1.Those of you, us, who think overproduction-
Tuesday, July 07, 2009
While We're Waiting...
1.Those of you, us, who think overproduction-
Sunday, June 21, 2009
Papers, Dragons, Tigers, Scissors
Speaking of blockheads, with or without Ian, on April 1, 2009, the US Federal Reserve, the US Treasury, and the US Federal Deposit Insurance Corporation-- that's Ben, Tim, and Sheila-- issued yet another in their line of joint get-happy-feel-good-the-worst-is-over-make-a-wish communiques designed to put the greed back into the fear and greed economy. Like all previous, and subsequent, communiques, this one was designed to prove that Ben, Tim and Sheila were no ordinary Toms, Dicks, or Harrys-- that they, Ben, Tim, and Sheila, knew what to do, how to do it, and when to do it; that they, Ben, Tim, and Sheila, were from the government and they were here to help us.
So standing shoulder to shoulder, the three proclaimed that henceforth now and forever April 1 would no longer be known as "April Fool's Day," but rather "Enlightened Responsible Patriotic Investors' Day," or for the sake of brevity, simply "April Bigger Fool's Day." April 1 would receive an upgrade, a "retention bonus' of a sorts, from a day of small pranks and minor deceptions to a day of gigantic tricks and spectacular deceptions, ranking second only to July 4th in the hierarchy of national holidays, and the refuge of scoundrels.
The announcement was hardly unexpected. More accurately, the announcement was overdue. After the creation of the Primary Dealers' Credit Facility, Maiden Lane LLC 1 and 2, the AIG Residential Mortgage Backed Securities Facility, the Term Security Credit Facility, the Asset Backed Commercial Paper Facility, the Money Market Investment Funding Facility, the Commercial Paper Funding Facility, Maiden Lane LLC 3 [the AIG Collateralized Debt Obligation LLC], the Term Asset Loan Facility...
After the Treasury's creation of the Troubled Asset Relief Program made up of the Capital Purchase Prgram, the Systemically Significangt Financial Institute Program [also known as the AIG program], the Targeted Investment Program, the Automotive Industry Funding Program, the Citigroup Asset Guarantee Program, the Homeowner Affordability and Solvency Program, the Credit for Small Business Program, the Automotive Supplier Support Program, the Capital Assistance Program, and the feather in this floppy-brimmed hat, the Public-Private Investment Program supplemented by the Legacy Loan Program...
After the FDIC's Temporary Liquidity Guarantee Program, and finally, after the ultimate, the program of programs-- the FDIC's quarantee of debt issued by the PPIPs participating in the FRB/UST TARP, TALF, TSCF, ABCPF, CPFF, Maiden Lane, LLP, programs, purchasing the troubled asset, legacy loan, asset backed, special investment vehicles of the banks so that every $1 of equity capital provided by private investors, matched of course by the public dollars, could be leveraged into $6, $12 of publicly guraranteed debt paid to the banks for taking over assets for which there was no market.
After all that, after that blizzard of acronym's that when read aloud sounded like the work of Gertrude Stein as interpreted by the Department of Defense, how else to celebrate the efforts of the few who have taken so much from so many except with a holiday? How else for the Fed, the Treasury, the FDIC to honor themselves as the biggest of the bigger fools? Happy Fools Days were here again, or just around the corner. For sure.
The government's show of holiday spirit was quickly embraced by those non-governmental bodies of standards, measures, weights, and thumbed scales. The Financial Accounting Standards Board revised its once lauded now dreaded mark-to-market rule to allow banks to list their SIVs, CDOs, CLOs, CMOs, ABSs, CMBSs, at notional, face, values rather than market values, thereby avoiding the irritating, exasperating, embarrassing, and troubling aspect of troubled assets-- that is the fact that there was no market, there was no need, no use, for the securities, thus there was no exchange, there was no value.
Bankers, fund managers, financial analysts, breathed a collective sigh of relief, offset of course by a sudden gasp from the bankers, fund managers, financial analysits, who were counterparties with counterpositions in these very same SIVs, CDOs, CLOs. CMOs, ABSs, CMBSs.
In fact, some bankers, fund managers, financial analysts didn't know whetere to breathe in or out, being at one and the same time on the same and different debt instruments, party and counter-party, with positions and counter-positions. Hyperventilation appeared as the only rational option.
