Getting Real Now

Paul Street, The Empire's New Clothes:

‘Holding Domestic Constituencies in Check'

At the same time, many in the establishment sensed (accurately) that Obama is particularly well-suited to the goal of wrapping corporate politics and the related American Empire Project in insurgent garb. Their profit- and empire-based system and "leadership" has been behaving so badly that a major image makeover is required to keep the rabble (the citizenry) in line. Once he was properly "vetted" and found to be "reasonable" - to be someone who would not fundamentally question dominant power structures and doctrines - Obama's multicultural background, race, youth, charisma, and even his early opposition to the Iraq War became useful to corporate and imperial elites. His outwardly progressive "change" persona is perfectly calibrated to divert, capture, control, and contain coming popular rebellions. He is uniquely qualified to simultaneously surf, de-fang, and "manage" the U.S. and world citizenry's hopes for radical and democratic transformation in the wake of the Bush-Cheney nightmare. As John Pilger warned last May:

"What is Obama's attraction to big business? Precisely the same as Robert Kennedy's [in 1968]. By offering a ‘new,' young and apparently progressive face of Democratic Party - with the bonus of being a member of the black elite - he can blunt and divert real opposition. That was Colin Powell's role as Bush's secretary of state. An Obama victory will bring intense pressure on the US antiwar and social justice movements to accept a Democratic administration for all its faults. If that happens, domestic resistance to rapacious America will fall silent" [8].


Obama's race is no small part of what makes him "uniquely qualified" to perform the key tasks of mass pacification for which he has been hired. As Aurora Levins Morales noted in a Z Magazine essay written for left progressives last April:

"We're far more potent as organizers and catalysts than as voters. Our ability to create a world we can thrive on does not depend on who wins this election, it depends on our ability to dismantle profit-based societies in which greed trumps ethics. This election is about finding a CEO capable of holding domestic constituencies in check as they are further disenfranchised and... [about] mak[ing] them feel that they have a stake in the military aggressiveness that the ruling class believes is necessary. Having a black man and a white woman run helps to obscure the fact that ...decline of empire is driving the political elite to the right. Both [Obama and Hillary Clinton] represent very reactionary politics...Part of the cleverness of having such candidates is the fact that they will be attacked in ways that make oppressed people feel compelled to protect them" [9].

Imperial ‘Re-branding'

The logic works at the global as well as the domestic level. A considerable segment of the U.S. foreign policy establishment thinks that Obama's race, name (technically Islamic), experience living (Muslim Indonesia, as a child) in and visiting (chiefly his father's homeland Kenya) poor nations and his nominally anti-Iraq War history will help them repackage the U.S. imperial project (replete with more than 730 military bases located in nearly every nation on Earth) in softer and more politically correct cover [10]. John Kerry, who ran for the presidency four years earlier largely on the claim that he would be a more effective manager of empire (and the Iraq War) than George W. Bush [11], was certainly thinking of these critical imperial "soft power" assets when he praised Obama as someone who could "reinvent America's image abroad" [11A]. So was Obama himself when he said the following to reporters aboard his campaign plane in the fall of 2007:

"If I am the face of American foreign policy and American power, as long as we are making prudent strategic decisions, handling emergencies, crises, and opportunities in the world in an intelligent and sober way....I think that if you can tell people, ‘We have a president in the White House who still has a grandmother living in a hut on the shores of Lake Victoria and has a sister who's half-Indonesian, married to a Chinese-Canadian,' then they're going to think that he may have a better sense of what's going on in our lives and country. And they'd be right" [12].

What Obama didn't tell reporters was that his idea of "prudent" and "intelligent" foreign policy is strongly committed to U.S. global hyper-militarism and world supremacy, including unilateral action whenever "we" deem it necessary to "protect the American people and their vital interests" [13].

Obama's distinctive biography is one of his great attractions to the mostly white U.S. foreign policy elite in a majority non-white world that has been deeply provoked and disgusted by U.S. behavior in the post-9/11 era (and truthfully before). He is a perfect symbol of deceptive imperial "re-branding." According to the power-worshipping and unconsciously imperialist New York Times columnist Nicholas Kristof three weeks ago, the election of a black president "could change global perceptions of the United States, redefining the American ‘brand' to be less about Guantanamo and more about equality" [14]. Never mind that the U.S. remains the most unequal and wealth-top-heavy country in the industrialized world by far, strongly dedicated to maintaining steep socioeconomic and disparity within and between nations and scarred by a domestic racial wealth gap of seven black cents on the white dollar.

Call it "the identity politics of foreign policy." The Empire wants new clothes and Obama is just the man to wear them.

"If there's anyone out there who still questions the power of our democracy..."

The first public words out of Obama's mouth on the evening of his election were richly consistent with his assignment of restoring legitimacy to the American System. "If there is anyone out there who still doubts that America is a place where all things are possible.....who still questions the power of our democracy," Obama intoned, "tonight is your answer" [15].

Our supposed "left" President-Elect's first statement was NOT a call for peace, justice, and equality. It wasn't a call for America to confront the inseparably linked problems (what Dr. Martin Luther King Jr. called the "triple evils that are interrelated") of economic exploitation, racism (deeply understood), and militarism-imperialism.

No, it was a Reagan-like declaration bolstering the American plutocracy's ridiculous claim that the U.S. - the industrialized world's most unequal and wealth-top-heavy society by far - is home to a great democracy and limitless opportunity for all.

And what's with the word "still" (used twice) in Obama's assertion? It's not exactly like the case for the U.S. being a great popular democracy has been made with special, self-evident strength in recent times! The last three-and-a-half decades have brought the deepening top-down infliction of a sharply regressive corporate-neoliberal policies that are widely (but irrelevantly) repudiated by the majority of U.S. citizens [16].

In this century we've witnessed the execution of a monumentally criminal petro-imperialist Iraq Invasion sold to the U.S. populace by a spectacular state-media propaganda campaign (including preposterous claims of noble democratic intent Obama has embraced) that mocked and subverted the nation's democratic ideals. Dominant U.S. media's role in the invasion of Iraq marks perhaps the all-time low point of the "free press" in the U.S. [17]. The "democracy disconnect" - the gap (chasm really) between majority public opinion (which supports things like national universal health care, significant reductions in military expenditure and imperial commitment, massive public works, reduced corporate power, etc.) and "public" policy - is a widely acknowledged problem in American political life [18]. The specter of homeland totalitarianism - please see Sheldon Wolin's recent book Democracy Incorporated: Managed Democracy and the Specter of Inverted Totalitarianism (Princeton, NJ, 2008) - has never loomed larger than in the opening decade of the 21st century.

"If there is anyone out there who still questions the power of our democracy"? Hello? How about: "Is there anybody who seriously thinks we really have a functioning democracy in the U.S.?"

8. John Pilger, "After Bobby Kennedy There Was Barack Obama," Common Dreams, May 31, 2008, read at www.commondreams.org/archive/2008/05/31/9327/.
9. Aurora Levins Morales, "Thinking Outside the Ballot Box," Z Magazine (April 2008).
10. James Traub, "Is (His) Biography (Our) Destiny?" New York Times Magazine (November 4, 2007). See also Liza Mundy, "A Series of Fortunate Events: Barack Obama Needed More Than Talent and Ambition to Rocket From Obscure State Senator to Presidential Contender in Three Years," Washington Post Magazine (August 12, 2007).
11. See Paul Street, "Bush, Kerry, and ‘Body Language' v. ‘Message': Notes on Race, Gender, Empire and Mass Infantilization," ZNet Magazine (October 12, 2004).
11A. John F. Kerry, "Truly Transformative," Newsweek (April 28, 2008): 34.
12. Quoted in Traub, "Is (His) Biography (Our) Destiny?"
13. For truly ugly details, please see the fourth chapter - titled "How ‘Antiwar?' Obama, Iraq, and the Audacity of Empire" - in my book Barack Obama and the Future of American Politics.
14. Nicholas Kristof, "Rebranding the U.S. With Obama," The New York Times, October 23, 2008, p. A27.
15. Barack Obama, "Remarks on Election Night," Chicago, IL (November 4, 2008), read at http://www.barackobama.com/2008/11/04/remarks_of_presidentelect_bara.php
16. For one among many sources, see see Jeff Faux, The Global Class War: How America's Bipartisan Elite Lost Our Future and What It Will Take to Win it Back (New York: Wiley, 2006).
17. For some important recent reflections, see John Bellamy Foster, Hannah Holleman, and Robert W. McChesney, "The Military/Industrial/Media Triangle," Monthly Review (October 2008), pp. 15-16.
18. For sources and details, see Paul Street, "Americans' Progressive Opinions vs. ‘The Shadow Cast on Society by Big Business,'" ZNet Sustainer Commentary (May 15, 2008), read at http://www.zmag.org/zspace/commentaries/3491.

