1. When measuring an age by the size of its heroes, it's important to keep in mind that heroes, like assets, like securities, have both a notational value and a mark-to-market value. In the discrepancy between those two, notational and market, values is everything we need to know about size, direction, and velocity, of the age and the heroes.
Measured by its heroes, and adjusted for the market vs. notational values, clearly this is an age of, not advanced capitalism, but advanced capitalist dwarfism.
So..... Alan Greenspan, once a genius, a colossus, a wizard, a fountainhead gets carried in the financiers' books of positions on that notational value. Meanwhile the mark-to-market value shrinks; not just shrinks, evaporates, withers, disappears and finally Greenspan is "uncovered" in all senses.
Marked-to-market he's back to being just another ugly face wobbling down the runway of riches-to-rags capitalism, flogging his faux erudition for the chance at another meal. "Will obscure, equivocate for food" says the blurb beneath his picture in the fashion/finance guide.
What else can we expect? What heroes can be produced by a system so venal, so petty, so miserable that it at its peak, that its peak, that its moments of greatest profit and power are measured not by the collective advance of the human species but in the reversal of those previous advances; that its moments of greatness are just that reversal? What can be expected where a "golden age in financial freedom" is accompanied, fed, sustained by another dark age in which all of science, art, humanity is politicized in the service of its own destruction?
2. So... in its plunge into the abyss of declining asset values, capitalism's financial oracles, heroes of digital and analog media, propose a rescue that consists, on paper, of a single solution-- "Don't Look Down"-- as if the acceleration of a falling body due to gravity, as if terminal velocity, depended on an orientation of the head.
Comedy, horror, unintended and intended, ripple through the despair of the traders, brokers, economists, bankers, like shivers in forensic chill of a morgue.
The Wall Street Journal advises that shotguns and canned goods are sound investments in times like these.
The Financial Times advises Lehman Bros. (before bankruptcy): "When seized by a panic attack, focus on breathing slowly and deeply."
It reports on Washington Mutual: "The destruction of shareholder wealth in the US financial sector is relentless. Washington Mutual, which parted company with chief executive Kerry Killinger [great name, bet he chose it himself --s.a.] on Monday, is joining Lehman on the rack."
It wonders out loud: "If propping up the banking system is not a socially useful role, what is?"
Finally! Finally the bourgeoisie, blubbering all the way home from the bank, grasp Marx's analysis of capitalist commodity production as private property but realizable only in a social role.
Socially useful role? Obviously, the market is judging the social usefulness of the banks, and deciding that such usefulness has been grossly overvalued. Far too much time has been expended on the capitalist reproduction of value.
And finally, none other than the shaved head knight in a white Dodge Charger (dual quads, Hurst four speed, 6 miles to the gallon), Secretary of the Treasury Paulson, mutters aloud, channeling Stevie Wonder, "Heaven help us all."
3. So...what distinguishes the present predicament of capitalism from previous predicaments? Why is this dark night different from all other dark nights in which all cats are black? In a word, nothing. In a word, everything. In a word, magnitude.
Global finanical instruments have been measured at 167 trillion dollars, almost 3 times world GDP. In 1980 world GDP and global financial instruments were approximately the same size.
Total global financial instruments were measured at 53 trillion in 1993.
Credit default swaps are at 62 trillion-- that is to say the "bets" on defaults have a notational value far greater than the market values of the securities at risk of default. Homeowners have negative equity when the amount due on their mortgages exceeds the value of their homes. It makes more "economic sense" to walk away from the home. Credit default issuers are in exactly the same position except they want to run, not walk.
All eyes and sighs turn to the "lender of last resort," that creator of windows, that builder of bridges, the Federal Reserve. And the Fed itself? After opening its windows, after accepting lower rated collateral, what about the doctor's own health?
The FRB, which one year ago, had 90% of its assets in US Treasury Securities has undergone, with the opening of the Primary Dealer Credit Facility and other mechanisms, an inflation in the notational value of assets with a decline in the quality of such assets-- to the point that now only 50% of the Fed's assets are in US Treasury instruments. And the market value of the other assets? Nobody knows.
However, the source for this distress, the predicament in capital is not in the overleveraging of the capitalist economy, the reproduction of expanding debt levels designed to parse, to chop, and ration available profit. These are manifestations, appearances of the real predicament, the real conflict beween expanded capitalist reproduction and profit; between private property and the accumulation of capital.
Next: Of Hats and Rabbits, 3. Roots and Prospects
address all comments to:
sartesian@earthlink.net
Tuesday, September 23, 2008
Sunday, September 21, 2008
Before We Go Any Further
1. No bailouts; immediate cancellation of residential mortgages on family units
2. immediate withdrawal from Iraq and Afghanistan; reductions in defense spending to be pooled into Social Security trust; universal single payer healthcare trust.
3. No export of capital; ban on US investors utilizing offshore shell companies; no US DFI by corporations, holding companies, trusts, banks,syndicates, etc. etc.
4. Seizure, without compensation, of all assets of financial institutions unable to meet market obligations, depositor demands.
address all comments to:
sartesian@earthlink.net
2. immediate withdrawal from Iraq and Afghanistan; reductions in defense spending to be pooled into Social Security trust; universal single payer healthcare trust.
3. No export of capital; ban on US investors utilizing offshore shell companies; no US DFI by corporations, holding companies, trusts, banks,syndicates, etc. etc.
4. Seizure, without compensation, of all assets of financial institutions unable to meet market obligations, depositor demands.
address all comments to:
sartesian@earthlink.net
Friday, September 19, 2008
Of Hats and Rabbits, 1
1. Moose and Squirrel
"Hey Rocky, watch me pull a rabbit out of my hat."
"Again?"
Six months ago the U.S. Federal Reserve put the Bear Stearns rabbit into JP Morgan Chase's top hat by insuring the purchaser against possible loss on 97 percent of the Bear Stearns' book-- positions, obligations, outstanding trades-- in mortgage back securities.
At the same time, the Fed opened a brand new window, the Primary Dealer Credit Facility, intending it to function in parallel to the Fed's discount window to its member banks. Overnight loans at the NY Fed's prime rate would be made available to the investment banks which were designated primary dealers in US Treasury securities. Collateral requirements were loosened to accept investment grade corporate securities, municipal securities, and mortgage and asset backed securities that could be priced by the dealer's clearing bank.
