Don't Blame Blacks for the Crisis of Capital
A Black Agenda Radio commentary by Glen Ford
"Trading in speculative
derivatives amounted to more than ten times the yearly value of all goods and
services on Earth!"
The crisis in sub-prime housing lending is bad enough - it
threatens to utterly derail the hopes and dreams of a huge chunk of what passes
for the Black "middle class" in the United States. More than half of all Blacks
that refinanced their homes last year were given high-cost loans, and African Americans
are three times
as likely as whites to have been sucked into the sub-prime, predatory loan
zone. The racial aspect of the current crisis is quite clear - just as it has
long been evident to any objective observer that much of today's - or should we
call it, yesterday's - vaunted Black upward mobility is built on shifting sands
of unsecured borrowing. But of course, to say so made one a party-pooper, a
gloom-and-doom monger - and few people wanted to spoil the party even if they
knew it would soon be unhappily over.
As the huge scope of the housing debacle began to emerge,
it was not long before familiar Black voices were heard, blaming something or
other in African American "culture" for bringing the catastrophe down upon our
own heads. Blacks don't pay enough attention to their finances; Blacks are too
caught up in the cosmetic aspects of wealth; Blacks just can't seem to hold on
to money and real property, etc., etc., etc. As if such dubious assumptions
somehow explained why African Americans were disproportionate victims of the
bursting sub-prime bubble.
But wait! Soon we learned that the financial giant,
Citigroup - the country's biggest bank -
was on the rocks, and ultimately had to be bailed
out by the Persian Gulf nation of Abu Dhabi. Investment markets all over
the planet were roiling, all supposedly because of the U.S. sub-prime lending
crisis. But how could that be? Sub-prime lending is a significant chunk of U.S.
housing transactions, but on a world scale U.S. sub-prime troubles should only
register as a large blip - not a global crisis. Clearly, something much larger
was afoot - a threat to global capitalism as a whole. Something HUGE.
"Something much larger
was afoot - a threat to global capitalism as a whole."
An article on the Bloomberg
website shows where the real speculative action - and global danger -
resides. The headline read, "Global Derivatives Market Expands to $516
Trillion." Derivatives are weird and mysterious financial instruments, for
buying and bundling debt, speculation on the value of debt, and betting on the
future of debt. Understand that the gross
domestic product of the United States is only about $13 trillion, and the
annual gross economic product of the entire planet is less than $50 trillion.
Yet trading in speculative derivatives amounted to more than ten times that
much - ten times the yearly value of all goods and services on Earth! This is
like playing monopoly with endless stacks of play money - there is little
connection between global speculation and what the world actually produces.
The U.S. sub-prime lending crisis got some big banks in
trouble. They then had to look elsewhere for someone to pump actual cash into
their portfolios, but in the process were compelled to at least attempt to
explain how much their financial institutions, the paper they were holding,
were really worth. They can't, because it is largely speculative capital, which
is not real money. The same holds for who knows how much of the world banking
"system," especially its Wild West derivatives sector.
So let's stop talking about the financial irresponsibility
of African American sub-prime borrowers. There is a much bigger bubble out
there, and it is unsustainable.
For Black Agenda Radio, I'm Glen Ford.
BAR executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com.
A federal judicial panel has approved new electoral districts in Michigan while struggles continue in other states.
The recent drone strike on World Central Kitchen workers exposed that organization's collusion with the Israeli and U.S. governments.
The United States uses its power within the United Nations and the concept of human rights to cover its plans for regime change.
The deaths of the six Latino immigrant workers in the Baltimore bridge collapse encapsulates the injustice inherent in the U.S. capitalist system.
This week, BAR's poet-in-residence discusses his work, we learn why Bill Clinton, the CIA director and Tony Blair recently visited Guyana. First, the Black vote and election year politics in Michigan.
