What Really Is At Stake

Sometimes dark thoughts intrude into mind when I hear the talking financial heads yak on CNN, CNBC, Fox Business News, etc. It is hard to take these pundits seriously when one remembers that in the months prior to the meltdown of the banks, Wall Street and the Dow Jones in September 2008, these same voices, almost to a person, served as cheerleaders for many of the sectors that soon lead the way in hitting the crapper. Can anyone ever forget Ben Stein gushing over the prospects of AIG, or Lehman Brothers? Where is his apology, his explanation? It's as if he never said a thing. It is if none of them ever said a thing.

Nowadays, many of these unchastened voices twitter and chattter in aghast voice and negative terms about the size, cost and details of the President's initial recovery bill. It isn't if there is not any criticism to be leveled at either the size, cost or the details. But when I hear their steady buzz of criticism, what comes to mind are thoughts that they are still shilling for the interests in the financial sector that have long buttered their bread.

Then my thoughts move on to what is the big game these interests are playing? And my mind fixes on the still-to-burst bubble that is out there, the one that will come when the wildly out-of-touch-with-reality paper value of all the world's total pile of junk paper is finally adjusted to what is real. What I am referring to is a shadow market of global securities with a paper value of many trillions of dollars, perhaps up in the 30-40 trillion dollar range. Frank Schiavone of Rancho Cucamonga puts the worldwide value of this house of cards much higher....Egads! This is a market which consists of all sorts of futures, derivatives, spliced and diced mortgages and credit cards turned into securities, and other inventions of marketeers with Gordon Gecko's imagination and absolutely no prudence.

Now my thoughts grow darker. Many of us who opposed John McCain last Fall suspected that if elected, he intended to bail out the banks holding crashing mortgages dollar for dollar. What else do corporatist Republicans do but strive endlessly to make money flow upward? Now, what if the relatively few very wealthy interests who hold much of the world's junk securities expect to be bailed out, for the full paper worth of the paper they hold or something very close to that? It would take trillions of dollars of government money the world over to do this for them. Trillions that cannot and must not be spent on other things, like giving you, me and the man down the street tax cuts or government jobs.

It may be that all the yak-yak about Obama's spending spree is part of a pre-emptive effort to keep a huge pile of our tax dollars free and available for bailing out this modern economic royalty? Those who dutifully serve others than the immediate interests of average Joes, would be very attuned to what this royalty wishes. They don't even have to be told, they know in their bones.

It bears remembering that we know that all during the Bush years, the networks hired former generals and defense spokespersons to serve as on-air media consultants. As it turned out, many were still working secretively with the Rumsfeld DOD to spin the reporting of the Iraq War and other defense matters to the liking of the War advocates. When I see these talking-heads on the financial shows, I see similar flaks, this time shilling for the business they supposedly are reporting on. It is no surprise that business reporters and pundits would claim to be the voice of the people, but actually serve vested power. The same has been long observed by Left media critics like Glenn Greenwald of Salon.com.

From Glenn Greenwald’s Salon column of February 14. 2009, speaking specifically of the NY Times' David Brooks:

The most significant fact of American political life is that political journalists (of all people) see their role primarily as defenders of, servants to, spokespeople for the Washington establishment. That's how they obtain all of their rewards and remain relevant. The concept of journalists as watchdogs over political power has been turned completely on its head by power-revering servants like David Brooks, who is anything but atypical (indeed, there's a whole new generation of Beltway journalists who have learned and are eagerly replicating this model). Brooks is about as typical and illustrative as it gets. They benefit substantially from the prevailing rules of political power and, thus, their only concern is to preserve and strengthen it and protect it from the growing dissatisfaction and anger of the peasant class. The more they do that, the more they are rewarded.

The game, as it has been played in Washington, on Wall Street and in world financial capitals since Reagan opened up the gates to unregulated speculation, the commodification of what Thom Hartmann calls the "commons" and corporate consolidation on a global scale, has pulled in much of the media. When we see a steady, unveering message that is uniformly negative towards what President Obama is trying to do, we are seeing versions of the RCA dog, hearing and heeding its master's voice.

Further proof will soon be seen when the White House unveils its legislative efforts to wring the bad paper out of the American investment marketplace. If it offers to only back up that fraction of the paper value of all the securitized junk out there that corresponds somewhat closely to the real value, we'll know whose voice these pundits hear when they react. I'm betting on a global scream of indignation and worse.

It would be grimly satisfying to just let this hidden market crash and burn, if only to see several classes of cretins get their deserved comeupance, but it is in our best, long-term interest that our government and what is left of that segment of the financial sector that is still rooted in social responsibility work to bring accountability, regulation, stabililty and reality to this hidden market. To let it crash and burn is to cut our throats. Frankly, there is a place in a vibrant, creative capitalist market system for the kind of risk taking that created these speculative instruments. But as I see it, it should always be a case of taking three steps onto the ice and no farther, that way if the ice should crack, solid ground is not too far away. What has happened in the last few crazed decades is a mass stepping onto the ice far beyond any solid ground. The ice will soon break and we cannot let trillions of real value just plunge into the dark cold water. It may well turn out that many large pension funds, like CALPERS and CALSTRS have monies invested in this shadow economy, and to let it go under would punish many good folk. We cannot let many thousands of retirees pay a brutal price for the foolish choices of their pension managers.