Notes On The News
by Gwydion M Williams
“Goldman Sachs, the Wall Street powerhouse, was accused of securities fraud in a civil lawsuit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly intended to fail.
“The move was the first time that regulators had taken action against a Wall Street deal that helped investors capitalize on the collapse of the housing market.” [A]
To put it in more mundane terms, supposing a shopkeeper was selling people 20-kilo bags of rice, on the grounds that the price was bound to go up and they would make a profit. And at the same time they were speculating on the Futures Market that the price would fall. That would be clearly crooked.
Goldman Sachs were selling ‘fancy finance’, as all of them have done. But in this case, they were persuading investors that one particular deal would be profitable, while at the same time betting their own money that the deals would lose money. Or that’s what the USA’s Securities and Exchange Commission are saying. They are bringing a civil lawsuit because that is their job and all that they are allowed to do. If they prove civil fraud then some other branch of the US government might decide to bring criminal charges. Or might not, since civil cases demand a lower level of proof.
It is agreed that Goldman Sachs did well out of the entire market bubble:
“The decision to get rid of positive bets on mortgages turned out to be prescient. Unlike most other Wall Street banks, Goldman profited from its mortgage business as the housing bubble was inflating and then again when the bubble burst.” [B]
What’s at issue is whether they made a profit within the rules or outside them. Goldman Sachs is composed of individual humans and it seems that different internal factions were divided on the strength or weakness of the market:
“But in 2006, some inside Goldman began to worry about the fragile state of housing. Daniel L. Sparks, the Texan who ran the mortgage unit, sided with those who believed the market was safe. Two of his traders, Joshua S. Birnbaum and Michael J. Swenson, had placed a big bet that mortgage bonds would rise in value.
“But this camp clashed with Goldman sales staff who were working with hedge funds that wanted to bet against subprime mortgages. Mr. Birnbaum told the team to stop promoting bets against some mortgage investments since such trades were hurting the market and Goldman’s own position, according to two former Goldman employees.
“But a few desks away, Mr. Tourre and Mr. Egol were quietly working on the Abacus deals…
“Unlike many of their colleagues at Goldman and other banks, they argued that the nation’s mortgage market was far more interconnected than believed, former Goldman employees said. Their view was that if one group of mortgages or mortgage bonds ran into trouble, the entire market might falter.
“Mr. Tourre and Mr. Egol created a way for a prominent hedge fund manager, John A. Paulson, to bet against risky mortgages.” [B]
There is enough ambiguity that it’s possible the prosecution will fail. If two branches of the same organisation took contradictory views of the market and acted accordingly, that’s not fraud. It is an indication that the whole system is out of gear and rewarding the wrong things. I’d see that as evidence that the law needs to be changed drastically to cut out all such speculation, to criminalise it.
The doctrine of ‘efficient markets’ has put billions into the pockets of successful speculators. I’ve said before, the ‘smart money’ cannot make a profit without a mass of ‘silly money’ making a corresponding loss. That’s the norm for modern finance, and it gives the ‘insiders’ a strong reason to distort prices and create bubbles.
You could say that markets only work when the participants are intent just on their own affairs and ignorant of the wider picture. Once knowledge is added, there are any number of ways for the knowledgeable to make money at the expense of the rest. All of it entirely parasitic, but not necessarily criminal. Up until the 2008 crisis, voters in both Britain and the USA had been talked into an anti-government mood that made many of them enthusiast for small government, low taxes and a removal of the various controls that had limited speculation. A vast number of people must have thought that they would benefit from this reversion to pre-1930s economics. In fact most of them have been hurt, with just a few people profiting massively:
“Three and half years ago, a New York hedge fund manager with a bearish view on the housing market was pounding the pavement on Wall Street.
“Eager to increase his bets against subprime mortgages, the investor, John A. Paulson, canvassed firm after firm, looking for new ways to profit from home loans that he was sure would go sour.
“Only a few investment banks agreed to help him. One was Deutsche Bank. The other was the mighty Goldman Sachs.
“Mr. Paulson struck gold. His prescience made him billions and transformed him from a relative nobody into something of a celebrity on Wall Street and in Washington.
