Weekend Reading - Ode to Financial and Political Narcissists and Sociopaths

The expense of spirit in a waste of shame (Sonnet 129)
by William Shakespeare

The expense of spirit in a waste of shame
Is lust in action; and till action, lust
Is perjured, murderous, bloody, full of blame,
Savage, extreme, rude, cruel, not to trust;
Enjoyed no sooner but despisèd straight:
Past reason hunted; and no sooner had,
Past reason hated, as a swallowed bait,
On purpose laid to make the taker mad:
Mad in pursuit, and in possession so;
Had, having, and in quest to have, extreme;
A bliss in proof, and proved, a very woe;
Before, a joy proposed; behind, a dream.
     All this the world well knows; yet none knows well
     To shun the heaven that leads men to this hell.

This video below illustrates why the rational expectations model of efficient markets is a dangerously misinformed theory, and perhaps a deadly rationalization for plunder. The theory, like so many flawed economic models, discards the outliers of the norm, who in the real world are in sufficient number to have a statistically significant effect on the outcome and the shape of the market.

And this is why self-regulation without objective oversight, the rule of law, and justice for all in equal measures is a path to self-destruction.

Power attracts certain personality types, and organizations that value power, or ruthless determination to achieve results at any cost, often end up being run by people with the mentality of predators. And the predatory environment can become self-reinforcing and self-sustaining given time.

“A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself.

For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist.

A murderer is less to fear.”

Marcus Tullius Cicero

Blaming the Victim and Other Biases and Their Use by the Predator Class To Subvert the Unwary

It is an occasional human fault to get pulled into the habit of 'blaming the victim.'

Most people do not do it regularly, except in the case of some uninformed prejudice or in response to misinformation.

But some people seem to do it more often and sometimes habitually. Why is that?

As we might imagine, nothing can make a certain type of person feel better about themselves than attributing the misfortune of another to foolishness or stupidity. Since a similar misfortune has not happened to them, they must therefore be a superior type of person, and not the ordinary person that they fear they might be who just happened to get lucky.

In my experience this 'distancing' of oneself from the rest of humanity is at the root of much of the bad behaviour that can become institutionalized into the corruption of an organizational structure that eats at the fabric of society.

Sometimes people do engage in serial risky behaviour that leads them into trouble.  It seems as though everyone knows at least one person who gets themselves into a bad situation by acting foolishly and recklessly. Sometimes it is caused by mental illness, alcoholism or some other negative influence. Everyone can think of someone who 'brought it on themselves.' And our imaginations can extend that instance quite easily and broadly.

We can use these few anecdotal examples to blame the victims unjustly on a more general and uninformed level. And we often fall into this bias on the prompting of con men and sociopaths of the predator class who use it to justify their own criminal actions and personal injustice. They are not burdened with empathy for their victims, and even delight in their misfortune. But they must find ways to make their actions more acceptable to society as a whole that normally does have such concerns for equity and justice.

Personal exceptionalism is rooted in pride, and is the antithesis of the old saying, 'There but for the grace of God go I.'

Those MF global customers? They had it coming because they should have known better. Those people who lost money in the stock market? Well, no one MADE them buy those fraudulent paper assets that professionals recommended to them. That family who lost their home to foreclosure because the father was severely injured by sickness or accident? They should have planned better and taken more precautions.

In its extreme example, the subornation of human caring becomes a form of madness, the 'demonization of the other.' That whole group/class/race/nation of people who are being mistreated, brutalized, cheated, starved, and even murdered? It is unfortunate of course, but they are lazy/cheap/stupid/dirty/sneaky/different/subhuman and so they had it coming. But we are not like that so we are doing well and even prospering.

But these are just thoughts from my own direct experience.  Here is a systematic and more thorough analysis that I found to be interesting.

Blaming the victim – why do we do it? For example, are rape victims responsible for what happens to them? Are victims of car crashes or other accidents responsible for what happened to them? These are the kinds of questions we examine as we look at the strange human tendency to blame the victim.

Here is the concept map for the biases discussed in this show:

Download Podcast here.

Source: Blaming the Victim and Other Biases

Attribution Map Quiz

1: Fundamental Attribution Error
•“people do what they do because of the kind of people that they are, not because of the situation they are in”
•“people tend to underestimate external influences when explaining other people’s behavior”

2: Actor/Observer (bias) Difference
•“Whereas we are very likely to find internal causes for other people’s behavior, we tend to look …to the situation to explain our own behavior”
•Example: in a murder trial, the prosecution will call the person a murderer, defense will focus on the difficulty of the person’s life at the time or their childhood, characteristics of the person murdered. “That person drove my client to do what he/she did”

