The Wall Street bankers who tanked the global economy haven’t just escaped jail. They’ve escaped ridicule. The media still take their utterances seriously. Lawmakers remain respectful whenever they drop by Capitol Hill.
How different the scene, back in 1933, when the Senate Banking Committee called J. P. Morgan Jr., the world’s most famous banker, to the witness table. The panel’s chief counsel, Ferdinand Pecora, grilled J. P. and his partners day after day, and that aggressive grilling had one Senate apologist for the bankers, relates one historian, complaining royally about the “circus” atmosphere.
soon grace America’s front pages — and ensure maximum visibility for Pecora’s tough final report.
Two weeks ago, after a year of quiet hearings, our contemporary Pecora panel releasedits final report. But this tough report from the commission Congress set up to investigate the run-up to the Great Recession has yet to gain any serious media traction. That’s a shame. We explain why in this week’s Too Much.
GREED AT A GLANCE
Quote of the Week
“In the long run super elites can only survive in one of two ways — by suppressing dissent or by sharing the wealth. I know which one I prefer.”
The billionaire Koch brothers, Charles and David, have been in the news a good bit lately — for their massive bankrolling of various initiatives that aim to make America ever more rich people-friendly. Their older brother Frederick, on the other hand, doesn’t seem to dabble in politics at all. He just rakes in the benefits. The latest example: Frederick’s mansion on New York’s Upper East Side has just registered the largest market value increase of any residential property in the entire city, jumping from a $20.8 million valuation last year to $31.2 million. But Frederick’s property tax bill has only jumped $871. The reason: Current law doesn’t let city assessors boost the taxable value of residential properties, mansions included, over 6 percent per year or 20 percent over five years. New York could certainly use a little more help from mansion owners. City public services are now facing an 8 percent funding cut, effective July 1 . . .
Few CEOs have ever thought more highly of themselves than Lou Gerstner, the former IBM chief who has pontificated nonstop about public policy since his 2002 retirement. Last week, in the Wall Street Journal, Gerstner offered his advice on how best to cut “the cost and size of government.” His main pitch: “Allow no exceptions.” Giving “sacred cows” special treatment, Gerstner warned, undermines “the sense of shared sacrifice” essential to any serious “restructuring.” Gerstner should know. At IBM, he replaced the pension plan that guaranteed employees a safe, comfortable retirement with a 401(k) that shifts all retirement responsibility — and risk — onto employees. Big Lou himself took home $127 million in 2001, the year before he retired with a $1.1 million guaranteed annual pension . . .
promised to ring a Tiger-designed 18-hole golf course with 200 villas that would start at $11 million each, all surrounded by 11,000 imported trees. That promise has proved a mirage. The developers finished only a handful of villas before Dubai’s housing market crashed. Last week they “confirmed” an indefinite hiatus. Woods reportedly received up to $25 million upfront for the project and would have made tens of millions more on royalties . . .
Michael Breman aims to please — and that’s getting harder and harder. Breman runs sales for Germany’s premiere luxury yacht builder, and his super-rich clients from all over world, a news report last week noted, “are becoming increasingly eccentric.” The current craze: shower heads — costing just under $25,000 each — that allow bathers to control the water droplet size and speed. One Russian oligarch is even demanding a yacht shower that can spray either water or champagne. Matthias Voit, an exec at the German firm that manufactures specialty showers, sees no problem managing that request. Only one question, he says, remains unresolved: “whether the champagne should be warm or cold.”
China doesn’t have much of a super-yacht industry yet. But overall, analysts believe, China stands poised to seize the global “luxury limelight.” A new projection, just out, is estimating that Chinese buyers will “account for as much as 44 percent of global luxury sales by 2020, up from 15 percent now.” In 2000, notes the CLSA investment group, only 24 Chinese nationals held as much as 1 billion yuan, or $151.7 million. Last year, China tallied 1,363 yuan billionaires. China’s growing “luxury cult” has now spilled beyond Shanghai and Beijing. In Xiamen, a coastal city of 2.5 million, Porsche’s showroom last year moved out 1,370 cars, and Lamborghini unloaded a sports sedan for over $1.1 million.
Stat of the Week
The United States ranks as the world’s most unequal developed nation. But parts of the United States rank as among the most unequal places in the entire world, developing nations included. Notes Fiscal Policy Institute economist James Parrott: “If New York City were a nation, its level of income concentration would rank 15th worst among 134 countries, between Chile and Honduras.”
IN FOCUS
Peddling Poison for Fun and Profit
A quarter-century ago, in 1986, the biggest Wall Street banker paycheck went to John Gutfreund, the Salomon Brothers CEO. Gutfreund pulled in $3.2 million. Two decades later, in 2006, Merrill Lynch CEO Stanley O’Neal pocketed $91 million.
To understand the 2008 Wall Street meltdown that cratered the U.S. economy, suggests the new final report from the panel Congress appointed to probe the causes of that crater, you need to understand this enormous pay explosion — and the fierce incentive this explosion created for reckless and fraudulent behavior.
How reckless and fraudulent? In the years that led up to the 2008 meltdown, the Financial Crisis Inquiry Commission report released late last month details, Wall Street’s top bankers and financiers “made, bought, and sold mortgage securities they never examined, did not care to examine, or knew to be defective.”
These same bankers borrowed, based on these securities, tens of billions of dollars “that had to be renewed each and every night” and then traded these billions in totally unregulated, semi-secret, financial “derivative” gambles.
This frenetic financial folly would eventually leave four million homes lost to foreclosure and another four and a half million American families either ensnared in the foreclosure process or seriously behind on their mortgage payments.
“Nearly $11 trillion in household wealth has vanished,” adds the Financial Crisis Commission final report, “with retirement accounts and life savings swept away.”
The top five execs at Bear Stearns, for instance, all lost their jobs when that investment house collapsed in 2008. But in the eight years before that collapse, notes the Financial Crisis panel, these five “took home over $326.5 million in cash and over $1.1 billion from stock sales.” Their windfall exceeded the annual budget of the SEC, the federal agency that’s supposed to keep Wall Street honest.
The Wall Street pay explosion also helps explain why this Financial Crisis panel final report — a clear, compelling read — appears to be going nowhere. The 545-page paper, since its January 27 release, has sunk, like a rock, from public view.
Reports from blue-ribbon panels don’t, of course, always sink. They sometimes help crystallize public outrage and serve as a useful stepping stone to fundamental reform. In the Great Depression, the Senate Banking Committee’s celebrated Pecora Commission report played just that role.
But blue-ribbon reports, to make an impact, need political patrons, elected leaders who’ll talk the report content up, in news conferences and speeches, and demand immediate action to correct the ills that report content identifies.
The Pecora Commission report had plenty of those patrons, including President Franklin D. Roosevelt. The Financial Crisis Inquiry Commission has had virtually none. The White House has done next to nothing to give the report legs, and neither have many Democratic lawmakers.
Republicans, for their part, have followed the lead of the four GOP appointees on the panel. All four “dissented” from the main report, and their convoluted rebuttal to the majority report has allowed conservatives — and much of the media — to dismiss the Financial Crisis panel report as a purely partisan exercise.
Why all the haste to bury this report? Politicos on both sides of the aisle have essentially become too dependent on Wall Street. The report itself supplies the basic numbers: From 1999 to 2008, the financial industry dumped over $1 billion into political campaigns — and spent another $2.7 billion on lobbying.
That money has kept the Wall Street money machine percolating nicely. Total pay in the financial sector, the Wall Street Journal reported last week, topped $135 billion last year, a new record. Overall, concludes the Council of Institutional Investors, pay practices on Wall Street “have worsened” since the 2008 crisis.
