Tuesday, 16 September 2008

Capitalism - A Marabou Stork Nightmare

It's only Monday and the markets are taking a hammering and the dollar is crashing again. As usual the BBC's Robert Peston offered some analysis on Meltdown Monday but unsurprisingly its the comments from the public that are more insightful than the BBC's own(although I do concede that there is another bovine element that post on message boards). Take for example this gem from sizzlestick:
"In 1997, we dumb Asians listened in abject humility as the "wise" men of both IMF and the World Bank lectured us what a sound financial system should be like. These guys went so far as to brand Malaysian PM Dr. Mahathir an incompetent Finance Minister who practised [sic] voodoo economics. 
So how now? Any wise advices [sic] for the incompetent US Fed Governor and Secretary of the Treasury."
The Gervaise family are known for their long beaks and links to General Depravity.
GONADS have theorised these features evolved for digging in corpses and snorting Columbia's finest.
Well, for what it's worth, I have some advice.
Would they have had more money if, for instance, the US government hadn't wasted over half a trillion dollars on the war in Iraq [1]. This figure does not include the costs incurred by other governments or the war in Afghanistan and is considered very conservative by Joseph Stiglitz, economist and former Senior Vice President and Chief Economist of the World Bank. Economic Stig puts the actual figure between $3-5 TRILLION (i.e. 3-5 billion, billion which is about half a billion for each person on the planet).  Despite the likes of BAE systems and Haliburton making money from war (which is 'good' for the economy), it's the rest of us that suffer on a simple economic footing - ignoring of course the social aspects that lead to poverty, terrorism and a bad conscience as we watch brown people getting blown to bits for oil. Stiglitz commented that:
"With the exception of a few lonely surviving supply-siders, most economists believe that deficits matter, and the huge deficits to finance the war will have their toll in the long run. Deficits matter in both the short run and the long. They help crowd out private investment that would have stimulated the economy far more than the war expenditures; and the reduced investments reduce long-run productivity... Finally, even Fed Chair Bernanke (formerly the president's economic adviser) admits that the deficits have reduced the room to manoeuvre - the ability of the government to respond to the looming economic crisis. Spending so much on the war has economic consequences, even if you don't think there is any connection between the war and the economy's current woes."  
Besides thinking that [Communist Rats] the BBC should employ the Stig instead of Peston (and incur the wrath of the establishment because he would point out the obvious), there is little doubting that there is more than just war involved in the current financial crisis. In his most recent article Falling Down (and is worth reading in full) Stiglitz states:
 "the view that our recent success is based on a house of cards has more than a grain of truth to it. In recent years, financial markets created a giant rich man's casino, in which well-off players could take trillion dollar bets against each other. I am among those who believe that consenting adults should be allowed great freedom in what they do--as long as they don't harm others. But there's the rub. These high-rollers weren't just gambling their own money. They were gambling other people's money. They were putting at risk the entire financial system--indeed, our entire economic system. And now we are all paying the price."
The cycle of birth and rebirth of the markets is an age old process which Gordon Brown's 'prudence'  cannot overcome, especially when practiced in the form of trickle up economics and warmongering.  The prostrations of the market to Capitalism, especially the self serving Neo-liberal ma'ket fundamentalist interpretation, is what has over inflated the market and what has gone up, propelled by war, famine, greed and dodgy accounting is now coming down like a house of cards.

Simon Jenkins commented back in 1992, when London was going through a previous housing slump, that  we were seeing the penalties of 'over-rapid property development'. He also noted that 'as every shrewd developer knows, fortunes are built not on good times but on bad ones.'  There will be winners in the recession, like the investment capitalists and property developers who have been waiting for the markets to readjust themselves so they can come in for easy pickings.

It is this carnivorousness financial system that reminds me of a wildlife program. In the middle of the African savannah a tree explodes with life as birds hatch from eggs, shrieking for food. Aware of the feast awaiting, the ugly, scavenging, bald-headed Marabou Storks, gather on the tree and gobble up all the nests on the outside of the tree and also any baby birds that happen to fall. It was pure carnage - nature at it's most savage.

This is how the market readjusts itself - and the large Marabou Storks, experts at picking apart corpses, have been waiting to consume the carrion of the financial system for some time. 

The real losers are not the city fat cats who will lose the ability to 'piss on the little man from the window of a 4x4 Porsche', but blue and white colour workers who see their outgoings increase and their jobs threatened.  During a recession, the super rich get even richer, using the cocoon of their wealth to protect them and buy up real wealth at a fraction of the cost, whilst the rest of us suffer after borrowing to try and keep up by buying into a false consumerist economy that is obsessed with wealth and  does not make us happy.
The fantasy of never ending growth will hopefully now be over and with it the warmongering bastards who have led us a merry dance for the past three decades.

[1]  The figure I used was from the National Priorities Project which today estimates the cost of war in Iraq is$554 bilion. It's interesting that Stiglitz notes the Bush administration have already admitted the war costing 600 billion which is more than the NPP estimate (they seem to use what is visible, rather than the way Stiglitz looks at the hidden costs for his $3-5 trillion estimate).