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<A HREF="http://www.zolatimes.com/V3.6/pageone.html">Laissez Faire City Times
- Volume 3 Issue 6</A>
The Laissez Faire City Times
February 08, 1999 - Volume 3, Issue 6
Editor & Chief: Emile Zola
-----
World Government Is Not Imminent?
by Wolf DeVoon
You can depend upon it: when a London Times economist swears that the
moon is made of dust and rock, then in reality it's green cheese. And if
Janet Bush is the soothsayer in question, assuring us that nothing's
amiss in the financial night sky, then lunar cheddar is well past its
sell-by date and starting to rot.
Last week, the perkiest little jackal in Murdoch's pack of news hounds
howled a seven-column banner headline that sent a jolt down my spine:
"World government is not imminent" it proclaimed (Times business
section, Jan. 27, 1999). Are we so close to global serfdom that
robo-hacks have been told to deny it?
Apparently so. Bush cites "deadly instability in world financial
markets" as the impetus for accelerating One World proposals. Argentina
wants to dollarize its weakening peso, Swedes and Danes are suddenly
eager to join the euro, and two leading Canadian economists have
helpfully mooted a single NAFTA currency--to economically merge Mexico
with the USA. "This rush to unite is an understandable emotional
reaction," Bush declares, "particularly for countries that have been hit
hard by the markets crisis over the past 18 months . . . [and some
economists] go even further, advocating a world monetary union: a
single, single currency."
You have to admire the brazen Murdoch chutzpah. Every word that followed
was calculated to turn heads in favour of financial fascism. "The
proponents of target zones and even of a world currency are not bonkers,
at least the ones I know," Bush explained. "In fact, they tend to be
people who are thoroughly fed up with the excessive fecklessness,
frivolity, incompetence and misused power of international capital. They
want to protect ordinary people trying to live in real economies . . .
Their motives are completely honourable."
I often marvel at the distance between financial columnists and factual
reality, and Janet Bush is truly in a class by herself. I don't know
which bank she deposits her paycheck into, but it sure ain't the First
National Bank of Lunatics, proudly offering their customers a portfolio
of "fecklessness, frivolity, and incompetence." Slamming capital markets
is sport nowadays, but it's complete bunk, no different than the Big Lie
pioneered by Hitler and Stalin. I defy anyone to show me a bank manager
or an investor who specializes in the misuse of capital. The real world
runs on reason and sober calculation of risk, especially in banking --
and I refuse to discuss this any further, because the facts are
abundantly demonstrated every business day in every teller cage, every
mortgage company, and every stock exchange, to the extent that decisions
are made by free market participants themselves, instead of being shoved
down their wallets (and yours) by feckless, frivolous, and incompetent
governments.
Murdoch's strident denial of imminent global government comes at
precisely the right time, because the One World bureaucracy is running
scared, despite all their smiling photo ops at the Davos World Economic
Forum. Five powerful, intersecting pressures are driving us to global
government, not much different than the way Native Americans once hunted
buffalo: by stampeding the whole herd over a cliff.
1. THE GATHERING EURO STORM
Two decades in the making, the European Monetary Union finally took off.
But what is it, exactly? Answer: a fixed exchange rate among 11 totally
different economies, who couldn't stick to a "flexible target" system
ten years ago that ended in farce when Britain was forced to devalue her
currency and drop out. I predict that the new single currency "euro" is
going to die an unpleasant death in about six months, because (a)
Western Europe is headed for a nasty recession, sending everyone for the
fiscal emergency exits; (b) Italian gangsters are busy printing a
mountain of counterfeit euro notes, to take advantage of mass confusion
when French francs, German marks, etc are confiscated; and (c) private
sector enterprise is being wiped out in Europe, a victim of increasing
regulation, low productivity, and punitive taxes.
Socialists are now in government in all 15 EU states, promising free
lunch with embroidered napkins for all, including Poland and a dozen
state-subsidized flagship companies. Watch what happens when public
employee trade unions take them at their word and present a list of
demands. Worse: all 21 left-wing political party leaders met in Vienna
last month to sign a European Socialist Manifesto suicide pact,
promising to end "harmful tax competition" among their respective
nations -- i.e., to drag everyone down to the weakest economy, the most
lavish welfare state, the uncompetitiveness attained by whichever EU
member imposes the highest tax on business and suffers the worst
unemployment (France? Italy?).
