by Matt Taibbi
These leaders are like the drug lords who ruled America’s ghettos in the crack age, men (and some women) interested in just two things: staying in power, and hoovering up enough of what’s left of the cash on their blocks to drive around in an Escalade or a 633i for however long they have left. Our leaders know we’re turning into a giant ghetto and they are taking every last hubcap they can get their hands on before the rest of us wake up and realize what’s happened.
The engine for looting the old ghetto neighborhoods was the drug trade, which served two purposes with brutal efficiency. Narco-business was the mechanism for concentrating all the money on the block into that Escalade-hungry dealer’s hands, while narco-chemistry was the mechanism for keeping the people on his block too weak and hopeless to do anything about it. The more dope you push into the neighborhood, the more weak, strung-out, and dominated the people who live there will be.
In the new American ghetto, the nightmare engine is bubble economics, a kind of high-tech casino scam that kills neighborhoods just like dope does, only the product is credit, not crack or heroin. It concentrates the money of the population in just a few hands with brutal efficiency, just like narco-business, and just as in narco-business the product itself, debt, steadily demoralizes the customer to the point where he’s unable to prevent himself from being continually dominated.
In the ghetto, nobody gets real dreams. What they get are short-term rip-off versions of real dreams. You don’t get real wealth, with a home, credit, a yard, money for your kids’ college—you get a fake symbol of wealth, a gold chain, a Fendi bag, a tricked-out car you bought with cash. Nobody gets to be really rich for long, but you do get to be pretend rich, for a few days, weeks, maybe even a few months. It makes you feel better to wear that gold, but when real criminals drive by on the overpass, they laugh.
It’s the same in our new ghetto. We don’t get real political movements and real change; what we get, instead, are crass show-business manipulations whose followers’ aspirations are every bit as laughable and desperate as the wealth dreams of the street hustler with his gold rope. What we get, in other words, are moderates who don’t question the corporate consensus dressed up as revolutionary leaders, like Barack Obama, and wonderfully captive opposition diversions like the Tea Party—the latter a fake movement for real peasants that was born that night in St. Paul, when Sarah Palin addressed her We.
If American politics made any sense at all, we wouldn’t have two giant political parties of roughly equal size perpetually fighting over the same 5–10 percent swatch of undecided voters, blues versus reds. Instead, the parties should be broken down into haves and have-nots—a couple of obnoxious bankers on the Upper East Side running for office against 280 million pissed-off credit card and mortgage customers. That’s the more accurate demographic divide in a country in which the top 1 percent has seen its share of the nation’s overall wealth jump from 34.6 percent before the crisis, in 2007, to over 37.1 percent in 2009. Moreover, the wealth of the average American plummeted during the crisis—the median American household net worth was $102,500 in 2007, and went down to $65,400 in 2009—while the top 1 percent saw its net worth hold relatively steady, dropping from $19.5 million to $16.5 million.
But we’ll never see our political parties sensibly aligned according to these obvious economic divisions, mainly because it’s so pathetically easy to set big groups of voters off angrily chasing their own tails in response to media-manufactured nonsense, with the Tea Party being a classic example of the phenomenon. If you want to understand why America is such a paradise for high-class thieves, just look at the way a manufactured movement like the Tea Party corrals and neutralizes public anger that otherwise should be sending pitchforks in the direction of downtown Manhattan.
There are two reasons why Tea Party voters will probably never get wise to the Ponzi-scheme reality of bubble economics. One has to do with the sales pitch of Tea Party rhetoric, which cleverly exploits Main Street frustrations over genuinely intrusive state and local governments that are constantly in the pockets of small businesses for fees and fines and permits.
The other reason is obvious: the bubble economy is hard as hell to understand. To even have a chance at grasping how it works, you need to commit large chunks of time to learning about things like securitization, credit default swaps, collateralized debt obligations, etc., stuff that’s fiendishly complicated and that if ingested too quickly can feature a truly toxic boredom factor.
