Global financial system implosion begins

[A Dashing Blade]

I read it very differently, Lehmen's book has to be closed, and all accounts settled, those who couldn't settle without selling the position on, got under 9% of the face value of the contract towards meeting their obligations by selling the position. And the media talk was of about 12-13%

Cash is king, government money just means more bullets to end it all..

Hmmmmm, will check this out on Monday, but deffo my understanding is that CDS's on Lehamns can be cashed in at 90.5% of face.

 

[elbows]

Well its still doing my head in trying to understand whats happened with the Lehman's CSD's stuff.

Financial times says:

http://www.ft.com/cms/s/0/25137702-972d-11dd-8cc4-000077b07658.html

Bad news on Lehman CDS
By Aline van Duyn and Nicole Bullock in New York
Published: October 11 2008 03:00 | Last updated: October 11 2008 03:00
The pay-outs on around $400bn of defaulted credit derivatives linked to Lehman Brothers are likely to be higher than anticipated after initial results from auctions to settle these credit default swaps resulted in a lower recovery price.

The initial auction results were settled at 9.75 cents in the dollar, meaning banks and other investors who had agreed to make these payments in the event of Lehman's default will have to pay out 90.25 cents on the dollar.

The final auction for Lehman credit default swaps (CDS) was due to settle in the New York afternoon. The final prices were likely to be lower than the initial ones because there were a lot more sellers of bonds to settle the auctions than buyers, according to traders.

Bloomberg says:

Oct. 11 (Bloomberg) -- Lehman Brothers Holdings Inc. bondholders didn't get a clear indication of how much they will recover in the firm's bankruptcy from an auction of insurance on its debt, two analysts said.

Yesterday's auction determined that investors who bet on a default of Lehman's debt by buying derivatives called credit- default swaps should get 91.375 cents on their dollar. The price was set by auction administrators Creditex Group Inc. and Markit Group Ltd., with 14 financial institutions bidding. That figure was calculated based on an ``inside market midpoint'' price of 8.625 cents on the dollar for Lehman's debt.

The auction has little to do with what bondholders will recover once Lehman's bankruptcy, filed Sept.15, has been fought out in court by creditors, said Matt Dundon, managing director of distressed analysis at Miller Tabak Roberts Securities.

``I take very little directionality on the ultimate value of the bonds from the CDS auction,'' Dundon said.

Such auctions rarely come close to predicting the true price of bonds because of the disparity between insurance on debt and the debt itself, Dundon said. He called the difference between the auction price of 8.625 cents and the recent trading price of most bonds at about 10 cents ``insignificant.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=a94veNnxI0NI&refer=home


Meanwhile Robert Peston of the BBC, who said it was the day of reckoning over the Lehmans CSD stuff, failed to do a follow-up on the situation so far.

Maybe I'll just move on to the fact that Morgan Stanley is getting battered. If its deal with Mitsubishi falls through as a result, the US government will probably end up taking a stake in it, as the fallout from Lehmans collapse has rather discouraged them from letting banks fail.

 

[gosub]

Browsed the you tube link of that cartoon link that starts debt as money, too many threads to be arsed finding it but good post and good series lost me be a bit (no it didn't, but would want to have a firewall even if open source) on the :imagine if it was entirely different down the line(there's about four extra parts). But sort of grasped how you can do both 8.65 cents on the dollar & 91% (as you ain't got back dashing blade). I did see estimates in print before of around 13 and even post the deal the calming journos saying was not that far different from ten. Having watched that mpeg can't see why it could-ever have been higher than 9, I could be wrong, be happy to be proved so. Otherwise:
The margin call that is and will impact on a huge number of lives is in regions that people running numbers in systems the public entrust their lives would balk at.
Happier with capitalization over buying debt off the table, am disappointed with standard of UK politicos never address the underlying issue of credit rating though the actual pressure for 'real' action at the EU is thankfully(not really that thankful but in democracy's attempt to be non credible) apparently addressing "Mark to Market"
Almost feel happy its moved into currency and commodity got a better grasp, think it will blast back through equities on the Iceland wind up with profit warnings containing too strong a rally in the mean time.
Regardless of Canute Brown efforts to reduce the price of Brent (internationally, if he had any revenue he could cut taxes locally) slump in demand+fall in dollar= cut in production

 

[Bernie Gunther]

Joseph Stiglitz on:

How Did We Get into This Mess?

