Monday, June 18, 2007

Signs of the Economic Apocalypse, 6-18-07

From Signs of the Times:

Gold closed at 658.70 dollars an ounce Friday, up 1.3% from $650.30 at the close of the previous Friday. The dollar closed at 0.7469 euros Friday, down 0.1% from 0.7478 at the previous week’s close. That put the euro at 1.3388 dollars compared to 1.3373 the Friday before. Gold in euros would be 492.01 an ounce, up 1.2% from 486.28 for the week. Oil closed at 68.00 dollars a barrel Friday, up 5.0% from $64.76 for the week. Oil in euros would be 50.79 euros a barrel, up 4.9% from 48.43 for the week. The gold/oil ratio closed at 9.69 Friday, down 3.6% from 10.04 at the close of the previous Friday. In U.S. stocks, the Dow closed at 13,639.48 Friday, up 1.6% from 13,424.39 at the close of the week before. The NASDAQ closed at 2,626.71 Friday, up 2.1% from 2,573.54 for the week. In U.S. interest rates, the yield on the ten-year U.S. Treasury note closed at 5.17%, up six basis points from 5.11 at the end of the previous week.

U.S. interest rates continued to climb and the price of oil jumped 5% last week. U.S. stocks rallied in the second half of the week, with the Dow ending up 1.6% on better than expected inflation news. The so-called “core” inflation rate (which doesn’t include energy prices) only rose 0.1% rather than the expected 0.2%. But overall prices rose faster than they have in 20 months in May. The hope of investors is that the wave of low-cost labor will offset higher energy prices.
Stocks surge, Dow jumps almost 86 points

Tim Paradis, AP Business Writer
June 16, 2007

NEW YORK - Wall Street barreled higher again Friday after the week's most anticipated economic reading indicated that inflation excluding the price of gas remained tepid last month, easing some concerns that have jolted stock and bond markets in recent sessions.

The Dow Jones industrial average in the past three days has surged more than 344 points, the biggest three-day point gain since November 2004. The blue-chip index is now less than 40 points below its record close reached June 4.

The three major stock indexes finished the week higher, even as Friday's consumer price index showed prices rose at the fastest pace in 20 months in May as the cost of gas jumped. Investors were enthusiastic that the core CPI, which excludes food and energy prices, rose 0.1 percent. The figure, which the inflation-wary Federal Reserve watches closely, was below the 0.2 percent increase Wall Street expected.

The yield on the benchmark 10-year Treasury note fell to 5.16 percent Friday from 5.23 percent late Thursday after release of the CPI report helped ease concerns that the Fed might raise interest rates this year.

The notion of a rate hike gained traction last week when inflation concerns sent the yield on the 10-year note above 5 percent for the first time since last summer. Subsequent spikes in bond yields, which move in the opposite direction as prices, roiled stock markets last week and early this week.

"Today's numbers showed us that the little spook we had last week and earlier this week was misplaced," said Rob Lutts, president and chief investment officer at Cabot Money Management Inc.

The Dow jumped 85.76, or 0.63 percent, to 13,639.48.

Broader stock indicators also rose Friday. The Standard & Poor's 500 index rose 9.94, or 0.65 percent, to 1,532.91, moving near its record close of 1,539.18, hit June 4.

The Nasdaq composite index, still well off its record levels reached during the dot-com boom, rose 27.30, or 1.05 percent, to 2,626.71.

For the week, the Dow rose 1.60 percent, the S&P 500 index rose 1.67 percent, and the Nasdaq composite index gained 2.07 percent. The S&P 500 and the Nasdaq more than offset their losses of last week, while the Dow regained nearly all the ground it had lost.

The dollar was mixed against other major currencies Friday, while gold prices rose.

Lutts contended that concerns about inflation have been overblown and that increased trade and further intertwining of world economies will stave off major spikes in prices.

