Archive for the 'economics' Category

And The Morbid Signs Multiply

I found myself befuddled after being drawn, more than willingly, into a political discussion with an old friend. At one point I was accused of advocating “Socialiam” (gasp!), and I let the comment go unchallenged. Later I drafted the reply below. The reply that remains and will remain unsent.

I do rankle at the use of the word “Socialism” as a pejorative term to cover any political, economic or social viewpoint left of free-market Republican capitalism. If millions of people say something absurd, it remains absurd. To get a term like “socialism” even relatively right, one needn’t wade through all 455 pages of Edmund Wilson’s “ToThe Finland Station” (Doubleday Anchor edition). I would recommend anyone seeking precision simply to go on Wikipedia, punch in “Socialism” and see what you get.

Barak Obama and the Democratic Party are not socialists, not even close, and as I see it, more the shame. To characterize him and his party in that way only further diminishes an already deteriorating level of public discourse. Despite my active dislike for the previous administration, I never would have referred to Dubya and his cohort as “Fascists,” probably the closest analogue for those now labeling Obama and the Democrats, Socialists.

Like the citing of the scriptures, every talking or writing head seems to be quoting Orwell to their own ends (me too). But Orwell was unequivocal in his contempt for the didactic abuse of language. And now we’ve reached the point where some fucking Tea-Party moron in Denver can describe a program to encourage the downtown use of bicycles as the work of “socialist revolutionaries.” I would say that’s a reasonable measure how far down the slippery slope of stupidity and madness this country has traveled in just the past few decades. In the words of old Simon Dedalus, “Jesus wept and Christ knows why.”

The actual reason stopping me from sending my friend any of the above lies in the even deeper truth spoken and sung by David Byrne (no relation) “Same as it ever was. Same as it ever was.”

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Crisis? What Crisis?

sb43_090102_140x1051I got cranky last night watching the Super Bowl. Other than the playing of the game itself, the whole self-congratulatory vibe of the NFL has always kind of pissed me off, seeming to exemplify everything that’s gone wrong with this country over the past forty or fifty years. They did have Bruce on at halftime, and last year it was Tom Petty. But last night, awash in the worst a crassly commercial culture can dish out, I couldn’t help but contrast the celebratory hype for so many lousy overblown movies, the outrageously overproduced commercials for sugar-water sodas and the pitches for more outsized, gas-guzzling cars and trucks, all of it against the backdrop of an ongoing economic disaster. It all seemed just so inappropriate, so tone-deaf, so like striking up the orchestra on a sinking ship.

Status Quo Ante Bellum?

images-1It’s easy to forget the shallow Cold War triumphalism, particularly from the American Right, that followed the collapse of the Soviet Union. Now with free-market economies worldwide in disarray, the words of Juan Goytisolo’s 1993 novel, The Marx Family Saga echo with prescience. 

“…you wanted to show how at the very moment when communism was being buried and the system was bankrupt, when [Marx]’s doctrines had really been discredited and the whole world was submitting either willingly or of necessity to the harsh law, but law all the same, of monetarism and the free market, the so-called leap forward was simultaneously a leap backward, things had returned to their point of departure…four-fifths of the world lived in dire poverty, millions of children were staving to death in the midst of saurian or reptile indifference, encouraged by its victories and the death of its enemy the capitalism that ruled over Europe and America was still, as its most lucid critics admitted, savagely destructive, based on immediate profit-taking and the jettisoning of civic responsibilities, and while aggressive nationalism, inter-ethnic struggles and racial cleansing spread from the underdeveloped world into the heartlands of Europe, you were all witness in your impotence to the waste of absurd military budgets, to the pillaging of nations and entire continents, to the systematic devastation of the planet, its polluted seas and sickly forests!” 

For the above quote, thanks to Terry Pitts and his blog site Vertigo: Collecting & Reading W. G. Sebald at http://sebald.wordpress.com

A Succinct Explication

There seems to be a concerted effort on the part of many of those complicit in the current economic debacle, they and their political running dogs, to shift the blame off and onto the impersonal forces of market dynamics, or to the government’s “irresponsible” encouragement of home-ownership or to the well-documented sleaze of Bill Clinton. Forget about it. 

