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Accumulation by dispossession and savage sorting

a little night musing's picture
Submitted by a little night ... on Fri, 07/02/2010 - 2:15pm
Thread: 
Economic Apocalypse
Tags: 
capitalism
Sub Prime crisis
CDS
fiscal policy
austerity

A review at the Global Sociology Blog. Here is a taste:

In this system, crisis is not a bug, it is a feature:

“‘Crisis’ is a structural feature of deregulated, interconnected, and electronic financial markets. These same features also fed the sharp growth of finance, partly based on the financializing of non-financial economic sectors, leading to overall extremely high financial deepening. Thus, if crisis is a structural feature of current financial markets, then crisis becomes a feature of non-economic sectors through their financializing. (…) The overall outcome is extreme potentials for instability even in strong and healthy (capitalist) economic sectors, particularly in countries with highly developed financial systems and high levels of financialization, such as the US and the UK.” (36)

In this sense, and as has been noted by many authors [ahem], the sub-prime crisis was not one of irresponsible homeowners buying homes they could not afford but has more to do with the structurally-based high demand for asset-backed securities for speculative investments. As Sassen shows, the defaults on sub-prime mortgages would have been too small to generate the crisis that hit in September 2008. Increasingly complex financial instruments are the roots of this: the fact that they were in high demand and the fact that the capital was not there when CDS holders came cashing in, a crisis of confidence, as Sassen notes.

As with structural adjustment programs and the new land grab, the sub-prime crisis has to do with deepening extraction, or accumulation by dispossession. This is a form of violence that is easily enacted as it is done by computer and since the bundling of mortgages into complex financial instruments also involve a complete delinking with the material basis (houses) so that extraction-by-software can be done with total disregard for anything else involved (the human factor).

Be afraid. Be very afraid.

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sisterkenney's picture
Submitted by sisterkenney on

And as so neatly described in the following article, the search for 'derivatives" led to speculation in world crops of wheat, rice, and corn, which led to starvation in many third world countries...(other crops, not listed on the 'market", such as sorghum, did not suffer this increase):
http://laudyms.wordpress.com/2010/04/21/...

My fave take from this article:
Nonetheless, the disproportionate influence of the unregulated financial market on the real economy of goods and services (see [7] Financing Poverty, SiS 40) is most devastating for people’s access to food, a basic necessity.

kohlrabi's picture
Submitted by kohlrabi on

attention. It made clear what I had suspected for a long time: the destruction of the housing market, and infrastructure (as neighborhoods decay, viz. Detroit) was an 'unfortunate result' of the intended dispossession of the financial assets of the middle class. I had been trying to figure out what the plan was for the millions of REO houses. Now it seems there was never a plan, and the homelessness and abandoned housing are mere artifacts of the scheme to frack out the money earned by the middle class during the age of prosperity (when there was a social contract and rule of law).

If we change our perspective of thought about what they're doing, and dispense with the outraged rants, and instead try to imagine that we are Sri Lankan fisher people after the tsunami, or SOWETO residents, when the IMF swooped in to put the squeeze on ANC, then we will have a better feel for what has already happened to our 'government' and what Congress and the president are going about. This is what was meant by 'the banks own the place.'

Naomi Klein's last chapter of The Shock Doctrine is called 'Shock Wears Off', and describes resistance to dispossession by the people in the IMF's usual target countries. We in the Global North have been softened up for stripping our assets by 35 years of 'free market' propaganda.

Over at Ilargi's I scrolled down to this Telegraph article 'Middle class families face a triple whammy' which describes a throwaway sentence in the IMF's 2005 'Financial Stability Report':

...households had become the financial system's "shock absorber of last resort". In other words, whereas in previous eras, much of the pain of recession and financial crisis was borne by businesses or governments, with families afforded some degree of protection by the pensions system or welfare state, it was now households who were far more likely to face the music.

I think the author, Edmund Conway, misinterprets. I think the IMF's statement was an outright declaration of intent to go after the assets that had, since WWII, been accumulated into the middle class of the Global North. I'm sure they viewed our 'wealth' as stagnating and that they could put it to better use increasing the GDP, or something. The economic crisis was nothing other than shock therapy intended to be used to empty the treasuries of the nations of the Global North, and of their citizens.

The response to the BP blowout shows that the government itself has already been hollowed out and populated with people whose mere function is to sell off the people's patrimony (mineral rights and energy resources), and run interference between the citizens and the corporate vultures who are now dispossessing us of the natural resources under our feet. The rape of Pennsylvania's Marcellus shale, as PA_Lady describes in her 'Life in the Gas Lane' series, is no different from an IMF SAP: by impoverishing those who own the land, they are forced into selling out to the gas man, one well at a time. Of course the state of PA was induced to sell out its state forests first, and without a severance tax, just as deepwater oil is tax-free.