Re: [Marxism-Thaxis] O and racism
It was a fatally flawed program from the start, but amazingly, Obama has made it this far. I'm sure that if he survives this Jeremiah Wright "crisis" that he will face equally formidable obstacles in the months to come. I was singularly unimpressed by Obama's allegedly inspiring 2004 speech. I haven't looked at his autobiography to see what happened to him between the time he was community organizer (whatever that means, exactly), the his entry into the electoral arena. Clearly he was a shrewd operator to make it to this point, but I wonder if he believes his own propaganda to the point that he thinks he can pull this off on the basis of the premises of this campaign. I have been disappointed by this whole campaign season. I don't see an easy way out of the current situation. It disturbs but doesn't surprise me that white voters are reacting adversely to the sudden discovery that Obama is black (according to the one-drop rule). Still, he is likely the lesser of two evils compared to Hillary, who was once annointed as the shoe-in. So what do you think of Bill Richardson as a running mate? -Original Message- >From: CeJ <[EMAIL PROTECTED]> >Sent: Mar 24, 2008 10:16 PM >To: marxism-thaxis@lists.econ.utah.edu >Subject: [Marxism-Thaxis] O and racism > >I think the biggest problem O. has got is that he won a lot of states >in the primaries and caucuses that no Democrat, of any race or gender, >is going to win in a national election. Also, the Republicans benefit >from the OVER-REPRESENTATION of some states at the expense of more >populous states. So unless he gets the NE, the MW and Florida, while >keeping California, he has no chance in the electoral college. > >I look at the primaries as something like this: suppose we had a >series of cola taste tests nationwide. Two brands emerge, Coke and >Pepsi. Right now Hilary is RC Cola, Obama is Pepsi, and McCain is >Coke. > >The Demoncrats will have to come up with a marketing strategy for >their brand, Pepsi/Obama. If they do about as well as they did last >time, Obama's book sequel should be titled, 'The Audacity of >Cluelessness'. > >This is the ultimate test of his leadership. But he might have signed >on to a ship of the damned. He might well have made choices in what >policies and ideas he was going to stand for that now doom him. I >believe his fatal mistake made sometime after Kerry picked him to >speak at the Demoncrat Convention last time was that he staked a >position too far right. >These mainstream Demoncrats like Obama never ever learn. > >OTOH, McCain looks an awful lot like Bob Dole. If that goober from >Arkansas, Huckabee, flares up, it could sink McCain. A right-wing >fundamentalist third party campaign from Huckabee would certainly help >the Demoncrats right now. Since the press is ignoring Huckabee right >now, I don't know if he has been appeased by the Repug bigwigs or not. >If he has, then it looks pretty bad for Obama. It might go more like >it did for Kerry than it did for Gore (whose key mistake was to choose >Joe Blubberman as VP candidate). > >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
Re: [Marxism-Thaxis] O and racism
>>> Ralph Dumain <[EMAIL PROTECTED]> 03/25/2008 10:36 AM >>> It was a fatally flawed program from the start, but amazingly, Obama has made it this far. I'm sure that if he survives this Jeremiah Wright "crisis" that he will face equally formidable obstacles in the months to come. I was singularly unimpressed by Obama's allegedly inspiring 2004 speech. I haven't looked at his autobiography to see what happened to him between the time he was community organizer (whatever that means, exactly), the his entry into the electoral arena. Clearly he was a shrewd operator to make it to this point, but I wonder if he believes his own propaganda to the point that he thinks he can pull this off on the basis of the premises of this campaign. CB: I wonder whether this much success is a surprise to him, too. So, maybe he says, "I didn't think I could get this far, and I got this far, so it may be possible that I can win the whole thing." ^^^ I have been disappointed by this whole campaign season. I don't see an easy way out of the current situation. It disturbs but doesn't surprise me that white voters are reacting adversely to the sudden discovery that Obama is black (according to the one-drop rule). Still, he is likely the lesser of two evils compared to Hillary, who was once annointed as the shoe-in. So what do you think of Bill Richardson as a running mate? ^^^ CB: I'm thinking Clinton should be the running mate, or O as vp for Clinton. Otherwise, some of their followers may not vote Dem or at all. -Original Message- >From: CeJ <[EMAIL PROTECTED]> >Sent: Mar 24, 2008 10:16 PM >To: marxism-thaxis@lists.econ.utah.edu >Subject: [Marxism-Thaxis] O and racism > >I think the biggest problem O. has got is that he won a lot of states >in the primaries and caucuses that no Democrat, of any race or gender, >is going to win in a national election. Also, the Republicans benefit >from the OVER-REPRESENTATION of some states at the expense of more >populous states. So unless he gets the NE, the MW and Florida, while >keeping California, he has no chance in the electoral college. > >I look at the primaries as something like this: suppose we had a >series of cola taste tests nationwide. Two brands emerge, Coke and >Pepsi. Right now Hilary is RC Cola, Obama is Pepsi, and McCain is >Coke. > >The Demoncrats will have to come up with a marketing strategy for >their brand, Pepsi/Obama. If they do about as well as they did last >time, Obama's book sequel should be titled, 'The Audacity of >Cluelessness'. > >This is the ultimate test of his leadership. But he might have signed >on to a ship of the damned. He might well have made choices in what >policies and ideas he was going to stand for that now doom him. I >believe his fatal mistake made sometime after Kerry picked him to >speak at the Demoncrat Convention last time was that he staked a >position too far right. >These mainstream Demoncrats like Obama never ever learn. > >OTOH, McCain looks an awful lot like Bob Dole. If that goober from >Arkansas, Huckabee, flares up, it could sink McCain. A right-wing >fundamentalist third party campaign from Huckabee would certainly help >the Demoncrats right now. Since the press is ignoring Huckabee right >now, I don't know if he has been appeased by the Repug bigwigs or not. >If he has, then it looks pretty bad for Obama. It might go more like >it did for Kerry than it did for Gore (whose key mistake was to choose >Joe Blubberman as VP candidate). > >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
[Marxism-Thaxis] Clinton campaign
http://www.politico.com/news/stories/0308/9149.html Story behind the story: The Clinton myth By JIM VANDEHEI & MIKE ALLEN | 3/21/08 1:32 PM EST Text Size: Clinton's campaign rests increasingly on a game of make-believe. Photo: AP One big fact has largely been lost in the recent coverage of the Democratic presidential race: Hillary Rodham Clinton has virtually no chance of winning. Her own campaign acknowledges there is no way that she will finish ahead in pledged delegates. That means the only way she wins is if Democratic superdelegates are ready to risk a backlash of historic proportions from the party’s most reliable constituency. Unless Clinton is able to at least win the primary popular vote - which also would take nothing less than an electoral miracle - and use that achievement to pressure superdelegates, she has only one scenario for victory. An African-American opponent and his backers would be told that, even though he won the contest with voters, the prize is going to someone else. People who think that scenario is even remotely likely are living on another planet. As it happens, many people inside Clinton’s campaign live right here on Earth. One important Clinton adviser estimated to Politico privately that she has no more than a 10 percent chance of winning her race against Barack Obama, an appraisal that was echoed by other operatives. In other words: The notion of the Democratic contest being a dramatic cliffhanger is a game of make-believe. Story Behind the Story Why news gets covered the way it does Politico’s top editors draw on their experience at the nation's largest news organizations to pull back the curtain on coverage decisions and the media mindset. Obama's pastor: The backstory How the sausage gets made Why reporters get it wrong The real question is why so many people are playing. The answer has more to do with media psychology than with practical politics. Journalists have become partners with the Clinton campaign in pretending that the contest is closer than it really is. Most coverage breathlessly portrays the race as a down-to-the-wire sprint between two well-matched candidates, one only slightly better situated than the other to win in August at the national convention in Denver. One reason is fear of embarrassment. In its zeal to avoid predictive reporting of the sort that embarrassed journalists in New Hampshire, the media - including Politico - have tended to avoid zeroing in on the tough math Clinton faces. Avoiding predictions based on polls even before voters cast their ballots is wise policy. But that's not the same as drawing sober and well-grounded conclusions about the current state of a race after millions