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Rat-fucking the bankers: A hero in California leads the way
09.07.2012
11:49 am
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Over the weekend, there was a fascinating article about the foreclosure crisis in Southern California that appeared at the Huffington Post with the title “San Bernardino Eminent Domain Fight Closely Watched By Other Struggling Communities.” That title might not have grabbed you, but what’s in the article, penned by Ben Hallman, is extraordinary and needs to gain more traction.

If you read what’s written there and disregard all of the “opinion” (what Rahm Emanuel and the banking PR flacks have to say) and just concentrate on the plan of action that’s being offered to deal with the mortgage crisis, it’s a winner.

It’s being proposed that “eminent domain,” the power local government have to seize property for the common good, be employed to help stressed communities in San Bernardino County. The idea for this originates with Steven Gluckstern, the executive director of Mortgage Resolution Partners: Local authorities could seize home loans—not properties—and “condemn” the ones that were underwater, though not in arrears, and held by private trusts. The local government would then forgive the debt in excess of current market value of the home. Homeowners could then refinance at the new, lower value, freeing up hundred of dollars per month, and boosting the local economy and jobs growth. The pension and institutional investment funds that actually own these loans would get paid fair market value. For investors in Inland Empire property, this will mean taking a significant haircut.

It’s estimated that there are around 150,000 homeowners in the county who owe more on their homes than they are worth, yet only a small percentage of them would actually qualify for a loan modification because their credit is bad.

One estimate sees as many as 42,000 homeowners in San Bernardino County benefiting from the plan. It would have a significant impact on the lives of county residents.

It’s also a beautiful solution that fucks over the capitalist greed-heads who deserve it the most. They made investments in bad securities. That’s capitalism, baby! Shit happens!

It’s thrilling to think we could be on the verge of seeing something like this occur:

This old railroad town in the heart of the Southern California foreclosure belt doesn’t attract many visitors these days, especially not in the blazing summer heat. Yet on a recent Thursday morning, a handful of well-heeled business travelers from the East Coast hurried along a sidewalk to address a government official they have come to know well.

Gregory Devereaux is the chief executive of San Bernardino County and its 2 million residents. At his urging, local authorities are considering a proposal that would allow local governments to exercise their power to seize private property without landowners’ consent in a dramatic—some say radical—new way.

Governments usually use this power, known as eminent domain, to acquire private land for public purposes, such as roads or utility lines. But this plan, proposed by a San Francisco-based venture fund Mortgage Resolution Partners, calls for government authorities to seize the mortgages of underwater borrowers, paying the investors that own them a fraction of what they are owed, using money borrowed from the fund. Homeowners could then refinance with a federal loan at a much lower rate, based on what their home is actually worth instead of what they owe.

Supporters say the plan would send a supercharged bolt of energy into the housing market, spurring economic development and preventing even more of the foreclosures that have wrecked many communities.

“It is a disaster of epic proportions,” said John Vlahoplus, chief strategy officer at Mortgage Resolution Partners, of the dramatic decline in home prices that in many areas has left homes worth less than half what the borrowers paid. “The crash has devastated the family wealth of these communities.”

Gregory Devereaux… you are my new hero.

You’ve met the good guys, now meet the bad guys (so to speak):

The group from the East Coast, representatives of the mortgage finance industry, don’t like this idea much at all. They have worn a path to Devereaux’s office in recent months to tell him, and anyone else who would listen, that the proposal amounts to nothing less than a threat to the entire mortgage finance system, and an assault on free enterprise and the U.S. Constitution.

They’re sort of right about that, but have you been in San Bernadino County lately? It’s very very easy to see why a plan like this would be popular in the Inland Empire: It’s getting to be just like Mad Max there. The local economies will never recover with so many residents underwater on their mortgages. If you owe $400,000 on a house that’s worth $150,000, tops, not that you could sell it anyway, just what the fuck are you going to do next? What if you lose your income? Then what’s your move?

You don’t have one. The bulldozer-like plan that Mr. Devereaux is proposing has the potential to change the lives of tens of thousands of desperate families in his county. He’s worried about them, not about some bankers, mortgage brokers and fat cats taking the hit. (Did I mention yet that Gregory Devereaux is my new hero?)

Absent something like this, how would the Inland Empire EVER be expected to recover? It probably won’t be during many of the current generation’s lifetimes, we’re talking decades to recover. Seriously, it’s fucking GRIM there. Really, really super grim. (Comparing parts of San Bernadino to Mad Max is only a slight exaggeration, trust me)

[“Blah, blah. blah” said mortgage industry spokespeople. “Blah blah blah blah blah blah blah” said someone else. Back to what matters…]

Proponents, meanwhile, argue that bold measures are worth considering in the face of a festering foreclosure crisis. Recent modest increases in home prices have done little to help the estimated 16 million underwater homeowners nationwide, who, according to the real estate valuation website Zillow, collectively owe $1.2 trillion more than their homes are worth.

The proposal also comes amidst broad frustration with the Obama administration, which has so far refused to offer a broad-based plan to bail out underwater borrowers, even as taxpayers have spent hundreds of billions of dollars to prop up banks.

“We’ve seen a bailout of the banking industry, but no bailout for homeowners,” said Arie Giddens, a San Bernardino resident whose home is worth less than half the $300,000 she paid for it in 2005, according to Zillow.

About a dozen communities have voiced some level of interest in the eminent domain plan, including Chicago, Sacramento, New York’s Suffolk County and most recently—according to sources familiar with the discussions—Detroit. Not coincidentally, these communities have also been particularly hard hit by the housing crisis. In San Bernardino County, more than half of all homeowners are underwater, and the foreclosure rate is three-and-a-half times the national average.

“Everyone here has a friend or a family member who has lost their home to foreclosure,” said Greg O’Donnell, the development director at Neighborhood Partnership Housing Services, a housing nonprofit in Ontario, Calif.

At the public hearing, Devereaux said the eminent domain plan is still far from reality.

“Thank you very much,” he said more than once in response to the mortgage industry lobbyists’ criticism of the plan. “We appreciate your involvement.”

Gregory Devereaux, you are a badassmotherfucker…

Nothing had been decided yet, he cautioned. Mortgage Resolution Partners has not even submitted a formal plan yet, he said.

What worries the finance industry is that nothing has been ruled out, either.

Officials in other jurisdictions, by all accounts, are waiting for someone else to make the first move. That someone, if it is anyone, will likely be Devereaux. What he thinks could determine whether the eminent domain proposal winds up on a scrap heap of failed ideas to resolve the housing crisis—or sets new legal precedent on the way to providing mortgage relief to a population at the highest statistical risk of losing their home to foreclosure.

