Lawlessness from Guantánamo to Mobile

Yves Smith at Naked Capitalism tells the story of two home-owners cheated out of their lives by Chase, a.k.a., JPMorganChase whose CEO, Jamie Dimon, is high up on the Obama White House invite list. When getting a feel for just how ruthlessly corrupt this institution is, try to keep in mind that this is the outfit feted and celebrated by the Democratic Party stalwarts, not the usual suspects regularly fellated by bad old GOP figures like Romney, Bachmann and Perry. I introduce the harrowing tales this way to underline that we are experiencing a slow coup d’état by the financier/rentier class that has completely seized control of both major parties and is proceeding to beggar us in exactly the bipartisan fashion that Obama is so enamored of.

Here’s one of the stories: April Barnett bought a house in Oxford, Alabama in 2007. Her fiancé and later husband Jason helped with the down payment.

In 2010 the house burned down. It was fully insured. The insurance company paid Chase the full amount of the balance due on two mortgage notes.

Chase cashed the checks. Voilà. But not so fast.

Shortly thereafter, April, now pregnant, checked the online record of the mortgage balance. It was listed as unpaid. No one at Chase could tell her why.

April and her husband now started getting repeated harassing telephone calls demanding further payment. They could never get anyone at this ‘bank’ to check their own records to find that the full value of the mortgage was sitting in Chase’s accounts and had been for months.

Chase then began foreclosure proceedings—despite having received the full amount of the mortgage balance from the insurance company.

Eventually, the bank ‘discovered’ that it had received the money but somehow did not know what it was for, despite having clear instructions from the insurance company that had issued payment. But Chase then demanded an additional $8,000 to ‘bring the loan current’. [Hint: was this the real reason the payment was ‘misapplied’?]

Eventually, Chase was forced to admit that it had been paid in full and released the lien. However, when April and Jason later sought a mortgage for a new house, they discovered to their horror (but not surprise) that Chase had reported them to a credit bureau for the (unfair, illicit, negligent, whatever) foreclosure. Their new mortgage loan, which was going to be at 4.1%, suddenly shot up to 6.8%, a penalty of over $100,000 over the life of the 30-year note.

While preparing to sue the ass off Chase, the now destitute couple tried to buy a washing machine at a home supply store. Their application for a store credit card was denied because Chase still refused to take the phony foreclosure off their credit report.

Now, there has been a lot of talk about banks making ‘mistakes’. What happened to the Barnetts were not mistakes—they reflect a pattern of misapplication of monies engineered to cause phony arrears or defaults, which then enable the mortgage servicers to charge extra fees and browbeat, intimidate and torture defenseless consumers into paying off the extortion. It is absolutely in no way different from having to give Paulie and Christopher 500 bucks out of the till of your corner deli to avoid a broken kneecap.

Smith has a second, eerily similar story, which those with strong stomachs and not in a homicidal frame of mind already can read here that illustrates once again that these drive-by assaults on customers are not accidents, errors, mishaps, goofs, screw-ups or the result of a low-level clerk’s hangover. THEY ARE STANDARD OPERATING PROCEDURE FOR CRIMINAL INSTITUTIONS KNOWN AS BANKS.

That’s why the Wall Street-Geithner-Obama posture of not pressing ‘technical’ issues against mortgage abuses (like New York AG Schneiderman is trying to do pretty much solito and getting all kinds of heat for) that could ‘undermine the banking system’ is so much repugnant bullshit. Schneiderman wants to unearth and prosecute and eventually put a stop to concerted criminal behavior that, if left unchecked, can and will undermine the rule of law in business. If our present Masters of the Universe think the housing market is weak now, just wait until the great mass of citizens from Nevada to North Dakota gets the idea that having a bank loan means risking your face being ripped off.

For example: in the comments column of Smith’s post today, I read this from Caitlin O: ‘We’ll be looking for a retirement home in another decade or so and are saving for it now with the intention of paying cash. We also intend to have a full forensic title audit done before we close. Sadly, this seems to be the route a prudent person has to take today’.

