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SENATE RECORD VOTE ANALYSIS101st Congress 1st Session April 18, 1989, 6:41 p.m. Page S-4124 Temp. Record Vote No. 47
FSLIC REFORM/Motion to Waive Budget ActSUBJECT: The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 . . . S. 774. Graham motion to waive the Budget Act for the Graham amendment No. 52.
MOTION REJECTED, 48 - 50SYNOPSIS: Pertinent votes on this legislation include Nos. 45-51. As reported by the Committee on Banking, Housing, and Urban Affairs, S. 774 provides a comprehensive restructuring of the savings and loan industry's regulatory framework. The bill provides that thrift capital standards materially conform to the capital standards applied to the banking industry. It creates an off-budget agency, the Resolution Funding Corporation (RFC), to issue $50 billion worth of 30-year bonds over the next 3 years to cover the costs of closing down or selling insolvent thrifts. The bill creates an additional off-budget agency, the Resolution Trust Corporation (RTC), to dispose of failed thrifts and the assets of failed thrifts and to assist the Federal Depository Insuran
By: Tim Wood Posted: 2000/12/13 Wed 18:00 | © Miningweb 1997-2002 The Bank for International Settlements is the linchpin around which Howe has crafted an ingenious case. He links the BIS's attempt to recover its privately held shares at an arbitrary discount with the depressed gold price, violations of the US constitution and federal law, common-law fraud, securities fraud and anti-trust violations.Howe's complaint, filed in Boston Federal Court last week, is flush with chutzpah. First defendant is Alan Greenspan, boss of the U.S. Federal Reserve. Howe would also like his day in court with Secretary of the Treasury Lawrence Summers, New York Fed President William McDonough and a handful of the best brands in banking.A higher go
Five years after it began steps to recapitalise its state banking system, China still suffers from an increasing stock of non-performing loans, widespread capital misallocation and manifold structural inefficiencies. They could yet cause a full-blown crisis unless bold measures are taken, according to a new report.
The report, Banking in China by CLSA, a brokerage house with extensive China experience, estimated that total non-performing loans in the banking system were around $450bn, or 37 per cent of gross domestic product in 2001. Losses from these loans were forecast at $360bn, or 30 per cent of GDP.
These estimates fall in the middle range. The People's Bank of China (PBOC), the central bank, said recently that NPL ratios fell 1.5 percentage points to 23 per cent between April and August this year. The more pessimistic independent economists have put the level of NPLs at around 50 per cent of GDP.
There was a chill in the air earlier this month on Paradise Island. Investors at a financial conference on the island in the Bahamas were told that some buyers of structured debt products known as collateralised debt obligations (CDOs) had been short-changed by scurrilous investment managers. They were warned to watch their investments carefully.
"Investors must really drill down to the trading patterns and scrutinise what managers are doing," said David Tesher, the head of Standard & Poor's CDO group. "There must be a focus on transparency."
This new emphasis on transparency in the complex world of structured finance comes amid record downgrades of CDOs, which are compilations of fixed-income assets such as bonds and loans.
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Click to scroll to commentary. TOPICS Business/Economy Editorial Foreign Affairs KEYWORDS CHINA DREAM CHINESE ECONOMY ECONOMIC COLLAPSE OVERSEAS INVESTMENT China dream alive and kicking (economy ripe for collapse)The New Australian | June 2002 | S.P. Seth
Posted on 07/13/2002 8:28 AM Pacific by spycatcher Return to The Front Page China dream alive and kicking by S.P. Seth Tiawan: TaipeiTNA News with Commentary No. 339, June 2002 A new book The China Dream: The Elusive Quest for the Greatest Untapped Market on Earth, provides an analysis of the unrealized hopes of foreign investors and businesses regarding the limitless scope of the mainland China market.
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RATES & BONDSKey RatesU.S. TreasuriesGovernment BondsMunicipal Bonds CURRENCIESCurrency RatesCross Currency RatesCurrency CalculatorEMU Update COMMODITIESMost Active FuturesCommodity MoversEnergy 10/24 04:02China, Asia's Other Potential Banking Crisis: William Pesek Jr.By William Pesek Jr.
Tokyo, Oct. 24 (Bloomberg) -- A gold-rush mentality has seeped into corporate boardrooms around the globe. The headlong pursuit of wealth in a new and lucrative place is focused on China, capitalism's latest frontier.
