The US government is corrupt

Senator admits that the banks "own" Congress:

Sen. Dick Durbin, on a local Chicago radio station this week, blurted out an obvious truth about Congress that, despite being blindingly obvious, is rarely spoken: "And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."

No comment. How appalling.

Additionally, Treasury Secretary Timothy Geithner has severe conflicts of interest, to the point of being corrupt. A recent New York Times article details his numerous personal connections with the financiers who he was supposed to oversee:

Geithner, Member and Overseer of Finance Club

His calendars from 2007 and 2008 show that those interactions were a mix of the professional and the private.

He ate lunch with senior executives from Citigroup, Goldman Sachs and Morgan Stanley at the Four Seasons restaurant or in their corporate dining rooms. He attended casual dinners at the homes of executives like Jamie Dimon, a member of the New York Fed board and the chief of JPMorgan Chase.

Mr. Geithner was particularly close to executives of Citigroup, the largest bank under his supervision. Robert E. Rubin, a senior Citi executive and a former Treasury secretary, was Mr. Geithner’s mentor from his years in the Clinton administration, and the two kept in close touch in New York.

Mr. Geithner met frequently with Sanford I. Weill, one of Citi’s largest individual shareholders and its former chairman, serving on the board of a charity Mr. Weill led. As the bank was entering a financial tailspin, Mr. Weill approached Mr. Geithner about taking over as Citi’s chief executive.

But for all his ties to Citi, Mr. Geithner repeatedly missed or overlooked signs that the bank — along with the rest of the financial system — was falling apart. When he did spot trouble, analysts say, his responses were too measured, or too late.

...

A revolving door has long connected Wall Street and the New York Fed. Mr. Geithner’s predecessors, E. Gerald Corrigan and William J. McDonough, wound up as investment-bank executives. The current president, William C. Dudley, came from Goldman Sachs.

Yep, it sounds pretty bad. While Geithner may not actually be corrupt in the sense of taking money from the financiers, he is definitely absorbed their mentality and identified with their interests. In short, he has long-since succumbed to what Willem Buiter calls "cognitive regulatory capture". Being closer to the bankers didn't make it any easier for Geithner to spot the excesses and idiocies of the banks - but he did end up believing that what was good for Wall Street was good for the country. (A bizarre viewpoint that has once again been contradicted by the facts: big banks made a government-funded profit in the first 3 months of 2009 while the economy contracted at an annual rate of 6.1%.)

Additionally, the possibility of a quid pro quo has always existed - if Geithner upholds the interests of investment banks, they will be prepared to give him a lucrative job when he wants it.

In short, in some important ways the US government is not giving priority to the interests and needs of the majority of its citizens - i.e. the voters. Due to Wall Street's ownership of Congress and the de facto corruption of the US Treasury and Federal Reserve, the interests of banking will always come first. This means unlimited trillions to support finance profits, and pittances for social investment or welfare. By the time we badly need a safety net, the money will have all been given to the owners of our elected representatives.

We no longer live in a democracy of equal men and women - we live in a democracy of dollars.

Social networking for the dead

If my generation grows up and keeps doing the things it's doing, we're going to be pretty damn fucked up when we get old. Don't believe me? Scale youth fashion forward into the rest home. Somebody's gonna refuse to give up on flashing their thong, even if they have to do it from a wheelchair.

And assuming that we all stay on Facebook (or a similarly invasive octopus of a website), many of us will survive to see our dead Facebook friends outnumber the living ones. Eventually, shadows of ourselves may be able to live on in virtual form: spreading memes, giving birthday wishes, and being marketed to.

Except that's already happening:

Facebook offers a way to leave the ultimate status update.

Already, Facebook has become a central hub for news that a person has died with their home page functioning as an ad hoc trading post for information about the funeral and gathering place for condolence notes.

After that initial phase, relatives can ask Facebook to place the dead person's page into a "Memorial State" that limits use to only certain friends and family members. To trigger that process, family members typically must send Facebook a newspaper clipping about the person's death, or an official death notice from a local government.

(Facebook launched the feature after the 2007 shootings at Virginia Tech, when students flocked to each other's pages to make comments.)

