Alex Cockburn on the fall of Neo-liberalism

Alex Cockburn lays the blame for the lending/finance crisis on the bipartisan-backed move to de-regulation, and on Phil Gramm (as I have suggested for the last week or so). Bill Clinton, however, signed off on ALL of it. Cockburn can be fairly offensive and hotheaded on occasion, but he wields a fairly wicked Maratian plume:

"....And if you want to identify symbolic figures in the legislated career of deregulation, there are no more resplendent culprits than the man at McCain’s elbow, Phil Gramm, and the man standing at Obama’s elbow at his press conference, Robert Rubin.

Take Gramm first.

In 1999 John McCain’s friend and now his closest economic counselor, then a senator from Texas, was the prime Republican force pushing through the Gramm-Leach-Bliley Act. It repealed the old Glass-Steagall Act, passed in the Great Depression, which prohibited a commercial bank from being in the investment and insurance business. President Bill Clinton cheerfully signed it into law.

A year later Gramm, chairman of the Senate Banking Committee, attached a 262-page amendment to an omnibus appropriations bill, voted on by Congress right before a recess. The amendment received no scrutiny and duly became the Commodity Futures Modernization Act which okayed deregulation of investment banks, exempting most over the counter derivatives, credit derivatives, credit defaults, and swaps from regulatory scrutiny. Thus were born the scams that produced the debacle of Enron, a company on whose board sat Gramm’s wife Wendy. She had served on the Commodity Futures Trading Commission from 1983 to 1993 and devised many of the rules coded into law by her husband in 2000.

Somewhat stained by the Enron debacle Gramm quit the senate in 2002 and began to enjoy the fruits of his own deregulatory efforts. He became a vice chairman of the giant Swiss bank UBS’ new investment arm in the US, lobbying Congress, the Federal Reserve and the Treasury Department about banking and mortgage issues in 2005 and 2006, urging Congress to roll back strong state rules trying to crimp the predatory tactics of the subprime mortgage industry. UBS took a bath of about $20 billion in write offs from bad real estate loans this year.""

Gramm's the real Richard III of the lending/finance/GSE scam, though Clinton may be just as responsible, given his rubber-stamping of the GOP/Gramm schemes. At the same time, the loan sharks and underwriters themselves (whether corp., or cowtown) should also be held accountable, certainly from a business standpoint. A Gramm or Dodd or Barney Mac did not sign the notes: JP Morgan/AIG/G-Sach/Wachovia does.


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Trials and Tribulations (Obama on Bailout).

Obama shows his Demopublican colors (the link to Obama's words via a Fox article implies neither support for GOP or McCaint-- or Fox-- except to DyslexiCrats):

“Democrats and Republicans, step up to the plate. Get it done,” Obama said, addressing his remarks to lawmakers in Washington. “And understand even as you get it done to stabilize the markets, we have more work to do to make sure that Main Street is getting the same kind of help that Wall Street is getting.”

Obama was 40 minutes late taking the stage, telling the crowd he’d been talking with Treasury Secretary Paulson and Speaker Pelosi following the bill’s defeat. “They are still trying to work through this rescue package. And obviously this is a very difficult thing to do. It’s difficult because we shouldn’t have gotten here in the first place,” he said.

“Democratic and Republican leaders have agreed, but members have not yet agreed. And there are going to be some bumps and trials and tribulations and ups and downs before we get this rescue package done,” Obama said. “It’s important for the American public and for the markets to stay calm because things are never smooth in Congress, and to understand that it will get done.”

Obama the insider, like his mentor Bill Clinton, apparently has no problem affirming the Bush-led bailout (McCaint also approves) and working alongside America's financial elite, though, yes, he does anticipate "trials and tribulations". (nothin' like a quote from the Book of Revelation to inspire the masses. Brutha be representin', y'all).


Obamaites often repeat the Accountability mantra of the PC left, not without some reason: BushCo should be held accountable, at least for IWE. Accountability would, presumably, also apply to economics and financial dealings. The New Deal legislation addressed to banking and speculation--the Glass Steagall Act, FHA, Fannie Mae, FDIC, etc.-- upheld the principle of Accountability as well, arguably. The GOP worked for years to overturn that legislation; it was Nixon who signed into effect FHLMC aka Freddie Mac, which privatized the older FanMae.

With De-regocrat Bill Clinton at the helm, the Gramm/Gingrich led GOP finally managed to overturn the New Deal regs completely, thereby allowing the JP Morgans, AIGs and G-Sachs to convert Americans' mortgage and retirement savings into a fat stack of chips to be used at the speculator’s poker table. Given his support of Bush/Paulsen's corporate welfare plan, Mr. Obama has himself, at least implicitly, pulled up a chair at the speculator's table. (DFV).

