Volatility

February 19, 2010

“The Grifters”, Taibbi’s Remake

 

Matt Taibbi’s new Rolling Stone piece, “Wall Street’s Bailout Hustle”, attacks the great crimes of our day with his usual vigor and ferocity.
 
This piece doesn’t really tell us anything new, but is another piece of the ongoing project in cataloguing these crimes and describing their real nature. We basically have two narrative options. The first is to describe it in terms of classical totalitarianism, corporatism masking itself in the simulacrum of democracy and capitalism (needless to say, what’s happening has literally nothing to do with democracy and textbook “free” markets and everything to do with their complete destruction). Hannah Arendt’s monumental work The Origins of Totalitarianism remains frighteningly relevant today. More topically up to date authorities are Naomi Klein’s Shock Doctrine (which I’ve long considered practically a part four of Arendt’s book) and Chris Hedges’ attempts to popularize Sheldon Wolin’s concept of “inverted totalitarianism” (corporatist tyranny which maintains the trappings of democracy for a while), as in these two excellent pieces.
 
The second is to describe it in terms of gutter gangsters and con men, swindlers and thugs. Both approaches are correct, and I use both myself. Tyranny is always infused to some extent with flim-flammery and thuggery. Although perhaps this corporatist tyranny is the most brazen and undiluted kleptocracy of all.
 
Here Taibbi goes all in on the con man lexicography. I don’t know where he picked up these quaint-sounding terms, but they all sound dead on.
 
So we have the rundown on the basics of this infinite capital crime, described in terms of its true wretched, sniveling, gutter crackhead pickpocket essence.
 
There’s “the Swoop and Squat”, originally describing an auto insurance scam, here describing how Goldman first bought CDS on mortgage securities from AIG, then bet against those MBS, then made $5.9 billion in collateral calls on the deterioration of its own bubble in order to cash in on as much of this “insurance” as possible before AIG went bankrupt. For the grand finale, Goldman used its government influence to extort another $13 billion in theft from the taxpayers, laundered through the AIG bailout. Grand total swindled: almost $19 billion. That right there wipes out Goldman’s alleged $13.4 billion in 2009 “profits”. That’s quite an insurance claim. But there’s lots, lots more.
 
We have “the Dollar Store”. For no reality-based reason, Goldman and Morgan Stanley were allowed to become bank holding companies, which gave them access to infinite free money from the Fed. (In spite of the MSM’s lies at the time, this move was heads-I-win, while the tails-you-lose was that the government never for a second intended to exercise the vaunted “greater regulatory oversight” holding company status was supposed to incur.) The FDIC helpfully guaranteed almost $30 billion of borrowing by this “bank”. The Dollar Store is simply a place set up to look like a legitimate outfit but really intended to fleece the mark. Here the banks, the government, the MSM were hustling and bustling about, looking intent, speaking of “getting the banks lending again” while the gullible taxpayer was taken for all he had. (Never explained was why, if it’s all government money, we needed the banks at all. I asked that the very first day Paulson said we need to get the banks lending again, and I’m still waiting for a real answer. I’ve always known there is none.)
 
Everybody thinks he knows a “Pig in a Poke” when he sees one, but if he’s the average American taxpayer, apparently not. Otherwise it’s hard to explain how the Fed got away with changing its rules to accept worthless toxic crap paper as Grade-A collateral for the free money it’s been shelling out.
 
The “Rumanian Box” was originally a scam counterfeiting device, but via its MBS buys and QE ideology, the Fed has become the biggest counterfeiter the world has ever seen. If you’re a casino bankster, this box works flawlessly and bounteously. If you’re any kind of saver or pensioner, or anyone who depends upon a paycheck, you’re the rube who bought a box that has stopped working.
 
“The Big Mitt” refers to a rigged poker game. Here the government and the banksters tip one another off and manipulate the deck so that the banks always draw aces while the taxpayer always gets a worthless hand. A particularly noxious example was how Treasury tipped off the banks on the mechanisms of the PPIP scam so they could load up on toxic paper ahead of time, which would promptly be exchanged with the government for stolen taxpayer money. At what point does corruption pass over into treason?
 
None of us needed Taibbi to remind us of how Goldman’s high-frequency trading algorithms are simply a legalized form of “the Wire”, the old scam whereby the manipulator of inside information acts upon it before releasing it to other stakeholders, to his profit and their detriment. After months of denial Goldman was finally forced to acknowledge that it sometimes acts against its own clients’ interests, if it can see an advantage in some fast insider trade based in the info a client has given them. It’s simply astounding that Goldman Sachs is allowed to exist at all, let alone that anybody still seeks their business.
 
