June 18, 2010

Democracy Sausage


“If enacted, Brown-Kaufman would have broken up the six biggest banks in America,” a senior Treasury official said. “If we’d been for it, it probably would have happened. But we weren’t, so it didn’t.”

I’d love for this quote to be the epitaph for this administration.
This open gloat that “We could have fought for the people and chose to fight against them.” It should be applied not just to the Kaufmann-Brown Break-Up-the-Banks amendment, but to everything (not an exhaustive list, but just some highlights) – single-payer instead of handing over the American people as a cash cow to the insurance gangsters, ending the war instead of escalating it, restoring civil liberties instead of further assaulting them, restoring the rule of law instead of further destroying it, breaking our captivity to oil and the oil rackets instead of tightening the bonds, ending corporate welfare instead of opening the sluice gates even wider, smashing all rackets instead of further entrenching them, eradicating the finance parasite instead of defending and further empowering it, thereby guaranteeing that the final crash and Depression will be as destructive and painful as possible.

“If enacted, Brown-Kaufman would have broken up the six biggest banks in America,” a senior Treasury official said. “If we’d been for it, it probably would have happened. But we weren’t, so it didn’t.”

That brings us to the sham finance sausage squeezing through the corporate congressional processors. Sinclair’s descriptions in The Jungle are apt but as metaphors still fall short of really capturing the evil and gutter repugnance of this magnitude of crime in action, the utter subhuman smallness of the criminals involved, the blackness of the primate heart.
They still keep trying to pretend. Today we learn that the conferencers really want an expanded Fed audit. But we already know that the Senate rejects this. That’s why Sanders had to pre-gut his amendment to even get a vote. (And what a vote! 96-0. It’s not just Soviet elections and Nazi plebiscites which can do that.) So this is just Frank putting on a show for the loser “progressives” in the House, so they can feel validated before they cave in and vote for a gutted audit or none at all.
The record is almost a clean sweep – this sausage-maker expelled all actual meat and squeezed together only the most filth-ridden fragments of snout, fatback, entrails, feces……
1. The critical thing is of course breaking up the Too Big To Fail banks. This was rejected completely in the form of the Kaufmann-Brown amendment. As we see with his self-written epitaph, the Obama administration is bragging about having killed it. Here Obama is eager to take personal responsibility.
Right there, it’s already game over. So long as the rackets exist, they will function as an extortion racket and general arsonist, raised to the level of tyranny. This is Bailout America. The 96-0 vote can stand in as a symbolic 30s style plebiscite, to give us that old European flavor.
2. Second most important would be derivatives reform, and here true reform would be nothing less than demolition of the casino. Only legitimate hedging by legitimate businesses should have legal status, while all mere betting should be relegated to the back alleys where it belongs. Outlaw all speculation. Simple bucket laws, and non-enforcement of sham “contracts” which are nothing but infinitely more destructive versions of sports betting, are what we need.
The bill does nothing remotely like this. The House version pretended, not to outlaw speculation but merely to place it on public exchanges. But even this meager measure was gutting by exempting, not just legitimate hedging, but “currency hedging”, which can pretty much be defined to include anything and everything. Which was the intent.
The Senate version, pushed by Blanche Lincoln under the duress of her primary campaign, is also loaded with loopholes and Trojan horses. But it does contain one strong piece – banks who want to play in the casino would have to give up their Fed window access. In other words, you can be a gambler or a welfare queen, but not both.
That this is the only piece in the entire mess with real bite is evidenced by the report that the banks are willing to concede the sham version of the “Volcker Rule” in order to focus their energies on defeating this gambling restriction. How can the congress possibly contemplate not letting the banksters keep playing casino games with free public money? That would strike at the core of their business model. Capitalism, right?
Lincoln herself, having won the primary but facing almost-certain defeat in November, looks ready to abandon her own amendment. I’d say there’s about zero chance anything better than the sham House version will be in the final bill, maybe with some of the bad parts of the Senate version added.
3. We already discussed the Fed audit. This looks like where they’ll play their political pretense game.
4. “Resolution authority” is a fraud in principle, since we already know from the 2008 experience that in the crisis nothing will be “resolved”, everyone will be bailed out, no matter what law is in place. The PCA law already confers resolution authority and requires that it be exercised. Why would anyone think a new law would be any different.
(Still believing or not believing in resolution authority is a good metric for one’s ability to learn from experience. As is everything involving racket “reform”.)
Both bills pretended to set up this sham authority. The House version pretended it would collect funds from the banks ahead of time to facilitate the resolutions. In this space I called it a sham “Financial Superfund”. Since the tax would be levied on banks far smaller than the TBTFs, it was even in principle another monopoly-entrenching measure, another socializing of risk and cost. And we know that in practice even if they did pre-collect such a fund and even if they did use it to take TBTFs into receivership, it wouldn’t be remotely sufficient, and the taxpayers would end up making up the massive difference. Just like with the original Superfund.
Meanwhile the Senate version was more honest and dropped the superfund idea, implicitly acknowledging that the taxpayers would be on the hook for the resolutions.
Obama, of course, prefers the Senate version.
And we know that in practice no collapsing TBTF will be “resolved”. To the extent it’s within the system’s power, it will always be bailed out as is. (Even the administration admits this.)
5. The vaunted CFPA has been a joke from the start. Obama pretended to want strong vanilla requirements, even said so in a white paper.
But remember:

“If enacted, [a real CFPA] would have [imposed real restrictions on] the six biggest banks in America,” a senior Treasury official said. “If we’d been for it, it probably would have happened. But we weren’t, so it didn’t.”

Obama didn’t fight for a strong, independent CFPA; by his own testimony that means he didn’t want a strong, independent CFPA.
Now he says that out of competing sham versions, he prefers the Senate version which includes car dealers but would be housed in the Fed, which guarantees it will do nothing at all no matter what its theoretical scope, over the House version which is loaded with more loopholes (the Senate version has many of those too) and is more overtly pre-emptive of stronger state laws, but would stand alone as a regulator, outside the Fed.
We already know Dodd would prefer to get rid of it completely, while Frank is presumably content with his kabuki version, playing to that House crowd again. So I expect something like the Senate version to be in the final bill.
6. There’s lots of other nonsense. The Franken amendment which would’ve tried to fix the absurd situation of the credit-rated hiring their own credit raters (even Dodd admits it’s ridiculous: “just saying it alone, it screams out for a resolution”) was thrown out. None of the Senate’s aspiring Glass-Steagal type amendments even made it into the Senate version, let alone having a chance in the conference.
I already mentioned how Wall Street is said to have decided to let Obama have his little volcker rule, which is also laden with enough loopholes that nobody has to worry about it cramping the banks’ style in any real way. (In the Senate version, it wouldn’t even be enacted until after a period of “study”, i.e. post-legislative lobbying.)
The NYT has been peddling hype about how hard the poor lobbyists are having it. All that means at most is that having gotten 95% of what they wanted, that last 5% gets more difficult. Diminishing returns, E=mc2 and all. After all, the politicians have to pretend, and then there’s randomness such that something small might squeeze through the nets. On the whole, I’d say the lobbyists can congratulate themselves on a (mostly easy) job well done, and it’s a testament to their professionalism that they’re still fighting hard for that last 5% and whining about it to the MSM. And how compassionate of the papers to report so sensitively on that whining.
But nobody has to worry. If it goes through, the volcker rule isn’t going to hurt anybody. After all, it’s Obama’s baby.
And what do we know about Obama, where it comes to anything which could possibly constrain the rackets and empower democracy?

“If we’d been for it, it probably would have happened. But we weren’t, so it didn’t.”


  1. I often wonder whether everyone privately understands this as you clearly do, but 99.9% realize that significant change is absolutely out of the question and simply resolve to ignore it and go about their business. Remember that 50% of the voters do not vote. I have voted only once since becoming eligible in 1960. Are you a voter or a non voter?

    Comment by jake chase — June 18, 2010 @ 7:52 am

    • I’ve never validated their rigged elections by participating.

      There’s never been an anti-corporate candidate for any applicable office. (Actually, I don’t see them running for any offices at all.)

      If I found that there seemed to be serious relocalization candidates running at the lower office levels, I could vote for them. But I don’t see them yet around here.

      I often wonder about the 50% of non-voters. What proportion of them are the “apathetic” type always subject to the scolding of the media and “good-civics” types, as opposed to how many are actively “anti-” voting under these circumstances like myself.

