Wishing my readers a most Happy New Year!! I hope 2016 brings you love, happiness and inner peace, and that your goals include compassion. My personal focus this year will be on empathy and work to broaden my intellectual experiences and develop avenues for creative passions. Much love, Apollo.
Directed by Adam McKay; screenplay by McKay and Charles Randolph, based on the book by Michael Lewis
Adam McKay’s new film The Big Short is a hard-hitting comedy-drama about the historic collapse of the US housing bubble in 2008.
Based on Michael Lewis’s book, The Big Short: Inside The Doomsday Machine(2010), the film offers a picture of rampant criminality on the part of the financial establishment and its government co-conspirators who, while systematically looting the American economy, created a financial disaster.
The calamity was further deepened by the use of hundreds of billions of dollars in taxpayer money to bail out the biggest Wall Street firms. For millions of people in the US and around the world, the 2008 collapse was a social tragedy from which there has been no meaningful recovery. Yet, as The Big Shortpoints out, the bankers and speculators––who ought to be sitting in prison––are richer and more powerful today than ever.
McKay’s The Big Short centers on a number of Wall Street “outliers” who, despite the efforts of the banks, government regulators and media lackeys, uncover the truth about the explosive market for bonds based on subprime mortgages: that the latter are “junk” and a rotten foundation for an economic boom.
The Big Short
The film takes the form of a series of vignettes involving these figures, a number of whose paths cross at critical moments.
Bankers, The Big Short’s narrator (Ryan Gosling) explains at the outset, were once perceived as staid and conservative. Now, as the trade in mortgage-backed securities mushrooms and a vast housing bubble develops, they have gone “from the country club to the strip club,” a function of the degree of parasitism and degeneracy in the system.
Christian Bale plays the real-life San Jose, California neurosurgeon-turned-money manager Michael Burry, who sports a glass eye and has a penchant for heavy metal. With a manic focus, he spends the end of 2004 and early 2005 scanning hundreds of home loans that are packaged into mortgage bonds, eventually discovering an alarming pattern. As opposed to the prevailing wisdom that “the housing market is rock solid,” Burry comes to believe it is a flimsy house of cards.
Burry approaches Goldman Sachs, seeking to purchase hundreds of millions of dollars in credit default swaps (a form of insurance against a loan default or other credit event) that amount to a bet against the housing market. His hedge fund’s owners and investors are apoplectic, but the eccentric, anti-social Burry is convinced that patience is the key as he waits for the bottom to drop out and his assumptions to pay off. (According to Lewis’s book, Burry explained, “I’m not making a bet against a bond, I’m making a bet against a system.”)
He admonishes his skeptics: “[Federal Reserve Chairman] Alan Greenspan assures us that home prices are not prone to bubbles––or major deflations––on any national scale. This is ridiculous, of course…. In 1933, during the fourth year of the Great Depression, the United States found itself in the midst of a housing crisis that put housing starts at 10 percent of the level of 1925. Roughly half of all mortgage debt was in default. During the 1930s, housing prices collapsed nationwide by roughly 80 percent.”
Jared “Chicken Little” Vennett (Gosling, playing a fictionalized Greg Lippman), a Deutsche Bank subprime mortgage bond manager, gets wind of Burry’s astonishing gamble. Vennett, slick, sleazy and smart, crunches the numbers and sees a potential gold mine.
Vennett solicits financial backing from Wall Street-bashing Mark Baum (Steve Carell, based on Steve Eisman), head of FrontPoint Partners, a unit of Morgan Stanley. Vennett explains the certainty of a housing catastrophe. The irascible Baum, who continues to suffer from his brother’s suicide, is chronically appalled by the banks’ shenanigans.
The Big Short
To investigate Vennett’s claims, Baum sends his colleagues to a subdivision in Florida, where they discover homes in foreclosure, delinquent mortgages that were purchased in the name of family pets, and a stripper who owns several properties—all with adjustable rate mortgages (ARMs)—and was told that continuous refinancing would always work in her favor. In one abandoned south Florida home, an alligator has taken over the swimming pool. One of Baum’s associates says, “It’s like Chernobyl.”
Baum also talks to cocky young mortgage brokers who inform him, with a laugh, that they have made millions selling subprime mortgages to poor people and immigrants. He subsequently meets with a Standard & Poor’s representative (Melissa Leo), who tells Baum she has to rate all the banks’ financial vehicles at AAA (the top rate) to keep their business.
Another of The Big Shor t’s plot strands involves young, inexperienced money managers, Jamie Shipley (Finn Wittrock) and Charlie Geller (John Magaro), who parlay $110,000 of their own money into a $30 million fund. Also seeing the writing on the wall for the housing market, they enlist the help of retired guru/trader and drop-out Ben Rickert (Brad Pitt, based on Ben Hockett), whose connections help them secure an agreement enabling them to work directly with the banks.
The filmmakers intersperse the narrative with comic interludes featuring what they call “celebrity explainers,” brought in to help make the complicated terminology comprehensible. In the movie’s production notes, director McKay elaborates: “Bankers do everything they can to make these transactions seem really complicated, so we came up with the idea of having celebrities pop up on the screen throughout the movie and explain things directly to the audience.”
