Susan Watkins’ econ summary (NLR)
Correlations between anniversaries and historical conjunctures are likely to be ironic. When nlr was launched in London fifty years ago, in January 1960, it was one of myriad small harbingers of left renewal. Anti-colonial forces were registering victories in Africa, Asia and the Arab world; the Communist movement was emerging from the stranglehold of Stalinist orthodoxy; in North America, Western Europe and Japan a new generation chafed at the conformism of Cold War culture. By the mid-60s the Review had staked out a programme of mapping these three world zones in a series of comparative studies of national social formations—not least its own. Strongly oriented towards Continental theory and practice, the journal played its part in the intensive debates within Marxism that accompanied the heady days of 68. It helped to pioneer work on women’s liberation, ecology, media, film theory, the state.
By the 1990s, the journal survived within an international landscape that would have seemed a sci-fi dystopia in 1960: the Kremlin’s economic policy run by Friedmanites, the General Secretary of the ccp lauding the stock exchange; Yugoslavia, the most pluralist and successful of the workers’ states, decimated by imf austerity policies and subjected to a three-month nato bombing campaign, cheered on by liberal opinion in the West; social democratic parties competing to privatize national assets and abolish labour gains. Neo-liberalism reigned supreme, enshrining a model of unfettered capital flows and financial markets, deregulated labour and internationally integrated production chains. On its fortieth anniversary, at the high noon of globalization and American supremacy, nlr was relaunched by its editorial committee in a spirit of uncompromising realism: ‘the refusal of any accommodation with the ruling system, as of any understatement of its power’. [1]
Ten years on again, the continuation of the neo-liberal era itself has been thrown into question by the eruption of an epic financial crisis at the heart of the system. During the grandes journées of September 2008 Fannie Mae and Freddie Mac, the giant us institutions at the centre of the mortgage-backed securities market, were taken into government stewardship…
DeAnander:
It’s interesting, it’s readable; and I kept asking myself “where in this long and confident discussion of the world of money, markets, manufacturing, trade, nation states, etc — where is climate destabilisation and peak oil?” I was skimming rather than reading in depth, so maybe I missed it. But aren’t there two rather large elephants in the bedroom, from which this measured geopolitical discourse has somehow averted its eyes?
8 February 2010, 4:10 pmStan:
It’s mentioned as a weak area for NLR, though they feature Mike Davis there frequently, who gets it on climate change and peak oil.
Elephants is right; but you’ve said it before, when all you have is a hammer…
What this does point up, which is the reason I found it so interesting, is that regardless of the contingent instabilities in ther system, the deeper secular (organic iaw Gramsci) trends do not suggest that these crises will morph into systemic collapse any time soon… which to my mind means that what may happen is a wind-down, static-state capitalism, as she suggests, where growth is desired but not possible… which amplifies the effects of climate, peak energy, peak water, et al, as determinants.
8 February 2010, 7:51 pmmark:
The totality of a propogandic system is proven by the assumptions that are implied. Here the assumption seems to be that continued economic “growth” is not only possible but desirable. Contained within this assumption is the idea that exponentional increases in energy supplies to fuel this growth will be duly found and expropriated. These assumptions are intrinsically tied to the economic paradigm of our age. An economic theorum that was concieved before the laws of thermo-dynamics were discovered. An ecomonic theorum IMO that is literally and figuratively bankrupt. But hey I’m preaching to the choir here.
The thing I kept thinking while I was reading this essay is what my fellow unemployed working-class Minnesotans would think of this. I can tell you what most would say: “Blah, blah, blah.”
The question at the end of the essay was “Can a left intellectual project hope to thrive in the absence of a political movement?” The answer is an emphatic NO. Most if not all of the working class people I talk to, people who are now having a pretty hard time even holding on to their homes, are talking about economics. It’s really amazing. But it seems all of the information they’re getting is coming from the right. People like Ron Paul or Alex Jones. There are pitifully few Left voices that are addressing these issues and the ones that are sound like a bunch of intellectual snobs. And then they wonder if they can “thrive in the absence of a political movement?”
Why is it that the Right has the ability to address the working class in terms they understand - albeit with a message that is vacuous and ultimately against their class interests - while the Left can’t seem to put forth any coherant thought that can be understood without a masters degree? Are these people that fucking clueless?
I’ve got the sinking feeling that we (The collective US electorate) will elect what James Howard Kunstler refered to as “corn-pone nazis” who will promise a return to the golden age of happy-motoring suburban consumption but will be unable to deliver. Meanwhile the “Left” will busy themselves with a bunch of intellectual blather that is not only predicated on the preservation of a system that is bankrupt but will go completely over their intended constituents heads.
I’ve got to go shovel snow and send out more resumes……
9 February 2010, 11:06 amm.c.:
Thom Hartmann was interviewed for an hour Sunday by Brian Lamb on C-SPAN. At the end Lamb asked him why he thought Air America went out of business. Hartmann’s answer was lack of funds. AA had a budget of roughly $20 million. In comparison he mentioned, the owners of the conservative Washington Times have sunk $1 billion in their paper and R. Murdoch and News Corp. lost $100 million per year for 5 years on Sean Hannity’s show before it slowly turned around and made it’s first dime. News Corp. has the cash to lose side money on a boutique operation like Bill Kristol’s Weekly Standard.
Even if these numbers aren’t exact, we see the problem. Deep pockets have the luxury of time/losing money & eventually bending reality. Maybe the internet is a great equalizer….
9 February 2010, 1:14 pmld:
“Left” political economy shorn of the metabolic exchange between human society and the natural world has its severe limits, for sure, but we can still learn from people like Watkins… and not only about the analytic shortcomings of “left” political economy. We would be worse off if we didn’t have able people digesting and critically reprocessing daily reports from the business press, even if their optic is not exactly ours.
The problem with the thesis that “ordinary folks” (white, petty bourgeois or working class) would be receptive to anarchist/communist/socialist/whatever organizing, if only the “leftist” intellectuals got off their high horses and spoke the language of economic populism now monopolized by paleoconservatives and conspiracy nuts is this: many (certainly not all) “ordinary folks” are receptive to economic populism _only to the extent_ that it scapegoats “unpatriotic” elites, “cosmopolitan” bankers, “illegal” immigrants, “undeserving” blacks and browns, etc. Fill the economic populism with real class content and half the audience will leave the room. This is a dynamic and a problem deeply ingrained in US historical development.
As for Hartmann: speaking of “economic populism,” he’s got little to offer other than economic nationalist opposition to “disloyal” TNC’s. The chauvinist potential of his shtick is so thick you can cut it with a knife.
10 February 2010, 12:59 pmStan:
Language is defintely not the essence of the problem. Anti-intellectualism will not fix whatever anyone thinks the problem is.
There are plenty of us in or alumni of IST movements and formations.
No essay will provide more than its singular perspective to questions of power. How well do some of these claims hold up? If they hold up, what do they mean? We can pursue the class and gender dynamics simultaneously if we like, because we aren’t bound by a thesis, as an essay is. How does this Watkins piece fit in?
I tend to think of left economic analysts as having a fair amount of credibility, because they are unencombered by apologetics for the establishment. They sure read things lot closer than “economists.”
As a layperson with no intuition about money and business, I worry that these grand fundamentals in the economy are as potentially volatile as they seem, even if that volatility is contained for a while longer.
I keep wanting to say that I am no longer a socialist, but the terrible destructiveness of present-day capitalism is such that I feel I have no choice. It’s just that the first thing I’d have an ideal imaginary socialist government begin to mass produce would be bicycles and dutch ovens.
I want to make the suggestion that debt is a concept that covers a host of ills, and crosses a lot of boundaries, just as food is a subject at the intersection of several emergent political trends. Millions and billions of people right now recognize the same red flag of debt.
10 February 2010, 1:49 pmld:
(CORRECTED VERSION)
Stan, when you made your “break” (if that is not too dramatic a term) from Marxism a few years ago, I am sure that there were a few (not many) Marxists of an ecological and feminist persuasion who still saw you as one of their own and part of the same movement, however you may have framed your own renunciation. OTOH, ideological labels do matter, but perhaps they don’t matter THAT much.
I think you and De came up with a real big breakthrough
with your theory/practice of food praxis, in so many ways that I can’t and hence won’t enumerate here. But the crux of it was/is that local food sovereignty is A) a pressing material need (or an emergent material need, at worst) faced by many, as well as B) a vehicle for instantiating the small-scale, networked organizations and cultivating the red-green values that will become crucial as global fossil capitalism shudders into its death throes. IMO, this was very “left Hegelian” (and I mean that as a compliment!) of you.
I haven’t thought about it meticulously — at all — but I don’t think I reserve the same revered status for the concept of debt (and practice of getting off the debt treadmill)… maybe because I suspect it leads down the trepidatious road of “funny money” critiques of capitalism and into the hands of libertarians, goldbugs, and other cranks. I dunno, I guess someday I’ll have to give this issue the serious thought it deserves rather than a casual blow-off.
10 February 2010, 2:20 pmStan:
I see debt as a form of primitive accumulation; and a form that is remarkably adaptable. I believe Luxemburg was right when she said that all capitalist centers require regular and expanding inputs by primitive accumulation.
Looking into historical Jesus material, I found a lot of stuff about debt and how it functioned - even as it is now - as a social control mechanism, as well as the means to expropriate small-holders back in 1st Century Palestine. Jesus’ family were likely recently unlanded peasants, and most land was lost through debt.
Looking around now, I see personal debt at an all time high, national debt at an all-time high, external debt owed by neoliberally subjected nations continues to metastasize.
The answer - in terms of movement - is not enemizing the creditors, but putting debt forgiveness on the agenda. Given that every major world religion has some history of forbidding usury, debt forgiveness has a strong claim to authoritative support.
One strategic point that Michael Hudson makes when he describes Super Imperialism is that the old primary contradiction was supposed to be the boss-worker antagonism. But with the ascendancy of the FIRE sector and the dollar-Wall Street nexus, that PRIMARY contradiction - at least in the metropolitan nations - is felt as creditor-debtor.
This has ramifications as numerous as food-praxis, imo. From the neighbor woman who can’t quit paying a legal loanshark like CITI from a $200 loan she got five years ago, to the nervous suburbanites whose House-ATM quit cashing out, to the global Jubilee campaigners arguing for debt forgiveness in small and poor nations. There are three unlikely allies… debt reaches a lot of places, and it maps directly onto other forms of colonization, material and mental. (I suggest we refer to debt as captivity, because those who are in debt totally get that.)
That would be my best thumbnail of where some heads have been on the debt thing.
And the debt thing gets us a step closer to the money thing… like what is money, and what does it do TO us, as well as for us?
Anyway… bit of a heat spell up this way today. Slightly nackered.