Yep, yep, that's creepy. Moving along...

There were a lot of weird parts to this article, which detailed a variety of websites being set up for the dead. Online funeral homes and so on and so forth. But the weirdest of the lot - and possibly the weirdest of e-businesses period - was this:

The Harwich, Mass.-based Web site YouveBeenLeftBehind.com promises to save your advice for relatives and friends whom you fear might not make it to Heaven should the end of the world occur.

But, you ask, how might they do this?

The computer system is designed to detect the Rapture: A group of several faithful families, geographically dispersed, log into the system daily, and their failure to do so trips the switch. In that event, the system presumes those families were taken up in the Rapture, and sends out your last-chance advice to a list of 60 or more addressees.

Several hundred customers have signed up to pay $14.95 per year, since the site launched a year ago.

This is actually a reasonably clever way of doing this. The bewildering part, however, is the certainty with which the site has chosen its Elect. They picked "several faithful families" - i.e. those who are assured of being Raptured. But didn't it ever cross their mind that they might have chosen wrongly, either by not being aware of some private failing of these families or by simply having no knowledge of god's criteria for salvation? (In the event of sudden Rapture, I'm hoping he picks the booze-loving yet principled nonbelievers and goes off to have a party with us. But how would I know?)

In short, to me this seems more or less like wishful thinking - if the Rapture comes, if I'm raptured, if my friends and family aren't, if the Internet even survives in the first place... But to a true believer I suppose all of those faint probabilities crystallize down into absolute certainty.

And even if it all did turn out, what the hell kind of good would advice to those remaining do? Would it go like this? "Sorry I was raptured without you honey. I reckon you should get out the Good Book, read up a little, maybe listen to some of my Billy Graham tapes, and let Jesus into your heart... ah, wait, he's already come and gone. Hmmm. That's a problem. Well. Have fun with the seven-headed beast."

The Nunns guide to men's fashion

Menswear is a dying art. Gone are the braces, the spats, the top hats, the vests and cravats. Work-wear has been slimmed down to what used to be evening-wear, and evening-wear now can often get by without any buttons or fancy widgets.

So we start with the humble two-piece suit. What is preferable? Tie or no tie? Collars? Number of buttons? Colors?

Here's what you do: Start in a thrift shop, and go back there once a week until you've found what you need. If you're my monstrously-sized brothers, this will be difficult (unless you're willing to get things altered).

Shirts: The two key factors here are the size of the shirt, and the lack of stains. Arms should be long enough to touch your wrists, and the body shouldn't be ridiculously baggy. Beyond that, anything goes. You may notice that collars vary in width - some are quite pointy and narrow, while others spread wider. This doesn't matter so much. (Wider collars seem to be in at the moment.) If you're getting stripy shirts, wide stripes often make you look like a guido. Solid colors are more reliable, unless they're puce or weird brown colors.

I quite like light yellow shirts.

Ties: The important thing is that the color doesn't look ridiculous against the shirt. Ties are usually multicolored, so when possible make sure that the minor color matches the shirt color. (Bonus points if the tie picks up the color of your suit too.) For whatever reason, I am highly suspicious of ties with circles on them - perhaps because I am a vertical sort of guy. Diagonal stripes, on the other hand, are nice.

Ties made in the 1970s are ideal, but not all of them. (For obvious reasons.) And learning how to tie a windsor knot at the right length is a good move.

Shoes, belt: Black suit = black shoes and belt. Anything else is your choice. Match the shoe and belt colors. I have yet to see white shoes work for anybody.

Monocle: Optional.

Suit: Black will never go out of style, and you can wear pinstripes in all seasons. However, both are getting somewhat old. (Especially on me: I have three black suits. Apparently half of Wellington faces the same problem.) The lighter colors are ripe for a revival, as is blue-gray, and I think that patterns other than pinstripes would be quite nice.

Three buttons look better than two, I think, and I like coats better when buttoned higher. Lapels do not need to be too absurd.

As for coats on their own, go wild. I've noticed that vertical striped coats don't go as well with jeans. Rougher fabrics go better with denim. The sports-coat with jeans and t-shirt is a classic from the college days - take that as you will.

