> I don't see apocalyptic collapse on the capitalist
> horizon.
You also told me my ideas about the world running out of oil were a crock of shit, before adopting the idea yourself while doing PR work for the American Methanol Institute. BTW, you still have not explained (you certainly didn't in your AMI paper) how the world is going to find all that methane, enough to last 1,000's of years. Hydrates are 'a myth' according to Jean Laherrere; and as for hydrogen from seawater: hmmm. I'd like to see the energy economics of that made plausible.
> Perhaps these are famous last words. But as
> the Rothschilds said, the time to buy is when there's
> blood on the streets. They meant that literally. We
> are a long way from that. It is useful to remember
> that no bourgeois parliamentary democracy has been
> overthrown in a French or Russian style manner.
Not sure what's useful or true about this. Plenty of bourgeois democrcacies have been overthrown, usually by rightwing violence tho: Weimar Germany, Italian constitutional monarchy, Chile... make yr own list. What these examples tend to show is that bourgeois democracy is a sham and if there is ever a danger of real socialists being elected to power, finance capital and its friends in the military do their toxic thing. That is the real reason why socialists cannot get elected. Unlike you, me or Doug, the downtrodden of the world are cowed into submission not only be every well-thought-out detail of their every- day lives but by everyone's deep knowledge of historical precedent, which teaches us that resistance will be met only by humiliation, torture and death of self and loved ones, unless one agrees to be bribed. That, BTW, is why socialists cannot get elected in Brazil. Isn't it and hasn't it been obvious, Doug, since the Monroe Doctrine was first announced, that socialists are not allowed to get elected in Brazil? But the day when the big swinging dicks get their comeuppance and Uncle Sam takes a nosedive into the crapper, believe me they will all with one loud voice ask for socialsm.
> A few points:
>
> 1. The Latin American debt crisis of $120 billion, if
> that number is correct, is trivial. $120 billion can
> be financed to the tune of $6 to $10 billion a year.
> That money can be found, no doubt much of it by the
> affected countries themselves. It is true that they
> don't have much control over investors' dumping their
> equities in order to cover losses in Russia. But I
> don't see anything in that number which looks
> insurmountable.
The authentic ring of pkt is heard at last on LBO. Like the dying wail of the last dodo. This and what follows comes in the class of argument which says 'we know it's awful, but there is nothing that can be done about it, these guys are just too clever'. The 'debt crisis' in Latin America and Russia alike is purely the result of those continents being plundered by US and other monopoly capitalisms and their local kleptocrat-comprador clients. It is the absolute duty of anyone with a conscience who lives in comfort on the west, ie lives off the sweat and toil of others, to register this fact in every relevant utterance, to do everything possible to support the struggles for self-emancipation of the peoples of those regions and above all not to give comfort to the oppressors by suggesting for instance that this level of debt - a mere $120bn, ie, a mere $1,000 dollars for every adult in Latin America -- in other words, a form of wholesale debt-bondage and usury, given their miserable pc incomes -- that this level of exaction is 'trivial'! Not a problem, ie insufficient! They can pay more! This is far below any level which might really produce a crisis in Wall Street! We are letting these peons off too lightly!!!
> 2. The Wall Street establishment has been more
> intelligent than members on this list give it credit
> for.
On the contrary, it is a sad reflection of the fact that this particular branch of higher primates is probably an evolutionary cul de sac, since some of its most intelligent members can be so easily bought, corrupted, and persuaded to act against the interests of their fellow primates.
> Standard ISLM analysis, whatever people may think
> of it, indicates that when the demand for money is low
> fiscal policy rather than financial policy is
> indicated. That's why the WSJ and the US gov are
> hammering for deficit spending in Japan.
What Greg is saying is that it's OK for the US to print money whenever it gets in a deflationary jam. This is the disingenuous advice the big swinging dicks dish out to little Japanese competitors: print some yen! Go for it! But they omit to add what everybody actually knows: the US is world-hegemon and we have to take its godamn greenbacks whether we want to or not, but all other countries have only 2 choices: they can print money -- and end up like Brazil or Russia. Or they can deflate and sweat, deflate and sweat, while they try to out-compete the US by producing better products cheaper -- an unequal struggle which the Germans and Japanese in particular have been engaged in since the Plaza Accords and indeed for long before. Either way the result is: the godamn Yanks end up with all the lolly. That is why people hate America (ask any Russian what s/he thinks of Clinton telling them 'no pain, no gain' this morning).
> It is quite likely that, since the redemptions are not pushing major
> firms to
> bankruptcy as they did in '87, the Fed would like to
> see some more shakeout in stocks before it announces a
> lowering of the rate.
Yeah, yeah, it's all under control, sure. The Fed would like to see a shakeout in stocks like the female teacher they took up in the shuttle would like to see what happens when you press this little red button...
