Volatility

April 14, 2010

Lying Hacks

 

At the NYT the hacks are running wild.
 
Errand Boy Sorkin is peddling the party line that
 
1. The TARP = the Bailout.
 
2. That it might lose less taxpayer money than expected.
 
The MSM has systematically lied to the people about the Bailout’s true monumental dimensions all along, in order to facilitate all sorts of propaganda. Goldman Sachs, JPM, and others paid back the TARP and therefore the Bailout itself; the proclaimed “profits” are therefore legit (and thus the “bonuses” as well); the banks are therefore solvent and healthy, while the government investment is winding down, and now looks like it won’t lose much money, and may even turn a profit. (Elsewhere the other day I saw a claim that even the Citi rathole is actually “profitable” for the taxpayer.)
 
The truth is that the Bailout has already stolen or exposed to theft $14 trillion, while Barofsky’s calculation last year of a $23.7 trillion total potential exposure was rendered antiquated by the quiet moves of Fed and Treasury in December to extend the Bailout limits to infinity, via lifting all limits on laundering the Bailout through Fannie and Freddie.
 
The banks are all permanently insolvent since their balance sheets can never recover a non-fraudulent solvency. Only accounting fraud and the Bailout-supported phony “values” for all that worthless toxic paper keep any of this artificially going at all. All reported “profits” are fraud. The point of this fraud is to enable the banksters to continue their personal looting in the form of “bonuses” and other “compensation”, and to enable the government to lie claiming that the Bailout worked and the banks have been restored to health.
 
Therefore, according to this party line, the system works, the crash was just an accident, and we don’t need structural transformation but merely some tinkering, and this tinkering will constitute real “reform”. That’s the government line and therefore the MSM line, as propagated by hacks like Sorkin and Krugman.
 
Perhaps the most disgusting part of Errand Boy’s piece is his endorsement of accounting fraud:
 

Of course, we’re still expected to lose $48 billion on the government’s rescue of the American International Group. But two people close to the board suggested to me that as the company recalculates the value of assets in its portfolio that were once considered “toxic,” the government could actually claw its way back to even on that investment, if it holds on to its stake long enough.

A year ago, by the way, these same people told me they expected the government to take a “$100 billion bath” on its investment in A.I.G.

 
So there you have it, according to Sorkin. These “assets” aren’t toxic after all, and anyone who says otherwise is, in Sorkin’s term, “panting”.
 
What’s really happening is the mapping out of a two-track future. Kleptocracy, the Bailout, and eventually forcible tyranny on the part of the elite; impoverishment, joblessness, Depression, liquidation and eventual serfdom for the rest of us. Sorkin’s job, besides delivering ransom notes from AIG, is to lie to the future serfs, to help lull them into complacency. He’s not very good at fake empathy, however. He keeps referring awkwardly to this bizarre species, “the American public” with their “panting” and their peculiar notions of “right and wrong”.
 
Buried toward the back of the piece he does briefly touch on the existence of the rest of the Bailout. But he grossly downplays it and implies that it’s arcana over which the reader needn’t much concern himself. He gushes ahead with the whistles and banners of celebration, that this is a “recovery.” (He also quotes the pessimism of dissenter-within-the-system Joe Stiglitz, but represents him as a kind of buffoon. Thus Stiglitz “has made a career of seeing every glass as half-empty” and is trying to ruin our “feel-good moment”. of course Errand Boy himself hasn’t “made a career” out of anything but good solid objective journalism. And needless to say, no critic of the system as such is ever quoted in these pieces.)
 
In all of this, mentioning the formal extent of the Bailout (but misdirecting from any accurate grasp of its real quantity or quality) and citing Stiglitz, Sorkin tries to give the simulation of an even-handed, objective account. But his thesis is the Big Lie, his leading theme is TARP=Bailout, he defends control fraud and the lie that the toxic paper is worth anything at all let alone what it can now be “marked” to under the fantasy accounting regime. He proclaims the banks aren’t insolvent, that the fraudulent “profits” are real, and that it would be acceptable, indeed occasion for “feeing good”, if the taxpayer ended up losing “only” $89 billion on the TARP. He demands that the banks along with their phony “profits” and looted “bonuses” remain in private criminal hands, and his concept of justice is that the criminals themselves, history’s worst robbers, terrorists, and traitors, not only avoid prison (let alone the end of a rope), but get to keep their jobs and stolen wealth, and get to continue with the same crimes. All this while the real America enters the Permanent Depression.  
 