While Mike Whitney doesn't quite match Prez-elect BO in terms of biblical invocation (or Comrade Cockburn's invective) Whitney believes the US "is headed into its worst recession in 60 years":

"Indeed, the $700 billion is just part of a massive "pump and dump" scheme engineered with the tacit approval of the US Treasury and the Federal Reserve. Once the banksters have offloaded their fraudulent securities and crappy paper on Uncle Sam, they will do whatever they need to do pad the bottom line and drive their stocks up. That means they will shovel capital into hard assets, foreign currencies, gold, interest rate swaps, carry trade swindles, and Swiss bank accounts. The notion that they will recapitalize so they can provide loans to US consumers and businesses in a slumping economy is a pipedream.

The US is headed into its worst recession in 60 years. The housing market is crashing, securitization is kaput, and the broader economy is drifting towards the reef. The banks are not going to waste their time trying to revive a moribund US market where consumers and businesses are already tapped out. No way; it's on to greener pastures. They'll move their capital wherever they think they can maximize their profits. In fact, a sizable portion of the $700 billion will likely be invested in commodities, which means that we'll see another round of hyperbolic speculation in food and energy futures pushing food and fuel prices into the stratosphere. Ironically, the taxpayers’ largesse will be used against them, making a bad situation even worse."

Yikes. Paranoia as Praxis. Whitney makes one important point: investment and speculation has some relation to the "real economy" of jobs and production (Samuelson's words), usually a negative relation for middle and lower class citizens (the great depression itself evidence of that relation). In effect the provisions of the bailout allow for a few dozen boxcars' worth of chips (700 billion dollars worth) to be doled out to the state-sponsored gamblers at the commodity casino, and Whitney believes that "means that we'll see another round of hyperbolic speculation in food and energy futures pushing food and fuel prices into the stratosphere." Es posible.

Blame Bill Clinton

One Mr. Meritocrat on the subprime meltdown (reply #6 in comments to article):

"....How did this happen? Economist Robert Kuttner has criticized the repeal of the Glass-Steagall Act as contributing to the subprime meltdown. 1. This act had since 1933 eliminated Conflicts of interest characterize the granting of credit – lending – and the use of credit – investing – by the same entity, which led to abuses in 1933 (Great Depression remember?). 2. Depository institutions possess enormous financial power, by virtue of their control of other people’s money; its extent was limited by the act to ensure soundness and competition in the market for funds, whether loans or investments. 3. The act kept banks out of the securities business. Securities activities can be risky, leading to enormous losses. Such losses could threaten the integrity of deposits. In turn, the Government insures deposits and could be required to pay large sums if depository institutions were to collapse as the result of securities losses. 4. The act made sure deposits and liabilities did on get out of balance. Depository institutions are supposed to be managed to limit risk. Their managers thus may not be conditioned to operate prudently in more speculative securities businesses. An example is the crash of real estate investment trusts sponsored by bank holding companies (in the 1970s and 1980s). Why was it repealed by the Republican Congress in 1999? So it could be replaced by the Gramm-Leach-Bliley Act, also known as the Gramm-Leach-Bliley Financial Services Modernization Act, which allowed banks and insurance companies to do it all, investments - grant credit - lend - and use credit; which led to abuses and the fix we're in today. Who led this charge of Deregulation? Gramm? That's right, Phil Gramm: Mr. “nation of whiners” who is still advising McCain on economic matters. Senate Democrats Voted Against it 39 to 1 Senate Republicans voted it for it 44 to 1 McCain's vote on Gramm's bill - Yea.

This great act was followed by the "Commodity Futures Modernization Act of 2000" The Bill was slipped in and rammed through both the House and Senate without any debate. The way the latter passed was extraordinary: 262 pages of dense language slipped into an 11,000-page omnibus bill on the Friday before the Christmas recess. This act is widely known for creating the so-called "Enron Loophole," which exempts most over-the-counter energy trades and trading on electronic energy commodity markets.

The "loophole" was drafted by Enron Lobbyists working with senator Phil Gramm seeking a deregulated atmosphere for their new experiment, "Enron On-line" which helped bilk millions of dollars from California utilities customers. "The act freed complex derivatives from any regulation," said Michael Greenberger, who served in the Commodities and Futures Trading commission in the late 1990s. "It set the stage for the present mess and the problem is, no one knows how many of these instruments are still out there or who holds them." http://www.forbes.com/reuters/... Several Democratic Legislators introduced legislation to close the loophole from 2000-2006 but were unsuccessful due to Republican control of the House and Senate. Who led this charge of Deregulation? Gramm? Again, Phil Gramm, about whom John McCain said this on Jan 18, 2008, “I love him dearly. On issues of economics and ... family values, there's nobody that I know that's stronger.” Gramm and his wife were big friends of Ken Lay (died just before HE WENT TO JAIL); he collected more than $97,000 in campaign contributions from ENRON. Wendy Gramm was on ENRON’s board and was paid between $915,000 and $1.8 million in salary, attendance fees, stock options and dividends for helping ENRON implode.""""