It has come to this: More than five years after home prices fell like a rock into a well, the last hope for some borrowers stuck at the bottom could be a public official unknown even to many citizens of his own county.

On Thursday, Mortgage Resolution Partners announced that they are expanding their original proposal to help individuals underwater on their mortgages by including homeowners who have defaulted or are delinquent on their mortgages.

Keep in mind that this is not all bad for the investors themselves. There’s a (theoretical) “silver lining” upside for them, too: Laurie Goodman, of Amherst Securities, analyzed the potential impact of eminent domain mortgage write-downs: “Taking select loans out of a trust could conceivably result in a higher realized value for (the) investors,” Goodman wrote. “Using eminent domain is a novel (albeit aggressive) idea to reach this goal.”

Banks holding loans already use formulas to decide how far they can write down a mortgage and still make money. The same should hold true for mortgages held in trusts, at least that’s the theory.

The top regulator at the Federal Housing Finance Agency, has warned that the agency might “take action” against San Bernardino County should it decide to adopt the Mortgage Resolution Partners. A highly visible supporter of the plan is California’s lieutenant governor, Gavin Newsom. This could get really interesting.
 
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Gregory C. Devereaux, Chief Executive Officer for the County of San Bernardino, California

Thank you Michael Backes!

Posted by Richard Metzger
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09.07.2012
11:49 am
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Capitalism’s sacrifice zones: Some people are happy to destroy the lives of others for a profit
07.22.2012
04:55 pm
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Image by Skywalker11

I grew up in West Virginia. Practically from the day I was born, I was exposed to the idea of what a strip mine is. When I saw The Lorax on TV for the first time, I would have been about six, and I can recall drawing an immediate connection to the barren wasteland hell-pit down the hill from my parents’ house as I watched. My childrhood was spent in an area where the “Truffula trees” were hard, black and underground, but the point Dr. Seuss wanted kids to instinctually grok, I can assure you, was not lost on me.

Large coal companies have been coming in and raping the land without opposition for decades. That is the way things are in West Virginia. Without opposition? Who am I kidding, they roll out the red carpet for the pleasure, because residents of the state are so desperate for the work. When your family is hungry, it’s all about the here and now. The coal companies write the laws in WV. This is how they’re able to saw the tops off of once pristine mountains and hills, fuck up the drinking water and destroy the soil, generally leaving the place looking like a lunar landscape in their wake.

When the coal is gone, West Virginia is going to be a big hole in the middle of the country. That’s all that’s going to be left of it. The people who live there who would like to stop it, can’t stop anything and most people outside of the state are either totally unaware of what’s going on there or they simply don’t care.

Very few images of the so-called “sacrifice zones” left behind by rapacious late-stage Capitalism make it to the mainstream media. Once in a while, maybe, but what goes on in the hills of Appalachia isn’t really the stuff of The New York Times, CNN or even MSNBC. The state is too far removed from the media centers and corridors of power, so the mountain tops keep getting removed and now the guy living in the mobile home down the road has sold the fracking rights to his five acres. Who gives a shit about your drinking water?

The answer, quite frankly, doesn’t seem to be anyone. This is just the way it goes…

After the jump, watch Bill Moyers and Chris Hedges discuss Capitalism’s ‘sacrifice zones’...
 

READ ON
Posted by Richard Metzger
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07.22.2012
04:55 pm
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The logic of Capitalism unravels: Are we living in the end times?
07.11.2012
11:43 am
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Al Jazeera’s Riz Khan asks Slavoj Žižek, “the Elvis of Philosophy” about climate change, Obama’s handling of the BP oil spill, if a classless society can exist, the need for a social safety net and if we’re about to see the end of the liberal capitalist system.

Žižek is really on fire here. It’s one of the best interviews I’ve seen with him and Khan is a sympathetic, intelligent interviewer (one of the best in the business, I think)

Slavoj Žižek’s latest book is Less Than Nothing: Hegel and the Shadow of Dialectical Materialism. You can see more of Riz Khan’s interviews on Al Jazeera English and YouTube (which has a live Al Jazeera English feed, check it out).
 

 

Posted by Richard Metzger
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07.11.2012
11:43 am
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Looking down the throat of The Beast: Why the LIBOR conspiracy might knock the dominoes down

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This is a guest editorial from Dangerous Minds reader Em, expanding on some pointed commentary he’s made elsewhere on this blog. Em—who’ll keep his last name to himself, thank you very much—works in the financial industry:

One day you’re going to arise from your habitual feast

To find yourself staring down the throat of the beast they call The Revolution

“They Call It Democracy”—Bruce Cockburn

When Bruce Cockburn sings these lines during a performance, his largely left-leaning audience will often cheer, apparently not comprehending that this is intended to be a cautionary tale. In They Call It Democracy, Bruce is informing the international 1% that time is running out, and that if they don’t use their disproportionately vast resources to reform and truly democratize access to goods and services and capital, then the 99% are going to lose faith in the system itself and eventually overthrow it. And Bruce is fully aware of the fact that The Beast isn’t well represented by romantic notions and Che Guevara T shirts. The Beast is often ugly and brutal and doesn’t always bring in something better. But by the time it comes to that, the 99% will be fully aware of the risks but just won’t give a shit anymore.

That’s why the LIBOR issue is so damned dangerous.

Back in 2009 I was working at a “Too Big To Fail Bank” on Canary Wharf in London, and during my lunch hour walked over to where LIBOR is set and took the above photo. (LIBOR is housed in that building on the left.) Never in my wildest dreams did I imagine, however, that the setting of this key rate upon which the price of mutual funds and derivative securities are indexed, could be easily manipulated by a tiny number of coked-up traders. Although I worked on the retail half of that TBTF Bank, for one summer, I did actually utilize the famous Ho-Lee model to analyze derivative securities for volatility risk. So I knew enough about LIBOR to understand that it is in some ways as important as the prime interest rate, set by the Fed. But I naively assumed that the US and UK governments, along with the Big Banks, would tightly control the LIBOR process because a loss-of-faith in LIBOR could set international markets into chaos.

And that’s the last thing we anyone really wants right now. Right?

But I was wrong. And who knew? Who knew LIBOR could be impacted by such a slipshod and unregulated process? What the hell? Conflicts of interest seem to be practically built into the system, but it only hands out benefits to those in special positions of power. And if I, a banker, can begin to view the system as this deeply corrupt, how will rank-and-file investors feel? Will they put their money into real estate? Hide it in mattresses? That can only accelerate a possible collapse or, worse yet, a revolution.

