Griftopia

"Matt Taibbi is the poet laureate of vitriol. There is no one better to capture the gestalt of the country’s angst, fury, and anger, and how upset people are that, essentially, these banks blew themselves up, and then managed to twist Congress’s arm to give them billions of dollars, much of which, by the way, has not been repaid. Every time I see some idiot say all the TARP [Troubled Asset Relief Program] and bailouts have been repaid, it’s nonsense. Even if you count all the Citigroup stock, all the Bank of America stock and the GM stock – none of which you can really sell because you’ll crush the stock price – we’re not back to break-even. We still have massive liabilities thanks to the huge losses at Freddie [Mac] and Fannie [Mae] and the losses at AIG. And anyway, who undertakes a trillion dollars’ worth of risk in order to break even? The deals that were negotiated were just so absurd, so ridiculous. It’s outrageous. That sense of outrage is just throughout Griftopia . Matt Taibbi is the guy who coined the phrase “Vampire Squid”, he’s the one who put Goldman Sachs as a great evil on the map. I’ve been reading him for years, I think he’s a really fascinating guy. There are few people who are angrier, who are more incensed, and have an ability to express it in prose, better than him. It’s poetry to read. The prose is flowery and full of profanities, and by the time you’re done with each chapter, you’re pretty angry. It very much appeals to your sense of “I can’t believe these sons-of-bitches got away with this.” Yes, that’s actually a chapter. The funny thing is I don’t fully agree with him. Some of his conclusions I think are fair but I come down on a different spot. I’m always looking at the data side of things, not just the human side. But it is a rollicking, raucous read. Some of it is hilarious. I’m on the train back and forth to the city reading Griftopia and every now and then I just start laughing out loud. But more than anything else I’ve seen it just sums up the fury and frustration of the American public, who just don’t believe justice has been served. This has been the greatest transfer of wealth in the history of mankind – trillions of dollars – and nothing has been fixed. The overall situation is just as precarious, if not more so, than before the crisis. People were initially very angry, but then Michael Jackson died. Then it was an unusually close American Idol final. Then it was the Super Bowl. My answer to why there isn’t enough anger goes back to Ancient Rome, and it’s just bread and circuses. As long as people have enough food to eat and they’re entertained you can rob, rape, pillage and murder, and they’ll shrug their shoulders and say, “I’ve got to take the kids to soccer.” It’s also a little complex – it’s a difficult subject to wrap your head around. I remember, maybe in 2008 or early 2009, saying, “The best trade you can make right now is to go out and buy torches and pitchforks, because there’s going to be massive demand for those.” It turns out that was a bad call. The outrage was this unfocused frustration that people didn’t understand where to direct, or what to emphasise. When the Tea Party rose to prominence, it looked like, “Wow! Finally a group of people who are really angry at the government giving away all this money to the banks.” And it got jiu-jitsued, completely flipped over. My favourite Tea Party sign was the guy standing there saying, “Keep your government hands off my Medicaid.” There’s a great chapter in Taibbi’s book where he infiltrates the Tea Party. He’s really sympathetic with these people. He sees they’re really frustrated by what is going on, but they’ve been completely bamboozled. On the one hand, they’re really upset, “Why do we have these mortgage giveaways, why do we modify mortgages for people who made really bad decisions and borrowed money?” But when you look at the amount of money involved, it’s 100th of how much money we gave away to the banks. These people have just been wildly misled. You ended up with this really weird group of ideas, focused on the mortgage modification plan, which is a few billion dollars. Whereas the bailouts – between what the Fed did, and what the government did – is in the trillions of dollars. Taibbi explains that. He’s empathetic to the individuals in the Tea Party – they’re frustrated and angry, but they’re led by people who are disingenuous and dishonest. They’re cattle being led to the slaughter by these corporatists, for whom banks can do no wrong, and government can do no right. It’s also about the politics. You have guys like Grover Norquist , who with his tax pledge has made intelligent policy negotiations, comprises and debate impossible. Europe is such a different world. People can discuss politics even though they have different views and it’s an intelligent, almost philosophical debate. In the US, the politics is so poisonous that you end up with a screaming match every time people discuss stuff. I don’t know who to blame. I certainly look at Fox News as raising the decibel levels. Reagan and Tip O’Neill would argue all day and they’d go out at night, have a beer, work out a compromise. They’d get stuff accomplished and things would move through Congress. Today, that sort of stuff is impossible. I don’t think Reagan would have survived the current GOP nominating