3. Self-serving Attribution (bias): while we tend to take credit for our successes (attribute success to internal causes), we blame our failures on external causes
•I earned an A, my professor gave me a C
•Why? Because it threatens our self esteem to think that failures were caused by something about ourselves
•Example: sports – when a team wins, they attribute it to talent or skill, when they lose, they attribute it to bad luck, poor playing conditions, bad calls from the umpires rather than “I didn’t train hard/study hard enough”, “Our team wasn’t as good”
•It feels bad to attribute our failures to ourselves

4. Optimism bias: “good things are more likely to happen to oneself than to others and bad things are less likely to happen to oneself”
•A kind of “defensive attribution”
•Why do we tend to hold this belief? Because the world is a scary, unpredictable place and that makes us feel anxious. The only way to feel a little better is to believe that it couldn’t happen to me. “I would have acted differently”, “That wouldn’t happen to me because…”I would make different decisions”

5. Belief in a Just World: bad things happen to bad people, “or at least to people who make mistakes, poor choices, etc.” thus, bad things won’t happen to me because I wouldn’t make those mistakes.
•“the belief in a just world keeps anxiety-provoking thoughts about one’s own safety at bay” Aronson, et. al.
•when the world seems chaotic or dangerous, this is anxiety provoking. so we attempt to reassure ourselves by blaming the victim

Charles Ferguson: Predator Nation, Global Predator Class

"Over the last thirty years, the United States has been taken over by an amoral financial oligarchy, and the American dream of opportunity, education, and upward mobility is now largely confined to the top few percent of the population. Federal policy is increasingly dictated by the wealthy, by the financial sector, and by powerful (though sometimes badly mismanaged) industries such as telecommunications, health care, automobiles, and energy. These policies are implemented and praised by these groups’ willing servants, namely the increasingly bought-and-paid-for leadership of America’s political parties, academia, and lobbying industry.

If allowed to continue, this process will turn the United States into a declining, unfair society with an impoverished, angry, uneducated population under the control of a small, ultrawealthy elite. Such a society would be not only immoral but also eventually unstable, dangerously ripe for religious and political extremism.

Thus far, both political parties have been remarkably clever and effective in concealing this new reality. In fact, the two parties have formed an innovative kind of cartel—an arrangement I have termed America’s political duopoly, which I analyze in detail below. Both parties lie about the fact that they have each sold out to the financial sector and the wealthy. So far both have largely gotten away with the lie, helped in part by the enormous amount of money now spent on deceptive, manipulative political advertising. But that can’t last indefinitely; Americans are getting angry, and even when they’re misguided or poorly informed, people have a deep, visceral sense that they’re being screwed...

So I’m not going to spend much time describing ways to regulate naked credit default swaps, improve accounting standards for off- balance-sheet entities, implement the Volcker rule, increase core capital, or measure bank leverage. Those are important things to do, but they are tactical questions, and relatively easy to manage if you have a healthy political system, economy, academic environment, and regulatory structure.

The real challenge is figuring out how the United States can regain control of its future from its new oligarchy and restore its position as a prosperous, fair, well-educated nation. For if we don’t, the current pattern of great concentration of wealth and power will worsen, and we may face the steady immiseration of most of the American population...

Before getting into the substance of these issues, I should perhaps make one comment about where I’m coming from. I’m not against business, or profits, or becoming wealthy. I have no problem with people becoming billionaires—if they got there by winning a fair race, if their accomplishments merit it, if they pay their fair share of taxes, and if they don’t corrupt their society...

But that’s not how most of the people mentioned in this book became wealthy. Most of them became wealthy by being well connected and crooked. And they are creating a society in which they can commit hugely damaging economic crimes with impunity, and in which only children of the wealthy have the opportunity to become successful.

That’s what I have a problem with. And I think most people agree with me."

Charles Ferguson, Predator Nation

This is not only an American phenomenon, but one deeply rooted in the Anglo-American banking cartel, and in the money centers and hidden wealth of Europe. Ferguson talks primarily of how the solution may come from the people of the US, but the true impulse for change may come from without, from the countries who have already been brutalized by the rise of the predator class.

See also this 2008 post from Le Café Américain , Predator Class and from 2010 Class Warfare and the Decline of the West.

Popular resistance against the decline of freedom and opportunity is often thwarted by the foolish self-interest of many who believe that they themselves have the ability to benefit from and become a part of the predator class, although they would never call it by that name. After all, they are successful, they have money and wealth, and they think they have the power to stand alone, but want more.

Weak and amoral people rationalize their service to what they come to realize, over time is objectively evil in a thousand different ways.  The most common is the expediency of a career, going along to get along.

"His success alone proved that I should subordinate myself to this man."

And frequently, if only in the back of their minds, is the thought that they too could be as gods. What they do not yet realize is that to the ubermensch they and their children are no different from the illegal immigrants and the poor, fit only for exploitation, who will do as they are told, until their time comes.  

This is the shock that was felt by the customers of MF Global when their money was brazenly and openly stolen. They were a part of the game, they were believers in the system, well educated, hard-working. But to the powerful insiders they were really just cockroaches, and another form of prey.

