Once again, I come to write an essay for the Center Post, the journal of Rowe Camp and Conference Center. Once again, I come with heavy heart. I would love to share musings about spring, about life bursting out of the earth after a long, snowy winter. This is a time for joy, for love, for celebrating the wonder of life on this beautiful planet, a miracle if ever there was one. Yet I feel called to speak to what is becoming of our country and what is being done in our name throughout the world.
In the past six months things have become considerably worse. The American invasion of Iraq continues; “the surge” has reduced some of the immediate violence, though much of this reduction was due to the cease-fire declared by Muqtada al-Sadr and because the American troops hired tens of thousands of Sunni insurgents. While they’re on our payroll, they aren’t attacking our soldiers, but we are still deep in a quagmire with no plan for how to get out. The war is debasing our currency and our collective morality and is destabilizing our local, national, and international economic systems. It has led to close to a million dead people, according to the most comprehensive estimate, published in the Lancet, a magazine in Britain comparable to the NE Journal of Medicine.
The Big Dig in Boston is legendary because the original estimate of 2 billion ballooned up to 14 billion, a sevenfold increase. The people who pushed us into invading Iraq said it would cost 50-60 billion. According to Nobel Prize winning economist Joseph Stiglitz and Harvard professor Linda Blimes, this war will cost 3 trillion, a cost overrun of 50-60 times. Astounding.
One of the reasons we invaded Iraq was to stabilize the production of oil, but the opposite has happened. More oil is being used and less is being produced, so the price goes through the roof. And war uses up enormous amounts of oil, which adds to the problem. War is inflationary. Five years ago oil was $25 a barrel, now it is $115. And food prices are also becoming unhinged.
My wife and I spent several months in Italy in 2003 during the beginning of the war and the euro and the dollar were about equal; now the dollar is worth less than two-thirds of a euro. If Dow Jones average were to include the decline of the value of the dollar, there would be a 40% decline in the stock market value. Much of this precipitous decline is caused by our government’s decision to finance the war by borrowing money from China, Japan, and Saudi Arabia. We’re “running up a tab” that our children and grandchildren will have to pay.
These same economists estimate that every American is spending an average of a little more than $100 a month for the Iraq invasion. When we read about the closing of our neighborhood schools and libraries, we don’t usually think about Iraq, but the $100+ you’re sending to Iraq every month isn’t paying your mortgage or sending your children to college.
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The catastrophic costs of this war are an important part of what is bankrupting our economy, but that is not all. From 1987 to 2006 Alan Greenspan chaired the United States Federal Reserve Board, with direct oversight of the Federal Reserve Bank (the Fed). During his tenure the sum of public and private debt in the US went from $10 trillion to $43 trillion. This matters. Debts come with interest.
When he was a young man, Dr. Greenspan was a follower of Ayn Rand, who wrote novels extolling the giants of capitalism who broke free of any restraints. As the head of the Fed, he had the authority to issue rules for the mortgage industry, but he didn’t believe in regulation, he believed markets to be self-correcting.
In the absence of controls, there was a free-for-all. You’ve probably heard about hedge funds, but like me, you may not quite understand what they are or how they work. Essentially, they’re organizations that gather and invest capital (money). Many hedge funds brag about making a 20% return on their investments. How do they do this? By making risky investments.
Once upon a time, bankers were sensible chaps, conservative in the best sense of that word. They knew who they were lending money to and they were careful. People where happy to make 7 or 10% on their investments. But free market ideologues took over the Republican Party and lobbied to remove many of the protections that were instituted in the wake of the Great Depression to keep the markets fair, honest, and transparent.
Want an example of a high-risk, high-yield investment? Subprime mortgages. Subprime isn’t even in my computer spell-check, but they’re one of the prime (sic) ways that investors made 20% on their investments. Until they didn’t. Two Bear Stearns hedge funds collapsed last year, but the bank kept investing in subprime loans. It’s hard to stop sailing when you’re having a fabulous time, even when you see storm clouds on the horizon and it’s growing dark.
The head of Bear Stearns was paid 141 million dollars over the last five years and a lot of other aggressive employees were making seven figure bonuses on top of their massive salaries. Bundling subprime loans and selling them off in groups to investors who weren’t sure what they were buying is not a pretty picture, but a lot lot lot of money was being made.
In the unregulated housing market, mortgage brokers were often paid $10-20,000 to get people to sign housing deals not their client’s best interest. Free-market ideologues are quick to blame the people who took out the loans. Personally, I find reading technical, legalistic documents to be about the last thing I want to do, even though I’m good at reading and good at math. If someone is likeable and sounds like s/he knows what s/he is talking about, I’d probably believe him or her. I expect licensed brokers to be trustworthy. Who knew they might get 15 grand for getting me to sign onto what was a bad deal for me?
