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Trust Your Guts
A reassuring new story line is emanating from our leaders. I heard Representative Barney Frank, chair of the House Banking Committee, explain it. Then I read the same line in a Washington Post news story. That tells me people in high places are selling it. Dynamic capitalism, they explain, invents ways to create greater wealth, but sometimes it goes a little too far. Then government has to step in to correct things. This need typically occurs every generation or so, all in a day's work. The Obama administration is proposing "sweeping" new regulatory laws so that capitalism can continue its good works.
The story makes disturbing current events sound practically normal. But what are the storytellers leaving out? They aren't saying that this financial catastrophe was not merely an inevitable development of history but a man-made disaster. Greedheads on Wall Street did their part, but so did Washington. The reason we need new rules is that a generation of Democrats and Republicans systematically repealed or gutted the old ones--the regulatory controls enacted eighty years ago to remedy the last breakdown of capitalism (better known as the Great Depression).The White House executed a nifty two-step this week to re-educate the public and deflect anger. On Tuesday Treasury Secretary Timothy Geithner relaunched the massive bailout of banking and finance. Knowing how unpopular this is with the people at large, Geithner followed on Thursday with his "sweeping" plans to re-regulate the bankers and financiers. Whenever official plans are called "sweeping," it indicates that they really, really mean it this time.
Most Americans are not financial experts. It's very difficult, nearly impossible, for normal mortals to sort through the dense policy talk and conflicting opinions to figure out if the rhetoric of reform is real. Confusion is widespread in the land. Most Americans want to believe this president is leading us out of the swamp, but how can they know? I say, trust your gut feelings. They are as reliable as the learned experts.
Many Americans want to believe because they think that returning to "normal" means their decimated 401(k) accounts might somehow recover the 30-40 percent that disappeared during the past year. If it takes monster bank bailouts to restore stock-market prices, let's have bailouts. Good luck with that. The Dow has regained 21 percent in two weeks of rallies, but I remind friends that steep, short bursts in the stock market do not foretell the future of the economy. Banks may be relieved of their losses without changing the general economic outlook. After the crash of 1929, there were occasional stock rallies, followed by fierce bears. It took twenty-five years (until 1954) for the Dow to regain its old peak. Another way to assess the Obama plan for reform is ask: who likes it? The verdict was swift and sure after Geithner's twin announcements. Wall Street likes it. The blueprint for regulatory reforms was applauded by the Securities Industry and Financial Markets Association; the American Insurance Association; and the Private Equity Council, the trade group for the major private funds that will get public money and backup insurance to buy the banking system's rotten assets. This could be born-again patriotism. Or it could be the animal appetites of financiers smelling gorgeous opportunity for returns.
This may be one of those moments where people can find some guidance from their moral convictions. They do not need to know all the details to ask simple questions. Does the outline of what's happening to rescue major financial institutions seem morally wrong? Or is it justified by the larger necessities of the national predicament? Is the government insufficiently tough in demanding reciprocal commitments from the beneficiaries? Should Washington pursue larger structural changes in the banking system?
Trying to imagine alternatives to the bankers-first bailouts is a good place to start. What follows are suggestions I produced at the request of young people organizing demonstrations around the country for April 11. They call themselves A New Way Forward. I hope they light lots of bonfires.
This rough outline leaves out lots of particular regulatory issues, but the core goal of reform is to create a banking and financial system that serves the society and the economy, not the other way around. Everything being done to rescue and restore the old order gets in the way of creating something truly new and valuable for the future. Those of us throwing logs in the path of the bailouts are dismissed as naysayers or worse, but the financial titans are trying to foreclose just solutions by stampeding Congress and the president to adopt ill-considered ideas.
If Wall Street gets its way, the "reforms" may further consolidate power and ratify a corporate state--a grotesque hybrid that combines the worst aspects of socialism and capitalism. The reform ideas announced by Geithner would plant the seeds by creating a "systemic risk" regulator, presumably the Federal Reserve, to oversee the largest, most politically adept banks and financial firms that qualify as "too big to fail." Capitalism, with its inherent tendency toward monopoly, would have the means to monopolize democracy (see my recent Washington Post article.)
My new book, Come Home, America, asks people to enunciate their versions of "patriotic realism." That is the essence of an alternative vision: deconcentrate power, liberate people and smaller enterprises, workers and middle managers and investors, to help shape the country's future from many different perspectives. This is how democracy was supposed to work. It can again.
Some points I recommend people consider:
1. Euthanasia for insolvent banks. Transferring their losses to the public will not restore the trillions in capital the bankers helped destroy. It would merely relieve the banks, their creditors and shareholders of the pain. Government must take control of the system to supervise a just unwinding of the mess--whether we call it nationalization or something else. Handing out money and leaving bankers in control of how it's spent is nutty and morally wrong. People everywhere understand this. Only Washington seems oblivious to the irrationality of what it is attempting.
2. The Federal Reserve must be democratized and effectively stripped of its peculiar antidemocratic status as an unaccountable island of power within the government. A new federal agency--accountable to Congress and the president--can be refashioned from the working parts of the Fed. Call it a central bank or something else, but its governing power must not rest with heavyweight bankers on the board of directors at the twelve regional banks. (To understand why, consider that the New York Federal Reserve Bank was headed until recently by Geithner.)
3. The reformed Fed would be confined to conducting monetary policy and stripped of its regulatory functions. A different section of the Treasury or a new free-standing regulatory agency can assume responsibility for regulation and be armed with strong antitrust laws and other rules to ensure that "too big to fail" institutions are redefined as "too big to save."
4. The federal law against usury can be restored to halt predatory lending. Persistent violators would not be fined with trivial penalties, as they are now, but stripped of their government protections and subsidies--that is, doomed.
5. A new banking system--smaller and more diverse and responsible to the public interest--can fill the hole left by the demise of major banks like Citigroup. Vast public resources should be devoted to creating this system, not to saving the mastodons. Public banks (like the North Dakota State Bank) and nonprofit savings and lending cooperatives can also serve as an important cross-check on private commercial banking--a competitive model that offers credit on nonusurious terms and keeps the big boys honest.
