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The Mucky-Mucks Fuck Everything Up


A friend just forwarded this seven-minute gem to me.  It’s called "The Sub-Prime Mortgage Blues," and it’s the work of Gregg Somerville and Chris Conti.  (Also see below.)

 

It’s pretty darn good. — To quote from its chorus:

 

This sub-prime mortgage thing is a mess.

Have you heard the news?

The U.S. dollar is worthless.

I’ve got the Ben Bernanke blues.

 

I’d make only one change: In place of "sub-prime" (i.e., the phrase refers to lower end of the social structure, as if less wealthy Americans are the cause of systemic institutional problems and speculative exuberance), the root of the problem lies at the top — among the Mucky-Mucks.  The Super-Prime strata. 

 

Indeed.  If there even can be such a thing in the human universe as a law of economics, toss out all of the Nobel Prize-related stuff that pertains to variations on the rules of games like Dungeons and Dragons, fancy treatments of bread and circuses, supply and demand, money, notions of equilibrium, expectations, rational or not, and the really, really pathological stuff that gives honorable titles to exploitation and speculation.   

 

Instead, it’ll be something much closer to these: First Law: If there are too few people left alive who can tell the difference between real and counterfeit wealth ("fictitious value," to repeat Eric Janszen’s wonderful phrase), then collectively things will be messed.  Second Law: The foxes will seek to control the hen house.  Third Law: Any time the foxes exercise control, the development of the planet invariably will be ill-done.

 

In short, and to sum-up all three laws under one single overarching Law: The Mucky-Mucks will always fuck everything up.

 

Notice what the New York Times reported on Sunday ("In Treasury Plan, a Reluctant Eye Over Wall St.," Nelson D. Schwartz and Floyd Norris, March 30):

The Bush administration is proposing the broadest overhaul of Wall Street regulation since the Great Depression. But the plan, to be unveiled on Monday [March 31], has its genesis in a yearlong effort to limit Washington‘s role in the market. And that DNA is unmistakably evident in the fine print. Although the proposal would impose the first regulation of hedge funds and private equity funds, that oversight would have a light touch, enabling the government to do little beyond collecting information — except in times of crisis.  The regulatory umbrella created in the 1930s would grow wider, with power concentrated in fewer agencies. But that authority would be limited, doing virtually nothing to regulate the many new financial products whose unwise use has been a culprit in the current financial crisis. The plan hands vast new authority to the Federal Reserve, essentially formalizing what has been an improvised process over the last three weeks. But some fear that the central bank’s role in creating the current mess will undercut its ability to clean it up. All the checks and balances in the plan reflect the mindset of its architect, Treasury Secretary Henry M. Paulson Jr., who came to Washington after a long career on Wall Street. He has worried that any effort to substantially tighten regulation could hamper the ability of American markets to compete with foreign rivals, though he has intervened in the mortgage crisis to try to persuade banks to offer concessions to some troubled borrowers.

Need I quote more?  What Washington is proposing, essentially, is nothing beyond taxpayer-bailouts of mega-capitalists in times of crisis.  Everything else is political gesture.  The foxes are  setting policy. 

Of course this is a formula for crises without end.  What is more, it is evidence of a political system that cannot address problems, no matter how grave, in a proactive manner because, as just this one instance illustrates, the architects of the solutions derive from the class that causes the problems on a recurring basis.

Meanwhile, the debris field only keeps growing larger.

"The Sub-Prime Mortgage Blues," Gregg Somerville and Chris Conti, YouTube, January, 2008

(Quick note. — The best stuff below begins with the Rousseau and proceeds thereafter.  As for the rest, it’s there for context. — As always in the human world, the smartest bet is to look upon the Treasury Department’s newly minted "Blueprint" as providing some additional corroboration — as if any more were needed — of the thesis argued by Rousseau et al. to the effect that "civil society is hardly more than a conspiracy by the rich to guarantee their plunder." — You’ve got to love a mind that suffers from zero belief in respectable norms.)

"Remarks by Secretary Henry M. Paulson, Jr., on Blueprint for Regulatory Reform," U.S. Department of the Treasury, March 31, 2008
Blueprint for a Modernized Financial Regulatory Structure, U.S. Department of the Treasury, March, 2008
"
Fact Sheet on Blueprint," U.S. Department of the Treasury, March 31, 2008

"Revamp Proposed for Financial Regulators," Jeannine Aversa, Associated Press, March 31, 2008

"The Fed’s Revolution,"  Michael Mandel and Peter Coy, Business Week, March 31, 2008  
"
The Financial Fix Just Got Political," Jane Sasseen, BusinessWeek.com, March 31, 2008 
"
How a Lack of Faith Pounded the Markets," Daniel Gross et al., Newsweek, March 31, 2008

