The Null Device
Posts matching tags 'economy'
Dispatches from the American kleptocracy: In 2008 and 2009, the US Government distributed trillions of dollars in bank bailout funds. These funds were authorised as a matter of urgency to prevent the imminent collapse of the financial system and get the banks lending money to the little people again; the distribution was done in secrecy. Now, thanks to an act of Congress, the destinations of these funds have been revealed, and it's not pretty.
Among the beneficiaries of the US taxpayer's largesse: financial firms run by bank executives' wives, themselves having little financial experience to show other than having invested in racehorses, random billionaires with Cayman Islands addresses, funds for investing specifically in foreign countries, and carmakers in Germany and Japan. Oh, and a bank majority-owned by the Gaddafi regime. If you made this stuff up, nobody would believe it:
It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure. The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. "Our jaws are literally dropping as we're reading this," says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. "Every one of these transactions is outrageous."
Cue your Billy Mays voice, because wait, there's more! A key aspect of TALF is that the Fed doles out the money through what are known as non-recourse loans. Essentially, this means that if you don't pay the Fed back, it's no big deal. The mechanism works like this: Hedge Fund Goon borrows, say, $100 million from the Fed to buy crappy loans, which are then transferred to the Fed as collateral. If Hedge Fund Goon decides not to repay that $100 million, the Fed simply keeps its pile of crappy securities and calls everything even.
And then there are the bailout deals that make no sense at all. Republicans go mad over spending on health care and school for Mexican illegals. So why aren't they flipping out over the $9.6 billion in loans the Fed made to the Central Bank of Mexico? How do we explain the $2.2 billion in loans that went to the Korea Development Bank, the biggest state bank of South Korea, whose sole purpose is to promote development in South Korea? And at a time when America is borrowing from the Middle East at interest rates of three percent, why did the Fed extend $35 billion in loans to the Arab Banking Corporation of Bahrain at interest rates as low as one quarter of one point?it's like the salad days of the Iraq occupation, only those in the loop don't need to actually fly to Baghdad to pick up a pallet or two of greenbacks. Of course, it's the long-suffering US taxpayer who's stuck holding the bill for this party, but they've been well trained to believe that it's their fault for having it too good for too long. (Isn't Calvinism, with its attendant self-loathing, a wonderful ideology for keeping the masses from rebelling?) So no, America can't afford a public health care system, or decent public schools, high-speed trains or non-crumbling bridges, because the cupboard's bare, and it's your fault. That money over there? Well, that's not yours, and you can't take it because that'd be socialism, and socialism is always absolutely wrong. So when they're given the choice of a 50% pay cut and unpaid overtime or losing their job, and are struggling to keep their homes from beign foreclosed, they flagellate themselves for having the temerity to have bought a PlayStation and a plasma screen, and then turn their rage on the trade unionists whom they see as trying to take their few crumbs of the pie.
Though at least America's luxury goods dealerships will survive another day.
I recently read an interesting article in the September issue of Exberliner (though not on the web site yet, it seems) about the state of the music industry in Berlin. According to it, the clubs of Berlin still draw in the "Easyjet set" who fly in for weekends (apparently a significant proportion of Berlin's clubbers are tourists), though the club market is saturated, to the point where door charges have dropped dramatically. Meanwhile, gentrification is threatening a lot of long-established clubs, as apartments are built next door, yuppies move in, and the clubs' licenses are not renewed due to the newly bourgeois, residential nature of their environs. (Which all sounds familiar.) Though, according to the article, the real area of growth in Berlin is not so much clubbing or music performance as music technology; the article pointed to the growth of Berlin-based music software firms like Ableton and Native Instruments, and also mentioned SoundCloud's Swedish founders having relocated to Berlin to establish the firm. Which seems to tie in with what I've heard elsewhere about Berlin being Europe's IT startup hub these days.
Anyway, while that article is not online, here's an earlier one about the rise of "place consumers" and "post-tourism tourists", foreign "hipster nomads" who move to Berlin temporarily to enjoy and participate in the lifestyle before moving on.
23% of voters in Iceland sign a petition against a deal to repay British and European savers in an Icelandic national bank, and surveys suggest that 70% of voters oppose the deal, believing it to impose crippling burdens on the struggling Icelandic economy.
In other news, the UK Foreign Office has denied that the aircraft carrier battlegroup headed towards Reykjavík has anything to do with the current issue, stating that it is on routine exercises.