The following is the final paragraph in a lengthy piece that appears in the February 12, 2009, edition of The New York Review of Books titled, “How We Were Ruined & What We Can Do,” by Jeff Madrick, editor of Challenge Magazine, Visiting Professor at Cooper Union, and Senior Fellow at the Schwartz Center for Economic Policy Analysis at The New School. 

“This is, as many economists now concur, the worst economic crisis since the Great Depression. Financial market participants created a financial bubble of tragic proportions in pursuit of personal gain. But the deeper cause was a determination among people with political and economic power to minimize the use of government to oversee the financial markets and to guard against natural excess. If solutions are to be found, the nation requires robust and pragmatic use of government, free of laissez-faire cant and undue influence from the vested interests that have irresponsibly controlled the economy for too long.” 

Couldn’t say it better myself. I did try; See The Compost Heap, “Whadda I Know About Economics?”  Posted July 28, 2008. Apparently just enough.

There May Be No Precedents for This One

images61More difficulty trying to come to grips with the what’s going on in the world at large. My inability to understand the workings of the national and global financial systems that are crashing around us seems not an uncommon frustration. My lifelong, instinctive distrust of the optimistic certainties that have marked the assurances given us by life’s major players is visceral, and arises, I believe from what I call my army draftee’s “Fort Chaffee, 1956” revelation: That the human condition is essentially that of  “blind piss-ants crawling around trying to find the flat side of the marble.” (see Posting, May 3, 2008, “Military History, Chapter Two, 1956”) 

In addition, I am convinced that these times are indeed unique. Changes in quantity have become changes in quality. Everything that’s transpired in the recent past; socially, economically technogically, geo-politically, and now environmentally, is change that exceeds in its rate and magnitude anything previously experienced in human history. 

McLuhan’s line of forty-years ago holds, we are rushing into an unknown future looking for guidance in the rear-view mirror of the past. It’s as if over the recent past, blinkered, short-sighted individuals, experts and teams of experts have been assiduously at work putting up, adjusting and tying-together the complex structures and interlocking superstructures of this house-of-cards we call our world. Nobody is in charge. Nobody really has a coherent overview, and now it seems, the financial components of the whole fucking thing have collapsed. 

In the immortal words of late, great Andy Brown, “Kingfish, we’s in big trouble.”   

 

Another Crisis For Another Old Order

images-1In the 1920s, President Calvin Coolidge proclaimed “the business of America is business.” The stock market crash of 1929 and the ensuing Great Depression took some of the wind out of that one.

With the so-called Reagan Revolution, the aggressive business agendas of pre-Depression America once again asserted their hold on the country. Over the past three decades business ceased to be a subset, if even a major subset of the national purpose, but became the underlying if unstated rationale for the existence of America. We were no longer a community, no longer a commonwealth or even a polity. We were a nation of consumers, market-targets and sheep to be fleeced. And, it was everyone for themselves.

The stock market boom of the 1990s, the housing bubble and the introduction of 401K retirement accounts turned ordinary working people into the equivalent of financial groupies. Tens of millions of Americans with any money at all to invest feared being left behind when the great Wall Street gravy train began to roll. But in the national frenzy for gain, a few fundamental economic principles somehow got lost:

Index-based mutual funds were only as stable as the market itself.

The gospel that “in the long-run,” the market ultimately rights itself ignores Keynes’ sharp observation that “in the long run we are all dead.”

And finally, the absolute touchstone of investment prudence; never put any money into equities you can’t afford to lose.

The national economy went through the looking glass into credit and investment   instruments of near-infinite complexity while an instantaneous process of globalization led to overnight, overseas  outsourcings of most of the nation’s industrial production. Inside a speculative bubble, and a gluttonous consumption of third-world goods (China), the economic health of the supposedly mightiest nation on earth became so jittery that trivial things like the level of Holiday shopping or a slowdown in the surreal values of housing could cause panics. This year, the shoe finally dropped.

