The Fantastic Success of Occupy Wall Street - Immanuel Wallerstein

The Fantastic Success of Occupy Wall Street

Commentary No. 315, Oct. 15, 2011

The Occupy Wall Street movement – for now it is a movement – is the most important political happening in the United States since the uprisings in 1968, whose direct descendant or continuation it is.

Why it started in the United States when it did – and not three days, three months, three years earlier or later – we’ll never know for sure. The conditions were there: acutely increasing economic pain not only for the truly poverty-stricken but for an ever-growing segment of the working poor (otherwise known as the “middle class”); incredible exaggeration (exploitation, greed) of the wealthiest 1% of the U.S. population (“Wall Street”); the example of angry upsurges around the world (the “Arab spring,” the Spanish indignados, the Chilean students, the Wisconsin trade unions, and a long list of others). It doesn’t really matter what the spark was that ignited the fire. It started.

In Stage one – the first few days – the movement was a handful of audacious, mostly young, persons who were trying to demonstrate. The press ignored them totally. Then some stupid police captains thought that a bit of brutality would end the demonstrations. They were caught on film and the film went viral on YouTube.

That brought us to Stage two – publicity. The press could no longer ignore the demonstrators entirely. So the press tried condescension. What did these foolish, ignorant youth (and a few elderly women) know about the economy? Did they have any positive program? Were they “disciplined”? The demonstrations, we were told, would soon fizzle. What the press and the powers that be didn’t count on (they never seem to learn) is that the theme of the protest resonated widely and quickly caught on. In city after city, similar “occupations” began. Unemployed 50-year-olds started to join in. So did celebrities. So did trade-unions, including none less than the president of the AFL-CIO. The press outside the United States now began to follow the events. Asked what they wanted, the demonstrators replied “justice.” This began to seem like a meaningful answer to more and more people.

This brought us to Stage three – legitimacy. Academics of a certain repute began to suggest that the attack on “Wall Street” had some justification. All of a sudden, the main voice of centrist respectability, The New York Times, ran an editorial on October 8 in which they said that the protestors did indeed have “a clear message and specific policy prescriptions” and that the movement was “more than a youth uprising.” The Times went on: “Extreme inequality is the hallmark of a dysfunctional economy, dominated by a financial sector that is driven as much by speculation, gouging and government backing as by productive investment.” Strong language for the Times. And then the Democratic Congressional Campaign Committee started circulating a petition asking party supporters to declare “I stand with the Occupy Wall Street protests.”

The movement had become respectable. And with respectability came danger – Stage four. A major protest movement that has caught on usually faces two major threats. One is the organization of a significant right-wing counterdemonstration in the streets. Eric Cantor, the hardline (and quite astute) Republican congressional leader, has already called for that in effect. These counterdemonstrations can be quite ferocious. The Occupy Wall Street movement needs to be prepared for this and think through how it intends to handle or contain it.

But the second and bigger threat comes from the very success of the movement. As it attracts more support, it increases the diversity of views among the active protestors. The problem here is, as it always is, how to avoid the Scylla of being a tight cult that would lose because it is too narrowly based, and the Charybdis of no longer having a political coherence because it is too broad. There is no simple formula of how to manage avoiding going to either extreme. It is difficult.

As to the future, it could be that the movement goes from strength to strength. It might be able to do two things: force short-term restructuring of what the government will actually do to minimize the pain that people are obviously feeling acutely; and bring about long-term transformation of how large segments of the American population think about the realities of the structural crisis of capitalism and the major geopolitical transformations that are occurring because we are now living in a multipolar world.

Even if the Occupy Wall Street movement were to begin to peter out because of exhaustion or repression, it has already succeeded and will leave a lasting legacy, just as the uprisings of 1968 did. The United States will have changed, and in a positive direction. As the saying goes, “Rome wasn’t built in a day.” A new and better world-system, a new and better United States, is a task that requires repeated effort by repeated generations. But another world is indeed possible (albeit not inevitable). And we can make a difference. Occupy Wall Street is making a difference, a big difference.

While walking down the street one day a Corrupt Senator

While walking down the street one day a Corrupt Senator (that may be redundant) was tragically hit by a car and died.

