Bailout won’t stem the fall of capitalism
Fall of the House of Capital?
By the time you read this the $700 billion bailout will have been old news, one of the biggest transfers of wealth in history. But it will not heal that which ails the nation as it trips and stumbles like a drunken sailor on shore leave.The reasons are simple. For the problems are systemic, built into the rapacious nature of the machinery humming all around us. The Rube Goldberg-like contraption of democratic forms at the service of the financial services industry is a bottomless maw, a gaping mouth that is never sated.
Why was there no alarm when millions of people lost their homes to foreclosures made inevitable by variable mortgage rates? When millions lost manufacturing jobs to low paying service gigs? When living standards crumbled, and when take home pay fell to 1973 levels?
Where was the alarm?
There was no alarm -- for this was the 'blind hand of the market' at work, the leveling way of globalism, the new world order moving through, preparing the way for the triumph of capitalism uber alles. Few were the politicians who gave voice to this immense social suffering. Fewer still used their power to try to assuage their pain, for they too were drunk on the wine of globalism.
But when the ripples spread upwards, from the foreclosed homes to the foreclosing banks -and from the banks to investment houses, Congress stirred from their drunken stupor, and rang alarm bells loudest."It's an economic 9/11!", some bellowed; "It's a financial tsunami!", yelled others.
When Americans were hoodwinked into ruinous sub-prime loans, and millions were faced with foreclosures, where was the alarm?More importantly, where was the help for those who were endangered?
If they helped them the present economic crisis would've been mitigated.Instead, we're in a situation where a scam artist sets up shop in a street-corner, playing a fraudulent 3-card monty hustle, and along comes a cop. The cop, instead of rousting the scam artist, rifles the pockets of every passerby, and delivers the stolen loot to the scammer.
The scam artist, of course, is the financial investment houses; the cop, of course, is Congress -- and you are the passerby, hustled and robbed by both of them.
Karl Marx and Friedrich Engels wrote, 160 years ago, that the State was but the executive for capitalist. After what we are all seeing, who can doubt it?
The Empire is crumbling.
The Next Bail-out- or déjà vu all over again
Rodney D. Coates
As we contemplate the fiscal situation today, it does not take a genius see that while both problems and blame are legion, few real solutions are evident. Part of the problem was generated by many layers of investors. These layers, one for each time the loan was packaged and sold, each took a small profit. The catch was to sell the package(s) as quick as one could. It was the Country-Wide’s, Washington Mutual’s, Lehman Brothers’ and etc. who gobbled up more and more of these –exotic, super inflated, and marginally (and potentially negatively) amortized properties. Greed, like a drug, got investors, builders, real estate appraisers, home buyers, and loan specialists – caught up in a scheme where all expected to reap huge benefits with limited investments, accountability, or responsibility. These functioned in a type of synergistic bubble/circle where reality was suspended, the future held at bay, and fictional transactions ruled the day.
Home buyers, with limited capital were encouraged to overextend themselves. These buyers were encouraged to purchase an overinflated house with little if nothing down. Home buyers, buoyed by real estate history 101, honestly believed that the safest investment was in restate were easy to seduce. Many took their hard earned monies out of stocks and bonds or borrowed from any source available – and plopped it down on houses that they hoped would not only retain, but rapidly increase in value. It was happening all around them.
Loan officers, being paid to write loans –were offering whatever products the market would bear. An endless array of sub-prime loans greased the wheels of a runaway market. Further incentives were added not only to the number but also the total amount of loans –thus we see awards for Million loans written and etc.
Many builders, through their sellers/real estate agents, actually steered their clients to particularly aggressive loan officers/or firms who guaranteed quick, easy, and assured loans to prospective clients. It is here that the real collusion often occurred. For unchecked by market conditions, home prices began to skyrocket as loans were more accessible. Again, the most accessible loans were sub-prime as these promised the greatest profits to the investors. Now, with the circle complete, builders building more and more homes at inflated prices that were marketed to clients who were riskier and riskier. A disaster made more palatable since “everybody was doing it”.
We are now in the first wave of the fiscal tsunami, as the first set of sub-prime loans have matured. These loans written about 3-5 years ago are actually the smallest aggregate group. There are at least 3 other waves that will come due over the next 3 years. If it is currently is projected that $700 billion will secure markets – we need at least 3 times this amount to sustain the “correction” -And then what?
If there are no new behaviors, norms, and regulations put into place –it will be déjà vu all over again. But then, who will bail us out.