Sipping champagne in a bubble bath, actress Margot Robbie discusses mortgage-backed securities, while chef Anthony Bourdain compares a “toxic financial asset” to a seafood stew. (McKay recruited Bourdain after reading the latter’s recommendation that no one should “order seafood stew because it’s where cooks put all the crap they couldn’t sell.”
The director goes on, “I thought, ‘Oh my God that’s a perfect metaphor for a collateralized debt obligation, where the banks bundle a bunch of bad mortgages and sell it as a triple-A rated financial product.’”)
Economist Dr. Richard Thaler and actress Selena Gomez take part in a casino sequence to demonstrate how synthetic Credit Default Obligations (CDOs)––essentially groups of bad mortgages bundled together to hide the real likelihood of default––are the means of arranging numerous layers of speculation. Says McKay: “It was investors making those kinds of side bets on mortgage-backed securities through CDOs that drove the whole world economy to where it was poised to crash.”
The film’s tipping point comes when Vennett convinces Baum to attend the American Securities Forum in Las Vegas, an event whose out of control goings-on prove to the latter that the housing market is a gigantic Ponzi scheme.
The vindication of the nay-sayers is delayed when the housing market begins to collapse, but the value of the CDOs remains steady. Only then do the protagonists realize that the banks are concealing the toxicity of their holdings on a massive scale.
As the meltdown approaches, the mood of The Big Short markedly darkens. Baum starts to believe the “party’s over” and that “the world economy will collapse.” He is convinced the bankers “are crooks and should be in jail.”
This is effectively highlighted by a scene where Baum debates a representative of Bear Stearns. The latter sings the praises of the housing market even as the firm’s stock price falls off the cliff.
The Big Short’s approach to the run-up to one of the greatest financial crises in history, despite its comic-absurdist mode, is a serious one. The filmmakers do their best to bring this crisis and its human dimensions to life.
The film touches upon the systemic and far-reaching character of the 2008 crash. McKay and his collaborators are obviously appalled by its outcome and consequences, and even invent an alternative scenario in which the bankers responsible for the crash are jailed and the banks become regulated. They point the finger at not only those who issued the mortgages, but those who sliced and diced them into rotten products and the credit agencies that gave them top ratings. They conclude that the financial establishment made super profits through the immiseration of the population. The various actors, as clearly demonstrated by their performances, were fully committed to the project.
Of course, dramatizing something as complex as the 2008 financial collapse is an immense undertaking, involving a mass of historical and social questions.The Big Short’s makers have chosen one means of treating it. This film is clearly not the final word. While McKay and the others involved obviously feel sympathy for those devastated by the crisis, the mass of the population is largely absent. Their attitude to capitalism is a critical one, but they are not opponents of the profit system.
However, at a time when most filmmakers seem obsessed with gender, sexuality and race (and themselves), McKay and the others have chosen to treat—and treat trenchantly—one of the critical events in recent times. Genuine credit is due them.
As the year 2015 ends, a general mood of fear and foreboding predominates in ruling circles. It is hard to find a trace of optimism. Commentators in the bourgeois media look back on the past year and recognize that it has been a year of deepening crisis. They look forward to 2016 with apprehension. The general sense in government offices and corporate boardrooms is that the coming year will be one of deep shocks, with unexpected consequences.
The Financial Times’ Gideon Rachman gives expression to this pervasive feeling in his end-of-the-year assessment published on Tuesday. “In 2015, a sense of unease and foreboding seemed to settle on all the world’s power centers,” he writes. “All the big players seem uncertain—even fearful.” China “feels much less stable.” In Europe, the mood is “bleak.” In the US, public sentiment is “sour.”
Significantly, Rachman singles out as the “biggest common factor” in the world situation “a bubbling anti-elite sentiment, combining anxiety about inequality and rage about corruption that is visible in countries as different as France, Brazil, China and the US.” This observation reflects a growing recognition within the corporate media that the coming period will be one of immense social upheavals.
Rachman’s comment and others like it that have appeared in recent days confirm the assessment made by the WSWS during the first week of 2015. The intervals between the eruption of major geopolitical, economic and social crises have “become so short that they can hardly be described as intervals,” we wrote. Crises “appear not as isolated ‘episodes,’ but as more or less permanent features of contemporary reality. The pattern of perpetual crisis that characterized 2014—an essential indicator of the advanced state of global capitalist disequilibrium—will continue with even greater intensity in 2015.”
In defending its rule, the ruling class seeks to cover over the reality of capitalism beneath a mass of lies and hypocrisy. War is cloaked in the language of freedom and democracy; antisocial domestic policy is portrayed as the pursuit of equality and freedom. But—and this is characteristic of a period of crisis—more and more, the essential nature of capitalism—a system of exploitation, inequality, war and repression—comes into alignment with the everyday experiences of broad masses of people. Illusions are dispelled; the essence appears.