Finally, “the Reload” is where the scammer tries to hit the same mark again. In the case of the docile doormat taxpayer I guess it’s hard to resist. So no sooner had the crash occurred and the Bailout was on then all the Wall St and Washington criminals pulled together to try to reflate some bubble, any bubble. The most obvious new bubble is the stock bubble, fueled 100% by public money stolen by the banks (and perhaps even surreptitious direct government buying). But quietly the Fed and Treasury have bought far above $1 trillion in MBS to prop up toxic paper prices and try to get this bubble as well reflated. They’re so desperate for bubbles they’ve even been pretending to take climate change seriously, because via cap and trade they’re on the scent of another bubble.
 
Of course, they have no choice but to try to reflate the bubble. America’s real economy, any productive basis for an economy, have long since been gutted. Those aren’t coming back under the auspices of this system. The one and only way the power structure can try to preserve its wealth and power is to prop up the zombie system, keep blowing bubbles, use the crashes for disaster capitalism and to consolidate creeping totalitarianism (this to be “inverted” as long as possible). Overt mass state violence will be postponed as long as possible. The final goal is remedievalism. The restoration of the Dark Ages. A handful of warlords, a mass of starving, freezing serfs.
 
This is the one and only path they can tread. The only alternative is to voluntarily relinquish power, return it to the people. I doubt they’ll do this.
 
What comes through most clearly from all this:
 
1. The big banks are permanently insolvent. None has made a legitimate cent in ages, and none ever will again. Especially now, 100% of their “profit” is: (A) simply looted from the taxpayer, (B) accounting fraud, (C) the result of crimes like HFT front-running.
 
2. America’s apathy and docility in the face of its liquidation, this docility being a form of extremism in itself, is exceeded only by the absolute derangement of the sodomites. The orgy, the “bonuses”, the psychopathic behavior, make it clear that by now they can’t help themselves. They’re like sharks in a feeding frenzy. They’ll rip and tear and gorge and bathe in blood until all the food is destroyed and all that’s left is to rip themselves to shreds.
 
To harken back to yet another example from medieval history, this is a modern example of the Dance of Death.
 
3. Taibbi brings in one last term from con lingo – America looks like “the True Believer.” The mark is desperate not to hear what he hears, not to see what he sees, not to know what he knows, and most of all not to do what he must do to redeem what was stolen from him. Too invested in his delusions, in the false comfort of the short-term status quo, in all the lies the con man convinced him to believe to the point that by now they constitute a significant part of his identity, or perhaps all of it, he refuses to hear, to see, to know, to do.
 
Instead he listens as the criminal himself sidles up again with a new scam. One which convinces the mark he can get everything back if he only believes another lie and forks over what little he has left. As long as for another moment the believer, who believes so intimately in such a bundle of lies that he can’t bear the thought of existence without them, can be warmed with a new reason to believe the lie, he can stave off the coldness of reality.
 
And so in a sense Lloyd Blankfein is right when he says he provides something in return for his theft. He tells the True Believer the lie he needs to believe in, lest he be forced to face his fleecing. Lest he be forced to face the cold hard choice of fighting back for what’s his, or submitting once and for all, before the world, before history, before himself, to abject slavery, forever.
 
So the only question is, will the inertia True Believers defeat the real truth and the real call to arms?
 
Meanwhile, there’s no question at all about the cons themselves. There’s not enough rope in America to hang ’em all. 

6 Comments

  1. “America’s apathy and docility in the face of its liquidation, this docility being a form of extremism in itself…”

    Wow. Just wow. Never considered that “extremism” but you nailed it. Russ, can I vote for you next election?

    Comment by Bloodgroove — April 12, 2010 @ 5:32 pm

  2. “There’s “the Swoop and Squat”, originally describing an auto insurance scam, here describing how Goldman first bought CDS on mortgage securities from AIG, then bet against those MBS, then made $5.9 billion in collateral calls on the deterioration of its own bubble in order to cash in on as much of this “insurance” as possible before AIG went bankrupt. For the grand finale, Goldman used its government influence to extort another $13 billion in theft from the taxpayers, laundered through the AIG bailout. Grand total swindled: almost $19 billion. That right there wipes out Goldman’s alleged $13.4 billion in 2009 “profits”. That’s quite an insurance claim. But there’s lots, lots more.

