The bold new era drove on; the under-regulation responsible for economic chaos in inter-war years, the chaos which the Bretton Woods agreements sought to contain, was renewed. Chaos was seen as creative now. With the lifting of currency controls around the world, money started whizzing around the world at ever increasing speed and complexity, a supercharged hyper-reactive flow of energy, inexorably seeking its natural level, the moment-to-moment points of highest return. Towers could be sent soaring into the sky only to see the ground below them disappear overnight.
In 1992, the UK got a taste of what massive international capital working in concert can do, when the government were humbled in the events of Black Wednesday. The UK were forced to leave the European Rate Mechanism for failing to maintain the agreed lowest value for Pound Sterling. This might have been the first time a lot of people were aware of this sort of power, (maybe even cabinet members, too), this demonstration of an overwhelming international financial vastness that exists that can bully a government as large as the UK’s. For many this was the first hint that it wasn’t national sovereignties that were in charge, there were greater forces in the world.
The leader of the pack that hunted down the UK that day made £1 billion profit by short selling Sterling, which was a lot of money in those days. To have made a billion in profit, we imagine that the sums being played with must have been truly colossal.
The destructive power that could be brought to bear by unrestricted flows of superheated capital was shown in what happened to thriving Asian economies in the financial crisis of 1997, Indonesia, South Korea and Thailand being hit the worst. Colossal sums of international capital had flowed into these countries, bringing an economic miracle, land values soared. In 1997, as soon as there was a downturn in the unbelievable returns that these investments had been earning, all the money is suddenly withdrawn, like standing in a hot shower that suddenly turns cold.
There seems to have been no logical reasoning behind this flight of capital, a slight wobble had become magnified, and the money was suddenly gone. It ruined economies and snatched away the ambitions and confident expectations of millions.
And it provoked, of course, a global financial apocalypse scenario, which brought in the IMF. Once again, the debt lever and the free trade lie was used to open up economies. The IMF have been like one of those birds with great big bills who prize open shellfish. And so these nations had to undergo the structural readjustment treatment and they had to remove restrictions on foreign ownership of their businesses, which was the cue for Western corporations to enter the wreckage of these ravaged economies and pick up rich pickings from what were now desperate people who had to sell for what they could get.
If that had done deliberately it would be brilliant, you’d have to admire the evil genius of it, using the overwhelming force of vast amounts of capital as an instrument of expropriation of a nation’s businesses and resources. Of course, it wouldn’t be possible to actually consciously plan this? But it’s what in effect happened. Michel Chossudovsky, Professor of Economics at Ottawa University, used the term global financial warfare to describe a system where increasingly huge benefits flow to Western banks and corporations from the people of the poorer world.
And it is almost as if behind the mirage of bringing freedom to the world, there was actually a grand plan to keep the world subverted and as a rich hinterland. Keeping global business free and fast and fluid, dynamic and unstable, in such an asymmetric field, is precisely what creates the opportunities for the dominant players to take their pickings and siphon money from much smaller and defenceless economies. There isn’t the option of not playing the game, that's been made clear.
What is called casino banking is particularly lucrative for banks, because this is a casino where colossal international capital is the house, in a game with captive players, in a game that they can’t lose. If they ever did lose, everyone else would have to cover their losses, anyway, otherwise it would be the end of civilisation.
The opportunities to make money here are themselves the product of the massive inequities of the world economy, and are opened up by the instability caused, in part, by the very reason of hypersonic speculative money racing around the world, causing countries to lose control over events. Instability and turbulent uncertainty are the opening, the opportunity for expert thieves to appropriate others’ earnings.
This process whereby vast amounts of capital can flood into somewhere for a while, then race away again somewhere else, on the movement of a percentage point about something thousands of miles away, and then return to the chaos caused to pick up assets, where the price has become exactly right, is described by Nobel Prize winning economist, Joseph Stiglitz as the Hot Money Cycle.
The way everything unfolds always seems to trigger some mechanism which transfers wealth to the rich of the rich world at the expense of the poor of the poor world and the poor of the rich world, and always keeps the prices of their commodities and their labours low.
It’s as if we met extra-terrestrials, and they had far superior power and technology, how would we feel? We’d be praying they were benign. That’s the position the Third World has been in for centuries. And the rich world, the first world, hasn’t been benign; they’ve only ever been after one thing. None of the rich nations’ economies developed under the trading conditions new nations found themselves in, or possibly could have done. To get on in the world wasn’t ever possible for the hopeful new nations of the post-war, that was a brief mirage. Everything is loaded against them.