Revolution? Hah. No one in the US would seriously consider a socialist much less a communist revolution. But those aren’t the only kinds of revolution. The Islamic revolution in Iran in 1979 proves to us that even moderate and reasonably urbane and clever people will sometimes simply choose the devil they don’t know when the Devil they do know (in that case the Shah) has proven beyond all doubt that his system won’t work for most people by design. On purpose. Like the American version of capitalism.

And is that what we really want? OK, maybe in the US we won’t have an Islamic revolution. But who knows what our idiotic science-denying masses might come up with? Maybe the Tea Party was just a first try and all that’s needed now is some less idiotic reformulation that appeals to a wider audience. And remember, it doesn’t have to work in reality, it just has to be able to convince enough people that it might or could be better than the corrupt and closed system most people believe operates today. All it has to do is make a few promises while providing a sort of “purity code” that allows the rank-and-file to throw off outside influence. And for all of its bloodshed and hostages, the Iranian revolution at least returned Iran’s destiny back into the hands of the Iranians, rather than the US and UK-backed torturous regime that was impoverishing practically everybody outside a tiny cabal of the well-connected. And if the Iranians can do it (ie, create a populist strain of Politcal Islam that freezes out external meddling influences), there’s no reason to believe the Americans can’t come up with something of their own in order to lock out and dismantle predatory economics and access structures.

Back in the late 1990s and during the Bush II era, The Fed continued to lower interest rates in order to boost the housing sector. They did this precisely because it worked, and because the traditional industries that provided wealth and capital to the working classes had been strip-mined of value by not only upper-level managers but by Private Equity firms (such as Bain Capital) that searched for value and then capitalized it into their own pockets by moving jobs and manufacturing overseas. As the “Mighty Trucks of Midnight” (another lefty Bruce Cockburn ref there) moved whole industries overseas and Labor imploded, there were fewer and fewer investment opportunities for fund managers. So the steroidally pumped-up housing sector took up the slack while the level of personal indebtedness (to the banks, of course) skyrocketed. We were, in effect, borrowing chunks of our future in order to pay the bankers that colluded with an unregulated system to enrich a very few but without the creation of real new wealth.

When the Great Recession hit, we had to pay the piper for all that debt we had amassed but, Lo! We had no money left. A lot of the money we had been spending had come from debt but now we couldn’t borrow anymore, because the banks were failing and couldn’t make any more loans. And yet, no one really wanted to change anything because it looked like the system was essentially fair so we just had to let it recover a bit so we could all continue on our merry way.

But now, perhaps, we know that wasn’t the real story. And that the system was rigged. We are slowly becoming aware of the fact that only a tiny minority benefit from it while the rest of us work our asses off and still suck shit and struggle every day to feed our families and keep a roof over our heads. As awareness of what LIBOR-fixing really means begins to penetrate popular consciousness, more and more people will begin to question whether the system is even reformable at all. What the 1% and their Walking Dead-like minions do not comprehend, however, is that even if there is a way to reform the system and keep this party rolling a little longer, we are rapidly passing the time where anyone will still believe the system can be reformed. In other words, the window of reform and long-term survival of a system that resembles our current one is closing, and closing rapidly. It will have to be the 1% who choose to utilize their resources in order to give themselves (and their privileged families) a shot at longer-term survival.

That is the only chance the 1% has of keeping the 99% from invoking The Beast, in some form or another.

About the author: After living in China in the late 80s, Em worked in the physics and electrical engineering space until 2002, at which time he moved into the financial world. In July of 2010, Em returned to the US after living in London for several years.
 
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“The Great Red Dragon and the Beast from the Sea” by William Blake

Posted by Richard Metzger
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07.10.2012
01:08 pm
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The Illuminati exposed: Why the Libor conspiracy scandal is the most important story in the world
07.08.2012
01:49 pm
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American banks are about to be engulfed by the biggest scandal in financial history. Or maybe not, it will largely depend on how closely the public pays attention. If they are paying attention, the game, as it is currently being played, is finished.

The Libor scandal reveals capitalism’s vaunted Free Market is a con trick, which has been fraudulently controlled by international banks for their own and select cartels and speculators’ interest. The cost of this fraudulent activity has been paid for by the public - the savers, mortgage owners and pensioners. There is now proof positive that the financial elite have been playing us all for fools.

The bankers at the tip top of the food chain (literally) have been caught red-handed with their collective hands in our collective cookie jars, to put it another way.

Last week, Barclays’ Bank was fined $450-million for manipulating Libor (the London Inter Banking Offered Rate). This is the rate through which banks lend. The rate is agreed upon every day by a select group of banks, and is considered a “global benchmark worth hundreds of trillions of pounds.” The slightest deviation in the rate can cost a bank billions.

Libor along with Euribor are the central mechanisms for setting global interest rates for a vast array of financial services and products.

Libor is the largest, operating over 10 currencies, which includes determining the rate of US dollars in the form of Eurodollars.

Traders in the main financial markets in London, New York and Japan colluded to set inter bank rate, thus making either huge profits or covering-up their losses.

Traders like low interest rates so they can buy cheap bonds and make quick speculative profits. The retails side prefers high interest rates, which can help savers make higher return on their savings. Between the two positions is a “sacrosanct” wall which prevents either side from fraudulent collusion. At least that’s the idea…

Last week, Barclays’ Bank admitted their bankers broke through this so-called “sacrosanct” wall, and that there was collusion in the “fixing” of inter bank rates. (Translation: The bankers are behaving like the mafia)

The US watchdog the CFTC (Commodity Futures Trading Commission) said it wasn’t just Barclays’ traders who were involved in the market manipulation but the bank’s top bosses.

‘...as a result of instructions from Barclays’ senior managemnet, the Bank routinely made artificially low LIBOR submissions to protect Barclays’ reputation from negative market and media perceptions concerning Barclays’ financial condition.’

Leaked e-mails between traders revealed the staggering level of collusion between traders and bank staff.

‘Dude. I owe you big time! Come over one day after work and I’m opening a bottle of Bollinger.’

While the bankers bashed the Bolly, the public picked up the tab.

That investment bankers are corrupt, psychopathic thieves of the lowest order is nothing new, but the Libor scandal shows that the whole process of rate fixing is not dependent on the realities of market values, but on the arbitrary say so of investment bankers!!!

In other words, the whole of Capitalism is based on a house of cards, which are, at last, about to come tumbling down.

A friend, with ties to the financial industry, recently said that the public’s relationship with the banks was similar to a put-upon wife with an abusive and violent husband. The worse the husband behaves, the more the wife forgives. Until one day, something snaps, and the wife realizes her husband is a brutal bully, a monster, a low and despicable human, and there has been no real love in their relationship on his side. ‘One day, the public will similarly wake-up and realize the banks have been brutalizing them for centuries.’

