You are absolutely right. Not only is the cheerleading misplaced, but, as you argued in your recent editorial, the system itself is fundamentally flawed. However, it is not at all clear how that system can be restructured without falling back into the same traps as before. The system as it now exists is far too big and complex for any government to regulate. And since the only ones qualified to regulate it would be the same people who ran it into the ground previously, how could we assume they’d be trustworthy and not subject to bribery, intimidation or simply a reluctance to go against the flow? Sorry, I know that neither Obama nor you nor hardly anyone else in the USA wants to hear this, but as I see it, the only recourse is some sort of planned economy, where all the large banking and investment firms are allowed to fail, then nationalized, then gradually wound down, to be replaced by a system closer to socialism than most Americans are — apparently — comfortable with. As the system collapses and increasing numbers of ordinary people experience real pain, I think the paranoia regarding socialism will die away in favor of a more realistic approach to our economic dilemma. What’s important to remember is that we are still a nation of abundance with respect to resources, people, skills and knowledge. Once the money mirage is dispelled, there’s no reason we can’t once again prosper.Wouldn't it be great if he posted a comment here, in response? I'd love to know whether he's even considered a socialist option. Sometimes he sounds that way. But most of the time he appears to want to see capitalism survive, albeit in an altered form. What exactly would that mean, Paul?
Posts of Special Interest:
Tuesday, March 31, 2009
Sunday, March 29, 2009
Actually what I'm doing is remembering what I've read about the Russian Revolution. And thinking about certain similarities with the Situation In Which We Now Find Ourselves (SIWWNFO). In a nutshell, Obama reminds me of Kerensky.
What I'm getting at here, is that when Kerensky came to power, after the initial revolution, in February, he vowed to continue the Russian war effort against Germany, despite the unpopularity of that war and the huge losses the army was taking on the German front.
When the February Revolution broke out in 1917, [Alexander] Kerensky was one of its most prominent leaders, and was elected vice-chairman of the Petrograd Soviet. He simultaneously became the first Minister of Justice in the newly-formed Provisional Government. When the Soviet passed a resolution prohibiting its leaders from joining the government, Kerensky delivered a stirring speech at a Soviet meeting. Although the decision was never formalized, he was granted a de facto exemption and continued acting in both capacities. The New York banker Jacob Schiff made large loans to Kerensky's government.
After the first government crisis over Pavel Milyukov's secret note re-committing Russia to its original war aims on May 2-4, Kerensky became the Minister of War and the dominant figure in the newly formed socialist-liberal coalition government. Under Allied pressure to continue the war, he launched what became known as the Kerensky Offensive against the Austro-Hungarian/German South Army on June 17, Old Style. At first successful, the offensive was soon stopped and then thrown back by a strong counter-attack. The Russian Army suffered heavy losses and it was clear - from many incidents of desertion, sabotage, and mutiny - that the Russian Army was no longer willing to attack.
Kerensky was heavily criticised by the military for his liberal policies, which included stripping officers of their mandate (handing overriding control to revolutionary inclined "soldier committees" instead), the abolition of the death penalty, and the presence of various revolutionary agitators at the front. Many officers jokingly referred to commander in chief Kerensky as "persuader in chief".Like Obama, Kerensky used his powers of gentle persuasion to effect liberal reforms. But, also like Obama, he was determined to maintain what he saw as iron clad commitments carried over from the previous regime. In Kerensky's case these commitments took the form of military treaties, while for Obama they take the form of financial obligations based on a respect for the laws protecting bonuses and private property, in the form of investment obligations on the part of the world's largest banking and investment companies. Timothy Geithner insisted today, in a televised interview, that these obligations must be respected regardless of the cost to US taxpayers.
Kerensky's major challenge was that Russia was exhausted after three years of war, while the provisional government did not offer much motivation for a victory outside of continuing Russia's obligations towards its allies. Furthermore, Lenin and his Bolshevik party were promising "peace, land, and bread" under a communist system. The army was disintegrating due to a lack of discipline, which fostered desertion in large numbers.During the October Revolution, the famed "Ten Days that Shook the World," the Bolsheviks, led by Lenin, defeated the forces of Kerensky's provisional government and established a Communist state, leading to a prolonged and extremely violent civil war. A significant factor in the Bolshevik success was its commitment to ending the war and bringing the demoralized and exhausted troops home.
Kerensky and the other political leaders continued their obligation to Russia's allies by continuing involvement in World War I - fearing that the economy, already under huge stress from the war effort, might become increasingly unstable if vital supplies from France and the United Kingdom were to be cut off. Some also feared that Germany would demand enormous territorial concessions as the price for peace (which indeed happened in the Treaty of Brest-Litovsk). The dilemma of whether to withdraw was a great one, and Kerensky's inconsistent and impractical policies further destabilized the army and the country at large.
The parallel I see is between Kerensky's insistence on honoring Russia's treaties, to the point of maintaining a disastrous war, and Obama's insistence on honoring legal obligations protecting the fortunes of the wealthy in the face of a disastrous economic meltdown. Ultimately the Russian people sided with the Bolsheviks who insisted on cutting the ties to their allies and bringing the war to an end. At some point, Americans will demand that our government, in a similar spirit, cut its ties to the oligarchs whose greed and corruption are having similarly disastrous effects in our own time.
Saturday, March 28, 2009
What is this "it" I'm talking about? Check out my January 26th posting here on the blog:
I can’t believe anyone in his right mind is still thinking in terms of “recovery.” Recovery of what? What is it we think we can recover? And why is it we think we need to recover? The last thing the world needs is a return to the status quo ante, which would simply be a re-inflation of the same old bubble and the perpetuation of the same old Ponzi economics.I admit I've been a bit worried about Paul Krugman's take on all this. He's been persistently advocating for huge deficits as a way of containing the crisis and sometimes it seemed as though he too, like Obama, was hoping the old system could somehow be revived. Last Thursday, however, he finally made his position crystal clear, in a great Op-Ed piece called The Market Mystique:
Quite a few economists have reconsidered their favorable opinion of capital markets and asset trading in the light of the current crisis. But it has become increasingly clear over the past few days that top officials in the Obama administration are still in the grip of the market mystique. They still believe in the magic of the financial marketplace and in the prowess of the wizards who perform that magic. . .I've already referred to last night's Bill Moyers show, where he interviewed James Thindwa and discussed the Republic Windows and Doors rebellion. But the second segment was possibly of even greater importance. Veteran political reporter, William Greider appeared and what was his message? More or less the same as Krugman and good old DocG:
Much discussion of the toxic-asset plan has focused on the details and the arithmetic, and rightly so. Beyond that, however, what’s striking is the vision expressed both in the content of the financial plan and in statements by administration officials. In essence, the administration seems to believe that once investors calm down, securitization — and the business of finance — can resume where it left off a year or two ago.
To be fair, officials are calling for more regulation. Indeed, on Thursday Tim Geithner, the Treasury secretary, laid out plans for enhanced regulation that would have been considered radical not long ago.
But the underlying vision remains that of a financial system more or less the same as it was two years ago, albeit somewhat tamed by new rules.As you can guess, I don’t share that vision. I don’t think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don’t think the Obama administration can bring securitization back to life, and I don’t believe it should try.
BILL MOYERS: We saw Secretary Geithner on Monday. We saw President Obama on Tuesday night. We saw Secretary Geithner again on Thursday. And the storyline seems to be, we're going to get tough on the financial industry. Your old newspaper, "The Washington Post," says, calls it, "A sweeping expansion of Federal authority of the financial system. A rebuke of raw capitalism, and a reassertion that regulation is critical to the healthy function of financial markets." That's the storyline as I read the week, but if you read between the lines, what's missing?
