The Quiet Coup and the Coming Armageddon

Updated April 15, 2009

...or How I Learned to Live in a Banana Republic


Don't count this as rational. I'm a Terminator kind of guy and just finished watching an episode of the Sarah Conner Chronicles and am in the midst of John Gresham's latest, The Associate. So don't mind my paranoia. If Arnold were to show up as a robot from the future, I wouldn't be shocked. And if we faced the devastation in some apocalyptic films, I would nod and say, "see, told you so!"

Imagine the worst, as I often do. What Joel Klein or Eva Moskowitz or Randi Weingarten does may soon be irrelevant.

I saw on 60 Minutes how people were lining up to buy guns so they can defend their food in case society falls totally apart. I ran and buried my favorite nuts under the floorboard and started thinking about Cormack McCarthy's The Road. Imagine hordes of people going postal. Or will we start seeing educators taking hostages and have that term morph into "going pedagogic?" Do we worry about charter schools when we are all living in the woods?

Think Germany c. 1930. Things get really bad. Like 25% or more unemployment. Deflation. Or printing money leads to hyperinflation. I can't tell which, but either scenario looks like disaster. I mean, what if we're in a decade long hole that could make the lost decade in Japan look like a sunny spring day? Jeez, am I channeling Glenn Beck, who I consider a right-wing nut?

A black president who the left looks at as a front man for a coup by wealthy bankers and the right views as a socialist supported by a rabid youth movement that some loonies are comparing to Hitler Youth. That makes him a centrist where the word CHANGE has been changed to small change.

Some think the crisis is manufactured to create a sense that these bailouts, which will shift even more wealth in the hands of the few, are necessary, while that was the plan all along. As things deteriorate, some of the people on the left, who might have been rioting in the streets, are mollified by their guy in office – liberals who will try to keep hope alive. But what if Obama was part of the plan all along to enable this coup?

I see rioting from the right as more likely than from the left, which always seems so week in this country compared to places like Europe. Just a few years before Hitler took power, the left in Germany was stronger than the Nazis, who were looked on as a fringe. Hitler exploited that fear of the left and the German oligarchy came to see him as the less fearsome threat.

You already hear the right calling for people to take up arms, directed at the black president. Look at the names of so many of the "villains" of the financial crisis: Rubin, Bernacke, Madoff. It would not be hard to target a certain group to blame for the crisis – Blacks and Jews. Could be a hit with the right wing. Remember Father Coughlin's populist rants in the 1930's which turned anti-semitic and ended up with supporting Hitler? (No I really don't remember but I was a history major.)

From an article in The Atlantic,

“The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says [Simon Johnson] a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.”

The entire article is worth reading and is at The Atlantic

The difference from other recent situations is that it is occurring world-wide so there is no one left to bail anyone out. The essence of Johnson's thesis is that bankers have done very well in this crisis. In his experience with emerging market economy crashes in the past, the small oligarchy, which had a symbiotic relationship with the government, always managed to glom the lion share for themselves, which hindered the recovery. These markets did not recover until these forces were broken up.

Now that the US is moving into banana republic territory (not the store), our own oligarchy must be damaged before recovery can begin. Batten down the hatches. In the US this relationship is more than symbiotic. They actually are the government (see one Goldman Sachs).

Related: Anything Reality-Based Educator writes over at NYC Educator. Start with this one.

Matt Taibbi on The Big Takeover

Select quotes from Taibbi's scathing piece in Rolling Stone

...this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires.

People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

AIG is what happens when short, bald managers of otherwise boring financial bureaucracies start seeing Brad Pitt in the mirror.

The Democrats, tired of getting slaughtered in the fundraising arena by Republicans, decided to throw off their old reliance on unions and interest groups and become more "business-friendly."

Paulson used the bailout to transform the government into a giant bureaucracy of entitled assholedom, one that would socialize "toxic" risks but keep both the profits and the management of the bailed-out firms in private hands. Moreover, this whole process would be done in secret, away from the prying eyes of NASCAR dads, broke-ass liberals who read translations of French novels, subprime mortgage holders and other such financial losers.

the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.

Illustration by Victor Juhasz

A MUST READ
http://www.rollingstone.com/politics/story/26793903/the_big_takeover/

Related: Naomi Klein's Nov. 08 piece, The New Trough

Teacher Unions and the UAW

Why Teachers Have an Interest in the Survival of the US Auto Industry

GUEST EDITORIAL

By Michael Fiorillo, Chapter Leader, Newcomers High School

The fate of the US auto industry, and particularly General Motors, has been much in the news lately. The pitiful performance of auto executives appearing before Congress with their begging cups, the morality play of their flying in private corporate jets to Washington to plead for taxpayer assistance, has become a rallying cry for people who are appalled at the long lines of executives seeking corporate welfare. People are rightfully upset that incompetence and dishonesty in business are being tolerated, if not rewarded, by their tax dollars. Oddly, though, most of the anger and calls for discipline have been directed at Detroit, rather than the banking and securities industry. What are some of the deeper reasons and assumptions behind this, and what are the implications for teachers?

