Wall St was down 94 overnight, its biggest fall in a month, while the local market is down 66.
Rundle 08: A political and cultural crisis of capitalism
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The final act of Monday the 29th of September – Black Monday? Greyish? Hawkstooth black and white Monday? It’s like picking Cindy McCain’s Nazi mistress wardrobe – was a press conference by Walnuts McCain himself in Des Moines, Iowa. He’d put it off for a long time – so long, that CNN just played footage of tech setting the white balance, holding up a sheet of paper to the cameras, as they droned on about the day’s events. It had a weird performance art quality, as if Laurie Anderson had taken over the airwaves. Eventually he hustled on like he was powerwalking, flourished a single sheet of paper and began:
Good old John, the chuzpah kid – now is not the time for partisanship, especially from that partisan c-nt Obama – the old showman still got it. He gave the statement and then he hustled out as fast as he came in, not taking a single question. So, the whole Republican ticket is now off limits to actual scrutiny. He had no choice but to do all that, because the silly boob had made a statement practically claiming credit for the whole bailout just before jumping on a plane at the exact moment the bailout went kablooey – and landed to find that his last statement zinging around the wires was a statement on his personal responsibility for the failed deal that may have killed America. Obama didn’t do a specific press conference, but he didn’t need to – he gave two great speeches with a half-dozen zingers in each that the cable networks were more than happy to excerpt. They were old stuff — - “I think John McCain just doesn’t get it” – but they were delivered with more authority than there’d been for a while. Most importantly politically, he took on the presidential voice urging everyone to “stay calm” and work through it – pretty much the stuff the President should be saying, if America currently had a President. For those of you who missed the morning edition, and haven’t had a chance to read the news before this bulletin: EVERYTHING IS F-CKED! CONGRESS DIDN’T PASS THE BAILOUT BILL, DEFEATING IT 228 TO 205, AND THE MARKET FELL NEARLY 800 POINTS! NO-ONE KNOWS WHAT THE HELL’S GOING ON, OR WHAT TO DO NEXT! Okay, where were we? Ah yeah, collapse of America. People thought it could be over as night came down. But of course we live in a global society, so nothing is insulated. For it was morning in East Asia, and everything started tanking there too, falling by the requisite 5%. This fed back into the evening news shows, to create a fresh round of panic, disguised as earnest discussion. By that point, any hope of sensible discussion had departed as the evening discussion shows took over. It is the particular tragedy of the US that its discussion programmes have become dominated by a particular type of telepopulism, in which various hosts – Lou Dobbs and Glenn Beck are the most prominent examples – present themselves as the unmediated voice of the people against a monolithic political class. This has always been tiresome, but now it’s starting to look ridiculous and noxious. It is part of the dominant political fantasy of American life – that government is, in the last analysis not a part of society, but a necessary evil, like an annual colonoscopy, to be despised, loathed and feared. This mood took hold of America in the late 1970s, with Ronald Reagan humming the tune, as everything was going wrong for the country. Reagan and his supporters, taking up the themes of the failed Goldwater campaign of 1964, suggested that government was “the problem” and linked that theme to the American Revolution, effectively portraying the founders as a bunch of anarchists. But the whole point of the American revolution, at least in terms of ideals, was not minimal government per se – it was virtuous government. The core of it was that there were good and bad governments, and you could judge them based on the principles they were founded on. The weird thing is that survives to a degree. Watching Congress today, I didn’t see caricatured, crony government, even though it was obvious that those voting the bill down would be members from both sides in danger of losing their seat. I saw complex, detailed arguments, the clash of ideas about what should be done, about what was happening, about different models of reality. In effect, the TV pundits were the least intelligent thing going on, with their failure to get behind one or other model of reality, with its consequent course of action, one idea of what is going on. Man oh man, this ain’t the dumper – that will be the next one, in around 2017 – but it’s starting to feel really, really big. What anyone in the know in the US is scared witless about, in the developing stockmarket tank, is the 401(k) situation. 