Today marks the thirtieth anniversary of the Three Mile Island catastrophe. The event began in the late afternoon on March 28, 1979. The accident quickly became a trigger for the popular effort to suppress this form of energy production as plant construction declined significantly after the event.
Make a mistake, then repeat
The Obama administration has indicated that it will augment America's Afghanistan and Pakistan commitments, according to The Washington Post.
Obama plans to announce a "simple, clear, concise goal — to disrupt, dismantle and eventually destroy al-Qaeda in Pakistan," said… [an administration] official, one of three authorized to anonymously discuss the strategy. The president will describe his plan in a White House speech to a group of selected military, diplomatic and development officials and nongovernmental aid groups.
Yet, as Patrick Cockburn points out:
The US troop surge in Afghanistan can probably prevent further erosion of the Afghan government's position if enough troops are deployed and money spent. But there are limits to what the US can do. The Taliban is never going to be defeated so long as it has its bases in the Pushtun belt inside north-western Pakistan. Nor is it likely that the Pakistani military will act against the Taliban so long as it sees them as one of its few allies against India. American drone attacks on Taliban and al-Qa'ida within Pakistan may kill some leaders but further anger ordinary Pakistanis. The ISI may not directly control the insurgency in Afghanistan but it can determine its intensity. This in turn gives Pakistan leverage over the US to prevent the Americans going too far in supporting India.
One of the main achievements of the surge in Iraq was that it gave the US public the impression that a victory had been won which in turn allowed the Americans to agree to withdraw their forces. President Bush was able to sign a Status of Forces Agreement with the Iraqi government at the end of last year which included a timetable for a US pull-out which Washington had furiously rejected in the past.
The surge may play a similar role in Afghanistan. One of the main reasons for keeping American and British forces there is because it would be humiliating to withdraw. But the role of foreign military forces has always been ambivalent. They prop up the Karzai government but they also de-legitimise it as a puppet administration. Their use of firepower, originally designed for use against the Soviet army, against mud-brick compounds in Afghan villages means an inevitable flow of civilian casualties and builds support for the Taliban. And despite all these efforts Mr Obama says military victory is not feasible. The Americans are finding, as the British did in the 19th century and the Russians in the 20th, that the effort of keeping an army in Afghanistan is not really worth it.
Once again human beings will die so that Uncle Sam can save his face…
Amid plant closings and layoffs, some French workers have occupied their workplace, took a boss as a hostage while others took to the streets to display the anger with the current economic situation, according to reports (see, for instance, this).
Jake DeSantis has famously submitted his resignation because he concluded that AIG had betrayed him and every other employee now working in AIG's Financial Products group who never profited from the ill-fated credit default swaps that subsequently wrecked the company. DeSantis believes he has earned his bonus. And he has if his account of his AIG career is at all accurate. Yet, problems remain.
First, DeSantis should have his bonus but for the fact that his company is insolvent and remains in business mostly because the Bush and Obama administrations were willing to keep it out of bankruptcy court. Why ought the taxpayers reward him and others like him when he willingly participated in this dubious enterprise?
Second, was DeSantis aware of the dangers posed by these credit default swaps? If he was, did he blow a whistle? Did he indirectly profit from this activity (by working for a company that greatly profited from this activity)?
Third, let us not forget that the relevant events occurred in a capitalist economy — in the especially brutal American system, no less. Fairness would have as much bearing on the AIG bonus situation as it had, say, on the UAW members who were forced by the crisis and political hectoring to give back additional monies and benefits. Does DeSantis believe that these men and women deserve this fate in any way at all?
While I find it easy to feel sympathy for Mr. DeSantis' plight; I also believe that the wrong he has suffered at the hands of AIG and the public pales when compared to the despair and misery one can easily find throughout the world. It is a matter of proportion. The world has more pressing problems to address than the one made public by Mr. DeSantis.
According to a World Bank report:
Developing countries face a financing shortfall of $270-700 billion this year, as private sector creditors shun emerging markets, and only one quarter of the most vulnerable countries have the resources to prevent a rise in poverty, the World Bank said.
In a paper for next Saturday's meeting of the Group of 20 finance ministers and central bank governors, the World Bank said that international financial institutions cannot by themselves currently cover the shortfall — that includes public and private debt and trade deficits — for these 129 countries, even at the lower end of the range. A solution will require governments, multilateral institutions, and the private sector. Only one quarter of vulnerable developing countries have the ability to finance measures to blunt the economic downturn, such as job-creation or safety net programs.
A failure to respond may produce widespread conflict, according to the Guardian/Observer account of the World Bank's position.
The Wall Street Journal reports that:
The Texas Board of Education will vote this week on a new science curriculum designed to challenge the guiding principle of evolution, a step that could influence what is taught in biology classes across the nation.
The proposed curriculum change would prompt teachers to raise doubts that all life on Earth is descended from common ancestry. Texas is such a huge textbook market that many publishers write to the state's standards, then market those books nationwide.
"This is the most specific assault I've seen against evolution and modern science," said Steven Newton, a project director at the National Center for Science Education, which promotes teaching of evolution.
Texas school board chairman Don McLeroy also sees the curriculum as a landmark — but a positive one.
