Category Archives: economy
The Great American Bubble Machine
The bank’s unprecedented reach and power have enabled it to turn all of America into a giant pumpanddump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere — high gas prices, rising consumercredit rates, halfeaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you’re losing, it’s going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it’s going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth — pure profit for rich individuals.
They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They’ve been pulling this same stunt over and over since the 1920s — and now they’re preparing to do it again, creating what may be the biggest and most audacious bubble yet.
– Matt Taibbi, The Great American Bubble Machine
also, this is a useful resource: Financial Crisis for Beginners
subprime crisis animated
another cheerful post!
Foreclosure Alley – SoCal Connected
What I find particularly interesting is that there are no interviews with people who have lost their homes, just their neighbors. At the end, the reported asks something along the lines of “are you afraid of losing your home? We want to hear your story.” They don’t ask “have you lost your home?” even though that’s the most blatantly absent perspective in the article. I’ve noticed this in other pieces of journalism– as soon as someone actually becomes homeless, they totally lose their voice and citizenship in society.
Also this is a couple weeks old, but definitely check out This American Life‘s special on the housing crisis if you haven’t already. [via cameron]
Despite Everything, I Still Love America
This is not sarcasm. America is more interesting right now than any piece of fiction on my bookshelf. Frankly, I don’t even care much who wins the election– we’re fucked either way. But I find the whole debacle fascinating: if not a climax (though if Palin has her way, maybe) then certainly a major plot point in American history. So in some ways I’ve detached and am now watching the world like a movie. Every once in a while depression seeps in, but mainly I’m just trying to maintain a sort of bastard love (and understanding) for the disaster that is my homeland. What follows is a collection of what I’ve been reading, and my comments only when I feel like I have something relatively novel to say.
First off, if you read one book during this election season, I so totally enthusiastically recommend Joe Bageant‘s Deer Hunting with Jesus. In fact, unless you have either read this book or spent significant time in a red state, I probably don’t want to discuss the election with you. This sounds harsh, so let me explain: this book offers a perspective on America that is unfortunately super foreign to almost all the liberal Yankees that I know, and yet is arguably more American than we are. I’m well versed in (and largely bored by) coastal liberal thought and supremely ignorant about the rest of the country. This is a primer of sorts. Its also a quick read, both amusing and terrifying. If you want a sample, try his essay Why Rednecks May Rule the World.
Palin was undoubtedly the catalyst for my detachment/amusement towards current events. She represents the glorious union of tabloid celebrity with politics and smirks at the tricky issues of gender that everyone pretends to have figured out (hence the extreme spite most women of my class have for her). Unlike Bush, and is an actual member of the hugely influential, but until now, largely invisible class known as the Scotts Irish/red necks/white working poor, a class that traditionally has been pitted against blacks to ensure the exploitation of both. Palin’s entrance turned the election into this incredible story-within-a-story for all this deep shit bubbling and stewing in our culture. Rolling Stone’s Matt Taibbi has probably the best take on Palin that I’ve read yet, though lacking Bageant’s much needed empathy:
In America, it takes about two weeks in the limelight for the whole country to think you’ve been around for years. To a certain extent, this is why Obama is getting a pass on the same issue. He’s been on TV every day for two years, and according to the standards of our instant-ramen culture, that’s a lifetime of hands-on experience. It is worth noting that the same criticisms of Palin also hold true for two other candidates in this race, John McCain and Barack Obama.
As politicians, both men are more narrative than substance, with McCain rising to prominence on the back of his bio as a suffering war hero and Obama mostly playing the part of the long-lost, future embracing liberal dreamboat not seen on the national stage since Bobby Kennedy died. If your stomach turns to read how Palin’s Kawasaki 704 glasses are flying off the shelves in middle America, you have to accept that middle America probably feels the same way when it hears that Donatella Versace dedicated her collection to Obama during Milan Fashion Week. Or sees the throwing-panties-onstage-“I love you, Obama!” ritual at the Democratic nominee’s town-hall appearances.
So, sure, Barack Obama might be every bit as much a slick piece of imageering as Sarah Palin. The difference is in what the image represents. The Obama image represents tolerance, intelligence, education, patience with the notion of compromise and negotiation, and a willingness to stare ugly facts right in the face, all qualities we’re actually going to need in government if we’re going to get out of this huge mess we’re in.
Here’s what Sarah Palin represents: being a fat fucking pig who pins “Country First” buttons on his man titties and chants “U-S-A! U-S-A!” at the top of his lungs while his kids live off credit cards and Saudis buy up all the mortgages in Kansas.
The truly disgusting thing about Sarah Palin isn’t that she’s totally unqualified, or a religious zealot, or married to a secessionist, or unable to educate her own daughter about sex, or a fake conservative who raised taxes and horked up earmark millions every chance she got. No, the most disgusting thing about her is what she says about us: that you can ram us in the ass for eight solid years, and we’ll not only thank you for your trouble, we’ll sign you up for eight more years, if only you promise to stroke us in the right spot for a few hours around election time.