We the people bought the banks. We OWN the banks. Paying back the TARP, i.e. paying back a few pennies worth of our monumental purchase, is meaningless from any point of view other than system propaganda. As for what Sorkin sneers at as our picayune peasant concern with “right and wrong”, yes, we do demand Justice. To real human beings, this system is not just financially insolvent but morally bankrupt, and has to go out of business on that ground as well. We have many reasons to say No Justice No Peace, not the least of which is that the obscene robbery continues, every day, every hour, every minute.
 
Meanwhile Paul Krugman is taking his lies to a new level of criminality. The latest Krugman lies are:
 
1. That reformers say breaking up the bank rackets would be sufficient for real reform.
 
2. That the FDIC doesn’t exist, and therefore “only” breaking up big banks would merely send us back to the old days of bank runs on small banks. (He does try to fudge this lie by saying what’s changed is that we now have “shadow banking”, but this brings us back to Lie #1, since we who demand breaking up the TBTFs also want to drag all shadow banking into the light, and to greatly restrict casino gambling in general. So Thugman’s “answer” to being called on Lie #2 only highlights the malevolence of his Lie #1. It’s a kind of Uncertainty Principle effect. Or to put it in more down to earth terms, it’s the old truth, you tell one lie, then you tell another to cover it up, and so on, and soon your lies get tangled up with one another. Even Hack Number One himself is having this trouble.)
 
Thugman’s real goal is to coordinate the administration line on finance “reform”, that we don’t need structural changes but just some minor tweaks. It’s the same lie Sorkin propagates from another angle. To falsely champion false reform requires falsely disparaging real reform ideas, and therefore Krugman’s project is to disparage the idea of breaking up the rackets. Since even he seems to recognize that he can’t tell the same lie here that he did with the health insurance bailout (there Krugman flatly asserted that insurance rackets could be the vehicle of real reform; but with the banks everyone knows they’re enemies of America – Krugman himself even explicitly said so), he instead conjures the straw man that those calling for breaking up the rackets are claiming this by itself would suffice. With this lie he tries to demonize and discredit real reformers. Thus he tries to clear the path for a reprise of the legislative crime on health insurance. They will try to label as true reform the phony charade of pretending to seek reform. Orwell lives: “Reform” is reform.
 
(Thugman even has the bad Republican taste to pull out the old trick of accusing your opponent of doing exactly what you’re trying to do. So he says, “in practice talking about doing so [breaking up the banks] is just an excuse to avoid real reform”. In Orwellian code this means, “breaking up the big banks is a necessary part of real reform, so my campaign against it is my attempt to crush real reform.”)   

 

 
I do agree with this: “Promises not to bail out banks in the future aren’t credible.” I agree that’s true so long as the bank rackets still exist. Which is why we have to eradicate them. So it’s true, “fail to reform finance now, and there will be two, three, many TARPs in our future.” Of course, since Thugman’s here to defeat the drive to break up the rackets, he’s really here to defeat reform.
 
So why does he do this? Because, as he’s said many times and as he says here (“just letting banks fail isn’t going to happen – nor should it”), by ideology and by mercenary interest he believes the purpose of society is to be mined for the profit of FIRE sector rackets. He’s a corporatist ideologue. He always was. When we consider the moral and criminal indictment, we only need to look at his affirmative activities under Democratic administrations. His negative activity, his attacks on Republicans during the Bush years, have generated a completely misleading picture of who he is. He never attacked Republican policy, only that it was Republicans doing it, only on partisan grounds. Everything else was a pose, a lie. Since Democratic corporatism is back in the saddle, Krugman has resumed his neoliberal aggressor role from the Clinton years.
 
We do get one piece of comedy out of the confluence of these pieces, as Krugman claims to take offense at Sorkin’s characterization of K’s part in the scam gambit of the Swedish-style “nationalization” idea. It’s true, Sorkin does exaggerate what K said (I recall it pretty well). The only purpose of Thugman’s advocacy in the first place was to float that idea just in case there came to be enough political pressure on the Bailout that they needed to pretend they were doing anything other than directly looting. “Nationalization”, the “bad bank” and so on was a scam meant to play the same role if necessary as the “public option” scam played in the health racket bailout. Bait and switch.
 
Since that ended up not being necessary with the bank bailout, Krugman probably wants the record to forget about it. Especially since, whereas a year ago he may still have felt on the outs with the administration, since the health racket bailout he’s all in as a government shill.
 
So he’s huffing and puffing at the Errand Boy demanding an apology. Meanwhile, I won’t hold my breath waiting for Thugman’s apology for lying about what reformers say about the sufficiency of only breaking up the bank rackets.
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20 Comments

  1. Krugman is an odd case. A lot of the water carriers for the status quo can say equally ridiculous nonsense and unless you really think about it (which we usually don’t) it at least sounds plausible. Or at least not ridiculous.

