The Effect of the Micheletti Regime on Honduran Businesses Big and Small

I've commented before on the impact that the Honduran coup and Micheletti regime's actions may have had on business elites, and how those business elites in turn may have played an important role in the negotiation of the end of the crisis. However, as the Christian Science Monitor reminds us, the Micheletti regime's actions also directly negatively affected small- and mid-sized businesses:

Doris Midence, a snack bar employee at La Tigra National Park outside the Honduran capital, Tegucigalpa, has the empty gaze of someone with too much time on her hands.

"Customers are down by half," she says, reorganizing gum and candy bars. "Between curfews and protests, people are not leaving their homes."

[...] But even if the curfews are being lifted, the economic ramifications of Latin America's worst crisis for decades could endure much longer.

Tourists who typically visit the northern Bay Islands, for example, are opting for other places in the Caribbean to scuba dive. Foreign investment has dropped. Cuts in aid have stalled construction of roads. And the nation's consumers, some facing their own unemployment or simply saving in the face of political instability, are no longer buying shoes or furniture or other non-essentials.

"Since June 28 demand has declined dramatically," says Jose Enrique Nuñez, the president of the country's national association of small and medium-sized businesses. "It has created chaos, and that chaos is causing us to collapse."

I think it's safe to say that one of the biggest long-term damages that the coup and Micheletti regime caused was economic. To be clear, I'm not some neo-Marxist who sees material struggle and economics as the source of all historical struggle or anything. However, the negotiation has theoretically returned Zelaya to office (though Honduras' Congress is moving particularly slowly in finalizing the act), and so (for now) world opposition to Honduras had faded away; what is more, with the elections (presumably) being held under Zelaya's watch, for now it appears that there won't be any long-term political blackballing of Congress in the international community.

However, the economic consequences of the military coup and Micheletti's actions both domestically and in the broader global economy are definitely going to continue to manifest themselves for years to come. Honduars was already struggling with the global economic crisis, losing hundreds of millions of dollars in trade and forecasting a shrinking GDP this year, according to the article. While wealth does not "trickle down," economic crisis often does, and this certainly is the case in Honduras. As foreign businesses and tourists have pulled out and looked for alternatives, the small- and mid-sized businesses have been adversely effected, too; financial loss has not just been the domain of major business leaders in the country.

And thanks to curfews and repression, small businesses have suffered doubly, as Hondurans were prevented or intimidated from going to the streets to buy basic goods from these businesses. The final part of the article really hammers this point home:

"The country is paralyzed," Mario Canahuati, a businessman and strategist for presidential contender Porfirio Lobo, said last month. He says that the poorest Hondurans suffer most. "The big companies will survive," he says.

The smaller ones might not. Mr. Nuñez says his business association generates about 30,000 jobs but since June 28, according to a survey of its members nationwide, 35 percent of those jobs have been lost. He says that intermittent curfews that force people into their homes, unemployment, and general anxiety are keeping people away from stores, which is having a ripple impact all the way down the chain. "No one is paying more for the crisis than small companies," he says.

While that seems dire, it also seems like a tragically accurate assessment, and really hits home just how reprehensible the Micheletti regime was. It wasn't just that it clamped down on basic civil rights, tried to perpetuate itself under the most illogical and falsest of "legal" excuses, and demonstrated a clear power-hungry tendency. It also managed wage open warfare on everyday Honduran citizens who protested the clear violation of democratic process in their country, and even as the regime (hopefully) comes to an end, those same everyday Hondurans who own or work for small- or mid-sized businesses will continue to feel the economic ramifications of Micheletti's actions for years to come. Micheletti may be out of office soon, but his ruinous legacy isn't going away anytime soon.

Investigating Fernando de la Rua's Role in Deaths in 2001

While the collapse in the economy last year was truly remarkable and a little frightening, it really didn't compare to what Argentina went through in 2001 - a total economic collapse, street protests and subsequent police violence that resulted in the deaths of 5 protesters in Buenos Aires and another 21 dead elsewhere in the country, and the president fleeing Argentina from a helicopter.

De la Rua, who had also attempted to censor all the media in Argentina at the time, was charged for ordering the police repression that did result in the deaths of the five in the Plaza de Mayo. In April, a lower court had dismissed the charges, but yesterday, an appeals court overturned the dismissal, ruling that the case be re-opened and charges continue until the investigation comes to a close. This of course doesn't guarantee that de la Rua will ever be punished for anything, or even connected directly to anything, but the ongoing investigation at least allows prosecutors, lawyers, and human rights officials to examine the case fully to get at what de la Rua's exact role in the events of December 19 and 20 of 2001 were, rather than letting him go free from any legal consequences of his actions, as would have been the case had the dismissal of charges been maintained. So this is overall good news, and it will be curious to see what (if anything) happens from this point on.

Memo to Indiana Pension Funds: Stop Whining

The deal to sell Chrysler to Fiat has become bogged down because of lawsuits filed by several Indiana pension funds that hold Chrysler debt. Under the current sales plan and bankruptcy proceedings, the funds would receive 29 cents on the dollar for their portion of the debt. This isn't enough for them, so they have temporarily blocked the sale via the courts. Absent the deal with Fiat, Chrysler would likely be cut up into parts and sold off (it seems that some debt holders like the pension funds think that there is more to be made off of the carcass of the company than 29 cents on the dollar-- I'm not sure how). I suppose I would have more sympathy if not for two reasons-- one, this debt was purchased in the summer of 2008 (really?), and two, that everyone-- from individual 401(k) accounts to university endowments to hedge funds to real estate investors-- have lost their asses in the last year. Take it on the chin like everyone else in the world.

It just came out that Ginsberg has granted the temporary stay despite Obama's Solicitor General filing papers against the stay this morning; it seems the matter will be referred to the full court (though there is a possibility that Ginsberg will rescind the stay and allow the deal to close by herself). This is not good; if the deal with Fiat falls through, it will cost even more jobs and will be a huge blow to the UAW.

