One common form of this speculation, what we would call gambling really, is the wasteful and parasitic practice of borrowing in one currency with low or next to nothing interest rates and then buying another with higher rates; betting one currency goes down and the other goes up, or that they at least stay the same in relation to each other. These investments triggered the recent slide as a favorable low currency, the Japanese Yen began to appreciate causing investors to flee to less risky bonds or to “hedge” their bets in other ways. This is known as the “Carry Trade”. 

But also of some concern has been the US housing market. This is an $8 trillion industry that has played a major role in sustaining the US economy as consumers have borrowed against their homes to buy what they need or to finance that vacation. Consumer spending is some two thirds of all economic activity; they never told us to go shopping after 911 for nothing. Much of the speculative deals have as their collateral the US worker who pays the moneylenders for the privilege of having a roof over our head. One sector, the subprime market (those with poor credit history) has seen 25 lending institutions go out of business in the past few months. (1)

When we pay the mortgage we know what that means in real terms. It consumes, like rents, a huge portion of many young workers’ incomes forcing them to work longer hours and multiple jobs. We are all too aware of the stress these financial burdens cause. Domestic violence, alcoholism and drug abuse increases as working people are stretched to the limit simply to attain the basic necessities of life. Students too suffer the same stresses as the moneylenders surround them with debt for what should be a human right, an education.

Despite these pressures even the capitalists themselves recognize that people pay. “Most people, even with bad credit histories, repay their loans.” admits the Financial Times (2) No doubt a strong incentive for this is that the capitalists who also control the courts and write the laws dole out severe punishment to those who don’t pay the pound of flesh; they will terrorize us if we don’t pay. We will not be able to function in society.

So the investors have a real deal here. They are involved in the lending of the money that allows us to buy a place to live. But they also make bets on whether or not we’ll be able to pay it back. Hedge funds, a major speculative practice actually bets that, and hopes for, working people not to be able to pay these loans back. They win that bet and life is good. There are also capitalists that charge other capitalists fees to insure their bet. So since the recent rapid decline in workers’ inability to repay the blood money, the cost of insuring against default has risen. Those who bet on the side of a stable and secure subprime market are the losers; those who bet and prayed no doubt for a collapse of this market are the winners.

The Financial Times put it this way, “..the hedge funds who placed their bets against the subprime markets a few months ago when it was historically cheap to do so, are licking their lips.” (3)

There are millions upon millions of transactions like this every minute of every day on ever more risky and what economists call “opaque” speculative deals. “After all…” writes Gillian Tett in the Financial Times, “…in a world awash with liquidity it has been difficult to make reasonable returns buying anything mainstream.” (4)

We all know someone whose life is consumed by struggling to pay the mortgage or the rent or the student loan. In many cases, the strain causes families to break up; it leads to husbands beating their wives, women their children or the kids the family pet or each other. In the worst cases people can no longer deal with the pressure and break down mentally, killing entire families that they believe they have “let down.” And globally the free market means starvation and death for millions as medicines are denied people. And food is denied people while traders on exchanges bet on whether the price of grain of pork bellies will go up or down over an agreed upon period.

And people are betting on this happening; are hoping for it. They take the wealth working people create, something that is not theirs except through the laws they themselves make, and they use it to enrich themselves in parasitic unproductive activities. 

Imagine if we could bet on how many US troops die in Iraq each day? Why not? What would people think of me if I took those bets, some folks betting there would be 10 deaths that day, some betting only five, and me getting rich as the bookie.

Obviously I would be labeled a pariah. The media would crucify me. All the well-dressed, respectable men and women in the halls of Congress would vilify me. In the pulpits throughout the land I would be condemned to eternal damnation. But these same people perpetrate the very system that destroys lives on a daily basis.

While most people are aware that a handful of people are getting richer at the expense of lost American and Iraqi lives, few of us consider that this type of gambling goes on every day in the market economy. More and more, capitalists, the “legal owners” of the wealth that workers’ produce in a society where one section of society works and another owns the means of production, choose not to invest this capital in further production; they get richer gambling with it and have no permanent structures to maintain or employees to deal with.

This wealth is ours. It is the product of the labor of the overwhelming majority of Americans as well as workers abroad. It’s ownership and the decisions about how it should be used belong to those who created it. This is not utopian; it is simply being realistic, and, if we want to survive as a species, an absolute necessity.

(1)The Short View: John Authers Financial Times 3-7-07

(2) ibid

(3) ibid

(4)Gillian Tett: FinancialTimes 3-2-07