The Dictatorship of Finance Capital Made in USA

One of the grand virtues of the Promethean protest march against the unrelenting advance of transnational capital in Genoa is that it exposed  not only the criminalisation of the social policies of the so-called 'democratically elected' governments, but has sharply focused debate, once again, on the criminalisation of the international financial, monetary and trading systems.

The operational mechanisms of this triad have always been rigged in the interests of finance capital that masquerades under the fetishism  of free markets and democracy. The epicentre of this radiating force is the dollar, at once a medium of exchange and a political bludgeon in the service of US imperialism.

It is a hegemonic force on foreign exchange markets in which 75-80% of international transactions are carried out. The dollar and its workings are one of the highest embodiments of the dictatorship of finance capital.

The deliberate smashing of Bretton Woods...was triggered by the policies of the US government... The upshot of the collapse was that it conferred on US imperialism the boundless capacity to print greenbacks - with accountability to no one.

But the dollar and its master are not beyond the realm of vulnerability... The continued erosion of stock markets everywhere is indicative of the dimensions of the swelling crisis.
[Frederick F. Clairmont, Dilemmas of Imperialism: The Enfeebled Dollar (Economic & PoliticalWeekly, 10 Nov. 2001, Vol xxxvi No.45 )]
 

Volatile Speculation

One of the major debates in the recent conference at Porto Alegre was the parasitical role of the tax havens and the crescendo of volatile speculative funds that dominate world financial markets. It was pointed out that daily over $1.2 trillion of foreign currency is bought and sold...  The growth of highly speculative markets is considerably higher than that of world GDP and international trade. In a world of chronic overproduction, speculation is the only alternative. [Frederick F. Clairmont, in his paper given at the conference]

The End of Globalisation?

The world economy is enduring the worst slowdown in a generation... For the first time in the modern era of global integration, the world's biggest economies...have stalled at the same time. As a result, the principal measures of economic integration, cross-border flows of goods and capital, showed no advance last year. After growing by 12% in 2000, and averaging 7% throughout the 1990s, the volume of global trade was virtually stagnant in 2000. Foreign direct investment flows also slumped by nearly half. John Gray, British political scientist wrote that: "The era of globalisation is over. The entire view of the world that supported the market's faith in globalisation has melted down". [Economist 2.2.02]

Obey Ye The Markets!

The world is now increasingly governed by market-based economics, where governments have passed power to the market place, the market is supreme and governments must not interfere. Large players dominate markets and small players have no influence and no power. The resulting feeling of impotence is one of the reasons for demonstrations that have been held in recent times outside meetings of the World Bank and the International Monetary Fund. [Malcolm Fraser,  SMH  21.2.02]

Hoping for the Best, Preparing for the Worst?

In the final analysis, it's what consumers do that matters to the state of the economy, but in the coming year it is the behaviour of business that poses the greatest risks to growth...  American company executives are not nearly as confident about the outlook as its economists and financial markets are... There are also suggestions that after a decade of heavy borrowing... many US companies have over-extended balance sheets. If so the focus will be on cost cutting not expansion... In Australia the latest survey of manufacturing industry shows only slow growth, and demand for building products is falling.[Ross Gittins, SMH 11.2.02]

Corporate Collapses

The banks keep assuring us that the rash of corporate collapses in Australia during the past six months is a series of one-offs. But HIH and Harris Scarfe and One Tel  present a clear pattern of accounting that is radically removed from reality. This is a scenario that is made all the more frightening by the complete fiction that are the accounts of energy trader Enron - until its demise the US's seventh largest company. The banks are right in one respect - that these collapses are not the result of a failing economy. A lack of proper accounting is more frightening and more insidious. If what sits beneath the published financial figures is a lie, then investors are extremely exposed. [Elizabeth Knight, SMH 30.1.02]

