"Dirty Money" Foundation of U.S. Growth and Empire

[DMJ]

This is originally from La Jornada (http://www.jornada.unam.mx/), and
translated in narconews (http://www.narconews.com).  The claim here seems
to be pretty sweeping -- any of you economists care to comment?

-d

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"Dirty Money" Foundation of U.S. Growth and Empire

>From La Jornada, May 19, 2001
By James Petras

Size and Scope of Dirty Money
Laundering by Big U.S. Banks

There is a consensus among U.S. Congressional Investigators, former
bankers and international banking experts that U.S. and European banks
launder between $500 billion and $1 trillion of dirty money annually, half
of which is laundered by U.S. banks alone.

As Senator Levin summarizes the record: "Estimates are that $500 billion
to $1 trillion of international criminal proceeds are moved
internationally and deposited into bank accounts annually. It is estimated
half of that money comes to the United States".

Over the decade between $2.5 and $5 trillion criminal proceeds are
laundered by U.S.banks and circulate in the U.S. financial circuits.
Senator Levin's statement however, only covers criminal proceeds,
according to U.S. laws. It does not include illegal transfers and capital
flowsfrom corrupt political leaders, and tax evasion by overseas
businesses. A leading U.S. scholar who is an expert on international
finance associated with the prestigious Brookings Institute estimates that
"the flow of corrupt money out of developing (Third World) and
transitional (ex-Communist) economies into Western coffers at $20 to $40
billion a year and the flow stemming from mis-priced trade at $80 billion
a year or more. My lowest estimate is a $100 billion per year by these two
means which we facilitated a trillion dollars in the decade, at least half
to the United States. Including other elements of illegal flight capital
would produce much higher figures." The Brookings expert did not include
illegal shifts of real estate and securities titles, wire fraud, etc.

In other words an incomplete figure of dirty money (laundered criminal and
corrupt money) flowing into U.S. coffers during the 1990s amounted to
$3-$5.5 trillion. This is not the complete picture but it gives us a basis
to estimate the significance of the "dirty money factor" in evaluating the
U.S. economy. In the first place, it is clear the combined laundered and
dirty money flows cover part of the U.S. deficit in its balance of
merchandise trade which ranges in the hundreds of billions annually. As it
stands, the U.S. trade deficit is close to $300 billion. Without the
"dirty money" the U.S. economy external accounts would be totally
unsustainable, living standards would plummet, the dollar would weaken,
the available investment and loan capital would shrink and Washington
would not be able to sustain its global empire. The importance of
laundered money is forecast to increase. Former private banker Antonio
Geraldi, in testimony before the Senate Subcommittee projects significant
growth in U.S. bank laundering. "The forecasters also predict the amounts
laundered in the trillions of dollars and growing disproportionately to
legitimate funds." The $500 billion of criminal and dirty money flowing
into and through the major U.S. banks far exceeds the net revenues of all
the IT companies in the U.S., not to speak of their profits. These yearly
inflows surpass all the net transfers by the major U.S. oil producers,
military industries and airplane manufacturers. The biggest U.S. banks,
Bank of America, J. P. Morgan, Chase Manhattan and particularly Citibank
derive a high percentage of their banking profits from serving these
criminal and dirty money accounts. The big U.S. banks and key institutions
sustain U.S. global power via their money laundering and managing
ofillegally obtained overseas funds.

[ continues: http://www.narconews.com/petras1.html ]