For Vince Kaminski, the in-house risk-management genius, the fall of Enron Corp. began one day in June 1999. His boss told him that Enron President Jeffrey K. Skilling had an urgent task for Kaminski's team of financialanalysts.
A few minutes later, Skilling surprised Kaminski by marching into his office to explain. Enron's investment in a risky Internet start-up called Rhythms NetConnections had jumped $300 million in value. Because of a securities restriction, Enron could not sell the stock immediately. But the company could and did count the paper gain as profit. Now Skilling had a way to hold on to that windfall if the tech boom collapsed and the stock dropped.
Enron's Empire - CorpWatch_org - Issues - Enron - Articles.htm
RELATED STORY A Chronology of Enron's Empire Showcasing Enron's ability to leverage $7.2 billion dollars in public financing.
(Excerpted from the full report, available at http://www.seen.org/) The US public is only just beginning to comprehend the devastating domestic impact of Enron's financial machinations and dirty deals. However, the part of the story that has been eclipsed until now, is that Enron's international empire, which was fraught with charges of human rights and environmental abuses, was built on a foundation of about $7 billion in taxpayer money. This $7 billion came from institutions whose mandates range from poverty alleviation to promoting the US Merchant Marines or German exports, yet Enron convinced each that it was in their interest to promote the capitalization of Enron.
Marx originally described a system-wide falling rate of profit crisis as part of his analysis of advanced capitalism. In Marx's model, the increasing use of machinery with a decreased use of human labor would ultimately so increase total production, that total consumption power would be too low to keep production recycling back into consumption. 1 A great inventory bulge would lead businesses to lay of excess workers and the downward spiral of laid-off workers and decreasing sales would so affect sales, the profits would fall.
Today, the Internet threatens to bring about another type of falling rate of profit crisis (falling rate crisis). An article in The Wall Street Journal described how the Internet is allowing consumers to compare national prices on given articles, particularly automobiles and to obtain the lower prices:
Fallout Spreads After Collapse of a Health Services Lender.htm
Fallout Spreads After Collapse of a Health Services LenderBy MICHAEL ONEAL
The collapse of National Century Financial Enterprises toppled another of its clients yesterday when Doctors Community Healthcare — a company based in Scottsdale, Ariz., that owns five hospitals in low-income neighborhoods in Washington, D.C.; Chicago and Southern California — filed for Chapter 11 in the Federal Bankruptcy Court for the District of Columbia.
Doctors Community joins several other major customers of National Century that have filed for bankruptcy since the health care finance company, based in Dublin, Ohio, began to come apart in late October. The PhyAmerica Physician Group in Durham, N.C.; Tender Loving Care, a unit of Med Diversified in Andover, Mass.; LifeCare Solutions in San Diego; and Lincoln Hospital Medical Center in Los Angeles have all sought Chapter 11 protection in the last two weeks after they stopped receiving payments from National Century.
Farm Productivity, the Web and the Next Depression Exports as Means for Managing Excess Productivity: Farms Since the 1920s In testimony before Congress on February 23, 2000; Federal Reserve Chairman Alan Greenspan was asked about the immediate situation of farms. With short term interest rates rising, oil prices at high levels and farm commodity prices down, farm belt Congressmen are worried. Greenspan replied with an answer which went into the history of farm productivity, but ended with his usual reply, that farms will have to export their way out of the problem. Aside from the fact that farms have been following that policy off and on since the 1920s, even as the actual numbers of farms has steadily dropped; Greenspan's reply showed what could be a crucial fact in understanding his view on the Web economy. It may also have revealed a potentially fatal weakness in how Greenspan hopes to deal with th
It has been fascinating to watch the market reaction to two dramatic recent events - Argentina and Enron.
In the first case investors didn't put a hair out of place as an entire country collapsed into chaos, owing the rest of us a lot of money it probably will never repay.
In the second, the fall of an energy trading company has sent shock waves through the equity, bond and energy markets, the accountancy profession, regulatory and political circles.
The simplest explanation for the difference in the scale of reactions is this: that Argentina was a widely anticipated event for which investors had many months and even years to prepare, while Enron was a bolt from the blue, played out over a few short weeks in late 2001. A financial crisis ensues when an event occurs that the market fails to predict.
