Page 2 of 2 Change? Yes, it can
By Julian Delasantellis
Canny investors are learning to profit from the perverse incentives this
situation provides. A too big to fail institution, if it wanted to, could throw
caution to the winds and load up on high-yielding debt securities and/or
investments, knowing that the government's implied backing has, in effect,
severed human history's previously ironclad association of higher returns with
higher risk. This could give, and in some ways already has given, many
financial stocks volatility profiles more similar to late-90s' dopey dot-com
dream stocks instead of sound and probative banking institutions.
Of course, all this depends on a bank going for all that extra risk, as I put
it, "if it wants to"; then again, when was the last time you remember a bank
leaving scratch on the table?
The Washington Post reports that, much as American banks did
with Europe in the 1950s and Latin America in the 1970s, today they are rushing
to transfer staff and open offices in Washington, DC. This is not being done so
that officials of the Census Bureau don't have to drive so far to cash their
paychecks; it's because the banks want a greater presence among and enhanced
access to the most important government ears, the next time somebody in the
administration to decides to lay another half-trillion-dollar barrage onto the
American economy.
"We are going to be spending more time inside the Beltway, either by helping
the government or, if we are asked, shaping policy and decisions," BlackRock
chief executive and hedge fund superstar Larry Fink said in the Post. "It is
beholden on us on behalf of our clients to have input in Washington."
Oh, Larry, how nice that you want to help. I'm sure that you don't want
anything in return, right?
Many times, up to and including a Monday speech on Wall Street, Barack Obama
has affirmed that he wants government to withdraw from its current crisis
overextension back to a more normal role. In support of this desire, the
Federal Reserve has started to close out some of its extraordinary loan
facilities it opened during the worst of the crisis last year. Still, there is
hesitancy; they don't want to repeat the mistakes of Franklin Delano
Roosevelt's New Dealers in acquiescing to Republican demands to close the
budget deficit in 1937; this is said to have extended the Great Depression
right until the war orders came into the factories after Pearl Harbor.
As a French wag once put it on observing the 69-year reign of the supposedly
temporary Third Republic (1871-1940), "there is nothing more permanent than a
provisional government".
But there is one after-effect of the sorrows of September that few could have
anticipated - the development of an actual grassroots American protest and
resistance movement.
In the seven months since its birth as a casual slip of the tongue from CNBC
commodities reporter Rick Santelli, I have written frequently about the so
called "teabag" anti-Obama resistance in the US. Frequently, I have seen there
displayed blatant racism and bigotry, and heaped helpings of the principal stew
meat of virtually all grassroots movements - rampant anti-intellectualism.
I continue to hold true to all these assessments, but I have come to see here
something more, a curious hidden nougat underneath all that greasy,
Budweiser-marinated fat meat.
From the time of his rise to national prominence after his address to the 2004
Democratic convention, critics have been charging Obama with being a socialist.
If what is being implied with the charge is that Barack and Michelle are
socialist/street rioting revolutionaries like Rosa Luxemburg and Karl
Liebknicht in Berlin after World War I, then the charge is ridiculous; Michelle
Obama is not developing those biceps and triceps in order to throw Molotov
cocktails.
But ever since the end of World War II, and especially in Western and Northern
Europe, a new form of socialism has become established. Sometimes called
democratic socialism, but most accurately called corporatism, this ideology
calls for government to be a sort of meeting mediator at grand conferences with
business and labor; where, under government's urging, business and labor reach
agreement on the major economic and social issues of the day. Then, government
codifies this amity into law.
This working ideology has been particularly popular in Nordic countries like
Sweden and Norway; most of the rest of Western Europe, with the possible
exception of Britain with Thatcherism and Tony Blair's Third Way, has also
experienced it at one time in one way or another.
But in the United States, corporatism has always been a much tougher, to near
impossible, sell. The country's stress on providing limitless individual
opportunity and indulgence of free expression is a disconsonant jangle compared
with corporatism's demands to submit to the group's, whether it be labor's or
businesses', harmoniously blended collective identity. For America, freedom is
not just something people want or expect from government; they want freedom
from co-workers, other business interests, unsatisfactory religious and/or
social arrangements - frequently, from their very spouses and children
themselves.
In delving deep into corporate matters with his emergency recovery plan, Obama
has been forced to adopt a semi-corporatist model of governance, and his
falling poll numbers can largely be blamed on this factor.
Right now in the US, the corporatists are in charge and the anti-corporatists
are but a vocal minority, but what if that changes? If the current tentative
economic recovery sputters out, the anti-corporatists will take the White House
in 2012; there's a very good chance they'll go a long way towards taking back
Capitol Hill next year.
What if there is an anti-corporatist (President Pawlenty? President Palin?) in
the White House in three-and-a-half years? What happens then, at the new
president's first meeting with European leaders? To judge by their rhetoric,
many teabaggers view the corporatist/socialists of Europe with the same dread
and fear that Ronald Reagan did with the Soviet "evil empire" upon his
inauguration in 1981. Will some measure of detente be able to be established
between these ideological opposites, or will the book on the American century
then be finally closed through the development of a trans-Eurasian alliance,
consisting of Europe, Russia and China, uniting to deal with a hostile upstart
with a philosophical outlook the rest of the world seems quite content to live
with?
On September 16 last year, Asia Times Online published my account of the last
weekend of Lehman's life,
"Silences say it all". In it, I said that one of the most interesting,
and certainly quintessentially New York, things to happen that weekend was
that, late on Sunday night, as time ran down low for the venerable Wall Street
institution, crowds of average New Yorkers converged on its Manhattan corporate
headquarters - seeing all the police cars outside, they thought a celebrity was
about to emerge from the inside.
Well, after 7 million jobs have been lost just in America, with the uncountable
attendant misery and suffering, the collapse of world trade, and the dire
possible future consequences I described above, maybe a celebrity was emerging
that night. He goes by many names, Apollyon, Ahasversus, the Serpent, the
Wicked One - my favorite is the name of this celebrity from Stephen King's post
biowar holocaust novel The Stand - the walking dude.
Julian Delasantellis is a management consultant, private investor and
educator in international business in the US state of Washington. He can be
reached at juliandelasantellis@yahoo.com.
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