My head is spinning and not just because this is the third time I've tried to write this. Unfortunately, as far as clarity and fresh thinking is concerned, my computer kept crashing as I pecked away at these thoughts last night, trying to make some sense of a dizzying day. Maybe my laptop was having some empathetic response to the banking crisis. Now I'm left feeling hungover and fuzzy. Probably like a lot of Washington Mutual customers.
More to the point, though, what can you say about a day like yesterday that begins with a walk in the park, literally, and ends with the largest bank failure in the history of the world? I don't have a brush wide enough for the strokes necessary to paint the picture of an average day in these times, one filled with blessings and a sense of impending doom. I wonder what's being taught in school, because I believe we're experiencing one of the most pointed lessons in civics in our time.
Let me start with how the day began. A beautiful day, like today. A couple friends and I took our dogs to Elysian Park and were treated to views of the San Gabriel mountains to the north and downtown Los Angeles to the south, which looked splendid peaking through the trees. The views were unfettered by clouds or smog. The whole magnificent metropolis spread out around us from the hills of the park. But there was something ominous in the air – a sense of uncertainty about what the day or the coming days would bring.
After the hike, I went to get what was left of my hair buzzed. My barber, Tony, is a hard-working immigrant who's made good. Tony doesn't suffer fools or bullshit. Once, a gang-banger tried to skip out on his bill and Tony locked him in and threatened to call the police until the kid paid up. Tony's old-school. And he's old. But his liver-spotted hands are still steady and he has a great chair-side manner. We discussed the financial system bailout that was all-but-agreed upon by mid-morning yesterday. Tony, who doesn't take credit cards and doesn't keep money in the bank, isn't in favor. Like a lot of “Main Street” Americans (whatever that is) he doesn't know why taxpayers should be on the hook for $700 million dollars to bail out Wall Street, which he think should be made to pay for its own sins.
I respect Tony immensely, but I have to disagree. If this was about bailing out Wall Street, I'd say “hell no” too. But it's not. This is a financial system bailout, not a Wall Street bailout. It's about whether or not in the coming days or weeks you go to the bank to withdraw some money to buy groceries, or whatever, only to have your ATM card chewed up and the machine blinking system error or you get your $60 and go on your way. It's about whether or not my neighbor, whom I went to the park with, can continue to draw the payroll for her small business from her bank. It's about whether or not the money you have in the bank in savings or checking accounts or CDs or IRAs or the like have any basis in reality and are not just empty promises. It's that fundamental.
Here's an example of how unnerved the system is. I have had a fairly significant, relatively speaking, wad of cash in the bank for more than a year — the result of selling a home I'd have rather kept. It's been just sitting there earning some small level of interest. I've basically ignored it because of some antipathy towards to the nature of how it came to be.
Yesterday, concerned that all that I have to show for a lot of work and some heartache might be gone if the banks fails, I decided to spread it around to other banks so it's at least covered by FDIC insurance. When I asked my bank for two sizable cashier's checks (I'd still be leaving a decent sized account with it), the manager nearly cried. I'm not kidding. It was as if i were breaking up with her. I felt bad. She felt bad. We both kind of understood.
Then, I walked across the street to another big bank and presented them with one of the cashier's checks and said I'd like to open an account and make a deposit. They almost didn't seem to understand. What was this thing before them? Someone with money… to put in a bank? A deposit? Liquid funds? It didn't quite compute. They were very happy. Same with the next bank, which got an even larger deposit. The bank nearly shut down to attend to me. I think they made a documentary of the whole transaction so they'd have something to use as a learning too for employees who have never seen such a thing.
Somehow I, who is less adept financially than a piece of wood had become that rarest of things — a person with money. And that's the problem. Nobody has money. Everybody has debt. Collectively, our debt far outweighs our cash. And the fundamental law of physics, when it comes to finances, is that cash goes to debt. Thus the crisis — there's not enough cash and way too much debt. And our banks to some extent are merely the institutions that hold our cash and our debt. So, if, as Tony and others say, we let the market run its course, there will soon be no cash in our banks. And, like Washington Mutual, they will collapse and your checkbook and ATM card stand a pretty decent chance of becoming souvenirs of ancient times.