As rising oil prices bite, people are talking about moving to a 4-day work week to reduce fuel consumption. The idea has been tried in Utah, but as befits a conservative Mormon state in the US whose emblem is the beehive, it didn't result in an extra day of leisure time, but rather four 10-hour workdays. Nonetheless, the results have been promising, and the experiment has proven popular, with 82% of participants preferring to stick with it:
"If employees are on the road 20 percent less, and office buildings are only powered four days a week," Langmaid says, "the energy savings and congestion savings would be enormous." Plus, the hour shift for the Monday through Thursday workers means fewer commuters during the traditional rush hours, speeding travel for all. It also means less time spent idling in traffic and therefore less spewing of greenhouse gases and other pollutants. The 9-to-5 crowd also gets the benefit of extended hours at the DMV and other state agencies that adopt the four-day schedule.
I'm spending the Easter break in Iceland. I flew in to Keflavík last night. On the Icelandair flight, the attendants handed out copies of a free newspaper named Reykjavík Grapevine. This is a slim English-language weekly, which exists primarily to distribute event listings wrapped in a thin shell of articles and the obligatory ads for restaurants and tours. In the past, when Reykjavík was a capital of cool, it would have undoubtedly been buzzing with events and self-congratulatory pieces on the next big thing on the Reykjavík scene. Now, with the economic crisis, the tone is somewhat more muted and soul-searching; there's an article about the closure of an art space; next to it, in the print edition, is a column titled "Icelandic art makes me feel nothing at all". (On the facing page, meanwhile, is a full-page advertisement from the Ministry of Justice and Ecclesiastical Affairs on how to vote in the upcoming parliamentary elections—which are open only to Icelandic nationals—written, perplexingly, in English and Polish.) Elsewhere, the opinions page contains pieces on anarchism and one titled "I'm Not Stupid!", railing against the torrent of recent blog articles describing Icelanders as "naïve", "immature", "over-confident" and "stupid".
Anyway, the Grapevine's feature article is its own piece on the genesis and collapse of the Icelandic economic crisis. Titled The End Of Neo-Liberal Neverland, it argues that Iceland was a testbed of radical Chicago-school economics, and/or a victim of what Naomi Klein calls the Shock Doctrine:
President Grímsson was not the first to mythologize Iceland's rapid implementation of global capitalism with Viking references. In the late 1970’s and early 80's, a handful of young men, members of the so-called Locomotive group [Eimreiðin], made themselves busy importing Milton Friedman's free market ideology. Davíð Oddsson was a prominent member of this group. He would later implement Friedman’s ideology as the Independence Party leader, Prime Minister (1991-2004) and, since 2005, chairperson of the Central Bank. Milton Friedman’s dogma is now well known: privatize, deregulate, then look away. In The Shock Doctrine, Naomi Klein has exposed to us how Friedman’s disciples went about doing this, by using the disorientation caused by traumatic events, such as natural catastrophes or economic depression, to push through programmes that otherwise would never have been democratically approved.
A lesser known proponent of ‘more radical capitalism’ is Milton Friedman’s son, the self-professed 'anarcho-capitalist' David Friedman. In 1979, Friedman jr. published an article entitled 'Private Creation and Enforcement of Law: A Historical Case'. The historical case in question is medieval Iceland, when law was not upheld by a state, but by individuals: “Medieval Icelandic institutions […] might almost have been invented by a mad economist to test the lengths to which market systems could supplant government in its most fundamental functions,” wrote the young Friedman. In such a society, he goes on, seats in parliament are a commodity and justice is upheld by the threat of thralldom as punishment for any offence. The Old Norse term ‘thralldom’ is a bit of an obscurity in modern English. Its modern Icelandic variant – Þrældómur – is transparent enough; it just means slavery.
Most of the country’s citizens live in debt but precise statistics are hard to find. Thatcher’s dictum ‘There is no such thing as society’ was taken very seriously by policy makers under Oddsson’s rule, and institutes that had the role of providing social data were disciplined and silenced, or simply shut down. When the National Economic Institute repeatedly published unsuitable information, Oddsson passed law through the Parliament to abolish the institute. That was in the late 1990’s. He then redirected the institute’s role to the Central Bank and years later appointed himself as Central Bank manager. This is why key figures, such as the international Gini index, meant to measure equality of wealth distribution, do not exist for Iceland.The article then asks how deep the rabbit hole goes; whether Iceland wasn't set up from the start:
Neoliberal Iceland was run as a secret conspiracy worthy of a James Bond screenplay: it was exchanged for gambling money in a plot involving Russian oligarchs, offshore accounts in the Caribbean, and luxury yachts no less kitschy than your average dictators’ – not to mention Elton John, Tina Turner and Duran Duran entertaining in private parties, and a lot of cocaine. Or so they say. Rumours abound, but no details, no facts: no single money transaction has been publicly verified. In Iceland, no businessperson, politician or civil servant has been charged with any crime.
