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When Greed is God
This entry was posted on 3/24/2009 4:42 PM and is filed under Added Articles.
People who protest that the public is missing the point when they protest bonuses paid out to incompetents, the very incompetents who have wrecked their own businesses on the way to collapsing half the world’s economic system, are themselves missing the point.
While no one suggests that the egregiously generous bonuses being paid out at AIG is the core of the problem causing our economic meltdown, these bonuses are certainly an unwelcome recrudescence of the very disease that is at the source of the problem. That is greed.
What is occurring today is playing out exactly along the same lines as the Savings and Loan rip off the American people in the eighties – except on an even greater scale. In that instance congress got bribed into deregulating the Saving and Loans. Then the Republican White House malignly neglected any measure of oversight over the diminished regulations under which they then operated. Crooks soon infested and collapsed an entire segment of the S&L system from inside out. The government (via the Resolution Trust) brought up all the toxic and often wildly inflated assets of the failed S&Ls at premium prices, thereby letting the vast majority of the thieves get away with their thefts intact and with no penalty attached.
Then the Resolution Trust bundled these newly purchased taxpayer assets at bargain prices and peddled them to other big money interests – the only ones who could afford them in bulk. This ensured sweetheart deals at low prices for their well-heeled and well-connected purchasers. Congress for its part did absolutely nothing to rectify its massive mistakes other than agree among themselves to cover up the entire corrupt mess and stick the taxpayer with the tab of up to half a trillion dollars. In short, the public got reamed coming and going. We paid high and sold low and let the fat cats on either end of the transaction reap windfall profits at our expense.
Does any of this smell familiar? The current financial crisis and our government’s response to it is history repeating on a far, far bigger scale. We can already see that, amazingly, the government is trying to paper over the greed and corrupt practices at the heart of this scandal and stick the poor taxpayer with all the burden of costs and debt necessary to clean it up. Meanwhile the bankers and politicians will divvy up the winnings among themselves at their leisure.
As very wealthy people and their political friends make out like bandits on either end of this current scam, the whole sub-prime mortgage-credit default swap double pyramid gambit, the taxpayer (again!) via the government that is allegedly looking after their interests is getting stuck with making a whole new category of multimillionaire.
Even when the pickpockets get caught red handed with their hands still in our pockets nothing happens to them. In fact the government wants to reward them if they will just kindly take them out of our pockets. If we let them get away with it this time (again!) it will only encourage them - like ego competing pharaohs of yore - to build their pyramids higher next time and guarantee that same corrupt cycle of greedy bankers and shady pols will continue unabated.
Therefore rest assured that pundits and pols and who discount public outrage over payouts to AIG are complicit in the scam in one form or another. After all, what is good about what has been done here? This isn’t capitalism, it is greed, venality, corruption, mismanagement, and stupidity. It is everything that goes wrong when the hinges come off capitalism. And yet the apologists are saying it is this tendency to theft and fraud which must be protected and forgiven and insulated from change and reformation. Greed isn’t just king any more, it has been defied. It has become God.
Therefore AIG is an outrage exactly because it is the festering ugly pustule on the surface which indicates that the infection is still percolating just out of view under the skin inches below. This is exactly what the public senses, that the underlying issues which caused the venality pandemic are not being addressed at all. Greed and corruption are being richly rewarded, not vigorously deterred. The AIG bonuses, along with a myriad of other outrages on display in newspapers and newscasts daily are symptomatic that the government’s approach to the problem is less designed to solve the problem than to encourage its reoccurrence.
The government bailout system engineered by Bush and Paulson and being continued by the Obama administration is named TARP (troubled asset recovery program, or something) which is an apt name because it is specifically designed (like the Resolution Trust) to throw a cover up over the whole sordid affair. All the fat cats who got well on the S&L pyramid against the public have now grown downright obese twenty years later and are doing it to us again. TARP should really be OCPP – the obese cat protection plan.
Because the government system of bailouts is a “let ‘em eat cake and ice cream” plan for overeaters anonymous, it’s a “hair of the dog that bit you” cure for the incurable alcoholic. It is a tribute payment to the thieves who robbed us, it is negotiating with terrorists who threaten to murder the economy unless we pay them off, it is payoffs to kidnappers with little expectation that the victim they took will be discovered alive.
