This is Armageddon

The last in our series 'Lunatics take over the Asylum: Neoliberalism uncut'

We lend to countries because... we can always find them

1968 is remembered as the year of assassinations – Martin Luther King and Bobby Kennedy. Also of the My Lai massacre in Vietnam, riots in Paris, the student takeover of Columbia University, and the election of Richard Nixon.

Yet the most significant event of 1968 was arguably none of these. It was the establishment of CitiCorp, the company by which the CityBank CEO Walt Wriston sidestepped American banking law and opened the floodgates to largescale speculative banking.

The usual history of neoliberalism claims that the oil crisis of 1973-74 unleashed a combination of economic stagnation and inflation and that it was Milton Freidman’s brilliant ‘monetarist’ solution that secured his place as the period’s dominant economist.

The real significance of the oil crisis of 1973-74 was not stagflation or monetarism. It was the enormous stash of dollars that now accumulated in the oil rich nations once they had hiked the price per barrel right up. The American Ambassador to Saudi Arabia quietly negotiated an exclusive deal for its new wealth to be invested in CitiCorp and the other financial institutions of New York.

1975 was a turning point. Awash with oil cash, CitiCorp now began lending to struggling nations, starting in Latin America – Mexico, Argentina, Brazil, Venezuela. ‘It’s simple,’ said Walt Wriston. ‘We lend to countries because countries don’t go away. We can always find them.’ Other banks followed.

'Twilight of Sovereignty'

In 1992 Walt Wriston produced a book. He called it Twilight of Sovereignty. The title bears a moment of reflection.

The architect of the runaway financial explosion of the 1960s and 1970s, the out-of-control seizure by financial giants of the world’s economies, was proudly recording that sovereign governments were ceasing to matter. He had, he boasted, launched ‘an attack on the very nature of sovereign power.’

Power now, he bragged belonged to the banks, whose only interest was, he said in one of his most appallingly disingenuous moments, ‘To satisfy the economic desires of the people.’

In 1992 President Bill Clinton was prevented from investing in certain infrastructure projects by opposition from the New York bond markets. Clinton’s reaction was forthright. ‘You mean to tell me that the success of the program and my re-election hinges on the Federal Reserve and a bunch of f***ng bond traders?’ Yes, Mr President, he was told, that’s correct.

The same year, 1992, Germany’s vice chancellor told the Financial Times, ‘It is no longer possible for the individual states to dictate the rules of the economic game.’

Nelson Mandela pointed out that for developing nations it was even worse. It was now, he said, ‘Impossible for countries … to decide national economic policy.’?

‘I have abandoned free market principles to save the free market system'

In 2007 the US?subprime mortgage bubble burst and with it exploded another hoary old neoliberal myth, which was that unregulated markets are self-correcting. CitiBank lost over $45 billion and had another $49 billion at risk.

It was not, of course, alone. The World Bank reckoned that, worldwide, bailing out the banks and other financial institutions cost an average of nearly 13% of everyone’s national GDP.

In Britain every man, woman and child was forced to fork out over ￡19 000. It was stolen from them in cuts to public expenditure on things like the health service, schools, community care or transport.

So much for the indivisible link that neoliberals tell us exists between freedom and prosperity. So much for trickledown. But, as we all know, had governments let the banks collapse, they would have dragged our national economies with them.

So, in a neoliberal world where there is supposedly no role for government and no money, the US government eventually guaranteed over $300 billion of CitiBank’s toxic assets.

In a ridiculous, and no doubt unconscious echo of the notorious Ben Tre incident during the Vietnam war (when an unnamed American Major ordered the obliteration of a settlement and was then reported as saying, "It became necessary to destroy the town to save it"), President George Bush announced ‘I have abandoned free market principles to save the free market system.’

This is not Liberty. It is not even the twilight of sovereignty. This is Armageddon...

So, finally, what is Neoliberalism?

As we record this, Elon Musk has announced plans to eliminate the Consumer Protection Bureau, which is the government office responsible for protecting Americans from pay-day lenders and other predatory financial organisations. It is straight out of Milton Friedman’s playbook.

One of the never-discussed pillars of Milton Friedman’s neoliberal free market philosophy was always to achieve a kind of anarchy and?to achieve this?he in effect advocated having no government at all.??For Friedman, all government was bad.

As Friedman himself said, ‘if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government.’Wrong, Professor Friedman. That’s what has been known since 1969 as anarchocapitalism. Getting rid of government. Letting businesses do what they want. And the rest can go to the dogs.

It makes you ask what the unspoken objective of the most hardline neoliberals – notably the British Tories and their business backers – was? ?Perhaps never to rebuild the economy, but simply to have as little government as possible.

Neoliberalism makes the rest of us the prisoners of the unaccountable rich, who close down the small businesses, tell governments what they can and can’t do, end the right to protest, shut down public services, buy elections, and then stand by while the poor lose hope and the sick and the old suffer and die. Then they steal all our savings.

This is not liberty. It is not even the twilight of sovereignty. This is Armageddon.

#107 This is Armageddon? -?Ep 7 Lunatics take over the asylum: Neoliberalism uncut