(Very Belated) Ronnie Drew Appreciation

Seven Drunken Nights

The Auld Triangle: Featuring Charles Haughey! (and U2)

Monto (at the Royal Albert Hall)

Forgiveness, Redemption, America

A comment on this post by Greenwald:

We have a financial crisis, two wars and a president-elect who won on a strategy of post-partisan politics. We all know Bush was small-minded and quite possibly a criminal, and we certainly should get the facts out (behind closed doors) so this does not happen again. But a political witch hunt for bureaucrats would send Obama home after four years. The entire affair would become immensely political and discredit Obama's whole appeal to the MIDDLE MAJORITY. No self respecting Democrat wants to see America's dirty laundry aired after we have just won back a big dose of good will from our international friends. Isn't it remarkable how many people they've been able to convince that their fate depends upon letting our political leaders break the law without consequences?

Greenwald's response:

If the Government were to create the position of Brainwashing Czar -- or Citizen Control Czar -- and that person issued a report recommending that the Government try to inculcate the population into believing that it was for their own Good that political leaders were free to break the law and not be prosecuted, nobody would think it possible. Everyone would say: "oh not, not even the most potent brainwashing techniques, applied to the most mindless and subservient population, could ever convince them of that."

And yet, right here in my very own comment section, you have one person after the next coming forth to say how all of the Important Things the New Leader has to do for them means that, for their own Good, the Old Leader and everyone who worked with him must be given carte blanche to commit crimes.

Really stunning.

Jeremy Scahill

American Policy

An interesting contrast to the Lessig-Spielberg moment.

Civil Liberties

Michael Ratner

I Have A Dream

On Vietnam

Rahm Emanuel

Writing back in February about Lawrence Lessig urging Americans to cast Obama as the Prez:

So I want you to shut your eyes and imagine what it will seem like to a young man in Iraq or in Iran, who wakes up on January 21st, 2009, and sees the picture of this man as the president of the United States. A man who opposed the war at the beginning, a man who worked his way up from almost nothing, a man who came from a mother and a father of mixed cultures and mixed societies, who came from a broken home to overcome all of that to become the leader in his class, at the Harvard Law Review, and an extraordinary success as a politician. How can they see us when they see us as having chosen this man as our president?

There can be no clearer way that we could say, that we could say that the United States could say, that we have changed, than by electing this man. There is no way we could more clearly move on toward peace than this. He represents the very best of who we are, the best of character, of integrity and ideals. And someone who opposed the war from the start.

Just picture it - the faces of those young men, all over the world, from Borneo to Nome, their eyes agleam, cut to the madrassah in Northern Pakistan, to the café in Gaza, to the slums outside Mexico City, see the wonder and happiness, face - face- face - hear the soundtrack swell...Filipinos, slowly beginning to applaud...worshippers in Mecca, looking up, as one, to read the news in skywriting overhead, slowly releasing smiles....O...B...half an A... and in Sierra Leone someone lifts a scarred limb and cries Obama! There won't be a dry eye in the house!

And here the entertainment industry really delivers:



Here's the UGC version:

"The Content of His Character"

"all I have heard from the US is a strange elation and this from people who normally don’t lean toward optimism. " – steppling at Lenin’s Tomb

That strange elation. Yes. An inexplicable euphoria. Sadrugestrane was right wasn’t she? It became evident on election night. I know those were all real tears, Keith Olberman’s and Jesse Jackson’s. And mine. And my friend’s with whom I stayed up late, on the phone watching MSNBC on the web. And saying of some missed old folks how sorry we were they’d not lived to see it – as over the past years we sometimes said when feeling sad one consolation was they had not lived to see so many things. My friend voted for McKinney that afternoon – NYState was safe enough. On election night we were so moved it was strange, really really nervous and then really really elated, strangely, like the feelings were being shot into you like a drug, my friend said she felt like her emotions were attached to strings being yanked... it was so eerie.

-what's this feeling?

-what is it, I know this feeling!

-lemme think shhh! Shhh!

- baseball

- uh-hunno. No. Shhh!

-like a familiar scent that just…

-Spielberg! It’s Spielberg euphoria!

- yes! exactly! ET! Schindler's List!

And then all those flags in the park in Chicago, so scary suddenly. I thought about sadrugestrane’s comments which I had just read a little before and started telling my friend. Those flags and the ebullient youth, American rebirth, and the old men veterans of the civil rights movement saying "I never thought I'd live to see the day...." , renewal, rebirth (rebranding) and everyone in tears, and then there’s Obama.

“If he says…if he says that I’m going to freak out.”

He said it, though. Immediately. The immediate assertion that if anyone is worried about the United States’ ruling class’ power, about its lawlessness and ruthlessness, about power concentration in the US, anyone worried about civil liberties and the vestiges of democracy, about crimes against humanity, the closing possibility of progressive politics, the loss of influence of the US citizenry over their so powerful state, the global hegemon, just put that thought aside....America is a beacon....America is the world leader because of its inherent virtue…America is unique….uniquely Good….the way he worked in I Have A Dream to mark then versus now (we have judged him by the content of his character)....the way he said "opportunity" instead of "equality"....that ultra frightening creepy sea of stars and stripes, t shirts and baseball caps, and close-ups.

The whole thing was suddenly obviously completely ersatz, completely managed, a completely commodified grass roots movement like MobLogic.Tv is CBS Interactive’s pseudo indymedia. That ice rink at Rockerfeller Plaza, the tension and the release, very much a spectacle, a pageant, the rebranding of the American empire, even the beginnings of the creation of an American master race, a new kind of race, Herrenvolk 3.0, the antiracist master race, the antifascist fascism. MSNBC takes you to his father's little hometown in Kenya, roots, "we are the world", we own the world. The US has always used blackness this way, culturally imperialistically, to disguise imperialist capitalist power in popular black culture etc.. Then of course my friend and I are thinking we're so cynical, and paranoid, but those American flags, and that dreadful speech, and all this self-congratulation by the citizens of a country in the course of escalating crimes against humanity, somehow brought to cheer the belligerence and the bullshit they are actually mobilised to oppose, to buy the cause as the cure, and it all so easily distracts from the massive concentration of power and capital going on, it's all so reassuring – see? Our election special shows it’s still possible to have a clean election, it’s still possible to have crowds in the street who aren't getting teargassed, young people opposing the current regime vocally not handcuffed and arrested as terrorists etc etc.. If you just accept the patronage and leadership of the elite, you can vent in the streets all you like.

Something so incredibly creepy ersatz spectacle imageverse descended over the Historical Moment as we watched it (on the web, talking on the phone). Even though of course it is really real, people's feelings are real, the support is real but all absorbed by what is unreal, by image, by not even convincing image. It's good enough, this flimsy image, because there is no competition. (Yes yes, but Bullshit does matter! Bullshit is all that matters! It's all there is after all!) And it happens before your eyes, the substance evaporating into image. The opposition to the occupations is real but taken under the direction of the beneficiary and protagonist of those occupations; the desire for the redistribution of wealth is real but simply harnessed and transformed into support for the plutocrats, just the way real desires for real goods and real satisfactions are channelled into purchases of iPhones and sneakers. The whole movement is real, real discontent and real desires but seized, given form, organised by a massively costly, centrally planned marketing operation by the oligarchy around a main character cast by Wall Street to be the protagonist and hero of all this, not chosen by people or rising through a movement, chosen by Wall Street and given the resources to organise dispersed grievances around him into an ersatz movement given value by real movement content, enclosing real public fury and willingness to be active that lacks any left organisation to organise it, enclosing that and arranging it around this appointed leader, laying claim then to all the appearance of legitimacy that expropriated reality of political activism, clustered around him and the democratic party wall street machine, grants. And so he deftly ornaments it in these phrases of MLKJr and these images and gestures to the past, spectral spectacle of a real movement, but this is the commodified “movement”. It’s made out of real popular politics just the way commodities are made out of real labour and talents and efforts and lives; there’s a use value there but it's transformed into the property of the plutocratic oligarchy who will use it, have used it, for their own ends. Amazing enclosure and exploitation. Real popular politics are enclosed to be turned to the profit of empire.

But for several weeks before the election "Steal Back Your Vote" was among the top Google searches. One is tempted to believe the plutocrats have done us all a favour without knowing it, sort of the way Marx saw capitalism creating conditions for socialism. "Steal back your politics."

