How you too can participate in the financial crisis

About 15 (or was it 25?) years ago many building societies conned their members into agreeing to them turning themselves into banks. Was this the law of unintended consequences in action? Oh the joys of capitalism!

Bishop Alan’s Blog: HBOS: Personalised Credit Crunch:

Welcome to the share offer that enables you to have your very own credit crunch at home this Christmas. As a student I earned some holiday money and put it in the building society. Then the building society became a bank and my shares were converted into, er, more shares… Imagine my joy, then to be sent an “important document” this morning that “required my immediate attention.” It’s my opportunity to bail the bank out by taking them up on a very special offer — They are willing to flog me 261 shares, as a special favour, at only 113.6 pence a share. Here comes fate, tapping me on the shoulder, offering me a career as a major capitalist, and all for only £296-49! Deep Joy!

The financial journalist and the monk

Some years ago the author Arthur Koestler wrote a book called The Yogi and the Commissar, about two very different worldviews. This article could be called “The financial journalist and the monk”.

What makes a rather worldly financial journalist visit a monastery, not as a break form the rat race, but to find out the story of what’s going on in the world where he earns his bread an butter. And it seems that Vatopedi Monastery has had quite a big influence in worldly affairs.

Read the story to find out.

Beware of Greeks Bearing Bonds | Business | Vanity Fair:

After an hour on a plane, two in a taxi, three on a decrepit ferry, and then four more on buses driven madly along the tops of sheer cliffs by Greeks on cell phones, I rolled up to the front door of the vast and remote monastery. The spit of land poking into the Aegean Sea felt like the end of the earth, and just as silent. It was late afternoon, and the monks were either praying or napping, but one remained on duty at the guard booth, to greet visitors. He guided me along with seven Greek pilgrims to an ancient dormitory, beautifully restored, where two more solicitous monks offered ouzo, pastries, and keys to cells. I sensed something missing, and then realized: no one had asked for a credit card. The monastery was not merely efficient but free. One of the monks then said the next event would be the church service: Vespers. The next event, it will emerge, will almost always be a church service.

Read the rest of the story here. It’s long, but quite illuminating.

The end (of the recession) is not in sight

The end of the global recession is not in sight, and seems to be perpetually receding. It seems that we are still on the road to a full-scale depression, thanks to “casino capitalism”.

Merkel Reaches Her Overdraft Limit: Greek Bailout Could Push German Debt Through the Roof – SPIEGEL ONLINE – News – International:

The end of the spiral of debts is nowhere in sight. It just continues to grow — and soon it will grow further if Germany provides €8.4 billion ($11 billion) in financial aid to Greece. Initially, that assistance will only come in the form of credit guarantees from the federal budget for state development bank KfW, which will then provide the money in the form of loans to Greece. So they aren’t technically debts. But what happens if cash-strapped Greece is unable to pay back its loan? Then Germany’s deficit would grow in real terms by several billion.

While free-marketeers prescribe “hair of the dog that bit you”, others take a different view: Pension Pulse: Beyond the Greek Crisis: Will Capitalism Survive?:

It is clear to me that pensions and the global economy have succumbed to Casino Capitalism – a form of capitalism which benefits the financial and corporate oligarchs, leaving the rest of the population behind. Greece is the birthplace of democracy, will it also be the birthplace of a new form of capitalism?

Some commentators seem to be moving into conspiracy theory territory, though some might attribute this to the law of unintended consequences: First of May 2010: Organize and Fight Against Capitalist Exploitation! | Mostly Water:

Information indicates that the US and UK finance capital are using speculation in other countries’ economies as a weapon against competitors. Various Anglo-American financiers [intended] that a diversionary attack on the euro, starting with some of the weaker Mediterranean or Southern European economies, would be an ideal means of relieving pressure on the battered US greenback which was at a record low in November 2009.

At the time as the EU was launching its Lisbon Treaty in December 2009 there were speculative assaults or bear raids against Greek and Spanish government bonds as well as the euro itself, accompanied by a press campaign targeting the so called PIGS (Portugal, Ireland, Greece and Spain). Both the Greek and Spanish Prime Ministers reacted against these speculative attacks.