His soul arrives in heaven and is met by St. Peter at the entrance.

"Welcome to heaven," says St.. Peter. "Before you settle in, it seems there is a problem. We seldom see a high official around these parts, you see, so we're not sure what to do with you."

"No problem, just let me in," says the Senator.

"Well, I'd like to, but I have orders from the higher ups. What we'll do is have you spend one day in hell and one in heaven. Then you can choose where to spend eternity."

"Really?, I've made up my mind. I want to be in heaven," says the Senator.

"I'm sorry, but we have our rules."

And with that, St. Peter escorts him to the elevator and he goes down, down, down to hell.

The doors open and he finds himself in the middle of a green golf course.

In the distance is a clubhouse and standing in front of it are all his friends and other politicians who had worked with him.

Everyone is very happy and in evening dress. They run to greet him, shake his hand, and reminisce about the good times they had while getting rich at the expense of the people.

They played a friendly game of golf and then dine on lobster, caviar and the finest champagne.

Also present is the devil, who really is a very friendly guy who is having a good time dancing and telling jokes.

They are all having such a good time that before the Senator realizes it, it is time to go.

Everyone gives him a hearty farewell and waves while the elevator rises.

The elevator goes up, up, up and the door reopens in heaven where

St. Peter is waiting for him, "Now it's time to visit heaven...”

So, 24 hours passed with the Senator joining a group of contented souls moving from cloud to cloud, playing the harp and singing. They have a good time and, before he realizes it, the 24 hours have gone by and St. Peter returns.

"Well, then, you've spent a day in hell and another in heaven. Now choose your eternity."

The Senator reflects for a minute, then he answers: "Well, I would never have said it before, I mean heaven has been delightful, but I think I would be better off in hell."

So St. Peter escorts him to the elevator and he goes down, down, down to hell...

Now the doors of the elevator open and he's in the middle of a barren land covered with waste and garbage. He sees all his friends, dressed in rags, picking up the trash and putting it in black bags as more trash falls to the ground.

The devil comes over to him and puts his arm around his shoulders.

"I don't understand," stammers the Senator. "Yesterday I was here and there was a golf course and clubhouse, and we ate lobster and caviar, drank champagne, and danced and had a great time. Now there's just a wasteland full of garbage and my friends look miserable. What happened?"

The devil smiles at him and says,

" Yesterday we were campaigning. Today, you voted.."

 

A War on the Nature of Freedom They Hate Us for Our (Reproductive) Freedom

A War on the Nature of Freedom

They Hate Us for Our (Reproductive) Freedom

by KATHLEEN PEINE

The barrage of late, regarding reproductive legislation shouldn’t be viewed as an assault only on women, but an attempt to curtail and contain the entire population, men included. It’s a broad, scorched earth policy that won’t end with this patchwork of bills.

They hate us for our freedom, and I’m not talking about the “terrorists”.

To be clear in this, I would say that one could be sympathetic in the past with those anti-abortion individuals who seemed sincere in their belief that it was wrong, even if you disagreed with them. But here’s the thing- those beliefs never seemed to be combined with a desire to provide easily accessible birth control or even an acceptance of a sexuality that didn’t not result in procreation. The more recent assaults further flesh out their worldview. They are going after not just abortion, but the very funding that prevents unwanted pregnancies. It’s an ownership ethos that is punishing and immovable. Those with these ideas seem to feel something of a punitive pull- another may be less restrained in some manner, and they can’t abide that- I’m not free they exude, and in something of a hazing mentality, want others to go through what they did, and be just as miserable. It goes beyond sexuality and broaches the very limits of what we call free will.

It’s not really a shocking development when you consider that we are all considered simple consumers by most in power. Ownership and boundary issues stem from that, and can become cherished topics of the authoritarians. The bodies of women are simply easy pickings. You are pretty freaking vulnerable waddling around at 8 ½ months, and forcing that upon the many is a magnificent control method. It has morphed into something beyond abortion, into private sexual behavior- an area the “anti-government” types can’t seem to get enough of.