WILLIAM GREIDER: Well, among other things that are missing from that story is that we had the rules and regulations, the agencies created some 80 years ago and afterwards to prevent this sort of catastrophe. And these same political players, Republicans and Democrats holding hands, stripped them away, eviscerated them. The same agencies these reformers want to put in power to prevent this from happening again. Starting with the Federal Reserve, the Securities Exchange Commission, other regulators, utterly failed in their duty to do that. Now, we're going to give them new power.
I'm offering a breath of skepticism toward this grand transformation of government. I don't want to be a cynic, but it feels more to me like trying to restore the old order that failed. And I mean by that these big mega banks that had been liberated by deregulation to do as they pleased and the other rules that were undermined. I think this President, and I'm a big fan of this President, but I think his first priority seems to be to recreate those institutions which, some of which are now insolvent, as healthy again.
And actually it's quite scary, because unless they set about to make much more fundamental changes, I fear we will, sure enough, get this back again.
Finally, here's what George Soros had to say recently, quoted in an article in the London Times, George Soros, the man who broke the Bank, sees a global meltdown. And by the way I have to give him special credit here, because he's been saying this sort of thing for a long time and no one was listening:
The urgent task now, he says, is to realise that the system that collapsed was flawed. “Therefore you can’t restore it. You have to reform it.” He worries that politicians have not yet accepted the need for fundamental change and that “a lot of bankers have their head in the sand”.My own take on all this is that ultimately it may not matter what Geithner, Bernanke, Obama and congress do or don't do, the result will be the same: total collapse beyond any hope of restoration. However, if they finally "get it" as so many others are now getting it, and decide to work toward fundamental change instead of restoration of the old oligarchic order, the ride to the bottom of the money barrel will be a whole lot smoother -- and safer -- for all concerned.
Friday, March 27, 2009
BILL MOYERS: He was in the thick of things recently when local factory workers stood up to a deadbeat employer. The company they worked for, Republic Windows and Doors, suddenly announced it was closing up shop and leaving town. By law, Republic's unionized employees were entitled to 60 days notice and some parting benefits. Instead, the owners gave them three days notice and cut off their health insurance. The angry workers took over their factory. Backed by their union, the United Electrical, Radio and Machine workers of America or U.E., they called it a "peaceful occupation" and announced they wouldn't budge until the company did right by them.
REPORTER #1: Developing right now, laid-off workers occupying a Chicago factory-
REPORTER #2: Hundreds of workers are barricaded in a business on Chicago's-
BILL MOYERS: The story caught the nation's attention...
REPUBLIC WINDOWS AND DOORS EMPLOYEE: We've been here since yesterday and we aren't going anywhere. We are committed to this!
BILL MOYERS: As workers stood firm inside the factory, James Thindwa helped rally supporters to raise a ruckus outside.
CROWD: The workers united will never be defeated!
JAMES THINDWA: We were going to use Republic Windows as an example. That if you're thinking about walking away from workers, you know, walking away from your obligation to pay workers wages and their benefits, and that you're going to have a fight on your hands. That we're going to bring the entire community- the wrath of the community was going to come and express itself. Chicago is a union town. And we like to say that here. And so we drew a line in the sand and said- it was snowing outside, we drew a line in the snow, and said that you can't do this in Chicago.
BILL MOYERS: Factory owners blamed the closure on declining home construction. They said they couldn't meet the payroll or pay their bills, because Bank of America had canceled the company's line of credit.
CROWD: Se, se puede!
BILL MOYERS: So organizers took on the bank. It had just received 25 billion dollars in federal bailout money- money meant to help banks do the very kind of lending companies like Republic Windows and Doors needed.. . . .
JAMES THINDWA: And so this became a very, very powerful campaign, politically, emotionally. And I think Bank of America wisely decided that this was not a fight that they were going to win.
CROWD: Yes, we did! Yes, we did!
BILL MOYERS: After five days of public pressure, Bank of America caved. It came up with a cash loan to pay the workers what they were owed.
It's a great story. You can find the entire transcript here.
Wednesday, March 25, 2009
"Arrest us. Or else we'll do something illegal and you'll have to arrest us anyhow. Then find the jails to put us in. And if there's no room, then why not simply put back in our old homes, under 'house arrest,' like Bernie Madoff, for example. If we're prisoners you'll have to find someplace reasonably clean to keep us in, with a sink and toilet that work, you'll have to feed us and you'll have to provide us with medical care. Best of all, you'll have to find work for us."
Prisoners don't need money. They don't need credit. They are provided with what is necessary for survival. But don't go out and stab anyone, please. Civil disobedience should do just fine.
Tuesday, March 24, 2009
1. First the hedge fund buys an asset with a face value of $100 for $80. The hedge fund puts up $2.40, while the Fed contributes the rest, $77.60. Huge leverage.An even more devastating assessment appears in an interview with noted economist James Galbraith, who finds the plan "extremely dangerous":
2. The next day, the hedge fund re-runs the model and realizes that they overpaid the bank. Turns out, it was only worth $20 -- which was where the market had been, sans-government leverage.
3. The hedge fund loses it entire $2.40, and the taxpayer loses its entire $77.60.
4. BUT! The bank buys the asset back from the hedge fund at $20, while paying it a $5 million fee for its trouble.
5. The upshot: The banks sells high, buys low. The hedge fund collects a fee for holding the asset. And the taxpayer is screwed.
Why? In short, because the plan is yet another massive, ineffective gift to banks and Wall Street. Taxpayers, of course, will take the hit Why does Tim Geithner keep repackaging the same trash-asset-removal plan that he has been trying to get approved since last fall?
In our opinion, because Tim Geithner formed his view of this crisis last fall, while sitting across the table from his constituents at the New York Fed: The CEOs of the big Wall Street firms. He views the crisis the same way Wall Street does--as a temporary liquidity problem--and his plans to fix it are designed with the best interests of Wall Street in mind.
If Geithner's plan to fix the banks would also fix the economy, this would be tolerable. But no smart economist we know of thinks that it will.
We think Geithner is suffering from five fundamental misconceptions about what is wrong with the economy. Here they are:
The trouble with the economy is that the banks aren't lending. The reality: The economy is in trouble because American consumers and businesses took on way too much debt and are now collapsing under the weight of it. As consumers retrench, companies that sell to them are retrenching, thus exacerbating the problem. The banks, meanwhile, are lending. They just aren't lending as much as they used to. Also the shadow banking system (securitization markets), which actually provided more funding to the economy than the banks, has collapsed.
The banks aren't lending because their balance sheets are loaded with "bad assets" that the market has temporarily mispriced. The reality: The banks aren't lending (much) because they have decided to stop making loans to people and companies who can't pay them back. And because the banks are scared that future writedowns on their old loans will lead to future losses that will wipe out their equity.
Bad assets are "bad" because the market doesn't understand how much they are really worth. The reality: The bad assets are bad because they are worth less than the banks say they are. House prices have dropped by nearly 30% nationwide. That has created something in the neighborhood of $5+ trillion of losses in residential real estate alone (off a peak market value of housing about $20+ trillion). The banks don't want to take their share of those losses because doing so will wipe them out. So they, and Geithner, are doing everything they can to pawn the losses off on the taxpayer.
Once we get the "bad assets" off bank balance sheets, the banks will start lending again. The reality: The banks will remain cautious about lending, because the housing market and economy are still deteriorating. So they'll sit there and say they are lending while waiting for the economy to bottom.
Once the banks start lending, the economy will recover. The reality: American consumers still have debt coming out of their ears, and they'll be working it off for years. House prices are still falling. Retirement savings have been crushed. Americans need to increase their savings rate from today's 5% (a vast improvement from the 0% rate of two years ago) to the 10% long-term average. Consumers don't have room to take on more debt, even if the banks are willing to give it to them.
