Collapse of the Capital Markets.
Image by wallyg via FlickrOver the past six-eight years the MildGreens have often made the claim that were illicit drugs to be globally legally regulated, the capital markets would collapse. (cf: Narcodollars for Dummies, introduced to NZ's SCOOP by the MildGreens). While our comment was aimed at the fiscal risk created by pump and dump when black money is laundered, the destabilised banking markets we see today are inseparable.
In a ringing endorsement of that claim the following headline substantially agrees.
U.N. crime chief says drug money flowed into banks
Sunday, January 25, 2009
VIENNA: The United Nations' crime and drug watchdog has indications that money made in illicit drug trade has been used to keep banks afloat in the global financial crisis, its head was quoted as saying on Sunday.
Vienna-based UNODC Executive Director Antonio Maria Costa said in an interview released by Austrian weekly Profil that drug money often became the only available capital when the crisis spiralled out of control last year.
"In many instances, drug money is currently the only liquid investment capital," Costa was quoted as saying by Profil. "In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor."
Image via Wikipedia
The United Nations Office on Drugs and Crime had found evidence that "interbank loans were funded by money that originated from drug trade and other illegal activities," Costa was quoted as saying. There were "signs that some banks were rescued in that way."
Profil said Costa declined to identify countries or banks which may have received drug money and gave no indication how much cash might be involved. He only said Austria was not on top of his list, Profil said.