Corporate Scandals and Audit Failures

Current events might create the impression that corporate financial reports, the quality of company profits, and the standard of auditing in America have suddenly and simultaneously deteriorated. Yet that would be wide of the mark. The deterioration has actually been apparent for many years... The place to start is auditing... This is only the latest string of corporate scandals involving appalling audit failures... Over 700 American companies have been forced to restate their account. What should be done? The most radical change would be to take responsibility for audits away from private accounting firms and give it, lock, stock and barrel, to the government. A simpler suggestion is to take the job of choosing the auditors away from the company's bosses... Instead a government agency would appoint the auditors. Also there should be much fiercer statutory regulation of the auditing profession. Hitherto, auditors have managed to get away with the fiction of self regulation. [The Economist 9.2.02]

Quis Custodiet Ipsos Custodes? [Who will check on those in charge?]

Federal Treasurer Peter Costello signaled he would make the overhaul of auditory regulations  a priority, and attacked the profession's industry standards. Following the Enron scandal in the US, and a royal commission continuing into the collapse of HIH,  Mr. Costello said the government would tackle conflicts of interest and legal liability of auditors.["Navigator", in AFR 10.2.02]

Physician Heal Thyself?

The chief executive of the Commonwealth Bank, David Murray, has called for a dramatic improvement in the standard of corporate governance... He said some boards in Australia had become complacent, and advocated that companies re-examine the role of auditors, accounting standards and related party transactions. This followed a recent statement by the Treasurer, Peter Costello, that the Government would tackle conflicts of interest and legal liability for auditors in an effort to improve corporate  governance. [Robert Guy and Tony Boyd, AFR 14.2.02]

The Quiet Death of Australian Economics?

The decline in popularity of economics at university has been attributed to the rise of the business school. Economists consoled themselves by arguing that the market shift was because these courses were perceived as being more vocationally oriented than economics... The decline...coincides with the decade long clamour against economic rationalism... The public reputation of economics and economists was on the nose... Despite the rank unpopularity of economists, the 80s and 90s were the era of rampant economism... The Australian economics profession was once known for its interventionist, nation building streak. That was long ago, for today the syllabus... resembles that offered by any American campus... The local economics profession has become a "minor sub-branch of the American Economics Association". The 掲atal embrace' of American economics means that the local variety is infected by the worst vices of its parent. Mainstream economics has shrugged off its public and noble mission and fallen in upon itself. [Alex Millmow, Arena Magazine, March02]

Opening the Door of the Dismal Science?

 The new branch of behavioural economics, (or post-autistic economics) is opening the door of the "dismal science" into the messy areas of human endeavour that psychologists normally cater for more cheaply... But the breakdown of homogenous theory is not just causing ructions in those neat linear corridors occupied by our economists... The practice of specialisation that once kept economists confined to numbers, and scientists in the laboratory, is breaking down within the academies as the more adventurous scholars look for answers across the disciplines... In France, students at the Sorbonne... have forced a government recommendation for sweeping changes in the way economics is taught. [Deirdre Macken, AFR 9.2.02]

Large Grains of Truth?

The essential charge against globalisation is that it is a conspiracy of the rich against the poor. This is alleged to be so within the developed economies, but also between the developed and the developing economies. Unionists and others who oppose globalisation for their own domestic reasons seek the moral high ground by arguing that globalisation makes the world's poor poorer. These claims are fundamentally mistaken. But they are kept alive by too many grains of truth... Although a third of the developing countries have done well from globalisation during the past 20 years - the other two thirds have gone backwards. [Ross Gittins, SMH  4.2.02]

Many Are Called, But Few Are Chosen?

