It goes without saying that poverty and inequality beyond rationally acceptable limit are caused by wrong economic, monetary and fiscal policies; legislative, legal and regulatory flaws; and imbalance between pro-business and pro-people and pro-employer and pro-employee policies.
The transfer of money through channels other than strictly regulated and monitored companies cannot be ruled out but that money’s unchecked investment in bonds, shares, properties and business companies clearly and convincingly points out that the countries and their governments at both ends are intentional accomplices of white collar crimes for a number of understandable but inexcusable reasons.
Is it possible that those who are responsible to monitor the inter-state flow of money don’t know from which countries money is transferred to their countries? Who in regulatory, banking and financial circles doesn’t know whose money is parked in which tax haven for how long? Who doesn’t know who manages the illegally transferred funds on whose behalf? Why do the tax havens hide the information?
Why these questions have not been answered so far?
Who is responsible?
What can be done about it?
The Answers follow…
Three curable symptoms of an ailing global economy and their treatment
1. 1
1
Three Curable Symptoms of an Ailing Global
Economy and their Treatment
The 11th Hour before the Doomsday
It goes without saying that poverty and inequality beyond rationally acceptable
limit are caused by wrong economic, monetary and fiscal policies; legislative,
legal and regulatory flaws; and imbalance betweenpro-businessandpro-people
and pro-employer and pro-employee policies.
The transfer of money through channels other than strictly regulated and
monitored companies cannot be ruled out but that money’s unchecked
investment in bonds, shares, properties and business companies clearly and
convincingly points out that the countries and their governments at both ends
are intentional accomplices of white collar crimes for a number of
understandable but inexcusable reasons.
Is it possible that those who are responsible to monitor the inter-state flow of
money don’t know from which countries money is transferred to their
countries? Who in regulatory, banking and financial circles doesn’t know whose
money is parked in which tax haven for how long? Who doesn’t know who
manages the illegally transferred funds on whose behalf? Why do the tax
havens hide the information?
Why these questions have not been answered so far?
Who is responsible?
What can be done about it?
The Answers follow…
2016
Zahid Hussain Khalid
Writtenfor my blogs on LinkedIn,Facebook,Slideshare andWordPress
5/9/2016
2. Three Curable Symptoms of an Ailing GlobalEconomy and their Treatment Page 2
Three Curable Symptoms of an Ailing Global Economy and their Treatment
By Zahid Hussain Khalid
Introduction
Nothing remains incurable in today’s world when the scientists are looking beyond Mars and DNA /
StemCellstoconquerthe universe andimmortalize humans. Seeing the strange mysteries of universe
and the life unfolding faster than the speed of light the unpleasantly slow pace of response to a wide
range of malfunctionsinthe overall system of governance are endangering the very survival of human
civilizationonplanetearthdemandinganimmediate identification of symptoms and a serious effort to
cure them.
The world was divided into two systems of governance and economic zones immediately after the
Second World War: American led Capitalist Zone built on the principles of democracy and social and
economicjustice;andSovietCommunistZone constructedonthe principle of absolute state control on
country’s natural resources and economic outcome of the human input resulting in a Cold War and a
bipolar world.
The firstpriority of the people of a world devastated economically by war and exploitation of colonial
powers before their decolonization needed funds for infrastructure development and economic
rehabilitation in Europe, Asia-Pacific, Middle East and Africa. United States of America and USSR used
carrots and sticksto bringcountriesintheirrespectivezones of influence byofferingthemdifferentsets
of social andeconomicincentivesand issuingthreatsof serious consequences for remaining out of any
one of the twozonesof influence.In spite of those incentives and threats there was a covertly Aligned
at country level but overtly Non-Aligned Group of Countries too. The response and its outcome were
mixed.WesternEurope was admirably helped by United States to become a rapidly growing industrial
manufacturing and trading zone. Eastern Europe was assisted by Soviet Union to share the benefits of
manufacturingandtradingactivitieswithin Russianzone of influence. Non-AlignedGroup had restricted
access to both zones of influence for social, economic and military assistance.
3. Three Curable Symptoms of an Ailing GlobalEconomy and their Treatment Page 3
The turning point in cold War, Gorbachev's conceptual racing car's crash and end of the first phase of
an era of a War for Influence
Soviet invasion of Afghanistan was a turning point in the history of Cold War in which Soviet Union’s
wronglypresentedsocial andeconomictheoryof Communism as an ideology was defeated by militant
Jihadisrecruited,trainedandequippedbyUnited States of America for helping to fraudulently defend
Islamwrongly propagatedtobe under threat by a social and economic theory which was theocratically
never a challenge or threat to any religion including Islam. The retreat of Soviet Union in Afghanistan
was a clearindicationof insurmountablepressuresof multipleweaknessesinthe system of governance
to keep the Union economically viable, socially intact and politically united. Michael Gorbachev had a
reform plan.
