Thursday, April 02, 2009

The Word Worry

Glad the G20 leaders are feeling good. What, We Worry?

"Worry" appears in the majority of the daily musings of my capitalist pals, in this case of Wolfgang Munchau of the Financial Times. He's not worried that the bankers are getting too much. He's worried they're getting too little: "By the end of December, global banks had written off about $1,000bn (€752bn, £699bn) in bad assets, approximately half of that in the US. Since the onset of the crisis, the writedown of assets in the US has exceeded the provision of new capital."
The EU is not much better off. The Geithner plan is way too small for Munchau, and he adds, "Europe, too, will have to start to address the problem, by forcing banks to write down their assets in exchange for new capital." The same concern about inadequate size applies to the G20 pledges of new stimulus money.

But the question at this point is what has the public gotten from the money we've spent so far? Bloomberg estimates that government commitments just in the US are nearing $13 trillion. So the "worry" that appears everywhere in financial commentary is, well, worrying. Has as this just gone into the big back-yard hole for toxic waste the banks can't fill up even with $26 trillion, or $39 trillion?

How much are you going to want? And why should we pay another dollar before Geithner et al can offer a plausible answer to that question?

A much better big picture comes from the geographer and famed analyst of capitalism David Harvey, both on Grit TV (with Alexander Cockburn) and on Democracy Now. Among other good moments he:
  • clearly defines neoliberalism as the reconstruction of class power
  • says at one point "Last January 2008, the Wall Street bonuses collectively came in at $32 billion. OK. And at that time, two million people had already lost their houses. Figure, two million people have lost their houses; Wall Street rewards itself $32 billion. Nobody got angry about that. And I was extremely angry about that. It seemed to me this was class robbery."
  • describes the Right to the City movement in terms that should lead people to look here.
  • suggest the need to theorize zero-growth economics, which he points out will not be capitalist
Among other things, the interview is a relatively short refutation of the familar claim that socialist or marxist economics have no practical solutions. Harvey is good at answering Amy Goodman-style questions like "What does this current crisis mean for the future of capitalism, David Harvey?" But at the point where she asks him "were you for no bank bailouts," he replied, " Well, I was in favor of solving the foreclosure crisis. You see, if you’ve solved the housing crisis, the banks wouldn’t be holding any toxic assets. If you had gone in and bailed out all of the people, there would be no problem on Wall Street."

For the interesting overlap between Harvey's marxism and the analysis of a former IMF banker, see the Atlantic Monthly article by Simon Johnson on how the US became a banana republic of bankers.

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