By Antonio C. Abaya
The decision of the Bush administration to inject $700 billion into the credit and finance sectors of the US economy is a tacit admission that American capitalism, especially under the stewardship of the Republican Party, has imploded and unraveled, probably beyond repair.
The $700 billion bailout is meant to buy bad housing debts and thus prolong the service lives of banks, credit and finance houses and institutional holders of mortgages, the total collapse of which would no doubt lead to a Global Depression that would dwarf that of 1929.
The interconnectivity of national economies, made possible through advances in communications – especially through the Internet – makes almost the entire world vulnerable to the ups and downs of the major players.
For once, something positive can be said of the hermit economies like Myanmar and North Korea, that they are somewhat immune to the vagaries of what must now be referred to with supreme irony as the Free Market.
The $700 billion bailout is the anti-thesis of that “Free Market,” also referred to reverentially as simply “The Market.” It runs counter to the sacrosanct Jeffersonian ideology, to which the Republican Party has traditionally genuflected, that the best government is the one that governs least.
Suddenly, Big Government is all over the place, like a wayward elephant – appropriately, the symbol of the Republican Party – straying into a studio apartment, now on its second mortgage, which the harassed occupant can no longer afford to pay, and which he or she will soon be forced to vacate in favor of a trailer or the back seat of a car.
How did this monumental American tragedy come to pass? The proximate cause is the sub-prime mortgage bubble that burst in July 2007. The crisis showed that millions of Americans had been sold mortgages that they could not afford to pay, leaving dozens of banks holding empty bags, which they in turn packaged with good assets and passed on to other banks and finance houses, not just in the US but all over the capitalist world.
I recall that weeks after the sub-prime mortgage bubble burst in 2007, the US Federal Reserve Board, the Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan and the central bank of Australia collectively released a total of $325 billion into the banking sector, in a bid to allow the global banking system, which had suffered massive losses, to continue to function and lend money out to businesses and individuals.
For a while, that seemed to have staunched the hemorrhaging. But it came back with a vengeance in mid-2008. Some of the biggest names in capitalist banking and finance – Bear Stearns, Merrill Lynch and Lehman Brothers – had to be bailed out, or sold at fire sale prices, or simply allowed to go belly up, followed by the collapse of Fannie Mae and Freddie Mac, the biggest institutional holder of real estate mortgages.
The last straw seems to be the death rattle of American International Group (AIG), the biggest insurance/banking/finance company in the world which was in effect nationalized by the Bush administration with an $85 billion buy-out of almost 80 percent of its equity, making the US federal government neck-deep in the business of business, contrary to the deeply held Republican ideology.
The rationale was that AIG was too big to be allowed to fail. But there is speculation that, with its many tentacles in every nook and cranny of the globe, the AIG was the financial conduit of choice of the CIA.
There is also speculation that the reason President Arroyo suddenly left for New York yesterday, after this trip had been cancelled last August, was to look after her family’s supposed investments in the suddenly nationalized AIG.. Illicit funds parked in AIG would now be subject to US anti-racketeering RICO laws.
(Sept. 23 Update: Today’s Philippine Daily Inquirer reports that while in the UN building in New York President Arroyo will “also have meetings with St. Vincent and Grenadines, St. Kitts and Nevis, and Antigua and Barbuda, all from the popular tourist destination Caribbean group of islands…”
(Why is this insignificant piece of trivia being passed off as news at all? Is it possibly to cover a meeting with representatives from those other Caribbean islands, Cayman Islands and the British Virgin Islands, both well-known havens for laundering illicit money?)
There is also speculation that the two remaining financial giants on Wall Street – Goldman Sachs and Morgan Stanley – are also in big trouble and are looking for either a buyer or a bail-out. The three US automakers – Ford, GM and Chrysler – are also said to be asking for a $25 billion bail-out.
But it is no idle speculation that American capitalism has imploded and must be redefined in the coming weeks and months. Since January 1 this year, some 600,000 Americans have lost their jobs, and the job losses continue at the rate of 80,000 a month.. And since July last year, some 1.5 million Americans have lost their homes because they could no longer to pay the monthlies.
And the troubles are not likely to end with the $700 billion bail-out, assuming it is approved by a cynical Congress.. Most adult, even teenaged, Americans are up to their necks in debt, either to their credit card providers or to their car financiers, or to both. It is safe to assume that those 600,000 Americans who have lost their jobs, and the 80,000 who will lose their jobs every month, will be an unabated drain on the US economy as they default and lead more banks to bankruptcy.
Will this economic meltdown have an effect on the November presidential elections? In Europe, such a debacle would indeed affect the politics. But I am not so sure it would in the US.
American voters are being made to choose between John McCain, who confessed early in the primaries that he knew absolutely nothing about economics, and two very talkative lawyers (Obama and Biden) who, from their public utterances, do not seem to know any more or better than McCain..
