About the A.I.G. affair: During the bubble years, many financial companies created the illusion of financial soundness by buying credit-default swaps from A.I.G. — basically, insurance policies in which A.I.G. promised to make up the difference if borrowers defaulted on their debts. It was an illusion because the insurer didn’t have remotely enough money to make good on its promises if things went bad. And sure enough, things went bad.

So why protect bankers from the consequences of their errors? Well, by the time A.I.G.’s hollowness became apparent, the world financial system was on the edge of collapse and officials judged — probably correctly — that letting A.I.G. go bankrupt would push the financial system over that edge. So A.I.G. was effectively nationalized; its promises became taxpayer liabilities.

But was there any way to limit those liabilities? After all, banks would have suffered huge losses if A.I.G. had been allowed to fail. So it seemed only fair for them to bear part of the cost of the bailout, which they could have done by accepting a “haircut” on the amounts A.I.G. owed them. Indeed, the government asked them to do just that. But they said no — and that was the end of the story. Taxpayers not only ended up honoring foolish promises made by other people, they ended up doing so at 100 cents on the dollar.

Could things have been different? Some commentators argue that government officials had no way to force the banks to accept a haircut — either they let A.I.G. go bankrupt, which they weren’t ready to do, or they had to honor its contracts as written.

But this seems like a naïve view of how Wall Street works. Major financial firms are a small club, with a shared interest in sustaining the system; ever since the days of J.P. Morgan, it has been common in times of crisis to call on the big players to forgo short-term profits for the industry’s common good. Back in 1998, it was a consortium of private bankers — not the government — that put up the funds to rescue the hedge fund Long Term Capital Management.

Furthermore, big financial firms have a long-term relationship, both with the government and with each other, and can pay a price if they act selfishly in times of crisis. Bear Stearns, the investment bank, earned itself a lot of ill will by refusing to participate in that 1998 rescue, and it’s widely believed that this ill will played a major factor in the demise of Bear Stearns itself, 10 years later.

So officials could have called on bankers to offer a better deal, for their own sake, and simultaneously threatened to name and shame those who balked. It was their choice not to do that, just as it was their choice not to push for more control over bailed-out banks in early 2009.

And, as I said, these seemingly safe choices have now placed the economy in grave danger.

via www.nytimes.com

The university steals and homogenizes our time yes, our bank accounts also, but it also steals and homogenizes meaning.  As much as capital is invested in building a killing apparatus abroad, an incarceration apparatus in California, it is equally invested here in an apparatus for managing social death.  Social death is, of course, simply the power source, the generator, of civic life with its talk of reform, responsibility, unity.  A  ‘life,’ then, which serves merely as the public relations mechanism for death: its garrulous slogans of freedom and democracy designed to obscure the shit and decay in which our feet are planted. Yes, the university is a graveyard, but it is also a factory: a factory of  meaning which produces civic life and at the same time produces social death.  A factory which produces the illusion that meaning and reality can be separated; which everywhere reproduces the empty reactionary behavior of students based on the values of life (identity), liberty (electoral politics), and happiness (private property).  Everywhere the same whimsical ideas of the future.  Everywhere democracy. Everywhere discourse to shape our desires and distress in a way acceptable to the electoral state, discourse designed to make our very moments here together into a set of legible and fruitless demands.

Totally managed death. A machine for administering death, for the proliferation of technologies of death. As elsewhere, things rule. Dead objects rule. In this sense, it matters little what face one puts on the university—whether that of Yudof or some other lackey. These are merely the personifications of the rule of the dead, the pools of investments, the buildings, the flows of materials into and out of the physical space of the university—each one the product of some exploitation—which seek to absorb more of our work, more tuition, more energy. The university is a machine which wants to grow, to accumulate, to expand, to absorb more and more of the living into its peculiar and perverse machinery: high-tech research centers, new stadiums and office complexes. And at this critical juncture the only way it can continue to grow is by more intense exploitation, higher tuition, austerity measures for the departments that fail to pass the test of ‘relevancy.’