of voters have registered their preferences. The antidote to last winter's flawed predictions is not to promote a misleading narrative based on the desired but unlikely story line of one candidate. There are other forces also working to preserve the notion of a contest that is still up for grabs. One important, if subliminal, reason is self-interest. Reporters and editors love a close race - it’s more fun and it’s good for business. The media are also enamored of the almost mystical ability of the Clintons to work their way out of tight jams, as they have done for 16 years at the national level. That explains why some reporters are inclined to believe the Clinton campaign when it talks about how she’s going to win on the third ballot at the Democratic National Convention in August. That’s certainly possible - and, to be clear, we’d love to see the race last that long - but it’s folly to write about this as if it is likely. It’s also hard to overstate the role the talented Clinton camp plays in shaping the campaign narrative, first by subtly lowering the bar for the performance necessary to remain in the race, and then by keeping the focus on Obama’s relationships with a political fixer and a controversial pastor in Illinois. CONTINUE ON PAGE 123 Racial problems transcend WrightVoting patterns show Obama's uneven record on getting beyond race.The Clinton myth: The backstoryHer campaign rests on a game of make-believe.Superdelegates: A running tallyCheck out the latest superdelegate updates. JOIN THE CONVERSATION (read all 3486 comments) POSTReplies: 3486 Viewed: 6042 jungleboy Location: NA Party: Democrat Reply #1 Date: Mar. 21, 2008 - 1:39 PM EST updated Some poll numbers: Poll Date Sample Obama Clinton Spread RCP Average 03/13 - 03/20 - 47.0 44.3 Obama +2.7 Rasmussen Tracking 03/17 - 03/20 900 LV 45 44 Obama +1.0 Gallup Tracking 03/17 - 03/19 1219 V 43 48 Clinton +5.0 CBS News 03/15 - 03/18 LV 46 43 Obama +3.0 CNN 03/14 - 03/16 463 RV 52 45 Obama +7.0 USA Today/Gallup 03/14 - 03/16 530 A 49 42 Obama +7.0 Reuters/Zogby 03/13 - 03/14 525 LV 47 44 Obama
Re: [Marxism-Thaxis] Precis on theories of capitalist crisis
>>> CeJ <[EMAIL PROTECTED]> 03/24/2008 10:04 PM >>> > ^ > 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 ? Will get back to you on your question. But let me say: Perhaps my question should have been stated as the question as to whether or now there was a profit crisis. Regardless, I think M-E and Lenin would be very much interested in what is happening right now, don't you? ^ CB: Yes, , but I have this thing that Marxists shouldn't be focussed on how crises occur, but what how they impact the classes and class struggle, , if you follow me. They would be interested in what's happening now, as you say, but they would be interested in a different aspect of what's happening now than what "economists" are interested in . They would want to know how the crisis impacts class consciousness, class unity, the struggle between the classes right now. Do you see the distinction I'm making ? ^ Much of 'Marxism' takes as its problematic crises theses and, in the case of academic economics, such as it is (who is that, Jim Tomcat Devine and Michael Wimp Pereleman?), how to quantify labor theory of value. Yawn. ^ CB: See above. Marx didn't even leave a coherent theory of crises. People have to pick through his writing and construct one. A lot of the theory is in Vol. III which he didn't even bother to complete. I think that's because he didn't want Marxists to spend a lot of time analyzing the why and how of crises. He wanted them to concentrate on raising the class consciousness of the working class. The main thing needed is to demonstrate to the working class that capitalist wealth is exploited from them, and that mass immiseration at one end of the wealth pole is linked inextricably with wealth accumulation at the other end of the wealth pole, i.e. the Absolute General Law of Capitalist Accumulation. ^ Duff Henwood seems to have this thesis that every time a crisis pops up, once American capitalism overcomes that crisis, American capitalism has evolved closer to perfection while the left gets loonier. The guy is a genius! 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
Re: [Marxism-Thaxis] Precis on theories of capitalist crisis
> CeJ <[EMAIL PROTECTED]> 03/24/2008 10:04 PM >>> >> > But let me say: Perhaps my question should have been stated as the > question as to whether or now there was a profit crisis. The crisis in profitability is demonstrated by the fact that for the past decade a huge share of newly formed money capital has been leveraged into fictitious capital rather than invested as real capital. Shane Mage "Thunderbolt steers all things...it consents and does not consent to be called Zeus." Herakleitos of Ephesos ___ 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] Precis on theories of capitalist crisis
