New York – 2parse

[digg-reddit-me]Reading the news stories about my Congressman Pete King’s “rant” pissing all over Michael Jackson’s dead body – saying “there’s nothing good about this guy” and calling him a “lowlife,” a “pervert”, a “pedophile,” a “child molestor” – I expected to be incensed when I saw the video. It’s not that I believe Jackson wasn’t any of these things – it’s just that in the absence of any convictions and with the accusations in the second trial at least looking rather calculated – I’m still reserving judgment. I wouldn’t go around denouncing a dead man for being a child molestor based entirely on the media’s portrayal of him.

But rather than being incensed at a ranting Congressman, what I saw instead was a rather sober, if cliched, Rep. Pete King – just down the block from my house in Wantagh – trying to cut through the bullshit and express something he felt without a politically correct censor. He does well to remind us that our country has many unsung heroes – police officers, firemen, people who volunteer in cancer wards, teachers who work in the inner city. It’s always a good time to remind people of that point. King’s “rant” reminded me of the way I had admired him for his defense of Bill Clinton through the impeachment trial:

In that same spirit that led King to take on Michael Jackson (but without relying on smears and accusations and instead relying on the Congressman’s own documented words), let me say this to my congressman, mincing no words:

Whatever your other redeeming qualities, you are a bigot – and a disgrace to the House of Representatives.

You have repeatedly demonstrated that you equate Islam with terrorism in public remarks – notwithstanding your attempts to save face by saying you are not talking about all Muslims.

When asked about protecting civil liberties, you responded that “there are too many mosques in this country.”

When asked by Sean Hannity about previous statement you had made that 85 percent of mosques in America are “ruled by the extremists,” you said that many American Muslims are in reality “an enemy living amongst us.”

You denounced a mosque for running subway ads as “especially shameful because the ads will be running during the seventh anniversary of September 11, and because the subways are considered a primary target of terrorists” – equating, once again, the religion of Islam with terrorism.

You recently claimed that the FBI was investigating a number of Long Island mosques – which if true, was classified and endangered active operations; and if not true, is a lie for your propagandistic purposes.

I first realized you were a bigot when I read your novel Vale of Tears back in 2004 expecting a standard thriller – but what I got instead was page after page of anti-Muslim invective, approvingly noted by the narrator – an Irish American Congressman from Long Island who bore a striking resemblance to you.

And all of this bigotry is justified by your reaction to September 11 – which transformed you from a sensible moderate to a bigot and a fetishist for executive power. Since then, you have had little time for such niceties as the rights of citizens and American values – as you focus on this fight against “the enemy living amongst us,” thereby targeting the rights of us all. When asked about balancing American values with government power over citizens, you advocated the government using any means necessary – ignoring civil liberties and constitutional protections – as “if there is any doubt, [you] want this resolved by going out and getting the job done.” “If there is any doubt” you want to err on the side of constricting the liberty of citizens! This is not consistent with your oath to uphold the Constitution. Given this, it’s not that surprising that you think Guantanamo – a place where hundreds have been tortured according to America’s own records – goes too easy on them – that it’s like “Club Med.”

You are not the type of congressman we need. Your bigotry is embarrassing. Your disregard for American values is abhorrent in a public servant, sworn to uphold the Constitution. Whether you decide to challenge Kristen Gillibrand for New York’s Senate seat or remain in your House seat, I will do my best to make sure you no longer represent me.

That’s from me, Joe Campbell, addressing you in the no-bullshit style you so value. Go ahead – rant about that.

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George Will may seek to defend greed (Or maybe not – it’s actually kind of hard to tell.) – along with Ayn Rand and other market fundamentalists.

But just about everyone else lists it as a fundamental cause of the financial crisis. Will tries to make the case that free markets punish greed. But what Will presumes is that an unregulated market is a free market – and on this fundamental point he is wrong. The market Will describes is not one heavily regulated by the government – but it is regulated by ebay which in this instance takes on the role of the government for this small market. The financial markets on Wall Street though were largely unregulated – especially the shadow banking system (which was created in such a way as to be unregulated) – and they were in this sense free from government interference. But they were controlled by a small number of individuals – and in this sense were part of a world where freedom was available only to a princely few. Will makes the point that greed is an immutable human characteristic – and thus does not account for the booms and busts of our business cycle (and of financial crises such as this.) But what does is the combination of perverse incentives for short-term profit (indeed a form of legal fraud), a relaxation of the regulations designed to keep the markets stable that tends to occur when Republicans have power, and greed.