“But now his brassy bets have thrust Mr. Paulson into an uncomfortable spotlight. On Friday, the Securities and Exchange Commission filed a civil fraud lawsuit against Goldman for neglecting to tell its customers that mortgage investments they were buying consisted of pools of dubious loans that Mr. Paulson had selected because they were highly likely to fail.
“By betting against the pool of questionable mortgage bonds, Mr. Paulson made $1 billion when they collapsed just a few months later, the S.E.C. said. Investors, who bought what regulators are essentially calling a pig in a poke, lost the same amount.” [C]
Because Mr Paulson didn’t sell any of the losing bets, he has done nothing illegal and can spend his profits as he wishes:
“Late last year, Mr. Paulson donated $20 million to the Stern School of Business at New York University and $5 million to Southampton Hospital in Long Island’s East End, where he bought a $41 million home in early 2008. He lives with his wife and two daughters on the Upper East Side of Manhattan.
“Amid criticism of investment strategies that profited from mortgage defaults, home foreclosures and other miseries, Mr. Paulson has also given $15 million to the Center for Responsible Lending for a center devoted to providing foreclosure assistance to troubled borrowers.” [C]
He spends more than twice as much on his own home as on aid to borrowers who’ve run into trouble because of the ‘bouncy market’ he has profited from. Four times as much on a business school as a hospital. Typical of the values of the ‘Overclass’ who have profited from the way the West has run its economic rules since the 1980s.
The idea was that markets work best when left alone, that regulations as such are a bad thing in the long run. The USA’s New Deal and the ‘Golden Quarter Century’ that Western Europe and the USA enjoyed between 1950 and 1975 were based on the idea that markets could not be left to themselves and must be regulated. But when regulation ran into trouble in the 1970s, there was a revival of older notions that the market knew best and should be allowed to go where it pleased. The doctrine became official policy in the USA and Britain in the early 1980s. It was in danger of being discredited by the 1987 crisis, in which doctrine was abandoned when the West’s economy threatened to crash. But then the Soviet Union came apart in 1989-91 and the Thatcher-Reagan line seemed vindicated.
The alternative view is that the Cold War was lost by the USSR rather than won by the West. That the Soviet Union self-destructed after successfully repressing its own radicals in the 1970s. That it insisted on continuing a system that had worked quite well in the 1950s and 1960s, but which had reached its limits and needed to change radically.
It is significant that left-of-centre politicians who went along with the deregulation at the time are now distancing themselves and admitting fault:
“Oversight on derivatives trading has been a contentious topic for years. Advocates of light-touch regulation argue that the investors involved are sophisticated institutions that are savvy about the risks they are taking.
“But the former US president Bill Clinton today expressed regret for listening to such sentiments. He said that he should not have listened to the former treasury secretaries Robert Rubin and Larry Summers, both of whom opposed tight protection when derivatives were gaining popularity during the 1990s.
“‘I think they were wrong and I think I was wrong to take [their advice] because the argument on derivatives was that these things are expensive and sophisticated and only a handful of investors will buy them,’ Clinton said.
“The flaw in the argument, he added, was that ‘sometimes people with a lot of money make stupid decisions and make it without transparency’.” [D]
“British premier Gordon Brown attacked the ‘moral bankruptcy’ of Goldman Sachs on Sunday after the US Securities and Exchange Commission accused the world’s most famous bank of fraud…
“Mr Brown, who is campaigning for re-election, demanded that the UK’s Financial Services Authority launch its own investigation. ‘The banks are still an issue. They are a risk to the economy,’ he said.
“Goldman has faced attacks from politicians on both sides of the Atlantic as they push for tougher financial regulation.
