Countrycritters,
Back from our semiannual resettlement frenzy. My ruminations this week keep returning to the bad behavior of banks, everywhere and here, which are without a doubt gumming up the arteries of commerce world-wide. Beneficiaries of the greatest public bailout so far, bankers at every level seem determined to avoid repeating the mistakes of the past by crippling the future.
The NY Times today -- October 25 -- points up the fact that banks all over the country, "flooded with cash," hate to lend it out, pay almost no interest, and indeed are talking about charging worried citizens for storing their savings. Easier for the bankers to park the cash in government securities, collect the difference, and spend the afternoon on the golf course.
That certainly reflects my experience recently. Seven years ago I signed on to buy a house our son lives in. My credit rating being top grade, I became the owner of record although he made the down payment and has been making the monthly payments without fail. With interest rates down, this seemed like a good time to remortgage the property. I went to our friendly neighborhood bank in rural New Hampshire and broached this possibility. I had maintained and paid off several mortgages with this bank without incident.
The portly local bank president heard me out and made a counterproposal. If I would lock up an amount somewhat in excess of the mortgage I was requesting in a non-interest-bearing account only the bank could invade for the life of the new mortgage, I might secure a marginally reduced mortgage balance for my son. These terms seemed preposterous -- there would be substantial closing fees and the rest rolled in -- and so I dropped the project, immediately. During the next few months I discovered that several contacts -- one a recently retired senior executive with a Fortune 500 corporation, another a Houston oil billionaire -- had substantially the same experience with local bank officers. Give me your watch and I'll tell you the time, as the Polish punch line goes.
We are a nation that has traditionally lubricated its economy with affordable credit. When credit dries up the economy implodes. During the 1920s, as I pointed out in my CIA history The Old Boys, the determination in Germany by Hjalmar Schacht and his fellow wizards to outsmart the British and the French by making reparations payments in wildly inflated Marks led quickly to the impoverishment of the middle class and the takeover by Hitler. Whether you hyperinflate an economy or starve it of ready capital, it is the productive, hard-working middle class that suffers first. Start-ups never get started; promising youngsters never make it to college. Our collective future darkens.
Every new president makes mistakes, but let's review Barack Obama's inclination to protect his flank by positioning spokesmen for Wall Street at the top of his economic management team. In the Oct. 31 issue of Time Joe Klein points out that Treasury Secretary Tim Geithner blocked the overdue effort to break up Citibank (where his Clinton-era predecessor and patron Bob Rubin had gotten a special sinecure with an astronomical paycheck for eliminating the Glass-Steagall provisions which had protected commercial banks from the opium dreams of investment banking since the New Deal). Geithner stepped on the nomination of the reformist Elizabeth Warren to head the Consumer Financial Protection Bureau. Ex head of the National Economic Council, Larry Summers, had prevented the government from regulating the terrifyingly volatile multi-trillion-dollar derivatives market when he was Secretary of the Treasury late in the Clinton Administration. With reformers like these in charge, it's really no wonder that the economy continues to ride the rollercoaster.
With clown after clown emerging from the jalopy of Republican politics, sane voters are going to have very little choice in 2012. The best we can hope for is Obama Redux. Let's hope enough lessons have been learned by then.
Burton Hersh
are all available in a highly affordable electronic format at treefarmbooks.com
Tuesday, October 25, 2011
Saturday, October 15, 2011
Jobs #3
Countryparsons,
The autumn deepens. The official unemployment levels refuse to budge, while effective unemployment -- people who have given up looking for work, recent college graduates who have simply moved in with the folks and are holed up until better times -- these totals are estimated to approach 25%. Our economy is stagnant, especially manufacturing.
The blame is commonly attributed to outsourcing, to automation, to the computerization of one white-collar profession after the next. And this explains a lot -- we are undergoing some kind of technological shift comparable with what went on during the mid nineteen-twenties, when nationwide electrification and the spread of mass-production techniques made millions of laborers, fresh off the farm, unnecessary. The Great Depression resulted, an agonizing slump it took World War II to remedy.