"What you're getting is a contribution of hundreds of millions of lower-cost workers coming into our economy. It's very positive for all economic activity," Lutts said…

How nice for all those investors, those who own. For those of us who work, the “hundreds of millions of lower cost workers” mean that our incomes will continue to drop. More and more of our energy will be sucked into the system. What will be left? I came across a couple of random passages last week that highlight the issue. First this from Salon’s advice columnist, Cary Tennis:
I was a very naive young man when I left school in my early 20s. The first thing I noticed when I began working was that the workplace was profoundly undemocratic. If I hadn't been so naive perhaps it would not have shocked me, but it did shock me, for I realized that people outside of the academic world spend nearly all their productive time working, and if they are not working in a democratic setting then they are not practicing democracy in the most important arena of their lives, and so, for all practical purposes, they are not living in a democracy. They are living under authoritarian rule. They vote about large issues outside of the workplace, true, but in their daily lives they have no vote. They have no vote over who will lead them in the office or what the rules will be under which they labor.

The people who actually rule their daily lives are called "bosses." True, one is free to quit. But wherever one goes, there is another boss who is not elected and who is not subject to the will of those he or she rules over.

Yes, yes, I was naive. But this is how I experienced work -- as a shocking example of authoritarianism.

I also found that work was really tiring, and that people after work did not have the energy to work on their projects. This too shocked me. Whatever art or writing or sports they might be doing, they let these things go, because they were tired. So I saw a nation of people whose energies were being wasted.

This sounds sillier and more naive all the time. And yet it was my experience.
So I thought, not me, that will not happen to me. I will work but I will not allow it to tire me out. I will write, and make music and live my life, even though I am working in an authoritarian organization in the daytime.

But I did not have the strength and endurance to do so. I lost the battle. I took refuge in addiction, so shameful was my failure to be an artist in America and also a worker in America.

So I do harbor a good bit of rage against the system. I think that many of us live terrible lives in the workplaces and offices of America -- terrible lives because we do not rule over our own conditions, we do not elect our own workplace leaders, we do not decide our own workplace issues, and we do not do the work that is most suitable to us, the work at which we would be most brilliant and productive.

Instead, we live like slaves.

I know that may sound crazy and naive, but it is how I feel. I feel that far too many of us live like slaves, and I do not understand why that should be so in a country in which we are supposed to be free to govern ourselves. It seems to me that if we are to govern ourselves we should govern the conditions under which we labor for survival.

Is the draining of energy away from creative pursuits an accident? Was this always the case? Coincidentally, I was also reading the memoirs of a 1960s music producer, Joe Boyd. Boyd concluded the book with some thoughts on the sixties ferment and the economic situation that made it possible, for better or worse:
The atmosphere in which music flourished then had a lot to do with economics. It was a time of unprecedented prosperity. People are supposedly wealthier now, yet most feel they haven’t enough money and time is at an even greater premium. The prediction that our biggest dilemma in the new millennium would be how to use the endless hours of leisure time freed up by computers has proved to be futurology’s least amusing joke. In the sixties, we had surpluses of both money and time.

Friends of mine lived comfortably in Greenwich Village, Harvard Square, Bayswater, Santa Monica and on the Left Bank and were, by current standards, broke. Yet they survived easily on occasional coffee-house gigs or part-time work. Today, urbanites must feverishly maximize their economic potential just to maintain a small flat in Hoboken, Somerville, Hackney, Korea Town or Belleville. The economy of the sixties cut us a lot of slack, leaving time to travel, take drugs, write songs and rethink the universe. There was a feeling that nothing was nailed down, that an assumption held was worth challenging. The meek regularly took on the mighty and often won—or at least drew. Debt-free students with time on their hands forced the Pentagon to stop using drafted American kids as cannon fodder and altered the political landscape of France.

The tightening of the fiscal screws that begain with the 1973 oil crisis may not have been a conspiracy to rein in this dangerous laxness, but it has certainly worked out to the advantage of the powerful. Ever since, prices have ratcheted upwards in relation to hours worked and the results of this squeeze can be seen everywhere. Protesters today seem like peasants outside the castle gates compared to the fiercely determined and unified crowds I joined in the sixties. Our confidence grew out of a feeling that large sections of the population—and the media—were with us and from what we saw as the inexorable power of our music and our convictions. In our glorious optimism, we believed that ‘when the mode of music changes, the walls of the city shake.’ And we achieved a great deal before the authorities figured out how to capitalize on our self-destructiveness. Right-wing commentators still spit with anger when they contemplate how fundamentally the sixties altered society. (Joe Boyd, White Bicycles: Making Music in the 1960s, London: Serpent’s Tail, 2006, pp. 267-8.)