Caitlin is answered by Alice who writes: ‘You are hardly the crazy one here. You are the smart one, and this is coming from someone who made a career in the mortgage business. The “biggest investment in your life” is what we told our loan applicants. I would never advise anyone to buy a home today. I have read the docs they are having people sign at closing, and the only thing the pretender lenders have left out are the requirement that you turn your first-born over to them’. [emphasis added]

I further believe that this sea of corruption is exactly and precisely reflected in that other festival of lawlessness known as the Bush Administration and specifically its successful introduction of torture into the accepted, standard practice of the government of the United States, along with suspension of habeas corpus rights, massive invasion of privacy and all the rest of it, now being celebrated and justified by Cheney on his book tour.

Both of these phenomena—the great bank rip-off and the torture regime—have been endorsed and strengthened by President Barack Let’s-Look-Forward-Not-Backward Obama, ie, the one now in office and towards whom any meaningful resistance must now be directed.

Is it 1910?

When we read about the Robber Barons like Carnegie and Rockefeller in high school, the tone was one of amazement and marvel at the crude old days when individuals amassed such wealth that a single man’s morning attack of bursitis could shift the tectonic plates of the U.S. economy. Well, guess what, them times are back, whoopee. Warren Buffett has now come to the single-handed rescue of Bank of America, an entity whose managers swore just 24 hours before that it did not need any such help. Shades of 2007! Recall how often you heard, ‘Everything is/will be just fine’ back then, right before the business-political complex had a massive panic attack.

Buffett bought $5 billion worth of preferred shares in the ‘perfectly solvent’ second-largest bank of the land and got a lucrative deal on another piece of business called warrants, which he can cash in later. But whether or not he makes money on paper is pretty irrelevant, even to a guy who sits atop a pile of gold that Scrooge McDuck couldn’t even fantasize about. If BOFA goes down, Buffett knows that the U.S. government will ride to his rescue a la TARP, which saved Buffett’s investment in Goldman Sachs. So let’s not fall into the wise-old-Warren camp and rush down to buy a few shares.

Meanwhile, will Buffett’s billions save us from the next banking crisis? Nobody, and I mean nobody knows.

Pundit narcissism

Watching a people rise up and throw off the yoke of an oppressive, murderous regime despite vast risks to life, limb and loved ones ought to occasion a moment of joyous congratulations. We certainly would be cheering if it were we ourselves who had done it.

All the subtle sniping at the Libyans’ heroic achievement is a mean-spirited outrage. Instead of marveling that a populace not blessed with iPhones and the Christian religion could actually gamble with their lives to escape tyranny, instead of applauding people who go beyond putting ‘Don’t Tread on Me’ on their license plates and wearing funny hats to their garden parties but who actually place their bodies in the way of the assassins’ bullets, the punditocracy has wasted less than a full day to tell us the many ways Libya’s revolution could go astray.

A Guardian sage stroked his beard and immediately warned that ‘there will be little time for euphoria’. Oh no, no celebrating down there in the street. Now, says this Brit expert, is the time to ‘unite factions’, overcome ‘tribalism and Islamists’ and recover from the ‘ruins of four decades of totalitarian control’ where state institutions remain ‘feeble and insecure’. (P.S.-I’m so relieved that we don’t suffer from ‘tribalism’ here in the United States and are carefully safeguarding our adherence to non-totalitarian practices through our non-feeble and secure institutions.)

Surely the most grotesque display of clueless insensitivity was today’s Daily Beast headline: ‘Libya War’s Unsung Heroes’. DB refers not, mind you, to actual Libyans but the ‘small crew of military specialists’ hunched over computer screens as they safely cruise above the Mediterranean and who this article says are ‘as responsible as anyone for Qaddafy’s defeat’. I wonder how the family members of those fighters who fell into the hands of Qaddafy’s torturers would react to the idea that NATO technicians are the true heroes of their revolution.

But even the knowledgeable and sympathetic, such as Patrick Cockburn at The Independent, got right onto wondering, now that Qaddafy has lost, who exactly has won? It seems that those even paying attention spend as much time lambasting each other for being right or wrong as noticing what the Libyan people might have been doing the last few months.

