I Can Only Hope This Proves To Be Inflammatory Nonsense
One of the great pleasures of writing finem respice relates to the wide variety of surprises that one finds in one's inbox as a consequence of having an audience of any size at all. Write about finance long enough with the same electronic mail address and a number of interesting anecdotes will flutter your way. Write just a little bit longer and a shocking tale will pass under your eyes once or twice. Stick it out for two and half a hundred weeks and one is like to hear something quite disturbing. Hang in for more than a pair of years and a truly horrifying, bone chilling narrative will eventually confront you. Today, I have the distinctly unpleasant distinction of being on the receiving end of exactly this sort of recollection. That is, a bit of dialogue so genuinely awful that- were it not from a source I consider impeccable, and unimpeachable- I would not dare to credit at all. Unfortunately, I must do precisely this, and personally believe it to be totally, frightfully accurate. I take no pleasure in relaying it, instead hoping that someone more directly in the business of running such matters down and printing them will carefully document it and- if true- expose it, or- if not- discredit it quickly and finally. This (as yet unproven) yarn goes exactly like this:
Confronting the head of a non-TARP fund holding Chrysler debt and unwilling to release it for any sum less than that to which it was legally entitled without compelling cause, this country's "Car Czar" berated the manager of said fund with an outburst of prose substantially resembling this:
Who the fuck do you think you're dealing with? We'll have the IRS audit your fund. Every one of your employees. Your investors. Then we will have the Securities and Exchange Commission rip through your books looking for anything and everything and nothing we find to destroy you with.
Faced with these sorts of threats, in this environment, with valued employees in the crosshairs and AIG a fresh, open wound upon the market, the fund folded.
It is a tale literally so outlandish and difficult to picture that, in these circumstances and given the source, it rings absolutely true. Consider all this in a larger context where:
You see Non-TARP entities claiming that:
...we have been systematically precluded from engaging in direct discussions or negotiations with the government; instead, we have been forced to communicate through an obviously conflicted intermediary: a group of banks that have received billions of TARP funds.1
...not to mention the fact that the salary, bonus and "stress test" results for TARP banks are all within Treasury's control.
Then you have White & Case attorney Tom Lauria, describing the experience of one of his clients, holders of Senior debt in Chrysler, to Frank Beckmann:
Lauria: One of my clients was directly threatened by the White House, and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight. That's how hard it is to stand on this side of the fence.
Beckmann: Was that Perella Weinberg?
Lauria: That was Perella Weinberg.2
We see the White House Chief of Staff (whose primary finance and economics qualifications appear to be a Bachelor of the Arts degree from Sarah Lawrence College- apparently appealing because of its strong ballet program- and a Master of the Arts in Speech and Communications) calling the plays over at Treasury for the last several months. To wit:
On Jan. 20, Timothy Geithner took control of the Treasury Department, directing the government's response to the financial crisis.
Within three weeks, the White House tightened its grip, alarmed by the poor reaction to Mr. Geithner's performance during the rollout of his rescue plan, government officials say. Since then, White House Chief of Staff Rahm Emanuel has been so involved in the workings of the Treasury that "Rahm wants it" has become an unofficial mantra among some at the Treasury, according to government officials.3
We have senior government officials apparently ordering, or at least strong-arming, the Chief Executive of a publicly-held firm to make or avoid certain disclosures and to close a merger, "or else."4
We watch the White House fire the Chief Executive of General Motors after he makes the most generous settlement offer to bondholders (to whom he owes fiduciary duties) up to that point, and smile gently when Wagoner's successor puts the screws to financial creditors and eases up on the UAW.
It is my deepest wish at this point that there is nothing about this latest bit of Car Czar thuggery even remotely based in fact- as this would mean that this country has truly and unarguably descended into fascism.
I use this term, "fascism," quite deliberately. I also use it well aware that many will consider it needlessly inflammatory. Be this as it may, I submit there is simply no other term that properly describes the style and tenor of government emerging both in public and behind once closed doors.
While it has seemed fashionable in past to brand the leanings of the current administration towards the left-biased "socialism," or even "communism," neither of these definitions withstands simple scrutiny. Nothing about these goings-on rises to the level of sophisticated argument required to sustain a claim that the state should a priori own the means of production. Nor does the present administration seem to harbor this as a goal. (It is not entirely clear if this is the result of philosophical or practical limitations, though I suspect the latter). Instead, the rhetoric flashing about commands subservience to the state, particularly by those industrialists and financiers whose acquiescence is required to maintain the machinery of commerce and the illusion of normalcy. Consider, then, these more elaborate definitions in light of what we have seen just in the last sixty days:
Fascism varied from nation to nation, but in its simplest terms it was a doctrine that sanctified the interests of the nation-state and minimised the rights of the individual.
The roots and antecedents of fascism can be traced back to the French Revolution of 1789, which ushered in ideals of liberalism and representative government that eventually spread across Europe as the old political and social order was overturned. During the nineteenth century, liberalism went hand-in-hand with a wave of nationalism that resulted in the unification of Italy and Germany in the 1860s and 1870s. Many believed, however, that liberal democracy had failed to curb the excesses of capitalism, providing instead the conditions under which the strong could prey on the weak. The 1890s saw an intellectual revolt against the dominant ideology of liberalism and capitalism. As a result, two major doctrines gradually emerged in opposition to liberalism. On the Left it was challenged by Marxism, which burst onto the European scene in Russia; and on the Right it was attacked by a right-wing movement that came to be known as fascism.
Fascism therefore emerged in direct opposition to liberal democracy, because fascists contended that democracy had created class conflict and that individual rights undermined the authority state. Fascists opposed communism because they argued that communism (or socialism) deliberately inflamed class conflict for revolutionary purposes, and this also threatened the nation-state. What distinguished fascism from other right-wing political movements was its 'revolutionary' intention to replace the existing political structure with the 'one-party totalitarian state' that would eliminate class conflict by encouraging the people to place the nation-state before their own self-interests.5
The core mobilizing myth of fascism which conditions its ideology, propaganda, style of politics and actions is the vision of the nation's imminent rebirth from decadence.6
[Fascism is] a form of political behavior marked by obsessive preoccupation with community decline, humiliation or victimhood and by compensatory cults of unity, energy and purity, in which a mass-based party of committed nationalist militants, working in uneasy but effective collaboration with traditional elites, abandons democratic liberties and pursues with redemptive violence and without ethical or legal restraints goals of internal cleansing and external expansion.7
I would gleefully wake in the morning to find my words of this evening alarmist, overwrought, and at variance with the facts. Until then, these connections so perfectly match descriptions of what would amount to nothing less than rank thuggery on the part of Mr. Rattner, that I cannot think of a better term- once removed from its unduly prejudicial context in Modern European history- to describe what appear to be the goals, aims and methods of this administration.
I am at a loss. Truly.
- 1. "Statement From Non-Tarp Lenders of Chrysler," The Wall Street Journal (April 30, 2009).
- 2. Tyler Durden, "The White House Threatened To Destroy Perella Weinberg's Reputation," Naked Capitalism (May 2, 2009). 6.5 MB .mp3 file.
- 3. Deborah Solomon, et. al., "At Treasury, Big White House Role," The Wall Street Journal (May 1, 2009).
- 4. "Excerpts From Ken Lewis's Testimony," The Wall Street Journal (April 23, 2009).
- 5. David Welch, "Modern European History," Routledge (1999).
- 6. Roger Griffin, "The Nature of Fascism," Routledge (1993).
- 7. Robert Paxton, "The Anatomy of Fascism," Vintage Books (2005).