"Dig We Must," was once the slogan of the repair crews of CON-ED, New York's bumbling Electric utility. It is also now a metaphor for what is happening on Wall Street as all the financial heavy-hitters fled their summer mansions in the Hamptons to return to the trading desks to try to help dig their industry out of the hole it has fallen since the meltdown of the subprime real estate market sparked so much volatility and vulnerability for the global economy. (Asian markets slumped this week)
Those who don't travel by helicopter have been burning up the Long Island Express to join bankers burrowing in their bunkers. This scary crisis is shaking up the worlds of the high finance boys who were raking it in until they weren't, as economist Max Wolff writes:
That is the heady road we traveled. It felt great to insiders speeding down the yield superhighway. That was until the sub-prime tire blew-out. Forced to stop and unable to re-inflate the tire with the usual hot air, folks began to look under the hood. That is where we are now. Peek under the hood and you see a lot of shiny borrowed chrome, a debt fueled engine and a lot of rot!There's suddenly been a wake up call for executives and media pundits who seemed so "clueless" in seeing the "rot" or anticipating and trying to defuse a meltdown that has now cost billions with no end in sight.
It's not a situation to joke about, although folk singer Ethan Miller has been singing about it for years in "The Market Song" (Written with Kate Boverman) which is now part of an IN DEBT WE TRUST CD of the songs on credit and debt that helped inspire the documentary film I directed.
Here's some of the lyric:
Well the first rule of the market is don't panic
And the second rule is you should panic first
'Cause if everybody panics at the same time
Then the whole damn stock exchange is gonna burst
This is the game of the market
Where everybody's maximizing profit
Money changes hands by the dictates of demand
Well it's stupid, yes, but no... body can stop it
Suddenly, as mortgage companies implode and banks withdraw financing deals based on worthless debt, our vaunted "market system" that the GOP candidates and their rightwing ideologues have been gloating about doesn't look so flawless.
Comments London-based journalist William Bowles:
It should be obvious to all and sundry by now that capitalism is in dire straights. Last week's meltdown of the world's major capital markets was only 'rescued' by the injection of literally hundreds of billions of dollars from by the European Central Bank, the Bank of Japan and the US Federal Reserve.
So much for the magic of the 'market' which we are continuously told, solves all problems. And in fact, last week's injection by the European Central bank of something like $100 billion dollars didn't do the trick! More had to be 'injected' in order to stave off a total collapse of the world's stock markets. The 'injection' is in reality a bail-out of the commercial banks.
Well now how can you hold me to commitment?
I must be flexible and ready for surprise
I'm really sorry that your job's been terminated,
But the Market told us that we must downsize
Continues Bowles, "added to the sense of dread as investors have no idea which institutions own what debt, leaving the markets to be riven by rumor and counter-rumor. 'There is great uncertainty as to how far risks are spread within the financial system and exactly where the losses reside,' said Paul Niven, at F&C Asset Management. 'The market is trading on fear.' -- ('Central banks pour in billions - but global slide goes on' -- The Guardian, Saturday, 10 August 2007) Thus the real cause of the current panic is financial speculation caused by unrealistically cheap credit and almost no regulation of speculative markets..."
Does it seem like we've given up our power
To an entity that we can't even see?
Oh, this is not the first time that it's happened
You can learn about the others on TV
That "entity we can't even see," in Miller's words, has hit a big bump in the road and the 'free enterprise for us' gang has turned, where else, but to government to bail them out by lowering interest rates and pumping massive amounts of money into the system. The people who created the downturn are now lining up for subsidies so they can go out and buy "distressed properties" and restart the greed machine. Naturally, the Hedge Funds now want to profit on the misery they helped fund. Deals R'Us is still their mantra.
Feeding our ignorance on the origins of this rollercoaster, which some fear could lead to other bubbles bursting and a global recession, or something worse, is a media that mythologizes markets and presents them as neutral self-correcting mechanisms that fairly regulate supply and demand and deserve confidence. There is nary a word on how they can be dominated, monopolized and ologopolized. (Is that a word?) Last week we were warned about "contagion." This week, the calming buzzword is "correction."
Left out in all this is any discussion of the shadowy forces that we don't see who are calling the shots and the many ways in which the game is damaging our society and is even self-destructive to business. (Remember Lenin's warning: "sell them enough rope and capitalists will hang themselves.") Who is investigating the profiteers and the tactics they use? What politicians are speaking out? Isn't the handwriting on the wall?
Steven Lendman writes, "Some astute financial observers now believe current excesses and resulting turmoil were caused by the intentional engineering of the US housing bubble with the Fed in on the scheme." The Federal Reserve Bank) by the way, contrary to appearances, is NOT a government agency but a private body run by big banks.
"Insiders made loads of easy money in the process and now stand to cash in big troubled assets for a fraction of their value the way they always do in the wake of market meltdowns. It's called "vulture" investing with shrewd buyers profiting hugely in good and bad times that are all good for them."
He concludes, "The problem is deep, structural and aided by stripped away regulatory protections giving predatory lenders and Wall Street schemers free reign to target unsuspecting victims." In other words, see who benefits.
Enough of all the uncritical market hyping in the media! Lets get at truths that are obscured with vague references to faith-based market "psychology" which has actually been described as motivated by "animal spirits" as if that's a good thing. They make it sound like fun time--when it's a crime.
As we remember the children's story of the Emperor who had no clothes. As we try to get a deeper fix on, and control over, that "entity that we can't see."