Volatility

April 30, 2010

Signal Lanterns

Filed under: American Revolution, Freedom — Tags: , , , , , , — Russ @ 12:55 am

 

A few weeks ago, April 18-19, was the anniversary of Lexington and Concord and Paul Revere’s legendary midnight ride. I didn’t think of it at the time, preoccupied as I was with stuff like the SEC and Goldman. But I intend to pay closer attention to these august dates from our lost revolution in the future.
 
It’s literally true that Paul Revere’s ride is a legendary matter. Throughout American history there have been many Reveres. There was the original story of the “wounded innocence” of 1775, the province of all who were forced by fate into the crucible of war and revolution. (Though when the participants were getting their story straight they rejected Revere’s own deposition because he wouldn’t swear to the alleged fact that the British fired first at Lexington, and he alluded too much to the patriots’ prior preparations for exactly such a British march, which planning tended to contradict the wounded innocence contention.)
 
The story of the heroism of the midnight ride and the signal lanterns was the folklore of Boston right from those first heady days. The legend grew though the first half of the 19th century. Then came the Civil War, and with it Longfellow’s immortal tale of the lone hero with his ringing call to a nation to fight for its freedom. It was carefully tailored to resonate with a public being fired up for war, and at the same time to flatter the already prominent American legend of the hardy, self-reliant man of action. The story had spectacular success from its publication in January 1861, and this has been the base of the legend ever since, while further hagiography as well as debunking built upon (or chipped away at) this base. Thus we’ve seen the martial “Colonel Revere” of proud imperial days, and Esther Forbes’ “simple artizan” [sic] of 1942, the common man who rose to the occasion, and even the capitalist-soldier of the Cold War, as well as the relatively playful satirical treatment of Revere and other patriotic-affiliated figures following the pointless horror of the Great War, or the far more angry debunkers of the Vietnam and Watergate era (some of them going so far as to claim the midnight ride never took place, or that Revere was drunk as he rode, or that he was a  snitch). And so on into modern times where between structural depictions of the social forces of history and “political correctness” Revere and his midnight ride have often disappeared completely.
 
While we can dismiss shallow liberal “correctness” with the level of respect it deserves, we are forced to recognize the power of history itself and its economic and social currents. Today especially we’re buffeted amid a vast turbulence of forces. So far as I can see the readers of this blog agree that the global financialized debt system is doomed and must collapse of its own weight, and also that there’s little even a large mass of the peasantry, let alone a few lonely denizens of the blogosphere, can do to affect the way these forces play out and the tempo of their doing so.
 
Where does this leave the people and events of our legends? Whether we take the legend of a lone midnight rider (or a handful of riders if you include Dawes and Prescott, who are the only other well-known names) and wounded innocence which spontaneously rose and fought back at Lexington and Concord, or whether we go with the more accurate story of a several dozen messengers acting out a well-laid plan which culminated in the vigorous resolution of the fight, either way it’s still just a relative handful of people.
 
Did history have greater space for contingency and small-scale agency back then? Was that too a casualty of the industrial age, the oil age, the age of masses, and by today nothing can any longer be contingent, and no one, not even among the powerful, can be an agent?
 
And then there’s the question of whether today’s events ever still concentrate such pivotal significance into such a small space, in terms of time, geography, and the number of actors engaged. If instead we expand the idea to just look for the metaphorical Lexington event, which could serve to fire the will to fight of millions, or if we go further and seek to envision the discrete moment which could signal the final breaking of the exponential finance and Bailout wave, it’s still hard to imagine. 
 
What can today be the equivalent of a General Gage marching upon Lexington? The latest and most exciting event has been the SEC’s filing against Goldman, which has indeed excited everyone to the point that we see speculation everywhere on whether this is the breaking point for Goldman, or even the turning of the tide against Wall Street itself. Almost as pregnant with portent is the looming European debt default unwind, which may roll up the EU itself, with incalculable consequences. We still have zombie Dubai, still extending and pretending. And providing eschatological backdrop as well as threatening economic devastation itself, we have the eruption of Iceland. Can any of these really provide the non-linear break? We’ll rightly keep doubting until the moment it happens, and probably for some time afterward, just as the newspapermen who witnessed the first Kitty Hawk flight said “that’s nice” and went home thinking, “that was a neat trick, whatever they were really doing”, and it was days before what had happened really sunk in. 
 
When I think of the early days of the crisis the date 9/29 still leaps out at me. I remember writing it on the cover of the notebook I started in August. On 9/29/08 I wrote, “Sarajevo”. It was the day the first TARP vote rejected it. Of course we know what happened next, and by now I don’t say that date was particularly important. But at the time it struck me as a critical moment in the crisis. I thought they might actually have to start letting the whole thing unravel right then and there. But of course that didn’t happen, then.
 
Can there really be such a day? Can there be Marches of the Regulars and midnight rides? And even if there still could be, could there again be a response? Can the Minuteman spirit ever reawaken?
 
Well, that’s just some musings when I thought about the old days. Paul Revere struck me because his legend has been so resilient and evocative for so long for so many. Like I said, I don’t know if they even teach him in school anymore. But should we ever be able to seize upon events, it would be of great use to have the legends to help render them familiar. Not just Revere (who’s really just an example here, but a good one) but the entire heritage is waiting and wanting to do real work once again. It wonders, How was our Revolution lost?
 
So I just wrote this as some notes and suggestions for further thought. Maybe it doesn’t make a lot of sense, or maybe it’ll give people something to think about. We seem to have unfathomable time (meaning simply that we have zero idea if the zombie starts toppling tomorrow or five years from now or anytime in between) and not a huge number of options for what to do with it at the moment.
 
Oh well, another strange gizmo for the toolbox.

April 28, 2010

Goldman Testifies: “We’re Not That Smart.” Jerks, too.

 

As I wrote a few days ago, I’m not concerned about whether or not Goldman actually did violate Wall Street’s own self-rigged law. So the technical strength of the SEC’s case is a side issue, at most a gauge of how far the law’s abdication has really progressed.
 
We should never fall into the trap of letting the enemy frame the issue according to their own corrupt measure of “law”. The dispute of whether or not something is technically illegal is always likely to help the banksters and not the people. We must always insist that these are crimes by any moral measure, crimes against humanity, and would be legalistic crimes in any human community which lived according to the rule of law. That there’s even a debate about the vast, systematic fraud of Wall Street, executive control fraud as the very basis of their business model, or about specific examples of patent fraud like the Abacus con, proves that we no longer have the rule of law in this country. At best law is something struggling to crawl back out from under the massive weight of poisoned mud under which Wall Street and Washington buried it alive.
 
As for their rigged laws today, the only reason we should look to where their crimes run afoul of even that corrupt measure is to taunt, “Even by their own rigged laws they’re guilty!” But that’s never our measure of the indictment. We know that just as nothing short of Nuremburg could deal with the magnitude of (mostly legalized) Nazi crime, so only a Second Nuremburg can deal with this, the same magnitude and quality of economic crime.
 
So with that in mind let’s look at yesterday’s spectacle. Its significance is political. Although it may affect the legalistic proceedings, the real value of it was to highlight before the eyes of the people the everyday criminal actions and unregenerate, clinically psychopathic mindset of these criminals. The more people see the gangsters squirm and stutter under the glare of such simple, morally common sense questions as “Do you think when you sell a security to an investor he has a right to believe you don’t think it’s going to fail?”, the more obvious it becomes that these are nothing at all but gutter con men, with their victim being no one less that America itself. (Although we also need to do more work from the other side of the issue: That they create nothing, perform no useful function. It’s true that “he only destroys” and “he produces nothing” are saying the same thing, but unfortunately many among the masses treat those as two distinct ideas.)
 
Let’s look at a few choice moments with Blankfein and Viniar. (The questioning of the peons was more of the same. It reinforces the ugly picture given by Blankfein and Viniar. We did learn that Tourre’s lawyers are really Goldman’s lawyers. So he’s either being set up to take the fall, or they already have a private deal worked out for him to willingly take the fall.)
 
It’s clear that they’re all incapable of anything but lame excuses and phony, truculent acquiescence when pressed about human issues like ethics or remorse. None of these thugs has a shred of those, or of any other human quality. They are in fact something alien to us, a species of vermin.
 
The only times they sound authentic are in their bursts of criminal defiance.
 
Perhaps my favorite moment was Viniar repeatedly saying he regrets that anyone wrote about Goldman’s crimes in an e-mail, and the vulgar tone of some of them, but not the crimes themselves.
 

Senator Levin is back to leading the questions, and his back and forth with Mr. Viniar has captivated the room.

He starts with a basic question, one he and other senators have asked so many others today: Do you think that a customer has a right to believe that you want securities that you sell to succeed?

Mr. Viniar, a numbers guy, stumbles: “I’m not sure what succeed actually means.”

Mr. Levin continues, asking if a customer has a right to believe that Goldman is selling something the firm believes is a solid security.

Mr. Viniar says that “when we sell securities to customers, we don’t necessarily have a view that they’re going to go up or down.”

Mr. Levin says that’s not what he meant. He means that customers do not think Goldman would sell something it thinks is junk, or the more vulgar word that the senator used. (Forgive him, though, he was citing Goldman employees in e-mails.). Mr. Levin says he sees a very clear conflict of interest that needs to be dealt with. He asks Mr. Viniar what he felt when he heard about the things Goldman employees had written about these deals, again using vulgar words.

