Fed plenty of rope, it’s time to hang.
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October 10th, 2009 at 7:43 am
That graph at the end of the article says it all.
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October 11th, 2009 at 6:35 pm
yup.
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October 12th, 2009 at 11:23 am
I’ve written an e-mail to the economist, Richard Wolff. I expressed how impressed I was with his graph illustrating changes in real wages (wages adjusted for inflation) against changes in productivity over a 100 year period or so. He referrs to the the widening diferential between the stagnating wages of the last 30 years and the rising productivity within the same 30 as “profits”. He then goes on to express that this unprecedented surplus in productivity (accounted for by computerization/automation and wage stagnation) accounted for enormous liquidity; money looking for somewhere to go. Giant corporations then started buying up each other, executives started getting hugely lucrative compensation packages, and the generational expectation for quality of living to rise from one to the next was similated by converting this great surpluss into credit instruments and securities. Since our wages couldn’t keep up with the generational expectation, we borrowed and purchased what our wages couldn’t achieve. Wolff’s interpretation of the crisis is thus a new twist on the classic “crisis of Capitalism” of Marx.
I have no doubt that this is at least partially a correct view. However, I have asked him to help clarify a few questions I have about the widening gap as he illustrates it. He has called the differential between the productivity and wages “profits”, but I don’t think that is technically correct, as profits are the dividends that shareholders earn on their stock. Capital expenses beyond wages also eat into surplusses. What makes this especially confusing to me is that if a company wants to take its surpluses and start buying up other companies, it is not paying out dividends with that capital, although the stock might end up being tradable or greater value. Also, if a company starts entering the credit and financial services industry, and is lending out its capital in the expectation of great returns from debtors, the capital is not profit anymore, but a capital investment; a risk that hopes for gains later.
That these great companies swimming in liquidity have squandered potential profits on lending to low wage earners with poor credit presents a different kind of crisis than the classic crisis of Capitalism (where wage-earners cannot afford the fruits of industry and the whole things comes apart at the seams).
It seems more a kind of diseased frenzy took place within both the capitalist and prole classes.
Anyway, I want to see how Wolff responds. Not sure he will.
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October 13th, 2009 at 1:45 am
let me know what he says, if he does.
the financial service companies didn’t really squander their profits, as their debt-based assets have been salvaged by the federal government. so masses of individual people couldn’t be counted on to pay off their debts (structured as they are), so the government assumed the debt, thus obscuring the inability to pay for a bit at least.
in this context, controlled demolition takes on additional levels of meaning. in particular, the controlled destruction of the financial structure presents a series of opportunities for transfers of wealth and power. it is in essence a new form of bankruptcy, which avoids, or shifts, the losses to shareholders normally incurred.
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bi11 reply on October 13th, 2009 4:49 pm:
“the financial service companies didn’t really squander their profits, as their debt-based assets have been salvaged by the federal government.”
Well, they still squandered them, but got bailed out. Unless this bail out was all part of their sub rosa buisiness plan — which I suppose is the case on some level.
“it is in essence a new form of bankruptcy, which avoids, or shifts, the losses to shareholders normally incurred.”
well, we have been made the shareholders in some cases (AIG) — in other cases we are merely holding the liability portion of shareholders.
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October 13th, 2009 at 6:05 pm
yeah, i’d say that was all part of the plan. it’s win/win – though not in the usual sense of the term. rather then I win/You win, it’s I win twice at your expense. Now people have the debt of the money they personally borrowed, *and* the public assumption of their creditors’ debts. Meanwhile, the Game Players of Titan, to borrow a phrase, have all their personal accumulations of profits – from the stagnation of wages, their past successes in reckless finance *and* the bailout. It’s been win/win/win for them, and lose/lose/lose for the general population.
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October 14th, 2009 at 6:31 am
I don’t think they can win three times over. That the public will hold the liability of the debt of other parties will relax the pressure on those parties to pay the debt back. Certainly, however, there is much more to help the major creditors than the debtors. The reckless financing immediately benefited those who got originating fees and other servicing fees while passing off and carving up the subsequent liabilities. The public ate these liabilities long before the bailout since they were being sold as assets for retirement and investment portfolios. Now that the values of these assets are either impossible to determine, or are effectively valueless, the public at large is being forced to invest in them, with the theory that if an asset has a buyer it must be worth something. But we are not buyers, we are just swallowers of force-fed crap. Unbelievable!