Freedom of any kind is feared. Any hint of anarchism (and I’m talking about the lack of external controllers on individual freedom-not the more skewed and corrupted notion of that word) is terrifying to those in power. I suspect that this was the main reason for some of the brutal Occupy take-downs. Sure, they didn’t want wealth disparity being discussed, but I think they also feared a model of concern for communal well-being. That goes against the constraints that cause us all to stand in line for the latest hideous cubicle job, and step on each other to get it.

The inconvenient fact that the US government was built on a notion of the separation of church and state is not a concern to these types, either. They can’t fathom that they would ever not be in power- that their own rights could truly be at risk. This exposes the hypocrisy of their constant bellowing out as victims. If they really perceived their station as such, they might push for protective measures against the will of a tyrannical group being thrust upon others. It’s an amazing unstated assertion that they have no true fear of anyone else ever really being in control- the railing against Muslims/Buddhist/Atheists/Others is pure theater. And the true believers seem to be carrying water for those who just want the populace under control- they benefit from that arrangement, and will never have to live under the same rules. They know their wealth and power would preclude that. I suspect they enjoy the show.

This control can force men to stay at awful jobs to support the family, just as it can do to the woman. You are certainly not likely to become an activist during dangerous times if you fear for the survival of your children. And having kids sometimes ties individuals into a lifestyle they would otherwise not choose. This is not to say that children are entirely punitive! But it’s a statement of fact that upon having children, most do become a more malleable and frightened follower of social morays. And it’s one thing to enter into this voluntarily, but quite another to be pushed into it.

Author Daniel Quinn had a term: “erratic retaliation”. He posited that unpredictable responses from certain individuals or groups could illicit better behavior, overall. You would have to consider that someone might react in an unpredictable manner to your own overarching behavior. I would term individuals who quit easily over labor abuses to be “erratic retaliators”. This sort of thing can make an employer more cautious when they consider extending future unreasonable requests on their employees. High unemployment serves in the same manner, as do the chains of student loan debt. Give folks few options and many mouths to feed, and they will not retaliate in any manner. And I’m speaking, of course, about those who respond in a clean and decisive manner that they will not tolerate abuses- not full blown psychotic episodes that hurt others, such as going postal. We seem to still have those capacities sadly intact in some of our population. That’s just the flailing out of angst with no redeemable quality behind it.

I would extend that this being termed “a war on women” is not entirely accurate. It’s really a war on the very nature of freedom and the ability to use your life as you see fit- for men and women. Don’t be lulled into a false sense of security if you lack a uterus. The women will, of course, suffer more in all of this, but make no mistake that this is just another method to own and control those of us they see as nothing but cogs in the enormous machine. And that machine churns out endless growth and gluttony for the few.

As it is with most things, there is a broadness that encompasses and swallows everyone in the interconnectedness- the diminished humanity and loss of freedom will not observe boundaries.

Kathleen Peine writes out of the US Midwest and can be contacted at kathypeine@gmail.com

The Mass Killer as Hero

MARCH 21, 2012

From My Lai to Kandahar

by JEFF SPARROW

My name is William Calley,
I’m a soldier of this land,
I’ve tried to do my duty and to gain the upper hand,
But they’ve made me out a villain,
They have stamped me with a brand …

The massacre of 16 Afghan men, women and children in Kandahar has, inevitably, recalled the My Lai incident in Vietnam.

But it’s worth thinking through what the comparison tells us.

In 1971, a military court found Lieutenant William Calley guilty of murdering Vietnamese civilians, a decision generally recalled by liberals as a tipping point in domestic opinion, a moment that Americans turned against the conflict.

That’s not entirely false. But it ignores an equally significant phenomenon  — the tremendous outpouring of support for Calley.

The lyrics above come from ‘The Battle Hymn of Lt Calley’, a spoken word track celebrating the lieutenant as an all-American hero. That’s right – a song recorded to laud the man who had ordered soldiers to open fire on unarmed civilians, forcing some of his victims to strip before they were shot; a man who’d later picked up a weapon and joined in the killing himself. Among other deeds, when a two-year old child escaped from the ditch in which his relatives were being massacred, Calley grabbed the infant, tossed him back into the trench and personally shot him.

Historians now think as many as 500 people died at My Lai. They were overwhelmingly old men, children and women. Some were tortured before being killed. Women were gang-raped; bodies were mutilated, with the words ‘C Company’ carved into their chests.

