No time for panic II

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Profile Robert Waite
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Message 813206 - Posted: 29 Sep 2008, 18:54:50 UTC

Naomi Klein

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Free Market Ideology is Far from Finished
By Naomi Klein - September 19th, 2008
Whatever the events of this week mean, nobody should believe the overblown claims that the market crisis signals the death of "free market" ideology. Free market ideology has always been a servant to the interests of capital, and its presence ebbs and flows depending on its usefulness to those interests.

During boom times, it's profitable to preach laissez faire, because an absentee government allows speculative bubbles to inflate. When those bubbles burst, the ideology becomes a hindrance, and it goes dormant while big government rides to the rescue. But rest assured: the ideology will come roaring back when the bailouts are done. The massive debts the public is accumulating to bail out the speculators will then become part of a global budget crisis that will be the rationalization for deep cuts to social programs, and for a renewed push to privatize what is left of the public sector. We will also be told that our hopes for a green future are, sadly, too costly.

What we don't know is how the public will respond. Consider that in North America, everybody under the age of 40 grew up being told that the government can't intervene to improve our lives, that government is the problem not the solution, that laissez faire was the only option. Now, we are suddenly seeing an extremely activist, intensely interventionist government, seemingly willing to do whatever it takes to save investors from themselves.

This spectacle necessarily raises the question: if the state can intervene to save corporations that took reckless risks in the housing markets, why can't it intervene to prevent millions of Americans from imminent foreclosure? By the same token, if $85bn can be made instantly available to buy the insurance giant AIG, why is single-payer health care – which would protect Americans from the predatory practices of health-care insurance companies – seemingly such an unattainable dream? And if ever more corporations need taxpayer funds to stay afloat, why can't taxpayers make demands in return – like caps on executive pay, and a guarantee against more job losses?

Now that it's clear that governments can indeed act in times of crises, it will become much harder for them to plead powerlessness in the future. Another potential shift has to do with market hopes for future privatizations. For years, the global investment banks have been lobbying politicians for two new markets: one that would come from privatizing public pensions and the other that would come from a new wave of privatized or partially privatized roads, bridges and water systems. Both of these dreams have just become much harder to sell: Americans are in no mood to trust more of their individual and collective assets to the reckless gamblers on Wall Street, especially because it seems more than likely that taxpayers will have to pay to buy back their own assets when the next bubble bursts.

With the World Trade Organization talks off the rails, this crisis could also be a catalyst for a radically alternative approach to regulating world markets and financial systems. Already, we are seeing a move towards "food sovereignty" in the developing world, rather than leaving access to food to the whims of commodity traders. The time may finally have come for ideas like taxing trading, which would slow speculative investment, as well as other global capital controls.

And now that nationalization is not a dirty word, the oil and gas companies should watch out: someone needs to pay for the shift to a greener future, and it makes most sense for the bulk of the funds to come from the highly profitable sector that is most responsible for our climate crisis. It certainly makes more sense than creating another dangerous bubble in carbon trading.

But the crisis we are seeing calls for even deeper changes than that. The reason these junk loans were allowed to proliferate was not just because the regulators didn't understand the risk. It is because we have an economic system that measures our collective health based exclusively on GDP growth. So long as the junk loans were fuelling economic growth, our governments actively supported them. So what is really being called into question by the crisis is the unquestioned commitment to growth at all costs. Where this crisis should lead us is to a radically different way for our societies to measure health and progress.

None of this, however, will happen without huge public pressure placed on politicians in this key period. And not polite lobbying but a return to the streets and the kind of direct action that ushered in the New Deal in the 1930s. Without it, there will be superficial changes and a return, as quickly as possible, to business as usual.
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Message 813343 - Posted: 30 Sep 2008, 2:54:04 UTC - in response to Message 813206.  

Ditto

Thank you for posting this article, Robert.
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Profile William Rothamel
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Message 813415 - Posted: 30 Sep 2008, 8:50:57 UTC
Last modified: 30 Sep 2008, 9:01:54 UTC

The thing that resonates with me most about this article is the comment on 'growth at any cost". About 30 years ago or so IBM ran a retreat of sorts at it's Poughkeepsie research center for people managing large IBM computer installations.