CeJ jannuzi I believe the most fruitful lines of thought are centered on Lenin. Tthat was, in part, his genius of adding the concept of imperialism to Marxist thought; clearly WW I and its aftermath were real crises. It's his conception of imperialism and his analysis of finance capitalism that make him one of the first post-modern Marxists (especially if you can accept the thesis, advanced by Althusser and others, that Marx is foundational to structuralism in social scientific thought). This leads to all sorts of flows and eddies in Marxist thinking but perhaps the most important thinkers in this would be Deleuze and Guattari, who as co-authors become something like a single entity, like Marx-Engels. Unfortunately, they are both dead now. It would have been wonderful to see them discuss the current crisis. http://www.generation-online.org/p/fpdeleuze7.htm CJ ^^ CB: On Marxism as structuralism, below is my first substantive post to an email list , almost exactly ten years ago, Marxism-Thaxis 1998. It is a structural marxist thought. ^^ http://lists.econ.utah.edu/pipermail/marxism-thaxis/1998-March/007351.html M-TH: A vulgar marxist here Charles Brown charlesb at CNCL.ci.detroit.mi.us Tue Mar 17 14:27:56 MST 1998 Previous message: M-TH: This is a test. I'm trouble getting the right address Next message: M-TH: Re: M-I: Re: Marxism and the Indians of Peru, part 2 of 3 Messages sorted by: [ date ] [ thread ] [ subject ] [ author ] By vulgar marxism I mean a constructive critic of fancy marxism and its left-liberal cousins. My general attitude is to extract the rational kernel from the modern and post-modern left neo and paleo liberals from Hegel to post-Foucaultists. So, I like the kernel of truth metaphor used in the list discussion in the last day. As to the true universal Doug asked Yoshie for, I would build it. not on a new idea, but Marx and Feuerbach's species-being. All of the workers and other people represented by other social movements are human species-beings. Although biiology only limits us human beings because we have culture (super-natures and natures ) this contradiction between biology and culture is still where it is at in generating universals or big generalizations. Being determines consciousness is still a focal rule of thumb (guide to action) for building a universal, real common interests among huge numbers of people, the masses. My first post-Marx development of species-being is to derive women's liberation organically from historical materialism's premises, as Marx and Engels derive workers' liberation from those species-being historical premises. It is a correction of classical Marxism, but based on Marxism's own premises. In ways its too vulgar for pomos and fancy marxists. However, the pomos and their old cousins, Frankfurt school, Gramsci, existentialists, et al. all the fancy marxists have taught us something: being determines consciousness discontinuously, intermittently, rarely. Through most of the actual time of history, consciousness and being are reciprocally determining. Only rarely, in revolutions, primarily and ultimately does being utterly determine consciousness. Today, that means that the direct naked appeal to the working class' class self-interest is inadequate in itself-necessary but not sufficient in the formal logical sense -to inspire revolution. That appeal cannot be dropped - the vast majority are working class, wage laborers - but must be complemented with appeals to other consciousness, other consciousness determined by being (gender, for example) and consciousness that is determined more by consciousness. Overall one wants to change the world based on interpreting it, changing it through practical-critical activity, a unity of theory and practice still. All Power to the People as a whole. Charles Brown, your new comrade ___ 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
Re: [Marxism-Thaxis] O and racism