In the sphere of world economy, any expectation of an upturn has given way to the reality of permanent crisis. In the United States, six years into the so-called economic “recovery,” real unemployment remains at near-record highs, wages are under attack, and health care and pensions for millions of Americans are being wiped out. Europe is growing at less than 2 percent a year, and large parts of the European economy—including Greece, the target of brutal austerity measures demanded by the European banks—are in deep recession. China, presented as a possible engine of world economic growth, is slowing sharply. Brazil and much of Latin America are in deep slump. Russia is in recession.
Meanwhile, the easy-money policy of the world’s central banks has produced a new wave of speculative investment, centered in junk bonds and other forms of debt, which is beginning to unravel in a process that parallels the crisis in subprime mortgages prior to 2008.
The essential and intended consequence of government policy over the past seven years has been to vastly increase social inequality. During the past year, the wealth of the world’s billionaires surged past $7 trillion and the top 1 percent now controls half of the world’s wealth. In the US, the scale of social inequality—and therefore political inequality—is so great that one recent scientific study concluded that “the preferences of the vast majority of Americans appear to have essentially no impact on which policies the government does or doesn’t adopt.”
The economic crisis intersects with and intensifies geopolitical conflicts, which in 2015 brought the globe closer to world war than at any time in the past half-century. Virtually every part of the world has either become a battlefield or is assuming the character of a potential battlefield. The Middle East has been propelled into a regional civil war stoked by the imperialist powers, with Syria now the target of an intensified war drive waged under the guise of a new “war on terror.” Eastern Europe is being remilitarized as part of the US and NATO’s campaign against Russia. In East Asia, the US is staging provocations against China over the South China Sea. In Africa, US and European forces are planning operations in Libya, Cameroon, Nigeria and other countries.
Imperialism operates with a level of ruthlessness and criminality that can be compared only to the period of the first half of the 20th century. Entire countries are being torn apart. Atrocities—like the deliberate bombing of a Doctors Without Borders hospital in Afghanistan in October—are carried out with no consequences. Wars are launched without even the pretense of international legality.
Great power conflict—which produced two devastating wars in the 20th century—is again emerging as the basic dynamic of global relations. The relentless war drive of American imperialism is bringing it into conflict not only with Russia and China, but increasingly with other imperialist powers. The past year has seen a major effort by Germany to reassert itself as the principal European power, with calls from politicians, media commentators and academics for the establishment of a “strong state” to enable Germany to fill the role of “taskmaster” of Europe. Once again, the German ruling class is developing plans to “control Europe in order to control the world.”
For masses of people, the essential character of the state as a “body of armed men” dedicated to the defense of class rule is becoming evident. The “war on terror”—intensified following the attacks in Paris and San Bernardino toward the end of the year—is used to justify the abrogation of the formal procedures of bourgeois democracy. France has been placed under a permanent “state of emergency.” The European powers, in response to a massive refugee crisis produced by the military devastation of the Middle East, are erecting barriers and expelling migrants. Under conditions of unending war, fascistic and neo-fascistic forces (the National Front in France, Pegida in Germany, the candidacy of Donald Trump in the US) are growing.
The American ruling class, which employs torture and drone assassination in pursuit of its global ambitions, has built up a colossal apparatus of repression at home. Every day brings new reports of unarmed workers and youth being gunned down in cold blood by police officers who operate, with impunity, as self-appointed executioners.
As in every period of intense crisis, the real class interests represented by different tendencies are exposed. This goes not only for the established bourgeois parties, but also for the “left” parties of the petty bourgeoisie. The central strategic experience for the working class in 2015 was the election in Greece of Syriza, the “Coalition of the Radical Left,” whose coming to power in January was presented as a major turning point in world politics. Over the course of the year, however, Syriza betrayed every one of its election promises and is now implementing the very policies it claimed to oppose. As the year came to a close, elections in Spain showed a significant growth in support for Syriza’s ally, Podemos, with new claims that the era of austerity is over.
In fact, as the experience in Greece demonstrated, parties like Podemos, Syriza and many others internationally are thoroughly hostile to the working class. Politically and theoretically, they are rooted in the anti-Marxist conceptions of postmodernism, obsessed with race, sex and gender. The past year has not only exposed the political bankruptcy of the pseudo-left, but contributed to a growing realization that what has been called “left” is, in fact, only one expression of the general rightward movement of bourgeois politics as a whole.
What these experiences prove is that there is no alternative except the revolutionary mobilization of the working class in opposition to the capitalist system.
Against this background, the final and most decisive expression of the capitalist crisis is the intensification of class struggle and the growing signs of the emergence of the working class as an independent force. There is deep and profound anger and opposition that is continually erupting in different forms—strikes, protests, demonstrations—which the ruling class seeks to isolate and suppress through a combination of violence and the mobilization of its auxiliary agencies in the pseudo-left and the trade unions.
In the final months of the past year, opposition among US autoworkers brought them into conflict with both the auto companies and the corporatist United Auto Workers union. The efforts of American workers, paralleled in countries throughout the world, to break through the barriers erected by the reactionary unions are entering a new stage. This process, though in its initial stages, will become increasingly pronounced. The period in which the class struggle has been artificially suppressed, in which opposition to war, inequality and dictatorship has been excluded from political life, is coming to an end.
