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Canadian election
Fear not, the bubbles and popping sounds are natural
By Kevin Potvin
Don’t panic, says the Prime Minister. We tend to agree
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Don’t worry, says Canadian Prime Minister Stephen Harper, “if we were going to have some kind of big crash or recession, we probably would have had it by now.”
So goes the sage advice of the leader of one of the G8 economies. If anything, the admission of total confusion and helplessness should come as a relief to those who suspect he’s a pawn of neo-cons in Washington. He’s no neo-con, he’s just a University of Calgary geek who fell into economics because, what else is there for someone good at math but nothing else, and who ended up Prime Minister at a moment when there was nobody else available? He’s a poser, which is not to put him down: in politics, they are all posers, some more or less effective at helping the very big money guys protect and grow their stashes. Those big money guys can barely tolerate the likes of him at parties any more than the rest of us can. The trick is to enact or destroy legislation as necessary to the smooth functioning of landed piracy while placating, cajoling, humouring or threatening the sometimes restless slaves who do the landed rowing. Hence the “What me worry” comment from our nominative leader standing with his back to the cliff.
We may be completely sure that in closed door meetings the past week between the Prime Minister, the governor of the Bank of Canada and the CEOs of the Royal Bank (monarchy?), the Canadian Imperial Bank of Commerce (empire?), the Toronto Dominion Bank (domination?), and others, there was no sentence uttered that sounded anything like the “no problem” the Prime Minister gave us.
There may or may not be an economic catastrophe in the offing, but the ordinary people of Canada are awfully resilient and strong and will survive. But the Dominant Blood-line Empire, otherwise known as Canada’s banking industry, is certainly scared of one.
What they are scared of in particular is ordinary Canadians suddenly stopping what they do that is most necessary to the functioning of the modern financial system, which is to consume far more than what they actually need, and to purchase it all with far more than they actually have. Long gone are the days of people working, earning, spending and enjoying. Credit-supported consumption has vastly outstripped earnings-supported consumption. The size of the economy used to be determined roughly by counting how much cash is floating around that economy. Today, cash and its equivalents amount to something less than 10% of the Canadian economy. Private bank-created credit swamps Canadian government-created cash currency.
Credit-based economy works great for the most part, except that banks know that credit-based currency isn’t real, and all of these credit devices they have invented and marketed need at some point to generate an income of real cash. Hence, there are credit card monthly minimum payments to be made in cash only: they don’t let you pay with another credit card account. (Why indeed are credit cards accepted for payment by everyone else except by those who invented them?) Monthly mortgage payments are tied directly to your real cash income and are not payable with any credit device either. Try telling a bank you’re going to reach into the walls of your own home to pay your mortgage. “No freakin’ way” is what the bank is going to tell you. It ought to tell you something when the guy who cooks your meal won’t eat his own food.
A person can run up an extraordinary level of credit based on his successfully meeting his monthly minimum payments, but there is a point at which even that obligation can’t be met—the payments have simply grown too big for his real cash income to meet. Typically, the consumer declares bankruptcy and starts all over again, stripped of all saleable personal assets and with zero owing all over again. An insurance policy taken out by the bank covers the loss, a cost already anticipated in general by the insurance company and so already covered off as part of its normal operating expenses. Bob’s your uncle.
But what if too many people go bankrupt at the same time? Last week, the biggest bank insurance company in the world was an hour away from itself declaring bankruptcy and was rescued only by a blackmailed US government forced into a nationalization scheme to the tune of $85 billion (in exchange for 79.9% of the company—why 79.9% and not 80% we’re still trying to learn the significance of).
Think about this: the company that insures credit cards against losses due to personal bankruptcies due to eventually too-high minimum payments on outstanding credit card balances, is now government-owned, and so is now kept alive and functioning thanks to money provided by the very same credit-card-defaulting and tax-paying ordinary citizens.
It’s quite possible the collapse of Merrill Lynch, Lehman Brothers, Fannie Mae, Freddie Mac, and AIG is not the end of imperial capitalism as we know it. Everybody thinks the popping of the housing bubble was a disaster, just like the popping of the dot-com bubble a decade earlier was going to be a disaster. But there have been bubbles and the popping thereof going back all the way to the original South Sea bubble that gave rise to the modern financial industry. The tulip bubble was another. These are not disasters. Bubbles are organic to the non-cash economy, and one after another have comprised business-as-usual for a long time. Some new craze, some new bubble, is coming. Whatever it will be, it won’t make any sense, just as the housing bubble and the dot.com bubble, no less than the tulip bubble and the South Seas bubble, made no sense. Of course they don’t make sense: they’re speculative bubbles. The real economy is only 10% the size of the speculative economy. It’ll keep going along. But just imagine if there was only as much money around as that which was earned. That would be the blue pill world.
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The Republic of East Vancouver masthead
The Republic of East Vancouver supports no party, advocates
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