Monday, December 14, 2009

Bad as it already appears, the Banking system may be even worse than we knew

We know that the Wall Street financial companies let their greed and stupidity very nearly bring the U.S. and the world economy fall into the second Great Depression in the Fall of 2008. But what did they do to save themselves? The Guardian has just published the story from the United Nations Office on Drugs and Crime.
Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations' drugs and crime tsar has told the Observer.

Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.

This will raise questions about crime's influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. "In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor," he said.

Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.
So it's not just the people in third world countries who died when the global economy froze up. It's not just the businesses and governments around the world who lost massive amounts of money. It's not just retirees who suddenly found they don't have the money they planned on for their retirement. It's also the people who have died because of the drug trade.

That is going to include people who have died because drug dealers are financing the Taliban in Afghanistan or the rebels in Colombia. This will almost certainly have exacerbated the Mexican war on drugs.

Hooray for the power of the uncontrolled Wall Street financial people. And they are paying off the Republicans and conservative Democrats in Congress to prevent the passage of laws that would reregulate Wall Street.

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