UPDATE: In case you figured I was just being dramatic when I accused the democrats of invoking ideology to gain political power on the back of a tragedy bigger than 9/11: here's an article that is also dramatic.
I just got home from an eleven hour day at work, and now I'm listening to Greenspan's testimony today in front of the House Committee on Oversight and Reform.
What the hell is wrong with me?
Anyway, it's really cute to hear Greenspan "discover a flaw" in his free market philosophy. He makes it sound like a spelling mistake.
We "discovered a flaw" in this handgun; rather than shoot a bullet in the direction it is aimed, it triggers a fission reaction. Damn, if only we didn't see this sooner.
The most interesting part to me is the introduction by chairman Henry Waxman and the "response" statement by ranking Republican Tom Davis. It is nothing really out of the ordinary; Democrat praises regulation, Republican blames big government for the problem from the beginning.
But their rhetoric is most interesting. In fact, it reminds me of rhetoric I've heard before. See if you can guess what it is.
D: "In each case, corporate excess and greed enriched company executives at enormous cost to shareholders and our economy." - blaming a isolated class of villians, attributing destructive actions to moral turpitude
R: "No one is minimizing or defending corporate malfeasance, and we share the outrage most Americans feel at the greed that blinded Wall Street to its civic duty to protect Main Street. But this Committee can take a broader view of the patchwork of federal financial regulators built by accretion after each cyclical crisis, and artificially subdivided behind Congress’ jurisdictional walls. No single agency, by action or omission, caused this crisis and no existing agency alone can repair the damage or prevent the next, some believe inevitable, boom and bust. " - pleading to not reduce the discussion to knee-jerk reactions, expressing a realist interpretation over populist ideology
D: "The Federal Reserve had the authority to stop the irresponsible lending practices that fueled the subprime mortgage market. But its long-time Chairman, Alan Greenspan, rejected pleas that he intervene. The SEC had the authority to insist on tighter standards for credit rating agencies. But it did nothing despite urgings from Congress. The Treasury Department could have led the charge for responsible oversight of financial derivatives. Instead, it joined the opposition. The list of regulatory mistakes and misjudgments is long, and the cost to taxpayers and our economy is staggering. The SEC relaxed leverage standards on Wall Street. The Offices of Thrift Supervision and the Comptroller of the Currency preempted state efforts to protect homebuyers from predatory lending. And the Justice Department slashed its efforts to prosecute white collar fraud." - blaming the opposition party's support of the transgressor for the transgression, and painting them as traitors
R: "The words “regulation” and “deregulation” are not absolute goods and evils, nor are they meaningful policy prescriptions." - please, let us think logically rather than morally! We aren't criminals for trusting them!
D: "But this deregulatory philosophy spread across government. It explains why lead got into our children’s toys and why evacuees from Hurricane Katrina were housed in trailers filled with formaldehyde." - not only are our enemies evil, they hate children and black people!
R: "In this political season, the search for villains is understandable and in some respects, healthy. While we’re at it, we might ask ourselves why this Committee didn’t convene these hearings last March, when market turbulence first turned toxic. There’s plenty of blame to go around as we try to unravel the wildly complex tangle of people, private companies, government agencies, and market forces that is choking modern capitalism. We’ve all played a part in this crisis, and we’ve all learned invaluable lessons." - can't you see, we're the reason this happened! You and me, Waxman! Aren't we, Americans, the one's who are really to blame?
D: "But the issues we are examining are of immense importance to our nation. I am proud of the work we are doing and especially the contributions of the members of this Committee." -finish up with a good ol' 'god bless us, everyone!' That unity shit really drags 'em in.
R: "But retribution needs to be tempered by wisdom. [...] We’re learning some expensive lessons, and we should put them to good use." - for god's sake, think with your head and not your asshole!
Get it? Political party uses catastrophe beyond anyone's imagination as a spectacle to attain political ascendency, where they will make a lot of noise, but generally fuck things up for eight years until it's time to do it again.
And before you question my taste in making such a comparison, think: which event will cost the most lives and well-being--the war on terror or the collapse of the world economy (far worse in the third world than here, obviously, in both cases).
And for goodness sake, I'm not republican! I just hate the obvious use of ideology, especially right out of the playbook of those to whom you are supposed to be in opposition! It's just so obvious, it makes me want to puke.
At least the liberals are seizing their moment, and not letting it pass them by. The only thing that the average american hates as much as people of another race is rich people. I guess the environment and peace are kind of wussy causes, whereas, attacking rich bankers is like shooting... well, rich people.
All kidding aside, I would really hate it if this crisis in the economy became the liberals' 9/11. What we are witnessing is perhaps one of the most profound, real-world economics lessons for which one could hope. It is the true-to-life failure of surplus value! The one thing economists always say about Marx--real ecnomists that is, because they have read Marx, even if they disagree with him; just being rich and hating communism doesn't make you an economist, sad to say--real economists say that the theory of surplus value is not in line with the realities of venture capitalism. In other words, the theory of surplus value doesn't explain how you can make money from nothing.
Now, I'm not an economist, (but not because I haven't read Marx) but it seems as if the continuous expansion of debt economics into an endless series of derivatives shows the fallacy of investments based on surplus value. You are abstracting the future; the "promise to pay". Abstracting, and quantifying. However, as we have seen, the promise to pay often does not equal the eventually payment. Surplus (being the benefit of the contractor at the expense of the contractee) that was valued as something is actually nothing, and the large-scale evaporation of supposed "value" makes a venture just a scam. It's like in the cartoons when someone is hanging off the edge of a cliff on a rope, and the person holding the rope hands it to another person who hands it to another person who hands it to no one--everything hangs it mid-air for a second, and then the person and the rope fall down the cliff.
These are the sorts of conversations that we should be having--why is the economy fucked? Because it is an economy of debt--it is an economy where contracts create surplus value (it's called usury) from nothing, and then sell this nothing to someone else. The worker is just another contractee. And if you can't sub-contract what you sold into contract, i.e., if you've got nothing other than your hands and your boot beneath your feet, then you are the real person that suffers.
Neither Waxman nor Davis seem interested in following up that at all. Then again, it doesn't seem that either of them have ever worn workboots in their lives.
[full text of Waxman's introduction here]
[full text of Davis' comments here]
[text of other testimony from the session]
Predictions for 2012
5 years ago