A unique combination of ideology, special-interest pressure, populist politics, bad economics, and sheer incompetence has brought us to our present condition.

Ideology proclaimed that markets were always good and government always bad. While George W. Bush has done as much as he can to ensure that government lives up to that reputation-it is the one area where he has overperformed-the fact is that key problems facing our society cannot be addressed without an effective government, whether it's maintaining national security or protecting the environment. Our economy rests on public investments in technology, such as the Internet. While Bush's ideology led him to underestimate the importance of government, it also led him to underestimate the limitations of markets. We learned from the Depression that markets are not self- adjusting-at least, not in a time frame that matters to living people. Today everyone-even the president-accepts the need for macro-economic policy, for government to try to maintain the economy at near- full employment. But in a sleight of hand, free-market economists promoted the idea that, once the economy was restored to full employment, markets would always allocate resources efficiently. The best regulation, in their view, was no regulation at all, and if that didn't sell, then 'self-regulation' was almost as good.

The underlying idea was, on the face of it, absurd: that market failures come only in macro doses, in the form of the recessions and depressions that have periodically plagued capitalist economies for the past several hundred years. Isn't it more reasonable to assume that these failures are just the tip of the iceberg? That beneath the surface lie a myriad of smaller but harder-to-assess inefficiencies? Let me venture an analogy from biology: A patient arrives at a hospital in serious condition. Now, it may be that the patient has simply fallen victim to one of those debilitating ailments that go around from time to time and can be cured by a massive dose of antibiotics. In this case we have a macro problem with a macro solution. But it could instead be that the patient is suffering from a decade of serious abuse-smoking, drinking, overeating, lack of exercise, a fondness for crystal meth-and that it has not only taken a catastrophic toll but also left him open to opportunistic infections of every kind. In other words, a buildup of micro problems has led to a macro problem, and no cure is possible without addressing the underlying issues. The American economy today is a patient of the second kind.

We are in the midst of micro-economic failure on a grand scale. Financial markets receive generous compensation-in the form of more than 30 percent of all corporate profits-presumably for performing two critical tasks: allocating savings and managing risk. But the financial markets have failed laughably at both. Hundreds of billions of dollars were allocated to home loans beyond Americans' ability to pay. And rather than managing risk, the financial markets created more risk. The failure of our financial system to do what it is supposed to do matches in destructive grandeur the macro-economic failures of the Great Depression.

Economic theory-and historical experience-long ago proved the need for regulation of financial markets. But ever since the Reagan presidency, deregulation has been the prevailing religion. Never mind that the few times 'free banking' has been tried-most recently in Pinochet's Chile, under the influence of the doctrinaire free-market theorist Milton Friedman-the experiment has ended in disaster. Chile is still paying back the debts from its misadventure. With massive problems in 1987 (remember Black Friday, when stock markets plunged almost 25 percent), 1989 (the savings- and-loan debacle), 1997 (the East Asia financial crisis), 1998 (the bailout of Long Term Capital Management), and 2001-02 (the collapses of Enron and WorldCom), one might think there would be more skepticism about the wisdom of leaving markets to themselves.