10 February 2010, 5:57 pm(Boer) Tom:
Debt is often as much a problem in poorer countries, for those who have the collateral (being employed is often counted as collateral for smaller loans) to apply for a loan (or for that matter, a banking account), and the interest rates are often obscene - officially the prime rate in RSA right now is 10.5% - a general tendency under neo-liberalism seems to be for the prime (or ‘lending’) interest rates to jump above 10% then to vary depending on the country, e.g. ~40% in Kenya at one point… but I know people who are paying much more than `prime’ to commercial banks, with effective rates around 40% in RSA - smaller loans tend to get much higher interest rates, and I’m paying four times official prime on my credit cards, but I’ve got no collateral to get a commercial bank loan… Lots of working first-worlders wouldn’t mind a debt forgiveness either - one friend’s up to his third ’second mortgage’…
10 February 2010, 8:52 pmDeAnander:
I’ve been thinking about the JSOC thread, militarism/authority/patriarchy, and the meme of the Avenger. Somehow this ties into debt; after all, what do we call revenge? “Payback.” Sometimes we even add “with interest.” Somewhere along the way, the patriarchal archetypes coalesce: the person who accepts aid is required, by stern, draconian rules, to pay it back; the person who commits an offence is required by stern, draconian “justice,” to “pay for his crime.” “You’ll pay for that,” threatens the injured, vengeful vigilante-hero. Real Men keep score. Real Men never let anyone off the hook. Real men exact their pound of flesh (with interest). Real Men insist on what they are “owed” — as in obedience. What’s missing in the whole meme cluster is of course the “sissy” element of forgiveness, of letting people off the hook, of willingly forfeiting contractual reimbursement, of giving freely without keeping score.
Even the IMF is gendered; the hard “economic restructuring” stance is part and parcel of the “punitive father” archetype, the hardline neolibs are acting out a masculinist fantasy/myth in addition to simple greed… or so it seems to me. Remember Arnold Schwarzenegger mocking “economic girly-men”? The monetisation of the world, quantification, abstraction, “objectivity” — all fits in well with the “tough guy” ethos. “Sentimentalists” (i.e. women and sissies) would care about the extinction of species for their own sake; Real Men would only consider their exchange or use value. Women and sissies would forgive a bad debt; Real Men would send in the kneecappers.
This is sheer blue-sky rambling, but I think it might be a thread worth pulling on.
10 February 2010, 11:41 pmCurt Kastens:
I am going to throw some snow, since there is so much of it around, on this debt forgiveness idea. If there a written or unwritten policy that debt is forgiven every X years what are the chances that many people will burrow money not to get what they really need but to live far above thier means? How many farmers went broke because crop prices were to low? How many farmers in the 1980s went out and bought huge tractors with A/C and stereo when they already had a smaller and older tractor already in the barn?
The Muslims say that loans should not have interest attached. To me that is like saying that money has no time value. Am I mistaken in that view? Does money have a time value?
If on the other hand people couldn not own means of production and if it were illegal to hoard land people who have achieved a degree of financial stablity would not have many places to put thier money except to hoard gold or diamonds.
They could also put their money in to a bank where it would add to the money supply and help to create a lower time value of money. They could also make personal loans and forgive the debts of those that they have loaned money to and there by create goodwill with other people which could be a more valuable thing to hoard than diamonds, or gold.
Perhaps money does not really have a time value? The government is running huge debts yet inflation is not rampant? The government may be lying about what the rate of inflation is but the last time that I bought bread I did not need to bring a wheelbarrel full of money to buy it? We have always been told that the debt of repaying the the victors in the first world war is what led to the German hyperinflation. Something is not making sense. If we can run up huge debts to bail out failing banks and wage illegal wars why not huge debts to make wind turbines or even give every farmer a cash cow to milk?
11 February 2010, 6:00 amStan:
The government is running up huge debts without hyperinflation because of the special place the $US has in the world economy as the hegemonic currency. China, who holds enermous US debt, will not sell down a currency that is based in its biggest consumer market. It’s an economic standoff, wherein the US uses its debtor status as a weapon. This is what Michael Hudson wrote about in Super Imperialism, and how Henry Liu describes dollar hegemony. We make the rules, so we can break ‘em any way we want.
The problem with the old lefty slogans - used frequently during the antiwar upsurge against Bush - was money for jobs/healthcare/education, etc, and not for war. The problem with that kind of phrase-mongering is that there’s no account for the fact that US military force is an essential component in the stability of those dollars, and in the status of Wall Street/US as a monetary safe-haven. Eliminate the war-making apparatus, and the other forms of power shift too, dramatically and unpredictably, but likely in ways that will lower what we call our “standard of living.”
Your hypothetical on borrowing just to live above one’s means reminds me of how the housing bubble crash was spun… those debtors did this. It confuses the symptom with the disease, I think. Gotta run to Ciudad Quesada, long early bus ride, but more later.
11 February 2010, 6:38 amCurt Kastens:
So, what is the disease? I have not read Super Imperialism. It sounds like I should though.
Will forgiving debts every 5 or 10 or 20 years cure this disease without creating a new disease in its place?
Yes your Bus ride is early but I bet it will be a lot more fun than a subway ride in New York, Moscow, Tehran, or Berlin. OH shit that reminds me I forgot to check my lottery tickets. Bye.
11 February 2010, 9:50 am(Boer) Tom:
@Curt Kastens
11 February 2010, 11:50 am(I assume that you are familiar with time value of money calculations…) Time value of money struck me as a game to get ahead, which then worsens the problems that it is trying to get ahead of. If your MARR (to non-specialists: minimum acceptable rate of return, a corporate policy on growth that is used to guarantee long-term profitability, and is thus used to judge whether to carry out a given project) is inflation plus 5%, who is giving up that 5% so that you can have that MARR? In a growing economy (of 5% in inflation-adjusted terms), one could in principle have a situation where no-one loses, though it does imply that all projects operate at MARR and extraction (and/or savings due to more efficient processes) grow at 5%, but there are technical limits to the savings that can be had, and much more so given corporate psychology. Once your ARR (average rate of return, defined as total annual gain per total initial investment, with adjustments for time-value of later investments vs earlier investments) exceeds inflation (long before you hit an average equal to the MARR, let alone all projects at MARR+), extraction must grow (at ARR at inflation, extraction must remain steady), or inflation will increase (as others try to get raises to keep up with the falling value of money, especially to pay debts, whose values don’t fall with inflation, which is what the debitor would need pay off at a constant rate - notice the contradiction with what the creditor wants). Extraction requires oil, which has peaked. My view is that time-value of money is a symptom of the psychotic nature of money/capitalism/debt and related systems. Should I set up a guide to setting up a spreadsheet that would make it obvious?
DeAnander:
The US position vis-a-vis China reminds me of the old saying. “If you owe the bank a thousand dollars and you can’t pay, you have a problem. If you owe the bank ten million dollars and you can’t pay… the bank has a problem.” The US debt is of such enormous size now that the bank (the rest of the world financial system) has a problem. Or so it seems to me.
11 February 2010, 11:51 ammark:
I can see that this thread has moved on to the idea of debt and debt forgiveness. I would like to offer a digression.
“many (certainly not all) “ordinary folks” are receptive to economic populism _only to the extent_ that it scapegoats “unpatriotic” elites, “cosmopolitan” bankers, “illegal” immigrants, “undeserving” blacks and browns, etc.”
“Anti-intellectualism will not fix whatever anyone thinks the problem is.”
I guess these were pointed at my earlier post so I will respond. The “anti-intellectualism or “economic populism” labeling is a bit dismissive of a significant problem. It’s not dealing with what I consider to be an important underlying issue. IMO the biggest problem the “Left” have with their intended constituents is that a significant portion of them (Left Intellectuals) are convinced that Stalin and Lenin’s proposal for a “revolutionary vanguard” necessary to lead the “dull masses” to the glorious revolution is even doable much less ethical, moral or in any way “democratic.”
Again, the question at the end of the essay: “Can a left intellectual project hope to thrive in the absence of a political movement?” The answer is obvious. A better question is: Who would ask such a question? How about - Why? Why would a person ask such an obviously rhetorical question? Do they despair at the loneliness atop the “Intellectual Ivory Tower,” and pine for a “political movement” upon which to ride into vanguardhood?
I would guess that almost any contemporary person who has studied Socialist/Marxist theory formally or like me, informally, knows ultimately that the whole “revolutionary vanguard” business will not work. All you get is “here comes the new boss - same as the old boss,” to quote a recent Superbowl has-been half-time performer. This is, I would say, the basis for the mistrust of the US working class toward the “Left.” They sense that they are being hustled by someone who is not from their own ranks and they suspect “Left Intellectuals” as being a bit too eager to be the “new bosses.” I suspect the writer of our essay and the intellectual “Left” in general as being a bit conflicted about really wanting to be a “Vanguard Intellectual,” while also knowing that this has been tried before…..and Stalin purges and burned villages and the gulag systems don’t need repeating, in fact, we already have our own capitalist versions - new and improved!
Also, I have heard very few “voices of the left” plainly analyze our current economic/geo-political environment in the terms I think are necessary: Marxist terms. The only one I can think of was recently a single show on Toronto Public Radio. I think it is a Marxist analysis which is needed to accurately explain the capitalist system and the essay we are discussing made no mention of Marx.
It has been my experience that the “’ordinary folks’ (white, petty bourgeois or working class),” in my community are open and even eager to discuss Marx and his critique of the capitalist system. These are people who also listen to Alex Jones and Rush Limbaugh. And the reason is simple, their material interests have changed and people are now open to new ideas. And everyone I’ve talked to above the age of ten can easily grasp the concept of Marx’s theories being different from the totalitarian thugs who call(ed) themselves Marxists.
The nlr has obviously been around for awhile and is prestigious, in my view anyway. I have read many of their writers’ essays though not many recently. I am most familiar with Tariq Ali. I guess I was expecting a more Marxist analysis. My mistake. Perhaps the biggest problem with the essay and our general political environment is the sense of missed opportunity. I see the window wide open now for discussing important issues with “ordinary folks” (Marx, Socialism, Federalism, the Federal Reserve System, etc..) that only a few years ago was simply not available.
11 February 2010, 12:05 pm(Boer) Tom:
@Curt Kastens
As for lending for such purposes, what is the rate of return? The thirty year treasury bonds have an interest rate of 5.13% right now - would doing what you suggest (windmills, etc) provide the necessary return (vs banks with their formerly spectacular speculative returns, that can also speculate money out of other countries’ economies) or funds for making the interest payments on existing bonds? And would USA elites support that (would doing that support them, or Chinese and other manufacturers)? Investment in manufacturing also makes an economy vulnerable to speculative attack (especially in export driven economies)… And finally, peak oil also means that the more oil/other available energy is consumed (e.g. during manufacturing, as occurs when poorer people get money - the rich `invest’ theirs, and though they consume more oil per capita, it would be dwarfed by the total consumption given more manufacturing and oil for poorer people), the higher the price (supply/demand), which causes political problems in USA and elsewhere, which weaken the system faster.
Of course, there is the little matter of China et al not asking the principal back, but a little warfare here and there should keep the dollars flowing… I’m curious, if anyone knows, how the interest is being paid on those bonds (breakdown of printing/third-world IMF et al payments/fresh principal from new bonds/agreed non-payment on bonds etc).
11 February 2010, 3:27 pm(Boer) Tom:
Oops! 5.31% was the mortgage rate - the treasury bond rate is much lower - they are pushing 0.33% on one year bills (where they’d be more likely to repay the principal) - the ten-year rate (principal unlikely, depending on the customer) is 3.66%…
11 February 2010, 3:31 pmCurt Kastens:
Tom,
11 February 2010, 6:23 pmNo I am not familiar with money time value calculations. Calculations, hmmm, that sounds something like math to me. That money has a time value seems apparent by the fact that if something costs 10,000 and you only have 5,000 or perhaps only 500 and you would have to work 5 years to get the remainder, but there is a place that you could get it today, getting it today would have value. Of course if the interest rate was very high then it might not have value unless of course the rate of inflation was also high and one could expect to pay it back with inflated money.