I agree with Michigan Democratic congressman Gary Peters in his statement that "the state of Indiana was risking losses far greater than its investment in Chrysler’s loans should the company be forced to liquidate".

The fetish for the center

Normally I love NPR's Planet Money podcast. Not because I'm a huge fan of money, but because they've done a great job of making the economic crisis understandable. I wouldn't know what a credit default swap is, or even a derivative, without them.

That said, the episode I listened to today while walking my dog pissed me off enough to make me come home and write about it.

See, Adam Davidson interviewed Elizabeth Warren, the chair of the oversight committee of the TARP--otherwise known as the big-ass bailout. Warren is a law professor by trade, and by ideological bent she's on my side of the spectrum--she sees the current economic crisis as not just a crisis of capitalization for major banks, but of an entire playing field tilted so far in one direction that all the money slides out of the average person's pockets into the pockets of corporate overlords.

Anyway, Davidson picked a fight with Warren because she said that the conditions for the average American family need to be improved at the same time as the banks need to be recapitalized, and Davidson said, not that she was wrong, but that he can't find a single other economist who agrees with Warren.

That's funny, because Davidson does this for a living and I, well, I make some pocket change writing about this stuff every once in a while, and yet I could think of several people who agree. Including Nobel Prize-winning economist and Clinton Administration veteran Joseph Stiglitz.

Anyway, the more irritating part of all this is that Davidson, who of course gets to explain himself because he's the guy in charge of the podcast, says that he's mad not because Warren is wrong, but because the panel isn't objective enough. Davidson claims to be an objective journalist (which is a term I'd never have applied to this podcast even if I thought that any human being had the right to claim objectivity), and he wants the Congressional Oversight Panel to be staffed with what he terms "senior statesmen."

Leaving aside the sexism that goes completely unquestioned in his statement and the names that he follows up with, he essentially goes on to argue that the panel should be made up of "centrists." The names he names are pretty much all old white men, the same ones who've been opining on the economy for so damn long that they all should've seen the crisis coming, yet they're the ones qualified to oversee the bailout--because they fall into some mystical category of not being too partisan?

I hate to always go back to the same thing (no, I don't) but once again we're seeing the fetishizing of the middle ground that happens in the media over and over again. Elizabeth Warren, whom one would think is certainly qualified to have her opinion if nothing else because the press usually gives those with official positions entirely too much credit, is placed in the sphere of deviance by Davidson because she's spent most of her career arguing FOR American working people and AGAINST corporate control.

The fact that she wants to look out for the average people being hurt by the crisis at the same time as she tries to salvage sinking banks is seen as a negative because it's partisan. There's absolutely nothing in this entire 18-minute podcast that takes on Warren's argument on a substantive level. The only argument Davidson has is that he hasn't talked to anyone else who agrees with Warren.

I have to go back to the sexism I called out above, because it's a major problem for me in this statement. The argument reminds me entirely too much of too many arguments where women are told they are too emotional to be objective. Davidson would probably be horrified at my implication there, but the fact is that women are used to hearing that we can't be objective, that only men (white, usually) are objective. Davidson unthinkingly reproduces that statement and it sets my teeth on edge. I wonder, for the sake of wondering, if he'd grill the male Republican on the panel the same way and tell him his opinions are wrong simply because they don't fit the mainstream economic thought. Didn't mainstream economic thought CAUSE this crisis, or did I miss something?

Anyway, on the one hand we have a journalist who claims to be objective nevertheless perfectly willing to argue with the subject of his interview that she is wrong (Yay!). On the other hand, he's doing it not because she's lying or because she's demonstrably wrong (:cough: Greenspan) but in defense of some mythical ideal of centrism/bipartisanship that he feels compelled to defend, much like our favorite Wanker Caucus.

Krugman at the time of the stimulus bill:

So Mr. Obama was reduced to bargaining for the votes of those centrists. And the centrists, predictably, extracted a pound of flesh — not, as far as anyone can tell, based on any coherent economic argument, but simply to demonstrate their centrist mojo.

In essence, Davidson is arguing that the oversight panel should be substantially less tough on the businesses it oversees in the name of centrist mojo and the ideals he thinks he lives up to of objective journalism, which has itself lost more than a pound of flesh by its very unwillingness to argue issues, not semantics. Elizabeth Warren's opinion has to be validated by some "senior statesman" before Davidson will admit that she has a point.

Where have we heard that before?

The Shock Doctrine 9: Crisis Works

(Previous posts here, Matt's posts here, Trend's "How to Overthrow a Government" here.)

"The more the global economy followed [Friedman's] prescriptions, with floating interest rates, deregulated prices and export-oriented economies, the more crisis-prone the system became, producing more and more of precisely the type of meltdowns he had identified as the only circumstances under which governments would take more of his radical advice.

In this way, crisis is built into the Chicago School model. When limitless sums of money are free to travel the globe at great speed, and speculators are able to bet on the value of everything from cocoa to currencies, the result is enormous volatility."

On page 200, Naomi Klein nailed it. Well, the whole book is an exercise in nailing it, really, but these two short, simple paragraphs made me stop and shake my head yet again in amazement that anyone bought the argument Bush, Paulson, and others made that "no one could've seen the current crisis coming."

The Shock Doctrine is many things, and at first it doesn't appear to be a guide to internal U.S. policy, but as I've read on, I keep picking out more and more bits and pieces of the crisis we're facing--Klein could go back and write a history of the current crisis without having to do much new work.

This chapter, for example. Klein starts out noting that hyperinflation crises around the world became excuses for the IMF and World Bank to step in and use the crisis as a reason to push their preferred policies of deregulation, privatization, spending cuts and "free trade."

Friedman did not believe in the IMF or World Bank, but his students used them to carry out his policies. IMF was supposed to stabilize the global economy, yet instead it carried out more shocks, holding loans over countries' heads and forcing them to enact Friedmanite "reforms."

