Charles Ponzi was criminalized in the 1920s for a pyramid
scheme whereby he duped people into investing in international postal coupons
(most of which were non-existent) and promised a 40 percent return on their
money in 90 days. The profit some realized resulted from unprincipled capital
accumulation. Just like what the market does when it sells what it calls
derivatives now, Ponzi�s investors derived value from other investors, until
the number of gullible people declined once the ruling class squelched his
scheme before their own schemes were seen to be much bolder methods of
producing money out of thin air. The credit creation which has supported our
consumption binge for many years now is merely an updated, far more vast and
dangerous expression of Ponzi�s hustle, carried to global extremes.
Purists can deny that the present shakeup in the home
mortgage sector is anything like a Ponzi Scheme, because an actual product
exists: a home. But rare is the buyer in America who sees real estate simply as
a procedure to acquire shelter. Rather, it has become a money making
proposition in which the commodity, and especially the speculative paper that
is its tenuous foundation, changes hands often, sees its value fluctuate, and
all with no more than religious faith in a steady stream of new investors to
buy the paper.
Once a mortgage is taken on by a hopeful home buyer, it
passes through many financial hands, bundled and rebundled to create greater
packages of funny money that exists only in the speculative minds of
manipulators who make some people rich, and most people debtors.
This market division is only a part of the casino credit
scheme that has been propping up capitalism in America for the past generation.
It may be in the process of falling apart, and even though many homeowners --
mostly debtors who own nothing -- won�t be immediately affected, all Americans
will ultimately pay a price. As is usually the case, when serious contradictions
cause chaos in the Ponzi Scheme that goes by the cosmetic name of contemporary
American Capitalism.
The crisis in the mortgage industry is part of the credit
colossus which is showing signs of collapsing on our heads. An economy carrying
trillions of dollars in global debt can only be maintained by bludgeoning
opposition into submission, as in Iraq and Yugoslavia, while injecting daily
doses of funny money into the veins of a monetary monster that is uniting much
of the world in opposition. That is happening as the empire sinks deeper into
indebtedness which its leaders think can never be collected by less powerful
global forces. They don�t seem to notice more opposition than their massive but
overextended military can hope to subdue without destroying the planet. Of
course if that crisis occurs, the more fanatical among them foresee being swept
up as brethren, by Jesus, or protected as Chosen, by his dad.
In a two-day period of recent panic, the Federal Reserve
created some $70 billion and placed a finger in the dike that threatened to
burst and flood Wall Street. There will be many more of these emergency
transfusions, but we may soon see an even deadlier economic tsunami that will
affect all of us, and not just some of us. It�s long past time for people to
learn about their economy, not only if they wish to make changes for the
future, but if they wish to have a future at all.
The thousands suffering layoffs when mortgage firms went
bankrupt are the usual product of failed enterprise, but though the unemployed
are weapons in capital�s war on wages, too much of it means little or no
shopping by those new victims of the market. And that means disaster for an
economy which has been thriving on massive credit spending to consume the
wasteful output of a production system that spans the globe, burying less
developed societies in death and debt while it empties wallets and minds in the
more developed, all to benefit a minority gorging itself on profits from the
majority�s loss. But increasing social and environmental destruction is
creating a global backlash to the rule of capital, and not just from outside
the USA.
The trillions spent to destroy Iraq and threaten worse for
Iran are denied to the nation�s health and infrastructure, bringing it closer to
falling apart at the seams if this military and monetary madness isn�t stopped.
Major candidates striving to replace the incompetent boob, whose term wont
expire soon enough, do not inspire confidence, but growing public disgust with
political and environmental reality brings some hope.
Ponzi�s populist hustle offered ordinary people a chance to
get in on the profit making of market capitalism, but the present scourge of
the planet needs the intervention of ordinary people in opposition to that
system. They will have to act as a real majority, for the first time in U.S.
history. Americans need to watch what�s going on in some other nations, but
free from the brain-numbing filter of our political media. What we are taught
to see as insurrection or terrorism often represents democracy in its infancy,
and perhaps better developed than in more materially comfortable places where
the illusion of freedom reigns, but the reality is a dictatorship of corporate
wealth.
If Americans don't take democratic control of their country,
they could suffer a much worse fate than Ponzi, who only served a few years in
jail. That means paying close attention to what our economy really is, and not
believing myths about what it�s supposed to be. If we don�t come to grips with
a reality that is destructive of all our futures, we may have to pay the
ultimate price of capital�s punishment, not as individuals but as a society. We
need a political form of crisis intervention, democratically practiced, and
very soon.
Copyright � 2007 Frank
Scott. All rights reserved.
This text may be used
and shared in accordance with the fair-use provisions of U.S. copyright law,
and it may be archived and redistributed in electronic form, provided that the
author is notified and no fee is charged for access. Archiving, redistribution,
or republication of this text on other terms, in any medium, requires the
consent of the author.
Frank
Scott writes political commentary which appears in the Coastal Post, a monthly
publication from Marin County, California, and on numerous web sites, and
on his shared blog at legalienate.blogspot.com.
Contact him at frank@marin.cc.ca.us.