So who wore the Free Calley stickers that proliferated in 1971? Where did this support come from?

In a history of the 70s, the conservative commentator David Frum notes:

Congressional liberals like Senator Abraham Ribicoff of Connecticut joined with conservatives like Georgia’s Herman Talmadge to condemn the verdict … The governor of Indiana ordered all state flags to be flown at half staff for Calley. The governor of Utah criticised the verdict as ‘inappropriate’ and the sentence as ‘excessive’. Governor Jimmy Carter of Georgia proclaimed ‘American Fighting Man’s Day’, and urged Georgia motorists to drive all week with headlights on. The Arkansas legislature approved a resolution asking for clemency. The lower house of the Kansas legislature demanded Calley’s release from prison. So did the Texas Senate and the state legislatures of New Jersey and South Carolina. … Alabama Governor George Wallace visited Calley in the Fort Benning stockade and called on President Nixon to pardon him. Wallace then spoke at a rally in Calley’s defence at Columbus, Georgia, alongside Governor John Bell Williams of Mississippi.

One poll showed that 78 per cent of Americans opposed the verdict, while a majority wanted Calley exonerated entirely. President Nixon, acutely keen to fan any backlash against the New Left, personally ordered Calley released pending appeal. Thus, in his book Nixonland, Rick Perlstein recalls how

‘a man convicted by fellow army officers of slaughtering twenty-two civilians was released on his own recognizance to the splendiferous bachelor pad he had rented with the proceeds of his defense fund . . . complete with padded bar, groovy paintings, and a comely girlfriend, who along with a personal secretary and a mechanical letter-opener helped him answer some two-thousand fan letters a day.’

Nixon’s intervention meant that Calley, originally sentenced to life imprisonment with hard labour, served only three years of house arrest, despite their never being any doubt about his guilt.

In some ways, the killings in Afghanistan are quite different. Though much about the slaughter conducted in the Panjwai district of Kandahar remains obscure, U.S. Staff Sgt. Robert Bales seems to have been acting on his own behalf rather than undertaking the kind of officially-sanctioned mission in which Calley was involved.

Thus, whereas General Westmoreland initially congratulated C Company on an ‘outstanding job’, President Obama immediately issued an apology for the
Kandahar massacre, claiming Bales didn’t represent ‘army values’. Bales was, the story goes, an aberration – a New York Daily News dubbed him ‘Sergeant Psycho.’

Yet for some Americans, he’s a hero nonetheless.

Blogger Charles Johnson writes:

‘I’ve looked at about a dozen right wing sites this morning to see how they’d react to the news from Afghanistan, and the comments at every single one of them were full of people celebrating the killings, praising the soldier who allegedly committed them, and denying there was any crime, while at the same time frantically trying to blame the crime on President Obama.’

Johnson documents a thread on Fox News that contains the following.

I don’t see a problem here.

[…]

Obummer what is tragic and shocking that you are a lying P O S P that supports t e r r o r i s m ! Burn in L L E H
moooooooooooooooooooslime

[…]

It’s perfectly okay for the Afghanistan military to mur der our troops, Obama dosen’t even flinch, however, condolences go out when it’s the other way around. I’ll be very glad when the loser-in-chief is on his way out. I hate muslums, big time, in a very big way! Right behind the muslums are the libtards, they’re just as bad.

[…]

What comes around goes around That soldier deserves a medal!!!!!

Just a few nutters? Perhaps. Except, as Johnson says, you can find similar comments on almost all of the big right-wing blogs, with a certain proportion of commenters greeted the killings with an open celebration of murder for murder’s sake.

One of the men responsible for bringing My Lai into the open was a helicopter pilot called Ron Ridenhour. He later discussed the war he saw.

We would identify somebody […].  We’d say, OK, here’s somebody who is looking suspicious or whatever.  And some infantrymen would walk up to him and just shoot him.  I mean, no provocation.  They just walk right up to him.  I’m not talking about something that’s ambiguous, I’m talking about murder.  I’m talking about somebody walking right up, pointing a gun and, without provocation, pulling the trigger.

