It is one thing to suspect that something is rotten in Denmark, quite another to have proof. Ever since Obama appointed his Rubinite economics team, it was blindingly obvious that he was aligning himself with Wall Street. The strength of the connection became even more evident in March 2009, when Team Obama embarked on its “stress test” charade and bank stock cheerleading. Rather than bring vested banking interests to heel, the administration instead chose to reconstitute, as much as possible, the very same industry whose reckless pursuit of profit had thrown the world economy off the cliff.
But now we see evidence in a new paper by the think tank Third Way of an even deeper commitment to pro-financier policies. The Democratic party has made clear that it supports institutionalized looting by banks, via the innocuous-seemeing device of rejecting the idea of writedowns on bonds they hold.
Policy advisors Lauren Oppenheimer and David Hollingsworth argue that point in the context of Greece, but the exact same logic would apply to banks anywhere. As Michael Hudson has warned:
…the war being waged against Greece by the European Central Bank (ECB) may best be seen as a dress rehearsal not only for the rest of Europe, but for what financial lobbyists would like to bring about in the United States.
And make no mistake about the role of Third Way. Third Way runs the policy apparatus of the Democratic Party. In Congress, staffers attend regular Third Way policy briefings, where the group hands out pre-packaged legislative amendments in legal form, generic press releases, polling around those policy ideas, and talking points. It’s a soup-to-nuts policy apparatus. Most of these ideas are harmless – like increased volunteerism – but some are not, like various tax proposals.
The group has enormous juice. On the Congressional side, it has six honorary Senate co-Chairs, and seven House-side co-Chairs. Jim Clyburn, a co-Chair, is in the House Democratic leadership. Two current cabinet members are former co-Chairs. Steny Hoyer, the House minority whip, held regular briefings for the freshmen member staff in the last Congress.
On the administration side, former Third Way board member Bill Daley is now White House chief of staff. Ron Klain, who was Biden’s Chief of Staff, is now with Third Way. The White House is pretty much full of Third Way-style apparatchiks.
Third Way also echoes, nearly entirely, the White House’s political line (though it is slightly ahead on gay rights). Here’s Third Way praising the Gang of 6 talks, opposing cut, cap, and balance, encouraging entitlement cuts, pushing various free trade agreements
Finally, most of the Board members are from the FIRE Sector (Wall Street and real estate), including the head of equity trading for Goldman Sachs and one of the heads of investment banking for Morgan Stanley.
It’s a highly optimized political operation for the White House and Congressional Democrats, with PR muscle, elite validators, access, and policy-making infrastructure.
This nine-page paper, Why Greece Matters, is lightweight, particularly for anyone who has kept up even minimally on the Eurozone mess. From the overview sent via e-mail:
As if DC policymakers don’t have enough to worry about with our own debt, we argue that the Greece bailout package announced last week may not stop the bleeding. And in our new memo, Why Greece Matters, we dissect and explain how a Greek default could affect the American economy—from Wall Street titans to widows on pensions—due to the interconnectedness of the global financial system.
A Greek default could lead to:
Stunning losses for European banks that hold Greek bonds;
A steep reduction in the value of the bonds of Ireland, Portugal, Spain, and Italy and exponentially increasing losses for the European banking sector;
Dissolution of the euro, the second most important world currency behind the dollar, with dire consequences for the world economy; and
Possible crippling losses for American financial institutions that lend to European banks, American exporters who rely on the European market, and anyone who holds a money market fund.
The tone is apocalyptic. And notice the failure to define what “default” means. Since it is never spelled out in the paper, a DC non-finance savvy reader would take it to mean “miss a bond payment”. But as anyone who has been paying attention knows, a good bit of effort was expended in the latest Greek package to devise a restructuring that did not constitute a default (technically a “credit event”) as defined for credit default swaps. Yet some commentators depict the latest rescue as a default, since banks will take an estimated 21% losses on Greek debt. Mirabile dictu, the world did not stop spinning.
Yet given the fulminating about the need to spare banks from taking meaningful hits, it’s not hard to see that a large writeoff would produce large losses to banks and hence would also be an outcome Third Way would see as detrimental.