What no one seems ready to discuss at this point is where they think all this poorly conceived planning will wind up. I hear talk about prolonged recession, but what does that really mean? With millions of Americans losing their homes and jobs, out on the street, begging for food, how long a "recession" can be tolerated?
Especially disturbing is that all our high hopes for the newly minted Obama administration seem about to be dashed. His plan is almost sure to fail and the Republicans will certainly be there, ready to pounce when that happens. What we need at this point is exactly what we do not have: a viable party of the left, socialist, liberal, whatever, with no ties to big money and a credible leadership. If some sort of meaningful political alternative doesn't emerge soon, we may all be screwed, and for a long time to come.
Sunday, March 22, 2009
However, as my friend Maju reminds us in a recent comment:
Well, don't know. I could go for longer but what I really feel is that there is no push yet, nor a project to replace the moribund Capitalism (with a handful of very tentative neo-commy exceptions, mostly in Latin America). And that it won't be as easy as to just see the system collapse and then the new ideal society flourish automatically.He is absolutely right. We can't afford to simply wait for the monetary system to collapse, especially because there are very powerful forces now being marshaled to prevent that from happening. Even after the collapse there could be a long period of chaos, where almost anything can happen. Maju fears the rise of fascism once again, and that is certainly a possibility.
It will need a huge effort and a most creative reinvention of nearly all.
What is needed now, therefore, are interim measures that could ease the transition from a private to a public sector economy. In my most positive, hopeful moments I believe the political climate is such that the proper interim measures will be taken as a matter of course, at least in the USA, as the need for them becomes increasingly clear. We do live in a democracy, liberal democrats are in control of congress and we have a potentially very powerful president, known for his humanity, in Barack Obama. In my more pessimistic moments, however, I fear we might have to fight for such measures, not through violent means, hopefully, but via the resurgence of various citizens interest groups, community organizers, labor unions, charities, even religious groups.
What interim measures am I thinking of?
1. First and foremost, we must find a way to get people back into their homes. The easiest way to do that would be by nationalizing the banks completely. That way, the delinquent mortgages would be owned by the government. The government could then set up a mortgage resolution system by which people could either renegotiate their mortgages at a rate they can afford, or give the house to the government outright in return for an affordable rental lease. Those who have already lost their homes could be assigned houses already standing empty. The government would hire carpenters, plumbers, etc. to restore the houses, which would also put many construction workers back to work.
2. Second of all, we could extend the food stamp system, which is already computerized (using cards very similar to credit cards) to many more people and many other commodities, such as clothing, shoes, inexpensive toys, even heating fuel and gasoline, as well as necessary services, such as a plumber, electrician, etc. These could be called "Resource Cards." Anyone without a job or earning less than the amount needed to maintain a reasonably adequate life style would be entitled to such cards. Since the food stamp system is already in place, such a program should not require a large increase in the federal bureaucracy. Though even if it did, that would be a good thing since we need to create more jobs anyhow. Anyone using a Resource Card who is offered a job commensurate with his or her training and skills would have to take that job or lose their card. Such a system would make our current unemployment insurance system unnecessary, so that would be discontinued.
3. The government would need to initiate a massive job creation program -- and to make it maximally efficient, there should be no middlemen, as there are now. In other words, the government itself should create specific entities that would perform needed services and hire the people to perform them, without benefit of the "private sector," aka the oligarchs. This would be very similar to the Works Project program initiated by Roosevelt in the 30's, and should include writers, which would mean I could be included as well if need be. :-)
4. The Medicaid system offering free health care to very low income people, should be extended to the same people eligible for Resource Cards.
What have I left out? Any other suggestions? Anyone see problems with such a plan?
Saturday, March 21, 2009
While music plays, in gentle ease
And wind will fill their sails and take them
To other undiscovered seas." [from Bertolt Brecht, "Ballad of the Pirates"]
TITUS LUCRETIUS CARUS: "The winds infuriate lash our face and frame,
Unseen, and swamp huge ships and rend the clouds,
Or, eddying wildly down, bestrew the plains
With mighty trees, or scour the mountain tops
With forest-crackling blasts. Thus on they rave
With uproar shrill and ominous moan."
BB: "And, at the last, a strange impression
While rigging screams and storm winds howl
Of voices hurtling to perdition." ["Ballad of the Pirates"]
Angel of Death: "Violence of the law before the law and before meaning, violence that interrupts time, disarticulates it, dislodges it, displaces it out of its natural lodging: 'out of joint.' . . . In the incoercible differance the here-now unfurls." [Jacques Derrida, Specters of Marx]
. . .
Angel of Death: "This barricade was furious . . . It was huge and living and, as from the back of an electric beast, there came from it a crackling of thunders. The spirit of revolution covered with its cloud that summit whereon growled this voice of the people which is like the voice of God; a strange majesty emanated from that titanic hodful of refuse. It was a garbage heap and it was Sinai. . . . [from Victor Hugo, Les Miserables, as quoted in Derrida, Specters of Marx]
VG: [picking up up a copy of the New York Times and reading] "Loosened by a week of monsoon rains, the huge garbage mountain here -- the symbol of the nation's poverty -- had collapsed and smothered hundreds of squatters who made their livings picking through it with metal hooks for scraps of refuse. . . 'The Promised Land' is a real mountain, 50 feet high and covering 74 acres, the main dump for 10,000 tons of garbage produced in Manila every day. . . . 'There's always smoke, there's always fire, even when it rains,' said Paz Calopez, who lives at the edge of the mountain. 'The garbage is always glowing, even at night, and you hear popping sounds. We think it's batteries exploding. It smells worse than a bathroom, especially when the bulldozers come through. Then you really smell the smoke. You cannot breathe. Your eyes water.' And as the new mountain grew, a whole economy developed around it, with middlemen buying and reselling the salvaged scraps and shanty shops springing up to sell soap and shoes and bicycle parts and school supplies and ice cream. 'It's raw capitalism working here,' Father Bernardo said. 'And it really generates money. Millions of pesos revolve through here every day.' [NY Times, July 18, 2000]
BB: "Capitalism, with its anarchic system of production, only becomes aware of its own laws of motion in a crisis: as Marx said, it is the roof falling in on its head that gives it its first introduction to the laws of gravity." [from Brecht on Theater]
VG: [still reading] "Mrs. Ochondra said she could not stop worrying about her lost children. 'I know my sons miss me,' she said. 'They can't really sleep well at night unless they're beside me.' Looking back now, she said, her life seemed to be filled with premonitions of tragedy. She would wake at night and gaze at the faces of her children and smooth their pillows. 'At night during the summer, the mountain of garbage would just light up, and I would say to my husband: 'Look, it's like candles are burning,'' she said. ''It's like we are living in a cemetery.'" [NY Times, July 18, 2000]
Angel of Death: "[F]rom all lips arose a strangely satisfied and terrible cry, funereal in meaning and triumphant in tone: 'Long live death!'" [from Victor Hugo, Les Miserables, as quoted in Derrida, Specters of Marx]
Chuang Tzu: "Men say there is no death -- to what avail? The body decomposes, and the mind goes with it. Is this not a great cause for sorrow? Can the world be so dull as not to see this? Or is it I alone who am dull, and others not so?" [Chuang Tzu, trans. Lin Yutang]
BB: "And I saw that nothing was ever completely dead, not even what had died. The dead stones breathe. They modify each other and cause modifications. Even the allegedly dead moon is in movement. It casts light -- however strange -- upon the earth and determines the trajectory of falling bodies and causes the ebb and flow of the sea waters." [from Becht's Me-Ti, quoted in Frederic Jameson, Brecht and Method]
Because the fastenings of primordial parts
Are put together diversely and stuff
Is everlasting, things abide the same
Unhurt and sure, until some power comes on
Strong to destroy the warp and woof of each:
Nothing returns to naught; but all return
At their collapse to primal forms of stuff.