Drawing upon Hannah Arendt's famous analysis of Adolf Eichmann, the Nazi regime, the destructive potential a modern administrative system harbors within and, of course, upon the Holocaust as a manifestation of that destructive potential, Shoshana Zuboff contends that: "The economic crisis has demonstrated that the banality of evil concealed within a widely accepted business model can put the entire world and its peoples at risk." Indeed, it can, for how might one assess a deep global economic crisis but as an systemic event that puts millions — if not billions — at risk? What also might one say about those individuals, groups and organizations responsible for the crisis? Zuboff continues by asking:
Shouldn't those businesses be held accountable to agreed international standards of rights, obligations, and conduct? Shouldn't the individuals whose actions unleashed such devastating consequences be held accountable to these moral standards?
I believe the answer is yes. That in the crisis of 2009 the mounting evidence of fraud, conflicts of interest, indifference to suffering, repudiation of responsibility, and systemic absence of individual moral judgment produced an administrative economic massacre of such proportion that it constitutes an economic crime against humanity.
Zuboff fails to provide a remedy for these crimes which were so neatly woven into the fabric of the modern world that they became perceptible to common folk long after the disaster began to snowball. This absence is unsurprising since the blame for the crisis properly extends to individuals, organizations and groups worldwide. We live in a globalized and globalizing world. The key problem: How might so many with so much power be brought to justice? The task is daunting. Yet parsimony in practice is possible. This potential derives from the fact that the major portion of the blame for the latest crisis falls upon the putative "masters of the universe." They earned this blame because with power comes responsibility. It is for similar reasons that countries like Great Britain and the United States deserve a special share of the blame since "[t]he use of force to configure a 'liberal' world economy (as Marx and Later Rosa Luxemburg argued) is what Pax Britannica [and later Pax Americana] was really about," according to Mike Davis (295). It is undisputable that the Western imperial powers gave shape to the modern world. Consequently they should at least be assigned responsibility for the world they have created and from which they have taken so much.
Frank Rich latest column for the New York Times believes that President Obama now faces just this situation:
A charming visit with Jay Leno won't fix it [Obama's legitimation problem]. A 90 percent tax on bankers' bonuses won't fix it. Firing Timothy Geithner won't fix it. Unless and until Barack Obama addresses the full depth of Americans' anger with his full arsenal of policy smarts and political gifts, his presidency and, worse, our economy will be paralyzed. It would be foolish to dismiss as hyperbole the stark warning delivered by Paulette Altmaier of Cupertino, Calif., in a letter to the editor published by The Times last week: "President Obama may not realize it yet, but his Katrina moment has arrived."
Requires a thorough housecleaning
Why must Americans begin their world anew? It is because disaster looms, David Lindorff believes:
The actions of Obama's Chief Financial Adviser Larry Summers and his Treasury Secretary Tim Geithner in permitting the payment of $165 million in bonuses to AIG executives (Summers, according to the Wall Street Journal, actually pressed Sen. Chris Dodd, D-CT, to secretly remove a bar to the payment of such bonuses from the bailout bill) and the storm of public outrage that has followed public disclosure of those payments, provides President Obama, whose administration is stumbling badly on many fronts, to turn things around and avoid political disaster.
His advice to the President:
He should promptly demand Geithner's and Summers' resignations, and should also fire the CEO of AIG, Edward Liddy (as 80% owner of AIG, the US has the power to do that anytime). It would also be a good idea at the same time to fire the CEOs of all the leading banks that are at this point surviving on government bailouts.
This would allow Obama to correct the fundamental mistake he made during the transition period following the November election in installing a bunch of Clinton-era economic advisors and Bush holdovers to be his economic team.
The reason Obama should make the about-face:
The US economy is in disastrous shape, and it is going to take new ideas, and people untarnished by the last 30 years of deregulatory excess and unsavory links to Wall Street, to rescue it.
A realistic optimism?
But if these are near-to-the-end times, when social change risks being "too late," as our new president repeatedly emphasized in a brilliant campaign speech that quoted Martin Luther King Jr. from 1967, then we must be as forthright about the need for disorder ("raise less corn and more hell") as were our populist and socialist ancestors.
From my point of view, this [effort to more hell and less corn] starts with the recognition that there are no realistic solutions to the current planetary crisis. None. A peaceful, just-in-time transition toward low-carbon, rationally regulated state capitalism is about as likely as a spontaneous connecting-the-dots of neighborhood anarchism across the world. Simply extrapolating from the present balance of forces, one most likely arrives at an equilibrium of triaged barbarism, founded on the extinction of the poorest part of humanity.
I believe that socialism/anarcho-communism — the rule of labor upon and for the earth — remains our only hope, but the necessary epistemological condition for serious strategic and programmatic debate on the left is a rising global temperature in the streets.
I find it difficult to disagree with Davis' position. If the moves made by the early Obama administration have made one thing plain to anyone with the eyes to see, the United States will stay with the neoliberal and imperial courses unless prodded by authentic protest from below or destroyed by the world it has led into being. That world is one that has given itself over to the massive resource use and abuse that has characterized each modern economy since the 1800s. And the future, more specifically, the future we are likely to have given our current situation, looks and probably will be a miserable one — a new Dark Ages or worse — if the world refuses to take the measures needed to mitigate the disaster.
What makes Davis' lament optimistic? He clearly believes a better future can be won through struggle.
