Never in my adult life have I felt so detached and indifferent with respect to American politics. I have always regarded it as a twisted sideshow, unfit for consumption by decent folk. But consume I have. For years I have watched and analyzed this ongoing train-wreck, first out of the hope that someday I could help play a small role in stopping it; then with the understanding that though I could not stop it, I would at least be able to comprehend it; and then finally, having realized that it is neither stoppable, nor comprehensible, I followed politics merely for my own morbid amusement.
I no longer glean much amusement from political diversions. Much hoopla has been made recently about a congressman sending photos of his penis over the internet. In two weeks, the media has spent more time on this “story” than it has explaining how and why the financial system collapsed in last two plus years. Our political debates, such as the one in New Hampshire last night, are nothing more than personality contests stripped of all substance and laden with clever one-liners that pundits use as some sort of standard of political excellence.
And maybe they are. Americans can rarely fix their attention on anything that lasts longer than seven seconds. During the debate Ron Paul no doubt left most people scratching their heads when he blundered by discussing monetary policy. Apparently he doesn’t watch much cable news; otherwise he would know that there is just no place on television for that sort of topic. Much as Americans are concerned about the economy—as they should be—they don’t care to listen or know much about it. The average American’s knowledge of economics is so shockingly deficient that it is no wonder the richest of the rich have been able to plunder middle class wealth for the past few decades. Tea Party types are right to protest wealth redistribution, but they do not seem to understand that the redistribution is upward, not downward to minorities and illegal immigrants as many of them seem to think.
There is a contingent of libertarians and survivalists who keep warning of a malevolent authoritarianism coming to America, and that the people will be ruled over by an iron fist of the kind seen in Third World countries run by military juntas. But this admonition makes a sketchy assumption—namely that Americans would care about, and fight back against, such a development. After all, a true, active dictatorship would only be necessary in America if the citizens push back against the current passive dictatorship, which is run by Wall Street oligarchs and their enablers in Washington. And yet, the populace seems so sufficiently passive, that there is no need to institute a true autocracy complete with the abolition of the Constitution and its Bill of Rights. (No doubt rights have been curtailed courtesy of the “war on terror,” but what I am referring to is the outright erasure of the Constitution by official government fiat.)
Herein is an alarming prospect, captured well in a famous comic strip about the differences between literary prophets George Orwell and Aldous Huxley. That strip reads in part:
“What Orwell feared was those who would ban books. What Huxley feared was that there would be no reason to ban a book, for there would be no one who would want to read one…
“As Huxley remarked in ‘Brave New World Revisited’ the civil libertarians and rationalists who are ever on the alert to oppose tyranny ‘failed to take into account man’s almost infinite appetite for distractions.’”
In a nation where a show called “Extreme Couponing” can exist, one must wonder how much longer the culture can be viable before it turns into a society of total serfs—a gigantic idiocracy too stupid and ignorant to operate at a functioning level. It is a sad state of affairs when one of the more popular shows on television is all about fat people working out. Reality television, once criticized for being unrealistic, has with time lived up to its billing. Programs with odd premises such as Survivor have been drowned out by shows about parking enforcers, mall security cops, exterminators, pawn shop owners, and home fixer uppers. One would think Americans already have enough contact with such people, that it would be entirely unnecessary and even idiotic to air shows about such mundane everyday activities. Obviously, one would be wrong.
One of the unstated benefits of the watered-down health care bill signed into law by Barack Obama last week, is that it will deprive conservatives of the ridiculous talking points that have become so dear to them lo these many months. That is not to say that the Republican Party isn’t trying. Indeed, the GOP is desperately attempting to prolong the health care debate—even after the legislation’s passage—in order for their tried-and-true platitudes to remain relevant.
Whether or not the tea party crowd and other conservatives realize it, the proposed repeal of health reform being bandied about—probably disingenuously since they surely know better—by some congressional Republicans is but pure fantasy. President Obama would never sign a repeal. Therefore, Republicans would have to gain enough seats to obtain a two-thirds majority in each chamber to override a veto, which would require an electoral disaster for the Democrats in November that is without historical precedent. It is absurd even to speak about repealing this law now or in the near future. Yet, there was Mitch McConnell (R – Kentucky) on Saturday delivering the weekly Republican radio address mindlessly canting, “Repeal and reform.”
Eventually, Republicans will come to realize that they must move on, lest they be perceived as beating a dead horse when the Democrats have already saddled up a new one to take them on to banking reform. That debate, which may carry us through the November midterm elections, ought to be a very interesting public discussion, if not a crazy one, even more so than health care. Christopher Dodd (D – Connecticut) recently unveiled his plan to reform the financial services behemoths on Wall Street. As usual with Democratic first drafts, the bill falls well short of what is needed. (To point out one glaring omission, the bill contains no capital requirements, which means that banks can continue to leverage themselves to the hilt—20:1, 30:1, 50:1, whatever, just like before—and wait for the next big crisis lay waste to their balance sheets.) However, at the moment it contains some important regulatory provisions which, if banking reform is ultimately passed will probably be watered down as well. This is how Democrats govern: roll out an initial legislative proposal that doesn’t go nearly far enough in the hopes that it will attract bipartisan support, and when it inevitably doesn’t, dilute it even further to garner a few marginally relevant GOP votes if any at all.
