Wednesday, February 25, 2009

The Abyss Stares Back And Doesn't Smirk

I've always thought Jim Kunstler had a firm grip on reality, but I hate to admit he's this right (although he undoubtedly is).

The public perception of the ongoing fiasco in governance has moved from sheer, mute incomprehension to goggle-eyed panic as the scrims of unreality peel away revealing something like a national death-watch scene in history's intensive care unit. Is the USA in recession, depression, or collapse? People are at least beginning to ask. Nature's way of hinting that something truly creepy may be up is when both Paul Volcker and George Soros both declare on the same day that the economic landscape is looking darker than the Great Depression. Those tuned into the media-waves were enchanted, in a related instance, by Rick Santelli's grand moment of theater in the Chicago trader's pit last week when he seemed to ignite the first spark of revolution by demonstrating that bail-out fatigue had morphed into high emotion -- and that the emotion could be marshaled against public policy. The traders in the pit on-screen seemed to color up and buzz loudly, like ordinary grasshoppers turning into angry locusts preparing to ravage a waiting valley. "Are you listening, President Obama?" Mr. Santelli asked portentously. In the broad blogging margins of the web that orbit the mainstream media like the rings of Saturn, an awful lot of reasonable people have begun to ask whether President Obama is a stooge of whatever remains of Wall Street, with Citigroup and Goldman Sachs's puppeteer, Robert Rubin, pulling strings behind an arras in the Oval Office. Personally, I doubt it, but it is still a little hard to understand what the President is up to. For one thing, the stimulus package, so-called, looks more and more like national sub-prime mortgage itself, a bad bargain made under less-than-realistic terms, with future obligations fobbed onto whoever inhabits this corner of the world for the next seven hundred years -- and all to pay for a bunch of granite counter-tops and flat-screen TVs. I suppose Mr. Obama is burdened with the knowledge that the economic truth is so much worse than he imagined back in November that there is simply nothing to do at this point except pretend to serve up a "tasting menu" of rescue plans in the hope that markets and mechanisms might be conned back into compliance with our wish keep getting something-for-nothing forever. FDR already used the fear of fear itself trope, so Mr. O is left with little more than displaying pluck and confidence in the face of overwhelming bad news. The sad truth is that banking has become a Chinese fire drill -- a frantic act of futility -- as insolvent companies persist in covering up their losses in order to avoid the counter-party hell of credit default swaps that would ring the world's "game over" bell. This can only go on so long. All the chatter about "nationalizing" the banks really boils down to what kind of bankruptcy work-out will they be put through, how destructive will the process be, and how much of the pain can be shoved forward in time to people now in diapers and their descendants. Among the questions that disturb the sleep of many casual observers is how come Mr. O doesn't get that the conventional process of economic growth - based, as it was, on industrial expansion via revolving credit in a cheap-energy-resource era - is over, and why does he keep invoking it at the podium? Dear Mr. President, you are presiding over an epochal contraction, not a pause in the growth epic. Your assignment is to manage that contraction in a way that does not lead to world war, civil disorder or both. Among other things, contraction means that all the activities of everyday life need to be downscaled including standards of living, ranges of commerce, and levels of governance. "Consumerism" is dead. Revolving credit is dead - at least at the scale that became normal the last thirty years. The wealth of several future generations has already been spent and there is no equity left there to re-finance. If contraction and downscaling are indeed the case, then the better question is: why don't we get started on it right away instead of flogging rescue plans to restart something that is DOA? Downscaling the price of over-priced houses would be a good place to start. This gets to the heart of Rick Santelli's crowd-stirring moment. Let the chumps and weasels who over-reached take their lumps and move into rentals. Let the bankers who parlayed these fraudulent mortgages into investment swindles lose their jobs, surrender their perqs, and maybe even go to jail (if attorney general Eric Holder can be induced to investigate their deeds). No good will come of propping up the false values of mis-priced things. Read the rest here.
Jon Ronnquist thinks that our "Economic Freefall" is a "Blessing in Disguise." He's got several ideas on how to reconstitute a fairer economy if we make it that far "after the deluge." (Some editing was necessary and emphasis marks were inserted - Ed.)
