Is the US Government the Managing Committee of the Pirate Banks?

Greg Palast at Vice exposes the way that Larry Summers, Tim Geithner and others in the Treasury Department conspired with JP Morgan and other pirate investment banks not only to destroy Glass-Steagall in the US but throughout the world, removing the difference between commercial banks. and investment banks. Basically, they used US financial muscle to leverage the world into letting banks play poker with your money and forcing regulators to treat toxic bad loans as ‘assets’.

It is not normal for moving money around, often in very shady and unsafe ways, to account for a fifth of the profits of the S&P companies,more than high tech, which actually makes something. Only a few decades ago, that sector was 10% of profits. In essence a small number of corrupt investment bankers (not all are) gained control of the Dept of the Treasury and then used it to ‘deregulate’ the whole world. In layman’s language, deregulating banks means firing the guards and unlocking the vaults.

Palast notes that Argentina, Greece and Spain are among the victims of this ploy, not to mention The millions of Americans who lost their mortgages in 2008 and after (if you see someone blame homeowners or consumers for 2008, know of a certainty that person is on the take.)

Deregulation fundamentalism in banking had already contributed to the 1997 meltdown in East Asia, where unregulated currency transfers were allowed and speculators just bounced billions around the world, leading to Thailand’s and then others’ vast currency depreciation. Malaysia refused the arbitrageurs and so weathered the storm well.

Palast explains why Obama never moved against Wall Street (we’re just about as vulnerable now as in 2008) and is even considering the sleazy Larry Summers to head the Federal Reserve.

One of the questions that Palast’s expose raises is the old one of how much autonomy the state really has in a society dominated by the business classes. The de Tocqueville tradition, revived in the 1980s by Theda Skocpol, emphasizes the government as an independent actor. The Marxist tradition famously sees the state as “the managing committee” of the rich.

Geithner’s memo favors Marx, not de Tocqueville. This is government as humble man-servant of the least savory sections of big business. Many of the ways that Obama has disappointed his base have to do with his being chairman of the managing committee rather than president, and so being captive to powerful interests whatever his own instincts. The billions it costs to become and stay president allows Wall Street to buy the presidency, regardless of which party wins.

You also have to wonder about hidden partnerships between US corporations and the NSA, which appears to do a fair amount of industrial espionage.

What Marx got wrong is that apparently people will put up with this sort of thing if you just provide them with some cheap consumer electronics and televised gossip about celebrity scandals.

29 Responses

  1. Impossible to be shocked or surprised at this in lieu of the past 6 years.
    What’s surprising is Palast getting real/genuine evidence of the collusion.
    Palast is an interesting, if somewhat eccentric, guy. He comes across as a sensationalist at times (passionate?), but seems to be fact based and well researched.
    I often visit his site, which is down at the moment. Thanks for the link to Vice, which I hadn’t heard of prior.
    Summers should be doing time or at least be recognized for his dishonesty; Obama seems to have a talent for picking exactly the wrong people for any given task/job.
    We’ll see…

    • “Summers should be doing time or at least be recognized for his dishonesty; Obama seems to have a talent for picking exactly the wrong people for any given task/job.”

      The point that should be more than obvious by now is that the plutocrats have taken over completely and Obama is on their team. The evidence was completely exposed when President-elect Obama had an economic team assigned to him of Wall Street agents, by Wall Street power brokers, and for Wall Street profiteers.

      This is just another variation on our “justice” theme. Protect the criminals and jail the whistleblowers.

      • “The point that should be more than obvious by now is that the plutocrats have taken over completely and Obama is on their team.”

        And Slick Willie’s Lady Macbeth is waiting in the wings to take over in 2016.

  2. Only quibble with this excellent statement is that I think Marx did recognize the 19th century’s version of cheap consumer electronics and televised celebrity gossip in his remark about religion’s being the o. of the p. They just didn’t have the electronics nor the technology for the level of gossip the 21st c.,can indulge in. It’s all just bread and circuses, which have worked well since the beginning of time, whatever their specific manifestations over the millenia.

    • I don’t believe the self-abnegation of higher religion can be confused with runaway materialism. Even 19th century apocalyptics though not higher religion, didn’t push material acquisition.

  3. Prof. Cole deserves his own political talk show, possibly replacing Schieffer or Gregory. Then sit back and watch the neocons and Wall Street types go bat a$$ crazy.

