Volatility

January 15, 2010

Where’s the Midget?

Filed under: Bailouts Only Propped Up Zombies, Reformism Can't Work — Tags: , — Russ @ 3:55 am

 

This week we saw the opening act of the Financial Crisis Inquiry Commission. So far it’s been what we expected, lots of empty words headed nowhere in particular. This, like everything that’s been said so far, reminds me of the opening remarks in The Road Warrior; how “their leaders talked and talked and talked”, but nothing could stave off the collapse.
 
On Wednesday the chief banksters slouched in. The photo of these crooks being sworn in provided the only amusement and insight. The sneer, the scorn, the boredom, the malaise, the childishness, the hostility, the incomprehension, the psychopathy, are clear to see in their faces, which radiate the banality of evil.
 
Again we see how incapable they are of even pretending to respect any community of law other than the law of the jungle. Their political ineptitude, their inability by now to even play the political game, reflects the profoundly anti-political essence and agenda of finance corporatism itself. This ideology, as it engulfs and assimilates the entire political system, has sought to completely destroy democracy itself. All real politics must perish if corporate monopoly is to enjoy full dictatorship. This process is largely complete (we’re still waiting on the Supreme Court for its decision on direct corporate election commodification).
 
In the bankster response to this commission, and our expectations for the commission in general, we have, unfortunately, kin responses to it. The only responses the current reality support.
 
True, the banksters couldn’t be quite so brazen in their contempt as they’ve been with Obama. Phil Angelides will probably try to accomplish something here. But the CEO testimony showed up what will likely be the limits throughout.
 
The banksters were able to evade the harshest questioning with the standard boilerplate, pandering, propaganda, lies about paying back the TARP, and statements of pseudo-accountability.
 
Blankfein pretended Goldman only dealt with “professional investors who want this exposure”. He repeated the longstanding Goldman line that the Bailout helped everyone including GS, but that GS didn’t need it. As far as the rest of America, the real economy, real people like the teachers and cops Angelides invoked, Blankfein issued the typical non-apology apology: “We regret the consequence that people have lost money”. Kind of like, I regret if anyone was offended by my innocent remarks. It’s all your fault, you fucking crybabies.
 
Dimon was similarly bland and sleazy. “I blame the management teams 100% and fault no one else.”
But I really blame everyone else but management, and better yet I blame no one in particular: “This kind of thing happens every five to seven years”. A financial crisis happens every five to seven years, and it’s just a kind of “thing” that kind of “happens”.
 
That’s of course a lie. Number one, financial crises did not happen every few years so long as Depression-era regulation like Glass-Steagal was still in effect. They only started constantly occurring and recurring once aggressive deregulation became the government policy. JPM itself, as Dimon well knows, took the lead in lobbying for monopoly finance dereg.
 
Dimon went so far as to claim his daughter called him up to ask, “Dad, what’s a financial crisis”, and that after he lied to her about it the same way he lies to America she said, “then why is everyone so surprised?” Quite a heartwarming story.
 
Blankfein was trying to mine the same vein when he obnoxiously compared this to a “hurricane” (not just a spontaneous thought, apparently; it was in his prepared statement as well). He said these were acts of god, prompting Angelides’ best line: “Acts of god we’ll exempt. These were acts of men and women.”
 
(Hmm, maybe that was unfair. Maybe these were “Acts of God”. After all, they’re doing “God’s work”.)
 
Angelides did flummox Blankfein on one line of inquiry, where he demanded to know how Goldman could legitimately induce the ratings agencies to give AAA ratings to CDOs where GS itself had information which would cause it to bet against them. Blankfein didn’t give anything approaching an “answer”, as of course he could not.
 
On Thursday government cadres came in to spew their own lies. Attorney general Holder bragged about over 2000 mortgage fraud investigations underway. Of course, all of these target only small fry. None are meant to threaten the real criminals, and RICO investigations remain, in the administration’s favorite fuck-you phrase, “off the table”. FDIC chief Sheila Bair gave standard boilerplate about the “resolution” scam. SEC head Mary Schapiro complained about unstable funding for the agency, even though it’s hard to explain how insufficient funds played into the SEC’s illegal and unconstitutional decree shielding AIG laundering from public interest transparency for ten years.
 
The only good testimony came from state regulators who told an all-too-familiar story of Federal-level corruption, obstruction, and interference. Illinois attorney general Lisa Madigan, one of the few who want action, who has filed anti-racketeering lawsuits, focused on federal foot-dragging and resistance to state action.
 
She thus by implication highlighted for us how the financial “reform” bill underway in Congress will seek to expand federal power to pre-empt state action. And in mentioning the anti-law, anti-public obstructionism of the OCC she reminds us how it is still headed by Bush political appointee John Dugan. (What, the Dems couldn’t find their own pro-Wall Street hack to put in that job? Once again we see how this idiot Obama can’t even get the spoils system right.)
 
In the end this is just political theater, and not even good theater. People hope this might live up to its 30s predecessor, the Pecora commission. But Pecora was empowered by FDR, who actually did want to do something about bankster abuses of democracy. But by that measure we’re today still in the Hoover stage.
 
Pecora had the great moment where they plopped a midget in JP Morgan’s lap. Will we be able to do that to Jamie Dimon this time around? Where’s the midget going to come from?
 
More seriously, as Yves Smith points out, this commission is “structurally flawed”, as it doesn’t have or seek broad subpoena power to peruse the big banks’ books. Rather, they’re going to issue subpoenas ad hoc, just in stimulus-response fashion, if they accidentally happen to get a lead.
 
It’s reminiscent of the Private Securities Litigation Reform Act of 1995 (another gift of Rahm Emanuel), the Catch-22 corporatist legal trap whereby plaintiffs are required to know ahead of time exactly what crimes the defendant committed, when in fact pre-trial discovery is necessary to get a good grasp of what those crimes were.
 
Unfortunately, all the indications are that the commission will be unable, and probably won’t even try, to effect a tipping point in the public’s understanding of these crimes and their motivation to take action.
 
It’s part of the system; therefore it’s not trying to upset the system. Just like Obama’s bogus bank tax, this is meant to distract and appease the angry public, not educate and empower it.
 
Such education will have to come from outside, from among the people themselves, and only the people themselves will be able to empower themselves.
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