Correctly putting two and two together, the London Sunday Telegraph
immediately predicted strikes and bankruptcies: "The overwhelming
evidence is that Euro-Socialism has been a disaster for workers,
creating unemployment in France, Germany and Spain at levels not seen
since the Great Depression . . . The contrast with America is great
indeed. Last month alone the US created more jobs than France and
Germany have done in the past 10 years."
2. THE DAVOS CIRCLE-JERK
With Europe tied to a block of concrete and poised to jump from a
bridge, every economic witch doctor on the planet met in Davos,
Switzerland, for a round of caviar and champagne chit-chat. The result?
This year's World Economic Forum unanimously concluded that freedom is
risky and has to be outlawed.
Chancellor Gordon Brown, speaking for Britain, implored the group to
"quickly set up a new global standing committee of international and
national regulators to conduct regular and systematic surveillance of
our world financial system." Eisuke Sakakibara, Japan's deputy minister
of finance, agreed to "proceed speedily on the issue of a new
international financial architecture." Dominique Strauss-Kahn, finance
minister of France, called for "a commitment by G-7 members to
strengthen their co-operation by even more frequent meetings and
systematic co-ordination." Paul Krugman of MIT suggested a freeze on all
bank deposits to shore up shaky governments in South America. "My view
is that basically all short-term debt constitutes potential capital
flight," Krugman argued. "Brazil is at risk not only from foreign
lenders, but from anyone who can take money out of the country." U.S.
presidential heir-apparent Al Gore happily ruled out a "laissez faire
approach that caused so many of today's problems," calling instead for
"more cross-border reviews and co-operation" -- such as the World Health
Organization's proposed global ban on tobacco advertising and smoking in
public.
Of course, the weekend conference at Davos was just another junket for
bureaucrats and political poseurs, no more significant than a
wreath-laying ceremony at Dunkirk. But if every G-7 finance minister is
publicly stumping for global capital controls, what are they promising
each other in private? That word "surveillance" sounded mighty fishy,
coming from Gordon Brown, whose UK Treasury has sovereign jurisdiction
over two-thirds of Europe's foreign currency exchange. Private sector
lending to so-called "emerging markets" has plummeted to less than $5
billion a year, down 96 percent from $200 billion in 1996. At the
moment, G-7 mandarins are talking about freezing bank accounts and
stepping up surveillance. Confiscation is obviously next.
3. THE END OF HISTORY
Believe it or not, the world has bigger problems than Al and Tipper
forging a few deposit slips to balance bad debt in Brazil (perhaps with
another dose of Brady bonds and IMF credits). Brazil is a comic
sideshow, compared to Russia and Japan. No matter who does what to whom,
claiming Super 301 privilege among thieves, the trade surplus piling up
in Toyko has nowhere to go but higher into the stratosphere. No wonder
the Japanese are eager to join a One World government, since they're
holding $1 trillion in U.S. government bonds they can't spend without
risking a global implosion of confidence. The tidal wave of
U.S.-European multinational mergers is like a feeding frenzy on the
cheap, stripping cash from a shrinking industrial pie before the lights
go out.
And in Russia -- trust me, brother – the lights are already out. There’s
no way to turn 'em back on again. IMF rescue missions are an excuse to
dicker. But no one expects Russia to feed itself, or clothe itself, or
learn to sit up straight at the table and talk sense, ever again. The
1999 Russian budget, recently passed by the Duma concurrently with
another wave of assassinations, is "a piece of fiction, inconsistent
with the basic laws of economics . . . perpetuating a vicious cycle of
inflationary financing, wage arrears and weakened credibility,"
according to US officials quoted by the Financial Times last week. There
won't be any Brady bonds for Russia. And IMF transfers are creating a
financial pyramid scheme, providing fresh funds simply to pay off the
old loans that fall due, contributing zippo to the real Russian economy.
Growing talk about world government is a sign of geopolitical panic,
because the scope of post-Soviet economic wreckage quickly outstripped
our goody two-shoes McNamara-IMF Band-Aid mechanism.
4. THE END OF EXXON AND IBM
Nobody expected a 40 percent fall in global oil prices, and no one knows
what to do about it, either. Small wonder the Justice Department turned
a blind eye to the Exxon-Mobil merger. They'd let Bill Gates off the
hook, too, if he agreed to merge with an oil company.
