A letter to and response from Joe Bageant
September 25, 2008
Good Afternoon Joe,
I live in the path of Hurricane Ike. While my TV and internet were down and I was listening to the local news for where to go for ice and when the utilities would come back on, the world changed.
The US economy had not only taken a swan dive as I expected it eventually would, but the Secretary of the Treasury and the Fed had stepped up with a "plan" to save the day. Of course if you read the fine print it actually would give them total discretion as to HOW the plan was to be implemented and I quote "without review or recourse by congress or the courts."
This is a fucking coup in sheep's clothing. Probably unconstitutional, but we have blown so far past that it shouldn't even count.
I am a confirmed cynic and have long since accepted that our government is corrupted and our officials are self-serving, but this is just too much.
The American people have been asleep while the current administration (with the complicity of Congress) has pretty much wiped their collective asses with our constitutional rights, but we are in the process of being completely sold down the river. (Debt slavery for us and our children and grandchildren). The absolute hypocrisy is that this is being brought to you by the people who espouse a "free market" and a sort of Darwinian economic survival of the fittest. The same people who helped to turn an ordinary citizen's bankruptcy into a sort of economic serfdom.
The fact that the same institutions with their hands out are the ones that made it much harder for the average Joe to get out of debt now are going be the beneficiary of our confiscated labor (that's what taxes are) in order to keep their sorry rears afloat is an obscenity of mythic proportions. The sheer gall of it should enrage us.
Hell, they wanted to let the people who ran their companies into the ground and the economy off a cliff keep their bonuses. (They made their bonuses by "booking" future profits when the deals were made, instead of when the money came in. Now that the illusionary profits have gone up in smoke along with their corrupt ponzi scheme, they should give it back!) If you are a drug dealer or a crime boss the government has no problem confiscating your ill gotten gains, but they want to leave their banking and brokerage buddies in tact! These people are thieves and liars! They should not be rewarded!
They won't even come clean on the cost. They lie and say that some of the money will be recouped. Ha ha. I've read estimates of the total cost of the financial bail out of up to $5 trillion. I don't think I can plug enough zeros into my calculator to figure out how much debt will be saddled on every man, woman, and child in this country but one figure I read quoted over two hundred thousand dollars. Wall Street threw a party, but foreign investors in US debt started running the other way. The US Treasuries aren't even keeping up with the current "official" rate of inflation and the dollar just tanked again.
If the government wants to give away money while creating a new mountain of debt, they ought to at least give it directly to the people who will pay it back. I thought the tax rebate was a bad idea, but compared to this it was genius. It could pay off peoples debts (a modest mortgage or student loan for instance) and the prudent person who has managed his/her finances responsibly could invest it or go on a hog wild spending spree. Presto! Money starts flowing back into the system, retailers quit going out of business, people stop losing their jobs, housing stabilizes, GDP goes up as the cash strapped consumer gets a break. Of course it is inflationary as hell, but so is the latest hair brained scheme and at least it gives some relief to the other 99% of us who don't have buddies in the congress and the Fed and the Treasury. (And they are buddies, as in business associates, golfing partners, probably boinking each others wives kind of buddies.) Of course my idea also has a snowballs chance in hell.
FYI the National Austailian Bank wrote the "funny paper" that the Treasury is about to buy in our name off at 95%. They valued it at 5 cents on the dollar. Most of this stuff cannot find a buyer at any price, and that is why Uncle Sugar is stepping up to take it off the banks hands. This stuff is so complex and interconnected and was so fly by night that in some cases the holders of the bonds or securities or CDs don't have clear title to the meager assets they are derived from and thus cannot forclose on "non performing" (that's not paying) properties. Having fun yet?
And, real estate is still falling in value, which means the underlying assets are falling in value with more and more people are making the rational decision to walk away from houses that they now owe more on than they are worth. And the Treasury wants to buy up car loans and credit card debt too. And they want to buy this crap back from foreign banks. Your pension fund probably holds a bunch of these "bonds" because the ratings agencies (who were being paid by the banks for ratings) were rating them as AAA, which is supposed to mean that they were safe investments so you won't have to be eating kitty chow in your retirement. They also held a lot of Freddie and Fannie funny paper too. AIG had insured a bunch of these bonds (as in we will pay if they tank) and didn't have enough liquidity (as in cash) to pay up. That's what drove them into bankruptcy. Now we own 85% of their sorry butts! But what we really own is 85% of a big, big liability. (That light at the end of the tunnel is a train and you are now tied to the tracks.)
Good old Congress is in a hurry to pass this so that they can go on vacation! I guess they need to go lick the banker's and the broker's boots for more campaign contributions. Anyone who says this is an unseen or "outlier" (black swan) event is a liar. There are credible and credentialed people in the economic and financial community who have been warning of this for years while the MSM and financial community marginalized them and called them nut jobs. (Nuriel Rubini, George Soros, Ron Paul, to name a few.) Many of the financial writers that I read are predicting a depression that makes the last one look like a picnic. Some expect martial law. Some are saying stock up on food and bullets. These people are not nut jobs. Many have worked for years in the financial industry and know how this stuff works. They don't buy the bullshit and they don't dish it out. And none of them think this "plan" will work.
Last but not least, this is really an d truly a disaster. Everyone in this country that has been hitting the snooze button and thinking the Government is going to take care of us needs to "Wake the fuck up right now!" No one is looking out for you and your interests. (Think Katrina. You are going to be on your own.) No one in government is telling you the truth about what is happening. This is the fall of the American empire. You are screwed. Period. Your vote in this election is the illusion that you are allowed to make you think you live in a democracy. Give it about 6 months to a year. This is the stuff that revolutions are made of. Even the latte slurping self involved types are going to feel the pain of this one and they ain't gonna like it.