The past year was not lived in vain. Workers all over the world are beginning to draw the lessons, to acquire a greater consciousness of the social and political forces they confront. In this regard, it is significant that the struggle of autoworkers corresponded to a sharp growth in the readership of the World Socialist Web Site, as thousands of workers turned to the WSWS as a source of truth and perspective. This can and will be repeated on an ever-larger scale in countless forms in the coming period.
Political problems are posed with enormous sharpness. That capitalism confronts an existential crisis is now self-evident. The question raised is: How will this crisis be resolved?
US President Barack Obama, speaking to NPR’s Steve Inskeep earlier this month in the White House, blamed the misdirected anger, frustration and fear of “blue-collar men” for the rise of the billionaire real estate mogul and media figure Donald Trump to the top of the Republican presidential primary field.
Without even a cursory acknowledgement of the consequences of the policies pursued by his administration over the last six years, Obama dispassionately listed the sources of workers’ frustrations including, “all the economic stresses that people have been going through because of the financial crisis, because of technology, because of globalization, the fact that wages and incomes have been flatlining for some time.”
He continued by noting that “particularly blue-collar men have had a lot of trouble in this new economy, where they are no longer getting the same bargain that they got when they were going to a factory and able to support their families on a single paycheck.”
From the combination of stagnant wages and a decline in industrial employment, the president concluded “that there is going to be potential anger, frustration, fear. Some of it justified, but just misdirected. I think somebody like Mr. Trump is taking advantage of that. That’s what he’s exploiting during the course of his campaign.”
As is always the case when he makes any references to the devastating conditions facing the bulk of the population, Obama speaks as if neither he nor the party that he presently leads has anything to do with it. But what is most striking is that the president accepts entirely the racial stereotypes that characterize bourgeois politics, and particularly the identity politics in which he embedded himself during his days in Chicago, namely that white workers are hopelessly backward and racist and are looking to be led by a demagogue.
The reality is that there is not in fact a mass racist movement among American workers, and polls show widespread disgust for Trump among all sections of the population. But to the extent that they fail to respond to those identity issues presented as “left” by the bourgeoisie and the more affluent middle class, such as gay marriage and affirmative action for women and racial minorities, white workers are denounced as reactionary.
Any ability that Trump has to exploit grievances and deep anger and focus them in a reactionary direction is due above all to what passes for “left” in official American politics. This is an expression of the social interests of privileged layers of the middle class, who have nothing but hostility and contempt for the working class.
It was only a matter of time before a demagogue like Trump stepped in to take advantage of the political vacuum created by the absence of any outlet within the official political set up for the mass grievances of the working class to find expression.
Not only does Obama propose nothing to ameliorate the dire situation faced by millions of people, he expects the American people to forget that his administration has overseen an immense assault on the working class that has resulted in the greatest transfer of wealth from the poor to the rich in world history.
Social and economic inequality has soared as the top one percent has monopolized the overwhelming majority of income gains since 2009. Through Obama’s program of quantitative easing, trillions of dollars of virtually free money have been injected into the stock market. The implementation of Obamacare, presented as a major domestic “reform,” has involved a massive attack on health care services.
As for “blue-collar men [who] have had a lot of trouble in this new economy,” it is the Obama administration that set the mold for lower living standards through the government-backed bankruptcies of General Motors and Chrysler in 2009, during which the wages of new autoworkers were cut in half and health care and retirement benefits were decimated.
Far from being a racially determined process, vast portions of the industrial working class of every race, gender and sexual identity have been subjected to the fate of declining living standards over the last period. Under the terms of the most recent contracts enforced by the UAW at the Big Three, workers will continue to make wages that do not even allow them to buy the vehicles they produce.
The Obama administration is the culmination of a longer historical process, during which the Democratic Party has abandoned the program of social reform with which it had previously been associated. For much of the 20th century, the Democrats advocated certain social programs as a means of containing the class struggle and warding off the danger of socialism: Franklin Roosevelt’s New Deal (including Social Security), Harry Truman’s Fair Deal, and Lyndon B. Johnson’s “war on poverty” (including Medicare and Medicaid).
Over the past four decades, the Democratic Party has moved sharply to the right, as the ruling class as a whole responded to the decline in American capitalism by dismantling all the gains won by the working class in an earlier period. While the economic demands of the working class have been dismissed by the existing political structure, great effort has been made to channel popular energy into secondary cultural and identity issues.
The trade unions, for their part, abandoned the working class, including many white workers who reside in what are now Republican-dominated states. The unions worked closely with the companies and the Democratic Party in dismantling entire industries, wiping out hundreds of thousands of jobs.
The more the Democratic Party abandoned and repudiated a program of significant socioeconomic reform, the more it allied itself and made itself the champion of the interests pursued by the affluent middle class as they emerged out of the politics of the New Left in the 1960s and 1970s. The Democratic Party and its hangers-on worked to redefine “left” politics to focus entirely on issues of identity, gender, race and sexuality.
