Are we sheep or men? The next year might reveal the true mettle of modern Americans. The challenge is described in this except by Matt Taibbi: “The Big Takeover“, Rolling Stone, 19 March 2009 — “The global economic crisis isn’t about money – it’s about power. How Wall Street insiders are using the bailout to stage a revolution.”
I strongly recommend reading the full article, one of Taibbi’s finest. At the end are other posts about these things.
Before you read it, read Paul Krugman’s brilliant but mild analysis of the latest Obama plan for the banks. Then consider the following words.
“Anger is easy. Anger at the right person, at the right time, for the right reason, is difficult.”
— Aristotle, in the Nicomachean Ethics, book IV, chapter 5 (lightly paraphrased)
“Telemachus, now is the time to be angry.”
— Odysseus, when the time came to deal with the Suitors. From the movie The Odyssey (1997)
An excerpt from Taibbi’s article
Introduction
It’s over – we’re officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline – a corporation that got rich insuring the concrete and steel of American industry in the country’s heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history – some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That’s $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG’s 2008 losses).
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. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck – bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company’s CEO, actually compared it to catching a cold: “The marketplace is a pretty crummy place to be right now,” he said. “When the world catches pneumonia, we get it too.” In a pathetic attempt at name-dropping, he even whined that AIG was being “consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet’s investment portfolio down.”
Liddy made AIG sound like an orphan begging in a soup line, hungry and sick from being left out in someone else’s financial weather. He conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its “pneumonia” was making colossal, world-sinking $500 billion bets with money it didn’t have, in a toxic and completely unregulated derivatives market.
Nor did anyone mention that when AIG finally got up from its seat at the Wall Street casino, broke and busted in the afterdawn light, it owed money all over town – and that a huge chunk of your taxpayer dollars in this particular bailout scam will be going to pay off the other high rollers at its table. Or that this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires.
People are pissed off about this financial crisis, and about this bailout, but they’re not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d’état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.
The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve – “our partners in the government,” as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.
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. …
II. The Regulators
“There’s this notion that the regulators couldn’t do anything to stop AIG,” says a government official who was present during the bailout. “That’s bullshit. What you have to understand is that these regulators have ultimate power. They can send you a letter and say, ‘You don’t exist anymore,’ and that’s basically that. They don’t even really need due process. The OTS could have said, ‘We’re going to pull your charter; we’re going to pull your license; we’re going to sue you.’ And getting sued by your primary regulator is the kiss of death.”
… None other than disgraced senator Ted Stevens was the poor sap who made the unpleasant discovery that if Congress didn’t like the Fed handing trillions of dollars to banks without any oversight, Congress could apparently go fuck itself – or so said the law. When Stevens asked the GAO about what authority Congress has to monitor the Fed, he got back a letter citing an obscure statute that nobody had ever heard of before: the Accounting and Auditing Act of 1950. The relevant section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include “deliberations, decisions and actions on monetary policy matters.” The exemption, as Foss notes, “basically includes everything.” According to the law, in other words, the Fed simply cannot be audited by Congress. Or by anyone else, for that matter. …
VII. You don’t get it
As complex as all the finances are, the politics aren’t hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system – transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.
The most galling thing about this financial crisis is that so many Wall Street types think they actually deserve not only their huge bonuses and lavish lifestyles but the awesome political power their own mistakes have left them in possession of. When challenged, they talk about how hard they work, the 90-hour weeks, the stress, the failed marriages, the hemorrhoids and gallstones they all get before they hit 40.
“But wait a minute,” you say to them. “No one ever asked you to stay up all night eight days a week trying to get filthy rich shorting what’s left of the American auto industry or selling $600 billion in toxic, irredeemable mortgages to ex-strippers on work release and Taco Bell clerks. Actually, come to think of it, why are we even giving taxpayer money to you people? Why are we not throwing your ass in jail instead?”
But before you even finish saying that, they’re rolling their eyes, because You Don’t Get It. These people were never about anything except turning money into money, in order to get more money; valueswise they’re on par with crack addicts, or obsessive sexual deviants who burgle homes to steal panties. Yet these are the people in whose hands our entire political future now rests.
