GREAT DEPRESSION in 2030s?

It is irritating to the point of absurdity to read or listen to economists and journalists dealing with economic issues, especially in political economy and macro-economics, trying to predict the future as though they have a crystal ball. Are economic predictions, even those made with the aid of computer models, any more credible than 'psychic' predictions, or should governments, business, labor unions, and academics do some serious reflection about how to create a social and economic safety net for the next great depression? Economic predictions of the next recession or the next mega growth trend in a national, regional, or global scale notwithstanding, there are theoretical and empirical indicators that lend themselves to analysts trying to assess how and why the next recessionary or expansionary cycle in the market economy would evolve.


We do know some structural features about capitalism as it has evolved since the Renaissance when it was in its embryonic phase under mercantile capitalism spurred on by conversion from subsistence to commercial agriculture and long-distance trade. One of structural feature is that capitalism entails perpetual quest for expansion; but that does not mean endless economic growth as its apologists try convince the public ever since Adam Smith. While the market economy strengthens the capitalist class, it does not mean a steady line of upward progress for the rest of society. or wealth of nations; on the contrary, social equality and social justice along with uneven international economic growth and development are sacrificed for capitalism to function.


Rooted in capital accumulation and social hierarchy, the capitalist system operates in small and larger cycles of expansion and contraction, small expansionary cycles that may last 3-6 years, followed by contraction that may last 2-3 years - economic cycles may last longer and should not be identified strictly with business cycles, though the two are not necessarily mutually exclusive. There are larger expansionary cycles as in the 1880s, followed by contraction of the 1890s - 1920s followed by the 1930s. Within the expansionary cycles there are small downturns just as within the contracting cycles there are  mini expansions. There are also mega expansionary and recessionary cycles that last for many decades, if not more than a century.


Variables that impact expansion and contraction are mainly found in the market itself that has the capacity to absorb what is produced. The state also has a catalytic role, for without its intervention through central banks and fiscal policy, as well as advocating for international market expansion, capitalism cannot survive, especially in today's world of welfare capitalism in some countries, quasi-statism in others, and a mix of both in others. The state has always been the key player in the market economy that has never wanted state intervention except when it came to serving its interests in expansion or rescue.


Besides social polarization inherent in the market economy, uneven geographic development and asymmetrical (unfair) trade relationships between the strong national economies and the weaker ones, combined with capital concentration in the core (strongest) capitalist countries, while the the weaker ones suffer chronic balance of payments deficits results in cyclical crises. As the world becomes more integrated economically under the market economy, social inequality rises owing to super concentration of capital in a small percentage of the world's socioeconomic elites that prevail over governments catering to the market economy. Studies indicate, including those of the UN and World Bank, that from 1970 until 2010, poverty has been rising on a world scale along with geographic and social inequality, largely owing to the slow decline of the middle class in the Western World. Will the rise in poverty and downward social mobility of the middle class, especially in Western nations precipitate the next major contraction and does it signal economic and political problems that will only be resolved through widespread social unrest?


With the help of computers, it is possible to see that after the sluggish growth decade of the 2010s, we may have a more robust decade of the 2020s. This will be helped by massive developments not only in technology, renewable energy and biotech industries. The more thorough exploitation of untapped resources in underdeveloped areas, especially Africa where China among the other Great Powers, is heavily focused may help with the next expansionary cycle of the 2020s. The so-called green technologies may also provide some stimulus, although much of this is mostly a very thin public relations veneer behind which rest corporate interests and governments trying to appease the public that economic exploitation will not come at the expense of the ecosystem and the large masses of the population.


The Malthusian theorists continue to argue that the problem of poverty - rising during contracting cycles -  rests with 'too many people, too few goods and services', so if we curb population growth and consumerism...well, the problem will be solved because there will be enough for everybody. On the surface, the theory seems to make some sense, largely because people immediately associate it with the size of the family and the income it earns as analogous to support the family. If the family has sufficient income to live well for three members, all is well and good, but if there are six children, there is a problem. So is this what is wrong with the world, it has too many people and not sufficient resources, or is it a problem of distribution of those resources?


If population were to remain frozen for the next two decades, would the world avoid a possible great depression in 2030s; even if population were to drop by one billion, and resources across the board were to rise by 20% would the capitalist economy avoid a major contracting cycle under the model of massive capital concentration, uneven economic development, speculative, parasitic and corrupt banking and corporate practices, a state fiscal structure intended to buttress finance capital? Finally, if poverty rises during contracting cycles, why has much of the Western World experienced downward social mobility in the past four decades amid a period of economic growth?


Even if the state were to do everything that finance and corporate capital requested, short of allowing people to die of starvation in the streets, is it theoretically possible that the market economy can avoid economic contractions in the future, and a major one in the 2030s? It is not true that the major cause of the depressions of the 1890s and 1930s rested with governments caving in to capitalists in the previous decades, only to come back and impose some sense of rationalism on the market economy so it does not self-destruct?