Now, under constant pressure to crank up "productivity," the great corporations which dominate our industry have moved very quickly to exploit the automation, global computerization and robotic methodologies currently available to create prosperity -- for the corporations -- without paychecks for the workers. In industries like autos foreign manufacturers have established plants here with the understanding that there will be two-tier wage levels, with a handful of unionized workers and the rest compensated at little better than minimum-wage levels. When a foreign firm took over a manufacturing facility in North Carolina to avail itself of the trained workers in the area, advanced automation made it possible to operate the company with 500 employees at a site that had previously employed thousands.
Moonstruck with numbers, we seem to be so preoccupied with how many workers are back on some kind of statistical roll that we are ignoring whether a middle-class wage will result as well as what kind of performance the rest of us can expect from our swelling but underpaid working population. One device that has become increasingly popular is the exploitation of "interns," recent students in the colleges and graduate schools who cannot get any kind of paying job and find themselves conned into sucking up their own living expenses while contributing their skills to a variety of enterprises, from law firms to newspapers, which are pleased enough to get the help for nothing. Time Magazine estimates that there are now millions of willing if naive youngsters in this expanding Intern Nation.
The problem with paying people little or nothing is that you are likely to get what you are paying for. As most of us can testify, attempting to get your computer back on line struggling with an incoherent menu or spelling out each word to some hapless clerk in Bangladesh whose English is shaky can gut an afternoon. Recently, when a book of mine came out and the publicity chores fell to an intern, I found that she was unable, over months, to make an effective connection with a single one of the several dozen radio or TV or book festival producers with whom I had recently worked successfully and whose names and contact information I had supplied. With time running out, within a few days I called them all and got onto every show.
What has been happening -- to the internet subscriber and to me -- is that the company or the publisher has in effect been saving money by taking on zombie employees, backloading the responsibility for normal commercial functions onto the customer or -- in my case -- the writer. Publishers are forever wailing that books don't sell. One central reason they don't sell is that the talented, well-connected editors and publicity people who knew and were trusted by media producers are mostly out, replaced by unpaid Valley Girls with better things to do. The reader has been abandoned.
You can replace somebody with somebody else or -- in some cases -- something else. But you cannot replace somebody with nobody. What we are headed into is an economy slipping beneath the waves from chronic unemployment and a lot of understaffed corporations that won't be able to compete in the long run.
Ten years from now, there may not be any Wall Street to Occupy.
Cheers,
Burton
The autumn deepens. The official unemployment levels refuse to budge, while effective unemployment -- people who have given up looking for work, recent college graduates who have simply moved in with the folks and are holed up until better times -- these totals are estimated to approach 25%. Our economy is stagnant, especially manufacturing.
The blame is commonly attributed to outsourcing, to automation, to the computerization of one white-collar profession after the next. And this explains a lot -- we are undergoing some kind of technological shift comparable with what went on during the mid nineteen-twenties, when nationwide electrification and the spread of mass-production techniques made millions of laborers, fresh off the farm, unnecessary. The Great Depression resulted, an agonizing slump it took World War II to remedy.
Now, under constant pressure to crank up "productivity," the great corporations which dominate our industry have moved very quickly to exploit the automation, global computerization and robotic methodologies currently available to create prosperity -- for the corporations -- without paychecks for the workers. In industries like autos foreign manufacturers have established plants here with the understanding that there will be two-tier wage levels, with a handful of unionized workers and the rest compensated at little better than minimum-wage levels. When a foreign firm took over a manufacturing facility in North Carolina to avail itself of the trained workers in the area, advanced automation made it possible to operate the company with 500 employees at a site that had previously employed thousands.
Moonstruck with numbers, we seem to be so preoccupied with how many workers are back on some kind of statistical roll that we are ignoring whether a middle-class wage will result as well as what kind of performance the rest of us can expect from our swelling but underpaid working population. One device that has become increasingly popular is the exploitation of "interns," recent students in the colleges and graduate schools who cannot get any kind of paying job and find themselves conned into sucking up their own living expenses while contributing their skills to a variety of enterprises, from law firms to newspapers, which are pleased enough to get the help for nothing. Time Magazine estimates that there are now millions of willing if naive youngsters in this expanding Intern Nation.
