You can probably forget any kind of other news today. There aren’t any details of the operation yet, but this is probably going to be something out of an epic yarn:
An American ship captain was freed unharmed Sunday in a swift firefight that killed three of the four Somali pirates who had been holding him for days in a lifeboat off the coast of Africa, the ship’s owner said.
Apparently, they (Navy Seals?) boarded the ship and killed the pirates and rescued the captain. It’s hard to believe it’s 2009.
Even though society fetishizes Christmas, for Christians this is really the big one. And while I’m not religious, the spring, rebirth, resurrection symbolism of Easter makes it my very favorite of the religious holidays. (Plus the chocolate. )
For those of us who aren’t going to church today, perhaps we can revel in the fact that Rick Warren is getting criticized from both sides for lying about his support for Prop 8 and is said to have canceled an appearance on Stephanopoulos this morning. Hallelujah.
Every now and then a debut film comes along that has a voice. And when I say “voice”, I mean that the director’s confidence and clarity of cinematic vision has a tangible presence-from the very first frame to the closing credits. Maybe I’m a little jaded, but it doesn’t happen that much these days. So when I saw Cary Fukunaga’s amazingly assured first feature, Sin Nombre, it “…made my big toe shoot right up in my boot,” (as Little Richard described his reaction the first time he ever saw Jimi Hendrix perform on stage).
Defying all expectations, this modestly budgeted, visually expansive gem hinges on a simple narrative, but is anything but predictable. It’s an adventure, yet it is informed by an almost meditative stillness that makes the occasional frisson that much more gripping and real. It delves into gang culture, but it isn’t a movie about gangs. It has protagonists who are desperately attempting to immigrate to the United States by any means necessary, yet this isn’t yet another earnest message film about “the plight” of illegal immigrants. It’s a “road movie”, but the future’s uncertain-and the end is always near.
The film is basically comprised of two stories, which eventually merge as one. One story begins in Honduras, centered around a headstrong teenaged girl named Sayra (Paulina Gaitan) who joins her long estranged father and uncle as they journey to Mexico, where they plan to ride the rails as far north as possible before making a final dash across the border to America, where dreams of milk and honey await in New Jersey (they hope). Sayra’s father hopes to use their time together on the road to become reacquainted with his daughter. Sayra, who seems to be working through some abandonment issues, is polite but set on keeping a cool distance from his belated attempts at offering fatherly advice and exerting parental authority. Still, Sayra, her father and her uncle begin to form a family unit, precipitated more by circumstance and necessity than by genuine affection.
Another type of extended family unit is examined in the film’s companion narrative, which takes us to the southern Mexico state of Chiapas, and is centered on a local chapter of the notorious “MS-13” gang. We are introduced to the group by witnessing a brutal initiation rite, a 13-second long “beat down” on a disturbingly young inductee nicknamed “El Smiley” (Kristian Ferrer). Punches and kicks are soon replaced by congratulatory hugs, as Smiley is welcomed as a “brother” by his new homies, and anointed a “son” by the leader, “Lil Mago” (Tenoch Huerta Mejia). We also meet Willy, known to his homies as “El Caspar” (Edgar Flores) who is Smiley’s sponsor, and a de facto big brother figure to the young boy. While he is a dedicated and respected member of the gang, Willy gives us glimpses of a creeping disenchantment with gang life; we sense that he dreams of a better life. He also has something that appears to be lacking in his fellow homies-a genuine heart and soul. This pang of conscience leads to a fateful conflict with Mago, a repugnant sociopath who will accept nothing less than unquestioning, blind obedience from his underlings. Circumstance puts Willy in the same train yard where Sayra and her relatives await to jump a train that will take them north; and thusly their stories converge.
While this is a very human story, containing all the elements of classic drama (love, hope, betrayal, revenge, personal sacrifice), it is also very much about geography, and the elegiac tone that it evokes for what is essentially a harrowing tale. As the train whistle stops its way the length of Mexico, that country’s rugged beauty is captured in gorgeous “golden hour” hues by cinematographer Adriano Goldman. Goldman’s work here started to remind me of the great Nestor Almendros, who did the magnificent photography for Terence Malick’s Days of Heaven. In fact, I found myself flashing on Malick’s film a lot (the Texas prairies used as backdrop in Days of Heaven are in the same neck of the woods, and some story elements and the protagonist’s point of view are reminiscent of that film, too). Whether or not Malick was a conscious influence on Fukunaga is a moot point, because this film stands on its own. Besides, one could have worse influences.