The paper’s argument rests on two fallacies. First it that it would be very bad to have Greece fail because it would spread to other periphery countries. They are quite explicit about that they see the risk propagating, using metaphors like dominoes and mountaineers tethered together. Second is that “the Greece contagion could spread to Eurozone banks”. We’ll deal with them in order.
Like Tolstoy’s unhappy families, each of the so-called periphery countries that is at risk is for reasons specific to each county, not because the spectacle of Greece about to fall over suddenly produces Ebola-like financial hemorrhaging in its neighbors. The document never once acknowledges that the other periphery countries are independently at risk. They all have independent stresses that are coming to a head in a closely synchronized manner thanks to the impact of the global financial crisis. One connecting device of the oft-abused notion of “contagion” is the poor policy responses at the EU level. If the EU can’t come up with a workable remedy for Greece, which is badly impaired but not all that large, it is not going to be credible in dealing with Spain, Italy, or France. That too is absent from the Third Way account.
Marshall Auerback pointed out via e-mail:
The economies of Europe continue to look weaker.
Spanish real retail sales get worse and worse. In June they were down a huge -7% year on year versus -5% for the since November of 2010. Nobody is taking notice. Perhaps they are focusing too much on this debt ceiling crisis, which is a manufactured one, as opposed to Europe’s which is an institutional weakness of EMU.
Italian and Spanish sovereign interest rate spreads are resuming their rise. This is raising interest rates on some private borrowers, which could add to economic weakness. This should especially be the case for Spain where the ratio of private non-financial debt to GDP is exceedingly high and collateral values are gravely imperiled.
The second channel of contagion is the interconnectedness of the banks. As this blogger and many other commentators have pointed out, the most important corrective measure that needed to take place in the wake of the global financial crisis was to reduce the tight coupling among major financial firms. Right now, the banking system is like a badly designed power grid, where a bolt of lightning hitting a single transformer takes down not just a neighborhood but half the country. The Third Way paper, by contrast, tries to have its cake and eat it too on this point. It gives the tight coupling prominent play, not in its discussion of the origins of the Greek mess but in its urgent call to spare the banks any pain, predictably invoking the Lehman trope and arguing for another bailout. And the bailout metaphor is well chosen. The failure to fix the defective architecture of the financial system means these rescues are tantamount to bailing out a leaky boat. A full bore effort is unlikely to keep it afloat.
It’s critical to understand the real vectors of contagion if you are to propose sound remedies. But if the aim is to product bank-supporting propaganda, plausible-sounding stories within hailing distance of reality work just fine.
But let’s examine the core foundational argument in more detail, “”the Greece contagion could spread to Eurozone banks”. There’s a huge lie misapprehension here. The pretense is that the banks are sound. They aren’t.
The authorities are playing Schrodinger’s banks. They want to preserve the notion that we really don’t know whether the major financial firms are alive or dead. As long as we keep the quantum uncertainty game going and don’t open the box the stress tests are an effort to discredit critics who manage to pry the top open and peek), the banks remain in an indeterminate state and the authorities can carry on as if they are really alive. In fact, based on the decay rules established for this game, informed observers know well that if the box were opened, the banks are pretty certain to be dead.
To put this in simpler terms: experts were predicting losses of 50% to 75% when the first iteration of the Greek crisis hit in May 2010. Some are now predicting 90%. The latest rescue took a major step forward, in that it substantially reduced interest rates and pushed maturities out. But if you take the most recent projections of Greek indebtedness, and apply the effective writedowns contained in the latest package, you still have a debt to GDP ratio in excess of 150% for 2012, when a year ago, the IMF forecast that it would never breach 144%. Virtually all experts agree that more aggressive writedowns now would lead to lower losses later, but the political incentives are to delay the day of reckoning as long as possible.
And where has Third Way been? The authors honestly seem to believe that if Greece is bailed out, all will be well. As we noted above, the paper presents the odd notion that if Greece were saved, the Eurozone can soldier on, and it fails to mention some obvious suspects, namely Belgium and Cyprus, as among the walking wounded. There have been a gazillion charts generated in the last year of which countries’ banks are exposed to the debt of various sovereigns. And all the arrows point to one conclusion: the effort to shield the banks from taking losses in the crisis has simply imperiled Eurozone states (the core will not escape the damage to the periphery), and will inevitably redound to the banks.