The American people, meanwhile, remain absolutely outraged. Over 70 percent of Americans, a Bloomberg poll found this past December, want big bonuses banned this year at Wall Street firms that took taxpayer money.
People power, of course, can check money power, but only if organized. In the Great Depression, people did organize. The hugely influential Senate Banking Pecora Commission operated against the backdrop of a mobilized popular uproar.
The lesson for today? Even the most compelling blue-ribbon reports can’t, on their own, drive real reform. The pressure to end the pay excess behind the horrors the Financial Crisis Inquiry Commission has so exhaustively chronicled is going to have to come from average Americans.
The Financial Crisis Inquiry Commission has its final report available online, for free download. Interested in organizing, in your community or congregation, for economic security and justice? Check the Common Security Club network.
Hugh Noble, The Spirit Level Revisited. A statistician demolishes the attacks on the 2010 British best-seller that exposed the heavy price societies pay for tolerating ever wider income inequality.
In Review
A Business Case for Greater Equality
The Nordic Way: Shared norms for the new reality. A report prepared for the World Economic Forum in Davos, Switzerland, January 2011.
President Obama has opened 2011 preaching a new gospel: competitiveness. To succeed economically, his argument goes, the United States must become more “competitive.”
So where do we start? How about looking at societies that are already competing quite nicely? Maybe they have lessons to share.
These societies, turns out, do feel they have lessons to share. Better yet, the four nations that rate highest on global “competitiveness” benchmarks seem to be in a sharing mood.
Last month, at the World Economic Forum in Davos, corporate and government leaders from these four nations — Sweden, Norway, Denmark, and Finland — brought a special report that lays out what they feel gives them their distinct competitive edge.
A distinct competitive edge — for Scandinavia? Conservatives all around the world would find this notion ludicrous. They’ve been arguing for years, as this new report wryly notes, that the Nordic economies are going to crash any minute.
In this conservative world view, the Nordic economies represent a compromise between socialism and capitalism that can’t possibly last — since “the costly and unproductive ‘socialist’ elements of the model were bound to overwhelm the productive ‘capitalist’ aspects that had been allowed to remain.”
But the Nordics, contrary to these dire predictions, are doing just fine. They’ve survived the Great Recession much better than the rest of the developed world.
The Nordics also boast budget surpluses and low public debt, not to mention “long-term political stability, transparent institutions, technological adaptability, flexible labor markets, open economies, and high levels of education” — all the elements that business analysts say make for competitive economic success.
The secret to this success? The Nordic business and policy leaders behind the Nordic Way report, a group that includes the chairman of the largest industrial holding company in Northern Europe, brought a somewhat surprising answer to their global corporate and governmental colleagues gathered in Davos.
The Nordic nations, these entrepreneurs and elected leaders maintain, value individualism, so much so that they make sure — through a tightly knit social safety net — that no individual ever has to feel beholden to another.
Individualism, The Nordic Way goes on to argue, “need not lead to social fragmentation, distrust, and short-term maximization of material interests.” Quite the opposite. Individual autonomy can “lead to greater social cohesion if it is done in an egalitarian way.”
And that’s what the Nordic nations have done. Sweden, Norway, Denmark, and Finland all rank among the world’s most equal nations. The resulting social cohesion nurtures a “high degree of trust” — a trust in each other, in the law, in the strong governmental institutions that guarantee the social safety net.
This trust, Nordic business leaders believe, translates into the “systemic advantage” that economists have labeled “low transaction costs.” People who do business in Scandinavia spend less time hassling with lawsuits and paperwork
Critics, The Nordic Way acknowledges, see “political and cultural drawbacks” to the Scandinavian “commitment to personal autonomy, a strong state, and social equality.” Such a commitment, the attack on the Nordics posits, generates “conformity, loneliness, and an intrusive bureaucracy.”
The Nordic Way sees a different Scandinavian reality: societies full of “citizens who feel empowered, accept the demands of modernity, and are willing to make compromises to achieve economic efficiency and rational decision-making.”
