Archive for December 2007
Plan B: Kill Shorty again and keep blinking.
Travis Fast
There is very interesting morality play unfolding in the financial markets as central banks are being increasingly forced to play hand-maiden to the expectations of the financial markets and by extension engage in asset (equity) price stabilization. The FED maintains that today’s move by the large CBs was planned months ago. If you believe that I have another asset bubble to sell you (or what central banks now seem to think what is meant by price stability).
It would be funny if I could not remember a time not so long ago when price stability was so dear to the heart of central bankers that interest rates could not be lowered just to put a few million workers back to work. But then that is why they are called workers and the others are called …
However, this is indeed a dire moment in neoliberal financial regulation. The near total dominance of the Anglo-Saxon financial model and its reputation is, as Martin Wolf notes, at stake. That is, there is more than just “economics” at stake. In fact there is more than just system maintenance going on here–there is a rear-guard ideological battle being fought between the pundits of what is rapidly becoming a clepto-cratic and oversold neoliberal Anglo-Saxon financial model and more moderate voices calling for thorough and restrictive public oversight over financial markets.
For the neoliberals the stakes may be high but they hold one Ace in their hand: the financial markets are now, thanks to neoliberalization, so central to the global capitalist system they cannot be allowed to come even close to failing and the financial boys know it: they have fully captured the state.
The fed gave 25bp yesterday and the markets cried like little children who refused to accept and then pay for their own mistakes. Good thing mother likes to reward bad behaviour and boy does she ever.
In the coming months we will see if all the king’s horses and all the king’s men can put humpty dumpty back together again. Meanwhile if you are a Shorty watch out for the king’s horses.
The essence of socialism.
Travis Fast
Sometimes when I find myself questioning many of my political positions (which I do every so often despite what appears here: which is the mark of a good social scientist I should add) I return to some foundational passages from bygone years and see if in them I am still able to see myself; that is, my sentiments –the fusion of the heart and head– reflected (don’t get all scared: you have a heart even if you think you don’t use it; and, don’t get all scared: you have a head even if you feel you don’t use it).
Below is one such passage which has been heavily edited down to the punch line. What I like about this passage is that it makes plain what characterises relationships between human beings when they are reproduced through alienated labour and its products. But more significantly the passage outlines the sentiment of what one might call an alternative socialist modernity in which mutual recognition in love through our individual labours and subjectivity is the causa belli. And although the passage offers no clue about how a community of human beings could be constituted on such a basis it does provide a normative basis from which we can judge our own and hold ourselves to account.
The passage is also quite stunning in the way that the author deals with subjectivity and objectivity: and even puts forward a positive notion of objectification. If you have not read this passage give it a twice-over; if you have, perhaps you will feel a little less lonely after having revisited it.
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Comment on James Mill
When I produce more of an object than I myself can directly use, my surplus production is cunningly calculated for your need. It is only in appearance that I produce a surplus of this object. In reality I produce a different object, the object of your production, which I intend to exchange against this surplus, an exchange which in my mind I have already completed. The social relation in which I stand to you, my labour for your need, is therefore also a mere semblance, and our complementing each other is likewise a mere semblance, the basis of which is mutual plundering. The intention of plundering, of deception, is necessarily present in the background, for since our exchange is a selfish one, on your side as on mine, and since the selfishness of each seeks to get the better of that of the other, we necessarily seek to deceive each other. It is true though, that the power which I attribute to my object over yours requires your recognition in order to become a real power. Our mutual recognition of the respective powers of our objects, however, is a struggle, and in a struggle the victor is the one who has more energy, force, insight, or adroitness. If I have sufficient physical force, I plunder you directly. If physical force cannot be used, we try to impose on each other by bluff, and the more adroit overreaches the other. For the totality of the relationship, it is a matter of chance who overreaches whom. The ideal, intended overreaching takes place on both sides, i.e., each in his own judgment has overreached the other.
On both sides, therefore, exchange is necessarily mediated by the object which each side produces and possesses. The ideal relationship to the respective objects of our production is, of course, our mutual need. But the real, true relationship, which actually occurs and takes effect, is only the mutually exclusive possession of our respective products. What gives your need of my article its value, worth and effect for me is solely your object, the equivalent of my object. Our respective products, therefore, are the means, the mediator, the instrument, the acknowledged power of our mutual needs. Your demand and the equivalent of your possession, therefore, are for me terms that are equal in significance and validity, and your demand only acquires a meaning, owing to having an effect, when it has meaning and effect in relation to me As a mere human being without this instrument your demand is an unsatisfied aspiration on your part and an idea that does not exist for me. As a human being, therefore, you stand in no relationship to my object, because I myself have no human relationship to it. But the means is the true power over an object and therefore we mutually regard our products as the power of each of us over the other and over himself.
That is to say, our own product has risen up against us; it seemed to be our property, but in fact we are its property. We ourselves are excluded from true property because our property excludes other men.
The only intelligible language in which we converse with one another consists of our objects in their relation to each other. We would not understand a human language and it would remain without effect. By one side it would be recognised and felt as being a request, an entreaty, and therefore a humiliation, and consequently uttered with a feeling of shame, of degradation. By the other side it would be regarded as impudence or lunacy and rejected as such. We are to such an extent estranged from man’s essential nature that the direct language of this essential nature seems to us a violation of human dignity, whereas the estranged language of material values seems to be the well-justified assertion of human dignity that is self-confident and conscious of itself.
Although in your eyes your product is an instrument, a means, for taking possession of my product and thus for satisfying your need; yet in my eyes it is the purpose of our exchange. For me, you are rather the means and instrument for producing this object that is my aim, just as conversely you stand in the same relationship to my object. But 1) each of us actually behaves in the way he is regarded by the other. You have actually made yourself the means, the instrument, the producer of your own object in order to gain possession of mine; 2) your own object is for you only the sensuously perceptible covering, the hidden shape, of my object; for its production signifies and seeks to express the acquisition of my object.
