Posts Tagged ‘washington’

The impending death of Conservative Socialism

October 23, 2008 Leave a comment

Brad DeLong wrote a piece that just begs to be read. In it, he examines the reason why, as he so elegantly states:

The Bush administration, having entered office as social conservatives, leaves office as conservative socialists, proprietors of the most sudden large expansion of the state’s role in the US economy since mobilisation for the second world war.

For Brad, the question is why this happened:

Why did they decide to partially and quasi-nationalise America’s banks – to invest $250bn in preferred stock plus warrants and tell the banks that it wanted them to use the capital to expand their loan base rather than contract it via deleveraging? It is certainly not what Henry Paulson signed up as Treasury secretary to do.

The question for us, however, as election day approaches and the Party of Wall Street plummets to earth, like John McCain’s fighter jet over the rice paddies of Vietnam, Moron in the cockpit (Mission Accomplished!) for an extended stay at the Obama Hilton, we wonder of the fate of his successor.

That tortured metaphor in place, we can proceed.

The rush of the Party of Wall Street into the safe embrace of its chief rival, the Party of Washington – so completely and handsomely expressed in the endorsement of Barack Obama by that lapdog of the House of Bush, Colin Powell, this past Sunday – the conversion of social conservatives to the conservative socialism of the Democratic Party, no doubt, causes you to consider the possibility that this event heralds not simply the collapse of the former, but also the timely demise of the latter.

In this, you are indeed one step ahead of us, knowing, full well, that without Wall Street, Washington can not function in the old way.

Conservative or not, the faint socialism of Washington’s variety – itself the faintest reflection of the no less faint European reflection of 19th Century Socialism – rests on the most vibrant practice of full blooded Wall Street ponzi schemes erected from a stable base of dollar reserves, easy credit, and an ever lengthening social work day.

Until now, the Party of Washington‘s most convincing argument on behalf of its conservative socialism – read: Social-Fascism (Yes, we did use the “F” word, now clap your hands over your eyes!) – consisted almost entirely of its alleged role in protecting the rest of us from the predatory practices of Wall Street.

One of the intellectual apologists for this “function” of Washington is the economist Jared Bernstein, who wrote some time ago:

… we live in a complex world, where markets can provide only partial solutions to the challenges we face. Market failures abound, and government will unquestionably be called upon to repair these failures. For years, we’ve elected politicians who’ve railed against this reality, pretending that they can refund that fifth of the economy that we spend on government –”it’s your money!”– and still provide the services we want and need. To put it mildly, it hasn’t worked. We’re spending the same share as ever, yet we’ve squandered years when we could have been making progress against the challenges of globalization, of environmental degradation, of deteriorating infrastructure, of economic inequality, of costly inefficiencies in health care.

The only problem with this delusion of Mr. Bernstein: precisely at the time the Party of Wall Street has finally and completely conceded its bankruptcy – both ideological and actual – and turned to the Party of Washington for Bolsheviki Salvation, Washington is itself insolvent, and, under the grinding crush of an unprecedented post-War economic downturn.

Washington may not only be unable to help its retainers on Wall Street, but itself as well.

It is clear industry is faltering, state and local government are facing defaults, unemployment is rising, housing mortgage, and consumer debt defaults continue to increase, pension and retirement funds teeter ominously.

In January, the victorious Party of Washington will face this daunting environment, armed only with the treasury’s printing press, a somewhat fearful community of central banks seeking the safest possible investment instruments in a rapidly deflating economic bubble, and an extremely attenuated ideology to repair what are now being called the “excesses of Wall Street,” but really is a watershed moment for humanity.

Good luck, guys!

Banks still not lending…

October 14, 2008 Leave a comment

According to Naked Capitalism, a key indicator of banks willingness to lend has, so far, barely moved, despite Washington $250 billion plan to partially nationalize them, guarantee their debt and most deposits, and inject billions of dollars in each:

Although the stock market has taken considerable cheer from the monumental action by central banks to try to restore interbank lending to something resembling normalcy, the results to date have been meager. However, hope remains that improvement will continue, albeit at a slow pace.


October 3, 2008 Leave a comment

The US Senate has passed a revised version of the plan, which is set to go before the House of Representatives today. In a disgraceful reflection on the Congress, the bill had to be loaded with $US150 billion in inducements to win the support of the Senate. This included tax credits that the pharmaceutical industry and the high-tech sector had been demanding.

In other words, it was not enough for senators to vote for a bill that would save the US economy from what an industry newsletter, the Bank Credit Analyst, calls “a black hole”. They had to be able to satisfy the special demands of lobbyists and donors.

This lack of national interest, and the assertion of sheer venality, has raised the risk of lending to the US because these legislators are the same people who make the spending and taxing decisions that will determine the national fiscal future.

America’s century: is the sun setting on an epoch?

Categories: Off Blog Tags: , ,

A plea for common sense…

October 3, 2008 3 comments

If we might offer an observation:

The credit market is dying, but no one has the courage to pull the plug. This is the result not of too little credit – which could be fixed – but too much credit – which cannot be fixed – and certainly cannot be fixed by making more credit available.

Let it go…

We are seeing the late results not of economic failure, but of economic success – the transition of our human family from organization on the basis of scarcity, to organization on the basis of abundance. All the indicators formerly taken as predictors of the health of the economy have been turned on their head.

As such, all steps being taken to prolong the existing order will only make the transition more difficult and painful.

The important thing at this moment is to sweep the credit market aside: abrogate by law all debt obligations personal and public, foreign and domestic. The houses that were built with it will not disappear, neither will the factories and farms produced by it.

What will happen instead is that they will be saved from being plowed under as they were in the 1930s to stabilize prices – as the so-called toxic assets are being plowed under with this bailout plan.

This will cause massive jobs loss – let them go as well, and offset this by a radical reduction of working time. The age of abundance is not an age of work, but of leisure and individuals self-development of our human capacities.

Work is necessary in the age of scarcity, but in the age of abundance, it becomes an optional exercise of men and women free to express themselves in productive or non-productive pursuits as they choose.

This will also cause the bankruptcy of governments around the world – a result few would mourn as they have been the chief tormentors – both figuratively and literally – of mankind during the entirety of recorded human history. In its place will be the voluntary association of human beings and a society based on mutual respect.

We have no illusion, such changes as described above will be seen as insane by every thinking person who reads this. Yet, that does not matter. These changes will be voluntarily adopted by us, or they will be imposed at great cost upon us through our own actions.

We have left Kansas, people.

Deal with it.