issue 168 - February 1987
A chance to explore
PIN-STRIPE pirates swoop on your grandmother's savings. Off-shore bounty-hunters bury ill-gotten loot in anonymous Geneva banks. Rape! Pillage! Institutionalized murder!
The last drop drained by financial vampires from the lifeless corpse of a malnourished Mexican,..
You say something?
.take it easy.
This magazine is about finance, right?
It sure is. The Pope's banker swings gently from a noose underneath a London bridge. Fraud!.
I'm trying to sleep. Readers should get a month off every so often. This is mine, Financial futures, GATT, UNCTAD, the IMF. You can't kid me, I've seen the contents page ... YAWN.
Capital flight, adjustment assistance, Euroequities. All these things leave you cold?
Wake me when it's over.
Here's the deal. You can stop at any time; leave whenever you like. I won't keep you beyond your bed-time.
Not that I want to put any pressure on you, of course . . . but a lot of people are very keen for you to doze off at this point
Banks who have risked your money on shaky Third World loans for a start. BankAmerica, Barclays, Bank of Montreal, they're all in it up to their liquid assets.
Government financial jugglers can also manage quite nicely without you. How on earth can they represent you properly if you complicate matters by actually telling them what you want?
And as for the IMF and the World Bank. If only a tiny proportion of the world's population understood what they were doing...
Guilt. I should know what's going on. But frankly life's too short by half and much too complex.
True enough. And it's not getting any simpler. Finance used to be a fairly specialized little corner of human life; a service industry that lubricated the axles of international trade.
But things are changing fast. Can't you feel the dollars, pounds, yen and deutschmarks bouncing off the telecommunications satellites and whizzing past your ears? Whose money was that? Where did it come from? Where is it going? It may seem complex, and none too clean a business, but money needs to be picked up and looked at every so often just to see what's going on.
Not necessarily by me. I'm happy just feeling it in my pocket.
Good for you. But what about the shanty- town dwellers of Mexico City? Each and every one of them is in debt to the tune of $1,000 per person - or so they are being told. So now they are all going to have to eat less and tighten their belts.
You think they have all been splashing out on video-recorders and home computers?
Well somebody must have had the money.
Somebody did. A lot of it never even left New York City - just jumped from one bank account to another.
Patience, patience ... Maybe we'll get round to that later. But see, you're almost getting interested
The point is that things which the bankers present as logical and prudent are often neither. Computerizing the international financial markets doesn't make them any more rational.
And as for compassion, well that is best left out of the equation. For every dollar we are giving in aid through all the mercy flights and food shipments to the 29 poorest countries in Africa, the bankers are slipping two dollars into their wallets as debt repayment and disappearing out the back door.
Don't get too indignant. They're only doing it on your behalf.
They certainly aren't.
They almost certainly are. But we're not too aware of all the funny business. Most people either stop halfway through their newspaper, or else jump over the financial pages straight into the football results. Meanwhile the bankers and the bureaucrats have been quietly flitting round the world and trying to sew it up, whether we understand them or not.
I suppose they know what they're doing.
That's the peculiar thing. They certainly know what they are doing today (making money) and can probably remember what they were doing yesterday (also making money). But as for the march of history or getting together to plan for the future, they don't seem to have a clue.
In fact there's still a fair chance that, left to their own devices, they could bring the whole rickety system crashing down around our ears. And you can be pretty sure that if that happens they will leave people like you and me - and more specifically our governments - to pick up the pieces.
Well, let the politicians whip the bankers into line then.
Maybe they should. But national governments are finding that there's less and less they can do about money - a lot of the global financial system is just out of their control. Have you heard of Eurodollars?
Is this some kind of test?
Sorry, didn't mean to probe. But there are a couple of trillion* dollars of stateless money awash around the world. And those who get their hands on it can more or less do what they like.
Dollars? They're American. Let Reagan sort them out.
Strangely enough he can't. But all this might seem marginally less mysterious if you stick around a bit longer. No guarantees, of course. But then you weren't going to read this magazine at all remember, so it'll be no great loss if you eventually switch on Dallas.
Where were we? Oh yes, money out of control. All those TV pictures you might have seen of stock exchanges with sharp-looking young men screaming prices at each other and frantically poking their fingers into the air it looks like bedlam and a lot of the time it is.
Somewhere between Australian rules football and a children's birthday party.
You think it's bizarre? What must other people make of it? Brazilian coffee farmers could watch their beans being bought and sold dozens of times before they have even been picked. And computerizing the commodity markets has, if anything, increased the number of times the beans can change hands. The dealers have discovered more and more ways of pushing cash and commodities around - and ways in which they can charge us for their services.
A good game to get in on.
Nice work if you can get it. And it has certainly been good news for some countries - the UK for example. Britain's Gross Domestic Product has increased by about £17 billion ($25 billion) over the last ten years or so. About half of this came from the North Sea oil. But the rest came from the increase in 'financial services'. All the stockbrokers and the bankers will claim it as a triumph for their innate financial acumen.
And it's not?
Not entirely. London's real advantage is that it provides a pitch in a time zone halfway between New York and Tokyo where the multinational teams can play when it gets dark everywhere else. And there's the added advantage that the natives speak passable English.
Meanwhile Third World producers stand and watch as their produce and their livelihoods are tossed around. The weaker you are the rougher the ride you get. You only have to look at GATT or at UNCTAD or at the IMF.
*A billion throughout this magazine refers to a thousand million. A trillion is a million million.
This special report appeared in the money makes the world go round - finance for beginners issue of New Internationalist. You can buy this magazine or, to get stories like this one through your door every month, subscribe.