From Matt Taibbi’s latest article at Rolling Stone:
The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers. …
…So it’s time to admit it: We’re fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we’re still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream.
Well, yeah.
Although I might quibble with some details, I think on the whole Taibbi gets to the core of the matter better than most. His article also made me think of the Harper’s article by Thomas Geoghegan I mentioned last week, “Infinite Debt,” which you can now read online in PDF form. [Oops, it appears the PDF is available only to subscribers. Sorry.] In a nutshell, the financial sector has eaten the other sectors, and our national wealth has been hijacked into a vast scheme of money chasing money. Less and less of our wealth is being used to create tangible things like food or consumer products; more and more is plowed into financial investment instruments that are, basically, air.
And ordinary citizens have been sucked into a treadmill of debt bondage. I keep thinking of that old Tennessee Ernie Ford song —
You load sixteen tons, and what do you get?
Another day older and deeper in debt.
Saint Peter, don’t you call me, ’cause I can’t go;
I owe my soul to the company store.
Maybe we didn’t see all of the details, but many of us have been viewing the bigger picture for some time. We unhappy few are called “liberals,” and of course nobody listened to us.
What’s remarkable is the degree to which apparently intelligent people still don’t see the bigger picture. These include, unfortunately, the Obama Administration, which appears to be in tweak rather than overhaul mode.
Not to say he is “apparently intelligent,” because he isn’t, but much of What’s Wrong With America is exemplified by the meathead anchor, CNBC’s Mark Haines, interviewing Rep. Brad Sherman (D-CA) in this video:
So to Power Tool John’s question, “Are We a Banana Republic?” I’d say yes, and for some time, but not for the reasons he thinks.
And you want to know how we gave it all away? Memory Lane time —
[Video no longer available, but I believe it showed Ronald Reagan claiming government is the problem.]
The disconnect in Saint Ronald’s thinking was that government is not a hindrance to self-government. It is the very tool the founders left us that enables self-government. By persuading people that government is irrelevant, Saint Ronald enabled the colossal power grab that is strangling our country. Forget the Road to Serfdom; we’re serfs already, and have been for years.
People may say I’m very, very slow in waking up to this (and I won’t dispute it), but our whole friggin’ stock market-and-derivatives-based economy is a really stupid idea. (Note, I’m using “derivatives” as a general term, referring to the ever-crazier forms of trading and “investment” that Wall Street concocts. These schemes have become so arcane and illogical that even their purveyors can’t explain them to a reasonably intelligent investor, or to the inevitable Congressional subcommittees trying to clean up the mess they leave.)
Now, I love how Suze Orman recently ripped Dubya a new one, saying it’s all his fault and the entire Bush clan ought to surrender their fortune to make things right. But Suze herself is a product of the system, and I think she’s ignoring the forest for the parasites.
Currently I’m reading not one, but two Abraham Lincoln biographies (hoping for a different ending, perhaps?), and in every chapter about Lincoln’s years as a state legislator, member of Congress and highly-respected Illinois lawyer, I learn There’s Nothing New Under the Sun when it comes to the American economic system. Granted, I’m mostly ignorant of the system’s history, of how the stock market came to be, its earlier European models, and how its components were cobbled together over time. But I’ve long known that the Great Depression of the 1930s was just one of many, many times the system has “crashed,” each crash destroying not thousands, but millions of American lives, as long ago as the 1830s. There are Panics, and Recessions, bank failures and national investment schemes of ever-more-creative varieties, all feeding on the basic American-capitalist desire for a huge profit with as little honest outlay as possible. If a disease caused as much human suffering as our economic system has done, we’d organize telethons and walk-a-thons, and raise money to research a cure.
Money chasing money is also the culprit behind the collapse of newspapers. As papers were treated as properties and bought, turned, sold and bought again, the debt loads created by these machinations were to be paid by income from the day-today profits of the newspapers. The problem is,that the papers can’t make enough money to pay for these huge debt loads on top of their normal operating costs.
Joan,
The same fiddler’s have been fiddling the same melody since this country began.
You can’t have royalty here, but you can have an entitled class that is virtually indistiguishable from royalty.
What’s been happening is the economic version of American Jazz. Each new scheme adds a layer to the line layed down before.
The Reagan melody line had been humming along its corrupt tune for nearly 30 years. But this siren song has led us off of a cliff. And, no one knows how to change the tune without getting rid of the fiddlers. And that is what they can’t, won’t, or are afraid to do.
Until we change the fiddlers, the tune will continue to take us off ever steeper cliff’s. We haven’t gotten to the biggest one yet, I fear.
And you know what the fiddlers say about this? “Lah De Dah…”
What is it about religious faith that most people do not question theirs? Intelligent people. People who, if they had been raised in a completely secular environment, would most certainly question religious faiths if introduced to them as an adult.