6. Once the Federal Reserve is domesticated in a democratic fashion, then it can be reformed to assume broad supervision of the nonbank financial firms in the "shadow banking system"--hedge funds, private equity firms, pension funds, mutual funds, insurance companies. (For more on this, see my recent Nation article, "Fixing the Fed.")
7. Our first political challenge is to disturb business as usual in Washington and prevent Congress from taking hasty action to adopt Wall Street's "reform" agenda. Congress is rattled by the exploding popular anger and listening nervously. The people need to speak louder--loud enough for the president to hear.
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55 Comments so far
Show AllI'm sick to my guts...
Considering the debacles that have been created for the sake of enriching a few, I think it's entirely appropriate to turn credit into a public utility. Wall Street has shown itself to be a hindrance, not a help. Caps on interest rates and incomes of managers of publicly-funded banks are what is needed. People who need a million dollars a year and more to function need a lesson in frugality. At least. Take the public money out of the Fed, and start a bank owned by the People. After all, it IS our money.
Nice sentiment, except we wouldn't get past #1. Because the government has been bought, lock stock and barrel, by the banksters and monied interests. We had regulations and anti-trust laws, all overturned or not enforced, lobbying is just a ligitimized form of corruption, we could go on and on.
We are not in control or in charge.
Another point. We need a constitutional amendment limiting free speech for corporations to truthful, commercial speech. Not enough is said about 19th century Supreme Court decisions that gave corporations the same constitutional rights as individuals. (Even Robert Bork agrees that this "precedent" needs another look!)
Under corporate law, the people who make bad decisions are not financially responsible for them. As in "responsible for my debts only". Fine, it's a way to encourage business growth (which can be argued) but the point is that that exemption requires limits on other behaviors of "corporations"--which are actually non-accountable individuals.
mr greider wrote a book some years ago called: One-World-Ready-Not
http://www.amazon.com/One-World-Ready-Not-Capitalism/dp/0684835541
good read
in it he makes the point - actually makes a lot of them - the one i remember most clearly is that the race of corporations to the bottom of the wage rate and lack of worker rights, environmental issues - that china is the cheapest place in the world - at 4 dollars a day china can provide a disciplined work force willing to work long hours six days a week
he goes on to say that china has enough workers to do EVERY job in the world
fast forward to today and we see his vision has in fact come true
the us has been de-industrialized and china has been modernized
the devil's deal forced upon the chinese was that they had to buy treasury bills
enter the scumsuckers at wallymart who have made trillions - often subsidized by the government - relocating entire business to china
now their peasants loan us their savings to perpetuate the imperial wars in a bizarre twist of global economics
but the question is - how does america rebound from this bank bailout - aka the biggest rip off the sheeple have ever seen - without jobs for the sheeple to work at
we don't make much anymore - so what do we sell
what will be the basis of the new economy
i don't think the chinese are interested in t bills anymore and there probably won't be any more suckers for the credit swap trash
that is where the imperial army comes in
the fake war on terror that reads like a bad ray bradbury novella
we can't earn it so the other alternative is to steal it
wag the dog - get the corporate media to repeat the lies over and over and soon we have liberated countries with natural resources
god bless america
i predict we will be bringing freedom and democracy to the entire planet whether they need it or not
it is also deeply concerning to me to hear henry kissnger give his blessings to obama as the man to take advantage of this crisis to establish a nwo financial system for the world
kissinger loves obama as does the psycho brzezinski
that ringing sound you hear are the alarm bells of the death knell of the republic
we are being scammed and we owe it all to
1. a puppet president - nwo shill
2. a bought and paid for senate and congress
3. corporate media
4. rockefeller educated sheeple who can't get beyond trance tv
5. ruthless corporations led by the likes of rockefeller and rothscchild
back to sleep sheeple - don't forget you have to rest up for this week's episode of american idol and dancing with the stars
no wonder you are tired
Between Bush and Obama, we are destroyed as a democracy under the rule of law! We now have a fascist state where the oligarchs and the politicians are in partnership. Revolt is the only thing left to do, however, the citizenry have been bombarded with the full force of psychological warfare and all the propaganda of the mass media which have effectively dumbed down the populace and morphed them into herds of sheeple and are now corralling then down the corridors to their cultural slaughter!! By the time most of the people awake from their hypnosis the operation (theft) on the middle class will be complete and they and there children and children's children will be forced into unrelenting slavery and the culling of the weak members of the herd/work slaves. The only thing to fear is fear itself.
Get up! Stand up! Don't give in without a fight!!!
Bob Marley
from globalresearch/ca
Newspaper reports seem surprised at how high banks are bidding for the junk mortgages that Mr. Geithner is now bidding for, having mobilized the FDIC and Fed to transfer yet more public funds to the banks.
Yet bank stocks are soaring: that is what is bidding up the Dow Jones Industrial Average (DJIA), as if the "financial industry" really were part of the industrial economy rather than external to it and extractive rather than productive.
I think I may have figured out why banks are engaging in what seems to be over-paying. In fact, it was obvious from the outset that this is the danger. And it explains why the very worst offenders Bank of America (now owner of Countrywide) and Citibank are the largest buyers. As the worst abusers and packagers of CDO's, shouldn't they be in the best position to see how worthless their junk mortgages are?
That turns out to be the key! Obviously, the government has failed to protect itself deliberately, intentionally failed to do so in order to let the banks pull off the following scam.
Here¹s how I think it works: Suppose a bank is sitting on a $10 million package of collateralized debt obligations (CDOs) that was put together by, say, Countrywide out of junk mortgages. Given the high proportion of fraud (and a recent Fitch study found that every package it examined was rife with financial fraud), this package may be worth at most only $2 million as defaults loom on Alt-A ³liars¹ loan² mortgages and subprime mortgages where the mortgage brokers also have lied in filling out the forms for hapless borrowers or witting crooks taking out mortgages at far more than properties were worth and pocketing the excess.