This may seem like a strange topic to bring up on a blog that mostly concerns itself with educational issues. But in fact the fate of unionized teachers is now closely intertwined with the fate of the UAW. The reason is that, just as anti-union forces are calling for letting GM go bankrupt – which would lead to the nullification of contracts between the Big Three and the UAW – emerging fiscal crises for states and localities will energize forces that have been calling for the elimination of tenure, work rules, defined benefit pensions and union representation altogether for educators. In this sense, the fate of unionized autoworkers and teachers are joined. The attacks on the unionized auto workforce – coded in statements by senators from right-to-work states and financial industry types – are a prelude to what educators will be facing shortly as states and localities grapple with collapsing tax revenues and financial crises. It’s a scenario right out of Naomi Klein’s Shock Doctrine: those with their hands on the levers of power will use crisis and disruption to implement policies that they could never have otherwise achieved.

First, a disclaimer: while the industrial base of the US must be preserved – and the auto industry is its core – that doesn’t mean that Detroit can continue with business as usual. Auto management must be replaced, and the industry must re-tool in order to produce reliable, fuel-efficient vehicles that people want to buy. The industry must also be reconfigured for production geared toward less reliance on cars and toward investment in mass transit. However, finance capital must not be allowed to fatten itself on the carcass of the auto industry, otherwise we will see investment bankers earning huge fees to dismantle auto plants and ship them to Mexico, China and elsewhere. Additionally, the federal government must resolve the health care crisis, which accounts for a large part of Detroit’s competitive disadvantage.

Much of the moralizing about letting the auto industry go under masks a deep-seated antagonism to union standards and worker rights. Critics of Detroit openly say that autoworker wages and benefits must immediately fall to the levels paid by Toyota, Honda, et. al. in their non-union plants in the South. This overlooks the fact that the wages workers enjoy in those plants are entirely dependent upon and follow from the wages established by years of struggle by the UAW. We could call it the Invisible Hand of labor economics. Non-union auto workers, and non-union factory workers in general, only get what they do because of the scales and standards established by the UAW. Here in NYC, non-union construction workers only get the wages they do because of the scales established by the organized trades. Likewise in education, the pay, benefits and working conditions in non-unionized schools track – at a lower rate – the scales established by the union. Take away the protections earned by unionized workers – whether they be teachers, electricians or auto workers – and you will quickly see a “race to the bottom” with employers going on the offensive to lower their cost structures and exert absolute control over the work lives of their employees.

People must question the fact that, while Wall Street and the banks have literally been given blank checks by the Treasury Department and the Federal Reserve Bank – money that has not been used to lend to the real economy but has instead been used to buy up competitors and strengthen balance sheets – Detroit, which has asked for a mere fraction of what the financial industry has had thrown at it, must jump through hoops to obtain a fraction of the needed funds. When you think about it, Congress seems to be saying that when an industry is run by criminals, parasites and predators (Wall St.) rather than idiots (Detroit), it is deserving of special consideration.

Ultimately, saving the auto industry is even in Wall Street’s interest, although their short term greed blinds them to that reality, for what will happen to the parasites and predators when they kill off the remaining hosts and prey? Who will continue to buy their junk and pay their mutual fund management fees?

So, teachers and other school workers, don’t fall into the trap of supporting attacks on “lazy” and “spoiled” auto workers, and how they must be subjected to the discipline of the market. Those arguments are being turned against us, and the screams will become louder.


FOLLOW-UP
Giving credence to the points Michael makes, Fred Klonsky posts this video of Congressman Mark Kirk urging the use of bankrupting GM to bust the UAW contracts.

Back in 1929 Financial Crash it was said...

....that some Wall Street Stockbrokers and Bankers JUMPED from their office windows and committed suicide when confronted with the news of their firms and clients financial ruin . . . Many people were said to almost feel a little sorry for them . . . . . .

In 2008 the attitude has changed somewhat:

How Will Crisis Impact on Market Based Ed Reform?

For one who worked in the schools through the catastrophic financial crisis in NYC in 1975 and 1976, these times seem very familiar. The impact on schools then?

About 13,000 layoffs with excessed people from schools bumping people all over the place.

Of course with the current contract, that won't happen. Just a mass of ATR's. Or not. Remember that "no layoffs" clause in the contract? I think there's some small print along the lines of "Unless there's a fiscal crisis." Hmmm.

