This is not an economic crisis, this is a political and cultural crisis of capitalism, and if you don't understand that, well, you're a financial journalist.
That is the meaning of what happened today.
Rundle 08: A political and cultural crisis of capitalism
US correspondent Guy Rundle writes from Washington DC:
The final act of Monday the 29th of September – Black Monday? Greyish? Hawkstooth black and white Monday? It's like picking Cindy McCain's Nazi mistress wardrobe – was a press conference by Walnuts McCain himself in Des Moines, Iowa.
He'd put it off for a long time – so long, that CNN just played footage of tech setting the white balance, holding up a sheet of paper to the cameras, as they droned on about the day's events. It had a weird performance art quality, as if Laurie Anderson had taken over the airwaves. Eventually he hustled on like he was powerwalking, flourished a single sheet of paper and began:
I worked hard to bring everyone to the table .......we improved it greatly...our leaders are expected to leave partisanship at the door...Senator Obama and his allies in Congress infused the process with partisanship...Now is not the time to fix the blame, now is the time to fix the problem...
Good old John, the chuzpah kid – now is not the time for partisanship, especially from that partisan c-nt Obama – the old showman still got it. He gave the statement and then he hustled out as fast as he came in, not taking a single question. So, the whole Republican ticket is now off limits to actual scrutiny.
He had no choice but to do all that, because the silly boob had made a statement practically claiming credit for the whole bailout just before jumping on a plane at the exact moment the bailout went kablooey – and landed to find that his last statement zinging around the wires was a statement on his personal responsibility for the failed deal that may have killed America.
Obama didn't do a specific press conference, but he didn't need to – he gave two great speeches with a half-dozen zingers in each that the cable networks were more than happy to excerpt. They were old stuff --- "I think John McCain just doesn't get it" – but they were delivered with more authority than there'd been for a while. Most importantly politically, he took on the presidential voice urging everyone to "stay calm" and work through it – pretty much the stuff the President should be saying, if America currently had a President.
For those of you who missed the morning edition, and haven't had a chance to read the news before this bulletin: EVERYTHING IS F-CKED! CONGRESS DIDN'T PASS THE BAILOUT BILL, DEFEATING IT 228 TO 205, AND THE MARKET FELL NEARLY 800 POINTS! NO-ONE KNOWS WHAT THE HELL'S GOING ON, OR WHAT TO DO NEXT!
Okay, where were we? Ah yeah, collapse of America. People thought it could be over as night came down. But of course we live in a global society, so nothing is insulated. For it was morning in East Asia, and everything started tanking there too, falling by the requisite 5%. This fed back into the evening news shows, to create a fresh round of panic, disguised as earnest discussion.
By that point, any hope of sensible discussion had departed as the evening discussion shows took over. It is the particular tragedy of the US that its discussion programmes have become dominated by a particular type of telepopulism, in which various hosts – Lou Dobbs and Glenn Beck are the most prominent examples – present themselves as the unmediated voice of the people against a monolithic political class.
This has always been tiresome, but now it's starting to look ridiculous and noxious. It is part of the dominant political fantasy of American life – that government is, in the last analysis not a part of society, but a necessary evil, like an annual colonoscopy, to be despised, loathed and feared.
This mood took hold of America in the late 1970s, with Ronald Reagan humming the tune, as everything was going wrong for the country. Reagan and his supporters, taking up the themes of the failed Goldwater campaign of 1964, suggested that government was "the problem" and linked that theme to the American Revolution, effectively portraying the founders as a bunch of anarchists.
But the whole point of the American revolution, at least in terms of ideals, was not minimal government per se – it was virtuous government. The core of it was that there were good and bad governments, and you could judge them based on the principles they were founded on.
The weird thing is that survives to a degree. Watching Congress today, I didn't see caricatured, crony government, even though it was obvious that those voting the bill down would be members from both sides in danger of losing their seat. I saw complex, detailed arguments, the clash of ideas about what should be done, about what was happening, about different models of reality.
