Friday, October 31, 2008

Mr. Secretary, this analysis is not rocket science. Just twenty days before Goldman announced that it would “accept” Treasury’s investment, Warren Buffett invested $5 billion into Goldman Sachs and acquired the very same type of security – preferred stock – with the very same form of “upside” – warrants to purchase common stock. For some reason, however, per dollar invested, Mr. Buffett received at least seven and perhaps up to fourteen times more warrants than Treasury did and his warrants have more favorable terms. In addition, Mr. Buffett’s preferred stock has a higher dividend rate and can only be bought away from him at a premium, while Treasury’s investment of taxpayers’ money pays a lower dividend and can be repurchased at par.

Now I know that you have a lot on your plate, but I am sure that someone at Treasury saw the terms of Buffett’s investment. In fact, my suspicion is that you studied it pretty closely and knew exactly what you were doing. The 50-50 deal – 50% invested and 50% as a gift – is quite consistent with the Republican version of the “spread-the-wealth-around” philosophy that seems so much in vogue.

If the result of our analysis is applied to the deals that you made at the other eight institutions – which on average most would view as being less well positioned than Goldman and therefore requiring an even greater rate of return – you paid $125 billion for securities for which a disinterested party would have paid $62.5 billion. This means that you gifted the other $62.5 billion to the shareholders of these nine institutions.

Link [PDF]

Wednesday, October 29, 2008

Saturday, October 25, 2008

Hot Topix

James Buchan reviews some books.

Bulls, he writes, are what someone else might call zealously open to the messianic other:

In rising financial markets, the world is forever new. The bull or optimist has no eyes for past or present, but only for the future, where streams of revenue play in his imagination. In falling markets, there is nothing that has not happened before. The bear or pessimist sees only the past, which imprisons the wretched financial soul in eternal circles of boom and bust and boom again.

Bulls don't read. Bears read financial history. As markets fall to bits, the bears dust off the Dutch tulip mania of 1637, the Banque Royale of 1719-20, the railway speculation of the 1840s, the great crash of 1929. Leering phantoms emerge from the historical dark, like the parade of ghostly Scottish kings in Macbeth...

(Funniest paragraph:

Ferguson's reputation is so high that if he were a stock one would short him. The very title of his book, The Ascent of Money, is a screaming sell signal, like the shoe-shine boys trading stock tips at the door to Grand Central Station in New York in 1929. In fairness, Ferguson recognises that and his pages are hot with proof-stage tyre-marks, as he goes into violent reverse to escape from under collapsing arguments. None the less, his book is very readable indeed and the television series for which it is a sort of trailer, will, I am sure, be even better.)

Friday, October 24, 2008

In This Issue

Naked Short: Bare Life As Fidelity To The Truth Of The Financial Event

Prodigal Sums or The Revenant Revenu - Openness to the Gift of Good Debt

and the cover story

Immaterial Wages

As wages and assets of the working class rapidly dematerialise, a Left trapped in hopeless nostalgia for crudely tangible indulgences laments the transcendance as a catastrophe, obstinately resisting incorporation into the explosion of post-human imaginary prosperity already achieving the utopian transformation our world and unraveling an infinite realm of immaterial wealth and pleasure easily accessible via iPhones

Monday, October 20, 2008

Wednesday, October 15, 2008


Matt Taibbi: You don't think the unregulated CDS market was a major factor in the current crisis? Were you watching when AIG almost went under? Were you watching the Lehman collapse?

Byron York: I think that Fannie Mae and Freddie Mac were also major factors. And I believe that many of the problems in the mortgage area can be attributed to the confluence of Democratic and Republican priorities: the Democrats' desire to give mortgages to people, particularly minorities, who could not afford them, and the Republicans' desire to achieve an "ownership society," in part by giving mortgages to people who could not afford them. Again, I believe that if you are suggesting that the financial crisis is a Republican creation, or even more specifically a McCain creation, I think you're on pretty shaky ground.

M.T.: Oh, come on. Tell me you're not ashamed to put this gigantic international financial Krakatoa at the feet of a bunch of poor black people who missed their mortgage payments. The CDS market, this market for credit default swaps that was created in 2000 by Phil Gramm's Commodities Future Modernization Act, this is now a $62 trillion market, up from $900 billion in 2000. That's like five times the size of the holdings in the NYSE. And it's all speculation by Wall Street traders. It's a classic bubble/Ponzi scheme. The effort of people like you to pin this whole thing on minorities, when in fact this whole thing has been caused by greedy traders dealing in unregulated markets, is despicable.

B.Y.: I was struck by the recent Senate testimony of James Lockhart, who is head of the Federal Housing Finance Agency, about the sheer recklessness of Fannie in recent years. Despite "repeated warnings about credit risk," Lockhart testified, Fannie became more reckless in 2006 and 2007 than they had been in the scandal-ridden tenure of Franklin Raines (who departed in 2004). In 2005, Lockhart said, 14 percent of Fannie's new business was in risky loans. In the first half of 2007, it was 33 percent. So something terribly wrong was going on there, and it became a significant part of the present problem.

M.T.: What a surprise that you mention Franklin Raines. Do you even know how a CDS works? Can you explain your conception of how these derivatives work? Because I get the feeling you don't understand. Or do you actually think that it was a few tiny homeowner defaults that sank gigantic companies like AIG and Lehman and Bear Stearns? Explain to me how these default swaps work, I'm interested to hear.

Because what we're talking about here is the difference between one homeowner defaulting and forty, four hundred, four thousand traders betting back and forth on the viability of his loan. Which do you think has a bigger effect on the economy?

B.Y.: Are you suggesting that critics of Fannie and Freddie are talking about the default of a single homeowner?

M.T.: No. That is what you call a figure of speech. I'm saying that you're talking about individual homeowners defaulting. But these massive companies aren't going under because of individual homeowner defaults. They're going under because of the myriad derivatives trades that go on in connection with each piece of debt, whether it be a homeowner loan or a corporate bond. I'm still waiting to hear what your idea is of how these trades work. I'm guessing you've never even heard of them.

I mean really. You honestly think a company like AIG tanks because a bunch of minorities couldn't pay off their mortgages?

B.Y.: When you refer to "Phil Gramm's Commodities Future Modernization Act," are you referring to S.3283, co-sponsored by Gramm, along with Senators Tom Harkin and Tim Johnson?

M.T.: In point of fact I'm talking about the 262-page amendment Gramm tacked on to that bill that deregulated the trade of credit default swaps.

Tick tick tick. Hilarious sitting here while you frantically search the Internet to learn about the cause of the financial crisis — in the middle of a live chat interview.

B.Y.: Look, you can keep trying to make this a specifically partisan and specifically Gramm-McCain thing, but it simply isn't. We've gone on for fifteen minutes longer than scheduled, and that's enough. Thanks.

M.T.: Thanks. Note, folks, that the esteemed representative of the New Republic has no idea what the hell a credit default swap is. But he sure knows what a minority homeowner looks like.

