Bulletin N° 397
Subject: ON ETHICS, SELF-INTEREST, AND COLLECTIVE SUICIDES.
Women's Day 2009
Dear Colleagues and Friends of CEIMSA,
"It is doubtful," concluded University of Maryland law professor Sherrilyn Ifill in her book On the Courthouse Lawn: Confronting the Legacy of Lynching in the Twenty-first Century, "that a single Black male growing up in the rural South in the period between 1900 and 1940 was not traumatized by the fear of being lynched."
The modalities of social control have changed over the decades, but because social class divisions in capitalist society must be maintained one way or another if the entitlement to profit from human exploitation is to continue, the victims of capitalist exploitation must be reduced to silence. Feelings of inadequacy are promoted by the watchdogs of the bourgeois order, and falling below the "norm," many perceive themselves as being inferior and are effectively neutralized. Up to now, the social class structure in America has been remarkably stable due to such techniques of social control initiated and maintained by the ruling class representatives.
Gabriel Kolko, in his classic study of income stratifications in the first half of the 20th century, discovered that : "While the income share of the richest tenth has remained large and virtually constant over the past half century, the two lowest income-tenths have experienced a sharp decline."(Wealth and Power in America, 1972, p.15) This pattern has continued into the 21st century, according to U.S. government statistics, with the richest 20% of the population in 2006 receiving more than 50% of the total national personal income, before taxes, while the lowest 20% received less than 4%. In contrast to income distribution, the distribution of wealth in the United States shows even greater inequalities: at the end of 2001, the top 10% of the population owned 71% of the wealth, and the top 1% controlled 38%. On the other hand, the bottom 40% of the U.S. population owned less than 1% of the nation's wealth.
The approaching global economic depression naturally gives rise to thoughts about alternatives to the late capitalist social order. Not unlike picking oneself up by his/her own bootstraps, the proposition seems to defy natural laws. How could we possibly reinvent ourselves, hoist ourselves to a level where we could develop new habits, new relationships different from the competitive, acquisitive, selfish ethos of the old capitalist social order? Many of us are asking what new retro-forces may we expect to see coming into play that would keep us in our places and serve to stabilize once again the economic inequalities and political injustices to which we have become so accustomed.
The 7 items below should prepare CEIMSA readers for our colloquium on "Ethics and Social Class Relations in the United States of America" at The University of Paris in Nanterre, on 6 May.
Item A. is an article sent to us by Michael Parenti from the Huffington Post, on bringing "Wall Street firms under the rule of law," by William K. Black, Associate Professor at the University of Missouri and Senior regulator during S&L debacle.
Item B., sent to us by Truthout, is an article by Norman Solomon on President Obama's "future war plans".
Item C., from Tom Dispatch, is an article by Michael Klare on the future forms of global violence in a deepening crisis.
Item D., from Information Clearing House, is a video on "the coming economic disaster in the USA."
Item E. is a 45-minute video, "Money as Debt," which offers a crash course on "the fundamental contradictions of capitalism" and how they have grown to a malignant stage today.
Item F. is a discussion of "The War Party" and "The War Party Revisited" sent to us my Information Clearing House.
Item G. is a report by Ann Nogueira on the current status of Israeli Apartheid.
We conclude this CEIMSA Bulletin with a discussion by Mumia Abu-Jamal on judicial ethics from a recent broadcast on Death -Row Radio;
then, we look at U.S. "self-interests" in training counter-revolutionary tactics to police officers and military leaders from Latin America on The Real News;
and finally, we revisit a documentary on the failed strategies for change at " Jonestown , Guyana" in November 1978.
Francis McCollum Feeley
Professor of American Studies
Director of Research
Université Stendhal Grenoble 3
from Michael Parenti :
Date: 26 February 2009
Subject: [Clarity] Why Is Geithner Continuing Paulson's Policy of Violating the Law?
