Tag Archive for 'Ben bernanke'

Bernanke’s confirmation in doubt

Published
by
Mark
1 month, 2 weeks ago
in International, Markets, Politics and USA
. 15 Comments

A number of US financial blogs are reporting that Ben Bernanke faces a chance of failure to be confirmed by the American Senate for a second term in office.

James Bianco at The Big Picture has all the details, and there’s also coverage at Naked Capitalism.

What’s the big picture here?

On the short term political front, Scott Brown’s win in Massachussetts exemplifies the frustration felt by many with politics as usual. Whether it’s expressed as concern over deficits (and that’s a much more salient touch point with Indendent voters on health care than the rhetoric of the wingnuts), or just as disgust with the jobless recovery’s disjunction with business as usual on Wall Street, there’s no doubt that an election year is starting to focus minds on the politics of financial decision making.

… and that brings us to the bigger picture. Continue reading ‘Bernanke’s confirmation in doubt’

The state of the capitalist economy IV

Published
by
Mark
1 year, 4 months ago
in China, Developing world, Economics, Europe, International, Markets, Sociology and USA
. 79 Comments

One of the intriguing things about wading through some of the business and economics shelves of some CBD bookshops in (fruitless) search of some of the titles John Quiggin reviewed in the Fin Review on Friday (not online of course) was seeing tomes with titles such as “Bubbles last forever!”, “How to make enormous amounts of money from endless bubbles!”, “Greenspan is the greatest!”. I’m exaggerating, but not much. I suspect their shelf life is almost over, and they’re headed for the remainder bin soon. At any rate, I’ll have to cross my fingers and hope the AUD recovers soon so I can afford to buy something a tad more contemporary – and serious – from Amazon.

Since September, I’ve been wading through far more reading matter than I’d ever imagined possible on economics and finance. Much of it has been, by necessity, somewhat ephemeral. However, it’s good to see some commentators coming out with something of a longer view.

Continue reading ‘The state of the capitalist economy IV’

The state of capitalism today II

Published
by
Mark
1 year, 5 months ago
in Apocalypse, Disasters, Economics, Europe, Foreign Elections, International, Markets, Media, Nationalism, Politics, Sociology and USA
. 28 Comments

SocProf over at The Global Sociology Blog and I must be reading the same things, and thinking along similar lines, because I had planned to link to precisely the same articles she highlights in an update to my recent post on the state of the global financial crisis.

In The Guardian, Will Hutton explains why measures to halt the cascading crisis have been ineffectual to date. He might have made more explicit the implication that one of the basic structural problems is that action taken at the level of the nation state can be counter-productive given the disseminations and movements of capital, and that there are real domestic political barriers to coordinated action, as well as all the obvious problems of concertation through institutions such as the EU and the G20.

But he does make this point – harmonising with the note I’ve been sounding repeatedly – very clearly indeed:

There was no effective opposition. The left and organised labour collapsed as intellectual, social and political forces; there was no conviction that any alternative to this shareholder value-driven, financial, ’securitised’ capitalism existed, or any political muscle to support it even if there were. Mainstream culture moved away from public purpose and fairness; the new priorities were individual self-fulfilment, personal experience and loyalty to self.

Hutton is perhaps more sanguine than I am, though, about the capacity of state action to turn all this around. Continue reading ‘The state of capitalism today II’

The state of capitalism today

Published
by
Mark
1 year, 5 months ago
in Activism, Consumerism, Culture, Economics, Ethics, International, Markets, Media, Politics, Poverty, Sociology and USA
. 89 Comments

Iceland may be a barometer for what’s changing in the world economy. It was only very recently that the Milton Friedman fan club was hailing Iceland as a “Nordic Tiger”, lauding its flat taxes and praising its “economic freedom”. “Economic miracle” was a common phrase. What’s it looking like after the credit crisis?

Iceland right now is apparently in a state of shock and gives a snapshot of what a depression with the Great in it will look like everywhere – “cafes were half-empty, real estate agents sat idle, and retailers reported few sales” says the AP.

This after the government basically took over its banking sector, with Russian money, which as noted in the linked post, has real geopolitical implications.

Meanwhile, the British government is laying out 500 billion pounds to take equity in its banking sector, but basically proposing business as usual. Co-ordinated interest rate cuts are having very little impact on the stock market, and more worryingly, on the liquidity crisis. Paul Krugman writes:

We’re way past the point at which conventional monetary policy has much traction.

In America, in the eye of the economic storm, the Fed has basically become the financial system, but to little avail:

The time for a recession was 2005. At that time simple macroeconomic policy; simply raising interest rates, would have ended the bubbles in credit and housing at the cost of a standard if somewhat nasty recession. Trillions of dollars of intervention would not have been needed. Just standard macro policy. Even in 2006 it might still have worked. The Fed blew it, and they broke the system, and now with the system broken they may have to either buy it all out (and Paulson may be considering that after all) or just become the system. And even if they do that may not work, because, well, who wants to borrow and invest right now?

Bernanke and Greenspan are certainly in the “worst Fed chairman of all time” stakes in a big, big way.