It is not my intention to engage in historicist logic, but if the political economy continues on its present course of massive capital concentration and downward social mobility, the chances of a great depression in 2030s, perhaps a decade later, is inevitable. It is true that there are social and regulatory safety mechanisms that exist today to protect both the economy and society from the type of depression that took place in the 18890s and 1930s. However, as much in the US as well as as across Europe those safety and regulatory mechanisms have been eroding in the last three decades, making the economy and society much more vulnerable. 

Predatory by nature, capitalism needs regulatory mechanisms along with perpetual injections of capital transfers through the fiscal system - money collected from the bottom social classes - in order to survive. Any other scenario would mark its demise, not because of any external threats, but owing to self-destructive tendencies. I have no crystal ball that tells me we are headed for a great depression on the one-hundred year anniversary of the 1930s tragedy. All I have is the record of the past and current trends indicating that there is a very good possibility of a major economic contraction on a world scale with very serious social and political consequences if it takes place.

SLAVES TO GODS AND DEMONS - chapter V: the Curse of Eros

This historical literary novel takes the reader through a journey of mid-20th century Greece, as it reflects on the rich legacy of the classical world of paganism and Christianity.


The following link will take you to the novel's fifth chapter  "THE CURSE OF EROS"  in its completion.

http://assets.booklocker.com/pdfs/5512s.pdf

http://assets.booklocker.com/pdfs/5512s.pdf

EURO-CRISIS AND CRISIS PEDDLERS

The Eurozone dilemma:
Are the choices before the Eurozone between 1. a devalued euro currency or the real possibility of dissolving the common market/currency bloc, 2. a northern euro-currency versus a southern one,
3. a euro-currency for international trade and national currencies for domestic consumption, 4. other options such as a return to national currencies but retaining the trading bloc? That the accrediting agency Moody's has placed Germany among other EU creditor nations on watch for a downgrade of their triple A rating is very significant in so far as it forced Germany to defend the eurozone; but doing so proves the point that Moody's was making about the reality of an inevitable downgrade. Exactly what does all of this mean economically at the national, regional and global level? Who is propagating to exacerbate the crisis and who is profiting in this speculative market? Can the words of well-paid Nobel prize winners in economics be taken seriously, unless they have full disclosure as to their personal financial interests?

1. SPAIN: Banking, Fiscal and Social Crisis
Spain has agreed to an one-hundred billion euro bailout for its banks. That may sound like a lot, but it is not sufficient for Spain to recover, for it turns out that Spain, like Greece, has a crisis that is not merely confined to banking but impacts the state budget and real economy currently in severe recessionary more and 25% unemployment. After looking at various figures from different sources, I have concluded that Spain will have to have a haircut of its debt and additional money to service past debt, as well as operational expenses to meet budgetary needs, all of it amounting to around half a trillion euros, or one-quarter of the European Central Bank reserves.

This may sound like an astounding figure, but if one considers that Greece has already absorbed a quarter of trillion between 2010 and 2012, the figure for Spain may actually be very low. The 10-year bond is trading at extremely high levels (7.5%) that cannot be supported from domestic assets. Speculators are waiting in the wings to make money from the Spanish crisis, assuming that the IMF, European Central Bank, US, and Germany allow for such a scenario to unfold unchecked. If these funds (roughly half-a-trillion) are not made available, Spain will have to revert to a national currency, thus taking down with it all of the eurozone; to say nothing of the fact that Spain may have explosive social unrest that could trigger a European-wide movement against the austerity regime that the banks, IMF and Germany are imposing on the rest of Europe. Does this mean that the EU must come up with half-a-trillion euros, otherwise there is a chronic problem? Only an announcement is needed that the EU stands behind Spain to meet its monetary needs, and that will calm the markets.

2.  ITALY vs. GERMANY
The situation in Italy is even worse than Spain, partly because Italy is in the G-8, enjoying one-quarter of the eurozone's GDP, wish sufficient leverage to bring down the entire eurozone, if it does not secure EU cooperation on how to fix its fiscal problems. Italy's economy is even more integrated into the EU than Spain and while it may not be at the boiling point like Spain in terms of a banking and social crisis, it is not far behind. Because it has a two-trillion euro economy and sovereign debt that cannot be supported without massive austerity measures and foreign injections of capital, Italy will need twice the bailout money that Spain will. In short, between Italy, Spain, Portugal, Greece and Ireland, the entire reserve fund of the European Central bank estimated at two trillion euros will be gone in a single day.

How can Germany save Italy to preserve the eurozone, other than to make money much cheaper, with the exchange rate well below one euro to the dollar? Growth for the balance of the decade will be slow, so the only other option within the eurozone model is to let the printing presses work overtime -  the current exchange rate reflects this is where things are headed, but we have a long way to go with another 10 to 30 percent devaluation of the euro. Does Italy have a choice but to force Germany to devalue the euro? When the US, followed by France and UK withdrew money from Germany on the eve of the Great Depression, the result of such retrenchment was a worsening of the crisis. Can Germany afford to disengage just because it wants to make greater profits from a higher exchange rate?

