16 February 2009 | Draft
Extreme Financial Risk-taking as Extremism
subject to anti-terrorism legislation?
- / -
Legal action against extreme risk-takers?
Financial "crimes against humanity"?
Extreme financial risk-taking by al-Qaida?
Example: United Kingdom
This is an exploration of the degree to which financial risk-taking, of the
kind acknowledged and deplored as central to the financial crash of 2008, can
be defined as "extremism". And, to the extent that that is the case, does such
extremism fall under the proscriptions of anti-terrorism legislation -- given
that "extremism" has been conflated with "terrorism".
The exploration follows from an earlier study on the forms of what be understood
as "terrorism" (Varieties
of Terrorism -- extended to the experience of the terrorized, 2004).
Given that there has been a more recent tendency to conflate "extremism" with
"terrorism", two further explorations focused on the nature of "extremism"
of Guilt by Association: reframing extremism in the response to terrorism,
in the Global Struggle against Extremism: "rooting for" normalization
vs. "rooting out" extremism? 2005).
Whilst different legislations may define "terrorism" with
a degree of precision, it would appear to be the case that no clear international
definition exists. This follows from the saga of many years regarding the international
definition of "aggression".
In particular definitions do not take account of the experiential situation
as to whether people can legitimately claim to have been "terrified"
or "terrorized". They notably fail to take account of "terror" induced
by government agencies (for reasons they frame as legitimate) or which they
simply deny. This confusion notably arises in relation to any form of "interrogation",
defined as legitimate, or of "collateral damage" in a conflict situation.
Incitement to terrorism, as opposed to any incident defined as involving "violence",
has been progressively associated with "extremism" -- defined as "unacceptable"
in any form. Unfortunately, here again, there is no clear definition of "extremism".
The term may be qualified as "violent extremism", presumably to be
understood as incitement to violence.
The difficulty with such definitions is that:
Johan Galtung (Violence,
Peace, and Peace Research, Journal of Peace
Research, Vol. 6, No.
3. (1969), pp. 167-191) makes
a vital distinction between physical violence and structural
violence is for the amateur, using weapons in order to dominate. For Galtung,
structural violence is the tool of the professional employing exploitation
and social injustice to achieve domination. But beyond the latter, acting
behind the scenes (and adjusting the scenery) is surely the conceptual violence
of the super-professional, using disinformation and psychological operations
(military psy-ops) -- and the associated processes of brainwashing. Examples
of conceptual violence include use of category euphemism to inhibit or numb
recognition of other dimensions of an experience. This is typical of business
and military jargon (bodycount, collateral damage, etc.) but even of reference
to body processes (washroom, etc.) -- reinforcing an insidious form of experiential
In addition to "structural violence", Johan Galtung (Cultural
Violence, Journal of Peace Research, Vol. 27, No.
3, 291-305, 1990) has defined "cultural violence" as any
aspect of a culture that can be used to legitimize violence in its direct
or structural form. Symbolic violence built into a culture does not kill
or maim like direct violence or the violence built into the structure.
The difficulty is how then is "violent extremism" to be understood and addressed
by the law?
There is no lack of references to the extreme risks taken by traders on the
financial markets in the past decade -- whether primarily for their own personal
benefit or with the incitement of their institutional superiors. The level
of the rewards has been exorbitant by many, if not repugnantly so.
There is also no lack of references to the consequent loss of livelihood,
shelter, and the ability to obtain food and health care. The loss of housing
as a result of the subprime crisis, and the loss of employment thereafter,
have been the subject of repeated comment in the light of detailed statistics
available in many countries.
Many have been appalled at the continued payment of financial rewards to
those who have been most intimately involved in these practices -- rewards
made notably with the use of taxpayer bail-out funds.
The argument has been put forward that many such payments were made in conformity
with legally binding contracts -- presumably on the assumption that no professional
fault was involved that would nullify the terms of such contracts.
