Three on Economic Crisis

[Below are three ZNet sustainer commentaries by Mumia Abu-Jamal on the economic crisis.]

Behind the Money Crash
By Mumia Abu-Jamal

For millions of people, the economic crash and crisis seems almost mystical.

What happened?  Why did it happen?  How did it happen?

It seems more complex than it really is.  That’s because the corporate media is, more often than not, a contributor to confusion, rather than a source of clarity.

The media thrives on conflict, chaos and controversy.

That’s why I found in the {British} left press what I’ve never seen in the corporate media: the text of a 2002 open letter from U.S. financier, Warren Buffett to his Berkshire Hathaway shareholders.  Buffett, one of the richest people in the U.S., warned his shareholders to avoid ‘derivatives’. which he described as "time bombs, both for the parties that deal in them, and the economic system."

Buffett explained that derivatives are financial agreements for the exchange of money at some future date, which can be 20 years or more. What makes them dangerous is they’re collateralized, or guaranteed, based on often faulty reference points.  For example, derivatives may be traded saying in 10 years, GM stocks will double its 2004 value, and if it does in 2014, the instrument buyer will receive say, $10 million.  In many cases, before the contract is ripe, not a penny has changed hands, yet some companies assigned these instruments a value, recorded them on their books as assets, when in fact, they had no real value.

Remember Enron? On paper, they were rolling in dough.  In fact, however, they were rolling in paper — for, at any time, if they hit a snag, they had no real cash to cover corporate debts — it was on the books, but not in the banks.

Again, Buffett explained six years ago why these instruments should be avoided, writing to his shareholders:

The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clean. Knowledge of how dangerous they are has already permeated the electricity and gas businesses, in which the eruption of major troubles caused the use of derivatives to diminish dramatically.  Elsewhere, however, the derivatives business continues to expand unchecked. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts.*

In closing, Buffett warned, "derivatives are financial weapons of mass destruction, carrying dangers that……are potentially lethal."

{Source: Labour & Trade Union Review (No. 191: Oct. 2008), pp.16-18}

Scare Tactics
By Mumia Abu-Jamal

With the passage of the Wall St. bailout bill, a major line has been crossed in U.S. economic and political history.

The rulers can do anything, as long as they leaven it with fear.

Just like the Iraq War authorization, with enough fear Congress will roll over, and say, "Uncle."

And there was an avalanche of fear.  The corporate media sold oceans of fear and dread, just as it sold facile patriotism, the Iraq War and the so-called "War on Terror."

Using individual tales of fallen 401(k)s, or of a few firings, they successfully insinuated that unless the bailout passed, you might lose your job, or your 401(k) might turn to dust.

They ran the banner headlines of the drop of the Dow Jones Industrial Average, and scared legislators into flipping their prior no votes into yea votes.

Here’s the deal.  What we’ve seen from both major political parties is the greatest transfer of public wealth into private hands in history.  Indeed, it is privatization run amok.

It is a bailout, pure and simple, that the media and its masters want you to call a ‘rescue’, but who is rescued?

You? C’mon.

Does  a government that facilitated the loss of millions of jobs; that scuttled public education; that gave away the public treasury to Wall St. bankers; that sold a long war based on lies; that allowed millions of homeowners to fall into foreclosures, give a damn about you?

A government that cared about its people wouldn’t have led them to this disaster.

Think of it this way: the same government that fought for months to privatize social security, or in other words, to invest peoples’ retirement funds into stocks, came up with this bailout plan.

If the government was successful, some 40 million people (those 65 and over) would’ve been flat broke.  What they couldn’t do one way, they did another, for the economic hole that another trillion dollars will blow into the deficit spells danger to this project.

If you elect a government based on its rhetoric of anti-government, of deregulation, of the ‘blind hand of the market’, you get economic carnage, crony capitalism, and misery for millions.

Moreover, what you have is the privatization of the State, by its rental by private capital.

For, in both houses of Congress, in both major parties, we find pols who have received tens of thousands of dollars from Wall St.  Can anyone deny that this money donated to Congress was wasted?  (By ‘wasted’, I mean to those who made those donations — not to average Americans).

As the saying goes, ‘you get what you pay for.’

It might also be said that you get what you vote for.

{Note: Check out www.opensecrets.org for data on Congress for sale.}

Fall of the House of Capital?
By Mumia Abu-Jamal

By the time you read this the $700 billion bailout will have been old news, one of the biggest transfers of wealth in history.

But it will not heal that which ails the nation as it trips and stumbles like a drunken sailor on shore leave.

The reasons are simple.

For the problems are systemic, built into the rapacious nature of the machinery humming all around us.  The Rube Goldberg-like contraption of democratic forms at the service of the financial services industry is a bottomless maw, a gaping mouth that is never sated.

Why was there no alarm when millions of people lost their homes to foreclosures made inevitable by variable mortgage rates?  When millions lost manufacturing jobs to low paying service gigs?  When living standards crumbled, and when take home pay fell to 1973 levels?

Where was the alarm?

There was no alarm — for this was the ‘blind hand of the market’ at work, the leveling way of globalism, the new world order moving through, preparing the way for the triumph of capitalism uber alles.

Few were the politicians who gave voice to this immense social suffering. Fewer still used their power to try to assuage their pain, for they too were drunk on the wine of globalism.

But when the ripples spread upwards, from the foreclosed homes to the foreclosing banks -and from the banks to investment houses, Congress stirred from their drunken stupor, and rang alarm bells loudest.

"It’s an economic 9/11!", some bellowed; "It’s a financial tsunami!", yelled others.

When Americans were hoodwinked into ruinous sub-prime loans, and millions were faced with foreclosures, where was the alarm?

More importantly, where was the help for those who were endangered?

Nowhere.  Nowhere.

If they helped them the present economic crisis would’ve been mitigated.

Instead, we’re in a situation where a scam artist sets up shop in a street-corner, playing a fraudulent 3-card monty hustle, and along comes a cop.  The cop, instead of rousting the scam artist, rifles the pockets of every passerby, and delivers the stolen loot to the scammer.

The scam artist, of course, is the financial investment houses; the cop, of course, is Congress — and you are the passerby, hustled and robbed by both of them.

Karl Marx and Friedrich Engels wrote, 160 years ago, that the State was but the executive for capitalist.  After what we are all seeing, who can doubt it?

The Empire is crumbling.

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