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This page contains an editorial
prepared for the October 2013 edition of
Safe Haven
Real Estate property magazine.
 | Safe Haven
Real Estate was
fashioned on the
English model and
has its outlet on
the Roseau
Bayfront, between
the Post Office
and the
Magistrates Court.
It has a permanent
core of loyal and
dedicated staff,
several of whom
have been with the
company since its
inception in 1999. |
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Everyone is complaining, not just in
Dominica but throughout the region -
business is slow, the number of stay-over
visitors has fallen and the cruise
shippers are holding tightly
onto their purse strings. I read recently
that tourism in Barbados is down 40% this
year. The problem cannot be blamed purely
on rising air fares or the dismal service
of our local carrier, LIAT, though these
elements have surely contributed to some
extent.
To understand
what is happening today, we have to go
back a few decades and examine the
western trends that have led to a lack
of liquidity in the global financial
marketplace, in which the USA is the
most influential player. Almost a
century ago, corporate and banking
excesses lead to what is remembered as
the great depression in the USA,
following which the Banking Act of
1933, otherwise known as the Glass–Steagall
Act was enacted. This Act imposed
banking reforms to protect customers, by
separating regular banking from
speculative banking practices.
When I grew up in the ‘50s and ‘60s, the
mixed economy of the UK worked well. The
economy was expanding and our standard
of living noticeably improved throughout
the period. The private sector produced
our televisions and motor cars, watches
and chocolate bars, whilst the State
took care of such things as education,
health care, public transport, utilities
and roads. An American economist by the
name of Milton Friedman came up with a
"free market" philosophy, suggesting
that all such State run activities
should be provided by the private sector
and that the private sector would
perform best with minimal or "self"
regulation. His ideas were eagerly
embraced in the '70s by British Prime
Minister Margaret Thatcher and by
America’s President Ronald Regan. In the
decade that followed many State run
enterprises in these two countries were
privatised, raising extra cash for the
government to spend. Less well known is
that some of the politicians involved in
these privatisations enriched themselves
in the process, as their names found
their way onto the boards of these newly
formed companies. The trend continued
through the '80s and '90s even though
elections in Britain saw the
Conservatives displaced by the Labour
Party and across the pond the
Republicans replaced by the Democrats.
By this time the corporations and banks
had begun swallowing each other up and
swelling in size, flexing their muscle
with lobby groups to influence policy
making. The stock market also
transformed from merely trading stocks
and shares to also trading derivatives (bets
on anything and even bets on bets).
As the wealthy indulged in the gambling
frenzy, more and more deregulation was
demanded and towards the end of the
Clinton Administration in the USA the Glass–Steagall
Act was scrapped in November 1999.
This opened the way for the reckless
banking practices that have since
undermined confidence in our entire
monetary system. Times were good and the
USA had a surplus of around $6 trillion
when Clinton left office in 2000.
What happened next was an acceleration
in the process of wealth transfer from
the middle and working classes and the
public sector to the already exceedingly
wealthy 1% of 1% of the population. 9/11 and a few
subsequent natural disasters provided
"opportunities" for the well connected
to exploit using funds from the public
purse. Two wars were launched illegally
from which privatised military and
surveillance contractors also grew fat
at the taxpayer's expense. During the
first 7 years of the new millennium, the
deregulated financial free-for-all led
to an epic campaign of predatory lending
in the USA, later referred to as the
"sub-prime" mortgage scandal. No longer
did anyone need an interview to
ascertain whether they were a good risk
before being granted a mortgage as
these mortgage loans were quickly
insured, re-insured, disguised, packaged
with other financial products,
fraudulently given AAA (the safest)
rating and traded on Wall Street and
around the world. Fuelled by the
commissions that the aggressive sellers
of these loans generated for themselves,
the number of mortgage sales more or
less doubled each year, until the game
of pass the parcel finally ended with it
being opened, to reveal nothing but an
uncollectable debt. Repossessions
escalated, house prices tumbled and
banks and financial institutions gaped
into an abyss created by their own
reckless behaviour. One sad consequence
was that thousands had their homes
repossessed both in America and
Europe.
Financial institutions had grown to
sizes regarded as "too big to fail" (without
bringing down entire economies).