“The German government said it would consider legal steps against Goldman. IKB, a German bank that was one of the first casualties of the global crisis in 2007, was one of three investors in the collateralised debt obligation at the centre of the case and lost about $150m when it collapsed as the US housing bubble burst.” [E]
A lot of economists are also now saying that the theories that have dominated the West since the 1980s are rubbish. As John Kay put it recently:
“The macroeconomics taught in advanced economics today is largely based on analysis labelled dynamic stochastic general equilibrium. The unappealing title gives the game away: the theorists are mostly talking to themselves. Their theories proved virtually useless in anticipating the crisis, analysing its development and recommending measures to deal with it…
“There is no room for the notion that people bought subprime mortgages or securitised products based on them because they knew less than the people who sold them. When the men and women of Goldman Sachs perform ‘God’s work’, the profits they make come not from information advantages, but from the value of their services. The economic role of government is to keep markets working…
“The standard approach has the appearance of science in its ability to generate clear predictions from a small number of axioms. But only the appearance, since these predictions are mostly false. The environment actually faced by investors and economic policymakers is one in which actions do depend on beliefs and perceptions, must deal with uncertainty and are the product of a social context. There is no universal economic theory, and new economic thinking must necessarily be eclectic. That insight is Keynes’s greatest legacy.” [E]
“The notion economists pushed – that markets are efficient and self-adjusting – gave comfort to regulators like Alan Greenspan, who didn’t believe in regulation in the first place. They provided support for the movement which stripped away the regulations that had provided the basis of financial stability in the decades after the Great Depression; and they gave justification to those, like Larry Summers and Robert Rubin, Treasury secretaries under Clinton, who opposed doing anything about derivatives, even after the dangers had been exposed in the Long-Term Capital Management crisis of 1998.
“We should be clear about this: economic theory never provided much support for these free-market views. Theories of imperfect and asymmetric information in markets had undermined every one of the ‘efficient market’ doctrines, even before they became fashionable in the Reagan-Thatcher era. Bruce Greenwald and I had explained that Adam Smith’s hand was not in fact invisible: it wasn’t there. Sanford Grossman and I had explained that if markets were as efficient in transmitting information as the free marketeers claimed, no one would have any incentive to gather and process it. Free marketeers, and the special interests that benefited from their doctrines, paid little attention to these inconvenient truths…
“Keynes’s great contribution was to save capitalism from the capitalists: if they had had their way, they would have imposed policies that weakened the economy and undermined political support for capitalism. The regulations and reform adopted in the aftermath of the Great Depression worked. Capitalism took on a more human face, and market economies became more stable. But these lessons were forgotten. Thatcher and Reagan ushered in a new era of deregulation, growing inequality and weakening social protection. We are now seeing the consequences, and not just in greater instability. Keynes’s insights are needed now if we’re to save capitalism once again from the capitalists.” [F]
“In a small Massachusetts town, American fund manager Harry Markopolos lived in fear of his life. For three years, he carried a Smith & Wesson revolver, checked under his car for bombs and avoided walking along dark shadowy streets. A self-confessed maths geek, he had unravelled the secret of Wall Street’s biggest conman.
“A belatedly celebrated whistleblower who was ignored by everybody, Markopolos tried, umpteen times, to raise the alarm about Bernard Madoff’s $65bn (£43bn) Ponzi scheme which imploded at the end of 2008, leaving thousands of charities, hedge funds, pensioners and Hollywood stars bereft of billions of dollars. Dismissed as a misguided obsessive until Madoff’s eventual confession, he became increasingly anxious for his safety.
“‘Think about it. Here was a man that wiped out thousands of families,’ says Markopolos, who was afraid both of Madoff and of the tame ‘feeder funds’ that fed him customers’ money. ‘If he didn’t have a reason to kill me, think about the feeder funds. What’s going to happen to their lifestyles? They’re all going to be ruined financially, they’ll all be sued and, hopefully, many of them will go to jail. What will people do to protect their lifestyles?’..
“He remains wary over safety, claiming that Madoff’s clients included Russian mafia and South American drugs cartels. And he wastes few words describing his view of Wall Street’s most notorious crook, describing the 71-year-old as ‘evil’.
