Wednesday, June 25, 2008

Disaster Capitalism on a Grand Scale

Thomas Paine's Corner

mr_burns

By Rowan Wolf

6/24/08

As the cost of food and fuel spirals out of control, and the mortgage and credit crises all strike at a global level, one has to ask if this is a “perfect storm” or a manufactured opportunity - or both. In her book, Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein documents the planned manipulation and creation of disasters as opportunities to advance a corporatized free market environment. While generally operating at a national level, the process has also been utilized at a regional level. For example, the deliberate attack during the Asian market collapse. As I have watched the unraveling of the global economy, I have wondered if the scheme has not moved to a global level.

There are an array of events and actions that seem to provide evidence that “disaster capitalism” is at play in current global events. These current disasters are running side by side and sweeping across the world. The global food crisis (particularly grains), the massive run-up in fuel prices, and the global mortgage crisis which has morphed into a global credit crisis, all evidence the hand of economic “liberalization.”

While called “liberalization,” this is a process aimed at undermining the sovereignty of nations by removing any “barriers” to trade, and any nation-based efforts to control their own economic and social policies. This “liberalization” is actually aimed at chaining the total resources of the planet to the total control of private capital.

FOOD CRISIS

I had suspected that these various crises were being manipulated (and in part constructed) for some time. However, recent events have shown the hand that is at play. The global food crisis is sending millions of people into poverty and even death. A complex of issues are involved in this crisis - petroleum costs, biofuels initiatives, global warming resulting in water and crop failures, and the implementation of global economic policies. As nations struggle with the crisis, and governments are shaking under the stomping feet of the hungry, one has to wonder at the solution being offered to address runaway costs. That solution is to further “liberalize” the global food markets.

This call for “liberalization” has sounded loudly twice - once from the UN world food summit, followed a week later by a statement from John Negroponte (U.S. Deputy Secretary of State) for removing trade barriers on food.

They (heads of state) agreed urgent economic assistance for affected countries, and to support agricultural production and trade through further liberalisation and reduced trade barriers. These measures, the conference statement says, would assure “better integration of small-scale producers with local, regional and international markets.” (IPS)

“These restrictions should be lifted. They have taken food off the global market, driven prices higher and isolated farmers from the one silver lining of the rise in food prices: higher incomes for agriculture producers,” he said. (Negroponte as quoted by Reuters)

There is apparently no discussion of how creating the import/export economies has undermined the food security of nations, nor how that has replaced small agriculture with plantation agriculture. Nor any discussion that while “biotechnology” may produce some yield gains, that it places the food chain directly in the hands of transnational agri-business.

It also seems a major oversight to call for dramatic increases in the amount of money for food aid at the same time that the push is on to further corporatize the food supply. Just whose pockets is food aid filling?

MORTGAGE / CREDIT CRISIS

The “creative” financing that blew up the housing bubble and is resulting in foreclosures across the United States and Britain (and perhaps elsewhere), were part of “creative” investing in a “liberalized” global marketplace. Low interest and risky loans were bundled and sold up the financing/investing food chain. Then bundled with other investments and sold again and again across a global financial market. Then interest rates rose and with them the mortgage payments of millions of people. The collapse has sent cannon blasts through the global financial markets spurring bail-outs by reserve banks in an attempt (purportedly) to stop the hemorrhaging. Unfortunately, it has not. Further, and not surprisingly, the mortgage crisis “turned into” a credit crisis. This was totally predictable given the “bundling” schemes.

The lie underlying the mortgage / credit crisis is the huge losses. While certainly lots of folks got hurt (and continue to be hurt), those bundled investments made a profit at each sale and re-bundling. Those profits went in somebody’s pockets. Further, Both the U.S. and the British federal reserve banks have thrown billions of dollars (and pounds) into the gapping maw. Those finances coming ultimately from our pockets … and ending up in someone else’s. This is a massive expropriation of present and future wealth - not to mention the potential collapse of national economies.

OIL (COST) CRISIS

Let me start by stating that what is driving oil prices is complex. I firmly believe that we are at (or beyond) peak oil. We are in a world where the demand for oil and natural gas continue to climb and the production is remaining steady or falling off. The increasing demand for a limited resource will drive up prices. This does not mean that there are not profit-taking opportunities. In fact, there are more opportunities than at any previous time. It is also true that manufacturing capacity has not been increased despite increasing demand. While the efficiency of refineries has increased, it appears to be maxed out. Therefore, regardless of increases in production, only so much petroleum can be refined - driving up prices by limiting supply. However, given peak oil it makes no sense to me to increase refinery capacity.