The new populist rhetoric of the right-persuading taxpayers that ordinary people always know how to spend money better than the government does, and promising a new world without budget constraints, where every tax cut generates more revenue-hasn't helped matters. Special interests took advantage of this seductive mixture of populism and free-market ideology. They also bent the rules to suit themselves. Corporations and the wealthy argued that lowering their tax rates would lead to more savings; they got the tax breaks, but America's household savings rate not only didn't rise, it dropped to levels not seen in 75 years. The Bush administration extolled the power of the free market, but it was more than willing to provide generous subsidies to farmers and erect tariffs to protect steelmakers. Lately, as we have seen, it seems willing to write blank checks to bail out its friends on Wall Street. In each of these cases there are clear winners. And in each there are clear losers-including the country as a whole.

source

 

[Yuwipi Woman]

Not everyone is doing badly by this. Warren Buffet's current net worth has risen 17%. He's overtaken Bill Gates as the world's richest:

http://atlanta.bizjournals.com/atlanta/stories/2008/10/13/daily20.html

 

[sleaterkinney]

Fucking priceless

"This is not intended to take over the free market, but to preserve it."

http://news.bbc.co.uk/1/hi/business/7668704.stm

 

[Darios]

"This is not intended to take over the free market, but to preserve it."

Jesus wept tears of hate then skullfucked his own eyeballs out.

 

[hipipol]

We is fucked say man at JP Morgan

Whichever way you look at it......

 

[Kanda]

Marc Faber comment on US economy :

Investment analyst and entrepreneur Dr. Marc Faber concluded his monthly bulletin with the Following:

''The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China . If we spend it on gasoline it goes to the Arabs. If we buy a computer it will go to India . If we purchase fruit and vegetables it will go to Mexico , Honduras and Guatemala . If we purchase a good car it will go to Germany . If we purchase useless crap it will go to Taiwan and none of it will help the American economy. The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I've been doing my part.'

 

[elbows]

Credit Default Swaps are going to get a little piece on Newsnight tonight, it would seem from the intro complete with black hole graphic.

 

[Crispy]

Marc Faber comment on US economy :

hehe

 

[darkfibre]

Joseph Stiglitz on:

-- one might think there would be more skepticism about the wisdom of leaving markets to themselves.

The new populist rhetoric of the right-persuading taxpayers that ordinary people always know how to spend money better than the government does --

source

The 'populist rhetoric of the right' is probably so effective because it contains a grain of logic - that is;

The collective intelligence of the market (as in billions of distributed individuals making day-to-day economic decisions) is inherently superior to a centralised authoritarian decision making entity.

How exactly we ended up with the latter despite being sold the former is an interesting question.

I'm now left wondering how one might stage a shareholders meeting for 60 million people.

 

[elbows]

The Credit Default Swap thing on Newsnight was short and simple and fairly good.

It sounds like its insane, so they need to unwind it and avoid too many large corporations going bust in the meantime, as too many more collapses would probably set off the CDS bomb.

 

[elbows]

Oh I just tuned into Bloomberg for a laugh and I saw something on the ticker about S&P warning that Icelandic bank collapses will cause interesting CDS problems.

Maybe the bomb already got triggered. I guess it will take a little while to find out, meanwhile at the very least CDS fears are adding to the great uncertainty and lack of confidence.

 

[Bernie Gunther]

The 'populist rhetoric of the right' is probably so effective because it contains a grain of logic - that is;

The collective intelligence of the market (as in billions of distributed individuals making day-to-day economic decisions) is inherently superior to a centralised authoritarian decision making entity.

How exactly we ended up with the latter despite being sold the former is an interesting question.

I'm now left wondering how one might stage a shareholders meeting for 60 million people.

Well, perhaps it might be if it was actually applying that collective brain-power to producing a stable system of governance over the most socially productive application of savings and the management of financial risk.

That doesn't appear to have been what they were doing with it though ...

Or to put it another way:

These considerations should not lie beyond the purview of the economist. But they must be relegated to their right perspective. If I may be allowed to appropriate the term speculation for the activity of forecasting the psychology of the market, and the term enterprise for the activity of forecasting the prospective yield of assets over their whole life, it is by no means always the case that speculation predominates over enterprise. As the organisation of investment markets improves, the risk of the predominance of speculation does, however, increase. <snip>

Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. The measure of success attained by Wall Street, regarded as an institution of which the proper social purpose is to direct new investment into the most profitable channels in terms of future yield, cannot be claimed as one of the outstanding triumphs of laissez-faire capitalism — which is not surprising, if I am right in thinking that the best brains of Wall Street have been in fact directed towards a different object.

source

 

[Bernie Gunther]

Also, I think there's a good argument to the effect that all the free-market rhetoric was nothing very much to do with what its fans actually implemented and that the relationship of the state, particularly the US state to modern finance capital is fundamental to both its hegemony over all other forms of human value and to the mess they've gotten us all into recently.