The problem with paying people little or nothing is that you are likely to get what you are paying for. As most of us can testify, attempting to get your computer back on line struggling with an incoherent menu or spelling out each word to some hapless clerk in Bangladesh whose English is shaky can gut an afternoon. Recently, when a book of mine came out and the publicity chores fell to an intern, I found that she was unable, over months, to make an effective connection with a single one of the several dozen radio or TV or book festival producers with whom I had recently worked successfully and whose names and contact information I had supplied. With time running out, within a few days I called them all and got onto every show.
What has been happening -- to the internet subscriber and to me -- is that the company or the publisher has in effect been saving money by taking on zombie employees, backloading the responsibility for normal commercial functions onto the customer or -- in my case -- the writer. Publishers are forever wailing that books don't sell. One central reason they don't sell is that the talented, well-connected editors and publicity people who knew and were trusted by media producers are mostly out, replaced by unpaid Valley Girls with better things to do. The reader has been abandoned.
You can replace somebody with somebody else or -- in some cases -- something else. But you cannot replace somebody with nobody. What we are headed into is an economy slipping beneath the waves from chronic unemployment and a lot of understaffed corporations that won't be able to compete in the long run.
Ten years from now, there may not be any Wall Street to Occupy.
Cheers,
Burton
Sunday, October 9, 2011
Another Date With Hitler
Countryfolk,
First, sorry to have missed a week. A quick trip to commiserate with the survivors of my high school class followed -- immediately, too immediately -- by our semiannual trek down or up the Eastern Seaboard ate up the days. But we are resettled and brimming over. Bring your mops!
It has become a commonplace on the right to accuse the leadership on the left, especially when pocketbook issues come up, of approximating the tactics -- if not presenting the apparition, the Antichrist himself -- of the risen Hitler. Posters of Barack Obama have been circulating for some time representing our angular, tawny president with a toothbrush mustache, a manifestation of the Evil that will consume your children and drain your bank accounts.
Somehow the temperate Obama seems to provoke this sort of hallucinated attack, no doubt an outbreak of the vestigial racism that haunts our politics. But in a way it might be time to pay a little attention to the historical forces that actually did thrust a hysteric like Hitler into control of a desperate society like Weimar Germany and opened the way to the worldwide catastrophe that followed.
Hitler's assumption of power was a fluke, the consequence of a fateful, hair-brained decision by his predecessor as Chancellor, von Schleicher, to drum into power this joke leader of a fading political movement -- the Nazis never exceeded 37% of the popular vote -- and give the shrill little demagogue the opportunity to destroy himself. Von Schleicher and his Junker colleagues miscalculated badly; Hitler installed Hermann Goering as the Minister of the Interior, let loose his Brownshirt army, and grabbed total control in a Germany too culturally and economically depleted to resist.
I myself arrived in Central Europe, after years of contemplating German history from a university setting, as a Fulbright Scholar in 1955 and spent the next six years in the region living, soldiering, and writing. Much of post-war Germany was rubble still -- not only East Berlin and Dresden but entire neighborhoods of Frankfurt and Munich. I lived for some months with a typical German family -- to keep his job, the father had become a Nazi Party member, and fought in both World Wars. Later, in the military myself, I rented a flat from another family of onetime Nazi functionaries. These people, and many others, turned into lifelong friends.
What kept coming through as I came to know these survivors was what they had been through. In the aftermath of World War I their world had collapsed. Unemployment was universal; the Allied reparations policy and the depredations of bankers in New York and London had forced economic technocrats like Hjalmar Schacht to water the Reichsmark until virtually everybody's savings were worthless. In pre-1914 Germany, the cultural and scientific center of Western thought, a mood of tolerance and respect for the contributions of citizens of every background was expected. Walther Rathenau, a Jewish economist, had run the finances of the country for the Kaiser. Hitler's own father, a mid-level bureaucrat in the Austro-Hungarian tax collection bureaucracy, had nothing but contempt for anti-Semites, whom he considered declasse.
