November 7, 2007 (LPAC)--At a time when the world economic crash unleashed by the explosion of the U.S. mortgage bubble is taking a turn for the worse, a new European directive, the MIF (Market for Financial Instruments), whose aim is to eliminate any of the obstacles remaining to massive financial looting throughout Europe, has just become a law in France and other member states.

On February 1986, the European Single Act was created explicitly with the aim of transforming the European Union into a "unique market for the free circulation of goods and persons." One of the main axes of this policy was the realization of the free circulation of capital and services.

The MIF has two objectives:

1. It facilitates the emergence of a "European passport." Financial companies, which have received authorization by the control authorities, to operate in one member state, will automatically be able to operate in all other member countries.
2. The second change, and a massive one, is that from now on, the monopoly exerted by one institution for the trading of stocks and bonds in one country -- the Stock Exchange generally -- will be broken and full competition opened up among three types of financial investment companies: 1) traditional Stock Exchanges, 2) new entities called Multilateral Trading Funds (MTF) operating under equivalent rules as the former but without being able to introduce new companies in the Stock Exchange, and 3) investment companies which can execute orders from their clients outside of the regulated markets or of an MTF. The aim of this entire system is to be able to offer cheaper and "more accessible" trading systems to the population as a whole.

One example of the new possibilities this system offers is the joint MTF created recently by NYSE/Euronext, BNP Paribas, and HSBC, called Smart Pool, conceived as an operation able to carry out orders of very large size of European values. Different than a traditional Stock Exchange, where there is a full pre-negotiation transparency, Smart Pool will allow its users to act without revealing their identity, the volumes or the prices at which they wish to negotiate! This responds to the wish of financial institutions to limit the leaks of information and their impact on the market. All transactions carried out by Smart Pool, however, will be made public post-negotiation, in conformity with the rules imposed by the MIF directive.

The financial instruments concerned by the MIF are stocks, bonds, OPCVMs, trackers (instruments based on stock indexes), warrants (options to buy or sell taken on financial instruments, also called calls and puts), and derivative products.

This entire process will facilitate the direction of large financial flows not towards productive and useful activities but towards takeover of existing facilities via LBOs, and merger & acquisition processes. If nothing is done to stop it, this process of financialization and cartelization of the economy, will lead inexorably to the emergence of a financial fascism like that of the 1930s.