theSun | WEDNESDAY APRIL 8 2009
speak up!
Time to break Wall Street’s
control of Washington
by Eric S. Margolis
PEOPLE around the globe are angrily blam-
ing the international financial crisis on the
United States and their own leaders. At least 25
million people have been thrown out of work
by the made-in-USA crisis.
Admiral Dennis Blair, the US intelligence
chief, warns the global financial crisis, not
al-Qaeda, is the greatest threat to US national
security.
Politicians from leading industrial nations
sought safety in numbers at the G20 summit
in London last week to demonstrate they are
taking action against the worst economic crisis
since 1930. US President Barack Obama was a
huge hit. He urged Europe and Asia to join the
US in spending billions more to stimulate their
battered economies.
The US government and Federal Reserve
have already spent, guaranteed, or lent a
staggering US$12.8 trillion (RM45.7 trillion) to
jumpstart the US economy, an amount equal
to 90% of total US economic output in 2008.
To aid the financial industry, the Fed
slashed interest rates to nothing, punishing
middle class savers and retirees. Unable to
further lower rates, the US government is
flooding the economy with billions of dollars
created from thin air that will inevitably gen-
erate future asset bubbles, stoke inflation, and
eventually drive down the US dollar.
By contrast, Europe, Russia and Japan re-
sisted more stimulus deficit spending, rightly
fearing inflation. They have declining popula-
tions and cannot, like the US, saddle the next
generation with monster deficits.
France’s President Nicholas Sarkozy and
Germany’s Chancellor Angela Merkel de-
manded more regulation of the international
financial industry. Europe and Asia blame
America’s and Britain’s financial gamblers
and fraudsters for the Panic of 08. Reckless
borrowing caused this world crisis; more mas-
sive debt hardly seems the correct remedy.
However, the G20 summit finally compro-
mised on US$1 trillion (RM3.57 trillion) more
spending for the International Monetary Fund
and some more vague regulation.
Particularly interesting were comments
by Britain’s Prime Minister Gordon Brown
that a new world economic order is emerging
from the London summit. Meaning: the days
of total US economic hegemony are ending
and a multi-lateral world economic order will
replace it. But this financial crisis won’t be
resolved until the rotten US financial sector is
restored to health, transparency, and integrity.
Many major US financial institutions are in-
letters
letters@thesundaily.com
Allow market to heal itself
THE impending bankruptcy of General Motors
was, as we argued several months’ earlier, in-
evitable news. After wasting billions of taxpayer’s
money on a “mission impossible” to bail out a
company that has been ripe for a major shake out
for so long, the US government is finally bowing
to commercial realities.
GM will not disappear but will be broken up
into bits, with the profitable parts remaining as
viable units and the dead wood being removed,
resulting in a much stronger world class motor
manufacturer. In this way, real jobs will be main-
tained, without creating a burden to either the
company or the taxpayer. Big companies fail and
many are revived; Pepsi is an example of this,
having gone bankrupt in both 1923 and 1932.
Nab the scumbags
ON behalf of my generation and future genera-
tions, I would just like to say a sincere “thank you”
from the bottom of my heart to theSun and its
team for the great work. You guys do a great job
in exposing many a scumbag.
The authorities should give out awards to
theSun for doing their job. It is very unfortunate
13
solvent: their liabilities exceed assets. Neither
the bankers nor the Obama administration
will admit it, or take necessary action.
That’s because the US financial industry
has grown far too powerful. Today, finance
is America’s leading industry at about 24% of
GDP. Manufacturing has shrunken to 12%.
Wall Street’s “Masters of the Universe” grew
so rich they were able to buy or manipulate
most politicians and government regulators.
Investment banks like Bear Sterns, Leh-
man, and Goldman Sachs routinely lent
US$35-50 per dollar of assets. Banks borrowed
money at 1% and invested in billions worth
of fraudulent subprime mortgages at 4%, net-
ting 3%. Money was made from money, not
productivity. Hedge fund managers paid only
15% income tax.
When this house of cards finally collapsed,
the money men used their clout to get both
the Bush and Obama administrations to bail
them out. At the heart of the financial web
dominating America is the bank, Goldman
Sachs. Ironically, many of its alumni have
been managing Bush and Obama’s “rescue
plan”.
In the outrageous, obscene AIG bailout,
Goldman alone got US$12.9 billion (RM46
billion) from Washington, no-strings attached.
Obama, John McCain, Hillary Clinton and
everyone important in Congress received
embarrassingly large cash contributions from
Wall Street. Now, the money lenders are trying
to block meaningful financial reforms.
If US banks don’t admit their true losses,
and if the White House keeps propping them
up, they will become like Japan’s bankrupt
“zombie” banks in the 1990’s: dead men walk-
ing.
The right answer is to make them come
clean and fire the fraudsters who ran them
into the ground. Then temporarily nationalise
these banks and break them up into smaller
firms that are not too big to fail. The bankers,
brokers, traders and credit rating agencies
responsible for the greatest fraud in US his-
tory, the subprime and Alt-A mortgage scams,
should join crook Bernie Madoff behind bars.
The Panic of 08 laid bare just how much
Wall Street controlled and manipulated the
US government. The axis of sleaze between
Wall Street and Washington’s politicians has
to be broken.
Eric S. Margolis is a contributing editor to
the Toronto Sun chain of newspapers, writing
mainly about the Middle East and South Asia.
Comments: letters@thesundaily.com
From this futile exercise, all governments
should realise that the best way to handle a
recession is to get out of the way and allow
the market place to provide its own solutions.
If governments maintain a steady control of the
money supply and resist the temptation to inject
inflationary dollars into the economic system to
boost what should actually be left to deflate, the
economy will sort itself out in a short time. Stocks
will plunge, prices will fall, jobs will be lost, but
these are all symptoms of a cleansing process
which, like any painful healing process, must be
left alone to take its course.
Dr Ian Mackechnie
Kuala Lumpur
that there is zero action by the MACC or the police
in bringing the culprits to book.
Anyway, good job in cleaning up Selangor.
Keep up the great work.
Eugene Foo
Via email