The fundamental relationship between capitalist states and financial markets cannot be understood in terms of how much or little regulation the former puts upon the latter. It needs to be understood in terms of the guarantee the state provides to property, above all in the form of the promise not to default on its bonds - which are themselves the foundation of financial markets' role in capital accumulation. But not all states are equally able, or trusted as willing (especially since the Russian Revolution), to honour this guarantee. The American state emerged in the 20th century as an entirely new kind of imperial state precisely because it took utmost responsibility for honouring this guarantee itself, while promoting a world order of independent nation states which the new empire would expect to behave as capitalist states. Since World War Two, the American state has been not just the dominant state in the capitalist world but the state responsible for overseeing the expansion of capitalism to its current global dimensions and for organizing the management of its economic contradictions. It has done this not through the displacement but through the penetration and integration of other states. This included their internationalization in the sense of their cooperation in taking responsibility for global accumulation within their borders and their cooperation in setting the international rules for trade and investment.

It was the credibility of the American state's guarantee to property which ensured that, even amidst the Great Depression and business hostility to the New Deal's union and welfare reforms, private funds were readily available as loans to all the new public agencies created in that era. This was also why whatever liquid foreign funds that could escape the capital controls of other states in that decade made their way to New York, and so much of the world's gold filled the vaults of Fort Knox. And it is this which helps explain why it fell to the American state to take responsibility for making international capitalism viable again after 1945, with the fixed exchange rate for its dollar established at Bretton Woods providing the sole global currency intermediary for gold. When it proved by the 1960s that those who held US dollar would have to suffer a devaluation of their funds through inflation, the fiction of a continuing gold standard was abandoned. The world's financial system was now explicitly based on the dollar as American-made 'fiat money', backed by an iron clad guarantee against default of US Treasury bonds which were now treated as 'good as gold'. Today's global financial order has been founded on this; and this is why US Treasury bonds are the fundamental basis from which calculations of value of all forms of financial instruments begin.

To be sure, the end of fixed exchange rates and a dollar nominally tied to gold now meant that it had to be accepted internationally that the returns to those who held US assets would reflect the fluctuating value of US dollars in currency markets. But the commitment by the Federal Reserve and Treasury to an anti-inflation priority via the founding act of neoliberalism - the 'Volcker shock 'of 1979 - assuaged that problem. (This 'defining-moment' of US-state intervention, like the current one, came in the run-up to a presidential election - i.e. before Reagan's election, and with bipartisan support and the support of industrial and well as financial capital in the US and abroad.) As the American state took the lead, by its example and its pressure on other states around the world, to give priority to low inflation as a much stronger and ongoing commitment than before, this bolstered finance capital's confidence in the substantive value of lending; and after the initial astronomical interest rates produced by the Volcker shock, this soon made an era of low interest rates possible. Throughout the neoliberal era, the enormous demand for US bonds and the low interest paid on them has rested on this foundation. This was reinforced by the defeat of American trade unionism; by the intense competition in financial markets domestically and internationally; by financial capital's pressures on firms to lower costs through restructuring if they are to justify more capital investment; by the reallocation of capital across sectors and especially the provision of venture capital to support new technologies in new leading sectors of capital accumulation; and by the 'Americanization of finance' in other states and the consequent access this provided the American state to global savings.