The bank now offers $3 million to buy back this mortgage. What the hell, the more they bid, the more they get from the government. So why not bid $5 million. (In practice, friendly banks may bid for each other¹s junk CDOs.) The government that is, the hapless FDIC puts up 85% of $5 million to buy this namely, $4,250,000. The bank only needs to put up 15% namely, $750,000.
Here's the rip-off as I see it. For an outlay of $750,000, the bank rids its books of a mortgage worth $2 million, for which it receives $4,250,000. It gets twice as much as the junk is worth.
The more the banks holding junk mortgages pay for this toxic waste, the more the government will pay as part of its 85%. So the strategy is to overpay, overpay, and overpay. Paying 15% is a small price to pay for getting the government to put in 85% to take the most toxic waste off your books.
The free market at work, financial style.
If Wall Street gets its way, the "reforms" may further consolidate power and ratify a corporate state--a grotesque hybrid that combines the worst aspects of socialism and capitalism.
I'm afraid this is precisely what's going to happen. The Republicans and the Democrats have allowed the pirates, the money illusionists and the abra cadabraists to cut this nation off at the knees. We are devouring ourselves. I never thought I'd say this: Umpff off, Obama. You're headed for the same ash heap as George Wanker Bush. And when you get there, tell 'em Groucho sent you.
Is this the Greed Depression then?
http://prorev.com/moneyreform.htm
"The people need to speak louder--loud enough for the president to hear."
I'm done "speaking", Greider. Speaking-up is no longer an option. Its a waste of time just like typing these words.
Its way past time for some severe direct action--and lots of it and without mercy.
Since this is about the money (as it always is) not once during Frontline's "Ten Trillion and Counting" was the outrageous defense budget mentioned. Not once. But they want to take away entitlements from the poor.
These people need to be stopped. They are a proven danger, not only to us as a people, but they are a danger to humanity, indeed the entire planet, period.
The Government of the United States is openly and admittedly being Privatized. They are doing this by taking on the DEBT of the Private banking system, shifting it over to the people and borrowing that money from the very same banking system at interest.
The question to be asked is "How can a system where only 800 Billion dollars exist in circulation" suddenly LOSE 800 Times 20 Billion dollars?
Why should the taxpayer have to pay for lost wealth that was never more then an entry on a computer screen and never existed?
Let us turn the tables. Imagine I had theft insurance and someone broke in and stole my watch which i brought for 29 dollars at wal-mart.
The Insurance company comes in and says "Ok you tell us how much that watch was worth and I say "Its value was 45 million dollars and you owe me that much"
They ask "where did you get that figure from and I say, I just entered it into my computer screen you see I sold 10 dollars junks of that watch to 4.5 million different investors and now have neither the watch nor the money to pay them off .."
Would the insurance company fork over 45 million dollars?
Good analogy, GwNorth, just what are we bailing out? What tangible goods and services are we protecting?
Mr. Greider is a very wise man, and I have been following his articles for years and my assessment is that he pretty much understands the situation we now face. He now says to trust your guts and doing so, I might see a light at the end of the tunnel. For this exercise I will refer to my own personal observations and the writings of John Ralston Saul, another writer who also describes our situation accurately.
In my working life I interact with many companies engaged in providing goods and services that people want to buy. This is the real economy. This is at a scale that we can all understand. In the real economy money is only a lubricant that allows the economic engine to work.In "Voltaires Bastards" John Ralston Saul has written that "money is an abstraction" meaning its not really wealth. Money is only pieces of paper, or nowadays blips in some computer somewhere. Real wealth in this context would be property, or perhaps your automobile, or any other tangible item you might own. Saul also wrote that once the elites started treating money as something real, then the crisis would be upon us. Well, we have now arrived at that point.
For me, it can be summed up by the remarks of a small business owner I worked with the last few years. In his view, there is in fact not all that many truly good investments. However, people have been lead to believe that they should always get a good return on their money so why get 3 per cent at the bank when Bernie Madoff or some lesser version of him will get you 10 per cent? The financial industry cooked up increasingly esoteric "products" in order to keep the gravy train rolling, but now the house of cards has collapsed. I believe that sooner or later citizens will realize that the emperor has no clothes on, and act to decouple the real economy of work and production from the imaginary economy of pieces of paper with numbers in the trillions written on them. I tend to think that this process would be facilitated if we were to give those responsible for this fiasco a rope for a collar and make their feet dance on air. Of course, we as citizens, will not have the stomach for that sort of thing until those same stomachs are good and empty. I suppose we will go through a very messy period while our elites attempt to reconcile the disappearance of trillions that never in fact existed but we will sooner or later arrive at an economy far more sensible than what we have now.
Sioux Rose
XYP: Interesting analysis. As for the gap between tangibles indicative of a real economy and the "esoteric products that keep the gravy train rolling," the problem is that taxpayers are being asked to fork up real assets (the worth of their savings, the newly adjusted market prices of their homes) to fill the flat tire (as you refer to it: the disappearance of trillions that never existed) with air. And the air is vital fuel to workers. The decoupling you speak of will be in the league of an operation intending to separate Siamese twins joined at the brain.
We should seriously ask ourselves the question, "Why are Americans so passive in the face of massive economic violence perpetrated on themselves and their children?"
It appears to me to be the result of one of the most successful social conditioning campaigns in history. Whatever relates to commodities and productivity has become supremely real; whatever relates to political obligations has become supremely unreal. Social bodies such as governments have become simply targets for exploitation to which no loyalty or even elementary moral consideration is required.
Having given their loyalty to the corporate system, Americans become deeply conflicted at stories of corporate robbery. Since they usually share the same values as the corporations that have robbed them, they are often half-tempted to celebrate the successful heists, heists they themselves would have gladly participated in, despite what they tell themselves. The government and the values it represents have become an abstraction (inspiring or otherwise) to them, the representative of a power that is alien to their lives, while the values of the corporate world are ever present and pressing.
