Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

11 June 2011

The Manhattan Dragon and Sir Cyrus of Vance

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One of the oddest and least-noticed things about our recent and ongoing economic collapse is its origin. Its epicenter and wellspring were and are a single, small island that our forebears once bought from native Americans for $24 in wampum.

Manhattan is the culprit. There mortgage-backed securities, derivatives, collateralized debt obligations, credit-default swaps and other toxic “innovations” sprang from the fevered brows of our self-righteous apostles of greed. So did the rotten culture of gambling and swindling that has overwhelmed not only us poor consumers, but later most big banks as well.

Like many others, I have written (1 and 2) about the dangerous concentration of financial power in Manhattan that made those banks “too big to fail.” But the concentrated power wasn’t just financial. Over the last two years we have learned how a single firm, Goldman Sachs, has infiltrated the highest councils of executive government, even in a Democratic administration that had promised fundamental change.

We have watched with growing disappointment as that power has prevented any change from seriously affecting Wall Street. No one has gone to jail for perpetrating history’s second-greatest financial catastrophe on the nation and the world. Instead, the big banks and the very people who caused it are back to business as usual, earning billions from taxpayer bailouts and looking forward to more easy money.

So few people in so little space. You would think that the rest of the nation would have made short work of them—just as a body’s immune system rejects a tiny abscess.

But it didn’t. It hasn’t. And it might never.

Why? Because unbeknownst to most of our 308 million people, Manhattan has seized control of every lever of power in our society, with the possible exception of the military.

It’s not just Goldman Sachs’ almost complete penetration of the Executive Branch. Wall Street, with its enormous profits (made in large part on taxpayers’ backs) has bought Congress lock, stock and barrel.

Our antiquated Constitution and Senate rules don’t make that hard to do. You don’t have to buy the whole thing. Just buy a few small minds from a few small states. With filibusters and Senate “holds,” they’ll make sure that nothing you don’t approve ever happens. And I’ve just reviewed how the South, with a tradition of self-submission that only an engrained culture of bossism can explain, lives in Manhattan’s pocket.

So much for the executive and the legislative branches. The judiciary signed on enthusiastically in January 2010, with the Supreme Court’s infamous Citizens United decision. It declared business corporations “people,” like you and me, able to use their huge profits to propagandize us and corrupt our leaders.

Of course Wall Street’s banks are not the only corporations in the land. But a few years ago the finance sector (which they dominate absolutely) accounted for 41% of all our nation’s business profits. That perilous vital statistic dropped a bit as the crisis deepened, but it’s probably gone back up again since.

As Jesse James (who robbed them) observed, banks are where the money is. So Wall Street, which controls the banking industry, controls the money, which controls the pols. Nice and simple, isn’t it?

Did I forget anything? Oh, yes! There’s the “Fourth Estate,” the purveyors of news and shiners of light into dark places. What about them?

Well, TV news is a joke. Except for the PBS News Hour, you might as well read a tabloid. Real news comes from the few remaining serious print media, whose reporters have mostly become “talking heads” for the TV shows. Anyway, TV news is also centered in Manhattan, where all the studios and anchors are.

And what has happened to our print media? They have become just as concentrated as finance, and in precisely the same place.

National politics has degenerated into slapstick comedy (or tragedy, take your pick). Apart from continuing job losses in government, the only real news worth knowing today is what’s happening in the private sector, i.e., in business. After all, as the GOP keeps reminding us, that’s where most of our jobs come from.

But, as you may have noticed, there are no real local print media any more, at least none that have any clout. The Internet has killed them all off. Only our three national newspapers—the New York Times, the Wall Street Journal, and the Washington Post—have survived with any substantial readership. They have not just won the field. They occupy it. Only their stories garner well-written on-line comments from every state and many foreign countries.

But there’s the rub. If you read them all closely, as I have, you will see something interesting. The Times has been moving more and more into business lately, trying to challenge the Journal, which is a self-described business newspaper. The competition between them is so fierce that the Post doesn’t go there much any more. It has relinquished most business coverage to its two stronger competitors. Then it retreated into national and regional politics, relying on its home-court advantage in Washington, D.C.

So we’re left with just two big and prestigious newspapers vying for national supremacy in business and related news, which (apart from foreign affairs) is all the news that matters today. And where are they both located? In Manhattan, of course. Even the PBS News Hour, the last credible outpost on the Boob Tube, is there.

Now, if finance not too long ago accounted for 41% of all the entire nation’s business profits, how much more important do you think it is in Manhattan? Take a guess.

When Wall Street caught a cold in 2008 and early 2009, tens of thousands of Manhattanites lost their jobs. Wall Street dominates Manhattan. It keeps real property prices high. It keep people in restaurants, bars and theaters employed. And it subsidizes all the lawyers, accountants, and other professionals who serve it. Do you think anyone in a position of leadership in New York City is ever going to bite the hands that feed them?

So there you have it. Executive Branch. Legislative Branch. Judicial Branch. National Media. Local business, government and consumers. Check, check, check, check and check. Manhattan in general, and Wall Street in particular, control them all.

Ever wonder why basic financial reform is so hard? Ever wonder why Elizabeth Warren, the best qualified financial regulator since the New Deal, is still waiting in limbo to begin her work? Look to Manhattan, with its professional gamblers, swindlers and bedbugs. And of course no one in Manhattan is going to challenge the island’s national supremacy because Manhattanites like it and the high life it brings. There is no ego so strong as one that inhabits Manhattan.

