The Armageddon That Never Comes

Conditions: Cold. And Hard.


The Financial System That Dare Not Speak It's Name.

By all accounts, it's been an extraordinary week. The financial markets have plummeted like Wile E. Coyote above running off a cliff, then soared upwards like ...some big soaring thing. All the experts seem as perplexed as everyone else.

Stock markets have been rising and falling all week as investors try to decide how severe the global economic downturn will be.

"This is the most volatile week we've seen," said Thierry Lacraz, strategist at Swiss bank Pictet in Geneva.

"The sole intelligent thing is to remain on the sidelines and not make any huge bets."
[...]

On Friday, the investor Warren Buffett said he had been moving all of his own money into US shares.

"If prices keep looking attractive, my non-Berkshire net worth will soon be 100% in United States equities," he wrote in the New York Times.

"Fears regarding the long-term prosperity of the nation's many sound companies make no sense," he said in the article, titled: "Buy American, I am".

- news.bbc.co.uk/

We're either on the edge of a collapse in civilization as we know it, or just 'having a bad month'. It's a little difficult to tell. What's more clear cut is what world governments have been doing to try and fix it, because they keep telling us, seemingly a new plan for every day of the week. And the biggest idea I heard about was essentially a rejection of capitalism itself.

On Monday US Treasury and Federal Reserve Bank officials met the chief executives of some of America's biggest banks, to work out details of the US government's $700bn (£400bn) bail-out package.

The US has said it was also getting ready to follow in Europe's footsteps and purchase stakes in financial institutions.

On Monday the US Treasury announced it was set to buy stakes in a "broad array" of financial firms.

European governments have said they are putting up to 1.7 trillion euros ($2.3 trillion; £1.3 trillion) to protect the continent's banks through guarantees and other emergency measures.

- news.bbc.co.uk/

The US government has announced a $250bn (£143bn) plan to purchase stakes in a wide variety of banks in an effort to restore confidence in the sector.

President George W Bush said the move would help to return stability to the US banking sector and ultimately help preserve free markets.

US federal authorities will also temporarily insure most new debt issued by US banks.

The moves echo similar steps taken by the UK and other European countries.

"This is an essential short-term measure to ensure the viability of America's banking system," Mr Bush said.

"This is not intended to take over the free market, but to preserve it."
[...]

The money will come from the $700bn bail-out package approved by US lawmakers earlier this month.

The US plan - effectively part-nationalisation - comes after the bosses of the country's largest banks were summoned to a special meeting at the US Treasury on Monday.

Treasury Secretary Henry Paulson said that the lack of confidence in the financial system was a threat to the US economy.

He said that taking equity stakes in banks "was objectionable to most Americans, including myself".

"We regret taking these actions," Mr Paulson said.

"But we must do this to restore confidence in the financial system."

- news.bbc.co.uk/

We regret buying banks? Buying banks is objectionable to most Americans? Whatever for? Well, turns out the central idea of America and the free market is that it's free to make mistakes. And the problem with that idea is that when it does make a mistake, it can bring down the entire financial system. Kind of like wanting your kids to buy their own car, but not fully realising that they could then crash said car into a kindergarten. Freedom's great and all, up until it starts being bad. But the assumption always was that freedom would provoke a steady hand, that the weight of responsibility provided it's own stability. Like oil tankers forcing sobriety on their captains.

Then the present crisis came and proved that if market forces are left to operate without restraint, the result will be global catastrophe. At the same time it became clear that globalization, the phenomenon that Tom Friedman so picturesquely called "the world is flat" - is not just a recipe for growth and prosperity but also a pipeline that quickly and limitlessly channels one economic crisis to another and acts like a deadly universal virus.

The best example of the devastating outcome of globalization is the fact that municipal pension plans and British police departments lost all their money when the Icelandic bank in which their money was deposited went under.

And then came the wake-up call. The Bush administration, not the North Korean government, is trying to stabilize the market, not by channeling money to banks in distress, but by imposing nationalization (partial, albeit, but compelled) on the nine big banks - to ensure people's deposits and prevent massive bankruptcy. Could anyone have imagined that the Bush administration would compel the nationalization of banks? Welcome to the world of Keynes and the welfare state, in which the state - and not the market - is the guarantor of citizens' welfare.

We are not going back to the Cold War, but we are going back to classic competition between powers, in which realpolitik and balance-of-power control the heights. The American market and the global economy will recover from the crisis, but it is difficult to suppose that we will soon again see unrestrained and crushing capitalism in the form we have known for the past two decades. No, history does not repeat itself; it only continues along its circuitous paths.

- haaretz.com/

So, is this, as they say, it? Is it the end of the belief in the free market, as we sit and watch the decades of unfettered and complicated greed cause turmoil to everyone on the planet? Well, that depends on whether you think the markets were ever actually free.

