Our Lords and MastersPopulist resentment does exist, and much of it is righteous. Better to understand it and embrace the best parts of it than to allow wingnuts to turn it into something very nasty.- HTML MenckenAt the outset of the crisis, the oligarchs are usually among the first to get extra help from the government . . . Meanwhile, needing to squeeze someone, most emerging-market governments look first to ordinary working folk -- at least until the riots grow too large.- Professor Simon Johnson, in this Atlantic article, which should be required readingI watched carefully the reporting of the Dow breaking 10,000 the other day and not anywhere did I see a major news organization include a paragraph of the “On the other hand, so fucking what?” sort, one that might point out that unemployment is still at a staggering high, foreclosures are racing along at a terrifying clip, and real people are struggling more than ever. In fact the dichotomy between the economic health of ordinary people and the traditional “market indicators” is not merely a non-story, it is a sort of taboo — unmentionable in major news coverage.- Matt TaibbiI realise that, in the first installment of this series, I referred to the financial elite connected elements of various national governments in the westernised world as a corporotocracy. I now see that was a mistake, and would like to rescind that name, in favour of something far more accurate. No, these people are a kleptocracy.
Consider this, for example. Last week, Goldman Sachs, the biggest political campaign funder in America, reported earnings of $3.19 billion inbetween July and September. This is their second most profitable financial quarter ever, after the April to June quarter - the one where it recieved massive government funding while several of its competitors were allowed to die off. Hank Paulson, the Treasury Secretary under Bush, was a Goldman Sachs CEO. He appointed Neel Kashkari, a Goldman Sachs Vice-President, to oversee the $700 billion TARP payout, the largest, but by no means only funds paid out to failing financial institutions. In January, Tim Geithner hired Mark Patterson, a former Goldman Sachs lobbyist, to be his Chief of Staff and top aide. Gary Gensler, a former Goldman Sachs executive, was appointed by President Obama in March as the head of the Commodity Futures Trading Commission, despite overseeing the lax regulations in the 90s which lead to this crisis. In April, Goldman Sachs hired Michael Paese, the former chief aide to Barney Frank, who chairs the House Financial Services Committee. The top economic official at the State Department is Robert Hormats, who was a Vice President of Goldman Sach's international arm, and was paid $1 million for consulting work with them last year. This week, Adam Storch, Vice President of the Goldman Sachs Business Intelligence Group, has been appointed as the Chief Operating Officer of the SEC's enforcement division. He is 29 years old, by the way, and has worked for Goldman Sachs since he was 24. No doubt he was the only person with relevant experience that they could find, or something.
And I could go on. The bailing out of AIG, you know, the one that happened after Hank Paulson advised not to bailout Lehman Brothers and oversaw vast sums of cash going into the pockets of Goldman Sachs, was engineered in a meeting between Paulson, Tim Geithner and the Goldman CEO Lloyd Blankfein. Larry Summers, a top advisor to President Obama on economic issues, was paid a six figure sum for consulting with Goldman last year - for a day.
The point here, I believe, is pretty simple. The top positions in government for attempting to oversee and regulate the massive flows of capital which sustain the modern world, are held by the same people who need to be regulated and overseen because of their overbearing arrogance, greed and lack of foresight.
In the UK, things are no better. Lloyds TSB are due to get another £5 billion with no strings attached. A sum, which incidentally, is equal to that of all unemployment spending, including bureaucracy, that is spent by the government at the moment. In fact, Britain has undertaken the biggest peacetime fiscal expansion in history, according to The Economist. And what did that achieve? Well, Alistair Darling's actions last October, the application of trickle-down economics to lending (why banks would lend money to failing industries the government refused prop up was never clearly explained) actually accelerated and intensified the recession. Banks hoarded money to cover bad losses, while spending dried up. The net flow of of lending to businesses collapsed, falling faster than at any recorded time. Meanwhile, the government gave away half a trillion without a single string or condition attached.
This is the truth of our economic situation. Consumerism is dead (Situationists of the world, rejoice!). Manufacturing is dead. Money in circulation has stuttered to a standstill and unemployment has soared. Meanwhile, these thieves in business suits are awarding themselves six, seven or even eight figure bonuses for ruining the world financial system. They've divided the economic system into two: at the bottom is us, the former working and middle classes. Our lot is detailed above. Meanwhile, the banks and financial elites, once again flush and on top of the world, are gambling massive sums on the stock market, insurance and house prices. Because the lines of credit, which created the illusion of growth and wealth for the middle classes over the last thirty years have been severed, the reality of their position has become clear: they are serfs with unsustainable lifestyles, and nothing more. Maybe a better education, slightly larger house and fancier TV than the working classes, but little different really. They are no longer a bridge between the upper and lower class, only a subset of the latter. That bridge is long demolished, the gap is too wide to allow for it.
