I will not bore you with a long painful diatribe of economic bafflegab. Suffice it to say that this is not a normal market relative to the past few decades. This market conundrum cannot be compared to the effect of 9/11. This market reflects two fundamental issues: an overly financially engineered market, and too much consumer debt. Yes, the regulatory system has its share of blame, but it is a reflection of the market ideology of the latter Clinton presidency and certainly the
free market approach of the neo-con economic ideology (laissez faire) over the past 8 years.
Aside from the tsunami created by the collapse of Bears Sterns, Lehman and others, it was the massive nationalization of corporate debt via the expropriation of Fannie Mae and Freddie Mac that was the true harbinger of the seriousness of this meltdown. $5.6 trillion dollars is an astounding figure! The bail out of AIG is another manifestation of the absolute panic of the Fed to hold the line. For neocons to nationalize the economy is an astounding ideological about-face!
I don't think it is enough to stave off further serious collapse. America does not own its economy. The buy-out of Fannie and Freddie was needed to keep the US dollar from going into freefall. Many nations have large US dollar denominated holdings, and if the US Fed had let Fannie and Freddie die, it would have instantly killed the value of the massive investment in the US by foreign entities (China, Israel, European
The buy-out of Fannie and Freddie was needed to keep the US dollar from going into freefall.
Many nations have large US dollar denominated holdings, and if the US Fed had let Fannie and Freddie die, it would have instantly killed the value of the massive investment in the US by foreign entities (China, Israel, European Union States, Middle East etc...).
As such, the value of the US dollar, which is propped up by the paper behind these foreign entity investments, would have collapsed.
Union States, Middle East etc...). As such, the value of the US dollar, which is propped up by the paper behind these foreign entity investments, would have collapsed. AIG is not the only insurance company in trouble, it is just one of the biggest.
Aside from the obvious market volatility risk, when combined with geopolitical risk stemming from;
1. a pivotal Presidential election
2. a pissed off Russia
3. massive hurricane damage (and the season has just begun)
4. destabilized Pakistani/US relations
5. a new surge in Afghanistan
6. a continued Iraq sh*tshow
7. higher prospect of world recession, and
8. higher risk of a broader and more brutal Middle East war involving Israel, the Gulf States, Lebanon, Iran, Syria and who knows who else.
you have a perfect storm for continued volatility.
War is Peace. Ignorance is Strength. Freedom is Slavery.
You say "For neocons to nationalize the economy is an astounding ideological about-face!", and I scratch my head. It doesn't seem like an "about face" for neocons to endorse huge government bail-outs for giant corporations. Libertarians might object, but there's no libertarian streak to the neo-cons -- they're just fascists. Mussolini said, "Fascism should more properly be called corporatism because it is the merger of state and corporate power." That merger and the emergence of fascism is what's happening, and the neo-cons love it -- it's their idea, and always has been.
I disagree. I understand your anger, but conspiracy theory does not apply here. It's not so black and white. Nationalization occurred during the Great Depression as well. Be careful of applying conspiracy theory; this explanation provides only a false means of understanding a complex issue.
I don't understand. I'm no more or less angry than I usually am when I look at the mess we're in. And conspiracy theory? I suppose what the neocons are doing is a conspiracy by the word's definition, but it's pretty much out in the open and I'm not proposing any theory, just stating the obvious. Like socialists are all about socialism or football is all about scoring touchdowns, neocons are fascists at heart. And of course it's more complicated than that, like there's more to football than touchdowns, but that's a reasonably accurate shorthand summary, ain't it?
I was specifically referring to the idea you stated that this whole fiasco was some outcome as the result of the execution of some long-term neo-con plan. I think you give these morons more credit than they deserve by postulating that they are executing some grand plan. This market outcome just the result of arrogance, greed and a rabid free-market ideology. The same can be said for the results of the Bush Doctrine. Mostly I think it is bare-ass incompetence.
As to your comment about fascism. I think America has devolved politically into more of a police state than a true full-blown fascist state. I do, however, understand your Mussolini quote. Ironically, it was the Italians, and not the Germans, that engineered the mechanics of the modern Fascist state. Truth be known, Fascism could probably trace its historical antecedents to the Jacobin period of the French revolution. In any event, Germany simply followed suit and added the perversity of eugenics, which can be argued was a sociopolitical manifestation of the ideas of certain German philosophers such as Nietzsche.
On the fascist/police state issue, you and I agree. I alluded to this when I quoted George Orwell's 1984 at the end of my email.