Curiously the expression "financial extremism" was already used in
London in 2002 (Anthony
extremism that gives cause for alarm, Evening
Standard, 16 May 2002).
Little effort has been made to undertake legal proceedings against those who
have been intimately involved in the processes which have affected the lives
and livelihoods of so many.
Within the above context, what is to be considered "violent" in the light
of either "violent extremism" or terrorism. Clearly the crisis has engendered
terror in many uncertain of their livelihoods, their future, or their pensions.
Presumably many will die prematurely as a result of the extreme risk-taking,
especially in developing countries or regions dependent on economies that have
effectively collapsed. Presumably also, some investors, faced with financial
collapse, may have committed suicide, or may do so.
However, these consideration can be set aside as more difficult to assess.
Potentially more credible is the question of how "violent extremism" is to
be understood in relation to extreme risk-taking. At what point is any form
of extremism to be understood as "violent"? If the risk-taking places the lives
of others in danger, should this not be considered as "violent extremism"?
A simple, perhaps trivial example, is driving at high speed such as to endanger
the lives of others, whether or not they are "terrorized" by the process. Incitement
to do so might also be considered in the same light.
Legal action against extreme risk-takers?
The issue is then the extent to which the extreme risk-taking in which traders
engaged, and were incited to engage, should be considered as tantamount to
"violent extremism" and therefore subject to the relevant legislative provisions
-- however these may or may not be conflated with those for "terrorism".
Of interest in this respect is any statute of limitations on undertaking such
Also of interest is that legal proceedings would then be undertaken under
anti-terrorism laws rather than seeking to redress for actions relating to
the legality of financial activity of the trading corporations. Ironically,
whereas the notorious Al Capone was
not indicted for any of his gangster and racketeering activities but for income
tax fraud, here the situation is reversed in seeking to pursue extreme risk-takers
for the "violence" resulting from
their activity -- as envisaged by legislation against "violent extremism".
In some cases it is "extremism" alone that is subject to legal sanction,
irrespective of the use of "violent" as a qualifier. To what extent
is the extreme risk-taking in which financial traders engaged then to be understood
as a form of extremism? How is complicity in such activity then to be understood?
More generally, what "extreme" initiatives and viewpoints are not to
be considered as potentially justifying action against their "extremism".
For example, is this argument worthy of such consideration? More provocatively,
is fanatical conformity to norms to be considered "extremism" --
especially when it leads to loss of life through "following prescribed
"obeying orders" -- irrespective of whether they constitute "withholding
aid to those in danger" (held to be a crime in some countries)?
With respect to criminality, how is the distinction to be made between misleading
clients through a Ponzi scheme -- considered "fraudulent" -- and misleading
investors in financial derivatives -- considered "legal"? Both clients and
investors are well-satisfied for an extended period -- until the moment of
truth. Like "creative accounting" does this exemplify the quest for "flexibility",
with only the first case being considered unacceptable?
Financial "crimes against humanity"?
The main argument against criminal action against those who are responsible
for the financial crisis of 2008 and its consequences is that they did nothing
illegal at the time and were encouraged in their risk-taking by the institutions
for which they worked and with whom they had lucrative contracts. People at
the highest level of government were supportive of their role.
Given the harm inflicted on the livelihoods of millions, as is becoming increasingly
evident in 2009, the question is to what extent those responsible are effectively
protected by legal niceties. These might be usefully compared to "creative
accounting" -- equally legal but challenged as suspect. As an example, given
his formal regulatory role in the UK Government, how irresponsible is Gordon
Brown to be considered for his speech on 20 June 2007, as quoted by Will Hutton
Stakes, Low Finance, The Guardian, 2 May 2009):
This is an era that history will record as a new golden age for the City
of London," Brown intoned. "I want to thank all of you for what you are achieving." Just
weeks later the financial catastrophe burst, creating the "great recession" and
leaving the UK taxpayer with a one-sided exposure of £1.3 trillion
in loans, investments, cash injections and guarantees to the banking system,
of which over £100bn may be lost for ever. Brown went on to hymn the
and ingenuity" that had enabled it to become a new world leader. In language
so purple it could make a cardinal blush, he praised London's invention of "the
most modern instruments of finance" -- the very instruments that were to
bring it and the western banking system down.