This process reached a certain culmination in Obama, presented as a “transformational” candidate who, because of his race, would permanently alter the trajectory of American politics. Many workers, including white workers, supported Obama in 2008 on this basis. Illusions, however, were quickly shattered. The Democratic Party is now associated even more directly with Wall Street and hedge fund operators than the Republicans, the traditional party of the banks and big business.
The Republicans pursued a different strategy during this period, intensifying efforts to use religion and cultivate various forms of backwardness to develop a broader political foundation, while working with the Democrats to implement the demands of the corporate and financial aristocracy. Their ability to win a base of support was facilitated by the rightward shift of the Democrats.
For his part Trump seeks to exploit the hypocrisy and absurdity of so much of what underlies identity politics. More generally the Republicans benefit from the widely perceived insincerity of official “left” politics.
The real danger is that a demagogue such as Trump working on the same axis of racial politics as the Democrats could turn the anger of white workers in a reactionary direction. Indeed, the neo-fascistic ravings and increasingly open racism of Trump have their political counterpart in the obsessive focus on race by the Democratic Party and those in its orbit. In both cases, the function is to divide and misdirect the working class.
The self-absorbed preoccupation of the pseudo-left with various forms of identity and their complete indifference to the issues facing the working classas a class only facilitate Trump’s exploitation of deep-rooted and largely ignored social grievances.
The more basic dynamic in the United States is the deep anger and hostility of the vast majority of the working class toward both political parties. However, what is ultimately required for this sentiment to find progressive expression—creating the conditions for dealing with the likes of Trump—is the building of an independent political movement of the working class, irreconcilably opposed to the Democratic Party and its “left” periphery, and to the Republicans and their ultra-right demagogy.
Since the eruption of the global financial crisis seven years ago, it has been commonplace for bourgeois commentators to end each year with predictions of better economic times ahead. Not so this time.
Financial Times columnist Gideon Rachman summed up the prevailing mood in a comment this week. “In 2015,” he wrote, “a sense of unease and foreboding seemed to settle on all the world’s major power centres. From Beijing to Washington, Berlin to Brasilia, Moscow to Tokyo—governments, media and citizens were jumpy and embattled.”
On the economic front there are two sources of this mounting disquiet: First, the fact that despite the pouring of trillions of dollars into the global financial system by the world’s major central banks, recessionary tendencies are gathering momentum. Second, that, in Rachman’s words, “there is… a widespread fear that, after years of unorthodox monetary policy, another financial or economic crisis might be building.”
The predominant economic development in 2015 has been the deepening trend towards global recession. At its meeting in October, the International Monetary Fund forecast the lowest rate of global economic growth since the immediate aftermath of the financial crisis and warned that it could further downwardly revise its estimates.
The myth, assiduously promoted for a number of years, that China and the emerging market economies would provide a new foundation for global capitalism was finally buried this year, as China experienced its lowest growth levels since the early 1990s. Rather than provide a new base for expansion, the mounting problems in the Chinese economy, exemplified by the Chinese stock market crash over the summer and the devaluation of the renminbi, are negatively impacting the rest of the world, with major economic and political consequences.
The “left” turn in Latin American politics has come to an end as the boom fuelled by exports to Chinese markets has given way to recession. Brazil, once seen as a source of economic expansion, along with the other members of the BRICS group of countries, has been plunged into recession. Its economy contracted 4.5 percent in the last quarter in the biggest downturn since the 1930s Depression. This contraction has intensified its financial problems. November’s figures for the increase in Brazil’s public debt were the third highest on record.
The effects of slower growth in China are extending to the advanced capitalist economies. Canada, which is highly dependent on exports to China, has, with the announcement that the economy contracted in October, experienced negative or stagnant growth in seven of the first ten months of the year.
Falling iron ore export revenue, the result of the Chinese slowdown, is causing major fiscal problems for the Australian federal government as well as the states. In its latest budget update, the Turnbull government announced that it expected to lose another $7 billion in revenue over the next four years as compared to estimates made just last May, largely as a result of falling ore prices. These are now below $40 per tonne, compared to $180 per tonne four years ago. The once boom state of Western Australia has announced its biggest income fall since the Great Depression due to lost revenue from the mining industry.
For some time the US was touted as a bright spot in the world economy. To the extent that this is still the case, it only underscores the dismal situation everywhere else. US wages remain stagnant, economic growth remains well below levels achieved in all previous post-war recoveries, and industrial output is falling, with warnings that the sector has entered a recession.
The euro zone has yet to recover the levels of output reached before the beginning of the financial crisis, with no signs of any revival of investment.
One of the most prominent indicators of the onset of global recession is the precipitous fall in the prices of all industrial commodities. The Bloomberg Commodity index of 22 raw materials has fallen to its lowest level since the financial crisis.
While the plunge in the price of oil—down from its levels of around $100 per barrel in the middle of last year to just $36—has attracted the most attention, it is only the most prominent expression of a general tendency. Iron prices continue to fall, accompanied by precipitous declines in other metals associated with basic industry.
At the beginning of this year, the price of nickel, which is used in the manufacture of stainless steel, was expected to rise by 22 percent. It has fallen by more than 40 percent, a bigger decline than the collapse suffered by oil. Likewise, the price of zinc, which was predicted to rise by 16 percent, has dropped by 28 percent.