The decision of the FASB was not likely to provide much relief to the financial institutions on either side of the debt instruments. Rather, the revised standard merely codifies what has been the market truth for over a year. The relief that the banks will obtain will be, like the assets carried on their books, impaired, and will in fact, work in oppositions to the clearing of troubled assets from the banks' balance sheets; will hinder the liquidation of illiquid instruments.
These debt vehicles are, first and foremost, derivatives, representing not value, but the image of the value of an underlying asset or pool of assets; representing the image of the exchange of property. That image of implied, imputed congealed substantive value of a parcel, a unit of ownership, of property, is debt. That image, that reflection that is a claim on value, allows debt to pose, represent, substitute, as value in the markets, that allows debt to be considered an asset.
All of these sophisticated, complicated, structured, tranched, layered, tiered investments exist only to be traded. Market velocity, the turnover of these instruments either through direct sale and purchase, or through further collateralization, functioning as security for other similar vehicles is the only mechanism for the image of value to achieve even a Mayfly's moment of earthly existence.
These are, after all, collateralized instruments, with terms, restrictions, obligations, covenants attached requiring the posting of specific, and increased, amounts of actual property, should the market value of the instrument, or the ratio of the face amount of the debt instrument to the valuation of the underlying assets, deteriorated. In establishing its non-mark-to-market rule, the FASB enshrined the dis-integration of asset from value and the impossibility of the reproduction of value.
Next: Part 2, China Moon
Monday, March 16, 2009
Was, Not Was; Is, Is Not 2: Political Economy's Last Stand
Leading Economic IndicatorsSo... it comes down to this on the way down to the way down below the lowdown-- over here, in front of the TV cameras, the bankers, financiers, the brokers, all of them pointing fingers in every direction but home, shaking their heads in a hundred different rhythms, rolling their eyes in asynchronization, but singing with one voice a drop-dead imitation of Shaggy-- "It Wasn't Me."
And over here, after the cameras are turned off, and the mikes killed, and the committee men and women have left the platform, then the bankers, financiers, brokers, all of them grabbing at the same time with every hand outstretched, all of them channelling Wreckless Eric, singing "Take the K.A.S.H," off-key of course, which is exactly the point when singing Wreckless Eric.
2. Hair[cut]s of the Dog
And it comes down to this too, that the Chairman of the Federal Reserve System, nostalgic for those salad yesterdays days of capital liquidation, that golden era of asset stripping, that happier time when dissolving hard assets in the acid bath of leverage was so innovative, has committed the Fed to lending money at leveraged rates of 10 or 20 to 1 to private equity investment firms, hedge funds, brokers, for the purchases of securities backed by the cash flow from student loans, credit card debt [prime and subprime], auto loans [prime, subprime, and floor plan], and small business loans backed by the US Small Business Administration.
The Fed will offer its, your, cash at par or market value of these securitized loans, minus a haircut of course, to anybody and everybody with a minimum of ten million dollars worth of the securities; the Fed, with commitments from the US Treasury, will offer these loans at the LIBOR rate plus 50 or 100 basis points, for three years, with the collateralized securities themselves the only collateral the borrower need provide-- in effect, allowing the borrower to walk away from the securities with the K.A.S.H. at any time, for any reason, without any recourse on behalf of lender-- the Fed.
So as not to frighten our intrepid financiers from this pot of gold in the middle of the black rain, participants in the TALF will not be subject to the limits on executive compensation that the Congress so thoughtlessly, callously, cruelly imposed on those taking the public's money.
Obviously, the latest version of Federal Reserve monetarism is derived from both the sophistry of Milton Friedman and the legendary larceny of Eddie Antar retailing stereos and VCRs to New Yorkers in the 1980s.
At 2 Maiden Lane in New York City a banner appeared over the Fed's battery of special lending windows: " Welcome to Crazy Feddie's. Prices So Low, We're Practically Giving It All Away! Our Prices Are INSANE!"
3. Barking up Trees while the Forest Burns
Meanwhile, the scientists of the dismal science of political economy, circling the wagons around the pit that is called finance capitalism, fill the print, video, and digital media with their favorite theories of what, where, how, and why things went more than just wrong-- how capitalism has made its own existence so problematic.
Political economy came into being as a natural result of the expansion of trade, and with its appearance elementary, unscientific huckstering was replaced by a developed system of licensed fraud, an entire science of enrichment.