3. GREECE: Apocalypse Now!
We come to the poster-child of the eurozone crisis, Greece that has a debt of 365 billion euros, a GDP of around 200 billion, and no chance in hell of reducing its debt, mostly foreign-held, down to 120% of GDP by 2020. Currently, Greece is hoping to sell assets to make some headway, but even if it sold everything the public sector owns and that is profitable, it would still have a problem with the public debt, which cannot come below 120% of GDP by 2020. Contrary to what the IMF has been promising in the past two years, Greece has been sinking into deeper debt, deeper economic and social crisis and political polarization where the middle class sees no solution but in leftist and extreme right wing political parties. Former IMF official, currently bank executive Panayiotis Roumeliotis, stated that: "We knew at the Fund that this program (austerity program) was impossible to be implemented because we don't have any successful example." The IMF went ahead with the EU in implementing a program that was doomed to fail from the start, and the question is why? The former IMF official went on to state that the IMF was prepared to argue that if the program failed it was the fault of the government receiving IMF-EU advice, not of the program.

The amazing thing about the failure of the IMF austerity program in Greece is that it is a repeat of what the IMF has been doing in the past six decades around the world with equally disastrous results for the real economy, but with resounding success in securing national integration into the global corporate system. The situation in Greece has served as the canary in the coal mine, though clearly the real explosion will come from Spain and Italy, while Greece remains rather insignificant with just 2% of the eurozone's GDP. If there is a social uprising in Spain, Greece will certainly follow; all of this may take place by winter 2012-2013 as tourism season will come to an end and unemployment rises across Southern Europe.

4. Conclusions
The stock and bond markets along with social and political developments prove on a daily basis that the situation in EU is very serious. Is it serious enough to bring down the eurozone and sink the world economy into another recession. On the payroll of companies that a speculating on currencies and 'shorting' securities, some economists constantly argue that a double-dip recession is upon us. I have stated in the past that I have no argument with any analysis on the part of economists like Roubini and others, as long as they disclose their sources of income and the percentage that comes from companies shorting the market. Scaring investors because they are paid and hiding behind academic credentials is more than highly unethical. It is true that all of Southern Europe and most of Eastern Europe have very serious fiscal, economic and social problems. Trying to analyze those problems and proposing possible solution is one things; trying to cash in on those problems as a propagandist is unethical and condemnatory. The eurozone needs a liberal monetary policy for the decade to lift itself out of crisis, and the sooner political and financial elites realize it the better for all concerned.

DRUG LORDS, BANKERS, AND THE STATE

One assumes that bank executives are honorable, while drug lords are criminals; bankers contribute to the economy and society in a positive manner, while drug lords are parasitic, destroyers of human lives and the social fabric; bankers represent the official economy that has the stamp of legitimacy from society, while drug lords represent the underground economy. 

What if owing to the structural weaknesses of the formal economy and the relative strength of the informal economy on a global scale there is a merging of interests between drug lords and bankers, between the formal and informal informal economies where the lines are blurred owing to money laundering operations on a global scale? What if the process of capital accumulation is no different regardless whether the money deposited in banks emanate from pharmaceutical companies or drug lords, does it mean that capital from the legitimate source is not as useful as from the illegal? If this is the case, can regulation prevent the convergence of interests between drug lords and bankers?


This is not to suggest that the average bank employee is corrupt, or that the average bank manager or executive is hardly distinguishable in deeds than a drug lord; any more than it is to suggest that banking has not provided a useful function in the world's economic growth and development in the past six hundred years. The idea here is to raise some questions that governments have been asking and some they dare not ask about the symbiotic relationship between legitimate and illegitimate money in the world of finance. 

True there have been many official reports about narcotics and banks in Florida, Cyprus, Mexico, Central America, Latin America and the Caribbean, just as there had been rumors of mega-banks of HSBC fame dealing in narcotics money laundering. Given that at least 10% of the world's entire GDP is illegitimate money - in some countries that percentage is as high as 30% - how does capital from drug lords corrupt the legitimate business of banking, politics and society?While there are excellent UN, US, and World Bank reports on narcotics and the money flow, it is very difficult to find comprehensive reports that have the road map of narcotics that traces money to large banks like HSBC and even more difficult to trace narcotics to US intelligence agencies working with foreign governments and military - Honduras, for example. By contrast, there is no shortage of reports linking the narcotics trade to any regime on the US enemy list. In short, if it were not for the fact that HSBC was laundering money for "enemy Islamic states", would we know everything about the bank's narcotics laundering operations?


