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"We have all been here before.
We have all been here before . . . ."
Do you understand how Europe's own money fiasco (much of it enabled by our buddies at Goldman Sachs, Morgan, etc.) can (and probably will) turn our cataclysm into a much more desperate situation? Robert Reich, ex-Secretary of Labor, does. (Still loving that Rethuglican deregulation mania? And wondering why Greenspan's boys ran so fast with the Fed/TARP $$$$ to bail out the overseas banks? Get a hint below at why so close the friendship of Dumbya and Nicolas Sarkozy (and Tony Blair - but that BP friendship goes without comment for soooo many reasons!).
Representative government, anyone?
Follow the Money: Behind Europe’s Debt Crisis Lurks Another Giant Bailout of Wall Street
Tuesday, October 4, 2011
Today Ben Bernanke added his voice to those who are worried about Europe’s debt crisis.
But why exactly should America be so concerned? Yes, we export to Europe – but those exports aren’t going to dry up. And in any event, they’re tiny compared to the size of the U.S. economy.
If you want the real reason, follow the money. A Greek (or Irish or Spanish or Italian or Portugese) default would have roughly the same effect on our financial system as the implosion of Lehman Brothers in 2008.
Financial chaos.
Investors are already getting the scent. Stocks slumped to 13-month low on Monday as investors dumped Wall Street bank shares.
The Street has lent only about $7 billion to Greece, as of the end of last year, according to the Bank for International Settlements. That’s no big deal.
But a default by Greece or any other of Europe’s debt-burdened nations could easily pummel German and French banks, which have lent Greece (and the other wobbly European countries) far more.
That’s where Wall Street comes in. Big Wall Street banks have lent German and French banks a bundle.
The Street’s total exposure to the euro zone totals about $2.7 trillion. Its exposure to to France and Germany accounts for nearly half the total.
And it’s not just Wall Street’s loans to German and French banks that are worrisome. Wall Street has also insured or bet on all sorts of derivatives emanating from Europe – on energy, currency, interest rates, and foreign exchange swaps. If a German or French bank goes down, the ripple effects are incalculable.
Get it? Follow the money: If Greece goes down, investors start fleeing Ireland, Spain, Italy, and Portugal as well. All of this sends big French and German banks reeling. If one of these banks collapses, or show signs of major strain, Wall Street is in big trouble. Possibly even bigger trouble than it was in after Lehman Brothers went down.
That’s why shares of the biggest U.S. banks have been falling for the past month. Morgan Stanley closed Monday at its lowest since December 2008 – and the cost of insuring Morgan’s debt has jumped to levels not seen since November 2008.
It’s rumored that Morgan could lose as much as $30 billion if some French and German banks fail. (That’s from Federal Financial Institutions Examination Council, which tracks all cross-border exposure of major banks.)
$30 billion is roughly $2 billion more than the assets Morgan owns (in terms of current market capitalization.)
But Morgan says its exposure to French banks is zero. Why the discrepancy? Morgan has probably taken out insurance against its loans to European banks, as well as collateral from them. So Morgan feels as if it’s not exposed.
But does anyone remember something spelled AIG? That was the giant insurance firm that went bust when Wall Street began going under. Wall Street thought it had insured its bets with AIG. Turned out, AIG couldn’t pay up.
Haven’t we been here before?
Republicans and Wall Street executives who continue to yell about Dodd-Frank overkill are dead wrong. The fact no one seems to know Morgan’s exposure to European banks or derivatives – or that of most other giant Wall Street banks – shows Dodd-Frank didn’t go nearly far enough.
Regulators still don’t know what’s happening on the Street. They have no clear picture of the derivatives exposure of giant U.S. financial institutions.
Which is why Washington officials are terrified – and why Treasury Secretary Tim Geithner keeps begging European officials to bail out Greece and the other deeply-indebted European nations.
Several months ago, when the European debt crisis first became apparent, Wall Street banks said not to worry. They had little or no exposure to Europe’s problems. The Federal Reserve said the same. In July, Ben Bernanke reassured Congress the exposure of U.S. banks to European nations in trouble was “quite small.”
Now we’re hearing a different tune.
Make no mistake. The United States wants Europe to bail out its deeply indebted nations so they can repay what they owe big European banks. Otherwise, those banks could implode — taking Wall Street with them.