While the big banks went long in donating to Democrats in 2008, they cannot reasonably expect that there will be no financial reform. It’s quite amazing that Congress has yet to do anything on this front, as financial regulatory change is equally, if not more important than health care reform given the global magnitude of the stakes involved. It would be even more amazing—almost impossible—to imagine that there will be no changes at all. Given that there ought to be far less opposition to financial reform than health care, the Democrats should have an easier time passing Dodd’s or a similar piece of legislation. After all, can the tea partiers and their ilk really get whipped up into opposing a bill that seeks to impose new regulations on the financial services sector to ward off a future economic crisis?
Upon preliminary consideration, the answer is no. But the Republicans have shown themselves particularly adept at souring seemingly good policy ideas in order to make them less palatable to their ill-informed base. The key to killing or weakening any banking legislation, whether it’s Dodd’s current proposal or something else, will be to convince Americans that regulating banks will end up hurting them personally. Expect a recurrence of some of the main themes of the opposition to health care. Conservatives will almost surely decry the proposed “government takeover” of our financial system. The addition of more regulation will create cumbersome “red tape” that will hinder lending, and thus cripple all-American “small businesses” which are the “real engines of the economy.” A Consumer Financial Protection Agency will create an unnecessary bureaucracy that will inhibit economic growth, etc.
The U.S. Chamber of Commerce absurdly presents itself as being a defender of American workers and consumers by virtue of its being rabidly pro-business, as if the interests of all parties involved do not conflict. It should therefore come as no surprise that the Chamber has already released several ads against the would-be agency. Its most prominent ad (which starts automatically when you go to its site) rails against the CFPA without ever mentioning what the acronym actually stands for or what it would attempt to do for obvious reasons. The commercial features a presumably upstanding white small business owner who is kept awake until the wee hours of the morning worried sick about his struggling finances (for which he actually has Wall Street to thank), whereupon around 5am he walks toward his SUV which is parked right in front an American flag quaintly hanging from the porch of his house in Anytown, U.S.A. (I thought the footage more appropriate for a Paxil advertisement, but that’s just me.)
This is the narrative conservatives will have to weave if they want to stop or weaken banking reform: The CFPA, which under Dodd’s bill would exist as an arm of the Federal Reserve, is not designed to crack down on high-risk and predatory lending; it is not designed to consolidate the regulatory functions of several different bureaucracies into one agency. Rather, it is designed to destroy the fabric of American capitalism by imposing undue restrictions on lending institutions by the creation of a vast superbureaucracy within the already all-powerful Federal Reserve.
This last hypothetical objection leaves the Democrats open to some legitimate criticisms about giving the Fed more power. There is a small but very vocal contingent of Americans—particularly in the tea party crowd—who despise the Fed and its opaque way of doing business. While there is need for a CFPA or something akin, placing it under the aegis of the Fed is a dubious proposition.
Nonetheless, fundamental change is desperately in the financial sector.
We will probably get some change, but again, whatever it is will leave much to be desired. Almost as critical as the reform will be this coming debate about it. As I and countless other analysts have observed, many Americans have an alarming penchant for opposing measures that would actually benefit them. The debate will be crucial, not only because it will shape reform’s outcome, but because it will help pinpoint Americans’ tolerance threshold for corporate propaganda. Although it seems nearly unconscionable that anyone could oppose tightening banking regulations in light of the recent financial crisis, this is what’s going to happen very soon. In relatively short order, the Republicans will drop their phantasmagoric rhetoric about repealing the health care bill when they realize that they’re the only ones still talking about it. They will then paradoxically ride the populist wave of anger in a bizarre attempt to prevent these new bank regulations from being enacted into law. To some extent, it will probably work.
Of course, the main problem with this effort to reform Wall Street is the same that mars all attempts at financial reform: Congress is always regulating the last crisis. Defense is at its best when guarding against plays and formations it’s seen before. The problem is, Wall Street is always devising new high-powered offensive schemes that no defense could anticipate until it’s far too late.
CEO Uncle Pennybags of Monopoly Managed Care celebrates the passage of health care “reform.”
Quite predictably, health care stocks rose on Monday after the House of Representatives passed health care “reform” on Sunday night. While there are some aspects of the bill that are not HMO-friendly—such as prohibiting discrimination based on preexisting conditions—the insurance mandate is huge for them. Forcing over 30 million uninsured people buy private insurance is a great way to transfer yet more wealth to corporations. This is especially true when you take into consideration the government subsidies for American families pulling in less than $88,000 a year. And Big Pharma is ecstatic because this bill means that by 2014, tens of millions of new people will be able to get prescription drugs more easily. With no provisions for the reimportation of cheaper (but the same) drugs from other countries, and nothing allowing the government to negotiate drug prices under Medicare, this legislation is a can’t miss for the pharmaceutical industry.
The sorry lesson of this health care bill is that if you want to get a major, “historic” piece of legislation passed in the United States, it must contain giveaways to the powerful parties affected. That’s a given. Neither the Democrats nor the Republicans are very much interested in pissing off the private power centers that throw money at political candidates like confetti at a parade. We’ll see the same thing as banking reform makes its way through the Congress. Last week, the Senate Banking Committee voted 13-10 along party lines to send Christopher Dodd’s (D – Connecticut) imperfect financial reform bill to the floor. The funniest thing about it was that Dodd agreed not to allow any amendments from Democrats in order to garner bipartisan support. I’m glad that worked out.