This political economy or science of enrichment born of the merchants' mutual envy and greed, bears on its brow the mark of the most detestable selfishness. People still lived in the naive belief that gold and silver were wealth, and therefore considered nothing more urgent than the prohibition everywhere of the export of the "precious" metals. The nations faced each other like misers, each clasping to himself with both arms his precious moneybag, eyeing his neighbours with envy and distrust. Every conceivable means was employed to lure from the nations with whom one had commerce as much ready cash as possible, and to retain snugly within the customsboundary all which had happily been gathered in.
If this principle had been rigorously carried through trade would have been killed. People therefore began to go beyond this first stage. They came to appreciate that capital locked up in a chest was dead capital, while capital in circulation increased continuously. They then became more sociable, sent off their ducats as callbirds to bring others back with them, and realised that there is no harm in paying A too much for his commodity so long as it can be disposed of to B at a higher price.
On this basis the mercantile system was built. The avaricious character of trade was to some extent already beginning to be hidden. The nations drew slightly nearer to one another, concluded trade and friendship agreements, did business with one another and, for the sake of larger profits, treated one another with all possible love and kindness. But in fact there was still the old avarice and selfishness and from time to time this erupted in wars, which in that day were all based on trade jealousy. In these wars it also became evident that trade, like robbery, is based on the law of the strong hand. No scruples whatever were felt about exacting by cunning or violence such treaties as were held to be the most advantageous.
The cardinal point in the whole mercantile system is the theory of the balance of trade. For as it still subscribed to the dictum that gold and silver constitute wealth, only such transactions as would finally bring ready cash into the country were considered profitable. To ascertain this, exports were compared with imports. When more had been exported than imported, it was believed that the difference had come into the country in ready cash, and that the country was richer by that difference. The art of the economists, therefore, consisted in ensuring that at the end of each year exports should show a favourable balance over imports; and for the sake of this ridiculous illusion thousands of men have been slaughtered! Trade, too, has had its crusades and inquisitions.
The eighteenth century, the century of revolution, also revolutionised economics. But just as all the revolutions of this century were onesided and bogged down in antitheses -- just as abstract materialism was set in opposition to abstract spiritualism, the republic to monarchy, the social contract to divine right -- likewise the economic revolution did not get beyond antithesis. The premises remained everywhere in force: materialism did not attack the Christian contempt for and humiliation of Man, and merely posited Nature instead of the Christian God as the Absolute confronting Man. In politics no one dreamt of examining the premises of the state as such. It did not occur to economics to question the validity of private property. Therefore, the new economics was only half an advance. It was obliged to betray and to disavow its own premises, to have recourse to sophistry and hypocrisy so as to cover up the contradictions in which it became entangled, so as to reach the conclusions to which it was driven not by its premises but by the humane spirit of the century. Thus economics took on a philanthropic character. It withdrew its favour from the producers and bestowed it on the consumers. It affected a solemn abhorrence of the bloody terror of the mercantile system, and proclaimed trade to be a bond of friendship and union among nations as among individuals. All was pure splendour and magnificence -- yet the premises reasserted themselves soon enough, and in contrast to this sham philanthropy produced the Malthusian population theory -- the crudest, most barbarous theory that ever existed, a system of despair which struck down all those beautiful phrases about philanthropy and world citizenship. The premises begot and reared the factory system and modern slavery, which yields nothing in inhumanity and cruelty to ancient slavery. Modern economics -- the system of free trade based on Adam Smith's Wealth of Nations -- reveals itself to be that same hypocrisy, inconsistency and immorality which now confront free humanity in every sphere.
But was Smith's system, then, not an advance? Of course it was, and a necessary advance at that. It was necessary to overthrow the mercantile system with its monopolies and hindrances to trade, so that the true consequences of private property could come to light. It was necessary for all these petty, local and national considerations to recede into the background, so that the struggle of our time could become a universal human struggle. It was necessary for the theory of private property to leave the purely empirical path of merely objective inquiry and to acquire a more scientific character which would also make it responsible for the consequences, and thus transfer the matter to a universally human sphere. It was necessary to carry the immorality contained in the old economics to its highest pitch, by attempting to deny it and by the hypocrisy introduced (a necessary result of that attempt). All this lay in the nature of the case. We gladly concede that it is only the justification and accomplishment of free trade that has enabled us to go beyond the economics of private property; but we must at the same time have the right to expose the utter theoretical and practical nullity of this free trade.
