Wishing all my readers a Happy Easter. After a bone dry winter it’s raining here on Ocean Beach in San Francisco. April showers bring May flowers. Easter, no matter what you believe, is the Spring time of hope for the future. Seeds are planted in the hope of a bountiful harvest; the Earth is reborn after the death of winter. Wishing each of you happy beginnings and fruitful outcomes.

Monster bubbles: the delayed crisis of capitalism resurfaces

By Jerome Roos On March 30, 2015

Post image for Monster bubbles: the delayed crisis of capitalism resurfaces
Seven years since the bursting of a US housing bubble led to financial meltdown, investors and policymakers are already well on their way to the next.
If there’s one lesson from the history of financial manias, panics and crashes, it’s that bankers never solve their own crises: they merely move them around, eternally passing the hot potato of impending catastrophe on to others and systematically displacing the burden of adjustment onto the weaker members of society. As a result, the way in which a particular crisis is “resolved” inevitably ends up laying the seeds for the next one. This time has been no different.
In recent months, amidst growing enthusiasm about an incipient global recovery, some investors and regulators have been starting to express their concerns over the inflation of a set of large asset bubbles spread across the world economy. Whether it’s skyrocketing property prices in London, a record-breaking bull market on Wall Street, or investors falling over themselves to lend to heavily indebted European governments and flailing energy and tech start-ups in the United States, one thing is clear: we find ourselves in the middle of yet another major speculative frenzy.This observation may seem odd to some. Aren’t we supposed to still be in the final stages of the last crisis? Why would anyone want to gamble with their capital if profitable investment opportunities are still so few and far between? Well, that’s precisely the problem: asset prices have now completely decoupled from their underlying fundamentals. In recent years, the crisis of casino capitalism has been successfully delayed through the central bank-led inflation of a new set of monster bubbles in property, stocks and bonds. While the rest of us linger in “secular stagnation,” the speculators are having a field day.

In other words: the root causes of the 2008 financial crisis were never truly resolved — policymakers simply moved around some of the symptoms (and not even all of them!). Governments bailed out insolvent banks with taxpayer money, heavily indebting themselves in the process, while central banks turned on the printing presses to pump trillions of dollars into the financial system. The result, in simple terms, has been the accumulation of a vast excess of money in the financial sector and an acute shortage of it everywhere else.

What we are dealing with, then, is a classical example of what David Harvey refers to as the capital surplus absorption problem: an excess of idle money capital lies side by side with an excess of labor power — and somehow the system can’t combine the two to bring about productive outcomes. As one banker toldthe Financial Times, “what’s really driving all this activity is the availability of capital rather than the underlying fundamentals. It just comes down to people needing to deploy capital.”

Investors have dealt with this problem in the same way that they always have: by scouring the surface of the Earth in a frantic quest for the highest possible yields. As long as demand remains low and growth stagnant, yields in so-called “productive” investments will not be very attractive for the average gambler. And so investors have been turning to the same kind of speculative high-risk/high-return bets that caused the 2008 financial meltdown to begin with.

The results have been stark. Just three years after Greece concluded the largest sovereign debt restructuring in the history of capitalism, global bond markets are back on fire. In a UK survey, almost four in five fund managers for major bond-trading firms expressed a concern that bonds are currently “more overvalued than ever before and that government bonds are the most overvalued asset class of all.” John Plender of the Financial Times accuses the ECB of directly stoking this bond bubble through quantitative easing:

Government bond markets are supposed to be sedate places, devoid of the thrills and spills that characterise equities. Not any more. Since central banks started enlarging their balance sheets sovereign bonds have become exciting to the point where investors have bought more than $2tn of them on negative yields, mainly in Europe. Even in the Depression of the 1930s interest rates never fell below zero. Is this that rare thing — a bond market bubble?

It’s not just government debt that’s booming. Last year alone, US companies issued an astonishing $1.43 billion in corporate bonds; 27 percent more than they sold at the peak of the last bubble in 2007. In fact, a reasonable argument could be made that the supposed US recovery of the past years has been based entirely on an energy bubble — which has already burst due to the oil price collapse — and an even larger tech bubble. Billionaire investor Mark Cubanrecently warned that the latter is “worse than the tech bubble of 2000” and is now on the verge of bursting as well.

When this over-excited US corporate bond market collapses, it will inevitably take the stock exchange down with it. Stock valuations have been rising steadily ever since they bottomed out, in March 2009, following the last crash. The S&P 500 has shot up an astonishing 200% since then, while the Nasdaq recently breached 5,000 points for the first time since the collapse of the Dotcom bubble. The fact that this six year bull market has coincided with the deepest economic downturn since the Great Depression should suffice to give pause for thought.