      In other words, to what extent is abstention a de facto plebiscite on the rigged system itself. I haven’t seen polls on that.

      Comment by Russ — June 18, 2010 @ 10:42 am

  2. Homework time.
    You are an intelligent, educated person, and a gifted writer.
    Like Edwardo, you have a talent for ranting.
    In recent times.. other people have had a talent for ranting. A talent that took them… FAR.
    Time to crack open a good translation of “Mein Kampf” and study it. You don’t have to read all 600 pages, because that’s pretty indigest, (I haven’t read all 600 pages either) but at least 100-200 pages, and the chapter on propaganda.
    As it turns out.. i have a talent for ranting too.
    People who have a talent for ranting should have a feeling of GREAT RESPONSIBILITY for employing that talent, and a feeling of.. just how DANGEROUS that talent really can be.
    Our times are really not top for instilling a sense of humility in ANY of us, myself included.
    I am very wary of MY talent for ranting these days.
    That is why I am trying harder… to be like Jesus and NOT John the Baptist… (who incidentally, by his own admission considered himself less talented than Jesus, and careful thought corroborates his judgment).
    Do NOT misconstrue my suggestion that you crack open “Mein Kampf”.
    Because… I think that if you do so, you may… go into shock.
    The question of rhetoric and STYLE is very important.
    And… check out the content and analysis… you WILL go into shock.
    I bet.

    Comment by Debra — June 18, 2010 @ 3:45 pm

    • I have read it, years ago. The chapters on propaganda and organization are the only good part, though the conspiracy theories are if nothing else impressive in their single-mindedness.

      So you’re saying I should make sure to use my talents for good and not for evil? I’m flattered, and thank you. I sure try to write on behalf of the good, though these are hardly favorable circumstances.

      Comment by Russ — June 18, 2010 @ 5:34 pm

      • I think I am the only person I know who has identifications with.. Jesus AND Adolf…
        (Not just, of course…)
        Adolf followed in his father’s footsteps heading off for cosmopolitan Vienna at 14, in the hopes of… becoming SOMEBODY (the dream of the middle class, while we’re at it, social promotion. Belonging to the.. elite someday).
        He got lost in the poor, uneducated, exploited masses (but I’m not discounting that he had some responsibility in all this. But… he was ONLY 14 when he landed in the gutter with no social protection, right, or not a soul to extend a helping hand to him ? An adolescent).
        The first two chapters are poignant, I feel.
        And they show what happens when people lose what allows them to know who they are in their society. Their identity.
        The masses… not a good thing.
        We can pass any and every law, bottoming out the law itself in the process, and even turn our society into a police state through our desire to punish all the bad guys, but until we get rid of “the masses”, it will be in vain.
        I mean… getting rid of the IDEA of the masses.
        Our THINKING is taking us down.

        Comment by Debra — June 18, 2010 @ 6:20 pm

      • Yes, as long as they let themselves be corralled into masses, people will just be a resource herd for the criminals.

        Comment by Russ — June 19, 2010 @ 4:03 am

    • Hi Debra,

      Your comment gave me a chuckle, first because I enjoyed your compliment to Russ whom I agree is a great writer, second because I thought it was interesting to see a “rant master” by her own admission in action. Unfortunately I have a bad habit of skimming your comments when I encounter them — am I correct that you also post on NC? — as the formatting make them very hard for me to read. An extra line break between paragraphs would help me out immensely! Wishing you the best,


      Comment by reslez — June 18, 2010 @ 7:28 pm

  3. What is the point of going on and on about national politics, when the problem is an international one engineered by international finance oligarchs?

    Comment by art t. fice — June 19, 2010 @ 1:30 am

    • I’ve written plenty about the globalized aspects of kleptocracy. The categories and tags are in the sidebar.

      This post happens to be about the US kleptocracy.

      Since globalization is dead (just temporarily zombified), since in the end power and economies will decentralize and relocalize, and since wherever possible we should seek to speed up this structural process, it follows that we should take a special interest in where we are.

      Since I’m an American, and I assume most of my readers are as well, I write many posts about Bailout America.

      Comment by Russ — June 19, 2010 @ 4:00 am

      • You write about your national politics as if your national politicians had some choice in the matter. Why do you think they never break lockstep with what the international bankers ask of them? Why do you think the politicians of other countries don’t either?

