Forget Class Wars, It's Economic Coup d'état

By Mwarang'ethe

A few days ago, Luke wrote an interesting piece on the forthcoming class war between Wanjiku and the Kenyan comparadore elite. Yes, we agree that, there may be a class war between Korogocho and Muthaiga. However, we are of the view that, a class war or tribal wars are not only suicidal, but, totally unnecessary. Thus, class wars between Korogocho and Muthaiga or tribal wars can only proceed from false consciousness. False consciousness masks the truth and makes us unable to acknowledge the precise historical occurrences. Ultimately, it distorts the true sources of social conflict with devastating consequences.

Firstly, let us bear this in mind. States are disguised military organisations. Therefore, when we deal with any and all foreign states, we must appreciate that, we are dealing with military organisations. Sample this. When the British Navy ruled the seas in the 19th Century, its navy force policed the oceans and thereby, provided cost – free insurance for British merchants shipping vessels. At the same time, its competitor’s merchant ships were forced to insure their ships against piracy, catastrophe and acts of war through London’s Lloyd’s insurance syndicate.

Also, when British Parliament adopted Adam Smith’s “free trade” as a hegemonic device in 1820, the British merchants’ banks reaped enormous profits on the India – Turkey – China opium trade. When the Chinese blocked this poison, the British military mercilessly attacked China to open its ports in the spirit of “free trade.” In the wake of these wars that humiliated China, in 1884, the US Cushing Mission to China forewarned the Chinese Imperial government “that refusal to grant American demands [commercial demands] might be regarded as an invitation to war.” Thus, when you see the Chinese being wary of human rights and Google talk from the West, it is because they have learnt correct lessons of history which Africans are sadly, yet to learn.

On 14th April, 2010, the “DN” had an editorial entitled: “Review Cost of Power.”(. Among other stuff, we read this.

“If there’s one thing that has made the life of households and businesses hard, it is the high cost of electricity. For most domestic consumers, power bills have more than doubled in the past one year. And manufacturers have electricity taking up to 40 per cent of expenses.”

We also read this:

“Pricing of electricity is a question that is often not easily answered, which is why this matter should not be left to KenGen and KPLC alone. The Electricity Regulatory Board must scrutinise the complex tax and levy computations to ensure power suppliers get no more than they deserve. Also, the costly independent power producers’ contracts should be reviewed so that taxpayers do not keep financing them long after the switch to hydro-power. Underpinning the quest for cheaper power is the argument that it will reduce the cost of business. And it should. We hope companies will follow suit and lower the prices of goods and services.”

So, what is going on here? In geopolitics, there is something called “strategic denial.” In other words, at any time in history, the powerful nations try to deny others the necessary materials for advancement. What the “DN” does not mention is that, the “complicated” price of energy from the IPPs is dictated by the IMF, WB, donors and their commercial banks. Therefore, these terms are part of an agenda. Since energy is the main ingredient in the industries, by making it expensive, our industries are crippled. This gives foreign nations a ready market which off course translates into poverty for our Kenyans.

On 15th April, 2010, the Standard wrote this in the “business section.” “Banks still bag billions in real estate.” Among other stuff, we find this. Real estate (read land speculation) remains the banker’s blue eyed boy in terms of credit facilitation taking up the second largest chunk of loans extended by commercial banks. As a result, in 2009, this speculation received Sh52.8 billion. This accounted for 19.3% of total credit to the private sector. This is second to trade (read mostly imports of consumer goods). Thus, we see that, land speculation and imports are the biggest element in commercial banking credit facilitation in 2009. Add the public debt and you get the full picture.

Inviting us to celebrate this nonsense, the reporter tells us that, “[These developments] goes miles to reflect the interesting growth potential of the industry, which has prompted banks to come up with innovative products (read more usurious) to attract more business.” However, the most interesting and equally dangerous is this. Due to high interest rates in Kenya ranging from 15-16%, “Up to 90 per cent of our financing for development comes from local banks. The other ten per cent is sourced from China and Europe, which is far much cheaper than the rates local banks extend to us," says Daniel Ojijo, the chairman of Mentor Group Limited. This man Ojijo, then happily, tells us that, “Even though lucrative, the flip side of borrowing overseas, however, means exposing ourselves to fluctuations of the dollar and thereby we have to contend with the movement of the currency."

We are then told this by Daniel Kimenyi. Kenyan banks are also offering two options for borrowing, “one in dollar terms which has minimal interest charges of up to eight per cent and charging about 14 per cent for borrowing in Kenya shillings.” He then adds this. "The rate charged on borrowing in dollar forms is indeed very attractive; however, it exposes you to the externalities of dollar fluctuations." We are then informed this. “Nonetheless, it is easier to access a mortgage than a development loan with many banks shying off from financing development projects...” So, what do we make of this monkey language?

Let us visit Latvia so as to appreciate what is coming. But, before we do this, bear in mind this statement, “The Central Bank Rate (CBR) remained at seven per cent in December last year, having been lowered from 7.75 per cent in November during the Monetary Policy Committee (MPC) meeting.” We note, it is now 6.75%.