Somewhere along the line, our society adopted a certain belief about human worth which, like religious faith, most people have not questioned. Here, a person’s worth is based on his assets – property, portfolio, income sources…
If someone were to respond to the “assets” question on any “official” form their attributes, abilities, talents, and skills (like “critical thinker”, “community organizer”, “extensive knowledge of carpentry”, “experienced ceramicist”, “good sense of design”, “vegetable gardener” – anything that cannot be immediately sold), they would be written off as a nutcase. Worthless.
Yet, if our economy were to collapse completely, it is exactly such skills that we would have to rely on in our local communities. Some of the most talented people I know are working (if they’re lucky) at meaningless low-paying day-jobs so they can manifest their true assets.
Meanwhile, most of us have not questioned the assessment of our worth based on this bizarre “faith”. Look at the recent rise in suicides over losing one’s “assets”. It is tragic that they truly feel worthless without them. Serfs indeed. Yet, those who can move enormous quantities of vaporous money around (including into vast black holes) are worth… what?
Maybe all this will help us rediscover our true worth (rather than what we haul around in a sack behind us). Maybe we can find a new religion.
Cabin: You’re describing religion as a mode of thought, which is certainly valid. It’s a point I think about from time to time. It’s currently fashionable in some circles to blame religion for all the irrational thinking of civilization. The idea is that if we got rid of religion, everyone would be rational and logical. I think that’s nonsense. If we define “religious” thinking as a way of placing all cognitive understanding in the context of a belief system or even a mythology, then “religious” type thinking abounds in many areas other than religion. You see it big-time in politics, for example. The question is, did this “religious” thinking develop from religion and leach into other areas, or did it originate elsewhere and leach into religion?
maha,
It seemd to me that it had to come from religion.
Religion was ancient man’s first way of rationalizing and explaining the world beyond him/herself.
How did I/we get here? Why is the sky blue? The deer to tough to catch, the tiger so fierce?
The belief system was taken over by those more powerful to maintain power. If they controlled the message, the message to the people would be what those in power wanted them to hear.
Overly simplistic, yes I know. But, I’m pressed for time. I’m going over to my sister’s house for dinner. Then church tomorrow, and Tanya’s (see earlier post) funeral on Monday.
Enough of the doom and gloom – I’m doing a happy dance today. Just did my taxes. Partly due to the continuing break up of the GTE companies over the years, I found myself in possession of 0.0805 shares of some little telecommunications company I’d never heard of. I liquidated this massive position for a net short-term capital gain of 51 cents, and
the moronsmanagement actually reported the transaction to the IRS, so I had to report it myself. I am going to pay 15 cents in taxes on this gain and am left with 36 cents in after-tax gains for the year. (I actually had to do a Schedule D to record this transaction.)My friends, I am a financial genius. I did better in the 2008 stock market than AIG, Bear Stearns, Citi Group, Bank of America, …
It’s a world gone mad.
Dave, it looks like you’re paying more capital gains tax this year than any number of wealthy individuals, particularly those with offshore accounts. These are indeed strange times!
Joanr16, I recently did a quick search for a client I do editing for, and found 9 downturns and/or financial crises since Reagan became president. I suspect I missed one or two. That’s a dismal performance.
In general, I agree with Paul Babiak and Robert D. Hare, who wrote in their book, Snakes in Suits, that corporate reorganization, which actually began in the 1970s (and seem to have received blessing during the Reagan years), has led to an era where psychopaths found corporate doors wide open for their shenanigans. What’s happened in the last thirty years is different than what happened in the forty years previous to that.
But corporatism, or whatever one calls it, has become an international problem. Too many corporate guys think they are above the law, outside society or merely, with their legions of lawyers, in legal competition with governments. Given how bad things got during the Bush years, we cannot have much of a democracy while we allow a cabal of corporations to look at the government as one of their subsidiaries.
I’ve always enjoyed Taibbi, particularly his laser-like and on-target evisceration of Thomas Friedman.
Most interesting is our susceptibility to framing. It is always easier to be against something than to be for something and a media that encourages nothing but venting does not help.
Maybe as soon as we circulate through all the permutations of who is the problem and who is the solution, if we haven’t started to forget what we’ve learned in the process, we might start to see that our choices for placing blame are actually limited…the people, government or corporations.
I’d much prefer looking for solutions rather than placing blame. So, if one believes Reagan that government is the problem, the relative neutering of government since Regaan didn’t exactly help and neither did that which arose to fill the vacuum formerly occupied by government.
…back to the drawing board. I give us about as much chance of pulling out of current problems as I do of the general public being able to focus, not on a single talking point but a simple set of interrelationships with some minimum number of moving parts. That would be an improvement.