So, I found your post kind of technical. Can you summarize it in everyday terms that a person with a limited economics background, such as myself, can understand.
Thanks,
Curt
Curt Kastens:
PS, yes the major religions prohibit usery but that is not the same thing as debt forgiveness, which seems to me is likely to encourage irresposible behaivior if it is codified or even becomes custom for individual debts.
National debt COULD be something all together different. When an industrialized country forgives the debt of a non industrialized country can anyone living in the industrial country tell the difference? Perhaps something else to consider is considering how government to government loans can be abused should they perhaps be forbidden on the grounds that giving this power to government officials is putting them in a postition of temptation that no mere mortal can withstand?
That is a position that cold hearted libertarians would love. Maybe they are right on that position. It goes along the lines that an ounce of prevention is worth a pound of cure.
When I was a libertrian and argued with liberals I always said that all charity should be private. The liberals always responded with, people are to selfish to volunatarily give away their money at the levels that are needed to prevent people from starving to death and dieing of simple illnesses. I said that might be the case but people have a right to be assholes.
I no longer agree with the idea that people have a right to be assholes. If it is acceptable to force parents to immunize thier children to promote the general welfare it is acceptable to make them take some risk to prevent people from starving to death to promote the general welfare. Of course someone might say yes I agree that it is acceptable to take money from people in the US to make sure that no one legally residing in the US starves to death but we can not be expected to take responsiblity for the whole world.
I guess at that point the liberal starts talking about the practices of the IMF and world bank which leads to poverty. But a conservative or libertarian could say, even if the IMF and world bank were led by Angles a foreign government could be lead by corrupt and ruthless crimiinals who destroy the wealth of their country. There are a lot of them and are attempts to help the people living in poverty in these countries will be pouring money down the drain. I suppose that liberal could then point out how many of those criminals came to power in foriegn governments with US assisatance but that will just go in one ear and out the other of a conservative. A liberal could also point out that in such cases the US government could find ways of working around the foreign government.
Somehow I just have to bring this point and counterpoint to an end so I will change the subject.
It was around 1840 I believe if I remember correctly that the US Supream Court ruled that the Cheerokee had a right to remain on thier lands in western North Carolina and eastern Tennessee. So much for the Supream court being the Supream law of the land.
11 February 2010, 7:24 pmcabdriver:
“So, what is the disease?”
I’m about as much of an uneducated layperson as one can get on these matters and still be literate and numerate, but I think I can identify a few factors in “the disease.”
First: low wages for most of the working population- including in the U.S.A.
Globalization conferred most of its benefits (or “benefits”) to Americans through lower prices for clothing, durable goods, and a host of consumer items. Technological innovations like VSLI chips and increased used of petroleum-based plastics to substitute for metals enabled the “ephemeralization of technology” that resulted in less material cost for various electronics, as well as the invention of all of the new microelectronic devices- digital cameras, cellphones, home computers, laptops.
This in turn encouraged a vast wave of consumption for a fantastic array of high-tech toys, most of which had either previously been much bulkier, heavier and with more restricted capabilities (consider the amount of resources and consumer required for a 16mm film projector/reel to reel tape recorder/stereo amplifier in the tube era of the 1950s on through to the VHS/color TV/solid state stereo amp 1980s, as compared with the cost of a DVD player/video screen/5-channel amplifier nowadays.)
A fairly irresistible array of goodies, for cheap. Same with clothing and textiles, which beginning in the 1980s were largely sewn overseas and sold for what amounted to (and still amount to, imo) deflationary prices.
All of that accounted for a huge new cornucopia of STUFF. At hitherto unimaginably low prices. (Except for the notable exception of shelter. Rents and home values kept going up, up, up- and even in the post Summer 2008 Crash era, there’s still been little or no deflation or contraction. After all, a home has to be actually purchased to fully register a real contraction in value, and in most places there are still plenty of houses that are overvalued for sale, in today’s market.)
But there was another side to globalization- depressed and stagnant wages, and continuing inflation in rents and housing in much of the country- sometimes exorbitantly so, due largely to the pressures of the newly affluents on what were viewed as the most desirable regions of the country (for example, the Washington DC suburbs, SF Bay Area, various coastal and vacation communities from the Sea Islands of Georgia to Aspen and Bozeman.)
Additionally, the old forms of prudent savings and investment once traditional to the working and middle classes were increasingly replaced with more unstable “corporatist” forms.
The Savings and Loans, with their passbook accounts- once the cornerstone of everyday “savers” in the working and middle classes, with their 4-5% interest rates and stolid regulatory regime- were first deregulated, and then raided and “busted out” by criminal financial opportunists, many operating in the arena of commerical real estate- parking lots and shopping malls to nowhere.
Meanwhile, the money pool of pension funds and retirement plans became the target of various untrustworthy schemes and swindles, to the point where these days most government and university pension funds aren’t held in a lock box or invested in stable bond markets- they’ve long since been invested into mutual funds, i.e., the stock market. (But in the 1980s, not that many people were looking ahead with concern, because the retirement of the baby boom generational bulge was decades away. Hey- decades away!…)
Also as of the 1980s, the use of plastic- credit cards- comes into widespread use. Not ubiquitous, like nowadays, but increasingly common. The advent of the ATM was at hand, by the late 1980s.
Only thing was…those interest rates. Like nothing ever seen before. 15% in the early 80s; 18% by the mid-80s; 20% and higher by the early 1990s. And they’ve stayed that way. Increasingly- and eventually nearly universally- linked to “debit cards”, i.e., plastic attached to one’s own bank account.
With all those new toys around. And ATMs.
Understand, I’m not trying to absolve the consumers who found themselves in a state of debt slavery completely, for their profligacy. But when it comes right down to it, how much of that debt was in practical terms an attempt to stay even, over a 30-years period of depressed/stagnant/decling wages? A way of purchasing an illusion of upward mobility on the installment plan?
And along with that, another factor entered in, beginning in the early 1990s- the computerization of money. That led to a huge expansion in the “financial sector.” But how much authentic productivity was generated in return- and how much of it was simply the rakeoff from every transfer, and from the “arbitrage” of commodities bets?
Someone who makes wastebaskets is involved in authentic productivity, for the economy. Someone who empties wastebaskets, likewise.
Someone who simply shifts money back and forth through fiscal and commodities- not so much, I think.
And as for people who make bombs and tanks instead of wastebaskets or baby strollers or steel girders or garden hoses- they’re arguably not involved in creating wealth at all. After a point, the balance tips toward them creating “illth”- something that’s at best a huge waste of productive resources, energy, and labor; at worst an arsenal of death and toxic waste.
Well- what does the USA still make, any more, in terms of peaceful technologies versus military tech and weaponry? How about as far as proportionally to 50 years ago?
It all adds up.
The corrosive effects of all of the factors outlined above- increased consumer debt, the corporatization of pensions and retirement and health plans, of the use of “the free enterprise system” as a gambling casino rather than an engine of producive investment, the proportions of non-military R&D, public investment,and manufacturing output shifted to military purposes, to produce products that are at best wasteful, and at worst ecocidal- are incremental, and insidious. Not easily measured or even noticed, in the short run.
But over time, the effects compound. Which brings us to where we are today- with a huge increase in government debt used to compensate for phantom productivity, overinflated equity, financial chicanery, usury and the resulting massive consumer debt- and national debt.
George W. Bush entered office in January of 2001, inheriting the stewardship of a national debt of $5.7 trillion.
He left office in January of 2009 with the national debt of $10.6 trillion. Bush’s two tax cuts, two extraterritorial military interventions, and status quo spending programs for things like agricultural subsidies largely accounted for that increase of $4.9 trillion.
The interest (about 3.2% per annum, presently) on that $4.9 trillion added by Bush to the national debt accrued to around $157 billion, over the last year. I do believe that partially accounts for the recent increase in the national deficit.
Undentaibly, some American consumers and mortgage holders went into massive debt, or even bankruptcy, because they were irresponsible wastrels. But the fact is, entirely new, non-traditional systems of finance, savings and investment were put in place in order to encourage that as normative conduct. And many people in the working/middle/employee classes simply grew to regard it as the way to get down the road. Hey, for a long time it appeared to work, for a great many people- for decades on end!
But, ultimately- cui bono?
Consider the role models.
I think that the bulk of this mess has to do 30 years of depressed wages for most of the workforce, and the breaking of the social contract between employees and large corporate employers (who did the most to alter and revamp the standards for wages and benefits in the post-1980s globalization era); along with the simultaneous deregulation of usury and the destruction of ordinary, uncomplicated, low-investment compound interest savings plans, like S&L passbook accounts, for individual savers.
Consumer interest rates on credit cards these days are still up there around 24%, are they not? That’s along with all of the little games the banks and credit companies play in order to get even people who intend to pay off their balances every month to owe them.
And let’s not even get into what happens to an account that falls delinquent for a month.
Meanwhile- what does an old-fashioned garden-variety savings account pay these days in compounded interest- .6% or so?
Does that strike anyone else as a little bit funny?
In the 1980s, the consumer interest rates were more like 15%, while a savings account paid 4%.
Now, go back and compare wage rates for various occupations- and this needs to be done specifically, and accounting for regional differences, in order to really have meaning- between 1980 and 2010. Then, check out the Consumer Price Index.
And then look at what’s happened to residential rents- because the CPI doesn’t include that expense in the index. Bear in mind that many a home purchase was sold as a way of retaining equity, instead of simply tossing it away every month as monthly rent or leases subject to increases on the whim of the landlord(s).
More funny business.
Get into health costs, insurance plans, and employee coverage- more funny business.
College expense are even more outlandish. Perhaps the highest inflation rate of all. Yet it’s sold as upward mobility. A BS in Debt.
Like I say, my financial expertise is nearly nonexistent. But even I can figure out that it wasn’t just wastrel credit card spendthrifts who broke America. There’s more to the picture than that. And that same spending class- gainfully employed consumer-debtors and mortgage holders- was continually cheered on as an economic engine vital to continued prosperity, right up to around July of 2008.
Why aren’t our international creditors leaning on us more?
Hmmm…in the first place, consider how the trade representatives of the Chinese government told off the wastrel spendthrift Americans at the recent climate summit. Our leverage with them is approximately zero.
Secondly, both China and the Saudis- and I suppose the Japanese and Western Europe can be included in this, as well- are counting on US military power to do the heavy lifting in the Winning of Central Asia, as far as developing it as a mineral and energy resource frontier.
And if we go broke trying, while our creditors eventually cut deals on the flanks with the Russians and the Iranians…well- maybe the USA should have invested in fewer bombs, warplanes, naval ships, and troop carriers, eh?
12 February 2010, 2:21 amCurt Kastens:
Cab driver,
12 February 2010, 5:07 amVery good. You did an excellent outline showing many of the factors that have led to the moral bankruptcy of the US. I do not think that a general debt forgiveness is a cure though.
Your points on Real Estate strengthened my hunch that Real Estate is a more important factor than the military angle in supporting the value of the dollar.