B.Y.: It's National Review.

Tuesday, October 14, 2008

Only In The Cocaculture...

RICHMOND, Va. (AP) - Republican vice presidential candidate Sarah Palin mistook some of her own fans for hecklers Monday at a rally that drew thousands.

A massive crowd of at least 20,000 spread across the parking lot of Richmond International Raceway, and scores of people on the outer periphery more than 100 yards from the stage could not hear.

"Louder! Louder!" they began chanting, and the cry spread across the crowd to Palin's left. Some pointed skyward, urging that the volume be increased.

Palin stopped her remarks briefly and looked toward the commotion.

"I hope those protesters have the courage and honor to give veterans thanks for their right to protest," she said.

Aristos and Gentry

Obama vs. McCain among the propertied.

Monday, October 13, 2008

1000 Billion Words

Persevering through these hard times: Mack and Pandit emerge refreshed by involuntary injections.

Much To Overcome

It was from James Bryant Conant-president of Harvard for twenty years, WWI poison-gas specialist, WWII executive on the atomic-bomb project, high commissioner of the American zone in Germany after WWII, and truly one of the most influential figures of the twentieth century-that I first got wind of the real purposes of American schooling. Without Conant, we would probably not have the same style and degree of standardized testing that we enjoy today, nor would we be blessed with gargantuan high schools that warehouse 2,000 to 4,000 students at a time, like the famous Columbine High in Littleton, Colorado. Shortly after I retired from teaching I picked up Conant's 1959 book-length essay, 'The Child the Parent and the State', and was more than a little intrigued to see him mention in passing that the modern schools we attend were the result of a "revolution" engineered between 1905 and 1930. A revolution? He declines to elaborate, but he does direct the curious and the uninformed to Alexander Inglis's 1918 book, Principles of Secondary Education, in which "one saw this revolution through the eyes of a revolutionary."

Inglis, for whom a lecture in education at Harvard is named, makes it perfectly clear that compulsory schooling on this continent was intended to be just what it had been for Prussia in the 1820s: a fifth column into the burgeoning democratic movement that threatened to give the peasants and the proletarians a voice at the bargaining table. Modern, industrialized, compulsory schooling was to make a sort of surgical incision into the prospective unity of these underclasses. Divide children by subject, by age-grading, by constant rankings on tests, and by many other more subtle means, and it was unlikely that the ignorant mass of mankind, separated in childhood, would ever re-integrate into a dangerous whole.

Inglis breaks down the purpose - the actual purpose - of modern schooling into six basic functions, any one of which is enough to curl the hair of those innocent enough to believe the three traditional goals listed earlier:

1) The adjustive or adaptive function. Schools are to establish fixed habits of reaction to authority. This, of course, precludes critical judgment completely. It also pretty much destroys the idea that useful or interesting material should be taught, because you can't test for reflexive obedience until you know whether you can make kids learn, and do, foolish and boring things.

2) The integrating function. This might well be called "the conformity function," because its intention is to make children as alike as possible. People who conform are predictable, and this is of great use to those who wish to harness and manipulate a large labor force.

3) The diagnostic and directive function. School is meant to determine each student's proper social role. This is done by logging evidence mathematically and anecdotally on cumulative records. As in "your permanent record." Yes, you do have one.

4) The differentiating function. Once their social role has been "diagnosed," children are to be sorted by role and trained only so far as their destination in the social machine merits - and not one step further. So much for making kids their personal best.

5) The selective function. This refers not to human choice at all but to Darwin's theory of natural selection as applied to what he called "the favored races." In short, the idea is to help things along by consciously attempting to improve the breeding stock. Schools are meant to tag the unfit - with poor grades, remedial placement, and other punishments - clearly enough that their peers will accept them as inferior and effectively bar them from the reproductive sweepstakes. That's what all those little humiliations from first grade onward were intended to do: wash the dirt down the drain.

6) The propaedeutic function. The societal system implied by these rules will require an elite group of caretakers. To that end, a small fraction of the kids will quietly be taught how to manage this continuing project, how to watch over and control a population deliberately dumbed down and declawed in order that government might proceed unchallenged and corporations might never want for obedient labor.

That, unfortunately, is the purpose of mandatory public education in this country. And lest you take Inglis for an isolated crank with a rather too cynical take on the educational enterprise, you should know that he was hardly alone in championing these ideas. Conant himself, building on the ideas of Horace Mann and others, campaigned tirelessly for an American school system designed along the same lines. Men like George Peabody, who funded the cause of mandatory schooling throughout the South, surely understood that the Prussian system was useful in creating not only a harmless electorate and a servile labor force but also a virtual herd of mindless consumers. In time a great number of industrial titans came to recognize the enormous profits to be had by cultivating and tending just such a herd via public education, among them Andrew Carnegie and John D. Rockefeller.

There you have it. Now you know.

Sunday, October 12, 2008

End Of Capitalism/World Thinkability Spreads

Paul Krugman being interviewed on Bloomberg over the weekend; at around 7:30 on the stream he's asked about GM and is this the kind of situation where the government can't let a company like that go under? He says well, you know there is this big worry about when the "too big to fail" doctrine starts to spread to everything, then we're talking about nationalising the, seizing the, seizing the means of production.

Back in May, Donald MacKenzie wrote in the LRB:

I asked one investment banker what might cause half of North America’s top corporations to default. No ordinary economic recession or natural disaster short of an asteroid strike could do it: no hurricane, for example, and not even ‘the big one’, a catastrophic earthquake devastating California. All he could think of was ‘a revolutionary Marxist government in Washington’. That’s not a likely scenario, yet the cost of insuring against it had shot up ten-fold.

Just Run The Tape

Two weeks after persuading Congress to let it spend $700 billion to buy distressed securities tied to mortgages, the Bush administration has put that idea aside in favor of a new approach that would have the government inject capital directly into the nation’s banks — in effect, partially nationalizing the industry.

Having to report this - they can't not report it, of course, the headline of the year - the NYTimes doesn't bother to try to make sense of it, just re-runs the "incompetence and ideology" tale, or rather simply gestures to it exhaustedly, for the umpteenth time.

Saturday, October 11, 2008

Not an Arab. A decent family man.


The cost of the Wall Street (1987) negative was around $15 million; it grossed $45million in the initial US box office release.

Gordon Gekko is superrich but not really part of the establishment. A figure of intelligent cynicism, abundance and personal rather than institutional power. ("Makes twenty times what Dave Winfield makes in a year.") Will and energy. Culture too – he possesses a refined aesthetic sense. The screenwriter claimed to have based Gekko’s style of pontificating on director Oliver Stone.

