Reckless by Byron L. Dorgan

book cover piggy bank Reckless: How debt, deregulation, and dark money nearly bankrupted America (and how we can fix it!) (2009)

The first thing to note is that this book was written by a Democratic Senator (ND) and he was in the thick of things during the TARP scam concocted by Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke.

In the preface he makes his position clear:

I voted against the $700 billion [TARP bailout] because I didn’t think the Treasury Secretary had the foggiest idea of what he was going to do with the money. That turned out to be the case.

In a matter of weeks in what must surely have been one of the biggest bait and switch operations in government history, the Treasury Secretary changed his mind after he got the money. Instead of buying “TROUBLED ASSETS” from financial institutions, he decided he would use the money TO INVEST CAPITAL IN BANKS. And he doled out the money WITH NO STRINGS ATTACHED. There was NO REQUIREMENT THAT THE BANKS USE THE FUNDS TO EXPAND LENDING [which was what the economy needed]. And there was NO PROHIBITION on the use of the money for EXECUTIVE BONUSES. It made no sense that he would pur money into the big banks without requiring some increase their lending. But he did.

But the use of the money to pay huge multi-million dollar bonuses is the part that was outrageous but we were told there was nothing to be done about it. Some crap about contractual obligations and contracts are revered by all politicians and judges and justices because of the delusion that employment contracts are all “voluntarily’ entered into despite the obvious disparity of power and consequences of an employee who does not sign. Negotiation is limited, mainly to men, women who dare to negotiate are designated troublemakers and thus should they be hired start with certain reservations about their failure to be deferential enough.

. . . For example the bonuses reportedly paid by Merrill Lynch just one month before it was acquired by Bank of America in January 2009. It was reported that Merrill Lynch LOST $27 billion in 2008, yet gave out $3.6 BILLION IN BONUSES, including more than $1 million each to 694 EMPLOYEES, and $250 MILLION to the top FOURTEEN [14!!!!] EXECUTIVES. Remember, this was happening just prior to the Bank of America receiving $20 BILLION in TARP funds with a portion of those funds being attributable to its takeover of Merrill Lynch. It looks to me like the taxpayers ended up financing the big bonuses! And it seems that the bonuses were accelerated to happen just prior to the takeover. AND BY THE WAY, aside from the fact that it looks to me like the taxpayers got stuck paying for those bonuses, WHY WERE THE FIRMS REWARDING BUSINESS FAILURE?

If this type of behavior makes your blood boil, that’s the right reaction. And this is just the tip of the iceberg. What has been happening in recent years at the top of the financial food chain is scandalous.

He mentions that Paulson had “earned millions on Wall Street the year before” and it is well known that Wall Streets
“finest” were and remain the ones using the government as the backroom to their wheeling and dealing, connected by a revolving door.

book jacketThere is still no permanent cap on executive salaries or bonuses despite this egregious betrayal of all that is ethical and decent and probably illegal shenanigans to boot (witness The Big Short, the movie or the book (which was better of course). And nothing anyone could ever do is worth a million dollar “bonus” on top of insanely high salaries in the first place. Furthermore, you can bet your ass that no secretary (female presumption) and no janitorial or other ancillary administrative positions got any bonuses and why should they — THE COMPANIES WERE SO BADLY MANAGED THEY WERE LOSING BILLIONS OF DOLLARS. They probably weren’t even paying the administrative staff more than the minimum wage, so the gap between the lowest paid worker and the CEOs was probably thousand times more than their pay. But God forbid we interfere with that magical free hand of the market or God’s will that the poor shall suffer and the rich get richer.