Deregulation was more a consequence than the main cause of the intense competition in financial markets and its attendant effects. By 1990, this competition had already led to banks scheming to escape the reserve requirements of the Basel bank regulations by creating 'Structured Investment Vehicles' to hold these and other risky derivative assets. It also led to the increased blurring of the lines between commercial and investment banking, insurance and real estate in the FIRE sector of the US economy. Competition in the financial sector fostered all kinds of innovations in financial instruments which allowed for high leveraging of the funds that could be accessed via low interest rates. This meant that there was an explosion in the effective money supply (this was highly ironic in terms of the monetarist theories that are usually thought to have founded neoliberalism). The competition to purchase assets with these funds replaced price inflation with the asset inflation that characterized the whole era. This was reinforced by the American state's readiness to throw further liquidity into the financial system whenever a specific asset bubble burst (while imposing austerity on economies in the South as the condition for the liquidity the IMF and World Bank provided to their financial markets at moments of crisis). All this was central to the uneven and often chaotic making of global capitalism over the past quarter century, to the crises that have punctuated it, and to the active role of the US state in containing them.

Meanwhile, the world beat a path to US financial markets not only because of the demand for Treasury bills, and not only because of Wall Street's linkages to US capital more generally, but also because of the depth and breadth of its financial markets - which had much to do with US financial capital's relation to the popular classes. The American Dream has always materially entailed promoting their integration into the circuits of financial capital, whether as independent commodity farmers, as workers whose paychecks were deposited with banks and whose pension savings were invested in the stock market, as consumers reliant on credit, and not least as heavily mortgaged home owners. It is the form that this incorporation of the mass of the American population took in the neoliberal context of competition, inequality and capital mobility, much more than the degree of supposed 'deregulation' of financial markets, that helps explain the dynamism and longevity of the finance-led neoliberal era. But it also helped trigger the current crisis - and the massive state intervention in response to it.

source

 

[TomPaine]

Maybe the bomb already got triggered.

I would say all of this is more akin to a bad fart. You hear about it first although aren't immediatly hit. Then the smell of rank hits you full on and it takes ages for the lingering smell to finally vanish.

TomPaine

 

[darkfibre]

Well, perhaps it might be if it was actually applying that collective brain-power to producing a stable system of governance over the most socially productive application of savings and the management of financial risk.

That doesn't appear to have been what they were doing with it though ...

Or to put it another way: source

Absolutely - Keynes is on it.

I'm suggesting that because the individual stakeholders decision making power has been concentrated within the agency of the financial institution, the potential collective intelligence is lost, with it the tendency towards system resilience, a perception of social consequence etc.

The point being that it's the ceding of power itself, regardless of who to, that's the problem. Increasing Government power over markets seems somewhat counter intuitive - a step in the wrong direction - as it invariably means less power for the individual.

Sure, individual empowerment has it's pitfalls as Keynes points out, still I think he's on the right track with this notion - explored further in ch.23

The only radical cure for the crises of confidence which afflict the economic life of the modern world would be to allow the individual no choice between consuming his income and ordering the production of the specific capital-asset which, even though it be on precarious evidence, impresses him as the most promising investment available to him. It might be that, at times when he was more than usually assailed by doubts concerning the future, he would turn in his perplexity towards more consumption and less new investment. But that would avoid the disastrous, cumulative and far-reaching repercussions of its being open to him, when thus assailed by doubts, to spend his income neither on the one nor on the other.

Remove liquidity preference?

Also, I think there's a good argument to the effect that all the free-market rhetoric was nothing very much to do with what its fans actually implemented and that the relationship of the state, particularly the US state to modern finance capital is fundamental to both its hegemony over all other forms of human value and to the mess they've gotten us all into recently.

source

Yep, the free-market rhetoric is as hollow as the Christian rhetoric, or that stuff about 'freedom'.

That article notes:

also because of the depth and breadth of its financial markets - which had much to do with US financial capital's relation to the popular classes. The American Dream has always materially entailed promoting their integration into the circuits of financial capital, whether as independent commodity farmers, as workers whose paychecks were deposited with banks and whose pension savings were invested in the stock market, as consumers reliant on credit, and not least as heavily mortgaged home owners. It is the form that this incorporation of the mass of the American population took in the neoliberal context of competition, inequality and capital mobility, much more than the degree of supposed 'deregulation' of financial markets, that helps explain the dynamism and longevity of the finance-led neoliberal era.