It is critical to understand the outside and inside of the crisis from their perspective. They see themselves as inside the corporate system, but view the government from the outside. They also see the “financial crisis” as a phenomena external to the system they are part of. It is largely an abstraction to them, something that pundits talk about, but which doesn’t directly affect their world, even if they lose their job or house. This “externalizing” attitude applies to the crisis as a whole. Since they are actually an intimate part of the system and what they do is by definition the result of worthy motives, the crisis must be caused by abuses of the system which are external to the system’s normal operations. Therefore, the crisis is the result of a fortuitous combination of circumstances that threatens the smooth operation of the system, but is not part of the system itself.
Their ability to see this crisis as the inevitable result of the ordinary operation of profit system has been systematically deleted. This is one reason why the corporate media so easily runs diversionary maneuvers that distract attention from the primary theft – the robbery of trillions of dollars by those who caused the crisis. That robbery is an abstraction to most Americans, but when some culprits are found to be receiving bonuses from the tax money, their outrage swells because the crime has become personal at that point. In other words, they have a strong affinity toward private profit, but public obligations have become unreal, which demonstrates why such crises are inevitable. The witnesses of the crime cannot see it as a crime because their attitudes have been shaped by the same causes as the crimes themselves.
So strongly have they internalized the profit system that they see the system as a victim in the same way as they feel their own victimization. The dominant analysis of the crisis as the fault of various malefactors - reckless speculators, greedy and overpaid executives, and the self-indulgent American consumer — allows the evil to be personalized and externalized at the same time. The cause is always external to the system itself, just as the system that they participate in is not part of the “financial crisis” which the system generated. The key theme of media coverage of the crisis is to reinforce its personal and subjective aspects, to focus microscopically on personal faults and moral failings so as to isolate causes away from the nature of the system itself. The mortgage crisis is explained as the result of unregulated personal greed, as if this evil could be separated from the nature of the profit system, which obviously depends on it as the primary motivating force behind all economic activity.
What we must see is that by internalizing the profit system so profoundly, Americans have no vantage point outside the system to criticize it without condemning themselves. Until they can face their own moral visage in the mirror, they will remain easily manipulated victims of their own victimization.
The ubiquitous and oft-repeated belief that both parties have been "taken over by the banksters" is provably false.
The Clinton White House fought Sen's Gramm's bill repealing Glass-Steagal as hard as it could, but powerful Congressional Dems wanted to kill Glass-Steagall. The White House fought them as well as Gramm on this issue. Clinton signed the bill because it had a veto-proof majority. The battle was over. As blogger Joe Cannon notes, "Clinton fought to get the best deal that he could, but gale-force political winds were against him."
http://cannonfire.blogspot.com/2008/09/hard-times-blame-clinton.html
If the Clinton Adminstration had been owned by the bankers, they would not have opposed Gramm's bill. Reality disproves the conspiracy theory.
Perry's account of the repeal of Glass-Steagall is preposterous. It was Clinton's Treasury Secretary, Robert Rubin, who was one of the earliest and most ardent pushers of the repeal of Glass Steagall. He and his friend Sandy Weill became the point men for recruiting a huge majority of key House and Senate members of BOTH parties to support this atrocity. The idea that Clinton fought against this measure is simply an absurdity--a travesty of the historical record.
Cannon's "case" is based on nothing but his own unsupported and undocumented assertions. For a meticulously documented, blow-by-blow account of the Clinton administration's overt complicity in opening the floodgates for the current disaster by repealing Glass-Steagall, see the following:
http://thestrangedeathofliberalamerica.com/bill-clinton-glass-steagall-and-the-current-financial-and-mortgage-crisis-part-two-of-an-indepth-investigative-report.html
Nearly every key Democrat in Congress supported the final version of the repeal of Glass-Steagall, including phony progressives such as Kerry, Edwards, Kennedy, Schumer, Frank, and Pelosi.
Moreover, there is a surfeit of evidence that both major parties do the bidding of the corporate/banking interests. There is almost complete bipartisan uniformity on all key issues affecting the economy and national security: BOTH major parties (INCLUDING CLINTON) were behind another reversal of the New Deal--welfare "reform"--not to mention WTO/NAFTA (which has hollowed out the country's industrial capacity), the Telecom Act, etc., etc. Democrats also provided the needed majorities to pass the handout to the banking industry known as bankruptcy "reform," as well as the wars in Afghanistan and Iraq. Democrats--including H. Clinton and Obama and Pelosi--have consistently voted for funding of BOTH wars, whatever their occasional rhetorical feints to the contrary to gull the credulous such as Perry. Finally, Obama has joined with Republicans in fronting for the private insurance industry by taking single-payer Medicare for All off the table.
If you want to know which interests control both major parties, follow the money. According to the Phoenix Business Journal,
"Obama and McCain . . . have accepted a substantial amount of campaign money from Wall Street bankers, investment and securities firms and their executives during this election cycle.
"Investment firms have donated $9.9 million to Obama and $6.9 million to McCain this campaign thus far, according to the Center for Responsive Politics. Commercial banks have given Obama $2.1 million and McCain $1.9 million. Private equity firms and hedge funds have given Obama $2 million and McCain $1.4 million, according to CFRP.
"Lehman Brothers, Goldman Sachs, JP Morgan Chase & Co., UBS and heavyweight law firm DLA Piper are among Obama's top contributors. JP Morgan acquired Bear Stearns with the federal government taking on as much as $30 billion Bear assets as part of the deal. McCain's top donor sources include Merrill Lynch, Goldman Sachs, Citigroup and Blank Rome and Greenberg Traurig LLP law firms."
"Clinton signed the bill because it had a veto-proof majority."
That doesn't mean he had to sign it. If he were really against it he would have made Congress override his veto. And I'm sure he'd love to be gloating now about how he did the right thing by vetoing the gramm-leach-bliley act.