The people well understand that that the people in charge of the recovery plan to this point have been far more interested in not annoying the greedy pseudo capitalist tormentors that got us into this crisis, in coddling them to murmuring approval as if our bailouts were somehow inconveniencing them, than in insulating the public from the ongoing effects of their highway robbery. The government is less concerned with fixing the wreck of the economy and in salvaging the lives of the innocent Americans who these people have so cruelly victimized than it is in shoring up the paper losses of the Ponzi artists who have destroyed so many peoples’ livelihood.
Our real problem is that all the people taxed with fixing all the problems connected to the derivatives markets were all in on its creation together. The republicans have long been so morally and ethically bankrupted as to be beyond all reclamation but the democrats ethics have been heavily mortgaged as well.
Look at Obama’s crack team of economic advisors. I hate to say it, but to put Larry Summers in charge of your economic response team is to use the exact same logic that AIG is using to justify its exhorbitat pay-offs to the authors of the credit collapse. In other words we are mistaking and equating knowledge how the crime was committed with innocence of and a desire to fix the crime.
There is a large gap between being brilliant and being wise. Many, many very smart people over time have proven themselves to be complete idiots. Larry Summers, we’re told, is brilliant, even indispensable, but this has never stopped him from being a fool. George Bush went to Harvard and Yale both. So educational pedigree is no guarantee of excellence.
Therefore, when Larry Summers, working for his boss Robert Rubin and Alan Greenspan, who was allegedly working for the American people, argued together against any modicum of oversight over these newly forming derivative markets, they reached the bizarre conclusion that markets may be trusted (when?) to regulate themselves (How?) honestly (where?) and laid the foundation of this entire fiasco.
The question we might want to ask is, how could anybody be that dense? Or that corrupt? The answer lies with the corrosive moral effect and inbred myopia that comes with rampant self-interest and greed. We are being led at every level in Washington by the back-scratch twins. You scratch my back and I’ll scratch yours. This equation doesn’t leave room for either democracy or logic, the public be damned.
This far into the Obama administration it seems that on the economic front little has changed from George Bush, one of the most haplessly incompetent men in our history. Larry Summers and his second in command, Tim Geithner have proven far more industrious in helping Wall Street bankers cover their rear ends, where their asses-set, and abet them in getting completely away with our money without recrimination than they have ever been in bringing these miscreants to any sort of remunerative collective justice.
Because if nothing else is clear in this vast dimness it is that the perpetrators of these interconnected frauds are not remorseful people. They don’t care and never will. They are amoralists. They are enemies of the public. Much as they have stolen already they are still primarily concerned with trying to get their grubby hands in the public till even today, when the public is doing everything it can to bail them out of the fire they themselves set. Even now they are doing everything they can to cheat us, singed rear ends and all. Gratitude and remorse alike are foreign to such empty people.
The problem with both Larry Summers and the bonus scandal at AIG is this: can a person who helped create a problem be counted upon to solve the problem they created? The simple answer is – very rarely. It’s like paying a car bomber a premium to put the pieces of the car he’s just blown up back together on the theory that since he knows where the bomb was placed and why he should know where the pieces of the car have flown to after the explosion. The logic of this type of thinking fails on every level.
The world works the other way. People who make huge mistakes are uniquely disqualified from being able to correct or even see or own up to their own mistakes
or perhaps they wouldn’t have made such idiotic mistakes to begin with.
And this particular instance is even worse because these were not honest mistakes. There was not only a heavy dose of irrationally exuberant stupidity involved in these financialization schemes but also a complete lapse of moral and ethical fiber inherent to them as well. This makes it doubly unlikely that any of the participants in these frauds will be able to be of any use whatsoever in trying to selflessly unravel them. In this case they have been guilty of more than just willful dishonesty, or complete incompetence, but a fatal combination of both.
The capability of these people is reminiscent of the old refrain of “being blind as a bat in one eye and not able to see out of the other.” Now to expect such people as these to be able to be farsighted enough to navigate us out of the very jungle which they have just gratuitously navigated us into, when there must be far better people available to do it, is insane.
This brings us back to the illogic of putting Larry Summers in charge of fixing a problem that he was instrumental in creating. It is almost impossible to reconcile that Larry Summers and Timothy Geithner, both eyeball deep in their obliviousness and complicity to these problems as they arose are right for the job of undoing the effects of these problems they allowed to occur.
