Volatility

September 13, 2011

New Orleans-Style Shock Doctrine Possibilities in New Jersey

Filed under: Climate Crisis, Corporatism, Disaster Capitalism, Relocalization — Tags: — Russ @ 3:01 am

>

These are some speculative thoughts inspired by history and some unconfirmed anecdotes I’ve heard. The fact is that significant areas of NJ were severely flooded by hurricane Irene (not to mention a second thorough soaking which followed a week later). These included residential and commercial areas, including some which still held a high proportion of local businesses. It’s this last group which got me thinking.
 
Obama declared the place a federal disaster and made one of his stupid drive-by appearances. (Governor Christie got into a nice little spat with some fellow Republicans over it – you know how these hypocrites are the moment it’s their turn to mooch). In theory disaster aid means subsidized loans from the Small Business Association and grants to municipalities. (Only infrequently direct grants to homeowners.) Given Obama’s record, it’s hard to believe he’s not going to corporatize this as much as possible. But I admit I can’t find anything indicating that yet. All NJ media stories I could find (here’s a typical one) merely regurgitated the administration press release.
 
It’s true that especially the people of poor neighborhoods in Paterson and elsewhere doubt they’ll actually get help. They know the record of this government in general and in disasters like New Orleans in particular. They believe government is trying to just temporarily mollify them with rhetoric. In practice it will either neglect or assault them.
 
In New Orleans government collaborated with corporate predators to use the destruction as a pretext to seize and privatize large swaths of public land and infrastructure. Naomi Klein described the crimes in Shock Doctrine:
 

The news racing around the shelter [in Baton Rouge] that day was that Richard Baker, a prominent Republican Congressman from this city, had told a group of lobbyists, “We finally cleaned up public housing in New Orleans. We couldn’t do it, but God did.” Joseph Canizaro, one of New Orleans’ wealthiest developers, had just expressed a similar sentiment: “I think we have a clean sheet to start again. And with that clean sheet we have some very big opportunities.” All that week the Louisiana State Legislature in Baton Rouge had been crawling with corporate lobbyists helping to lock in those big opportunities: lower taxes, fewer regulations, cheaper workers and a “smaller, safer city”–which in practice meant plans to level the public housing projects and replace them with condos. Hearing all the talk of “fresh starts” and “clean sheets,” you could almost forget the toxic stew of rubble, chemical outflows and human remains just a few miles down the highway….

Endesha Juakali helped set up a protest camp outside one of the boarded-up projects, St. Bernard Public Housing, explaining that “they’ve had an agenda for St. Bernard a long time, but as long as people lived here, they couldn’t do it. So they used the disaster as a way of cleansing the neighbourhood when the neighbourhood is weakest. … This is a great location for bigger houses and condos. The only problem is you got all these poor black people sitting on it!”….

Over at the shelter, Jamar Perry, a young resident of New Orleans, could think of nothing else. “I really don’t see it as cleaning up the city. What I see is that a lot of people got killed uptown. People who shouldn’t have died.”

He was speaking quietly, but an older man in line in front of us in the food line overheard and whipped around. “What is wrong with these people in Baton Rouge? This isn’t an opportunity. It’s a goddamned tragedy. Are they blind?”

A mother with two kids chimed in. “No, they’re not blind, they’re evil. They see just fine.”

 
This included the idea that the corporate-government nexus should launch a full-scale assault upon the people while they were dazed and disoriented, much like police thugs arresting someone at 2AM. This shock treatment idea was premeditated by Milton Friedman and his Chicago colleagues going back to the 50s:
 

In one of his most influential essays, Friedman articulated contemporary capitalism’s core tactical nostrum, what I have come to understand as the shock doctrine. He observed that “only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That’s our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.” Some people stockpile canned goods and water in preparation for major disasters; Friedmanites stockpile “free-market” ideas. And once a crisis has struck, the University of Chicago professor was convinced that it was crucial to act swiftly, to impose rapid and irreversible change before the crisis-racked society slipped back into the “tyranny of the status quo.”

 
So it was in New Orleans. (Many commentators scoffed at or considered overblown and “conspiratorial” the allegation that federal government consciously sought this goal. The Bush administration denied it. Characteristically, it was left to the Obama crew to openly admit it.)
 
So what could be the parallel in NJ? It’s true that infrastructure like public schools don’t look like an immediate easy target and weren’t tremendously damaged anyway. But anecdotally, there’s already speculation about what damage to individual businesses will be covered by government and/or private insurance*, as well as reports than in some places not previously prone to flooding (but hit hard by this storm), many had foregone flood insurance completely. This is based on anecdotes I was told, not on anything I read, nor could I find confirmation (or disproof) in the media. So I don’t know how much this is true, but certainly it all rings true. The specter looms of harried municipalities turning in desperation to lowball offers from corporate developers and retailers (themselves, no doubt, well larded by federal aid), at the same time that devastated local businesses are left unable to rebuild. We know where that all leads.
 
We’ll see if this acceleration of Walmartization, whether as acutely intentional or chronically inertial disaster capitalism, turns out to be the case. If I hear anything new I’ll let you know. If anyone has more information let us know.
 
[*Meanwhile, as disasters continue to compound, ever more financially devastating, we have to wonder how long it'll be before insurers try to abrogate as a group with regard to some disaster. I'm sure that where it comes to any particular disaster there's a theoretical out which could absolve insurers of having to pay, just like health insurers always look for ways to refuse payment. I'm sure Congress and many courts would be friendly.
 
One historical precedent is Kristallnacht. Synagogues, cemetaries, and Jewish-owned businesses all over Germany were damaged or destroyed in a one-night pogrom. Most of these were duly insured. The insurance companies raised a stink over paying on these claims. Although of course they didn't publicly say so, they knew that the allegedly "spontaneous" mob action was really orchestrated by the regime from above. Why should they get stuck holding the financial bag for all that damage?
 
In his capacity as head of the Four Year Plan, the command economy coordination structure, Goering issued a ruling that the insurers weren't liable for claims arising from Kristallnacht. (The logic was basically that through their provocations the Jews had brought the spontaneous people's reaction upon themselves.)
 
We have the same ingredients today - tyrannical elitist government, insurance rackets trying to minimize payouts even on claims everyone recognizes are legitimate, complete contempt for the people. So while federal insurance can be counted on to continue to assist big developers in their endless rebuilding on flood plains, we can equally expect all types of insurance to try to evade paying where it comes to keeping local small businesses in business.]
 
Before I close this passel of speculation, I want to make a comment on system disaster assistance in general. Federal assistance is under the general aegis of FEMA, a highly disputed organization. The system calls it a selfless public servant, detractors accuse it of setting up concentration camps. While the camps certainly exist on paper and to some extent in reality and can be used for any purpose, so far in practice FEMA’s record has been typical corporatism – do all one can to promote corporate interests while neglecting one’s ostensible responsibilities as much as possible, doing only the bare minimum. This record (as well as a basic hollowed-out incompetence) was also borne out by the New Orleans experience.
 
I think Derrick Jensen gets it right – FEMA is by design a tool which can be used for pretty much any purpose. I’ll add that by now it’s likely to be incompetent at its “good” uses. But this may mean it’ll also be incompetent at tyrannical uses.
 
Some commentators noticed another New Orleans parallel. Just as with Katrina, the pre-storm call from “authorities” was for people to prepare or evacuate on an individual basis, usually including the same callous assumptions* about people’s ability to get out. There was little in the way of any kind of collective effort. This is by design, part of the general anti-cooperative ethos of the entire unsociety.
 
[*I did see one local newspaper account. People had been driven from their homes by evacuation orders and rising floodwaters. Now the waters were allegedly threatening the hotel into which they'd been driven. The police showed up there to order another evacuation, but as a group the refugees angrily declared they had nowhere left to go. The police left. (The hotel never did flood.)
 
The article, of course, said the police "allowed" them to stay. No, it sounded more like the people made it clear they weren't leaving short of the police arresting and dragging them away. Facing such defiance, the cops backed down. They weren't capable of handling it.
 
Just one little example of the way power flows have always worked throughout history. No one in power ever "allows" anything. The people take what they can.]
 
Whatever the momentary character of a disaster or the government response to it, one rule we can recognize is that the government does not mean well, and its efforts will be incompetent at best, malevolent at worst. We can rely only on ourselves. We can choose to do so the way we have been, as atomized individuals, or we can do it cooperatively as part of the relocalization movement. (How best to do this has been debated before within the movement.) One thing to always keep in mind is that you DO NOT want to end up in anything like a refugee camp. This must be avoided if at all possible.
 
Well, I hope this post wasn’t too episodic and rambling. It’s just some thoughts and possibilities I wanted to rope together into a preliminary assessment/prognostication. Food for thought.
 

June 1, 2010

The Freedom Flotilla and the Neoliberal Assault (1 of 2)

 

Israeli pirates physically stopped the Freedom Flotilla, but the spirit and idea of the Flotilla continue on their voyage to Gaza and to everyone besieged by the neoliberal/corporate onslaught.
 