Now would they lay off $45,000 a year teachers while keeping people making 80- 100 grand? Hey, the law says they have to. I wonder how those mad dogs from the Leadership Academy (costing us $50 million over 5 years and one of the numerous pet projects of BloomKlein that will survive class sizes of 80) will take to that? Maybe Bloomberg can do a 2 for 1. While buying the city council to extend term limits and the state legislature to continue mayoral control, he can get them to change other laws.


They hit the elementary schools in '75 and the secondary schools the next.

My elementary school lost 15 people from a staff of about 70. All cluster teachers except one was left standing. Our preps were cut from 5 to 3 a week. How did they manage that? We got one prep a week and they sent kids home 45 minutes early 2 days a week for 2 years. (The only benefit was the wine and cheese Friday 2:15 parties.) A freeze even of the salary steps we were to get. Basically, a total suspension of many of our contractual gains. Class size? Forget about it.

Oh yeah. And we went on a strike to supposedly resist. Al Shanker's "We won't go back 'till we all go back," still resounds. Then the next thing we know is he is giving away our pension money to bail out the city. I was with the Coalition of NYC School Workers and we stood outside Madison Square Garden pleading with people to vote the plan down to no avail.

For you newbies used to the capitulation of the UFT (the one bulwark that could organize resistance) the Unity Caucus leadership has had a lot of practice.

Other than special ed (which exploded in the late 70's) over the next 10 plus years, I don't remember one regular ed addition to our staff.

Schools were closed and later sold off to private interests - in Williamsburg (Brooklyn) there are still 4 large former public schools being used by the Hasidic community that they bought for about a buck. (They DID have 3 members of the school board.)

Pretty much all long-term maintenance on schools was stopped for 15-20 years and that caught up with them in the 90's when serious problems cropped up in many buildings that they are still addressing today.

So, how will the current crisis that can turn out to be worse than the one 33 years ago impact on the schools in NYC and the BloomKlein program that puts a premium on high priced executives and extremely expensive private schemes while shortchanging classrooms? What about all those frills floating on the pond of market-based ed reform?

We'll speculate on the future of the extended day (can you see them cutting this - and the salaries that go with it?) small schools movement, merit pay schemes, after school programs, etc. a bit in an upcoming blog.

But here's an early warning shot from a Chicago teacher:

The Chicago High School Redesign Intiative (CHSRI) layed off all of its employees last Monday who were working with small schools. CHSRI managed the Bill Gates grants that help fund additional money to the small school movement. This will be the last school year that there will be a small school AIO. Next school year the small schools will return to the area offices AIO's or to the turnaround school AIO. CPS will be closing small schools and turning them back to "one" whole school. Small schools cost too much money because of higher administrative costs and CPS will be able to save money by going back to one principal instead of three or four principals per building. In a small school you must have at least 600 students per school, for the staffing formulas to work economically.

(jargon translation: AIO is Area Instructional Officer--small schools have had their own separate area, rather than being organized like the other schools into geographic areas. Turnaround schools are run by an outside agency headed by "venture capitalist" Martin Koldyke and also have their own "area".)

The Best Laid Plans Of Mice And Mayors

Miami teacher Paul Moore ruminates on the financial crisis' impact on the business model for education. - UPDATED


Oh, they had such grand plans for public education. Homage was paid to their ideological godfather Milton Friedman. In his 1950 book Capitalism, Friedman wrote that "The privatization of schooling would produce a new highly active and profitable industry."

Their pride and joy is burning as you read. It was never sustainable but they had us going for awhile, didn't they? It was immutable. It was eternal! It was a pig with lipstick in a poke!

Oh, they had such grand plans for public education. First the masters of the universe genuflected to their ideological godfather Milton Friedman. In his 1950 book Capitalism, Friedman wrote that "The privatization of schooling would produce a new highly active and profitable industry."

Then fueled with the fire of the Reagan revolution they put the finishing touches on their devious campaign at the Business Roundtable education summit in 1989. Standardized testing would be their primary weapon. The tests would isolate urban schools first and bury them under public posturing for accountability . The corporate vultures from Edison Schools and the others would move in to pick up the pieces and impose their gospel, the business model. Vouchers and charter schools would even redirect public monies to the destruction of public schools .

Toxic wastes, like incessant testing and mindless data collection and merit pay plans, would be pumped into the public school environment to sicken both teachers and students. And bye and bye the privatizers would have their brave new education system to serve their global economy.

And they were so close. They had their blueprint for legally closing public schools, the No Child Left Behind Act, in place. Billionaire Bloomberg and his CEO sidekick Joel Klein were in control in New York City. Mayor Daley and Arne Duncan were strangling the Chicago Public Schools. Mayor Villariagosa and Admiral Brewer were trying to get their hands around the throats of the Los Angeles Unified Public Schools. Jeb Bush, in and out of office, was calling the shots in Florida. Bill Gates had succeeded in winning Washington D.C. for Mayor Fenty and he in turn introduced the nation to a new level of ruthlessness and brutality in the person and policies of Michelle Rhee. Eli Broad's superintendents dotted the landscape from Vallas in New Orleans to Crew in Miami, chirping over the achievement gap and with grave voices declaring "the children of Singapore are eating our kids lunch." Many of those pesky democratically elected school boards had been eliminated.