book jacket By the way, when I was checking Goodreads to get the link and jacket, this is a book that popped up as recommended and it looks good. So it’s now on my want to read list. But I am not sure how much more I can take, reading about the recession and the fuck ups that were in charge and the greedy bastards with no scruples and the ratings agencies that colluded with them. Because NOBODY WENT TO FUCKING JAIL. They all just got rich. Main street people got foreclosed. AND THEY ARE NOW BIGGER THAN EVER and Hillary Clinton still doesn’t see the need to reinstate Glass-Steagall Act, plus though some have paid fines, Goldman Sachs paid $5 BILLION in fines, no one has ever said where that money goes. Just back into the pool that is sucked up by the military industrial complex? Sure as hell isn’t reimbursing the people who had there homes foreclosed on or anything for individuals because that would not be an incentive for them to work themselves to death. Plus it would be immoral to help human people, but justified to help crony and former and future employers for the executives in government to support corporations. And Obama proposed an economic recovery plan for $789 BILLION more dollars.

“Inexplicably, the Republicans in the Senate offered a substitute plan that cut taxes by $2.5 TRILLION in ten years. It was apparently lost on them that theirs was a nearly identical strategy that helped steer us toward the big federal deficits in the first place. Remember, the Bush administration had inherited a LARGE BUDGET SURPLUS and immediately put in place, with Republican support, very large tax cuts tilted toward the wealthiest Americans. That turned budget surpluses into budget deficits in a big hurry.”

Later in the book (p. 66) he names another name of the bad actors in the “recovery” including Federal Reserve Board Chair Alan Greenspan [who would later admit to being wrong] . “He [W. Bush] had a willing partner in offering big tax cuts when Federal Reserve Board Chairman Alan Greenspan said he was WORRIED THAT THE BUDGET SURPLUS COULD BECOME A PROBLEM if we accumulated big surpluses and paid down our national debt too rapidly.” Fucking idiot.

Years later, Greenspan wrote a book, The Age of Turbulence, in which he made it sound like he was exploring the surface of Mars while all this was happening. The fact is that he gave the green light to what he should have known was a reckless fiscal policy (it should also be noted that he failed as chairman of the Fed to regulate the reckless practices in the HOME MORTGAGE INDUSTRY and he OPPOSED REGULATING THE HEDGE FUNDS and DERIVATIVES TRADING.).

Here is another issue that seems to have been forgotten. (p. 68-70)

The table for some of it was set under the [Bill] Clinton administration. According to David. R. Baker, in an article that appeared in the San Francisco Chronicle in 2005, “Bankrupt energy trader Enron Corp. started manipulating California’s electricity market a month after it was DEREGULATED in 1998, according to internal documents and phone transcripts.” While there is evidence of market manipulation before Bush took office, it became brazen afterward. Businesses ran wild. The Enron Corporation was bilking electricity ratepayers on the West Coast out of billions of dollars by controlling and manipulating the supply of wholesale electricity. Enron wasn’t the only culprit, but set the standard for illegal and unethical behavior.

The Enron executives concocted schemes called Fat Boy and Get Shorty, which were designed to manipulate supply in a way that would drive up the price and maximize revenue for the energy companies. This is all fact. Yet in early 2008 when I and others suggested that there could be similar manipulation by speculators in the oil markets as the price of oil rocketed to $147 a barrel, the wise men spilled their mint juleps and swooned like Scarlett O’Hara: “Why, I nevuh!” Interestingly, the price collapsed just as quickly as it went up when some of the same interest that made money speculating on the rise in prices turned around and made money by bringing the prices back down.

But back to Enron! With Enron’s close association with the new White House, Bush pal Ken Lay believed he had a green light to fully exploit the market. And he did. There was even some talk that he might become Energy Secretary.

It wasn’t until four years after the Enron collapse that recordings of some Enron energy traders were made public, showing the brazen criminal activity. Those recordings were in the files of the U.S. Justice Department and were ONLY MADE PUBIC OVER THE JUSTICE DEPARTMENT’S OBJECTIONS after the filing of a Freedom of Information (FOI) request. One lawsuit in Washington State alleged that Enron manipulated power to its advantage in one stretch 400 out of 537 days up to June 1, 2001.

