SHADOW BANKING SYSTEM
The part of the capitalist financial industry that performs the functions of banks without
formally calling themselves banks, especially facilitating various types of speculation,
and often without being regulated as banks by the government, including investment banking,
hedge funds, exotic securities operations by insurance companies, and the like. Moreover,
even many large banks which do call themselves banks and have their traditional
banking operations regulated, also now participate in these newer, more risky, and
unregulated (or less regulated) types of financial operations beyond the bounderies of
what used to be considered conservative mainstream banking. Much of this involves complex
and semi-mysterious new derivatives such as
CDOs and credit default swaps, and other
financial shenanigans. All of this goes to make up the so-called “shadow banking system”
of contemporary finance capitalism.
“Our current system of financial regulation dates back to a time
when everything that functioned as a bank looked like a bank. As long as you
regulated big marble buildings with rows of tellers, you pretty much had things
nailed down.
“But today you don’t have to
look like a bank to be a bank. As Tim Geithner, the Treasury secretary, put it in
a widely cited speech last summer, banking is anything that involves financing
‘long-term risky and relatively illiquid assets’ with ‘very short-term liabilities.’
Cases in point: Bear Stearns and Lehman, both of which financed large investments
in risky securities primarily with short-term borrowing.
“And as Mr. Geithner pointed
out, by 2007 more than half of America’s banking, in this sense, was being handled
by a ‘parallel financial system’—others call it ‘shadow banking’—of largely
unregulated institutions. These non-bank banks, he ruefully noted, were ‘vulnerable
to a classic type of run, but without the protections such as deposit insurance that
the banking system has in place to reduce such risks.’
“When Lehman fell, we learned
just how vulnerable shadow banking was: a global run on the system brought the world
economy to its knees.” —Paul Krugman, “Out of the Shadows”, Op-Ed column in the
New York Times, June 19, 2009.
[While it would indeed be
more rational of the bourgeoisie to thoroughly regulate investment banking and other
types of “shadow banking”, the absence of this regulation was not the reason
for the financial crisis which struck so hard in 2008, nor will such regulations
prevent this sort of crisis in the future, as Geithner, Krugman, and bourgeois
economists in general imagine. They can’t understand or admit that such crises are
inherent developments of the capitalist mode of production. —S.H.]
SHAHEED
As most widely used in India, the word shaheed means “martyr”. Often also used as
an honored title with a martyred person’s name, as in “Shaheed Azad” or “Shaheed Comrade
Azad”. A Shaheed Diwas is a Martyr’s Day (day of honor and remembrance for fallen
revolutionaries), and Shaheed Saptah means Martyr’s Week.
SHAKUR, Tupac Amaru (1971-1996)
A famous deceased rapper and Black activist. Born to a member of the Black Panther Party,
Shakur came to see how the American “justice” system oppresses people of colour and the
poor, as well as seeing the inherent hypocrisy of the U.S. political and economic system.
He incorporated many of these insights into his music. He was often vilified by the media
and others for his lyrics that seemed to glorify violence and misogyny. Shakur inspired
many people with his uncompromising stances against injustice, but his analysis, while
incorporating some elements of class consciousness and strong denunciations of racism and
police brutality, never reached a very coherent and satisfying outcome. While his songs
often expressed the sentiments of people who have lost any confidence in the capitalist
system, he himself called for Blacks to make as much money as possible in order to achieve
equality, rather than calling for a broad working class movement to overthrow capitalism
itself. Thus his outlook was a rather eclectic mix of militancy against the worst
injustices of capitalism, and conformity to basic capitalist precepts like “the right to
get rich”.
Shakur was murdered in 1996, probably by
members of the Crips street gang. He is regarded as one of the greatest rap artists of
all time. —L.C.
SHAW, George Bernard (1856-1950)
A famous Irish playwright and author, who was strongly influenced by Marxism and a supporter
of the socialist Soviet Union, but who was also much influenced by revisionism. He was a
prominent member of the Fabian Society. It was said of
him that he was a good man who had unfortunately fallen among Fabians!
