My Hate is Pure

Posted on December 3, 2014 by camelotkidd

Every time I calm down, there’s another reminder of the damage that neoliberalism has wrought. Once again, rather than reading about this in the New York Times or Washington Post, this has to be pointed out and emphasized by William Black, at Naked Capitalism. William Black is an associate professor of economics and law at the University of Missouri–Kansas City. He was the executive director of the Institute for Fraud Prevention from 2005-2007.

“We have just seen the three most destructive epidemics of financial fraud in history cause a Great Recession that cost $21 trillion in lost U.S. GDP and over 10 million jobs – and both numbers are far larger in Europe. In addition we have the world’s largest banks and bankers leading the two largest financial frauds in history – the Libor and FX conspiracies – plus banks helping fund one of the most violent drugs cartels (Sinaloa) in the world, genocide in Sudan, and (the U.S. government believes) Iran’s development of nuclear weapons. They also manipulated commodity prices, conspired with the ultra-wealthy to evade taxes, rigged municipal bond bids throughout the U.S., and led the massive sale of grossly inappropriate financial products to millions of people in the UK.”

Both of our flagship newspapers–the New York Times and Washington Post–have become infected with neoliberal economic orthodoxy. The Post whines about Elizabeth Warren being mean to President Obama’s nominee to be undersecretary of the Treasury.  And, the  Times acts as a apologist for finance, and downplays the fact that not one banker has gone to prison as a result of their widespread crime spree.

“The biggest banks—JPMorgan Chase, Bank of America, and Citigroup—have all recently paid multibillion-dollar fines stemming from the mortgage fraud perpetrated in the lead-up to and fallout from the crisis, but no top executives have gone to jail. Moreover, those companies copped to civil charges, but have not faced criminal prosecution. This marks a sharp departure from past banking scandals, such as the savings and loan crisis, where more than 1,000 bankers were convicted by the Justice Department through the late 1980s and early 1990s.”

I firmly believe that these epidemics of financial fraud would have been impossible without the tireless work performed by the neoliberals.

To better understand neoliberalism it’s useful to turn to one of the best books written about this ideology. In Never Let a Serious Crisis Go To Waste, Philip Mirowski, agues that neoliberalism is much more complicated than just a way to transfer wealth to the rich and powerful. Personally, I think that was the plan all along, and they succeeded beyond their wildest dreams. Anyway, Mirowski is correct when he describes neoliberalism as infinitely complicated. He describes it as the Neoliberal Thought Collective, with multiple strands of the collective stretching throughout academia, government and business. It’s safe to say that neoliberalism has insinuated itself to a large degree in our everyday life. How they did it is quite fascinating.

One of the biggest intellectual scams that neoliberals pulled off was to equate corporate and financial oligopolies with free enterprise, thereby making them respectable and giving them a sheen of righteous morality, almost like a fictional scene out of Atlas Shrugged. Another neoliberal intellectual misdirection was promulgating the notion of desiring a small government, and a laissez-faire economic system, when the opposite was true. If you remember nothing else, remember that neoliberals require a strong state, they control, to implement their version of a “free market.” Chile under Pinochet is an instructive illustration of this requirement for a strong state to carry out neoliberal market policies.

Neoliberal intellectuals also laid the groundwork for the enormous privatization of public infrastructure that allowed corporate and financial oligopolies to set up toll booths on our economy and extract rent, all in the name of market efficiency.

Neoliberals were able to largely succeed, I believe, because opposition by the political party that that had traditionally represented labor has vanished and what remains is theatre. Or, perhaps sports is a better metaphor. The Democratic Party plays the role of the Washington Generals, whose mission was to regularly lose to the Harlem Globetrotters, played by the Republicans. Or, maybe this crude sports metaphor is wholly inadequate. Maybe the Democrats are actually performing their historical role as a crucial component of the Ratchet Effect.

Whatever the reason, the economy the neoliberals constructed is the economy we have. Corporate and financial oligopolies, owned and controlled by the wealthy, supported and feted by the state, with the whole thing described reverently in the media as free enterprise.

If you’re following this, perhaps you can comprehend my rage.

What can we do?

Don’t fight on their terms, use their strength against them. Too many progressives seem incapable of seeing the ground changing under their feet, and believe the neoliberal propaganda about laissez-faire. Instead, we need to welcome markets, but with a caveat: a strong government, controlled by us, that promotes a different type of market system, one where all can participate.