Pretending a better bailout is the answer is just plain naive unless you start considering much more radical measures, namely having the ECB step up in a much bigger manner than before and abandon austerian policies. The latest estimates are that the rescue costs are two to three times the size of the facilities now authorized. But most observers believe that the ECB’s Bundesbank reflexes and other impediments like the parliaments of countries like Finland and the Netherlands and the German constitutional court will block this path.
Why is the Third Way position tantamount to endorsing institutionalized looting? Consider the definition in the classic George Akerlof and Paul Romer paper (emphasis ours):
. . . an economic underground can come to life if firms have an incentive to go broke for profit at society’s expense (to loot) instead of to go for broke (to gamble on success). Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations. Bankruptcy for profit occurs most commonly when a government guarantees a firm’s debt obligations. The most obvious such guarantee is deposit insurance, but governments also implicitly or explicitly guarantee the policies of insurance companies, the pension obligations of private firms, virtually all the obligations of large banks, student loans, mortgage finance of subsidized housing, and the general obligations of large or influential firms. . . .
If so, the normal economics of maximizing economic value is replaced by the topsy-turvy economics of maximizing current extractable value, which tends to drive the firm’s economic net worth deeply negative. Once owners have decided that they can extract more from a firm by maximizing their present take, any action that allows them to extract more currently will be attractive—even if it causes a large reduction in the true economic net worth of the firm). . . .
Notice the Third Way script is a refinement of the process. We no longer bother with the actual stage of bankruptcy; that would be too messy and would embarrass too many powerful people. We now have a drip feed running directly from governments to banks via various hidden subsidies (super cheap interest rates being the biggest one of late) and the official “no more Lehmans” policy stressed in this paper.
“Bondholders can’t take losses” is now an explicit part of the “preserve the zombie banks” strategy. This is utterly ridiculous, since bonds are risk capital. Even before the crisis hit, economists like Nouriel Roubini were advocating wiping out bank equity and forcible conversion of some bank debt to equity as the remedy. Instead, the authorities are committing themselves to what will be at best a Japan trajectory of near zero growth (and unlike many European countries and the US, Japan has the social cohesion to carry this off with some grace). It assures high unemployment and low wage growth and is a very costly way to stabilize French and German banks. At this juncture, it would be better to write off the dud loans held by Eurobanks and thus re-capitalize them by using the currency-issuing power of the ECB and abandoning the Orwellianly-named Stability and Growth Pact. The other option is, contra the Third Way’s alarmism, to let the eurozone fracture into two or three more economically homogenous groups.
As we’ve said before, saving a banking system does not mean preserving individual firms in their current form or coddling diseased managements. Failed banks should be resolved and their executives should be replaced by more realistically paid and publicly-focused professionals and their operations reoriented to public purpose. The ECB clearly has the financial capacity to do but the banks in the US and their Democratic party mouthpieces at the Third Way want to make sure ideas like that never get a hearing.
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In a sense it’s funny to watch Capitalism implode the way it is doing: with such shamelessness and lack of any kind foresight or even self-respect.
However I know I’m laughing on the edge of a sharp knife: my life and those of so many others are at the stake as this implosion happens: from happy normality to the depths of hell in just few years. I just read that people in Montenegro or Serbia are cooking their own bread because they can barely afford anything but a bit of floor, and bathing together in stove-heated water… they say: “I do not know anymore what century I’m living in”.
“In a sense it’s funny to watch Capitalism implode the way it is doing”
Where is this Capitalism of which you speak? I see only Socialism. Those who warned of its evils were correct, I must reluctantly agree, at least when it’s used only to benefit those who already have the most.
Capitalists are ‘socialist’ when it suits them, and for whom it suits them. There is no contradiction here, as the point is simply that they have the power, and wield it as they see fit.
It is very much a contradiction. In saying there isn’t you’re accepting Minitrue’s Newspeak definition of “capitalist”.
