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this is a nice article that sums up the current financial crisis and some of its global implications. the major piece which is missing, as usual, is an understanding of how global capitalism, and the American Empire in particular, has been propped up by a sea of oil, how the depletion of that oil has sparked this collapse, and why the deepening shortage of oil will prevent anything similar to this capitalist system from coming back, ever again. i’ll try to write an article to explain this soon. [alex]
Death of the American Empire
America is self-destructing & bringing the rest of the world down with it
by Tanya Cariina Hsu
Originally published by Global Research, October 23, 2008.
I believe that banking institutions are more dangerous to our liberties than standing armies. (Thomas Jefferson, US President; 1743 – 1826)
America is dying. It is self-destructing and bringing the rest of the world down with it.
Often referred to as a sub-prime mortgage collapse, this obfuscates the real reason. By associating tangible useless failed mortgages, at least something ‘real’ can be blamed for the carnage. The problem is, this is myth. The magnitude of this fiscal collapse happened because it was all based on hot air.
The banking industry renamed insurance betting guarantees as ‘credit default swaps’ and risky gambling wagers were called ‘derivatives’. Financial managers and banking executives were selling the ultimate con to the entire world, akin to the snake-oil salesmen from the 18th century but this time in suits and ties. And by October 2009 it was a quadrillion-dollar (that’s $1,000 trillion) industry that few could understand.
Propped up by false hope, America is now falling like a house of cards. Read the rest of this entry »
Hopi Grand Canyon Sunset
Copied from Relocalize.net
A Hopi Elder Speaks
“You have been telling the people that this is the Eleventh Hour. Now you must go back and tell the people that this is the Hour. And there are things to be considered . . .
Where are you living?
What are you doing?
What are your relationships?
Are you in right relation?
Where is your water?
Know your garden.
It is time to speak your Truth.
Create your community.
Be good to each other.
And do not look outside yourself for the leader.”
Then he clasped his hands together, smiled, and said, “This could be a good time!”
“There is a river flowing now very fast. It is so great and swift that there are those who will be afraid. They will try to hold on to the shore. They will feel they are torn apart and will suffer greatly.
“Know the river has its destination. The elders say we must let go of the shore, push off into the middle of the river, keep our eyes open, and our heads above water. And I say, see who is in there with you and celebrate. At this time in history, we are to take nothing personally, Least of all ourselves. For the moment that we do, our spiritual growth and journey comes to a halt.
“The time for the lone wolf is over. Gather yourselves! Banish the word struggle from your attitude and your vocabulary. All that we do now must be done in a sacred manner and in celebration.
“We are the ones we’ve been waiting for.”
— attributed to an unnamed Hopi elder
Hopi Nation
Oraibi, Arizona
Whose economy is it really? [alex]
Special report: How our economy is killing the Earth
Originally published by New Scientist, 16 October 2008.
Growth is death
THE graphs climbing across these pages (see graph, right, or explore in more detail) are a stark reminder of the crisis facing our planet. Consumption of resources is rising rapidly, biodiversity is plummeting and just about every measure shows humans affecting Earth on a vast scale. Most of us accept the need for a more sustainable way to live, by reducing carbon emissions, developing renewable technology and increasing energy efficiency.
But are these efforts to save the planet doomed? A growing band of experts are looking at figures like these and arguing that personal carbon virtue and collective environmentalism are futile as long as our economic system is built on the assumption of growth. The science tells us that if we are serious about saving Earth, we must reshape our economy.
This, of course, is economic heresy. Growth to most economists is as essential as the air we breathe: it is, they claim, the only force capable of lifting the poor out of poverty, feeding the world’s growing population, meeting the costs of rising public spending and stimulating technological development – not to mention funding increasingly expensive lifestyles. They see no limits to that growth, ever.
In recent weeks it has become clear just how terrified governments are of anything that threatens growth, as they pour billions of public money into a failing financial system. Amid the confusion, any challenge to the growth dogma needs to be looked at very carefully. This one is built on a long-standing question: how do we square Earth’s finite resources with the fact that as the economy grows, the amount of natural resources needed to sustain that activity must grow too? Read the rest of this entry »
Worth watching this 3 minute video for an incredibly clear and concise explanation of Peak Oil and why it’s the source of this economic collapse, by Dr. Richard Heinberg. The near-term forecast for the economy is probably a series of large swings up and down, but as the oil shortage deepens the long-term trend will be an accelerating decline in economic activity.
