the american economic system is geared to suck even the smallest savings back into its mill through its articulate and complex arrangements of the banking and finance sector. it relies on obtaining cheap money from the populce by way of bankers, which then is invested in supposedly lucrative enterprises.
unlike europe, where a tradition of landlording is historical and historic heritage, there are few opportunitiies for the american moneyed and rich classes to roll in luxury on a rentiér model of what financiers term "pure profit". you cannot buy a flat on park avenue for instance, let it to someone and laze around in malibu squandering the rent away. taxes, costs, overheads, over- burdens etc. will leave you poorer than a pauper.
if you are a beach bum type like me, the only way you can beat the system is invest enough capital in the securities and exchanges market to get you by and to cross your fingers hoping it will not come down crashing with all your debauchery and dreams too - in the 1987 "crisis", which indeed was an earthquake in the american finance system that served to funnel capital toward the cheaper labor markets of asia, an ex-executive on an easy circumnavigation with his wife had to return stateside to get a well paying job for a couple years, so he would not have to sell their yacht (then moored in bodrum) because all their savings had gone gown the drain. well, the quirks and snags of "impure" profit. a french rentiér would be much less shaken.
since americans could not rationally buy houses or other real estate in order to draw an easy income from, realty turned into a field of speculation in the heydays of finacier-ism of the 90's and early 21st century - as opposed to the monetarism of the 80s and early 90s. houses, etc. construction is usually profitable, it launders money well and real estate is truly the rarest good available, so there is always a profit margin that cyclically becomes exaggerated.
thus, buying and selling real estate made money, even with mortgages, i.e., money that is only on paper. the loose finances anchored to america's inbound economy with limited profit margins grabbed the milkier mortgage system like a bonanza, instead of seeking outlets within the universal global market.
real estate and mortgage practically operated on the same level of "money that was not there, virtual money" (1). money that produced some inverted form of pure profit that was denied to the much more honest and controllable endeavor of landlordship.
now that the whole mortgage dream-system is dead, papers report, the demand for skilled labor has already increased - since the last year of bill clinton or thereabouts, unskilled, cheap workers were in demand, signifying the plight of real, unproductive, uncompetitive, un-global american economy.
production economy is back, or waiting to make a come-back, even in america.
since the current "crisis" was a composite result of a failing and unyieldy inbound, introvert "national" economy, talking for the future of production in america should mean a more competitive american presence in the world, as opposed to a more domineering and bullying old fashioned hegemon in military fatigues.
look where harley davidson have come in the last five years or so... from a slumberous style and technology belonging in mid-20th century that caused the legendary machines to be called "hardly-ableson", to once more a world wide magnet for motorcycle freaks (2).
so this is not really a crisis for harley. it is still "crisis? what crisis?" for enterprises and sectors and businesses and what not that can behave as universally as harley did.
and now that the "crisis" blew up the money on paper, we're talking real money. american savings will now most likely go to banks and finance markets that have the world as their playing field. as a very large, indeed, the largest part of that world, american economy will ingest a good deal of such savings made at home and elsewhere, perhaps even in turkey. international, trans-border mergers and a de-nationalization of the most volatile, versatile and fluent element of economics, "capital" will have to dictate a new world order, too, where the nation state, if it wants a say in things will also somehow de-nationalize.
in question is a new world order that dubya and his cohorts could not and will not understand. luckily for america and the entire globe, with mccain on an apparent slide -thanks a lot to sarah palin - the republican anachronism seems to be fading in both its present and promised forms. a couple more weeks and hussein barack obama, it seems, will ascend the world's political throne.
he is lucky... he comes forward at a turn where things, unless clipped by some sick and parochial mentality typified in the dubya regime, have only up as a way to go
(3).
--------
(1) if what we were taught in macro economics is true, there can be no "money that is noot there" (money used here to signify general resources that may be converted into capital). economy does not tolerate any hiatus and simply fills it in. as it turns out, the states, the bane and brunt of the capitalist system, had the funds and were sleeping on them! however, since they need it to finance wars, armies and a huge bureaucratic apparatus ever ready to cook even further ills, the seeming hiatus may still be filled also by elements even worse than governments, like those headquartered in medellin or the afghan-pakistan border.
