Only Yesterdays
I. What a difference 200+ days don’t
make. It seems like it was only
yesterday when Greece was facing
bankruptcy; when the European Central Bank was the lender of first, last, and
only resort for major European banks; when the sovereign debts of Italy, Spain
and Portugal were suspect, contaminated, shunned; when seats on the flight to
safety were going, to use the language of the trade, at a premium; the fate of the euro was the latest speculation; when
the future of the European Union was the latest, to use the language of the
trade, short; when Geithner was urging his counterparts across the
Atlantic to do something dramatic, to pull out the “big bazooka;” when the EU
was apoplectic, or anaphylactic, or both over the prospects of a referendum in
Greece concerning the terms of so-called bailout. Only yesterday.
These 200+ days later?
Well, Greece is facing bankruptcy; Greece had a referendum, disguised as a general election and the results
were exactly the results expected only yesterday; the ECB is the only lender of
any resort for European banks; the sovereign debts are again suspect; the
flight to safety has driven certain short term interest rates below zero, which
is also the latest line on the future prospects of the European Union. And once again Geithner is urging, hoping,
praying for that big bazooka to drop out of the sky, a miracle of another sort
in government green. Praise the lord and
pass the ammunition.
While we’re at it, remarking as it were on the amazing and
the banal, the banality of the “amazing,”
the recurrence of the unusual,
exceptional with such frequency that unusual becomes the tedious, everyday functioning of this system based
upon the aggrandizement and depreciation of human labor……..let’s ask a
question. Let’s ask a question that
appears to be as tangential to the predicament of irrelevant to the predicament
of capital accumulation as a question can be:
Is it possible to compare “amazing” “things,”— events, quantities,
qualities, effects, non-effects?
Can one amazing event, quality, quantity, effect,
non-effect, be more or less amazing than a different amazing…etc?
As we ponder this, and count the number of pinheads dancing
on angels too, let’s just slog on with the predicament of capital accumulation,
to wit:
It’s really amazing how far a lot, a real lot, of money can’t go these days. And it’s even more, or less, amazing how
little time lots and lots of money buys these days. The most amazing, or not, thing of all is
that this exchange of money for time, this buying of time exposes, condenses,
displays, distills, but most of all narrates
the historical trajectory of value production; the once and future prospects of
capitalism.
Amazing, isn’t it? Or
not.
After all, it was just a few short months ago that the ECB
took to the stormy Mediterranean in its rescue vessel, the EUSS Long Term
Refinancing Operation, LTRO, to the spread the oil of
long-term-low-interest-any-collateral-will-suffice loans on trouble waters of
Eurozone bank finances.
That was an undertaking of amazing, even epic,
proportions—supplying over one trillion euros—that’s a thousand billion for
those of you not hooked up with hedge funds or astronomical observatories—for a
term of three years, at rates of 1% or less.
This was not, to be sure, an original undertaking. The ECB was borrowing a page, and a bit of liquidity from the US Federal
Reserve, which had borrowed a page from Crazy Eddie of 1980s discount
electronics, and TV commercial fame—“prices so low, they’re practically giving
it away.” Crazy Eddie, as we all, know,
folded, having folded into his own pockets significant amounts of the readies
provided through his bank credit lines, and
having turned his stores into sources of credit, into mini-banks, financing purchases, and counting the debts
as earnings, thus pyramiding downward, reproducing
in infinite miniatures, fractals really, the bad assets as bad banks. “I’ve looked in the mirror, and I’ve seen a
million little mes.”
While separate and apart from the sovereign “bail outs”
engineered by through the EFSF cum ESM, the ECB’s LTRO has the same origin and
object as the programs that produced the sovereign debt crises—that is
relieving the distress of the European Union private banking system with the
application of massive state sponsored liquidity.
