by Tom Sullivan
Not all drugs have to be injected, ingested or inhaled. Yesterday, I drew parallels between the man-made crisis on Wall Street and the man-made water crisis in Flint Michigan. The reason is that the amoral pursuit of personal gain is an addiction that goes far beyond Wall Street. The Big Short made a big impression, can you tell?
The Guardian's Tim Adams spoke with "The Big Short" author Michael Lewis about the film's protagonists:
The idea that the madness was going to get worse did not occur to him. “In fact, it got worse and worse to the point where people were paid unbelievable fortunes just to do stupid things with money. Even the movie can’t really get this across. The movie gets across that there was a bet and these smart guys were on the right side of the bet. And those smart guys made hundreds of millions of dollars. That inevitably leaves you thinking that the people on the other side of the bet lost. Of course, the banks went down. But the real story is the actual people on the other side of the bet also got very rich despite the banks collapsing. If no matter what side of the bet you are on things are still going to work out for you, the world is upside down.”
In a pivotal scene, two cocky, Florida mortgage brokers explain to hedge fund traders how they are getting rich selling subprime, adjustable rate loans to immigrants and strippers. Flabbergasted, the hedge fund boys step out of earshot to consult:
Mark Baum: I don't get it. Why are they confessing?
Danny Moses: They're not confessing.
Porter Collins: They're bragging.
The street-level brolers were simply the bottom feeders supplying Wall Street with the raw material for more and more mortgage-backed securities. They mirrored the upstate New York broker, Glen, from Planet Money's May 2008 "The Giant Pool of Money":
Alex Blumberg: Glen had five cars, a $1.5 million vacation house in Connecticut, and a penthouse that he rented in Manhattan. And he made all this money making very large loans to very poor people with bad credit.
Glen Pizzolorusso: We looked at loans, these people didn't have a pot to piss in. I mean, they could barely make the car payment, and now we're giving them a $300,000 to $400,000 house.
Alex Blumberg: But Glen didn't worry about whether these loans were good either. That was someone else's problem. And this way of thinking thrived at every step of this mortgage security chain. A guy like Mike Francis from Morgan Stanley, he told me he bought loans, lots of loans, from Glen's company. And he knew in his gut that they were bad loans, like these NINA loans.
He just didn't care. Everybody else was doing it. And they were all getting rich doing it.
The gravitational attraction of the kind of personal wealth being accumulated not just on Wall Street but in the metastasized global economy is a kind of moral and financial black hole from which few escape. The traders Lewis found to profile are not heroes. They themselves profited from the financial corruption by betting against the banks peddling the fraudulent loans. What made them open up to Lewis was that he had worked at Salomon Brothers left to make a name for himself by exposing Wall Street's excesses in "Liar's Poker." Lewis left Salomon Brothers to write his book after receiving a $200,000 bonus. His father urged him to stay another 10 years, then write his book:
Lewis was 27 at the time. He looked around at colleagues at the bank who were 37, the men who might 10 years ago have said the same thing. He saw nothing left in them that suggested they could leave. They had been so transformed by the rates of pay and the needs it had created in them, they couldn’t escape from it.
The charter school industry, and the privatization of prisons, water systems, highways, and other public infrastructure – hell, the Powerball lottery – are simply quieter manifestations of the cultural celebration of greed as a virtue and wealth accumulation as a secular sacrament. In the Midas Cult, Donald Trump and Jamie Dimon are high priests.
Malcolm Harris writes at Al Jazeera about how that concentrates rather than distributes power in what is still nominally a democratic republic. So much so that the emerging oligarchy is becoming open about it:
Democracy isn’t supposed to be a vehicle for wealthy people to hedge their bets, but the open secret is that capitalism is more than just an economic regime. It’s a total social system, and it’s ruled by a small class of people, not elected representatives as such. The practices that we think of as making up democracy — like voting, volunteerings, protesting, writing op-eds — are just part of what determines the structure of American social reality, and not a very big part when it comes down to it. Between “money is power” and “all power to the people,” we know which one describes life in the United States.
That imbalance threatens to shift the world's axis. Oxfam UK released a report in which it finds "62 of the world’s richest people own as much as the poorest half of humanity combined."
Oxfam GB chief executive Mark Goldring explains:
“It is simply unacceptable that the poorest half of the world population owns no more than a small group of the global super-rich – so few, you could fit them all on a single coach,” he said.“World leaders’ concern about the escalating inequality crisis has so far not translated into concrete action to ensure that those at the bottom get their fair share of economic growth. In a world where one in nine people go to bed hungry every night we cannot afford to carry on giving the richest an ever bigger slice of the cake.
“We need to end the era of tax havens which has allowed rich individuals and multinational companies to avoid their responsibilities to society by hiding ever increasing amounts of money offshore.
Wall Street is only the most visible tip of the iceberg.