"fought as hard as it could" That's fucking hilarious! You need to get off those pharmaceutical drugs. :-)
Sorry you silly rabbit Trix are for kids.
The repeal of Glass Steagal was buried in an 11,000 page omnibus bill that wrapped up the business of a lame duck Congress and was submitted to a lame duck President for signature at the eleventh hour. There was no fight, there was no debate, there was only a fevered effort to get out of Washington DC at terms end.
I would accept that you probably believe what you have posted, but I assure you that it is as phony as is Obama's progressivism.
"The people need to speak louder--loud enough for the president to hear."
What "the people" presently lack is a few powerful, respected, angry leaders who can rally the troops to organized and sustained action. "The people" are mostly followers - they need to be led to the boycotts, led to the marches, led to the sit-ins and work-stoppages and tax-protests. Without leaders, they're nothing more than loud speakers, which the powers-that-be have no reason to fear.
Of course, the minute a leader might emerge, he/she would be torn to shreds by the gov-corporate-media complex, if not outright disappeared. Just think about how Nader is vilified, or the disgusting attacks launched against Cindy Sheehan, etc.
"The people" are divided and, hence, conquered at the moment, not to mention stupid, obese, lazy and afraid. Until they, er, I mean we, are able to focus and maintain a multi-pronged attack, said PTBs will continue doing whatever the f@#k they want...
Finally an explanation I understand...
Derivative Markets: An Explanation
Heidi is the proprietor of a bar on Stock Island. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later.
She keeps track of the drinks consumed on a ledger (thereby granting the customers loans). Word gets around about Heidi's drink now pay later marketing strategy and as a result, increasing numbers of customers flood into Heidi's bar and soon she has the largest sale volume for any bar on Stock Island.
By providing her customers' freedom from immediate payment demands, Heidi gets no resistance when she substantially increases her prices for wine and beer, the most consumed beverages. Her sales volume increases massively.
A young and dynamic vice-president at the local bank recognizes these customer debts as valuable future assets and increases Heidi's borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral.
At the bank's corporate headquarters, expert traders transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are then traded on security markets worldwide. Naive investors don't really understand the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, their prices continuously climb, and the securities become the top-selling items for some of the nation's leading brokerage houses.
One day, although the bond prices are still climbing, a risk manager at the bank (subsequently fired due to his negativity), decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi's bar.
Heidi demands payment from her alcoholic patrons, but being unemployed, they cannot pay back their drinking debts. Therefore, Heidi cannot fulfill her loan obligations and claims bankruptcy.
DRINKBOND and ALKIBOND drop in price by 90%. PUKEBOND performs better, stabilizing in price after dropping by 80%. The decreased bond asset value destroys the banks liquidity and prevents it from issuing new loans.
The suppliers of Heidi's bar, having granted her generous payment extensions and having invested in the securities are faced with writing off her debt and losing over 80% on her bonds.
Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor, who immediately closes the Miami plant and lays off 50 workers.
The bank and brokerage houses are saved by the Government following dramatic round-the-clock negotiations by leaders from both political parties. The funds required for this bailout are obtained by selling Treasury notes to China... and by a tax levied on employed middle-class non-drinkers.
(author unknown)
Sioux Rose
GERIX: Excellent post; and by the way in case you are not its author, there IS a bar on Stock Island (a few miles from Key West) with a sign painted on its side that says, "Free Beer Tomorrow." I suppose the sign moved some sentient soul to recognize its stunning analogy to the massive banking scam now underway.
In a previous and purer day, the hanged corpses of bankers would festoon many a lamppost in the U. S. of A.
Remember, as the Bible saith, "The stinking corpses of stinking bankers are a sweet aroma in the nostrils of the Lord Jesus Christ."
one old atheist
Three things that will improve the economy:
1.) Jobs
2.) Jobs
3.) Jobs
"With the benefit of the lessons of our history we are destined to repeat many otherwise preventable policy mistakes because we believe ourselves to be exceptional.” – Dr. Zimmerman Robert
Krishnamurti gave a talk in 1945 that is just as true today as it was then. He essentially says that we much resolve the dualistic modes we operate under, one concerning our interpersonal relationships and the pursuit of an 'occupation' where ambition and ruthlessness rule:
"Krishnamurti: Most of our occupations are dictated by tradition, or by greed, or by ambition. In our occupation we are ruthless, competitive, deceitful, cunning and highly self-protective. If we weaken at any time we may go under, so we must keep up with the high efficiency of the greedy machine of business. It is a constant struggle to maintain a hold, to become sharper and cleverer. Ambition can never find lasting satisfaction; it is ever seeking wider fields for self-assertiveness.
But in relationship quite a different process is involved. In it there must be affection, consideration, adjustment, self-denial, yielding; not to conquer but to live happily. In it there must be self-effacing tenderness, freedom from domination, from possessiveness; but emptiness and fear breed jealousy and pain in relationship. Relationship is a process of self-discovery, in which there is wider and deeper understanding; relationship is a constant adjustment in self-discovery. It demands patience, infinite pliability and a simple heart.
But how can the two meet together, self-assertiveness and love, occupation and relationship? The one is ruthless, competitive, ambitious, the other is self-denying, considerate, gentle; they cannot come together. With one hand people deal in blood and money, and with the other they try to be kind, affectionate, thoughtful. As a relief from their thoughtless and dull occupations they seek comfort and ease in relationship. But relationship does not yield comfort for it is a distinctive process of self-discovery and understanding. The man of occupation tries to seek through his life of relationship comfort and pleasure as a compensation for his wearisome business. His daily occupation of ambition, greed and ruthlessness lead step by step to war and to the barbarities of modern civilization.
Right occupation is not dictated by tradition, greed or ambition. If each one is seriously concerned in establishing right relationship, not only with one but with all, then he will find right occupation. Right occupation comes with regeneration, with the change of heart, not with the mere intellectual determination to find it.