In examining why our present market based system is so biased, we must turn to theories of political/economy, specifically: rent seeking, monopolies and oligopolies. Look around you in America today. What do we have a far as the eye can see? Rent gauging, monopolies and oligopolies. Examples are everywhere–Goldman Sachs, Comcast, Verizon, Wal-Mart, etc.

Many of these oligopolies are the result of corporate seizure of the commons. Progressives would do well to understand the infrastructure-capital concepts of economist, Simon Patten.

Patten believed in a “…fourth factor of production.” Instead of rentiers making a profit by charging access fees and user fees, the return to public investment should take the form of reducing the economy’s overall price structure…rentier rights are legalized tollbooths to extract revenue that rightly should belong in the public sector.”

Getting this version of political/economy will not be easy, to say the least. The corporations and banks that benefit from our present system are not going to go peacefully into the good night.

Next, we’ll talk about the really big impediment to my utopian plan–neoconservatism.

*In memory of Alexander Cockburn

Posted in Uncategorized | Tagged , , , , , , , , , | 1 Comment

It’s Their World

Posted on November 28, 2014 by camelotkidd

I think I’ve come up with a working definition/differentiation between neoliberalism and neoconservatism.

Neoliberalism refers to the economic policies the United States pursues, specifically: free enterprise–state subsidized private power with no infringement on managerial prerogatives. Neoliberalism is not, contrary to what many people believe, laissez-faire, but rather a state imposed market based economic system. Philip Mirowski has written the definitive description of the power of neoliberal ideas with his book: Never Let A Serious Crisis Go To Waste.

Neoconservatism refers to US foreign policies enacted to enforce neoliberalism, specifically, the use of force to impose this grotesque economic system on the rest of the world. Neoconservatives believe that the United States can invade any country that goes against the diktat of the US, specifically any country that chooses an economic system contrary to neoliberalism. Since 9/11 we have been able to witness this neoconservative foreign policy in real time–Afghanistan, Iraq, Libya, Syria, Ukraine, etc. Both Republican and Democratic foreign policies are controlled by neoconservatives. This is why the Obama administration has not been appreciably different in its foreign policy than the Bush administration. Neoconservatism is the military-industrial complex. Neoconservatism is the intelligence-industrial complex. Neoconservatism is the homeland security industrial complex--since 9/11.

Those are the differences.

The similarities between neoliberalism and neoconservatism is the consequence free outcome for the proponents of these noxious ideologies. Both neoconservatives and neoliberals have escaped any and all accountability in the aftermath of the disasters of the last decade. The neoconservatives walked away scot free after the criminal invasion of Iraq and the ongoing debacle that the War on Terror has become. The neoliberals wrecked the economy with the Wall Street crash, yet have emerged stronger that ever.

Both of these ideologies have escaped accountability, I believe, because both are immensely useful to the American empire–the deep state, that I’ve talked about before. Also, both neoconservatism and neoliberalism serve very powerful factions within the US and are held aloft by the greedy/ideology that both our political parties fully support.

Going forward, I’ll examine these two ideologies in much more detail, but at the present time it’s clear that these two factions are in complete control over our government policies, with no end in sight.

It’s their world, we just live in it.

 

 

Posted in Uncategorized | Tagged , , , , | Leave a comment

Free Enterprise

Posted on November 21, 2014 by camelotkidd

In the United States the term free enterprise has been used as a key component of an organized propaganda program to concentrate corporate wealth and power.

Political scientist, Alex Carey wrote that the “20th century has been characterized by 3 developments of great political importance: the growth of democracy, the growth of corporate power, and the growth of corporate propaganda as a means of protecting corporate power against democracy.”

The United States is nominally a representative democracy, however corporate interests have an outsized influence on the policies we enact. These corporations spend enormous amounts of money to get the American people to identify free enterprise (meaning state subsidized private power with no infringement of managerial prerogatives) as the American way. In addition to the day in and day out pro-business advertising and PR, corporations have waged intensified propaganda campaigns, deploying the term free enterprise as a means of gaining support for corporate policies.

“The first campaign occurred after the Second World War when American business interests felt threatened by government intervention and controls on the one hand, and union activity on the other. They responded with a massive ‘economic education’ program, aimed at the public, school students and employees, which taught the fundamentals of free enterprise economics. Business values, such as the rewards of hard work and enterprise and the benefits of capitalism were equated with patriotism and American values.