And not every psychopath chooses to use a knife.

"Psychopaths have a grandiose self-structure which demands a scornful and detached devaluation of others, in order to ward off their envy toward the good perceived in other people."

“He will choose you, disarm you with his words, and control you with his presence. He will delight you with his wit and his plans. He will show you a good time but you will always get the bill. He will smile and deceive you, and he will scare you with his eyes.

And when he is through with you, and he will be through with you, he will desert you and take with him your innocence and your pride."

Robert D. Hare, Without Conscience


"Do you think he is so unskillful in his craft, as to ask you openly and plainly to join him in his warfare against the truth? No; he offers you baits to tempt you. He promises you civil liberty; he promises you equality; he promises you trade and wealth; he promises you a remission of taxes; he promises you reform...

He shows you how to become as gods. Then he laughs and jokes with you, and gets intimate with you; he takes your hand, and gets his fingers between yours, and grasps them, and then you are his."

J.H.Newman, The Antichrist

The Quebec Students Strike

"But the most interesting resistance happening right now is going on in Quebec, Canada. There are, according to one representative report, over 165,000 students on strike from class out of a 495,000 student body.

Quebec is looking to increase their tuition 75% over the next several years; students responded by starting what is now the longest strike in the province's history. It's gone on even though the government has offered to make student loans a nicer, kinder form of debt, with income-contingent repayments while not budging on the tuition hikes...

The campus combines several issues into one - the privatization of public services, the dismembering of social insurance and its replacement with a regime of debt and risk-shifting, the dismantling of the primary means of social mobility with one designed to entrench inequality, which all builds towards a lack of freedom to fully develop ones talents and abilities and be full, productive citizens.

These students are right to fight this battle at the beginning, during the initials cuts. Privatization creates its own justification; the more public universities are defunded and reconceived as a private good, the less civic interest there is in defending them as a public good. And they are also fighting at the beginning of their lives, both for what kind of world they want to live in while resisting the constraints of indenture that we see when this process of privatization and debt reaches its ultimate conclusion - a path the United States is much further along."

The Quebec Students Strike - Rorty

At this time strikes and protests are more oddities, although the numbers are growing.

In time they will become a trend and will be met by even harsher repression, Mideast-style, in the US, the UK and Canada.

It sometimes seems as though the leaders of the great world powers have decided not to fight among themselves, except in controlled regional conflicts. Blood keeps the ledgers green.

Rather, they have learned to cooperate with each other, to enrich themselves and increase their personal power which has always been the goal of the predator class, by dominating and abusing their own people, engaging in financial pogroms, and preparing the way for a de facto global government and planned economy of the elite, by the elite, and for the elite.

And so we see once again the dreams of world domination, the rhetoric of privilege over law, and the perennial rise of the ubermensch. Even the victims of yesteryear seem to be getting on board, or at least their leaders are for it, hoping to get their own piece of the pie.

How soon we forget, forsaking what is lasting and important, becoming wilfully blind out of pride, fear and greed. There are those who would have a world in flames, as long as they might own the ashes, winning. And so history repeats.

The US GDP Report

One picture is worth a thousand words...

Buffaloed Tim and Howdy Bernanke

Jon Stewart: The Poor's Free Ride Is Over

The Daily Show - World of Class Warfare - The Poor's Free Ride Is Over

Class War and the Decline of the West

Before he rediscovered his self interest, ignoring the outrageous financial frauds perpetrated by his own ratings agency, Warren Buffett famously said, “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

I find it remarkable that there is so little meaningful discussion of this in mainstream circles. Well perhaps not, considering that most of them are now owned by a few major corporations.

The key to stopping this theft of your freedom is purging the political system of the corruption of paid influence, campaign contributions by non-persons like corporations, special interest groups, and unions, the breaking up of the media conglomerates that seek to control the news, and the implementation of a system of sound money for international trade at least, using a standard that resists the manipulation of the financial system as outlined in Hugo Salinas-Price's quietly brilliant and remarkably insightful essay, Gold Standard: Protector and Generator of Jobs.

The powers that be will fight reform every step of the way, using propaganda and your prejudices and emotions against you. The best way to conquer a people is to persuade them to enslave themselves using slogans and simplistic views of the world that play on their fears and hatreds. The neo-liberal economic fraud that was scripted by the monied interests is played out daily to vast audiences using actors and actresses masquerading as politicians, analysts, and commentators.

I receive at least ten emails per day from the self-enslaving, sadly to say mostly older men like myself, that repeat the slogans and urban myths like faithful party members, seasoned with hateful prejudice and mindless propaganda, so I know that the influence peddlers and indoctrinators are doing a good job of it, subverting the middle class.

