Volatility

April 7, 2010

Some Bad Hackman Performances

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(Sorry about the paragraph breaks. The formatting on this is screwed up, and I can’t figure out how to fix it.)
So have you undergone Krugman’s sessions in trying to back everyone off the idea of breaking up the banks?
I’m still refining my perception of what this guy does. His last two columns seem to want to take us down a set of stairs, from the sunlit foyer of shiny happy reform ideals to the dank basement of the Obama sellout, without our noticing the trip, since the Princeton illusionist has his gaslights and mirrors strategically deployed.
1. First he assures us that only Republicans oppose “real reform”, while we can rest assured Democrats are acting in “good faith”. The Dems are doing the best they can for us. Then he starts in:

Here’s how I see it. Breaking up big banks wouldn’t really solve our problems, because it’s perfectly possible to have a financial crisis that mainly takes the form of a run on smaller institutions. In fact, that’s precisely what happened in the 1930s, when most of the banks that collapsed were relatively small — small enough that the Federal Reserve believed that it was O.K. to let them fail. As it turned out, the Fed was dead wrong: the wave of small-bank failures was a catastrophe for the wider economy.

(He thinks we can’t figure out that the reason the Depression bank failures brought on a general economic disaster wasn’t bank failures as such, but because common depositors lost their savings. Today we have FDIC for that.)

While the problem of “too big to fail” has gotten most of the attention — and while big banks deserve all the opprobrium they’re getting — the core problem with our financial system isn’t the size of the largest financial institutions. It is, instead, the fact that the current system doesn’t limit risky behavior by “shadow banks,” institutions — like Lehman Brothers — that carry out banking functions, that are perfectly capable of creating a banking crisis, but, because they issue debt rather than taking deposits, face minimal oversight.

He denies the TBTF structural problem, and by sleight-of-hand switches in a lesser depiction of the problem (“shadow banks”), declares that to be the real problem, and that in principle it can be solved by “regulation”.
If we broke them up completely, while not sufficient, it would go a long way. But since Krugman is for ideological and partisan reasons opposed to taking this necessary step, he directs us to this watered-down depiction of the problem which can then be solved the way he claims. Now he’s framed the issue the way he wants.
So he smuggles in the alleged law of nature that we have to endure the existing system, as it is, and can only hope to “regulate” it more or less well. Getting rid of the rackets completely is, as Obama hacks like him love to say, “off the table.”
He makes sure to tell us again that the Bailout “was necessary” (past tense, thus trying to sneak in the lie that the TARP equals the Bailout, and that it’s all been paid back). He keeps stipulating that.

The same would be true today. Breaking up big financial institutions wouldn’t prevent future crises, nor would it eliminate the need for bailouts when those crises happen.

I don’t get it. Why would people who are willing to Smash the Banks be willing to bail out the odd small bank that fails? When he talks about the kleptocratic bailout mentality he’s talking about himself and everyone like him who sees America as a resource to be mined for Wall Street. He’s not talking about actual reformers. So everything he writes is simply tautological: Bank flunkies will always act as bank flunkies. Yet he pretends to speak for everyone.
Here’s my tautology: Real reformers would enact real reform.

 

2. He says the Dodd bill is good in principle, but faulty in the proposed execution.

The Dodd bill tries to fill this gaping hole in the system by letting federal regulators impose “strict rules for capital, leverage, liquidity, risk management and other requirements as companies grow in size and complexity.” It also gives regulators the power to seize troubled financial firms — and it requires that large, complex firms submit “funeral plans” that make it relatively easy to shut them down.

3. He pretends to make a vague stab at what the specifics should be:

The point is that the Dodd bill would give an administration determined to rein in runaway finance the tools it needs to do the job. But it wouldn’t do much to stiffen the spine of a less determined administration. On the contrary, it would make it easy for future regulators to look the other way as another bubble inflated……

So what the legislation needs are explicit rules, rules that would force action even by regulators who don’t especially want to do their jobs. There should, for example, be a preset maximum level of allowable leverage — the financial reform that has already passed the House sets this at 15 to 1, and the Senate should follow suit. There should be hard rules determining when regulators have to seize a troubled financial firm. There should be no-exception rules requiring that complex financial derivatives be traded transparently. And so on.