But the ‘irrelevant’ departments also have their place.  With their ‘pure’ motives of knowledge for its own sake, they perpetuate the blind inertia of meaning ostensibly detached from its social context.  As the university cultivates its cozy relationship with capital, war and power, these discourses and research programs play their own role, co-opting and containing radical potential.  And so we attend lecture after lecture about how ‘discourse’ produces ‘subjects,’ ignoring the most obvious fact that we ourselves are produced by this discourse about discourse which leaves us believing that it is only words which matter, words about words which matter.  The university gladly permits precautionary lectures on biopower; on the production of race and gender; on the reification and the fetishization of commodities.  A taste of the poison serves well to inoculate us against any confrontational radicalism.  And all the while power weaves the invisible nets which contain and neutralize all thought and action, that bind revolution inside books, lecture halls.

There is no need to speak truth to power when power already speaks the truth.  The university is a graveyard–así es. The graveyard of liberal good intentions, of meritocracy, opportunity, equality, democracy. Here the tradition of all dead generations weighs like a nightmare on the brain of the living. We graft our flesh, our labor, our debt to the skeletons of this or that social cliché. In seminars and lectures and essays, we pay tribute to the university’s ghosts, the ghosts of all those it has excluded— the immiserated, the inca

via anticapitalprojects.wordpress.com

Debt didn’t get dangerously out of scale because the system was broken. It got out of scale, in part, because the system worked.

The government doesn’t make people go into debt, of course. It just nudges them in that direction. Individuals are able to write off all their mortgage interest, up to a million dollars, and companies can write off all the interest on their debt, but not things like dividend payments. This gives the system what economists call a “debt bias.” It encourages people to make smaller down payments and to borrow more money than they otherwise would, and to tie up more of their wealth in housing than in other investments. Likewise, the system skews the decisions that companies make about how to fund themselves. Companies can raise money by reinvesting profits, raising equity (selling shares), or borrowing. But only when they borrow do they get the benefit of a “tax shield.” Jason Furman, of the National Economic Council, has estimated that tax breaks make corporate debt as much as forty-two per cent cheaper than corporate equity. So it’s not surprising that many companies prefer to pile on the leverage.

There are a couple of peculiar things about these tax breaks—which have been around as long as the federal income tax. The first is that they’re unnecessary. Few people, after all, can save enough to buy a home with cash, so home buyers naturally gravitate toward mortgages. And businesses like debt because it offers them tremendous leverage, making it possible to put down a little money and potentially reap a huge gain. Even in the absence of the deductions, then, there would be plenty of borrowing. The second thing about these breaks is that their social benefits are pretty much nonexistent. Advocates of the mortgage-interest deduction, for instance, claim that it increases homeownership rates. But it doesn’t: in countries where mortgage deductions have been eliminated, homeownership rates haven’t dropped. Instead, the deduction simply inflates house prices. The business-interest deduction, meanwhile, may lower an individual company’s taxes, but it also means that the over-all corporate tax rate is higher, so its real impact is to give companies with lots of debt an unjustified advantage.

If the benefits are illusory, the costs are all too real. Economies work best, generally speaking, when people are making decisions based on economic fundamentals, not on tax considerations. So, as much as possible, the tax system should be neutral between debt and equity, and between housing and other investments. It’s not, and, worse still, as we’ve seen in the past couple of years, debt magnifies risk: if companies or individuals rely on large amounts of leverage, it’s much easier for bad decisions to lead to insolvency, with significant ripple effects in the wider economy. A debt-ridden economy is inherently more fragile and more volatile.

via www.newyorker.com

Excerpts from Henry Giroux (read the whole thing):

Zombies are invading almost every aspect of our daily lives. Not only are the flesh-chomping, blood-lusting, pale-faced creatures with mouths full of black goo appearing in movie theaters, television series, and everywhere in screen culture as shock advertisements, but these flesh-eating zombies have become an apt metaphor for the current state of American politics. Not only do zombies portend a new aesthetic in which hyper-violence is embodied in the form of a carnival of snarling creatures engorging elements of human anatomy, but they also portend the arrival of a revolting politics that has a ravenous appetite for spreading destruction and promoting human suffering and hardship.[4] This is a politics in which cadres of the unthinking and living dead promote civic catastrophes and harbor apocalyptic visions, focusing more on death than life. Death-dealing zombie politicians and their acolytes support modes of corporate and militarized governance through which entire populations now become either redundant, disposable or criminalized. This is especially true for poor minority youth who, as flawed consumers and unwanted workers, are offered the narrow choice of joining the military, going to prison or being exiled into various dead zones in which they become socially embedded and invisible.[5] Zombie values find expression in an aesthetic that is aired daily in the mainstream media, a visual landscape filled with the spectacle of destruction and decay, wrought by human parasites in the form of abandoned houses, cars, guttered cities, trashed businesses. There are no zombie free spaces in this politics, as a country paralyzed by fear has become the site of a series of planned, precision attacks on constitutional rights, dissent and justice itself. Torture, kidnappings, secret prisons, preventive detention, illegal domestic spying and the dissolution of habeas corpus have become the protocol of a newly fashioned dystopian mode of governance. Zombie politics reveals much about the gory social and political undercurrent of American society.

