Newsnight & the neo-liberal agenda

In Uncategorized on May 8, 2010 by chr1sr0berts

Last night (Friday 7th May 2010) on the BBC Flagship news program Newsnight one of the commentators called on to discuss the economy was one Hugh Hendry Now I do not necessarily have anything against this man per se, but in all the post election coverage debate around “strong govt” and the ridiculous (surely transparent) narrative of “national interest” is the ongoing concern regarding the economy. “The markets are jittery” so we’re told, “the markets won’t wait for ever” etc etc. Firstly – let’s be clear about this, when the term the markets are mentioned, it means capital pure and simple. Capital does not have a vote (individual capitalists do) but the personification of “the market” as some sort of rational entity with human quality and capaity is bunk. Let’s remember that it was in fact “the market” (failure) that caused large parts of the crisis in the first place. Why now the need to bend to the demands and logic of the markets is never really explained…it’s just assumed. The possibility that the UK might lose its AAA* rating is another threat constantly evoked. However, this AAA* rating is provided by three credit rating agencies. The very same credit rating agencies that allowed, ney encouraged precisely the sort of leveraged and “creative” (sic) practices that caused the global system to collapse and come (cap in hand) to governments for bail outs in the first place. However, I digress. It turns out though that the market does not need a vote for it can seemingly hold us to ransom anyway. The reason “it” (and I’m aware I too am now assuming it to have agency) can do so, is precisely because mainstream political culture and discourse – perfectly encapsulated by Newsnight, have internalised this logic as common sense. This is best demonstrated by the presence of such people as Hugh Hendry.

This man makes his money via speculative practises. The way this works is as follows (with thanks to David Harvey, Hyman Minski, Marx, Keynes et al for explaining this):

The key to the scam is leverage. I’ll set up an imagined position and go from there.

Assume that you are a hedge fund manager and some rich people give you one billion to invest. You then use this one billion to borrow another 30 billion from the government at a 0.5% interest rate.
For this you buy government bonds that pay 4.25% after one year. If you had not been able to borrow the 30 billion you would only make the 4.25% profit (42 millions) but with the additional borrowed money you now make a profit of 117% (1168 millions). Where did your fantastic profit come from? It came from the government that just gave you more than a billion pounds for nothing.
What did you contribute to society? Nothing. On the contrary, you are a parasite sucking out money from the treasury that could otherwise be used for public services. Have you done something incredible clever? Not at all. Any idiot that has the possibility to borrow large sums of money at zero interest rate can do it. What should be done? Cut off the leverage. Do not provide the parasites with free borrowed money. If these parasites can only invest their own money they would soon be out of business.

Of course the investment banks are mostly to blame for the present financial crisis. And the hedge funds are not to blame for the crisis in Greece, they just profit from it. And make the situation worse for the Greeks

I’m aware that in fact Hedge funds were not the main casue of this crisis, investment banks played the largest part but hedge funds contribute to it and are all part of the same speculative practises.

The point of this post is not to castigate Hugh Hendry – he may be a smug man but he’s merely a representative of this system. No, the point is actually to question why Newsnight – and you can be sure he’ll be popping up on other news broadcasts soon – has him on to “explain” the debt crisis…and laughably, ways to tackle it. His raison d’etre is to make money via currency speculation and in advising people on the best ways to avoid/evade (potato/potarto) their tax obligations. The fact that he and his ilk are called upon to explain things to us, and is respected as an impartial commentator is intensely problematic. Further, it demonstrates that political and economic discourse is now entirely dominated by the “logic of the market” …but it also shows how much work radical and progressive people have still to do. How can “we” intervene and have our voices heard? I have no fully formed answers – but will return to possibilities at another time. In the meantime, please head here for some ways in which we might be able to do something and perhaps take steps towards a more progressive and representative electoral system.

P.S. Sorry for any rather amateur spelling/typos – I’m typing this quickly before heading out to celebrate my birthday.


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