This is not just a pedantic point. As Orwell so keenly observed, words have power. “Capitalist” has certain positive connotations for many people. In the case of true capitalists, I think that’s not without justification. You’re assisting fake capitalists in their justification to themselves and the general public by calling them capitalists, rather than by more accurate names such as welfare queens. Don’t tolerate propaganda terminology!
Sure, but you’re making the exact same mistake by calling this socialism when the operative word is corporatism or kleptocracy.
Same thing was said by socialists about real socialists republics when these failed (“but that wasn’t real socalism!”).
Sorry, get your head out of your butt. Ideologies are idealizations of reality, ALWAYS. Capitalism of the ‘randian’ or ‘libertarian’ brand is just utopia, never existed and never will.
I guarantee that if we perform a historical appraisal of the big merchant/capitalist owners of “capitalist” societies more will fall into your false capitalist group than your true capitalist group. So which is which I ask? Should we talk of “pure” capitalism, which apparently only exists in your mind, or of practical, real-world examples, as alike to your pure capitalism as was Soviet “communism”to Marx’s ideal?
Do you specialize in flunking the most basic concepts?
A refresher:
Socialism by definition means at least public ownership, though not necessarily worker control.
Not much of that around these days. On the contrary, public assets are being “privatized”, i.e. stolen by private actors, handed over by embezzling government officials, at an accelerating rate.
Corporatism, AKA the economic aspect of fascism, is a command economy which maintains private rentier rackets and is dedicated to maximizing the expropriations on the part of those rackets.
That’s clearly the nature of every Western government, most other governments, and of globalization.
“A refresher: Socialism by definition means at least public ownership, though not necessarily worker control.”
Thank you for consulting your dictionary. However, you needn’t bother in the future as I also have access to one.
“Do you specialize in flunking the most basic concepts?”
No. Do you specialize in relying strictly on the denotation of words and ignoring their all important connotations and de facto usages?
Curiously, while insisting on a strict definition of socialism, you accept an utterly bastardized definition of capitalism. Please explain that contradiction.
I use the English language. Sorry it doesn’t suit your lying purposes. Socialism by definition means public ownership. Deal with it. (I of course have slight regard for the right-wing “connotations and de facto usages” you’re spewing here.)
And like I said, my definition of capitalism is the empirical description of capitalism as it’s always existed in real life. What definition could possibly have more authority than that? But I know you’ll stick with your Ayn Rand fantasy.
attempter: “Socialism by definition means public ownership. … my definition of capitalism is the empirical description”
So for socialism you use the dictionary definition, and for capitalism you use your own homebrew “empirical” definition. Gotta love that consistent use of the English language!
They’re both the English language, and no dictionary required.
But as this whole thread proves, you’re incompetent to use the language even with a hundred dictionaries.
Capitalists find ways to subvert power and capture the state. The silly ‘free market’ ideal can never exist because the system that breeds corruption and encourages naked self interest based on endless accumulation of profit. This is capitalism’s natural course.
As for ivory tower “capitalism”, that’s the most utopian fantasy of all. What’s called capitalism has been in the full deployment stage long enough and universally enough, always with the same racketeering result, for us to know for a fact that what capitalism has always been in practice is the real capitalism.
How about plutocracy? I believe this word was coined by Bill Moyers.
I think kleptocracy is preferable because whereas plutocracy just denotes “government by and for the rich”, kleptocracy emphasizes the fact that the rich stole all they have.
Please! “Plutocracy”: the rule (kratos) of the rich (ploutos) is a classical term and was in use as early as ancient Rome, maybe classical Greece. A quasi-synonym is “oligarchy” (rule of few).
But while you can have oligarchy or plutocracy in pre-modern contexts, Capitalism is modern. Also Capitalism does not refer to the form of government but to the whole economy: it is a mode of production that impregnates all society. By its nature Capitalism is plutocratic and oligarchic, though it can acquire monarchical or democratic appearances, the real power is oligarchic always – otherwise the mode of production would be subverted and private property either fully suppressed or heavily restricted and put to the service of the community (hence “communism”), of society (hence “socialism”).
