From Each According to His Inability, To Each According to His Greed
Politics / Social Issues Jul 12, 2012 - 04:53 AM GMT
I think the one recurring question that has been on everyone's minds since at least 2008-09 is - what will the government do? We all know what the large private corporations and high-level bankers are going to do - they are going to lie, cheat, scheme and steal their way into whatever forms of wealth and control they can get their grubby little hands on (see the Libor scandal for the most recent example). But then we must ask whether the government is going to help them do those things and how exactly they are going to help. After four painful years of betrayal, the answer to the first part of that question seems to be a resounding YES.
And with political partisanship propaganda filtering through the Western populace in time for various elections, a lot of people will look at these government policies and scream "SOCIALISM" or "COMMUNISM" with a growing sense of frustration and anger. Indeed, there has been no other time in recent history in which central authorities have been so actively involved in the affairs of the private sector. But, if I remember correctly, the foundational tenet of central planning in a Communist system is, "from each according to his ability, to each according to his need" - the economic version of the Golden Rule. Is that what we see happening here?
That's not what I see happening... I see the central authorities bending over backwards to take what people can no longer afford to give and giving it to those who are never satisfied with what they have. That's the entire point of low interest rate policy, quantitative easing, central bank currency swaps, discount loans to banks, public loan guarantees, etc. They either directly hand out taxpayer money to the banks (and their large corporate beneficiaries) in exchange for worthless collateral, or they coerce workers and savers to put their wealth into the private sector in the form of consumer spending and investments. They also coerce debtors to remain in debt and continue running on the treadmill for fear that it slows down and they fall off the back, as Nicole would say.
This dynamic is the most potent in the Eurozone right now, where banks are starting to get bailed out by their governments en masse, AGAIN, and the struggling masses are forced to forgo public salaries/pensions, health benefits, etc. and also pay higher taxes. We see it all to clearly in Spain, where the Spanish government is currently at the forefront of bailing out reckless bankers and implementing austerity, while the Spanish population is already suffering upwards of 25% unemployment. However, don't be fooled for a second into thinking that the same dynamic isn't happening right here and right now in the U.S.
In fact, a headline from Reuters today, which probably comes off to most people as a "positive" economic development, actually confirms that the wealth extraction process in America continues on even in the absence of QE3, and is beginning to reach extreme levels.
U.S. Bankruptcies On Pace To Fall To Pre-Crisis Levels
July 5 (Reuters) - The number of U.S. businesses and consumers filing for bankruptcy fell 14 percent in the first half of 2012 and could end the year at the lowest level since before the 2008 financial crisis, according to data released on Thursday.
New bankruptcy filings fell to 632,130 in the first six months of the year compared to the same period last year, according to Epiq Systems Inc, which manages documents and claims for companies in bankruptcy.
The number of businesses filing for bankruptcy dropped 22 percent to 30,946 and the number of consumers seeking court protection from creditors fell 13 percent to 601,184.
"We are on pace for perhaps the lowest total new bankruptcies since before the financial crisis in 2008," said Samuel Gerdano, executive director of the American Bankruptcy Institute, which jointly released the report with Epiq.
Gerdano attributed the decline to low interest rates, which have been kept at rock-bottom levels since the financial crisis by the U.S. Federal Reserve.
Despite the drop in filings, there have been several large bankruptcies this year, including photography icon Eastman Kodak Co, textbook publisher Houghton Mifflin Harcourt Publishers Inc, and Hostess Brands Inc, the maker of Wonder Bread and Twinkies.
The first question we should be asking here is who benefits from low interest rates that prevent businesses and consumers from filing for bankruptcy and discharging their debts? Yep, you guessed it - the same people who benefit from every other policy enacted by central authorities. As long as there remains wealth to be extracted from people who have mortgages, car loans, business loans, student loans, credit card debt, etc., the government will help the private banks do just that. The bankruptcy process is really the closest Americans will ever come to having a "debt jubilee" over the next decade, and that's the one thing that is progressively slowing down, becoming sclerotic and growing much too expensive for the little guys.
A friend of mine works for a law firm that handles corporate and individual bankruptcies in Northern Virginia, and he also confirmed that business had slowed down for the firm lately. He made it clear that a primary reason was the fact that it simply wasn't worth it for potential clients to file anymore - they didn't have nearly enough equity left in their assets or dischargeable debt to justify paying the lawyers' fees and court costs associated with a bankruptcy filing. Basically, they have already been squeezed out of so much wealth that they have been priced out of the bankruptcy process. It is really a sad state of affairs...
"From each according to his inability, to each according to his greed"
Make no mistake, that is the golden rule of our age. And when central governments around the world decide to nationalize their private industries through legislative dictate, it will STILL be the motto we are forced to live by, because only a select group of elites will benefit from the decisions of those central planners. No, such a paradigm cannot described as Socialism or Communism. What is happening is so unprecedented and radical that our current language barely has the words to describe it. Perhaps we can call it Fascism on Steroids and in Hyperdrive... or something like that.
But regardless of what we choose to call it, we must remember that 99%+ of humanity occupies the same boat here - there is no use trying to scapegoat one segment over another through the political process. Those types of populist calls will start coming in strong and fast, but we must resist the urge to validate them ourselves. The political machinations of nation-states are all but dead now; only the natural sovereignty of individuals and their local communities remain.
Ashvin Pandurangi, third year law student at George Mason University
Website: http://theautomaticearth.com (provides unique analysis of economics, finance, politics and social dynamics in the context of Complexity Theory)
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