Financial Chaos And The Smell Of Napalm In The Morning

Financial Chaos And The Smell Of Napalm In The Morning

By Peter Ewart

May 13, 2010 "Information Clearing House" -- What in God’s name should we make of it all? On Thursday, the New York Stock Exchange had its most severe plunge in history - nearly 1000 points, before it recovered minutes later. On Monday, it shot up 400 points, one of the biggest spikes in memory. All told, the variance was around 1400 points over the period of a couple of days.

The context for this, of course, is the financial turmoil that has spread from Greece and is sweeping across Europe, threatening the very existence of the European Union and the Euro as a common currency. Last week alone, it is estimated that global stock markets lost $3.7 trillion of their value as a result of this crisis (1). According to the Canadian finance minister Jim Flaherty, not even the Canadian economy is immune from the financial contagion.

There is no doubt about it – the global financial sector is still in a period of extreme volatility and instability despite massive and unprecedented bailouts from the coffers of governments around the world a year ago. Now the European financial sector is to receive “the mother of all bailouts” amounting to an astounding $1 trillion more.

But there is a troubling feature of this situation - a “financial war”, so to speak – that is not getting the attention it should. As Anders Borg, Swedish Finance Minister has put it, one of the main contributing factors to the extreme volatility in the financial sector is that “wolf packs” of speculators are roaming around Europe looking to feast upon the economic carnage (2). These include bond and currency speculators, as well as hedge funds, banks and other financial institutions.

The situation has become so grave that German Chancellor Angela Merkel has said that “the [financial] speculators are our adversaries” and that financial markets have become “perfidious” (3). What she does not clarify, of course, is that German financial institutions, along with U.S.-based Goldman Sachs and others, have played a big role in precipitating the turmoil, including that which is currently unfolding in Greece.

The barbarity of all of this is no secret, giving rise to great tragedies in previous years as well as today in Europe. David Cohen, an economist with Action Economics, comments that “the bond market vigilantes are still hungry, they smell blood” (4). In his opinion, despite the massive bailout package, the situation could become like the 1997-1998 Asian crisis, where “countries were attacked one by one”

Edmund Conway, Economics Editor of The Telegraph newspapers and website, dismisses the idea that the $1 trillion bailout “will help clamp down on the ‘wolfpack’ of speculators baying around the wreckage of the euro area.” According to him, “if anything, it is rather likely to make billions for the speculators, who will make a killing on the big increases in [stock] prices today, and will make another killing when there is another dip” (5).

Thus these financial speculators seek out or - as has been suggested by various analysts - actually cause or precipitate financial and economic chaos. Like the Robert Duvall character in the movie “Apocalypse Now”, they “love the smell of napalm in the morning.”

Just who are these financial speculators? Well some are no doubt respected “pillars of the establishment” and “respected business leaders”. But, as Danny Schechter comments, “despite all the rules that govern the markets or regulations designed to assure transparency and accountability, crooks, swindlers, and even gangsters are commonplace” (6).

Whether “pillars of the establishment” or crooks or gangsters or just individuals who “love the smell of napalm”, they all have one thing in common though - when it comes to financial speculation, the flag they hoist is black as night and has the skull and cross bones emblazoned across it.

How can such individuals have so much power over the futures of millions of people and, indeed, of entire countries? One of the features of the last several decades in North America, Europe and elsewhere has been the tremendous growth in the financial sector relative to other sectors of the economy. Large parts of this financial sector have become parasitic and a danger to economic stability, as can be seen in the sub-prime mortgage crisis in the U.S., the debt crisis in Greece, and other examples.

Politically, financial institutions have become extremely powerful. As even some members of Congress have admitted, “the banks own the U.S. Congress” and have contributed massive amounts to the election campaigns of Barack Obama and other prominent political leaders, both Democrat and Republican (7).

What can people do in the face of this extremely volatile situation, whether they live in Europe, North America or elsewhere?

One of the things we can do is to take the discussion out of the hands of the financiers, as well as the political pundits and politicians who are in their service. They are desperately trying to blame ordinary people for the financial chaos, claiming that is their high wages, pension funds and benefits that are the source of the problem – i.e. people are living “beyond their means”. Furthermore, they claim that banks, hedge funds and other financial institutions are absolutely vital for the economy and cannot be allowed to fail. Let the population fall, let the country be ruined, but whatever you do, keep propping up the financiers and moneybags.

Now it is true that financial services are a necessary part of a modern economy. Indeed, they are as necessary as utilities, such as water, gas, and electricity. So then, why couldn’t financial services actually be converted into a type of public utility and be owned, operated, and stringently regulated as such?

In other words, stop bailing out the banks and financiers. Let them fall. In their place, set up public non-profit banking institutions, similar to credit unions, and ban the hedge funds, currency manipulators, and other speculators as pirates who constitute a threat to human society.

Jesus cleared the moneylenders from the temple. Given the financial chaos of the last several years, maybe it’s high time to follow his example.

Peter Ewart is a writer, columnist and community activist based in Prince George, BC. He can be reached at: peter.ewart@shaw.ca


References

(1) Nazareth, Rita. Bloomberg.com. May 10, 2010.

(2) Neuger, James. Bloomberg.com. May 10, 2010.

(3) Today Online. May 10, 2010.

(4) Cohen, David. CBC.ca. May 10, 2010.

(5) Conway, Edmund. TelegraphUK. May 10, 2010.

(6) Schechter, Danny. Information Clearing House. May 9, 2010.

(7) Grim, Ryan. Huffington Post. March 29, 2009.