Uncle Sam shown to be king of bad bookkeeping By MARTIN CRUTSINGER Associated Press
Exaggerated earnings, disguised liabilities, off-budget shenanigans -- they are all there in the government's ledgers on a scale even the biggest companies could not dream of matching.
London, Aug. 12 (Bloomberg) -- Over the distance of centuries, great investment disasters become cliches. What were they hoping to do in the South Sea exactly? What was so great about tulips? Who was Charles Ponzi and what was he selling? Nobody quite recalls. Yet, though the details are forgotten, the words enter the language as shorthand for stupidity, blindness and greed.
The complex instruments known as derivatives are meant to hedge risk. But
they may raise the odds of a collapse at the storied bank -- and, say many,
for the market as a whole.
By Jim Jubak
Could a failure at J.P. Morgan Chase (JPM, news, msgs) crash the entire financial system? That’s a scenario with credibility on Wall Street, which helps explain the recent trouncing of financial stocks.
These circumstances certify this bear market as unique in all of history. Thus, we are probably correct in assuming the mania was and still is the biggest mania of all time. If so, it may be entirely logical to assume that the biggest stock market mania of all time should be followed by the worst bear market of all time. However, the notion of "worst" is dependent upon three factors; price or time or both. Thus far, the current bear market is not in first place in any of the three categories. But as long as the bear market remains unique in those regards mentioned above, the greater the odds will be that the bear will ev
When John Woo's costly World War II epic "Windtalkers" had a disastrous debut this summer, MGM Studios responded in Hollywood fashion: It spent millions of dollars on emergency marketing.
Despite the infusion of cash for new ads, the box-office receipts didn't climb, but the losses did. "Windtalkers," starring Nicolas Cage, grossed just $41 million in the U.S., or $1 million less than what sources said it cost to market. And that didn't include the film's price tag of more than $110 million.
Recently-released comments from the policy-making meeting that month show the Fed had what might seem to be a largely academic discussion about the other options available to it. This is an amazing revelation.
I've been giving hints about this sort of thing since September, but I believe the Fed's discussions were much more than just theoretical. I think the Central Bank actually stepped in and saved the stock market.
With the Fed taking an active role in the market, just about anything could happen - both good and bad.
The Fed's intervention in stocks is, to put it mildly, earth shaking in a free-market economy that prides itself for having equities that move up and down on their merits alone.
[...]Asset-backed commercial paper programs use a vehicle called a special purpose entity (SPE) to issue commercial paper. The programs provide a service basically similar to that offered by a factoring company in that the SPE finances the receivables of corporate clients. In other respects, however, the SPE differs from a factoring company. Typically a factor assumes the role of a credit department for its clients to evaluate the creditworthiness of the clients’ customers. While it finances a client’s receivables by purchasing them, the SPE does not perform a credit evaluation of each obligor associated with the receivables in the pool as a factor would, but relies instead on an actuarial review of the past performance of the client’s portfolio of receivables.”
Importantly, Credit insurance provides a “wrap” around the underlying risk collateral, with insurers “lending” their top ratings to the special purpose vehicles borrowing in the commercial paper markets. And whether it is with Credit insurance, the asset-backed securities market, default swaps and other Credit derivatives, or the powerful GSEs, we are very troubled by the blind reliance on historical loss models. We have been in a long Credit-induced Bubble, with historical loss experiences today irrelevant for the future. We are reminded of the “studies” of junk bond historical outperformance that provided key propaganda for the Milken-led junk bond Bubble in the late eighties, as well as the nonsense that stocks always outperform that became religious doctrine at the late stages of the stock market Bubble. So, at the pinnacle of the Credit Bubble, we should not be surprised that similar dogma prevails. Certainly, the perception of invincibility for “structured finance” is deeply engrained and, hence, dangerous. There is always a critical flaw in commonly held financial delusions (as well as a related source of monetary and Credit excess) that fuels eventually self-destructing Bubble excess. I would argue that these forces are only more seductive, powerful and self-feeding in the Credit cycle. What we have experienced in the U.S. Credit system over the past few years makes the late-80s junk bond excesses look trivial and the stock market Bubble seem relatively benign in comparison. It is our view, of course, that we are in the midst of a critical inflection point for one of history’s most extreme episodes of Credit and speculative excess. [...]