401Ks are basically super funds, built evenly by employee and employer contributions, as in Australia. Unlike Australia, employees still have little control over their 401ks, which can be regularly raided and ruined, even though hundreds of millions depend for their old age on them utterly. The 401ks are all invested by various pension funds in the stock market – not in crazy stocks of course. In stable blue chip things, like Washington Mutual, or Wachovia or…..So the short point is that if the market tanks to the degree that 401ks slide through the floor, then this economic crisis will become a social and political one as people, faced with the prospect of lifelong penury and no reward for decades of work, will simply be disabused of any notion that the system has any legitimacy whatsoever. That is already starting to happen, and to a degree, the general political cynicism is the beginnings of a more mature political push-back – which may or may not bloom in full – but which is being sold down the river by the Democrats and Republicans’ acceptance of a deal that everyone calls “rotten”, “the worst possible deal”, “something I would normally never vote for”. Etc. But here is what is really, really important to understand about this current event is that this is not merely a financial system crisis – that is a mere ripple of a much deeper problem. Desperate to gain some political capital out of this, the right have been suggesting that the problem is over-regulation, which is mad. But no less illusory is the centre-left assertion that the problem is simply one of lack of regulation, and that if a proper framework could be put in place everything would be all right. For the great truth of this mess is that the folks who designed the deregulation were, in a narrow sense, right — if their goal was to give western capitalism another lease of life. What the market faced in the US at the end of the 90s, was a crucial lack of things to invest in, for the free money sloshing around the markets. By 2001, the dotcom bubble had burst and you couldn’t shove $X billion into Ewidgets.com, and so there was a desperate need for another object that would keep the circus going. Mortgage backed securities was it – bricks and mortar, which looked like the most concrete investment was actually the most abstract, the notional capacity of people with no-deposit mortgages to repay. Crazy, but what could you do? For the bitter fact is that without these pseudo-investments, the West is running on fumes. As China and the East roars ahead in classical 19th century high capitalist mode, the West runs on financial services, and rents – such as intellectual property, and debt and debt and debt. For twenty five years, the US has been starving its public sector of investment – investment that would have created jobs and real growth and lowered overall costs – and allowed the rich to shuffle money into luxuries and useless services and waste, as the society decayed around them. To keep that running there was no choice but to keep coming up with increasingly unreal financial instruments, to give the illusion that a real economy was at work. But there is no way to avoid what is now obvious to many people – the big sectors of the economy are not private products, they are social products – hence the need to keep them going, even when the morons who run them screw it up. The great great result of this crisis, is that hundreds of millions of people have now begun to understand this. Effectively what we have seen is the first glimpse of the shores of socialism. It may take another decade or two – and another two crises each worse than this – to get there, but we are on the way. In the wake of this crisis, blame is being sheeted home to the average person, who is apparently running up too much debt. Well, mercy, what a surprise, it’s the people’s fault. Let’s face it, people only consent to this crappy society because of what they can rack up on debt. If you’re going to spend forty years of fifty hours a week – your whole one life on Earth – in the same office, doing crap you don’t want to do, damn right you want a frikkin flat screen TV at the end of it. And to eat out. And drink stupid overpriced cocktails in awful resorts. The short point is that if we close down easy credit, the rationale for Western capitalism collapses instantly. Because the rest of it is so godawful, that without rewards, no one would put up with it. Hence the need, over the last eight years, to keep it all bubbling, at any cost. This is not an economic crisis, this is a political and cultural crisis of capitalism, and if you don’t understand that, well, you’re a financial journalist. That is the meaning of what happened today. Ya es da dia! |
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25 Comments
Tell it like it is Guy…nice work.
Dear Guy Rundle
Greatly appreciate your comments and analysis, spoiled only by the recent resort to f-cked and c-nt.
John James is so cute when he is manic and incoherent. It’s adorable.
Before 1996 John Howard and his Liberals were horrified by the vast size of Australian’s foreign debt, they charged about the country in an imported car screeching their consternation and severely rebuked the Keating government for allowing such a catastrophe to occur. During the Howard/Costello years of control of financial matters the personal foreign debt of Australians more than trebled and that great Treasurer Peter Costello declared that it was appropriate for Australians to take on large debts because they could afford to pay. I hope he was right.