It is interesting that the rise of corrupt banking corresponds with the deepening economic crisis of the political economy and the rise of narcotics trafficking in the last three to four decades. The question is whether drug lords and bankers have assumed roles of inordinate influence in society just at a time that official or formal capitalism is weakening and contraband activity assumes greater significance. As far as protesters across US and European cities are concerned, are bankers not more parasitic and destructive than drug lords? After all, drug lords have influence in Mexico, Central America, Colombia and the Andes, Caribbean, Afghanistan and coastal  West Africa, whereas bankers have a global reach. Are we now at a turning point where government is so much weaker than bankers that state regulation cannot prevail to provide a semblance of legitimacy to the financial sector, even though the links between drug lords and banks have been established for some financial institutions?

From the later Middle Ages to early Renaissance rise of banking houses in Italy until the early 21st century, banking has always had more than its share of mega scandals, especially as its significance in the economy and society has risen. This is in part because banking business deals in the movement of large sums of money deposited and loaned both from and to private and public sectors where the origin of money may not always be as clean as bankers would wish it. However, it is also the fact that so many from the world of banking/finance are in charge of ministries of finance - consider that Goldman Sachs, a company with its share of numerous scandals around the world, manages to have its former executives serving in key US and EU government positions. 

In the 19th century, the Riggs Bank in Washington made it money and reputation both as a lender and exclusive depository for the government. One of the most influential banks in financial and political circles, Riggs was instrumental in the creation of the Federal Reserve and remained a powerhouse of influence until the massive scandals of the 1970s involving the bank's role in handling deposits for Chilean military dictator Pinochet and Saudi Arabian funds used for intelligence operations. FBI discovered that Riggs in the 1970s, like HSCB in the last ten years, had been used as a catalyst to money laundering, terrorist financing, and other illegal activities, all with the full knowledge of politicians, among them the uncle of President George W. Bush serving in executive role at Riggs. In 2004, when the Justice Department fined Riggs for engaging in illegal activities, a number of other banks, including HSBS, Deuchebank, Bank of America, Wells Fargo, ING, CITI, Barclays, to name only a few, were engaged in questionable if not blatantly illegal activities that included everything from money laundering from global narcotics operations to manipulating the rate banks charge each other (Libor) to insider trading and falsifying statistics. 

It is possible that the Frank-Dodd Act of July 2010 may still restore some safe guards into banking so that risks are limited, thought there are those that doubt the new set of regulations will limit the rising power of the banking lobby. Will the new act only protect the big banks and destroy the small ones, and will it be able to prevent scandals that include money laundering operations from drug cartels?

The Reagan and Bush administrations launched the deregulation machinery of banks, thus allowing banks to enjoy wider range of risks in deposits, which included drug money, as well as 'investment products' that included high risk ventures that is reminiscent of the 1920s when the banking system crashed, along with the stock market, taking down with it the entire global economy. 


It is possible that the Frank-Dodd Act (July 2010) may restore some safe guards into banking so that risks are limited, thought there are those that doubt the new set of regulations will limit the rising power of the banking lobby. Will the new act only protect the big banks and destroy the small ones, and will it be able to prevent scandals that include money laundering operations from drug cartels? What does the record show for the past two years? Has Frank-Dodd prevented a 'banking culture' rooted in questionable if not blatantly outright illegal activities? Is the answer nationalized banking system, more regulation, no regulation, including permitting money to flow in and out of banks from any source, including drug cartels, just as long as the bank keeps presenting healthy quarterly reports to investors?

Regardless of regulation, there have been many banking scandals in the last three decades, but one of the largest involves UK-based HSBC, which does business in many countries, including US and Mexico. That the bank was involved in money laundering from drug lords should not surprise anyone, because money laundering operations have been an integral part of the banking business for as long as banks have existed. After all, what is a drug lord to do with all that cash, if not store it somewhere and launder it in the process?

Besides HSBC, ING recently paid a fine of more than $600 million, a good deal lower than what will be imposed on HSBC. There are more banks waiting in the wings to have their story told about their activities with drug cartels and money from 'enemy Islamic sources'. Some may find it absurd that Vatican Bank has been involved in corruption, money laundering, mafia money and other illegal operations, but this too is an old story that makes sense only as a part of the larger question of how we distinguish legitimate from illegitimate money  (good clean Catholic money from bad mafia money) and whether there are illegal influences in the political realm behind the smiling faces of legitimacy, even if the Holy Cross hangs behind the bank executive's desk.

It is not known what amounts illegal drugs generate every year, but estimates are $18-39 billion from the Mexican and Colombian cartels alone, with the US remaining the world's biggest consumer coming in at between 25 and 30% for a population that is roughly 4% of the world. It is also estimated that drug related violence in drug producing and drug-running nations has surged, as a large percentage of the money in circulation comes from the drug trade. Of course the solution does not rest with farmers asked not to raise the high-cash coca crop, any more than the solution is 'just say no to drugs'. Legalization may be a something to consider and there are many articles that make a good case for the manner that legalization may help in some respects, but result in higher drug use. 