Mr. Vinar replies, “I think that’s very unfortunate to have on e-mail.”

The room erupted in a gasp.

Mr. Viniar continues: “I think it’s very unfortunate for anyone to have said that in any form.”

The senator presses the chief financial officer, who adds, that he thnks it’s unfortunate in and of itself that his employees thought their deals were junk — or worse, as the words indicated.

Mr. Levin retorts, “That’s where you should have started.”

He then called a brief recess for the procedural vote on the financial bill.

[Then, after the recess:]

Mr. Viniar said Senator Levin was 100 percent correct in the statements he made before the procedural vote. Mr. Viniar said he felt he should have straight off expressed dismay at the vulgar expressions that some at Goldman believed described their own deals.

 
He was groping to say something like, “I regret that we had people with such an unprofessional, unethical attitude about our duties to our clients; this does not reflect the Goldman creed”, but try as he might he couldn’t find the words. It was like a scene in a movie where the character can’t help revealing what he really thinks even though he’s trying to conceal it. (After a break he tried again, and again could only say, “I regret the vulgarity”. How clueless, how unaware of one’s surroundings, can one get?)
 
We look here directly into the black abyss of these soul-dead criminals. They’re so committed to their crimes, so engrossed in them, that they’re incapable of any attitude other that open defiance or fumbling, incompetent spin. They’re such clinical psychopaths they’re no longer even capable of tactical lying where it comes to the politics of the situation. They have a disease. We should be grateful for it, since things would be worse if they were also good political liars.
 
And now we come to Blankfein, who reveals the same character. He started out lying again about the Bailout, that it was only $10 billion from the TARP and that Goldman paid it back (Goldman’s real cut of the loot so far is over $50 billion and counting).
 
In Blankfein’s exchange with Levin, you can look in vain for B himself to provide any evidence of any productive function Goldman performs, how it contributes to humanity in any way.
 
B himself says they do nothing but run a casino and place bets:
 

Senator Levin and Lloyd Blankfein just can’t agree.

Like the exchange played out between the senator and Goldman’s chief financial officer, Mr. Blankfein and Mr. Levin volleyed back and forth, with their views miles away from each other.

Mr. Levin asks the question he’s asked over and over again. Should Goldman be telling its clients about its own positions? Is Goldman mistreating its clients by betting against them? Do you think clients should know if Goldman thinks something is a piece of junk (or a word more vulgar)?

Mr. Blankfein insists that Goldman is a principal. “The act of selling something is what gives us the opposite position of what the client has. If the client asks us for a bid the next minute we own it, they don’t,” he says.

It is the nature of market-making, he says, that puts Goldman on the other side of its clients’ bets. “What clients are buying or customers are buying is they’re buying an exposure. They are not coming to us to represent what our views are,” Mr. Blankfein says.

But the senator presses on. He thinks clients should know when Goldman is betting against them.

“You say betting against,” Mr. Blankfein says almost incredulously.

 
Kaufmann catches up B on the question, when did you know the mortgage market was going to collapse? B says he never knew, and that he had nothing to do with Goldman’s shutting down the “CDO warehouses”. B ends up having to say, “I think we’re not that smart.” (Picture Salazzo in “The Godfather”: “You think too much of me, kid. I’m not that clever.”) It’s the same old heads-I-win-tails-you-lose. We’re always told the “bonuses” are justified because of how “talented” all these cadres are. And certainly nobody on Wall Street is more talented than Blankfein, who now suddenly says the talent hype was all a lie, that he’s “not that smart”. So which is it? If they’re now admitting they have no “talent”, aren’t that smart, didn’t know what they were doing, surely they’ll be giving back all the bonuses?
 
At any rate, we certainly shouldn’t listen to any objections the day we’re able to claw back all of it, correct? Blankfein himself says so: “We’re not that smart”.
 
Kaufmann missed a bet here:
 

As the exchange continues, Mr. Blankfein points out that many financial companies lost tens of billions of dollars because of the sharp decline of the housing market. (Think Citigroup, Merrill Lynch, UBS — the list goes on.)

 
He should have retorted, “You mean ‘would have lost’ if the taxpayer hadn’t bailed you out.”
 
There’s more back and forth with McCaskill and Tester about synthetic CDOs. It comes through loud and clear that these are worthless, unproductive criminal scams.
 
It’s odd how many commenters on the econoblogs, even among those unsympathetic to Goldman, who scoff at the “financial illiteracy” of the senators. Illiterate they may be by quant standards, but at least in this forum they seem to be as literate as anyone needs to be. The only ideas and words you really need to describe any of this are fraud, con, scam, crime.
 
Yesterday’s exercise provided a demonstration of the mindset of pure, incorrigible, irredeemable criminals. They cannot be rehabilitated. The rackets and their cadres cannot be “citizens”. Wall Street and America are antithetical. Both cannot exist. One must die.
 
The only question is whether we’ll have the triumph of America or of Bailout America; whether we’ll live as human beings, or according to the whims of fraud, theft, robbery, bribery, and extortion. That’s the way it is today. But they’re adding serfdom, and soon they’ll enforce enslavement.
 
Today is the crossroads. Whether or not there’s to be any future at all is the decision. Let’s make sure we seize every opportunity like yesterday’s testimony, to drive the right decision.

April 27, 2010

Silly Season

 

Things are reaching quite the bizarre crescendo this week for finance “reform”. We have the regular crooks and the windmill tilters, and sometimes it seems exciting enough that I’m ready to charge a windmill myself.
 
Today Lloyd Blankfein will go before Congress to talk about Goldman’s political plight. (This is definitely a political matter as far as its real significance; even if the SEC is serious about its action, it’s doubtful that with these rigged laws Goldman will end up getting more than a wrist slap.) They’ve already issued some preliminary lies and nonsense, as dissected here and here.
 
Is it really possible that the SEC suit against Goldman will be the tipping point? That even the worst Democrats like Blanche Lincoln are feeling the heat to the point that they might even pass a quasi-reform rather than a pseudo-reform? This past weekend they even made a good adjustment in the derivatives proposal. They beat back arch-criminal Warren Buffett’s brazen attempt to carve out an exception for himself, which was enough to piss off Buffett’s waterboy Ben Nelson, who yesterday voted with the Republicans to cut off debate on the bill….
 
…and that brings us back down to earth. What I just said is probably nonsense, since the very fact that with 59 votes on paper (which not long ago was the filibuster-busting 60), and certainly more than 50 even with the possible defection of absolute villains like Nelson, the Democrats still refuse to go ahead and use their majority, either through reconciliation or by just getting rid of the filibuster altogether, proves that they have no will to real reform. At most, like Lincoln they’re politically trembling for November, as well they should be. But even with those political fears, they’re still only going to pander and engage in pseudo-reformist political theater.
 
Yes, for the moment the derivatives regs are headed in the right direction. But they still fall far short of what’s necessary – the complete banning of speculative derivatives, period. And, the existing House bill contains nothing but loopholes and scams masquerading under the name of “derivatives reform”. What kind of odds would Goldman offer if I wanted to bet on that eventual negotiation improving or gutting whatever the Senate comes up with?
 
And the bill doesn’t break up the big banks. Instead it wants to enshrine an allegedly new “resolution authority” which would really take its place alongside the existing PCA law which was violated and ignored in 2008 and 2009, and would undergo the same fate in the next crash. This is a scam plain and simple. Via the Kanjorski amendment it may even be a Trojan Horse designed to guarantee further bailouts, by enshrining a new “right” of insolvent, collapsing banks to demand judicial review of resolution seizures. Since such resolutions would have to be undertaken with speed, to let the bankrupt banks sue can only be intended to ensure that if an administration ever actually wanted to use the resolution authority, it wouldn’t be able to, but would have to cave in and agree to a bailout.
 
Also, the mechanism by which this bill is supposed to “guarantee” that the resolution won’t cost the taxpayers any money is a fund which will allegedly be collected from all “big” banks, meaning banks with “assets” of $50 billion or more. While that’s pretty big, it’s still extending the net far and wide for the benefit of just a few of the biggest rackets. As we saw with CIT, the government doesn’t consider $100 billion “too big to fail”. So why are they mining as low as 50 to help out the likes of JPM, BofA, and Citi? It’s obviously a pro-oligopoly measure, meant to harm mid-level competitors of the biggest rackets. (Not that I’m getting teary-eyed for the mid-size rackets, but we have to recognize what’s going on here.)
 
So this “resolution authority”:
 
1. Will not be used in lieu of bailouts. In the crisis they’ll simply ignore it, just like they did before.
 
2. Even if they wanted to resolve an insolvent big bank, it’s likely the bank could take legal action to stall, thereby forcing the bailout through disaster capitalist extortion.
 
3. Whatever motions they go through to collect monies from the rackets themselves to fund these bailouts will fall disproportionately upon the smaller rackets. So just as from the Bailout’s inception, so the continuation of the Bailout will have intensifying monopoly as one of its primary goals.
 
Overall the Senate bill is shaping up to be sham. Even if the derivatives regulation does end up being strong on paper, it’s likely to remain ineffectual if the derivatives market remains in the stranglehold of a handful of rackets. The bill doesn’t break them up, so they’ll instead break up anything worthwhile that’s in the bill.
 
It seems that for all their public whining, the banksters are on more solid ground in their laughter. The laughter suffuses their jolly e-mails crowing over the cleverness of their crimes.
 
And then they have their ever-reliable MSM errand boys to package their propaganda for them.
 

