Monthly Archives: May 2009

Mattick: “Ups and Downs – The Economic Crisis (pt. 3)”
http://sites.google.com/site/radicalperspectivesonthecrisis/crisis-for-beginners/mattickupsanddowns%E2%80%93theeconomiccrisispt3

This articles focuses on understanding the “business cycles” of our country. The United States has been going through “Boom and Bust” cycles ever since the colonial era. Building up to a strong economy and then failing only to become stronger a certain period later was thought to have been put to an end when dramatic overhauls took place after the great depression.

Before that, of course, economic life was disrupted by a variety of disturbances: war, plague, bad harvests. But the coming of capitalism brought something new: starvation alongside good harvests and mountains of food; idle factories and unemployed workers in peacetime despite need for the goods they produced.

We find ourselves in a different place today as the economic status of the country does not become disrupted in the same ways it once was. We also find our economies acting similarly to other countries—more so than when the world was not as interdependent.

Clegg notes various issues concerning a Capitalist economy. All of these issues eventually lead back to credit, decline of profits, stagnant investments and the decline in value of capital. The article is to be followed up by one that addresses the problems proposed that cause a capitalist economy to fail.

Neoliberal educational reforms

In the article, Neoliberalism and education reform, E. Wayne Ross and Rich Gibson argue that public education is a key target of the neoliberal project because of its market size, its centrality to the economy and its potential challenge to corporate globalization.

Neoliberal educational reforms emphasize opening up the educational services market to for-profit education management organizations (such as Edition Schools) and via international trade and investment agreements such as GATS, which in turn affects the scope of collect agreements.

With global spending on education as more than $1 trillion, it makes sense why there is such a big push for the commodification or privatization of public education. Instead of expanding services and resources to all students, the same government has produced policies that are destroying and making education less accessible.

Efforts are made to reduce educational costs, often through economies of scale. Closing school libraries, reducing the number of special needs teachers, increasing class size, expanding online learning programs are examples.

The No Child Left Behind Act in the United States has been instrumental for the commodification of public education by reducing learning to bits of information and by marketizing education through programs that promote privatization.

Neoliberal educational reform policies focus on creation of curriculum standards (where the state defines the knowledge to be taught) and “accountability.” The dominant approach to educational accountability is an “outcomes-based bureaucratic” one.

The No Child Left Behind Act seems to have further solidified corporate control of education for profit by framing it in the language of accountability and choice

Four crises of modern capitalism

In the article, four crises of the contemporary World Capitalist System, William K. Tabb examines the four areas of crisis in modern capitalism: Financialization and financial meltdown, U.S. led Imperialism is losing its predominant influence, the rise of new centers of power, and resources and sustainability.

The first problem is the financial turbulence that has gripped the economy of the United States and has had widespread effects. It is a crisis that further discredits mainstream Anglo-American economics.

Some experts, including the authors, think that financialization has not only brought global crisis with the failure of financial markets but has also put the United States in a position like that of a poor nation in debt to foreign creditors.

A second crisis is that of U.S.-led imperialism, which has been discredited both in terms of its regime-change-wars-of-choice and the increasingly effective resistance to the international financial and trade regime we know as the Washington Consensus.

Neoliberalism may be on defense because of the harm it has done, and continues to do around the world through the mediation of “Washington’s arrogant militarism” and through the International Monetary Fund and World Bank.

A third point of crisis is the rise of new centers of power in what had been the peripheries of the capitalist system and the tensions this has unleashed, providing room to maneuver for countries wishing to break with the United States.

Emerging markets comprised over 50 percent of global output for the first in 2006. A 2006 study by PriceWatcherhouseCoopers projected that the “E-7” (Brazil, China, India, Indonesia, Mexico, Russia, and Turkey) will be about 25 percent larger than the current G-7, will be the driving global economic growth.

A fourth area of crisis has to do with resource usage, the uneven distribution of the necessities of life, and a growth paradigm that is no longer sustainable.

