Saturday, March 14, 2009

what else is to be done? 

The Nation is hosting a forum of brief thoughts on socialism. Doug Henwood contributes:

While the current economic crisis probably won't be the magic intervention that will deliver us to a post-capitalist future, there are opportunities to advance the socialist cause. The mass insecurity and impoverishment produced by the imploding labor market are wonderful arguments for a more civilized welfare state. The need for a new dynamic sector to generate an economic recovery is a perfect opportunity to promote high-speed rail and alternative energy research (and in far greater quantities than the Obama administration is proposing). Our banking system is being rescued with public money. Why shouldn't the public get something in return for that, like publicly or cooperatively owned financial institutions that could provide customers with low-cost services and communities with economic development funds? And with the housing market not likely to recover for at least several years, why not experiment with different models of ownership? For example, instead of foreclosing on houses, why not turn them into limited-equity co-ops, which take the speculative motive out of that essential of life? These things won't happen spontaneously; they need state action, prodded by organized and thoughtful activism. The public isn't with us yet, but we're a long way from the days when The Market seemed like a fresh idea.

Friday, March 13, 2009

Jim Cramer for President 

Well, maybe not -- maybe only for Secretary of Treasury.

The video Scats posted below is amazing, of course; Stewart is correct and articulate, Cramer justly humiliated, etc.

However, I have to remind everyone of a couple of things:

1) The ontological principle by which we can safely say that anyone who is the object of media derision -- i.e., Cramer -- is ipso facto more honest and truthful than the media deriding him; for the reason that media members engaged in tarring and feathering of the "bad men" are necessarily using the public spectacle to shift blame from themselves for behavior that is objectively the same as, or worse, than the crime being denounced.

Glenn Greenwald points this out in his very good Salon piece, which celebrates Stewart, while also pointing out that Cramer and CNBC are absolutely typical of the mainstream media, and that Tim Russert in particular was as a journalist as bad as or worse than his fellow GE employees at CNBC. Both Russert and Cramer carelessly or gleefully passed on lies (from bank CEO's, from Bush hit-men) and then plead innocence for having been lied to.

2) Greenwald also points out that Cramer is unlike Russert and the other dead MSM'ers, who never apologize or even acknowledge criticism. That Cramer actually met with Stewart and said he was wrong shows that he is of infinitely greater integrity than Russert, Mitchell, Gregory, Couric, Gibson, Schieffer and the other decomposing corpses who have died in the near or distant past.

So if Cramer isn't automatically being considered for the Democratic presidential nomination in 2008, perhaps he could be considered for Timmie Geithner's job?

P.S.: This piece in the Washington Post perhaps makes Geithner's recent behavior seem a tad more excusable; there are reasons to think that the much-desired gov't "takeover" of the banks would not deal with the real problems raised by bad bonds owned by international investors. Still, this doesn't explain why the money is being poured directly into the banks, rather than into the banks through the conduits of individual bad mortgages -- for this would at least start to reduce debt and interest rates. (And as Stewart makes clear, the "moral hazard" of mortgage relief is far preferable to the immoral larceny of filling the coffers of gamblers who leveraged mortgages 35-1.)

Monday, March 09, 2009

What is to be done? 

That's what Lenin asked, but the reality of this situation is not revolutionary. It may be true that the whole system is wrecked, but I don't think anyone -- i.e., an organized socialist party -- is in any position to do anything to bring anything good out of the wreckage. And that means that the biggest dogs will grab the biggest pieces of meat. I hope there isn't a collapse; there are non-demented people still thinking about what might be done to stave one off. They tend not to be on the "left" actually. Even the smart "progressive" critics like Baker and Krugman and Galbraith have only been talking about the futility of the bailouts, without talking about how to un-cluster the fuck. They're right of course that the solution is not to throw money into the bank-pit. But what then is the solution? I haven't heard them talk about the stuff mentioned by Ann Pettifor in this piece:

....policy-makers - at the US Treasury, the Federal Reserve and the British government - do not understand what is going on. Let us spell it out for them. Banks are going bust because their customers cannot repay debts, or afford to borrow. Customers cannot repay debts because a) these debts exceed their income and/or assets and b) because the interest rates or borrowing costs on these debts are too high, and unpayable. If you don't believe me, ask Warren Buffett. He tells shareholders that "highly-rated companies, such as Berkshire, are experiencing borrowing costs that, in relation to Treasury rates, are at record levels.

Though Berkshire's credit is pristine - one of only seven AAA corporations in the country - (its) cost of borrowing is now far higher than competitors with shaky balance sheets but government backing."

Millions of individuals and many thousands of companies are now unable to borrow. Burdened with huge debts by de-regulated lenders and financiers, many are being bankrupted by record high borrowing costs on their debts. This is the real crisis in the economy. And the Federal Reserve declines to address this crisis of high real rates of interest.

Because they are facing insolvency, companies are firing workers. This is pushing up unemployment to levels comparable to those at the height of the Great Depression. Unemployed workers can't pay debts. It's simple.... Last week the Labor Bureau suggested that only 5 million people have lost their jobs in the last twelve months, and that only 12.5 million people are unemployed. We think that is optimistic. The Bureau does not include in the official release, 'discouraged' employees or those working part-time because they simply can't get full time jobs. Dig deeper, and the percentage unemployed today is almost double that announced on Friday: 15%. We predict if policies are inadequate and interest rates stay high, that it will be as high as 20% by the end of this year. That will bring unemployment - under President Obama's watch - close to the level it hit, 25%, at the height of the Great Depression in 1933.

....By throwing money at the banks, and by refusing to take full charge of how they are run; by refusing to lower borrowing costs, US Treasury officials and the Fed Reserve are dodging the big issue: corporate and household insolvency. Cutting borrowing costs would start to address the solvency issue. Putting a floor under insolvent companies and insolvent homeowners - would save the banks. At the same time it would release the hostages that are the unemployed, the elderly, the savers and the entrepreneurs.

The Federal Reserve can begin to lower borrowing costs by measures known as Quantitative Easing (QE). These were adopted by the Bank of Japan in March, 2001, and by the Bank of England last week. QE does not mean 'printing money' - this is a widespread misunderstanding. (For more on QE, click here.) QE will help to lower interest rates and therefore borrowing costs. Governor Ben Bernanke is still ignoring the experience of Japan and the way in which QE was used to lower rates and loosen the grip of insolvency on the economy.

The author of the above tells us more about QE here. A related idea was proposed last fall by the Reagan Republican Martin Feldstein, who has been highly critical of the Rubin/Summers/Paulson/Geithner cabal for a long time. His idea is that the government should give large long-term loans to homeowners to replace large chunks of mortgages that have become prohibitively costly. In cases where the mortgage has become larger than the market-value of the house, the government would pay the banks directly the replaced part of the mortgage loan, and the homeowner would then pay the government at a much lower interest rate over a much longer period of time. This would drastically cut the cost of the homeowners' debt, would make sure the banks get some of the value of the mortgage, and keep homes from going into foreclosure -- which leaves the debt unpaid and depresses the value of homes still further (by creating yet another empty house). Helping people to pay mortgages would stabilize the housing market -- which needed to crash but is in danger of entering a deflationary spiral, where people stop buying in anticipation of further falls in prices.

The basic idea is that debts need to be repaid, and the cost of debt is prohibitively high. The non-payment of debts causes household bankruptcy and/or forces companies to cut costs (i.e., jobs). High real interest rates keep money from being spent. Until the paralysis is broken, Obama's stimulus is pitifully irrelevant.

The Feldstein piece is probably the clearest account of the subprime crisis that I've read.

are we there yet? 

Martin Wolf plays Creon in the FT as we approach Capitalism's anagnorisis:

Another ideological god has failed. The assumptions that ruled policy and politics over three decades suddenly look as outdated as revolutionary socialism.

Only in this version, upon learning of his crimes Oedipus struggles mightily to keep his throne. Probably a lost play penned by the bastard child of Euripides and Aristophanes.

I particularly like the "editor's choice" sidebar which featured:

In depth: The Future of Capitalism
Comment: A failure to control the Animal Spirits
Editorial: A survival plan for global capitalism

"Animal Spirits" !!!!!!

Tomorrow in FT:

In depth: Whaddrewegunnadoooo?
Comment: Must...control...the...bad...magic!!!
Editorial: No seriously, whaddrewegunnado?

I love the smell of capitalist ideological disarray and existential panic in the morning. Smells like...possibility.

Sunday, March 08, 2009

Steep decline 

Ok Scats, you may be right-- perhaps they are already harmless/charming.

Hilarious, appalling, etc. Rightly located in the NYT's "Fashion and Style" section.

If the Republicans are so desperate and brain-dead that they will trot out a ringer for the kid from Freaks and Geeks, then Obama has a lot more leeway than the networks are letting on. From Bobby Jindal to Sarah Palin to this poor, home-schooled specimen to Rush to Michael Steele to whatever cuddly animal with speech the party comes up with next, two things are clear: they are in the Baroque phase of headline-begging, in which any absurdity will do, and their messages are utterly devoid of substance and can only be uttered by parrots and fools.

Why do all these idiots lose out? W. wore out their welcome before they even popped up on the screen. One human flapjack will do per generation.


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