While the US wastes millions to fight the drug trade, it cooperates with the military and intelligence in Central America, Caribbean and Bolivarian republics which is deeply involved in the narcotics trade. If the CIA and the Pentagon have a good working relationship with military and intelligence offices in Latin America and Caribbean for security reasons, how can any money spent on fighting the drug trade be effective? How is it possible for the war on drugs to be effective if large world-class banks launder drug money? In short, how can government pursue an official policy against corruption and narcotics, but at the same time have close ties to the officials that make the drug trade possible? How can government have massive public campaigns against drug lords, but not bankers that launder drug money?

RECESSION AND SUICIDE

       Materialistic/hedonistic lifestyle and Suicide

• During the Great Depression, the press published dramatic stories of people committing suicide after they had lost their savings, homes, and/or jobs. The World Health Organization (WHO) currently reports that more than 800,000 people kill themselves each year, a rate that has been rising owing to the recent recession. Is there a correlation between economic recessions and increase in suicides? The figures from developed, semi-developed and underdeveloped nations indicate that there is a link. Even in the UK, which is outside the perimeters of official austerity, unlike Ireland, Portugal and Greece, the rate of suicides rose 15%  in 2011 in comparison with 2007. It is true that suicide rates in many developed nations have risen sharply in the last half century, although incomes have risen for most of that period, but falling in the past two decades. This is in part because the materialistic/hedonistic culture and lifestyle on which the individual's psychology is molded cannot absorb the shock of having a lessening of materialistic/hedonistic lifestyle undercut by economic contractions impacting the individual's life.Therefore, when the nice home, car, and lifestyle are diminished, all things on which the value system is based, the individual cannot cope and sees no point to go on living.
•  Suicides in Southern Europe
• More interesting than northwest Europe, which has a long-standing pattern of higher suicide rates than most of the world, southern Europe (Greece, Portugal, Spain and Italy) have seen their suicide rates skyrocket in the past two years. From 1980 to 2000 suicide rates averaged six per 100,000, or about the same as in Mexico and Israel, whereas in the Russian Federation and South Korea rates were almost three times higher. There is a long-standing debate about suicide as an individual matter vs. a social problem, something that is discussed more in Asian and other non-Western societies, but is more likely dismissed in Western nations by media, politicians and social elites that want to blame the individual and not the institutional structure for the conditions providing fertile ground to suicide attempts.
• Mental Illness, Alcohol, Substance abuse and Economic hardships.
• While suicide is often associated with mental illness, abuse of alcohol and substances, suicide rates since the recession of 2008 have risen owing to people losing jobs, homes, income, falling into debt and watching their lives destroyed and identities shattered. Particularly in Italy and Greece, suicide rates have been rampant in 2011 and 2012, with blatant cases of individuals killing themselves because they see no way out of economic hardships. The dignity question, often associated with middle class status is linked to rise in suicides at a time that the economic recession has eroded middle class living standards.   
• OECD warnings on suicides
• OECD - Organization for Economic Cooperation and Development - has been compiling statistics that indicate a direct a correlation between economic hard times and suicides, especially in countries under formal or informal austerity pressures. As EU economy will continue to struggle in 2012 and 2013, with rising unemployment, falling wages and benefits, the likely scenario is higher rate of suicide attempts across most of EU, along with higher crime rates  and social unrest. At the same time, the social fabric is under attack, given that the economic recession is impacting the integrity of the family, as more people need to take anti-depressant medication to cope with external problems that they internalize.
•  GDP Correlation to Suicide
• Studies conducted over long periods suggest that the higher income the lower the suicide rate. Moreover, higher income nations suffer a lower suicide rate during expansionary economic cycles than they do during recessionary cycles. As much in the US as in Japan, suicides rates rise during recessionary cycles, though it is not true that such rates rise across all of Asia during economic hard times, thus indicating that value systems - traditional-religious rooted society does impact the individual's outlook on suicide. 
• Suicide: Internalizing an external problem.
• It is true that in much of the Western World the external problems of economic recessions that lead to job loss, home loss, savings depletion, high debt, divorce, etc. is often internalized, largely because the media, politicians, priests and sages insist that any calamities that befall on the individual are her/his fault and not a structural or institutional problem. Therefore, the sense of guilt, self-hatred, and pain is so intense that to stop the hurt, the individual must kill the self, instead of pointing to the predatory institutional system as the root of the problem.  
• Capitalist value system and Suicide
• In Arthur Miller's Death of a Salesman, the option of suicide is seen as one that the system of the market economy brings to Willy Loman, an option from which he cannot escape because his life, his identity, his family, his success is defined. Has finance capitalism created a new class of Willy Lomans on the verge of depression and contemplating suicide, or is this an exaggeration, considering that no matter the political economy,  human beings would always contemplate choosing to end their lives when pressured by unpleasant circumstances? Does the marketing/publicity machine of the free market economy condition peoples' minds to the degree that they actually believe in the illusion of 'making it rich some day', and once that does not come true some become depressed and a few suicidal? To what degree has the credit economy contributed to false hopes about achieving the dream of riches, when in reality such dreams are confined to a tiny percentage of the world's population? Finally, what is the meaning of life for an individual who grew up in materialistic/hedonistic society in which material success cannot be achieved?