Glenn Greenwald, whom I normally admire greatly, couldn’t shift his sour gaze from the fact (true enough) that Obama wiped his backside with the War Powers Act by refusing to seek congressional endorsement for the intervention.

‘And now, in the wake of the apparent demise of the Gadaffi regime, we see all sorts of efforts, mostly from Democratic partisans, to exploit the emotions from Gadaffi’s fall to shame those who questioned the war’. . .

Greenwald is right, but his relentless trashing of his critics today reveals a barren, windswept heart. He could have taken a day off to celebrate human freedom instead of pounding away at his own virtue. I’m disappointed in him.

Another arena of unseemly display is the comparison of Libya with Iraq as if the people who actually inhabit these two countries are a sidebar to our discussion of outsiders’ roles in their affairs. To draw parallels between the Libyan civil uprising and Bush’s unprovoked attack is morally distasteful, to say the least. The two are not comparable; one is a revolution; the other, an aggressive war of conquest condemned and prohibited under the Nuremburg precedent. Or should revolutionaries refuse outside help? Let’s ask the ghost of George Washington.

I’m not sure what to make of this peculiar reaction to what should be a moment of worldwide inspiration. Is it merely Orientalism again rearing its racialist head? Are the smug western polities, including their most astute newswriters and best-informed observers, permanently incapable of taking Arabs seriously?

All these sourpusses may be right. But just as there’s a time for war and a time for peace, there’s a time for saying, Well done. There’s a time for honoring the sacrifice of people who laid down their lives for their country. I repeat, if it were us, we’d insist on it.

Ill fares the land

I hasten to acknowledge theft of this title from the incomparable historian, the late Tony Judt, because he was, as usual, remarkably prescient about where we are headed, both here in the U.S. where Judt ended his teaching career at NYU and in Europe from whence he sprung. (A pity he didn’t manage to hang on for a few more months—what an essay he would have penned over the recent upheavals back home in England.) This was the title of his last major lecture, delivered without notes from his wheelchair before ‘Lou Gehrig’s disease’ incapacitated him completely.

The immediately evident illness afflicting our sister continents is the economic one, and I side with those pessimist commentators who think we are on the verge of something very big and very nasty. Despite the bleating reassurances from the permanent shill brigades, the evidence of my inexpert eyes tells me that the banking crisis of 2007-08 is soon to be back because, behind the smoke, the mirrors and the unfathomable trillions, it was never really solved. As Judt wrote, ‘The little crash of 2008 was a reminder that unregulated capitalism is its own worst enemy: sooner or later it must fall prey to its own excesses and turn again to the state for rescue. But if we do no more than pick up the pieces and carry on as before, we can look forward to greater upheavals in years to come’. Judt would probably have been surprised to find his warning justified so soon.

The TBTF behemoth banks may or may not be solvent; but if they aren’t, we won’t know until it is too late as the lame state continues to permit them to obfuscate and hide their books (as well as cook them). Meanwhile, European banks are most certainly skating on very thin ice, and while they could be saved by a vigorous dose of supra-national, pan-European intervention—precisely the antidote not to be found in the Sarkozy-Merkel medicine cabinet—they won’t be. God only knows how this will play out, but recent market gyrations suggest that some big players are heading for the hills, cash in hand.

That Anders Breivik, the Norwegian nazi, should have appeared just at this moment to murder liberal teens is no accident, not in any direct cause-and-effect sort of way but because he reflects so aptly the racist and reactionary mood of that continent and, I think, our own. What the euro mess has exposed is that the monetary union was ill thought out for a variety of technical reasons with which I’m only minimally conversant. But the next step, deeper integration and merging of international destinies in one, big, happy, Euro eco-political project, is now both required and impossible. While the Europeans’ economic futures are intertwined in actual fact, in moments of stress it’s much easier for people to revert to exclusive solidarity with clan, tribe, race and nation. This, I believe, is in store.

