'A pen warmed up in hell' | Reality-based commentary about Phoenix, Arizona, and the nation.
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The killers are among us. In exurban Washington state, a man with a stormy marriage reacts to his wife leaving him by killing his five children — with multiple gunshots — and then killing himself. This came the same day as a nutjob in Pittsburgh escalated a fight with his mother over a dog peeing in the house into the murder of three police officers. Days before, a man burst into a center that helps immigrants in Binghampton, N.Y. and shot 13 to death before committing suicide. Last month it was eight shot to death in North Carolina, another 10 shot to death in Alabama, and four Oakland officers murdered after a routine traffic stop.
In many cases, the gunmen had recently lost jobs. There were histories of instability and alienation among the suspects (the Oakland case was simply a murderous ex-con). And what our age now calls "anger management problems." All this happened during the Great Depression, too. America had plenty of guns then, and not a few demagogues whipping up the gullible. But in my relatively extensive study of the era I can't find one example of these kinds of mass shootings of innocent people. (I know my literate readers will disabuse me of my ignorance here; but the shootings certainly were not widespread). When America faced mass slaughter, it was events such as the now all-but-forgotten natural gas explosion at a rural Texas school in 1937. It killed nearly 300 students. The outpouring of support and volunteers was immense. (Even Adolf Hitler is said to have sent a telegram of condolence).
But we were a different nation then.
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No CommentsWe're being played for fools again. The Financial Accounting Standards Board just relaxed its "mark to market" rule. Instead of forcing banks to value assets what they would really bring on the open market, the bankers get to set the value — i.e., at bubble levels. At the least, this will bollix up the Geithner bailout plan, giving banks no incentive to part with "toxic" assets that are suddenly Chanel again. At the worst, it will create another bubble. It's already produced a sucker's rally on Wall Street.
As for that bank plan, Treasury Secretary Tim Geithner has produced something that sticks the taxpayers with most of the risk and does nothing to deal with the underlying problem. In many cases, these "assets" aren't. At any price. The bankers made bad decisions and we're still bailing them out. Not mad enough? Now that you own Fannie Mae and Freddie Mac, you'll be glad to know that you'll be helping to pay $159 million in retention bonuses. And we want to retain these idiots…why? Let them take their "talent" into a job market with millions looking for work. Could an AIG or Fannie executive even count change correctly at McDonald's? ("Sorry, sir, that quarter I missed is now a derivative.")
Yet even the reformers can't get their acts together. "Populist rage" dissipated quickly — that especially happens when people are faced with problems that seem impossibly complex. These are complex problems, but some solutions with proven records could be implemented quickly.
2When I saw this morning's headline in the Arizona Republic, "ASU's Dreams Dashed," I didn't realize it was just a sports story. Arizona State University was the prime example of a recent New York Times story headlined, "State Colleges Also Face Cutbacks in Ambitions." Reporting on the hundreds of layoffs and scores of closed programs, among other draconian austerity measures, the Times wrote:
"Mr. Crow," of course, is Michael Crow, who arrived as ASU's president in 2002 promising "the new American university." When he was riding high, I talked to an eminent Arizonan, a huge supporter of higher ed, who had just spent some time with Crow. "He's brilliant…visionary," this person said. "And he's a con man." On my visit to Phoenix last month, a major civic leader said flatly: "I think Crow's house of cards will collapse soon."
7I confess: I'm tired of arguing about newspapers. In my city, one of the most literate in America, there's still a numb feeling from the loss of the Seattle Post-Intelligencer. The Rocky Mountain News is barely cold in the ground. Thousands of skilled journalists are unemployed and perhaps can never regain their former living standards. The suicide of the industry has little to do with what the dumb-downers and consultants claim. All the enemies we made over the years can dance on our graves. But the issue is pretty well settled. Some newspapers will remain in some form. But the era of great newspapering is over.
So comes Jack Shafer's latest rattle-the-cage piece on Slate, "It's Time to Kill the Idea that Newspapers are Essential for Democracy." Shafer claims he likes newspapers, but…the Republic did fine for its first 100 years without investigative journalism, most people don't care whether newspapers survive, many newspapers did mediocre work and even the best journalism rarely kept government honest for long. Also, "political parties, special interests, and government itself all have a stake in the maintenance of elections and democracy."