As I always say, simple principles for simple minds. When in doubt, I consult with Anne, and she corrects my bizarre ideas about how olive green is a nice color for a suit, or that I can "get away" with sleeves that end mid-wrist.

Curses

The lampposts on Devon Street, just below our flat, have developed the disturbing habit of shutting off when I walk under them. It's happened at least eight times thus far.

What does it mean???

Drinking problems

I have started reading the New York Times' Proof Blog, which is all about alcohol. Mainly, unfortunately, from a middle-aged perspective: The people who have undergone liver damage and AA, who floated along drinking casually for years and are now wondering what it all meant, or who now drink like miniature poodles and feel vaguely pathetic. It's entertaining - but there's far too much pseudo-boho ennui for my liking.

Meanwhile, a good friend and I have agreed that we will get together in our forties to drink forties.

One (lengthy) post notes that "many of us aren’t drinking what we’d truly like to drink". Instead, it comments, we drink to fit expectations:

What are we all trying to prove? ... what we choose to drink can reveal more about us than, say, our astrological sign or whether we prefer Elvis or the Beatles. What a tense moment, to be the first to order a drink with a group of people you haven’t hung out with before. Do you order a beer to let them know you’re easygoing? Do you order champagne to convey that you’re the fun, sassy type who likes to celebrate ordinary moments? Do you order scotch to let them know that you might start to get kind of intense in a couple hours? Do you order a Merlot, as if “Sideways” taught you nothing? The pressure.

Sure, these are ridiculous generalizations, but people buy into them.

This writer also describes her and her friends' frustrated alcohol choices - "my unrequited predilection for Drinks With Umbrellas", "A friend of mine [who] frequently orders Pimms to remind people of her stints abroad, though I suspect she longs for vodka tonic", "husband [who] sometimes pours himself a glass of apple juice and nurses it, pretending it’s whiskey". There's the reality - the chemical reaction taking place in your brain that generates the fine times - and then there's the patina of social games.

Speaking as a 23-year-old, this is imbecilic logic.

In this country where it is impossible to get beer for less than a dollar a bottle (no matter how vile coughcoughViking), and almost as impossible to get a half-decent dark beer, I end up drinking what is cheapest, whether it be the two cases of Double Brown we got for our flatwarming party (most of which we kept, and spent much of the next week looking at with queasy desire) or the chilled box wine.

You know what that signals? That I'm on a budget.

With more money, I would drink the darkest of stouts. I would do this because I like the bitter, creamy flavor and the sense that one is drinking a pureed mixture of wholegrain bread and ethanol. I like the way a good stout looks in the glass. I prefer it to mixes, which swiftly become disturbingly sweet, and wine, which goes down easily but leads me into bizarre gaffes quite quickly. (Hard liquor is even worse on the latter count.) It is infinitely preferable to pilsners and lagers, which were invented for people who liked a musty taste in their mouths the next morning, and to IPAs, which were developed solely for purposes of colonialism and don't taste very good anyway. Bocks are a toss-up, ales vary wildly, and porters are best considered as a subset of the mighty stout.

In twenty years, I plan to drink the darkest of stouts. Except for the weekends with Josh, where we will start out with 40oz before comparing homebrews. Our social patina will be necessarily limited.

On the subject of social games, an economist writes about the practice of buying drinks:

I once debated the relationship between the social sciences with some anthropologists. We adjourned to the pub, and someone bought a round of drinks: the discussion naturally turned to the reasons why. For the economists, the explanation was obvious: the practice of buying rounds minimized transaction costs, reducing the number of exchanges between the patrons and the bar staff. The anthropologists saw it as an example of ritual gift exchange and described the many tribes that had developed similar customs. I proposed a test between the competing hypotheses: did you feel cheated or victorious if you bought more rounds than had been bought for you? Unfortunately, the economists and the anthropologists gave different answers to that question.

I might snark that getting a PhD serves mainly to help people come up with more complex theories about booze. But at least then they appear to debate context, not contents of glass.

