Economic "Stimulus" Considerations

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By Rowan Wolf (about the author) Page 1 of 3 page(s)

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There are certain realities and issues that need to be recognized in our current economic "crisis" as trillions of dollars are being thrown around to try and "fix" the problem. Unfortunately, the debate seems to be focused around rescue of one sort or another. Further, that rescue is being focused on stabilizing the system. I believe we need to step back and examine this a bit differently.

Hegemonic Capital

We are no longer living with "capitalism" per se. Instead, we are living in an era of capital. The markets are no longer solely issues of production, resources, or even service sectors. They are capital (or financial) markets. There is a difference and an important one. Markets in the old sense had at their base certain tangible things such as a tangible product, a natural resource, or labor. The financial market does not. Money is a construct, and financial markets are largely ruled by emotion and trust (and greed).

With the progression of contemporary globalization, we have moved from an environment of national (or even regional) economies and into an era of globalized capital. Underlying modern economic globalization has been the removal of "barriers" (national controls) to trade, then services, then capital. This plan was deliberate, and nations large and small have paid huge prices for its "success."

The rewriting of the General Agreement on Tariffs and Trade (GATT) shifted power from states to corporations - or corporate powers. While the initial thrust caused dramatic changes in global labor and production, the press was on very quickly to liberalize financial and investment markets. What has been created (or evolved) is a global financial environment that has no controls or controlling institutions. There is no framework in place. No fences. No protections.

The current economic crisis, which is spiralling downward at an ever faster rate, is not a U.S. crisis, or a European crisis, or an Asian crisis, or and African or South American crisis. It is a global crisis. Across the globe, nations are trying numerous strategies to stem the bleeding. None of them are working.

Why the trillions being thrown into the breach are having virtually no effect.

The creation, or evolution, to our current situation has created a global capital market without control. Nations, individually and collectively, have largely deregulated these "markets," and have looked the other way as "exotic instruments" have been created. These exotic instruments have magnified the creation of capital investments that are "vaporware", but are honored as if they had some real basis. In fact, they are less tangible than Monopoly money, but being honored by the "full faith and credit" of nations.

Now nations are literally throwing trillions of dollars into trying to stabilize a Monopoly money crisis where non-state actors have built their own printing presses. In doing this, the "real" money is rapidly becoming very similar to the Monopoly money, but it is backed by us - the people.

I am neither an economist, nor an accountant, but the issue seems pretty straight forward. We have a global derivatives market which has been created. That "market" (which is thousands of "dollars" to funny money to the penny) is estimated to be valued at more than the entire gross domestic product of the planet. That essentially means that if we took everything - all labor, all products, and all services, and threw them into the maw of the derivatives market, we would still not break even - or fill the hole that has been created.

In attempting to stabilize the financial markets (banking and investing), we (all of the nations) are throwing real money to back Monopoly money which no nation ever printed - but all nations have guaranteed.

Suggestion 1
Close the "derivatives" and related markets. Shut them down and do not honor them. Disconnect them from the economic "system." This HAS to be a global decision and action. No one nation (or small alliance of nations) can do this on its own because the "arteries" are there in every national economy. If the whole market is not closed then there will be ongoing "collateral bleeding" through international markets and connections.

I am sure there is some consequence of this action. I have no idea what it would be. However, I am sure that this is a gangrenous limb that is poisoning the "body" and needs to be removed. It is for sure that trying to "save" this limb (or make it whole) is bleeding the rest of the world dry.

The "Stimulus" Packages
Thus far, the United States and other nations have attempted to bail out the banks and investment firms (and other corporations) largely by trying to pump money into them and to take their "toxic" assets off their hands. Some of this is considered (or is) "nationalization." That has many very nervous if not outraged. In the U.S. there are loud complaints that the effort it nothing more than "socialism." Hence, the struggle (in the U.S. and I imagine elsewhere) is to have states somehow find a balance between "saving" the system while maintaining the autonomy of private capital and corporations.

TARP I, which threw more than $300 billion to banks and investment firms without any controls or even oversight, has failed. We are told that things would have been so much worse without that injection of funds, but no one is saying what we were saved from - as the crisis spirals faster out of control. Now, the Obama administration is requesting another $850 billion in stimulus with the remaining $350 billion authorized under TARP to throw into the rescue effort. While some of those requested funds are directed towards job and infrastructure, a significant portion is going straight to where the TARP funds were directed - capital markets.

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Rowan Wolf is an activist and sociologist living in Oregon. She is the founder and principle author of Uncommon Thought Journal, and a Senior Editor for more...)

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