Anybody out there a Karl Marx or Adam Smith fan?

6 thoughts on “Anybody out there a Karl Marx or Adam Smith fan?”

1. Hi there, This is a bit late but just to say I’ve been doing a lot of research into this money thing since alerted to the danger the economy was in by Max Keiser’s podcasts on karmabanquradio.com about 2 years ago. He’s satisfyingly scornful of Wall St with the authority of someone who used to work there, and has been calling the US economy a ‘command economy’ a la the Soviet Union for years, since those who control it do everything they can to protect themselves from risk, including passing a recent law forbidding people from making public statements which could endanger corporate profits. Walmart has used this law to shut protesters up.

   I wasn’t satisfied with his gold-bug line (that the problem is that money’s not backed by gold – no small amount of self-interest there since he’s a big holder of gold) and realized that after 20+ years of militating about women’s economic position I hadn’t really thought about what money actually is. And when you come down to it, it turns out that neither Adam Smith nor Marx really tackled this question. Marx followed Smith and thought of money as just another commodity, and it’s easy to get lost in all the various forms of value he describes. Economists of both the left and right to this day avoid the question, and those who do try to deal with it are scorned by academia.

   From what I’ve understood from people like Ellen Brown (www.webofdebt.com) and Thomas Greco (www.reinventingmoney.com) money is whatever we agree it is in order to exchange goods and services with strangers, and to store value for the future. The weird thing is that a man-made system could be treated as being as unpredictable as the weather. Here is an interesting interview with Michael Hudson which pretty much explains how things have been working: http://www.globalresearch.ca/index.php?context=va&aid=10129

2. To be fair, �socialism for the rich’ might be a bit of an oversimplification. One of the roles of economic policy / the government is to stabilize the economy during crises. I’m not defending the lack of oversight or prudent regulation of financial institutions that got us here…without a doubt, there are problems…but there is a rationale for the government propping up bear or aig. I think the term that came out around the time of the bear stearns bailout was “too interconnected to fail”. It’s not just a bunch of hooey. What if all of AIGs insurance guarantees suddenly disappeared? Mayhem. Major losses might be mitigated by slowing things down and reorganizing in an orderly way. Kind of like how deposit insurance prevents bank runs or how Ch.11 reorganizations can help investors recover more than they would if everyone just grabbed company assets immediately.

   Financial contracts have evolved faster than regulation and we need to catch up. What kinds of new regulation are necessary in the age of credit derivatives and super-connected institutions so the government won’t always be caught holding the bag?

3. Wow. Like water falling into water waiting. One solution may be to leverage more ‘cash’ into the economy (which will be devalued almost instantly); the other will be to borrow what we don’t print.

   What I find interesting is that both options point to serious (as in Argentina 1980) levels of inflation, which means that even the Big Bad Rich are going to rue the day.

   Meanwhile, where does human productivity actually go?

   I know it must seem like a magical-thinking response, but the issue of authentic value keeps beckoning my attention, as the fiduciary system enters the Rock&Roll: “Over here,” it whispers, “focus on this…”

   …~soft surprise~…

4. Here’s the other one (FB):

   Money Mkt Busts the Dollar: A Major Shoe Has Just Fallen Updated
   by mikeypaw [Subscribe]
   Tue Sep 16, 2008 at 03:56:10 PM PDT

   A major shoe in the financial industry has just fallen that may have far reaching impact for every day Americans. The Sacred $1.00 share value for money funds has just been breached. This is being reported by Bloomberg News and has the potential to rile the markets even more than they already are.

   Sept. 16 (Bloomberg) — Reserve Primary Fund, a money-market mutual fund with $64.8 billion in assets as of Aug. 31, fell below $1 a share in net asset value because of losses on debt issued by Lehman Brothers Holdings Inc.

   Money Market funds are a staple of the financial industry and are the place where most people park their funds when they are looking for a safe return. These funds are routinely considered to be the same as cash. That is to say that you can get to your money at anytime without penalty and without delay.

   The fact that Reserve Primary fund fell below the sacred $1.00 redemption price could have far reaching implications for the entire financial sector. Remember money funds are nearly ubiquitous throughout the entire financial sector and they are used for everything from corporate cash management to a parking place for un-invested funds of a pensioner. These funds sole raison d etre is to provide liquidity and safety for investors.

   Money funds are regulated in the U.S. by the Securities and Exchange Commission and are considered the safest investments outside insured bank accounts and government debt. They are required to hold debt that matures in 13 months or less, with a weighted average maturity of 90 days or less. The securities must have top short-term corporate debt ratings.
   The Reserve Primary fund will delay paying liquidations up to seven days on requests for funds that were being made after 3:00 pm EST today.

   It will be interesting to see if this causes a ripple or a wave throughout the financial system.

   `This is uncharted territory,” said Peter Crane, president of Crane Data LLC in Westborough, Massachusetts, which tracks money-market funds. “That’s certainly a stunner.”

   A stunner to say the least.

   More from Bloomberg…

   Unable to Prop Up Fund

   Spokeswoman Ming Lee Hatch said she couldn’t immediately comment on whether the company planned to secure credit to support the fund or wind it down.

   Carl Lantz, an interest-rate strategist in New York at Credit Suisse Securities USA, said the fund’s failure “exacerbates some of the flight-to-quality into Treasuries.”

   Crane said Reserve Management probably was unable to prop up the fund before halting redemptions because it lacked the backing of a large institutional owner.

   “Reserve just didn’t have the deep pockets to buy troubled securities out,” he said.

   Boston-based Evergreen Investment Management Co. said yesterday it had secured support from Wachovia Corp., its parent, to protect three money-market funds from losses linked to debt issued by Lehman. The funds’ Lehman holdings totaled $494 million.