Along these lines I a friend told me that yesterday the European Union has decided to refuse to continue to share bank information with the US that the US said was needed to fight terrorism. He said that all of the conservative country delegations in Europe voted to continue this practice of sharing information except for the CDU/CSU from Germany.
My friend reported that the report that he heard said this information was being used by the CIA to spy on German industry to help US firms. Specifically that the US had the power until yesterday to find out who the suppliers were for German companies. This information could be used to learn more about German manufacturing and production technics.
Drive Safely,
Curt
Stan:
I don’t think anyone but Kurt has used the term “general debt forgiveness,” which seems the anticipation of a policy, as opposed to the way it was originally intended, as a strategic need, that is, a real need confronting so many people from so many walks of life that has potential to become a generalizable grievance - which gives this need a potentially strategic dimension… we were talking about mass movements, I think. ‘S okay Kurt. Ain’t picking on anyone, and you went ahead and said what was on your mind. Respect that.
The various takes on financialized global capitalism - addressed to the comment about symptoms and disease - were not burdend, as far as I could tell, with an agenda to push this unstated policy - general debt forgiveness.
We can separate those two emerging threads just to avoid confusion. Text is an imperfect medium.
My own take on disease vs. symptom is metastasis. This relates closely to ld’s marxian reference to metabolism… and I take this connection to be as material as it is cultural. A body is in a state of health - by most norms - when it is closest to homeostasis, an old 19th Century term that has retained its currency in medicine, meaning something like total system equilibrium. Metastasis is a condition - assoicated with cancer - wherein diseased cells that have had their growth limiting mechanisms destroyed, fine some means to pass the same pathology on to all the other sub-systems in the body.
General-purpose money facilitates this metastasis, deracination of culture contributes to this metastasis, commodification contributes to this metastasis, and large quanta of extra-somatic energy contribute to this metastasis. Sometimes the symptoms - like extremely high fevers or opportunistic infections - can be as debilitating or even fatal as the the disease’s causastive agents, but we still need to understand the disease process. Sometimes treating the symptoms unitl the patient survives is the protocol. These de-centering and de-localizing phenomena are also de-immunizing. Think about the rush to rescue AIG, based on the too big to fail doctrine. Others can riff on this better than I can.
Oddly enough, economists refer to growth as economic health, which leaves us with the credentialed doctors (remembering Illich’s reference to institutionalized medicine as a radical monopoly) examining us and finding this cancer - unlimited growth - then telling us that metastasis, not homeostasis (sustainable equilibrium), is the sign of health. We could at least sue them for malpractice. (:
On debt, first of all, periodic debt forgiveness is very much a part of the Hebrew Bible and the New Testament, called Jubilee, part of the original Mosaic codes, and a central issue for the original Jesus movement in Palestine.
On debt otherwise, actually existing debt is alwasys more complicated than a hypothetical situation designed to raise an ethical dilemma. It is seldom between social equals, and the actual inflections of power in this debtor-creditor relation - like the relation between actual workers and actual bosses, like the relation between co-located but unequal ethnic groups, like the relation between men and women. This social relation needs to be seen as it actually functions.
Lending institutions pushed credit with one hand, and gouged to make it more attractive with the other. The issue is not default, which assumes the debtors to be the more morally inept in this relation, but the practices of usury, and especially of employing the esploitative magic of compound interest.
In the rest of the world, credit was offered by the IMF et al to places that had been rendered so desperate they had no choice but to take the usurious loans, which they can now never pay back… placing them in a permanent state of debt-bondage, and forcing economies to orient toward export (not self sufficiency) in order to get the $US required to pay back these extortionist loans.
Debt forgiveness for these poor nations is a no-brainer afaic, whether one wants to generalize that policy or not. I’m surrounded here by coffee trees and sugarcane, more than this country could ever consume. But the monocropping and intensified-input methods are used to get the dollars in that pays the external debt off. And this country is well off ocnpoared to neighbors like Nicaragua.
When I was in Haiti, I studied this system in its semi-feudal form, where sharecropping peasants were caught in a cycle of debt by the comprador class. These were not loans, like a service, but brutal exploitation designed to force peasants to accept the prices for their little surpluses paid by the same compradors. Get them on the money grid, get them in the money trap. Get the law behind you (there is the state!). Checkmate.
Debt does not often happen between equals. Systematic debt never does. The captives number in the billions.
And I doubt anyone here is pushing Stalinism.
12 February 2010, 8:46 amCurt Kastens:
Stan,
If I understand you correctly you are saying that not only is debt forgiveness for poor 3rd world countries a no brainer but in addition because so many people in the US have reached a point in which they can not pay their debts that wiping out personal debt, PENALTY FREE, in the US should be considered to prevent mass suffering.
Is that correct?
If so, the first thing that comes to my mind is that it will cause a type of psychological reaction that could have been caused by the first amnesty for so called illegal aliens. People in general will say, ahaa they have done it once they will do it again. I missed out on this benefit the first time around I will not miss it the second time. Yes it is true that the US economic system is not fair. But if by chance it should become fair then such a system would be burdened by unrealistic economic expectations because of what had previously happened.
The second thing that comes to mind is perhaps people do need to suffer to put them in a revolutionary mood.
Speaking of revolutions I was watching this Naiomi Kline DVD the other day about the similarities between NAZI Germany and the current US society. This one retired 4 star Army general spoke before the camera, not a real old timer, he was chief of the Army JAG I think until around 2000. Well he basically echoed what Mrs. Kline said.
12 February 2010, 10:02 amWhen I saw that I thought to myself, so what the hell are you ACTIVELY doing about the situation. Someone who was a 4 star general should have a lot of friends who know how to kill people and get away with it. Someone who is a 4 star general played a pretty damn important role in getting US society to where it is today. I know that you are opposed to killing anyone but we both know that the vast majority of people on this planet are only opposed to killing the WRONG people. That is something like being opposed to usury that cuts across all religious lines, with small exceptions.
Stan:
No.
There is already a movement to forgive third world debt, and there are already political forces in play, with grassroots support, in various places around the world. The question is being raised around ‘what is to be done?’ The first way to lend support to those organic efforts underway is to learn more about the issues and the struggles.
My own point is that the grievances associated with debt cross a lot of boundaries, because debt is putting a lot of pressures on a lot of people. The first steps in any strategic response to this kind of latent issue are to assess the empirical reach of debt, and provide opportunities for people who are suffering under debt to share their stories.
NOT wage election or policy campaigns!!!
There is no blanket solution to this problem right now in the arena of policy, though there are many, many individual instances where policy struggles are appropriate… fights against redlining minority neighborhoods, eg, or campaigns directed against specific lenders.
Big policy struggles are the tombs of mass movements. The value of mass movements is not in policy change, but in disruption - either systemic disruptions or disruptions of consciousness (as Bull Connors learned when he turned on the hoses). The Black Freedom Movement of the 60s did not start with a demand to end segregation. It started with the boycott of one city’s bus lines. But it touched on shared grievances that took the movement viral.
Don’t sweat the hypotheticals and abstractions. We’re not there yet. Get the actual stories of what has happened to people on account of unpayable debt… but the start point is not judging them or creating a throwaway category for people who are undeserving of benefits from a policy that doesn’t yet exist.
The stories will tell us what categories are and are not valid, useful, or humane.
Having said that, let me get hold of the Ideal Imaginary; general debt forgiveness. The reality is that most debts now accrued in the world will never be paid off. What might be the advantages of simple forgiveness, as a way of clean-slating without means-testing?
Our escape from bondage requires our escape from the idea of meritocracy.
12 February 2010, 1:06 pmStan:
Here is a debt story.
FULL
And another one from CP, on a roll today over debt!
More on Greece’s debt restructuring:
Lead at Alternet today:
More Pain for Devastated Haiti: Under the Pretense of Disaster Relief, U.S. Running a Military Occupation
Haiti is a debt forgiveness issue.
Here are a few prominent links from today’s news using the search words “debt” and “forgiveness”:
* * *
* * *
* * *
* * *
* * *
* * *
* * *
Here are the first three Google-News headlines using the search words “debt” & “crisis”:
* * *
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And here are the first three pulls for the search term “household debt”:
* * *
* * *
The world at our fingertips, and it is the world of debt.
Ohhh, lookie here, AIG, the debt we all just inherited for ten generations:
FULL
I think we ought to ask people why they think they ought to service this debt to the rich. They just privatized their gains and socialized their losses. Why can’t you and I do that? Should anyone?
And watch Greece get what Argentina got a few years back.
The pot is boiling, and the main ingredient is debt.
12 February 2010, 1:46 pmCurt:
Stan,
12 February 2010, 5:05 pmYou make some good points, especially about debt which is not collectable.
DeAnander:
As to whether money has time-value… It has less time-value than the things that are liquidated to “generate” money. In other words, when a 1000-year-old tree is cut down and turned into lumber, that lumber should really be worth 10x more than the lumber from a 100-year-old tree. If 100-year-old cedar is worth $6/board-foot then 1000-year old cedar should be worth $60/board-foot. Because it takes 10x as long to replace — “forever” in terms of our wantonly destructive, hasty, greedy industrialism. But that borrowing from the future (or looting of the past) is not reflected in the money economy. The dollars obtained by looting long-lived species are the same as those obtained by looting short-lived species (though there is some, slight, inadequate acknowledgement of “rarity value” for the higher-quality, longer-lived “resources”, it usually doesn’t kick in until they are already decimated).
Taking another approach to the question, a loan does have some time-value; but *compound* interest is insanity, as anyone can verify with a fairly simple thought experiment.. Modern-day debt is based on compound interest, a geometric/exponential progression rather than a steady return modelled on real biotic systems (which can only “grow” so much in one year based on a fixed solar input, fixed — slow — topsoil accretion, etc). A lot of the driver for Growth is the desperate need to repay debts accumulating in geometric progression, by looting biomass that only grows in linear progression (or other, mineral resources that don’t grow at all on our human timescale). We might tame a portion of the insanity by banning compound interest in favour of interest-simple, or better yet on “shares” of whatever yield was obtained by the investment.
But our current system is very good at replacing traditional slavery with debt-slavery, and as such it disciplines subject populations and concentrates wealth in the hands of elites, so “The System Works.” To change it means not just arguing *for* sanity or survival, but arguing *against* entrenched privilege. As J Diamond and others have pointed out at length, most civilisations that have come to this painful disjuncture of entrenched privilege and survival have… not survived.
12 February 2010, 5:05 pmJonathan:
Happened to catch a segment on the radio where a loan adviser being interviewed was telling her clients to seriously consider walking away from their houses that they owe more on the mortgage than what the house is now worth.
She noted that in the commercial market this action would be considered as a strategic economic move, which is what it would be in the case of most home loans as in most states (but not all!) all the bank can do is take the house.
However, the biggest obstacle to her clients taking this step was a social taboo, a sense of shame that people think they will feel by losing their house. (not to mention the dreaded “credit score”).
I thought it an interesting phenomenon - perhaps a key one to the maintenance of the debt regime.
The report also hinted somewhat ominously that once this social taboo starts to loose hold that we may see a huge new wave of foreclosures. In fact banks are starting to stall on foreclosing in some circumstances for this very reason.
12 February 2010, 6:11 pmStan:
Do you have links for any of this? I’d love to, in good conscience, exhort people to default on banks.