MILITARIZED OLYMPIC GAMES and the CULTURE OF 'TERRORISM'

With the US and Western Europe at its core, much of the world has been immersed in the cultural politics of 'terrorism', as the US and Western governments define it; namely, religious terrorism emanating from fanatic Islam intent on undermining 'Western Democracy'. There have been right-wing Christian religious fanatics as well as neo-Nazi elements in the US and Europe engaged in mass violence. However, that is something that Western media, politicians and 'expert analysts' dismiss as 'isolated incidents of unbalanced individuals', while anything with the imprint of Islam entails guilt of the entire Muslim world - collective guilt for Islam. More significant, there is another kind of terrorism, (for more on this, see my posting entitled 'Human Rights Violations: Governments and Banks') namely, the kind that has resulted from wholesale displacement of large segments of the middle class and workers as a result of neo liberal policies, policies that the International Labor Organization (ILO) argues account for the very high rate of unemployment across much of the Western World.

After 9/11, not just the US but much of the Western World established institutions and geared its domestic and foreign policies to combat Islamic-based 'terrorism' that has replaced the old Cold War. The 'war on terror' became the new catalyst to engender social conformity and maintain loyalty to the status quo. From the media to educational systems, from police to intelligence, all sectors of society and institutions operate under the cultural cloud of 'terrorism' as molded by Western governments. Though the Olympic games of Beijing in 2008 were largely the exception, the Olympic games of Athens in 2004 and those of London in 2012 are very much part of the Western culture of terrorism, looking at Islam as the potential enemy waiting to strike. This is indeed ironic, considering the the spirit of the Olympic games entails peace and solidarity  even among 'warring factions'; a goal that Pierre de Coubertin, a product of the Franco-Prussian War, was interested in promoting when he revived the summer games in  Athens in 1896.

The spirit of the Olympic games was tainted politically by Nazi Germany in 1936 when Hitler and the psycho-neurotic individuals who ran the Third Reich were interested in demonstrating the superiority of the Aryan race. The games were tainted politically throughout much of the Cold War as they had become an arena of competition between the Communist East and the capitalist West. By the time that the Cold War ended, however, the games had become so commercialized that the Atlanta Olympic games were labeled the "Coca Cola games", marking the total triumph not just of the bottling company, but of the corporate dominance of the games that were the excuse to sell products and services to billions of consumers around the world.

What is the spirit of contemporary Olympic games if not the use of athletic games - hardly amateur and hardly non-professional - by large corporations to advertise their products and services, and an attempt to attract tourism and validate a certain national image that would add national (commercial and political) prestige? Both Greece in 2004 and China in 2008 used the Olympic games as platform to demonstrate to the world that they are 'global players'. This was certainly very true in China's case, but a myth of Olympian proportions in the case of Greece whose foreign debt skyrocketed as a result of the games that provided another pretext for Greek Olympic game officials and politicians to line their pockets with massive bribes from domestic and foreign contractors like Siemens among others.

The Greek government has never published an official cost of the games. Security alone cost one billion euros, while the range of estimates for the games runs from 10 billion to 27 billion euros, despite the fact that only 5.5 billion was actually budgeted for a country with a GDP of 200 billion billion and current public debt of 365 billion! Regardless of the controversy about the actual cost, one thing on which everyone agrees is that the Olympic games contributed heavily to the public debt crisis.

That countries use the Olympic games to showcase themselves is well and good, even if its means total bankruptcy as in the case of Greece and even if it means paying past debts for the next three to five decades, while suffering double-digit chronic unemployment. Human beings are hardly perfect and even less so their institutions that undermine any semblance of human decency, even if those institutions are supposed to represent noble ideals as the Olympic games. More practically speaking, do Olympic games generate sustainable growth and development, do they attract domestic and foreign investment that will create jobs and benefit the local and national economy? Certainly every government, including UK in 2012, promises that the games will do all of that and more for the economy and society.

Political promises about the games aside, the question is whether the Olympic games be used to promote multinational corporations and militarism and police state as is the case of UK in 2012? There have been a number of thoughtful articles regarding the 2012 London-hosted Olympic games that are the most militarized in history. Some such articles argue that the Olympic games are the pretext to convert the city of London into an emergency police state, with more than 17,000 soldiers serving as part of a security network that includes uniformed and undercover police, special agents, and other security personnel. Possibly the largest military-police operation in Britain's history during peacetime, the militarized Olympic games will have sharp-shooters as well as sophisticated military hardware - surface-to-air missiles, etc. -  across the city, all to make certain that there is no 'terrorist' incident.

