The Calamity (or “Kassandra vindicated”)
My insistence on laying the blame equally at the door of the two political parties and the singular class they represent is not to provoke yet another senseless debate about Coke vs Pepsi elections in the US. It’s to remind folks that the game is rigged, rigged, rigged. You don’t try to break into a collapsing building unless you want to be buried in the rubble.
We and our children are about to be ripped off in a way and at a scale that is unprecedented; and the punditocracy is telling us, just as Maggie Thatcher did, “there is no alternative.” Any time you hear the term “bipartisan,” be extremely afraid.
Gramm is a prime exhibit in any list of the architects of the current economic mess. At the behest of the banking industry he wrote the laws that enabled the huge balloons of funny money debt that exploded this year. The deregulatory statutes bearing his name prompted Wall Street’s looting orgy in the subprime thievery.
But is he Exhibit A? No. That honor should surely go to Robert Rubin and to the economic course he set for his boss, the eagerly complicit Bill Clinton. Gramm has been the hireling of the banking industry. Rubin is at the beating heart of Wall Street finance, and he and Lawrence Summers at Clinton’s Treasury, were the guiding forces for financial deregulation.
Obviously the Republicans hoped that the roof wouldn’t fall in on their watch, and the crisis could be deferred to 2008 and then blamed on the Democrats. But their insurance policy was that if the roof did cave, as it has now, the rescue policy would be identical in both cases. That’s why Obama has collected more money than McCain from the big Wall Street houses.
The gang that successfully got out of Dodge in time was the Clinton-Rubin-Summers gang, just before the last bubble -–the stock market bubble — burst in March of 2001. They knew what was coming….
Legume Sam:
As I have suggested elsewhere, this is not “the stake through neoliberalism’s heart” (Cockburn’s words). The neoliberals have failed before, in Chile in 1982. Why should they care about this failure now? Neoliberalism is an ideology of convenience. When the truth interrupts their collective reverie, they just keep lying.
What this is, however, is another indicator that we are in late, late capitalism, in which the economic guarantees which were proposed to secure capitalism after the collapse of 1929-1932 start to replace the fabric of capitalism itself. Capitalism will at some point become a slogan, to be inscribed on all banners so that all may perform the exchange rituals prescribed by the capitalist state theocracy, but having little to do with everyday life. We are at the beginning now, with the Paulson plan proposing an elite of bankers immune to risk and an autocracy over the money supply.
22 September 2008, 11:04 amJay Taber:
We are not without precedent on this continent of the collapse of civilizations and the obliteration of ways of life contrary to industrialized aggression. Part of enduring such calamities as this looming larceny and the associated abuses of power, or surviving the gross violations of civil and human rights — envisioned as official policy by the US government for the foreseeable future — is developing independent mutual support systems that enable our pro-democracy networks to continue functioning under extreme duress. Contending with the anticipated public panic and private despair related to our society’s collapse is a challenge we might want to begin discussing with our friends.
22 September 2008, 1:14 pmTimothy R. Anderson:
Cringe-worthy this stuff is.
I suppose most folks have already noticed how the CheneyBush Administration has a very unnatural nature of being like, all HUR
RY HURRY HURRY HURRY at the beginning, and then ” Hey, everybody, you need to be patient ! ” as time wears on.
Talk about self-righteous and wrong-headed.
And pathetic.
Hurry into the Iraq War. Wait til we win ( win ? ) before the military can exit Iraq. Hurry into the 700, 000, 000, 000 dollars
economic “solution. ” Just please pay attention, somebody, at just
how slooooowly the economic “solution” takes to heal……..
Timothy R. Anderson
22 September 2008, 1:58 pmGaryE:
From the blog DailyKos:
How big did this market become? Here’s business correspondent Bob Moon and host Kai Ryssdal on American Public Media’s Marketplace from back in the spring.
BOB MOON: OK, I’m about to unload some numbers on you here, so I’ll speak slowly so you can follow this.
The value of the entire U.S. Treasuries market: $4.5 trillion.
The value of the entire mortgage market: $7 trillion.
The size of the U.S. stock market: $22 trillion.
OK, you ready?
The size of the credit default swap market last year: $45 trillion.
KAI RYSSDAL: That’s a lot of money, Bob.
Full story: http://www.dailykos.com/storyonly/2008/9/21/9322/74248/245/602838
22 September 2008, 3:01 pmVJP:
Stan, I’ve known you for what, 7 years? Our mutual friend and I used to call ourselves the Stan Fans, aka the Cassandra-ettes. I hate that you are right, as I know that you hate you are right. It was the very first thing I heard you say when you spoke at UNC after 9/11.
YOU influenced me read about economics, which I hated doing.
Our mutual friend dropped out when it became too obviously painful.
We are in for a world of hurt. Maybe deservedly so ….
Maybe we will learn the meaning of the word ‘community’ when we absolutely, positively HAVE TO.
At least the socialists have a counter solution than the financiers are offering [not that I’m optimistic about human nature]:
The socialist answer to the financial crisis
http://wsws.org/articles/2008/sep2008/econ-s22.shtml
Viv
22 September 2008, 3:52 pmVJP:
This might be a good time for a silent thank you to the Arabs for inventing the numeral zero.
