[Peace-discuss] Fw: [socialistdiscussion] Could it be we've just entered the second half of the credit crisis?

[unionyes]

----- Original Message ----- 
From: Richard Mellor 
To: "444" 
Sent: Saturday, January 24, 2009 6:45 PM
Subject: [socialistdiscussion] Could it be we've just entered the second half of the credit crisis?



Nothing new in here for those of us that have been closely following events.  But what working people should take note of is what is missing in this very critical and informative article-----the mention of the system, the mention of capitalism.


The author blames speculators, bankers, lenders, greedy people and miscreants.  But no mention of the organized system of production that exists and in which these events take place.  It would be like describing a sea disaster and not mentioning the ocean or weather conditions.  This author is quite thorough so it's not a mistake.  They want us to think that the problems of society are are problem of character flaws, of nasty men and women; if they are the fault of a "system" then why not change the system.  Manager of sport teams change the system all the time.


If you read the Wall Street Journal or the Financial Times, or the Economist, any of these journals tha are produced for the capitalist class themselves, journals where they talk to each other about the system they govern and how best to govern it, they often talk about capitalism, the economic system in which we live.  In fact, at the present, there is constant talk of it, constant discussions between experts (strategists of the capitalist class) about capitalism, about the free market "system" and how it is the best despite its faults.  In the Financial Times today there were references to Obama's speech confirming that he is not a "socialist" as he was labelled during the election but that he recognizes the need for the market to be regulated and that the state should protect society from it.  Regulation, (capitalists regulating their system) that never prevented slumps or two world wars is the new panacea that replaces the old Laissez Faire panacea.


But when the mass media informed us of the goings on in the former Soviet Union or in China or Cuba, they refer! to the system.  Communism has failed. Of course, these are not communist or socialist states neither is  Sweden, but they want us to see it that way.


The existence of the Stalinist  dictatorships (not Sweden of course) and them calling them socialism or communism did much to deter working people from these ideas for ever, and this was their purpose.


Once we see through that, we see the system not as permanent thing but ever changing.  That capitalism hasn't always existed. that it is not the end of civilization but a part of a long period of human development, simply a method of organizing the production of our needs.


That way we see we can change things and influence how we live our lives.  The Russian revolution was one of the the greatest events in human history; the first time the working class held state power.  It was the most democratic system (leaving aside tribal society where the social product was no the private property of a few who owned the means of producing it.) and we can can learn great lessons by reading about it and understanding what actually took place then.


That's why the  capitalists spend billions on propaganda attacking it, attacking any system that eliminates their control of the state and production like Cuba; they don't want us reading about it, discussing it. It's why they detest having to nationalize sectors of the economy in this crisis, because it undermines their propaganda that the private sector and the so called free market has the answer to all things.




Richard 


Energy and Capital headerd)


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The Second Half of the Credit Crisis
By Ian Cooper | Saturday, January 24th, 2009


Could it be we've just entered the second half of the credit crisis?


Just as 2008 was the year of subprime woes, this one will go down as the year of Option ARM resets (or adjustable rate mortgage resets). With billions in Option ARMs resets in 2009 and 2010, this crisis is about to unleash a fury no one's prepared for.


It won't be as bad as subprime, of course. It'll be worse.


That's because lenders created these ARMs with "teaser" features to borrowers, which included making lower minimal payments for the first few years before the loan reset to a higher payment schedule. And if that weren't bad enough, there's another feature called "negative amortization," which means you're not paying back any principal.


In fact, with negative amortization loans, your loan balance increases over time. Incredulously, every time you make a payment, you owe the bank even more. These are the loans that allow consumers to buy a house they can't otherwise afford.


As for speculators, they may use negative amortization loans if they believe prices will increase at a fast pace. But with the opposite happening, they're out of luck.


And the banks will be left holding the bag.


So when your financial advisor tells you the financial crisis is well behind us, you'll know better.
Housing aside, despite repeated injections of taxpayer money, the financial system continues to teeter on the brink of disaster. And while hope abounds for Obama's new approach, described as a "fundamental reform of the $700 billion rescue plan," it may still require trillions more dollars, putting added pressure on our unstable economy.


And if you thought we were in bad shape... look no further than across the pond. 

The UK, just like the U.S., consumed more than it could pay for in what's amounted to one massive liquidity bubble.  The UK economy shrank 1.5% (vs. 1.2% estimates) in Q4, and the government announced it was in recession.


A House of Cards. 


It was in February 2008 that British consumers owed $2.7 trillion on credit cards... when debt per capita was at a higher level even than for U.S. households... when British household debt stood at 164% of disposable income, as compared to 138% in the U.S... and when research suggested that one in four people were either struggling with debt or felt their debt was unmanageable.


Here in America, we're still wondering how it is that no one sounded the bell. Will we actually learn from our mistakes? 


As the "sage of Baltimore" H.L. Mencken once said.. "... the common people know what they want, and deserve to get it good and hard."
And if you're looking for someone or something to blame, try the banks, which took on unsustainable levels of debt, and the greedy CEOs, like ex-Merrill Lynch CEO John Thain, who helped take us to the abyss.


Thain, for what it's worth, is finally out of the picture at wobbly Bank of America, having come to a "mutual agreement" with CEO Ken Lewis. Who will inherit Thain's $1.2 million office is anyone's guess.


Of course, he's just one of the miscreants who helped bring on the financial crisis.  


To learn more about Thain, his predecessor Stanley O'Neal, and more "culprits of the financial crisis," I urge you to take a read of our new report: The Architects of Destruction.


Good Investing,


Ian L. Cooper


"Just because you don't take an interest in politics doesn't mean politics won't take an interest in you."  Pericles, 430 BC


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