The impression of Gekko’s rogue status, playing a system ‘subversively’ from within, expert in it but adversarial with the regard to its rules (the spirit of competition in a pure form), is not only conveyed by his explicit lawlessness, which we might be free to assume the norm at his wealth level, but underscored in various oblique ways, so that the audience is prevented from identifying him as an embodiment of the ruling class, or even of the financial industry, or, despite the film’s title, of “Wall Street”. He is a disruptive element within it, necessarily created by it but not a microcosm. Most effective in creating this apartness, at least for a New York audience, we never see Gekko in his own real home in NYC: placing that home in any swank building in Manhattan would fix him too firmly and specifically in a network, a social setting, a structure of unassailable power and legitimacy. He is seen on the move, in limos, in restaurants, and in his rented office in a tower, like a Renaissance condottiere, and finally confronting in single combat his insubordinate protégé on a misty green field in Central Park. When we see him "domestically", it is only at his beach house in Montauk, a costly, luxurious but pale, impermanent haunt, not a residence, poised on an expanse of empty sand at the edge of the foaming, heaving, wintry Atlantic, wearing a bathrobe. He's a pirate king. Or Monte Cristo. Playing Shogun, wise master to his favoured apprentice "poor, smart and hungry - and no feelings." Of all Hollywood’s finance/corporate themed films, Wall Street is intended as the most didactic, the most unforgiving indictment, but it is the most in love with its heavy, tempter, bearer of evil forces. The figure of ruthless finance capital, unproductive rampaging speculative capital, doubles as the phantasy figure of upward mobility in meritocratic America, land of opportunity, and even, whisperingly, as a image of revolutionary potential. His fall enacts thus both a consoling phantasy punishment of crime (the comeuppance of insatiable parasitic destructive speculative capital) and, less overtly but in some ways more intensely, a registration of victorious Thermidor, of successful Reaction, the end of the revolutionary era and of revolutionary possibilities, the acknowledgement of the Reaganite immiseration of the working class and middle class, rendering this figure of the self made mogul, to which they aspire, false and thus requiring disposal and repudiation. Bud will not repeat Gekko’s (streetwise unconventional) trajectory, indeed Bud’s failure to do so will take Gekko, the figure of the American dream of seized opportunity, down with him as the film itself undermines the promise he represents (ethically, practically, politically), even while it poses, itself, with its auteur, as that promise confirmed and vindicated. This composite that is Gekko is thus additionally used as the mouthpiece for the director and screenwriter’s direct address to the audience, from ‘the dark side’ of self congratulatory ‘success’, which doubles as the Master’s counsel to his apprentice, but allows the filmmakers not only to conceal their complex attraction to the cruel but charismatic pirate king they have fashioned as their dark double, but to disavow and obscure the applicability of his lectures to their own industry.

Telling the story of Bud’s failed effort at embourgeoisement involves telling, obliquely but significantly, the story of an enterprise, Blue Star airlines. The film raises in an indirect quasi-allegorical mode the possibility of socialism – the Fox family, the working class, becoming the owner/manager of the airline, through working class solidarity - but contains that possibility within ‘there is no alternative’ verisimilitude which requires its depiction within the generic tale of personal advancement and cross class cooperation. The corporate raider is offered as a possible resource and instrument of social change, and his capital is sought within the plausible story as the practical means of obtaining control over the enterprise, but this sequence also conveys, in ‘the political unconscious’, an attempt by the agent of the working class to instrumentalise all the seductive qualities his figure embodies: initiative, determination, courage, the bold, rule-changing, ruthless revolutionary energy needed to accomplish this transformation, to “turn the airline around” and place it in the hands of “the heir of the working class”. How this turning around is explicitly envisioned and depicted (just expanding the enterprise and making it more profitable within the given framework) does not limit the possibilities of “turning around” and transformation the story implicitly raises (only to reject), precisely because of the presence of Gekko as a force of unbridled self will, capable of remaking the world, which introduces alongside the story of Blue Star’s trade unions and their pursuit of their interests the explosive element of human inventiveness and self interest, the possibility of something unexpected being brought about by people making their own history. Gekko’s indifference to customary constraints contrasts with the union representative’s mode of negotiation, but putting them in the same room, in Bud’s apartment, poses at least the question to the audience of what would happen were some kind of combination of qualities created, were the union representatives to possess the ferocious determination to prevail, to use powers falling to him by circumstance to transform reality to his advantage, that Gekko possesses and embodies. “Greed is right”: in his odd mix of social Darwinist and populist rhetoric is conjured the spectre of the collective greed of the working class which expresses itself – twisted and stifled by individualism and bourgeois ideology - in Bud’s ambition, greed for pleasure, leisure, justice and liberty, greed for utopia, transforming society, bringing about communism. The vision is conjured, already deformed and hamstrung by the dominant ideology, to be further mangled and repudiated by narrative. Yet its images, the vision, (of wealth, leisure, freedom, abundance, power, of the life for which Bud and not only Bud but the audience is greedy) however contorted, remain the most seductive. The film makes a tremendous effort against its own impulses to moralise about the lifestyle Bud desires and thus to trivialise the benefits it offers (liberty, leisure, plenty, pleasure) and especially to trivialise and rebuke his desire to escape a life of wage slavery in the cubicle by any means necessary. Hammacher Schlemmer gadgets producing meals that look a lot better than they taste, garish exhibitionist over-decoration of his condo, a lovelife divided been a call girl and a shallow woman he cannot fully possess, neglect of his downscale friends and cynical use of his upscale ones, disrespect for his father. But all this is displayed as advertisement as well, the loving Tom Wolfe exactitude of stereotype and props easily drowning out the overt disapproval and fun-poking. Selling a lifestyle and preaching against it at the same time, the commodified critique of “capitalism as its finest” – the “illusion” of value “become real” (in the aesthetic object, an abstract canvas) - indirectly absolves itself as it advertises itself, encloses critique of itself and extracts surplus value.