    I doubt Lindsey Graham and McCain would be regular guest on a program that wouldn’t let them get away with neocon talking points.

    • “Prof. Cole deserves his own political talk show, possibly replacing Schieffer or Gregory.”

      Never happen. Only lapdogs make it on the mainstream media. Cenk Uygur went beyond the bounds of corporate-approved liberal talk on the neo-liberal MSNBC and was dumped. Helen Thomas, the only journalist with integrity and guts in the White House stenography pool, was gotten rid of at the first opportunity for telling the truth.

  4. Prof Cole,

    You hit the nail on the head with this one!

    The lack of alternative political parties with some sort of cohesive ideology or vision (i.e., socialist) and cooption of labor unions serves the interests on the ultra-rich’s political duopoly.

    • Right, Gregg. Juan’s point is the central one in all of “Christendom”. Money is King. Robert Rubin, Tim Geithner, Larry Summers, and all the rest are the Royal Executioners.

  5. It doesn’t seem completely right to speak of The American President as “captive to powerful interests.” That’s like saying that the actor playing Hamlet is captive to the script. The actor might have personal ‘instincts’ in the sense that, were he in a similar situation, he’d do something different. Nothing could be more irrelevant to the job.

    It’s increasingly plausible to think of Obama in this way. He gave a stirring performance as The Democratic Candidate back in ’08. Elected, he embraced the role of American President with the same level of commitment.

    As a thought experiment, it might be worth while to ponder this question: will the US ever have a progressive president? I’m not seeing how this could realistically come about, given the current machinery and ownership of the state.

  6. “Many of the ways that Obama has disappointed his base have to do with his being chairman of the managing committee…”

    I’m sorry, but this man has never been anything other than a creature of the financial and energy sectors, a hip neoliberal. There is nothing whatever to be surprised at in his continued upbeat chairmanship of the “managing committee.”

    Amusing to think of him as Marxist, however…

  7. as an addendum to the comment above, consider the following concerning the vigorous ongoing push to conclude negotiations on the Trans-Pacific Partnership by the end of this year:

    Public Citizen: “Public Interest Analysis of Leaked Trans-Pacific Partnership (TPP) Investment Text”

    link to citizen.org

  8. This is government as humble man-servant of the least savory sections of big business.”

    Well said.

    The power of the progenitor of feudalism should not be “misunderestimated” nor misunderstood.

    • Thank you for that very timely and appropriate link. I hope others will read it. One wonders what, if anything, has a prayer of displacing the Current And Growing System. Which has absorbed the commercial structures and faiths that might have led to something better…

  9. The NYTimes column today by Dr Krugman comes around to this same conclusion: Uncontrolled financial flows spurred by huge financial/banking corporations seeking short-term advantage is the reason that the planet is victimized by wave after wave of ‘bubbles’.

    • Wave after wave of bubbles was in fact the normal state of affairs for the US between the Civil War and 1929. So was wave after wave of deflationary crashes. Why do people so resist the idea that this is an inherent problem – or that this era was worse for the average American than the the more-regulated postwar period?

      • These bubbles did not evolve of themselves. They were created by the big players in the prevailing capitalist system that made them possible.

  10. one way to break the grip of Wall Street might be for a 3rd party to win some seats in Congress.
    Greens, Constitutionalists, doesn’t matter.

    • Not likely to happen in the foreseeable future. Two strikes against such an event: Corrupt campaign financing and an apathetic populace.

    • Ultimately, can any doctrine based on private property rights resist the creation of a financial elite? Some of the Founding Fathers were a financial elite too; they owned slaves who were an appreciating asset as long as the plantation system was expanding. Slaves or stocks, they’re both capital goods. Not surprising that an elite of slaveowners made slavery politically sacred over time, and that an elite of stockowners did the same later with stocks.

  11. we beat the Romans. They had ‘panem et circenses’. We just have ‘circenses’. A lot cheaper…

  12. “This is government as humble man-servant of the least savory sections of big business.” The Butler did it. Which one? The Marxist one.