Generations

In Landscape Painted with Tea, Milorad Pavic puts forward the idea that generations are cyclic - one generation of "solidaries" (those who live a life in common) is succeeded by another of "solitaries" (who go off in their own way), and vice versa. This pattern forms the structure of the book, as a man born in post-war Yugoslavia, in a generation of individualists, is squeezed out by the communal experience of his father's generation and, increasingly, the solidarities of his son's generation.

Out of step with his world, this man changes names, languages, nationalities, and reinvents himself as a solidary, only to gain some sort of obscure financial success. (It goes without saying that this is an extreme simplification of the narrative.)

I encountered a similar narrative in a book about the 1980s economic restructuring of New Zealand (New Territories by Colin James). James begins with generalizations about the "prosperity consensus" generation - our grandparents - which lived through depression and war and then forged a social democratic state with safety nets and guaranteed employment. To analyze why social democracy went the way of the moa, he pointed to the "gimme" generation - our parents - which, raised with social security, sought to break free of the limits that security entailed.

I am suspicious of this sort of amateur sociology, as it seeks to explain social change in terms of broadly-generated social consensus. A better model, I think, might be Gramsci's discussion of hegemony, in which the ideas of a minority set the terms of debate. (Or, as David Harvey commented in his discussion of neoliberalism, of which the liberalization of the NZ economy was a part, "The possibility... that the ruling ideas might be those of some ruling class is not even considered...") Given that neoliberal changes were carried through by a small commanding segment of the ruling Labour Party (in the main, 3 members of Cabinet) in a parliamentary system with virtually no checks and balances, this seems a more likely explanation.

However, what if there is something to what Pavic has to say? On generation individualistic, another upheaval-wracked but with a common spirit - the one that consumes and tears down walls (not always to bad effect - Berlin being an example), the other that pays down the debts and rebuilds.

I saw a similar thesis being advanced by a Canadian columnist. Our parent's generation, she argued, dismantled social safety nets and spent the wealth accumulated by their parents and - "in a moment of supreme overconfidence - placed everything that was left on a bad bet."

This time round, my generation has more in common with the hobos than the pony clubbers.

Of course, the bleeding will eventually staunch, but the loss of the wealth and economic stability accumulated in the postwar boom will reverberate right through the prime of our lives. All the stuff our sense of entitlement entitled us to - home ownership, job security, holidays, savings, university funds for our kids - just disappeared. It's not that these things are impossible. But we'd be wise not to count on them.

Perhaps positive thinking was our mistake in the first place. As Foot pointed out in a telephone interview this week, "Your generation has had the lowest interest rates in 20 years. You had jobs in your 20s. Some of you were overly optimistic on your future earnings and bought much bigger houses than you should have."

You can say that again. And now it's last hired, first fired. Foot concedes that the situation isn't good. "You have all of the responsibility of adults and none of the protection," he said. "I didn't say there wouldn't be ups and downs."

While I don't endorse all of the article's conclusions - they seem too based on a personal story in which the writer's parents learned profligacy and passed it on to her - the themes resonate. I sometimes suspect that I'll end up with some of the same attitudes as my grandmother, a child of the Depression who buys second-hand, never eats out, and considers it the height of recklessness to willingly leave a job. I wonder - how long before I'm storing money under a mattress?

But then again my parents were basically the same - they espouse fiscal prudence and never going into debt for anything but a house. With a larger income, they buy and save more. But the basic attitude is the same. So who knows what to think? And for that matter, amateur sociology and extrapolation from limited datasets are both examples of bad reasoning.

Socialism with American characteristics?

Evidently Americans are getting more willing to accept socialism:

Only 53% of American adults believe capitalism is better than socialism.

The latest Rasmussen Reports national telephone survey found that 20% disagree and say socialism is better. Twenty-seven percent (27%) are not sure which is better.

Adults under 30 are essentially evenly divided: 37% prefer capitalism, 33% socialism, and 30% are undecided. Thirty-somethings are a bit more supportive of the free-enterprise approach with 49% for capitalism and 26% for socialism. Adults over 40 strongly favor capitalism, and just 13% of those older Americans believe socialism is better.

