Why are we in such a financial mess today? There are lots of proximate causes: over-leverage, global imbalances, bad financial technology that lead to widespread underestimation of risk.
But these are all symptoms. Until we isolate and tackle fundamental causes, we will fail to extirpate the disease. ECONned is the first book to examine the unquestioned role of economists as policy-makers, and how they helped create an unmitigated economic disaster.
Here, Yves Smith looks at how economists in key policy positions put doctrine before hard evidence, ignoring the deteriorating conditions and rising dangers that eventually led them, and us, off the cliff and into financial meltdown. Intelligently written for the layman, Smith takes us on a terrifying investigation of the financial realm over the last twenty-five years of misrepresentations, naive interpretations of economic conditions, rationalizations of bad outcomes, and rejection of clear signs of growing instability.
I completely missed the release of this film in July, and stumbled on it while picking movies for a sick son.
It opens with Henry Kissinger, since demonstrated to be a war criminal, calling Daniel Elsberg the most dangerous man in America, and lamenting the release of secret documents (that ultimately proved government perfidy). Fast forward to WikiLeaks as a sequel to the 935 documented lies led by Dick Cheney.
In this book, “deregulation” is a four-letter word: a synonym for leaving the U.S. taxpayer, U.S. markets and the U.S. reputation wide open to greedy mindless homegrown plutocrats. In short, it is a synonym for leaving the nation vulnerable to conscienceless unpatriotic Wall Street thieves.
Here in easy to understand language, Robert Scheer has pealed back the layers that cover up the whole stinking mess that has become “stripped-down vulnerable deregulated America.” The method of robbery is basically a five-step political process: (1) “demagog” FDR and all existing regulations relentlessly as the enemy of free enterprise; (2) use paid lobbyist to help justify, tear-down and then rewrite new regulations; (3) use lobbyists' contributions to buy off the votes of key politicians in both parties to open up the laws for the impending thievery; (4) once legislation is passed, oversee the Wall Street financial casino with watchdogs that do not watch; and then (5) appoint members of the plutocracy who stand to gain the most, as facilitators and the palace guards of policy.
The present system of “high-level state sanctioned grand larceny” was designed and implemented, not by Ronald Reagan, or GW Bush, but by William Jefferson Clinton with the help of none other than the gang of four — Timothy Geitner, Robert Rubin, Alan Greenspan, and Lawrence Summers. However, the unsung hero of the grand heist, was Windy Lee Gramm, senator Phil Gramm's paramour and then wife, (who as a grad student was first his lover and then very quickly his wife). It was this “devious duo” that engineered the plans for the ultimate robbery of the American economic system.
This is an astonishingly well balanced book that while deeply critical of CIA and its senior management also credits its strengths and successes. The author, Melvin Goodman, spent some 34 years as an analyst within the Directorate of Intelligence (DI) of CIA. His principal criticism is that CIA directors in collusion with the executive branch have routinely politicized not merely intelligence products, but the very processes of research and analysis basic to intelligence production. He further argues that most intelligence `failures' can be traced to the practice of far too many at CIA to distort the intelligence process to support policy decisions and even to suppress sound, contrary intelligence. He also sees the growing `militarization' of the U.S. Intelligence System as further evidence that the Intelligence Community (IC) is moving from producing objective and accurate intelligence to producing intelligence that supports the ideologies and prejudices of its masters.
Goodman supports his argument with a remarkably detailed chronicle of CIA intelligence production over the last 35 years. This chronology emphasizes those instances where political pressure and the need to support a particular point of view took precedence over the need to produce accurate intelligence. Also, although he doesn't say so directly, he demonstrates the truth that intelligence is only as good as the system it serves. Unlike so many books on intelligence, this book actually identifies both the good guys and the bad .guys of CIA over the years. In particular he has a fascinating analysis of CIA Directors from Bill Casey (1980-1986) onward that is quite devastating. Although his principal target is the deleterious effect of the politicization and militarization of intelligence, he also effectively criticizes CIA's analytic and clandestine tradecraft.
This is an absolutely important critique of the course of CIA and by extension the entire U.S. Intelligence Community. However, given the controversial claims made by Goodman and the fact he actually names his heroes and villains, the reader might ask does he really know what he is talking about? In this reviewer's opinion, the answer is yes he does. Having been personally involved in a number of specific intelligence events that he chronicles, this reviewer would argue that Goodman has accurately described them. This is a book that ought to guide any effort to reform the U.S. Intelligence System.
