Friday, September 26, 2008

Buying the Bridge to nowhere

Watching the American Investment Banks fall like a pack of dominoes it brings back memories of the Saving and Loans fiasco of the past two decades or so. There is this tendency for the US to sell everyone a pig in the poke and for the Brits as their greatest cheerleaders to ensure it resonates across the world.

Mwalimu Nyerere is reputed as saying that there should be universal principles with local standards unfortunately the US sells its aspirations as universal standards. With the help of its 'objective' media and the support of its 'rational allies' who are all committed to the good things whilst any deviation is an insistence on a lifestyle of debauchery. How else can you explain how so called objective media oversaw the invasion of Iraq building consensus for the fantasy of WMDs or even the perversion that is Guantanamo detention without trial or Abu Graib or even the somewhat callous use of open bribery to get the Northern League to fight the Taliban I suppose everyone thinks that this is just in the field of International politics surely it does not extend to any other field or does it ? Think about it the working assumption is that free markets or Market Capitalism is the universal standard that the entire world should live by. The same was said for Democracy until 2000 when it was convenient for the US supreme court not to count votes and to support an openly rigged election. It is the same kind of selective application of standards that is at work in this financial mess.

The people who brought us free unfettered markets forgot to tell us that when their backs are to the wall well to hell with the standards to which they held all of us. It is those who ask others to open their markets to any type of investors that shut their ports to the Dubai Investment company or even prevent the Chinese from taking specific slices of their economy. For years the there has been aggregation and leveraging of debt. It is repackage and sold to consumers whose need for instant gratification far outweighs the capacity to pay has been the engine room for growth in the US as well as the UK. The shouted this notion of consumer led economy whereby the media made a lot of advert revenue by selling everything as a must have. Every sale was a bargain, every gadget was editorialised like a cure for cancer. For all this greed there was credit on offer whether you could handle it or not. This dangerously designed and poorly executed attempt to lazily maintain growth was accompanied with the freedom to roam and gorge without regulation given directly to financial institution. Capital crossed borders in search of fresh kills with very little concern for its underpinning.

As it falls apart spare a thoughts for Nigerian Banks whose unintelligent mimicking of this failed policy is now starting to take root. Banks here give credit to business in ways that will make Shylock blush but offer the middle classes all kinds of credit to easily purchase Plasma TVs , cars even home furnishings. The cheap takings from funding consumption rather than production as become the business model. In spite of less than 20% of the population having bank accounts the same banks put pressure on their staff to seek additional accounts from the same middle classes who already have accounts. Their requirements are so onerous for the Woman in Oja Oba or Epe Fish market that it is only the very same 20% that now have four or five accounts from different banks.

Believe we already bought the bridge and surely whether there is credit crunch or not we cannot sustain the journey. This group think has to stop.

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