There are plenty of reasons to believe banking reform will go the way of the health care bill: passed and signed into law, but very watered down, coming up far short of what the situation calls for. I’m sure that enough Democrats—particularly in the Senate—will have reservations about banking reform so the White House and congressional Democratic leadership will have the perfect excuse to pass a bad bill. I can see Nancy Pelosi now with her frozen face and goofy smile in a few months time consoling the disappointed: “We’d love to, but we just don’t have the votes for that kind of reform.” Granted, it will be very difficult for the Republicans to mobilize popular support against banking reform à la the health care debate. But then again, never underestimate the ability of the American population to unwittingly go to bat for the very people who, at this moment, are thinking up new and exciting ways to siphon more money from them.
Peter Schiff, who is most famous for correctly predicting the housing collapse and subsequent financial fallout (among several incorrect predictions), has something of a cult following on the internet. Oftentimes his fans are younger people, particularly of the Ron Paul fan club variety, which is to be expected because Schiff was an adviser on Paul’s 2008 presidential campaign. Schiff himself has recently entered the political fray, running for the Republican nomination in this fall’s senate election in Connecticut.
As with Ron Paul, I admire Schiff’s candor. He does not kowtow to people by making pleasing and uncontroversial statements. One can generally count on Peter Schiff to say exactly what he thinks. However, this is where my admiration for him ends. I have been following his regular video blogs on YouTube for several months now, and I think I get the economic picture that Schiff would like to paint if it were up to him. It isn’t pretty.
Schiff, like most conservatives, thinks government is awful, and that if it would only get out of the way and deregulate, the markets would be able to function uninhibited and purely, and produce optimal economic outcomes. Everything you need to know about Schiff’s economic philosophy is summed up by the man himself in this video. The relevant portion is from 3:20 to 5:20. Schiff is discussing the Fair Minimum Wage Act of 2007, which mandated that U.S. minimum wage laws apply (piecemeal) to its overseas territories.
So Schiff thinks that it was wrong for the government to require that American Samoans be paid more than $3-something per hour because all the law did was prompt Star-Kist to lay off hundreds of workers, and Chicken of the Sea to shut down its tuna canning plant altogether.
Let’s just concede the obvious—that the people of American Samoa are worse off for this minimum wage law having been enacted, at least for now. Schiff and other conservatives would chalk up this episode to another instance of government intrusion in the free market that made most everyone worse off.
Or, one could view this ordeal as indicative of a very serious problem in the modern global economy: that there is an ongoing race to the bottom among countries to see who can have the most business-friendly climate. The United States is no longer considered the ideal place to produce clothes, toys, electronics, etc.; not because American workers have gotten incompetent, but because we have pesky labor laws on the books regulating things such as minimum wage and workplace safety conditions. In the age of mass production and expedient international transport, it is much more profitable for even U.S. companies to set up shop in Mexico or Indonesia to produce their widgets, even though Americans are the most insatiable consumers in the world.
The solution for Schiff and others, such as the like-minded porn-stached John Stossel of Fox Business, is to eliminate the minimum wage altogether.
It appears that Stossel is being serious when he asks, “If a minimum wage really does help workers, why be so cheap? Why only raise it to $14 [as one town has done] or $7.50—that’s the new national minimum [sic, it’s actually $7.25]. Why not a hundred dollars an hour?” He then notes that at that level, everyone would realize that people would be hurt, but that even at the lowly rate of $7.25, “the principle is the same.”
No it isn’t. That’s like asking why we don’t have a taxation rate of 90% across the board to increase government revenue. Because it wouldn’t. When it comes to taxation, the idea is to set a rate that will generate enough public revenue to cover operating costs, but not so much as to destroy supply and demand and all means and incentives to produce goods and services. Think of the Laffer Curve. Somewhere between 0% and 100% lies the ideal rate at which to tax people (and businesses). Is there such a thing as the “ideal minimum wage?” Many conservatives would say, “None.” While everyone can agree that if raised to a certain point, the minimum wage would inflict great harm rather than providing an overall benefit, I do not believe $7.25 is that point. Not even close. In fact, in inflation adjusted dollars, the minimum is right where it was in the early 1980s, and we’re still lagging behind the 1950s. So even though people like Peter Schiff and John Stossel talk about the disappearance of entry level jobs such as movie theater ushers and gas-pumpers, the fact is that back in the 1970s, those workers were making more money in real dollars.
For a guy who went to Princeton, Stossel often uses arguments so specious that one wonders how he could think them valid in the first place. Stossel is an unabashed apologist for outsourcing because, he says, that means lower prices for American consumers. Of course, he doesn’t address the issue of the millions of jobs, and billions of dollars in wages lost in America as a result of this. If your job has been outsourced, you may not have the kind of money you used to with which to buy these wonderful, now foreign-made products.
Then there was Stossel’s argument against sharing he once made in a 20/20 episode when he was with ABC. His argument—and I’m not making this up—was essentially:
The refrigerator in the staff room at my work is “shared” and the inside is gross and unclean.
Public restrooms are “shared” and they are also gross and unclean.
Sharing/socialism is bad.
Therefore, private ownership is the answer to everything.
Just as frightening as the undying faith that Schiff, Stossel, and other prominent conservatives have in corporations to collectively run the markets effectively and fairly, is that their message is resonating with people. Sure, the Federal Reserve kept interest rates irresponsibly low for way too long in the early 2000s, leading to a nationwide lending spree, but Schiff wants condemn the bartender who kept on serving the alcoholic. Yes, some fault lies with the barkeep, but ultimately it’s on the drunk to clean up his act. And sometimes, an intervention is needed.
