[Marxism] The Casino Class - The Looting of America

[Dennis Brasky <dmozart1756@xxxxxxxxx>]

The Casino Class The Looting of America
by Les Leopold.  Reviewed by Bill Onasch
Chelsea Green. Paper, $14.95.

http://www.kclabor.org/casino_class.htm
Labor Advocate Online

If you want to know why it was necessary to give over a
trillion dollars to big banks and insurance companies
over the last year Les Leopold's new book is for you.
Carrying on the tradition of the Labor Institute he
helped found and now directs, Leopold manages to
explain the most complex shenanigans of finance capital
in language the average worker can understand. To keep
us going off the deep end in to despair he sheathes the
sharpest edges with some humor. He even closes with
some suggestions of what to do.

The reader finds out about derivatives; collateralized
debt obligations, including their squared and cubed
variations; credit default swaps; and, most inventive
of all, synthetic collateralized debt obligations.
You'll also be equipped to impress the counterman on
your next trip to the deli by instructing him to
tranche your corned beef thin and extra lean. If, like
me, you at first find yourself having trouble keeping
these byzantine terms straight you can bookmark a handy
glossary included by the author in the back.

It wasn't intended that even mere stock brokers or
politicians, much less workers, would ever understand
this strange new lexicon, with its underlying
definitions of finance. The author quotes former
Senator Phil Gramm (of Gramm-Rudman fame) "politicians
don't know a credit default swap from a turnip." This
is the brave new world of "fantasy finance,"
exceedingly complicated, not possible before powerful
computers started appearing on bank desktops.

But once those PCs arrived, and the old firewall
between investment and savings banks was scrapped,
thousands of creative hustlers at banks big and small
started designing new custom-made over-the-counter
securities for customers eager to get more bang for
their buck. Leopold explains how early perceived
successes in this completely unregulated arena
ultimately led to their handling of trillions of
dollars-mostly other people's dollars-like they were
playing Fantasy Baseball.

There were a few sticks-in-the-mud who warned early on,
even fifteen years ago, the potential for disaster and
urged regulation. They were dressed down not only by
Greenspan and Bernanke but Obama's financial gurus as
well-Volcker, Rubin, Summers, Geithner. All are free
marketeers who likely review a few pages from Milton
Friedman before going to bed every night.

If the gambling casinos had been risk takers on a par
with the financial casino Las Vegas and Atlantic City
would have become ghost towns long ago. With no one-not
even the vaunted credit risk evaluators such as Moody's
and Standard & Poors--telling the bankers about their
evolving nudity they lost their shirts and got caught
with their pants down when the housing bubble burst.
Their delicately layered tranches-"insured" by those
turnip-like credit default swaps-- forced them to coin
yet a new term-toxic asset. The U.S. meltdown also had
ramifications throughout the world, even bringing down
the government of Iceland.

Suddenly the banks not only had to suspend their
fantasy finance; loaded with toxic assets they could no
longer carry out their day job of providing basic
credit for the day-to-day operations of industry and
commerce. Plants and stores started closing. Blue chip
companies geared to just-in-time cycles started looking
at bankruptcy. That's what led the free marketeers of
both parties to unite around the extraordinary measures
of the TARP bailout and even defacto nationalization in
some cases.

Leopold writes,

"At least a trillion dollars was handed to big bankers
in 2008 and 2009, with very little debate. This is
borrowed money that we, the taxpayers and our children,
are on the hook for. It's an immediate transfer of
wealth from present and future generations to the
largest financial institutions in the world. It may
well be the largest wealth transfer since
African-Americans built the South. We went along
because the financial markets had a gun to our heads.
No bailout, no lending. No lending, no economy."

Nobody tells this story better than Leopold. He also
does a great job of explaining the decline of the
working class in the USA. The decoupling of
productivity and wages, that had moved in tandem
through the Fifties and Sixties, mirrored the decline
in unionization-especially since Bill Clinton's NAFTA
gave new impetus to offshoring unionism's manufacturing
base.

Unfortunately, the masterful job in looking at the
grand scale of class relations and class crisis in the
earlier chapters, that left us hungry for the
solutions, becomes diluted in to a rather thin soup in
the concluding ones. Some regulatory reforms,
nationalization of banks, increased minimum wage,
passage of labor law reform such as EFCA, are not bad
things but hardly seem up to the epic struggle now
required. Leopold says,

"...the choice is not between total socialism and
unfettered capitalism. Given the vast complexities of
our global economic system, we need to make room for
more nuanced alternatives."

I'm not sure what "total" socialism would be. The woman
who cuts my wife's hair in a salon in her home probably
doesn't have to be part of a nationalized planned
economy. But there's no long term future for peaceful
coexistence of planned and market economies in any
nuanced setting in my opinion. The meltdown of the
financial market might have been ameliorated by
regulation but it was still driven by the basic
internal laws of capitalist markets.

Merely preventing market catastrophes is not good
enough. The market economy--especially with its vast
global complexities-will continue to transfer more and
more of the wealth we produce to the ruling class. And
it is a obstacle that must be removed for the huge job
of economic conversion essential to saving our
biosphere from destruction by global warming. Only a
democratically planned economy can handle that urgent
task.

But answers to these questions are more than we have a
right to expect from one book-or one book review. All
in all, Les Leopold has done a commendable job with the
Looting of America. Every worker trying to sort out the
mess we find ourselves in should read it.

Bill Onasch
May 28, 2009
KC Labor



"It is dangerous to be right when the government is wrong."- Voltaire
________________________________________________
YOU MUST clip all extraneous text when replying to a message.
Send list submissions to: Marxism@xxxxxxxxxxxxxxxxxxx
Set your options at: 
http://lists.econ.utah.edu/mailman/options/marxism/archive%40archives.econ.utah.edu