One of the many ironies here is some badly-indebted European nations (Ireland is the best example) went deeply into debt in the first place bailing out their banks from the crisis that began on Wall Street.
Full circle.
In other words, Greece isn’t the real problem. Nor is Ireland, Italy, Portugal, or Spain. The real problem is the financial system — centered on Wall Street. And we still haven’t solved it.
In an earlier post, entitled What Was Fascism?, I responded to a set of right wing pundits who treat social democracy, liberalism and a welfare state as modes of fascism. The logic behind that equation is simple: unregulated markets promote consummate freedom and rationality; state regulation of markets stifles both and produces irrational intervention in the daily lives of people. One point of my post was to remind people what these revisionist histories seek to forget: Drives to European fascism were triggered above all in the thirties by the advent of the Great Depression; and that Depression was produced by practices of market utopianism. While market utopianism was not itself fascistic, the collapse it fomented helped to spawn fascist movements in several countries and to intensify them in others. Only a few actually succeeded. But the results were devastating.
There were several characteristics of fascism the first time around. It was virulently anti-semitic, propelling death camps in its most extreme version. It also defined social democrats, communists, homosexuals and the Romani as degenerates, deserving to be placed on the dumping grounds of history. Its racism with respect to non-Europeans was virulent.
Where it succeeded, it introduced a one-party state, disallowing electoral challenges, to say the least. The success of fascist movements, when they did succeed, was spurred by a dark series of resonances between the state, industrialists and local vigilante groups who spread terror in the streets.
These versions of fascism were also capitalistic. Profit and ownership of the means of production were private. Fascist capitalism replaced the myth of market self-sufficiency by one of exclusionary national unity, brownshirts, bellicose militarism, police repression and aggressive war policies.
It is thus a mistake to equate every large state with fascism, as the radical right loves to do under the umbrella of market utopianism. In fact, it is difficult to find a capitalist state anywhere that is not also a large state, though the priorities of such states do vary significantly.
2008 RNC National Convention St. Paul, MN
One critic of that post suggested that I had merely pretended to read Hayek. Hayek, of course, was an early purveyor of the view that regulated markets promote a fascist state, though socialism was his key target. He presents an uncanny mixture of the insightful and the fanciful: a fascinating account of freedom, spontaneity and social processes of self-organization; a utopian view of market processes as the only place such processes occur; and a homogeneous suspicion of any large state, however distinctive in aim, accountability, and organization.
He was not a friend of aspirational fascism. A critique of Hayek, joined to a corollary appreciation of his early engagement with complexity theory, could thus be timely. He was, for instance, wary of any association between the state and religious enthusiasm. It is too bad, then, that he confined the play of spontaneity and real complexity to economic markets, setting into motion an ideological movement that denies the role of spontaneity and self-organization to social movements and, indeed, to a much larger host of interacting human and nonhuman domains (See The Fragility of Things). Welcome to the world of under-regulated markets and rapid climate change, Mr. Hayek.
2011 Texas Wildfires Bastrop, TX
What about aspirational fascism today and the possibility of its enactment in America? Its reoccurrence, if it happened, would express some continuities with the past punctuated by a series of significant differences. To detect hints about those affinities and differences, we can listen to Republican, Tea Party candidates such as Michelle Bachmann, Rick Perry and Newt Gingrich; we can heed the expressions of hate and ugliness regularly spouted by an active minority in their audiences; we can recall the Tea Party’s willingness to shut down the government to support the ends of a minority movement; and we can attend to repressive police practices already underway in American cities. Here is what such listening suggests:
1) Neo-Fascism, if it were to arrive, would not take the shape of one party rule. The media, corporations, the state, and vigilante groups together would cow constituencies on the middle and the left.
The minority party would offer only weak resistance to the policies of the right, and some sections would collude with it.
2) Anti-semitism, while hovering in the wings, would be displaced by virulent opposition to all Muslim groups, within and outside the country. Gays, feminists, professors, atheists, and union leaders would also be on the list of enemies. The war on terror would morph, as it is always on the verge of doing, into a war on Islam as such. The most right wing tendencies in Israel would be supported enthusiastically, even as calls to make America a more Christian nation intensified.
