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Entries in 2008 financial crisis (2)


Lee Atwater: 'A helluva lot more abstract than [saying] 'N----r, n----r'."

Lee Atwater, Southern strategy master mind.

In case there is any doubt that the Republican party still relies on stoking voter prejudice for political gain, let all doubt die a decisive death.

The latest high profile figure to ply the Southern strategy is Rep. Paul Ryan (WI).

The chairman of the Congressional Budget Committee still weathers excoriating criticism for what he has since called “inarticulate” remarks made as a guest of Bill Bennett’s radio show.

The two of them chewed over the congressman’s speech delivered at the 2014 Conservative Political Action Conference (CPAC). It took little prodding from Bennett for Rep. Ryan to launch his platitude-laden harangue on the “poverty trap” (in his budget it’s reason enough to cut social safety net funding).

Let’s be clear—when you’re a Republican and happen to be talking about poverty, it’s rarely ever in reference to low-income white residents of regions like Appalachia.

Still posing as the GOP’s intellect and conscience, Rep. Ryan let loose a rousing rhapsody on the “tailspin of culture in our inner cities… of men not working and just generations of men not even thinking about working or learning the value and culture of work….”

Leaving aside his paternalism, as well as the question of whether or not Rep. Ryan consciously referred to communities of color, it would be far more useful to consider the messaging angle of such a screed. Without question, it aims directly at white middle class voters. It is a rhetorical device that has been deeply ingrained in Republican campaign messaging over the last five decades.

A crass explanation of such thinking was once formulated by President Lyndon Johnson in the mid 1960s: “If you can convince the lowest white man that he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him someone to look down on, and he’ll even empty his pockets for you.”

Years later, in a 1981 interview with political science scholar Alexander Lamis, the scorched-earth campaign tactician Lee Atwater gave away the key to winning the votes of white Southerners.

You start out in 1954 by saying, "N----r, n----r, n----r." By 1968 you can't say "n----r"—that hurts you. Backfires. So you say stuff like forced busing, states' rights and all that stuff. You're getting so abstract now [that] you're talking about cutting taxes, and all these things you're talking about are totally economic things and a byproduct of them is [that] blacks get hurt worse than whites. And subconsciously maybe that is part of it. I'm not saying that. But I'm saying that if it is getting that abstract, and that coded, that we are doing away with the racial problem one way or the other. You follow me—because obviously sitting around saying, "We want to cut this," is much more abstract than even the busing thing, and a hell of a lot more abstract than "N----r, n----r."

This campaign messaging scheme—originally appealing to the hostility of white Southerners toward the black community—became known as the Southern strategy. Its use by Republicans shows no signs of fatigue. As recently as the 2012 presidential election, Gov. Mitt Romney wielded the Southern strategy in a television ad that accused President Obama of hatching a plan to end the work requirement in welfare. The story was untrue, but that did not stop the Romney campaign from doubling down on the lie.

Both the Romney ad and Rep. Ryan’s poverty double-talk strove to stoke white middle class voter resentment toward a minority segment of our nation that is somehow “getting something for nothing”, while hardworking folks struggle to get by.

Ginning up white middle class antipathy against communities of color merits the classification of con job; especially when Republicans refuse to lift a finger of reform on matters like tax breaks, government subsidies and the privileged treatment they lavish upon their big business clients.

Again, in case there is any doubt about the Republican rhetorical appeal to the enmity of white middle class voters toward minorities, consider a very telling statement made by Sen. Lindsey Graham. It appeared during the 2012 Republican National Convention when GOP bosses were falling over themselves to exhibit an open, more inclusive party to the nation.

"The demographics race we're losing badly," the senator lamented. "We're not generating enough angry white guys to stay in business for the long term."

So far this writing has only covered the "convince the lowest white man that he's better" factor of the Johnson equation. What about the part that mentions "picking his pocket"?