The only certitude seems to come from Sarah Palin and her Christian Evangelicals who fervently believe that the world is coming to an end soon, as predicted in the Bible. In their closed universe, hermeneutics – the interpretation of Scriptures - is more important than economics. Hallelujah!
Simultaneous to the collapse, or the impending collapse, of the credit and financial basis of American capitalism would or should be a rethinking of the Free Trade and Globalization religion and its own gibberish sect, the Free Movement of Capital.
Free Trade and Globalization was/is an Anglo-American ideological construct meant to allow the surplus outputs of their economies to be dumped into the global marketplace with the least hindrance from other governments in the form of customs levies and numerical quotas. To some extent, this has succeeded. The pre-sub-prime prosperity in many countries can indeed be credited to Free Trade and Globalization.
(The saling-pusa Philippines under President Fidel Ramos was suckered by Opus Dei economists Bernie Villegas and Jess Estanislao into embracing Free Trade and Globalization even ahead of fully developed Taiwan and South Korea, thus decimating many domestic producers who could not compete with a flood of imports and forcing hundreds of thousands of laid-off Filipinos to look for jobs overseas.)
But it has also backfired or boomeranged with the unforeseen rapid growth of China – plus South Korea, Taiwan, Malaysia, Thailand, Vietnam, India – as manufacturing centers that took away millions of jobs from the US heartland, leading to its massive trade deficits and a weakened dollar, and becoming hostage to foreign oil.
The Asian financial crisis of 1997 was the direct result of the Free Movement of Capital, another article of faith of Anglo-American capitalism, which allowed currency speculators to move in and out of any economy in search of quick profits, even if it meant millions of people losing their jobs and sinking into poverty..
It is not a coincidence that the Asian country which was least affected by the Asian financial crisis was China, which refused and still refuses pressure from the IMF to allow its currency to be fully convertible, which prevented ‘hot money’ from playing with it.
Then Malaysian Prime Minister Mahathir Mohamed specifically castigated Jewish currency speculators – in particular, the Hungarian-American Jew, George Soros – as being responsible for the global debacle in 1997.
I have not read any comments from Dr. Mahathir regarding the current debacle, but I would say that the Unbridled Greed that motivated the currency speculators in 1997 is the same Unbridled Greed that motivated the sub-prime speculators who are responsible for the wider debacle of 2008.
American capitalism, with or without Jewish speculators, will never be the same. *****
Reactions to tonyabaya@gmail.com. Other articles in acabaya.blogspot.com. Tony on YouTube in www.tapatt.org.
The decision of the Bush administration to inject $700 billion into the credit and finance sectors of the US economy is a tacit admission that American capitalism, especially under the stewardship of the Republican Party, has imploded and unraveled, probably beyond repair.
The $700 billion bailout is meant to buy bad housing debts and thus prolong the service lives of banks, credit and finance houses and institutional holders of mortgages, the total collapse of which would no doubt lead to a Global Depression that would dwarf that of 1929.
The interconnectivity of national economies, made possible through advances in communications – especially through the Internet – makes almost the entire world vulnerable to the ups and downs of the major players.
For once, something positive can be said of the hermit economies like Myanmar and North Korea, that they are somewhat immune to the vagaries of what must now be referred to with supreme irony as the Free Market.
The $700 billion bailout is the anti-thesis of that “Free Market,” also referred to reverentially as simply “The Market.” It runs counter to the sacrosanct Jeffersonian ideology, to which the Republican Party has traditionally genuflected, that the best government is the one that governs least.
Suddenly, Big Government is all over the place, like a wayward elephant – appropriately, the symbol of the Republican Party – straying into a studio apartment, now on its second mortgage, which the harassed occupant can no longer afford to pay, and which he or she will soon be forced to vacate in favor of a trailer or the back seat of a car.
How did this monumental American tragedy come to pass? The proximate cause is the sub-prime mortgage bubble that burst in July 2007. The crisis showed that millions of Americans had been sold mortgages that they could not afford to pay, leaving dozens of banks holding empty bags, which they in turn packaged with good assets and passed on to other banks and finance houses, not just in the US but all over the capitalist world.
I recall that weeks after the sub-prime mortgage bubble burst in 2007, the US Federal Reserve Board, the Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan and the central bank of Australia collectively released a total of $325 billion into the banking sector, in a bid to allow the global banking system, which had suffered massive losses, to continue to function and lend money out to businesses and individuals.
For a while, that seemed to have staunched the hemorrhaging. But it came back with a vengeance in mid-2008. Some of the biggest names in capitalist banking and finance – Bear Stearns, Merrill Lynch and Lehman Brothers – had to be bailed out, or sold at fire sale prices, or simply allowed to go belly up, followed by the collapse of Fannie Mae and Freddie Mac, the biggest institutional holder of real estate mortgages.
The last straw seems to be the death rattle of American International Group (AIG), the biggest insurance/banking/finance company in the world which was in effect nationalized by the Bush administration with an $85 billion buy-out of almost 80 percent of its equity, making the US federal government neck-deep in the business of business, contrary to the deeply held Republican ideology.