That is what Marx and Lenin describe as dictatorship (rule) of the bourgeoisie (a minoritary but powerful class: oligarchy, plutocracy), to which they oppose the dictatorship (rule) of the working class (the vast majority, the citizenry: democracy, popular power). The use of the term “class dictatorship” (meaning “class rule”) has brought many misunderstandings but that was the original intent in any case.
Naturally the class dictatorship of the majority (working class) cannot (or should not at least) take the form of a dictatorship of a few but of a perfected democracy in which the power of the people reaches to all facets, including and specially the economy.
No, Socialism is ownership by the state (or workers) of the means of production. Private property is Capitalism. The USSR, Yugoslavia, China in better days… were socialism. Cuba is still today.
Private property of companies such as banks, industries, commerces, transport, electricity, oil… well, nearly everything, is Capitalism. Within Capitalism there may be some variants that allow greater or lesser state intervention but these are just shades. And often not even that because those who yell more against “socialism” make the state intervene once and again in favor of the rich, and those who yell more for “socialism”, privatize like crazy and destroy the acquired rights of the working class. It’s like pepsi and coke but, not just that you can’t choose to drink water or wine anymore, but you pick pepsi and get coke and vice versa.
Capitalism in any case: much to choose but all is the same junk with a different label. And no money to buy anyhow.
Yves: you misspelled apparatchik
Typos are my “Where’s Waldo?”
You seem to manage fairly well. :)
Yves,
Have you picked this up on the BBC:
http://www.bbc.co.uk/news/world-us-canada-14296682
He’s retracing the ‘Grapes of Wrath’ route from the Depression. I saw the report of the ‘middle class underclass’ on the TV last night and it was really moving.
Neil,
Thanks for pointing out the BBC link, words beget me at this moment and have been commenting on the UK’s Guardian website – to call it ‘SAD’ would be unjust – its a national tragedy and disgrace – that its happening in all 50 States makes a travesty of Obama, Congress, D.C. and Wall Street.
How any of these individuals who cause such needless economic hardship can sleep at night beggars belief.
I hope for the USA’s sake, and that of the World that in 2012 your nation has a FDR moment, a re-awakening and major re-think.
Whilst by Western standards i may be poor, by these standards I’m wealthy.
I should not invoke religion, but may God bless America and punish all those who have had an hand in pauperising a once proud and great nation.
It remains frustrating to see how easily people get away with offering such bad analyses of the problems facing the US/Eurozone, and how utterly Orwellian the title of Hayek’s The Road to Serfdom is. By having a political class (and public sphere) responsive to the worries offered in it (and like books), we seem to be nearing the end of that road.
How is “Road to Serfdom Orwellian”?. Basic point centralization and growth in organization and state leads to citizens being serfs. Accurate. Think of u.s. cube rats working 50 hours per week to feed family and feed the tax man subsidizing the bankers.
But look at what’s happening now that that intuition has been widely adopted: while the government is withdrawing from areas like social security, medicare, affordable housing, student loans, education subsidization, etc., defense- and security-related spending has exploded. Yet expenditures in these areas would never be criticized by the people who are now chanting the down-with-big-government mantra.
And I suspect Hayek was quite aware of that.
Debating the application of the label ‘Orwellian’ seems rather pointless.
The point is kinda, despite all the cogent and well-informed points one can find in the Road to Serfdom, Hayek’s actual road also seems to lead to serfdom. So there’s that.
Reality. Theory. Not the same.
Yeah, competition works great, until it doesn’t. It’s a positive, until it’s a negative. It helps in some situations (which Hayek focused on) and hurts in others (which Hayek steadfastly avoided). Confirmation bias, my friend. Learn about it.
The Road to Serfdom was not a warning against socialism but a description of what you would be on were you to follow Hayek’s recommendations.
Get it?
Tao,
Read much Hayek? Clearly not! Get it?
Hayek’s thesis in “Road to Serfdom” was emphatically a denunciation of socialism!
