Snooping and the Demise of "Hope and Change"

You've got to marvel at the industry of Cold Warriors and their offspring constantly reminding us of the state security measures-- real or imagined-- suffered by the inhabitants of the former Eastern European socialist countries. Books, movies, television and anecdotes have deeply embedded in the minds of people in the US the notion that life in Eastern Europe was under oppressive monitoring with spies lurking everywhere. Countless reports of visits to socialist countries told of the suspicions or hunches or impressions of being followed, watched, or overheard. I was always disappointed, in my admittedly infrequent visits to Eastern Europe or Cuba, that I never shared these experiences. I was either incredibly myopic or deemed not nearly as worthy of attention as were others.

Outside of the minority of US citizens who systematically question every “truth” endorsed and proclaimed by official circles, most people feel secure in believing that “we” don't do what “they” do or did. In fact, the certitude of our superiority in respecting privacy, speech, and beliefs serves as a pillar of the mythology of the land of the free.

Of course many of us on the left know better. We know first hand that the US security services operate without restraint or oversight. We know that every significant anti-war movement, every committee in solidarity with the victims of US imperialism, every party to the left of the Democrats, and even every renegade celebrity earns the attention of the US secret police agencies. We know that the tens of thousands of operatives employed and the huge budgets granted are not there for occasional or aberrant spying, but for systematic surveillance and monitoring of anyone perceived as challenging the ruling class consensus. We know that, whenever the need is felt, laws are passed that violate or stretch the intent of the Constitution. And extra-legal means-- easily concealed from the public-- are also common.

But you don't have to be among that select group to know what security services do. You don't have to be an anti-war activist to know that FBI files do not magically appear, but are created through surveillance and informants. The sordid history of the FBI, especially during the Hoover era, is available for all to see. Congressional committees have exposed enough of the chicanery, illegal activity, and violence of the security agencies to give everyone but the willfully blind an idea of just how fragile our privacy and personal integrity are under this self-styled democracy.

Yet liberals-- occupying a political category brazenly drawing its name from “liberty”-- have woefully fallen short in confronting the rise and expansion of the intrusive, Orwellian surveillance state, a process that only accelerated since the Second World War. The fears of the Cold War provided a handy excuse for government intrusion into the lives of hundreds of thousands of US citizens, driving such august institutions as the American Civil Liberties Union into backsliding and equivocation.

We saw it again in the uprisings of the 1960s, when even more presumably innocent citizens became the object of surveillance by a myriad of federal, state, and municipal spy agencies. Once again, the response was loud and clamorous on the part of the liberal establishment, but to little effect. Only Nixon's outrageous near-coup and the persistence of a few members of the normally somnolent media saved us from even further devolving toward a repressive, intrusive state in the early 1970s.

A further step towards a police state arrived with the so-called “War on Terror.” Few in the liberal establishment defied the hysterical surrender of the rights to privacy, speech, or association that ensued. In fact, most joined conservatives in a race to empower the security agencies with money, manpower, and legislation.

Oddly, those who find it so easy to identify snooping in foreign lands are conveniently blind to that malignancy in their own neighborhoods.

And now comes the Snowden affair.

The Nation magazine pens a headline, “A Modern Day Stasi State,” really a gratuitous slap at the former German Democratic Republic, to characterize the Snowden revelations of massive and comprehensive surveillance by the NSA. The truth is that nothing that the GDR security services could have possibly envisioned parallels the collection of every electronic communication by every US citizen. Perhaps the liberals at The Nation draw some perverse satisfaction from the false belief that other countries have gone to the same lengths to monitor their unsuspecting and innocent citizens.

And in an editorial commentary (“Snoop Scoops”) by Hendrik Hertzberg, The New Yorker magazine attempts to simultaneously maintain three pathetically weak excuses for the Administration's secretive spying programs: first, the Snowden revelations expose nothing new-- we already knew about the NSA programs; second, the NSA collects the content, but doesn't examine it; and third, there is nothing illegal about the NSA surveillance.

The best that can be said for the Hertzberg apology is that maybe his boss, the old Cold Warrior David Remnick, forced him to write this nonsense. The fact that one could follow threads and leaks to learn of NSA programs hardly excuses the absence of the topic in most mainstream media and popular discussion. Hertzberg glaringly fails to point to any effort on the part of his magazine to discuss the NSA surveillance. Moreover, if everyone knew about the programs, how do we account for the hysterical response of the Administration, its cronies (Senator Feinstein called Snowden a “traitor”), and apologists? How do we account for the criminal charges against Edward Snowden? For revealing something everybody knew?

Clearly this is a sleazy sidestepping of the profound dangers raised by the government's license to snoop.

Only the terminally gullible would believe that the content of collected data lies untouched in NSA electronic files. With nearly one and a half million government employees and contractors enjoying top secret clearance, surely a few would be tempted to check the e-mails or phone calls of their neighbors, ex-lovers, or rivals. Hertzberg takes literally the assurances of the same people who have been trying desperately to keep NSA activity from public scrutiny.

I suppose one could equally say that “nothing illegal” occurred in Nazi Germany, given that laws were passed enacting or enabling nearly all of the carnage inflicted by the fascist regime. In truth, the vast powers granted by the Patriot Act and the secret kangaroo courts legitimizing NSA acts guarantee that legality washes over anything and everything that government agencies do or could do, as they equally would sanction the SS or Gestapo in the Third Reich.

Indeed, our moment is not so remote from those moments preceding the consolidation of fascist rule in Italy or Germany. Like those times, liberals and social democrats are temporizing, excusing, and denying the assault on privacy, personal security, association, and dissent.

The true history of those times-- not the convenient history that blames the staunchest opponents of fascism, the Communists-- points to the treason and capitulation of bourgeois politicians who sought to compromise, outsmart, or neutralize the tide of fascism. Similarly, our liberal politicians populating the Democratic Party (with a few notable, courageous exceptions) rush to establish their security bona fides by endorsing the expansion of the police state. They show the same misplaced confidence in their ability to restrain or control the uncontrollable.

Amplifying the hesitation of liberals is the embarrassing role of the Obama Administration in the construction of the NSA police state. After giving their undivided, unqualified support to the candidacy of hope, change, and the restoration of liberal values, the liberal establishment finds itself in the uncomfortable position of defending the trappings of a police state or, conversely, righteously attacking their designated standard bearer. This dilemma has driven liberals to such outrageous statements as Hertzberg's: “The critics [of the NSA] have been hard put to point to any tangible harm that has been done to any particular citizen,” a statement worthy of a self-satisfied burgher in Munich in 1934.