If you think this picture is distorted, just think about the news. We live in a huge, diverse and enormously productive nation of 308 million people. We’ve got Microsoft and Boeing in Washington State (with Boeing’s HQ now in Chicago). We’ve got Silicon Valley in the Bay Area (with Apple and Google), Route 128 in Boston, and Silicon Gulch (with Dell) in the Roundrock-Dallas corridor. We’ve got biotech centers in San Francisco, San Diego, Boston, New Jersey, the Research Triangle and parts of Philadelphia. We still have enormous manufacturing plants in the Midwest and South, aerospace in Washington State, Southern California and Texas, and the movie industry in both Northern and Southern California. And then we have our great breadbaskets in California’s Central Valley, the Midwest, and large parts of Texas and the South. They feed us and much of the world.

How much do you hear or know about all these very real industries? We do hear about things that matter to Manhattan: delays in Boeing’s Dreamliner (because Wall Street flies), Apple’s latest iThings (which Streeters and their children love), and the latest, greatest social networking Internet fad (ditto). But what do you hear about all those others places and industries?

As far as we know from the news, the rest of our national world might as well not exist. We see it only through a glass darkly, and then only when something goes terribly wrong, a Manhattanite makes a killing with an acquisition or merger, or a Streeter is in the dock for malfeasance.

Remember that famous New Yorker Magazine cover by Saul Steinberg, showing Manhattan in detail and San Francisco and Japan as mere points in the distance? That’s how we now see our entire nation, from the Manhattanite’s point of view. And we don’t even know we’ve got blinders on because our eyes and ears are now all in Manhattan, where finance rules and no one dares challenge it.

It stands to reason that this sad condition will be hard to change. Any anti-Manhattan crusader from outside Manhattan will get no news coverage, no contributions from Wall Street, and no attention from Washington. But what about one from Manhattan itself? Can New York City’s news oligopoly ignore a reformer from among its own?

Enter Cyrus Vance, Jr. He’s the District Attorney for Manhattan, and he recently served Goldman Sachs with a subpoena. Apparently he’s going to follow up on a strong suggestion in a Senate Report that Goldman misled investors in the lead-up to the 2008 crash and that its chief executive, Lloyd Blankfein, perjured himself before the Senate committee that wrote the report. In other words, Vance may be making the first real bid to put someone, anyone, responsible for the global economy’s near destruction and the misery of tens of millions in jail.

Vance comes from good stock. His father, the late Cyrus Vance Senior (1917-2002), was Secretary of State under Jimmy Carter. More important, he had been Deputy Secretary of Defense under Lyndon Johnson but had resigned in protest, on principle, over Johnson’s war policy during the Vietnam War.

Will good breeding tell? Stay tuned. The Senior Vance was a noble and dedicated public servant. Maybe Junior will be, too.

Beyond him, it’s hard to see who might be our savior. Manhattan’s dominance is so complete and so little noticed that no one else seems to have a clue.

Crack reporter Matt Taibbi has described Goldman Sachs as a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” But even that colorful metaphor is weak in two respects. First, it’s not just Goldman Sachs. It’s the whole island of Manhattan.

Second, it’s not just a vampire squid that you can knock off your face with a good punch. It’s an enormous dragon whose fire breathing has sucked the oxygen, money, power, information and life out of the rest of the country. It has Americans trapped in a cave of disinformation and powerlessness and is herding us toward a decadent plutocracy, with itself at the core.

Who can fight back? Who can restore geographic balance?

One thing is clear. No clueless idiot who, in Shakespeare’s words, “struts and frets his hour upon the stage and then is heard no more” is up to the task. That rules out all of this cycle’s crop of presidential contenders, including Mitt Romney, a cardboard caricature of the clueless, arrogant frat boy (1 and 2), who changes his so-called fundamental values with every shift of the political winds.

As for the President, it’s hard to see him playing the role. As good and smart a man as he is, he’s in too deep with Manhattan already, and he shows no signs of backing out.

Slaying the Manhattan dragon is a job for a young man like Vance. He will have to be very smart and very careful. The smooth Wall Street gangsters didn’t take control of the nation by being stupid or soft. Remember Eliot Spitzer? Sexual peccadilloes used to be private, but not any more, and certainly not with so much at stake.

The dragon will exploit the tiniest weakness or defect to immolate and destroy its enemies. And Vance will not be a popular man in Manhattan for going after it.

But he has a good incentive. Not next year, but maybe somewhere down the road, there’s a presidency in it for him if he succeeds. And breaking the Manhattan dragon’s death grip on the nation is a first and essential step in any rational plan for national renewal.

Update June 13, 2011:

Barely had the foregoing post been up thirty hours before this story in the New York Times confirmed it. Headlined “Obama Seeks to Win Back Wall St. Cash,” it reports that the President, a “few weeks before announcing his re-election campaign, . . . kicked off an aggressive push . . . to win back the allegiance of one of his most vital sources of campaign cash[,]” namely, Wall Street and its hedge-fund managers.

Anyone who believes that hedge-fund managers serve a valuable, let alone vital, societal function hasn’t been paying much attention during the last three years. But lest you think the President is special in kissing their diamond rings, the article also reports that Mitt Romney, the leading Republican candidate, is “using his background as a venture capital executive and his policy proposals to woo financial-industry donors,” including hedge-fund managers unsatisfied with the depth of the President’s bows.

What does all this mean? It means precisely what I argue above, that Wall Street and Manhattan control both parties and the country. And one of their two principal mouthpieces, the New York Times, gloats about it publicly within thirty hours after I point this out. I doubt the Times’ reporters or editors read this blog, but the coincidental timing sure makes it seem a taunt.

Truly I feel like the medieval peasant waiting for Saint George to slay the dragon. Godspeed, Sir Cyrus of Vance. The beast you must face is powerful, and you may be our last hope.

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