See George Orwell’s review:
George Orwell on F.A. Hayek’s Road to Serfdom. “…Professor Hayek’s thesis is that Socialism inevitably leads to despotism…”
http://spiritualfreedom.me/george-orwell-f-a-hayek-road-to-serfdom/
IN LIEU OF HAYEK (mesiah to the neo-liberals, neo-cons, and libertarians –and especially the “Chicago School” of Milton (Trickle-down) Friedman, and includes followers: Alan Greenspan, Larry Summers, Robert Rubin, Tim Geithiner)
See Hayek’s contemporary, CARL POLANYI, and his contrasting book published the same year (1944): “The Great Transformation: The Political and Economic Origins of Our Time.”
Also, check out the work of Immanuel Wallerstein: “World-Systems Analysis,” especially “The Rise and Future Demise of the World Capitalist System.”
“..bailing out a leaky boat.” when the garboard sprung. Saw this at Jesse’s Cafe Americain this a.m.
http://www.practicaldad.com/index.php/article/450
Trial
Damn
Can’t post. Try tomorrow.
sine poena nulla lax, the government’s mentality and answer to guarantee all means no guarantees at all; seems the author gives us eventual, sound logic that applies to most forms of politically engineered situations and solutions regardless of the party. Just keep the natives happy and distracted while I run for reelection
The very premise of the “news” media is conflict – kind of like wrestling on pay per view. Its entertaining, but the important thing to know is who was decided to be the winner before the match.
What I would be curious is all the things repubs and dems agree on (or more accurately, agree not to even bring up). For example, they seem to be in lock step on bailing out banks, not enforcing mortgage laws (at least the part that forgeries submitted to courts are illegal), tax law.
“It is one thing to suspect that something is rotten in Denmark, quite another to have proof. Ever since Obama appointed his Rubinite economics team, it was blindingly obvious that he was aligning himself with Wall Street.”
Bahahahhaa! They paid for the election, come on.
Prediction:
A surprising number of you all are going to support Sarah Palin in taking the country back from the looters.
“Viator says:
Prediction:
A surprising number of you all are going to support Sarah Palin in taking the country back from the looters.”
No. Sarah Palin is one of the looters.
Prediction:
MMT will bring about the revolution against the Pathocracy.
If the banks are broke that means we are all broke and our creditors will come knocking on the door looking for a payment or looking to take our stuff.
Shhhhhh.
Our banks aren’t broke and our government is completely aboveboard and we all have jobs.
Repeat after me: Our banks aren’t broke and our government is completely aboveboard and we all have jobs.
If you repeat something often enough, people will believe it is true.
whoops@formatting
Just out of curiosity: do they correct for inflation, or is the 21% loss all-inclusive? Because it seems to me that over the course of 10-30 years, a 21% loss of value, while getting all of that leveraged money all at once in the present is very, very generous, even aside from the fact that a 20% haircut is fairly minimal.
“Failed banks should be resolved and their executives should be replaced by more realistically paid and publicly-focused professionals and their operations reoriented to public purpose. ”
Should be nationalized and their executives be replaced by public employees making pay grade 7 c that maxs out at 90k.
Indeed! If an Army General has to live on 180k, the public employee known as “banker” would in fact be well compensated at 90k!!!!
At this point, I just want to see one prominent banker take a perp walk; even without a conviction, consumer confidence would soar at the sight of blankfein or fuld in handcuffs. Dreaming? Sure. Thankfully those are free.
PLEASE dream bigger. I want to see lots of folks in jail or nothing will change.
I dream of Fannie Mae doing a metaphorical perp-walk.
Robert, you are indeed a gentle soul. My dreams of retribution are much more bloodthirsty.
Lets recall that the current constitution of the US was written to favor those with money (they were the folks there in Philadelphia). The convention happened after Shay’s rebellion in MA, where the courts were closed and people could not be put in jail for debts and taking over properties was stopped. Alexander Hamilton was all for the banking class (he was on of the first corporate bankers founding what is today Bank of New York Mellon). He created the first bank of the US and took over the state debts from the revolution. Then after the war of 1812 and the era of good feeling, the American System by Henry Clay was all in favor of bankers (the Second Bank of the US was created because of all the problems of financing the War of 1812 in 1816, Madison signed the bill).
So the federal government was created by the wealthy for the benefit of the wealthy. Recall that unless you held property at that time you could not vote (fixed in the Jacksonian period). John Adams felt that allowing all men to vote would be the downfall of the country as they would vote themselves bread and circuses.