For an unknown cast (many acting in a film for the first time), there are an astonishing number of outstanding performances. I think this adds to the naturalistic, believable tone of the film. My film going companion, who is a native of Mexico (she’s from Colima), was quite impressed by that element, and seconded the motion that the milieu was muy autentico. Sin Nombre is another rarity these days-it’s meant to be seen on the big screen.
I just watched one of the most disturbing yet bizarrely entertaining shows I’ve ever seen on television. It’s a Glenn Beck special called “Destined To Repeat(?)” featuring noted right wing intellectuals Jonah Goldberg, Amity Schlaes, and a couple of other fringy authors discussing the connections between Obama and Hitler, Stalin, Woodrow Wilson, FDR and other “progressive” dictators, illustrated throughout with black and white footage of Nazis and concentration camps.
It ended with a stirring speech by an actor dressed as Thomas Paine exclaiming that the American founders wouldn’t have flown airplanes into buildings or passed the biggest spending program in history. And then he said to join the tea parties.
Here’s Beck’s intro:
Our country is not being controlled by jack-booted fascists, but just like I said during George W. Bush’s presidency, the groundwork is continuously being laid to take us there.
History shows us that it only takes two simple things for fascism to rear its ugly head virtually overnight: fear and hunger. A temporary crisis is almost always a precursor to a much more permanent one.
With that in mind, let me show you the four main things we’ll be talking about tonight.
First, to Russia, where, under communists like Lenin and Stalin, their revolution pitted peasants against the rich. They were basically saying “Eat the rich! They did it to you! Get them, kill them!” These days? There were demonstrators rioting in front of the G20, unions protesting in front of AIG and buses showing up at the houses of the evil AIG executives.
It’s a different style, but the sentiments exactly the same: find them, get them, kill them.
Second, we’ll consider what the average person thinks about fascism. They believe it’s ridiculous and could never happen in America; after all, no one’s electing Adolf Hitler to office. But the secret we’ll learn tonight is that fascism wasn’t always synonymous with mass murder.
Progressives once had a love affair with it — particularly with Mussolini. You may remember him as the guy whose body was hung upside down by meat hooks while civilians threw stones at it. But before that he had lots of admirers in the United States, including singers Irving Berlin and Cole Porter, comic Will Rogers (who said “I’m pretty high on that bird,”) and The New York Times, which wrote “Mussolini is a Latin [Teddy] Roosevelt who first acts and then inquires if it is legal. He has been of great service to Italy at home.” Mussolini was also well-respected abroad. Winston Churchill once called him “the world’s greatest living lawgiver.”
Third, I’ll show you how Woodrow Wilson moved away from the Founding Fathers’ principles and values. Today, those who disparage the strict constructionists as worshiping old men in wigs are building on what the progressives started at the top of the last century.
The fourth topic tonight is the Great Depression. The world was starving and when the world goes into darkness, it’s always based on several small events followed by one cataclysmic one. Hitler used the world economic crisis as a pivot point; he said he was going to protect the common man, people rallied around him.
I watched this surreal, intellectual train wreck with a mixture of awe and stunned disbelief. (You can watch video excerpts here.) I don’t think I’ve ever seen anything quite like it on national television.
I wrote the other day that Roger Ailes is a genius and I am convinced more than ever that he really is. He’s reinventing FOX News as the voice of a revolutionary, counterculture right and, frankly, it’s really fresh. It’s like they’ve been set free and can finally do what they’ve always wanted to do.
I’ve featured Howard Beale over there on the left side of the page for a long time, mostly because the film Network predicted today’s wierd, surreal media to an astonishing degree. But I think it’s finally coming to full fruition with this Beck thing. And Roger Ailes is the Diana Christenson (Faye Dunaway) of our time:
Diana Christensen: Look, I sent you all a concept analysis report yesterday. Did any of you read it?
