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Propaganda of the class war

by das monde Mon Aug 15th, 2011 at 09:15:37 PM EST

Without much preface, I will turn here on two articles currently top-headlined at "Asia Times". The authors are Spengler (David P. Goldman) and Chan Akya. The economic commentary of these regular contributors was timely interesting in 2008. But by now their insight and argumentation are reduced to simplistic "National Review"-lite anti-liberal chatter.

Spengler's article is "The people's Ponzi scheme". Here is its point:

The story the country awaited from Barack Obama [...] went like this: "This was a disaster, but it was not a natural disaster. It was made by Wall Street gamblers who speculated with your lives and futures. It was made by conservative extremists who told us that if we just eliminated regulations and rewarded greed and recklessness, it would all work out."

The trouble is that "Wall Street gamblers" didn't do the speculating. The American public did. This was a Ponzi scheme by the people, of the people and for the people, the most democratic crony-capitalist scam in the history of humankind. Households made more money than the bankers during every year of the bubble, and ended up better off than they were before the bubble, while the bankers got wiped.

Ri-iii-ght. Millions of households ended up better off, while the bankers got whipped out painfully wiped. To furnish his thesis, Spengler brings a couple of graphs, like

See, privately owned real estate assets improved and held up much better than bank stocks. Never mind that the real estate wealth was more imaginary than its derivative CDSs - the latter had to be respected no matter what. And the real estate market is still in a stonewalling phase of basic supply-and-demand principles.

In general, Wall Street remained stolidly sanguine about the bubble until it was too late. There were exceptions - Goldman Sachs and the John Paulson hedge fund, among others - who took short positions on subprime. But there had to be a long position on the other side, and the destruction of institutional and personal wealth among the top tier of bankers exceeded the balance-sheet damage to American households.

Let's just say that the top predators got their spoils while most of lower wannabes got hammered. This is a classical class war picture: you feel so good looking down at the crowded masses, while those above look at you with a like contempt. And with George Carlin's quote

The poor are there... just to scare the shit out of the middle class.
we arrive at Akya's article "London riots reduce lies of left to ashes".

What's in the better lie? Akya starts humorously, characterizing a lazy Chinese, an Indian, an African, and then

A lazy European on the other hand, gets to sit at home and watch television while receiving benefits from his government. On his television over the past week, he would have seen unfamiliar scenes...

Then stereotypes of 10-30 years old are just piling up. A whole section is on trashing Keynes - his ghost is on par with Marx's now. You see, all that post-war great moderation and strong consumer bases have nothing to do with Keynesian policies: it's just
a case of happenstance being confused with causality.

Never mind that the "Third way" and later left governments have been only pretending in implementing Keynesian economics seriously, and the world is actually on the reverse Milton Friedman's recipes for three decades already - exactly enough to show its true effects. Yep, timing is a problem for Akya's thesis - and a whole section on "why now" does not help his thesis.

Doesn't it look like the Reagan-Thatcher revolution needed the constant growth drug to keep "outperforming" all other economic systems? That its wealth skewing tendencies ran into their logical conclusion of "producer" entitlements amidst mass deprivation? Let us see the common opportunities of the last decades: The young have to work longer hours of their most fruitful years to save for any future plans. They could get a house and high education, but for an increasingly ridiculous debt burden. And if you get something saved, you are supposed to channel it into some stock investment - with only hinted mass-intuitive understanding of its bounties and dangers. Like at a poker table, you are just a fish next to a few sharks. Now your stock and pension savings are drained, house and job lost - and you are a lazy welfare collector.

May I add to Akya's wits an image of a really lazy American? He is sitting on a heap of money just because he was fortunate and lucky to sell a house on the top of the bubble. Or because he happily picked up some defense industry stocks on cheap. Now he earns more sitting on his porch from those stocks than burger flippers working 10 hours a day. And the government pays him more for bonds than "hands out" to several ghetto families. It is not that he is absolutely safe - he is just an ill "investment" away from being disrespected by his new buddies. But the more lazy he is, the longer he will probably live comfortably.

I had mentioned a while ago that the class war is being waged according to all classical warfare cannons. The most prominent strategies are (from Robert Greene's list):

17) Defeat Them in Detail: The Divide and Conquer Strategy. Citing George Carlin again:

That's all the media and the politicians are ever talking about! The things that separate us. Things that make us different from one another. That's the way the ruling class operates in any society. They try to divide the rest of the people. They keep the lower and the middle classes fighting with each other so that they, the rich, can run off with all the fucking money! Fairly simple thing! Happens to work! You know? Anything different! That's what they're gonna talk about race, religion, ethnic and national background, jobs, income, education, social status, sexuality, anything can do, keep us fighting with each other, so that they can keep going to the bank!

33) Sow Uncertainty and Panic Through Acts of Terror: The Chain Reaction Strategy. That is more or less the official US military strategy in Iraq. And that is the perfect strategy of Wall Street behemoths. As Greene's last law of power says: Assume formlessness. The real pressure and power structure is not what it seems - and it is unpredictable.

I was just thinking of posting a LQD on that Spengler piece . . . so utterly insane that I couldn't make heads or tails of it.  I especially loved the ending, where he concludes that a witch-hunt against bankers would be stupid and malicious and misguided.  After all, their bank stocks are down!  Oh, woe is them.

I've long noticed the total finance-centric nature of the economic and business analysis at Asia times.  While their political analysis is quite interesting and informative, their economics writers buy completely into the 'markets are all' mantra.

by Zwackus on Mon Aug 15th, 2011 at 10:50:18 PM EST
Well, I'm another example of the finance-centric output of 'Asia Times', and I think that 'markets are all'.

It's just that the markets I write about have nothing whatever to do with the markets Spengler is used to.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Aug 16th, 2011 at 07:13:36 AM EST
[ Parent ]
"Asia Times" had Julian Delasantellis for a welcome balance - but he passed away in 2010.

And it still hosts Henry Liu - though he has not been active recently.

by das monde on Tue Aug 16th, 2011 at 10:32:08 AM EST
[ Parent ]
Believe it or not, Noriel Rounini said this in an interview to WSJ:

Karl Marx had it right. At some point, Capitalism can destroy itself. You cannot keep on shifting income from labor to Capital without having an excess capacity and a lack of aggregate demand. That's what has happened. We thought that markets worked. They're not working. The individual can be rational. The firm, to survive and thrive, can push labor costs more and more down, but labor costs are someone else's income and consumption. That's why it's a self-destructive process.
by das monde on Wed Aug 17th, 2011 at 01:11:11 AM EST
And we didn't learn this in the 1930's because...?

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Aug 17th, 2011 at 02:08:34 AM EST
[ Parent ]
People learn many things. For example, how to induce market bubbles and profit from them. How to corrupt other smart people, media and governments. How to wait a couple of generations, and then falsify history lessons.

I wonder, did Roubini recently got a new insight for himself, or he coolly though like this all along?

by das monde on Wed Aug 17th, 2011 at 03:50:55 AM EST
[ Parent ]
We did.

But, as Bruce quibbed once, we repeat the mistakes of our fathers, the gross blunders of our grandfathers and the catastrophes of our great-grandfathers.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Aug 17th, 2011 at 04:05:47 AM EST
[ Parent ]
The individual can be rational.

If food gets too expensive, he just stops eating. But we don't have rational monopoly power nor rentiers, right?

by kjr63 on Thu Aug 18th, 2011 at 05:17:23 AM EST
[ Parent ]
Rational actors are very predictable, and there are surely ways to (ab)use them.
by das monde on Thu Aug 18th, 2011 at 11:16:01 AM EST
[ Parent ]
Waren Buffet feimously said:

"There's class warfare, all right," Mr. Buffett said, "but it's my class, the rich class, that's making war, and we're winning."

He definitely is not thinking about Marx words...and they are so simple and clear and true...Do we need Marx to tell us something this logical?
But Buffet is not going to live long enough to realize this. Maybe his children or grandchildren will learn...

Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Wed Aug 17th, 2011 at 07:42:59 AM EST
Mr Buffet looks increasingly like a new Russian who used to think that his wealth is the result of his smart insight and brisk work, but now realizes that he is living in a system rash to push most wealth into hands of few people.

Keep writing New York Times columns:

Last year my federal tax bill -- the income tax I paid, as well as payroll taxes paid by me and on my behalf -- was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income -- and that's actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine -- most likely by a lot.

Or put your money you would like to see taxed to make the politics and the social economy more interesting.

by das monde on Wed Aug 17th, 2011 at 05:16:30 PM EST
[ Parent ]
The emerging CW among the TeaBaggers, Libertarians, and all that ilk is Mr. Buffet, who grew a couple of million dollar textile company into a $50 billion conglomerate, "doesn't know anything about investing."

Therefore, doesn't know anything about economics.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sat Aug 20th, 2011 at 02:02:58 PM EST
[ Parent ]
Funny thing is, they're actually mostly right that Mr. Buffet does not know anything about investing. Because what he does very well is not investment but speculation.

But I suppose that distinction would sail way over their heads.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Aug 25th, 2011 at 08:59:49 PM EST
[ Parent ]
Except for Liu, I can't think of anyone at AT who doesn't write with a shovel.  And Spengler is absolutely crap-stuffed.  I tried for two years to be allowed into AT so I could comment on him, but they never let me in.  Finally, gave up and took my comments elsewhere.  What can you expect from anyone on the First Things editorial staff?
by rifek on Thu Aug 25th, 2011 at 05:48:48 PM EST

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