THOUGHTS ON THE SUB-PRIME CRISIS

I am wondering if anybody is having any thoughts on the problems they are having with the stockmarket in the USA at the moment.
I am going to toss some thoughts out there and see if anybody is interested in replying or commenting.
I think it is very relevant to SOC 104 and would be worth discussing for a little while in tutorials.
Commencing with neo-liberalism. As Mark has noted in the Week 9 lecture notes (p. 20), neoliberalism involves governments privatizing services they were previously responsible for, allowing them to wash their hands of the responsibility to the population.
This process passes responsibilities of the privatised services to tending the interests of shareholders, away from the people using the service. From here it can be argued that responsibilities of the privatized service are transformed. There is a need to try to achieve balance – on one hand creating profits for the shareholders while at the same time providing a service that people are willing to pay for. I am confident in saying that a privatized company will show preference to the shareholders concerns as opposed to those who use/pay for the service.
When Keating in his wisdom commenced the privatisation process in Australia, freeing up markets for free trade and ending many protectionist strategies in place, the process of neoliberalism began. We have seen what were many public owned services sold off in the name of privatization. The point I will argue here is that historically, and I am going back a long way, governments had origins in looking after services that were common to the people when societies grew too big for individuals to look after such things as their own waste disposal, road maintenance, water and power supply, moving later on into the provision of communications and public transport.
The people originally elected representatives to oversee these services. Correct me if I am wrong, but I am at a loss as to how modern government have been permitted to privatise these services that in reality (historically, at least) belong to the general population. It was a common feature of the workforce after World War II that if a person was unskilled or otherwise unemployed they would be able to find employment in one of these public services e.g. Water Board, RTA, Council, Telstra (then the PMG – Postmaster Generals Office). The shareholders of these organizations were the general population, the user pays system here meaning the people that owned the services paid for them. Profits were spent in further employment and the improvement of services. The point here is that there was not the extra economic burden of payment to shareholders.
Moving along to the present day, I fail to see the sense in the sub-prime loans affairs that were permitted in the US recently. People with absolutely no chance of repaying a housing loan were permitted to borrow amounts of money that they had zero chance of repaying. Who in their right mind would propose such a scheme, let alone put it into practice. It was only a matter of time before the system collapsed. A basic argument that could be proposed here is that there is no humanity involved in profits made for shareholders. i.e. Profit first, people last. Conspiracy theorists could possibly read the attempt in the creation of an increased poor (people living in cars), a very neat method of population control.
Here is where I thank my lecturer and tutors. From a sociological viewpoint, and it is difficult to be objective, I will try to explain in terms of conflict. The people in power in tandem with mass media have created a culture where people strive to reach the unattainable. Any of those in opposition are marginalised or otherwise oppressed. The needs of the society as a whole run a poor last to the making of profit. The collapse of companies such as Fannie Mae and Freddy Mac are a result simply of the need for greed. Now it seems as if the self proclaimed most powerful government in the world is going to spend $700 odd billion dollars owned by the general population to keep these companies afloat while still leaving the same people in control. There is no mention of any help going to the people whose lives have spiraled into crisis over the sub-prime affair.
Quite simply, since governments have rated the success/wealth of a nation in terms of things such as average wages earned or Gross Domestic profit and governed using economic models allowing the proliferation of shareholder dominated institutions, there has been a greatly increased movement of wealth towards the “haves” at the expense of the “have nots”. I know I will attract criticism here, but I feel that the capitalists have now acquired so much wealth that the top end has overbalanced, and is now toppling over. It seems to be the best way to put it in layman’s terms. Keep an eye out for possible class conflict.
I will argue that privatisation has added the extra burden of the provision of profit to shareholders, an unnecessary and unaffordable capitalist orientated expense that society in general can ill afford, a process enabled and re-inforced by modern mass media.
Is there anybody willing to have a go at explaining this economic crisis in terms of consensus or conflict theory?
I am open to criticism providing it is constructive.

Click here to access George Bush’s address to the American people on this issue.