Calling our economy a free market economy is illogical. It makes no sense because it is in no way a free market. It is equivalent to the church's doctrine that the Earth was the center of the solar system. We now know how utterly stupid that belief - yes, belief, for it had no credible basis - was, and presently, we are discovering that the same is true in our economy.

What do we have then? We have a market created by our government. Government usually provides the currency, although in our case, a group of private bankers called the Federal Reserve provides the currency. Government provides the legal network and courts to enforce the agreements that make markets a possibility. Government provides education through the public education system and transportation on public roads, rails and airways. "Free market" businesses are defended by police and fire departments supplied by the government.

Even more importantly, one must admit that the rules of this business game are defined by our government. Like sports, business does not work without rules - rules that our government makes.

So, when I listen to someone say something like, "Let the market decide," or when I listen to them talk about our supposed free market in America, I can't help but laugh. There is no market without government rules.
[...]

A middle class has never been the expected result of allowing corporations to do as they wish. "Free markets" do not produce a middle class. They produce, instead, a miniscule, extremely powerful affluent class, a small middle merchant class and a mammoth and horrified worker class of serfs.

- www.reflector-online.com/

So, the practice of free market capitalism has fallen as completely and as totally as communism did, back in the day. But this does not prove or disprove either system in theory. Rather, it shows that any idea, any idea at all, regardless of it's potentials and possibilities, can be abused and corrupted and screwed up, and end up causing a lot of grief. Ladies and Gentlemen, I give you human nature.



Houston, We All Cosmonauts.

In a further blow to America, the planned retirement of the Space Shuttle in 2010, with no obvious American candidate to replace the venerable old bus, has meant that from 2010, all Americans wanting to travel into space will have to do so at the permission of the Russians. Star City, a once secret military base north of Moscow, is set to be the only gateway to orbit, the International Space Station, and beyond once the Shuttles are parked.

The gap is coming: from 2010, when the National Aeronautics and Space Administration shuts down the space shuttle program, to 2015, when the next generation of American spacecraft is scheduled to arrive, NASA expects to have no human flight capacity and will depend on Russia to get to the $100 billion station, buying seats on Soyuz craft as space tourists do.

As NASA celebrates its 50th anniversary this month, the time lag in the Bush administration’s plan to retire the nation’s three space shuttles and work on a return to the Moon has thrust the United States space program squarely into national politics and geopolitical controversy.

Senators John McCain and Barack Obama have denounced the gap and promoted their commitment to the space program while on trips to Florida, where thousands of workers will lose their jobs when the shuttle program ends. And antagonism between the United States and Russia, over the conflict in Georgia and other issues, is clouding the future of a 15-year partnership in space, precisely when NASA will be more reliant on Russia than ever before.

The administrator of NASA, Michael D. Griffin, has called the situation “unseemly in the extreme.” In an e-mail message he sent to his top advisers in August, Dr. Griffin wrote that “events have unfolded in a way that makes it clear how unwise it was for the U.S. to adopt a policy of deliberate dependence on another power.”

- nytimes.com/

You know, empathy often is hard to come by in those who need it most. But every now and then, a little something happens that offers hope in some kind of shadowy empathy-angel, clocking the hypocritical over the heads and trying to bring balance to the force.




Film Review: Body Of Lies.

You know, it's hard work making a middle eastern CIA thriller these days. Not only do you have the whole standard convoluted-terrorist-plot thing going on, that has to thread it's way across multiple interconnected countries, the current political situation of each having to be briefly explained by someone as we go, but in today's world you also have to deal with the whole America problem. I remember, back in the day, the Hollywood CIA would make mistakes, but they'd be genuine mistakes, mistakes born from misinformation, bad guys lying to them, stuff like that. That's not good enough now, today's Hollywood CIA has to be inherently bad, fully living up to the modern impression of an organisation actively undermining our very civilisation as they act to try and patch it up.

The upshot is that while on the one hand you have to have the CIA 'winning' in the end, it has to be seen as no more than the least worst outcome, in that the CIA themselves are only a step or two above the terrorists. So while technically the "good guys" won, we don't really feel all that good about it. So what do you do? Ridley Scott has an idea: let's have Leonardo DiCaprio play a burned out CIA agent who keeps getting screwed over by the agency, and eventually renounces the whole damn thing. We can surely identify with that.

It's a pretty safe idea, and allows Scott stalwart and professional rogue Russel Crowe to delight the screen as a truly evil CIA manager, orchestrating all manner of shady deals over a cell phone while safe and sound in the good ol' US of A. There's a rich subtext here of exactly how the basic American pushy, impatient and detached mentality has caused screwup after screwup in the middle east, and the ramifications of it, but ultimately Hollywood must have it's happy ending, and it's that that rings most false of all in a film that tries so very hard to tell the truth. Three fingers out of Five.



- Peace out.