1. Was, not was
What it was was not what it was supposed to be– years 2010 and 2011 to be precise. Those were supposed to be years of strong recovery from the most severe recession of the post-WW2 era; a recession that exposed the world’s banks as nothing more, and nothing less, than digital warehouses filled with non-performing 1s and zeros.
After 2009, 2010 and 2011 were supposed to be bounce back years. Problem was, of course, that no matter how much you twist, fold, and mold a dead cat, you can’t turn it into a rubber ball. A dead cat by any other name– Troubled Asset Relief Program, Term Auction Loan Facility, European Financial Stability Fund, Maiden Lane(s), etc.– is a dead cat and will smell just as bad.
The poets and war planners weren’t exactly wrong, they just left something out. The world ends with both whimpers and bangs, and a splat.
Hope doesn’t exactly spring eternally, but it does spring more or less quarterly among the bourgeoisie. Every three months it’s a brand new day. Sure, the US bourgeoisie in 2010 were still whistling by the graveyard but hell, they’re still whistling by graveyards today.
Sure it was one humongous graveyard, containing the bones of trillions of dollars in defaulted and delinquent debt, but when the quarter turned and the US bourgeoisie still found their hands securely wrapped around other peoples’ money and other peoples’ necks, once again Zip-A-Dee-Doo-Dah was the tune escaping their puckered lips.
Puckered indeed. Commenting on data from the Federal Reserves Flow of Funds Report, the Wall Street Journal proclaimed that the first decline in US household debt since 1945 was a sign of good things coming: “Massive Defaults Produce Rare Annual Drop in Obligations. Clear Ground for Growth.” What a two-fer from our journal of the capitalist disorder. We get optimism and gallows humor at the same time, just like we get the other conjoined twins of political economy, cleared ground and scorched earth.
Some 80 percent of the reduction in household debt was the product of defaults on residential mortgages. Those with a firm grasp on the route capital had taken to get where it was, argued that the collapse would remain a noose around the neck of the US economy for some time. Some even recognized the epidemic of household thrift for what it was: the expanding reproduction of poverty.
How did this, all this–this asset backed valuation and asset backed devaluation; this ground clearing and scorched earth; this dead cat bouncing, come to be?
3. Interlude– Back to the Future
a) In March 2010, Senator Charles Schumer proposed that the US government issue national ID cards to US citizens and permanent residents in order to prevent the hiring of undocumented workers. “Don’t call them undocumented, they’re illegal,” says Chuck.
b) In May 2010, President Obama deployed 1200 National Guard troops to the border with Mexico to check illegal immigration.
4. How, indeed
Historically, gold has been the favorite, the front-runner, #1 with a bullet among all those things aspiring to be the concrete equivalent to any particular value, and the abstract embodiment of all value.
Value, however is not a thing. It is a condition of social organization expressed in and through ex-changeability. Exchange expresses value, of which exchange itself is one moment, like a virus expresses and is expressed by nucleic acid. The individual moments of exchange and the totality of exchanges solidify and dissolve themselves into money. Plus ça change, plus c’est la même chose.
Now the very qualities that made gold so attractive, so basic, as money, really all come down to a single quality–its scarcity. And that same scarcity makes gold unsuitable, inadequate to the expansion of capital accumulation. Gold is just too damn slow to find, extract, refine. It’s too slow to turnover fast enough to sustain the expansion of value. Gold has to be detached from its physical being in order to truly function as the equivalent to wealth, since all wealth within capital is but an image. Capitalist wealth is but a reflection of the ability to separate human beings from the products of their collective, social labor. Capitalist wealth is a reflection of the alienation–the act or result of the transfer of ownership (property) to another person (Oxford Concise Dictionary)–of the producers’ time. Capitalist wealth is the command of time…time belonging to others. Capitalist wealth is that time of those others stripped bare, made useless, save as and in the exchange of that time for the means of social subsistence and reproduction, that being food, shelter, clothing, education, transportation.