Countries were required to pay the debts of their oppressive governments after liberation--sort of like finally divorcing your abusive spouse only to find out that he's left you in thousands of dollars of credit card debt. I've likened the feeling at Obama's inauguration to finally getting rid of an old abusive relationship and starting a new one. That overwhelming relief and optimism. It must've been hundreds of times stronger for Chile and Argentina when their murderous regimes finally collapsed.

And then? In 1982, Argentina's new government agreed to pay the debts of large multinationals while the companies kept their assets--firms like, um, Citibank. Sound familiar? Scarily so.

And the shocks just kept on coming. Paul Volcker--yes, the one who is one of Obama's advisers--let interest rates skyrocket in the early 80s. Since these countries had been pressed into relying on one export for their entire economies, any time a price shifted, economies went into freefall. And the IMF and World Bank, counter to their original purpose, forced even more volatility down their throats in the disguise of "helping."

Free markets are volatile. That's part of the problem, and why unregulated capitalism just doesn't work. Companies fail. This is part of capitalism. Small businesses fail every day--I watched my family business crash and burn in the 90s. No one bailed us out. The less support and regulation you build into the system, the more likely wild price spikes and drops are going to run people out of business. Rebuilding the system the same way it has been is not enough. "Recovery" isn't going to cut it.

I watched MSNBC's new Ed Schultz show for a while the other night when it replaced Olbermann, and I swear I'm never going to complain about Olbermann being a blowhard again. (OK, I still will, but allow me my hyperbole.) Schultz really was the liberal version of a Fox News show, stocking his segments with radio hosts from both sides of the aisle who shouted at each other like Crossfire had returned, and running a segment on immigration with Al Sharpton and three white people. Seriously.

But aside from my critiques of the program, I was also troubled by Schultz's exultation that Wells Fargo (a company that was never in serious trouble to begin with until it bought up troubled Wachovia) is making a profit and will be able to pay back TARP money.

Only problem is, the TARP was Bush's plan, enacted by Secretary of Goldman Sachs the Treasury Henry Paulson. It was the original absorption of bad debt by the government, while allowing the companies to keep their profits.

So while it's good news, sure, that we might get some of that cash back, it hardly means the crisis is solved, let alone that Obama's (read: Geithner/Summers's) plans are working.

We don't want to sound like Rush Limbaugh, so we don't say that we hope the Geithner plan fails. No, we want it to succeed. We even want the TARP to succeed. We're good progressives and we care about the actual people being hurt by the crisis too much to harp on ideology. But at the same time, will it be enough for our system to just go back to where it was? It requires change. Change that wasn't an original part of the Obama plan (clearly--look at his financial team) but that we must now press for, not least because if we don't see this crisis as an opportunity, the other side will.

Klein's work has clearly taught us that.

Need a New Car?

Honda just came out with a new fuel-cell technology car called the FCX  Clarity.  It is completely fueled by hydrogen, so the only by-product that the car actually produces is water.  On their website, they boast that the car only uses hydrogen, which is produced domestically - either extracted from water or reformed from natural gas, so it will be a boost to the U.S. economy.  However, they are only releasing about 200 over the next 3 years and only in Southern California, so nothing is going to change quickly.  

Obviously it's great to have zero-emission technology on the market, but I'm not convinced that this is the solution we've been looking for.  The first problem is that right now only the rich in California have access to the new technology.  Understandably, they need to test out the new cars and new refueling stations, but even if this new idea catches on like Honda is hoping, the switch to this new technology is going to take a LONG time because it requires building an entirely new infrastructure of refueling stations.  Even more than that, mechanics would need to be trained in this completely new technology.  Even with the economic stimulus package that includes $13 billion for renewable fuels, this new infrastructure cannot be developed quickly enough to make the technology affordable for the average car-buyer.  To some extent, new technology is always going to be exclusively for the wealthy, but for some reason I don't see this type of technology ever trickling down and becoming affordable for everyone.

More Geithner Bullshit

I was in a good mood this morning. I WAS.

Then I read this, from the Washington Post:

The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials...

At first, when the initiative was being developed last year, the Bush administration decided to apply executive-pay limits to firms participating in this program. But Obama officials reversed that decision days before it was unveiled on March 3 and lifted the curbs, according to sources who spoke on condition of anonymity because the discussions were private...

Yet as the Treasury has readied other programs, it has increasingly turned to creating the special entities. Legal experts said the Treasury's plan to bypass the restrictions may be unlawful.

The concerns persisted as the administration crafted other initiatives. Some private investors said, for instance, that they would not help the government buy toxic assets from banks if the congressional restrictions were applied to them. And every major provider of small-business loans has said that it will not participate in the government's program if it has to surrender ownership stakes to the government or submit to executive-pay limits.

I'm friggin' livid. Seriously. The OBAMA administration is so invested in Geithner's stupid fucking plan that it's willing to take possibly-illegal steps to preserve the profits for the same assholes who got us into this mess.

From the Wonk Room:

Last week, reports surfaced showing that bailed-out banks Citigroup and Bank of America were actively speculating on toxic mortgages with taxpayer money, potentially gaming the public-private investment fund that Treasury Secretary Timothy Geithner has created to clean up the banking system.

Eric Martin at Obsidian Wings is good and pissed too. And we all should be.

When I stop being searingly fucking angry, there are other things here to consider. The administration is still pushing, at the same time, for expanded options to nationalize and liquidate "too big to fail" financial institutions.

The U.S. Treasury and FDIC would immediately have the tools need to walk into America’s largest financial institutions, such as Citibank or Bank of America, and liquidate them, or rewrite their contracts and capital structures. Such powers are clearly useful: if the banks are undercapitalized, and private money is not available, then the government could force creditors to swap claims into equity, thus instantly recapitalizing the banks while avoiding use of taxpayer funds. With such steps, the problem of moral hazard, where creditors to banks are bailed out by taxpayers, would at once be forgotten. Shareholders in banks would lose through dilution, some (unsecured?) creditors would lose with debt-equity swaps, while the nation would be better off having a well-capitalized banking system. The banks would remain private but now be controlled by (ex)creditors.