The AIG mess
Alexander Cockburn believes the Obama administration now courts serious trouble. The highlight of his account:
Rough though the week has been, there is a silver lining for the White House. It stems from the very word that has landed Obama and his team in such trouble — "bonus". A bonus is something people can relate to. You hope to get it at Christmas. It's a reward for working hard. You don't give bonuses to thieves and deadbeats. Yet at the same time as the uproar over $165 milion in bonuses is in full spate, Obama has approved bailout of AIG to the tune of about $200 billion, much of it passed on to the infamous "counterparties" like Goldman Sachs and foreign banks.
Among those who have pointed this out is former New York governor Eliot Spitzer, who contributed an acrid column to the Slate website. It's his first surfacing since he was politically destroyed in a sex scandal, certainly contrived by major Wall Street players, worried that when the roof fell in — as it did — he would be telling his attorney general to issue indictments. The fact that Spitzer feels secure in entering public life again, lashing the Wall Street gangsters, shows how vulnerable Obama and his administration are to charges that they have no serious plan beyond bailing out the big Wall Street banks, and no intention of asserting control of the assets they substantively own, by formally taking them over. Obama is dancing on the edge of a volcano.
Gallup recently asked Americans whether policy should favor economic growth or environmental protection. In a unique shift, the majority chose economic growth, presumably because of the economic crisis.
The dilemma is false because it excludes the "environmental protection as a basis for economic growth" option.
March 19-20 is the anniversary day of Iraq invasion. It was six years back that the United States began its shock an awe campaign that has directly benefited only the most gruesome predators in the United States and Iraq.
Across Connecticut, anger is erupting against Mr. Dodd, the chairman of the Senate Banking Committee, whose stature in Washington once reflected the state's beneficial ties with the financial industry. Now, he finds himself a symbol of the political establishment's coziness with tainted corporations and a target of populist wrath over their excesses.
A reversal like this can happen and should be expected when a powerful and well-known politician appears to have aided corporate looters while most of his or her constituents suffer through an economic crisis.
On Thursday, the senator sought to defuse the furor over the latest revelation, holding a conference call with reporters to explain how legislation meant to limit executive compensation was changed at the last minute. That change exempted bonuses protected by contracts, like those at American International Group, a big campaign contributor to Mr. Dodd that received billions in federal bailout money.
Some of Connecticut's citizens were unimpressed by Dodd's excuse:
In dozens of interviews, residents said they were appalled by Mr. Dodd's ties to financial firms and believed that he had damaged himself as he prepares to run for re-election next year.
It remains to be seen whether this backlash moment has the staying power needed to undermine Dodd's 2010 reelection efforts.
E.J. Dionne writes:
We are at the beginning of a great popular rebellion against those who showed no self-restraint when it came to lining their own pockets. Their entitlement mentality arose from an inflated sense of their own value and of how much smarter they were than everyone else.
The sound you are hearing in response to the AIG payoffs — excuse me, bonuses — is the rancorous noise of their arrogance crashing to earth.
Yet there is much hand-wringing that this populist fury is terribly perilous, that the highfliers who could not control their avaricious urges have skills essential to repairing the damage they caused in the first place.
Beware populism, we are told. Honor those AIG contracts. Forget about any moral reckoning and just fix the economy.
This view is wrong on almost every level, especially about populism. Of course not all forms of populism are attractive. But as historian Michael Kazin argued in "The Populist Persuasion," the "language of populism in the United States expressed a kind of idealistic discontent" and "a profound outrage with elites who ignored, corrupted and/or betrayed the core ideal of American democracy."
Is this not an entirely appropriate reaction to elite decisions dating to the 1980s that ultimately ran our economy into the ground?
This will be John Beddington's publicly announced judgment, according to a BBC report (the link comes via Naked Capitalism). The target date for the storm: 2030. The causes are now well-known: Resource depletion due to increased usage of goods in limited supply, population growth and escalating global warming.
A tidal wave of public outrage over bonus payments swamped American International Group yesterday. Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all.
"It's a mob effect," one senior executive said. "It's putting people's lives in danger."
During his House testimony today (3.18.2009), Edward Liddy, AIG's CEO, stated that "…he had asked some recipients to give at least half the money back," according to the New York Times.
According to the Washington Post:
The firestorm over bonuses paid by insurance giant American International Group has triggered alarm at other financial firms, threatening federal efforts to draw private investors into economic recovery programs.
A senior executive at one of the nation's largest banks said he had heard from several hedge funds that they would not partner with the government for fear that lawmakers would impose retroactive conditions on their participation, such as limits on compensation or disclosure requirements.
Other firms want to bide their time to see how early participants in the rescue programs are treated before they decide whether to sign up, said the executive, who spoke on condition of anonymity.
Briefly put, it appears that America's rentier capitalists will take the government's money when it comes without strings attached. But they will think twice about taking this money when it comes with these strings. I find their reluctance odd, however. Are we to believe that they and their agents would rather have their firms made bankrupt by the crisis than to bind themselves to rules requiring transparency, personal integrity and fiscal probity? I ask because bankruptcy is a probable alternative for some of these companies. If my conjecture is true, if they prefer firm failure to governmental oversight and regulation, then those rentiers staffing companies facing destruction simply do not care how greedy and vicious they appear to the rest of the country while those who work at firms that can survive the crisis seemingly wish to engage the Obama administration in a game of chicken in order to gain an advantageous position from which to exploit the crisis for their personal advantage. Both possibilities are outrageous and ought to draw a firm response from the Obama administration.