If not NOW, when? It’s now of never with this one. It’s off the scale of scandal. This is a real “lock them up and throw away the key” moment.

This is what must be kept in focus as the Libor scandal begins to expose the scale of the other banks involved in similar fraudulent activity. At present, sixteen other banks are suspected of involvement. Already, a blame-game has commenced with the current Conservative government attempting to lay the blame for the Libor scandal at the previous Labour government’s door. All of this is of secondary importance.

Here’s the take-away: Governments have colluded with banks to keep the public imprisoned with debt. Cheap loans, credit cards, mortgages, and unemployment, are the core values of Western-Liberal-Capitalist society, which is based on keeping its citizens impoverished and debt-ridden. We can only hope that the Libor scandal will lead to the irrevocable damage of the banking and finacial industry’s reputation, which will in turn lead to the nationalization of banks and strict regulation of the financial industry.

Below, Matt Taibbi tells Eliot Spitzer: “This is like finding the whole world is built on quicksand”
 

 

Posted by Paul Gallagher
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07.08.2012
01:49 pm
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Everything You Know About Free Market Capitalism is Wrong
04.19.2012
06:00 pm
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One of the big “sacred cows” of libertarian “free market” Capitalism is the supposed “invisible hand” of the marketplace keeping supply and demand in line with the price of a particular commodity or service.

The problem is, it’s just a myth, albeit a persistent one.

Jonathan Schlefer writes at the Harvard Business Review, that there is no evidence for the invisible hand:

One of the best-kept secrets in economics is that there is no case for the invisible hand. After more than a century trying to prove the opposite, economic theorists investigating the matter finally concluded in the 1970s that there is no reason to believe markets are led, as if by an invisible hand, to an optimal equilibrium — or any equilibrium at all. But the message never got through to their supposedly practical colleagues who so eagerly push advice about almost anything. Most never even heard what the theorists said, or else resolutely ignored it.

Of course, the dynamic but turbulent history of capitalism belies any invisible hand. The financial crisis that erupted in 2008 and the debt crises threatening Europe are just the latest evidence. Having lived in Mexico in the wake of its 1994 crisis and studied its politics, I just saw the absence of any invisible hand as a practical fact. What shocked me, when I later delved into economic theory, was to discover that, at least on this matter, theory supports practical evidence.

Adam Smith suggested the invisible hand in an otherwise obscure passage in his Inquiry Into the Nature and Causes of the Wealth of Nations in 1776. He mentioned it only once in the book, while he repeatedly noted situations where “natural liberty” does not work. Let banks charge much more than 5% interest, and they will lend to “prodigals and projectors,” precipitating bubbles and crashes. Let “people of the same trade” meet, and their conversation turns to “some contrivance to raise prices.” Let market competition continue to drive the division of labor, and it produces workers as “stupid and ignorant as it is possible for a human creature to become.”

That’s Adam Smith talking there, about 75 years before Marx and Engels wrote The Communist Manifesto!

Just saying….

The search by classical economists for a concrete and mathematically verifiable theory of economic equilibrium continued throughout the decades, but apparently no one could ever really find much evidence for it:

Leon Walras, of the University of Lausanne in Switzerland, thought he had succeeded in 1874 with his Elements of Pure Economics, but economists concluded that he had fallen far short. Finally, in 1954, Kenneth Arrow, at Stanford, and Gerard Debreu, at the Cowles Commission at Yale, developed the canonical “general-equilibrium” model, for which they later won the Nobel Prize. Making assumptions to characterize competitive markets, they proved that there exists some set of prices that would balance supply and demand for all goods. However, no one ever showed that some invisible hand would actually move markets toward that level. It is just a situation that might balance supply and demand if by happenstance it occurred. [Emphasis added].

In 1960 Herbert Scarf of Yale showed that an Arrow-Debreu economy can cycle unstably. The picture steadily darkened. Seminal papers in the 1970s, one authored by Debreu, eliminated “any last forlorn hope,” as the MIT theorist Franklin Fisher says, of proving that markets would move an economy toward equilibrium. Frank Hahn, a prominent Cambridge University theorist, sums up the matter: “We have no good reason to suppose that there are forces which lead the economy to equilibrium.”

Schlefer concludes by accusing the Federal Reserve of assuming market equilibrium would avert something like the subprime mortgage crisis—and being so wrong about it—precisely because their models incorrectly assumed equilibrium. That’s a hell of an overlooked variable! Of course when the economy did implode, the Fed responded with a flood of money and Keynesian tactics aimed at propping up the system.

But the misconceptions about the free market don’t end there. Have you heard of the “Minsky Moment”? Hyman P. Minsky? Don’t worry, you’re not alone. Most orthodox economists have never heard of him, either.

Hyman Minsky is the name of a once obscure “contrarian” professor of macroeconomics who died in 1996.  A “red diaper baby” born to socialist parents in Belarus, Minsky spent the 1950s and 60s studying the causes of poverty. Throughout his entire career Minsky’s theories carried almost no weight in the field of economics. When the global economic crisis shook faith in the Capitalist system, his star began to rise. Minsky came to be regarded as “perhaps the most prescient big-picture thinker about what, exactly, we are going through” as the Boston Globe’s Stephen Mihm described him.

Minsky, Mihn wrote in 2009: “[P]redicted, decades ago, almost exactly the kind of meltdown that recently hammered the global economy.”

Minsky drew his own, far darker, lessons from Keynes’s landmark writings, which dealt not only with the problem of unemployment, but with money and banking. Although Keynes had never stated this explicitly, Minsky argued that Keynes’s collective work amounted to a powerful argument that capitalism was by its very nature unstable and prone to collapse. Far from trending toward some magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a cliff.

This insight bore the stamp of his advisor Joseph Schumpeter, the noted Austrian economist now famous for documenting capitalism’s ceaseless process of “creative destruction.” But Minsky spent more time thinking about destruction than creation. In doing so, he formulated an intriguing theory: not only was capitalism prone to collapse, he argued, it was precisely its periods of economic stability that would set the stage for monumental crises.

Minsky called his idea the “Financial Instability Hypothesis.” In the wake of a depression, he noted, financial institutions are extraordinarily conservative, as are businesses. With the borrowers and the lenders who fuel the economy all steering clear of high-risk deals, things go smoothly: loans are almost always paid on time, businesses generally succeed, and everyone does well. That success, however, inevitably encourages borrowers and lenders to take on more risk in the reasonable hope of making more money. As Minsky observed, “Success breeds a disregard of the possibility of failure.”