Where in debt would we be without it now?
22 September 2008, 6:43 pmJonathan:
Stan -
This is somewhat off-topic, but goes to another thing you’ve been saying for some time now - the need for a local food movement. Not sure if you’ve come across what they are doing in Milwaukee with Growing Power, but if not I think you will be as excited as I was when I started reading about it. I am planning to go there as soon as possible to learn about their aquaponics systems, to start a CSA here where I am at in Ohio.
Check it out - it may deserve its own post over at IA?
http://www.treehugger.com/files/2008/05/growing-power-urban-aquaponics.php
As said here, this project feeds over 2000 people on 2.5 acres!
http://smallfarms.typepad.com/small_farms/2006/04/where_theres_a_.html
http://www.sciencefriday.com/newsbriefs/read/174
See also their own website at: http://www.growingpower.org
Provides hope in spite of gloomy news.
22 September 2008, 6:50 pmdoviende:
another side of the bailout stuff that i wasn’t aware of before…”Counterparty Risk”
23 September 2008, 12:26 amhttp://www.fourmilab.ch/fourmilog/archives/2008-09/001051.html
Stan:
FULL
And the Democratic Party finds yet another way to snatch defeat from the jaws of victory.
23 September 2008, 5:21 amVJP:
‘Obama, the Times reported [Saturday], “does not rule out retaining Mr. Paulson, a Republican. The two have spoken almost daily since Treasury put the mortgage giants Fannie Mae and Freddie Mac into government conservatorships two weeks ago, and Mr. Obama speaks highly of Mr. Paulson.” ‘
Paulson made $30 million in 2004, $37 million in 2005, and his net worth is estimated at >$700 million from his career at Goldman Sachs.
23 September 2008, 3:19 pmcharles:
we are in late, late capitalism,
^^^^^^^
24 September 2008, 9:20 amI have called this the “Night of the Living Dead” phase of imperialism, the last stage of capitalism.
charles:
From the blog DailyKos:
How big did this market become? Here’s business correspondent Bob Moon and host Kai Ryssdal on American Public Media’s Marketplace from back in the spring.
BOB MOON: OK, I’m about to unload some numbers on you here, so I’ll speak slowly so you can follow this.
The value of the entire U.S. Treasuries market: $4.5 trillion.
The value of the entire mortgage market: $7 trillion.
The size of the U.S. stock market: $22 trillion.
OK, you ready?
The size of the credit default swap market last year: $45 trillion.
KAI RYSSDAL: That’s a lot of money, Bob.
^^^^^^^
24 September 2008, 9:23 amWhat’s the total amount of money in the whole world ?
Legume Sam:
Martial law to begin in October: are they scared now?
24 September 2008, 9:32 amLara Johnstone (JMCSwan):
There is not enough money in the entire world to pay the monthly INTEREST on $45 Trillion!!
24 September 2008, 6:34 pmLegume Sam:
Well, the US Mint could print the money, or just write enough code to make it “real”…
25 September 2008, 7:42 amCraig:
Lara Johnstone (JMCSwan):
Many large firms will often have one desk sell a CDS to another, mostly for hedging/bookkeeping purposes. Similar games happen between firms as well. When you net out the exposure, it’s actually far less than 45 trillion dollars.
Of course, this assumes all of the contract holders are solvent. When a large player like AIG goes under, then the net exposure becomes the gross exposure, and that’s the biggest danger with this market.
Stan: “And the Democratic Party finds yet another way to snatch defeat from the jaws of victory.”
CNBC said this morning that it’s the Democrats in the House who are taking the lead on getting the bailout passed, and that the ideological opposition is on the Republican side. It’s also the Dems that introduced the CEO compensation palliative and the equity share proposal, which presupposes this is akin to an investment, which it really, really isn’t.
Actually, Paul Krugman has written a lot of worthwhile posts about this bailout.
Legume Sam: “Martial law to begin in October: are they scared now?”
The potential is there, but as you pointed out, “neoliberalism is an ideology of convenience.” I doubt that anyone in power truly has the foresight to plan this far ahead.
25 September 2008, 10:06 amCraig:
$700 billion here, $150 billion there, and pretty soon it adds up to real money.
25 September 2008, 1:45 pmJonathan:
I’ve been banging my head against the difference between a solvency crises and a liquidity crises and where we are at now. I heard Nader on Democracy Now state that the difference between now and the 30’s is that its not a solvency problem, which seems to be in contradiction to what Henry C K Liu is saying here: http://www.atimes.com/atimes/Global_Economy/JI23Dj12.html (wish I could remember how to embed links)
I had to scan to Liu article to get the main points as most went over my head, but he seems to be saying that the fed is reacting to a liquidity crises when its really a solvency problem. From that I’ve been able to gather its not necessary either/or - but Liu seems to be saying that the difference is a significant one as to whether or not this bailout will really do anything to help stave off the inevitable (which Liu seems to be suggesting that those in power *should* know and probably do)
Does anyone care to take a stab at breaking this down? The more I try to grasp economics the more it seems like some sort of alchemy.