process! When you look at how far apart the parties have gotten… the Democrats have moved to the right, and the Republicans have moved wildly to the right. I grew up as a northeastern Republican. Jacob Javits was my senator. He was a socially progressive guy, he didn’t think the government should be involved in issues like birth control or abortion, and thought that we shouldn’t be involved in wars like Vietnam. If he had been around during Iraq, he certainly wouldn’t have supported that. He was very much a low tax, moderate regulation, balanced-budget kind of guy. That used to be a centrist Republican. That now makes me a wild-eyed leftist, being what 20 years ago was a pretty moderate guy in the middle! I find that amazing. There’s this great chasm between the two parties and the public has just turned their back on them, and said, “We’re not interested.” So instead of being outraged, and throwing the bums out, the public has been, “I’m going to go home and watch TV.” And that is a terrible, terrible tragedy. There’s a website called Move Your Money . What’s crazy is that following the crisis, the big bailed-out banks are bigger than ever – 75% of the assets in this country are held by the top 12 banks. It used to be 50% by the top 30. There are lots of small regional banks, but there are always mergers in the banking world. I can’t tell you how many different chequebooks I have. First I had an account with Manufacturers Hanover, then it became Chemical, then it became Chase, now JP Morgan. So I thought, to hell with it, I’ll set up a Washington Mutual account. And then that gets bought by Chase… What we ended up doing was setting up an account at TD Bank. They’re a Canadian bank, they don’t dabble in derivatives, they don’t do any subprime stuff. They’re just a relatively strong bank without these issues and they have lots of branches everywhere. Because, also, if you set up an account at Joe’s Local Community Bank, you’re not giving money to Chase, but wherever you travel, you’re paying a $2 fee every time you use your ATM card. One of the ways we can avoid all these problems in the future is to put a rule that you can’t own more than 5% of the assets in the US, and you can’t have more than this much leverage. There are a number of rules you can put into effect. Canada seems to have done a much better job than the US has. They have a lot of banks with big market share, but they didn’t get into trouble, because the rules didn’t allow them to. To go back to our original conversation about causation and David Hume: What we’ve seen over the past 30 years is an increasingly bad relationship between Congress and Wall Street, and this revolving door . Congress exists to do the bidding of the big banks. The way to fix it is to change the campaign finance laws, so you have public financing, and congressmen aren’t spending 75% of their time raising money for their next election. As soon as they get elected, they’re immediately raising money for their re-election campaign! So first and foremost, we have to reform the lobbying laws. It’s one thing for a bank to say, “We have a concern about this regulation and here’s what our issues are.” It’s something completely different to say, “We’re writing this regulation, we’re giving it to you to submit, and by the way here’s a $100,000 cheque for your re-election campaign.” The Romans would call that graft. The Romans had a great punishment for that. Anyone caught corrupting a public official would have their nose cut off, be tied in a burlap sack – naked with a wildcat – and thrown into the Tiber. And let me tell you, you go to one or two of those, and there’s not much corruption going forward. I doubt it would be allowed in the US. I have a suspicion it wouldn’t pass Supreme Court muster. But hey! the Supreme Court is as much a problem as everybody else. No, corporations are not people, corporations should not have the right to give unlimited amounts of money to campaigns. This is supposed to be a democracy! Leaving aside the historical anachronisms – like women not being allowed to vote, or black people only counting as three-fifths of a person – it’s supposed to be “one person, one vote”! It’s not “one corporation and as much money as you can give”. I work on Wall Street, I make a nice living. I’m in the 1% in terms of income. And I know lots of people who are similarly situated who are really, really unhappy with the corporate takeover of America. As Matt Taibbi would say, it’s Goldman Sachs’s world – we just live in it. It is quite astonishing, and I just don’t know what the endgame is. You have a very ineffective, uninvolved, corn-syrup medicated, endlessly entertained public. What was the book a few years ago, Amusing Ourselves to Death ? Some of them are disgusted, but some of them are very distracted. What’s been taking place on Wall Street and in Washington DC has been nothing short of a coup d’état. Democracy has been replaced with a de facto corporatocracy. For me the great hope for America and the world is technology. I hope that with Twitter and the blogosphere there will be a general moving away from big corporate entities to individuals and small companies. There’s an enormous potential to wrest control away. We need to get people angry enough to say, “this is ridiculous”. What the United States needs is its own Arab Spring."