But this isn’t how Schiff sees it. He is an enabler of financial terrorism. We ought not to tax the banks that were bailed out, Schiff and many Republicans say, because they will simply gouge their customers to compensate for the lost revenue. This is likely correct, but what does this say about our financial system? What they’re saying is that we can’t enact financial reform that could cut into banks’ profits because the costs will be passed on to the consumers.
Excuse me, but what the fuck? The idea that we shouldn’t attempt to reform financial services institutions, or energy companies, or HMOs because they’ll take it out on the customers is a very dubious and dangerous rationale. This is financial terrorism straight up: threatening a country or a people with economic harm in order to attain a desired (profitable) outcome—in this case, the maintenance of the status quo. Imagine if after 9/11 America had said, we’re not going to go into Afghanistan because that will only make al Qaeda angrier. What would we think of someone who made that argument? I mean, it’s one thing to make a case against war on the grounds that we shouldn’t do it for moral or practical reasons, but it’s quite another to make that decision based on whether you think your adversary will be pissed off or not.
The fact is, the financial services sector of this country needs serious reform. A year and half after the onset of the biggest economic crisis since the Great Depression, fundamentally, nothing has changed. The “too big to fail” problem has only gotten worse; and over-the-counter derivates, which are an integral part of our casino economy, are very badly in need regulation in the form of a central clearinghouse responsible for approving such transactions.
But incredibly, Americans don’t give a shit about the banks or banking reform. They’re worried about socialism. They’re worried that whatever wealth they have left will be distributed to poor blacks and Mexican immigrants. They’re for some reason worried about their taxes that have either gone down or stayed the same under the present administration. This country may be unreal, but it unfortunately doesn’t surprise me when a guy such as Peter Schiff develops a huge following for his market-knows-best-philosophy, even right on the heels of the real estate bubble burst where the market clearly did not know best. As with government, the fundamental problem with markets is that they rely on human decision-making. By definition, that makes them inherently flawed.
Thanks to today’s predictable 5-4 decision by the U.S. Supreme Court in Citizens United v. Federal Elections Commission, corporations will now be able to buy elections directly, without having to go through the inconveniences of adhering to, and trying to circumvent, state and federal campaign finance laws. This decision means that the corporations may now spend as much as they want on behalf of their preferred candidates. In other words, if Goldman Sachs were to come up with an algorithm that would enable them to spend $∞(infinity dollars) in support of a candidate, they could, because according to the Supreme Court, (1) Corporations are persons; and (2) Money is speech. Hence the rather Orwellian conclusion: All Americans have a right to free speech, but some have more speech than others.
The ruling applies to unions and other organizations as well, but given the vastly deeper pockets of corporate America, the implications of the decision are clear. This development should be ridiculed by liberals and conservatives alike, because frankly, this decision takes yet another step towards fascism—a merging of state and corporate power in nation of citizens that can be whipped into a patriotic frenzy on a moment’s notice, and thus, be conditioned to ignore the gradual destruction of their democracy.
Writing the majority opinion, Justice Anthony Kennedy penned one of the most buffoonish lines ever to appear in a Supreme Court decision—a line that will go down in infamy along with some of the doozies from Dred Scott v. Sandford, Plessy v. Ferguson, Buck v. Bell, and Korematsu v. United States:
“Because speech is an essential mechanism of democracy—it is the means to hold officials accountable to the people—political speech must prevail against laws that would suppress it by design or inadvertence.”
By itself, there is nothing wrong with this line. It is akin to something one might find in the papers of Jefferson. However, since it is being written to justify giving private tyrannies the ability to spend indefinite amounts of money in order to achieve a desired electoral outcome, this remark makes a total mockery of the First Amendment. Apparently it does not occur to Kennedy that even though corporations are “persons,” their interests may differ greatly from those of natural persons. In the overall context of this case, Kennedy’s phrase “accountable to the people” reads like a sick joke.
Naturally, the business world is ecstatic. From the Wall Street Journal: the court decision “rips the duct tape off the mouths of the American people.” It’s an “unequivocal victory” for people “who believe in free speech and the rights of organizations…to promote [their] point of view,” no matter how destructive they are to liberty, equality, and other elements of free society.
The Republican leadership in Washington, which consists mostly of fake conservatives, welcomed the ruling as well. While Democrats are also the beneficiaries of corporate money, the GOP is expected to reap more of the fruits of the court’s decision.
“The decision may boost Republicans as they aim to recapture congressional seats in the November election. Senate Republican leader Mitch McConnell of Kentucky was among those urging the court to lift the corporate spending restrictions, while the Democratic National Committee backed the limits.”
The American philosopher John Dewey once said, “Politics is the shadow cast on society by big business.” What an understatement that has turned out to be.
A much more appropriate version of the American flag.
Recently Thomas Frank, author of What’s the Matter with Kansas and The Wrecking Crew was on Bill Moyers’ Journal where the two had an outstanding conversation about contemporary American conservatism. If you have twelve minutes to spare at some point, I highly recommend watching it.
The main thrust of Frank’s argument in The Wrecking Crew is that American conservatives want to create a culture of government failure: It’s a good point of departure for what I am going to discuss:
What conservatism in this country is about is government failure. Conservatives talk about government failure all the time, constantly. And conservatives, when they're in power deliver government failure…And sometimes from design...
Not always from design, but often. The Department of Labor, for example, the conservatives when they’re in office, routinely stuff the Department of Labor full of ideological cranks. And people that don't believe in the mission.
