Remora

A story in the Biz section of the NYT about the conflicted interests of the banks that are presiding over the anatomy lesson taking place over Enron's corpse:


"In a Manhattan bankruptcy court, where hundreds of lawyers are trying to carve up what remains of Enron, the first order of business is finger-pointing � and many of the fingers are pointing at J. P. Morgan Chase and Citigroup.With billions of dollars at stake, many creditors question whether the two Wall Street giants can represent their interests when, they contend, the banks helped cause many of Enron's financial problems in the first place. Some are even asking that the banks be thrown off the 15-member committee responsible for determining what is owed to Enron shareholders, lenders, employees and thousands of others left in the lurch by Enron's collapse. The banks are the subject of government investigations and private lawsuits over their role in structuring off-balance-sheet partnerships that helped sink Enron. Some creditors say the banks are in hopeless conflict, and the Securities and Exchange Commission has expressed concern, as well."


Greider has a nice piece on the suit against the banks that kept investor money flowing into Enron. This is manna -- poisoned manna, granted, but what else does a critic of the corporate culture live for, nowadays?

"Win or lose, the lawsuit poses numerous embarrassments for Washington politics, and Congressional reformers should study it for a summary of the corrupted laws that need to be re-examined. Perhaps the most important one is this: The merger of commercial banks and Wall Street investment houses, ratified by Congress in 1999 and legalizing the new financial conglomerates like Citigroup and J.P. Morgan Chase, has already reproduced the very scandals of self-dealing and swindled investors that led to the legal separation of these two realms seventy years ago in the Glass-Steagall Act. Morgan and Citigroup senior executives, for example, consulted Enron's top executives almost daily on how to solve the company's deepening financial problems, but that knowledge was never shared with investors to whom the banks sold Enron shares and debt securities or, for that matter, with other banks who took a share of syndicated loans. The banks' stockbrokers maintained "strong buy" recommendations even as Enron entered its "death spiral," as the lawsuit calls it. "

Lose is probably the way that coin is going to come up. But remember, way back, when the banking regulatory "reforms" were enacted -- remember the ardent opposition of Ralph Nader and his ilk? And the bipartisan, smily support of the Clintonites and the Repubs, all just getting along, for once?
Thank God for the impeachment. More bipartisanship would have sunk us all.

Here's an other graf from Greider's piece explaining the workings of the Enron partnerships:

"E nron's "partnerships" essentially allowed the company to sell assets to itself--a Brazilian utility, commodity trading contracts, broadband capacity--and to rig the prices and profits on both sides of the transaction, then book the sale as rising revenues for Enron and thus send the share price higher. "In order for Enron's accounting scheme to work, the parties involved had to be controlled by Enron," the lawsuit explains. "But this control and affiliation had to be concealed." The selected private investors, who received lucrative rewards for putting up front money for Jedi or Chewco or the others, understood this reality because they were assured by Enron execs managing the schemes of exclusive access to the company's charmed opportunities. If they knew, the bankers who arranged the SPEs must also have known."

Greider reaches back to Ponzi to explain this kind of scheme. But a much more relevant reference is to the daisychains of beloved memory perpetrated by Texas S & L's in the 80s. It would surprise LI if Ken Lay didn't know various of the participants in that scandal. The Enron partnerships look like the old "flips" so beloved of the consortium of S&L pirates and crafty realestatesmen in the good old days.

There's a story in D Magazine about one of the jailed in that scandal, which also, come to think of it, involved some Bush nearest and dearest. Those Bushes.

The story is authored by the fishily named Shad Rowe, and it rains down sympathy on one Wayne Pickering, who 'flipped' some land for an international "loan facilitator", an Indian named Asomull Mukesh. The S &L scandal actually puts LI in a difficult position, cliche wise, since we'd like to use the old, first time is tragedy, second time is farce phrase, but ... what about when the first time around was farce?

Well, upshot of the D story is that Wayne went to jail, yes he did, while Mukesh, incredibly, became a protected witness type. Mr. Rowe is very sympathetic to Wayne's plight, and mentions that "despite 400 letters on his behalf", our man had to go to the hoosegow. Once in prison, Wayne discovered that he was in... prison. There is a truly heartfelt graf in the piece -- don't cry after you read this, I beg you, reader. This is Wayne on what he learned in prison:

"Pickering says that in prison, if you mind your own business and keep your head down, people leave you alone. �For example,� he says, �I would not sit in the rec room with 100 guys�most of whom are minority�and try to change the TV channel from the NBA game to the Golf Channel. I would use a little common sense." Common sense kicks in when you are with minority guys, We suppose.

