XXII/YOUR MONEY OR YOUR LIFE!
much wealth as the total annual Income of three billion people! The
gap between holders of capital, on the one hand, and the majority of
the population, on the other, is growing wider and wider.
The UNDP also makes a radical critique of Thatcherism without
mentioning the Iron Lady by name: 'During the 1980s, the gap
[between rich and poor] in the United Kingdom widened by a degree
never before seen in an industrialised country.'
SO MUCH FOR PRIVATE-SECTOR EFFICIENCY
Neo-liberalism has been the dominant creed for some 20 years. One
of the major arguments made by neo-liberal opinion-makers has
been that the private sector is much more efficient than government
in economic matters. Yet 1997 and 1998 have been replete with
examples of private-sector inefficiency. The 1998 reports of the
World Bank and the Bank for International Settlements (BIS)
concede that it was the private companies of Southeast Asia that had
amassed unsustainable debt levels, not government. The same
reports say that the previous Third World debt crisis (from 1982
onwards) had resulted from excess public-sector debt. In other words,
once the private sector was given free access to international
financial markets, it (alongside the financial institutions of the North
that provided the loans) proved to be just as short-sighted and
reckless as government.
In the most industrialised countries, the 'hedge funds' that boosted
their financial fortunes over the last 15 years have also been reeling
of late. The best known example is that of Long Term Capital
Management (LTCM), a misnamed company if ever there was one. By
late September 1998, LTCM was on the verge of bankruptcy. It had
4.8 billion dollars in real assets, 200 billion dollars in leveraged funds
in its portfolio, and a notional value of 1.25 trillion (1,250 billion)
dollars in derivatives. It is worth noting that LTCM had been advised
all along by the two recipients of the 1997 Nobel Prize in Economics,
Myron Scholes and Robert Merton - two stalwarts of the 'science of
financial risk', rewarded for their work on derivatives. As its
bankruptcy loomed, even big international banks with conservative
reputations admitted to having made imprudently large loans to
LTCM. Had LTCM not been bailed out through the massive interven
tion of a number of big banks such as the Union des Banques Suisses
(the biggest bank in the world before Deutsche Bank and Bankers