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October 21st, 2009 at 1:02 pm
it doesn’t matter if the debt is ever paid back, as the real benefactors of the process are not the institutions but the individuals operating through the institutions. Selfish Gene and his friends. they’re still getting huge bonuses, bigger than ever, even though the organisms they’ve operated through have only survived bankruptcy by government largess.
in general, i think the scheme of the predatory capitalist class is to bankrupt societies and so maximize profits. then move on. it’s happened again and again around the world. the only weakness to this approach is when there’s no place to move on to, or in other words when the system itself becomes critically unstable due to the repeated use of intentionally (or unconsciously) induced local instability.
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October 21st, 2009 at 3:05 pm
I sometimes wonder if the runaway (aka predatory) Capitalist class has built a spaceship somewhere and plans to lift off after the damage has been done. They don’t behave as if they belong on earth. They may be aliens.
The sort of thing has played itslef out again and again. It is one of the scenarios I return to again and again, when I am up at night and paranoid about the fate of the world: the intentional destruction of the economy for the purposes of being first in line at the fire sale auction of the worlds assets.
Hard for me to determine from my low perch if the end of the line has been reached for this kind of behavior. I’m still working on the thesis that the whole practice MUST have an end in principle, even if we cannot predict exactly when that must happen.
My big fear is that an utterly cashless society is about to be introduced in which our citizens accounts will all be centralized and vulnerable to tinkering by either a central government or a cabal of private interests. Hey, if I were evil, that’s what I’d be working on.
I agree that this sort of thing has pl
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October 21st, 2009 at 10:26 pm
hopefully you weren’t just carried off, mid-sentence.
the thesis you speak of is one worth working out, i think. it’s a thesis, of course, of the conspiratorial view of history. we know that people conspire. we know that people conspire to shape history. PNAC provides a ready example of a group who conspired non-governmentally, then entered into government and executed their plan. from the perspective of normalized history, this acting upon the pre-existing plan came only in response to the totally unforeseeable tragedy of 9/11. by disallowing that those events were somehow connected to the non-governmental/governmental conspirators the sheer coincidence of them becomes the most amazing thing about 9/11.
we have at least these three possibilities:
1. it was really just coincidence, in which case, the Lord does indeed move in mysterious ways (or alternately, imagination somehow has the power to call events into existence… in which case the God of History is the unconscious [of itself] whole of humanity)
2. the non-governmental/governmental actors were indeed consciously part of a larger conspiracy.
3. the actors were unintentionally part of the larger conspiracy. this is the understanding of ‘illuminism’ offered by that quote a while back. illuminism, in short, is turning all the lesser conspiracies to some occult aim unknown to those actors who imagine themselves working in their own self-interests.
i imagine all three of these things occurring.
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October 23rd, 2009 at 1:14 pm
Well I will indulge you (or myslef) with my own theory. Several independent plots may have been coordinated by comission and omission to occur in such a way that we get the attacks we witnessed. In addition, events took place which were not anticipated by the plotters owing to:
1)unforseen circumstances, and 2) a less than total coordination of actors involved. I imagine it was perpetrated in such a way that very few of the actors had full knowledge of the entire plan, thus preserving deniability as well as actual shock even among those who knew ahead of time.
In short, I’ve been working against false dichotomies in considering what may have occured. Indeed, there may have been aspects of the official story which are factual, but the neccessary information needed to formulate the meaning of those facts has been sullied or obscured by the official story.
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October 23rd, 2009 at 4:32 pm
Just learned about the existence of this investment instrument from Michael Moore’s new documentary:
http://deadpeasantinsurance.com/
It’s really pretty shocking just how nakedly venal and illegitamate the whole system is becoming to my eyes.
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October 24th, 2009 at 8:36 am
just came across this from Wikipedia’s page on “Risk Management”
Interesting food for thought.
In ideal risk management, a prioritization process is followed whereby the risks with the greatest loss and the greatest probability of occurring are handled first, and risks with lower probability of occurrence and lower loss are handled in descending order. In practice the process can be very difficult, and balancing between risks with a high probability of occurrence but lower loss versus a risk with high loss but lower probability of occurrence can often be mishandled.
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