Globally Active Banks, Financial Institutions And Their Effect - PART 4 Isokratia Global
Financial capital with its’ offshore domicile state, has gained so much advantage, that often, big multinational corporations and international financial institutions, have gained such powers, that their actions, can be impinging, on the sovereignty of state.
Banks and financial institutions, through amalgamation, have accumulated the powers to affect the market economics. They can cause inflationary tendencies, recessions and they do so at national, regional and global levels. At times taking advantage of government instigated policies, with political or economic aims. At other times, driven by profiteering.
Banks and financial institutions have, and will go on causing economic upheavals, if not meltdowns unless they are stopped. Sometimes by the en mass withdrawal of facilities. At other times by the withdrawals of investment funds, from small and medium sized companies; Sometimes by the withdrawal of capital from weak or vulnerable countries.
Brake 24 September 2004 21.41 Sofia Bulgaria
Back to work 25 September 2004 19.08 Sofia Bulgaria
We have recently witnessed the Asiatic markets financial crisis. We have also witnessed the collapse of the currency, of even an economic power such as the UK. When the speculative actions of George Soros caused the sterling crisis. Frightening, absolutely frightening. When one man can master such market power, which can affect the lives of millions of people, thousands of miles away from him. In his words the door was open. If it was not him, someone else would have done it. And I agree. Unless we close the door to such individuals and organisations, we will always be vulnerable to their amazed powers.
There is no shortage of solutions to this problem, though we must never stop searching for better ones. George Soros himself, identified such dangers and has put forward some solutions, or at least the basis for solutions, to be built upon. Others have put forward such basis for solutions to be developed.
All suggested solutions require global policies. Banks can be regulated to give periods of notice. For example give notice of one or two years’ notice, before they can call in their loan facilities to their customers, be it individuals or sovereign nations. This can prevent the collapse or national economies. It can also save thousands of healthy small and medium sized companies from collapsing and going into liquidation, triggering economic havoc.
If an investing organisation be it a bank or finance or any other organisation wants to make profit by investing in a country, enterprise or individual, then such an organisation must be expected to respect the right of such customers countries, enterprises and individuals to make use of the facilities offered.
The right to withdrawal without notice I believe should be curbed. Special provisions can be made for sudden demand but only for extreme cases where justification can be shown. The right balanced solution can be developed.
Lets not forget that the individuals behind the decisions of the banks and other financing organisations are vulnerable humans with all the human vulnerabilities and affects from third parties. I was the victim of such human weakness and I know by first hand experience. Fortunately when they called in my facilities without any viable commercial reason, I was ready an d able to meet such demand with savings I had which were not to their knowledge ( if you do not trust them never show all to your bankers, solicitors and accountants) and I managed to prevent or avoid the financial collapse of my family finances. Millions of others were not ready and wil never be ready and have experience this anathema losing everything even their family’s resident. The same of course has been experience by whole states where millions of their citizens buried the consequences.
Banks and financial institutions, can be regulated to prevent them from engaging in a sudden en mass withdrawal from national markets, causing their economic meltdown. This is even more important when the size of a national economic is less powerful than a bank or other financial institution. The banks, through their misguided policies, can affect the inflation and deflation of an economy and it has been proven so.
We have seen the likes of banks not passing the full reduction of interest rate cuts to the consumers. Banks need to be profitable, need to be healthy to fuel the economic activity, not to stranglehold the markets. At the same time, banks and other financial institutions must be made to work within certain guidelines, which will prevent their actions becoming catastrophic, especially for the economy of a whole a country,
The same happens in a wider spectrum, in the international and global arena. The IMF at it’s present form and function, serves only as an after pill and that with limited pain killing effects. New global institutions are urgently needed to regulate and smooth the globalisation of both the economy and politics.
An organisation of new factional bodies, needs to be set up, to control the flow in and out of currency, into the developing countries. Otherwise such economies will continue to be one minute on the rise due to funds floating in, and the next minute on the collapse because investment funds are suddenly withdrawn en mass.
At the other end countries must provide for the security of such investments from outside finance organisations. Politicians in such countries must be made to respect these investments and not just change policies affecting such investments from one day to the next. The respect towards the investors whatever shape they come from individuals or organizations, must be preserved the same as we must preserve or introduce the respect of the investors towards the consumers of their services be it individuals, companies or States.
The speculative capital flow is indeed dangerous with today’s institutional inabilities. The absence of global co-ordination and co-operation, makes it even more dangerous by the day. In my view, such unregulated and uncoordinated flow of capital, can cause an economic collapse and as such, cause devastating suffering to people within these economies. Such economic devastation has many times led to a political collapse.