I believe it's the re-edit including the NYPost photo, in other words, the post went from discussion to trollish humor, in one simple edit.

With all due respect to the reasonable criticisms of neoliberalism, this issue shouldn't have come as a surprise, but it always does.

Herd mentality and short-term memories tend to mislead people into thinking that things could always and should always improve. This sort of market movement could have very well been predicted, and some have done so. The S&P has operated at a net loss since 2000 and the Dow Jones has returned to a level it hit in 1999 and again in 2000, 2001, and 2006—and both had a good climb between 2006 and the end of 2007. Those who have this whole time expected (or at least prepared for) such things as this week's events call these past ten years a secular bear cycle.

Individual investors should get to know what this means so they can protect themselves (eg, sometimes holding a lot of cash is better than having everything in the market).

The government, Wall Street, and others more directly involved should stop being so greedy or power-hungry and understand these issues as well. A relatively unregulated economy is ludicrous when you know how the machine works. Do you know of any other elaborate machinery that has no mechanics, no operators, no "reconfigurators"?

Neoliberalism is a travesty of economic theory and practices.

actually, RB, I'd say liberalism (in the classical sense) produced capitalism. It's not the only possible outcome of a liberal order but it is the one that historically has resulted from real life application of liberal principles. The two aren't synonymous - I agree with you there - but they do tend to go hand in hand. I don't know what "neo" adds to the equation.

As for Keynes....... been there, done that, got the bumper sticker. Remember "stagflation"? That was brought to you by John Maynard. Not intentionally, of course. But that's pretty much the logical outcome of excessively empowering planners. There are always other agendas to be served, and that leads to unintended consequences.

Go ahead, call me neoliberal. I can take it. Heck, call me neoconservative, too. It makes just as much sense.

it's funny, loquitor, reading the press accounts of this farce and noticing the rhetoric, which is about storms and about schumpeter and about anything and everything that preserves a sense of continuity---which is in a sense about avoiding material and ideological problems by pushing them into some imaginary continuum that extends into a future just the same as the past.

neoliberalism is in serious serious trouble---but because it is the dominant ideology, and because the press speaks largely through that ideology in part because it is responsible for its dissemination and in part because in the states---and ***nowhere*** else, neoliberalism is a lingua franca on matters pertaining to the economy. that is what being a dominant ideology entails. the problem that ideological crisis generates is that it undercuts the frame of reference that shapes how this information is organized. in the soft authoritarian political context that is the american, this is an obstacle to being able to articulate the collapse of the ideology. it's a circle, and not an interesting one. intellectual monocultures run into it alot. neoliberalism is to this soft-authoritarian context what dialectical materialism was to stalinism. hard to articulate problems for the frame itself when the frame is understood as necessary.

that'll pass, i expect.
but implosion of neoliberalism probably wont pass, though.
you'll just have to figure out a different set of fables to believe in, sooner or later.


neo- generally implies redux but with alterations. i didn't make the term up.

this is an interesting interactvie graphic

A Year of Heavy Losses - Interactive Graphic - NYTimes.com

So naturally, if indeed "neo-liberalism", "capitalism" are on its way out, what do you (general you) think will take its place as the next economic system? Do you think it will be a collapse or a gradual change?

For those so opposed to "neo-liberalism", "capitalism" can you elaborate a little bit on why you do so? Is it the theory, practice? Do you like some elements or is it a wholesale dislike? What improvements or alternatives do you think are better or workable?

For me its simple...an unregulated free market leads to the greatest abuses (of workers, the environment, product safety, etc) and the greatest disparities between the "haves and have nots".

A solution....a constitutional amendment...along the lines of "a well regulated" militia....how about a "well regulated" economy?

j/k with the amendment...but de-regulation is not the answer....and it never has been.

jorgelito--neoliberalism is not the same as capitalism in general.
protestant evangelicals who refer to themselves as christians are not the same as christianity in general.
this should be simple.
i don't understand why there's such a problem with this.

we'll see what happens with aig tomorrow....

Actually, DC, I think it's a very productive start. However, I would think there needs to be some elaboration on "well-regulated". Do we mean well regulated as in a well done job of regulation, or lots and lots and lots of regulation? That I think is the tar baby here.

I will say as a person who leans towards neoliberalism, capitalism, I don't really have a problem with SOME regulation. I do see TOO MUCH regulation as being strangling and detrimental to business and the overall economy in general.
-----Added 16/9/2008 at 08 : 57 : 36-----
That's a good analogy Roach, very clear and understandable, thank you.

The problem is because the terms are used loosely and in a variety of ways causing confusion, in a similar manner as your Christian analogy.

So, what do you think of the rest of the post?
-----Added 16/9/2008 at 09 : 08 : 40-----
ADD: Well it looks like the Feds are going to "bail out" AIG with a $85 billion loan.

I just want to be clear that my own position is not one that calls for an end to capitalism per se. Rather, I want to see an end to the drive towards completely deregulated and laissez-fair capitalism. This particular flavour of capitalism does not sit well with my humanist sensibilities.

For further clarity, I am not looking for an answer in the great bug-a-boo of communism either. To my mind they are at either ends of the economic spectrum from each other and in their orthodoxy are essentially bankrupt.

What I seek... what I always seek... is a balance between the two poles.

History has shown us that both extremes are problematic (to say the least).

There are a few things that I would say need regulated. I'll start with international trade.. It's not that it's a bad thing to grow and strengthen foreign markets, and it has stabilized the world. It isn't all bad. But it moved too fast, and it was too lop-sided. Companies wanted , and got, outsourcing of jobs and factories done in 10 years. The foreign countries grew really fast and production of raw supplies didn't. But now we have people who are just living with what they have and not buying anything new, there are plenty of people who can't get work (although it isn't too bad yet), and older people are working longer. The 20-somethings and 30-somethings don't have the money/credit to buy houses because they can't get into jobs that pay enough with the rising prices.

Speculation and short selling are two other things that need to be reigned in. There should be limits on how much any one person can do each year. And there needs to be some type of serious penalty if you foreclose on a house or can't pay back credit card loans. I'm not sure what that penalty should be, but something like 10 years of garnished wages would be good place to start.

The problem is how do you avoid bubbles? The tech bubble was justified at first, but then you had investors throwing money into it as fast as they could because they couldn't lose. The more investors, the higher the stock price. Until enough of them want to cash out, and then all of them panic and sell. Repeat with the housing bubble and the oil bubble. And it will continue into the next hot thing because the money has to go someplace, and whatever seems like a good idea to a bunch of people will catch the attention of more and then the big banks will want in and make a quick buck... And it all repeats.

And the government's deficit spending needs to be regulated as well. But that is another topic.

overnight, it became clear that aig was too big to allow to fail.

Federal Reserve rescues insurer AIG with $85bn bailout | Business | guardian.co.uk

aig collapse would have put into serious jeopardy the entire neo-liberal/"globalizing capitalist" financial order, the network of flows that has long outstripped the purview of nation-states. over the past 3 days, somewhere in the area of a trillion dollars has been pumped into this system by the fed and central banks from around the world---the main system of flows, what neoliberalism is really about, autonomous capital flows operating in a spatially segregated virtual region moving independently of any coherent relation to the wider social world, motoring a new concentration of wealth and a radical reconfiguration of the geography of political and socio-economic power---while the social consequences are abandoned to the play of abstract forces---one of the consequences of neo-liberalism---here used to designate an entire ideological configuration--is an extreme extension of one of the main logics you saw fully in place under fordism--the dominant order legitimates itself through service delivery, through the fact of operative flows rather than through the location and effects of them. when the location and effects of these flows generates radicalized social inequality, the problem is talked away as being a function of the "natural" consequences of climates in the second nature of markets---but when flows themselves are seriously endangered, THEN you have a political Problem.

so you see what neoliberal structures look like, what the situation of the nation-state is really in the new order, how irrelevant populist conservative discourse is to the main project neo-liberalism is geared around---so you see the consequences of the collapse of politics onto the fact of activity, onto the fact of flows---so you can piece together the relation between neoliberal social policies in any given space--which is "let em choke, the don't matter"--because functionally, we don't matter---risk reduction, and the focus of neo-liberal attention.

you see a host of reasons why neo-liberalism is cooked, why is must and should be cooked, why some other logic has to be put into place.