In May 2009, the European Commission indicated that it expected the recession
across Europe to be twice as bad as previously predicted. The European economy
was declared to be in the midst of its deepest and most widespread recession
since World War II. Unemplyment across Europe was expected to rise to 26 million,
or 11.5% -- increasing from 7.5% in 2008. The eurozone budget deficit will
triple to 6.5% of GDP in 2010, well above the EU upper target of 3%. (Julia
Finch, It will be twice as bad as we feared, says Brussels. The Guardian,
5 May 2009). Given that these forecasts have been revised from those made only
months earlier, it is questionable how much confidence it is appropriate to
have in them.
As pointed out by Timothy Garton Ash (This
epochal crisis requires us to resolve the paradox of capitalism, The
Guardian, 6 May 2009):
The conduct of the bankers who pitched us into the slurry-pit - not
all bankers, of course, but quite a few of them - may not have been
illegal but it was selfish, irresponsible and immoral. Year after year, they
took huge personal gains for themselves on the basis of assets whose real
nature and prospects they either did not understand or cynically ignored.
Their pay and bonuses, out of all proportion to the sums almost everyone
else was earning in the societies around them, were justified as "performance-related",
but "performance" was measured by inadequate indicators over too short a
A strong argument is made for the inappropriateness of initiating legal action
against those who might be held responsible by any reframing of the
legal perspective with regard to past actions. The interesting question is
what is the degree of harm caused by such actions which would justify reviewing
such legal protection? If 10 million were to lose their livelihood would that
justify such a review? 50 million? 100 million? If deaths were involved? Specifically,
how much consequential harm is required to justify revision of what has been
A potentially valuable parallel is the manner in which the Nuremberg
Trials were justified as a means of prosecuting the most prominent members
of the political, military, and economic leadership of Nazi Germany after its
defeat in World War II. The legal basis for those trials was established by
Charter of the International Military Tribunal, issued on 8 August
1945, which restricted the trial to "punishment
of the major war criminals of the European Axis countries." Three categories
of crimes were defined: war
against peace, and crimes
Some sources date the end of World
War II from the armistice
of 14 August 1945, rather than the formal surrender of Japan (September
2, 1945); in some European histories, it ended on V-E
Day (8 May 1945). It is to be noted that this
charter was signed after the latter date and therefore is
in some measure retroactive.
The charter stated that holding an official
position was no defence to war crimes. Obedience to orders
could only be considered in mitigation of punishment if the Tribunal determined
that justice so required. The question therefore stands as to how comparable
is the harm done by those complicit in the financial crisis and its consequences. At what stage should
a charter be signed to prosecute those held to be responsible -- whether or
not they are esteemed to have acted legally (as presumably did those within
the Nazi regime) and whether or not the enabling charter is signed after the
perpetration of those crimes (as was the London Charter)?
What is to prevent financial
crimes against humanity being considered as meriting such prosecution? What
level of damage to livelihoods justifies treatment of irresponsibility and negligence
as worthy of prosecution?
Failing any consideration of such possibilities by states, is there a case
for undertaking such trials by the Permanent
Peoples' Tribunal as a long-established international opinion tribunal?
This would at least constitute token recognition through naming and shaming.
However, purely as a matter of legal principle regarding the nature of the
implication of those deemed responsible for Nazi war crimes, is it remotely
possible that the outcome of their trials could now be considered a miscarriage
of justice in the light of the legal principles now determining the degree
of responsibility of those complicit in engendering the current worldwide loss
of livelihood, whether deliberately or through neglect?
Extreme financial risk-taking by al-Qaida?
