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New Stock Exchange Opens in Africa

Econophile's picture




 

From The Daily Capitalist

A "stock exchange" for piracy is something to consider. I hesitated before I published this article because the usual types will no doubt say that this is laissez-faire capitalism ("See what happens when you don't have any government regulations"). So the purpose of this article is to show that the activities described in this article is a criminal conspiratorial enterprise with no respect for the rule of law. It is not capitalism nor is it laissez-faire capitalism.

For the uninitiated, (free market) capitalism as most people define it is based on natural law and on a set of private, but enforceable, trade customs. In the U.S., natural law has been enshrined in our constitution. This is not the place to discuss Hume, Locke, and Jefferson, but through economic rules and regulations, natural law been subverted to the will of the majority in power at any given time. But, you can't cheat, steal, embezzle, defraud, murder, or violate your contractual word, which fits nicely into the concept of natural law. In addition we have a common law based commercial code and case law built up over many centuries to establish ground rules for commercial enterprise that works pretty well.

On top of all this you have the SEC which enforces their own rules and regulations in response to what they see as wrongdoing in the securities business. And, on top of that you have a lot of economic regulation at every level of our economy. Our existing form of capitalism is heavily regulated and is far from being laissez-faire.

Somalia operates without much regard to human rights as defined under natural law. In fact you could say that this piracy exchange is more like a general partnership to engage in criminal behavior--piracy, robbery, extortion, kidnapping, and murder. As a general partner-investor you share in the profits, stand to lose your investment, and you may be subject to its liabilities (jail or death). As a general partner-service provider you share in the profits and stand to lose your life.

But this article is so fascinating, I had to publish it. It shows the desperation and ingenuity of people when they have nothing. I don't condone this. I condemn it.

Pirate stock exchange helps fund hijackings

By Mohamed Ahmed, Reuters Published: Tuesday, December 01, 2009

piracy exchange

I wouldn't stand too close to this building if I were they.

 

HARADHEERE, Somalia -- In Somalia's main pirate lair of Haradheere, the sea gangs have set up a cooperative to fund their hijackings offshore, a sort of stock exchange meets criminal syndicate.

Heavily armed pirates from the lawless Horn of Africa nation have terrorized shipping lanes in the Indian Ocean and strategic Gulf of Aden, which links Europe to Asia through the Red Sea.

 

The gangs have made tens of millions of dollars from ransoms and a deployment by foreign navies in the area has only appeared to drive the attackers to hunt further from shore.

 

It is a lucrative business that has drawn financiers from the Somali diaspora and other nations -- and now the gangs in Haradheere have set up an exchange to manage their investments.

 

One wealthy former pirate named Mohammed took Reuters around the small facility and said it had proved to be an important way for the pirates to win support from the local community for their operations, despite the dangers involved.

"Four months ago, during the monsoon rains, we decided to set up this stock exchange. We started with 15 'maritime companies' and now we are hosting 72. Ten of them have so far been successful at hijacking," Mohammed said.

 

"The shares are open to all and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials ... we've made piracy a community activity."

 

Haradheere, 400 km (250 miles) northeast of Mogadishu, used to be a small fishing village. Now it is a bustling town where luxury 4x4 cars owned by the pirates and those who bankroll them create honking traffic jams along its pot-holed, dusty streets.

Somalia's Western-backed government of President Sheikh Sharif Ahmed is pinned down battling hard-line Islamist rebels, and controls little more than a few streets of the capital.

 

The administration has no influence in Haradheere -- where a senior local official said piracy paid for almost everything.

 

"Piracy-related business has become the main profitable economic activity in our area and as locals we depend on their output," said Mohamed Adam, the town's deputy security officer.

 

"The district gets a percentage of every ransom from ships that have been released, and that goes on public infrastructure, including our hospital and our public schools."

 

RISK VS REWARDS

 

In a drought-ravaged country that provides almost no employment opportunities for fit young men, many are been drawn to the allure of the riches they see being earned at sea.

 

Abdirahman Ali was a secondary school student in Mogadishu until three months ago when his family fled the fighting there.

 

Given the choice of moving with his parents to Lego, their ancestral home in Middle Shabelle where strict Islamist rebels have banned most entertainment including watching sport, or joining the pirates, he opted to head for Haradheere.

Now he guards a Thai fishing boat held just offshore.

 

"First I decided to leave the country and migrate, but then I remembered my late colleagues who died at sea while trying to migrate to Italy," he told Reuters. "So I chose this option, instead of dying in the desert or from mortars in Mogadishu."

 

Haradheere's "stock exchange" is open 24 hours a day and serves as a bustling focal point for the town. As well as investors, sobbing wives and mothers often turn up there seeking news of male relatives missing in action.

 

Every week, Mohammed said, gang members and equipment were lost to the sea. But he said the pirates were not deterred.

 

"Ransoms have even increased in recent months from between $2-3 million to $4 million because of the increased number of shareholders and the risks," he said.

 

"Let the anti-piracy navies continue their search for us. We have no worries because our motto for the job is 'do or die'."

 

Piracy investor Sahra Ibrahim, a 22-year-old divorcee, was lined up with others waiting for her cut of a ransom pay-out after one of the gangs freed a Spanish tuna fishing vessel.

 

"I am waiting for my share after I contributed a rocket-propelled grenade for the operation," she said, adding that she got the weapon from her ex-husband in alimony.

 

"I am really happy and lucky. I have made $75,000 in only 38 days since I joined the 'company'."



 

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Sat, 12/12/2009 - 18:20 | 161485 Gordon_Gekko
Gordon_Gekko's picture

Oh my! Holier than thou, are we? Let's see:

On top of all this you have the SEC which enforces their own rules and regulations in response to what they see as wrongdoing in the securities business.

