The rescue of the American captain from pirates -- handled with cool competence from President Obama to the SEAL snipers -- gives the nation a much-needed boost. This comes after eight years of "bring 'em on" grandstanding by the Bush administration. And now, as the company that once stood for American success and the rising middle class, General Motors, faces bankruptcy. At least we can still do something right.
This should not distract us from piracy that has been happening on Wall Street, and that the Obama administration seems committed to, at best, merely applying a nip-and-tuck. It emerges that Obama chief economic adviser Larry Summers not only received $5.2 million from a hedge fund and $2.7 million in speaking fees from big financial institutions after he left Harvard. He also was working for a hedge fund while he was president of Harvard. Frank Rich asks, "Can he be a fair broker of the bailout when he so recently received lavish compensation from some of its present and, no doubt, future players?" Ben Stein answers, "I know people and I know money, at least the basics. If anyone thinks that a man who has had a taste of honey from Wall Street on that scale will ever really crack the whip on Wall Street, he’s dreaming."
Larry Summers, the man leading Obama's reckless push into socialism; sorry, SOCIALISM!! (or is it fascism? -- the right-wingers can't figure it out). What's really happening is that the pirates are winning, and there's no SEAL team out of D.C. to protect taxpayers -- or the future of this republic.
One of the best articles that explains the origins of our financial troubles was by Matt Taibbi in Rolling Stone. He traces the financialization of the economy and its grip on political leverage -- it was never about the money, but about the power. It began in the 1990s with both the Republican Congress, led by uber-deregulator Sen. Phil Gramm, and Clinton Treasury Secretary Robert Rubin (with protege Summers), and accelerated in the Bush years. Taibbi makes some important points:
And with the Paulson/Geithner bailouts:
Taibbi writes, "By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power..." Indeed, which makes the decline of real newspapers even more lamentable.
The trouble is that none of this will prove sustainable. America is deeply in debt, overextended abroad. We have left a trail of such neglect over the commons (hey, you got your tax cut!) that the stimulus that is not another tax cut can only backfill a little of the social and infrastructure "deferred maintenance." (This was why Europe wouldn't go along -- it already has a real social safety net and great infrastructure, and doesn't want more debt). America has been deindustrialized at an alarming pace, and the erosion of the middle class is not abating. So the bigs at Goldman Sachs and other transnational companies will socialize their losses and privatize their profits -- but the next crash will soon follow. They will fly out, leaving this more and more a banana republic.
Meanwhile, we are doing little or nothing to address other aspects of the Great Disruption, such as peak oil and climate change. The New York Times still -- still! -- gives respectful treatment for warming deniers, burying far down in the story their funding from Big Oil. And Obama is realizing the oil companies don't want to be "energy companies" and move into alternatives. So we're stuck.
The right-wing screaming -- abetted by the disciplined obstructionism of Republicans in Congress -- helps this state of affairs, of course. For one thing, it distracts the duhs and ignos, while channeling their rage at declining living standards and fewer opportunities toward shadows, such as "Obama's going to take your guns." Also, it distracts the media (why didn't the Obamas get a shelter dog??). Best of all, it keeps people from seeing the coup that has occurred.
The changes we must make to avoid a much more painful reckoning are hard. Obstruction is easy (we see that at work in Arizona politics). So is the fool's optimism, waiting for the next get-rich-quick scheme to replace day trading and house flipping. And so the gravity of decline takes its course. We are willing hostages.
Another parallel with the pirate attacks is that piracy has been escalating off the Somali coast for the last two years. The International Chamber of Commerce maintains a website that tracks piracy and they show an attack for every day in March, 2009. They also recommend round-the-clock watches anywhere within 1000 nautical miles of Somalia. Those that do keep watch have little trouble evadnig the pirates. Only those that do not watch are boarded. (that is no reflection on the brave work of the crew AFTER they were boarded)
So, much like our economy, there are those who have seen it coming and tried to warn others.
And, much like the media coverage, until it happens to an American ship and an American crew - its not news.
Posted by: Buford | April 13, 2009 at 03:08 PM
If you're outside the walled fortress called Conventional Wisdom (say, this blog, Krugman, various doomers and cranks, and those hands-on regulators like William Black and Simon Johnson), you'll catch the surreality of the false war. It pits the right-wing scream machine, perennially angry and excitable, vs the "socialists" (say, Democrats). That the real war is actually being waged against the screamers and most non-filthy rich Americans is the coup itself. We don't know because we've been subverted into thinking stimulus spending is some huge evil (money that might end up in black hands, no less). So, instead of following the quickly moving hands that secrete the nut in a different shell, we pretend we're hip to a phantom transgression.