That last bit was the dicey part. After years of "marking to market," of steering their jolly pirate ship/party boat, the USS Leviathan, with an invisible hand across the green span of the world's oceans, the lusty free marketeers of America had precisely no market for these mortgage backed securities and thus no way of pricing the items they most wanted to unload at the port of New York Fed.
With no way to price the securities that represented both asset and debt, there was no way within or without the Fed to refinance the debt. There was no way to recirculate the values that once were. And without circulation, there's nothing. Finance is nothing. Refinance is everything.
The notational values existing only in the book entries of the investment banks could not be passed on. The buck had stopped all right. With that, the book was being closed. And burnt.
Meanwhile....meanwhile who didn't, who couldn't, experience a shiver of pleasure, of glee, of schadenfreude, viewing the pictures in the New York Times, the Financial Times, the Wall Street Journal, of the hundreds of thirty-something year old, bullet headed, over tailored, investment bankers stumbling out of their offices in Canary Wharf, in midtown, downtown, sans their company issued Blackberrys--your service has been discontinued-- carrying their personal histories of pillage in cardboard boxes that read Iron Mountain?
Now, just maybe, now it will be possible to eat in a restaurant in Manhattan on a Saturday night without hearing them bellow like moose in the rut or chatter like squirrels amped on steroids, about their deals, their positions, their bosses, their companies.
Yesterday's sharks just so much chum in today's waters.
Address all comments to:
sartesian@earthlink.net
"Hey Rocky, watch me pull a rabbit out of my hat."
"Again?"
Six months ago the U.S. Federal Reserve put the Bear Stearns rabbit into JP Morgan Chase's top hat by insuring the purchaser against possible loss on 97 percent of the Bear Stearns' book-- positions, obligations, outstanding trades-- in mortgage back securities.
At the same time, the Fed opened a brand new window, the Primary Dealer Credit Facility, intending it to function in parallel to the Fed's discount window to its member banks. Overnight loans at the NY Fed's prime rate would be made available to the investment banks which were designated primary dealers in US Treasury securities. Collateral requirements were loosened to accept investment grade corporate securities, municipal securities, and mortgage and asset backed securities that could be priced by the dealer's clearing bank.
That last bit was the dicey part. After years of "marking to market," of steering their jolly pirate ship/party boat, the USS Leviathan, with an invisible hand across the green span of the world's oceans, the lusty free marketeers of America had precisely no market for these mortgage backed securities and thus no way of pricing the items they most wanted to unload at the port of New York Fed.
With no way to price the securities that represented both asset and debt, there was no way within or without the Fed to refinance the debt. There was no way to recirculate the values that once were. And without circulation, there's nothing. Finance is nothing. Refinance is everything.
The notational values existing only in the book entries of the investment banks could not be passed on. The buck had stopped all right. With that, the book was being closed. And burnt.
Meanwhile....meanwhile who didn't, who couldn't, experience a shiver of pleasure, of glee, of schadenfreude, viewing the pictures in the New York Times, the Financial Times, the Wall Street Journal, of the hundreds of thirty-something year old, bullet headed, over tailored, investment bankers stumbling out of their offices in Canary Wharf, in midtown, downtown, sans their company issued Blackberrys--your service has been discontinued-- carrying their personal histories of pillage in cardboard boxes that read Iron Mountain?
Now, just maybe, now it will be possible to eat in a restaurant in Manhattan on a Saturday night without hearing them bellow like moose in the rut or chatter like squirrels amped on steroids, about their deals, their positions, their bosses, their companies.
Yesterday's sharks just so much chum in today's waters.
Address all comments to:
sartesian@earthlink.net
Monday, September 15, 2008
A Brief Word
Six months after the Fed guaranteed Bear Stearns' losses to JP Morgan Chase, six months into $500 billion in write-downs on the mountain of junk called "assets" with another trillion to go; after Fannie and Freddie got laid and the Treasury got scared; six months into overdue, seriously overdue, 'I'm not kidding you are really late' overdue, delinquency, and foreclosure; six months into a wasteland of cancelled IPOs, LBOs, credit lines, Ms&As, six months into the portfolio of photographs and streaming video showing all those young near and real MBA investment bankers, financial advisors, hedge fund floggers, structured investment vehicle dealers, specialty market makers, all dressed up with cardboard boxes in their arms with only one place to go --home, and that home overdue, seriously overdue, and I'm not kidding overdue-- after all that IT HAS ONLY BEEN SIX MONTHS.
And after six months of incantations, jawbones, collateral easing, calming statements, rescue and resuscitation, of here epinephrine, of there defibrillation, the Fed and the Treasury had to let a patient go. The Lehman Bros died of complications.
In truth, it's not medicine that the Fed practices, not even shamanism despite the hocus-pocus of interest rates. It's triage. The Fed and the Treasury reviewing their own finances, assessing the criticality of their own health and that of the life-blood of the financial markets, the short-term "repo" markets, decided that their own credit ratings, their own abilities to operate with and in the money markets outweighed Lehman Bros rescue.
In the long-run for capitalism, the short-term is all there is. Finance is nothing. Re-financing, and re-re-financing is everything.
Much more to come
Address all comments to: sartesian@earthlink.net
And after six months of incantations, jawbones, collateral easing, calming statements, rescue and resuscitation, of here epinephrine, of there defibrillation, the Fed and the Treasury had to let a patient go. The Lehman Bros died of complications.
In truth, it's not medicine that the Fed practices, not even shamanism despite the hocus-pocus of interest rates. It's triage. The Fed and the Treasury reviewing their own finances, assessing the criticality of their own health and that of the life-blood of the financial markets, the short-term "repo" markets, decided that their own credit ratings, their own abilities to operate with and in the money markets outweighed Lehman Bros rescue.
In the long-run for capitalism, the short-term is all there is. Finance is nothing. Re-financing, and re-re-financing is everything.
Much more to come
Address all comments to: sartesian@earthlink.net
Sunday, August 10, 2008
The Shipping News, 2
Ships On The Ocean
So I'd like to know
Where you got the notion
To...rock the boat
(Don't rock the boat, baby)
Tip the boat
(Don't tip the boat over)
--The Hues Corporation
1. In 1997 the currency and financial crises that swamped the export-driven NIEs of Asia and the Pacific soon revealed themselves to be just one face of that many faced coin of the capitalist realm, overproduction. The secret to money, after all, is contained within the secret of the commodity and not vice-versa.