12 February 2010, 7:04 pmBruce F:
“Stan:
Do you have links for any of this? I’d love to, in good conscience, exhort people to default on banks.”
……..
Dean Baker is quoted on Alternet
[snip]
From the NYT, it looks like it depends on what kind of loan you have. If it’s a “non-recourse” loan, you’ve paid a premium (up to $800 per $100,000 borrowed–sorry no link, can’t remember where I read it) for the right to turn the house back over to the bank.
More info on “non-recourse” loans - http://www.google.com/search?hl=en&safe=off&client=firefox-a&rls=org.mozilla:en-US:official&hs=IHo&q=mortgage+non+recourse+loan&revid=1179622892&ei=CBh2S4nUFNShnQf9u-CiCQ&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=6&ved=0CDMQ1QIoBQ
12 February 2010, 10:16 pmLisa:
Guns and Butter - The New Junk Economics: From Democracy to Neoliberal Oligarchy - February 10, 2010 at 1:00pm
“The New Junk Economics: From Democracy to Neoliberal Oligarchy” with financial economist and historian, Dr. Michael Hudson. We discuss the Federal Reserve; money as debt; Fed Chairman Ben Bernanke’s misconception of the causes of the great depression of the 1930’s…
http://www.kpfa.org/archive/id/58530
—————————————
Guns and Butter - Obama’s Republican Class War Presidency - February 3, 2010 at 1:00pm
With financial economist, Michael Hudson, on Obama’s State of the Union Speech and its economic consequences. The reappointment Federal Reserve Chairman, Ben Bernanke.
http://www.kpfa.org/archive/id/58336
13 February 2010, 6:37 amStan:
Thanks Lisa for the links. Good stuff.
Bruce, this is very useful. So what is the handbill version? Is this something we could do here? Create a one-sided one-page 8.5 x 11 pdf handbill that tells anyone who looks at it how to strategically default? Something for very general use, anyone can download and copy, no authors or organizaitons listed, just a webpage or something where an interested reader could follow up by mulling over the how-to’s.
These kinds of little, practical, strategic things were part of the thinking over at Insurgent American before fate swallowed it up.
Here’s a down-n-dirty draft - editorial suggestions welcome:
JUST WALK AWAY
Mortgage got you underwater? Economist says, “Send the keys to the bank.”
More than 23% of all mortgages in the United States are going to cost the homebuyer more than the house is worth. Almost 2 ½ million additional mortgages are on their last equity legs. And the government’s Home Affordability Modification Program (HAMP) is securing the fortunes of a lot more lenders than borrowers. Geithner’s Department of the Treasury is working for bankers, not you.
If your mortgage debt is dragging you further into the jailhouse of debt, your best bet may be “strategic default.” You may be able to simply move your stuff out, quit paying that mortgage, and walk away. The financial institutions – who got us in this mess - don’t want you to know that. But many people can do this and come out ahead, and cancel a big chunk of household debt in the bargain.
“We have not, in fact, fully revived the U.S. financial system,” says economics editor Zach Carter from Alternet. “We’ve just helped banks book profits on the backs of troubled borrowers. With HAMP, we’ve even encouraged borrowers to waste their money on irrational payments.”
Irrational payments. “Every month,” says Dean Baker of the Center for Economic Policy and Research, “that you keep that person in their home paying that mortgage, that’s a gift to the bank. So if you could keep a lot of people from sending their keys to the bank, and keep sending their checks instead, that helps the banks directly.”
You may be one of hundreds of thousands of households that can save tens of thousands of dollars and cancel burdensome debt by simply defaulting.
“And the sooner you walk, the harder it hits your bank—they’re hoping you’ll take on credit card debt and hit up family members to make a few more payments before you lose the house anyway,” says Carter. Walking away is legal and ethical. “It’s written right into the mortgage contract: If you can’t pay the debt, the bank gets the house. ‘Personal responsibility’ doesn’t mean further subsidizing the banks that your tax dollars already bailed out.”
Wall Street and the big financial institutions that hold your debts do not want you to default, and they will offer up quasi-ethical arguments against default, not telling you that Wall Street and big investors routinely engage in strategic defaults as part of their business bag-of-tricks.
Articles to study strategic default as an option for you:
Roger Lowenstein’s New York Times Magazine article, “Walk Away from Your Mortgage!” http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html?hp
Market blog Chumpchanger’s article, “Morally Conflicted About Walking Away? Don’t Be.” http://www.chumpchanger.com/2008/11/morally-conflicted-about-walking.html
Zach Carter’s article, “Home Underwater? Walk Away from Geithner’s Perverse ‘Homeowner Relief’ Plan”
13 February 2010, 8:52 amhttp://www.alternet.org/module/printversion/145551
Stan:
Greece has responded to the debt crisis… with a general strike.
FULL
Here is a capitalist press editorial, as Europe prepares to bail out Greece enough to save their currency:
FULL
Debt is serious politics.
13 February 2010, 2:48 pmStan:
Lookie here. Two stories on Treasuries and Greece… see how this plays? A ping-fest of money panic, as people switch between euros and dollars:
Then later…
“…the haven appeal of US debt.”
13 February 2010, 6:54 pmJonathan:
I couldn’t find the original segment I listened to but this gives even more detail:
http://www.npr.org/templates/story/story.php?storyId=122573604
Stan - I love the idea of a handbill. I will do some more research to bring out the details of the risks they talk about and how to mitigate them (credit scores, what states allow banks to put you in collection etc.), but it seems that the key is to overcome the taboo - especially if you are in one of these adjustable mortgage cons.
It is interesting to think that many banks are stalling on foreclosures to keep them off their books - so you might be able to live in your house for six months to a year without payment - allowing one a sock away some funds or catch up on other bills. Maybe there are some legal maneuvers to drag this out even further?
Will let you know what else I find out.
13 February 2010, 7:09 pmBruce F:
The curmudgeons at Stop Me Before I Vote Again pointed me to walkaway.com
13 February 2010, 11:58 pmCurt:
I am comming to see this with a new perspective. Killing people is normally a bad thing but can be understood in a time of war as a neccessary evil. Lying is normally a bad thing but can be understood in a time of war as a neccessary evil. So I guess I could understand not paying our debts along similar lines.
14 February 2010, 7:00 amAll of these debt crisises though are very discouraging. One of the reasons that I have been such a pessimist is that I always thought that even if capitalism were dismantled and businesses were collectivley owned not much would change because you would still have the bookkeepers joining together to get highter salaries at the expense of the mechanics who will be working to get more at the expense of the salespeople and on and on and on.
Now the link on the problem in Greece does not say it directly but I do not think that it is to hard to figure out that over the decades the Greek governments tried to keep everyone happy and not show any restraint on what they were financially capable of doing. Of course that could go back to the old saying by Keynes that free markets might work in the long run but in the short run we will die.
A week or so ago I saw a sign that said, War is the symptom but capitalism is the disease. But these debt crisis shows me that it is even something deeper than capitalism. It is more like…….well there are so many ways that I can think of to say it but the one that at the moment seems best to me being human is the disease. Stan made the comment some weeks ago that it is impossible for consumers to make rational economic decisions. Could it ever be possible?
Curt
Stan:
I doubt I said that, that way. Surely there was something mitigating or extenuating in a blanket claim like that.
Curt, your description of bookkeepers working to get more from mechanics actuaslly describes one of our perennial obsessions here - division of labor, and the emergent rule of administration. The strength of that point, however, gets muddied when you universalize it into human nature… a thing so plastic that any claims about it have to be uber-specific, like opposable thumbs, or uber-general (and even paradoxical), like “human beings are biologically determined not to be biologically determined.”
“Human nature” is an easy out, but it’s not supportable as an explanation. Humans do not always try to get over one one another; and all of us have known enough caring, selfless people, or even people who are only sometimes caring and selfless, to know that misanthropy is an evasion of both culture and complexity.
It’s actually a little harder than that to figure out, speaking as a non-Keynesian. (: The history is all important, studied in light of our own experience with governments, ie, that a small rich fraction of the population actually participates decisively in determining the direction of governance, and the rest of the population bears the burden of their schemes. Greece has to be understood beginning with WWII and its immediate aftermath.
The external debt was not caused by an entity called Greece borrowong money from an equally powerful lender in order to fluff everyone’s pillows. It involved coups and dictators and arm-twisting by the IMF (a US-based international loan shark), with usurious loans granted when there seemed little choice between borrowing what was offered and - as you say - dying. The conditions of these loans was unfettered acces to national capital markets, which the GATT made sound like equality (”Greece has access to US capital markets, too.”), even though a comparison of the power between the US and Greece to controlthe other’s markets exposes this abstract equality as the rationalization of a bully. Unpayable debt then leads to more unpayable debt; meanwhile, the supposedly sovereign people of Greece fight their asses off, at one point in the face of terrible state repression, to build a few unions, etc, that do NOT represent the tiny fraction in power, that is running up external debts to keep the economy afloat in the US sea because they are getting paid. Now, when the inevitable default appears, the burden of the “readjustment” falls on the common people, and not one scintilla on the rich. Like I said, read up on this, because it cannot be represented accurately by blaming the victims.
As to killing and lying, I’m one of those peculiar folk who have decided that even war doesn’t justify killing, but it is no analog, in any case, to the issue of mortgage defaults. These are contracts, already an agreement that the house and land are collateral for the loan. No lying or deception involved. It’s spelled out. The buyers are simply exercising their contractual option.
Here is the text from an old IA series on Homeland Security, with references to Greece and GATT:
Part 7
While the United States was in the process of breaking England to its will in the Sterling Zone and figuring out how to fill the newly emerging post-colonial voids in Africa, the Middle East, Latin America and Asia, Eurocommunism began gaining a popular foothold in places like Italy, Spain, France, and Greece. This did not sit well with Truman, whose administration had settled on a strict policy of “containing” communism, especially since communist-led governments — still following Moscow’s lead — were unlikely to go along with GATT. The additional benefit of anticommunism was to paint the communist political movement as a nearly-demonic threat as a means of justifying massive spending abroad to a war-weary American population, and to push Western Europe under an American security umbrella.
During the war, the most disciplined and tenacious of the underground resistance movements to Nazi occupation had been peopled and led by communists. This gave communism a positive reputation among the masses, and instilled the Eurocommunists with a sense of postwar political entitlement.
In Greece, as early as 1944, this resulted in an open conflict between the Greek monarchy and the Greek Communist Party’s resistance movement, the Democratic Army. By 1946, this conflict deteriorated into a full-scale civil war. In a typically cynical maneuver to protect Soviet national-interest strategies at the expense of other national communist parties, Stalin had agreed in secret with Churchill in 1944 to cede Greece to the British as an area of “influence.” When the civil war began, it began with British occupation still in place.
But as British influence was being displaced by American power, the Truman administration made the civil war in strategically-placed Greece a high priority. The Comintern was implementing a policy of abandonment in Greece; and the Americans stepped in with a new postwar paradigm that combined the military and economic goals of the Truman administration — the Truman Doctrine.
(Barnet, Richard, Revolution and Intervention - The United States in the Third World, 1968, p. 118)
American policy during the Greek Civil War, which lasted from 1946-49, and after, became an American foreign policy template. So did the rhetoric which accompanied these policies.
