So, the bailout goes down in flames, the Republican pundit and talk show host talking point handout sheet directs the right wing media droids to hammer speaker Nancy Pelosi over the failure of this plan. They obediently proceed to do so in spite of the fact that the house republicans were instrumental in scuppering the plan to which the democrats had characteristically conceded . Alex Jones has been foaming at the mouth in a most entertaining way as a protest on Wall Street and over a hundred other locations on Friday goes pretty much unreported. The Standard & Poor’s 500 (SPX) index was down 8.7% and the Nasdaq composite (COMP) 9.1%. The Dow closed down 777 points (7%!). Is this God showing his opinion of our actions as Rosh Hashanah was about to begin at sunset? Happy New Year.
Fed chairman Ben Bernanke has been manipulating the interest rate to hide what was going on since the housing market started teetering in the edge of the precipice at which it had been rushing for years. So instead of making sure to prepare for inevitable changes in market conditions those who were in a position to know what was coming they just exacerbated the problems caused by corporate to politician cronyism. The only logical reason for this shell game must have been to put off the day of reckoning until after the election and no more.
Well, it did not put it off long enough for that, but the show that is this crisis has thrown off attention from issues that seemed to loom large in this election until now. From our loss of right to privacy, telecoms being given a free pass to subvert the constitution at the behest of a seemingly all-powerful chief executive, ever bleaker environmental news, the US using torture a la military juntas past and present, we are effectively distracted. Neither candidate has shown any inclination to reverse any of these trends that we can expect to be exacting a terrible cost on coming generations.
The government taking over a part of the credit market roughly the size of one third of the UK’s annual GDP only serves to formalize the existing relationship between the capital markets and the US government. This relationship can not be any closer in fact than it has been over the last few decades, but not having to hide it could have implications that would make us wish it was just about bailing out wealthy people for their screw ups.
Rest assured that todays rejection of this attempt at forced financial buggery only signals a short reprieve from the encraochment of the Corporatocracy into every aspect of our lives, business, politics, education, culture and yes even religion. It seems that the phrase “unprecedented authority without oversight” has been the theme thoughout the term of this administration, and they will hot give up on this one huge last chance easily. The Federal Reserve announced today that it plans to dump an additional $630 billion into the global financial system, releasing a massive infusion of funds into banks globally. More is sure to come, and whatever bill is passed will only be part of the immediate price paid. The language will change when the next bailout plan is put before congress. The citizens reacted negatively to «bailout», the phrase «Rescue Plan» was introduced too late in the day to work that old newspeak magic, but we are still placid enough to wait for a manipulation of language that’ll leave most of us unaware of what beast looms on the horizon.
The bailout is coming and the money is going to come from cuts in the national budget, and the list of programs to come up for pruning will no doubt be the usual targets. (Read: anything that benefits average citizens, communities, the environment, and forget about keeping any remaining scraps of support for any cultural endeavours.) Add to that a likelihood that the tax base will shrink as retail slumps and unemployment rises. The American econonomy has gone from being one based on production and trade to being one based on credit and an explosion of service sector jobs. A service and credit economy is a consensual illusion that can not be sustained for much longer than it already has been.
Criticism of free market economics misses the point, unless we’re all communicating from parallel universes. This is not a free market economy, I can’t find any real world examples of a free market economy. We have been trading in an economy of Washington pull, an economy of political and media manipulation, an economy heavily dependant on government largesse and government contracts as personal favors, an economy of corporate tax breaks, gratis use of public land and privatised government and military services as a license for companies to raid US tax dollars.
The direction of strategic use of taxes and subsidy by the US government shows up as what choices are on the supermarket shelves, what crops are planted, and what business practices are permissible. Could pressure to conduct business in certain ways, to use one set of raw materials instead of another for reasons of patriotism and national security be far behind? Could calls for more regulation lead to centralized economic planning?
The closest historical parallel to the American economy of the past thirty years is National Socialism. Where the current American economy differs from Germany’s National Socialist economy is that there is not a strong base of production in the US as there was in Germany at the time. Another difference is that these large financial institutions and corporations hold power over our government and not the other way around. And we don’t need to have the trains running on time since the credit based economy has put nearly every adult in a car, and buying a living rom set on credit will give you a voucher for gasoline.
Watch China, and other foreign entities who will be playing a role in this, and we’re sure to rack up quite a debt to the foreign governments and corporaions. We could also see economic issues, internet openness, copyright issues and homeland security involvement converge in an unprecedentedly huge clusterfuck squirming beneath a heavy cloak of newspeak and well-rehearsed hand-wringing. If there exists a plan for an I-911, what is the likelyhood that there may be an Econ-911 type plan, not necessarily relying on attacks, but a crisis. Hey, here’s a crisis. Let’s float some ideas to find out how much further we can push the American public.
Looking back to the recession of the -90’s, it was middle management in the major financial companies that took the hit, though with some nice golden parachutes in many cases. Entry level to clerical, retail and production workers who remained after “downsizing” were left with exponentially heavier workloads, fewer, if any benefits and lower wages. No easing of this trend happened during the following boom years. Since then, the little guys have been on the shit end of the boom, and will be carrying a disproportionate part of the burden of paying for the fallout.
The aspirational classes who are hoping the government can guarantee future capital infusions to cover past debt and a continued mortgaged lifestyle were breathing easier when it looked like last call was being pushed back. The nature of a market bubble is that it will not inflate to the same size it was before it popped. Housing is still over valued, and it would take another round of shell games to put u7s back in that trance. I don’t see thirty years of junk economics being sustained for much longer. It just doesn’t work. And continual and expanding growth, which is what we have become used to has to be based on production and exchange, so where can this come from? Third world sweat shops? Minimum wage retail workers? Software and game developers? The latter have been paying off well, and their third world replacements will be just as effective for a fraction of the cost.