Some crisis links (10.28.2008)

Mike Whitney reminds his readers that the global economic crisis will cost many their livelihoods and, in the end, their lives, personal goods which are significantly more valuable than their non-existent 401(k) plans, houses, boats, cars, etc. Famine, violent resource conflicts and an ubiquitous morbidity — these social bads promise to be commonplace features of the world now coming into being. The collapse of the world economic system exacerbates these outcomes. This general point is worth keeping in mind as this system reforms around the Chinese Yuan as the new reserve currency. Given this particular change, most Americans will not safely watch the degradation of life across the planet from the sidelines, so to speak. They are likely to be among the leading actors in this tragedy.

Michael Hudson concurs. His current assessment:

U.S. consumer spending and living standards will have to fall — and it seems, to fall sharply — in order to finance the "trickle down" economy at the top. Current Treasury policy is to bail out the creditors, not the debtors. The banks are being saved, but not U.S. industry, and certainly not the U.S. wage earner/consumer. Instead of pursuing a Keynesian type of deficit spending in a manner that will increase employment (government spending on goods and services, infrastructure spending and transfer payments), the Treasury and Federal Reserve are providing money to the banks to buy each other up, consolidating the U.S. financial system into a European-type system with only a few major banks. The financial system is to become monopolized and trustified, reversing two centuries of economic policy aimed at preventing financial dominance of the economy.

None of the money being given to the banks really will trickle down, of course. Instead, the largest upward transfer of property in over seventy years will occur. The policy of giving money to the wealthiest sectors — these days the financial sector — turns the trickle-down economy into a euphemism for the concentration of wealth. The pretense is that America's economy needs the financial and property overhead in order for the "real" economy to "take off" again. But a stronger financial sector selling yet more debt to the economy at large threatens to deter recovery, not to speak of a new takeoff.

In the first and last instances, as Hudson might put it, America's "wealth creators" must produce useful goods to sell to consumers, and the latter must have the wherewithal needed to purchase these goods. Manufacturing matters, and it counts not only to the owners of industrial capital, but also to those who toil or would toil in that sector along with those who depend upon industrial production as the key source of their separate but related economic activity. "This is the 'inner contradiction' of today's financial rescue operation," according to Hudson. "Finance itself cannot survive in the face of a stifled domestic 'real' economy." This point is relevant for every national economy.

Chris Hedges looks again to the right. He writes:

The ideological foundations of free-market economics and a consumer society have collapsed. This collapse is hard for us to fathom. We are still in shock and denial. We cling to old structures of meaning and outdated words to describe them. We have yet to realize that all our political science and economic textbooks have become junk. We have yet to formulate a vocabulary to describe our altered reality. We grasp, on a subliminal level, that laissez-faire capitalism is gone, but we have not viewed the corpse, scheduled the funeral and read the last rites.

"People get very clearly that Washington found hundreds of billions of dollars to bail out rich people in a way the government does not usually intervene," said Anthony Pollina, The Progressive Party candidate for governor in Vermont. "They understand that the government came up with all this money to support the wrong group of people. People get that in their gut. There is anger. It is not rage yet. There is still a little bit of disbelief. I may be running for governor, but all people want to talk about is how did we come up with all this money to give to rich people on Wall Street and why didn't they let them pay their mortgage off."

Millions of people will lose their homes. Jobs and savings will vanish. The government will continue to lurch from crisis to crisis.

Hedges believes two populisms (self-organized movements) will emerge in response to the crisis, a left (radical democrat) and right (reactionary Christian) version. They can be considered populist because both will take root within civil society, will reflect American's capacity for self-organization and will intentionally oppose America's political and economic elite. Although populist in nature and intent, they likely will diverge in attractiveness and ultimate significance: A political victory of one variant could be judged progressive whereas the victory of the other will likely end with a Christian fascist dictatorship, as Hedges often warns.

GOP skullduggery in Virginia: According to a report in The Virginian-Pilot, a flyer now circulating around Virginia informs Democrats that they will vote on November 5^th, not the 4^th!