The Audacity of Despair

Although polls going into the final weeks of October showed Sen. Obama in the lead, it remained unclear whether the failing economy, dilapidated housing market, crumbling national infrastructure, health care crisis, energy crisis, and five-year-long disastrous war in Iraq had made the nation crappy enough to rise above 300 years of racial prejudice and make lasting change.

"Today the American people have made their voices heard, and they have said, 'Things are finally as terrible as we're willing to tolerate'," said Obama, addressing a crowd of unemployed, uninsured, and debt-ridden supporters. "To elect a black man, in this country, and at this time—these last eight years must have really broken you."

Added Obama, "It's a great day for our nation."

Mr. Secretary, this analysis is not rocket science. Just twenty days before Goldman announced that it would “accept” Treasury’s investment, Warren Buffett invested $5 billion into Goldman Sachs and acquired the very same type of security – preferred stock – with the very same form of “upside” – warrants to purchase common stock. For some reason, however, per dollar invested, Mr. Buffett received at least seven and perhaps up to fourteen times more warrants than Treasury did and his warrants have more favorable terms. In addition, Mr. Buffett’s preferred stock has a higher dividend rate and can only be bought away from him at a premium, while Treasury’s investment of taxpayers’ money pays a lower dividend and can be repurchased at par.

Now I know that you have a lot on your plate, but I am sure that someone at Treasury saw the terms of Buffett’s investment. In fact, my suspicion is that you studied it pretty closely and knew exactly what you were doing. The 50-50 deal – 50% invested and 50% as a gift – is quite consistent with the Republican version of the “spread-the-wealth-around” philosophy that seems so much in vogue.

If the result of our analysis is applied to the deals that you made at the other eight institutions – which on average most would view as being less well positioned than Goldman and therefore requiring an even greater rate of return – you paid $125 billion for securities for which a disinterested party would have paid $62.5 billion. This means that you gifted the other $62.5 billion to the shareholders of these nine institutions.

Link [PDF]

Discuss

Coke - Its Mine HD
par sabotage

It is starting to appear as if one of Treasury’s key rationales for the recapitalization program — namely, that it will cause banks to start lending again — is a fig leaf, Treasury’s version of the weapons of mass destruction.

Hot Topix

James Buchan reviews some books.

Bulls, he writes, are what someone else might call zealously open to the messianic other:

In rising financial markets, the world is forever new. The bull or optimist has no eyes for past or present, but only for the future, where streams of revenue play in his imagination. In falling markets, there is nothing that has not happened before. The bear or pessimist sees only the past, which imprisons the wretched financial soul in eternal circles of boom and bust and boom again.

Bulls don't read. Bears read financial history. As markets fall to bits, the bears dust off the Dutch tulip mania of 1637, the Banque Royale of 1719-20, the railway speculation of the 1840s, the great crash of 1929. Leering phantoms emerge from the historical dark, like the parade of ghostly Scottish kings in Macbeth...

(Funniest paragraph:

Ferguson's reputation is so high that if he were a stock one would short him. The very title of his book, The Ascent of Money, is a screaming sell signal, like the shoe-shine boys trading stock tips at the door to Grand Central Station in New York in 1929. In fairness, Ferguson recognises that and his pages are hot with proof-stage tyre-marks, as he goes into violent reverse to escape from under collapsing arguments. None the less, his book is very readable indeed and the television series for which it is a sort of trailer, will, I am sure, be even better.)

In This Issue

Naked Short: Bare Life As Fidelity To The Truth Of The Financial Event

Prodigal Sums or The Revenant Revenu - Openness to the Gift of Good Debt

and the cover story

Immaterial Wages

As wages and assets of the working class rapidly dematerialise, a Left trapped in hopeless nostalgia for crudely tangible indulgences laments the transcendance as a catastrophe, obstinately resisting incorporation into the explosion of post-human imaginary prosperity already achieving the utopian transformation our world and unraveling an infinite realm of immaterial wealth and pleasure easily accessible via iPhones

Atlas Shrugs

Former Federal Reserve Chairman Alan Greenspan said a ``once-in-a-century credit tsunami'' has engulfed financial markets and conceded that his free-market ideology shunning regulation was flawed.

``Yes, I found a flaw,'' Greenspan said in response to a grilling from the House Committee on Oversight and Government Reform. ``That is precisely the reason I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well.''

The GOP won't go without a struggle

Police prepare for unrest

By Alexander Bolton

The Hill, 10/21/08 07:58 PM [ET]

Police departments in cities across the country are beefing up their ranks for Election Day, preparing for possible civil unrest and riots after the historic presidential contest.

Public safety officials said in interviews with The Hill that the election, which will end with either the nation’s first black president or its first female vice president, demanded a stronger police presence.

Some worry that if Barack Obama loses and there is suspicion of foul play in the election, violence could ensue in cities with large black populations. Others based the need for enhanced patrols on past riots in urban areas (following professional sports events) and also on Internet rumors.

...

Deutsche Bank AG Chief Executive Officer Josef Ackermann was criticized by German politicians after reportedly saying he would be ``ashamed'' to accept state aid. (...) The German government is ``very critical'' of the Deutsche Bank CEO's remarks, which were ``extremely alarming,'' Thomas Steg, a spokesman for Chancellor Angela Merkel, told reporters in Berlin today. Banks that use state aid are ``courageous'' and ``responsible,'' Steg added.

(via)

The Justice Department's report on the firing of the US attorneys.

Hilarious:

Matt Taibbi: You don't think the unregulated CDS market was a major factor in the current crisis? Were you watching when AIG almost went under? Were you watching the Lehman collapse?

Byron York: I think that Fannie Mae and Freddie Mac were also major factors. And I believe that many of the problems in the mortgage area can be attributed to the confluence of Democratic and Republican priorities: the Democrats' desire to give mortgages to people, particularly minorities, who could not afford them, and the Republicans' desire to achieve an "ownership society," in part by giving mortgages to people who could not afford them. Again, I believe that if you are suggesting that the financial crisis is a Republican creation, or even more specifically a McCain creation, I think you're on pretty shaky ground.

M.T.: Oh, come on. Tell me you're not ashamed to put this gigantic international financial Krakatoa at the feet of a bunch of poor black people who missed their mortgage payments. The CDS market, this market for credit default swaps that was created in 2000 by Phil Gramm's Commodities Future Modernization Act, this is now a $62 trillion market, up from $900 billion in 2000. That's like five times the size of the holdings in the NYSE. And it's all speculation by Wall Street traders. It's a classic bubble/Ponzi scheme. The effort of people like you to pin this whole thing on minorities, when in fact this whole thing has been caused by greedy traders dealing in unregulated markets, is despicable.

B.Y.: I was struck by the recent Senate testimony of James Lockhart, who is head of the Federal Housing Finance Agency, about the sheer recklessness of Fannie in recent years. Despite "repeated warnings about credit risk," Lockhart testified, Fannie became more reckless in 2006 and 2007 than they had been in the scandal-ridden tenure of Franklin Raines (who departed in 2004). In 2005, Lockhart said, 14 percent of Fannie's new business was in risky loans. In the first half of 2007, it was 33 percent. So something terribly wrong was going on there, and it became a significant part of the present problem.

M.T.: What a surprise that you mention Franklin Raines. Do you even know how a CDS works? Can you explain your conception of how these derivatives work? Because I get the feeling you don't understand. Or do you actually think that it was a few tiny homeowner defaults that sank gigantic companies like AIG and Lehman and Bear Stearns? Explain to me how these default swaps work, I'm interested to hear.

Because what we're talking about here is the difference between one homeowner defaulting and forty, four hundred, four thousand traders betting back and forth on the viability of his loan. Which do you think has a bigger effect on the economy?

B.Y.: Are you suggesting that critics of Fannie and Freddie are talking about the default of a single homeowner?

M.T.: No. That is what you call a figure of speech. I'm saying that you're talking about individual homeowners defaulting. But these massive companies aren't going under because of individual homeowner defaults. They're going under because of the myriad derivatives trades that go on in connection with each piece of debt, whether it be a homeowner loan or a corporate bond. I'm still waiting to hear what your idea is of how these trades work. I'm guessing you've never even heard of them.

I mean really. You honestly think a company like AIG tanks because a bunch of minorities couldn't pay off their mortgages?

B.Y.: When you refer to "Phil Gramm's Commodities Future Modernization Act," are you referring to S.3283, co-sponsored by Gramm, along with Senators Tom Harkin and Tim Johnson?

M.T.: In point of fact I'm talking about the 262-page amendment Gramm tacked on to that bill that deregulated the trade of credit default swaps.

