[Peace-discuss] Structured by cows

[Ricky Baldwin]

"It could be structured by cows and we would rate
it": another fascinating peek into the parallel universe that,
unfortunately in the end, did intersect with ours ...


http://tpmmuckraker.talkingpointsmemo.com/2008/11/it_could_be_structured_by_cows.php

Maybe it’s the whole economy that was structured by cows.  The focus has been Wall Street, and there’s
plenty of craziness there to focus on.  People buy and sell hogs that aren’t born yet, fer chrissakes!  Crops that haven’t grown yet, all kinds of
insanity.  They take bets – essentially
bets – on which loans will go bad, and so on.  It’s nuts, and that’s even with regulation.  Without regulation it gets downright bestial.
 
But it’s obviously much more than Wall Street.
 
There’s been a lot of talk about debt – private debt, public
debt – and how it’s been ballooning for 30 years.  It was already considered problematic when
Reagan, the balance-the-budget president, jacked the federal deficit to record
levels.  And as we all know, Bush had
to  pull out all the stops.  Jack Rasmus (Z, Nov. 08) has a very thorough
rundown of US debt accumulated during the ‘W’ years, including $8 trillion in new debts to
banks (speculative, etc., added to $6 trillion in household mortgages), $1
trillion to credit card companies (largely because people don’t earn enough to
pay bills), $3 trillion in government debt (Iraq mostly) and over $3 trillion
in “non-financial” business debt: it adds up to around $21 trillion in new
debt just since 2000.
 
Credit card and mortgage companies are now pushing new debt
with ads that center around the bailouts!
 
Yesterday the Senate killed the vote on the auto bailout -
playing 'chicken' with maybe 2 million jobs, and possible economic depression -
but they keep talking about this the wrong way.  It isn't clear at all to
the American people *why* these humongous companies are in debt in the first
place.  It isn't just because sales have been declining.  And it
isn't really, except just in the immediate, because of the Wall Street
crunch.  Why would that bother big manufacturers?  Don’t they have
money?  Or if they don’t, why didn’t they
realize it before now?  
 
It’s the way they run their businesses, by trading on their
status - in a way that small businesses can never do, so really on their
*size*.  (Similar, you have to admit, to
the way the big financial institutions were running: these are not bad loans,
not irresponsible reckless screwball cowboy ventures, we wouldn’t risk our
business that way, we’re big and well respected!)
 
Turns out, really big businesses don’t run the show on the
money they take in, or on their savings or cash reserves, or even on loans that
they plan for and include in annual or even monthly budgets.  It’s more proof, in case we needed it, that
capitalism doesn’t actually work, at least not without passing a giant
collection plate around the plebes, sometimes (and always at least indirectly)
at the point of a gun  – serfs, Native
Americans, African slaves, taxpayers, somebody has to prop up this façade at
all times.  
 
The dirty secret is, the Captains of Industry keep their show
on the road by borrowing money, tens of millions, on a near-daily basis, and
pay it back almost daily, too, usually.  Your typical manufacturing giant or other towering edifice of capitalist
potency will have, secreted away in the bowels of the organism, a small office
that swings into action at the end of every business day, or at some point near
the end.  The function of this office is
to check the daily balance – take versus layout – and if there’s a shortfall,
borrow, say, $10 million or so, over the phone, just to tide the big boss over
until tomorrow.  Or, on days when there’s
a surplus, pay it out. 
 
There was a recent episode of “This American Life” that told
the story, and jaws hit the ground in kitchens and living rooms all over America.  They depend on these day-to-day loans so
heavily that, in the case of the carmakers (and others), when the loans locked
up, the businesses started to bleed out immediately.  That’s why the crisis seems to have exploded
out of nowhere with every major institution, bar some, whimpering about
mountains of debt – mountains of debt that moreover continue to grow at least
arithmetically even as they struggle to slow it down.  They can’t stop it.  They have no other resources.  They have been operating miles beyond their
actual capacities for decades.  Their
very capital, the physical existence of the corporation itself is constructed
out of this fact.  It is literally who
they are.  
 
For some like GM the unwinding is happening so fast, they
may code by the new year or soon after, taking 2 million or so jobs with them
(in addition to the million-plus already down the crapper this year).  That’s a lot like a depression, folks.
 
 Talk about a house of
cards.
 
But it’s an inescapable fact, it seems to me, that the kind
of free money the carmakers are or were hoping for, sans fundamental
restructuring, is just feeding the bad wolf.  It wouldn’t even seem to delay the inevitable very long, maybe just long
enough for stockholders to pull out but probably not long enough for 10-plus
year employees to find another home, especially not nowadays.  So the “free” marketeers don’t like it
because it enables bad practice.  But
there’s a good reason for social progressives not to like it either: we could
wind up paying them to kick people out of work.
 
And I know I’ve said it before, but we need to pay them to
put people back to work.  We need the
opposite of an IMF, something like a *Social* Monetary Fund, and it needs to be
one with a vision beyond the WPA or CCC.  It needs to encourage investment in what economists might call
“externalities”: infrastructure needs; gainful employment, yes, but also
alternatives – a kind of social diversification – renewable energy, public
transportation, etc.; we need to encourage freight to move by rail, not over
public roads; so many things.
 
Now, GM can’t do that alone, no matter how much we lend
them.  But that’s where the Fund’s
management comes in, a sort of coordinating function – “planning” you might
call it.  GM, for example, gets a bailout
and it required to participate in restructuring, not just internal restructuring
but external restructuring, of the whole economic mess.
 
It doesn’t have to be structured by cows.  We are smarter than cows, in theory.  The economy can be structured by people.  It is anyway, just not by the right people,
and not by enough people.
Ricky

"Only those who do nothing make no mistakes." - Peter Kropotkin



      
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