For more, see this short explanation of why the current drop in oil prices is only temporary… (once again – my normal disclaimer – don’t hold me to everything he says here.. particularly not the “markets may be efficient…” statement) [alex]
“The Magic Market”
Richard Heinberg
Originally published by Post Carbon Institute, Oct. 13, 2008.
As the world finance system disintegrates and the price of oil wafts below $80 a barrel, we are about to see yet another instance of Market Magic.
Demand for oil is falling as world economic activity sputters. Many analysts are now forecasting that the barrel price could go as low as $50 to $60 in the next few weeks.
Meanwhile, however, the marginal cost of bringing a new barrel of oil into production has been rising in recent years, and now stands in the range of $80 to $100. Therefore, as the spot price and futures prices weaken, efforts to develop new oil sources will be mothballed. Read the rest of this entry »
US Senate — Working for Wall St., not us
Jerry Silberman, Oct. 2, 2008
The Wall St. Rescue bill which gained new life with the Senate rubber stamp yesterday will neither halt the decline of the US economy nor penalize the financial gamblers who have been the most immediate cause of this disaster.
Here are two important historical comparisons —
In the late 70’s and early ’80’s, the offensive by big business against workers took the form of demanding concessions in wages and benefits mostly from industrial unions, claiming that if factories weren’t made more “competitive” through reduction of labor costs, they would go out of business. Of course, no employer guaranteed the future of the plant of the job, we were supposed to trust them. Of course, it was a scam. Plants that took concessions closed. Plants that didn’t closed. The economic transformation was based in much larger issues. In plants that closed after concessions, the bosses simply walked away with more, and the workers were left with less. The money stolen by the bosses as a result of concessions helped fund the elimination of thousands of jobs through automation, as well as the transfer of manufacturing plants out of the country. The labor movement at the time was unprepared to fight back, since it bought into the general principles of the bosses, and is still suffering, despite renewed energy in certain unions.
The several “bail outs” that have happened over the past year are identical to those concessions — big business is threatening us with dire consequences if we don’t protect them, while making no promise that anything will get better if we do. Each bailout is bigger than the last, and more futile — except for the corporate executives who are continuing to stash the cash. Each bailout imposes more costs on us, now and in the future, as positive government programs are sacrificed and more debt is imposed on our tax dollar. Right now about 51 cents of every tax dollar goes to the military. Interest on the national debt, that is tax dollars which go directly to pay the government bond holders is the third largest item in the federal budget, right now one half trillion per year. Since about 140 million people file federal income tax returns annually, this means that on average, about $2000 of your taxes are already going to pay off bondholders on Wall St, in Saudi Arabia, China, and many other countries. This number will jump as a result of this bailout. That’s all money not available for schools, health care, environmental protection, etc.
In the early ’30’s the economy collapsed in what is commonly referred to as the Great Depression. Unlike this collapse that began early in the term of Herbert Hoover. By the time of the next presidential election, millions of Americans were impoverished and beginning to organize to fight back. They were marching in the streets for unemployment insurance, refusing to allow people to be evicted from their homes by blockading homes from the sheriff, WWI vets marched on Washington demanding relief and were fired on by current troops under the command of Gen. MacArthur (later of WWII fame) Radical political movements were growing. The new president recognized that some concessions had to be made to the working class by big business or the US would risk a revolutionary situation. Roosevelt, pressured by those movements of ordinary people who couldn’t take it any more, finally convinced Congress to enact several reforms, including unemployment insurance, Social Security, and tough banking regulations (repealed in the Reagan and Bush administrations) to stabilize the economy.
Although there are many very important differences in the current situation from those historical times, there are some very important common threads, the most important being that collective action by working people to challenge the rich and powerful is the key to any change which can create a more stable, secure and healthy life for us. And our goal must be based on a comprehensive vision of a just society, not just trying to protect a niche for ourselves.
This is a very provocative idea, but an important one. If collapse is inevitable, is it a case of ‘the sooner, the better’? Good article overall, though I think a stronger anti-capitalist analysis is needed here. [alex]
‘The best outcome is probably for humans to hit the wall soon and hard.’
By Roger Baker / The Rag Blog / October 2, 2008
Is industrial collapse the BEST way out of our current economic mess?
