US Attorney General Eric Holder, after five years in the Obama administration DOJ, has announced his resignation. Responses in the elite press have ranged from the kind of subordination to power typical in establishment circles to outright canonization. The dominant portrayal of Holder is an Attorney General staunchly committed to racial justice and civil rights but very protective of the status quo as it relates to Wall Street criminality and the crimes of the national security state. As the New York Times observed in their review of Holder’s record “On the financial front, he did not prosecute a single prominent banker or firm in connection with the subprime mortgage crisis that nearly destroyed the economy.” Few, if any, journalists have attempted to draw the connections between how Holder’s defense of white-collar criminals within the United States informs his support for war crimes abroad. Economist and financial analyst Loretta Napoleoni draws these crucial connections between domestic and foreign policy in her highly informative study Terrorism and the Economy: How the War on Terror is Bankrupting the World. Central to Napoleoni’s text is the assertion that the financial lawlessness that precipitated the 2008 economic disaster emerged from a reservoir of fear and irrationality that was traceable to the events of September 11, 2001. It was after this attack that the US adopted a new form of politics that linked exaggerated fears of “terrorism” with the need to finance illegal wars using massive amounts of credit. This systemic over-reliance on credit, what Napoleoni described as the “borrow-invest spiral”, was then exacerbated by aggressive imperial policies carried out in the name of “democracy.”
A similar dynamic could be perceived in the legal decisions of Attorney General Holder. Not only did he perpetuate the dangerous ideology that certain financial institutions are “too big to fail”, a flagrant violation of principles that mandate equal treatment under the law, but he also legitimized executive authorizations of extrajudicial assassination under the ludicrous notion that “due process and judicial process are not one and the same.” In both cases, Holder was nurturing a culture of power where the public is expected to entrust high officials with rights that no ordinary citizen could conceivably possess. In addition to inflicting unimaginable suffering on people abroad, these policies threaten US citizens as well. One particularly grotesque example of how the politics of fear negatively affect the global economy can be found in the frequency of food crises. These crises are not created, as commonly argued, due to scarcity of goods. Rather, these crises are intimately linked with a particular model of financing embodied in what are called “agricultural futures.”
“The culprits of the 2008 food crisis,” Napoleoni states “were neither famine nor natural disasters but rather food prices.” The food crisis arose because “hordes of speculators invading future markets prompted the inflation [in food prices].” Furthermore, “the race to purchase these [agricultural] futures led to price increases, inflating speculative demand without ever creating any actual scarcity. This explains the anomaly of a food shortage in a world where there is plenty of food to feed everyone.” Napoleoni attributes this tragic state of affairs to “two gigantic mystifications”: “the strategy of fear administered by the politicians,” and “the irresistible fascination with the fatuous promise of eternal wealth …” What was the Obama DOJ’s unprecedented attack on whistleblowers if not a reiteration of this “strategy of fear”? And what was Holder’s exoneration of Wall Street if not a clear declaration that he would work vigorously to preserve this “irresistible fascination” by granting financial elites god-like immunity and placing them above the law?
It is through these policies, Napoleoni argues, that the professed goal of Osama Bin Laden—“to bleed the American economy until it is bankrupt”—was, in many ways, fulfilled. In fact, September 11 alone dealt a decisive blow against the American economy. Shortly after the towers collapsed, Muslim investors, very much aware of the anti-Muslim and anti-Arab animus that would be generated within the US, withdrew their money from the United States or as Napoleoni notes “a year after 9/11, about $700 billion belonging to Muslim investors had left the US.” The Bush administration then compounded this damage by engaging in deflationary economic policies and plunging the country further into debt. Ever since the tenure of Federal Reserve chairman Alan Greenspan these low interest rate policies were pursued with a religious zeal. “If during the 1990s Greenspan created the bubble, after 9/11 the financing of two conflicts inflated it.” Beyond the devastating human and material loss that these socially destructive policies inflict is a much more troubling ideological orthodoxy that is singularly committed to fulfilling the desires of the wealthy at the cost of the lives of the very poor.
Among the alternatives to this orthodoxy is what Napoleoni describes as “Islamic finance.” Features of Islamic finance include the prohibition on the charging of interest and the embracing of zakat or “religious almsgiving requiring all Muslims to pay 2.5 percent of annual profits or disposable income, and the hajj, the pilgrimage to Mecca.” Napoleoni locates the origins of modern Islamic finance “in the 1950s in rural Egypt and outside Kuala Lumpur, Malaysia.” It was not until the late 1990s that Islamic finance began playing a prominent role in global affairs, particularly after the Asian stock market crash in 1997 and September 11th. A central figure in the ascendancy of Islamic finance as a competitor to “western” state-capitalism was Malaysian Prime Minister Mahathir bin Mohamad. In addition to rejecting IMF intervention in Malaysia, Mohamad “criticized Western speculation for devaluing Asian currencies and accused Western finance of purposefully weakening the economy of his country.”
It is from historical examples like this that new and innovative conceptions of finance will likely gain inspiration. Napoleoni, in her prescription on how to structurally confront this systemic problem, suggests that “western” countries nationalize their banking industries. “We should nationalize the banking sector and save only that part which serves to keep the economy afloat,” she states, adding “if derivatives led to the creation of toxic assets then why not outlaw them? Why should taxpayers be required to rescue insurance companies that acted like hedge funds, which created and sold credit default swaps … without having the capital to back them up?” In order to meaningfully deal with these conflicts of domestic and global importance these points of convergence between class warfare and imperial war must be highlighted. Terrorism and the Economy effectively draws attention to this convergence of power interests and offers constructive paths forward to combat them.Source: http://www.nytimes.com/2014/09/26/opinion/eric-holders-legacy.html