CURMUDGEON’S CORNER: Cannibal Capitalism

In the third world they call it “crony capitalism.”  The president’s brother gets richer faster than any body else.

As usual Wall Street leaped over the top, jacked everything up on steroids and invented Cannibal Capitalism.  They aim to eat your lunch and you alive.  And they want a bonus for it.  For instance, Goldman Sachs gave 36 million stock options to their top execs, aka partners in crime, in 2008.  This amounted to king size cash bonus for playing a leading role in raping the entire world economy.

The polite, misleading, disingenuous, and most common way of describing this catastrophe goes something like this: The sub-prime mortgage meltdown made trillions of dollars simply disappear.

Don’t believe any of it for a minute.  First not all those trillions of dollars simply disappeared.  They simply moved from your 401k (another brilliant rip-off), your state pension funds, and your saving into the pockets of Wall Street’s best, brightest, dumbest and most venial bankers and brokers.  You can see many of those dollars in their multi-million dollar first, second, third and fourth homes.  And the problem wasn’t actually the sub-mortgages, which never did amount to all those trillions of dollars, but rather to the explosion of credit default swap, CDO, and derivative markets where Wall Street hid the leverage that allowed them to skim off huge profits by churning ever more heavily leveraged derivatives.  

The most brilliant book on all of this so far is “The Big Short” by Michael Lewis.

He managed to find the tiny handful of people who really saw all this coming, really understood it was completely insane, and bet the farm and everything else they could get their hands on that it would blow up big time.

Lewis looks into what he calls the doomsday machine and finds that the Wall Street wankers who powered it up had hearts of stone, feet of clay, and heads of air.  They didn’t know what they were doing.  They didn’t know how it worked.  They didn’t know what it was going to cost.  And they didn’t care.  All they knew is that they were taking money off the table as fast as bandits.  And nothing else mattered.

Now the frightening thing is that these are the same people who ran the banks and brokerages that were too big to fail.   These are the people you and I bailed out.

And they are the people running those places now, stone walling regulation and transparency, foreclosing on homes, ratcheting up bank fees, jacking up credit card costs, borrowing money from the government at next to nothing with no collateral and lending it to us at usurious rates, while they tell us how smart they are and how we need to be more fiscally responsible.

The chain saw massacre movie version of this same gigantic swindle is the must see horror film documentary called “Inside Job,” produced, written and directed by Charles Ferguson.  He had some help but he also picked up an Academy Award nomination for an earlier documentary, No End in Sight, on Iraq.

This movie ought to be a prelude to a perp talk for many of the Wall Street power brokers it covers.  If this movie doesn’t scare the shit out of you, because these guys are still running and ruining our lives and leave you fuming with rage then you weren’t paying attention.

In the movie Ferguson virtually crucifies the supercilious Dean of the Columbia University Graduate School of Business, a former Bush Administration economic guru.  The wonderful thing about all these financial geniuses that blew up the world economy is the way they sell spending cuts as the magic cure for the mess they made.  They want to cut billions from state and municipal payrolls and pensions, billions from healthcare benefits, social security and unemployment benefits, billions from education, police and fire departments, libraries and infrastructure, all in order to make sure there are enough billions in the piggy bank to pay their bonuses.  It’s taking from the poor and giving to the rich, but it is always spending cuts for us and raises for them.

Leading economist Richard Wolff, author, lecturer and Professor at The University of Massachusetts and the New School University in New York, writing in the Guardian, called it “Bonuses for Bankers, Bankruptcy for public services.”

He writes “Goldman Sachs sets aside $15 billion for pay; the State of California cuts $1.5 billion from education.  What’s wrong with this picture?”

“One really gets the sense of an economic system spiraling out of control,” Richard Wolff warned in an interview recently.  Wolff cautions that the global economic meltdown is not limited, not temporary, and not easy to fix in his latest book Capitalism Hits the Fan that is also available as a DVD.  You can also find him on the internet at

How out of control is the economy? How bad can things get? The way things are going now you don’t need a crystal ball to see the future.  You just need to look at Japan over the last 20 years, the lost decades of a one time economic super power.  When we talked to Wolff he warned that the current situation is not sustainable.  How many of us can hold our breadth underwater for 20 years waiting for the stock market and the real estate market to recover?

John Boehner cries crocodile tears over American kids not getting a shot at the American Dream.  But that dream has never been more threatened and the threat comes from people like Boehner.  Wolff makes it very clear the American Dream began to turn into a nightmare 30 years ago.  That is when real wages in America stopped rising and flat-lined while corporate profits, executive salaries, and productivity soared.  In other words the rich started getting a lot richer fast while the rest of us started getting nowhere fast.  So how did we keep the illusion of the American Dream looking good?  Wolff explains it this way.  More and more women went to work, which meant more families had two paychecks instead of one.  Americans worked harder and they worked longer hours.  But most of all they borrowed more and more money to try and keep up.  

“Credit cards created something that had never existed before, huge amounts of unsecured debt.  People could borrow money with no security, no guarantee that they could repay the money,” Wolff explained.  Finally average debt climbed to 125% of income.  Unsustainable.

The amazing thing is that Wolff says the big bankers and brokers, the financial elite, know that things can’t go on like this.  But so far every time they have pushed a little bit harder, demanded a little bit more the American people have stepped to the plate and borrowed more, worked harder, worked longer hours, boosted productivity and kept going.

The question is where is the outrage?  Why aren’t Americans demonstrating and manning the barricades like students in England and unions in Greece protesting austerity measures?

The economy is in a state of collapse and from Washington comes a hue and cry to cut spending, cut, cut. cut.  But as Wolff points out, “the vast majority of Americans are paying for this, paying or something that is not their fault.”

And at last other people are beginning to question the moves to blame the victims and reward those responsible for the damage.  As Gretchen Morgenson wrote in the New York Times in the piece called “So That’s Where the Money Went.”

“Clearly, the federal government was much more willing to deliver mountains of money to big banks that made big mistakes than it was to lend a financial hand to rank-and-file Americans struggling through foreclosures.”

And when it comes to unsecured debt there remains no debt more unsecured then the trillions of dollars sucked out of the economy and into the pockets of the financiers through sliced and diced mortgage derivatives and CDO’s not to mentions Credit Default Swaps with no regulation, no reserves and no transparency.  And you can bet your last borrowed dollar that this is a profit center the financial elite wants to keep secret, unregulated, without resources and about as transparent as a brick wall.

These guys are the real welfare queens, and the mythical middle class is stuck subsidizing them and paying for their Cadillacs and MacMansions.

Republicans want to repeal what they call “job killing Obamacare.”

All those budget cuts politicians say they want and need, those are real job killers, because the way to cut spending is to cut payrolls, cut jobs, and put people out of work.

That’ll help unemployment all right.  It will send it right up.

Cannibal capitalism is killing the American middle class that made America a super power and the envy of the world.

And it is a homicidal waste.

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