Gorbachev’spolicies of Perestroika(restructuring)andGlasnost(openness), according to General Mirza
Aslam Beg, Pakistan’s former Chief of Army Staff, “were like abruptly taking a u-turn while driving a
racing car running at a speed of more than 200 Kilometers an hour which was expected to result in
crash” and didresultin breakupof the Soviet Union. Gorbachev’s move was premature. Former Soviet
Union was not ready for such a shock which caused the ultimate breakup of the Union.
4. Three Curable Symptoms of an Ailing GlobalEconomy and their Treatment Page 4
How UnitedStates of America missedan opportunityto become a genuinelyacceptable worldleader?
That was presumably anend of the Cold War, a bi-polar world and assumingly beginning of the trial of
victoriousCapitalismfree of anychallengesofarfromany side.Itwas the victory of an American dream
calledCapitalistWorldinitfirst phase and to expandthe landof opportunityfromwithin the borders of
the United States to the four corners of the world in its second phase by sharing the experiences of
reconstructingaworldwhichwas turnedintoruinsafterSecondWorldWar, successfully turning a large
numberof countriesintoprosperousmanufacturingandtradinghubs inthe thirdphase.Keepinginview
the resulting good will and a feeling of gratitude for America’s admirable role in putting the ruined
economies and also the means of earning a livelihood of a large number of countries it was not a
questionable expectation that United States of America could be whole heartedly accepted as a
genuinely generous peace loving world leader.
Did it mean that there were no dark sides at all? War in Vietnam and CIA’s widely known tactics to
change regimes and dictate American Cold War Agenda in different continents of the world also has a
longdisappointingandannoying chapterinthe historyof international relationsandpowerpolitics. The
end of Cold War was the beginning of an invisible economic world war through military means and
military operations other than war.
The original planwaspreparedduringandafterthe Yaum Kapoor War but partiallyimplemented due to
the fear of Soviet Union’s possible intervention to counter American move for global economic
domination through regime changes, military operations and occupation of militarily weak and
economically resource rich countries of the world with the help of proxy militant groups. After the
disintegrationof SovietUnionthere wasnovisible constraint to worry about any interference from any
side.The hawksinWashington’sStrategicPolicy Designing Teams were ready to avail the opportunity.
Please read the details here America, the great game and the greater middle east an undiscussed
perspective unveiling the birth of conspiracy theories
5. Three Curable Symptoms of an Ailing GlobalEconomy and their Treatment Page 5
Hurriedly launched flawed economic reform package for finanancialization of globalization with an
overt back up plan of Grand Military Operation other than War
Theypreparedanaggressive economicplantoerase everysignof communismbyintroducingpoliciesof
privatization,public-private partnership, deregulation, out-sourcing, and globalization of banking and
financial services withthe help of a globally interlinked network of banks, stock exchanges and equity
brokers.
They had a very strong case for economic reforms and military intervention also because the Soviet
Occupationof Afghanistanhad createda dangerousgroupof highlytrained,well equipped and fearless
armed non-state terrorists belonging to resource rich countries of the Middle East and Africa. The
potential terrorismthreatto the countriesof the regions, resultingfearof theireconomicinstability and
political insecurity of the rulers were the soft grounds for the justification of military intervention
wrapped in military assistance to combat terrorism. Smartly using these grounds for military
intervention the running-for-their-lives non-state terrorist groups convincingly appeared fighting for
their own survival and political change in more than half a dozen countries.
An Unknown Short History of Two Post-Colonial Invisible Global Empires – UK, USA and Extremism
This was a smooth transition of Cold War into Proxy War for Economic Dictation and Domination
through Military Operation Other Than War!
A Technically Flawed and Unintentionally Criminalized Financialization of Globalization
It was assumed that money leads to power and power on its turn leads to authority. The process of
globalizationhascreated national, regional andglobal banking,businessandstockmarket cartels. Banks
are the placeswhere the white and/or blackmoney isparkedand itsflow andflightare facilitated with
and withoutthe connivance of regulatoryauthoritiesunderaninvisible indirect influence of ministry of
finance.Itiswrongto eventhinkthatthe regulatoryauthoritiesworkindependently in developing and
developed countries.