via www.truthout.org

This is a politics where the undead, or more aptly, the living dead, rule and rail against any institution, set of values, and social relations that embrace the common good or exhibit compassion for the suffering of others. Zombie politics supports megacorporations that cannibalize the economy, feeding off taxpayer dollars while undercutting much-needed spending for social services. The vampires of Wall Street reach above and beyond the trajectories of traditional politics, exercising an influence that has no national or civic allegiance, displaying an arrogance that is as unchecked as its power is unregulated. As Maureen Dowd has pointed out, one particularly glaring example of such arrogance can be found in Lloyd Blankfein's response to a reporter's question when he asked the chief of Goldman Sachs if "it is possible to make too much money."[6] Blankfein responded by insisting, without irony, that he, and I presume his fellow Wall Street vampires, were "doing God's work."[7] A response truly worthy of one of the high priests of voodoo economics who feels no remorse and offers no apology for promoting a global financial crisis while justifying a bloated and money-obsessed culture of greed and exploitation that has caused enormous pain, suffering and hardship for millions of people. Unfortunately, victim to their own voodoo economics, the undead along with their once barely breathing financial institutions keep coming back, even when it appears that the zombie banks and investment houses have failed one last time, with no hope of once again wreaking their destruction upon society.

Zombie ideologies proliferate like the breathing, blood-lusting corpses in the classic "Night of the Living Dead." They spew out toxic gore that supports the market as the organizing template for all institutional and social relations, mindlessly compelled, it seems, to privatize everything and aim invective at the idea of big government but never at the notion of the bloated corporate and militarized state. Zombie culture hates big government, a euphemism for the social state, but loves big corporations and is infatuated with the ideology that, in Zombieland, unregulated banks, insurance companies and other megacorporations should make major decisions not only about governing society but also about who is privileged and who is disposable, who should live and who should die. Zombie politics rejects the welfare state for a hybridized corporate and punishing state. Just as it views any vestige of a social safety net as a sign of weakness, if not pathology, its central message seems to be that we are all responsible for ourselves and that the war of all against all is at the core of the apocalyptic vision that makes zombie politics both appealing as a spectacle and convincing as a politics. Zombie violence and policies are everywhere backed by an army of zombie economic advisers, lobbyists and legislators, all of whom seem to revel in spreading the culture of the undead while feasting on the spread of war, human suffering, violence and catastrophe across the United States and the larger globe.

Evidence of the long legacy of zombie politics and its death-dealing policies are on full display as we move into the early stages of the Obama administration. Even progressive zombie books such as Max Brooks's "World War Z" have a hard time keeping up with the wrath of destruction overtaking American society, especially as the mutually determining forces of economic inequality, corporate power and a growing punishing corporate state become the defining features of zombie politics at the beginning of the new millennium. A millennium in this case marked by a burgeoning landscape filled with the wreckage of those populations now considered disposable, especially with regards to children who are increasingly treated as one of the most disposable populations. For instance, the Obama administration now labors under the burden of death-dealing institutions and advisers, along with a predatory market-driven economics that continues to produce an economic recession in which 13 million children live in poverty, 17 percent of poor children lack insurance, one million children are homeless, nearly half of all children and 90 percent of black youth will be on food stamps at some point in their youth, 45,000 people die every year because of a lack of health insurance, 3.6 million elderly live in poverty, and more than 16 million people are unemployed. The violence of zombie politics is also evident in the fact that more and more working- and middle-class youth and poor youth of color find themselves confronted with either vastly diminishing opportunities or are fed into an ever-expanding system of disciplinary control that dehumanizes, medicalizes and criminalizes their behavior in multiple sites, extending from the home and school to the criminal justice system - not, of course, devoured in order to be "integrated" or "incorporated" into the system, but rather ingested and vomited up, thus securing the permanence of their exclusion.

...