The over-accumulation of industrial assets became, as it always does, the overproduction of commodities and declining profits. Failure to realize expanded value in the circulation of commodities necessarily reproduces itself in the devaluation of the means of production and the means of circulation. The secrets to accumulation and trade are in the secret of the commodity and not vice-versa.
By 1998, the shipping industry had absorbed, painfully, a 33% decline in asset values. Earnings per vessel declined. For the entire decade, the annual earnings per year average $4.2 million. Things were to get better, as they sometimes do. By 2000, the annual earnings had increased to $7 million.
Things were to get worse, as they always do, before they got better again, as they sometimes do. By 2004, earnings had recovered to $11 million per vessel per year, and 2008 estimates are for earnings of $13.7 million. Except estimates are often optimistic and early, and sometimes wrong.
2. 2oo6 was a very good year for the maritime trade; 2006 was a very good year for capitalism in general. In fact 2006 was the peak year for the recovery of capitalism, for its profitability, from the 2001/2002 contraction. The secret to maritime trade is in the secret of profitability and not vice-versa.
The UN's Review of Maritime Transport 2007, reporting on 2006 performance, noted that value of world merchandise trade had grown by 8%, twice the rate of growth of world GDP. Seaborne good tonnage increased to 7.4 billion tons with ton-miles increasing 5.5% as longer haul south-to-south trade increased.
The world maritime fleet increased 8.6%, exceeding the previous record for increase of 7.2% in 2005, Total fleet capacity measured 1.04 billion deadweight-tons (dwt). Oil tanker capacity increased 8.1%, dry bulk carrier increased 6.2%, and these 2 categories represent 72% of fleet tonnage. The highest growth in tonnage was recorded by the container ship segment which grew 15.5% to represent 12.3% of fleet tonnage.
The average vessel age declined to 12 years, with that of tankers at 10 years, container ships at 9.1 years.
"Productivity" measures, however, absorbed the impact of the record deliveries. Tons carries per deadweight ton of capacity declined to 7.3 and thousand ton-miles operated per dwt declined to 30.1. The surplus tonnage increase to 10 million dwt, with tanker surplus at 1.4% or 4.5 million dwt and dry bulk carriers at .6%, or 2 million dwt. Still, hardly anything to worry about. In 1990 surplus rates for the world maritime fleet measured at 9.7 percent.
The greatest growth in tonnage and ships was recorded in the sector that has been recording the greatest growth for more than 20 years, container shipping. Container shipping has grown from 7.4% of total dry cargoes in 1985 to 24% in 2006. Since 1988, container shipping capacity (measured in TEUs--twenty-foot equivalent units) has increased sevenfold. At the start of 2007, the container fleet capacity had increased increasing 16.2% over 2006 to 9.4 million TEUs. More than 1/3 of this fleet is less than 5 years old.
And, in 2006 for the first time since 2001, the increase in capacity exceeded the increase in the world's container trade which grew 11.2% to 1.13 billion TEUs.
So I'd like to know
Where you got the notion
To...rock the boat
(Don't rock the boat, baby)
Tip the boat
(Don't tip the boat over)
--The Hues Corporation
1. In 1997 the currency and financial crises that swamped the export-driven NIEs of Asia and the Pacific soon revealed themselves to be just one face of that many faced coin of the capitalist realm, overproduction. The secret to money, after all, is contained within the secret of the commodity and not vice-versa.
The over-accumulation of industrial assets became, as it always does, the overproduction of commodities and declining profits. Failure to realize expanded value in the circulation of commodities necessarily reproduces itself in the devaluation of the means of production and the means of circulation. The secrets to accumulation and trade are in the secret of the commodity and not vice-versa.
By 1998, the shipping industry had absorbed, painfully, a 33% decline in asset values. Earnings per vessel declined. For the entire decade, the annual earnings per year average $4.2 million. Things were to get better, as they sometimes do. By 2000, the annual earnings had increased to $7 million.
Things were to get worse, as they always do, before they got better again, as they sometimes do. By 2004, earnings had recovered to $11 million per vessel per year, and 2008 estimates are for earnings of $13.7 million. Except estimates are often optimistic and early, and sometimes wrong.
2. 2oo6 was a very good year for the maritime trade; 2006 was a very good year for capitalism in general. In fact 2006 was the peak year for the recovery of capitalism, for its profitability, from the 2001/2002 contraction. The secret to maritime trade is in the secret of profitability and not vice-versa.
The UN's Review of Maritime Transport 2007, reporting on 2006 performance, noted that value of world merchandise trade had grown by 8%, twice the rate of growth of world GDP. Seaborne good tonnage increased to 7.4 billion tons with ton-miles increasing 5.5% as longer haul south-to-south trade increased.
The world maritime fleet increased 8.6%, exceeding the previous record for increase of 7.2% in 2005, Total fleet capacity measured 1.04 billion deadweight-tons (dwt). Oil tanker capacity increased 8.1%, dry bulk carrier increased 6.2%, and these 2 categories represent 72% of fleet tonnage. The highest growth in tonnage was recorded by the container ship segment which grew 15.5% to represent 12.3% of fleet tonnage.
The average vessel age declined to 12 years, with that of tankers at 10 years, container ships at 9.1 years.
"Productivity" measures, however, absorbed the impact of the record deliveries. Tons carries per deadweight ton of capacity declined to 7.3 and thousand ton-miles operated per dwt declined to 30.1. The surplus tonnage increase to 10 million dwt, with tanker surplus at 1.4% or 4.5 million dwt and dry bulk carriers at .6%, or 2 million dwt. Still, hardly anything to worry about. In 1990 surplus rates for the world maritime fleet measured at 9.7 percent.
The greatest growth in tonnage and ships was recorded in the sector that has been recording the greatest growth for more than 20 years, container shipping. Container shipping has grown from 7.4% of total dry cargoes in 1985 to 24% in 2006. Since 1988, container shipping capacity (measured in TEUs--twenty-foot equivalent units) has increased sevenfold. At the start of 2007, the container fleet capacity had increased increasing 16.2% over 2006 to 9.4 million TEUs. More than 1/3 of this fleet is less than 5 years old.