A similar media and school-based campaign was undertaken when capitalism came under attack during the late 1960s and early 1970s when a proliferation of public interest groups challenged the authority of business and sought government controls over business activities.”

Professor William K. Black, a leading scholar of control fraud at University of Missouri Kansas City, and author of the book, The Best Way to Rob a Bank is to Own One, has written an amazing article that adds considerably to my understanding of the second propaganda campaign. Professor Black examines in more detail future Supreme Court justice Lewis Powell, and the infamous memo he sent to the US Chamber of Commerce in 1971. At that time Powell was a successful and influential corporate attorney who made his reputation defending the cigarette industry against critics who claimed that their product was dangerous and led the deaths of its users.

“August 23, 2011 will bring the 40th anniversary of one of the most successful efforts to transform America. Forty years ago the most influential representatives of our largest corporations despaired. They saw themselves on the losing side of history. They did not, however, give in to that despair, but rather sought advice from the man they viewed as their best and brightest about how to reverse their losses. That man advanced a comprehensive, sophisticated strategy, but it was also a strategy that embraced a consistent tactic – attack the critics and valorize corporations! 

[Powell] issued a clarion call for corporations to mobilize their economic power to further their economic interests by ensuring that corporations dominated every influential and powerful American institution. Lewis Powell’s call was answered by the CEOs who funded the creation of Cato, Heritage, and hundreds of other movement centers.”

Professor Black examines who Lewis Powell and business saw as their chief critic and, more importantly, what it was they were afraid of. In 1971 corporations loathed Ralph Nader–who as a consumer watchdog was intent on stopping corporations from selling shoddy products that harmed or killed their customers. Powell makes clear in his writing that he and the corporations he represented were deathly worried about this attempt to hold corporations accountable. As part of their ongoing propaganda campaign Powell and and these corporations claimed any and all attempts to hold corporations accountable was tantamount to hatred of free enterprise.

“Powell and Fortune believe that prosecuting criminal CEOs is terrible for businesses, terrible for CEOs, and terrible for “free enterprise.” They conflate support for prosecuting criminal CEOs with “hatred” for “corporate power” and they conflate “corporate power” with ‘free enterprise.'”

This is where the big lie inherent in any good propaganda come into play. Notice how Powell claims that holding corporations liable for their behavior deters free enterprise, when the opposite is true? Notice how free enterprise has been conflated with corporate power? This big lie is still being used today, it’s at the heart of the corporate propaganda we hear every day, like a mighty Wurlitzer. It’s why we couldn’t prosecute bank CEO’s after they crashed the economy with their looting. It forms the substance of Mitten’s claim of CEO’s as heroic job creators. And, it blocks any and all attempts to ameliorate our gross inequality.

According to Professor Black, failing to hold corporations accountable, results in a Gresham’s Dynamic, where unethical behavior crowds out ethical, resulting in a system that rewards the worst actors and leads to the type of crony capitalism we see today in our country.

The term free enterprise has become a ubiquitous component of our own little American economic morality play, but it’s important that we recognize how powerful the expression has become. It’s not a stretch to say that free enterprise forms the intellectual underpinnings of the vicious neoliberal policies that we see around us every day.

In the novel 1984, George Orwell used the term newspeak to describe a word or phrase that meant the opposite. It’s not 1984, but I believe Orwell would feel right at home in 2014.

Welcome to America–home of the free enterprise.

 

 

 

 

Posted in Uncategorized | Tagged , , , , , , , , , , | Leave a comment

Epistemic Closure

Posted on November 15, 2014 by camelotkidd

Democratic supporters of President Obama love to point and snicker at Fox News watching conservatives who refuse to entertain any ideas that challenge their right-wing world view. But, supporters of Barack Obama are just as prone to epistemic closure as conservatives. They believed that their progressive champion would solve all of our problems magically and when he did nothing of the kind, they blamed Republican obstruction rather than face the fact that they were played. Obama lied and had really good advertising, but the refusal to believe any of the obvious contradictions is what marks   the Obots epistemic closure.

The latest illumination of this phenomenon is the video of Obamacare architect Jon Gruber admitting that deceiving Americans was necessary to ensure its passage. The deception leading to the passage of the Affordable Care Act wasn’t that hard to see if you looked, but  supporters of Obama ridiculed anyone that dared to point this out.