[Aides stare blankly at her]
Diana Christensen: Well, in a nutshell, it said: “The American people are turning sullen. They’ve been clobbered on all sides by Vietnam, Watergate, the inflation, the depression; they’ve turned off, shot up, and they’ve fucked themselves limp, and nothing helps.” So, this concept analysis report concludes, “The American people want somebody to articulate their rage for them.” I’ve been telling you people since I took this job six months ago that I want angry shows. I don’t want conventional programming on this network. I want counterculture, I want anti-establishment. I don’t want to play butch boss with you people, but when I took over this department, it had the worst programming record in television history. This network hasn’t one show in the top twenty. This network is an industry joke, and we’d better start putting together one winner for next September. I want a show developed based on the activities of a terrorist group, “Joseph Stalin and His Merry Band of Bolsheviks,” I want ideas from you people. This is what you’re paid for. And by the way, the next time I send an audience research report around, you’d all better read it, or I’ll sack the fucking lot of you. Is that clear?
Now Beck isn’t carrying Howard Beale’s actual rants by any stretch. But he is performing the same role. And I would guess that it’s going to translate into lots of money for the network.
The question is what it’s going to do to politics.
And lest anyone think that this problem isn’t helped along by the rest of the media’s capitulation to the same values, here’s Diana Christenson again to help you understand how this works:
Diana Christensen: I watched your 6 o’clock news today; it’s straight tabloid. You had a minute and a half of that lady riding a bike naked in Central Park; on the other hand, you had less than a minute of hard national and international news. It was all sex, scandal, brutal crime, sports, children with incurable diseases, and lost puppies. So, I don’t think I’ll listen to any protestations of high standards of journalism when you’re right down on the streets soliciting audiences like the rest of us. Look, all I’m saying is if you’re going to hustle, at least do it right.
Ailes has just upped the ante.
It’s hard to believe that movie was made as a satire 33 years ago.
Update:Here’s Dennis Hartley’s review of Network from a while back.
As we wait another day for the resolution of this hostage situation by the Horn of Africa, it’s worth understanding the nature of the piracy problem off the Somali coast, which has exploded over the past several years. Matt Yglesias, who unlike most people in the media has actually written a fair bit about Somalia, has a great short piece on this, and at the risk of just reiterating it let me just summarize his two basic points.
First, it’s a big ocean, and no amount of sophisticated monitoring systems or military patrols will be able to proactively stop pirating. If the areas near the coasts become secure, the pirates just move out further into open water. You’re not going to secure the entire 70-odd percent of the planet covered by the oceans. And accompanying every shipping container with a military protector vessel is impractical.
Second, the way to end piracy is to provide opportunity for the pirates on land. Somalia has essentially had no government for close to 20 years, and the money that can be made from piracy significantly dwarfs the money that can be made on land.
To make a long story short, to curb the Somali pirate problem you need to fight them on land. This was recognized by everyone back in December but it hasn’t materialized since nobody really wants to try to mount a serious operation to bring Somali territory under control. And far be it from me to question that decision. I don’t want to either. But given that reality, while we can try to mitigate the pirate problem at sea, we’re never going to resolve it and suggestions that the Obama administration should snap its fingers and make this problem go away are absurd. What we need to do is wait until such time as someone or other establishes some kind of coherent control over Somali territory and then deal with piracy issues as part of our relationship with that person / group / organization or whatever it may be.
Unfortunately, the last time it appeared that a coherent de facto government was emerging in Somalia—the Islamic Courts Movement—we helped sponsor an Ethiopian invasion that plunged the country back into chaos. We need to stop doing that!
Ian Welsh concurs, and this is one of the more little-known Bush screw-ups that made the world less safe. Peace can only be had with the groups that can secure it. The Ethiopians couldn’t hand off Somalia to a transitional government that had no legitimacy. The new “unity government” in Somalia actually includes some more moderate ICU members, and they’ve vowed to deal with the piracy problem, if they get some funding help. But the hardliners in the al-Shabab movement continue to fight. The Obama Administration apparently is watching al-Shabab closely, but hasn’t come to a decision. I don’t think we know if the unity government has the legitimacy inside the country among the people yet, but I think striking the al-Shabab camps at this point wouldn’t help matters. Whatever the case, there needs to be a larger effort to understand the problems on land in Somalia as a means of stopping the problems at sea, as Russ Feingold has been saying for years.
