I've been thinking about the video I posted last. I decided that for my own sake I needed to type out what I think is happening in the world economy, so as to organize my own mind a bit.
I post it here hoping for your criticism and thoughts, my public. Any constructive feedback will be gratefully received.
This is the product of only a couple hours thought. It meanders and rambles and is anything but authoritative. Take it as merely the half baked thought of an ill educated layman, no more..
Ici-bas, mes pauvres pensées:
First truism: government debt is a necessary shelter for major capital. The debt exists solely for the purpose of sheltering massive (and usually essentially fraudulent, in that profits are nearly always privatized and losses socialized) investment returns with a guaranteed continuing return from the taxpayer.
The public debt is therefore the creature of capital.
Government investment in infrastructure (which includes investment in human infrastructure by way of things like education and health care) and subsidies of private business that is not financed directly by taxation must be financed by the creation of privately held debt.
We can either make rich people pay for the public expenditure directly by way of taxation, or else borrow the money from them.
The rich of course much prefer the second option, since the creation of public debt becomes a cash stream allowing them ever greater - by the mystical power of compound interest - control over the economy.
For capital is not "normal money." It cannot just sit there as cash on the counter. This is the first meta principle that "normal people" who think of their money as paper that they can carry around in their pocket must realize:
Money is not *real*. It is not even symbolic, not even a platonic actuality, not even meaningful in the sense that words are significantly real. Money is rather merely a number, an utterly arbitrary unit of measurement that we assign to wealth. When we say that Carlos Slim or Bill Gates or Mark Zuckerburg has 63 (or whathaveyou) billion dollars, we mean that that person has **contractual control** over certain aspects of our economy that we "value" at that amount.
It is interesting that the very most essential things in our economy often cannot be so easily controlled, and hence "valued" by monetary contracts. Sunlight, the air we breathe, our thoughts and feelings, the energy and blood coursing our synapses and sinews; very often the water (rainfall) we drink, our "casual" and familial (which is to say the most essential aspects of our) social interaction, our leisure time when we refuse to sell it; all of these things are generally free from contract.
Ownership is the most atavistic of contracts. It is a social construct, a metaphysical system, by which things (largely the fruit of other people's labor) are associated with a person. Money is thus a type of implicit non-specific contract. When we exchange our time, effort and expertise for money we are accepting the reality of that money as a contract.
When Facebook is said to be worth a trillion dollars, we mean that the information and participation of people in that system is held by advertisers and people who value access to that information and such influence upon people that Facebook has, to be worth that much. Facebook is in investment terms merely a metaphysical construct, a contractual system. A source of information and influence over people.
Money is an utter abstraction, in other words. Apart from its very real blunt contractual power, it is unreal and so substantially meaningless. As a unit of measurement it is insubstantial, unlike most units of measure in that it is utterly arbitrary. This is especially true on the level of capital, where the contract has been substantially abstracted from the physical and human reality that the number represents.
This is even more true of contemporary speculators, who trade on stock, insurance and futures markets in an utterly abstract manner. There is no sense of proprietorship in a modern hedge fund.
So, in order to have money in the sense that a capitalist has money (which is as different from the way "normal people" have money as prosaic Newtonian physics is from Einstein's quantum physics) you **must be investing it** .. Because that money represents contractual power over men and property, and nothing else. It cannot be completely abstracted and unused. It must be somehow allocated, its power exercised.
Investment is merely the substantially abstract allocation of wealth and property, then.
And again, you can see how the public debt insulates the major capitalist from risk. The debt is backed by the "full faith and credit" of the U.S. taxpayer, which means that any economic activity financed by way of that debt is insulated from utter failure by the taxpayer. Barring the collapse of the government, the bond holder will get his return. The public exchequer is also simultaneously the perfect customer: it always pays its debts, and is a perpetual source of new business.
Second truism: the recent housing bubble and resulting banking crisis were (on the highest levels of banking and government) deliberately created.
Fraudulent profits created during the bubble have been guaranteed by the taxpayer.