Two thirds of developing countries have not gained from globalisation. This group includes countries from sub-Saharan Africa, the Middle East, and the former Soviet Union. They account for 2 billion of the world's population, and are predominantly exporters of primary products. These countries have suffered an outflow of capital, and life expectancy is falling.[Ross Gittins, SMH 2.2.02]

In Australia the Rich Are Richer and Live in Sydney

Average taxable income in Australia's wealthiest post code, Darling Point 2027, was an estimated $105,486, four times more than the adjacent post code. Nine of the top ten post codes in Australia were in Sydney, and included Balmoral ($89,235), Bellevue Hill ($86,194) and Hunters Hill ($83,715). The tenth was Toorak in Victoria with $95,097). [Fiona Buffini, AFR 14.2.02]   Andrew McCallum, president of the Australian Council of Social Service, warned that the widening discrepancies threatened to polarise Australia.  While Sydney dominated the top end of the list, the ACT recorded the highest average taxable income and the highest increases among the states, followed by NSW and Victoria. The lowest average income was in Carcuma, S.Australia - $22,999.[ Nic Leys, SMH 14.2.02]

Some Are More Equal Than Others

A recent study shows that on average all Australian households enjoyed higher incomes in 98-99 than in 88-89. But while those of the top one fifth increased by 14%, those of the bottom one fifth grew by only 1.5%; the incomes of the middle fifth grew by 10.2%. [Julie Macken, AFR 13.2.02]

Sustainable Inequality?

The richest 50 million people in the world are in Europe and North America, and have the same income as 2.7 billion poor people. The slice of the world cake taken by the top 1% is the same size as that handed to the poorest 57%. The economist who did the calculations, Branco Milanovic, and published them in the Economic Journal in January 2002, wondered whether this state of affairs is sustainable. [Larry Elliott, Guardian Weekly,  24.1.02]

Greed Inc. and Short Arms Deals

In the USA some executives are walking away with huge personal fortunes, whilst many employees are losing significant parts of their pension funds. Gary Winnick, for example, a former executive at the junk bond group, Drexel Burnham Lambert, founded Global Crossing in 1997, and sold shares worth $US734 million, before it collapsed a few years later. In 2000, Winnick drew a salary of $785,833, a bonus of $1.03 million, and other payments of $57,000. One compensation expert said that his pay was not high by US corporate standards. It was said that the deals he did were done at arms length, but one expert said the arms were very short: "This perpetuates an atmosphere of cronyism and clubbishness that makes it easy for board members to forget that they are there on behalf of shareholders".  [From the New York Times, cited in SMH 14.2.02]

The Commodity Curse

Since 1990, Australian inflation has fallen to be about the same as the USA; the long term decline in the terms of trade has ended, due to falling import prices and the narrowing of the current account deficit... But a dependency on the export of commodities has not helped the currency... Falling commodity prices have been a fact of life for centuries and until the Australian dollar decouples from commodities, they will continue to be the currency curse. [Stephen Wright, AFR 13.2.02]

Those Who Pay the Piper...

Big corporations remain the largest funders of political parties. Examples are the retail and food industries, and tobacco: Philip Morris, British American Tobacco, Pfizer, and Glaxo Smith Kline. On last year's figures, Labor was the best funded party, with $31.9 million. The Liberal Party received $21.8 million, the National Party $6.6 million, and the Democrats $1.2 million. [Wilkinson, Allard & Sexton, SMH 2.2.02]

United States of Australia?

Some of the biggest business names in the USA are supporting a proposed free trade agreement between Australia and the USA. A US-Australia business leaders' forum in New York was attended by John Howard with a "who's who" of Australian business. He told reporters that there was very strong support for a free trade agreement within the American and Australian business communities. He said it would be hard to create, but now is a good time to try. [Steve Lewis, AFR 2.2.02]

The American Empire

The indispensable instrument for maintaining the American empire is its huge military establishment. The American military ... is becoming an autonomous system. Today, the military is an entirely mercenary force, made up of volunteers paid salaries by the Pentagon.  As their size and prominence grow, the armed forces... tend to displace other instruments of foreign policy implementation... What grows is militarism. The armed forces can... deliver death and destruction to any target on earth and expect little in the way of retaliation... Barring an unforeseen reform movement, it seems most probable that economic contradictions will force the unraveling of the American Empire. [Chalmers Johnson,  Blowback: The Costs and Consequences of American Empire (Henry Holt & Co., New York, 2000)]

USA - A Profitless Recovery?

