A Renewed Discourse on Inequality: Part II

It’s time to embark on a new discussion on the “redistribution of wealth.” It begins with the reclamation of this battered phrase in a way that tunes our collective ear to the sound of justice.

marx-eng6Distributing Wealth
Picking up on Part 1 of A Renewed Discourse on Inequalityan attempt to examine Jean-Jacques Rousseau’s original publication in 1755 through a modern lens—it is logical to extend our view to the theories offered by Karl Marx, another controversial Enlightenment theorist. (There are those who would take issue with this characterization.) At the outset, however, one should distinguish between equality as a measurement of how a society rewards individual behavior and accomplishment from the concept of egalitarianism. An egalitarian society is entirely too utopian (or dystopian depending upon the measurement) of a concept because it fails to recognize inherent differences in human beings. To strive toward an egalitarian society is to presume that every person enjoys a similar level of wants and needs.

Unfortunately, our concept of equality is too often reduced to “redistribution of wealth,” a familiar refrain uttered by talking heads in the media. This is a poisoned narrative lazily ascribed to Marx whose philosophy is an anathema in western circles. Mind you, this impression is not entirely without support. The ideological expressions of Marxist economic theory have failed in practice due in large part to the corrupt legacy of the twentieth century communist states. But there are aspects of Marxism still relevant today with respect to inequality, particularly as they relate to war and capitalism.

Marx viewed both nation states and capitalism as destructive forces that require the suppression of labor and forcible acquisition of land and natural resources. Marx tended to steer away from discussions of morality and justice, preferring a clinical analysis of the clash between market forces under capitalism and the natural tendencies of human behavior. Nevertheless, Marx is viewed as the anti-hero to capitalism and is therefore considered an affront to those who cannot discern the difference between capitalism and democracy. (Another subject entirely.)

That’s not to say Marx had no natural predispositions – he made his feelings more evident to his close associates and in moments of unscripted candor. But Marx should be viewed first and foremost a social scientist who sought to prove that capitalism, by design, would inevitably advance communism once capitalism reached the maximum exploitive potential of both labor and natural resources.

Marx was correct in predicting that unfettered capitalism advances inequality and suppresses the working classes. However, he was wrong that communism was the logical evolution of capitalism. To this, it was Mao Tse-Tung who offered a more insightful prognostication on the decay of capitalism saying, “humanity left to its own does not necessarily re-establish capitalism, but it does re-establish inequality.”

Regarding the aggression of capitalist nation states, Marx speculates that once a capitalist nation had reached the inevitable limits of human and environmental capacity it would be forced to seek these means of production elsewhere, and attain them by force when necessary. This is the part of Marxist theory that has been born out conclusively by the United States. To this end, Marx believed that ending war was possible if workers of the world were united beyond the artificial boundaries and political constructs of nationhood. In theory, workers who controlled the means of production would naturally supersede the economic interests of the bourgeoisie and imperial proclivities of governments.

Marxist theory holds that the animus of nations does not exist in the fraternity of the working class and that any act of aggression would be considered a form of cannibalism and therefore antagonistic to our humanity. Likewise, our humanity is only tenable when the working class is closely linked with production.

When one considers the age during which Marx was most prolific, his logic is more enticing than it is today. Science and reason had shattered the intellectual prism that confined mankind during the middle ages. Empires had crumbled and the church was losing its grip on politics. And while technology had advanced enough for Marx to envisage the terrible consequences of an industrial society, the industrial revolution was in its nascent stages.

What was evident to Marx were the conditions created by capitalism. For the destitute and working classes, the boom and bust cycles of the western economies were apocalyptic. Even those who briefly climbed into the middle class would be frequently thrust back into penury due to the need of the bourgeoisie to maintain wealth during the bust cycles. Ultimately, Marx’s theories would be perverted by communism and the boom and bust cycles under capitalism would eventually be mitigated. Typically, however, these cycles were tamed by policies more associated with socialism than capitalism, particularly in the United States, during the first half of the twentieth century. This nuance has been lost to time as the conservative American movement today seeks to destroy the last vestiges of the temperate regulations instituted with fairly strict accordance to capitalist theory. Which is to say, capitalism is not mutually exclusive of regulation.

Lastly, Marx couldn’t have foreseen the rise of nationalism at the turn of the twentieth century, which would render the concept of a unified global proletariat virtually impossible. Militant Jingoism and xenophobia, manufactured tools of the ruling class, would supplant the possibility of universal solidarity among workers. Continuity can be found, however, in Marx’s theory of alienation.

The underlying precept of Marx’s theory suggests that mechanization and industry would alienate the worker from the process and therefore strip any meaning from his work. As a consequence, labor would become despondent and therefore further detached from its own humanity. The capitalist, forced to pursue greater profits, would continue to degrade working conditions through increased mechanization thereby contributing to the downward spiral of human existence.

Examining this subtext adds layers to the phrase “redistribution of wealth,” a phrase that has been purposely bastardized and cheapened by conservative propaganda.

It’s time to embark on a new discussion that takes into account the shortcomings of Marxist theory but includes the best part of its intent. It begins with the reclamation of this battered phrase in a way that tunes our collective ear to the sound of justice. An economic system that functions properly while preserving our morality does not rely on redistributing wealth; rather, it relies on creating equitable access to wealth. An economic system based upon increasing alienation is doomed to failure, particularly when the political system supports such a divide. A system that rewards work and industriousness with participation in both the political and economic process is sustainable.

When food is used for fuel while children are “food insecure” is not simply immoral, it’s bad economic planning. When rampant speculation causes spikes in the price of food and fuel, it punishes the lower economic classes disproportionately. “There is a crime here that goes beyond denunciating,” writes Steinbeck at the end of his Depression era novel, The Grapes of Wrath. “There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. The fertile earth, the straight tree rows, the sturdy trunks and the ripe fruit. And children dying of pellagra must die because a profit cannot be taken from an orange. And coroners must fill in the certificates­—died of malnutrition—because the food must rot, must be forced to rot.”

 

Jed Morey is the author of The Great American Disconnect: Seven Fundamental Threats to our Democracy
Image: Portrait of Marx and Engels. Source: Marxists.org

A Renewed Discourse on Inequality

Apathy is a direct corollary of inequality. Most of us are too busy and under too much financial pressure to remove ourselves from the cycle of madness. It’s the capitalist way

corporatocracy

Vive la Corporation!
Suddenly, it is in vogue to discuss economic inequality. The idea of inequality and how it is interpreted today is relatively new in human history and has its roots in the Enlightenment period. By the same token the discourse surrounding it is old enough to have evolved greatly since this period to where it has finally entered the public consciousness via the mainstream broadcast media today. As usual, now that the quicksand is up to our chins, we have decided it’s time to start looking for help.

In many ways, having a rational conversation about economic inequality is like trying to have a rational discussion about climate change. Both have reached a consensus within their respective scientific communities that these issues are influenced by human behavior. Problematically, both are also highly charged and emotional matters being debated in high definition by a shallow pool of uniformed talent that panders to the lowest common intellectual denominator among us.

Many of the themes examined by Enlightenment philosophers, scientists and scholars remain highly relevant and are worth revisiting. These figures attempted to define the role of man in civil society, which was revolutionary thinking as civilizations emerged from the Middle Ages and the Renaissance. From the mid-17th to the mid-19th centuries, philosophers such as Descartes, Locke and Rousseau, scientists from Newton to Darwin, and writers such as Dostoevsky, Dickens and Melville created enduring masterpieces that challenge our concepts of liberty, democracy and the rights of man to this day.

Yet while understanding the foundations of inequality is instructive when examining it through a modern lens, there is a disruptive shift that has occurred that cannot be overlooked. The idea that corporations enjoy the very liberties we associate with humans is a dangerous departure from the theories suggested by the intellectual luminaries highlighted above.

Before we move further on, it is important to acknowledge that inequality is multifaceted and takes on several meanings depending upon the context in which it is raised. Gender and race, for example, are significant topics that move the discussion in meaningful directions but often correlate to the level of agitation. As economic inequality can serve as both the underlying cause and product of these factors, it therefore provides a more complete template for analysis. Without the polemic that surrounded the nature of liberty and man’s place in society, we would have little concept of equality and therefore no ability to debate tributaries such as sexual orientation, gender and race.

Another reason it is important to become familiar with the arguments proffered by the great Enlightenment thinkers is that their words informed the founders and subsequent leaders of this nation. For many, America represented the living enlightened experiment across the sea. This great ideological laboratory, theoretically free from old world constraints was a curiosity to Enlightenment theorists and a danger to established secular and theological rulers.

At times, the distance between this period and present day is incredibly short. To wit, the celebrated, and at times rancorous debate between Edmund Burke and Thomas Paine still plays out today, though diminished in both eloquence and erudition. Yet no matter how diminished our discourse has become and how far we have traveled from the egalitarian notions that inspired our founding,America as the “Enlightened state” is a portrayal we hold dear to as a people.

To be useful in today’s circumstances, any renewed discourse must begin by focusing on the nature and definition of equality in moral and economic terms before attempting to prescribe solutions to inequality. Until we evaluate our national sentiment toward inequality and determine what exactly we are striving for as a society, any practical solutions will be lost in the toxic ether of our rhetoric. Gross inequality is no longer a theoretical exercise, nor is it exclusive to underdeveloped or developing nations. It is a global phenomenon and one that is best illustrated by conditions in the wealthiest nation on Earth.

In purely economic terms, inequality is both America’s greatest challenge and number one export.