The first revolutionary stroke in Iceland’s history re-established the possibility of meaning. Just that. Then everything is left unsaid and undone. How far back do the lies reach? Was Iceland rigged up to feed the US army? It may not be much harder to forge a national identity than decorating a Pizza Hut: one Nobel Prize here, Viking myths there, put a ‘The world’s oldest democracy’-plaque on the wall ….
We have every reason to fear that they and other representatives of global market interests will want to use this opportunity for a full-scale Friedmanite Shock Doctrine. Already in early October, right-wing forces tried to create consensus on the dogmatic “Now nothing can be holy”, i.e. now is the time for environmentalists, feminists and socialists to shut up and let business do its business. Venture capitalists have made bids at the state’s total real estate. It’s Don Corleone’s world, full of ‘offers they can’t refuse’. We know little about the IMF’s agreement with Icelandic authorities, only that they promised each other to suspend the full force of the collapse until 2010. It’s a gluey sort of Apocalypse. 8000 of the country’s 300 thousand inhabitants are currently studying business and finance, acting as if nothing happened. Everyone still acts as if money has a function and basically every trick in the hysteric’s toolbox is currently applied to hide the fact that there is no way back. Tomorrow may be capitalist, but tomorrow’s capitalism would be a dystopian remix of Fukuyama’s universe, without any pretences towards freedom.
The Independent had an article this week on how Stockholm has become a centre of web technologies and social software, from the likes of Skype and Spotify to more ethically ambiguous ones like The Pirate Bay, and why this is the case:
Rick Falkvinge is the leader of Sweden's most plugged-in political group, The Pirate Party. "In the rest of Europe," he says, "the internet roll-out was done by telecommunications companies, who had an incentive to delay it for as long as possible because it shattered their existing business model. When you put disruptive technology into everyone's hands, it changes public perceptions of what you can, and should, do with it."
Technology must be in the Swedish genes; in 1900, Stockholm had more telephones than London or Berlin. When Crown Princess Victoria announced her engagement last week, she did so via a video on the royal website. The weekend's biggest film opening was an adaptation of novelist Stieg Larsson's thriller The Girl with the Dragon Tattoo. The heroine of the title is a young computer hacker with a flexible attitude to the law.
Sweden has long been held up as a model of social democracy. So is there something in the mindset that predisposes the Swedes to the provision of free, communal culture online? "There's a law [Allemansratten] that I think is unique to Sweden, about common spaces," says Andersson. "You can go out camping in nature anywhere in Sweden without asking the landowner's permission. That sort of attitude predominates here."Which is not entirely true; England has the ancient "right to roam", which is still valid everywhere that's not owned by Madonna. However, Britain has more of the Anglocapitalist model of culture, predicated on intellectual property licensing and marketing, than the collectivist, Jante-compliant variety in Scandinavia. Were three Londoners to start a BitTorrent tracker in the UK, they'd be extradited to the United States (whose intellectual property, after all, it is) faster than you could say "Gary McKinnon".
Texan Cyberpunk sci-fi author turned father of the Viridian pro-green design/technology movement turned Belgrade-based design theorist Bruce Sterling gives his annual state-of-the-world address to the Inkwell forum. It's focussed mostly on the economic cataclysm in progress, and it's full of the sorts of apposite powder-dry black humour you'd expect from him:
Do we HAVE to talk about the economy this year? I'm wondering what conceivable event could overshadow the fiscal crisis. Maybe a cozy little nuclear war? An Indo-Pakistani nuclear war might conceivably take a *back page* to the fiscal crisis.
I'm a bohemian type, so I could scarcely be bothered to do anything "financially sound" in my entire adult life. Last year was the first year when I've felt genuinely sorry for responsible, well-to-do people. Suddenly they've got the precariousness of creatives, of the underclass, without that gleeful experience of decades spent living-it-up.
