The United States and Britain embarked on the liberalization of global financial services markets and promoted the expansion of the casino economy that allows speculative money to wield its power unharnessed in the borderless world. Financial speculation caused a currency crisis in East Asia and an economic crisis in the United States triggered by the collapse of major hedge funds and the burst of the IT bubble.
Once speculative investors find sources of profit, they will begin ransacking financial markets without considering the outcome of their actions. If an economic bubble bursts, they will seek profits from another bubble. “After me the deluge” is exactly what their activities are all about. That was how they arrived at the sub-prime mortgage-backed securities bubble. Securities firms securitized sub-prime mortgage loans, which have high risks of default, to sell them to investors and speculators at high prices. In order to ensure high returns, securities rating firms guarantee the security of those collateralized obligations or mortgage-backed securities to make them look like “low risk” products. This is how the stock market bubbles spread around the world.
Financial institutions have scattered financial products all over the world to reap profits from them, involving the low-income earners with what might be called the “Wisdom of Satan,” although no one really knows the real value of these products. That is the extent to which capitalism has fallen into decay.
Japan’s subservience to US must be called into question
US President George W. Bush said that “in the short run, adjustments in the financial markets can be painful” but that in the long run, “I'm confident that our capital markets are flexible and resilient, and can deal with these adjustments." However, the U.S. economy has constantly prospered by allowing fiscal and trade deficits to grow due to deindustrialization, raking in wealth from around the world, and greatly expanding the gap between rich and poor.
What must be called into question is casino capitalism and Japan’s subservience to the US-style economy.
Japan must end subservience to the US in its financial policy
The bankruptcy of the major investment bank Lehman Brothers triggered by the “sub-prime mortgage meltdown” after the bursting of the housing bubble in the United States has put the US financial market into confusion.
Commenting on the Lehman Brothers collapse in the Diet on September 16, Japanese Communist Party Secretariat Head Ichida Tadayoshi said, “It is extraordinary indeed that three of the five major investment banks have gone bust in the United States.”
“This confirms the shady nature of sub-prime loans and its role in decaying the core of the US economy,” he added.
Ichida continued: “In the face of the failure in the drive of securitization of loans, Japan’s subservience to the US in its financial policy must be reviewed.”
He stated, “Amid the recent financial market meltdown, speculative investment has dramatically increased in the oil and grains markets and helped to push up prices.”
“It is impossible to hold prices down without international efforts to control financial speculation. The US Congress is beginning to make efforts to this effect. The Japanese government is also called upon to make a drastic review of its financial policy,” Ichida said.
Ichida went on to say, “The Lehman Brothers case is causing a sharp appreciation of the yen against the US dollar as well as falls in share prices. It is essential for Japan to immediately focus its attention on the household economy by breaking away from relying on foreign demand. The need now is to help increase personal incomes and create domestic demand.”
