Globalisation and hit men push finance aristocracy trans-Atlantic
Broadsheet newspaper publication: http://www.dailynews.lk/2009/09/25/fea01.asp
Globalisation and hit men
push finance aristocracy trans-Atlantic
By Wendell W Solomons
Summary: Anglo-American finance institutions find themselves forced to cough up larger and still larger pay rewards for their hit men. Britain’s Chancellor of the Exchequer explains tactfully, “Our aim should not be to prevent rewards where they are deserved, for long-term success or hard work.”
Today’s rules of unregulated markets allow executives to go out and become financial raiders in their own right — in competition with their previous financial home. This headache shakes the firms at a time when France and Germany at EU summits ask for a ceiling on the incomes of executives of financial institutions.
Yet, there's more. Besides the EU, globalisation now causes the G-20 to take up the risk to world trade posed by financial freebooting. China, India, Russia and Japan (which states that it can no longer play the role of "Yes-man") belong in the G-20 which represents two-thirds of humanity.
A diplomat who served Australia for more than a quarter century brings up the year-2005 published work, “Confessions of an Economic Hit Man” by John Perkins.
This stimulates thought.
(a) Have the hit men been part of the plan to make us walk the economic gangplank today? (b) In the alternative, do events in the market suggest that the world’s traditional finance aristocracy walk the razor’s edge to avoid losing control of its financial raiders whose ranks have expanded into thousands? These thousands have been saturated too by the media catch-phrase of the last three decades — “Free to Choose.”
The US Federal Reserve has been placed on the horns of a dilemma because financial institutions like J P Morgan pay increasingly large salaries and bonuses to keep their financial raiders at home instead of their zipping out to carve for themselves a part of the cake like the infamous Bernard Madoff who took a $ 60 billon wedge of savings, including those of his friends. In this next quote, we see a careful US Federal Reserve chief trying to keep financial firms from being restrained in their endeavours:
“Forcing large, troubled financial firms to shrink is not a useful solution to the dangers created by ‘too big to fail’ institutions, Minneapolis Federal Reserve President Gary Stern said in an essay released on Tuesday.’
“If we exclusively embrace a reform that misleadingly promises victory over TBTF by constraining the size of large financial firms, we may squander the time and resources needed to address the problem at its roots,” Stern said. (Reuters, Apr. 21, 2009)
Australian diplomat Reg Little recollects how John Perkins had described life as part of an elite group trained to “utilise international financial organisations to foment conditions that make other nations subservient to the corporatocracy running our biggest corporations, our government, and our banks.”
The Australian diplomat adds —
“Perkins’ second book on financial strategies, ‘The Secret History of the American Empire,’ invites readers to revisit and reconsider events like the 1997 Asian Financial Crisis and ponder on it as the product of a team of economic hit men. It also raises daunting questions about the longer-term viability of major global institutions like the World Bank and IMF.”
Those then are the dimensions of the hit men’s world and scope of their know-how. We have a salient example next of the men who want to have their cake and eat it.
Zombie Hit Men
Lawrence Summers, a nephew of economics text-book writer Paul Samuelson, was placed on a team to conduct economic reforms in the Baltic republic of Lithuania. Within a year of his team’s effort, the economy of the republic turned pale. Suicide rates rose to the highest in Europe. Lawrence Summers played out more than the familiar role of loan salesman for Wall Street banks. He ambled on as a master zombie, groomed by what US journalists in 1976 had called "Voodoo Economics".This behavioural nudging was a legacy from Great Communicator President Ronald Reagan who promoted Milton Friedman to Presidential Economics Adviser, the position he had hankered for after the slaying in 1962 of President John F Kennedy. Friedman had been translating for two decades for the psyche of hit men such as Lawrence Summers, the social philosophy of Ayn Rand.
Rand, Ayn (1905-1982) was named Alice Rosenbaum in St. Petersburg by her non-observant Jewish family. A fan of early movies, she had chosen to study social pedagogy in Bolshevik Petrograd. From there she carried her stock-in-trade across oceans to the USA. Her movie scripts to adjust behaviour flopped and she took to typing stories instead. A wealthy sponsor was found through the grapevine to finance the printing of her work and force-feed its promotion on university campus.
In the USA of the 1950s and 1960s Rand received promotion as a cult figure for college students. By 1965, courses on her books were offered in as many as eighty American cities. Wearing a $ sign as a brooch in her dress, the chain-smoker taught that selfishness is a virtue, that altruism is a vice, that the unfettered capitalist, Mr. Top Hat of her writings that began in the 1930’s, was the best possible persona for the world.