One of the cardinal policies of zombie politics is to redistribute wealth upwards to produce record high levels of inequality, just as corporate power is simultaneously consolidated at a speed that threatens to erase the most critical gains made over the last fifty years to curb the anti-democratic power of corporations. Zombie policies aimed at hollowing out the social state are now matched by an increase in repressive legislation to curb the unrest that might explode among those populations falling into the despair and suffering unleashed by a "savage, fanatical capitalism" that constitutes a war against the public good, the welfare state and "social citizenship."[12] Deregulation, privatization, commodification, corporate mergers and asset stripping go hand in hand with the curbing of civil liberties, the increasing criminalization of social problems and the fashioning of the prison as the preeminent space of racial containment (one in nine black males between the ages of 20 and 34 is incarcerated). [13] The alleged morality of market freedom is now secured through the ongoing immorality of a militarized state that embraces torture, war and violence as legitimate functions of political sovereignty and the ordering of daily life. As the rich get richer, corporations become more powerful, and the reach of the punishing state extends itself further, those forces and public spheres that once provided a modicum of protection for workers, the poor, sick, aged and young are undermined, leaving large numbers of people impoverished and with little hope for the future.

David Harvey refers to this primary feature of zombie politics as "accumulation by dispossession,"[14] which encompasses the privatization and commodification of public assets, deregulation of the financial sector, and the use of the state to direct the flow of wealth upward through, among other practices, tax policies that favor the rich and cut back the social wage. As Harvey points out, "All of these processes amount to the transfer of assets from the public and popular realms to the private and class privileged domains"[15] and to the overwhelming of political institutions by powerful corporations that keep them in check. Zygmunt Bauman goes further and argues that not only do zombie politics and predatory capitalism draw their life blood from the relentless process of asset stripping, but they also produce "the acute crisis of the 'human waste' disposal industry, as each new outpost conquered by capitalist markets adds new thousands or millions to the mass of men and women already deprived of their lands, workshops, and communal safety nets."[16] The upshot of such policies is that larger segments of the population are now struggling under the burden of massive debts, bankruptcy, unemployment, lack of adequate health care and a brooding sense of hopelessness. Once again, what is unique about this type of zombie politics is not merely the anti-democratic notion that the market should be the guide for all human actions but also the sheer hatred for any form of sovereignty in which the government could promote the general welfare. Zombie politics and the devaluation of the public good go hand in hand.

If financialized neoliberal capitalism is hanging by a thread, what does it take to cut the thread?

Does the shift of indicators of financial stability to markets, currencies, credit, and risk mean that those are the primary locations for political engagement? Differently put, if organized labor was the primary means for opposition industrial capitalism and, say, boycotts a primary means for engaged opposition in consumer capitalism (I don't actually think this is accurate; nor do I think the opposition or clear staging this suggests works), what is the corresponding activity and location of struggle under finance capitalism? Are the only actors whose resistance counts investors? Those who can pull or redirect massive amounts of capital? Is China the only political agent left?

I can imagine a general strike--service sector, medical personnel, transportation, call centers, IT sectors, local banks, grocery stores, gas stations. But, under conditions of over ten percent unemployment, this doesn't seem like the most likely or effective sort of action.

The right imagines armed resistance--frequently and vocally. It doesn't seem like a fantasy; it feels a threat, thuggish, a way of inciting fear. (Yet, a line from The Prisoner: fear is a cover for guilt; is at least part of the fear a mask for guilt in not having convictions worth defending, worth fighting for?). While I sometimes find myself admiring the boldness, I think this is ultimately weak, a failure to do the harder work of organizing, changing minds, building something else (Zizek sometimes says that violence betrayals the refusal to go to the end). It favors acting out rather than an Act (although aren't there instances when these overlap, like in the last scene of Fight Club?).

I don't admire either a micropolitics of everyday transactions--I'll just pull my money out of the bank and put it under my mattress; even better, I'll stop using money altogether. Yet, the hyperindividualism and personalization of communicative capitalism pushes the tiny gestures: click here to say you don't like the bailouts. 

What does it mean to cut the thread? The bad guys are screaming about refusing to pay taxes. This dismantles government and social services--it feeds the neoliberal mentality of letting economic competition govern ever more aspects of existence.

What does it mean to cut the thread? Maybe pull the plug, scramble the code, deny service. Maybe erase and block and redirect and rewrite, a pretty easy task for 100 or so well placed programmers. But here's the thing: is that what we want? Or are we hanging on by it, too?