Nobel Prize-winning economist Joseph Stiglitz has a powerful post (h/t to University of Oregon Economics Professor Mark Thoma at his
Economist's View blog) running over at Project Syndicate, right now, entitled: "
Justice for Some."
...The mortgage debacle in the United States has raised deep questions about "the rule of law"... The rule of law is supposed to protect the weak against the strong...
Part of the rule of law is security of property rights... But in recent weeks and months, Americans have seen several instances in which individuals have been dispossessed of their houses even when they have no debts. To some banks, this is just collateral damage... Most people evicted from their homes have not been paying their mortgages... But Americans are not supposed to believe in justice on average. ... The US justice system demands more...
--SNIP--
In America ... It is not particular judges that are bought, but the laws themselves, through campaign contributions and lobbying, in what has come to be called "corruption, American-style."
--SNIP--
Growing inequality, combined with a flawed system of campaign finance, risks turning America's legal system into a travesty of justice. Some may still call it the "rule of law," but it would not be a rule of law that protects the weak against the powerful. Rather, it would enable the powerful to exploit the weak.
In today's America, the proud claim of "justice for all" is being replaced by the more modest claim of "justice for those who can afford it." And the number of people who can afford it is rapidly diminishing.
When it comes to Wall Street's grip on our society, I could go on (and I have gone on) at length about how "the banks own the place." But, tonight, I thought I'd do something a little different, and simply overwhelm you with truths (about 70 of them; actually, if you go to the links, below, you'll see it's about 200 commentaries and sets of facts, from just 2010, alone) relating to the over-arching reality that -- if nothing else, it's due to the sheer onslaught of stories relating to the financial evisceration of Main Street by Wall Street that's still occurring before our very eyes -- we, here in America, have become almost NUMB to the extent of fraud that now runs rampant throughout our society, as we concurrently witness the greatest economic disparity between the haves and the have-nots since metrics were first introduced to track those realities.
As Robert Reich and many others, including yours truly, told us on Friday, it's about: "America's Two Economies, and Why One is Recovering and the Other Isn't."
But, we tend to forget those bigger truths, as this percolating anger has been allowed to brew within our guts for the past decade. And, over the past year, alone, we've been witness to these travesties offending our sensibilities, one after another, up until today. Yes, if for no other reason than the sheer, overwhelming nature of this macro-farce, it just forces one to virtually tune out...
...What else can one do when contending with an onslaught of cognitive-dissonance-generating realities -- that some mistakenly label as "doomer porn" -- such as this? (See 2010 story list, below.)
Among many others, Kossack Shaun Appleby covered some of what I'm covering here in an excellent diary on Sunday, "Moral Hazard and Fraud." And, FPer Laurence Lewis' post, also on Sunday, entitled: "An unlearned lesson about neoliberalism," covers much of this, too. (His commentary, IMHO, gets my vote for the most important DKos post of the year, to date!) Of course, there's Kossack Badabing's free-wheeling posts on the unchecked fraud that has been running rampant throughout our financial services sector, too. (Frankly, posting the list, immediately below, helped me with my own thinking as far as grasping the enormity and the true extent of the problem was concerned!)