That might work, if the banking distress was in fact a
liquidity issue. It is not. As the governor of the Bank of England put
it, “The crisis in the euro area is one of solvency not liquidity.” And who could possibly know more about
chronic, extended, and attenuated insolvency than the guv of the bank of the
bourgeoisie of that storied isle, Mervyn God Save the Ring-a-Ding-Ding ? Only Crazy Eddie, for sure.
So anyway, the various “sovereign” governments had tried that, just that old liquidity shuffle
[pay no attention to the left hand, watch the right hand], turning their public
treasuries into lenders of penultimate resort, into bad banks. The ECB determined it could do no less than
repeat the process, since, after all, accumulation of capital, is by origin,
definition, and destiny a repetition
compulsion, pathology.
The ECB offered its balance sheet as the virgin to be
sacrificed at the altar of the great god of non-performing assets. The best laid plans, and hedges, of mice,
men, and the recombinant DNA offspring of both called finance ministers, had
come to less than zero.
II. Let’s catch
up. In September, 2011, the then finance
minister of the Spanish government, Elena Salgado, stated, “The banking sector
now is prepared to overcome any test it may face in the future.” The fact that she was reading from a text
originally written in 2008 by the former finance minister of Ireland in which
he claimed that he had provided Irish banks with “the cheapest bailout in the
world so far” didn’t do much to convince the international debt markets that
the Spanish banking sector was prepared to overcome anything, least of all the
e220 billion in non-performing debt on its books.
In December 2011, Mario Draghi, the new chief of the
European Central Bank announced that the bank will accept “a wider range of
assets as collateral” as security for its lending programs to the eurozone
banking center, including corporate
bonds, covered bonds and “previously encumbered assets”—i.e. non-performing
debts. Happy Christmas.
In the same month, Italian banks borrowed e200 billion from
the ECB, equal to 25% of all ECB lending for that month.
In 2012, the Spanish government acknowledged that it would
not reach its target for reduction in the government deficit.
Italy’s Banco Monte dei Paschi di Siena suspended payment on
bonds issued to the Italian government by the bank to secure the government’s
bailout.
Spain announced it was suspending its plan to privatize the
airports of Barcelona and Madrid because of a precipitous decline in the valuation of the properties.
Greece too could not privatize assets at anywhere near the
numbers, nor the schedule, embodied in
the bailout agreement.
The ECB’s balance sheet [loan’s outstanding] reached e3
trillion, an amount equivalent to one-third of the Eurozone’s GDP.
In March 2012, the European Union announced that Spanish
banks would not need a bailout.
German banks’ exposure to Spanish debt measured e148 billion
including e53 billion in claims against Spanish banks.
The largest EU private banks had deposited e 1.2 trillion
with the various central banks in the union, an increase of 66% since 2010.
In May, elections in Greece yielded no government.
Also in May, elections in France installed someone claiming
to be “socialist” in the Élysée Palace, a result slightly, but only slightly less appalling to
the bourgeoisie, than that of the Greek elections.
III. The news
coming from Europe hasn’t been all bad.
After the British government revealed that it planned a state funeral,
at the cost of sterling 2 million, for Margaret Thatcher upon her demise, the
remaining Keynesians in the Labor Party argued that the funeral should be
absorbed into an economic stimulus program.
Given the dire circumstances of the economy, the Labor Party’s shadow
Exchequer proposed that the government not wait for Lady Thatcher’s illnesses
to take their natural course, but rather put her to death, painlessly but immediately,
as part of the emergency measures for restoring growth. “Markets hate uncertainty,” said the shadow
Exchequer, “We must act decisively and boldly.”
If nothing else, the Labor Party Keynesians proved, at least
and at last, that they had grasped the substance of Lenin’s tactic of “critical
support”— “like the rope supports the hanged man.”
And……..the former head of the Vatican’s Instituto per le Opere di Religione (IOR), Ettore Gotti Tedeschi,
under investigation for money-laundering, indicated that he is in fear for his
life. Pope Benedict laughed off
suggestions that Tedeschi was responding to threats of possible retaliation
from the bank if he cooperates with the investigating authorities. Said the pope, “He has nothing to fear. Everyone knows we never molest anyone over 14
years of age.”