It is a little remembered fact that the greatest boost in support for the rise of the National Socialist party came not from the underclasses which had always been a minority player on the political stage, but from the more influential professional class, the petit-bourgeois: doctors, dentists, accountants, shop owners, and small business owners. They added their force to the earliest supporters , the industrialists and the monied interests, the bankers and the industrialists.

This is how the National Socialists were able to so easily co-opt the medical profession and educated classes into the early horrors of euthanasia, sterilization, and then finally extermination of whole categories of 'undesirables.' The middle class thought they could ride the wave, the will to power, in their greed and hate and revenge, but they soon learned that madness has no master, consuming all with fire.

This is how your freedom, your wealth, will be taken from you and your children, their futures devastated. So it is something with which you might wish to be familiar, so you can at least explain it to them when they are homeless in the land their forefathers gave you.

"For we wrestle not against flesh and blood, but against principalities, against powers, against the rulers of the darkness of this world, against spiritual wickedness in high places." Ephesians 6:12

Here is a recent essay by Professor Ismael Hossein-zadeh that is worth reading.

"Never before has so much debt been imposed on so many people by so few financial operatives--operatives who work from Wall Street, the largest casino in history, and a handful of its junior counterparts around the world, especially Europe.

External sovereign debt, as well as occasional default on such debt, is not unprecedented [1]. What is rather unique in the case of the current global sovereign debt is that it is largely private debt billed as public debt; that is, debt that was accumulated by financial speculators and, then, offloaded onto governments to be paid by taxpayers as national debt. Having thus bailed out the insolvent banksters, many governments have now become insolvent or nearly insolvent themselves, and are asking the public to skimp on their bread and butter in order to service the debt that is not their responsibility.

After transferring trillions of dollars of bad debt or toxic assets from the books of financial speculators to those of governments, global financial moguls, their representatives in the State apparatus and corporate media are now blaming social spending (in effect, the people) as responsible for debt and deficit!

President Obama's recent motto of "fiscal responsibility" and his frequent grumbles about "out of control government spending" are reflections of this insidious strategy of blaming victims for the crimes of perpetrators. They also reflect the fact that the powerful financial interests that received trillions of taxpayers' dollars, which saved them from bankruptcy, are now dictating debt-collecting strategies through which governments can recoup those dollars from taxpayers. In effect, governments and multilateral institutions such as the IMF are acting as bailiffs or tax collectors on behalf of banksters and other financial wizards.

Not only is this unfair (it is, indeed, tantamount to robbery, and therefore criminal), it is also recessionary as it can increase unemployment and undermine economic growth. It is reminiscent of President Herbert Hoover's notorious economic policy of cutting spending during a recession, a contractionary fiscal policy that is bound to worsen the recession. It is, indeed, a recipe for a vicious circle of debt and depression: as spending is cut to pay debt, the economy and (therefore) tax revenues will shrink, which would then increase debt and deficit, and call for more spending cuts.

Spending on national infrastructure, both physical (such as roads and schools) and social infrastructure (such as health and education) is key to the long-term socioeconomic developments. Cutting public spending to pay for the sins of Wall Street gamblers is bound to undermine the long-term health of a society in terms of productivity enhancement and sustained growth.

But the powerful financial interests and their debt collectors seem to be more interested in collecting debt claims than investing in economic recovery, job creation or long-term socioeconomic development. Like most debt-collecting agencies, the IMF and the states serving as banksters' bailiffs through their austerity programs may shed a few crocodile tears in sympathy with the victims' of their belt-tightening policies; but, again like any other debt-collecting agents, they seem to be saying: "sorry for the loss of your job or your house, but debt must be collected--regardless."

A most outrageous aspect of the debt burden that is placed on the taxpayers' shoulders since 2008 is that most of the underlying debt claims are fictitious and illegitimate: they are largely due to manipulated asset price bubbles, dubious or illegal financial speculations, and scandalous conversion of financial gamblers' losses into public liability.

As noted earlier, onerous austerity measures to force the public to pay the largely fraudulent external debt is not new. Benignly calling such oppressive measures "Structural Adjustment Programs," the International Monetary Fund and the World Bank have for decades imposed them on many less developed countries to collect debt on behalf of international financial titans.

To "help" the indebted nations craft debt-servicing arrangements with external creditors, the IMF imposed severe conditions on the way they managed their economies--just as it is now imposing (in collaboration with the European and American bankers) those austerity policies on the debtor nations in Europe. The primary purpose of such restrictive conditions is to divert or transfer national resources from domestic use to external creditors. These include not only belt-tightening measures to cut social spending and/or raise taxes, but also selling-off public enterprises, national industries, and future tax revenues.

Calling such fire-sale privatization deals "briberization," the ex-World Bank chief economist Joseph Stiglitz revealed (in an interview with the renowned investigative reporter Greg Palast) how finance ministers and other bureaucratic authorities in the debtor countries often carried out the Bank's demand to sell off their electricity, water, transportation and communication companies in return for some apparently irresistible sweetener. "You could see their eyes widen" at the prospect of 10% commissions paid to Swiss bank accounts for simply shaving a few billions off the sale price of national assets..."