(Barnet, p. 101)
The other claim was that other countries were funneling support to the Greek Communists (when in fact the Comintern had directed that they be left to their fate at the hands of the monarchy and its allies). Truman:
Sound familiar? Of course, the actual post-Civil War government was anything but democratic. It was essentially a military dictatorship that allowed US investors free access to its national markets.
Structurally, the US participation in the Greek Civil War helped establish the first, tentative foreign policy apparatus for post-WWII interventions. It also inaugurated the tacit alliance between the US press and US imperial policy.
(Barnet, p. 122)
The Truman Doctrine prefigured the next four decades by confronting communist-led governments, but also by characterizing any and all national liberation movements as “communist.” In the same way the Global War on Terror (GWOT, a Bush administration legalistic term that has been dropped by the Obama administration) today becomes the blanket narrative behind which all US imperial-maintenance initiatives can hide, the Red Menace was the Evil One in this Manichean fable. And in the same way, the narrative became in many respects self-fulfilling.
The American experience in Greece was formative, and set the US on a path that would be in many respects determinative until today. Communism per se, a political movement, was not the main issue; but it was an important narrative to divide the world into us-Good and them-Evil as a quasi-permanent ideological backdrop for all US actions, foreign and domestic. The US would demonize the Communist Bloc, led by the USSR, then practice guilt-by-association against any entity that resisted the US diktat.
This is not to say that anticommunism was pure ploy. The fear of communism as a popular movement, by capitalists, had been tangible ever since 1917. It was fascism itself that was deployed to blunt the spread of revolution into the European metropolis in the 1930s, when the global depression was devastating precisely the people to whom communists most appealed — urbanized factory workers. Robin D. G. Kelley’s historical account in Hammer and Hoe - Alabama Communists during the Great Depression described a now-forgotten militant Black Communist movement in the American South at that very time — one which coincided with the expansion of coal and steel production in the American South.
This movement came to be predominated by a particular organizational form, named Marxism-Leninism (a term coined by Stalin to suggest his own continuity thesis, from Marx to Lenin, to him). Marxism-Leninism was an organizational form (and I stress both words, “organizational” and “form” to differentiate it from ideological rhetoric) that was itself forged in civil war and defense against invasion; and what it did was militarize the movement, and eventually, whole societies. I will refer to this phenomenon as Karl Marx himself did — “barracks-socialism.”
Barracks socialism’s advantage was that it was capable, within this form, of defending itself from attack, and of attacking. Given how this highly disciplined form appeared just as many nations were about to be drawn into the conflagration of WWII, the Marxist-Leninists were at a unique advantage in building resistance movements, like the ones in Greece, Yugoslavia, France, Italy, Spain, and China. When the war was over, these formations, now under central guidance from the Comintern, were left with a very high degree of credibility because of their performance against the Nazis and the Japanese during the war.
The rejection of GATT by the Comintern, then, sealed the deal on the Cold War. It was on; and Greece was a preview.
In a quasi-democracy like the US, political rhetoric has the tendency to begin as an instrumental lie then become a perceptual truism. The same bourgeois patriarchy that controls the levers of US power comes to believe its own rhetoric.
Intervention in Greece took the nationalist desire for independence (from GATT, for example) and conflated it with Communism, a sleight of hand made easier by the fact that the most effective resistance movements in the wake of WWII were led by, or included significant numbers of, communists (e.g., China, the most populous nation on earth).
Communists in China moved to the forefront of a national liberation struggle would succeed in seizing state power by 1950 (triggering the Truman administration to invade Korea under the auspices of the freshly-minted United Nations). It was also true in Vietnam (Indochina), Algeria, South Africa (against the Boer regime), Mozambique, Angola, Guinea-Bissau, Congo, and several others. In those instances where communists were not the dominant force within nationalists formations, the polarization of the Cold War would pit the US against national independence movements, driving them into alliances, tacit or overt, with the Soviets… who adopted a policy of provisional (and sometimes very reluctant) support for the nationalists.
Perhaps the most important thing to emphasize here — because it will hold true in later upheavals in Cuba, Nicaragua, and Iran — is that these revolutionary surges were not waged in order to establish Marxist-Leninist, or even small-S socialist, societies. This was understood even by the communists who participated in them. These were movements primarily for national independence.
The conflation of national independence with communism, and the substitution of “competing ideology” for actual circumstances and motives in the mind of the American citizenry were deliberate obfuscations to support an American foreign policy that had hung its hat on anticommunism. The centrality of nationalism in these social struggles was thereby hidden from public consciousness here in the US, where it remains hidden to this day.
The principle Iraqi resistance to the United States-led occupation of Iraq was and is nationalist, and the key nationalists are both Sunni and Shia. The secular Sunni resistance, which forced the Americans to allow it to run Anbar Province (and eventually engaged in a shooting war against the so-called al Qaeda franchise), the Islamic State in Iraq (ISI)), is composed of nationalist formations.
Likewise, the most popular Shia formation in Baghdad is Muqtada al Sadr’s Mahdi Army is Iraqi-nationalist in its political identity. Yes, there are ethnic divisions in Iraq, but there are also many intermarriages, and — before the disruptions of provocateurs — many mixed neighborhoods.
Like African Americans, whose past ethic identities might have been Congo or Ibo or Hausa, etc., the sustained common experience of colonial control paradoxically created a unifying identity and culture that was unique and separate (though a regional Kurdish community with an armed struggle ongoing in neighboring Turkey maintained a strongly-felt Kurdish national identity).
In the case of African America, that process was pushed further by the forced separation from African communities and erasure-from-above of past ethnic identity; but the general dynamic is the same. Iraqi nationalism is real; and it is powerful. That is precisely the reason Sadr is considered so dangerous by the Americans; he has consistently called for Sunni-Shia and secular-Islamist Iraqi resistance to the occupation.
Once the post-WWII US had broken in its covert operations apparatus on Greece, it quickly turned its attention to the newly emerging independence movements, and left battered Britain to lose its own anti-independence struggle against India (the jewel in the crown of the former Sterling Zone).
Underestimating the power and attraction of post-colonial nationalism, and triumphant after Greece, the Truman administration launched down a disastrous path that would lead to Korea.
Another vast area populated by multiple ethnicities, that was forged into a common cause (and the culture of that cause) by foreign domination, was China.
In 1945, Truman immediately garrisoned Marines in China as part of the forced repatriation of Japanese occupation forces. In 1947, confident that the US-puppet President (General) Chiang Kai Shek — the son of a wine merchant — could function as China’s steward. Instead, the ambitious Chiang accelerated attacks against the war-weakened but popular Chinese Communists with all the force at his disposal, expanding a civil war between the Kuomintang and the CCP that began in 1927, and was put on hold occasionally only to fight Japanese.
Under guidance from the industrial-obsessed Comintern, led by the struggling and newly-minted Soviet Union, the Chinese Communists had tried basing themselves with China’s small, urban, industrial working class. This had rendered them vulnerable to Chiang’s Kuomintang (KMT, a national independence party established by Sun Yat Sen), and in 1927 Chiang massacred thousands of Communists in Shanghai. When Mao Zedong ascended to leadership, he abandoned the urban-centric strategy of the Comintern and elected to base the build-up of resistance in the vast rural areas of China. When the war against the Japanese occupation was over, and the civil war re-erupted, weakened as they were, Mao’s rural-centric organization paid off. Self-sustaining and dispersed, the forces of the Red Army were able to systematically encroach on the urban centers and choke them off.
While Chiang was reassuring his American patrons that all was under control, the “facts on the ground” created by the protracted rural-based strategy of Mao had turned the countryside into a great sponge that could soak up the brunt of Kuomintang attacks. In June 1950, this civil war culminated in the victory of the Chinese Communist Party’s People’s Liberation Army.
Truman, whose administration had been pursuing a delusional policy of negotiating a rapprochement between the KMT and the CCP — and who had Chiang as its equivalent to Ahmad Chalabi — was stunned. At home, Truman’s administration was being red-baited by the right-wing, as McCarthyism took hold, for being “soft on communism.” As happens in the US, election cycles combine with this kind of masculinist baiting (being soft on… communism, drugs, crime, terrorism, etc.) to create a race to the bottom. Truman took the bait.
He set up a “Federal Loyalty Board” at home to spy on government employees; and he committed troops to fight in another post-Japanese-occupation civil war on the Korean Peninsula. In November 1950, Truman even threatened to drop an atomic bomb on China. That war was fought to a stalemate, with a truce (not an armistice) signed in June 1953. The use of conventional, direct military force had run headlong into a new post-WWII reality.
Meanwhile, Truman was following up on GATT.
End Part 7
14 February 2010, 8:45 amStan:
Today on Greece:
FULL
Oops, my money just got stronger in Costa Rica. Yesterday, it got weaker from the “safe haven” effect. Then those union people queered the pitch for a bailout.
This could, of course, change again. It’s what panic looks like. As to Germnans in ths street:
FULL
And for a peek into the issue of ever more universal currencies (a subject oft discussed here), The INdependent ran this (wiht a little pound-chavinism as background music):
FULL
So T-Bills may sell like hot cakes (safe havens); but what are T-Bills? Well, they are debts! Incurred by the US Treasury Dept, that you taxpayer people get to pay off.
And here is a good summary of a Christian analysis of debt.
14 February 2010, 12:42 pmCurt Kastens:
The last link is interesting.
14 February 2010, 3:17 pmI remember in the late 1990s many Germans were against the Euro because they feared the Italians or the Greeks would ruin the currency. The funny thing is that the Germans themselves have often been in trouble for breaking the agreements that led to the common currency.
I find it a bit odd that the financial problems of a country with 10 million people, the population of many American states can be so critical to the EU.
Yes, I have read a number of books on the history of Greece in first half of the 20th century. The thing is I and I think many Germans think of Greece as a wealthy country, one that should have been able to put its economic house in order. But no we were just guessing. I know that one should not judge someone unless you have beeen in their shoes. Neither I nor I imagine the vast majority of Germans understand exactly how this state of affairs came about………….
Stan:
Here’s (hypothetically) how the catastrophic cascade goes from Greece to the world.
Greece defaults.
Euro plummets.
International financiers seek refuge in dollar.
Dollar rises.
T-Bills issued, and they appreciate.
US Exports fall when dollar rises.
Trade deficit increases. US government under pressure from US manufactories and exporters (except agribiz, which is held to be sacred for subsidies, and whose dumping has become part of US foreign policy)
US needs a strategic devaluation (to wipe out value of debts to others, like China). [Then expats like me have less buying power.]
Anticipating these developments, US presses China to raise the value of the RMB… shifting the burden of the crisis from the US to China, but delaying the need to devalue the $$$.
Anticipating these developments, China stops collecting dollar-denominated assets (US debt mostly), and starts to convert them into… whatever. Not euros… not yet.
Lottas dead ends.
That’s why the fear of deflation is the fear that reflation cannot occur (which is what the bailout is, an attempt to reflate a bubble, which will make things far worse than they would have been).
China’s running a bubble, too.
Way down in the center of this scary circumstance, is debt.
14 February 2010, 5:00 pmCurt:
I do not think that there is any government in the world that does not have a budget deficit.
15 February 2010, 5:12 amSome countries obviously run trade surpluses, although I do havae doubts about how accurate the official reports about trade are. The only point from above that is often mentioned but I still find strange is why should the Euro plummet? If Georgia or North Carolina were going bankrupt would it cause the devaluation of the dollar?
