lbo-talk-digest V1 #1023

J. Barkley Rosser, Jr. rosserjb at
Wed Feb 24 12:31:15 PST 1999


This list used to have more discussion of economics and finance, so much so that Doug was unhappy. So, then he started a thread/seminar on the writings of Judith Butler, theorist of the lesbian phallus and other brilliant stuff. The result is what you see today... Barkley Rosser -----Original Message----- From: James Wilson <James_Wilson at> To: lbo-talk at <lbo-talk at> Cc: lbo-talk-digest at <lbo-talk-digest at> Date: Wednesday, February 24, 1999 2:58 PM Subject: Re: lbo-talk-digest V1 #1023

>Dear LBO-talk participants,
>As a newbie who has just joined this listserve after reading Doug
>Henwood's excellent book "Wall Street", I'm a bit surprised to find that
>it doesn't seem to involve much discussion of business or economic issues
>per se, and has drifted to topics\s as far afield as good/bad television
>programs and women's body images... all valid and interesting topics, but
>not quite what I had in mind after reading "Wall Street"...
>Rather than just bitch about it, I'm going to try to start the ball
>rolling in a different direction...I'm posting a short article which I
>just wrote for my local ---ie, St. Catharines Ontario --- Unitarian
>fellowship's newsletter. As president of that august body, one of my
>duties is to write a monthly column.
>I invite your comments- good,bad or ugly!
>James Wilson
>My dear fellow Unitarians,
>I have been writing and re-writing the following column for the past
>several months. Well, there’s no time like the present, so prudence be
>damned, here goes...
>As many of you know, I have become interested in economic issues over the
>past few years. My study of the financial system underpinning our modern
>world’s economic and political system has led me to become a thorough
>non-believer in the beliefs and rituals of the new religion “Free Market
>Fundamentalism”. Examining carefully the dogma of our modern-day popes,
>cardinals and priests (ie Wall Street bigshots, central bankers,
>neo-liberal thinktanks, the IMF and World Bank, corporate CEO’s,
>economists, paid-off politicians, etc. etc.) what we see is a fabric of
>half-truths and outright lies, chiefly useful for weaving into lovely
>clothing to dress up the gods of greed and avarice.
>You have probably heard about the depression-style conditions the
>Russians, Indonesians, Brazilians, Mexicans, and now many of our Canadian
>hog and grain farmers are now enduring. But somehow the worshippers of the
>Savage Market God have managed to evade all responsibility for what
>radical University of Ottawa economist Michel Chossudovsky has called “the
>globalization of poverty”. Considerable resources have been used to
>persuade us that prosperity for all lies just around the corner --- or at
>least, it might if only that damned government would stop meddling.
>Well, here we go off the deep end: I am going to make a rather dire
>prediction: sometime in the year 1999, I believe that the Western world
>will finally reap what has been sown for the past ten or twenty years, the
>Crash of ’99 -- which will the 1929 stock market crash look like a Sunday
>school picnic. What the hell, I will even go so far as to predict that
>this will happen in October, traditional market mayhem season.
>How can I justify this dark apocalyptic vision? Has your president gone
>bonkers? Well, time will tell. But here is my reasoning.
>First of all, many of the world’s major debtor nations are reaching the
>point, after years of austerity, sacrifices and belt-tightening, where
>they just won’t be able to stay on the debt treadmill any longer, and will
>simply have to default, just as Russia is in the process of doing. This
>will certainly wipe billions of dollars off of Wall Street. I’m thinking
>here especially of Mexico, the world’s greatest debtor nation. (Remember
>all the great things that NAFTA was supposedly going to do for Mexico?)
>Secondly, if you read John Kenneth Galbraith’s book “The Great Crash”,
>available at the public library, you’ll recognize a lot of today’s events
>-- but with one major difference. Hardly anyone in the twenties was
>expecting a crash. Today, just about all the big shots, including the head
>of the U.S. Federal Reserve Bank, are plainly worried about one. They
>don’t share these fears boldly with the general public, but if you listen
>closely, you will hear allusions to them sotto voce.
>Banks and other financial institutions have covertly acquired exclusive
>title to create more and more money through lending and other mechanisms.
>So, there are too many dollars (and other financial instruments) for the
>real goods and services available. The typical figures cited: $72 are
>traded in the “financial” economy for every $1 used to buy and sell real
>goods and services. To watch the TV ads lately, you’d almost believe that
>mutual funds were the major national product of both Canada and the United
>States. What they really are is casino gambling having little or nothing
>to do with investment in real goods or services.
>We in the developed world now have a “bubble economy” where the tacit
>policy of both our large financial interests (ie, our unelected
>government) and our elected government is keep that stock market going
>ever higher. And what is making the stock market go ever higher?
>Technological innovation? A rising worldwide standard of living? Better
>health, education and housing? A higher price to earnings (P/E) ratio for
>stocks? No, no, no and no.
>Merger-mania, “downsizing”, systematic, planned wipeout of the currencies
>of many of the world’s smaller nations, global piratization of public
>assets. Like a cancerous growth upon a healthy organism, the casino
>economy is growing at a tremendous rate while sucking away at the
>lifeblood of its host, the productive “real” economy .
>For example, a recent study by the Vanier Institute of the Family show
>that ordinary Canadians are facing record debt (“Right now, families are
>not saving one red cent”) with real family incomes virtually flat since
>1980. Two spouses now typically work to make the same salary that one used
>to bring in.
>If and when there’s a sudden loss of confidence, then all the players will
>rush to cash in their chips at the same time to purchase real goods and
>services. As if 72 people all tried to sit down in the same chair.
>If my prediction is right, we are now living in the last days of Pompeii.
>What does one do in such circumstances? Well, you try to cash in your
>chips before the high rollers do; withdraw all your money from the bank,
>perhaps converting it into U.S. dollars or gold, and then bury it in a jar
>and wait.
>Time will tell, and you’ll soon have the chance to either deride Wilson as
>a dangerous crank, or praise his foresight and rue the fact that you did
>not follow his wise advice.
>James Wilson

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