In those remarks, he wasn’t talking about My Lai. He was referring to the rest of his service, the everyday conduct of a colonial war in which callousness and oppression became routine.

That’s why, back in 1971, the right-wingers who supported Calley understood far more about Vietnam than most liberals. When conservatives celebrated Calley as a man who ‘tried to do [his] duty and to gain the upper hand’, they tacitly acknowledged that the war itself was inseparable from atrocity and that what took place at My Lai was merely an extreme example of a logic underpinning free fire zones and village pacification and all the rest of it, a logic that identified the population as a whole as the enemy.

In a recent interview with Democracy Now, journalist Neil Shea explained how the occupation in Afghanistan inculcates a similar  brutality in today’s soldiers.

By the time I reached these guys, they had already been sort of—they had been building up anger and aggression in strange ways for a number of years. And when I saw them, they had just shot a dog that had been a pet in an Afghan home that they had confiscated during the mission, and they treated Afghan civilians fairly roughly, and they took a few prisoners and treated them very roughly, as well. Nothing that would rise to necessarily the—sort of a crime at that time, but the way that they talked about things and the way that they sort of handled themselves was really aggressive. And it was only—it seemed to me only to be barely kept in check.

So it’s just this small—when we cycle our soldiers and marines through these wars that don’t really have a clear purpose over years and years, I write in the article that we begin—we expect light-switch control over their aggression. We expect to be able to turn them into killers and then turn them back into winners of hearts and minds. And when you do that to a man or a woman over many years, that light-switch control begins to fray. And that’s what I believe I was seeing with these guys in Afghanistan.

Shea’s does not claim that the men with whom he embedded were particularly evil. On the contrary, they were, he says, entirely ordinary, which is why they needed a protective layer of hatred to perform what was asked of them.

But it’s not just that the War on Terror changes soldiers. It also changes the society on behalf of which those soldiers fight. Lukacs says somewhere that the modern mass army is directly linked to what he calls the ‘inner life of a nation’. You don’t have to look very hard to see what he means.

Since 2001, we’ve seen the normalization of torture against (mostly Muslim) detainees; the construction of secret prisons to detain Muslim prisoners indefinitely without charges or trial; the routinisation of assassinations and other extrajudicial killings of Muslims in Iraq, Afghanistan, Pakistan and Yemen; and, most of all, deaths of (by the most conservative reckoning) hundreds of thousands of people, most of them Muslim, in Iraq and Afghanistan and elsewhere.

What attitudes to ordinary Muslims does such a record inculcate? What notions does it foster about the way they should be treated?

Should we really be surprised that, within the semi-anonymity of a blog forum, a large number of Americans discuss Muslims as untermenschen, subhuman enemies of civilisation, fit only for extermination?

Back in 1971, ‘The battle hymn of Lt Calley’ sold a million copies in less than a week. Its final verse runs like this:

When all the wars are over and the battle’s finally wonCount me only as a soldier who never left his gunWith the right to serve my country as the only prize I’ve won …

More than a decade of the War on Terror has, just as you would expect, created a new audience who wants to never leave the gun, an audience no longer shocked by atrocity but increasingly prepared to celebrate it. The consequences will be with us for a long time.

Jeff Sparrow is the editor of Overland magazine and the author of Killing: Misadventures in Violence.

What If Kony Was a Muslim? Kony’s Invisible Christian Fanaticism by MAMOON ALABASSI

MARCH 21, 2012

There is no doubt that the thirty-minute video ‘Kony 2012′ by the advocacy group Invisible Children has raised much awareness regarding the relatively under-reported atrocities committed by the Ugandan rebel group the Lord’s Resistance Army (LRA). It is also true that the video, which boasts of over 80 million views on YouTube so far, has been subjected to much – I think fair – scrutiny. Criticism of the motives, accuracy and objectivity of the video’s makers has stirred a rather healthy debate on the issue, where alternative ways forward were discussed.