(2) present company begs to be excluded... i still favor italian élan and styling and bmw engineering, although my previous "wouldn't be caught dead riding a hardly-ableson" attitude is now of the past... i appreciate and welcome the transformation of harley and hope it is a harbinger of other american industries and services - which will have to turn global in ownership, too.
(3) that's why i supported hillary and would love to see a clinton in the coming democratic administration. once this stage is passed, any flaws in the foundations-in-the-laying of the renovated world-system can only lead to more devastating tremors in its structure. a world-weary, street-savvy u.s. administration would become a blessinng for the world. joe biden is simply not up to standard and hussein is too green behind the ears. i only hope his passing over hillary was not the sum of a petty grudge left over from the campaigns.
Thursday, October 23, 2008
Saturday, October 11, 2008
crisis? what crisis?
the world is in a dire financial crisis that, according to some experts at least, threatens to turn economic. well, thanks to that crisis, we, the general public and a not-so-few number of specialists now at last have remembered, if not realized that "financial" and "economic" may be mutually inclusive but not identical.
crisis? big deal! it is a fact established since karl marx that capitalism thrives on crises. immanuel wallerstein, the late andre gunder frank, their crony giovanni arrighi and many others have been harping on how crises alter economic events and structures for no less than 40 years. each crisis, which they summarily define as a (set of) condition(s) that disrupt(s) the balance of capitalist socio-economic structures, forcing them to transform in order to adapt and self-sustain.
the crash of 1929 ended with state-wide economies integrated more or less on national levels, only to serve the inter-nationalization of capitalism as a worldwide system in the post war era. in 1970, the system came of age, as the dollar-gold parity was abandoned. meantime, the accumulated wealth was more generously spread to the consumer classes. the effects of the 1973 oil embargo and subsequent waves of inflation necessitated and hastened an end to keynesian economics. in the 1980s, monetarism operated more or less to unite a world economy about a financial orbit, calling to favor two hitherto secret gods of capitalism, productivity and competitivity. hence, the crisis of the late 80s, with which (if i were an economist, i would claim because of which) the soviet, or rather the state-as-economy system collapsed irrecoverably.
the world economy became more consolidated and associated around capitalist mechanisms than ever.
smaller scale crises continued on a course toward globalization as capitalist production on the trail of profit through productivity and competitivity, discovered the new slave labor throves of the pacific rim and eventually, chindia. the market crashes of 1987 and 1997 ended up with the supremacy and preponderance of a finance-economy that triggered world scale production and consumption.
money was freed! regardless of what nation-state printed it, money became a world citizen. the most fluid element of economics, money, was now globalized as nothing previous.
capitalism, which had ever had to suffer from state apparati since its emergence, was now clearing itself of national bounds, too although that could cause significant suffering for "national" economies. finance determined the fate of the world economy and economies in general.
money made money. and when money made money,it also made money not in evidence. so, everyone got rich. at least, on paper.
when capitalism was more dependent on goods production rather than financing its (re?)productive system, it nevertheless needed to be territorially based, locally established, supported, sometimes protected, even defended against physical outside attacks. the states provided that "service" for a "fee"; i.e., prospering national economies or political élites, depending on how a specific country was run. always, however, a politicallly conducive balance was always struck between the power wielded by the bureaucratic-apparatus and captains of economy.
how public welfare extended to lower classes developing into consumers was also a function of that balance. whereas increased welfare returned almost automatically to the system by way of consumer spending, the state meddling with or in the economy in any form could often become a bothersome, profligate burden; frittering away good resources in a bottomless pit of counter-productive political priorities.
it was this margin of license and power of the state/bureaucracy that enjoyed some influence on political-economy that prompted the structuralist marxists of the 1980s, louis althusser, nikos poulantzas, étienne balibar etc. to propose a "relative autonomy of the state from the ruling (capitalist) classes".
actually, that autonomy was always there. all states in the world are at best, relics from eras where the power vested in them was exclusive to only a few. by definition, if a state exists at all, it has a form of power in reserve that is exclusive only to those who run it. just look what the federal government of dubya's u.s.a. came up with from its deeper recesses to reppress the citizen with, in the name of fighting "terrorism".
neither do nation states belong as powers in global capitalist economy. america is the largest single source of global economical activity, with its huge armory of floating capital, technology, enterpreneurship, knowledge and expertize, etc... its global presence outweighs any rivals. still, in the words of investment analyst and entrepreneur dr. marc faber, "the rebate the federal government issues to beat the crisis can only be kept at home if it is spent on prostitutes and beer, since these are the only products still produced in u.s.".
despite the innegligible accuracy of this economic gallows humor, still, in this age of globalization, even globality, two thirds of american economy is basically national: its processes and methods are introverted, inbound. it is comparatively unproductive and uncompetitive in the markets the world over.
it is true that the said two third almost equals to the total output of the rest of the world and represents extreme power - however, it is powerful only stateside and compared to its true "global" potential, parochial in nature and mentality.
when money started making money, naturally, the largest economy in the world offering the highest profit potential attracted the biggest share of the real and "virtual" profits. naturally, the wealth not only spread around, through consumption and savings, it returned to the money market and boosted its profits.
few other fields of investment in the "real" economy were as inviting, since speculation always pays high dividends if it pays at all, and the finance market was swollen to twice its actual capacity with speculative money that was not there...
real estate emerged as a favorite area of speculation for the virtual economy of the virtual money market. to the small consumer with little money, buying realty with mortgages felt good, both as a means of economic security and because he thought he could finally realize his dreams. real estate was also a quick money maker for the virtual "investor". however, profitable as it may be, real estate is hardly "real" productive enterprise. in the old days, money allotted to realty and land development was dubbed "placement" rather than investment; because it returned little to the economy except some speculative "swollen" money.
then again, a house in malibu or palm beach is hardly a globally competitive item on the market, beyond a certain limit. and however exproportionately its price may be blown, the baloon bursts when the global forces of a world economy summon limited resources to hard core, economic activity on a global scale, where the key to survival is competitiveness.
so this crisis is likely to end up mainly as a potential disaster for two categories of players in the worldwide theater of economy: all non-global, un-competitive, backward, inbound, introverted economies, including the local or transnational finance sectors that vested fortunes in them; and states that count on such economies in order to retain their nationally-defined political interest structures and boundaries may be expected to bear the vrunt and maybe fold - iceland provides a fine example.
this is a crisis that, in order to end without the world bursting somehow in flames, has to establish the few but essential rules of capitalism universally: free flow of resources, rationalization of capital and production activity, no or very limited government regulation coupled with relentless control of compliance with principles, unhampered competition, supported by a universally valid democracy - not only in the home grounds of capitalism but anywhere that is part of the world market. after all, freedom and democracy have costs of their own, which bids unfair competition, should "countries" in chindia not also pay them as most have so far eluded.
a lot depends on how the huge dinosaurs in america will or can respond to the challenge of globalization, as far as global welfare and prosperity are concerned. if all the resources the government allocates for them are spent to restructure the existing system; that is money down the drain. if even half of the colossal home-oriented american economy can turn globally efficient with that infusion, the world cannot help but become collectively richer.
possible? yes but difficult. expect plenty of mergers and acquisitions. plan on the concentration of capital to be invested in production-efficient high technology in goods and services to be marketed worldwide. could you imagine chrysler and gm becoming one firm in the 80s? expect to hear more american brands putting their stamps on universally available products as also euro-american collaboration spirals upward. expect chindia (especially the number one slave labor economy of the cosmos, china) to slow down and watch them get immersed in their "aggravating" internal political problems - then, not so soon but in due time, see how their "citizens" arise as a new middle class of consumers with liberal demands.
also see states losing their "national" billions and sinking their authority in their effort to save "national" savings in the internationally owned, terribly globalized greedy banking sector.
wait for new supra-national forms of organization within which "the nation state" hopes to prolong its current mode of existence. bow to the sarkkozys and merkels and berlusconis of this world -thank god dubya is outbound- and especially gordons, whose incompetence and intransigence simply caused recent crises to deepen.