Matt Taibbi – The scariest thing about Sarah Palin isn’t how unqualified she is – it’s what her candidacy says about America
With a figure like Palin I can’t resist Paglia‘s take:
Conservative though she may be, I felt that Palin represented an explosion of a brand new style of muscular American feminism. At her startling debut on that day, she was combining male and female qualities in ways that I have never seen before. And she was somehow able to seem simultaneously reassuringly traditional and gung-ho futurist. In terms of redefining the persona for female authority and leadership, Palin has made the biggest step forward in feminism since Madonna channeled the dominatrix persona of high-glam Marlene Dietrich and rammed pro-sex, pro-beauty feminism down the throats of the prissy, victim-mongering, philistine feminist establishment.
In the U.S., the ultimate glass ceiling has been fiendishly complicated for women by the unique peculiarity that our president must also serve as commander in chief of the armed forces. Women have risen to the top in other countries by securing the leadership of their parties and then being routinely promoted to prime minister when that party won at the polls. But a woman candidate for president of the U.S. must show a potential capacity for military affairs and decision-making. Our president also symbolically represents the entire history of the nation — a half-mystical role often filled elsewhere by a revered if politically powerless monarch.
Camille Paglia – Fresh blood for the vampire
I know this will get me kicked out of the sisterhood of northeastern career women but I do find Palin appealing. I mean, she’s dumb as a doornail and will probably bring about the rapture if McCain dies and she gets her hands on our nukes. I don’t want her in power. I don’t respect her, but I respect her feminine aesthetic and I respect the challenge it poses to the “feminism” I was raised with. Of course I’ve always turned to female villains (not princesses) as models for feminine power. They get to use sex and spells/weapons. So maybe I just have a soft spot for girlie evil. As in, “Yay! We finally have a bad ‘guy’ too! Even if she is just Karl Rove’s puppet….”
But I feel there are things we could learn from Palin’s embrace of motherhood and guns. Not necessarily attitudes to emulate out-of-the-box, but she’s an important data point on the domesticity/ambition scatter-dot graph. While I agree with Taibbi that this election is more about narratives than reality, and that’s partly why America is so fucked up, I do think narratives are important. Life imitates art and all. Palin is too ditzy and evil make a productive archetype. But the mother-warrior image is something that progressives might do well to explore, both politically and personally.
And then there’s Elaine Meinel Supkis. She’s even more insane/prophetic/offensive than Paglia:
For 2,000 years even up to 20th century Germany, the Jews were the main population used by the elites to protect themselves from ‘poor white trash’. They would toss this religious minority to the raging mobs and say, ‘Kill them, not us!’ This worked about 90% of the time. When civil rights were finally and extremely belatedly handed over to religious minorities and former slaves in the USA when LBJ signed the 1964 Civil Rights Act, the army of arrogant white racists exited the Democratic Party in a group huff. They milled around a while. One pro-white trash racist, Wallace, tried to launch his own racist/fascist party but he was conveniently shot and thus, prevented from interfering with the new Republican program.
After the failure to launch an all-racist-all the time party, this great mass of disaffected, lower class whites flowed like a sea into the Republican Party which embraced them with open arms. This is the ‘Southern Strategy’ which the money interests used to corral a herd of bewildered human cattle into a pen where they could moo and moo and be milked while money could flow into the coffers of Eastern Establishment bankers like the Rockerfellers.
I.e: the Real Rulers latched onto the very same population that normally would be after them with pitchforks when things go bad. When the Real Rulers needed to herd this lowly population into sorting pens so they could be either milked or killed for dinner or skinned for leather, the rulers had to become Cowboys. This is why granddaddy Bush encouraged his spawn to spit food while talking at the dinner table. Ma Bush imitated Ma Kettle by having her spawn run riot, torturing small animals, skipping school, teasing weaker children, bullying the servants, etc. Each generation of the Bushes are cruder and crueler. They are nearly universally cowardly but entice the real trailer trash to strut about arrogantly while killing brown skinned people who are of different cultures or religions. The US Indian Wars have moved to the Middle East and are pretty much identical. The natives there live on top of mineral wealth we want so we go cowboy our way into their lands and ‘tame’ them by killing millions of them.
Warning: This essay is quite politically incorrect, but then so is our country. Elaine Meinel Supkis – Triumph Of The GOP White Trailer Trash
Now, lest all this talk of red necks get you thinking that that’s who we should be blaming, lets just be clear about who are the sheep and who are the herders. Who has already lost their job, their home, and a kid in Iraq? Who just destroyed the economy so they could have their house in the Hamptons?