And the result is that it doesn’t—they don’t enforce anything. Towards the very end of the Bush-era, the Department of Labor had been whittled down. It was a shell of its former self. And at the very end of the Bush Administration, one of the government accountability programs did a study of the Department of Labor. And, I’m smiling, because it's kind of amusing. It was like an old spy magazine prank.
They made up these horrendous labor violations around the country and phoned them in as complaints to the Department of Labor to see what they would do, okay? They responded to one out of ten of these, you know, where they called in as like, “Well, we got, you know, kids working in a meat packing plant during school hours. You know, can you, you going to do anything about that?” “No.” Or you look at something like the Securities and Exchange Commission. These guys are supposed to be regulating, you know, the investment banks, okay? Goldman Sachs, Morgan Stanley, that sort of thing. These guys were so under-funded, and not just under-funded, but you had people in charge of it who didn’t believe in regulating Wall Street.
As I noted in my post about the conservative backlash to Howard Zinn’s The People Speak on History, government is obviously geared toward maintaining the status quo. It will not change unless pressured to do so by the masses. While we should always be skeptical of government, we should also realize that government can be a positive outlet through which to exercise the power of the people.
American conservatives will have none of this. They are concerned with people power only insofar as it will help elect politicians who want to make government—and thus by extension the general population—virtually irrelevant. In this way, contemporary American conservatism is extremely undemocratic, as it seeks to discredit or destroy the role of government even where it is welcomed as in the cases of social security or Medicare. As a corollary to this, what is termed the “free market” is understood by conservatives to be the be-all end-all of society. If only the government would get out of the way, they say, the market would provide us with everything we need.
Except they don’t want government totally out of the way. As a reservoir of taxpayer money for corporate subsidies and the Pentagon budget, conservatives very much want government involved in the “free market.” America’s military expenditures are a good illustration of this, and rarely do they come under fire from either party for being too high despite the fact that the U.S. military budget is about $600 billion more than the world’s second highest total, which belongs to China, a major U.S. trading partner. One of the worst kept secrets of the Pentagon budget is that its immense size has more to do with military Keynesianism and pork-barrel spending than national security. The lesson that many economists learned from World War II was that heavy government spending could lead to substantial economic growth. After the war, the way to keep up America’s wartime economic boom, they argued, was to keep arms expenditures relatively high even in peacetime. Over the next several decades, trillions of dollars in taxpayer money would be invested into the private sector for arms and technology. Many of the technological developments that came as a result of public funding turned out to be useful for civilian purposes as well as military, such as computers, the internet, cell phones, and GPS.
Standard free market principles dictate that when investment results in the successful and ongoing production of a commodity or service, the investors receive a return on the capital they provided toward that very end. But the “free market” envisioned by American conservatives is quite different. In this scenario, the taxpayers do not get a return in the traditional sense of the word, but rather an opportunity to simply purchase that which their money made possible—cell phones, computers, etc. Applying conservative “free market” principles on a smaller scale for a moment, imagine that your friend wants to start a restaurant and convinces you to invest say, $5,000 in startup capital. A year later, his restaurant is booming with business. When you ask him for a return on your investment, he tells you that you may stop by anytime during business hours to buy a nice meal and that this is your share of the spoils.
This is the exact same principle at work with the Pentagon budget.
Or take the now-forgotten misnamed Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, incidentally passed by a Republican congress with Democratic support not long before the housing bubble collapse/foreclosure boom of 2007-08. A very anti-capitalist piece of legislation, this law makes it more difficult for individuals and businesses to file for bankruptcy under Chapter 7. Not surprisingly it was fervently supported by the credit industry who had been lobbying for a bill like it for years. Under this law, many debtors wishing to file for bankruptcy have had to file under Chapter 13 of the federal bankruptcy code, which requires that a certain percentage of the total debt be paid back within five years, rather than simply liquidating existing assets for repayment purposes as under Chapter 7.
Lending is an inherently risky endeavor. While some loans carry less risk than others, there is always the possibility of default. Lenders assume the risks in the hopes of reaping interest on the principal. Sometimes it works out, sometimes it doesn’t. Either way, free market principles dictate that it is up to the lenders to assess the risks involved and determine whether a loan would be a good investment. Free market principles also dictate that it is not up to the government to help investors recoup losses because they made bad loans. (A lesson unfortunately not recalled by Congress during the TARP vote.) In fact, now that they found themselves with stronger government-guaranteed protection from defaults, and with no provisions in the law for curtailing the issuance of predatory loans, creditors became even more cavalier in their lending, at least before the housing crisis.
These examples are typical of the conservative position of the role of government vis-à-vis the “free market.” Rather than the government having no role, as conservatives like to proclaim, time and again they have shown that they believe government should intervene in the markets, and always on the side of business. As such, American conservatives favor the “redistribution” of wealth to the already well-off through these and other mechanisms, such as tax cuts, which apparently in and of themselves constitute a comprehensive economic policy.
Regarding health care, one of the few coherent arguments against a government-run insurance option emanating from conservatives was that the government would be able to undermine private insurance because government doesn’t need to make a profit. And that’s absolutely correct. But what does that say about the state of American conservatism when Republicans can offer, as an actual argument, that even though the government can provide affordable health care to millions of Americans, such a program would be unfair because the private sector would not be able to compete? Here again we see the high priority given to markets by American conservatives: people have a right to profit from health insurance, but they don’t have a right to health insurance. And given medical costs, not having a right to health insurance essentially means not having a right to health.