Recently American economists have grown increasingly optimistic about the US economy, yet  corporate executives are sceptical. The Business Council reports that 75% of their members believe the US remains in recession, and 77% do not think the economy will grow much more this year than last. This gap - between chief executives and economists - suggests one group is missing something The chief economist for small businesses argues that their executives are more optimistic because they are operating closer to the pulse of the economy than big business. The pessimism of big business derives in part from their increasing inability to raise prices, and hence suggestions that any economic rebound could be a profitless recovery. [John Hilsenrath,  Wall Street Journal, in AFR  1.3.02]
 
 

Unilateralist USA? The Bush Doctrine

The central thrust of the Bush Administration is deliberately, unmistakably, breathtakingly unilateralist... Bush declared he didn't want other countries dictating terms or conditions for the war on terrorism... The US prevailed in the Cold War, as it had in WW II, as the leader of a grand global coalition. The inheritor of this coalition was now declaring that it was dispensable. Was this just an emotional outburst by an overwrought man, or a new doctrine from a determined superpower? A few days later Bush gave an electrifying address to the nation. He declared a new criterion for dealing with other nations: "You are with us, or you are with the terrorists". This was quickly dubbed "the Bush doctrine". [Peter Hartcher, AFR 9.2.02]

America Uber Alles?

There is little doubt the war in Afghanistan has been a triumph of American might. But out of sight and out of mind, day after day, in dribs and drabs, a lot of ordinary people are dying in a war that sees the most advanced fighting machine ever assembled doing its killing in one of the most backward societies on earth.[Guardian Weekly 14.2.02]

Expansion of the US Empire

The United States is engaged in a huge strategic power grab in Central Asia. In previous eras this sort of expansionism would have been called colonialism or imperialism. Now it is simply called "the war against terrorism"... Having pushed, cajoled and bribed its way into the Central Asian backyard, the US clearly intends to stay. [Simon Tisdall, Guardian Weekly 24.1.02]
But according to the editor of Le Monde, the United States has no choice but to take a more multi-lateralist approach to world affairs. He said an imperialist attitude is no longer possible. [Lenore Taylor, AFR 22.2.02]

An Elite and Arrogant Club?

The World Economic Forum (WEF) that met in New York in January no doubt again provided a stage for the world's big business.(Its corporate membership is limited to the thousand foremost global companies.) They and political leaders will have fulminated about world poverty, racism, human rights abuses, and greater access to world markets.  The business leaders who attend the forum need to understand that their enterprises are not just successful because they deploy capital and human resources in more innovative ways than their competitors...  but  that here is a social and institutional context to their success that is largely provided by taxpayers... Business leaders in general, but especially in Australia, are not involved enough in public debate, nor engaged in the task of improving human rights and poverty amelioration. There should be an action plan to ensure that the wealthy nations from which most of them come will dismantle trade barriers... The WEF must change its spots - it does not have to be seen as an elite and arrogant club that attracts the ire of so many, both justified and unjustified. But this means that its participants must practise what they preach. [Greg Barns and Jason Fallinski, in AFR 30.1.02]

The ENRON Scandal in the USA

 The business of most Americans is business. Enron already ranks as one of the biggest business scandals in history... Enron was not profitless dot.com. run by crazy kids; it seemed to be a company with a proven track record; its executives seemed to be smart, but solid personal men. It seemed to be a company with a great work ethos, a sense of mutual loyalty.  Then it came apart at the seams (!) Demands for reform are confused... but they are all about ending an era of laxity, in which nobody asked hard questions as long as everything looked ok. That era is now over. [Paul Krugman, SMH 30.1.02] (emphasis added)