I wish I knew whether this extravaganza of ruin might settle the question as to whether America goes into hyperinflation or implacable deflation, but the net effect is that money is leaving the system in big gobs. And if not money per se, then the idea of money as represented in certificates, contracts, counter-party positions, and gentlemen’s agreements. This is the day that America finds itself a much poorer nation. The capital we thought was there, is gone.
A lot of it was actually translated over the years into Hamptons villas, Gulfstream jets, and other playthings that will now go up on Ebay or some equivalent as we turn into Yard Sale Nation in a general liquidation of remaining assets. Of course, the trouble in a situation like this, where absolutely everybody is trying to pawn off assets, is that there are very few buyers on the scene, so the prices of all these things go down down down. Everything is for sale and nobody has any money.
This was essentially the state of things in the Great Depression of the 1930s, and the only escape from that turned out to be the mobilization for war. And in the aftermath of that terrible war, we were the only industrial nation that hadn’t been bombed to rubble. What’s more, we had a very handsome supply of industrial world’s primary resource, oil, at our disposal. So we spent the next thirty years making oodles of things and selling them to people in other lands (lending them the money to buy), until these nations were back on their own feet and solvent. And after 1975, the industrial club picked up a bunch of new members and they all began to clean our clock.
So, as our industrial base waned, and our factories got old and brittle, and our labor force was steeply under-bid by cheaper labor forces, we embarked on a quest for “the new economy.” This was represented in successive turns as the information economy, the consumer economy, the high-tech economy, et cetera. They were all ruses, aimed at concealing the truth — which was that we had become a society no longer producing things of value, no longer generating real wealth. The final act of this farce has been the so-called “financial industry.”
That “industry” turned out to be most earnestly devoted to the production of complex swindles. They were so finely engineered that it took twenty years for the swindles to stand revealed, and they were cleverly hitched to the primary thing that the American public vested its identity in: house-and-home. Thus, much of the public finds itself in very real danger of becoming homeless and broke.
James Kunstler – The Clusterfuck Nation Chronicle
Ideally everyone deserves empathy. But if times like these require you to hate someone, let’s hate the rich, okay? Racism sucks, but its the people who exploit racism for material gain that are evil (edit: not that people who do horrific things like this aren’t, just that I think we’re better off blaming the more powerful puppet masters). Things are clearly going to get really bad in this country. In the culture wars to come, who are the ones with guns? The same ones who don’t believe in birth control. There’s more of them, and they’re armed. So its really in our interest to try to understand the people Palin represents, to have some sort of tolerance and warmth for them. Nothing’s gonna change unless we can unite against the exploiters.
back at harvard…
And I can’t deny that witnessing the total collapse of the house of cards that is our banking system makes the transition a little easier. I remember my first week on this campus, the special reverence with which the polo-shirted freshmen spoke of “I-banking”, the magical way for (really) smart people to make obscene amounts of money; doing what, no one quite knew. Now three years later, that wealth has tumbled into dust. Too bad you had the bring the whole country down with you, you greedy, short-sighted, dickwads.
Of course it’s the people outside the gates who are going to actually suffer. And its partly the sale of Lehman stock that’s paying for this fine education, so I’ve no claim to the moral high ground. But I gotta get my kicks where I can, and I’m looking forward to watching those econ fuckers squirm tomorrow morning. Pre-med’s looking real good now, isn’t it?
For ordinary Americans, though, it has been a different story. Real wages have been growing slowly; at just 1.6% a year on average over the latest upswing, well down on the experience of earlier decades. Business, of course, needs consumers to carry on spending in order to make money, so a way had to be found to persuade households to do their patriotic duty. The method chosen was simple. Whip up a colossal housing bubble, convince consumers that it makes sense to borrow money against the rising value of their homes to supplement their meagre real wage growth and watch the profits roll in.
As they did – for a while. Now it’s payback time and the mood could get very ugly. Americans, to put it bluntly, have been conned. They have been duped by a bunch of serpent-tongued hucksters who packed up the wagon and made it across the county line before a lynch mob could be formed.
The debate now is not about whether the US is in recession but how deep and long that recession will be. Super-bears have started to say that this is perhaps “The Big One”, by which they mean the onset of a new Great Depression. The need to rescue Bear Stearns has done little to still those voices.
America was conned – who will pay? – The Guardian
Today is ZDay, a day of “awareness and activism” about the issues addressed in the delicious agitprop conspiracy doc Zeitgeist: The Movie.
I don’t have the patience to be a true conspiracy theorist, but I do believe the following: that the government is not to be trusted; that the elite are sketchy, secretive and often psychotic bastards; and that humanity has much to gain by ditching theistic religions, nationalism, and corporatism. But above all, I enjoy a good story. And for that reason alone I recommend taking two hours to watch Zeitgeist, preferably with a couple friends and your preferred paranoia-inducing substance.
[via alex o.]