Yves Smith of Naked Capitalism concisely identifies a reason for its significance:
I agree, as others have said, the bonus affair seems overdone, but on another level, it makes perfect sense. Intuitively, the public knows the execs and troops of the big financial firms were overpaid in recent years since the earnings were overstated, due to phony accounting and insufficient loss reserves. They can't get that money back, but the idea of even more going out the door, even amounts small relative to the bailouts, now that the companies are bust, is offensive.
What likely offends most common folk is not the size of the AIG bonuses per se. Nor is it their size when compared to the bailout payments the government has already made to AIG. Rather it is likely the size of these bonuses when compared to the job compensation most Americans enjoyed even in the best of times. Obviously few feel secure in the midst of a crisis. It appears to these individuals that AIG's executives got the lion's share of the rewards from the destruction of this company but have suffered little from their catastrophic mistakes. Nor, for that matter, will these well-compensated executives need to personally manage the risks generated by the AIG bailout. Their wealth can save them from a bad fate if they are prudent. The risks will mostly fall upon the taxpayers of the present and the future. Most American taxpayers are not well-compensated and will not be so any time in the future if the current crisis is a manifestation of America's secular economic fate.
The compensation matter poses, then, a question of justice (what share of the burdens must be given to these executives if justice is to be served), on the one hand, while it presents the world with an instance of a class-specific injury (the exploiters accumulate and the exploited suffer because of this accumulation). It ought to be interpreted as a path that leads to more pressing political problems and not to the pressing issue of the moment.
According to the New York Times:
The bonuses that the American International Group awarded last week were paid to 418 employees and included $33.6 million for 52 people who have left the failed insurance conglomerate, according to the office of the New York attorney general [emphasis added].
Retention bonuses were paid to employees who were not retained!
The story briefly put:
Iowa Sen. Charles Grassley suggested that AIG executives should take a Japanese approach toward accepting responsibility for the collapse of the insurance giant by resigning or killing themselves.
But why would the Senator wish the disgraced AIG executives would die with their honor restored?
The target of Kuchinich's proposed investigation according to the Cleveland Plain Dealer (see also this): The Bush administration's "executive assassination group," the existence of which came to light during a recent talk by investigative Seymour Hersh.
Hersh made his allegations public during a question and answer session that followed a panel discussion which had America's Constitutional crisis as its topic.
Kucinich made his request for an investigation into Hersh's allegations in a letter he just sent to the House Committee on Oversight and Government Reform.
In an article appearing on the Huffington Post (a link appears on Naked Capitalism), William K. Black, Thomas Ferguson, Robert Johnson and Walker Todd offer a practical solution to the AIG bonus outrage. Their plan:
- "…[T]he US trustees in charge of the firm [AIG] must immediately instruct the corporate treasurer to make no payments of any bonuses. They also need to order him to issue stop payment orders on any checks that fly out the door at the last minute, as with Merrill Lynch."
- "…[T]he trustees need to split off the derivatives unit from the rest of the firm and separately incorporate it. This step leaves AIG's other businesses free to operate as usual. If the recipients of the bonuses refuse to waive them, then the derivatives unit should at once be thrown into bankruptcy, terminating all obligations to pay them."
- "AIG CEO Edward Liddy, accordingly, should be asked to resign at once, for the sake of public confidence and to send a clear signal that gaming the system is unacceptable."
- Investigate "…the validity of AIG's past accounting and securities disclosures and its executive compensation program…." "…[T]he Office of Thrift Supervision, the Securities and Exchange Commission, and the FBI" can perform this investigation.
Rachael Corrie was an American citizen and peace activist who died in 2003 while attempting to prevent an Israeli Defense Force bulldozer from destroying a Palestinian home.
Yves Smith of Naked Capitalism addresses once again the AIG bonus scandal. This time she extensively quotes from her email correspondence with William Black, a professor of law and economics at the University of Missouri-Kansas City. Given Professor Black's past work on the Savings and Loan crisis, his take on the AIG scandal is worth considering and reproducing in full:
This [the AIG situation] is the consequence of six things on the Treasury end of things:
(1) the failure to use Chapter 11 bankruptcy/pass-through receivership to deal with deeply insolvent financial institutions
(2) the failure to expose, and to the extent possible, remedy through restatements the massive accounting fraud that AIG was/is engaged in that triggers the bonuses
(3) the failure to bring criminal charges against the control frauds
(4) the failure of Treasury as negotiators — they had all the leverage when they bailed out AIG and could have conditioned the aid on at least the VP tier and above giving up their bonuses
(5) the weakness of Treasury's current lawyers who, if press reports are accurate, couldn't think of any way for the U.S. government to take effective action against what it reportedly views as a scandal,
(6) (and I haven't seen this discussed) why was Treasury blind-sided by this? It confirms that they did not conduct even the most obvious due diligence on AIG's assets and contingent liabilities
Given what we know about the lack of due diligence by AIG on underlying assets, particularly nonprime paper, this confirms exactly how dangerous Treasury is to the the nation. It is also consistent with the concern that it faces such a critical staff shortage, particulary [sic] in the relevant skills (which the folks it hires from Wall Street lack). I doubt that they have five senior officials that have ever reviewed loan files for a living or conducted meaningful due diligence (which requires cracking the loan files).