It is estimated that the ratio of security personnel to athlete may be four-to-one - 10,000 athletes to 40,000 security personnel, a new world record! Is the militarization of London justified and is this the future of Olympic games? Naturally, militarized games translate into big profits for defense-intelligence-security-communications companies, like the US-based company Long Range Acoustic Device. Considering that UK is a close US ally and it has taken a hawkish role in overt and covert operations in Muslim countries over the last two decades, should anyone be surprised that it is arming London as it has never done before? If I were in position of authority, I would opt for massive spending on security and I would leave nothing to chance. 

The cost of the games is now estimated at 24 billion pounds sterling, despite promises at one point that it would be under three billion, and despite promises that the games would be a 'public-private' joint enterprise - only 2% will be paid by the private sector and the rest by the British taxpayers amid a recession. All of the major multinational corporations will have a prominent present, from Dow Chemical to McDonald's. This is fine, except for one thing, why should UK taxpayers foot the bill so that the government can put on a show that offers multinational corporations an opportunity to sell their products? If the answer is so that UK can increase tourism, studies show that Olympic games have an ephemeral bump in tourism and not a long-term one. Clearly, some cities, like Atlanta in 1996, have benefited from the games, while others, like Athens in 2004, will continue to feel the pain of paying back debt for many decades.

More significant than economic growth and development, what is the cost of militarizing London to English democracy, to Western democracy at large? Is there hope that the Olympic games will recapture the spirit of ancient times or of its 19th century French  founder who believed in amateur competition, peace, and solidarity among all people? Are the games used to distract the attention of people away from austerity and banking scandals, like the recent one of Barclay's that manipulated inter-banking rates?

The dominant culture shaped largely by the political economy swallows up all institutions. The Olympic games are no exception, although people like to believe that there is something sacred about top ranked world class athletes competing for the honor of the sport. If the dominant culture is geared toward consumerist values and 'manufactured terrorism' emanating from Islamic sources, then why should the Olympic games be the exception; how can they possibly not reflect that culture which is the mirror of contemporary society? Besides the irony of the London games taking place under quasi-police state conditions, the added irony is that the Olympic games of 2012 are showcasing the corporate sector at a time when the EU and world economy is in recession and unemployment rising at a time of ongoing massive transfer of capital from the middle and lower classes to the upper socioeconomic groups. "London Calling", but what message is it sending to the rest of the world?

HUMAN RIGHTS VIOLATIONS: GOVERNMENTS AND BANKS

When people think of human rights, they automatically think of torture, prisoner abuses, ethnic, religious or refugee persecution. Invariably, the vast majority of the people associate human rights with the governments and international organizations such as the UN. It is almost impossible to find people that would associate human rights abuses with banks or finance capitalism. Yet, the source of human rights abuses today is not the hyperbolic flamboyant colonel of a Third World nation, but the business-degree bank executive who is well connected to a powerful banking lobby and wields inordinate influence in public policy. 

When Jimmy Carter was elected President, the US was trying to recover from post-Vietnam syndrome, at a time that the economy was showing signs of weakness and the country's global image was at its nadir. To continue the diplomatic confrontation with the Soviet Union as part of a global campaign to win support in the rest of the world, Carter and Secretary of State Cyrus Vance decided to play the human rights card, knowing that it would go a very long way inside Communist countries, but it would backfire in pro-US countries like South Africa, Iran and Nicaragua.

Helped by the hearings on CIA abuses revealed by the committee chaired by Senator Frank Church, the US passed the Foreign Intelligence Surveillance Act of 1978 intended to stop violations of privacy rights via illegal wiretapping and other clandestine operations. Granted, the mood of the country in the late 1970s was to correct the abuses of a democracy that had adopted authoritarian, if not police-state methods at home and abroad; something that would be thoroughly undermined in the conservative decade of the 1980s, and then again in the 'terrorism decade' of 2000.

Although the US supported the UN Declaration of Human Rights in 1948, the record from presidents Truman to Ford shows that the US backed some of the more notorious dictatorships, from the racist apartheid South African regime to murderous authoritarian governments in Africa and Latin America, defaulting everything to the higher cause of the Cold War and the race to win the ideological and political struggle against the Soviet bloc and Communist China. In essence, the Cold War served as the ideal cover to permit the US military and economic integration ambitions to continue, thus strengthening Pax Americana. Human rights, therefore, was an obstacle to the expansionist integration model that the US was pursuing; that is until the end of the Vietnam War.

 As admirable as the Carter human rights campaign may have been for the US that had violated human rights when it was promoting pro-US military dictatorships around the world, the ultimate goal was to undercut the moral authority that the Soviets pretended to have as defenders of peoples' movements. When the revolutions in Iran and Nicaragua erupted, the Carter administration adopted a hard line toward all revolutionaries and abandoned human rights as part of its foreign policy; something that manifested itself in the conflict between the dovish secretary of State Vance against National Security Adviser Zbigniew Brzezinski.