And, in 2006 for the first time since 2001, the increase in capacity exceeded the increase in the world's container trade which grew 11.2% to 1.13 billion TEUs.
3. A very good year was 2006. Shippers took delivery of almost 2400 new vessels, a record 71 million dwt, 20% above the 2005 mark.
Nothing inspires growth like growth; nothing inspires spending like spending. The bourgeoisie, see nothing in those floating fixed assets in good, or nearly good times, except an increased revenue stream; seeing nothing but clear sailing and a bigger wave ahead/behind; never seeing the deadweight in all those deadweight tons until the seas have dried up; never missing their water until their ships run high and dry, continued to fill the order books of shipmakers.
While deliveries slowed in 2007, orders for new shipping did not. In 2007 tonnage on order for container ships tripled from the 2006 level; tonnage on order for oil/refined product tankers nearly tripled; for dry bulk and general cargo carriers doubled. Since construction times from order to delivery are from 1 to 2.5 years, the merchant fleet will more than double between 2006 and 2010 as the generallow average age of the existing fleet means break-up rates (the process of tearing down obsolete shipping) will not impact overall capacity.
For the bourgeoisie to make so dramatic a statement of confidence in world-wide liquidity, and the accelerating growth rates for trade, it is of course more than fitting that such increased purchases were made right as growth in trade is decelerating and lines of credit are drying up. More than fitting, it is in fact the increased purchases, the increased expenditures on these floating fixed assets that are the means for circulating capital, that drives international capitalism from expansion to contraction, from expanded reproduction to declining rates of return.
No more and no less than the increased price of oil reapportions profits to, does more than channel the profits, more than canalize the revenue streams of all other industries, to the petroleum majors, but also measures the overproduction of the means of production, measures the inability of capital to realize a mass of profit quickly enough to offset a fall in the rate of return, the increased freight rates of the maritime shippers are more than a response to increased operating costs, increased fuel costs. Increased maritime rates measure a declining rate of return on investment brought about by the very "over-investment" in the industry's real assets.
In 2005, total world import values transported by the maritime fleet increased 13.4%, while the freight revenue from these shipment increased 31.2 percent. The average freight tariff for advanced countries amounts to 4.5% of the value of the goods in shipment. For developing countries, the ratio is 7.7% of the value. For the period 1990-2000, the tariff ratio had dropped 22% for the developing countries, only to begin moving upward again in 2004. For the advanced countries the tariff ratio has remained essentially unchanged.
The relative higher rates for developing countries are directly a factor of longer dwells (loading/unloading) at ports with lower throughput capacities. The inequity in development then refracts, and perpetuates, itself in a penalty, a microcosm of unequal exchange.
The price inflation of shipping rates cannot offset the declining rate of return for the industry. It will instead bring the over-investment, overproduction of fixed assets with longer and slower rates of return into painful relief, as there will be "too many" ships on the ocean, too many ships in the construction yards, too many ships on the order books, too many ships in the list of collateralized loans.
s.artesian
address all comments to: sartesian@earthlink.net
Saturday, August 09, 2008
Summer Reading
Way back when... Thirty-four years ago, A. Solzhenitsyn was allowed to leave the then Soviet Union and reap the usufructs of advanced capitalism. Around that same time, Solzhenitsyn's Letter to the Soviet Leaders appeared in print and those who actually read, rather than promote, his work learned just how right the Soviet leaders were to send this master of literary banality packing.
Way back when, when the predecessor of The Wolf Report, Nightwatch, appeared in print on actual paper, I wrote an appreciation of sorts of the man, and the circumstances that brought the man to his new home.
Way back when, Nightwatch prided itself on featuring regularly, in its every most irregularly scheduled publication, obituaries, marriages, births-- "transitions" that in their absurdity, venality, false propriety most clearly illuminated the darkness at the heart of modern capitalism. What a Difference a Day Makes, and made, way back when.
The Solzhenitsyn report was written in that vein, with that intent, but its length, which is to say, and singularly concentrated attack, required that it appear as a separate piece.
I never thought much more about Solzhenitsyn, not to mention my most unliterary criticism of the man, but my former collaborator on Nightwatch, noting the death and the outpouring of appreciations offered in tribute to the now stuffed literary lion suggested I reproduce it here, where it may be preserved, like Solzhenitsyn himself, and ignored, like Solzhenitsyn himself, eternally.
So...edited [in brackets] and abridged, here comes, there goes:
A Five and Ten Cent Baby in a Million Dollar Store, Fall 1974
While capitalism exports credits, grain, technology, and complete industrial plants to the USSR, the Stalinist bureaucracy returns the favor by exporting minerals, some natural gas, and some unnatural gas in the person of Aleksandr Solzhenitsyn, to the capitalist countries. Somebody's getting a raw deal along with the raw materials. It sure isn't Solzhenitsyn. He stands to make a cool million off his exile. It isn't the bourgeoisie. They will get their percentage of the gate. It isn't the Soviet bureaucracy. [Solzhenitsyn's exile goes right to their bottom line as a plus]. But Solzhenitsyn is a total liability for human emancipation. Once again, Stalinism has forced the working class to carry the burden and the debts of Stalinism's own deformity.
....A "dissident" in the USSR, Solzhenitsyn became a "champion of freedom," a "defender of artistic truth." Now that Solzhenitsyn is out, so is the truth. The champion of freedom is an organic reactionary....His struggle is nothing but the slavish praise for the historical poverty of Russia. The real crime of the Russian Revolution, according to Solzhenitsyn, was disturbing the sanctity of that poverty.
Hard on the heels of Solzhenitsyn's arrival in the West came the publication of his Letter to the Soviet Leaders in which he fuses his literary and political purposes into one-- the slavation [intentional reversal of letters] of Russia from the "horrors" of modernism and for the spiritual regeneration through a return to the past. Holy Russia is Solzhenitsyn's cause, but how little he knows of earthly Russia and how much less he understands. Of the Russian Revolution, its advance and decline, of this single most important event in all of modern history, he knows nothing and detests everything. In this, Solzhenitsyn is a perfect example of petty Russian cretinism. Solzhenitsyn claims Marxism broke the tranquility and strength of Holy Russia, [catapulting] it into the clutches of a profane world. ... nothing so evil could have grown up in the natural soil of Holy Russia, the revolution was imported from the West.