On the AIG end we see the perverse incentives of keeping the senior level folks on that caused the crisis. They have every incentive not to be honest about the true extent of the losses. They know the place is dead (hopelessly insolvent) and have strong incentives to loot the corpse, e.g., through bonuses. They do not alert Treasury sufficiently in advance even to bonuses that they should know will be perceived as scandalous (though another problem with keeping these failed elites in power is that they are clueless about the reaction of normal people). They do not work to limit bonuses, e.g., by being honest about past accounting fraud. I believe when the facts come out that we will find that they did not make criminal referrals on the prior senior officials that led AIG's accounting fraud (which would have given AIG and the Treasury a far stronger legal basis for refusing to pay bonuses that were "earned" via accounting control fraud.
I don't oppose bonuses that are actually earned through long term performance. That is not the case with the AIG bonuses. We can offer well designed performance pay if we use bankruptcy or receiverships.
Fraud and looting, dissembling and the force majeure now exercised by American finance capital — these are becoming the significant and blatantly outrageous features of the AIG bonus scandal.
The New York Times reports that:
President Obama vowed to try to stop the faltering insurance giant American International Group from paying out hundreds of millions of dollars in bonuses to executives, as the administration scrambled to avert a populist backlash against banks and Wall Street that could complicate Mr. Obama's economic recovery agenda.
Lest we forget, the federal government now owns about eighty percent of AIG. But will this fact matter? How could have this situation come about in the first place? After all, as Glenn Greenwald makes clear:
The only way a company like AIG throws up its hands from the start and announces that there is simply nothing to be done is if they are eager to make these payments. One might expect AIG to do so — they haven't exactly proven themselves to be paragons of business ethics — but the fact that Obama officials are also insisting that nothing can be done (even while symbolically and pointlessly pretending to join in the populist outrage over these publicly-funded "retention payments") is what is most notable here.
More pointedly, as the Razor's Edge wonders: "How did the AIG executives expect to sneak this by the media and angry taxpayers?" Can the AIG people be that clueless? Or did they expect the Obama administration to provide the political coverage they needed to further loot this company?
A debauched currency….
W Joseph Stroupe speculatively addresses the fate of the dollar as the world's one hard currency. The danger, according to Stroupe:
Increasingly ominous clouds are gathering in what could soon be the perfect storm against the United States dollar and against the present dollar-centric global financial order.
This is not shaping up to be a storm that anyone is trying to initiate, not even those who are actively driving for a new global financial order that is no longer centered on the dollar. Instead, it will result from a correlation of forces arising out of the deepening global financial and economic crises, coupled with recurring and conspicuous miscalculation on the part of some of the world's political, financial and economic leaders.
The storm has the potential to cause upheaval on a grand scale, opening the door to swift, and largely uncontrolled, fundamental transformation.
As is widely recognized, the present financial order that is inordinately reliant on the US dollar must some day [sic] give way to a new order that is more balanced, stable, resilient and reliable, one that is based on multiple currencies and that therefore won't be plagued by the extremely dangerous structural drawback of an increasingly worrisome elemental single point of failure (the dollar).
But if the current dollar-centric financial order should become more seriously shaken than it already has been, perhaps even suffering a collapse, as a casualty of the present deepening global crisis, then the transition to any new global financial order is most likely to be disorderly, disruptive and unmanageable rather than gradual and orderly.
We can hope — but cannot be at all confident — that world leaders and global investors will act coherently, cohesively and intelligently enough in this crisis so as to ensure that the policies and actions being undertaken will not put at further serious risk the fundamental structure of the current dollar-centric financial order, and that they will instead be effective in bolstering deteriorating global confidence in the present order and in the safety of the dollar, at least until we get through this crisis.
Unfortunately, we cannot be confident that world leaders know what they are doing in seeking to resolve the crisis. Are their measures attacking the heart of the problem, or only its periphery? Are they exacerbating the crisis, either by enacting certain misdirected measures, or by failing to enact certain required measures? Are they setting up conditions that make a dollar crisis and radically increased financial upheaval virtually inevitable, by blindly pushing ahead with a simplistic agenda of trying to spend their way out of the present crisis?
If the dollar is being put at significant short- and medium-term risk by such measures, then we're seriously risking plunging the global financial order into a depth and breadth of transition that we cannot adequately control.
According to a New York Times report: "The Obama administration is increasingly concerned about a populist backlash against banks and Wall Street, worried that anger at financial institutions could also end up being directed at Congress and the White House and could complicate President Obama's agenda." No one should be surprised that the White House publicly raised these concerns soon after Edward Liddy of AIG set Timothy Geithner straight on the pecking order which now governs the world (the prerogatives of rentier capital are superior to those of the tax-paying public and its institutions) and after a sizable part of America applauded Jim Cramer's humiliation at the hands of Jon Stewart. As a matter of fact, the financial elite and its abettors may have found the Cramer interview especially troubling, for as John Nichols of the Nation points out:
The Comedy Central host hit the nail on the head when he accused the CNBC host of pitching "snake oil as vitamin tonic."
That isn't the sort of talk bankers and brokers are used to hearing. It frightens them — not because it isn't true, but because the great mass of Americans aren't supposed to be let in on the secret.