Tick tick tick. Hilarious sitting here while you frantically search the Internet to learn about the cause of the financial crisis — in the middle of a live chat interview.

B.Y.: Look, you can keep trying to make this a specifically partisan and specifically Gramm-McCain thing, but it simply isn't. We've gone on for fifteen minutes longer than scheduled, and that's enough. Thanks.

M.T.: Thanks. Note, folks, that the esteemed representative of the New Republic has no idea what the hell a credit default swap is. But he sure knows what a minority homeowner looks like.

B.Y.: It's National Review.

Only In The Cocaculture...

RICHMOND, Va. (AP) - Republican vice presidential candidate Sarah Palin mistook some of her own fans for hecklers Monday at a rally that drew thousands.

A massive crowd of at least 20,000 spread across the parking lot of Richmond International Raceway, and scores of people on the outer periphery more than 100 yards from the stage could not hear.

"Louder! Louder!" they began chanting, and the cry spread across the crowd to Palin's left. Some pointed skyward, urging that the volume be increased.

Palin stopped her remarks briefly and looked toward the commotion.

"I hope those protesters have the courage and honor to give veterans thanks for their right to protest," she said.

Aristos and Gentry

Obama vs. McCain among the propertied.

1000 Billion Words

Persevering through these hard times: Mack and Pandit emerge refreshed by involuntary injections.

Much To Overcome

It was from James Bryant Conant-president of Harvard for twenty years, WWI poison-gas specialist, WWII executive on the atomic-bomb project, high commissioner of the American zone in Germany after WWII, and truly one of the most influential figures of the twentieth century-that I first got wind of the real purposes of American schooling. Without Conant, we would probably not have the same style and degree of standardized testing that we enjoy today, nor would we be blessed with gargantuan high schools that warehouse 2,000 to 4,000 students at a time, like the famous Columbine High in Littleton, Colorado. Shortly after I retired from teaching I picked up Conant's 1959 book-length essay, 'The Child the Parent and the State', and was more than a little intrigued to see him mention in passing that the modern schools we attend were the result of a "revolution" engineered between 1905 and 1930. A revolution? He declines to elaborate, but he does direct the curious and the uninformed to Alexander Inglis's 1918 book, Principles of Secondary Education, in which "one saw this revolution through the eyes of a revolutionary."

Inglis, for whom a lecture in education at Harvard is named, makes it perfectly clear that compulsory schooling on this continent was intended to be just what it had been for Prussia in the 1820s: a fifth column into the burgeoning democratic movement that threatened to give the peasants and the proletarians a voice at the bargaining table. Modern, industrialized, compulsory schooling was to make a sort of surgical incision into the prospective unity of these underclasses. Divide children by subject, by age-grading, by constant rankings on tests, and by many other more subtle means, and it was unlikely that the ignorant mass of mankind, separated in childhood, would ever re-integrate into a dangerous whole.

Inglis breaks down the purpose - the actual purpose - of modern schooling into six basic functions, any one of which is enough to curl the hair of those innocent enough to believe the three traditional goals listed earlier:

1) The adjustive or adaptive function. Schools are to establish fixed habits of reaction to authority. This, of course, precludes critical judgment completely. It also pretty much destroys the idea that useful or interesting material should be taught, because you can't test for reflexive obedience until you know whether you can make kids learn, and do, foolish and boring things.

2) The integrating function. This might well be called "the conformity function," because its intention is to make children as alike as possible. People who conform are predictable, and this is of great use to those who wish to harness and manipulate a large labor force.

3) The diagnostic and directive function. School is meant to determine each student's proper social role. This is done by logging evidence mathematically and anecdotally on cumulative records. As in "your permanent record." Yes, you do have one.

4) The differentiating function. Once their social role has been "diagnosed," children are to be sorted by role and trained only so far as their destination in the social machine merits - and not one step further. So much for making kids their personal best.

5) The selective function. This refers not to human choice at all but to Darwin's theory of natural selection as applied to what he called "the favored races." In short, the idea is to help things along by consciously attempting to improve the breeding stock. Schools are meant to tag the unfit - with poor grades, remedial placement, and other punishments - clearly enough that their peers will accept them as inferior and effectively bar them from the reproductive sweepstakes. That's what all those little humiliations from first grade onward were intended to do: wash the dirt down the drain.

6) The propaedeutic function. The societal system implied by these rules will require an elite group of caretakers. To that end, a small fraction of the kids will quietly be taught how to manage this continuing project, how to watch over and control a population deliberately dumbed down and declawed in order that government might proceed unchallenged and corporations might never want for obedient labor.

That, unfortunately, is the purpose of mandatory public education in this country. And lest you take Inglis for an isolated crank with a rather too cynical take on the educational enterprise, you should know that he was hardly alone in championing these ideas. Conant himself, building on the ideas of Horace Mann and others, campaigned tirelessly for an American school system designed along the same lines. Men like George Peabody, who funded the cause of mandatory schooling throughout the South, surely understood that the Prussian system was useful in creating not only a harmless electorate and a servile labor force but also a virtual herd of mindless consumers. In time a great number of industrial titans came to recognize the enormous profits to be had by cultivating and tending just such a herd via public education, among them Andrew Carnegie and John D. Rockefeller.

There you have it. Now you know.

End Of Capitalism/World Thinkability Spreads

Paul Krugman being interviewed on Bloomberg over the weekend; at around 7:30 on the stream he's asked about GM and is this the kind of situation where the government can't let a company like that go under? He says well, you know there is this big worry about when the "too big to fail" doctrine starts to spread to everything, then we're talking about nationalising the, seizing the, seizing the means of production.

Back in May, Donald MacKenzie wrote in the LRB:

I asked one investment banker what might cause half of North America’s top corporations to default. No ordinary economic recession or natural disaster short of an asteroid strike could do it: no hurricane, for example, and not even ‘the big one’, a catastrophic earthquake devastating California. All he could think of was ‘a revolutionary Marxist government in Washington’. That’s not a likely scenario, yet the cost of insuring against it had shot up ten-fold.

Just Run The Tape

Two weeks after persuading Congress to let it spend $700 billion to buy distressed securities tied to mortgages, the Bush administration has put that idea aside in favor of a new approach that would have the government inject capital directly into the nation’s banks — in effect, partially nationalizing the industry.

Having to report this - they can't not report it, of course, the headline of the year - the NYTimes doesn't bother to try to make sense of it, just re-runs the "incompetence and ideology" tale, or rather simply gestures to it exhaustedly, for the umpteenth time.

Not an Arab. A decent family man.

Perception

The cost of the Wall Street (1987) negative was around $15 million; it grossed $45million in the initial US box office release.







Gordon Gekko is superrich but not really part of the establishment. A figure of intelligent cynicism, abundance and personal rather than institutional power. ("Makes twenty times what Dave Winfield makes in a year.") Will and energy. Culture too – he possesses a refined aesthetic sense. The screenwriter claimed to have based Gekko’s style of pontificating on director Oliver Stone.

The impression of Gekko’s rogue status, playing a system ‘subversively’ from within, expert in it but adversarial with the regard to its rules (the spirit of competition in a pure form), is not only conveyed by his explicit lawlessness, which we might be free to assume the norm at his wealth level, but underscored in various oblique ways, so that the audience is prevented from identifying him as an embodiment of the ruling class, or even of the financial industry, or, despite the film’s title, of “Wall Street”. He is a disruptive element within it, necessarily created by it but not a microcosm. Most effective in creating this apartness, at least for a New York audience, we never see Gekko in his own real home in NYC: placing that home in any swank building in Manhattan would fix him too firmly and specifically in a network, a social setting, a structure of unassailable power and legitimacy. He is seen on the move, in limos, in restaurants, and in his rented office in a tower, like a Renaissance condottiere, and finally confronting in single combat his insubordinate protégé on a misty green field in Central Park. When we see him "domestically", it is only at his beach house in Montauk, a costly, luxurious but pale, impermanent haunt, not a residence, poised on an expanse of empty sand at the edge of the foaming, heaving, wintry Atlantic, wearing a bathrobe. He's a pirate king. Or Monte Cristo. Playing Shogun, wise master to his favoured apprentice "poor, smart and hungry - and no feelings." Of all Hollywood’s finance/corporate themed films, Wall Street is intended as the most didactic, the most unforgiving indictment, but it is the most in love with its heavy, tempter, bearer of evil forces. The figure of ruthless finance capital, unproductive rampaging speculative capital, doubles as the phantasy figure of upward mobility in meritocratic America, land of opportunity, and even, whisperingly, as a image of revolutionary potential. His fall enacts thus both a consoling phantasy punishment of crime (the comeuppance of insatiable parasitic destructive speculative capital) and, less overtly but in some ways more intensely, a registration of victorious Thermidor, of successful Reaction, the end of the revolutionary era and of revolutionary possibilities, the acknowledgement of the Reaganite immiseration of the working class and middle class, rendering this figure of the self made mogul, to which they aspire, false and thus requiring disposal and repudiation. Bud will not repeat Gekko’s (streetwise unconventional) trajectory, indeed Bud’s failure to do so will take Gekko, the figure of the American dream of seized opportunity, down with him as the film itself undermines the promise he represents (ethically, practically, politically), even while it poses, itself, with its auteur, as that promise confirmed and vindicated. This composite that is Gekko is thus additionally used as the mouthpiece for the director and screenwriter’s direct address to the audience, from ‘the dark side’ of self congratulatory ‘success’, which doubles as the Master’s counsel to his apprentice, but allows the filmmakers not only to conceal their complex attraction to the cruel but charismatic pirate king they have fashioned as their dark double, but to disavow and obscure the applicability of his lectures to their own industry.