TARP therefore essentially represents a massive transfer of wealth from the American taxpayer to the banking sector.
Moral hazard has been substantially removed from the system for the major capitalist insider. Institutions may be destroyed, and minor investors and pension systems ruined, while the individuals responsible for these disasters are richly rewarded.
Legal consequence, risk exposure - moral hazard - exists in the middle and the bottom, but not the very top.
This radical imbalance exists, in that the laws criminalizing such behavior (eg, Glass Steagall) and separating prosaic banking from risky investment were overturned under Clinton, allowing the banker bastards to speculate with mortgage income (the money you pay every month for the privilege of occupying your home) - which income is the backbone of the banking system, accounting for most of the money in it - allowing them to use this money (which use was strictly regulated in the past, after the last crash that caused the Great Depression) in further very risky speculative loans to people very likely unable to repay, rather than merely as a source for further securitized mortgages.
People with poor credit histories were allowed to borrow without the 20% down payments historically required under Glass Steagall. People with no collateral, and insufficient income to repay loans, were nevertheless given mortgages. Usually under usurious variable rate mortgages that had seductively low initial rates, but then inevitably increasingly higher interest rates over time, guaranteeing quickly increasing profits until the inevitable moment they failed to repay. These loans were deliberately designed to fail. The bankers providing them knew the people receiving them would eventually be unable to repay, and deliberately issued mortgages that would concurrently fail sooner than later. The bubble was meant to blow up quickly and catastrophically, causing a "shock and awe" crisis where the "fire just simply had to be put out" or else the entire economy would go off the rails, causing another Great Depression.
The American taxpayer is left holding the flaming turd filled bag, guaranteeing the profits "earned" in the bubble, not on the level of the homeowner (or, more accurately, the dumb chump paying and so owned by his mortgage), and not even usually on the level of the mortgage seller (the bank receiving the interest), but on the level of the mortgage insurer. The major insurer in this past crisis, which is to say the primary tool used by major capital to defraud the taxpayer, was AIG.
This innovation, of insuring risky mortgage loans in large groups called "tranches," was again an "accidental" "innovation" made in the 90's at the time they overturned the banking laws protecting the public. Major insurance companies were allowed to guarantee very risky mortgage debt, allowing banks buying insurance for that debt to free up more capital under the banking laws that remained. Usually banks are made to hold ten percent of their capital in reserve (read low interest but very secure government securities and such) as a sort of anchor against a massive failure of mortgage buyers to repay their debts. In such an instance, the bank needs this secure reserve to garantee it's ability to continue loaning money, and hence the integrity of the banking process, and preventing a "run on the bank" (where investors and account holders pull their funds out of the bank simultaneously at the moment of crisis) and the resulting collapse of the lending process.
Banks were allowed both to make more risky loans without backing collateral, while simultaneously being allowed to reduce their reserve capital requirements. In lieu of significant low interest reserves, they were allowed to instead insure their high risk mortgage lending, and then release the money that would otherwise have been held in secure investments to use in further high risk (and very lucrative on the sort term) lending that was feeding the housing boom.
The insurers, most infamously AIG, were not then required to have the sorts of very conservative reserves on hand to guarantee the policies they were writing. Traditional insurers of property are bound by strict laws requiring they keep sufficient conservatively invested reserves on hand to guarantee their policies in the event of a massive disaster. These common sense requirements were not made of this new market. These insurers were allowed to guarantee massive speculation without being required to hold any reserves to back their massive exposure to risk. Again, this was deliberate on the part of the architects of the new system.
So, when the fraudulent loans (made without collateral, given to people who the bankers knew were very poor risks, to people who could and would simply walk away from the loans when they could not pay them, and who would suffer relatively minor consequence of bankruptcy) went bad on a massive scale, the banks turned to AIG to pay the policies. AIG had nowhere near the capital necessary to back its exposure, and so immediately failed. As did Bear Sterns and Lehman.