Globalisation and Corruption

 Corporate-driven globalisation is a process that is marked by massive corruption, and one that is deeply subversive of democracy. Shell was a good case study in Nigeria. Scores of TNCs, and the World Bank were implicated with the Suharto political economy in Indonesia.
Now, ENRON strips the veil from what Wall Street used to call the "New Economy", which showered rewards on sleazy financial operators like ENRON, while burdening the rest of the world with the costs of a global downturn. Corporate corruption is central to the US political system; the fact that it is legal...does not make it less immoral than crony capitalism of the Asian variety.[Walden Bello, in Era Newsletter, March 02]

Australia's Strong Position in Economic League Tables; But the Current Account Deficit is the Bogey

 In various economic growth measures, Australia is well placed; it is top of the league of measurements of growth produced recently by the London Economist, with 3.3% compared with 1.9% for the UK; 1.2% for the USA, and  -1.3% for Japan. But its current account deficit proportion is the highest, at -2.9% of GDP, and so is its ten-year bond yield, at 5.98%. The Australian sharemarket has been a top performer - one of the few to have posted gains in the past year. Our annualised rate of gross domestic product growth was 4.6%, second only to Finland with 5%. Forecasts for 2002 are 3.3% growth in GDP, the highest in the group analysed. We are also near the top of the league of growth of industrial production and retail sales volumes.
Our inflation rate however, of 3.1%, is second only to Norway's with 4%. Our current
account deficit is expected to be 2.9% of GDP, compared with 4.1% for the USA, 2.3% for Spain, and 2.1% for the UK.
Our ten-year government bonds are yielding just below 6; most developed economies have close to 5%. The current account deficit is the bogey that must be addressed.[Craig James, AFR 20.2.02]

Floating Out Of Trouble

 In his Adelaide speech, the deputy governor of the Reserve Bank, Glenn Stevens, said that some Asian economies with heavy exposure to technology production had suffered badly in the recession. But macro-economic policies have been able to cushion the impact of global events...  Exchange rates have been adjustable; banking systems reformed, and governments have been less willing to rely on short-term foreign debt. Accounting standards and data quality have been improved. These standards are meant to help emerging economies reform themselves. The most important single change has probably been a greater reliance on flowing exchange rates. [Alan Mitchell, AFR 20.2.02]

Australia May Lag Behind in the Global Recovery

Australian export prices and volumes are likely to respond to the gradual global recovery with a lag, as was the case with the down turn. Growth in export volumes of minerals will be modest this year, partly because of the low rate of mining investment since the Asian crisis. It is not clear that recovery will live up to the expectations of the markets. [Alan Mitchell, AFR 1.2.02]

A Licence To Print Money?

The Government has in effect given Lang Corp and Toll Holdings a licence to print money. Along with hard assets such as locomotives, rolling stock, terminals and contracts this deal gives Lang/Toll track access... It is a bit like giving Qantas most of the landing slots in Australia's major airports. With this deal the Lang/Toll joint venture has bought 70% of Australia's intermodal rail business.[Elizabeth Knight, SMH 1.2.02]

Higher Price Education in the Lucky Country

Figures released by the Universities Admission Centre show that entry scores for full-fee paying courses in popular subjects are lower. Thus, a person prepared to pay full fees for a bachelor of arts degree can get in with a Universities Admission Index of 72. But HECS students - the majority who pay back fees once they begin working - would need a score of 91.90 to get into the same courses.  A full-fee paying student at the University of Sydney would need an entry score of 75.05 - a mark 14 points less than a HECS student. [An arts course there costs $10,500 a year in fees.]  A double degree in arts and education at the University of NSW has an entry score of 72.0 for full fee paying students, and 91.90 for Australians who pay via HECS. [Gerard Noonan and Aban Contractor, SMH 1.2.02]

Newspeak and Double Think

Paul Keating, who framed Australias media ownership laws, believes the Federal Government's plan to overhaul the regime is designed to allow Kerry Packer to sell the Nine television network to Murdoch, and buy the Fairfax group. Keating said: "If you are at the top of a Packer business unit, you are not employed; you are owned, you almost get a blood transfusion"... Packer, Australia's richest man...has long harboured ambitions to control the company owner of The Australian Review. Senator Alston's legislation, to be introduced in the next parliamentary session, would end the prohibition on common control of newspapers, TV stations and radio networks in the same area. It would also lift foreign ownership restrictions. [Aaron Patrick, AFR 2.2.02]