Calm down. Our betters in politics and commerce know what they are doing. All we need to do is let them run the government and national finances. America has always had these little ups and downs and we, the people of the richest nation on earth, blessed by god in all things, are creative and entrepreneurial enough to get past this little speed bump. Our leaders now what they are doing. So relax.
Yeah, sure buddy.
Here's what's fascinating as hell -- the view from the belly of the beast. Most Americans, honest to god, are not thinking about the bail-out at all. I'm serious. To most Americans it's just another flurry of national news. And the only thing that can mean is that Americans ares till too comfortable to take notice. Or too brainwashed. Or too stupid. Or all three, or any combination of all three. Any combination of which amounts to the "delusional optimism of mainstream, all-American, positive thinking," as Barbara Erenreich recently put it, "as promoted by Oprah Winfrey, scores of megachurch pastors and an endless flow of self-help best sellers..."
So let's all close our eyes reeeeeal tight and believe in Tinkerbell. Or weight loss, angels, motivational speakers, self-help books, Depak Chopra ... whatever. All you gotta do is visualize and kablong! Visualize success. Visualize a raise in your pay envelope. Visualize your sarcoma shrinking. But for god sake DON'T BE NEGATIVE! Don't deal with facts. Facts are a bummer. Meanwhile the Boyz in the Wall Street Hood are jamming it to us and cackling: Visualize THIS you dumb motherfuckers! Seven hundred billion bucks for starters. Another hundred billion after you bend over.
Meanwhile, I had the repugnant experience of talking to two economists a couple of days ago, one an international financier, and the other a wealthy developer with a master's degree in economics (who appears in my book.).
I posed this question to both:
What if we took the bail-out money and paid off every college loan, every credit card, every pending foreclosure and every mortgage in arrears, and every unpaid hospital bill? Wouldn't that free up a lot of income to stimulate our economy, 70% of which is based on Americans consuming good, services and commodities? Wouldn't it be better to have the money circulating, stimulating the U.S. economy than stashed in overseas as accounts? If Bush's little $250 rebate propped up the national economy for a couple of months, wouldn't distributing the $700 billion push the economy into the stratosphere? What if we used it to pay down the national debt? Wouldn't the American dollar reverse its plunge? At the very least for the first time in 80 years Americans would actually owe the debt to themselves, not the unseen financial lords.
The international financier said: "It just cannot be done. The financial machinery of our free market economy would fall apart. Then we'd be in worse shape than ever."
"How's that? It seems like it's already fallen apart. Been turned into a swindler's paradise, with the swindlers now asking that all future productivity of Americans be signed over to them, since there's nothing left to steal at the moment."
"It simply cannot be done. Nor should such socialism ever be allowed. It's a ridiculous idea."
The economist developer, when asked the same question, "Why not bail out the American people, instead of the fat cats?" was more honest:
"Doing that would have unintentional consequences.'
"Like what? You're an economist, so tell me."
"Well, I don't know. That's why they are called unintentional."
"So why should the American public be perpetually and increasingly in debt?"
"Because debt is the source of American wealth."
"Wealth for whom?"
"Obviously for those who understand the system and have the know how to use it to its best purpose for all concerned."
"Won't that devalue the dollar over time?"
"Sure, but if you've got enough dollars it doesn't matter. Look at how African dictators live, despite that their nations' currency is worthless."
Meanwhile, most of the American public remains not at all concerned. Hard as that is for political junkies and the outside world to believe, it's the truth. This week I have been helping a TV crew from MEGA-TV in Greece put together a group of ordinary working class Americans from Virginia -- people who are not political junkies or pushing some party line -- to discuss politics, the upcoming elections and the bail-out. It's been nearly impossible. When I was writing Deer Hunting With Jesus, it was hard as hell to get any serious discussion of politics going with my working brothers. It seems even harder now. I'd call it denial, but you cannot deny what you are not even aware of.
Both Republicans and Democrats in Congress are making a big show of their outrage, mostly because it is an election year, and political pundits are watching. But in the end, the fat cat Republicans on Wall Street are going to get this bail-out. Maybe with a few small bones thrown to unwashed masses -- probably one of those items I mentioned above. But inevitably our children and grandchildren will still be paying off the fat cats' homes in Southern France and fueling up the big boys' private jets.
Let's make a little wager. How long will it take before Social Security is privatized in order to "save Social Security?" Which by sheer coincidence would also pour billions more into Wall Street hands.
Pisses me off. I was counting on Social Security. I just filed for it last month. I'm sure I will get a check all right, paid in fiat currency.
Hmmmm. Wonder of there is a way to get paid in pesos?
In art and labor,
PS: Regarding the upcoming financial depression, which our money masters assure cannot ever be as bad as the Great Depression of the thirties. During that depression one half of Americans lived on farms, most of which were not affected by the dust bowl. Now we're looking at two percent of Americans living on farms. And the vast majority of acreage is now controlled by agri-biz corporations, such as Con Agra and Archer Daniels Midland, who do not own the land (let the private farmer take the risks of financing land) but manage the price of inputs and manage how much and what kind of crops are planted. Thus we are pumping food acres into our vehicles in an automobile dependant nation. It's a safe bet farmers, who now raise cash, not crops, are not going to be encouraged to grow carrots.
It's gonna be interesting when food prices reach the point where they can compete with ethanol acreage. Maybe we can get employment as stoop labor harvesting $15 a head lettuce.
In art and stoop labor,