The (false) naïve faith and hope the film, with Bud and the union representatives, places in the heroic individualist capitalist energy (recognised and distrusted as despotic, amoral and fascistic by Carl Fox) is quickly betrayed – Gekko’s ‘revolutionary’ energy is revealed as necessarily destructive and selfish. With this fusion of lawless, inventive self-determination to heartless individualism, the film performs its liberal duties of repudiation of ‘extremism’ and revolution in the guise of mature dissent. Bud “saves” Blue Star in the most conservative, non-transformative fashion: he saves it as a capitalist enterprise, saves the workers’ ‘jobs’, by transferring his loyalty from Gekko the pirate who does not hesitate to destroy capitalist enterprises to realise his private/personal utopia, to the white knight, in this case literally a knighted Englishman, whose practise of corporate raiding is more ‘honourable’, cautious, stability-preserving and paternalist. (He transfers his allegiance from the capitalist to capitalism.) The alternatives between which the protagonist must choose are familiar contradictions: Gekko’s form of destruction of capitalist enterprises (competition) and Wildman’s preservation of them (class war). The narrative offers preservation of capitalist enterprises as clearly preferable to their obliteration but only by, ever so faintly awkwardly, latching the obliteration of production itself to the obliteration of capitalist ownership and exploitation. Another type of transformation is hinted at, though overwhelmed by the only two alternatives (‘restructuring’ with cheaper labour or asset stripping). The alternative to Gekko’s creative destruction, which fuses a vision of finance capital with an allegorical suggestion of the revolutionary abolition of capitalism with the effect of discrediting the latter while seeming to chide the former, is a kind of fantasy feudalism-in-capitalism and a recommendation of petty bourgeois reformism which holds out the promise that the working class can manoeuvre for its own survival between capitalist competitors; the spirit and structural imperatives of competition it turns out are not only the danger – when ‘taken to extremes’ –in capitalism but the solution, the stabilising force which makes capitalism finally the best of all possible arrangements and allows Bud to conclude ‘there is justice in the world’. But this declaration is ironic – that justice Bud realises through the mechanism of competition is revealed as the rigged justice of a system which blocks his upward mobility. - “Did somebody die?” - “Yeah”. The petty bourgeois myth of the ladder died. The working class whose standard of living and political power rises generationally died. The pirate energy whose potential is revolutionary if ever it would be fused with the working class died. The possibility of Utopia died. The audience is set up to be relieved that it is the phantasy of piratical upward mobility that has died, because led to fear it is Carl Fox who has died. But Carl Fox survives, is vindicated, the working class soldiering on, with dignity, the bearer of timeless values. The moral approval of the ‘culture’ and character of wage workers is offered by the dissident capitalist as consolation and compensation for the permanent inescapability of the condition of unfreedom and drudgery, the registration of the abolition of all utopian possibilities, the chastisement of the persistent ambition as inescapably criminal, depraved and doomed to fail. Like Nietzsche, but with different commitments, Wall Street forces a false identification of the desire for revolution/liberation with fascistic ruthless individualist supremacism and confuses and then replaces the championing of that communist impulse, humanity’s unquenchable desire for liberation, leisure, pleasure and plenty, (rooting for Bud), with hypocritical self congratulatory bourgeois admiration for the moral superiority of those whose desire it daily thwarts and obstructs (for their own good, to spare them the temptations and corruption the bourgeois himself must endure as best he can).

Glengarry Glen Ross, (1989) based on Mamet's 1984 stage play, is set in an environment of real estate sales. The film's negative cost $12.5 million. Domestic box office was about $10 million.

Mamet’s vision is routinely deemed more sophisticated than the pop culture product of Stone and the like simply because it is cruder, misanthropic, unpleasant to consume. Sermons mustn’t be uplifting, consoling and gratifying when the congregation is so depraved.

Other People's Money (1991) was also adapted from a stage play. By 1991 the theme is technological obsolescence and postmodernisation. (The company is saved by ‘populist’ technological/social advances – the metal wire being replaced by fibre optics is newly needed for automobile airbags.)

Trading Places (1983), a phantasy of the efficient market, when the free market by its invisible hand would reveal true worth so long as access to competition in the free market was not blocked by obsolete extra-market structures of hierarchy; the market envisioned as the lever of meritocratic upward mobility and guarantor of equality and ultimate justice:

Friday, October 10, 2008

Missed the Memo

Even after the ruling class itself has rejected the Paulson scheme as just too ridiculous and too flagrant and risky a predatory intraclass competitive scam, the loyal servant of neolib extremism is still selling it (Orwellian feints removed for the sake of clarity):

The real dilemma is not ‘state intervention or not?’ but ‘what kind of state intervention?’ And this is true politics: the struggle to define the conditions that govern our lives. The debate about the bailout deals with decisions about the fundamental features of our social and economic life, even mobilising the ghost of class struggle. As with many truly political issues, this one is non-partisan. There is no ‘objective’ expert position that should simply be applied: one has to take a political decision...

[T]here is no way to separate the welfare of Main Street from that of Wall Street....What is good for Wall Street isn’t necessarily good for Main Street, but Main Street can’t thrive if Wall Street isn’t doing well ....

The...argument against redistribution (through progressive taxation etc) is that instead of making the poor richer, it makes the rich poorer....
Although we all want the poor to get better, it is counter-productive to help them directly, since they are not the dynamic and productive element: the only intervention needed is to help the rich get richer, and then the profits will automatically spread down to the poor. If you want people to have money to build, don’t give it to them directly, help those who are lending it to them. This is the only way to create genuine prosperity – otherwise, the state is merely distributing money to the needy at the expense of those who create wealth.

It is all too easy to dismiss this line of reasoning as a hypocritical defence of the rich. The problem is that as long as we... [have] capitalism, there is a truth in it.... That is why the Democrats who supported the bailout were not being inconsistent with their leftist leanings. They would fairly be called inconsistent only if we accept the premise of Republican populists that...state interventions are an upper-class strategy to exploit hard-working ordinary people.

Thursday, October 09, 2008


The two NSA whistleblowers, Adrienne Kinne and David Murfee Faulk, were interviewed by ABC News’ Brian Ross. Kinne said that “US military officers, American journalists and American aid workers were routinely intercepted and ‘collected on’ as they called their offices or homes in the United States.” He also said his co-workers “were ordered to transcribe these calls.”



Here is what the AP report of the McCain/Palin event today in Ohio describes — now a regular, daily feature of their events:

“We’ve all heard what he’s said. But it’s less clear what he’s done, or what he will do,” McCain told supporters in the battleground state of Pennsylvania.

McCain’s remarks about Obama were interrupted with shouts of “socialist,” “terrorist” and “liar.”

Just look at the videotapes of the angry, hateful hordes attending these rallies — screaming that Obama is a socialist; that he’s both a Muslim and a terrorist as proven by his “bloodline” and his name; that his supporters are “commie faggots”; that he’s guilty of treason; underscored by increasing racial invective and even punctuated in one case by a call from an audience member for someone to be killed. These aren’t just isolated individuals; these sentiments are common at these rallies and becoming increasingly virulent and enraged — at the rallies and otherwise:

A billboard in West Plains, Mo., showing a caricature of Democratic presidential candidate Barack Obama wearing a turban has caused quite a stir in town.

The sign, located south of West Plains on U.S. 63 across from the Dairy Queen, says: “Barack ‘Hussein’ Obama equals more abortions, same sex marriages, taxes, gun regulations.”

And worst of all, all of this rage and this innuendo is taking place in the most volatile climate of all — one of severe economic distress and anxiety — and these mobs are increasingly becoming convinced, because the Right and the McCain/Palin campaign is leading them to believe it, that this economic crisis is the fault of the black candidate — Obama — for making banks give mortgages to racial minorities.

From an Agence France Presse wire story today:

WAUKESHA, Wisconsin (AFP) - Shouts of “terrorist” and “treason” aimed at Barack Obama have echoed around Republican rallies, whipping up into alarming, hate-filled frenzies against the Democratic White House hopeful.

Republican presidential nominee John McCain has taken to asking, “Who is the real Barack Obama?” at rallies this week, leading one supporter in Pennsylvania, a blue-collar battleground state to shout back, “he is a bomb.”