Of course, the survey didn't bother to carefully define what "socialism" and "capitalism" mean anyway - and in an age in which insolvent banks are propped up with trillions of dollars of public money, definitions become even more blurred. But it does tend to confirm a feeling of mine that the average person doesn't really care what their society is called as long as it gives them a (chance at a) good life.

[Incidentally, I might loosely define "socialism" to mean a social system in which production decisions are made democratically to fit individual, collective, and environmental needs, rather than made on the basis of whether or not a profit can be made. This could still incorporate markets and competition in a number of areas, as the experience of the Soviet Union showed that rigid central planning will often fail to meet social needs, and be destructive to the individual and the environment anyway. However, the terms for "success" would have to be radically reconfigured away from pure profit-making. This is an initial approximation rather than any sort of a positive program.]

Why this weak result for capitalism? Aside from the above, I think that several factors may have increased the numbers for socialism. First, the Cold War ended, and memories of the lousy results of the Union of Socialist Soviet Republics are dimming, especially among the young. As a result, people tend to think of Europe when they think of socialism - and Europe's social safety net doesn't look so bad these days. Second, the effects of the current capitalist crisis are widely felt, and America's lassez-faire welfare system is letting many slip through the cracks at a time when rich financiers are protected. The mask has slipped off neoliberalism - it's showing its colors as a project to restore and expand class power. Third, Obama - who is quite popular, especially among the young - has repeatedly been called a "socialist" by the right. Popular policies like universal health care are derided as "socialism". The perverse result may be to increase the popularity of socialism rather than decrease Obama's.

I still don't think it's time to break out the red party hats.

Far North

Anne and I drove from one end of the island to the other. To Auckland in a twelve-seat passenger van we had gotten for free to drive north, and from there in my grandma's tiny car.

We started in Wellington on Thursday and arrived at Cape Reinga at sunset on Monday. Along the way, we stayed in Turangi on the southern side of Lake Taupo, where, driving up the 1 on a clear night, we glimpsed the ghostly shape of snow-covered Ruapehu off in the distance. It was cold that night so we lit a fire. The next morning we went to the Tokaanu hot springs.

The Waitomo glow-worm caves were followed by a stop at an ostrich farm. I discovered that I could feed them grass and leaves from my hand. And we arrived in Takapuna to be greeted by my grandma and her pumpkin soup.

The next day: The Hokianga. My parents have a few acres of land on the south side of the harbour, and there is a delicious fish-and-chip shop in Opononi. (Opononi is famous for a year in the 1950s in which a dolphin came in and made friends with the locals.) We stopped at the Cafe Eutopia, which I liked for entirely predictable reasons as well as the fact that it was made out of ferrocement in fantastical shapes, and in the kauri forests, where Tane Mahuta amazed us.

The sunset over Hokianga Harbour is an extraordinary sight.

We stayed two nights in the shipping container my dad recently installed on his section. We lit a fire with fish-and-chips wrappers and teatree branches each night, toasted weirdo smores, and drank beer, loving the fact that we had to look up at the stars with each big swig.

In the day, we swam at the rocky beach, built a lean-to whose roof collapsed at the application of the final twigs, picked olives (mostly from an English doctor's trees - whoops), walked around the harbour heads, and read.

We went on to points north.

A ferry across the harbour, several produce stands, a stop in Kaitaia, a brief drive up and down Ninety Mile Beach, and the last 100 kilometers of state highway 1. And then the Cape, where the Maori believed the spirits of the dead departed for the ancestral homeland. The tip of New Zealand; the end of the land and the start of the vast Pacific.

Just off the Cape the waters of the Tasman Sea meet the Pacific Ocean. There is a perpetual roiling tension and a crashing sound; whirlpools swim in the surf. At the point of the cliff is a lighthouse (manned until 1987) - and then the ocean, unbroken except for three islands to the left and the occasional reflection of a cloud. My Catholic grandmother later described it as a spiritual experience; with my atheistic paucity of language I broke down, stammeringly describing it as a "total" or "sublime" experience.

I think of the lighthouse keepers - how small it must have made them feel to see that sight every day. Man can get used to many things - but this struck me as uncompromising, vast in a way that defied neat mapping onto our language.