What I want to know is, "what are the taxpayers going to get for this $85 billion?"

debt.

The money can come from China, ultimately.

hear that sound?


FT.com / In depth - US Treasury recapitalises Fed

that's the sound of this form of capitalism cracking at it's seams.

here's a .pdf which shows something of a.i.g.'s structure, which helps explain why it was too big to allow to fail:
http://media.ft.com/cms/425ac584-841...0077b07658.pdf
(you may need to subscribe to ft.com to see it)

so what this means, i think, is that the nation-state based mechanisms available to stabilize major perturbations in the trans-national capital-flow stratum of social being (neat-o terminology, yes?) has reached it's limit.
there's been something on the order of 3 TRILLION dollars pumped into the banking system over the past 72 hours. this capital has come from most of the central banks in the metropole.
it was not enough.
the particular ineptness of the bush administration--acting in strict accord with the premises of the neo-liberal ideological substitute for the world---has resulted in a.i.g. costing so much to bail out that the fed is stretched to its absolute limit--and that, folks, means that we were on the brink of the collapse of the state itself as a regulatory mechanism *capable* in principle of managing dysfunctions at the level of these capital flows.

this is still unfolding---what do you make of this new creak in the system soundtrack?

why do you think this is still not THE story in the american media?
i think it is because, in part, the press has adopted neoliberal premises as its collective lingua franca, and that as the world commensurate with this ideology hits a wall of it's own making, description requires that one step outside the discursive frame of neoliberalism itself--you cannot deal with questions about axioms from within a proof that presupposes them--so it follows that you cannot deal with ideological crisis if your own framework presupposes the ideology that;s in crisis.

hear that sound?

so we just created more money out of thin air?

best i can figure, cyn, the money was created from thin air by way of t-bills.
it's a little hard to say because, for example, there's not a whole lots of real estate on the dept of treasury's website devoted to actual life, particularly not when compared to the amount devoted to neo-liberal horseshit about competition, deregulation and their virtues.
but here's a link to press releases, which of course tell you very little:

U.S. Treasury - Press Releases - September 2008

Pretty much. But we'll likely borrow the cash.

Watch the dollar drop now.

well at some point in time either the shell game stops or the ponzi gets called, seems like they are still trying to pass it around.

no choice on this one, cyn, it seems.
the scale of this is WAY beyond that...
i'm trawling about for more detailed/updated information...feel free to join me and post what you find. other on the fly analyses welcome too, of course.

this is fucked up. that is the short version.

Um. What do you think money is?

Our money has been worth the value of the paper and the ink since the gold standard went away. And before that, it was worth the promise of gold, not the actual gold.

Money is a convenient fiction.

yes, i understand the idea of the fiat currency, but when the House in Vegas wants to give out more chips there has to be funds to cover them in some fashion.

Here there isn't anything but the wave of a pen, nod of a conversation, or maybe even just a press of a keyboard.

At some point, it would seem, people (and countries) will stop buying these "bills."

And then what does the US do?


Treasury selling debt to help Fed | Reuters

what matters is continuity of movement, the continuance of flows, not what flows. the objects that move through these systems are secondary to the fact of their movement. trafficking in debt means that value is a temporal form, not a 1:1 relation--so it's not about objects, not about thinking with or through objects...it's thinking motion, systems that allow it, and relations which are structured in and through that movement. value is a convention--but it's always been convention, nothing more. the value of gold was a convention and the assumption about that convention was that scarcity (or at least limitation) of supply functioned to anchor that convention in something outside itself--but that too was a convention. and what mattered was the movement of these conventional objects--these time-forms, like sounds---through particular systems. when you extract "value" from the systems of circulation, you convert media, but the conversion of media doesn't mean that you move from a system anchored in circulation to something else--you just move from one circulatory system to another.

