Wall $treet’s Pax
Published in La Republica
(Peru ) on 20 November 2011
by Alberto Graña (link to original)
Four years after the start of the neo-liberal global crisis, the rich are much richer. In reality, the dynamics of the central crisis revolve around the socialization of immeasurable bank losses that are not ours to pay for. The “occupy” movement is part of this global rejection. The small Icelandic giants understood this ethical, political and social conflict well and were able to have their elections early. Ninety percent of Iceland’s population mobilized to vote no to paying the debt, thus creating new technical and democratic opportunities to audit the so-called debt and write a new constitution, because the present one is a copy of Norway’s. They were able, through will and political strategy, to reduce, as did Ecuador, the cost of the illegitimate debt that weighs substantially on its contributors. And, the $ystem didn’t collapse!
A recent investigation shows that the systematic banking institutions (the international financial system, or the ten main banks in the U.S.) extract significant rents of moral risk for the endorsements and implicit or explicit guarantees that they receive from their central banks and state agencies. If those game rules continue, the $ystem will have to maximize the social income extracted from the endorsements and guarantees.
Paradoxically, while the international financial system sits on excessive loans (of an unpublished amount ) from the Federal Reserve, and the money gains interest, the already capital-deprived middle class and small and medium businesses have been excluded from the financial $ystem, because of the extra fees and fines that the banks now charge in their flight toward quality assets. It could be said that the essential function of financial mediation (of savings or investments) has collapsed and is stuck in the vaults of the Federal Reserve.
However, the cost of the real global economy and world commerce becomes prohibitive, since every dollar held hostage by the banks is a dollar extracted from the investment in public goods, social spending or in the creation of jobs. According to The New York Times columnist Paul Krugman, the renting class would benefit from this status quo: “It prefers to risk a financial catastrophe for the country as long as it doesn’t have to put in a single extra cent of taxes in revenue.”*
The end result after three consecutive crises in 1990, 2000 and, particularly, the last one in 2009, show an accelerated intensification of the exploitation of workers (output per hour). In addition, such rates end up higher if we consider that the real wage per hour froze in the year 2010, and fell drastically by 2.3 percent in the third trimester of 2011. An 8-hour day?
It can also be verified that in the last two decades the exponential rise of corporate gain became inversely proportional to the near extinction of labor’s share of the national income.
It would seem that the present logic of business is not to create more work but to maximize the production of the absolute and relative surplus. In a deflationary environment, consumers tend to defer their payments, hoping that the prices will be down soon. The present logic of governments and bankers that has them applying austerity politics and spending cuts, feeds the “great recession” spiral as well as inequality and social indignation. The combustion of such logic will create a future scenery of obdurate incertitude.
In order to regain growth and prevent the Great Depression from following its natural path, then-Secretary of Treasury Andrew Mellon told President Woodrow Wilson to "liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people."
P.S. Any similarity to the way of thinking of the Tea Party is purely coincidental.
*Editor’s Note: This quote could not be verified.
A recent investigation shows that the systematic banking institutions (the international financial system, or the ten main banks in the U.S.) extract significant rents of moral risk for the endorsements and implicit or explicit guarantees that they receive from their central banks and state agencies. If those game rules continue, the $ystem will have to maximize the social income extracted from the endorsements and guarantees.
Paradoxically, while the international financial system sits on excessive loans (of an unpublished amount ) from the Federal Reserve, and the money gains interest, the already capital-deprived middle class and small and medium businesses have been excluded from the financial $ystem, because of the extra fees and fines that the banks now charge in their flight toward quality assets. It could be said that the essential function of financial mediation (of savings or investments) has collapsed and is stuck in the vaults of the Federal Reserve.
However, the cost of the real global economy and world commerce becomes prohibitive, since every dollar held hostage by the banks is a dollar extracted from the investment in public goods, social spending or in the creation of jobs. According to The New York Times columnist Paul Krugman, the renting class would benefit from this status quo: “It prefers to risk a financial catastrophe for the country as long as it doesn’t have to put in a single extra cent of taxes in revenue.”*
The end result after three consecutive crises in 1990, 2000 and, particularly, the last one in 2009, show an accelerated intensification of the exploitation of workers (output per hour). In addition, such rates end up higher if we consider that the real wage per hour froze in the year 2010, and fell drastically by 2.3 percent in the third trimester of 2011. An 8-hour day?
It can also be verified that in the last two decades the exponential rise of corporate gain became inversely proportional to the near extinction of labor’s share of the national income.
It would seem that the present logic of business is not to create more work but to maximize the production of the absolute and relative surplus. In a deflationary environment, consumers tend to defer their payments, hoping that the prices will be down soon. The present logic of governments and bankers that has them applying austerity politics and spending cuts, feeds the “great recession” spiral as well as inequality and social indignation. The combustion of such logic will create a future scenery of obdurate incertitude.
In order to regain growth and prevent the Great Depression from following its natural path, then-Secretary of Treasury Andrew Mellon told President Woodrow Wilson to "liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people."
P.S. Any similarity to the way of thinking of the Tea Party is purely coincidental.
*Editor’s Note: This quote could not be verified.
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