Market meltdown

[peaccenicked]

http://uk.youtube.com/watch?v=SWksEJQEYVU

A terrible thing sure but this is the first material sign that the market system and imperialism are at loggerheads and their internal contradiction is exploding. No ammount of liquidity, meaning good money after bad, can save them ultimately.

These are interesting times for revolutionaries.

[hajduk]

VIVA LA MSN :D

[La Comédie Noire]

Woah, i don't think I've ever seen him that mad. People really are getting screwed on the interest rates, my friend just lost his house last year.

[Kwisatz Haderach]

I like this version: http://uk.youtube.com/watch?v=CEZKbfof7bs&...related&search= (http://uk.youtube.com/watch?v=CEZKbfof7bs&mode=related&search=) :D

[Tower of Bebel]

-_- We knew this would happen, but they didn't want to listen.

[Karl Marx's Camel]

As far as I know, Jim Cramer isn't really a trusthworthy source. He has investments and portray himself as something of an investment guru, but his portofolio has only done slightly better than the market average.

[peaccenicked]

The fact that Cramer is untrustworthy is neither here or there.
It does seem to me that he was asked to say everything was ok, and he just blew his top. Obviously everyone he has talked and that includes some really big players are saying things are not ok.

He is even telling us why things are not ok. The housing market is making mortgages unpayable for millions of US citizens.

That is much bigger than Cramer's credentials, and this has grave consequences for the world economy, ''The only super power who can do what it wants'' image of the US is being utterly rubbished, at the moment.

Here is another take http://www.endofempire.org/reports.php?page=240

Never in my experience of watching the markets has anything looked saw traumatic to US vital interests. At a time when expectations of what one get out of life are lot higher for house buying consumers/workers that are the bedrock of the the US economy.

[Moonwalk Mafia]

So ironic how the most profitable form of mortgages for capitalists, the sub-prime mortgage market, lit the fuse. They just couldn't get enough money from screwing average home-buyers so they instituted something that not only self-destructed but created the domino-effect which we were forewarned would happen.

The entire market system is bound to self-destruct anyway, as we all know, but it's interesting that sub-prime mortgages are the starting point. We haven't even seen the worst of it. October is notorious for being the worst month of the year for trading, and the Fed and foreign banks are already panicking and pumping more money into the system.

I just hope people can wake up and become class conscious so the inevitable suffering can be ended sooner.

[Nothing Human Is Alien]

Don't hope, organize!

[bootleg42]

If this continues, it could be chaos.

And when there is chaos..............there is opportunity, muh ahahahahahaha.

Seriously, we knew shit like this was gonna happen. We've been saying it for like over 150+ years.

[Spartacist]

Yes, we have a real possibility of a new 1930s style depression, but this time the violence will be intense and widespread.

We had better not fumble this one.

[bloody_capitalist_sham]

Well, aren't millions of the poorest americans losing their homes at the moment because of this?

I hope they are angry, they should be.

[Coggeh]

Originally posted by [email protected] 10, 2007 08:42 pm
Yes, we have a real possibility of a new 1930s style depression, but this time the violence will be intense and widespread.

We had better not fumble this one.
:lol:

I saw some stuff on sky and what not about some market screw up , i don't know how bad it is , anyone mind in explaining it too me ? :unsure:

[Tower of Bebel]

Let's hope China will collaps because of this :) ;) .

[BreadBros]

Things will really be interesting if and when this spreads to Europe. The downturn in housing prices has been going on in the US for nearly 6 months, longer in some places. On the other hand, prices in some parts of Europe are still jacked up which can't really last with the new credit restrictions.

[RedAnarchist]

Originally posted by Comrade [email protected] 10, 2007 01:48 pm
Woah, i don't think I've ever seen him that mad. People really are getting screwed on the interest rates, my friend just lost his house last year.
Looking at this video, is that guy normally that mad? Hes gouing to give himself an heart attack if hes not careful.

[BreadBros]

Originally posted by Coggy+August 11, 2007 03:08 am--> (Coggy @ August 11, 2007 03:08 am)
[email protected] 10, 2007 08:42 pm
Yes, we have a real possibility of a new 1930s style depression, but this time the violence will be intense and widespread.

We had better not fumble this one.
:lol:

I saw some stuff on sky and what not about some market screw up , i don't know how bad it is , anyone mind in explaining it too me ? :unsure: [/b]
Basically: Over the past few years many mortgages in the US (and to a lesser degree abroad) have been in the form of sub-prime loans, meaning they have special terms to accommodate flimsier credit on the part of the person taking out the loan. Beyond that the real estate market in most major cities in the US and Europe is incredibly inflated, its a bubble. As interest rates have risen and prices fallen people have increasingly started to default on their loans. That debt is "owned" by investors around the world. That means home-owners and investors are both taking losses. Those losses are bad for the economy because they scare banks who are afraid people will be unable to repay them and are less likely to loan out money, which slows the economy. In order to prevent this, the central banks of the US and Europe pump money into the economy (via buying back government securities) in order to shore up losses for banks and prevent a slowing.

I'm not sure if we're anywhere near "depression" levels. But this + the loss the US economy is gonna take from the new immigration restrictions looks like its making a recession more and more of a possibility. Thats not necessarily something good we should be happy about though. It means major losses for a lot of working-class people AND the political current of the populace can go one way or another. During the Great Depression the American populace went increasingly to the Left but on the other hand the German populace went to the far right.

[Tower of Bebel]

Originally posted by [email protected] 12, 2007 06:01 pm
During the Great Depression the American populace went increasingly to the Left but on the other hand the German populace went to the far right.
Well, the German has to go through a failed revolution and were betrayed by both the trade unions and the social democrats.
Let's hope that if the American workers would step up they will ignore the trade unions and democrats.

[peaccenicked]

This article (http://www.isg-fi.org.uk/spip.php?article140) by Mandel(who has his faults), is a very good summary of Marx's position on crises. It has the spirit of Engels remark to Conrad Schmidt
"What these gentlemen all lack is dialectic. They never see anything but here cause and there effect. That this is a hollow abstraction, that such metaphysical polar opposites only exist in the real world during crises, while the whole vast process proceeds in the form of interaction (though of very unequal forces, the economic movement being by far the strongest, most elemental and most decisive) and that here everything is relative and nothing is absolute--this they never begin to see. Hegel has never existed for them."

Today's situation is different from previous crises. This is truly a http://us.rd.yahoo.com/finance/news/topnews/*http://biz.yahoo.com/ap/070812/global_contagion.html?.v=2]world (http://www.stockmarketenews.com/feed/?s=Recent&url=http://us.rd.yahoo.com/finance/news/rss/story/*[url) crises[/url], which
is more subjectively realised through communication technology.

What does it mean? In terms of revolution we look at three criteria, the effect on the ruling class, the effect on the middle class, the effect on the working class.

We look to see if the ruling class can rule in the old way. It has ruled in many different ways, but immediately we can see that one of the ways it rule is affected.
This is namely confidence in the Market, according to a recent article in the Observer/Guardian (http://observer.guardian.co.uk/business/story/0,,2146852,00.html) it is somewhere between nerves of steel and brass neck,
and there is also a sense of "what does not kill me, will make me stronger here (http://www.endofempire.org/news_eoe.php?page=790).
The middle class will certainly feel the pinch it basically runs itself on credit and mortgages which increasingly is affecting better-off workers. The degradation of the middle class, or the proletarianisation of the middle class, may not reflect itself as socialist consciousness, but these are early days.
Incidentally the 'move to the right' in Germany was at a time when there was a million members of the German communist Party. Imperialism came down hard on what was an emerging revolutionary situation.

As to the working class, I suspect they will be largely unaware of the crises ahead but will feel more and more the "mudslide from Wall Street" (http://www.endofempire.org/reports.php?page=243) .

The history of world revolution is the history of lost opportunities, whether this is an opportunity will be dependent on working class unity, this is dependent on the organisational skills of the working class.
We shall see actions and where actions are taking place.

The Banks will want to maintain ideological control over investors, the middle class,
and workers, so expect that they will tell us to tough it out. How many of their bloody crises do we have to tough out. The class war has perhaps only taken a baby step forward, in terms of recent relative retreats.

We can only observe the direction it takes and act appropriately. The current crisis , has the potential to be the decisive turn against the system. The banks are desperate.

[Comrade Castro]

Well, my mom's a real estate agent here in Miami, so she knows of this from the inside. She hasn't really sold a house in about a year, offices are deserted, no one wants to buy or sell anything, and over 70 banks have closed in the last month or 2. She's pretty sure the economy is beginning a total collapse. It has just literally NEVER been this bad. Finally, this is another step towards the death of capitalism, we just have to educate people....

[hajduk]

i dont think they will fall down so easily this is just replacing the capital on other places where they whant to make better control over the third world countries becouse lot of facilites is there so....

[peaccenicked]

There is the collapse of the imperialist economy and there is the building of socialism.
Webster Tapley writes "IS A STRIKE WAVE COMING IN THE US?

