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« Rudyard Kipling on Careers | Main | What's So Liberal about Liberalism? »

November 01, 2008

Quote for the Day

Michael Blowhard writes:

Dear Blowhards --

In the typhoon of commentary that's blown around the world a step behind the financial tsunami that's wrecking everything, two little words have been curiously absent: "fraud" and "swindle." But aren't they really at the core of what has happened? Wall Street took the whole world "for a ride" and now a handful of Wall Street's erstwhile princelings have shifted ceremoniously into US Government service to "fix" the problem with a "toolbox" containing a notional two trillion dollars. This strange exercise in financial kabuki theater will shut down sometime between the election and inauguration day, when the inaugurate finds himself president of the Economic Smoking Wreckage of the United States. What will happen?

You may love him or you may hate him. But it's hard to deny that James Kunstler has his own hyper-vivid way of putting things. I suppose that, where judging Kunstler goes, it doesn't hurt that this time around the sky really does seem to be falling ...

2Blowhards visitor Ed From Malabar was wondering why we haven't heard more about angry retirees wreaking physical vengeance on disgraced financial honchos. Interesting to see -- in Kunstler's posting as well as in the comments on it -- that Ed From Malabar isn't the only person marveling about the restraint that so many of the screwed-over have shown. "How long before they go to the Hamptons with lethal intent?" writes one of Kunstler's commenters.

Best,

Michael

posted by Michael at November 1, 2008




Comments

I agree. Where IS the outrage? In Warren Buffet's phrase, the tide has gone out and we've found out who has been swimming naked--and it seems to include not only our outlandishly compensated financiers but also our Congress and our regulators. Of course, the mess they've left behind will impoverish the rest of us for, what?--a decade or more?

I alternate between thinking:

1) Americans have been so brainwashed that they really believe that the "experts" know best (and that experts that haven't been completely corrupted and co-opted by big money, influence and power actually exist) on the one hand and

2) that reality will just catch up to the broad mass of society and we'll see more serious reactions from the fleeced in 2009 on the other.

Any ideas on this?

Posted by: Friedrich von Blowhard on November 1, 2008 4:29 PM



To paraphrase Howard Beal, "Just let me keep my flat screen TV, broadband wireless, Netflix subscription, SUV, my daily Starbucks allotment, and my suburban cocoon and I won't revolt."

Posted by: Peter L. Winkler on November 1, 2008 9:54 PM



While you're looking up addresses for your hit list, check this out...

http://tinyurl.com/62tawe

Posted by: Charlton Griffin on November 2, 2008 1:49 AM



How would we revolt? What in the world would we do?

The fix is in for both the major parties.

Obama, who is presenting himself as the reformer set to fix the great rip-off, is one of the perpetrators of the rip-off.

Tell me. What in the hell can we do? I'll be damned if I know.

Posted by: Shouting Thomas on November 2, 2008 7:54 AM



FvB -- I'm flabbergasted too. I mean, there have been grumblings and such, but generally people just seem to be watching (and accepting) the show. I like Kunstler's way of portraying it as a swindle perpetrated by Wall St whole. FWIW, I was talking to a couple of guys at a party the other night. One works in the mortgage biz. I asked him if people he knew hadn't worried about the way they were handing out mortgages with no backing, no money down, etc. "They didn't care," he said, "because so long as they were writing mortgages, any kind of mortgages, they were making money." This guy's guessing that it'll take 5 years to wring the bad deals and losses out of the system. The other guy's an investment banker. I asked him if he thinks the rough patch we're going through will be paved over in a year, or if it's more serious than that. "I think it's likely to be more like 1929," he said. Yikes.

Peter -- Funny. Sad. Funny. Sad ...

Charlton -- Excellent link, tks.

ST -- I've got that helpless but trying to feel cheery about it feeling too. What stumps me is the lack of actual violence. I'm not advocating it, of course. I'm just surprised there haven't been vengeance murders. In this Enron doc that I watched the other day, for instance, one of the characters was an electrical company lineman whose company was bought out by Enron. Thanks to Lay, Skilling, etc, his 401K savings went from 350,000 bucks to $4000. He was robbed of a ton of dough (and hard work and time) and his life was severely blighted by the bastards. I mean, in financial terms this poor guy was anally raped and had his throat slit and was left to die. I admire his honor and restraint in NOT trying to wreak actual physical vengeance. But I wouldn't be surprised at all if he lobbed a hand grenade at Skilling, or anyone else who was in a position of power at Enron. Same with the current scandals. We've been robbed blind and the robbery is likely to continue. Given that millions of us will be affected, how surprising would it be if one or two go postal?