In September 2008, many commentators in the USA were arguing that the damage
done to stocks through short selling could have been the
work of "financial terrorism" (Jerry Mazza, Financial
terrorism: US taxpayers bail out Wall Street criminals, Online Journal,
22 September 2008). The possibility was reviewed under the heading Financial
Terrorism on Wall Street? (Michael Webster, Terrorist
attack Wall Street, Right
18 September 2008; Northeast Intelligence Network, Our
current economic crisis: Could part be a terror attack on U.S. financials? Right
Side News, 28
September 2008). The arguments were developed by various parties of questionable
objectivity, especially given the quality of information available and the opportunities
to gain political advantage from the crisis.
However earlier in 2008 in the UK, the case had already been made that
hedge funds should be forced to reveal their trading secrets to deter
them from the more evident kinds of market manipulation (Neil
to financial terrorism, The Spectator, 23 April
2008). The term "financial terrorism" had figured in commentaries
prior to 2008. Max Keiser (What
is 'Monetary Extremism? The
Huffington Post, 5 July 2008) defined "monetary extremism" as:
In other words, in response to the so-called terrorists the Fed in Washington
has embarked on its own jihad by expanding
the money supply at 18% -- one of the largest percent increases in history.
The results are near catastrophic and about to get a lot worse
Had the financial crisis of 2008 been the result of al-Qaida sympathizers,
operating through several international bank trading houses, it would have
been considered a great strategic success by them. But, if they had done nothing
"illegal", as is claimed by those currently claiming no responsibility,
at what point would this position have been considered indefensible?
Of particular interest would have been the situation if "al-Qaida" had
"violence" in any physical form -- and had strategically shifted
its focus to ensuring "structural violence" -- as a riposte to the
structural violence it sees as justifying its own action. .
Of even more interest would be the case if they had eschewed violence in any
form, including structural violence, and were then able to claim no responsibility
for any "collateral damage" arising from their actions.
More fundamental is the issue of how much extreme risk-taking can be deliberately
undertaken, placing the livelihoods of others in danger -- if not their lives
-- without it being appropriate to substantiate any claim against those risk-takers.
Speeding in an automobile offers an interesting example, even though "speeding"
is now illegal in its own right -- but not as "extreme risk-taking".
Of course, as suggested above, speeding might also provide the basis for action
under anti-terrorism legislation -- as engendering terror in others.
More provocatively, given how effectively the financial traders pursued a
strategy that would have been welcomed by al-Qaida, to what extent can those
traders be interpreted to be covert sympathizers, "aiding and abetting" the
al-Qaida cause -- if only unconsciously in an increasingly "unconscious" civilization
Ralston Saul, The Unconscious Civilization, House of Anansi,
If the non-violent "financial extremism" in which trading houses were complicit
is to be interpreted as constituting a degree of complicity analogous to
that of the chauffeur of Osama bin Laden, it is useful to explore the judgement
against that chauffeur. A
U.S. military jury convicted the driver, Salim Hamdan, of providing material
support to al-Qaida, but cleared him of terrorism conspiracy charges (Bin
Laden's former driver guilty in terror trial. CNN, August
this suggest how "financial extremism" should be handled?
Liberal Defence of Murder, 2008) considers, for example, that with
respect to the US imperial enterprise, its foot soldiers include a great number
of liberals and progressives -- thinkers and writers he labels as "enablers".
He argues that the "moralisation of the means of violence has been
the task of liberal and progressive intellectuals since they first competed
with clerics for moral authority". If those enabling violent terrorism
in any way are to be a focus of legal retribution,, what of the "enablers" of
global financial catastrophe.
- did extreme financial risk-taking effectively assist al-Qaida?
- did the results correspond to the strategic interests of al-Qaida?
- could agents of al-Qaida have done it better in the interests of al-Qaida?
- having lost livelihoods, life savings or pensions, do significant
numbers of people now face a terrifying future?