However, I could not help but wonder how Invisible Children – whose founders are reported to have evangelical leanings – would have fashioned their video had the LRA been a Muslim extremist group (instead of being a Christian one, whose former name was the ‘Uganda Christian Democratic Army’). I am not suggesting here that the group’s professed beliefs are behind their abduction and enslavement of more than 30,000 children over the period of 25 years, where some of the boys become child soldiers, forced or brainwashed into murdering their own parents, and many of the girls end up as sex slaves after being captured. The LRA fighters would chop off the arms, legs or ears of their victims. Sometimes they would padlock their lips. As a result of their terrorising violence, hundreds of thousands of people have been displaced. The group does – bizarrely – claim to be fighting for the establishment of the rule of the Ten Commandments in a theocratic Uganda (although they have been active in three other African countries: South Sudan, the Democratic Republic of Congo and Central African Republic).

But in the video, you hear the claim that the LRA leader is “not fighting for any cause but only to maintain power” (without any mention of the group’s own proclaimed reasons). That may very well be true of many fanatics but how many of those would have their religious views subjected to censorship (maybe to avoid confusing their extreme interpretation with that of the mainstream understanding of a religion)? Not many Muslim ones, I would argue. Even the full name of the group – the Lord’s Resistance Army – was not even pronounced once (although it did appear in writing) during the whole video. Instead you only hear the LRA acronym. Perhaps the video makers did not wish to ‘take the Lord’s name in vain’.

According Vincent Otti, the now deceased second in command of the group, the LRA is “fighting in the name of God. God is the one helping us in the bush. That’s why we created this name, Lord’s Resistance Army. And people always ask us, are we fighting for the [biblical] Ten Commandments of God. That is true – because the Ten Commandments of God is the constitution that God has given to the people of the world. All people. If you go to the constitution, nobody will accept people who steal, nobody could accept to go and take somebody’s wife, nobody could accept to innocently kill, or whatever. The Ten Commandments carries all this.”

The above quote suggests that the enemies of the LRA are not “innocent” and therefore killing them is justified. And Joseph Kony, a former Catholic preacher, is himself reported to use biblical references – mainly passages from the Pentateuch – to justify mutilation and murder. Elaborating on that logic, one of Kony’s most trusted commanders, named Moses, was quoted as saying: “If someone has done something bad to you, you have to kill them! Go and read in Matthew, chapter what and what, it is stated that if your right hand causes trouble, cut if off! It is there in the Bible!”

Kony is reported to have named one of his sons ‘George Bush’, and although the former US president certainly does not condone the LRA (which is more than can be said for the American Christian conservative Rush Limbaugh who had defended the group in a radio gaff), both men – Kony and Bush – claim to receive direct messages from God.

In addition to the overtly religious rhetoric of LRA leaders, testimonies from boys who have escaped from the grip of the terror group point to religious symbolism, where the child soldiers would make cross signs on their chests, foreheads, shoulders and guns, using special oil that is said to have the power of the Holy Spirit. And they were told that those who die – from all sides – must have broken religious commands.

Of course the LRA’s mystic brand of Christianity is different from the mainstream understanding of the faith (although that too had long been abused to promote terror). And the reality is that the conflict has never really been of a religious nature. It is much more complicated than that. But that’s true of many violent groups who use religious rhetoric to make political points. These groups, like the LRA, can be found making strange bedfellows – sometimes forging unexpected alliances and fighting unlikely enemies. However, if any group professed to have committed some of the aforementioned atrocities in the name of Islam – regardless of how far such actions are from the mainstream of the religion – it is quite common that the faith (and by extension everyone who believes in it) would take the blame. It would not be about one man – or his army – gone mad or is on a quest for power, as the video suggests.

Mamoon Alabbasi is a news editor and translator based in London.

Oh for the days of John McCain and the Silverado Savings and Loan Scandals which only cost 100's of Billions!

MARCH 20, 2012

25

Financial Crisis, Round Two

Wall Streets Reloads With Toxic Bonds

by MIKE WHITNEY

“Despite the Dodd-Frank financial reform bill and its directive to address this issue, the problem of bank runs in the shadow system has not yet been solved.”

–Mark Thoma, Professor of Economics, University of Oregon, February 13, 2012.

Wall Street is at it again.