The appearance of the “death panel” myth in the public discourse on health insurance last summer seemed quite effective in convincing some of the more ignorant citizens that the government is evil. Again, by extension, this means that democracy is evil. Implicit in the American conservative message is that the population has to be taken out of the equation, with their representatives serving only to dismantle the last vestiges of a once functioning democratic society in order to make way for the wonders of “capitalism.”
Of course, the U.S. doesn’t have capitalism. What we have instead is a corporatist system, which may very well be the inevitable sum of capitalism plus dysfunctional democracy. But conservatives are not concerned about the democratic deficit in American society. Indeed they welcome it. In their eyes, the people (government) have to get out of the way so the markets can do their thing, even if it means marginalizing the majority of the population.
With the inevitable incorporation of a virulent anti- illegal immigration stance and nativist rhetoric into its informal platform against government overspending, the Tea Partiers have cobbled together a quasi-coherent narrative that purports to explain the sorry state of America. The narrative itself has little grounding in reality, but as an instrument for mobilizing popular support against a myriad of government initiatives, it has the potential to imperil not only the Democrats who are up for reelection in 2010, but also many incumbent Republicans who are viewed by the Tea Partiers as RINOs—Republicans in name only.
Or not. Perhaps the Tea Partiers will be nothing more than a curious footnote in the annals of American political history—just another fleeting fringe political movement whose basic platform was co-opted by one of the major parties in time to gain critical support in an election year. I suspect that the historians of posterity will say of the Tea Parties something like the following:
In an era of rising dissension in the United States, the Tea Partiers created a rhetoric appealing to a cluster of basic values that the nation still found compelling, no matter whether the hearer was from North or South. For a time, it molded the perceptions of a large number of Americans by providing a precise cause and simple solution for all the social ills. The values selected by the Tea Party imply an audience that embodies these values, reveres them, and seeks to practice its principles. Thus, by accepting the Tea Party role, Americans of the period became heroes, defenders of Americanism in every sense of the word.
Tea Party rhetoric cast the audience as united Americans who could save the union by reinforcing traditional American values at the ballot box. This vision of the audience had two weaknesses, one which was intrinsic to the nativist message, and one which was extrinsic. The intrinsic flaw arose from the contradiction between noble values and ignoble actions which violated the audience’s newly created self-concept. The second problem arose because the party did not adapt its vision of the audience to fit political reality.
The rise and fall of the Tea Partiers lends hope to those who fear similar “paranoid” political parties might someday garner enough power to rule in the United States. Americans have seen the rise of many prejudiced political movements, and have also, with no small amount of relief, seen them fall. But the sentiments persist, and may rise again.
Now for the full disclosure. I did not write this passage. Professor Cheree Carlson of ArizonaStateUniversity did. And not only that, her essay that this passage is excerpted from is not about the Tea Parties, but rather the anti-immigration, anti-Catholic Know Nothing Party of the 1850s. All I did was replace “Know Nothings” with “Tea Partiers.” If it doesn’t seem like there’s much of a difference between these two factions, that’s because there isn’t. Like the Know Nothings, the Tea Partiers have made their ascent during a time of internal strife and “rising dissension.” The charge by House Speaker Nancy Pelosi and other liberals that the Tea Parties are “Astroturf”—a faux popular movement devised by corporate interests to sabotage Democratic legislative efforts—has a parallel in criticisms of the Know Nothings:
Genuine free soilers [a pre-Civil War political movement against the spread of slavery into the western territories] deplored the Know-Nothing craze as a red herring that diverted attention from “the real question of the age,” slavery…[Indiana politician] George Julian even suspected that this “distracting crusade against the Pope and foreigners” was a “cunning” scheme of proslavery interests “to divide the people of the free states upon trifles and side issues, while the South remained a unit in defense of its great interest.”
As tensions mounted between North and South, immigration became decreasingly important as a political issue. Just like the much more politically successful Whig Party, the Know Nothings were done in during the 1850s mainly by the fact that party members split along geographical lines on the slavery question.
The Tea Partiers have no such disadvantage. They are mobilizing against and speaking to the “real question of the age,” the economy. Despite the recent troop surge in Afghanistan, Americans are focusing more on domestic problems—unemployment, underemployment, stagnant wages, tight credit. Americans know that there is indeed something terribly wrong with the country, and the Tea Partiers have an answer that’s been spoon-fed to them by the right-wing media: liberals want to bankrupt America by enacting “socialist” policies, and grant amnesty to illegal immigrants who “take jobs from Americans.” The reason for the financial crisis, says the narrative, is that poor people—often minorities—took out mortgages they knew they couldn’t afford, and defaulted on them en masse, leading to the collapse of the housing bubble, sending shockwaves through the rest of the economy. Furthermore, the resulting high unemployment is thanks in large part to illegal immigrants, who work for very low pay. As a corollary to this, Barack Obama—who is a Muslim immigrant from Kenya—is seeking to help the illegals at the expense of hardworking Americans by proposing several “Marxist” reforms.
Anyone with her head screwed on properly knows that this explanation is pure fantasy. But for people who don’t know what a derivative is, or what the Gramm-Leach-Bliley and Commodity Futures Modernization acts did, the narrative makes perfect sense. Ingrained in just about every Tea Partier’s brain is a preconceived set of notions about traditional American values: freedom, individualism, and capitalism are the common denominators, and these have made the United States “the greatest country on earth,” whatever that means. The idea that the White House is presently inhabited by the Manchurian Candidate means trouble for these values. If America became the greatest country ever by championing capitalism and fighting communism, then surely with a Marxist president at the helm, America has nowhere to go but down.