Forty years of passivity, demoralization, apathy and defeat weigh heavy on the US population. But the mass strike may not be as far away as is generally supposed. A veteran organizer for the United Auto Workers observed in the 1980s that Americans were never going to rise up in mass action, because they were too concerned that one missed paycheck would result in eviction from their homes. Suddenly, 10 million or more have nothing left to lose, and they may soon be joined by many more. A mass strike cannot be decreed by bureaucrats, nor is it totally spontaneous. It requires thorough preparation, but it is likely to be detonated by an outside event, often of the most unpredictable type. The only thing to do is to keep up a campaign of mass political education about the vast possibilities of a general strike, especially in response to an illegal war and/or an unconstitutional dictatorship, of the type which Cheney's controllers so ardently desire. "

Class war is at hand, and we must prepare to promote a logical agenda, at home and abroad.

[Tower of Bebel]

I hate it when Europeans say it's only an American problem.

[peaccenicked]

As far as I am concerned the UK is a US colony. Politically it is worse than the USA,
there is a prevalent peasant mentality, probably centuries old, where the mass of people doff their cap to the pumped up royals, and ride the ever thinning gravy train.


Its getting so thin though, people are starting to see through it, the crisis is though more hidden by our lying media which is for ever trying to distract us from what is going on.
The gutter press blackouts the most important stories, but this is from the Guardian. Aug 11.

''The prospect of a mortgage debt crisis loomed yesterday after the number of home repossessions in the UK soared by 30% to an eight-year high as households ..."


This can possibly up the days of work lost to strikes in the UK too.

[RedCommieBear]

Add inflation caused by the falling of the of the dollar, and rising oil prices to the house bubble bust. CFF explained the situation quite well in Live Chat....

[23:12] Communist_FireFox: Anyhow, what do you think of the banks ejecting emergency money in order to attempt to stabilize the bank system?
[23:13] RedCommieBear: Hmm... I didn't know about that..
[23:13] RedCommieBear: Emergency money?
[23:13] Communist_FireFox: *the Federal reserve
[23:13] Communist_FireFox: The markets are too unstable.
[23:13] RedCommieBear: Would this have something to do with forclosures and such?
[23:13] Communist_FireFox: Yes.
[23:14] Communist_FireFox: The housing market is collapsing it seems.
[23:14] *** RedSouth has joined #che-lives
[23:14] RedCommieBear: I think they're predicting 1.5 million forclosures
[23:15] Communist_FireFox: Oh boy,
[23:15] RedCommieBear: Yeah?
[23:16] Communist_FireFox: It also looks like China is getting really desperate to sell back the US Dollar bonds that they have obtained back to the Federal Reserve. They are looking for any excuse.
[23:16] RedCommieBear: How desperate are they getting?
[23:16] RedCommieBear: Who are they trying to sell them to?
[23:17] RedCommieBear: What is going to make this selling back worse is the fact that the Federal Reserve has no foreign reserves from which to buy them back.
[23:17] Communist_FireFox: That means that the Dollar will fall and that would cause hyperinflation
[23:17] Communist_FireFox: Hyperinflation + Destruction of Housing Bubble = Depression.
[23:18] Communist_FireFox: It is really only a matter of time.
[23:18] RedCommieBear: I didn't know it was that bad.
[23:18] RedCommieBear: I knew there was stuff going down
[23:18] RedCommieBear: by now that I see it in persepctive..
[23:18] RedCommieBear: but*
[23:19] RedCommieBear: Will rising oil prices factor in?
[23:19] Communist_FireFox: That is what we get for de-industrializing; we really have nothing to fall back on. In the last depression, we were able to fall back on our factories, but not now; there are too few of them.
[23:19] Communist_FireFox: Yes.
[23:20] RedCommieBear: Now, who comes out of this as the new super power?
[23:20] RedCommieBear: The EU? India?
[23:20] Communist_FireFox: In fact, another big excuse that China would have to sell back the dollar is if oil hits $100.
[23:21] Communist_FireFox: It is possible that the American economy may drag the entire world economy down with it.
[23:21] RedSouth: cff, wouldnt the US react militarily to secure itself a stable economy?
[23:21] Communist_FireFox: The situation is bad financially; there would not be enough money for America do what it wishes to do if the economy collapses..
[23:22] Communist_FireFox: Essentially, America would be stuck between a rock and a hard place.
[23:22] Communist_FireFox: So would the rest of the world.
[23:22] Communist_FireFox: We may even see another World War because of this shit, if it happens.
[23:23] RedSouth: damn. i wish the world economy would let me finish school.
[23:23] RedSouth: haha
[23:24] RedCommieBear: So... Would it be back to the souplines this depression?
[23:24] Communist_FireFox: Yes.
[23:24] Communist_FireFox: It is not only America doing this.
[23:24] CherryBlossom: Doing what?
[23:24] Communist_FireFox: All the other central banks throughout the world are doing it.
[23:25] Communist_FireFox: Ejecting emergency money.
[23:26] Communist_FireFox: If America's dollar collapses due to China and Japan selling back US dollars, do not think that China would be able to get away with it.
[23:26] Communist_FireFox: Eventually, China will get bitten in the ass too.
[23:26] CherryBlossom: Eventually but they can absorb it.
[23:27] CherryBlossom: The US and EU are already military and financially spent.
[23:27] Communist_FireFox: They have the manufacturing capacity.
[23:27] CherryBlossom: China still has its strength plus a large population.
[23:27] Communist_FireFox: But it is still considered an non-industrialized country.
[23:27] CherryBlossom: That's a good thing.
[23:27] CherryBlossom: It's the industralised countries that'll be hit hardest.
[23:28] Communist_FireFox: And the majority of its population are not workers still.
[23:28] Communist_FireFox: They are farmers.
[23:28] CherryBlossom: The fact that so much of China is still rural will be to their advantage.
[23:28] CherryBlossom: Exactly.
[23:28] CherryBlossom: And the Chinese just don't care.
[23:28] CherryBlossom: A million Chinese are nuked or something, and they're like, "So what?"
[23:28] Communist_FireFox: If they get nuked, it depends on where.
[23:29] CherryBlossom: I remembering reading something about it one time.
[23:29] CherryBlossom: About whether China could absorb a nuclear attack.
[23:29] Communist_FireFox: Shanghai has almost eight million people and forty million people living in its metropolitan area.
[23:30] CherryBlossom: The Chinese figure that with their population they can afford to lose a million here or there.
[23:31] Communist_FireFox: If Shanghai was nuked, a major portion of Chinese industrial manufacturing infrastructure will go along with it, not to mention, forty million people.
[23:31] CherryBlossom: True.
[23:31] CherryBlossom: I don't think it'd come to that though.
[23:31] Communist_FireFox: That would weaken China's ability to act economically
[23:32] RedSouth: would china pursue this bond thing if they knew they would get fucked over too?
[23:32] CherryBlossom: The US as a military power is already dead.
[23:32] Communist_FireFox: Well,
[23:32] RedSouth: the US military has alot of cash, but not as much manpower as some
[23:32] CornetJoyce5: The empire still has 95% of the planet's killing power
[23:32] Communist_FireFox: It seems that they feel that they need to sell back the bonds.
[23:33] CherryBlossom: The US just doesn't have the resolve, IMHO.
[23:33] CherryBlossom: The Chinese on the other hand...
[23:33] CherryBlossom: They play the long game
[23:33] Communist_FireFox: China feels that keeping the bonds are going effect their economy.
[23:33] Communist_FireFox: So they have to sell it. ?
[23:34] RedSouth: but they know if they sold back the bonds, they would get fucked too, right?
[23:35] Communist_FireFox: Well, they are not thinking long term in this case RedSouth.
[23:36] Communist_FireFox: They are more interested in the short term, because it feels that it will help the economy keep from overheating if they do it.
[23:36] RedSouth: so how many years before this hypothesis would take effect
[23:38] Communist_FireFox: It depends on one out of three things happening; 1.) If oil hits $100 a barrel, 2.) If the housing market collapse pushes the US Dollar to an outrageous extent or 3.) America goes to war with another country, and happens to increase the debt in the process.
[23:39] RedSouth: whats the range then? like 1-10 years, instant, indefinite?
[23:39] Communist_FireFox: marmot: Severian is weird.
[23:40] Communist_FireFox: I would say 1 to 9 years.
[23:42] Communist_FireFox: That I forgot to mention; One of these three will trigger both other options or one of those options.
[23:42] CherryBlossom: It might even start with Israel I guess.
[23:42] CherryBlossom: If they attack someone.
[23:43] Communist_FireFox: Either way, America is going to hell in a handbasket.
[23:43] CherryBlossom: Yup.
[23:45] *** Communist_FireFox has quit (Killed (NickServ (Nick kill enforced)))
[23:45] *** Communist_FireFox has joined #che-lives
[23:45] Communist_FireFox: Back.
[23:46] CherryBlossom: Wb.
[23:46] Communist_FireFox: I wonder what will some Americans do if the American economy falls apart.
[23:47] RedCommieBear: Hmm..
[23:47] RedCommieBear: Which "some" are you talking about?
[23:47] CherryBlossom: Escape to Canada.
[23:47] Communist_FireFox: The suburban ones.
[23:47] Communist_FireFox: The ones who think that they are living the American dream.
[23:48] CherryBlossom: They'll have it bad.
[23:48] CherryBlossom: The survivalist types will love it.
[23:48] Communist_FireFox: They are going to wake up and realized that they have been lied to for their entire lives.
[23:48] Communist_FireFox: *realize
[23:49] RedCommieBear: How would this influence politics?
[23:49] RedCommieBear: Like
[23:49] RedCommieBear: Would we see a return to new deal reforms
[23:49] RedCommieBear: or something more?
[23:50] Communist_FireFox: The situation would be that we would be unable to effectively restore our industrial manufacturing capacity in a Capitalist sense.
[23:51] Communist_FireFox: And that is because it would require money.
[23:51] Communist_FireFox: Which America will not have.
[23:52] Communist_FireFox: No one would loan it to America either, because it would be at their own expense;
[23:54] Communist_FireFox: The political system would go into deeper and deeper crisis and the entire situation may end up like that of the Caracazo that happened in Venezuela in 1989, when its president launched a neo-liberal package and practically destroyed the economy of Venezuela.

