[OPE-L] That hissing? It's the sound of bubblenomics deflating

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Sat Oct 06 2007 - 08:36:59 EDT


I'll read your book. Just quickly, this definition of economic value as the
currently average socially necessary labour time objectified in a product is
not unproblematic, insofar as labour-services do not result in any
identifiable product. I am not sure how I could possibly prove that the
dispersion of exchange ratios around value ratios is small, and that as a
whole, it is a zero sum game. But I agree that if asset prices rise or fall
due to changing supply/demand conditions, this does not necessarily tell us
anything about the Marxian labour-values of those assets. Throughout Cap. 1
and 2, Marx assumes a commodity theory of money and a gold standard, only in
Cap. 3 does he begin to qualify this assumption.

One question is whether you define the production of the gross output as
constituting the whole economy. I do not. And with Marx, I think that
capital does not have to be lodged in productive assets in order to be
capital. Consequently, it is possible that a larger amount of capital assets
can exist external to production, than inside it.

I had hoped that, confronted with half a million US home-owners foreclosing
their mortgages, that American leftists would investigate the social meaning
of all this - what are the specific causes for this, what are the
consequences for people's lives, and what opportunities does this create for
an alternative politics etc. But they don't do this, instead they reiterate
the boring refrain that the rate of profit is falling and that the recession
is coming, blah blah. Well, every boom is followed by a bust, but that is
not an analysis that can orient anybody (well, I haven't read Michael
Perelman's new book yet).

- Merrill Lynch said it will have to write down a $5.5 billion loss for bad
investments linked to defaulted US sub-prime mortgages.
- Fannie Mae and Freddie Mac reportedly could have $4.7 billion in
unrealized losses from the deterioration in subprime mortgages.
- Washington Mutual forecasts its losses will amount to $975 million.
- Eight of Japan's largest banks have so far disclosed U.S. sub-prime losses
totaling 20 billion yen (approx. $170 million)
- The BBC said total bank losses that will occur from sub-prime defaults are
currently estimated at $18 billion (presumably spread over some years).
-  Total average home prices and home sales in the US are now estimated as
falling at about 4% year-on-year.
- The Center for Responsible Lending http://www.responsiblelending.org/
estimated that 2.2 million US borrowers who got subprime loans since 1998
either have lost or will lose their homes through foreclosure over the next
few years, costing them potentially about $164 billion (this figure however
refers to the estimated volume of cancelled loans, not the net financial
loss to the homebuyer). These foreclosures would include one in every five
borrowers who got subprime loans in 2005-06.

It's still not clear to me how a great economic conflagration can result
from this rumble alone though. It's best to be Left of the Left, or better
still, to be Left of the Left of the Left, i.e. do you own thing, never mind
the propaganda. Society gives rise to certain problems, the bourgeois
intellectuals then interpret those problems from their point of view, and
the Left criticises that interpretation. In the process, the problems are
framed wrongly, and it is often no longer even clear whose problem it is

NYT (June 3, 1996) reported that of the world's 5.8 billion people
(increasing by 86 million a year) more than 600 million are homeless or
living in inadequate, unsafe and unhealthy housing.

In 2005, UN  Special Rapporteur on Adequate Housing Miloon Kothari estimated
that over one billion people on the planet lack adequate housing, while
around 100 million have no housing whatsoever.

Estimates differ on the number of homeless in the US, but it is a fairly
safe bet that there are at least 1 million of them.


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