Tuesday, October 21, 2008

Sufficiently Evil? The Idiots who Rule America

Big business' favorite quote?

Chentleman, you are vorried about the depression. You should not be. For capitalism, a depression is a good cold douche. [By which he meant shower.] - Joseph Schumpeter
Disagree with Chris Hedges' argument or accept it, the U.S. (and much of the rest of the world) is entering a very dangerous period:
The working class, which has desperately borrowed money to stay afloat as real wages have dropped, now face years, maybe decades, of stagnant or declining incomes without access to new credit. The national treasury meanwhile is being drained on behalf of speculative commercial interests. The government—the only institution citizens have that is big enough and powerful enough to protect their rights—is becoming weaker, more anemic and less able to help the mass of Americans who are embarking on a period of deprivation and suffering unseen in this country since the 1930s. Consumption, the profligate engine of the U.S. economy, is withering. September retail sales across the U.S. fell 1.2 percent. The decline was almost double the 0.7 percent drop analysts expected from consumers, whose spending represents two-thirds of U.S. economic activity. There were 160,000 jobs lost last month and three-quarters of a million jobs lost this year. The reverberations of the economic meltdown are only beginning.
Whether you believe that there may "be a national crisis that allows those in power to instantly sweep away all constitutional rights in the name of national security" or some less invasive activities, you have to admit that the prospects facing the U.S. labor force, looking toward several years of deep recession, are not particularly pleasant.
Our oligarchic class is incompetent at governing, managing the economy, coping with natural disasters, educating our young, handling foreign affairs, providing basic services like health care and safeguarding individual rights. That it is still in power, and will remain in power after this election, is a testament to our inability to separate illusion from reality. We still believe in “the experts.” They still believe in themselves. They are clustered like flies swarming around John McCain and Barack Obama. It is only when these elites are exposed as incompetent parasites and dethroned that we will have any hope of restoring social, economic and political order.
The argument made here accepts the premise that if the current oligarchy remains in charge, the U.S. "will either recover the concept of the public good, and this means a revolt against our bankrupt elite and the dynamiting of the corporatist structure, or we will extinguish our democracy."
'Depression' is the word used to describe how the working classes get soaked.
Len Hart, the Existentialist Cowboy, offers a unique purview of the history of recessions and gives us a ground-level read on how the lower classes react to hard times and what may well be in store for at least 85% of us. I believe this essay provides some sharp insight into why the Paulson $750-billion taxpayer bailout (the first(!) bailout) provided no relief to the victims of the plunging stock and housing markets, but instead guaranteed the bonuses for those who had caused it (and a little more background on the 9/11 stock market 'churnings' than the insiders may actually enjoy - notice how the companies on the downside of today's market action were involved in the 9/11 puts and other CIA connections). (Emphasis marks and some editing were added - Ed.)
I hate to say 'I told you so' but I told you so! Here is an excerpt from my previous article.
1. Recessions, though not caused by declining stock markets, are always accompanied and often predicted by a plunging stock market. Republicans sell out at the peak, taking their profits. Enough selling will trigger the plunge; less knowledgeable investors begin to follow suit from fear but too late. Last man out loses.
2. Having taken their profits on the upside, a depressed market is but an opportunity for the rich Republican to get back in at lower prices. Guess who sells at the lower price: the poor schmuck who is 180 degrees out of phase and can only dream of being a rich Republican. In reality, those he aspires to join are exploiting him. 3. Very knowledgeable investors make money 'selling short', buying 'put options'. These investors get peak prices for stocks even as the price declines. Illegal insider information is executed with 'calls' and 'puts.' The perpetrators of 9/11, for example, made millions, possibly billions, selling short the stocks of UA and AA. I defy anyone to come up with an 'innocent' explanation. The recipients of those profits had guilty foreknowledge of 9/11. The name 'Buzz' Krongard comes in connection with a known terrorist organization: the CIA. Now - a planned financial meltdown might have presented the same opportunities. Historically, 'elites' have always emerged richer, stronger from recessions. On the other side of Ronald Reagan's recession of some two years, the rich had gotten richer while the middle class was all but wiped out. The ill-effects of that recession are still seen in the decline of middle class neighborhoods, the permanent loss of manufacturing base and the jobs it created. The profits and volume were most certainly outside norms, proof that those executing the options had precise foreknowledge of the attacks. Those making those profits had "guilty knowledge" of the attacks; they were at the very heart of a murderous conspiracy. 