Integration is only possible if there is clarity of understanding on all the different levels of our consciousness. There can be no integration of love and ambition, deception and clarity, compassion and war. So long as occupation and relationship are kept apart, so long will there be endless conflict and misery. All reformation within the pattern of duality is retrogression; only beyond it, is there creative peace."
Sioux Rose
CHESSGAME: The flaw in Krishnamurti's "case" is the presumption that all work is ambition-directed or affiliated with business. Many people go into the "helping professions" not out of ambition, but out of a genuine need and desire to alleviate others' suffering. Sure, they take a paycheck as ours is a society where finance and/or commercial transactions often mean life and death (being homeless can lead to a short lifespan). While there are aspects of his analysis that are fitting and worthwhile, he falls into his own paradigm of dualism by presupposing all work to fit the ambitious model.
I think you miss the point of Krishnamurti's post in two respects: first of all, the vast majority of jobs are taken out of necessity rather than real interest, so his basic point holds for the vast majority of quotidian jobs. Second, even people who work in the so-called helping professions encounter petty rivalries and ambitions, stodgy and callous bureaucrats, etc., etc. I have found that there is nothing pettier than the backbiting and sniping that goes on in a high-school faculty--often the smaller the stakes, the more intense the venom.
The fundamental dichotomy between the organic mode of personal relationships and the instrumental mode of the workaday world is all too real in nearly all cases, and bringing the ethos of the latter close to the ethos of the former would indeed spur human consciousness and activity closer to something like true, organic communitarianism or socialism. The idea would be, in Kantian terms, to always treat every person, even in the workplace, always as an end in him/herself, and not merely as a means (the emphasis here is on "merely," since one can never avoid treating another as a means to some small extent). See also the distinction between Gemeinschaft and Gesellschaft.
Sioux Rose
VANMUGO: Point well-taken. I haven't worked for "the system" since l982, so as a freelancer who defines her own daily tasks, it's hard for me to relate to those who DO work jobs inside of corporate shells. I realized a long time ago that I could pursue financial status or do my thing, and I decided to do my thing. Now as I see those who forfeited so much of their time to gain the objects of status and temporal success watch the VALUE of these items diminish, it reinforces my view that the most precious thing we have is our time. That is what is key. Most of my friends live the way I do where personal integrity is far more important that being inside some hierarchical institution. I guess I'm "out of the loop" insofar as penetrating the thought process of those that do conform to these artificial systems. For me work and consideration of others go hand in hand. And I suspect we are coming into a phase where barter will be more important than exchanging wampum. With all these sudden trillions injected into the US economy (its banks, anyway), one wonders what impact this contrived basis for prosperity will have on prior concepts of worth, wealth, and the protocols of exchange.
I had a friend who once told me Rose: You can either be on the bus or off the bus, but not both. To be off the bus, while wanting to be on it brings inner conflict; you still behave in an ambitious dog-eat-dog way (much of it unconscious). Awareness, itself, will bring about the right kind of occupation. It does necessarily mean changing jobs (though it very well may); it may mean a transformation in the way one performs his present job--perhaps selfless as opposed to selfish.
Krishnamurti has an enormous volume of work that spans several decades. I found a wonderful site that contains most of his works in their entirety for anyone who is interested:
http://tchl.freeweb.hu/
Enjoy!
Sioux Rose
CHESSGAME: These either/or choices are self-limited and self-limiting feedback loops. So the "bus" analogy doesn't hold. You cannot speak for my ego. I dated an attorney who had very ambivalent feelings towards ambition due to his thrall to Krishnamurti. I have read and studied a broad array of spiritual teachers and Masters, and Krishnamurti may be the logician's favored teacher, but he does not speak to my heart or relate to the cosmic picture that provides a very different set of reference systems, those that I can resonate with. I believe each of us is mandated to fulfill specific goals/functions while in a body, and if that's your take on ambition, we define the word through different intellectual prisms. I believe I am under "employ" to a higher authority, and I have witnessed all kinds of events and manifestations that would leave logic standing on the terminal long after the train departed.
You are correct in the either/or loop, Rose, when making reference to intellectual opposites, but NOT when it applies to what is spiritual and what is not (hasn't it been said we cannot serve both God [the Spirit of Truth] and mammon? That's what I'm trying to get at). If we subscribe to the concept of 'truth,' than something is either true or it is not. The 'essence' of the circumstances is what determines the truth of fallacy of something, which generally involves some kind of dynamic. Human psychology is a great example. Though the particulars of a relationship change, there are underlying psychological or spiritual laws that govern it, whether or not we are ignorant of them. Right 'meditation and watching will reveal this. What is truly spiritual makes the 'choice' for you when you allow yourself to surrender to it. And spiritual surrender can ONLY occur in a state of awareness, where genuine intuition operates. Let's put it this way: it is EITHER 'you' (your egoic self) OR the Cosmic; one displaces the other, so to speak. Why? Because the I, me, mine, my story, narrows one and prevents a broader perception. When operating from the egoic mind, we see only what we desire, which is a derivative--and artifact--of the past. And the Cosmic cannot penetrate the desire-driven self. Fortunately, as human beings we are not bound to this limited self because it is not the ESSENCE of what we are. I agree, though, language is very difficult when writing about these things.
Sioux Rose
OKAY, Chessgame... this analogy works for me, and I know when (usually) I am coming from ego versus spirit. I think the litmus test is when we come from ego, we feel vaguely "lessened," and when we come from Spirit, we sense an expansiveness that is and can be ecstatic.
And as a matter of intuition, I feel you just drew me back to this thread... just as two days ago I got off my computer just in time (I don't use TV and thus have no Weather Channel), for a few instants later the sky seemed to explode. A few days prior to that I biked over to my companion's house and had this vibe to leave, and as I began biking home there was light rain; but just about as soon as I got inside, the rains came falling hard. I am very tuned to intuition or the voice of Spirit... usually ego shows up when we need or want to be right, or when we're justifying a behavior on the basis of self-interest as opposed to wider possibilities. I wish others were so tuned! I have taught courses in tarot, astrology, numerology and prophecy & prediction to try to develop this capacity in persons.
