Thursday, October 27, 2011

Hating banksters is hardly new in USA

One of the questions that seems to baffle the academic world is "Why didn't USA have a significant socialist (cooperative, labor) movement?"  After all, they reason, if we are a capitalist country with most of the problems capitalism brings, we should have had a Socialist Labor Party.

Well, that didn't happen and there is a thunderingly obvious reason—the USA had for much of its history an escape valve in the frontier.  Among other things, the Homestead Act turned millions of people into small land-owners and the towns that served those sod-busters filled up with small businesses.  And when these people discovered that there was something rotten in the economic arrangements, they couldn't strike against their evil bosses (themselves), so they developed a critique based on the one segment of capitalism they discovered did not play by the same rules they were forced to play—the moneychangers.  And since this critique is at least as old as the Bible and was certainly reinforced by the giants of American history like Franklin, Jefferson, Jackson, Lincoln, Ford and Edison, the politics of monetary policy REPLACED any impulse towards socialism (which had almost nothing to say about money and banking in any case.)

And since we have arrived at the point in history where even the useful functions of banking have been seized by shameless criminals, the critiques of the banksters developed by the USA Progressives are still relevant while those who mention socialism are treated as distractions.

Here we see a statement supposedly written by a committee of banksters to counter the threat posed by the People's Party Convention of 1892.  It was supposedly read into the Congressional record by Congressman Lindbergh who devoted much of his political career fighting the evil of the "Money Trusts."

The Bankers Manifesto of 1892

Revealed by US Congressman Charles A. Lindbergh, SR from Minnesota before the US Congress sometime during his term of office between the years of 1907 and 1917 to warn the citizens.

"We (the bankers) must proceed with caution and guard every move made, for the lower order of people are already showing signs of restless commotion. Prudence will therefore show a policy of apparently yielding to the popular will until our plans are so far consummated that we can declare our designs without fear of any organized resistance. 
The Farmers Alliance and Knights of Labor organizations in the United States should be carefully watched by our trusted men, and we must take immediate steps to control these organizations in our interest or disrupt them. 
At the coming Omaha Convention to be held July 4th (1892), our men must attend and direct its movement, or else there will be set on foot such antagonism to our designs as may require force to overcome. This at the present time would be premature. We are not yet ready for such a crisis. Capital must protect itself in every possible manner through combination (conspiracy) and legislation. 
The courts must be called to our aid, debts must be collected, bonds and mortgages foreclosed as rapidly as possible. 
When through the process of the law, the common people have lost their homes, they will be more tractable and easily governed through the influence of the strong arm of the government applied to a central power of imperial wealth under the control of the leading financiers. People without homes will not quarrel with their leaders. 
History repeats itself in regular cycles. This truth is well known among our principal men who are engaged in forming an imperialism of the world. While they are doing this, the people must be kept in a state of political antagonism. 
The question of tariff reform must be urged through the organization known as the Democratic Party, and the question of protection with the reciprocity must be forced to view through the Republican Party.
By thus dividing voters, we can get them to expand their energies in fighting over questions of no importance to us, except as teachers to the common herd. Thus, by discrete action, we can secure all that has been so generously planned and successfully accomplished." source
Jack London wrote about the plans of the powerful in the early 20th century.  He borrows heavily from the Progressive critiques even though he WAS a Socialist.
Nima Shirazi   October 26, 2011
Jack London didn’t just write tales of the Klondike Gold Rush and canine adventure stories. Sometimes he foretold the future.

Occupy Oakland & Mercenaries of the Oligarchy:
The 99% vs. The Iron Heel

“We are in power. Nobody will deny it. By virtue of that power we shall remain in power…We have no words to waste on you. When you reach out your vaunted strong hands for our palaces and purpled ease, we will show you what strength is. In roar of shell and shrapnel and in whine of machine-guns will our answer be couched. We will grind you revolutionists down under our heel, and we shall walk upon your faces. The world is ours, we are its lords, and ours it shall remain. As for the host of labor, it has been in the dirt since history began, and I read history aright. And in the dirt it shall remain so long as I and mine and those that come after us have the power. There is the word. It is the king of words–Power. Not God, not Mammon, but Power. Pour it over your tongue till it tingles with it. Power.” 
- Mr. Wickson, The Iron Heel by Jack London (1908), chapter 4 
Jack London didn’t just write tales of the Klondike Gold Rush and canine adventure stories. Sometimes he foretold the future. The above quote, written over a century ago and spoken by an aristocratic one-percenter in response to the rising tide of anti-plutocratic sentiment among the working class, is taken from London’s dystopic novel, The Iron Heel.

