Thank you for bringing to the attention of Muslims the Southeast Asian currency turmoil (See Muslimedia - September 1-15, 1997: “Lessons from currency turmoil”).
As the fan club of the western economic system grows, so do the bailouts. In reality these are nothing short of economic takeovers as the concerned country surrenders its monetary policy to the donors or the international monetary fund (IMF). We have seen this phenomenon at work in Latin America during the Reagan era.
The bailout package was named ‘Brady bonds’ after then treasury secretary Nicholas Brady. Then came Mexico and now Thailand. Latin America and Mexico were taken care of by the US since the region was considered its backyard. Thailand’s package is led by the IMF.
To understand this pattern we must take a closer look at the western economic system. It is entirely based on the usurious (riba) flow of capital. Western government corporations and municipalities continuously battle with each other in this vicious cycle, issuing more and more promisory notes. The reliance on borrowing to finance themselves, they must attach competitive interest rates to their notes. Domestic savings are often not enough to quench their insatiable thirst for money.
So they must peddle their promisory notes to countries with surplus money.
The west is good at pushing garbage down the throat of its obedient client regimes, just as they force ‘third world’ countries to purchase useless arms to keep the west’s death industries running. The fragility of issuing debts to pay down old ones is evident all over the US. The most recent examples were the bankruptcy of Orange County in California and the Savings and Loan crisis.
Muslims must note that despite imposing massive taxes, western regimes borrow heavily. The basic reason is their unjustified defence (read offence) budgets. People in the west are the most overworked and overtaxed on earth. An average American works from January to May each year just to pay income taxes. Whatever is left is further taxed by Uncle Sam in almost every transaction he makes (ie sales tax, tolls).
European countries are even worse. The much-touted social safety net has been unstable due to frequent cutbacks to keep up with economic cycles. Staggering unemployment in Germany and France and their chronic budget deficits keep the European Monetary union a pipe dream!
Let us focus on the debt situation. Historically there are two ways out of the mess: inflating the debt away, meaning taking on more debt; or raising taxes. The second option is not favoured for domestic political reasons. So there is a tendency to find soft targets. Often these are the so-called emerging economies whose governments are eager to emulate western style consumerism. But the west’s greed does not stop at selling mortgage papers to these naive rulers.
They are forced to float their currencies to open their equity markets. Soon thereafter, the slaughter begins. The attack is two pronged: the attack is led by currency speculators who drive down the value of assets in the target country. Almost simultaneously, the equity vultures then move in for the kill (take controlling stake in major enterprises). Southeast Asia presented a classic case of this scenario in July/August.
The tactic is designed to force the beleaguered government to allow foreigners to trade with minimal legal and fiscal constraints and realize maximum profits. If history teaches any lessons, people worldwide must take the west’s ‘noble intentions’ with a pinch of salt. It is well-know that they not only exploited and looted the mineral-rich ‘third world’ countries but also raked in huge cash by selling arms to dictators by creating artificial crises.
The west’s wars have been the deadliest in history. Their roots can be traced to the usurious economic system of the west. Almighty Allah says in the noble Qur’an, ‘O ye who believe! devour not usury, doubled and multiplied; but fear Allah; that ye may (really) prosper’ (3: 130). Another verse says, ‘Allah will deprive usury of all blessings, but will give increase for deeds of charity; for He loveth not creatures ungrateful and wicked’ (2: 276).
The west has invested much to achieve economic and military superiority over other peoples. They have created a black hole for themselves which their leaders are desperate to hide from the masses. Many social ills are directly linked to the debt situation. Crime and stress have skyrocketed in most major US cities. Many states have resorted to legalized gambling on a massive scale to scoop up public money to finance debt.
Western governments spend one-third of their revenue (tax receipts) just to service (pay interest on) their debt. Even their own economists concede that this is a ticking time bomb. The bubble may burst soon. But who is listening? Arrogance has made western leaders deaf to such problems.
Returning to Southeast Asia’s currency turmoil, we see the same villains and the expected victims. Dr Mahathir Mohamed’s Malaysia and monarchist Thailand both fell into the western trap. Mahathir’s all too familiar ‘tantrum’ in the face of a crisis did not deter the western sharks. They know Mahathir’s love for power and publicity prevents him from taking any serious steps to create a barrier for their onslaught. As expected, he ultimately backed down from earlier threats of limiting foreign ownership of Malaysian stocks or curbing capital outflow. Malaysians would do well not to fall for Mahathir’s gimmicks of putting up an anti-western stance.
Muslims must think deeply before becoming fans of the western economic system and see the danger inherent in it. One only has to look at how mutual suspicion, mistrust and deception are eating away the social fabric of the west. The noble messenger of Allah, upon whom be peace, warned us fourteen centuries ago.
Muslimedia: November 1-15, 1997