For most of my adult life, the needs and wants of the moneychangers have taken precedence over the needs of the real economy. So now that the real economy has been crippled, it is really not surprising that the Predator economy which preys on it is stumbling as well. And so NOW the heavy hitters in the media are beginning to notice like they NEVER did when the casualties were farmers and other members of the Producing classes.
Our financial system has become a madhouse. We need radical change
As a new global crisis looms, and political paralysis worsens, genuinely bold solutions are required to overcome the malaise
Will Hutton
guardian.co.uk, Saturday 6 August 2011
There was fear this week – real fear. There was fear eliminating $2.5tn from the value of global shares in a mere five days. There was fear provoking the dumping of Italian government bonds at rock-bottom prices. And there was fear taking the yield on short-dated US treasury bills to below zero: investors were so anxious to park their cash somewhere safe that they were, in effect, paying the US government money to steward their savings – something not seen since the second world war.
Yet the credit ratings agency Standard & Poor's ended the week by casting a shadow over the creditworthiness of American government debt, unprecedentedly downgrading it from its AAA status, a monumental blow to the standing of the richest country on Earth and its political system. S&P's held its ground despite intense lobbying from the US treasury. Without tax increases, it said, the US could never recover its fiscal position – but tax increases, given the implacable opposition of congressional Republicans, have become impossible. The markets lurched downward.
Meanwhile in Europe, France's president, Nicolas Sarkozy, chair of the G20, finally managed to disturb German chancellor Angela Merkel's holiday and, with Spain's prime minister José Zapatero, discussed in a conference call how best to react. It was long overdue. Even the president of the European Commission, José Manuel Barroso, described a week in which individual governors of the European Central Bank, and the German government, were openly saying different things about whether the ECB would support the Italian and Spanish stricken bond markets as "undisciplined communication". The ECB said it was "constructive ambiguity". To panicking markets, it looked what it was: hesitation and indecision that could only fan the flames.
What we have witnessed is a mass global flight from risk and an accompanying hoarding of cash on a huge scale. It was the worst week in the financial markets since the dark days of autumn 2008 at the height of the implosion of the western banking system – itself one of the worst periods since the early 1930s. But in important respects this week was worse. At least in 2008, governments could put their national balance sheets behind their respective banking systems to restore confidence. Now the fears are more deep-seated and far harder to counter.
The markets have lost confidence that western governments can successfully manage the legacy of vast private debt and broken-backed banks without imposing huge and nameless costs. They don't know what the costs will be – perhaps a series of chain defaults on government debt starting in Europe, perhaps worldwide debt deflation, or even helplessly printing money to pay off public and private debts, so generating unmanaged and volatile inflation. But they know the costs will be huge. And unpredictable. more
Notice here, we are to bemoan the loss in the faith in "free markets." I believe I am going to swoon.
Capitalism in crisis, a warning from history: Eighty years ago, a banking collapse devastated Europe, triggering war. Today, faith in the free markets is faltering again
5th August 2011
Exactly 80 years ago, international capitalism stood on the verge of meltdown.
The collapse of the banking system in the summer of 1931 sent shockwaves through Europe, bringing governments to their knees and thousands out onto the streets.
In the United States, an increasingly careworn president and his congressional critics fought a bitter battle over government spending and tax rises.
And in Britain, with the Labour government broken by the economic crisis, a Conservative-dominated coalition imposed the deepest spending cuts in a generation, slashing benefits in an attempt to restore confidence in the nation’s finances.
With the banks refusing to lend, and millions of people thrown out of work, capitalism itself seemed utterly discredited.
In other countries, many turned to the far Right, swelling the ranks of the Nazis and their allies.
In Britain, a generation of intellectuals turned their backs on capitalism, placing their faith in the utopian idealism of Soviet Communism and closing their eyes to the horrors of Stalin’s barbaric regime.
For decades afterwards this extraordinary historical moment — when capitalism itself appeared to have failed — was forgotten, and looked like the stuff of ancient history.
But in the summer of 2011, with the eurozone in chaos, the British economy stagnant and the U.S. crippled by debt, with social mobility at a standstill and millions of ordinary families squeezed until they can barely breathe, it feels disturbingly familiar. more
Once Upon a Time in the West
A Commentary by Jakob Augstein 08/04/2011
Hate has become a part of the everyday culture of American politics.