Also even if a Greek bankruptcy would cause the Euro to fall that might actually make many in Europe happy.
Anyways another elephant in the room here, a main tenent and libertarian preaching point for decades, is that EVERYONE is, collectively speaking, bankrupt because the US government is bankrupt. When you coonsider not only what the (US)(and probably every other country’s) Government not only owes but also the promises of payments that it has made for the future it is clear that not all these promises can be kept.
So one the small scale, who is the Greek Government indebted to?
On the large scale who owns the worlds debt? Yes I imagine alot by the worlds top one percent of wealth with some large percent also owned by pension funds and insurance funds. So, I just had this thought, if we are all bankrupt, at least collectively speaking, the only thing to do is start over and wipe the slate clean. But some people will say today, some tommorrow, some next year, and some at some point in the future………….
Curt
Stan:
Read this book. It’s free.
15 February 2010, 8:53 amStan:
Also read this book. It’s free, too.
15 February 2010, 8:55 amLisa:
On Greece:
“Greece Signs its National Suicide Pact”
By Marshall Auerback
Agreement has been reached in Europe on a “rescue” package for Greece. But it’s no cause for celebration. It’s the kind of “rescue” sensation one experiences after paying out what’s left in one’s wallet when confronted with a robber with a gun. The insanity of self-imposed budgetary constraints will be manifest to all soon enough. Economists and the EU bureaucrats who advocate a slavish adherence to arbitrary compliance numbers fail to comprehend the basis of government spending. In imposing these voluntary financial constraints on government activity, they deny essential government services and the opportunity for full employment to their citizenry.
Score another one, then, for the high priests of fiscal rectitude. Harsh cuts, tax increases — this is by no means a recovery policy. The capital markets have got their pound of flesh. But Greece is no more able to reduce its deficit under these circumstances than it is possible to get blood out of a stone. Politically, it means ceding control of EU macro policy to an external consortium dominated by France and Germany. Greece becomes a colony.
The rest is at:
http://neweconomicperspectives.blogspot.com/2010/02/greece-signs-its-national-suicide-pact.html
15 February 2010, 10:25 amStan:
Hudson today on Latvia, worse than Greece:
FULL
15 February 2010, 3:39 pm(Boer) Tom:
@Curt
15 February 2010, 6:13 pmUp there you asked me for an explanation of why I say that time-value of money (in the sense that I use it) or profitability tends to cause inflation. I spent the weekend checking my own understanding, and I’ve come to the conclusion that it is a bit more complicated than that, due to the money-redistributive effect of banks (loaning out ‘their’ money, and creating money with fractional reserve to boot!), but it is a bit long, so I’ll post a link. (I had been meaning to set up a blog again…)
Lisa:
Taxation: A Secret of Colonial Capitalist (so-called) Primitive Accumulation
(rough draft—comments welcome)
In Volume One of Capital, Marx laid out what he called “The Secret of Capitalist Primitive Accumulation.” Capitalist accumulation must be preceded by some previous accumulation, “an accumulation which is not the result of the capitalist mode of production but its point of departure” (Marx, 1990, p. 873). Marx, identified the ‘double-freedom’ requirement necessary for capitalist production: workers must be ‘free’ to sell their labor-power and they must be ‘free’ from the means of production. The existence of a working class ready to sell their labor-power to capitalists requires that a mass of population have no means of production with which to produce their own means of subsistence. If they could produce their own means of subsistence, they would not be compelled to sell their labor-power to capitalists. A legal system is also required under which workers are freed from their feudal obligations and by law may enter the market to sell their labor-power. As Marx wrote, “so-called primitive accumulation, therefore, is nothing else than the historical process of divorcing the producer from the means of production” (1990, pp. 874-875).
The rest at:
http://www.cfeps.org/pubs/wp/wp25.html
or the pdf file:
http://www.cfeps.org/pubs/wp-pdf/WP25-Forstater.pdf
16 February 2010, 1:41 amStan:
David Harvey talks a lot about “accumulation through dispossession” (primitive accumulation), and Hornborg does as well, citing Rosa Luxemburg’s point that PA is not simply a feature of “early” capitalism, but a permanent feature of capitalism necessary for continued expansion/valorization of capital.
I would contend that debt has been a long standing method of legitimized dispossession.
16 February 2010, 7:41 am(Boer) Tom:
Debt is also a means to redistribute money to allow commerce to continue (accumulation would otherwise end in an impasse due to lack of money - someone must buy the product, even if it is not the worker creating it), without the accumulators losing the claim on that which they’ve accumulated money to lay claim on. As to colonialism, one of the effects in Kenya (I’ve been reading up on colonialism there) was for certain groups to decline under extraction (people having less children), and in one area at least, the colonial authorities changed the local rites by having earlier FGM in an area where it was prevalent, but carried out on young adults prior to the colonial intervention, and on children afterward - see “The politics of the womb”.
The colonial taxation-based extraction in Kenya also did fund one group, namely the white colonists, to the extent that the British Colonial Office was considering ditching them - the Black-owned farms were more productive, even when soil quality was taken into consideration (the colonists had taken lower-quality land in the main region of settlement in the South, known as the ‘White Highlands,’) according to John W. Harbeson in “Nation-building in Kenya; the role of land reform” (although he has an unseemly sympathy for the colonists and the colonial authorities that they staffed, accepts the Kenyan government’s claims of socialism without analysis, and accepts claims of ethnic hostility on their face, even though many of the ‘ethnic’ groups were newly minted by the British). Britain gave loans to ‘buy back’ the land from white farmers in these regions, and Kenya had to ‘earn’ the money to pay the British back. Harbeson does mention that the colonial extraction system broke down during WWII, as the colonial authorities could not effectively tax or account, and as a result, some black farmers made effective profits in that time. After the war, the system resumed, but with many people in a better position to resist.
16 February 2010, 8:55 amStan:
Aren’t credit and debt two different, but related things?
16 February 2010, 9:30 amStan:
FULL
16 February 2010, 12:52 pm(Boer) Tom:
But credit does not redistribute money to allow continued accumulation - see my blog post link to Curt above (the word `link’) for a set of thought experiments to convince oneself of this (there is a slight jump from non-consumerist goods to consumerist goods). Perhaps credit `drives’ the system insofar as it is a precondition for issuing debt, but without debt, other monetary redistribution or creation of money, accumulation must stop. With massive creation of debt, other patterns can emerge, but without debt (or other creation/redistribution of money), accumulation must stop. I don’t completely agree with Liu when he says,
“Bankruptcy only relieves the debtor, not the economy. If, as economist Hyman Minsky claimed, money is created whenever credit is extended, then the erasure of debt destroys money and shrinks the economy.”
What happens in a bankruptcy is the erasure of accumulation. The underlying problem is continued accumulation, which causes money distribution problems, leading to debt. Other than that, I found the Liu article clarifying. Is his writing clear to someone who hasn’t given the matter the necessary thought (is such a thing possible?), or is some exercise necessary to clarify it?
16 February 2010, 2:50 pmxenia:
It has often occurred to me that producers are the most despised people in the neo-liberal economy. “dumb” people really work and produce, “smart” people are upper level managers and CEOs. why produce and create if it’s easier to play around with money?
stan, in any future considerations about debt, do not forget student loan debt. it cannot be discharged as it is. i will not speak of myself, but good friends of mine have 80,000-150,000 total, no income, currently in second year forbearance (three max allowed as it is). as i said several times here, older folks have no idea what kind of a burden it is. and just by the way, some students at big schools get punished for wanting to unionize.
16 February 2010, 2:51 pm(Boer) Tom:
Sorry for dominating the thread.
@DeAnander
Regarding your first comment/query above. Consider, within what I say about debt (namely that money must be redistributed in order for accumulation to continue - also the above comment under moderation), and what Lisa says here, namely that an economy that decouples itself from the neoliberal framework can create money to fuel economic growth, though with the caveat that such economic growth requires production (and commodification). Let some national economy decouple itself from the neoliberal system, for analytical purposes. Let that economy have sufficient negative entropy and other economically extractable (in the short term) resources, to produce sufficiently for a short-term ‘economic’ recovery (until the fish is used up, the climate changes wipes that country out, or they befall some other calamity upon themselves and others). Then the matter is obvious - the government creates money, distributes it either to the poor would-be consumers, starting off a production-and-accumulation-fueled boom, until resource-depletion-fueled inflation brings their region to the end of its carrying capacity or the government-issued money ends up accumulated (stacking up of debts) thus slowing production, or they give it to their elites, who destroy at a potentially slower rate, due to the failure of the above boom to occur, as the money is pre-accumulated.
I believe that the solution to the analytical problem you pose is that the inflation is decided by the (productive, i.e. consumer-goods generating) consumption of negative entropy, which is determined by the redistribution of money in a fashion that requires production for elite/institutional accumulation, until resource-depletion and weather/climate based crop destruction and inhibition of cultivation dominates inflation, or we return to the current slower destruction of nature situation due to money distribution. The economy is partially determined by a physical-social consideration of future resource usage. The same must remain true within the broader neoliberal setup, although the system inhibits productive consumption of negative entropy (either way, unpleasant), thus setting us on a slower route of destruction.
16 February 2010, 5:14 pmCurt:
One of the links on the Greek debt crisis showed that the Greek debt to GDP ratio was 84%.
17 February 2010, 6:22 amThen I thought so why in the hell is the Greek situation being highlighted in the first place.
Something funky is going on right here and now. I rember seeing a debt to GDP ratio around 10 years ago with the other countries of the EU listed and perhaps some other developed countries like the US for compairson. I seemed to recall at that time some EU coutries had a Debt to GDP ratio of above 100%. Belgium was a country that came to mind. So I googled to see what the current debt to GDP ratio was for Belgium. I was able to go to a list on Wikipedia that shows Debt to GDP ratio for the whole world from 2008. OK the info is a few years old. But the information contained in the this chart clearly show that some kind of shinanigan is going on.
At that time JAPANESE debt to GDP ratio was 170 PERCENT. Has anyone been making a crisis out of JAPANESE bankrupycy?!!!! There were reports that Greeces debt would go above 100%. So what Italy’s debt ratio is above 100%. Furthermore I see no reason why there should be a magic number in which 101% of GDP is unacceptable but 69 of GDP is acceptable.
So I wonder for this con game over a Greek crisis to proceed to what extent does it require Greek collaborators? To what extent does it require German collaborators? To what extent does it require English and French collaborators?
Other countries with very high debt to GDP ratios include Zimbabwe, Singapore, Lebanon, and Jamaica. If one rembers that Italy, Belgium, Greece and Japan are high on the list it makes me wonder whether countries that take full advantage of thier abilty to run a deficit are doing something wrong or are they doing something right?
Curt
Stan:
xenia, your post reminded me of several documentaries that comment on student loans and banks hard-selling children on credit cards. Credit Card Nation, Default - The Student Loan Documetary, Maxed Out, Life and Debt, & In Debt We Trust; if y’all know more, send along.
I’m going to contact my home church in Raleigh and float the idea of running a weekly documentary program with theological conversations afterward. Story of Stuff, with Annie Leonard is 20 minutes long iirc, and available free online. Content-dense, and accessible.