Because Ken Lay had, at the invitation of the White House, helped in the SELECTION PROCESS of the new chairman of the Federal Regulatory Commission (FERC), I assume he didn’t worry much about interference by that regulator. And sure enough, while Enron and others bilked the consumer to the tune of billions, it was the FERC that sat on its hand, acting deceased.

Both President Gush and Vice President Cheney mocked those who wanted an investigation into what we later learned was criminal behavior through supply manipulation. This was simply the FREE MARKET AT WORK they claimed. The result was billions of dollars being extorted from citizens on the West Coast who were paying inflated prices for electricity to air-condition their homes in the hot summer and heat them in the winter.

Anyway, this gives you a pretty good idea of the detail from someone from inside of Congress on what the various dirty rotten scoundrels were doing. Chapter 4 is on DARK MONEY and “collateralized debt obligation” and “credit default swaps” and other financial corruption. He likens it to the good old days Upton Sinclair wrote about it in The Jungle when sawdust was used as filler by meatpacking plants (and worse).

Chapter 6 covers insanely high CEO salaries. Page 110 states a fact that I have read elsewhere:

It used to be that in our country and in our economy there was some sort of relationship between effort and REWARD that was reflected in income. Increasingly, that isn’t always true anymore. An example of that is CEO pay in America’s publicly traded corporations. In 1980 the average CEO earned about forty [40!!! still too much] times the salary of the average worker. Today CEO pay has grown to over four hundred times [400!!!!] the salary of the average worker. But even at that, the CEO salary looks small compared to money earned by those running a hedge fund or a private equity firm, for example. [Like Chelsea Clinton’s husband]

He cites John Paulson, who made #3.7 billion in 2007. No indication if related to the other Paulson. He says this is “about the gross domestic product (GDP) as Tibet. This works out to just a bit more than $300 MILLION  a month. . . .about ten [10] MILLION DOLLARS A DAY. . . .” But these corporations and funds can’t afford to pay more than minimum wage for regular workers, versus management and traders etc. He calculates that this works out to be “more money in four minutes than the average American worker does in a year.”

The book addresses in a nice simple way some of the other major issues, like war, drug addiction, healthcare, etc. but really doesn’t end up with concrete legislative actions that can be taken, much less implemented in the face of intransigent Republican opposition. He had a good few paragraphs on the insanity of 445,000 American’s dying from smoking cigarettes a year at the cost of billions and demonstrates that compared with the tobacco settlement they are still extremely profitable. Also, I was sad to see it noted, that the states that benefited from this lottery win did not apply it to healthcare efforts or things related to smoking but put it wherever the heck they wanted on pet projects basically.

One part I have to fault him on is it blame the victim bit declaring “get up off the couch” for some health issues. First of all, try working 2 jobs and caring for family and keeping house and then see if you still dare to berate someone for watching a few hours of television. He says to read his book while on an Exercycle, it makes me wonder if he has priced them lately. We are too sedentary he exclaims. Well, that is what the jobs require in many cases. If you are stressed, overworked, underpaid, overwhelmed with family responsibilities, uncertain job future, dental bills, and growing kids needing new shoes at $50 bucks a pop (often more than a days’ wages!), it is hard to just take some time to sit down. And yeah, the soda pop and junk food, and fast food (because you are too exhausted to cook and organic food is too expensive) contribute, but when you are tired and hungry for a snack, fixing a salad or eating carrot sticks is not going to be fast or acceptable to many people and especially to kids.

The fact that the wealthy can eat and afford whatever they damn well please while states like Oklahoma and others are trying to restrict poor people from buying “bad” food — or expensive food, like steaks and seafood, AND organic[!] just furthers the fact that wages aren’t high enough, family assistance isn’t high enough to enable “healthy” meals, and low-income people who are run ragged trying to survive are blamed for  “BAD” eating habits. Cheap food is processed food with high calories and little substance to be filling enough to avoid the need to snack. Cooking and shopping and maintaining all the ingredients to prepare food from scratch costs money. There is limited or no training for cooking and nutrition for many people. AND WE’RE ALL JUST TOO DAMN TIRED ANYWAY. Plus yes, it would be nice to have a gym membership and a personal trainer and TIME to use it, but that is not something that is possible for the majority of Americans.

If you want people to eat better and get more exercise because it is in the State’s interest to save money, then make it possible for people to receive either universal basic income or require all jobs to be paid at full time wages for part-time hours so that people have time to exercise daily, or cook from scratch, or hell, play outside with their kids.

That would be the moral thing to do. It would improve productivity, eliminate unemployment, make for stronger healthier families, and it will never happen in America because we don’t even consider dental care to be a “medical” expense and expect everyone to pay $3k to $4k for their own hearing aids when they naturally lose their hearing as they age. Think about that and the price of a notebook computer today. WTF is wrong with this picture? Price fixing much? The poverty level is, I think, $12,000 a year. So for someone to buy hearing aids with that income, they would have to spend all of their income for 3 or 4 months. They certainly don’t have the chance to save up for it not to mention RETIREMENT. People who live paycheck to paycheck (vast majority) do not have the capability to pay $1,000 for a root canal — and how can that not be medical!? it’s an infection and requires surgery. Why is that different than an infected finger?

So while the book claims in the subtitle that he has a bunch of ways to suggest how some stuff can be fixed, he doesn’t really get to the core stuff that impacts the daily lives of everyone. Child care, dental care, paid vacation, benefits for part-time work, contract labor that is really employment, poverty level minimum wage, inadequate social benefit support systems, penurious level of Social Security payments based on unknown and probably invalid statistical basis of determination for amounts.

Getting ideological zealots and authoritarian theocratic politicians out of women’s uteri would be a good start but that doesn’t even make the discussion.

So while it is a respectable basic overview, this book actually doesn’t address how to fix core issues of greed, cronyism, Citizen’s United, corporations as people, Hobby Lobby, and any position Scalia took  for when he was alive. And how we can keep people like Ted Cruz, Joni Ernst, forced birthers, and thieves and perverts and adulterers and “religious freedom” martyrs out of public office.

If I could move to Iceland or Ireland or New Zealand or Australia or Canada or France or anyplace with socialized medical benefits, I would, even though if Trump blows up the world, nowhere will be safe. But at least I wouldn’t have to live in frustration with the rest of my fellow “Amuricans” who want their God, Grits, and women barefoot adn pregnant.

I did learn one thing today from another book that hadn’t really sunk in to me before; the problem with lead paint in old houses and lead pipes is that it literally takes off IQ points and lead has other consequences in brain damage, like poor impulse control and maybe ADHD, and is now considered to be a possible if not 100% cause of the spike in violent crimes from the 70s on through 90s I think. Book on CD so can’t check page number reference exactly. The point is there used to be NO UNLEADED GAS. Lead from gas became detectable in people’s bloodstreams. And of course the industries fought tooth and nail against REGULATION of leaded gasoline, because who needs brains! We only need to be smart enough to do what we are told. Not until enough kids had been living without having been exposed constantly to leaded gas did crime drop, IQ rise, and blood levels did not show lead traces.

So when I look around and wonder at the stupidity of Trump voters, or Republicans in general I can say, lead poisoning and testosterone poisoning! Democrats don’t escape either since they are too spineless and distracted (ADHD) to focus on what needs to been done to fix the country. That’s why we get the machine picked Hillary instead of the choice of millennials who have NOT been brain damaged by lead gasoline fumes for their whole lives. Imagine what smart people could have been if they too hadn’t had IQ points shaved off by lead damage. Maybe we’d have cured cancer now. Or at least been smart enough not to ever elect Scalia to the court or the others who awarded the presidency to George W. Bush and ruined the country, possibly forever.

 

 

 

 

 

 

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