Are you serious? ROTFL! And here I am thinking that the SEC is just the bankers' bitch.

Our existing form of capitalism...

It's not capitalism - period.

Somalia operates without much regard to human rights as defined under natural law. In fact you could say that this piracy exchange is more like a general partnership to engage in criminal behavior--piracy, robbery, extortion, kidnapping, and murder. As a general partner-investor you share in the profits, stand to lose your investment, and you may be subject to its liabilities (jail or death).

You could replace Somalia/piracy exchange with "US Government" and it would still be true, except the last part where "general partner-investors" (i.e. bankers) over here are Gods and can never EVER lose.

Sat, 12/12/2009 - 14:59 | 161301 Econophile
Econophile's picture

Lot's of conspiracy theorists here, I see. There is no one to blame for their misfortune except the Somalis themselves. The point of the article was not that societies can exist without government as discussed in the Mises article. I spent some of my early years thinking about anarcho-capitalism, and many of the legal alternatives, such as the Irish tuaths, similar to the Somali clan dispute resolution. What this "exchange" is, is a criminal enterprise by any standard and violates natural law. Without a respect for natural law, and the ability to enforce those laws consistently, they will remain poor herders and will forgo the benefits of capitalism. I am sure any Somali would prefer to get beyond just wanting to survive. Ask the ones who got here.

Sat, 12/12/2009 - 18:32 | 161494 Gordon_Gekko
Gordon_Gekko's picture

Lot's of conspiracy theorists here, I see.

The only "conspiracy theorists" are the ones who believe that the US is all free, fair and capitalistic with all its stupid rules and regulations when the very purpose of those "rules" is to assist TPTB in looting and pillaging.

What this "exchange" is, is a criminal enterprise by any standard and violates natural law.

Those who live in glass houses should not throw stones at others. The US Government is the biggest criminal enterprise in human history. BTW, "Natural law" as you seem to envision it is nothing but a figment of your imagination. If you're surviving, then you're following "natural law" pretty good IMHO. Survival is the only natural law.

Sat, 12/12/2009 - 08:08 | 161072 Anonymous
Anonymous's picture

That "free market disclaimer" was retarded. I don't think anybody in Somalia gives a crap about what kind of market system they are living under - they just want to survive. I hadn't thought of the ancillary effects - it's pretty cool that they can go fishing again, they got rid of the toxic polluters, and shipping insurance companies are happy. My favorite part is the lady who got an RPG as part of a divorce settlement (can you imagine the courtroom - "go ahead and take the kids, but that RPG is MINE").

An old story - the emperor has captured a pirate, and demands to speak with him before he is executed. He asks the pirate, "how dare you molest the high seas and call yourself a pirate"? The pirate responds, "how dare you molest the entire world and call yourself an emperor"?

Sat, 12/12/2009 - 06:11 | 161054 arnoldsimage
arnoldsimage's picture

no different than goldman sachs.

Sat, 12/12/2009 - 18:24 | 161487 Gordon_Gekko
Gordon_Gekko's picture

or the US Government.

Sat, 12/12/2009 - 11:43 | 161140 percolator
percolator's picture

Its totally different. 

GS is getting rich looting their country, but the pirates are getting rich while contributing to their country.  From the article above "The district gets a percentage of every ransom from ships that have been released, and that goes on public infrastructure, including our hospital and our public schools."

And from Mises which another commentor above linked too:

http://mises.org/story/2066

I have to do much more research, but I've just placed Somalia on the list of countries I'd consider moving too.

Sat, 12/12/2009 - 10:10 | 161098 Anonymous
Anonymous's picture

Except they work longer hours, make less money and leave fewer dead bodies.

Sat, 12/12/2009 - 03:30 | 161021 Keyser Soze
Keyser Soze's picture

I think it's wonderful that Africans are taking control of their destiny instead of waiting for handouts. No wonder speak-like-a-pirate day is so supported. I think I'll start up a local piracy chapter and teach school children about this new type of innovation. And at least their 'take' is still much lower than the South African government, which is where I live. And they probably do more for the locals. Example:

http://www.news24.com/Content/SouthAfrica/Politics/1057/4e9a883edb194ce7...

'Cape Town - A deputy minister has bought herself a Porsche as her official vehicle'

Fri, 12/11/2009 - 22:55 | 160893 Anonymous
Anonymous's picture

What about the subsidy's from Lloyd's of you know where? These Guy's are subsidized from Major Maritime Insurers to keep the Rates of passage jacked up there. Common knowledge in these parts is $1,000,000 in ransom from said Insurers will be made up in a few day's for exaggerated protection.
It's just like the way our Politicians work here in the good old U.S.A.

Fri, 12/11/2009 - 21:59 | 160850 Anonymous
Anonymous's picture

Big fishing vessels are now gone, so locals are in abundant joy as now they can fish for themselves and aren't left with scraps that giant fishing vessels didn't pick up. That puts cash straight into local fishermen who were broke before. The somali pirates are viewed as heroes by locals.

Fri, 12/11/2009 - 20:56 | 160780 Anonymous
Anonymous's picture

And remember that the "pirates" only started operation after many years of the big multinational corporations dumping their toxic waste off Somalia's shores (since there was no sovereign government to speak of that could actually raise a hand to stop them).

Of course, two wrongs don't make a right. On the other hand, it's not at all surprising that some Somalis would want to "take something back" from "the other side" (in some vague collective sense) that had been fouling their waters for years.

Fri, 12/11/2009 - 20:00 | 160723 alexdg
alexdg's picture

Actually sounds like a fair non-manipulated market with no PPT!

 

Stateless in Somalia, and loving it!  - http://mises.org/story/2066

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