David A. Lee
I used to work in politics. Cohen nails the intrigues, pitfalls, and glories of power that I observed in my past life, made ever more poignant by the analogies to the arcs of the dramatis personae of the Shakespeare-verse.
The politics of the court — that of the scheming Plantagenet lords in the court of the feckless Henry VI — permeate our lives more than we like to admit. But the bard's insights remain timeless — like Virgil guiding Dante, Cohen masterfully leads the reader on making sense the intricacies of power and our collective existence.
I have read no biography as therapeutic for the spirit as Thomas's on 37.
“It is only a beginning, always. The young must know it; the old must know it. It must always sustain us, because the greatness comes not when things go always good for you, but the greatness comes and you are really tested, when you take some knocks, some disappointments, when sadness comes, because only if you have been in the deepest valley can you ever know how magnificent it is to be on the highest mountain.”
Finished up Neil Barofsky's “Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.” I'm a big stickler for needing to understand the workings of the state and financial capitalism in the most rigorous and technical of terms, going beyond the fundamentally correct but ultimately vague tropes of “capitalists profit at the expense of workers and that's a bad thing.” As an ex-federal prosecutor for the US Attorney's Office for the Southern District of New York who worked on plenty of mortgage fraud cases, and most relevantly, the former Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Barofsky does not fail to deliver on detail.
Barofsky has a great ability to convey the most elaborate of schemes behind the 2008 recession in a manner that elucidates their nefarious elements in a way non-experts can easily grasp. For instance, a considerable portion of the book is dedicated to discussion about the TALF (Term Asset-Backed Securities Loan Facility) and the PPIP (Public-Private Investment Program), which were ostensibly designed to “unclog” banks' balance sheets by providing easy liquidity for toxic assets (e.g. subprime mortgage-backed securities) and spur consumer lending from investment institutions. As Barofsky explains, this convoluted mechanism was one of the numerous means in which banks were a) not only able to get away with not cleaning their balance sheets of these toxic assets, but b) effectively contributed to rewarding and valorizing the “too big to fail” ethos that led to Wall Street's disaster and will lead to even more in the future.
Where the most incensing parts of Barofsky's narrative emerge, however, is in his discussion of the Obama-era Home Affordable Modification Program, or HAMP. Really, this is at the core of the aftermath of the subprime mortgage crisis, and the disastrous failure of the US government in amending exorbitant or even underewater mortgage terms (that were fraudulently underwritten to begin with), letting the mortgage servicing industry administer these mortgage modifications, and the ultimate sunsetting of HAMP that returned mortgage interest rates to pre-program levels, spiking rates by over 20 percentage points in some cases, and forcing honest and hard-working families into foreclosure after doing everything right.
As I like to say, one of capital's most potent weapons against workers and families is to make the rules of the game as fiendishly convoluted as possible, and rely on the ignorance of policy-makers and the public to take advantage of all of us. Barofsky does a superb job of cutting through the technocratic morass, the alphabet soup of government and financial acronyms, and extracting for the reader the remorseless tactics of every actor in the financial sector and in the US government that led to this crisis.
Finished up “This Vast Southern Empire,” a 2016 book by Princeton historian Matthew Karp on the foreign policy regime and political economy of the United States in the 1840s-1861. I've been especially intrigued by analyses of the antebellum and the American Civil War (these days I like to refer to it as the American Anti-Slavery War) from a more internationalist perspective, particularly as it relates to the formation of the United States as a hemispheric hegemon (e.g. fending off British abolitionism in the Americas while building relations with pro-slavery Spain, the annexation of the Republic of Texas and the Mexican-American War, allyship and diplomatic overtures with the Empire of Brazil, and the Ostend Manifesto and repeated attempts by antebellum presidents towards annexing Cuba), the advances in the organizational, tactical, and technological capacities of the United States Army and Navy, and the ambitions of southern American slaveholders in establishing their worldview of not only a sectional slave society, but a global one.
I figured I should study this aspect of mid-19th century US history more closely after reading a passage from Du Bois' “Black Reconstruction,” Chapter III: The Planter. It is a fascinating chapter in which Du Bois examines the southern planter class; specifically, the commanding political power pro-slavery southern Democrats had at the highest ranks of the United States federal government in the decades leading up to the war, and consequentially, their global ambitions in creating a worldwide slave society, backed by the racial hierarchy in enslaving African labor and by a defense of free trade of slave-produced goods everywhere.
It's poignantly fitting that the author chooses to conclude the text with Du Bois' baccalaureate disquisition at Harvard University's commencement ceremony in June of 1890, titled “Jefferson Davis as a Representative of Civilization.” In this essay, which Du Bois composed and presented at the age of 22, a quarter-of-a-century since the surrender of the Confederacy to the Union Army at the Appomattox Courthouse, and in the milieu of the racist “lost cause” myth rising amongst white southerners, he provides an incisive analysis on the type of civilization that produces a man – and indeed, men – like the ex-CSA president. In his words:
“I wish to consider not the man, but the type of civilization which his life represented: its foundation in the idea of the strong man – Individualism coupled with the rule of might – and it is this idea that has made the logic of even modern history, the cool logic of the Club. It made a naturally brave and generous son Jefferson Davis – now advancing civilization by murdering Indians, now hero of a national disgrace called by courtesy, the Mexican War; and finally, as the crowning absurdity, the peculiar champion of a people fighting to be free in order that another people should not be free. Whenever this idea has for a moment, escaped from the individual realm, it has found an even more secure foothold in the policy and philosophy of the State. The Strong Man and his mighty Right Arm has become the Strong Nation with its armies. Under whatever guise, however a Jefferson Davis may appear as man, as race, or as nation, his life can only logically mean this: the advance of a part of the world at the expense of the whole; the overweening sense of the I, and the consequent forgetting of the Thou.”
Good read by the Levy Economics Institute's L. Randall Wray on Hyman Minsky's life's work, and a great primer to Minsky's theorizing on the investment cycle – his financial instability hypothesis – which traces instability in an economy to private sector debt accumulation progressing through degrees of safety margins (ranging from hedge to speculative to Ponzi positions), everyone thinks asset prices will continue to soar and optimism wins the day...until the bubble bursts.
Equally fascinating is his “longue durée” theorizing of capitalism's stages, from commercial capitalism in the 19th century with commercial banks primarily financing production and lending to firms to accomplish such, to the finance capitalism described by Rudolf Hilferding (Minister of Finance in the Weimar Republic; you might recognize Hilferding's work which V.I. Lenin cites in “Imperialism: The Highest Stage of Capitalism”) and the domination of investment banks in financing high-risk speculative activities leading to the Great Depression, followed by managerial-welfare state capitalism with considerable more interventionist measures by the Federal Reserve and Treasury Dept. post-New Deal reforms, culminating where we are at now, money manager capitalism with the rise of shadow banking, non-bank actors that essentially serve banking functions but are not subject to the same regulations chartered banking institutions are (e.g. sovereign wealth funds, hedge funds, corporate treasuries) that played a significant role in Great Recession a decade ago.
And beyond that: a good primer to an economic framework that doesn't casually dismiss tangible analysis of institutions (private sector finance and banking, Federal Reserve and U.S. Treasury operations) and money, all of which critical to understanding how the contemporary capitalist system is mechanically constructed and operates in function – one critical mistake of many of the economics orthodoxy that causes it to be so blind to the state of what's really going on.