In an effort to focus the conversation on economic inequality in advance of the World Economic Forum in Davos, Switzerland, Oxfam International released a new report on the widening economic gap in the world. Its findings are hardly startling, but they are staggering. The report, compiled from numerous sources, concludes the following:
• Almost half of the world’s wealth is now owned by just one percent of the population.
• The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.
• The bottom half of the world’s population owns the same as the richest 85 people in the world.
• Seven out of 10 people live in countries where economic inequality has increased in the last 30 years.
• The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.
• In the United States, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.

These findings seem more like verdicts; judgments handed down on capitalist society from the high court of natural law. How we act to reform these conclusions relies on our willingness to objectively interpret them and decide whether these are acceptable characteristics of modern society.

The Original Discourse
The title of this piece and much of the sentiment found within is drawn from the Swiss philosopher Jean-Jacques Rousseau’s work A Discourse On Inequality, published in 1755. In it he attempts to establish the nature of inequality by distinguishing between the perceived rights of “savage” man and civil society. The savage man, he claims, lives predominantly in a state of nature that values present existence and subsistence above all things. The civilized man lives within a system of laws designed to protect artificial geographic boundaries and places an economic value on property beyond what it provides for subsistence.

“Savage man,” he states, “will not bend his neck to the yoke which civilized man wears without a murmur; he prefers the most turbulent freedom to the most tranquil subjection.” At its best and most functional, Rousseau believed civilized society exists to organize principles and laws around the natural rights of man within the context of modern civilization.

According to Rousseau, the nexus between a natural existence and the need for civil society is founded in the concept of property. He begins the second half of A Discourse describing the evolution of human existence from savage and free to civil and enslaved with the following: “The first man who, having enclosed a piece of land, thought of saying ‘This is mine’ and found people simple enough to believe him was the true founder of civil society.”

Yet Rousseau sees civil society—when laws are meted out evenly and economic protections are in place—in more sanguine terms than other philosophers of the Enlightenment period such as Thomas Paine or later Karl Marx. In fact, A Discourse On Inequality, was intended as a defense of his hometown of Geneva, which he regarded at the time as the best example of progressive civil society and governance in terms of protecting man’s civil liberties. (Rousseau would feel differently after the same government he extols in A Discourse would later ban his work and accuse him of sedition. In this, Rousseau’s experience can be viewed as a cautionary tale regarding the vagaries of political corruption, but one that doesn’t diminish the intellectual scope of his earlier work.)

“Inequality,” Rousseau believed, “derives its force and its growth from the development of our faculties and the progress of the human mind, and finally becomes fixed and legitimate through the institution of property and laws.”

In linking “progress of the human mind” to inequality, Rousseau tacitly acknowledges the inevitability of inequality while arguing the need to protect some semblance of natural rights, lest our humanity be consumed by man’s insidious greed. “A devouring ambition, the burning passion to enlarge one’s relative fortune, not so much from real need as to put oneself ahead of others, inspires in all men a dark propensity to injure one another, a secret jealousy which is all the more dangerous in that it often assumes the mask of benevolence in order to do its deeds in greater safety: in a word, there is competition and rivalry on the one hand, conflicts of interest on the other, and always the hidden desire to gain an advantage at the expense of other people. All these evils are the main effects of property and the inseparable consequences of nascent inequality.”

Rousseau’s pessimism regarding ambition and greed informed his belief that a civil society is one in which our natural impulses are restrained by a just system of laws dispensed in an equitable fashion. This coincides with traditional Aristotelian theory that politics ordains all human sciences and artistic pursuits and therefore, “this end must be the good for man.”

If we are to submit, as Rousseau did, to the idea that civil society exists to contain the human impulse of greed that grows relative to progress, then we must also surrender to the idea that we can never return to a natural, or “savage” state. Put simply, liberty—in its truest sense—can never be achieved within a civil society. The best state it can attain is equity in terms of man’s access to, and representation by, the system.

To this end, we must therefore conclude that a system that restricts access to capital and social mobility regardless of talent—one that places the means of production and extraordinary profit in the hands of a few individuals—can then only be defined as the opposite of civil society. Inequality is a form of social and moral anarchy.

Slaves to Corporate Masters
In the United States, inequality is exacerbated by the extension of our natural and civil rights to corporations, which are organized solely for profit and therefore exist in a state contrary to the good of man. The rise of corporate influence further alienates us from our rights as well as the means of production. Furthermore, we have allowed corporations access to the political process while extending protections to corporations previously reserved for the people. Corporate personhood and the civil and criminal protections it affords, accompanied by the ability to craft legislation and pour unlimited funds into the political process diminishes all civil political theories that revolve around democratic principles.

Some in this country are awakening to the fact that our understanding of capitalism cradled within a democracy bears no resemblance to the world we live in. They have rightfully concluded that America is no longer a democracy, but a corporatocracy. Most of us, however, continue the grand delusion. We prefer to be spoon-fed comfortable ideological anachronisms while debating the symptoms of inequality with little or no relation to the underlying cause.

This is not a criticism; it’s an observation that recognizes that apathy is a direct corollary of inequality. Most of us are too busy and under too much financial pressure to remove ourselves from the cycle of madness. It’s the capitalist way. You snooze, you lose. Thinking is for the weak. Hard work and perseverance is enough. To question our corporate overlords (as Chris Hedges refers to them) is to commit economic suicide and to risk being ostracized from the system. It’s why so many marginalized people come to the defense of the very masters of their subjugation.

Even Rousseau recognized this phenomenon: “The rich man under pressure of necessity conceived in the end the most cunning project that ever entered the human mind: to employ in his favour the very forces of those who attacked him, to make his adversaries his defenders, to inspire them with new maxims and give them new institutions as advantageous to him as natural right was disadvantageous.”

Ultimately, a corporate system ensures that there is no fail-safe for penury beyond what the government provides. And if corporations, which by definition require growth at any expense, subsequently seize complete control of government interests, inequality ceases to become a word. It becomes a foregone conclusion.

NEW FOX, SAME HENHOUSE

Considering who is about to be in charge of administering LIBOR, the Obama Administration and U.S. regulators might want to pay close attention to how the process unfolds.

How Wall Street Cornered the Market
by Taking Control of the World’s
Most Important Financial Benchmark

Twitter: @jedmorey

There is a scene in the Godfather II when the Hyman Roth character, played by Lee Strasberg, admonishes Al Pacino’s Michael Corleone over the death of the character credited with building Las Vegas out of a “desert stopover for GIs.”

Roth fixes his steely gaze angrily on Corleone and says, “That kid’s name was Moe Greene and the city he invented was Las Vegas. And there isn’t even a plaque or a signpost or a statue of him in that town.”

The same could be said of Thomas Jasper, the architect of the biggest gambling venture ever invented: the swaps market.

In her book The Futures, Forbes writer Emily Lambert describes how in 1981 Salomon Brothers “pulled an investment banker named Thomas Jasper out of a cloistered office and set him up on Salomon’s trading floor with its loud, swearing, cigar-smoking men.” Jasper’s job was to figure out how to turn a new type of banking agreement called an interest rate “swap” into a contract that could be traded on an exchange much like a commodity. By 1987 Salomon’s new product was ready for market, and as Lambert notes, “by that spring, there were $35 billion worth of bond futures contracts open at the Chicago Board of Trade, and there were $1 trillion worth of outstanding swaps transactions.”

For Wall Street this was like graduating instantly from slots to craps.

Twenty years later, unregulated swaps would be at the heart of the global financial meltdown and the very banks responsible for creating them would be considered “too big to fail.” A lethal mixture of deregulation, manipulation and greed would transform swaps—a type of investment known as a “derivative” in which two parties exchange risk with one another in a negotiated agreement—into opaque mega investments that many traded but few understood.

Today, the global derivatives market is estimated to be somewhere around $1.2 quadrillion—more than 14 times larger than the world economy.

After the crash in 2008, the whole world became acquainted with these investments and some of the toxic assets they were based on. Yet since the crash, and despite the best attempts on the part of regulators to get their arms around the world of derivatives, surprisingly little has changed in the way they are packaged, sold and regulated.

By staying one step ahead of regulators, banks have continued to rake in historic profits. Bart Chilton, a commissioner at the Commodity Futures and Trading Commission (CFTC), is one of the U.S. regulators charged with implementing rules that would curb risky speculative behavior on the part of banks and protect American consumers. He expressed his irritation in an interview with the Press, saying, “The financial sector has made more profits every single quarter since the last quarter of 2008 than any sector of the economy by like a hundred billion dollars. So they crash the economy and still make more than anyone else.”

Chilton points to the aggressive bank lobby against regulators as one major impediment to reform. “They have fuel-injected litigation against regulators,” he laments. “There are ten financial sector lobbyists for every single member of the House and Senate.”

Despite this frustration, Chilton believes in the importance of speculators “in determining what the prices of things are, whether it’s a home mortgage or a gallon of milk.” Instead of squarely blaming the banks, he believes the question “is whether or not government has allowed too much leeway so that the markets have simply become a playground for speculators to roam and romp.”

One of the most important determinants in pricing everything from mortgages to the multi-trillion-dollar derivatives market is the London inter-bank offered rate, better known as LIBOR. Barclays, the British banking giant, thrust LIBOR into the headlines last year when it was discovered that it was among a handful of banks found to be manipulating daily rates for its own benefit. The scandal rocked the banking sector and sent European regulators searching for a replacement to LIBOR or, at the very least, a new third-party administrator.

Charting LIBOR’s new path was left to Martin Wheatley, who was head of the Financial Services Authority in the U.K. when the scandal broke. The recommendations, known as the Wheatley Review, included the formation of a panel charged with finding a new host for LIBOR that would restore confidence to the market and ensure transparency in the rate-setting process.