        Your politicians, as it were, are not even employees of the banks, not even their slaves. They are something much lower than a slave. There isn’t even a word for it…maybe we should call it “democracy”?

        Comment by r.t. fice — June 19, 2010 @ 10:09 am

      • No, it’s not democracy. Even prior to all this we didn’t have real democracy, let alone now.

        And of course the politicians have a choice. Maintaining any parasitic sector like the finance rackets is always a political choice. These politicians, all of them, have chosen to be the flunkies and thugs of the corporations. Of course by now I don’t expect any of them to change his path. By now they’re all criminally committed, and most of them have probably internalized the corporatist ideology as well.

        But it’s still always a choice, even where they’re going through the motions of reiterating their prior choice.

        Comment by Russ — June 19, 2010 @ 4:01 pm

      • Let’s review some history

        Earth 20th Century

        Immigrants, running liquor, speak-easys, turfwars

        Mid 20th Century

        Running numbers, breaking kneecaps, corrupting local judges and police officers in Chicago, made men

        60’s and 70’s

        Casinos, jai alai, racetracks, bookies, loan sharking, and the other stuff

        Late 20th century

        Stock market, politicians, junk bonds, shell corporations, S&L’s, BCCI, Russian Kleptocracy and recruitment,
        grandchildren graduate from Harvard

        21st Century

        Stolen elections, energy derivatives, generalized derivatives, owning the banks in turn owning the government

        Comment by Arty Fialli — June 19, 2010 @ 11:30 pm

      • Yup, organized crime always has the same goal. Just the form of the scam changes, and the magnitude gets bigger.

        Comment by Russ — June 20, 2010 @ 7:12 am

  4. Russ, let me encourage you: keep pounding away! You’re helping to wake people up. You’re taking action. You’re part of the solution.

    I spotted this in the news this morning. http://wallstreet.blogs.fortune.cnn.com/2010/06/21/americans-love-their-treasurys/

    I made a comment, and they actually posted it. I didn’t figure they would because I all but called CNNMoney a corporate-shilling whore.

    Comment by Bloodgroove — June 21, 2010 @ 9:53 am

    • That was good, JD. The NYT wouldn’t have posted that. (I know because years ago I used to comment there, or try to. I stopped when I had two comments “disappeared” the same morning.)

      And thanks for the pep talk. I hope you’re right.

      Comment by Russ — June 21, 2010 @ 2:14 pm

  5. Russ, I don’t mean to compare you to Jesus, but didn’t he “harangue” the money changers in the temple? What is wrong with justifiable anger? I’m all for it: beats the hell out of unconcerned, detached and oblivious. I prefer to think of you more as Thomas Paine than the author of Mein Kampf. Remember: “Reason was considered as rebellion; and the slavery of fear had made men afraid to think. But such is the irresistible nature of truth, that all it asks, and all it wants, is the liberty of appearing.”
    Thomas Paine, Rights of Man, 1791

    Rant on, gentle sir.

    Comment by Jessica — June 21, 2010 @ 7:20 pm

    • Thanks, Jessica. If I could come close to living up to Paine’s legacy, I’d consider my attempts to have been worthwhile.

      I recently reread Common Sense and found it inspirational, and Rights of Man (along with Burke’s Reflections) is on my list for next year.

      Comment by Russ — June 22, 2010 @ 3:48 am

  6. BTW, your comment on naked capitalism about the educators keeping childhood friends apart was excellent. I’m glad to see I wasn’t the only one absolutely horrified at it.

    I wish I had my copy of 1984 around… as I’m pretty sure there’s a choice quote in there about the similar mistreatment of children.

    Comment by jimmy james — June 22, 2010 @ 12:17 am

    • Probably. Although nowadays we hardly need 1984 – you could almost rewrite it every day just by rearranging the newspaper.

      Comment by Russ — June 22, 2010 @ 3:50 am

  7. […] more than enough on the sham finance bill and didn’t see the need for another piece on it . (My most recent.) But I thought this post mortem was true and typical.   The ink is not even dry on the new rules […]

    Pingback by Finance Reform Sham, CFPA Sham, SEC/Goldman Sham « Volatility — July 17, 2010 @ 2:22 am

  8. Thanks.

    Comment by ssc — August 4, 2010 @ 10:52 am

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