Chants of “Nobama, Nobama” mingled with cries of “terrorist,” as one banner in the crowd declared: “Go ahead, let the dogs out.”

In the video, the interviewees don't appear to believe what they are saying so much as to feel the need to repeat it. Terrorist is understood to be very flexible. "Well maybe's he's not really a terrorist but...yeah he's a terrorist. I think so!"

Tuesday, October 07, 2008

How broad, how flexible?

In the statement of the plunge protection team, TARP does not appear under the heading Liquidity, the purported reason for its design and passage, the plumbing problem to which it was sold as an (urgent!) solution. Instead it gets its own heading:

Strengthening Financial Institutions


Strengthening Financial Institutions

The Treasury Department will move rapidly to implement the new authorities in EESA to help strengthen financial institutions that are struggling with troubled assets and/or need to raise capital. It will be done in a transparent and methodical fashion. In the coming days, Treasury will work with the Federal Reserve and other financial regulators to develop strategies that deploy these tools to maximize their effectiveness in strengthening the financial system while protecting the taxpayers' interests.

The new legislation adds broad, flexible authorities to allow Treasury to buy troubled assets and provide guarantees, and address capital raising. The new legislation also enables Treasury to directly strengthen the balance sheet of individual institutions. These authorities allow Treasury to act to remove some of the uncertainty regarding financial strength, and provide financial institutions with greater operating flexibility and enhance their ability to raise additional capital in the private marketplace.

So they got this legislation - hurry up before the frozen feces asteroid hits us!!!!!!!! - which prevented Congress from recapitalising the banking system or addressing the crisis in any constructive fashion (the Fed is going around the banking system entirely to keep favoured industry exploiting on schedule through the drought that allows the tarp to come into being: "In some ways what the legislation does is help facilitate consolidation" in the financial market), now they sit down and figure out what they can do with it, how to get around any obstacles in it while waiting for some banks to fail for GSax and Morgan Stanley to acquire for farthings found under their sofa cushions, some further discovery in 'toxic' asset related lawsuits, some political developments, some European taxpayer bailouts, some public forgetting....

Back in February 2007

"What you have at the SEC is people rotating from jobs where you make $180,000 a year into jobs where you make over a million," Aguirre tells the Guardian in an interview, on what he sees as a mutually back-scratching relationship between the regulator and Wall Street. "It's very friendly - it's a club. I'm here, I'm inside, now I'm outside, now I'm inside again.

"When the SEC starts playing favourites and they decide not to go after Wall Street elite and focus on small fry, then they're not focusing on the players that really impact the capital markets. It's not the penny stock dealers that could trigger a credit crisis in this country."

Aguirre's testimony. And here. (The "state attorney general" referred to by Aguirre is Spitzer and this.)

Monday, October 06, 2008


Iceland In Trouble. (Oh, they were commie unAmerican antiAmericans anyway so who cares.)

Saturday, October 04, 2008

Palinism Is Contagious

Senator Boxer "replies":

Thank you for contacting me regarding the financial rescue legislation (H.R.1424). I appreciate hearing from you on this critical issue.

The fundamentals of our economy have been shaken, and Americans are deeply concerned. When Secretary Paulson and Chairman Bernanke placed an urgent phone call a few weeks ago to Congress to say we needed emergency action to prevent a major financial meltdown, I expected they would come forward with a plan that was targeted and reasonable, with appropriate oversight and taxpayer protections.

Unfortunately, what they brought us was a $700 billion blank check, which they asked us to sign with no questions asked. This plan contained no oversight, no taxpayer equity, and no control over CEO pay. I strongly opposed this proposal - and thanks to your phone calls, e-mails, and letters, Congress stopped it in its tracks.

The Senate made major improvements designed to strengthen our economy and protect our taxpayers. Instead of a blank check, the Senate plan included significant Congressional oversight, equity for taxpayers, curbs on executive compensation, an increase in FDIC insurance protection for bank depositors, middle-class tax relief, and job-creating tax incentives for renewable energy. The bill passed the Senate by an overwhelmingly bipartisan vote of 74-25 and the House by a vote of 263-171.

These were very important changes. But let me be honest: There were still aspects of this package that I didn't like. I preferred the government acquiring more equity instead of toxic assets. I wanted the package to be put forward in smaller installments and to include more checks and balances to make sure it would work.

For me, the deciding factor in my Yes vote was information I received from the State of California. I was told by the Treasurer's office that without access to credit, which is the goal of this legislation, California wouldn't be able to sell voter-approved highway, school, and water bonds that are desperately needed for our economy and the creation of good-paying new jobs. In addition, I was told by the Governor's office, that without action, our state might be forced to withhold funds for law enforcement, schools, and other needed services. This would bring our state to its knees and many middle-class families would be in deep trouble. Small businesses are beginning to tell me they cannot get lines of credit to meet payroll, as well.

Rest assured, I will continue to speak out forcefully about the failures that led us to this place and keep working with my colleagues to strengthen confidence in our markets, protect the American taxpayers, and enact regulatory reform to ensure that we don't end up in this mess again.

Again, thank you for writing to me about this very important matter. Even though you may feel frustrated with the outcome of the legislation that passed, your voice absolutely resulted in the enactment of a better bill. Feel free to contact me again about any issue of importance to you.

Barbara Boxer
United States Senator

Another Effect

Beyond short attention span, the impression that the real world is divided like television into different channels and episodes, so that synthesis of information to form an understanding of the real world is hampered. (Indeed synthesising elements from the different discrete stories the media packages is derided as paranoid. You have to be psychotic to notice that currently unfolding events required the removal in advance of Spitzer from the New York State Governor's mansion just as the Enron caper end game required the removal of Davis from California's.) When asked on Democracy Now about the the case against Paul Kagame, and the assassination of the Presidents of Rwanda and Burundi which ignited the genocide, a US courtier intellectual responded with an almost comically overt insistence on this fragmentation; I don't think that's part of the same story. We can be sure not only that events in DR Congo, Iraq, California, Albany and Bolivia have nothing to do with those on Wall Street and in the City of London, but that separately reported events on Wall Street and in the City of London have nothing to do with one another.

So the $9 billion that Governor Grey Davis was in the process of recovering for California from Enron: the extraordinary recall vote and the conspiracy to place the high name recognition Schwarzenegger in his place to forgive Enron's fraud and plunder, is not figuring as part of the story of California's current problems, even though the figures are so close.

An Effect of Television

The impression that we see them and they don’t see us. So the legislators can say they were deceived by the Bush administration about Iraq, even though the public informed them, loudly and unequivocally. The impression they are sealed in a glass bubble, a virtual world different from ours. The perpetual irony of television, watching over the shoulder of the heroine as she enters the dark alley where danger awaits, deaf to our screams, somehow has carried over onto the public’s relation to politics, faintly, irrationally, so that now Congress can claim they did not understand the Bush bailout, although it was explained in all the daily papers and on the internet and by their constituents when they called and emailed; they had to deliberately avoid having any hearings, to avoid inviting economists, to avoid letting even members of the financial industry give opinions on the Congressional record, inside the reality tv scenario where it cannot but become part of the story, part of what they can be held accountable for knowing. They exist in the isolated pseudoworld of a television show which penetrates our living rooms while not being penetrated in return – a television show unaware of us, except to display occasionally a self-consciousness of being watched from another plane of existence.

