17 September 2013

Max Keiser and Greg Palast on Larry Summers and the Financial Crisis

"Cynicism masquerades as wisdom, but it is the farthest thing from it. Because cynics don’t learn anything. Because cynicism is a self-imposed blindness, a rejection of the world because we are afraid it will hurt us or disappoint us.”

Stephen Colbert

In our time truth comes from the mouths of comedians, because otherwise no one would take it seriously. 

Here is an interesting discussion that Max Keiser had with investigative reporter Greg Palast about Larry Summers and 'The Endgame Memo.' The interview occurred a few days before Summers withdrew his name from consideration as the next Fed Chairman.

Jeffrey Sachs has previously raised some serious concerns in a video speech to the Philadelphia Fed about his own conversations with the financial leaders of other nations, and the anger which they feel towards the US regarding the rampant financial fraud which caught their own economies in the financial crisis through the promulgation of bad paper and manipulative derivatives.

Obviously I do not know if all of what Palast is saying is correct. But the memo seems to be legitimate.  And it is also puzzling that Obama was pushing Summers so hard against such strong political headwinds, with a track record of serial disasters and potential scandals and conflicts of interest abounding.

Obama and Summers finally withdrew the nomination when faced with a revolt from their own Senators, and the normally complacent economist community, at the idea of placing Summers in charge of the Fed.    

Apparently even the culture of hypocrisy has its limits. 

I just finished reading This Town by Mark Leibovich.   In 1974 roughly 3% of Congressmen stayed in the District as lobbyists after serving their terms.  Today that number is approximately 50% of Senators and 43% of Congressmen who stay in the Beltway to become highly paid lobbyists, fueled by corporate money, cashing in on connections and influence often for the same causes which they fought against while in the Congress.  
“In poor countries, officials receive explicit bribes; in D.C. they get the sophisticated, implicit, unspoken promise to work for large corporations”

Nassim Taleb, The Bed of Procrustes
We have seen the meteoric rise of 'full service firms' that contain former high profile figures of both the Republicans and the Democrats in a partnership of cynicism, raw power, and greed.  Right or left, they offer a one stop shop that can fix any problem, fashion and implement any loophole, and promote aggressive war and excuse genocide with a straight face if there is enough money to be made in it.  

The story in the book is how broadly the politicians are co-opted by the promise of salaries in the tens of millions, even while they are still legislating.  It envelopes the journalist community and the media, and it has gotten completely out of hand. 

It is as if the government has been taken over by an army of Huey Longs of the right and the left, who operate on a principle of shameless self-enrichment.  They bamboozle the public with distracting emotional issues, while allowing the powerful interests which they serve to rob them blind. 

And the extreme moral hazard is that there are rarely any lasting negative consequences for anything if done with the right spin, since cynical competence has become rite of passage in The Club, and the fashionably proper thing to do.  The only sin is virtue, because it is bad for business. 

And if you think movements like the Tea Party are a force for reform through small government and deregulation, the problem is a bipartisan loss of shame, decency, and compassion in the cult of the self,  across the political spectrum.  Deregulation is the first tool of the financiers and their corporations.

Some years ago the French novelist Léon Bloy wrote in The Woman Who Was Poor that 'the only tragedy is that we are not all saints.' What a quaintly funny thought in our cynical culture, to aspire to high ideals and self denial.   Jed Purdy laments this loss of striving for good in his book For Common Things.  We lose our innocence in cynicism.  It is as it is.  And such acquiescence makes one blind to their own hardened hearts, deaf to the agony of the victims, and unmindful of the approaching abyss. 

In our time the prophet is the will to power,  and its god and measure is money.  The only tragedy is not to get filthy, stinking rich, even if it is done over the crushed bodies of innocent people.  And it is not enough to get richer than everyone else, but one must also see the others fail, and to be crushed.   How much more sweet then is the victory.

The suppression and co-opting of the legitimate voices for positive change is perhaps the saddest thing of all.  But it is certainly nothing new to anyone who has even a passing familiarity with the darker passages of history.  And for those who say I would never, the gods first make them mad.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

The American dream is dying on our watch, having been led down a blind alley of powerful self-interests and big money, and strangled.   As Roger Babson said on 5 September 1929, "sooner or later, a crash is coming, and it may be terrific."

Welcome to The Hunger Games.  And may the odds be ever in your favor.