We drove south to the ancestral homeland of Pukenui, where a street and a bridge are named after my ancestor Henry James Lamb, and stayed in a caravan belonging to my dad's cousin. An acre remains in my dad's hands; it features a newly-drilled well, a century-old fig tree, and several rows of native plants. Talking to another of my dad's cousins, Anne was struck by his attachment to the land - he came alive when showing us the 1893 maps that defined the corners of the Lamb homestead. He now owns a video shop in Kaitaia.

The next day, after picking pumpkins and a blissful interval hopping waves and basking on Ninety Mile Beach, we left the North. The climaxes of the trip had passed and we glided south along the east coast, stopping to buy macadamia nuts from a Dutch woman and view the fabulously weird Hundertwasser toilets in Kawakawa. I speculated that my ideal economic stimulus program would hire artists to design public toilets in all the small towns and big cities in America. The preferred material being ferrocement.

It's a small country, but I like it.

Easter

We need a beachfront vacation.

Anne and I are driving up to the Hokianga for Easter. We will be living in my dad's shipping container/retirement plan, swimming in the sunset, driving up to 90 Mile* Beach, and in general trying not to get in too much trouble.

(*Not really 90 miles, but still very long.)

Funny money

Paranoid conservatives have long feared that the venerable US dollar will be replaced by a sinister one-world currency. Why? I have no idea. Possibly for the same reason that a subset of deranged lunatics are buying up gold, which they insist is the only true form of value.

As things turn out, the dollar is disintegrating from within. (Not really, but it's fun to say.) In response to the financial crisis, a number of regions - including the Berkshires in Massachusetts, where I went to school - are printing up their own regional scrip to keep money circulating around the local economy.

A small but growing number of cash-strapped communities are printing their own money.

Borrowing from a Depression-era idea, they are aiming to help consumers make ends meet and support struggling local businesses.

The systems generally work like this: Businesses and individuals form a network to print currency. Shoppers buy it at a discount — say, 95 cents for $1 value — and spend the full value at stores that accept the currency.

Workers with dwindling wages are paying for groceries, yoga classes and fuel with Detroit Cheers, Ithaca Hours in New York, Plenty in North Carolina or BerkShares in Massachusetts...

About a dozen communities have local currencies, says Susan Witt, founder of BerkShares in the Berkshires region of western Massachusetts. She expects more to do it.

Under the BerkShares system, a buyer goes to one of 12 banks and pays $95 for $100 worth of BerkShares, which can be spent in 370 local businesses. Since its start in 2006, the system, the largest of its kind in the country, has circulated $2.3 million worth of BerkShares. In Detroit, three business owners are printing $4,500 worth of Detroit Cheers, which they are handing out to customers to spend in one of 12 shops.

During the Depression, local governments, businesses and individuals issued currency, known as scrip, to keep commerce flowing when bank closings led to a cash shortage.

The idea is this: The scrip makes it easier for people to spend money with local businesses, which in turn will spend it in the same place. It will make it easier to pay for local services or buy food from the local farm, potentially strengthening regional economies.

Of course, all of the regions adopting scrip currency are already impoverished. The Berkshires, with the exception of Williamstown, are not wealthy. These places aren't exactly the leading edge of the economy. But if a deepening (banking) crisis leads to more communities adopting scrip, it may have the potential to re-regionalize the US, making many pockets of it less dependent upon imports and exports, and as a result reducing transport costs and greenhouse gas emissions.

Yes, it sounds over-optimistic. But who knows? Some good could come out of this entire mess.

The crisis as the obscene secret law of capitalism

My good friend Tim, now an investment banker, asks what it means to be a Marxist these days. After all, he notes, we view our world and relationships in terms of capital. Within those ideological coordinates, what's so unique about Marxism?

I responded:

It can't just be that you see commodities, or capital, or even class struggle as a fundamental ordering principle of our world. After all, everything is now commodified, we all tithe to finance capital through our credit cards, and the Bush administration embraced the logic of class struggle (don't believe me? what happened after Katrina?).

