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article imageOp-Ed: Global markets panic — Days of slime and poseurs hit the fan

By Paul Wallis     Aug 9, 2011 in World
Sydney - It’s an interesting commentary that the heart and soul of capitalism turns out not to have a brain or a spine. The Great Catharsis of Capitalism apparently needs to make an idiot out of itself on a regular basis.
The joke is that it’s the people most supportive of the disastrous policies bringing it on themselves. This is what all these years of political and ideological poseurs have achieved. The entire basis of the Reagan/Thatcher brand of conservatism is that all forms of government exist to tax the poor, persecuted rich. Regulation of financial markets is seen as a form of communism. Other self-serving delusions, notably the theory that you can buy a Congress and make it legislate for a safe plutocracy, are by-products of this peasant-Machiavellian approach.
The Sleaze Factor, represented by astro turf political movements, the White Collar Crime capital of the world, Wall Street and the ridiculous gyrations of an obviously illiterate and staggeringly incompetent Washington, has finally hit the fan. Exactly how much the fan can take is a matter of opinion, but it’s nice to see that the great blender of reality is going to work on it.
So now the entire global financial market is keeling over, thanks to the very policies of those most committed to the financial markets. Billions of dollars have been wiped out. These are real assets that were once worth a lot more. The private capital base of conservatism is being obliterated, largely by the sheer stupidity of those supposedly working for these interests.
So much for the weather report. The fact is that this isn’t necessarily a “get up and start over” routine as in the past. Global credit is likely to get hit, hard. Banks will be under severe pressure to join the dots on their assets. Since a lot of those assets are in loans, any further pressure on lending or any major defaults, could unravel the very dubious arrangement of glue and string holding the financial system together.
The other problem is that real assets in the domestic economy are getting burned down wholesale. 401ks, superannuation, property prices, you name it, the likely result is a combination of train wrecks. Far too much credit was provided in the past. The Western world in general went nuts on borrowing, and like the housing market, the Credit Bubble is bursting.
The ramifications are pretty gruesome to contemplate:
1. Reduced credit means more expensive credit.
2. It also means less cash in the domestic economy, not good for the United States, which already has a very anaemic looking cashflow in the core economy.
3. Reduced cash could mean lower prices, or people madly raising prices trying to make ends meet, or both.
4. Either scenario means more unemployment. The economy can’t support a workforce without any money.
5. More unemployment means more stagnation and negative growth.
The economy, in an ironic burst of belated justice, is downsizing itself, after having downsized so many people’s lives into oblivion. This time it’s taking the parasites that caused the disasters with it. The days of slime and poseurs are well and truly over, although like many things with slow nervous systems, they may keep walking around for a while.
These policies, their theories and absurd ideologies just don’t work, can’t work, and are clearly responsible for the mess. The mentality of the 19th century doesn’t belong in the 21st century. As London burns and New York evaporates, the answers are becoming all too plain:
1. Dismantle the financial junta system.
2. Make fiscal management statutory.
3. Abolish derivatives and other blue sky third party securities.
4. Put a lid on the futures market, which is a speculative industry gone berserk.
5. Regulate the hedge funds and make them fully accountable for losses.
6. Give real incentives to real business to start generating real capital, not paper capital.
7. Enforce lending practices laws.
8. Take out the corrupt trash in politics by any means available- These people are supposed to be representing the public, not their own interests. That’s what they’re paid to do, and that’s what they have to be made to do.
9. Modernize the revenue system to have some hope of collecting enough working capital.
10. Get rid of, retire or otherwise dispose of the large funding measures on riders related to various US legislation. This is a hidden cost, and it’s huge.
11. Put an end to the idiotic ideological bull. Countries can’t run on bull and businesses don’t make ideological capital.
If you had a board of directors which did nothing but cause disasters, you’d sack that board and replace them with competent, or at least credible, people. You’d go into damage control on business fundamentals, shore up a working business model, and get into recovery mode.
Nothing else is going to work.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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