Regardless, there's no question that we can survive in an economy without money, at least without money as we now know it. What's important even in our present situation is not really the shuffling around of money (as in the shell game run for so long by our beloved plutocrats) but the production and allocation of resources. One way to think about it is to think about what happens when someone with health insurance goes to the doctor. Money need not change hands (though in some cases there might be a small co-pay). You show someone your membership card, they sweep it through a little box and you're good.
But what about the doctor, won't he insist on being paid with money? Only if he's a fool. Because in the economy we are now headed for, he'll have no way of knowing what his money is worth, and its value will certainly deteriorate over time. Much better to be presented with a piece of paper telling him that he now has the right to continue living in his home without having to worry anymore about a mortgage; that he can forget about his car payments because the car he's been paying on is now available for his use whenever he needs it; and he can get all the gas he needs simply by presenting a ration card at the gas station.
Of course, such a system will require a huge bureaucracy to run it and there is always the danger of inefficiency, unfairness and corruption. Just as there is now, and always has been, regardless of whether we are living in a "free market" system (in which every large business has a bureaucracy of its own) or a socialist system. There is one very real rub, however. Because it's going to take time to set up such a system and make it work. Which is why it's important to start planning it now.
Is this an idealistic way of thinking? I've been accused of being an idealist. But I'm not. It's a realistic way of thinking. Unless anyone has a better idea of how to deal with our present, ever expanding, catastrophe. If so, please by all means comment below.
In a comment to my post of March 15, The Rain in Spain, Maju asked a simple question, which I promised to answer in a future post:
You say abolish money... but how? It needs more than just supressing money: it needs real nationalization or collectivization of all. Today's ecnomy is not anymore a farm economy of self-sufficiency: every single productive process is interdependent with too many others. I think that more important than abolishing money is to make corporate decissions democratic and accountable to the workers and the public in general. The primary goal is to abolish any kind of organization that doesn't work by the principle: one person, one vote. Including corporations and religious sects.Actually what I'd written was
We’ve woven a Gordian knot out of all these trillions of dollars worth of MONEY and are now desperately looking for some magic formula that will untangle it for us. So why not, simply, take up the sword of Alexander, who was not called “Great” for nothing, and cut the knot? Kill the money. Let all the leaders of the most heavily invested, and therefor most at-risk, nations meet and agree to simply do away with money. Or, at least, money as we now know it.Cutting the Gordian Knot of our monetary system is actually even simpler than what Alexander did, because this system has already self-destructed. So in this respect what it would mean to cut the Gordian Knot would be to simply acknowledge that fact. Stop trying to revive a paper corpse and start concentrating on the real problems of real people. The alternative now being pursued by the US government in its efforts to shore things up will take longer, but will ultimately be even more effective because it will demonstrate in no uncertain terms that the old monetary system can no longer work. The more money that's printed, the less money is going to matter. This is not simply a question of generating runaway inflation, because inflation per se is not really what's most important. What's most important is meaning.
The electronic printing of trillions of dollars by the flick of a switch is in itself a demonstration that money no longer has any meaning, regardless of whether or not "inflationary forces" are at work. Because money cannot be separated from value and real value cannot be generated out of thin air. As this "money" comes increasingly into play in the world economy, its dubious meaning will undermine everyone's confidence, not only in the value of the new money, but the value of money in general -- because there will be no way to tell the difference. No one will any longer want to accept dollars, of course, but it will go much farther, because the value of all the world's currencies are tied to the dollar. This is why a UN panel recently suggested that the world should ditch the dollar. Ditching the dollar as the universal reserve currency would already be one way of cutting the Gordian Knot. But it will not solve the problem so long as the powers that be insist on reviving the old monetary system, a process that will still require the extravagant printing of currency of some kind, dollars or no.
So the first thing to be understood about the question of abolishing money is that this is already what is happening, the Gordian Knot is being cut as we speak -- by the very people hoping to gradually and carefully unwind it. But it's a slow process that has the potential to be extremely destructive. Why? Because every government is now concentrating on reviving its economic corpses and not paying enough attention to certain very serious social and human problems to be found among real, living people.
What I recommend, therefore, is to really then just cut that knot, as quickly and suddenly as possible. A meeting of the General Assembly of the UN could be called and there could then be a general agreement to abolish money as we know it. And with the money, all the accumulated debts that are at the heart of our current dilemma. In the past such agreement would have been almost impossible to achieve, because there would be certain nations that owed more debt than others, and the ones holding such debts would feel cheated if all such debts were canceled. But in the current climate every nation's economy is so closely bound up with every others that such a decision should come as a great relief to all -- once they are mentally and emotionally able to deal with the enormous paradigm shift, aka "gateless gate," that they would have to pass through. Perhaps a two week retreat in a Zen ashram would be a good idea for all the delegates before they vote on such a measure.
"Does a dog have the Buddha mind?" NO! Now rephrase the question: "Does this dog have the Buddha mind?" Again, NO. At this moment the dog (i.e., you yourself) will have attained the Buddha mind -- and there will no longer be any need to ask the question.
To be continued . . .
Friday, March 20, 2009
This is the video you've heard about, by the students of Academy High School in Pomona, California. President Obama mentioned them in his speech on education, and later visited Pomona to meet with them. (I could say something cynical about his visit, but I won't.) The stories they tell will soon be the stories many young people all over the country -- and all over the world -- will also be living, as this so-called "recession" wreaks havoc everywhere.
Obama's stimulus package may help some, at least for a time, though from the sound of their stories it looks as though the money trickling down to their families will amount to too little and come too late.
I'm still thinking about that 1.2 trillion dollars Ben Bernanke managed to conjure out of nothing and I'm thinking about how far that amount of money could go if it weren't already committed to the fool's task of "reviving the economy." If our leaders had the guts to defy people like Rush Limbaugh, Sean Hannity, and a host of other conservative hypocrites, seeking to profit from Obama's impossible situation by crying "socialism" (as if they had any idea of what socialism actually is), then every failing business in this country could be nationalized, at least temporarily, and revived, putting people back to work, so they could afford to renegotiate their mortgages and get back into their homes. If certain businesses were no longer viable then the money could be used to start up new businesses aimed at what is needed now, such as, for example, home restoration businesses, plumbing and heating businesses, auto, truck, bus and rail maintenance businesses. If there weren't enough trained workers to man these businesses, on the job training programs could be implemented. A great deal could be done with money now being used basically to protect the fortunes of millionaires and billionaires who gambled their fortunes and lost. It's essential to remember that those fortunes have already been lost. But these people are too "important" to fail, so trillions of US dollars are basically being handed over to them for no good reason beyond the fact that they are and always have been the ones running the country all along: the oligarch/plutocrats. The "plutigarchs."
Aside from Bill Moyers, God bless him, no one in the media is daring to talk about class in any meaningful way, about the class warfare the moneyed elite has been waging against middle class, working class and just plain poor people for so many years, and how their efforts have been sanctioned by a government bought and sold by them through every form of corruption one can think of, from outsized campaign contributions to gifts and perks, lobbying efforts, job offers, and in some cases, no doubt, outright bribes. The Democrats as well as the Republicans have been tainted (I hesitate to say "corrupted") by the same process, which is undoubtedly why the same old Henry Paulson-type financial "experts" are still runnng the Washington show. Moyers interviewed a real live "socialist" this evening, a guy named Mike Davis, who had a lot of very interesting and illuminating things to say about the history of this country -- and its future. If there is any hope for the world, it's with people like Moyers and Davis.