As people forget that failure is a possibility, a “euphoric economy” eventually develops, fueled by the rise of far riskier borrowers—what he called speculative borrowers, those whose income would cover interest payments but not the principal; and those he called “Ponzi borrowers,” those whose income could cover neither, and could only pay their bills by borrowing still further. As these latter categories grew, the overall economy would shift from a conservative but profitable environment to a much more freewheeling system dominated by players whose survival depended not on sound business plans, but on borrowed money and freely available credit.

Once that kind of economy had developed, any panic could wreck the market. The failure of a single firm, for example, or the revelation of a staggering fraud could trigger fear and a sudden, economy-wide attempt to shed debt. This watershed moment—what was later dubbed the “Minsky moment”—would create an environment deeply inhospitable to all borrowers. The speculators and Ponzi borrowers would collapse first, as they lost access to the credit they needed to survive. Even the more stable players might find themselves unable to pay their debt without selling off assets; their forced sales would send asset prices spiraling downward, and inevitably, the entire rickety financial edifice would start to collapse. Businesses would falter, and the crisis would spill over to the “real” economy that depended on the now-collapsing financial system.

Sound in any way familiar?

If the “invisible hand” is just hogwash and if Minsky is right, what’s to stop the economy from imploding again?
 
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Posted by Richard Metzger
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04.19.2012
06:00 pm
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What comes after the end of Capitalism?
04.13.2012
11:49 am
Topics:
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Noam Chomsky has long advocated simply reading the Wall Street Journal if you wanted to understand the mindset of the ruling class. No special detective work is necessary to divine the attitudes and intentions of the rich and powerful. In the pages of their house organ you could find what you were looking for, often with unvarnished bluntness.

It’s good advice, but today, the WSJ isn’t the only place to look for hints of ruling class attitudes. In a column published today at Huffington Post, Dr. Klaus Schwab, the founder and executive chairman of the World Economic Forum poses a salient question: If this is the end of Capitalism, then what’s next?

One of the criticisms of capitalism centers on the widening gap between winners and losers due to the so-called turbocapitalism that is a result of global competition. In this context, the so-called Nordic model demonstrates that a high degree of labor market flexibility and social welfare systems do not have to be mutually exclusive—indeed, they can actually be combined to very good effect. This type of economic policy also enables countries to invest in innovation, childcare, education and training. The Scandinavian countries, which underwent a similar banking crisis in the 1990s to that which we are now experiencing in other Western economies, have shown that by reforming regulation and social welfare systems, flexible labor and capital markets really are compatible with social responsibility. So it is no coincidence that these countries are now among the most competitive economies in the world. [Emphasis added]

Other aspects of the criticism of capitalism that are worthy of serious consideration are excessive bonuses, the burgeoning market in alternative financial instruments and the imbalance that has emerged between finance and the real economy. However, we do see some progress in these areas thanks to mounting pressure from the general public, governments and also the market.

So even though capitalism was not laid to rest in Davos, it is fair to say that capital is losing its status as the most important factor of production in our economic system. As I outlined in my opening address in Davos, capital is being superseded by creativity and the ability to innovate—and therefore by human talents—as the most important factors of production. If talent is becoming the decisive competitive factor, we can be confident in stating that capitalism is being replaced by “talentism.” Just as capital replaced manual trades during the process of industrialization, capital is now giving way to human talent. I am convinced that this process of transformation will also lead to new approaches within the field of economics. It is indisputable that an ideology founded on personal freedom and social responsibility gives both individuals and the economy the greatest possible scope to develop.

If this is the sort of intellectual currency that was circulating around Davos this year, I think this is a pretty strong indication that the Occupy backlash is having a big effect. You’d hope that by now the elites must know that the natives are restless!

Obviously a worldwide group-mind consensus is demanding, if not exactly the end of Capitalism, certainly a major rethink/reformation of the way it is practiced in the 21st century. The world is a different place than it was before the Industrial Revolution, it’s high time we updated the operating system to reflect those changes.

It’s just getting to be so fucking stupid, isn’t it?

Michael E. Porter, a Harvard University professor cited by Schwab in his essay, explains why business leaders must focus on “shared value creation.”
 

Posted by Richard Metzger
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04.13.2012
11:49 am
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Capitalism is making humanity obsolete
01.30.2012
12:45 pm
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Eric Hobsbawm, the prominent British Marxist historian was on BBC Newsnight earlier this month discussing the “pathological degeneration” of the Capitalist system. The eminent, 94-year-old best-selling author recently published a new book How to Change the World: Reflections on Marx and Marxism.

It’s difficult to imagine a conversation like this appearing on American television, but that is what YouTube is for, isn’t it?
 

 
Via Adbusters

Posted by Richard Metzger
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01.30.2012
12:45 pm
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Newt skullfucks Mitt Romney (and Capitalism itself)

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Political junkies alert: If you haven’t seen Newt Gingrich’s epic 27-minute-long violent disembowelment of Mitt Romney, When Mitt Romney Came to Town, holy shit will it will take your breath away!

I mean… WOW. I can only imagine the look on Romney’s face when he saw this puppy. He probably broke down and cried! This shit is hardcore. Reagan’s Eleventh Commandment has been repealed.

Rating the political damage this film does to Romney on a scale of one to ten with one being merely annoying and ten being castrated and then having your balls shoved down your throat for the whole world to see? When Mitt Romney Came to Town is probably an eleven or twelve. Think I’m exaggerating? See for yourself!

This has to be the single meanest, most vicious political hit piece ever made. It’s a cold, cruel masterpiece of character assassination.

It makes the worst things Lee Atwater did in his career look warm and cuddly in comparison. “Willie Horton”? That’s amateur hour compared to When Mitt Romney Came to Town.

I suppose it’s a bit disingenuous to call it “Newt’s” film because he was just the highest bidder. The film was also offered to the other campaigns—they all had their chances—but it was Gingrich, or rather the “Winning Our Future” Super PAC supporting him, that allowed Gingrich to be the one to get all Ed Gein on Romney’s ass and deliver the axe to his head.

When Mitt Romney Came to Town was directed by Jason Killian Meath, an associate of Romney’s during the 2008 Republican primary who made ads that year that were pro-Mittens. He must have seen something in Romney that he didn’t like, or maybe not. Maybe When Mitt Romney Came to Town was simply a way for Meath to cynically sell his services to the highest bidder and enrich himself personally at Romney’s expense. Loyalties can be very flexible in Washington. The film looks like it cost no more than $50k to make, but surely Jason Killian Meath was well-compensated for this expert hit. The film’s all-out annihilation of its target positions Meath nicely as the “Scaramanga” of political operatives. In the future pols from both parties will be clamoring for his services. Why hire anyone but the very best? No one else comes even close to this guy’s mad satanic skillz! He’ll burn your opponent to the fucking ground.

