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Re: <nettime> Keynesianism is IN
Stefan Heidenreich on Tue, 11 Nov 2008 13:55:04 +0100 (CET)


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Re: <nettime> Keynesianism is IN


Hi Brian et all

i skip as much as possible all the questions - gold, keynes,-ism - where 
keynes-specialists might help us further off-list and where your points 
in fact seem mostly more precise. In order to come straight to the more 
interesting points at the end.

(writing from pretty much the same standpoint as you - as I studied
philosophy, write about art etc. But as it were well educated
economists, who brought us into that mess & who continue to dig the
hole deeper, there is ample need for outside opinions.)

> "euthanasia of the rentier." 

here is one interesting point: can the vast amount of privately owned
finance money a) be saved from the crisis (looks like - guessing from
the efforts taken to bail out banks = bail out assets stuck in
illiquid if not insolvent banks) and b) can that money still claim its
yield. Because the rentier dies when the yield comes close to zero,
receiving no return on his money.

What does that mean for the rest of us? Money takes the form of a gift. 
And we might need to ask for our share ...

Now it looks like the state being swiftly transformed into an agency 
that hands gifts to the finance industry. (A bit simplistic here, but 
that is the reason why I called it 'our' state .. as a reminder of the 
fact, that one should not just let it become a bank's branch. We're not 
witnessing the nationalization of banks, but rather the bankization of 
the state.)

> On the other hand, with approximately $60 trillion worth of credit
> default swaps ALONE currently in circulation, we are definitely
> somewhere unprecedented! 

Well .. here we are definitely not in Keynsas anymore. (To misquote the 
Wizard of Oz, by the way a novel on the struggle between gold- and 
silver-backed money. Oz. = ounce.)

> Will those countries buy US Treasury Bonds if they are also being asked to 
> take a loss on US derivatives? 

Theoretically the derivatives serve to hedge against losses in bonds. 
Unless the issuer of the CDO is insolvent ... and here we are with AIG, 
Lehman et...

> It's all about renewed credit to the banks, to keep the pyramid of
> securitization up in the air.

Not exactly about credit to the banks only. But about credit as such, 
being the raw material of the financial industry. What has to be avoided 
under all circumstances is the absolute amount of credit to shrink. As 
credit is money. So it's about:

a) pls do NOT pay your credit back. NEVER!
b) take more credit as long as you can. Whoever.

> The big political question is how this money will be spent....

Karl Polanyi: The great transformation - shows the dangerous chain of 
events that leads form crisis to protectionism (end of globalisation: 
something very dangerous we should watch out for) to fascism to war.
"The giant public works program that restored full employment, otherwise 
known as the Second World War" as Krugman puts it in his brilliant 
introduction to the new issue of the General Theory.
http://www.pkarchive.org/economy/GeneralTheoryKeynesIntro.html
Worth a read for all Keynes starters.

> Then Roosevelt immediately declared a bank holiday upon entering
> office and restructured the entire system, cleaning out the banks
> that could not be saved. Will Obama and other presidents have to do
> something similar?

I agree completely here. That could explain some of Biden's strange 
remarks, issued in front of investor's in Seattle shortly before the 
election.

Best,
Stefan


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