Good luck with that, America. And enjoy tax season.
About the author
See the Wikipedia entry about Matt Taibbi. Here are two of his best.
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“Flathead – The peculiar genius of Thomas L. Friedman“, Matt Taibbi, New York Press, 26 April 2005 — Review of The World is Flat.
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“Flat N All That“, New York Press, January 2009 — A review of Friedman’s news book Hot, Flat, and Crowded.
Afterword
Please share your comments by posting below. Per the FM site’s Comment Policy, please make them brief (250 words max), civil, and relevant to this post. Or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).
For information about this site see the About page, at the top of the right-side menu bar.
For more information from the FM site
To read other articles about these things, see the FM reference page on the right side menu bar. Of esp interest are:
- About Financial crisis – what’s happening? how will this end?
- About America – how can we reform it?
- Good news about America, a collection of articles!
Are we sheep — or men?
- Americans, now a subservient people (listen to the Founders sigh in disappointment), 20 July 2008
- de Tocqueville warns us not to become weak and servile, 21 July 2008
- A philosphical basis for the Batman saga, 23 July 2008
- The American spirit speaks: “Baa, Baa, Baa”, 5 August 2008
- We’re Americans, hear us yell: “baa, baa, baa”, 6 August 2008
- This crisis will prove that Americans are not sheep (unless we are), 8 January 2008
- About security theater, a daily demonstration that Americans are sheep, 25 January 2009
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Sort of goes off the rails very early on with:
To no avail? Really Matt?
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Fabius Maximus replies: I have read a large chunk of the literature on “security theater”, and not found a single expert (not employed in the game) who believes these have had a substantial impact. A tiny part of the program is meaningful, which is why the overall effort is called “security theater.” For more about this see (esp note the links at the end):
* About security theater, a daily demonstration that Americans are sheep, 25 January 2009
Kinda makes you want to go John Galt, doesn’t it? But since quitting is for losers…. Marvelous rant. Will be even more marvelous when it doesn’t work & all equity prices head back down to the cellar. The die has been cast – not only can you not MAKE the banks lend, you can not make people borrow.
And today China’s central bank proposed replacing the dollar as the international reserve currency with a new system controlled by the IMF. Presumably they would also like the IMF to have greater independence from the US.
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Fabius Maximus reples: They are following Russia in this. Watch this story; it might be big.
Andrew, you beat me to the punch. However, folks, note that John Robb is predicting that There are strong indications that the Iraqi Awakening program that shut down Iraq’s open source insurgency program is in trouble.
Apparently Iraq no longer has sufficient funds to bribe them.
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Fabius Maximus replies: What a surprise! Leasing allies is not the same as having friends.
According to the WSJ:
I used to think that Obama would be another Jimmy Carter (which would be a pretty good deal, nowadays, BTA ). However, now I am beginning to think he will be America’s Gorbachev.
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Fabius Maximus replies: He might be America’s Bozo the Clown. At some point even Americans will wake to the massive transfer of wealth from the public trough to private purses. The new Obama plan is a heads-we-win but tales-the-treasury-loses proposition for Wall Street. We should protest in the streets that Obama does not even attempt to hide the theft. He can at least pretend to believe that we’re sentient.
To say we are ovine is in an insult to the sheep community.
What am I missing?
“AIG […] posted the largest quarterly loss in American corporate history — some $61.7 billion.” Who gained what they “lost”? Or did it never exist, and what happened was that the illusion of $61.7 billion was revealed to be a mirage?
And what has that to do with anything real?
Our cities and factories have not been bombed.
Our fields have not been devastated by drought.
Our workforce has not been ravaged by the black plague.
Are we so dependent on the wizardry of Wall Street that it is impossible to amputate this festering, failing financial sector and save the part of the system that actually fulfills human needs and wants?
OK, I confess to hyperbole… but doesn’t it seem like the tail is wagging the dog? We eat corn and chickens, not CDOs; we wear pants and shirts, not CDSs; we live in houses, not mortgages; and we still have everything we need to produce those things. Apparently we have a few excess houses — again, am I missing something, or are we actually evicting families from houses because we have too many houses?