Truly I don’t see how Romney will be able to counter this. It’s like the box that rips your face off in Hellraiser.

The thing is, When Mitt Romney Came to Town inadvertently goes to great lengths to expose the moral and intellectual bankruptcy at the heart of today’s Tea party-led GOP: Free market Capitalism, seen in the human form of Mitt Romney and the rest of his mega-rich cronies at Bain Capital, are such hideous and loathsome creatures that the unavoidable “takeaway”—even for conservative viewers, I should point out—is that Capitalism is an evil system rigged to benefit the people at the top of the food chain and fuck over anyone who gets in their way.

The rest of us are just their food. When Mitt Romney Came to Town makes that very, very clear… even for the most dumbshit Republicans. Freedom? You think you’re free? You’re free to lose your house, health insurance and starve is what you’re free to do, according to the message of this film. It’s called “creative destruction” and Mitt Romney will tell you all about it. It’s how he made his vast fortune: from the misery of hardworking Americans. The next time you hear some asshole going on about impersonal market forces and all that blather, show them When Mitt Romney Came to Town—this is an impersonal market force that has a first name, a last name, a social security number and a street address, albeit one that’s probably behind a big gate with security guards.

But it’s not just Mitt Romney’s mouth that this film pisses in. When Mitt Romney Came to Town dramatically and clearly indicts the entire way BUSINESS is done in America.  The film is of a set with anything that Michael Moore has ever done and seems far more in tune with the Occupy Wall Street movement than anything we’d normally associate with Republicans. Who wrote the voice over script, Trotsky? Yes, I mean to tell you that When Mitt Romney Came to Town is that much of a wildcard to throw into the GOP primary. Even Ron Paul might have his doubts about the free market after viewing this one.

Ultimately, though, I don’t think this film benefits Newt Gingrich in any way. It utterly destroys Mitt Romney, true, it absolutely skullfucks him and leaves him bleeding from his anus and shivering on the ground in a fetal position, but you’d have to be an absolute idiot if the only question you had when When Mitt Romney Came to Town is over was which one of the other Republicans you were going to vote for!
 

Posted by Richard Metzger
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01.11.2012
11:40 pm
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If U.S. land were divided like U.S. wealth
10.31.2011
06:18 pm
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Not much to comment on here is there?

Via Crooks and Liars

Posted by Richard Metzger
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10.31.2011
06:18 pm
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Shoplifters of the World Unite
09.06.2011
03:32 pm
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On an individual basis, when you are staring one dumb kid in the face who can’t articulate why he wanted to burn a local shop to the ground, well then, yes, you can say it’s criminal behavior, someone who wasn’t raised properly or a matter of law and order. However, when mass-rioting is seen on a scale the likes of which occurred in England recently, it seems quite obvious that what we’re observing is a widespread social pathology resulting from end-stage capitalism.  From the tepid (and often counter-productive) response of the British government to the riots, one can only conclude that they have completely run out of ideas—or lack the will—to do anything about the root causes of the unrest.

Radical Marxist philosopher Slavoj Žižek writes on on the deeper meaning of England’s riots in the London Review of Books:

Repetition, according to Hegel, plays a crucial role in history: when something happens just once, it may be dismissed as an accident, something that might have been avoided if the situation had been handled differently; but when the same event repeats itself, it is a sign that a deeper historical process is unfolding. When Napoleon lost at Leipzig in 1813, it looked like bad luck; when he lost again at Waterloo, it was clear that his time was over. The same holds for the continuing financial crisis. In September 2008, it was presented by some as an anomaly that could be corrected through better regulations etc; now that signs of a repeated financial meltdown are gathering it is clear that we are dealing with a structural phenomenon.

We are told again and again that we are living through a debt crisis, and that we all have to share the burden and tighten our belts. All, that is, except the (very) rich. The idea of taxing them more is taboo: if we did, the argument runs, the rich would have no incentive to invest, fewer jobs would be created and we would all suffer. The only way to save ourselves from hard times is for the poor to get poorer and the rich to get richer. What should the poor do? What can they do?

Although the riots in the UK were triggered by the suspicious shooting of Mark Duggan, everyone agrees that they express a deeper unease – but of what kind? As with the car burnings in the Paris banlieues in 2005, the UK rioters had no message to deliver. (There is a clear contrast with the massive student demonstrations in November 2010, which also turned to violence. The students were making clear that they rejected the proposed reforms to higher education.) This is why it is difficult to conceive of the UK rioters in Marxist terms, as an instance of the emergence of the revolutionary subject; they fit much better the Hegelian notion of the ‘rabble’, those outside organised social space, who can express their discontent only through ‘irrational’ outbursts of destructive violence – what Hegel called ‘abstract negativity’.

There is an old story about a worker suspected of stealing: every evening, as he leaves the factory, the wheelbarrow he pushes in front of him is carefully inspected. The guards find nothing; it is always empty. Finally, the penny drops: what the worker is stealing are the wheelbarrows themselves. The guards were missing the obvious truth, just as the commentators on the riots have done. We are told that the disintegration of the Communist regimes in the early 1990s signalled the end of ideology: the time of large-scale ideological projects culminating in totalitarian catastrophe was over; we had entered a new era of rational, pragmatic politics. If the commonplace that we live in a post-ideological era is true in any sense, it can be seen in this recent outburst of violence. This was zero-degree protest, a violent action demanding nothing. In their desperate attempt to find meaning in the riots, the sociologists and editorial-writers obfuscated the enigma the riots presented.

The protesters, though underprivileged and de facto socially excluded, weren’t living on the edge of starvation. People in much worse material straits, let alone conditions of physical and ideological oppression, have been able to organise themselves into political forces with clear agendas. The fact that the rioters have no programme is therefore itself a fact to be interpreted: it tells us a great deal about our ideological-political predicament and about the kind of society we inhabit, a society which celebrates choice but in which the only available alternative to enforced democratic consensus is a blind acting out. Opposition to the system can no longer articulate itself in the form of a realistic alternative, or even as a utopian project, but can only take the shape of a meaningless outburst. What is the point of our celebrated freedom of choice when the only choice is between playing by the rules and (self-)destructive violence?

The outright dismissal by many conservative commentators in England that there was ANY political content to the actions of the (supposedly pampered) rioters seemed idiotic to me. AS IF the observation of the mass behavior of thousands upon thousands of underclass young men deciding to burn their neighborhoods to the ground provided not a scrap of data to be interpreted by social scientists? Nonsense!