Rodney D. Coates is associate professor of sociology and gerontology at Miami University. He is solely responsible for these views which do not necessarily reflect those of Miami University. He can be reached at email@example.com
Bailout Lesson: Capital Crisis Will Wreck Both Parties
Wednesday, 01 October 2008
by BAR executive editor Glen Ford
The crisis of finance capital has thrown both big business parties into extreme disarray and split the Congressional Black Caucus right down the middle. "In the aftermath of Monday's bloody siege, it was difficult to tell who Wall Street guns-for-hire John McCain and Barack Obama hated most: each other, or the citizens who despite their outraged confusion had the presence of mind to bar the doors to the national treasury." As the Obama-McCain-Bush-Pelosi Axis struggles to serve a common master, "the rest of us must fashion new institutions to perform the societal tasks that were purportedly the domain of the now-extinct investment bankers."
"The Democratic and Republican Parties, creatures of capital, are decomposing in full view."
In their role as mercenaries in service of finance capital, three-fifths of Democrats joined one-third of Republicans in a (temporarily) failed heist of $700 billion of the people's funds - a nest-egg the public needs to hold onto to weather the unfolding collapse of the Lords of Capital. In the aftermath of Monday's bloody siege, it was difficult to tell who Wall Street guns-for-hire John McCain and Barack Obama hated most: each other, or the citizens who despite their outraged confusion had the presence of mind to bar the doors to the national treasury.
Understandably disoriented from having had to charge backwards - pretending to lead the people while simultaneously assaulting them - Obama peered across the field at the hastily-erected barricades that had broken Hank Paulson's Charge. "I'm confident we're going to get there," said the frustrated thief-enabler, "but it's going to be rocky."
To paraphrase Oscar Brown, Jr., "What you mean WE, Obama-man?" The Illinois senator and his pretend-opponents in the other business party just had their colluding asses kicked by the most motley, disorganized crew imaginable: the American public, who bombarded their legislators with threats of retaliation in November if they bowed to Wall Street's extortionist demands.
Never has Republican-Democratic co-subservience to finance capital been on such naked display. But then, "We the People" have never before been witness to the terminal unraveling of late-stage global finance capital. (See BAR, "Death Rattles of a Criminal Class," September 24.) When the New York Times features no less than three articles declaring the nation's investment bankers ready for burial, as did last Sunday's paper, it is time for the Democrats, especially, to find another paymaster.
Black Caucus Split
Obama's party is wedded to Wall Street. At the local level the Democrats have long been the party of "developers" - the money bags who shape urban policy to fit the needs of corporations. These gentrifiers are the "Renaissance Men" that insist Black politicians earn their campaign and graft payments by helping to expel their own constituents from the cities, so as to make them more congenial to business. Betrayal starts at home. So it's not surprising to find Rep. Charles Rangel (NY), the corporate-loving Chairman of the House Ways and Means Committee, among the 18 members of the Congressional Black Caucus (CBC) to vote with the Bush-McCain-Obama Wall Street Axis. Edolphus Towns (NY), Gregory Meeks (NY), and Artur Davis (AL) are also in their element, reeking as they do of corporate excretions. However, it is strange - and sad - to see Maxine Waters (CA), Gwen Moore (WI) and other relatively progressive members aligned with the rump end of the Black Caucus.
Among the slim, 21-member majority of the CBC that defied Speaker Nancy Pelosi's edicts, one finds more curious company. Voting alongside usually reliable progressives such as Barbara Lee (CA), John Conyers (MI), Donna Edwards (MD) and Bobby Scott (VA), are some of the Caucus's most rightwing members: William "Dollar Bill" Jefferson (LA) and David Scott (GA), once described as the "Worst Black Congressman" in the House. Panic makes strange bedfellows.
Virginia Rep. Bobby Scott summed up the "No" position: "There's no point in spending all this money on worthless assets" such as toxic mortgages. Detroit's Carolyn Cheeks Kilpatrick said of the Obama-McCain-Bush-Paulson plan, "This helps the banks in their book of mortgages. It doesn't help the little person who needs it."
"It is strange - and sad - to see Maxine Waters (CA), Gwen Moore (WI) and other relatively progressive members aligned with the rump end of the Black Caucus."
These are eminently good reasons to resist the bipartisan, flag-waving, hyper-ventilating and increasingly ill-looking Wall Street mob, now regrouping for another bum-rush of the Congress. However, the anxious thieves are only a 12-vote switch away from consummating the Greatest Theft Ever. Pelosi's wing of the Business Party is confident they can assemble the blandishments and threats to do the trick.
