Sen. Carl Levin pretty much had Goldman Sach’s (GS) Lloyd Blankfein dead in a casket with that now-notorious email from GS’s head of sales and trading, Tom Montag, describing one of their billion-dollar investment “products” as “one shitty deal.” Levin seemed to delight in crossing the boundary into the realm of the unspeakable, knowing that even the so-called “family” newspapers and cable TV networks would have to report it. And just to make sure nobody missed the point, the senator repeated that phrase at least 20 times before the day was over. It was like the climactic scene in that old Hammer Films classic, “The Horror of Dracula,” where Professor Van Helsing moves from coffin to coffin pounding stakes through the hearts of Drac and all his fellow bloodsuckers.
It’s hardly the climax of our story, though. Ours has barely started. It seems to me, lately, that the crack up we’ve entered is liable to play out more gruesomely for our privileged elites than the orgy of bloodletting that attended the French Revolution. That historical moment was a sharp transition between old, settled, social relations and the new political realities of imminent industrialization and a rising middle class. The elites in charge of things to that moment, an ossified aristocracy, responded to rising discontent with utter feckless stupidity. To make matters worse, a great many of them were hunkered down in the fantasy-land royal palace of Versailles, enjoying what was for practical purposes a nonstop, mega house party. They must have thought they were safe 12 miles outside Paris.
The French Revolution actually got off to a better start than the way for which it is remembered. A progressive opposition put together a new legislature, the National Assembly. They undertook the writing of a constitution. But it all fell apart rather quickly, since the dim-witted king and his cohorts didn’t really get into that old changing-times spirit and their lack of cooperation – not to mention their decadence – provoked the more violent factions of the common people to form that kraken of politics, the mob. What a goddamned mess it turned into – a revolving cast of mob masters, each worse than the last, whipping up the crowds to ever more horrible enormities of human vivisection – a political process that had gone hopelessly out of control. Despite the agile precedent of their friend, the new USA, quickly resolving its own rebellion into a functioning government of law, France opted for a bloody cluster fuck – which went on for eight more years.
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The France of 1789 and the USA of today have a few important elements in common: a striking inability to sort out any national problems, an arrogant, depraved, ruling elite resistant to reform and an intellectual underclass motivated by blind fury. Some signal differences: most of our even theoretically best-intentioned “leaders” – e.g., elected officials, business, education and media figures – are unable to articulate the problems we face, which go way beyond the mere distribution of political power or even wealth. (In fact much of the so-called Left, especially the faculty intellectuals, are preoccupied with esoteric sideshows around wealth, power and the ridiculous “politics” of gender.) Paul Krugman and David Brooks have no more of a clue about the implications of peak oil than Rush Limbaugh and Sarah Palin.
The resounding message of Senator Levin’s hearings on GS last week is that Wall Street is a shitty deal for America. O.K., now everybody knows it. Nobody has an excuse for not knowing it. The machinations ongoing over a financial reform bill seem to be leading to a rather feeble outcome. The only people who are excited by it are – surprise! – a bunch of economists, who will soon be relegated to the dumpster of discredited professions along with necromancers, alchemists and magnetic mesmerists. My guess is that something lame will pass, it will be instantly denounced as yet another fraud, and then the next move is probably the stock market’s. A return of volume will signal a return of cratering equities as all the indexes give up their hallucinated gains of the past year, and all the pension funds, college endowments and banks, which flocked there in the desperate search for yield, will find that they were hosed.
By August, it’s possible that the entire country except for the editorial board of The New York Times will be members in good standing of the Tea Party, and it will have split into a dozen warring factions. By then, too many other destabilizing events will be in motion. The hangover of the British election will reveal the fatal insolvency of the UK, torpedoing the pound – a huge event that would certainly trigger a cascading fiasco of credit default swap obligations. I don’t see how the global financial system emerges from that in any form recognizable to someone watching the scene in the first week of May 2010.
In the background of all this, something wicked this way comes in the matter of oil prices and availability. The eco-disaster underway from the Deepwater Horizon oil spill is looking every hour more like an event horizon that will rock the whole industry and, with it, the developed world. At the moment, oil is over $86 a barrel (and gasoline over $3 for regular at the pumps).
I continue to wonder how it will all go down this summer in the Hamptons where, like Versailles in 1789, the elite mega-wealthy of today cavort shamelessly in a semi-private fantasy land of status vamping for the Vanity Fair shutterbugs. The Hamptons are not defensible – unless you count private hedge as an effective fortification. Any bloody-minded gang of unemployed, grievance-maddened mudlarks can creepy crawl down the Sunrise Highway to Gin Lane with firearms bought at the Walmart (and modified to full automatic in the garage). What if hundreds – thousands! – of them get the same idea? Louis XVI and his homeys probably never thought the mobs would scale the ha-has of his fabulous estate, either.
This article was previously published on James Howard Kunstler’s blog.