I could talk at length about Marx's analysis of the commodity, and the C-M-C and M-C-M' cycles (the former corresponding to the labourer, who sells commodified labour power in exchange for money which s/he then exchanges for different types of commodities, and the latter corresponding to the capitalist exchange, which seeks to amass greater quantities of money). And this is relevant - for one thing, capitalists in the aggregate will only invest if they can expect to extract surplus value (the difference between the principal, M, and the return, M'). This in turn makes profit and growth a necessary condition of capitalism. (Raising the ecological question: what happens when we can no longer sustainably extract more resources?)

What I do want to highlight, though, is a (certain) Marxist view of the financial crisis. I have been reading a lot of economists, from the deranged Austrian right to the mildly progressive new Keynesians, and although views vary one theme is consistent: that the financial crisis is an aberrant contingency that could have been avoided with certain changes to the policy settings (usually more or less regulation, depending upon the economist's stripes).

The Marxist view is that the financial crisis was a necessity or inevitability rather than a contingent event. Think of the M-C-M' cycle. The entire idea is that, for society as a whole, M' is larger than M. This means that at the end of the year, more value must be in circulation than at the beginning of the year. A portion of this surplus value must be reinvested to ensure the reproduction and expansion of the system as a whole - i.e. to ensure that there are further profit opportunities.

Since the early 1800s, the yearly growth rate of the world economy has averaged somewhere between 2-2.5% - probably faster for the capitalist centers. In short, at the end of the year the capitalist class as a whole has to find a productive place to invest 2% of the total value that it produced in the previous year. (It could consume the surplus, but then it would fall out of the M-C-M' cycle and cease to be capitalist.)

The problem is that it is relatively difficult to find productive (read: profitable) places to invest 2% of output. New territories can be opened up for capital, or new markets/new needs created within existing territories. But the basic problem - the extra 2% of value that can not be directly realized through consumption in the here-and-now - remains. It's a structural feature.

This is what Marxists call the theory of overaccumulation. In essence, a portion of profits must be reinvested, which can take place in a variety of ways, in hopes of profiting from future consumption. But, as there is a constantly increasing stock of capital, it becomes harder to make productive investments. In some cases, capitalists miscalculate and build too many shoe factories. In others, they get clever and invest it in asset bubbles (also known as stock markets and residential housing). After a time, it becomes clear that the investments cannot be realized, leading to their devaluation in a crisis. Often-times, capitalists attempt to fob off the losses on the working class - this is commonly called a Structural Adjustment Program or, alternately, a TARP.

So, returning to your initial question, I might say that Marxists view crisis-formation as an integral part of capitalism itself. In this view, we're not going to get away from the crisis without doing away with capitalism.

I would note an empirical point as well: Since the Great Depression, policymakers have responded to each crisis with a new set of policies designed to fix the problems encountered in the previous cycle of boom and bust. Three examples: In the wake of the Depression and WWII, the Bretton Woods system of currency controls and national Keynesian compacts between labour and capital was devised to avoid a repeat. This system proved too inflexible, precipitating the stagflation of the 1970s and a long decline in profitability in the core capitalist countries.

In Argentina in the 1990s, a serious bout of hyperinflation was ended by pegging the peso to the dollar - a monetary stability policy that won wide praise - and privatizing the state sector. This sparked a wave of speculation that ended in the 2001 crisis - and now the dollar peg is seen as the paradigmatic example of Latin American economic malfeasance.

After the Asian crisis of 1997/98, in which economies collapsed due to capital outflows leading to abrupt closure of current account deficits, the Asian economies (including China, which was not affected due to its closed capital accounts) decided to hedge against future capital outflows by running current account surpluses that enabled them to build up large foreign exchange reserves. Those policies played a key role in precipitating the current collapse by flooding US and European markets with liquidity and making it very cheap to make speculative investments.

In short, the overaccumulation crisis - which we might follow Zizek and call the obscene secret law of capitalism - has managed to evade any yet-devised set of policy coordinates.

Housewarming

Friday night, we summoned people over, broke out the Mai Tais and cheap beer, and warmed our flat.

At the cost of a Saturday spent alternately sleeping, feeling wretched, sleeping while feeling totally wretched, and going out for Malaysian food, all the while swearing that I would never touch Double Brown again, our flat is totally warm. It feels like a real home now.