By the way, I'm not sure my attempt to find FDIC coverage for my little nest egg is anything more than psychological, or stupid. The Federal Deposit Insurance Corporation has enough assets to handle about half of the deposits it's on the line for.
So, as hard to digest as this bailout is, the calculus is pretty simple. But apparently not simple enough to be above exploiting by a political system that's become disingenuous at it's core. Instead of showing leadership by pushing Republicans to put politics aside and work towards the agreement, John “I'm In Charge Here” McCain uses the event for an almost comical stab at political theater. It would be comical if the joke weren't going to be on us. If ever you needed an example that this guy puts himself above the welfare of the country, this has been it.
McCain's been trying to exploit the situation in every way possible — to delay his inevitable pummeling during the debates, to fog over his extreme complicity in the unchecked, trickle-down, greed-is-good, deregulating, securitizing, privatizing, bullshit brand of capitalism that got us into this — and make himself look like a white knight. Instead he looks like a buffoon and was all but called that yesterday by those who are seriously trying to salvage this mess.
But what about the civics lesson? If civics were still taught in school (and it's part of the grand lesson we're in the middle of that they are not) what would teachers and students be thinking about these events.
Would they take the long view and see how this mess is really just part of a culture that has been festering and growing like a cancer since the Reagan Revolution? Would they see the roots of the Reagan Revolution right here in SoCal and the Howard Jarvis Prop. 13 tax revolt? Would they make the connections and see the trend toward a view of society that is bereft of a sense of community and full of a sense of self? A something-for-nothing, entitlement culture?
Would they see the connections between the junk bond and savings and loan disasters of the 80s? Would they watch movies like Wall Street and discuss them? Would they see how our politics has become but a function of the unbridled capitalism of the past three decades? Would they be able to discern how, like everything else, our political system has become a commodity for sale and speculation like everything else? Would they realize how fundamentally fucked it is that just a couple years ago the exurbs around San Diego ignite in fire and can't be put down because the folks out there don't want to pay taxes for a fire department? Are people starting to understand that you can't live in a civil society without investing in the infrastructure of civilization?
The past thirty years have been, really, about turning back the New Deal. It's been so successful we stand at the brink of needing a new New Deal to correct the same abuses that led to that massive financial collapse and Depression. Genius.
Our political culture has become so devoid of integrity that towards the end of the day — when the bailout that was suddenly wasn't because of a group of grandstanding House Republicans — I find myself treated to excerpts of Sarah Palin's interview with Katie Couric. And I can't help but think: this says it all. Only in this culture, one that is so far removed from an idea of the public well-being, would a moron – and I'm sorry to have to say that, because Sarah Palin shouldn't be here; she's a hapless stooge in another ridiculous and dangerous political stunt by the same folks who brought us Bush, but she is a moron, and maybe a crazy one at that — be foisted upon us under the guise that she's ready to lead this nation.
Well, yes, she is. Further down the road to ruin that it's been on in earnest ever since we started bankrupting ourselves morally, constitutionally and civically. As a potential leader, she's a disaster. As a symbol of how lost we are, she's genius.
I seriously hope John McCain doesn't show up for the debate tonight. Game over if he doesn't. But, I won't be surprised if he doesn't because the game's over even if he does. How can he hide any longer from the fact that he's been part and parcel of the culture that's brought us to this brink. He's been flying cover for the deregulating predators for years — remember the S&L crisis, the Keating Five? And he's been even further out in the wilderness than Bush and the neocons when it comes to the disaster of the Iraq War that may turn out to be the biggest financial and moral blunder in this country's history.
After the Palin treat, came the news that Washington Mutual had collapsed. Once thought too big to fail (what will be the next bank that's too big to fail), WaMu is now distinguished as the largest bank failure in the history of the world. WaMu is lucky that JP Morgan Chase Company could absorb it. But how many banks can be absorbed by other institutions and how long before the liquidity crisis is too grave to be propped up?
As some ancient Chinese philosopher once said: These are interesting times. Speaking of the Chinese, they've told their banks not to lend our banks money anymore. Our biggest creditors have lost faith in our financial system.