“With more than a thousand miles of coastline along the Gulf of Aden and the Indian Ocean, however, increased maritime patrolling can only do so much. Until stability, the rule of law and effective governance are established, Somalia will remain a safe haven for these pirates. Moreover, until a functioning economy can be established, piracy will remain the most lucrative business in the region.
These bankers amaze me. In spite of everything, they continue to flex their muscles and insist that the taxpayers should hand over money with no strings attached and do things their way. Or else.
Remember when Alan Greenspan said this?
“Those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity — myself especially — are in a state of shocked disbelief.”
Well, I wasn’t that shocked, but I confess that I am a bit shocked by their current self-destructive narcissism. The executives of these lending institutions understand their own self-interest to be to do anything they damned well please and to hell with anyone who says otherwise and they are ready to take down the entire system if they don’t get their way.
WASHINGTON — As the Obama administration completes its examinations of the nation’s largest banks, industry executives are bracing for fights with the government over repayment of bailout money and forced sales of bad mortgages.
President Obama emerged from a meeting with his senior economic advisers on Friday to say “what you’re starting to see is glimmers of hope across the economy.” But there were also signs of growing tensions between the White House and the nation’s banks over the next phase of the financial rescue.
Some of the healthier banks want to pay back their bailout loans to avoid executive pay and other restrictions that come with the money. But the banks are balking at the hefty premium they agreed to pay when they took the money.
Jamie Dimon, the chief executive of JPMorgan Chase, and two other executives of large banks raised the issue with Mr. Obama and the Treasury secretary, Timothy F. Geithner, at a meeting two weeks ago.
“This is a source of considerable consternation,” said Camden R. Fine, who attended the White House meeting as president of the Independent Community Bankers, a trade group of 5,000 mostly smaller institutions, many of which are complaining about the repayment requirements.
Meanwhile, the Obama administration wants weaker banks to move more quickly to relieve their balance sheets of the toxic assets, the home loans and mortgage bonds that nobody wants to buy right now. But the banks are resisting because they would have to book big losses.
Finally, there is increasing anxiety in the industry that the administration could use the stress tests of the 19 biggest banks, due to be completed in the next three weeks, to insist on management changes, just as it did with General Motors when officials forced the resignation of its chief executive after examining that company’s books.
If only the rest of us had the kind of clout (and chutzpah) to nearly destroy an entire industry, the country and the world — and expect to be able to dictate the terms of how it’s fixed. Oh and then whine publicly about everything being unfair and calling the bailout un-American:
Facing a host of government restrictions — from how much they pay executives to how many foreign citizens they employ — some small banks have returned the bailout money, and some larger ones, including Goldman Sachs, Wells Fargo and Northern Trust, have said they want to do so as quickly as possible.
On Friday, Sun Bancorp of Vineland, N.J., became the sixth bank to exit the program, returning $89.3 million just three months after it received its loan.
Regulators are reluctant to approve the early repayments until banks can show that they have the capital to withstand further erosion in the economy and will not curtail their lending.
Both large and small banks have pressed the Obama administration to make it less costly for them to exit the bailout program by waiving the right to exercise stock warrants the banks had to grant the government in exchange for the loans. At a meeting last month, the chiefs of three of the largest banks separately asked Mr. Obama to direct the Treasury not to exercise the warrants, Mr. Fine said.
Douglas Leech, the founder and chief executive of Centra Bank, a small West Virginia bank that participated in the capital assistance program but returned the money after the government imposed new conditions, said he complained strongly about the Treasury Department’s decision to demand repayment of the warrants. That effectively raised the interest rate he paid on a $15 million loan to an annual rate of about 60 percent, he said.
“What they did is wrong and fundamentally un-American,” he said. “Even though the government told us to take this money to increase our lending, the extra charge meant we had less money to lend. It was the equivalent of a penalty for early withdrawal.”