When the oil price began to fall, the view was advanced that this could be beneficial to the world economy by reducing energy costs. But any positive effects have been completely outweighed by the deepening slump. In an indication of future trends, the Organisation of Petroleum Exporting Countries lowered its long-term estimates for global oil demand and said oil prices would not return to the level of $100 per barrel until 2040 at the earliest.
The falling oil price has sent a shock wave through financial markets, hitting high-yield or so-called “junk” bonds as well as mutual funds that have invested in energy-related projects. With money available at ultra-low interest rates and oil fetching more than $100 per barrel, there was money aplenty for speculation. But with oil at below $40, many of these projects are unviable.
Mutual funds that invested in pipelines and other infrastructure projects have also been adversely affected. According to one analyst cited by the Financial Times: “These funds have never gone through the kind of energy price crash that we have had this year.”
The problems could extend more broadly to US banks. Wells Fargo, one of America’s largest banks, has already warned that low oil prices mean exploration companies and oil producers may not be able to repay their loans. It has been estimated by US regulators that there are five times as many oil and gas loans in danger of default than there were a year ago.
When the financial crisis broke in 2008-2009, the air was filled with talk of coordination and cooperation among the major capitalist powers. That has already gone by the board and the past year has seen growing divergences.
There is a rift in the policies of the world’s central banks, with the US Fed starting to lift rates while the European Central Bank and the Bank of Japan hold rates near zero and continue to pump money into the financial system.
While a façade of unity is maintained, divisions are deepening, especially as regards China. In March, there was a conflict between the US and Britain when the Cameron government, acting on behalf of British financial interests, defied US opposition and announced it was signing on to the Chinese-backed Asia Infrastructure Investment Bank, opening the way for other European powers to join.
A new conflict has now opened up, with the US reported to be lobbying to prevent the European powers, with Britain and Germany playing a key role, granting China market economy status under the World Trade Organisation (WTO). If China were so designated, it would further open up the world market to its exports. US officials have denounced the move as an attempt by European powers to win the support of Beijing as they seek profitable outlets for euro investments.
Widening rifts were also in evidence with the effective burial of the Doha Round of trade negotiations at the WTO talks in Nairobi earlier this month. This was chiefly at the instigation of the US, which is abandoning the pursuit of multilateral trade deals in favour of exclusive agreements, such as the Trans Pacific Partnership covering Asia and the Transatlantic Trade and Investment Partnership covering Europe, in which trade concessions are not extended to all but only to those countries agreeing to Washington’s demands.
The implications for the international working class of the deepening crisis are further austerity coupled with intensifying attacks on jobs, wages and working conditions.
Euro zone economists polled by the Financial Times this week set out the agenda with a call for a renewed push on so-called “structural reforms” of the labour market—the scrapping of remaining regulations governing wages and working conditions—aimed at nothing less than the creation of an impoverished cheap labour force.
Economic developments in 2015 have again underscored the fact that the crisis of 2008 signified a breakdown of the global capitalist system, not a downturn from which there would be a “recovery.” The coming year will bring a stepping up of the assault carried out over the past seven years. It can be met only through a political movement of the working class based on an international socialist program.
Hossein Derakhshan was imprisoned by the regime for his blogging. On his release, he found the internet stripped of its power to change the world and instead serving up a stream of pointless social trivia
Late in 2014, I was abruptly pardoned and freed from Evin prison in northern Tehran. In November 2008, I had been sentenced to nearly 20 years in jail, mostly over my web activities, and thought I would end up spending most of my life in those cells. So the moment, when it came, was unexpected. I was sharing a cup of tea when the voice of the floor announcer – another prisoner – filled all the rooms and corridors: “Dear fellow inmates, the bird of luck has once again sat on one fellow inmate’s shoulders. Mr Hossein Derakhshan, as of this moment, you are free.”
Outside, everything felt new: the chill autumn breeze, the traffic noise from a nearby bridge, the smell, the colours of the city I had lived in most of my life. Around me, I noticed a very different Tehran from the one I had been used to. An influx of new, shamelessly luxurious condos had replaced the charming little houses I was familiar with. New roads, new highways, hordes of invasive SUVs. Large billboards with advertisements for Swiss-made watches and Korean TVs. Women in colourful scarves and manteaus, men with dyed hair and beards, and hundreds of charming cafes with hip western music and female staff. They were the kind of changes that creep up on people; the kind you only really notice once normal life gets taken away from you.
Two weeks later, I began writing again. Some friends agreed to let me start a blog as part of their arts magazine. I called it Ketabkhan – it means book-reader in Persian.
Six years was a long time to be in jail, but it is an entire era online. Writing on the internet had not changed, but reading – or, at least, getting things read – had altered dramatically. I’d been told how essential social networks had become, so I tried to post a link to one of my stories on Facebook. It turned out Facebook didn’t care much. It ended up looking like a boring classified ad. No description. No image. Nothing. It got three likes. Three! That was it.
It became clear to me, right there, that things had changed. I was not equipped to play on this new turf — all my investment and effort had burned up. I was devastated.