In a twist even Michael Corleone would appreciate, the panel chose Wall Street.

LIBOR: “A huge, hairy, honking deal.”
Beginning in 2008, rumors began to circulate in the financial world that several of the London banks were involved in influencing the daily posted LIBOR rates. During a 2012 House Financial Services Committee investigation into the matter, Treasury Secretary Timothy Geithner admitted to hearing the rumors while he served as head of the Federal Reserve Bank of New York. In his testimony, Geithner said he attempted to warn U.K. and U.S. regulators but assumed they would “take responsibility for fixing this.”

What the British and American governments knew and when they knew it unfortunately matters little at this juncture, as both have since levied financial penalties on the banks involved that amount to a slap on the wrist. What matters now is how rates are set going forward to ensure some degree of integrity. To understand how the Wheatley Review panel merely chose a new fox to guard the world’s financial henhouse, it’s important to understand how LIBOR is calculated and how much is riding on it.

LIBOR rates are determined on a daily basis. According to an Economist article that details the scandal, “The dollar rate is fixed each day by taking estimates from a panel, currently comprising 18 banks, of what they think they would have to pay to borrow if they needed money. The top four and bottom four estimates are then discarded, and LIBOR is the average of those left.”

Rates were submitted to the British Bankers Association (BBA), a nonprofit third-party administrator responsible for gathering and posting the data. In theory, the arms-length distance of a disinterested third party provided enough oversight and assurances to the market that rates were being determined fairly. Only the rates weren’t based upon actual market rates. Rather, they were estimates supplied by traders from Europe’s largest banks and therefore surprisingly susceptible to manipulation and, as it turns out, collusion.

Traders were caught periodically manipulating these estimates in order to gain a trading advantage in the market and maximize profit on recent transactions. Moreover, because LIBOR is an indication of the perceived health of a financial institution, bankers had an added incentive to suppress rates to artificially illustrate confidence among their colleagues. In short, everyone was in on it. Because of the global credit crunch, few banks were actually lending large sums to other banks since both sides had cheap and easy access to government dollars to provide market liquidity. This reality made LIBOR even less realistic.

Former Barclays president Bob Diamond initially responded to the scandal by admitting that while manipulation occurred, it didn’t happen “on the majority of days.” The Economist said Diamond’s response was “rather like an adulterer saying that he was faithful on most days.” Diamond subsequently resigned and so far three U.K. traders, Tom Hayes, Terry Farr and James Gilmour, were swept up in the LIBOR price-fixing scandal. According to the Financial Times, “Mr. Hayes, Mr. Farr and Mr. Gilmour are the only individuals to face U.K. criminal action to date in a global scandal that has seen three banks pay a combined $2.6bn in fines for attempting to manipulate interbank lending rates.”

Many bankers have distanced themselves from the importance of the scandal by calling it a victimless crime. Bart Chilton had a choice expletive for this attitude, and then added, “If it’s a home loan mortgage, or a small business loan or a credit card bill, if you buy an automobile or if you have a student loan, about everything you purchase on credit is impacted by LIBOR. It’s a huge, hairy, honking deal. If somebody says it’s a victimless crime, I bet you it’s a banker.”

Michael Greenberger, a professor at the University of Maryland, has been an outspoken critic of the way derivatives have been regulated for several years. (The Press first spoke with Greenberger for a 2008 cover story on the price manipulation of crude oil.) He weighed in on the Obama Administration’s reaction to the LIBOR price-fixing scandal saying, “This Justice Department is settling these LIBOR cases for what you and I would consider to be traffic tickets.”

Considering who is about to be in charge of administering LIBOR, the Obama Administration and U.S. regulators might want to pay close attention to how the process unfolds.

The Wheatley Review panel chose NYSE Euronext to step into the BBA’s role as administrator of LIBOR. On the surface, choosing the members of the New York Stock Exchange—one of the oldest and most trusted brand names in global finance—to oversee rate-setting seems like sound concept. Only the NYSE isn’t the clubby, self-governed body of individual members it once was. Today the exchange is a publicly traded, for-profit business whose shareholders include none other than the world’s biggest bank-holding companies.

“They’re moving from a disinterested nonprofit that couldn’t do the job,” exclaims Greenberger, “to an interested for-profit. There’ll be less transparency I bet in the way that rates are set.”

Chilton is equally apprehensive at the idea of the transition: “When there’s a profit motive, I think it’s always suspect. That’s why key benchmark rates like LIBOR in my view should be monitored or overseen by either a government entity, a quasi-government entity or a not-for-profit third party that doesn’t have a vested interest in what the rates should be.”

How LIBOR will be determined in the future is still being hashed out. A spokesperson for NYSE Euronext declined to answer the Press’ questions on the record, instead directing us to their standard press release. Most observers agree, however, that the days of aggregating estimates should be a thing of the past.

“These benchmarks need to be based upon actual trades,” says Chilton, “not a poll of what the money movers believe it should be.”
As far as the bankers’ claims that price-fixing was a victimless crime, there are several municipalities that beg to disagree. The cities of Baltimore and Philadelphia, among others, have filed suit against several banks claiming severe financial injury due to LIBOR manipulation. “That’s the hidden story of Detroit,” says Greenberger. “Detroit got clobbered in the swaps market.”

Greenberger also warns that “pensions are still in this market.” That’s a scary proposition considering the underlying risk and leverage that still exists off bank balance sheets.

Eric Sumberg, the spokesman for the New York State Common Retirement Fund—the nation’s third-largest pension—says State Comptroller Tom DiNapoli is watching the LIBOR transition closely.

“There have been some calls for moving from LIBOR’s banker’s poll to a rate-setting process that is more directly based on a broader universe of transactions and on actual market activity,” Sumberg wrote the Press in response to our inquiries. “Such a change over time could have the potential to improve transparency and integrity in rate-setting, but potential details of any such process have not yet emerged. We will continue to monitor developments in this area.”

Yet even when the proposed rules are made public and the administration of LIBOR has fully transitioned, NYSE Euronext will still only be the titular head of LIBOR. The real force behind the market is neither in London nor New York. Atlanta, home of the Intercontinental Exchange (ICE), is the new financial capital of the world.

ICE in his veins
Many of the toxic assets the public became aware of after the 2008 crash have worked their way through the system and been mostly written off by many of the largest financial institutions. Much of the credit for the industry’s stunning recovery belongs to the U.S. Federal Reserve’s low interest rate policy and aggressive liquidity practices known as quantitative easing. Much like the exuberance that preceded both the tech-bubble crash of 2000 and the mortgage-backed securities crash of 2008, a capital bubble established by the Federal Reserve is artificially propping up the market.

Hedge funds and bank holding companies fueled their own recovery by using deposits, borrowed federal funds and leverage to drive the equity market to historic highs and post speculative profits in the derivatives market. And while the financial sector was scrambling to regain its footing, regulators in Washington, D.C., attempted to keep pace by passing reforms to prevent the next global financial crisis should the Federal Reserve change course and remove liquidity from the system while simultaneously allowing interest rates to gradually climb.

In 2010, Congress passed the Dodd–Frank Wall Street Reform and Consumer Protection Act in an effort to curb speculation and create greater oversight in the financial sector. It was a monumental legislative task that has proven even more difficult to translate into regulatory policy. Regulators at the Securities and Exchange Commission and the Commodity Futures Trading Commission have been working against bank lobbyists and the fact that the markets are global and U.S. regulatory authority only reaches so far.

To complicate matters further, banks have been busy changing the rules of engagement by shifting markets from classic bilateral swaps between parties to futures contracts, which are more standardized agreements traded on exchanges and therefore subject to greater regulatory scrutiny. In theory, exchange-traded derivatives will provide the transparency that regulators seek. In practice, however, this capital shift might simply move risky investments from the frying pan into the fire, as futures exchanges are global, meaning U.S. regulators must rely heavily on the voluntary cooperation of foreign exchanges.

The one person set to benefit from this capital shift is Jeffrey Sprecher, founding chairman of the ICE. Though not a household name outside of investment circles, Sprecher has emerged as the unlikely king of the global trading exchange industry. In little more than a decade, he helped transform the commodities market from a $10 billion market to more than a half a trillion dollars, with the ICE being a huge beneficiary.

The growth of trading on the ICE has been so explosive Sprecher is about to close on a deal to purchase the vaunted NYSE Euronext for $8.2 billion. The deal has already been approved by European regulators and awaits final approval in the U.S. Once completed, Sprecher will not only run the world’s most famous trading exchange; he will also extend his reach into the global derivatives market as the acquisition includes NYSE Liffe, one of the world’s largest derivatives trading desks.

Nathaniel Popper’s front-page story in the business section of The New York Times on Jan. 20, 2013 pulls the veil back on Sprecher, the man, and describes how he grew a little-known Southern exchange into a juggernaut capable of purchasing NYSE. As Popper himself writes, “It sounds preposterous.” Given the inevitable capital shift sparked by U.S. regulators, Popper also notes that “Wall Street firms will have to move trading in many opaque financial products to exchanges, and ICE is in a perfect position to profit.”
Popper’s piece brings forward a story that few people know. Most have no idea that trading exchanges are even for-profit businesses.

And while he does a worthy job demystifying the business of exchanges, he overlooks the planet-sized regulatory loopholes that allowed Sprecher to convert a small energy futures trading exchange into a global exchange that is buying the most famous trading platform on Earth.