The whole thing actually was a conspiracy, and we can put names to it. William Simon and Nelson Rockefeller, just to name two. William Simon was Treasury Secretary under Richard Nixon. Simon resented the fact that the capitalist system funded artists and academics who opposed capitalist values. He wasn’t alone in thinking that back in the late sixties and early seventies, but Simon did something about it. He began a program of funding right wing thought and policy proposals, most of which have been implemented in the last three decades. Here’s Bill Moyers:

It is widely accepted in Washington today that there is nothing wrong with a democracy dominated by the people with money. But of course there is. Money has democracy in a stranglehold and is suffocating it…

The rich have the right to buy more homes than anyone else. They have the right to buy more cars, more clothes, or more vacations than anyone else. But they don't have the right to buy more democracy than anyone else.

I know: This sounds very much like a call for class war. But the class war was declared a generation ago, in a powerful polemic by a wealthy right-winger, William Simon, who was soon to be Secretary of the Treasury. By the end of the '70s, corporate America had begun a stealthy assault on the rest of our society and the principles of our democracy. Looking backward, it all seems so clear that we wonder how we could have ignored the warning signs at the time.

What has been happening to the middle and working classes is not the result of Adam Smith's invisible hand but the direct consequence of corporate activism, intellectual collusion, the rise of a religious orthodoxy that has made an idol of wealth and power, and a host of political decisions favoring the powerful monied interests who were determined to get back the privileges they had lost with the Depression and the New Deal. They set out to trash the social contract; to cut workforces and their wages; to scour the globe in search of cheap labor; and to shred the social safety net that was supposed to protect people from hardships beyond their control. Business Week put it bluntly: "Some people will obviously have to do with less….It will be a bitter pill for many Americans to swallow the idea of doing with less so that big business can have more."

To create the intellectual framework for this revolution in public policy, they funded conservative think tanks - the Heritage Foundation, the Hoover Institution, and the American Enterprise Institute - that churned out study after study advocating their agenda.

To put political muscle behind these ideas, they created a formidable political machine. Thomas Edsall of The Washington Post, one of the few journalists to cover the issues of class, wrote: "During the 1970s, business refined its ability to act as a class, submerging competitive instincts in favor of joint, cooperative action in the legislative area." Big business political action committees flooded the political arena with a deluge of dollars. And they built alliances with the Religious Right - Jerry Falwell's Moral Majority and Pat Robertson's Christian Coalition - who happily contrived a cultural war as a smokescreen to hide the economic plunder of the very people who were enlisted as foot soldiers in the war.

And they won. Warren Buffett, one of the richest men in America and the savviest investor of them all, put it this way: "If there was a class war, my class won." Well, there was, Mr. Buffett, and as a recent headline in The Washington Post proclaimed: ‘Business Wins With Bush."

Look at the spoils of victory: Over the past three years, they've pushed through $2 trillion dollars in tax cuts. More than half of the benefits are going to the wealthiest 1 percent. You could call it trickle-down economics, except that the only thing that trickled down was a sea of red ink in our state and local governments, forcing them to cut services and raise taxes on middle class working America.

Now the Congressional Budget Office forecasts deficits totaling $2.75 trillion over the next 10 years. These deficits have been part of their strategy. The late Sen. Daniel Patrick Moynihan tried to warn us, when he predicted that President Reagan's real strategy was to force the government to cut domestic social programs by fostering federal deficits of historic dimensions. President Reagan's own budget director, David Stockman, admitted as much. Now the leading right-wing political strategist, Grover Norquist, says the goal is to "starve the beast" - with trillions of dollars in deficits resulting from trillions of dollars in tax cuts, until the U.S. government is so anemic and anorexic it can be drowned in the bathtub.