Those two apparently incompatible drives can be sustained in some circles by saying that the first stage of Armegeddon will arrive in Israel, to be followed by the Second Coming in which only Christians are rescued. You don’t need to worry about the devastation of the earth if you are waiting for the Second Coming; you don’t want to if you are committed to a neoliberal image of production, consumption and markets. Such a combination, to the extent it succeeded, would silence a large and growing section within Christianity that eagerly supports a pluralist culture.
3) Carbon-based sources of energy for production, consumption and military operations would be celebrated and extended. The dangers of fracking and nuclear power would be ignored. Climate change would be ridiculed. And imperial operations designed to protect traditional modes of energy would be launched.
4) As the effects of climate change foment suffering and disorder in several regions, the United States would become even more of a garrison state, invoking massive state power to barricade its borders and creating a series of wars in vulnerable or oil rich regions.
5) As market utopianism, unlimited corporate campaign money, and state repression grows, inequality of wealth, income and communicative power would become even more extreme. Attempts to protest these developments would foment more intensive modes of state and media repression to disparage and silence them. You might think that the Supreme Court would help here, but its recent drive to give more rights to corporations as “persons” than to living persons is hardly reassuring. The majority of the current court participates in the ideology of market utopianism.
6) As the combine of market utopianism and state bellicosity grew, another world wide market collapse would almost certainly occur. It is an open question whether China would escape its effects. The right would draw upon the suffering promoted by that collapse to pursue even more intensely market utopianism. Since a perfectly free market is always a chimera promised for a fanciful future, you can always blame the latest failures on too much market regulation and taxation of “job creators”.
6) Vigilante groups, already discernible in this country, would grow in size and type, seeking to silence alternative voices as they infiltrate localities, churches, corporations, and universities. The state and the police would enter into covert alliances with them.
Such a new type of fascism is certainly not inevitable. It does, however, operate as an aspiration in some circles that already makes a big difference in our politics. It also could occur, if a major terrorist event encountered a Republican President and Congress. It poses a real danger.
The immediate question is how to criticize market utopianism more effectively as we identify the dangers it promotes, the denials it demands, the suffering it fosters, the unfocussed anger it unleashes, and the repressive, militaristic state it solicits to sustain its fantasies. Above all, how can we awaken a large constellation of “Independents”--who first try to ignore politics as much as possible and then become susceptible to slightly softened versions of right wing sound bites when a crisis emerges. Here Mitt Romney, perhaps, is even more dangerous than Rick Perry, as he exudes a willingness to be the soft voice of a rampant minority movement. The secret of the neoliberal/evangelical machine resides in the way that it promises smooth markets for the future as it feeds off crises of today it helps to foment.
Barack Obama, for all his eloquence, is not good at exposing these drives and dangers. Paul Krugman, for all his economic insight, does not crack through either. Academic radicals have insufficient reach and connections on their own. Steve Colbert and Jon Stewart show merely a few flashes of brilliance in this regard. What then? Some noble intellectuals in the American Jewish community are now speaking out actively about the American/Israeli/Palestine quagmire. A forthcoming documentary by Bruce Robbins at Columbia University is promising in this regard. Recently, I have begun to wonder whether Rachel Maddow and Elizabeth Warren might provide hope in exposing the insidious character of this machine to a wider audience.
One thing seems clear, however: it will take enhanced participation by more people in the micropolitics of families, churches, unions, localities, consumption cooperatives, universities, the new media, protests, and corporate exposes to pave the way for the social movements and electoral coalitions needed today. Connections to social movements in other countries are critical too. In these respects protest movements on Wall Street and in Wisconsin, along with militant protests against austerity in England, Greece and elsewhere may be promising.
Boehner: Debt panel can start on major tax changes
Just like the financial industry, the pharmaceutical industry also shuffles people between boards and the ratings industry.
The most startling finding to emerge from Hare’s work is that the popular image of the psychopath as a remorseless, smiling killer — Paul Bernardo, Clifford Olson, John Wayne Gacy — while not wrong, is incomplete. Yes, almost all serial killers, and most of Canada’s dangerous offenders, are psychopaths, but violent criminals are just a tiny fraction of the psychopaths around us. Hare estimates that 1 percent of the population — 300,000 people in Canada — are psychopaths.