During this time they had folks come down from the Harvard Business school to run a simulation of managing a company for six months. I enjoyed the game and made decisions which ran the company just fine and produced growth with good response to customer delivery lags etc.
At the end of the simulation the winner was announced. It wasn't me, the winner had no inventory and had very few employees left. It had no R and D dollars--it could not have met any customer demand for it's product in the near future. But you see the goal was to maximize profit during that period only.

I was appalled at the realization that this was being taught in our Business Schools. No "moral compass" here at all--just a one-sided view of temporal success. A one dimensional measure of "good Business".
And so the quarter-over- quarter profit growth motif has by now caused some voodoo decisions, some voodoo economics and fraud in financial reporting to shareholders and markets.

i watched a major Telecom equipment manufacturer drive it's 100 dollar stock down to practically nothing while producing more and more offshore and in Mexico. Every quarter they shipped excess production to it's warehouses and booked it as sold. They booked future orders profits in the current quarter as well --all to make the numbers come out. It made a 2 billion dollar company look to wall street as a 20 billion dollar company. Every few years they would downsize (restructure and "return to our core competency") and clean up the books and then start all over.

So, in the light of the current miasma in our economy, I renew my call for the presidents and deans of all the major business schools to resign at once. They should be sentenced to studying ethics under the Jebbies somewhere and be forced to create capital by taking in each other's washing. They should be joined by any CEO and Board Member that presided over any monumental losses of capital and shareholder's investments.

Another good rant by Daddio.
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Message 813529 - Posted: 30 Sep 2008, 23:42:46 UTC - in response to Message 813415.  

So, in the light of the current miasma in our economy, I renew my call for the presidents and deans of all the major business schools to resign at once. They should be sentenced to studying ethics under the Jebbies somewhere and be forced to create capital by taking in each other's washing. They should be joined by any CEO and Board Member that presided over any monumental losses of capital and shareholder's investments.

Why don't you just get everyone that thinks like you do together and start and run your own company as you see fit, and let other people run their companies as they see fit?

Paul Newman seemed to do just fine with his company. He made those eeeevil profits too.

Cordially,
Rush

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Message 813532 - Posted: 30 Sep 2008, 23:46:52 UTC - in response to Message 813206.  

And now that nationalization is not a dirty word, the oil and gas companies should watch out: someone needs to pay for the shift to a greener future, and it makes most sense for the bulk of the funds to come from the highly profitable sector that is most responsible for our climate crisis. It certainly makes more sense than creating another dangerous bubble in carbon trading.

Oh yeah. Just like oil companies in the former Soviet Union and the ones in Cuba and the DPRK, they'll pay for EVERYTHING--all you have to do is nationalize them, Naomi. That's all you have to do, and everything would perfect.

Cordially,
Rush

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Message 815447 - Posted: 6 Oct 2008, 22:28:03 UTC

By the look of the stock markets today, it might be time to panic. If you hold stocks that is. I don't right now. Usually, it seems like the more people get laid off the better the market performs. This time it seems different.

Looks like the markets are not enthusiastic about the 700 billion bailout.
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Message 815493 - Posted: 7 Oct 2008, 1:11:28 UTC - in response to Message 815447.  

This time it seems different.

Dat's 'cause they're running out of people to steal from... ;)
It may not be 1984 but George Orwell sure did see the future . . .
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Profile Robert Waite
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Message 815584 - Posted: 7 Oct 2008, 7:29:55 UTC

Jeffrey comes to bat and hits a homerun.
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Message 815865 - Posted: 8 Oct 2008, 9:12:18 UTC - in response to Message 815584.  

Jeffrey comes to bat and hits a homerun.

And for the grand slam:

When our troops finally return home with all that borrowed money from China, they will need places to stay...

I'm quite sure the local 'do nothings' will be more than happy to leave them jobless and hoard their money... ;)

(Welcome home boys and girls!)
It may not be 1984 but George Orwell sure did see the future . . .
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Message 818028 - Posted: 13 Oct 2008, 13:59:32 UTC

What do you think of this link: http://www.newsweek.com/id/163451

Chris.
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Message boards : Politics : No time for panic II


 
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