The novel depicts a society of unregulated and unrestrained capitalism; a society of the impoverished and disenfranchised, the unemployed and the unrepresented, at the mercy of a tiny but ruthlessly aggressive corporate elite that controls the government. London describes the perception of “the great mass of the people [who] still persisted in the belief that they ruled the country by virtue of their ballots,” when “[i]n reality, the country was ruled by what were called political machines. At first the machine bosses charged the master capitalists extortionate tolls for legislation; but in a short time the master capitalists found it cheaper to own the political machines themselves and to hire the machine bosses.” 
Furthermore, London delves into the deluded arrogance of the wealthy, stock-holding plutocrats, explaining, “They believed absolutely that their conduct was right. There was no question about it, no discussion. They were convinced that they were the saviours of society, and that it was they who made happiness for the many. And they drew pathetic pictures of what would be the sufferings of the working class were it not for the employment that they, and they alone, by their wisdom, provided for it.” Journalists are excoriated for their willingness, for fear of losing their jobs, “to twist truth at the command of [their] employers, who, in turn, obey the behests of the corporations.” 
The revolutionary hero of the book, Ernest Everhard, at one point addresses an exclusive gathering of the local aristocracy known as The Philomath Club, consisting of “the wealthiest in the community, and the strongest-minded of the wealthy, with, of course, a sprinkling of scholars to give it intellectual tone.” Everhard tells the crowd,

“No other conclusion is possible than that the capitalist class has mismanaged, that you have mismanaged, my masters, that you have criminally and selfishly mismanaged…You have failed in your management. You have made a shambles of civilization. You have been blind and greedy.” 
The Iron Heel preceded Aldous Huxley’s Brave New World and Sinclair Lewis’ It Can’t Happen Here by about two and a half decades and George Orwell’s 1984 by over 40 years. It anticipated the rise of totalitarianism in Europe over a decade before Mussolini’s Blackshirts marched on Rome. In his Introduction to the 1980 edition of the book, Rutgers professor H. Bruce Franklin explains that London essentially defined Fascism before it even officially existed as “the form that the capitalist state assumes when the oligarchy feels that its economic and political power is seriously threatened by working class revolution.”

Franklin proceeds to catalogue the brutal and authoritarian actions and abuses of The Iron Heel‘s ruling elite as envisioned by its prophetic author:

London foresees: the creation of attractive suburbs for the relatively privileged strata of the working class while the central cities are turned into what he calls “ghettoes” for the masses of unemployed and menial laborers, shoved into the darkest depths of human misery; the deliberate economic subversion of public education in order to spread illiteracy and ignorance; adequate food, health care, and housing priced above the reach of more and more people; the ubiquitous secret police infiltrating all organizations opposing the government; the establishment of a permanent mercenary army; the government conspiring in real and phony bomb plots, in the suppression of books and the destruction of printing presses, in witch hunts aimed at dissident labor leaders, professors, and authors, in destroying the reputations of some of its opponents, imprisoning many others and murdering the few it finds too formidable; spontaneous mass rebellions of the downtrodden people of the central cities; urban guerrillas battling the government’s army of mercenaries and police in the canyons of the cities.  more
 Matt Taibbi understands too.
OWS's Beef: Wall Street Isn't Winning – It's Cheating

Americans love winners. But that's just the problem. These guys on Wall Street are not winning – they're cheating. And as much as we love the self-made success story, we hate the cheater that much more.

In this country, we cheer for people who hit their own home runs – not shortcut-chasing juicers like Bonds and McGwire, Blankfein and Dimon.

That's why it's so obnoxious when people say the protesters are just sore losers who are jealous of these smart guys in suits who beat them at the game of life. This isn't disappointment at having lost. It's anger because those other guys didn't really win. And people now want the score overturned.

All weekend I was thinking about this “jealousy” question, and I just kept coming back to all the different ways the game is rigged. People aren't jealous and they don’t want privileges. They just want a level playing field, and they want Wall Street to give up its cheat codes, things like:

FREE MONEY. Ordinary people have to borrow their money at market rates. Lloyd Blankfein and Jamie Dimon get billions of dollars for free, from the Federal Reserve. They borrow at zero and lend the same money back to the government at two or three percent, a valuable public service otherwise known as "standing in the middle and taking a gigantic cut when the government decides to lend money to itself."

Or the banks borrow billions at zero and lend mortgages to us at four percent, or credit cards at twenty or twenty-five percent. This is essentially an official government license to be rich, handed out at the expense of prudent ordinary citizens, who now no longer receive much interest on their CDs or other saved income. It is virtually impossible to not make money in banking when you have unlimited access to free money, especially when the government keeps buying its own cash back from you at market rates.

Your average chimpanzee couldn't fuck up that business plan, which makes it all the more incredible that most of the too-big-to-fail banks are nonetheless still functionally insolvent, and dependent upon bailouts and phony accounting to stay above water. Where do the protesters go to sign up for their interest-free billion-dollar loans?