Is this 'integration' a bad thing, or did it simply not go far enough - in that the integration was incomplete, the individual was still too divorced from the ability to act autonomously?

I'm coming at all this from the POV that relocalisation of economic activity at an individual level is a sane response to all this, but with concern that we might 'recycle a few babies along with the grey water' when it comes to formulating ways of building resilient local economies, or worse, construct barriers to doing so as a response to current events.

(good article, thx)

 

[Barking_Mad]

Has anyone got a list or any idea of what sort of things have yet to work their ways out of the economic system?

How much more debt is left to come out of this monster?

 

[Barking_Mad]

Joseph Stiglitz piece on BBC news on what he thinks needs doing: http://news.bbc.co.uk/1/hi/business/7670421.stm

 

[sleaterkinney]

Has anyone got a list or any idea of what sort of things have yet to work their ways out of the economic system?

How much more debt is left to come out of this monster?

$55 trillion in credit default swaps, the recent dip was caused by Lehman's, Iceland and Washington Mutual have yet to come.

http://news.bbc.co.uk/1/hi/business/7641528.stm

 

[gosub]

That is is size of the market, not the size of the hole. The zeitgiest of the moment, is barking mad's question

 

[Bernie Gunther]

Interesting article here by George Caffentzis

Let us take each of these sectors and examine the deal that is being offered by the state to them in outline:

F (the financial sector): This sector agrees to still-to-be announced government imposed open-ended restrictions on their freedom of action and government regulation of their money capital movements. It also agrees to at least temporary nationalization of certain branches of the industry. In exchange it will get a large-scale "socialization" of debt losses across the board (not just in so-called subprime mortgage loans). Implicitly there is an assumption that this socialization will not be adversarial (i.e., the personnel involved in choosing the debts to be purchased by the government will not be looking out only for the government's interest).

I (industrial and commercial sector): This sector agrees to support the "rescue" of the financial sector in exchange for a government guarantee of a continuous access to credit (the end of the "credit crunch") and an implicit indication that the principle--"too big to crash"--that was used to judge which firms in the financial sector would be "bailed out" would also be applied to this sector.

W (the working class): This class agrees to a dramatic wage decrease either through debt-inspired inflation and exchange rate devaluation or the theft of the Social Security Fund or both in exchange for a return to relatively full employment relatively quickly.

The configuration of the relations between F, I, W in the immediate future is described below:

F-I (the relation between interest and profit and financial and industrial capitalists). This coming period will repose the eternal conflict between the financial sector (and its claim to interest) and the industrial and commercial sector (and their claim to "the profits of enterprise") after a period of hegemony of the financial sector. Economic rhetoric will be filled with snide remarks about pure money magicians and rocket scientists who land their projectiles in teacups and the need for "real" investments (especially in the energy sector).

F-W (the relation between wages and interest or working class and financial capitalists). The coming period will be, on the one side, in the face of a tremendous downward pressure on wages, replete with demands for debt cancellation or Jubilee and, on the other, draconian sanctions for breaking loan agreements, for falling behind the mortgage schedule, and for sending money to cover the credit card statement TOO LATE.

I-W (the relation between wages and profits, and between workers and industrial and commercial capital). The Bush Administration's "ownership" society will begin to look quaint. As a consequence, the efforts by workers to regain their previous levels of income will no longer rely on finding a "financial" exodus (through stock ownership or house purchasing) and will have to confront capital directly around wage struggle.

All classes and sectors, however, agree that much of the ideology and some of the practice of neoliberalism will be turned into relics. "Government" is now trumping "governance" on all levels of the economy (not, of course, that the state was ever aiming to wither away as some postmodern thinkers were led to believe during the last decade.) Just as developments after September 11 like the invasions of Afghanistan and Iraq showed that the centerless and "flat" world of globalization was more an advertising gimmick than a reality, just as the return of the surveillance state with the "war on terrorism" showed that the internet was no field of open communication, then so too events this September and early October have shown the era of the symbolic, future-centered economy operating at light speed has reached its limits in a meteor shower of falling stock prices, bankrupt investment houses, foreclosed homes and tent cities.