This week, the United States nearly allowed itself to succumb to economic disaster. Increasingly, the divided country has more in common with a failed state than a democracy. In the face of America's apparent political insanity, Europe must learn to take care of itself.
The word "West" used to have a meaning. It described common goals and values, the dignity of democracy and justice over tyranny and despotism. Now it seems to be a thing of the past. There is no longer a West, and those who would like to use the word -- along with Europe and the United States in the same sentence -- should just hold their breath. By any definition, America is no longer a Western nation.
The US is a country where the system of government has fallen firmly into the hands of the elite. An unruly and aggressive militarism set in motion two costly wars in the past 10 years. Society is not only divided socially and politically -- in its ideological blindness the nation is moving even farther away from the core of democracy. It is losing its ability to compromise.
America has changed. It has drifted away from the West.
The country's social disintegration is breathtaking. Nobel economist Joseph Stiglitz recently described the phenomenon. The richest 1 percent of Americans claim one-quarter of the country's total income for themselves -- 25 years ago that figure was 12 percent. It also possesses 40 percent of total wealth, up from 33 percent 25 years ago. Stiglitz claims that in many countries in the so-called Third World, the income gap between the poor and rich has been reduced. In the United States, it has grown.
Economist Paul Krugman, also a Nobel laureate, has written that America's path is leading it down the road to "banana-republic status."
The social cynicism and societal indifference once associated primarily with the Third World has now become an American hallmark. This accelerates social decay because the greater the disparity grows, the less likely the rich will be willing to contribute to the common good.
When a company like Apple, which with €76 billion in the bank has greater reserves at its disposal than the government in Washington, a European can only shake his head over the Republican resistance to tax increases. We see it as self-destructive.
The same applies to America's broken political culture. The name "United States" seems increasingly less appropriate. Something has become routine in American political culture that has been absent in Germany since Willy Brandt's Ostpolitik policies of rapprochement with East Germany and the Soviet Bloc (in the 1960s and '70s): hate. At the same time, reason has been replaced by delusion. The notion of tax cuts has taken on a cult-like status, and the limited role of the state a leading ideology. In this new American civil war, respect for the country's highest office was sacrificed long ago. The fact that Barack Obama is the country's first African-American president may have played a role there, too. more
America In Decline
By NOAM CHOMSKY AUGUST 5, 2011
“It is a common theme” that the United States, which “only a few years ago was hailed to stride the world as a colossus with unparalleled power and unmatched appeal is in decline, ominously facing the prospect of its final decay,” Giacomo Chiozza writes in the current Political Science Quarterly.
The theme is indeed widely believed. And with some reason, though a number of qualifications are in order. To start with, the decline has proceeded since the high point of U.S. power after World War II, and the remarkable triumphalism of the post-Gulf War ’90s was mostly self-delusion.
Another common theme, at least among those who are not willfully blind, is that American decline is in no small measure self-inflicted. The comic opera in Washington this summer, which disgusts the country and bewilders the world, may have no analogue in the annals of parliamentary democracy.
The spectacle is even coming to frighten the sponsors of the charade. Corporate power is now concerned that the extremists they helped put in office may in fact bring down the edifice on which their own wealth and privilege relies, the powerful nanny state that caters to their interests.
Corporate power’s ascendancy over politics and society—by now mostly financial—has reached the point that both political organizations, which at this stage barely resemble traditional parties, are far to the right of the population on the major issues under debate.
For the public, the primary domestic concern is unemployment. Under current circumstances, that crisis can be overcome only by a significant government stimulus, well beyond the recent one, which barely matched decline in state and local spending—though even that limited initiative probably saved millions of jobs.
For financial institutions the primary concern is the deficit. Therefore, only the deficit is under discussion. A large majority of the population favor addressing the deficit by taxing the very rich (72 percent, 27 percent opposed), reports a Washington Post-ABC News poll. Cutting health programs is opposed by overwhelming majorities (69 percent Medicaid, 78 percent Medicare). The likely outcome is therefore the opposite. more
No comments:
Post a Comment