"Prophesying catastrophe is incredibly banal. The more original move is to assume that it has already occurred" - Jean Baudrillard.
"Truths are illusions which we have forgotten are illusions" - Friedrich Nietzsche.
"Criminals come in handy" - Michel Foucault.
Okay, if you are busy, you will be able to condense this troika of posts into these three statements - the rest is merely poorly written detail...
Like its not miserable enough already, its time for our annual look at the state of the neo-capitalist ideology.
Last year we gave you our views of the oncoming Recession/Depression when the mainstream press were still in dinner party denial (see: http://footballisfixed.blogspot.com/2007/12/recession-recession-recession-recession.html).
This year, its time to further deconstruct the non-sustainability of this psychopathic system, on both economic and psychological bases.
Systemic and sub-systemic corruption, whether it be in the international financial markets, football, national elections, horseracing or, as we have just witnessed, snooker is tied in with the very concept of free markets.
Free markets produce gamed neorealities which massively skew any 'benefits' in highly selective directions.
In the meantime, the Reality that these free markets have leeched onto in order to ply their insider trades, are contorted to diabolical simulacra of their original form.
This much is accepted.
But, when matters commence from the primary foundation of a simulacrum, the neohyperrealities (secondary phase falsehoods) approach surreality.
ScudamoreWorld is one such neohyperreality.
Of much greater concern, the globalised financial infrastructure, we'll call it GSWorld, is similarly neohyperreal.
First, we need to get up to speed on the state of the Depression.
Consider this conversation between Alan Greenspan, one of the primary architects of the crisis, and Congressman Henry Waxman during hearings this autumn on Capitol Hill.
Greenspan: "I have found a flaw."
Waxman: "In other words, you found that your view of the world, your ideology, was not right; it was not working."
Greenspan: "Absolutely, precisely."
As Joseph Stiglitz states: "The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal."
And it is unsurprisingly Stiglitz who provides the best overview of this self-destructive entity, neocapitalism: "... the deregulation philosophy would pay unwelcome dividends for years to come. In November 1999, Congress repealed the Glass-Steagall Act - the culmination of a $300 million lobbying effort by the banking and financial-services industries, and spearheaded in Congress by Senator Phil Gramm. Glass-Steagall had long separated commercial banks (which lend money) and investment banks (which organize the sale of bonds and equities); it had been enacted in the aftermath of the Great Depression and was meant to curb the excesses of that era, including grave conflicts of interest. For instance, without separation, if a company whose shares had been issued by an investment bank, with its strong endorsement, got into trouble, wouldn't its commercial arm, if it had one, feel pressure to lend it money, perhaps unwisely? An ensuing spiral of bad judgment is not hard to foresee. I had opposed repeal of Glass- Steagall. The proponents said, in effect, Trust us: we will create Chinese walls to make sure that the problems of the past do not recur. As an economist, I certainly possessed a healthy degree of trust, trust in the power of economic incentives to bend human behaviour toward self-interest - toward short-term self-interest, at any rate, rather than Tocqueville's "self interest rightly understood."
The most important consequence of the repeal of Glass-Steagall was indirect - it lay in the way repeal changed an entire culture. Commercial banks are not supposed to be high-risk ventures; they are supposed to manage other people's money very conservatively. It is with this understanding that the government agrees to pick up the tab should they fail. Investment banks, on the other hand, have traditionally managed rich people's money - people who can take bigger risks in order to get bigger returns. When repeal of Glass-Steagall brought investment and commercial banks together, the investment-bank culture came out on top. There was a demand for the kind of high returns that could be obtained only through high leverage and big risktaking."
Okay, we've moaned on about Hank Paulson and Goldman Sachs and AIG and Lehman Brothers and Fannie and Freddie and Brown and Darling and Bernanke and All from time to time over the last eighteen months, and there is no intention to cover old ground here.
Three years ago, Bernard Madoff became aware that his hedge fund had a $50 billion black hole sitting in the middle of it.
Three years...
What sort of regulatory system is able to allow this to happen?
A free market self-regulatory one, that's what...
Furthermore, what sort of risk management, both within financial organisations and between them (Basel II is so regulatory-lite), exists to monitor any insider awareness of such toxicity?
I mean, if you were to be $50 billion overdrawn at the bank, you might have expected a call...
But these hyperrealities are gamed.
They are neohyperrealities.
Hanky Panky has directly targeted hedge funds with his randomised banning on short selling. Uncertainty abounds across the industry sector as Hanky is producing a report in mid-January where it is quite likely that the ban on selective short-selling will be extended, or perhaps be made permanent.
Ah! Free markets.
There are other hedge funds that are about to disappear.
The Recession is about to become the Depression proper.
Hedge funds have had their worst ever months in the second half of 2008.
Meanwhile Hank's lot at GS reported their first quarterly loss (as we predicted) at the end of November. And yet, the losses were far smaller than expected and the GS share price climbed over 5% on the news.
It is in an infrastructurally cornered location that hedge funds find themselves - they understand that a competitor sector is gaming the system against them.
Of course, the additional benefit of buttressing the share prices of financial stocks is that the sector that caused the crisis has a built-in slush fund to ride out the crisis - an enhanced share price and a bottomless pit of government handouts.
These people are taking the piss.
Globally, the myopic and psychopathic pilots of the global economy believed that China and the US were decoupled economically ie if a Recession hit the US then China would have enough trade with other areas of the world to ride out the storm, and bolster the global economy as well.
This is a nonsense as a whole raft of recent data has shown.
As John Authers said in the Financial Times: "For years, fear has orbited around the US, with hope centred on China... In the last few weeks, some small items of data have provoked great concern about China."
There is no decoupling.
China's manufacturing is declining in lockstep with the US.
Excessive fiscal stimulus, reduced interest rates, issues of concern with regard to exchange rates, stockmarket plummeting and with volatility...
Sounds familiar?
And, while on the subject of interest rates, yesterday the Fed reached what the Financial Times term "uncharted waters" when they reduced interest rates to between zero and 0.5%, the lowest level ever.
And, the official data is not kosher.
For example, the Bank of England has stated that the Office for National Statistics produces deliberate discrepancies into its figures.
The Recession started long before the governmental figures declared this to be our neoreality. The wisest economists are all in agreement that we are currently in the middle of a secular bear market. These occur about three times per century and last around twenty years - the latest version began in 1997.
Within these secular bear markets, the architects of the global financial infrastructure and their criminalised cohorts are able to create a boom-and-bust template on top of what would otherwise be a stagnant market.
Fake highs and fake lows...
The stockmarket is now at exactly the same level as it was in 1997.
Just consider how much money has been made out of the two illusory cycles that we have just been put through...
The key phase is now beginning.
It should be a battle of rational arguments.
Of course, this will not be the case.
In the next post in this triptych of festive fun, we'll turn our attention to the next phase of this global financial meltdown.
ObamaWorld.
© Football Is Fixed/Dietrological
