It's a big day for the money people today. So imagine yr a capitalist.
Yr sitting in an antique chair in Elvis' Jungle Room, and some rook hands you the latest financial data with a pair of silver tongs.
You've got a housing slump, with aging Baby Boomers everywhere facing negative savings. They are about to have their only earthly assets, their homes, foreclosed upon - poor Boomers. You've got half-assed Senate Bills compelling Banks not to foreclose upon the bankrupt Boomers, because, shit, it's not like there's anybody out there to buy these foreclosed-upon mortgages anywho.
You're convinced that if people don't own homes, they won't have the personal ATM necessary for them to continue purchasing at the hospitals, restaurants and bars that make our economy grow. You need for their to be "easy money" available to do business, but you are patently opposed to higher wages, progressive income and capital gains taxes, decreased military spending or various Keynesian-y public investments.
So what do you do, lower interest rates? Sure you do. Make it easier for banks to lend each other money to lend to other people? That seems like the most logical solution in the world. Why reproduce labor power through wages or social services when you can financialize the process? That way, wages, benefits and standards of living once thought of as "rights" can now be reckoned as "debts:" somebody else's cross to bear.
Two problems, though. First, nobody's positive that the credit crunch has finally, fully unfolded, and for all you know all that is solid (insert financial institution here) may very soon melt into air, unleashing a concomitant burst of market terror; bankrupting the occasional municipality; and threatening to bring about a more concerted, more ubiquitous "run on the bank" vibe at home and abroad. Lowering interest rates increases lending and may defer our getting to the bottom of the credit fuck-up and allowing you to cut out the cancer - remember yr a capitalist, so this is about "a few bad apples," and not a structural problem."
Second, everybody everywhere else is making moves against impending inflation, and that means raising interest rates, not lowering 'em.
So what is to be done? I have no idea whether the Fed will raise or cut rates today, but I think it will be a while longer before you see an active "war on inflation" a la Volcker that's filled with rate hikes.
Too many people are hurting too much, still, and it's an election year. And this is that unlikely bout of inflation that many attribute to commodity price increases rather than blaming on overpaid workers.
Weird times. A new chapter of neoliberalism. This is the political economy we're navigating or not navigating, labor movement. Don't expect President Obama to be able to tell us how to find a good restaurant here.
Max Fraad Wolff takes us as close as we're going to get to a punchline with his newest expose on an almost pomo indecisiveness around inflation:
A newly enhanced interest in blaming foreign actors smoothes political and media discussion. The confluence of today's high prices with declining home prices, stagnant wages and dimming job market prospects helps explain radically different perception of the new inflations. In the end, none of this explains it all. We seem to have decided some hyper-inflations are good and some are bad. Ultimately, we like hyper inflation in what we already own and hate it in what we have to buy.
3 comments:
It seems to me that the logical thing to do would be to cut taxes.
If we would just let working families keep what they have earned, then they'd able to afford to pay their mortgages. They pay their mortgages, credit stabilizes. Credit stabilizes, then I can use my tax cut to invest in, let's say mortgage-backed securities. Or better yet, real estate. That would drive housing prices up, creating equity that home-owners could borrow against, enabling them to buy my goods and services.
It's all really pretty simple when you remember that taxes are evil.
dave,
'sounds like BHO is yr man. Well, not "your" man, but the candidate best suited for your tongue-in-cheek characterization from the preceding comment. His "middle class tax cut" threatens to be the first tax relief for actual wage-earners in some time, which obviously I don't think you or I would oppose necessarily.
It's just, that's only half the ballgame. Taxes on wages should plateau or lessen, okay - but taxes on WEALTH need to rise. And we need something like a Tobin tax to generate revenue and kinda-sorta police rampant, chaotic financial speculation. And what chance in hell do we have of getting to that, unless major political pressure comes to bear from out of nowhere, say, the labor movement?
And why would the labor movement even think about anything like tax policy or corporate finance? What the fuck does any of THAT have to do with protecting manufacturing jobs?
Lex:
Indeed! If the fate of the auto industry has taught us anything it's that unions only drive industry out of the US with their artificially high labor costs (after all, anything more expensive than what the poorest child on the planet would accept is artificially high).
Let's assume for a second that I babble on about shareholders taking risk and deserving of the rewards that are derived from the wise exploitation of labor. Let's also assume that I ignore any bailout of capital that has recently happened, thereby mitigating my risk and encouraging capitalist me to take any chance to maximize any dollar I can get.
My point is, of course, that, as a capitalist, I believe that the solution to our economic crisis is that the government stop restricting the economy by taking my tax dollars and spending them inefficiently and unwisely.
In this case, I believe that McCain's pledge to further cut taxes for the wealthy is more to my advantage than Obama's middle-class tax cuts. Although I would advocate for cutting taxes for everyone. Maybe if we can somehow direct that any tax cut for the middle class must be spent on mortgages, then I can see it. Otherwise, I am relatively secure in the belief that there is no way that my money is all that at risk, as the government has so far shown a desperate willingness to protect the investor class at all times. I don't see this changing any time soon.
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