Arthur M. Schelsinger, Jr, titled the first volume of his “The Age of Roosevelt,” “The Crisis of the Old Order, 1919-1933.” The Obama election and the economic collapse that contributed to that victory will, I hope, lead to a new crisis of the old order, the now old order that ran things from 1980 – 2008. The sanguine, irresponsibility of the Reagan/Bush ideological approach to government oversight of the economy (an utterly un-conservative philosophy holding that the beast of human economic self interest could be kept tame without serious regulation), and let’s not forget the two Clinton terms where the only ideology was (no pun) “naked” opportunism, led to the mad dance of greed that preceded the current debacle.

The  “old order,” the plutocracy of our own time; the sharpies, the MBAs, the piggish CEOs, lobbyists, the system-gamers have had their day at the trough. My hopes for an Obama administration go beyond the GOP’s much-feared spectres of “Socialism.” I think something even stronger is on order. My own modest proposals would include a bracing dose of class warfare with the application of near-confiscatory tax rates at the country’s stratospheric levels of wealth. Think of it as a way of a rebalancing of the national equity, a way of repealing the outrageous upward transfers of money to the rich during the obscene national barbeque of past twenty-five years.

During the campaign, Obama himself said something like, “Lets’ spread some of the wealth around.” That sounds like a great idea, whose time, I hope has finally come.  

Whadda I Know About Economics?

It seems that the American financial system and perhaps the entire U.S. economy could be headed toward a meltdown in the magnitude of the Great Depression. How the hell  could this be happening? There is a word for it. That word is greed, a greed unchecked by any concern of the public good; criminal, outlaw greed. 

Who are the culprits? Let’s start with Ronald Reagan. Move from there to Newt Gingrich and his “Contract With America’s Rich.” From there move back to the faceless economic and political theorists of the American Right. Collectively the vision of this gang was to emasculate government oversight of the economy. Hey they succeeded! Now we’ll all be paying the price of that ignorance and ideological recklessness. 

First, let’s remember that all that dough, those huge amounts of it, did not simply go missing. Very little of it just disappeared. Not at all. It was skimmed off the system by the sharp operators over the past three decades and migrated – To the slippery accountants, lawyers and lobbyists, to the MBA fixers, to the oily friends of Bubba Bill, the Bushes and the likes of Jack Abramoff, the dealers and fixers, the New Paradigm shysters, suits and scam artists who were given free reign to game the system to the disadvantage of the rest of us. The business sections of most daily newspapers now read like the police blotter of an inner city; indictments, fraud, scams perpetrated or abetted by the leading financial institutions of the nation; major banks, brokerage firms, predatory credit card companies.  Enron was not unique or isolated, and tax cuts for the rich were just not enough. The former Washington Post columnist William Grieder chose the biblical word “usury” to describe the massive shifts in wealth away from the have-nots and into the pockets of the already haves. Woody Guthrie’s line from the thirties fits well the situation of this new century, “some men rob you with a mask and gun, some with a fountain pen (read laptop).” 

Visit any of the choice, second and third-home, waterfront/golf course McMansion regions anywhere in the country. You can calculate the extent of the ill-distributed gains. Drive the roads of the “better “ suburbs and count the plethora of over-the-top luxury cars. All this in a time of increasing numbers of poor and working poor Americans. Universal health care? We can’t afford universal health care! Ask yourself how did all of this narrowly distributed new wealth come about?  Just hard work I suppose. Think about CEO compensation, and recall if you will, that little creep who waltzed away from the NYSE with a sweetheart severance deal of a mere $179 million. The national Ponzi scheme that’s marked the past several decades of the American economy is beginning to look like the fowl or foul bird come home to roost. Too late now to whitewash the walls. 

Whadda I know about economics? Not much. But I remember former Philadelphia Daily News columnist Pete Dexter writing of the attempts by utility company executives to explain the 1979 Three Mile Island meltdown. When challenged about his lack of nuclear expertise, Dexter wrote, “I don’t know anything about nuclear technology, but I know a lot about bullshit. And that’s what this is, Bullshit.” 

After the Bear Stearns bailout, the imminent rescues of Fannie Mae and Freddie Mac and now several major banks going go belly up, I listen to the words of Dubya, of Bernake and Paulson and like Pete Dexter, I think I know what I’m hearing. Stay tuned!