It is the way of the Tao to act without acting, to conduct affairs without trouble, to taste without discerning flavor, to consider what is small to be great, and to consider a few as many, and to recompense injury with kindness.
The master of the Tao anticipates things that are difficult while they are easy, and does things that would become great while they are small. All difficult things in the world are sure to arise from a previous state in which they were easy, and all great things from one in which they were small. Therefore, the sage, while he never does what is great, is able on that account to accomplish the greatest things. . . .
Thursday, March 19, 2009
The Federal Reserve’s decision to fire up the printing presses to the tune of $1 trillion continued to wash over world financial markets on Thursday, pushing the price of government bonds higher and dragging down the value of the dollar.Actually, it's more like 1.2 trillion.
This is Yves Smith's version, entitled, appropriately enough, On the Fed's 'Shock and Awe', from the blog Naked Capitalism:
When some deemed the Fed's move today to expand its balance sheet by as much as a trillion dollars plus as "shock and awe", I recalled that when that term was first used, at the beginning of the US invasion of Iraq. The notion was a display of superior force would lead to quick capitulation.Hardly any of the professional economists seem very happy about this. But I'm not an economist, only a bewildered -- and bemused -- poet. So I have some very simple and unsophisticated questions for our respected Federal Reserve Chairman:
We know how well that theory worked. And I suspect the unintended Iraq-Fed analogy is apt.
Let me focus on the Treasury part of the equation, but with a recap first. The Fed announced today that it would buy up to $750 billion in Agency MBS this year (in addition to an earlier commitment of $500 billion) and up its purchases of Agency bonds from $100 billion to as much as $200 billion. It also said it would purchase up to $300 billion of longer dated Treasuries over the next six months.
1. Since it is possible for the United States to settle $1.2 trillion worth of debt by "printing money," then why is it that the US government still feels the need to tax its citizens? Why can't all the monies needed by our government simply be printed?
2. Why can't a single -payer, government funded, health care system be implemented in the US on the basis of "printed" money? Why hasn't this already been done, since the lack of a viable health care system in the US has for years been regarded as an emergency. Isn't the physical and mental health of our citizens at least as important as the financial health of the banks?
3. How is such a policy different from a Ponzi scheme of the sort perpetrated by Bernie Madoff? Don't all such schemes involve adding ever greater sums to the pool, either by sucking in new investors or borrowing money, rather than actually investing money in some productive enterprise?
4. Finally, what, exactly, is your intention? Last fall we were told there was a one-time emergency, that billions needed to be pumped into the financial system immediately to stave off a complete collapse of that system. We were also told that once the system was stabilized we could then work on developing more carefully thought through programs to repair it, so we would never have this problem again. Are we still living in the same, original state of emergency? Is the current "shock and awe" an extension of what was done last fall? And if so, how will we know when the ongoing emergency is over, so we can finally begin to plan rationally again? And if not, then what exactly is the logic behind the new plan, how is it going to repair our economy and ensure that it remains stable in future years and for future generations?
Wednesday, March 18, 2009
The people will live on.
The learning and blundering people will live on.
They will be tricked and sold and again sold
And go back to the nourishing earth for rootholds,
The people so peculiar in renewal and comeback,
You can't laugh off their capacity to take it.
The mammoth rests between his cyclonic dramas.
The people so often sleepy, weary, enigmatic,
is a vast huddle with many units saying:
"I earn my living.
I make enough to get by
and it takes all my time.
If I had more time
I could do more for myself
and maybe for others.
I could read and study
and talk things over
and find out about things.
It takes time.
I wish I had the time."
The people is a tragic and comic two-face: hero and hoodlum:
phantom and gorilla twisting to moan with a gargoyle mouth:
"They buy me and sell me...it's a game...sometime I'll
. . . . . . . . . . . .
After allowing for items to protect future operation
every cut in production cost should be shared
with the consumers in lower prices
with the workers in higher wages
thus stabilizing buying power
and guarding against recurrent collapses.
"What is this? Is it economics, poetry, or what?"
The Federal Reserve said today that it will deploy an additional $1.2 trillion to try to lower interest rates and stimulate the economy, an aggressive move aimed at containing the recession.Don't say I didn't tell you so. From The Shape of Things to Come, Part 4:
The central bank will increase its purchases of mortgage-backed securities by $750 billion, on top of a previously announced $500 billion. It also will double its purchases of debt in Fannie Mae and Freddie Mac to $200 billion. Those steps are intended to lower mortgage rates. The announcement of the previous purchases pushed mortgage rates down a full percentage point.
The Fed also said it will buy $300 billion in long-term Treasury bonds, a step it had previously considered but had been reluctant to act on. That move will lower long-term interest rates for the U.S. government directly and, Fed officials hope, will indirectly lower borrowing costs for businesses and individuals.
In for a penny, in for a pound. The $800 billion targeted for TARP will clearly not be enough to cover all the "toxic" (i.e., utterly worthless) debts incurred by the bankers and rogue investors deemed "too big to fail." When the financial markets figure that out, the Dow will once more take a nosedive, most likely from 8000 to 7000, or less.I'll admit I'm not the only one to have seen this, not by a long shot. Economists all over the Internet have been screaming bloody murder about this intolerable situation for months.
And once again, the fed, or the treasury, or congress will be prevailed upon to save the day by coming up with yet another TARP, even larger than the first. Once again we will be warned of the "dire consequences" that will inevitably ensue if yet another bailout isn't engineered -- as soon as possible, natch.
This can't go on. But it will anyhow. Because it "has to." Because "there is no other choice."
But of course there are other choices, just not anything considered politically acceptable to Americans conditioned for so long by the policies and rhetoric that have brought us to this point. But the political climate is changing. Rapidly. Let's hope it changes soon enough to bring us back to our senses. People are more important than economics. Homes are more important than mortgages. Resources are more important than money.
To quote a sly old fox: When money becomes God, we will discover that, like God, we can do without it.
Tuesday, March 17, 2009
In the living room the voice-clock sang, Tick-tock, seven o'clock, time to get up, time to get up, seven o'clock! as if it were afraid that nobody would. The morning house lay empty. The clock ticked on, repeating and repeating its sounds into the emptiness. Seven-nine, breakfast time, seven-nine!Bradbury was, as we know, thinking about the aftermath of a future nuclear war, a threat that remains all too real. However, at this particular historic juncture, these lines remind me of what is actually happening now, in the aftermath of the great Ponzi scheme once known as "free market capitalism." The monstrous system we've been living with for so many years that it's become a part of our mental and emotional environment has already self-destructed, and with it literally hundreds of trillions of dollars in so-called "wealth." Nevertheless, the empty mechanisms behind the system continue as before, symbolic of our own denial of the horrible truth.
In the kitchen the breakfast stove gave a hissing sigh and ejected from its warm interior eight pieces of perfectly browned toast, eight eggs sunnyside up, sixteen slices of bacon, two coffees, and two cool glasses of milk.
"Today is August 4, 2026," said a second voice from the kitchen ceiling, "in the city of Allendale, California." It repeated the date three times for memory's sake. . .
Ten o'clock. The sun came out from behind the rain. The house stood alone in a city of rubble and ashes. This was the one house left standing. At night the ruined city gave off a radioactive glow which could be seen for miles.
Wall Street continues to churn out daily indices for the various markets, Dow-Jones, S&P 500, Nasdaq, etc., despite the fact that these indices no longer reflect the actual value of any of the businesses whose stocks they chart. (See Reading the Entrails parts one and two, below). Giant financial houses that once ruled a mighty fiscal empire are effectively bankrupt, but continue to function nevertheless, going through the motions of making loans, placing bets (so-called "investments"), even handing out hundreds of millions in bonuses to failed traders, thanks to old, irrelevant, contracts that must still be honored, as the mechanism of outrageously unfair and corrupt compensation cranks on nevertheless. The heart and soul of our old economy has perished, but the corrupt, manipulative, self-destructive automaton drones on pointlessly and hopelessly, simply because it's there -- and we don't know how to turn off the switch and start over.