In the last few months, the nation’s biggest banks and investment firms have resumed the same perilous activities that crashed the financial system and plunged the economy into the deepest slump since the Great Depression. According to a number of recent reports, there’s been a steady uptick in the type of risky bond deals that preceded the repo market bank run in 2008 leading to the default of 106-year old financial giant Lehman Brothers. With interest rates locked at zero percent and gradual improvements in the economic data, investors have been scouring the markets for better returns on their investments. This search for higher yield has triggered a gold rush on risky assets which has increased the probability of another major cataclysm. Here’s the story from CNN Money:

“The risky bond deals that were a hallmark of the pre-financial crisis boom are staging a comeback as investors continue to hunt for ways to find higher rates of return.

And companies are willing to meet the demand. Roughly $58 billion of high yield, or junk, bonds have been issued by 95 corporations since January. That’s the fastest start in 15 years, according to Dealogic.

Investment grade bonds, which offer a lower, albeit more stable yield, have also continued to attract investor interest. Since January, about $150 billion of corporate bonds have been issued by 315 companies, according to Dealogic. While that’s slightly faster than the past two years, it’s well behind the pace set in 2007, 2008 and 2009.” (“Bonds: Risk is back!”, CNN Money)

Trillions of dollars in bailouts, subsidies and other corporate welfare has restored many of the Too Big to Fail banks back to health, allowing them to reengage in transactions which, once again, put both the financial system and the broader economy in danger. And, although there have been modest efforts to re-regulate the system–particularly Dodd-Frank–the new laws fall well-short of what’s needed to decrease the vulnerabilities in the shadow banking system or to increase confidence in the bonds that are at the center of this latest

investment binge. Congress has failed to pass legislation that would improve the underwriting standards of the loans that are pooled in these bonds to make sure that borrowers have the ability to repay their debts. Absent stricter standards, there’s certain to be a repeat of the collapse in the secondary market which followed the implosion in subprime mortgages. It’s deja vu all over again. Here’s more fromInternational Financing Review:

“As the credit crisis recedes and underwriting standards begin to loosen, bonds backed by consumer debt such as auto loans, credit card payments, and student loans are becoming increasingly risky, Moody’s said on Thursday.

Relaxed underwriting standards, more complex structures, and new untested market participants are just three of the trends suggesting that risk is on the rise for some sectors of the asset-backed securities market, Moody’s said in a report….

With credit standards slipping in asset classes such as subprime auto loans, and risky crisis-era structural features showing up in transactions, credit rating agencies need to make sure they are keeping up with the deteriorating credit standards and rating the these bonds appropriately – which means withholding their coveted Triple A rating if it is not deserved, or making sure there are other features that mitigate the risks, said Moody’s.” (“As crisis fades, risk returns to asset-backed debt – Moody’s”, IFR)

Easy money, looser credit and poor underwriting standards: Where have we heard that before? And all this is by-design, the inevitable result of a monetary policy that feeds liquidity into an overbloated financial system that neither creates value nor provides capital for productive activity. The present arrangement merely transfers the wealth from working people to a class of investors who’ve become a danger to themselves and society. Here’s more from the IFR:

“The riskiness of securitizations is still low and has not approached the level it reached in the early to mid-2000s…ABS reached its issuance peak in 2006 at US$754bn. However, if the normal pattern of the credit cycle plays out, the easing of credit that took place in 2011 will persist into 2012 and beyond…

Originators have begun to ease underwriting standards…. in sectors such as subprime auto-loan securitizations, where underwriting is returning to its pre-recession norm, losses on loan pools backing auto ABS are bound to increase.” (“As crisis fades, risk returns to asset-backed debt – Moody’s”, IFR)

As we have noted in earlier articles, subprime auto securitization and student loans represent most of the gains in the recent credit expansion. Loans that are bundled and sold to investors are used numerous times-over as collateral (rehypothecation) so that banks and financial institutions can maximize leverage. This same “gearing” process was all the rage until 2007 when two Bear Stearns hedge funds unexpectedly defaulted precipitating a run on the shadow system that wiped out over $4 trillion in equity in less than a year.

Other signs that Fed chairman Bernanke’s loosy-goosy monetary policy is inflating another asset bubble include the fact that banks have doubled the volume of their credit card solititations since 2010 “with an increased emphasis on offerings to individuals with less than pristine credit histories.” In other words, the banks don’t care whether they get their money back provided they can offload the unpaid debt onto gullible investors in the form of bundled loans. The former head of the FDIC, William Seidman, figured this scam out long before the dot.com bubble burst and issued this warning to regulators:

“Instruct regulators to look for the newest fad in the industry and examine it with great care. The next mistake will be a new way to make a loan that will not be repaid.”