All the problems seem to be on paper — is there no way to quarantine this nonsense from the “real economy”… what folks who don’t spend their time legally gambling with other people’s money do all day?
In the shape of a rant, this is an honest question: do we really need the broken “financial sector”? Isn’t it the dispensable part?
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Fabius Maximus replies: So might the muscles and other systems ask about the nerves. What do they do? A $40 billion global economy needs a system to manage the flow of capital as it needs ones for food and energy. Capital is an intangible, but as important for a large economy as the other things. The Soviet Union collapsed in part from a complex but inadequate finance system.
Coises wrote, “All the problems seem to be on paper — is there no way to quarantine this nonsense from the “real economy”… what folks who don’t spend their time legally gambling with other people’s money do all day?”
A very good question, one I have been asking myself more and more lately. FM rightly charges that many Americans are essentially sheep, incapable of self-government or standing up for themselves. This begs the question, what are the tools with which common people (those who wish to resists) may fight the current corrupt system? Two methods come to mind: civil disobedience, and armed insurrection. The former has not yet been tried on a large scale in this country since the civil rights era, when under Martin Luther King non-violent resistance proved very effective. King in turn modeled his movement on Gandhi’s methods in India. For the present, violence is off the table as an option; we have far more to lose as a society by resorting to it than we do by not using it. Perhaps another method is disengagement. If one is distrustful of financial institutions, simply avoid using them. Withdraw your money and either keep it yourself in some manner, or convert the value of your money into something else – gold, goods, whatever you consider to be of value. The state – our federal government in this case – has always struggled to collect taxes from the “underground economy” – whether from cash-only businesses such as the local handyman, or from waiters and waitresses working for tips. It is not at all hard to see a situation arise where this form of activity is much more common, or even more barter.
Whatever method is chosen to bring the out-of-control beast to heel, will likely use the methods of 4GW, albeit we hope non-violently. They will have work at the moral level, because that is where victory will be won. That’s one reason why King’s methods triumphed in the end, because he insisted upon non-violence. That was the way to appeal to our national conscience.
Of course, talking about withdrawing from our economy and actually doing it fully and w/o knowledge of the IRS are two different things… but still, it never hurts to run these thought experiments from time to time.
from page 7, …the Accounting and Auditing Act of 1950. The relevant section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include “deliberations, decisions and actions on monetary policy matters.” The exemption, as Foss notes, “basically includes everything.” …
Now why would such a piece of legislation have been aproved?
Thanks for the Rolling Stones reference. Best overview I’ve yet seen.
Good comment/question by Coises. In general, we don’t separate the economic from the financial. The economic is, at base, real. The financial is, at base, a stealthy way of moving money from the general public to a small elite.
This financial system works beautifully. Therefore, I suspect the “brains” at the top will figure out a way to save the system to continue to suck revenue from the general public. They want to make even more billions (I was almost to write “millions”, but I forget myself) as the casino, sorry, I mean stock market, soars once again.
“… 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.”
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He’s just now noticed this? I’m afraid this has been going on a long time. We’re just a contemptible herd of livestock. They milk us for tax dollars and harvest our votes. “Vote for me, I’ll give you oats in the barn so you won’t have to stand in the field eating grass!”
Democrats and Republicans belong to the same tribe, and you ain’t part of it. The founders set up the constitution as a bulwark against this BS, but our politicians and the mullahs with gavels have shot it full of holes. US Politics is a pay to play game, wipe your feet on the constitution before entering.
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Fabius Maximus replies: For similar view, see “Politics of the FM site: radical leftist reformer or right-wing iconoclast?” (25 January 2009).
The important thesis of this article, “The Big Takeover”, is that finance capital has taken control of the government. This is both self-evident, and not quite proved. Just check the list of Treasury Secretaries going back to, say, 1900, and you’ll find they all came from Wall Street. The Federal Reserve is itself simply a private bank, or group of banks, made to sound like a government institution and given authority over the nation’s money supply.