Blogs were gold and bloggers were rock stars back in 2008 when I was arrested. At that point, and despite the fact the state was blocking access to my blog from inside Iran, I had an audience of around 20,000 people every day. People used to carefully read my posts and leave lots of relevant comments, even those who hated my guts. I could empower or embarrass anyone I wanted. I felt like a monarch.
The iPhone was a little over a year old, but smartphones were still mostly used to make phone calls and send short messages, handle emails, and surf the web. There were no real apps, certainly not how we think of them today. There was no Instagram, no SnapChat, WhatsApp. Instead, there was the web, and on the web, there were blogs: the best place to find alternative thoughts, news and analysis. They were my life.
It had all started with 9/11. I was in Toronto, and my father had just arrived from Tehran for a visit. We were having breakfast when the second plane hit the World Trade Center. I was puzzled and confused and, looking for insights and explanations, I came across blogs. Once I read a few, I thought: this is it, I should start one, and encourage all Iranians to start blogging as well. So, using Notepad on Windows, I started experimenting. Soon I was writing on hoder.com, using Blogger’s publishing platform before Google bought it.
Then, on 5 November 2001, I published a step-by-step guide on how to start a blog. That sparked something that was later called a blogging revolution: soon, hundreds and thousands of Iranians made it one of the top five nations by the number of blogs. I used to keep a list of all blogs in Persian and, for a while, I was the first person any new blogger in Iran would contact, so they could get on the list. That’s why they called me “the blogfather” in my mid-20s – it was a silly nickname, but at least it hinted at how much I cared.
The Iranian blogosphere was a diverse crowd – from exiled authors and journalists, female diarists, and technology experts, to local journalists, politicians, clerics, and war veterans . But you can never have too much diversity. I encouraged conservatives inside Iran to join and share their thoughts. I had left the country in late 2000 to experience living in the west, and was scared that I was missing all the rapidly emerging trends at home. But reading Iranian blogs in Toronto was the closest experience I could have to sitting in a shared taxi in Tehran and listening to collective conversations between the talkative driver and random passengers.
There’s a story in the Qur’an that I thought about a lot during my first eight months in solitary confinement. In it, a group of persecuted Christians find refuge in a cave. They, and a dog they have with them, fall into a deep sleep and wake up under the impression that they have taken a nap: in fact, it’s 300 years later. One version of the story tells of how one of them goes out to buy food – and I can only imagine how hungry they must have been after 300 years – and discovers that his money is obsolete now, a museum item. That’s when he realises how long they have been absent.
The hyperlink was my currency six years ago. It represented the open, interconnected spirit of the world wide web – a vision that started with its inventor, Tim Berners-Lee. The hyperlink was a way to abandon centralisation – all the links, lines and hierarchies – and replace them with something more distributed, a system of nodes and networks. Since I got out of jail, though, I’ve realised how much the hyperlink has been devalued, almost made obsolete.
Nearly every social network now treats a link as just the same as it treats any other object – the same as a photo, or a piece of text. You’re encouraged to post one single hyperlink and expose it to a quasi-democratic process of liking and plussing and hearting. But links are not objects, they are relations between objects. This objectivisation has stripped hyperlinks of their immense powers.
At the same time, these social networks tend to treat native text and pictures – things that are directly posted to them – with a lot more respect. One photographer friend explained to me how the images he uploads directly to Facebook receive many more likes than when he uploads them elsewhere and shares the link on Facebook.
Some networks, like Twitter, treat hyperlinks a little better. Others are far more paranoid. Instagram – owned by Facebook – doesn’t allow its audiences to leave whatsoever. You can put up a web address alongside your photos, but it won’t go anywhere. Lots of people start their daily online routine in these cul-de-sacs of social media, and their journeys end there. Many don’t even realise they are using the internet’s infrastructure when they like an Instagram photograph or leave a comment on a friend’s Facebook video. It’s just an app.
But hyperlinks aren’t just the skeleton of the web: they are its eyes, a path to its soul. And a blind webpage, one without hyperlinks, can’t look or gaze at another webpage – and this has serious consequences for the dynamics of power on the web.
More or less all theorists have thought of gaze in relation to power, and mostly in a negative sense: the gazer strips the gazed and turns her into a powerless object, devoid of intelligence or agency. But in the world of webpages, gaze functions differently: it is more empowering. When a powerful website – say Google or Facebook – gazes at, or links to, another webpage, it doesn’t just connect it , it brings it into existence; gives it life. Without this empowering gaze, your web page doesn’t breathe. No matter how many links you have placed in a webpage, unless somebody is looking at it, it is actually both dead and blind, and therefore incapable of transferring power to any outside web page.
Apps like Instagram are blind, or almost blind. Their gaze goes inwards, reluctant to transfer any of their vast powers to others, leading them into quiet deaths. The consequence is that web pages outside social media are dying.
Even before I went to jail, though, the power of hyperlinks was being curbed. Itsbiggest enemy was a philosophy that combined two of the most dominant, and most overrated, values of our times: newness and popularity. (Isn’t this embodied these days by the real-world dominance of young celebrities?) That philosophy is the stream. The stream now dominates the way people receive information on the web. Fewer users are directly checking dedicated webpages, instead getting fed by a never-ending flow of information that’s picked for them by complex and secretive algorithms.
