Alpha Plus

SUBHEAD: A Brave New World of Bankster Godfathers.

By John Schettler on 26 January 2009 in The Writing Shop -

Image above: detail of album cover for Iron Maiden's 2000 "Brave New World"
“Consumer” confidence plummeted to the lowest figure ever recorded in January. That is no surprise. The dismal Christmas selling season provided ample warning, but this year the normal psychology of change that the champagne of New Year’s brings did not offer solace, in spite of the uplifting change at the top of our government. The bad news continued unabated. January 26 week brought no less than 71,400 new job cuts on a single day! Profits are down, businesses are closing, foreclosures continue to rise, credit remains frozen. So it is no wonder that people are holding onto what little money they have.

They spend when they have hope that their future will be brighter than the present, and no one can see through the gloom to discern just how bad things will truly become, or when a recovery might be expected. Even with hope in abundance, “normal” spending still requires money. (I use quotations on the word “normal,” for in my mind most typical spending by Americans has long been excessive and unnecessary.) The hard times seem to have finally made the point that you cannot use other people’s money, (credit) to spend 25% more than you earn each year. The crisis in the economy is what happens when all that credit suddenly vanishes due to banking malfeasance, and “consumers” can no longer pay their bills, let alone consume.

When people don’t have money to pay their IED rigged mortgage, is it any surprise that they stop paying and default? And when they do, the housing market crashes. When they stop buying cars, the auto industry crashes. When they stop buying clothes, the retail sector crashes. And on it goes. The unemployment numbers are just starting to get warm. The real heat and fire is yet to come. A husband and wife both lost their jobs this week and both took their lives in a nice little suburb of LA--along with the lives of their five children.

This is pain and despair so deep that it boggles the mind. And the hardest thing about that story was this--where were their friends? Was there no one on this earth who knew them and loved them enough to offer help? That they felt so isolated, and so hopeless in their situation is a sad testimony to the state of our Society, with a capital S. As President Obama wrangled on the Hill for support for his $850 billion stimulus plan, I realize that we cannot wait for the Directors and Controllers of our Brave New World to save us. We have to save ourselves. If we cannot take care of each other on a personal level, and help one another through this, no amount of government bailout money will matter.

How did we get here, staring into the abyss of yet another economic collapse, and one to possibly rival or even eclipse the Great Depression of the 1930s? Is it all the fault of extravagant “consumers,” the millions of Betas and Deltas in the soma ridden shopping malls of our Brave New World? Or perhaps we should blame those further down on Society’s ladder of privilege, the “sub-prime” Gammas and Epsilons who were unable to escape the Alt-ARM reset traps the bankers set for them in their “home loan.”

No. We must look higher up if we are to find the real culprits. The real damage to Society did not occur in the copper gutted neighborhoods of Cleveland and Detroit, but in the glitz and opulence of Wall Street, with John Thain’s $80,000 area rugs and $1400 trash cans the accepted norm. The shiny new corporate jets that the CEOs of GM, Ford, and Chrysler used when they first flew to Washington to beg for money are another clue, along with the $50 million addition to Citigroup’s corporate jet fleet after that bank received over $50 billion in free taxpayer money.

The half million dollar party AIG threw after it received its $90 billion was yet another clue. Or perhaps we should look to the $13 million dollar estate of ex-Lehman Brothers CEO Richard Fuld, quietly sold to his wife for a sum of a hundred dollars to make sure it stays in the family… or to the millions in diamond studded jewelry Bernie Madoff tried to slip into the mailbox to his relatives and friends. No, my friends. If we want to point the finger of justice at anyone, we must look first to the very top, where our Alpha-Plus executives sit in their mansions and multi-million dollar office suites—the men who have brought some of the largest and most powerful institutions in the nation to the brink of bankruptcy through their excessive greed, incompetence, lack of prudence and foresight, and downright corruption. Now they are looting the public purse as well.

Paul Craig Roberts of Counterpunch said it well when he wrote: “The gangsters are using the crisis as an opportunity to steal from taxpayers and to finance their misdeeds and exorbitant salaries with Federal Reserve loans. Their shills among economists and the financial press tell the people that the solution is to fatten up the banks with funds so they will resume lending to an over-indebted public that will then return to the shopping malls.” In effect, they want to start the wheels turning again, greased by taxpayer money this time, so they can return to the same old game.

How did we get here? It’s no great secret. Quite simply, banks were playing a huge shell game with the world’s money supply, and with the trust and confidence of all their investors and customers. It started with a loan, a little nut placed under the first shell of a “home.” Then the hands of bankers and investors became that well practiced blur of distraction and deception as the loan was tranched away into securities and moved from one shell to another, and then off the table of reality altogether, deftly slipped up the banker’s sleeve to the nebulous world of “off balance sheet assets.”

And when the game was finally exposed for what it was—a massive con—all the other traders and investors around the game tables at places like Bear Stearns, Lehman Brothers, Merrill Lynch, Morgan Stanley and Goldman Sachs had a panic attack. All the betting stopped, and the trading of these rotten nut “assets” came to a screeching halt. Confidence in the gamesters plummeted, along with the stock value of financial institutions all across the globe. As one storied investment house after another began to collapse like the floors of the World Trade Center, bankers began to panic as well. They hoarded cash and stopped lending. Credit, the fuel the economy was running on, like cheap oil, underwent a massive contraction. And that was the end for the main street consumer, who had financed big spending almost entirely on credit cards and home equity loans.