Jobs for the Boys

The list of former Howard Government ministers securing lucrative private consultancies continues to grow, with J.P. Morgan's investment bank signing up John Fahey as an adviser. The bank's head of investment said Fahey would help J.P.Morgan in securing government deals... Morgan acquired one of Australia's oldest broking firms, Ord Minnett, last year. It is also a member of the AMP-led consortium of one of three bidders for the sale of Sydney airport. The news of Fahey's appointment will add to the concerns over the growing links between business and former senior MPs. [Steve Lewis, AFR 18.2.02]

The Forgotten Long Term Unemployed

 Today there are 385,000 people in Australia who have been on the dole for more than a year - no fewer than in 1995 just before the Howard Government was elected. They include young people, married women, and low-skilled workers. Most of the long term jobless are equipped to fill low-skilled blue collar jobs, but demand for these has not been strong. It is clear that strong growth in the economy is not sufficient to make inroads into long-term unemployment... The long term jobless need extra help to get back into work.[Ross Gittins, SMH 20.2.02]

Doubling Up?

The Australian Bureau of Statistics has estimated that the number of people who want more work, but cannot find it, is double the ranks of the officially unemployed. Its latest measures calculate that in addition to the 596,000 people officially unemployed in the year 2000, there were another 584,000 people who were "under-utilised" in the labour market. This increases the official figure of 6.1% unemployed, to 11.9% "under-utilised". [Mark Davis, AFR 28.2.02]

The Golden Takeover

A report released by Surbiton Associates shows that gold output in Australia is still falling. It has now dropped by 11% since the peak of 314 tonnes in 1997. However, the price has gone up, averaging $524 per ounce last year, and recently came close to $600. Dr. Sandra Close, managing director of Surbiton, said output has now fallen by 11% since 1997. She noted that the recent rash of mergers and acquisitions would mean that many of the benefits from rising prices and increased profits will not flow to Australian investors. "Overseas shareholders would be the winners", she said. Dr. Close estimated that foreign control of our gold mining industry had risen from 20% in 1995 to 30% in 2000. Recent takeovers have increased overseas control to 60%. [Barry Fitzgerald, AFR 18.2.02]

High Costs of High Power

Changing the way electricity generators offer to supply electricity to the national grid could cut power costs by as much as a billion dollars a year, according to Stephen Kelly, managing director of  the National Electricity Code Administration. He said the present bidding system should be changed in an attempt to stem the windfall profits power generators are able to make at present. He said that market power exists in every electricity market in the world but Australia is alone in having no means to tackle abuse of that power within market rules. [Brian Robins, SMH 26.2.02]

Constructing Bribery and Corruption

The leading construction firm of Baulderstone Hornibrook admits it paid $275.000 to a company with links to the Melbourne underworld to ensure union cooperation on a $100 million Victorian building site. The Cole Royal Commission heard that Baulderstone paid the fee after being assured by the firm that it could bring the Electrical Trades Union into line with other unions. [Katherine Towers, AFR 26.2.02]

Construction Turning Down?

According to Alan Oster, Chief Economist of the National Bank, construction activity has peaked, and forward orders have fallen significantly. This suggests that the downturn in residential construction may come earlier than mid 2002, the timing expected by most commentators. [Media Release, January 2002]

Office of Financial Mismanagement?

The Australian Federal Treasury has lost more than $2 billion as a result of speculating in the risky foreign currency market. Two years ago the Auditor General warned Treasury's Office of Financial Management that it could face escalating losses if it continued trading in highly volatile foreign exchange contracts (called currency swaps), for financial gain. Despite the warning and mounting losses, the OFM has stubbornly continued the practice. No other government treasury in the OECD uses such a strategy. [Toni O'Loughlin, SMH 22.2.02]

Safe As A Bank?

