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<nettime> Mark to Mars (U.S. Congress rolls over on Bailout Bill)
Ed Phillips on Sat, 4 Oct 2008 03:21:39 +0200 (CEST)


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<nettime> Mark to Mars (U.S. Congress rolls over on Bailout Bill)


Folk wisdom of the Freddy Jameson bootleg variety has it that the
Bourgeoisie brought reason in the form of open and free markets to a
dark world of rattle shaking and fetish, of feudal opacity.  No
sooner, however, so the wisdom goes, did opacity and obscurantism
return again in the very form of the product itself.

Transparency is a word one hears much of, as in the transparency of
free markets, as in the bringing of transparency to the world in the
form of free markets. Efficiency, transparency and economy so the
thinking goes emerges from the supposed spontaneous ordering of an
open market. So the thinking goes. Not only does the reality of global
capitalism not fit this model, neither does in fact, the thinking. The
banking and the shadow banking networks are truly opaque and grossly
inefficient and they are revealing themselves to be so at the moment
in which they need most to come into some light of reason.  They are
too thin and too shy for any market; here they appear as anorexic
virgins.  The pontiffs of the central banks and institutional
economists themselves seem to not be able to come into the light of
reason either. They treat a monster as gingerly as if it were a
virgin. The veil must not be pierced. "Confidence" might be lost if
the veil were pierced.

The enormous forces of production unleashed by development have come
home to roost and brought deflation to the very centers of financial
capital that were previously benefiting from deflating service and
goods pricing. Rather than seeing the light and the fact of deflation
in housing, or the bursting of the housing bubble, the bankers cower
and wait. They obscure and fudge and attempt to inflate and print
their way out of what they see as a black hole. It is not the black
hole it looks to be. It could be a chance for reason. It could be an
opportunity for an economics to actually come into being.  If only our
good bankers could muster a little of their own free market poison.
They are unable to come to market, unwilling or unable to price in
deflation. The way the credit financialization crisis has been playing
out in the farcical political discourse of Washington D.C. gives ample
display to a flight from economics in favor of sheer fantasy.

It is said that the credit markets are frozen or clogged and that
something "needs to be done" to unclog a supposedly free market.
There is indeed a kind of silent bank run and bank credit deflation in
effect. But the credit markets are not, to use the favorite metaphor
on the floor of the senate, a sick old and week patient on a table.
The credit markets are a rough beast of enormous proportions. In other
words the patient on the table is a Frankenstein made monster who does
not need Senator Judd Gregg to put a tourniquet on him. The monster
needs the light of reason to be applied to his undead form. He needs a
bitch slap from the free market, not tears and lamentations over his
slumbering gigantism.

How is that one sits in the august body of the senate of the united
states and mawkishly mewls about the terrible effects that might ensue
if a farced mincemeat of offal, a bailout bill to buy up the rubbages
of wholeborrow shadow banks at mark to fantasy prices, is not passed?
One does it by celebrating the supposed bipartisanship of a body that
seems barely able to muster anything but sentimentalism about how
grand it is in the totemism of its own mediocrity? Bipartisanship is
here a cloak for lack of thought and lack of ability to debate.

There is an open conspiracy in our world, an inability to think or
act, a complete divestment of the very powers of reason that were
supposedly unleashed by the great rationalizing revolution of the
markets.  How can anyone look at the artifacts of credit making and
not see a shaking of the rattles, an occluding of reason before the
fetish of the decree, before the dread of the banker's cry that doom
is at hand. Who does not see the great weight of a sovereign
passivity, a great slumbering mass, lying like a rock on our
collective tomb in all these pronouncements of a freeze.  Images of
breadlines are trotted out. Roll the music. Please ignore the fact
that the fed has been dumping hundreds of billions in the money
markets in the form of low interest loans for over a year now.  An act
of congress is called for this week or doom will descend they say.

Totemism and fetish, the stuff of primitives in Hollywood movies is a
big piece of polyester rug lint clogging the federal brain.  How is it
that a federal body so capable of seizing power for itself is not able
to get failing banks to cough up some light instead of shrouded,
cowering paper. Paper, they can't even manage to see through paper.
Never has there been a more dumbed down and passive body than we see
in the halls of power, on the official channels of neo-fetishism.
Wherever they are, they are easily recognizable in their cowering
before the panic and the fear, before the dread of the fetish of fiat.
Nothing but incessant hammering at the tactless repetition of basic
reason will be of any use against this monstrous beast of moral
cowardice.

Here we see a parallel to the run up to the Iraq war except the
weapons of mass destruction are now little pieces of paper and
promissory notes. And the same punditry that rolled over and ignored
common sense enough to believe Boosh are now believing Paulson.
Please ignore the fact that this act of congress will just be more
hundreds of billions paid towards more hiding, more cloaking. Never
mind that this same punditry will turn against the bailout once they
see how little good it does.

Folk wisdom also has it that wandering the hallways and the
bookshelves and Internet is the very force of a banished reason that
has been haunting the specter of the undead for centuries. And it has
flooded the halls of power with a stream of focused bootstrapping
reason of late. The house and senate .gov sites were on their knees
this week as their crappy cold fusion websites delivered message after
message exhorting them to awaken.  History, Internet time has spread
reason about as it should be spread, as basic understanding, as
nothing but the ability to think and see.

Unfortunately, the doleful powers cannot or will not reason, or think,
or see, or listen. It seems they must have outsourced intellect along
with labor.  It is said by them that the derivatives and instruments
that they purchased in a 700 billion dollar bid for price discovery
are too complex for their own understanding, or for public
understanding. Let the machines do the thinking for us, they cry. Let
the obscurantist bankers take care of it for us. Never mind that the
bankers created these derivatives and that they are now too shy or too
thin to price them or to sell them. Never mind that the underlying
assets, the mortgages on which the pyramids of derivatives are built,
have declined in value by 5 trillion dollars. What part of deflation
do they not understand? It is really quite simple.

Perhaps it is too simple. Standard and Poors, one of the rating
agencies that should be downgraded recursively (Moodys to downgrade
Moodys), provided shrink wrapped software to banks to help them create
CDOs, whereupon, mirabile dictu, S&P would give them top rating. What
thinking was there in that? The only wizard those banks used was the
Microsoft install wizard. And of course the model itself, the Gaussian
copula, read pyramid, was flawed and foolish. The hackneyed and
unthinking misuse of models is one long standing joke and no act of
wizardry.

It is too simple. It has now become recherche to say that the value of
something is what someone is willing to pay for it. Is it now
recherche to say that there is no intrinsic value to paper? Reason is
the precious provenance of shrink wrapped software and models gleaned
from other sciences.

Forget reality. The groaning body stirred enough to declare this week
that the fantasy will continue, that fact has proved too inconvenient.
Markets are free when Boosh says they are free, and as long as they go
up. Market to market accounting rules which barely helped goad the
financials begin to absorb loss have just been removed in time for the
federal government of the U.S. to buy the wholeborrow rubbages at mark
to fantasy prices. A chorus of honest economists such as the centrist
Stiglitz have advised that the coffers of the state instead be used to
cushion the blow of the downward repricing of trillions of dollars of
mortgages. But somehow congress could not hear them over the shaking
of the rattles. They were hypnotized by the holy dread of the bankers.
An image comes to my mind of Paulson as a kind cheap B Movie witch
doctor coming to congress and holding up a frightful fetish, festooned
with dead mortgage backed paper and capped with the grinning capped
tooth skull of Sarah Palin. A sepulchral bank vault and a predatory
polyanna optimism; Wall Street and Main Street. What a marriage they
make.

Mark to Mars.....I'll see you there.


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