It is warm and sunny in Jaffa, a fishing harbour on the Eastern Mediterranean just south of Tel Aviv; the skies are blue and the sea rather calm, with the clientele of sidewalk cafés enjoying their milky arak and coriander-laced coffee. The economic crisis never arrived here; there are few lay-offs, prices have remained high, though the shopping frenzy has somewhat subsided. A steady stream of tourists from overseas reassures us that Israel is not the only island of calm in a troubled world. However, the newspapers compete with one another’s economic horror stories. They say that sales of vintage French champagne in Kazakhstan are down. “Sales of Porsche and Mercedes cars have fallen by half so far this year. People are just going to have to get used to buying fewer Louis Vuitton bags”, bewail American salesmen. Jeez, this is a real calamity, calling for emergency measures!
I read Tom Friedman’s column in the NY Times, asking young Americans who normally crowd restaurants to stay home, eat tuna fish and be afraid, very much afraid – but they do not heed his warnings. Well, the old boy has cried wolf too often. He tries to scare us, but I do not get scared, as Leo Tolstoy once said about a fellow writer. The great Western propaganda machine has run too many scares for us to care. Do you remember Iraqi WMD, evil al-Qaeda, world terror, Peak Oil, global warming, mad cow disease, bird flu? Do you know personally of even one person who suffered because of any of it?
Or look further back, into the great AIDS scare of 1990. Then, AIDS was supposed to destroy the world as we know it and kill billions; but actually it caused just a few casualties within the gay communities. Yes, condom manufacturers and the Big Pharma made a fortune and professional guilt-trippers accused us of being not-sufficiently-compassionate with the sufferers, but otherwise, it was just a scare. Now they want to scare us into eating tuna fish sandwiches.
This is not to say that they can’t succeed. If one shouts ‘Fire!’ in a crowded cinema, the results could be tragic even if there is no fire. And there are reasons why things happen this way.
The usual explanations refer to bankers being stupid. They did not know what they were doing when they flooded the markets with their cheap credit, or sold swaps or marketed derivatives. Alternatively, it is argued that they were so greedy that did not understand their long-term interests and ruined everything. But the bankers and the financial elite are not stupid, neither are they short-sighted. I believe that things happen because people intend them to happen, unless there are very strong proofs to the contrary. I believe that unless we do something pretty drastic, they will emerge out of this crisis even more rich, more powerful and in fuller control of our lives.
A similar development took place in ancient Egypt, we are told. There were some years of prosperity, and the clever guys hoarded the stuff; afterwards, some years of scarcity duly followed, and the ordinary folk ended up being indebted and enslaved to the clever guys.
You probably recognise this as the story of Joseph and the Pharaoh (Genesis 41). The Pharaoh had a dream of seven nice fat cows coming out of the Nile and feeding in a meadow. And suddenly, seven other, ugly and lean cows came up after them out of the river. “And the ugly lean kine did eat up the seven nice fat kine”, saith the Writ. So Pharaoh awoke and asked for Joseph’s advice; and he advised him to hoard the harvests up until the days of scarcity, when the collected harvests could be used – not just to feed the people, but to enslave the people. And so it worked: all the people of Egypt became slaves of the Pharaoh, thanks to the clever advice of Joseph. For this reason, the people of Egypt bore a serious grudge against Joseph and his tribe of financial advisers.
History is always repeating itself. Latter-day financial advisers have used the archetypal model of Joseph in the Bible, but they went it one better: Instead of enjoying prosperity and being prepared for scarcity, they orchestrated both. First, they opened the gates of credit and got a lot of people hooked. Afterwards, they shut the gates and ushered in their Armageddon weapon, the seven lean kine. The bottom line remains the same as of old: they intend to enslave America and the world.
Our like-minded friends on the Web (Mike Whitney) condemn technical tools – swaps, derivatives, ABS, MBS, CDO, CLO and other abbreviations. They get into the technicalities, how this device worked, how they convinced others, how they dumped and securitised the toxic debts. The “how?” part can be entertaining, but the “why?” should interest us more. If we deal with a burglar, we do not waste much time on discussion of his tools of crime, we look at the crime itself.