ROBIN BLACKBURN - THE ENRON DEBACLE AND THE PENSION CRISIS.htm
New Left Review 14, March-April 2002 What does the collapse of America’s energy conglomerate reveal about the mechanisms of financial intermediation? Crooked accountancy and plundering of employee pensions as badges of the Anglo-Saxon model that is conquering the landscape of capital today.
ROBIN BLACKBURN THE ENRON DEBACLE AND THE PENSION CRISIS The collapse of Enron has cast revealing light not just on the venality of business leaders, auditors and politicians but on the contours of deregulated ‘Anglo-Saxon’ capitalism as it has emerged from the stock-market bubble. It has highlighted, too, the vulnerability of the broad layers whose pensions are tied up in the savings regime so integral to the neoliberal economy. The debacle has affected not only Enron’s employees but tens of millions of holders of 401(k) and defined-benefit retirement schemes. The greed of the Houston-based directors, and their willingness to cash in huge stock options as the company went down, was matched by many se
Rich Lost $2.6 Trillion in 2001By REUTERS Filed at 7:34 p.m. ET LONDON (Reuters) - Rich investors on both sides of the Atlantic lost $2.6 trillion -- or six percent of their wealth -- in 2001's plunging markets, according to a survey.
The mountain of assets wiped off in just one year is roughly the size of the entire private banking industry in Switzerland, where wealthy client assets managed by banks are estimated at between $2 trillion and $3 trillion.
``Few investors or regions were untouched by the destruction,'' said the benchmark industry survey published by global management consultants Boston Consulting Group (BCG).
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Guest Commentary, by Richard Hastings The wildcatter’s wildcard April 30, 2002 Richard D. Hastings, CCE, is VP-Credit Economist and Retail Sector Analyst with CyberBusinessCredit.com, Inc., a supply chain research and credit rating firm based in New York, NY. You may contact Richard at (704) 366-0405, or send email to rhastings@cyberbusinesscredit.com
Most of us tend to analyze globalization from rather comfortable perches -- and in relative isolation. During the five days of the annual World Economic Forum, Davos, Switzerland becomes a real-time laboratory of globalization. I know of no other gathering in the world -- and I’ve been to all of them -- that brings the major constituencies of globalization to the same table. Politicians, policy makers, academics, corporate leaders, artists, religious leaders, and senior representatives of most of the world’s leading NGOs (non-governmental organizations) come to Davos with a seriousness of purpose and an urge to engage. Contrary to widespread impression, Davos is
Did RussiaKnow?21st September, 2001A PsyOpNews.com AlertPsyOpNews.com Comments: Just because Russia was forecasting the demise of the US Financial Bubble, does NOT mean they knew of the WTC attack. Because the dogs in the street knew that Wall Street was headed for a fall. That's because the dogs in the street do not listen to the paid promoters of the Wall Street socio/political analysis -the so-called analysts who are as bullish as they are politically indoctrinated.PsyOpNews predicted the war option would be used as a solution to the imminent market crash in our mid-August article "Animal Farm UK" and in our "Iceberg Ahead".So read on
Broadway @ 50th Street, NYCJune 6, 1998 1. Introduction 2. Smith, Marx and Keynes3. Long Waves and the Contradictions between Smith, Marx and Keynes 4. Major Modern Economists and Their Long Wave Overlap5. Production Consumption Balance and the Long Waves6. Keynes, Secular Stagnation and the Great Depression7. Keynes: Fiscal Deficit Policy, the First Debt Wave and Monetarism8. Keynes's Debt Waves 1 and 2: Roosevelt to Reagan9. From Labor Long Waves to Debt Long Waves to Knowledge Long Waves10. Market Crash of 1987, the Internet and the Knowledge Wave11. Crisis in the Economy and Economic Theory12. The Internet, Falling Rate of Profit and Knowledge-Based Accumulation
Chart 1 First Three Long Waves as Defined by KondratieffChart 2 Major Modern Economists and Long Wave Overlap with Their Life SpansChart 3 Major Modern Economists with their Life Dates and Economic Assumptions on Production-Consumption Balance, Economic Destabilization-Stabilization Effects and Long Waves Chart 4. Six Long Waves From 1790 to 2000 with Upswing and Downswing Dates, Type of Innovation, and Starting and Concluding Innovations
South China Morning Post -- Saturday, August 25, 2001 To the Victor... Sterling and Peggy Seagrave In the closing months of World War II, in the Philippines, several of Japan's highest ranking imperial princes hid tonnes of looted gold bullion and other stolen treasure in caves and tunnels, to recover later. This was the wealth of 12 Asian countries, accumulated over thousands of years.