> 3. I think that it's quite obvious, contrary to Mark
> Jones, that we are on the verge of major new
> technologies in the energy/transportation field. And I
> mean production possibilities. I think it likely that
> the traditional dichotomy between stationary power
> grids and the transportation system is going to be
> effaced, much the same way as computers altered the
> differences between the mechanics of calculation and
> the technicques of communication. I posted on this and
> then went on vacation, so I don't know if it made it up
> or elicited any comments.
What Greg is talking about is fuel-cells. 'On the verge of' means that it still costs 10x to make a fuel-cell automobile engine what it costs to make a gasoline engine. I was talking to a lunatic from Ford's the other day who was raving on about how they planned to sell 400m such vehicles in China and another 200m in India. Right on, brother, I told him. You do that. Pollution-free, green power, love it in California and the best of it is: we don't need no godamn Persian Gulf oil!!! Why there's methane everywhere! Chicken shit is full of the stuff; so is every garbage heap and the US is full of garbage heaps, we have enough methane to power fuel cells for a million years! Even Julian Simon was a pessimist!!! Cows fart methane, for chrissake!!!!
And in Greg's crazed scenarios, which he has palmed off on the AMI, or they on him, or it was a mutual orgy of methane-driven mind-expansion, we won't need power grids any more: when we get home from work we'll plug our Chevvy into the house ring main, and it will juice us up, and the beauty of it is that even when we are lying in bed side by side with our wives, we'll be able to hear that little engine whirring away and lulling us to sleep. Ah, cars! We love 'em, don't we?
What was that again about hydrogen from seawater, Greg?
> 4. If the DOW were to fall at 5000 P/Es would be, I
> think, in the neighborhood of 13-15 (about half of the
> average 25 for the record high). That would be a
> tremendous buy and average dividends would compare
> favorably with bank yields. Perhaps average dividends
> will fall, putting further pressure on PEs. But even
> so I doubt P/Es will hit 7 as they did in the 1970s.
Therefore, the Dow will not stop at 5000 but will fall much lower. Read my lips.
> 5. Even outstanding consumer debt in the US isn't as
> high as some apocalypse theorists would have it. There
> is a high percentage of so-called "convencience
> charging", people that pay in full each month but in
> doing so have high outstanding balances. I know,
> because I started to do it, and have gone from 0
> outstanding debt to an average of $800 to $1500 per
> month, and occasionally two or three times that. This
> is not real "outstanding debt" in the traditional sense
> of the term.
Could you possibly lend me one of your cards for a month Greg? I have a real outstanding case of traditional debt I need to solve THIS WEEK.
> 6. As for the US trade deficit, we have to consider
> that looking at a trade deficit through the eyes of a
> gold standard horror of same is really not relevant.
> The US in addition to whatever imbalance there may (or
> may not) be in goods versus services, etc., the fact is
> that there is a whole world economy, both legal and
> illegal, which functions on the US unit of currency.
What Greg means is the US is a great nation of cut-throats and thieves: it robs everybody else blind and issues them with dinky little IOU's in exchange which are only redeemable against OTHER IOU's it also and alone issues.
> The dollar is the de facto real currency of Russia. If
> the US has to export currency to run two economies at
> once you have to figure that people who are using the
> currency unit *have what they want*, an exchange
> instrument (transaction demand in standard economics),
> and that is why the dollars are not coming back in
> search of goods and services. On this and other
> matters see Eisner's book on deficits.
Translation: and we even encourage the suckers to pretend to each other that the IOU's are actually money. This trick was first invented by Genghis Khan's grandson, Kublai Khan, who when he became emperor of China took away everyone's gold and silver and issued them with rice paper banknotes instead. This worked fine for a while, but had to be supplemented by such rules for keeping social order as having everyone go to bed before 8pm every night (this is true). Also, every Chinese debtor (apart for Kublai Khan) had his name carved on a village stone, which actually only created a new form of organised crime, since all these named ones were known to each other and could network more easily, which they did. This resulted in several centuries of civil war and the collapse of the Middle Kingdom.
> All of which is to say that I am not expecting a
> revolutionary crisis. ....In every age, the
> capitalist world system has existed on a mixture of
> blood (mostly in the periphery) and grinding crisis
> mixed with prosperity in the core. Why should this be
> any different? What is amazing about this social
> system is not its fragility but its strength. And I
> *do* think that a flurry of radicals hoping for the
> millenarian "coming end" is perhaps one of the best
> "buy" indicators around, as the Rothschilds figured out
> well before me.
You'll be sobbing crocodile tears all the way to the bank, then. But what is amazing about history is the number of times this kind of complacency comes before wars and revolutions. Another thing: history is not a Ptolemaic system of cycles and epicycles, Greg. It moves on, and the wars and revolutions this incarnation of capitalism is already now producing will be different in scale and intensity from what has gone before.
Mark