Particularly bruised by the Snowden revelations are those pseudo-radicals who have unceasingly called for a love fest with the Democratic Party as a response to the “fascist danger.” How does one enlist those who we now know have crafted and implemented fascist-like policies as partners in stopping fascism? Surely embracing them as anti-fascist allies borders on insanity.

Perhaps it is only fitting that those seduced by the pied piper of hope and change have arrived at this juncture. However, we have lost far too much ground to this political silliness. There is too much at stake. We deserve better.

Zoltan Zigedy

zoltanzigedy@gmail.com

The Global Economy: A Midyear Snapshot

What happens to the US economy when the Federal Reserve stops printing money to buy mortgage based securities, treasury notes, and other bonds? What happens when that body stops injecting 85 billion dollars into the US economy every month?

These questions torture the economic pundits in the mainstream press.

Contrary to what most believe there has been no recovery. The reports from the other principal global economies have been dismal, recording stagnation or anemic growth. In the mean time, the US economy has been sustained by forced feeding. The Federal Reserve quietly prints notes and takes around 85 billion dollars worth of various securities off the market and parks them on the Fed's balance sheets. The announced reasons for this action are to keep interest rates low, attracting borrowers, and to thus stimulate business growth and job creation. An unannounced consequence of the 85 billion dollar injection has been a surge in equity markets and housing prices. Since both stock portfolios and home values are the principal components in the psychological “wealth effect” -- the subjective, personal sense of financial well-being -- they have spurred the impression of recovery and consumer confidence. Behind this conjured image of recovery, the US economy continues to stagnate and erode.

Whenever the Federal Reserve has suggested that it might slow or end this life-support, markets have dropped precipitously.

Obviously, the Federal Reserve program, dubbed “quantitative easing,” is a back-door stimulus program. Not a stimulus program of the New Deal type, not public works and public jobs, but more a reclamation of the garbage piled up after the massive, destructive party thrown by the financial sector and a rekindling of the pre-crisis euphoria. No one in the political establishment, neither Republican nor Democrat, had the stomach for a full-blown New Deal program, nor did they have any desire to pass even a little of the cost of a fix-up on to their corporate masters.

So the task of recovery fell in the lap of the Federal Reserve, an ostensibly independent non-political body. The Federal Reserve is not political, except when it is. While it can't be dictated to by the branches of government, its make-up of ivy league professors and financial industry veterans guarantees loyalty to corporate moguls. It also keeps an ear open to the powerful as well as the rich. On occasion the Fed even hears the voices from the barricades, but only when they are at the barricades!

It shares that “independence “ with the Supreme Court. Like the Supreme Court, the Fed gets occasionally chastised when it either missed or failed to get the message of a ruling class change in policy.

All central banks boast of their independence, but all listen closely for a shift in political favor. The Central Bank of Japan recently demonstrated its fealty to political change. With the election of Shinzo Abe as Prime Minister, the Bank relented to his pressure and began a policy of quantitative easing with the goal of doubling Japan's money supply in two years. Abe, a right-wing nationalist, advocates purchasing securities and bonds through a speed-up of the Bank's printing presses, but makes no effort to conceal his real goal: radically reducing the exchange rate of the national currency, the Yen.

Like his foreign policy initiatives, Abe's currency policy is a bold act of aggression, in this case, economic aggression. A weak yen makes Japanese manufacturing products cheaper in global markets, giving Japan a competitive edge against other global manufacturers. The rise of Japanese nationalism has not gone unnoticed by other Asian powers. Chinese demonstrators have trashed Japanese cars in a way reminiscent of similar spectacles in the US decades ago. Japanese automobile sales have dropped sharply in the PRC.

While retaliation may well be on the horizon, the Abe policies have brought a sharp drop in the Yen's value, but also great volatility in Asian equity markets.

Similarly, for all the US Federal Reserve's aggressiveness in printing money, the stock market's surge and the recovery of housing prices have masked serious issues plaguing the real US economy.

[June 2: “Investors have ignored poor economic news as stocks have risen... The Basil, Switzerland based Bank of International Settlements said... that central banks' policies of record low interest rates and monetary stimulus had helped investors “tune out” bad news-- every time an economic indicator disappointed, traders simply took that as confirmation that central banks would continue to provide stimulus.” as reported by Fox News.]

Disposable personal income growth is collapsing, for example. Excepting the 2008-2009 collapse, disposable personal income growth was lower in 2012 than any time since 1959 and is trending even lower in 2013. Not surprisingly, the personal savings rate-- a rate that grew dramatically after the frivolity leading to the 2008-2009 collapse-- has now dropped sharply. Clearly, workers are taking home less while reducing their savings to pay the bills. While unsustainable, this tact has buoyed consumer spending.

[May 31: The Commerce Department reported a .2% pull back in consumer spending for April, 2013.]

Manufacturing production in the US has declined for three of the last four months. Caterpillar Inc., a bell weather of the basic manufacturing sector, has witnessed factory orders of machines, calculated on a rolling three-month average, decline steadily throughout 2012, moving into negative territory at year's end.

Hyper-exploitation in 2009, in the form of unprecedented gains of productivity growth, pulled the US economy from its nadir. But since 2009, productivity gains have slackened with a substantial decline in the last quarter of 2012 and only a very modest recovery in the first quarter of 2013. Consequently, anemic corporate revenue growth is increasingly crimping earnings, once again threatening the rate of profit.

Pressures on profit are demonstrated by the falling yield on junk bonds. The demand for yield-- the never-ending search for a higher rate of profit-- has driven the yield on the riskiest investments lower than at any time in recent memory (a leading high-yield bond index records a return below 5%, the lowest since records began in 1983!). Conversely, treasury bonds, once popular as a safe haven, are now commanding greater and greater yield despite the fact that the Federal Reserve gobbles them up and removes them from bond markets. Obviously, investors do not want safe Treasuries; investors do want risky junk bonds! The gap between Treasury yields and junk bond yields are narrower than any time since 2007. Are we skating on the same thin ice, the same crisis of accumulation?

Accelerating private debt in Asia suggests that much of the capital seeking higher profit growth rates has landed there. But Asia is not the hot bed of growth that it was a few years ago. The mounting private debt in Asian economies supports risky, speculative projects and services like commercial and residential real estate. With international trade tepid, these once export-leading countries are attempting to sustain growth through speculation and the hope of global recovery. The new Chinese leadership seems determined to reduce the role of the state sector, market regulation, and public financing, the very factors that allowed the PRC to painlessly weather the global crisis. They are determined to entrust the fate of the economy to global markets. The simultaneous shrinking of government debt and the explosion of private debt underline this policy shift.

[May 31: The Reserve Bank of India reported the lowest annual GDP growth rate in a decade for the end of the fiscal year, March 31.]