Then just as the campaign appeared ready to bear fruit, their rationale for being, their precious global economy, crashed! Their pride and joy is burning as you read. It was supposed to be immutable. It was eternal! When the men of the Business Roundtable came down from their Charlottesville, Virginia education summit they were imbued with the Reagan Revolution's confidence. Now that's all gone.

A forlorn John Castellani's mug has been all over TV for the last couple weeks. He's the president of the Business Roundtable. Who could have imagined that less than twenty years after their education summit these same men would appear on their knees, hat in hand, to desperately plead with every public school teacher, parent and student to give them $3,000 as their share of a $700 billion public bailout. Goodness, what happened to their vaunted business model? Somehow these proponents of data driven education have no idea what their collateralized debt obligations (CDO's) and structured investment vehicles (SIV's) are worth. Most shockingly, the poster boys for accountability who pranced around with their noses in the air chanting "no excuses" over the battered minds and bodies of poor children, now beg for sympathy and want to be rescued by their victims!

Well it will take some time to clean up this mess, and we will suffer for their folly, but there is now some light ahead. Our corporate tormentors will soon slink away to lick their wounds and we will have the chance to rebuild the public schools, make them truly places of learning. Imagine there's no pacing guides, it's easy if you try. Our time under these sanctimonious, hypocritical blowhards is over! They have forfeited their right to any influence in our schools and in our lives.

Mail your No. 2 pencils to the Business Roundtable, swords into plowshares, standardized tests into poetry contests!

Long live Douglas Avella*! http://www.talkbx.com/tag/douglas-avella/

Paul A. Moore
Miami Carol City High School

*160 students in 4 classes left the entire papers blank on a [useless] practice test at IS 318 in the Bronx. All classes were taught by Avella. Nothing happened at first but when the story came out in the press, Avella was sent to the rubber room and has since left the system. Students reported they had their cell phones confiscated, were not allowed to contact Avella, were questionned intensely and many were manipulated into giving up Avella by being threatened that they wouldn't be allowed to attend graduation (and worse.)


Articles on Ed Notes on the Avella story in chronological order beginning in May 2008.

http://ednotesonline.blogspot.com/2008/05/bronx-teacher-refuses-to-test.html

http://ednotesonline.blogspot.com/2008/05/support-for-doug-avella-builds.html

http://ednotesonline.blogspot.com/2008/05/dear-joel-klein-letters-on-student-test.html

http://ednotesonline.blogspot.com/2008/05/where-is-leo-casey-and-edwize-on-test.html

http://ednotesonline.blogspot.com/2008/06/ask-uft-to-make-testing-boycott.html

http://ednotesonline.blogspot.com/2008/06/more-nyc-students-boycotting-tests.html

They Just Cut Interest Rates

What will they do when rates are zero?

In the Japanese financial crisis of the 90's - the lost decade - where the stock market didn't recover for over a decade, they tried cutting rates to stimulate the economy – until they reached bottom. Instead of getting interest when people put their money in banks, they had to pay the banks. Call it negative interest rates.

Numbers of people who bought apartments during the real estate boom of the 80's just walked away finding it cheaper to rent, thus losing their entire investment.

In July, William Patalon wrote:

If you think the "Lost Decade" Japan endured during the 1990s was deep and painful, stick around: As the global financial crisis that was jump-started by the meltdown of the subprime mortgage market continues to unwind, the U.S. economy is headed for a financial Ice Age that will make Japan’s 10 wasted years seem like a single chilly night.

The two meltdowns started in much the same way - with busted stock-and- real-estate bubbles. With both the United States and Japan, the market manias were ignited by laughably loose credit policies, smoldered under a lack of oversight from government regulators, market analysts or such private-sector sentinels as credit-rating agencies, and were finally fanned into a frenzied financial conflagration by the promise of easy profits.

...

On Dec. 29 of that year (1989), the Nikkei 225 Index topped out at 38,957.44, before closing at 38,915.87. By the following September, it had nearly been halved - and there was still much more bloodletting to go (despite several subsequent rallies up over the 20,000 threshold, the Nikkei ultimately bottomed at 7,830 in April 2003. It closed yesterday - Wednesday - at 12,760.80, still down 67% from its trading high 19 years ago).

...

By early 2004, houses were selling at 1/10th their peak value, and commercial real estate was selling for less than 1/100th of its peak-market value.

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It's going to be a long ride.

If you had purchased...