The Treasury doesn't have those powers now, as the piece notes, and Geithner is not exactly the type of weasel that inspires confidence in me (or anyone else) when it comes to properly using them. But Geithner is inextricably tied to the current plan, and if it fails, he's probably out on his ass (I'd say not a moment too soon, but it might be redundant).

But what if this plan is designed to let the fat cats get complacent while the administration moves in for the kill (nationalization)?

I wonder. And yet I think that Obama IS essentially conservative on this--he's invested in keeping the status quo rather than making real change in the system--in this case, Wall Street. He wants to restore "the economy," even though he talks about change. Most of the "changes" he's discussed have simply been restoring the regulations that controlled the financial industry for decades before the deregulation revolution hit.

And I wonder, would the Fair Elections Act help with Congress's willingness to press for systemic change in Wall Street, when less of them have financial investors from Wall Street? It might not help with the president, but if only Connecticut and New York congresscritters could take money from Wall Street, the rest of 'em would be a lot more willing to take drastic action without fear of losing cash.

As always, follow the money.

G20 Watch: Merkel Gets More Oversight.

From Der Speigel (h/t matttbastard):

On Wednesday, eyebrows were raised when German Chancellor Angela Merkel and French President Nicolas Sarkozy went before the press to demand in no uncertain terms that the G-20 do more to strengthen regulation of global financial markets. On Thursday, the two leaders appeared to be getting everything they asked for...

Now, the G-20 has agreed to the creation of blacklists of tax havens in addition to measures to tighten rules pertaining to hedge funds and credit rating agencies. An oversight body will also be created...

In addition to the increased regulation, the G-20 leaders agreed to pump $1 trillion into the global economy, to be distributed through the International Monetary Fund and the World Bank...

Prior to the summit, a split appeared to develop between the Anglo-American approach, which emphasized economic stimulus measures, and the continental European approach, which demanded tight financial regulation. US President Barack Obama, eager to avoid dissent at his first foray onto the world diplomatic stage, said on Wednesday that the differences had been "vastly overstated."

So why am I quoting all this? Because I find it interesting that the "conservative" leaders of France and Germany are the ones pushing for heavy-handed regulation, while the "liberal" leaders like New Labor's Gordon Brown and our own Barack Obama were not so much in favor.

It strikes me, in reference to all the Shock Doctrine talk lately, that once again I want to poke at the definition of conservative. People are surprised that conservative leaders are pro-regulation, but like I've said several times in Shock Doctrine posts, Friedmanite capitalism was not at all conservative. It was radical, shocking.

For Sarkozy to call for giving capitalism a conscience--well, it underlines the difference between French conservatism and American, but it also points out that state regulation and control over capital markets is not actually a shocking, strange idea, and that the rapid deregulation was actually the revolutionary idea.

The Shock Doctrine 6: Entirely Unrelated

(Previous posts here, Matt's posts here, Trend's "How to Overthrow a Government" here.)

Since Klein's chapter here notes how the Nobel Prize for Economics legitimized Friedmanism and cleansed it of its taint of involvement with the horrors of the Pinochet regime (after Amnesty International won the Nobel Peace Prize for its work against Pinochet), I thought it was only right to quote another Nobel Prize-winning economist on Friedman.

Paul Krugman wrote,

"Keynesianism was a great reformation of economic thought. It was followed, inevitably, by a counter-reformation. A number of economists played important roles in the great revival of classical economics between 1950 and 2000, but none was as influential as Milton Friedman. If Keynes was Luther, Friedman was Ignatius of Loyola, founder of the Jesuits. And like the Jesuits, Friedman's followers have acted as a sort of disciplined army of the faithful, spearheading a broad, but incomplete, rollback of Keynesian heresy."

Krugman is a little bit intellectually dishonest in this piece, I think, mentioning Chile briefly and all but ignoring the abuses of the regime while poking at Friedman's failures there, but this shows exactly what Klein is talking about in this chapter. As here:

"Similar questions about the lack of clear evidence that Friedman's ideas actually work in practice can be raised, with even more force, for Latin America. A decade ago it was common to cite the success of the Chilean economy, where Augusto Pinochet's Chicago-educated advisers turned to free-market policies after Pinochet seized power in 1973, as proof that Friedman-inspired policies showed the path to successful economic development. But although other Latin nations, from Mexico to Argentina, have followed Chile's lead in freeing up trade, privatizing industries, and deregulating, Chile's success story has not been replicated.

On the contrary, the perception of most Latin Americans is that "neoliberal" policies have been a failure: the promised takeoff in economic growth never arrived, while income inequality has worsened. I don't mean to blame everything that has gone wrong in Latin America on the Chicago School, or to idealize what went before; but there is a striking contrast between the perception that Friedman was vindicated and the actual results in economies that turned from the interventionist policies of the early postwar decades to laissez-faire."

"Everything that has gone wrong in Latin America" clearly is a euphemism for the abuses of the people, and "what went before" is the developmentalist/socialist state of Allende.

Still, I didn't start this to beat up on Krugman, just to use him to illustrate a point. It's simply not allowed for anyone, even a high-profile progressive who has no problem attacking others (:cough: Obama) to question whether Friedman was "a great man," let alone to imply that he might've been willing to collaborate with disgusting regimes with full awareness of their abuses.

Klein goes on to discuss Amnesty International and the rise of nonpartisan human rights watchdog groups, who were forced to prove their lack of partisanship by only being allowed to critique the abuses, not the governments that perpetrated them and the larger framework under which those governments operated.

This reminds me of nothing so much as the tendency of the US military to blame abuses of detainees on "a few bad apples" and ignore the larger, systemic flaws. And we see this now going on with our own economic policy.

