[PEN-L:28259] Re: Re: Something strange about this crisis

[Waistline2@xxxxxxx]

Speculation is the act of buying and selling with the motive of then selling and buying in expectation of making a profit. Speculators may trade in stocks and bonds in anticipation of selling them at a future date at a higher price. More important, in terms of dollar volume, are currency funds. The amounts traded in currency dwarfs the stock market. Perhaps $1.5 trillion passes trough the major interbank clearinghouses everyday - about 100 times the actual commodity trade and about 100 times the daily trading volume of the three major U.S. Stock exchanges.

When money capital cannot be profitably invested in the reproduction of capital  (i.e.. production and consumption) it ca become speculative capital. Speculative activity exists in a world where productive activity obviously still takes place. Thus, it intermingles with productive capital, and movements of speculative capital respond to and reflect the underlying motions of various national economies. The increasing abandonment of investment in production and consumption in favor of speculation is symptomatic of the early phase of the emergence of increasingly valueless production, which is the last phase of capital.

Faced with shrinking returns, a section of capital abandons the productive process, in hope of accumulating capital through speculative activity.

Something strange is about to happen again. This strange thing has been unfolding for the past decade amongst the lower sector of the working class in America. This sector has no social organizations or national forum for its voice. Perhaps 40% of the city governments in America are in various stages of collapse right now. Where I live the city government collapsed with the Argentina banking crisis. There is no police department or fire department.

What has characterized this specific phase in the decay of capital is not widespread chronic unemployment but extreme polarization of wealth and poverty and the further stratification of the working class. Stated another way, there has been an absolute reduction in the standard of living of the working class as a class. This process was not uniform or affected everyone equally. The bottom of the working class is slowly being pushed outside capitalist production relations and the production of surplus value.

A new class configuration within the working class is in consolidation and has already emerged. Capital increasingly divorced from production and consumption must of necessity mirror its counterpart in the working class as a sector increasing divorced from production and consumption on the basis of capital. Just as industrial capital created its counterpart in the industrial proletariat, the ascendancy of the speculator to leader of the world total social capital must engender its antithetical polar opposite.

The speculative boom took shape in a period of recovery of profitability driven my increasing the productivity of labor through implementing new technological models in the production process. Mergers and economy of scale was the watchwords.  Corporations opened new factories, attempted to buy market shares through mergers and acquisitions and poured billions of dollars into business models that promised to give them one up-man ship over the competitor.

Corporations not only increased their debt load relative to cash on hand and based on inflated "stock mareket value (assets), but the accounting and financial divisions joined in the speculative boom as speculators. Trading in each other "paper" as if it had real value - (embodied socially necessary labor). In the end paper is paper and its value is the socially necessary amount of labor that goes into the production of paper.

The law of value is a cruel master and proletarians and capitalist alike must bow before master's law system. Capital as a system of production has internal and external limits and this is clearly witnessed in the market on planet earth.

The world peoples are in debt up to their necks and this most certainly includes the corporations of capital. AOL has recorded the largest single loss of a corporation in the history of civilization. Xerox is on the ropes.  When Enron fell it affected more than 45 major companies like J.P. Morgan, Bank of America, Citigroup, Hartford Insurance Group, TXU and Principle Financial Group.

For a moment lets forget Argentina and that segment of the world that's been in crisis for the past decade. Campbell Soup is shaky with a huge debt load; Ford Motor Company, Revlon, Nextel Communications, Sprint PCS and roughly 4000 companies. In the past few months Coseco, Delta Airlines, AES, Gateway Computer, Hilton, United Airlines, GAP ("Fall Into The Gap"), Aetna and Goodyear Tires have had their bonds  - promissory notes that good times is just around the corner, downgraded to junk bonds.

Even IBM has $35.1 billion in debt coming due within 12 months and only $6.4 billion to cover them. That's about 18 cents in cash for every dollar it is obligated to pay out this year.

I take zero pleasure in the carnage that is in progress. PMC Sierra has three about months of cash left, Nortel Networks, 9 months; JDS Uniphase, 11 months; Lockheed Martin, 13 months and Sprint PCS about 13 months. These companies alone imply about $50 billion in losses to investors. Deflation is in the wings rearing its ugly head.

Ford, GM and Chrysler have just finished their biggest fire sale in history. Thousands of companies are launching "pay nothing for a year sale" just come and get these products. You can buy a car and pay Zero interest and no payments for a whole year - Nada. Deflation is in the wings. The price of a 128-megabyte dynamic random access memory chip used in almost all computers has plunged from $14 in February 2001 to under $2 currently. Most of this information comes from the Investment Guru Dr. Martin C. Weiss, and I could kick myself in the pants for not listening two years ago.

And everybody know about Mississippi - I mean KMART, g*ddamn!

It is true that the mode of accumulation is in crisis. This mode of accumulation mirrors and is inexplicably fused with the mode of production and distribution or the buying and selling of labor power.  Price is not value. Price is what something cost in currency or wages. Value ain't currency or wages but is the amount of socially necessary labor in the production of commodities. Value will inevitably drag down prices as companies compete to sell - realize the surplus value in their products and continue to cheapen the human labor component of production. This of course is why the technology revolution is called the technology revolution.

In the deflationary period - to come, unemployment becomes a consequence, not simply the extreme polarization between accumulated wealth and accumulated poverty. Private property relations and the carnage of capital, which the peoples of our country have been relatively immune to are coming home to roost.

This is a classic crisis of overproduction in progress. In the 1980s, Japan built more offshore production equal to that of France. In the 1990s, Japan added still ore capacity abroad, again equal to that of France. This expansion took place without regard for possible sales. China productive capacity has leaped during the past two decades. Manufacturing capacity in the US has been rising by roughly 3-4 percent annually during the last decade.

Putkin has to be out of his mind if he thinks Russia can enter the world market and compete with Japan, China and the US - nay, South Korea.

Relying on the US market to absorb the world productive capacity - as the absorber of last resort, was a risky gamble that now threatens systemic collapse - world stagnation, in perhaps 24 - 36 months. This time frame comes from considering the period of not paying for that new car everyone needs to get, for a year - August 2003, and then paying for it for one year - August 2004.

Damn, I though I might be able to get 10 years of pension without a big glitch. I do hope things proceed slowly to give us a change to develop the language of class standpoint for our respective working classes.  


Melvin P.