The Political Situation (10/14)
Blair incorporates all of the elements of conservative-social democracy previously encompassed in the right-wing of Labour, The Liberal Democrats, and the social-democratic wing of the Tory Party, required to serve the interests of big socialised capital, and the owners of fictitious capital. He represents, like Major, a continuation of early Thatcherism, containing the organised labour movement, promotion of European integration, a continuation of privatisation, and a continued emphasis on promoting the illusion of wealth creation from inflating asset prices that have become the basis for a low wage, low productivity economy founded upon inflating debt, as the other side of the coin from inflating asset prices, used as collateral for it.
The trouble is that this fantasy is precisely that, and cannot continue forever. There had been early tremors showing that the foundations of this debt economy was built on shaky ground, when in 1987, just as it is beginning, it suffers the worst crash in the history of global stock markets, as they plunged by 25% overnight.
In Britain, its followed by a 40% crash in house prices, in 1990, and in the US there is a Savings and Loan Crisis. In Japan, its stock market drops from 39,000 to below 10,000, and its property prices drop by up to 90%. In 1994, as the Federal Reserve attempted to raise interest rates, bond markets sold off. Then in 1997, there is an Asian Debt and Currency Crisis, followed the next year by a Rouble Crisis.
In 2000, there is a crash in global stock markets, again, led by the bursting of the bubble in technology shares, as the NASDAQ dropped by a staggering 75%. On each of these occasions, central banks followed the play-book of the Federal Reserve in 1987, under Alan Greenspan. They printed money tokens, and threw them into circulation, cutting their official interest rates along with it. It was an open invitation to continue gambling on these rising asset prices, in the sure knowledge that whenever they fell, the central banks would intervene to reflate them, what came to be called The Greenspan Put. Its what is called moral hazard, as the gamblers in the casino were told, you can take all of the gains you make privately, but any losses you incur will be socialised.
So, it was no wonder that, the owners of fictitious capital lost any interest in actual investment in real capital that they previously saw as the necessary basis for increasing the profits required to keep paying out increased levels of dividends/interest. Real capital now, was not the factories, machines and so on, but merely all of these bits of paper, the share certificates and bonds, and all of the derivatives developed from them, as being just more and more ways of gambling. As I wrote in my novel, 2017, comparing the reality of life for the former industrial workers, and their material production, with the fantasy of the yuppies involved in the inflation of paper wealth,
“At around this time of day, the same people could usually be seen occupying their own traditional seats in the bar. They were a group that stood in marked contrast to all those stock market traders and other yuppies, who, at the same time of day, frequented the designer pubs and wine bars, in other parts of the capital, where they showed off their designer stubble, alongside their designer clothes, and designer watches, which, at the end of the day, they checked, before getting into their designer sports cars, to drive home to their designer apartments, where they entertained their designer girlfriends, and their designer vaginas. And, despite their multi-million pound bonuses, much of it was paid for by designer credit, which reflected the superficial and ephemeral basis upon which it all rested.
The regulars in the bar, at the Red Lion, had nothing that was designer, other than the odd bargain they had picked up at the charity shop. There was nothing designer about the stubble on their face. It was just the result of lives spent in hard work, lives which now had nothing much to show for it, nothing much to look forward to, and no pressing reason, therefore, even to shave every day.”
Nor was this mentality restricted to the top 0.01% that owns the majority of this fictitious capital. In the 1980's, ordinary people were introduced to this gambling too, be it on the rise of their house price, or the rise in the price of the shares in privatised companies they were encouraged to buy, or in the value of their mutual funds, and pension funds that they had been encouraged to take out. In the 1990's, it was even encouraged by the introduction of the National Lottery, in Britain. No wonder, that a survey of social attitudes found a majority of people saw the way of becoming better off being from some such lottery wins, getting on to TV, or becoming some form of celebrity, or else being able to get a large compensation pay out! And when, in the 1990's, interest rates on savings dropped substantially, and private pensions continually declined, its no wonder that many saw becoming a buy to let landlord as the way to riches, not from the rents, but from inflating property prices of their portfolio of properties. And, that was true across the globe. Chinese peasant farmers, seeing the Shanghai Stock Market soaring, used the money they would have used to expand their farms, instead to gamble in the purchase of shares, many of them being wiped out when that market then crashed.
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