It stands to reason that the white middle class, when whipped into frenzy over trumped up threats posed by minorities, won’t give much thought to hedge funds siphoning their pension or 401K assets. Is it just the most head-smacking coincidence that the very same elected leaders who spin campfire stories about the leeching entitlement horde, would also pass out hoarse from arguing for further deregulation of Wall Street?

If the 2008 financial crisis failed to illustrate in Technicolor strokes that voters had entrusted this republic to a malfeasant class of elected leaders, what else possibly could?

In the aftermath of 2008 it hadn’t received much consideration, but a conversation about campaign finance finally emerges—especially now that the Supreme Court has removed the limit on aggregate amounts that an individual can contribute to federal candidates. Will the white midde class take part in the discussion about how to counteract the tsunamic financial force of wealthy campaign contributors? The McCutcheon decison has trimmed election finance's regulatory fig leaf of accountability down to button size.

In election season this will mean a greater volume of television and radio campaign ads, probably … at greater volumes, saturating the airwaves and internet with Southern strategy themes. Won’t someone please alert white middle class voters to stop trading their economic interests for the illusory comforts of superiority? That no matter how promising Rep. Paul Ryan’s path to prosperity appears, it is paved to penury with the campaign contributions of elite financial interests.


Too big to know what's best for the nation, economy

Former Wall Street Executive: Complexity Of Today’s Banks ‘Makes You Weep Blood Out Of Your Eyes’ via Think Progress

Another former Wall Street executive has emerged to advocate reform of banks in the "too big to fail" category.

Sallie Krawcheck, once the head of Bank of America's wealth management division, was a guest panelist at the Bloomberg Markets 50 Summit on Thurs., Sept. 13 when she made the stunning observation about the complexity of big bank operations.

She joins Sandford Weill, former Citigroup head, who advocated the break up of big banks back in July.

The chorus opposing such measures has been adamant. Two voices in particular merit consideration--Jamie Dimon, CEO of JP Morgan and his predecessor, William B. Harrison Jr.

Touting the benefits of the too-big-to-fail scale, Jamie Dimon actually used the "port in the storm" metaphor to bolster his argument--this from the head of a bank that lost $5.8 billion in credit derivatives trades.

Writing in the New York Times, William B. Harrison Jr. wields a straw man, the first of several, to launch his defense of big banks. Serously, who is arguing that breaking up big banks will eliminate the risk of future crises? He'd have no trouble naming the source of the phony argument if someone were actually making it.

Wouldn't he also name the source of the fallacy that the emergence of the big bank was an artificial, unnatural market development? Worse is the bale of grass he stuffs into the notion that anyone with a shred of credibility blames big banks for the 2008 financial meltdown.

There is a very compelling reason why the likes of Messrs. Harrison and Dimon would defend the size and scope of big banks--a reason they'd probably never admit in polite company. What is at stake for them is the generous compensations earned by CEOs at said financial behemoths.

How is this so?

Harvard-trained economist Xavier Gabaix and his research partner, Augustin Landier, have taken a look at CEO compensation and its link to a company's market capitalization (the value of its share price multiplied by number of shares issued by the company).

What they found happening between the years of 1980 and 2003 is that CEO compensation increased by a multiple of six--along with the market capitalization growth for large U.S. corporations. As The American put it more bluntly: "The trend lines of market capitalization and executive payouts rose and dipped in near-perfect tandem."

One might acknowledge the same motivating impulse with participants in a betting pool--the larger pool, the greater the payout.

So, what difference does this make for the economy and the nation as a whole?

The public should be asking, what's the worth of systemic risk that massive financial institutions pose? For an example, consider the scenario when certain big banks knowingly sold toxic assets to institutional investors who managed 401k's, pension- and mutual funds.

What resulted from buying the imploding mortgage-backed assets? Millions of mid-income, hard working citizens were hooked for the losses set in motion by defaulting borrowers.

So, is the American public ready to confront goliath financial institutions for what they are? That synaptic network of transactions--enabling those massive capitalizations that money-starved CEOs dream of--which have very little to offer for the greater good of a nation seeking stability and sustainable economic growth.