The liberals in the UK don’t seem to have that much better a grasp of the situation, as Žižek goes on to point out…

Watch for the repetitions. They’re going to be hammering us harder and faster until we start to wise up…

Read the rest of “Shoplifters of the World Unite” by Slavoj Žižek (London Review of Books)

Below, Slavoj Žižek: “What does it mean to be a revolutionary today?” speech from the Marxism 2009 conference.
 

Posted by Richard Metzger
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09.06.2011
03:32 pm
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The End of Work: A conversation with Charles Hugh Smith

Charles Hugh Smith, author of Survival+ and An Unconventional Guide to Investing in Troubled Times discusses why the Great Recession is here to stay, the structural unemployment that will affect many people and the future of the US economy. Plus, investing your money and time in your own life and in your own community and not getting burned by a publicly traded company you’ve never personally visited. Charles Hugh Smith blogs daily at Of Two Minds.com.
 

 

READ ON
Posted by Richard Metzger
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09.03.2011
11:19 pm
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Capital Exploits Labor: The US-China Trade and Beyond
05.11.2011
10:54 am
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Why are these people smiling? Fom left, Chinese Vice Premier Wang Qishan, Chinese State Councilor Dai Bingguo, Hillary Clinton, and U.S. Secretary of the Treasury Timothy Geithner at the 2011 U.S.-China Strategic and Economic Dialogue at the U.S. Department of State in Washington, D.C., Monday, May 9.

 
A guest editorial courtesy of our super smart friend, Charles Hugh Smith, cross-posted from his essential Of Two Minds blog:

In a classic Marxist set-up, Capital is free to exploit labor because labor is in surplus.

The fundamental dynamics of the U.S.-China trade partnership—certainly the biggest economic story of this generation—boil down to “capital exploits labor.” I am well aware that this sort of quasi-Marxist analysis is supposed to be passe in the era where young nerds can start billion-dollar enterprises in a garage or dorm room. Capitalism is a priori “win-win,” as all those workers in China are getting ahead while our youth launch $50 million IPOs of social networking Web 2.0 companies.

But if you scrape away the high-gloss propaganda and myth-making, then the fundamental dynamic is definitely Marxist: American capital jettisoned American labor as a costly hassle in favor of cheap, no-hassle Chinese labor.

Since Capital’s best buddy in the whole world is the Central State and its proxies, i.e. the Federal Reserve, then the Central State and the central bank (the Fed) smoothed over the exploitation and furthered the consumer economy by inflating a credit-housing bubble. Since 60% of American households own a home, this enabled the increasingly impoverished “middle class” to borrow trillions of dollars in “free” money that could be spent—surprise!—on the new imports from China that filled the shelves of big box global retailers everywhere.

Allow me to illustrate this dynamic by deconstructing two recent stories in the Mainstream Financial Media: ‘Superjobs’: Why You Work More, Enjoy It Less Businesses expect a lot more out of their employees these days…

Taco Bell and the Golden Age of Drive-Thru: Operational innovations at restaurants like Taco Bell rival those at any factory in the world.

The first piece describes in clinical fashion how U.S. capital is ruthlessly exploiting labor, demanding more work for little to no additional pay. The underlying dynamic here is purely Marxist: capital encourages over-supply of labor, which then drives the value of labor down. Competition for the few jobs available makes desperate wage-earners willing to put up with exploitation and insecurity because the options of escaping the cycle of centralized Corporate value extraction are insecure and risky.

Global Corporate America fosters a surplus of labor in the U.S. via three mechanisms:

1. Vast illegal immigration which keeps labor costs down in low-skill corporate workhouses such as slaughterhouses, fast-food outlets, etc.

2. H1-B visas for high-tech workers (now falling out of favor as those positions are better filled directly in India and China).

3. Ship production, software coding and back-office functions to China, and to a lesser degree, to India and elsewhere in east Asia.

The unemployment rate among PhDs is roughly 50%. So much for “winning” by becoming ever more educated. The number of slots in academia is shrinking, and the total number of research positions is relatively inelastic. For more on academia’s “plantation economy,” please read Faulty Towers: The Crisis in Higher Education (The Nation).

With labor in surplus, capital is free to demand whatever it needs to boost all-important profits. The propaganda machines in HR (human resources) spray-paint slogans everywhere (“you’re really really valuable to us, Super-Duper Team Member!”) but everyone knows the reality: everybody is dispensible, and everyone but the CIO at a hot startup a few months from an IPO is a corporate serf a paycheck away from being booted out of the castle into abject poverty.

As a result of this exploitation—known as “wage abritrage”—corporate profits (which boost the wealth of the top 10% who owns the vast majority of stocks and mutual funds) are extremely plump and juicy:
 

 
In the second piece, BusinessWeek breathlessly assures us that we have thousands of highly efficient factories running 24/7 in the U.S.—fast food outlets. Yes, all 6,000 Taco Bells are miniature factories pumping out “product” in vast quantities. The fast food “industry” revenues are $168 billion a year, and the workers, we’re told, are paid $1.25 above minimum wage—woo-hoo, love you, Corporate America!—which means that the full-time employee makes $16,500 a year.

$16K a year doesn’t go very far in urban America, but there is no pressure on Corporate America to raise wages.

I realize that I am an outsider, and biased against global corporate power regardless of the nominal country of origin (down with Canal+!), but I still found it noteworthy that BusinessWeek could run thousands of words of glowing praise for the profitable efficiency of the fast food “industry” without noting that it isn’t an industry at all—it’s just a consumerist fantasy (fast and cheap meals that require no effort or discipline) that produces “food” of low value that pushes the consumer into ill-health with overloads of salt, sugar, and low-grade fat.

70% of the fast “food” served is via the drive-through window, which suggests that an overworked, stressed out, focused on getting through the next two hours American is opting to shut the kids up and stave off hunger by pulling into the drive-through lane and loading up on a “meal” that they know is bad for them but they have no time to make a real meal at home (or so they’ve been brainwashed by thousands of hours of adverts).

If Taco Bell is the “manufacturer/factory of the New America,” then I think we need a peaceful revolution, and soon. The toadies and sycophants of the financial media are pleased to worship 1) CEOs 2) profits 3) efficiencies 4) globalized “growth” as long as its owned by global corporations and of course, everyone’s favorite, 5) innovation, because “innovation” drives profits!

Elsewhere in the latest issue, BusinessWeek breathlessly cooed over digital game company Electronic Arts latest “innovation,” which was selling a digital parrot for $10 a pop that sits on your digital warrior’s shoulder.