[Referring to his reading of Marx’s Capital in 1883:] “That was the turning point in my career. Marx was a revelation... He opened my eyes to the facts of history and civilization, gave me an entirely fresh conception of the universe, provided me with a purpose and a mission in life.... [Das Kapital] achieved the greatest feat of which a book is capable—that of changing the minds of people who read it.” —George Bernard Shaw, quoted in Francis Wheen, Marx’s Das Kapital (2006), p. 90.
SHORT SALE (in Capitalist Housing Markets)
The sale of a house, or other piece of real estate, for less than the nominal “owner”
still owes on his or her mortgage. For example, a family might still owe $250,000 to the
bank when they are forced by capitalist economic circumstances (such as losing their jobs)
to sell their house for only $220,000. Of course the bank will receive that money, not the
nominal seller. The bank normally must approve such a sale, since it will probably take a
loss on its loan (in this case $30,000). Banks are sometimes willing to do this in order to
at least get back part of their mortgage loan.
Short sales are common after the
collapse of a major housing bubble, such as in the U.S.
at the present time. (As of September 2009, there were about 1,000 short sales per month in
the San Francisco Bay Area, or about 14% of the houses being sold.)
The banks have only themselves to blame for this predicament since they were foisting off
expensive mortgages (including sub-prime mortgages)
on people who could not possibly continue to meet their mortgage payments. Meanwhile,
millions of people are losing their homes. The capitalist system simply cannot guarantee
even such a basic thing as a home for the masses of people.
SHORT SELLING (in Capitalist Stock or Commodities Markets)
Selling a financial asset such as a share of stock, or some uniform commodity, which the
seller does not actually own, but which he or she has only borrowed for the purpose.
Speculators do this when they expect the price to decline, and therefore expect to be able
to buy back the item after that price decline. They will then pocket the difference in
the selling and buying prices, after paying a fee to the broker who loaned them the stock
or commodity. If the price of the borrowed asset rises and does not fall, the
speculator will have to buy it back at a higher price, and will therefore suffer a loss.
In brief, selling short is one of a great many methods of speculative gambling that
financial capitalists have come up with.
So-called “naked short selling” is when
the speculator sells the asset before he even borrows it, on the assumption that
he will be able to borrow it before he has to actually deliver it. In the aftermath of
the financial crisis which developed in the fall of 2008 the U.S. Securities and Exchange
Commission prohibited (first temporarily and then permanently) naked short selling.
“SHORT TWENTIETH CENTURY”
A concept originated by Ivan Berend, former President of the Hungarian Academy of Sciences,
and then widely popularized by the liberal-radical (previously revisionist “Marxist”)
historian Eric Hobsbawm in his book The Age of Extremes: The Short Twentieth Century,
1914-1991 (1994), in contrast to what he called the “Long Nineteenth Century”
(1780s-1914). As delineated in the original sub-title of that book, the term “the Short
Twentieth Century” is meant to refer to the period from World War I and the Bolshevik
Revolution to the collapse of the Soviet Union in 1991. Hobsbawm claims that this period
“forms a coherent historical period that is now ended” (p. 5). This is indeed the way it
seemed to many in 1994; it was a way for liberals to partially agree with reactionaries
who believed that the era of socialist revolution was over. [See:
“END OF HISTORY”]
Of course it is true that the Soviet era
was an important one in world history. But from the genuinely Marxist standpoint it was
made up of two separate eras—the socialist period and the revisionist (state-capitalist)
period. It was the October Revolution and socialist period that is most important to us.
Even just a couple decades later, the final collapse of the USSR in 1991 no longer seems
to be quite the overwhelmingly important turning point that Hobsbaum thought it was.
Instead, as the world gradually slips into a new period of prolonged economic depression
there now appears to be a wholly different boundary to the preceeding period of
history.
“SHORT-WORK” SYSTEM [in Germany]
See: KURZARBEIT
Dictionary Home Page and Letter Index