[Entrails Konfetti]

I'm scared that when the market collapses I will just not know enough.

[peaccenicked]

Comrade El Kabamo, There is nothing to fear but fear itself. Life is more important than money.
At the sharp end, if important hospital operations are not at stake. I would relax somewhat. The fear is that we all will be hurt economically, but depending on how poor you have been most of ones life things will only be a lot tighter. Shelter might become a problem, but if you are part of the resistance (we need to build the resistance)you might have to learn how to squat, or how to stop the banks from coming in to your home. We will need a many people for that. When it comes to food, if the worst comes to the worst, I recommend stealing it,some old Labour MP thought it was your duty, if it meant feeding yourself and your family.
What there is to know can be learned.

[gilhyle]

Well, you guys probably dont want to hear this, but the current 'crisis' is a financial market crisis not a generalised industrial crisis. Marx distinguished between the two.

While it is not entirely US, the heart of it is the US sub-prime market (a repricing of mortgage risk that is classic free market correction) AND that part of the investtment banking sector that act as prime brokers to hedge funds.

Certainly it has a potential to hurt and to spread. In particular, fixed income traders operating in the corpirate bond market everywhere have a lot to fear - if they have open positions.......but its no more than that. There have been about ten financial 'crises' this bad in the last thirty years; they come, the market corrects, they go.

People like that guy on TV get very upset cos they want central banks to bail them out....sometimes they do get bailed out, sometimes they dont - who cares ?

As to low property sales in the US, that also happens. The US property market is one of the most cyclical in the world. Again, its a case of 'shit happens', thee sky is not falling.

[peaccenicked]

"Marx visualised the business cycle as intimately intertwined with a credit cycle, which can acquire a relative autonomy in relation to what occurs in production properly speaking. An (over) expansion of credit can enable the capitalist system to sell temporarily more goods that the sum of real incomes created in current production plus past savings could buy. Likewise, credit (over) expansion can enable them to invest temporarily more capital than really accumulated surplus-value (plus depreciation allowances and recovered value of raw materials) would have enabled them to invest (the first part of the formula refers to net investments; the second to gross investment).

But all this is only true temporarily. In the longer run, debts must be paid; and they are not automatically paid through the results of expanded output and income made possible by credit expansion. Hence the risk of a Krach, of a credit or banking crisis, adding fuel to the mass of explosives which cause the crisis of overproduction.

Does Marx’s theory of crisis imply a theory of an inevitable final collapse of capitalism through purely economic mechanisms? A controversy has raged around this issue, called the ‘collapse’ or ‘breakdown’ controversy. Marx’s own remarks on the matter are supposed to be enigmatic. They are essentially contained in the famous chapter 32 of volume I of Capital entitled ‘The historical tendency of capitalist accumulation’, a section culminating in the battle cry: ‘The expropriators are expropriated’. But the relevant paragraphs of that chapter describe in a clearly non-enigmatic way, an interplay of ‘objective’ and ‘subjective’ transformations to bring about a downfall of capitalism, and not a purely economic process. They list among the causes of the overthrow of capitalism not only economic crisis and growing centralisation of capital, but Also the growth of exploitation of the workers and their indignation and revolt n the face of that exploitation, as well as the growing level of skill, organisation and unity of the working class. Beyond these general remarks, Marx, however, does not go."

This is from Mandels article I linked to earlier.

The industrial crises? We have witnessed largely the deindustrialisation of US/UK imperialism and in imperialist counties were wages were cut by exporting jobs.

That is a fundamental crisis of imperialism. It exists.
The credit crises is real, previously the was the fall back on commodity production, to create real money. M-C-M' but now the processes of M-M' are primary in the most influentual sphere of the world economy the US which is credit dependent.

What is happening is that the Federal Reserve is borrowing more money to throw at
the banks who are propping up the housing market.

This may be a correction but it is one hell of a correction.

"The banks are currently holding (roughly) $300 billion in collateralized debt obligations (CDOs) and another $225 billion in collateralized loan obligations (CLOs) More than one-half trillion dollars in debt which is essentially “illiquid” and has no clear market value. They could be worthless for all we know.

That hasn’t stopped the Fed riding to the rescue, buying up many of these toxic CDOs and increasing banking reserves so the great fractional banking con-game can continue unabated. This is what one astute observer called “alchemy finance”.

Central banks around the world have opened up the liquidity spigots to avoid a global credit meltdown. But their efforts are bound to fail. The banks are sitting on huge losses from assets that they can’t move through the pipeline and which have gobbled up their reserves. Bloomberg News summed it up like this: “The $2 trillion market for mortgages not backed by government-sponsored agencies is at a standstill”.

The same is true of the corporate bond market. As the Wall Street Journal reported last week:

“The investment grade corporate bond market HAS GROUND TO A HALT, making it difficult for companies to access capital and hard for investors to find a place to put their money to work. ....The problems in the primary market could, if they persist, throw a wrench in the workings of corporate America, making it tougher for companies to finance, among other things, investments, buyouts and equity buybacks....For July, corporate bond issuance was down 77% from June.” (“Corporate Bond Market has come to a Standstill”, Wall Street Journal)

The mighty wheels of commerce have rusted in place. Nothing is moving. Only the sense of panic continues to grow. Trillions of dollars poisonous CDOs need to unwind, but the banks cannot put them up for bid for fear that they’ll only get pennies on the dollar. This is what a slow-motion train-wreck looks like. The Fed’s cheap credit won’t help either. At best, it’ll just buy a little time before the true value of these bonds is established and trillions of dollars in market capitalization vanish into cyber-space. Banks, equities, hedge funds, insurance companies and pension funds are all in line to suffer major losses.

The irony, of course, is that the Federal Reserve created this mess by lowering interest rates to 1% and flushing trillions of dollars into the economy. That cheap money created a series of lethal equity-bubbles in housing, credit, stocks and bonds which are quickly falling to earth. Expanding the money-supply might be a short-term fix, but it’s really just throwing more gas on the fire. Why add hyper-inflation to the long-list of existing problems?" Mike Whitney August 13

The question is how long can this short term fix hold ? Can it hold? How many more bubbles need to burst before the whole thing comes crashing down.


Yet is not just an economic process, it is a political process, in which revolutionaries have to be aware of the real economics and not hang on to the complacency that belies the confidence of market commentators whose very livelihood is involved in pretending that everything is ok.

How much crap does the working class have to suffer before one calls it an economic crisis.

Marx saw slumps and booms. How many slumps do we need to suffer? Their booms are bad enough, someone has to pay usually the poorest. Remember- an injustice to one is an injustice to all.

Capitalism is fundamentally a societal crisis, it is class war every day without fail, some people can ride on the gravy train, some can dream of the gravy train and rest on the laurels of commodity fetishness. This does not stop the crisis, it only means that they are militantly ignorant of the crisis.

The task of revolutionaries is to educate, stir, and make clear to those who hold false believes about the nature of the system, that they are wrong.

Shit does happen. Bullshit happens too.

[gilhyle]

Originally posted by [email protected] 15, 2007 12:47 am

But all this is only true temporarily. In the longer run, debts must be paid; and they are not automatically paid through the results of expanded output and income made possible by credit expansion. Hence the risk of a Krach, of a credit or banking crisis, adding fuel to the mass of explosives which cause the crisis of overproduction.

[.....]

Yet is not just an economic process, it is a political process, in which revolutionaries have to be aware of the real economics and not hang on to the complacency that belies the confidence of market commentators whose very livelihood is involved in pretending that everything is ok.

[.....]
Capitalism is fundamentally a societal crisis, it is class war every day without fail, some people can ride on the gravy train, some can dream of the gravy train and rest on the laurels of commodity fetishness. This does not stop the crisis, it only means that they are militantly ignorant of the crisis.