Take note: The corporate conservatives and their allies in the political and Religious Right are achieving a vast transformation of American life that only they understand because they are its advocates, its architects, and its beneficiaries. In creating the greatest economic inequality in the advanced world, they have saddled our nation, our states, and our cities and counties with structural deficits that will last until our children's children are ready for retirement; and they are systematically stripping government of all its functions except rewarding the rich and waging war.

And, yes, they are proud of what they have done to our economy and our society. If instead of producing a news magazine I was writing for Saturday Night Live, I couldn't have made up the things that this crew in Washington have been saying. The president's chief economic adviser says shipping technical and professional jobs overseas is good for the economy. The president's Council of Economic Advisers reports that hamburger chefs in fast food restaurants can be considered manufacturing workers. The president's labor secretary says it doesn't matter if job growth has stalled because "the stock market is the ultimate arbiter." And the president's Federal Reserve chair says that the tax cuts may force cutbacks in Social Security - but hey, we should make the tax cuts permanent anyway. You just can't make this stuff up. You have to hear it to believe it. This may be the first class war in history where the victims will die laughing.

But what they are doing to middle class and working Americans and the poor - and to the workings of American democracy - is no laughing matter. It calls for righteous indignation and action. Otherwise our democracy will degenerate into a shell of itself in which the privileged and the powerful sustain their own way of life at the expense of others and the United States becomes another Latin America with a small crust of the rich at the top governing a nation of serfs.

And this was all done by weakening labor unions in the developed world and killing labor organizers in the poor countries. Cheap labor in the poor countries and debt slaves in the rich countries. The racking up of huge structural deficits enriched the corporations and their owners and will impoverish everyone else. And it was all planned. In the following piece about Nelson Rockefeller from 1975, written by the well-known journalist Robert Scheer, we can see the Rockefellers’ hands on the dial turning it back in another direction. The essay, “Nelson Rockefeller Takes Care of Everybody,” can be found in a collection of Scheer’s work called Thinking Tuna Fish and Talking Death: Essays on the Pornography of Power (New York, Hill and Wang, 1988). Scheer, at the time a well-known leftist journalist, was allowed to spend several weeks following Nelson Rockefeller around. He describes a typical day hanging with Rockefeller:

Once we stopped to have cocktails with the entire Supreme Court, another afternoon it was an hour with the Empress and the Shah of Iran, and on a third occasion Rocky spent a relaxing evening at the Kennedy center with Nancy and Henry Kissinger. In the process, I kept finding myself squeezed up against a lot of the people whom I had spent most of my adult life demonstrating against. They are not a bad bunch of people to have hors d’oeuvres with, if you can forget things like the Shah’s secret police or Attica. But I came away from all this with no doubts at all that America has a ruling class and that it gets along quite smoothly with its counterparts abroad.

Ironically, I had just published a book (America After Nixon) on the power of the top multinational corporations and the ways they run this country. The day I was trying to get on the Rockefeller plane, Business Week had just come out with a long, serious review. Although the reviewer considered me a Marxist, he said my main thesis about the crisis of corporate power was valid. As I stood in Morrow’s office, I looked down on his desk and saw my picture and the review staring up at me. My immediate thought was “Damn, it’s all over and the Secret Service is going to hustle my ass out of here in two minutes.”

But it was just the opposite. Rockefeller greeted me with “Hey fellow, I see ya got a best-seller on your hands. Looks like a really interesting book.” Since the main point of my book, which was hardly a best-seller, is that people like the Rockefellers pretty much run this country at the expense of the rest of us, I was perplexed. But after getting to know the man, I came to understand that Rockefeller implicitly believes in the Marxist analysis of economic classes and struggle—he’s just on the other side...

Rockefeller: I’m a great believer in planning.

Scheer: What kind of planning?

Rockefeller: Economic, social, political, military, total world planning.

Scheer: Does the question of class enter into this at all?

Rockefeller: Not for me.

I asked him when we were on that plane ride about any possible conflicts between the needs of the multinational corporations and labor, and he said there were none: “My feeling is that that segment [labor] is terribly important, but they’re going to be taken care of if our economic system works, which is what I was talking to these guys about—we’re hobbling the economic system by accelerating social objectives.

The “guys” that he had been talking with were Arthur Burns, head of the Federal Reserve Board, and Alan Greenspan, the President’s top economic advisor.”

…I knew something important must be happening, because as I crossed the lobby with Morrow, he suddenly said, “Oh, there’s David. Hi, David, this is Bob Scheer. Bob, this is David Rockefeller and his wife, Margaret.”

David was in a golfing getup and was very relaxed and friendly, as was his wife, who wanted to know if Nelson’s wife, Happy, had gotten in yet. Within the next half hour I saw Thomas Murphy, chairman of General Motors, and Edgar Speer, head of U.S. Steel.

It turned out that we had flown down to one of the very important quarterly meetings of the Business Council, a group of the country’s to two hundred industrialists and bankers. Rockefeller closeted himself with some of the leaders to go over his speech for that night. I wandered the lobby in a daze. After fifteen years of doubts, college debates with professors, and confusion about whether America really has a ruling class, I had suddenly found myself right smack in the middle of it.” (Scheer, op cit., pp. 200-2)

Rockefeller then addressed the group after dinner:
“I enjoy this opportunity because, frankly, ladies and gentlemen, I feel that those of you in this room symbolize, really, the essence of what our country stands for… Now we find ourselves in a situation in which many of these values are challenged as never before… No group knows this better than you, because you men and women—so many of you representing much-maligned multinational corporations… we, as Americans, should be so grateful that your ingenuity and your imagination and your drive has seen the opportunities that existed in this world.” (Scheer, pp. 202-3)

On the plane ride back, Scheer asked Rockefeller about his brother David. He said,

“Well, David is concerned with the world, he’s the banker, so he has to take care of the global problems, and I started with the domestic—how to build domestic consensus for what needs to be done.” (Scheer, p. 203)

…There is no question but that in terms of the current planning within the executive branch of government, Gerald Ford is a bystander—a small-town politician—and that Rockefeller’s old club is running things. It is certainly spinning the big visions about where things should go in this country over the next forty years and making decisions that will very dramatically affect our world. And we are not, in any sense, participating in those decisions.

Rockefeller believes that American corporate capitalism is at a point of crisis in the world, and he is quite frank in stating that the working out of concrete plans for the survival of that system is the main contribution that he must make in what remains of his life… He told me: “A lot of people don’t want to be bothered or upset or disturbed by these awful things that are happening abroad, but more and more they are coming to realize that this is the fact, and I happen to be a great believer in Darwin’s concept of the survival of the fittest, those who can adapt to their environment. Okay, that’s the way I feel [and then he pulls me closer with those almost whispered tones of the Godfather]. This is a very exciting, open period, and if we are as smart and intelligent as I think we are as a nation, we’ll work these things out, and if we get rid of the emotional things, I mean get them behind us… our emotional traumas are, I think, going to pass and we’ll be able to settle down and sort this stuff out and approach it intelligently. I’m very optimistic about the future. I’m glad to see you. You really understand me.”

By “awful things,” he means poorer people in the world wanting a share of the pie; by “emotional issues,” he means all of the resistance from Vietnam to Attica that people put up to his rule; and by being glad to see me, he means he thinks he’s got me conned because I kept my mouth shut and nodded appreciatively every few minutes. (Scheer, pp. 217-8)

Thirty-two years later it is clear that the world we live in was created, not by the utopian dreamers of the sixties, but by the high-level right-wing reactionaries. Some even say that the upswelling of utopian revolution was engineered by the Rockefeller types to help build that “domestic consensus for what needs to be done.”

Going back to what Cary Tennis and Joe Boyd were talking about, the difficulty of truly creative artistic or political action in a global capitalist world, Rockefeller had that covered as well. His other obsession, after building that domestic consensus, was modern art patronage. Scheer tells how Rockefeller related an anecdote about a discussion he had with Henry Luce and others in 1945 about whether or not modern art was subversive. Rockefeller, through an art historian he had bought, Alfred H. Barr, convinced Luce that it was not. For Rockefeller, art wasn’t subversive because it could be coopted and its energies turned toward supporting the system, as modern art did in the U.S. dominated post-World War II era. Scheer concludes:
What Rockefeller wants from his art is what he is what he wants from his politics. He doesn’t want the rest of us to get “emotional,” because to be emotional would mean to be pissed off at the Rockefellers. Get it? Anger, hate, emotion are expressed or contained in one corner of the museum. If you can accept that, baby, then make your funny-looking beds or weird constructions, or drip paint all over the f******* canvas; he couldn’t care less.

It’s only when the finger of the artist points at the sources of power in this country that he reacts. Do that and you’re being rude, adolescent, simplistic, fanatical, and, worst of all, emotional. People of real power are never emotional; they don’t have to be, because they can just administer. If you have power and can just administer, then emotion is wasteful.

Rockefeller’s influence over the arts now extends into the worlds of symphonies, ballets, operas, and individual fellowships. This is done through the vehicle of a lifelong friend, Nancy Hanks, who has been in his employ virtually throughout her adult life. She is now on the government payroll as the chairman of the National Endowment for the Arts. Do you know what that means? It means that you are in your loft somewhere and there’s no money for going out for tacos anymore and you’re about to give up on the whole bit—and how do you know you can paint or write, anyway, and who says you’re special and why don’t you get a real job, like, in the post office and forget this art stuff? Right? And just at that moment, and old professor of yours hears that you’re going nuts and says, “I’ll tell you what. I’ll write a letter and maybe, just maybe you’ll get a grant from the National Endowment for the Arts.” And do you know what that means? Why, to begin with, you get a cabin somewhere in the country so you can get your head together and create. Your kid goes to a private school and isn’t beaten up for a while, and you take your love out to the best French restaurants. And you have a year to create, and you want to really know what? You don’t have to produce a goddamn thing. They don’t even want to to produce something, because then they have to edit it, print it, or hang it, and that causes problems for them. All they really want you to do is acquiesce (know the word: Adapt with grace and the world’s your oyster).

And Nancy, by virtue of her association with Rockefeller, is the lady in the country who can give you so much money that you can hardly handle it…

Art has its place, all right, and Nancy has worked out a scheme to make sure it doesn’t become a public issue. For those interested in the subject, I would recommend a reading of The Performing Arts—the Rockefeller-panel reports on the future of theater, dance, and music in America, which Nancy told me contain ten-year plans already implemented to prevent the socialization of American art. What she means is keeping the power over ballet, opera, Lincoln Center, museums, etc., in the hands of the same people who form the boards of directors of the largest corporations—yet getting the public, you and me, through tax dollars, to pay for it. (Scheer, pp. 210-1)

Thirty years later the public money doesn’t flow to artists like it used to, but Rockefeller’s vision of corporate sponsored art remains the model for official high culture. Low culture is dominated by the centralized corporate media conglomerates. What is left is the hope of an unofficial high and middle-brow culture of the internet. If Rockefeller were alive today, no doubt he would be making plans to recapture the internet.

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Blogger Shutter said...

It makes me realise that John Lennon WAS a threat and maybe why he met his nemesis in Hinckley.

Stuffing the mouth of Damien Hirst etc., with gold not only qietens him but also provides a focus for any poorer artists....simply buy them off.

If Joh lennon can sing a song and John Sinclair is let out of jail - he has more power than us.

It also explains the ideology of the soaring US deficit.

11:34 AM  
Blogger Shutter said...

Thx , our eyes are opened a litle wider

11:34 AM  
Blogger paul said...

great article, while I don't believe the elite are omnipotent. There certainly do what they can.

cf shutter;
As for the banality of hirst, emin etc, they went into it with their eyes and mouths open.
Being glam and rich is where its at and they are merely hyper-conformists who furnish undifferentiated commodities to help make a particular market

12:12 AM  

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