Still Think It’s About the Bonuses? The Big Takeover
March 22nd, 2009Via: Rolling Stone:
It’s over — we’re officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country’s heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history — some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That’s $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG’s 2008 losses).
So it’s time to admit it: We’re fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we’re still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck — bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company’s CEO, actually compared it to catching a cold: “The marketplace is a pretty crummy place to be right now,” he said. “When the world catches pneumonia, we get it too.” In a pathetic attempt at name-dropping, he even whined that AIG was being “consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet’s investment portfolio down.”
Liddy made AIG sound like an orphan begging in a soup line, hungry and sick from being left out in someone else’s financial weather. He conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its “pneumonia” was making colossal, world-sinking $500 billion bets with money it didn’t have, in a toxic and completely unregulated derivatives market.
Nor did anyone mention that when AIG finally got up from its seat at the Wall Street casino, broke and busted in the afterdawn light, it owed money all over town — and that a huge chunk of your taxpayer dollars in this particular bailout scam will be going to pay off the other high rollers at its table. Or that this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires.
People are pissed off about this financial crisis, and about this bailout, but they’re not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d’état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.
The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — “our partners in the government,” as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.
The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.
Like I’ve posted before, here and other places: the people won’t be “pissed off enough” until they think they have less to lose by taking a risk than they do by playing it safe. And we aren’t there yet. (I, too, am one of “they”, of course.) Who knows, maybe if enough of us just fade into the background, becoming self-sufficient, the Machine will implode of its own weight. But I don’t think the Machine will go down without a fight, and I think that will be ugly.
Big takeover? Do people read history? The same monied interests have always controlled this country. They founded it, and it was just a matter of time before they began to systematically and incrementally implement their various plans and schemes.
Glad to see Matt Taibbi spelling out the reality of the economic crisis clearly. But he was a real disappointment regarding 9/11 …. not that it matters anymore (sarcasm). I guess it’s safe to talk about conspiracies of this kind. Oh the irony. He almost sounds like Alex Jones in that section you highlighted, Kevin.
Still don’t buy the psychopath line. These people are perfectly normal, they just have unique opportunities, and have (naturally) developed beliefs that allow them to take advantage of them. Anyone tempted to think otherwise should google milgram experiments, or read up on nazi germany or stalinist russia.
The idea that these people are some special class of bad guy is actually a dangerous misconception, because it promotes the belief that the situation can be fixed by replacing the actors in the power structure, while the real problem lies with the incentives centralized power itself creates. The ‘psychopath’ line of thinking points fingers and creates an us/them mentality, but preserves the corridors of power.
Was russia improved when the czarists were kicked out?
@Remrof
The problem with using terms like “psychopath” is that they are outdated terms developed by practitioners of a soft science during its infancy to cover an extremely complicated topic: humans and their “minds.”
And don’t get me started on “normal,” because it doesn’t exist. Is it normal to turn the other cheek? It certainly isn’t natural. Animals that are attacked will usually run or defend themselves; they won’t just take it.
Naturally developed beliefs. Interesting choice of words. Intelligent people who observe things closely often realize that there are the strong and the weak, and that the strong prevail over the weak. Intelligent people, being strong, will typically exercise their power, unless they choose not to, or unless they have countervailing weaknesses.
There are special classes of bad guys. Sorry, but there are.
Drug dealers, human traffickers, arms manufacturers are some examples. Serial killers would be another.
Do some research on Basil Zaharoff and tell me that special classes of bad guys don’t exist.
But bad guys often only appear to the people they exploit. Some feel guilty. Others don’t. Zaharoff would be an example of someone who didn’t. There are plenty of others like him.
If you were an evil genius, would you make the Hollywood mistake of announcing your intentions? Or you would keep them hidden by cloaking them in impenetrable euphemisms.
Remrof, regarding psychopaths; you make a good point on a cause of the power junkie’s actions, but it’s still true that the term fits the behavior.
The only good empire is a dead empire. What’s the problem?
@ltcolonelnemo
Hmm, interesting comment. I certainly wasn’t denying that psychopaths exist, or even that there is a special class of bad guy. Those are empirical facts.
What I did say was that “these people,” by which I meant specifically the “group on Wall Street” the rolling stone article was attacking, aren’t genetic aberrations, or otherwise oddball developmental fuckups. They are relatively “healthy” products of a culture, who’ve managed to become what they need to be to “succeed,” as they define it. That’s not an endorsement of their behavior, it’s a comment on the human condition. Just look at the DEA, for god’s sake.
Why make the point? I’m attacking the idea that there is some kind of “essential” difference between the perpatrators and the victims, and that therefore, as I said, “the situation can[‘t] be fixed by replacing the actors in the power structure, while the real problem lies with the incentives centralized power itself creates.
That said, yeah sure, some of these guys probably are genuinely crazy, and don’t bother fooling themselves. But their position in society is a product of self-selection in a system of centralized power.
I’d also like to point out that without a centralized state, these financiers could get nowhere, something progressives are loath to admit. It seems ridiculous to me to advocate a strong state, and then complain when it gets captured by special interests and turns around and fucks you in the ass.
The “naturally” was parenthetical, btw. By that I meant “of course.”
@dale
You are absolutely right. It would be fair to say they are acting like psychopaths. The point I was trying to make: most people potentially can. That’s why I mentioned the milgram experiments. Moral ideas are ideas, and can be very wrongheaded, as in nazi germany.