“Leftists and sincere liberals were accused of being purists who do not live in the real world, who make the perfect the enemy of the good and fail to grasp the necessity of compromise to get things done.”

Of course, Republicans are going to hold “stupidity hearings” in response to this disclosure by Gruber.

Like I say, you can’t make this shit up.

What should be apparent is the contempt that both parties hold for their supporters. Republican–neoconservatives, follow the political philosophy of Leo Strauss to guide their deception, while Democratic–neoliberals, exalt Walter Lippmann’s idea of management of public opinion by wise technocratic experts. Neither party believes in democracy, it’s all an act.

Modern American policy follow from this logic. Both parties believe American voters are too stupid to understand complicated policy decisions, so they let banks and corporations formulate the policies since they’re the experts. Both parties also agree that government should enable this process. At Counterpunch, writer Rob Urie underscores this point about the Obama Administration’s passage of the ACA, but the same logic applies to the Republicans.

“Mr. Obama appointed industry and government ‘insiders’ to manage the process of getting an industry bill turned into law. But if private interests precede the public interest then in what way does promoting an industry bill not strengthen this relation? This entire approach to ‘public’ policy is radically undemocratic and its joint product is to put a ‘political’ wrapper on a health care industry give-away. As with the Wall Street bailouts, any actual benefit to the public is incidental. And this political wrapper proceeds from a neo-liberal conception of the public interest as the aggregation of individual ‘private’ interests.”

Urie goes on to explain how the Democratic Party, rather than providing an alternative to, has enabled right-wing policies.

“The corporate-neo-liberal programs increasingly found in state and local political races— privatization, the undermining of democratic institutions and the disappearance of the public realm under ‘fiscal’ constraints, is every bit as much the work of national Democrats as it is of ‘local’ Republicans. And part of the reason the selling of political outcomes under the guise of economic constraints has been so effective is that ‘liberal’ politicians like Barack Obama and Bill Clinton have been selling right wing misdirection as liberal ‘fact’ for decades now.”

This perversion of American political discourse is a huge problem. It’s been so long since we’ve heard something explained as other than right-wing bullshit, that we don’t even know what it sounds like.

With Republicans controlling the next Congress, we are going to have an opportunity to see these crazy right-wing policies implemented openly rather than having the Democrats implement them surreptitiously. I for one think this will be illuminating, in that it will allow us to plumb the depths of Obama supporter’s epistemic closure. With a Republican controlled Congress, the Obots will have the opportunity to see how right-wing their erstwhile progressive champion really is. Obama came into office talking about bipartisanship and working with Republicans. Now he will have the chance to truly implement the plutocrat agenda that will enable him to leave office and cash out like Bill Clinton did. Paradoxically, Democrats like Obama can do what Republicans cannot, as Clinton demonstrated with welfare reform and the repeal of Glass-Steagall.

The next two years should be interesting.

Posted in Uncategorized | Tagged , , , , , , | Leave a comment

Veterans Day Blues

Posted on November 11, 2014 by camelotkidd

Veterans Day has become another American holiday full of contrived bullshit and lies. That’s why, as a veteran, it’s nice to see an editorial like this.

“Here’s a legend that’s going around these days. In 2003, the United States invaded Iraq and toppled a dictator. We botched the follow-through, and a vicious insurgency erupted. Four years later, we surged in fresh troops, adopted improved counterinsurgency tactics and won the war. And then dithering American politicians squandered the gains. It’s a compelling story. But it’s just that — a story.

The surge in Iraq did not “win” anything. It bought time. It allowed us to kill some more bad guys and feel better about ourselves. But in the end, shackled to a corrupt, sectarian government in Baghdad and hobbled by our fellow Americans’ unwillingness to commit to a fight lasting decades, the surge just forestalled today’s stalemate. Like a handful of aspirin gobbled by a fevered patient, the surge cooled the symptoms. But the underlying disease didn’t go away. The remnants of Al Qaeda in Iraq and the Sunni insurgents we battled for more than eight years simply re-emerged this year as the Islamic State, also known as ISIS.”

Posted in Uncategorized | Leave a comment

Dig it

Posted on November 10, 2014 by camelotkidd

Reading Bloomberg’s article about how the GOP, when it takes control of the Senate, should embrace infrastructure spending, made me laugh. Just the language, with its nod towards hippy vernacular, was priceless.