In fact, as I look over my financial RSS feeds for the day, these headlines pop out at me: "Wealthy ramp up their spending, so all must be well", "Banking Profits Might Be Due to Government Handouts", "Krug Champagne flows in The City" and "Merrill Lynch to pay no corporate tax in UK for next 60 years." And that is just skimming the surface. The FDIC has now shut down 99 federally insured banks, with the closure of San Joaquin Bank yesterday. Big banks are threatening to kill what little lending they are doing if if FASB 166 and 167 - new accounting standards for how banks account for securitized assets - is passed.
Ladies, gentlemen and others, we are well and truly fucked. This is it. It's not going to get better. It will probably get worse, but don't expect an apocalyptic disaster to wipe out the scum at the top. You should be so lucky. As the Simon Johnson quote shows, the "government" will protect the "banks". The reality is actually reversed, due to regulatory capture (where regulatory systems adopt the ideology of the people they are meant to be regulating), but that is how it will seem to those without the economic or political savvy to understand the situation. Meaning most people, despite the upsurge in brilliant and iconoclastic business and financial reporting in the past year or so.
And when the government is just another tool in the kleptocrats arsenal, where else can you turn? The kleptocracy isn't uniform, and so can be played off against itself, as Goldman Sachs did to Lehman Brothers, but all that changes is the faces at the top of the operation, not the craptastic situation we find ourselves in.
No, the only solution is Populism. As a brief definition, I will say Populism is the belief that "the people" are in constant battle with "the elites" and that the people are in the right and should be sided with. Sometimes, this can be nasty, especially when the populism works against certain ethnic or minority groups (here it becomes conspiratorial and proto-fascist). We see this in the lazy right-wing populism in America, where working class people will rail endlessly against the government, but will argue for economic elites, because they are not percieved to be the "other", normally "liberal". However, when directed against deserving elites, or all of them, populism can be a far more beneficial thing. Populism directed against the actual economic elites who are taking us for everything we have would be far more useful than this petty, identity-centered, social values based populism we often see nowadays.
The problem is building it, and educating people to overlook their social differences and unite on economic grounds. Class warfare is an ugly word, but its not like any of us here started it. If the Fed, Goldman Sachs, JP Morgan, Merrill Lynch and the rest didn't want it, then they shouldn't have engaged in their own, top-down form of Class Warfare for the past thirty years.
So far, the closest thing there has been to a populist movement against the bailouts was the Tea Party Movement, and I don't have to tell you what washouts they were. The Democrats, who are mostly bound to the economic elites with a few exceptions (Grayson, for example) fear and loathe populism on cultural grounds - because they are usually upper middle class and the social values of lower classes disturb and disgust them. So instead they ceded the movement to the Republicans, who have always been willing to use populism against select targets to further their own niche markets in economic elitism, and the movement quickly became a laughing stock. Quel surprise.
Because economics have been put on the back burner for the past thirty years - we have been told time and time again that there is no choice, that neoliberalism is the only future - populism has only ever really centred on social topics, and people who might've otherwise leaned left on economic grounds, have been caught up in a whirlwind of Christian nuttery, covert racism, conspiracy theorism and the machinations of the Straussian inclined members of the Republicans - who have even less qualms than an ordinary politician about lying for the purposes of social order. When both parties are essentially the same economically, but one plays to your social biases, while the other holds you in thinly veiled contempt (rightly so, in many cases, but equally contempt never helped change someone's mind), then people will go for the one which seems to at least satisfy some of their views, even if its a washout on others. Most Christians have no love for the social Darwinism of the economic world, for example, but because the GOP play to them on themes like abortion and marriage, and the Dems are incapable of playing to them on economic grounds, the Republicans always win, and economics is always relegated to the background.
I wish to finish by saying that while things are pretty bleak, they could be worse. I've been reading on American working-class movements lately, and things have been pretty bad. We could go back to the days of Teddy Roosevelt, under whose leadership America still had child labour, sweatshops, daily mine collapses, federal troops ordered to shoot strikers, deadly factory fires and almost complete rule by robber baron, except where those robber barons threatened the President (Roosevelt was probably the only man to ever shake a fist at J. P. Morgan and not have that fist cut off) or the stability of the country, as when the economic elites when too far in their depredations, and threatened a backlash which could have eventually coalesced into a revolutionary working class movement.
But at least back then, people fought back. The movements back then had enough clout to make Roosevelt - a Republican corporate suckup masquerading as a progressive man of the people (hey, that sounds familiar...) - introduce some measures, like the Square Deal, to avoid further problems down the road. Now, what do they do? Whine on the internet (this is no different), or dunk tea in cups and go "aha liberals! We too can protest!"
This cannot continue.