It's Hard Work


Even after working feverishly over the last two weeks, the Treasury will not buy its first distressed asset from a bank for roughly six weeks, and almost certainly not until after the Nov. 4 elections.

Treasury officials do not plan to manage the mortgage assets on their own. Instead, they will outsource nearly all of the work to professionals, who will oversee huge portfolios of bonds and other securities for a management fee.

...The government will hire only a bare-bones internal staff of about two dozen people with expertise in asset management, accounting and legal issues, according to administration officials, and will outsource the bulk of the program to 5 to 10 asset management firms.

...The selected asset management firms will receive a chunk of the $250 billion that Congress is allowing the Treasury to spend in the first phase of the bailout. Those firms will receive fees that are likely to be lower than the industry standard of 1 percent of assets, or $1 for every $100 under management.

Administration officials said they would try to drive down fees with a competitive bidding process. But with $700 billion to disburse, the plan could still generate tens of billions of dollars in fees if the firms negotiate anywhere close to their standard fees.

The main mechanism for buying these assets will be reverse auctions, using the same principles that govern auctions of electricity or the wireless spectrum. In this case, the government will issue an offer to buy a class of assets — for example, subprime mortgage-backed securities — with the final price being determined by how many banks are willing to sell.

...The Treasury officials said they were still writing a policy on conflicts of interest as well as guidelines on compensation.

As if the mechanics were not daunting enough, Treasury officials need to make wrenching decisions that will determine the bailout’s winners and losers. With so much money on the line, lobbyists for interest groups are already besieging the government to decide in their favor.

The prospect of pitching in during a national crisis has drawn unsolicited offers from prominent asset managers, like William H. Gross, the managing director of Pimco, who offered his services free.

In setting up the program, Mr. Paulson has relied on a cadre of former Goldman Sachs executives: Edward C. Forst, a former co-head of Goldman’s investment management business who is on leave from his job as executive vice president at Harvard; Kendrick R. Wilson III, formerly chairman of Goldman’s financial institutions groups; and Dan Jester, who was deputy chief financial officer at Goldman.

...The bailout legislation itself highlights the contradictory goals that the Treasury will face when it goes on its buying spree. Among the goals it is supposed to consider are “protecting taxpayers,” “preventing disruption to financial markets” and “the need to help families keep their homes.”

Democratic lawmakers insisted that the Treasury use its authority to help restructure many subprime mortgages so that at least some troubled homeowners could avoid foreclosure.

But the Treasury’s auction plan will make that difficult. More than 90 percent of all subprime mortgages are part of giant pools, or trusts, which sell mortgage-backed securities to investors around the world.

Before the government would be able to modify any mortgage that was in a trust, securities experts said, it would have to acquire agreement from 100 percent of the bondholders. But a senior Treasury official said the government would probably want to buy no more than half of the securities tied to a trust, which would hamper winning agreement from all investors.

Friday, October 03, 2008


We had a former head of the FDIC tell a group of congressmen yesterday that the Bush administration has been going around the last few weeks, actually, so tightening up on the practices of banks that they’re forcing them to have bigger reserves, which in a way would, you know, kind of create—help to create the kind of tight money policies that we’re saying we’re trying to alleviate with this bill. So, you know, there needs to be a deeper look at this. It seems to me there’s a possibility that this crisis has a little bit of manufacture to it.

- Kucinich

Suspending mark-to-market accounting, in essence, suspends reality.

-Beth Brooke, global vice chair at Ernst & Young LLP, WSJ, Sept 30, 2008

Some "public opinion" from the finance geek sites:

The bailout, I mean rescue plan, can be seen as nothing less than a new Ponzi scheme. It works like this:

Fed as only lender, in an attempt to keep the financial system from imploding;

TARP needed to keep Fed balance sheet intact so that it can continue as only lender;

Treasury will need to significantly increase the amount of Ts (public money) auctioned to fund TARP;

Panic serves to encourage T. buyers, especially for bills;

This represents a liquidity trap: TARP recipients of Ts will hoard cash to buy Ts: rinse and repeat.

This results in drying up of lending to corporations/crowding out private capital - no new credit lines;

The Fed becomes a holder of private capital, the later of which is now frozen to protect that capital from deteriorating, The rollover scheme will restrict even more lending in the private sphere for purposes of keeping the financial sphere on life support, but with the consequence of furthering the deterioration of the 'real' economy.


My thoughts exactly, Don. Plus the durations target the drawdown precisely on the capital we need most. We're desperately short of 3 month working capital, and here comes Paulson to take $700 BB of what we've got left away and dump it in the mortgage industry. I don't think you could devise a worse plan. We might be better off if he *did* steal it.


So, financial predators and parasites, having cannibalized the actual productive economy of the US over the past 30 years, now have no choice but to cannibalize each other.

It points out the fundamental need to free the republic from the stranglehold that finance capital has held the country in for the past generation, starting with the bankruptcy of NYC in 1975, aka The Banker's Coup. It was this event that presaged the dominance of the neoliberal regime and serial credit crises to come. Now, as a result of their infinite greed and arrogance, we will see a Final Offensive of structural readjustment, privatization - already announced in Thursday's New York Times, in an article buried in the back of the Metro section announcing that Governor Patterson is exploring the sale of state assests - and widespread immiseration.

While Marx's prescriptive powers left much to be desired, his powers of description - namely, the inherent tendency of capitalism to generate crisis - remain prescient.


Having listened to all 42 minutes of the late night Treasury briefing of investment banks on Sunday, there is no doubt in my mind that this legislation represents the sort of federal largesse for Goldman Sachs, Morgan Stanley, Citibank and JPMorgan Chase that the Iraq war provided for Halliburton and Blackwater.

The most cynical moment in the call is when the Treasury official confirms, ”our preference would be to help the healthy banks become even healthier” rather than helping troubled banks or illiquid banks.

America is now a centrally planned economy where the Treasury will determine which firms survive and prosper through allocation of scarce capital to an undercapitalised financial sector.

Clearly what is going on here has nothing to do with kick starting the credit markets or stabilising the equity markets or restoring depositor confidence in banks. (Treasury official: “No provision in the legislation that mandates re-lending.”) What is going on here is a blatant attempt to provide government funds to a select cadre of firms (not all banks) which are chosen to be the survivors feasting off the carcasses of their less fortunate and less well-connected brethren as the downturn intensifies in the years to come.

The crash in equities will still happen. The debt deflation of the economy leading to mass commercial and consumer credit defaults will still happen. The collapse of many national, regional and local financial institutions will still happen. The bankruptcy of many municipalities and shortfalls in state budgets will still happen.