Here's how Bradbury's story ends, with just a teensy little tweak by me, in the final sentence:
The fire burst the house and let it slam flat down, puffing out skirts of spark and smoke. In the kitchen, an instant before the rain of fire and timber, the stove could be seen making breakfasts at a psychopathic rate, ten dozen eggs, six loaves of toast, twenty dozen bacon strips, which, eaten by fire, started the stove working again, hysterically hissing! The crash. The attic smashing into kitchen and parlor. The parlor into cellar, cellar into
sub-cellar. Deep freeze, armchair, film tapes, circuits, beds, and all like skeletons thrown in a cluttered mound deep under.
Smoke and silence. A great quantity of smoke.
Dawn showed faintly in the east. Among the ruins, one wall stood alone. Within the wall, a last voice said, over and over again and again, even as the sun rose to shine upon the heaped rubble and steam:
"The Dow-Jones average gained 100 points today, as favorable news of yet another federal bailout bouyed investor confidence . . . investor confidence . . . investor confidence . . ."
Sunday, March 15, 2009
The latest entry in his blog concerns Spain and some especially disturbing aspects of its economy:
For much of the past decade, Spain had a huge construction boom, financed by vast inflows of capital: [here he's inserted a graph] Now that boom is over. But it left as its legacy a sharp rise in Spanish costs and prices relative to the rest of the euro zone (the chart below is Spanish unit labor costs in manufacturing relative to the EZ average, but it doesn’t much matter which measure you use): [another graph] How does Spain get out of this? No devaluation is possible — and no, I don’t think exiting the euro is feasible. So it has to do it with relative deflation, hard enough in normal times, when at least costs and prices elsewhere are rising a few percent a year. In the face of a depressed and possibly deflationary European economy … this is going to be ugly.Devaluation isn't an option for Spain because it no longer has its own currency. It now has only the Euro. And as the man says, "exiting the euro" isn't really an option either, as it would be way too disruptive.
I wrote a comment to this post on Krugman's blog, but it still isn't up yet and may never get up ("Your comment is awaiting moderation"). So, just in case you don't follow the blog or just in case they don't post it, or just for the Hell of it, here's what I wrote:
There is a common thread to all these crises and the common thread is: money. How do we reconcile this monetary problem with that one, how do we deal with the threat of either deflation or inflation or both, or, as in the case of Spain, the need to devalue or revalue a currency one can’t control? How do we deal with the huge sums of money that are owed, all the bad investments of huge sums of money by companies too big to fail? How do we borrow enough money to cover all these debts, how do we deal with a situation where those whose money we’ve borrowed no longer want to lend more money — or worse want to pull their money out? We’ve woven a Gordian knot out of all these trillions of dollars worth of MONEY and are now desperately looking for some magic formula that will untangle it for us.
So why not, simply, take up the sword of Alexander, who was not called “Great” for nothing, and cut the knot? Kill the money. Let all the leaders of the most heavily invested, and therefor most at-risk, nations meet and agree to simply do away with money. Or, at least, money as we now know it. For far too long, this particular medium has been dominating the message, this particular tail wagging the dog.
In the past, such a recourse would be unthinkable, as it would result in a huge destruction of wealth worldwide. But that wealth has already been destroyed. All that’s left is a mountain of essentially meaningless debt that must be shuffled around endlessly so it can be “serviced” as part of a process that no longer makes any sense, like the automated kitchen appliances still meaninglessly going through their prescribed motions at the end of the Ray Bradbury story (”There Will Come Soft Rains”).
Saturday, March 14, 2009
Following the death of Konstantin Chernenko (Andropov's successor) in 1985, Gorbachev was appointed general secretary of the party despite being the youngest member of the politburo. He embarked on a comprehensive program of political, economic, and social liberalization under the slogans of glasnost (“openness”) and perestroika (“restructuring”). The nuclear disaster at Chernobyl (1986) forced Gorbachev to allow even greater freedom of expression. The government released political prisoners, allowed increased emigration, attacked corruption, and encouraged the critical reexamination of Soviet history.From What is Perestroika, by Kerry Kubelius: "Perestroika literally means 'reconstruction.' In this particular case, in the Soviet Union under Gorbachev, perestroika meant reconstruction of the economy, which was in dire straights right before its collapse."
In a series of summit talks (1985–88), Gorbachev improved relations with U.S. President Ronald Reagan, with whom he signed an Intermediate Nuclear Forces (INF) arms limitation treaty in 1987. By 1989 he had brought about the end of the Soviet occupation of Afghanistan (see Afghanistan War) and had sanctioned the end of the Communist monopoly on political power in Eastern Europe. For his contributions to reducing East-West tensions, he was awarded the 1990 Nobel Peace Prize.
From The Significance of Gorbachev's Glasnost and Perestroika, by Chad Hagy:
The significance of Gorbachev's glasnost and perestroika was to expose the decades of corruption in the political, economic and social control created by Marx, Lenin and Stalin. This, in turn, gave Russians much more freedom in their daily lives and in the economic dealings. It led to less censorship throughout the country and people were allowed to discuss politics like never before. Eventually, the significance of Gorbachev's plan would change the history of Russia and mold it into a freer capitalist society.While Gorbachev's reforms did in fact lead to the abolishment of state planning in favor of a largely unregulated capitalist system, that was never his intention. He remained a committed socialist throughout the crisis, but events outran his intentions, the rise of Yeltsin led to the breakup of the Soviet Union, and the avatars of "free market capitalism," led by our own Larry Summers, took over, with disastrous results -- for which Gorbachev was, in my opinion, unfairly blamed.
Despite the failure of his reform efforts, Gorbachev was clearly one of history's great political leaders, initiating sweeping, progressive, changes with a boldness and imagination that have rarely been equaled.
Gorbachev calls on Obama to carry out 'perestroika' in the U.S.
MOSCOW, November 7 (RIA Novosti) - Former Soviet leader Mikhail Gorbachev has said that the Obama administration in the United States needs far-reaching 'perestroika' reforms to overcome the financial crisis and restore balance in the world.Can Obama rise to the challenge with policies equally as bold and progressive as those of Gorbachev? All indications point to a crisis in the United States every bit as urgent, and in need of radical reform, as that faced by the former Soviet leader. The question is: does Obama have what it takes to develop a policy of reform every bit as thorough, sweeping -- and progressive -- as that achieved by his Russian counterpart?
The term perestroika, meaning restructuring, was used by Gorbachev in the late 1980s to describe a series of reforms that abolished state planning in the Soviet Union.
In an interview with Italy's La Stampa published on Friday, Gorbachev said President-elect Barack Obama needs to fundamentally change the misguided course followed by President George W. Bush over the past eight years. . .
"This is a man of our times, he is capable of restarting dialogue, all the more since the circumstances will allow him to get out of a dead-end situation. Barack Obama has not had a very long career, but it is hard to find faults, and he has led an election campaign winning over the Democratic Party and Hillary Clinton herself. We can judge from this that this person is capable of engaging in dialogue and understanding current realities."
Friday, March 13, 2009
And here, for comparison is the Standard & Poor 500 Index, also for today:
Finally, here's the Nasdaq index for today:
Notice anything interesting about these three graphs?
Gee, they look almost identical, don't they? Now how could that be?