12The stock market is a leading indicator. I fear the recent "Obama rally" (such as it is) is telling us that the president has made peace with the financial barons that brought us to the abyss. He will throw crumbs to average Americans while shoveling trillions into the corrupt system so thoroughly outed by Matt Taibbi's essential-reading article in Rolling Stone. The barons, through their henchmen Tim Geithner and Larry Summers, have assured Obama that they can right the system and have average Americans back on their feet (i.e., create another bubble). The coup of the economic royalists — they really more resemble Third World kleptocrats than the moguls who opposed FDR — may have happened long ago. And Obama has no choice but to go along.
Or so he may think. Meanwhile, the cheap rage over AIG seems to be abating. But where's the rage over FedEx threatening to cancel a big order from Boeing if its workers are more easily allowed to join a union? Where's the outrage over Arlen Specter's defection on the Employee Free Choice Act — dooming it — because he fears an ultra-reactionary primary opponent? The disconnect between unions and the majority of working Americans continues. Neither labor nor liberal Democrats can find the compelling language to reach them, or to take the debate from the sterile ground it has occupied for years. And how to match the huge war chests of a corporate American that wants its workers cheap, pliable and hating organized labor?
Thus, the average duh and igno can bluster against AIG while watching Fox News, listening to right-wing talk radio and blaming government for his falling living standard. Probably the majority of Americans are just too baffled by the discontinuity facing them, too emotionally limited to look for more than "optimism," however illusory and temporary, and too into their distracting material worlds, to realize the stakes and act. At the moment, Obama and the Dow comfort them. Now, gotta pick up the kids from their play date.
6Readers have asked me what I think of the school of writers The New Yorker has dubbed "the dystopians." There is no shortage of slap-in-the-face reality on this blog, so you can decide whether I am one of them. Chief among them is James Howard Kunstler. Another is the Russian emigre Dmitry Orlov. In the magazine, Ben McGrath writes:
Malthus was wrong in his time, of course. Kunstler, on the other hand, has proven remarkably prescient in the here-and-now.
7We had to struggle with the old enemies of peace: business and financial
monopoly, speculation, reckless banking, class antagonism,
sectionalism, war profiteering. They had begun to consider the Government of the United States as a
mere appendage to their own affairs. We know now that Government by
organized money is just as dangerous as Government by organized mob.
Sound familiar? Those were Franklin Roosevelt's famous speech in 1936, where he also said, "Never before in all our history have these forces been so united
against one candidate as they stand today. They are unanimous in their
hate for me, and I welcome their hatred." In reality, FDR always had to backtrack to keep from antagonizing capital too much. On the other hand, he led a nation in the 1930s that was on the verge of repudiating capitalism for what then seemed viable alternatives of fascism or communism.
Early 21st century America is reveling in easy populist anger over bonuses paid out to the very AIG executives who did so much to collapse the economy. But I wonder if they have Roosevelt's understanding of these "old enemies of peace"? And what will they do about it? If things really change, it will be because Wall Street did something far worse than break the social compact. It broke the greed compact.
5In the arresting prologue to his book, The Crisis of the Old Order, Arthur Schlesinger Jr. describes America on the day of the inauguration of Franklin Roosevelt — an economy nearly shut down, people starving, machine-gun nests around Washington, opinion-makers taking of the need for dictatorship, capitalism given up as dead, even the March sky dark and foreboding. Pace today's revisionists such as Amity Shlaes, FDR indeed restored confidence and began an economic recovery that was only tripped up when he reverted to his instinctive desire to balance the budget and back away from stimulus. If it makes them feel better, many of the New Deal's successes built off the programs first established by Herbert Hoover, the often unfairly maligned onetime progressive. Yet those policies had not been pushed with the energy or scale demanded by FDR.
Many liberals and progressives want to see the current economic phase of the Great Disruption as a Depression-like opportunity. Meanwhile, conservatives such as Ms. Shlaes — and the reactionary thugs who consider even Social Security, as they would phrase it, SOCIALISM!! — use the Depression and New Deal as a foil. The reactionaries back then wanted to raise taxes to balance the budget. Otherwise, today's right is little changed intellectually from its predecessors.
