lbo-talk-digest V1 #1023

James Wilson James_Wilson at
Wed Feb 24 11:38:45 PST 1999

Dear LBO-talk participants,

As a newbie who has just joined this listserve after reading Doug Henwood's excellent book "Wall Street", I'm a bit surprised to find that it doesn't seem to involve much discussion of business or economic issues per se, and has drifted to topics\s as far afield as good/bad television programs and women's body images... all valid and interesting topics, but not quite what I had in mind after reading "Wall Street"...

Rather than just bitch about it, I'm going to try to start the ball rolling in a different direction...I'm posting a short article which I just wrote for my local ---ie, St. Catharines Ontario --- Unitarian fellowship's newsletter. As president of that august body, one of my duties is to write a monthly column.

I invite your comments- good,bad or ugly!


James Wilson


My dear fellow Unitarians,

I have been writing and re-writing the following column for the past several months. Well, there’s no time like the present, so prudence be damned, here goes...

As many of you know, I have become interested in economic issues over the past few years. My study of the financial system underpinning our modern world’s economic and political system has led me to become a thorough non-believer in the beliefs and rituals of the new religion “Free Market Fundamentalism”. Examining carefully the dogma of our modern-day popes, cardinals and priests (ie Wall Street bigshots, central bankers, neo-liberal thinktanks, the IMF and World Bank, corporate CEO’s, economists, paid-off politicians, etc. etc.) what we see is a fabric of half-truths and outright lies, chiefly useful for weaving into lovely clothing to dress up the gods of greed and avarice.

You have probably heard about the depression-style conditions the Russians, Indonesians, Brazilians, Mexicans, and now many of our Canadian hog and grain farmers are now enduring. But somehow the worshippers of the Savage Market God have managed to evade all responsibility for what radical University of Ottawa economist Michel Chossudovsky has called “the globalization of poverty”. Considerable resources have been used to persuade us that prosperity for all lies just around the corner --- or at least, it might if only that damned government would stop meddling.

Well, here we go off the deep end: I am going to make a rather dire prediction: sometime in the year 1999, I believe that the Western world will finally reap what has been sown for the past ten or twenty years, the Crash of ’99 -- which will the 1929 stock market crash look like a Sunday school picnic. What the hell, I will even go so far as to predict that this will happen in October, traditional market mayhem season.

How can I justify this dark apocalyptic vision? Has your president gone bonkers? Well, time will tell. But here is my reasoning.

First of all, many of the world’s major debtor nations are reaching the point, after years of austerity, sacrifices and belt-tightening, where they just won’t be able to stay on the debt treadmill any longer, and will simply have to default, just as Russia is in the process of doing. This will certainly wipe billions of dollars off of Wall Street. I’m thinking here especially of Mexico, the world’s greatest debtor nation. (Remember all the great things that NAFTA was supposedly going to do for Mexico?)

Secondly, if you read John Kenneth Galbraith’s book “The Great Crash”, available at the public library, you’ll recognize a lot of today’s events -- but with one major difference. Hardly anyone in the twenties was expecting a crash. Today, just about all the big shots, including the head of the U.S. Federal Reserve Bank, are plainly worried about one. They don’t share these fears boldly with the general public, but if you listen closely, you will hear allusions to them sotto voce.

Banks and other financial institutions have covertly acquired exclusive title to create more and more money through lending and other mechanisms. So, there are too many dollars (and other financial instruments) for the real goods and services available. The typical figures cited: $72 are traded in the “financial” economy for every $1 used to buy and sell real goods and services. To watch the TV ads lately, you’d almost believe that mutual funds were the major national product of both Canada and the United States. What they really are is casino gambling having little or nothing to do with investment in real goods or services.

We in the developed world now have a “bubble economy” where the tacit policy of both our large financial interests (ie, our unelected government) and our elected government is keep that stock market going ever higher. And what is making the stock market go ever higher? Technological innovation? A rising worldwide standard of living? Better health, education and housing? A higher price to earnings (P/E) ratio for stocks? No, no, no and no.

Merger-mania, “downsizing”, systematic, planned wipeout of the currencies of many of the world’s smaller nations, global piratization of public assets. Like a cancerous growth upon a healthy organism, the casino economy is growing at a tremendous rate while sucking away at the lifeblood of its host, the productive “real” economy .

For example, a recent study by the Vanier Institute of the Family show that ordinary Canadians are facing record debt (“Right now, families are not saving one red cent”) with real family incomes virtually flat since 1980. Two spouses now typically work to make the same salary that one used to bring in.

If and when there’s a sudden loss of confidence, then all the players will rush to cash in their chips at the same time to purchase real goods and services. As if 72 people all tried to sit down in the same chair.

If my prediction is right, we are now living in the last days of Pompeii. What does one do in such circumstances? Well, you try to cash in your chips before the high rollers do; withdraw all your money from the bank, perhaps converting it into U.S. dollars or gold, and then bury it in a jar and wait.

Time will tell, and you’ll soon have the chance to either deride Wilson as a dangerous crank, or praise his foresight and rue the fact that you did not follow his wise advice.

James Wilson

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