IV. This is
definitely not a liquidity crisis. This is not a fiscal crisis. This is not a
monetary crisis. It is, however, more than a crisis in the
reproduction of capital, in the accumulation of capital, in the profitability
of capital. It is that moment when the
mechanisms of crisis—bankruptcy, unemployment, declining wages—are not enough to restore the
profitability of capitalist production. For
that reason, the programs, policies, agreements, and disagreements, within, between, among, the institutions, parties,
and bourgeoisie of the nations of the EU; and the agreements and disagreements
of the EU, or its members, with the United States about policy and program,
about big bazookas, super-regulators, Basel 3 capital requirement, eurozone
bonds, sovereign debt guarantees are irrelevant, immaterial, and
meaningless.
Money, being what it is to the bourgeoisie—church and state,
love and lust, god, goddess and dominatrix, mirror and lens, wing and prayer—it’s
to be expected that the bourgeoisie see every problem and every solution in
terms of money, as problems of finance.
However, the problems condensed and expressed in money-capital, in money
as capital, as credit, are not
amenable by solutions focusing on money
as a medium of exchange; money as a means of circulation; money as a universal
equivalent; money as a store of value; money as a hoard.
If money is the “ultimate issue” of exchange value, its
embodiment, distillation, and abstraction, then credit and credit instruments
are the embodiment, distillation, and abstraction of money; they are money’s
money. The origin of credit instruments
in capitalist production has everything to do with that need of capitalists to
buy time—that the time of realization of value
need not, does not, cannot correspond with the actual aggrandizement of
value. Return on investment cannot be
coincident with investment. If return
were coincident, there would be no time to expropriate; there would be no
distinction between private property and social need; there would be no rate of profit; capital in fact could
not exist.
Credit originates in the lags in, between, among the various
sectors of capitalist production; in the different rates of turnover of various
capitalist enterprises; in the time differentials between investments and
profits. Credit bridges those
differentials and in that process distributes accumulated values, accumulated
profits, according to the same exact laws that govern all exchanges in capital.
There is, in fact, nothing fictitious about the
credit instruments of finance capital; or nothing more fictitious about credit instruments than there is about all
capital—namely it’s not a thing, it’s
a social relation of production and when capital cannot reproduce itself, that
social relation, quickly and profitably enough, when capital cannot maintain a
rate of self-expansion, it loses its aggrandized corporeality, its life stolen
from labor.
The inability to restore the expansion of profitability is
what besets capital in the EU, and in the United States. The differences in policies and programs
between and among an Obama, a Merkel, a Hollande, a Tsipras (who has promised
to keep Greece in the Eurozone; who proclaims only his party can restore stability
to capitalism in Greece), even an idiot like Cameron are immaterial and
irrelevant to the unity, the totality
of capital’s antagonism to labor.
It is sad then to see the comrades of Insurgent Notes giving voice to this notion that there is a
substantive conflict among the bourgeoisie regarding policy and program. In an article entitled “Chicken Game: Eurocrisis, Again” (http://insurgentnotes.com/2012/06/chicken-game-eurocrisis-again/)
by Raffaele Sciortino, we get the usual list of the usual suspects as working
to take advantage of the predicament of the European Union and compel the Union
to conform to a new Washington Consensus.
The author actually claims that a “financial war” has emerged pitting
the dollar against the euro, and that the assault on European banking and
sovereign debt is not only part of that war, but a strategic effort by the
Washington-Wall Street-US Federal Reserve to reinforce dollar dominance over
the euro. Says the author:
In the middle of the year, as the effects of
the Fed’s injections of liquidity were being exhausted, underscoring the risk
of a double dip in the Unites States, we
saw a further surge of speculative funds betting against the European sovereign
debts, a surge which pushed Italy and Spain into the highly dangerous grey area
between liquidity crisis and insolvency…The crises of public debt issue and the
devaluation of the assets of the European banks, left without liquidity from
the a simultaneous withdraw of US monies, were circularly reinforce, while the
euro itself entered the risk zone.