As more information comes out, the Israeli “side” sure doesn’t look any better. The IDF’s own media presentation can’t obscure the fact that they launched an attack on the high seas. They’re reduced to whining that their commandos were resisted with improvised implements. The pirates’ own video seems to show the overmatched activists heroically resisting a professional assault any way they could.
 
Nothing Israel or their US lapdogs say can elide the basic, dispositive fact: The Israelis attacked civilian ships in international waters. All else is peripheral to this. (Although as I just described, their own video shows they’re lying when they claim they were “ambushed” by the activists.)
 
So the pro-Israel flunkey position boils down to:
 
1. The High Seas belong to Israel.
 
2. Therefore they have the right to commit piracy. (Technically, it may in fact be an act of war rather than piracy. But it has to be one or the other. Morally, and from the point of view of man’s law, it’s a crime. It’s first degree murder. War, piracy, do the legalities matter anymore? All law has been hijacked by the power elites and will be infinitely twisted to their ends. So human beings are left with only moral and political categories.)
 
Meanwhile, as the world comes together to condemn this crime, Bailout America stands alone in its lame attempts to exonerate Israel. As predicted, Obama’s response is to oppose placing blame on the killers, but instead wanting a bland, impersonal statement against abstract “violence”.
 

Prime Minister Benjamin Netanyahu of Israel canceled plans to come to Washington on Tuesday to meet with Mr. Obama. The two men spoke by phone within hours of the raid, and the White House later released an account of the conversation, saying Mr. Obama had expressed “deep regret” at the loss of life and recognized “the importance of learning all the facts and circumstances” as soon as possible.

 
Yes, we need the pertinent facts. In this case, we already have the overwhelmingly pertinent fact: Aggression on the high seas. International waters. Piracy. That renders all else insignificant.
 
(It’s no surprise that Obama agrees with the Israelis’ claim to “sovereignty” over the high seas. Obama has already tacitly surrendered US sovereignty in its own waters. He has alienated sovereignty in the Gulf of Mexico to the stateless non-legitimate entity BP. When a government does that, it abdicates any legitimacy it had in itself. Clearly Obama believes in no principle of sovereignty or law whatsoever. Clearly he believes in nothing but corporate prerogatives and might-makes-right.) 
 
Decent people of course recognize this, thus the unanimous condemnation among all who aren’t part of the Western globalization power structure.
 
As for the video showing the victims fighting back, good for them! Although this was no “ambush” the way the Israelis’ lie would have it, even if it had been that would make no difference. Whether you look at it  morally or in the most legalistic terms, either way on the high seas they have every right to resist pirates attacking the ship. It’s exactly as if a robber were breaking into your home. (It’s funny the way the IDF calls the activists “rioters” on their own ship. That’s like the burglar calling the homeowner who pounces on him a rioter in his own home.)
 
This is really naked state terrorism. The proximate motivation here is Israel’s will to enforce its regional totalitarian dominance. From that point of view, for nonviolent activists to challenge the blockade, that is to challenge Israeli “authority”, is an offense punishable by death. That was the proximate occasion for the dispatch of this death squad, to carry out a mass execution.
 
At the next level, we see how as always the Global War on Terror is a pretext for the aggressive deployment of power. Hamas has of course been a threat to Israelis, although not to Israel itself. But just as with “terrorism” worldwide, which poses no existential threat to any western entity but is everywhere used as the pretext to justify police states and imperialism, so here Hamas is really the pretext for Israeli neoliberalism to aggressively extend its power and robbery and tyranny.
 
What is Israel? As I wrote in February, it’s not just any country, but serves as the spiritual and organizational core for the totalitarian security-industrial and disaster-capitalist complex. The global aspects of these have radiated out from that core, for example through China to the West.
 
Two excerpts from Naomi Klein’s Shock Doctrine describe it well:
 

What makes Israel interesting as a guns-and-caviar model is not only that its economy is resilient in the face of major political shocks such as the 2006 war with Lebanon or Hamas’s 2007 takeover of Gaza, but also that Israel has crafted an economy that expands markedly in direct response to escalating violence. The reasons for Israeli industry’s comfort level with disaster are not mysterious. Years before US and European companies grasped the potential of the global security boom, Israeli technology firms were busily pioneering the homeland security industry, and they continue to dominate the sector today…From a corporate perspective, this development has made Israel a model to be emulated in the post-9/11 market. From a social and political perspective, however, Israel should serve as something else – a stark warning. The fact that Israel continues to enjoy booming prosperity, even as it wages war against its neighbors and escalates its brutality in the conquered territories, demonstrates just how perilous it is to build an economy based on the premise of continual war and deepening disasters.

 
Israel serves as the frontier outpost and proving ground for all imperial assaults:
 

Israel’s case is extreme, but the kind of society it is creating may not be unique. The disaster capitalism complex thrives in conditions of low-intensity grinding conflict. That seems to be the end point in all the disaster zones, from New Orleans to Iraq. In April 2007, US soldiers began implementing a plan to turn several volatile Baghdad neighborhoods into “gated communities”, surrounded by checkpoints and concrete walls, where residents would be tracked using biometric technology. “We’ll be like the Palestinians”, predicted one resident, watching his neighborhood being sealed in by the barrier. After it becomes clear that Baghdad is never going to be Dubai, and New Orleans won’t be Disneyland, Plan B is to settle into another Colombia or Nigeria – never-ending war, fought in large measure by private soldiers and paramilitaries, damped down just enough to get the natural resources out of the ground, helped along by mercenaries guarding the pipelines, platforms, and water reserves.

 
Claude Salhani referred to the “spill over of trouble” from the Middle East. Nowhere is this more true than with the toxic mindset and practices of Israeli crypto-totalitarianism. That’s what corporate imperialism wants, to bring all its trouble home. Disaster is its business, as we’ve seen over and over in recent decades. Since 2008 disaster has been enshrined as the official basis of the US economy and polity themselves. Between the institution of the permanent Bailout, already in place under Bush but with full cooperation from candidate Obama, and then Obama’s enshrinement of Bush’s permanent war and war crimes regimes as official US policy (as opposed to a Bush/Cheney aberration), we now have the enshrinement of a new, toxic regime, Bailout America.
 
This brings us back to the Flotilla atrocity and its broader implications. Just as Israel’s version of the “war on terror” is one iteration of the Global War on Terror, so Israel’s will to enforce regional domination is a regional iteration of the neoliberal global will to total domination. The real terrorists, in deed and propaganda, are the neoliberal thugs themselves.
 
As the banksters and globalization elites contemplate the next stage of their economic assault, in particular as they attempt to fit the peoples of the countries onto the various torture devices of “austerity”, they face increasing protest. Possibly resistance. That’s why the Freedom Flotilla, which seeks to be exemplary in the eyes of freedom activists the world over, was the target of this brutal assault. The robbers want the example to be a demoralizing and terrorizing one. The real target audience for this exercise in terrorist propaganda is activists and anybody contemplating protest and resistance, all over the West. The real targets are Greek protestors and anybody else who might get uppity about being crucified on “austerity”.
 
What does US “diplomacy” say?
 

The United States, which habitually defends Israel in the council, said that the attempt to run the blockade by sea was ill advised. “Direct delivery by sea is neither appropriate nor responsible, and certainly not effective, under the circumstances,” said Alejandro Wolff, the deputy permanent representative of the United States.

 
Yes, when pirates attack the ship and slaughter the passengers and crew, delivery tends to be “not effective.” The veiled threat is clear: “To all you activists, do you think [whatever resistance you contemplate] will be effective? Not if we kill you instead.”
 
So now we’ve seen overt fascist terrorism before the eyes of the world.
 
The crime is the same as where Obama claims the right to put out a hit on anybody he chooses, anywhere, without trial, on his “authority”. The crime is to challenge corporate domination. To engage in assertive nonviolent activism against the global kleptocracy is a capital crime. This was a mass execution.
 
So as I said yesterday, this is a war of example against example, lesson against lesson, idea against idea. The killers want to efface the exemplary courage of the Flotilla crewmen by drowning our courage in the blood we’ve seen flow. As always with the tactic of terrorism, they want to use terrorism to force fear and resignation to overwhelm courage and exuberance and resolve in the minds of the people.
 
So far it doesn’t seem to be working, as the world has spoken with one voice its revulsion and rage. But the real test is the long grind. I hope Hamas learns a lesson from this and takes up the tactic of assertive nonviolence rather than playing into the hands of the killers by reciprocating with further violence against civilians. That’s just what the Israelis and the neoliberals at large want – the dialectical burning of the world in a gyre of terrorism and state terrorism. Their world is the burning world. They expect to lauch their arsonist sorties from secure fortresses while the rest of the world alternately slaves and tears itself to shreds.
 
But if instead we the people unite for the Ghandiesque counteroffensive on a global scale; if we can keep dictating the battlefield and the pace through assertive nonviolence; and if we don’t let the thugs quash our intelligence and resolve with the fog of fear and hate; if we do all this, we’d turn the flames around. The nightmare they’ve prepared for us would become their nightmare, while we’d emerge from the smoke into a new sunlight.
 