The availability and distribution of resources such as oil, food, and water may be the greatest crisis of all, yet “the sustainability of human life is simply not consistent with inherently wasteful capitalist growth.”

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“Financial: A primer” helped me understand what financialization is and this will help me in my paper. The author Ramaa Vasudevan states “You don’t have to be investor dabbling in the stock market to feel the power of finance” this tells me how finance applies to daily life. From the article I learned that financialization is changing the value of finance.

I think changing the value includes from income to some tradable like a bond or stock. The article also speaks of the dynamics of how corporations use stock and bonds freely. Finance is compared to a casino. Everyone places bets.

The casino comparison makes me remember about the use of futures and derivatives which was discussed in class. It is so funny that people are betting on something that is not so tangibles. I also believe this happens because it is very quick money. It has a huge outcome.

This affects the average American. The use of credit cards is also discussed. The credit cards allow people to think they have actual money like an asset but it is an actual loan. People forget that and get into trouble with debt. This is an example financialization.

Dhanha Bien-Aime

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It was hard to find articles about fashion but I found one in Naked Capitalism. The article was about American consumption. This connects to fashion. Shopping for clothes whether luxury or affordable is a way to buy into the idea of fashion. For many people buying expensive clothes shows their status.

The article is entitled “Is Retail Therapy Ending in America?” I found this article interesting because Americans like to go shop to feel better about themselves. This is increased with credit cards. It gives people license to shop for many things.

The one thing that is big expense is luxury goods such as designer clothing and luxury cars. Upper class and middle class Americans spend their wages with these types of commodities.

However the recession has given a shift in spending habits. According to the article consumption has gone down. According to Pamela Danziger president of Unity Marketing “Over the past year some affluent Americans have simply given up the fight to keep up with the Joneses” I think this quote sums up the article.

I believe that wealthy Americans are feeling the effects of the recession with their retail therapy. I think they can afford food insurance and other necessities. I think the extra miscellaneous hitting them hard financially. The fact that this group of people are going to outlet malls and looking sales just like the working class says something.

Dhanha Bien-Aime

Elizabeth Warren on Bill Maher

http://www.nakedcapitalism.com/2009/05/elizabeth-warren-on-bill-maher.html

Elizabeth Warren is a Harvard professor and the head of the “Congressional Oversight Panel”. This organization is a branch of the greater program known as “Oversight of the Troubled Asset Relief Program”. The Congressional Oversight Panel, and subsequently Elizabeth Warren, is charged with the role of reviewing the state of various markets. This includes monitoring the money given by the government in order to assist in repairing the economy, roughly 350 billion dollars.

During the interview Bill Maher asks Warren “So how’s that going, how are the banks doing?”, and Warren responded by saying, “Theres a little problem with the first 350 Billion dollars”. Warren says the majority of the money was given to banks but seems unsure as to the whereabouts of the remainder of that money.

The reassuring detail is that this panel of people will truthfully report back to Congress and does not seem to be tied down to a branch of government that will alter its opinion or cause it to give biased feedback to the American people; they merely report what they observe.

The two also talk about credit cards, and usury – meaning “the charging of interest on loans”. Every separate U.S. state determines how much interest is acceptable to charge before it is considered usurious/unlawful. Warren states that she feels this extends further than just credit cards, and delves into the realm of mortgages and the entire lending industry.

Instead of the once accepted model of borrowing money and having a reasonable amount of time to pay it back with a justified amount of interest, the lending industry has switched to trapping and tricking people into owing them an unreasonable amount of money that they will not possibly be able to pay back. This is a very real issue that is only hurting our economy, and anyone that has ever dealt with the dark side of fine print knows this to be true.

The Commercial Games: How Commercialism is Overrunning the Olympics
http://www.corpwatch.org/article.php?id=15164

Weissman speaks about the excessive commercialism in the modern Olympic games. He insists that the event that was once used to bring nations together in the spirit if competition is now simply an excuse for companies to overwhelm spectators and athletes alike with advertisements.