Human rights abuses connect with economic policy abuses very easily: laissez-faire economics favors the rich and its supporters, and writes off as bad in itself the idea that people should care what happens to those poorer than they. If we should not care about what happens to poor people as far as paying bills and feeding kids, why bother worrying if they simply disappear off the streets? (Of course, things went the opposite way in repressive Communist states--those who dissented were counterrevolutionaries who were out to hurt the people and must be reeducated or removed. Either way, the idea they would pollute the whole is significant.)

Klein also notes the involvement of philanthropic groups in this scrubbing of human rights talk from left-right ideologies. The Ford Foundation, she notes, was funding both the programs that trained economists in Friedmanism and the human rights groups arguing against the regime's excesses. It was possible to critique the violence, but never to connect the dots.

Klein writes,

"In a way, what happened in the Southern Cone of Latin America in the seventies is that it was treated as a murder scene when it was, in fact, the site of an extraordinarily violent armed robbery."

It is impossible, she notes, (and cites such voices as Simone de Beauvoir for support) to rule a people against their will without violence. It is impossible too to take away social supports they have grown used to without violence. The violence stems from the ideology that says you do not have to care what happens to the others, you just take care of yourself.

Krugman again:

"When Friedman was beginning his career as a public intellectual, the times were ripe for a counterreformation against Keynesianism and all that went with it. But what the world needs now, I'd argue, is a counter-counterreformation."

He's right. But he does not take it far enough. What we need is not just a counter-counterreformation of economics, but one that links everything in the chain together. An understanding that people have basic needs and rights and that the job of government and economic policy is to provide for those needs and protect those rights for ALL, not just for the people who can afford to have them protected. The anger over bonuses and such is for the first time properly directed: at the rich. Now we have to direct that anger in the right direction and use it to change policy, not just opinion polls.

Must-read

I've already linked this post at Twitter and I'm going to recommend it here too because it's absolutely right on. Please read it, from Echidne of the Snakes.

By “we” I mean us, the ones who are supposed to really own the United States and its government. That our government puts our needs behind the insatiable greed of the economic elite is the clearest of all signs that our legal and governmental system is entirely gone awry. That our clearest needs and our ability to force our government to address those needs are constantly undermined by the mass media is the fact that they are the servants of that economic elite. The judiciary and legal orthodoxy which enforces a system that protects both a lying, propagandistic media and the direct theft of our money is another basic aspect of the ruin of our country and our lives.

This is such an amazing, killer post that points out exactly what's wrong right now. It's much longer, so please click through and read.

Spitzer and populism

Yes, I know, as a feminist blogger I'm supposed to be OUTRAGED at Eliot Spitzer, right?

Yeah, F that.

When the man is right, he's RIGHT. And he is absolutely right on on the financial crisis, and I wish he hadn't been stupid enough to be caught with his pants down acting like a hypocrite. My views on sex work (decriminalize, harm reduction) aside, the point is that Spitzer's voice is an important one that is simply not getting heard on this issue.

Today, he appeared on Fareed Zakaria, for my money the only person on CNN worth watching (I know Karthika agrees with me on this subject). In his first interview since resigning from office, Spitzer, who went after AIG when he was NY Attorney General, called out executives, regulators, and congresspeople alike. He denounced false populism from legislators who had plenty of authority to enforce regulation (:cough: Chuck Schumer) and noted that the SEC and other regulatory agencies had plenty of authority to do what they needed--like I wrote here, they simply didn't do it.

Katrina vanden Heuvel at The Nation has an interesting proposal.

Then there's a novel idea. Why not bring in the man who took on Wall Street and AIG long before it was trendy? Elliot Spitzer. Call me crazy. But he foresaw the bubbles and disasters resulting from deregulatory frenzy and the financial service industry's creation of toxic credit default swaps and derivatives. As the Sherriff of Wall Street, Spitzer launched investigations and lawsuits deploying the creative cudgel of the previously-obscure 1921 Martin Act. Yes, he acted miserably toward his wife and family and he should pay the price for that. But some believe Spitzer was taken down by certain "masters of the universe" seeking vengeance for his aggressive policing of their financial fraud and corruption.

"The search for villains is emotionally satisfying, but...it does not solve the problem," Spitzer said, and he's right. And whatever you think of his past screwups, he's right the hell on and has EVERY moral authority to speak out on AIG and Wall Street, and far more than most.



After Spitzer, Fareed lost a whole bunch of credit with me by convening a "panel of experts" to talk about populist rage. His panel? Megan McArdle, Henry Blodget (formerly investigated by Spitzer on fraud charges from his tenure at Merrill Lynch, now a "journalist"), and Roy Smith (formerly of Goldman Sachs). A bunch of experts on populism, in-fuckin-deed.

Or absolutely not. Fareed's had Barbara Ehrenreich on before--he knows where to find actual populists and outside voices, if he wanted them. Instead, he chose a bunch of the very same vapid insiders who both caused the current crisis, and failed to see it coming--or made excuses for it. One of his "experts" is banned from ever working in securities again after fraud charges. Seriously?

This is exactly what's wrong with the media. The reliance on insider voices, a circle of consensus and a very, very narrow sphere of legitimate debate. You're talking about public rage without a single voice of public rage? People are organizing a march on Wall Street--where are they? Where are the labor voices, the people? How about William Greider, with a great op-ed in the Washington Post today?

How about our own Erik, whose study is actually relevant? How about historians, organizers, anyone who is actually used to dealing with "the great unwashed"? (Y'know, us?)

This isn't helping. Following Spitzer's great interview with this panel of so-called experts is insulting--or maybe a failed attempt at balance?

I was starting to have a little faith in the media for a second. But by the end of that, I just wanted my pitchfork again.

Maybe that was what Fareed was going for? Stoking the populist rage rather than understanding and explaining it?

Ask the President for the day

Shameless Self-promotion blogging: AIG Outrage edition

Hi kids, it's that time again. The time when I busted my ass on an article for GlobalComment and now I beg you to read it. Well, not beg. Ask nicely. I pretend that y'all come here to occasionally read what I write in between the historical images and debates over Eagles records. Ha.