Lest we miss her purpose, Martin Seymour-Smith, a critic, explains:
“Unfortunately her crypto-totalitarian and ultra-simplistic ideas have had some influence on the conservatively bred young, since they allow people to be ruthless without a bad conscience. Her ‘philosophy’ is capitalistic-Superman (as in the figure in the comics).’
He continues,
“The ‘great’ men are those who use others, in the name of ‘reason,’ with an enlightened ruthlessness.” As icing on the cake, he adds, “The Fountainhead” — like her other books — is offensively ill written (‘pedestrian, pockmarked with short, clipped staccato sentences’).”
Many defined her social philosophy as one proposing a dog-eat-dog outlook. Gore Vidal described her outlook as “nearly perfect in its immorality.”
Ayn Rand and Milton Friedman brought forth men like Lawrence Summers as zombie functionaries. Pushed out of Harvard by teachers but himself ‘Too Big to Let Loose,’ the same Summers has been promoted by the financial aristocracy to the position of head of the National Economic Council at the White House of President Barrack Obama. Hopefully, Summers will now face the music and dance — promoting discipline on the turf as Godfather of financial raiders.
Alerts
Financial icon George Soros with an intellectual coterie of his own, anticipated that the hit men would shift the anchor of the aristocracy. He moved in with an article called “The Capitalist Threat” a decade ago —
“Unsure of what they stand for, people increasingly rely on money as the criterion of value. What is more expensive is considered better... People deserve respect and admiration because they are rich. What used to be a medium of exchange has usurped the place of fundamental values, reversing the relationship postulated by economic theory. What used to be professions have turned into businesses. The cult of success has replaced a belief in principles. Society has lost its anchor.” (‘Atlantic Monthly’, Volume 279, No. 2, February 1997.)
Two centuries ago a forecast on lost moorings had been penned: “This is the abolition of the capitalist mode of production within the capitalist mode of production itself... It establishes a monopoly in certain spheres and thereby requires state interference. It reproduces a new financial aristocracy, a new variety of parasites in the shape of promoters, speculators and simply nominal directors; a whole system of swindling and cheating by means of corporation promotion, stock issuance, and stock speculation.”(Marx’s manuscript edited and published by F. Engels in ‘Capital’, Volume III, Chapter 27.)
Contemporary US commentator Laura Knight Jadczyk follows on —
“And so it is: such a state of affairs cannot last long... and, as Lobaczewski says, the outcome is inevitable. Sooner or later, the reality this psychopathic elite think they create is going to turn around and bite them. In fact, it is already beginning to. And that is due to another psychopathic trait: the inability to remember the past or conceive of the future and the consequences of their actions.’
“Goaded by their character, psychopaths thirst for global power even though it ultimately condemns them to death along with millions — or billions — of others. Psychopaths do not have the capacity to understand the catastrophes that they repeatedly bring on themselves and the world. Just as germs are not aware that they will be burned alive or buried deep in the ground along with the human body whose death they are causing, so the psychopath does not understand that the only reality he is creating is the reality of his own ultimate destruction. (http://laura-knight-jadczyk.blogspot.com).
Old Clan versus New Legions
How did the number of financial raiders reach cataclysmic size? In part, Rand and Friedman had chanced to imperil the financial aristocracy by promoting the conversion of an old system. Here is a case study to reflect what the old system was.
A man named Jacob Schiff emigrated from Germany and settled in the US in 1865. After ten years in the market, he was settled for marriage with the daughter of Solomon Loeb, the head of Kuhn, Loeb & Co. Thus was Jacob Schiff incarnated in the firm’s destiny in 1875.
Jacob Schiff had bonded with a social clan in the USA. Yet, Schiff’s family had other resources too. The Schiff patriarch, a Rabbi, shared a mansion in Frankfurt with the Warburgs (of the old Venetian Abraham Del Banco family) and with the Rothschilds (newer to the money trade but future king-pins in financial London.) Thanks to these ties and underwriting with money, by 1900 Jacob Schiff came to be advertised as the prime mover for a $200 million war mobilisation loan for then distant Japan.
Awarded (a) state honours by the emperor and (b) loan interest on the public finance by the Japanese people — Schiff reached global landfall. His financial fraternity was also (c) playing Japan against Russia for the Russo-Japanese war of 1905. The fraternity’s business background to the blood and gore event was that Russia was the last major European power that remained to be taken into bondage by loan salesmen.