So long as this stuff is not widely understood by the public, the Grifter class is going to skate on almost anything it does—because the tendency of most voters, in particular conservative voters, is to assume that Wall Street makes its money engaging in normal capitalist business and that any attempt to restrain that sector of the economy is thinly disguised socialism.
That’s why it’s so brilliant for the Tea Party to put forward as its leaders some of the most egregiously stupid morons on our great green earth. By rallying behind dingbats like Palin and Michele Bachmann—the Minnesota congresswoman who thought the movie Aladdin promoted witchcraft and insisted global warming wasn’t a threat because “carbon dioxide is natural”—the Tea Party has made anti-intellectualism itself a rallying cry. The Tea Party is arguing against the very idea that it’s even necessary to ask the kinds of questions you need to ask to grasp bubble economics.
Bachmann is the perfect symbol of the Dumb and Dumber approach to high finance. She makes a great show of saying things that would get a kindergartner busted to the special ed bus—shrieking, for instance, that AmeriCorps was a plot to force children into liberal “reeducation camps” (Bachmann’s own son, incidentally, was a teacher in an AmeriCorps program), or claiming that the U.S. economy was “100 percent private” before Barack Obama’s election (she would later say Obama in his first year and a half managed to seize control of “51 percent of the American economy”).
When the Chinese proposed replacing the dollar as the international reserve currency, Bachmann apparently thought this meant that the dollar itself was going to be replaced, that Americans would be shelling out yuan to buy six-packs of Sprite in the local 7-Eleven. So to combat this dire threat she sponsored a bill that would “bar the dollar from being replaced by any foreign currency.” When reporters like me besieged Bachmann’s office with calls to ask if the congresswoman, a former tax attorney, understood the difference between currency and reserve currency, and to ask generally what the hell she was talking about, her spokeswoman, Debbee Keller, was forced to issue a statement clarifying that “she’s talking about the United States … The legislation would ensure that the dollar would remain the currency of the United States.”
A Democratic staffer I know in the House called me up after he caught wind of Bachmann’s currency bill. “We get a lot of yokels in here, small-town lawyers who’ve never been east of Indiana and so on, but Michele Bachmann … We’ve just never seen anything quite like her before.”
Bachmann has a lot of critics, but they miss the genius of her political act. Even as she spends every day publicly flubbing political SAT questions, she’s always dead-on when it comes to her basic message, which is that government is always the problem and there are no issues the country has that can’t be worked out with basic common sense (there’s a reason why many Tea Party groups are called “Common Sense Patriots” and rally behind “common sense campaigns”).
Common sense sounds great, but if you’re too lazy to penetrate the mysteries of carbon dioxide—if you haven’t mastered the whole concept of breathing by the time you’re old enough to serve in the U.S. Congress—you’re not going to get the credit default swap, the synthetic collateralized debt obligation, the interest rate swap. And understanding these instruments and how they were used (or misused) is the difference between perceiving how Wall Street made its money in the last decades as normal capitalist business and seeing the truth of what it often was instead, which was simple fraud and crime. It’s not an accident that Bachmann e
merged in the summer of 2010 (right as she was forming the House Tea Party Caucus) as one of the fiercest opponents of financial regulatory reform; her primary complaint with the deeply flawed reform bill sponsored by Senator Chris Dodd and Congressman Barney Frank was that it would “end free checking accounts.”
Our world isn’t about ideology anymore. It’s about complexity. We live in a complex bureaucratic state with complex laws and complex business practices, and the few organizations with the corporate willpower to master these complexities will inevitably own the political power. On the other hand, movements like the Tea Party more than anything else reflect a widespread longing for simpler times and simple solutions—just throw the U.S. Constitution at the whole mess and everything will be jake. For immigration, build a big fence. Abolish the Federal Reserve, the Department of Commerce, the Department of Education. At times the overt longing for simple answers that you get from Tea Party leaders is so earnest and touching, it almost makes you forget how insane most of them are.
