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Temple of Mammon, Planet of Doom

When Frank Gehry gets around to designing America’s answer to the Sistine Chapel, I trust this postmodern Temple of Mammon on Las Vegas Boulevard will have a ceiling fresco depicting Warren Buffett’s consignment of $31 billion to Bill and Melinda Gates. As the older billionaire sits on his pillow of cloud, his outthrust hand with its bag of securities is grasped by Gates–the Adam of Software Commerce–while seraphs and cherubs muse delightedly over the IRS regulations governing the sheltering of Buffett’s swag in tax-exempt nonprofit foundations.

Let us not waste too much time here advising Mr. and Mrs. Gates how to spend Buffett’s money. At the moment it seems that the Gates couple’s core focus is the war on AIDS and malaria, both ravaging Africa. How to improve the Dark Continent’s overall well-being? America’s senators and representatives can be bought for bargain-basement sums. A modest disbursement by the Gates Foundation-let us say $50,000 for each senator and $20,000 for each rep-would most certainly buy enough votes to end the current government subsidy, $4.5 billion for 2004, to cotton growers. The entire crop that year, the last for which figures are available, was worth $5.9 billion and the subsidy en-ables US growers to export three-quarters of their harvest and control about 40 percent of world trade, thus destroying the farm economies of countries like Mozambique, Benin and Mali. The WTO found the United States in violation this spring, but the ten largest cotton growers here-virtuous Jeffersonian toilers such as Kelley Enterprises (Tennessee) and JG Boswell (California)-have the necessary political clout to keep the subsidies coming. From 1995 to 2004, JG Boswell Co of California received $16,808,427 in cotton subsidies from the US government, while Kelley Enterprises received $8,694,643.

With overthrow of the cotton subsidy as a pilot program, Gates could launch a wider onslaught on the subsidies doled out to large wheat, rice and corn growers. Economists are slightly more costly than politicians, but generous Gates “scholarships” to prominent neoliberal economists would be contingent on these economists’ swift revision of their foolish theories, currently ravaging rural India.

In Vidharbha, a cotton-growing area of the state of Maharashtra, journalist P. Sainath has reported in The Hindu that 540 suicides of ruined cotton farmers occurred between June 2005 and May 2006. As many as 325 farmers have killed themselves since January. May saw nearly eighty farmers taking their own lives, ten of them doing so on a single day. Some weeks, Sainath reports, there have been suicides every eight hours, usually by the ingestion of pesticide.

The reason for this catastrophe is the neoliberal onslaught on India’s peasantry, which has been advancing without remit for more than the past decade, promoted by the World Bank and executed by India’s federal and state governments. The traditional NGO approach-ecstatic boasts in grant applications and annual reports, zero benefits for the farmers-has been futile. It should be the job of the Gates Foundation to turn the tide inside the ivory towers generating the economic nonsense that has wrought such a dreadful toll.

One particularly delightful aspect of Buffett’s $31 billion transfer was its stately mime of the Great American Pageant. Here was no twitchy trader but Buffett the wise investor, cherishing his favored stocks over decades, ambling around his headquarters in homely Omaha. And here was the younger entrepreneur, no longer the ruthless Master of Micro-soft but the Third World’s Santa Claus.

Could America desire any more potent evocation of virtuous capitalism at work? Surely not. And is this not a good time to evoke such virtues? It surely is, because it’s clear, as we head into the summer of 2006, that the world capitalist system is out of control. Literally so. In the older order of things, international bodies such as the International Monetary Fund, the central banks and kindred bodies could claim to have some purchase on the overall situation. Not anymore. The major players these days are thousands of managers of private equity funds-traders in shares, bonds, derivatives and other instruments of a complexity that would require the genius of the late Stanislaw Lem to evoke, as he did the planet of Solaris.

It’s virtually impossible now to penetrate, let alone oversee, this vast Solaris of speculative recycling of financial instruments such as credit derivatives. As the historian Gabriel Kolko recently remarked in an essay here on the looming crisis, “The credit derivative market was almost nonexistent in 2001, grew fairly slowly until 2004 and then went into the stratosphere, reaching $17.3 trillion by the end of 2005. Banks simply do not understand the chain of exposure and who owns what. Senior financial regulators and bankers now admit as much. The Long-Term Capital Management hedge fund meltdown in 1998, which involved only about $5 billion in equity, revealed this. The financial structure is now infinitely more complex and far larger. The top 10 hedge funds alone in March 2006 had $157 billion in assets.”

The Bank for International Settlements is no circus-tent Cassandra shrieking about the onrush of Doom. Bankers don’t shriek. But here’s the BIS, trembling before its crystal ball and talking, in its most recent annual report, about “planning for the worst. Consider first a discrete event which, if it occurred, would disrupt financial markets. What might be done in advance to prepare for such an eventuality? One important step would be to ensure the integrity of domestic lines of communication among core financial firms, their supervisors, the central bank and the operators of systemically critical parts of the financial infrastructure. Another would be to ensure similar openness at the international level. Stress testing is now almost universal in financial firms, which is highly desirable. Yet stress tests are based on simplifying assumptions that necessarily fail to match the complexity of real world events.” That’s a banker’s way of saying, “The show could blow up tomorrow, and there may not be any way to stop it.” Steve Wynn should get Gehry to work on the Temple of Mammon sooner rather than later.

 

 

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Alexander Cockburn’s Guillotined! and A Colossal Wreck are available from CounterPunch.

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