All this is leading to my historical point. Bad luck, bad judgement, a lost war and atrocious economic management had led within comparatively few years to the utter erosion of the middle class and fed the rise of the Nazis. A rich, modernist society characterized by tolerance, invention, and prudent economic management had collapsed internally and produced the sustained nightmare from which my generation has been attempting to recover ever since. Obama is no Hitler. But unless we begin to deal with the crisis we face, and replace the short-sighted, greed-driven expectations which activate so many of our citizens with a genuine willingness everywhere to sacrifice and rebuild, our prospects are dimming every day. We are much closer to imploding than most of us realize.
The new Hitler waits in the wings.
Burton Hersh
First, sorry to have missed a week. A quick trip to commiserate with the survivors of my high school class followed -- immediately, too immediately -- by our semiannual trek down or up the Eastern Seaboard ate up the days. But we are resettled and brimming over. Bring your mops!
It has become a commonplace on the right to accuse the leadership on the left, especially when pocketbook issues come up, of approximating the tactics -- if not presenting the apparition, the Antichrist himself -- of the risen Hitler. Posters of Barack Obama have been circulating for some time representing our angular, tawny president with a toothbrush mustache, a manifestation of the Evil that will consume your children and drain your bank accounts.
Somehow the temperate Obama seems to provoke this sort of hallucinated attack, no doubt an outbreak of the vestigial racism that haunts our politics. But in a way it might be time to pay a little attention to the historical forces that actually did thrust a hysteric like Hitler into control of a desperate society like Weimar Germany and opened the way to the worldwide catastrophe that followed.
Hitler's assumption of power was a fluke, the consequence of a fateful, hair-brained decision by his predecessor as Chancellor, von Schleicher, to drum into power this joke leader of a fading political movement -- the Nazis never exceeded 37% of the popular vote -- and give the shrill little demagogue the opportunity to destroy himself. Von Schleicher and his Junker colleagues miscalculated badly; Hitler installed Hermann Goering as the Minister of the Interior, let loose his Brownshirt army, and grabbed total control in a Germany too culturally and economically depleted to resist.
I myself arrived in Central Europe, after years of contemplating German history from a university setting, as a Fulbright Scholar in 1955 and spent the next six years in the region living, soldiering, and writing. Much of post-war Germany was rubble still -- not only East Berlin and Dresden but entire neighborhoods of Frankfurt and Munich. I lived for some months with a typical German family -- to keep his job, the father had become a Nazi Party member, and fought in both World Wars. Later, in the military myself, I rented a flat from another family of onetime Nazi functionaries. These people, and many others, turned into lifelong friends.
What kept coming through as I came to know these survivors was what they had been through. In the aftermath of World War I their world had collapsed. Unemployment was universal; the Allied reparations policy and the depredations of bankers in New York and London had forced economic technocrats like Hjalmar Schacht to water the Reichsmark until virtually everybody's savings were worthless. In pre-1914 Germany, the cultural and scientific center of Western thought, a mood of tolerance and respect for the contributions of citizens of every background was expected. Walther Rathenau, a Jewish economist, had run the finances of the country for the Kaiser. Hitler's own father, a mid-level bureaucrat in the Austro-Hungarian tax collection bureaucracy, had nothing but contempt for anti-Semites, whom he considered declasse.
All this is leading to my historical point. Bad luck, bad judgement, a lost war and atrocious economic management had led within comparatively few years to the utter erosion of the middle class and fed the rise of the Nazis. A rich, modernist society characterized by tolerance, invention, and prudent economic management had collapsed internally and produced the sustained nightmare from which my generation has been attempting to recover ever since. Obama is no Hitler. But unless we begin to deal with the crisis we face, and replace the short-sighted, greed-driven expectations which activate so many of our citizens with a genuine willingness everywhere to sacrifice and rebuild, our prospects are dimming every day. We are much closer to imploding than most of us realize.
The new Hitler waits in the wings.
Burton Hersh
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