“‘He was a knowing predator. He would show up at weddings, funerals. At funerals, he would put his arm round the grieving widow and say ‘I’ll take care of you’ and of course he did, he’d wipe her out,’ says Markopolos. ‘He was hunting at social occasions. Everybody thought of him as nice uncle Bernie. But he was a predator.'” [G]
Predators like Madoff and other proven fraudsters are just the tip of the iceberg. There is a legitimate business in taking care of other people’s money, ensuring that they can save safely and spend conveniently. And there is another legitimate business in ‘venture capitalism’, lending money to someone who maybe is doing something profitable. But beyond this there are two types of financial business that should not be legitimate. One is financing excess consumption, encouraging people to run up debts that they cannot easily clear. The other is a whole mass of gambling activities
Humans gamble, unless prevented from doing so. Western society was maybe healthier when it was harder to gamble at Betting Shops or Lotteries. At a higher level, much of the financial system including the Stock Market is essentially a grand gamble. It has intentionally been made more accessible and volatile, which makes for bigger profits for most ‘insiders’ and more losses for the ‘outsiders’ who get flattered into thinking that they are ‘in’.
Madoff and others flourished because they offered a higher return than the normal safe return for money. But remember, the ‘smart money’ cannot make a profit without a mass of ‘silly money’ making a corresponding loss. In this case it was Madoff cheating everyone else, apart from a few lucky enough to get out before the whole thing collapsed. But had it been ‘honest’ investment, the high returns would still have been at someone else’s expense.
I said last month, Classical Capitalism flourished as well as it did because it had walls of ‘respectability’ to supplement state power. That ‘respectability’ has gone, and no one really wants it back, at least not in as far as it would cost them anything. When it comes to schools, many parents demand stricter discipline – but only for other people’s children. Very few nowadays would side with the school against their own misbehaving child, which was once the norm. Most of them get outraged when their own children get punished for anything. Many people would like to dump the problem onto others. But no one is willing now to be dumped on
The other theme of the 1980s New Right was an official commitment to ‘democracy’. Now democracy means ‘power to the people’, and in practice the New Right moved power further away. They did manage a considerable extension of multi-party electoral systems of the Anglo sort, the type of system that had existed in Britain and the USA for a long time and which was not always democratic. The USA was not committed to votes for most white males until the 1830s. Britain did not get that far until the 1880s. Both countries hang onto a ‘first-past-the-post’ electoral system that has mostly kept politics organised into two large voting blocks competing for a ‘middle ground’ that is easily influenced by the media, with the media in turn heavily influenced by business interests. Still, there are merits to multi-party electoral systems and these have been extended to many more places than they existed back in 1980.
The trouble is, such systems dumped onto a society unfamiliar with them often fail to work. In Iraq, the removal of Saddam’s repressive one-party state led to a revival of the things which that state had been repressing, Kurdish separatism and Islamic extremism, especially among the Shia. If the Shia Islamists were united they would dominate easily, but they are split into various blocs that dislike each other. What the recent election shows is that there is no longer an Iraqi people, just a collection of fragments living next to each other. It hasn’t changed much since the previous indecisive election:
“Despite some breathless headlines, the outcome of the elections is not very different from previous elections. Allawi put together a coalition of Sunni Arabs and secular Shiites. In the December, 2005, parliamentary elections, those two groups received about 80 seats, only 11 less than Allawi’s just list won. If the two major Shiite religious lists (State of Law and Iraqi National Alliance) had run on the same ticket, they would have nearly a majority, about what they won in December, 2005. The Kurdistan Alliance only has 43 seats, down from 54 in the last parliamentary election, but the overall number of Kurdish Members of Parliament is not so different from that in the last polls.” [H]
The Sadrist movement bounced back from repression and got 39 seats, probably enough to stop any stable government being formed, given that the two biggest blocks represent opposites and are unlikely to work together. But the Sadrists had a referendum among their supporters, who were against the leaders of the two big blocs. Where it goes from here is anyone’s guess.