"In Treasury Plan, a Reluctant Eye Over Wall St.," Nelson D. Schwartz and Floyd Norris, New York Times, March 30, 2008
"
As Jobs Vanish and Prices Rise, Food Stamp Use Nears Record," Erik Eckholm, New York Times, March 31, 2008 
"The Dilbert Strategy," Paul Krugman, New York Times, March 31, 2008 
"Paulson Plan Begins Battle Over How to Police Market," Damian Paletta et al., Wall Street Journal, March 31, 2008
"
Fed’s ‘Supercop’ Role May Give It Headaches," Greg Ip, Wall Street Journal, March 31, 2008 

Discourse on the Origin and the Foundations of Inequality Among Men, Jean-Jacques Rousseau, 1754 (Trans. Ian Johnson)

The Power Elite, C. Wright Mills, New Ed (Oxford University Press, 1999)
"
The Power Elite," C. Wright Mills (excerpt of Ch. 12 of the book) 

Who Rules America?  Power, Politics, and Social Change, G. William Domhoff, New Ed. (McGraw-Hill, 2005) 
"
Who Rules America?" (Homepage), G. William Domhoff, University of California at Santa Cruz

Social Stratification in the United States, Stephen J. Rose, Rev. Ed. (The New Press, 2007) 

"It Could Happen Here," Gregory Myerson and Michael Joseph Roberto, Monthly Review, October, 2006

"Ponzi nation," Edward Chancellor, Institutional Investor, February 7, 2007

"The Financialization of Capitalism," John Bellamy Foster, Monthly Review, April, 2007

"Repairing the Global Financial Architecture: Painting over Cracks vs. Strengthening the Foundations," David Felix, Foreign Policy In Focus, September, 1999
The Past as Future? The Contribution of Financial Globalization to the Current Crisis of Neo-Liberalism as a Development Strategy, David Felix, Political Economy Research Institute, 2003

"The Welfare King of the 21st Century," Dean Baker, Truthout, March 31, 2008.  ("J.P. Morgan is being given the opportunity to do some gambling, with the taxpayers committed to making good any losses.")  

 


Update
(April 1): Take a look at the quote that David Felix used for the inscription to his 1999 analysis, "Repairing the Global Financial Architecture: Painting over Cracks vs. Strengthening the Foundations" (Foreign Policy In Focus):

 

"In a world of free capital flows, this burden (economic losses from financial crises) tends to fall on those who are unable to escape. Loss distribution is a political matter." (Andrew Sheng, Bank Restructuring: Lessons from the 1980s (Washington: World Bank, 1996), p. 181.)

 

The incalculable and perhaps inscrutable losses racked up by the speculators (for they are all speculators, at bottom — any human sense of real and inherent wealth having been dispatched once and for all from this very counter-human world of finance) are to be borne by the suckers lacking the political power to escape from them.  "Loss distribution is a political matter," after all.  As are "capital gains."

 

What else do you suppose the Treasury Department’s newly minted Blueprint for a Modernized Financial Regulatory Structure is really all about, but the U.S. Government’s pledge to the speculators to help them distribute their losses widely — even into the distant future — while keeping their gains where they belong?

 

In the silly Paulson "Blueprint" and all future plans to be derived from it, look for the regulatory elements to be utterly stripped away.  But also look for the elements that would institutionalize the marshaling of taxpayer bailouts of the Muck Mucks to remain and even be strengthened. — Don’t forget: This is the United States of America we’re talking about here.  Not the Soviet Union or Cuba.

 

Last, on a front closely related to the Wall Street – bailout crap: Some intrepid reporter might ask the presidential candidates which rivers they pledge to divert through the stables of entrenched interests in Washington DC and New York City, as part of their contribution to better ecology in the United States, and to clean up the mess made by the counterfeiters of high finance?

Blueprint for a Modernized Financial Regulatory Structure, U.S. Department of the Treasury, March, 2008
"
Fact Sheet on Blueprint," U.S. Department of the Treasury, March 31, 2008

Treasury’s Blueprint for Reg Reform (Homepage), American Banker
"Not So Fast, Mr. Paulson," Joseph Weber, BusinessWeek.com, April 1, 2008 
"Paulson proposes major new role for the Fed," Ron Scherer, Christian Science Monitor, April 1, 2008 
"Doubts Greet Treasury Plan On Regulation," Stephen Labaton, New York Times, April 1, 2008 
"On Paper, Wall Street Gets Its Way," Jenny Anderson, New York Times, April 1, 2008  
"Overhauling financial rules will take years," Carolyn Lochhead, San Francisco Chronicle, April 1, 2008
"Lobbyists, Small Banks Attack Plan For Markets," Damian Paletta and Elizabeth Williamson, Wall Street Journal, April 1, 2008 
"Americans Delay Retirement As Housing, Stocks Swoon," Jennifer Levitz, Wall Street Journal, April 1, 2008
"Long Fight Ahead for Treasury Blueprint," David Cho and Jeffrey H. Birnbaum, Washington Post, April 1, 2008
"Dreams End With Collapse of Tinker Bell Market," Allan Sloan, Washington Post, April 1, 2008"

 

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