Does it elucidate this drama that the right-wing billionaire funders of "tea parties" and the putative left-wing apologists for Wall Street have similar interests? That is, keeping the financial industry above water while the rest of us drown? The scandal is that America has no rhetorical skill set that can confront corporate malfeasance and greed. We gave it up for the loony-tunes outrage of right-wing puppetmasters.
If you're frustrated and angry, these charlatans are very convincing. They keep you agitated about the jaywalkers and litter bugs while the sharpies are robbing the bank.
Somehow, we have to hope Obama succeeds at a game that is ultimately going to preserve concentrated wealth at our expense. It's either an irony if you're somewhat aware or a bitter pill if you're genuinely liberal. We don't have options here because we let the debate shift so far to the right that a Larry Summers somehow got on our team. Obama is the hope of a culture that has no real political power because it traded cold-eyed realism for a Prague Spring called "change".
Posted by: soleri | April 13, 2009 at 04:08 PM
I know that the pirate drama is being used as a metaphor here, but before I comment on the metaphorical content, I'd like to remark on the events which inspired it, because I think there is a common thread.
Frankly, it all seems a bit staged. The pirates are, first of all, not terrorists, but out of work Somali fishermen, originally organized into militias to stop toxic dumping and illegal fishing off their coasts by ships from more advanced countries -- apparently what ruined their livelihood in the first place -- who then turned to piracy as a source of easy money.
http://www.huffingtonpost.com/michael-vazquez/on-pirates_b_186015.html
The four pirates involved in the current drama, were reported by the Associated Press to be out of ammunition and, being stuck on a drifting vessel, under the hot sun, in shark infested waters, and surrounded by potently armed naval destroyers, were ready to release the captain of the seized vessel in exchange for, not ransom, but the mere promise of their unaccosted escape. One of the pirates (the one "captured") was in fact in discussions with the navy at the time of the "rescue" operation.
http://www.kansascity.com/105/story/1138895.html
So, how does one evaluate the claim of "clear and present danger" when the navy, being a party to these negotiations at the very time of the "rescue", knew what the pirates' position and intent was?
Supposedly, the navy snipers fired when one of the pirates pointed an automatic weapon at the back of the captain, as though with the intent to shoot him.
So, an automatic weapon, with finger on trigger, was pointed at a hostage, and we are to believe that at this time the trained navy rescue snipers chose to shoot. One might expect this to be contrary to training, since a finger on the trigger of an automatic weapon pointed at a hostage might easily go off, spraying said hostage with bullets, strictly as a reflex in response to being shot. Yet, not only did the navy supposedly choose this moment to fire, but the hostage went unharmed.
Then, there is the remarkable fact that, whereas the choice by a navy sniper to fire, based on the pointing of a rifle at the hostage, must ipso facto have been spontaneous, all of the pirates (excluding the fourth, who was in negotiations with the navy for the safe release of the hostage) were killed simultaneously: something that, surely, argues coordination and planning.
In short, all of the unfriendly witnesses to the events were killed.
I can't help but wonder whether, with the clock ticking away, and the peaceful release of the hostage (and escape of his captors) looking more and more like an unwelcome anti-climax, a decision was made to use the first excuse that came along to end the standoff dramatically and decisively.
The Somalis, predictably, have issued threatening statements in response to this. The media may attempt to built this up into a terrorist threat, just as they did with the pirates (though unsuccessfully, since they are, unquestionably, sad sacks indeed).
I'll try to post something about the banking equivalent to piracy (the real subject of this blog item) later.
(By the way, I always enjoyed Ben Stein's deadpan comic delivery, and took particular pleasure in his performance as host of the comparatively highbrow trivia gameshow Win Ben Stein's Money, despite the fact that he is a political conservative who used to work for the Nixon administration. I had no idea that he wrote a column for the New York Times, but I'm delighted to learn of it.)
