Tuesday, December 2, 2008

Think of the Damage that Socialists Could Do to the Economy!!!

One of the more amusing shrieks from the pro-stupid side of the political spectrum during this political crisis is for Canadians to think about the damage that the "socialist" NDP could do to the economy if it gets power in this coalition.

Let that sink in for a moment.

It's amazing. Being a "conservative" means never having to say you're sorry.

Guess what "conservatives"? This blogger is proudly socialist and one of the reasons for that is because socialism compares so well to the disastrous results of YOUR economic policies. You guys are the dangerously incompetent ones!

Right-wing economics have been in the driver's seat of the leading economies since at least 1980. Even social-democratic ("socialist") and real socialist parties have drunk the kool-aid and were yammering about "market realities" since the 1990s. As a result, we have the economic mess that we have today. Labour markets are "flexible" which means widespread insecurity. Unions have been tamed, which is big contributor to the wage stagnation of the past four decades. We have free trade, lower corporate taxes, monetarist low inflation policies, ... all of these things were supposed to bring us social and economic nirvana. What's the results though?

A decaying industrial base. Deteriorating public infrastructure. Crumbling healthcare systems. Greater poverty. Greater homelessness. A ravaged environment. An increasingly indebted society.

This is your handiwork. Own it.

And where did this present economic disaster start? Well, the standard story is the US housing bubble. But what did that consist of? People who couldn't afford houses were getting mortgages that they couldn't afford, and some people were using easy loans to buy more expensive houses that they hoped to "flip" before their terms were renewed. When US housing prices declined, and when mortgage terms changed, all these people were stuck with assets that they couldn't afford and couldn't sell.

But none of that would have happened if there hadn't been people offering credit to people who shouldn't have gotten it. But why were they offering this credit? (Don't blame it on the Carter-era CRA. That nonsense has already been dealt with.) They did so because they knew that they could pass these toxic mortgages to other people who would have to deal with the mess. They were more than willing to con poor people into thinking they could become part of bush II's "ownership society" or to work with up-and-comers who thought that housing was a sure-fire way to make a quick buck because there were plenty of people willing to take the risks of default off their hands.

Who were these other people? The vangaurd capitalists of a newly deregulated Wall Street. The peak of the capitalist system. There were literally billions pouring in, looking for avenues of "investment." With the real economy stagnant due to falling demand (caused by stagnating wages and job insecurity) this capital sought any oasis of expansion, and, once found, further infusions of liquid billions would create a self-perpetuating bubble.

But why would Wall Street think risky mortgages was a good place to put money? Because you could take these, and other loans, carve them up and re-bundle them into complicated derivative products, and then use your AAA status, your reputation as a cagey Wall Street giant to convince the world's "investors" that these derivatives are sound investments (which pay a high rate of interest because they're still based on poor people being gouged in the subprime market or what have you).

Capitalists being what they are, the giant Wall Street financial firms never stopped buying these mortgages and repackaging them into "mortgage-backed securities" because the customers never seemed to stop coming. When the market peaked, when the "greater fool" theory again revealed its limitations, the Wall Street giants had enough garbage in their possession to threaten their own solvency. The size of the amount of garbage that they sold is being deliberately obfuscated.

There is the source of this massive financial crisis. Unregulated capitalism. But these imbeciles on the right-wing have the nerve to yammer about the damage that "socialism" could cause? There's a reason that I hardly seek out right-wing opinion anymore. It's generally stupid garbage.

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