If home mortgages were sold to people who couldn’t afford them and this helped create the housing bubble, have you ever wondered why you get dozens of invitations to take out new credit cards? Is Citibank checking to see if people are “qualified” for these loans? I don’t think so.
People who invent new ways to make money are rewarded handsomely. I have limited my discussion to subprime mortgages, though they are just a small part of the unregulated marketplace, a vast shadow economy of financial instruments that hedge funds and investment banks have created. Derivatives are investments whose value is somehow based on other assets, like stock, commodity, debt, or currency. There are also collateralized debt obligations (CDO), credit default swaps (CDS), structured investment vehicles (SIV), and many other unregulated systems. Investors find these institutions extremely difficult to understand and even harder to measure. Derivatives are worth about $500 trillion, an astounding number; rivaling the value of the entire stock market, but they’re unregulated and no one really knows what they are worth.
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Americans love being entertained. I’ve loved movies all my life, and Americans have mastered this genre; we entertain the world. There is more action in the opening sequence of a recent James Bond movie than there was in the entire early 007 movies.
Millions of children are plopped down in front of the television. It keeps them quiet, so adults can find some time for their own lives. But the big corporations that advertise on TV buy the airwaves and their goal isn’t to help people to live happy, fulfilling lives; it is to get us to buy their stuff. Years after we park our children in front of the TV, we wonder why they can’t pay attention, why they’re neurotic, why they always want more.
I’m involved in this. I like being stimulated. I like pop culture. I like Netflix. Compared to what human beings have known throughout most of history, many Americans live in amazing wealth. Bob Dylan’s words ring true, “Each of us has his own special wish, to have it too fast and too much.”
There are millions of people in this country who live modest, careful, and thoughtful lives. Yet millions more are deeply hooked into our consumer culture, which offers something for everyone. Much of it is legal: big houses, fancy vacations, expensive drinks, fast cars, deep chocolate, sleek sail boats. Some of it is illegal: cocaine, un-prescribed prescription drugs, prostitutes. If you want something and you have the money, you can buy whatever you want.
The reason this matters is that most of us have something we want, and we don’t want to give it up. Americans don’t have an off switch. We lack self-control. We are inclined to vote for the status quo, because in the status quo, we have what we want, which we think we need, and we don’t want to give it up. If the next election turns out to be a choice between the status quo and the future, there is not no guarantee that the future is going to win.
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Iraq suffered a terrible eight year war with Iran in the 1980s. In 1991 the bombing that preceded the ground war destroyed bridges, electrical generating stations, and much more. Following the war 12 years of crippling trade sanctions killed half-a-million people, mostly children. The Iraqi people remember this.
In 2003 we invaded again. The Iraqis saw our troops protecting oil wells, while museums containing treasures from “the cradle of civilization” were looted, as were the ammo dumps of Saddam Hussein’s army. That army did not disappear; it went underground and later became the heart of the resistance to our occupation, not al Qaeda or Iranian Shiites.
Neo-cons, who believe in the power of the sword and in using our unprecedented military might to lord it over the rest of the world, also believe in the magical, self-correcting free market. Dick Cheney and Donald Rumsfeld consciously appointed ideologues to run Iraq after our invasion. They didn’t speak the language, knew nothing about Iraqi culture, didn’t respect the Iraqi people, and don’t even believe in government. No wonder it was a fiasco.
According to counter-insurgency theory, it takes at least ten or twelve years to pacify a country, but Rumsfeld and Cheney spent the first years denying there was an insurgency. General Petraeus is running the war in a much smarter way, but he only started in 2007, which means we won’t be close to winning until 2017 or 2019. This won’t fly with the American people,
It won’t fly with the Iraqi people, either. When the American forces arrived, the Iraqi people, most of whom hated Saddam, were open to seeing what happened, but the failure to make basic things like electricity and sewage work caused the people to lose faith in the occupation. Now it is probably impossible for us to ever win their support. About 80% of the Iraqis want us to leave, but when they express their opinions, they are ignored. Spokesmen from the Iraqi government are found who say “don’t leave,” and the American press acts like all of Iraq is speaking. Father knows best
No one is being held accountable for this tragedy, with its cost overruns of 50-60 times what we were told it would cost. The US has a problem with its leadership. George W. Bush tells us not to worry, the economy is sound, but he’s the same guy who lied us into Iraq. And many of the same failed leaders want to attack Iran, too.
The fox should not be asked to guard the chicken coop. The people who invaded Iraq are responsible for solving the financial crisis. Why are these people given any credibility whatsoever? They should be hounded from the public square in disgrace. In our system of government, we make these changes every two or four years, so this November is decision time. If it turns out to be a contest between the past verses the future, between the status quo and what could be, it will be very interesting to see if we could really become what we once believed we were.
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