Posted by: Emil Pulsifer | April 13, 2009 at 06:35 PM
Regarding "the next get rich quick scheme", according to a recent New York Times article, the arbitragers, having received the equivalent of papal forgiveness for their schemes in the form of a revision to the accounting rules which makes their toxic assets less toxic on the books, and seeing some life in the stock markets, have already been hard at work investing your money (or if not yours, someone else's) in -- wait for it laddies -- the junk bond market.
"Even as credit rating agencies predict high rates of default for 2009 and junk-rated companies like General Growth Properties, the shopping mall owner, struggle to avoid bankruptcy, investors are pushing more money into high-yield debt. Junk bonds just ended their BEST QUARTER IN FIVE YEARS, and a report by AMG Data Services said that $923 million flowed into junk-bond mutual funds last WEEK, the most since 2005. . .Yields on junk bonds are about 16.5 percentage points more than Treasuries, a fat premium for risk by historical standards." (NYT, Business section, 4/7/09)
http://www.nytimes.com/2009/04/07/business/economy/07credit.html?ref=business
Well, you know what they say: buy low, sell high. You can't make an omelet without breaking a few eggs, and you can't buy low unless the market drove down prices in a panic. Arrrr, matey...
Posted by: Emil Pulsifer | April 13, 2009 at 06:53 PM
A few more skeptical observations regarding piracy on the high seas:
(1) The pirates were armed with automatic weapons, and there were four of them.
It is reported that the pirates came on board "shooting into the air" and that the captain ordered the crew to lock themselves into their cabins, then offered to exchange himself for their safety. Supposedly this is how he ended up in their hands in a small boat.
http://www.miamiherald.com/news/nation/AP/story/996737.html
Yet, it is also reported that the 20 member unarmed crew "managed to overpower" the four pirates and to "regain control" of the ship. One of the pirates was reportedly stabbed in the hand during this outbreak -- yet not one crew member was shot.
(2) How did these pirates manage to get aboard? This was the second attempt in 30 minutes. The captain and crew should have been prepared, and at the very least have left the area at top speed after the first attempt. Yet, these "pirates" managed to approach a second time, in two "skiffs", and board using grappling hooks, without being repelled or outrun.
(3) The ship's owner is a Virginia based U.S. subsidiary of the Danish line, and is a "longtime Pentagon contractor" with "top security clearance".
Supposedly, these Defense Department connections involved training the captain and crew in "prevention methods to combat piracy".
Yet, they allowed four pirates to climb aboard after two tries, approaching in skiffs each time. Furthermore, they apparently felt comfortable attacking the pirates unarmed, despite having heard automatic rifle fire and having been given a direct order by their captain early on to lock themselves into their cabins.
It is also unclear how the crew, locked into their separate cabins, managed to coordinate a successful tactical operation against four pirates armed with automatic weapons.
http://www.latimes.com/news/nationworld/world/la-fg-somali-pirates9-2009apr09,0,4104857.story
(4) It is now reported that three snipers fired simultaneously at all three pirates. Yet, supposedly the decision to fire was a spontaneous reaction to a "clear and present danger" involving a sudden, direct threat to the life of the captain which came from one of the pirates pointing a gun at his back.
Are we being asked to believe that, during the entire time that the captain was being held hostage, this is the only time that his captors pointed a weapon at him?
It is also reported that at one point the captain jumped overboard off the small boat and tried to swim away, only to be recaptured (without injury) by the pirates (who were also in direct negotiations with the navy to release the captain without a ransom, in exchange for their own free passage.
Maybe they were just unemployed fishermen, not hardened criminals, who were looking for easy money and were taken aback by unexpected resistence, but the whole story is fishy.
Posted by: Emil Pulsifer | April 14, 2009 at 07:31 PM
(5) Note that if the captain was already in the hands of the pirates at the time of the crew's outbreak, they not only undertook to risk themselves in an unarmed fight against four desperados wielding automatic weapons, but in doing so directly risked the life of the captain, who was a hostage of armed pirates.
If the captain was not already a hostage of the pirates at the time of the crew's outbreak (when they supposedly "overpowered" the four pirates and "regained control" of the ship), then how did he subsequently come to fall into their hands? After all, what need would there be to exchange himself for his crew's safety after they had overpowered the pirates and regained control of the ship, all without a single casualty among the crew?
Perhaps the captain felt that the pirates, brooding over their unseemly ejection, might work themselves into a blood frenzy if he did not give himself up as a hostage...
Posted by: Emil Pulsifer | April 14, 2009 at 07:48 PM