Arguably yes and here is why. But does it even matter? Perhaps not. Capitalism, in its global form and as we now know it, is likely finished in any case, so the choice is likely to be an illusion. But the best outcome is probably for humans to hit the wall soon and hard.
The Economic Context
Capitalism as an economic system depends on an endless expansion of material goods production at a rate that allows lenders to earn interest on money saved and invested. The only way to get potential lenders to lend rather than spending their money immediately is to reward them with a real rate of return on their savings. This is done by promising lenders that they will be rewarded with the ability to buy more material goods in the future. A reward must be offered to lenders for not buying and stockpiling bars of gold, barrels of oil, or any other desirable goods or services now as opposed to putting their money in banks or investing it in stocks or bonds or whatever else can earn them a real rate of interest as a reward for offering their savings up for investment by others.
Keynesian economics tries to maintain a mild inflation rate of a percent or two in order to encourage people to save their money in banks and other alternatives that offer a return above the rate of inflation. This is necessary to keep people from simply putting their money under a mattress. If the rate of inflation is one percent and they can earn three percent in a bank, they will bank their spare funds and will, in theory, be able to come out ahead and buy two percent more in the amount of physical goods or services than they had originally put in.
That is how those managing the economic system (like the Federal Reserve representing the banks) try to set things up. It is meant to encourage people to behave predictably and to keep them saving and investing. Under conditions in which in which it is possible to keep the material world always expanding and yielding a production of desirable goods at or above the rate of interest on money saved, this system remains viable and stable. This assumes that the financial system has been well-managed, and that there are no external limiting factors.
Enter Peak Oil
We now live in a world economy that is rapidly approaching the limiting factor of fossil fuel energy sources. The specific limiting factor that is most relevant is a looming shortage of liquid fuel based on petroleum as the total world oil production peaks and declines.
The peaking of world oil production strongly affects the investment equation that underlies the global capitalist economy and rewards investments and savings. The global economy is based on a cheap-oil-related infrastructure for its expansion of the production of real goods. Capitalism requires cheap energy to deliver the exponential expansion of material goods through investments that can pay real interest rates on loans. But this expectation is probably more than the expansion an oil-addicted global production system can really deliver. It changes the system’s economic potential by making it impossible to earn a real rate of return on the money saved by lenders, who in the case of the United States have increasingly been foreign lenders.
The underlying problem is that nobody can think of a way to keep expanding the material production of a global economy that is experiencing a shrinking supply of liquid fuels. These oil-based fuels move almost all goods in our global economy. This economy is based everywhere on the cheap transport of people, goods, and the capital goods needed to expand global production, whether it be by ship, by rail, by road, or by air. When the ability to move almost all goods declines, the expansion of the ability of capitalist investments to exploit nature for human uses must also decline. Read the rest of this entry »
With Congress giving in to this historic power-grab by Secretary of the Treasury and former CEO of Goldman Sachs Paulson and his friends in the banking industry, to seize control of the country’s finances (despite loud and obvious public opposition), it appears the end of capitalism is at hand. [alex]
Originally published by CNN.com, Oct. 3, 2008.
Stocks slump despite bank rescue
Dow suffers worst weekly performance since the week after 9/11 attacks, as investors remain fearful about the economy.
NEW YORK (CNNMoney.com) — Stocks slumped Friday, as a brutal week ended with President Bush signing the historic $700 billion bailout plan after weeks of contentious debate.
Credit markets remained frozen, despite the vote, with two measures of bank jitters rising to record highs. Investors also looked to Wells Fargo’s planned purchase of Wachovia and a dismal job market report.
The Dow Jones industrial average (INDU) lost 1.5% Friday and 7.3% for the week. On a point basis, the Dow lost 818 points this week, its biggest weekly point loss in seven years and the third biggest weekly loss ever.
The Standard & Poor’s 500 (SPX) index lost 1.4% Friday and 9.4% for the week. On a point basis, the S&P lost 114 points, the worst weekly point loss in seven years and the third biggest weekly loss ever.
The Nasdaq composite (COMP) lost 1.5% Friday and 10.8% for the week. The 10.8% decline was the worst in seven years and fifth worst ever. But the weekly point drop of 236 points fell outside the ten worst in history. Read the rest of this entry »
The End of Capitalism 
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