‘We work while they eat souvlaki and drink ouzo’, sneered the extreme right-wing Dutch pol, Geert Wilders, whose anti-immigrant party has steadily gained electoral strength. Wilders was speaking of the supposedly profligate Greeks, but his tone is immediately recognizable: lazy bums on welfare. Nativist parties all over Europe are vetoing any attempt by their political leadership to save the euro through massive, central bank intervention despite the harrowing consequences that may result for the Fatherland, much as the Tea Party blithely weakened our own prospects with its sophomoric antics. The reactionaries set the terms, and the supposedly sane are impotent—or complicit.

Wilders would be at home in the Republican Party of Arizona or perhaps Alabama. Hard-working [fill in nationality here]’s are being victimized by [insert hints of race/ethnicity here]’s who just want to suck the teat of our tax-and-spend nanny state. Sadly, this is extremely appealing to bipeds and in fact has been the main tune on the GOP playlist since the Nixon era and probably before I was born. Given the glacially slow and painful victories of the civil rights movement, overt racism is bad form—but the wink-wink version is making a comeback, capitalizing on the presence of a black president.

Oklahoma senator Tom Coburn was asked whether Obama wants to ‘destroy America’. Coburn pretended to defend the president but then promptly said that, as an ‘African-American male’, he had benefited from government programs (affirmative action, wink-wink) and so ‘his intent is to create dependency because it worked so well for him’. Translation: uppity Negroes can’t make it on their own, so they like giveaways that take away from hard-working white people.

Then there is Texas governor Perry, the lastest nutbag on the scene, who distinguished himself with a crack about a ‘dark cloud’ over America, exactly the phrase my racist neighbors used to use when a black family would make a rare appearance in our Ohio town. Expect more of the same as the campaign heats up, and further expect Obama to pretend he’s not hearing what the dog-whistlers are communicating.

In Judt’s long essay, which was excerpted in the New York Review of Books, he draws a parallel with the run-up to 1914, in which few Europeans had any idea that their entire world was about to go smash in an orgy of destruction. The comparison is not reassuring. Judt did not, however, linger on one of the more depressing aspects of that debacle, the collapse of working-class internationalism in the jingoist flames of war. I anticipate a similar process of retreat away from the superficial pluralism of our times to a bold, resurgent racism, couched of course in permanent denial.

I’ve also foolishly predicted that our current president will be lucky to finish out his (single) term and that, despite the confident shaking of liberal heads over the wacko brigade presented by the GOP, one of these clowns is going to haunt our nightly news starting in 2013. But that is a detail about which I could easily be wrong. Whatever or whoever comes to rule in Washington, the financial elite is going to continue to hijack the ship of state into its privatized waters and pump the gold out of the hull until there is nothing left.

Joe Nocera illustrates by example in Saturday’s New York Times how it will work: we taxpayers are building a huge white elephant at the Ground Zero site, supposedly in honor of the hallowed victims. But what is really occurring is that in exchange for our hard-earned wealth, developers will make a killing, Condé-Nast will get subsidized office space to produce their elitist magazines, and payment will come out of bridge and tunnel tolls for decades to come. That’s because the Port Authority (which, bizarrely, owns and manages the twin tower site) must find some way to pay for its pathetically inefficient use of public assets for private gain.

Such is the panorama in store for us in the 21st century: obscene wealth accompanied by mass impoverishment and, eventually, social breakdown. No wonder Obama is busily trying to turn the Internet into a tool of the Surveillance State.

Crime & Punishment

Here’s what the underage texters jailed for four years in Britain for promoting riots on Facebook SHOULD have been texting:

‘Blimey, I woke up pitching a tent this morning, I need a million pounds quick. Let’s go defraud some pathetic Paki out of his life savings’.

‘Nang, bro! I’m in. Any penny stocks to flog to a dumb-ass pensioner? I’ve nicked the seniors list from the town council, there’s a shed load of old geezers around so senile, they’re ripe as shagbags for a poke’.

‘Dog’s bollocks! We’ll peddle lots of P.O.S. to them, then arb a half-million moves by lunchtime!’

‘Piece of piss! My new algorhythms are mega’.

‘You’re pulling my damn plonker! How’d ya nab off with it?’

‘I’ve got a bloke at Barclays, kabish?’