In fact, therefore, you have become for yourself a means, an instrument of your object, of which your desire is the servant, and you have performed menial services in order that the object shall never again do a favour to your desire. If then our mutual thraldom to the object at the beginning of the process is now seen to be in reality the relationship between master and slave, that is merely the crude and frank expression of our essential relationship.
Our mutual value is for us the value of our mutual objects. Hence for us man himself is mutually of no value.
Let us suppose that we had carried out production as human beings. Each of us would have in two ways affirmed himself and the other person.
1) In my production I would have objectified my individuality, its specific character, and therefore enjoyed not only an individual manifestation of my life during the activity, but also when looking at the object I would have the individual pleasure of knowing my personality to be objective, visible to the senses and hence a power beyond all doubt.
2) In your enjoyment or use of my product I would have the direct enjoyment both of being conscious of having satisfied a human need by my work, that is, of having objectified man’s essential nature, and of having thus created an object corresponding to the need of another man’s essential nature.
3) I would have been for you the mediator between you and the species, and therefore would become recognised and felt by you yourself as a completion of your own essential nature and as a necessary part of yourself, and consequently would know myself to be confirmed both in your thought and your love.
4) In the individual expression of my life I would have directly created your expression of your life, and therefore in my individual activity I would have directly confirmed and realised my true nature, my human nature, my communal nature.
Our products would be so many mirrors in which we saw reflected our essential nature.
This relationship would moreover be reciprocal; what occurs on my side has also to occur on yours.
Let us review the various factors as seen in our supposition:
My work would be a free manifestation of life, hence an enjoyment of life.
Presupposing private property, my work is an alienation of life, for I work in order to live, in order to obtain for myself the means of life. My work is not my life.
Secondly, the specific nature of my individuality, therefore, would be affirmed in my labour, since the latter would be an affirmation of my individual life. Labour therefore would be true, active property.
Presupposing private property, my individuality is alienated to such a degree that this activity is instead hateful to me, a torment, and rather the semblance of an activity. Hence, too, it is only a forced activity and one imposed on me only through an external fortuitous need, not through an inner, essential one.
My labour can appear in my object only as what it is. It cannot appear as something which by its nature it is not. Hence it appears only as the expression of my loss of self and of my powerlessness that is objective, sensuously perceptible, obvious and therefore put beyond all doubt.
We are all Keynesians now?
Travis Fast
So the bank of Canada did it. They really did it. Now if the commercial banks drop their prime rate I will save ¼ point on the interest rate of my student loan. Now I can splurge on Christmas. Somehow I think my marginal spending behaviour changes in bigger utility chunks than a ¼ point. But then the cut was not really for me.
Who was it for?
Was it for the dollar and thus the domestic manufacturers and retailers?
What will such a general move do to help with the regional ands sectoral imbalances that have built up over time?
What was the evidence that the economy needed more stimuli on top of the massive tax cuts just announced by the Tories?
Was it the fear of a recession in the US?
If so, will monetary policy be the key lever in such a situation?
If it is the value of the dollar then will a ¼ point cut make a dimes worth of difference if the FED goes the same or ½ a point?
Has the Bank finally abandoned that ever so useful ideological Trojan Horse called the NAIRU?
Ok so we are all monetary Keynesians now; but are we all fiscal Keynesians?
Bank of Canada cuts key interest rate
Published: December 4 2007 17:24 | Last updated: December 4 2007 17:24
The Bank of Canada cut its key interest rate on Tuesday for the first time in more than three years on the grounds that faltering US growth now poses a bigger threat than inflation to the Canadian economy.
The bank lowered its overnight rate from 4.5 per cent to 4.25 per cent. It was set to raise rates as recently as last summer when labour shortages, capacity constraints and rising commodity prices threatened to unleash inflationary pressures.
From credit to profits
Travis Fast
It seems as though everything is going through its “natural” paces in the US economy: first there was the massive credit crunch in the mortgage market which came on the heals of the bursting of the property market; then in train, durables and semi-durables took a hit and now it appears as though corporate earnings and thus profits are being squeezed. There is a textbook recession in the making. First, workers lost the wealth effect (for those who own their house) from their appreciating home values and soon it seems they are going to lose what little security they derived from near full-employment.
The up side is that even heavyweights like L. Summers are pushing for the federal government and the Fed to deliver an old fashioned Keynesian demand push. If oil continues to drop and if food prices hold steady there just might be enough flexibility in the US economy to handle that kind of stimulus without generating inflation. As Greenspan noted some time ago the American worker is so traumatized that even in the context of full employment there have been little to no signs of wage push inflation.
Enjoy Christmas but be careful you may be paying-off your credit cards in very different conditions from the recent past.
NB. my intuition tells me it is not inflation the Fed should be worried about but rather the inverse driven by over production in the face of declining or stagnant demand. That would imply a protracted period of depressed corporate earnings indeed.
View of the day: The earnings recession has arrived
By David Rosenberg
Published: November 28 2007 15:36 | Last updated: November 28 2007 15:36 Financial Times
While the debate rages over whether the real economy is going into a recession, the reality is that the earnings recession has already arrived,” warns David Rosenberg, chief North American economist at Merrill Lynch……
Mr Rosenberg says it is reported earnings that investors ultimately pay for. “So, this is not just about a pullback in risk appetite or a ‘panic’ – that’s the story in the money and credit markets. The story for equities is that the earnings cycle seems to have ended more abruptly than investors had anticipated.”
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