Again, all this is loco. Actual capitalism hasn’t prevailed in the United States for at least seventy years or maybe ever. The dirty little secret of the World War II economic boom in America was that it came during a time when government intervention in the economy was at its peak. During the war years, the U.S. ran a Soviet-style command economy centered on the production of military hardware, and experienced unprecedented growth and prosperity. This development did not go unnoticed by America’s elites, and ever since, the government has been running a permanent war economy, characterized by heavy taxpayer subsidies to defense contractors in what has been a horrifying vindication of Eisenhower’s warning about the military industrial complex.
There is no indication that these considerations enter the minds of Tea Partiers, and with good reason. Part of the mythology of America the Greatest is that it has the mightiest military on earth because as the saying goes, “Freedom isn’t free.” So attacks on defense spending have been nonexistent from the Tea Partiers, which is hardly a surprise because the Pentagon’s budget is off limits in public discourse generally. Any talk of cutting its mesospheric budget is liable to be perceived as an attempt to weaken America and make it more susceptible to terrorist attacks and other foreign machinations. But what is a surprise is the almost total lack of outrage at Wall Street and its deregulatory enablers in Washington. Without question, the Tea Partiers are angered by the bailouts, but they have inexplicably already moved on from the ongoing government subsidization of the financial services sector. Now, the brunt of their fury is aimed at the Democrats and their efforts to reform health care, which, unlike TARP and related programs, is actually designed to provide some measure of relief to regular people—people who cannot afford private health insurance. The bill is not great by any means, but it nonetheless has the potential to help millions of Americans, including many of the poor working stiff Tea Partiers who have haplessly misdirected their anger at red herrings such as immigration and phantom socialism. Never mind that key economic advisers to Obama are former investment bankers and other corporate-types. Obama’s a Marxist because Rush Limbaugh, Glenn Beck, and Sean Hannity say so. And between the three of them, they have zero college degrees, which means they haven’t been corrupted by the liberal intelligentsia.
Like the Know Nothings during their heyday, the Tea Partiers are succeeding because they are providing a coherent answer for the perceived ills of the country. Ultimately, the former party was rendered irrelevant by the slavery issue and the rigidity of the its rhetoric. The Tea Partiers, on the other hand, are addressing the big problem on everyone’s mind. However, their prominence will last only as long as the economy is in the tank. I suspect that the significance of the Tea Parties will have an inverse relation to the perceived strength of the American economy. As long as Americans think the economy is in trouble, the concerns of the Tea Partiers will seem salient to them. But turn the economy around—or at least convince the American people that it’s turned around—and the Tea Partiers will become a nonfactor.
If America were a sane place, there would indeed be mass protests, but ones directed at the megabankers in Lower Manhattan, and the deregulators and the bailer-outers in Washington. But America is not a sane place. Instead, it is a place where popular outrage manifests itself in absurd attacks on illegal immigrants, gays, nonexistent Marxist politicians, and whatever other nonsensical scapegoats can be conjured up by the delirious, paranoid masses who have been taking it on the chin ever since Reaganomics started to chip away at the average American’s standard of living.
It is to be hoped that the Tea Partiers either redirect their outrage at the real culprits of the times, or fade into obscurity. That they are accusing Obama—a man who has packed his administration with shameless corporatists—of being some kind of communist, illustrates the preposterous and misguided nature of the movement. The Tea Partiers are right to criticize the president, but they are doing so for all the wrong reasons—reasons which amount to laughable non sequiturs.
In light of these considerations, the Tea Partiers aren’t just similar to the Know Nothings, they are Know Nothings, literally. They know not the instruments of their oppression, and popular ignorance is the most valuable asset that Wall Street and Washington could ever possess.
Larry Kudlow explains why Wall Street needs our money, but we don’t.
I wasn’t going to write anything for this site today, but then I happened to catch part of the Kudlow Report tonight on CNBC. It was thoroughly infuriating. Larry Kudlow was talking about the reduced cost of the Troubled Assets Relief Program. Now, in case you missed that story, from NPR:
“Large banks are repaying the bailout money they received much faster than expected. The administration says the cost of the TARP program will be about $200 billion less than estimated. Big financial firms are making profits again because the government has driven down borrowing costs for banks and safeguarded their debts.”
“Safeguarded their debts” is a euphemism for “saddled the taxpayers with the responsibility for the banks’ toxic assets and have extended huge lines of credit to them.” The government has promised Citigroup that it would cover up to $277 billion in losses for that firm alone!
Anyway, Kudlow was interviewing Senator John Thune (R - South Carolina), talking about the possibility of the $200 billion going towards what the former called a “Democratic slush fund,” instead of paying down debt. Kudlow seemed to be particularly concerned about the prospect of the money being spent on “social safety nets” and a jobs creation plan that might be on Obama’s agenda. Put another way, Kudlow doesn’t want the money going to social programs, such as unemployment insurance, health care, and education.
Ok, so Kudlow’s a stickler for paying down the national debt, and “protecting the taxpayers,” as he likes to say. There’s nothing wrong with that. But wait. Let’s rewind to the days right before TARP was passed by Congress in what was a hideous betrayal of American public opinion. See what Kudlow told Senator Bernie Sanders (I - Vermont) in the first 30 seconds of this clip:
Later in the interview Kudlow claimed of TARP, “This is a bailout…of Main Street, of middle class folks who desperately need credit.”