The stream means you don’t need to open so many websites any more. You don’t need numerous tabs. You don’t even need a web browser. You open the Facebook app on your smartphone and dive in. The mountain has come to you. Algorithms have picked everything for you. According to what you or your friends have read or seen before, they predict what you might like to see. It feels great not to waste time in finding interesting things on so many websites. But what are we exchanging for efficiency?
Popularity is not wrong in and of itself, but it has its own perils. In a free-market economy, low-quality goods with the wrong prices are doomed to failure. Nobody gets upset when a quiet Hackney cafe with bad lattes and rude servers goes out of business. But political or religious opinions are not the same as material goods or services. They won’t disappear if they are unpopular or even wrong. In fact, history has proven that most big ideas (and many bad ones) have been quite unpopular for a long time, and their marginal status has only strengthened them. Minority views are radicalised when they can’t be heard or engaged with. That’s how Isis is recruiting and growing. The stream suppresses other types of unconventional ideas too, with its reliance on our habits.
Today the stream is digital media’s dominant form of organising information. It’s in every social network and mobile application. Since I gained my freedom, everywhere I turn I see the stream. I guess it won’t be too long before we see news websites organise their entire content based on the same principles. The prominence of the stream today doesn’t just make vast chunks of the internet biased against quality – it also means a deep betrayal to the diversity that the world wide web had originally envisioned.
The centralisation of information also worries me because it makes it easier for things to disappear. After my arrest, my hosting service closed my account, because I wasn’t able to pay its monthly fee. But at least I had a backup of all my posts in a database on my own web server. But what if my account on Facebook or Twitter is shut down for any reason? Those services themselves may not die any time soon, but it is not too difficult to imagine a day when many American services shut down the accounts of anyone from Iran, as a result of the current regime of sanctions. If that happened, I might be able to download my posts in some of them, and let’s assume the backup can be easily imported into another platform. But what about the unique web address for my social network profile? Would I be able to claim it back later, after somebody else has possessed it?
But the scariest outcome of the centralisation of information in the age of social networks is something else: it is making us all much less powerful in relation to governments and corporations. Surveillance is increasingly imposed on civilised lives, and it gets worse as time goes by. The only way to stay outside of this vast apparatus of surveillance might be to go into a cave and sleep, even if you can’t make it 300 years.
Ironically enough, states that cooperate with Facebook and Twitter know much more about their citizens than those, like Iran, where the state has a tight grip on the internet but does not have legal access to social media companies. What is more frightening than being merely watched, though, is being controlled. WhenFacebook can know us better than our parents with only 150 likes, and better than our spouses with 300 likes, the world appears quite predictable, both for governments and for businesses. And predictability means control.
Middle-class Iranians, like most people in the world, are obsessed with new trends. Since 2014 the hype is all about Instagram. There’s less and less text on social networks, and more and more video, more and more images, still or moving, to watch. Are we witnessing a decline of reading on the web in favour of watching and listening? The web started out by imitating books and for many years, it was heavily dominated by text, by hypertext. Search engines such as Google put huge value on these things, and entire companies – entire monopolies – were built off the back of them. But as the number of image scanners and digital photos and video cameras grows exponentially, this seems to be changing. Search tools are starting to add advanced image recognition algorithms; advertising money is flowing there.
The stream, mobile applications, and moving images all show a departure from a books-internet toward a television-internet. We seem to have gone from a non-linear mode of communication – nodes and networks and links – toward one that is linear, passive, programmed and inward-looking.
When I log on to Facebook, my personal television starts. All I need to do is to scroll: New profile pictures by friends, short bits of opinion on current affairs, links to new stories with short captions, advertising, and of course self-playing videos. I occasionally click on the like or share button, read peoples’ comments or leave one, or open an article. But I remain inside Facebook, and it continues to broadcast what I might like. This is not the web I knew when I went to jail. This is not the future of the web. This future is television.
Soon the internet will be a collection of mobile apps rather than of websites. And the money these apps generate will be out of monthly subscription, instead of advertising – something like cable television with its various theme-based packages, and its primetime. (Already if you want to post anything to a social network, you have to do it early morning or late night, when most people are using the app.)
Sometimes I think maybe I’m becoming too strict as I age. Maybe this is all a natural evolution of a technology. But I can’t close my eyes to what’s happening: a loss of intellectual power and diversity. In the past, the web was powerful and serious enough to land me in jail. Today it feels like little more than entertainment. So much that even Iran doesn’t take some – Instagram, for instance – serious enough to block.
I miss when people took time to be exposed to opinions other than their own, and bothered to read more than a paragraph or 140 characters. I miss the days when I could write something on my own blog, publish on my own domain, without taking an equal time to promote it on numerous social networks; when nobody cared about likes and reshares, and best time to post.
That’s the web I remember before jail. That’s the web we have to save.
• Hossein Derakhshan (@h0d3r) is a Tehran-based author. He is currently working on an art project called Link-age to promote hyperlinks and the open web.