“.we have seen the first glimpse of the shores of socialism..” Oh, please! This is like one of those late night horror movies, ‘Return of the Zombies’. Here they come, the old marxists and socialists rising out of the ground, staring blankly ahead of themselves, arms outstretched, mumbling “come to meeee!” Fidel, all is forgiven!
I reckon that today will go down as the day China won World War 3. They won’t even have to fire a shot - just call in the loans and watch the US collapse.
What you’ve written here, Guy, is either completely true or complete crap, but we won’t know until years from now. Great journalism!
Why does is always have to be a “left vs right” p*ssing contest? Perhaps there is another way, one that doesn’t rely on Wall St pyramid schemes (or Florida land booms, or Tulip futures bubbles), and doesn’t require the means of production to be controlled by a centralised “revolutionary” apparatus? Keep on fighting the same arguments and we’ll keep on getting the same results…
If you love JamesK’s logic then you will love this clip of Sarah Palin and the media. She reads “all of ‘em” but which ones particularly she is not so sure of. However, not to worry because she is a maverick and mavericks can fix anything.
http://au.youtube.com/watch?v=9go38MgZ4w8&eurl=http://talkingpointsmemo.com/
No-one is blaming the average person for getting too much into debt. John Howard was the one who encouraged them to borrow more because of the [temporarily] increased value of their houses. This was a failure of leadership. We had a debt-fuelled boom that went on far too long and it reached into the most vulnerable parts of the economy. Simultaneously, more fuel was poured on the fire by pro-cyclical fiscal spending. The weakest sector of the economy, being the household balance sheet, is the most stretched. The strongest sector, the federal government, is ungeared. The sector which used to wear most of the pain of economic contractions, publicly listed companies, are mostly conservatively geared and free of obligations to their workers. The blame for the Australian housing bust lies with the PM who claimed credit for the boom. His legacy hangs as heavily as an albatross around his neck.
Best analysis of the global financial meltdown so far. The things you own end up owning you. But that’s me, I could be wrong, maybe it’s a terrible tragedy. In Guy we trust.
http://www.youtube.com/watch?v=qEFYOajzyD0
What alot of Left wing bilge. I can’t believe it! Talk about arm chair socialists and they’re all probably driving Mercedes! Some of these postings are classics, just “rolled gold” as the Djs say. First there is Tom’s “peace, democracy and sustainabilty are the real goals, not wealth..” Funny, but the only peaceful and democratic nations are the wealthy. The only countries in a position to do anything about the environment are the wealthy! Did you see the eastern European experiment in centrally planned economies and ownership by the’ proleteriat’ of the means of production and distribution.It’s called a DESERT! ( economic, cultural, spirtual )
Then there is this piece of socialist dreaming from John( the government made me do it ) Goldbaum ” we had a debt fuelled boom!” We had a productivity fuelled boom. We enjoy unprecedented advances in longevity, health and well being that our grandparents would have scarcely dreamed possible.
Lucy’s flying the hammer and sickle again! Ah, the bourgeoise Lucy! The hide of them wanting to improve their lot without the ‘Dear Leader’ saying it was okay. And then this classic from Marion, another of the old Central Committee comrades. ” ..the John Howard and the Liberals.. horrified by the size of Australia’s foreign debt..” Dead right Marion. It took Howard 12 years to convince those boofhead Labor economists that we need a SURPLUS. And guess what Swan, Rudd and Tanner are saying will now allow Australia to come through this storm relatively unscathed? Our surplus! Give that lady a cigar.( made in Cuba, of course )
Ah yes, it’s nice to see the hammer and sickle out flying again, I was starting to think all that northern exposure had turned Guy into a standard-issue, Stuff White People Like liberal. It certainly feels like times are changing… then again it was only six weeks ago the ‘Labor’ Party was trying to privatise electricity supply, so who knows.
Keep voting Green folks, not because they are Solomon but because peace democracy and sustainability are the real goals, not wealth, and at least they have it in their platform. Listening to Garnaut today and you would get the impression there really is no hope of avoiding cataclysmic climate change. If this slows down carbon emissions I for one will experience relief even as my super bites the dust.