Solzhenitsyn employs Spiro Agnew's criteria of social development, Malthus' principles of political economy, and Teilhard de Chardin's philosophy as he argues that Russia is doomed to destruction of the bureaucracy maintains its ideology of "economic growth" and "international revolution." A moron always stands on the shoulders of other morons but that does not mean he will be able to see past his own noses, especially when the eyes are crossed and the brain is addled.
The "ideology" of Marxism can only bring calamity after calamity for Holy Russia argues our Calamity Jane. The calamity will be war with China... and then Russia, like the West will collapse in the calamity of economic "over-development." Solzhenitsyn's solution to these calamities is "zero-economic growth." Modern technology, large scale industry and agriculture, world trade, cities, and even babies must be renounced. The underdeveloped countries, who don't have all that much to renounce, must employ "small-scale technology, simple machinery, and increased manual labor to insure their purity. Well, it just so happens that much of the underdeveloped areas have existed on just that diet and those rations for 200 years and see how good life is there? ...1974 is making the idea of zero economic growth a reality. In the first half of 1974, the US GNP actually declined 4.1% and the rest of the world isn't far behind. So let's hear it now. Is everybody happy? Is the world any "cleaner," any less strapped for wealth?....If Solzhenitsyn really hates economic expansion, he should love the Stalinists whose desperate need for technology already obsolete in the West reveals just how backward they are.
It is economic growth that Solzhenitsyn views as the greatest calamity of all, for it disrupts everything dear to his backward little heart. How he longs for the good old times of the good old time villages with their good old time Orthodox churches, their good old time Black Hundreds, their good old time smallpox and typhus, their good old time wife-beatings and illiteracy. And all this nostalgia from a man born in 1918. What a true novelist's memory to remember the joys never experienced. How poetic he waxes as he dreams of the resurrection of the small towns made for "people, horses, dogs" (not necessarily in that order). Solzhenitsyn's five year plan calls for the construction of these charming little outhouses all Russia with transportation provided only by horses and battery-powered electric motors......
Intellectual poverty always extols the virtues of physical poverty. The real positive outcome of Solzhenitsyn's un-development of the USSR will be the Christian salvation of the Russian people who suffering will once again produce that chorus of moans and groans that are music to the ears of every priest. Solzhenitsyn performs a service here in articulating religion's inherent need for absolute immiseration of human life. Poverty may be murder on the body, but it's gangbusters for the spirit.
Marxism opposes and uproots poverty and religion, and both at once. For this reason, Solzhenitsyn finds Marxism more intolerable than Stalin's labor camps where both poverty and religion flourished. Solzhenitsyn never read Marx, but that's no drawback. Stalin never read Marx, Mao Tsetung never read Marx, most Marxists haven't read Marx....Solzhenitsyn calls Marxism a "primitive, superficial economic theory, it declared that only the worker creates value and failed to take into account the contribution of organizers, engineers, transportation, or marketing systems." Like capitalism, Marx never ignored the role of engineers or advertising agents, but like capitalism, Marx knew that only the proletariat created surplus value. In 1972, US Steel's executives were bemoaning the fact that only one-third of their employees was involved in actual production. The company's top heaviness, they complained, devoured profits before they were realized.
...Economic development drags in its wake the possibility of concrete human freedom. Solzhenitsyn despises that freedom above everything else. He craves "authoritarianism with love." Solzhenitsyn wants a Czar, nothing more and there is nothing less. It is no accident that Solzhenitsyn's books as well as this letter reek with a secret admiration for Stalin, who after all, provided his own brand of "authoritarianism with love." How Solzhenitsyn must have embraced and even fondled his imprisonment in the labor camps. Those were the days that come closest to the good old days he desires for the future. "Authoritarianism with love," cries Solzhenitsyn. "Long live the chains!" cried the Spanish guerrillas... when they threw Napoleon's troops out of Spain and restored the conditions of their own slavery. "Long live the chains!" echoes Solzhenitsyn
So what could the Soviet bureaucracy do with dear Aleksandr? Trial and imprisonment. But Solzhenitsyn obviously was mentally incompetent and unfit to stand trial. A mental ward? But Solzhenitsyn was already insane and an idiot to boot. Shoot him? but to do that the Stalinists would have had to reverse fifty years of policy and actually fire a shot in defense of the proletarian revolution. Solzhenitsyn had to be exported, and the bourgeoisie eagerly accepted him, COD.
address all comments to: sartesian@earthlink.net
Way back when, when the predecessor of The Wolf Report, Nightwatch, appeared in print on actual paper, I wrote an appreciation of sorts of the man, and the circumstances that brought the man to his new home.
Way back when, Nightwatch prided itself on featuring regularly, in its every most irregularly scheduled publication, obituaries, marriages, births-- "transitions" that in their absurdity, venality, false propriety most clearly illuminated the darkness at the heart of modern capitalism. What a Difference a Day Makes, and made, way back when.
The Solzhenitsyn report was written in that vein, with that intent, but its length, which is to say, and singularly concentrated attack, required that it appear as a separate piece.
I never thought much more about Solzhenitsyn, not to mention my most unliterary criticism of the man, but my former collaborator on Nightwatch, noting the death and the outpouring of appreciations offered in tribute to the now stuffed literary lion suggested I reproduce it here, where it may be preserved, like Solzhenitsyn himself, and ignored, like Solzhenitsyn himself, eternally.
So...edited [in brackets] and abridged, here comes, there goes:
A Five and Ten Cent Baby in a Million Dollar Store, Fall 1974
While capitalism exports credits, grain, technology, and complete industrial plants to the USSR, the Stalinist bureaucracy returns the favor by exporting minerals, some natural gas, and some unnatural gas in the person of Aleksandr Solzhenitsyn, to the capitalist countries. Somebody's getting a raw deal along with the raw materials. It sure isn't Solzhenitsyn. He stands to make a cool million off his exile. It isn't the bourgeoisie. They will get their percentage of the gate. It isn't the Soviet bureaucracy. [Solzhenitsyn's exile goes right to their bottom line as a plus]. But Solzhenitsyn is a total liability for human emancipation. Once again, Stalinism has forced the working class to carry the burden and the debts of Stalinism's own deformity.
