Two Crises - One Depression
The world economy is facing two distinct crises, one in the financial sphere and one in the productive sphere. While interlinked in their creation, they demand different remedies.
The creation of these crises originated in the financial part of the economy:
Over the last 15 years, increased competition (within the industry and increasingly from non-banking institutions) and the reduction of earning from the commoditisation of products forced banks to rely on “voodoo banking” - performance enhancement to boost returns.
Voodoo banking created money out of nothing, pushed it down the throats of gullible consumers and sold the such created debt assets to gullible investors.
The regulators stood by or were even complicit in the gigantomaniac Ponzi scheme. The fictitious financial industry grew ten times bigger than the real one it was betting on.
Driven by brutal marketing the consumers indebted themselves more and more. They used the money to buy more and more stuff. Houses, cars or whatever China could produce for them. This artificial demand created production capacity that under more benign circumstance would never have been created. World wide car building capacity now by far exceeds plausible demand.
But finally the consumer was exhausted. Even at 0% interest and no income questions asked there was no one left to take on another loan to buy another house at astronomic prices. The bubble burst.
The financial pyramid came down first. Investors found out they had been lied to. Banks found they held the toxic stuff they had created in their own portfolios. Lehman crashed and took everyone with it.
The feds and governments of this world try to pump money into the financial industry black hole to reanimate the bubble economics. This will inevitably fail. The financial industry is mostly insolvent. No one will lend to another financial entity unless it knows it will get its money back.
As everyone by now recognizes, no one can trust the statement of a bank CEO, balance sheet numbers, the rating agencies ratings, the regulators neutrality, finance media talking heads or politicians.
No one lends in such an environment no matter how much money is thrown into the game. Bernake's quantitative easing will fail.
In the end all financial business is based on trust. Trust in the system and in counter-parties is gone.
The only way to revive some kind of financial system is to sort out the bad apples, to open the books, to re-regulate to very clear and simple standards. And yes, throw some folks into jail. Unless that gets done, trust will not come back.
The real world has a different problem. The artificial demand created by debt peddled to the consumer has evaporated. The production capacities that were created to satisfy that demand are now standing still. Unless debt gets forgiven the consumers will, for many years to come, not be able to go on another buying binge.
Lots of people will now become unemployed. The production capacity will rot away one way or another just like many of those cheaply build overpriced houses.
There is no way to avoid this now. The government can create some demand and put some people to work with infrastructure investment. But it can not replace all the artificial consumer demand that has withered away. If it tries by pumping up money supply it might well create an immense inflation in the mid of a depression.
My grandfather left me some Reichsmark notes. One has 100 million printed on it. But before it was issued the 100 million got overprinted in red with 1 billion. It may have bought a loaf of bread at that time.
The fixing of the financial realm will come when authorities get real with re-regulation and shutting down zombie institutions.
A fixing of the real economy is not possible. Production capacity has to shrink back to a more realistic demand level. Public programs can help to soften the slump. What can and should be done is to help those who lose their jobs, be that by public works or some payed retraining. To let wages fall, as soon some will argue for, will only decrease demand further.
Such crashes as the current one happen every century or so. Usually after the generation that lived through the last crash is gone. Then people forget and redo the errors their ancestors committed.
Unfortunately the politicians that have the task to find ways out of the crisis also redo the errors their ancestors committed.
Instead of cleaning up the Augean stable that the financial industry is, they feed the animals to produce more dung. Instead of letting over-production capacity decay, they will try to keep it going through subsidies and tariff barriers. It will take years until some sanity will get into their action.
Stable societies can survive such storms. Unstable societies may see large revolts and wars. Some stable societies may join in on those wars as domestic Keynesian programs. To created demand at home, to put unemployed into uniforms and in hope to capture this or that natural resource.
Let's hope that will not happen.
But I am not optimistic anymore. This is not just another recession. This is a depression and a global one. Not a great one, but greater.
Posted by b on December 17, 2008 at 19:47 UTC | Permalink
oh I forgot
"Hegel bemerkte irgendwo, daß alle großen weltgeschichtlichen Tatsachen und Personen sich sozusagen zweimal ereignen. Er hat vergessen, hinzuzufügen: das eine Mal als Tragödie, das andere Mal als Farce. Caussidière für Danton, Louis Blanc für Robespierre, die Montagne von 1848-1851 für die Montagne von 1793-1795, der Neffe für den Onkel. Und dieselbe Karikatur in den Umständen, unter denen die zweite Auflage des achtzehnten Brumaire herausgegeben wird!
Die Menschen machen ihre eigene Geschichte, aber sie machen sie nicht aus freien Stücken, nicht unter selbstgewählten, sondern unter unmittelbar vorgefundenen, gegebenen und überlieferten Umständen. Die Tradition aller toten Geschlechter lastet wie ein Alp auf dem Gehirne der Lebenden. Und wenn sie eben damit beschäftigt scheinen, sich und die Dinge umzuwälzen, noch nicht Dagewesenes zu schaffen, gerade in solchen Epochen revolutionärer Krise beschwören sie ängstlich die Geister der Vergangenheit zu ihrem Dienste herauf, entlehnen ihnen Namen, Schlachtparole, Kostüm, um in dieser altehrwürdigen Verkleidung und mit dieser erborgten Sprache die neuen Weltgeschichtsszene aufzuführen. So maskierte sich Luther als Apostel Paulus, die Revolution von 1789-1814 drapierte sich abwechselnd als römische Republik und als römisches Kaisertum, und die Revolution von 1848 wußte nichts besseres zu tun, als hier 1789, dort die revolutionäre Überlieferung von 1793-1795 zu parodieren. So übersetzt der Anfänger, der eine neue Sprache erlernt hat, sie immer zurück in seine Muttersprache, aber den Geist der neuen Sprache hat er sich nur angeeignet, und frei in ihr zu produzieren vermag er nur, sobald er sich ohne Rückerinnerung in ihr bewegt und die ihm angestammte Sprache in ihr vergißt."
Posted by: outsider | Dec 17 2008 20:22 utc | 2
The regulators stood by or were even complicit in the gigantomaniac Ponzi scheme.
The investigator investigating Madoff was having sex with Madoff’s niece, Shana Madoff prior to their marriage, the supervisors were aware of it apparently!
Bernard Madoff mentioned the marriage last year as he boasted about his close ties with regulators while speaking at a conference in New York. The Washington Post reviewed a digital video of the speech.
Posted by: Hans Blink | Dec 17 2008 20:23 utc | 3
b is absolutely astute on this. this will be a greater depression affectin more people, more severely
we are witnessing two things immediately - the commencement of an insurrectionary politics articulated well by the youth of greece & their allies - it is happening even inside the belly of the beast - with the occupation of factories - what we are also witnessing is an unprecedented attack on working people
this will be a slow burn but capital has no real resolution to its irreconcilable contradictions except repression
Posted by: remembereringgiap | Dec 17 2008 20:31 utc | 4
Yes, b, the financial industry needs to be punished. I wrote yesterday in another thread that the excess money needs to be flushed out of the system. As your grandfather did, you will experience hyper-inflation which should do the trick.
There should be some better ways to achieve the aim, especially as lots of people will be hurt along the way as money looses its value.
What nearly all governments did wrong during the crisis was propping up the banks, the rationale given is that banks are needed to lend to industry and commerce and a big banking crash would cause a crash-stop of the whole economy. Well, the strategy failed: The banks took the money, and continued to play their games: buying weaker competitors, gambling on the stock market, whatever. Only companies of the real economy are hurting as they are not getting any of the windfall.
It would have been a lot better not to put any money into banks: Let creative destruction have its day. However, since all sectors of the economy need to have access to credit, the money would have been needed anyway: To lend it out to all the businesses which are hurting now because the banks are hoarding the loot. Meaning, that some state-owned banks should have been created to take over as needed.
I know that the solution has some gaps, especially the short time for the setup and that a new player does not know which customers are creditworthy and which are not. But right now the money was given to entities which did show that any trust in them was misplaced - and which continue to abuse any trust into them - is this so much better?
But well, the time for this chance is past. The hundreds of billions are pledged, and will be lost in good time. But the current system is propped up for one or two more years.
I really do hope that someone is using this time constructivly; that someone is putting together the framework of a better world in the time bought by so much money. When the masses with the pitchforks and the torches are banding together to demand bread, then there will be an opportunity and there will be the force needed and there will be the need seen by everyone to get all the laws passed which get shot down by lobbyists in the current system. Be the new laws good or bad - and I would rather have good laws to replace the mess we have now.
Posted by: No So Ana | Dec 17 2008 20:32 utc | 5
@outsider - your quote in German is from Marx's The Eighteenth Brumaire of Louis Napoleon
The work is the source of one of Marx's most quoted statements, that history repeats itself, "the first as tragedy, then as farce" (with the former referring to Napoleon I, the latter to Napoleon III): "Hegel remarks somewhere that all great world-historic facts and personages appear, so to speak, twice. He forgot to add: the first time as tragedy, the second time as farce."I never stumbled over the actual Hegel quote Marx was peddling there. Maybe it does exist, maybe not. Anyway - I don't agree with Marx on that one. Nice rhetoric - but facts?
History does repeat itself in that human behavior, social networks and culture form in the same way then and now and produce the same results then and now.
To see one as tragedy in one instance and the other as farce is judgment, not fact. Indeed I believe a certain pattern that was devastating in its first historic instance but not 'deadly' enough may surface again and be more deadly BECAUSE it was not deadly enough in the first case.
In such a case the tragedy would be the forgetting of the lecture, the farce the first instance of the happening.
My suggestion for naming the debacle: The Great Collapse
If we run out of a certain level of energy while in this mess, do youall have any idea of how screwed we'll be? There must be a certain amount of electricity just to keep our modern society on life support. Shit, I can't even burn the fuel oil in my tank without electricity -- that's why I have a wood stove as backup.
"The time is sad, the time is mad and everything is coming unglued..."
Posted by: Chuck Cliff | Dec 17 2008 20:53 utc | 8
the more telling marx explains that "all that is solid melts into air" - we are living through that moment
Posted by: remembereringgiap | Dec 17 2008 21:03 utc | 11
History repeats itself, to paraphrase the caustic but astute English historian AJP Taylor, people learn from history how to make new mistakes. World War II happened not because people forgot World War I, but because of its alleged "lessons." Should something insane break out again, I am sure that the path will be paved with the cries of "Munich," "appeasement," and "never again."
Posted by: kao_hsien_chih | Dec 17 2008 21:07 utc | 12
b, my typing is so horrendous i feel timid to correct you & given the encylopedic range you've been riffing for some time now i feel even more timid
i think the quote about repeating history is neither marx nor hegel but is normally credited to that spanish american cretin george santanyana
Posted by: remembereringgiap | Dec 17 2008 21:07 utc | 13
though i share a love of spinoza with george
& you know i've read my hegel - once as a mere slip of a thing - as a student stalinist & again in french in the early 90's & i've never come across that phrase - maybe our resident theologian slothrop knows its source
Posted by: remembereringgiap | Dec 17 2008 21:19 utc | 14
What here, in this blog, is described is simply the process but not the cause or reason for the present transition. All the pleasure of thinking consists in transitions and now we are feeling one. Our society has fallen into fantastic fraud because profit is impossible and our society continues to base itself on the notion of profit. Because profit is impossible taxes have to be lowered so that we may think that we are accumulating more money than we actually do, money is created out of "fiat pecunia" Eventually the truth appears in the way of recession depression collapse ruin destruction whatever. A new society will appear, not a perfect one, original sin, simply different. What it will be is hidden, we will be able to analyze it when the transition will have occurred. History does nor repeat itself, because history is the accumulation of experiences all of them equally valuable. The amazing legislative stupidity of the WEST T.M. for the past fifty years will be probably corrected.
Posted by: jlcg | Dec 17 2008 22:21 utc | 15
#13, R'Giap, my favorite version of this is Mark Twain (Samuel Clemens):
"History doesn't repeat itself, but it does rhyme."
Posted by: Obelix | Dec 17 2008 22:51 utc | 16
The only plus I see coming out of the economic crisis is the demise of the ideology of the unrestricted Free Market, and those who saw any form of government regulation as undue interference in its divine efficiency.
Installing a traffic light at a busy intersection is not undue interference in our freedom of movement, it is just ensuring that the traffic system works for everyone, not just those with the biggest cars.
Installing regulations, checks and controls in the financial industry is not government interference in the right to free trade, it is just ensuring that the market works to everyone's benefit, not just those with the biggest portfolios.
Posted by: ralphieboy | Dec 17 2008 22:51 utc | 17
The real economy is indeed in deep doo-doo. Reviving consumption will be a huge problem.
Less affluent Americans have been slammed, so they need all the assistance they can get. But that is not the way the political system works.
I believe the Americans with discretionary income will not start spending anytime soon. Fist is the confidence problem. As long as stocks and real estate prices were rising, they felt wealthy enough to consume. Now they don't feel wealthy anymore, so they will stop consuming until times are better (lagging indicator). The second part of the problem is what they were consuming. Long ago, the affluent had adopted the Martha Stewart approach to living--constantly buying not because they needed stuff, but to perfect their living environment. 35% of households have three or more vehicles. They don't need to buy more vehicles any time soon, so auto consumption will be in the toilet for years. The same is true of high end housing. Industry reports that there is enough supply on the market to satisfy demand for decades, particularly size baby boomers are going to start downsizing, if they can afford it.
The crux of the issue is how to stimulate demand among affluent buyers, whose needs have already been sated. (Good luck!) Failing that, how do you change the political system to allow the overt transfer of money (the loathed income redistribution) to the less affluent who desperately need it?
Posted by: JohnH | Dec 17 2008 22:53 utc | 18
There was a segment on BBC World Service business this morning that addressed the topic of Christmas bonus payments in the financial community. One party who was interviewed unwittingly drew a circle around the problem when he defended huge bonus payments because they "encouraged originality, daring and innovation in banking".
That's what's wrong. Banking or "financial services" is viewed as an end in and of itself now--something to create vast amounts of money for principals and speculators. Should not the goal of banking be that of providing a dependable and steady source of capital that enables society to operate?
I don't want a banker who's daring or innovative when writing mortgages. I want him (or her) to collect the necessary data, verify it, and crunch the numbers so that the bank gets a fair return for its money and someone gets a house that they can afford.
Supply of capital should be like the supply of electricity, water or food--dull and absolutely dependable.
There was a time when "banker" was a synonym for "conservative".
Posted by: Obelix | Dec 17 2008 23:08 utc | 19
B, you basically summarised most of my thoughts and ideas about the current mess, really good post.
The only remark I'd make is that, environmentally-speaking, we definitely don't want to get back to the 2007 level of overproduction and global waste, and should wait until productivity is massively reduced before going back to rebuild something.
Ralphieboy: If the crisis is big enough, laissez-faire capitalism is dead. That said, if the crisis is really big enough, not only will capitalism be doomed and tarnished for centuries, but other less nefarious bits of Western societies might suffer a similar fate - dependaing on what happens, I wouldn't be totally surprised that in the next decade, many people will be disappointed with how "democracy" and "freedoms" utterly failed to deliver and wrecked so much and so many in such a short time. What worries me is that Wallerstein definitely thinks this is a possible outcome.
Posted by: CluelessJoe | Dec 17 2008 23:51 utc | 20
Re: #8
That is what angers me the most -- I did not choose to be born into a society that makes itself overly dependent on technology and capital. But here I am. I do not choose to live in a house with no fireplace (ubiquitous absurdity if there ever was one) ... neither do I choose to be paid in fiat paper.
The anger of my generation is boiling over in Greece, but it is pointed in more or less something like the right direction. When the anger boils over in America this will not happen. They will blame whomever they are told to. b is spot-on with his description of war as domestic Keynesian program.
Posted by: Cloud | Dec 18 2008 0:06 utc | 21
I think that in a lot of industries (but automobiles is the poster child) overcapacity was festering there even before the final credit bubble.