To call Sprecher an opportunist would be technically accurate but cheap and intellectually dishonest. He understood the inevitability of electronic trading and the superior potential it held. But there’s a danger in spreading the accepted mythology of Jeff Sprecher and his plucky exchange. Behind his story is the familiar invisible hand of Wall Street.

“The reason Sprecher has been so successful is he’s really representing all the major ‘too big to fail’ banks,” says Greenberger. “And they want him to succeed, and therefore he is succeeding.”

Missing from the brief history of the ICE are the loopholes that gave it life and the ability to flourish beyond imagination. It was the oft-spoken of— but rarely understood—“Enron Loophole” that gave corporations the legal right to trade energy futures on exchanges such as the ICE even if the corporation itself was in the business of energy. The second loophole was a maneuver by the Bush Administration that granted the ICE foreign status as an exchange despite its being based in Atlanta. This initiated a massive shift of trading dollars, and influx of new ones, into the ICE for one reason: This singular move placed the ICE outside the purview of U.S. regulators like Chilton at the Commodities Futures and Trading Commission (CFTC). Essentially, corporations could now trade energy futures electronically through the ICE without oversight or disclosure.

Moreover, the mere fact that the founding investors of the ICE are some of the world’s largest bank-holding companies, Morgan Stanley and Goldman Sachs in particular, speaks to how little transparency there truly is.

This in no way takes away from Sprecher’s genius as a businessman. It simply illustrates how willfully ignorant we are to the business of Wall Street and therefore how frightfully far away we are from properly regulating it. Everything Sprecher has done is legal and ethical, to the extent there is an ethos on Wall Street. Where all of this hits home for the consumer is at places like the gas pump and the supermarket.

Now it’s easier to place the LIBOR issue in its proper context. Almost every “too big to fail” bank has a significant ownership stake in both the ICE and NYSE Euronext, soon to be one entity. This combined entity will also soon control LIBOR, the world’s largest rate-setting mechanism. In trader’s parlance, this would be considered the perfect “corner.”

But wait, there’s more. In the attempt to rein in speculation and manage risk in the marketplace, Dodd-Frank might have unintentionally become the gift that keeps on giving—to Sprecher.

The Future of Futures
The sheer size and complexity of the derivatives market overwhelm even the most interested parties—including Congress, regulators and bankers themselves—leaving average citizens utterly dumbfounded and sidelined. It’s little wonder. Banks that were too big to fail in 2008 are bigger today in 2013. The vast majority of the much-ballyhooed Dodd-Frank regulations have yet to take effect, and bank leverage is back at pre-crash levels.

A former trader who worked in both New York and London recently told me, “At the end of the day, this market is running on the [Federal Reserve]. Once they pull out it’s all over. Cheap money, loads of people making loads of money, but no lessons learned.”
Derivatives themselves aren’t nearly as difficult to understand as the markets they trade in. They are essentially risk transfer agreements between two parties, a way to hedge investments. The word ‘derivative’ refers to the fact that the agreement derives value from other investments: a bet as to how the original investment would perform. It’s helpful to once again employ the casino analogy.

Ten random players approach the roulette table and lay down $100 worth of chips on various numbers. Each individual gambler is making a bet, or an investment, collectively totaling $1,000.

Now imagine that another gambler watching the action on the roulette table calls his or her bookie and places a bet on the outcome of their total wagers when the wheel stops spinning. Having sized up the situation, the gambler predicts that overall this group will win and walk away with $1,100. But in order for this bet to be placed, someone else has to take the action and bet the group will lose $100, leaving them with $900. Before the ball drops on the number, the bookie connects the two outside gamblers and creates a new bet. This bet functions as the derivative investment because even though they’re not actually playing the game, they have a stake in the outcome.

In the real world of investing, the bookie is a trader and the gambler taking the action from the outside is a speculator. Sounds nefarious, but in reality, these transactions are essential to providing market stability.

“If we didn’t have speculators,” says Chilton, the CFTC commissioner, “consumers would pay disproportionate prices.”
There are three classic types of derivatives, all of which Chilton and the CFTC have been trying to rein in well before the crash introduced the world to this type of investment. All three involve counterparties, which trade these investments either directly or through exchanges.

But the differences between the three types of derivatives are diminishing. The first type of derivative is commonly referred to as a “swap.” This is where two parties exchange risk with one another in a negotiated agreement. In the United States, these have traditionally been deals between banks that fall under the purview of the SEC. The other two types of derivatives, futures and cleared derivatives, are negotiated similarly but must be listed and cleared on exchanges.

The CFTC and other regulators have long argued that these investments are similar in nature and should therefore be consistently regulated with complete transparency. With the exception of swaps, the investment created at Salomon Brothers in the 1980s, this was historically the case. But despite the similarity between swaps and other types of cleared derivatives, regulators allowed swaps to be treated as banking instruments that were held “off balance sheet.” Over the next two decades a flurry of deregulation and the growth of global trading reduced the transparency of derivatives trading and increased the size of the market dramatically.

The Dodd-Frank regulations were designed to put an end to this practice by requiring anyone who deals in large amounts of swaps to register as a swaps dealer and clear their trades through an exchange. Yet CNBC’s John Carney believes the new swaps regulations have already created a “flight to futures” from swaps, an unintended consequence of Dodd-Frank that will end up with a “world with less collateral and less capital, less transparency, less investor protection, more concentration of risk, and a huge unanticipated market transformation.”

In other words, the ICE will likely be the greatest beneficiary of Dodd-Frank.

Nevertheless, Chilton believes that there will still be “trillions, tens of trillions if not hundreds of trillions of swaps that will be traded in the U.S. and worldwide that will be regulated and have the light of day cast upon them.”

For his part, Greenberger agrees U.S. regulators are beginning to get a handle on the markets but thinks inordinate risk is still present in the market. He calls the original Dodd-Frank a “Rube Goldberg system” that was “prospective in nature. There’s still trillions of dollars of swaps that are operating in an unregulated environment.”

The world will have to hold its breath until these unregulated swaps run their course and settle in the global marketplace. Intelligent reforms such as margin and capital requirements, position limits and cross-border coordination with respect to regulation are indeed around the corner. These reforms essentially mandate that everyone involved in trading these agreements has enough money to cover potential losses and plays by the same set of rules.

“Ultimately we will have position limits,” Chilton believes. “I would be surprised if they weren’t in place by the end of the year.”
Greenberger also believes the world will begin to recognize universal standards, saying: “The CFTC has made it clear that for futures the foreign exchanges have to comply with U.S. rules.”

Even still, he worries that “this international guidance is a roadmap for banks to avoid Dodd Frank. Just trade in foreign subsidiaries.”
Chilton takes a more sanguine view on immediate concerns such as transparency, working with his European counterparts and the future of LIBOR, but he worries more about the things he cannot see.

“I feel like we’re going to get things done on capital requirements and on cross-border stuff so that other regulators come to where we are,” says Chilton. “But there’s a bunch of new things that are around the corner that we can’t see.”

He cites high-speed trading computers that he calls “cheetah traders” as an example of the unknown. “The cheetah traders, the high-frequency traders, are proliferating. They’re 30 to 50 percent of markets on average but during feeding frenzy time, cheetahs can be up to 70 or 80 percent of the market. There’s not one single word in the Dodd Frank legislation that deals with high-frequency trading. Not one word.”

Once again, pulling the strings behind this unseen phenomenon is Sprecher, the man responsible for making high-frequency trading what it is today.

Thomas Jasper will likely never get that plaque for inventing the investment world’s biggest game of chance. On a positive note, however, he’s alive, well and wealthy, unlike Moe Greene, who infamously took a bullet through the eye. But there are better-than-even odds that a statue of Jeff Sprecher will someday be erected on Wall Street. Or, at the very least, downtown Atlanta.

The Original Occupy

Americans maintain a somewhat outdated vision of Canada as a nation of tree huggers and environmentalists. To wit, unlike every other industrialized nation in the world, Canada has regressed on climate change initiatives.

Ah, the Great White North. America’s attic. Uncle Sam’s hat. The land of self-deprecation, Tim Hortons donuts and ice fishing. Less notably, it is the land of my birth. Although I became a U.S. citizen in the fifth grade, my Canadian roots were always a source of pride, despite precluding me from ever becoming president.

It has always amazed me how little we Americans think of our sister nation to the north. With the occasional exception of the tabloid coverage that accompanies “Bieber Fever,” the media here are devoid of Canadian news. Perhaps it shouldn’t be surprising there hasn’t been a single article devoted to the indigenous Idle No More movement that has taken hold in Canada. As we witnessed during the early days of Occupy, corporate media are indifferent to dissent unless it’s displayed in a faraway nation by throngs of angry Arabic men. (Congrats again on winning Best Picture, Ben.) Recall that it took weeks for any established media to begin covering Occupy in any meaningful way, and when they finally did, they were largely dismissive of it.

Yet the American news media do spend a good deal of time and ink discussing the relationship between the United States and China. Any news of civil unrest in China is worrisome to corporate America because of our obsession with our mutual economic interests. After all, we are the global champions of human rights so long as we’re not stripped of our fundamental economic right to slave labor.

Missing from this equation is the fact that China is America’s second top trading partner. The first is Canada. Yes, the land that calls its one- and two-dollar coins “loonies” and “toonies” is our number one trading partner on the planet. This is why the lack of coverage of the Idle No More movement is rather astounding given that our economic interests are involved. Not only have Canadian Indians disrupted commerce, they are providing the strongest resistance on the Canadian side to the controversial Keystone XL Pipeline project that would run from Canada through several U.S. states.