On the other hand, the main evidence for the “takeover” theory in this article is limited to the second half of it, and in that Taibbi’s most interesting comment could be that it all began when the Democrats decided to shift their support base from labor and minorities to Wall Street (Democrats were also the first to camp out in Silicon Valley.) If you’re interested in when the two-party system became a one-party system in America, this is a key moment.
Why angry? In a decaying society, politics becomes elaborate theater for the masses and army units patrol streets to keep citizens safe from the Other. It always ends like this and USA will prove to be no exception. Surely, you and many readers have known this beforehand? Or did you really believe that ‘spending’ is new ‘saving’?
Phase One (ongoing): deeper consolidation/concentration of power of the military-industrial-congressional-financial complex, aka ‘shadow government’ mentioned or more entrenched multinational corporate oligarchies.
Phase Two: consolidation is sufficient in the Western bloc to take on rising Eurasian axis by
a) maintaining Europe-US financial and political axis
b) maintaining destabilised oil supplies along with East-West Eurasian (aka Middle Eastern) political instability
c) prising India into the Western axis and/or preventing harmony between India & China
d) putting the squeeze on vulnerable though still powerful Russia also in the middle
e) preventing China from becoming culturally and politically dominant internationally
Something like that.
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Fabius Maximus replies: Is this the plot from Spiderman #36 or Avengers #45? IMO these kind of specific long-range predictions are best accompanied by pictures (ideally of pretty girls, like Mary Jane Watson).
Ersamus: you leave me speechless!!
As a Canadian and resident of Singapore, I’ve had the privilege of growing up next door to the United States, then seeing just how much better off the world is by its mere existence.
Having lived and worked in 6 countries, including 4 in Asia, I came to the conclusion that no matter how sheep-like you imagine Americans are, they are actually far more independent minded than Europeans or Asians. Compared to older societies, they had a strong pride in their country and an even stronger backbone to stand up for it.
America, I never thought I’d see you like this –being sucked dry by a pack of wealthy parasites –this is the sort of thing that happens to shameless slaves, not a free, proud people.
Your hour of destiny lies straight ahead of you, America. In the next few years, will you rout these reptilian financial cannibals (the way Andrew Jackson did) or will you let your proud country be eaten up by them?
The time is short and the world’s freedom hangs in balance. Everywhere I go, people are subservient to government or powerful people. Only in America do they (or did they?) hae the backbone to keep themselves free. If you allow yourselves to go broke and be enslaved by these hyena bankers, a world dominated by Russia and China is sure to sink into a high-tech medievalism.
Please stand up and be the people I know you really are. I have met many people around the world, from all walks of life, from so many countries, that admire Americans, that wish their society could be like the United States.
Now, you are being enslaved in debt from the day you are born — to the wealthiest members of your society — this is what happenned to the peasantry in Imperial China. Yet, you are allowing this to happen while barely raising a protest.
Americans, please be who I know you are. Stand up and be counted. You cleaned out your country of the British 233 years ago, against all odds. Your old courage is still there, so please reach down deep, throw out these bastards and renew yourselves…and don’t let these creeps make your forget who you are…
Eric in Singapore
Great link FM! Though really another downer, unfortunately.
Last night I started asking one of my Russian friends what it was like in the early 90’s there, which is what we may be in for, absolute worst case.
From what I understand, it wasn’t as crazy as you’d think, although people were terrified at the time. Everybody’s bank account becomes worthless, those who have the guts leave to go to another country. A small group of “connected” individuals take over 100% of the country’s natural resources, but enough of the bricks-and-mortar infrustructure stays around that noone starves, there isn’t significant looting or rioting or anything like that.
Overpayment to financiers and to lawyers discourages people from pursuing engineering and technician careers. This in turn is growing into a security threat:
1. Flippant but disturbingly pithy article-cum-rant on why the US won’t resist:
http://informationclearinghouse.info/article22281.htm
2. Eric, I feel very similar to yourself. Despite current confusion, I feel that the US ‘heartland’ could turn very quickly. That said, it is very hard for the ‘masses’ to organise, local/regional culture and power/governance has long been marginalised vis-a-vis federal/central power/governance.