Indeed, why would the "masters of the universe" wish to be exposed as mountebanks and grifters? They would not, of course, and presumably believe little or no good can come from the current political situation.
When considered together, the AIG bonus scandal and the Cramer incident point to what currently looks to be a budding legitimation deficit the Obama government must master or suffer the consequences due to its failure to master. What is a legitimation deficit? Simply put, the term refers to the inability of a polity to satisfy a common sense of what is just and natural. It reflects an experience that something has gone wrong and is thus unacceptable to those who suffer it. Given the existence of these experiences along with their systemic correlates, a legitimation deficit can motivate individuals and groups to withdraw their support from a government. Americans could learn about this first hand during George W. Bush's second term. But that is not the whole of it. More importantly, a legitimation deficit refers not only to a potential withdrawal of support from a sitting government; it also implies a possible lack of support for the systemic conditions which originally brought the deficit into being. Thus the now frequently made claim that the global economic crisis destroyed political-economic ideologies such as neoliberalism, Reaganomics, market fundamentalism, etc., ideologies which informed the policies and developmental tendencies responsible for the crisis. Much like Marxist-Leninism after 1989, these were "falsified" by 'reality,' so to speak. Briefly put, then, a legitimation deficit forewarns that a system crisis is in the making. It suggests the actual or possible presence of a dangerous political threat.
Naturally the Obama administration would view the potential for such popular outrage with great concern. And it should worry about an authentic backlash originating from below since the development of a critical, angry and growing counter-public could undermine the administration's plans to implement its program, which is to say, to better manage America's empire, to ensure a domestic and international stability that conforms to America's perceived interests and to take wealth from current and future American taxpayers and transfer it to Wall Street, the security apparatus and the defense industry. Furthermore, the template for this potential undermining work has already been forged, tested in the real world and proven successful. This happened directly before and after the first House vote on the outrageous Paulson bailout.
To be sure, candidate Obama supported this horrible bill even though he claimed then that the pending bailout would not provide a "blank check" to the recipients of the bailout money. Yet his 'qualified' support failed to reassure many Americans, and rightly so, as it turns out. Their response to the Paulson-Bush program: They inundated House members with calls, emails, letters, etc. that conveyed their disgust with the bailout as it then stood. The House initially responded to this unstructured but meaningful political communication by voting down the bailout bill! Briefly put, it can be said that an aroused citizenry willing to make its voice heard forced the House to pull hard on the legislative brake handle! This victory — and it was a victory for democracy and justice as well as for fiscal sanity and sound government — gains in significance when one considers the fact that the House is the national and elected body which has the deepest roots in America's civil society. It is due to these comparatively deeper roots that the electorate can hold the government accountable with less effort than it would need to expend on the Senate or on the executive and judicial branches. This specific House vote thus reflected the potential power of public opinion and democratically inspired collective action.
If one keeps in mind the fate of Paulson's insult and, more importantly, the swift decline of the Bush administration and the GOP in general since the 2004 presidential election, it becomes clear that President Obama and his political advisors cannot reasonably suggest that he was, is or will be unaware of what "the people" think about the crises of the day and those institutions responsible for their existence. Nor can the current administration complacently believe that they possess the political resources needed to finesse the crisis and an irate public. Barack Obama might be as charismatic as he seems; but charisma can take him only so far. He must eventually — soon! —make a gesture that addresses the economic crisis and the effects it is having on a now threatened citizenry. He must give America at least the appearance of a rational response to the crisis. This was the promise made known to everyone by the initial and collective response to the Paulson bailout and, more importantly, to the failures of the Bush regime. It is a promise that originated in the sense that the American way of life as most Americans know it will no longer exist.
I believe it would be prudent to believe that the presence of this populist promise also worries the remainder of America's national elite. They may worry simply because they can reasonably expect to find this once politically docile nation ungovernable and illegitimate, bankrupt and defenseless, jobless and hungry, fearful and bitter at the betrayals it has suffered at the hands of this selfsame elite. Put differently and succinctly, it can be said that the present moment includes a possible future defined by a destructive state-society clash. If it does, the economic crisis and the Obama government's response stand as just another marker on a path that may end with an American dictatorship. Clearly the Obama administration and others belonging to the elite are not the only groups that need to worry about the future.
Writing for TomDispatch, Robert Dreyfus reviews the Charles Freeman incident and assesses its significance for American politics. He suspects — and rightly so — that Freeman's "defeat" at the hands of the Israel Lobby may have been the Lobby's "Waterloo."
Josh Marshall of Talking Points Memo believes AIG chief executive Edward Liddy humiliated the Obama administration when he decided to pay what are unjustified bonuses to AIG executives.
MSNBC's Rachael Maddow provides her take on Stewart vs. Cramer:
The dollar a nanosecond men and women
According to the New York Times:
The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year.
We are what we do
According to a recent Bloomberg report, the future looks grim for many children now living in California:
California teachers organized protests in more than a dozen cities today as about 26,000 may lose their jobs because of spending cuts the Legislature approved last month to keep the state from running out of money.
School districts across the most-populous U.S. state have been warning thousands of teachers that they may be fired as a result of California's declining tax collections. The plan signed by Governor Arnold Schwarzenegger last month cut $8.4 billion from schools and community colleges out of $15 billion trimmed from state spending through June 2010.