If the straights were not "prone to hostility" before that experience, they might well be so after it, because they've got a new host of excellent reasons. The sheer galling come-down of watching the Bottom Line, the Almighty Dollar, revealed as a papier-mache pinata. It's like somebody burned their church.After indulging in terriblisma for a while, Sterling turns his attention to Dmitry Orlov's prediction of the US disintegrating, and ideas for a "new localism" that might arise in the event of catastrophic collapse:
In any case, after eight glum years of watching Bush and his neocons methodically wreck the Republic, both Kunstler and Robb have gotten really big on American localism -- "resilient" localism. Kunstler has this painterly, small-town-America, Thoreauvian thing going on, kinda locavore voluntary simplicity, with lots of time for... I dunno, group chorale singing. Kunstler seems kinda hung up on the singing effort, somehow... Whereas Robb has a military background and is more into a gated-community, bug-out-bag, militia rapid-response thing.
Certainly neither of these American visions look anything like what happened to Russia. As Orlov accurately points out, in the Russian collapse, if you were on a farm or in some small neighborly town, you were toast. The hustlers in the cities were the ones with inventive opportunities, so they were the ones getting by.
So the model polity for local urban resilience isn't Russia. I'm inclined to think the model there is Italy. Italy has had calamitous Bush-levels of national incompetence during almost its entire 150-year national existence.Meanwhile, Clay Shirky gives his predictions for 2009. Whether or not we're all toast, a lot of the old media, such as newspapers, seem to be:
The great misfortune of newspapers in this era is that they were such a good idea for such a long time that people felt the newspaper business model was part of a deep truth about the world, rather than just the way things happened to be. It's like the fall of communism, where a lot of the eastern European satellite states had an easier time because there were still people alive who remembered life before the Soviet Union - nobody in Russia remembered it. Newspaper people are like Russians, in a way.
Why pay for it at all? The steady loss of advertising revenue, accelerated by the recession, has normalised the idea that it's acceptable to move to the web. Even if we have the shallowest recession and advertising comes back as it inevitably does, more of it will go to the web. I think that's it for newspapers. What we saw happen to the Christian Science Monitor [the international paper shifted its daily news operation online] is going to happen three or four dozen times (globally) in the next year. The 500-year-old accident of economics occasioned by the printing press - high upfront cost and filtering happening at the source of publication - is over. But will the New York Times still exist on paper? Of course, because people will hit the print button.Shirky's not one for terriblisma, so not much about social collapse, cannibalism or killer caravans marauding the post-apocalyptic landscape there. For that, you'll have to read Charlie Brooker's column:
Dim your lights. Here's the highlights reel. The worst recession in 60 years. Broken windows and artless graffiti. Howling winds blowing empty cans past boarded-up shopfronts. Feral children eating sloppy handfuls of decomposed-pigeon-and-baked-bean mulch scraped from the bottom of dustbins in a desperate bid to survive. The pound worth less than the acorn. The City worth less than the pound. Your house worth so little it'll collapse out of shame, crushing you in your bed. Not that you'll die peacefully in your sleep - no, you'll be wide awake with fear, worrying about the situation in the Middle East at the precise moment a chunk of ceiling plaster the size of a flagstone tumbles from on high to flatten your skull like a biscuit under a shoe, sending your brain twizzling out of your earholes like pink-grey toothpaste squeezed from a tube. All those language skills and precious memories splattered over your pillows. It'll ruin the bedclothes. And instead of buying expensive new ones, your grieving, impoverished relatives will have to handwash those bedclothes in cold water for six hours to shift the most upsetting stains before passing them down to your orphaned offspring, who are fated to sleep on them in a disused underground station for the rest of their lives, shivering in the dark as they hear bombs dipped in bird flu dropping on the shattered remains of the desiccated city above.
(via Boing Boing)
The US subprime crisis, and the wave of foreclosures and evictions which ensued, left a ticking timebomb: countless thousands of abandoned swimming pools; ideal breeding grounds for mosquitoes. But not to worry: help is at hand, in the form of armies of underground skateboarders who find abandoned pools, drain them and skate in them:
Some skateboarders use realty tracking sites like realquest.com and realtor.com to find foreclosed houses with pools, while others trawl through satellite images from Google Earth. On the Web site skateandannoy.com, where skaters trade tips about how to find and drain abandoned pools, one poster wrote about the current economic malaise. “God bless Greenspan,” the post read, “patron saint of pool skatin’.”
Mr. Peacock travels around town in his pickup searching for the addresses of homes he has learned have been foreclosed on, either via the Internet or from a friend who works in real estate. He has also learned to spot a foreclosed house, he said, by looking for “dead grass on the lawn and lockboxes on the front door.”
(via Boing Boing)