This bill is about engineering survivor bias to friends of the Bush administration so that they profit disproportionately from the collapse of these markets using the funds provided by the taxpayer via the unreviewable and unconditional authority of the Secretary of the Treasury.

Long and Short Fuses


In a separate bankruptcy case, Lehman Brothers Holdings Inc. creditors said they ``believe'' that JPMorgan, the investment bank's main lender and clearing agent, caused the liquidity crisis that led to Lehman's collapse.

Creditors want to investigate:

Creditors of Lehman Brothers have asked a judge to allow an investigation into whether JPMorgan Chase & Co. had a role in weakening Lehman as it headed toward bankruptcy.

The committee filed the request in court documents late Thursday.

The creditors committee believes Lehman Brothers Holdings Inc. had more than $17 billion in cash and securities held at JPMorgan before its Chapter 11 filing but that JPMorgan froze the assets Sept. 12, three days before Lehman filed for court protection. Its case is the biggest in U.S. history.

"The creditor's committee believes that as a result of JPMC's actions, LBHI suffered an immediate liquidity crisis that could have been averted by any number of events, none of which transpired," lawyers for creditors wrote in court papers.

"In freezing LBHI's assets, JPMC was purportedly holding all of LBHI's assets as a potential offset against any claims," lawyers said. JPMorgan provided billions in clearing advances _ short-term loans investment banks use to clear trades on a daily basis _ to Lehman in the days around its Chapter 11 filing.

Jim Chanos said Bank of America cut the line to Merrill Lynch in advance of swallowing them.

The SEC has announced its "longs only" boost will expire on the 8th; the expected extension to the 17th called off.

On Victorious Friday, Goldman Sachs cheered the troops with the promise of a "significantly deeper" recession than was previously expected.

Treasury Conference Call

Q: Glenn Schorr, UBS: How do you incentivize if you cant come to clearing price that isn't too punitive?
A: Our objective is not to get everyone to participate so...we won't be paying too much...I can envision a firm taking a loss, because we're giving them cash that they can redeploy. We're soliciting ideas from all over the place.

Q: Guy Moszkowski, Merrill Lynch: Is your goal with the pricing mechanism to inject as much liquidity and capital or is it to force recognition of losses and consolidation so we can see who will survive and who will die.
A: Hard to say either of those extremes. It's a balancing act.

Some guy from Treasury says he wants people to focus on legislation, not implementation. One of his colleagues says he thinks that's a "very good idea."

Q: Mike Mayo, Deutsche Bank: Do banks have the option to purchase insurance or sell assets or does the option remain solely with the treasury once banks decided to participate?
A: Yes banks have the option to choose what program to participate in.
Q: Will insurance premiums be stretched out?
A: We don't know
Q: Will the Treasury still get equity stake in companies that chose insurance? Can the Treasury decide whether or not to let companies participate?
A. The Treasury will consider "long-term viability" of the firm. For the most part, we want to help the healthy banks get healthier as opposed to healing the failing banks.

Q: Mike Holt, Boston Company: when will the treasury start purchasing these assets? Wednesday? A couple weeks?
A: A few weeks, several weeks, once Congress passes bill
Q: But some people will fail before that?
A: We understand.

A Lot Worse Than We Thought

How Dumb Are We Americans?

Well, not so dumb, if the comments sections of newswebsites are an indication. Much less dumb than the official journalist bloggers are or pretend to be. But the twitterers are a little more dumb; this is explained I supposed by the youthful demographics. Twitterers appear to be most concerned about the casting side of the question, grave matters such as hair plugs, who looks at the camera best, winking, what's "boring" and what's ridiculous but entertaining. The hottest topics seem to be the pronunciation "nucular" and, amazingly, that there is no such word as "Bosniak", a fact of which many twitterers are firmly convinced and about which they can work up some remarkable dudgeon.

Thursday, October 02, 2008

Market Theatrics

Remember the last dip in the public markets, which due to plunge protection was not allowed to become an honest to god correction and which was abruptly halted and reversed by 9/11, was called a "stealth bear" market. A slow slide, the focus NASDAQ. Now the NYSE's suffering and torture is displayed on television, its image a trader or two on the floor staring aghast at something horrible - falling digits - whose position we the viewer of this photo are assigned. We are collapsing, these kindly bystanders are watching us collapse! Help us!Help!

But the public markets can be yanked about like a marionette on strings. (It must be the herd!You all saw the Dark Knight didn't you? You know what the selfish capricious ignorant herd is like!)

On Sept 19, NASDAQ filed for a little practically automatic rule change with the SEC, shuffling around the Portal Alliance (some of the members vanished recently but still appear in the filing) which anticipates its long promised offerings of Portal debt securities alongside its already flourishing Portal equity securities to the superrich private equity buyers of 144as. It's just kind of funny to read it today, with the headline names, it's a bit like picking up a tabloid:

The Nasdaq member firms expected to enter into agreements with Nasdaq either directly or through affiliated or successor entities are: Banc of America Securities LLC; Citigroup Global Markets Inc.; Credit Suisse Securities (USA) LLC; Deutsche Bank Securities Inc.; Goldman, Sachs & Co.; J.P. Morgan Securities Inc.;
Lehman Brothers Inc.; Merrill Lynch, Pierce, Fenner & Smith Incorporated; Morgan Stanley & Co. Incorporated; UBS Securities LLC; and Wachovia Capital Markets, LLC.

From Forbes back in January:

Not ready to take your company public? Take it semipublic. Do a Rule 144a offering. The Securities & Exchange Commission rule allows companies to raise capital while dispensing with such formalities as registering with the SEC, filing financials or following accounting standards. The securities can be sold only to sophisticated investors, to wit, hedge funds and investment advisers with at least $100 million under management. Issuers are also exempt from the nitpicking requirements of Sarbanes-Oxley.

Although most of the $2 trillion in Rule 144a securities outstanding represents debt, the equity portion is nonetheless big enough to eclipse the public market in recent issuance. Through the first nine months of 2007 companies raised $300 billion in 144a equity, compared with $215 billion for public markets, reports Dealogic. Often these deals were for private offerings in companies that are already public. But within the 144a category is a subset that goes by PIPO (for "pre-initial public offering"): These are privately offered shares in companies that are not yet public. In the two years before Sarbox went live in 2002, there were only two PIPO deals. Since then there have been 83, raising an average $282 million.

Not being public doesn't prevent a company from having its shares traded. In the coming months the semipublic sector will be getting an assist from Nasdaq, whose Portal Alliance database provides price information to buyers and sellers of 144a shares.

Individuals should keep a sharp eye on this market--not to buy in but to avoid being whacked by the tail end. Dealogic says that 20 of the 85 PIPOs have led to public offerings, which then tend to perform poorly. During the first 12 months after going public the average PIPO did 21.5% worse than a simultaneous investment in the s&p 500, while new issues as a whole beat the markets by 7.2%.