Basically he’s saying that it’s un-American for the US Government to try to save the banking system in spite of the fact that the people running it are such short sighted, greedy, self centered jackasses that they refuse to be saved unless they get to fuck things up all over again. (Oh, and make a killing doing it.) I’m not against these banks paying back the TARP money but they have to live up to the agreements they made when they took the money — just like I do when I have to pay a penalty for early withdrawal. After all, they have a rather nice alternative: they could just loan the money to someone, which was the intent of the program. But then they’d have to live under the threat that the big bad gummint is coming to take their bonuses and that’s just unacceptable to these pampered princes.
Nobody wants to take on the ruling class, particularly once they’ve become (or were born into) the ruling class themselves. But there are times when it’s very dangerous for politicians not to do it and this is one of those times. If the bankers insist upon preserving their prerogatives in spite of all they’ve done and continue to carry on like a bunch of French aristocrats, they have to be taken on or risk something much more politically destabilizing.
Obama is playing with fire by trying to appease these guys, even if he’s convinced that the best thing to do is simply restore the system to what it was. They are too far gone. If he doesn’t decide to take on systemic reform we’re going to find ourselves in a worse mess not too far down the road.
Greenspan was shocked because he thought these guys were operating out of self-interest and it turned out they were actually quite stupid and self-destructive. They just keep proving it over and over again.
In the coming debates over health care, when your Uncle Bob pulls out the old conservative trope asking, “would you really want government bureaucrats to be in charge of your health care?” give him this article:
Five months ago, Rose Camilleri was a superstar at the Zales outlet at Woodbury Common Premium Outlets.
In November, the diminutive grandmother with an Italian accent was flown to Dallas, home of Zales’ headquarters, where she was honored with a 1-carat diamond necklace for making $1 million in sales last year.
[…]
It was the fifth diamond Camilleri had earned during 4½ years at Zales, where she received nearly a dozen commendations.
“I loved my work,” she said. “I loved the people, and I loved it when people came in and asked for me.”
But in early March, Camilleri developed bronchitis and went for a chest X-ray and an MRI. Her doctor discovered an aortic aneurysm, a weakness in the wall of the aorta, which, without prompt treatment, might rupture and cause quick death.
Camilleri told Zales she would need surgery as soon as possible.
“I told my manager I can’t get upset because it could explode any minute,” she said. “I typed up a letter asking for time off and guidance from human resources.”
One week later, on March 14, she was asked to attend a meeting with a new regional manager.
“He said, ‘You’re terminated,'” Camilleri recalled. “I tried to keep myself very calm because I knew something could happen to me. I said, ‘You’re joking — you’ve never been in my store.’ He said, ‘It’s the best thing.'”
It also meant Camilleri had to postpone her March 26 surgery until she could convert her insurance to a self-pay plan known as COBRA.
Two weeks later, Camilleri had not even received the paperwork.
Her son e-mailed the Times Herald-Record.
“We are told that it could take up to 45 days,” Charles Camilleri wrote. “I lay awake every night fearing the worst.”
Contacted by the Record, Zales would not comment. Charles Camilleri called Zales’ human resources, explaining it was a life-or-death matter, and he simply needed a fax from Zales to start the COBRA process. He was floored by the employee’s response.
“She said, “Well, if the surgery was rescheduled, then it’s probably not a life-or-death situation,” Charles Camilleri recalled. “I absolutely was blown away
Once again, the Record contacted Zales’ corporate office, stressing that Rose Camilleri’s condition could be fatal.
That afternoon, Charles got good news from Zales.
“They’re turning my mother’s health coverage back on today and expediting the COBRA information,” he said.
After paying the first premium of $830, Rose had surgery last week and was back home on Sunday. “I don’t think we would have had the surgery so soon if it weren’t for your e-mail,” Charles Camilleri said. “They probably would have kept us hanging.”
If people really think that dealing with private industry bureaucrats is any improvement over government bureaucrats, they need their heads examined. Human resources is a cost center not a profit center and most businesses do not put their best employees there. (That’s not to say there aren’t good HR people out there, just that they are the step children of the business world.)
The sad thing is that this woman’s fight is only getting started because she hasn’t even begun to deal with the insurance company yet. Lord knows what awaits her with that. In that industry, they actually give bonuses to their employees for denying coverage to their policy holders.