The ultimate “take-away” message that Nordic business and government leaders want their peers elsewhere to take to heart?
“In the Nordic countries,” The Nordic Way sums up, “social trust, confidence in state institutions, and relative equality coincide.”
In the United States, this trust, confidence, and equality have gone by the boards. To become “competitive,” we have work to do. A lot.
Informing this series is the sense that three years into the gravest economic crisis since the Great Depression, the vast majority of Americans have no significant political movement that truly represents their interests.
The people of the United States – and the world, due to the central geopolitical and economic role of the USA and the global nature of the economic crisis – desperately need such a movement to advocate on their behalf.
So, how do we build one?
This question will be addressed all next week at 4pm (PST) on KPFK.
In addition to the daily hour-long special at 4pm (PST), there will be many segments during the week on KPFK’s other political talk shows that will be a part of the series – these interviews will also be available on the series website.
The series will be “evergreen” for at least a few months – i.e. it will not be a series relating to the specific news of the day, though it will reflect on the political and economic situation in America in the first half of 2011.
The power of popular dissent and the limits of peaceful protest.
Egypt: Tariq Ramadan & Slavoj Zizek
The Muslim scholar and philosopher discuss the power of popular dissent and the limits of peaceful protest.
A Villa in the Jungle?
The turmoil in Egypt was caused by economic factors: the rising cost of living, the poverty, the unemployment, the hopelessness of the educated young. But let there be no mistake: the underlying causes are far more profound. They can be summed up in one word: Palestine. People can suffer deprivation, but they will not stand humiliation. What every young Arab from Morocco to Oman saw daily was his leaders humiliating themselves, forsaking their Palestinian brothers in order to gain favor and money from America, collaborating with the Israeli occupation, cringing before the new colonizers.
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WE ARE in the middle of a geological event. An earthquake of epoch-making dimensions is changing the landscape of our region. Mountains turn into valleys, islands emerge from the sea, volcanoes cover the land with lava.
People are afraid of change. When it happens, they tend to deny, ignore, pretend that nothing really important is happening.
Israelis are no exception. While in neighboring Egypt earth-shattering events were taking place, Israel was absorbed with a scandal in the army high command. The Minister of Defense abhors the incumbent Chief of Staff and makes no secret of it. The presumptive new chief was exposed as a liar and his appointment canceled. These were the headlines.
But what is happening now in Egypt will change our lives.
AS USUAL, nobody foresaw it. The much-feted Mossad was taken by surprise, as was the CIA and all the other celebrated services of this kind.
The turmoil in Egypt was caused by economic factors: the rising cost of living, the poverty, the unemployment, the hopelessness of the educated young. But let there be no mistake: the underlying causes are far more profound. They can be summed up in one word: Palestine.
In Arab culture, nothing is more important than honor. People can suffer deprivation, but they will not stand humiliation.
Yet what every young Arab from Morocco to Oman saw daily was his leaders humiliating themselves, forsaking their Palestinian brothers in order to gain favor and money from America, collaborating with the Israeli occupation, cringing before the new colonizers. This was deeply humiliating for young people brought up on the achievements of Arab culture in times gone by and the glories of the early Caliphs.
Nowhere was this loss of honor more obvious than in Egypt, which openly collaborated with the Israeli leadership in imposing the shameful blockade on the Gaza Strip, condemning 1.5 million Arabs to malnutrition and worse. It was never just an Israeli blockade, but an Israeli-Egyptian one, lubricated by 1.5 billion US dollars every year.
I have reflected many times – out loud – how I would feel if I were a 15 year-old boy in Alexandria, Amman or Aleppo, seeing my leaders behave like abject slaves of the Americans and the Israelis, while oppressing and despoiling their own subjects. At that age, I myself joined a terrorist organization. Why would an Arab boy be different?
A dictator may be tolerated when he reflects national dignity. But a dictator who expresses national shame is a tree without roots – any strong wind can blow him over.