And so the middle class meets its prize construction. Imagine! The article is full of compassion for a guy like Wayne in meshes like that. Ah, perhaps if there were more Waynes checking out the dark side, there'd be less prisons.

Dope

Burke, when speaking of the Gordon riots -- a series of London anti-Catholic riots targeting the relief of the Penal laws against Catholic property holders in Britain -- used the wonderful phrase, "the midnight chalk of incendiaries" to refer to the crude, grafitti driven style of jacquerie populism. I love the phrase partly because of the violence it both encodes and expresses -- the violence with which a higher literacy, or at least a more clerically orthodox one, meets a lower literacy, scrawling with its chalk, or spraying with its paint cans, the complaint of the day. The Gordon riots are in their way a perfect example of popular anger harnessed to the worst and most reactionary forces in history. That's the force that drives the Lepeniste, the Peronist, the Fascist, and every black shirted factotum that stalks the street, lead pipe in hand. Often, of course, the black shirt is hidden beneath the policeman's blues.

But LI also knows something else. LI is perhaps fatally addicted to knowing something else, but so it goes. The aristocratic disdain, the disdain of men like Burke, derives its own sarcasm from a privileged resentment that has never scrupled to use the midnight chalk of incendiaries for its own ends. To make an excuse for arrangements of property and caste that are inherently unjust by manipulating a thuggish and sickening discourse against any that would criticize them, and to do this in the name of populism, has become the dominant style of conservatism in our time, its own pact with the cretinous devils. We all know the drive by shooting style of talk radio hosts, right wing columnists, and Texas politicians. And we all know that grafitti artists, now, are killed by the cops, and that the cops are are simply the incendiaries in power.

Limited Inc has been mulling this politico-stylistic question since Saturday morning, when we read the NYT's Tom Shanker and David Sanger's excellent report on the administration planning for Mr. Bush's coming bully little war. It is a measure of the nihilism of the opposition in this country that LI's first reaction -- and we would bet the first reaction of most members of the scattered American left -- was indignation mixed with helplessness. Here is the machine, here are its parts, here is its objective, here are the erroneous assumptions that have gone into its design. And what words are there to oppose it? Not simply condemn it; not simply analyze it, unfolding error upon error; not simply insult the men who have compounded it, and the supposed leader (that man whose face, every day, becomes just a little bit more unendurable, don't you think?) who desires it; where are the words going to come from that will stop it?

The feeling that the words aren't going to come from anybody in the official opposition party is rather paralyzing. The feeling that there is, in the incendiaries who gathered to protest against Bush's Middle East policy in D.C. last weekend, a few too many who are anti-Semitic, and a few too few who want to extend the same rigorous standard of conduct to Israel and, say, Cuba -- this rather knocks at LI's nervous system.

Okay, for what it is worth, here is the beginning of Shanker and Sanger's story:

"WASHINGTON, April 27 � The Bush administration, in developing a potential approach for toppling President Saddam Hussein of Iraq, is concentrating its attention on a major air campaign and ground invasion, with initial estimates contemplating the use of 70,000 to 250,000 troops.

The administration is turning to that approach after concluding that a coup in Iraq would be unlikely to succeed and that a proxy battle using local forces there would be insufficient to bring a change in power.But senior officials now acknowledge that any offensive would probably be delayed until early next year, allowing time to create the right military, economic and diplomatic conditions.

These include avoiding summer combat in bulky chemical suits, preparing for a global oil price shock, and waiting until there is progress toward ending the Israeli-Palestinian conflict."

There was surprisingly little stir about this story in this weekend's media. At least, the WP didn't bother to cc it with addenda, as they would with the usual scoop. I saw no reference to it in the Dallas paper site. Even the Boston Globe, owned by the Times, headlined the ongoing, ambiguous struggle of the Catholic church against
pedophilia (with the attitude of the cardinals being much like the attitude of union bosses being asked to give up a traditional rank and file perk in hard times -- a disgruntled acceptance, and a search for loopholes, about describes it).

Nevertheless, LI is preparing the midnight chalk. We will speak more, this week, about Iraq.