Expert teams accompanying Japan's armed forces had systematically emptied treasuries, banks, factories, private homes, pawn shops, art galleries, and stripped ordinary people, while Japan's top gangsters looted Asia's underworld and its black economy.
Savings & Loan Crisis: Lessons and a Look Ahead Volume 2, Spring 1990 Lobbying Into Limbo: The Political Ecology of the Savings & Loan Crisis Joseph A. Grundfest The S&L crisis was caused primarily by underpriced deposit insurance and inadequate supervision. This was not an accident but the result of intense lobbying by the U.S. League of Savings Institutions. Four factors enabled the savings and loan industry to strong-arm Congress into providing unconscionable benefits: 1) a broad geographic base; 2) a non-controversial ideology that was popular with the middle-class; 3) the ability and willingness to finance congressional campaigns; and 4) the willingness to exploit Congress’ fiscal bind spots. The S&L bailout will cost from $325 to $500 billion. Other government programs threaten to impose similar costs. To avoid this, the information component of the political equation must be changed: hidden costs of loan insurance and guaran
Policy Analysis No. 93 October 27, 1987
THE EMERGENCE OF THE SERVICE ECONOMY:FACT OR ARTIFACT? by Richard B. McKenzie Richard B. McKenzie is a professor of economics at Clemson University and an adjunct scholar at the Cato Institute. This study is drawn from The American Job Machine: Problems, Principles, and Policies (Cato Institute, 1988). Executive Summary The emergence of the service economy has given birth to the public policy worry that the United States is being reduced to a nation of orderlies, fast-food workers, and bus boys. Much of the analysis that has appeared in the press, policy papers, and books has simply sought to describe structural changes in U.S. production and employment.[1] On the basis of the data depicted in Figure 1, some analysts have concluded that employment in the U.S. service- producing s
Policy Analysis No. 138 August 29, 1990
THE PERILS OF MANAGED TRADE by Susan W. Liebeler and Michael S. Knoll Susan W. Liebeler, former chairman of the International Trade Commission, is a partner in the law firm Irell & Manella. Michael S. Knoll, a lawyer and an economist, is an assistant professor at the University of Southern California Law School and of counsel to Irell & Manella. Executive Summary From Capitol Hill, Wall Street, the Great Plains, andSilicon Valley have come proposals to abandon the multilateraltrading system and begin managing trade from Washington.(1)A move toward managed trade--substituting government inter-vention and market-share goals for market forces and multi-lateral rules--would represent a change in policy for theUnited States, which since the end of World War II has beena leading advocate of liberalizing international trade.Advocates of managed tr
S t r a t e g i c A n a l y s i s The US Economy;A Changing Strategic Predicament Wynne Godley Levy Economics Institute, February 15, 2003 INTRODUCTION AND SUMMARY Right through the boom years prior to 2001, the US economy was facing a strategic predicament - to which attention was repeatedly drawn in a series of papers emanating from the Levy Institute - in that the main engine of growth (credit financed private expenditure) was unsustainable, from which it followed that the whole stance of fiscal policy would have to be radically changed if the New Economy was not to become stagnant. The experience of the last two years has partially vindicated the Levy view. The boom was indeed broken because, as predicted, private expenditure fell relative to income. And the potentially dire effects on the level of activity were mitigated by a transformation in the stance of fiscal policy, accompanied by a radical change in attitudes to budget deficits,
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Guest Commentary, by Edmund M. McCarthy Through the obverse of the looking glass darkly April 11, 2002 Edmund M. McCarthy is President and CEO of Financial Risk Management Advisors Company.