About Richardson. Does anyone outside New Mexico know he is Hispanic? He looks very white male ethnic, but his name says Anglo-Celtic elite. He seems to have positioned himself with a future Obama presidency, perhaps he does have V.P. stars in his eyes. I think an Hispanic from California or Texas is a risky strategy, but that now is not the time for Obama to play it safe. That is my hunch. Playing it safe makes him the next John Kerry. He may help JK and Dean get rid of the influence of the Clintons, but he doesn't do more than this. But I think the white male ethnic Roman Catholic demographic is also worth considering. Hillary Clinton does better with this category over Obama, but not that much better. That is one reason why he has got this far. This type of voter doesn't like the professorial type. Both Mondale and Dukakis were too professorial for them (though Dukakis comes out of this demographic, if you call Greek Orthodoxy another form of catholicism). Perhaps a white ethnic female might make the best VP choice? Nancy Pelosi? Diane Feinstein? But since so much of this is symbolic and emotional, I think his VP choice should be around his age or younger by a year or two. 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
Re: [Marxism-Thaxis] Precis on theories of capitalist crisis
Precis on theories of capitalist crisis, replies to CB and SM >>CB: Yes, , but I have this thing that Marxists shouldn't be focussed on how crises occur, but what how they impact the classes and class struggle, , if you follow me. They would be interested in what's happening now, as you say, but they would be interested in a different aspect of what's happening now than what "economists" are interested in . They would want to know how the crisis impacts class consciousness, class unity, the struggle between the classes right now. Do you see the distinction I'm making ?<< Well as lists like PEN-L and LBO-T show (at least to me), discussion and analysis is largely futile. I don't see myself as socially placed to affect elite opinion about such matters, and yet I don't see myself as socially placed to take part in some enhanced class struggle. Besides, by the time the analysis is taking place, it might be that opportunities for exploiting the crisis have already passed. It's history, and history gets written by the academics in the establishment. I suspect, as has already been pointed out at, for example, Leninology blog, that it isn't going to be places like US, UK or Australia where the political opportunities present themselves. CB: >>See above. Marx didn't even leave a coherent theory of crises. People have to pick through his writing and construct one. A lot of the theory is in Vol. III which he didn't even bother to complete. I think that's because he didn't want Marxists to spend a lot of time analyzing the why and how of crises. He wanted them to concentrate on raising the class consciousness of the working class. The main thing needed is to demonstrate to the working class that capitalist wealth is exploited from them, and that mass immiseration at one end of the wealth pole is linked inextricably with wealth accumulation at the other end of the wealth pole, i.e. the Absolute General Law of Capitalist Accumulation.<< I think Lenin is one of the more important analysts in a rationalist tradition, and he was certainly no laid-back, sold-out academic or establishment opinion-maker. And he worked on the issue past his important conception of imperialism and analysis of WW I and its aftermath. As for taking advantage of the current crisis, who is placed to do this? Democrats who promise mortgage relief? Lou Dobbs who has a show that is viewed by millions where he gets to argue that there is nothing wrong with finance capitalism so long as it is regulated? When I look at the current figures as to the extent of the sub-prime loan problem combined with the way venture capital and private equity are faltering at putting together ever larger take over and merger deals, this crisis does look to be a MAJOR one. I'm reminded of late 70s, early 80s. And that is because the US and other OECD countries really do look to be heading into a recession together, which brings up the depression word. OTOH, one thing to remember about private equity--and things that act like private equity even though the term is not used, such as Warren Buffett's Berkshire Hathaway--this sort of predatory capital has pretty much had free run of the OECD economies for the past 15 years, and this sort of predatory capital likes crises. It likes distressed assets; it even orchestrates panics on companies and sectors to make its money go further (since its principals expect 20% or more returns on investment). SM: >>The crisis in profitability is demonstrated by the fact that for the past decade a huge share of newly formed money capital has been leveraged into fictitious capital rather than invested as real capital.