Marion, Peter Costello also suckered rich 60 year olds to put one million dollars into their super just prior to the stock market plunge. Many of them put in the proceeds of the sale of their small businesses. Some of them borrowed against real estate investments to get the super tax concessions. They are all screaming blue murder now their wealth has fallen 30 percent. I don’t think they will regard the Howard Government as good economic managers.
The thing you are forgetting Guy, with your fancypants analysis,is that John and Sarah are mavericks and there is nothing that mavericks can’t fix. That’s why they’re mavericks! Can’t you see that? God himself was a maverick and are you telling me that he couldn’t fix this? Man, you are so dumb.
JamesK, you are fucking paranoid! I didn’t blame John Howard for people being fatter and sicker. I simply pointed out the error in John James’ rant. All I blame Howard and Costello for is the pro-cyclical fiscal stimulus and the active encouragement of the debt-fuelled spending binge which caused the housing bubble which has now burst. If you claim credit for the boom, you have to accept the blame for the bust. As for being a fucking leftist loon, I’ve previously been criticised as a market fundamentalist, you right-wing goon.
The line “…about different models of reality” reminded me of something Phillip K. Dick is supposed to have said … here it is: Reality is that which, when you stop believing in it, doesn’t go away.
The current economic crisis is forcing people to abandon their beliefs and face up to reality that won’t go away.
Hopefully our environment won’t have to get into the same state before people begin to see that reality.
John Goldbaum Excerpts(!): “No-one is blaming the average person for getting too much into debt. John Howard was the one who encouraged them to borrow more because of the [temporarily] increased value of their houses. This was a failure of leadership…The blame for the Australian housing bust lies with the PM who claimed credit for the boom. His legacy hangs as heavily as an albatross around his neck….Peter Costello also suckered rich 60 year olds to put one million dollars into their super just prior to the stock market plunge….I don’t think they will regard the Howard Government as good economic managers……We didn’t have a productivity fuelled boom. Productivity fell. Retirees are experiencing longer lives and better health and well being but workers and their children and grandchildren are getting fatter and sicker……..JamesK, you are fucking paranoid! I didn’t blame John Howard for people being fatter and sicker”
Well…ok…if you say so John!
Blue Monday?
“how does it feel…”
Guy Rundle has grasped the meaning of the meltdown. His clear exposition can be understood by anyone, but not by the finance gurus (who still confuse cause and effect).
Crikey.com deserves great credit for publishing what the rest of the media world has not (maybe cannot) understand ie the dominance of Finance Capital was the result, not the cause, of failure of Main Street Capital.
No point in blaming anyone. The crisis was inevitable, given the rule of the “Free Market” system.
John James, your second post was wishful thinking. We didn’t have a productivity fuelled boom. Productivity fell. Retirees are experiencing longer lives and better health and well being but workers and their children and grandchildren are getting fatter and sicker.
Nice article. The spawn of Hayek et al have hollowed out our societies leaving fragile shells whose ticking heart lies in a far away East Asian sweat shop. There was a popular term floating around a few years ago that describes the fumes Guy says the West is running on, the ‘post industrial economy’. It may take a decade or two of pain a misery, but maybe the idea will re-emerge that politics and economy go together, one is not subservient to the other. Governments of the world will strike a ‘new deal’ to rebuild society, people will be citizens, not consumers and the idea of choice will no longer supplant the idea of consensus. However, the ghost of Hayek will surely be waiting in the wings and the day will come when the many will grow too strong and the few will drive a wedge between them and pick them off one by one until a day will come when a Labor party will espouse the same drivel as the self proclaimed aristocratic heirs to the earth.
I love how the ad-sense picks ads for trading CFDs on your mobile as the most appropriate for this article….
Hilarious!
Where’s a Christian Kerr-shaped counterweight when you need one?
So John Goldbaum, “fatter and sicker” workers and their children and grandchildren are Johnnie Howard’s fault.
That probably makes perfect sense to leftist loons……