I also think there is a tendency in the Western press to castrate Europe generally. Europeans know how to live well, which does not just mean bizarre bedroom antics, exotic foods and more tastefully erotic pornography, but also how to make things, do things, educate themselves and stand their ground. It was mainly middle class educated Europeans who made America after all.
If Europe were to wake up politically, they could tilt the entire world balance of power towards Eurasian solidarity, an axis from Beijing, through Moscow, through the Middle East, through to Lisbon.
This is not a prediction (unfortunately) but statement of fact, namely that they have the global ‘swing vote’ right now more than any other region. Something I have yet to see remarked upon anywhere. They also have the ability to turn American citizens perception about things since they are still culturally very close despite all the distorted media narrative to the contrary.
B&N’s definition of capitalism – a quick paragraph extract has eluded me unfortunately – is : ‘the commodification of power’. i.e. it is not money/profits per se as per the received dogma, rather control/influence that is the prize. Their thesis is that the natural trajectory of the capitalist elites is to increasingly dominate the main organs of a society versus simply accumulating profits from selling widgets to ‘consumers’ – the modern word for citizens.
Here is a current example – amongst zillions – of that nexus/complex about how Holbrooke – a very well known career diplomat, was in 2008 on the Board of AIG, not something most of us would have imagined of him, but – disturbingly – not in the least surprising to learn:
http://www.huffingtonpost.com/2009/03/19/obama-envoy-richard-holbr_n_177161.html
Another – and this frankly IS surprising – example, showing how our new ‘change’ administration uses one of history’s greatest swindlers to further their service to US citizens: humor from the Huffington Post.
Andy Borowitz is a comedian and writer whose work appears in The New Yorker and The New York Times, and at his award-winning humor site, BorowitzReport.com. Extraordinary how comedians have such important inside information these days!
Let me extend your comment #6 where muscles ask what do nerves do?. Returning to an earlier country/city or urban/rural divide noted during the election, more and more I think the country folk, who grow the food, and man the factories, and mine the ore, and cut the forests, and burn the coal are asking, “What do them fellers in New York City Do?”. And more and more the answer keeps coming back, “They stick their nose where it don’t belong, and they fuck up investing other people’s money”. I include the current Global Warming bullshit as part of this. The only question is are the City Folk pure evil, or are they just running out of good ideas for something to do? Maybe they’re still needing money for obvious reasons and desperate to look busy while the fact is, there just isn’t much for them to do that makes economic sense?
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Fabius Maximus replies: I don’t know what fraction of Americans meet your definition of “city folk”, but by any meaningful definition it is the vast majority of Americans. Most of the factories are in cities (not the country), by the way. Since you wonder if we’re “pure evil”, perhaps you should move somewhere else and set up your agrarian paradise. I suspect you’d last perhaps a few years without the products of the industrial civilization produced by us evil city folk.
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The political lines were drawn, according to the data, between urban and exurban/rural. So much for factory towns throwing in their lot with the cities. Whenever I have seen men do immoral or unethical things, like steal, and vote Democratic (joking), I find they are often acts of desperation. They perceive they have no choice, or are doing it in service to a higher good. I believe the Cities are in big trouble. Bloomberg is worried for NYC. He points out that about 40,000 rich guys are/were carrying NYC on their well heeled shoulders. That’s a big responsibility for Trickle Down Masters of the Universe. I don’t personally hate these guys, I’m just trying to understand their behavior. I understand the disconnect in politics though, having lived in lots of both cities, and countrysides.
And now that my dander’s up, the answer to the question, “What do those fellers in NYC do?” used to be: ,”Everything important. They loaded and unloaded the ships, they wound motors, they educated everyone, they utterly, and profitably, dominated culture and the media, and did a good job dominating media and culture. Reporters did great investigative journalism, and busted the bankers and politicians before they stole too much. They allocated capital to where it would do the most good, and earned the public trust. They built great Cathedrals, (Now they’re night clubs) and said mass in them, performed weddings in them. They wrote the great books, and reviewed them. They served as great communication hubs, vast webs of physical wire went in to huge switch arrays and back out again. And on, and on, and on. But it’s gone now, mostly or completely, diffused into the exurbs, and the countryside. So you tell me. What’s going to replace it?