In December of 2012, four Canadian activists named Jessica Gordon, Sylvia McAdam, Sheelah McLean and Nina Wilson founded Idle No More to protest the Canadian government’s passage of C-45—a massive omnibus bill containing anti-environmental provisions that might surprise many Americans. Since December, native people across Canada have disrupted major events and even gained international attention from a hunger strike waged by Attawapiskat Chief Theresa Spence. Protestors have closed off roads, blockaded bridges, cut off a road to a De Beers diamond mine and generally raised hell by attacking this bill for moving Canada further away from the path of sustainability.

Americans maintain a somewhat outdated vision of Canada as a nation of tree huggers and environmentalists. To wit, unlike every other industrialized nation in the world, Canada has regressed on climate change initiatives. In January, Global Legislative Organisation (GLOBE), an environmental NGO, issued its third report on the legislative initiatives of 33 nations. Of the 33 countries, which include China and the United States, GLOBE gave 32 of them credit for making progress in enacting and adopting beneficial environmental legislation. The only nation to go backwards? Canada.

John Kane, a native activist and writer who hosts a show on Indian affairs on WWKB-AM in Buffalo, says that Idle No More “is about water, land and sovereignty.” Like many who have observed Canadian politics of late, Kane laments that the dominion has been besieged by a warped conservative agenda, characterizing Canadian Prime Minister Stephen Harper as a “cross between Bush and Cheney.” Relations between the tribes and her majesty’s government, strained as they are, worsened as C-45 set off alarms among tribal leaders almost immediately.

“Harper initiated a suite of legislation,” says Kane, “that would lower the threshold to invade native lands and take streams, rivers, minerals, you name it.” Reading between the lines of a “jobs act” in the bill, Kane says that “job creation” is a euphemism for “the opportunity for other countries like China to participate in mineral extraction.”

Idle No More intersected with other activist movements in February when its members joined the massive rally in Washington, D.C., organized by the Sierra Club and 350.org, to call for President Obama to continue the U.S. obstruction of the Keystone XL Pipeline project. An estimated 30,000 to 40,000 protestors descended upon the National Mall. Michael Brune, head of the Sierra Club, was even arrested at the rally, breaking the organization’s longstanding prohibition against civil disobedience. (The rally was also woefully under-reported by corporate media.) President Obama is clearly important in the process and the U.S. has to clear far more regulatory hurdles to move the Keystone project forward. But the pressure to begin construction is coming more from the Canadian government than anywhere else. The Harper administration, with tremendous support from Canadian petro companies, is hell-bent on exploiting the Alberta tar sands, no matter how environmentally catastrophic the process is.

“This is an area the size of Florida,” says Kane. “The bottom line is Canada can make a lot of money by raping Alberta.”

Idle No More goes beyond the Keystone Pipeline. This week I spoke with Yoni Miller, who is the president of Occupy Wall Street—an intentionally ironic title as Occupy continues to be an amorphous, leaderless and volunteer movement. I reached out to him because the Occupy outlets were among the relatively few areas to obtain any information outside of native publications. Regarding C-45 and the potential toll on native territory, Miller said, “We all know it’s more than that—it’s about the ongoing and existing process of colonialization.” He also believes the tribes have better insight to environmental issues because of “their unique relationship to the land.” 

On Jan. 5 of this year Yoni was invited to Akwesasne, the Mohawk territory that straddles the St. Lawrence River between New York and Ontario. For several hours Iroquois members of Idle No More shut down the Seaway International Bridge between the U.S. and Canada—an experience Miller called “humbling.” When I asked him whether he felt Occupy had fueled any of the confidence in Idle No More, he was reluctant to take anything away from what had been accomplished.

“It may not have been possible without the energy from Occupy,” he said, but then quickly added, “but these people were activists before we were even born.  Indigenous resistance has been going on since 1492. It’s what makes this different.”

Both Occupy and Idle are relatively quiet at the moment. But John Kane and Yoni Miller independently expressed the same sentiment that spring is the season of awakening and that both groups will be on the move. Perhaps they will jolt the mainstream media from their hibernation as well, though I doubt it. These particular bears appear to be idle, forever more. 

 

Illustration by Jon Moreno

From Watergate to Occupy Wall Street

The men who brought down one of the most toxic administrations in American history were lamenting the toxic state of today’s political environment. That’s pretty terrible.

This column appears in the March 22nd, 2012 edition of the Long Island Press

“It’s a mess.” This was the sentiment offered by Bob Woodward at a Hofstra University luncheon on Tuesday when asked to describe the current political environment. After his flight was delayed by fog in New York for the better part of the morning, Woodward was late in joining the other half of the famous Woodward and Bernstein duo at the podium in the University Club. The hour prior to his arrival was the Carl Bernstein show as he regaled the packed room of attendees with stories of their travails in journalism during a road show marking the 40th anniversary of the Watergate affair.

The luncheon was part of a series of high-profile political events Hofstra is hosting for the student body, as well as the greater Long Island community, culminating in the second presidential debate to be held there this fall. For his part, Bernstein was also chagrined at the state of politics today and his anecdotes were didactic in this regard. He broke through the haze of mythology that over time has shrouded the Watergate story and boiled it down to the simple premise that no one is above the law and the entire system of democracy must function properly in order for this notion to be upheld. It was the latter sentiment that hung in the air like the fog that had held Woodward at bay on the tarmac for hours.

Time has benefitted both men by allowing them to evaluate Watergate through the backward lens of history. Stepping away from their youthful selves (they were in their late twenties when they broke the story that catapulted them to the top of their newspaper careers), they even reevaluated some of their own beliefs such as the pardoning of Richard Nixon by his VP/successor Gerald Ford, a move that arguably cost him the election to Jimmy Carter. Bernstein recalled telephoning Woodward early that morning in 1974, saying “the son of a bitch pardoned the son of a bitch.” What he once viewed as ignominious Bernstein now considers magnanimous as Ford believed this was the best way to heal the nation from its “long nightmare,” no matter the consequences to his presidency.

Subtle reflections and anecdotes aside, the afternoon offered a glimpse into the thoughts of two devout Washington insiders who have witnessed a sea change in American politics. To be clear, these are not two old curmudgeons touting the “things ain’t what they used to be” line. They deftly fielded questions about new media and the surge of information as well as our ability to process the constant onslaught of news and commentary today. And while they were genuinely hopeful that their efforts four decades ago could be replicated by today’s reporters, they were less sanguine about whether the political climate existed to allow journalism to flourish and find its natural audience.

The men who brought down one of the most toxic administrations in American history were lamenting the toxic state of today’s political environment. That’s pretty terrible.

Bernstein spoke eloquently about the support their reporting received from The Washington Post but was careful to point out that the entire democratic machine had to function properly at every stage of the investigation in order to yield the historic results that it did. From the judicial system that forced President Nixon to hand over his personal tapes to the legislative branch that carried the articles of impeachment against the president, to the protection afforded the journalists in shielding their sources, democracy in all of its glory won the day. But Bernstein argued that it was the people who ultimately played the most critical role in judging the Nixon presidency as even staunch supporters of Nixon and the Republican Party were open enough to review the facts before them and draw their own conclusions.

Ultimately, partisanship among the elected and the electorate was cast aside for the greater good.

Bernstein went on to argue that money has corrupted the political system beyond recognition. He excoriated the Citizen’s United decision by the U.S. Supreme Court, which allows unlimited contributions from corporations and wealthy individuals in campaigns. Furthermore, he believes the glut and immediacy of information has had the unintended consequence of allowing people to reinforce existing beliefs rather than exposing them to new ideas or multiple sides of a story.
The rancor that exists in Washington is a reflection of this phenomenon, and it has created a vicious cycle of partisanship with politicians pandering to the most extreme elements of our society. It’s mob rule. As to how the system could be fixed, no solutions were offered by either man. Perhaps this is because there are none.

The system is broken and I believe it to be irreparable. And that’s okay. Sometimes it’s easier to build anew than to salvage a diseased and crumbling infrastructure. I’m not being pessimistic here, either. To the contrary, I’m fairly optimistic about our chances because I believe the foundation and principles that have guided us to this point are strong enough to endure the collapse and rebirth of a functioning and more equitable system no matter how painful the process may be. This hope derives from the fact that the older generations are the ones who are fixed in their ways and reinforce their existing belief systems no matter how dangerous or antiquated they are. And quite frankly, the answer to this is rather simple math: They have far less time left on the planet than we do.

It’s true that they have hoarded the world’s money and resources and polluted the Earth. It’s also true that they have left those in my generation and younger to foot the bill for their greed and consumption. They have “engineered” our food and contaminated our water and established a culture of pharmaceutical addiction. They’ve started wars around the globe in the pursuit of oil by blaming bogeymen while selling themselves as false prophets.

Now they have a credibility problem because we no longer believe. And as sure as these are the truths they bequeath to us, so too is the truth that they will all soon be dead. Even the good ones like Woodward and Bernstein cannot escape the inevitable. We can take solace, however, that although we must someday lose them, so too will we rid ourselves of people like the Koch Brothers. Death is funny that way; forever indiscriminate.

The youth of today, such as those in the Occupy movement, are wide awake and watching. Six months ago I didn’t believe this to be the case, but it’s real. So to you, Mr. Bernstein, I offer my thanks and some comfort as you and your venerable collaborator enter the winter of your lives. Your wisdom and work have better prepared us for the long, difficult task ahead.

Philosopher King Wenceslas

As the playwright’s allegory is a triumph of farce over fear, so too was Havel’s call to “step out of living within the lie” that was the “post-totalitarian system.” By the end of year, Czecheslovakia’s Velvet Revolution had toppled, without firing a shot, a dictatorship that violently suppressed the ‘Prague Spring’ twenty years before.