....A "dissident" in the USSR, Solzhenitsyn became a "champion of freedom," a "defender of artistic truth." Now that Solzhenitsyn is out, so is the truth. The champion of freedom is an organic reactionary....His struggle is nothing but the slavish praise for the historical poverty of Russia. The real crime of the Russian Revolution, according to Solzhenitsyn, was disturbing the sanctity of that poverty.
Hard on the heels of Solzhenitsyn's arrival in the West came the publication of his Letter to the Soviet Leaders in which he fuses his literary and political purposes into one-- the slavation [intentional reversal of letters] of Russia from the "horrors" of modernism and for the spiritual regeneration through a return to the past. Holy Russia is Solzhenitsyn's cause, but how little he knows of earthly Russia and how much less he understands. Of the Russian Revolution, its advance and decline, of this single most important event in all of modern history, he knows nothing and detests everything. In this, Solzhenitsyn is a perfect example of petty Russian cretinism. Solzhenitsyn claims Marxism broke the tranquility and strength of Holy Russia, [catapulting] it into the clutches of a profane world. ... nothing so evil could have grown up in the natural soil of Holy Russia, the revolution was imported from the West.
Solzhenitsyn employs Spiro Agnew's criteria of social development, Malthus' principles of political economy, and Teilhard de Chardin's philosophy as he argues that Russia is doomed to destruction of the bureaucracy maintains its ideology of "economic growth" and "international revolution." A moron always stands on the shoulders of other morons but that does not mean he will be able to see past his own noses, especially when the eyes are crossed and the brain is addled.
The "ideology" of Marxism can only bring calamity after calamity for Holy Russia argues our Calamity Jane. The calamity will be war with China... and then Russia, like the West will collapse in the calamity of economic "over-development." Solzhenitsyn's solution to these calamities is "zero-economic growth." Modern technology, large scale industry and agriculture, world trade, cities, and even babies must be renounced. The underdeveloped countries, who don't have all that much to renounce, must employ "small-scale technology, simple machinery, and increased manual labor to insure their purity. Well, it just so happens that much of the underdeveloped areas have existed on just that diet and those rations for 200 years and see how good life is there? ...1974 is making the idea of zero economic growth a reality. In the first half of 1974, the US GNP actually declined 4.1% and the rest of the world isn't far behind. So let's hear it now. Is everybody happy? Is the world any "cleaner," any less strapped for wealth?....If Solzhenitsyn really hates economic expansion, he should love the Stalinists whose desperate need for technology already obsolete in the West reveals just how backward they are.
It is economic growth that Solzhenitsyn views as the greatest calamity of all, for it disrupts everything dear to his backward little heart. How he longs for the good old times of the good old time villages with their good old time Orthodox churches, their good old time Black Hundreds, their good old time smallpox and typhus, their good old time wife-beatings and illiteracy. And all this nostalgia from a man born in 1918. What a true novelist's memory to remember the joys never experienced. How poetic he waxes as he dreams of the resurrection of the small towns made for "people, horses, dogs" (not necessarily in that order). Solzhenitsyn's five year plan calls for the construction of these charming little outhouses all Russia with transportation provided only by horses and battery-powered electric motors......
Intellectual poverty always extols the virtues of physical poverty. The real positive outcome of Solzhenitsyn's un-development of the USSR will be the Christian salvation of the Russian people who suffering will once again produce that chorus of moans and groans that are music to the ears of every priest. Solzhenitsyn performs a service here in articulating religion's inherent need for absolute immiseration of human life. Poverty may be murder on the body, but it's gangbusters for the spirit.
Marxism opposes and uproots poverty and religion, and both at once. For this reason, Solzhenitsyn finds Marxism more intolerable than Stalin's labor camps where both poverty and religion flourished. Solzhenitsyn never read Marx, but that's no drawback. Stalin never read Marx, Mao Tsetung never read Marx, most Marxists haven't read Marx....Solzhenitsyn calls Marxism a "primitive, superficial economic theory, it declared that only the worker creates value and failed to take into account the contribution of organizers, engineers, transportation, or marketing systems." Like capitalism, Marx never ignored the role of engineers or advertising agents, but like capitalism, Marx knew that only the proletariat created surplus value. In 1972, US Steel's executives were bemoaning the fact that only one-third of their employees was involved in actual production. The company's top heaviness, they complained, devoured profits before they were realized.
...Economic development drags in its wake the possibility of concrete human freedom. Solzhenitsyn despises that freedom above everything else. He craves "authoritarianism with love." Solzhenitsyn wants a Czar, nothing more and there is nothing less. It is no accident that Solzhenitsyn's books as well as this letter reek with a secret admiration for Stalin, who after all, provided his own brand of "authoritarianism with love." How Solzhenitsyn must have embraced and even fondled his imprisonment in the labor camps. Those were the days that come closest to the good old days he desires for the future. "Authoritarianism with love," cries Solzhenitsyn. "Long live the chains!" cried the Spanish guerrillas... when they threw Napoleon's troops out of Spain and restored the conditions of their own slavery. "Long live the chains!" echoes Solzhenitsyn
So what could the Soviet bureaucracy do with dear Aleksandr? Trial and imprisonment. But Solzhenitsyn obviously was mentally incompetent and unfit to stand trial. A mental ward? But Solzhenitsyn was already insane and an idiot to boot. Shoot him? but to do that the Stalinists would have had to reverse fifty years of policy and actually fire a shot in defense of the proletarian revolution. Solzhenitsyn had to be exported, and the bourgeoisie eagerly accepted him, COD.
address all comments to: sartesian@earthlink.net
Wednesday, July 23, 2008
The Shipping News
1. High and Dry
Dragged along in the wake, or pushed ahead by the wave, of increased oil prices, that is to say dragged and pushed by the US war/recovery program, the Baltic Dry Index, measuring daily hire costs for ocean going dry bulk cargo vessels, broke away from its historical baseline and began an intractable climb to measure, in 2008, 800% above its 1997-2003 average.
It wasn't a steady climb-- what could be "steady" in capital's world of shaky disequilibrium, of constant tremor? Fear and greed, after all, don't lend themselves well or often to steadfastness. The index quintupled in 2004, dropped 70% in 2005, climbed 600% in 2007 before falling 50% only to double again in the first quarter of 2008, falling again 22% off its peak.