Ismael Hossein-zadeh, The Vicious Circle of Debt and Depression: It Is a Class War

Here is a lengthier history of the undermining of the US political system using financial fraud from Renaissance 2.0.

The bailout of AIG is near the core of the great fraud. Crack that nut, and we may learn something about financial fascism and the Fed. That is why they may dance around it, but they will never take down the principals and bring the truth out into the light of day.

Le monde est sourd. The world is deaf, and the truth has no place to lay his head in their hearts.



I am a citizen of the world, and nothing is alien to me except sin.

Wall Street Excluded from European Government Bond Sales

The Ugly American is a novel that was published in 1958, and was later made into a movie starring Marlon Brando. It tells the story how America was losing the hearts and minds of the people in Asia after its heroic performance in the Second World War by the predatory business practices and exploitation of US multinationals. The book was a bit of a scandal, coming on the heels of Nixon's visit to South America where he was spat upon by angry mobs.

At the time people talked about the way in which US corporations were alienating the developing world (we called it 'third world' then), and how it would create a generation of political difficulties for the US around the world. This was an initial wake up call to the American public, which was lost and forgotten in the fervor of the Go-Go Sixties. What was good for General Bullmoose was good for the USA. Or so we all thought.

Regrettably, once again US corporations, the Wall Street banks, are busy alienating the world against America's interests through their unethical and shockingly predatory business practices. It will be interesting if Asia and South America pick up this theme of banning the Wall Street banks on ethical considerations from doing certain types of business in their regions.

It would be even more significant if US financial assets were to no longer find a place with foreign investors, based on a perception of their somewhat fraudulent taint from the CDO ratings scandals. Little or no reform has yet occurred. Who will then expect anything to have changed?

The imbalances, flaws and conflicts of interest in the US financial markets are a genuine shame, and may yet cripple the economy once again. And the unwillingness of the reform President to do anything about it is even more shocking still. What is he thinking?

Congressman Alan Grayson (D-Fla) recently said , "There is a growing feeling on the part of Democrats that the president is getting bad advice from people who have sold out to Wall Street."

I think far too many people would agree whole-heartedly with him.


Guardian UK
Europe bars Wall Street banks from government bond sales
By Elena Moya
Monday 8 March 2010 21.36 GMT

European countries are blocking Wall Street banks from lucrative deals to sell government debt worth hundreds of billions of euros in retaliation for their role in the credit crunch.

For the first time in five years, no big US investment bank appears among the top nine sovereign bond bookrunners in Europe, according to Dealogic data compiled for the Guardian. Only Morgan Stanley ranks at number 10.

Goldman Sachs doesn't make the table. Goldman made it to number five last year and in 2006, and number eight in 2007, the data shows. JP Morgan was in the top ten last year and in 2007 and 2006 but doesn't appear this year.

"Governments do not have the confidence that the excessive risk-taking culture of the big Wall Street banks has changed and they still cannot be trusted to put the stability of the financial system before profit," said Arlene McCarthy, vice chair of the European parliament's economic and monetary affairs committee. "It is no surprise therefore that governments are reluctant to do business with banks that have failed to learn the lesson of the crisis. The banks need to acknowledge the mistakes that were made and behave in an ethical way to regain the trust and confidence of governments."

European sovereign bond league tables are now dominated by European banks such as Barclays Capital, Deutsche Bank, and Société Générale, the Dealogic table shows. Their business model is usually seen as more relationship-based, while US investment banks have traditionally been focused on immediate deal-making. (A euphemism for customer face-ripping - Jesse)

Being left out of government bond sales means missing out on one of the top fee-earning opportunities this year, given the relative drought in mergers and acquisitions and stock market flotations. Western European governments need to raise an estimated half a trillion dollars this year to refinance debts and pay for bank bailouts and rising unemployment....

Investment banks insist their business areas are separated by confidentiality walls, but countries have been furious about some of their trades appearing to conflict – either on their own books, or on behalf of clients.

Goldman Sachs said its overall position in the European sovereign bond market had improved this quarter once US dollar denominated deals were included. It said its own data showed it ranked fourth in European sovereign bond sales this year...

"The power of big investment banks was a factor in the banking crisis, and it's up to regulators and customers to stand up to them, and not picking them is one of the ways," Augar said...

The EU is also trying to curb US financial power by creating its own monetary fund – a replica of the Washington-based IMF. The need of a European fund has emerged during the Greek crisis, as European politicians have insisted financial troubles should be resolved at home.

Wall Street Thinks You Are a Jealous Little Malcontent

After thinking it over, and listening carefully to the discussion on financial television and the news today in reaction to the proposal for a special bank tax, I can come to no other conclusion. Wall Street thinks that the American people, who came to their aid after the collapse of a monumental and most likely fraudulent bubble, are jealous little malcontents.