Telling the story of Bud’s failed effort at embourgeoisement involves telling, obliquely but significantly, the story of an enterprise, Blue Star airlines. The film raises in an indirect quasi-allegorical mode the possibility of socialism – the Fox family, the working class, becoming the owner/manager of the airline, through working class solidarity - but contains that possibility within ‘there is no alternative’ verisimilitude which requires its depiction within the generic tale of personal advancement and cross class cooperation. The corporate raider is offered as a possible resource and instrument of social change, and his capital is sought within the plausible story as the practical means of obtaining control over the enterprise, but this sequence also conveys, in ‘the political unconscious’, an attempt by the agent of the working class to instrumentalise all the seductive qualities his figure embodies: initiative, determination, courage, the bold, rule-changing, ruthless revolutionary energy needed to accomplish this transformation, to “turn the airline around” and place it in the hands of “the heir of the working class”. How this turning around is explicitly envisioned and depicted (just expanding the enterprise and making it more profitable within the given framework) does not limit the possibilities of “turning around” and transformation the story implicitly raises (only to reject), precisely because of the presence of Gekko as a force of unbridled self will, capable of remaking the world, which introduces alongside the story of Blue Star’s trade unions and their pursuit of their interests the explosive element of human inventiveness and self interest, the possibility of something unexpected being brought about by people making their own history. Gekko’s indifference to customary constraints contrasts with the union representative’s mode of negotiation, but putting them in the same room, in Bud’s apartment, poses at least the question to the audience of what would happen were some kind of combination of qualities created, were the union representatives to possess the ferocious determination to prevail, to use powers falling to him by circumstance to transform reality to his advantage, that Gekko possesses and embodies. “Greed is right”: in his odd mix of social Darwinist and populist rhetoric is conjured the spectre of the collective greed of the working class which expresses itself – twisted and stifled by individualism and bourgeois ideology - in Bud’s ambition, greed for pleasure, leisure, justice and liberty, greed for utopia, transforming society, bringing about communism. The vision is conjured, already deformed and hamstrung by the dominant ideology, to be further mangled and repudiated by narrative. Yet its images, the vision, (of wealth, leisure, freedom, abundance, power, of the life for which Bud and not only Bud but the audience is greedy) however contorted, remain the most seductive. The film makes a tremendous effort against its own impulses to moralise about the lifestyle Bud desires and thus to trivialise the benefits it offers (liberty, leisure, plenty, pleasure) and especially to trivialise and rebuke his desire to escape a life of wage slavery in the cubicle by any means necessary. Hammacher Schlemmer gadgets producing meals that look a lot better than they taste, garish exhibitionist over-decoration of his condo, a lovelife divided been a call girl and a shallow woman he cannot fully possess, neglect of his downscale friends and cynical use of his upscale ones, disrespect for his father. But all this is displayed as advertisement as well, the loving Tom Wolfe exactitude of stereotype and props easily drowning out the overt disapproval and fun-poking. Selling a lifestyle and preaching against it at the same time, the commodified critique of “capitalism as its finest” – the “illusion” of value “become real” (in the aesthetic object, an abstract canvas) - indirectly absolves itself as it advertises itself, encloses critique of itself and extracts surplus value.

The (false) naïve faith and hope the film, with Bud and the union representatives, places in the heroic individualist capitalist energy (recognised and distrusted as despotic, amoral and fascistic by Carl Fox) is quickly betrayed – Gekko’s ‘revolutionary’ energy is revealed as necessarily destructive and selfish. With this fusion of lawless, inventive self-determination to heartless individualism, the film performs its liberal duties of repudiation of ‘extremism’ and revolution in the guise of mature dissent. Bud “saves” Blue Star in the most conservative, non-transformative fashion: he saves it as a capitalist enterprise, saves the workers’ ‘jobs’, by transferring his loyalty from Gekko the pirate who does not hesitate to destroy capitalist enterprises to realise his private/personal utopia, to the white knight, in this case literally a knighted Englishman, whose practise of corporate raiding is more ‘honourable’, cautious, stability-preserving and paternalist. (He transfers his allegiance from the capitalist to capitalism.) The alternatives between which the protagonist must choose are familiar contradictions: Gekko’s form of destruction of capitalist enterprises (competition) and Wildman’s preservation of them (class war). The narrative offers preservation of capitalist enterprises as clearly preferable to their obliteration but only by, ever so faintly awkwardly, latching the obliteration of production itself to the obliteration of capitalist ownership and exploitation. Another type of transformation is hinted at, though overwhelmed by the only two alternatives (‘restructuring’ with cheaper labour or asset stripping). The alternative to Gekko’s creative destruction, which fuses a vision of finance capital with an allegorical suggestion of the revolutionary abolition of capitalism with the effect of discrediting the latter while seeming to chide the former, is a kind of fantasy feudalism-in-capitalism and a recommendation of petty bourgeois reformism which holds out the promise that the working class can manoeuvre for its own survival between capitalist competitors; the spirit and structural imperatives of competition it turns out are not only the danger – when ‘taken to extremes’ –in capitalism but the solution, the stabilising force which makes capitalism finally the best of all possible arrangements and allows Bud to conclude ‘there is justice in the world’. But this declaration is ironic – that justice Bud realises through the mechanism of competition is revealed as the rigged justice of a system which blocks his upward mobility. - “Did somebody die?” - “Yeah”. The petty bourgeois myth of the ladder died. The working class whose standard of living and political power rises generationally died. The pirate energy whose potential is revolutionary if ever it would be fused with the working class died. The possibility of Utopia died. The audience is set up to be relieved that it is the phantasy of piratical upward mobility that has died, because led to fear it is Carl Fox who has died. But Carl Fox survives, is vindicated, the working class soldiering on, with dignity, the bearer of timeless values. The moral approval of the ‘culture’ and character of wage workers is offered by the dissident capitalist as consolation and compensation for the permanent inescapability of the condition of unfreedom and drudgery, the registration of the abolition of all utopian possibilities, the chastisement of the persistent ambition as inescapably criminal, depraved and doomed to fail. Like Nietzsche, but with different commitments, Wall Street forces a false identification of the desire for revolution/liberation with fascistic ruthless individualist supremacism and confuses and then replaces the championing of that communist impulse, humanity’s unquenchable desire for liberation, leisure, pleasure and plenty, (rooting for Bud), with hypocritical self congratulatory bourgeois admiration for the moral superiority of those whose desire it daily thwarts and obstructs (for their own good, to spare them the temptations and corruption the bourgeois himself must endure as best he can).

Glengarry Glen Ross, (1989) based on Mamet's 1984 stage play, is set in an environment of real estate sales. The film's negative cost $12.5 million. Domestic box office was about $10 million.



Mamet’s vision is routinely deemed more sophisticated than the pop culture product of Stone and the like simply because it is cruder, misanthropic, unpleasant to consume. Sermons mustn’t be uplifting, consoling and gratifying when the congregation is so depraved.

Other People's Money (1991) was also adapted from a stage play. By 1991 the theme is technological obsolescence and postmodernisation. (The company is saved by ‘populist’ technological/social advances – the metal wire being replaced by fibre optics is newly needed for automobile airbags.)