<< Except your timeline is a bit short, don't you think? I mean what do the S&L, junk bond (remember Milken?), dot.com, and Enron debacles indicate? Enron was fictioning its capital from the late 1980s, because it had managed, like so many of these fictitious capital firms, to stay ahead of big bang 'reforms', such as deregulation and privatization schemes, not just in the US (which often lags behind other OECD countries in actual deregulation and privatization), but in Europe and Asia. I think the term 'crisis' indicates the fairly rapid onset of said crisis. So it's like saying the symptoms of an illness which just started this morning are key to understanding the illness. It might be crucial to control the symptoms, but you have to get to the root causes of the illness as well (or let 'nature run its course'). So for me the more fundamental question is: why now has the US hit the limits to all this leveraged speculation? For one thing, I believe it is because its militarism can not now be financed, and much of this has been financed through speculation, since there were no limits placed on debt. For example, banks and financial institutions in Japan, after months of almost denial that they wouldn't do anything as stupid as invest in sub-prime loans in the US, are now revealing tens of billions of dollars of loss
Re: [Marxism-Thaxis] Precis on theories of capitalist crisis
What is interesting about the 'crises' of the 80s is, not only are they earlier historic examples or analogues to what is going on now, they are at the very root of what is going on now. http://en.wikipedia.org/wiki/Savings_and_Loan_crisis#Causes >>The damage to S&L operations led Congress to act, passing a bill in September 1981[7] allowing S&Ls to sell their mortgage loans and use the cash generated to seek better returns; the losses created by the sales were to be amortized over the life of the loan, and any losses could also be offset against taxes paid over the preceding 10 years. This all made S&Ls eager to sell their loans. The buyers - major Wall Street firms - were quick to take advantage of the S&Ls' lack of expertise, buying at 60%-90% of value and then transforming the loans by bundling them as, effectively, government-backed bonds (by virtue of Ginnie Mae, Freddie Mac, or Fannie Mae guarantees). S&Ls were one group buying these bonds, holding $150 billion by 1986, and being charged substantial fees for the transactions.>> http://en.wikipedia.org/wiki/Salomon_Brothers >>During its time of greatest prominence in the 1980s, Salomon became noted for its innovation in the bond market, creating the first mortgage-backed security. Later, it moved away from traditional investment banking (helping companies raise funds in the capital market and negotiating mergers and acquisitions) to almost exclusively proprietary trading (the buying and selling of stocks, bonds, options, etc. for the profit of the company).>> >>He traces the rise of Salomon Brothers through mortgage trading, when deregulation by the U.S. Congress suddenly allowed Savings and Loans managers to start selling mortgages as bonds. Lewie Ranieri, a Salomon Brothers' employee, had created the only viable mortgage trading section, so when the law passed, it became a windfall for the firm. However, Lewis believed that Salomon Brothers became too complacent in their newly-found wealth and took to unwise expansion and massive displays of conspicuous consumption. When the rest of Wall Street wised up to the market, the firm lost its advantage. Likewise, Lewis argued that Salomon Brothers improperly tried to "professionalize" itself. As he notes, Ranieri and his fellow traders lacked college degrees; one of the traders only had an eighth-grade education. Despite this lack of credentials, the group was extremely successful financially. However, the firm, in order to improve its "image," began to hire graduates of prestigious business and economics programs (a group which included Lewis himself). Because of his uncouth manners, Ranieri (along with many of his Italian colleagues) was eventually fired. By relying more on diplomas than on raw trading skill, Lewis argued that Salomon crumbled. After mortgage bonds, Lewis examined junk bonds and how Michael Milken built junk bonds from nothing to a multi-trillion-dollar market. Because the demand for junk bonds was higher than its supply, Lewis argues that corporate raiders began to attack otherwise sound companies in order to create more junk bonds. In conclusion, Lewis remarked that the 1980s marked a time where anyone could make millions, provided they were at the right place at the right time, as exemplified by Ranieri's success.>> ___ 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
Re: [Marxism-Thaxis] Precis on theories of capitalist crisis