..... $1,000 of shares in Delta Airlines one year ago, you would have $49.00 today.
......$1,000 of shares in AIG one year ago, you would have $33.00 today.
......$1,000 of shares in Lehman Brothers one year ago, you would have $0.00 today.

But, if you had purchased $1,000 worth of beer one year ago, drank all the beer, then turned in the aluminum cans for recycling refund, you would have received $214.00.

Based on the above, the best current investment plan is to drink heavily and recycle.

Call it the 401-Keg.

Will Obama or McCain Be FDR or Hoover?

UPDATE: Fred Klonsky on Palin's future - a companion piece

“Terrorist,” they screamed at Obama at a McCain rally. “Kill him,” some in the crowd were quoted as saying. These are people who are preparing for life after an Obama victory and are beginning to organize now. Economic pain for working people is not going to end on November 4th or even in January. Organizing fear and anger and attempting to direct it at a black president and a potentially progressive dominated congress is their plan. History has seen stuff like it before.

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If we are comparing the world to the Great Depression and we are roughly in the 1928 area with the major economic crunches to come, it is much more likely that whoever "wins" the election will be fairly helpless to do much other than to watch the economy spiral down to massive unemployment.

In my opinion, only a New Deal WPA-like government supported massive job program could reverse course. Our infrastructure could sure use a little injection of capital instead of sending enormous sums to bail out Wall Street.

Remember, in the 20's and 30's, the Soviet Union was still viewed as heroic by many and the left was fairly strong. With the right wing anti-left, anti union ideology so prevalent today, there is little chance Obama, even if he wanted to, would get to set much of an FDR New Deal agenda. McCain doing so, of course, is out of the question.

If Obama wins, if he can't pull off FDR-type magic, it is likely he would be a one-term president as he gets the blame for not being able to stop the bleeding. Then Hillary Clinton gets to pick up the pieces for 2012.

Goin' Shoppin'

Some lessons of the 1920's and 30's: Remember how Germany printed money and they had hyperinflation, one of the keys to the rise of Hitler. See Reality-Based Educator over at NYC Educator today:

The Fed is going to start lending directly to businesses.
And where are they going to get the money from?
They're going to print it.

Of course in the Great Depression there was massive deflation. But given the choice today, government will choose inflation by printing money which might help disguise the problem.

But eventually, the population will get restless and move left. That is where repression comes in. [See Naomi Klein's "Shock Capitalism" for the chilling details.]

In the meantime, Palin polishes her act. Expect her to be around as a leading Republican presidential prospect for the next 20 years. It is almost inevitable that at some point she will be president.

In times of massive economic dislocation you end up with dictatorships and totalitarianism. And horrendous wars. (Iraq may prove to be a cupcake.)

People as late as the mid 30's laughed at Hitler. To those who laugh at Palin, beware. Imagine if Bill Clinton had ignored subpoenas, which Palin has done in Alaska over the firing of her ex-brother-in-law’s boss? All the seeds are in place in this country with extraordinary powers given to turn this into a police state.

A third term for Bloomberg? When will we see a president in crisis times calling for a repeal of the XXII Amendment limiting presidents to two terms?

As for me, my wheelbarrow is ready to be loaded with the money for that hyper inflated day when I’ll need to buy a loaf of bread.

The horror, Colonel Kurtz? Yes indeed and now the irony too!

From Paul Moore

The horror, Colonel Kurtz? Yes indeed and now the irony too!

John Castellani's puss has been all over TV for the last several days. He's the president of the Business Roundtable.

Back when the Business Roundtable was riding high in 1989, flush with Reagan era confidence, the big company CEO's met for an education summit in Charlottesville, Virginia. They came down from their summit and announced to the world that they would transform America's public schools.

Who could have imagined that less than twenty years later these same men would appear, hat in hand, to plead with public school teachers, parents and students to each give them $3,000 as their share of a $700 billion public bailout. Goodness, what happened to their vaunted
business model? Somehow these proponents of data driven education have no idea what their collateralized debt obligations (CDO's) are worth. Most shockingly, the poster boys for accountability who pranced around with their noses in the air chanting "no excuses" over
the battered minds and bodies of poor children, want sympathy and want to be rescued by their victims!

Public school teachers, parents and students our time under these sanctimonius, hypocritical blowhards is over! They have forfeited their right to any influence in our schools. Mail your No.2 pencils to the Business Roundtable, swords into plowshares, standardized tests into poetry contests.

Long live Douglas Avella!

Paul A. Moore
Miami Carol City High School

September Madness

Which bank will win the tournament and become the only bank left standing? Choose the winner and take home the pool.

Click to enlarge

Naomi Klein: Now is the Time to Resist Wall Street’s Shock Doctrine

The dumping of private debt into the public coffers is only stage one of the current shock. The second comes when the debt crisis currently being created by this bailout becomes the excuse to privatize social security, lower corporate taxes and cut spending on the poor. A President McCain would embrace these policies willingly. A President Obama would come under huge pressure from the think tanks and the corporate media to abandon his campaign promises and embrace austerity and "free-market stimulus."