“Dig, if you will, a picture: Republicans, basking next month in the glow of victory, draw up a few broadly reasonable civic goals for the new Congress and agree to achieve them without doing anything dumb. Spending to shore up the country’s public works–bridges, ports, the electric grid–should be near the top of their list.”

Still, the idea that Republicans should embrace government spending now that they control Congress, has a certain ring of truth. After all, they only hate government when the Democrats are in power and federal largess is going to “those people.” The other side of the coin is that, supposedly, the Democrats are the party that effectively wields government to advance the cause of progressive politics. However, as writer Arun Gupta explains, it ain’t necessarily so. Gupta claims that the Democratic Party under Obama has emerged as the true party of neoliberalism, which is why they suffered catastrophic losses in the recent mid-term elections.

“It’s time to rethink this notion that Democrats lack principles. They have a clear agenda and are actually more ideological than Republicans. Democrats like Obama are willing to lose power to carry out the neoliberal agenda. Since the Clinton era, Democrats have been the most effective architects of policies that increase the wealth and power of those on the top of the economic pyramid. Now, neoliberalism is often thought of as synonymous with privatization, deregulation, and trade and capital liberalization, but the state will discard these policies for corporate handouts the instant elites get into a self-inflicted mess, as with the Wall Street crash.”

Wall Street influence and ideological symmetry dates back to the Clinton administration, but most members of the Democratic coalition didn’t get the memo. They bought into the the notion of Obama as a blank slate that they could pour their aspirations into. His campaign slogan–Hope and Change was voted Advertising Age magazine’s “Marketer of the Year” by the Association of National Advertisers. However, early Obama actions should have raised red flags about his connections to and support of Wall Street. During the 2008 election Obama raised more money from Wall Street than did McCain. Then as president he nominated “Little Timmy” to be his treasury secretary.

Lambert, at Naked Capitalism explains the Democrats’ dilemma of relying on corporate and Wall Street funding while expecting minorities, woman, unions, environmentalists and young people, to vote for them.

“If the essence of neo-liberalism is transforming public social relations into transactions — ideally involving rental extraction — because markets, then ObamaCare is the quintessential neoliberal program. And — nobody could have predicted — ObamaCare was not a vote-getter. But Democrats went ahead with it anyhow. Out of principle!

The midterms were not a “wave election” for Republicans, and in fact left policies were adopted by voters. The Democrats did not lose because of technical factors like the electoral map, structural issues with their “coalition,” or even for the reasons put forward by emo-dems. Rather, the midterms were a protest against neo-liberal principles and policy outcomes successfully achieved by Obama and the dominant factions of the Democratic Party”

This is the essence of our political reality that makes me want to tear my hair out. I get that the Republicans are evil-motherfuckers, but the Democrats are almost worse with their pathological misrepresentations. The Democratic party either needs to change back into a party that represents the majority of Americans that are neither rich or corporate, or cease to exist. We definitely don’t need two corporate parties.

And, by all means GOP, start digging. We could really use some infrastructure.

Update: Former congressional staffer, Matt Stoller reviews Al From’s book,  “The New Democrats and the Return to Power”  and discusses in more detail why the modern Democratic Party governs the way it does.

Posted in Uncategorized | Tagged , , , , , , , | Leave a comment

Lost In Space

Posted on November 3, 2014 by camelotkidd

It’s been a rough week for commercial space travel.

First, on Tuesday an un-manned commercial supply rocket bound for the International Space Station, exploded after liftoff. The accident prompted criticism over NASA’s reliance on private corporations to launch payloads, now that the space shuttle program has been mothballed.

Then, on Friday Virgin Galactic’s Space Ship Two, “…a prototype passenger rocket broke up during a test flight, scattering debris over the Mojave Desert and killing one pilot while seriously injuring the other.”

By my count the private space program is batting o-2.

This story points to a larger problem in the US–the steadfast belief in the superiority of the private sector in relation to government. Since President Reagan famously declared government the problem and not the solution, there has been an unprecedented propaganda campaign to demonize the public sector. As I’ve pointed out ad-nauseum, belief in this fable is dependent on imbibing a large glass of ideological Cool-Aid.

In fact, government drives innovation not the private sector. Private business just benefits from this government investment, paid for by we the taxpayers. Naked Capitalism recently had an excellent segment deconstructing this pernicious falsehood.