This stuff here is not of the the post-war Marxist 'crisis' analysis, which bores me to death anyway, but good analysis of what actually went on in the US. This has ramifications for the entire world because post-war, the US has dominated the rest of the world and much of that world finances the US, but knows very little about the US other than Hollywood films and TV programs and the US military (the fusion of which has given us the 'war porn' genre, but I digress). CJ It is worth getting through all three parts to see what a layered shit cake of speculation we have here. http://www.dailykos.com/story/2007/12/7/44952/8234 Part One: Lewis Ranieri and the Collateralized Mortgage Obligation Mortgages were, prior to the 1980s, poor investments. The rationale for this was twofold: first, mortgages are highly personalized investments. So many small factors unique to each borrower impact the probable results that trading in individual mortgages makes little sense. The second reason is that the rate of return on mortgages is difficult to predict, as borrowers have the option of paying back the entire principal at any time, as well as paying more than the required payment, making the rate of return on the loan excessively variable. All this led to a stillborn mortgage trading market; who would buy a loan with an unknown chance of default, with multiple options for the borrower which could lead to minimal payoff? As such, most Wall Street banks shuttered their mortgage groups. But not Salomon, which had a strong loyalty at the time for Ranieri, who had begun in Salomon's mail room. As such, Salomon was perfectly positioned to take place of an extraordinary act of government foolishness. On September 30, 1981, a tax break was passed which allowed Savings and Loans to sell their mortgage loans at a loss to renew their capital, and then to amortize their losses both over the course of the loans (so that the loss, which happened in real time, could be hidden over decades) and to obtain refunds from the IRS on previous year tax payments offset by current losses. So the Savings and Loan industry was eager to sell mortgages for as little as 35 cents on the dollar, all to reap massive payouts from the IRS. And Ranieri and Salomon were the principal buyers. But the net effect was that the S&Ls were also eager to buy other mortgages, and didn't much care if they took a loss on those as well. Salomon's mortgage trader Tom DiNapoli told Michael Lewis of a trade where he bought one hundred million dollars of thirty-year mortgages at seventy-five cents on the dollar from one S&L, and at the same time sold one hundred million dollars of thirty-year mortgages to the same S&L for eighty-five cents on the dollar. This swap cost the S&L $10 million to hold the exact same paper, but was essential to the S&L's balance sheet for the IRS (Liar's Poker, Lewis, p.105). The results from this were profound for Ranieri and Salomon Brothers. After three years of middling results, in 1982 the mortgage group of Salomon showed a profit of $150 million. But further changes were underway which would make that number seem minute; in 1984, a single mortgage trader at Salomon, Steve Baum, was able to show a profit of $100 million in that year. By 1983, the mortgage group represented 40% of Salomon's profits. This change not only changed Salomon, it changed America. In 1977, the holdings of mortgage bonds in the United States was valued in total at $12.6 billion. By 1986, that number was $150 billion. As the tax change for Savings and Loans created a rapacious market in whole mortgage bonds, Ranieri and other Wall Street lobbyists convinced the US Government to alter the rules governing the two semi-private institutions dominating the secondary mortgage market, the Federal Home Loan Mortgage Corporation (known as Freddie Mac) and the Federal National Mortgage Association (known as Fannie Mae). Both Freddie Mac and Fannie Mae are government-sponsored enterprises ? meaning that both had originally been authorized by Congress. Fannie Mae, in fact, was originally a government agency established as part of the New Deal, but was converted into a private corporation in 1968 to help balance the Federal budget. What Freddie Mac and Fannie Mae do, in essence, is guarantee mortgage loans made by banks. For a fee, which varies based on the perceived risk of the mortgage loan, Freddie Mac or Fannie Mae will indemnify the lender against the risk of default. The reason that Ranieri and others sought a rule change was because while there was a fortune to be made in fleecing the S&Ls and the IRS, this was not enough to create a real market in mortgages. This didn't appear to make sense. Mortgage bonds had a generally higher yield than corporate or government bonds of similar credit ratings, and were either explicitly or implicitly backed by the Federal government. The problem was that early payments and prepayments made it impossible to ca