The Freedom Flotilla is holding that course and will do so for as long as we hold the course with them.

March 12, 2010

Bush Rehab (Social Fascists, 1 of 2)

 

It’s long been known among those familiar with him that Obama is a neoliberal corporatist. That’s why, under Robert Rubin’s tutelage, he became the recipient of the bulk of Wall Street donations. Still, even the corporatists must be pleasantly surprised at the gleeful alacrity with which Obama has broken all his change promises and instead devoted his presidency to looting the country on their behalf even more brazenly than Bush did.
 
Meanwhile the Republicans, who had to expect the worst for themselves (since Obama could easily have served his masters while still hammering the Reps), must be amazed at how well Obama and the Democrats have fixed things up for them as well. If Obama’s actions prove that his first priority is to serve Wall Street and the big rackets, his second has been to rehabilitate George Bush and the Republicans.
 
It was only a little while ago that Bush policy and Bush disasters were almost universally repudiated as one long bad dream. Everyone agreed that Iraq was a debacle, that the MSM had behaved shamefully in shilling for it, serving as stenographer for administration lies, that Democrats had been wrong to support it. Since the financial crash everyone uttered a big sigh of relief that Social Security privatization had failed. Everyone said, Where would we be today if Bush and Wall Street’s plot had succeeded? Fighting back to defeat it was the Democrats’ one great moment in an otherwise dismal decade of cowardice and betrayal. Even Republicans didn’t want to associate themselves with the Bush years exemplified by the monumental failure and betrayal of Katrina. 
 
Katrina broke Bush’s spell over the people. Katrina opened up the space for the Dems to crawl back into power, as Bush’s real approval rating permanently plummeted below 30%. For the rest of history, any revived good feelings for Bush and his Republicans will only be the result of nostalgia as things get even worse. The truth about how the people really saw him will never change.
 
But Democrats are also eternally Democrats, and the same cowardice and betrayal which characterize them in opposition even more profoundly mark them in power. Look at how Obama and the Dem establishment have embarked upon the full-scale rehabilitation of all the defining Bush policies and actions.
 
Obama’s refusal to obey the law and bring Bush war criminals to justice is one part of a broader program to reglorify Bush’s war, including Iraq. Obama did say he’d continue the war in Afghanistan, while promising to get out of Iraq. But he never hinted at the sprawling escalation he’s actually embarked upon in the Afghan theater. Meanwhile, he’s indicating that the vaunted Iraq withdrawal also isn’t going to happen.
 
The Democratic rehabilitation of the Iraq war and the most vile tactics used to fight it has in turn encouraged the MSM to flip yet again on the war. After their sojourn of some years of apologetics and even some alleged self-searching, outfits like the WaPo and NYT coming back full circle to their original jingoism. (These days chickenhawk Bill Keller at the NYT seems to want to outdo the Times’ old bloodlust, even soliciting op-eds complaining that Americans aren’t killing enough civilians.) Afghanistan, just like Iraq before it, is the glorious project for a unified front of the same old warmongering flacks representing themselves as decent, responsible people. And now even Iraq is being restored to its old respectable position.
 
Surely it could never be possible that the worst fuck-up of an American government imaginable, the multiple SNAFUs which converged in the Katrina disaster, could ever be rehabilitated? For the first time in broad daylight, for all the world to see, America was revealed in its true banana republic nature. No one would ever want to revise this as a great time. And when Naomi Klein depicted in Shock Doctrine how American governments and business leaders were overjoyed at the disaster capitalist opportunities the havoc had opened up, this was surely a slanderous exaggeration on her part? Sure, there’s always a few rotten crooks and vultures in any disaster, but decent people would never so much as think, let alone act upon, such a notion as exploiting the great suffering of a disaster-beleaguered people to do things like destroying their homes and schools permanently?
 
Well, yes they could. And while Bush’s own people lied about their intent and actions, it was left to Obama himself to openly say, “Katrina was a good thing”. We now have smoking gun confirmation that Klein was always right not only about the actions but the systematic intentions and precalculation. Yet it’s not even unreconstructed Bush Republicans who are cheering on the Bush system’s crimes here. Here, as with Iraq, it’s the Obama administration which has dedicated itself to rehabilitating Bush’s worst crimes and failures. Obama’s goal is nothing less than to revise history so that Bush’s worst disasters are reformulated as triumphs.
 
Obama’s actions prove that he cherishes his position as steward of Bush’s assault on civil liberties. And, as the keystone of his overarching dream of out-Bushing Bush, Obama even wants to carry to completion Bush’s failed project to privatize social security. Never mind that there’s no reason to even think of this; that for this zombie system a dozen crises loom, any one of which is more pressing than this; how the system will be brought down of its own weight long before Social Security could ever come into crisis of its own accord; how even acknowledging the notion gives aid and comfort to Republican memes in general; how nobody who’s not a criminal wants to even discuss “entitlement reform” right now.
 
None of that matters. Obama, with the support of the deficit terrorists* in the MSM, has unilaterally decreed that privatization must be on the table. The only conceivable reason to do it is to further empower Wall Street, and that as always is Obama’s main motivation. But he also wants to step up the assault on the social safety net, on general principle. That’s part of his homage to his true hero, Reagan. And here above all we see the reason for his rehabilitation of Bush. If Obama can first redeem Bush, revive all of Bush’s ideas and projects, reaffirm them all as good, and then outdo Bush at their achievement, he’ll have proven himself even more Reaganesque than Bush. He’ll be the real Bush, and therefore the real consummator of the Reagan revolution, and therefore the consummator of neoliberalism and the imperial presidency in themselves. Here we see the true evil and derangement of Obama’s deepest fantasy.
 
That’s why some commentators, including myself, have compared gutting Social Security and Medicare to Nixon’s going to China. Just as it’s been supposed that only a Republican could go to China, so now they’re trying to make it look like only a Democrat can undertake the necessary (in the mind of the establishment) painful job of destroying these popular programs.
 
Does this sound like a fanciful interpretation? It’s borne out by the evidence. It’s hard to explain Obama’s actions otherwise. And Obama’s only the epitome of the true nature of Democratic party hacks and liberal cadres. He exemplifies what they really are, as I’ll discuss in the sequel to this post.
 
[*Just to be clear, the reason deficits don't matter is because the system is already unsustainable because of the lack of sufficient physical energy to keep it "growing", and because, as we're already seeing, the debt tower is just one big ponzi scheme. Even if there were no such thing as Peak Oil, the system's own contradictions render it impossible to prop it up. They're liquidating the rest of the existing "consumers", and they're not going to be able to create new ones out of Chinese peasants.
 
So for these reasons the reserve currency's already a dead dollar walking. The entitlement system is already doomed. All these now are just political fictions. So if the issue of a "reform commission" comes up, that's just the same exercise in political theater as the legislative kabuki over bogus health "reform" or finance "reform". The only question is who gets a political boost out of the way a play is performed.
 
So if Obama makes up out of thin air this alleged necessity to resurrect a Republican meme which was dead and buried, this can only help the Republican political brand as such. Indeed, it's so obvious that it's hard to believe even he's stupid enough not to realize that. That's why it's such a prime piece of evidence that Obama actually wants to rehab the Republicans.
 
If we ask how he could think that sacrificing himself for the sake of the Republicans would gain him credit as having consummated the Reagan legacy, why he doesn't know that they'll still revile him as a "socialist" and spit on his memory, I guess we can chalk that up to his fundamental kumbaya character flaw. Deep down he's not only desperate for the right-wing cool kids to like him, but is actually deluded that his own personal greatness and righteousness (as he's deluded into seeing them) will overcome all their resistance, contempt, and hatred.] 

February 10, 2010

Imperialism vs. the Law

 

The Napoleonic failure to unite Europe under the French flag was a clear indication that conquest by a nation led either to a full awakening of the conquered people’s national consciousness and to consequent rebellion against the conqueror, or to tyranny. And though tyranny, because it needs no consent, may successfully rule over foreign peoples, it can stay in power only if it destroys first of all the national institutions of its own people.

 
So says Hannah Arendt in The Origins of Totalitarianism.
 
That’s our theme – how conquest which seeks nothing but economic exploitation must in the end rule tyrannically, and how this in turn must bring tyranny back to the imperial country itself. Those who have fought imperialism on behalf of the exploited and conquered have always also been fighting for their own liberty which was under implicit, and increasingly explicit, assault. Over the past decade that’s been proven true with great ferocity, as the long economic assault on America’s non-rich, and on our politics and press, has been joined by the vicious assault on civil liberties, the freedoms of speech and assembly, the rise of the imperial presidency, the militarized police, and the prison-industrial complex.
 
Today we have to look at everything in the sense of dissolving the rule of law. The law of the home country is no longer indigenous, “national” law, but the imperialist state “law” which is really nothing but process for the sake of maximized corporatist outcome (to put it in terms of jurisprudential philosophy, the corporatists are consequentialists all the way, they care about means only toward an end, while those who would ever stand fanatically on some myopic means, like the ACLU and other process fanatics where it came to the Citizens United case, are once again playing by rules the enemy will never pay by; I’ll revisit this in an upcoming post). “Law” as would be fit only for the extralegal, anti-political business competition becomes the “law” of the country. Corporatized capitalism becomes the ruling social ideology.
 
A core part of the process of imperialism coming home is the breakdown of the rule of law. In that connection I found this article by Claude Salhani interesting. He broaches the possibility of Israel joining the European Union. The implications he discusses seem so far-fetched that reading it, I thought it was tongue-in-cheek. “They’ll just get a waiver for that”, I kept saying. But I think he was serious.
 
But meanwhile maybe we should read it in reverse. In that case its a fascinating piece, almost Swiftian. For everything he says would have to change in Israel, I think we need to make the experiment of reading it as, “This is how the EU has to change to become more like Israel.” (And the US too.)
 
Salhani starts out deploring the “deadlock” in the Middle east peace talks and its ruinous effect on imperial investment in the Mideast. He goes on:
 

And whenever trouble brews in the Middle East it tends to spill over into other parts of the world. The risk that Mideast violence could spread to nearby Europe might have been one of the reasons that pushed Italian Prime Minister Silvio Berlusconi to say that Israel should be admitted into the European Union earlier this week. Berlusconi made the statement during an official state visit to Israel. Berlusconi, of course, is one of Israel’s strongest supporters.

 
But what is Israel? It’s not just any country. It has a very well-defined role as ground zero for the totalitarian security-industrial complex, all of whose aspects have radiated out from that core.
 
Naomi Klein describes this in Shock Doctrine:
 

What makes Israel interesting as a guns-and-caviar model is not only that its economy is resilient in the face of major political shocks such as the 2006 war with Lebanon or Hamas’s 2007 takeover of Gaza, but also that Israel has crafted an economy that expands markedly in direct response to escalating violence. The reasons for Israeli industry’s comfort level with disaster are not mysterious. Years before US and European companies grasped the potential of the global security boom, Israeli technology firms were busily pioneering the homeland security industry, and they continue to dominate the sector today…From a corporate perspective, this development has made Israel a model to be emulated in the post-9/11 market. From a social and political perspective, however, Israel should serve as something else – a stark warning. The fact that Israel continues to enjoy booming prosperity, even as it wages war against its neighbors and escalates its brutality in the conquered territories, demonstrates just how perilous it is to build an economy based on the premise of continual war and deepening disasters.

 
It’s the frontier outpost and proving ground for all imperial assaults:
 

Israel’s case is extreme, but the kind of society it is creating may not be unique. The disaster capitalism complex thrives in conditions of low-intensity grinding conflict. That seems to be the end point in all the disaster zones, from New Orleans to Iraq. In April 2007, US soldiers began implementing a plan to turn several volatile Baghdad neighborhoods into “gated communities”, surrounded by checkpoints and concrete walls, where residents would be tracked using biometric technology. “We’ll be like the Palestinians”, predicted one resident, watching his neighborhood being sealed in by the barrier. After it becomes clear that Baghdad is never going to be Dubai, and New Orleans won’t be Disneyland, Plan B is to settle into another Colombia or Nigeria – never-ending war, fought in large measure by private soldiers and paramilitaries, damped down just enough to get the natural resources out of the ground, helped along by mercenaries guarding the pipelines, platforms, and water reserves.

 
Salhani referred to the “spill over” of “trouble” from the Middle East. Nowhere is this more true than the toxic mindset and practices of Israeli crypto-totalitarianism. That’s what imperialism wants, to bring all its trouble home.
 
With that in mind let’s delve into the Salhani piece (he’s talking about Europe, while I’ll mostly talk about America, but I see these same processes playing out everywhere, and therefore examples specific to one place are usually generally applicable):
 

First of all, no prospective partner of the Brussels club can be allowed to join the European Union while it occupies territory that is not legally recognized as part of its own. Israel’s adhesion into the European Union would have to be preceded by a complete withdrawal of Israeli military and civilian forces from all Palestinian territory. That would mean that before such a withdrawal can happen a peace deal will have to be reached between the Palestinians and the Jewish State.

 
Or alternatively, they’d have to “legalize” this occupation, just like how the patently illegal war in Iraq was legalized. That’s the first “waiver” I thought he was hinting at.
 

Israel’s admission into the European Union would mean that the highways and security roads that Palestinians are not allowed to travel on would have to disappear. It would be inadmissible to have segregated roads in the European Union. Imagine if Italy, France or Germany, for example, banned certain ethnic groups from traveling on its national highways.

 
America already had the terrorist color code system where, under a red alert, highways and such may be arbitrarily shut down. They may have gotten rid of the colors, but the looming policy is still the same.
 
Of course, the movement to privatize American roads, to ration their use according to wealth, is already well underway.  Rendering non-luxuries artificially expensive and then rationing them by ability to pay the extortion price is just the same tyranny by another name.
 
And we don’t really have to imagine “certain ethnic groups” having a hard time on America’s highways. Racial profiling already accomplishes that.
 

The Separation Barrier (official United Nations designation) which Israel calls a “fence,” and Palestinians refer to as an “Apartheid Wall;” in reality a series of segments of a wall resembling the Berlin Wall, ditches and moats, erected between Israel proper and the West Bank to keep potential terrorists out, would have to come down. It would be unimaginable for a member of the EU to maintain such a symbol of segregation.

 
Of course our Mexico wall is well known.
 

Similarly the situation regarding Gaza would have to be resolved. Again, it is unimaginable for a European country to lay siege to a neighboring territory.

 
Lay siege to a neighborhood? LAPD, anyone? Speaking more generally, America is full of physical walls as well as less tangible boundaries aggressively patrolled by various kinds of goons. The siege itself may not yet be as coordinated as the mindset, but the mindset is every bit as aggressive as that in Israel. So it’s no wonder anyone who wants to build a physical wall looks to their example, and often to their contractors.
 

But that is not all. The whole concept of the European Union, the world’s largest economic and political zone, which saw the day shortly after the end of World War II, was to tie the economies of Europe’s countries in such a way that war would simply become unimaginable. Nations that spent centuries fighting each other – England and France, France and Germany, Germany and its neighbors to the east, and so on and so forth – began building the foundation to make those wars a thing of the past and inconceivable in the future. And it worked. Today war between once former foes in Europe is just not possible. To be sure, there may well be disagreements between members of the EU, but the disputes are settled in the European Parliament or at the International Court of Justice in The Hague. Not on the battlefield any longer. This is an example from which the Middle East could greatly benefit.

 
The rhetoric here is reminiscent of Norman Angell’s sadly misguided utopia. But more truthfully, whether Salhani intends this reading or not, the coded message is clear: totalitarian repression prevents the Palestinians from fighting back against Israel. So we Western elites can all learn the lesson in our war upon our own people.
 
Salhani wraps it up:
 

Is any of this possible? Yes, would say the optimist in me, but with a caveat. Unilateral withdrawal from Arab lands is unrealistic and dangerous for the security of Israel. And Israel’s domestic and foreign policy is driven by its security needs. So the bottom line is this: If Israel wants to become a member of the European Union, even with all the backing of the Italian prime minister, and others, it would first have to negotiate peace with its Arab neighbors. And that is a good thing.

 
The realist in me says that paragraph proves that the whole idea’s a joke. He may be an Angell-style “optimist”, but the idea can have application only through its inversion. We don’t export peace to troubled regions, but import tyrannical methods of dealing with the trouble. We bring it home as our new, alien law.
 
Nietzsche knew the true nature of this alien anti-law, in his Thus Spoke Zarathustra:
 

State is the name of the coldest of all cold monsters. Coldly it tells lies too, and this lie crawls out of its mouth: “I, the state, am the people.”

Where there is still a people, it does not understand the state and hates it as the evil eye and the sin against customs and rights.
Every people speaks its tongue of good and evil, which the neighbor does not understand. It has invented its own language of customs and rights. But the state tells lies in all the tongues of good and evil, and whatever it says, it lies, and whatever it has it has stolen. Everything about it is false; it bites with stolen teeth. Confusion of tongues of good and evil: this sign I give you as the sign of the state. This sign signifies the will to death.

Behold, how it lures them, and how it devours them, chews them, and ruminates!
“On earth there is nothing greater than I: the ordering finger of God am I” – thus roars the monster.

 
That’s the corporatist state. There’s nothing organic about it, nothing national, nothing rooted in history, rooted in the soil, evolved out of ancient culture, there’s nothing human about it, and since it partakes of nothing human, it is not a Law for human beings, but an anti-law to destroy humanity and freedom. It is indeed a monster.
 
This is the false bureaucratic “law” of globalization. It’s the secretive pseudo-law of the WTO, the SPP, what the FTAA would have been and still will be if the neoliberals get their way. (Just yesterday I wrote about the pending “free” trade deal Obama’s pushing.) “Law” – directly administrative, administered by a bureaucratic machine and secret tribunals.
 

Dani Rodrik has posited the existence of a policy trilemma:

I have an “impossibility theorem” for the global economy that is like that. It says that democracy, national sovereignty and global economic integration are mutually incompatible: we can combine any two of the three, but never have all three simultaneously and in full…

To see why this makes sense, note that deep economic integration requires that we eliminate all transaction costs traders and financiers face in their cross-border dealings. Nation-states are a fundamental source of such transaction costs. They generate sovereign risk, create regulatory discontinuities at the border, prevent global regulation and supervision of financial intermediaries, and render a global lender of last resort a hopeless dream. The malfunctioning of the global financial system is intimately linked with these specific transaction costs.

So what do we do?

One option is to go for global federalism, where we align the scope of (democratic) politics with the scope of global markets. Realistically, though, this is something that cannot be done at a global scale. It is pretty difficult to achieve even among a relatively like-minded and similar countries, as the experience of the EU demonstrates.

Another option is maintain the nation state, but to make it responsive only to the needs of the international economy. This would be a state that would pursue global economic integration at the expense of other domestic objectives…. The collapse of the Argentine convertibility experiment of the 1990s provides a contemporary illustration of its inherent incompatibility with democracy.

Finally, we can downgrade our ambitions with respect to how much international economic integration we can (or should) achieve. So we go for a limited version of globalization, which is what the post-war Bretton Woods regime was about (with its capital controls and limited trade liberalization). It has unfortunately become a victim of its own success. We have forgotten the compromise embedded in that system, and which was the source of its success.

So I maintain that any reform of the international economic system must face up to this trilemma. If we want more globalization, we must either give up some democracy or some national sovereignty. Pretending that we can have all three simultaneously leaves us in an unstable no-man’s land.

 
Thus Dani Rodrik, an ardent globalizer himself, laid out the “trilemma”. How you can’t have democracy, national institutions, and free trade. At least one has to go.
 
But even this is in fact a distortion of the truth. The record proves that globalization cannot coexist with either sovereignty (except perhaps for the richest countries) or democracy (at all). By definition free trade is at war with democracy, and is either the aggressive weapon of or the assault upon any particular country, depending upon how wealthy it is.
 
When we look at Gitmo, at the secret CIA dungeon system; when we look at how in Iraq they established a lawless administrative zone similar to the Nazis’ General Government of Poland; when we look at the lawless “free trade zones” Klein writes about in No Logo and Shock Doctrine; when we look at the “supreme” court’s recent enemy combatant case laying the groundwork for gutting habeas corpus for all citizens, once and for all, forever (and what a contrast – within weeks of one another we have decisions declaring corporations to have total personal rights while actual flesh-and-blood people are to be legally declared unpersons; that juxtaposition proves we no longer have a legitimate judicial branch of government, but an abdicated rogue, but “still out in the field commanding troops ["Apocalypse Now"]); when we look at how vicious bankruptcy law became in 2005, how we inch ever closer to the restoration of debtors’ prisons (is that the real reason they’re so harsh with deadbeat dads? To set a precedent? Given the way the system acts in most other cases, gutting all social services, reducing contraception access etc., it’s hard to believe the sincere purpose is to be mother-friendly); when we look at these and far too many other examples, we see the net being cast around us.
 
I’ll finish with a consideration. Arendt, in discussing the British method of colonial rule, considers how oppression can either concentrate resistance or atomize it.
 

The British tried to escape the dangerous inconsistency inherent in the nation’s attempt at empire building by leaving the conquered peoples to their own devices as far as culture, religion, and law were concerned, by staying aloof and refraining from spreading British law and culture. This did not prevent the natives from developing national consciousness and from clamoring for sovereignty and independence – though it may have retarded the process somewhat. But it has strengthened tremendously the new imperialist consciousness of a fundamental, and not just a temporary, superiority of man over man, of the “higher” over the “lower” breeds….

 
They are in fact leaving to us pop culture, TV, sports, all that crap. And we still have our “religion” which clearly means nothing to anyone any longer. Indeed the churches shill for the system. For most it’s far more like Brave New World than 1984, though this will change as we sink back into serfdom.
 
In The True Believer Eric Hoffer compares resistance where there still exist social and cultural institutions, to circumstances where all such institutions have been liquidated, leaving behind only atomized individuals.
 

The capacity to resist coercion stems partly from the individual’s identification with a group. The people who stood up best in the Nazi concentration camps were those who felt themselves members of a compact party (the Communists) of a church (priests and ministers), or of a close-knit national group. The individuals, whatever their nationality, caved in. The Western European Jew proved to be the most defenseless. Without vital ties with a Jewish community, he faced his tormentors alone. One realizes now that the ghetto of the Middle Ages was for the Jews more a fortress than a prison. Without the sense of utmost unity and distinctness which the ghetto imposed upon them, they could not have endured with unbroken spirit the violence and abuse of those dark centuries. When the Middle Ages returned for a brief decade in our day, they caught the Jew without his ancient defenses and crushed him.

The conclusion seems to be that when the individual faces torture or annihilation, he cannot rely on the resources of his own individuality. His only source of strength is in not being himself but part of something mighty, glorious, and indestructible. Faith here is primarily a process of identification; the process by which the individual ceases to be himself and becomes part of something eternal. Faith in humanity, in posterity, in the destiny of one’s religion, nation, race, party, or family – what is it but the visualization of that eternal something to which we attach the self that is about to be annihilated?

 
Do we now seek new institutions? Nietzsche asks in Twilight of the Idols:
 

In order that there may be institutions, there must be a kind of will, instinct, or imperative, which is anti-liberal to the point of malice: the will to tradition, to authority, to responsibility for centuries to come, to the solidarity of chains of generations, forward and backward to the horizons….

The whole of the West no longer possesses the instincts out of which institutions grow, out of which a future grows: perhaps nothing antagonizes its “modern spirit” so much. One lives for the day, one lives very fast, one lives very irresponsibly: precisely this is called “freedom”. That which makes an institution an institution is despised, hated, repudiated: one fears the danger of a new slavery them moment the word “authority” is even spoken out loud. This is how far decadence has advanced in the value-instincts of our politicians, our political parties: instinctively they prefer what disintegrates, what hastens the end.

 
I add, today “the worst are full of passionate intensity” (Yeats) for money and corporate power, while all “politicians” and “parties” who could and should have fought for the people have become traitors. All our institutions have been corrupted.
 
Today we must choose: human community or atomization? We have the socioeconomic atomization of the corporate system, and increasingly the physical and media barriers with the individual atomized inside. We must contrast this with real communities. Where these exist, even physical barriers may not be prisons, as Hoffer wrote.
 
I look back to the opening quote about Napoleon’s conquests. It presents the same decision - community consciousness or tyranny? Now that tyranny is coming home, and America faces the need for a second national awakening in the face of this tyranny, can this be done?
 
Do we still have a civic identity to rally round as at a banner? Can we raise this banner, and raise a call to it? Or are we washed up?

January 8, 2010

The Insatiability

Filed under: Afghanistan, Global War On Terror — Tags: , , , — Russ @ 2:44 am

 

Apologists for the British Empire have often used the formula that it was acquired in “a fit of absent-mindedness”. That it just sort of happened opportunistically; power was there for the using and entered whatever vacuums it perceived, and then policy had to catch up to rationalize and sustain what impetuous aggression had wrested.
 
By now most critics of the Global War on Terror recognize the basic insanity of it, and even many of its supporters seem to shrug and justify it as a fact of life rather than anything having a rationale.
 
It’s clear that the power vacuums America perceives as being filled with terrorists are really vacuums it first imagined up for itself and then encouraged the terrorists to try to occupy. America and Israel generate terrorism through their own GWOT aggression.
 
Indeed America explicitly blasted open the Iraq vacuum in order to encourage terrorists to rush into it. The rationale was to “fight them there so we wouldn’t have to fight them here”. (Compare the German concept for the Battle of Verdun.) Obama has said the same thing for Afghanistan. Now everyone, terrorists and locals alike, expect that everyplace America goes must become a jihadist battlefield.
 
This, of course, is exactly what Osama bin Laden wanted. You’d think the US power structure would want the opposite, but in fact the corporate fascists and the jihadists have much in common seeking their nihilistic power goals. Above all both are committed to the spread of terror among all civilian populaces, domestic and foreign. What we have here is really a symbiotic terrorist superstructure, much like the so-called “two parties” in Washington.
 
Is the Permanent War in any American interest? It clearly serves no national interest and is against all interests. On the contrary, American economic, social, and political well-being all depend upon pulling back from the empire, greatly lowering our exposure and risk, getting rid of all dead weight and top-heavy elements, decentralizing, trending toward autarchy. But the insane drive of unsustainable power and consumption to keep feeding and intensifying itself will lead only to absolute destruction.
 
Look how phony and tediously repetitive are the rationales.
 
Vietnam: domino theory, commitment to the ally, “peace with honor”, most of all credibility.
 