Thanks Rose, and yes ego does always try to creep in. Sometimes a 'school' can help if you find someone who is awakened, but there's so much ersatz spirituality out there that it often becomes confusing or difficult; the 'darkness' within us knows what we want, and will generally lead us to it, away from the Light, away from exposure. One way to discern is to become attuned to listening to ego within yourself, which will help you spot it in others (this must be done without condemnation or identification). A false teacher WILL always, sooner or later, give away his or her true motives (of which they may not be aware of themselves, meaning that they are--to one degree or another--self-deceived). Authentically enlightened individuals are exceeding rare and, because they do not cater to their students' desires, are usually not popular or mainstream.
Rose writes: "I wish others were so tuned! I have taught courses in tarot, astrology, numerology and prophecy & prediction to try to develop this capacity in persons."
Women generally are more intuitive and I think they find their complement in a man who is strong, true, and practical. In a 'right relationship' both are helped in their spiritual growth, but I also think that dynamic is very rare. Presently, in just about every relationship, ego predominates, and there are, at best, only 'imitations' of spirituality.
As far as others being tuned, Rose, it depends on their essence, and perhaps what they have or haven't done in past incarnations (if there is such a thing. Ouspensky seemed to think recurrence was more likely than reincarnation, but that is only a detail). To many, what we are discussing here is the antithesis of what they are seeking. G says it's possible to crystallize in wrong 'triads' and thus cut yourself off from spiritual development. Whether that is true or false, we need to discover for ourselves. If true, that might explain the "pearl" thing in the bible, meaning that it can actually backfire if we attempt to 'develop this capacity in other persons,' when they inwardly do not welcome it.
I cannot say much about numerology and the tarot but, like the Ouija board, it may bring what is unconscious to the surface (though it must already be present in some shape or form) or resonate with energies that one has the capability of resonating with (due to some unknown sensitivity or developed ability?). Mentally, about things I do not understand, I put on a shelf until I receive clarity about them. For better or worse, it is impossible for me take anything on mere belief.
Too bad you're not closer, it might be interesting to meet for coffee. :o)
Anyway, thank you for your post, I found it very uplifting today for some reason. It's refreshing to see such honesty, especially in blogs where so much posturing goes on.
Boyd R. Collins makes an excellent point re. passivity and social conditioning. I address this (from a somewhat different perspective) in the strategy I present at needsandlimits.org. I call for "conceptual autonomy" to allow us to assert our own perspective in the economic sphere. Please have a look and tell me what you think.
I just got finished reading the Overview essay on your web site and I found it very interesting indeed. This appears to me to be an economics centered where it should be - on geniune human and ecological values. I also found the idea of defining value in other than monetary terms a compelling approach. Another concept I find refreshing is the idea of not basing production on the decisions of the individual about about their wants. Questioning the conventional basis of economics in this way is quite radical and opens a pathway out of the present impasse. I also searched diligently for "conceptual autonomy", but I didn't find it. But it appears that your approach exemplifies this autonomy. This is the type of imagination that I was advocating in my post. Thanks for this breath of fresh air.
Social concerns are not felt as a personal reality. They are abstractions, something we submit to, but not anything to which we have made a personal commitment. In the words of Erich Fromm, "Man submits to the state as to the embodiment of his own social feelings, which he worships as powers alienated from himself; in his private life as an individual he suffers from the isolation and aloneness which are the necessary result of this separation. The worship of the state can only disappear if man takes back the social powers into himself, and builds a community in which his social feeling are not something added to his private existence, but in which his private and social existence are one and the same." - The Sane Society.
It is this sense of commitment to the good of the whole, the commonwealth, which has been systematically undermined and which we must recover.
CALL FOR HELP FROM THE ECONOMICALLY LITERATE!
Today on Meet the Press Tim Geithner argued that his plan would be less costly than nationalization. Now it's my understanding--and I don't claim to have any specialized technical expertise in this area--that proponents of nationalization (temporary or otherwise) have argued that that option would be less costly because the first step would be simply to wipe out the shareholders and bondholders, eliminating that vast pile of phantom "wealth" and thereby sparing the taxpayers the burden of keeping all those speculators afloat with government funds (gamblers' welfare). In other words--although nationalization would indeed be much more costly to the investor (gambling) class, it would really be much LESS costly in the aggregate because there would be no need to drain the Treasury to sustain the illusion of a vast pile of phantom computer-generated virtual wealth. So with nationalization the investors take the hit, but under the Geithner plan the taxpayers take the hit; the gamblers and sharpies take smaller aggregate hit than the taxpayers would take under the Geithner plan, so nationalization overall is less costly and Geithner is either lying or clueless.
Do I have this approximately right, or am I hopelessly confused? In either case, I would appreciate some comments on this issue, along with any suggested on-line sources that deal with this issue of the true overall costs of the Geithner plan vs. nationalization.
One hopes that Obama's enthusiasm for education includes "functional literacy", the basic knowledge one needs to navigate the complexities of our economic life, such as how to calculate interest on borrowed money, as one example. We are in the crisis we are in because our educational system DOES NOT educate people in the fundamental economic facts of life.
Greider knows this well enough. Let us hope that the American people are inspired by this crisis to try to understand the huge con game being played on them by Geithner & Bernanke as chief representatives of the private financial system. It is time to change that system as Greider says.
Here is an excellent source for an alternative monetary system of which Wm Greider would approve. It is a six part video presentation by Richard C. Cook. We do not have to be in this crisis at all and there is a relatively easy way out. But Geithner & Bernanke aren't going to tell the people about it. Neither will Obama. The people have to educate themselves and make it happen.
http://www.globalresearch.ca/index.php?context=va&aid=12932
"This may be one of those moments where people can find some guidance from their moral convictions. They do not need to know all the details to ask simple questions."
I think this goes for much of what's going on and where we find ourselves.