The task of revolutionaries is to educate, stir, and make clear to those who hold false believes about the nature of the system, that they are wrong.

Shit does happen. Bullshit happens too.
It is true that in Marxist economics debts are not automatically paid through expansion of output, but it is also true that in Marxist economics the expansion of output based on credit is not in some fundamental sense flawed in a way that makes unwinding of credit inevitable.

I couldnt agree more that it is not just an economic process. The rates of return to capital depend on the class struggle, they are not given.

But for all those commentators who are complacent, there are also commentators at a moment like this who want to talk up the hiccup into a global meltdown. They have a profit motive for that behaviour to.

Capitalism is indeed a class war every day, but it debases the word 'crisis' to make it designate a long term constant. The only consequence of that is that you have no theory of crisis because you dont even have a name for it anymore.

Look, this is a major blip. It will affect bank profits, it will affect a significant number of sub prime borrowers (who would otherwise mostly be in rental accomodation), but it has very limited poltiical potential because it hits people as isolated borrowers and as pensioners etc. Its just not going to be the focus of major political struggles unless contagion takes it out of the financial markets and that is unlikely. These losses are quite containable (at least as currently revealed) on the balance sheets of the financial system. Simple fact.

[hajduk]

only the common people will feal the consequences of this meltdown not capitalists

[capstop]

Do the wars on Yugoslavia, Iraq and Afghanistan have anything to do with the ‘development’ of the economic crisis?

[gilhyle]

Originally posted by [email protected] 15, 2007 05:51 pm
only the common people will feal the consequences of this meltdown not capitalists
Almost the other way around, to my mind.

[Karl Marx's Camel]

What lies in the words "market meltdown"?

And why is the housing market going so bad?

And these worries of "market meltdown" they are based on housing market, oil prices and China wanting to sell their bonds?




They are more interested in the short term, because it feels that it will help the economy keep from overheating if they do it.

Why does China feel this will help?


only the common people will feal the consequences of this meltdown not capitalists

I'm pretty sure companies like KB HOME will get a severe beating if there is a housing crisis.

[capstop]

“Almost the other way around, to my mind.” You say, but do the wars on Yugoslavia, Iraq and Afghanistan have anything to do with the ‘development’ of the economic crisis?

[gilhyle]

In principle such wars have boosted the U.S. economy and thus given a short term boost to the real cycle. Of course the rising US debt levels makes the move from equities to bonds more attractive and weakens the US currency; but none of that is of great significance in itself. Its significance depends on the underlying rate of growth.

In the longer term, I think those wars (ex Yugoslavia) have more to do with raising the price of oil and thus raising the cost base of production. The significant fact at the current time is that those increasing costs don't generally chase through to retail inflation and that seems to be because of international competition, particularly from China. Thus profit margins per unit are narrowed and this is compensated for by increased volumes of production.....its called a 'boom'.

But it is a boom that involves militaristic imperialist adventures by the U.S. even as it marginally looses economic power. How do we best understand this: a wounded animal is a dangerous thing and its the old tiger that becomes the maneater.

(Best I can do by way of an answer)

[capstop]

Gilhyle

“In principle such wars have boosted the U.S. economy and thus given a short term boost to the real cycle.”

“In principle” ... has it affected the ongoing war dance of the US state and the people of the rest of the planet in any way at all that is worth commenting on at all?

[Comrade Rage]

The index hit 14,000 recently and is now slumping BIIIG time. It wouldn't shock me if the market collapsed as n 1929. Milwaukee, which could possibly be in the top 20 poorest American cities, is facing record foreclosures citywide and in the suburbs. Could this be the catalyst for a revolutionary action?

[capstop]

Yes

[Comrade Rage]

This is a great time to be a revolutionary. Not necessarily easy, but a great time.

[peaccenicked]

Look, this is a major blip. It will affect bank profits, it will affect a significant number of sub prime borrowers (who would otherwise mostly be in rental accomodation), but it has very limited poltiical potential because it hits people as isolated borrowers and as pensioners etc. Its just not going to be the focus of major political struggles unless contagion takes it out of the financial markets and that is unlikely. These losses are quite containable (at least as currently revealed) on the balance sheets of the financial system. Simple fact.

http://www.endofempire.org/reports.php?page=21

There is already a shift in economic power away from the US, that in itself is an element of contagion. There are reports of this spreading world wide markets have went down everywhere. The US economy has been a 'stable' bedrock for international finance, that is not true anymore. The Fed throwing money at it wont change the situation any.

The question about who it is hurting is relative to poverty. How much more can you hurt the poor, and what is a life threating loss for the relatively rich? It is really about how these feelings are translated into politics that counts.

Taking the subprime fiasco as a single issue is just simply wrong. It is like looking at the butterfly flapping its wing while the storm is happening everywhere else.

The question of crisis, has to be looked at again, Marx is not the final word, I contend that capitalism is presently an absolute fetter on human development, which is different from economic growth. In fact, the economy has moved into genocidal mode, that the market has taken a course aimed at wiping us out.
This is without global warming, health and safety is under attack from various forms of pollution and poverty.http://www.counterpunch.org/castro04072007.html
What is the real cycle of Marx is exactly ?

There is nothing in Marx which describes this. There is the long wave."but latterly to strangle the long-wave development of mankind's means of production proportional to our labour power" from wiki.

Let us face reality. Imperialism, which the US has been unipolar superpower
is coming to an end. This is unlikely to pass by without huge economic, industrial, a financial and environmental reverberations around the globe. The subprimes fiasco was just the pip of the orange that came out first.

What is holding up financial capital at the moment.

I am reminded of a Sufi tale, whereby a traveller goes up a few mountains in search of a great teacher, after several days and nights of hardship,he finds the guru.
The traveller asks the question what holds up the earth?
The guru replies. "A great giant turtle."

The traveller bemusedly asks, "So what holds up that great giant turtle?"
The guru says"Another great giant turtle"
The traveller then asks "and below that"

"Sorry" says the Guru" But it is turtles all the way down"


This is the way finance capitalists think. It is the zeitgeist, the spirit of the empire in decline, like Nero losing its marbles, believing that they have access to a bottomless pit of money.

The news is that resources are finite, and that productivity(in that what is produced cant be sold) is in decline.
http://www.endofempire.org/news_eoe.php?page=798

The Fed is now bailing out large capitalists(so much for the free market) The market belongs to them but it looks like their delusions of grandeur are being levelled by the collapse of the dollar.

This is clearly enough of a deepening general crisis of global capitalism that has the capacity to send us into further war and chaos.

The question has always been the same, how long can we take it?
Or will social forces develop that will bring reason into the realm of production?
This is the same question!

The relative insanity of capitalism, has become absolute.

The need for revolution more ripe but still we are gripped by the slow development of consciousness.
The latent consequences of letting capitalism go unbridled are now becoming
manifest . We have to wake up before it is too late.

[capstop]

Keep going Peaccenicked! You are on target I think.

[ComradeR]

http://news.bbc.co.uk/2/hi/business/6948916.stm
And the markets continue to tumble.

[hajduk]

YEAH peaccenicked is right becouse in this time developing capitalism there is some kind of "black hole" for capitalist which make them very wounderable for us becouse in this kind of "black hole" they dont have full control over us becouse they must focusing on his own money and they dont have time to spend on us so in this time we have chance to change system forever,,,becouse if they do this developing for capitalism and we dont stop them then we will have NEW WORLD ORDER in full throtile power

[gilhyle]

I'd be very happy if peacenicked was right, but revolutionaries have been saying this kind of thing for seventy years and, yes, they will be right sometime like a broken clock is right once (or twice) a day. Personally, I'm sick of endless rhetoric of the crisis around the corner by which people prove just how revolutionary they are. Sorry peacenicked, Im not trying to get at you - but this catastrophism just goes on and on and on and on and on.

Leave aside the 'subprime' crisis for a moment.

What moment are we in ? We are actually in the greatest world economic boom there has ever been. The opening up of China, the 'success' of the WTO means that there is classic capitalist economic growth going on on a vast scale, never before seen. Productivity isnt falling, its rising.

Does that mean everything is fine No. Does that mean there are no contradictions ? No. Does that mean we arent destroying the planet ? No. Does that mean imperialism isnt the highest stage of capitalism ? No. Does that mean the U.S. is ok ? No. Does that even mean that the subprime issue couldn't turn into serious contagion across fixed income and equity markets worldwide ? No.

It just means one thing : we are not in a terminal crisis of capitalism, pity.

[capstop]

Whoever said this was the "terminal crisis of capitalism" might be right. The truth is that no one knows if it is or isn't. However, the “overproduction” contradiction at the heart of the profit making system has already driven the planet three times into universal war and chaos (on a widening scale) as the imperialist powers have tried to “solve” the constipation in their production by laying waste to surplus capital across the world, – simultaneously forcing the worst of the vicious destruction onto whichever rival powers can be “competitively” driven into the ground first by brute force, wiping out entire cities, regions and even countries, and millions of people with it.