Money doesn’t buy time. It turns it into paper.
Money, an abstraction, becomes the super-reality of society, determining and dominating social existence, becoming the living condition of human activity and human need.
“Give me enough paper and I’ll make my own lever,” announces our modern Archimedes, our hedge-fund physicist.
If every commodity, aspires to become money, every capitalist aspires to capture and pocket that transformation. In the speed and multiplication of the transformations into money, money appears to grow itself, to expand simply from being able to anticipate more money in the movement and direction of value.
The social condition of existence, valuation made liquid through its realization as money then flips. Money, embodying the image of wealth under capitalism, espies its own image in the liquidation of wealth. The dream of money, its anticipation, credit, becomes its nightmare, debt, the devaluation of all things conditions. Debt is money’s pimp.
The needs of social reproduction– housing, education, transportation–the real substance of social wealth are given a life as if they were reservoirs of value by affixing debt. Then the debt acts as the big “claw back,” diminishing society, transferring income up the social ladder; leaving husks everywhere.
The modern financial process is an exchange process. It affixes an imputed value to social wealth as if that wealth were the product of property, not social labor. Then the property, infested with the debt, can become an asset, detached from its functions, set “free” to circulate, to change hands, to exchange. A house is not a home, it’s, once securitized, an asset.
The asset, the imputed value, is sustained only to the extent that a cash flow, a stream of payments, is maintained that services the debt. Money can be made only to the extent that the cash flow is used to capture more property; to impute more value; to affix more debt; to collateralize more products. Money is made in expanding the debt service requirements, by leveraging a greater number of properties.
The more quickly the debt securities turnover, the more quickly they pass from balance sheet to balance sheet, the more it appears that money is being made from the expansion of the leverage itself, despite the rapidly shrinking proportion of debt actually being serviced.
Three trillion dollars in non-performing US debt, and we’re talking about 20 percent of the US economy and 5 percent of the global economy. Six trillion in non-performing US and European debt, and we’re talking about a catastrophe in the circulation of capital– the freezing of the capital markets, the collapse of the commercial paper markets, the shutdown of markets in municipal bonds, bank debts, cross border transfers and the rapid contraction of international trade. Function, use, need, the actual objects of production, had been subsumed by value. Value has obliterated itself in debt.
Emerging from the trough of the recession, liquidation became the order of day. “Recovery” isn’t so much “weak” or “strong” as it is indistinguishable from recession. The securitized property used by the banks to maintain their own valuations was forfeit.
Waves of liquidation rolled across the US, and the UK, and France, and Greece, Ireland, Portugal, Spain.
Every aspect of life that had been consummated in commercial exchange was depleted. Schools, depleted; pensions, depleted; medical care, depleted; wages, depleted; transportation, depleted; sanitation, depleted.
Austerity is by definition the elevation of all that is mean, petty, and cruel from the level of personal pathology to that of social policy.
Illinois stopped its support for Meals-on-Wheels.
California eliminated adult day care centers that served 400,000 disabled adults.
The UK embarking on the most sustained reductions in public spending since WW2, cut back on everything from recycling to day care centers.
“It’s a pathetic recovery,” said the chief economist for Citigroup, maintaining Citi’s unbroken string of inaccurate characterizations, and dissembling.
Compare the 2011 moment to the historical average of recoveries 18 months after the low-point of previous US recessions post-WW2:
Job Growth (-).6% (+)5.3%
Disposable Income 1.8% 8.8%
Manufacturing Jobs (-).3% (+)3.8%
Personal Spending 3.9% 8.5%
Bank Lending (-)4.1% (+)19.7%
GDP 5.5% 10.1%
Home Price (-)8.8% (+) .6%
It was no recovery at all. It was something else. And here was that something else.
Corporate Profits 46.6% 37.4%
There’s no free lunch, the bourgeoisie like to tell others, because they always make the others pay.
That’s capitalism, advanced, decrepit, industrial, financial, and always real.
May 8, 2019