And an apparently capitalist-favouring source makes a perceptive comment: The Greek Tragedy Unfolds – Walter Russell Mead’s Blog – The American Interest:

For many Greeks, capitalism still feels wrong. The substitution of market forces for traditional social relations undermines aspects of Greek life that are very dear to many people; the inequality that so often results from capitalism offends deeply held social ideas about fairness. More, since the rising powers whose policies and interventions have done so much to shape Greek history have been capitalist, Greeks associate institutions like the IMF and the ECB (European Central Bank) with foreign meddling and unjust usurpation. And the successful capitalist countries (and the foreign multinational corporations who come with it) have never scrupled to press their advantages in less developed or weaker countries like Greece.

I wonder if those social ideas about fairness ultimately spring from Orthodox theology, and church fathers like St John Chrysostom and St Basil the Great who suggest that goods that we own in excess of our needs are stolen from the poor.

Megachurches and the recession

Bishop Alan has been attending a conference at an American megachurch on the topic of how to weather the recesssion. Bishop Alan’s Blog: Church and MegaChurch Stress Test:

There’s some comfort in knowing the seas look rough from a supertanker as well as from our little English dinghies. Of course my Anglo tendency is to be sarcastic about the differences, but it’s a fact that a place like that, as well as yea many more dollars resourced (the thing people always notice first) is also yea many more dollars committed and exposed.

Sales of Marx soar

The recession and the collapse of many capitalist economies has resulted in a boom for booksellers — at least in the sales of the works of Karl Marx.

Thoroughly Modern Marx : NPR:

The economic crisis has spawned a resurgence of interest in Karl Marx. Worldwide sales of Das Kapital have shot up (one lone German publisher sold thousands of copies in 2008, compared with 100 the year before), a measure of a crisis so broad in scope and devastation that it has global capitalism -— and its high priests -— in an ideological tailspin.

Yet even as faith in neoliberal orthodoxies has imploded, why resurrect Marx? To start, Marx was far ahead of his time in predicting the successful capitalist globalization of recent decades. He accurately foresaw many of the fateful factors that would give rise to today s global economic crisis what he called the ‘contradictions’ inherent in a world comprised of competitive markets commodity production and financial speculation.

In the 1980s neoliberalism was advocated as the panacea for the world’s economic ills. The fact that the “structural adjustment programmes” imposed by the International Monetary Fund and the World Bank had a disastrous effect on health and education in much of Africa did not seem to worry the proponents of neoliberalism very much. By the 1990s many advocates of neoliberalism were saying that socialism was dead.

And in the 1990s many people could be excused for thinking that Marx’s ideas had been shown to be wrong, and that there could never be a revival of interest in them. Most of the “socialist” countries had abandoned socialism, and often followed the advice of neoliberal Westerners to liberalise their economics as well as their politics. In Russia the immediate result of this was a drastic drop in life-expecatancy, as health services deteriorated. Another result was a gangsterisation of the economy.

And, as the article quoted above points out, much of this was predicted by Marx. Capitalism has changed a great deal in the 150 years since Marx wrote about it, but some of the fundamentals remain the same.

But while Marx was quite good at analysing the weaknesses of capitalism, his proposals for alternatives were not as successful. And some of his fundamentalist followers who tried to apply his solutions in a spirit of ideological correctness regardless of their practical effects produced results as disastrous of those of the neoliberals.

So we should not be surprised that the sales of Marx’s works are booming. But we can hope that the buyers will pay more attention to Marx’s analysis of the problems than to some of the solutions proposed by him and his followers in the past.

Perhaps the adage of G.K. Chesterton can be applied to this, mutatis mutandis: “As much as I ever did, more than I ever did, I believe in Liberalism, but there was a rosy time of innocence when I believed in Liberals.”

And so I hope that people will say, “As much as I ever did, more than I ever did, I believe in socialism, but there was once a rosy time of innocence when I believed in socialists.”