As decades proceeded, the number of hit men increased by leaps and bounds. During that process Jacob Schiff’s international cruise ship, Kuhn, Loeb & Co, hit reefs. According to a standard reference:
“The firm’s fortunes began to fade following World War II, when it failed to keep pace with a rapidly changing investment banking industry, where Kuhn, Loeb’s old-world, genteel ways, did not seem to fit... The firm lost its independence in 1977 when it merged with Lehman Brothers, to create Lehman Brothers, Kuhn, Loeb Inc.”
That was not the end of the so-called genteel affair. On September 15, 2008, take-over giant Lehman Brothers filed for bankruptcy protection following the massive exodus of most of its clients, drastic losses in its stock, and devaluation of its assets by credit rating agencies. The Lehman filing marked the largest bankruptcy in U.S. history.
When National Idea Meets International Idea
Seeing more doings of zombies in the market, financier George Soros also stated that Milton Friedman’s neo-liberalism (with Ayn Rand hidden at the spinning wheel,) “is a false and dangerous ideology” (‘The New Republic,’ September 2002).
The head of the Catholic Church, Pope John Paul II, dealt with the dangers of neo-liberalism too. He chose to visit Cuba and make his pronouncement at an open-air mass on January 25, 1998. By then he had witnessed neo-liberal experts conjure up despair in his native Poland.on their advertisement of prosperity.
Russian Patriarch Cyril II visited miners in the coal-producing region of Donbas in summer 2009 and said,
“[This city] Gorlovka, like the whole of the Donbas region — where people earn their daily bread by the sweat of their brow and risking their lives — is a locality of miners, metallurgy workers, land workers and chemists” he declared, “And your labour produces real value. If the whole word laboured like this ... there would be no crisis…”
“Honest workmen pay for those who create money out of thin air.” (APN, July 31, 2009.)
The Patriarch’s discussion of fair-play emerged in another form at the EU Brussels summit in mid-September. French President Nicolas Sarkozy, who led the charge against exorbitant levels of banking executives’ booty, threatened to walk out of the conference if no stringent compensation rules were passed.
“The bonus bubble burst tonight,” added Swedish Prime Minister Fredrik Reinfeldt, whose country holds the EU presidency.
“We have agreed to say that enough is enough and we need to move away from the current culture of compensation based on short-term performance.” (BBC, 17 Sept. 17, 2009)
Yet, Democrat President Obama is forced to respond that he is against being ‘over-prescriptive’ on pay.
* * *
In the 1950’s America emerged as the world’s richest nation and continued receiving the attention of the financial city of London for the geopolitics of the 1-sq-mile financial city had bankrupted their British host in both World Wars. Today an interlinked London-New York financial clan dreams up taxpayer bailouts (1) to accommodate its prosperity and (2) to keep its financial hit men from straying.
Britain’s Chancellor of the Exchequer in a September 2009 speech to the Scottish CBI, said that bank bonuses and pay needed solutions which were “global in scope and practical in action,” and international co-operation was needed to prevent banks playing one country off against another.
“Our aim should not be to prevent rewards where they are deserved, for long-term success or hard work,” he said. (BBC Sept.3, 2009)
Unlike in Jacob Schiff’s day, marrying the financial house’s daughter won’t accommodate legions of hit men. Simple arithmetic of the day has demanded instead that raiders’ booty should keep building up. So if the financial aristocracy can’t pirate enough booty, its hit men will abandon ship and freeboot in competition…
The financial aristocracy will continue its fall between the devil and the deep blue sea at the September 2009 G-20 meeting in Pittsburg and successive ones. It is a difficult geography to play —
1. A trans-Atlantic game against the EU;
2. One against India, China, Russia and Japan who are among the two-thirds of the world’s population that globalisation sees represented in the G-20;
3. A cat-and-mouse game of the financial aristocracy with its own in-house raiders.
Further daydreaming by the financial aristocracy about further taxpayer bailouts may bring to the fore a central issue: that its centrepiece is not the Bank of England that was nationalised at the end of World War II. The aristocracy’s vessel is the privately owned US Federal Reserve for whom steaming presses churn out paper dollars to ‘buy’ goods from the world. Democratic President John F Kennedy was slain after his edict issuing a competing government dollar, and that leaves to the world community the task of dislodging the abusers of the US Federal Reserve.
Thomas Jefferson wrote in 1821, “The flames kindled on the Fourth of July 1776 have spread over too much of the globe to be extinguished by the feeble engines of despotism; on the contrary they will consume these engines and all who work for them.”
About the Author
Reel Deal: Who wants to be a superhero?
A movie based on a comic book, “Kick-Ass” ponders what it would be like if people tried to be superheroes in the real world. The flaw, of course, is that the “Kick-Ass” world isn’t the real world at all. It’s not even in the same zip code.
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