“What do you want to be a sailor for? There are greater storms in politics than you will ever find at sea. Piracy, broadsides, blood on the decks. You will find them all in politics.”
- David Lloyd George (British Prime Minister. 1863-1945)
It's quite ironic and more than apropos that this past Friday was
Talk Like a Pirate Day as the US government decided how best to pillage more of the booty of the American people by bailing out private financial companies to the tune of some $700 billion dollars. This is not a
feel good Disney movie and the pirates involved are not the mythical, stereotypical, Hollywood likable, swashbuckling types. The only happy ending in this movie will happen for those whose enabled mismanagement of predatory lending practices and unregulated greed, saved from walking the proverbial plank, will blissfully sail off into the sunset ready and able to loot even more.
As the empire crumbled, defence secretary Robert Gates was
busy panhandling in England this past week because the ability of the US government to financially manage its wars is in jeopardy:
...the US is to ask its Western allies, especially those who have failed to contribute to the military mission, to provide the bulk of $20 billion (£11bn) needed to more than double the size of the Afghan army from 65,000 to 134,000.
One senior US defence official said: "We feel it is only right that those who have not sent troops should pay towards the cost of the Afghan army. It's not just Nato countries, for example we have Japan, the world's second- biggest economy, who have no troops in Afghanistan. Shouldn't they contribute something?"
The audacity is astounding especially considering that several countries' central banks came to the rescue of the global financial system because of what's happening in the US in the same week
to the tune of $180 billion, including $60bn of dollar liquidity' from - you guessed it - Japan.
If you can't afford your wars, perhaps you should consider ending them. Just a thought. But when you've committed to pillaging the natural resources of the countries you've invaded, the
means apparently justify
the ends.
So, who's responsible for this massive piracy on such an obscene scale? While Democratic and Republican partisans are blaming each other, trying to assure the public that if you vote for their guy "change" is a coming, Kevin Phillips
provided the real picture to Bill Moyers last week and it shows the complicity of
both parties:
BILL MOYERS: So how is it that, as you write in the book, the financial sector has hijacked the American economy? You used that term.
KEVIN PHILLIPS: I use the term. And without using a whole bunch of numbers, let me try to put it this way. You had-
BILL MOYERS: The numbers are there in chapter two.
KEVIN PHILLIPS: The numbers are there in chapter two. You had essentially a financial sector that, let's say, was sort of neck and neck with manufacturing back in the late 1980s. But they got control in a lot of ways in the agenda. Finance has been bailed out. I mean, everybody thinks this is horrible now what we're seeing in terms of bailouts. Even a lot of the people who do it think it's bad.
This has been going on since the beginning of the 1980s. Finance has been preferred as the sector that got government support. Manufacturing slides, nobody helps. Finance has a problem, Federal Reserve to the rescue. Treasury to the rescue. Subsidies this, that, and other.
So bit by bit, they got bigger. And the other reason they got bigger was because this became a country that was further and further in debt. Consumerism was just pushed to the nth degree. People were given the sense that they had to buy everything and they had to borrow to do it increasingly.
But we've seen the central component of the rise of the financial sector is the rise of the debt industry. Mortgage, credit cards, all these gimmicks that Wall Street sells-- just all kinds of products. And, of course, the products are laying an egg all over the world right now.
BILL MOYERS: You're very hard in here on Alan Greenspan's tenure at the Fed.
KEVIN PHILLIPS: Well, I know Alan from the Republican campaign back in 1968. He was always a very scholarly, data-driven guy. But I think, for some reason or other, his chairmanship will be remembered as turn on the spigots.
BILL MOYERS: Turn on the spigots?
KEVIN PHILLIPS: Turn on the spigots. He started in 1987 with a crash that was a wicked one in one day in 1987. And he turned on the spigots. And they had the huge growth of the tech bubble in the 1990s. And then right after the tech and the stock market bubble blew up in 2000, you had 9/11. So there was a need for more stimulus. And they ginned up the stimulus again hugely.
And the upshot is that during Greenspan's tenure from 1987 to 2006, what they call total credit market debt in the United States quadrupled, quadrupled from about $11 trillion up to $44, $45, $46 trillion. And finance got the great bulk of it. And Greenspan would do nothing to disturb finance.
He wouldn't puncture a bubble. He wouldn't crack down on the exotic mortgages. He really wouldn't do much of anything except give obscure speeches in which, you know, he mumbled the different directions so nobody would know what he meant. But basically he gave finance what they wanted.
BILL MOYERS: And you write also that during this period the Clinton Administration aided and abetted this kind of speculation. Bill Clinton's economic advisor, Bob Rubin, who later became Secretary of Treasury — wanting to fuel this, right?