The Last Hold-up
The criminal-minded and mortally wounded Lords of Capital believed, as Pam Martens has written, that they could "loot and collapse a 200-year old financial system and...be rewarded with a fresh $700 billion of public money to disperse among your cronies who aided and abetted in the collapse."
Or, as Mike Whitney puts it:
"...the $700 billion is just part of a massive 'pump and dump' scheme engineered with the tacit approval of the US Treasury and the Federal Reserve. Once the banksters have offloaded their fraudulent securities and crappy paper on Uncle Sam, they will do whatever they need to do to pad the bottom line and drive their stocks up. That means they will shovel capital into hard assets, foreign currencies, gold, interest rate swaps, carry trade swindles, and Swiss bank accounts. The notion that they will recapitalize so they can provide loans to US consumers and businesses in a slumping economy is a pipedream."
Treasury Secretary Henry Paulson and his designated wrecking crew have but one objective: theft. Their own world is doomed - "The system is de-leveraging and nothing can stop it," says Whitney - so they are pulling off one last, mega-heist before it sinks beneath the waves.
The rest of us must fashion new institutions to perform the societal tasks that were purportedly the domain of the now-extinct investment bankers: to gather large amounts of capital for projects of social value - for example, a Marshall-type Plan for the cities, a nationwide infrastructure makeover, and fulfillment of the 70-year old federal commitment to provide truly affordable housing for everyone. And of course, jobs, jobs, jobs.
"We must fashion new institutions to perform the societal tasks that were purportedly the domain of the now-extinct investment bankers."
We have many other uses for that $700 billion - what Barack Obama called "our last bullet," although intending to make it a gift to mega-thieves - for instance, to provide relief to current and future homeowner (and rental) victims of the housing bubble that will take years to fully deflate, as prices (and rents) decrease to levels consistent with wages and other social factors.
In a perverse way, Henry Paulson and his co-conspirators have done the public a great favor. He has told us that, Yes, the federal government can come up with $700-plus billion, in an instant, if the health of the nation demands it. He has expanded the fiscal scope of the domestic political conversation, so that it may encompass projects of transformational size. Never again can the corporate class speak of socially valuable projects being so large as to "break the bank" or the budget. Popular forces are now free to think large, too, without being ridiculed from the corporate Right.
The demise of finance capital's premiere institutions, and the brutal arrogance with which their servants moved to strip the commonweal of every squeezable drop of cash, has alerted vast sectors of the citizenry to the reality of capitalism-in-crisis in ways that no amount of Left agitation could have accomplished.
Technical public "ownership" of previously "private" institutions has been thrust upon us by the capitalists, themselves. But this is merely an opening for the great debates and struggles that must follow. Power does not devolve to "the people" by simple virtue of majority shares in failing institutions or even outright nationalization. And "the people" have no need of institutions that serve no purpose but as creatures of capital.
The second casualty of the current crisis, after the collapse of the financial sector, is surely the twin-party game of musical chairs that served to legitimize the rule of capital. The obscenity of a Democrat-Republican syndicate arrayed against the roaring, raging sentiments of citizens of all self-described political persuasions, cannot be erased from the collective national memory - even if congressional party leaders succeed in whipping their members into line, later this week.
"The second casualty of the current crisis is the twin-party game of musical chairs."
When catastrophe hits, radicals must be ready. Recent events have proven Cynthia McKinney and Rosa Clemente to be amazingly prescient in their belief that the Green Party can be - I emphasize can be - a vehicle for presenting and popularizing a truly transformational program for social change. (See McKinney "The Financial Crisis: Seize the Time!" BAR September 24.) McKinney and Clemente always intended that the Green Party become a nexus for the roiling social currents set in motion by the inexorable decomposition of ruling class institutions. The Democratic and Republican Parties, creatures of capital, are decomposing in full view, as witnessed by the events of this week. Too fragile to weather real political storms, they will not survive the larger, unfolding crisis of capital as twin hegemons. As the crisis deepens, the parties will crack - at a pace dictated by the increasing frequency of convulsions.
When we are confronted with the surreal spectacle of John McCain and Barack Obama attempting to destroy each other even as they rush to deliver nearly a trillion dollars to the same master, while the people scream at both of them to "Stop!" - we know that "change" is coming. But not the kind the Democrats or Republicans anticipate.
BAR executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com