Or maybe a critical mass must be herded in the needed direction with better talking points, at least to whatever degree is needed to give the architects of tomorrow the elbow room they need to act.
Good points about the worth of people. Let’s just hope the masses aren’t once again snookered by distracting arguments such as corporate personhood (Santa Clara County v. Southern Pacific) that might have an appealing ring but which leave people second to competing interests. It will take many more years of changes to get a Supreme Court that will no longer subjugate the rights of a majority of individuals to those of corporations to seek profit by almost any means necessary.
Maha,
I meant to describe religion as something other than a mode of thought, which is why I think it tends not to be questioned. The tenets of one’s religious beliefs seem to be “givens” rather than thought-out determinations. And I don’t blame religion for irrational thinking (although it is possible I may blame irrational thinking for religion). No. Irrational thinking has many causes, but I don’t think religion per se is one.
I also did not mean to imply that getting rid of religion would make everyone rational and logical. We would still have human emotions. Anyway, some religious liturgy is fun and magical. I like fun and magical stuff. Personally, I find Nature fun and magical. But enough about me.
I meant to say that this belief that most of us seem to have absorbed (that our worth is based on our salable assets) seems to be as pervasive and unquestioned as religious beliefs – as though it has seeped into the reptilian part of our brains. To many people, that bizarre means of measuring our worth is a “given”.
To your last question: indoctrination and repetition. The source is debatable, but I think c u n d galag has a bead on it – it’s about power and control.
Pat Patillo,
Agreed, corporate “personhood” has been a major problem. Should never have happened. And, I suspect, if that case were to come up today, the decision might be different. I share your hopes.
Craig,
Good points too about corporations.
To both (and anyone else): Have you seen the documentary “The Corporation”? Excellent.
CabinInTheWoods, the client I work for asked me to read Joel Bakan’s book version of “The Corporation.” It was well worth reading.
I enjoyed the Taibbi excerpt – he gets it – and was pleasantly surprised that Brad Sherman – from a district near mine – also gets it, and stood up to the dolt on CNBC. I couldn’t bear to play the clip of Saint Ronnie, whose philosophy I’m thrilled to see is going down in flames (but unfortunately taking most of the world with it).
I feel I should step in and provide a short history of derivatives. One form of derivatives is commodities, or what are more generically known today as futures. They originally came about because farmers (producers) needed a way to hedge their risk. Prior to the advent of futures, if it was a good year, many farmers would descend upon Chicago to sell their harvest, but most would end up ruined because the bumper crop so depressed prices. Many would dump their nearly worthless harvest in the river and return home broke. The invention of futures contracts allowed farmers and consumers (such as millers) to know in advance how much they could expect to receive or pay from a future harvest, by locking in a future price – this had the beneficial effect of stablizing the agricultural economy. These contracts could themselves be bought and sold.
Expanding the risk shifting aspect of futures out of the agricultural sphere into overseas manufacturing, a Japanese car company could likewise buy futures contracts on the US dollar, thus hedging their risk of an adverse move in the dollar/yen exchange rate, which would otherwise have a devastating effect on their ability to sell cars in the US.
Of course derivatives have gotten way more sophisticated than these humble and beneficial beginnings, and worst of all, the regulatory structure hasn’t kept pace. I’m just trying to show that derivatives are not necessarily evil, but without proper regulation they can be what Warren Buffet called “financial weapons of mass destruction”.
Cabin, “The Corporation” is a great movie.
Republican Reagan basically told Citizens to give up their Citizenship. For the last 30 years more than half the countries voters consistently listened and what those citizen’s neglect enabled was a creeping corporatism that AIG is symptomatic of.
Government by the Citizens and for the Citizens was and is the solution to this malignant corporatist greed. Had the right wing not systematically deregulated the financial system, the sociopaths that looted America’s treasuries would have had rules that would have prevented much of financial collapse, or at the very least put some of these Ponzi schemers in prison.
Instead, the right wing enabled the AIG-FP swindlers at the heart of this huge con that recklessly gambled America’s (and American’s) financial resources. The right wing gamed the entire system so that the destroyers of companies get rewarded for their predatory behavior.
The sick heart of the entire modern day right wing philosophy is the justification of predatory behavior. And there’s a warped corporate media that keeps giving these sociopaths national megaphones.
I hope you don’t delete this, but I couldn’t disagree with you more about Reagan’s view on government. I can’t see where he expended government (with the exception of military, which was decimated after the Vietnam Era and the Carter Admin). Reagan believe and demostrated that Americans are best when they choose for themselves how to live their lives. I believe GW Bush forgot this and that Obama hasn’t even given it thought. We are on track for a larger and unfortunately less effective government.