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Fabius Maximus replies: This doesn’t make much sense to me, but you can easily test it. Take a walking trip through the fifty large cities in America. Go into the offices, factories, and shops. See how many people you find who are “pure evil.” I suspect that you might find this enlightening.
Now I understand your frustration when people read, but do not understand the point of your posts. People everywhere including the cities are not evil, pure or otherwise. They do however become desperate, and then they become morally conflicted. My explanation for lots of outrageous, anger inducing behavior, as noted above in your topical post de jour, is that elites in the urban centers have been getting ever more desperate trying to make a buck, thus taking ever greater risks, and are now fighting for their lives (figuratively), and the lives of the cities they love (literally). These elites are under tremendous pressure to get back in the saddle, partly for the benefit of city dwellers who are dependent on their success.
Jeez, remind me never to call you evil.
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Fabius Maximus replies: That is quite specific and clear, and I think I understand your point. A few questions.
* What is the basis for your belief that a substantial fraction of our elites are becoming desperate?
* A large number, perhaps half or more, of our lower middle class (quintiles 2 and 3) are near bankruptcy. A long deep recession will push them over at rates not seen since the 1930’s. Are they desperate and morally conflicted?
* We have many towns in rural areas that will die over the next generation from sustained outmigration of their young people since WWII. Ghost towns. Are their elites becoming desperate and morally conflicted?
regarding city folk… they’re not pure evil, they just haven’t spent significant amounts of time living in smaller towns where life is so much less stressful :-)
and some city folk *are* obsessed with money and the rat race and so forth… i grew up in manhattan smack in the middle of NYC and since the late 90s my impression of it has changed to where it’s been taken over by investment bankers and their professional servants- lawyers, computer programmers, marketing/media geeks, and of course the party crowd, girls/musicians/drug-dealers who are there for the fame and excitement that comes with such a concentration of wealth. Good people all of them, but very much into the get-ahead mentality.
You can invert “Desperate men do desperate things”, to get, “Men doing desperate things are desperate men”. The desperate things I see happening include AIG gambling their existence by creating AIGFP, and letting them write over 500 billion of Credit Default Swaps. Either they were stupid, (not plausible), evil, (already discussed, and discounted), or desperate.
A recurring theme going back to Hamilton is the tension between farm and city. The picture is clearer without debating where manufacturing occurs. Cities don’t grow food. Farmers do practically nothing but grow food. There must therefore be trade between farms and cities. Historically, both benefited from this trade. That mutual benefit may be breaking down now.
It is primarily the cities that are losing the ability to add value. The list of things the cities used to do to add value above is emblematic. The toll on long distance telecommunications, once big bucks for the cities, is gone to zero. Free telecom is inducing outsourcing of “City” activities like customer support, travel planning, billing, and so on, as noted in your other posts. Our domestic politics is polarized in the extreme, and the fault lines clearly overlay this “Country/City” schism. Paraphrasing Tolstoy, when cities and countryside are happy, it’s always the same, happy urbanites doing their thing, happy farmers doing theirs. But when misery comes, there are a million variations of how and why. Why ghost towns? It’s never the same answer twice. But the cities are losing their historic position, no longer enforced by physical and geographic constraints, to capture value added activities.
Is our middle class desperate? Watch sales of guns and ammo.
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Fabius Maximus replies: I do not believe any of this is correct, well-supported, or even sensible — but will just note two points.
* The senior people at AIG acted rationally. They were paid millions for AIG’s success, and have not (and almost certainly will not) be required to pay any of their compensation back. How foolish that people call them evil. None of their descendents for many generations need ever work.
* What evidence is there that sales of guns (and often-mentioned, stored food) relate to desperation? Were people desperate in Y2K? The US has regions with far higher than average gun ownership: are people in those areas desperate? Gun ownership is rising among women, are they desperate?
Much of the decisions made by the financiers responsible for this crisis were based on a few incorrect beliefs regarding the value of the products they created and resold. Individuals should have been able to identify the potential risk in their behaviour, but when they saw everyone else profiting from such risky behaviour, it only helped to reinforce those incorrect beliefs. Desperation did not begin to appear until the house of cards began to collapse and is largely gone now that the taxpayers are paying for the cleanup.