This is a most revealing and informing commentary. When does the rule of law return to Wall Street (and the White House)? what do you expect when you appoint the head of New York Fed to "fix" the banking problem?
Why Is Geithner Continuing Paulson's Policy of Violating the Law?
by William K. BlackAssociate Professor, University of Missouri; Senior regulator during S&L debacle
Whatever happened to the law (Title 12, Sec. 1831o) mandating that banking regulators take "prompt corrective action" to resolve any troubled bank? The law mandates that the administration place troubled banks, well before they become insolvent, in receivership, appoint competent managers, and restrain senior executive compensation (i.e., no bonuses and no raises may be paid to them). The law does not provide that the taxpayers are to bail out troubled banks. Treasury Secretary Paulson and other senior Bush financial regulators flouted the law. (The Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) are both bureaus within Treasury.) The Bush administration wanted to cover up the depth of the financial crisis that its policies had caused.
Mr. Geithner, as President of the Federal Reserve Bank of New York since October 2003, was one of those senior regulators who failed to take any effective regulatory action to prevent the crisis, but instead covered up its depth. He was supposed to regulate many of the largest bank holding companies in the United States. Far too many of these institutions are now deeply insolvent because the banks they own are deeply insolvent. The law mandated that Geithner and his colleagues place troubled banks in receivership long before they became insolvent. Why are the banking regulators, particularly Treasury Secretary Geithner, continuing to disobey the law?
We need a Pecora investigation
We can understand now why the administration and so many committee chairs are virulently opposed to the single most essential step we need to take to diminish future crises -- a modern Pecora investigation. Pecora was the prosecutor hired by the Senate banking committee to investigate the misconduct that helped cause the Great Depression. You must vigilantly study past failures to learn causation and to enact remedies. If we were dealing with a crisis of airplane crashes and someone opposed studying the causes of the failures we would (correctly) label him a lunatic. Congress largely stopped conducting meaningful oversight hearings of financial regulation during the Bush administration. The results were horrific. It appears that only intense public pressure will suffice to overcome congressional and administration resistance to a Pecora investigation. I hope readers will add their voices to this call.
The financial cost of Paulson's and Geithner's flouting of the law
Paulson and Geithner's refusal to comply with the law has already cost the taxpayers scores of billions of dollars in unnecessary costs. Geithner indicated Friday, February 20 that he would continue to flout the law. If he is allowed to do so it will add hundreds of billions of dollars to the eventual cost to taxpayers. The amount of taxpayer money wasted due to Paulson and Geithner's violations of the prompt corrective action law will exceed the total present value cost of resolving the S&L debacle, $150 billion ($1993). The waste will take the form of the U.S. taxpayers subsidizing the officers, shareholders and subordinated debt holders of failed banks -- who are disproportionately wealthy, frequently profited from the accounting fraud that caused the banks to fail, and are often foreign. The prompt corrective action law was passed in large part to prevent such a subsidy.
The S&L debacle led to a new financial regulatory system premised on "prompt corrective action" (PCA). Future posts will explain more fully why this system failed, but it is remarkable that the system, the phrase, and the law have disappeared from the coverage of the banking crises. PCA's premise was that regulatory discretion led to cover-ups of failed banks and excessive losses to the taxpayers. The PCA solution was to require higher capital requirements and to mandate that the regulators take over troubled banks before they deteriorated to the point that the failure would impose a cost on the Federal Deposit Insurance Corporation (FDIC). PCA also recognized that failing bankers had perverse incentives to "live large" and cause larger losses to the FDIC and taxpayers. PCA's answer was to mandate that the regulators stop these abuses by, for example, strictly limiting executive compensation and forbidding payments on subordinated debt.
PCA's purpose is "to resolve... problems... at the least possible long-term cost to the [FDIC]." That means the least possible cost to taxpayers. Secretary Geithner's priority is protecting private shareholders:
We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system....
