I don't usually watch cable news. But lately I have turned on the TV, skipped the barely tolerable idiocy of Fox News of course, and found that on CNN and MSNBC they seem to be talking about the oil spill every minute. Very subjective impression here, I didn't do any studies or anything. And besides the oil spill, they are talking about scandals and screwups. Joe Sestak being offered a job from the White House, Rand Paul saying stupid things in interviews.
Right now the conference committee has been chosen to patch together the fin reg bill. A lot has already been decided, but a lot is still up in the air. No, they didn't break up the banks. They should have. But if we are going to get momentum to move forward, we cant just sit around and say, damn, banks didn't break up so we lost.
Since the 1980s, and maybe in some ways the 1970s, in this country there has been a shift away from doing REAL THINGS and toward just finding ways to profit off of the backs of other citizens. To quote Krugman,
After 1980, of course, a very different financial system emerged. In the deregulation-minded Reagan era, old-fashioned banking was increasingly replaced by wheeling and dealing on a grand scale. The new system was much bigger than the old regime: On the eve of the current crisis, finance and insurance accounted for 8 percent of G.D.P., more than twice their share in the 1960s. By early last year, the Dow contained five financial companies — giants like A.I.G., Citigroup and Bank of America.
In other words there is likely an extra FOUR PERCENT of GDP that is being WASTED because of finance big wigs piggybacking on other people. That is not good for our country. How much is four percent of GDP? It's almost $600 billion dollars PER YEAR. Not only is that the amount directly consumed by our bloated financial sector, but the wild swings and pathological behavior (giving loans to homeowners who can't afford them, making a quick buck and then yanking out their home later, etc.) undoubtedly hurt our economy in other ways, although I don't know how to separate out exactly how much.
What we need in this country is a lean, "boring" financial system, the kind that existed after WWII. We need to get our brightest minds, not dreaming up wasteful CDOs of CDOs of CDOs for financial companies, but working on building a faster microchip, discovering cures for cancer, or making cheaper solar panels. Instead of making "products" that are simply new ways to package other assets, we need to be finding ways to make NEW assets.
Which brings me to financial reform.
People only get riled up when there's a black and white story. There has to be an enemy. There has to be somebody who is right and somebody who is wrong. With the oil spill, it's BP who is wrong. But BP is not as powerful an enemy as the financial companies. BP doesn't control 8% of our economy. The total cost of this oil spill has been estimated at more than $30 billion. By comparison, the total cost of this recession is in the trillions. And who is wrong? The bankers. And the regulators.
No, Maddow and Olbermann can't create a black and white narrative for financial reform the way they can make one for the oil spill. One problem is that the media in general isn't focusing on fin reg right now. Look at the New York Times. Do you see anything about fin reg? Look at USA Today. Look at CNN's website. Nothing on the front page. Maybe there's stuff on the other pages, but too bad. One media host can't just create a narrative out of thin air. People would get confused. They would ask, "Why the hell are you talking about that? Who cares?" You can't be too unconventional. Go with the flow, or don't go at all. That's the rule.
But that's not the whole story. The really big question is, "Why hasn't the whole media created a narrative against the banksters?"
One answer is because it's really hard to keep such narratives focused on rich banksters. They have a tendency to spin off and start talking about rich people generally, and if they do, the shadow of the narrative might very well cover the people doing the talking, or at least some of their advertisers, who would get really pissed off. MSNBC remember is owned by General Electric. CNN is owned by Time-Warner. Fox, well we know who owns them. And the guys who own big shares in these places have a tendency to sit on boards at all kinds of other companies. Some of those companies are financial.
Another answer is because the media focuses on people in power. And people in power need to respect other people in power, or else they'd quickly get thrown out of power by somebody with even more power. Look at how the media handled Section 716. You may not know what the hell Section 716 is, but what you need to know is that Fed Chair Bernanke, the head of the FDIC, and Presidential adviser Paul Volcker were opposed to it. Who was for it? Just a couple of guys like Joseph Stiglitz, Robert Reich, Simon Johnson, and others. Difference was, they weren't in power at the time, and they certainly didn't offer feel good messages that didn't assign blame. So, as far as the media was concerned, they did not exist.
We need to build our own narrative, not rely on the corporate media, or even the supposedly progressive corporate media like Maddow and Olberman, to make a narrative for us. They are doing what they have to do to survive in a nasty media environment.
I am not going into the details of fin reg in this post. But we need something to do, to fight for. Let me propose this. Let's fight for Section 716. I think this is the single most important part of the fin reg bills that is still on the table. I'll let Matt Taibbi explain it:
The real shocker is a thing known among Senate insiders as "716." This section of an amendment would force America's banking giants to either forgo their access to the public teat they receive through the Federal Reserve's discount window, or give up the insanely risky, casino-style bets they've been making on derivatives. That means no more pawning off predatory interest-rate swaps on suckers in Greece, no more gathering balls of subprime shit into incomprehensible debt deals, no more getting idiot bookies like AIG to wrap the crappy mortgages in phony insurance. In short, 716 would take a chain saw to one of Wall Street's most lucrative profit centers: Five of America's biggest banks (Goldman, JP Morgan, Bank of America, Morgan Stanley and Citigroup) raked in some $30 billion in over-the-counter derivatives last year. By some estimates, more than half of JP Morgan's trading revenue between 2006 and 2008 came from such derivatives. If 716 goes through, it would be a veritable Hiroshima to the era of greed.
I've been calling representatives and senators this week asking them to support Section 716. I feel kind of beaten down, honestly, because I know that Jamie Dimon is doing the same thing. And who are these representatives and senators going to listen to? Are they going to listen to me, or are they going to listen to Jamie Dimon? Take a wild guess. The only way that ordinary citizens can accomplish anything is in a group. Individually, you're toast and you can never compete against the banksters. There has to be organization.
Here's the message I've been reading. Why I am reading this? Because derivatives, that's what Section 716 is about, helped cause this crisis. They brought down AIG. They helped fuel the mortgage crisis, because banks were able to package risky mortgages through incredibly complex and arcane derivatives instruments, then pass them off on sucker investors with the benefit of AAA ratings from negligent credit ratings agencies. Derivative abuse is the sin qua non, the very essence, of producing nothing of value while profiting off of the backs of your fellow citizens. As Joseph Stiglitz says, many derivatives are literally gambling. No joke. And there is a provision right now called 716 in the Senate bill that stands a chance of actually doing something real, but only if people band together and come down hard now and tell their Congresspeople to get in line. That is why I'm reading this.
I hope that X will support Section 716 of the Senate financial reform bill, S. 3217. [(if a conferee) since he’s been picked for the conference committee to iron out differences between the House and Senate bills.] [(if a House rep) That's of the Senate version, not the House version, which doesn't have this provision.] Section 716 was authored by Senator Blanche Lincoln and bans government assistance to companies trading derivatives. Too much that of trading helped cause the financial crisis, and we should absolutely not, in my opinion, be using taxpayer money to support it. So, I hope that Senator X will fight to save Section 716 in conference.
So call somebody. Look, I don't care you who call. I'd hope it's your congressmen, I'd hope it's the people on the conference committee and the banking committee and the finance committee, but if you want to call your mother, ok, call your mother. Just call somebody. Do something. Please.