In dollar terms spot market daily rentals for Capesize (the largest) dry bulk carriers are at $156,000 or 500% above the January 2006 mark. Panamax (of a beam, length, and draft not exceeding the capacity of the Panama Canal lock system) rates nearing $71,000 per day, stand 400% above the January 2006 price.
Meanwhile.. and there's always a meanwhile, from 2006 through most of 2007 hire costs for oil tankers declined, 20% for VLCC class ships (200,000 + deadweight tons), 25% for Suezmax (120,000-199,000 dwt), and 35% for Aframax (up to 119,999 dwt) class tankers. Then... and there's always a then, the oil price boosts caught hold, and in 2008 rates began to climb. For the VLCC class, despite the recent climb, these rates are still 33% below their 2004 peak.
Although certainly of benefit to shippers, this wave of petrodollars and petroprices pushing through the channels and locks of capitalism is not exactly the rising tide that lifts all boats. The increased costs of transportation are both product and producer of disruptions in capital's ability to maintain expanded reproduction. Profit apportioned to the transportation systems through price inflation are a deduction from the profitability of capitalist reproduction as a whole. "Circulation sweats money from every pore," wrote Marx, and he was right; but when the costs of the circulation absorbs the money being excreted, capitalism breaks out in a cold sweat.
2. One If By Land...
For the capitalist economy as a whole, or in particular, the movement of commodities to and through the markets for exchange is not qualitatively different from the movement of the materials required for production of the commodity within the production process itself. There can be no expansion of capital, no reproduction of capital; there can be no expansion of production without improving the circulation of the capital within the specific production processes. Volume, distance are not just physical characteristics of production and exchange, but also components of cost and cost is managed through efficiencies in time.
After the end of the war of 1812, US capitalism began its development. The volumes, direction, value and means of commerce, foreign and domestic, were substantially altered. The expansion of production and revenues from merchant-capital/slaveholder alliance of colonial and post-colonial period was threatened and surpassed by the expansion of free-soil agriculture to the west and the "free labor" manufacturing in the east. The development of a reciprocating domestic market established in the exchange of products between free-soil farming, and the manufactured products of "free" wage-labor in the states north of Chesapeake Bay, required, and produced, besides the US Civil, sustained improvement in the means of transportation.
In 1816, a report of the US Senate noted that domestic freight charges measured $9 per ton per 3o miles. The report noted that rate was 100 times the rate charged by European shippers for the transatlantic trade of goods between the two continents. At the US domestic rate, the price of wheat would double every 218 miles of transport; that of corn every 135 miles.
By 1822, with the development of the canal system, river barges, and intra-coastal shipping, haulage rates had declined to 12 cents/ton mile, a decline that was partly product, partly producer of the general price deflation of the time.
Until 1850, it was improvements in waterway borne freight haulage that had the greatest impact on ton-mile costs. However, by 1851 rail freight costs had dropped to 4.05 cents a ton-mile. Domestic production and trade expanded so quickly, however, that the canal, river boat and barge, and rail systems were all required to meet these needs regardless of relative efficiency. This was a rising tide that kept some old boats afloat.
In 1860, canal and rail handled equivalent volumes of freight, but duration in transport ("dwell") times for goods shipped by rail were 1/3 of the times for canal and barge shipments. The average freight costs for rail shipments had dropped to 2.2 cents per ton-mile. Remember that number.
3. Not So Long Ago
In 1980, the US Congress passed the Staggers Act, effectively deregulating the rates that railroads could charge for the shipment of goods. Rate deregulation was no stand alone program for the railroads, but rather the mechanism for sanctioning abandonment of "non-performing" assets, severe reductions in track mileage and employment levels. Economic contraction, rather than the 19th century expansion, inaugurated the new "golden era" of the railroads with bankruptcies and consolidations.
Rates per ton-mile charged by the railroads began a sustained decline. For corn, rates dropped from 3.73 cents per ton-mile in 1981 to 2.53 cents per ton-mile in 1992 to 2.06 cents in 2000. During the same period rates for wheat declined even more dramatically, some 60%, to 2.59 cents per ton-mile. Rates for soy dropped 55% to below that 1860 mark of 2.2 cents per ton-mile.
Clearly, deregulation did not produce the decline in rates, as competition can produce price-efficiencies only to the degree that the components of capitalist production, constant and variable, animate and inanimate, are altered to sustain and expand profit.
And altered those components were. Railroad employment declined approximately 40% between 1990 and 2000, eclipsing the 33% increase in hourly compensation rates. Between 1990 and 1995 annual gross capital expenditures increased 65%, dropping back 10% by 2000 despite an increase of 50% in net railroad operating income. The all-important rate of return on investment declined to 6.5% from 1990's 8.1 percent.
The improved productivity factor of revenue ton-miles per mile of railroad, ton-miles per employee, revenue per employee, sustained the decline in haul rates.
After 2000, all these indexes, rates of return, revenue ton-miles per track mile, total revenue, net revenue from operations, net railroad operating income, gross capital expenditures moved up and down in a narrow band... until 2005. Then in 2005, all began to move markedly upward, as the industry continued its "rationalization." Pushed, pulled by oil prices, railroads like the rest of the US industry increased its rate of expenditure on fixed assets. The assessed value of private fixed assets for the entire transportation industry, which had increased only 3% between 2001 and 2003, grew 8% between 2004 and 2006. Railroads fixed assets increased 6% between 2004 and 2006. Ton-mile rates, however, did not decline. The golden age was over. The black golden age ruled all. Rates increased and have exceed 2.5 cents per ton-mile for grain transport.
If price is the mechanism for apportionment of profit in capitalism, then increasing price indicates an apportionment based on a decline in the ability of capitalism to reproduce profitability as a whole for its entire network. The rising tide lifting the boats, the surge in profits, is in fact an ebb tide, pushing back into an ocean of overproduction.
Next-- Two If By Sea: Ships On The Ocean
Dragged along in the wake, or pushed ahead by the wave, of increased oil prices, that is to say dragged and pushed by the US war/recovery program, the Baltic Dry Index, measuring daily hire costs for ocean going dry bulk cargo vessels, broke away from its historical baseline and began an intractable climb to measure, in 2008, 800% above its 1997-2003 average.