Governments justified the use of public
money to bail out many of the failing
banks to a tune of over $20 trillion
worldwide (capitalism for the poor,
socialism for the rich). $7
trillion of the bailout was in the USA
and with a population of around 350
million that equates to a staggering
$20,000.00 per head of population. When
George W. Bush left office in 2008 the
USA was already about $9 trillion
dollars in debt. The bailout was not therefore
funded by money sitting in the Treasury,
but by money that had to be borrowed
from the future, from the tax that will
be collected from the public for a great
many years to come. In the interim this
caused a cash-flow crisis. Elsewhere,
the first economy to fail was Iceland,
then Britain's Northern Rock Building
Society, followed by larger banks,
similarly rescued by massive government
bailouts. Almost all of the
European countries are suffering. The economy of
Greece is close to collapse, relying on
the EU to keep afloat. The Cyprus crisis
earlier this year saw the savings of
individual bank account holders raided
in a dreadful precedent demanded by
Germany as a precondition to an EU
financial rescue package. This is the
story of how a bunch of economic bandits
in the almost unregulated USA more or
less bankrupted not just the USA but,
via the conduit linking global stock
markets, the whole of the western world!
Had there not been willing poker players
across the table from the USA to absorb
a fat chunk of its debt the US economy
may not have survived to tell the tale.
5 years later the economic criminals
still walk free whilst the public are
punished by austerity measures. Banking
reforms are still inadequate, interest
on our savings has shrivelled to almost
nothing and our accounts are now
bombarded by an array of new charges (we
wouldn't want our cherished CEOs to go
without their million dollar bonuses,
would we?).
You
might have heard the term "Quantitative
Easing" and wondered what it means. In a
nutshell, it is the magical creation of
digital money, by the Federal Reserve
and Central Banks, which is then loaned
to their governments at interest and
sold on in the form of Government Bonds.
When economies fall deep into debt, the
only thing that can continue to sustain
them is the generation of more debt.
Whilst the vaults of many government
reserves remain empty and jobs are hard
to find, the very wealthy continue to
amass more and more wealth. Forbes
magazine recently revealed that the 400
richest Americans are now worth
$2.3trillion, up from $1.7 trillion last
year. That is more than the combined
wealth of America's poorest 150 million
people!
As America's
debt ceiling, last raised in May 2013,
approaches once again, (now somewhere
between 16 and 17 trillion dollars),
the future looks uncertain. However,
in Dominica banking and business
regulation is less lax, interest rates
have remained relatively stable and
the property market has not witnessed
the violent swings of "boom and bust"
experienced in the USA and England.
This is probably why the property
market is still seeing activity as
foreigners and the Dominican Diaspora
alike look for a more stable
alternative in which to invest their
money. Property prices in Dominica are
still reasonable compared to, for
example, the Virgin Islands, the
French Antilles, Barbados, St. Lucia
and Grenada. Dominica also has many
other positives. Its mountainous
terrain, cloaked in forest and veined
with rivers, keeps the temperature at
a pleasant level all year round. I
believe its agricultural sector,
although impacted by decades of trade
tariffs and massive farm subsidies
handed out to farmers in North America
and Europe, has a hopeful future.
These farm subsidies cannot be
sustained for much longer by
governments struggling under such
heavy debt, at which time Dominica's
produce may once again begin to fetch
its true value in the open market and
this in turn will help to rejuvenate
its economy. In addition, living in
Dominica is an investment in one’s
health. We will never freeze in
winter, we have unpolluted air, no
shortage of food and clean water. It
is for good reason that Dominica
boasts the most centenarians in the
region. So if you are wondering where
would be a suitable location to buy or
build a second home Dominica offers a
great choice.
Colin A. Lees, Nature Island
Destinations Ltd http://www.natureisland.com/
'Once Upon a Time in the West' was the title of a 1979
song by British rock group, Dire
Straits.
Footnotes:
1. Following the USA's scrapping
of the Glass–Steagall
Act in 1999, the lack of sound
regulation allowed speculators within
the financial sector to generate large
fast profits by questionable means that
had been denied them previously. Players
within the financial sectors of Britain,
Europe and elsewhere looked on with
envy, also desiring the means to do
likewise. They then pressured their own
governments into relaxing the regulatory
financial framework within which they
operated, using the argument that
American financial institutions now had
the competitive edge over them. The ploy
worked, particularly in the UK, where
Chancellor Gordon Brown desired to keep
the City of London in the forefront of
its competition with New York as the
financial capital of the world.
2. Since the end of
World War II the USA has enjoyed
currency hegemony, with the US$ being
the world's reserve currency - i.e.
every commodity traded around the world
is priced in and traded in US$. In
Dominica, our currency is pegged to the
US$. In 2008 President Obama inherited a
poisoned chalice - a US$9trillion dollar
deficit left behind by the outgoing Bush
Administration, added to by a
US$7trillion bailout (gift of
taxpayers money) to the failing
private sector financial institutions in
reward for their reckless behaviour,
thus lifting the deficit to
US$16trillion. During the 8 year
reign of the Bush Administration, the
total overspending of public funds -
i.e. tax revenue (including the bank
bailout) was in the region of
US$22trillion (equivalent to more
than US$60,000.00 for every man, woman
and child resident in the USA today!).