“Innovation is not led by the private sector; it lacks the long term horizons and risk appetite to do so. Instead, the most innovative countries and regions have the state playing a very active role, not just in funding basic research or making sure markets work properly, as in limiting anti-competitive practices that can stymie new entrants. Instead, the state plays an active role along the entire value chain. One result of the wide-spread misperception that the private sectors deserves most of the credit is that businesses are able to skim a disproportionate level of the returns for themselves.”

This brings us back to the problem we face in this country of disproportionate corporate power and rampant inequality. The ideology of private innovation is one of the main justifications for this state of affairs. As a result, we end up allowing corporations and individuals to profit for investments that we paid for. As an example, look at high tech firms Apple and Google, whose success is dependent on government investments in R&D. They profited enormously from this arrangement and now, in a perverse form of payback are using innovative tax avoidance gimmicks to avoid paying taxes on the profits they received from taxpayer largess.

Who says this isn’t a great country?

This disparagement of government has become one of the ways in which conservative ideas have become sacred, but also enormously profitable. A strong government that employs rules and regulations to promote a common good is a threat to profits. In fact the modern conservative movement, as investigative journalist Robert Parry, relates, “…has regarded the regulatory powers of the federal government as a threat to the ability of rich industrialists to operate corporations and to control the economy without regard to the larger public good.”

However, the idea that government is inherently evil and incompetent, while useful in advancing conservative policies, hides a deeper and darker secret. Despite the constant depiction of government as a evil bureaucracy when it comes to enforcing rules and regulations that protect the common good, our elite actually welcomes a strong activist government when it enables their looting and further consolidation of corporate power.

As Philip Mirowski concludes with his seminal study of neoliberalism: Never Let a Serious Crisis Go to Waste, neoliberalism differs from laissez-faire in that its insistence on the use of markets for everything actually requires “strong uses of state intervention.”

We can see that clearly with the space travel story, mentioned earlier. Richard Branson’s Virgin Galactic was planning on using the $250 million dollar Spaceport America in New Mexico to launch well paying tourists into space. “Taxpayers footed the bill to build the state-of-the-art hanger and runway in a remote stretch of desert in southern New Mexico as part of a plan devised by Branson and former New Mexico Gov. Bill Richardson.”

What we are left with, I suppose, is to examine carefully what government is used for. Our government can promote policies that promote the common good or they can promote policies that further enrich the 1%.

Insisting on the common good, is what makes progressive politics. Unfortunately, what we have in the US are two political parties pursuing policies that enrich the 1%.

Coke or Pepsi. Not much of a choice and they’re both bad for you.*

 

* Not my quote. Read it online, not sure where.

 

 

Posted in Uncategorized | Tagged , , , , , , | 1 Comment

The vandals took the handles

Posted on October 22, 2014 by camelotkidd

Reading the bizarre effort by Paul Krugman to portray Obama as a great president, it occurred to me that it all could have been different. Newly elected with a huge mandate for reform, Obama had a chance to break the stranglehold the financial industry had on our economy in the aftermath of the 2008 meltdown. He could have done it without bi-partisan Republican input or obstruction. And, it would have allowed him to have a successful presidency, rather than the disaster we have today.

Professor of Economics and Law, at University of Missouri, Kansas City, William Black, finds Krugman hagiography strange as well.

“As the scholar who has led the critique of the Obama administration’s failure to prosecute the elite (and not-so-elite) senior officers who led the three most destructive epidemics of accounting control fraud (appraisal fraud, liar’s loans, and fraudulent “reps and warranties” in secondary market sales) in history I can attest that Krugman could have quoted literally thousands of specific criticisms I have made about the failures to hold these senior bankers accountable.”

Holding the bankers that engaged in widespread fraud responsible would have provided the political space for Obama to implement a much more robust series of economic reforms.

Here’s Professor Black, explaining how this might have happened.

“It would have been more difficult for Obama to have pushed effectively to reduce income inequality, but there are concrete things he could have done that we urged. Note that by discrediting the banks and bankers through the actions I’ve just described above, the administration would have enormously increased the political space for real reforms on executive compensation. The single greatest source of the growth of inequality at the top is finance. Financial services compensation is grossly excessive, but it is also a leading source of the perverse incentives that drive our epidemics of accounting control fraud and are used to create “Gresham’s” dynamics in the professions and more junior officers and employees that aid and abet the financial frauds. Perverse executive compensation also provides the primary means by which controlling officers loot “their” firms in a manner that makes effective prosecution more difficult.”

