Volatility

October 23, 2009

Draft for A Bank Heuristic

Filed under: Mainstream Media — Russ @ 9:32 am

 

There’s so much information (not to mention “information”) about the banks, the bailoutocracy, and the financialized economy they constructed and now use as the vehicle of tyranny.
 
How to process it all? How to separate the good information from the bad, the useful from the pointless, the truth from the lies? How to weaponize each idea, anecdote, and piece of data?
 
In some ways it may be more difficult for those of us who lack a formal background in this stuff, but we have the much bigger advantage that we have less brainwashing to overcome in our struggle toward clarity and truth.
 
So I’ve been thinking about how to organize all the material into a basic heuristic. I’ve tentatively settled on a list of categories which I think are both true and useful.
 
Some involve ongoing processes, others basic truths. My goal is, as much as is possible from my humble position, to assemble a knowledge base and analysis for resistance against the finance tyranny.
 
The goals would be education of the not-yet-educated, radicalization of the educated (and of course educating existing radicalism, which is usually the even more common process), and figuring out a plan of action. (I’ll write more about radicalization and action later; for today I’m writing about education, including self-education.)
 
Maybe this list isn’t final. Perhaps some of these can be folded into others, and at any rate lots of things straddle categories, but I thought I’d suggest this list as a first draft. From there I think I’ll try posting periodic roundups detailing how each of these is playing out. And perhaps in comments people can give examples.
 
If anybody thinks any of these are wrongly conceptualized, or can think of other ones I missed, then make suggestions.
 
1. The big banks caused the crash. They hold the overwhelming responsibility for a Tower of Babel which was bound to come down and is bound to come down again. Any other responsibilities are trivial. The proximate causes are irrelevant.
 
2. The bailouts artificially propped up insolvent banks. But in spite of their phony profits, the banks remain collectively insolvent, and most if not all of them individually so.
 
3. The bailouts accomplished no socially valid end, but only enabled the banks to reopen the casino.
 
4. The bailouts only intensified monopoly concentration, which lay at the core of the Too Big To Fail extortion dilemma. (The policy of TBTF only helped confirm the structure in a positive feedback loop.)
 
4A. (Wealth and power concentration in themselves are anti-democratic, socially and economically destabilizing, and morally perverted.)
 
5. The finance sector is a purely rentseeking monopoly. We can place pretty much anything it does on the list of feudal tactics. All its “innovations” are con jobs, and all its lobbying is bribery and extortion.
 
6. No true reform will be legislated thanks to corruption.
 
7. Anything which is legislated will not be enforced thanks to corruption and capture. We can extend the principle: The law itself is a battleground, and the rule of law in great jeopardy.
 
8. We don’t need the big banks for recovery, for lending, for international competition, for anything else. All the evidence is that smaller banks provide the real value here, while big banks are not only unable and unwilling to engage in constructive action themselves, but their monopoly power actively hinders the smaller banks.
 
9. The size of the banks runs counter to our need for a decentralized economy with greater resiliency and robustness. The stimulus has been remarkable for how little money has headed in a constructive direction, as opposed to down reactionary ratholes like Cash for Clunkers and the housebuyer’s tax credit. This is because of the banks.
 
10. Only the rich have benefited from the bailouts. Only they will continue to benefit. Everyone else is prey.
 
11. The banks (and therefore the bailouts) fund the permanent war, which in turn militarizes the country for the benefit of the banks.
 
12. The stock market is the terrorist wing of finance monopoly. Its purpose is to punish all public interest government action (for example letting the market work in Lehman’s case, or the Congressional rejection in the first bailout vote). Such punishment is a tool of disaster capitalism, generating the sense of immediate crisis, the Shock Treatment, to terrorize and stampede policy-makers, the media, and the public into allowing or enabling the power and loot grabs.
 
(On the other hand, it rewards official crime. Thus health insurance stocks have been a barometer of the policy debate on health reform, for example going up after things like Obama’s very racket-friendly speech.)
 
Appendix: The mainstream media’s coverage is systematically bias in favor of corporatism, often atrociously so. The infrequent good articles are accidents, incidental to the media project. (They don’t have very good discipline.) 
 
 
For example this morning’s news. The big story is czar Feinberg’s pay decree for TARP recipients (along with the Fed’s own pay initiative).
 