Klein's full piece from Huffington Post

http://normsnotes2.blogspot.com/2008/10/disaster-capitalism-in-action.html

The next time it could be an economic shock: Naomi Klein

Keith Olbermann discusses "The Shock Doctrine" with Naomi Klein.

Video from Nov. 2007
http://www.naomiklein.org/video-audio/countdown-keith-olbermann

Klein's thesis is that Milton Friedman's "fundamental capitalism" thesis can be best implemented in a "clean" slate environment. But people will resist. So there is a need for some kind of shock to get them to submit. It could be war, natural disaster, or economic meltdown - whoa there Nelly, sound familiar? Only a crisis produces real change. Democracy gets in the way.

Create a period of confusion, dislocation, regression. Politicians come forward playing the father figure and use that dislocation to push through policies in a state of emergency. The shock of 9/11 was used to privatize the military. Iraq is a perfect example of using shock and awe to privatize the entire country - drool, capitalists, drool. The uniform of a disaster capitalist - Brooks Brothers suit and army boots. Iraq was a corporate takeover with guns. It was looted, not reconstructed.

We should recognize signs of coming shock therapy and the next time there's a shock - AND IT COULD BE AN ECONOMIC SHOCK - she says in this Nov. 2007 interview. Which may explain some of the resistance to the bailout. Hmmm, the stock market drops 700 points and resisters are shocked. You see, ze bailout is good for you.

You can only play the same record a number of times before it gets badly scratched.

Thanks to Sean for the find.

700 Billion Reasons to Vote Against the Bailout

David Sirota actually has 5 reasons. Read them at Norms Notes.

If You Want to Dance, Pay the Fiddler

Thanks to Fred Klonsky over at Prea Prez for coming up with this almost perfect quote that can be applied to today's financial situation from an old source. Boy do we need someone like him today.

It is an old maxim and a very sound one, that he that dances should always pay the fiddler. Now, sir, in the present case, if any gentlemen, whose money is a burden to them, choose to lead off a dance, I am decidedly opposed to the people’s money being used to pay the fiddler…all this to settle a question in which the people have no interest, and about which they care nothing. These capitalists generally act harmoniously, and in concert, to fleece the people, and now, that they have got into a quarrel with themselves, we are called upon to appropriate the people’s money to settle the quarrel.

- Abraham Lincoln, January 11, 1837

Message to the Press: Ask tough questions about the bailout

Are we being railroaded into believing there's a phony crisis to force the public to pony up to rescue the wrong people? Is the "crisis" the weapons of mass destruction of today? I think I got this right when I heard on CNN today that Goldman Sachs had $20 billion in risk that would be saved by the bailout. Remember that is where Paulson comes from. Goldman Sachs execs actually sat in on talks to design the bailout.

I am repeating a call I made a few days ago to bailout the American worker who provides the fuel for the economy by creating New Deal style WPA jobs for all the things this country need so desperately, including hiring scads of teachers and creating enough space to reduce class size in urban schools.

David Cay Johnston was an economics/tax reporter for the Times. This piece was posted on a forum for journalists (http://poynter.org/forum/view_post.asp?id=13611). Contradicting most of what we've been told about the credit situation, that he says is not a crisis, Johnston exhorts his fellow reporters to be skeptical and "check it out" instead of making the mistake they made in reporting the Administration's case for the Iraq war and the Patriot Act.

Here's an excerpt:

Ask this question -- are the credit markets really about to seize up?

If they are then lots of business owners should be eager to tell how their bank is calling their 90-day revolving loans, rejecting new loans and demanding more cash on deposit. I called businessmen I know yesterday and not one of them reported such problems. Indeed, Citibank offered yesterday to lend me tens of thousands of dollars on my signature at 2.99 percent, well below the nearly 5 percent inflation rate. That offer came after I said no last week to a 4.99 percent loan.

If the problem is toxic mortgages then how come they are still being offered all over the Internet? On the main page AOL generates for me there is an ad for a 1.9% loan (which means you pay that interest rate and the rest of the interest is added to your balance due.) Why oh why or why would taxpayers be bailing out banks that are continuing to sell these toxic loans?

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Thanks to Merry T.

Hoola Hoops, Tulips, and CDOs... by George Schmidt

Naomi Klein points to the Chicago School of Milton Friedman's disciples as the most fundamental of capitalists. (To our educators, reading Klein will show you how Uncle Miltie's theories underlie a lot of what is going on in your schools today.) When right wing Republicans blew up yesterday's bailout conference at the White House, economists from Chicago were cited. No surprises there.