Good King Wenceslas first looked out, on the Feast of Stephen,
When the snow lay round about, deep and crisp and even;
Brightly shone the moon that night, tho’ the frost was cruel,
When a poor man came in sight, gath’ring winter fuel…
Therefore, Christian men, be sure, wealth or rank possessing,
Ye who now will bless the poor, shall yourselves find blessing.

Photo: Playwright Vaclav Havel viewing the victorious Velvet Revolution in Wenceslaus Square

The irony gods have been morbidly ironic this year.  On May Day, Osama bin Laden was eliminated even as Pope Paul II was being beatified.  A month later Jack, ‘Dr. Death’, Kevorkian died of natural causes.  This past week a seminal foe of totalitarianism, Vaclav Havel, was dispatched on the very same day as that nuke-toting, tinhorn totalitarian, Kim Jong-il.

Playwright/essayist Havel was part Arthur Miller, Thomas Paine and Nelson Mandela.  Suppressed and imprisoned by the Communists, he went on to become the first president of a free Czechoslovakia.  “Ideology is a specious way of relating to the world,” Havel wrote in The Power of the Powerless that rapidly became the anti-totalitarian treatise embraced by the Solidarity movement in Communist Poland.  “It offers human beings the illusion of an identity, of dignity, and of morality…it enables people to deceive their conscience and conceal their true position and their inglorious modus vivendi, both from the world and from themselves.”

Still very much under the yoke of Communism, “Golden” Prague looked more like deeply tarnished silver when I visited in 1985.  The Czech capital was reputedly anointed Zlata Praha when King Karel (Charles) IV was crowned the Holy Roman Emperor in the 14th century and had the towers of his castle painted gold.  Six centuries later and four decades deep into Communist rule, Prague was dark and dreary, compliments of its coal-fired power.  Much of its venerable, once glorious architecture was shrouded in rusting scaffolding.

I saw no one manning the scaffolding and actually refurbishing these buildings during my time in Prague.  Its unappetizing restaurants were no-service cafeterias where not even an epileptic fit would have aroused the wait staff.  Then there were the omnipresent Communist slogans writ in large block letters on white billboards attached to the scaffolding.  “You pretend to pay us, we’ll pretend to work,” was, doubtless, not among the exhortations.

I was witness to flash-fires of totalitarian state intimidation. A former student of my father’s at Cornell, now a professor, put his Duke Ellington records on loud to mask dinner conversation, pointing to possible mikes in the ceiling.  There was the uniformed interior ministry officer aboard the train to Budapest making a protracted show trial of peering back and forth between me and my passport photo.   But mostly it was the grim, expressionless populace drudging slump-shouldered through the drabness of daily existence.

I was treated to one unintended parody of the system. Performing Puccini’s opera, La Bohème in the capitol of Bohemia must have been deemed appropriate by the authorities, spotlighting, as it does, the anti-materialist credo of Bohemians, forerunners of beatniks and hippies.   This was a socialist production of ‘boy falls for terminally ill girl’ love story where even the most minor character got to saunter front and center and ham it up.  With his eye for the absurd, playwright Havel might well have been in the audience putting the finishing touches on Temptation.

In Havel’s retelling of the Faust legend, a pact is made with dogma rather than the devil.  When Temptation premiered at New York’s Public Theatre in April of ’89, I was in the audience and Havel was locked up in a Czech prison for leading a demonstration.  (As Oscar Wilde’s Dorian Gray sold his soul to the Devil for eternal youth, I’m always on the lookout for Faustian pacts.)  Attempting to contact the devil in the detailed government restrictions that bind him, Temptation’s Dr. Foustka conjures an odious Rumplestiltskin named Fistula who smells like Limburger cheese.

As the playwright’s allegory is a triumph of farce over fear, so too was Havel’s call to “step out of living within the lie” that was the “post-totalitarian system.”  By the end of year, Czecheslovakia’s Velvet Revolution had toppled, without firing a shot, a dictatorship that violently suppressed the ‘Prague Spring’ twenty years before.  Havel was elected his country’s first post-Communist leader.

The following year, 1990, I spent months observing another philosopher attempting to be elected king.  Peru’s Mario Vargas Llosa, the 2010 recipient of the Nobel Prize in Literature, is Havel’s superior as a writer and storyteller.  But Vargas Llosa was haughty where Havel was humble, rigid not resilient like Havel, and he was rejected by the Peruvian electorate.

Philosopher kings are few and far between, successful ones even more so.  While Havel declined to preside over the splitting of his country, he stood for election as president of the Czech Republic and served for two terms as Prague was once again restored to its past glory.  Another Vaclav named Klaus was his conservative rival and presidential successor whom Havel came to dread dealing with owing to his “distaste for confrontation.”  In typical form, Klaus complained that Havel’s invitation to writer Salman Rushdie, who had a ‘fatwa’ hanging over his head, would undermine Czech trade with Arab countries.   More than anyone, Havel would appreciate the irony that many conservative pundits in America misattribute quotes to him that were actually declared by Klaus.

Havel was able to exact some level of retribution by thinly casting his rival as the villain ‘Vlastik’ Klein in his final play, Leaving, the only one he wrote in the twenty-two years following his country’s liberation.  Creativity is born of restraint, it is said, and dies in freedom.

Time to Chuck Schumer

Chuck Schumer is the honey badger of legislators. He devours campaign cash, microphones and anything else to advance his vainglorious cause. Or, as the narrator in the now-infamous badger video says, “Honey badger don’t give a shit, it just takes what it wants.”

As Long Island Press readers may have gathered by now, brevity is not my strength. And, admittedly, my more interminable diatribes have been known to prompt eye rolling, even from those who love me. Therefore I shall be as efficient as possible in conveying this important political message:

It’s time for Sen. Chuck Schumer to move on.

Chuck Schumer is the honey badger of legislators. He devours campaign cash, microphones and anything else to advance his vainglorious cause. Or, as the narrator in the now-infamous badger video says, “Honey badger don’t give a shit, it just takes what it wants.”

Schumer’s patented move of holding a Sunday press conference in order to glom Monday morning headlines has become a long-running joke in Washington, and yet the media continue to cover every one of his self-serving events. Frankly, starting the week by opening up the daily newspaper only to see Chuck’s mug has become tiresome and insulting. Rarely, if ever, do these photo opportunities translate into anything tangible. Don’t get me wrong, there is frequently a bill or resolution spawned from Chuck’s press conference of the week, but most are dead on arrival with a pitiful few ever being referred to committee.

Those that do get there are largely perfunctory resolutions naming things like post offices or commemorating individuals. More importantly, not one of the bills proposed by Chuck since the financial collapse in 2008 had any effect on the financial services industry to which he answers. In fact, since the implosion of the financial sector he has successfully guided only seven pieces of legislation through Congress. Three of them were to re-name buildings and one had to do with the handling and archiving of FDR’s memorabilia. Not one of the three remaining resolutions was tied to the financial industry in any way, shape or form.

Yet Schumer has reaped historic donations from Wall Street firms in large part by providing the most important service to them that he possibly can: nothing. Chuck Schumer has done nothing to stand in the way of the reckless deregulation that brought the economy to its knees; nor has he authored any reasonable solution to fix things. But behind the scenes he is the go-to guy for Wall Street and his campaign coffers are undeniable proof of his effectiveness at stymieing anything that would negatively impact the ill-gotten gains of the financial mafia.

His transition from representative to senator seems to mark the precise moment of Schumer’s Faustian bargain that now has him serving at the pleasure of many Wall Street wizards, all of whom offer their allegiance to the almighty dollar. Through this compact with the devil Schumer has emerged as the ultimate Washington insider and the head of the Democratic Senatorial Campaign Committee from 2005 to ’09, a powerful fundraising arm of the Democratic Party, where he thrived. His tenure oversaw a record number of donations funneled to the committee, most notably from – you guessed it – the financial industry.

The past few months Chuckles has been uncharacteristically quiet given the raucous events taking place down on Wall Street. In fact, the man who has made his career occupying Wall Street himself and benefitting from its largesse has precious little to say to, or about, those in Occupy Wall Street. One has to search diligently for the senator’s reaction to a phenomenon so big Time Magazine just named “the protestor” as its Person of the Year only to discover that while he defends the rights of protestors, they should “make sure they don’t get in the way of every day New Yorkers getting to and from work and going about their daily business.”

Actually, Sen. Honey Badger, that’s the point. If we continue to do nothing—the art of which you have perfected—there won’t be any daily business. This is a crisis, Chuck. One you had a pretty big hand in creating, for the record. How so? By being the world’s greatest accomplice as a member of the U.S. Senate Committee on Banking, Housing and Urban Affairs.

Chuck was there when Congress repealed the 1933 Glass-Steagall Act, thus allowing investment banks and commercial banks to merge. He was there for the creation of the Enron Loophole in the Commodities Futures Modernization Act. And he was there when President George W. Bush allowed the Intercontinental Exchange to trade oil futures, and later swaps and derivatives, as a foreign exchange outside of the purview of U.S. regulators. Lastly, Schumer is widely credited as the guiding force behind the controversial bank bailouts. In each case, what Schumer said publicly was very different from how he acted and voted. Every scenario saw “public Chuck” peering over his spectacles and haranguing officials over minute details when in reality he was helping to turn the screw behind the scenes.