No, I didn't mean to suggest that any of this was necessarily part of a long-term plan to drive Fannie Mae and Freddie Mac onto the rocks and sink Bear Stearns and Merrill Lynch and Lehman Brothers, etc. Bare-ass incompetence -- that's an accurate description. I don't think they're having meetings to plan these catastrophes, it's just bare-ass incompetence and criminality sinking those ships. I'm mostly talking about the governmental response, rescue after rescue with billions and billions from the taxpayers -- lots of people describe the bail-outs as corporate socialism, but fascism seems like a more accurate term to me.
I'm still a little weirded out when you suggest there's a "free-market ideology" in the executive suites of any giant corporations. Corporations might use that line in their public lobbying and it's a catchy catch-phrase for their henchmen in Congress, but big business operates on greed, and greed is their only ideology during business hours. Maybe this is just semantics? Maybe I'm being too highfalutin here? The thing is, I spent several years calling myself a libertarian and I still have some sincere free-market ideology in me, and it's just the absolute utter opposite of what we're seeing here. Nobody who takes a multi-billion-dollar bailout from the government is driven by a free-market ideology -- that's just greed, which isn't the same thing.
Comment: (9/19/2008) I agree with you. The free-market is not free. I used this phrase because most people understand it's intended meaning. That is to say, what the market is supposed to be and not how the market really works. Of course, any social construct such as an economic system can never be separated from the vagaries of human nature.
The CanadianPERMANENT LINK Comment: (9/19/2008) I think you can boil it down to this.
Libertarians believe in a free market -- for better or worse. Neo-cons (fascists?) believe in freedom to "privatized gain", and buy the government (i.e. the masses of everyone who works for a living) as sort of an insurance policy to "socialize losses". Thus, the end result is "Heads I win, Tails you lose" philosophy of the market emerges in fact, but never in theory.
JeffreyETPERMANENT LINK
Comment: (9/19/2008) It is just amazing to me how successful the right wing propaganda machine has been in destroying the language. Is it considered not a conspiracy when things go wrong for the conspirators?
Little bits keep coming out about a vast nest of conspiracies to pump and dump housing, the stock market, banks, and just about any other source of loot. I doubt if we will ever have a coherent report (maybe a little water boarding might help) but to say that the financial troubles just happened like bad weather just happens seems obscurantist. Granted, following Marx, the collapse of predatory capitalism is predictable from first principles, but what we are seeing is far from the final collapse, more the illusionary victory that comes before Marx's prediction.
From the greatest perceptual distance I can manage, what I see is a set of nested conspiracies with a round robin of double crosses and slick moves that has swept up what remains of the true wealth of the world in a great many fewer hands than before. When bigger fish start eating smaller fish in a feeding frenzy it can seem like chaos because the great size and prominence of some the really big fish that are getting eaten, big banking houses for instance, it can seem without plan. The mind has a hard time believing that there is any predator big enough to swallow such big prey. Scary to think about too. But that is the way of economic warfare. It makes the picture of a WWI no-mans-land look peaceful.
When the dust settles from this latest economic battle the stated wealth of the world will be greatly reduced, but the actual valuable property will have been scooped up by the really, really big fish that have been waiting in the shadows. It really is such a backward, medieval way of thinking that I have a hard time imagining how these mega-predators think other than to believe that their thinking is very, very primitive. Might makes right and the mightiest must claim everything and so what if the world is ruined. Reading The Shock Doctrine helped me tumble across this hurdle.
Other people's problems are not the concern of the most powerful. Having this kind of power seems, to echo Lord Acton, to wash away the soul leaving a reptilian entity in its place. The best portrayal of this sort of thinking is in the character of Gordon Gekko (Michael Douglas) in the movie Wall Street. Though in real life the Gordon Gekkos of the world do not get caught and made to pay a price for their crimes. They get bonuses. This is the face of reptilian predatoriness chewed on in the old TV series V (1984-85 TV season) where the aliens are just reptiles made up to look like humans. Reality imitates art.
It is entertaining a bit to see some of the mighty fall though, schadenfreude. In the final analysis, an economic system that is amoral at its core there is a lot of blood letting. Change becomes a situation of, "Meet the new boss. Same as the old boss, just bigger and meaner."
I would suspect also that the eventual winners here will be disproportionately white. White financiers have been skinning the folks of color for half a millennium now and I don't think it is reasonable to expect that to stop. That may be the big mistake here. Dominant white financial centers, London and New York primarily, are able to pull these scams century after century because the non-white dominated cultures have been under a spell that sees whites as more powerful and trustworthy. If Asia, Africa and S. America wake up and combine against the white West the dominance of the West will shrivel like a hard on in a police raid.
Herb Ruhs, MDPERMANENT LINK