The 1870 Franco-Prussian was followed by the 1914-18 “war to end all wars” and only two decades later by the greatly multiplied and much more widespread aggression and blitzkrieging of the Second World War after a decade of appalling slump misery and deprivation (except in the Soviet Union).

Now after six decades of the greatest expansion of the system ever seen, into all the once untouched corners of the world, built on the stretching of inflationary paper dollar credit to insane limits, the world is pregnant with yet another round of terrifying economic collapse and its horrifying “resolution” in total warmongering.

If unopposed and unchallenged, imperialism will unleash destruction on an unprecedented scale, reinforced by all the hugely increased blitzing power of modern technology including nuclear weapons (already used once). No rationality or protests will stop it.

Even before the economic chaos has fully emerged the crisis is finding expression in the early rounds of blitzing and bombing deliberately allowed by the ruling class to become a “normal” part of daily news, to warm up the atmosphere.
The “shock and awe” torturing and mass civilian blitzings, chaos, disintegration and mayhem deliberately imposed on Iraq, Afghanistan and Lebanon (and tiny Serbia beforehand), are themselves an expression of the oncoming collapse, war and aggression.

The political-military symptoms are completely intertwined with trade and economic conflict as the dominant US power attempts to bludgeon its way out of total bankruptcy, intimidating all potential rivals and simply “killing all terrorists” as its propaganda falsely and idiotically labels every scrap of upheaval and rebellion anywhere in the world.

These onslaughts are simply the early starters, just a small taster of what the imperialist conflicts have in store for the planet. Already plenty of other demonised victims are being lined up.

But far from giving the working class the urgent warnings it needs of the headlong rush of the imperialist system into desperate catastrophic collapse at some not far off point on a giant scale, reflecting the total historical bankruptcy of the entire class exploitation system after hundreds of years of domination, the analyses given by the assorted 57 varieties of “lefts” yet again only serve to underline their utter philistinism and craven defeatist servility.

In not a single article where the “lefts” grudgingly notice the economic turmoil seething under the surface of all inter-imperialist relationships, is there the tiniest hint that these threatening developments fit into any kind of historic pattern at all, let along a major historic world perspective of urgently needed revolutionary transformation of the entire ruling order, as Marx and Engels spelt out in the Communist Manifesto over 160 years ago and as every genuine Marxist has done since, and particularly the Bolsheviks in Russia under Lenin’s leadership (Imperialism: The highest Stage of Capitalism for example.)

The gut-wrenching panic of the ruling class as it watches the disintegration of the US housing market, threatening to implode the hollow bankruptcy of the entire insanely overblown dollar credit system worldwide, is completely missed.
The near terminal breakdown of the endless world trade negotiations and their signalling of incipient international trade war are left untouched.

The links to the escalating arms race production and corruption (such as the recent decision of the US to pour $billions of arms onto the Zionists, the gangster stooge Egyptians and other reactionary forces in the Middle East) are ignored.
The non-stop provocations against Iran, Sudan, Zimbabwe, and various other assorted demonised victims being lined up to bring the world back into blitzing and punishment mode so that the real warmongering - between the major imperialist powers - can be got underway, are not mentioned.

In the worst cases the more craven of the “lefts”, even help reinforce the ludicrous lying Goebbels propaganda against the Third World (under the cover of an insane “war on terror” and “clash of civilisations” by the twisted invention of academically devised categories like “reactionary anti-imperialism” (!!!) to justify these Trotskyite frauds lining up with every move Washington makes.

[peaccenicked]

Gilhyle,A terminal crisis? This would be my hope not a conviction. As for catastrophism, I hate alarm-ism. However, what is happening is real, and saying everything is not ok, but its not the end is of no comfort.
I am not trying prove I am a revolutionary. I was born into this movement I know nothing else. I am a third generation communist on my mothers side.

I would not bring myself to these conclusions for the sake of bravado, I come to these conclusions because I have been watching the market for 30 odd years and I have seen deindustrialization. I have personally suffered from it.

The capitalism you imagine exists does not exist. Even Chomsky recognises this, he gets it wrong by designating the world as various forms of State Capitalism.
The highest stage of capitalism has been Lenin as this.

(1) the concentration of production and capital has developed to such a high stage that it has created monopolies which play a decisive role in economic life; (2) the merging of bank capital with industrial capital, and the creation, on the basis of this “finance capital”, of a financial oligarchy; (3) the export of capital as distinguished from the export of commodities acquires exceptional importance; (4) the formation of international monopolist capitalist associations which share the world among themselves, and (5) the territorial division of the whole world among the biggest capitalist powers is completed. Imperialism is capitalism at that stage of development at which the dominance of monopolies and finance capital is established; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun, in which the division of all territories of the globe among the biggest capitalist powers has been completed.

Things are different.

The US economy is the imperial economy all other imperialisms have been subsumed under its might.
This means that the US financial oligarchy are has been in control from the end of www2 although US hegemony started after WW1.

The crisis in the 70's which petered out was when the US and the UK was powered
by industry. The economy has something to fall back on now it has nothing but more credit.

This is the fundamental fact that is fuelling this general and deepening crisis.

Over production is useless when you cant sell your goods.

That is a fact, what use is all those goods on the shelf if people cant afford their mortgages.\?

What Boom? We are seeing this. Get real comrade,

"The collapse of the U.S. market for subprime loans has left its mark on banks, brokerage firms and funds in France, Germany and Australia. China may be next.

Six of China's largest banks may report losses amounting to 4.9 billion yuan ($647 million) on subprime-related investments, according to a report in Capital Week, a mainland magazine. The publication cited unnamed people at financial institutions."
From Bloomberg.
I thing you study whats going on a little closer and if you disagree with Castro on the internationalisation of genocide. You should say so. Castro is not a famous alarmist.


If you want to live in your fantasy world and rant against what I am not saying, that is up to you, but terminal crisis is not really fit.

What I have said I believe on this forum if not in this thread that world revolution is the history of missed opportunities.

Anyhow,Iraq has been a costly affair, a new war may indeed be counter productive.
If so the Financial oligarchy is running out of options .
You seem to believe that the US is still a bloated industrial economy. Where have you been?http://www.ncpa.org/pd/economy/may97c.html

I dont know how this will pan out but things bad are unprecedented on a world scale.

What do you propose, closing one eyes to it, what scale of terminal decay is the real measurement?

Saying its all happened before and it will all happen again is a useless empty truism, especially when you have nt looked at the situation you say is a 'boom'.

Are you just trying to reassure yourself because you are not convincing me that you are hoping for anything to emerge out of the current down turn of all the major stock exchanges. The loss of the USA s major lending company.etc
Have you loked at the BBC article posted by ComradeR

You can leave sub primes behind because the crisis is expanding in front of our eyes.

What do you have to gain by denying it?

[gilhyle]

Originally posted by [email protected] 16, 2007 08:43 pm
The US economy is the imperial economy all other imperialisms have been subsumed under its might.
This means that the US financial oligarchy are has been in control from the end of www2 although US hegemony started after WW1.

The crisis in the 70's which petered out was when the US and the UK was powered
by industry. The economy has something to fall back on now it has nothing but more credit.

This is the fundamental fact that is fuelling this general and deepening crisis.

Over production is useless when you cant sell your goods.

That is a fact what use is all those goods on the shelf if people cant afford their mortgages.

What Boom? We are seeing this. Get real comrade,

[....]
If you want to live in your fantasy world and rant against what I am not saying, that is up to you, but terminal crisis is not really fit.

world revolution is the history of missed opportunities.

Anyhow,Iraq has been a costly affair, a new war may indeed be counter productive.
If so the Financial oligarchy is running out of options .
You seem to believe that the US is still a bloated industrial economy. Where have you been?http://www.ncpa.org/pd/economy/may97c.html

I dont know how this will pan out but things bad are unprecedented on a world scale.




I'll tell you what I have to gain by denying it - realism: the opportunity to build revolutionary politics on perspectives that accord with reality instead of filling enthusiastic young revolutionaries heads with false perspectives that lead them to burn out and leave revolutionary politics. What I have to gain by it is the slight possibility of a revolutionary politics that is not based on people expecting an immanent change when it isnt immanent and the method to recognise what is possible. That was what separated Marx from the ultra lefts - he insisted on trying to understand what was practical instead of always just looking for the revolution around the corner. I believe in that.

I actually agree with you that "world revolution is the history of missed opportunities" but that makes me want to develop the methodology to recognise those opportunities, recognise when it is and when it isnt an immanent opportunity, cos the blind optimism hasnt worked.

The US is not the imperialist economy. Rather it is the military power of the North Atlantic alliance, a superfiical alliance of European and US imperialism that will break up in due course, revealing again the underlying US-EU rivalry. The real long term issue is as China develops, how will this imperialised country be managed by imperialism. We see the issue already with Russia.