KEVIN PHILLIPS: It's been a bipartisan phenomenon. You can go back to the 1980s and say Reagan and George Bush, Sr., got a bubble started. Clinton got in and got an even bigger bubble going. And then George W. Bush with the biggest bubble of all. But it's not that the Clintonites didn't play. They did. Bob Rubin as Secretary of the Treasury — I mean, if he was a Hindu and he was being reincarnated, he'd come back as a pail because this guy bailed out everything you can imagine. They had the Mexican loan bailout. They had the long-term capital management bailout, the Russian Southeast Asian currency bailouts.
BILL MOYERS: All of which, however, kept them from coming into this economy, into our economy, coming to our continent.
KEVIN PHILLIPS: Well, except that a lot of the liquidity they created and the momentum and the borrowed money produced the implosion of the bubble in 2000.And a lot of what was imploding was the $2.5 trillion in new debt that was tied to energy and telecommunications, that's Enron, WorldCom, and Global Crossing. So there was a lot more of a bubble blown up there.
Rubin was also central — Democrats more than Republicans in a lot of ways with the Clinton Administration — in getting rid of Glass Stiegel [sic] [it's Glass-Steagall -catnip] , was the old restriction that the banks couldn't tie up with brokerage firms and insurance companies. Well, basically after they made their reform led by Clinton and by Bob Rubin, you had like four-color linguini here in a bowl. It's all mixed up together.
BILL MOYERS: So you have it — for this disaster has bipartisan parentage.
KEVIN PHILLIPS: Absolutely.
So, who's going to save the world?
BILL MOYERS: What do you think when you hear John McCain and Secretary Paulson say that the fundamentals, however, are solid?
KEVIN PHILLIPS: Well, John McCain once said he didn't know anything about economics. And half the time what he says, you know, proves that on a day-by-day basis. I don't think we have a sound economy at all. Not remotely at this point. I mean, there are, like, ten yardsticks I could use. Paulson is your typical Treasury Secretary guy that has to deal with it. And everybody knows he has to exaggerate. He has to say all the Hoover type stuff about how strong the economy is and the recession's going to be over in three months and that sort of stuff. I don't really credit these people very much. But, frankly, I don't credit the Democrats either.
BILL MOYERS: No, I was going to say Obama's trademark rhetoric of inspiration seems to desert him when he talks about economic affairs.
KEVIN PHILLIPS: He doesn't seem to have anything very specific to say. That's part of the problem. A second problem is, for me at least, you know, just as I can't believe that John McCain ever wanted to get his economic advice from Phil Gramm. I mean, Phil Gramm, a former Texas Senator, appalling. He and his wife were known as Mr. and Mrs. Enron because they were so flagrant, that's McCain.
But then you've got Obama with Bob Rubin and he doesn't have any problem with the hedge fund types. I mean, one of the Chicago people was a major financer of his. He gets a guy to pick his vice-president. Turns out to be somebody who was part of the Fannie and Freddie mess.
So I don't exactly see Obama as this fellow riding in on a horse who represents all kinds of reformism. It's an important thing probably to have to change from the Republicans but I don't see that he is free of the ties to finance and Democratic Party financial types.
Once again, the American public will be left holding the bag with a dismal choice for the future.
One would think that
maybe those who have been written off as "commies", "socialists", "liberals", and "radicals" would at least garner a bit of respect now after warning for decades of the perils of globalization, global integration of the financial sector, wars without end, the rape of natural resources, and the danger of the status quo conservative philosophies that have been accepted by the largest mainstream western political parties. But it seems the public is not yet ready to admit in any grand or humbled way that it has so foolishly been led by the nose down a gangplank of its own making while envisioning its' leaders to be that kindly, likable Johnny Depp type of pirate who would still, after all, turn around and steal all of its money in the blink of an eye.
Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of smaller ones. The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.
- Albert Einstein, Why Socialism? (1949)
Related:Text of Draft Proposal for Bailout PlanTreasury Seeks Asset-Buying Power Unchecked by Courts (Update2)Exclusive: Foreign banks may get helpBipartisan Support for Wall St. Rescue Plan EmergesChalmers Johnson: Why the US Has Gone BrokeRobert Fisk: Why does the US think it can win in Afghanistan?Paulson Bailout Plan a Historic Swindle
Just guess how far the Dow Jones will drop on Wednesday morning in reaction to Obama's "high-stakes" speech before Congress this evening.
While Stephen Harper has been crossing the country trying to reassure Canadians that the fundamentals of our economy are solid, insisting as well that our financial institutions are "solid", US regulators have announced that the RBC is under investigation:
It's quite ironic and more than apropos that this past Friday was Talk Like a Pirate Day as the US government decided how best to pillage more of the booty of the American people by bailing out private financial companies to the tune of some $700 billion dollars. This is not a feel good Disney movie and the pirates involved are not the mythical, stereotypical, Hollywood likable, swashbuckling types. The only happy ending in this movie will happen for those whose enabled mismanagement of predatory lending practices and unregulated greed, saved from walking the proverbial plank, will blissfully sail off into the sunset ready and able to loot even more.