The US after the Cold War proved completely incompetent at propagating its own way of life in other countries. This is in sharp contrast its global efforts after World War Two, when it had some considerable successes. This time round, the official line in favour of multi-party electoral systems did not extend to accepting unwelcome victories by left-wing parties, or parties deemed insufficiently obedient to US interests. They started a pattern of mass protests by the losing party in a close election, and also uprisings when the winning party gets unpopular. But once established as the new norm, anyone can do it. The USA failed to get rid of Chavez in Venezuela, despite some fairly direct pressure. And in Kyrgyzstan, a pro-US government could not cope with the backwash of the global economic crisis and has now been thrown out. Kyrgyzstan five years back had one wave of popular uprising that was called the ‘Tulip Revolution’. No one has found a name for the latest round, but maybe it should be ‘Hiccup Revolution’.
“A few years ago, I interviewed Amy Chua, a Yale professor and author of the New York Times bestseller World On Fire: How Free Market Democracy Breeds Ethnic Hatred and Global Instability.
“According to Chua, more than 80 developing countries and former socialist countries have carried out privatization since the 1990s.
“From Peru to Vietnam, countries all around the world established stock markets and developed the foundations of investment and securities laws, usually in consultation with US experts. But in these countries, the hatred of the majority poor population toward the wealthy minority has become more and more intense.
“As Chua told me, the key problem was that these countries had not found a more reasonable allocation of wealth, which could not be naturally achieved by engaging in the democracy of a free market.
“Kyrgyzstan is a typical example. In 1997, the majority of its enterprises were privatized. The authority of the government was undermined and it was not able to undertake reforms aimed at redistributing wealth.
“Corruption intensified and the gap between the rich and the poor widened. Kyrgyzstan is divided by high mountains, and the north is more developed and less traditional.
“In the ‘Tulip Revolution’ of 2005, the poor of the south overthrew the rich of the north, but then the southern elites went on to decide it was their turn at the trough. They’ve now been overthrown.
“Kyrgyzstan’s development in recent years proves Chua’s assertions. In fact, countries with successive turmoil did not successfully solve the problem of equitable distribution. In some cases, such as Kyrgyzstan, it sparked sharp contradictions between different regions or ethnic groups, while others, like Thailand, have been torn apart by conflicts of interest.
“Thailand was once a stable, fast-growing nation. But for a long time, some interest groups benefited far more than others from development. When exiled PM Thaksin Shinawatra was in power, he wanted to give more benefits to the poor but was constrained by some interest groups, resulting in the strange phenomenon of the upper classes taking to the streets. This eventually intensified conflicts. The current clashes in Thailand are between Thaksin’s mostly poor supporters and others, which in essence reflects a long-term accumulated problem of inequitable distribution.
“There are generally two ways to pass this threshold of inequitable distribution during the development process.
“One is when intensified social conflicts, turmoils or riots occur, people are forced to negotiation tables. And eventually new ‘game rules’ are formed to achieve social balance with acceptable methods and give more priorities to vulnerable groups. The US, the UK and other developed countries went through this.
“However, some developed countries avoided major disturbances in the modernization process, such as Sweden and Norway. They started establishing and adopting an equitable distribution system while their economic growth was steady. Through this system, the government became a credible arbiter of redistribution, rather than an embarrassed and passive participant.” [J]
This is from Global Times, one of the increasingly readable and sophisticated publications that People’s China is producing.
A couple of months back, I discussed the way the modern world has become vulnerable to natural disasters thanks to governments taking a back-seat and expecting private profits and the market to sort things out. I’d not expected anything like the current crisis, with most of Europe becoming a no-fly zone. But it certainly fits.
Iceland sits on the mid-Atlantic ridge, and thus is a natural spot for volcanoes. Most of them are no problem for anyone except the Icelanders themselves, who have usually managed it very nicely. In this case, a rather average eruption happened to hit a covering ice-cap, meaning that a lot of the larva turned to ash. The continuing eruption raised the ash high into the atmosphere, and the winds blew it to North-West Europe.
How dangerous is the dispersed ash-cloud? No one can be entirely sure, though at the time of writing, the airlines are arguing that it may not be all that dangerous. Previous near-disasters have come from flying through a concentrated volcanic plume. The much more dispersed ash floating over Europe might be OK, and a few planes have flown through it without ill effect. But that’s not a conclusive argument. Russian roulette would have no ill effects in just over 83% of cases: that does not mean that it is a good option.