One thing we should not overlook when taking in the impact of the current economic situation is that it is both inevitable and invaluable in equal measure. That there was no escaping the consequences we are now facing has been a well known fact among those in the know for many years. If anything, it is amazing that we have staved it off for so long. For this we have the hard working men and women of the real world to thank, who toiled on in the name of pride, dignity and responsibility until the burden of debt simply became to great to bear. A cursory understanding of the “pre-collapse” financial system and the inescapable debt trap it lays in the path of the majority who seek to survive within it, points clearly to the end we have now met. And while it is indeed tragic on an individual level, for the world at large this may well be a blessing of unprecedented proportions. As economies stagnate and the production level of superfluous commodities shrinks, so too does the havoc that this reeks on the environment through unsustainable consumption of natural resources and heavy pollution. Whether we like to admit it to ourselves or not, prior to this forced deceleration there was no real hope of any timely or significant solution to the problem. Nothing short of a decrease in demand was going to interfere with the reckless consumer frenzy and the deadly impact it was having on the planet we call home. We were borrowing the earth into oblivion and neither conscience nor understanding looked likely to force an end to it. To say that a million unemployed Chinese is a tragedy when their entire activity consisted of flooding the world with cheap useless toys, is exactly the kind of short sighted and blinkered view that got us into this mess in the first place. I suppose we could have waited for the oil to run out, and judging by the way we were prepared for the money to run out, it really would have been a case of oil one day and none the next. Luckily money, unlike oil, is relatively easy to replace or replenish. A savvy economist, of which there are sadly still none at the reigns, could reconstruct the monetary system in such a way as to make it more useful and user friendly than that which we are burdened with today. The real tragedies which loom on the horizon are the artificial cost this economic situation will have on the lives of real people and the dangerous possibility that we will not take advantage of this opportunity to restructure not only the monetary system, but the entire economy, its infrastructure, energy needs and sustainability. The plague has effectively run its course, run out of steam if you like. What we are faced with now is a genuine opportunity for convalescence. Even in this age of extensive corruption of government, this chance is surely not entirely lost. We can clearly see the old school fighting to hold on despite the impotency of their efforts to borrow the economy out of debt. This idea is so fundamentally flawed that it is hard to see how the affected populations stand by and watch as the new US administration sells their children and grandchildren to the Federal Reserve. Read the rest here.
Danny Schechter has my vote in every coming election. (Emphasis marks were inserted - Ed.)
As New Scammers Emerge, Is It Jailout Time Yet? The Right Mobilizes Against The Stimulus While We Sign Petitions Judging by my in-box, there seem to be no shortage of organizations and individuals obsessed with an image: Dick Cheney and George Bush in prison, and Karl Rove in the next cell. Never mind that Congress doesn’t have the guts or the President the gumption to go after those responsible for the gutting of the Constitution. Nevertheless, there are many campaigns and calls to hold the last Administration accountable for its crimes. At the same time, as we watch an economy in free fall, there seems to a lot less agitation for a serious investigation of those responsible for this collapse. Evan as you overhear conversations in every bar and union hall that begins with “those bastards should be in jail,” few progressives are leading the charge to demand a Jail-Out alongside those stimulus bailouts. It’s as if economic crimes provoke a ho-hum reaction among activists. Oddly, some corporate media are more sensitive to the seething mass public outrage. Time did a spread on the 25 individuals responsible for the crisis including politicians and CEO’s. They ran a photo spread with their images against the background of police line-up. CNN has profiled corporate criminals. CNBC is running a series on “American Greed” - mostly of small time con men. Of course the Madoff case stays in the news even as he stays in his fancy apartment. The investigators have now determined that he never made any trades with the money investors trusted him with. Tom Lindmark seemed shocked to hear this on the Seeking Alpha financial blog:
“…it now turns out that Mr. Madoff may not have traded any securities for the past thirteen years. You heard that right. The guy just ran his Ponzi scheme. No extra complications. All of which begs the question of what were his employees doing? Did they just show up, surf the Internet and text friends for all those years? If it’s this easy to get away with things, evade arrest and live the good life, why are all of us walking on the right side of the line? Who are the fools?”
There is a deeper problem, of course. How did he get away with it? Lawyer John Coffee of the Columbia Law School addressed that question in an interview:
“I think our regulatory system failed and failed badly over basically the last six or seven years in failing to spot a Mr. Madeoff. Although in fairness Mr. Madeoff has been a crook for almost 20 or 25 years and we can't just pick on the last couple of years there. But I think that regulatory system allowed these offerings when there was evidence that lending standards were being relaxed at the mortgage loan originator stage, when the underwriting standards were being relaxed and in which credit rating agencies were becoming so conflicted that the really sophisticated person no longer believe their ratings.”
Three new crime stores came to light this past week.
•There’s Texan Alan Stanford, another billion-dollar fraudster, who we were told was arrested, but wasn’t. •Then there’s evidence that as many as 52,000 Americans dodged taxes with secret accounts in the Swiss bank UBS, which was also deeply invested in worthless subprime securities. •On Friday, the NY Times reported the arrest of mortgage scammers who recruited prisoners to apply for subprime loans, a mere $10 million case. They were busted by the DA’s office in Manhattan.
Who is going to prosecute these and other new cases popping up every day? The FBI told Congress it is investigating 500 White Collar crime cases, 39 connected with the financial crisis. Earlier, they said they were looking into 27 companies. At the same time they admitted that a large number of their trained corporate crime investigators had been reassigned after 9/11. Many had been ordered to chase terrorists even after the FBI and CIA, which had knowledge of Al Qaeda pilots in the country, failed to stop them. Take a look at what’s happening now with financial institutions, known as “Zombie banks” that everyone realizes are insolvent. No wonder there are increasing calls or nationalizing them — to save the system. Two members of our feared Republican Guard, Alan “Maestro” Greenspan and Senator Lindsay Graham (along with Democrats Chris Dodd and Chuck Schumer) have said it might not be a bad idea. That same notion, so far scotched by the Obama Administration, drove the markets to new lows. The Wall Street Journal reported: “The White House, meanwhile, reiterated that it "continues to strongly believe that the privately held banking system is the correct way to go." Of course, this may just be a rhetorical ploy, since publicly admitting it was considering nationalization would depress stocks even further.” Some on the left are quietly launching pro-nationalization on-line petitions while the right is fighting loudly with anti Obama TV ads appropriating words like “fiscal responsibility” and “accountability” and organizing vigils in the streets with placards against the stimulus. They are ridiculing Obama as a “savior” and the “Messiah” while carrying signs like like “Stimulate the Economy, Give Me a Tummy Tuck.” They are playing down and dirty with protest techniques once exclusive to activists while those of us who realize more radical measures are needed are, once again, mostly on the sidelines. The right has found a new Joe the Plumber-like loudmouth demagogue in CNBC’s Rick Santelli whose rants were challenged by the White House. That attention is likely to encourage him more and make him a martyr if the network shuts off his mike. (Controversies like this are great for ratings.) So Obama the centrist is under attack by the right with progressives mostly passive even as the public demands action against corporate criminals and their enablers. (Yes, that cartoon in the NY Post was offensive but is that what angry activists should be focusing on?) Knock, Knock, is anyone listening?
And Danny's commenters are always worth a meditative read:
Catherine Austin Fitts (solaris) has written extensively about TRILLIONS of dollars missing from various Federal agencies, including Housing & Urban Development and Defense. She has also chronicled much about the Enron scam. There is enough money that's been pilfered for every working American to have been given an economic stimulus of at least $100,000. Now THAT would have been a boost to the economy. Instead, it is lost money and a select group of thieves are living large off other people's sweat equity. Most Americans don't know about this though, and they seemingly don't really care. If you try to tell them, most just can't bring themselves to believe it, or investigate it. Some day when they realize they are in prison by their own will, they might just want to escape to another reality. Perhaps then, some heads will roll as it will be time to bring the guillotine out of mothballs! You French got any leftovers for sale? Doug Girard
Interesting idea. Suzan __________________________


Serving Patriot said...


Lots of goodness here! Thanks for the extended excerpts. I am with Kunstler on this - let's get on with it - kill the zombie banks and push stimulus money into the safety nets that prevent outright violent rebellion. And while I despised Santelli and his over the top performance, he speaks some bits of truth - as Kunstler notes.

I hope you don't mind if I link to this post at my own place.


Suzan said...

Thanks, SP!

Please do.

I wish we could get the word out better, faster, etc., etc., about the coming deluge, and I'm with you on the Santelli scream.