“Because of the origins and the impact of the global financial crisis, we have now entered an historical phase in which most industrial country governments will restrain banks through the wide use of regulatory, tax and enforcement tools,” he said. “People can debate for hours whether this should happen or not. The fact is that it will happen.”

 
This is part of the full court press, everyone playing his role in putting over the farce of “reform.”
 
And of course Sorkin himself:
 

While most agree that the system needs to be reformed, the worry, at least in Beverly Hills, is whether the reform will go too far — in contrast to the rest of America, where many feel the reform won’t go far enough.

 
What an odd term – “rest of America.” By that he means, America, period. I think any real American recognizes that Wall Street is an alien cesspool, and the finance globalists, to the extent that they’re nominal American “citizens”, are a cabal of traitors. They’re all enemies of the true American people.
 
But I suppose he’s telling a kind of truth there. To the finance gangster elite and their little flunkeys, Wall Street is the “real America”, and a hack like Sorkin probably thinks he’s being magnanimous in referring to the feral, filthy peasants, slated for serfdom, as “Americans” at all.
 
That’s the same mindset which is producing the Senate bill, which produced the House bill, and the health racket bill and so much else, and encompassing it all, the Bailout itself.
 
In the ideology of Bailout America, only the rich are citizens. The rest are economic cannon fodder. We who truly do comprise the real people, the real economy, any real chance of human community and well-being, must turn this lie upside down. We must recognize these gangsters and their servants as the stateless, as the rootless, as the useless, as the worthless. They’re not Americans, and they have no legitimate place in America. With their treason, their robbery, their vandalism, they’ve forfeit all such consideration.
 
They’re rabid dogs, and must be driven as such.

April 23, 2010

Information Superhighway Crossroads (Net Neutrality and the NBP)

Filed under: Corporatism, Freedom, Internet Democracy, Neo-feudalism, Relocalization — Tags: — Russ @ 5:51 am

 

Earlier this year the FCC announced its National Broadband Plan. Its stated goals are to extend high-speed Internet access throughout the country, in particular to facilitate wireless connections and provide rural service.
 
They’re promoting this on both democratic and economic grounds.
 

The plan envisions a fully Web-connected world with split-second access to health care information and online classrooms, delivered through wireless devices yet to be dreamed up in Silicon Valley……..

Mr. Genachowski also argues that broadband expansion can be an economic stimulant, a crucial selling point in a time of high unemployment. “Broadband will be the indispensable platform to assure American competitiveness, ongoing job creation and innovation, and will affect nearly every aspect of Americans’ lives at home, at work, and in their communities,” he said Friday.

 
Here’s the basic mechanism for achieving this:
 

According to F.C.C. officials briefed on the plan, the commission’s recommendations will include a subsidy for Internet providers to wire rural parts of the country now without access, a controversial auction of some broadcast spectrum to free up space for wireless devices, and the development of a new universal set-top box that connects to the Internet and cable service.

The effort will influence billions of dollars in federal spending, although the F.C.C. will argue that the plan should pay for itself through the spectrum auctions.

 
That spectrum auction looks to be the sticking point for the broadcast rackets. Everyone expects them to fight ferociously to hang onto their public sinecure (cap and trade advocates might usefully ponder this corporate view of public property to which they now claim a “right”). This looks to be the main impetus of attack against the NBP itself.
 
Racketeering is also the existential threat to net neutrality. Corporations who control the transmission system for the Internet (the “pipes”) want to be able to give preferential transmission to websites who pay protection money, while relegating those who can’t pay to the slow, lower-quality transmission ghetto.
 
Picture how if, even though you pay for telephone service, the phone company could discriminate in the quality of the calls you make or are made to you based upon whether or not the other party also pays, and how much they pay.
 
Picture your calls to the bank going through loud, fast, and clear, while your calls to a loved one are full of static, or have a delay, or don’t go through at all.
 
This would further empower and enrich the already-rich and powerful, and disenfranchise everyone else. Just as big money has corrupted democracy in general, here it seeks to destroy online democracy.
 
That’s what looms on the web if net neutrality isn’t enshrined. Net neutrality is the principle that access racketeers can’t set up this toll booth. That they must treat all transmissions equally. Needless to say, the telecoms – Comcast, AT&T, Verizon, etc. – want to quash the concept and the practice. Again we see the same lies about their alleged “property” and prerogative.
 
But in fact, as usual public money built the Internet, both the physical and the conceptual infrastructure. The Telecommunications Act provided massive subsidies for the telecoms to perform the new wiring.
 
Net neutrality has largely been the practice so far, but it’s not enshrined in law. The FCC recently proposed new regulation seeking such enshrinement. But the current Hobbesian state was made clear by a recent decision by the DC Circuit Court. According to them (and it seems this wasn’t an activist decision, but reasonable given the parameters of the technical law) the FCC’s attempts to prevent Comcast from imposing different transmission tiers were an abuse of authority. So even though Comcast has temporarily suspended its plans for PR reasons, legally any access provider is currently free to discriminate among information providers. It can ration access based on ability to pay any level of extortion, and probably on any other ground as well.
 
Here’s what happened. Until 8/05 the FCC required companies providing high-speed access over telephone lines to give equal access. This is the century-old “common carrier” doctrine. It enabled information innovators from Google right down to the smallest online business to flourish.
 
But in 2005 the FCC decided that cable Internet service was a bundled “information service” and not similar to phone line service. From this they made the leap to decree that high-speed service as such (regardless of pipe type) was deregulated from the common carrier section of the Communications Act. This accomplished the Bush goal of oligopoly among access providers (many mergers ensued). Meanwhile “prices stayed high and speed slow”. So the first Bush lie here was that deregulation would increase access provider competition.
 
The second lie was when the FCC claimed that the AOL-model of a gated community Internet would be the main access vehicle, with information providers herded inside the gates. This putative bundling of access and information was the pretext for the deregulation. But in practice broadband has enabled the opposite. Information provision became more unbundled than ever.
 
So the result is that today we have innumerable information providers vying for space on a handful of pipelines. Since the Bush goal was always to choke off democratic information, this deregulation was a potential win-win. Either they’d be right about the gated information communities, which in themselves could be modes of social and political control. Or if they were wrong, they’d still have laid the groundwork for access racketeering. Either way, the corporate elites would control the information flow, enclose the Internet, destroy online democracy and impose online tyranny.
 
The FCC claimed at the time that if there were any problems it could continue to regulate under another provision of the act, such as in order to promote competition. But that’s precisely the approach this court decision rejected. It seems that the FCC has no authority to impose such regulation on an “information service”. This decision threatens both the NBP and the FCC’s net neutrality proposals.
 
The obvious solution, immediately called for by many, would be for the FCC to restore access provision to its original, correct classification as a “telecommunications” service rather than an “information” service as it’s now illegitimately being called, triggering the court’s obstruction. This would put net neutrality and the NBP back on legalistic track, and a court would have to engage in renegade activism to try to block them.
 
Unfortunately, in subsequent testimony before the Senate FCC chairman Julius Genachowski showed every sign of caving in. He wobbled on reclassification, saying he still thought they had the authority to do whatever they need to do in coexistence with this court decision. This is dubious. Republican Mike Johanns correctly said this sounded bogus, that it looks like the FCC cannot both abide by this decision and impose rigorous net neutrality and NBP regs. So we have to suspect that Genachowski is maneuvering to eventually make the fraudulent “reform” claims with which we’re all too familiar by now. A real NBP will become “the NBP”, and “net neutrality” will be switched in for real net neutrality.
 
This show of weakness logically brings us back to the conceptual fecklessness of the FCC’s net neutrality proposal in itself. There are several problems with it, indicating that even before this adverse court case the FCC was gearing up to promulgate a very weak version of net neutrality.
 
The centerpiece of the FCC’s proposed “fifth principle” enshrining net neutrality says: “Subject to reasonable network management, a provider of broadband Internet access service must treat lawful content, applications, and services in a nondiscriminatory manner.”
 
Watchdog group Free Press describes the loopholes implicit in this statement. Technically, it says you have the right of access, but says nothing about the quality of the access. So in theory, short of outright blocking anything goes. “Nondiscriminatory” should clearly outlaw all broad areas of discrimination. A new scam of the telecoms is to claim that congestion problems require them to discriminate. Historically, the response of access providers to increased bandwidth use has been to increase capacity (this infrastructure expansion being subsidized by the taxpayers). This has always worked and is what the capitalist textbooks would say should be done. So it’s also what should continue to be done (but without the subsidies). They claim the new problem is something called “exaflood”, which in some inexplicable way can’t be solved with further expansion but only through discrimination. This is a lie. They really just want to use their monopoly to lock down feudal controls and extort protection payments from the information transmitters.
 
Chris Riley of Free Press says “reasonable network management” can require some discriminatory exceptions, but that these must be clearly delineated. A reasonable network control has to have a real, that is a public interest purpose, and it has to be reasonably executed. Reasonable execution would discriminate only at the congested time, only in the congested geographical region, and would be deployed only as much as was needed to relieve the congestion. Needless to say, the telecoms prefer much broader, blunter powers, because their real goal is feudal monopoly extortion and not relief of congestion in the public interest. The way the FCC proposal is written, the extent of discriminatory loopholes is left vague, and enforcement depends upon the vigilance of the regulator. We know how that always turns out. The rule should clearly specify the limits of temporary access discrimination.
 