Example: United Kingdom
As reported by Seumas Milne (We
are all extremists now, The
16 February 2009), the government is criminalizing legitimate dissent under
the guise of fighting "extremism", a word for which it has no definition.
He notes indications that security services are now coordinating surveillance
and infiltration of "domestic extremists". This is understood to be
specifically working with government departments, university authorities
and private corporations to "remove
the threat" of "public disorder that arises from domestic extremism" using "secret
data" and "sensitive source material".
Given the historically unprecedented disruption to the national economy and
individual livelihoods, resulting from the acknowledged complicity in extreme
financial risk-taking, it must surely be asked how this threat to national
security is to be distinguished from "domestic extremism"
With respect to the same initiative with regard to "domestic extremism", Asim
to categorise every Muslim as an extremist, The
17 February 2009) comments:
According to documents
seen by the Guardian, the government is planning to move its counterextremism "prevent" strategy
from targeting those that promote violent extremism to those that endorse
extremist ideas in general but condemn violence. The idea being that there
is a "conveyer belt" from people finding extremist ideas appealing to then
becoming violent extremists themselves, and that by the government working
with non-violent extremists (which the government has apparently been doing)
to tackle violent extremists simply legitimises and emboldens the world view
of said extremists and hence makes their followers easier prey for the violent
In this case the question arises whether the "counterextremism strategy" had
taken account of the extreme financial risk-taking in framing its preoccupations
-- surely a clear example of "non-violent extremism". Arguably banks had
indeed been endorsing "extremist
but with no incitement to violence in the physical sense -- whatever the complicity
in structural violence. Seemingly however an extremist will be "defined" on
the basis of a set of criteria. As Siddiqui notes:
is an extremist? To provide us with the answer, the state will do your
thinking for you and will apparently provide a checklist against which you
can tick off the various criteria.
Siddiqui's concern is that the draft
for "extremism" focus narrowly on Muslims. It is not clear whether any other
group holding views that could be framed as endangering British national security
would be recognized by such criteria. Again, the extremism in which the financial
traders so "successively" engaged (at the expense of British interests) would
seem to have been neglected. Indeed the British government is now in a situation
of funding those that engaged in this very activity -- only tardily curtailing
individual bonuses in those companies in which they have a direct financial
|Case of Fred
Bank of Scotland)
Widespread concern at the level of payout of Fred Goodwin (following
a disastrous financial performance of RBS consequent upon its involvement
in the financial bubble in 2008) resulted in an articulation of the possibility
of recovering his exorbitant pension allowance (Afua Hirsch, What
are the legal options?, The Guardian, 27 February 2009). These
- claw back
- criminal charges
- refuse to pay
- higher taxes
With respect to "criminal charges" it was stated: The only way to challenge
it now is to find something that was done in the past. If he was guilty
of any gross misconduct, or he was in breach of a fiduciary duty to disclose
his own wrongdoing, that could force him to reconsider his position.
In the light of the case of Al Capone and the UK legislation against
"extremism", would it not be more appropriate to indict Goodwin under
the legislative provisions regarding terrorism?
Council of the European Union:
- Council Framework Decision of 13 June 2002
on combating terrorism. [texts]
- The European Union Counter-Terrorism Strategy. 30 November 2005
- Implementation of the Action Plan to Combat Terrorism. 12 December 2005
European Commission. Establish EU legal framework for fighting terrorism [text]
European Parliament recommendation on the role of the European Union in combating
terrorism. Official Journal of the European Communities, A5-0273/2001
(2001/2016(INI)) 5 September 2001
Library of Congress. General Resources on Terrorism: Law and Legislation.
United Nations Office on Drugs and Crime. Terrorism Prevention [links]
United Nations, General Assembly:
- Report of the Secretary-General. Uniting
against terrorism: recommendations for a global counter-terrorism strategy.
27 April 2006, A/60/825
- The United Nations Global Counter-Terrorism Strategy, 20 September 2006,