“And so on”, indeed. He limits himself to the House bill’s 15-to-1 leverage (already way too high) and rehashes the resolution authority nonsense which already failed with the PCA law.
So that’s those columns. That’s where we are in these maneuvers. So what comes next?
4. The final step will be to declare that the final bill, whatever’s in it, does meet his exacting standards. (All this time he was convincing us of how exacting his standards are.)
So the pattern seems to be this: He starts out dubious. But he’s already maneuvering himself around. Softening the demand. Lowering the expectation.
Eventually, whatever bag of garbage the Congress agrees upon, he’ll say it’s good enough. (Maybe that you can count on his Dems to “build on it”.) And if necessary he’ll escalate the rhetoric until the wreck is a “great” reform achievement. And he’ll promise catastrophic consequences if the thing doesn’t pass.
That was his flight plan for the health racketeering bill, and so far we’re up to softening and lowering-expectations stage.
In the end he’ll declare Obama’s bill, however bad it is, “real reform”, and insist that all decent people support it, or else…
It’s all a setup. He’ll gradually lower expectations, and eventually he’ll tell us to accept a garbage bill as “reform”.
It’ll be just like with the health racketeering bill.
(For an alternative hack method, see here. In Hayes’ version, the same hacks who just told the lie that health “reform” was real reform regardless of racket acquiescence will now say the opposite, that racket opposition proves that this phony reactionary bag is real reform. That’s because they know this time the rackets will definitely oppose it. Krugman’s also been softening us up for the proposition that Republican and Wall Street opposition will be badges of courage for a tough, scrappy reform bill.)
 
Some people think Krugman’s been co-opted. Actually, Krugman hasn’t been co-opted, but has simply followed his longstanding path of the partisan hack. People only forgot about his aggressive corporatism under Clinton because of his excellent attacks on Bush and the Republicans.
But he never in fact objected to Bush policies, but only that it was Republicans doing it.
Here’s two examples, from 1997 and from 1999 of the real Krugman, one of globalization’s most malefic propagandists:
We’ve known at least since the experiments of the first half of the 20th century that whenever an ideologue says, “we have to suffer now in order to achieve Utopia twenty years from now”, he’s simply a lying thug.
And so we know that knew at the time that the real goal of “free trade” was to permanently liquidate all good jobs and social stability, first in the Global South and eventually in the Western countries as well. We’re undergoing the end game today.
Since the Dems are for the moment back in power Thugman has fired up his Big Lie Machine again for the final push. Thus we get his playing lead Pied Piper for the “reform” lies, first for health rackets and now for the finance rackets.
Thus we get his acting as chorusmaster for the new round of China-bashing, simply a textbook exercise in one of history’s oldest tricks, lies and misdirection via riling up xenophobia.
(Also, notice how silent he’s gone on Bush’s war now that it’s 100% Obama’s war? But I guess after being considered such a hero on Iraq, even he’s embarrassed to shill for the war now.)
And it’ll be interesting to see how he’ll try to drum up support for the liquidation of Social Security, which is Obama’s fondest dream. They’re all gearing up for it as we speak. It’ll be the consummation of Krugman’s career.
The fact is that Krugman’s role has always been to be a top propagandist for neoliberalism and corporatism when the Democrats are in power, while he remains outside of official power.

 

So no, he hasn’t been co-opted. He was Thugman from day one.
Since I’m in such a hack-bashing mood, I’ll finish with a few notes on Frank Rich’s latest drivel.
He starts out with several despicable false equivalences of simple fact about Obama with absurd fiction.
 

Depending on where you stand — or the given day — he is either an overintellectual, professorial wuss or a ruthless Chicago machine pol rivaling the original Boss Daley. He is either a socialist redistributing wealth to the undeserving poor or a tool of Wall Street’s Goldman Sachs elite. He is a terrorist-coddling, A.C.L.U.-tilting lawyer or a closet Cheneyite upholding the worst excesses of the Bush administration’s end run on the Constitution.

 
To put it bluntly, in at least the second and third of those dichotomies the second item is empircally true and the other is laughable. And it goes downhill from there.
 
Suffice it to say that after for awhile looking like he was coming off the Kool Aid, Rich has now gone all in on his hack Obama hagiography. He previously asked, “Is Obama punking us?”; now he’s satisfied that Obama is exactly the person he always openly claimed to be.
 
He invents a “friend” to trot out again the lie that Obama ran as a “moderate”:
 

Last week, after I wrote about the role race plays in some of the apocalyptic right-wing hysteria about the health care bill, a friend who is a prominent liberal Obama supporter sent me an e-mail flipping my point. He theorized that race also plays a role in “the often angry and intemperate talk” he has been hearing from “left-liberal friends for the past many months about what a failure and a disappointment” the president has been. In his view, “Obama never said anything, while running, to give anyone the idea” that he was other than a “deliberate, compromise-seeking bipartisan moderate.”