The nearer to our time the economists whom we have to judge, the more severe must our judgment become. For while Smith and Malthus found only scattered fragments, the modern economists had the whole system complete before them: the consequences had all been drawn; the contradictions came clearly enough to light; yet they did not come to examining the premises, and still accepted the responsibility for the whole system. The nearer the economists come to the present time, the further they depart from honesty. With every advance of time, sophistry necessarily increases, so as to prevent economics from lagging behind the times. This is why Ricardo, for instance, is more guilty than Adam Smith, and McCulloch and Mill more guilty than Ricardo.
Even the mercantile system cannot be correctly judged by modern economics since the latter is itself onesided and as yet burdened with that very system's premises. Only that view which rises above the opposition of the two systems, which criticises the premises common to both and proceeds from a purely human, universal basis, can assign to both their proper position. It will become evident that the protagonists of free trade are more inveterate monopolists than the old mercantilists themselves. It will become evident that the sham humanity of the modern economists hides a barbarism of which their predecessors knew nothing; that the older economists' conceptual confusion is simple and consistent compared with the doubletongued logic of their attackers, and that neither of the two factions can reproach the other with anything which would not recoil upon themselves.
This is why modern liberal economics cannot comprehend the restoration of the mercantile system by List, whilst for us the matter is quite simple. The inconsistency and ambiguity of liberal economics must of necessity dissolve again into its basic components. Just as theology must either regress to blind faith or progress towards free philosophy, free trade must produce the restoration of monopolies on the one hand and the abolition of private property on the other.
The only positive advance which liberal economics has made is the elaboration of the laws of private property. These are contained in it, at any rate, although not yet fully elaborated and clearly expressed. It follows that on all points where it is a question of deciding which is the shortest road to wealth -- i. e., in all strictly economic controversies -- the protagonists of free trade have right on their side. That is, needless to say, in controversies with the monopolists -- not with the opponents of private property, for the English Socialists have long since proved both practically and theoretically that the latter are in a position to settle economic questions more correctly even from an economic point of view.
In the critique of political economy, therefore, we shall examine the basic categories, uncover the contradiction introduced by the freetrade system, and bring out the consequences of both sides of the contradiction.
He wasn't kidding. And he wasn't wrong.
6. Was, Not Was; Is, Is Not
Capitalism exists in a condition, not a state, of continuous and dynamic disequilibrium. It "manages" this disequilibrium by maintaining its reproduction as capital. To do that capital must engage, exchange itself with wage labor. The more capital accumulates, the more of itself it must exchange with this opposite-identity in order to increase its accumulation. Yet in order to increase its accumulation, its rate of aggrandizement capital must continuously expel from the production process that proportion of living labor necessary to its reproduction, so that more of itself, its accumulated mass, can be animated by less of its-other-self, living wage labor. Consequently, the more capital exchanges itself with wage-labor, the relatively less of itself capital exchanges with wage-labor, and so its profitability falls. The faster it goes, the slower it gets. The more it reproduces, the more it reproduces itself as the enemy of its reproduction, and thus it embarks on asset-stripping, liquidation, devaluation, and destruction.
The resolution of capital's immanent critique of itself is not in bailouts, nationalizations, "stimuli"etc. For the bourgeoisie, the resolution is, and is only, in destruction of both identities-- the means of production, and wage-labor. For the working class the resolution begins, only begins, with the opposition to bailouts, nationalizations, etc. The resolution advances through and by acts of solidarity with those most intensely exploited in the build-up to the decline in the rate of return. The critical second step-- May Day 2006 was the first step-- is for all workers to oppose all attacks upon, all discrimination of immigrant workers. The class as a whole must insist that unemployment benefits include amounts for remittances to immigrant workers' families. Now that would be stimulating.
Address all comments to: sartesian@earthlink.net
Sunday, March 08, 2009
Intermission
1. Faubourg 36-- Opening Night! US premiere! At the new Alice Tully Hall! What a buildup. What a letdown. Moulin Rouge meets The Cradle Will Rock as interpreted by Disney.
