An Untold Story

In his new book, Bad Money, Kevin Phillips says that the staggering transformation of our financial institutions between 1987 and 2007 is one of the “greatest stories never told.” Among other things that period saw the financial sector of the economy replace manufacturing as the largest segment of the Gross Domestic Product (GDP). This was due in part to the increasing deregulation of the financial sector allowing the major financial institutions to invent new “products” with no regulatory oversight and evaluation. Among these products was the bundling of mortgages, which were then sold to investors as securities. The debts of millions of homeowners were thus commodified and placed on a speculative market. Speculation is the preeminent source for disassociating finance from reality. My question is, “Was this an unforeseen accident?”

In an article in the April 28, 2008 Dissent Mag blog by Michael Hudson (Dr. Hudson was Dennis Kucinich’s Chief Economic Advisor) quotes the Wall Street Journal as follows, “Even the Wall Street Journal expressed surprise. Jon Hilsenrath noted the seeming irony: “In August 1999, as the tech-stock bubble was worsening, Alan Greenspan stood before central-banking colleagues in Jackson Hole, Wyo., and argued it wasn’t the central bank’s job to prevent asset bubbles. All it could do was clean up the mess after the bubble had burst.” On the contrary, the commentator noted, the Fed could have slowed the bubble by raising interest rates and boosting margin requirements on stock trading during the tech bubble. Mr. Greenspan could have heeded the advice of Fed Governor Ed Gramlich to slow and regulate subprime mortgage lending. Instead, Mr. Greenspan’s–and Mr. Paulson’s–idea was simply to clean up the bubble’s debt aftermath by bailing out Wall Street.” My point is that Greenspan knew exactly what the trouble was and elected to do nothing about it. Why? I believe it is clear that Greenspan callously allowed the financial community to milk every last dollar out of a failing market at the expense of millions of ordinary people. Contrary to the practice of corporate financiers, Republican politicians and the Democratic Leadership Council, the function of Greenspan’s Federal Reserve agency was to protect the American citizens from financial rapaciousness, not to help the financial community destroy the well being of millions and the credibility of their government. And that is my point. I suspect that this debacle has as at least one of its goals to further weaken government and thereby the only leverage the vast majority of Americans have for dealing with the enormously powerful multinational corporations that would dominate them and use them and their resources for their own purposes – not incidentally as soldiers.

I am also reading Broken Government, a book by John Dean. Dean describes in considerable detail how the Republicans have systematically and in defiance of Constitutionally mandated separation of the powers of government acted with an arbitrariness not seen before. The nexus of Dean’s concern is the disregard for “process” in the conduct of our governing bodies and that a proper concern for process is essential to a democratic government. He argues that the current belief in Washington and in the mainstream media is that citizens are not interested in process, only in results, actual or supposed. He offers substantial evidence that, to the contrary, people are very interested in the process of government. The failure of the media and politicians to focus on process has allowed the Republicans to massively and recklessly reorganize the federal government in the interests of corporations and to suppress a protesting public. I ask why this radical shift to unprecedented and unconstitutional arbitrariness in the exercise of our government? You may recall that the House under Newt Gingrich literally shut down the Federal government by denying any funding. This was unprecedented and while of short duration caused chaos. Again, under Tom Delay, Democrats representing at least half the population were routinely shut out of legislative committee meetings and were not informed of arbitrary votes, sometimes held at midnight, so that only Republicans were present. Notice that all trade agreements, and in this with the complicity of the DLC, have been negotiated without the representation of ordinary citizens. Labor unions were kept out of the process. These agreements, created at the behest of the corporate world, can overrule laws passed by a country’s representative legislature. Does democracy count for so little in what is supposed to be its most congenial home? And once more, when Dick Cheney met secretly with oil executives to divide up the oil reserves expected to fall under U. S. control with the invasion of Iraq, Cheney refused to divulge the content of those privately-reached agreements on the grounds of executive privilege. Why the pervasive secrecy of the Republican administration? I suggest that these things happened because corporate America wanted to reshape government to serve their interests only, which requires the destruction of democratic government.

My fundamental question is whether there is a connection between the refusal by Alan Greenspan to deal with the mortgage crisis and let the financial corporations reap as much profit as possible on the one hand and on the other the rampant arbitrariness of Republican governance. Could both of these phenomena constitute an effort to create a radically unregulated environment for corporate enterprise. This raises the fundamental question of whether there is a corporate interest in the destruction of our government and its ability to serve the people. This would be more than fascism. This would be the substitution of the top down dictatorial structure of corporations for the bottom up consent of the governed structure of democratic government. With this privatization of government functions everything would be done for profit, which is to say for those with the money to generate that profit. I used to think that corporations wanted to use our government, especially the military, for their own purposes. It now seems to me that they want to replace government by privatizing its functions for profit, including the military.

Grover Norquist, a power in the neocon movement, has openly declared he wants to destroy our government and turn its operations over to the private sector. Given the Republican’s pronounced antipathy to government, what better way to do it then by overburdening it with debt and excessive tax breaks for the wealthy? One of the favorite mantras of the business sector has been the notion of “creative destruction,” which is deemed to be a good thing. Hence we have seen over the last thirty five years or so the repeated arbitraging of viable businesses simply because the purchasing arbitrager saw a way to make money by breaking up a business, i.e. destroying it, and selling its parts. It would not surprise me that the corporate world sees government in much the same light. In this case they would break up government and privatize the pieces all of which would operate for profit. I do not think, in view of all the evidence, ranging from corporate attacks on social security to their domination of foreign governments for resources form oil to bananas, that such an enterprise is beyond multinational corporate consideration and possibly within their current practice.

As an indication of how dangerous this situation can be, not only to our civil liberties and Constitutional rights, but to human lives and the welfare of the planet, it is useful to take into consideration an observation by Kevin Phillips. He notes that Iran and Venezuela have begun to accept euros and yen rather than dollars for their oil. This can be the beginning of a shift away from the dollar as the dominant world currency and with it the power to control world finances. Could this rather than the asserted nuclear weapons capability of a small country be the real source of the call to war against Iran? Note that this call is not only that of Bush/Cheney, but increasingly of Democrats such as Hillary Clinton. We live in VERY complex times and are exceptionally vulnerable to manipulation. In times like these caution and a vigorous demand for truth before action are in order. These are the times that can precipitate monumental disaster.

Bob Newhard