Wages of Fear: Lockdowns And The IMF on Occupied Wall Street
I walked around lower Manhattan for a long time last Friday. looking for the #OccupyWallStreet protests. It was an experiment: Had Mayor Bloomberg and the forces of “security” hidden the demonstrators so effectively that they couldn’t be found, even if you went there specifically to look for them?
But Wall Street was “occupied” anyway. Tourists, locals, and Stock Exchange employees were herded by police and barricades into tiny funnels of foot traffic. They shuffled down Wall Street and New Street and Broad Street as slowly as prisoners bound by ankle chains.
Wall Street is occupied ... by fear - of the public and of its anger.
If we were herded like cattle, there was a certain rough poetry to that. Wall Street has never needed less from ordinary people to generate its wealth, which is why corporate profits are so high during a period of massive unemployment and a decaying middle class.
But it still needs us a little. Our labors and debts are still the raw material that Wall Street slices, layers, bundles, and sells for its financial instruments.
Our household finances are to Wall Street derivatives what cows are to hamburgers.
Twist of Fear
The market had conducted one of its usual plunges the day before, after the Federal Reserve announced a miniscule program called “Operation Twist” that will do little for our broken and bleeding economy. The market may not be all-knowing. But it knows when a program is too weak to change our current picture of ongoing economic misery for millions, or to hold off the increasing probability of another severe economic shock.
That’s why we saw a sharp downturn after John Boehner and Barack Obama agreed on their austerity program a few months ago. The market knew that wouldn’t stop the ongoing pain of a stagnating economy and massive unemployment.
Wall Street is occupied ... by doubt.
But the heads of our largest banks can’t stop paying their servant-class of Washington politicians to kill any programs that might rekindle the economy. They know what’s needed, but they can’t stop themselves from keeping their own taxes as low as possible for as long as possible. That forces them to fight government spending when it’s most urgently needed.
And it drives them to fight against the regulations that could prevent them from creating another disaster. (Have you heard of ETFs yet? You will. Remember, there was a time when you hadn’t heard of credit default swaps, either.)
They won’t lend money to people to buy homes or start businesses, because these new and complex financial instruments are so much more lucrative. Banking isn’t lucrative enough to interest bankers anymore. It’s not clever enough. From William Blake:
“... the water wheel that raises water into cisterns (was) broken & burned with fire ...
and in their stead, intricate wheels were invented, wheels without wheels,
to perplex youth in their outgoings ...”
You know why otherwise smart hedge fund managers say crazy things, why they call themselves “a persecuted minority” or react to the suggestion that they pay the same tax rates as a firefighter by comparing it to the invasion of Poland?
Because they’re addicts. Junkies, even the smart ones, say crazy things to get their next fix. Especially the smart ones.
Wall Street is occupied by ... addiction.
A rights-free zone
The fear could be seen in the barricades across Wall Street. And the greed could be seen in a bargain-hungry market that came roaring back that day, hoping to find gems among Thursday’s ruins.
But where were the demonstrators? They want to create an American Tahrir Square, but when it comes to public demonstrations Michael Bloomberg isn’t as democratically inclined as Hosni Mubarak. He proved that during the 2004 Republican convention, when his police force engaged in massive violations of civil liberties.
Mass arrests of demonstrators and “innocent bystanders” alike (aren’t they all innocent until proven guilty?), spying on nonprofit groups, illegal detentions ... Mayor Bloomberg’s antidemocratic skills were honed before #OccupyWallStreet came along.
“People have a right to protest,” said the Mayor, “and if they want to protest, we’ll be happy to make sure they have locations to do it.” The city found a location -- well away from Wall Street and the Stock Exchange. That’s straight out of the George W. Bush playbook, where “free speech zones” were set up --where the demonstrators couldn’t be seen.
Think about it: We cherish the rights of Tea Party demonstrators so much that they’re allowed to bring guns into a Presidential rally. But these demonstrators, whose critique of Wall Street speaks for a vast majority of the public, must be herded away from our titans of finance and their delicate senses.