Don't be surprised by events this year. Merger mania and skyrocketing
Internet stocks are the last gasp of our merchant banking paradigm,
selling unlimited blue-sky growth without reference to earnings or
dividends. Sushil Wadhwani, research director at Tudor Investment, put
the cascading Wall Street "weight of money" phenomenon into perspective
recently: "Although computers and the internet open up many new
opportunities, the same has been true in technological advances
throughout history," Wadhwani observed. "Is it really the case that the
productivity improvements implied by the steam engine, the telephone or
the aeroplane were less than that implied by the computer?" Good
question -- since output per worker has only risen 1 percent a year over
the last ten years, despite the introduction of computers.
The short service life of computers implies that their contribution to
overall productivity growth has been approximately zero. "The key point
is that computers make up only a small fraction of US capital stock,"
Wadhwani concluded. Success stories like IBM and Microsoft are basically
a fraud -- shipping a majority of their so-called solutions to
government agencies, where mountains of paper are filling bureaucratic
cubicles and document warehouses at an alarming rate.
After a decade of equivocal bullshit, Fed chairman Alan Greenspan
finally decided to admit the truth, in testimony to the Senate budget
committee last month. "The vast majority [of Internet stocks] are almost
sure to fail," he said. "When you are dealing with stocks, the
possibilities of which are either that it's going to be valued at zero
or some huge number, you get a premium in that stock price which is
exactly the same sort of price evaluation process that goes on in a
lottery."
Wall Street is not designed to be a lottery or a slot machine -- it's
the financial store of value where most people have pensions and savings
parked for predictable, long-term growth. Wall Street is supposed to be
our mechanism of industrial capital allocation, funding well-managed,
profitable companies and valuing them much higher than riffraff, who
make senseless crap like Ronco Spray-On Hair. The consumer technology
bubble is about to burst, kicking Yahoo and Netscape into the junkyard,
where they belong. "We will get a 40 to 50 percent sell-off," Gary
Shilling predicts, "but it is not going to happen all at once, because
people will keep on piling back into the market. It is going to happen
in a saw-tooth pattern until people are ground into submission." Halfway
to submission, watch everybody suddenly yell for global government and
fail-safe capitalism.
5. THE SHARKS AND BARRACUDAS
If you've been reading the financial press, perhaps you already know
that a new word entered the banking lexicon this year -- "bulge bracket"
ambition. It refers to global capital underwriting and lending, the
ability to do deals with governments like China, transferring hundreds
of billions of dollars in a single keystroke. Finally, these are players
that everybody is talking about and wants to control. They are few in
number: Citigroup, Deutsche Bank, UBS, Goldman Sachs, Merrill Lynch, and
maybe J.P. Morgan. The Japanese are out -- dead in the water and closing
up shop. The second-tier Europeans are busy talking about how to combine
to form a "bulge bracket" entity of their own, in order to survive. This
is the secret agenda that inspired European Monetary Union, merging 11
currencies into one, creating a pan-European legal framework that will
allow dozens of small fry to merge into a few, huge European banks,
probably one French and two or three Anglo-Dutch-German (depending on
when the UK finally joins the single currency zone). The people who are
driving this oligarchy are incredibly evil. They can bankrupt
governments, simply by refusing to roll over existing debt. Their
geopolitical guru was and still is Henry Kissinger, who once said: "The
illegal we do immediately. The unconstitutional takes a bit longer."
Faced with the power of Goldman Sachs, weaklings like Al Gore and Tony
Blair have their backs to the wall. All they can do to keep their little
brown noses above water is threaten to form a "global government."
Merrill Lynch will probably go for it, since it would simplify their
bookkeeping to have just one client and they can ditch a bunch of
obsolete computer systems that never worked right anyhow.
-30-
from The Laissez Faire City Times, Vol 3, No 6, Feb. 8, 1999
-----
Published by
Laissez Faire City Netcasting Group, Inc.
Copyright 1998 - Trademark Registered with LFC Public Registrar
All Rights Reserved
Disclaimer
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founding trust. Just as the New York Times is unaffiliated with the city
of New York, the City Times is only one of what may be several news
publications located in, or domiciled at, Laissez Faire City proper. For
information about LFC, please contact [EMAIL PROTECTED]
-----
Aloha, He'Ping,
Om, Shalom, Salaam.
Em Hotep, Peace Be,
Omnia Bona Bonis,
All My Relations.
Adieu, Adios, Aloha.
Amen.
Roads End
Kris
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