Posted by: ...---... | Dec 18 2008 0:10 utc | 22
The major difference I see between this crises and the crises in the 30ies is our ecological footprint, the burden we place on the planet. If World wildlife federation is right - and I suspect they are - we have increasingly been overconsuming natural resources. We are now consuming about the output of 1.3 planets a year. In the 30ies Keynesian programs could get the average consumption up, and everybody could get richer. Took quite some destruction of previous production to pull it off, but it was possible.
Now we are entering a phase were the average consumption will - cause it must - shrink. Or the population must be shrunk drasticly, and it wont be the overconsuming hogs taht will be killed. The classwar over who will bear the burden started years ago, and the rich are winning. So while wars might be in the offing I do not see any repeat of the prosperity of the post-war era.
Posted by: a swedish kind of death | Dec 18 2008 0:49 utc | 23
if we would all take a moment to ask in personal sincerity what it is that fulfills us, thats how we start to heal ourselves & our environment. We do'nt ask ourselves that question enough if ever.
Posted by: jony_b_cool | Dec 18 2008 0:57 utc | 24
The American people have so thoroughly internalized the concept of being ruled by an aristocracy, be it religious, financial, military, media, or political that they will never stand up for themselves against the corporatized State, or the thieving rich until forced to by horrendous events.
Until they are forced to by loss of other things they thoroughly identify with, like driving to the job, having a job to drive to, a house in suburbia, 24-hour electricity, affordable food, and the illusion at least of upward mobility, even if only for the children.
Only when it becomes clear that this generation is raising its children for a tighter and deeper slavery to inherited wealth, will despair finally drive revolution. Until they have nothing left, they will happily hang separately, not together, for every American is exceptional, and every one of us is above average. Every one of us is 'pre-rich,' just waiting for our Horatio Alger story to come true. Any time now.
What's particularly missing in 'we, the people' as an aggregate point three billion is a solid body of knowledge and understanding of how we want to govern ourselves. A copy of "Common Sense" and a copy of the Constitution and a set of brass knuckles should be in the back pocket or purse of every American by this point. Yep, I don't see it either.
As a population, we don't want to govern ourselves. We want to hand that off to the pastor at the corner church, to the mayor of our particular WalMart-welcoming Wasilla, to the banks that are too big to fail and so are beyond the law, to the media, to any Ivy League graduate, to the governor and senators and to the President, to the Unitary Executive.
To a savior.
To anybody but we. We won't do for ourselves what only we can do for ourselves.
This nation has a deeply held messiah complex, rushing into economic and political slavery as fast as it can be arranged for us. Hell, we're happy to wait in line while they get it ready. We will welcome a Fuhrer in pants or a skirt.
If you asked the average American today to write a new Constitution that set things right and fair for a self-governing people, the average answer would be regurgitated anger at some ethnic group, some economic class, or some foreign foe.
This is the nation that elected Reagan twice, three Bush Administrations, put up happily with all their thievery and outright class warfare, and most recently has watched a few trillion of their dollars disappear into the black holes of insolvent banks with not a word of explanation being allowed them -- only the IOU.
This is a seriously, seriously stupid and dependent populace, as a whole. They will respond to the coming hard, hard times with stupid anger, easily directed by their Jesus, their Governor, their President at advancing their own slavery and poverty.
The American solution to any problem is to make war on it. Drugs, Poverty, Illiteracy, Energy, Pollution, Drunk Driving -- we get all wound up about it, throw money at it until it looks like something is happening over there, and then change the channel.
Rest assured, the solution to this economic depression will be resource wars, and heavy repression of domestic politics at home. The survival of the State and the People will be held sacred above anyone's liberty.
Here comes the Fatherland.
Posted by: Antifa | Dec 18 2008 2:28 utc | 26
outsider 2: (roughly) "To translate the novice who learned a new language has always returned to his native language, but the spirit of the new language, he has only appropriated, and freely in it only he can produce when he was without back memories in their moves and to him in their native language forgets."
Good comment. Exactly right. You can never adapt to the future until you're so far into it, you've forgotten your past. None of US have any "go-forward" from here. All those who survived the Great Depression are in nursing homes by now, and the first to go under, literally. Our children will find a go-forward, just as my father went forward from his childhood in the Great Depression, working like a zombie, pinching pennies so tight they bent, then committing suicide after he was forced to retire and realized the life he might have had that he had missed.
Our children will suffer horribly. Beyond that we can't know, thankfully. Whether society learns to re-govern itself, or devolves into animist worship, we can't say. We can only crowd around the shopping malls like latter day cargo-cult Papuan's, waiting for something, anything, to break the awful stillness of the snow falling.
r'giap 4) Yes, the Mother of All Migraines, but in ways we can't possibly fathom. There is more currency in play now that ever in all history, and more people and greater disparity than ever,...ever!! If the Pharaoh ran out of gold and slaves, the Africans didn't starve to death, the Papuan's didn't run out of petrol, the denizens of Mexico City didn't have food riots then disappear into the jungle. They will now. The likelihood is so severe, I doubt any human can comprehend it without falling back on nursery rhymes and grimm fables, as No So Ana and b choose to do.
On the news tonight, the $300B housing bailout has benefitted precisely ... no one.
That'd be a bureaucratic administrative overhead of 100% so far, AKA "Rio Grande".
Rio Grande - n. To so confabulate and administrate an aid program that not a single penny comes out the other end of the pipeline. (adj. To "Rio Grande" a program.)
NSA 5) and b - Your chatter about 'flushing the financial systems' and 'declaring CDSs null and void' are like those Obama groupies screaming 'happiness, happiness, happiness' in a human wave at some soccer stadium. All it does is enervate the viewer to thinking that somehow, someone, somewhere will bring retribution to Wall Street, Fed and WA DC. Just click your heels together three times!
News for you. Ain't gonna happen. The establishment circles the wagons.
The falling-to-zero Fed interest means all the retirees are gonna be smoked out of their Treasuries, the bank vaults will fill up with cash, Cadillacs will go on the block, nursing homes and hospitals will "round trip" the destitute to some park, if they get their hooks on you, FrankenPharm you up until you're frozen in place.
The $T institutional bailout won't change that metric one iota. Retirees will still be broke and pulling their savings principal out in $10,000 gulps to live on, but again, the government bureaucracy will just suck that $T up like it did the $300B.
It's the Politburo versus the People now. You're either with them, or you're broke.
A potato peeler. A rag picker. You kids are too young to remember that, aren't you?
You've never seen an apple cart, any of you. Or a knife sharpener cart, ding, dong.
US R SOVIET NOW, FO' SHO'
Posted by: Yellow Tiber | Dec 18 2008 2:45 utc | 28
The only way to revive some kind of financial system is to sort out the bad apples... if any good ones are left. Bad apples drive out good
To let wages fall, as soon some will argue for, will only decrease demand further.
One would hope that the pain could somehow be shared "fairly." In that imaginary scenario, everyone's income would fall somewhat, but no one would end up without any income at all.
Excellent article b. I think I've seen more and more mention in the mainstream press broaching the idea of voiding all credit default swaps. Anyone have more news on this front?
If they aren't voided, I predict the US will hyperinflate them into extinction anyway. Crazy that our leaders would burn down the entire economy to preserve the balance sheets of their banker friends, but then this is the country that "destroyed the village in order to save it."
US$ RIP.
Posted by: JoeJoe | Dec 18 2008 3:26 utc | 31
Unfortunately, it now seems to me that - due to a confluence of enroaching circumstances - World War III is now essentially inevitable.
2-5 years.
And I fear that WWIII will be far more devastating than WWI or II.
I hope that I am wrong.
Posted by: Al | Dec 18 2008 5:10 utc | 33
@ #33,
Actually -- and sadly -- I doubt that your wrong. That is except for WWIII -- what's in the tube is of a different order than the conflicts between nat'l states we, in hindsight, call WWI, WWII. What I see is Terrible Times and Ultimate Wars conflated with global catastrophe.
It's kind of strange, don't you think? The world totters on the brink of global catastrophe and total, endless war.And how is it we all react?
We all go out and shop for more
of them shiny things that glow in dark
and tickle the dragon's tail!Listen to the night winds wail!