It is also clear that the bailout deal is only as strong as the results it produces. There is no guarantee that either buying up hundreds of billion of dollars of “toxic” loans will be adequate to "restore" confidence in the financial sector, or that the credit flows will resume to the extent that will make an economic upturn possible, or that there will be a return to historically normal levels of employment after a period of "turbulence." Moreover, some parts of the system might eventually reject the deal previously accepted when confronted with demands that were merely implicit in the initial offering. For example, how will workers respond to the demand by the next administration that the Social Security fund be invested in stocks after just seeing the latest of a series of stock market crashes? Will the financial houses balk if they are regulated too stringently? Will the collapse of neoliberalism lead to a more powerful anti-capitalist movement in the US or something resembling what we would call "fascism"? These are the kind of questions that will be central to understand the class politics of capital's "exodus" from neoliberalism that is taking place now.

source

 

[butchersapron]

The key poiont for me in that article, politically, is that

The blockage of the credit route out of the long-term stagnation of the wage will have major strategic consequences. Since capital will not allow the US working class to be a class of rentiers (living off the ever increasing value of their stocks and of the equity on their homes), workers must return to the hard terrain of the wage in the coming era, however unpropitious it appears.

...and it's something whose truth can be measured. And more importantly it (if true/happens) puts the western w/c as a whole on the same footing as the rest of the global proletariat again.

 

[Bernie Gunther]

This would be a really good time for those 200m armed US citizens that pbman was always on about to take to the streets in the interests of social security, free medical care and the right not to be evicted from their homes.

I'm not holding my breath though ...

 

[Brainaddict]

It wont implode, despite all the doomongering

I predict a boom in doom-mongering and weekly "the-sky-is-falling-in" articles and a long-term decline in their accuracy... Chicken Little fancy-dress prices will also be a good buy...

 

[Bernie Gunther]

The key poiont for me in that article, politically, is that



...and it's something whose truth can be measured. And more importantly it (if true/happens) puts the western w/c as a whole on the same footing as the rest of the global proletariat again.

My guess is that we're all going to be on the wrong end of something not unlike the 'structural readjustment' programmes the IMF inflicts on third world countries, after all, where are they going to loot the money to pay for bailing out these shits? Not from productive industry 'cos we don't have much of that since the ascendancy of finance capital under neo-liberalism.

So what is to be the target of the primitive accumulation required to guarantee ongoing profits for the finance industry, who as far as I can tell are the people that the likes of Gordon Brown and David Cameron actually work for.

I'm pretty sure that it's going to be those of us who maybe have a house that can be sold, or a bit of money in a pension fund, or some wages to tax and the people who are dependent on social wages that can be taken away on the justification of a bit of propaganda in the Daily Mail. It really seems quite unlikely that people are going to be able to use inflated house prices and easy credit to make up for the loss of income that the inevitable 'financial discipline' programmes are going to inflict, so I think we really are back to wage struggles, only we don't make or do anything terribly useful that someone would be likely to miss anymore. So I think our leverage in that direction is sort of limited. Furthermore the many draconian anti-terror laws that have been brought in under the nuLabour scum can easily be adapted to suppress the other obvious forms of struggle.

So where does that leave us?

 

[gosub]

I'm not sure but I imagine this will be a once in a life time oppuntinty to examine the nature of currency. I say once in a lifetime coz it may be like once in 400 hundred years, was running through the options with a bloke I know, who qute frankly as a smoker I would consider "over zealous" about the smoking ban, who leads me to further enquire as to the historic nature of the state relationship with commodity and further endevour.

 

[A Dashing Blade]

The more people say "this time it's different" the more bullish I get.

 

[kyser_soze]

A recession is not an implosion or collapse tho, is it?

The funny thing it, I'm more reassured that the stock markets are hinky on the basis of an actual recession rather than a perceived banking collapse - a real reason as opposed to a virtual reason if you will...