The double calculus here is to profit from
the deterioration of public balance sheets and to give Europe a serious
warning, specifically to the ECB and especially to the German government…
What bollocks. What’s
next from our comrades at Insurgent Notes?
An article claiming that the real reason Bush invaded Iraq is because
Hussein threatened to price Iraq’s oil in euros?
The author of this article makes the rookie mistake of
confusing the New York Times, and George
Soros, as the “voice of Wall Street.”
Anyone who has ever worked, or traded, on Wall Street knows that the
opinions of Soros and the NYT reflect
exactly nothing about the street.
Now regarding the claims of our author—the closing of the US
short-term debt markets, the commercial paper money markets to European Union
banks did not begin in middle of 2011.
The declining market for bank paper, including US bank paper, in the
commercial paper money markets has been going on since 2008. It was the major reason that the US FRB and
Treasury produced its Asset Backed Commercial Paper Money Market Funding Liquidity
Facility, its Money Market Funding
Facility, ad almost infinitum. While
2010 did bring some relief to the banks, allowing the Fed to close the
ABCPMMFLF, the volume of open market paper
issued by US financial institutions declined a cumulative $850 billion in
the years from 2007 to 2011.
Total credit market borrowing by US domestic financial
corporations declined by more than $3 trillion in 2009, 2010, 2011, as US banks
and institutions wrote off or sold assets, both performing and non-performing,
raised capital through rights and equity issues, and simply shrank their
businesses.
Today, participation in the commercial paper money markets
is centered on the purchase and sale of paper with the shortest maturities to
the degree that 31% of the portfolios of US Prime money market funds are overnight loans.
The action, and lack thereof, in the CPMMs hardly amounts to
“targeting” the EU, or “sending a warning” regarding a policy
disagreement. It represents the poor
condition of the US and EU banks, the mountains of non-performing assets, and the
emptying of the public treasuries to support the insolvent banks.
Moreover, the European Union banks are practicing the very
same credit withdrawal against each other.
For the 4th quarter 2011, The Bank of International
Settlements (that executive committee formed by the Reichsbank in which it would
meet with its friendly correspondent banks in belligerent countries during WW2? In order to manage its international holdings
and ensure the uninterrupted flow of profits from companies in Latin America,
the US, the UK? The very same) reported
that interbank lending declined by
$637 billion, 60% of which was the
result of reduced cross-border lending by European Union banks.
Flogging the dead horse of “fictitious
capital,” the author claims:
Behind this confrontation, we see the
outlines of an unavoidable next phase:
the devalorization of the enormous mass of fictitious capital (Marx)
which has accumulated over the cycle of more than 30 years of growth based on
debt.
First off, the 30 years of growth in the capitalist economy
has not been based on debt. It has been
based on reducing wages, shrinking unit labor costs, liquidating pensions and
benefits of the workers and taking that liquidation right to the bottom line as
profits, and substantial gains in
labor productivity. The devaluation that
is going on is not the devaluation of “fictitious capital” per se. This process is not confined to credit
instruments, debt obligations, but rather involves the very real and very deep
devaluation of capital, of the living
and accumulated components of capital.
Precisely because this is not a liquidity issue, but one of
reproduction, the “crisis” is inadequate to that task and capitalism against
must and will attempt to drive wages below the cost of the reproduction of labor
and destroy the means of production.
The presentation of the last 30 years as one that can be
apprehended by the notion of “fictitious capital” has produced its
complementary opposite, fictitious Marxism.
The momentary divisions, disagreements of the capitalists
are insignificant and irrelevant to the unity, the totality of capital’s
opposition to human labor.
S. Artesian, 17 June 2012