MEF just released a great one on consumerism (with strong emphasis on debt), and they have a low res preview for Shop Til You Drop.
17 February 2010, 8:30 amLisa:
Person the lifeboats!
Last week (February 10, 2010), the ever-louder irrational rantings of Niall Ferguson about debt got another airing in the Financial Times in his article – A Greek crisis is coming to America. My two word reaction – which might be better than writing a whole blog was – Oh really! But the article demonstrates how desperate conservative academic commentary is becoming. The inflated self-importance of these characters quite obviously craves for ever increasing attention. However, not only does Ferguson demonstrate a poor attention to detail; a confusion about which monetary system is which; and a denial of history – but he also discloses such a vivid imagination that he might productively turn his hand to writing children’s fairy tales. Except then he would have to lighten up a bit or the kid’s would be having nightmares. As for the rest of us, we should be getting the lifeboats out if he is right. For me, I am staying on dry land except in the mornings when I chase those waves!
At the outset I would ask Ferguson questions such as: So since when has the US government entered a monetary system which takes the power of its central bank to set interest rates and issue currency?
And: since when has the US government abandoned its capacity to make fiscal redistributions between the regions that lie within its borders?
And: since when has the US government imposed rigid fiscal and debt parameters upon itself which require harsh pro-cyclical austerity measures to be imposed on them by non-elected officials when they are breached?
And: since when has the US pegged its exchange rate against the currencies of several other nations with vastly different industrial structures?
And: since when has an economy which is $US14.2 trillion in size (US GDP GDP) been anything remotely like one that is about $US383 billion in size (Greece GDP 2008)?
The rest at:
http://bilbo.economicoutlook.net/blog/?p=8147
18 February 2010, 3:46 pmCurt:
It has recently been reported that the countries of the EU will give about 30 billion (give or take 30 billion?) in “bailouts”. But since all of the other countries of the EU are more or less as indebted as Greeece does this really make any logical sense. Furthermore by sending the 30 billion all of these countries must increase thier own debt levels and become even more like Greece.
22 February 2010, 4:51 amI had made some comments earlier about this crisises “clearly being caused by the fact that the Greek Government was trying to please everyone”, or something to that effect. I must have made those on another thread.
Of course I take those words back but I do not appologize for making them in the first place. When reports start appearing in the media that there is a Greek financal crisis any normal person, of which I am one, would believe that there really is a Greek financial crisis.
I am in a fowl mood this morning not because I have to eat crow but because of how the crow ended up on my plate for breakfast. I was wrong. I was wrong becasue I did not check on facts. But most imporantly I did not check on facts because I did not know that this was a story that needed the facts to be checked. That puts me in a fowl mood because it means that there is nothing that one can take for granted when it comes from the MSM.
That puts me in a really fowl mood because it points out how fowl human nature generally is. Did you know that the German word fowl (spelled faul) means lazy? I did not know, or had temporarily forgot some basic facts, at least facts (debt levels) as far as they are broadly reported. Was I lazy for not checking on them before I open my mouth so to speak? I do not work with these concepts on a daily basis. Yet there are many people including reporters in the MSM who do. You would think that at least one of them would sound an alarm.
So this goes back to a couple of comments on human nature I have made in the past days or weeks. First why it is hard to be opptomistic. When one sees a whole industry completely betray their their public trust it is rather hard to maintain any optomism about the capabilities of the human race resist illegitimate authority. Second it reinforces my thinking that even if the means of production were owned publically the all of the different departments would be fighting each other over their share of the procceeds of the corporation. Third this reporting on the Greek debt and Stans comments on another thread about a rise in reporting about Eco-terrorism imply a type of advanced planning and coordination that can only come about as the result of a centrally controlled conspiracy.
If doing the right thing, acting for the general welfare, was easy for humans to do, the human race would not be in the place that it is now. That puts me in a fowl mood because it is pretty strong evidence that I am fighting a loosing battle. Just like the Minnesota Vikings my political team is cursed never to win the Super Bowl. But did you see that one play before time ran out in the NFC championship game where after making a good run Adrian Peterson fumbled the ball and yet managed to recover his own fumble just milliseconds before 3 Saints fell on the ball? Damn, that was exciting. I almost had a heart attack.
So as our planet collapses I can look forward to a lot more tradgedy and perhaps a little drama. It seems the Gods know almost nothing about comedy though.
I think that even if they came to me for advise on comedy they could do better that what they are doing now.
Curt
(Boer) Tom:
@Curt
22 February 2010, 12:38 pmIs it a question of ‘your team winning’? Or do you learn and teach skills, build, renew and occasionally terminate friendships, and create an economy of resistance? To give you an idea of life in resistance, take the anti-apartheid struggles - there is a black town on the east rand (eastern Johannesburg metropolitan area) called Mamelodi. Between fighting between factions of the various resistance movements (between a faction that wanted to simply make the area ungovernable through their own violence, and a faction that was more bent on recruiting to MK and other bodies and achieving a more popular resistance) and violence from the apartheid security forces (they’d come in with tanks and APCs, torture children as elsewhere in the back of APCs etc.), the resistance groups were largely dispersed. The apartheid government was able to declare ‘victory against the terrorists’ and set up some ‘model projects’ that were ‘developing’ the area (this was around 84-87). Within four years, the apartheid forces were outclassed in Angola/Namibia, and the regime requested negotiations, resistance members were freed, restrictions including national segregation were weakened and/or dropped. New movements arose to deal with problems that the old order had prevented from being addressed (e.g. HIV, rape). If you are too focused on the TV and whether your side is winning or losing, you have no social connections of resistance, and achieve nothing. The state and other forces must declare victory or being-on-the-road-to-victory as a matter of course (if you want some amusement, go read up on the blogs of veterans of the border war/grens oorlog, many of whom still insist that the National Party of apartheid had committed treason by sacrificing the victory that was at hand, where they cite a battle at Cuito Cuanavale - these guys seem to have control of the wikipedia page on the battle - where they claim they roundly defeated the Cuban forces - a few weeks later, Cuba was controlling the skies over Namibia, thus leading to the negotiations). As such, claims of victory or defeat should be understood as propaganda to make you feel lost up front. And another hint: Remember that your opponents are human - be sympathetic to them (including the police! Many in the resistance knew how to handle police - condemnation with sympathy without revealing information - and occasionally even recruit them away or for specific goals - I call police forces and armies terrorist, but I do the same to the faces of off-duty cops and on-duty soldiers, and I try to do so sympathetically, i.e. by explaining their moral duty wrt the actions of their organizations as I see it. Certain apartheid police did on occasion do favours, though most were brutal and some e.g. ‘Spyker’ van Wyk would sexually torture political detainees, thus his nickname) - Steve Biko was actually very sympathetic to us Afrikaners and RSA English - which is likely why he was tortured to death - it takes a sympathetic understanding of an opponent to undermine that opponent effectively.
Curt:
Tom,
Another way to understand my comments about losing and winning is, learn to enjoy the journey not just the desitination.
“It takes a sympathetic understanding of an opponet to undermine that opponent effectively.”
That is an interesting point. If it is true I have certainly been guilty of routinely breaking it. I have no doubt that it is true as an interogation technique. I read the book about this one famous German interegator, who lived in South Africa for many years before the Second World War, who managed to always get the correct answers from the allied soldiers that he interrogated without ever using torture.
22 February 2010, 4:38 pmCurt:
Does anyone have any thoughts why the powers that be have decided to make an issue about Greek debt in the first place. I know that the EU rules say that a country can not run a deficit of more than 3% of GDP in one year but that is kind of stupid if the country does has an over all lower debt to GDP ratio than other countries in the EU.
23 February 2010, 5:51 pmFurthermore I suspect that some countries have brought themselves in to line with this requirement in the past through smoke and mirrors. I do not have any examples may be some one can help me out.
Curt
Stan:
Diane Johnstone on Greece.
1 March 2010, 12:57 pmCurt:
I wonder if, perhaps it is more than wonder, perhaps it is suspect, the fact that the Greeks now have a suppossedly left of center party in power is the reason for the timing of this “crisis”. Well there could be multiple reasons. What I found most interesting in the article by Diane Johnstone was that Greece cheated to get in to the Euro zone in the first place. How many other countries cheated and by how much?
2 March 2010, 7:04 amIs money not at minimum a claim on resources? The EU tries to put a few basic rules in place to prevent cheating so that one country in the EU can not get more than their “fair share” of resources by having a bigger “credit card limit” so to say. 3% a year and 60% of GDP, supposedly.
What stops states in the US from having vastly different debt levels? What stops counties and cities from having vastly different debt levels? If Oregon ran up a debt 125% of GDP would California and New York and Texas complain? Now what if there are written rules against Oregon going above 125% of GDP-debt ratio would it be hard for them to make it appear as if they were in compliance. Could they not take a bunch of programs that have been a state budget responsiblility and make them a county responsibility? That would transfer debts to the county level off the states books. Likewise counties could transfer programs to the cities. Can Oregon go bankrupt? I would be willing to bet that any finacial institution would loan money to Oregon no matter what Oregons debt level was because they would figure that in the end the federal government will bale them out.
If that happened would people in the other states be pissed? I would think so. I would be as if collectively speaking the people of Oregon were working as truck drivers and living like they were doctors. But if every state government is cheating then not to cheat yourselves would be irresponsible. Cheating becomes a legitimate act of self defense. Is it possible to get to a point in which 50 Governors or 25 heads of state think that all of the other Governors are not cheating, or that even if they thought that the others were not cheating would not be tempted to cheat themselves because they had some desperate need that was not being met in their area of responsibility? Can this problem be overcome with centralized control? Yugoslavia was once centralized but some of its parts thought that they were getting a raw deal.
Right wing Republicans and Libertarians say that laws against Cartels can be gutted because they will be broken up by a temptation to cheat.
Am I going anywhere with this? Looks to me like I am lost in the forest going in circles.
Save me before I drown in the swamp.
Curt:
The situation in Greece and other countries in the EU may cause some people to reconsider whehter or not the Euro should continue to be a European currency.
3 March 2010, 10:02 amDo not forget if the Euro is gone it means everytime a Dutch person wants to come to Germany or a Belgian to France or a Swede to Spain money will have to be exchanged. That again means profits for the banks. Just as bad is profit for the banks whenever paper from Finland is sold outside of Finland and profits for the banks whenever cars from Germany are sold outside of Germany, and profits for the banks whenever shoes from Italy are sold outside of Italy. I see that as an unacceptable disadvantage that banks should be allowed to take a cut of every intra state transaction in Europe. Can rules be written so that if each country had there own currency there would be no transaction costs for cross border trade?
m.c.:
I recently found out that in the U.K. you can exchange money at any regular post office without a commission fee. They are a E.U. member but not on the Euro. They usually have one line designated. Wouldn’t it be nice if US post offices did the same thing.
3 March 2010, 4:25 pmCurt:
MC, that is very interesting. I have never seen a service like that anywhere else. Of course I never thought to look. But you would think that if there were a service like that anywhere else you would be able to read about it somewhere. Also that if it had existed very long that knowledge of it would spread by word of mouth.
4 March 2010, 11:12 amm.c.:
A girl that worked the desk of a London hostel told me last year; me on my 5th or 6th trip to England. I thought of trying to bring global finance down to the level of a single average-joe consumer.
4 March 2010, 4:26 pm