# # #
"HSBC and JP Morgan accused of manipulating silver market," Garry White and Rowena Mason, UK Telegraph, 11/8/10
"Michael Lewis Exposes Goldman's Prop Trading In Flow Clothing," Zero Hedge,10/27/10
"Chris Whalen Welcomes Our New Tyrannical Overlords, Prepares For The Taxpayer Funded Mortgage Insurer Bailout," Chris Whalen, Institutional Risk Analytics via Zero Hedge, 10/27/10
"Homeowners Protest HAMP: 'It's Just A Scam And The Banks Are Getting Everything'," Arthur Delaney, Huffington Post, 10/26/10
"Treasury Hid A.I.G. Loss, Report Says," Mary Williams Walsh, NY Times, 10/26/10
"SIGTARP Calls Out Tim Geithner On Various Violations Including Data Manipulation, Lack Of Transparency, "Cruel" Cynicism, And Gross Incompetence," Zero Hedge, 10/25/10
"The enormous mortgage-bond scandal," Felix Salmon, Reuters 10/13/10
"Exclusive Excerpt: America on Sale, From Matt Taibbi's `Griftopia'," Matt Taibbi, Rolling Stone, 10/18/10
"Foreclosure Fraud: We Need to Fix the Banks Again," Yves Smith, Naked Capitalism, 10/16/10
2010-197 Oct. 15, 2010 Former Countrywide CEO Angelo Mozilo to Pay SEC's Largest-Ever Financial Penalty Against a Public Company's Senior Executive*
2010-177 Sep. 30, 2010 Former State Street Employees Charged for Misleading Investors About Subprime Mortgage Investments*
"Ending the Off-Balance Sheet Charade," Rolfe Winkler, Seeking Alpha, 9/17/10
"Follow the Dirty Money," Robert Mazur, NY Times, 9/13/10
"SEC Says Prince, Rubin Knew of Losses Assets at Suit's Focus," Joshua Gallu and Donal Griffin, Bloomberg, 9/9/10
"Why Robert Rubin and Citibank Execs Should Be in Deep Trouble," Zach Carter, Alternet.org, 9/9/10
"Wall Street's Big Win," Matt Taibbi, Rolling Stone, 8/6/10
2010-136 Jul. 29, 2010 SEC Charges Citigroup and Two Executives for Misleading Investors About Exposure to Subprime Mortgage Assets*
2010-133 Jul. 27, 2010 SEC Charges General Electric and Two Subsidiaries with FCPA Violations*
2010-123 Jul. 15, 2010 Goldman Sachs to Pay Record $550 Million to Settle SEC Charges Related to Subprime Mortgage CDO*
"Bank of America Admits To Repo 105-Like Fraud, Even As End Of Quarter Window Dressing," Zero Hedge, 7/11/10
"America's Municipal Debt Racket," Steve Malanga, Wall Street Journal Online, 6/14/10
"Senator Kaufman Blasts SEC And Getco For Latest Episode Of Glaring Regulatory Capture," Zero Hedge, 6/11/10
"SEC Investigation of Goldman Trading Against Its Clients Widens," Yves Smith, Naked Capitalism, 6/10/10
"No Criminal Charges Against AIG Execs," Yves Smith, Naked Capitalism, 5/21/10
"Goldman to Face SEC Deputy Director in Subprime Securities Suit," David Glovin, Bloomberg, 5/18/10
"DOJ: Banks Colluded with Municipal "Advisers" to Rig Bids on GICs," Yves Smith, Naked Capitalism, 5/18/10
"Conspiracy of Banks Rigging States Came With Crash (Update1)," Martin Z. Braun and William Selway, Bloomberg, 5/18/10
"Citi And Deutsche Subpoenaed Over CDO Sales," Zero Hedge, 5/12/10
"SEC Didn't Act After Spotting Wall Street Risks, Documents Show," Bloomberg, Jesse Westbrook, 5/6/10
"Crisis Panel to Probe Window-Dressing at Banks," Louise Story, NY Times 5/5/10
"Goldman Said to Face Criminal Probe by U.S. Prosecutors Examining SEC Case," Justin Blum and David Glovin, Bloomberg, 4/29/10
"The Feds vs. Goldman Sachs," Matt Taibbi, Rolling Stone, 4/26/10
"Criminal Charges Next? Barofsky To Coordinate With DOJ To See If US Taxpayers Were Victims Of Goldman Fraud," Zero Hedge, 4/20/10
"SEC Investigating Other Soured Deals," Carrick Mollekamp, Serena Ng, Scott Patterson, Gregory Zuckerman, Wall Street Journal, 4/19/10
"S.E.C. Inquiry May Widen, Khuzami Hints," Dealbook, NY Times, 4/16/10
2010-59 Apr. 16, 2010 SEC Charges Goldman Sachs With Fraud in Structuring and Marketing of CDO Tied to Subprime Mortgages*
"Rampant Fraud and Financial Collapse," Zach Carter, Alternet.org, 4/14/10
Big Banks Mask Risk Levels Kate Kelly, Tom McGinty and Dan Fitzpatrick, Wall Street Journal, 4/9/10
"Finally! SEC Charges a Big Bank with Fraud," Zach Carter, Alternet.org, 4/7/10
"Wall Street's Repo 105 Cops Wake Up From Dead: Jonathan Weil," Jonathan Weil, Bloomberg, 4/1/10
"SEC Launches Repo 105 Investigation," Yves Smith, Naked Capitalism, 3/30/10
"Full SEC Letter Demanding Repo 105 Disclosures From Financial Firm CFOs," Zero Hedge, 3/29/10
2010-48 Mar. 26, 2010 SEC Announces $185 Million Distribution to Investors Injured by Prudential Securities Market Timing Fraud*
"Bank Of America Can Not Deny It Used Repo 105, Response From PricewaterhouseCoopers Pending; The BofA QSPE's," Zero Hedge, 3/23/10
"Obstacles to SEC/DOJ Pursuing Criminal Indictments for Lehman," Yves Smith, Naked Capitalism, 3/21/10
"Repo 105's antecedents: Ken Lewis," Bronte Capital, 3/20/10
2010-42 Mar. 18, 2010 SEC Warns Firms on Muni Pay-to-Play Rules*
"Deutsche Bank, JPMorgan, UBS Are Charged With Fraud (Update1)," Elisa Martinuzzi and Sonia Sirletti, Bloomberg, 3/17/10
"Goldman's Great Greek Swindle and the American Blowback," Scott Thill, Alternet.org, 3/16/10
"NY Fed Under Geithner Implicated in Lehman Accounting Fraud Allegation," Yves Smith, Naked Capitalism, 3/11/10
"Secret AIG Document Shows Goldman Sachs Minted Most Toxic CDOs," Richard Teitelbaum, Bloomberg, 2/23/10
"Goldman Says `Nothing Inappropriate' in Greek Swaps (Update1)," Gavin Finch and Andrew MacAskill, Bloomberg, 2/22/10
"When is a Fraud Not a Fraud? (Greece-Goldman Edition)," Yves Smith, Naked Capitalism, 2/17/10
2010-21 Feb. 4, 2010 SEC Charges State Street for Misleading Investors About Subprime Mortgage Investments*
"Is Geithner Toast? Barofsky Announces 2 New Fed-AIG Probes," 1/26/10
"Reuters: SEC Considered AIG Bailout National Security Matter," 1/25/10
"SEC mulled national security status for AIG details." Matthew Goldstein, Reuters, 1/24/10
"Naked Capitalism Guest Post: AIG Bailout Secrets Exposed!" Naked Capitalism, 1/23/10
2010-10 Jan. 20, 2010 SEC Charges General Re Corporation for Role in AIG and Prudential Accounting Frauds*
"New York Fed Told AIG To "Stand Down" On All Counterparty Discussions," Zero Hedge, 1/19/10
"New York Fed Faces House Subpoena Over AIG Bailout (Update2)," Hugh Son, Bloomberg, 1/12/10
"Breaking (Update): Fed Denies House Subpoena For AIG Docs," 1/12/10
"SEC order helps maintain AIG bailout mystery," Matthew Goldtein, Reuters, 1/11/10
"Geithner's dubious AIG cover up," Edward Harrison, Credit Writedowns via Naked Capitalism, 1/7/10
"Might AIG Escape Prosecution for (Allegedly) Cooking the Books?" Marla Singer, Zero Hedge, 01/07/2010
*=THIS
# # #
Back to Stiglitz and the reality that many in U.S. society are now attempting -- and, at least to some extent, succeeding -- at instilling a sense of moral bankruptcy into our national dialogue. (What else may one call it when we're told by some that it's okay to let 1.2 million Americans lose their unemployment benefits this month? Or, that 10% unemployment is the new normal? Or, that if you are fortunate to even have a decent job, you'll have to work until you're 70 just to be eligible to collect Social Security?)
Moral Bankruptcy
by Joseph E. Stiglitz
Mother Jones January 2010
...Exaggerating the virtues of one's wares or claiming greater competency than the evidence warrants is something that one might have expected from many businesses. Far harder to forgive is the moral depravity--the financial sector's exploitation of poor and middle-class Americans. Our financial system discovered that there was money at the bottom of the pyramid and did everything possible to move it toward the top. We are still debating why the regulators didn't stop this. But shouldn't the question also have been: Didn't those engaging in these practices have any moral compunction?
Sometimes, the financial companies (and other corporations) say that it is not up to them to make the decisions about what is right and wrong. It is up to government. So long as the government hasn't banned the activity, a bank has every obligation to its shareholders to provide financial support for any activity from which it can obtain a good return. The predecessors to JPMorgan Chase helped finance slave purchases. Citibank had no qualms about staying in apartheid South Africa.
But consider, too, that the business community spends large amounts of money trying to create legislation that allows it to engage in nefarious practices. The financial sector worked hard to stop predatory lending laws, to gut state consumer protection laws, and to ensure that the federal government's ever laxer standards overrode state regulators. Their ideal scenario, it seems, is to have the kind of regulation that doesn't prevent them from doing anything, but allows them to say, in case of any problems, that they assumed everything was okay--because it was done within the law...
Bold type is diarist's emphasis.
So, coming full circle, almost two years after he published his tome: "The Quiet Coup," we have none other than Simon Johnson telling us who we're gonna' call...
The White House Needs Elizabeth Warren, Now More Than Ever
Simon Johnson
Baseline Scenario
November 3, 2010
...the administration needs to get beyond its mental framework of early 2009, which led it sadly astray with regard to the financial sector. The President needs to find people and themes capable of cutting across the political spectrum; specifically he needs to promote strongly the ideas of Elizabeth Warren - what we need in financial services, above all else, is much more transparency.
--SNIP--
....the president needs is someone who can take the fight to the Chamber - force them publicly to defend business practices that are unacceptable and abhorrent to responsible entrepreneurs and executives.
--SNIP--
The problem is ... that a few people (and their prominent organizations) at the center of our financial system got out of control. We can fix this problem - there is no reason to subject ourselves to the risks inherent in these individuals having excessive power and an inclination to take advantage of ordinary people.
--SNIP--
...we need a champion. Deputy Treasury Secretary Neal Wolin railed against the Chamber of Commerce earlier this year for its lobbying activities against reform, but he is too low profile to get much traction. Secretary Geithner may now understand these issues but he is not the greatest communicator to the broader public. And the rest of the Obama economic team looks, at best, rudderless - what exactly do they stand for or against?
Elizabeth Warren has the vision, the credibility, and the communication skills needed to really bring overdue changes to our financial system - and to lay the groundwork for 2012. If the White House downplays her role or themes, the next two years will be very difficult.
But, lest we forget the overwhelming task ahead, which is to put a saddle on three decades of laissez-faire-managed greed, gone-wild, Liz Warren can' t do it alone...if she's allowed to truly "do it," in the first place.
It's going to take the support of Democrats everywhere to stand up to our heavily-entrenched status quo. And, the cards are massively stacked against the public on this matter, from the get-go, at best. So, having Stiglitz involved in the management of our economy would seem to be just what the doctor ordered for Main Street, as well! (And, with Stiglitz' arch-enemy Summers exiting, stage right, I would hope that President Obama at least had this epiphany about Stiglitz' availability, even if it was just for a fleeting moment or two, and then just wishful thinking on the part of this diarist, more than not.)
Alas, one may dream...