Continue reading ‘The state of capitalism today’

Is neoliberalism finished?

Published
by
Mark
1 year, 5 months ago
in China, Developing world, Economics, Foreign Elections, Foreign policy, International, Markets, Philosophy, Politics, Sociology, USA and War
. 74 Comments

The question’s in the air at the moment. In the Australian blogosphere, John Quiggin thinks the financial markets crisis has killed it off, while Nicholas Gruen is (rightly in my view) more skeptical. [In response to commenters, Quiggin goes on in another post to define what he means by neoliberalism.]

From my (sociological) point of view, the shorter answer to the question is – no.

In fact, I think the way the question’s posed reflects a number of category mistakes. Continue reading ‘Is neoliberalism finished?’

The elephant in the room (or on Wall Street)

Published
by
Kim
1 year, 5 months ago
in China, Foreign policy, Markets, Media and USA
. 17 Comments

In an interview where he displayed to the full his immense self-regard, and incidentally engaged in his now customary tease about his future in politics, Peter Costello was asked by Tony Jones to comment on his warnings during the election campaign last year about financial tsunamis from China. He didn’t exactly address that front on, but he did comment that Asian sovereign wealth funds were providing a force for stability in world financial markets. That’s intriguing, because Ian Welsh at Firedoglake highlights what isn’t being openly discussed in the political reaction to the proposed Paulson bailout of Wall Street, in the context of the Japanese company Namura acquiring a 20% equity stake in Morgan Stanley after Henry Paulson’s announcement:

Investors, and especially foreign investors, want to know that if they buy in again, they’re protected. Since they aren’t going to be allowed to buy up the US’s financial sector for pennies, that means they need to know that prices will be maintained so they aren’t buying pigs-in-a-poke.

Which is also why the Paulson or Dodd bailout is still on the books. Because if the US doesn’t bail out its own financial sector (by borrowing money it doesn’t have) then the only people with enough money are foreign sovereign funds and large investors. And they willbail it out for cents on the dollar at fire sale prices. The end result is that New York would definitively no longer be the world’s financial center. Odds on favourite to be the new one? Dubai. London doesn’t want it (they want to be middlemen). Tokyo can’t quite do it. Shanghai isn’t ready.

But Dubai is raring to go. And that’s one real reason why Congressional leaders and Wall Street CEOs are panicking. If Wall Street isn’t bailed out by Congress, the executives will all be either working for Chinese and Arabs, or they’ll be out on the street, drowning their sorrow in their 50 feet yachts drinking $100,000 dollar bottles of whine. Er, wine.

What the US government is really seeking to do (among other things) is to engage in its own version of state capitalism in order to fend off the accelerating shift of power from America to Asia. And that’s one of the motivations they don’t particularly want to foreground, because the US taxpayer will be footing the bill. Make no mistake, this is just as much about geopolitics as finance.

Continue reading ‘The elephant in the room (or on Wall Street)’

The end of financialisation? II

Published
by
Mark
1 year, 5 months ago
in Economics, International, Markets, Media, Sociology and USA
. 62 Comments

As a supplement to earlier posts on the sociology of the global financial crisis from Kim and dk.au, I thought I’d note something very interesting written by Henry Farrell at Crooked Timber. Farrell traces the shift in paradigm in the regulatory architecture of finance, one that has supplemented the first shift away from direct involvement of the state in economic ownership:

The second is more specific and recent – the tendency to replace ‘heavy-handed’ forms of regulation with ‘regulation with a light touch’ and self-regulation. This has been most marked in Anglo-American economies, but other countries (in continental Europe and elsewhere) have faced persistent ideological pressures to move in this direction. This is a large chunk of the so-called ‘reform’ agenda that the Economist magazine, the OECD and other such bodies keep pushing. Both of these shifts are largely ideological – that is, they gained much of their impetus from changes in the ideas which constitute policy-makers’ shared collective wisdom about how to deal with the economy.

The second shift (the reform agenda) is now a busted flush. Its proponents are in disarray (if I’m feeling in a vindictive mood, I may well buy a copy of the next Economist to see how its editorialists try to rationalize all of this).

Any reasonable assessment of the actions of the Fed and the US Treasury would suggest that they’re driven by confusion and are very much ad-hoc measures. Neither Bernanke nor Paulson seems to have much of a big picture grip, and politicians reciting “the fundamentals are sound” is clearly not going to cut the mustard now, even, as with John McCain, precipitating something of a backlash.

John Quiggin has speculated on how all this will play out. The confusion has led to some quite bizarre moments, such as pundits on Lateline Business declaiming “capitalism is in crisis” and “the financial markets may not be viable”. What we’re seeing – among other things – is a decomposition of that abstraction “the markets” and a reduction of these so-called impersonal forces to the panicked reactions of individuals. If Robert Skidelsky is right, and a tipping point has been reached, it begs a very big question, which Farrell answers in terms of process (because no one can know the outcome of such a fluid conjuncture). Continue reading ‘The end of financialisation? II’