He calls them “subclinical” psychopaths. They’re the charming predators who, unable to form real emotional bonds, find and use vulnerable women for sex and money (and inevitably abandon them). They’re the con men like Christophe Rocancourt, and they’re the stockbrokers and promoters who caused Forbes magazine to call the Vancouver Stock Exchange (now part of the Canadian Venture Exchange) the scam capital of the world. (Hare has said that if he couldn’t study psychopaths in prisons, the Vancouver Stock Exchange would have been his second choice.)
A significant proportion of persistent wife beaters, and people who have unprotected sex despite carrying the AIDS virus, are psychopaths. Psychopaths can be found in legislatures, hospitals, and used-car lots. They’re your neighbour, your boss, and your blind date. Because they have no conscience, they’re natural predators. If you didn’t have a conscience, you’d be one too.
Psychopaths love chaos and hate rules, so they’re comfortable in the fast-moving modern corporation. Dr. Paul Babiak, an industrial-organizational psychologist based near New York City, is in the process of writing a book with Bob Hare called When Psychopaths Go to Work: Cons, Bullies and the Puppetmaster. The subtitle refers to the three broad classes of psychopaths Babiak has encountered in the workplace.
“The con man works one-on-one,” says Babiak. “They’ll go after a woman, marry her, take her money, then move on and marry someone else. The puppet master would manipulate somebody to get at someone else. This type is more powerful because they’re hidden.” Babiak says psychopaths have three motivations: thrill-seeking, the pathological desire to win, and the inclination to hurt people. “They’ll jump on any opportunity that allows them to do those things,” he says. “If something better comes along, they’ll drop you and move on.”
How can you tell if your boss is a psychopath? It’s not easy, says Babiak. “They have traits similar to ideal leaders. You would expect an ideal leader to be narcissistic, self-centred, dominant, very assertive, maybe to the point of being aggressive. Those things can easily be mistaken for the aggression and bullying that a psychopath would demonstrate. The ability to get people to follow you is a leadership trait, but being charismatic to the point of manipulating people is a psychopathic trait. They can sometimes be confused.”
Once inside a company, psychopaths can be hard to excise. Babiak tells of a salesperson and psychopath — call him John — who was performing badly but not suffering for it. John was managing his boss — flattering him, taking him out for drinks, flying to his side when he was in trouble. In return, his boss covered for him by hiding John’s poor performance. The arrangement lasted until John’s boss was moved. When his replacement called John to task for his abysmal sales numbers, John was a step ahead.
He’d already gone to the company president with a set of facts he used to argue that his new boss, and not he, should be fired. But he made a crucial mistake. “It was actually stolen data,” Babiak says. “The only way [John] could have obtained it would be for him to have gone into a file into which no one was supposed to go. That seemed to be enough, and he was fired rather than the boss. Even so, in the end, he walked out with a company car, a bag of money, and a good reference.”
“A lot of white-collar criminals are psychopaths,” says Bob Hare. “But they flourish because the characteristics that define the disorder are actually valued. When they get caught, what happens? A slap on the wrist, a six-month ban from trading, and don’t give us the $100 million back. I’ve always looked at white-collar crime as being as bad or worse than some of the physically violent crimes that are committed.”
The best way to protect the workplace is not to hire psychopaths in the first place. That means training interviewers so they’re less likely to be manipulated and conned. It means checking resumés for lies and distortions, and it means following up references.
Paul Babiak says he’s “not comfortable” with one researcher’s estimate that one in ten executives is a psychopath, but he has noticed that they are attracted to positions of power. When he describes employees such as John to other executives, they know exactly whom he’s talking about. “I was talking to a group of human-resources executives yesterday,” says Babiak, “and every one of them said, you know, I think I’ve got somebody like that.”
By now, you’re probably thinking the same thing. The number of psychopaths in society is about the same as the number of schizophrenics, but unlike schizophrenics, psychopaths aren’t loners. That means most of us have met or will meet one. Hare gets dozens of letters and e-mail messages every month from people who say they recognize someone they know while reading Without Conscience. They go on to describe a brother, a sister, a husband. ” ‘Please help my seventeen-year-old son. . . .’ ” Hare reads aloud from one such missive. “It’s a heart-rending letter, but what can I do? I’m not a clinician. I have hundreds of these things, and some of them are thirty or forty pages long.”