2. La Fille de Monaco-- NY Premiere. An insult to people of all sexual persuasions. Unbridled, unrepentant, emancipated female sexuality must die so that homoeroticism can go about its business of ... business and murder. The female lead, Louise Bourgoin, is without a doubt the sexiest person to hit the screens since... maybe forever.
3. With a Little Help from Myself-- NY Premiere. Outstanding. The long hot summer of 2003 in the banlieue of Paris-- love, immigrant labor, aging, oppression, and death. With a shovel. Love will find a way. Pleasure will never quit. Doesn't change anything, but beats the hell out of abuse and loneliness. Perfect answer, and antidote to the Vicky Cristina Barcelona garbage from Woody Allen. Felicite Wouassi is brilliant. The scenes between her and her neighbor, Robert [Claude Rich], are of aching need, understanding, and cautious tenderness.
address all comments to: sartesian@earthlink.net
Monday, February 23, 2009
Was, Not Was; Is, Is Not, 1

Thursday, February 05, 2009
Word, Sounds

Tuesday, January 20, 2009
And Now For Something Completely Different
Sometimes, you just have to cut the crap about faith and hope and progress and this land being your land and the perfectability of man and the enormous potential of clean coal and just spit it out, with the emphasis on the spit. Word.
As a species we distinguish ourselves through-- besides our eagerness to kill so many unknown, unencountered, unthreatening members of our own species-- our affliction with addictions and our addiction to afflictions. Word.
Nothing gives us more pleasure than satisfying our own addictions, but seeing some poor sot suffering miserably, unable to satisfy his or hers comes in a close second. Word.
We are not only participants we are observers... and from a distance, what is easier, more interesting, diverting, riveting, than seeing others like- but not- us suffering endlessly, miserable in the grips of.... whatever. Who really cares? Now that's entertainment. Word.
From a distance, I mean. Distance being the critical word. Word. As in don't come too close; do not touch; keep off the grass; God forbid we should get any of that, of them on us. You know what I mean? I know you know what I mean.
Speaking of god-- there isn't one, or two, or many, but god is, and is all powerful because god is affliction and addiction all rolled up into one... the Big One, the Universal One, the All of Us One... which accounts for all the violence associated with religion. It makes no sense, ergo let's go out and kill. God bless you.
It, religion, is us at our best, inflicting ourselves on each other, complete with afflictions and addictions, and getting some of us on each of us in the name of god. Word. Oh happy, and holy, day. Oh most perfect, supreme, sanctified anti-species being.
That's how I see it. Of course, I also think that history is a play acted by fools for the enjoyment of cynics. And vice-versa. Waiting for Godot? And what about Godot? What's he waiting for? And why is he delayed? They pretend Godot is going or coming, but can't tell which, and he plays along by pretending to even exist.
Pretending, pretense.... pretension. That's another one of our distinguishing characteristics, along with species slaughter, and addiction.
Speaking of species, this is the 200th anniversary of the birth of Charles Darwin and Darwin never said evolution was smart, or progressive, or better-- just that it is adaptive. Evolution, unlike god, really is and like god, is mindless, bloody, ignorant and often a mistake. But tough to stop.
That's something else we are, adaptive. We can move our afflictions and our addictions and our anti-species being species all over the globe and soon enough other planets, which for their own sake should be more than uninhabitable, they need to be downright hostile so that we will move on with our afflictions and addictions, gods, history, drama, evolution, needs, and leave them peacefully barren.
So there you have it. And so do I. Please don't think that I hold myself apart, exempt myself from this dismal science that is we, us, you, me... humanity.
Speaking of humanity, what was it the radio announcer said, collapsing in tears as the Hindenburg lit itself up over New Jersey-- "Oh the humanity"? Right. Oh the humanity, ladies and gentlemen. Which is why we thrill to watching that particular piece of newsreel time and time again, wondering about the humanity trapped in that furnace. Give us the spectacular "accident," and we're plowing through the Kleenex like disappointed heirs at the reading of a will. But as for the daily, programmed murder that makes up our waking hours.... whatever. Word.
Anyway that's it. That's you and me and us and we. And that's why, right now, I've got to stop-- take a time out, attend to my addiction to affliction and vice-versa, cooking up this little dose of brown powder that came all the way from Afghanistan, and synching up the podcasts I have of the Jerry Springer show. Don't get too close, I wouldn't want to get any of me on you. Word.
sartesian@earthlink.net