Posted by: Chuck Cliff | Dec 18 2008 5:45 utc | 34
The problem is not 'overproduction' (if we ignore for a moment the environment), the problem is that the casino game called 'free market capitalism' that is being played mainly to the comfort of a few thousand big, very sick, egos has entered in a new phase. The pieces of this game, the allocation of resources, the game score, aka money, have started to change hands at a rapid pass. The casino game doesn't really cares about people so effects of the game on people are not taken into account by the players.
If the problem was just 'overproduction' you wouldn't end with a few more millions without access to the products required for their survival. The products would still be there. There is no physical law that says that you have actually to work (play your small act as a piece of the game) or work so much as before to actually receive a part of the world production. That's just one the casino game rules.
Even in an utopian world were all the production was done by machines with unlimited access to resources and energy would we would still need to work 40+ hours a day in some silly 'service' sector or similar because the casino game rules say so.
Try to discuss or solve the problem from inside the framework of the game is pointless and self defeating. The fault is in the game. Not in the effects on the real world of the game rules.
I was just reading an interview to a chinease expert (chinease born, exiled on US, paid by the usual right wing think tank) in El Pais telling about how the chinease communist party faces disgregation and China desintegration due to the economic crisis. Of course it may happen. Stated reasons: leadership disconnection with the needs of the people, accumulation of power and resources on very few hands, lack of social policies, widespread corruption, use of repression over dialogue. Of course the solution would be to bend over to a 'free market fake democratic US puppet' government I guess.
Guess what, all those reasons apply to the US and other western powers. The only difference is the political regime: fake democracy, absolute control of the media, no disdain to the usage of violence to keep the 'public order' vs dictatorship, absolute control of media and no disdain to the use of violence.
But you won't heard about this from the periodist or the expert. It just a wonderful word game to shift the fears of the crisis over there far from here. The crisis will be worst for those fake communist, those foreigners that are stealing our jobs than for us in our safe casino economy.
Spain along is suffering from a big housing and debt bubble. The economy was only propped up by low euro interests and speculative housing building. Spain is a service economy (tourism) with no actual real industry (but some disappearing fabs from international car or electronic corporations that were created in the 60s and 70s due to the cheap wages when compared with other european countries). With the unemployed rising to 11% and no end in sight I guess we need to look and how awful the crisis will be over China. And of course, the other article is about how we need to 'consume' to keep the casino game working. There is crisis because people still employed (but many with prospects of losing their jobs, reduced pay or increased spending) are afraid and are not consuming enough.
Posted by: ThePaper | Dec 18 2008 10:14 utc | 35
Well, there is a different take on this whole mess. First, I agree someone needs to be in jail. Preferably Robert Rubin and Phil Gramm. I do agree there will be inflation, but 5-10 years down the road, except a good Keynsian will tax the excess liquidity out of the system or the Fed can start extinguishing the money supple by targeting M-1 or M-2. You can have low interest rates and still contract money.
This is my take. The Fed is lowering interest rates so mortgage rates fall to 4.5%. That will save consumers vast amounts of interest. Depending on the rates you want, fees could help bank balance sheets for the refinancing. I will be refinancing myself.
Second, lower gas prices alone are adding $300 billion of discretionary spending for consumers a year in the US. This is a big tax cut. Natural gas has fallen from a high of $12 per million cubic feet (MCF) to between five and six. Saving household billions. Diesel prices have fallen and should be reflected in next years food crops along with lower natural gas prices for fertilizer. This will add thousands of dollars per year to households.
Third, the large stimulus package, $850 billion over two years will add jobs and put money into "the real economy" that should pay long term benefits in productivity creating a more efficient economy.
Fourth, I don't see any wars happening, in fact, I believe b is right that the US will retreat to its borders, especially if Obama pushes alternative energy and creates a green economy. I do believe this must be policy even with cheap gas. The problem is gas is still the best producer of energy for the money. Alternatives will need an industrial policy and large subsidies that the republicans will fight while they try to get back into power. As seen with the auto bailout, they will kill the economy if it means getting political points.
I could ad more but I have to work. Although one last point. While wages are falling, there must be some type of counteraction and much of the above is it. Elites can plan when needed.
Posted by: jdp | Dec 18 2008 12:13 utc | 36
Clueless Joe,
all freedoms have their limits, we accept limits on free speech or association when they impinge on others' rights, but for some reason, Free Trade was held to be so holy and sacrosanct that any restrictions on it were seen as interference. Now we are paying the price for this lack of oversight.
Posted by: ralphieboy | Dec 18 2008 15:38 utc | 37
JoeJoe -- Sadly, I think you are probably right. In fact, not only now but beginning during the 1980s, I have been expecting something like the scenario you suggest.
On the other hand, lately I have begun to think that, because of the US's 50-year-old role as central bank for the world, the situation now contains certain novel elements. My impression, based on reading, not on genuine expertise, is that the US scenario, c. 2008, is not unfolding quite the way things did in Germany, France, Argentina and so forth. The world may have too much on deposit in the mega-Bank of the USA to allow it to fail.
It's one thing to wipe out (whether through default or hyperinflaio, capital held inside one medium-sized country or group of countries, but something else entirely to wipe out the investments and savings of the most powerful countries in the world.
jlcg, well said!
Neither ideologically limited "capitalism," nor its mirror image, ideologically limited "communism," can function as conceived, especially not in an overpopulated world of rapidly diminishing natural resources. My guess is that only some combination of private businesses, along with major and complex central planning, has any hope of keeping a majority of humans alive during the next, say, fifty years.
As suggestive evidence for the above, consider that any conventional company of significant size is budgeted and run like a hierarchical socialist economy.
Also consider that almost every "communist" country (North Korea may be the only exception) now allows individual for-profit enterprise.
"Free market capitalism," to almost no one's surprise, turns out to be as absurd and unworkable as enforced communism.
Great Article
Sy Hersh says it best about Iraq but it is just as applicable to the Great Collapse:
"You have to ask yourself what interest we had 40 years ago for going to war in Vietnam. You'd think that in this country with so many smart people, that we can't possibly do the same dumb thing again. I have this theory in life that there is no learning. There is no learning curve. Everything is tabula rasa. Everybody has to discover things for themselves."
There is this thing about American Baby Boomers in particular George W Bush; they are so self centered that they think they know all but when in reality they know nothing. They know no history. They never learn. All they have is their ideologies.
The Baby Boomers are only now leaving the Stage; totally trashed.
Posted by: VietnamVet | Dec 18 2008 17:27 utc | 40
The USA will most emphatically NOT retreat to its borders, it will instead widen and strengthen corporatized government to include Canada and Mexico. Failure to do so would allow democracy the upper hand over oligarchy. Just as NAFTA, CAFTA, and the WTO now set rules that trump the US Constitution, that trump the inalienable rights of Americans, the American Union will trump the Constitutions of all three North American nations, making the survival of the NAU primary, and human beings merely bricks in that wall.
The USA will most emphatically pursue wars to gain resources and to hold off or hold down rising economies (enemies) because this is the organizing principle of the American state, and has been since 1947.
Dominating the planet is the published and publicly stated organizing principle of the Pentagon's multiple planning departments, and the alphabet intelligence agencies, and it is the only modus operandi the American state has ever exercised. We have two announced wars that have each lasted longer than WWII still going strong; we have unannounced wars in Pakistan, Somalia, and Darfur, and are rekindling a Cold War with Russia for no reason other than it is profitable to the war industry.
War is the American state. Without it, we would have to live within our means, look after our own, and let the peoples of the world live and work as they choose.
Posted by: Antifa | Dec 18 2008 17:41 utc | 41
Even in a utopian world wmere all the production was done by machines with unlimited access to resources and energy, we would still need to work 40+ hours a day in some silly 'service' sector or similar because the casino game rules say so.
ThePaper -- that is such a good point, never anywhere mentioned because, I suppose, to do so would threaten some people's hold on sanity. Most don't realize that their supposed contribution to the world -- certified, as it were, by the money the are paid -- in fact does little or nothing for anyone except to keep both people in the work transaction busy for a few hours per week.