Posted by: Michael Blowhard on November 2, 2008 8:00 AM



The problem is that the web of guilt spreads too far: both political parties, public administrators and financiers, they're all guilty, so there's no incentive too start pointing fingers too much. They all bought the silly story that the reason poor people don't own homes is because the system is unfair and they tried to make it fair by loosening the rules.

We can look forward to more of this.

Posted by: steve on November 2, 2008 8:24 AM



Steve, "more of this" is what it is going to take to get the average Joe out from in front of his TV. Much more.

Posted by: Charlton Griffin on November 2, 2008 9:31 AM



*sigh*. I guess every good narrative needs some evil villains. Of course, we need villains that fit our view of the world, so for Republicans, it's the government that interfered in the proper running of the market. For the Democrats, it's got to be the evil bankers. For the immigrant restrictionists, it's the false demand by those evil illegal immigrants.

Then again, it's a lot easier to take than the truth - we've developed an immensely complicated, fully global system of finance whose complexity rivals the chaos of long-term weather-prediction when trying understand how its thousands of interlinking parts work together. And so, despite the best efforts of most of the components, there will inevitability be instabilities in it that are by their very nature, almost impossible to predict with certainty.

And just to anticipate - of course some people did predict the disaster - unfortunately, there are even more people predicting disaster because of this newfangled paper money thing, and we don't listen to them either. In the end, those who were right were unable to build a logical, compelling case that was capable of convincing the general consensus of economists.

Well, I suppose it's an improvement on hanging strange old people as witches when natural disaster hits...

Posted by: Tom West on November 2, 2008 10:36 AM



Bottom line is people haven't *really* felt pain here yet, certainly not for long enough. We've had stagnant incomes for 8 years, and 6%+ unemployment. A mediocre performance, but not yet a disastrous one. But the system has still done OK materially by most people. The impacts of the financial crunch haven't fully spilled out into the broader economy (and the Fed is trying like hell to avoid having this happen). People don't riot over newspaper headlines, they riot when enough of them truly can't support their family, right now, today. It took 3+ years of 20%+ unemployment to get the Bonus Army in the streets of Washington during the Depression.

Posted by: MQ on November 2, 2008 10:47 AM



hat stumps me is the lack of actual violence. I'm not advocating it, of course. I'm just surprised there haven't been vengeance murders.

Indeed, forget about *this* crisis. What about doctors? How many thousands die or are permanently crippled each year because of doctor's misdiagnoses and other errors. Why aren't hundred of doctors being executed by vengeful patients? And what about politicians. No matter which policies they choose, it will have terrible impact on thousands of lives (just different lives). Why aren't they being snuffed out by those who have paid a dreadful price for the politicians policy decisions?

And what about those who truly feel abortion is murder? Why haven't they been taking bloody vengeance on those who (in their opinion) openly support the murder of the utterly innocent?

Could it be because we're, I don't know, basically decent people?

Considering what I think of people who do take vengeance on those who (for example) democratically elected a government they feel has inexcusably interfered in their internal religious affairs, I'm rather happy that as a populace we don't feel the need to take vengeance into our own hands.

Posted by: Tom West on November 2, 2008 11:27 AM



Ha, great comments, Tom West.

Posted by: MQ on November 2, 2008 11:46 AM



While I don't condone vengeance, Tom, your analogies are BS.

The bureaucrats, politicians and banking execs who ripped us off in the mortgage meltdown were not just people trying to do their job.

Although they cleverly structured their stealing to make their ripoff legal, they were still stealing.

Stealing on the backs of old folks fixing to retire is pretty abominable stuff.

Posted by: Shouting Thomas on November 2, 2008 1:02 PM



Yes, both comments from Tom are great. We're all culpable in this financial mess. The lenders for offering unsustainable loans and the borrowers for being gullible enough to take them. There's a reason oversight is important, because people are just people and will take what they can get for the most part without sensible rules reigning them in a bit.

