial Marxism

ALL AROUND THE WORLD a new phenomenon has been created as a result of the severe economic and financial crisis in the United States which is likely to lead to a shutdown of the credit system, with or without the bail-out.

We are seeing a situation now where taxpayers are becoming lenders of last resort. This has come as no surprise as all the signs of impending tragedy were there for some time in the form of cheap and risky credit in what has been characterised as a "financial casino."

The Economist magazine has been repeatedly warning about the housing bubble for over a year. So did many European, Asian and Canadian bankers. The United States is now reaping the whirlwind of absurdly low interest rates.

The entire American financial system, and some parts of the world, is now at stake as a result of the implosion of mortgages and securities backed by them. An extraordinary initial price tag of US$700 billion is needed to stem the tide.

We in Barbados and the region are assured that the impact will be minimal but, indirectly, the situation is more complex. Our abilityto raise funds for development on the international market at reasonable rates could disappear in the weeks ahead if the rescue effort fails.

The War on Terror has now taken a back seat but what has it really accomplished? The terrorists are still around but the war has brought together the governments of the world to work together in an international, coordinated attack on free travel and the free movement of money.

This, curiously, may be the New World Order touted many years ago. It has become more real, thanks to the War on Terror. The US$700 billion is about what has been spent on the Iraq war so far and is climbing.

What does it all mean? So much has happened so fast that the global financial system is still trying to appreciate the fuller implications of this tragedy.

The irony is that this enormous state intervention, though presented as an example of American pragmatism, is the work of the most ideological right wing administration in its history.

The Bush administration used the 9/11 attacks as an excuse for the biggest increase in military spending and policepower since WWII. Now it is using the market correction (caused largely by its own interventions in the credit industry) to expand state power in the financial area.

Is there anyone left in the world who isn't trying to get something for nothing?

"Then you will see the rise of the men of the double standard--the men who live by force, yet count on those who live by trade to create the value of their looted money--the men who are the hitchhikers of virtue. In a moral society, these are the criminals, and the statutes are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law--men who use force to seize the wealth of disarmed victims--then money becomes its creators' avenger. Such looters believe it safe to rob defenseless men, once they've passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter.

"Do you wish to know whether that day is coming? Watch money. Money is the barometer of a society's virtue. When you see that trading is done, not by consent, but by compulsion--when you see that in order to produce, you need to obtain permission from men who produce nothing--when you see that money is flowing to those who deal, not in goods, but in favors--when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you--when you see corruption being rewarded and honesty becoming a self-sacrifice--you may know that your society is doomed. Money is so noble a medium that is does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.

"Whenever destroyers appear among men, they start by destroying money, for money is men's protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked, 'Account overdrawn.'

"When you have made evil the means of survival, do not expect men to remain good. Do not expect them to stay moral and lose their lives for the purpose of becoming the fodder of the immoral. Do not expect them to produce, when production is punished and looting rewarded. Do not ask, 'Who is destroying the world? You are.

"You stand in the midst of the greatest achievements of the greatest productive civilization and you wonder why it's crumbling around you, while you're damning its life-blood--money. You look upon money as the savages did before you, and you wonder why the jungle is creeping back to the edge of your cities. Throughout men's history, money was always seized by looters of one brand or another, whose names changed, but whose method remained the same: to seize wealth by force and to keep the producers bound, demeaned, defamed, deprived of honor. That phrase about the evil of money, which you mouth with such righteous recklessness, comes from a time when wealth was produced by the labor of slaves--slaves who repeated the motions once discovered by somebody's mind and left unimproved for centuries. So long as production was ruled by force, and wealth was obtained by conquest, there was little to conquer, Yet through all the centuries of stagnation and starvation, men exalted the looters, as aristocrats of the sword, as aristocrats of birth, as aristocrats of the bureau, and despised the producers, as slaves, as traders, as shopkeepers--as industrialists."

--Francisco d'Anconia

-Ayn Rand, Atlas Shrugged. It's happening...

“Gentlemen, I have had men watching you for a long time, and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out.”

~~President Andrew Jackson

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

---Ludwig Von Mises

“Several brokerage houses tumbled; blue-sky investment companies formed during the happy bull market days went to smash, disclosing miserable tales of rascality; over a thousand banks caved in during 1930, as a result of marking down both of real estate and of securities; and in December occurred the largest bank failure in American financial history, the fall of the ill-named Bank of the United States in New York.”

~~"Only Yesterday: An Informal History of the 1920’s" by Fredrick Lewis Allen

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