The Cycles of Financial ScandalBy KEVIN PHILLIPS
OSHEN, Conn. — America is at a turning point. Corporate scandals, the fall of the stock markets, the sudden mobilizations in Washington of the last few weeks to legislate against some of the more egregious corporate abuses: they all indicate that the nation's attitude toward business is changing. It is potentially a bigger change than many politicians realize. What's unnerving them is that the payback from the market bubble of the late 1990's is becoming apparent to Main Street. The charts of the downside since March 2000 are starting to match the slope of the earlier three-year upside.
The Death of Industrial Civilization by Wolf DeVoon It is sensible and proper to sequester your financial assets and head for the encrypted hills—but this is not the same thing as saving industrial civilization; it is merely covering your own butt (for the time being).
People have been hiding cash under mattresses a very long time, to conceal it from the IRS and other thieves. Every American family does business in unreportable cash and fibs a little on Form 1040. For instance, Phil and Doris breed poodles. They get $500 a puppy, and federal, state, and local tax collectors get zippo. All well and good—but black market puppies, swap meets, garage sales, babysitters, and dope deals are economically insignificant (approximately 3 percent of U.S. GDP). An industrial society cannot function "underground," no matter how cleverly we hide a few pennies. The value of our pennies (i.e., our purchasing power) is determined by much larger, non-portable economic entities — farms, mines,
The Decline in the Rate of Profit and The Theory of Crises Editor's Note: This discussion by Raya Dunayevskaya of Marx's critique of capitalist production consists of excerpts from the first draft of what became her first book, MARXISM AND FREEDOM--a manuscript entitled "State-Capitalism and Marxism",written in 1947. The original can be found in THE RAYA DUNAYEVSKAYA COLLECTION, microfilm no. 472.
By Raya Dunayevskaya/Founder of Marxist-Humanism Volume III [of CAPITAL], which deals with the phenomena of capitalism in their concrete movements, is the one which is preferred by present-day academic economists. These tell us that it is only from this vantage point, where Marx deals with prices and profits, that one can understand Volume I where he deals only in abstractions: value and surplus value. MARX'S POINT WAS THE EXACT OPPOSITE. He maintained that once you understand the law of surplus value, the law of profit would present no difficulty; if you reversed the process, you could understand neither the one nor the other.It is true that Volume III is Marx's nearest approximation to the real world. Commodities
The US Federal Reserve in January considereda variety of "unconventional" emergency measures to be taken if cutting short-term interest rates failed to arrest a US recession and prevent Japanese-style deflation. One of those steps may have been a plan to buy US stocks.
According to minutes of its January 25-26 meeting, the Fed's policy-making Open Market Committee agreed "unconventional policy measures might be available" to deal with a situation in which "the economy were to deteriorate substantially in a period when nominal short-term interest rates were already at very low levels", although, it said, the efficacy of such measures was "uncertain". The minutes vaguely mention internal analyses of such a scenario.
Reuben L. Norman Jr., Ph.D. February 8, 2000 OUTLINE 1.1 Labor-Dominant vs. Knowledge-Dominant Products: The Web & a Falling Rate of Profit Crisis &nb
THE OTHER SECURITY RISK U.S. Hospitals FaceCritical Drug ShortagesPart 2 by Linda Everett As President Bush was releasing his proposal for a Cabinet-level Department of Homeland Security on July 16, calling for the most sweeping changes in government since 1947 to protect the United States against a "new wave of terrorism," hospitals across the United States were findng it impossible to meet the basic, daily needs of their patients, due to the worst-ever shortage of 39 critical hospital drug products. The shortages are not only crippling hospitals in terms of time and resources spent, they are also contributing to an increase in hospital medical errors, related deaths, and "near misses."
Every mania appears to have its myth. Although purely extrapolative expectations during the best of times probably give birth to bubbles, the attraction such manias have for the general public probably rests to some degree on the “new era” myth that accompanies it. No doubt the degree to which professional money managers are willing to bypass the high fiduciary standards they are held to and to chase self-fulfilling prophecies is equally a function of the power of the myth accompanying the mania.
The bull market of the 1990s was underpinned by a number of these myths, most of which have been subsequently blown apart. In an earlier piece, we set forth a number of ways in which the stock market boom of the 1990s, coupled with a number of questionable accounting practices, contributed to an increasing degree to a misleading picture of the sustainable earnings power of several leading companies, particularly (but not restricted to) the high tech sector. The Enron debacle and its aftermath have pretty well exposed the extent of these fictions and illustrated the degree to which the bull market was built on a tissue of lies and accounting fraud. Standard setters are now targeting stock options again; after Enron, this is becoming harder to resist.