For me, the only question was where in the Arab world it would start. Egypt – like Tunisia – was low on my list. Yet here it is – the great Arab revolution taking place in Egypt.
THIS IS a wonder in itself. If Tunisia was a small wonder, this is a huge one.
I love the Egyptian people. True, one cannot really like 88 million individuals, but one can certainly like one people more than another. In this respect, one is allowed generalize.
The Egyptians you meet in the streets, in the homes of the intellectual elite and in the alleys of the poorest of the poor, are an incredibly patient lot. They are endowed with an irrepressible sense of humor. They are also immensely proud of the country and its 8000 years of history.
For an Israeli, used to his aggressive compatriots, the almost complete lack of aggressiveness of the Egyptians is astonishing. I vividly remember one particular scene: I was in a taxi in Cairo when it collided with another. Both drivers leapt out and started to curse each other in blood-curling terms. And then quite suddenly, both of them stopped shouting and burst into laughter.
A Westerner coming to Egypt either loves it or hates it. The moment you set your foot on Egyptian soil, time loses its tyranny. Everything becomes less urgent, everything is muddled, yet in a miraculous way things sort themselves out. Patience seems boundless. This may mislead a dictator. Because patience can end suddenly.
It’s like a faulty dam on a river. The water rises behind the dam, imperceptibly slowly and silently – but if it reaches a critical level, the dam will burst, sweeping everything before it.
MY OWN first meeting with Egypt was intoxicating. After Anwar Sadat’s unprecedented visit to Jerusalem, I rushed to Cairo. I had no visa. I shall never forget the moment I presented my Israeli passport to the stout official at the airport. He leafed through it, becoming more and more bewildered – and then he raised his head with a wide smile and said “marhaba”, welcome. At the time we were the only three Israelis in the huge city, and we were feted like kings, almost expecting at any moment to be lifted onto people’s shoulders. Peace was in the air, and the masses of Egypt loved it.
It took no more than a few months for this to change profoundly. Sadat hoped – sincerely, I believe – that he was also bringing deliverance to the Palestinians. Under intense pressure from Menachem Begin and Jimmy Carter, he agreed to a vague wording. Soon enough he learned that Begin did not dream of fulfilling this obligation. For Begin, the peace agreement with Egypt was a separate peace to enable him to intensify the war against the Palestinians.
The Egyptians – starting with the cultural elite and filtering down to the masses – never forgave this. They felt deceived. There may not be much love for the Palestinians – but betraying a poor relative is shameful in Arab tradition. Seeing Hosni Mubarak collaborating with this betrayal led many Egyptians to despise him. This contempt lies beneath everything that happened this week. Consciously or unconsciously, the millions who are shouting “Mubarak Go Away” echo this contempt.
IN EVERY revolution there is the “Yeltsin Moment”. The columns of tanks are sent into the capital to reinstate the dictatorship. At the critical moment, the masses confront the soldiers. If the soldiers refuse to shoot, the game is over. Yeltsin climbed on the tank, ElBaradei addressed the masses in al Tahrir Square. That is the moment a prudent dictator flees abroad, as did the Shah and now the Tunisian boss.
Then there is the “Berlin Moment”, when a regime crumbles and nobody in power knows what to do, and only the anonymous masses seem to know exactly what they want: they wanted the Wall to fall.
And there is the “Ceausescu moment”. The dictator stands on the balcony addressing the crowd, when suddenly from below a chorus of “Down With The Tyrant!” swells up. For a moment, the dictator is speechless, moving his lips noiselessly, then he disappears. This, in a way, happened to Mubarak, making a ridiculous speech and trying in vain to stem the tide.
IF MUBARAK is cut off from reality, Binyamin Netanyahu is no less. He and his colleagues seem unable to grasp the fateful meaning of these events for Israel.