But it’s his utter silence since the banking crisis began and to a greater extent since the Occupy movement took off like a rocket that Schumer’s true colors have shown. Protestors flooded the streets of New York beginning in September, chanting phrases that have spread across the nation. Phrases such as “Banks got bailed out, we got sold out” and “Whose street? Our street!” But who sold us out exactly and who really “owns” the street? Chuck.
In between authoring legislation that never goes anywhere accompanied by a carnival sideshow of Sunday press conferences, Chuck is busy doing what he does best. In the past five years alone he has raised more than $19 million in personal campaign donations, the majority of which came from the following industries: 1) Securities & Investment, 2) Lawyers/Law Firms, 3) Real Estate, 4) Lobbyists, and 5) Miscellaneous Finance. There you have it. Chuck Schumer—man of the people.

There are only 100 of these clowns in the Senate. How did we get Bozo? This is the Empire State. Can’t we do better? Is it too late to try and convince Elizabeth Warren to move here instead?

#OWS: America’s Id

Those of us who believe America has been co-opted by greed and fallen victim to radical nihilism view the agitation of the 99% as the manifestation of our nation’s morality, if such a thing can possibly exist.

The police barricaded the corner of William and Pine streets in lower Manhattan, preventing the tributary of protestors who had broken off from the main throng from doubling back toward Wall Street. Cordoned off, several chose to sit in the street and accept incarceration in the name of civil disobedience.

It’s 9 a.m. on Nov. 17, the International Day of Action for the Occupy Wall Street movement. The arrests are just beginning.

I’m aware of the time because, for a moment, everything is eerily silent but for the sound of the bell from Our Lady of Victory Church tolling above us. The din of the helicopters overhead and the shouts of “Shame!” as protestors are dragged into the nearby NYPD van fade away while the bell rings for what seems like an eternity.

As the last chime echoes in the street, the cacophony returns as though someone is controlling the volume button to the soundtrack of dissent. Gradually, my eyes return to the scene unfolding in front of the church door, which bears a quote from Cardinal Spellman. It reads: “This Holy Shrine is dedicated to Our Lady of Victory in Thanksgiving for Victory won by our valiant dead, our soldier’s blood, our Country’s tears, shed to defend men’s rights and win back men’s hearts to God.”

How strange that a church, born during World War II and forged in blood, should serve as the backdrop for the nation’s symbolic struggle against the excesses of the neighborhood it calls home. America’s new Civil War is spilling onto the streets of cities throughout the country; and here, in this moment, it is raging beneath a monument to our spiritual and temperate selves.

Over the past few years, I have made no secret of my contempt for Wall Street and the insidious corporate interests that run this nation. Admiration for the Occupy Wall Street movement has gushed from my fingertips and poured onto the page, as I am perpetually amazed at the breadth and fervor of the burgeoning revolution. Being here, seeing it evolve and take shape so quickly, so dramatically, has influenced every corner of my mind. Those of us who believe America has been co-opted by greed and fallen victim to radical nihilism view the agitation of the 99% as the manifestation of our nation’s morality, if such a thing can possibly exist.

The question of morality is central to America’s struggle. We perceive ourselves as a good and righteous nation, purveyors of liberty. At times this has been the case. Often, however, our actions belie this view of ourselves, particularly during imperialistic periods of expansion. To wit, we spent the better part of the 19th century expanding our empire to its natural boundaries, squashing and annihilating the indigenous people of the continent every step of the way. Then we deified the likes of Andrew Jackson by imprinting his likeness on our currency, thus bestowing him with the greatest honor of a capitalist society. These are not the actions of a moral nation, but victories such as these in the name of Manifest Destiny have always served to rationalize our pursuit of omnipotence.

The first half of the 20th century held more promise. The country as we know it today was nearly assembled and America was finally recognized as a dominant player on the world stage. Our financial and military ascension gave weight to the Monroe Doctrine and the Roosevelt Corollary, which established complete hegemony in our hemisphere. Yet despite Teddy Roosevelt’s bellicose nature and hawkish views, his and most subsequent administrations tended toward isolationism. Between the great wars, which were seen as moral imperatives, there was work to be done at home. And during this time, America hammered out a legal, industrial and economic infrastructure that fully recognized our potential as a nation.

Internally, this approach also allowed us to focus on social issues such as equal pay and civil rights in the latter half of the century. Unfortunately, while the nation toiled away at crafting a system that recognized the rights of all of its citizens, we began behaving badly in the rest of the world. At precisely the halfway mark of the 20th century we became embroiled in the fighting in Korea. This conflict and the conjuring of bogeymen in far-off lands presaged an era of unprecedented immorality when we would conduct costly battles against phantom enemies. More precisely, it marked the beginning of the Military Industrial Complex.

In his book A People’s History of the United States Howard Zinn describes the dawn of this era as “an old lesson learned by governments: that war solves problems of control. Charles E. Wilson, the president of General Electric Corporation, was so happy about the wartime situation that he suggested a continuing alliance between business and the military for a permanent war economy.” Two million Koreans and 36,000 Americans perished in the formation of our newfound ideology, which continued into Vietnam and, most recently, in Iraq and Afghanistan. America has exported fear and death in the name of democracy but in the actual pursuit of oil and natural resources.

But our politicians did not go it alone. No one person owns these deeds. Over the past few decades the interests of Christian Fundamentalists, Wall Street tycoons, the ruling class and individuals of enormous wealth have gradually coalesced in the quest for a new world order. They are the 1%. They are the reason I’m standing almost nose-to-nose with a cop in riot gear, his club drawn and his eyes fixed on me as I chronicle the events by the church.

There are those who decry Occupy Wall Street as unpatriotic, misguided, or worse. These are understandable reactions to an uncomfortable reality.  The reality is that OWS is more than a movement to restore sanity to the financial markets and equality to our economy. OWS is a cry for help from America’s id. It is the realization that we have strayed not only from the optimistic perception of ourselves but also from what we strive to be as a country.

Ultimately this is a test of our commitment to the First Amendment. But it isn’t simply about free speech or the right to peaceably assemble. This is about the right to “petition the Government for a redress of grievances.” As a free, democratic society this is the penultimate failsafe, the last opportunity before total revolutionary collapse.

So as the Occupiers continue to refine their message, our political leaders would be wise to listen carefully. This is not a dress rehearsal. This is a very real battle; perhaps the first battle since World War II worthy of the inscription at Our Lady of Victory.

Remember the Fifth of November

After everything that went down involving the corrupt practices behind the financial collapse in 2008, I find it amazing that only two people have been found worthy of prosecution thus far. I find it less amazing and more ridiculous that both of them happen to be brown.

Sandwiched between Halloween and Thanksgiving is a new American holiday known as Bank Transfer Day, which takes place this year on Nov. 5. Rejoice.

The movement against Corporatocracy has taken hold and found its footing. And while the media struggle to parse a bumper sticker message from the Occupy Wall Street movement, the occupiers continue to grow in numbers, awakening America’s dormant revolutionary spirit. Bank Transfer Day is one of the first tangible manifestations of the Occupy phenomenon whereby Americans are encouraged to move their money from large public banking institutions to community banks and, more specifically, member-owned credit unions.

Don’t be misled by Chicken Little pundits on Fox News. This is not a run on the banks and it will neither cripple the economy nor coerce Congress into enacting prudent regulatory reform. But it will send a small and important message to the American financial oligarchy that people are paying attention and ready to take action against institutional greed and corruption.

If you are one of the tens of thousands of Americans who are planning on participating in this holiday, there are a few practical rules of engagement to heed. The first is to put away your Guy Fawkes mask when removing your hard-earned money from a bank. While Nov. 5 is indeed Guy Fawkes Day in England and his likeness is symbolic of Anonymous, the group largely credited with the more surreptitious planning behind Occupy Wall Street, wearing a mask into a bank and demanding money— even when it’s your own—is still a pretty terrible idea.

Moreover, it is important to understand the overall health of the institution you’re considering moving your money into. Although it is unlikely most of us will move sums that exceed federal deposit insurance guarantees, risk is a consideration in any financial transaction. Because federal law requires every bank and credit union to maintain minimum capitalization and liquidity standards, a significant growth in deposits in a short period of time without income producing instruments such as home mortgages and auto loans to offset deposits can overwhelm a small institution. In fact, some smaller banks and credit unions may be unable to increase their deposit base, forcing them to turn potential customers away.

It is wise, therefore, to treat Nov. 5 as the beginning of a process, not an event. Consolidating debt and improving your personal credit rating are important first steps that should be taken to solidify your personal foundation. At this point, you will be able to more easily move deposits as well as loan obligations on your personal assets to a community bank or a credit union. A great banking relationship is one that works both ways.

One of the primary reasons small, stable banks are having a difficult time in this recession is the onerous burdens placed upon them due to the passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act in early 2010. Despite the honorable intent implied in the name of the bill, Dodd-Frank did more to handcuff our economy than help consumers. In fact, the regulatory burden placed on community banks and credit unions is so disproportionate that it favors larger financial institutions that are sitting on (literally) trillions of dollars instead of pumping them back through the economy via the consumer. These banks and investment banks have the personnel and financial wherewithal to handle the mountains of paperwork required to eventually turn consumers and business owners down for loans. What we’re left with is a sadly ironic low-rate lending environment that no one can participate in. The Obama administration has taken the stance that any reform is positive despite the fact that this exact scenario played out for more than a decade in Japan with similar results. The combination of Congress’ Dodd-Frank Act and the Federal Reserve’s Quantitative Easing policy has essentially brought the banking sector to a grinding halt for the majority of Americans. There is no such thing as a “character loan” anymore. Fall one month behind on your mortgage payment or fail to pay your credit card bill on time and you are out of luck. And as for the giant Wall Street firms that got us into this mess and continue their reckless behavior to this day—it’s business as usual.