I know that people think the government is cumbersome and unresponsive. But I have had dealings with the IRS that are far more efficient and pleasant than anything I’ve ever done with an insurance company. The post office almost never loses a letter. Airplanes rarely run into each other in the sky and until George Bush came in, we didn’t have a lot of food born illness or drugs malfunctioning. They actually do a pretty good job, if only because the people raise holy hell if they don’t and have some ability to affect who the bosses are.
I would much prefer a government run bureaucracy than a for profit bureaucracy. In the first I am at least a stakeholder. In the latter I’m simply a cost.
Michael Hirsh is one of the few MSM columnists whose writing on the economic crisis, and specifically the Obama approach to dealing with it, succinctly and I think accurately synthesizes the debate among liberals. (One of the interesting things about all this is the fact that conservatives have absolutely nothing to say on the matter besides screeching about taxes and mouthing platitudes about free markets.)
Hirsh is not a reflexive Obama critic although he is a skeptic. (He gave the Geithner plan a pretty good review.) But his value is in dewonkifying the details and giving us a look at the big picture,which for most laypeople is about the only way to wrap our minds around what’s at stake. Today’s piece offers a look at what I consider to be the essence of the economic disagreements between the Obama administration and its critics: fundamental change in the financial sector vs putting a band-aid on the problem and letting reform wait for another day.
Not long ago, a group of skeptical Democratic senators met at the White House with President Obama, his chief economic adviser, Larry Summers, and Treasury Secretary Tim Geithner. The six senators—most of them centrists, joined by one left-leaning independent, Vermont’s Bernie Sanders—said that while they supported Obama, they were worried. The financial reform policies the president was pursuing were not going far enough, they told him, and the people Obama was choosing as his regulators were not going to change things fundamentally enough. His appointed officials and nominees were products of the very system that brought us all this economic grief; they would tinker with the system but in the end leave Wall Street, and its practices, mostly intact, the senators suggested politely. In addition to Sanders, the senators at the meeting were Maria Cantwell, Byron Dorgan, Dianne Feinstein, Carl Levin and Jim Webb. That March 23 gathering, the details of which have gone largely unreported until now, was just a minor flare-up in a larger battle for the future—one that may already be lost. With the financial markets seeming to stabilize in recent weeks, major Wall Street players are digging in against fundamental changes. And while it clearly wants to install serious supervision, the Obama administration—along with other key authorities like the New York Fed—appears willing to stand back while Wall Street resurrects much of the ultracomplex global trading system that helped lead to the worst financial collapse since the Depression. At issue is whether trading in credit default swaps and other derivatives—and the giant, too-big-to-fail firms that traded them—will be allowed to dominate the financial landscape again once the crisis passes. As things look now, that is likely to happen. And the firms may soon be recapitalized and have a lot more sway in Washington—all of it courtesy of their supporters in the Obama administration. With its Public-Private Investment Program set to bid up and buy toxic assets, the administration is handing these companies another giant federal subsidy. But this time the money will come through the back door, bypassing Congress, mainly via FDIC loans. No one is quite sure how the program will work yet, but it’s very likely going to make a lot of the same Wall Street houses much richer at taxpayer expense. Meanwhile, the big banks that still need help will almost certainly get another large infusion once the stress tests are completed by the end of the month.