Stock brokers are the portfolio managers and proxy investors of both black and white money. They,
again I am not ruling out the exceptions, serve the genuine entrepreneurial role models, crooks and
criminals with the same dedication with which they serve the governments and their countries. As an
unwritten globally practiced principle, depending on the status and the stature of the customer, it is
6. Three Curable Symptoms of an Ailing GlobalEconomy and their Treatment Page 6
none of their business to know how the money is earned, from where it comes and to which overseas
destinationithastogo. They smartlypackage tailor-made investment plans to match every customer’s
need. Can they do that without the knowledge and support of the regulators? Strangely no one
addressesthis question to those who are supposed to answer. And even when someone dares to ask,
the people at the other end are not legally bound to answer because the regulatory procedures are
intentionally made so complicated that no one dares to initiate the probe.
The main players
There are nearly two dozen following major suspects at cabinet, legislative, regulatory and business
ends who need to be thoroughly investigated for tracking the sources of inward and outward flow of
black money and those who facilitate them:
Ministers/Secretariesof Finance,Trade,Industries, Petroleum, Natural Resources, Ports and Shipping
and Housing
Auditor Generals
Governors of Central Banks
ChairmenandDirectorGeneralsof InvestmentBoards,PrivatizationCommissions, TradingCorporations,
Boards of Revenue, Directorates of Customs: sea, dry and airports
Chairman Public Accounts Committees on Finance
Chairmen of Stock Exchange Regulatory Commissions
Chairmen, Presidents, Director Generals and Administrators of the District Civil and Defense Housing
Development and Highways Authorities
Leading Stock Brokers
Leading Real Estate Developers
Foreign Currency Dealers and Money Changers
The above ministries,regulatory bodies, commissions, boards, authorities, corporations, directorates,
developers,brokers anddealers workindependentlybutinso many ways they cannot function without
extensive interaction with each other for necessary approvals, licenses, registrations, duties, taxes,
refunds, investments, banking transactions and on-and-off-book facilitations and most of the time
withoutfavors, bribesandspeedmoney.Thisis what results in collaboration between the white collar
criminalsingovernmentandbusinesscirclestoprotecteachothercovertly and overtly with the help of
intentionally and technically engineered temporary and / or permanent untraceable legislative, legal
and regulatory flaws. These flaws make the job of investigators extremely difficult in developing
countries which have been enslaved and recolonized through their rulers. These countries have been
turned into hell evidently in connivance with the leaders of the developed countries (I will shortly
explainhow) forunchecked fearless plunder by almost all leaders of the ruling and opposition parties
(hard to find exception cannot be ruled out) with the active role of business cartels, armed party
extortionists and target killers as front men in almost all major economic sectors.
7. Three Curable Symptoms of an Ailing GlobalEconomy and their Treatment Page 7
The Smart Tactics to Knit a Web of Safety Measures
The following tactics are used to fearlessly plunder the developing countries:
Charter of Democracy
National Reconciliation Ordinance
Amendments in Constitution
Issuance of SROs
Relaxation of and amendments in Tax Laws
Deliberate Regulatory Negligence and
Appointments of allegedly men of questionable integrity in investigation, regulatory and law
enforcement agencies
The above measures stop the process of accountability and trigger violence through indirect state
sponsoredeconomicterrorismencouraging the extortionists, target killers and crime mafias to hollow
the very foundation of the states from within. The following three deadly symptoms are discussed in
informed circles which are in the knowledge of the rulers and the governments also:
Overtlyregulatedandcovertlyunregulated activities in Stock Markets, banks and financial institutions
are as deadly as incurable poison extracting value, causing economic exclusion, resulting in growth
without prosperity and possible result in Ultimate Demise of Capitalism…
Read the details here ABC of Life 3Cb: Value Creation-Extraction=Profits without Prosperity
Flawedlegal differentiationbetween tax evasion and tax avoidance promoting technically engineered
capital flighthave turned tax havensinto graveyardsof social andeconomicjustice creatingsecretoases
of affluence and expanding deserts of deprivation… Please read the details here
ABC of Life 3-Ca: How Rich the Rich & Poor the Poor Countries Are?
8. Three Curable Symptoms of an Ailing GlobalEconomy and their Treatment Page 8
State AuthorityplusMarketForcesminusGoodGovernance hasresultedindemands for legislative and
legal immunityforirresponsible business and irresponsive political behavior of global business cartels
and political leadersof NOTonlythe about-to-fail-fragile andfailedStatesof the developing and under-
developing but developed and the most developed countries of the world also!
Please readthe detailshere ABCof Life 4: Nation-State Authority+Global Market Power-Governance=?
What to do?