The once robust South American economies are also slowing. Exports to the PRC are declining and exports to the EU are on the skids, retarding growth throughout the region. Stagnant growth presents new challenges to the conservative neo-liberal regimes on the continent as well as the more progressive social democratic governments. Nor do South American economies offer any relief, as they have until recently, to the global economy.

And, of course, Europe is in a depression-- a deep and profound depression. The EU as a unity faces both centrifugal and centripetal forces that challenge any policy resolution. Moreover, the major parties – conservative, liberal, and social democratic-- have exhausted their policy toolboxes. Until a new road is chosen, the European Union will only drag the world economy towards a similar fate.

[May 31: Eurostat reports the EU unemployment rate reached a new high-- 12.2% in April-- the highest level ever recorded since euro-wide tracking began in 1995.]

The global economy faces two stubborn challenges: first, a crisis of accumulation and second, an insufficiency of global demand. They are, of course, inter-related, continuation of the 2008-2009 collapse, and immune to conventional treatment. The vast inequalities of wealth and the resultant massive accumulation of capital hungering for investment opportunities (driven by Marx's tendency for the rate of profit to fall) stand at the center of the lingering crisis. Capital continues to seek increasingly risky and unproductive profit schemes, schemes that strangle productive, socially useful (but unprofitable!) activities. At the same time, the crisis has immiserated millions and idled a vast mass of human capital. Left with limited resources and limitless insecurities, these casualties of the crisis have necessarily reduced their patterns of consumption. A shrinkage in global demand followed.

Some still harbor illusions of taming capitalism and slaking its thirst for profit. As the years of crisis continue, it looks more and more like the beast must be slaughtered.

Zoltan Zigedy

zoltanzigedy@gmail.com

Anarchy in the USA-- Live at Zuccotti Park

In my last posting, I deplored the state of the US left, citing the rise of utopian and reformist alternatives to socialism. Deeply ingrained anti-Communism explains the ready acceptance of the shallow and muddy alternatives to capitalism served up by academic oracles like Professor Gar Alperovitz. These wishful options come at a time when more and more US citizens, especially young people, are showing a hunger to learn more about socialism. But the thin gruel of cooperatives and other small-scale and locally owned enterprises will not satisfy that hunger. Nor does monopoly capital seem too alarmed by the prescriptions of the good Professor. The threat of one, two, three... thousands of little “socialisms” has left big business singularly unmoved in spite of Alperovitz's reach well beyond the left establishment.

Among those fans of Alperovitz who wish to slink away from Marxism and revolutionary politics it has become customary to cite Lenin's essay “On Cooperation” from 1923. This shamefully dishonest tactic rips Lenin's praise of agricultural cooperatives from its context. Writing at the time of the New Economic Policy, Lenin emphasizes that cooperatives are only viable because of Soviet power, the monopoly of “political power is in the hands of the working-class.” He is crystal clear on the cooperative movement under the capitalist state:

There is a lot of fantasy in the dreams of the old cooperators. Often they are ridiculously fantastic. But why are they fantastic? Because people do not understand the fundamental, the rock-bottom significance of the working-class political struggle for the overthrow of the rule of the exploiters. We have overthrown the rule of the exploiters, and much that was fantastic, even romantic, even banal in the dreams of the old cooperators is now becoming unvarnished reality.

“Fantastic, even romantic, even banal...”

Seasoned veterans of the left know that any strategy that promises to be non-threatening and enters through the front door of the monopoly media should be received with suspicion.

Occupy Revisited

For the above reason, I read a recent The New Yorker article with a jaundiced eye. While nearly everyone acknowledges that the Occupy Movement is --if not dead --splintered and marginalized, a New Yorker “critic at large” Kelefa Sanneh, picked this moment to revisit it. Moreover, the usually attuned-to-the-cutting-edge editors indulged five full pages of copy to the movement's “godfather” and the allure of anarchism.

Just weeks ago, before the elections in Venezuela, the magazine published a long piece scathingly critical of the Bolivarian Revolution and its late leader, Hugo Chavez. No doubt with the approval of The New Yorker's dogmatic Cold War editor David Remnick, who still sees Stalin lurking under every bed, the author revived the tired canard of Chavez “preventing a coup like the one that put him in office.” [my italics] Of course Chavez didn't come to office through a coup, a fact that The New Yorker later acknowledged with a small correction. Certainly joining with the mainstream media to trash Chavez and his socialism doesn't dispose me to expect The New Yorker to experience a sudden change of heart and promote any genuine alternative to capitalism. And they don't disappoint.

Paint Bombs: David Graeber's 'The Democracy Project' and the Anarchist Revival (5-13, 2013) is a stealth exercise in distraction and diversion. Where many of us saw the Occupy movement as an incipient anti-capitalist movement degraded through its failure to generate organization and focus, Sanneh sees a noble struggle against “verticals” and in defense of the procedures of the “horizontals.” Sanneh crows: “Occupy resisted those who wanted to stop it and those who wanted to organize it”.

Imagine wanting to organize the Occupy movement! The shame!

The self-styled and New Yorker-anointed guru of the “horizontal” movement is David Graeber, an anthropologist and author of an interesting, eccentric book on debt. Sanneh acclaims Graeber as “the most influential radical political thinker of the moment” (Take that, Gar Alperovitz!). The arch enemies of the “horizontal” movement are “verticals” represented by Marx, the Soviet Union, and parties, leaders, and demands. Sannah claims to see this through the prism of Occupy:

...instead of arguing about economics and ideology, the Occupiers could affirm, instead, their unanimous commitment to freedom of assembly. Occupy may have begun with a grievance against Wall Street, but the process of occupation transformed the movement , peopled by activists demanding the right to demand their rights...

Perhaps no one could say exactly what the Zuccotti Park occupation wanted, but lots of people knew how it worked.

At a critical moment in an economic crisis adversely affecting millions, the “horizontals” were able to transform a movement against Wall Street into a statement “demanding the right to demand... rights.” Thankfully, this does not characterize all Occupy experiences outside of Zuccotti Park. In many cases, Occupiers joined activists in their cities and neighborhoods fighting for health care, jobs, economic justice, and against US aggression. They found righteous demands and learned valuable lessons in organized struggle.

Sanneh concedes that the “rehabilitation of the anarchist movement in America has a lot to do with the fall of the Soviet Union, which lives in popular memory as a quaint and brutal place-- an embarrassing precursor that modern, pro-democracy socialists must find ways to disavow.”

So it's embarrassment and not ideology, disavowal and not commitment that drives the popularity of anarchism. Does this not reek of opportunism? An opportunism that prefers to swiftly and resolutely condemn and separate from the Soviet experience in the face of a “popular” inquisition rather than candidly address both the Soviet strengths and weaknesses?