As for now, the stats are quite clear: six years of global GDP growth on an unprecedented scale, low inflation, rising global productivity, low commodity prices, rising consumer spending. This is a global boom.

When you say "The crisis in the 70's which petered out was when the US and the UK was powered by industry. The economy has something to fall back on now it has nothing but more credit." To me that means nothing. US industry is healthy based on having pushed up the rate of exploitation; sure a lot of the production capacity is located abroad...so what, they still own it and they can still protect that ownership. So this is not a fundamental fact fuelling a crisis, its just a change in the structure of imperialist society.

You think there is over production ? Where are the signs ? Overproduction should create deflation and stockpiles.....no such thing happening. Even in the US, this week the market has looked again at industrial production and consumer spending and realised that the situation is improving there, that the US deficit is falling etc.

You say "If you want to live in your fantasy world and rant against what I am not saying, that is up to you" : I agree - correct me if I misreprent you, its not intentional

You say "Anyhow,Iraq has been a costly affair, a new war may indeed be counter productive.
If so the Financial oligarchy is running out of options" I agree with the first part, but it is a mistake to think the fate of imperialism hangs on the possibility of a prosperous war. The truth is, Iraq was a mistake cos the U.S. overshot the mark due to the domestic political importance of cheap gas. The American ruling class has options to correct its Middle East policy or at least the capaciity to contain the mess they have made - its a big problem for them, but not life threatening.

[capstop]

"You think there is over production ? Where are the signs ? Overproduction should create deflation and stockpiles.....no such thing happening."

It is the ‘overproduction’ of capital itself that is the problem for capitalism and us. =To much capital chasing to few profitable markets. That capital has to be destroyed to get more profitability back into the system. And the “global boom” you talk about is built on paper dollars mainly. Do you think that the US near-worthless dollars held by China as payment for its exports to America can keep this INFLATIONARY “boom” going much longer. The US bourgeoisie knows its in the shit and so does every other gang of crooks on the planet. So, its time for them to “rock and role” over every bit of opposition. You talk as though someone was actually in control of all these processes.

“The American ruling class has options to correct its Middle East policy or at least the capaciity to contain the mess they have made - its a big problem for them, but not life threatening.”

Correct, not “life threatening” , but already life extinguishing! The US are in fact ratcheting up the war preparations in the Middle East, because they can do no other. Capitalist crisis competition is what is dictating policy not simply the whims of individuals, parties or governments. It is the height of irresponsibility to tell young comrades that US imperialism has “options” and they are only making wrong “policy” decisions which can be reformed. Its not Marxist. But you have to say this, or admit that there is an economic crisis driving everything that is happening.

[peaccenicked]

You are mirepresenting me again. Worse using false allegations.
I am not here to lead any young minds astray. I am here to point out there is a global crisis. I have pointed to the financial mess the world economy is in.

Which you have ignored as if it is not happening, your boom is bursting everywhere. Why are you blind to the evidence.

I have not said it is a revolutionary situation, but I have said it has made the need for revolution more ripe.
Hence.

I'll tell you what I have to gain by denying it - realism: the opportunity to build revolutionary politics on perspectives that accord with reality instead of filling enthusiastic young revolutionaries heads with false perspectives that lead them to burn out and leave revolutionary politics. What I have to gain by it is the slight possibility of a revolutionary politics that is not based on people expecting an immanent change when it isnt immanent and the method to recognise what is possible. That was what separated Marx from the ultra lefts - he insisted on trying to understand what was practical instead of always just looking for the revolution around the corner. I believe in that.

This is a bastardisation of my position.



You have not dealt at all with the expansion of the current crisis and lie about what I claim it to be.

The perspective I am given is merely to make conscious something which have relegated tothe solution of market corrections, which you have not demonstrated will work.

I beginning to think I sould not argue with peoples whose arguments are abundantly full of misrepresentation and bogus and deflamatory implicit name calling "ultra-leftist".

You shifting the goal post from misrepresentation to the personal from the begining.It is a very good sign that your position is untenable.

What is practical is to analyse in concrete terms the particular moment.
The nature of a crisis. You have only really pointed to what it is not, and I agree because I did not say it was. You are just bullshitting me.

Again youre defence of the booming capitalist economy should put you in OI.


Here is a recent Market Snapshot of your 'boom' or the boom that was.

http://money.cnn.com/news/newsfeeds/articl...NLINE000610.htm (http://money.cnn.com/news/newsfeeds/articles/djhighlights/200708161148DOWJONESDJONLINE000610.htm)

Can you explain how a boom can do this?


And it is not enough to say that the Wall st Journal say it wont prompt a recession.

[Tower of Bebel]

You think there is over production ? Where are the signs ? Overproduction should create deflation and stockpiles....

Automobile sector?

[peaccenicked]

The question of over-production was not what I was raising at all. It is a variable depending on commodities and it also depends on where.

What I was getting at was that productivity is useless if It cant be afforded.


Here is an article from a "marxist" and a group I have no contact with, now.
I was a member 1983-86.

http://www.marxist.com/niare-wall-street150807.htm

I cannot really but I guess where this slump in the housing market is going but the signs so far are not good.

The market it s always upbeat about itself, and revolutionaries who are upbeat about the market are on the wrong side.

The word 'realism' used in defence of a bursting boom is utterly over-cautious.

We are only watching and observing this negative ripple through the world economy.

To give confidence to the corrective power of the Market is positively reactionary.

How can we tell what is exactly going to happen?

Throwing mud at the situation only helps to make it clearer for me.
The direction is recession, I am not saying it is a recession yet.

But noone has pointed out a corrective measure that does not involve passing the buck to the "biggest fool" as the posted article suggests is happening. Hardly a way to avoid recession.

And more evidence that noone knows whats really happening
http://edinburghnews.scotsman.com/business.cfm?id=1296092007

[piet11111]

i see the iraq was as a success for american capitalists as they are making billions of dollars.
america as a nation is bleeding money but that money goes to the capitalists that provide the means of waging war.

thats why i believe that america will start more wars as time goes by.

[peaccenicked]

Oh yes I nearly forgot the "containable" cost of the war.

http://www.venusproject.com/ecs/Cost_of_Wa...ost_of_War.html (http://www.venusproject.com/ecs/Cost_of_War_files/Cost_of_War.html)



Oh. Another thing about the GDP.
People have been known to lie about it.


Take this story as one example.
(and what if Chomsky is somewhwere near right on the universality of State capitalism.)


BEIJING – According to a March 7 Beijing Youth Daily report, at the Chinese People’s Political Consultative Conference, Chinese National Bureau of Statistics Commissioner Li Deshui began his speech by saying that many had asked him how could “numerous provinces and cities report double-digit gross domestic product levels last year when our national GDP was only nine percent?”
“Many provinces and cities overestimated GDP and reported false statistics,” said Li. “This is the main reason why many local GDP totals were larger than the national figure.” Li described the four major reasons for the GDP discrepancies: each level of many municipal governments over-reported to meet targets set at beginning of the year, there are no unified standards for the statistics, different data sources are used and products are often double-counted.

Li also said, “The root cause of the problem is that local governments are in competition with one another and have overemphasized the importance of GDP. Many local governments have used GDP as an index to measure officials’ performance, with some areas even dismissing officials for comparatively low GDP. Thus, local GDP is often reported higher than provincial GDP, and the total of all provincial statistics was higher than the national figure. The differences were very significant.”

Gu Yongjiang, the former chairman of China Resources Co., called for more severe punishment for officials reporting false statistics. Gu told a story about a provincial leader who went to inspect a locality’s economy. He did so without advance notice to observe the true state of affairs. The provincial leader stopped his car and asked people he met on the streets about the local economy and production system. The people told him that everything was great.

Later, the provincial leader learned that local officials had coached the people he had met on the streets to give those answers. Gu said he was saddened. “It is very alarming that local officials are creating false statistics and false news.”

Gu said that corrective measures have to be introduced to provide reliable statistics, and he expressed concern that false statistics could contribute to incorrect policy-making.

[capstop]

Leaving the world to be run by the greed of the capitalist monopolies can never stop resulting in periodic crises where trade-war destruction MUST rule, and to which the only antidote is Revolution and a strong workers state, --- as the essentials of Marxist-Leninist SCIENCE explain.

Only the crisis events of collapsing imperialist rule interpreted in this Marxist-Leninist light will educate a mass workers party of leadership to do the necessary tasks.

The Revisionist retreat from the Soviet workers state because of crawling to shallow Western glitz and shame at their own past bureaucratic mistakes has only proved the soundness of Lenin's 'State & Revolution' science about a very long period of proletarian dictatorship being the only way for the world to see-off monopoly imperialist warmongering, now back with a vengeance.

[capstop]

Short extract from the Communist Manifesto by Marx and Engels

Modern bourgeois society, with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells.For many a decade past, the history of industry and commerce is but the history of the revolt of modern productive forces against modem conditions of production, against the property relations that are the conditions for the existence of the bourgeois and of its rule.