The Risk Of Credit Collapse - FT.htm
The band of fallen angels, once favoured companies now facing big debt troubles, grows with each passing week. The bonds of WorldCom and Qwest Communications, which together owe more than $50bn to creditors, were both downgraded this month to junk. Their travails and the bankruptcy of companies such as Enron, Global Crossing and Kmart have infected debt issued by a swathe of companies as distinct as AT&T and AOL Time Warner.
Corporate defaults reached record levels last year, and this year the picture is forecast to be no better. It could be even worse. If the forecast is right, the impact will be felt by a large group of investors inside and outside the US, and by the foreign exchange market.
But throughout congressional hearings on the topic in July, the real scandal with the military's other piece of plastic, the Government Travel Card (GTC), went ignored by the mainstream press, despite the fact that the card has plunged thousands of ordinary servicemen and servicewomen into debt so deep that the Pentagon is busy garnishing the wages of its own soldiers. And the only military commander known to raise hell about the scheme—a lone air force colonel based in the Midwest—tells the Voice that blowing the whistle on the GTC ruined her career.
The causes of the Great Depression have been difficult to determine. Moreover, broadbased financial data series which would be necessary to establish the definitive interpretation do not exist. What we are left with is a hodge-podge of theories, some specific, limited data and large amounts of anecdotal information. Almost all interpretations are heavily riven with the politics of the particular writer. Stalinist interpretations of the era preached about the 'final' collapse of capitalism, while another Soviet economist, Nicholai Kondratieff had only recently developed a theory which posited that Marx was incorrect and that no 'final' collapse of capitalism was likely. Kondratieff spent at least part of the depression decade in the Gulag, awaiting his fate. Free-marketeers such as Milton Friedman would have us believe that incorrect monetary policy either directly led to the Great Depression, or at the very least, greatly compounded the problem.
Various conspiracy theorists have equally various views on the Great Depression. Richard Hofstader did a collection of his articles in the 1950s, The Paranoid Style in American Politics, with a central article by roughly the same title which described many of these fringe theories, although not specifically related to the Great Depression. Still, as another serious economic problem looms across the Pacific, any serious writing about today's problems needs to have a perspective on the causes of the Great Depression. This section uses views and information from these three writers:
Theory of Value Typology: Feudal, Capitalism, Post-Capitalism
NEW YORK (CNN/Money) - The Tilt-A-Whirl has nothing on the global markets lately, where the speed with which traders have been shifting positions has been enough to make anybody's stomach spin.
One moment the war is going poorly, sending cash pouring into safe-haven assets, like government bonds and gold, jacking the price of oil higher, hammering stocks and the U.S. dollar. The next, the war is going well again, and all these "war trades" that have been put on get suddenly unwound. With traders running from one side of the boat to the other, one can hardly say that global markets are on an even keel.
Making matters even worse, the traders in different markets are all taking cues from one another, creating a magnifying effect on each move. Oil goes up so stocks go down so bonds go higher so oil goes up some more.
Shoneys, Moultrie Ga.October 28, 1995 Marx developed an idea about how capitalist economics worked and carried this idea to its logical conclusion, which for Marx was a generalized overproduction vis-a-vis the ability of the society to consume. An important corollary to this idea was that machines would come to replace a greater and greater percentage of human labor in the production process. Carried to its logical conclusion, this idea suggests that machines could ultimately replace almost all human labor. For Marx, this presented both a theoretical as well as a practical problem.
The practical problem was that sooner or later, the system was bound to overload its carrying capacity in terms of production and a crisis was bound to result. Put simply, capitalist society had the capacity to produce far more than it had capacity to consume. Carried to its logical conclusion, capitalism would ultimately displace so much human labor, that it would impossible for consumption to continue, at least private consumption of mass market items. With consumption slowed or strangled, production would soon have to stop as well. Profitability of the system would drop rapidly, furthering the crisis. Into this gap, Marx believed that the displaced working class would step in, establish a new system of government and humanity could live from the machine-based production indefin
Transitional Investment & Working Class Organizations: Use Value to Exchange Valueto Use Value Atlanta to Newark, Kiwi AirlinesMarch 11, 1996 From a feudal use value system to a modern capitalist system then back to another use value system was the trend line laid out by Marx. In fact, all prior economic systems- or modes of production as Marx termed them- had been use value systems, in that production seldom exceeded the absolute or relative needs of the majority of people, masses who toiled most of their lives with little to show for their miserable existence in the end. Only capitalism had the potential to eliminate absolute scarcity. Capitalism would accomplish this is a roundabout fashion, almost despite its own tendency towards excessive greed.
