HEALING GLOBAL ECONOMY VIA NEW FINANCIAL ARCHITECTURE

Erle Frayne D. Argonza

Magandang hapon! Good afternoon! Buenos tardes!

At this juncture, this economist, who is also a healer (pranic healer, soul healer, psychosocial counselor), will begin to articulate economic problems from a wellness vantage point. I will be calling the paradigm ‘healing economics’ as a fusion of wellness principles and economic analysis.

If we observe the ‘treatment’ applied by public policy experts on national economies today, we would see that the solutions to the problems are largely short-term ones that only mitigate economic collapse for a while. We can call them ‘band aid’ solutions to problems that are more of ‘cancerous’ in nature, and by common sense we know that band aid cannot cure cancer.

The economies of our nations have already been integrated over the last three (3) decades or so. This integration constituted the ‘global economy’ which is distinct from national economies and which manifest its own laws. National economies have become interstices or tissues of the global economy, and trying to cure ailing national economies without taking into consideration the wellness of the whole global economy will fail.

What is now urgently most needed, as a formula for enabling healthy national economies, is to put into place a new global ‘financial architecture’ as a beginning treatment. There is no way that economies can heal without the proper macro-policies and institutional frames that support them, and those policies cum institutions must be constructed at the global level.
Just by using that ‘global’ category as a yardstick, we can see that the solution of bank bailouts being rushed in the USA and echoed in Europe are not the long-term salvation to the ailment.

That bailout route was already tried in Japan in the 1990s, it was then called ‘crisis management’, and it resulted to a 12-year recession-to-low growth catastrophe. Japan became the “sick man of Asia” for a decade, which was unbelievable for observers who knew this country’s economic might all along.

If there are certain realities that we must admit as having already turned into dead carcasses, they are:

· Virtual or Bubble Economy: Economy that is founded on speculation, with values derived from out of financial values themselves and divorced from production, cannot be sustained for long. It is finally DEAD. Only fools would still think that reviving it, without regulating and/or criminalizing the economic predators that thrived on it, is the soundest healing work preferred. Nobody needs to heal a dead thing, just bury it deep below the ground, lest you create a zombie or vampire out of it.

· Free Market of Currencies. Treating currencies like commodities that are tradable without sufficient regulation, is voodoo paradigm of ‘monetarism’. This is now DEAD. It can never work, it doesn’t, and will never work under any given context. Free market doctrine (laissez faire)), in the first place, was long dead. It was a doctrine that was enforced by the British Empire, through the “power of the gun,” and supported the slave trade business. To revive such a doctrine in the current context—guiding trade and exchanges in the monetary-currency markets—is plain voodoo practice, as it fattens the purses of economic predators at the expense of national economies and marginal social sectors.

The route to strategic healing, which combines ‘preventive’ with ‘curative’ treatments, is through a new ‘global financial architecture’. This can be and should be done most urgently, as the carcasses are now spreading havoc of ailments across the planet, through a global conference of all the nation-states. Through this conference, proper diagnostics can be done, with the help of top experts, including those representing marginal sectors, and proper treatment can also be conjured.

An outline of agenda items for deep reflections in such a treaty-making conference would be as follows:

· Shift Back to Regulated Trading of Currencies/Monies. Money is the lifeblood of the economy. As such, no private group or whatsoever should be allowed to play it like gambling toys just to fatten their already fat pockets. Private stakeholders that gamble in the currency markets are like cancerous corpuscles in the blood vessel, their operations must be well regulated and certain trading activities declared as banned.

· Securitize Currencies with Precious Metals. A reconstruction of the gold standard should be done most quickly. This system was junked in 1971 yet, and look at the catastrophic result of its folding up. Not only gold, but certain other precious metals and crystals, such as diamonds, can be declared as securitization measures to guide money production within any country at any given time.

· Fixed Exchange Rates. National currencies are still around. In no way should they be forcibly junked in favor of a global currency, which is too premature a measure. Within a period of transition, of say 25 years, national currencies should be the chief legal tender, exchangeable based on fixed exchange rate policy.

· Tobin Tax on Cross-border Financial Transactions. All cross-border financial-monetary transactions, done as matter of business engagement, should be imposed a Tobin Tax, the amount of which will be defined in the conference. The revenues generated from such tax will then be used to fund the United Nations and its attached institutions (UNESCO, WHO, ILO, etc). Through this measure, all cross-border transactions can also be monitored, making it easier for international enforcers (e.g. Interpol) to counter-check sabotage and related criminal operations by predators.

· Ban or Criminalize Excessive Speculation. Excessive speculation of currency markets and related financial transactions must be banned and declared as crime. Those engagements of ‘currency attacks’ that have wrecked many economies are on top of the agenda for criminalization. Till these days, they remain unchecked, due to free trade principles in currency and financial trading.

· Ban Banks from Derivatives Operations. Banks should operate largely in support of developmental and re-development pursuits. In no case should any country be allowed unrestrained speculative and/or derivatives operations that leave the banks vulnerable to collapse.

· End Usury One and For All. For as long as usury remains, poverty and underdevelopment will never end, while once wealthy economies can crash back into 3rd world status. Usury must be criminalized as an evil act, thus ending once and for all a long history of predatory hoarding.

· Create New Global Financial Institution. To enforce and monitor the new financial architecture put into place, a new global financial architecture or GFI should be installed as well. The international Monetary Fund is a total failure, even as it was used as a mere tool by predatory financiers to extract usurious rents and disable national economies through immoral austerity measures. In the long run, this GFI can be considered as the infrastructure for a global central bank, should cooperating states approve it in principle.

Incidentally, the clamor for installing a new financial architecture is now getting stronger by the day. I am very optimistic that this will be concurred in due time, for failure to do so would prolong the agony of global economic collapse and decline. Let us cross our fingers that it will be called for very soon.

[Writ 28 November 2008, Quezon City, MetroManila]