It is enough to mention the commercial crises that, by their periodical return, put the existence of the entire bourgeois society on its trial, each time more threateningly. In these crises, a great part not only of the existing products, but also of the previously created productive forces, are periodically destroyed. In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity - the epidemic of over-production. Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation, had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed.

And why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce. The productive forces at the disposal of society no longer tend to further the development of the conditions of bourgeois property; on the contrary, they have become too powerful for these conditions, by which they are fettered; and so soon as they overcome these fetters, they bring disorder into the whole of bourgeois society, endanger the existence of bourgeois property.

The conditions of bourgeois society are too narrow to comprise the wealth created by them. And how does the bourgeoisie get over these crises? On the one hand, by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented.
Emphasis added

Now, what the imperialist system THINKS it is doing, or PRETENDS to be doing, while all this unfolds, is only an issue for communist propaganda to deal with as it explains what is ACTUALLY happening, in real class-war terms.

Assumptions that imperialism "cannot WANT total war devastation" trap workers into fatal illusions that "maybe the moral pressure and embarrassment from the whole world saying 'No to war' will humiliate the 'leaders' into stopping", etc, etc; or "maybe they'll see they cannot win against the entire Third World and so will give up", etc, etc.

The only sane course of reasoning is to assume that the imperialist system will follow its historical record to the letter and inflict unbelievably barbaric warmongering devastation on mankind with no thought of stopping until FORCED to stop by being overthrown.

[gilhyle]

Peacenicked, Once again let me emphasise that I have no wish to misrepresent you. My comments about young comrades being deluded were not directed at you. You are over sensitive in thinking they were.

If I understand your position correctly, your core point is that this recession makes the need for a revolution 'more ripe'. I dont think it does, particularly, but - by contrast - I have no difficulty with the formulations in the IMT article to which you posted the link.

I dont agree with you that "To give confidence to the corrective power of the Market is positively reactionary." The market has a corrective capacity - partial, flawed, expensive for workers, but real. We should understand that capacity. Whether to understand it involves 'giving confidence to it' I dont see....it doesnt in my mind. I guess on that train of thought Marx's Kapital gives confidence in the market since it shows that the secular tendency for the rate of profit to fall has no definite realisation date and is constantly subject to countervailing tendencies and may be off-set by war to destroy capital.

As to being restricted to OI, I'm not making any comments different in quality from comments that Marx and Engels made in their day. I'm interested inrevolutionary politics and how to build it on solid foundations. Does that deserve restriction.....if this board thought it did I wouldnt want to be here. My judgement is this board is full of people who dont think like that.

As to capstop's point about over production of capital, this is close to the truth - there is certainly an oversupply of capital to the corporate bond market and this has sucked capital from the equity markets and the government bond markets. This is linked to an important structural change in the structure of the financial sector which has seen a significant disintermediation by banks by way of securitisations, particularly in the U.S. but to some extent in the UK, the Netherlands and Spain.

Now that is a complex process because the disintermediation has been mediataed by a dfiferent form of intermediation - namely the lending of significant funds to hedge funds and private equity funds by banks. But this is on a lesser scale than if the relevant loans had stayed on bank balance sheets.

This process has had a couple of signficant consequences. The first one was a signficant mis-pricing of risk in the securitisation market - entirely predictable and cyclical in character - which is currently being 'corrected'. Secondly the main effect of this restructuring is that because the securitised assets are held by institutional and hedge fund investors rather than by banks, the repricing process is (or should be) realised as an investment loss outside the banking system rather than as wiping out bank capital. That means it has significantly less systematic significance than would otherwise be the case.

[Let us note in passing, however, that significant investment losses, if not realised can create long term real economy problems - witness japan in the 1990s. But there is no sustainable capacity for the investment industry to hold unrealised losses on balance sheets.]

The current appearance is contrary to this because most banks are currently seeking to defend the hedge funds for which they are prime brokers or sponsors. That intention on their part takes the form of a liquidity crisis. At any time - and this is important - those banks could choose to withdraw liquidity support to the holders of securitised assets and then the true nature of the 'crisis' would be revealed as investment losses to investment funds, hedge funds etc. The banks would be able to protect their own liquiddity at that point (they have spent significant funds setting up the legal barriers to protect themselves from these liabilities - it is a question whether they will use that defence ) For that reason this crisis is fundamentally different from 1929 when the withdrawal of liquidity by the fed left the banks with no defence.

At the moment the first line of defence is triggered - central banks are providing liquidity to the banks to provide liquidity to the funds. This is undoubtedly a dangerous approach - since it actually increases the exposure of the banking system to the investment funds industry. It was not necessary; they could have allowed the investment funds to take the hit. But rightly or wrongly the central banks patently believe that the underlying assets of securitisation vehicles are mostly sound. there is some reason to believe this as most mortgages are and will continue to be 'good' assets - particularly if the crisis does not spread to the real economy creating unemployment etc. Thus the central banks are puring money in and pushing the commercial banks to defend the investment fund industry because THEY believe that contagion to the real economy will only arise if they bottle it -as the Fed did in 1929.

There is a basic weakness in their analysis, namely that these securitisation assets are mostly not traded and therefore not priced. The absence of any objective valuation (other than dodgy models and rating agency opinions) means that the value of these assets is not just a matter of the default rate on the underlying mortgages. That variable has to be multiplied by the NPV implicit in the underlying cash flows. In that regard no one knows the significance of teaser mortgages. The net underlying cash flow of a huge lump of those will only be shown next year. Until then, this remains an unverified optimistic strategy by the central banks.

If it happens that the net cash flow from teaser mortgage assets falls considerably in 2008, then the Central Banks will be seen to have damaged the financial system by encouraging banks to lend to investment funds facing a liquidity crunch. Their actions will have the paradoxical effect of nullifying the bank's second line of defence, namely letting the investment funds sink.

But my reading is this - the central bank's high wire act is more likely to work than fail. This is because there is unlikely to be any extraneous shock from the real economy to upset the process. It is also because mortgage assets are intrinsically safe. That means that while the net cash flow may fall below a competitive market rate, that is a very different thing from falling below a rate necessary to service debt at central bank rates - that is the bottom line. There can be very significant losses on mortgage debt but they still be able to service the debt on which they are based. Even if not, what happens ? They get sold at a discounted rate and the holders and - maybe - the banks take a loss and life goes on.

In other words the mechanism of contagion is just not evident. Thus we will see in this 'crisis' evidence of the anarchy of capitalism, its addiction to the destruction off capital, but because it is a financial crisis in the midst of an industrial boom based on globalisation it does not make revoluton more ripe.

[VukBZ2005]

Originally posted by [email protected] 17, 2007 06:08 pm
In other words the mechanism of contagion is just not evident. Thus we will see in this 'crisis' evidence of the anarchy of capitalism, its addiction to the destruction off capital, but because it is a financial crisis in the midst of an industrial boom based on globalisation it does not make revoluton more ripe.
Yes, yes, I agree, but even though it does not make the conditions for revolution more ripe, it is pointing to the instability of the United States economy and the destruction of its manufacturing sector. The destruction of its manufacturing sector has created such a situation that now the economy is practically being held up on the accumulation of both living and dead labor-power, generations of both living and dead labor-power. Despite the Capitalist commodity relationship's continuation in the service sector of the American economy, the labor-power that is being extracted is not absolute, so it is not being valorized effectively and is thus causing the economy to be practically be dependent on what the Federal reserve does to an extent.

[grove street]

Here's an interesting video that compares the Housing bubble to the Great Depression through the use of quotes spoken by so called experts and Bourgeise economists of both times.

http://uk.youtube.com/watch?v=pLjo7-J1qho&...related&search= (http://uk.youtube.com/watch?v=pLjo7-J1qho&mode=related&search=)

[gilhyle]

Originally posted by Communist [email protected] 18, 2007 03:39 am
..... the labor-power that is being extracted is not absolute, so it is not being valorized effectively .....
This is an interesting post, although maybe a slightly differeent topic. No matter. I woud like to hear a bit more about the theory behind this idea of 'absolute' labour power and the effect of the 'relative' (I'm guessing here) character of the labour power in the US on the valorization process.

[peaccenicked]

Well, I really don't want to move to the level of the personal, so I will move to the question on hand.
I am not really concerned about what we call the current crisis. The Daily Record,
called it Bleak Thursday (http://www.dailyrecord.co.uk/news/news/tm_headline=pound-59bn-lost-on-bleak-thursday&method=full&objectid=19650107&siteid=66633-name_page.html). Cramer (http://www.endofempire.org/reports.php?page=250) says that is much worse than we think.
We have to get to grips with what is actually going on, it is complex (http://www.endofempire.org/reports.php?page=251) enough.

The question of what is next after the sub prime market is manifest of contagion.