After the end of Cold War, Latvia and other former Soviet Union republics which HAD NO DEBTS, were “freed” from the “evil Empire.” They were then advised by the West (led by Sachs, he of MDGs in Africa) on how to get rich. One of the ideas they were sold is the financial policy of borrowing in foreign currency for real estate development (speculation) although the income to pay these debts was in domestic currency. Their central banks, just as ours is doing now, would then take these foreign currencies and use to import consumer goods like used women under wears as Kirubi told us.

When this land speculation bubble burst, as it will in Kenya (it need not happen because an attack on our currency will be sufficient), Latvia etc, have found themselves with huge problems on how to earn the foreign currency to pay the foreign currency denominated mortgage credit debts as well as for imports since domestic production was dismantled in the name of liberalization. Around 87% of the real estate mortgages in Latvia are in foreign currency, mainly from Swedish and German banks. Since the foreign credit has dried up, the only way to support the currency is by borrowing from foreign official agencies like IMF and the EU. In other words, incur external public debts to allow land speculators pay their loans. However, the terms are extremely destructive to say the least for they will shrink Latvian economy further because they call for more taxes, sacking of nurses etc. All this is meant to free money to pay foreign creditors. More so, this involves more shift of power from elected leaders to bankers, i.e. modern aristocracy.

What is interesting is this. The IMF and EU loans are not meant to build productive sectors in Latvia. That cannot be because Latvian market must be left for Westerns exports. The Latvians will incur debts so as to pay the Swedish banks for loans they recklessly gave to Latvians. In other words, Sweden wants to reduce the Latvian population to a state of debt peonage to foreigners. Why so? History tells us that, Sweden was indeed Latvia’s old feudal master. In simple words, Sweden is now using financial means to restore Latvia to serfdom that Latvians thought they had escaped centuries ago. The question is if Sweden is treating Latvians this way, how will they treat us when our turn comes?

Let us now revert to the CBK rates. As we noted above, the CBK’s rate is now 6.7%. Two questions are in order. Does the CBK need such a high rate? And, is such a high rate compatible with s.3 (4) (3) of the CBK Act, which requires it to formulate and implement monetary policy that “SHALL support the economic policy of the Government, including its objective for growth and employment?” As concerns the first question, any bank can cover its operations cost at 1% interest rate. Anything beyond 3% is MONOPOLISTIC PROFIT, i.e. a tax on citizens without representation. Now, having charged the banks 6.75% for putting some ink on papers, these banks in turn lend that same paper to Kenyans at 15%, a rate suitable for drug dealers. We ask, what do these banks do/create to demand such an atrocious gain? We answer nothing.

When these diabolical arrangements are read together with s.49 of the CBK Act inserted in 1996 (that time we were busy chanting as instructed, Moi must go to see this) which outlaws the ability of the CBK to extend credit to any public entity are fully understood, the intentions become clear. They are to stifle the ability of the Kenyan’s people to build their industrial base. As an example, if NOCK which is a public entity wants to borrow sh20 million to pay salaries and local suppliers, the system works like this. The CBK prints sh. 20 million for cents, lends this money to Equity at 6.75%. Thereafter, Equity lends to NOCK, i.e. Kenyans for 15%. At the end of the year, we are invited to celebrate Equity’s “success.” Yes, celebrate our slavery. Look around KK and you see a post which invited us to do this.

All this is happening because; our fiscal and monetary policy has been hijacked by a “parallel government” headquartered in the Upper Hill (look at Permanent Secretaries in Finance and Energy Ministries and you will see how long they have been there, then ask yourself why). So, why do they do this to us? The reason is very simple. As long as Kenyans cannot borrow cheaply, they cannot create the necessary industrial capacity to compete. This ensures that, we are a market for foreign manufacturers (as it was during colonial times) who can get cheap money. More so, since the foreign multinationals in Kenya can get almost free money from outside, they can expand their manufacturing capacity and crush the local firms.

In our submission to the COE in a proposal entitled: “The Money Question, the Draft Constitution & Freedom,” we requested the COE to take a hard look at our monetary system. Among other stuff, we informed it that:

“The strongly held belief in the 21st Century that bankers have a divine right to create money out of thin air, and thereafter charge interest/usury and thereby enslave those who honestly labour, will be looked at by the future generations as an obnoxious idea as we look today at the vicious idea pregnant with peril, of the bygone ages that, kings had divine right to rule. ... The tap root of freedom is unrestricted exchange. All other freedoms are appendixes of this tap root. ... Therefore, unhampered exchange is the neck of the bottle of freedom and happiness. If growth of freedom is dependent on freedom of exchange, whatever impedes exchange must be rejected while that promotes exchange and therefore, freedom of mankind should be welcomed.”

They made [the] world so hard,
Every day we got to keep on fighting,
Every day the people are dying, for hunger and starvation,
Give us the teachings of His Majesty, For we not want no devil philosophy – Bob Marley.