Consumer spending fell off a cliff. Auto showrooms across the nation sat empty. Retail sales fell to new lows. Businesses, once flush with the frenzy of one day sales and blowout holiday specials, suddenly saw their margins evaporate and red ink swelled like a blood stain on their books. Inventory backed up on store shelves and could not be moved even at 70% discounts. Cars sat idle in the dockyards of American ports, in tens of thousands. The wheels of the economy finally stopped turning, the very same wheels that Huxley’s World Controller Mustopha Mond said must never stop.

Bush and Cheney sent our young men and women off to war for eight years to guard and secure the fuel we needed to keep those wheels constantly turning. They hunted out “enemies” in the caves of the Hindu-Kush, while all the while the real danger to Society was lurking in the plush high rise office suites of Wall Street. So if anyone is to be blamed, let us begin at the very top of the pyramid, where that all seeing eye surveils the world on the back of the almighty dollar. Let us begin with the very best and brightest men who were entrusted with the leadership of all these failed institutions, the masters of the shell game, the great con artists of our generation.

One writer at the “Debt Slavery Emancipation” blog expressed what many must surely feel about the Wall Street wizards competence: “One could understand how maybe a few mere mortals might have missed the warning signs, but how could the Masters of the Universe not have seen the tsunami of financial sewage that was headed toward this economy? After all, these are the people at the helm of the ship with a bird's eye view of the inner workings of the Ponzi scheme we know as banking. People that rise to these levels in business are more often than not grossly unqualified for their responsibilities - which include protecting the meager wealth of those who actually earn it through legitimate work. Cronyism and access to influence rule the day while good business sense and prudence have found their way onto the endangered species list.”

But for my money, let’s just stick with Aldous Huxley, who showed us how the Brave New World handled its fallen heroes.

“Ladies and gentlemen,” the Director repeated once more, “excuse me for thus interrupting your labors. A painful duty constrains me. The security and stability of Society are in danger! Yes, in danger, ladies and gentlemen. This man who stands before you here, this Alpha-Plus to whom much has been given, and from whom, in consequence, so much must be expected, this colleague of yours—or should I anticipate and say ex-colleague?—has grossly betrayed the trust imposed in him…For this reason I propose to dismiss him, to dismiss him with ignominy from the post he has held in this Center…In Iceland he will have a small opportunity to lead others astray by his unfordly example.” --Aldous Huxley, Brave New World

Here they are, ladies and gentlemen. I give you the Alpha-Plus of our own Brave New World of finance and banking: Ken Lewis of BofA, John Mack of Morgan Stanley, Angelo Mozilo or Countrywide Financial, Alan Schwartz of Bear Stearns, Vikram Pandit of Citigroup, Richard Fuld of Lehman Brothers, former NASDAQ head Bernie Madoff, and let us not forget the esteemed John Thain of Merrill Lynch…and the list goes on and on, from former WaMu CEO Killinger and on through one bank and mortgage lending boiler room after another, through hedge funds and junk bonds and credit defaults swapped from one to another in the greatest heist and squandering of wealth the world has ever seen. (And of course we must also include those at the very top of the Directorate itself, the Grand Maestro, Alan Greenspan, and his apprentice Ben Bernanke.) Oh how they culled and wooed and dissembled about the game tables, until they had not only destroyed the wealth and confidence of all their investors and shareholders, but also stole away the public trust and treasure in the bargain.

The wheels have stopped, ladies and gentlemen, and they must never stop. Society is in danger. Who should we blame, the gammas and sub-prime epsilons these men burdened with loans that could never be repaid, or the Alpha-Plus at the very tip top of the pyramid, where all the rules were made, and then so egregiously bent and broken? And what should we do—send them all to Iceland? The banks, and the government, have failed there as well, stopping the wheels in that far flung outpost of Society and bringing down the local Directorate. Perhaps they can ply their deceptive and foolhardy craft in that isolated place, where the opportunity to lead other astray will be much diminished.

But even as these former titans of finance shuffle off, one after another, wholly discredited, who will replace them? How will the damage they have wrought be repaired? There has been much talk of late about the nationalization of the banks, following a model Sweden used to save itself in a similar crisis. The banks were nationalized, bad assets isolated and disposed of. Then they were recapitalized and sold back into private hands to start over. The UK is facing this very same problem, except the government is cowed by the fact that some of the nation’s largest banks have bad asset problems that dwarf the government current ability to redress them, many times over. The only solution seems to be the printing press, creating the money necessary to clean up the bad debt. Yet the danger in this is an eventual debasing of the currency when all that new money enters the real main street economy.

Have a look at the “liquidity” that has been slowly building up in the bank vaults of America. Want to know where all your taxpayer funded billions are being hoarded? Look no further. The banks are not lending this money because the reality of what they have done has finally dawned on them, and they realize the losses already on their books now, while cleverly hidden, render them technically insolvent. So, like water behind a dam, the bailout cash is rising ever higher. Current financial World Controller Ben Bernanke probably believes the banks will eventually release this tide in an “orderly fashion,” though I would not bet that it will quickly begin to circulate in the form of new loans.

So don’t worry about the value of the dollar just yet, or the specter of hyperinflation.” The most likely scenario is that all this bailout money will be devoured in the black debt hole of the banking system, which is already eating capital faster than it can be printed. Until this condition changes, we will continue in the ever darkening downward spiral of deflation that is now destroying the economy and taking us, most surely, into the maw of the next “Great Depression.”

Hang on to your soma, folks! Have a half-gram holiday and try to forget. Play another round or two of Obstacle Golf or take the family out to the Feelies tonight. Remember the teachings of Our Ford—that “every man, woman, and child is compelled to consume so much a year in the interests of Industry.” Console yourself by simply repeating the simple slogans born of happier times: “Ending is better than mending… the more stiches, the less riches…the more stiches, the less riches…” But through it all remember the words of the Director himself: “Happiness has to be paid for.” 

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