George Schmidt, who has lived under mayoral control of the school system for 13 years, would be classified as the alternate Chicago School. Can it be that George and Miltie's boys and girls have some common ground of agreement on opposing this bailout? In this post to ICE mail George treads on this ground.

Note that when George says, "The white collar workers who produced these commodities may have had "perfect" SAT scores and MBAs from the "best" Ivy League schools" he is also describing the very same types that Joel Klein has surrounded himself with.

9/26/08

Friends from ICE:

Some of us have been talking about this for a couple of weeks as the latest Wall Street, "bi-partisan", and Bush scam unfolded. For the first time in a long time, I find myself re-reading the first volume of Capital while agreeing with the most conservative Republicans. The market has judged these commodities, and there is no reason why we should not let the market continue to take its course.

Basically, the "products" that Lehman Brothers, Goldman, Merrill and Genworth Financial (watch that one next, shipmates) and the others were selling were no different (in the classical capitalist sense) from any other commodity produced for a competitive market. Just because they were given fancy named like "Collateralized Debt Obligations" (CDOs) or "Default Swaps" and had to wait to be birthed by Capital until the age of computers doesn't make them any different from their classical ancestors in the history of markets, bubbles, and panics.

The fact that the products were produced using computers by overpaid whiz kids (and their elders, right up to Henry Paulson) doesn't change their basic reality. The white collar workers who produced these commodities may have had "perfect" SAT scores and MBAs from the "best" Ivy League schools, but they were still producing a product to sell at a profit in the "marketplace" they've been worshipping since the first day they read "Atlas Shrugged" in one of those right wing essay contests every high school was forced by poverty to sponsor.

The financial products, as commodities, were and are no different from Hoola Hoops, SUVs, and Rely tampons (which also proved "toxic" after years of marketing hype).

This latest (bi-partisan) scam, from an Adam Smith point of view, is that they think they can unload a worthless inventory of commodities they have overproduced (in typical fashion, going all the way back to the Tulip Bubble at the very onset of Capital) on the taxpayers.

It may help some people to see what's going on by viewing all these arcanely named thingamajigs as simply the latest version of the Hoola Hoop. There is a market. The commodity is overproduced by those trying to cash in on the market. The price of the commodity crashes, and someone is left with huge inventories.

Why should we be buying this generation of Hoola Hoops with our tax dollars when we were smart enough to avoid buying them when they were for sale in the open market?

George N. Schmidt
Editor, Substance

www.substancenews.net

Dearest

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully
Minister of Treasury Paulson

PS: Non-Americans welcome too.

Anon. from internet

Awe Shocks: Disaster Capitalism in Action

Are we in the worst financial crisis since the depression of the 1930's? I'm not so sure. And why should we believe what we're being told? Sure there are banks in trouble. But imagine if there's a tad of exaggeration to exploit the crisis. We're seeing shock and awe all over the place. While we're left staring into space, they run in a grab the cookie jar. Naomi Klein's "The Shock Doctrine: The Rise of Disaster Capitalism," lays a lot of this out.

The proposed massive bailout has been called socialistic. Not. It is the reverse - the total take over of the financial system (it was part of the way there already) without the few checks and balances that remain. I can assure you of one thing. You hear all that talk about limiting CEO profits and pay? Right now for public consumption to temper the critics. Like I say about the UFT: Watch what they do, not what they say. They'll make an example of a few but the fat cats will walk away fatter than ever. At one point we said the new Russia was becoming more like us. It looks more like the US is becoming Russia with its privatized state with billionaire oligarchs and gangsters. Can assassinations of critics in the press in the US be far behind? Maybe that's why the press corps is so cowed about reporting the truth. Like, why isn't Naomi Klein on major TV stations explaining what's really going on? (Though I hear she made a great appearance on Bill Maher a few days ago.)

Klein's thesis is that when a system suffers severe shock, whether a natural disaster or man made, a golden opportunity is presented for those who are prepared to rush in and grab what can be grabbed while people are still in shock and before any opposition can formulate. This is a world-wide phenomenon: Examples she cites: Iraq, New Orleans, Russia, Chile in the 70's under Pinochet. She could have included the NYC school system under BloomKlein, as clear a case of the shock doctrine as can be made. But more on shock and awe in NYC schools at another time.

Klein (Naomi, not Joel) puts forth the idea that in the 1970's the Milton Friedman school of an unfettered, fundamentalist view of capitalism began to put into effect its plan to dismantle the New Deal, which just by the way saved capitalism from coming undone in the last great financial crisis when there was actually a left in this country that was capable of organizing people.

Klein writes in her introduction:

The corporatist alliance is in the midst of conquering its final frontiers: sectors of Western economies that have long been protected from profit making – including responding to disasters and raising armies. Since there is not even the veneer of seeking public consent to privatize such essential functions, either at home or abroad, escalating level of violence and even larger disasters are required in order to reach the goal....Bush's exploits merely represent the monstrously violent and creative culmination of a fifty-year campaign for total corporate liberation.