The first thing that leaps out about this is the anodyne, demagogic nature of it. Pay reform (which will apply only to outstanding TARP patients, will be gentle, and probably easily evaded) doesn’t go to the base of the structural problem. Meanwhile possible real reforms like a CFPA and derivatives restrictions have already been gutted. So it’s utterly insufficient even if it works as it’s supposed to, and is primarily meant to be misdirection. Compare it with the gutting of finance reform in the House committee, and we see that it’s an example of No Reform Will Be Legislated[6].
 
(As for MSM alerts, the NYT piece on Feinberg’s decree is a particularly bad example. It elides the fact that the bailouts go way beyond the TARP[2] (every MSM piece has been doing that) and bends over backward to feature pro-racketeer arguments and quotes[5], including parroting the Big Lie that We Need The Big Banks For Recovery[8].)
 
Meanwhile, Freddie Mac severance agreements are an attempt at legalized bribery to cover up crime [7, 5]; Joe Nocera informs us that AIG is at it again with the bonuses [3, 10]; and Christina Romer gives us more bad news on jobs [10].
 
So there’s my proposed twelve categories. Everything I see fits into one or more. Unfortunately, nothing runs counter to them. 
 
Any suggestions?
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22 Comments

  1. Very Nice list.

    A few comments and suggestions:

    Capture is nothing more than a euphemism for corruption.

    12. The stock market is the terrorist wing of finance monopoly. Its purpose is to punish all public interest government action (for example letting the market work in Lehman’s case, or the Congressional rejection in the first bailout vote).

    -This one lacks clarity for me. I feel as if you are conflating different market arenas with the share market which is THE CASINO for speculation for big banks and their handmaidens, and is one of only two places where “Big Banks generate profits presently.

    Such punishment is a tool of disaster capitalism, generating the sense of immediate crisis, the Shock Treatment, to terrorize and stampede policy-makers, the media, and the public into allowing or enabling the power and loot grabs.

    -I think I understand what you are suggesting, correct me if I am wrong, that the stock market’s health or imminent death is used as a cudgel by the
    “financial services industry” to extort Congressional compliance with respect to bailouts.

    Put another way, “Give us the trillions or the stock markets gets it in the neck”

    If that is your meaning, I agree, that is the bankster ploy. And the great tragedy is that the bluff has not been called. Had it been last year, the cancerous banks would have been excised from the body politic and mop up operation would, by now, be well towards completion.

    Comment by Edwardo — October 23, 2009 @ 10:58 am

    • Yes, these stock traders buy or sell often based on their perception of how the policy winds are blowing.

      I don’t know (and don’t care) how many of them consciously see it this way, but the effect is to reward the “correct” behavior and punish the incorrect, just like with some dumb animal, and in that way to reinforce the desired policy outcome: corporatist, anti-public.

      As for capture and corruption, as I said I couldn’t care less about someone’s intent where it comes to the political; I care only about actions and results.

      But for housekeeping purposes, I’d say corruption is where you consciously seek pecuniary gain in return for policy actions, while capture is where you’re still deluded enough that you really think your crimes are good for the people, and that you’re still a “public servant”. I suppose it’s possible Geithner and Obama sincerely think they’re doing the right thing.

      Then there’s out and out fascist ideologues like Gramm who know and enjoy that they’re waging vicious class war.

      Like I said, in the end it doesn’t matter. Only the result matters, so all three types are objectively the same.

      Comment by Russ — October 23, 2009 @ 12:14 pm

      • One more thing about “punishment and reward” is that Senators and congress people generally get incredible access to initial public offerings on a totally unfair preferential basis, when the general public has next to no access to them. They can then sell their much appreciated shares after waiting the required time. There are many other ways of keeping Senators and Representatives tethered to the stock market. If they weren’t, they might not care as much.

        Comment by Yakkis — October 23, 2009 @ 2:00 pm

  2. I believe the entire problem can be solved by the proposed legislation you will find at

    paskudnyaks.blogspot.com

    Comment by jake chase — October 23, 2009 @ 10:58 am

    • That does look like a good way to gut casino derivatives.

      And it would greatly reduce complexity compared to what a mess it all is now, though as I mentioned in the Bill George post the bank flacks would take existing complexity as the baseline and whine that this is “too complex”.