Also, I’ve heard some people theorize that crashing the market was an intentional move by those in power to secure more control. Do others see this?
25 September 2008, 7:15 pmStan:
Here is a link on the difference between “solvency and liquidity”. Both these aspects, as I grok them, are form aspects; whereas the essence is — for me, at least — more well-explained by Peter Gowan’s “The Globalization Gamble” as an increasing and vast quantity of fictional value (a marxian-derived economic term). Henry Liu’s most accessible contribution to explaining essences has been the notion of “dollar hegemony” (a more political term, albeit involving money, describing a relationship between nations). Hudson’s big contribution has been as a financial historian, in describing the evolution of “super-imperialism,” a departure from the imperialism theses of Hobson, et al, which shows how the US managed the “alchemy” (good term here) of turning its biggest-debtor status into dominant nation status. The essence is that if you owe th bank a thousand dollars, you have a problem. If you owe the bank a million dollars, the bank has the problem.
What they are doing with this bailout part of a master plan to strategically devalue the dollar in order to reflate the bubble. This wipes out the purchasing power of people like the Chinese and a bunch of others, who own a gazillion dollars of dollar-denominated debt, thereby shifting the burden onto them, as the golden parachute for Wall Street is provided coutesy of the US taxpayer. They are between the Scylla and Charybdis now of hyperinflation or devastating deflation (depression).
I suppose one way they could try is to liquidate large amounts of capital in an expanded South Asian war that includes Pakistan; but that’s a strategy that resolves massive overproduction. The productive pole of the economy, in this case, has been set atop a high-altitude force field of abstraction. As it was said once, a foolish man builds his house on the sand… or on fictional value.
26 September 2008, 5:23 amcharles:
There was a march on Wallstreet, the geographical location, yesterday, led by labor
26 September 2008, 10:36 amcharles:
the evolution of “super-imperialism,” a departure from the imperialism theses of Hobson, et al, which shows how the US managed the “alchemy” (good term here) of turning its biggest-debtor status into dominant nation status.
^^^
Yes, a departure, but for some reason using the same term “imperialism”. If you want to emphasize your difference with the Hobsonian concept of “imperialism” why use the same term… but , comrades, come rally, we aim to unite not divide, so, GO HUDSON, Go Hobson, go,go,go.
Another term for Hudson’s idea is “Jujitsu” imperialism - using other countries’ financial strength/creditor status against them. Of “I’ve-got-the-world-on-a-string-sittin’-on-a rainbow-got-the-string-wrapped-around-my-finger-” imperialism.
Ive got the world on a string
Im sitting on a rainbow
Got the string around my finger
What a world, what a life - Im in love
Ive got a song that I sing
I can make the rain go
Any time I move my finger
Lucky me, cant you see - Im in love
Lifes a wonderful thing
26 September 2008, 10:51 amAs long as I hold the string
Id be a silly so-and-so
If I should ever let her go
Timothy R. Anderson:
My comment earlier about the healing process on the USA ’s economy being a slooooooow process. Yes, that is true. That’s a hazard of borrowing more to pay off the previous borrowing.
Timothy R. Anderson
26 September 2008, 11:33 amStan:
Re: The productive pole of the economy, in this case, has been set atop a high-altitude force field of abstraction.
Could you put this into English that we untutored can understand? We find it hard to fly in the open skies of abstraction. We know you’re smart. Please don’t belabor the fact.
The Other STAN: Capital has two poles — productive capital (a factory, eg, that makes a commodity) and finance capital (whose return on investment is nat made by “profit” (surplus value), but by taking royalties (interest, rents, et al). Within the financial pole, there is the commercial pole (banks in the older sense, who supply credit to the productive capitalists) and speculation. Speculation puts increasingly larger quantities of value (money) at risk if left unattended. Happenedin 1929, and during the New Deal, they enacted a legal firewall between speculative capital and commercial banks, called the Glass-Steagall Act. Gowan accuratley describes this as repressionn of the financial pole, to wnsure the the productive pole doesn’t get swept up in speculative excess. That was systematically end-run in various ways beginning with Reagan, then formally abolished under the Clinton administration. In conjunction with debtor imperialism which allows the US to print money at will (then sell it as debt instruments to rich folk, as well as other countries), a mass of fictonal value was created… more money than what matched the actual commodities on the market. Normally this results in inflation, but the US found serial mechanisms (not detailed here) top ship the inflation overseas while daring the rest of the world to sell down the dollar (or they’d let the whole house burn). But lots of that value was money seeking return-on-investment… except there was nothing real, so it was used to bid up prices on first the dot-com “boom” (this is a financial bubble), and after that crashed, to bid up real estate in a speculative frenzy. This bubble inflation took the form of arcane financial instruments that combined the real economy with speculation, exposing the whole economy to the inevitable bubble-pop. Including commerical banks, who provide the credit to productive capital (and the rest of us); and their exposure was “leveraged,” that is, they had borrowed to speculate themselves… WAAAAY beyond their real assets. The Glass-Steagall firewall was gone. They went wild with everyone else, becausein capitalism, the big fish will eat the little ones, so you have to engage in competition whether you want to or not. Now they are broke. They have no money to lend. No credit; no capitalist expansion in the real economy (economists call this “growth”). I’m running right now, so I apologize for the rushed and inexact way I am explaining myself here. Great system, eh?