the entire idea of the old marxian labor theory of value was to anchor value to praxis, acting on nature, transforming nature into usable objects, as a way of making it more "material"----but even there value was located in labor power, in process, and it's object-expression---commodities---was seen as "dead labor"....

i don't know why this is surprising, that the anchors of bourgeois "reality" are basically objectifications of modes of being that are basically motion or pattern within motion (another metaphor that you could plug into the above and run the machinery).

what matters is not the relation to materiality, not the relation between process (which is temporal) to the object-oriented world that we see and live through because we see it---what matters is the equity of modes of allocation, what matters is the distribution of power. in contemporary capitalism, we--you and i---have NO power. we are spectators. this is a form of spectatorship. and it also turns out that the institutions we assumed DID have power do not have it--not really--what has power is the flowing of capital within abstract networks. that rules the world, the world that neoliberalism has enabled.

better to watch tv, i sometimes think.

RB, on that theory, the gold standard is preferable to fiat currency because gold provides an "anchor" to something real. Except that that anchor made it very difficult to react to market shocks, which is why it was abandoned. (In effect we traded some degree of unavoidable inflation for a smoothing of the business cycle - not a bad trade, in my view).

The system isn't cracking. It'll take a few months but things will consolidate and return to normal. Unless we start rescuing every bad business in sight like the Japanese government did - that kept japan in recession for 15 years.

when the nixon administration scrapped bretton woods and instituted floating currency, the idea was to abandon an outmoded break on capital accumulation. it never anchored anything to anything, the gold standard--rather it was a residuum of the inability of folk do deal with value as an effect of circulation, as relational, as based, in the end, on momentum, and so, by extension, no-thing.

the neoliberal order is definitely in trouble. i think the system that has taken shape is at its limit. i don't think that means capitalism will collapse---what it means is that we're entering a period of mutation in the course of which you'll get a little demonstration of what it mean when folk characterize capitalism as an autopoeitic system. changes in environment force adaptation in system logic in order to preserve system identity. neoliberalism is as outmoded as the edsel at this point, but without the lovelt design points that make the edsel still interesting--it's inability to provide either a compelling or robust description of actually existing capitalism is now obvious--that an inadequate description leads to incoherent policy is now also obvious. but this has been true for quite a long time--the only real changes are (a) the material required for becoming-visible within the bizarre little ideological bubble that is the united states are in place because (b) the dysfunctions of the system have reached the metropole. that's it.

that folk invested in precisely the ideology that is being pulverized in real time have trouble seeing what's in front of them is not surprising.
that it is so pervasive in the states is an index of the monocrop culture we live in from the political viewpoint.
it provides an idea of the consequences of soft-authoritarian rule, shows its limits.

so i find it almost funny watching the problems folk are having with getting their heads around what's in front of them.

Hang on to your seats, WaMu is next.

Looking at T-bills, apparently 25% are held by foreign governments, which is double what it was in 1988. Is this going to put more of the U.S. public debt in foreign hands?

It seems to me that as time goes on, the U.S. continues to cede an increasing amount of control over its economy to foreign powers via the unabated increasing of public debt.

When will this stop?

interesting, comrade. i was just looking at a blog that talks about this very question. i'll link it here because the original has some useful hotlinked areas. and because, well, it's a blog.

Winter (Economic & Market) Watch Financial Tar Pit Update

Interesting indeed, roachboy.

I find it disquieting that people aren't more focused on the bigger dangers of this issue. Most people look at the bailout figures and get angry at big business. How soon they forget that such money is absorbed by the banks and the bill for it is being held by someone else, much of it quite possibly in Asia. The more foreign bills being swept up, the more control they have over American economic policy. The threat of dumping (i.e. cashing in) T-bills is enough to get someone's attention, especially when you figure that there's $1 trillion dollars' worth between Japan and China alone.

But here we're talking about foreign banking absorbing U.S. banking. Interesting. I wonder how this will play out globally as things continue to shake up.

Probably. Then Goldman Sachs and Morgan Stanley. Then?

baraka--well, if things move in a straight line, it looks like the end of the american empire, engineered through idiocy and incompetence by the very people most committed to the idea of american empire.

Then back to your regular scheduled programming....

It's one aspect of the kind of environment that adds to my suspicion that a Puritan reformation is on its way in America. It's not as extreme as it sounds, so it's not far-fetched; what it means is that some crisis (or crises) will empower someone who will guide American interests inward in a mode of self-preservation. It might not go as far as isolationism, but it will certainly be a great shift in what we've come to know as American culture and society.

America is going for broke; someone will have to fix it.

Much of the wealth in this country seems to be obtained not by hard work and innovation but by political influence and corruption. I don't know what regulations could be put in place to avoid this with the foxes watching the hen house but what we have now is not giving capitalism a chance to work. Of course I guess it is sometimes hard work and innovative to set yourself up to get in on the corrupt action.

well, as an aside---what matters really i suppose is whether things do or do not move in a straight line. by a straight line, i mean a bunch of things, but principal among them is the possibility of another republican administration coming into power and being responsible for dealing with the fallout of this fiasco. that would, i think, mean the end of the american empire. and that will not be pretty. i do not think obama that radical an alternative, but i do think that the international community, such as it is, probably prefers something of a variant of the status quo in terms of geopolitical and economic power simply because they know it and it generally works to their benefit--so obama might well represent a kind of "coming to their senses" on the part of the us internationally and i think that'd generate more room to manoever for the states. either way, the unipolar world of republican fever dreams is self-evidently on fire, with the ruins of neoliberalism helping it burn. because everywhere except in the us, neo-liberalism and the new and improved colonial order they call "globalizing capitalism" and american domination are synonymous more or less--even amongst more friendly political positions, the three operate in tandem. it seems to me that the americans---whom i refer to at a distance because i do not really recognize myself anywhere in a context wherein a nitwit politics like that of the us right can be taken seriously---anyway, the americans have a choice--burn with the outmoded arrangement or put the place in a position to remain a meaningful player in the mutation/reconfiguration---be the geopolitical entity the marginalization of which is amongst the central features of the mutation, or be part of reshaping it, so that the mutation would be something else.
-----Added 17/9/2008 at 03 : 12 : 16-----
an end-of-the-day wrap kinda article from the financial times.
i continue to be struck by the distance which separates the coverage in this paper from anything that has appeared in the states, and i keep thinking about why this is the case and what is going on with it.

anyway, read on.....

FT.com / In depth - Credit panic hits historic levels

so what it looks like is that that machinery of the international trading system is jamming up, and the reason for the jamming is a kind of institutional panic that is deploying across the instruments of credit.

at this point, there's no obvious conclusion, but things are ramping in a kinda scary direction.
unless you're like me, and are mostly just watching this and trying to figure it out.

Good question. I wonder if there is a threshold (theoretical or practical) in which the percentage of foreign holdings of our t-bills becomes a national security issue. There has to be some line where our economy becomes very vulnerable and beholden to a foreign interest.
-----Added 17/9/2008 at 04 : 35 : 23-----
I think alot of this stuff is over the average persons head. It is complex and alot to absorb and understand. Since the media knows this they probably avoid it or just reduce to panic headlines. Heck I must admit, the few articles I've seen I have given just a perfunctory glance in favor of some other story or article until lately when it was more of a presence in general news.

So yes, people are mad, but they really don't know who or what to be mad at.
-----Added 17/9/2008 at 04 : 36 : 33-----
Good lord, I don't know. Do you think Morgan Stanley and Goldman Sachs could be next?

I do think CitiCorp/Group could be next.

Hopefully it won't be an endless fall of dominoes.

which headline comes from an american newspaper?

Dow Falls by More Than 440 Points in Jittery Trading

Panic grips credit markets

And then what? What do you think will replace it? DO you think there will be a complete paradigm shift or gradual change? Will it be a systems change?

Sadly, yes I do-

The Associated Press: Shares of Morgan Stanley and Goldman Sachs plunge