If only someone had been listening.

IFR also reports that private equity high-rollers are joining in the fray by loading up on junk paper that promises slightly better returns than low yielding CDs or US Treasuries. Here’s the clip:

“The entrance of players … with higher risk profiles is a sign that competition for asset origination will increase”….Additionally, small originators and issuers with low credit quality have been getting back into the game, and their ability to honor representations and warranties may be limited.”

“Too Big To Fail” ensures that any investment in high-yield garbage bonds is a reasonably safe bet due to the fact that US taxpayers now guarantee Wall Street against any substantial loss. That implicit backstop includes all manner of financial institutions including insurers, PE, hedge funds etc. The Fed has wrapped its arms around the entire system while transferring trillions of dollars in red ink from the balance sheets of these foundering Wall Street casinos onto its own.

This below-the-radar surge in financial offal has spread to the same complex assets that were at the heart of the crisis, collateralized debt obligations or CDOs. The big boys–Goldman and Barclays–have been inquiring about the $47 billion in AIG assets held by the New York Fed. Some of these assets have already been sold off in, what appeared to many to be, secret auctions. Even so, there’s more dreck where that came from which has piqued the interest of other banks and brokerages. Here’s more from the Wall Street Journal:

“The $47 billion face value in assets, held by the Federal Reserve Bank of New York, are the same kinds of financial instruments that … caused record losses across the financial industry. Plunging values of the securities, called collateralized debt obligations, or CDOs, caused AIG’s near collapse and a government rescue in 2008. The $182 billion bailout was widely criticized because a chunk of taxpayer aid was funneled through AIG to large banks.

Now, amid rising investor demand for riskier, higher-yielding assets, attempts by Wall Street firms to buy those same assets may spark further controversy. Some large banks were on the winning end of bets with AIG over the instruments during the crisis, and benefited from the insurer’s bailout….

Banks that bought credit-default swaps from AIG on the CDOs had inundated AIG with demands for collateral when the housing downturn caused market prices of the CDOs to nose dive. The New York Fed’s move made more than a dozen U.S. and foreign banks whole on their bets with the weakened insurer. Some of those banks, including Goldman and Barclays, are now the same ones interested in buying the securities, people familiar with the matter said.” (“Banks Want Fed to Iron Out ‘Maiden’”, Wall Street Journal)

Wow. So all 12 banks were paid 100 cents on the dollar for bogus insurance policies (CDS) that were essentially worthless since AIG did not have the resources to repay the claims. And now these same banks want to buy the remaining AIG assets at firesale prices? That’s what you call the double whammy.

The reason that most people can’t grasp how serious these new developments are, is because their understanding of the financial crisis remains sketchy. The Crash of ’08 had less to do with subprime mortgages and Lehman Brothers than it did with the flawed architecture of a shadow system that performs the same tasks as traditional banking, but is unregulated, undercapitalized and hopelessly crisis-prone.  ”What happened in September 2008 was a kind of bank run,” said Robert E. Lucas, of the Minneapolis Fed. “Creditors lost confidence in the ability of investment banks to redeem short-term loans, leading to a precipitous decline in lending in the repurchase agreements (repo) market.” Yes, but there’s more to it than that. The reason that “creditors lost confidence” was because they knew the banks were using bonds that were comprised of dodgy loans to people who had no ability to repay the debt. In other words, there was a moment of enlightenment (when two Bear Stearns hedge funds stopped redemptions) when the main players suddenly realised that the entire $10 trillion shadow banking system and repo market was propped up on a foundation of pure quicksand. (ie–”bad loans”)  That’s when the race for the exits began.

And now, not even 4 years later, the banks are at it again, buying up toxic bonds by the boatload.   We’re back to Square One. Barring a dramatic reversal in the present policy, (which is extremely unlikely) it’s hard to see how another disaster can be averted.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion, forthcoming from AK Press. He can be reached at fergiewhitney@msn.com