26 September 2008, 1:37 pmcharles:
«–Previous Post | Blog Index | Next Post–»
Solvency vs. Liquidity
Now, there are obviously all sorts of problems here. How is the
Treasury going to value all the sludge? If they value it too high, then
we really are bailing out irresponsible bankers who made stupid loans,
and the taxpayers will foot the bill when the sludge eventually gets
sold off at a loss.
^^^
26 September 2008, 2:07 pmOf course, if they get bailed out, those bankers weren’t so stupid - dumb as foxes.
Timothy R. Anderson:
If I promise to pay any of you nine trillion dollars by the year 2059, will any of you lend me 991 billion dollars today, please ?
Sweeeet deal, no ?
27 September 2008, 4:09 pm(smile) Timothy R. Anderson
Ms Kitty:
The Army Times reports that the 3rd Infantry’s 1st Brigade Combat Team is returning from Iraq to defend the Homeland, as “an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.” The BCT unit has been attached to US Army North, the Army’s component of US Northern Command (USNORTHCOM). (See Gina Cavallaro, Brigade homeland tours start Oct. 1, Army Times, September 8, 2008).
“Beginning Oct. 1 for 12 months, the 1st BCT will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.”
This excerpted from an article by Michel Chossudovsky - 2008-09-26.
Stan, comments?
27 September 2008, 9:19 pmCraig:
Stan: “What they are doing with this bailout part of a master plan to strategically devalue the dollar in order to reflate the bubble.”
This is what they’ve been doing. They’ve lowered Fed rates, set up term auction facilities and emergency injections of liquidity, and none of it is working. It has, however, led to higher oil prices due to a weaker dollar. In the summer, drivers in the South got hit in the wallet. In the winter, users of heating oil in the Northeast get hit.
By the way, the noting that CDO’s are “illiquid” is misleading and irrelevant. These bonds were always illiquid and intended for proprietary trading, i.e. buy and hold. Even if the bonds were still paying off, they’d be a lot harder to sell than most other bonds. The bonds are lower in price because they are far riskier and less valuable than was thought when they were first sold, when the price was 100 cents on the dollar.
Also, now it looks like Fortis is the next bank teetering on the brink of failure.
27 September 2008, 9:21 pmJonathan:
Stan: “Within the financial pole, there is the commercial pole (banks in the older sense, who supply credit to the productive capitalists) and speculation. Speculation puts increasingly larger quantities of value (money) at risk if left unattended.”
I am thinking that I need to put some time aside and do my homework and read the works you have pointed at here the comments. But until then I still need a little help in understanding speculative capital. I can grasp the productive pole and the commercial pole - that makes sense its still somewhat concrete, where I lose the tack is in speculative capital - how it functions, how they create bubbles and it has seeped in and endangered the other poles?
Most of the talk about this financial crisis is that banks made bad loans and that when home prices fell they couldn’t be repaid - but this was what burst the bubble not necessarily what created it, right?
Again, it is clear that I need to do some reading - I’ve made a commitment to educating myself on this stuff so I can pass it along to others and move the discussions I’ve been involved in past the idea that this is just a few people who got greedy but rather something endemic to the whole system. Anyways, thanks for providing a place to hash through all this!
28 September 2008, 1:47 pmStan:
Speculation is gambling on financial markets, sometimes called “casino capitalism.”
http://www.investopedia.com/terms/s/speculativecapital.asp
In effect, transnationals and billionaires, who had control of our economic life, gambled it away. Now they want to be bailed out.
28 September 2008, 4:14 pmStan:
Re: “In effect, transnationals and billionaires, who had control of our economic life, gambled it away.”
In casinos, if I lose the house wins. In this casino economy, it seems some “billionaires and transnationals” lost, but then who is the house? Where did all the money go? Either some unnamed entities suddenly have a hell of a lot of money, or there has to be an explanation for its supposed disappearance.
STAN: That’s what fictional value is… value that doesn’t really exist. What happens now is “correction” through devaluation of the dollar.
29 September 2008, 12:16 pmLisa:
Financial Bailout: Thanks but No Thanks
What Lincoln would have said to Paulson’s $700 Billion Ransom
By Dr. Ellen Brown
Global Research, September 28, 2008
http://www.webofdebt.com
“These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people’s money to settle the quarrel.” – Abraham Lincoln, speech to Illinois legislature, January 1837
In July, Treasury Secretary Henry Paulson said of his massive underwriting scheme for Fannie Mae and Freddie Mac, “If you have a bazooka in your pocket and people know it, you probably won’t have to use it.” On September 7, Paulson pulled out his bazooka and fired, effectively nationalizing the mortgage giants. Last week, Paulson pulled out the bazooka again and held it to Congress’s head. “Seven hundred billion dollars or your credit system will collapse!” Seven hundred billion dollars is more than the country currently pays annually for Social Security; and for what do we owe this ransom? To bail out bankers from their own folly in speculating in a giant derivative Ponzi scheme that is now imploding. But policymakers justify rewarding the guilty parties at the expense of the taxpayers by arguing that “we have to do it to save the banking system.”