The corporate elite who run the military
supermarket enjoyed bumper profits
throughout this whole period, continuing
into Obama's presidency, and would like
to keep their best customer, the US
Government, spending there at similar
levels for the foreseeable future. The
lobby groups are baying, but this is not
sustainable.
3. As this
publication went to press, the USA's
debt ceiling of US$16.69trillion needed
to be raised again by 17th October 2013
to prevent a shut-down of Government
services it would no longer have the
line of credit to fund. The problem will
have to be faced again in a few months
time and at regular intervals
thereafter. Unless corporate and banking
regulation is seriously reformed,
loopholes closed that allow corporate
giants to dodge paying their fair share
of tax and spending on the USA's
military industrial complex is massively
curtailed, it has little chance of
restoring a balanced economy or
maintaining the strength and stability
of its currency. Maybe this is the time
that our Eastern Caribbean Central Bank
should consider disengaging our EC$ from
the US$ and looking at an alternative
currency to latch on to, in preparation
for a possible US$ crisis.
4. 1 billion = 1,000,000,000. 1 trillion =
1,000,000,000,000. October
2014: One year later, media speculation over breaching the debt ceiling
has subsided and been replaced by speculation over when the Fed and
Bank of England will raise the base interest rates from their current
levels of almost zero. This, however, is just media hype, for the
government debt levels have not improved, if anything they have
deepened! Anyone with an understanding of basic arithmetic
can see that they simply cannot afford to permit any rise at all -
raising rates by just one tenth of one percent will increase the annual
debt servicing cost on US $17trillion by $17billion, and on Britain's £2trillion by £2billion.
To prevent (or at least delay) the collapse in value of our fiat
currencies, the bubble has to be kept inflated at any cost
- and the only course remaining is to commit more QE, i.e. create
more money at the push of a button, which is then pumped into the
economy. Unfortunately it is not finding its way to where we really
need it - to help small businesses or to the National Health Service,
but to financing more war and to the already bloated corporations, to
fund crimes like Fracking. This is an absurd process in which water
laced with a secret cocktail of toxic chemicals is pumped into the
ground to release a little natural gas, costs more to implement than
the value of the fossil fuel extracted, contaminates our drinking
water, triggers earthquakes and leaves a trail of environmental
degradation in its wake. The CEO's get fat whilst their outfits operate
at a loss. The "Old Boys" network is alive and
well!
March 2021 update: I
expect you have noticed how much the cost of almost everything is
rising - food, utilities, transport, property, rental accommodation, the stock
market, commodities, precious metals, cryptocurrency etc. yet our
governments continue to spin the yarn that inflation is near to zero,
so interest rates must remain low (for the real reason I explain above).
Once upon a time the money we used had guaranteed value, because it was backed by
a
real and valuable commodity - gold. The USA, the country with hegemonic financial dominance, however, took the reckless decision in 1971 to abandon this gold
standard. Many other countries followed suit, after which our
money
became known as "fiat currency". Since then the discipline required to
maintain the value and integrity of the currency has waned, leading to a spree of
money printing (QE). It was used to bail out a failing, fraudulent
banking cartel in 2008 and in 2020 to help prevent economic collapse in
the face of a pandemic. Approximately 25% of money in circulation in
the west today was created during the past 12 months. This money
creation might solve a government's short term dilemma, but ultimately
adds to the mountain of debt that will one day have to be repaid by
future generations. The effect of this has been to increase the
wealth of the few whilst impoverishing the many. Unfortunately, the
majority of people have been lured into the debt trap - a 'live now,
pay later' trend that leaves them vulnerable to an economic
downturn such as the one we are currently experiencing due to the
covid19 pandemic. Governments have now become so reliant on QE that they have
left themselves no way out. The fiat money bubble can inflate only so
far. then... it must 'pop', leading to financial pandemonium as stock
markets tumble and the value of our fiat money ebbs away. For those
prudent enough to have been able to avoid the debt trap and have some savings put
aside for a 'rainy day', it may be advisable to diversify into things likely
to hold their value, such as precious metals, cryptocurrency and green
ventures - so important if we are to save our planet from the
destruction that we are currently wreaking upon it. Below are some
suggestions.
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Precious metals:- paper gold may be traded but this is leveraged (more traded than actually exists). Buy the real thing, but not within the regular banking system, where it could be vulnerable to confiscation in the event of a financial crisis. Goldbroker is a UK based company which purchases precious metals for its clients (minimum initial investment £10,000, subsequent investments £5,000), which, if not collected, may then be stored in vaults in any one of 4 locations:- New York City, USA:
Toronto, Canada: Zurich, Switzerland or at Singapore's Free Port
complex. Your account will incur a modest maintenance fee and the
maximum annual
storage charge is 1.5% of the value. Both coins and bars in various sizes may be
purchased. The 4 precious metals available for purchase are: gold,
silver, platinum and palladium.