Trading Places (1983), a phantasy of the efficient market, when the free market by its invisible hand would reveal true worth so long as access to competition in the free market was not blocked by obsolete extra-market structures of hierarchy; the market envisioned as the lever of meritocratic upward mobility and guarantor of equality and ultimate justice:

Missed the Memo

Even after the ruling class itself has rejected the Paulson scheme as just too ridiculous and too flagrant and risky a predatory intraclass competitive scam, the loyal servant of neolib extremism is still selling it (Orwellian feints removed for the sake of clarity):

The real dilemma is not ‘state intervention or not?’ but ‘what kind of state intervention?’ And this is true politics: the struggle to define the conditions that govern our lives. The debate about the bailout deals with decisions about the fundamental features of our social and economic life, even mobilising the ghost of class struggle. As with many truly political issues, this one is non-partisan. There is no ‘objective’ expert position that should simply be applied: one has to take a political decision...

[T]here is no way to separate the welfare of Main Street from that of Wall Street....What is good for Wall Street isn’t necessarily good for Main Street, but Main Street can’t thrive if Wall Street isn’t doing well ....

The...argument against redistribution (through progressive taxation etc) is that instead of making the poor richer, it makes the rich poorer....
Although we all want the poor to get better, it is counter-productive to help them directly, since they are not the dynamic and productive element: the only intervention needed is to help the rich get richer, and then the profits will automatically spread down to the poor. If you want people to have money to build, don’t give it to them directly, help those who are lending it to them. This is the only way to create genuine prosperity – otherwise, the state is merely distributing money to the needy at the expense of those who create wealth.

It is all too easy to dismiss this line of reasoning as a hypocritical defence of the rich. The problem is that as long as we... [have] capitalism, there is a truth in it.... That is why the Democrats who supported the bailout were not being inconsistent with their leftist leanings. They would fairly be called inconsistent only if we accept the premise of Republican populists that...state interventions are an upper-class strategy to exploit hard-working ordinary people.

Hm

The two NSA whistleblowers, Adrienne Kinne and David Murfee Faulk, were interviewed by ABC News’ Brian Ross. Kinne said that “US military officers, American journalists and American aid workers were routinely intercepted and ‘collected on’ as they called their offices or homes in the United States.” He also said his co-workers “were ordered to transcribe these calls.”

Scary

Greenwald:

Here is what the AP report of the McCain/Palin event today in Ohio describes — now a regular, daily feature of their events:

“We’ve all heard what he’s said. But it’s less clear what he’s done, or what he will do,” McCain told supporters in the battleground state of Pennsylvania.

McCain’s remarks about Obama were interrupted with shouts of “socialist,” “terrorist” and “liar.”

Just look at the videotapes of the angry, hateful hordes attending these rallies — screaming that Obama is a socialist; that he’s both a Muslim and a terrorist as proven by his “bloodline” and his name; that his supporters are “commie faggots”; that he’s guilty of treason; underscored by increasing racial invective and even punctuated in one case by a call from an audience member for someone to be killed. These aren’t just isolated individuals; these sentiments are common at these rallies and becoming increasingly virulent and enraged — at the rallies and otherwise:

A billboard in West Plains, Mo., showing a caricature of Democratic presidential candidate Barack Obama wearing a turban has caused quite a stir in town.

The sign, located south of West Plains on U.S. 63 across from the Dairy Queen, says: “Barack ‘Hussein’ Obama equals more abortions, same sex marriages, taxes, gun regulations.”

And worst of all, all of this rage and this innuendo is taking place in the most volatile climate of all — one of severe economic distress and anxiety — and these mobs are increasingly becoming convinced, because the Right and the McCain/Palin campaign is leading them to believe it, that this economic crisis is the fault of the black candidate — Obama — for making banks give mortgages to racial minorities.
.....

From an Agence France Presse wire story today:

WAUKESHA, Wisconsin (AFP) - Shouts of “terrorist” and “treason” aimed at Barack Obama have echoed around Republican rallies, whipping up into alarming, hate-filled frenzies against the Democratic White House hopeful.

Republican presidential nominee John McCain has taken to asking, “Who is the real Barack Obama?” at rallies this week, leading one supporter in Pennsylvania, a blue-collar battleground state to shout back, “he is a bomb.”

Chants of “Nobama, Nobama” mingled with cries of “terrorist,” as one banner in the crowd declared: “Go ahead, let the dogs out.”

In the video, the interviewees don't appear to believe what they are saying so much as to feel the need to repeat it. Terrorist is understood to be very flexible. "Well maybe's he's not really a terrorist but...yeah he's a terrorist. I think so!"

How broad, how flexible?

In the statement of the plunge protection team, TARP does not appear under the heading Liquidity, the purported reason for its design and passage, the plumbing problem to which it was sold as an (urgent!) solution. Instead it gets its own heading:

Strengthening Financial Institutions

Ah.

Strengthening Financial Institutions

The Treasury Department will move rapidly to implement the new authorities in EESA to help strengthen financial institutions that are struggling with troubled assets and/or need to raise capital. It will be done in a transparent and methodical fashion. In the coming days, Treasury will work with the Federal Reserve and other financial regulators to develop strategies that deploy these tools to maximize their effectiveness in strengthening the financial system while protecting the taxpayers' interests.

The new legislation adds broad, flexible authorities to allow Treasury to buy troubled assets and provide guarantees, and address capital raising. The new legislation also enables Treasury to directly strengthen the balance sheet of individual institutions. These authorities allow Treasury to act to remove some of the uncertainty regarding financial strength, and provide financial institutions with greater operating flexibility and enhance their ability to raise additional capital in the private marketplace.

So they got this legislation - hurry up before the frozen feces asteroid hits us!!!!!!!! - which prevented Congress from recapitalising the banking system or addressing the crisis in any constructive fashion (the Fed is going around the banking system entirely to keep favoured industry exploiting on schedule through the drought that allows the tarp to come into being: "In some ways what the legislation does is help facilitate consolidation" in the financial market), now they sit down and figure out what they can do with it, how to get around any obstacles in it while waiting for some banks to fail for GSax and Morgan Stanley to acquire for farthings found under their sofa cushions, some further discovery in 'toxic' asset related lawsuits, some political developments, some European taxpayer bailouts, some public forgetting....

Back in February 2007

"What you have at the SEC is people rotating from jobs where you make $180,000 a year into jobs where you make over a million," Aguirre tells the Guardian in an interview, on what he sees as a mutually back-scratching relationship between the regulator and Wall Street. "It's very friendly - it's a club. I'm here, I'm inside, now I'm outside, now I'm inside again.

"When the SEC starts playing favourites and they decide not to go after Wall Street elite and focus on small fry, then they're not focusing on the players that really impact the capital markets. It's not the penny stock dealers that could trigger a credit crisis in this country."

Aguirre's testimony. And here. (The "state attorney general" referred to by Aguirre is Spitzer and this.)

Iced

Iceland In Trouble. (Oh, they were commie unAmerican antiAmericans anyway so who cares.)

A Recap, PT. 1

The structured investment vehicle. Rated.

Some rules waived.

Then.

One year ago.

(The whole thing was illegal, btw)

And pointless.

A shell game.

And.

Then because.

(Financial institution shakedown impending.)

Then this thing.

Ibracadabra

Palinism Is Contagious

Senator Boxer "replies":

Thank you for contacting me regarding the financial rescue legislation (H.R.1424). I appreciate hearing from you on this critical issue.

The fundamentals of our economy have been shaken, and Americans are deeply concerned. When Secretary Paulson and Chairman Bernanke placed an urgent phone call a few weeks ago to Congress to say we needed emergency action to prevent a major financial meltdown, I expected they would come forward with a plan that was targeted and reasonable, with appropriate oversight and taxpayer protections.

Unfortunately, what they brought us was a $700 billion blank check, which they asked us to sign with no questions asked. This plan contained no oversight, no taxpayer equity, and no control over CEO pay. I strongly opposed this proposal - and thanks to your phone calls, e-mails, and letters, Congress stopped it in its tracks.

The Senate made major improvements designed to strengthen our economy and protect our taxpayers. Instead of a blank check, the Senate plan included significant Congressional oversight, equity for taxpayers, curbs on executive compensation, an increase in FDIC insurance protection for bank depositors, middle-class tax relief, and job-creating tax incentives for renewable energy. The bill passed the Senate by an overwhelmingly bipartisan vote of 74-25 and the House by a vote of 263-171.

These were very important changes. But let me be honest: There were still aspects of this package that I didn't like. I preferred the government acquiring more equity instead of toxic assets. I wanted the package to be put forward in smaller installments and to include more checks and balances to make sure it would work.

