"The Icelandic economy is prosperous and flexible. Per capita income is among the highest and income inequality among the lowest in the world. —Against this backdrop, the long-term economic prospects for the Icelandic economy remain enviable." And down it went.
But only a part of the US economic crisis is related to the US empire. True, the pumping of wealth, as unequal exchange inside the Periphery countries, and unequal exchange between them and the Center in general, and the USA in particular–adding the massive deposits from the rich in the poor countries into the banks etc. of the rich countries–has been going on for ages, impoverishing the poor in the poor countries doubly, supported by military, political and cultural power.
But the basic contradiction between real and finance economy would have led to a crisis in the economy even of an isolated USA. Some finance "products"–particularly the CDFs, the "credit default swaps" and other derivatives–shoot up in the thin, hot air and like economists not disciplined by a solid empirical footing in the lives of real people in the real economy, only guided by their abstractions, crash when the lack of real economy backing becomes evident. For the ignorant and innocent this comes as a surprise even when highly predictable.
Some of this can be seen as the working of acts of omission, the failure to intervene in time. And some, no doubt, is due to acts of commission.
Michel Chossudovsky, an economist with his feet firmly planted in reality, focuses on this third aspect ("Global Financial Meltdown", Current Concerns, No. 9/10 2008):
"The Worldwide scramble to appropriate wealth through ‘financial manipulation’ is the driving force behind this crisis."
"The financial meltdown is intimately related to the unregulated growth of highly leveraged speculative operations."
"A stock market meltdown can be a highly profitable operation. With foreknowledge and inside information a collapse in market value constitutes through short-selling a lucrative and money-spinning opportunity for a select category of powerful speculators who have the ability to manipulate the market in the appropriate direction at the appropriate time."
"The current financial meltdown–is characterized by financial warfare between competing institutional speculators–who were able to reap large money profits both during the upward and downward movement of the price of crude oil."
"As stock values collapse, lifelong household savings are eroded, not to mention pension funds."
And so on, and so forth. No empire is needed for this caricature of an economy to become so counter-productive.
But it helps. There is more to suck. And the blowback on the highly vulnerable Periphery economies, and particularly the poor steeped in misery, is catastrophic. A structural holocaust.
But there is more to it. Empire means coupling. And coupling means transfer of social, economic, etc. dialectics, as Latin American dependency analysts of the 1960s like Fernando Henrique Cardoso (unforgettably brilliant analyst who transmuted into a forgettable president of Brazil operating the system he had critiqued) pointed out. The crisis reverberates through the empire. Solution: decoupling, and quickly, getting rid of the rotten products, switching from US Dollar to Euros, Yuan, etc.
Dialectics is just common sense: forces produce counter-forces. Wherever a bubble expands there will be strain on its carrying capacity till it bursts. Wherever a bubble bursts there will be forces creating non-bubbles or anti-bubbles, etc.
And that raises the question: which financial institutions have been able to weather the finance economy twister, uprooting everything, high into the air, crashing it mercilessly on the solid ground? Answer: "Islamic Banking: Steady in Shaky Times," (Washington Post, 31 October 2008):
"–advocates say the system has built-in protection from the kind of runaway collapse that has afflicted so many institutions. For one thing, the use of financial instruments, such as derivatives blamed for the downfall of banking, insurance and investment giants, is banned. So is excessive risk-taking–you only promise what you own. –Money cannot just sit and generate more money. To grow, it must be invested in productive enterprises."
And Tany Cariina Hsu adds in "Death of the American Empire" (www.globalresearch.ca/index.php?/context=va&aid=10651):
"–least affected by the crisis are Islamic banks. They have largely been immune to the collapse because Islamic banking prohibits the acquisition of wealth via gambling (or alcohol, tobacco, pornography, or stocks in armament companies) and selling of a debt as well as usury. Additionally, Shari’ah banking forbid investing in any company with debts that exceed thirty percent."
Hats off for Islam and shari’ah. It would help enormously in a 9/11 context if the arrogant West in general, and Anglo-America in particular, could see the value of sharing all our truths, also Islamic, in the struggle for better human conditions.
10 November 2008