However, embarrassment should be felt for the anarchist blueprint for forging a new society. Rather than the vision offered by “grim joyless revolutionaries,” Graeber wants “a kind of de-centralized socialism, with decisions made by a patchwork of local assemblies and cooperatives...” – in his own words - “something vaguely like jury duty, except non-compulsory.” Thus, the road to an other-than-capitalist future is paved with “open mics,” assemblies, cooperatives, and a fuzzy analogy.

Adding more to the anarchist strategy are the views of a fellow anthropologist and ally, Yale professor James C. Scott. Scott salutes anarchism for “its tolerance for confusion and improvisation.” He finds anarchism's foot print in such acts of resistance as “foot-dragging, poaching, pilfering, dissimulation, sabotage, desertion, absenteeism, squatting, and flight.”

“Grim joyless revolutionaries” will be surprised to learn how easy is the road forward. Instead of tiresome organizing, demonstrations and marches, instead of demands and manifestos, instead of meetings and planning sessions, instead of party-building and coalition work, acts of individual and often covert defiance mark the way.

One suspects that despite the rhetoric of radical and participatory democracy advocated by Graeber, Scott, and other anarchist “influentials,” their ideas were not forged in the cauldron of struggle, their thinking was not the product of collective, “horizontal” decisions. The professors decry leadership, but contradictorily speak authoritatively for their movement with little hesitation. They are unsanctioned spokespersons for a leaderless movement. Strange.

To appropriate an old expression: Scratch an anarchist and find an angry, embittered liberal. Like all liberals, modern-day anarchists are obsessed with procedure. It's not a program that defines their agenda, but the ritual of decision making. It's no surprise that the liberals at The New Yorker are fascinated. And it's no surprise that they take us no further from a decadent, crisis-ridden capitalism.

Zoltan Zigedy

zoltanzigedy@gmail.com

Socialism or “Castles in the Air”?

It’s hardly a secret that the US left is barely alive. While left-wing movements in the US have hardly shaken the foundations of power in my life time, they have known moments of modest success, reshaping the political landscape in significant and irreversible ways. Since World War II, left activism has stirred and nourished important movements like the struggles for African American equality and against US aggression in Vietnam. The left has also played important roles in fueling struggles for women’s and gay rights and for strengthening environmental protection. While 1960s talk of revolution and radical alternatives were more hyperbole than real, the ferment of those days was real.

Unfortunately, little of the US left’s modest success penetrated the labor movement, a social force defanged and declawed by anti-Communism early in the Cold War. And little of the left’s wave of vitality challenged the two-party system in any serious way. As the risings of the sixties recede further and further in our collective memory, the quantity and quality of popular struggle diminishes as well.

It’s not just the number of actions or the size of the crowds that are shrinking, but also the ideological understanding that purports to animate our US left. That is, the ideas embraced by various elements of the left have grown more and more murky and superficial.

What Ails the Left?

There are many symptoms and causes of the relative decline of the US left.

But always looming in the shadows of struggles for social justice is the demon of anti-Communism. Other peoples have suffered periods of hysterical, paranoid anti-Communism, but few countries outside of the US have elevated it to a state religion. While fear of Islam may have currently replaced Cold War fears as the national obsession, anti-Communism remains deeply embedded in the national psyche. Recent movies featuring West Coast and East Coast invasions of the US by forces from the tiny Democratic People’s Republic of Korea only underscore the persistence of this demon.

Of course the US left is neither immune from nor unwelcoming to Red-baiting. From the fifties, “leftists” could earn respectability and credibility with the public ritual of denouncing Communism. It was from this period that critical financial umbilical chords from the most prominent, most influential left and liberal formations to wealthy donors, foundations, and, in some nefarious cases, the security services were established. Any independent organizations deriving grass roots funding from workers’ organizations or the nationally oppressed were routinely looked at suspiciously for Red ties.

By the early sixties, the purge of everything Red or even Pink was largely completed. Everything—words, ideas, associations—even vaguely linked to Communism had disappeared from the mainstream. And the rise of a “new” left reflected the weight of that legacy. Both opportunism and ignorance led most of the left’s new leadership to establish a political camp to the right or left of Communism, demonstrably distant from Communism: radical democracy and social democracy to the right; Maoism and anarchism to the left.

Arguably this failure to establish an honest, objective encounter with Communism, this Cold War attitude of framing all politics as a counterweight to Communism, contributed mightily to the decline of the left in the next decade. The student base and alienation from working people demonstrated the shallowness of New Left ideology. Most leaders and activists turned to careers, the Democratic Party, the social service bureaucracy, or retreated to the universities.

Anti-Communism continued and continues as a blind faith. The fall of Soviet and Eastern European socialism added a new dimension to the anti-Communist canon: Not only was Communism evil, but it didn’t work.

Without the foil of real existing socialism, the US left drifted aimlessly. Some found an ideological anchor in “market socialism,” especially with the rise of Market-Leninism in the Peoples’ Republic of China. Others found romantic answers in Comandante Zero, a pipe-smoking, inscrutable poet/revolutionary diminutive caricature of Che Guevera. Still others attempted to restore life to the New Left of the sixties. One cannot but be reminded of the situation of Russian revolutionaries after the suppressed 1905 uprising as described by Lenin:

The years of reaction (1907-10). Tsarism was victorious. All the revolutionary and opposition parties were smashed. Depression, demoralisation, splits, discord, defection, and pornography took the place of politics. There was an ever greater drift towards philosophical idealism; mysticism became the garb of counter-revolutionary sentiments. (Left Wing Communism: An Infantile Disorder)

Where most European Communists degenerated into social democrats in this period, US leftists, scarred by anti-Communism and with no similar tradition, found hope in narrow-issue activism, cult-like formations, or the unlikely revival of the New Deal Democratic Party.

Obama and the Left

The candidacy of Barack Obama proved to be a disaster for the US left. Anti-war and social justice activists put aside their signs and plans and flocked to the Obama campaign. Grandiose expectations were conjured out of thin air; a candidate associated in the past with conservative Democrats and a professed admirer of Ronald Reagan was imagined to be the second coming of Franklin Delano Roosevelt; and even cautious measures of critical support were overwhelmed by wild-eyed enthusiasm.

After the election, most of the US left kept faith with Obama, a faith that has produced very little of the anticipated change, but succeeded in disarming the left. The big loser was the historically most progressive element in US politics: the African American community. Understandably, African Americans rallied to support the first African American president, but his administration has neither represented African Americans nor lifted a finger to relieve the sinking material conditions of life for that community. In fact, often more has been done for African Americans under Republican presidents when the left is actively and vocally pressuring and Democrats are in opposition! As an example, no Republican president would get away with so few African American appointees or nominees in an administration as has the current President!