      I like giving everyone standing to sue and get a piece of the recovery. Now that’s the free market at work. 🙂

      Comment by Russ — October 23, 2009 @ 12:02 pm

  3. You might want to make your categories/concepts more granular so that they can be combined in interesting ways.
    For example, someone has pointed out that #capture is a form of #corruption, so logically everything you write about capture is also in some way related to corruption.
    Then you can take these individual concepts and combine them to make statements like you have done. Such as “Corruption implies either no reform or no true reform.” Previously, you might have said reform includes true reform and false reform.
    If you’re interested there is open source software for managing these kinds of knowledge bases.

    Comment by Yakkis — October 23, 2009 @ 11:12 am

    • I saw you saying something like that in a Baseline comment.

      I don’t know much about computer wonk stuff, but that’s something to think about.

      Comment by Russ — October 23, 2009 @ 12:19 pm

      • Actually, you don’t need to know that much about it to use it. And if you’re really serious about making a knowledge base, eventually it’s going to be huge and include thousands or tens of thousands of discrete bits of information. A computer could really help in managing that for you whereas trying to organize them on scraps of paper or in your own memory would be much harder.

        Comment by Yakkis — October 23, 2009 @ 12:26 pm

      • Well, I’m not thinking of trying to keep track of every detail myself, although you’re right, even the notes I do take are really too much to completely organize.

        I take notes, with a list of articles and index of important points, and then just see what sticks with me. If there’s something I want to look up I can usually find it easily enough.

        But as time goes on and stuff adds up…

        Comment by Russ — October 23, 2009 @ 4:56 pm

  4. I sense a bit of irritation with some of what I wrote, but perhaps, that is simply me, as they say, projecting.

    I agree with your point about the objective sameness of capture and corruption:

    “….corruption is where you consciously seek pecuniary gain in return for policy actions, while capture is where you’re still deluded enough that you really think your crimes are good for the people, and that you’re still a “public servant”. I suppose it’s possible Geithner and Obama sincerely think they’re doing the right thing.”

    I would only add that the two are not mutually exclusive, Obama is, in fact, paid for by the financial services industry, Goldman in particular, and yet, I believe it is still quite possible that he still sincerely believes he is doing the “right thing.”

    Comment by Edwardo — October 23, 2009 @ 1:08 pm

    • Not being a corrupt politician myself, I can hardly speak for them. But it always strikes me that they would have to somehow fool themselves in a deep way like in the movie Memento, to be able to lie convincingly.

      Comment by Yakkis — October 23, 2009 @ 1:53 pm

  5. There are con artists who know full well they are scamming and then there are con artists who believe their own swill.

    Comment by Edwardo — October 23, 2009 @ 4:17 pm

    • Nietzsche thought all competent liars have to on some level convince themselves that they’re not lying, otherwise they won’t be convincing.

      Comment by Russ — October 23, 2009 @ 4:30 pm

      • According to Costanza, it’s not a lie if you believe it.

        Comment by Yakkis — October 23, 2009 @ 5:50 pm

  6. Edwardo, no, I wasn’t irritated. Sorry if it sounded that way.

    I guess I emphasized the point because it’s so uncommon nowadays. Most people want to focus on “intentions” and so on, which I don’t think is politically helpful. (I didn’t think you were saying that, but I took the opportunity to elaborate.)

    Comment by Russ — October 23, 2009 @ 4:27 pm

  7. Right. Glad to hear I wasn’t causing upset.

    Comment by Edwardo — October 23, 2009 @ 5:19 pm

  8. I think this is a very good first draft. I am in total agreement with these (non-list) points:

    “In some ways it may be more difficult for those of us who lack a formal background in this stuff, but we have the much bigger advantage that we have less brainwashing to overcome in our struggle toward clarity and truth.”; and

    “The goals would be education of the not-yet-educated, radicalization of the educated (and of course educating existing radicalism, which is usually the even more common process), and figuring out a plan of action. (I’ll write more about radicalization and action later; for today I’m writing about education, including self-education.)”