Riley also looks askance at the disclosure exemption written into the “reasonable network management” provision. We hold it democratically necessary that any and all discrimination be fully transparent. But the FCC would not require disclosure for what’s “reasonably required” for users to “enjoy the protections” of this “reasonable management”. Riley says this looks like a Catch-22. Only what’s illegal according to the policy would be required to be disclosed, while what’s “reasonable” (as we saw, a purposely vague concept) wouldn’t have to be.
 
These weaknesses of the proposed rules demonstrate how we can’t rely on the FCC (so Free press thinks the reclassification idea, relying as it would on continued FCC vigilance, is insufficient; they say we still need legislation – I’d say good luck with that). And it puts in perspective Genachowski’s weak response to the court decision. It seems that from the start the administration’s plan was once again to not only leave the status quo intact, but enshrine it. That’s our Obama.
 
Meanwhile the NYT recently anointed an argument from the racket flacks themselves as “news fit to print”. This piece objects to even the limited FCC proposal, making instead the same old voluntary market self-regulation lie which has been discredited a thousand times.
 
The piece is instructive as a clinic in the lies we’ll no doubt be hearing more of.
 
1. It engages in misdirection, hijacking the term “transparency” for Orwellian purposes.
 
2. It says the telecoms “innovate” (I bet their executives are “talented” as well), when they in fact do nothing but drag a chain across a river. In truth they stifle real innovation among the information providers.
 
3. Since in their lying world view it’s the telecom rackets who are the innovators, it follows that net neutrality itself stifles innovation! Did Frank Luntz ghostwrite this after he got done saying a CFPA would further empower the big banks?
 
4. We have the same old lie that you can trust the good will of the rackets (they “deserve confidence”, according to the piece), that you can “regulate” them minimally, that the government can let the rackets do their thing while policing “abuses”. Such lies have been so overwhelmingly disproven and are so malevolent by now that anyone who still tells them should be driven out of civilization with a whip.
 
5. And of course they never even glance in the direction of the obvious: Why should we do all this? Why should we run such risks of victimization when such simple, robust solutions are at hand? They’re too cowardly to admit that there’s one and only one reason, to help a parasitic racket extract rents while contributing nothing but cost and complexity. It’s a replay of the health racket bill, whose one and only purpose was to bail out the insurance rackets. We should crucify ourselves on the profit cross of a few gangsters.
 
Once again we see how we can count on the NYT to produce the pro-racketeering argument.
 
So as we can see from all this, Internet liberty and democracy is in dire peril. Trusting Obama’s FCC looks like a bad bet, on account of both the weakness and vagueness of its original proposals as well as its anemic irresolution in the face of the adverse court action. But is there any chance of good legislation? That seems even less likely. It looks like two bad options in which the people can repose their confidence. (As for the NYT-endorsed notion of trusting the rackets themselves to do the right thing, we can reject that with all the curt contempt it deserves.)
 
I guess the only hope is the possibility that the people have become so inured to nondiscriminatory online access that they may spontaneously fight back here in a way they haven’t fought back elsewhere. As I saw one commenter put it in a thread somewhere, “you don’t get between a grandmother and pictures of her grandchildren.” If that’s true, then maybe public backlash can prevent the worst, and public pressure can force something approaching the good. (I know that contradicts what I usually say, but I suppose it’s possible this is a qualitatively different kind of example. Or maybe I’m just in an optimistic mood.)
 
One thing’s for sure: No matter how many other critical issues people normally ignore, every blogger, and everyone who uses the Internet at all who isn’t rich, needs to be a net neutrality activist.
 
“Needs to be” – but whether they actually will be is the question.
 
The tenuousness of Internet freedom, in the face of questions of economic rationing and content censorship, not to mention physical energy and infrastructure issues, is why as part of a general relocalization plan we should think about maintaining and being in the habit of using physical printing presses, especially presses which aren’t hi-tech.
 
This is an imperative for anyone who’s thinking about a more robust, resilient, decentralized, self-reliant, democratic way of living.

April 22, 2010

Racket Wars and Reform Policy

 

As we’re driven out into the arena for the next circus, we see that the next bloodbath on the list is “finance reform”.
 
As always, what we need to do here is clear:
 
1. Break up the rackets completely. This can include a restoration of something like Glass-Steagall.
 
2. Ban speculative derivatives.
 
3. Real leverage limits and reserve requirements.
 
4. A Tobin tax.
 
5. A strong, independent CFPA.
 
This isn’t an exhaustive list, but #s 1-3 constitute the core necessity.
 
In particular, smashing the rackets is the first necessity, the measure which enables all the others. Break up the TBTF banks and everything else becomes possible. Leave them intact and everything else, even if sincerely attempted, is doomed to failure.
 
Therefore, under today’s polity this list is a fantasy, since all system cadres reject breaking up the rackets.
 
Where the rackets exist we can never have real regulation. We can smash them completely, or submit to their tyranny. Their corrupted government and its hacks want to lie and pretend we can “regulate” (while “progressives”, in thrall to Obama and the Democrats, are desperate to believe this so they believe it).
 
That’s where reform scams come in. These are meant to play a bait and switch role. They’re meant to at least temporarily give the semblance of reform, to provide a seemingly acceptable alternative to real reform proposals, to divert the more gullible reformers away from these proposals, which are then discarded. And then once the bait has worked, it’s switched out. The phony “reform” is either gutted or thrown out completely. By then hopefully the Kool Aid has worked well enough that most of the brainwashed victims of the scam will remain in thrall, and will simply follow down whatever reactionary path the fraudulent watchword “reform” leads them.
 
The classical Obama example was fraudulent health insurance “reform” and the “public option”. This was meant to misdirect progressives away from the demand for single-payer, and therefore to strangle the real reform in the cradle. Then once the liberal rubes had been strung along enough the PO would be either tossed out or kept in an nominal but eviscerated form. So with the PO they were temporarily forced to pretend. They even conjured up a second bait and switch, the “progressive block” scam. Eventually the House passed a gutted thing they called a “public option” but which had none of the characteristics of a real PO. Then in subsequent wrangling even the husk was thrown out. The Kool Aid held, and to this day a large mass of liberal teabaggers thinks a real reform bill was passed.
 
So here’s the basic pattern, which can be applied to most, perhaps almost all, issues which are forced into the “reform” arena. We can say there’s A, the real reform, and C, the complete gutting and betrayal of reform. Republicans where they have the power leap right to C, while the Democrats’ preferred bridge from A to C is via B, the scam bait-and-switch “reform”. With health insurance, Obama’s scam was to use B, the public option, to dump A, single payer, and get to C, a grossly reactionary health racket bailout to be enforced by IRS goons. (So in a nutshell: A = real reform, B = scam “reform”, the bait and switch, C = complete gutting which is still called “reform”.)
 
Here’s some other examples.
 
On climate change: A = a combination of a carbon tax and EPA regulation, while cap-and-trade is a combination of B and C. (The idea of it is meant to scuttle real reform, while in practice it’s meant to serve as a Wall Street profiteering mechanism, to blow up a carbon bubble.)
 
On net neutrality: A = a clear prohibition on all classes of access discrimination, and rigorous enforcement thereof. B = the FCC’s proposed “net neutrality” regs, with their many loopholes. Non-enforcement will bring this to the C stage.
 
And the issue of the day, finance reform.
 
We have A, starting with breaking up the bank rackets and real derivative reform, moving on to the program I described above.
 
We have C, the shared goal of Republicans and Democrats, the absence of any reform even as they claim the mantle of being reformers. This is definitely Obama’s ideal.
 
Then we have B, several baits to be switched out. The CFPA is a clear example. The concept was broached with such fanfare. Then somewhat more quietly the Obama white paper proposed to Congress a version far weaker than the public hype had suggested. Then Barney Frank orchestrated its further gutting in the House bill. All this was done in the expectation that the Senate would gut it further or dump it completely.
 
Sure enough, Dodd’s preference was to expel it. Failing that, he wants to house it in the Fed. People have been comparing that to the fox guarding the henhouse. I’d say it’s more like chucking the chicken down the foxhole.
 
So that’s been a scam all the way. Another, more for the better-informed but still gullible, is the “resolution authority” scam. Here the lie is that they’ll enact a resolution plan somehow guaranteed to be used in the next crisis (and not to be paid for by the taxpayers). There’s two lies here. One, we already have such resolution authority, the Prompt Corrective Action law. Two, as the fate of the PCA law demonstrates, in the crisis they’ll never actually use such authority. The disaster capitalist predators of Wall Street and government will demand that we go right for the Bailout “or else by Monday we won’t have an economy”, and everyone else will panic and stampede whichever way Paulson and Bernanke, or Geithner and Bernanke, or whoever, wants to stampede them.
 
(As an example of rigging the system just to make sure, the vaunted Kanjorski amendment setting up a resolution mechanism for big banks includes a provision allowing bankrupt banks to sue to prevent their being resolved. So in the crisis, even if the government somehow wanted to use the resolution authority, this poison pill would enable the rackets to use stalling tactics at the same moment they and their flunkies are screaming “STAMPEDE!” Does anyone really think that under those circumstances the would-be “resolvers” wouldn’t cave in?
 
So this “Trojan Horse” not only doesn’t enact a real resolution reform but would weaken existing FDIC power.)
 
