As an emerging market
Instead commercial and central banks, along with institutions like the
International currency markets are the free market on steroids. Speculative trades on currency exceed the value of global GDP every 12 days.
Only 2.5% of all currency trades deal with actual money - the rest is speculative flim-flam. This indirect form of asset stripping simply enriches the apex predators of
The double standards are clear. Despite rescuing renegade banks and financial institutions with billions of dollars stripped from national assets post 2008, the developed economies have signally failed to provide the assistance they have repeatedly promised to developing economies at various G8 and
The reality is that the post 2008 "economic rebound" was as illusory as the shadows flickering across the wall of Plato's cave. International financial markets - dominated by speculative trading, too big to fail banks and deeply leveraged hedge funds - have not been meaningfully reformed, despite government promises to do so.
Not only are the sharks allowed to flourish, the system actively feeds them. They grow fat on speculative trading in vulnerable commodities - be they hard, soft, currency or human resources. These commodities are targeted, stripped of value through similar ploys as those which sank the sub-prime mortgage market.
Speculative financial market exploitation is comparable to the mechanisms that enable denial of service (DoS) attacks to disable targeted computer networks. DoS relies on anonymous botnets to amplify requests for service to targeted servers, effectively compromising their ability to operate thus putting them out of action.
Instead of DoS, the financial market employs arbitrage to speculate on derivatives, bonds and other exotic financial instruments, targeting vulnerable financial targets.
Developing nation's currencies are targeted because they lack adequate leverage to protect their vulnerable positions. This vulnerability is largely the consequence of exploitative economic policies imposed by the global north on the south.
The recent currency market instability has been further attributed to US interference in international financial markets through its controversial quantitative easing (QE) programme. QE was meant to increase market liquidity during times of low interest rates instead of simply printing money.
Back in 2011 Nobel winning economist
Some mainstream economists disagree with Stiglitz, insisting that unfettered growth without due control on financial flows fuelled a bubble in emerging markets.
This is a trite analysis. Many countries presently under assault have seen constrained growth over this period. Just as
The implications are increasingly serious for developing economies. From the BRICS to MINTs, all are vulnerable. Currencies around the world remain exposed to the sharks of capital.
The IMF questionably blames the problem on insufficiently robust economic policies in developing countries, discounting the role of the dominant western controlled banking system.
The beneficiaries are the usual suspects, the global elite. Profits are sequestered in anonymous tax havens or redirected toward further damaging speculative activity. Since at least last November there have been ongoing investigations into the manipulation of international currency markets.
This month senior currency traders from
It is also important to ascertain whether these developing currencies are as fundamentally weak as portrayed. Was the Indonesian Rupiah over-valued; or is the country being victimised because it has curbed exports of raw, un-beneficiated mineral commodities?
Could it be that
This equates to serious money in the bank. The same applies to Russian gas and oil and Chinese gee-gaws.
Could it actually be that developed nations wish to access these commodities as freely and cheaply as possible? Isn't devaluing currencies simply an easy way to achieve this goal?
The same questions apply to agricultural producers in the southern cone, including
How can the developing nations, the BRICS, the MINTs, ASEAN and other emerging blocs, control this exploitative, neo-colonial financial exploitation?
Firstly there is a fundamental requirement that the G8 must maintain their promise to break up the oligopoly of "too big to fail" banks. They remain unreformed and disruptive of international financial markets through driving speculative behaviour. Secondly, speculation in assets such as currencies must be controlled by transparent regulation and oversight.
What other practical means are there to control these hugely powerful interests? One material change that must be tackled is to shut down the black holes of currency speculation, the tax havens.
These effectively remove hot money from the marketplace. Next, unearned, speculative income and non-productive capital must be punitively taxed. Finally, the trades themselves, whether in currencies, commodities or any other speculative instruments, must be taxed.
While some blame can be laid on developing nations, they are certainly not responsible for the ongoing speculation. The actual recovery, even amongst developed nations, since 2008 is fragile.
It is not founded on fundamental market improvements. Rather it is centred on business as usual by the predatory elite, exploiting the poor to benefit the rich. Inequality has increased since 2008. The currency rout presently underway will only deepen this trend.
The fact is that this continued immoral accumulation of wealth, made on the backs of the poor of developing nations, should be returned to those it has been stolen from, the citizens of the developing world. In reality this is unlikely to happen.
We remain at sea, surrounded by sharks. Perhaps we should adopt the Western Australian practice of culling those perceived to act as renegades.
Ashton is a writer and researcher working in civil society. Some of his work can be viewed at www.ekogaia.org.
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