To put this issue another way: How do we FEEL about what's going on? Not just with the economy, but what this whole system does to us as humans? How do we feel about having to work in jobs that are meaningless and dehumanizing and then having to pay the corporate bosses further with our hard-earned money and with our childrens' lives in wars that benefit said bosses? How do we feel about being lied to 24/7 on every front about...well, almost everything? How do we feel about being manipulated to feel it necessary to constantly buy crap we know is killing us and our progeny? How do we feel when the people who created this system get away with it while we get stuck with the bills, the problems, and the fall-out?
Indeed, we should start letting our moral convictions as well as our guts instruct us. Do we really believe that the way things have been is the way we want to continue? Do we really believe that this way of life is healthy and sustainable? Do we really believe that this is what we want to live for? Do we really believe that all we need to do is recognize the problem without having to change our behavior? Do we really believe we are above it all, not part of the problem?
How does all this feel...in our guts? When we look into the mirror, how does it feel? Really. We should ask ourselves. Our lives, our children's lives, all our lives, depend on our honest answers.
This is a very profound and important post....well done ,Mr. Markow.
Well stated! Thank you. This latest bailout just doesn't pass the smell test.
If we truly began to react with honest feelings, we would start to shake off the numbness induced by media manipulation of the crisis. While watching the pundits pontificate on the crisis, it seems as if they treat it as they would a flood or hurricane that was totally outside human control, whereas in fact the crisis is entirely created and maintained by human beings, who could have made other choices, just as our leaders could be making new choices now. But this responsibility is declined, individually and collectively, as Erich Fromm described it in the Sane Society, "Our own actions are embodied in the laws which govern us, but these laws are above us, and we are their slaves. The giant state and economic system are not any more controlled by man. The run wild, and their leaders are like a person on a runaway horse, who is proud of managing to keep in the saddle, even though he is powerless to direct the horse."
Agreed, Boyd.
Greider's piece is entitled "Trust Your Guts," not "Trust the Politicians" or "Trust the System."
At the risk of sounding like a parrot with a small vocabulary, I believe the questions and the answers come down to us. We know (or should, by now) that the answers are not going to come from the politicians or the corporate bosses. After all, the system works perfectly for them - they designed it! For the rest of us, the system is not only broken, it is working against us. It is doing us harm.
"But this responsibility is declined, individually and collectively..."
I like this. It is honest. They are the words of someone who stopped and really looked into himself and saw things as they truly are. Not to say that the fault lies completely with us as individuals, but that the answers lie with us as individuals. Indeed, we are slaves to the laws, and soon will be serfs to the masters, perhaps, quite literally. If we realize this, then we should also realize that asking the masters to stop abusing us is futile.
I am not sure whether the horse is running wild or whether it is indeed being controlled by the "leaders." Sometimes I get the feeling as if things are going according to plan. The people are in a continuous state of shock, and what better time to turn the screws even tighter on us? Either way, we are being squeezed, and we will continue to be so until we either completely surrender or figure out how to fight back.
So, what does our gut tell us?
Thanks for your thoughtful reply. I too am undecided about who is really in control at the top. The Obama presidency, for instance, seems to be a carefully contrived element in a plan to make the current wealth transfer to Wall Street harder to oppose. But on the bigger issue, I think the first step is for us to stop being so easily controlled and to fight against the intensive conditioning to which we have been subjected. It appears that the current financial crisis is being used as another shock to ease the consolidation of financial power into fewer and fewer hands. Figuring out how to fight back involves two elements, in my opinion, 1) Find ways to counter the individualistic conditioning; and 2) Connect with like-minded people in concrete, physical organizations where strategies of social resistance can be developed. So what does my gut tell me? Accept the responsibility, individually and collectively.
Our lives, our children's lives, all our lives, depend on our honest answers.
You are so right. However, there will be no honest answers from the Republicans and the Democrats. For them, honesty is something to be snickered at. The Democrats roll their eyes and shake their heads with a sense of pity and arrogant superiority at anyone who mentions honesty. The Republicans paraphrase Herman Goring: "When I hear the word honesty, I reach for my gun." Glenn Beck and Michelle Malkin, two absolutely demonstrable psychotics, speak for the paranoid, pissed off, red in the face crypto fascism that is the Republican party.
What Obama should have done was run on a platform of Hopelessness and Microscopic Change. I would not feel so ashamed of having voted for him.
There is still a thimble full of democracy left in this country. George Wanker Bush and Cheesedick Cheney did not overthrow it because, thank our lucky stars, they were too stupid to figure out how to destroy all of it. The rest is up to the frightened and exhausted people of this country. Had enough of this shit? You can still change it if you want. Like Diogenes, find yourself a lantern, then get out there and look for an honest person.
If so many smart, well-informed people like you had done some additional reading--even just checking out the articles in CounterPunch every day--you might not have been suckered by Obama. After all, his voting record has been consistently centrist and neoliberal. The progressive image was just a marketing illusion.
Anyway--don't blame me. I voted for Nader.
Right, but some here seem to believe that Counterpunch is biased. I wanted to vote for Nader but, alas, he wasn't on the ballot in NC. The one party duopoly apparently wants things to stay that way. One begins to wonder if 'choice' itself is an illusion, especially when discussion of the 'issues' is so tightly controlled. The article says 'trust your guts.' For me, that means getting in touch with what you know intuitively, and being open and aware to find confirmation in a broader context. If it truly be intuition, it will be confirmed by events, and especially the understanding of those events, so verification remains essential. GWB was said to decide things on gut instinct, but it obviously was not intuition, rather gut instinct based on self-interest, which is the antitheses of genuine intuition.
If so many smart, well-informed people like you had done some additional reading--even just checking out the articles in CounterPunch every day--you might not have been suckered by Obama. After all, his voting record has been consistently centrist and neoliberal. The progressive image was just a marketing illusion.
Anyway--don't blame me. I voted for Nader.
Thank you William Greider for you clarity. And thank you Ted Markow for your comment,8:45 am.