oh, and oil... watch as russia pretends to bare its teeth and gnarl as its petrol revenues surge and slump beyond its control. check how it has to spend petrodollars for political adventures that turn out to be minor repetitioons of the afghan disaster. wonder why those adventures unfailingly end up dealing the "west" the better hand. laugh as chavez makes more of a clown of himself as the best example of his kind, the nationalist charlatan, getting certainly not himself but his nation poorer.
then say your prayer for the poor, because poverty is not one globally viable commodity and in the global economics, as jesus of nazareth said "shall be taken from he who hath not and be given to he who hath".
put on the 'tramp album and listen to "crsis? what crisis?". there is still fun in life.
crisis? big deal! it is a fact established since karl marx that capitalism thrives on crises. immanuel wallerstein, the late andre gunder frank, their crony giovanni arrighi and many others have been harping on how crises alter economic events and structures for no less than 40 years. each crisis, which they summarily define as a (set of) condition(s) that disrupt(s) the balance of capitalist socio-economic structures, forcing them to transform in order to adapt and self-sustain.
the crash of 1929 ended with state-wide economies integrated more or less on national levels, only to serve the inter-nationalization of capitalism as a worldwide system in the post war era. in 1970, the system came of age, as the dollar-gold parity was abandoned. meantime, the accumulated wealth was more generously spread to the consumer classes. the effects of the 1973 oil embargo and subsequent waves of inflation necessitated and hastened an end to keynesian economics. in the 1980s, monetarism operated more or less to unite a world economy about a financial orbit, calling to favor two hitherto secret gods of capitalism, productivity and competitivity. hence, the crisis of the late 80s, with which (if i were an economist, i would claim because of which) the soviet, or rather the state-as-economy system collapsed irrecoverably.
the world economy became more consolidated and associated around capitalist mechanisms than ever.
smaller scale crises continued on a course toward globalization as capitalist production on the trail of profit through productivity and competitivity, discovered the new slave labor throves of the pacific rim and eventually, chindia. the market crashes of 1987 and 1997 ended up with the supremacy and preponderance of a finance-economy that triggered world scale production and consumption.
money was freed! regardless of what nation-state printed it, money became a world citizen. the most fluid element of economics, money, was now globalized as nothing previous.
capitalism, which had ever had to suffer from state apparati since its emergence, was now clearing itself of national bounds, too although that could cause significant suffering for "national" economies. finance determined the fate of the world economy and economies in general.
money made money. and when money made money,it also made money not in evidence. so, everyone got rich. at least, on paper.
when capitalism was more dependent on goods production rather than financing its (re?)productive system, it nevertheless needed to be territorially based, locally established, supported, sometimes protected, even defended against physical outside attacks. the states provided that "service" for a "fee"; i.e., prospering national economies or political élites, depending on how a specific country was run. always, however, a politicallly conducive balance was always struck between the power wielded by the bureaucratic-apparatus and captains of economy.
how public welfare extended to lower classes developing into consumers was also a function of that balance. whereas increased welfare returned almost automatically to the system by way of consumer spending, the state meddling with or in the economy in any form could often become a bothersome, profligate burden; frittering away good resources in a bottomless pit of counter-productive political priorities.
it was this margin of license and power of the state/bureaucracy that enjoyed some influence on political-economy that prompted the structuralist marxists of the 1980s, louis althusser, nikos poulantzas, étienne balibar etc. to propose a "relative autonomy of the state from the ruling (capitalist) classes".
actually, that autonomy was always there. all states in the world are at best, relics from eras where the power vested in them was exclusive to only a few. by definition, if a state exists at all, it has a form of power in reserve that is exclusive only to those who run it. just look what the federal government of dubya's u.s.a. came up with from its deeper recesses to reppress the citizen with, in the name of fighting "terrorism".
neither do nation states belong as powers in global capitalist economy. america is the largest single source of global economical activity, with its huge armory of floating capital, technology, enterpreneurship, knowledge and expertize, etc... its global presence outweighs any rivals. still, in the words of investment analyst and entrepreneur dr. marc faber, "the rebate the federal government issues to beat the crisis can only be kept at home if it is spent on prostitutes and beer, since these are the only products still produced in u.s.".