I’ll also mention Krugman’s original touting of Swedish-style nationalization for insolvent rackets. This too was meant to be a scam. The idea was that if the original Bailout plan was failing, the banks were still collapsing, and the political heat made the administration desperate enough, they’d pretend to take the banks into public-interest receivership. It would be sold as a responsible crisis measure which would eventually turn a profit for the taxpayers like it had in Sweden. In practice, it would’ve been just another mechanism for the government to steal from the taxpayer to buy the toxic crap from the banks at the banks’ own valuation.
 
As it turned out, they ended up not having to go that route. Endless free money, GSE guarantees, and Fed MBS buys have so far been sufficient robbery methods to prop up the zombie banks.
 
So there’s our A, B, and C. Note how in every case B always further entrenches corporatism and racketeering while A is always either anti-corporatist or neutral with regard to it.
 
So here’s the political conclusion from all this. B is never worth supporting. The laws of the corporate war upon the people dictate that the rackets will always take all they can. So for them ever to accept a strong version of B would be such a defeat for them as to indicate that the forces for reform were in fact strong enough to achieve A. Conversely, if you’re not strong enough to get A you’re also not strong enough to get a real version of B. So in either case it’s never tactically sound to fight for or accept B. B will always be just an ornamented version of C.
 
So the course of action is clear. Once we’ve identified the A and the B (as I said, the most common clue is that B is pro-corporatist), there’s no decision to be made in any particular case. If you’re entering the reform arena, always demand A and fight as hard as you can for it. But once A is gone, reform is gutted. So don’t prostitute and discredit yourself lending aid and comfort to criminals by settling for C, either directly or in the sham B version. 

April 20, 2010

What if the Volcano Erupts Forever?

 

Watching animation of the ash dispersal from the Eyjaffjollajokull volcano is mesmerizing. The chaotic turbulence seems an apt image for the chaos spreading over the world today. The last three times this volcano erupted it triggered a greater eruption by its neighbor Katla. These are synchronized parts of a system. The greater eruption may come within the week.
 
I wonder if anyone’s trying to generate a similar graphic to depict the turbulence of the bailout; the now zombified, insolvent, yet ever more intense global finance casino, the Tower of Debt Babel becoming more top heavy by the day even as it totters more dynamically.
 
More and more criminal energy keeps being pumped into the system, accompanied by more and more fear, despair, and rage on the part of the victimized peoples of the planet. Non-linear jumps are inevitable.
 
This volcano, arising in Iceland of all places, the one place where people are showing any sign at all of being willing to fight back and say No, seems eerily symbolic.
 
If I were a mystic I’d think it’s no coincidence at all…..
 
By now we’re so used to the pulse of globalization and its mechanisms like cheap, on-demand air travel that it seems an odd interlude for so many planes to be grounded. (My fellow Naked Capitalism readers are familiar with how Yves Smith has been trapped in England for days now.) It’s especially unfathomable and infuriating that there’s no easy way to cast political blame for a volcano, though some are trying, and of course everyone’s looking for how to turn it into a scam. The system being what it is, the airlines are already whining for a bailout. The response to yet another shot across the bow from the uncanny orb itself is to try to build the Debt Tower higher, add another layer to the pyramid scheme, double down and compound the crime.
 
The system has literally zero ideas beyond theft by now. The hubris of kleptocracy has become extraordinary. Since the Greek meltdown has transfixed all us  perplexed commentators, we’ve grasped at the imagery and morality tales of Greek mythology. Today the story of Icarus seems apropos. Full of irrational exuberance, Icarus defied his father’s warnings and flew too close to the sun, which melted the wax of his wings and sent him plummeting into the sea.
 
Today the planes want to fly into the ash. Every flier wants to fly ever higher into what he thinks is the sun of infinite greed and power satiety. As Lloyd Blankfein and others have said, they consider themselves gods. But they are not. They’re louts and thugs who managed to strap on the artificial wings of cheap oil and a phony economy based on a fictive fiat dollar and exponential debt. That sun toward which they fly, into which they want to drag us all, is actually their hell on earth. But it shall be the furnace of their own immolation.
 
Just as a flight of fancy (though no more fanciful than the flight plan of infinite globalization itself), we can see the volcano as a parable. The flight gods now rescind our wings, which took us too close to the sun.
 
We face the impending economic and energy descent into the Second Great Depression, this one permanent by our measure of time. If this is to be what most would experience as a new Dark Age, what might be the effect of a physical blast out of Katla? A new, quickly-descending physical, literal Dark Age, including the mass failure of crops and subsequent famine? Yet this would not be a wild card, like the asteroid which mortally wounded the dinosaurs. It would just be an acceleration of everything that’s fated anyway by Peak Oil. The failure of globalization, of industrial agriculture, of consumerism, and the acceleration of every pathology, and of the system’s eventual collapse.
 
What if the planes were grounded forever? We see how the system’s already pushing back against reality. They’re already saying European transportation ministries overreacted and should lift the restrictions. Everyone was too hysterical about the threat of the ash. That you can fly through it just fine. Let the “free market” do its thing. There go those pointy-headed safety freaks again. All the same arguments which have worked out so well with the finance sector, and at every single other point they were deployed against reason, common sense, and reality.
 
But just as a thought experiment, what if the planes were grounded forever right now? The reality is that they will eventually be grounded forever, and any grounding today only lessens the finite number of flights left in our future. Man cannot fly forever on renewable energy and biofuels. You can’t have cheap globalized flight without cheap fossil fuels. As the oil depletes and becomes impossible to extract except at prohibitive costs, we’ll face a choice about flight. We can allow “essential” flight to continue. In practice this will mean elites, the rich, and the military get to fly, while the rest of us are permanently grounded. This particular technological stratification will be a stark milestone on the road to our impending enslavement, as we look up in wonder at the alien things in the sky in the same way a South Seas islander once did.
 
We’re already enshrining our own version of cargo cults, as we keep absurd faith in things like consumerism, what the elites call “capitalism”, the “ownership society”, the monetized version of the “American dream”, even as these have been proven to be Big Lies. So we may even tolerate the dear, slave-extracted oil being used to power luxury jets that hop among fortified elite compounds while we grovel in the mud. So far that’s been our response to things.
 
Or, we can make the choice, find the resolve, to say the oil, like every other resource, belongs to we the people, and we’re going to take it back to use for the public good. In the unlikely event of such morality and wisdom prevailing, we will indeed ground the planes as a stupid luxury which under corporatism produces almost nothing but generates enormous waste and pathology.
 
The reality is that the fossil fuel economy will be grounded. Financialization will be grounded. All the volcanoes are rumbling. The only one we’re not sure about is the political volcano. There too, only in Iceland have we felt some slight shaking of the earth.
 
Meanwhile the whole airline fiasco is being derided as yet another EU failure. Just as they thought they could have their monetary union cake but eat their sovereign fiscal policies too, so it turns out their parochial transportation ministries don’t know how to coordinate responses to things like volcanoes. Following the eruption it took five days for the ministries of the whole gaggle of countries to even get together. After the disparate, nationally based responses to the financial crisis, to the Georgian war, and the feckless pseudo-coping with Greece, this is yet more evidence of the absurdity of “Europe” as an entity and as a concept.
 
Once again I’m reminded of how the “EU” like every other aspect of globalization and financialization, is in itself a bubble phenomenon. It looks good and functions well only on the upswing, only when things are going well. But the moment things go wrong, having to mark it to market becomes a disaster.
 
(And with something like a volcano, there’s no craven FASB to cave in and let you cook the books. You fly the plane or you don’t.)
 
And what about that Greek bailout? After all the tedium and angst of the protracted negotiations toward a bailout, everyone has concluded almost immediately that this bailout won’t work. Greece may still default in 2010, 2011 at the latest. And the wobble in Portugal’s debt tower is becoming more pronouced.
 
(At Zero Hedge they joked that the Greeks should still sell islands like Santorini. There’s another volcano, which leveled the Minoan civilization at Thera and gave rise to the legend of Atlantis. So where to for today’s Atlantis? It’s the same flagitious pseudo-civilization, the same crime and depravity as in the original legend. Once again we see how symbolic this volcano is.)
 
One last rumble which some are claiming (or hoping) to detect is that the SEC’s suit against Goldman will open the floodgates of a general offensive against this particular hedge fund, and against the whole compass of the TBTFs. Since Friday several other actions against Goldman have commenced. We’ll see what happens.
 
My position has long been that on the longer, more ponderous curve, this is the downslope of fossil fuel globalization and the financialized pseudo-economy, and the pseudo-civilization which by now is a diseased vestige. But politically there’s no linear reform curve here. The only linear political curve heads down as well – to neo-feudalism, neo-medievalism, serfdom.
 
Only a non-linear political break, seizing an opportunity opened up by some stumble along the vaster economic curve, can flip the political trend over to a different strange attractor. The two attractors are fascism or revolution (I take solace in the fact that either way corporate liberals are doomed). By “revolution” I mean the people transforming themselves back into a true constitution the way we once were, when we still lived according to the values of freedom, justice, morality, and community. The great volcano of the age already casts its pall over modern “civilization”, which was really just an oil- and debt-fueled blip. All that must choke and die.
 
But it’s our choice whether we die with it, or whether we use the surge and winds of our own spiritual volcano to loft us above the ashes of the burning neoliberal world, where we can again soar the currents and breathe the clear, bracing air of our redeemed humanity.
 
They flew into their false sun of greed, war, destruction, despair. But they and their gaslight sun will now crash to the inexorable earth. Will we fall with them? Or shall we seek the old, and what can again be the new, light? Humanity never had a sunset, only a light blotted by the smog of crime. Our sun can still be rising, if we rise to meet that dawn. It’s a choice of volcanoes.