They believe that the public wants to limit the bonuses paid by Wall Street because they are just jealous. Or stupid and petty. At least they wish to leave their viewers and readers with that impression.

That's the long and short of it. You, average working stiff and retiree, are just a jealous little malcontent who envies the great success of the financial sector, much like some foreign agitator who attacks the West because they envy its freedoms.

And you are seeking retribution, revenge. That is what this bank tax is all about, retribution.

An economics professor just admitted that he too feels a need for retribution at times, as an emotional response, but being a more educated fellow he sees how negative that is. Instead he proposes that if we must have some bank tax that we divert the funds received into a bank holding fund, a kind of a TARP II, to pay for future financial disasters. Forget about reform. The banks are too smart for it.

I would not call it jealousy or a need for retribution.

I would say that the people as a whole have a sense of right and wrong, a sense of fairness and balance, a sense of outrage that is being held in check by patience, a remarkable forebearance, but wish to see justice done for themselves and their children, because it is the right thing, the only practical thing, to do.

But I can also understand why the Wall Street Bankers and the financial elite would see this as jealousy and envy.

Sociopath: (so⋅ci⋅o⋅path) a person, as a psychopathic personality, whose behavior is antisocial and who lacks a sense of moral responsibility or social conscience.

The most amoral, pathological son of a bitch I ever worked with, who by the way was enormously charismatic and charming when on public display, was a big tech entrepreneur from the Boston area. When his grandiose schemes started to fall apart, as much from the impracticality of his ego as from the fact that no one would trust him any longer, having senselessly betrayed everyone including his closest friends, he said to me in all the sincerity he could muster, "I am failing because people want to drag me down to their level."

And I can assure you, the halls of too many corporations and big government are infested with such power needing, neurotically driven personality types.

This is what renders any notion of self-regulation and efficient markets the romantic fantasy that they are. People are not uniformly rational and moderate in their behaviour. All people are not possessed of a natural goodness and a self-effacing moderation.

This is what makes the rule of law, the Constitution, so indispensable.

This is not to say that their enablers, the financial demimonde, are sociopaths. They are doing what enablers too often do; go along to get along, say and do whatever is required for pay. Camp followers, as they used to be called.

And as for what happened, well, as one well-heeled, successful young manager advised, "Older people are easy to handle. You just scare them. Then they do whatever they are told."

In his mind 'older' was anyone over 40. And as for the rest of the people, well, you just play on their other emotions like hatred and greed and prejudice. He saw absolutely nothing wrong with this, and was so straightfoward and unabashed in this view that it made my blood run cold, because it was clear that he was not alone in this perspective. And it is obvious that Tim, Ben, and Hank did exactly this, and it worked.

And so now they hit the theme that if the banks are taxed, they will just find ways around the restrictions, and keep doing what they wish to do with bonuses and speculation, but may stop lending to the people for their commercial and personal needs, to punish them.

So there you have it. You are a jealous, envious, little nobody desiring retribution from your betters in the land that your fathers fought and died for.

And not only that, but many of your middle class fellows would agree. They would not think this about themselves of course, but about you, the other. The lazy stupid one. There is no easier way to elevate yourself in your own mind than to just put down, impoverish, the other.

And the banks and their enablers in the government will use this, and shape your thinking with it.

You cannot say that you have not been warned. Many times. Money is power, and in a free republic power must be restrained with checks and balances, with a continuing effort and vigilance.

"Banks have done more injury to the religion, morality, tranquility, prosperity, and even wealth of the nation than they can have done or ever will do good." John Adams

There can be no easy truce, no peaceful resolution of the current crisis, until the banks are restrained, and the political and financial systems are reformed, and balance is restored to the economy.

"I believe that it is better to tell the truth than to lie. I believe that it is better to be free than to be a slave. And I believe that it is better to know than be ignorant." H. L. Mencken

Never allow yourself to succumb to hatred and a desire for retribution rather than justice. It is always wrong to hate, because the ultimate tragedy is that we become what we hate, we take the shape of that which possesses our passions, thoughts and attention, we adopt its methods and distortions, even if as in a mirror, until we too are misshapen and lost. And that is the real tragedy, how the whole world can descend into a whirlpool of madness, and become blind. So let us appeal to the law, and to justice, at every turn.

Mr. Obama. Reform these banks.

The Predator Class

Its interesting to read this essay from early 2006 today in the light of what we have seen in the intervening period. A number of people who might have dismissed this out of hand back then might see a little more truth behind the rhetoric today.

So, how can the political system reform itself? How can we reestablish checks, balances, countervailing power, and a sense of public purpose? How can we get modern economic predation back under control, restoring the possibilities not only for progressive social action but also—just as important—for honest private economic activity? Until we can answer those questions, the predators will run wild.