Love the new look of the site Maha. Very clean.
St. George — you don’t understand what I said. “Expending” or not expending government is a phony issue, but put that aside for now. Not the point. You write, “Reagan believe and demonstrated that Americans are best when they choose for themselves how to live their lives.” That’s a cornerstone of liberalism; I cannot disagree with it. Where Reagan disconnected is that he confused “self-government” with “personal behavior.”
Self-government as the founders used the word is the democratically elected government of the United States. Government is not an alien presence separate from the people, it is the people. Government ‘r’ us. It is how we govern ourselves and how we solve problems we cannot solve individually. Reagan and his followers took that away from the people. The people of the U.S. were sold on the idea that government was irrelevant in their lives and was not part of their lives. This had the effect of taking government away from the people and giving it to the wolves.
“The people of the U.S. were sold on the idea that government was irrelevant in their lives and was not part of their lives. This had the effect of taking government away from the people and giving it to the wolves.”
Very well-stated, Maha.
“The sick heart of the entire modern day right wing philosophy is the justification of predatory behavior.”
Newsreference, I would agree except for the “modern day” part – unless you are referring to the last 200 years.
What I don’t understand is how we are supposed to actually make stuff again when the rest of the world can do it better for various reasons (ranging from efficiency to worker slavery). Aside from say “we are putting a tariff of $x because this is how much it should cost if you treated workers fairly” (and I am positive that would be shot down by WTO) what can be done to return manufacturing to the US that doesn’t involve lots of robots and redundant people?
What we are living in at present is an economic autocracy. We make a big deal about the sanctity of political democracy, but the very thought of an economic democracy, not to mention a social democracy, sends Reaganites into convulsions.
Why do Reaganites hate FDR? Not because he represents big government but because under his presidency union membership tripled. Cheap labor is the capitalist’s wet dream. But because that won’t play well in Peoria, big government (hey, does anyone even know what that means?) is the advertised culprit ever lurking in the shadows threatening our very lives – with something.
So well have the Reagon clones convinced the populous on the evils of big government, they’ve gotten away with making Joe the plumber, labor last time I checked, the poster child of the Republican party.
Just thought of another Republican ruse, raising taxes on those with incomes above 250 grand/year will ‘kill’ small businesses. We’re all familiar with that mantra, when in fact 97 percent of small businesses in this country don’t have incomes anywhere near 250 grand/year.
A big major problem effecting public discourse has to lie in the dismally minuscule accumulated knowledge of economics. There is no coherent vocabulary that is universally used. Defined meanings holding universal use do not seem to exist. When it comes to economics, the story of Babel becomes the archetype, few indeed are able to translate between the tribes.
Economics at its basic has to be he study how the human animal sustains itself. The study of Economics then is the study of human ecology and the economic superstructures which have been built upon that ecology. Until such a text is written, developing universal specific economic terms, the Babel will continue; the ability to see, address, reform, restructure, and mend the broken or dysfunctional will continue to elude the finest attempts. That is the story of Babel.
The system collapse being witnessed is the result of a bankrupt ideology, promoted by academic charlatans, supported by corporate fraud, political connivance, and public ignorance. The worlds inheritance has been traded for a handful of beans promising myth; the substance of knowledge has been discounted and silenced. As debased currency replaces valued coin, so too have lies and fraud displaced ethics and standards; there is always a cost to pay whether it is visible or surreptitiously hidden. But then, it makes little problem for those who cannot recall yesterday; the social Alzheimer always faces new facts as long as they live, but cannot get from here to there, or back again.
The present economic fraud – Capitalism has become camouflage hiding the systemic dysfunction of entrepreneurial monopoly of economic production that has again placed the economic system into a state of total imbalance leading to collapse. Not until this is understood can steps be taken to wright the economic system to the point that function can resume. The imbalance this time is such, all including the corporate monopolists stand to loose the accumulated wealth they control, and the economic sharks will ultimately feed on those of great wealth, for that is all there will be for them to feed on, all else will not sustain their great appetites. Few will stand to protect those fortunate few from the feeding frenzy coming.
What I don’t understand is how we are supposed to actually make stuff again when the rest of the world can do it better….what can be done to return manufacturing to the US that doesn’t involve lots of robots and redundant people?
Two things: 1) a weak dollar will make overseas good expensive, and 2) peak oil (the end of cheap energy) will cause “relocalization”, the production of all things locally. Both of these forces will cause a resurgence of sorts for Made in USA.
But I wouldn’t rule out slavery either. With the American Dream on the deathbed, hungry natives here will be glad to work for starvation wages, just as happens today overseas. For a really scary vision of what the future could look like, read Octavia Butler’s Parable of the Sower.