5. I posted this in the thread below, but it bears repeating. PLUS, I have an additional diary from Kos about Money markets bringing down the dollar.

   It looks like a slide is coming on:

   Here we go again, socialism for the rich:

   AIG to Get $85 Billion Loan, Give Up 80% Stake
   Topics:Federal Reserve | Banking

   American International Group will get an $85 billion bridge loan from the federal government in exchange for an 80 percent stake in itself, sources have told CNBC.

   Sources said the loan, which will allow AIG to avoid bankruptcy, will be secured and include incentives for quick asset-sales by AIG.

   Government warrants for most of AIG’s equity will severely dilute existing shareholders.

   AIG has been racing the clock to avoid a bankruptcy filing on Wednesday, making efforts to work out a deal with the Federal Reserve to shore up its finances.

   Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke met with Senate and House leadership Tuesday night to discuss how to assist AIG, sources said.

   The Fed’s financial aid to the troubled insurer marks a reversal of its decision on Monday to refuse a bridge loan to AIG.

   The Fed met with the company’s advisers throughout the day and came to a better understanding of what is needed to help the company through its current crisis, people familiar with the negotiations told CNBC.

   Bloomberg reported late Tuesday that the Fed was considering some kind of conservatorship for AIG—which would mean bringing in an outsider to run the company. But sources told CNBC that no legal authority exists for such an arrangement.

   [snip]

   The shares, which are a component of the Dow Jones Industrial Average, at one point were down more than 50 percent in the wake of a cut in the insurer’s credit rating, which only served to heighten the concerns that it would file for bankrupcy and further upset the troubled global financial system.

   The plunge in AIG shares has been the biggest drag on the Dow this week.

   AIG, one of the world’s largest insurers, is the latest company to be convulsed by a mortgage and credit crisis that this week led to a bankruptcy filing by Lehman Brothers Holdings [LEH 0.30 0.09 (+42.86%) ] and the sale of Merrill Lynch [MER 22.18 5.12 (+30.01%) ] to Bank of America [BAC 29.55 3.00 (+11.3%) ].

   AIG late Sunday asked the Federal Reserve for help, including a possible “bridge” loan to tide it over while it pursues asset sales and capital raising. The Fed refused, but pushed JPMorgan Chase [JPM 40.74 3.74 (+10.11%) ] and Morgan Stanley [MS 28.70 -3.49 (-10.84%) ] to try to put together a credit facility of $70 billion to $75 billion for New York-based AIG, a person familiar with the matter said on Monday.

6. Hi, Eric.

   I know squat about Marxism and root Capitalist philosophy and I’m nobody’s idea of an astrologer, but yesterday’s events plus one comment by Jerome a Paris that Fe Bongolan quoted – “It’s simply a crisis of greed” – leapt off the pages at me. I’ve been saying that for the past month, and I was only talking about life in Spain.

   Here (in Spain), the week of the lunar eclipse I witnessed a string of seemingly unrelated events at personal, community and national levels that were so striking in the similarity of the conditions leading up to them that it was easy to find a common thread: the exposure of greed, avarice and the inevitable exploitation that goes along with them (and, interestingly, just desserts for the perpetrators). That got me wondering what might be going on in the big picture, and just how big and bad things would get. I guess yesterday we got our answer.

   While you’re musing on what’s going on, maybe these events will give you more to consider, or just confirm something you’re already thinking. So here’s what happened over here:

   First the personal story: My beau (Sagg/Aquarius/Aquarius) was getting sicker & sicker with migraines for 2 months, a result of his increasing dissatisfaction with being severly overworked and underpaid in a restaurant whose extraordinary success has depended entirely upon him (head chef in a 180-seat seafood restaurant). On August 15th he stopped going to work altogether – just couldn’t take any more – and the following Monday was granted a medical leave. His boss (your basic greedy, exploitative lug whose staff work seven days a week, seven months straight for pathetic salaries) freaked out, “I don’t deserve to be treated this way”, etc. etc. His next conceit was to think he could take over the kitchen himself. He couldn’t, of course; within one week he was going home with migraines and business started to fall off rapidly. Then he tried to lay off the chef on sick leave, hoping to weasel out of paying him what’s left of a paltry seasonal contract (by the way, the guy’s a millionaire). Within two weeks the business plummeted and now, one month later, is nearly dead. He’s lost not just the tourist trade but his regular, daily clientele of the past seven years. The other day he got vandalized. And he’s having to negotiate with one kickass labor lawyer. There’s more, but you get the picture: a well-deserved crash and burn at breathtaking speed.

   At the national/corporate level, later the same week was the Spanair crash in Madrid that killed 154 people. It was quickly revealed that Spanair’s management had been cutting corners for years, forcing the mechanics to skimp on maintenance and putting unsafe planes on the runway. Spanair spent the rest of August in endless public denial but they’re in a heap of trouble and being sued left and right. Just before the crash, the airline was also facing an imminent strike over their gross mismanagement; things were so bad that despite six months of trying to sell the business – the 2nd largest airline in Spain – they didn’t even get a nibble of interest.

   These stories and others I’ve witnessed this past month share identical elements. They are just as much manifestations of unchecked greed finally spinning out of control, and one way or another getting checked, as are the events on Wall Street.

   So I’m curious about a couple of things. First, that what’s going on is working as much in the personal realm as in the corporate. Second, in my experience and observation this absolute avalanche began with the lunar eclipse. So my question is, what else atrologically was going on at the time of the eclipse that would trigger all at once not only the exposure of so much greed and all that goes with it – avarice, conceit, exploitation – but also the failure of so many greed-based entities large and small?

   Would love your comments.