Re: [xmca] US discovers capitalism doesn't work

Great descriptions there Martin. I don't swallow the line
that the tide has been stemmed though. I am more interested
in the fact that the US government is now paying out these
profiteers and will presumably be inviting every wealthy
Republican to join the queue for billion dollar hand-outs.
The US govt was already in debt to the tune of $32,000 per
citizen, while borrowing an additional $3 per day from every
person in the world before this latest crisis, just
maintaining their usual life-stle, if you could call it
that. As Mike says, with our geniuses running for President
promising to cut taxes I see big trouble ahead. Exploitation
has reached its limits, only extortion and robbery can now
satisfy the greed of these people.

Andy

Martin Packer wrote:
> It seems to me that we ought to mark here the events of the past week in the
> US, as they throw light on the kind of social reality in which many of us
> live. I'm certainly no economist, but this is what I think I've figured out
> so far.
>
> A bunch of smart bankers figured out how to turn debt, especially mortgage
> debt, into a commodity. They arranged to package it and label it as high
> quality, with some dubious auditing. They arranged to market it to
> individual and corporate investors. And then they set about mass producing
> this new commodity, by exploiting the people whose debt they could purchase.
> They advertized easy credit to naïve would-be home owners. This pushed up
> house prices, but this was fine because it created more demand for mortgages
> and these loans were for higher amounts, so the size of the debts was doubly
> increased. They sold credit with one hand while with the other hand they
> sold the debt this created. A win-win situation, seemingly.
>
> Several things went wrong at the same time. The price of housing got so high
> that the demand to buy it dried up. The mortgage contracts turned out to be
> so grossly exploitative that the people bound by them were simply squeezed
> dry. So the value of the new commodities fell into doubt, and the banks
> found they could no longer sell them. They were over-stocked with goods that
> were no longer wanted, and overnight a vast amount of value simply
> disappeared. The banks woke up to discover that they could no longer pay
> their own debts, to one another, to industry, or to investors. The country
> woke up to find their savings disappearing, their currency falling, their
> homes not worth what they paid for them, their credit revoked, and their
> jobs on the line.
>
> So now the federal government has stepped in, and will buy these unwanted
> commodities from the banks for a total of perhaps $500 billion. The banks
> will get real cash in its place and will be able to do business again. The
> government will hope to squeeze some value from the mortgage holders,
> presumably on less onerous terms, in order to get something back for its
> purchase. The wheels of capitalism will turn again, and the crisis may be
> over.
>
> This at least is the picture that is now visible, on the basis of data
> collected by government agencies and reporting by the media. But the
> participants in all this were able to see only a small part of what they
> were doing, and understood what they saw only poorly. Part of this was
> wishful thinking and deception, but it was also a result of the positioning
> of the various actors and the ways capitalist economies take on a life of
> their own, escaping both the needs and the intentions of we who inhabit
> them.
>
> It's a fascinating situation, enough for a dozen good dissertations.
> Alexandra Michel and Stanton Wortham, who were at ISCAR, are publishing a
> book based on their study of the contrasting cultures of two investment
> banks. I hope they will extend their work to include what is going on today.
> To me it would be especially interesting to explore the psychological
> dimension – how desires are created and manipulated, how perceptions of risk
> and probability are changed, how people act in a time of such instability.
> But it also shows how modern society, civilized and modern and advanced, is
> a house of cards.
>
> Martin
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Andy Blunden http://home.mira.net/~andy/ +61 3 9380 9435 
Skype andy.blunden
Hegel's Logic with a Foreword by Andy Blunden:
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