Well, I'm not an expert on this sort of thing, so I'm hoping someone reading here will be willing to lend us his or her expertise to explain this strange phenomenon -- because it looks awfully suspicious to me.
The Standard and Poor and the Dow Jones might be expected to have some things in common, since the Dow Jones is, I believe, a subset of the S & P. But the Nasdaq represents a completely different set of businesses, differing widely in many ways from the Blue Chips of the Dow Jones. What does it mean when the indexes of all three move up and down in lockstep like that? By all means, correct me if I'm wrong, but it looks to me like these markets are being manipulated, possibly according to a scheme similar to the one I presented in my last post, where bets are made based on the relation between the principal index and the VMA (voume moving average). If this is the case, then what does it mean when, at the end of the day, the "market" is up or down by this or that number? As far as I can tell, all it means is that this is where things stood at the time the betting window slammed shut.
Invariably the news media offer fatuous explanations of why the markets behaved as they did on any given day: "dire employment news causes market to nosedive," or "unexpected manufacturing profits boost market," etc. If these indices actually reflected anything meanigful about the business climate from day to day, then we'd expect to see significant differences between the way investors were investing in these three markets from day to day. But we don't. Keep your eye on these three indices from now on and you'll see how they're almost always in lock step, amost perfectly synchronized. Many people are acting very excited this week because the market has "gone up," which is taken as a sign of possible recovery. To me, however, it just looks like more of the same, just a lot of random gibberish, produced by some very heavy bettors manipulating the markets to sit up and beg on command.
Wednesday, March 11, 2009
When interpreting the chart above, you need to remember that the most important factor is the relationship between Index Price and the Volume Moving Average (VMA). Here we see that the index has taken an advancing trend with not much supporting volume to cause this change. This occurs because investors are taking profit from covering their short orders; this causes the market to increase. When the VMA has peaked, professional investors once again enter into a short position by selling; this action causes the index to trend down again. It is just after this VMA peak that one should make a trading decision.From Sacrificial Divination: Confirmation by Extispicy:
Observational divination inferred the gods' will through close examination of portentsfrom the world around. The gods could also send messages though dreams and divinely inspired utterances, or oracles, to any citizen of Assyria. But sometimes it was not enough to wait for the gods' messages. The king might need to resolve a pressing political problem, or he might not be certain whether to trust the human intermediary of a divine oracular pronouncement. Under those circumstances he commissioned a sacrificial divination, or extispicy, to obtain a divine yes-no answer to a question he put to the gods. His haruspex (bārû, literally "seer") examined the entrails of a sacrificed ram for ominous marks, counting up good and bad and declaring the most prevalent as the divine response to the king's query.
One might want to believe that reading modern market indices is a very different matter from the ancient practice of divination, where the entrails of a sheep or goat were methodically examined to predict the future. And until last summer, it did seem as though there must be a considerable difference, since the masters of high finance, aided by bona fide math geniuses, using the most sophisticated computer models, were so consistently doing so spectacularly well. Now we know better.
If a Design is drawn from the centre of the top of the Station to the Gate of the Palace and a "weapon"-mark points parallel to it: a leader will leave his country.
If a Design is drawn from the centre of the top of the Station to the Gate of the Palace and a "weapon"-mark points to it: a leader will enter the country.
If a Design is drawn from the centre of the Gate of the Palace to the Station: the gods have heard the wailing of the land.
If a Design is drawn between the Station and the Path: a god will request an emblem or a censer from a man.
If a Design is drawn twice between the Station and the Path: a man's wife will have her husband killed.
If a Design is drawn three times between the Station and the Path: a man's wife will write again and again about killing her husband, "Kill my husband and marry me!"
And if we'd given things a little more thought, we should have figured it out long ago. For example, the method shown above for predicting the zigs and zags of the market, based on the relation between the price average and the VMA, or "Volume Moving Average," is extremely suspect. For one thing, it fails to take account of exceptional cases that might not perform as expected and could trigger huge losses under certain circumstances. For another, it doesn't take into account the liklihood that a great many investors could be using the same model, creating a situation George Soros has described as "reflexivity":
which holds that our thinking is inherently biased. Thinking participants cannot act on the basis of knowledge. Knowledge presupposes facts which occur independently of the statements which refer to them; but being a participant implies that one’s decisions influence the outcome. Therefore, the situation participants have to deal with does not consist of facts independently given but facts which will be shaped by the decision of the participants.
Consequently many traders using more or less the same methods will influence the outcome of their methods in ways that are inherently impossible to predict. Not to minimize the contribution of George Soros, a man of extraordinary intelligence, this is not rocket science and should have been obvious to the geniuses programming the computers that made such trades, sometimes as many as a million a day per firm, as I understand it.
Taking a close look at today's Dow Jones Industrial "entrail," we see that it wound up at pretty much the same place as it started. But look at all those squiggles in between. This is what is called a "volatile market." Certain types of traders, particularly day traders, are very fond of such markets because they provide many opportunities to make bets as to which direction the entrail will take at any given time. And the more such bets are made, the more "opportunities" there will be, thanks to the effects of Soros's reflexivity. I think it safe to say that the majority of what is happening today in all these market indices is due to the placing of such bets, rather than any legitimate reflection of what is actually happening in the business world as far as profits and losses are concerned. What we are dealing with is indeed a type of necromancy, inherited from age-old traditions based on sheer superstition.
So what does it mean when we see that the Dow ended the day up or down by so much? As far as the average investor is concerned it might seem to matter a great deal. But to the trader it hardly matters at all. His money is made or lost each time the little squiggle moves up or down, as it can do thousands of times in a single day.
Is there any longer any reason for continuing with this nonsense? Sorry, but I can't see any. When you place a bet in a casino, at least you know the odds.
Monday, March 9, 2009
This, then, was what they were saying about us: we were Trotskyists, Fascists, traitors, murderers, cowards, spies, and so forth. I admit it was notAs the conflict wore on, the situation deteriorated dramatically, and the Communists, who eventually became the dominant force in the Republic, turned on P. O. U. M. and the anarchists in a dramatic, and completely unexpected manner:
pleasant, especially when one thought of some of the people who were responsible for it. It is not a nice thing to see a Spanish boy of fifteen carried down the line on a stretcher, with a dazed white face looking out from among the blankets, and to think of the sleek persons in London and Paris who are writing pamphlets to prove that this boy is a Fascist in disguise. One of the most horrible features of war is that all the war-propaganda, all the screaming and lies and hatred, comes invariably from people who are not fighting. The P.S.U.C. militiamen whom I knew in the line, the Communists from the International Brigade whom I met from time to time, never called me a Trotskyist or a traitor; they left that kind of thing to the journalists in the rear. . . .
When later on I decided that the P.O.U.M. were right, or at any rate righter than the Communists, it was not altogether upon a point of theory. On paper the Communist case was a good one; the trouble was that their actual behaviour made it difficult to believe that they were advancing it in good faith. . . The thing for which the Communists were working was not to postpone the Spanish revolution till a more suitable time, but to make sure that it never happened. This became more and more obvious as time went on, as power was twisted more and more out of working-class hands, and as more and more revolutionaries of every shade were flung into jail. Every move was made in the name of military necessity, because this pretext was, so to speak, ready-made, but the effect was to drive the workers back from an advantageous position and into a position in which, when the war was over, they would find it impossible to resist the reintroduction of capitalism.