Well, we may be in the mother of financial disasters and whether it is all real or "created" or exaggerated to create the sense of shock needed, the goal is to move the ball up the field. Check Blackwater to see private armies and the privatization of disaster response. Oh, and have you checked the enormous profit-making opportunities in the NYC school system where even after school programs have been thrown on the table for private firms to make a bundle? Sorry, I was going to resist going there today.

Klein talks about the Keynesian/New Deal concepts of capitalism:

A free market in consumer products can coexist with free public health care, with public schools, with a large segment of the economy – like a national oil company– held in state hands. It's equally possible to require corporations to pay decent wages, to respect the right of workers to form unions, and for governments to tax and redistribute wealth so that the sharp inequalities that mark the corporatist state are reduced. Markets need not be fundamentalist.

Keynes proposed exactly this kind of mixed, regulated economy after the Great Depression, a revolution in public policy that created the New Deal and transformations like it around the world.

It was exactly this system of compromises, checks and balances that [Milton] Friedman's counterrevolution was launched to methodically dismantle....the desire for a clean slate on which to build a re engineered model society.

Klein refers to the Friedman doctrine as a "dangerous ideology" because of its drive for purity. Sound familiar?

Bob Herbert in the NY Times last week discussed the Palin/McCain health plan which would basically lead to the end of employer backed health plans and throw everyone at the feet of health insurer middlemen who can take their pound of flesh out of the system. And how's about that old kid, social security, the prime New Deal enchilada the Friedman bunch have been after? I'm heading down to get mine while it's still there.

So expect the latest economic shocks to lead to - not more regulation, but less. Just listen to those radical kids for change - Palin and McCain who will take the right wing ideology so well described by Naomi Klein in her book and use the current crisis to go further in making the American government an instrument and banker for the private interests while removing as many of the protections for the American public as they can get away with.

As for the NYC school system, 3 reorganization shocks were applied and the continuance of the mayoral control onslaught continues. As we write this the UFT leadership is figuring out how they can present to the membership a PR-based document that makes it look like they want changes but in reality continues a system that has the ability to apply the shocks needed to cow parents and teachers, not to say children, into submission.

For a prime example of the latter, check out D2Route's Educating the future workforce to accept disaster capitalism. (thanks to A Voice). If you think this is about KIPP, you are correcto.

Q&A on NYC Pensions

I remember hearing some bad stuff about how pensions and salaries were treated in NYC in the 30's. And we haev the example of the mid 70s' when salaries were frozen, schools closed, preps cut and there were 15,000 layoffs. Remember the current UFT contract assures no layoffs - unless there is a financial crisis. That is the source of the ATR situation. And if there are layoffs, will they find a way to get rid of ATR's or will the newer teachers be cut?

Anita asked a question on ICE-mail to Queens high school chapter leader Michael Fiorillo (see his suggested financial commentary web sites in the sidebar). (People could use some answers from the UFT.

The questions I have and I'm hearing from colleagues: is a TDA account insured? What about our pensions?? (Feel squeamish that we just don't know such basic facts.......)

Michael responds:

Hello Anita and Everybody,

To answer your questions as best I can, and please DO NOT base any personal decisions on what I'm about to say since I can be wrong, my understanding is that:

- If by "insured" you mean guaranteed by the federal government a la the FDIC, then Variable A is most certainly NOT insured.

- I am not familiar at all with Variable B, and cannot comment. It is said to be invested in the most secure and stable financial financial instruments, but what does that even mean in this climate?

- Frankly, with the caveat that I could be wrong, I have fears about the fixed fund, as well: it is certainly not insured by the FDIC, and if there is any kind of insurance it is through private entities (such as AIG , AMBAC and others). Not a comforting thought. I've been following this issue very closely for years now, and have worried about the safety of the fixed fund in a financial crisis. After all, at a time when banks were paying 2-3% on CD's, how was the fund able to provide an 8.25% return? My fear is that they could possibly have these toxic intstruments, which paid higher interest.

- As for the pension fund, the New York State constitution protects the pensions of all vested members. However, and realistically, how much comfort is that, when the Federal Reserve Bank itself is overextended? Unfortunately, the predators and parasites at the investment banks - the same people "investing" in charter schools, Teach for America and corporate school reform in general - have for years seen the pension funds as rubes to be fleeced.

What we are seeing is the direct result of thirty + years of income polarization based on the cannibalizing and outsourcing of the nation's real productive capacity; unfortunatley, because of the infinite greed of these sons of bitches, we will all reap the whirlwind.

I hope this "helps."

Best,
Michael Fiorillo (aka "Mr. Sunshine")