Anyway, I got my pitchfork all sharp at the AIG bonuses, noted some suggested solutions, pointed out Eliot Spitzer's article with information on the real outrage here, and calculated how much more these assholes make than your average auto worker, whose contract is certainly not nearly as important as some overpaid douchebag who ran the country into the ground.

AIG has received $170 billion—yes, with a B—in federal taxpayer bailout dollars since the first payment from then-Treasury Secretary Hank Paulson, while George W. Bush was still in the White House. Its current CEO, Edward Liddy, was put in place by Paulson after the government took a stake in the company. The company is now nearly 80% owned by the federal government—in essence, the taxpayers. You know, us.

Anger over the bonuses is a nonpartisan sentiment—Republican Senator Chuck Grassley of Iowa implied that the AIG executives should make a public apology and then either quit or commit seppuku, and Democratic Representative Barney Frank said, “We can’t keep them from getting bonuses but we can keep them from having their jobs. … In high school, they wouldn’t have gotten retention (bonuses), they would have gotten detention.”

...

Executives and government officials should take note of the public anger. No longer are huge bonuses the stuff of aspiration and dreams. They’re evoking anger. That sound you hear is the death knell of trickle-down economics.

Americans have heard for 29 years that we were going to reap the benefits of tax cuts on the rich, while seeing our own real incomes shrink and get replaced by credit. We aren’t going to accept being told that inequality is simply the proper outcome of a market economy. We know we work hard, and it’s about time we got some recognition of that fact.

Read the whole thing. Thanks.

The Shock Doctrine 5: Cleaning the Slate

(previous posts here, Matt's posts here. also, Trend's corollary series here.)

"The economic plan has to be enforced, and in the Chilean context that could be done only by the killing of thousands, the establishment of concentration camps all over the country, the jailing of more than 100,000 persons in three years...Regression for the majorities and 'economic freedom' for small privileged groups are in Chile two sides of the same coin." -Orlando Letelier in The Nation, 1974.

Less than a month after writing this, former Chilean defense minister Orlando Letelier was dead, killed in Washington, D.C. when a bomb went off in his car. The assassins were found to have been admitted into the country with the knowledge of the CIA.

Klein points out that public opinion (media opinion, anyway) outside of Latin America voiced approval for the economic policies in Chile, Argentina, and the rest of the countries of Friedman's revolution even while condemning human rights violations. In this chapter, she sets out to prove Letelier right, linking the economic shock policies with the physical torture and shock of the citizenry.

Free markets have been sold to us as a benchmark of a free society--I've harped on this before, with my ever-present joke that when Bush said "Freedom" he meant "Free markets." But in Latin America free markets came with the most abject repression of people imaginable. Klein notes that the regimes' "cleansing" policies focused on the young--in Argentina, 81% of those disappeared were between 16 and 30 years of age. They also focused on uprooting leftist ideologies, in one case going into a Ford factory and pulling out union leaders--with the help of the factory foreman.

The repression included bookburning, punishing musicians and writers, firing professors or imprisoning them--tellingly, Klein says, most were from economics departments.

One thing she noted that I found interesting was that in Chile, gender norms were rigidly enforced. Men could be arrested for having long hair, while women were arrested for wearing pants. Klein doesn't make much of this point, so I want to spin it out a little bit. Again, the association between the radical free-market economists and the cultural conservatives (in this country and elsewhere) often seems strange: I've noted that Friedmanite markets are hardly a "conservative" position. They are as radical and revolutionary as any Communist idea.

Yet we see them again and again coupled with militarism and cultural conservatism, coming in on a wave of torture, death, terror, and strictly enforced gender roles. Klein writes of babies being taken from families that were opposed to the regime (often prisoners who were then killed) and given to proper ideologues to raise in the "right" way.

The whole process was about keeping the people under control. Keeping them from fighting back. Torture was used not to gain information, but simply to break people. And we see the reflection of this in our current debate over it. Though it is widely known that torture is a shitty way to get information, it's an excellent way to break people down.

Klein notes that torturing people until they informed on others or even tortured others to stop themselves from being tortured indoctrinated them into the capitalist mindset: look out for #1.

It's terrifying stuff, this book. It's absolutely horrifying. I'm glad I'm only reading it chapter by chapter, once a week--it allows me breaks in between for movies and comics and other lighthearted things before I delve back into the horrors that have been inflicted if not in our names, with our government's approval.

Still, there are bits of inspiration in here, too. I leave you with a quote from Allende's last public address, as the military closed in on him:

"They have the strength; they can subjugate us, but they cannot halt social processes by either crime or force. History is ours, and the people make it."

Guest Post: Governor Mark Sanford is an evil, stupid swine.

I'm exhausted and sick, so I don't have it in me to rail about the AIG bonuses or Mark Sanford's stupidity. Thankfully, Daisy at Daisy's Dead Air did so for me, and has kindly agreed to let me repost her comments. I'm a former South Carolinian and Daisy lives there still, and I am disgusted by what Sanford wants to do to my former home.

South Carolina state flag.

(Cross-posted from Daisy's Dead Air.)

Our Governor, Mark Sanford, wants to cheat the people of South Carolina by refusing fully a QUARTER of the economic stimulus.

We have serious problems with health care, prenatal care, unemployment, bad roads, education, etc etc etc in this state, since the Republicans have been "running" it (ha!) since the 60s. Sanford wants to stay BACKWARD and STUPID, just like he is.

Sanford grew up rich and privileged on a 3000-acre plantation near Beaufort. Of course he doesn't give a fuck about the less privileged. I say, SELL THAT FAMILY LAND, Sanford, and throw the money into the DEFICIT that you helped make. I mean, since you claim to be so concerned--how about you contribute some of that family fortune?