Yeah, who knows, we could have even emerged with a different sort of economy, one that works for the rest of us, rather than just the 1%.

“The richest one percent of the world’s population now controls 48.2 percent of global wealth, up from 46 percent last year, according to the most recent global wealth report issued by Credit Suisse, the Swiss-based financial services company…The report found that the growth of global inequality has accelerated sharply since the 2008 financial crisis, as the values of financial assets have soared while wages have stagnated and declined…”

Also, by taking down the financial miscreants who crashed our economy we could have avoided the plague of austerity. Who has been at the forefront of the push to implement austerity in the aftermath of the crash? You know the answer–it has been the same people who should be in prison who have been the biggest cheerleaders for the mass suffering austerity has brought about.

The idea, at this late date, of a different Obama, is almost comical, I realize, but hear me out. If we are going to have better policies, we need to imagine them. There is, after all, an alternative to the neoliberal bullshit they’re foisting on us. Anyway, thinking about this reminded me of the essay Simon Johnson, wrote back in 2009, entitled the Quiet Coup. In the essay Johnson, former IMF chief economist, well described the lock on power the financial elite have on our country.

“The crash has laid bare many unpleasant truths about the United States. One of the most alarming, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform.”

But, that’s not what we did, is it? We never broke the hold of the financial oligarchy and that inaction is what has defined the Obama Administration, despite what Paul Krugman might wish.

Here’s Johnson, describing what happens when you leave a powerful faction in power after they fuck up.

“…elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them….”

Why didn’t Obama take action against the financial industry, despite his historic appeal to Hope and Change? Lots of reasons: the financial industry was a significant campaign supporter, Obama had lots of friends who were bankers, but most importantly, I believe, is that Obama bought into the PR.

Obama didn’t take action because he believed, with all his heart, like other Washington insiders, “…that large financial institutions and free-flowing capital markets were crucial to America’s position in the world.”

What would Simon Johnson tell the US as one of the nations he advised for the IMF?

“The challenges the United States faces are familiar territory to the people at the IMF. If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say: nationalize troubled banks and break them up as necessary…Johnson says the second thing the US needs to do is break up the oligarchy.”

Obama’s failure to prosecute the bankers who crashed the economy has consequences that reverberate. We can look around every day and see them.

 “The widening chasm between rich and poor is traceable to the policies that were adopted in 2008. That’s why things are so fu**ed up, it’s because the “surge in paper wealth, fueled by the trillions of dollars pumped into the financial system by central banks via zero interest rate and “quantitative easing” policies.”

As an allegorical device, finance can be thought of as a pump, getting capital to the economy as a whole. Finance, historically, has served the function of properly and efficiently allocating capital. But in the US it doesn’t work that way anymore. Finance has become an end to itself and is more concerned with speculation than allocating capital for productive economic activity.

“The pump don’t work ’cause the vandals took the handles.”

Update: You can’t make this shit up! Now the Justice Department is claiming that they couldn’t prosecute the vandals because they were “rocket scientists.”

Posted in Uncategorized | Tagged , , , , , , , , | Leave a comment

Godzilla vs Mothra

Posted on October 8, 2014 by camelotkidd

With  the dearth of investigative journalism and embrace of entertainment as news by our corporate press, sometimes the only way we learn about the important events shaping our world is when there is a dust up among our elite.

Right now we are privileged to have heavyweights within the financial industry duking it out in court. I’m referring to the AIG bailout case that began this week in Washington.

Luckily, there is a remnant of investigative writers out there, mostly on the internet. As author David Dayen writes “…regardless of the outcome, this trial should matter to every American. In fact, just in its first week, we’ve learned a lot of new information about how the bailout architects– then-Treasury Secretary Henry Paulson, ex-Federal Reserve chair Ben Bernanke, and former president of the New York Fed Timothy Geithner – conducted themselves amid the chaos of the financial crisis. And it doesn’t reflect well on any of them, with concealed information, bait-and-switches, and favorites played among financial institutions. As these three prepare to take the stand this week in the case, we should be pleased to finally have this debate about the bailout in public.”

Another bastion of investigative journalism is Naked Capitalism, whose beat is the world of finance. Founder of NC, Yves Smith, has been all over this case with two posts–part 1, and part 2, looking at all the documents that have come to light during the discovery phase of the trial. To me the salient point is one savvy analysts have long suspected: that the takeover of AIG by the government was initiated to hide all the losses of the Too Big to Fail Banks, who were AIG counter parties. Here’s Yves.

