So...
Has capitalism been saved?
If you were to believe the hysterical coverage in the mainstream capitalist media, you would certainly think so.
After trillions of dollars have been simply handed over to the architects of the Crash, the markets bounced back slightly from the 40% losses that they have experienced in the last months.
After all of the previous efforts to create a safety net, the markets plummeted, yesterday, they merely stabilised.
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Quoting John Authers of the Financial Times: "Markets are good at bouncing; their course is naturally erratic and a move like this does not prove the trend has changed. After the 1929 crash, which prefaced disaster, the Dow Jones Industrial Average gained 18.8 per cent on the next two days. There was a two-day rally of 16.6 per cent after Black Monday in 1987... So the bounce is unsurprising, and sheds no light on where markets will go next... Furthermore, we need to look at what prompted the bounce. The latest actions to bolster the international banking system are extreme. Other actions that looked extreme at the time had no effect. It would have been alarming if they had not had a response now."
Markets are not free and prices are not Real.
Neo-classical economists would have us believe that markets are efficient ie all the information is in the price.
This is patently not the case.
Firstly, there is the impact of our behavioural irrationalities.
Markets are not economic mechanisms but psychological ones.
The prices are entirely fake, and are not based on either the economic fundamentals or the systemic Realities.
Behavioural mechanisms make the 'true' price an imaginary concept.
But, that is not all.
The rampant cornering and insider trading of markets for speculative gain further distorts the 'true' price so that the prices quoted on screens and by brokers are simply figments of the collective imaginations of a privileged grouping of market architects.
It is simply not feasible to build a sustainable system on such a Poker Reality.
Furthermore, as we posted yesterday, neither systemic risk nor externalities are factored into the market prices - we used the example of the car purchase price only representing one of the costs that such a purchase brings to the planet.
All financial markets demonstrate inflated values due to this refusal to accept systemic risk and costs into the price.
The market price is ALWAYS too high.
The combination of fake price and the attempts to create a fake investor psychology are the only levers left as we slump towards the deepest Depression in a century.
So, the US/UK have been in recession throughout 2008 and yet still the prediction markets price the probability of recession in the US in 2008 market at 80 on the indices (a make-up of 100 represents a recession).
Apparently, there is no recession in the US despite trillions of dollars failing to bolster the system, the foreclosure of 3.6 million homes, the fear of hyperinflation through the gaming of the markets via interest rate cuts, the disappearance of the investment banking sector, the biggest weekly Wall Street losses ever etc etc etc.
Quoting Joseph Stiglitz: "A unique combination of ideology, special-interest pressure, populist politics, bad economics, and sheer incompetence has brought us to our present condition... As America attempts to work its way out of the present crisis, the danger is that we will listen to the same people on Wall Street and in the economic establishment who got us into it. For them, our current predicament is another opportunity: if they can shape the government response appropriately, they stand to gain, or at least stand to lose less, and they may be willing to sacrifice the well-being of the economy for their own benefit - just as they did in the past."
We have repeatedly posted how Hank Paulson has been #####################
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The markets would have made a more ordered retreat if he had not deconstructed Lehman Brothers, and even this year's Nobel Prize winner for Economics, Paul Krugman, places responsibility at Paulson's door.
Throughout his tenure, Paulson's public machinations #############################
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But his hidden agendas are equivalent in strategy.
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So a private payment of taxpayers money was made to a group of investment banks, including Goldman Sachs, while, publicly, the Fed refused to state that the rescue came under the auspices of the Depression-era rescue package.
Several days later, the Fed were forced to mention such a Reality when, despite the transfer, Bear Stearns went out of business.
Under terms of the $700 bailout (remember how Paulson described this amount as being the absolute total required to save the system?), the Fed would have to publicise private use of public money as it took place.
But, guess what?
At the Fed's request, this information can be kept confidential!
So Paulson can provide backhanders and kickbacks to his financial friends without any of us being any the wiser.
And this type of template defines the infrastructure that will lead to the next wave of this Recession/Depression.
Just before Paulson allowed Lehman Brothers to be deconstructed, the investment bank was in the process of setting up a new business called Baikal with the London Stock Exchange.
Baikal was a Dark Pool.
Dark Pools are private exchanges where institutional investors are able to trade huge quantities of financial assets away from the regulators' or the public eye.
This infrastructure is primed for corruption.
Indeed, we are preparing an internal consultancy document assessing the different ways that the financial system can be gamed by these Dark Pools of massive liquidity.
These private underground markets are the absolute equivalent of the underground betting markets that are destroying the sporting world.
It is the final phase of capitalism, from the stakeholder to the shareholder to the psychopathic...
A key issue in this crisis has been the focus on the micro - interest rates, inflation, share prices, bond yields, market sentiment etc.
The Reality is, however, defined by the macro.
The systemic risks and externalities that are not factored into this strategy are, by a considerable distance, the more prevalent ones.
The autistic focus on the micro is defining the fruition of the massive negative impacts of the macro.
The fake figures that are being traded simply ignore the systemic risk of climate change, for example.
Some of these trillions of pounds and dollars could have been used for the social - universal healthcare in the US comes out at $50 billion per year, for example.
For years to come, there will be real reductions in the amount of money available for healthcare, education, the social, as we cannot expect that the US/UK imperial war adventures are going to be curtailed.
We are not angry enough about this audacious robbery.
After Paulson had bailed out insurance giant, AIG, with $85 billion of taxpayer's money, the executives of AIG threw a spa party to celebrate.
The cost?
$500,000.
Just weeks later, AIG were back to receive a further $38.5 billion off Paulson.
The cost of Grade A Cocaine is obviously inflating in the Crash.
Unfortunately, the blocked out parts of the posts and all posts labelled # are available in full to subscribers only.
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