4. Unemployment always goes up in a recession. At the end of a longer recession, companies have the luxury of hiring from a larger labor pool at lower wages and/or salaries. Some companies - citing hard times - may reduce benefits, cut vacation or sick time. Big business must hate good times; it is only during times of full employment that workers have any leverage at all. Offhand I can think of only two times in history that have come close: the Clinton years, and, interestingly, Europe after the Black Death. The labor supply had been depleted by plague. Employers were often forced to accede to worker demands for better conditions, money, a place to live! Serfs had been freed and it marked the beginning of the end for Feudalism and set the stage for 'corporate feudalism,' an age in which we still labor and suffer. 5. Admittedly, many businesses go belly-up during recessions. While lip service is given to 'free markets' and Adam Smith's 'invisible hand,' diehard robber barons hate the 'free market.' They prefer 'monopoly' when they can create one and 'oligopoly' when they can't. Free competition among many sellers is the last thing they want. Recessions are welcomed. It's the 'cold douche,' a ruthless flush, so beloved by Schumpeter and the robber barons of American capitalism. 6. Don't expect recessions to bring down prices. More often, higher prices are the light that is seen at the end of the long, dark tunnel. In other words, those businesses fortunate enough to survive a 'downturn' are in the enviable position of raising prices on the other side. Higher prices benefit businesses that manage, even with government help, to stay in business during a recession. So much for laissez-faire capitalism. Those fortunate businesses now make more money per unit produced and will do so with fewer employees. The world is not so kind to everyone else, primarily smaller businesses and entrepreneurs, freelancers, and worker bees. Prices, we learned in Economics 101, are determined by supply and demand. If the demand is such that the market is quite willing to pay any price for it (prescription drugs, gasoline, certain rents) then demand is said to be inelastic. 7. At the expense of oversimplifying, consumer demand is the arbiter of price only in markets characterized by diffuse competition. Recessions militate against a market of this sort, weeding out all but 'privileged' businesses, primarily those with juicy government contracts or GOP cronies in office. Only in the textbook model, is it assumed that the oligopolist's market demand curve becomes less elastic at prices below a certain point. In markets characterized by the continuing decline in the number of 'sellers,' it is obvious that there are fewer motivations for oligopolists to reduce prices. In such a market, the oligopolist (an aspiring monopolist) makes more money selling fewer units at higher prices than could be earned selling more units at lower prices. How many people are out of a job makes no difference to the American right wing for whom Scrooge is their abiding inspiration.
The American right wing, consulted by slick Madison avenue whiz kids, will never call the American gulag of FEMA camps by the names 'work houses' or 'prisons'. By any name, they are presumably open and ready for those who fall through the gaping cracks. A perpetually depressed economy is a good source of slave labor. Who benefits? KBR? Halliburton? Recessions/depressions are paid for with the 'blood, toil, tears and sweat' of the working classes without whom nothing would ever get produced and no profit would be realized. This would be a high price to pay even if the benefits were fairly distributed at the end of what is euphemistically called the 'business cycle.' But they never are. It is always the upper classes, recently, the top one percent of the nation, that benefit. It is the 'lower classes' who pay for the recession by suffering the Four Horsemen of Economic Apocalypse: unemployment, lower wages, higher prices and bankruptcy. The GOP exploits convenient rationalizations that benefit Bush's 'my base.' Some in the GOP will choose to believe, as did Joseph Schumpeter, that depressions are but 'a process of creative destruction' that weeds out 'inefficiencies' in the economy. Others know that not to be true but repeat it anyway just as they had espoused 'supply-side' economics during the Reagan years. It is not 'inefficient firms' that are weeded out. It is the competition. It is what is left of America's working class, it is the millions who will be deprived of education, opportunity, future.
Are there no FEMA camps? Are there no prisons? Then let them die and decrease the surplus population. —Scrooge (updated)
I'll say more next essay about watching Charlie Rose give lap dances last evening (Monday) to the exultant winners of the churned markets: Meg Whitman, John Doerr, James Wolfensohn, Jeffrey Immelt and Anand Mahindra. You'll notice that they all have no problem with saying that they love(d) Bush's policies. I took it as the insider's answer as to why the Supreme Court interfered and chose him as President in the 2000 election. The video lives here. Suzan Today I'd especially like to thank those who are supporting my efforts. It's been a tough couple of weeks. Thank you!

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