“It’s not in the enumerated powers of the U. S. Constitution,” says Bill Parson, a Tea Party–friendly Republican Senate candidate in Nevada who was gracious enough to take me around the state in the spring of 2010. I’d asked him about his attitude toward certain proposed financial regulations, like a mandate that derivatives such as credit default swaps be traded and cleared on open exchanges, just like stocks.
Parson is a big, burly ex-marine with an affable disposition who, like a lot of retired military types, never learned that a flattop starts looking weird on men after the age of fifty or so. He and his campaign manager, a witty and sharp-tongued older woman named Karel Smith who works as a blackjack dealer, are my tour guides on a trip around the Nevada Republican primary race, which features multiple Tea Party candidates, including eventual nominee Sharron Angle.
My whole purpose in going to Nevada was to try to find someone in any of the races who had any interest at all in talking about the financial crisis. Everyone wanted to talk about health care and immigration, but the instant I even mentioned Wall Street I got blank stares at best (at one voter rally in suburban Vegas I had a guy literally spit on the ground in anger, apparently thinking I was trying to trick him, when I asked him his opinion on what caused AIG’s collapse). Parson, meanwhile, seemed obsessed with a whole host of intramural conservative issues that make absolutely no sense to me whatsoever—at one point he spent nearly an hour trying to explain to me the difference between people who call themselves conservative and people who are conservative. “You have people who say, ‘Well, I really think we ought to help people, but I’m a conservative,’ ” he says. “So it’s like, you can’t find anything in their statement that shows they’re a conservative. Do you see the distinction?”
I nod, trying to smile: helping people is bad, right? I’m really trying to like Parson—he’s been incredibly hospitable to me, even though he knows I work for the hated Rolling Stone magazine, but half the time I can barely follow the things he’s saying. I keep trying to bring him back to the economy, but he keeps countering with his belief that we need to abolish the Departments of Energy and Labor, to say nothing of financial regulators like the Securities and Exchange Commission and the Commodity Futures Trading Commission. The DOE and the DOL, he says, aren’t in the Constitution.
“But neither is toothpaste, or antibiotics,” I say. “I mean, they wrote the Constitution a long time ago. It’s missing a few things. This is a whole realm of financial crime that was not even conceived of back then. How do you police the stuff that’s not in the Constitution?”
Parson frowns and looks ahead at the road—we’re driving through the Nevada desert at night. Then he turns slightly and gives me a This one goes to eleven look. “Well,” he says, “I just keep getting back to what is in the enumerated powers of the Constitution …”
Parson’s entire theory of the economy is the same simple idea that Bachmann and all the other Tea Partiers believe in: that the economy is self-correcting, provided that commerce and government are fully separated. The fact that this is objectively impossible, that the private economy is now and always will be hopelessly interconnected not only with mountains of domestic regulations (a great many of which, as we’ll see, were created specifically at the behest of financial corporations that use them to gain and/or maintain market advantage) but with the regulations of other countries is totally lost on the Tea Party, which still wants to believe in the pure capitalist ideal.
Bachmann spelled this out explicitly in an amazing series of comments arguing against global integration, which showed that she believed the American economy can somehow be walled off from impure outsiders, the way parts of California are walled off from Mexico by a big fence. “I don’t want the United States to be in a global economy,” she said, “where our economic future is bound to that of Zimbabwe.”
The fact that a goofball like Michele Bachmann has a few dumb ideas doesn’t mean much, in the scheme of things. What is meaningful is the fact that this belief in total deregulation and pure capitalism is still the political mainstream not just in the Tea Party, not even just among Republicans, but pretty much everywhere on the American political spectrum to the right of Bernie Sanders. Getting ordinary Americans to emotionally identify in this way with the political wishes of their bankers and credit card lenders and mortgagers is no small feat, but it happens—with a little help.
I’m going to say something radical about the Tea Partiers. They’re not all crazy. They’re not even always wrong.
