The dangers of financial shock therapy…

A week ago Saturday, when the preparation of Sarah Palin to be vice president seemed like the central political issue, I heard Naomi Klein, among others talk about the presidential campaign. Like any good writer with a recent book, she offered a capsule summary of the shock doctrine. Instead of getting into the detail, I let the amazing director Alfonso Cuarón do it for you.

Whether or not you’ve caught up with the details of the crisis in the financial markets or the Wall Street bailout, keep one eye on the political game being played here. After a week of downtown Manhattan traders whipsawing the market (with a net loss of less than 1%), an emergency measure is proposed, on a scale larger than anything we’ve ever seen in our lifetime (think the full price of the Iraq war being proposed up front). This is classic shock politics. And it doesn’t end today, it transfers the risk and the loss from Wall Street banks to the US Treasury in the form of new debt. Klein argues on Real Time with Bill Maher:

The disaster is far from over. They’ve actually just relocated the disaster. The disaster was on Wall Street and they have moved the disaster to Main Street by accepting those debts. … The bomb has yet to detonate, the bomb is the debt that has now been transferred to the taxpayers. So it detonates when — if John McCain becomes president, in the midst of an economic crisis, and says, “Look, we’re in trouble, We’ve got a disaster on our hands. We have to privatize social security; we can’t afford healthcare; we can’t afford food stamps. We need more deregulation, more privatization. You know the thesis of the Shock Doctrine is that you need a disaster to rationalize putting through these policies.”

And it’s not just McCain who might try some kind of emergency pullback around the debt. Those of us who were hopefully watching the president from Hope, Arkansas, saw this whole story in 1992:

It was in the two and a half months between winning the 1992 election and being sworn into office that Bill Clinton did a U-turn on the economy. He had campaigned promising to revise NAFTA, adding labor and environmental provisions and to invest in social programs. But two weeks before his inauguration, he met with then-Goldman Sachs chief Robert Rubin, who convinced him of the urgency of embracing austerity and more liberalization. Rubin told PBS, “President Clinton actually made the decision before he stepped into the Oval Office, during the transition, on what was a dramatic change in economic policy.”

The narrative is from Klein again, who warns that Barack Obama has his own Chicago Boys advising his economic policies. And right on cue, Mr. Hope is announcing the bailout “will likely postpone his sweeping proposals on healthcare, education, alternative energy, and other priorities.”

Primer on the financial mess…

Okay. No one can claim that the vortex of disappearing money is not confusing. Those of us who spend our days buying mere things with services thrown in for a bonus, are bound to be confused by the array of ways in which money, currencies, debt are bought, repackaged and sold. Not to mention the ways in which the possibility of any of those “things” fluctuating in value is then remade into a commodity in and of itself.

So, I’m assembling here (stay tuned to this post) as much background as I can on how this happened…

First up, is This American Life’s collaboration with NPR on The Giant Pool of Money, an hour-long radio documentary on how excess cash begat a housing boom, a mortgage collapse, and the credit crunch. Ignore the bit from early this summer when they speculate that everything will only get as bad as the 1970s. As Lehman Brother’s understated last dispatch declares:

This episode of financial crisis appears to be much deeper and more serious than we and most observers thought it likely to be. And it is by no means clear that it is over.

Smart and graph-heavy expert Doug Henwood of Left Business Observer gives his take in two parts (1|2) as the crisis evolves.

The New York Times, which has had to start a blog called Freakonomics (after a book, but imagine the great grey paper running that title in stabler times), offers summaries of the crisis by David Leonhardt, “Bubblenomics,” and John Steele Gordon, “Greed, Stupidity, Delusion — and Some More Greed.”

$700B! WTF? New York to talk back to Wall Street THURSDAY

A do-it-yourself protest is gathering to counter the rush “do something” by bailing out Wall Street. More thoughts from me soon on how “we” got into this mess, and what options there are, but here’s one place to pull the emergency brake on the train to spending $700 billion of our money to buy bad debt. Seems to me all the times we’ve asked for our money for something useful, we’re told there isn’t any…

When: 4pm Thursday, September 25!
Where: Southern end of Bowling Green Park, in the plaza area
What to bring: Banners, noisemakers, signs, leaflets, etc.
Why: To say we won’t pay for the Wall Street bailout
Everyone,

This week the White House is going to try to push through the biggest robbery in world history with nary a stitch of debate to bail out the Wall Street bastards who created this economic apocalypse in the first place.

This is the financial equivalent of September 11. They think, just like with the Patriot Act, they can use the shock to force through the “therapy,” and we’ll just roll over!

Think about it: They said providing healthcare for 9 million children, perhaps costing $6 billion a year, was too expensive, but there’s evidently no sum of money large enough that will sate the Wall Street pigs. If this passes, forget about any money for environmental protection, to counter global warming, for education, for national healthcare, to rebuild our decaying infrastructure, for alternative energy.

This is a historic moment. We need to act now while we can influence the debate. Let’s demonstrate this Thursday at 4pm in Wall Street (see below). We know the congressional Democrats will peep meekly before caving in like they have on everything else, from FISA to the Iraq War.

With Bear Stearns, Fannie and Freddie, AIG, the money markets and now this omnibus bailout, well in excess of $1 trillion will be distributed from the poor, workers and middle class to the scum floating on top.

This whole mess gives lie to the free market. The Feds are propping up stock prices, directing buyouts, subsidizing crooks and swindlers who already made a killing off the mortgage bubble.

Worst of all, even before any details have been hashed out, The New York Times admits that “Wall Street began looking for ways to profit from it,” and its chief financial correspondent writes that the Bush administration wants “Congress to give them a blank check to do whatever they want, whatever the cost, with no one able to watch them closely.”

It’s socialism for the rich and dog-eat-dog capitalism for the rest of us. Let’s take it to the heart of the financial district! Gather at 4pm, this Thursday, Sept. 25 in the plaza at the southern end of Bowling Green Park, which is the small triangular park that has the Wall Street bull at the northern tip.

By having it later in the day we can show these thieves, as they leave work, we’re not their suckers. Plus, anyone who can’t get off work can still join us downtown as soon as they are able.

There is no agenda, no leaders, no organizing group, nothing to endorse other than we’re not going to pay! Let the bondholders pay, let the banks pay, let those who brought the “toxic” mortgage-backed securities pay!

On this list are many key organizers and activists. We have a huge amount of connections – we all know many other organizations, activists and community groups. We know P.R. folk who can quickly write up and distribute press releases, those who can contact legal observers, media
activists who can spread the word, the videographers who can film the event, etc.

Do whatever you can – make and distribute your own flyers, contact all your groups and friends. This crime is without precedence and we can’t be silent! What’s the point of waiting for someone else to organize a protest two months from now, long after the crime has been perpetrated?

We have everything we need to create a large, peaceful, loud demonstration. Millions of others must feel the same way; they just don’t know what to do. Let’s take the lead and make this the start!

When: 4pm Thursday, September 25!
Where: Southern end of Bowling Green Park, in the plaza area
What to bring: Banners, noisemakers, signs, leaflets, etc.
Why: To say we won’t pay for the Wall Street bailout
Who: Everyone!