Abraham Lincoln was faced with a similar situation when he stepped into the Presidency in 1861. The country was suddenly in a civil war, and there was insufficient money to fund it. The British bankers, knowing they had him over a barrel, agreed to lend him money only at 24 to 36% interest, highly usurious rates that would have bankrupted the North. Our fearless forefather said, “Thanks but no thanks, I’ll print my own.” Issuing the national currency is the sovereign right of governments. A government does not need to borrow its national currency from bankers “merely pretending to have money.” That was the phrase used by Thomas Jefferson when he realized the bankers’ “fractional reserve” lending scheme meant that they were lending the same “reserves” many times over.
Full article:
http://www.globalresearch.ca/index.php?context=va&aid=10359
29 September 2008, 12:45 pmLisa:
September 29, 2008
Global Investors Vote “No” on Paulson Bailout
Black Monday?
By MIKE WHITNEY
The wrangling continued on the floor of the House of Representatives all weekend, but it is still unclear whether there’s enough support to pass Treasury Secretary Paulson’s $700 billion Emergency Economic Stabilization Act of 2008. Paulson says he has the votes, but Paulson has been wrong before. The bigger question, is whether buying up the illiquid mortgage-backed assets from the nation’s banks will be enough to save the financial system from an impending meltdown. The jury is out on that question, too. Professor Nouriel Roubini, chairman of Roubini Global Economics, summed it up like this, “You’re not resolving the two fundamental issues: You still have to recapitalize the banking system, and household debt is going to stay high”. A large number of economists believe Roubini is right. The bill will not solve the underlying problems…
There is greater opposition to the Paulson bill than any legislation in the last half century. The groundswell of public outrage is unprecedented, and yet, Congress, completely insulated from the demands of their constituents, continues to blunder ahead following the same pro-industry script as their ideological twins in the White House.
Full article:
http://counterpunch.org/whitney09292008.html
29 September 2008, 1:11 pmTimothy R. Anderson:
I’m looking from the western half of the United States of America,
and it is looking like Wall Street is having a very bad day:
Monday, September 29, 2008.
Will 4.50 American buy one British pound when this business week is over ?
Timothy R. Anderson
29 September 2008, 1:17 pmGaryE:
From CEPR:
Why Bail? The Banks Have a Gun Pointed at Their Head and Are Threatening to Pull the Trigger
By Dean Baker
September 29, 2008, TPM Café (Talking Points Memo)
See article on original website
If you have a real story, you don’t have to make up phony stories. That’s pretty straightforward.
I’ve heard lots of phony stories. Much of the country’s political and economic leadership has been running around raising the prospect of the Great Depression and a breakdown in the banking system (I actually had taken the latter seriously). These stories are absolutely not true.
There is no plausible scenario under which the no bailout scenario gives us a Great Depression. There is a more plausible scenario (but highly unlikely) that the bailout will give us a Great Depression. There is no way that the failure to do a bailout will lead to more than a very brief failure of the financial system. We will not lose our modern system of payments.
At this point I cannot identify a single good reason to do the bailout.
FULL -
29 September 2008, 2:02 pmhttp://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/why-bail-the-banks-have-a-gun-pointed-at-their-head-and-are-threatening-to-pull-the-trigger/
Y.K.:
This vote was hilarious! The capitalist idealists called “House Republicans” can’t stand even “socialism for the rich”, even though they’ve been happy handing over wealth and power to the rich for decades upon decades (two centuries?). They uttered not a peep when nearly 700 billion in military spending was passed last week. It’s just when you call it socialism they get angry, insulted, and embarrassed. What an amazing combination of ignorance and stupidity!
They are mad because they want a inane expensive insurance scheme and zero capital gains tax… from bankrupt banks no less! But I’m sure these rightist CongressMEN, a fascistic petty “middle class” which dreams about riches for themselves one day, don’t have a clue about dollar hegemony! Whoops!! Ouch!!
But if the US ruling class wants to suckle such a band of idiots then they deserve an idiot’s revolt at a crucial hour.
All these politicians are agonizing over ways to preserve private property and the rotting illusion of fictitious claims. This has nothing to do with money as such and reveals the underlying aim of social control and power.
Y.K.
30 September 2008, 2:40 amLegume Sam:
Y. K., opponents of the bailout think that this $700b is different because it’s being viewed as the first installment on a blank check to the securities speculators, that they may create (for instance) a $70 trillion swaps market, and if it fails, the government will bail everyone out because the speculators have got their hooks in the entire banking system, which is now insolvent.
That’s what distinguishes this from the usual dollar-hegemony-fueled military spending sprees. To the extent that the proposed bailout will resolve the credit crunch for now, it will merely encourage the speculators to create more debt, and more fake paper, and this same scenario will recur. Thus the Bush administration/ Wall Street need to create a panic in Congress, to goad Congress into keeping the speculation game going. If the Right is resisting this, it’s probably because the bailout is phony on its face, especially as regards that clause that grants an autocracy to the Secretary of the Treasury, whereas understanding the absurdity of the whole system of private property is more difficult and requires them to overcome ingrained prejudices.