'Haven't you heard?' 'No. Heard what? I've heard nothing.' 'The P.O.U.M.'S been suppressed. They've seized all the buildings. Practically everyone's in prison. And they say they're shooting people already.' . . . On 15 June the police had suddenly arrested Andres Nin in his office, and theThe remainder of the book is the story of how Orwell and his wife barely escaped being arrested themselves, while vainly attempting to assist one of the P. O. U. M. leaders, a man named George Kopp, arrested in the midst of an important military mission. Kopp was one of Orwell's heroes:
same evening had raided the Hotel Falcon and arrested all the people in it,
mostly militiamen on leave. The place was converted immediately into a prison, and in a very little while it was filled to the brim with prisoners of all kinds. Next day the P.O.U.M. was declared an illegal organization and all its offices, book-stalls, sanatoria, Red Aid centres, and so forth were seized.
Meanwhile the police were arresting everyone they could lay hands on who was known to have any connexion with the P.O.U.M. Within a day or two all or almost all of the forty members of the Executive Committee were in prison.
He was my personal friend, I had served under him for months, I had been under fire with him, and I knew his history. He was a man who had sacrificed everything--family, nationality, livelihood--simply to come to Spain and fight against Fascism. By leaving Belgium without permission and joining a foreign army while he was on the Belgian Army reserve, and, earlier, by helping to manufacture munitions illegally for the Spanish Government, he had piled up years of imprisonment for himself if he should ever return to his own country. He had been in the line since October 1936, had worked his way up from militiaman to major, had been in action I do not know how many times, and had been wounded once. During the May trouble, as I had seen for myself, he had prevented fighting locally and probably saved ten or twenty lives. And all they could do in return was to fling him into jail.Orwell's efforts to convince the authorities that Kopp should be freed and allowed to resume his mission were in vain. He vanished into the Spanish prison system and was never seen again.
So much for Orwell's experiences in the Spanish civil war. Homage to Catalonia, published in 1938, was clearly the touchstone of his entire career as a writer, activist and political philosopher. This is what he wrote in his essay "Why I Write," published in 1946, while working on what was to be his last novel, 1984: "Every line of serious work that I have written since 1936 has been written, directly or indirectly, against totalitarianism and for democratic socialism, as I understand it."
Clearly Orwell was a socialist very early on and remained a socialist from his time in Spain to the time he wrote his most famous novel. And not only a socialist, but a radical socialist, a staunch supporter of the socialist worker's state formed in Barcelona at the time he arrived there, ready to lay down his life for what he "recognized . . . immediately as a state of affairs worth fighting for." Big Brother was not the product of his experiences with socialism, but, on the contrary, his experiences with the betrayal of socialism by a ruthless and doctrinaire communist faction controlled from Moscow by Joseph Stalin. Big Brother reflected these feelings of betrayal, which were to be confirmed as he followed the course of Stalin's career, from the Moscow trials onward, to the establishment of the notorious Gulag Archipelago, chronicled so thoroughly by Solzhenitsyn. 1984 and Big Brother are warnings about totalitarianism, which can arise in the context of any politico/economic system, including a capitalist one, if due diligence is not performed by everyone in a position to make a difference.
According to his biographer, John Newsinger,
[a] crucial dimension to Orwell's socialism was his recognition that the Soviet Union was not socialist. Unlike many on the left, instead of abandoning socialism once he discovered the full horror of Stalinist rule in the Soviet Union, Orwell abandoned the Soviet Union and instead remained a socialist--indeed he became more committed to the socialist cause than ever.
1. Let the banks and other brain dead financial institutions finally die rather than attempting to keep them on life support.
2. Then nationalize them. Won't cost a cent because they are clearly worthless anyhow, and have been for some time.
3. At this point the government will own all those failed and troubled mortgages, since they will have taken control of the banks that wrote them.
4. All of the above must be done with lightening speed, because it is clearly more important to get those people out of the tents and into real homes as soon as possible. This has to become our new priority. Forget about the "financial system," that's just an abstraction, it's all on paper -- and the paper is burning up faster than we can pour water over it. Real people are in a crisis, people with families, people with children, for crying out loud.
5. Once "we the people" control the mortgages we can tell everyone to go back home. Don't worry about your mortgages, we can, we must, work something out.
6. Offer them the option of refinancing at a significantly lower rate, or simply ceding ownership to the government, which can then rent them their homes at a reduced rate, based on income.
7. Many of these homes were abandoned some time ago and need considerable work. All the better, since the construction market has collapsed and thousands of construction workers in Sacramento, Seattle and many other communities are badly in need of work. Put them to work fixing up the abandoned homes.
Is this rocket science or what? Do you have to have a Ph.D. or a Nobel Prize in economics to get the point? People are homeless. Perfectly good houses are empty, and unwanted. Those with the necessary skills for making those homes livable once more are badly in need of work. It may be too late to save "the economy" but it is certainly not too late to save our families. Get your head out of the clouds Mr. Obama. You were once a community organizer, so I'm sure this can't be that hard for you to understand. It's called a paradigm shift. So shift that paradigm -- the most serious problems, the human problems, are within your power to fix. As for the "free market," forget it. It was never more than a mirage from the beginning.
Sunday, March 8, 2009
The Spanish Civil War, was not only a battle against fascism, but a social revolution. It involved all of Europe and the political forces of the left and the right, in the struggle to defend socialism and democracy from the forces of reaction.Here are some sections of the legendary film, The Spanish Earth, by Joris Ivens, with commentary written by Ernest Hemingway and narration by Orson Welles. The film is a documentary, so you'll be able to experience some of the sights and sounds of Spain during that period a (roughly 1931-1937) and get some sense of what the war was like and what some of the issues were.
In 1931 Spain had held its first ever democratic elections, after King Alfonso abdicated, which a united front of socialists, and liberals won. The government declared Spain a Republic bringing to an end 300 years of feudalistic rule by the aristocracy and the Catholic church. The republic declared itself in favour of land reform, breaking up the big haciendas and for union recognition for workers. The anarchists, socialists and some communists saw this as the beginning of a workers revolution. The liberal and moderate Republicans were terrified that change was happening too fast. In particular they were afraid of the power of the church, the old families, and the military which was under the control of extreme right wing elements.
In 1936 with the support of Hitler, Mussolini and the Catholic Church the right wing in Spain led a counter revolution against the Republican government. They used the army under General Franco to attack the government. Civil War was declared, and the call: NO PASARAN! (they shall not pass), went out around the world for workers to defend the Republic. The response to that call was the creation of the International Brigades, a volunteer army of workers, artists and intellectuals who went to Spain to fight on behalf of the Republican cause.
Franco's forces were held back in Catalonia, Barcelona and the northern Basque provinces. Here anarchist-syndicalists took over the factories and peasants formed anarchist communes on the land recently liberated from the old families. Direct democracy was instituted not only in the factories but in the cities. Police were replaced with civilian self defense forces made up of armed workers prepared to defend the revolution from Franco's forces. A new social revolution was being created in the midst of a civil war.
Part 6 (conclusion):
More from Plawiuk's history:
Stalin's support gave more power to the Communist Party of Spain which was smaller and weaker than either the Independent Marxist Party (POUM) or the Anarchists. It was this intervention by Moscow that led the Communists to the tragic mistake of believing they could compromise with Franco. The anarchists and members of POUM saw the Civil War as a chance at creating a social revolution. The war was seen as a defense of the communes and factory occupations that were going on in Northern Spain. In Madrid the communists and the Republican government saw this as a war in defense of parliamentary democracy against the forces of fascism and reaction. The world powers, saw this as a possible prelude to World War and were terrified of confronting Germany and Italy over the issue.
The Communists and the Republican Government believed that they could negotiate with Franco if they quelled the anarchist revolution in Catalonia and Barcelona. It was this tragic policy that led to a civil war within the civil war. Communist party commissars and military advisors from Moscow, seized control of the army and attacked the anarchists and POUMists. The most pitched battles in the last days of the civil war were in the cities controlled by the Anarchists laid siege to by the Republican army under communist control.
In the end Spain fell to Franco . . .