In effect, the TV pundits were the least intelligent thing going on, with their failure to get behind one or other model of reality, with its consequent course of action, one idea of what is going on.
Man oh man, this ain't the dumper – that will be the next one, in around 2017 – but it's starting to feel really, really big. What anyone in the know in the US is scared witless about, in the developing stockmarket tank, is the 401(k) situation. 401Ks are basically super funds, built evenly by employee and employer contributions, as in Australia.
Unlike Australia, employees still have little control over their 401ks, which can be regularly raided and ruined, even though hundreds of millions depend for their old age on them utterly.
The 401ks are all invested by various pension funds in the stock market – not in crazy stocks of course. In stable blue chip things, like Washington Mutual, or Wachovia or.....So the short point is that if the market tanks to the degree that 401ks slide through the floor, then this economic crisis will become a social and political one as people, faced with the prospect of lifelong penury and no reward for decades of work, will simply be disabused of any notion that the system has any legitimacy whatsoever.
That is already starting to happen, and to a degree, the general political cynicism is the beginnings of a more mature political push-back – which may or may not bloom in full – but which is being sold down the river by the Democrats and Republicans' acceptance of a deal that everyone calls "rotten", "the worst possible deal", "something I would normally never vote for". Etc.
But here is what is really, really important to understand about this current event is that this is not merely a financial system crisis – that is a mere ripple of a much deeper problem. Desperate to gain some political capital out of this, the right have been suggesting that the problem is over-regulation, which is mad. But no less illusory is the centre-left assertion that the problem is simply one of lack of regulation, and that if a proper framework could be put in place everything would be all right.
For the great truth of this mess is that the folks who designed the deregulation were, in a narrow sense, right -- if their goal was to give western capitalism another lease of life. What the market faced in the US at the end of the 90s, was a crucial lack of things to invest in, for the free money sloshing around the markets. By 2001, the dotcom bubble had burst and you couldn't shove $X billion into Ewidgets.com, and so there was a desperate need for another object that would keep the circus going. Mortgage backed securities was it – bricks and mortar, which looked like the most concrete investment was actually the most abstract, the notional capacity of people with no-deposit mortgages to repay.
Crazy, but what could you do? For the bitter fact is that without these pseudo-investments, the West is running on fumes. As China and the East roars ahead in classical 19th century high capitalist mode, the West runs on financial services, and rents – such as intellectual property, and debt and debt and debt.
For twenty five years, the US has been starving its public sector of investment – investment that would have created jobs and real growth and lowered overall costs – and allowed the rich to shuffle money into luxuries and useless services and waste, as the society decayed around them. To keep that running there was no choice but to keep coming up with increasingly unreal financial instruments, to give the illusion that a real economy was at work.
But there is no way to avoid what is now obvious to many people – the big sectors of the economy are not private products, they are social products – hence the need to keep them going, even when the morons who run them screw it up. The great great result of this crisis, is that hundreds of millions of people have now begun to understand this. Effectively what we have seen is the first glimpse of the shores of socialism. It may take another decade or two – and another two crises each worse than this – to get there, but we are on the way.
In the wake of this crisis, blame is being sheeted home to the average person, who is apparently running up too much debt. Well, mercy, what a surprise, it's the people's fault. Let's face it, people only consent to this crappy society because of what they can rack up on debt. If you're going to spend forty years of fifty hours a week – your whole one life on Earth – in the same office, doing crap you don't want to do, damn right you want a frikkin flat screen TV at the end of it. And to eat out. And drink stupid overpriced cocktails in awful resorts.
The short point is that if we close down easy credit, the rationale for Western capitalism collapses instantly. Because the rest of it is so godawful, that without rewards, no one would put up with it. Hence the need, over the last eight years, to keep it all bubbling, at any cost.
This is not an economic crisis, this is a political and cultural crisis of capitalism, and if you don't understand that, well, you're a financial journalist.
That is the meaning of what happened today.
Ya es da dia!