Finally, with memories of the subprime mortgage crisis still fresh, investors are already expressing fears over the build-up of a new housing bubble. The Wall Street Journal points out that UK property prices are now a third above their pre-crisis peak, while property in Australia, Canada, Sweden and Norway is also massively overvalued. Cities like New York, San Francisco, Miami, London, Berlin, Paris and Amsterdam are all experiencing rising real estate prices without any real accompanying improvement in the underlying fundamentals. Even property prices in Spain and Ireland now appear to be rising again.

The conclusion is clear: plus ça change, plus c’est la même chose. All this time, policymakers have tinkered around the edges with half-hearted measures, but none of the structural problems have ever been addressed. Instead, governments bailed out the gamblers as central banks inflated a set of new bubbles to cushion their fall, cover the debris, and delay the final moment of reckoning. Still, down in the real world, blowing bubbles can only take you so far. Nearly seven years since the last financial meltdown, investors and policymakers are already well on their way to the next.

Jerome Roos is a PhD researcher in International Political Economy at the European University Institute, and founding editor of ROAR Magazine. Follow him on Twitter at @JeromeRoos. This article was written for TeleSUR English.






I watched “Boyhood” last night. Didn’t think I could deal with a film running nearly three hours focused on the reality-based coming of age theme. I was, however, much impressed by the epic technical achievement the film represents, and I was deeply moved by the genuinely human intimacies shared throughout. The ending was a powerful insight into the human condition.

Got me to thinking about the values of the tech-fueled Bay Area where I live.

I really loath, truly hate, the materialistic, money-fueled tech culture that has enveloped San Francisco. And it’s not the technology per se. I’ve been using and building computers since 1985. It’s the disgusting excess and glorification of same.

Interestingly, watching “Boyhood” last night reminded me that there are other, more appealing, lifestyles and choices still available in the country. The main character in the film was not obsessed with tech. He questions the value of the ubiquitous smart phone. He works after school. Middle class. He doesn’t dream of going to Stanford or MIT, etc., to get a degree in CS and code. Hell, he wants to be an artist. He’s interested in the meaning of life. Like people I used to know in school and throughout my life. He represents my American Dream. Not this SF version with conspicuous consumption and phony hipster culture.



The secret to the Uber economy is wealth inequality


WRITTEN BY  Leo Mirani

Of the many attractions offered by my hometown, a west coast peninsula famed for its deep natural harbor, perhaps the most striking is that you never have to leave the house. With nothing more technologically advanced than a phone, you can arrange to have delivered to your doorstep, often in less than an hour, takeaway food, your weekly groceries, alcohol, cigarettes, drugs (over-the-counter, prescription, proscribed), books, newspapers, a dozen eggs, half a dozen eggs, a single egg. I once had a single bottle of Coke sent to my home at the same price I would have paid had I gone to shop myself.

The same goes for services. When I lived there, a man came around every morning to collect my clothes and bring them back crisply ironed the next day; he would have washed them, too, but I had a washing machine.
These luxuries are not new. I took advantage of them long before Uber became a verb, before the world saw the first iPhone in 2007, even before the first submarine fibre-optic cable landed on our shores in 1997. In my hometown of Mumbai, we have had many of these conveniences for at least as long as we have had landlines—and some even earlier than that.
It did not take technology to spur the on-demand economy. It took masses of poor people.

Silicon Valley catches on

In San Francisco, another peninsular city on another west coast on the other side of the world, a similar revolution of convenience is underway, spurred by the unstoppable rise of Uber, the on-demand taxi service, which went from offering services in 60 cities around the world at the end of last year to more than 200 today.

Uber’s success has sparked a revolution, covered in great detail this summer by Re/code, a tech blog, which ran a special series about “the new instant gratification economy.” As Re/code pointed out, after Uber showed how it’s done, nearly every pitch made by starry-eyed technologists “in Silicon Valley seemed to morph overnight into an ‘Uber for X’ startup.”
Various companies are described now as “Uber for massages,” “Uber for alcohol,” and “Uber for laundry and dry cleaning,” among many, many other things (“Uber for city permits”). So profound has been their cultural influence in 2014, one man wrote a poem about them for Quartz. (Nobody has yet written a poem dedicated to the other big cultural touchstone of 2014 for the business and economics crowd, French economist Thomas Piketty’s smash hit, Capital in the Twenty-First Century.)
The conventional narrative is this: enabled by smartphones, with their GPS chips and internet connections, enterprising young businesses are using technology to connect a vast market willing to pay for convenience with small businesses or people seeking flexible work.
This narrative ignores another vital ingredient, without which this new economy would fall apart: inequality.

The new middlemen

There are only two requirements for an on-demand service economy to work, and neither is an iPhone. First, the market being addressed needs to be big enough to scale—food, laundry, taxi rides. Without that, it’s just a concierge service for the rich rather than a disruptive paradigm shift, as a venture capitalist might say. Second, and perhaps more importantly, there needs to be a large enough labor class willing to work at wages that customers consider affordable and that the middlemen consider worthwhile for their profit margins.

Uber was founded in 2009, in the immediate aftermath of the worst financial crisis in a generation. As the ride-sharing app has risen, so too have income disparity and wealth inequality in the United States as a whole and in San Francisco in particular. Recent research by the Brookings Institution found that of any US city, San Francisco had the largest increase in inequality between 2007 and 2012. The disparity in San Francisco as of 2012, as measured (pdf) by a city agency, was in fact more pronounced than inequality in Mumbai (pdf).
Of course, there are huge differences between the two cities. Mumbai is a significantly poorer, dirtier, more miserable place to live and work. Half of its citizens lack access to sanitation or formal housing.
Another distinction, just as telling, lies in the opportunities the local economy affords to the army of on-demand delivery people it supports. In Mumbai, the man who delivers a bottle of rum to my doorstep can learn the ins and outs of the booze business from spending his days in a liquor store. If he scrapes together enough capital, he may one day be able to open his own shop and hire his own delivery boys.
His counterpart in San Francisco has no such access. The person who cleans your home in SoMa has little interaction with the mysterious forces behind the app that sends him or her to your door. The Uber driver who wants an audience with management can’t go to Uber headquarters; he or she must visit a separate “driver center.”

There is no denying the seductive nature of convenience—or the cold logic of businesses that create new jobs, whatever quality they may be. But the notion that brilliant young programmers are forging a newfangled “instant gratification” economy is a falsehood. Instead, it is a rerun of the oldest sort of business: middlemen insinuating themselves between buyers and sellers.

All that modern technology has done is make it easier, through omnipresent smartphones, to amass a fleet of increasingly desperate jobseekers eager to take whatever work they can get.

Six media myths about the Black Friday demonstration in San Francisco

Media Myths About Protests


By and

Since November 24, protests have been raging across the nation in response to the non-indictments of police officers Darren Wilson, who fatally shot unarmed black teenager, Mike Brown, and Daniel Pantaleo, who strangled an unarmed black man, Eric Garner, to death in New York City on camera. We believe the media has covered the protests in a way that exaggerates their violence and has minimized their significance. Here are six myths about a large demonstration in San Francisco that took place on Black Friday, followed by what actually happened.

Myth 1: the Media Said the Protest Became an Ugly, Violent Riot

Ugly. Violent. Riots. Looting. Cowering shoppers. Frightened crowds. That’s what Americans heard about the Black Friday march in San Francisco from the media.

But how violent was the protest really? The answer: not very. Only a tiny minority of the people present was involved in property damage or assault. And those moments were vastly outweighed by long periods of peaceful marching.

You might think it’s hard to estimate how much of the protest involved criminality. But we’re going to try, based on a minute-by-minute report of the four-hour protest by San Francisco-based freelance journalist Sam-Omar Hall, eyewitness accounts (including from us), and from information released by San Francisco Chief of Police Greg Suhr.

In the five incidents of vandalism and violence in Union Square, an estimated 9 people were involved, out of about 400 protesters — in other words, just 2 percent of those participating. The incidents took place over a span of about 15 minutes, starting at 6:43 p.m. — the only time during which vandalism occurred in the first two hours of the march.

Over the next two hours, in the Mission District, about nine isolated incidents of vandalism and violence took place during a span of about 20 to 30 minutes. In all, the four-hour protest involved isolated incidents of criminal behavior over about 35 to 45 minutes — far from the “riot” described by the media.

For comparison, let’s look back to earlier this fall, when the San Francisco Giants won the World Series. Rioting sports fans in the Mission District damaged 28 Muni buses; lit street bonfires on couches, trash cans, mattresses, and Lyft’s pink mustaches; smashed five police vehicles; and shot guns, wounding two people. The damage to Muni alone totaled at least $140,000. Despite the far greater intensity of property damage and violence, police only made forty arrests — half the number made on Black Friday.

Myth 2: There Was Indiscriminate Looting

In reality, property damage was targeted at major chain stores and upscale businesses. Stores damaged included Macy’s, Bank of America, Simayof Jewelers, McDonald’s, RadioShack, and Beretta — an upscale restaurant on Valencia Street.