“A record 63 companies have become sponsors or partners of the Beijing Olympics, and Olympics-related advertising in China alone could reach $4 billion to $6 billion this year, according to CSM, a Beijing marketing research firm. “

Companies set new standards for acceptable investments for the advertisement of their products in the previous Olympic games; money which the International Olympic Committee (IOC) is only glad to accept.
The idea that Weissman is trying to convey is one of “Olympism”, the idea that these games are a blend of sport, culture, and education. An idea that was held in high regard when the ancient Olympic games were recreated in 1896 on a multinational level is now an idea that’s dying. Companies that have no place supporting athleticism, like McDonald’s and Anheuser-Busch, are now attempting to sell their products rather then promoting pure Olympic ideals.

“It is undermining the professed ideals of the Olympic Games, and subverting the Olympics’ veneration of sport with omnipresent commercial messaging and branding.”

In order to preserve the ideals of a competition that once stopped wars for its duration, we must stray away from the things that are ruining the event. Weissman has several ideas for this purpose, one being the elimination of sponsors who sell a product detrimental to a person’s health. This includes any alcoholic beverages and fast foods. Another such idea would be to prohibit the national team coaches from endorsing equipment because of a deal that may have been made for exclusive use of their product. The idea that companies should disclose the fashion in which their products were manufactured is one that may be the most important in preserving the ‘Olympic Standard.’
If the International Olympic Committee recognizes these problems and chooses to address them accordingly, we will be able to preserve the etiquette of an ancient event in our history.

In an article in the New York Times, China is thinking about going to electric and hybrid cars.  So i think we all saw the movie in class… what happened to the electric car?! The US totally didnt go for the idea after a couple of years that it was out in the market.  will china realize the same thing or will they do things differently?  Do you think the US will then follow China, and come out again with the electric cars and hybrid cars?  something to think about!

“Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years, and making it the world leader in electric cars and buses after that.”

China is already behind in technology since US and Japan already sell hybrid cars,but

“by skipping the current technology, China hopes to get a jump on the next.”

Will this mean that the USA will have now competition from China when it comes to cars.  Will they start making the lead cars that everyone wants to buy now.  How is this going to affect the Auto crisis.?

China also plans to “go green” with these cars…

“China’s intention, in addition to creating a world-leading industry that will produce jobs and exports, is to reduce urban pollution and decrease its dependence on oil, which comes from the Mideast and travels over sea routes controlled by the United States Navy.”

This is also something the USA has been working on for years now, but yet we see no results at all.  Maybe all the change China is trying to do will change other countries perspectives and they can serve as a role model.

So my topic is the auto industry and i found this article in Naked Capitalism which is interesting and somehow is going to help me with my paper… i just havent tied it in yet…

In the article Treasury Soliciting Bankruptcy Funding for GM, Chrysler, is talking about how the TARP has given Citi $45 Billion in loans, and other smaller companies have lent Citi about $250 Billion.  GM and Chrysler (this article is from February, so lets ignore what has happened with GM and Chrysler since then)  have borrowed $17.4 Billion and are looking to borrow an additional $21.6 Billion.  They were not granted the loan and the  treasury it threating them to put the two car manufacturers into bankruptcy.

Administration officials involved in the auto talks said

“they are trying to find a way to restructure the two companies without resorting to bankruptcy proceedings”.

Others in the Obama administration say

“that the option of Chapter 11 filings by the two auto makers needs to be seriously considered.”

Lenders do not want to lend GM and Chrysler the money for the following reasons:

• they wont get all their money back at the end

• GM and Chrysler believe that they do not need to file for bankrupcy, they just need about $100 Billion to get rid of all the debt they have… (whose going to lend that kind of money)

Basically, i want to understand why the TARP will go so far for Citi, but wont lend the money over to GM and Chrysler.  This is still more research i have to do!!!!

By: Armenis Perez