It is something to think about for the New Year, for all parties involved. FDR was denounced as a 'traitor to his class' at the time, but in reality he was one of the most insightful of leaders. If one views outcomes in other contemporary governments from 1916 to 1940, and considers what a Huey Long administration might have been as an example, the New Deal seems like a wise and appropriate political move for all involved.

Why are people so reluctant to believe that sociopaths and narcissists can use the power of the pen to prey on people? Because they are well spoken and organized? We would contend that these are the most dangerous of the emotionally warped with a need to acquire, dominate and control, because they are smarter and more calculating than the impulse murderers, burglars, rapists, thieves, and pedophiles.
There is a need for economic law and enforcement as there is a need for the less cerebral, hairy knuckled criminal law and enforcement. The notion that people become naturally good, rational and well-adjusted because they are wearing a suit is ludicrous, especially to anyone who has worked with many of those who move in the upper echelons of money and power.
Some of the scariest people we have ever met were articulate and pathologically driven borderline psychopaths with a need to acquire political and economic power. It is the focus of their illness that makes them powerful. They are not distracted by the diffusion of emotional responses that color most people's actions. They have a need, and the will to satisfy it, no matter what it takes.
As an aside, we have met many kind and gentle and thoughtful people in all walks of life, rich and poor. It is not the office that makes the person; it is their character. Class prejudice is mistaken and unjust, and there is always someone less fortunate than you who might view you as the object of their anger, no matter who you might be. The hypocrisy and injustice of prejudice and 'class warfare' knows few limits.
There will always be those at the extremes who need to 'take it to the limit,' with a well stocked foreign retreat in case things get ugly. But for most of us, restoring a sense of justice and order and putting the nation back into some kind of working balance will be high on the priority list, if not for ourselves, then for our families. Violence does not work, ever. The Constitution is a restraint that works both ways, against the predations of the powerful, but also as a shield against would-be Robespierres with their dark reigns of terror.
It is going to take a lot of hard work, and time. Its been a long time coming, it will be a long time gone. But it has been done before by those who created this nation, and it can be done to restore it again.
We are not doomed. Our situation is not hopeless. But the system is badly out of balance, and will have to be restored by meaningful reform. There will be inflation and selective defaults, real justice and show trials, innovation and false starts, disproportionate suffering, uncertainty and even some level of conflict. But eventually the accounts will be squared and we will gather ourselves together an move forward. The sooner we start, the sooner it will be over.

Mother Jones
The Predator State
By James K. Galbraith
May/June 2006 Issue


WHAT IS THE REAL NATURE of American capitalism today? Is it a grand national adventure, as politicians and textbooks aver, in which markets provide the framework for benign competition, from which emerges the greatest good for the greatest number? Or is it the domain of class struggle, even a “global class war,” as the title of Jeff Faux’s new book would have it, in which the “party of Davos” outmaneuvers the remnants of the organized working class?

The doctrines of the “law and economics” movement, now ascendant in our courts, hold that if people are rational, if markets can be “contested,” if memory is good and information adequate, then firms will adhere on their own to norms of honorable conduct. Any public presence in the economy undermines this. Even insurance—whether deposit insurance or Social Security—is perverse, for it encourages irresponsible risktaking. Banks will lend to bad clients, workers will “live for today,” companies will speculate with their pension funds; the movement has even argued that seat belts foster reckless driving. Insurance, in other words, creates a “moral hazard” for which “market discipline” is the cure; all works for the best when thought and planning do not interfere. It’s a strange vision, and if we weren’t governed by people like John Roberts and Sam Alito, who pretend to believe it, it would scarcely be worth our attention.

The idea of class struggle goes back a long way; perhaps it really is “the history of all hitherto existing society,” as Marx and Engels famously declared. But if the world is ruled by a monied elite, then to what extent do middle-class working Americans compose part of the global proletariat? The honest answer can only be: not much. The political decline of the left surely flows in part from rhetoric that no longer matches experience; for the most part, American voters do not live on the Malthusian margin. Dollars command the world’s goods, rupees do not; membership in the dollar economy makes every working American, to some degree, complicit in the capitalist class.

In the mixed-economy America I grew up in, there existed a post-capitalist, post-Marxian vision of middle-class identity. It consisted of shared assets and entitlements, of which the bedrock was public education, access to college, good housing, full employment at living wages, Medicare, and Social Security. These programs, publicly provided, financed, or guaranteed, had softened the rough edges of Great Depression capitalism, rewarding the sacrifices that won the Second World War. They also showcased America, demonstrating to those behind the Iron Curtain that regulated capitalism could yield prosperity far beyond the capacities of state planning. (This, and not the arms race, ultimately brought down the Soviet empire.) These middle-class institutions survive in America today, but they are frayed and tattered from constant attack. And the division between those included and those excluded is large and obvious to all.