The rationale was that AIG was too big to be allowed to fail. But there is speculation that, with its many tentacles in every nook and cranny of the globe, the AIG was the financial conduit of choice of the CIA.
There is also speculation that the reason President Arroyo suddenly left for New York yesterday, after this trip had been cancelled last August, was to look after her family’s supposed investments in the suddenly nationalized AIG.. Illicit funds parked in AIG would now be subject to US anti-racketeering RICO laws.
(Sept. 23 Update: Today’s Philippine Daily Inquirer reports that while in the UN building in New York President Arroyo will “also have meetings with St. Vincent and Grenadines, St. Kitts and Nevis, and Antigua and Barbuda, all from the popular tourist destination Caribbean group of islands…”
(Why is this insignificant piece of trivia being passed off as news at all? Is it possibly to cover a meeting with representatives from those other Caribbean islands, Cayman Islands and the British Virgin Islands, both well-known havens for laundering illicit money?)
There is also speculation that the two remaining financial giants on Wall Street – Goldman Sachs and Morgan Stanley – are also in big trouble and are looking for either a buyer or a bail-out. The three US automakers – Ford, GM and Chrysler – are also said to be asking for a $25 billion bail-out.
But it is no idle speculation that American capitalism has imploded and must be redefined in the coming weeks and months. Since January 1 this year, some 600,000 Americans have lost their jobs, and the job losses continue at the rate of 80,000 a month.. And since July last year, some 1.5 million Americans have lost their homes because they could no longer to pay the monthlies.
And the troubles are not likely to end with the $700 billion bail-out, assuming it is approved by a cynical Congress.. Most adult, even teenaged, Americans are up to their necks in debt, either to their credit card providers or to their car financiers, or to both. It is safe to assume that those 600,000 Americans who have lost their jobs, and the 80,000 who will lose their jobs every month, will be an unabated drain on the US economy as they default and lead more banks to bankruptcy.
Will this economic meltdown have an effect on the November presidential elections? In Europe, such a debacle would indeed affect the politics. But I am not so sure it would in the US.
American voters are being made to choose between John McCain, who confessed early in the primaries that he knew absolutely nothing about economics, and two very talkative lawyers (Obama and Biden) who, from their public utterances, do not seem to know any more or better than McCain..
The only certitude seems to come from Sarah Palin and her Christian Evangelicals who fervently believe that the world is coming to an end soon, as predicted in the Bible. In their closed universe, hermeneutics – the interpretation of Scriptures - is more important than economics. Hallelujah!
Simultaneous to the collapse, or the impending collapse, of the credit and financial basis of American capitalism would or should be a rethinking of the Free Trade and Globalization religion and its own gibberish sect, the Free Movement of Capital.
Free Trade and Globalization was/is an Anglo-American ideological construct meant to allow the surplus outputs of their economies to be dumped into the global marketplace with the least hindrance from other governments in the form of customs levies and numerical quotas. To some extent, this has succeeded. The pre-sub-prime prosperity in many countries can indeed be credited to Free Trade and Globalization.
(The saling-pusa Philippines under President Fidel Ramos was suckered by Opus Dei economists Bernie Villegas and Jess Estanislao into embracing Free Trade and Globalization even ahead of fully developed Taiwan and South Korea, thus decimating many domestic producers who could not compete with a flood of imports and forcing hundreds of thousands of laid-off Filipinos to look for jobs overseas.)
But it has also backfired or boomeranged with the unforeseen rapid growth of China – plus South Korea, Taiwan, Malaysia, Thailand, Vietnam, India – as manufacturing centers that took away millions of jobs from the US heartland, leading to its massive trade deficits and a weakened dollar, and becoming hostage to foreign oil.
The Asian financial crisis of 1997 was the direct result of the Free Movement of Capital, another article of faith of Anglo-American capitalism, which allowed currency speculators to move in and out of any economy in search of quick profits, even if it meant millions of people losing their jobs and sinking into poverty..
It is not a coincidence that the Asian country which was least affected by the Asian financial crisis was China, which refused and still refuses pressure from the IMF to allow its currency to be fully convertible, which prevented ‘hot money’ from playing with it.
Then Malaysian Prime Minister Mahathir Mohamed specifically castigated Jewish currency speculators – in particular, the Hungarian-American Jew, George Soros – as being responsible for the global debacle in 1997.
I have not read any comments from Dr. Mahathir regarding the current debacle, but I would say that the Unbridled Greed that motivated the currency speculators in 1997 is the same Unbridled Greed that motivated the sub-prime speculators who are responsible for the wider debacle of 2008.
American capitalism, with or without Jewish speculators, will never be the same. *****
Reactions to tonyabaya@gmail.com. Other articles in acabaya.blogspot.com. Tony on YouTube in www.tapatt.org.
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