>>> CeJ <[EMAIL PROTECTED]> 03/23/2008 1:05 AM >>> Precis on theories of capitalist crisis by economist
That wasn't very precise or concise or incisive. American 'capitalism'--finance capitalism--was reporting huge profits almost right up until the onset of the crisis late last summer. I should think Marx, Engels or Lenin would be looking at what precipitated the crisis and what salient conditions applied at that time. ^^^^^ CB: I don't that Marx , Engels or Lenin analyzed what precipitated specific profit crises. Do you have an example of one of them analyzing a specific crisis ? ^^^^^ One complication to the notion of 'finance capitalism' is just about everyone does it. When Microsoft plots to take over Yahoo, it is really investing and speculating for profits. As are all the people at Yahoo. And Google and so on and son on. So all companies speculate financially in order to try and make still more yet profits, outside of any drive to expand their productive capacity to make things or deliver services. Just one example, there is a company here in Japan called Yakult. It makes fermented milk beverages and owns a baseball team. Now most Japanese companies that export try to hedge currencies--that is speculate on currency movements--to make money. But Yakult isn't really a major exporter. Still they got started in this by justifying it as efforts to prevent losses on currency movements (since currency movements also affect domestic producers, since so much of what is put into production is from imported commodities). But once the financial division started making money, this safety function was lost. They weren't playing dollar-yen currency markets as a hedge against losses on the commodities they bought to produce fermented milk beverages. They were gambling in an attempt to make more money than fermented milk beverages make. So Yakult lost a billion dollars on currency speculation back in the 1990s. That might seem small by today's figures, but it does show just how deep most companies are into financial speculation as a result of hedging strategies and 'sound' financial investing. For companies like GE or AIG or Berkshire Hathaway, it is the most important part of their reason for being. The same could be said to quite an extent about American automobile manufacturers, whose credit divisions and pension funds are the jewels in their tarnished crown. At any rate, somewhere between the US stock markets testing new highs in early 2007 and the summer, what happened? Was it the interest rate increases? One thing that stood out for me was the way hugely leveraged (indebted) takeover deals fell through. The principals couldn't get the usual line of still ever yet more credit to make the total. Meanwhile, as the stock markets and the value of the dollar faltered, speculative finance piled onto oil futures, gold, agricultural commodities, and seemed to make short term bets on the stock markets. If there is a psychological shift, are US allies and satellites in Europe, the Gulf States, and the trade surplus countries of E. Asia NOT investing in US financial instruments? Are they looking at the US budgets, the deficits, the mounting war and occupation debts, are they looking at all that and sensing that Rome is ripe to fall? The crisis in profits amongst the speculators would seem to be that they can't make money when interest rates go up. Yet as Greenspan and Bernanke must now sense, if Bernanke raises interest rates to stem core inflation (not the unprecedented, bubble-driven inflation of real estate assets), the whole system comes unhinged. What seems to be happening now is similar to what happened in Japan at the end of the real estate bubble there. Interest rates rose til the bubble burst, and then interest rates went down to almost nothing but analysts said the economy was stagnant because either the banks were not lending or the individuals (and that would include companies under capitalist law) were not borrowing. Some things apply to Japan that you might not find elsewhere. For example, low interest rates on bank and postal savings translate into lower consumption because so much of the workforce is older and even retired. When bank and postal savings account interest rates were 6.5%, they had more disposable income to spend. Now with interest rates at near zero and staying that way, they and their households sit on large amounts of savings that earn almost nothing. Bernanke seems to have bet that he can cut interest rates to very low levels in the way Japan has for the past 15 years but without his having to deal with the long-running Volker-Greenspan bubbles. And that is one of the problems. The other problem is the US and the dollar are not Japan and the yen (though Japan's crisis did hurt much of the rest of Asia in 1996-8). Plus the current US is strung out on credit and deficits and uncontrolled spending is so many ways that is fairly easy to think this could be THE crisis, not just another crisis. When Carlyle Group has to pull the plug on a fund that is geared at something like 30X (and yet given a triple AAA rating just last year), you know something has clearly changed in the way the capital and finance monopolists play the game. CJ _______________________________________________ Marxism-Thaxis mailing list Marxism-Thaxis@lists.econ.utah.edu To change your options or unsubscribe go to: http://lists.econ.utah.edu/mailman/listinfo/marxism-thaxis _______________________________________________ Marxism-Thaxis mailing list Marxism-Thaxis@lists.econ.utah.edu To change your options or unsubscribe go to: http://lists.econ.utah.edu/mailman/listinfo/marxism-thaxis