30 September 2008, 10:23 amcharles:
Stan:
Re: “In effect, transnationals and billionaires, who had control of our economic life, gambled it away.”
In casinos, if I lose the house wins. In this casino economy, it seems some “billionaires and transnationals” lost, but then who is the house? Where did all the money go? Either some unnamed entities suddenly have a hell of a lot of money, or there has to be an explanation for its supposed disappearance.
STAN: That’s what fictional value is… value that doesn’t really exist. What happens now is “correction” through devaluation of the dollar.
^^^^^
CB: Yeah, fictional capital.
And real existence means embodied in use-values. Commodities have two aspects: use-value and exchange-value ( or value). Fictional value is value not “in” a use-value.
The only source of new exchange-value is human labor. Labor is the source of all _exchange_-value. ( Nature is a source of _some_ use-values).
Labor embodies these exchange-values in commodities that are use-values, either material objects or services.
30 September 2008, 1:47 pmLisa:
Financial Tsunami: The End of the World as We Knew It
By F. William Engdahl
Global Research, September 30, 2008
The unexpected rejection by the US Congress of the Bush Administration financial rescue plan, TARP on September 29 has opened up the spectre for the first time of a 1931-style domino wave of worldwide bank failures. That is already underway across the US banking spectrum with the failure, nationalization or forced liquidation in the past two weeks of Fannie Mae and Freddie Mac, of the giant Washington Mutual mortgage lender, of the nation’s fourth largest deposit bank, Wachovia…
…
Power and greed are the only visible juice driving the decision-makers in Washington today. Acting in the long-range US national interest seems to have gotten lost in the scramble. As I wrote last November in my Financial Tsunami five part series on the background to today’s crisis, all this could be foreseen. It is what happens when elected Governments abandon their public trust or responsibility to a cabal of private financial interests. It will be interesting to see if anyone in Washington realizes that lesson. Whatever next comes out of Washington, however, one thing is clear, as reflected in what German Finance Minister Peer Steinbrück told the Bundestag. This is the end of the world as we knew it. The American financial Superpower is gone. The only important question will be what and how will the alternative be.
30 September 2008, 2:08 pmStan:
Charles, nature is — more than labor — the source of all exchange value.
30 September 2008, 3:28 pmY.K.:
I’m opposed to the bailout, if my post didn’t make clear. But I don’t think that the Republicans responded to “phoniness” or “autocracy”. They are liars and wanna be demagogues.
They refused because they, along with many of their constituents, idealize capitalism, just like their masters tell them. Their capitalism is petit bourgeois (”middle class” in US terms) and mercantilist. They get some candy from the system, in the form of houses, cars, etc., but they want to get rich and their class resentment shows immediately when “fat cats” get a “free lunch.”
But they don’t understand how state-driven most of the US economy actually is and they certainly don’t understand the nature of US power in the international sphere. They don’t understand the financial function of the US military. They don’t understand dollar hegemony. By contrast, Republican bosses, like Cheney, Rumsfeld, Baker, Paulson, etc., understand these dimensions of US power. These imperial managers are thoroughly cynical, not naive whiners like these Republican crybabies. In other words, these lower chamber Republicans are “out of the loop” and more focused on their petty interests.
This small mindedness was immediately detected by most European and Asia liberal media that I’ve been reading. European and Asian capitalists have a better sense of the world on the whole than their US counterparts. It is for this reason that there has been a deep loss of political “credibility” for the US. None of they care about the popular US anger about the bailout, they only notice US impotence and pettiness, which they see as an opportunity to extend their power, at least after the worst of the crisis passes. There will be long term consequences for this refusal vote, even if the bailout passes in some form, as I expect it will.
That’s why the Democrats in our day are better imperial managers than the Republicans. That’s why so much of the establishment is turning Democrat, giving Obama an “intellectual” appearance. The Democrat leadership tends to be more pragmatic and diplomatic than Republicans, who dream of an ideal capitalism. To maintain social power and control, the Democrats will compromise with socialism, if only to “save capitalism from itself”, a la “the New Deal.”
1 October 2008, 1:10 amStan:
Precisely why tactical alliances with libertarian R’s are possible and desirable. US capital is now utterly dependent on the state’s largesse. The DOD is our biggest export-market surrogate. Our unsustainable food system is sustained by subsidies and regulations desinged to kill off small producers, and dumping agri-trash onto other countries. The bailout is class-war from above. I don’t care WHY they are with us on these issues. There is no New Deal in the offing. Wht’s looming now, along with fianncial collapse, is peak oil. We ain’t seen nuthin’ yet. Relocalization suspends the old categories of liberal-conserivative, even right-left.
1 October 2008, 6:24 amLisa:
“They Just Don’t Get It”—Political Leaders and Pundits Are Clueless About Bailout Rejection
By Richard C. Cook
Global Research, September 30, 2008
Stephen Pearlstein is the Washington Post’s Pulitzer Prize-winning business columnist. In print and as a TV talking head—like on Chris Matthews’ Hardball late last week—Pearlstein is one of the foremost media cheerleaders for the $700 billion Wall Street bailout bill.