CREDIT AMNESTY. If you or I miss a $7 payment on a Gap card or, heaven forbid, a mortgage payment, you can forget about the great computer in the sky ever overlooking your mistake. But serial financial fuckups like Citigroup and Bank of America overextended themselves by the hundreds of billions and pumped trillions of dollars of deadly leverage into the system -- and got rewarded with things like the Temporary Liquidity Guarantee Program, an FDIC plan that allowed irresponsible banks to borrow against the government's credit rating.

This is equivalent to a trust fund teenager who trashes six consecutive off-campus apartments and gets rewarded by having Daddy co-sign his next lease. The banks needed programs like TLGP because without them, the market rightly would have started charging more to lend to these idiots. Apparently, though, we can’t trust the free market when it comes to Bank of America, Goldman, Sachs, Citigroup, etc.

In a larger sense, the TBTF banks all have the implicit guarantee of the federal government, so investors know it's relatively safe to lend to them -- which means it's now cheaper for them to borrow money than it is for, say, a responsible regional bank that didn't jack its debt-to-equity levels above 35-1 before the crash and didn't dabble in toxic mortgages. In other words, the TBTF banks got better credit for being less responsible. Click on to see if you got the same deal.

STUPIDITY INSURANCE. Defenders of the banks like to talk a lot about how we shouldn't feel sorry for people who've been foreclosed upon, because it's they're own fault for borrowing more than they can pay back, buying more house than they can afford, etc. And critics of OWS have assailed protesters for complaining about things like foreclosure by claiming these folks want “something for nothing.”

This is ironic because, as one of the Rolling Stone editors put it last week, “something for nothing is Wall Street’s official policy." In fact, getting bailed out for bad investment decisions has been de rigeur on Wall Street not just since 2008, but for decades.

Time after time, when big banks screw up and make irresponsible bets that blow up in their faces, they've scored bailouts. It doesn't matter whether it was the Mexican currency bailout of 1994 (when the state bailed out speculators who gambled on the peso) or the IMF/World Bank bailout of Russia in 1998 (a bailout of speculators in the "emerging markets") or the Long-Term Capital Management Bailout of the same year (in which the rescue of investors in a harebrained hedge-fund trading scheme was deemed a matter of international urgency by the Federal Reserve), Wall Street has long grown accustomed to getting bailed out for its mistakes. 
UNGRADUATED TAXES. I've already gone off on this more than once, but it bears repeating. Bankers on Wall Street pay lower tax rates than most car mechanics. When Warren Buffet released his tax information, we learned that with taxable income of $39 million, he paid $6.9 million in taxes last year, a tax rate of about 17.4%.

Most of Buffet’s income, it seems, was taxed as either "carried interest" (i.e. hedge-fund income) or long-term capital gains, both of which carry 15% tax rates, half of what many of the Zucotti park protesters will pay.  
And last but not least, there is:

GET OUT OF JAIL FREE. One thing we can still be proud of is that America hasn't yet managed to achieve the highest incarceration rate in history -- that honor still goes to the Soviets in the Stalin/Gulag era. But we do still have about 2.3 million people in jail in America.

Virtually all 2.3 million of those prisoners come from "the 99%." Here is the number of bankers who have gone to jail for crimes related to the financial crisis: 0.

Millions of people have been foreclosed upon in the last three years. In most all of those foreclosures, a regional law enforcement office -- typically a sheriff's office -- was awarded fees by the court as part of the foreclosure settlement, settlements which of course were often rubber-stamped by a judge despite mountains of perjurious robosigned evidence.

That means that every single time a bank kicked someone out of his home, a local police department got a cut. Local sheriff's offices also get cuts of almost all credit card judgments, and other bank settlements. If you're wondering how it is that so many regional police departments have the money for fancy new vehicles and SWAT teams and other accoutrements, this is one of your answers.

What this amounts to is the banks having, as allies, a massive armed police force who are always on call, ready to help them evict homeowners and safeguard the repossession of property. But just see what happens when you try to call the police to prevent an improper foreclosure. Then, suddenly, the police will not get involved. It will be a "civil matter" and they won't intervene.


The point being: we have a massive police force in America that outside of lower Manhattan prosecutes crime and imprisons citizens with record-setting, factory-level efficiency, eclipsing the incarceration rates of most of history's more notorious police states and communist countries.

But the bankers on Wall Street don't live in that heavily-policed country. There are maybe 1000 SEC agents policing that sector of the economy, plus a handful of FBI agents. There are nearly that many police officers stationed around the polite crowd at Zucotti park.