Hare’s book opened my eyes, too. Reading it, I realized that I might have known a psychopath, Jonathan, at the computer company where I worked in London, England, over twenty years ago. He was charming and confident, and from the moment he arrived he was on excellent terms with the executive inner circle. Jonathan had big plans and promised me that I was a big part of them. One night when I was alone in the office, Jonathan appeared, accompanied by what anyone should have recognized as two prostitutes.
“These are two high-ranking staff from the Ministry of Defence,” he said without missing a beat. “We’re going over the details of a contract, which I’m afraid is classified top secret. You’ll have to leave the building.” His voice and eyes were absolutely persuasive and I complied. A few weeks later Jonathan was arrested. He had embezzled tens of thousands of pounds from the small firm, used the company as a mailing address for a marijuana importing business he was running on the side, and robbed the apartment of the company’s owner, who was letting him stay there temporarily.
Like everyone who has been suckered by a psychopath — and Bob Hare includes himself and many of his graduate students (who have been trained to spot them) in that list — I’m ashamed that I fell for Jonathan. But he was brilliant, charismatic, and audacious. He radiated money and power (though in fact he had neither), while his real self — manipulative, lying, parasitic, and irresponsible — was just far enough under his surface to be invisible. Or was it? Maybe I didn’t know how to look, or maybe I didn’t really want to.
I saw his name in the news again recently. “A con man tricked top sports car makers Lotus into lending him a £70,000 model . . . then stole it and drove 6,000 miles across Europe, a court heard,” the story began.
Knowing Jonathan is probably a psychopath makes me feel better. It’s an explanation.
But away from the workplace, back in the world of the criminally violent psychopath, Hare’s checklist has become broadly known, so broadly known, in fact, that it is now a constant source of concern for him. “People are misusing it, and they’re misusing it in really strange ways,” Hare says. “There are lots of clinicians who don’t even have a manual. All they’ve seen is an article with the twenty items — promiscuity, impulsiveness, and so forth — listed.”
In court, assessments of the same person done by defence and prosecution “experts” have varied by as much as twenty points. Such drastic differences are almost certainly the result of bias or incompetence, since research on the PCL-R itself has shown it has high “inter-rater reliability” (consistent results when a subject is assessed by more than one qualified assessor). In one court case, it was used to label a thirteen-year-old a psychopath, even though the PCL-R test is only meant to be used to rate adults with criminal histories. The test should be administered only by mental-health professionals (like all such psychological instruments, it is only for sale to those with credentials), but a social worker once used the PCL-R in testimony in a death-penalty case — not because she was qualified but because she thought it was “interesting.”
It shouldn’t be used in death-penalty cases at all, Hare says, but U.S. Federal District Courts have ruled it admissible because it meets scientific standards.
“Bob and others like myself are saying it doesn’t meet the ethical standards,” says Dr. Henry Richards, a psychopathy researcher at the University of Washington. “A psychological instrument and diagnosis should not be a determinant of whether someone gets the death sentence. That’s more of an ethical and political decision.”
And into the ethical and political realm — the realm of extrapolation, of speculation, of opinion — Hare will not step. He’s been asked to be a guest on Oprah (twice), 60 Minutes, and Larry King Live. Oprah wanted him alongside a psychopath and his victim. “I said, ‘This is a circus,’ ” Hare says. “I couldn’t do that.” 60 Minutes also wanted to “make it sexy” by throwing real live psychopaths into the mix. Larry King Live phoned him at home while O. J. Simpson was rolling down the freeway in his white Bronco. Hare says no every time (while his publisher gently weeps).
Even in his particular area, Hare is unfailingly circumspect. Asked if he thinks there will ever be a cure for psychopathy — a drug, an operation — Hare steps back and examines the question. “The psychopath will say ‘A cure for what?’ I don’t feel comfortable calling it a disease. Much of their behaviour, even the neurobiological patterns we observe, could be because they’re using different strategies to get around the world. These strategies don’t have to involve faulty wiring, just different wiring.”
Are these people qualitatively different from us? “I would think yes,” says Hare. “Do they form a discrete taxon or category? I would say probably — the evidence is suggesting that. But does this mean that’s because they have a broken motor? I don’t know. It could be a natural variation.” True saints, completely selfless individuals, are rare and unnatural too, he points out, but we don’t talk about their being diseased.