And yet as I watch us move along the leading edge of history every day, I doubt many of the Depression analogies. We are not yet, most of us, on our backs. We have lost a huge amount of wealth — more than we realize, when one factors in the 25 years of destructive mergers, deindustrialization, deunionization and unwise trade deals. The floodwaters intrude on our peripheral vision — a friend laid off, a "depressing" news story. Otherwise, life goes on. American Idol goes on. A new release of Grand Theft Auto. Watchmen brings to the screen "the greatest graphic novel of all time" (was Sad Sack a graphic novel?). Talk radio continues to stir up the faithful. We are entertained, distracted, agitated, yet sleepwalking. Hoping for the next bubble. The next "Flip this House" casino economy moment. We don't realize how gone it all is, gone with the wind.
3My economics blog in liberal Seattle has lately attracted a crowd of commenters that would make Phoenix proud. The stock market's decline has nothing to do with the collapse of housing and banking bubbles, with historic levels of debt and all the unwinding of contracts based on leverage, nothing to do with a nation groping against fundamental discontinuity. No, it's Obama's fault. Sure enough, this has become a growing point of attack by the reactionaries, who offer no solutions beyond the failed policies that caused this mess.
But it caused me to think…we have Tim Geitner at Treasury, rather than, say, Joe Stiglitz. We have Larry Summers, and hovering in the background, Bob Rubin, as chief White House economic advisers. Not Robert Reich. Kathleen Sebelius at Health and Human Services, instead of Dr. Howard Dean. Obama insiders rushed to reassure the idiot David Brooks that "they do not see themselves as a group of liberal crusaders. They see
themselves as pragmatists who inherited a government and an economy
that have been thrown out of whack. They’re not engaged in an
ideological project to overturn the Reagan Revolution…"
This may be smart centrist politics. It will be completely inadequate to address the crises before us. Yet it may also mean that Obama realizes that the government was long ago taken over by, let's say a community of interests, that is fundamentally opposed to reform. Does this group have the capacity to bring him into line by collapsing the stock market — naked short-selling it — until he yells "uncle"?
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For a moment this morning I thought about asking a friend in Denver to send me a copy of the last edition of the Rocky Mountain News. But, no. It would hurt too much. After nearly 150 years, one of America's very good, and sometimes great, newspapers died today. Denver and America will be the worse for it.
For those of you dancing on the graves of newspapers, and the others who have their pet ideas for "saving" them, which always seem to continue the failed dumbing-down policies of the past 25 years (oh, but with streaming video and mom pages!). For those who think crowdsourcing and local opinion blogs can replace professional journalists in the lives of communities. All of you can stop reading now. I'm also tired of discussing the demise of the press — I've already made my views known. I hope the rest of you will stay for the wake.
Let there be no false sentimentality. The Rocky considered me a traitor because I chose to leave in 1993. I was young and ambitious and stupid. Yes, a traitor. We were in a war with the Denver Post — and what a war it was.
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The time for good options to deal with the banks was in, oh, 1999. That was when the Gramm-Leach-Bliley Act passed, repealing the last of the Depression-era regulations that had kept the American banking system sound for more than six decades. (Yes, the same Gramm who got rich once he left the Senate and joined a big bank, and called us a "nation of whiners.") Now some of our largest financial institutions are Zombie Banks — but we have no Mila Jovovich armed with miniskirt and full arsenal to take them down. They are left with only the most primal instinct: To feed on the Treasury. Resident Evil, indeed.
Paul Krugman makes the case for nationalization today. Socialists Lindsey Graham and Alan Greenspan have also signed on. Economist Nouriel Roubini, who called the crash, says a takeover would avoid throwing good money after bad. Indeed, some of this is not too complicated: Think back to the wreck of the Penn Central railroad, when the government stepped in and created Conrail. Later it was relaunched as a successful public company. Receivership is a better way to think of this than the charged word "nationalize."
Who loses? The shareholders. And as much as one might get a populist shiver up the leg from the idea of some big hedge funds getting sucker punched, remember that average Americans were lured into the market, too. They've lost about half their nest eggs already. Those in bank stocks — and Bank of America and Citi are widely held — will lose more. But, as Jovovich's Alice teaches us, you can't mow down a bunch of zombies without collateral damage.
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