Sep 25, 2008

Kevin Phillips interviewed on the Bill Moyers Journal

Phillips gives a sobering yet refreshing interview. A long-time capitalist analyst, Phillips says that this is only the mid point of a process the end of which is unknown and not particularly inspiring.

The interview covers much ground in what the potential meanings behind the latest crisis in the capitalist markets.

“BILL MOYERS: Are you suggesting that the best thing to do is let the house burn down and build it over again?

KEVIN PHILLIPS: I would say, first of all, you never should have blown the bubble this way. If we could invent a time machine and go back and cure it that would be the best economics of all. Having blown it up, I think the case is that they should have accepted more of the tough medicine beginning last year and not tried to rescue every stray tentacle of the financial octopus-

BILL MOYERS: But they didn't. We don't have a time-

KEVIN PHILLIPS: They didn't. No.

BILL MOYERS: So here we are. Where are we?

KEVIN PHILLIPS: Where we are, in my opinion, is about halfway through. Halfway through the serious part.

BILL MOYERS: Halfway to the bottom?

KEVIN PHILLIPS: It depends what you use in terms of bottom. I mean, in some ways, real estate prices were lower in 1936, '37 than they were in 1929 or '30. So I'm not sure exactly what you use as the measurement, real estate, the stock market. But it's a package which Americans have to understand is going to be awful. We're probably going to wind up nationally losing 20 to 30 percent of the average value of homes…

BILL MOYERS: So we're all going to be poor? Well, not all-

KEVIN PHILLIPS: Well, we're not all going to be poor because there are people in Wall Street who've used all this new technology basically to bet the other way. I mean, one of the things that finance can do now, it can bet on anything.”

“BILL MOYERS: So who do you trust anymore? I mean, you write in your book that the most worrisome thing is the extent of official understatement and misstatement, the preference for minimizing how many problems there are and how interconnected they are.

KEVIN PHILLIPS: Well, just to give you an example of how many there are… I sometimes use the description "seven sharks." There are seven sharks in the tank with the economy… Now, whenever you get this sort of package in one decade, you got a big one. And when Greenspan says it's a once a century, I think it's another variation but on a par with the Thirties.”

Speaking on the parties, Phillips spends little time on McCain making one particular comment, “Well, John McCain once said he didn't know anything about economics. And half the time what he says, you know, proves that on a day-by-day basis.”

Phillips spends more time on Obama, seemingly not out of a partisan mindedness, but in a way to deconstruct the Obama message of “Change” and bring to light the real implications of the financial crisis on what the Dems will really be having to undertake.

“BILL MOYERS: No, I was going to say Obama's trademark rhetoric of inspiration seems to desert him when he talks about economic affairs.

KEVIN PHILLIPS: He doesn't seem to have anything very specific to say. That's part of the problem. A second problem is, for me at least, you know, just as I can't believe that John McCain ever wanted to get his economic advice from Phil Gramm. I mean, Phil Gramm, a former Texas Senator, appalling. He and his wife were known as Mr. and Mrs. Enron because they were so flagrant, that's McCain.

But then you've got Obama with Bob Rubin and he doesn't have any problem with the hedge fund types. I mean, one of the Chicago people was a major financer of his. He gets a guy to pick his vice-president. Turns out to be somebody who was part of the Fannie and Freddie mess.

So I don't exactly see Obama as this fellow riding in on a horse who represents all kinds of reformism. It's an important thing probably to have to change from the Republicans but I don't see that he is free of the ties to finance and Democratic Party financial types.

BILL MOYERS: I've known you a long time. Are you reaching the point where you're leaving yourself and us despairing?

KEVIN PHILLIPS: Well, I'm not despairing because one of the things, as you know, when you get to be more or less our age, you've got grandchildren you can feel young with. But I'm sick of Washington. It really deserves the fact that 81 percent or 85 percent of the people think we're on the wrong track. I mean, we are on the wrong track. I wish I could say that there's a blueprint that would get us back on the right track. But my sense of histories previous goes to the one or two percent leading world economic power is you don't get back on the right track.

BILL MOYERS: So what happens?

KEVIN PHILLIPS: You go through a painful adjustment process… And I'm afraid the United States is coming right into that period which marks a couple of decades coming up that are going to be very difficult for America.

BILL MOYERS: You wrote in that AMERICAN PROSPECT piece that some people, particularly in the reform community and among progressives, see this as a great opportunity for returning to the New Deal regulatory period instigated by Franklin Roosevelt in the pits of the Depression. You don't think that's happening.

KEVIN PHILLIPS: The Democrats think it's going to be another 1933, they get in there, they can do all the New Deal stuff. My feeling is that they're coming in halfway and they're going to have to make hard decisions that are going to eat the Democratic coalition like a bologna sandwich. They're going to start civil wars-

BILL MOYERS: How come? What do you mean?

KEVIN PHILLIPS: Well, if you're going to bail out Wall Street while you're saying oh, the Social Security recipients, maybe they don't even need that money. A lot of people in the financial community basically want to push Social Security on some sort of voluntary basis and needs test it and get rid of it. Now, a lot of Democrats in the labor movement are very nervous about Obama. They put out press releases talking about Rubin-nomics because they see that the flesh of the Democratic Party carries a lunchbox. But the new soul of the Democratic Party wears a pinstripe suit.”

In what Philips says, we can see the argument that the Democrats - once able to secure themselves in the saddle of government, and with this “new” coalition based around “Hope” and “Change” and “Si se Puede!” but really just momentum derived in large part from an anti-Bush sentiment - will be able to push through massive reforms, ie. austerity measures.

If allowed the reigns of government, the Obamaites will make the argument that austerity measures may go against the agenda that they - the Obamites - had started their campaigning with, but that implementation of such measures are demanded because of the “American” and by extension the global financial crisis. The whole rhetoric of “change” will be used as the carrot to get much of the populace to follow the boss class down the path that ends in the confrontation and final liquidation of 100 years of concessions and social adjustments made by the System in the face of struggle.

There is no doubt that the Republicans will do the same. However, the difference with the Dems is that they have risen to where they are on a vague promise to “come to the rescue” of everyday people.

It is important to not sound alarmist or that this is the “CRISIS”, society is reproduced through a series of crisis and the workings of capitalism are defined by a constant recuperation and fracturing of its antagonisms – those movements opposed to the form that capitalism takes in the now: its rule and values – Left, Right, and beyond.

The crisis within capitalism may allow for capitalism itself to once again regenerate. Renewed life for the System means new forms of the subjugation of labor – us, the masses, existing labor pools and those who have been bled into irrelevancy.

you can watch the whole interview on Moyers' site: The Bill Moyers Journal

or view the youtube videos: