Apologies for feeling very dispirited!
Normally, there’s always a selection of bits and pieces in my LfD Blog folder from which to construct a new post.
But yesterday afternoon as I trawled a number of articles and blog sites I ended up feeling sick to the back teeth. Disgusted about the inequalities and injustices that seem to be in the news just now. (I use the word ‘news’ liberally!)
It started with me reading, even before I was out of bed, the latest essay from George Monbiot entitled The Shooting Party.
As the food queues lengthen, the government is giving our money to the super-rich.
Then I went back to re-read an essay from Patrice Ayme that came out on the 22nd called USA: Rich Plutos, Poor People. Here’s a snippet from there:
Plutocracy is a redistribution of wealth, power, income, from We The People to a small minority of controlling parasites. Plutocracy paralyzes the minds with a warped case of inverted decency. Plutocracy is neither optimal for the society, nor the economy.
Plutocracy affects the USA more than Europe, and the minds, even more than the stomachs. The fact that average Americans feel that they are much better off than in the rest of the world reinforces the plutocratization of the USA. Including astounding tolerance for the amazingly corrupt so called Supreme Court (Supremely plutocratic!).
I would like to share with you my thought about the major defaults of the economic system called “Market economy” or “Capitalism”, or in the language of this blog, the moral deficiency of the system run by Plutocracy.
The major problem of the contemporary economic system on the macro level is that it enabled on one hand to pour into the economy too much financial liquidity at times of boom and overheated economy, by investing too much money in wrong and too expensive assets, and on the other hand at times of bust, when the economy needs liquidity to sustain employment, the system is rather greedy with helping investments in the same assets for even very reduced price. This system a-priory has to cause bust and boom, situations.
The economist since the great depression of 1929-1933 which had disastrous consequences learned from the lesson, and since then the governments and the central banks took as their major task in economy (and be the price whatever it takes), to act as anti bust and boom instrument. This is why they made the economic stimulus of trillions that saved the banks and financial system from total collapse (luckily the collapse came during the time of republican presidency and they couldn’t resist this decision), and the quantitative easing that poured liquidity of government money into the economy as alternative to the private money from banks who stopped to borrow.
So if it is so easy to solve the economic crisis situations, what is the problem? Let the economy run on the waves of bust and boom, and whenever the bust comes the government interferes, and at the times of booms let the boys play and enjoy themselves. If economics would be only about mathematical formulas, probably it could work, but the truth is all the economic decisions have their moral-political aspects. [Ed. My emphasis] And here lies the problem.
Because it is morally and politically very hard to neglect the principle of punish those who do wrong and give tribute to those who has done good. And this is actually what happens when the government comes to rescue the “credit boomers”, the bankers who created a distorted financial system, that channeled the financial and material resources to wrong places to invest in wrong assets, and when the D day came, they did not have to pay the price for their wrong doings. The same happened to those who took the loans, without to ask themselves if and when are they going to pay them back.
These Financiers and their creditors, who get loans of other peoples’ money enjoy free lunch twice. Once when they give and get these loans with knowledge that it will never be repaid, and second time when they enjoy the debt reduction, when the governments come to rescue them.
On the other hand those who use the wealth generated at times of boom to accumulate reserves for the bad times have to pay twice. First time when they restrain their activities during the times of prosperity and reduce by it their profits, second time at times of bust, when still they have to fulfill all their obligations, and get no praise for their responsible behavior in the times of boom.
Of course this system of Boom and Bust causes with each wave a major shift of wealth from one sector to the other, and generally from the decent and responsible entrepreneurs to the irresponsible gamblers, who happen to make bid on other people’s money.
This is one of the reasons why the pension systems are all in deficit, the wages stagnate while the profits and mainly the rewards of corporate managers of publicly traded companies surge.
Isn’t this just unfair?
Sanctions salami tactics
Plutocrats have a certain grudging respect for one another. Naturally, they would like to put each other out of business unless it impacted their own business adversely. So I conclude that Obama’s sanctions are an attempt to isolate Putin from his plutocratic supporters (although perhaps supporters is too strong a word; Putin keeps his plutocrats on a pretty tight leash, just ask Mikhail Khodorkovsky).
But what if under the table the West is inviting Putin’s plutocrats to join them, where the grass is greener and you don’t have old Vlad busting your chops. We’re not going to mention that we’re going to give you a haircut on the way, but are you really ready for the rebirth of the Soviet Union? The London bankers must certainly be for it.
On the other hand, you have the Chinese promising big business… but China’s biggest real estate investor is unloading everything as China replicates the Western real estate bubble and collapse….
It’s tough being a Russian plutocrat these days. It’s tough being a plutocrat anywhere, really, with all this talk that plutocrats are *too* wealthy (and are actually mass murdering their fellow humans with their insatiable greed by hording wealth and depriving others of health care, education and jobs).
Come to America! Come to the UK! Plutocrats rule! This is the subtext of what the Russian plutocrats are hearing.
Finally, an essay published on Naked Capitalism had me reaching for the bowl. It was by Rob Johnson on the Breakdown of Democracy. Read it. It included this video.
Published on Apr 26, 2014
Rob Johnson: The influx of additional campaign finance dollars and central bank policies have contributed to the destruction of democratic institutions
That was enough for me.
Couldn’t take any more. Certainly wasn’t feeling inspired and creative. Just wanted to go out and find a horse to kiss.
Sorry! Hopefully back to being more positively creative tomorrow!