What did they plan to do? At Stage One, they turned the US into a great money-sucking device, a vacuum-cleaner for the world’s assets. They printed paper dollars, issued worthless bonds, generated trillions of debts. Income from Russian gas, Arab oil, Chinese labour, Japanese innovations, African ore, Swedish cars and French wine was trapped in this black hole. Michael Khazin, the Russian economist, explained that these criminals acted like any wastrel: they got into debt, and then they took their money and stepped out while leaving debts for the public to handle. They succeeded tin putting a lot of Americans and Brits into debt, and with these debt-promissory notes they swindled the rest of the world.
At Stage Two, they fleeced the ordinary Americans who had been quite happy to participate in the grand larceny of Stage One. Their bankruptcy does not hurt them a tiny wee bit. You do not have to be a Jew to use Jewish tactics, and the American bankers – Jewish and non-Jewish alike – took a leaf from traditional Jewish scam book and applied it on an unheard-off scale. And among these scams, bankruptcy was one of the most popular. Enron was a first try; the idea was a very successful one: you take a public commodity and steal it; eventually people will have to buy you out.
If their plan is completed, the ordinary people of the US will find themselves deep in debt, while the profits will go to a happy few. Their plans to “save the economy” are just follow-up for what they did earlier. A few guys make millions, salt their fortune away, and then ask the people to foot the bill, for otherwise, (God help us!) there will be massive layoffs among the PR companies who advertise for champagne in Kazakhstan. The remedy is also the same as it was of old. The people of Egypt could answer Pharaoh and his financial adviser Joseph: the collected harvests are ours, thank you for temporary storage, now please move away. Do not even dream that we shall indebt ourselves and our children in order to get what is ours by right.
Likewise, Americans may answer austerity planners, including Tom Friedman: you made money, now you pay back. You promoted the plan, now you foot the bill. You planned to confiscate our assets, now we shall confiscate yours. Take over private and personal assets of the fat cats, cancel their accounts, sell their houses and tangible assets. Make every person who was employed in a bank fully responsible for their bank’s failure. Lynch Goldman Sachs. Forbid bankruptcy. Try those responsible for the crash: they knew it is coming, they planned for it. It is not by chance that architect of the collapse Alan Greenspan swore his oath of Federal office on the Talmud in front of Ayn Rand, Satanist and creator of the Enlightened Selfishness cult. (Rand’s Atlas Shrugged reads like a novelization of Mein Kampf by Barbara Cartland, quipped our friend Ian Williams.) And Greenspan has been rightly described by Stephen Lendman as Public Enemy No 1.
This economic crisis provides us with some important lessons: World economy has been run for the last twenty years (and made a lot of progress) using no “real money”, just inherently worthless IOUs of paper dollars, promissory notes and bonds. The money we use is “monopoly money”, play money – and it still works! We should demystify money, understand that it has no real substance, that it is just a provisional device that may help accountants, and serve as measure of investments, but not the final measure of everything. The world can take the next step, and switch to issuance of some future zero-interest free-credit money, which will not enrich one group of people at the expense of another. Such money was used in Soviet Russia with great success, until the party nomenclature swapped it for the US dollars, reaping immense profits for themselves and leaving the rest of the public penniless. Now, the US nomenclature has decided to use the example of the Russian oligarchs and rip off the US public.
Do not panic, because that is what Friedman and Greenspan want you to do. Panic is a bad adviser. The crisis is imaginary: machines still work; the people still know how to do their jobs. The sharks will eat each other, but the small fish will escape the net. The Americans had a lot of good, if borrowed, time. Though a lot of it was stolen or wasted, some of the debts funded real improvements. Outside of the Anglo-American Neoliberal core, the economy is sound. A cooling-off period would not be too bad for the planet. Some job restructuring is called for – after the crisis, there will be less need for brokers and more need for menders. And as for the debts, there is a solution: instead of robbing the public, expropriate the expropriators – rob the robbers!