Keep in mind Clinton could have vetoed the GOP-engineered repeal of the Glass-Steagall Act, and Gramm's pro-financier alternative (and the Senate at least might have filibustered). He chose not to, and instead made deals with the likes of Gramm and Gingrich, America's first crypto-fascist. De-reg, courtesy of Bill Clinton, Mr. Demopublican. (Vote DFV! Don't F-ing Vote).

Jefferson it might be recalled battled with Hamilton and the Federalists for years over matters related to banking and finance. TJ on occasion penned some rather harsh criticism of financiers:

"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs." -- Thomas Jefferson.

Res Ipsa Loquitur.

Diogenes-Day

Ambrose Bierce's thoughts on the business of American Bidness:

CORPORATION. An ingenious device for obtaining individual profit without individual responsibility.

ECONOMY, n. Purchasing the barrel of whiskey that you do not need for the price of the cow that you cannot afford.

FINANCE, n. The art or science of managing revenues and resources for the best advantage of the manager. The pronunciation of this word with the i long and the accent on the first syllable is one of America's most precious discoveries and possessions.

INSURANCE: An ingenious modern game of chance in which the player is permitted to enjoy the comfortable conviction that he is beating the man who keeps the table.


OPTIMISM: The doctrine or belief that everything is beautiful, including what is ugly.

RABBLE, n. In a republic, those who exercise a supreme authority tempered by fraudulent elections.

REVOLUTION: An abrupt change in the form of misgovernment.

Heh heh.

Hitchens on a "boring contest":

"Interviewed by Rick Warren at the grotesque Saddleback megachurch a short while ago, Sen. Barack Obama announced that Jesus had died on the cross to redeem him personally. How he knew this he did not say. But it will make it exceedingly difficult for him, or his outriders and apologists, to ridicule Palin for her own ludicrous biblical literalist beliefs. She has inarticulately said that her gubernatorial work would be hampered "if the people of Alaska's heart isn't right with god." Her local shout-and-holler tabernacle apparently believes that Jews can be converted to Jesus and homosexuals can be "cured." I cannot wait to see Obama and Biden explain how this isn't the case or how it's much worse than, and quite different from, Obama's own raving and ranting pastor in Chicago or Biden's lifelong allegiance to the most anti-"choice" church on the planet. The difference, if there is one, is that Palin is probably sincere whereas the Democratic team is almost certainly hypocritical. The same is true of the boring contest over who can be the most populist, and of the positively sinister race to see who can be the most demagogically anti-Washington. With this kind of immaturity right across both tickets, it's insulting to be asked to decide on the basis of experience, let alone "readiness."

"

Well-placed. The hordes of DNCocrats ranting and raving against Ms. Palin should remove the mote from their own, uh, eye (and from their candidate's).

The Valor-code (McCain's puffed-up POW experience).

”You see Barack Obama at that rally surrounded by all those Kennedys? Man, I couldn’t tell if he was running for president or bartender.”—Jay Leno

An article by Ted Rall from 2/08 offers up an interesting take on McCain's time at the Hanoi Hilton (that said, Contingencies does not affirm the eco-leftism of Common Dreams across the board). As Rall shows, McCaint, like most Miles Gloriosos, exaggerates the heroics, and leaves out the details, nor are his supporters overly concerned with historical accuracy (Fred Thompson greatly embellished McCain's POW experience during a RNC-Rant). AS with the stoical astronaut-heroes of space opera (Viva Johnny Rico!), a McCain may hint at the sacrifice demanded by War--reiterations of "dulce et decorum" etc.--during his Ode to Valor, yet rarely if ever addresses the real carnage.

Unlike most of the flagwaving pundits and bimbo commentators---including the Demo ones too spineless to take on the 'Nam---Rall addresses the historical context of Commander McCain's capture and imprisonment:

"McCain is lucky the locals didn't finish him off. U.S. bombs had killed hundreds of thousands of Vietnamese civilians, many in Hanoi. Ultimately between one and two million innocents would be shredded, impaled, blown to bits and dissolved by American bombs. Now that one of their tormentors had fallen into their hands, they had a rare chance to get even. "About 40 people were standing there," On later recalled. "They were about to rush him with their fists and stones. I asked them not to kill him. He was beaten for a while before I could stop them." He was turned over to local policemen, who transferred him to the military."