Trade unionists and communists in South Africa seem to have the unhappy knack of allying themselves to all the wrong people and causes, and attacking all the wrong targets. Here in South Africa we have an example of unrestrained capitalism that the government dare not control, and which is a magnificent example of the application of neoliberalism in practice — the taxi industry. I would love to see someone do a Marxist analysis of that.

Slumdogs Unite! – populist rage

I haven’t seen the film Slumdog millionaire, but Mardon Seevey gives a good hint about why it won so many Oscars.

Op-Ed Columnist – Slumdogs Unite! – NYTimes.com:

The tsunami of populist rage coursing through America is bigger than Daschle’s overdue tax bill, bigger than John Thain’s trash can, bigger than any bailed-out C.E.O.’s bonus. It’s even bigger than the Obama phenomenon itself. It could maim the president’s best-laid plans and what remains of our economy if he doesn’t get in front of the mounting public anger.

I don’t know who Daschle and Thain are, but it is not hard to imagine the kind of people they are, and to think of South African equivalents. Frank Rich goes on to say:

The public’s revulsion isn’t mindless class hatred. As Obama said on Wednesday of his fellow citizens: “We don’t disparage wealth. We don’t begrudge anybody for achieving success.” But we do know that the system has been fixed for too long. The gaping income inequality of the past decade — the top 1 percent of America’s earners received more than 20 percent of the total national income — has not been seen since the run-up to the Great Depression.

This is why “Slumdog Millionaire,” which pits a hard-working young man in Mumbai against a corrupt nexus of money and privilege, has become America’s movie of the year. As Robert Reich, the former Clinton labor secretary, wrote after Daschle’s fall, Americans “resent people who appear to be living high off a system dominated by insiders with the right connections.”

Middle-class Indians are up in arms about the film, because they say it misrepresents their country, but perhaps its popularity doesn’t depend so much on how it represents India as how it represents life in general.

How the recession will affect the motor industry

How the recession will affect the motor industry.

First the oil price soared to over $US 130 a barrel. Then people stopped buying big cars. Then they stopped buying smaller cars. Then the motor manufacturers started laying off workers and getting bail outs. Then the steel industry began feeling the pinch. Hope the oil speculators are happy.

How will it affect Jeremy Clarkson?

Hat-tip to Posh Totty — and there’s more where that came from.

Spend! Save! Don’t spend! Don’t save!

As the economic recession gets closer to a full-blown depression, the conflicting messages from economic fundis and would be fundis become more and more confusing, leading to reports like this: Spend less this Christmas, says the Church of England, as retailers head for bankruptcy :: Damian Thompson:

Every year the Church of England tries to underline ‘the real meaning of Christmas’ with a publicity campaign and every year it makes a hash of it. Indeed the sound of a Christian PR stunt backfiring has become a much-loved feature of the festive season. This year s headline the Bishop of Reading the Rt Rev Stephen Cottrell calls on the public to spend less in the shops just as the recession is biting and shopkeepers are searching anxiously for customers. Nice one bish.

Hat-tip to A conservative blog for peace.
And then there’s this.
TitusOneNine – Joe Nocera–The Worst Is Yet To Come: An Anonymous Banker Weighs In On The Credit Card Debacle:

Over my career, I have seen thousands of consumers that have credit card lines in excess of their annual salaries. Some are sinking under their burden. Some have been fiscally responsible and have minimal amounts outstanding. My 21-year-old daughter, who’s in college, gets pre-approved offers all the time. She has no ability to repay debt, yet the offers flow in just the same. We all know how these lines are accumulated. The banks, in their infinite stupidity, keep upping credit lines because the customer pays the minimum payments on time. My daughter’s credit line started at $1,000 and has been increased over the last two years to $4,400. She has no increased earnings to support this. But the banks do it without asking. And without being asked. The banks reel in the consumer, charge interest rates higher than those charged by the mob, increase lines without the consumer asking and without their consent, and lure them into overextending. And we can count on the banks to act surprised when they aren’t paid back. Shame on them.

You swipes your credit card and you takes your pick.