So in essence this is the way the country has been run for most of the time since 1789.
Yves Smith worked for Goldman Sachs just as Rubin did. That’s how she has made money, by working for the banks. Why do you people actually think she is on your side?
That’s what I call a hypocrite!
“Prior experience includes Goldman Sachs (in corporate finance), McKinsey & Co., and Sumitomo Bank (as head of mergers and acquisitions). Yves has written for publications in the United States and Australia, including The New York Times, The Christian Science Monitor, Slate, The Conference Board Review, Institutional Investor, The Daily Deal and the Australian Financial Review.[Yves is a graduate of Harvard College and Harvard Business School.”
Oh noes. And to think: We never knew! And to see that it was there all along, hiding in plain sight. How humiliating!
From the bottom of my heart: Thank you.
Fun fact: did you know she also breaths air — again, just like Rubin, Paulson and Summers?
Hah. Excellent riposte.
Dear Foppe;
She also, sometimes, breathes fire! That’s when she’s the most fun to read! (As to the troll, he or she must have been raised on Murray Bowens theory of personality development. About as Calvinist as it gets, psych wise.)
Get a grip. It was my first real job, I was there for two years after business school, in the early 1980s. And BTW, new MBAs on Wall Street were decently paid back then, but it was well before the escalation of compensation that started in the mid 1980s. I joined in the middle of the markets-crushing Volcker-induced recession.
If you think two years of yeoman’s work nearly thirty years ago, back in the day when Goldman partners took home less that top heart surgeons would somehow make me a life long operative, you are really crazy.
Yves, you do not have to answer for anything. Your work on NC stands for itself. Trolls will be trolls, and as stated below, we read what you write and find it insightful, truthful, moral and fair. You are not a dogmatist and have extensive knowledge of the subject, and as I state above, you have a moral conscience and a true sense of what once made American capitalism a good thing.
I do not think she is on my side or whatever: I just read what she writes and, often enough, it makes sense.
Gee, Engels owned an industry! So?
Amen! Excellent piece.
Third Way doesn’t tell us anything we didn’t already know about the Democrats. It merely lends insight into how the kleptocratic talking points of elite Conventional Wisdom are transmitted to and among members of the Democratic party.
The Tea party has the Koch brothers. The Democrats have Third Way and other similar organizations.
Wash, rinse, repeat:
“Every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and trillions of dollars of the world’s wealth”
Third Way is a pseudo reincarnation of the old DLC since Frum got crosswise with the Obamaites. Interested that Gresser former head of DLC is now in some thing called Progressive Economy and is shilling for “free trade” and for Pharma under the guise of a non-profit. Same spice different bottles…..
Iranian deadbeats:
“In a significant escalation in the rhetorical battle against Iran, the U.S. Treasury Department Thursday accused Tehran of having forged a “secret deal” with Al-Qaeda to allow it to use Iranian territory to transport money and operatives to Pakistan and Afghanistan.”
Evidently, our policy elite don’t know what to do if the banks are broke – which of course they are and have been since the early 2007’s.
But does anyone know? Richard Koo seems to be most articulate on the need for fiscal stimulus. But all the usual vested interests (turn a battleship metaphor, here) prevent GOV from turning on a dime. So, absent an emergency like WW2, this is very hard to do.
My own two cents: Declare a payroll tax holiday. After all, SS and Medicare have trust funds. Let them run down a bit. Do that until unemployment starts to drop.
And note that, so long as the Fed holds the volume of paper that they do, they have the bankssters by the short hairs. The banks are effectively “nationalized”. So long as they owe the Fed $2T, there’s not much wiggle room for them.
Uh? The banks are effectively nationalized? How’s about, the federal gov has effectively been privatized. That’s effectively the reality.
assiosity.
Great post Yves… I hadn’t heard of the Third Way, kinda sounds like the new version of the DLC only worse.