despite the innegligible accuracy of this economic gallows humor, still, in this age of globalization, even globality, two thirds of american economy is basically national: its processes and methods are introverted, inbound. it is comparatively unproductive and uncompetitive in the markets the world over.
it is true that the said two third almost equals to the total output of the rest of the world and represents extreme power - however, it is powerful only stateside and compared to its true "global" potential, parochial in nature and mentality.
when money started making money, naturally, the largest economy in the world offering the highest profit potential attracted the biggest share of the real and "virtual" profits. naturally, the wealth not only spread around, through consumption and savings, it returned to the money market and boosted its profits.
few other fields of investment in the "real" economy were as inviting, since speculation always pays high dividends if it pays at all, and the finance market was swollen to twice its actual capacity with speculative money that was not there...
real estate emerged as a favorite area of speculation for the virtual economy of the virtual money market. to the small consumer with little money, buying realty with mortgages felt good, both as a means of economic security and because he thought he could finally realize his dreams. real estate was also a quick money maker for the virtual "investor". however, profitable as it may be, real estate is hardly "real" productive enterprise. in the old days, money allotted to realty and land development was dubbed "placement" rather than investment; because it returned little to the economy except some speculative "swollen" money.
then again, a house in malibu or palm beach is hardly a globally competitive item on the market, beyond a certain limit. and however exproportionately its price may be blown, the baloon bursts when the global forces of a world economy summon limited resources to hard core, economic activity on a global scale, where the key to survival is competitiveness.
so this crisis is likely to end up mainly as a potential disaster for two categories of players in the worldwide theater of economy: all non-global, un-competitive, backward, inbound, introverted economies, including the local or transnational finance sectors that vested fortunes in them; and states that count on such economies in order to retain their nationally-defined political interest structures and boundaries may be expected to bear the vrunt and maybe fold - iceland provides a fine example.
this is a crisis that, in order to end without the world bursting somehow in flames, has to establish the few but essential rules of capitalism universally: free flow of resources, rationalization of capital and production activity, no or very limited government regulation coupled with relentless control of compliance with principles, unhampered competition, supported by a universally valid democracy - not only in the home grounds of capitalism but anywhere that is part of the world market. after all, freedom and democracy have costs of their own, which bids unfair competition, should "countries" in chindia not also pay them as most have so far eluded.
a lot depends on how the huge dinosaurs in america will or can respond to the challenge of globalization, as far as global welfare and prosperity are concerned. if all the resources the government allocates for them are spent to restructure the existing system; that is money down the drain. if even half of the colossal home-oriented american economy can turn globally efficient with that infusion, the world cannot help but become collectively richer.
possible? yes but difficult. expect plenty of mergers and acquisitions. plan on the concentration of capital to be invested in production-efficient high technology in goods and services to be marketed worldwide. could you imagine chrysler and gm becoming one firm in the 80s? expect to hear more american brands putting their stamps on universally available products as also euro-american collaboration spirals upward. expect chindia (especially the number one slave labor economy of the cosmos, china) to slow down and watch them get immersed in their "aggravating" internal political problems - then, not so soon but in due time, see how their "citizens" arise as a new middle class of consumers with liberal demands.
also see states losing their "national" billions and sinking their authority in their effort to save "national" savings in the internationally owned, terribly globalized greedy banking sector.
wait for new supra-national forms of organization within which "the nation state" hopes to prolong its current mode of existence. bow to the sarkkozys and merkels and berlusconis of this world -thank god dubya is outbound- and especially gordons, whose incompetence and intransigence simply caused recent crises to deepen.
oh, and oil... watch as russia pretends to bare its teeth and gnarl as its petrol revenues surge and slump beyond its control. check how it has to spend petrodollars for political adventures that turn out to be minor repetitioons of the afghan disaster. wonder why those adventures unfailingly end up dealing the "west" the better hand. laugh as chavez makes more of a clown of himself as the best example of his kind, the nationalist charlatan, getting certainly not himself but his nation poorer.
then say your prayer for the poor, because poverty is not one globally viable commodity and in the global economics, as jesus of nazareth said "shall be taken from he who hath not and be given to he who hath".
put on the 'tramp album and listen to "crsis? what crisis?". there is still fun in life.
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