    Krugman hasn’t learned to do this yet, and for a Noble prize winner he’s a little slow in figuring it out. I mean, really, if you’ve been following the financial crisis at all his criticisms of the reformers seem completely ridiculous.

    The trick isn’t so much to convince people that black is white, so much as the whole world is an immutable shade of gray so you might as well helplessly throw up your hands and let the powerful do as they please.

    For all his tortured metaphors and absurd name dropping, Tom Friedman is “better” at least in this. Read a Friedman column and you’re lulled into a sense of dumb complacency, nodding along with whatever idiotic point he’s trying to make. Read a recent Krugman column and you’ll think he’s an asshole.

    I really hate the New York Times.

    Comment by jimmy james — April 14, 2010 @ 9:38 am

  2. That’s true about Friedman. Years back when I was really focused on renewable energy and climate change and not upon the bigger picture of globalization and corporatism, I found Friedman’s columns alluring in a facile way.

    Even Brooks is better at sounding plausible. Before I knew him well, even I once in awhile thought he sounded like a “reasonable conservative.”

    Ah, those were the old days…

    But since Krugman now has to defend wickedness rather than pretend to attack it while pretending to seek the public interest (as he could when he was attacking Republicans and lying about opposing their actual policies), we see how he lacks the knack of it. I doubt he convinces anybody other than existing Obama cultists, the liberal teabaggers, but then that’s probably his only real target audience. (On the econoblogs people seem mostly skeptical.)

    Comment by Russ — April 14, 2010 @ 10:05 am

  3. I think you are too easy on Sorkin, as smarmy a little toady as ever floated to the top of the business journalism racket.

    You have to understand that you will NEVER read or hear anything honest in the MSM. The only purpose of the MSM is to collect rents by hewing to the corporate line. If the NYT ever told the truth about anything important it would find its advertising revenue slashed 50% the following month.

    The MSM is propaganda. It is silly to argue with propaganda. Newspapers can be useful; just don’t read them.

    Comment by jake chase — April 14, 2010 @ 10:45 am

    • LOL, too easy. I guess any written response has to be too lenient for such criminals.

      As for arguing with the propaganda, I guess it’s practice for when we may have more new refugees from the MSM flooding into the blogs.

      Comment by Russ — April 14, 2010 @ 3:40 pm

  4. Well done, again, Russ. The MSM is, as jake points out, though not in these words, a cancer on the body politic. The blogosphere is the closest thing we have to a retardant to MSM propaganda.

    In the meantime, as per your observations that:

    “The banks are all permanently insolvent since their balance sheets can never recover a non-fraudulent solvency. Only accounting fraud and the Bailout-supported phony “values” for all that worthless toxic paper keep any of this artificially going at all. All reported “profits” are fraud. ”

    I ponder what shock to the system will ultimately sunder this monstrous scheme. I am pretty sure it must be an exogenous shock, but that is as far as my certainty goes.

    Comment by Edwardo — April 14, 2010 @ 11:07 am

    • Yeah, I think about that too. Anything might do it.

      In Kyrgyzstan it was surging energy bills. (Although they already had opposition leadership in place, and outside support.)

      Comment by Russ — April 14, 2010 @ 3:43 pm

    • Unfortunately, the shock won’t come until they can no longer create money out of thin air. Perhaps we’ll run out of trees?

      In Russia under communism, the workers pretended to work and the bosses pretended to pay them. That worked for 70 years. In today’s America, the Chinese send us drek that falls apart in exchange for worthless money which they park in Treasury bills while they continue milking the relationship for access to technology they need to become the world’s superpower. I’d say they are still ten years away, but Russia and Japan may have a little problem.

      Comment by jake chase — April 16, 2010 @ 7:53 am

      • Like an elephant with a bullet in its brain, it still has considerable inertia.

        But it can also trip.

        We’ll see how long these plastic green shoots last with oil up above $80.

        Comment by Russ — April 16, 2010 @ 10:32 am

  5. Take a look at Krugman’s most recent maddening blog entry:

    http://krugman.blogs.nytimes.com/2010/04/14/the-secret-of-the-banks-success/

    Facts and no conclusion. A normal person would see that chart and think:

    1) The banks are peeling massive rents out of the economy; greater competition (perhaps by breaking up the largest ones a la AT&T or Standard Oil) is needed; or,

    2) Given the enormous subsidies the sector has received when it nearly collapsed, maybe it should be treated more like a power plant company, which is nearly impossible to bankrupt but cannot deliver outsized returns to equity. (Or think of the “narrow banking” concept that Taleb and others are in favor of.)

    Yet Krugman is against both of these things. One wonders why he posted the chart at all.