What Marx either could not or would not understand, was that his beloved working class would not have the ability to transform capital at the point of the crisis. Working class organizations have shown a remarkable tendency to deteriorate into mini feudal fiefdoms, often concerned with little except feathering the presidents for life's nests. To speak of union democracy is to speak of an oxymoron. But the lack of democracy is the least of the working class organizations's problems. Their evolution in most western countries has occurred in a such a fashion, that their primary role has been to protect jobs from the ongoing effort by capital to eliminate jobs. Since over the long term, unions only have whatever political influence they possess to protect jobs and since job destructio
By Sue Kirchhoff, USA TODAY WASHINGTON — The good news is that the price of a DVD player has plummeted. The bad news is that the cost of a college degree — needed to decipher the instruction manual — has soared.
During the past year, manufacturers and retailers have discounted electronics, cars, clothing and other items so ferociously that even the comic strip Doonesbury has worried the country was skidding toward deflation, a widespread fall in prices that is good news at the cash register, at least to start, but can choke economic growth.
While manufacturers have struggled, however, prices have risen a brisk 5% to 10% in parts of the far-larger services sector, including tuition, insurance and medical care. Gasoline has soared, as the United States has moved closer to a possible war with Iraq. Home prices, in the main, keep climbing.
Manufacturing Matters John Zysman, Stephen Cohen & Harley Shaiken - Zysman and Cohen are professors at the University of California, Berkeley, and co-directors of the Berkeley Roundtable on the International Economy Harley Shaiken teaches at the University of California, San Diego, is an advisor to the United Auto Workers and a national authority on industrial organization.
John Zysman - When Daniel Bell wrote the Post-Industrial Society in 1973, he captured an extraordinary shift in employment statistics - the number of service and white-collar occupations was exploding.
Extrapolating from this data, Bell offered a new vision of our society where information and services would replace manufacturing as the key economic mainstay. But Bell's vision was fundamentally flawed because he failed to realize that society remains driven by its industrial base. Saying manufacturing is unimportant is like saying the foundation of a new skyscraper is unimportant.
The uptick is evident from movie theaters, where the average ticket price ($5.85) has jumped 3.5 percent this year, to Broadway theaters, where the top price for a musical ($100) has risen $10 since last summer.
Many experts credit the rising prices – which, in many cases, exceed inflation – to the bounty of disposable cash held by many baby boomers, some of whom are now prioritizing leisure after decades of putting work first.
Higher prices are yielding larger profits. But not all fans are taking the hikes in stride. Attendance is flagging at many events as consumers grow more sensitive to skyrocketing ticket prices.
A close look at the cost of three summer entertainment options – rock concerts, baseball games, and amusement parks – reveals a variety of causes for the price boom.
Yen-Carry Trade -- Japan's Other Bubble?: William Pesek Jr.By William Pesek Jr.
Tokyo, Nov. 12 (Bloomberg) -- If there's anything Japan Inc. fears more than a global recession, it's a stronger yen. It could slam profits at Honda Motor Co., Sony Corp. and Toyota Motor Corp. -- basically, the nation's strongest companies at the moment.
Late Capitalism and the Struggle for a Socialist Future-- A Discussion Document by Harry Targ Introduction:The enormous changes in the global political economy, in national economies and political systems, and in the forces struggling for socialism have frustrated, stifled, and confused the left. Capitalism seems on the verge of demise and yet it has extended its tentacles all across the globe. It generates mass mobilizations from workers, women, indigenous peoples, and youth and at the same time defuses revolutionary ferment and absorbs leftists, old and new, in the neoliberal agenda. As Marx wrote about his own day, the material advances today, economic, technological, and scientific, are historically unique and yet the levels of immiseration, marginalization, victimization, and mass psychosis are worldwide. Without the anchor of a Socialist Bloc or revolutionary regimes