12 December 2011

The European Union Is No Different Than Russia and China?

I was astonished, when I started to read what promised to be an interesting piece about the Fed swap lines, that Chris Whalen thinks that with regard to political and economic freedom there is no distinction to be made among Europe, Russia and China. Perhaps he is writing from the perspective of the banks, who are quite unhappy with some proposed European restraints.

"Many readers of The IRA have asked us in the past several months if we despair for the future of the United States and the economic system built upon the much abused dollar. The short answer is no; we at IRA are bullish on the United States, in part because the very democratic freedom that allows Americans to commit acts of libertine stupidity is also our greatest strength.

No matter how much gold is stored in the central banks of the nations of the old world such as China, Russia and the European Union, these nations are not democratic. No amount of monetary rectitude will offset the fact that the peoples of the old world are not free to act, either in political or economic terms."

Chris Whalen, The Fed as the New Global Aristocracy

Contrast that expression of American financial triumphalism with this blistering comparison of the Arab protests and the Occupy Wall Street Movement.

"And that is the true parallel in the West. The protest movements are indeed against Big Business – a perfectly justified cause – and against "governments". What they have really divined, however, albeit a bit late in the day, is that they have for decades bought into a fraudulent democracy: they dutifully vote for political parties – which then hand their democratic mandate and people's power to the banks and the derivative traders and the rating agencies, all three backed up by the slovenly and dishonest coterie of "experts" from America's top universities and "think tanks", who maintain the fiction that this is a crisis of globalisation rather than a massive financial con trick foisted on the voters.

The banks and the rating agencies have become the dictators of the West. Like the Mubaraks and Ben Alis, the banks believed – and still believe – they are owners of their countries. The elections which give them power have – through the gutlessness and collusion of governments – become as false as the polls to which the Arabs were forced to troop decade after decade to anoint their own national property owners. Goldman Sachs and the Royal Bank of Scotland became the Mubaraks and Ben Alis of the US and the UK, each gobbling up the people's wealth in bogus rewards and bonuses for their vicious bosses on a scale infinitely more rapacious than their greedy Arab dictator-brothers could imagine."

Robert Fisk, Bankers are the Dictators of the West

According to Janet Tavakoli in this account, even the well-heeled and highly educated are beginning to show their puzzlement and disgust for the blatant cover up of fraud as demonstrated in this instance of the credibility trap.
"Afterwards, several people came to me and to the other questioners. Much of the audience complained to CCGA's conference organizers. All were disappointed in Professor Shiller. A male CPA in the audience later contacted me via my website and wrote that he was glad I had put the question to Shiller: "though I have a great deal of respect for him, I was disappointed in his 'response' (if you could call it that)."

One woman who earned a Ph.D. in history found Shiller's response to me "incoherent:"
I was with my husband, brother, and his wife. I chatted with the stranger next to me and at least two people escaping at the same time [leaving after the speech]. No one could believe what a huge "fail" the evening had been...the failure of our political and expert classes to address the core issues...have alienated even those working in the financial industry--right up into the rung below the top of the food chain...this feels like the Ancien Régime's last days.
Alumni of the Federal Reserve, corrupt politicians, and willfully blind academics would be correct to say that evening was a case of "class warfare." Well-heeled U.S. patriots declared war on the lack of class demonstrated by their financial peers."
Perhaps Americans can revel in their unique freedom of action when they step to the voting booths next fall, and vote for one of the two choices offered to them by their corporate oligarchs, while their elected representatives continue to ignore massive bank frauds and the gaming of the system by the monied interests, now colloquially called the 'one percent.'

And don't step out of line or speak up because you may be pepper sprayed at will.

But more interestingly, it seems likely from my read of the demimonde that the States are going to diverge from Europe once again in some greater policy matter, probably involving the handling of the financial crisis, a shock like nationalizing the banks, or even a military solution to a nagging problem. And this may just be an advance serving of 'freedom fries' with extra ketchup and a side of jingoism.

By the way, I am watching this stock market decline somewhat sceptically this morning. There is the Zynga IPO coming out this week, and the markets will welcome it with open hearts and hopefully, your open pocketbooks.