‘Nosh on me nadgers, that fuckwit’s thick as shit in the neck of a bottle, wouldn’t trust him to float an air biscuit’.

‘FOAD, unbeliever. I’ll make a dozen monkeys without any feeble wankers muckin in then. Hang with Rosie Palm and her five daughters if y’d ruther’.

‘Don’t get jarred up, mate, keep your hair on. I’ll be down at the sausage fest, save me a place, I’m still in my scuds’.

‘Clean the shit from your rocking horse, and get over here, you knuckle shuffler’.

‘Hey, I know my onions when it comes to selling knocking shops to nuns, how do you think I aced all my accounting finals?’

Had they merely engaged in this sort of harmless banter over their plans to defraud the downtrodden, the spotty lads would not be facing jail time at all. In fact, they’d probably be hailed as promising potential Masters of the Universe and pulled in offers from Bank of America and AIG. Instead, this is what happened, according to The Guardian:

Sutcliffe-Keenan, 22, used his Facebook account in the early hours of 9 August to design a web page titled The Warrington Riots. The court was told it caused a wave of panic in the town. When he woke up the next morning with a hangover, he removed the page and apologised, saying it had been a joke. His message was distributed to 400 Facebook contacts, but no rioting broke out as a result.

No, rioting did not break out over the joke. I suppose it would be too much to hope that this sentence results in some.

Excuse me, but Obama is toast

Which is far from the most worrisome aspect of our future. To review:

The Republican line-up [cartoon: Rolling Stone] on display last week may be laughable, but anyone amused had best prepare for a lengthy stretch of stand-up as the lumbering wreck of the GOP claws its way back into the White House next year. Although predictions are perilous, it doesn’t take a crystal ball to see that the fragile, collective faith that alighted on Obama the newcomer as a vehicle for doing things differently has evaporated and will not return. All those hoping for a ‘real loony’ like Bachmann or Perry to become the nominee so that Sensible People will stick with Obama had better be careful what they wish for. I will happily place money on the likelihood that the Democratic wipe-out of 2012 will rival that of Walter Mondale in 1984.

Under normal circumstances, such a prospect would be discouraging but not necessarily grim. We’ve survived religious nut-cases in the Oval Office before. But needless to say, normal times these are not. The social break-down evidenced in the British riots are a foretaste of what the seizure of our polity by the super-rich holds for our own future. Two eager economists even reported they dug into the historical record and found that, Behold! austerity leads to unrest.

But more disturbing than witnessing the social costs of wrong-headed social and economic policy is the realization that the entire system is incapable of righting itself. I am persuaded by those commentators who have concluded that this—not the silly S&P downgrade—is the true motive for the stock market implosion. At a time when households cannot goose economic activity for lack of purchasing power, Washington is now completely trapped in the demented worship of fiscal pruning, cutting back government stimulus at exactly the time when it is only thing that could save our collective ass.

Thus the mega-rich have managed both to achieve their immediate goals—crippling government and avoiding punishment for their looting—and to undermine the system that makes them super-rich in the first place. They are like drug addicts who know that using is wrecking their lives and nonetheless head out every night to score.

This is the real crime of the Obama presidency and the reason it must end as soon as possible. If he were fighting for a traditional Democratic, Keynesian strategy, insisting that long-term deficits must only be addressed later when the economy is not in danger of capsizing, that instead government must step up and direct income to the poorest and most destitute as the only means of restarting its engine, it would be worth sticking with him even in a losing battle. That way, once the current strategy fails, as it will, there would be some remaining chance for a humane and sensible alternative.

Instead, we have happy talk and paralysis while the hateful and spiteful claim— correctly—that the current occupant of the White House is out of his depth, has botched the recovery and has no plan B. It will be ironic indeed if the first act of the incoming 2013 Bachmann or Perry administration is to call for emergency deficit spending to put people back to work, for example, on war industries in preparation for an attack on Iran.

And it’s not hard to anticipate the reaction that will greet any manifestations of British-style urban chaos that may erupt in the meantime. In fact, we lived through it once in the 1960s when ‘law and order’ became the Nixonian watchword during the construction of the Southern strategy that turned all of Dixieland into red states. Covert racism is always the fall-back position in our country in times of social stress, so expect more Confederate flags to fly at the Rick Perry rallies as the Civil War gets refought, possibly with an entirely different outcome.

Let’s not forget how dangerous real economic collapse can be—the last one ended with 50 million dead. It was war that got the wheels of German industry moving again as well as our own, and the world remains populated, last time I looked, by the same fragile bipeds desperate for answers in troubled times.

Follow the money [Updated]

It makes no difference whether the riots spreading across urban Britain are comprised of mindless crowds delighting in destruction and focused on carrying off large-screen TVs. This is not a political movement that will be damaged by the ugly aspects of the chaos, the targeting of random passers-by, the Clockwork Orange violence and the cruel mockery of shop-owners losing their livelihoods in an evening’s burst of Molotov cocktails. It is an explosion.

But why should we expect the marginalized lumpen at the extreme bottom of Britain’s underclass to behave any differently from the bankers at the extreme top? When the ruling elite burns down the economy and giggles over its ongoing looting of the nation’s accounts, why shouldn’t idle youth who will never have a real job torch a furniture store and laugh while it turns to ashes? Why should they care about anything except the money they might illicitly obtain or feel any responsibility toward ‘society’, which as Margaret Thatcher reminded them decades ago, doesn’t exist?

For over a generation the unemployed and unneeded have been told by Thatcher and New Labour (and her counterparts here, the neolibs, the Reaganites, the Clintonian triangulators and now the Teabagger faction) that nothing counts except making it, that you’re a winner or a loser, and losers can go piss off up a rope because the winners owe you nothing and will make sure the state is powerless to do anything about it. Winners will tool about on yachts and shop at Louis Vuitton; the rest of you can sell drugs and spend your down time in for-profit prisons.

It’s no accident that the trigger for the riots was yet another shooting of a non-white citizen by the disgraced Metropolitan police force and that the family learned about his death from the telly. The top cops, too busy earning cash from the Murdoch tabloid empire to focus on actual police work, still haven’t cleaned up their racist act after decades of commissions, inquiries and scandals. Anyone surprised at the result should get out more. And for New Yorkers, the references in the British press to the smoldering resentment of black teens over the constant police practice of stopping and frisking them for ‘suspicion’ rings ominously familiar.

As our own Masters of the Universe continue to insist that banks must be made whole while people may crumble into dust, the British riots provide useful information about where the country’s current idiocy is taking us. With one fifth of the working-age population struggling, the cloud-cuckoo Congress wants to slash unemployment benefits and cut taxes on the rich. Time to refill the fire extinguishers!

[Update] I see the Financial Times agrees with me. Albert Edwards writes, ‘While I hear the UK politicians denounce the looters as common criminals (which of course they are), I can’t help but think that Louis XVI in 1789 and Tsar Nicolas II in 1917 might have said the same thing’.

The long downward grade

In the midst of the market panic last week, the Bank of New York Mellon began to charge large clients a fee for parking cash. That is, a bank, which in a normal world pays for the privilege of acquiring deposits, is now charging the depositor for the privilege of keeping his cash safe because there is so much wealth sloshing around the system with no reliable harbor.

What better metaphor for the latest example of free-market capitalism’s failure at what it claims to do best—efficiently allocate resources? The unbridled worship of free markets, which was supposed to distribute capital efficiently if the Titans of Industry could just be unshackled from the interference of gummint, has now resulted in the accumulation of vast stores of money that have no use while equally vast sectors of actual people have no money. Next, we’ll have a replay of those Depression-era tales of farmers dumping their oranges into the ocean while soup kitchens were running out of food. Meanwhile, the Tea Bagger faction will be begging the hedge-fund manager Creosotes to have just a bit more tax-free dessert on us—just a tiny slice, ‘It’s wafer-thin’.