It wasn't a steady climb-- what could be "steady" in capital's world of shaky disequilibrium, of constant tremor? Fear and greed, after all, don't lend themselves well or often to steadfastness. The index quintupled in 2004, dropped 70% in 2005, climbed 600% in 2007 before falling 50% only to double again in the first quarter of 2008, falling again 22% off its peak.
In dollar terms spot market daily rentals for Capesize (the largest) dry bulk carriers are at $156,000 or 500% above the January 2006 mark. Panamax (of a beam, length, and draft not exceeding the capacity of the Panama Canal lock system) rates nearing $71,000 per day, stand 400% above the January 2006 price.
Meanwhile.. and there's always a meanwhile, from 2006 through most of 2007 hire costs for oil tankers declined, 20% for VLCC class ships (200,000 + deadweight tons), 25% for Suezmax (120,000-199,000 dwt), and 35% for Aframax (up to 119,999 dwt) class tankers. Then... and there's always a then, the oil price boosts caught hold, and in 2008 rates began to climb. For the VLCC class, despite the recent climb, these rates are still 33% below their 2004 peak.
Although certainly of benefit to shippers, this wave of petrodollars and petroprices pushing through the channels and locks of capitalism is not exactly the rising tide that lifts all boats. The increased costs of transportation are both product and producer of disruptions in capital's ability to maintain expanded reproduction. Profit apportioned to the transportation systems through price inflation are a deduction from the profitability of capitalist reproduction as a whole. "Circulation sweats money from every pore," wrote Marx, and he was right; but when the costs of the circulation absorbs the money being excreted, capitalism breaks out in a cold sweat.
2. One If By Land...
For the capitalist economy as a whole, or in particular, the movement of commodities to and through the markets for exchange is not qualitatively different from the movement of the materials required for production of the commodity within the production process itself. There can be no expansion of capital, no reproduction of capital; there can be no expansion of production without improving the circulation of the capital within the specific production processes. Volume, distance are not just physical characteristics of production and exchange, but also components of cost and cost is managed through efficiencies in time.
After the end of the war of 1812, US capitalism began its development. The volumes, direction, value and means of commerce, foreign and domestic, were substantially altered. The expansion of production and revenues from merchant-capital/slaveholder alliance of colonial and post-colonial period was threatened and surpassed by the expansion of free-soil agriculture to the west and the "free labor" manufacturing in the east. The development of a reciprocating domestic market established in the exchange of products between free-soil farming, and the manufactured products of "free" wage-labor in the states north of Chesapeake Bay, required, and produced, besides the US Civil, sustained improvement in the means of transportation.
In 1816, a report of the US Senate noted that domestic freight charges measured $9 per ton per 3o miles. The report noted that rate was 100 times the rate charged by European shippers for the transatlantic trade of goods between the two continents. At the US domestic rate, the price of wheat would double every 218 miles of transport; that of corn every 135 miles.
By 1822, with the development of the canal system, river barges, and intra-coastal shipping, haulage rates had declined to 12 cents/ton mile, a decline that was partly product, partly producer of the general price deflation of the time.
Until 1850, it was improvements in waterway borne freight haulage that had the greatest impact on ton-mile costs. However, by 1851 rail freight costs had dropped to 4.05 cents a ton-mile. Domestic production and trade expanded so quickly, however, that the canal, river boat and barge, and rail systems were all required to meet these needs regardless of relative efficiency. This was a rising tide that kept some old boats afloat.
In 1860, canal and rail handled equivalent volumes of freight, but duration in transport ("dwell") times for goods shipped by rail were 1/3 of the times for canal and barge shipments. The average freight costs for rail shipments had dropped to 2.2 cents per ton-mile. Remember that number.
3. Not So Long Ago
In 1980, the US Congress passed the Staggers Act, effectively deregulating the rates that railroads could charge for the shipment of goods. Rate deregulation was no stand alone program for the railroads, but rather the mechanism for sanctioning abandonment of "non-performing" assets, severe reductions in track mileage and employment levels. Economic contraction, rather than the 19th century expansion, inaugurated the new "golden era" of the railroads with bankruptcies and consolidations.
Rates per ton-mile charged by the railroads began a sustained decline. For corn, rates dropped from 3.73 cents per ton-mile in 1981 to 2.53 cents per ton-mile in 1992 to 2.06 cents in 2000. During the same period rates for wheat declined even more dramatically, some 60%, to 2.59 cents per ton-mile. Rates for soy dropped 55% to below that 1860 mark of 2.2 cents per ton-mile.
Clearly, deregulation did not produce the decline in rates, as competition can produce price-efficiencies only to the degree that the components of capitalist production, constant and variable, animate and inanimate, are altered to sustain and expand profit.
And altered those components were. Railroad employment declined approximately 40% between 1990 and 2000, eclipsing the 33% increase in hourly compensation rates. Between 1990 and 1995 annual gross capital expenditures increased 65%, dropping back 10% by 2000 despite an increase of 50% in net railroad operating income. The all-important rate of return on investment declined to 6.5% from 1990's 8.1 percent.
The improved productivity factor of revenue ton-miles per mile of railroad, ton-miles per employee, revenue per employee, sustained the decline in haul rates.
After 2000, all these indexes, rates of return, revenue ton-miles per track mile, total revenue, net revenue from operations, net railroad operating income, gross capital expenditures moved up and down in a narrow band... until 2005. Then in 2005, all began to move markedly upward, as the industry continued its "rationalization." Pushed, pulled by oil prices, railroads like the rest of the US industry increased its rate of expenditure on fixed assets. The assessed value of private fixed assets for the entire transportation industry, which had increased only 3% between 2001 and 2003, grew 8% between 2004 and 2006. Railroads fixed assets increased 6% between 2004 and 2006. Ton-mile rates, however, did not decline. The golden age was over. The black golden age ruled all. Rates increased and have exceed 2.5 cents per ton-mile for grain transport.
If price is the mechanism for apportionment of profit in capitalism, then increasing price indicates an apportionment based on a decline in the ability of capitalism to reproduce profitability as a whole for its entire network. The rising tide lifting the boats, the surge in profits, is in fact an ebb tide, pushing back into an ocean of overproduction.
Next-- Two If By Sea: Ships On The Ocean
address all comments to: sartesian@earthlink.net
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