The Occupy Wall Street protestors are keeping a tally of the number of protestors arrested for exercising their constitutional right to peaceably assemble versus the number of Wall Street bankers busted. It’s more than 1,000 to 1. The one is former hedge fund manager Raj Rajaratnam (Left). This number may double, however, as prosecutors have set their sights on another man named Rajat Gupta (Right), former partner at McKinsey and Company. After everything that went down involving the corrupt practices behind the financial collapse in 2008, I find it amazing that only two people have been found worthy of prosecution thus far. I find it less amazing and more ridiculous that both of them happen to be brown.

But take heart, my dear revolutionaries. Progress and change are upon us all. If you believe it is useless to resist the will of mega-corporations and government, witness the decision by several banks, most recently Bank of America, to rein in their proposed new banking fees. This was a victory for the consumer and a testament to the power of protest. This effort was successful for the same reason Bank Transfer Day will signal a real shift of dollars. It is also the reason why Republican presidential nominee Herman Cain’s 9-9-9 plan is being revealed as an anti-poor regressive policy, the Citizen’s United ruling by the U.S. Supreme Court is being ridiculed, and war veterans have joined protests across the nation.

The reason, my friends, is that the jig is up. The 99 percent have woken up and they’re pissed.

It will take time to untie the thousands of knots the 1 percent has tied in the financial system, effectively choking off the money supply from flowing throughout the economy. It will be done one knot at a time. And for those who believe that the Occupy Wall Street movement is simply a plan for the redistribution of wealth in America, it’s not. This is about creating equitable access to wealth and the ability for people everywhere to thrive on a level playing field that properly rewards equal measures of risk, planning, luck and diligence – the fundamentals of entrepreneurship that comprise the so-called “American Dream.” At a minimum this is about creating a system that does not punish those who seek to earn a fair wage for an honest day’s work.

#OWS WK4: Kaptur and Gramm and Schumer, Oh My.

Tying the tubes of banks that have been, ahem, fornicating with the global economy and impregnating speculative bubbles only to watch them burst, will only hasten the inevitable seismic crash that looms around the corner. Breaking up the banks will happen one way or another…either by the law of the land or the law of nature.

The only phrase in connection with Occupy Wall Street repeated more often than “We are the 99%” is “What do they want?” The former is, of course, the rallying cry inviting citizens to join the movement against plutocracy in America—a show of strength against corporate greed and government corruption. The latter is the response to the growing number of dissenters in the “American Autumn”—criticism for their lacking a coherent list of specific demands. Personally, the only thing I find lacking is the imagination embodied by this mindless question.

The communal process of exploration and debate taking place in Zuccotti Park is like nothing I’ve ever seen. There are plenty of cogent, specific demands to be heard, but only by those who are willing to listen. A good deal of patience and a pinch of intellect are helpful because this isn’t a bumper-sticker movement and the occupiers don’t suffer fools (Geraldo) gladly.

There is no substitute for visiting the park and absorbing democracy, grassroots style. This past weekend my wife and I brought our two children with us to witness history unfolding in Manhattan, as it will someday grace the pages of a textbook, or a tablet, during their college years. With that said, allow me to indulge the frothing masses with a chunk of raw meat by examining one of the cornerstone issues behind OWS: Glass-Steagall.

Breaking the Bank: A Brief History of Glass-Steagall

In short, this was the name of the Act that prohibited commercial banks from engaging in investment-banking activities, among other things. It was established in 1933 to tame the harmful speculative behavior of an industry run amok in the early part of the 20th century; behavior largely credited for the market crash that precipitated the Great Depression. Fast forward to the waning days of the Clinton administration when the Gramm-Leach-Bliley Act repealed the meat of Glass-Steagall and cleared the way for the greatest, most rapid consolidation of banking interests and wealth in recorded history.

Reinstating Glass-Steagall is, of course, easier said than done. Technically, the mechanics of doing it are fairly simple from a structural perspective, though it would cause massive upheaval in the banking world for several years to come. What is almost beyond comprehension are the circumstances that allow banks to continue gambling promiscuously in the world markets, which is a direct result of complementary deregulatory measures, globalization and an extraordinarily loose monetary policy.

These three factors have allowed banks to engage in worldwide investment schemes using cheap, borrowed money in a manner that is both irresponsible and opaque. In other words, be careful what you wish for. Tying the tubes of banks that have been, ahem, fornicating with the global economy and impregnating speculative bubbles only to watch them burst, will only hasten the inevitable seismic crash that looms around the corner. Breaking up the banks will happen one way or another…either by the law of the land or the law of nature.

Protestors from Zuccotti Park to San Francisco are keenly aware of this reality. They have an extremely sophisticated view of the world that goes beyond what we have seen in other movements both here and abroad. It’s their appreciation for complexity and nuance that makes it impossible to translate demands into bite-sized morsels for the media to gobble up and regurgitate into the mouths of shrieking birds in the nest that many television viewers have become.

To make matters worse, our elected federal representatives have no idea how to respond appropriately to a leaderless, populist movement. Apart from some platitudinous, mealy-mouthed responses from ranking Democrats like House Minority Leader Nancy Pelosi or truculent, dismissive statements from the likes of Rep. Peter King (R-Seaford), the upper echelon of American politics is collectively clicking its heels and hoping to wake up on the farm after the storm.

But there is hope for us yet–from someplace you might not expect.

A Buckeye Bulls Eye

Ohio’s 9th Congressional District cradles the southernmost tier of Lake Erie and has been steadfastly represented by Rep. Marcy Kaptur (D) for the three decades. Despite the presence of rollicking Toledo in the westernmost part of her district, things have been pretty quiet in the ninth. Until now.

Ohio’s much ballyhooed loss of two Congressional seats due to redistricting has resulted in a mash up of Kaptur’s 9th district and the neighboring 10th represented by fellow Democratic Congressman, Dennis Kucinich. Kucinich, who has long-represented the most progressive wing of the Democratic caucus, ran back-to-back failed campaigns for the presidential nomination, but he gained more notoriety when he famously called for the impeachment of co-Presidents George W. Bush and Dick Cheney for manufacturing evidence that pushed us into war with Iraq at a cost of nearly $2 trillion, thousands of U.S. soldiers and hundreds of thousands of  civilians. Somehow, this effort lacked the same traction and enthusiasm as the impeachment trial of President Bill Clinton for, well, you know.

The combination of the 9th and 10th districts has given new life to Kucinich, who might otherwise have been homeless after Ohio’s redistricting plan, as he is planning to primary Kaptur for the seat. Not to be outdone, the GOP has recruited newcomer Samuel Wurzelbacher to run on the Republican ticket. This development would be of little moment, however, if Wurzelbacher wasn’t none other than “Joe The Plumber,” who made headlines during the McCain-Obama race. Although it was later revealed that he was neither “Joe” nor a licensed plumber, Wurzelbacher became an oft-abused example of the disenfranchised workingman in America. Not content to be a footnote in American political history, Wurzelbacher now seeks to extend his 15 minutes of fame by attempting to join the ranks of hundreds of other talentless slobs who also have no business running the country.

This entire hubbub overshadows one of the most interesting things to come out of this part of Ohio. Earlier this year Kaptur revived a failed effort during the previous Congress to reinstate regulations repealed under the Gramm-Leach-Bliley Act of 1999. Kaptur’s bill, H.R. 1489, is appropriately titled “Return to Prudent Banking Act of 2011,” and it has the support of 45 sponsors, one of whom is Dennis Kucinich.

The men behind the original bill in question—Gramm, Leach and Bliley—are an interesting lot; notable because not one of them remains in government today though their impact is felt every day. Phil Gramm, one of the most loathsome scoundrels ever to hold office, is the reprobate who brought us the Enron Loophole, disastrous tax cuts that destabilized the first part of the Reagan era, and this horrendous bill that bears his name. His darling wife, Wendy, was at the helm of the Commodities Futures Trading Commission when her husband was shepherding through the bill that would castrate the agency and lead to the collapse of Enron and the birth of energy speculation. She went on to head the conservative think-tank, Mercatus Center, which is funded by the Koch brothers.

Thomas J. Bliley, former representative from Virginia, was himself a serial deregulator. Before handing America this pile of legislative crap, he authored the Telecommunications Act of 1996, which paved the way for massive consolidation in the media industry and gave us Orwellian juggernauts like News Corp. that control the airwaves today.  Jim Leach, also no longer in office, is more of a curiosity. Brilliant, progressive and, at times, defiant, Leach of Iowa often stood in opposition to the increasingly conservative members of his party and was eventually ousted by a Democrat write-in candidate. Although Leach was a noted fiscal conservative, his true expertise was in foreign affairs. By attaching his name to one of the most destructive economic bills ever written, an otherwise brilliant career has been sullied in a way only Bill Buckner could understand.

Going Forward

So, Marcy Kaptur “gets it.” The protestors on Wall Street also “get it.” And believe it or not, many of us in the media also “get it.” If the banking system is going to collapse under its own weight and hubris because of the sheer volume of horrible investments still filtering through the economy with zero oversight, what’s the next logical play?

Apart from the obvious, which is to enact H.R. 1489, I think it’s time to grant subpoena authority to the protestors on Wall Street so they can hold those responsible for the economic crisis accountable at a people’s tribunal. Since our judicial system has failed to do that, perhaps it should be left to the people in Zuccotti Park. And just to bring things full circle to New York politics, the first star witness to be called should be Sen. Charles Schumer, poster boy for Wall Street and the senior Democratic elected representative of our state.

Time’s up, Chuck. Your silence on the Occupy Wall Street movement is deafening and incriminating.