The US ruling class has successfully and opportunistically gauged the hard won level of racial tolerance of US voters. The new face of US policy and diplomacy presented by Obama was welcomed everywhere—at home and abroad—over the failed Bush regime. A byproduct of this tactic is the disarming of the left and the silencing of African American leaders. Tragically, the US left has accepted the shallow symbolism of an African American president at the expense of the African American masses.

The Crisis and the Left

For the left in the US and internationally, the profound economic crisis beginning in 2008 and continuing today offers a great opportunity to mount an anti-capitalist offensive and project a clear alternative. For over a century and a half that alternative was socialism. The vision articulated over that period differed from time to time, but shared some straightforward features: the theoretical primacy of class relations, public ownership of productive assets, an end to exploitation, a new democracy based upon the rule of the working majority, and social and economic planning. Each feature clearly addresses a glaring, unacceptable shortcoming of capitalism.

But in the US, our left will not address the devastation wrought by capitalism and embrace these features or even discuss them honestly. One of the most prominent and respected national leaders of the anti-war movement recently said: “I used to think I was a socialist… But I also think that people should have the right to be individually enterprising. I have yet to see the society that I would like to live in but I see pieces of it, bits and pieces of it here and there.” This is hardly encouragement for the 11.7 million US citizens looking for a job, the nearly 8 million who would prefer a full-time job over their part-time employment, or the tens of millions who still lack health insurance, all benefits once guaranteed and delivered by real, existing socialism.

Another prominent left pundit, in reviewing another left oracle’s “new economy” manifesto, remarks that the author’s assumptions are “…that socialism, as we have known it in the 20^th century did not work.” He blithely concedes that the book’s author “spends little time critiquing 20^th century socialism.” Not deterred by the lack of argument, the reviewer affirms that “I was persuaded… that a glimpse into the future is critical largely due to reality of the failure of 20^th century socialism, or more accurately, what is better described as the crisis of socialism.” “…did not work, “failure,” “crisis” are the unexamined, easy assumptions of our floundering left.

So what do they offer as an alternative?

Anything but the socialism associated with Communism. They take us back to the foolishness that Marx and Engels called “utopian socialism,” the schemes concocted by Fourier and Owen in the early 19^th century. In the Communist Manifesto they conclude that utopians “…therefore, endeavor, and that consistently, to deaden the class struggle and to reconcile the class antagonisms. They still dream of experimental realization of their social utopias, of founding isolated phalansteres, of establishing ‘Home Colonies,’ or setting up a ‘Little Icaria”—pocket editions of the New Jerusalem—and to realize all these castles in the air, and they are compelled to appeal to the feeling and purses of the bourgeois… They, therefore, violently oppose all political action on the part of the working class; such action, according to them, can only result from blind unbelief in the new gospel.”

We find a modern incarnation of utopianism in the “New Economy” movement, the US left’s current flavor of the day. Back in late 2011, Professor Gar Alperovitz reached for the golden ring of utopia with his America Beyond Capitalism: Reclaiming our Wealth, our Liberty, and our Democracy, a book that promised to take the disenfranchised in the US from peasants to lords. Alperovitz, like his utopian predecessors, believes that ideas generously given from a fount of wisdom will, if only embraced by those below, lead to “democratizing capital.” Alperovitz’s magical ideas are the spawning of “thousands of co-ops, worker-owned businesses, land trusts, and municipal enterprises” that will, with time, “democratize the deep structure of the American economic system.” A more romantic version of Marx and Engel’s derisive “new gospel” I cannot imagine.

The very notion of “democratizing” something, let us say “capital,” that doesn’t wish to be “democratized” is mind-boggling. Will capital be embarrassed into sharing the wealth? Will the success of co-ops demonstrate to Exxon that energy should be free to all and produced in an environmentally sound manner? Will the 17-trillion-dollar US-based multinational corporate behemoth shudder in the face of worker-owned enterprises and co-ops, surrendering control of the boards of directors to the people?

I don’t think so.

Alperovitz points to existing self-styled alternative ownership models like ESOPs (Employee Stock Ownership Programs), community development corporations, co-ops, etc. as the way forward (he concedes that ESOPs have a dubious record). As such, they would offer a relatively painless “evolutionary” road different “from traditional theories of ‘revolution’.” Many “businessmen, bankers, and others, in fact, commonly support the idea [of co-ops] on practical and moral grounds,” Alperovitz proclaims. Of course they do; they see no challenge to capitalism and a possible opportunity to cash in!

The fact that “castles in the air” ideas like Alperovitz’s actually gain traction demonstrates the sad state of the US left. The fact that opinion polls show a decided increase in interest in socialism is encouraging; however, the fact that those new to the idea must taste through the unappealing, non-nourishing gruel currently favored by so many on the left is disappointing. 

For more than a century and a half, socialism—the public and democratic ownership of the essential means of production under a majority peoples’ democracy—continues to be the only ultimate answer to a tenuous and destructive capitalist system.

Zoltan Zigedy

zoltanzigedy@gmail.com

Stockman’s Rant

On the rare occasion, an article appears in the mainstream press that takes a deeper, more thoughtful view of human affairs, a document that gives a hint or glimpse of an unspoken truth beyond the pablum that occupies media puppets. Such an occasion was the publishing of The New York Times opinion piece entitled “State Wrecked: The Corruption of Capitalism in America” (3-31-2013) and authored by former Reaganite budget director, David Stockman.

Now Stockman is a renegade from corporate Republicanism; he actually believes in the ancient principles put forward by Adam Smith and other classical capitalist thinkers. While corporate Republicans cozy up to their party’s ugly, fascistic outliers, they always, in the end, make their bed with the rich and powerful. Stockman, on the other hand, actually embraces the mythical virtues of small business ownership and town hall democracy. In classical Marxist terms, he represents the ideology of the petite-bourgeoisie.

In the swamp occupied by Democratic and Republican politicos—the breeding ground for conventional politics—such views are unwelcome. Principled politics from the right or the left are alien equally to the snakes and the rats that prey on the cognitively weak and unwary.

Stockman is in a panic because he sees beyond the stock market euphoria and Pollyanna commentaries that have induced the mass delusions of the last several months. And what he sees angers him.