April 17, 2010

The SEC Sues Goldman

Filed under: Law, Reformism Can't Work — Tags: , , — Russ @ 2:05 am

 

Yesterday the SEC sued Goldman Sachs for civil fraud. The case centers on Goldman’s 2007 ABACUS CDO, which it manufactured at the behest of hedge fund predator John Paulson. The scam was for Paulson to cobble together a toxic mess of MBS he expected would blow up, find suckers to buy this CDO, and then short it. Goldman’s role was to launder the CDO as having been conscientiously constructed. They used the good name of a vetting firm, ACA. Goldman supposedly told ACA that Paulson was consulting on the MBS selection and would be taking the same side of the bet as the buyers would be.
 
Goldman then cited ACA’s imprimatur in touting this CDO to the suckers – pension funds, other institutional investors, dumber banks, the usual suspects. Meanwhile it helped Paulson really bet against what was really garbage. It collected fat fees every step of the way, including from the investors it defrauded.
 
(Barry Ritholz compares it to The Producers, who try to defraud their investors by putting on a crappy play they expect to quickly close while embezzling much of the loot.)
 
Typical of this feckless government, it’s only a civil and not a criminal indictment. Even if the SEC is serious this time (which I won’t assume until I see it), Goldman would still get off easy for capital fraud.
 
Of course the terrorist stock market struck fast, with the Dow plunging 125.91 points, the most in tow months and ending a week-long surge, to punish this nuisance to the banksters. The MSM rushed to defend the market. The NYT showed great compassion for the victims and fear for the future. “A relatively calm day turned turbulent” as those regulatory barbarians struck out of a beautiful spring sunrise.
 

Expectations are unusually high this quarter: investors are looking for an average of 38 percent growth in profit. Banks have driven much of the strength in the market over the last year, helped by a period of historically low interest rates that have made borrowing cheap.

But analysts worry the golden days for the financial sector may be limited if government investigators intensify their examination of risky trading practices. That may raise new questions about whether the broader momentum in the market can endure.

“What you’re going to go into now is a market that is very skeptical about the outlook,” Mr. Battipaglia said. “Whether this recovery continues or flattens out will be made clear in the weeks ahead.”

 
Even in the first moments of the indictment the first speculation was on how GS probably had a heads up and took positions to capitalize. Zero Hedge was asking how, not if, they must have shorted themselves. Sure enough, a few hours later there were more specific rumors. It’s likely that Goldman has committed every financial crime it was able to conceive every time it could, so it would be extremely out of character for them not to have engaged against insider trading against their own market image. After all, it would only be shareholders who took any hit.
 
If the SEC is serious about this, that’s fine as far as it goes, though we have to assume the least. When everyone parses the technicalities of this or the similar Magnetar trade, or any of an endless list of crimes, we get bogged down in counting how many angels were dancing on the head of a pin. What was technically a violation? What was a “crime” in the legalistic sense.
 
This misses the big picture that the rule of law has already long since been subverted. The law was hijacked to legalize many of the worst crimes. A corrupt Congress led the way, with such abrogations of the rule of law as the CFMA, which unleashed CDS into a lawless free-fire zone. Where it’s technically impossible for “crimes” to be committed, crime can run wild. That’s just one example of how the rule of law has been completely liquidated. Few financial crimes are clearly identifiable as crimes anymore, since the system is set up to allow them to use the very complexity which enables their cons to also legally whitewash them. Meanwhile “regulators” are generally compliant and often accessories.
 
That’s the whole point of rule by administrative decree. You first liquidate the law and replace it by the rule of unaccountable bureaucrats. Then you select the bureaucrats themselves according to their conformity with whatever gangsterism is the regime you really want to impose. Any rogues who actually want to work in the public interest are bullied, marginalized, or purged.
 
So in any particular case like this struggling to figure out the technical extent of the “crimes” is likely to be a fruitless effort. Even if the process goes through the motions of establishing a technical violation, there won’t be any real punishment. It’s political theater. Meanwhile the overall criminal regime continues unabated. It’s misdirection.
 
The reality is always that the finance sector is organized crime, across the board. The government and the MSM want us to think that Goldman may have committed an isolated de jure violation here, an aberration from its general pattern of legality, with technical legality being synonymous with moral legality and with what any human community would treat as legal.
 
But the truth is the opposite. Goldman Sachs and all of Wall Street is a criminal enterprise. All of its major actions are crimes according to any common sense measure of morality and rationality. These crimes have simply been illegitimately legalized by a hijacked system of law. Goldman’s crimes are not the aberrations, but rather the criminal trend itself, while its truly legal actions are there only for money laundering and political cover, just like with similar criminal syndicates like the Mafia.
 
Since we live in a kleptocracy, this government will never actually restore the rule of law and bring justice to these rackets. Even what shreds of legality still remain will only be rarely, meagerly enforced. That this anodyne indictment (not even criminal) has been greeted with such a bustle is a testament to what a vacuum justice has become. We shouldn’t lose sight of the big picture – the entire finance sector is criminal, and this legal system has been hijacked and will never be sufficient to solve the problem. If we sit around and wait for the likes of the SEC to set things right, let them set the pace and dictate the scope of what can be done, we’ll definitely remain serfs and eventually become slaves.
 
In the meantime, what’s the real purpose of this lawsuit? The immediate consensus is probably correct. It’s meant to put on a big political show, to make the Obama administration look good as part of the rollout for his finance “reform” bill. In the end Goldman will at worst get a slap on the wrist. (But maybe not even that -there’s always Obama’s cowardice, his propensity to cave in under the slightest pressure even the rare times he ever tries to do something supposedly in the public interest. It wouldn’t surprise me if he fails to follow through on even this paltry little traffic ticket. Look at what happened to his bogus “Volcker rule”.) Meanwhile they seem to be setting up the standard “bad apple”, in this case one Fabrice Tourre, the Goldman cadre who ran the ABACUS operation. Presumably Blankfein and the rest of the brass have plausible deniability. Ah, there’s that “rule of law” again….
So the administration is inviting Goldman to make the bad apple defense. They can get together to make a deal. They can scapegoat this bad apple, implicitly exonerating the Goldman brass. Goldman gets a slap on the wrist, Obama claims a big phony victory. That looks like the plan. (But like I said, watch for Obama to instead cave in.)  
 
(Meanwhile we can see another example of the government’s bad faith in that phony finance bill. They’re sure in need of propaganda help for it. Its centerpiece is looking to be the “resolution authority” scam. We can see the scam when we look at how this vaunted, robust “authority” would actually require court approval to be exercised. The Federal Bankruptcy Court would have to sign off on any resolution. That’s absurd on its face.
 
Even assuming the government ever actually wanted to “resolve” a collapsing big bank instead of bailing it out, which we should never assume, how are you supposed to do this when you’re melting down so fast that “by Monday we won’t have an economy”? All a bankrupt bank has to do is stall, fight the action in court, and the government will feel it has no choice but to cave in and bail them out.
 
That’s the intended outcome of the “resolution authority” scam. It’s designed to fail even in the unlikely contingency that the government really tried to use it.)
 
These are history’s worst robbers. We need to stop obsessing on the scam “legalities” and develop a fully political consciousness and attack. Sure, when there’s a particular example like this, we can have fun with parsing it – but only and always within the broader context that this is part of a political war. Don’t let the government, the banksters, or myopic commentators frame it as: “Let’s see if they got caught in a technical violation. That’s the extent of culpability here. The burden of proof is on the accuser to prove his case according to the technicalities. If this fails, that signifies innocence.”
 
That would be the equivalent of a Russian in WWII having to prove in any particular case that German invaders were committing a technical crime.
 
The right way to look at this case, or any case like it, is “So for once you’re claiming you’re going to apply your law to one of these crimes? Refreshing. But we’re not going to let you fool us. We’ll believe you’re serious about justice when you restore real laws which criminalize all finance crimes. Until then this is all a scam. We’re not going to wait for a day that will never come. We’ll seek to redeem the law on our own.”

April 16, 2010

The Next Step for Krugman

Filed under: Bailouts Only Propped Up Zombies, Freedom, Reformism Can't Work — Tags: — Russ @ 4:34 am
   .
 .
In Krugman’s latest, he gives us another version of the common burning building metaphor to characterize Mitch McConnell’s crooked position on finance reform.
 

On Tuesday, Mitch McConnell, the Senate minority leader, called for the abolition of municipal fire departments.

Firefighters, he declared, “won’t solve the problems that led to recent fires. They will make them worse.” The existence of fire departments, he went on, “not only allows for taxpayer-funded bailouts of burning buildings; it institutionalizes them.” He concluded, “The way to solve this problem is to let the people who make the mistakes that lead to fires pay for them. We won’t solve this problem until the biggest buildings are allowed to burn.”
O.K., I fibbed a bit. Mr. McConnell said almost everything I attributed to him, but he was talking about financial reform, not fire reform.

 
He’s right about McConnell, of course, but Krugman’s scam is to pretend that he wants something different.
 
Let me try the burning building:
 
You have a building which will frequently catch on fire spontaneously, which often sets itself on fire. This fire then spreads to other buildings. Krugman and McConnell are both lying when they pretend to care about these other buildings, and when they claim they have the solution which will prevent further fires.
 
McConnell says “let it burn”. Let’s just vow, No More Bailouts. As Krugman rightly says, that’s obviously a lie. We know damn well the next time the fire starts, it will be fought. There will be another bailout.
 
But Krugman himself offers nothing but a more refined version of the same lie. He has now come out for the “resolution authority” scam. This is of course just the same no-more-bailouts lie, but with an extra layer of lie.
 
Just as we know a “no more bailouts” pledge will be broken when the next crisis hits, so we know any paper “resolution authority” will also be disregarded. The result will be the same – bail them out.
 
We don’t need to speculate on this since we already have resolution authority – the PCA law. This not only allowed but required the “resolution” of the insolvent banks in 2008. But we know what happened to this resolution authority – the same thing which will happen to the next version of resolution authority.
 
(With his silence on this point Krugman pretends this authority doesn’t already exist. He pretends his scam “reform” solution hasn’t already been proven to be a lie. For Krugman, Bill Black is an unperson.)
 
This is what disaster capitalism does. With every new piece Thugman reveals himself more and more its lackey.
 
The real solution for the burning building is in fact to let it burn. Better yet, demolish it. Set up a firebreak to defend the homes and other buildings which need to be defended (BTW, there are far fewer of these than the neoliberal corporatist Krugman and other globalization and financialization cadres think).
 
Let it burn down to the ashes. Once and for all. Then we’d be free of it forever.
 
That’s what reform has to mean – the will to freedom.
 
By definition, any prescription of a corporatist like Thugman, anything which leaves us still under the thumb of gangster rackets, any “order” of things where rackets still exist at all, cannot be reform.

April 14, 2010

Lying Hacks

 

At the NYT the hacks are running wild.
 
Errand Boy Sorkin is peddling the party line that
 
1. The TARP = the Bailout.
 
2. That it might lose less taxpayer money than expected.
 
The MSM has systematically lied to the people about the Bailout’s true monumental dimensions all along, in order to facilitate all sorts of propaganda. Goldman Sachs, JPM, and others paid back the TARP and therefore the Bailout itself; the proclaimed “profits” are therefore legit (and thus the “bonuses” as well); the banks are therefore solvent and healthy, while the government investment is winding down, and now looks like it won’t lose much money, and may even turn a profit. (Elsewhere the other day I saw a claim that even the Citi rathole is actually “profitable” for the taxpayer.)
 
The truth is that the Bailout has already stolen or exposed to theft $14 trillion, while Barofsky’s calculation last year of a $23.7 trillion total potential exposure was rendered antiquated by the quiet moves of Fed and Treasury in December to extend the Bailout limits to infinity, via lifting all limits on laundering the Bailout through Fannie and Freddie.
 
The banks are all permanently insolvent since their balance sheets can never recover a non-fraudulent solvency. Only accounting fraud and the Bailout-supported phony “values” for all that worthless toxic paper keep any of this artificially going at all. All reported “profits” are fraud. The point of this fraud is to enable the banksters to continue their personal looting in the form of “bonuses” and other “compensation”, and to enable the government to lie claiming that the Bailout worked and the banks have been restored to health.
 
Therefore, according to this party line, the system works, the crash was just an accident, and we don’t need structural transformation but merely some tinkering, and this tinkering will constitute real “reform”. That’s the government line and therefore the MSM line, as propagated by hacks like Sorkin and Krugman.
 
Perhaps the most disgusting part of Errand Boy’s piece is his endorsement of accounting fraud:
 

Of course, we’re still expected to lose $48 billion on the government’s rescue of the American International Group. But two people close to the board suggested to me that as the company recalculates the value of assets in its portfolio that were once considered “toxic,” the government could actually claw its way back to even on that investment, if it holds on to its stake long enough.

A year ago, by the way, these same people told me they expected the government to take a “$100 billion bath” on its investment in A.I.G.

 
So there you have it, according to Sorkin. These “assets” aren’t toxic after all, and anyone who says otherwise is, in Sorkin’s term, “panting”.
 
What’s really happening is the mapping out of a two-track future. Kleptocracy, the Bailout, and eventually forcible tyranny on the part of the elite; impoverishment, joblessness, Depression, liquidation and eventual serfdom for the rest of us. Sorkin’s job, besides delivering ransom notes from AIG, is to lie to the future serfs, to help lull them into complacency. He’s not very good at fake empathy, however. He keeps referring awkwardly to this bizarre species, “the American public” with their “panting” and their peculiar notions of “right and wrong”.
 
Buried toward the back of the piece he does briefly touch on the existence of the rest of the Bailout. But he grossly downplays it and implies that it’s arcana over which the reader needn’t much concern himself. He gushes ahead with the whistles and banners of celebration, that this is a “recovery.” (He also quotes the pessimism of dissenter-within-the-system Joe Stiglitz, but represents him as a kind of buffoon. Thus Stiglitz “has made a career of seeing every glass as half-empty” and is trying to ruin our “feel-good moment”. of course Errand Boy himself hasn’t “made a career” out of anything but good solid objective journalism. And needless to say, no critic of the system as such is ever quoted in these pieces.)
 
In all of this, mentioning the formal extent of the Bailout (but misdirecting from any accurate grasp of its real quantity or quality) and citing Stiglitz, Sorkin tries to give the simulation of an even-handed, objective account. But his thesis is the Big Lie, his leading theme is TARP=Bailout, he defends control fraud and the lie that the toxic paper is worth anything at all let alone what it can now be “marked” to under the fantasy accounting regime. He proclaims the banks aren’t insolvent, that the fraudulent “profits” are real, and that it would be acceptable, indeed occasion for “feeing good”, if the taxpayer ended up losing “only” $89 billion on the TARP. He demands that the banks along with their phony “profits” and looted “bonuses” remain in private criminal hands, and his concept of justice is that the criminals themselves, history’s worst robbers, terrorists, and traitors, not only avoid prison (let alone the end of a rope), but get to keep their jobs and stolen wealth, and get to continue with the same crimes. All this while the real America enters the Permanent Depression.  
 
We the people bought the banks. We OWN the banks. Paying back the TARP, i.e. paying back a few pennies worth of our monumental purchase, is meaningless from any point of view other than system propaganda. As for what Sorkin sneers at as our picayune peasant concern with “right and wrong”, yes, we do demand Justice. To real human beings, this system is not just financially insolvent but morally bankrupt, and has to go out of business on that ground as well. We have many reasons to say No Justice No Peace, not the least of which is that the obscene robbery continues, every day, every hour, every minute.
 
Meanwhile Paul Krugman is taking his lies to a new level of criminality. The latest Krugman lies are:
 
1. That reformers say breaking up the bank rackets would be sufficient for real reform.
 
2. That the FDIC doesn’t exist, and therefore “only” breaking up big banks would merely send us back to the old days of bank runs on small banks. (He does try to fudge this lie by saying what’s changed is that we now have “shadow banking”, but this brings us back to Lie #1, since we who demand breaking up the TBTFs also want to drag all shadow banking into the light, and to greatly restrict casino gambling in general. So Thugman’s “answer” to being called on Lie #2 only highlights the malevolence of his Lie #1. It’s a kind of Uncertainty Principle effect. Or to put it in more down to earth terms, it’s the old truth, you tell one lie, then you tell another to cover it up, and so on, and soon your lies get tangled up with one another. Even Hack Number One himself is having this trouble.)
 
Thugman’s real goal is to coordinate the administration line on finance “reform”, that we don’t need structural changes but just some minor tweaks. It’s the same lie Sorkin propagates from another angle. To falsely champion false reform requires falsely disparaging real reform ideas, and therefore Krugman’s project is to disparage the idea of breaking up the rackets. Since even he seems to recognize that he can’t tell the same lie here that he did with the health insurance bailout (there Krugman flatly asserted that insurance rackets could be the vehicle of real reform; but with the banks everyone knows they’re enemies of America – Krugman himself even explicitly said so), he instead conjures the straw man that those calling for breaking up the rackets are claiming this by itself would suffice. With this lie he tries to demonize and discredit real reformers. Thus he tries to clear the path for a reprise of the legislative crime on health insurance. They will try to label as true reform the phony charade of pretending to seek reform. Orwell lives: “Reform” is reform.
 
(Thugman even has the bad Republican taste to pull out the old trick of accusing your opponent of doing exactly what you’re trying to do. So he says, “in practice talking about doing so [breaking up the banks] is just an excuse to avoid real reform”. In Orwellian code this means, “breaking up the big banks is a necessary part of real reform, so my campaign against it is my attempt to crush real reform.”)   

 

 
I do agree with this: “Promises not to bail out banks in the future aren’t credible.” I agree that’s true so long as the bank rackets still exist. Which is why we have to eradicate them. So it’s true, “fail to reform finance now, and there will be two, three, many TARPs in our future.” Of course, since Thugman’s here to defeat the drive to break up the rackets, he’s really here to defeat reform.
 
So why does he do this? Because, as he’s said many times and as he says here (“just letting banks fail isn’t going to happen – nor should it”), by ideology and by mercenary interest he believes the purpose of society is to be mined for the profit of FIRE sector rackets. He’s a corporatist ideologue. He always was. When we consider the moral and criminal indictment, we only need to look at his affirmative activities under Democratic administrations. His negative activity, his attacks on Republicans during the Bush years, have generated a completely misleading picture of who he is. He never attacked Republican policy, only that it was Republicans doing it, only on partisan grounds. Everything else was a pose, a lie. Since Democratic corporatism is back in the saddle, Krugman has resumed his neoliberal aggressor role from the Clinton years.
 
