Hullabaloo

Tuesday, November 01, 2011

 
Justice, Part 2
by David Atkins

Continuing on with the justice theme, even the normally execrable Richard Cohen steps up to the plate with a surprisingly vitriolic anti-Wall Street column that hits on the same ideas as Taibbi and Friedman:

hat the morality of the used car lot has been adopted by Wall Street is now abundantly clear. Citigroup recently settled a civil complaint in which it was accused of selling mortgage-related investments that it knew were dogs. It was so certain that the investments were the financial equivalent of my used car that it bet against them — heads I win, tails you lose — and even selected the investments themselves, choosing from a cupboard of depleted and exhausted financial instruments. An investment in the Brooklyn Bridge would have been safer.

These investments are known as collateralized debt obligations (CDOs), and they consisted of the sort of mortgage securities that nearly sunk the U.S. financial system. According to federal regulators, they were sold with the full knowledge that they were careening toward worthlessness and that, by deduction, their buyers were patsies. The bank made substantial profits on them. But when the Securities and Exchange Commission decided to act, it got Citigroup to pony up a mere $285 million fine that, to presumed chuckles, will doubtlessly be taken out of petty cash. The bank last quarter reported a profit of $3.8 billion...

I do not want to be excessively harsh on dear Citigroup. It was not the only one selling smoke. Goldman Sachs and JPMorgan did something similar. In the words of Jesse Eisinger of the online journalistic group ProPublica, “This was the Wall Street business model.” And it was a model permitted and encouraged from the top, by people who became filthy rich from filthy practices and now take umbrage when President Obama calls out their industry for approbation. They should first spend a year in community service and then, if they still feel slighted, denounce Obama.

As for Obama’s government, it has been too gentle with these miscreants. Why not a single major banker has been cuffed and frog-marched to some Financial District Guantanamo is unclear. Why their firms have gotten off with modest fines and non-confession confessions is not clear, either. That, in itself, is a crime.

Somebody has to break this culture. In this sense, Wall Street is no different than the New York Police Department, where it apparently has been customary to fix traffic tickets for friends, family and — almost certainly — the odd person with some cash. When 16 of the alleged ticket-fixers were arraigned last week, hundreds of off-duty cops came to cheer them, denounce the DA and manhandle reporters. Their union took a firm position in defending this behavior. An appalled city awaits firm action by the mayor and police commissioner.

An appalled nation awaits a similar response to what went on in the financial sector. What we would like to see is some version of a public hanging, the appropriate reaction to the breathtaking fleecing of investors. In the end, those investors got their money back. That’s more than we can say about our lost faith in justice.

We'll set aside the fact that Cohen made (and his editors missed) the hilarious Freudian slip of using the word "approbation" (meaning approval) instead of the presumably intended "opprobrium" (meaning harsh criticism) to define Obama's stance on Wall Street. It's ironic and darkly amusing on multiple levels. Those 180-degree turns are tough on guys like Cohen, and these sorts of things just slip out, apparently.

More pertinently, it's like I said yesterday:

But people have a much more emotional and almost animal reaction to the notion of justice. People can tell when they're getting a raw deal. Game theory experiments have proven that people are willing to sacrifice personal gain just to enforce a sense of justice when the other player is perceived to be taking advantage of them. It is this same emotional dynamic that is leading people to camp out in the cold at Occupy sites all across America....

Gnawing, unresolved injustice eats away at societies. Ritual cleansings have been part of human organizations for millennia to resolve just this very issue. When major injustices have been committed, the public will continue to be agitated until they see some sort of resolution that involves accountability for those involved. Politically, that has taken the form of consecutive wave elections that make no rational sense politically, but do make sense emotionally.

People are only going to get more and more angry until they start to see some justice. Remarkably, though, our elites don't even seem to get the idea that there were even misdeeds that require any accountability.

What amazes me about guys like Richard Cohen is that they fail to see the part they played in all this. I'm going to sound like broken record here, but allow me to repeat myself from yesterday morning regarding Thomas Friedman's entry into the ranks of the shrill:

An increasing number of "serious" people are coming to realize far too late the multinational corporations and the global financial elite really don't follow any rules anymore, and don't intend to. This is shocking to them. They never saw it coming even as they championed the asset-driven economic policies that empowered those same elites.

Conservatives and neoliberals alike assume that rule of law, infrastructure and basic decency just happen. They're part of the automatic background of society, and they notice it as little as fish notice the water they swim in. It really doesn't occur to them that when you weaken the structures that support those things, they can and do disappear. Infrastructure decays without upkeep. Corporations and elites realize that there are no consequences to openly flouting the rule of law. Decency is for losers and suckers.

And then they recoil in shock at the consequences of the ideologies they themselves advocated, without even realizing the implicit connection.

It takes these "very serious people" years to wake up to what progressive bloggers and a few scattered liberal columnists like Paul Krugman have been saying for ages.

The sad part is that it apparently took not force of argument or even the evidence in front of their eyes, but a few people camped out in public parks to finally get their attention. Of all the pathetic things about the sudden awakening of the intelligentsia to the notion that people actually want justice, that is perhaps the most depressing.

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thereisnospoon 11/01/2011 07:30:00 AM |