When not in the Governor's mansion, Sanford lives on Sullivan's Island, so he is pretty well off. Of course he can't identify with poor people out of work. He is an upper class PIG with no compassion... can you hear voice of Ebenezer Scrooge?: "Are there no poorhouses?"

We need to throw his disgusting ass out, now, yesterday, last week, last month, last year. Sanford is from the RICH SOUTHERN WHITE MAN past, and he needs to go back to the past, where he so obviously came from.

"I've got a 15-year pattern of doing exactly this kind of thing," Sanford said. I think 15 years in federal prison might be enough to repay the people of South Carolina for his continuing obstinacy, greed, southern-rich-boy ignorance and general assholery. What do you think?

SC Gov. Sanford set to reject stimulus millions

By BETH FOUHY
Associated Press

NEW YORK (AP) — South Carolina Gov. Mark Sanford...
But the governor's announcement this week that he may reject nearly a quarter of the money headed to South Carolina has stirred criticism in the state and elsewhere that he has placed his own political future ahead of the needs of the state's most vulnerable citizens.

Several GOP governors, including Rick Perry of Texas, Bobby Jindal of Louisiana and Haley Barbour of Mississippi, have said they would reject a portion of the money that would expand unemployment benefits to those not currently eligible to receive them. Sanford says he will also reject those funds, but he has threatened to go much further, requesting a waiver to spend some $700 million targeted for education and other programs to pay down some of the state's debt instead.

"I have come to conclude that it would be a mistake to simply accept the money as offered," Sanford wrote to state legislators in announcing his decision. "When one is in a hole, the first order of business is to stop digging."
...

"I've got a 15-year pattern of doing exactly this kind of thing," Sanford said.

But his announcement came the same week that South Carolina's unemployment rate shot to 10.4 percent, the second highest in the nation. With those dire figures as a backdrop, national Democrats — keenly aware of Sanford's rising national stature — piled on...

South Carolina's senior senator, Republican Lindsey Graham, voted against the stimulus. But he said the state should take the money if it's a choice between the dollars going to South Carolina or going somewhere else.

But he says that may not be possible if Sanford rejects the money...

Clyburn issued a frustrated statement in response.

"I would hope the various leaders of this state would spend as much time and energy finding ways to bring relief to South Carolina's families rather than looking for creative ways to get around the federal help that has been made available and that other states are using very effectively," he said.

Clyburn also criticized Sanford on Thursday for a comment he made at a news conference in South Carolina likening Obama's economic stimulus efforts to the hyperinflationary economy in Zimbabwe, one of Africa's most corrupt governments.

"What took the man to Zimbabwe?" Clyburn said in Washington. "Someone should ask him if that's really the best comparison. ... How can he compare this country's situation to Zimbabwe?"...

"What I think's happening here is he has made headlines again, national headlines, and that is what he is after," said state Senate Finance Committee Chairman Hugh Leatherman, a Republican who introduced a measure Thursday that would allow the Legislature to circumvent Sanford's actions.

"It's my intent to take every dollar we can get," Leatherman said, calling Sanford's efforts "tomfoolery."...


___

Associated Press writers Mary Clare Jalonick in Washington and Jim Davenport in Columbia, S.C., contributed to this report.

Mr Daisy is beside himself, and I am getting there.

And what the fuck was that about ZIMBABWE? Code. (I think we all know what our spoiled southern-rich-boy governor was actually saying, don't we?)

Swine. Please God, make him go away.

Save South Carolina! DUMP SANFORD!

Populism, Jon Stewart style

Someday I'll be back to blogging something that isn't video. But Jon Stewart's takedown of Jim Cramer, CNBC, and financial "journalism" is so worth watching.

The Daily Show With Jon StewartM - Th 11p / 10c

Jim Cramer Pt. 2

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

A little bit of perspective

It seems, for the most part, people are giving Obama the benefit of the doubt on the economy-- as well they should, since this crisis was years in the making, and fixing something is often more complicated than breaking it in the first place. Unemployment keeps ticking upwards, and is often the last part of the economy to recover. For a little bit of perspective, we can look at the data from the U.S. Bureau of Labor Statistics and see how the horrible, miserable Carter years compared to the glorious Renaissance that comprised Reagan's reign.

Reagan won the 1980 election, when the unemployment rate was a salty 7.1% (a full pecent lower than the February 2009 rate of 8.1%). Unemployment rose in 1981 and 1982 (topping out at 9.7%), then slowly started to fall (9.6% in 1983, 7.5% in 1984, 7.2% in 1985). It wasn't until 1986-- six years into Reagan's term-- that unemployment was lower than it was at the end of the Carter administration, and then only by one-tenth of a percent (7.1% in 1986).

Clinton inherited a high unemployment rate as well-- in fact, higher than Reagan inherited from the Carter administration (7.5%). The Clinton administration enjoyed a quick and steep drop in unemployment to some of the lowest levels since the early 1950's-- 6.9% in 1993, 6.1% in 1994, 5.6% in 1995, 5.4% in 1996, continuing to drop until 2000, which had an unemployment rate of 4.0%. Every single year of the George W. Bush administration had higher unemployment than the last three years of Clinton.

So this may take some time to fix. This recession is more like the one in the early 1980's than the early 1990's, but I'm confident that Obama will get the ship turned around faster than Reagan did. And if Reagan can attain nearly canonized status by overseeing six years of unemployment higher than the Jimmy Carter years, Obama should be on the $20 bill if he can fix this mess in two or three years.

Van Jones in the White House!

Obama has just recruited environmental justice activist Van Jones to join the Council on Environmental Quality as a special advisor for green jobs.

I cannot overstate how much I LOVE this man.  He has been an advocate for green jobs as a solution to the environmental crisis and the growing economic inequality in the U.S. since before the economic crisis, but his work is even more important now.  He is the founder of the advocacy group Green For All, which advocates for government commitment to creating jobs and providing job training - especially for people from disadvantages communities - that will move the US toward a clean energy economy.  He is also the author of the New York Times best-seller, The Green Collar Economy: How One Solution Can Fix Our Two Biggest Problems.  To top it all off, he is also an amazing and inspirational speaker.  