The federal government was then mugged to back the bad insurance policies, thereby saving the remaining banks' bacon. AIG is now currently more or less owned (via "bankster socialism") by the Federal Reserve (which is a consortium or cabal of private banking interests allowed to print - create - and then loan money for their own profit, emphatically not a governmental agency acting in the public good) and so now simply a tool used to dispense public monies to the banksters.
The pattern is the same as that of the collapse of the tech bubble in 2001 that claimed WorldCom, Tyco and Enron. The watchdogs were again bought out by their masters: accounting firms and ratings agencies cooked the books and gave their approval (AAA ratings to bad investments, etc.), thereby participating directly in the massive fraud being committed. Then, in the aftermath, the regulators - the SEC and Justice Department and state prosecutors - did nearly nothing, when even under the existing gutted regulatory law they could have brought thousands of Wall Street cretins to prosecution.
The public is thus left paying for the bubble. Not by guaranteeing that normal people seduced into buying homes at absurd prices can keep the houses they were seduced into "buying" at hugely inflated prices, but by guaranteeing the insurance policies written on failed loans. The intact banks keep the title on the property (causing stagnation and massive destruction in many communities) and their speculative profits, too.
Normal people (non-capitalists, those subsisting on exchange of their own labor, 99% of the US populace) can rarely afford to actually buy homes - most Americans buy mortgages, which is to say the right to pay interest to a bank for thirty years, for the privilege of living in a house whose title is held by a bank- our new lords material are bankers.
Nota Bene: while certain institutions (AIG, Lehman, Sterns: that is to say the immediate competition of Goldman Sachs, whose alumni control the Fed and so Washington) were allowed to fail, the individuals running them were made rich. Or, rather, vastly richer. They destroyed their institutions, but kept their millions in bonuses.
They failed us deliberately. They cheated us massively. And they have been greatly awarded for their fraud and thievery.
The rich own the major media. This is why this story is suppressed. The American people should be able to figure this out anyway, and react; but we are far too selfish, stupid and bovine. It is in our self interest to accept the soporific line that the bankers are rich because they deserve to be rich. We gladly believe it because we know that we in relative (global) terms are also rich, and in the very same fashion.
Which is to say that wer are rich by way of massive violence, fraud and deception. Through exploitation by way of contract. The lawyer's and banker's game is our game. We are merely their house servants, their praetorians. A privileged subordinate caste of workers and soldiers.
Third truism: The Iraq and Afghan wars are in the tradition of the "Great Game" played between the European powers, especially Great Britain and Russia, for control of Asia and her resources. Now the stakes (rapidly declining irreplaceable essential oil wealth in Asia and the Middle East) are higher, and the players more numerous (add a previously dormant but now very serious China and India to the calculus, as well as major wild cards like Iran and Pakistan that can at any moment throw the entire game into deadly nuclear armed chaos) than before. We are being fed a propaganda line about terrorism, WMD and self defense that is essentially false. We are there for oil and other essential mineral resources, period, point final. Without them we would be a third world economy. With them, we are a continuing super power.
There are millions of Chinese, Indonesians and Latin Americans (etc.) working for us for a dollar or less an hour. We benefit from this exploitation just as the bankers do, if on a reduced scale. The irreplaceable fossil fuels and cheap human labor we consume every time we go to Walmart or order something online makes us complicit, too.
We tell ourselves that we deserve wealth because we are a great and virtuous country, blah blah blah. But that is simply bullshit.
This here is the bottom line: we can either stand for justice, which is to say for the rights of workers to be properly paid and treated, and for **moral hazard**, which is to say **enforced responsibility and consequences for the powerful**, or we will deserve to fail as a society and civilization.
Final (I pray provocative) truism: American culture, our capitalist economy, has given us every crude carnal pleasure to live for, yet nothing transcendent to die for. We now have nothing beyond radical sustenance of utilitarian desire; the spurious, libertarian "freedom" to sate our every whim.
This is anti-christ.
So I say. What then say you? Any and all comments are hereby gratefully solicited. Any and all critique is welcome.
---