Bull. Shit. Desperately need credit? What the hell does he think caused this crisis in the first place? High interest rates? A deflationary spiral? Credit was the last thingMain Street needed then or needs now. What the fuck was this man talking about? If anyone can make any sense of this comment, email me or post to the Facebook page.
But back to the main point of this post; Kudlow’s position on TARP and the $200 billion left over from it tell us all we need to know about him and the fuckers at CNBC, and the business world in general. To review, Kudlow heartily supported a $700 billion government bailout of Wall Street financial institutions that were in the shitter for no reason other than their own greed. When it is discovered that $200 billion of the TARP will not be necessary, Kudlow goes out of his way to express concern that the money will go directly to Main Street, which is in the shitter because of the greedy assholes on Wall Street.
If you watched the rest of the video above, (beginning at the 3:35 mark) Sanders pointed out that Kudlow is mortified by the idea that the government spend money for health care or the alleviation childhood poverty, but he has no qualms about forking over hefty sums of money to the giant vampire squids of Wall Street.
Should we be surprised that some douche can go on TV, lobby for the rescue of plutocrats from their own greed-driven death spirals, emphatically state that the extra money from this enterprise has no business going towards “social safety nets,” and then not get his studio burned down by an angry mob with him inside? On CNBC, probably not. The hoi polloi aren’t exactly known for following the business press—or any press for that matter. But one gets the sense that even if, say, some working class teabagger had been watching this, there would be nods of approval at Kudlow’s remarks while ignoring his outrageous double standard: socialism for the rich, capitalism for everyone else.
That’s where we’re at in this country. They don’t even try to hide it anymore. Larry Kudlow can go on television and advocate giving taxpayer money to Wall Street banks, but then say that the government has no business spending taxpayer money on programs for the taxpayers. That is his idea of “protecting the taxpayers.”
Are you looking to get the swine flu vaccine? Do you work for this company? Then fuck off.
This story has been making the rounds on television news and the blogs. It tells you a whole lot about how this country is run:
While thousands of at-risk Americans wait, some big Wall Street banks have already secured the hard-to-find H1N1 vaccine for their employees.
Building on a story that BusinessWeek broke, NBC reports that employees at the New York Stock Exchange, bankers at Goldman Sachs and Citigroup, and employees at the Federal Reserve have all received swine flu vaccine doses to administer to their employees.
In particular, NBC reports that Goldman Sachs has received 200 doses of the vaccine -- the same amount as LenoxHillHospital in New York. Wall Street banks, like many other companies, put in requests for the vaccine but seem to have had something of a leg up on securing doses.
It’s a good thing I’m not looking to get the swine flu vaccine, because the last time I checked, I don’t work for Goldman Sachs or Citigroup. It’s nice to know that these and other Wall Street firms are given priority over hospitals and doctors’ offices that have yet to receive doses. After all, their employees have to be healthy and on top of their game if they’re going to continuing robbing this country blind.
That’s secessionist Governor Rick Perry of Texas talking to a bunch of business leaders in Houston claiming that the state is basically recession-proof, which is strange considering that in August the unemployment rate in Texashit a 22-year peak. High comedy. Expect these remarks to be replayed in television ads by Perry’sopponents in the 2010 Texas gubernatorial race.
Perry joins a growing chorus of officials across the country and in Washington D.C., as well the oligarchs on Wall Street, who have been assuring us that things are looking up for our economy. Even the stoic Fed firebomber Ben Bernanke declared last week that the recession is “very likely over.” Well that’s a relief, because I had been hoping that someone important would come along and tell me that my reality-based assessment of the U.S. economy is off the mark. And here he is, telling me that everything is going to be ok.
Why is that? Because the Dow finished at an 11-month high on Friday? Big whoop. Unemployment is still hovering around 17% (not the cooked “official” 9.7% figure we keep hearing), and likely to get worse. The trade gap is narrowing, thanks to gun-shy American consumers and because of the falling U.S. dollar, which helps exporters. The problem with the atrocious dollar index figures, however, is that these numbers may not be temporary, but instead a harbinger of much worse things to come. Why? Please watch this instructional video featuring Bernanke, former Treasury Secretary Hank Paulson and his successor Tim Geinthner for the answer:
Well, after the Chinese saw this, they started buying up gold in order to hedge against the falling dollar—the world currency at the moment. They’ve even started to issue yuan bonds outside of China because they full well expect their currency to play a larger role in the global economy, especially with inflation in the U.S. likely to worsen.
Between inflation, low interests rates, and a consumer base still smarting from overspending, Americans are expectedly unsure about what to do with their money at this point. The options are not very appealing. In one of the better scenarios, do they stick it in a CD with a 17-month interest yield of a whopping 2% on a minimum $1,000 deposit, even though by the time they can get their money out it might have less real value than it did when it went it because of inflation? Or, do they take advantage of the flowing credit that’s been reestablished and buy a bunch of shit with their stagnant wages (assuming they’re actually employed) even though they’ll need to save up for their annual health insurance premium hike of 8% (assuming they actually have health insurance)?
Wall Street and its political wing, the U.S. Government, prefer that people do the latter, and prop up retail and stocks even though the last thing Americans need is another flatscreen television or a thousand shares in General Motors. Common sense says that Americans need to stop spending and start saving, but the Federal Reserve is doing its best to encourage people to part with their dollars, which, when you think about it might be a good thing. That way, when the dollar isn’t worth the paper it’s printed on, Americans can sell their flatscreen TVs and other possessions on Ebay in exchange for euros, pounds, and yuans. Maybe there is a method to the Federal Reserve’s madness after all.