“The way out”, which I had discussed earlier also in my article The Dark Sides of Deregulation and
Sanctions,“isto revisitthe existing regulatory regimes and reinvent the rules of doing business in and
outside a country by securing its real and potential industrial, manufacturing and agricultural
performance base without imposing any unnecessary restrictions on overseas investment and
entrepreneurialinitiatives.Such a step will keep the domestic economic performance intact and make
room for its positive and constructive role in contributing to global economic performance also. Any
overseas investment initiative after sufficiently securing the future economic growth timeline of a
countryought to be encouragedbutnotat the cost of the viabilityof itsowneconomic system. In order
to make it sure an internationalcode of doingbusinesshasto be introduced with the tripartite consent
of international entrepreneurs, their respective governments and a proposed International Overseas
DoingBusiness Code of Conduct Regulatory Regime. These proposed measures will effectively put an
endto jobexports,capital flight,political extortion and election campaign contributions narrowing the
gap between rich and poor and ultimately putting an end to it.”
9. Three Curable Symptoms of an Ailing GlobalEconomy and their Treatment Page 9
Points for Action of those who matter in G20 and G30
It goes without saying that poverty and inequality beyond rationally acceptable limit are caused by
wrong economic, monetary and fiscal policies; legislative, legal and regulatory flaws and imbalance
between pro-business and pro-people and pro-employer and pro-employee policies.
The transferof moneythroughchannelsotherthanstrictlyregulated and monitored companies cannot
be ruled out but that money’s unchecked investment in bonds, shares, properties and business
companies clearly and convincingly points out that the countries and their governments at both ends
are intentional accomplices of white collar crimes for a number of understandable but inexcusable
reasons.
Is itpossible thatthose whoare responsible tomonitor the inter-state flow of money don’t know from
whichcountriesmoneyis transferredtotheircountries? Whoinregulatory,bankingandfinancial circles
doesn’t know whose money is parked in which tax haven for how long? Who doesn’t know who
managesthe illegally transferred fundsonwhose behalf?Whydo the tax havens hide the information?
The onlyunderstandable answeristhatanyamountof moneythatflowsinfromany othercountryplays
an importantrole inthe economicgrowthof the recipientcountries.How can we expect such countries
to ask those whobringinhundredsof millions,billions and trillions of dollars to stop doing that? It will
be economically suicidal. But what do the rulers and policy makers of these tax havens forget that any
lawwhichresultsinthe deathof a person onlybecause someone else inanyothercountryisbeneficiary
of that law is not law but a criminal act to globalize such acts of murder.
How is that so?
“…by shapingandenforcingthe social conditionsthat foreseeablyandavoidably cause the monumental
sufferingof global poverty,”accordingtoThomasPogge, “we are harmingthe global poor – or, to put it
more descriptively, we are active participants in the largest, though not the gravest, crime against
humanity ever committed.”
There is, as Thomas Pogge insists, a very serious dimension of this alarming situation of human rights
violation which clearly establishes beyond any doubt that all the deaths caused by very severe
deprivations, chronic undernourishment, lack of access to safe drinking water, adequate shelter,
sanitation,electricity,qualitybasiceducationforcedunderage worklaborinslaverylike hazardouswork
conditions are “serious punishable crimes against humanity.
How is it so?
I have discussed it in detail here ABC of Life 3-B: Why Tax Havens Are Deadlier Than The Death?
10. Three Curable Symptoms of an Ailing GlobalEconomy and their Treatment Page 10
A few highlights of some important facts to prove that debtor nations are actually the creditors
James Henry’s 2012 report for the Tax Justice Network, “The Price of Offshore Revisited,” has
established that “for a focused group of 139 mostly low – middle income countries, these private
offshore holdings of US$7.3-9.3 trillion are roughly twice their aggregate gross external debts of $4.08
trillion.Thesecountriestraditionallyregardedasdebtornations,are in fact creditors to the world, once
these secret private offshore holdings are taken into account.”
Financial Secrecy Index (FSI) of Tax Justice Network shows that “some of the biggest tax havens are in
fact some of the world’s largest and wealthiest countries such as, Switzerland, Luxembourg, and the
United States.” The other countries are: Hong Kong, Cayman Islands, Singapore, Lebanon, Germany,
Jersey,Japan,Panama, Malaysia, Bahrain, Bermuda, Guernsey, United Arab Emirates, Canada, Austria,
Mauritius, and British Virgin Islands.
“By supporting investments routed through secrecy jurisdictions (Tax Havens) DFIs,” as alleged by
MathieuVervynckt, “allow the possibility of a significant loss of tax revenues. More importantly, they
are helpingtolegitimize the offshore industry.” These multilateral DFIs in addition to bilateral DFIs are
the World Bank’s International Finance Corporation (IFC); the European Bank for Reconstruction and
Development (EBRD); the EU’s European Investment Bank (EIB).