There is something significant happening beyond the realities of oil supply and capacity, and that is the commodities and futures market. It is estimated that 25% (or more) of the current cost run-up is “speculation.” It has been said that the market is “out of control.”

I suspect that a combination of profit-taking is happening, and this is totally predictable in a scarce resource market - even if that scarcity is being manipulated. Regardless, the crisis creates opportunities to push through more transfer of wealth and accomplish “other goals.” Those goals range from a renewed push to exploit every potential oil resource (off shore drilling, ANWR, the Arctic) as well as increased pressure and manipulation on producer states (OPEC, military bases in Africa, increased U.S. military placement in Latin America). Those “other goals” may also include increased military presence and control of civilian populations.

TYING IT TOGETHER

Are we seeing a world-wide “shock doctrine” move? I believe that we are. The crises we are seeing, while certainly based in certain physical realities, have been manufactured to collapse level. That manufacturing has been facilitated by global economic and social manipulation that has removed the supports for stability (and response) at the same time that other “uncertainties” have been introduced and fanned into a seemingly out of control conflagration.

The instituting of a global war on terrorism manufactured by the neo-cons and the Bush administration (with the help of Congress and corporate media) has been great for achieving multiple goals. In the United States and elsewhere, the implementation of “anti-terrorist” legislation and machinery has undermined the transparency of government while creating actual threat to those who would resist the power grab. The occupation of Iraq has generated tremendous regional instability while removing oil resources from the market - both of which have been a consistent feature in increasing oil costs. Further, it has normalized (if not institutionalized) massive levels of corporatization - particularly of the military. This in turn has led to an incredible increase in global military spending. In fact, according to Agence France Presse there has been a 45% increase in global military spending over the last ten years. This is certainly a wind fall for the “defense” industry.

Also facilitating the current catastrophe is the “liberalization” of the financial markets. One of the segments of the market that is linked to at least two of the three crises is the commodities and futures market. In the wake of the Enron scandal, there was noise made about closing the “Enron loophole.” As far as I can tell, that “loophole” remains in full usage.

Legislation was not moved forward until September of 2007 to address this “weakness” in the commodities sector. That legislation was H.R. 4066 / S. 2058 -To amend the Commodity Exchange Act to close the Enron loophole, prevent price manipulation and excessive speculation in the trading of energy commodities, and for other purposes which was referred to Senate Committee on Agriculture, Nutrition, and Forestry on 9/17/07. That bill was added to the farm bill that Bush vetoed - which explains a lot about why he really vetoed the bill. The legislation to close the loop hole and provide greater oversight was included in the farm bill (Text of bill) which became Public Law 110-234 over Bush’s veto. However, 110-234 does not seem to exist in either text or pdf form in the GPO database, one can view the enrolled House version H.R. 2419 . I believe that this is (coincidentally) the bill which had some sort of error and was returned to the Senate (where apparently it has languished once again).

It seems to me that one way to control the “out of control” market speculation on both petroleum and grains, is to clamp down on this market - both here and globally. At the very least, there should be a commodities “holiday” to allow a cool down period, and to move to improve the transparency and controls on these markets.

As these crises continue to drag down economies, nations, and peoples, more and more “shock doctrine” mechanisms will be thrust forward. The current situation and crises create a perfect opportunity for a corporatist end game. Such a move, would be catastrophic for us all.

I could be incorrect in my reading of the current environment. However, I could also be right. I write this to raise people’s awareness of the possible “invisible hand” that is at play so that we (meaning the people of the world) are not totally disenfranchised in a Ponzi scheme pitched as “saving” us. The disasters themselves pose deadly challenges for much of the global population. I strongly believe that increased “liberalization” is not going to resolve any of these issues. However, it would dramatically advance an agenda that has already caused immeasurable harm to billions of people and the earth which is our home.

Other Related Articles

Food Summit Agrees Greater Liberalisation

U.S. says ending trade barriers key to food crisis

Global Military Spending Soars 45 Percent in 10 Years, Agence France Presse, 6/09/08

New homes slump worst since 1945

Falling like a ton of bricks

Enron Commodity Trading was Not Original.

Myth-makers caught short in oil speculation. R. M. Cutler, Asia Times, 6/18/08.

Rowan Wolf, a senior contributing editor to Cyrano’s Journal, is a sociologist, teacher, writer and activist. Her areas of interest include social justice, environment, and globalization/
corporatization at the core. Since 5.6.07, she has also been the main host and director of Cyrano’s special blog,
AVENGER.

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