We do get one piece of comedy out of the confluence of these pieces, as Krugman claims to take offense at Sorkin’s characterization of K’s part in the scam gambit of the Swedish-style “nationalization” idea. It’s true, Sorkin does exaggerate what K said (I recall it pretty well). The only purpose of Thugman’s advocacy in the first place was to float that idea just in case there came to be enough political pressure on the Bailout that they needed to pretend they were doing anything other than directly looting. “Nationalization”, the “bad bank” and so on was a scam meant to play the same role if necessary as the “public option” scam played in the health racket bailout. Bait and switch.
 
Since that ended up not being necessary with the bank bailout, Krugman probably wants the record to forget about it. Especially since, whereas a year ago he may still have felt on the outs with the administration, since the health racket bailout he’s all in as a government shill.
 
So he’s huffing and puffing at the Errand Boy demanding an apology. Meanwhile, I won’t hold my breath waiting for Thugman’s apology for lying about what reformers say about the sufficiency of only breaking up the bank rackets.

April 12, 2010

Hail to Blogging

 

Today it’s more important than ever that we have independent, decentralized flows of information and commentary, and new ways to organize. The existing media and political organizations are corrupt and malicious, and seek only to stifle all public interest discourse and activism.
 
The one great promise of the internet which has so far been kept is how it would provide a new democratic space. It’s true that today this is the most capacious public space left in an otherwise increasingly enclosed world, and the only real bastion of participatory democracy left. Those of us who still value positive freedom, true political freedom, must cherish and exploit this great space while it exists, and fight to ensure that it continues to exist.
 
When we look back at the American Revolution today it’s striking how similar the atmosphere and modes of political communication were. Back then they had printing presses while today we have blogs and alt media sites. But the basic parallel of a decentralized dissemination of political ideas and calls to action, avidly devoured and debated, sparking a brush fire which riled itself up into a conflagration, is one we can look to with hope.
 
The basic literary form is the same – the pamphlet. Political blogging is simply old-style pamphleteering. The versatility and robustness of the form have proven themselves since Roman antiquity, and the pamphlets played a major role in preparing the Revolution in America. Common Sense, the Letters from a Farmer in Pennsylvania, the Four Letters on Interesting Subjects, and many others take their place as actions of history and weapons of freedom.
 
Meanwhile the MSM is corrupt and dishonest, and financially moribund. Ad revenues, already in a free fall for years, continue to plummet. Some are even asking if blogging is “winning” a fight against the corporate media. I don’t think bloggers in themselves can assault the establishment media. But the MSM is caught in a vise of its own design. It exalted the predatory corporate model and shilled for it, hoping to be a well-paid prostitute. But by its very nature corporatism has no gratitude or forbearance for sluggish performers. As it perceives its stranglehold to be secure, it won’t feel as much of a need for a pseudo-independent media to serve as a propaganda wing, if this is more expensive than using the government as a direct extortionist. Plus, it’s in the very nature of corporatism to liquidate every weak link by bleeding it even more vampirically. So it was predictable that as soon as advertiser-driven media found itself in any kind of financial difficulty, that advertisers would rush to lowball them. If I’m the ad buyer I figure, if you as a newspaper are charging too high an ad rate, I bet your competitor will offer me a lower one. You guys need me more than I need you.
 
So the MSM’s race to the streetwalking bottom hasn’t availed them. It’s only made their position worse and worse. (One of the few good pieces of Schadenfreude in this whole mess has been the poetic justice being visited upon the MSM. The way they’re an ongoing object lesson in how appeasement and prostitution don’t work.) Meanwhile the other grip of the vise is how, as the corporate media’s coverage is so obviously rank propaganda, the people no longer believe or value it, and become ever less willing to pay for it. (I sure never would.) Here’s where bloggers and the alternative media can come into the picture.
 
The blogs become more popular as, at their best, they offer the only outsider, non-corporatized point of view on the idiocies and crimes which afflict us. Here’s where the people can find the real discussion and the real truth-telling they will never get from the corrupted government, media, or academia. Here’s the first space where the power structure is completely collapsing, where power is falling back into the people’s hands as an unrefined glop, and where we have the chance in refine it anew for the sake of freedom and the public interest. That’s the essence of a revolutionary situation.
 
And there’s the sense in which, if blogs and alternative websites can maintain their integrity, refine this new people’s power and and cohere to a movement, that this could be a force fighting the powers that be, even something that could battle and “win”. So in that dialectical sense we may someday be able to talk about independent media winning against the corporate media.
 
But this is no freedom idyll. There are great threats on the horizon, and if our freedom isn’t vigilant today it may have no tomorrow. The most obvious threat to the integrity of the blogs is astroturfing. Today we survey the wreckage of the great dream of the “progressive” blogosphere, which arose as a veritable anti-Bush resistance movement. It claimed to oppose Republican ideas and policies, and many believed it. Today we know most of these bloggers were liars, that they were really partisan Democratic hacks who never opposed any Bush policy (corporatism, war, assault on civil liberties, secrecy, imperial presidency, just to name a few examples) but only that it was Republicans doing it.
 
We must take to heart the lesson of this disaster. The blogosphere cannot achieve its own emancipation so long as it remains ideologically beholden to any aspect of the existing system. By definition a blog that supports, for example, the Democratic party is not part of the blogosphere but an appendage of the corporate system trying to extend its hedges of enclosure into the blog space. This isn’t a picayune matter of “opinion”, but a structural feature of the age. One can be on the side of corporatism or of freedom, but never both, nor is any mediation possible.
 
Another threat is that the net sector may follow the usual processes of media consolidation and feudal calcification. Although what’s been called the “gated community” model of the online experience as envisioned by AOL, Compuserve and others was temporarily defeated in favor of a more freewheeling, decentralized setup, that’s no guarantee that it won’t still be the eventual victor. Every other sector ends up that way. Closely related to this is the critical net neutrality issue, where America just suffered a setback in a court decision which sided with the tollbooth tenders. According to what I read this was actually based on a technicality which can easily receive a technical fix (assuming this administration is willing to make such a fix, which I don’t assume; net neutrality’s yet another place where Obama has said all the right things, but we’ll see about the actions). But we should take it as a shot across the bow. Even if this decision was on a technicality, there are plenty of rogue corporatist courts which won’t need technicalities to serve as goons for the telecoms. (The scary thing with this issue is that, so far as I can see, we’re still in the hands of federal regulation and the noblesse oblige of companies like Google. I’m not sure how relocalization works where it comes to the activism of internet freedom.)
 
Then there’s the specter of censorship. Google’s recent (if belated) stance against Chinese censorship looks like a rare bright path in an otherwise blackening sky. If Yahoo and Microsooft went all in on collaboration with the Chinese government, there’s little reason to believe they wouldn’t do the same at home, as fascism becomes more overt. Thoroughgoing online censorship is already the order of the day in Australia. Meanwhile here in America we have Obama cadre and “supreme” court hopeful Cass Sunstein’s battle plan for the full castration of the unruly net. (Sunstein, a totalitarian by nature, has hated the internet since its inception. He instinctively hates anything that’s not dictated from the top down. He speaks in classical totalitarian code, claiming to want to use his “nudges” for the sake of democracy, when in practice they would always serve the corporate interest. It’s the same thing as with the “logic” of alleged speech activists who supported Citizens United.) The MSM are already enlisting in this war on the blogosphere.
 
That’s direct censorship. But there’s also the soft censorship of the economics of online access. Just as free speech in general is corrupted wherever monetized, so as the Depression sets in and fewer people can afford online access, the democratic promise of the internet will dissipate in the wind as it becomes a de facto gated community, rationed according to ability to pay. This makes it all the more critical that we maintain our libraries, which for many among the ever-expanding ranks of the poor provide the only opportunity to go online. By definition you can’t have a democracy where access in itself requires purchasing a ticket. (But libraries are being gutted as well.)
 
And then there’s the robustness of the internet itself. The system requires tremendous energy inputs, for its normal operations and infrastructure maintenance. As Peak Oil sets in and energy becomes ever more expensive, we’ll have yet another economic barrier to access, as well as instability in the physical system itself. Would fortresses of the rich, using their self-contained solar and wind systems, be able to maintain their own feudalized version of the web (I assume they wouldn’t be able to string wires from compound to compound)? Where would the spare parts come from? I suppose if things ever reach that extremity than the idea of democracy we’re talking about will be a moot point. But we can envision less complete manifestations of the problem. Just as we’ve already seen spot shortages of gasoline like in the Southeast in 2008, so we can expect to see increasing brownouts and blackouts as the system experiences problems with upkeep and delivery. Such blackouts will, of course, be manipulated for the benefit of the rich. (For example, the Giuliani administration in NYC was accused of browning out poor neighborhoods during the hottest times of summer to make sure there would be enough juice to run the air conditioners in rich neighborhoods.)
 
So there’s a rundown of the blogosphere’s democratic possibilities and the threats it faces. I know we don’t need more stuff to have to think about, but for the time being we’re unlikely to make progress on any point if we can’t discuss it online freely and in great numbers. So in that sense an issue like net neutrality is a preconditional issue.
 
In spite of the stumbles, in spite of the betrayals, we have a blogosphere growing in vibrancy and strength. If we want this growth to stay robust, this health to overflow, we’ll have to fight for that as well.
 
Here again we must achieve the vigilance of freedom. 
Older Posts »

The Silver is the New Black Theme. Create a free website or blog at WordPress.com.

Follow

Get every new post delivered to your Inbox.

Join 251 other followers