We have a law that says when banks are at or near insolvency private shareholders should be eliminated unless we can arrange a transaction that has no cost to the FDIC. Receiverships produce "private institutions." The FDIC manages the failed institution only long enough to get it in shape to be sold at the least cost to the taxpayers. Receiverships end unnecessary bailouts of private shareholders, reducing the cost to the FDIC, as the law requires. Receiverships place banks back in the hands of new shareholders. Geithner has so twisted the framing of this issue that he is warning that a cheaper, more effective means of resolving failed banks used under President Reagan is some alien form of socialism that President Obama must slay before it destroys capitalism. Geithner is channeling Rove when he conflates receiverships with "nationalization."
Secretaries Paulson and Geithner subverted the PCA law by allowing failed banks to engage in massive accounting fraud (which also means they are engaged in securities fraud). Treasury is telling the world that resolving the failed banks will require roughly $2 trillion dollars. That has to mean that the failed banks are insolvent by roughly $2 trillion. The failed banks, however, are reporting that they are not simply solvent, but "well capitalized." The regulators flout PCA by permitting this massive accounting and securities fraud. (Note that by countenancing this fraud they make it extremely difficult to ever prosecute these elite white-collar frauds.)
from Truth Out :
Date: 26 February 2009
Subject: Obama on "More War". . . No?
Hours after President Obama's speech to a joint session of Congress, The New York Times printed the news that he plans to gradually withdraw 'American combat forces' from Iraq during the next 18 months. The newspaper reported that the advantages of the pullout will include 'relieving the strain on the armed forces and freeing up resources for Afghanistan.' The president's speech had little to say about the plans for escalation, but the few words will come back to haunt: "With our friends and allies, we will forge a new and comprehensive strategy for Afghanistan and Pakistan to defeat Al Qaida and combat extremism, because I will not allow terrorists to plot against the American people from safe havens halfway around the world. We will not allow it."
from Tom Dispatch :
Date: 26 February 2009
Subject: A future of violence?
The global economic meltdown has already caused bank failures, bankruptcies, plant closings, and foreclosures and will, in the coming year, leave as many as tens of millions unemployed across the planet. But another perilous consequence of the crash of 2008 has only recently made its appearance: increased civil unrest and ethnic strife. Someday, perhaps, war may follow. As people lose confidence in the ability of markets and governments to solve the global crisis, they are likely to erupt into violent protests or to assault others they deem responsible for their plight, including government officials, plant managers, landlords, immigrants, and ethnic minorities.
from Francis Feeley :
Date: 28 February 2009
Subject: The beginning of the end of capitalism as we have known it.
Paul Grignon's 47-minute animated presentation of "Money as Debt" tells in very simple and effective graphic terms what money is and how it is being created. It is an entertaining way to get the message out. The Cowichan Citizens Coalition and its "Duncan Initiative" received high praise from those who previewed it. I recommend it as a painless but hard-hitting educational tool and encourage the widest distribution and use by all groups concerned with the present unsustainable monetary system in Canada and the United States.
They brought us war against Iraq - what do the hawks in Washington have in store for us now? BBC investigates the "neo-conservatives", the small and unelected group of right-wingers, who critics claim have hijacked the White House.
from Ann Nogueira :
Date: 2 March 2009
Subject: Israeli Apartheid.
There are many lessons to draw from the South African experience of Apartheid relevant to conflicts all over the world,
most especially the peaceful transition to democracy and relative harmony between the races of South Africa post 1994.
Ana Nogueira's Roadmap to Apartheid explores in detail the apartheid comparison as it is used in the enduring Israel-
Palestine conflict. As much an historical document of the rise and fall of apartheid, the film shows us why many Palestinians
feel they are living in an apartheid system today, and why an increasing number of people around the world agree with them.
The effectiveness of the Boycott, Divestment and Sanctions movement that helped end apartheid in South Africa is also
compared to its effectiveness in the Israeli context to end the occupation.