    We have “the Dollar Store”. For no reality-based reason, Goldman and Morgan Stanley were allowed to become bank holding companies, which gave them access to infinite free money from the Fed. (In spite of the MSM’s lies at the time, this move was heads-I-win, while the tails-you-lose was that the government never for a second intended to exercise the vaunted “greater regulatory oversight” holding company status was supposed to incur.) The FDIC helpfully guaranteed almost $30 billion of borrowing by this “bank”. The Dollar Store is simply a place set up to look like a legitimate outfit but really intended to fleece the mark. Here the banks, the government, the MSM were hustling and bustling about, looking intent, speaking of “getting the banks lending again” while the gullible taxpayer was taken for all he had. (Never explained was why, if it’s all government money, we needed the banks at all. I asked that the very first day Paulson said we need to get the banks lending again, and I’m still waiting for a real answer. I’ve always known there is none.)

    Everybody thinks he knows a “Pig in a Poke” when he sees one, but if he’s the average American taxpayer, apparently not. Otherwise it’s hard to explain how the Fed got away with changing its rules to accept worthless toxic crap paper as Grade-A collateral for the free money it’s been shelling out.

    The “Rumanian Box” was originally a scam counterfeiting device, but via its MBS buys and QE ideology, the Fed has become the biggest counterfeiter the world has ever seen. If you’re a casino bankster, this box works flawlessly and bounteously. If you’re any kind of saver or pensioner, or anyone who depends upon a paycheck, you’re the rube who bought a box that has stopped working.”

    Russ, that is such good stuff! Man, you’re like a cool drink in a hot desert.

    I read this article by Matt when it first came out (which if memory serves, was around when you wrote this). I was rather shocked that the MSM let him get it out.

    Where does this all end, Russ? I’m thinking it’s not gonna be good. I think “collapse” is inevitable – but to what degree?

    Comment by Bloodgroove — April 12, 2010 @ 5:38 pm

  3. Well, we’re headed for a much lower level of energy consumption as no alternative can replace cheap oil, and therefore a lower level of agricultural production as industrial agriculture is unsustainable. The financialized economy is a Tower of Babel, one big ponzi scheme which couldn’t be sustained in itself even if the physical energy were still available. It will be harder and harder to keep any kind of centralized large-scale organization going.

    So the deterioration of all of these is the collapse process. We don’t yet know what’ll be the ultimate speed and extent of the collapse, or how much regional variation in speed and extent there will be.

    These will depend on both natural limits and whatever (if anything) the people have learned in terms of political wisdom. We’ll see how much people are willing to fight their enslavement. The elites’ plan is to transform from industrial/technological corporatism to medieval feudalism, maintaining as much power, wealth, and luxury for themselves as possible while reducing the vast mass back to serfdom.

    So the degree of this will depend upon how far the people are willing to submit.

    Comment by Russ — April 13, 2010 @ 5:03 am

  4. “The elites’ plan is to transform from industrial/technological corporatism to medieval feudalism, maintaining as much power, wealth, and luxury for themselves as possible while reducing the vast mass back to serfdom.”

    Why, Russ? Why? I think you’re right, but why do they want to do that? Is it just the natural tendency of man, or is it something more? I don’t buy the Bible story and the anti-christ one-world ruler thing. Perhaps it is the elites thinking that they must reign us in or risk destroying the planet’s resources?

    Comment by Bloodgroove — April 13, 2010 @ 5:29 pm

  5. It’s because of the unsustainability of economic “growth”. This growth is unsustainable both in itself, because it’s by now a ponzi scheme, and also because of Peak Oil. Growth always depended upon cheap, plentiful oil. But the world has now reached the point where all the cheaply extractable oil reserves are depleted, and it will cost more and more to pump less and less. The same dynamic applies to other fossil fuels, and no alternative can replace them.

    It will be physically necessary for civilization to use far less energy. The same resource limitations loom for water, soil, minerals, etc.

    (The “Energy” links in my blogroll link to lots of information about Peak Oil, and I’ve written posts about it here as well, as it shows in my category list. See “Peak Oil”, “Resource fascism”, “neo-feudalism”.)

    So under these circumstances, where the pie will be getting smaller in an absolute sense, for the rich to maintain (let alone keep “growing”) their wealth and power will require the radical impoverishment and enslavement of everyone else.

    It’s a zero-sum game with a vengeance.

    Comment by Russ — April 14, 2010 @ 5:50 am

  6. Thanks for the illuminating answer, Russ.

    Comment by Bloodgroove — April 14, 2010 @ 2:58 pm


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