In the longer term, 20-30 years in the future will see a substantial voting block of the retirees whose retirement funds were destroyed and now subsist much closer to poverty than they believe they deserve. This mismanagement by the financiers will not be quickly forgotten.
FM note: This is a revision or update of “The Internationale” by Billy Bragg (1990).
Thank you Fabmaximus for presenting the excerpt from Matt Taibbis’ article,”the Big Takeover”. About the upper management and Board of AIG and many of the Wall Street lovelies, one would like to introduce them to the concept of shame.
I wish I had time to think about how to go about that, but I am a senior who must keep on working as my retirement account has shrivelled. My friend, a woman of 87 had $800,000 in August and $400,000 in Febuary. She can’t begin to comprehend what forces lifted half her funds,but I’m convinced it had something to do with the enrichment of our Wall Street lovelies. In my fantasies, however, I have visions of multitudes of seniors demonstrating peacefully at the estates of the lovelies, first to educate them about the meaning of citizenship,and also to beseech them to part with a fraction of their ill-gotten wealth by writing checks to begin to replenish the millions of the senior’s retirement accounts. I’d start with the A’s 70 or over.
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Fabius Maximus replies: James Bowman has written extensively about the concept of shame, and how it has almost vanished from our culture. As in this excerpt from “Honor Among Bankers”, The Weekly Standard, 9 February 2009:
What was an 87 year old doing with a substantial amount of retirement savings in the stock market? I feel sorry for her, but that’s like the Enron employees who put all their savings in Enron stock. Didn’t Mom ever tell you not to gamble?
That’s why investment advisers tell old people to put their money in safe investments. There’s not enough time to recover when the market goes south (as it inevitably does).
I’m as pissed off at Wall Street as anyone but that’s just dumb. And if you think the solution is shifting even more money and power to Washington, you’re not paying attention. Just like on Wall Street, that money attracts everyone and anyone who thinks he can get a piece of it. Think the politicians will use it to help you? Baa, Baa.
Re #26 — This tells the story better than I can. Read at least the reviews. “Welcome to the Homeland: A Journey to the Rural Heart of America’s Conservative Revolution“, by Brian Mann (2006).
A memoral passage from one of Peter Sellers last movies “Being There.” The late Richard Bassart playing a Russian Ambassidor, to Sellers: “Because if one goes, (reference to a potential collpahs of the soviet union, remembering this move was produced in the latter 1970s) then the other will go, (USA) then boom, and bume, bume !”
The inimitable Susan of Texas connects the economic policy discussed on this thread, to the social reality. And the social reality, in turn, to the internal psychological state. “The Corporate States Of America“, posted at The Hunting of the Snark, 25 March 2009.
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Fabius Maximus replies: The middle of Susan’s post echo’s the core message of Lewis Lapham’s book, “Money and Class in America” (1988). But I disagree with both ends of her post.
* The opening is factually incorrect: “Rich people came to this country and took what it had.”
* The end paragraph is an abnegation of our ability to rule ourselves. See today’s post for another perspective on this: Are Americans still willing to bear the burden of self-government?
The end paragraph is a plea for us to rule ourselves, instead of letting others rule over us. To overcome authoritarian control you have go back to the reason people become authoritarian–they are taught to be so. Parents insist on obedience and withhold or give love and approval in exchange. It is often unconsciously done and was of course taught in their own childhood. It is not done because the parent is a bad person, we just tend to repeat what we know, and those who are not given love will not be able to give it. Therefore we must let go of the need we had in childhood for our parents’ unconditional love. When we do this we will also be able to stop living in denial. We will see that religion is used to control us and the need for a god’s approval and love is version of the need for parental approval and love. We will see that American exceptionalism is another expression of this need for love and acceptance. And we will be able to see the manipulations used against us by those organizations clearly for the lies that they are.
Exploration and colonization are almost always about the elite gaining more wealth and power. Some might trickle down, but we here we are at the mercy of the financial elite anyway.
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Fabius Maximus replies: Thank you for posting this explanation!