Monday, September 29, 2008


In Sunday’s ‘Boston Globe’, Jeff Jacoby has an Opinion piece to the effect that Barney Frank and the Dems were very much a part of the rush-to-subprime that triggered what is probably the last great financial crisis in America’s career as a hyperpower – or perhaps even as a solvent sovereign entity.

He marshals the dates, times, and words during the past 30 years when Democrats exercised “pressure” that was “relentless” to make more mortgages available to minority neighborhoods. Does the ‘redlining’ crisis bring back memories?

In light of my take on American affairs for the past 40 years, I see it this way:

The Dems fell in with LBJ’s take on things as he revealed it in his speech at Howard University in June of ’65 – where a very hazy and fuzzy ‘next phase’ of civil rights was outlined and promised even before the ‘classic’ civil-rights era had been capped with success. (See my Post “We Bought What?” of last week.) Having fulfilled – finally – the promises of the Civil War and Reconstruction, the government and the Dems would take things to a whole new level with “affirmative racism”.

In the very year when economists were noting that America’s postwar industrial and economic pre-eminence was starting to decline relative to the now-recovering rest of the world, posing a challenge which should have summoned Our sustained and most careful and serious attention – as a matter of national prosperity (and now perhaps survival) – the seeds were sown for American politics and public attention to be hugely involved with the never-more-fully-explained plan unleashed by LBJ.

The Dems, We recall, were terrified that they would lose the Southern voters by supporting the civil-rights movement in its classic phase. They clearly had plans even before the summer of 1965 not to allow the huge changes of the past 10 years some time to be absorbed, but rather to escalate into that gauzy next phase of “affirmative racism”. Their determination was explosively crystallized by the monster Watts riots, scarcely a week after the Voting Rights Act was signed into law. And then the Republicans under Nixon started to make a play for the ‘black demographic’ and it looked like they were actually making more progress than the Democrats.

We note in passing that starting in about ’68 the Dems also began throwing their support behind the Feminists of the Second Wave, and as time thumped on, behind other Identities as they sprang up. But the Dems also cozied up to the corporations, legislatively erecting PACs to guarantee campaign funds that they could no longer count on from the increasingly balkanized and hard-to-satisfy Identity-groups that bombarded them with telegenic demands.

Meanwhile, the economy was starting to display odd signs. Nixon had to take the country off the gold-standard in ’71, there were sudden ‘shortages’ of beef and sugar (sirloin went over 50 cents a pound, candy bars jumped from a nickel to 15 cents overnight), then right after the Israeli success in the October War of ’73 there was the first OPEC-related gas shortage (Americans! Waiting in line for gas? How’d it evah happen heah?!! … No serious answer was ever given). And then in the later ‘70s Chrysler needed a government bailout and state governments started closing down their expensive mental institutions to save money that they suddenly didn’t seem to have - making many of the patients ‘homeless’ in the process.

My bet is that as the economy showed more and more signs of problems coping with the changing postwar world, the Dems simply tried to keep everybody happy, feeling like they had a piece of the old pie. The corporations began to see the fruits of their strategic assessments of new possibilities offered by the changing world: they’d undercut the New Deal labor laws and social arrangements by setting up shop in foreign countries with cheaper and unprotected – and undemanding – supplies of labor. The Dems kept taking the PAC contributions while trying to keep the ‘liberation’ ball rolling with the various Identities’ demands. They let the corporations pull the foundations out from under the ‘world’ that the working and middle classes had come to expect after the war as jobs and benefits began to seep out of the country like sand from a broken hourglass.

Then Reagan came along, and the Dems – although controlling Congress – had no alternative to his sunny assurance that the 1940s could be brought back again. Nor did they have any stomach for pointing out that the Great Oz was just a huckster; they decided they had more to gain by going along with him. The money began to flow – not through new inventions (although there was the PC; but the cars were crappy and imports were all the rage) but through all sorts of financial finagling. Billions and hundreds of billions were suddenly in the news for being ‘lost’ by banks – savings and loans – that were supposed to be the reliable servants of the saving classes. No prahblum! Greed was good, lawyers now boasted of making as much money as CEOs, and hotels got a lot brassier and glossier, just as Picard’s sparkling, computer-driven Enterprise made Kirk’s 1966 Enterprise look like a ratty trailer-park has-been.