    I don’t want to argue with the individual points — I think they are all valid — but with the nature of the list itself. “Ratifying” it would take a lifetime. I don’t think there is a list that can be drawn up describing what has been going that would not be divisive, which is why I recently changed tack and thought the way forward is consensus on some small set of “goals” upon which the overwhelming majority of humanity can agree. The word “clean” is what I think might unite, rather than divide.

    Let’s not talk about criminality, regardless of how justified that might be, let’s not point fingers, let’s present some simple, pursuable objectives and demand an open and honest of them, a televised, rolling discussion between experts from all relevant disciplines.

    The energy crisis is solvable, as are the water and top soil crises. Who can be against pursuing this? Who can argue that these are not urgent concerns? We the people must insist, via peaceful protest, that these issues be publicly debated. The thing is, the connotations of solving these problems lead unavoidably to radical change, unavoidably!. Proving corruption is, therefore, not even necessary, is in fact a waste of energy, if I may be so bold. That would sort itself out as a consequence of uniting opinion behind a harmless sounding objective that has enormous radical potential…

    Clean State, Clean Fuel, Clean World

    Something like that. What’s not to like?

    Comment by Toby — November 3, 2009 @ 7:47 am

  9. Sorry about the poor grammar and missing words. I’m typing two things at once here. My bad.

    Comment by Toby — November 3, 2009 @ 7:57 am

  10. Hi Toby,
    Well, the list isn’t a platform to be ratified. I believe it’s a set of facts which can be used to organize existing knowledge about the banks (and not just the banks, but all corporate rackets), quickly understand any new data, and make predictions.

    I appreciate that you don’t want to “be negative”, but I don’t think the corporatists are going to return that feeling.

    So I think if there is an activist way out of this mess, it has to both offer a new vision as well as fight the bankrupt but vicious and ruthless enemy aim.

    Comment by Russ — November 3, 2009 @ 11:39 am

  11. Russ, I agree with you. The game-plan I’m kicking around with Edwardo envisions bringing down a bank (such as BofA) by coordinated, targeted closing of accounts (amongst other actions). We need a game-plan attached to some non-divisive and simple to understand goal. I have no intention of debating the corporatists, or the politicians. The rolling discussions I would like to see would exclude politicians and CEOs, and be organized to clarify and educate generally about solutions such as cold fusion and hydroponics that the world can greatly benefit from. That the corporatists will not want to hear any of it, and pooh-pooh anything that threatens their grip on power is as clear as day to me. That the chance of me getting this ball rolling is close to zero is also not lost on me. But I hate not trying.

    If I came across as a dewy-eyed ingenue I certainly didn’t mean to. If I caused offense or irritation I apologize. If what I say does not resonate with you, so be it. I respect what you are doing here, but am of the opinion your talents and energy are being applied just slightly off target.

    Comment by Toby — November 3, 2009 @ 12:57 pm

  12. No, I take no offense. But I am quite assured regarding my target. I have zero doubts on principle; I’m only still pondering the strategy and tactics.

    I’m of the same mind as you guys regarding the general goal of getting people to withdraw their money from the big banks, stop using those credit cards, mortgage and loan services, etc. I would make that a key element of the educational offensive I’d like to launch.

    Focusing on one particular bank at a time is an interesting idea (as long as they didn’t just go to another big bank instead).

    And I concur on not debating or sincerely seeking “compromise” with the corporatists, like the way Obama really thinks the health insurance rackets have a legitimate “place at the table”. I’d only ever go into a “debate” in order to slam them as criminals.

    Don’t worry about chances close to zero. It’s really not in our hands to dictate the chance anyway. The system is unsustainable; it must come down. The only thing that has zero chance is the cornucopian dream/nightmare.

    So all we can do in the meantime is prepare, be ready, and try to make things less bad if we can.

    (I’ve actually been meaning to write up some mock platforms and organizational schemes, just as exercises.)

    Comment by Russ — November 3, 2009 @ 4:07 pm

  13. Cool. I’ll keep ploughing my furrow over with Edwardo and come back to you for feedback/criticism when the plan is tighter and more focussed.

    Perhaps we are more on the same track than these short exchanges can reveal, though. My ambition is very long term, as I hope my earlier posts have indicated. Be that as it may, I get the feeling our paths to a (possibly) common objective are not quite similar enough. Yet…

    I’ll stay in touch.

    Comment by Toby — November 3, 2009 @ 4:16 pm


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