Stockman constructs an indictment, a list of charges against the current US economy: growth of output is woefully inadequate, jobs are both indecently scarce and low paying, the incomes and the net worth of “ordinary” citizens are dropping while poverty is on the rise. To anyone with a grip on reality, these are not signs of real economic recovery or systemic success. He notes that “we’ve had eight decades of increasingly frenetic fiscal and monetary policy activism intended to counter the cyclical bumps and grinds of the free market and its purported tendency to underproduce jobs and economic output. The toll has been heavy.” And yet imagine the toll if no remedial action had been taken! Surely, this unintended critique of eighty years of state-monopoly governance counts as a devastating charge against modern capitalism. If the era of state-monopoly capitalism can do no better than produce the sad state outlined by Stockman, it is decidedly a failure.

Stockman dares speak the truth so discomforting to liberals and social democrats: [World War II] “did far more to end the Depression than the New Deal did,” though he misleadingly praises the Eisenhower years for its “sound money and fiscal rectitude.” Perhaps he is too young to remember the massive increases in military spending, the ambitious interstate highway system, and the enormous growth of public spending brought on by the Cold War and the Sputnik panic. In any case, the dose of war socialism and the “frenetic… activism” of state-monopoly capitalism kept the capitalist ship afloat, though with fewer and fewer rewards for the majority of US citizens.

Stockman correctly sees that the remedies pursued by US state-monopoly capitalism directed more and more of the lubricant of public funds towards the financial sector over the last decades: the Greenspan “put,” the Long-Term Capital Management bailout, extended ultra-low interest rates, TARP, Fed purchases of bank junk, the support of federal bond prices, and support for equity markets. He calls this, not incorrectly, “Keynesianism—for the wealthy.”

And this is a salient point. It is commonplace to express the differences between Democratic and Republican policy makers since the Reagan era as pro- and anti-Keynesianism. But this is wrong. Ironically, it was only during the Clinton administration that growth of government spending was at all curtailed and today fiscal and monetary expansion remains a ready tool of the ruling class well after Reagan's departure. Certainly Keynesian pump priming has taken new and evolving forms over decades: direct job creation, military spending, massive space programs, infrastructure projects, public-private partnerships, repair of financial institutions, and stimulation of financial demand. While one or the other may be the favored priming tool of rulers at any given time, the similarities of the forms are far more important to recognize than their differences. State intervention in markets continues to be at the core of contemporary state-monopoly capitalism. Stockman sees this; others don't.

In Stockman's account, the enabler of pump priming in all of its forms has been debt. Borrowing or printing money is the means to continue the regimen of “frenetic fiscal and monetary policy activism.” But, in his view, this regimen is running out of steam. “The future is bleak.” And the “Fed has incited a global currency war (Japan just signed up, the Brazilians and Chinese are angry, and the German dominated euro zone is crumbling) that will soon overwhelm it...”

A bleak picture indeed, but one entrenched in reality.

So if modern capitalism-- in its state-monopoly form-- is a disaster, does that mean that Stockman advocates socialism?

Definitely not. Instead he holds out for a nostalgic return to the gold standard. Avoiding what he calls “end-state metastasis,” “would necessitate a sweeping divorce of the state and the market economy [the wholesale rejection of state-monopoly capitalism! ZZ]. It would require a renunciation of crony capitalism and its first cousin: Keynesian economics in all its forms. The state would have to get out of the business of imperial hubris, economic uplift and social insurance and shift its focus to managing and financing an effective, affordable, means-tested safety net.”

 In short, Stockman advocates going back to a conjured idyllic time before state-monopoly capitalism, a time imagined by the petite-bourgeoisie as one of healthy competition, entrepreneurship, and opportunity. For him, the golden age of capitalism would be the pre-depression era of small town USA, family farms, vibrant and expansive industry and foreign policy isolationism. Of course any pretense of continuity or viability of that era was dashed by the Great Depression. In fact, the policies decried by Stockman (and associated by Marxists with state-monopoly capitalism) served as a temporary backstop to the further contraction of the capitalist system produced by that fantastic era.

Stockman may wish for a return to an earlier time just as others may wish to time travel back to the court of Louis XIV, but it isn’t going to happen. Capitalism, like any organism, has its own life span, its own history. Saved from a critical illness, capitalism passed from its laissez faire period to a period of intensifying state intervention and management. Today, that phase of capitalism’s development—state-monopoly capitalism-- is also threatened with a critical illness. I would not be so bold as to predict capitalism’s imminent death, but certainly it will not be revived by reliving its past as Stockman fantasizes.

At a time when liberals and conservatives argue pathetically over the right mix of austerity and stimulus, Stockman is a welcome mainstream herald of the profound crisis pummeling global capitalism. His anxiety and anger reflect a deeper understanding of the contradictions of the moment. His rant, spiked with sarcasm and vitriol, stands in stark relief against the smugness of the lap dog punditry.

Krugman Strides into the Ring

 The Stockman screed generated a storm of opposition. Liberals and the fuzzy, mushy left were particularly affronted. Unlike Stockman, they would like to only turn the clock back to the early seventies, another supposedly “idyllic” time when business unionism was generating satisfactory contracts, the “Great Society” programs were blooming, and war in Vietnam was winding down (at least for US combatants). The fruits of the civil rights struggles and urban uprisings were realized in the creation of programs, bureaucracies, and other buffering agents against domestic insurgency. Jobs servicing the Great Society generated a stratum of social liberals who matured into the base of a social democratic left inside and outside of the Democratic Party. For them, the world turned evil and foreboding with the Reagan “revolution,” a movement they characterize as neo-liberalism.

In the dust-up with Stockman, Paul Krugman, columnist for The New York Times, assumed the role of savior and protector of their interests and perspective. Krugman, the darling of the “respectable” left, attacked Stockman for his audacious critique of the track record of state intervention in the capitalist economy. Anyone who follows Krugman knows that his response to the crisis is a simple solution: spend more public funds and spend freely until growth perks up. The soft left finds this an agreeable solution because it promises to save capitalism (and forestall socialism!) while creating a potential material basis for pet welfare programs. It is simply the fantasy of another New Deal. And never mind that Krugman doesn’t share the fantasy!

Apparently, the Stockman-Krugman battle merited a major media appearance before the Sunday morning gasbags, the big stage for what our media passes off as intellectual fare. While I lacked the stomach to watch the sparring between the two, refereed by the likes of Huffington, van Sustern, and Will, I would commend an entertaining account of the match by Mike Whitney in Counterpunch (Krugman vs. Stockman, April 11, 2013).

The merit of Stockman’s account is that he is righteously indignant with an economic system that has failed the great majority of people and inflicted great pain and uncertainty. He goes beyond the dominant rhetoric of “we are all in this together” and “we are all at fault” to find systemic rot in capitalism. He correctly places the blame for this at the doorstep of state-monopoly capitalism, the stage of capitalism evolved to rescue the system from the accumulated contradictions of laissez faire capitalism, contradictions brought to light by the Great Depression. But he cannot go where logic would take him. He cannot entertain options that would transcend capitalism. Thus, he is resigned to a pathetic nostalgia for a bygone era where the contradictions of capitalism did not appear in such sharp focus. While he stretches the bounds of mainstream thinking, he can not see beyond markets and private ownership; he cannot see socialism.

