Re: [Marxism] Thoughts on Fictitious Capital

["S. Artesian" <sartesian@xxxxxxxxxxxxx>]

The Thatcher era was also part of a global reaction.  It was accompanied by 
the Reagan era in the US, the defeat of the Italian workers in the Turin 
strikes, an entire lost decade in Mexico, Central and South America,  oil 
price and interest rate spikes that reversed the capital expansion (in terms 
of fixed capital investment) in both Europe and the US that had been spurred 
by the first OPEC spike, an oil price collapse that triggered the NYSE crash 
of 1987, the S&L crisis, and the near-bankruptcy of Citibank  And of course 
produced the Plaza Accord, and the groundwork for the Washington Consensus.

I believe that what distinguishes "this crisis" from that is-- first 
nothing, secondly everything-- that is to say MAGNITUDE.

Global finanical instruments have been measured at 167 trillion dollars, 
almost 3 times world GDP.  In 1980 world GDP and global financial 
instruments were approximately the same size.

Total global financial instruments were measured at 53 trillion in 1993.  I

Credit default swaps are at 67 trillion-- that is to say the "bets" on 
defaults are valued at more than the values that might be at risk in 
default.

But all of this-- all of this is nothing but the mutation of the credit 
system which Marx described so well in Vol 3-- as doing nothing but making 
the contradictions of capital more acute, more universal, more complete.

I do not think that the non-bailout of Lehman Bros. was/is based on 
ideological concerns.  I believe that assumption of Lehman Bros. 
assets/debt/obligations by the Fed would have presented a serious risk to 
the "full faith and credit" interest rate advantage enjoyed by US govt.

The FRB, which one year ago, had 90% of its assets in US Treasury Securities 
has undergone, with the opening of the Primary Dealer Credit Facility and 
other mechanisms, an inflation in the notational value of assets with a 
decline in the quality of such assets-- to the point that now only 50% of 
the Fed's assets are in US Treasury instruments. With the US assuming the 
debt of the GSEs, Lehman represented one more straw that this illiquid camel 
didn't want to carry.

Couple of evil-gleeful notes:  I must say I am pleased as punch at the 
pictures in the NY papers of all those 20-30 something year old investment 
bankers in their flip-flops, shorts, dockers, carrying their gear out of 
Lehman offices in cardboard boxes.  Can't wait for their condos to be 
foreclosed on.  Maybe it willl be possible to eat in a restaurant in 
Manhattan on Friday night without hearing about their latest "positions" 
"deals."

For personal reasons, would love to see Blackstone go under next and soon. 
(I happen to know a couple of those pukebags).


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