My favorite line… “The authorities are playing Schrodinger’s banks.” LMAO… Schrodinger’s banks… I love it! I hereby nominate you for the most mahvelous Meme of the Month award :)
FDIC knows how to wind up a bank http://www.nytimes.com/2011/07/10/magazine/sheila-bairs-exit-interview.html?pagewanted=all. A government with balls and sense would be ramping that institution up like crazy and sending its execs overseas to set up deals with other governments.
The current situation reminds me of Briatains response to the rise of Hitler. Governments need to understand that their interests are directly opposed to the interests of the finance industry. Stop appeasing…prepare for war.
“Never has so much been paid by so many to so few”
Winston Churchill in Bizarro Land
Isn’t “the Third Way” another term for fascism?
I could be crazy (lol, that’s a given), but his post seems to have disappeared, unless I go to corrente or google cache to find the link.
So much time wasted on capitalist/socialist/fascist. The simple truth is the most powerful and wealthiest interests in the world are screwing the shit out of everyone else and this will end very badly for the great majority of us and possibly a few of them.
One truly wonders what is it going to take to eliminate the extreme power of the financiers and their seemingly limitless ability to infiltrate and take over the political apparatus.
Do we have to go through a real Great Depression 2.0? Or just witness a continual and unstoppable slide of this country toward militaro-financial fascism with its safari of misery, despair and repression?
To all the fuckers who work for these think tanks, PR firms and all components of these unproductive stealing “institutions”: Drop dead already!
Maju,
using the common ‘free world’ definition of communism [state ownership], it’s always necessary to ask who owns/controls the state. In the old Soviet Union that was – other than very few years – clearly not the working class or ‘the people’ but a party bureaucracy which could be seen as exploitive — the country was in many ways no more than a state capitalism.
There were though 2 or 3 years at the beginning during which the Bolshevik Party violently confronted what Lenin called an ‘infantile disorder’, i.e., actually self organized villages and workplaces. The wrong side won,,,and then even worse with Stalin who attempted to centralize the state into himself.
Beyond this extremely brief note, perhaps worth mentioning that the Bolsheviks misunderstood the reproduction schema in Vol. 2 of Capital, a misunderstanding that lead to excess weight being placed on production of fixed capital relative to means of production of consumption so exacerbated rural/urban tensions.
I pass of calling the USSR “communist” because whatever the initial ideology and whatever Brezhnev pretended (mere comedy) it never reached any sort of communist stage. Real Socialism is a much better label, even if debatable.
In my understanding the USSR had several problems, beginning by being in fact the product of what should have been a bourgeois revolution. Yet the bourgeois revolutions, like everything capitalist, was always manned by the working class and the direction that followed in the Soviet case surely indicates a growing self-consciousness as class and goals, which is at the worst part of a global process.
But the USSR was very effective in the Fordist period. They even thought then that they would overcome “the Capitalist side”. As soon as the World, or at least “the Capitalist side” entered Toyotism (which, oddly enough, was predicted by Marx in his posthumous manuscripts). At that point (c. 1968) the disciplinary mode of production became highly inefficient and the Soviet bloc, like the West, faced revolutionary movements (Prague 1968, I was born that night). Its rigidity impeded any reform, and when it finally happened, it was too little and 20 years too late and too sabotaged from inside.
It is Fascism.
Capitalism strives for efficiency.
Socialism is as inefficient as it gets.
Get it straight…Corporate Fascism runs America.
I know you haven’t heard the networks say it so it can’t be true.
“Capitalism strives for efficiency” is a silly idealization: Capitalism strives for private ever-growing profit and that some have claimed it produces efficiency (the “invisible hand”, never demonstrated) but it’s just a delusion.
Also Fascism is a Capitalist political system. But what you have in the USA is not Fascism, not yet: it’s an arguably degenerate (and arguably the same as always) variant of the ol’ good republic (or democracy).
Parliamentary Democracy was never but a show farce to forge consensus and rally the masses around the corporations, around the class dictatorship of the bourgeoisie. Today it is showing signs of aging and decay, as more and more people becomes aware of the farce it is and demands true democracy, i.e. one that is more directly participative, one where leaders and representatives are responsible for their acts as such representatives and “command obeying” as the Zapatistas say, and one that does not stop short of ruling in the economy as well, where all economic resorts are for the people, by the people and of the people.