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Friday, October 17, 2008

New Colonization

Malaysia past experience of trading with ethnic Europeans is not very assuring. We fear that free trade will not be fair trade. In this world economic current situation, we fear our commerce being monopolized again like 11 years ago, and maybe we will again be colonized. Already we are seeing moves towards monopolies or at least oligopolies in many businesses. Mergers and acquisitions are creating giants of the corporations of the U.S. and Europe, against whom few can compete.

We should know that bank can make or break not just people and business, but also whole countries. That’s why now every G8 countries come with ideas of bailout plan to save their banks. The big banks of the rich countries are merging and acquiring each other so rapidly that most of them now have more money than most national governments or even countries. If they can operate in any country unrestricted, the chances are the small national banks will be eliminated or swallowed up. The international banks can afford to lose in any country because they would be making a lot in the other countries. The national banks cannot afford to lose because they operate only in their own country. Two or three years of losses by a national bank, then it is ready to beg for a take over by the international giants.

Once the local competitor is eliminated, there would be no need for the big banks to make losses. They can now raise interest rates, etc and deal only with big business. Big banks don’t care for the small man or small business. The result will be a decline in medium and small businesses following the disappearance of the local banks.

Giant corporations are said to be more efficient, more cost effective, and more able to afford costly research and development and introduce new affordable products. But we have seen how giants also collapse. Enron, Globaldotcom, Arthur, Andersen; they have all collapsed. They have cheated. Mercedes-Benz is a great company but is unable to turn around Chrysler or Mitshubishi Motors. Several big banks such as Lehman Brothers, even big insurance company like AIG has failed.

Big is not always beautiful. Big is often ugly. When they fall, they drag down everyone with them. May Allah help us if these giants rule the world?

2 comments:

  1. And May Allah swt help us and NOT make these Giants fall on us indirectly too. Amin!!

    WaSalam.

    ReplyDelete

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