There has always been an historical wariness in America about the combination of greed and concentrations of wealth – focusing on a national bank, on various financiers, on “the malefactors of great wealth” and indeed, on Wall Street. The people, in their wisdom, could see that this concentration of financial power undermined the democratic distribution of political power. But by the 1980s, there was an additional reason to be wary – as Ronald Reagan unleashed a money revolution. This money revolution – like all revolutions – was the commingling of many forces – globalization, the ad-hoc Bretton Woods II agreement, and the relaxation of regulations and reduction of taxes. This revolution helped to concentrate an increasing percentage of the world’s wealth in the hands of a small number of Wall Street (and also London) bankers. The function of these bankers – their expertise – was to balance risk and profit to their customers’ satisfaction – to maximize profit for themselves and their customers while minimizing (or controlling for) risks. As a small percentage of individuals accumulated more and more wealth around the world, these individuals entrusted more and more of this wealth to Wall Street bankers – and the more money the bankers controlled, the bigger their cut. As Michael Osinski explained in a piece for New York magazine:

When you’re close to the money, you get the first cut. Oyster farmers eat lots of oysters, don’t they?

This closeness to the money created an easy money culture – in which enormous sums money were distributed whether they was deserved or not and the culture began to prize attempts to satisfy the bottomless desire that is greed. Wall Street bankers took on the culture of gamblers – except with the market going up, everyone made money. The long boom began to create perverse incentives – as risks began to seem safer, as luck and a rising tide and short term profits made everyone seem like geniuses, they all became accustomed to a certain lifestyle. Financial innovations sought to overturn many of “the fundamental rules of banking” including “that default risk is an inevitable liability of the business.” The combination of innovation and the culture of greed and gambling led to greater and greater risks being taken.

As steady foundations of banking – both as a business and as a culture deteriorated – and as the cautionary tales of Oliver Stone’s Wall Street and Liar’s Poker morphed into guides – a new culture of excess developed – excessive greed, excessive pay, excessive drinking, excessive spending, excessive personal risks, and eventually excessive professional risks. Wall Street bankers began to betray all the symptoms of the easy money culture – like gamblers whose knew their earnings were ephemeral and that every up would be followed by a down to be followed by an up – as long as they could stay at the table. But as Matt Taibbi wrote, “this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires…”

Osinski tells a story of how this easy money culture affected the individuals:

Now that I was spending more time on the floor, I wondered why the men’s room always stank. Then one afternoon at three, when I was in there taking a leak, I discovered the hideous truth. Traders had a contest. Coming in at eight, they never left their desks all day, eating and drinking while working. Then, at three o’clock, they marched into the men’s room and stood at the wall opposite the urinals. Dropping their pants, they bet $100 on who could train his stream the longest on the urinals across the lavatory. As their hydraulic pressure waned, the three traders waddled, pants at their ankles, across the floor, desperately trying to keep their pee on target. This is what $2 million of bonus can do to grown men.

This easy money culture warped the incentives at Wall Street firms as well – as they were structured in such a way as to generously reward short-term success (without controlling sufficiently for long-term failure.) Rather than being paid large salaries, most of a banker’s income was handed out in enormous bonuses based on yearly performance. As long as fees were generated, as long as this quarter’s profits were growing – bankers would be rewarded with enough profits to last a lifetime. This alone is enough of an incentive to cause massive fraud. But at the same time, the culture of Wall Street ensured that money would be spent ridiculously, ostentatiously, and quickly.

Perhaps no one has been more articulate in his visceral disgust for the excesses of Wall Street than Matt Taibbi of Rolling Stone.

[I]t’s time to admit it: We’re fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we’re still in denial – we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream.

The story of AIG – in its way – symbolizes better than anything else what this culture did to Wall Street. Back to Taibbi:

AIG is what happens when short, bald managers of otherwise boring financial bureaucracies start seeing Brad Pitt in the mirror. This is a company that built a giant fortune across more than a century by betting on safety-conscious policyholders – people who wear seat belts and build houses on high ground – and then blew it all in a year or two by turning their entire balance sheet over to a guy who acted like making huge bets with other people’s money would make his dick bigger.

A culture of greed and excess – a lack of respect for tradition – a market free only to a princely few – negligence bordering on fraud with regards to the evaluation or risk – and an increasing percentage of the world’s wealth concentrated in the hands of a few. Together, these were the recipe for this financial disaster.

The problem with greed is that it is unsustainable. It exists in a cycle, like all unsustainable desires. Government regulation, like morality, seeks to control and channel greed in less destructive ways – to mitigate the effects of this cycle. The true cause of this financial crisis was not greed – but the ideology that held that finally the immutable human vice of greed had been overcome with clever financial innovation and the magic of the market.