Excuse me while I raise my glass to American “innovation.” If pumping out fast food garbage (hello, 60% obesity rates, is there any connection?) is the new American “factory” and “innovation” is selling kids with access to Mom’s credit card a $10 digital parrot (and what does the parrot say? “Kill ‘em all and let God sort ‘em out, brawk!”) for their hyper-violent fantasy wargame, then this nation is well and truly doomed.

To reap a fat profit, you need to sell the stuff being imported from the American-owned factories in China. Since wages have been flat for decades, that posed a problem, as consumers were tapped out. Never fear, capital’s best buddy rode to the rescue, inflating a stupendous credit-housing bubble that enabled the working stiff to speculate “like the big boys” with free money and limitless leverage, all supported by lies (liar loans) and the misrepresentation of risk.

Wall Street reaped tens of billions in profits originating and packaging the debt loaded onto the middle class debt donkeys—not just mortgages, but auto loans, student loans and even credit card debt.

But now, at long last, capital’s doting partner, the Federal Reserve, has run into a spot of bother: the only way to keep profits rising is to crash the dollar, and doing that has squeezed the purchasing power of the debt donkeys. By exporting inflation to China and the rest of the world, the Fed has engineered massive profits for U.S. corporations (when profits earned overseas are stated in dollars, presto, a 10% increase) but it has also forced China into raising prices and fueled an oil and import-driven inflation in the U.S. which has caused millions of insolvent households living paycheck to paycheck to cut back on their consumption.

China has its own problems, namely runaway domestic inflation (thanks, Federal Reserve) and finding places to dump its excess dollars. It was a wonderfully beneficial trade for awhile: we print paper money, and you give us tangible goods for the paper. Thank you very much, and we can offer you some terrific low-yield Treasuries to recycle your growing stash of dollars.

The Fed’s inflation games are sinking the value of the dollar, and the Chinese are not amused. They are trying to buy tangible resources with their ocean of depreciating dollars, and even sinking to buying Spanish debt.

They have another problem: as capital’s return in China slips, it will exit China just as fast as it exited the U.S.

There is a grand irony in that dynamic: a supposedly Communist country trying to run a central-command quasi-capitalist economy will find that Marx had a point after all. Not that the leadership is at risk themselves; the ChiCom offspring already have homes in Vancouver B.C. and Los Angeles and citizenship/green cards, and the family fortune is safely invested in Switzerland and North America.

The “story” is that the Chinese consumer is about to step up spending, and as a result, “you gotta be in China to profit from all the trillions in new consumer spending.” The reality is that the Chinese middle class is already spending like drunken sailors and their 900 million rural compatriots already own TVs and other cheap consumer goods.

The reality is that Capital has already skimmed the big, fat easy profits, and it’s looking elsewhere as labor costs and pesky regulations rise in China. The truth is American and European corporations have already earned out their investments in China, and shipping the factories from China to Vietnam is not much different than crating the factory up in the U.S. and shipping it to China.

There is a theory that the Fed’s “master plan” is to sink the dollar to the point that the low-income states in the U.S. will be the lowest-cost manufacturing base in the world.

At $16,500 a year for full-time workers pushed to maximum production, they might be getting close.

The above essay was written by Charles Hugh Smith and is cross-posted from Of Two Minds

Posted by Richard Metzger
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05.11.2011
10:54 am
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Metzger on Michael Moore’s Capitalism: A Love Story
07.25.2010
11:00 pm
Topics:
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Tara and I watched Michael Moore’s Capitalism: A Love Story this weekend (it’s on the Netflix VOD currently) and I absolutely loved it. It’s a truly great film, one that I have no doubt will be looked at and revered by future generations trying to understand what the hell happened in our backwards era. I recommend it to everyone who reads this blog and cares about my opinion. It was absolutely spellbinding to me. I felt as if I wanted to cheer several times to see someone say these things and say them so powerfully. Capitalism: A Love Story, or a film just like it, needed to be made. but there is only one guy who could have pulled off something like this, gotten it funded, herded through the distribution system and gotten a message this radical the deep penetration in the culture that it deserves, and it’s Michael Moore.

Surprisingly, Capitalism: A Love Story is perhaps the least polemic of all of Moore’s films, even if it does, at root, articulately advocate the necessity of class warfare, at least at the ballot box.  Most of what Moore, or his protagonists, have to say in the film would be damed difficult to refute, perhaps this is why it doesn’t seem as confrontational as Moore’s films often are. You’d have to have a very closed mind to deny the reality of what you see on display here. Even Sean Hannity would have a hard time arguing with any of it (although I doubt he watched or will ever watch Moore’s film)

To say what Michael Moore says in Capitalism: A Love Story took balls and it also took amazing skill as a storyteller, underscoring his Mark Twain-like role in American society. After a mind-numbing section where the audience is introduced to the concept of the so-called “Dead Peasant” life insurance policies some major companies take out on their non-essential employees—unbeknownst to them—where they make more money if the employee dies, he cuts to an interview with Father Dick Preston, the Flint, Michigan-based priest who married Moore and his wife Kathleen Glynn (who interviewed me for a job once, she’s super cool).

He quietly asks the priest if capitalism is evil and what Jesus would think about free enterprise and his answer is devastating. This isn’t some left-wing loony he had to search out, this is the man who married him, the local priest who, like Moore, has witnessed the tragedy and destruction the loss of the auto industry in Flint, Michigan did to their hometown. Both of these men knows what greed does and how and who it harmed. People with first and last names.

And let me tell you, this priest fucking nails it. It’s a powerful, powerful cinematic moment.

Speaking as someone who took ten people on my own 24th birthday to see Roger and Me when it was in theaters—I also released This Divided State on DVD when I was at Disinformation—maybe I’m biased, but do yourself a favor and see this film. Better still, if you watch it and you like it, consider having a screening party at your house and invite 5 or 6 friends over to watch it and discuss it afterwards. It takes two hours to watch and could open the eyes of even a devout redneck Fox News watcher (well, some redneck Fox News watchers) to what’s really going on in this country. It’s not like Glenn Beck is ever going to tell them.

Below is one of the most powerful moments in a film full of them: rare footage taken right after FDR’s final State of the Union address where he lays out the concept of a Second Bill of Rights that would have guaranteed that all Americans have “a useful job, a decent home, adequate health care, and a good education.”

God bless Michael Moore. He’s a great American.
 

 
The Middle Class in America Is Radically Shrinking. Here Are the Stats to Prove it (Yahoo! Finance)

The U.S. Economy Is A Dead Horse And The American People Are Starting To Get Really Pissed Off And Frustrated (Economic Collapse)

Posted by Richard Metzger
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07.25.2010
11:00 pm
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