During his ‘Nam rants, for instance, McCaint generally neglects to mention that while those few dozen POWs were suffering at the hands of the Viet Cong, the US military (with many LBJocrats at the helm) killed hundreds of thousands of north Vietnamese, mostly civilians (many with napalm, against Geneva accords). McCain's heroism and "scars" may be legitimate, but there's a certain honesty lacking. It should also be kept in mind that the anti-war movement of the 60s (rather different circumstances than present IWE) had broad support, and was not merely some SDS freaks, marxist drudges, or college kids on cannabis. Bertrand Russell for one supervised an important investigation into US Govt. war crimes. While some gauchistes were involved (such as Chomsky), that does not negate the force of the admonition. When Lord Russell takes up his bullhorn and and barks "chandala" at some yankee generals, the rational person does well to listen.

Palin: Creationist?

"... The pure spirit is the pure lie ... As long as the priest is considered a higher type of man—this professional negator, slanderer, and poisoner of life—there is no answer to the question: what is truth? For truth has been stood on its head when the conscious advocate of nothingness and negation is accepted as the representative of "truth" ..."(Nietzsche, from the Anti-christ)

McCain's choice of Ms. Palin does little to advance the cause of secularism, and religious-free science for that matter. At the same time, Ms. Palin's qualifications should be addressed in context; compared to a Beltway pro. and papist like Biden (not to say his pious boss, BO), she doesn't offend that much. Obama has sided with evangelicals on numerous occasions, and who can forget the Wright fiasco--which is to say, Americans now have a choice between two rival mafia factions, both with ties to religion. Philosophy, schmilosophy: the Dempublican par-tay has nothing to do with the principles of Madison, Jefferson & Co. (go with DFV). Here's one Darwinian's reflections on Palinology:

[Sarah Palin] thinks that creationism should be taught along side evolution in school… that in my book disqualifies her from my personal vote. This shows a lack of critical thinking on her part, as it is clear in the article she does not understand what a scientific theory is.

Palin was answering a question from the moderator near the conclusion of Wednesday night’s televised debate on KAKM Channel 7 when she said, “Teach both. You know, don’t be afraid of information. Healthy debate is so important, and it’s so valuable in our schools. I am a proponent of teaching both.”

The usual conservative appeasement. Given the creationist/ID hype, as well as Palin's pro-life stance and religious comments, it's fairly obvious that McCain decided to pick someone who would appeal to the protestant-boneheads biblethumpers. While in agreement with Darwinian accounts of evo.--called the fossil record and radiocarbon dating, BubbaBot--and do not agree with the so-called Argument from Design (or Screeptural accounts), we respect it, at least in original forms (the "Watchmaker" analogy), or in Dr. Behe's updating (Darwin hisself was no biochemist. Behe is). Behe agrees with most but not all aspects of the Darwinian account of Evo.. Behe errors not so much in his science but in his reliance on the ad ignorantium fallacy: Behe insists that since Darwinian natural selection cannot account for some complex aspects of evo (like blood clotting), a Designer must exist. Nyet. The fundies' "new earth" version of ID, on the other hand, has little or nothing to do with a Watchmaker or Behe's ideas (or Darwin). Palin, alas, seems to be siding with the new earth quacks, "the conscious advocates of nothingness" in FritzSpeak (tho' FN included monotheists of all types in that class).

Yet that hardly implies the superiority of the DNCocrat gangsters and Obamaites: when you hear some east coast liberal pundit-stein yap something like "How Closely Was Palin Vetted?" reach for a luger. Vet this.

One other point (directed to sentimental, liberal xtians): if X insists a omnipotent, monotheist God exists, X must agree that his God controls natural phenomena in some mysterious fashion (even say, a "Gustav"); in effect, logic requires it. Omnipotence entails, like, infinite power, knowledge and responsibility. If believer or theologian X denies that omnipotence, or suggests pantheism, or manichaeism, or some other ism as explanation, he in effect denies his own putative God His godliness: what sort of God can't see into the future for one, or prevent horrible natural or human disasters? (as Ivan Karamazov observed, in rather sublime section of Dostoyevsky's Bros. K).

Thus, anyone who attends a xtian, jewish, or muslim church, by implication upholds Design (tho' the spooky catholics have some subtle tricks to circumvent the problems with the argument), and he at least implicitly affirms other theological arguments related to causality. The fundies themselves realize that basic categorical point (ie their sunday school raindancing, or earthquake prayers, "the heavens reveal His handiwork," etc etc.). Any real Zeus-God would control tectonic plates--which is to say, any such Deity would needs be a murderous fiend, and so safe bet the noun "God" doesn't refer to some actual Being, but to a human-created concept, belief in which might prove useful, etc etc....)