It seems to me that people in nearly useless occupations would be happier and of more benefit to themselves and others if they were working on something really useful, something that would contribute to keeping the essential structure of civilization intact during the years of chaos, starvation and madness.
For example, a car salesperson might plant a lot of trees to provide oxygen and soak up CO2. A health insurance salesperson could counsel uninsured people to help them obtain subsidized coverage. A burger flipper could be providing companionship and feeding nutritious meals to people living alone with no means. And so forth. These are not pie in the sky froth, but rather constitute progress toward stitching together the broken social fabric which is now in tatters but which will soon become precious.
And a lot of the things Ralph mentions, and others, one could do as an entrepreneur. It wouldn't be a job per se, but a business of one's own, with correspondingly less power for corporations. "Jobs" have mostly existed only as a result of the Industrial Age, and now Corporate Services. There are other ways of making a living, as many people are doing even now. I've done it myself, and so perhaps have you.
The Free Market (TM) is a fine mechanism for balancing supply with demand and for directing flows of capital to where they can be most beneficial.
But it has proven itself a poor mechanism for managing natural resources, not just mineral resources, but also land, water, clean air and public health in general.
I hope we learn to make this distinction.
Posted by: ralphieboy | Dec 18 2008 18:51 utc | 44
Ralph said, "-- in fact does little or nothing for anyone except to keep both people in the work transaction busy for a few hours per week."
Example: Years ago I was hired as an engineer for a defense contractor. The job was created when govt approved a company request for increased manpower. Two internal justifications for this hire were 1) It increased billable engineering time, not only for added cash flow but 2) higher annual $$pass-through improved the division's rank. Could this added labor have been done by machine? Yes, easily, even with the crude computers of the day, and with much lower error rate too.
Posted by: rapt | Dec 18 2008 19:41 utc | 45
Two crises, one depression... to be followed by worldwide outbursts of popular action.
USA: Students Occupy the New School!
At 9:49 pm, on Wednesday, December 17, a communique reached the Campus Antiwar Network national discussion e-mail list announcing the occupation of the New School University's cafeteria by students both from the New School, as well as from other universities in the surrounding area from New York and New Jersey. The students have occupied the cafeteria, claiming it as an autonomous students center, demanding that the university immediately reveal any and all investments in companies with military contracts and the immediate divestment from the same. The students have now been occupying their building for more than 10 hours at the time this report is being written.On the night of the occupation, students erected barricades inside the new autonomous students' center, but kept an open door policy toward other students who want to come and participate in the occupation.
(snip)Another aspect of the latest message from the occupying students which is quite heartening is the fact that they have linked their struggle to the overall economic conditions of the working class, the class which most students are or will be a part of themselves.
(snip)
One communique from the students:
From New York City:We have just occupied New School University.
We liberate this space for ourselves, and all those who want to join us, for our general autonomous use. We take the university in explicit solidarity with those occupying the universities and streets in Greece, Italy, France and Spain.
This occupation begins as a response to specific conditions at the New School, the corporatization of the university and the impoverishment of education in general. However, it is not just this university but also New York City that is in crisis: in the next several months, thousands of us will be losing our jobs, while housing remains unaffordable and unavailable to many and the cost of living skyrockets.
So we stress that the general nature of these intolerable conditions exists across the spectrum of capitalist existence, in our universities and our cities, in all of our social relations. For this reason, what begins tonight at the New School cannot, and should not, be contained here.
Thus: with this occupation, we inaugurate a wave of occupations in New York City and the United States, a coming wave of occupations, blockades, and strikes in this time of crisis.
Be assured, this is only the beginning,
With solidarity and love from New York to Greece,
To Italy, France and Spain,
To the coming insurrection.-The occupied New School
With pics at both links above.
(Found via Strategic Anarchy while reading up on the latest news from the Greek insurrection.)
Posted by: Alamet | Dec 18 2008 20:08 utc | 46
"The USA will most emphatically pursue wars to gain resources and to hold off or hold down rising economies (enemies) because this is the organizing principle of the American state, and has been since 1947."
I don't buy it. As the economy of the U.S. continues to crumble, the less patience the people will have for war. Especially wars of choice that generate little in the way of tangible benefit, as Iraq & Afghanistan, or Vietnam. The depression effected American people were were very wary to even enter WWII, and it took an actual military attack by another imperial state on its territory, to change their mind. The recent election shows that the War on Terror (and its overt & unsuccessful military response) has been shown to most people to have been a ruse. And its doubtful that even a large AQ operation would generate the same previous myopic bloodlust in support of invading, say Pakistan. War with another nuclear state, is totally out of the question. The U.S. will, albeit kicking and screaming, follow suit to the former CCCP and re-arrange its priorities.
Posted by: anna missed | Dec 18 2008 20:20 utc | 47
great post b
ralph 42, It seems to me that people in nearly useless occupations would be happier and of more benefit to themselves and others if they were working on something really useful, something that would contribute to keeping the essential structure of civilization intact during the years of chaos, starvation and madness.
as an aside, good news today Hilda Solis is going to be the new labor sec. (video: solis speaks on the house floor in support of the Green Jobs Act which she introduced and asks Congress for 125 mil to support 10 million new jobs in green jobs.)
Solis, who is the daughter of Mexican and Nicaraguan immigrants, has been the only member of Congress of Central American descent. She just won a fifth term representing heavily Hispanic portions of eastern Los Angeles County and east LA.Solis, in 1994, was the first Latina elected to the California Senate, where she led the battle to increase the state's minimum wage from $4.25 to $5.75 an hour in 1996.
In Congress, she wrote a measure that authorized $125 million for work force training programs in areas such as energy efficiency retrofitting and "green building" construction.
Andy Stern, president of the 1.9-million member Service Employees International Union, the 51-year-old praised Solis for her deep roots in the union movement. He recalled marching with her in Los Angeles — well before she was elected to Congress — to seek higher wages and benefits for janitors.
"We were with her fighting for the rights of people who work from the beginning and we're so proud that she's been chosen to be the labor secretary," Stern said.
Voted NO on promoting free trade with Peru. (Nov 2007)
Voted YES on assisting workers who lose jobs due to globalization. (Oct 2007)
Voted NO on implementing CAFTA, Central America Free Trade. (Jul 2005)
Voted NO on implementing US-Australia Free Trade Agreement. (Jul 2004)
Voted NO on implementing US-Singapore free trade agreement. (Jul 2003)
Voted NO on implementing free trade agreement with Chile. (Jul 2003)
No MFN for China; condition trade on human rights. (Nov 1999)
Posted by: annie | Dec 18 2008 20:46 utc | 48
Years ago, when I was in grad school I mixed drinks in a big sleezeball rock&roll club. This place was a loony magnet, were all manner of misfit clientele would make their nightly pilgrimage. There was one particular guy, in this group nicknamed "Creamy". He was a big fella, that on first appearances would indicate he was the type that wanted to prove something, and usually went right to work throwing that weight around. Trouble was, that Creamy would always select his opponents from what appeared to be a weaker set. They were always smaller than himself. And like clockwork that only he understood, that smaller guy would then proceed to kick the living shit out of the lumbering Creamy. It wasn't that he wasn't formidable enough himself, he was, having made a habit of starting barfights - but he had an uncanny ability to always pick the smaller one in a hundred, that could actually kick his ass. And he did with regularity the whole two years I worked in that miserable place. In looking back, I'd say Creamy had some issues that those running the U.S. government might find familiar.
Posted by: anna missed | Dec 18 2008 20:47 utc | 49
anna missed,
Especially wars of choice that generate little in the way of tangible benefit
Au contraire, these wars of choice have supplied huge profits to the well-connected. For more, click on my name.
I wouldn't dispute that some have made big profits. However the longer range plan was to form client states where the cost benefit ratio was sustainable. I think most people (judging from polls/the election) see that this hasn't been the case, either for economic reasons or security reasons.
The big selling point of the I&A wars was to appear to be exporting democratic values in the name of liberation - when in fact the plan was to transfer our economic template as a kind of passive neo-colonialism, where through means of privatization capital benefits would generate a high return on investment.