 
These hacks know damn well, of course, that the electorate did not take “Change” and “Yes we can” as calls for “bipartisan moderation”, but acclaimed them as part of the ongoing wholesale repudiation of the Republicans which started in 2006. That was the whole point of these vile lies, to convince the people that under Obama the Democrats would lead the charge away from Republicanism.
 
The second, implicit lie there is that Obama has “governed” as a moderate, instead of hard to the right the way he actually has.
 
(Not to mention all his broken specific promises.)
 
Rich’s “friend” said all this. Right. In other words, Rich is too much of a coward to even own up to his own lies. That’s how craven and embarrassed he is.
 
It’s pretty clear that, as a Democrat partisan, Rich is a typical cowardly bully who only worships Democratic success. Thus when Obama seemed to be going down the tubes in every way, Rich was one of the rats fleeing the ship. But now that The Big O temporarily has his mojo back, Rich is back in full worship mode. (Much of the column gives this away; Rich can’t hide his personal astonishment at the vagaries of perceptions of being “successful”, and at his own ever-shifting response.)
 
It’ll be interesting to see what Rich does when Obama reverts to his mean. Will he bail on him again? Even among liberal hacks Rich stands out for his faithlessness and opportunism.
 
One more detail from the piece that really goes to the core of hack rottenness. Expressing his disdain for the filthy peasants who still question Our Leader, Rich cites the “real authors” who speak the truth about Obama: Bob Woodward and Jonathan Alter.
 
“Real authors”! The courtier hacks Woodward and Alter! Now we see who Rich really is, what’s his wildest dream. He wants to write the great hack novel. (I guess that’s why he didn’t mention Lizza and other heroes; he doesn’t want to give the competition too much ink.)
 
So now Rich has thrown down the mask. Now we know who he really is. A “real author” is a court hack who carries water for power. In Rich’s case, his great dream is to carry that water for Democrats.
 
For anyone who wants to learn more about these “real authors”, just the other day Greenwald wrote a good piece on them.
 
If Rich gets his wish, someday he too can be among their number, honored by being attacked by Greenwald, who of course isn’t a “real author.” 
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6 Comments

  1. Great analysis as usual and nice links. Thought I would pass along some info by Lawrence Lessig, a Harvard law professor who is attempting to address matters as he sees them from the perspective of a political activist. In the following video, he narrates the disappointing developments in Washington DC over the past 14+ months. The video called
    Ctrl+Alt+Del

    L Lessig clerked for several conservative judges;his bio is at:

    http://en.wikipedia.org/wiki/Lawrence_Lessig

    Comment by William Wilson — April 7, 2010 @ 9:42 am

  2. Thanks, William. The anti-corruption focus is certainly a worthwhile endeavor.

    (I had to edit this comment because at first I had Lessig confused with Laurence Tribe. Careless.)

    Comment by Russ — April 7, 2010 @ 9:49 am

  3. Krugman and Rich are exactly the sort of hacks you describe, water carrying hos both.

    The nation has always had these sorts, but, likewise, as we have concluded, the “government” is corrupt to an unprecedented degree. As a result, these enablers and apologists of the regime are even more revolting and damnable than usual.

    Comment by Edwardo — April 7, 2010 @ 8:01 pm

  4. I say something similar to that in the new post I just put up.

    I argue that today’s “process” mentality is a reprise of that we originally had to overcome in the 1760s-70s. But I grant that the process conceivers back then did argue from intellectual principle to at least some extent, whereas today these are all just pure partisans and prostitutes.

    Comment by Russ — April 8, 2010 @ 1:52 am

  5. I’m SO glad you wrote about this. I read Krugman’s column and was ready to throw my computer through the window after reading his line about the ’30s and failing to note that these days we have this thing called “deposit insurance.”

    The man is absolutely dishonest, and has been roast beefed into cowering submission.

    Comment by jimmy james — April 8, 2010 @ 2:56 pm

  6. Dishonest, yes. But I don’t see him as cowering.

    I think he had to be extremely cold and calculating to spend eight years attacking Bush with such cogency and fervor that many people who knew him from the 90s thought he had really seen the error of his ways now that stark Republican practice illuminated it for him, and that once Dems came back in he’d continue as a public interest voice instead of go back to being a system hack.

    Well, it turns out that would be a “No.”

    That was quite an act he put on during Bush. He had me fooled too.

    But I’ll never trust anyone within the system again. Even if there were someone who seems good, I’d keep a constant “Show me” vigilance.

    Comment by Russ — April 8, 2010 @ 4:00 pm


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