It is interesting that the Senators who carried that message are not known as pitchfork wielding populists (if there is such a thing in the Senate) but rather are considered middle of the road centrists. One wonders what their motives are — I expect they sense the rising anger among the populace and worry that unless something pretty radical takes place the unintended consequences could be rather destabilizing, politically at least. But that’s just a guess. I have heard people argue that reforming the financial system, as opposed to propping it up, is not a liberal priority and will eat up too much political capital at the expense of more important priorities like health care. I have also heard that fundamentally reforming the system is a political impossibility if it requires that congress appropriate money for more bailouts. (Considering the likelihood of more bailouts anyway, this strikes me as weak.) many people make the connections, as is mentioned in the piece, that Obama is too close to people who run Wall Street — or more broadly, that the entire political system is too close to those who run Wall Street — and therefore, they are failing to see the forest for the trees. I do not know if those reasons are correct. But it occurs to me as I read about our latest gilded age that they may be making a broader calculation about the economy as a whole. After all, we are no longer the manufacturing giant we once were and globalization is rapidly cutting into the manufacturing capacity we still have. The promise of the highly educated workforce doing the high tech jobs for the future has been shrunk decidedly in the last few years as we’ve seen powerhouses like India produce educated high tech workers who make far less than Americans. In fact, it turns out that the financial sector is one of the few growing sectors in the American economy. As Krugman pointed out a few weeks back:
Even during the “go-go years,” the bull market of the 1960s, finance and insurance together accounted for less than 4 percent of G.D.P. The relative unimportance of finance was reflected in the list of stocks making up the Dow Jones Industrial Average, which until 1982 contained not a single financial company.It all sounds primitive by today’s standards. Yet that boring, primitive financial system serviced an economy that doubled living standards over the course of a generation.After 1980, of course, a very different financial system emerged. In the deregulation-minded Reagan era, old-fashioned banking was increasingly replaced by wheeling and dealing on a grand scale. The new system was much bigger than the old regime: On the eve of the current crisis, finance and insurance accounted for 8 percent of G.D.P., more than twice their share in the 1960s. By early last year, the Dow contained five financial companies — giants like A.I.G., Citigroup and Bank of America.
So perhaps the Obama folks have been convinced (by the guys with the metaphorical IEDs strapped to their chests) that if they constrain this sector in any way, the American economy will shrink even further — that the overfed, underregulated financial system is the only real hope for rapid, future growth.
Of course, the flip side is that this booming sector is built on wizardry and gimmicks and so at its best can only provide booms and busts — and leave all but the wealthy in a perpetual state of insecurity. And that leads to political instability. I’m pretty sure that only benefits the disaster capitalist Money Men, not the politicians (although the way the system works, they’re pretty much the same people.)
I can understand the political calculation that says you can’t fight on all fronts at once. The administration has the largest set of challenges since Roosevelt’s. They are necessarily having to prioritize. But I think what has so many liberal wonks spooked is that this meltdown is so systemic and so huge, they really don’t know whether we can rebuild the edifice of trust enough for it to even work on its own fraudulent logic anymore. It strikes me, anyway, as terribly naive to think that Humpty Dumpty can be put back together after this.
If the political calculation is to just get thing rolling again so they can do the things they campaigned on, I think they are taking a huge, huge political risk that far outweighs that of taking on reform. On the suibstance it’s just awful. The system as it stood was unjust and the suffering that’s come in the wake of its failure should not be seen as a normal price to pay for growth. Certainly, the people who perpetrated these schemes should not be allowed to pick up where they left off or further destruction is inevitable.I am not sanguine.
Hirsh concludes his piece this way:
The White House and Treasury Department did not immediately respond to my requests for comment on these issues or on the March 23 meeting (beyond confirming that it took place). But it’s noteworthy that more than a month and a half passed before Obama agreed to the meeting, which was prompted by a letter that Dorgan sent in early February. The senators were invited after one of the group, Sanders, put a hold on the nomination of Gary Gensler, Obama’s nominee to be head of the Commodity Futures Trading Commission. In an interview, Sanders said he opposes the nomination because Gensler has spent much of his career in Washington working for Wall Street’s interests. Gensler, in testimony, has said he has learned from his past mistakes. “At this moment in our history, we need an independent leader who will help create a new culture in the financial marketplace,” Sanders said.
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Instead, the old culture is reasserting itself with a vengeance. All of which runs up against the advice now being dispensed by many of the experts who were most prescient about the crash and its causes—the outsiders, in other words, as opposed to the insiders who are still running the show. Among the outsiders is Nassim Nicholas Taleb, the trader and professor who wrote “The Black Swan: The Impact of the Highly Improbable.” Taleb wrote in the Financial Times this week that a fundamental new approach is needed. Not only should firms be prevented from growing too big to fail, “complex derivatives need to be banned because nobody understands them and few are rational enough to know it,” he said. Yet even as we are still picking up the debris, we seem to be ready to embrace that world once again.
And if they succeed, which is debatable, there will be a few more millionaires made until it all blows up and another round of taxpayer bailouts of outrageous proportions will be required. And then we may find ourselves not laughing at those tea parties anymore because a whole lot more people will be on board. The right hasn’t figured out how to ride populism to power yet. But they will.