This has of course been a failure, not because they don't want democracy, but because they're culture is inverted, or upside down from ours in terms of the structure of power distribution. Because in our system all other power is subordinated to the economic network, where in theirs, all power is subordinated to the religious network (that also dictates the roles played by the political and military networks). It was probably Saddam and his secularism, that more than anything convinced Washington that Iraq would be conducive to economic oriented liberalism. that was a mistake that should have been understood from his own bloody attempts to quell the constant religious insurgencies (many of which we? supported) and keep them at bay. There is simply and unequivocally no way the U.S. can maintain their neo-colonial posture in these countries for the time it would take to reverse an entire peoples natural order of things.
Posted by: anna missed | Dec 19 2008 0:27 utc | 51
@alamet, 46
Myself and some of those of us who've spent the last 18 months on the Antioch College issue are trying to send a letter of support, and perhaps more, to the New School resistance.
The issues there parallel Antioch's almost exactly, and even more, are caused by the same mentality of power and money that has destroyed so many other aspects of our society. Bob Kerrey, right-wing Democrat and president of New College, likely has much in common with Antioch's Thomas Friedman-worshipping Chancellor.
I hope their resistance can succeed. They're doing something I wish we had done. But I'm running short on hope. Unemployed for four months can do that to ya.
Posted by: rowan | Dec 19 2008 1:37 utc | 52
@48,
Hilda Solis as Sec of Labor ??? According to the cynics & sceptics who claimed over & over again that Obama is a tool of the establishment, waldo is a shill and that we are such gullible suckers for listening to either, can you all please come back & explain this to me.
Posted by: jony_b_cool | Dec 19 2008 3:02 utc | 53
antifa,
The US will withdraw and stop the wars for now. First, go back and study all democratic and republican administrations and the difference is real. Commodities are always lower in democratic admins, the economy does better (my grandfather always said when a republican is in office money dries up, when a dem is in office money flows). Republicans always have recessions due to less money flow during republican rule. While dems have participated in wars, repubs have taken over as the war party trying to upstage FDRs success as a war president.
Also, the Chinese, Europeans and Japanese have all told the US "get your shit together." We don't really have any alternative, we are at their mercy until our books get back in order.
On another note, go to www.jeffersonhour.org and listen to the pod cast. It is good stuff.
Posted by: jdp | Dec 19 2008 3:06 utc | 54
Hilda Solis as Sec of Labor ??? According to the cynics & sceptics who claimed over & over again that Obama is a tool of the establishment, waldo is a shill and that we are such gullible suckers for listening to either, can you all please come back & explain this to me.
yes, jony, hilda is a scrumptious little crumb, so gobble up. then, for dessert, try some Rick Warren, seasoned with his signature anti-fag/dyke bile, and tell me how that tastes.
a few appointments that don't suck don't negate all the appointments that do.
Posted by: Lizard | Dec 19 2008 3:43 utc | 55
sorry, i should probably explain: Rick Warren will give the invocation at the inauguration. yummy.
Posted by: Lizard | Dec 19 2008 3:46 utc | 56
Why is cheaper commodities judged to be the sign of a more benevolent regime? see jdp@ #54?
To me all that signifies is more is being stolen for a lower cost.
Out here in the rest of the planet we are all too aware of the reality that a prez from the dem side of the empire party presents. A dem prez is more likely to wage war on some poor bastads unlucky enough to be sitting on something amerika wants than a rethug regime is, Iraq not withstanding.
Korea, Cuba Bay of Pigs, Guatemala, Ecuador, Vietnam, Brazil, Dominica, Guatemala again, Bolivia, El Salvador, Somalia, Bosnia, The siege of Iraq which killed approx 500,000 infants, Kosovo bombing, Haiti, strikes on Afghanistan and Sudan.
Those are just some of the mass murders implemented by amerika with a dem prez in the Whitehouse. We already know Afghanistan and Pakistan can look forward to an exponential growth in the undertaking industry with Obama in the O office, and of course the amerikan subsidised slaughter of Palestinians is likely to be cranked up that extra notch preferred by dems prez's under the aipac cosh.
I also predict that the elite's have a special purpose for the O man, one whose precise location is not yet apparent to us mere mortals even if the general location, Africa, is as obvious as a politician's greed.
Who better to lead amerika into it's first major African 'intervention' than an african amerikan commander in chief?
The Congo must be a very tempting target, what with all those metals, gems and loose radiation, but I doubt it will be the Congo first up. The population of the DRC is just too large for a 'quiet war'. Obama's backers will want a quiet one to bust the africa cherry, something that won't give the self-deluded, self proclaimed, 'liberal faction' of the dem party, conniptions.
Although Zimbabwe is small enough, it lacks the type of resources amerikans covet. The brits who would be most discomfited should amerika suddenly sequester Zimbabwe, since the english have had first dibs on that land for more than a century, may need a 'breadbasket', but amerikan elites have no great concern about feeding their masses.
Whatever african nation was finally selected for the role of african toehold, it will likely be light on peeps and heavy on resources. Maybe Sarkozy has been instructed to offer up one of the former french colonies in west africa, who knows, time will tell, but one thing we can be sure of is that the slaughter for empire will continue unabated.
Posted by: Debs is dead | Dec 19 2008 4:50 utc | 57
Alamet 46) Our governor has just issued the bad news on the State budget deficits, disclaiming "that nobody could have foreseen it (sic)," shades of 9/11, and their 'solution' is to "freeze State salaries", which will, of course, be challenged in court and some months from now quietly resolved in state employees favor at the administrative law level. While libraries and schools are being closed and shuttered left and right, there are still 10,000 State EPA employees happily cloistered and studying their LEED restrictions and Carbon-Tax Preparation tomes.
Yesterday I mentioned American Public Education Institute, [NASD APEI] an online "university" devoted exclusively to granting public and military employees with advanced degrees, by tapping and diverting public Federal Education Grants meant for educational access by all. If you think these entirely-online taxpayer-funded advanced degree programs held exclusively for public and military employees are just an interesting alternative to the traditional public education system, here's an example lecture, which I was able to soft-hack by reverse-surf out of them:
http://dfisk00.googlepages.com/W12a-Actors.ppt
Now they're closing our public schools and replacing them with online propaganda institutions, inculcating public and military employees with an entitled sense of an aristocratic oligarchy! Who was it said, "give me your child until they are seven?" So not only is the State closing down "liberal" libraries and schools, but the Pentagon is diverting public education funds to online propaganda arms to train advanced degree public and military candidates in public and military institutions to take over the rehire positions in academia through their veterans and public employees hiring preferences.
They're training the Neo-Con Counter-Revolution with our public tax dollars!
(And, while they're at it, grifting APEI's president $12M a month in stock options skimmed illegal profits paid for entirely with taxpayer education grants!)
Nobody blinked an eye here on MoA. No comment. So some black-ops Pentagon program is re-codifying and psy-ops-izing what passes for "advanced education" in America, and in our grandchildren's future these same mil's and pol's will be feeding them the mother's milk of the State, 1984 on steroids, using public tax funds meant to support liberal public educational institutions?
So? Yawn....
Antifa 26) Ralph 29) et al You're co-opting our future! You're saying revolution is not possible, that we are too weak, that we can't rule ourselves, that They are too strong! You're raising straw men, and knocking them down, leaving MoA readers with the sense of defeat and inward isolation, the seven stages of denial that leads to utter acceptance.
American Public Education Institute (and a host of similar gov.mil LLC 'pods', once you know to look for them) is siphoning off our taxes, creating psy-ops zombies who will teach our grandchildren to obey! Is there nobody here at MoA with academic background, and the integrity to ask SEC how the president of a public-funded online "university" can grift himself $12M a month from tax monies?!
Is there nobody here at MoA who has an administrative background, and can trundle down to the State house and picket to demand they trim the dead wood!? They've been growing public employment at 10% a year during the credit.con! 10% a year, whether they had meaningful necessary work for them or not! !!!Making bacon at Fat Camp!!!
Now with jack spat all for tax revenues, 20% of private employees being laid off, the State is still clinging to their largesse!! They're closing our libraries and schools, instead of laying off the 10,000 State EPA drones they had lined up for the new Green Tax Revolution! They're casting off our "liberal" knowledge acquired over hundreds of centuries, replacing it with Epistles of George Bush and Al Gore!