Airlines were already strained: this disaster, which they will mostly pay for themselves, could be the final blow for some of them. People get desperate and foolhardy in such circumstances. I think it right for the ban to stay while there are still a whole host of unknowns.
In Britain, there’s been yet another case of a family dog killing a child of the family that owns it. Tragic, obviously – but how can anyone be foolish enough to think that a dog from an aggressive breed is ever safe to leave alone near a child?
People treat dogs as ‘part of the family’, which is OK for dogs of a passably civilised nature, but not all dogs are like that. Have you ever been barked at by a dog when you weren’t intruding on its recognised territory, but just passing? And then been assured that the dog is OK? I’m not an expert on dogs, but I’d see it as a clear rule that any dog that barks is threatening to bite and might well bite.
People with vicious or aggressive dogs always insist that the dog is doing nothing wrong. That’s probably how the dog became vicious or aggressive: they are pack animals and take their queue from their owner. The worst part is, I think most of them are sincere. There have been enough tragic cases in which a dog-owner believed in the essential goodness of their pet, right up to the moment when it killed one of their children or grandchildren.
I’d take three simple measures. First, re-introduce Dog Licence. And insist that every applicant must attend a short course of a few hours in which they see the sorrow of those families whose dog killed one of their children. Also something about dogs that viciously attack sheep, while mostly being well-behaved.
The second measure would be a firm rule that dogs in public places must not bark at anyone. There would be an on-the-spot fine for the owner, unless the dog is immediately punished and backs down.
The third measure would be a separate category of Dangerous Dog Licence – the dog must always be kept under control, even in the owner’s own home where they must be kept away from children. That should prevent a few tragedies.
“Large numbers of prisoners who pose no danger to the public are trapped in jail because society has become risk-averse over whether to release them on licence, the chair of the Parole Board for England and Wales said tonight.
“Speaking to the Guardian, Sir David Latham said that public reaction to cases such as Jon Venables, the killer of James Bulger recalled to prison last month, heightened the danger of politicians and parole board members making ‘skewed decisions’ based on wrong assumptions about the risks offenders would pose to the public.
“As a result, he said, ‘large numbers’ of prisoners are kept in jail, probably unnecessarily.
“‘Our release rates have reduced in the last few years in a way which is arguably an over-reaction to public concern about the reoffending by released prisoners,’ said Latham, who became chair of the board last February. ‘Actually, the serious further offending rate of released prisoners is just 1-2%; a level that has remained stable for many years.'” [K]
Myself, I don’t think Venables should ever have been let out. A kid nasty enough to murder a much smaller kid for no clear reason is unlikely to grow up into any sort of acceptable adult. I can’t see how a 2% reoffending rate is acceptable, counting the rights of innocents as rather more important than the rights of violent criminals. And of course the ‘serious further offending rate’ only applies to those who get caught again. Lots of famous criminals have an early spell in jail and then commit dozens of crimes without ever being caught again. Famous Dublin criminal Martin Cahill was one example. Another was US underworld boss Meyer Lansky. The law had to be bent quite a bit to jail the Kray Twins in Britain, and Capone was only caught by giving him a ludicrously heavy sentence for tax evasion. Not that any of those men were as bad as Venables, in my judgement.
My solution? Certain criminals including most murderers should be judged as ‘unfit to be part of human society’. After their regular prison punishment, they should be sent to a holding area with hotel-level comfort, but cutting them off from most people. And the idea would be that they stay there till they die, without the need for the public to be further bothered by such creeps.
The whole matter of sex abuse may have been talked up as a way of getting at the Catholic Church, at a time when Catholicism is showing an unwillingness to submit further to Anglo values. But there is certainly lots of raw material. Not just the original offences, but a systematic willingness to cover up on the grounds of ‘not giving scandal’. Of course it generates a much bigger scandal in the long run, with the public wondering who can be trusted.
“A former Vatican cardinal who congratulated a French bishop for hiding a sexually abusive priest has said he acted with the approval of the late Pope John Paul, a Spanish newspaper reported on Saturday.