Most importantly, I think Van Jones and Majora Carter and other activists like them represent the beginning of the end of the racially-exclusive environmental movement.  Up until very recently, the mainstream environmental movement has been very limited to upper middle class white people, and some would even argue that women were kept out of the leadership of the movement as well.  Now environmental leaders like Jones and Carter (both black) are changing all of that.  Van Jones advocates changing the whole system - not just the pollution.  Taking the pollution out of a broken (read: racist, sexist, violent, etc.) system will only leave a racist world with solar-powered wars fought over the lithium for batteries.  ...And yeah, it's really easy to recognize that we have a lot of problems, but Van Jones also has a solution, which is why I'm glad he's starting at the White House next week.

Money, money, money

So this NY Times article talks about how the "Rising Dollar Lifts the U.S. but Adds to the Crisis Abroad." Ok, duh. The value of the dollar is going up, so everyone living on a different currency is hurt. But what does this mean for countries that depend on remittances from the US? For Mexicans with family members working in the US and sending money back, the rising dollar is both a blessing and a curse. The falling peso means that it is even more necessary for family members to work in the US, but it also means that the money sent back from the US will go a lot further compared to the peso. So, are we going to be seeing more immigration because of the value of the dollar? Or less because jobs are so hard to find right now in the US?

And on a slightly related yet different topic: right now the peso is at around 15 to the dollar (up (or down?) from 10 pesos to the dollar less than a year ago). Most Mexicans know the exchange rate because unfortunately the global economy demands that they know what their currency is worth compared to the dollar standard. Aside from other study abroad students, I don't know any on the US that knows any current exchange rates at all. Such is the luxury of living in the US...

The Shock Doctrine 4: States of Shock

“If that track record qualifies Chile as a miracle for Chicago school economists, perhaps shock treatment was never really about jolting the economy into health. Perhaps it was meant to do exactly what it did—hoover wealth up to the top and shock much of the middle class out of existence.” - The Shock Doctrine, page 105

(Previous posts here, Matt's posts here, here and here.)

Trend gave us an excellent rundown of the events in Chile that led to the Chicago School takeover of its economic policy, so I don't need to sum that up here.

Pinochet embraced the Chicago Boys' prescription for Chile's economy, according to Klein, because he liked the idea of a complete revolution rather than a temporary correction. He drove out the other members of the junta and appointed several of the Friedmanites to high government positions, and privatized, slashed social spending, and deregulated. This, predictably led to...

inflation, unemployment, and poverty. So the solution? MORE privatization, deregulation, and slashing social spending. Oh yes, and a calculated terror campaign in which thousands of people were "disappeared." Argentina, Uruguay, and Brazil followed soon after, though some of them took notes from Pinochet and attempted to conceal their torture and murder under a blanket of plausible deniability--in order to stay open to foreign investment, of course.

Klein points out that for all Friedman's free-market utopianism, what resulted was more corporatism than purist capitalism. The countries were run by repressive regimes with deep ties to the corporations who profited from them. Sound familiar? (Well, minus some of the repression.)

The parallels with Bush's disaster capitalism are easier to see when you phrase it in these terms. Bush didn't need a coup (just a disputed election) when September 11 happened (coincidentally, exactly 28 years after the coup in Chile started radical capitalist experimentation).

Warrantless wiretapping certainly isn't mass disappearances of citizens, but it is a tool that keeps everyone in fear that they are next. It suppresses dissent and keeps people in fear for their basic safety, while around them their economic safety net is dismantled. America hadn't undergone enough of a shock to allow, for instance, Social Security privatization, but in Chile and the other Friedmanite regimes, torture and repression left people unable to fight back.

Roger Cohen in the New York Times (h/t Matt) referred to Obama's "counter-revolution," an interesting choice of words considering that The Economist called the spread of disaster capitalism in Latin America its own "counterrevolution."

Which revolution is Obama countering, then? The Reagan revolution, perhaps, since even Bill Clinton furthered Reaganite principles of deregulation and privatization and slashing social programs (:cough: Welfare reform)?

Friday night, I attended a panel discussion put on by The Nation in New York. It featured Joseph Stiglitz, Barbara Ehrenreich, Bill Fletcher, Jr., Jeff Madrick and Chris Hayes discussing the economic meltdown. Stiglitz referred repeatedly to the economic situation in the 70s in Latin America as what we need to avoid--and what we are in danger of repeating.

Madrick noted as well that "This is not recession as usual. This is not recession-plus as usual," but Ehrenreich reminded us that "It's always folly to say this is the end of capitalism."

She went on to note that "What we have to shake off is the curious religion that is market fundamentalism," and Fletcher referred to "the great crap game that is called capitalism."

The fact that there was a line around the block for this event says something about the times, and the amount of little white note cards with audience questions that Hayes had to sort through was evidence that people are scared right now. I fear what this situation would look like at the moment with McCain in office, and the panelists all agreed that it is hard to criticize Obama because he's so much better than what we've had for the past however many years (Madrick pointed out that the standard of living for most Americans has been declining since 1974--in other words, we were better off under NIXON).

Still, the more I read through The Shock Doctrine, the more I realize the parallels. Naomi Klein was supposed to be at this event, and she would've fit in quite well between the economists and the socialists, diagnosing not only the technical problems with our current situation, but the moral and ideological problems there as well.

But the panel on Friday night gave me hope because it proposed solutions. Because we talked about a return to a living wage, a resurgence in unions (EFCA battle coming to a political theater near you), real health care (ditto), and a change in our banking system--a return to "plain vanilla" lending, Madrick called it.

"What are the social functions which a good financial system should serve?" Stiglitz asked, and Milton Friedman might have rolled over in his grave. Still, these are questions being asked right now, and the people in power for the first time in my lifetime may actually be willing to attempt an answer.