Why this has not been emphasized so far?
At the first High Level Meeting of the Global Partnership for Effective Development Cooperation in
Mexico in 2014, the affirmation of donors of their past commitments “to publish information to a
common,openstandard,incorporatingthe International AidTransparencyInitiative (IATI) by the end of
2015” is not reflected in The 2014 Aid Transparency Initiative Index in which “average score for all
organizationsstill sitsdisappointinglylow at39%,and there is an increasing gap emerging between the
organizations at the top and those at the bottom of the ranking” for the following three reasons:
1. There is a race to the top, but the majority of organizations are lagging behind in meeting their
international commitments.
2. The lack of comparable, comprehensive and timely publication of information means that
information on development cooperation is still difficult to access and use.
3. Progress is achievable, if the political will exists.
MathieuVervyncktestimates that as far back as in 2009, two million international business companies
and hundredsof thousands of trusts, mutual funds, hedge funds and captive insurance companies are
located in tax havens. In addition, about half of all international bank lending is routed through tax
havens and 30-40% of the world’s stock of Foreign Direct Investments is accounted as assets of firms
registered in these jurisdictions. What are the consequences?
In Europe alone, tax evasion and avoidance cause an estimated €1 trillion loss of income each year. In
2008, Christian Aid estimated that developing countries lost around $160 billion per year in corporate
tax revenues. They estimated that this would be enough to substantially address infant mortality and
save the lives of 350,000 children aged five or under every year. Furthermore, Tax Justice Network
reports that “an estimated $21 to $32 trillion of private financial wealth is located, untaxed or lightly
taxed, in secrecy jurisdictions around the world.”
Read the details here ABC of Life Concluded: Can the words really change the world?
11. Three Curable Symptoms of an Ailing GlobalEconomy and their Treatment Page 11
Acrossthe boardregulatoryinactionof statesis“a resultof four normative transformations,” according
to State of Power2015 whichis clearly reflected in the ongoing proceedings of the Transatlantic Trade
and InvestmentPartnership(TTIP) betweenthe European Union and the United State. This partnership
is feared to “have devastating effects on the rights of the people as a consequence of: downwards
harmonization, regulatory convergence, arbitration tribunals and the normative principles” which are
“part of a legal-political framework of domination,” marking, “a profound rupture in the hierarchy and
the normative pyramid of the human rights protection system. What is more, there is clearly a
democraticdeficitinglobal economicinstitutions,includingthe arbitrationtribunalsthatremainbeyond
national judicial powers’ reach.”
Social justice in any civilized society is nothing but the creation of a balance between greed and fear.
When greed and fear cross their respective limits they result in social and economic injustice and
imbalances.Aneconomicallyprivilegedindividual’suncontrolledanduncheckedgreedat the giving end
resultsinfearof a sociallyunprotectedandunder-privileged deprived person at the receiving end. The
question is who is there to create that balance? In deregulated capitalism I see the answer to that
questionmissingandholdthe systemof political governance responsible for that missing but essential
for saving millions of lives answer demanding strict regulations. Why?
Humansare civilizedsocialanimals.These civilizedsocial animals if not controlled by a set of strict laws
and inescapable bindingregulationshave bio-geneticpotentialtoturnintosocial monsters. This is what
social and economic scientists and rulers have failed to understand. What are the consequences?
Everybodyisdemandingrightsandnot willing to accept responsibilities in return creating and feeding
an irresponsible andirresponsive systemof governance which is evidently incapable of controlling the
crisis after an unending series of ongoing and potentially dangerous crises both at national and global
levels.
What can be done?
A lotcan be easilydone byhonestlyandsincerelycuringthe followingthree symptoms in the system of
global governance:
Meaningful regulationsandfullyindependentregulatoryinstitutionsheadedbymenof uncompromising
character and integrity.
Removal of flaws like tax avoidance from tax laws which encourage and facilitate tax evasion.
The governmentsare votedinpowerto address those concerns of the voters which they are incapable
of addressingthemselves without the proper planning of those they entrust with the responsibility to
lookafterthem. Thisiswhat people expectthe governmentstodo – serve the people!Rationalizationof
the corporate sense of optimism incountry’seconomy anditsalignmentwiththe expectationsandwell-
being of the people needs to be the first priority of any government anywhere in the world. Let the
corporate sector do what they are good at – doing business remaining within and strictly adhering to
national and global rules of doing business. They have nothing to with social service sectors like
education, health, housing, justice, inland and border security.