These inequities are what drive the OWS protests. People don't want handouts. It's not a class uprising and they don't want civil war -- they want just the opposite. They want everyone to live in the same country, and live by the same rules. It's amazing that some people think that that's asking a lot. more


  1. Hi Jonathan and congratulations on your 1000+ postings! All are great stuff, insightful and thought provoking.

    And of course I am here to quibble a bit, about the statement--
    "...baffle the academic world is "Why didn't USA have a significant socialist (cooperative, labor) movement?""
    --because I believe the USA had a significant socialist movement, and if academia does not recognize it, it betrays either the level of their ignorance or how they have become part of the co-opting of history to serve 'American Exceptionalism'...which in this case, means how exceptional americans are in believing they are exceptional and in how much they can deny the realities in their history.

    There were three periods in history where the elites in America made some briliant concessions to combat the growth of socialism/communism--
    1--the 'progressive age' where Teddy Roosevelt and his posse caved in and allowed labor friendly legislation...which served to undermine the appeal of the socialists/wobblies/et al.
    2--the 'new deal' where FDR and his new dealers had to rescue the country from the abuses of investment bankers by creating a functional banking industry...which gave people confidence to keep/start using banks.
    3--the 'cold war' where Ike and his ilk had to contruct a middle class fat and happy enough to fight off the red scare of the rest of the world.

    And of course...we were too young to understand how lucky we had it, how close the USA was to becoming socialist, how controlled we all were by these masters of the universe elites and the 'democratic' idealistic propaganda under which we were all being held in check...until they were too greedy and took it away and our eyes were opened.

    Thus, we have the Arab Spring, EU meltdown, OWS and tea parties in the USA...and if the oligarchs are not wise in restoring the economy and a separation of investment banking...socialism and communism movements will return worldwide, no?

  2. Quibble back

    Visit some country where they have Marxist Parties and THEN claim that Socialism in USA was anything more than a distraction. Good grief, I had a Finnish academic through this summer who could (and did) quote Marx in German! Yet when I quoted Veblen or Donnelly or any of the Populist positions that DID influence USA Progressivism, he had never heard of any of them—although in fairness, he was impressed by many.

    Please understand. Before 1917, there were literally dozens of anti-capitalist critiques. It is only after the Bolsheviks came to power that folks began to believe that you weren't REALLY against capitalism unless you were a Socialist as Marx described it. Well, since Marxism was such a murderous failure, I suggest we look at some of the rest of those critiques that were swept away by Bolshevism. I have spent much of my adult life looking at this stuff and I can assure you, we most certainly do NOT need Marxism to build a better society.

    Just remember, virtually all of the Progressive alternatives don't have 100 million innocent victims to explain away like the Marxists.

  3. Return Quibble--
    There was (and is) no need for a Socialist to equal a Marxism to equal a Bolshevik to equal a Communist in any country...that is like GOP idealogy uber alles lockstep crazy talk.

    Which is a lesson that I took away from the novel Darkness at Noon by Arthur Koestler--that what was failing their movement (which seems very obviously based on the realities of the first decades of the Soviet implimentation of communism)--that the elimination of political criticism, while initially appearing to strengthen the movement, in actuality it dooms it by reducing critical improvements and quashing motivation and intellectual discussion.

    Your Finnish friends and their nordic neighbors have all constructed SOCIAL democratic policies that are doing better than average progressing through time against all the usual faults and failed idealogies humanity can create. But there is no need for any of them to become more idealogically pure, whether that purist is preaching Marxism or Capitalism or any other -ism.

    I cannot understand even the goal of becoming ideologically pure--is this a holdover from religious thinking, some need to have one true God (or Rand or Marx or at least a golden calf celebrity leader) to worship?

    But, back to America...the oligarch elites in 1900-1915 made some tactical labor consessions that defused some of the socialist movement here, and then WWI and the Sedition Act cut the legs off it when the oligarchy feared a Russian Revolution repeat here.

    The New Deal prevented a banking collapse or rise in Soc Cred appeal or massive worker revolt in the 30s. The post WWII Red Scare was prevented from spreading here as it was calmed by actual worker rights and middle class prosperity.

    But now the last 20+ years of upper class greed has shuffed out much of the middle class buffer, resulting in an implied class warfare--not because anyone in the 99% had an axe to grind, but the crass stupidity of the 1% in their blind ignorance of history or appreciation of the wisdom of their own grandfather's decisions has caused them to break the social contract that kept comfort in the masses and peace in society.

    The 1% has only their own stupidity and greed to blame for global unrest; and their own herd mentality that prevents them from stopping their rush to the cliff ahead, that prevents them from fixing health care and banking, funding green energy and the jobs/economy it would create.

    And on and on...I can only shake my head, I cannot even muster a snort at the spot-on cartoons you post each weekend now.