Monday, September 15, 2008
Creak, grind, groan, croak. posted by Richard SeymourWell, this is fucking picturesque, isn't it? The world's biggest finance capital institutions and the US government circle round the mortally wounded humpy dumpty that is Lehman Brothers, take one look, and decide not to touch that shit with a twenty foot pole. Bankruptcy Actually, it seems that the head of the Federal Reserve, told those involved in trying to broker a deal that there was no political will for a government bail-out. Merril Lynch was bought out by the Bank of America, just as Bear Stearns was bailed out a few months ago by JP Morgan, but this one didn't have federal backing. Arguably, with the massive nationalizations last week, the US government is already massively exposed and doesn't have the chutzpah to shoulder yet more debt. Some bankers have expressed worries that the nationalizations would actually precipitate a further collapse into a full-blown depression. That sentiment wasn't reflected in the stock market rallies following the nationalizations, however, and one suspects it isn't widely shared. But it does indicate that there are limits to what the US government can actually do. It can make the landing softer for its rich friends, certainly, and invest heavily in the main infrastructure to prevent the whole global system that functions overwhelmingly in US interests from collapsing overnight. And that, a 'New Deal' for the ruling class, is certainly more pragmatic than blustering intransigently about "moral hazard", the equivalent of pissing into an on-rushing tsunami. But ultimately, the US government can't turn back the tide. If the world economy slides into depression, the only way it will be able to raise money will be through war bonds. And who knows - another jumbo round of accumulation-by-dispossession, though risky, could destroy enough capital to help restart the whole shaky enterprise, and secure another American century.
In the meantime, just so that US voters don't lose track of what is really important, guess what they're getting delivered with their morning papers?