It seems that the Obama stimulus lacks the funds needed to educate well the young. Yet America certainly has money to fund those things the Obama government considers important. For instance, the New York Times reports that:
The protracted wars in Iraq and Afghanistan are forcing the Obama administration to rethink what for more than two decades has been a central premise of American strategy: that the nation need only prepare to fight two major wars at a time.
This is an odd response to the current situation. It is strange because one might expect that failures of this degree and number would motivate the Obama administration to abandon the militarism which generated the debacles. Why, one might ask, given the failures in Iraq and Afghanistan, must the United States consider fighting two or more major wars at any given time? Why has the supposedly realistic Obama administration chosen to deepen its commitment to war-preparation and war-making? What enemies does America have that the country must always plan for war as well as to muster the will needed to make war anywhere in the world? As it turns out, every country and nearly everyone is a possible enemy:
"We have to do many things simultaneously if our goal is to remain the ultimate guarantor of international security," Mr. Donnelly [a policy 'expert' at the American Enterprise Institute] said. "The hedge against a rising China requires a very different kind of force than fighting an irregular war in Afghanistan or invading Iraq or building partnership capacity in Africa."
The United States of America — "…the ultimate guarantor of international security...." This pretentious assertion, one that emerges so easily from the mouths of many right-wing ideologues, concisely expresses the utter madness one can find these days in Washington, DC. The idea comes by its insanity with comparative ease since the United States currently guarantees no one's security, is effectively bankrupt and loses most of those wars it chooses to fight. America is, in fact, the major source of the insecurity which saturates the world today. The global presence of this threat, a threat which originates in Washington and serves the interests of the American elite, is just one legacy of the Bush regime's totalizing militarism, a governmental style the Obama administration has yet to repudiate.
In any case, it ought to be clear that, when it comes to spending to maintain America's empire, neither major party would fail to sacrifice military effectiveness in order to provide for the well-being of the children they allegedly represent.
According to the New York Times:
The Chinese prime minister, Wen Jiabao, expressed unusually blunt concern on Friday about the safety of China's $1 trillion investment in American government debt, the world's largest such holding, and urged the Obama administration to provide assurances that the securities would maintain their value in the face of a global financial crisis.
How might President Obama credibly assert that China's bonds will maintain their value throughout the current crisis? He cannot, of course. By definition a riskless investment does not exist. Perhaps the prime minister is playing an assurance game by seeking to promote trust and cooperation between two countries that have much to lose if economic crisis takes a turn for the worse.
Cramer vs. Stewart
Howard Kurtz of the Washington Post thus characterized the latest round of this "epic battle":
Jon Stewart wasn't trying to be funny.
Jim Cramer wasn't trying to be obnoxious.
The result was riveting, if not particularly hilarious, television, with Stewart dominating all the way.
Yves Smith of Naked Capitalism asks:
Why is it that the Daily Show is the only media outlet calling out CNBC on its, how shall we put it politely, less than stellar moments?
Alessandra Stanley, writing for the New York Times, dismisses Stewart by comparing him to a Congressional grandstander with a messianic streak:
Mr. Stewart treated his guest like a C.E.O. subpoenaed to testify before Congress — his point was not to hear Mr. Cramer out, but to act out a cathartic ritual of indignation and castigation.
"Listen, you knew what the banks were doing, yet were touting it for months and months, the entire network was," the Democratic Senator from Comedy Central said. "For now to pretend that this was some sort of crazy, once-in-a-lifetime tsunami that nobody could have seen coming is disingenuous at best and criminal at worst."
Congress has — belatedly and showily — gone after the leaders of banks, auto companies and insurance companies for their complicity in the financial meltdown. Mr. Stewart has always had a messianic streak to his political satire, as when he ripped into Tucker Carlson and Paul Begala on "Crossfire" for "hurting America." He is now focusing on business news cable networks like CNBC, which not only failed to foresee the credit crisis, but, in his view, sided with the bankers and helped inflate the bubble.
She concludes with this gem: "Mr. Stewart kept getting the last word, but Mr. Cramer may yet have the last laugh."
Readers may judge the quality of the interview for themselves by watching the unedited version:
In an essay that discusses America's compelling desire to jail its citizens, its commitment to prison privatization (profit taking from incarceration), the decadence of its judicial-political system (reflected in the replacement of the rule of law with the rule by law) and the use it makes of servile prisoner labor (profit taking from servitude), Chris Floyd concludes with this warning:
As the economy craters around the world, governments and their servitor intellectuals are sounding clarion calls about a coming tide of "unrest" amongst the newly pauperized rabble. This is to be met not with sensible economic policies designed to rectify the vast imbalances, injustices and virulent corruption of the sweetheart-deal world, but instead with multitrillion-dollar bailouts of bankers, venture capitalist and privateers — and with "contingency plans" for "security operations" to keep the rabble in line. The jails, prisons and detention centers will soon be full to bursting with those forced into petty crime by need and desperation — and with anyone who dares to venture outside a specially designated, often fenced-in "free speech zone" to protest the continuing greed of the elite. Meanwhile, the failed Drug War keeps on raging, doing nothing to stem the flow of narcotics but enriching a few people immensely, and providing justification for an every-expanding array of draconian police powers that too many states find too useful to give up now. So there will be no end of backroom operators and government frontmen ready to work their correction connections to squeeze money from this rising tide of human suffering.