For me, the deciding factor in my Yes vote was information I received from the State of California. I was told by the Treasurer's office that without access to credit, which is the goal of this legislation, California wouldn't be able to sell voter-approved highway, school, and water bonds that are desperately needed for our economy and the creation of good-paying new jobs. In addition, I was told by the Governor's office, that without action, our state might be forced to withhold funds for law enforcement, schools, and other needed services. This would bring our state to its knees and many middle-class families would be in deep trouble. Small businesses are beginning to tell me they cannot get lines of credit to meet payroll, as well.

Rest assured, I will continue to speak out forcefully about the failures that led us to this place and keep working with my colleagues to strengthen confidence in our markets, protect the American taxpayers, and enact regulatory reform to ensure that we don't end up in this mess again.

Again, thank you for writing to me about this very important matter. Even though you may feel frustrated with the outcome of the legislation that passed, your voice absolutely resulted in the enactment of a better bill. Feel free to contact me again about any issue of importance to you.

Barbara Boxer
United States Senator

Another Effect

Beyond short attention span, the impression that the real world is divided like television into different channels and episodes, so that synthesis of information to form an understanding of the real world is hampered. (Indeed synthesising elements from the different discrete stories the media packages is derided as paranoid. You have to be psychotic to notice that currently unfolding events required the removal in advance of Spitzer from the New York State Governor's mansion just as the Enron caper end game required the removal of Davis from California's.) When asked on Democracy Now about the the case against Paul Kagame, and the assassination of the Presidents of Rwanda and Burundi which ignited the genocide, a US courtier intellectual responded with an almost comically overt insistence on this fragmentation; I don't think that's part of the same story. We can be sure not only that events in DR Congo, Iraq, California, Albany and Bolivia have nothing to do with those on Wall Street and in the City of London, but that separately reported events on Wall Street and in the City of London have nothing to do with one another.

So the $9 billion that Governor Grey Davis was in the process of recovering for California from Enron: the extraordinary recall vote and the conspiracy to place the high name recognition Schwarzenegger in his place to forgive Enron's fraud and plunder, is not figuring as part of the story of California's current problems, even though the figures are so close.

An Effect of Television

The impression that we see them and they don’t see us. So the legislators can say they were deceived by the Bush administration about Iraq, even though the public informed them, loudly and unequivocally. The impression they are sealed in a glass bubble, a virtual world different from ours. The perpetual irony of television, watching over the shoulder of the heroine as she enters the dark alley where danger awaits, deaf to our screams, somehow has carried over onto the public’s relation to politics, faintly, irrationally, so that now Congress can claim they did not understand the Bush bailout, although it was explained in all the daily papers and on the internet and by their constituents when they called and emailed; they had to deliberately avoid having any hearings, to avoid inviting economists, to avoid letting even members of the financial industry give opinions on the Congressional record, inside the reality tv scenario where it cannot but become part of the story, part of what they can be held accountable for knowing. They exist in the isolated pseudoworld of a television show which penetrates our living rooms while not being penetrated in return – a television show unaware of us, except to display occasionally a self-consciousness of being watched from another plane of existence.

It's Hard Work

NYTIMES:

Even after working feverishly over the last two weeks, the Treasury will not buy its first distressed asset from a bank for roughly six weeks, and almost certainly not until after the Nov. 4 elections.

Treasury officials do not plan to manage the mortgage assets on their own. Instead, they will outsource nearly all of the work to professionals, who will oversee huge portfolios of bonds and other securities for a management fee.


...The government will hire only a bare-bones internal staff of about two dozen people with expertise in asset management, accounting and legal issues, according to administration officials, and will outsource the bulk of the program to 5 to 10 asset management firms.

...The selected asset management firms will receive a chunk of the $250 billion that Congress is allowing the Treasury to spend in the first phase of the bailout. Those firms will receive fees that are likely to be lower than the industry standard of 1 percent of assets, or $1 for every $100 under management.

Administration officials said they would try to drive down fees with a competitive bidding process. But with $700 billion to disburse, the plan could still generate tens of billions of dollars in fees if the firms negotiate anywhere close to their standard fees.

The main mechanism for buying these assets will be reverse auctions, using the same principles that govern auctions of electricity or the wireless spectrum. In this case, the government will issue an offer to buy a class of assets — for example, subprime mortgage-backed securities — with the final price being determined by how many banks are willing to sell.

...The Treasury officials said they were still writing a policy on conflicts of interest as well as guidelines on compensation.

As if the mechanics were not daunting enough, Treasury officials need to make wrenching decisions that will determine the bailout’s winners and losers. With so much money on the line, lobbyists for interest groups are already besieging the government to decide in their favor.

The prospect of pitching in during a national crisis has drawn unsolicited offers from prominent asset managers, like William H. Gross, the managing director of Pimco, who offered his services free.

In setting up the program, Mr. Paulson has relied on a cadre of former Goldman Sachs executives: Edward C. Forst, a former co-head of Goldman’s investment management business who is on leave from his job as executive vice president at Harvard; Kendrick R. Wilson III, formerly chairman of Goldman’s financial institutions groups; and Dan Jester, who was deputy chief financial officer at Goldman.


...The bailout legislation itself highlights the contradictory goals that the Treasury will face when it goes on its buying spree. Among the goals it is supposed to consider are “protecting taxpayers,” “preventing disruption to financial markets” and “the need to help families keep their homes.”

Democratic lawmakers insisted that the Treasury use its authority to help restructure many subprime mortgages so that at least some troubled homeowners could avoid foreclosure.

But the Treasury’s auction plan will make that difficult. More than 90 percent of all subprime mortgages are part of giant pools, or trusts, which sell mortgage-backed securities to investors around the world.

Before the government would be able to modify any mortgage that was in a trust, securities experts said, it would have to acquire agreement from 100 percent of the bondholders. But a senior Treasury official said the government would probably want to buy no more than half of the securities tied to a trust, which would hamper winning agreement from all investors.

Jigsaw

We had a former head of the FDIC tell a group of congressmen yesterday that the Bush administration has been going around the last few weeks, actually, so tightening up on the practices of banks that they’re forcing them to have bigger reserves, which in a way would, you know, kind of create—help to create the kind of tight money policies that we’re saying we’re trying to alleviate with this bill. So, you know, there needs to be a deeper look at this. It seems to me there’s a possibility that this crisis has a little bit of manufacture to it.

- Kucinich

Suspending mark-to-market accounting, in essence, suspends reality.

-Beth Brooke, global vice chair at Ernst & Young LLP, WSJ, Sept 30, 2008

Some "public opinion" from the finance geek sites:

The bailout, I mean rescue plan, can be seen as nothing less than a new Ponzi scheme. It works like this:

Fed as only lender, in an attempt to keep the financial system from imploding;

TARP needed to keep Fed balance sheet intact so that it can continue as only lender;

Treasury will need to significantly increase the amount of Ts (public money) auctioned to fund TARP;

Panic serves to encourage T. buyers, especially for bills;

This represents a liquidity trap: TARP recipients of Ts will hoard cash to buy Ts: rinse and repeat.

This results in drying up of lending to corporations/crowding out private capital - no new credit lines;

The Fed becomes a holder of private capital, the later of which is now frozen to protect that capital from deteriorating, The rollover scheme will restrict even more lending in the private sphere for purposes of keeping the financial sphere on life support, but with the consequence of furthering the deterioration of the 'real' economy.

---

My thoughts exactly, Don. Plus the durations target the drawdown precisely on the capital we need most. We're desperately short of 3 month working capital, and here comes Paulson to take $700 BB of what we've got left away and dump it in the mortgage industry. I don't think you could devise a worse plan. We might be better off if he *did* steal it.

¨
===========================

So, financial predators and parasites, having cannibalized the actual productive economy of the US over the past 30 years, now have no choice but to cannibalize each other.

It points out the fundamental need to free the republic from the stranglehold that finance capital has held the country in for the past generation, starting with the bankruptcy of NYC in 1975, aka The Banker's Coup. It was this event that presaged the dominance of the neoliberal regime and serial credit crises to come. Now, as a result of their infinite greed and arrogance, we will see a Final Offensive of structural readjustment, privatization - already announced in Thursday's New York Times, in an article buried in the back of the Metro section announcing that Governor Patterson is exploring the sale of state assests - and widespread immiseration.

While Marx's prescriptive powers left much to be desired, his powers of description - namely, the inherent tendency of capitalism to generate crisis - remain prescient.

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Having listened to all 42 minutes of the late night Treasury briefing of investment banks on Sunday, there is no doubt in my mind that this legislation represents the sort of federal largesse for Goldman Sachs, Morgan Stanley, Citibank and JPMorgan Chase that the Iraq war provided for Halliburton and Blackwater.