Of course, what this crisis has revealed is it's not just the mortgage business. I don't know about you, but I've learned more about the economy in the past 3 months than I have during my previous 40 years in this planet. I mean, credit default swap? What the holy fuck!? That is a motherfucking racket if there ever was one.

But I agree with Tom West, the very fact that there hasn't been violent revolt is tantamount to our basic civility. I'll take a financial crisis over vengeance mobs.

Posted by: JV on November 2, 2008 1:40 PM



I'm still scratching my head over "credit default swaps" myself ...

And just to make it doubleclear: No one's encouraging take-it-in-your-own-hands physical retribution. Just marveling that there hasn't been more of it.

That Enron lineman I mentioned, for example. Let's take a look at that. He was robbed of more than $300,000 by guys who were complete scumbags. That's like having your house stolen from you. Imagine someone coming in and taking your house from you (and from your family etc) -- and there's nothing you can do about it. It takes a lot of decency to shrug and move on. Should everyday people really be being asked to demonstrate such an awful lot of virtue? If this guy went and lit a fire to the house of an Enron honcho, would anyone blame him?

Another example: All those people who, during the last decade, didn't sell or purchase mortgages, who didn't go into credit-card debt, but who worked hard, saved, etc. And who are now being billed thousands of dollars to bail out the jerks who perpetrated this whole mess on us -- and who, further, are likely to lose a lot of their savings when we all get hit by inflation. All those years of working hard, living frugally, sacrificing for future wellbeing, being sensible -- all for naught. Plus they didn't even have the fun of partying during the party-hearty years. Again: they're being asked to show a little too much forebearance, no?

Posted by: Michael Blowhard on November 2, 2008 2:02 PM



JV:

That it's a "motherfucking racket", and that Tom West's fatuous comments are great, cannot both be true statements. "Motherfucking racket", after all, implies conscious action by culpable agents, whereas Tom believes it's not about facts in the real world, not about actual corruption and malfeasance, but about "narratives" spun by people who "need villains" because, well, you know the drill. Brutus is an honorable man.

And yes, Tom, ST is correct that your analogies are bullshit. There are few points of congruence, in the civic sense, between medical malpractice and the system in place for allowing redress thereof (abused though it undoubtedly is), and the entrenched political-financial "system" that has allowed this chicanery to flourish.

...the very fact that there hasn't been violent revolt is tantamount to our basic civility.

You keep using that word...(you were perhaps reaching for "testament" or "testimony?)

That a civil people will abjure violence except as an unavoidable last recourse, does not mean that a passive people are so because they are civil. It does not follow that because a political tradition of "laws, not men" and due process is admirable, that eating the endless shit sandwiches served up by a decaying governing caste is also admirable.

JV: We're all culpable in this financial mess.

The hell "we" are. There are a lot of us ants out here who do not, as a matter of fact, consider it virtuous to uncomplainingly bow under the burden of debt being off-loaded onto our backs, and the backs of our grandchildren, by grasshoppers high and low. We could at least be spared the vacuous twitter about "fully global system of finance blah blah blah complexity rivals blah blah blah chaos of long-term weather-prediction blah blah blah" from the fulsome apprentice drones of the New World Order.

Posted by: Moira Breen on November 2, 2008 3:59 PM



Yeah. The financial system only seems complicated to those who don't understand it. Its basically the printing of vast amounts of money, all backed by debt, and shooting it into the markets so that the insiders can steal from the productive people by means of monetary inflation and securities fraud.

Posted by: BIOH on November 2, 2008 4:03 PM



Moira, parts of it are a racket, like the credit default swap market, and parts are just inexperienced people on both sides of the lender/borrower playing field getting in above their heads. The 25 year old mortgage broker offering the 25 year old first time homeowner an unsustainable ARM are both culpable and victims of bad information of an overly exuberant market at the same time. Granted, both should have known better, but I'm one to forgive a little human folly. That said, none of those loans should be bailed out. You play the game, you take your chances.

And did I really use "tantamount" more than once? I admit to using it incorrectly in the sentence you quoted. Oh well.

I'm curious, since you and BIOH agree that the financial crisis can be attributable to identifiable sources, what is your recommendation for a solution? I'm not being coy, here, I'm interested to know. I don't believe it's a simple as you two believe it is, but I admit to not being especially financially savvy.