Moreover we have seen enough of them already to know where their essential sympathies lie. It is not with the American people, we are an abstraction to them, an afterthought. They speak of a public they don’t understand or particularly care for – and it shows. How in the world do you get a committed alcoholic who won’t admit he is one, to ban the source of the liquor that sustains his own habit?
When Obama chose someone like Summers over someone like say, a Stiglitz, a professional rival of Summers who saw all the problems before they arose, the writing was on the wall. The Obama team will never get “it” right because they don’t even have a clue as to what “it” is. If you don’t know the root cause of the problem you are hired to fix how are you going to fix it?
If you think it doesn’t make a difference whose in charge of these affairs, imagine taking your car in for repairs to the dealership mechanic who insists, for corporate reasons, that your problem is that your tires need realignment because they are trying to fix your car on the cheap. Meanwhile, while you waste your time there, you are avoiding the honest mechanic who can tell merely by listening that your car has a bad head gasket. Sure you hate the expense the second option entails but it will cost you less in the long run than hiring the company shill who has a vested interest more in serving his corporation’ interests than your own. Summers and Geithner won’t get this right because they are institutionally incapable of getting it right. They are too close to their work, too myopically involved with their own egos and circle of friends and special interests to see the larger picture from where they are.
Here’s the crux of Obama’s (and our) problem. He chose poorly in an area of which didn’t have expertise. He chose “experts” in their field and overlooked the fact that they were fatally tainted by the field they were expert in. At a time crying for economic populism they are economic elitists. They are programmed to be institutionalists. It’s what the schools they were very successful in, taught them. How can they betray such old allegiances now? For Obama to put people like this in charge of reforming a system they don’t believe needs reform is like Louis XVI calling forth a few members of the nobility to tell him what is wrong with the nobility – the answer comes back, obviously – “Nothing sire. Our fundamentals are fundamentally strong.” on the eve of the French Revolution.
But how does Obama get out from under his own mistake? He can hardly jettison his entire economic team this early in his term and this deep in an economic crisis without causing panic. He certainly can’t rely on congress to come up with solutions because they are deeply infected with the same mange, try as they may to pretend they are not. Plus they are too easily swayed by too many back room deals – and we know how often those things turn to the public good – that they will turn even good proposals bad.
The answer is he needs to get some advice from someone somewhere outside of the beltway soon and then be strong enough to not let Summers or Geithner (as they apparently were able to do with the issue of protecting execrable executive compensation) sway him away from good ideas.
Maybe he needs to look first for people who were against what was going on in Washington and Wall Street long before it was opportune to do so rather than continue to rely on those who’ve spent their entire careers neck deep in the very quicksand mire we are trying to swim our way out of. He needs to convene a committee of economic dissidents to listen to for a change. On economics he seems to have surrounded himself with functionaries more concerned with protecting their buddies and their own images and shoring up and perfuming corrupt practices rather than bringing them to an end.
So far, Obama’s economic plans don’t “scour’. They don’t cut deeply enough into the tumor to excise it. In a few words his approach to this economic crisis has been superficial, facile, complacent and condescending. And in this respect, despite all his great capabilities and the strong support of the public at his back his administration has gotten off on the wrong foot in the area which is most urgent and on which the success of his entire administration may well depend.
Injustices left covered up continue to fester and corrupt. In this way the cover up of the S&L fiasco may have led directly to the current financial scandals. Crimes unpunished only compound. They never go away. Therefore those who say the public shouldn’t be outraged over the egregious bonuses given by AIG to many of their worst and guiltiest employees are completely wrong.
The entire government bailout plan is worse than moral hazard. It not only doesn’t punish bad behavior but positively rewards it. It plays exactly into the worst traits of the individuals and institutions that are getting the bailouts. It assumes they mean well and can behave responsibly when they have just proved they will not. It’s like giving matches to an arsonist and asking them to please check for a gas leak under your house.
The recipients of these bailouts are not nice and gentle people. They are not good Americans. They are the “malefactors of great wealth” Roosevelt spoke of and if Obama thinks he can reach out in fairness to them without getting his hand chewed off he doesn’t know enough of life. These are mean, evil, greedy men who won’t be chastened by conscience or moved by doing what’s good for the country. Greed is their God, they worship nothing else.
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