Supply and demand don't explain the sudden doubling and sometimes tripling of grain and oil prices on the futures market. The flagging dollar and lack of oversight have unleashed speculative forces which are out of control leading to food riots, massive protests and starvation. The market cannot self-correct as long as interest rates on the world's reserve currency are kept artificially low. The global financial crisis radiates from Washington, which is where the solution lies.You tell 'em, Mike. They are not listening, of course, but tell 'em anyway.
But the real problem goes beyond Wall Street's exotic debt-instruments or the Federal Reserves low interest funny-money. Overcapacity is the result of slacking demand which naturally arises when workers wages stagnate as they have for the last 30 years. When that happens, the only way the economy can grow is by easing lending standards and expanding credit. That's why Greenspan and his fellows were so enthusiastic about all the complex derivatives and shaky subprime mortgages; it all fit with their class-based view that wages must remain low (to fight inflation) while debt is expanded ad infinitum. This is the blueprint for the New Economy that Maestro touted...
There is no way to escape the day of reckoning now facing the financial system; the hundreds of bank failures, the corporate defaults, the meltdown in real estate, the massive loss of jobs, the dreary contraction of credit, the tumbling stock market, and the blow to our national confidence. But there is a way to rebuild, to reassert control over our own currency; to "even the playing field" and recommit to a strong middle class; to smash the system that diverts the greatest portion of the nation's wealth to a handful of unelected oligarchs whose main objectives are to expand their own personal power and subvert the democratic process. The existing system cannot meet the challenges of the new century. It's gotta go.
PBS journalist Bill Moyers summed it up like this at a recent Media conference in Chicago:"Capitalism breeds great inequality that is destructive, unless tempered by an intuition for equality, which is the heart of democracy. When the state becomes the guardian of power and privilege to the neglect of justice for the people who have neither power nor privilege, you can no longer claim to have a representative government."You tell 'em, Bill.
Tuesday, June 17, 2008
When Was Your Last Pay Rise, Daddy?
Mike Whitney says the big investment banks are now playing the global commodities markets, creating new "bubbles" with horrific consequences: