Volatility

September 15, 2009

Two Speeches, One Policy

Another week, another speech. Another year, another unfolding disaster.
 
We saw quite a contrast yesterday between two opposed philosophies on what public service is supposed to be about, and what America is supposed to be about. Judge Jed Rakoff finally said he’d had enough of the criminal collusion in his court. The case is over how Bank of America lied to its shareholders about its pending deal to buy Merrill Lynch, promising that there would be no “bonuses” paid at Merrill. In fact they already knew that $3.6 billion in bonuses were all set to go. Under pressure from defrauded Bank of America shareholders, the SEC felt constrained to bring an action against BofA, which the collaborating parties agreed to settle for a slap on the wrist and no admission of wrong-doing. Corporatism in action. All the bigshots are happy, and everyone can get back to business as usual.
 
Just by accident, this case landed in the court of a judge who actually takes his job seriously. He repeatedly denounced the settlement as a whitewash and demanded more answers. He demanded to know who was personally responsible for this crime. BofA tried to claim that its executives never made any decisions, but only obeyed the advice of lawyers. But in order to maintain their client-attorney privilege they laundered the lawyer story through the SEC brief. So “both” sides agreed, no one in particular could be held responsible.* When the litigants (that is, the defiant defendant and its flunkey “prosecutor”) finally were reduced to insulting the court’s and the public’s intelligence in this way, Rakoff had enough. He rejected the settlement and ordered them to prepare for trial.
 
Everything the judge wrote sounds downright quaint. He said the settlement was “not fair”. He demanded to know where “justice and morality” have gone, where personal responsibility. He was especially incensed that even the token $30 million fine in the settlement would have been paid not by the executive wrongdoers, but by the very shareholders who were defrauded.
 
It’s a good bet that everyone on Wall St and in Washington today are scratching their heads over this decision and its language. It doesn’t make any sense to them. The words are familiar enough; we hear them all the time in politics. But what’s up with this action which seems to indicate that this guy actually means something by those words?
 
Luckily everyone could relax and listen to some similar words in a more familiar way, when Obama went up to Wall St to say something about financial reform. Here everyone could expect the same platitudes and bluster as in last week’s health reform speech, equally contradicted by his every action. He didn’t let them down. (Of course as the psychopathic louts they are they couldn’t even pretend to feel remorseful, even as an exercise in political tact. That’s how confident and incorrigible they are.)
 
“We will not go back to the days of reckless behavior and unchecked excess at the heart of the crisis.”
 
Just as with health care, this rhetoric is belied by this administration’s policy. From day one, and indeed going all the way back to the campaign, Obama has supported the massive redistribution of wealth from the people to the finance racket. He has done all he can to facilitate this conveyance, through bailouts, loan guarantees, loan “facilities”, maintaining illegal secrecy about these disbursements, and generally flooding the system with cash in order to prop up phony values on the stock market and on bank balance sheets. They call this “quantitative easing”, and it certainly does make it easy to pretend we’re “recovering”, even as the debt-hallucinated “wealth” of the middle class vaporizes like the hologram it has long been.
 
Meanwhile the very real jobs America used to enjoy have been permanently destroyed. They will not come back under this system. Even the propagandists are forced to call what they’re peddling a “jobless recovery”. Except that the phony mortgage bubble recovery following the early-2000s recession was already the start of a permanent jobless death march, which itself was the intensification of a forty year trend of eroding wages and concentration of wealth. The financialization of the economy was dialectically both a cause and effect of this increasingly social Darwinist economy.
 
Obama says they can’t commit the same crimes “and expect that next time, American taxpayers will be there to break their fall”. This is a flat out lie, because everyone knows Too Big to Fail is now officially enshrined American policy. Every aspect of Obama policy, simply following through on Bush policy, contradicts this lie and promises that in the inevitable future crashes the bailouts will be repeated. The entire sector, and by extension the business class, are structuring around this promise.
 
Indeed there’s no reason to believe the bailed-out banks will ever again be anything but wards of the lemon socialist state. Although Goldman and JPMorgan and a few others “paid back” the TARP money with much fanfare and administration self-congratulation, this was only a small portion of the bailouts. Trillions remain outstanding; nobody outside the Fed or government knows how much or held by whom, since the administration has tyrannically kept this information a secret from the very taxpayers whose money is being looted.
 
For this reason Congressman Brad Sherman, one of those who voted against the TARP last fall, raised a protest after yesterday’s speech over the provisions of the administration’s proposed systemic risk plan, which would, reminiscent of its health care proposal, require a large number of institutions to pay into an insurance fund which would offer benefits to only a handful of privileged big banks. As usual, the mass of small players must bear all the costs and losses of the big rentiers, who rake in all the profits. Sherman condemned it as “TARP on steroids.”
 
We can only wish that protest like this could lead to another kind of Progressive Block. 
 
This taxpayer bailout promise is summed up in the sardonic term “Bernanke put” (AKA Geithner put, back when they were attempting a more direct loot conveyance through the PPIP; today it’s more through the Fed’s quantitative easing)
 
This term can encapsulate the entire Obama economic ideology and policy, which is simply an extension of the longstanding corporatist ideology and policy.
 
So this economy is both mean and predatory in general, and has become permanently unstable and prone to crisis and crash as well. There is no longer any real, stable basis for this economy. It’s now a permanent casino, dependent upon the bubble and crash, boom-bust cycle.
 
This is the economy as dominated by the finance sector. It’s an economy of, by, and for the bankers. A government policy which is dedicated to sustaining this casino is as pure a distillation of corporatism as is possible. This is truly the end stage of monopoly finance capitalism.
 
Obama’s government has dedicated itself to this casino barker role. It has done nothing to restrain the “recklessness” and “excess”; on the contrary it has enshrined it as the core quality of America.
 
All American policy now emanates logically from this racketeering core. Every other racket, and even the legitimate businesses, are arranged according to their logical places in the financialized structure. All other policies stand or fall according to whether they fit in with this logic.
 
Thus with health care reform, since the combination of individual mandate-phony regulation confirms the loot flows along the chart from people to insurers and up to banks and bank shareholders, this is anointed as not only the correct policy but the only policy in the eyes of the feudal nexus of corporation-government-mainstream media.
 
Meanwhile since single-payer or a real public plan make no corporatist sense, they are beyond consideration. Establishment Democrats and the MSM treat a public plan as a stupid whim on the part of romantics, while single-payer is so alien as to not even be deemed a fit topic for conversation. Even the progressives are wobbling: are we really going to stand against the entire logic and vote against its result?
 
I guess the answer boils down to, is it really just a whim on the part of those who are system players at heart? Or are they true progressives, who have no choice by now but to become rebels vs. this system?
 
Where you see anyone say, let’s cave in again, but we’ll get ’em next time, you have your answer.
 
So it has been so far with pretty much everyone vis the big banks.
 
[* This Kafkaesque idea of saying “the lawyers told him it was OK, so we can’t prosecute him”, while the lawyers can’t be held to account at all since they were simply giving professional advice for which they take no responsibility, seems to be popular with the Obama people. It’s also Eric Holder’s preferred way of dealing with the Bush administration’s war crimes.]      
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3 Comments

  1. I cannot wait to see the trial of this SEC case against BofA. You may not realize the SEC NEVER goes to trial. It has no more than one or two lawyers who have ever seen the inside of a courtroom. The SEC flexes its musles against penny ante swindlers and writes rules which make it impossible for entrepreurial business to raise money. It has been this way for at least forty years.

    Comment by jake chase — September 17, 2009 @ 6:09 am

  2. I bet by now they’d prefer to just drop the case. I think Rakoff got it exactly right, that they thought they could win some easy political brownie points here.

    Now it’s blown up in their face because they weren’t counting on this rogue judge.

    I wonder how hard it would be on them politically to drop it. Especially just now as Obama’s trying to push his “reform” farce.

    It should be interesting.

    Comment by Russ — September 17, 2009 @ 7:51 am

  3. Well, sir, that was a well written and even inspiring piece. Keep up the good work.

    Comment by Edwardo — September 24, 2009 @ 11:05 am


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