Ireland's biggest bank has admitted that a rogue trader alleged to have gambled away hundreds of millions of dollars began making losses in 1997... The failure of the Allied Irish Bank to notice the mounting losses over such a long period has intensified worries about risk management, not only in Ireland, but across the international financial community. [Ed O'Loughlin, SMH  25.2.02]

Conflicts of Interest Between Doctors and Drug Makers?

Australia's biggest medial campus is set to make public all of the links between its doctors and drug companies. More than 100 doctors based at Sydney's Westmead Hospital, and connected to the University of Sydney, are setting up a website to detail their ties to industry, including research sponsorship, paid consultancies and significant corporate shareholdings. Proponents say the move is a response to the growing international push for openness in industry-academic relationships, and they believe it is the first time such public disclosure will occur in Australia. The head of the University of Sydney department of medicine, and chair of medicine at Westmead, Professor Richard Kefford, told The Australian Financial Review up to 90 per cent of all drug trials are now sponsored by pharmaceutical companies. While sponsored trials produced truly extraordinary innovations, Professor Kefford said there was alarm about the conflicts of interest which occurred when doctors were linked to the makers of the drugs they prescribed. "There is a legitimate relationship between the pharmaceutical industry and the medical profession...but it needs to be properly controlled and regulated," he said, suggesting the need for blind trust to provide a real distance between sponsors and the doctors conducting sponsored research. "I'd like to see an education and research foundation into which companies contribute and are acknowledged - but where the dispersal of funds was completely separated." [Ray  Moynihan, AFR 22.1.02]

 CSIRO Scorned

A top-secret CSIRO document has described the national science agency as too bureaucratic, ...unsustainable and often overly focussed  on short term revenue targets. Excerpt were read into the public record at a recent Senate legislation committee hearing:
CSIRO was aloof, arrogant and unresponsive... and less cooperative than it should be... It was not considered competitive in the labour market because of low salaries and the lack of opportunity to do strategic research. [Cheryl Jones, AFR 22.2.02]

Notes on the Rothschilds

In the late 18th century European Jews became emancipated, breaking away from feudalism to participate in industrial capitalism. The growth of the state through independent financial mechanisms - such as bonds - enabled British investors(and later other rich capitalists in Western Europe) to invest through purchasing international bonds. The growth of this market brought Europe's capitalists together. Bonds were liquid, being capable of being bought and sold in the market place, accruing large capital gains, but also suffering large losses.
Political confidence and information became crucial to those trading: the Rothschilds  excelled in understanding politics, and getting early access to news. They also developed  bullion broking and refining; discounting commercial bills; foreign exchange and arbitrage; as well as supplying personal banking services. They also were significant industrial investors, especially in railways and mining, with ability to cultivate the right people, and see opportunities in chaos. During the 19th century the five Rothschild brothers spread across Europe, but were unable to establish a strong base in the USA. [Abe David, (private communication)]

Argentina - Gold Mine for Foreign Investors and Poverty for the People?

Throughout the 1990s, Argentina dutifully carried out the orders of the men who run the international financial markets. It privatised state owned industries, selling them off to foreigners. It embraced free trade and pegged its national currency to the US dollar... Argentina was run by a gangster regime for most of the 1990s. [Former President Carlos Menem was only recently released from house arrest for his role in international gun running.] As long as it remained a lucrative investment for mobile international capital, and churned out double digit profits for wealthy overseas bondholders, it was the darling of globalisation. But after civil unrest drove the president from power in December, and Argentina suspended payments on its international debts, the IMF prescribed its usual medicine for the poorer half of the world. This is to cut social spending, reduce wages, raise prices, and balance the budget to attract foreign investment. But even though the IMF pumped billions of dollars into Argentina in return for its obedience, the economy still collapsed. This experience should be enough to throw into question the free market globalisation model that has been forced on Latin American countries as the only way to grow economically. Underneath the ledger numbers that world bankers hold up as the measure of success or failure, are the lives, aspirations, and dreams of real people. [Marc Cooper in the Los Angeles Times 30.2.01, reprinted in ERA Newsletter, March/April 02]

The Return of Mussolini?