Today, the signature of modern American capitalism is neither benign competition, nor class struggle, nor an inclusive middle-class utopia. Instead, predation has become the dominant feature—a system wherein the rich have come to feast on decaying systems built for the middle class. The predatory class is not the whole of the wealthy; it may be opposed by many others of similar wealth. But it is the defining feature, the leading force. And its agents are in full control of the government under which we live.

Our rulers deliver favors to their clients. These range from Native American casino operators, to Appalachian coal companies, to Saipan sweatshop operators, to the would-be oil field operators of Iraq. They include the misanthropes who led the campaign to abolish the estate tax; Charles Schwab, who suggested the dividend tax cut of 2003; the “Benedict Arnold” companies who move their taxable income offshore; and the financial institutions behind last year’s bankruptcy bill. Everywhere you look, public decisions yield gains to specific private entities.

For in a predatory regime, nothing is done for public reasons. Indeed, the men in charge do not recognize that “public purposes” exist. They have friends, and enemies, and as for the rest—we’re the prey. Hurricane Katrina illustrated this perfectly, as Halliburton scooped up contracts and Bush hamstrung Kathleen Blanco, the Democratic governor of Louisiana. The population of New Orleans was, at best, an afterthought; once dispersed, it was quickly forgotten.

The predator-prey model explains some things that other models cannot: in particular, cycles of prosperity and depression. Growth among the prey stimulates predation. The two populations grow together at first, but when the balance of power shifts toward the predators (through rising interest rates, utility rates, oil prices, or embezzlement), both can crash abruptly. When they do, it takes a long time for either to recover.

The predatory model can also help us understand why many rich people have come to hate the Bush administration. For predation is the enemy of honest business. In a world where the winners are all connected, it’s not only the prey who lose out. It’s everyone who hasn’t licked the appropriate boots. Predatory regimes are like protection rackets: powerful and feared, but neither loved nor respected. They do not enjoy a broad political base.

In a predatory economy, the rules imagined by the law and economics crowd don’t apply. There’s no market discipline. Predators compete not by following the rules but by breaking them. They take the business-school view of law: Rules are not designed to guide behavior but laid down to define the limits of unpunished conduct. Once one gets close to the line, stepping over it is easy. A predatory economy is criminogenic: It fosters and rewards criminal behavior.

Why don’t markets provide the discipline? Why don’t “reputation effects” secure good behavior? Economists have been slow to answer these questions, but now we have a full-blown theory in a book by my colleague William K. Black, The Best Way to Rob a Bank Is to Own One. Black was the lawyer/whistle-blower in the Savings and Loan and Keating Five scandals; he later took a degree in criminology. His theory of “control fraud” addresses the situation in which the leader of an organization uses his company as a “weapon” of fraud and a “shield” against prosecution—a situation with which law and economics cannot cope.

For instance, law and economics argues that top accounting firms will protect their own reputations by ferreting out fraud in their clients. But, as with Enron, Tyco, and WorldCom, at every major S&L control fraud was protected by clean audits from top accountants: You hire the top firm to get the clean opinion. Moral hazard theory shifts the blame for financial collapse to the incentives implicit in insurance, but Black shows that the large frauds were nearly all committed in institutions taken over for that purpose by criminal networks, often by big players like Charles Keating, Michael Milken, and Don Dixon. And there’s another thing about predatory institutions. They invariably fail in the end. They fail because they are meant to fail. Predators suck the life from the businesses they command, concealing the fact for as long as possible behind fraudulent accounting and hugely complex transactions; that’s the looter’s point.

That a government run by people rooted in this culture should also be predatory isn’t surprising—and the link between George H.W. Bush, who led the deregulation of the S&Ls, his son Neil, who ran a corrupt S&L, and Neil’s brother George, for whom Ken Lay sent thugs to Florida in 2000 on the Enron plane, could hardly be any closer. But aside from occasional references to “kleptocracy” in other countries, economic opinion has been slow to recognize this. Thinking wistfully, we assume that government wants to do good, and its failure to do so is a matter of incompetence.

But if the government is a predator, then it will fail: not merely politically, but in every substantial way. Government will not cope with global warming, or Hurricane Katrina, or Iraq—not because it is incompetent but because it is willfully indifferent to the problem of competence. The questions are, in what ways will the failure hit the population? And what mechanisms survive for calling the predators to account? Unfortunately, at the highest levels, one cannot rely on the justice system, thanks to the power of the pardon. It’s politics or nothing, recognizing that in a world of predators, all established parties are corrupted in part.

So, how can the political system reform itself? How can we reestablish checks, balances, countervailing power, and a sense of public purpose? How can we get modern economic predation back under control, restoring the possibilities not only for progressive social action but also—just as important—for honest private economic activity? Until we can answer those questions, the predators will run wild.

James K. Galbraith teaches economics at the Lyndon B. Johnson School of Public Affairs at the University of Texas-Austin. He previously served in several positions on the staff of the U.S. Congress, including executive director of the Joint Economic Committee.