Seven Red

1. House Organ

Going back to the governance issue and its material genesis, it is necessary to understand what making the mechanism of financialization work in the function of social production means. Like governance, the government of financialization is open to a series of antagonisms the solution of which is not so much strictly economic as political.  – Antonio Negri, Goodbye Mr. Socialism

Or rather, rhetorical. CNBC has been in the news a lot lately. Interestingly, the attention is starting to turn on the network itself. This sort of attention is always bad for propagandists; as soon as their position is denaturalized, the game is essentially up. The latest blow-up stems from Friedmanite propagandist Rick Santelli’s absurdist reverse rabble-rousing on the floor of the Chicago Mercantile Exchange, an event that is turning out to be much more planned than it had at first appeared. But that’s really just the most visible form of the network’s general purpose, which is not so much to present so-called “financial news” as it is to argue for Friedmanite free markets 24 hours a day. Just a house organ of an exploiter class. So Maria Bartiromo is now qualifying her rhetorical performances by noting that she is not interested in politics, but markets, as if the two are completely unrelated. That this is the core of the CNBC argument in the first place should be obvious enough. That this ultimately political conceit is more and more exposed as the politics swings away from the CNBC position is also obvious.

So I wanted to imagine what CNBC would look like if it took a different position, say, The Leninist Economics Network (TLEN). Imagine if there was a network that had twenty or thirty anchors and shows doing Leninist economic critique 24 hours a day. All the anchors would be essentially state socialists of the Leninist variety, say Ernest Mandel style analyses of production and labor, all day long. They all agree on the basic Marxist principles, and perhaps have minor disagreements on this or that “scientific” point (say, two versions of the falling rate of profit, or something like that); these disagreements develop into “debates” or “controversies” that play out on the various shows in happy banter, but none of the anchors take them particularly seriously, since the axiom holds regardless. Maybe they have a kind of kooky Leninist Jim Cramer, who discourses sarcastically with a bust of Milton Friedman while beating a copy of Capitalism and Freedom with his shoe  (Cramer famously pretends to understand Leninism for having putatively read What is to Be Done?, and sports a bust of Lenin on his set). The shows have names like “Vanguard,” “The Lunch Pail,”  “The New Imperialism” (their globalization show), and “Trends in Constant Capital” (their tech round-up). One of their anchors is The Labor Babe. She claims to be interested not in politics, a word she utters with a sneer, but in the extraction of surplus value. Does it sound ridiculous? It is no more ridiculous than what is happening on CNBC all day, every day. And no less discredited. One would imagine that a network spouting state socialist themes all day would be ludicrous, of course, given the general trajectory of Soviet style socialism. But the Friedmanite position is as abject a failure in practice as is the Stalinist.

This is why CNBC looks like an increasingly dubious proposition, and its various well-paid spokespersons seem increasingly unhinged as they carry water for not only failed businesses, but an ultimately failed philosophy. Turn it on at any hour of the day, and you will find some besuited clown hem-hawing that the “current situation” (which is to say, the crisis of their very social formation and privilege, the crisis in value itself) might lead to “excess regulations.” It’s a constant refrain, like the clicking of some background lever that runs the whole machinery of the network. Like these Reaganists have any credibility to speak on the matter? It’s not surprising that they would grow increasingly shrill as their program for society exposes itself as catastrophe and failure. But what may really be at stake is a form of capitalist rhetoric being exposed as rhetoric. What Bartiromo, like the Leninists before her, really insisted on was the “scientific” character of her analyses. Once it opens up to a broader series of antagonisms, she and her cohort may actually have to contest with others for their vision of a market, even at the definitional level.

2. House of Cards - In the New York Times on Friday, this article, titled “Propping Up a House of Cards,” on the continuing saga at American International Group. Caught in the center of the storm, AIG is the poster boy for systemic risk, and for good reason. The entire business strategy at AIG seems to have been one of gaming the ratings agencies and the regulatory arms (both with tacit approval, of course) by essentially distributing their once unassailable AAA bond rating to MBS junk. They called this ratings and regulatory arbitrage, both excellent financial terms for completely mystifying risk. Nocera notes the following:

If we let A.I.G. fail, said Seamus P. McMahon, a banking expert at Booz & Company, other institutions, including pension funds and American and European banks “will face their own capital and liquidity crisis, and we could have a domino effect.” A bailout of A.I.G. is really a bailout of its trading partners — which essentially constitutes the entire Western banking system.

One would think that it takes some doing to collapse a structure that’s been in place since the mid-1500′s (imagine, for example, if the fundamental theses of modern science took a header in a six-month period), but leave it to the rampant idiocy of the corporate lawyers and  investment bankers to make a run at such an ambitious project. Nocera again: “Other firms used many of the same shady techniques as A.I.G., but none did them on such a broad scale and with such utter recklessness.” Here’s how the deals worked. AIG was solid as all get-out as an insurance concern, so the ratings agencies graced them with AAA, which makes borrowing cheaper and generally comforts investors. The idea is that there’s no way in hell you can default. So AIG started handing this rating out for fees by “insuring” what were essentially junk, high risk securities. Since they were insured by AIG, they subsequently earned the AIG rating (or at least improved what would be their own rating), and ta-da!, junk is transformed into gold by the pure alchemy of financial shenanigans. They were truly polishing turds over there. As a second consequence, banks were able – under the delusional “self-regulatory” regimes devised by the imbecile Reaganites and their cohort – to assess their own risk based on the safety of their securities. Since all this junk they were buying on leverage was “insured” by AIG (which, incidentally, didn’t bother to keep reserves for default events, since these credit default swaps were pure fees, and no risk!), the banks could construct completely nonsensical, but cheerily optimistic, balance sheets. Call it postmodern accounting. When people ask “Where did all the money go?,” this is the answer: There was no money.  The creation of wealth for the last 10 years or so was largely illusory, a theoretical operation. Of course, it always is, but sensible people manage to keep the social contract of invented value within the stratosphere. Once you breach that barrier, as these clowns did, you’re in lala land, and there’s no air up there.