Blame for the current debacle can be apportioned widely and in a most fair and balanced way. As the Cassandra of finance, Yves Smith, says at her essential blog, Naked Capitalism, the roots of the recurring financial roller coaster go back to the failed strategy of the incoming Obama team:

‘All the authorities did was patch up a predatory banking system with duct tape and bailing wire and hoped enough cheerleading would restore confidence. And after the banks got their bailout money, the mood seemed to be, “We spent so much on them, we don’t have anything left for anyone else”. The alarming rise in government deficits, which was primarily the result of the crisis and not discretionary spending, has led to a deadly combination of austerian policies . . ., dysfunctional government responses, faltering recoveries and deliberate shredding of social contracts. It’s like watching a house burn and then having people throw Molotov cocktails at it’.

Yes, yes, of course the bad old Republicans were guilty of setting the stage for this, and the Teabagger faction is a dangerous passel of bug-eyed millenarians eager for Jaisus to ride in on a heavenly chariot. But Obama is going to take the bulk of the blame for getting us here, and he bears it. It was Mr O who brought in the Clinton-era architects of deregulation to make sure the mega-banks and their corrupt owners felt no pain; Obama who refused to heed the dissidents who said his stimulus package was too small and weak to jump-start the economy; Obama who included no direct job-creating measures in his first 100 days despite enjoying a giant congressional majority.

Maybe he would have been blocked. Maybe the Blue Dogs and the GOP would have stymied every attempt to take these radical steps. We’ll never know since Obama never made the attempt. Instead, he begged for consensus, empowered the saboteurs and cheapened his office instead of using it to do battle. He played footsie with Fox, brushed off the racist South Carolina congressman who shouted him down, refused any hardball and mocked the people who worked to elect him. His inconsistent and occasional rhetorical jabs at Wall Street’s stingy billionaires merely incensed them since they took him for a paper tiger that wouldn’t dream of showing them any real teeth.

And for all Obama’s pandering to the interests of the ruling elite, his reward is further disdain. Standard & Poor’s downgrade of U.S. debt is the finance sector’s collective act of flicking him off their shoulder like a bothersome gnat. This rating agency, the same one that so distinguished itself during the housing bubble by declaring worthless mortgage bonds to be triple-A quality because it was paid off by its clients to do so, now openly defies the executive authority on explicitly political terms and pretends to dictate policy from its unelected perch in lower Manhattan. The same rating groups that refused to notice the Bush tax cuts and their devastating impact on the nation’s accounts now dare to declare us unable to maintain the safety net that they and their friends sytematically shredded.

These financiers are like the ancient ruling families of a Latin American dictatorship who react with apoplectic rage when upstart newcomers throw a fancy party and dare to invite them. But they are only being who they are—a truly wise man would know that to win their favor requires causing them pain in the time-honored S&M tradition of the decadent aristocracy. Obama tries to coax them into partnership and instead only reaps their contempt.

Our democratic system missed a world-historic opportunity in 2008-09 when the zombie banks tottered on the edge. We only required a bold leader to use his (or her) enormous but temporary power to push out the corrupt leadership, declare the bank shares worthless, give bondholders new equity stakes with the infusion of system-saving government cash that had to come anyway and say, Welcome to a new era of finance re-subordinated to the needs of the productive economy. What a world we would be living in if those Goldman Sachs and BOFA execs suddenly found their life savings had gone up in smoke like those of the millions of people whose lives they ruined? How cautious hedge fund managers and bank presidents would be today, willing and even eager for careful federal regulations to keep their industry from experiencing such a traumatic episode ever again?

The future is not bright. But the reconstruction of popular resistance to the reign of this new finance mafia can only begin when the illusions that have brought us to this pass are ripped apart. For my part, I am eager to see an end to the facile demonization of the reactionary forces while the complicity of the Democratic Party and its principal figure is ignored. The coming recession, if such there be, is Obama’s very own, to have and to hold. He is the architect of this debacle, and it’s time to stop making excuses for him.

‘We have an agreement’

Has there been a bleaker moment in our adult lives where the forces of decency have looked so rudderless, so bereft of leadership? The Grand Bargain arranged by Obama seals the teabagger triumph as we officially declare government to be the enemy of virtue and worthy of being smothered at the altar of capitalist anarchy. Any and all attempts to ease the suffering of the powerless is to be considered suspect; wealth is to be worshiped unblinkingly; and even our increasingly futile exercises of democracy are now to be subordinated to a select ‘super Congress’, which will decide on the contents of our pocketbooks and, ultimately, the contours of our collective fate.

