Tuesday, September 13, 2011

If Only Osama had listened to Vito Corleone

Now that the tenth anniversary of the September 11 attacks in the USA has gone by, it is time to make the politically incorrect point that Osama Bin Ladin one fatal error – he forgot to watch the Godfather. If he had, he may have come across the advice that the Godfather, Don Vito Corleone (played by Marlon Brando) gave to his godson, Tom (played by Robert Duval) – “A lawyer with a briefcase steals more than a gangster with a gun.” The Old Don knew what he was talking about. The last decade has been marked by two traumatic man-made events. The first is the September 11 attacks, which left a powerful psychological impression on the world. The second event is the Sub-Prime crisis. While the attacks of September 11 were by far the more physically dramatic of the two-events, the sub-prime crisis is in many ways more insidious and more damaging. Let’s make no mistake – damage was done during the September 11 attacks. Nearly three thousand innocent people lost their lives, the Twin Towers were destroyed and the Pentagon was damaged. Then you have to take into account the fact that September 11 was the springboard for military adventures in Afghanistan and Iraq, which have cost several thousand lives more. However, while the effects of the attacks were dramatic, they can’t exactly be called strategic victories. Instead of weakening the US National Fabric, the attacks proved to be a focal point for the nation. In terms of international diplomacy, the US gained tremendous amounts of sympathy and goodwill from around the world. The French went as far as to invoke a NATO resolution declaring that an attack on one NATO member was an attack on the entire alliance. Osama became the most convenient “villain” for the US government to focus on. Prior to going into Iraq, the US government was in a position of strength. It was only the Bush Administration’s blatant disregard for international law and mishandling of international opinion that cost it goodwill. The Sub-Prime crisis of 2008 has been far less dramatic than the attacks of September 2011. There was no crashing building and there have been no reports of death caused directly by the Sub-Prime crisis. However, this does not mean that the Sub-Prime crisis has been victimless. An untold number of small businesses have been forced into bankruptcy and an even greater number of people have lost their homes. In the case of Iceland, an entire nation has gone bankrupt, ruining thousands of people through no fault of their own. What makes the Sub-Prime crisis so much more difficult to deal with is that unlike September 11, there’s no particular villain to focus on. American Foreign and Cultural Policy could be defined by being everything the Soviet Union was not. Then, when the Soviet Union collapsed there was Saddam Hussein. After Saddam there was Osama bin Ladin. These characters provided Western policy makers with an easy narrative. All they had to do was to deal with the “Bad Guys.” Reacting to September 11 was easy – all that was to needed was to “Hunt down Osama and the terrorist.” In the case of the Sub-Prime Crisis, there was no Osama. Yes, bankers were blamed for being a little greedy. However, the bankers could not be blamed for everything and more importantly the bankers were not doing anything illegal. While many people complained that bankers like Stan O’Neal of Merill Lynch and Chuck Prince of Citigroup were paid hundreds of millions of dollars after being sacked for running up losses in the billions, the fact is the severance payment they received was perfectly legal. It is not an exaggeration to say that the bankers who played a key role in the Sub-Prime Crisis did more damage to the economy of America and the Western World than Osama did when he decided to order the crashing of the planes into the Twin Towers. The image of the crashing planes and the collapsing towers was dramatic. However, the American nation regrouped and there was no economic melt down. No big names had to file for bankruptcy. By contrast the Sub-Prime has lead to trillions of dollars being lost in the effort to recover bad debts created by reckless lending. Even more money has gone into prop up institutions like AIG and Citigroup, which played a leading role in creating the crisis but cleverly positioned themselves as being “Too Big to fall.” Institutions like Bear Sterns and Lehman Brothers have gone bankrupt, throwing thousands of people out of work and leaving thousands of investors in financial ruin. Ordinary people have been kicked out of their homes. You can buy decent houses in places like St Louis for US 7,000 dollars. Both the US Dollar and the British Pound have collapsed against their major competitors. It was big news when the Australian Dollar was parity with the US Dollar. Nobody batted and eye lid when the Australian Unit became stronger. The Hindustan Times recently reported a story on how the Indian Table Tennis Federation failed to hire a Swedish coach because they were going to pay him in US Dollars instead of Indian Rupees. The collapse of the British Pound has been equally dramatic. In the “Sterling Crisis” of 1992, when Sterling was rejected from the ERM, it took two and a half Singapore dollars to buy one pound. That was an all time low. Today the rate hovers slightly above two Singapore dollars to a pound. The economic damage is not just American and British. The Euro Zone is also in crisis. Countries like Greece are deeply in debt and holding onto the hope of bailout from larger nations. A generation of people in Spain have never held a steady job in their lives for the simple fact – there are no steady jobs. The Sub-Prime crisis has done more damage to the economies of the Western World than September 11 ever did. Unlike the September 11, 2001, nobody has called for the ‘hunting down’ of the perpetrators. How many ‘prominent’ names have gone to jail for doing so much damage to the economy? Not only has nobody gone to jail but many of the big banks CEOs have retired on very high severance packages. Don Vito Corleone had a point and Osama should have taken his advice. Instead of trying to bring down the Western World’s economic system through death and destruction, he should have worked with a team of bankers and lawyers to perpetrate the culture of greed. The lynchpins of the systems he sought to destroy have done a far better job of it than he did.

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