The most cynical moment in the call is when the Treasury official confirms, ”our preference would be to help the healthy banks become even healthier” rather than helping troubled banks or illiquid banks.

America is now a centrally planned economy where the Treasury will determine which firms survive and prosper through allocation of scarce capital to an undercapitalised financial sector.

Clearly what is going on here has nothing to do with kick starting the credit markets or stabilising the equity markets or restoring depositor confidence in banks. (Treasury official: “No provision in the legislation that mandates re-lending.”) What is going on here is a blatant attempt to provide government funds to a select cadre of firms (not all banks) which are chosen to be the survivors feasting off the carcasses of their less fortunate and less well-connected brethren as the downturn intensifies in the years to come.

The crash in equities will still happen. The debt deflation of the economy leading to mass commercial and consumer credit defaults will still happen. The collapse of many national, regional and local financial institutions will still happen. The bankruptcy of many municipalities and shortfalls in state budgets will still happen.

This bill is about engineering survivor bias to friends of the Bush administration so that they profit disproportionately from the collapse of these markets using the funds provided by the taxpayer via the unreviewable and unconditional authority of the Secretary of the Treasury.

Long and Short Fuses

Bloomberg:

In a separate bankruptcy case, Lehman Brothers Holdings Inc. creditors said they ``believe'' that JPMorgan, the investment bank's main lender and clearing agent, caused the liquidity crisis that led to Lehman's collapse.

Creditors want to investigate:

Creditors of Lehman Brothers have asked a judge to allow an investigation into whether JPMorgan Chase & Co. had a role in weakening Lehman as it headed toward bankruptcy.

The committee filed the request in court documents late Thursday.

The creditors committee believes Lehman Brothers Holdings Inc. had more than $17 billion in cash and securities held at JPMorgan before its Chapter 11 filing but that JPMorgan froze the assets Sept. 12, three days before Lehman filed for court protection. Its case is the biggest in U.S. history.

"The creditor's committee believes that as a result of JPMC's actions, LBHI suffered an immediate liquidity crisis that could have been averted by any number of events, none of which transpired," lawyers for creditors wrote in court papers.

"In freezing LBHI's assets, JPMC was purportedly holding all of LBHI's assets as a potential offset against any claims," lawyers said. JPMorgan provided billions in clearing advances _ short-term loans investment banks use to clear trades on a daily basis _ to Lehman in the days around its Chapter 11 filing.

Jim Chanos said Bank of America cut the line to Merrill Lynch in advance of swallowing them.

The SEC has announced its "longs only" boost will expire on the 8th; the expected extension to the 17th called off.

On Victorious Friday, Goldman Sachs cheered the troops with the promise of a "significantly deeper" recession than was previously expected.

Treasury Conference Call

Q: Glenn Schorr, UBS: How do you incentivize if you cant come to clearing price that isn't too punitive?
A: Our objective is not to get everyone to participate so...we won't be paying too much...I can envision a firm taking a loss, because we're giving them cash that they can redeploy. We're soliciting ideas from all over the place.

Q: Guy Moszkowski, Merrill Lynch: Is your goal with the pricing mechanism to inject as much liquidity and capital or is it to force recognition of losses and consolidation so we can see who will survive and who will die.
A: Hard to say either of those extremes. It's a balancing act.

Some guy from Treasury says he wants people to focus on legislation, not implementation. One of his colleagues says he thinks that's a "very good idea."

Q: Mike Mayo, Deutsche Bank: Do banks have the option to purchase insurance or sell assets or does the option remain solely with the treasury once banks decided to participate?
A: Yes banks have the option to choose what program to participate in.
Q: Will insurance premiums be stretched out?
A: We don't know
Q: Will the Treasury still get equity stake in companies that chose insurance? Can the Treasury decide whether or not to let companies participate?
A. The Treasury will consider "long-term viability" of the firm. For the most part, we want to help the healthy banks get healthier as opposed to healing the failing banks.

Q: Mike Holt, Boston Company: when will the treasury start purchasing these assets? Wednesday? A couple weeks?
A: A few weeks, several weeks, once Congress passes bill
Q: But some people will fail before that?
A: We understand.

A Lot Worse Than We Thought

How Dumb Are We Americans?

Well, not so dumb, if the comments sections of newswebsites are an indication. Much less dumb than the official journalist bloggers are or pretend to be. But the twitterers are a little more dumb; this is explained I supposed by the youthful demographics. Twitterers appear to be most concerned about the casting side of the question, grave matters such as hair plugs, who looks at the camera best, winking, what's "boring" and what's ridiculous but entertaining. The hottest topics seem to be the pronunciation "nucular" and, amazingly, that there is no such word as "Bosniak", a fact of which many twitterers are firmly convinced and about which they can work up some remarkable dudgeon.

Market Theatrics

Remember the last dip in the public markets, which due to plunge protection was not allowed to become an honest to god correction and which was abruptly halted and reversed by 9/11, was called a "stealth bear" market. A slow slide, the focus NASDAQ. Now the NYSE's suffering and torture is displayed on television, its image a trader or two on the floor staring aghast at something horrible - falling digits - whose position we the viewer of this photo are assigned. We are collapsing, these kindly bystanders are watching us collapse! Help us!Help!

But the public markets can be yanked about like a marionette on strings. (It must be the herd!You all saw the Dark Knight didn't you? You know what the selfish capricious ignorant herd is like!)

On Sept 19, NASDAQ filed for a little practically automatic rule change with the SEC, shuffling around the Portal Alliance (some of the members vanished recently but still appear in the filing) which anticipates its long promised offerings of Portal debt securities alongside its already flourishing Portal equity securities to the superrich private equity buyers of 144as. It's just kind of funny to read it today, with the headline names, it's a bit like picking up a tabloid:

The Nasdaq member firms expected to enter into agreements with Nasdaq either directly or through affiliated or successor entities are: Banc of America Securities LLC; Citigroup Global Markets Inc.; Credit Suisse Securities (USA) LLC; Deutsche Bank Securities Inc.; Goldman, Sachs & Co.; J.P. Morgan Securities Inc.;
Lehman Brothers Inc.; Merrill Lynch, Pierce, Fenner & Smith Incorporated; Morgan Stanley & Co. Incorporated; UBS Securities LLC; and Wachovia Capital Markets, LLC.

From Forbes back in January:

Not ready to take your company public? Take it semipublic. Do a Rule 144a offering. The Securities & Exchange Commission rule allows companies to raise capital while dispensing with such formalities as registering with the SEC, filing financials or following accounting standards. The securities can be sold only to sophisticated investors, to wit, hedge funds and investment advisers with at least $100 million under management. Issuers are also exempt from the nitpicking requirements of Sarbanes-Oxley.

Although most of the $2 trillion in Rule 144a securities outstanding represents debt, the equity portion is nonetheless big enough to eclipse the public market in recent issuance. Through the first nine months of 2007 companies raised $300 billion in 144a equity, compared with $215 billion for public markets, reports Dealogic. Often these deals were for private offerings in companies that are already public. But within the 144a category is a subset that goes by PIPO (for "pre-initial public offering"): These are privately offered shares in companies that are not yet public. In the two years before Sarbox went live in 2002, there were only two PIPO deals. Since then there have been 83, raising an average $282 million.

Not being public doesn't prevent a company from having its shares traded. In the coming months the semipublic sector will be getting an assist from Nasdaq, whose Portal Alliance database provides price information to buyers and sellers of 144a shares.

Individuals should keep a sharp eye on this market--not to buy in but to avoid being whacked by the tail end. Dealogic says that 20 of the 85 PIPOs have led to public offerings, which then tend to perform poorly. During the first 12 months after going public the average PIPO did 21.5% worse than a simultaneous investment in the s&p 500, while new issues as a whole beat the markets by 7.2%.

Example: the $1.6 billion (sales) Aventine Renewable Energy. Formerly the biofuel operations of Williams Cos. (nyse: WMB - news - people ), Aventine was picked off by a private equity arm of Morgan Stanley (nyse: MS - news - people ) for $75 million in 2003. It then issued $160 million of debt to pay its investors a $107 million dividend. In late 2005 Morgan sold the company to 144a equity buyers through a PIPO for $275 million, quintupling its investment in two and a half years. Pushed by investors hoping to flip at a profit, Aventine filed to go public soon after Morgan's exit, and raised $390 million in its mid-2006 offering. Great for PIPO investors, who recouped a 42% return (before banking fees) in six months. Not so great for individual investors: Aventine's shares recently dropped to $10, 74% below their close on its first day of trading. Analysts see earnings falling 63% in 2007 and another 71% in 2008.