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Solar
panels are now able to generate electricity significantly cheaper that
that supplied by fossil fuel burning energy companies around the world.
Sunexchange, a South African company, takes advantage of this in a way
that benefits both investors worldwide and energy consumers in and
around South Africa. Once a project such as a school, old peoples home,
supermarket etc., has been identified and approved, Sunexchange hosts
an online crowdsale, where we investors can purchase solar cells for
the project. Sunexchange then installs these at no cost to the
recipient, who then lease them from us, receiving cheaper electricity which generates an income
for us for the next 20 years, paid to us monthly in
Bitcoin. Learn more.
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Cryptocurrency is an internet-based medium of exchange which uses
cryptographical functions to conduct financial transactions using
blockchain technology to gain decentralization, transparency, and
immutability. Importantly, it is out of reach of any government
control, scrutiny or manipulation. Bitcoin is the market leader with a
capitalization of over a trillion dollars, regarded by many as 'digital
gold'. There are many companies that facilitate the purchase, sale,
storage and transfer of cryptocurrency.  is a South African company, with branches around the world, including the UK and Europe. Not only can you open a wallet for Bitcoin , but also for four other popular cryptocurrencies - Etherium, Bitcoin Cash, Ripple and Litecoin. Learn more |
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related
viewing
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This Academy
Award winning film (2010) by Charles
Ferguson exposes the shocking
truth behind the economic crisis
of 2008. The global financial
meltdown cost of over $20
trillion, resulting in millions of
people losing their homes and
jobs. Through extensive research
and interviews with major
financial insiders, politicians
and journalists, Inside Job
traces the rise of a rogue
industry and unveils the corrosive
relationships which have corrupted
politics, regulation and academia.
Available on dvd from  , or watch the
full movie here.
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A well
researched HBO television
documentary that examines in
detail the trends, not only in the
USA but worldwide, which led to
the financial crisis in 2008. Watch the full
movie on
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A well cast
drama (2011) starring
James Woods as Dick Fulds,
head of Lehman Brothers,
William Hurt as Treasury
Secretary Hank Paulson, Billy Crudup
as Timothy Geithner, head of the
NY Federal Reserve and Paul
Giamatti as Fed Chairman
Ben Bernake. A behind the
scenes look at the companies
and personalities embroiled in
the unfolding scenario of the
USA's financial crisis,
leading ultimately to the
massive ($7trillion) bailout,
using public funds, to save
the failing financial
institutions from collapse on
the eve of Barack Obama's
Presidency in late 2008. Available on
dvd from , trailer only
remains on
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| Richard
Wolff is
interviewed on
25th March 2013 by
the American daily
news program Democracy
Now! on
America's economic
problems and ways to
correct them (click on
image). He is
professor
emeritus at the
University of
Massachusetts,
Amherst, now at New
School University, and
author of a number of
books, including Democracy
at Work: A Cure for
Capitalism. |
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CAPITALISM
a love story (2009).
Michael Moore is an American from
a working class background in an
industrial town called Flint. He
looks at the disruption brought
about by corporate USA from the
point of view of those at the
bottom of the ladder, who are all
to often exploited then discarded.
Available on
dvd from , or watch the
full movie on
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OVERDOSE
The Next Financial CRISIS (2010)
This excellent documentary
examines the root causes of the
last financial crisis from a
Swedish perspective. At such critical
times people seek strong leaders
and simple solutions. But what if
their solutions are identical to
the mistakes that brought about
that very crisis? This is the
story of the greatest economic
crisis of our age, the one that
awaits us.
Available on
dvd from , or watch the
full movie on
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FOUR
HORSEMEN (2013)
This excellently presented
British documentary, conceived
and directed by Ross Ashcroft,
looks at the flawed system that
permitted the conditions for
corporate monopolies to avoid
tax and accountability,
deregulated banksters to wreak
financial havoc, wealth
gap to break all records and a
privatised military that
encourages war - all this whilst
trashing our planet in the
process. 23 of
today's controversial thinkers
propose ways we could change to
redress the balance.
Available on
dvd from , or watch the
full movie on |
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In
this edition of the Keiser
Report, Stacy Herbert and
Max Keiser reveal not only how
use of the English language is
engaged to disguise financial
fraud and those affected by it,
but also how the wealthy elite
routinely manipulate the
markets, help corporate clients
commit tax fraud and even
bankrupt entire economies by
insider trading and wash trades
in a derivatives market that
facilitates trades many times
larger than the value of the
stock.
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