State and corporate power are fusing almost anywhere, but in Italy they have condensed into the stocky figure of  a single man, Silvio Berlusconi, the prime minister, who is worth around$14 billion. He has interests in just about every lucrative sector of the Italian economy. His control of most of the private and public media means that he can exercise a dominion unprecedented in a democratic nation over the thoughts and feelings of his people. He has been convicted for bribery, tax fraud and corruption, but by amending the law has had those convictions overturned and his business activities legalised. His government is sustained by parties which describe themselves as "post-fascist"... This is the man who is now Tony Blair's closest political ally in Europe... Blair and Berlusconi are now the only European leaders who seem to support a US attack on Iraq. Both have introduced repressive legislation restricting civil liberties. Both have granted concessions to big business. At the European summit in April they will be forming an alliance with Jose Maria Aznar, the right-wing Spanish prime minister, in the hope of forcing France and Germany to accept new measures demanded by the corporations. [George Monbiot, Guardian Weekly 28.2.02]

"Independent" Financial Advice (IFA)

Only five of Australia's top 40 IFA groups are not owned by a bank or fund manager. It is becoming more difficult to find those who are not ultimately employed by a manufacturer of financial service products... The actual advisers hold the most valuable "commodity"  -  influence over the client  -  and receive the lion's share of commission. Australia's third largest IFA group - Count Wealth Accountants - is 40% owned by the family of managing director Barry Lambert. He says there is no future for dealers, because administration costs made the business inefficient and costly. Financial deregulation has made advisers valuable. Buying a financial planning outlet gives its owner a ready-made client base to which it can sell management services... The former head of the National Companies and Securities Commission, Henry Bosch, said this is another layer of conflict of interest, and expressed his concern about the complexity of fee schedules. [Sharon Kemp, SMH 29.1.02]

Boys with New Toys?: World Congress on Information Technology (WCIT)

The chief executive of the Commonwealth Bank, David Murray,, used his keynote address at this congress to take a swipe at one of the key companies, Microsoft, and to accuse the US information technology industry of wrecking the world's economy, because the promises were large, and by the time they were turned into investment  promises at the casino end of the equity markets, the investments were unrealistic. He pointed out the benefits that IT has delivered to the bank, but said that companies should avoid the temptation of making IT  a strategy in itself. He said there were many instances where he was glad the bank had embraced information technology, but there were some cases where he was not. There were problems with service difficulties, with the internet platform and the ATM network. Murray criticised Microsoft, and questioned the worth of subscribing blindly to the software giant's suggestions for Australia. He said the first thing the government should do was to find out where the productivity gains would come from in implementing a broadband infrastructure. [Katrina Nicholas, AFR 1.3.02]

The Transformation of the Australian Economy

Ten years ago three quarters of the Australian markets capitalisation was in the traditional areas of mining, agriculture, and manufacturing. Today these sectors now account for only one third of such capitalisation, whilst finance and insurance comprise 36.7%; and services with 29.7%, make up the rest... Service companies now make up two thirds of the value of the stock market. Australia has become an intellectually-based economy, and Sydney a regional financial capital... Finance is the big growth area, last year 60 financial companies moved into Australia or expanded their presence there, attracted by economic solidity, political stability, an educated work force, a good IT infrastructure and a strategic time zone for Asian markets... Employment in financial services has jumped by 60,000 in two years - almost 20% - to 357,000. The largest Australian corporations are in the field of communications... The biggest resource company - BHP- does not rank in the top three. It is a big and dangerous world out there, with a worrying rise in wealth disparities between rich and poor, a trend which includes Australia. We now have a globally competitive economy in a world ruled by the survival of the fittest. [Paul Sheehan, SMH 26.1.02]