Example: the $1.6 billion (sales) Aventine Renewable Energy. Formerly the biofuel operations of Williams Cos. (nyse: WMB - news - people ), Aventine was picked off by a private equity arm of Morgan Stanley (nyse: MS - news - people ) for $75 million in 2003. It then issued $160 million of debt to pay its investors a $107 million dividend. In late 2005 Morgan sold the company to 144a equity buyers through a PIPO for $275 million, quintupling its investment in two and a half years. Pushed by investors hoping to flip at a profit, Aventine filed to go public soon after Morgan's exit, and raised $390 million in its mid-2006 offering. Great for PIPO investors, who recouped a 42% return (before banking fees) in six months. Not so great for individual investors: Aventine's shares recently dropped to $10, 74% below their close on its first day of trading. Analysts see earnings falling 63% in 2007 and another 71% in 2008.

Stockholm Syndrome

Krugman writes:

On Olbermann a few minutes ago (that basement classroom with the heavy paper over the windows and camera sure has come in handy lately!) a phrase popped out of my mouth: “Stockholm Syndrome”, with regard to the bailout rescue.

...I think that Congressional leaders know that it’s a bad bill, but feel compelled to defend it, because they’re (rightly) scared of the financial consequences of a second rejection. And to some extent economists like myself are in the same position; I think I called it the “hold your nose caucus.”

So am I for the bill? Yuk, phooey, I guess so. And I’m very angry at Paulson for putting us in this position.

But as he admits, he knows the financial consequences of a second rejection will be another one day stockmarket tantrum, and the financial consequences of passing the bill will be far worse and longer term and are coming anyway. It's like he's incapable of really identifying the source and nature of the fear. Which is all about the Bush regime and its clique. Because really there are numerous reasonable things the US government could do to alleviate the global financial crisis and many more things it could do to alleviate the problems of the real economy. But everyone knows there's an intent to defraud the public, and says it obliquely, but then lapses into this irrationality of the spectacle, that is to say: well we know what they will do with this legislation is not the stated intent, but they will take advantage of loopholes and flimsiness of the bill to engage in a racket to strengthen a small group of financiers; if they do that, it will be disastrous. But - (shifting invisibly to the spectacle now) - we know if they were to proceed with the plan as advertised, as we are with fausse naivété to pretend now to believe, and buy up lots of illiquid but valuable assets from all those who have been promised such relief, then it may have some small effect but we can't be sure, but the belief that it might means passing the bill is also uplifting theatre to affect the sentiment of financiers, while rejecting it at this point, after dangling the goodies in front of their noses, is, as theatre, a downer. So we must pass the bill even though we know they won't use it to enact the advertised plan which may be "better than doing nothing" but will assuredly use it either a)to do nothing or b)to enact the scam which is certainly worse than doing nothing.

To say that the numerous reasonable programmes of socialism for the rich, capitalism for the majority, which were always expected of the State, and undertaken on large scales as recently as the S and L bailout, are now "politically impossible" is to covertly acknowledge there is a radical aggressive agenda here the nature of which we dare not even contemplate, and to admit we are at the mercy of a lawless, ruthless, armed, wholly unscrupulous ruling class of whom we are in very serious terror. This would fit in with the other meme of "third worldisation" of the exceptional US of A, where things like this are not supposed to happen; where the influential educated indoctrinated elites of the lower bourgeoisie are not supposed to be terrified of displeasing the most powerful bloc of the ruling class when performing their usual function of reproducing the status quo.

Wednesday, October 01, 2008

This Meme

Bush should be nominated for honorary membership in the American Communist Party. - Zizek


Anway. The anger is good. To know how fierce it is is good. To see it flare in this particular instance and at this target is educational. But it's so easily deflected. The White House forgot to say whose evil unworthy babies they were going to kill with this money. Or so, in anger, says Chalmers Johnson. Because he too is angry, at those who are angry now about this but not angry about greater sums used in mass murder and destruction. (They are as angry about that, it's just hundreds of millions of people are difficult to coordinate and organise, and that anger hasn't been focussed temporally by a reality tv miniseries, as this has.)

I wonder if the White House had tried to sell the bailout precisely as punishment of the profligate population, taking action to punish the evildoers who defrauded investors with bogus loan applications, who cheat and chisel and are parasites on hardworking Americans, if that would have been more successful. Chalmers Johnson probably would think it might have been. And it might have been.

A bloc of the ruling class is trying to pull an inside straight. What if the population could in fact force the Congress to refuse to do anything? Henwood looks on this with horror, which is only surprising for a few seconds. We have to save the status quo or we are all thrown on the mercy of the jackals, even the privileged. But really, we know, we should refuse to do anything. The worst case scenario - global financial "meltdown" - is probably the best to be hoped for. If only we could, we should force the Congress to say: no. Not our problem. Don't bother bringing it up again, we don't care. Do your worst. This is your Katrina you (have the barbarity to) say. Well - sink or swim!

What would happen then? Either: the ruling class would solve their financial crisis, if they can, which they probably can, or Bush would declare martial law and the roundups to the KBR detention facilities would begin (if they have not already). Or so the Bush regime has very brazenly assured us all. Everyone has it in the back of the mind, if not the front. Everyone believes it's a possibility, even that the opportunity is hoped for. They would not hesitate to kill us all. Painfully. Anthrax. Radiation poisoning. If nothing else, this latest crisis shows us pretty starkly how very effectively terrorised we are.

This meme - this is communism! - has a lot to do with that.

"Foreclosure Alley"

What's Assumed

The point of the bailout is to buy assets that are illiquid but not worthless. But regular banks hold assets like that all the time. They're called "loans." -James K. Galbraith

To its ruling class supporters, the bailout bill must appear simply a promise to insulate a portion of the rich from the effects of unprecedented crushing and immiseration of the population, underway already but about to be greatly accelerated.

Doug Henwood, though speaking of the "ripening of the contradictions" of capitalism, is typical here: the American left seems to find itself in the position of determining to save capitalism from the leading capitalists and hoping only for the usual modest opportunities arising from these contradictions. "Scary stuff" is the inescapable theme in the US, where all the pieces are in place to change the game and enforce the new rules militarily. Scary stuff indeed.




But then of course the Democratic Party is no Milosevic.

At Least A Little

We had a former head of the FDIC tell a group of congressmen yesterday that the Bush administration has been going around the last few weeks, actually, so tightening up on the practices of banks that they’re forcing them to have bigger reserves, which in a way would, you know, kind of create—help to create the kind of tight money policies that we’re saying we’re trying to alleviate with this bill. So, you know, there needs to be a deeper look at this. It seems to me there’s a possibility that this crisis has a little bit of manufacture to it.
- Kucinich

Suspending mark-to-market accounting, in essence, suspends reality.

-Beth Brooke, global vice chair at Ernst & Young LLP, WSJ, Sept 30, 2008