Volatility

November 13, 2009

Extortion

Filed under: Law, Neo-feudalism, Reformism Can't Work — Tags: — Russ @ 6:02 am
“It would be a shame if any unintended consequences should befall you.”
 
The NYT’s op-ed page has a short piece by BusinessInsider’s John Carney once again laying out the standard threats and explaining how the people’s attempts to defend themselves against these gangsters are being punished. (I guess the Times thought it would be unseemly for their own editors to carry the water the way their business page regularly does, so they outsourced the blackmailing.)
 
Throughout Carney uses the term “unintended consequences” to describe the kneecapping tactics of the banksters.
 
He refers to Christopher Dodd’s proposal to move up the effective date for the credit card reform legislation enacted earlier this year.
 

Let’s start with the credit card rate freeze. The rising rates charged by issuing banks that inspired Mr. Dodd’s legislation are themselves the unintended consequence of an earlier attempt to assist the consumer. Back in May, Congress passed a law requiring banks to give customers a 45-day notification before raising rates. To give banks time to adjust to the new rules, Congress decided not to put that provision into effect until February.

So what happened next? Banks rushed to raise rates before the law takes effect. Many customers who may not have had their rates raised until 2010 — or perhaps not at all, if the economy continues to improve — found themselves paying higher rates even though they had not missed any payments. How could Mr. Dodd and his fellow lawmakers not realize that banks would pre-emptively raise rates?

 
So this wasn’t simple greed rushing to gobble up whatever crumbs it could before the floor got mopped. No, Congress forced them to do it. They had no choice.
 
So I guess if I tell a thief I’m going to have him arrested and he kills me, it’s my own fault. I made him do it.
 
And then here’s what’s always the underlying threat.
 

Mr. Dodd’s new proposal may also wind up dealing a serious blow to consumers — and the economy. If banks find themselves unable to raise rates, many will limit their risk by severely restricting consumer credit. Many people will find their credit cards canceled, and new customers will be turned away. This will come on top of an already tight consumer credit market: banks sent out 2.1 billion direct-mail credit card solicitations in the third quarter of 2006, according to the research firm Mintel; this year in the same quarter, they sent out 391 million. A further contraction in consumer credit could devastate our nascent recovery.

 
We know we don’t need these big banks for any real function, but as long as they’ve corrupted the government they’re going to get policy based on the ideology that we do need them. For as long as that condition holds they’ll be able to make these threats, and government and the media will cringe.
 
It’s just like when the infinitely obnoxious AIG (with an assist from the NYT’s Sorkin) threatened that unless its thugs got their bonuses, they’d refuse to clean up their CDS mess, and even take their knowledge of explosives elsewhere to use it as a weapon against the people.
 
Nice recovery you got going there. Shame if anything happened to it.
 
(Sometimes when I say I’d make a clean sweep of all these criminals people ask me what I’d charge them with. Well, they’re all guilty of extortion, fraud, and insider trading, for starters. So those would be my fallback equivalent of disorderly persons offenses while we got the real testimony.
 
Of course, as the Bear Stearns prosecutorial fumble shows, the law isn’t well set up to deal with crimes of these magnitude. Of course, that’s in large part because the law itself has long since been hijacked. So if the people really want their country back they’re going to have to be willing to be more intrepid than that kind of prosecution. At Nuremburg they had to create a new way.)
 
 
 
[I do agree with Carney on the housebuyer tax credit, though not for the same reasons. While we need stimulus, lots of it, and the right tax credits can be part of the mix, the whole package should be rationally planned, toward general socioeconomic reform.
 
But what are Obama’s two signature policies? Cash for Clunkers and this housing tax credit. Neither serves a rational or constructive purpose. Both are economically regressive (driving up prices for renters and used car buyers). Both are intended only to reflate the bubble and prop up zombie structures.
 
More broadly, since it’s the social engineering project of suburban sprawl and rendering the whole socioeconomy car-centric and enslaved to the car which got us into this whole energy and economic mess, it’s that model we need to move away from. So both of these policies are deeply reactionary.] 
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8 Comments

  1. The bank’s day is coming. But clearly this Administration isn’t going to be the one presiding over the general well deserved roundup of all things related to big banks.

    I’m afraid that, cumulatively speaking, what all the accounts of errant government functioning leave this citizen with, is the sense that, not only do we desperately not need the big banks, but we don’t much need what passes for government either. And that, I am afraid, is being kind.

    Comment by Edwardo — November 13, 2009 @ 9:15 am

  2. The most useful thing government can do is to prevent anyone from becoming a major predator.

    But where it not only allows such predators to arise but actively assists them, which is the essence of corporatist government, then it’s not only useless but an active evil.

    Comment by Russ — November 13, 2009 @ 11:40 am

    • Ayn Rand have agreed with you on that.

      Comment by jake chase — November 14, 2009 @ 10:52 am

      • Strike ‘have’ from the previous comment.

        Comment by jake chase — November 14, 2009 @ 10:53 am

  3. Edwardo, this morning I was again unable to comment at your place. It still says something like “Your open ID could not be verified”.

    So here’s the comment I was going to make (I didn’t want you to think I was being unneighborly and not reciprocating comments):

    I think by now they’re so insulated that they really aren’t even aware of the rising anger and discontent.

    They’re insulated by their wealth and the media coverage, which only reflects their own mirror image, the story according to them, right back at them.

    Bush used to brag about how he never read the MSM but instead only a predigested version of it. By now he wouldn’t need anyone to chew it for him because the media evidently heard, cringed, and obeyed. Now it does nothing but parrot the party line of Wall St and Washington.

    (And thanks for linking to my post.)

    Comment by Russ — November 13, 2009 @ 11:47 am

  4. Try again, Russ. On disasterporn I enabled comments from anyone weeks ago, but was a tad slow on ART.

    Comment by Edwardo — November 13, 2009 @ 8:49 pm

  5. It’s good to see more an more bloggers recognizing the folly of supporting the current financial structure by serial bailout.

    You’ve got great commentary, found you on baselinescenario comments. Keep at it. I gave it up because I was internalizing the stress I was feeling in trying to sort out issues and express in common language what is going on!

    Eventually the “higher-logical-content” discussions should enter the mainstream, or maybe influence the MSM more.

    Comment by rob denehy — November 16, 2009 @ 9:46 am

  6. Thanks Rob. I hope we can soon start accomplishing those things. My ambition is to play whatever part I can.

    It is stressful, but I’ve found that the stress and anger is less now that I’m doing this. I learn more, and gradually the vague outlines of possible courses of action start to resolve, and most of all I’m doing something and not just sitting there feeling helpless.

    Hope to see you around. 🙂

    Comment by Russ — November 16, 2009 @ 2:36 pm


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