In the 1980s, the Reagan administration wiped out human rights as a component of US policy, while it afforded extraordinary powers to intelligence, defense and banks. Handing all power of the state to these entities left citizens unprotected, and it subordinated human rights to the national goal of defeating Communism while strengthening capitalism. Giving enormous powers to banks, despite massive banking scandals during the Reagan presidency entailed that the state would serve as a shield of finance capital, while violating the rights of US nationals as well as the human rights of foreign nationals in the name of national security. Central America, with Nicaragua as the focus, is one of Reagan's human rights abuse legacies; giving birth to the Reagan Doctrine that justified it.

Absorbed by growth madness in the aftermath of Communism's fall, the Clinton decade did not have much of a human rights component, though it was a vast improvement over the 1980s. Clinton had to make choices when it came to human rights in Bosnia, Rwanda, Somalia, Haiti and Kosovo, choices invariably rooted in national security and economic interests above all, and only secondarily in human rights. Nevertheless, the Clinton team was in some respects sensitive to international criticism about human rights, whereas such sensitivity was absent during the Reagan era. When the horrible tragedy of 9/11 stuck, US policy became hostile not only to human rights, but to civil rights as well, justifying the hostility to the national emergency of combating terrorism. By legalizing the suppression of human rights, the US was in essence suspending a part of its democratic tradition and admitting that embracing quasi-police state methods was necessary to maintain its institutions.

In June 2012, president Carter doubted that the US can speak with moral authority about human rights, considering that the Obama administration has been guilty of violating human rights. Carter accused the Democrat administration of violating human rights at home and abroad, arguing that the US has been targeting both foreign nationals and US citizens for assassination, all part of a policy that has been continuing since 9/11 on the pretext of fighting terrorism.

Carter contends that after 9/11 the US has ignored human rights, something that is very evident by the reality that not just human rights but civil rights are violated in the name of national security, namely, threat of terrorism. US legislation now makes it possible to detain indefinitely a person without trial, simply on suspicion of 'terrorism', a nebulous political concept as the government defines it legally, although the law is contested in federal courts. 

Carter noted that US drones have killed many innocent people, including children and women, in a number of countries, among them Afghanistan, Pakistan, Somalia and Yemen. Just as significant as drone warfare, however, is when the US defends and protects human rights violators that it deems as allies, including Saudi Arabia and Israel. When it comes to casualties of other countries, the US dismisses it as collateral damage, but when its own citizens are victims of attacks it is a case of 'terrorism.'

While I agree with president Carter that the Obama-Clinton team has not made the shift to embrace human rights as had the Carter-Vance team in the 1970s, does human rights belong solely in the domain of foreign political affairs, or has the world economy changed to the degree that markets play a role as significant if not much greater than the state? I argue that the international political economy with banking at its core must not be divorced from the human rights discussion in the age of globalization. This is a subject that has been raised by studies dealing with the role of banks, including the World Bank, and indirect involvement (through financing of mineral, energy, manufacturing and agricultural operations) in human rights. Royal Dutch Shell, receiving financing from a number of banks, is an example of a company that has violated human rights in Nigeria.

Because some banks are sensitive that their business relationships could potentially result in human rights violations as the project is carried out, they make an effort to find out if human rights abuses could or do take place. One reason for this is government, shareholder, and social pressure. My fundamental contention is that owing to the contracting global economy, human rights abuses are more evident from sources one would not have suspected, namely finance capital that is behind both the state and the company directly involved in the given project - energy, mining, etc.

The escalation of human rights abuses as a result of the war on terror has been accompanied by the escalation of another form of human rights abuse whose source is finance capital. Besides financing large operations from mining in Indonesia to hydroelectric projects displacing farmers and fishermen, to factories and cocoa farms employing children, banks are in the business of manipulating interest rates that result in joblessness and homelessness of millions of people, as recent cases involving a number of UK, US and EU banks revealed.

Because banks are involved in all types of activities, ranging from legitimate operations to money laundering and financing arms sales, their fingerprints are on human rights abuses around the planet. Just as banks had a major role in sustaining the apartheid regime of South Africa before Nelson Mandela, they have a responsibility today around the world for impoverishing large segments of the population and demanding that government adopt increasingly illiberal - authoritarian or police-state methods - to deal with sociopolitical dissenters. Blatant cases from historical examples involve international banks and dictatorships in Argentina, Indonesia, Spain, Portugal and numerous African countries. A number of universities and private organizations have urged that government hold banks accountable for their role in human rights, but finance capital is above the state and thus cannot be harmed for the sake of human rights.

Because the state is the vehicle that uses the fiscal structure to redistribute income, appropriating income from the average person to strengthen finance capital as the backbone of the economy, the destabilizing social consequences that lead to unstable political conditions and fewer civil and human rights rest on the doorstep of large banks whose existence governments identify with the national interest. The world is facing a new kind of human rights problem and it is not the direct one associated with the police or military, but with finance capital that is hiding behind 'democratic' regimes whether in Western or non-Western regions.