Anthony Giddens future-gazes
To have a revolution means replacing one social system (or subsystem) with another. What aspect of modernity does Anthony Giddens, a much celebrated sociologist and social theorist writing for a popular audience in the Guardian, believes to be on the skids? We are witnessing, he claims, "…the demise of the fossil-fuel economy."
If Giddens is right about this, if the world is now entering an epoch that will be characterized by diminishing fossil–fuel use, one obvious and possible benefit would take the form of securing the long-term survival of life on the planet, a possible future which a resource-wasteful modern economic system has already made uncertain. Fossil fuel use is, as many have come to accept, a key source of the pollution which drives the global warming which threatens life on the planet. The present moment may be dire, but it contains a real opportunity, namely, to replace an unsustainable social system with one that could endure. Another benefit, paradoxically enough, would be the economic renewal this revolutionary transformation would require. Considered thusly, it would count as a beneficial instance of Schumpeter's creative destruction.
On the nitty-gritty side, one major concern has to be jobs. A climate change new deal will create new jobs, its proponents argue. I'm not so sure, if by this they mean net jobs — that is to say, larger numbers than existed before. As more energy is produced from low-carbon sources, and energy efficiency increases, some workers in the fossil fuel industries, like coal mining, will be put out of work. Most forms of technological innovation reduce the need for labour power.
Naturally, a transformation of this kind and magnitude would also radically change the modern form of everyday life:
Jobs will be created not so much through renewable technologies themselves, but through the lifestyle changes that coping with climate change and energy security will bring about. The emerging economy will be even more radically post-industrial than the one we have now.
Less can be more, Giddens suggests. Less carbon use can provide the basis for a better form of modern life than the kind known since the advent of modern industrialism. Giddens thus proposes consciously and qualitatively altering this everyday life so that those fated to live it can also enjoy a greater degree of well-being than they had beforehand. But this new life would not be one that depends upon the astonishing resource-use and, to put it bluntly, waste typical of modern industrial economy. The current situation has revealed that growth for the sake of growth is irrational:
Pondering what form recovery from recession should take must cause us to think seriously about the nature of economic growth itself, at least in the rich countries. It has been known for a long while that, above a certain level of prosperity, growth does not necessarily lead to greater personal and social welfare. Now is the time to introduce more rounded measures of welfare alongside GDP and give them real political resonance. Now is the time for a sustained and positive critique of consumerism which can be made to count politically.
The market fundamentalist scourge has been routed, Giddens avers:
The period of Thatcherite deregulation is over. The state is back.
… Now is the time to work out how to ensure that recovery does not mean a reversion to the loads-of-money society.
Complex financial instruments are out of fashion, blamed for the economic collapse. Yet we will have need of them again because, properly regulated, they are often the key to long-term investment, rather than a force against it.
And this fundamentalism must remain defeated if the human life is to survive and even thrive:
Both economic institutions and climate change and energy policy will need active planning, though the mistakes made by previous generations of planners have to be avoided.
Although it seems ironic to do so, we may give thanks for the global economic crisis for this emerging opportunity, Giddens' concludes:
The financial crisis and its aftermath have given a jolt to established ways of thinking that could and should prove massively important. We're at the end of the end of history.
This is Andrew Como's latest assertion about the defunct bank, according to the New York Times (the link comes via Naked Capitalism). The looting in question took the form of bonus payments taken by Merrill Lynch employees just before the Bank of America acquired the troubled investment bank. And, as Yves Smith of Naked Capitalism emphasizes, the Times story also reports the Como allegation that Merrill Lynch employees cooked their books to gain these bonuses:
"It appears that some of these losses may have been booked by Merrill employees who marked down their portfolios only after their 2008 bonuses were set," the attorney general wrote in the filing. "Despite the gargantuan unexpected losses, Merrill did not reconsider its bonus awards" and Bank of America did not request or demand that Merrill reduce its bonus pool, he wrote.
A second Times story indicates that the Obama administration will adopt an aggressive and, perhaps, coordinated strategy in this area. Momentum for a legal approach to the crisis and its sources has been building since last fall (see this, this and this).
You think they would have learned from Stewart's Tucker Carlson putdown….
Because protests and riots have already appeared across the world, events that undoubtedly were responses to the economic crisis and its social effects, José Miguel Alonso Trabanco wrote the following about the United States:
For decades, overall political stability in the US was taken for granted. However, as it has been pointed out, even senior American statesmen are taking into consideration that financial volatility could fuel a wave of discontent which could easily reach troubling proportions. It seems that America itself is not immune from "regime-threatening instability" as the Pentagon and the American intelligence community terms it. It is likely that American government officials have not dismissed the worst-case scenario. Indeed it looks like they have been preparing accordingly.
Therefore, as has been scrutinized here, once one proceeds to connect the dots a very dark picture begins to emerge, to say the least. An all-encompassing cloud of uncertainty prevents us from formulating an accurate forecast regarding what developments will occur and how they will unfold during the next few months, let alone years. The only thing that can be taken for granted and that one can be sure of is that the unthinkable has now become thinkable.
But why, when all things are considered, would Trabanco believe rioting unthinkable when well-informed Americans can easily recall events like these: