CRAMDOWN
A (usually court-ordered) forced restructuring of a debt load which involves the reduction of
the amount owed, in order to allow the debtor to at least be in the position to continue to
pay back part of the debt. This happens most often in bankruptcy proceedings. The term arises
from the fact that lenders view such reductions in the debts owed them as something that is
being “crammed down” their throats!
Under present U.S. law (as of November 2009)
if a person files for “Chapter 13 bankruptcy” (a court-supervised, multi-year plan designed to
provide at least partial payment of debts to the creditors), the judge can reduce the amount
owed on credit cards, auto loans, student loans and even mortgages on second homes, but
not on mortgages on an individual’s principal residence. At present there are once
again proposals to change the law in order to allow cramdowns on these sorts of mortgages
as well, as part of the desperate effort to resolve the financial crisis in the U.S. which
first broke out in the sub-prime mortgage sphere in 2008. At present, banks are often rapidly
forcing foreclosures, and then the sale of the house to someone else (even at a much lower
price), in order to quickly recover as much of the bad loan as they can. If this change is made
it might make it somewhat more difficult for the banks to do this, because a judge might cut
the mortgage amount owed and allow the person in bankrupcy proceedings to keep their home (thus
preventing the bank from selling it again).
CRASH OF 1929
The major stock market crash and financial crisis that
broke out in the United States in the fall of 1929 and is generally viewed as the beginning of
the Great Depression of the 1930s.
Most bourgeois economists view this Crash and
overall financial crisis, along with the inept handling of it by the Hoover Administration and
the Federal Reserve, as the main causes of the Great
Depression, which then spread through the entire world capitalist economy. This theory, however,
is mostly nonsense. A recession was already developing in the U.S. economy by the spring of
1929, and it was the fundamental workings of the real capitalist economy that led to
overproduction of capital, the massive debt bubble, the
initial recession, the wild financial speculation, then the Crash, and finally the Depression.
While it is true that financial crises such as the Crash of 1929 virtually always play a
prominent role in capitalist economic crises, they are by no means the fundamental cause of
them. Still, it is also true that a more rational response from the government (for example,
via what is now called Keynesian deficit financing)
might have somewhat mitigated or even postponed the Depression, at least for a while. But the
bourgeoisie was trapped by its own ideology that proclaimed the capitalist system as
self-regulating, and therefore was unable to respond with even limited effectiveness.
CRATYLUS OF ATHENS (5th century BCE)
Ancient Greek idealist philosopher who was a disciple of Heraclitus
and an influence on Plato. He was a Sophist,
who arrived at his extreme relativist views on the basis of Heraclitus’s dialectics. This appears
to have led to a misconception of Heraclitus’s actual philosophy by Plato and Aristotle and by
many others for centuries following them.
CREATIONISM
The religious doctrine that matter, energy, life, animal species, human beings, and the world
in general, were created by God out of nothing. Among fundamentalist
Christians this is assumed to have occurred as is described in the first book of the Bible,
Genesis. Of course this entire doctrine is totally unscientific nonsense.
CREDIT (Economics)
The benefit granted someone by allowing them to buy goods or services without immediate
payment, but requiring payment at some usually definite time in the future. Credit is
essential to the functioning of capitalism for a variety of reasons; most fundamentally
because the workers who produce all the goods to be sold are not themselves paid enough to
buy them all back! Thus, if they are to buy the “excess goods” at all, they must be extended
credit to do so. Of course, the repetition of this extention of credit, over and over again,
creates a CREDIT BUBBLE (see below).
See also:
CREDIT SYSTEM, LEVERAGE,
DELEVERAGING
CREDIT BUBBLE
The expanding amount of credit outstanding, as those who will never be able to pay back
all that they owe are granted more and more credit. Those borrowing money, or buying things
on credit, always imagine that they will someday be able to pay it back. And those lending
the money would not do so unless they expected to be paid eventually. But in a capitalist
economy this is inherently impossible because of the extraction of
surplus value from the workers, or—in other words—from
the fact that the value of their wages is necessarily less than the value of the commodities
they produce. But because things are going well for a certain period, the lenders and
borrowers always jump to the conclusion that the good times will continue for ever. This is,
alas, an illusion. All credit bubbles eventually burst, and this forms the heart (though not
necessarily the initial phase) of a major financial
crisis of the sort the world entered in 2008.
CREDIT CARD RECEIVABLES [Capitalist Finance]
The ownership right to receive the payments on outstanding credit card debt. While
the credit card company itself makes the loan to the customer when he or she uses the credit
card, that credit card company may sometimes turn around and sell the right to receive
payment on that debt to a third party. They are especially apt to do this if too many of
their customers are getting behind in their payments, and the risk of never being paid
is increasing. The credit card company will of course have to sell this right to receive
payment at a discount, and the company purchasing these “receivables” is gambling that it
will be able to collect enough of this outstanding debt to be able to make a profit on
the deal.
CREDIT DEFAULT SWAP (CDS)
[Capitalist finance:] An insurance contract that supposedly protects the holder against
corporate defaults by paying him or her the face value of a loan, bond or security if the
corporation issuing it fails to do so when it comes due. Buying a CDS therefore supposedly
removes the risk from buying very speculative bonds and various kinds of otherwise extremely
risky derivatives. However, the risk is really only removed if
the insurance company issuing the CDS can itself be relied on. The 2008 failure of AIG (the
American International Group), which was then the world’s largest insurance company and which
had issued hundreds of billions of dollars of CDS contracts, shows that this assumption by
financial speculators was not at all correct. Credit Default Swaps can themselves be traded
and thus form yet another arena for speculation. By the end of 2007, just as the speculative
bubble began to burst, more than $62 trillion in CDS’s had been issued, almost all of
it in the previous 7 years. This shows the truly absurd level of speculative gambling in
modern capitalism!
CREDIT RATING AGENCIES
Since capitalist companies and corporations cannot be trusted—even by other corporations—to
be honest about their financial status, capitalism requires the existence of credit
rating agencies to inform outsiders about just how great a risk it is to loan money to
them. This is in the form of public credit ratings for the securities (e.g. bonds) that they
issue, from say a top rating of AAA+ to a bottom rating of CCC-. (The precise rating system
used varies from one agency to another.) However, under the current system in the U.S., it
is most often the corporations being rated who pay the rating agencies! Thus there is
an incentive for these agencies to give companies a higher rating than they should, and to
be tardy in lowering their ratings when adverse developments occur. This partly explains how
risky sub-prime mortgages which were chopped up and repackaged
as Collateralized Debt Obligations managed to receive top-of-the-line AAA
credit ratings! This foolishness even suckered in some of the financial corporations who
issued these phony CDOs in the first place, and led to huge losses for investors and banks
in the financial crisis that began in 2008!
There are also credit rating agencies that
assign a rating to individual people, for the protection of the capitalist corporations who
issue them loans. Of course in this case the agencies are by no means biased in favor of
those they rate, and often make errors which unjustly lower the credit rating of ordinary
people.
CREDIT SYSTEM
[Intro material to be added...]
“The credit system itself [arose] out of the difficulty of employing capital ‘productively’, i.e., ‘profitably’. The English, for example, are forced to lend their capital to other countries in order to create a market for their commodities. Over-production, the credit system, etc., are means by which capitalist production seeks to break through its own barriers and to produce over and above its own limits.” —Marx, TSV, 3:122.
CREDIT UNION
A specialized type of bank operated as a cooperative and owned by its
members. Credit unions only accept deposits from, and only make loans to, their own members.
They are often set up by labor unions, professional organizations, and the like.
CRISES — ECONOMIC
An economic crisis is a serious interruption in the operation of the economy in a
society. Before the capitalist era, the most common causes of such crises were general crop
failures, wars and plagues (though after the “Black Death” in Europe there was a modest
economic boom, since fewer people now owned the same amount of material wealth).
Besides these traditional sorts of economic
crises, new types have appeared in the capitalist era. Marx notes that the sudden interruption
of trade channels caused an economic crisis in England after the war of 1815. [See: Marx,
TSV, 3:122] And in our own era it now appears that global
warming and other devastation caused by the capitalist disregard for the environment
may well result in a major long-term economic crisis (in addition to a general health and
well-being crisis) during the 21st century.
But in capitalist society by far the most
important and powerful type of economic crisis is usually the
overproduction crisis, which can exist only under capitalism. This means
overproduction by the capitalists of commodities relative to the actual market demand (and
not in relation to what people actually need and want). There are mechanisms (such
as the credit system and
Keynesian deficit financing) which allow the
capitalists to keep expanding production (beyond what the market would otherwise be) for a
long while. In the process they hugely expand the amount of capital itself beyond what
could otherwise be supported. This creates a tremendous economic house of cards which must
periodically come tumbling down. (The “house of cards” metaphor seems doubly appropriate
in the current crisis, since the collapse of the housing bubble was the fuse that
ignited it!)
CRISES — FINANCIAL
See: FINANCIAL CRISES
CRISES — and MONOPOLY
See: MONOPOLY—AND CRISES
CRISES — OVERPRODUCTION
See: OVERPRODUCTION CRISES
CRISIS OF 1873
A significant financial crisis, one of the most serious of the 19th century, that marked
the beginning of a prolonged period of economic weakness lasting about two decades.
CRISIS THEORIES (For Capitalist Economic Crises)
[To be added... ]
“CRITICAL THEORY”
The name given by adherents of the “Frankfurt School” to
their idealist and revisionist reinterpretation of Marxism.
CRITICISM — Sharp
“Criticism should be sharp. I don’t find the criticism made by some comrades at this conference very sharp; they seem to be afraid of offending others. If you are not sharp enough, if the sting doesn’t reach home, the person criticized will not feel any pain and take any heed.... Fear of offending others is only fear of losing votes and of an uneasy relationship at work. Will I lose my rice-bowl if you don’t vote for me? Nothing of the kind. Actually, if you speak your mind and lay the issues on the table sharply, you’ll find it easier to get along with others. Don’t draw in your horns. Why does an ox have two horns? They are for fighting, for self-defense and attack. I often ask comrades if they have ‘horns’ on their heads. Comrades, touch and feel if you have any. I can see some comrades have horns, some have horns but not very sharp ones, and others have no horns at all. In my opinion, it is better to have them, for that goes well with Marxism. One of the tenets of Marxism is criticism and self-criticism.” —Mao, “Speeches at the National Conference of the Communist Party of China: Concluding Speech” (March 31, 1955), SW 5:170-1.
CROCE, Benedetto [Pronounced: CROW-chay] (1866-1952)
Italian bourgeois philosopher of the neo-Hegelian school, historian, critic and politician.
He developed his own metaphysical system along the lines of Hegel, but without the dialectical
sophistication. His philosophy is that of absolute idealism. He
also devoted much attention to aesthetics and art criticism, and had a strong influence on
bourgeois aesthetics theory. He viewed art as an “intuitive cognition of the singular” as
contrasted with logical reasoning as a rational process of “knowing the general”. In an
idealist way he denied the physical reality of the work of art. (Cf.
AESTHETIC OBJECT. ) In ethics he tried to obscure
the social roots and class nature of morality.
Politically Croce was a prominent liberal
bourgeois ideologist, and member of the Italian government before Mussolini’s rise to power
and after his fall. He was a determined opponent of Marxism and revolution as well as of
Mussolini and Fascism. He wrote a short book, Historical Materialism and the Economics of
Karl Marx (1914) which is focused mostly against popularizers of Marx such as
Antonio Labriola.
CRORE
A number term in India and other south Asian countries which means 10 million. One
crore equals 100 lakhs. Thus to say that the government
spent $60 crores in an particular anti-revolutionary military campaign means that it spent
$600 million.
CRPF
Central Reserve Police Force. This is one of many government paramilitary forces seeking to
destroy Naxalites (Maoist revolutionaries) in India.
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