If gridlock, i.e., resistance from those affected, gums up the works, the cuts go through automatically. This from a Congress and a White House that can’t address Senate filibusters or permit appointments to the federal judiciary to occur automatically if a single member chooses to hold them up.

Needless to say, this complete collapse of opposition to the rule of the obscenely rich could only have occurred under a Democratic presidency. No McCain or Romney would have been able to deliver the national turkey trussed and ready for carving with the thoroughly cynical aplomb displayed by Mr Hope’n’Change. Under a GOP regime, those eager to fight would have had a rallying center of sorts instead of being immediately cast as petulant teens unwilling to accede to the reasonable demands of our increasingly goofy Ward Cleaver-in-chief.

The Voices of Reason are telling us not to worry so much, or ‘talking us back from the ledge’, as one Serious Person put it Monday. Fear not, the cuts this year are minor, the details aren’t yet worked out, concessions have been made that can be recouped later. Ha ha ha. Does anyone seriously think Bush’s ‘temporary’ tax cuts won’t be extended indefinitely when they are next due to expire? Are there still people gullible enough to think Obama truly, secretly opposes them?

We whistle along foolishly, however, if we think for a minute that this ignominious collapse and unconditional surrender to the neo-Confederates will satisfy them. Empowered by their successful threats to suicide-bomb the nation’s accounts into smithereens, al-Qaeda on the Potomac will now set its lustful sights on new targets.

It’s impossible to predict what those might be, but let us not forget that the election of our first black president was never accepted as legitimate by the race reactionaries empowered by the opportunistic GOP leadership and enabled by the cost-free rewards Obama continues to grant them. Obama dreams if he thinks pandering to their selfish desires will rehabilitate him in their eyes. Beneath the surface of the phony war over whether or not to further bipartisanly impoverish the defenseless is a quite real drumbeat of reaction based on clan, color and narrow nationalism. Norway provides a recent example.

Lest we slip into the now mainstream view that Mr Breivik is a lone nut representing no social tendencies, note that blogmeister Pam Geller, the main force behind the Ground Zero Mosque smear (who likes to call Obama ‘President Jihad’), thinks Breivik’s victims would have grown up to become ‘future leaders of the party responsible for flooding Norway with Muslims who refuse to assimilate, who commit major violence against Norwegian natives including violent gang rapes, with impunity, and who live on the dole’.

[caption from Geller’s blog to photo at right: ‘Note the faces which are more Middle Eastern or mixed than pure Norwegian’].

Geller didn’t exactly say the slaughtered teens got what they deserved, but her website briefly featured this photo helpfully pointing out that many of the dead had suspect racial characteristics. The Norwegian Labor Party was not holding a ‘summer camp’ on the island of death, she insisted, but an ‘anti-Israel indoctrination training center’. (Perhaps if it had been a drone attack, she could cheer openly.) Geller is not another marginal wackjob—the extreme right has absorbed those margins and largely erased them.

The examples proliferate: Colorado Tea Bagger Congressman Doug Lamborn compared Obama to a ‘tar baby’ yesterday, another blatantly racist trope that has become mainstream in Republican discourse.

No, we are not headed for a national socialist putsch, and we do not live in a fascist state. But by further crushing the struggling middle and lower classes through the disastrous debt deal, Obama piles fuel onto the already vigorous fires of irrationality and scapegoating fanned enthusiastically by Geller, O’Reilly, Buchanan & Co. with unpredictable consequences. Obama’s immigration policies are punitive and draconian, his security apparatus eagerly hounding Arabs with police-state tools at their command, and his all-out war on whistle-blowers weakening internal dissent. All that is missing from the mix is a relapse into recession and the end of any possibility of gainful employment for the one-sixth of the working-age population that is desperately awaiting the jobs recovery that no one on Capitol Hill seems any longer to care about.