Caveat Emperor, and if you don't believe it, or understand it, you're not paying any attention! America is being turned into a giant boot camp, a military institution whose entire function is martial consumption abetting the brutal rape of global resources to feed that consumption, while on the domestic front, a Neo Papacy is being build to tithe away profits from that rape, and enslave us to the Green God.
'Whatever you do, don't stop shopping' nee 'Whatever you do, pay your Green tithe'!
We can stop it! The Enemy is in plain view! Unarmed! They're just common thieves!
Pickpockets! Grab their arms! Call the law! Throw them in the same debtors prison our grandchildren will find themselves in, if NeoCon is allowed to keep stealing!
Posted by: Jim Deluise | Dec 19 2008 6:00 utc | 58
sorry twice, for being off-topic @55&56--will take my excitement over Rick's big chance to spread his intolerant jesus to the OT.
Posted by: Lizard | Dec 19 2008 6:11 utc | 59
Consumption represents 70% of US GDP. In most other Western countries consumption is around 50% of GDP. The marginal utility of debt is declining in the US. As recent as the mid-90s it took around $3 debt for every dollar of GDP growth. By 2007 it took around $7 of debt for a dollar of GDP growth. Now with all the borrowing it is even larger. Total credit market debt is over 350% of GDP. And this before the baby boomer retirement payments start.
So is it the right policy to once again reflate with more debt? With the Fed monetizing and front running the Treasury market there is flight of speculative capital into the Treasury market leading to a parabolic blowoff. Where does this all lead to when inevitably the Treasury market collapses?
The scenario is complex. There is too much capacity. Demand is falling. Reflation is the program globally. The reserve currency balance sheet is exploding with dubious assets. Holders of much of the reserve currency sovereign debt are now sitting on large paper capital gains. But going forward yields are low and the probability of capital gains is less. They are also the ones with excess capital investments. What real choices do they have in the short term? They need the debt addled consumer of first and last resort who happens to print the reserve currency to continue consuming by lending more and more to them. But for how long? When do they plan to get out with their paper profits? What can they convert it to when tangible assets are deflating? How can consumers in the country with reserve currency continue consuming more when their incomes have stagnated for many years and they are in debt to their eyeballs?
Ultimately at some point it seems that all this has to be squared up. But in social democracies people demand their governments take care of them whatever the future cost. So this squaring of the books keeps getting postponed. But it has to for everyone to move forward. Debt defaults. Destruction of excess capacity. Re-emergence from "bankruptcy". Who goes first? A kind of Prisoner's Dilemma!
Posted by: ab initio | Dec 19 2008 7:43 utc | 60
@55
the pattern so far in Obama's appointments has been to make solid competent picks. Hence I'm going to go with what I am seeing.
its really not hard at all to imagine an Obana admin team thats far worse than what we have.
Posted by: jony_b_cool | Dec 19 2008 10:29 utc | 61
@57, the point was elites know when the sheeples balance sheets are bad and sheeple need to be whole so they can be preyed on again.
Its system perpetuation.
Posted by: jdp | Dec 19 2008 14:38 utc | 62
yes, jony, hilda is a scrumptious little crumb, so gobble up. then, for dessert, try some Rick Warren, seasoned with his signature anti-fag/dyke bile, and tell me how that tastes.
hilda is not off topic, not on a thread about the economy. as for warren, while an invocation speech is a scrumptious little crumb, the sec of labor isn't. sure, she could just be treated as showcase to be ignored but she is not a little crumb to gobble up. she is about as staunch an ally to the unions we are going to find in congress, from east LA, daughter of immigrants(both union members). there is nothing (NOTHING) more worrisome to the elite right than the threat of unions. the first screaming coming off the election was from the rightwing noise machine was card check, first attack? blaming workers/union for the failure of the big 3.
time will tell if her appointment is merely a showcase, if she is just a little crumb to be gobbled up by the big machine. using rick warrens anti gay stance to 'season' the flavor of her appointment beneath you. i am truly interested in your opinion of the appointment. if you think she's worthless just say so.
Posted by: annie | Dec 19 2008 17:08 utc | 63
ps lizard, did you watch the video? creating 10 million green jobs is not insignificant.
Posted by: annie | Dec 19 2008 17:11 utc | 64
Why revive consumption?
The Swiss Socialists have now jumped on the bandwagon, they advise lots of bail outs, direct to companies! Their claim is that to keep the economy going internal consumption has to be boosted (copy cats) - everyone is to get on the treadmill of buying frothy blouses, pizzas, X boxes, flat screens (most of these are not made in CH, including the pizzas), and working away...where? In Korea of Japan? China, for the underwear of blouses? err?
And then, the Swiss must work a 60 hour week, to keep it all chugging. (If exports of watches drop even 8% CH is in big trouble.) But who will buy them if the rich already have 7 watches and have had to sell their yachts and are cutting back?
It is all completely, utterly senseless. An old vision, everyone running on a treadmill, so that the ‘bosses’ can skim off the top.
Why does a 10-year-old girl need or want 50 Barbies and all their costumes? And chariots, cars, homes?
Right, to keep her dad in a job and earning money to pay for her food, schoolbooks, and medical care.
Her dad is a bank employee who sells shares and funds of funds, amongst them Mattel shares, or an insurance salesman who actually writes in ‘children’s toys’ in a line on a form (X boxes cost a bomb), and charges for that; or he works for the textile industry - it’s a specialized niche - that sells to top class toy Cos (Lagersfeld and LaCroix and such check the quality).
Perhaps he is an accountant / supervisor, on the spot or at distance, who does the books and part of HR for cos. in Korea, Mexico, Guatemala. Or he might even be a state employee whose job would go phut if tax revenues sank. Or anything.
And if you have a drink with him at midnight, or see him in ‘family negotiation’ meets, where he sits, glum and silent, recalcitrant, or hyped up and voluble, he will tell you, bit by bit, or angry from the start, he is disgusted with his daughter’s room - filled to the brim with displays of consumption.
He will tell you his daughter begs and whines for toys, is always watching for opportunities to augment her cache, to the point of complaining on the internet or dressing up cute (real real cute, the details will be skipped) for a man who our hapless husband considers is his wife’s Albanian lover. Who actually has one-upped him with gifts of froth, pink bikes (never ridden), personal TV, boxes of make up, and subscriptions to a nail care service.
And he has to keep his job - selling shares in Mattel.
From the ground, I’ll leave it there.
Posted by: Tangerine | Dec 19 2008 18:23 utc | 65
So, you're all admitting -- no triumphantly crowing -- that you happily do the work of empire, working for a new imperial manager, endorsed by Cheney and Kissinger, who threatens more death to the poor of the world, just because he might create a few jobs, maybe one tenth of those lost (and even then, the devil is in the details whether a job is "green" or merely astroturf). What is your current calculus? $500 in new "green job" benefits for each dead Afghani and Pakistani? In what way is your stance any more moral than the professional mafia hitman who demands $2K for each hit (and takes personal responsibility for his own actions)? When Americans no longer have bread, they will crow over the crumbs of cake they find on the floor of existence. Marie Antonette would be proud. Let the fireworks begin.
And remember, it's a package deal you're supporting -- like the husband who drinks, cheats, and beats you, but still is a hunk who is good in bed. And I believe that the psychology, the rationalization of abuse, is the same. You gals will rationalize the actions of "your man" when you would have had a hissy fit if the last man did it.
Posted by: Malooga | Dec 19 2008 18:45 utc | 66
Driven by brutal marketing the consumers indebted themselves more and more. They used the money to buy more and more stuff. Houses, cars or whatever China could produce for them.
C'mon, do you really believe this neo-liberal drivel about the fictitious "consumer?"
What really happened is that neo-liberal policies eviscerated the middle-class while enriching a small segment of higher income earners. Those with much more wealth "consumed" houses, cars, whatever, without any debt , (at least until they lost investment money in ponzi-investment schemes). Meanwhile, the former middle-class, unionized blue collar workers, teachers, etc., saw their earning power drastically decrease, and were driven into debt by a lost job, an illness, whatever. These newly poor, are now blamed by the corporate media for the US's negative saving rate.