Here’s something Mr. Bloomberg should know: We already have a “free speech zone.” It’s called “the United States of America.”
The politicians don’t know, but the IMF understands ...
Along comes the International Monetary Fund, the IMF. For decades the IMF has been seen, usually correctly, as the enforcer of the developed nations’ banking interests in Third World countries. I’ve seen it in action myself, in dozens of nations.
The IMF may be many things, but it is not addicted - and it’s not fearful. It can see what Wall Street bankers can’t see, and it can say what Wall Street bankers can’t say: The austerity economics which it promoted for so long has gone too far. Austerity is no longer just abusing the populations that give finance its raw materials. It’s destroying them. it’s not thinning the herd anymore. It’s slaughtering it.
When Christine Lagarde became the IMF’s President there was widespread fear that she would end the somewhat more progressive policies of her accused predecessor, Dominique Strauss-Kahn. But she’s intelligent and articulate and unable to avoid stating the clear and obvious, even if she needed to cloud it in indirect language.
Here’s what she told a meeting of the G20, the IMF, and the World Bank while I was among the pedestrians being herded like cattle down Wall Street: “Very quickly the United States must reduce its fiscal deficit, particularly for the medium and the long term. It must deal urgently with unemployment and it must relieve pressure on overly indebted households.” (Reuters)
The People’s IMF
Several weeks ago she was considerably more specific. She said that “future consolidation” (deficit reduction) first required “policies that support growth and jobs today ... growth is necessary for fiscal credibility.” She added, “Who will believe that commitments to cut spending can survive a lengthy stagnation with prolonged high unemployment and social dissatisfaction?”
In other words, we need jobs now, or we might have British-style riots and social unrest later. Lagarde went on to suggest “more aggressive principal reduction programs for homeowners, stronger intervention by the government housing finance agencies, or steps to help homeowners take advantage of the low interest rate environment.” (via Matt Yglesias)
Christine Lagarde isn’t a radical populist. She’s saying we must be rescued for the sake of the entire financial system. That’s the same reason they helped Wall Street. But they won’t do it for us.
Ironic, isn’t it? The leader of this often-undemocratic institution is calling for policies that are widely popular among Democrats, Republicans, and independents, but which are considered “unrealistic” by the leaders and opinion makers in our “democratic” system.
Looking for Liberty
Meanwhile, back in lower Manhattan, I was trying to find a place I’d never heard of in all my years of working there: Zuccotti Park. That was where the demonstrators had been penned in by police, where they weren’t visible to offend the delicate sensibilities of Wall Street’s most effective predators.
Some quick Googling told me why I’d never heard of it. It was called “Liberty Plaza Park” when I worked here, but private investors rebuilt it after 9/11 under the leadership of executive Robert Zuccotti.
The name “liberty” had been replaced by the name of an investor. Perfect.
Wheels in Motion
The #OccupyWallStreet demonstrators are expressing the frustrations of the majority, hoping to channel them into Arab Spring-style change. That’s the work of our time. It’s the same work we’ll be discussing at next week’s Take Back the American Dream conference.
The work is urgent and the time is now. Unemployment is still high. Income inequality is higher in this country than it is in Egypt. For those lucky enough to have a job, wages are stagnated and opportunities for advancement are few. Those wheels of William Blake’s continue to spin, binding the youth of the country to
“grind & polish brass and iron, hour after hour, laborious task, kept ignorant of its use; that they might spend the days of wisdom
in sorrowful drudgery to obtain a scanty pittance of bread”
As for Mayor Bloomberg, and the men of women of Wall Street, and those who pass by without seeing the demonstrators a few blocks away, they’re destined to
“view a small portion & think that All,
and call it Demonstration, blind to all the simple rules of life.”
And to stay that way, unaware of the changes happening all around them. They’ll find out someday, hopefully before it’s too late.