Or should we call it the Bush-Paulson-McCain-Obama-Pelosi-Reid-Dodd-Frank Wall Street bailout bill?
Nancy Pelosi and the rest of the leadership of the Democratic majority in Congress have become the indispensable partners in Bush administration travesties. First it was funding for the Iraq War. Now it’s lavishing rewards on the Wall Street “Masters of the Universe,” who, coincidentally, have been the financial mainstay of the Democratic Party since the Clinton years.
The TV networks are filled this morning with commentators who are sneering about how a majority of congresspeople voted to save their political butts in the face of the upcoming congressional elections. Political expediency, say the financier-owned media, trumped principle, when the House defeated the bailout bill yesterday by a vote in which 67 percent of the Republicans and 60 percent of the Democrats voted “No.”
The “principle” in this case is that of the loaded gun which Wall Street is holding to Main Street ’s head. “Bail us out or no more loans,” Wall Street says in this alleyway mugging. And no more loans seemingly would be a disaster, because for the last quarter century it’s primarily been borrowed money Main Street has been living on…
But in the point about nationalization there is a glimmer of truth, though not the way Pearlstein means it. For he is wrong in thinking that this particular bailout bill which rewards years of greed, criminality, and government collusion in private banking swindles is the way to proceed. Neither is it right for the government to administer bad bankers’ debts while already the big banks that leveraged the terrible investment decisions—Citibank, the Bank of America, and J.P. Morgan Chase—are getting off scot-free and adding to their empires by gobbling up the small fry…
What then should be done?…
Full article:
http://www.globalresearch.ca/index.php?context=va&aid=10395
1 October 2008, 10:53 amcharles:
Charles, nature is — more than labor — the source of all exchange value.
^^^
1 October 2008, 10:58 amCB: Stan, Human labor is the _only_ source of _exchange_-value ( This is a fundamentally humanistic economic thesis). Nature is the source of _some_ use-value.
jack:
stan- speaking of peak oil there is an article on counter punch by Ismael Hossein-Zadeh about the “myth” of peak oil you might want to take a look at. same same, but ignores environmental consequences, global warming, increasing cost of extraction, and dismisses peak oilers as malthusian. i still don’t understand what motivates leftists to ignore what seems to me to be pretty sound science. i figure you might have something to say about it, but may not be worth your effort.
1 October 2008, 11:38 amStan:
Charles, I practically have Capital embedded in my genetic code. Repeating its categorical claims doesn’t prove anything. Exchange value is a social (read: human) phenomenon. Duh. But human society exists in the material (natural) world. Nature is the ultimate source of all use value, even in the appropriation of time and space. And all exchange value is inextricable from use-value. This is not a useful argument any more. It’s a polemic to re-elevate Marx as the last Word… on everything.
Jack, you have made concrete my exact point. Traditional leftists still suffer from machine fetishism, and the whole modernist myth of “progress.” That’s why they like to use the dodgy term “progressive” to describe themselves. Calling those who note that an extracitve resource is finite “malthusian” is the left’s own special form of McCarthyism… except no one understands what they’re talking about but themselves. These debates are 150 years old; and many still insist on ignoring that anyone has discovered anything since Marx… except some new gadgets. Like I said, machine fetishism.
1 October 2008, 5:23 pmtochigi:
@jack:
that article on Counterpunch is a sad excuse for a joke. if only. or a reflection of one of the editor’s delusions?
funny that an article of such length that sets out to debunk the “myth” of peak oil should contain no graphs or tables about production by countries or regions or the world. the following excerpt says it all, IMHO:
the final sentence in that quote is the real giveaway. the precice reason we know peak oil is imminent is because new discoveries and energy sources have NOT been able to offset declines in existing oil field production.
2 October 2008, 3:39 amjack:
tochigi-
“the final sentence in that quote is the real giveaway. the precise reason we know peak oil is imminent is because new discoveries and energy sources have NOT been able to offset declines in existing oil field production.”
or that the new discoveries will be increasingly remote, technically more difficult to extract and consequently much more expensive to make productive.
2 October 2008, 7:36 amcharles:
Charles, I practically have Capital embedded in my genetic code.
Repeating its categorical claims doesn’t prove anything.
^^^^
CB: Surely you don’t think asserting creative caetgorical claims proves anything either. One good categorical claim from you deserves another from me.
^^^^^
Exchange value is a social (read: human) phenomenon. Duh. But human society exists in the material (natural) world.
^^^^
CB: Duh. Historical and dialectcal _materialism_ is practically embedded in my dna.
Surely, you realize that what I said is based on the notion that human society is exists in the material world ( Nature).
^^^^^^^
Nature is the ultimate source of all use value,
even in the appropriation of time and space.
^^^
CB: Only in the sense that Nature is material, and there is nothing but matter ( and its mode of existence is motion).
_Capital_ may be embedded in your dna, but this statement means you are not quite apprehending a fundamental concept in _Capital_. Do I have to bring quotes here ?