What are the common denominators of these targets? They’re either large national chains or symptoms of gentrification.

Myth 3: Police Arrested 79 Vandals

In reality, police did not arrest any vandals. In a press conference last week, San Francisco Police Chief Greg Suhr concluded his statement by saying that “All told that night, we made 79 arrests.”

But Suhr did not specify why the 79 people were arrested, leaving the journalists present with the impression that 79 arrests were made in response to violence and vandalism.

A later question, however, blew that idea to shreds. In response to a media question about how many arrests were made in regard to vandalism, Suhr admitted, “We have no arrests for vandalism.”

In fact, of the 79 arrested, all but 4 were cited and released for misdemeanors unrelated to assault or vandalism. Of the four booked into jail, two were for outstanding warrants, leaving only 2 arrests that had anything to do with violence that night.

But of the 9 news reports of the press conference, only 2 mentioned that none of the 79 arrests were for vandalism.

Myth 4: Police Acted Legally Throughout

In reality, police mass-arrested seventy people on legally dubious grounds. Starting at about 9:45 p.m., police silently arrested around seventy protesters who were trapped and huddled together on Liberty Street. The arrests occurred over a period of about two hours.

So you might imagine that cops had good reasons for the mass arrests. But you’d be wrong.

Those arrested were compliant, exhausted, and wanted to go home. Here’s how they ended up cuffed and jailed instead:

The group had turned onto Liberty in an attempt to escape two police lines trapping them on Valencia. Police chased them onto Liberty and ordered them to get out of the road and onto the sidewalk. Everyone got onto the sidewalk.

Then a different police line approached from ahead and ordered protesters to get back into the road. Police circled the group of protesters, forcing everyone back onto the sidewalk and up against a wall on Liberty.

Police wouldn’t respond to questions, and when approached, they lifted what looked like automatic weapons. (These weapons were probably rubber-bullet guns.) No one knew what was happening, everyone was tired, and no one was offering any resistance. People started calling family to say they were likely getting arrested, as police began picking off and cuffing protesters one by one.

People were not read their rights. Police quickly mumbled the charge numbers to each person as they were handcuffed. It turned out that everyone present had been charged with jaywalking and with failure to obey a law enforcement officer. Everyone was taken to the Hall of Justice in vans, cited, and released some hours later — except for three people detained overnight because they had prior warrants.

Were the arrests legal? Not really, because it was impossible for protesters to simultaneously obey two sets of officers and be on and off the sidewalk at the same time, one legal expert explained. “Implied with any directive is the ability to obey or comply, so if they told you to do something that was in some way impossible then that would be unlawful,” said Danny Everett, a criminal defense attorney and former San Francisco deputy district attorney.

The arrests were legally dubious in another respect, too. The officer who handcuffed one of us — Ryan Heuser — told Heuser that he had “failed to disperse.” But no dispersal order was given in the vicinity of the mass arrest.

We later learned that a dispersal order was given to a different group, several blocks away on Valencia and completely out of earshot. This tactic has been used recently by Los Angeles Police Department officers who arrested a large group of protestors after a dispersal order had been read in a different part of downtown.

Is that a legal move by police? Not exactly. “If you give an order to one set of people and then expect another to comply with it, then that would not be lawful,” Everett said. “It’s not a lawful order.”

Myth 5: Police Acted With Great “Restraint”

Police Chief Suhr said last week that police acted throughout the protests with “restraint.” Media accounts have supported that narrative and totally avoided any criticism of police tactics.

Yet during the protest, SFPD used a kettling tactic — essentially blocking or trapping protesters in a tight area — that is highly controversial in other countries. In the United Kingdom, some legal experts say that kettling is used to make protesting so unpleasant that people who experience it will never protest again.

It’s also widely accepted that kettling is likely to provoke violence. In Union Square, it was only after protesters had been kettled between police lines for more than fifteen minutes that we heard glass break for the first time. “Does the benefit of any prevention of disorder by kettling justify the anger, dismay, and sometimes further disorder that it creates?” asked British reporter Dave Hill in a report after a notorious kettling incident in London in 2010.

Myth 6: Police Acted In The Public Interest

Arresting people who aren’t criminals is not in the public interest. But arresting protesters who didn’t commit a crime has one major advantage for police. It makes those people less likely to ever take to the streets and protest again. “I would highly anticipate that there’s a 99.9 percent chance that all those charges would be dropped,” Everett said. “The purpose is to arrest you and defuse the situation.”

Mary Noble is managing editor of Topix, and has written on politics and social justice since 2012. Ryan Heuser is a freelance journalist and a graduate student at Stanford University.