Posted by: JV on November 2, 2008 4:48 PM



I'm curious, since you and BIOH agree that the financial crisis can be attributable to identifiable sources, what is your recommendation for a solution? I'm not being coy, here, I'm interested to know. I don't believe it's a simple as you two believe it is, but I admit to not being especially financially savvy.

It might be helpful if you could first describe exactly what this simplistic view of the problem is that you're attributing to either one of us - because I'm missing the logical connection between "identifiable sources" and "simple problem with simple solution". I happen to think it's a massive problem whose (identifiable) sources are in a lot of bad policy pursued by this country in the last 20-30 years, and not just in banking and finance. Yes, I am pretty sure that problem is not going to be controlled by piling ever more debt on a nation and public already drowning in debt, that Tom is talking twaddle, and that there are indeed perps in the mess who can be named and shamed. What I don't get is how you infer from that that I think it's "simple".

Let's start with something specific. Explain to me what is simplistic, or incorrect, in BIOH's claim that "[i]t's basically the printing of vast amounts of money, all backed by debt, and shooting it into the markets so that the insiders can steal from the productive people by means of monetary inflation and securities fraud." To make it more straightforward, let's leave out any distracting quibbles about what constitutes "productive people" and "securities fraud", and reduce the claim to "printing vast amounts of money, all backed by debt [our debt] and handing it over to the same people who contributed greatly to the mess in the first place." I think we can infer that BIOH disapproves of this policy. If he is not incorrect on the facts, explain why his disapproval of the process is simple-minded and uninformed. I am not financially savvy, either. We can help each other out here.

And did I really use "tantamount" more than once?

No, you did not. I just let my inner adolescent obnoxious nerd-boy come out to mock your amusing mis-type with a lame pop culture ref. The sort of irritating habit I consider a hanging offense on my better days. Sorry.

The 25 year old mortgage broker offering the 25 year old first time homeowner an unsustainable ARM are both culpable and victims of bad information of an overly exuberant market at the same time. Granted, both should have known better, but I'm one to forgive a little human folly. That said, none of those loans should be bailed out. You play the game, you take your chances.

If you're not going to bail them out, you're not forgiving them their folly (in any way that would matter a rat's to them, anyway). And 25? How old does one have to get in this infantilized society to "know better"? I may feel some human sympathy for the not-so-bright out there who were being preyed upon by the unscrupulous, but nobody who was selling 400k mortgages to people with 40k/yr (or 0k/yr) incomes could be unaware that he was running a scam (legal or not). Bad information in an overly exuberant market, my ass.

Posted by: Moira Breen on November 3, 2008 9:32 AM



That it's a "motherfucking racket", and that Tom West's fatuous comments are great, cannot both be true statements.

I actually believe both of those things, but they're sort of a matter of perspective. Where I wholeheartedly agree with Tom is that it's a positive thing there isn't blood in the streets. Also, that there is wide-scale responsibility for this crisis, because it's the result of a particular sort of worship of "free-market" financial capitalism that was widely bought into across the society, and therefore we all cooperated in normalizing rampant speculation with other peoples' money as the wondrous workings of the market. In that environment, it's hard to go along with hanging individuals for something that was so widely socially sanctioned. (Here I think the financial crisis differs somewhat from Enron, where I think the traders knew very well that they were directly ripping people off and who they were ripping off -- the systemic risk in the financial was more concealed).

Where I disagree is this statement, which really is (sorry Tom) sort of fatuous:

we've developed an immensely complicated, fully global system of finance whose complexity rivals the chaos of long-term weather-prediction when trying understand how its thousands of interlinking parts work together. And so, despite the best efforts of most of the components, there will inevitability be instabilities in it that are by their very nature, almost impossible to predict with certainty.

On the contrary, I think what was going to happen was highly predictable, and there were several warnings back in the 90s (Long Term Capital Management, the Asian crisis). It wasn't cranks warning us. There was a conspiracy of silence, because the easy money served too many peoples' interests and it was easy to wave off catastrophe as a vague future possibility.

So no blood in the streets, but what justice does demand here is some effort to get back -- to confiscate through the legal or tax system -- the many hundreds of billions of dollars in Wall Street bonuses that were paid out over the last seven years in what now appears as a giant pyramid scheme. That's wealth redistribution we should all get behind.

Posted by: MQ on November 3, 2008 11:48 AM






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