    Comment by jimmy james — April 14, 2010 @ 2:59 pm

    • I guess he feels constrained to offer whatever pseudo-evidence he can muster to claim the Bailout “worked”.

      Comment by Russ — April 14, 2010 @ 3:44 pm

  6. “is to lie to the future serfs, to help lull them into complacency.”

    Funny, the MSM is loaded with propaganda today.

    The economy is healed! Everything is roses. Soon, the administration will see to it that every American house will have a full fridge, and every American will get a fitful night’s sleep – but not before having better “his and her” orgasms. It’s all grand!

    What could possibly go wrong?

    Comment by Bloodgroove — April 14, 2010 @ 6:44 pm

  7. They don’t expect anything to go wrong for their masters.

    (But their own ad revenues? Oops!

    I can’t imagine why they’re having such trouble – they’ve been such good whores.

    Surely in light of their services Wall Street will bail them out. It would only cost them pennies. What could go wrong with that plan?

    Right? 🙂 )

    Comment by Russ — April 15, 2010 @ 3:28 am

  8. I can see i have found the resistance blog for baselinescenario.com:

    Sorkin was born in 1977 in bloody Scardale, NY. He was in college a little more than 10 years ago. Did the typical junior year abroad. He is a media darling. Just another case of “the media interviewing the media.” It flies in the face of reason, but they don’t teach reasoning at Scarsdale High School, or Cornell, for that matter…they teach sensitivity training, peer group evaluation, Queer Theory, LGTB Studies, Social Inequality,Caribbean Literature, etc., etc.

    Comment by Jessica — April 15, 2010 @ 7:52 pm

    • Thanks for the Sorkin info, Jessica. I can picture that curriculum.

      “Resistance blog to baseline scenario.” LOL.

      I mostly like Baseline. In principle they’ve come around well on the fact that merely regulating the existing system can’t work, but they still backslide on details.

      They’re still overly respectful and even reverent toward anyone from the power structure who might superficially seem to be semi-reasonable. In the end they’re still hoping for salvation to come from within the system.

      Maybe that’s just their tone.

      (BTW, I posted a comment there yesterday in response to somebody’s accusation, and today both comments seem to be gone.)

      Comment by Russ — April 16, 2010 @ 5:09 am

      • I like baseline too. I found it by accident searching the web when the bottom fell out of the market. I watched Simon’s MIT Lecture series online…more Socratic dialogue than lecture. That led me to the blog.

        Cicero said something like a man who only uses his passion, does so because he lacks reason. That said, I would like to see a little passion from Kwak and Johnson. They are obviously bright guys. Simon Johnson’s lectures were a little less clinical/reverent than his writings.

        Comment by Jessica — April 16, 2010 @ 4:23 pm

      • I haven’t seen the lectures. The Socratic style can be interesting. I had a college professor who started out using it (indeed proclaiming with some fanfare) at the beginning of the semester, but it didn’t work very well in practice (the course material was tough and most of the students seemed to usually be unprepared) and ended up fizzling out.

        I first heard about Baseline from…(drum roll)…Paul Krugman!

        Comment by Russ — April 16, 2010 @ 5:10 pm

    • Queer Theory? I didn’t know Barney had a theory. All this time I believed he was just winging it.

      Comment by jake chase — April 16, 2010 @ 7:56 am

      • I am visiting Barneyland right now…Brookline MA. Hear tell it here, he is a saint or whatever the eqivalent is in Judaism. No matter that he had a public and intimate relationship for nine years with the executive at Fannie whose responsibility it was to design Fannie’s MBSs. The same Fannie that Barney was supposed to be overseeing. No matter…he is a potentate of the first order.

        Comment by Jessica — April 16, 2010 @ 4:12 pm

      • Don’t get me wrong, Jessica, there’s a lot of blame to go around, and enough to attach to Barney if you so desire… but it isn’t Congress that actually goes out and performs regulatory functions, it’s the Executive.

        Comment by jimmy james — April 16, 2010 @ 10:24 pm

      • Jimmy, even if the executive wanted to strictly enforce regulations, there’d still be the fact that thanks to Wall Street waterboys like Frank the legislation passed is so weak in the first place.

        In 2009, though, it was a joint effort. Frank took already weak administration proposals on the CFPA and derivatives and watered them down even further. (I’m so rusty on the House bill I don’t recall if a potemkin “CFPA” even made it in; that’s how clearly they had already gutted it, for example exempting auto loans.)

        So while I agree that within reason you can choose which of the worst criminals you hate most, still it’s not the case that Frank has given administrations excellent tools they didn’t want to use. He collaborated with them in not giving them the tools in the first place.

        Comment by Russ — April 17, 2010 @ 2:15 am


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