Psychopathy research is raising more questions than it can answer, and many of them are leading to moral and ethical quagmires. For example: the PCL-R has turned out to be the best single predictor of recidivism that has ever existed; an offender with a high PCL-R score is three or four times more likely to reoffend than someone with a low score. Should a high PCL-R score, then, be sufficient grounds for denying parole? Or perhaps a psychopathy test could be used to prevent crime by screening individuals or groups at high risk — for example, when police get a frantic “My boyfriend says he’ll kill me” call, or when a teacher reports a student threatening to commit violence. Should society institutionalize psychopaths, even if they haven’t broken the law?
The United Kingdom, partly in response to the 1993 abduction and murder of two-year-old James Bulger by two ten-year-olds, and partly in response to PCL-R data, is in the process of creating a new legal classification called Dangerous and Severe Personality Disorder (DSPD). As it stands, the government proposes to allow authorities to detain people declared DSPD, even if they have not committed a crime. (Sample text from one of the Web sites that have sprung up in response: “I was diagnosed with an untreatable personality disorder by a doctor who saw me for ten minutes, he later claimed I was a psychopath. . . . Please don’t let them do this to me; don’t let them do it to anybody. I’m not a danger to the public, nor are most mentally ill people.”)
Hare is a consultant on the DSPD project, and finds the potential for abuse of power horrifying. So do scientists such as Dr. Richard Tees, head of psychology at UBC, a colleague of Hare’s since 1965. “I am concerned about our political masters deciding that the PCL-R is the silver bullet that’s going to fix everything,” he says. “We’ll let people out [of prison] on the basis of scores on this, and we’ll put them in. And we’ll take children who do badly on some version of this and segregate them or something. It wasn’t designed to do any of these things. The problems that politicians are trying to solve are fundamentally more complicated than the one that Bob has solved.”
So many of these awkward questions would vanish if only there were a functioning treatment program for psychopathy. But there isn’t. In fact, several studies have shown that existing treatment makes criminal psychopaths worse. In one, psychopaths who underwent social-skills and anger-management training before release had an 82 percent reconviction rate. Psychopaths who didn’t take the program had a 59 percent reconviction rate.
Conventional psychotherapy starts with the assumption that a patient wants to change, but psychopaths are usually perfectly happy as they are. They enroll in such programs to improve their chances of parole. “These guys learn the words but not the music,” Hare says. “They can repeat all the psychiatric jargon — ‘I feel remorse,’ they talk about the offence cycle — but these are words, hollow words.”
Hare has co-developed a new treatment program specifically for violent psychopaths, using what he knows about the psychopathic personality. The idea is to encourage them to be better by appealing not to their (non-existent) altruism but to their (abundant) self-interest.
“It’s not designed to change personality, but to modify behaviour by, among other things, convincing them that there are ways they can get what they want without harming others,” Hare explains. The program will try to make them understand that violence is bad, not for society, but for the psychopath himself. (Look where it got you: jail.) A similar program will soon be put in place for psychopathic offenders in the UK.
“The irony is that Canada could have had this all set up and they could have been leaders in the world. But they dropped the ball completely,” Hare says, referring to his decade-old treatment proposal, sitting on a shelf somewhere within Corrections Canada.
Even if Hare’s treatment program works, it will only address the violent minority of psychopaths. What about the majority, the subclinical psychopaths milling all around us? At the moment, the only thing Hare and his colleagues can offer is self-protection through self-education. Know your own weaknesses, they advise, because the psychopath will find and use them. Learn to recognize the psychopath, they tell us, before adding that even experts are regularly taken in.
After thirty-five years of work, Bob Hare has brought us to the stage where we know what psychopathy is, how much damage psychopaths do, and even how to identify them. But we don’t know how to treat them or protect the population from them. The real work is just beginning. Solving the puzzle of the psychopath is an invigorating prospect — if you’re a scientist. Perhaps the rest of us can be forgiven for our impatience to see the whole thing come to an end.
© 2001 Robert Hercz. Used with permission.(end snip)
If you want to know MORE please see Twelfth Bough
http://twelfthbough.blogspot.com/2011/08/do-you-know-one-when-you-see-one.html
. . . and an excellent piece over at Winter Patriot
http://winterpatriot.com/node/642
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