Apologists for the Kleptocracy
Published by marco on
“About the A.I.G. affair: During the bubble years, many financial companies created the illusion of financial soundness by buying credit-default swaps from A.I.G. — basically, insurance policies in which A.I.G. promised to make up the difference if borrowers defaulted on their debts. It was an illusion because the insurer didn’t have remotely enough money to make good on its promises if things went bad. And sure enough, things went bad.
“So why protect bankers from the consequences of their errors? Well, by the time A.I.G.’s hollowness became apparent, the world financial system was on the edge of collapse and officials judged — probably correctly — that letting A.I.G. go bankrupt would push the financial system over that edge.”
Perhaps Krugman has told this story so many times that he’s lost the energy for outrage, but what he describes is patently immoral (for the people involved; a bank is amoral by definition and cannot be immoral) and should be criminal. He’s describing extortion and insurance fraud on a grand scale. If it isn’t illegal, then that’s only because the perpetrators also made their plan legal before putting it into action. That’s two crimes instead of just the one, then.
Once something like this happens, the system is broken. That the history of the last year is described in terms of “errors” instead of crimes is the only indication we need that the system is irrevocably broken, not just down for the count. That almost no one has been prosecuted or fired or anything is not a sign that no wrong was done; rather, it’s a sign that the wrong continues. He goes on to describe how the banks then paid themselves back much of the money they’d lost:
“After all, banks would have suffered huge losses if A.I.G. had been allowed to fail. So it seemed only fair for them to bear part of the cost of the bailout, which they could have done by accepting a “haircut” on the amounts A.I.G. owed them. Indeed, the government asked them to do just that. But they said no — and that was the end of the story. Taxpayers not only ended up honoring foolish promises made by other people, they ended up doing so at 100 cents on the dollar.”
Again, Krugman describes the situation as if it was just a big avalanche over which no one had any control. Just let the tidal wave wash over the city, then start building again to make it exactly like it was before: just as close to the shore and everything. Forget Russia and all of the other favorite punching bags of the Western media: The government of the United States is a textbook example of a kleptocracy.
As a result of this highway robbery, the administration has far fewer options because Americans in general now know that they’re being robbed blind. However, since the bailout package went entirely to banks and the portions of the stimulus that have been doled out have been hoovered up by private industry that was doing just fine without it, the economy is mysteriously still extremely weak and, for (almost) all intents and purposes, in the shitter. The main intent seems to be to bleed it as dry as possible before, well, what? Moving to another planet? What, exactly, do the powers-that-be plan to do once the corpse of the most powerful country to ever grace this planet has stopped twitching? The stimulus is based almost entirely on trickle-down economics, which doesn’t work for anyone but the kleptocrats. The people seem perfectly willing to put up with this indefinitely, but even their willingness will, at some point, be eclipsed by a physical inability to do so.
So, with two huge piles of money allocated and mostly wasted, it’s time the government buckled down and put together an even bigger one that will really work this time.
“For the economy is still in deep trouble and needs much more government help. Unemployment is in double-digits; we desperately need more government spending on job creation. Banks are still weak, and credit is still tight; we desperately need more government aid to the financial sector. But try to talk to an ordinary voter about this, and the response you’re likely to get is: “No way. All they’ll do is hand out more money to Wall Street.””
And that is completely justifiable because the ordinary voter’s ass is still mighty sore from the reaming it’s gotten over the last year. At some point, you just stop loaning your stoner roommate money. But Krugman laments not that the U.S. has been hijacked by criminals nor that its leadership is so politically stagnant that it can’t effect any change whatsoever, but that the American people aren’t stupid enough to fall for the same trick a third time.
Krugman, on the other hand, knows that the economy cannot recover without a huge cash injection, so he’s willing to believe the patently unbelievable. Can you imagine Krugman confronting his wife about a potential infidelity?
“Who was that man and what were you doing?”
“Well … it’s a funny story, actually … I was just walking along, minding my own business when I tripped over a rug, all of my clothes flew off and I landed naked in his lap. In my struggles to extricate myself, I may have accidently made love to him a few times. Anyway, the next thing I know, you’re standing there in the doorway, all glaring and accusatory and embarrassing me in front of my new friend.”
“Oh, all right then. So I imagine you haven’t had time to cook; we’ll be ordering out, then?”
Krugman is undoubtedly right that the economy will never recover without more stimulus. But what does “recover” mean in this context? To what should America—and, indeed, the global economy—recover? A hyper-consumerist economy with enormous debt-loads and inflated value built on a phantasmagorical house of cards of fraudulent financial instruments? To ex-ex-exurbs, strip malls and driving everywhere? To food that travels an average of 1700 miles? The American lifestyle was only maintainable with a thick layer of fraud at its base and it has collapsed. There is no turning back because it was never real.
As horrific as it sounds—because letting the current global system collapse will cause untold suffering—it is preferable to simply propping things back up the way they were with the same people in charge, as is being attempted now. There have been no lessons learned, no people punished and no changes made. Regulation is still non-existent and the majority still kowtows to a minority that has its power simply because it assumed it, not because it earned it. Is it any better to pour money back into a system that is, even now, sucking us dry for its own petty gain? Is it better to superficially prevent the collapse but still have most of the suffering? To end up even more in thrall to our lords and masters? It is their exhortations we hear that the system not be allowed to collapse; it has always been them, whispering that they work for our well-being while they strip of us most of what we have, leaving us only enough to survive another day, to produce just a little bit more value for their endlessly champing maws.