The process by which the boom is bursting also has roots deeper, than how they wish it to appear which is

At the moment the first line of defence is triggered - central banks are providing liquidity to the banks to provide liquidity to the funds. This is undoubtedly a dangerous approach - since it actually increases the exposure of the banking system to the investment funds industry. It was not necessary; they could have allowed the investment funds to take the hit. But rightly or wrongly the central banks patently believe that the underlying assets of securitisation vehicles are mostly sound. there is some reason to believe this as most mortgages are and will continue to be 'good' assets - particularly if the crisis does not spread to the real economy creating unemployment etc. Thus the central banks are puring money in and pushing the commercial banks to defend the investment fund industry because THEY believe that contagion to the real economy will only arise if they bottle it -as the Fed did in 1929.


Cramer puts it like this.
"But now all hell’s broken loose on Wall Street because of those mismarks. This spring, as many homeowners stopped paying, the mortgage bonds—for the first time—starting losing value. Hundreds of billions in bonds that were thought to be worth more or less the price they were sold at, it turns out, are worthless. That’s triggered a chain reaction: Brokers like JPMorgan, Goldman Sachs, and Merrill Lynch that lent money to the firms that bought the bogus loans—most famously, Bear Stearns—basically foreclosed on those firms to get their cash back. But the firms, which are always running full tilt, didn’t have the money to pay up. Bear, at the direction of the now-fired former co-president Warren Spector, let one fund just go down the drain. But Spector thought the other was still worth a great deal, so he put up $1.3 billion to pay back what the fund owed to the lenders and take direct control of the mortgage bonds. Spector, maybe one of the best minds in the bond business, genuinely believed that these mortgage-backed bonds still had substantial value. If someone as savvy as Spector thought these bonds were still good when they were actually worthless, that tells you that thousands of other managers are simply dreaming if they think their portfolios are worth anything near what they claim they’re worth. In other words, we’re looking at the start, not the end, of the lending meltdown.

Now these funds, which were supposed to be brimming with cash—the “liquidity” you hear about all of the time—turn out to have not much at all, and there are virtually no buyers anywhere for these mortgage-backed bonds, because who knows if the mortgages that are in them are worth anything? We only know that each day they are worth less than the day before, because every week, thousands of borrowers are being foreclosed.

Seven million people could lose their homes. New York, where the architects of card houses live, will feel the full force of the storm."

The need for revolution has been with us for a very long time. The objective situation, has been devastation for the poorest and now the threat to millions of homes, and contagion to other parts of the so-called real economy which which itself has been dwindling and replaced by the service industry.

You can visit closed mines with the tourist industry. Unemployment figures have been concealed with mickey mouse jobs and wages. The environments problems are immense.
The need for socialism should not be questioned on this side of OI.
The question of an increased need for socialism, is probably better off there to.

To confuse the 'need' for revolution with the conditions of a pre-revolutionary situation is to miss the point merely obscures what is going on.
It is a deflection from the main argument.

Now lets try to agree that being made homeless is a concern for every revolutionary, and if we not abandoned the class struggle we should be laying down a programme that allows people to maintain their homes.
The maximum demand of free housing is not going to have in clout in the short term, but we could campaign to have people to pay their mortgage at a rate related to their income, that gives them a liveable wage.

I have been listening to the Bloomberg News channel and most commentators, are saying that the Fed's intervention is too little too late.

The thing about booms is that they come to an end. The fundamentals of the economy are unravelling.

We are not here to speculate how well the economy will do, or how badly it will get.

We have to look at the situation through the prism of class struggle and prepare for the possible outcomes ahead.
How do we know that contagion is not happening?
Is it a guess we can afford to be guessing about?

It looks very much to me that we are witnessing a Market meltdown, and if it is corrected, and risk is part of what needs to be corrected, then hyperinflation is a great possibility, and a road to depression is possible.
Hey, it is possible, and I am not in the betting game.
I am out to defend the working class from the excesses of the market, and gain
working class confidence in socialist politics.

The question of how we intervene and when and what signs we are looking for
is an on going concern but to broker beforehand a capitalist solution as a sure thing
might be considered a dereliction of our duty as socialists.

[Rosa Lichtenstein]

Check this out:

http://leninology.blogspot.com/2007/08/dea...ockbrokers.html (http://leninology.blogspot.com/2007/08/dead-stockbrokers.html)

[gilhyle]

Originally posted by [email protected] 18, 2007 09:05 pm

The question of how we intervene and when and what signs we are looking for
is an on going concern but to broker beforehand a capitalist solution as a sure thing
might be considered a dereliction of our duty as socialists.
I tend to agree with this bit, but I would ask then what are socialists to do.....that is a real questin and a hard question given that we have no recent history of revolutinary sociaist organisatins intervening - or rather orientating - on the basis of good economic analysis. O think the contagion question is unavoidable because there is no current locus of class struggle arising from this turmoil. We must predict whether one is to come.......and I dont see it.Happy to listen to those who think otherwise, but I dont see it.

On the specific point of the value of those funds, actually Im not aware of any figures on the rate of default on the underlying assets. The problem with these investment funds is that they have fixed cash flows; they simply cannot survive someone withdrawing their credit lines for that reason. Thus you can have a default arising from a liquidity crisis while the underlying assets continue to perform. What is at issue at the moment is to what extent that is the case. And because capitalism is an anarchic system, no one actually knows what is the underlying situation.

[peaccenicked]

The main reasons for the structural precarity are: (i) the exorbitant levels of global debt, with hedge funds currently valued at $1.5 trillion, making a 'great unwind' probable; (ii) a liquidity boom which has increased financial instability; (iii) the imbalances in the US economy, with a middle class squeezed by declining house prices and the drop in real wages, and its relative global decline leading it to seek less multilateral ways to expand its hegemony; (iv) the entry of rising capitalisms to the global club, with competition increasingly taking the form of neo-imperialism, particularly over energy access (Wade includes Russia's recent moves over energy in Central Asia in this category), thus raising the prospect of instability in the geopolitical system. The implications of a crash, in other words, are that economic autarky will be accompanied by increasingly militarised drives to facilitate the export of capital as well as access to energy resources. Aside from that, the condition of the labour movement is not optimal, and its ability to resist the inevitable attempts to make the working class pay for a recession with pay cuts and degraded conditions is weak. Not that it couldn't be done, not that a populist or anticapitalist challenge couldn't be renewed, but we'd have to re-learn some old lessons extremely fucking quickly.

Very well said. It is not just rising capitalisms but old one's too. The yen has been on its biggest roll for ten years.
My question is where is the rest of the left?
The wobble theory seems to be prevalent.

[peaccenicked]

gilhyle,

http://uk.youtube.com/watch?v=0YNyn1XGyWg


And http://agonist.org/numerian/20070801/sub_p..._felt_worldwide (http://agonist.org/numerian/20070801/sub_prime_market_earthquake_is_felt_worldwide)
I hope this helps.

The problem is relatively new, in that it only largely became manifest, on Bleak Thursday. The direction we take is still to be thrashed out.

The thing is we need to start, seeing how dangerous Wall streets games have been.

[grove street]

Originally posted by [email protected] 18, 2007 10:48 pm
gilhyle,

http://uk.youtube.com/watch?v=0YNyn1XGyWg


And http://agonist.org/numerian/20070801/sub_p..._felt_worldwide (http://agonist.org/numerian/20070801/sub_prime_market_earthquake_is_felt_worldwide)
I hope this helps.

The problem is relatively new, in that it only largely became manifest, on Bleak Thursday. The direction we take is still to be thrashed out.

The thing is we need to start, seeing how dangerous Wall streets games have been.
Right on g> My country"s (New Zealand) stock market dropped by two billion over night and our house market has dropped by ten percent within two days>

Even though our economists on the news are trying to convince everyone that all is fine< you can see the fear and panic in their eyes> :lol:

Lucky enough my parents were able to sell our house in time< but now that their moving to Malyasia< I"m scared that when shit hits the fan and the Malyasian Communist movement remerges< they might come knocking on their door>

[gilhyle]

Originally posted by [email protected] 18, 2007 10:48 pm
gilhyle,

http://uk.youtube.com/watch?v=0YNyn1XGyWg


And http://agonist.org/numerian/20070801/sub_p..._felt_worldwide (http://agonist.org/numerian/20070801/sub_prime_market_earthquake_is_felt_worldwide)
I hope this helps.


Now that you have posted these useful links, I can add two further minor points I had not wanted to make previously:

Firstly, it is quite amazing that you can still trade BBB- tranches at all - talk about an act of faith in the market.

Secondly, all the evidence prior to this drama was that the majority of hedge funds dont leverage significantly.That that is probably true is evidenced by the activity of vulture hedge funds at the moment - if they were leveraged banks would not allow them to dive in at this time.

[peaccenicked]

There has been some articles looking at this crisis more deeply.

http://www.telegraph.co.uk/opinion/main.jh...8/19/do1903.xml (http://www.telegraph.co.uk/opinion/main.jhtml;jsessionid=IZD1PJ4JZFPHTQFIQMFSFF4AVCBQ 0IV0?xml=/opinion/2007/08/19/do1903.xml)

http://www.endofempire.org/news_eoe.php?page=822


At the moment the central banks have steady some nerves, but just about everybody is waiting for the next tumble.