“AIG’s contention is that the driver of how its rescue was done was to force as many RMBS and CDO credit losses on AIG, so as to reduce the amount of support that would have to go directly to banks. In other words, it was to facilitate the bailout of the investment banks and banks that were perceived to be essential due to operating the payments system and large domestic and international over-the-counter debt markets. AIG could be handled more roughly because it was not a critical part of the financial plumbing and also had never done much to curry political favor. By contrast, if foreign investors were part of the rescue team, they would almost certainly have insisted on haircuts on the AIG credit default swaps, a large mechanism for laundering bailout dollars through AIG to banks and former investment banks like Goldman and Morgan Stanley.”

It’s simply amazing that 6 years after the bailout, we are just finding out these details. If you have any doubt that our elite feel they are above the law, follow this case, especially by reading Naked Capitalism, every day. Yves is having a fundraiser now, so if you’ve got some spare change, be sure to give a little to support all the great work she and her staff do.

And, no, I’m not calling our elite monsters, it’s just an analogy, silly. After all, they’re doing “God’s Work.”

* We also have whistleblowers to thank for a peek behind the curtain. Thanks Carmen Segarra. 

Update: Too funny. New York Times reporter Andrew Ross Sorkin is now telling us that this is old news, and that all the cool kids knew all about it.

Posted in Uncategorized | Tagged , , , , , , , , , | Leave a comment

Why we can’t have nice stuff

Posted on October 6, 2014 by camelotkidd

We’ve been talking a lot about foreign policy lately, but why does US foreign policy matter to the American public?

It matters because our elite are committed to empire. Empire is their political economy.  Empire benefits them. Us, not so much.

Most Americans don’t want to be part of an empire and they also don’t want the hyper-militarized surveillance state that goes with empire. The American people, by and large, haven’t benefited by the enormous wealth generated by this arrangement of global hegemony, but have been terrorized by events and threats and red-alerts into thinking that a political decision was a historical necessity–or destiny.

But, as we have discussed previously, the US is largely controlled by a “deep state” composed of finance, energy and a military, industrial complex (MIC).

And, empire is very good for the bottom line of the MIC, as writer Tim Shorrock relates.

“70 percent of the U.S. intelligence budget is spent on private contractors. Much of this spending – estimated at around $70 billion a year – winds up at the NSA, where SIGINT operations, particularly for collection and analysis, were heavily outsourced at the turn of the century.”

This article by Shorrock, reveals a window into the world of the MIC and how it is that empire is so profitable for a small group of corporations and individuals. Government spending that could benefit the vast majority of Americans, things like infrastructure refurbishment, or creating new “green jobs,” goes instead to empire.

That’s why we can’t have nice things.

If we want to have nice things, we need to dismantle empire.

Writer Chris Hedges, who has long warned of the dangers of our present arrangement, discusses what happens to empires that wage endless war.

“But endless war is not sustainable. States that wage endless war inevitably collapse. They drain their treasuries, are hated by the wretched of the earth, and militarize and strangle their political, social and cultural life while impoverishing and repressing their populations.” 

And, it’s not just about the economic aspects of empire. It’s also about raw power. We can’t have nice things in this country anymore because our elite have taken us back to a sort of neo-feudal milieu, where they are the lords and we the serfs. Here is Noam Chomsky describing the way the US is being dumbed down to bring this about.

“People must come to believe that suffering and deprivation result from the failure of individuals, not the reigning socioeconomic system. There are huge industries devoted to this task. About one-sixth of the entire US economy is devoted to what’s called “marketing,” which is mostly propaganda. Advertising is described by analysts and the business literature as a process of fabricating wants – a campaign to drive people to the superficial things in life, like fashionable consumption, so that they will remain passive and obedient.”

Chris Hedges rages against this neo-feudalistic turn and describes what needs to happen.

“We too are powerless. We have undergone a corporate coup d’état in slow motion. It is over. They have won. If we want to wrest power back, to make the consent of the governed more than an empty cliché, we will have to mobilize, to carry out sustained acts of civil disobedience to overthrow—let me repeat that word for the members of Homeland Security who may be visiting us this afternoon—overthrow the corporate state.”

Let’s get started.

Update: Way more from Ian Welsh–

Why We Live In a Shitty Economy for Most People

 

 

Posted in Uncategorized | Tagged , , , , , | Leave a comment