  13. The source of the problem is widely known and obvious. Fixing the problem requires a crisis that significantly threatens elites. It’s unsettling to think how big a crisis that will require. The problem: “Thousands of lobbyists plus billions of dollars equal access and influence out of the reach of ordinary Americans….In 2009, more than 13,700 registered lobbyists spent a record $3.5 billion swaying government policy…double the amount lobbyists spent as recently as 2002….And that is just the money corporate America is spending on lobbying. Millions more are given directly to politicians and the political parties….Over the past two decades, [the financial sector] was the top contributor to political campaigns….[T]he bankers’ money rained down [to both Democrats and Republicans]…The investments paid off…with the rollback of…financial regulations that had kept the worst excesses of corporate greed in check since the Great Depression…The results for corporate America: record profits, record pay packages, and record bonuses. The results for the rest of us: the savings and loan crisis, the corporate scandals of the Enron era, and the [current] economic collapse…” The US “spent $182 billion to bail out AIG ($12.9 billion of which went straight to Goldman Sachs)…this amount alone would be more than enough to close the 2010 budget gap in every state in the Union.” “[One] effective means of restoring the integrity of our government is through the full public financing of political campaigns….[This is] the one reform that makes all other reforms possible….If someone’s going to own the politicians, it might as well be the American people.” link to detailedpoliticalquizzes.wordpress.com

  14. Larry Summers is not merely being considered as Fed Chair by the White House, he is Obama’s first choice. It is Summers who Obama wants, for reasons Ezra Klein outlines:

    link to washingtonpost.com

    Paul Krugman commented on the Klein piece (I can’t find the link) and noted that these are all the worst possible things to look for in a candidate for the Fed Chair’s office.

    • More likely, Summers is Wall Street’s choice and it it Obama’s task to see that Summers is installed as Fed Chairman. Obama will be ably assisted in this by Wall Street lobbyists “persuading” senators to confirm Summers.

  15. “What Marx got wrong is that apparently people will put up with this sort of thing if you just provide them with some cheap consumer electronics and televised gossip about celebrity scandals.” -J. Cole

    Here’s Marx’s plan for analyzing capitalist society was to dialectically reconstruct capitalist reality, including the political sphere in theory. “I examine the system of bourgeois economy in the following order: capital, landed property, wage-labour; the State, foreign trade, world market.”

    Unfortunately in Marx’s lifetime he only finished Volume 1 of three of the books for Capital, i.e, less than one sixth of his planned work. Thus, he never dealt with the state, foreign trade or the world market in any comprehensive way. Further none of his followers have systematically completed his work. We would have a much better understanding of the relationship between the state (superstructure) and the economy (economic base) had he or his followers finished his project.

    Thus, it’s not really fair to claim that Marx was wrong about the working class putting up with a state of capital as long as they’re bribed and distracted with new and shiny toys.

    What Marx got right is that capitalist social relations are a fetter on the further development of the forces of production. He was also right that there comes a time the viability of human life is threatened by decisions made about the use of the Earth’s resources on the basis of private profit, e.g., global warming. This is the time when, “From forms of development of the productive forces these relations turn into their fetters…Then begins an epoch of social revolution…”

    We’re probably going to live through and be active participants in that time of “social revolution.”

  16. If you look at the next post down Dr. Cole’s site, the one about how mil-mil contacts and “defense contracts” interoperably operate, it ought to be apparent that the finance game and the state- security game are just all of a piece. Ordinary people pay, and pay, and pay, with their lives, their loved ones and any HEALTHY wealth and real security they may happen to accumulate, so our feudal overlords can play. How’s it feel to be a helpless pawn on this RISK! tm board? Now that the real nature of the Game and its costs are starting to be more apparent?

    And how frustrating to know that Rule of Law is a sham, and that there are no consequences for the parasites and predators, who will live large and die comfortably? Priced your necessites of life lately? How about that great bargain, privatized “medical treatment UNsurance?” Thinking about a home mortgage? Hmmm? And “we have to keep building a network-centric worldwide military structure, now don’t we? Cuz otherwise The Rooskies, and TheChinese!!!!!! AND THAT GUY AL QUAEDA!!!!!!!!”

  17. “What Marx got wrong is that apparently people will put up with this sort of thing if you just provide them with some cheap consumer electronics and televised gossip about celebrity scandals.” -J. Cole

    Or as as acquaintance of mine put it: The people will put up with this abuse until they can no long afford Happy Meals.

  18. The Associated Press carried a story about a federal civil rights action that has since been filed by a civil rights group claiming that hundreds if not thousands of Arab-Americans in Metro Detroit had their bank accounts closed without any stated reason.

    link to wilx.com

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