Human beings are the ultimate source , or origin, of some use-values. Of course, human beings are material or natural beings ,but that’s logically not the point in the issue we are discussing. On this issue, where a distinction is made between “humans” and “Nature”, many use-values originate with human labor. Raw materials orginate in Nature, yea. But iron ore,for example, is not _use_ful to humans in its form as found in Nature. Only by adding human labor to it, does it become the use-value steel. The origin of the use-value steel is in human labor. If left in its natural form , it is not useful to humans.
^^^
And all exchange value is inextricable from use-value.
^^^^^
CB: Agree
^^^
This is not a useful argument any more.
^^^^
CB: Please.
^^^
It’s a polemic to re-elevate Marx as the last Word… on everything.
^^^^^
CB: Bullshit. Marx is correct on the issue we are discussing not _everything_. It is a gross logical error to characterize relying on Marx for a cogent critique of capitalist political economy as relying on Marx as the “last Word on everything.” That is an outrageous slander. Everything ! Please show me where I discuss “everything” above. Please drop that bullshit for good. That’s one of the oldest stupid redbaiting idiocies in existence.
^^^^^
Jack, you have made concrete my exact point. Traditional leftists still suffer from machine fetishism, and the whole modernist myth of “progress.”
^^^^
CB: You are suffering from pop-philosophy fetishism.
^^^^^
That’s why they like to use the dodgy term “progressive” to describe themselves. Calling those who note that an extracitve resource is finite “malthusian” is the left’s own special form of McCarthyism… except no one understands what they’re talking about but themselves. These debates are 150 years old; and many still insist on ignoring that anyone has discovered anything since Marx… except some new gadgets. Like I said, machine fetishism.
^^^^^
CB: Some things have been discovered since Marx, but not everything somebody thinks they have discovered is actually a “discovery”. Beware of false discoveries.
Pop-philosophy fetishism
2 October 2008, 3:04 pmJonathan:
In fact as this article states, which I have seen elsewhere - global oil discoveries peaked in the 60’s:
“Globally, oil discoveries peaked in the 1960s. Each year since 1984, world oil production has exceeded new oil discoveries, and by a widening gap. In 2006, the 31 billion barrels of oil extracted far exceeded the discovery of 9 billion barrels.” http://www.earth-policy.org/Updates/2007/Update67.htm
I caught economist Joesph Stiglitz on DN!, who I think correctly linked the war with the current economic situation by saying that when we started the war oil was at $23 a barrel (with speculators predicting at the time it would stay that way) and since then it has stayed fairly consistently over $100. This spike should have caused the economy to significantly slow down if it were not for the Fed and Wall Street engineering the real estate bubble. I wish he would have then connected this all with peak oil - but as its been said here this is something almost no one wants to talk about.
Part of what I think gets confusing about peak oil is that it isn’t as simple as thinking about it in terms that oil producers have the tap completely open, or that demand will be consistent curve upwards, or that there isn’t speculation or market manipulation. There will be fluctuations, but that doesn’t change the underlying physical reality. The first and second law of thermodynamics are *laws* for a reason - just as the necessity for growth is a law of capitalism. Sooner or later the two will meet in contradiction, and it seems as if its not even sooner or later but now. (although this contradiction has really been operating for some time, I think its effects are now becoming undeniable)
2 October 2008, 3:51 pmTom:
To Charles:
My education is in engineering, and I have only a limited understanding of the term fetishism, much more so ‘machine fetishism’ but I’ll sketch my thoughts/understanding, and perhaps you can point out where the scheme fails:
The bit that I get about fetishism (Marx aside?) is the notion that some (usually mythical or mythically endowed - loaded term?) entity is necessary for the completion of some ritual (or collective fantasy). To apply this reasoning to machines, a definition of machines is needed. The engineering definition of a machine is roughly something that converts one force into another (think pliers), although conversion of energy, or a device that uses energy to change a material (think stove, etc) or even perform calculations (e.g. calculator) would qualify as a machine.
As many machines convert energy, and often large quantities (and produce often forces that are huge to humans), one may imagine machines as ‘producing’ energy (or independently producing forces, etc). Machines are imagined as producing the energy (actually order - reducing entropy) to solve problems that (other) machines, social arrangements etc produce. Machines (’high’ or entropic technology) are the fetish that the fantasy or ritual require to work, except that it often doesn’t, and cannot thermodynamically.
OK, I’ve rambled my limited understanding. Please explain how this (pop-philosophic?) explanation fails. Also, would you consider it fetishist, and if so, how?
4 October 2008, 12:31 amLisa:
http://www.cnn.com/2008/US/10/08/chicago.evictions/index.html
CHICAGO, Illinois (CNN) — An outraged sheriff in Illinois who refuses to evict “innocent” renters from foreclosed homes criticized mortgage companies Thursday and said the law should protect victims of the mortgage meltdown.
Sheriff Thomas J. Dart said earlier he is suspending foreclosure evictions in Cook County, which includes the city of Chicago
“When you’re blindly sending me out to houses where I’m coming across innocent tenant after innocent tenant, I can’t keep doing this and have a good conscience about it.”
10 October 2008, 7:46 pm