Yesterday was quite a day, with lots of sound and fury signifying in the end very little other than reinforcement of what we already know about this busted system.
The biggest headline among several big stories was the Dow’s temporary plunge almost 1000 points followed by an equally dramatic recovery of much of the lost position. The market still ended up down 347 points. The media’s all aflutter with descriptions of this which hardly reach the level of explanations. The most absurd way of looking at it is to blame it on an alleged trader error. Even if this discrete “error” actually happened at all, it’s still not an accident by any means.
There are three structural explanations here. One regards the actual mechanism of HFT trading. It’s largely based on pro-cyclical computer algorithms which respond to stimuli by accelerating the trend of those stimuli. So if a large dip occurs, the computers automatically start selling off in compliance with the dip, thereby exacerbating it. This is characteristic of our whole fragile, interdependent system. At every level, from the way our desperation to keep the oil flowing at the same rate through ever more tenuous extraction lines increases the chances of catastrophic failures like the Gulf blowout (where there are reports that the situation is far worse than BP and the administration are allowing to be made public) to the way the Bailout keeps requiring ever more thin, expansive band-aids to cover the rapidly expanding cracks in the Tower walls (I’ll get to Greece in a moment), to the minute-to-minute falls and surges of the computer trading lemmings, everywhere we’ve become critically exposed, critically vulnerable, utterly fragile.
The other explanation of the stock lurch is the market’s political terrorism function. Throughout the crisis the market has always stood ready to punish any sign of the government acting in the public interest (for example rejecting the TARP, or contemplating Bernanke’s rejection, or the SEC’s suit against Goldman), or even looking irresolute in its will to the infinite Bailout (letting Lehman go down, or when early in 2009 Geithner looked tentative in laying out the administration’s plan to aggressively further the Bailout). So yesterday there was lots of buzz about Congress possibly “doing something” for once. The market had the attitude that this must be punished, and so it was. Not that I think Brown-Kaufmann would have passed, or that we’d be getting a full audit plan, if yesterday’s crash hadn’t occurred. But it provided reinforcement for the general Capitol Hill attitude that Congress must never do anything to upset Wall Street or the markets, and it’s that attitude which causes these attempts to be defeated, even when they seem buoyed by such a surge of public enthusiasm that it seems to penetrate even the hermetic vaults of the corporatist Congress. I’ll get to Congress in a minute.
(I’m not saying there’s a specific cabal on Wall Street which decrees when the market must tank. There doesn’t have to be – all the big players understand that signs of government wobbling need to be punished with a sell order. Many of them probably don’t even consciously see it as punishment. It’s simple ideology that government must be flamboyantly pro-bank, and that wherever this enthusiasm seems to be flagging, that’s a bad sign, and it’s probably best to start liquidating positions to take profits now. The aggregate effect is terrorist extortion. The market holds a gun to the head of the country. That’s the way they want us to see things, and for as long as we continue to cave in and not call the bluff, we’ll remain under the market’s thumb. [If you want to read a disgusting example of this ideology, the mindset of these cretins, check this out.])
Third, the markets must become ever more jittery as the Zombie Debt Monster becomes harder and harder to keep upright and in motion. Everybody knows it must collapse once and for all, which could happen at any time, so everyone who’s riding what they know is a phony, purely Bailout-driven rally looks anxiously to every moment wondering when will be the right moment to sell once and for all. Greece, the Gulf of Mexico, and even the sham Congress are indicators which render the moment full of portent. Anything can trigger a sell-off. And someday soon the terminal sell-off must commence.
As for public enthusiasm and the isolation of Congress, by yesterday there did seem to be such a surge and such a penetration. While I still don’t expect a real bill, I’ll grant that yesterday they put on the best show yet. Senator Feingold now proclaims that he’ll join a filibuster of any sham bill. (Of course, I’ll believe that when I see it.) A few days ago Brown-Kaufmann looked like it wouldn’t be allowed to come up for a vote at all. Yesterday, in what I suppose is mild progress, it did get a vote. It was still resoundingly defeated, with the No votes including half the Democrats. So there the show was a little better than expected, but it was still all show.
Meanwhile Bernie Sanders seems to have made a deal which will greatly cut back the scope of his proposed Audit the Fed amendment but preserve one good part. The deal would direct the GAO to conduct a one time only audit of the existing and previous Fed lending facilities by December, at which time we’d learn who was handed trillions in public money. This would be good to know, but the deal meanwhile guts the plans to audit the Fed’s embezzlement going forward. It would leave the existing politicization of the FOMC sacrosanct and unaccountable. So if this ends up being the deal, we’d end up with a mostly gutted audit. It would be better than nothing, but still a defeat. That’s if this ends up being the deal. They’re not expecting to vote on it till next week, so that’s plenty of time for the deal to be altered further, or for Sanders to cave in completely.
I’ll conclude with Greece, which is currently the raging battlefront where the Bailout’s vanguard is facing stiffening resistance, both politically and from economic reality. The Greek parliament voted Yes to the economic immolation of the people, in direct flouting of the people’s will as expressed by the rage in the streets. This is reminiscent of the similarly rogue US Congress voting Yes on the TARP, though of course we cannot compare the resolve of American protest. (Pro-bank commentators keep saying protest is common in Greece, as if that’s a bad thing which somehow invalidates the protests of today. On the contrary, that’s a barometer of a far more vigorous populace among whom the spirit of democracy is not completely quenched. Chronic street protest is one of the correct, rational, virtuous responses to chronic kleptocracy and creeping police statism at the top. To say that in general Greeks protest far more than Americans does not condemn the Greeks, but the Americans. To imply the opposite is simply another way of alleging that the power structure is truthful and sound and right and should be obeyed.) Next up will be the vote in Germany, where the people are also hostile to the Bailout.
A ”Greek” bailout, like every other specific manifestation of the Bailout, is simply another bailout for the big banks, in this case the German and French banks who hold the largest part of the debt. I’ll again link to this graphic which lays out the debt relations. The entire Bailout is nothing but:
1. the now permanent looting expedition of the bank rackets, and
2. the only way the whole structure of the globalized debt economy, which is one big zombie, can be propped up and ambulated at all.
Every iteration of the Bailout serves only these two goals.
So it follows in parallel with these two goals that we the non-rich are:
1. slated to be the permanent victims and slave stock for this permanent looting, and
2. the only way to save ourselves to arrest the progress of the Bailout so that the whole zombie collapses.
The structure is existentially unsustainable and must collapse of its own weight, but how long this will take is unknown. We don’t know to what extent political resistance can accelerate the process, or even to what extent political resistance is dialectically hardwired into the unsustainability function itself.
Either way, political resistance is helpful and morally necessary.
So that’s a brief recap. Despite some political theater in Congress and some real action in Greece, the Bailout is still hacking its way forward and reform is still stalled. The structural fraudulence of the system is being physically embodied in the oil eruption of the Gulf, economically and politically embodied in the Bailout’s torturous progress in the Eurozone. Even in America, little by little things are getting tougher for them.
The day ended as another loss for humanity, but we put up a slightly better fight this time, while we continue to receive indications that the planet and history itself are weighing in on our side.
No matter what happens in the short run, in the end the Earth will always win out over the petty insults of a few of its ugliest creatures. The Bailout will fail, and the kleptocracy will perish.