Asian crisis, hedge funds, US military, 'crony capitalism'

The following article links the hedge funds with the Asian economic 
crisis with the US military etc.  

I find it slap-dash - provocative but not terribly substantive.  Perhaps 
that's the norm in journalese, or perhaps an inevitable feature of
illustrating 
the bigger picture using broad brush strokes...

Geoff Holland.

www.smh.com.au
Sydney Morning Herald
MONDAY, JULY 5, 1999

How America’s crony capitalists runied their rivals
Chalmers Johnson 

It was the crisis Asian economies had to have --
Uncle Sam said so.

	AFTER all the endless mouthing off in the pages of the 
English-language business press about East Asia’s “crony 
capitalism” the lack of "transparency" in Asian stock 
exchanges, the “no pain, no gain" logic of the International 
Monetary Fund and how the Asian economic challenge to 
Anglo-American capitalism had fizzled, we now know that 
none of these things had anything to do with the Asian -- now 
global -- economic crisis.

	Addressing what did cause the crisis is the main business of 
the leaders of East Asia as they reflect on what has happened over the 
past two years.  If they ignore this question and pretend that the road 
is still open to "globalisation” in the Pacific, they.risk being 
repudiated by their own people.

	Heres the new explanation as it is developing in seminar 
rooms from Seoul to Kuala Lumpur to Beijing.

	With the end of the Cold War, the US decided it had to launch 
a rollback operation in East Asia if it was to maintain its global 
hegemony.  The high-growth economies of East Asia had become the 
main challengers to American power in the region, and it was time 
they were brought to heel.

	The campaign worked in two phases.  First a major ideological 
barrage was launched to soften up the Asians.  The Americans 
mobilised famous professors of economics from their universities, 
who never once faced a "market force” in their lives, to preach the 
beauties of globalisation, in this case meaning American economic 
institutions.

	They include total laissez faire, destruction of unions and 
social safety nets, staffing of regulatory agencies with retired 
financiers, indifference to the pay differentials between chief 
executive officers and the ordinary labour force, moving 
manufacturing to low-wage areas regardless of the social costs, and 
totally unregulated flows of capital in and out of any and all 
economies. 

	Since the Asia Pacific Economic Co-operation summit in 
1993, the Americans have hammered home to the Asians that they 
needed to "open up” their economies in these ways.

	Then came phase two.. Once the Asian economies had begun 
to “deregulate" and were standing in the world marketplace more or 
less naked, the “hedge funds" were let loose on them.  These funds 
are actually huge concentrations of capital owned by very wealthy 
Western white men, who manipulate bewilderingly complex financial 
instruments called derivatives.

	They usually locate their offices in offshore tax havens such as 
the Cayman islands and do everything in their Power to avoid 
regulators or tax collectors in the so-called free-market democracies.

	The funds easily raped Thailand, Indonesia and South Korea 
and then turned the shivering survivors over to the IMF, not to help 
the victims but to ensure that no Western bank was stuck with non-
performing loans in the devastated countries.

	The IMF is also the US Government's chosen instrument for 
"reforming" these countries to make them look more like New York. 

	The Americans suspected that all this might cause some 
trouble. 

	On March 4, 1998.  Admiral Joseph Prueher, then commander 
in chief of American military forces in East Asia and today the US 
ambassador-designate to China, testified before Congress that the US 
military was on alert for "early signs of instability" in East Asia, 
including "labour disputes." The Indonesian armed forces, whom 
Prueher’s special forces had been training for years, got rid of 
Soeharto when it seemed necessary.  The Indonesian troops killed 
about 1200 shopkeepers and raped more than 150 Chinese women 
doing so.

	Then it all got a bit out of hand.  One of the biggest hedge 
funds proved so greedy that the US had to organise a bailout, which 
brought the scheme out into the open.  David, Mullins, a former 
deputy to the Federal Reserve chairman, Alan Greenspan, had gone 
straight to work for the Long-Term Capital Management fund after 
he left the Federal Reserve in 1994.  Had this not been the case, it's 
unlikely that the Federal Reserve Bank of New York would have 
arranged a $US3.5 billion ($5.25 billion) rescue for it. The incestuous 
relationship between Washington and Wall Street -- what the 
Columbia University economist Jagdish Bhagwati calls the Wall 
Street-Treasury complex made East Asia's crony capitalism look 
tame.

	The weakened economies of East Asia also could not continue 
to buy the weapons the Pentagon wanted to sell them, and some 
began to have second thoughts about paying to keep US Marines (aka 
the Hedge Fund Protective Corps) in their countries.

	Globalisation was discredited as a crooked financier's scam. 
The Chinese never looked so clever as they did in keeping out of the 
World Trade Organisation, as did the Japanese when they more or 
less ignored the pleas for  "reform" from Washington.

	These issues came to a head in Kuala Lumpur last November 
when the US trade representative, Charlene Barshefsky, accused 
Japan of offering $US30 billion in aid to the stricken countries of 
East Asia as a way of buying their votes against further measures to 
open markets.

	The Japanese foreign ministry responded that the US 
Government was possessed by "an evil ,spirit”, a phrase painfully 
close to the evil empire epithet that President Reagan used against the 
Soviet Union. 

	The Vice-President, Al Gore, then gave a speech in the 
Malaysian capital denouncing its head of state for trying to protect his 
country from internatinal speculators and calling on the people of 
Malaysia to overthrow him.  After that, APEC no longer had a future 
worth speaking of.  

	The Americans do not seem to understand that their message 
of free trade and market economics is in serious disrepute.  Wall 
Street itself now looks like the ancestral home of crony capitalism.

Chalmers Johnson is president of the Japan Policy Research Institute 
in San Diego

Los Angeles Times


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