Brutal marketing (advertising has always existed) has little to do with any of this.
The world economy is facing two distinct crises, one in the financial sphere and one in the productive sphere...Stable societies can survive such storms.
Actually, the world economy (and more importantly, the world) faces environmental crises, limits to growth, and limits to capitalist expansion. But, when was capitalism, ever more than briefly, stable? What did such stability mean to those who were systematically killed in the third world to buy this transient stability?
My grandfather left me some Reichsmark notes. One has 100 million printed on it. But before it was issued the 100 million got overprinted in red with 1 billion. It may have bought a loaf of bread at that time.
The fixing of the financial realm will come when authorities get real with re-regulation and shutting down zombie institutions.
Germany's inflation was forced on it by the victors of the first world war. The financial realm has been very effective at transfering wealth upwards. The ultra-wealthy will resist any attempt to change this. When the starving begin to scream, they will be thrown a breadcrumb. The striking workers in Chicago walked away with a mere $6k in exchange for losing their jobs without notice.
People are losing the homes, their jobs, their life-savings, their retirement. They live without health or dental care. Let's cheer for every crumb dear leader throws us. Then we won't have to get off our butts and actually revolt.
Posted by: Malooga | Dec 19 2008 19:14 utc | 67
So, you're all admitting -- no triumphantly crowing -- that you happily do the work of empire, working for a new imperial manager, endorsed by Cheney and Kissinger, who threatens more death to the poor of the world, just because he might create a few jobs
could you copy paste some examples of the triumphant crowing(s) just so i can get a clearer understanding of the target(s) of your assertion.
Posted by: annie | Dec 19 2008 19:30 utc | 68
@Malooga - all those new shiny suburban houses were not bought out of necessity. All those SUV were not bought out of necessity. These were people going into debt to "consume".
I agree partly with your take - there is a long move since the 60s/70s to move money to the top after a short period where the field was more leveled.
But that wasn't what made people buy overvalued houses with a 2hr ride to work.
People bought/buy all this stuff because they CAN. They are encouraged by advertising, and enabled by the financial sect, while expanding the economy into yet another dimension of incremental leverage. If people are stupid to think they CAN have all this crap, then they have been encouraged and enabled to become that stupid by the economic class, who in their own right became stupid enough to not see or ignore the likely consequences of creating a society of the stupid. Forrest Gump was right.
Posted by: anna missed | Dec 19 2008 20:16 utc | 70
annie @63i am truly interested in your opinion of the appointment. if you think she's worthless just say so.
i think she's a fine appointment from what I've read so far, but jony wanted "the cynics" to respond, with the attitude that one appointment can just negate all the criticisms that have accumulated so far, so i did. As i indicated over at the OT, picking Rick to give the invocation is baffling and disgusting. His selection is certainly not as important as an official appointment, but it definitely sends a pretty strong message.
Posted by: Lizard | Dec 19 2008 21:34 utc | 71
with the attitude that one appointment can just negate all the criticisms that have accumulated so far
ok, i see your point, but that was not quite the angle i read w/jony's remark. one appointment doesn't wipe away afghanistan and palestine, that's for sure. on the other hand, labor is a big deal. if he is taking this appointment seriously i'd say it is a very good sign. y'never know tho, he could use her as figure head. the cards are still out, including card check.
Posted by: annie | Dec 19 2008 21:56 utc | 72
@b et al "new shiny suburban houses"
Again, the rich who bought SUVs, in general, did not go into debt. I don't like SUVs either, but if they didn't by them they would have sunk $75K on a fancy eco-car. The money wasn't an issue for the wealthy.
The working class went into debt because it was the only way to survive in a society with no support systems as the bottom fell out from under them.
You are reading too much of the neo-Malthusian regressive, James Howard Kunstler, and making too many generalizations about something you don't know about. The population of America has increased by more than the population of your whole country in the past fifty years. Twice, you advocated demolishing whole cities in order to prop up the price of property values. Now you are complaining about new houses. People have to live somewhere. They generally live as close as possible to their jobs. When they live two hours away (or more likely one hour), it is because they cannot afford to live closer. My rather ordinary house in Boston was worth 700K. If you couldn't swing that, you moved an hour away to save 400K. I now live in a small semi-rural area, and I still must commute half an hour because I can't afford 1K/month for a one bedroom efficiency shitbox in the tourist town where I work on a salary of $8.50/hr.
Six years ago, I was getting all the work I could handle at $90/hr, often taking home 5K/wk. Now I can't get 40 hours at $8.50.
I'm not arguing about the design of American houses, or the atrocious pattern of land use in America, Kunstler is right there. But it is a cheap shot to blame the victims: individual people who have lost jobs, whole careers, because of de-industrialization, privatisation, off-shoring, out-sourcing, illness, whatever. Policy like that, the means of production of a society is set by lying fat-cat politicians, like Clinton who passed NAFTA, and corrupt corporations.
It is too easy, and there is nothing "progressive" (for lack of a better word) to blame people for trying to have a life.
I thought the bottom was going to fall out on US society five years ago. I'm surprised Bushco was able to keep things going as long as he did.
@annie, jbc, et al,
One good appointment in no way makes up for a murderer's row on foreign policy. It doesn't matter how well you treat your own people if they are being carried on the backs of other's misery.
In one sense, we must wait and see. But in another, much deeper sense, the problem comes with waiting and seeing; that is to say, with ceding any power or room to maneuver to a President at all.
People might hate Bush, but the truth is, he encountered almost no resistance whatsoever from the public. Ten million people across the world -- the largest protest ever -- gathered to protest the start of the war in Iraq. Bush called it a "survey" group, or some such marginalizing comment, and what happened? The anti-war movement cowered. If twenty million had gathered the next weekend, and forty million amassed the next weekend and started rioting and burning police stations, and then gotten enraged and threatened eighty million the next weekend, there would have been no war. It would have been that easy, eighty million people, 4 afternoons, probably a score dead in violent clashes, an enraged public, and no war. Eighty million Americans alone will tell some phone survey that they are against the war, but they will not give three afternons shutting down the machinery of state to stop it. The same goes to Europeans, whose governments are ALL complicit in aiding the USuk effort.
Eighty million people, several weekends, a million lives. The math is simple.
People DO have the power, but only if they take it; if they SIEZE it from their rulers, whether it is Bush or Obama. Restrict their scope of action, question their legitimacy.
Instead too many are BESTOWING legitimacy on Obama. Fucking corrupt UFPJ will not even protest "the war," much less all the manifestations of empire, the 700 bases and twenty or more low level conflicts being constantly fanned by the US worldwide.
Meanwhile people are dying and starving. I am too poor to have the free time to post here very much anymore, certainly too poor to campaign for Obama, but I have the time to help out at the homeless shelter, or stand weekly vigil against empire.
And so it goes....
Or, as one of my old favorite blogs used to say, "Do what you want, you will anyway."
Posted by: Malooga | Dec 20 2008 0:30 utc | 73
It's so very nice to see annie remains the apologist for Obama. I must say, you do a very good job annie. It's so clear that you're saving America from the ... from the ... uh, from the ...
... can you help me out here? I seem stuck.
I can't fathom what it is you're helping here, annie. Is it the DLC agenda you find so incredibly great and toothsome? The idea that "RePukes" are bad only when they are GOP, but they're good when they're DLC?
Oh, never mind. What we really need is MORE corporations running America, and fewer individual citizens with any say in the American destiny. Because really, corporations -- especially those who finance the DLC and the Democratic Party generally (which, incidentally, means the same sorts of businesses who own the GOP, OOPS!) -- well, corporations always know best.
Right, annie?
I wonder if annie ever bothers to imagine herself a free entity. Does she have the courage to imagine such things? Or must she consult her local DLC supporter, and ask him/her what to think?
Glory, glory, glory!
Posted by: micah pyre | Dec 28 2008 23:17 utc | 74
The comments to this entry are closed.
no b. history does not repeat itself.
Posted by: outsider | Dec 17 2008 20:06 utc | 1