Krugman and most of the US left are thoroughly conventional in their thinking—they offer a more “enlightened” management of the economic system and a cheerful capitalism with a human face. They would be hard pressed to point to a period when capitalism bore a human face, however. Nonetheless, they are undaunted before a rising tide of interest in the socialist option. They are resolute in their fear and rejection of real socialism.

Pressured by five years of relentless economic crisis and increasing signs of favor towards socialism, especially with the young, our feckless left offers a cold plate of empty slogans of localism, anti-consumerism, platitudinous “participatory” democracy, cooperatives, and a vacuous “new” economy. As if these are answers to the $17 trillion dollar US multinational, monopoly capital behemoth. In truth, these are simply evasions and dissemblance. 

If Stockman is right and capitalism is “state-wrecked,” then its time to leave the wreckage and turn to socialism. 

Zoltan Zigedy

zoltanzigedy@gmail.com

Sixto and the Queen of Versailles

Seventy-five years ago, Christopher Caudwell’s Studies in a Dying Culture was published posthumously. Caudwell, a brilliant young British Communist writer and poet volunteered to fight for the Spanish Republic and was killed in 1937. If Caudwell’s assessment of capitalist culture was appropriate to the mid-twentieth century, that culture has reached a terminal phase in the second decade of the twenty-first century.

The artistic and personal liberties unleashed by the escape from the repressive, conformist 1950s and the energy and optimism accompanying the civil rights and anti-war movements were methodically and overwhelmingly suffocated by corporate cooption. Any and every new spring of creative originality—whether it be a new popular musical form or an original film director—has been damned and channeled by the monopoly entertainment industry. As a result, cultural products with any claim to broad popularity are reduced to either formulaic, safe entertainments or vapid, lifeless expressions of “high” culture.

This is not to demean the tens of thousands of talented cultural workers who struggle at minimum wage jobs while studying and exercising their craft for the few willing to step away from the corporately constructed temples of culture. They labor even more heroically than their predecessors who were occasionally able to hew some measure of independence from the grasp of cultural moguls and business accountants. That is less possible today when only unrestrained vulgarity and violence or unchallenging distraction and fantasy offer the keys to entering the cultural big stage.

In an age where the promise of hip hop has been reduced to a grinding pulse of swagger, violence, and selfishness and the freedom of independent commercial film predictably delivers time-released, regular spasms of ultra-violence, nudity, and sex, relief from the tedium is especially delicious. More and more that relief is coming from documentary film.

I have in mind two documentaries that expose the worst and best of the US. 

The Queen of Versailles

The best documentaries often rise to great heights on sheer dumb luck; the Irish film makers who, by happenstance, captured close-up the coup against Hugo Chavez and its aftermath were extraordinary examples of the film gods in action (The Revolution Will Not Be Televised). Similarly, Lauren Greenfield's 2012 documentary, The Queen of Versailles draws its drama from the impact of the economic crisis upon one of the richest families in the US. What begins as the capture of the excesses and embarrassing vulgarity of the nouveau riche devolves to a tale of blame, self-pity, and neglect, thanks to the impact of the unforeseen crisis.

On the way up, a fortune built around the hustle and shrewd entrapment of the time-share industry allows an orgy of self-indulgence, senseless consumerism, and smugness. David Siegel, the ruler of the empire, brags about his clandestine role in getting Bush elected President; he creates a glitzy tower in Las Vegas to signal his success, and he aspires to build the largest private home in the US to flaunt that success. Siegel embodies Marx’s infamous iconic capitalist: “… The less you eat, drink, and buy books; the less you go to the theater, the dance hall, the public house; the less you think, love, theorize, sing, paint, fence, etc, the more you save—the greater becomes your treasure which neither moths nor dust will devour—your capital.” But as Marx acknowledges, your abstinence and single-minded greed is rewarded, for your accumulated wealth can “appropriate art, learning, the treasures of the past, political power…” And Siegel does all of this.

But the 2008 economic collapse brings the Siegel family to its knees. Dead, unattended pets; dog feces on carpets; fast food; cranky, spoiled children; and sullenness and self-pity replace the former swagger. “It’s the banks, the rotten, greedy banks,” the Siegels exclaim. They angrily protest that “ordinary” people like themselves are victimized by selfish bankers.

As the empire totters, the Siegels scramble to adjust. On a visit to her childhood friends, wife Jackie must subject her children to their first flight on a commercial airline. “Why are these other people on our plane?” they wonder. Jackie asks the rental car agent for the name of the driver; he responds with a puzzled look. The rich are not like the rest of us.

Through their “ordeal,” David Siegel sulks, whines, and wallows in self-pity. While Jackie’s untamed consumerism remains pathological, she shows more character and resilience, serving as both the family’s anchor and morale-booster. This snap shot of the very wealthy in full bloom and under duress shows the shallowness of that life choice and the ugliness of conspicuous self-aggrandizement. It is hard to feel sympathy for the Siegels.

Searching for Sugarman

If the Siegels conjure contempt, even disgust, Sixto Rodriguez—the focus of the documentary, Searching for Sugarman—counts as a glorious expression of the best of us. Rodriguez, a discarded cultural worker, exudes nobility, humility, warmth, and intelligence, whether working in small, marginal clubs, laboring on excavation or demolition sites, raising his children, or enjoying a belated celebrity.

Others have written of his strange, magical journey from a quickly emerging and falling talent forty years ago to the re-discovered celebrity of today. In between, Rodriguez worked and raised his children like millions of others, but with uncommon dignity and strength. The film, Sugarman, attests to the man’s resilience, but also celebrates his incredible impact upon others.

Unmistakably, Rodriguez, himself a former autoworker and the son of an immigrant Mexican autoworker, is a legacy of the US multi-national working class—a living example of the best of working class values. He, like his co-workers interviewed in the film, has an unassuming intellect and unqualified respect for others.

And he and his music are consummately “political.” Not in any clumsy or preachy sense, but in a way that speaks to and for the disadvantaged, that resonates with those who seek change. Early in his career he associated in Detroit with John Sinclair, the political commissar of the proto-proletarian-punk group, the MC5. Later, when his music arrived in Australia, he opened in live performances for Australia’s most widely known politically outspoken rock group, Midnight Oil.