Needless to say, these uber-capitalists now need another block of cheese from Uncle Sugar, and here they come for it. There’s not a lot more comical than the CPAC conference goers yelling about “socialism” for a few days, followed by AIG coming hat in hand to the big bad government for hand-outs, lest the “entire Western banking system” collapse. Some Reaganite numbskull was at CPAC intoning that Obama was “the best salesman for socialism” – a statement that sent the requisite chills down the spines of the utterly out-of-touch attendees. Clearly, he’s wrong. The best salesman for socialism has always been capitalism itself. In any case, the so-called fiscal conservatives who invented all this bullshit can now pretend in public (at both CNBC and CPAC) that they just want the market to play itself out, since they know damn well that no government in its right mind will allow that to happen, and, in fact, they don’t want it to happen either. In an op-ed today meant to forecast the length of the recession, titled (appropriately enough) “The Long Goodbye,” economist A.Michael Spence notes the following in support of his thesis that the recovery will be drawn out:

Global growth is approaching zero, and the economies of all the advanced countries are likely to shrink in 2009. The prices of stocks and real estate continue to fall, and thus it will take more time for consumers and companies to pay off debt.

These factors have led to, first, reduced consumption and then declining investment and employment. This has lowered sales, profits, credit quality and, completing the loop, asset values. This interacting spiral is what makes this recession exceptional.

Governments and central banks are the only major sources of credit, liquidity and incremental demand — private capital and sovereign wealth funds, having experienced losses, are largely sidelined. [...]

Everyone knows this, however much the conservatives want to still proclaim their fantasies of markets. So, a long goodbye, but what are we saying goodbye to?

3. Houses in Ghost Towns

Here’s the man with teeth like God’s shoeshine
He sparkles, shimmers, shines
Let’s all have another Orange Julius
Thick syrup standing in lines
The malls are the soon-to-be ghost towns
Well so long, farewell, goodbye
– Modest Mouse

This article describes the plight of the Elks Grove Promenade project, a mall planned for suburban Sacramento. Its construction, which has been stopped for months, was put on “indefinite” suspension Friday by its owners, General Growth Properties (GGP):

The mall site is a freshly paved ghost town these days. Tall chain-link fencing surrounds deserted buildings lacking the finishing touches to cover their yellow-and-gray construction materials. Blinking traffic lights greet the few travelers who drive by.

As the article goes on the discuss, an entire town incorporated behind the idea that this mall would be completed and serve as a kind of town center. Now it’s just half-completed shells and empty parking lots. You know who I’d like to hear from about stuff like this? My good friend who is probably Texas’ current leading expert on the concept and history of the suburbs. When alternative-heads and other Lefties were generally falling into the trap (like the Modest Mouse song, to some extent) of replaying the same tired critiques of the suburbs that have been with us since William Whyte (that is, since the suburbs have), this guy was thinking through the suburbs as a positive phenomena. That doesn’t mean valorized, but asking what they do rather than bemoaning how they don’t do other things. But this brings me back to the same point. The crisis does seem to follow the predictable pattern of observers returning to something like a “real economy,” with the concomitant return to a discussion of limits – where your suburban McMansions would be the chief excess, along with these newly incorporated communities and their mall centers. This is certainly the theme of the Lefty blogs. Now, it should go without saying that the crisis seems to have little to do in either its origin or operation with a “real economy” as distinct from putatively “speculative” (that is, unreal) finance capital. If anything, it shows us in the clearest way possible that such distinctions are poorly constructed for contemporary analysis. But I think the status of the suburbs is where the thing comes to a head.

It’s never been a Wall Street – Main Street problem, because there is no Main Street anymore. It’s a Wall Street – Teaberry Ridge problem, or whatever these lunatic developers were naming their cul-de-sacs during the Bush Years. Elk Fucking Grove. Come on, now. But that would seem to be the point of intersection , since the suburbs are nothing but symbolic capital in bodily form to begin with, and more so as the home shifted its accent as commodity from the disciplinary space of the family toward the investment vehicle side. If anything, the credit default swap is more real than the abandoned shell of the Elk Grove Promenade, and the whole community thus exposes itself as the actual speculative economy. They were, after all, in their so-called “real” economic behavior, investing in GGP, JC Penny’s, and Orange Julius as surely as were the traders in their exchange smocks. That these communities did so through houses and pot lucks and Little league teams rather than with equity and debt securities only intensifies the affective and bodily tilt toward speculation. They didn’t “buy” shares. They literally were the shares in both their real social location and ghostly physical existence. But now I guess a specter is haunting Elk Grove, or at least the Promenade…

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