Everything the Israeli leadership has done in the last 44 years of occupation or 63 years of its existence is becoming obsolete. We are facing a new reality. We can ignore it – insisting that we are “a villa in the jungle”, as Ehud Barak famously put it – or find our proper place in the new reality.
Peace with the Palestinians is no longer a luxury. It is an absolute necessity. Peace now, peace quickly. Peace with the Palestinians, and then peace with the democratic masses all over the Arab world, peace with the reasonable Islamic forces (like Hamas and the Muslim Brothers, who are quite different from al Qaeda), peace with the leaders who are about to emerge in Egypt and everywhere.
Beckum, Germany as Helmut Ostermann, Avnery and his family emigrated to Palestine in 1933, fleeing the Nazi regime.[2][3] He currently heads Gush Shalompeace movement, one of Israel’s largest peace formations. He is famous for crossing the lines during the Battle of Beirut to meet Yassir Arafat on 3 July 1982, the first time the Palestinian leader ever met with an Israeli. Avnery is the author of several books about the Israeli-Palestinian conflict, including 1948: A Soldier’s Tale, the Bloody Road to Jerusalem (2008); Israel’s Vicious Circle (2008); and My Friend, the Enemy (1986). During the 1948 Arab-Israeli War Avnery fought on the southern front in the Givati Brigade as a squad commander, and later in the Samson’s Foxescommando unit (and also wrote its anthem).[2][4][9] He wrote dispatches from the front line which were published in Haaretz and later as a book, In the Fields of Philistia (Hebrew: בשדות פלשת,Bi-Sdot Pleshet).[2] Avnery was wounded twice, the second time, toward the end of the war, seriously; he spent the last months of his army service convalescing and was discharged in the summer of 1949.[2]
EDITORIAL: Revolution or no revolution, that is the question.
The Egyptian uprising is still very much undecided in terms of ultimate outcome
“The Tunisian and Egyptian uprisings are not, as some armchair pundits called the Tunisian one, Jasmine Revolutions. They are ones of bread, bullets, blood, democracy and dignity. State security forces have killed hundreds of people in both countries and wounded thousands. Many more have been arrested. But the fire of revolt sparked by Muhammad Bouzizi’s self-immolation in Tunis last December has now turned into a conflagration of popular upheaval across the Arab world largely led by workers, students, and the unemployed (men and women). Current protests in Egypt have reached a new crescendo. Other demonstrations in Yemen, Algeria and Jordan are far from turning the tables on their regimes but continue to exert pressure against the status quo. Large disaffected sections of an emaciated middle-class of professionals, public servants, and petit-bourgeois have also jumped on the revolutionary bandwagon….”(Hicham Safieddine, Reform or Revolution)
PATRICE GREANVILLE
But this is not to deny one iota that the precedent alone of this explosion will have enormous, long lasting implications for the region and beyond. (Among other things it has opened a rare window onto the actions of a courageous people to sheepish Americans, many of whom are increasingly mad at the status quo but keep fretting about the options. The window is all the more interesting because the powers that be, along with their meretricious media, are seen as endorsing the rebellion).
So far the class composition of the uprisings is diverse, and that of the leadership—if we can call it that at this point—is mixed. Obviously (and fortunately) there are radical elements in their ranks, and the unions—long discounted as effective players in this area of the world—have suddenly begun to show renewed vigor. But bourgeois participants are many, and fundamental islamists are also capable of influencing large numbers. If the masses follow either of the latter two ideological strands, the possibility of a true revolution is finished. Perhaps for generations. And that is even without factoring the impact of foreign intervention—open and stealthy by the usual suspects—and the braking effect of conservative army fficers and civilians.
THE SUDDEN EXPLOSION OF POPULAR IRE being seen in Egypt and other countries of the Middle East ensues from decades of brutal oppression and corruption by dictators and elites cynically supported by Israel and the United States. This video is courtesy of The Real News Network (TRNN). For continuous coverage of events in Egypt as they develop, watch history in the making on Al Jazeera television.