Iraq: WMD, Saddam was behind 9/11, fighting terrorism in general, democracy, dominos, commitment to the ally, credibility.
 
Afghanistan: Get Al Qaeda, fight the Taliban, terrorism, dominos, Pakistan, Pakistan nukes, commitments (to “democracy”, to women), credibility.
 
In the end it’s clear that when all the other reasons fail or are proven bogus, the milquetoast warriors always need above all to feel credible in their own timid little minds, since they throw away all real credibility they ever had precisely on their crazed wars.
 
(Of course I don’t take seriously for a second “democracy” as ever having been a real reason for any imperial war. That was always just chucked in there to give jingoistic “liberals” an excuse to get on board.)
 
Let’s examine “terror” more closely. All the talk about how “war on terror” was the wrong term because terror is just a tactic, and you really make war on an interest or ideology, was beside the point. War on terror is exactly right, because “Global War on Terror” is simply a contentless, insatiable murder machine. It’s really just a tactic itself. It’s the Permanent War, “pursuit of power after power” (Arendt), war for its own sake, to feed a corporate maw which can never be satiated.
 
So it’s terminologically sound to call it a war on “terror”, precisely because terror is merely a tactic of the weak trying to fight back vs. America’s pointless endless bullying aggression, while the war on terror is simply this aggression seizing upon the resistance to itself to further justify itself. As we know, the main driver of terrorism is the American presence in these countries, so the self-feeding aggression creates the very rationale used to sanctify it.
 
Also, the very fact that terror can be plotted anywhere renders the rationale ideal for justifying theoretical war anywhere and everywhere, since there’s few places to attack where you can’t claim there are or can be “terrorists” there.
 
The term “terrorist” does lots of domestic propaganda work, as to this day an appalling proportion of people are slavish and stupid enough to believe in this “war on terror”, and that terrorism (as opposed to “terror” itself, which the terrorists have been completely successful in imposing; of course these are mostly domestic US government and media terrorists) is some real existential threat. (It’s sociologically and propagandistically similar to the fraudulent 80s scares over street crime, “super-predators” and such. I bet a lot of the same academics of fear are doing this same propaganda work today.)
 
Domestic fear and hate, creeping totalitarianism – with these we’re getting to some of the “real” reasons for the Permanent War.
 
The partially real reasons for the GWOT were obvious from the marketing leading up to the Iraq assault. It was a war for oil, and it was a textbook example of launching a foreign adventure to distract from domestic issues, in this case the snowballing looting of the country. It’s very true, they did want the oil and they did want to distract.
 
And, as Naomi Klein described so wrenchingly in Shock Doctrine, they also wanted to achieve the corporatist “blank slate” to facilitate the complete subjugation and looting of the country way beyond just the oil. And they’ve tried for years to replicate this operation in Afghanistan.
 
But these, while pieces of the puzzle, still don’t satisfy fully, especially since the plundering of Iraq was largely a bust, with even the American-affiliated multinationals getting aced out of most of the oil. Nor does any of this look promising in Afghanistan.
 
When I’ve tried to explain Afghanistan in peak oil terms, that they want to control the routing of natural gas pipelines and whatnot, I felt silly trying to offer that as a main explanation. In Afghanistan fossil fuels and corporatist plunder are parts of the puzzle, but just small ones. Fossil fuel, not enough to be worth the effort even under our deranged circumstances, for looting not enough there there. There’s no objective correlative.
 
(Indeed, we should look at Greenspan’s admission that Iraq was a war for oil in a new light. By now TPTB would probably rather it could be seen as even a war for oil, now that so-called “American” companies got so little a draw from the well.)  
 
No, here we have to go back to historical irrationalism. Expansion for expansion’s sake, power for power’s sake, greed for greed’s sake, “growth” for growth’s sake. The Permanent War is for its own sake, each step only intended to provide the staging point for the next step, and all of it justified by some obviously bogus rationale.
 

Degree being vizarded,
The unworthiest shows as fairly in the mask.
The heavens themselves, the planets and this centre
Observe degree, priority and place,
Insisture, course, proportion, season, form,
Office and custom, in all line of order;
And therefore is the glorious planet Sol
In noble eminence enthroned and sphered
Amidst the other; whose medicinable eye
Corrects the ill aspects of planets evil,
And posts, like the commandment of a king,
Sans cheque to good and bad: but when the planets
In evil mixture to disorder wander,
What plagues and what portents! what mutiny!
What raging of the sea! shaking of earth!
Commotion in the winds! frights, changes, horrors,
Divert and crack, rend and deracinate
The unity and married calm of states
Quite from their fixure! O, when degree is shaked,
Which is the ladder to all high designs,
Then enterprise is sick! How could communities,
Degrees in schools and brotherhoods in cities,
Peaceful commerce from dividable shores,
The primogenitive and due of birth,
Prerogative of age, crowns, sceptres, laurels,
But by degree, stand in authentic place?
Take but degree away, untune that string,
And, hark, what discord follows! each thing meets
In mere oppugnancy: the bounded waters
Should lift their bosoms higher than the shores
And make a sop of all this solid globe:
Strength should be lord of imbecility,
And the rude son should strike his father dead:
Force should be right; or rather, right and wrong,
Between whose endless jar justice resides,
Should lose their names, and so should justice too.
Then every thing includes itself in power,
Power into will, will into appetite;
And appetite, an universal wolf,
So doubly seconded with will and power,
Must make perforce an universal prey,
And last eat up himself.

 
Shakespeare, Troilus and Cressida Act 1, scene 3.

March 26, 2009

The Bailout War IV: Toxic Bank Assets and the Bailouts

 

(See also the rest of the five-part series)
 
http://attempter.wordpress.com/2009/03/24/the-bailout-war-part-i-aig/
 
http://attempter.wordpress.com/2009/03/24/the-bailout-war-ii-too-big-to-fail/
 
http://attempter.wordpress.com/2009/03/25/the-bailout-war-iii-corporatism-and-finance/ 
 
http://attempter.wordpress.com/2009/03/27/the-bailout-war-v-nationalization-and-relocalization/

 

For a long time I didn’t understand the toxic asset issue. I basically took the conventional frame for granted. This is that America needs for the big banks to get this toxic paper off their balance sheets at some elusive but extant acceptable price; that this is necessary for the good of the economy, of society, for posterity, etc. But it’s become clear that it’s not economically or socially necessary to do anything with this paper. It’s only claimed to be such by those who stand to profit from a massive handout and their agents in the media.
 
The point of all this policy angst is supposed to be to get the big banks lending again. The banks claim to be on board with this project. That’s what the government and the pundit pen have said from the start. That was how they sold the first $700 billion bailout, and that’s how they defend the $3+ trillion in secret loans the Fed has made. So why didn’t all this money do what it was supposed to do? If the idea was that the bad paper stinking up the banks’ balance sheets was crippling their lending abilities, the infusion of government money was supposed to be an end-run around this. There seems to be no reason the banks can’t lend and just let the “assets” sit. But they haven’t used the money to lend. They’ve hoarded some of it, and boasted that they’re hoarding not out of fear, but to be ready to use that money to seize acquisition opportunities. They’ve spent the rest: quite a bit on acquisitions, and more famously on bonuses, parties, golf outings, stadium sponsorships, airplanes…It seems the banks are not particularly nervous about their financial position. So what gives?
 
The truth is that before they are willing to resume lending, these bankers are demanding to be bailed out of these toxic paper positions. This is a stick-up. A ransom demand. The banksters are on strike. They are holding America hostage, and their demand is that America buy them out on their own terms. They’re saying, “You want us to lend? Gives us our profits first.” Until then it’s a work stoppage.
 
The big banks are insolvent. Their assets exceed their liabilities only in fantasy league accounting. If they actually had to obey their vaunted “market” and sell this paper at its real value they’d be bankrupt. They could have used the bailout money to recapitalize as they wrote down this paper, or they could have done the same while selling the paper to the government at marked-down value. This was in fact the original advertised bailout concept. But the irremediable obstacle is that the banks have always privately refused on principle to consider such a thing, while the Bush and Obama administrations were lying when they claimed otherwise. The banks, the administration, and the MSM with few exceptions refuse to accept anything short of a complete public buyout of these assets at fantasy model value. They haven’t yet figured out how to get away with this, although this week Geithner and Obama are trying again.
 
So given this impasse so far administration policy has sought to prop up the big banks with the minimum necessary but still massive welfare, and the implicit promise that one way or another the administration, in an act of top-down civil war, will redistribute from the people to the bankster elite however many $trillions are necessary to satisfy them. That’s why these are called “zombie banks”. Paul Krugman calls it a new kind of voodoo economics, “the belief that by performing elaborate financial rituals we can keep dead banks walking”.
 
This is unjust and an incalculable moral hazard (which in spite of its name is a practical concern, not a moral one; the powers that be seem to have closed ranks on this point, that whatever else they may debate, actual morality should have no place in the discussion; thus we get the supercilious tone even from nationalization advocates where it comes to “populism” and public rage).  
 
Meanwhile the cabal is seeking a new bubble. The fantasy among most in the government is that somehow this will all work out with a new bubble, new debt creation; the banks will be able to pay back the loans, perhaps all that paper can even be reinflated for a taxpayer profit and so on. It’s the exact fix any Ponzi schemer eventually finds himself in, except until now Ponzi schemes didn’t have full government support. But now the government is the top schemer, and who’s going to bail it out? America is running against a greater headwind all the time in selling its debt to China, and China’s looking for a way out.
 
It doesn’t matter right now. This is their policy and they’re sticking with it. Obama agrees which is why from the moment he was elected he tacked 180 degrees from “Change” to “continuity”. That’s why today we have the “new” Geithner plan, which is really just as retreaded from last September as Geithner is.
 
I’ll give a quick synopsis of the Geithner plan. They’re going to have an auction of this toxic paper. The bidders will be ostensibly private members of a “Public-Private Investment Program”. These private bidders will have to put up very little of their own money. The bulk of the money is to come from an FDIC bubble: Treasury will pledge some ridiculous amount, and the already precariously leveraged FDIC will match it 6:1. (They say FDIC isn’t happy about this. Nor should we be. It’s already questionable how readily FDIC, the bedrock of stability for America’s deposit banking system, could actually pay out claims in a commercial bank crisis. And now they’re going to use its balance sheet as a toxic asset shooting gallery. Sociopathic.) The rest of it will come from the $75-100 billion of TARP money still left. The private bidders can default on the loan portion of this at will. So they stand to profit if this paper ever goes up in value in some mythical future, while they have almost no risk. Meanwhile the Taxpayer’s exposure is overwhelming and completely negative. (OK, they too can profit if they turn out to have bought low. The chances of winning the lottery are better. Indeed, this is as if you gave somebody a million dollars to buy lottery tickets, only making him chip in a hundred bucks or so, and then gave him 20% of the tickets, and said he only had to pay you anything back if one of his tickets won.)
In addition to this bailout, the plan calls for the Term Asset Lending Facility, already dispenser of gargantuan sums, to lend the banks another $1 trillion or so, at generous terms and with no real collateral.
 
Of course the real and intended winners here are the banks. The auction is supposed to be the vehicle by which they can trump up an inflated price for these assets. The private bidders, bidding with taxpayer money, are intended to bid the price up to whatever figure the banks choose. Then the adminstration happily shovels out that much money in a monumental loot conveyance, while claiming “the market” discovered that price, and that this is what we need to do to put the financial system on solid ground. As Yves Smith wrote, they must really think we’re idiots.
 
We must be clear that these “securities” have little if any real value. They never had more than a fantasy value. Now that the fantasy has been dispelled, the market has correctly priced them at or near zero. But the administration’s top priority is to bail out the banks, so they want to hand out as much public money as is politically possible. Beyond that, they’re like hippies trying to levitate the Pentagon. They want to levitate a new debt bubble. They believe we can resume exponential growth. Even the best of them is intellectually bankrupt. This is all they have. Reinflate, levitate. Indeed, the fantastical alleged taxpayer upside is completely dependent upon reflating the “growth” bubble, meaning the debt bubble. (America has not in fact legitimately grown in this century, it has only bubbled up debt.)
 
The bankers concur with the administration that their profitable bailout be the #1 priority. Only then will they too join in seeking the next bubble, and embarking upon new disaster capitalist expeditions.
 
The real public-private relationship can be seen in comparing these two quotes:
 
Geithner from February: “We have a financial system that is run by private shareholders, managed by private institutions, and we’d like to do our best to preserve that system.”
 
At around the same time, Citi’s Vikram Pandit: “We completely remain in day-to-day charge of the company. We are going to run Citi for shareholders.”
 
Citi has to date received over $350 billion in handouts and loan guarantees (another kind of handout). It seems Pandit and Geithner are simpatico. Geithner only needed to add that where it comes to financial policy, the administration as well is run and managed by private shareholders, and they want to do their best to preserve that system.
 
Here we have explicit public-private confirmation of a corporatist coup. 
 
The stock market stands ready as enforcer. How did the Lehman failure cause a market crash? Or the failure of the first bailout vote in the House last September? It was market terrorism, a corrective blow, the infliction of punishment upon society for misbehaving. The market insists that every policy step have private investor profit with socialization of all losses as its overriding goal. It demands that unlimited public resources be used up for this purpose. When the government misbehaved and allowed one of the fraternity to fail, the market launched a retaliatory strike against America. You could view it as a terrorist attack. And you should consider that when you see how the market rewarded the announcement of the new PPIP. As Naomi Klein wrote back in November, “The markets can be relied on to vote in precisely the opposite way that Americans have just voted….Any and all moves to change course will be met with short term market shocks.” When the media knuckles under and parrots the dogma, Bailouts Uber Alles, we have Too Big To Fail joining with appeasement.
 
So that’s the bottleneck we face: an extortion racket, bankers demanding that their private profit be the #1 concern of public policy; and an administration which is ideologically sympathetic but which is under political constraint such that it can’t directly convey the loot. It needs to find ways to redirect and launder it. This is the  source of the “public-private” concept, with these Potemkin “private ” investors who are really in effect extremely well paid agents earning a guaranteed salary for playing the role of capitalists. The result is an administration which is malevolent in principle, bumbling and ad hoc in practice. Willem Buiter gets it just right: the bailouts are “without redeeming social value”. (I add, this thereby places them in the legal category of obscenity.)
 
Fundamentally, the concept that these assets have to come off the books at a profit level dictated by the banks is a theological tenet. The zombie banks and the financial/insurance/real estate (FIRE) trust as a whole are existential and psychological obstructions to any kind of real solution. All their actions are devoted to further consolidation and more intensive rent-seeking – the consolidation and intensification of a new feudalism.
 
As for our general problem, it’s that everyone in positions of power or influence have one and only one pseudo-idea: always, always more lending, more debt, more bubbles.
 
The numbers no longer have meaning: $100 billion more from TARP, plus a lot more from new Treasury borrowing, and that amount to be sextupled by even more borrowing in the name of the FDIC, oh and don’t forget another $1 trillion in sweetheart loans. This is clinical insanity by now.
 
I’m convinced the “leadership” has actually given up all reality-based hope of saving the situation. Where not bolstered by ideology, their nerves have caved in completely. They can only see, only think, only scream “More debt!” It’s a depraved latter-day degeneration from the call Marx imagined them hearing in the capitalist heyday, “Go on! Go on!” toward more production, more profit. Today they can only go on under the hypnosis and artificial stimulant of debt.
 
Anyone not psychologically sealed in the insanity must look at this Tower of Babel of debt, being built ever higher and ever more top-heavy by the day, and know that it can never reach whatever heaven the bingers are seeking.
 
If we are to try to constructively unwind the exponential debt civilization, the first thing to do is detach in our minds from the lies and craziness, as well as the seductions and promises, of this delusion. The seductions are only a mirage; no amount of propping up dead banks, no matter how profitable for the bankers themselves, is going to bring back the greed circle of debt which for a few years swept everyone along. People’s material conditions are now being forcibly simplified, but this can all be for the better if not the good if we use this pivot to simplify our aspirations as well.
 
The world can be a beautiful place, and no one needs the debt civilization to live there. But first we must free ourselves, and a good place to start is to stop fearing the threats of bankers.
 
[Next up: Nationalization]
 
 

March 24, 2009

The Bailout War II: Too Big To Fail

 

(See also the rest of the five-part series)
 
http://attempter.wordpress.com/2009/03/24/the-bailout-war-part-i-aig/ 
 
http://attempter.wordpress.com/2009/03/25/the-bailout-war-iii-corporatism-and-finance/
 
http://attempter.wordpress.com/2009/03/26/the-bailout-war-part-iv-toxic-bank-assets-and-the-bailouts/
 
http://attempter.wordpress.com/2009/03/27/the-bailout-war-v-nationalization-and-relocalization/

 

In the classic Mel Brooks comedy-western Blazing Saddles, the new sheriff arrives in town only to find the townsfolk ready to lynch him. He puts a gun to his own head and, talking about himself in the third person, threatens to shoot himself if they don’t let him as kidnapper/hostage go. They townspeople believe him: “I don’t think he’s bluffing!” He escapes to marvel over how gullible they were.
 
Today we have a whole industry making the same threat, except they threaten not only to destroy themselves but the whole American economy. The response of America’s public elites has been the same as in the movie. “I don’t think he’s bluffing.” But this is no comedy.
 
Since this crisis began we’ve been living in fear. The specter which looms over us is called “Too Big To Fail”. This concept is seldom treated as a concept, and almost never questioned. It is accepted on faith and in fear. It was peddled by the same administration whose only idea, ever, was to monger fear. Even though the media and the cognoscenti had been burned so many times by the Bush administration’s lies, and even though this latest threat followed the exact patterns which stampeded us into the Patriot Act and Iraq, and even though the same interests as before stood to profit here, they were still as gullible as ever and have been first the Bush and now Obama administrations’ water carriers right on down the line.
 
I believe TBTF is a classical Big Lie. Even if it were true, could any of the proposed solutions really solve such a problem? And if it is true, why does there seem to be so little will to solve it in a way which would ensure we are never so vulnerable again? Surely any good-faith plan to temporarily prop up the TBTF banks would include a plan to carefully and with all deliberate speed dismantle these entities such that we would never again be in this position.
 
Yet it is clear no one in the power structure has such a thought. The very personnel who express such fear and loathing over our helpless predicament are the same who seem content with the TBTF institutional model, and more often they seem intent on further consolidating and aggravating it. For that reason we must consider the possibility that out of ideology and greed they want America in the grip of TBTF. If that’s the case, we must also ask if TBTF is simply an ideologically motivated lie. Beyond this we should ask, what kind of world do we want to live in? What are we trying to preserve, that it’s worth living as a slave, paying protection to boardroom thugs, all for the sake of what? Cheap junk from China?
 
The basic notion of TBTF is that if the likes of AIG, Citi, BofA and others were allowed to go bankrupt, as they certainly would if they hadn’t been propped up with prodigious sums of taxpayer money, the effects of this would reverberate to other giant institutions, weakening or collapsing them as well, and out through other big corporations, and down through smaller banks, pension funds, consumer lending, etc. to hit every individual, while the failure of savings institutions would bankrupt the FDIC. The government’s only option would be to run the printing presses or default on monumental guarantees, either way destroying the dollar. It would be the end of civilization as we know it. (Of course much of this is happening anyway in spite of the bailouts.)
 
It’s a harrowing picture. Is it true? If this really is what will happen when this massive inverted pyramid built on bubbles and debt finally comes crashing down, then shouldn’t our priority be to build firewalls against it? Instead of obsessing on the status of all this toxic paper, talking of good banks and bad banks, shouldn’t we instead be bolstering local and regional lenders, providing them with “facilities”, helping them unwind their entanglements with the Wall Street monstrosity? Shouldn’t we be dismantling these radioactive structures as quickly as we can do with any level of reasonable care? Since the government evidently has $trillions available, shouldn’t this be used to start brand new local and regional education networks to train a new workforce of relocalized small farmers, small craftsmen, small factory workers, small distributors? Perhaps even help launch regional and local currencies? Shouldn’t the stimulus be directed toward all these endeavors, which clearly look ahead to a future in a world where exponential debt, suburban sprawl, consumerism and profligate fossil fuel use can no longer serve as the basis for an economy or a civilization? That no one among the powers that be sees things in any way other than the opposite is strong evidence of their bad faith.
 
To properly judge the motivation of the bailout policy, we must go back to how this came about. We must consider how the same cadres who preach TBTF are those who constructed the system in the first place. The financialization of the economy goes back to the 70s. Since the dollar was detached from gold and set loose as the free-floating reserve currency of globalization and petrodollar recycling, while the manufacturing economy of America was hollowed out and the production offshored to an ever more exploited third world work force, the elite level of the American economy has mostly engaged in rent-seeking. It wove a fantastic web of interconnections, games of chance, tricks and cons, cash flows, inflating bubbles here, preying on the aftermath of burst bubbles or otherwise gutted economies there. All the while it encouraged a massive accumulation of addiction to debt, to the point that all of America’s alleged growth over the past decade has been the result of debt and bubbles. Take those away, and America has been in recession throughout this century. As the final ingredient in this witches’ brew, we had deregulation to the point of anarchy.
 
While the whole process may not have been planned out step by step, the basic goal was always the same: maximum size, concentration, interdependence, and efficiency. It was the most precariously perched, least robust system imaginable. Even the slightest thing going wrong would crash it. So as delusional as many of the participants became, it’s not credible that they gave no thought to the crash contingency. “TBTF” was a planned campaign.
 
When the financial crisis reached critical mass with the imminent fall of AIG the TBTF machine went into action. Paulson and Bernanke sounded the cry, “Stampede!” Fear seared it in. They told a Congressional delegation if Paulson wasn’t made a literal financial dictator “by Monday you won’t have an economy”. Although the people were more skeptical, elites everywhere, panicked further by the terrorism of the stock market, leapt on board the bailout train. Since then no one has seen an alternative to shovelling hundreds of $billions, and now $trillions, and soon tens of $trillions, into an ever more hellish, more gaping crematorium, and no one sees an end to it.
 
Today, even as the “new” Geithner/retreaded Paulson plan is being batted about, we should ask a few questions about the status of TBTF as an economic concept. A major concern is how to unwind AIG’s CDS boondoggle. But here’s something I don’t understand about this. If these bets were never supposed to pay off, as the dogma of the perpetual bubble held, then shouldn’t that have been factored/priced into the system? Weren’t those who bet on failure more like typical casino gamblers, just having fun, betting on long-shots, while other buyers were buying for the rationalistic purpose of evading reserve requirements? My point is, why should it crash the economy if we just declared all CDS contracts held by bailed-out companies, or contracts that were offshored, void? Granted, the banks were absurdly overleveraged thanks in part to the CDS scam, but we have that problem anyway. Why are the CDSs in themselves a problem? It seems like an ideological lie, peddled in tandem with the tantrums of the stock market, to scare the people into allowing public money to be used to pay off these bets in full.
 
Similarly, as some have commented, this all seemed new last Fall. Perhaps people overreacted to Lehman. But today any reasonable person has been contemplating the destruction of AIG, Citi, BofA and others for over six months. So if the TBTF exposure ever did exist, why should it still exist? Surely most participants could have decoupled by now (while anyone who could have unwound at a reasonable loss but hung on in expectation of a taxpayer bailout should be treated as an asocial element).
 
And, if banks really were on the verge of failure, they would’ve used the bailout money to forestall this. If they aren’t going to lend it as promised, why haven’t they used it to buy the toxic assets from themselves and in that way cleanse their balance sheets? Instead they’ve used it for bonuses, parties, golfing, airplanes, mergers and acquisitions, or just hoarded it. How do any of these keep you from “failing”? How do they help the economy as a whole?
 
So TBTF was used to stampede America into submission to a massive redistribution of wealth from the public to the very same criminal elite who profited so obscenely in the buildup to the crisis and then set it off. It was the classical pattern of disaster capitalism: trigger the disaster; confuse, terrorize and stampede the people; apply the shock treatment; carry out the corporatist coup. Although they sold the first TARP as a stimulus to lending, they moved immediately to their real purpose. While no lending materialized, word got out that Treasury was encouraging the big banks to use the money for acquisitions. TBTF was really about helping the big get bigger, the rich get richer, and to wipe out the smaller and not-so-rich. Is the encouragement of further structural concentration the action of anyone who truly believes and fears that things are “too big to fail”?
 
So we’re embarked upon a program of endless cash injections, sweetheart loans, loan guarantees, every kind of subsidy and direct loot conveyance, as all the while first Paulson/Bush and now Geithner/Obama try to figure out how to fulfill every profit expectation of the banks holding this toxic paper,no matter how much loss has to be socialized. Now Geithner even wants to use the FDIC to leverage a bailout bubble, AIG-style, in his desperate attempt to serve the banks. All of this has been shrouded in as much illegal secrecy as the executive branch can manage. Obama is now continuing with what Naomi Klein called “Bush’s most creative innovation: no risk capitalism”. The goal is a kind of permanent corporatist revolution to complement the permanent imperialist war abroad. The two brand names Too Big To Fail and Global War On Terror are parallel and corollary, and both are intended to be the never-ending Long War.
 
How can we resist this? The first thing is to ask ourselves, are we willing to pay this price? Even if it were possible to salvage the existing system at the price of paying this protection money and having to live permanently under the thumb of these gangsters, would it be worth it? Would a human being desire to live this way? Are we willing to pay this price? Or just like the War on Terror, is it another form of throwing away our freedom for the mirage of “security”?
 
To anyone who doubts any of this, who claims to believe in Too Big To Fail in good faith, the question is simple: What is your plan to dismantle the TBTF structures and ensure that Never Again will any such structure exist to threaten us. These things are a clear and present danger to all economic and social stability. No one can in good faith wish for their propagation, or wish to pay the terrible price of their continued existence.
 
If we can accept the unsustainability of the exponential growth economy and the malevolence of TBTF; if we see how this is a path we cannot take and must not wish to take; we could take another look at the world. We could see ways to rebuild the future and build a new, revitalized America, centered on a relocalized, truly productive, truly fulfilling economy.
 
The financial crash could yet prove to have served a creative purpose if it alerts us to our predicament. These institutions are not our friends and they do not wish us well. They want to condemn us forever to the road of serfdom. If instead the detonation they’ve triggered can cast a light on a different trail where we retake control of ourselves and our futures, it will not have been in vain. 
 
        

The Silver is the New Black Theme Blog at WordPress.com.

Follow

Get every new post delivered to your Inbox.

Join 243 other followers