Then the Soviets collapsed and now there was nothing to stand up against Us. The first Gulf War was fought for almost nothing; We put up the troops and equipment and the rest of the world’s major nations sent cash – lots of it. A Democratic President came in and who could doubt that somehow the Democrats would keep the New Deal going? But the Dems had quietly abandoned the New Deal and everybody who had come to rely on it; it was party-time, America was going to take a well-deserved splurge. ‘Business’ seemed to have absolutely nothing to do with making things any more; and the ‘smart’ life, even the good life, involved lots of expensive imported stuff. But in order to keep the little people happy, credit was expanded – credit cards became plentiful and if any of the small fry noticed that the whole ‘job’ thing was starting to get iffy, there was plenty of credit on the card to buy something shiny. Even big and shiny. All sorts of high-end stores opened, and not just in high-end locales. And seemed to make money.

The ‘economy’ was reported to be going through the roof. Not to worry, We were told; you don’t need to make things to have a stable and growing economy; empty factories and mills make great condos. And there’s Finance and Insurance and Real Estate. And takeovers and mergers: Cookie companies bought up famous old clothing companies and long-established free-standing companies providing this or that service simply became subsidiaries of something that did something else (newspapers and then radio and TV stations started going the same way). ‘Profits’ started to come from layoffs and reductions-in-force rather than from making stuff, but the bottom-line somehow came out as stronger than ever before. The evening news became a ‘magazine’ and it all started to sound the same. CEOs began to make money like the Rockefellers and the Astors and Carnegie made in the Gilded Age, though fewer folks seemed to know that much about American history.

Then the bedrock of Our ‘new’ knowledge economy, the internet and computing sectors, crashed. It had been a bubble, the word was. But not to worry: housing starts were going through the roof and real-estate was climbing to the stars (where We apparently were no longer heading in any real sense; commemorative tchochkes of the 1969 moon-walk’s ‘one giant leap for mankind’ (person-kind) suddenly seemed like ‘history’ too).

And the Dems found a way to get themselves a shrewd two-fer (the Dems have a serious case of being too shrewd by-half, as the Brits would say). They would insist that their Identities also get a piece of this exploding pie: sub-prime mortgages made the rich richer and the poor seem to be rich. The former was real; the latter was ‘spin’. But what they hey! – ‘facts don’t matter’ and anyway, Americans make history, they aren’t slaves to it. History – like bombing – happens to other people.

Immigration – the illegal kind – was another two-fer, even a five-fer: the rich could get folks who were humble and hard-working enough to clean toilets and pools with some regularity, liberated working women who were mothers could get nannies, their corporations and businesses could get cheaper labor with no New Deal-type expectations, the Dems could get a lot of folks who were not ‘white industrial males’ to build the brave new America envisioned by the Identities, and the lid could be kept on Mexican and Central American nations whose people were being overrun by the workings of NAFTA. Something for everybody. And housing was going to the stars.

And then came the invasion of Iraq. And as that operation blew through the ceiling of 100 billion bucks and started heading for the stars itself … well , shopping was the great engine of the economy. The credit cards were still working and it was the best way to ‘be American’, according to the President. History – God no longer being easily mentionable in public speeches – was with Us.

And here We are. And now the Dems are going to put a stop to it. If We would just kindly forget anything that happened any further back than a month ago, they’ll be glad to receive Our support. If they expect voters to have that short a memory, they’re going to have to start giving six-year-olds the vote. Or maybe not.

I am writing this not knowing if the bailout bill has passed, and whether it will actually help anybody besides the big-spenders who have been bankrolling both Parties for the past umpty years. But I have read somewhere that the International Monetary Fund is sending a ‘working group’ to come for a working visit, and Washington has said ‘OK’. This is what happens to small, third-world countries – ‘banana republics’ in the old argot – when the big boys aren’t sure that your country is solvent any longer. Their job is not to help your people (that’s your job) but to make sure that international creditors get their payments on time. It will – you must understand – help ‘your people’ in the long run because the contraction in the economy, no matter how drastic, will give them that much more opportunity to learn thrift, industriousness, self-control, and how to postpone gratification … all the great strength-making characteristics of advanced nations.

We’re all going back to school this Fall. Buy some pencils. Or get ready to sell them. Arbeit, it is guaranteed, macht frei.

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