“Cardinal Dario Castrillon Hoyos, the Vatican official in charge of priests around the world when he praised the French bishop in 2001, dragged the Polish pope into the controversy during a conference in the Spanish city of Murcia.
“His comment came after a Vatican spokesman indirectly confirmed that a 2001 letter to the bishop posted on a French website on Thursday was authentic and was proof the Vatican was right to tighten up its procedures on sex abuse cases that year.
“By invoking John Paul, Castrillon Hoyos appeared to up the ante in a subtle Vatican power struggle over who was to blame for past failures to deal effectively with the abuse cases whose revelations in recent months have shaken the Church.
“‘After consulting the pope … I wrote a letter to the bishop congratulating him as a model of a father who does not hand over his sons,’ the daily La Verdad quoted Castrillon Hoyos as telling the conference on Friday, to a round of applause from the assembled prelates, priests and lay people.” [L]
Were not the victims also ‘sons’? (Or sometimes daughters?) The authority of priests is supposed to be based on their accepting greater burdens and practicing deeper holiness than the laity. But the Catholic Church is functioning as a professional union for priests, as indeed do all the other Churches I know anything about. They look after ‘their own’, priests defeinding priests, rather than performing their official task of promoting general welfare on the basis of particular Divine Ordinances.
I assume it is loss of faith that makes this more natural, as well as encouraging more priests to express their sexual desires. But it’s hardly acceptable when innocents get hurt.
The New Right facing the prospect of being classified as an historic error, with the march of Big Government resuming regardless. Naturally they see this as due to a mass outbreak of stupidity and malice, and not a result of their own policies being defective. (This gives them a natural compatibility with exiles from Trotskyism, which has never achieved anything beyond sabotaging left-wing alternatives.)
The dominant idea of the original bourgeoisie was to fragmenting the world into units of private property, each of which is supposed to sink or swim by its own efforts. This is defined as ‘freedom’, but is actually a very major infringement on freedom, and was seen as such by those used to more communal values.
It was also for a time the basis of a radical change to the society. The USA was founded on this idea – fragmentation of the means of production, linked by cash and a framework of law. Also with no limits on some people accumulating a very unfair share of it. This led to rapid economic progress, but also to the subversion of the very thing it had been founded on. Without social controls, it is pretty reliable that large-scale production will win out.
The New Right was founded on a denial of this reality. The state was the problem, the state was unable to cure anything, the state must be cut back and taxes reduced to give ordinary people a chance again.
Ordinary people believed it. Ordinary people were fools, unable to shake off decades of self-deception. Ordinary people found their standard of living stagnated while a rich minority got all of the economic gains. They are also depressingly slow to learn – but learning would mean denying the special nature of the USA, their central point of pride.
Reagan did bring a resurgence of confidence, and he was lucky enough to be still the dominant figure in the USA when the Soviet Union collapsed. So there is now a proposal to evict General Grant from the 50 dollar bill and replace him with Reagan. [M]
The official reason for honouring Reagan is that he supposedly won the Cold War. It would also be an endorsement for his economic policies at a time when many are turning against them. Evicting Grant would be a further benefit: US Republicanism depends on the racist vote, the people who resent Grant for first defeating the Confederacy in battle and then being serious about Black rights during his two terms as President.
Nine US Presidents presided over the Cold War: Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter, Reagan and Bush Senior. The actual collapse occurred during the term of Bush Senior, but no one wants to credit him. Kennedy forced through vital Civil Rights legislation that imposed racial equality, removing one major cause of non-white suspicion of the USA. He also got the space program successfully focused on getting to the moon first, which was a blow to Soviet prestige. Nixon got out of Vietnam without disaster, and also made peace with China, when it might possibly have reverted to the Soviet alliance after Mao died. I can’t see Reagan as doing more than a holding-operation internationally, while sowing the seeds of long-term economic decline for the USA.
Of course they could give Reagan something uniquely his own. Maybe a nine-dollar bill (the traditional US metaphor for fraud). Or maybe a note for 666 dollars – in a very real sense, he led the West down a road to hell.
[H] [http://www.juancole.com/ Saturday, March 27, 2010]