QUOTE (32): What has taken place over the last generation is a highly complicated merger of crime and policy, of stealing and government. Far from taking care of the rest of us, the financial leaders of America and their political servants have seemingly reached the cynical conclusion that our society is not work saving and have taken on a new mission that involved not creating wealth for us all, but simply absconding with whatever wealth remains in our hollowed out economy. They don't feed us, we feed them.
I defer to the other reviewers on the substance of the book, but want to provide links here to several books that address the larger context of the soul of capitalism and the corruption of the two political parties that have undermined the US Government and US economy with malice aforethought.
I am blogging twice a week at Huffington Post on what a Virtual Cabinet doing sane evidence-driven policies in the context of a balanced responsible budget might look like, and would welcome visits there by those interested in getting back to honest government and responsible capitalism.
This is an extraordinary book, combining gifted insights and turns of phrase with serious research that has a point worth fighting for: Wall Street led by Goldman Sachs has ripped off the entire US economy, and they still have most people thinking that politics matters.
It merits comment that while Michael Lewis was first, with Liar's Poker, and was recently quoted as saying he had no idea Wall Street would get away with these obvious high crimes against the public for another 30 years, this author takes us all up another level, weaving in everything–politics, culture, sex, booze, LSD, and the occasional rabbid racoon.
The author is especially deft at observing, documenting, and describing the combination of lunatic ignorance and blessed righteous anger within the Tea Party, at the same time that he points out they have no idea that they have been funded and directed by the very people who have stolen their economy out from under them.
I am especially impressed by the author's understanding of how Wall Street has managed to co-opt the very people they are destroying by leveraging the “shared” view of excessive government regulation. I for one absolutely believe that states should start nullifying federal laws and regulations that impair state-based businesses (e.g. butchers and cabinet-makers). What the people being destroyed do not understand is HOW they are being destroyed by Wall Street, which is essentially eating out the foundation from under them.
QUOTE (32): What has taken place over the last generation is a highly complicated merger of crime and policy, of stealing and government. Far from taking care of the rest of us, the financial leaders of America and their political servants have seemingly reached the cynical conclusion that our society is not work saving and have taken on a new mission that involved not creating wealth for us all, but simply absconding with whatever wealth remains in our hollowed out economy. They don't feed us, we feed them.
Unquestionable a great book, with one big missing piece: it does not follow the money back to Wall Street. Buckminster Fuller understood in the 1960's that the White House had become theater, I did not understand his meaning until the economic meltdown and my noticing that Goldman Sachs has provided the Secretary of the Treasury for the last six or so Administrations.
The Tea Party, a grand mix of idealistic individuals who really think they have a shot at making a difference, is funded by the Koch Brothers, and all the other wing-nuts this book discusses all have financial underpinning that serve a purpose: to create theater. They are the American version of a political circus that keeps people's eyes off the raw fact that the US is a two-party tyranny with election manipulation so embedded that we no longer qualify as a democracy according to international standards.
NOTE: To investigate funding yourself, just search, my preferred search portal is Duck Duck Go, for <Koch Tea Party funding>
Wing-nuts is an “order of battle” for the extremist fringe, but it does NOT explain why the US government and US economy are in the toilet. For that we need just one word: INTEGRITY (lost).
The wing-nuts are getting their time in the sun because the extreme wealthy that have hollowed out America, exported all the skilled jobs, allowed illegal immigration so they could pay even less for unskilled labor, are now nervous. Bush Junior did his eight, Obama gave Wall Street four more years, right now the best that Wall Street can think of is making the next four years a complete circus.
`All that is necessary for the triumph of evil is that good men do nothing' (or words to that effect). Edmund Burke and Justice Brandeis are both cited on this one. It says a lot when two comedians make more sense and demonstrate more integrity than all of our Senators, Representatives, and Executive Branch officials. Perhaps it really does take a comic (or two) to save a Nation.
Just one of many books supporting my suggestion that this is all theater:
You can find all of my non-fiction reviews sorted into 98 categories at Phi Beta Iota the Public Intelligence Blog. I have also created lists of reviews (e.g. corruption, education) and two master lists. The negative list is everything that is wrong with America and the world, the positive one everything that is right or could be right. Both those lists are also at the Huffington Post. It's time to restore the integrity of our Republic, that must of necessity begin with Electoral Reform.
Stunningly Relevant Today and Always
Theater–Follow the Money to Understand