What they are, and they don’t realize it, is an anachronism. They’re fighting a 1960s battle in a world run by twenty-first-century crooks. They’ve been encouraged to launch costly new offensives in already-lost cultural wars, and against a big-government hegemony of a kind that in reality hasn’t existed—or perhaps better to say, hasn’t really mattered—for decades. In the meantime an advanced new symbiosis of government and private bubble-economy interests goes undetected as it grows to exponential size and robs them blind.
The Tea Party is not a single homogenous entity. It’s really many things at once. When I went out to Nevada, I found a broad spectrum of people under the same banner—from dyed-in-the-wool Ron Paul libertarians who believe in repealing drug laws and oppose the Iraq and Afghan wars, to disaffected George Bush/mainstream Republicans reinventing themselves as anti-spending fanatics, to fundamentalist Christians buzzed by the movement’s reactionary anger and looking to latch on to the “values” portion of the Tea Party message, to black-helicopter types and gun crazies volunteering to organize the bunkers and whip up the canned food collection in advance of the inevitable Tea Party revolution.
So in one sense it’s a mistake to cast the Tea Party as anything like a unified, cohesive movement. On the other hand, virtually all the Tea Partiers (with the possible exception of the Ron Paul types, who tend to be genuine dissidents who’ve been living on the political margins for ages) have one thing in common: they’ve been encouraged to militancy by the very people they should be aiming their pitchforks at. A loose definition of the Tea Party might be fifteen million pissed-off white people sent chasing after Mexicans on Medicaid by the small handful of banks and investment companies who advertise on Fox and CNBC.
The formal beginning of the Tea Party was a classic top-down media con. It took off after a February 20, 2009, rant on CNBC by a shameless TV douchewad named Rick Santelli, who is today considered a pre-prophet for the Tea Party movement, a sort of financial John the Baptist who was dunking CNBC-viewer heads in middle-class resentment before the real revolution began.
Of course, CNBC is more or less openly a propaganda organ for rapacious Wall Street banks, funded by ad revenue from the financial services industry. That this fact seems to have escaped the attention of the Tea Partiers who made Santelli an Internet hero is not surprising; one of the key psychological characteristics of the Tea Party is its oxymoronic love of authority figures coupled with a narcissistic celebration of its own “
revolutionary” defiance. It’s this psychic weakness that allows this segment of the population to be manipulated by the likes of Sarah Palin and Glenn Beck. The advantage is that their willingness to take orders has allowed them to organize effectively (try getting one hundred progressives at a meeting focused on anything). The downside is, they see absolutely nothing weird in launching a revolution based upon the ravings of a guy who’s basically a half-baked PR stooge shoveling propaganda coal for bloodsucking transnational behemoths like JPMorgan Chase and Goldman Sachs.
Rick Santelli’s February 20 rant came in response to an announcement by the administration of new president Barack Obama that it would be green-lighting the “Homeowner Affordability and Stability Plan,” a $75 billion plan to help families facing foreclosure to stay in their homes.
Now, $75 billion was a tenth of the size of the TARP, the bank bailout program put forward by Bush Treasury secretary Hank Paulson that directly injected capital onto the balance sheets of failing Wall Street companies. And $75 billion was more like a hundredth, or perhaps one two-hundredth, the size of the overall bailout of Wall Street, which included not just the TARP but a variety of Fed bailout programs, including the rescues of AIG and Bear Stearns and massive no-interest loans given to banks via the discount window and other avenues.
The Tea Partiers deny it today, but they were mostly quiet during all of those other bailout efforts. Certainly no movement formed to oppose them. The same largely right-wing forces that would stir up the Tea Party movement were quiet when the Fed gave billions to JPMorgan to buy Bear Stearns. Despite their natural loathing for all things French/European, they were even quiet when foreign companies like the French bank Société Générale were given billions of their dollars through the AIG bailout. Their heroine Sarah Palin enthusiastically supported the TARP and, electorally, didn’t suffer for it in the slightest.