But the greatest testament to his strong politics is the curious and bizarre impact on South African youth. After Angolan independence at the end of 1975, South Africa intensified its military interventions in that country and Namibia. Over the next decade, conscription of white South Africans into the military met further and further resistance. For reasons that remain obscure, the music of Rodriguez, commercially a flop in the US, found a following in South Africa. Rodriguez became the voice of resistance and change for many young, white South Africans. His music created the sound track for the anti-conscription movement. And by the mid-eighties he inspired other musical groups to propel the End Conscription Campaign. The Kalahari Surfers, Cherry Faced Lurchers, and other alternative musical groups gave expression to disenchanted white youth (see Forces Favourites, Rounder Records, 1986). The resounding defeat of the South African military by the Angolan military and its Cuban internationalist ally, the growing militancy of the African National Congress and the South African Communist Party, and the disenchantment of white South Africans brought apartheid to its knees and paved the way to South African liberation.

In a real way, this modest worker in Detroit helped rock the foundations of the racist, repressive apartheid system in South Africa-- quite an accomplishment for an artist without recognition in his homeland. Quite an achievement for a talent initially crushed by the gears of an industry driven by immediacy and profit.

Where The Queen of Versailles drains the spirit with its celebration of accumulation and ostentation, Searching for Sugarman brings joy and inspiration. Both are revealing. Watch them both, one after the other. Hang your head in embarrassment with the decadence that the unbridled capitalist system has wrought. Raise your head with hope for the nobility that people like Rodriguez bring to us.

Zoltan Zigedy

zoltanzigedy@gmail.com      

Notes from the Brink: March 2013

More Workers’ Woes

If it seems like I’m picking on the United Auto Workers union, it’s only because its descent from its once lofty, exemplary stature as one of the most democratic and militant CIO unions has been the steepest. Last month, I wrote of the leadership’s complicity in the gutting of union wage and benefit standards, a gutting that has left starting wages often lower than for their non-union counterparts. I reported that UAW contracts were pressuring management at non-union Toyota to buy out older workers in order to establish a new, lower starting wage to compete with their unionized competitors. UAW union contracts are now the corporate tool for slashing labor costs!

But it’s even worse than I thought. A retired autoworker pointed out that my claim of two-tier employment at UAW shops was incomplete. At Ford, the UAW has acceded to a three-tier system! Below the “entry” level tier, Ford, with UAW agreement, has established a classification of “long term supplemental” that offers the $14-16 entry-level starting wage, but with no job security or benefits! In some suburban, high- income areas, fast food restaurants offer better wages and benefits than this!

Labor Notes Ken Paff reports on a shameful act of treachery against workers employed at a car-hauling company under a Teamster contract. As revealed by a National Labor Relations Board decision, Ford colluded with a UAW local to underbid the Teamster contract and award the work to a lower-paying competitor. The NLRB administrative law judge ordered the voiding of the UAW contract and the re-employment of the laid-off workers with full back pay. According to the decision, Ford arranged the sub-standard contract with the UAW beforehand to secure a lower bid. As a result, the Teamster members who had made about $20 an hour were replaced with workers employed under a UAW contract at $11-14 per hour. According to a leaked document, the collusion would save Ford $9.8 million a year. This sorry deal was known to the top union leadership.

Treachery of this dimension transcends class collaboration and business unionism and sinks to the level of scabbing. Those who gave their lives to organize the UAW must be turning in their graves. Their legacy deserves much better than this insult to labor solidarity.

Currency War

Why is the escalation of the global currency war by the Abe government in Japan significant?

Until now, the leaders of all of the leading capitalist countries have proclaimed open and unrestrained trade—free markets—as a mark of a new level of international cooperation. They have advertised the dramatic growth of international trade as establishing bonds of mutual dependence that strengthen relations and lessen tensions.
But these “interdependencies” were tenuous at best. They temporarily concealed the ever compelled, inevitable drive for competitive advantage, to win at the expense of competitors. Cooperation is alien to a system—capitalism—based upon ever greater accumulation. A deepening crisis quickly surfaced these tendencies.

It was not the Abe government that opened the currency wars, but the US. The doses of “quantitative easing” adopted by the US Federal Reserve cheapened the dollar, making US exports more attractive and foreign imports less so. As a result, there was a marked revival of US manufacturing. In short, US policy makers broke with international cooperation and set out on the road to securing national advantage.

The first to feel the bite from this unilateral policy were many economies in Latin America. Despite the justifiable complaint of their leaders, US investment money flooded these markets, disrupting capital markets, and attacking their exports. Two years ago, Brazil lodged loud complaints against US quantitative easing and its negative impact on Brazilian exports.

Other countries, like the Republic of Korea, Switzerland, and Israel, have acted to protect their currencies, while Australian manufacturing has been seriously slowed because it has refrained from reacting.

The already seriously wounded EU economy has been further disrupted by the currency wars, with the European Central Bank reluctant to retaliate. Germany, with its manufacturing largely immune to price competition, has successfully blocked any strong reaction. The rest of the EU has consequently felt the loss of competitiveness.
It was the Abe government in Japan that brought this escalating contest into the open. Their explicit determination to weaken the yen served as the basis for Abe’s election campaign.

Despite a frantic attempt to get some agreement among the G7 powers, the battle only promises to become more aggressive and destructive. The Brazilian Finance Minister was recently quoted in The Wall Street Journal: “The currency war has become more explicit now because trade conflicts have become sharper. Countries are trying to devalue their currencies because of falling global trade. So many of them are in a difficult situation.”

The tensions emerging in the currency war are leading to sharp military confrontations and threats, especially among Asian Pacific countries. The capitalist sharks are turning on each other.

Here We Go Again!

Signs are eerily pointing toward developments reminiscent of the 2008 crash. Once again an enormous pool of capital is accumulating and overflowing into riskier and riskier areas to find a return. As reported in the WSJ, $149 billion has channeled into money market funds since November of 2012. The Journal notes that these funds are increasingly accepting risk (for example, French bank debt) to secure better returns.

Cash is also flooding equity markets. In only four weeks in the New Year, $38.1 billion was invested in stock mutual funds, more than the previous record in February, 2000 (remember that moment?).

A recent bank of charts published in the WSJ tellingly demonstrates the many signs of an overheated, dangerously speculative economy:

● Issuance of high-yield corporate bonds below investment grade is nearly double what it was in 2007.

● Business loans not required to meet traditional standards have risen sharply (though still well below

2007).

● Total assets in US high-yield, junk bond funds and exchange traded funds are more than double what

they were in 2007.

● Iowa farmland prices are more than double what they were in 2007.

As if there were not enough danger signs in the global economy, another over-accumulation event approaches. Hold on to your hats!

Zoltan Zigedy

zoltanzigedy@gmail.com