Remora

LI likes a hard hitting first graf. Why go to a boxing match if the fighters aren't going to mix it up? As the rounds toll by, one understands a little hanging onto the ropes, but one wants to see a little blood in the first round, at least. Similarly, we have such steak tartar tastes in news pieces -- a journalist should come out from his corner with appropriate growling, and wound up. So we liked this graf from Josh Gerstein's story about the continuing scandal of the government sponsored kidnappings of Middle Eastern men in this country:

"Last month, Colin Powell unveiled the State Department's annual report on human rights. Not surprisingly, the report faults authoritarian regimes such as China, Iraq, and North Korea for imprisoning people without charge and for holding legal proceedings in secret. What it neglects to mention is that in the past year those two practices have also become widespread in the United States."

The article rehearses the sad state of civil liberties, when it comes to men named Mohammed or, of course, Osama since 9/11. It focuses particularly on the New York City judge who is condemning many of these people to indefinite sequestration as "material witnesses" (ah, the lawyers wink, another material witness): Michael Mukasey. Mukasey sounds like a man on a mission. "Within days of the September 11 strikes, Mukasey announced that court hearings in all of the material-witness cases would be closed to the press and the public on the grounds that they were connected to a grand jury probe. (Grand juries, by law and tradition, usually carry out their business in secret.) The transcripts, dockets, and court orders in the material-witness cases remain sealed. Last fall Mukasey's secretary told The Washington Post that Mukasey wanted the cases kept secret "forever."
"

Forever is a long long time -- inaccessible to most of us, but not, perhaps, so much to Mukasey, one of whose colleagues is 95, and many of whose co-judges are over the age of 65: "Nearly 40 percent of the nation's more than 1,200 working federal judges are on senior status." Eternity, for Mukasey and his like, is less a theological issue than a tenure description.

There's a decidedly tedious news release from Human Rights Watch about conditions in the U.S. jails for these detainees, which seems designed, mainly, to show that HRW is there. It isn't doing much there, but by God, they want to see where these prisoners shower. Why this sound and lack of fury, one wonders. Touring the jails is good -- LI applauds this, and besides, our Lord Jesus Christ seems to find visiting prisoners of such high merit those who do it are conducted to the right hand of God, and ... well, live happily ever afterward. But shouldn't we be seeing jeremiads? Shouldn't human rights organizations be attacking with fire and brimstone this gross, massive abuse of judicial power? Apparently that is is off the agenda, apparently. There's an arrogance in a U.S. based Human Rights organization adopting such a tepid attitude that one wonders what is behind it. Is HRW afraid of angering some donation base? Or is it easier to condemn Albania, or Macedonia, or whatever onia, than going after the District court for the Southern District of New York?

Dope

The end of Sir Thomas Browne�s Garden of Cyrus, a meditation on the forms and meaning of the quincunx, is one of the most gorgeous ringings down of the curtain in all literature:

Night which Pagan Theology could make the daughter of Chaos, affords no other advantage to the description of order: Although no lower then that Masse can we derive its Genealogy. All things began in order, so shall they end, and so shall they begin again; according to the ordainer of order and mystical Mathematicks of the City of Heaven.

Though Somnus in Homer be sent to rowse up Agamemnon, I finde no such effects in these drowsy approaches of sleep. To keep our eyes open longer were but to act our Antipodes. The Huntsmen are up in America, and they are already past their first sleep in Persia. But who can be drowsie at that howr which freed us from everlasting sleep? Or have slumbring thoughts at that time, when sleep it self must end, as some conjecture all shall awake again?

LI is impressed by this on a number of levels (let me not count the ways). Take, for instance, the tacit opposition between the hunters in America and the writer and his audience in the Old World. The page that is ended is also, for the reader, the page that is turned. But the page turned in the Old World will not be turned back in the New � in the New, they hunt. In the New, action, not contemplation, occurs over the hills and dales; the old violence is renewed, the old energy revived, and who knows if the hunters will not one day set up an X on those hills again, and nail a man to it.

Opposition, the antipodes, for Browne, and for all educated Europeans, was not a thing of the mind, but in the very grain of nature, operating there much as the opponents in a chess game operate, moving pieces against each other, creating the patterns that appear and disappear on the board. This sense of opposition as a living principle, the foundation of alchemy, magic, and natural philosophy in general, was weakened by the Enlightenment and overthrown entirely by Darwinism. Opposition has retreated to a mere mode of cognition, and not, probably, a very respectable one.

All this folderol to tell you, readers, that LI has been reading Hayek's much touted and little read summa, The Constitution of Liberty -- and we have found our opposite. It is a book with whose premises we agree vehemently, and with whose conclusions we disagree with equal vehemence. More in our next post.

Remora

After a night of disturbing dreams, LI awoke to find ourselves transformed into a crab... No. It isn't the dreams that have been disturbing, but the news. Merely the news. Every day, showered with evidences of universal imbecility, LI gets more crab-like -- with a crustacean's melancholy, or what we imagine to be the melancholy of an imperfectly armored creature. Yesterday, we were putting out a claw and an antenna, testing the air, and we stumbled upon, of all things, good news. Let's modify that as -- less than catastrophic news. News of the type: dam holds. Building does not collapse. Type news. Good news, in short, from, of all places, the Supreme Court. In a 6-3 ruling, the S.C. actually built a levee, at least a temporary one, against takings madness.



"The Supreme Court ruled today that a government-imposed moratorium on property development, even one that lasts for years, does not automatically amount to a "taking" of private property for which taxpayers must compensate the landowners.The 6-to-3 decision was a sharp setback for the property rights movement, which has scored many recent successes in the Supreme Court. The ruling came in a case that sought millions of dollars in compensation for a prolonged restriction on development along the shores of Lake Tahoe."

The takings movement, which is the child of the University of Chicago Law and Economics movement, has become the right's battering ram against environmental and, in general, corporate management. It is an attempt to hotwire a coup against the New Deal behind the backs of the electorate. The coup is rather funny -- these are the same people who want to reduce social costs, which is a real cost against third parties, i.e., property-holders, into a vaguely distributed "externality." But their ardor for property is really an ardor for large property holders... Far be it from us to evoke that dread and discredited phrase, class warfare, for this instance of class warfare. But one needs an analytic category to explain systematic discrepencies in the application of a theory, and class, pace the neo-liberal crowd, certainly seems to fit the bill.

Scalia, the right's Quasimodo on the court, suffered a setback with the ruling. NYT, again:

"For Justice Scalia, the decision today in Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency, No. 00-1167, must have been a particularly bitter defeat in two respects.

First, the majority rejected an expansive ruling of one of his most important opinions, a 10-year-old decision called Lucas v. South Carolina Coastal Council in which the court announced for the first time that a land-use regulation that, while leaving the property in the owner's hands, permanently deprived it of all economic use was a "categorical taking" that must be compensated.The Lucas decision breached what had been a doctrinal wall between a physical taking, in which the government actually takes possession of private property and for which compensation has always been required, and a "regulatory taking," in which the government restricts the owner's use of the property."

The second defeat is more technical. To paraphrase the NYT, Scalia had advocated a flat rule regarding the application of regulatory taking, which claimed that no pre-existing regulation should be considered when considering individual cases that might constitute such takings. Thus, the size of the taking would be calculated without regard to previous restrictions on the property -- an absurd attempt to inflate the cost of regulatory taking, the importance of which lies less in the individual cases to which it might apply than in scaring legislatures from considering measures that might, conceivably, be construed as regulatory takings -- measures such as protecting wetlands.

Private property is not, in itself, theft, contra Proudhon -- the phrase is in the nature of a sorites. However, given the wild eyed ideology of the Law and Economics movement, property functions as theft. The "takings" movement goes back to a case, Pennsylvania Coal Company vs. Mahon, from 1922. The Community Rights Org website has a nice summary of the case:

"Mahon sold the surface rights to land, but he reserved the right to remove the coal from under the land. The state then enacted a statute that prohibited coal mining if it threatened subsidence and damage to structures on the surface. The Court ruled that the restriction constituted a taking of Mahon's coal because the law made it commercially impractical for Mahon to mine the coal and thus had the same effect as destroying or appropriating the coal. In the first decision to hold that a land use restriction constituted a taking, the Court noted that "property may be regulated to a certain extent, [but] if regulation goes too far it will be recognized as a taking."

Holmes wrote the following in his opinion:

"The question of whether a regulation is a valid exercise of the police power or an unconstitutional taking depends on the particular facts. The property being protected here is private property belonging to a single citizen, in which there is no public nuisance if it is destroyed. The law is not justified as a protection of personal safety. The contract itself provided notice of the risks, and the grantee still contracted. Since coal rights are worthless if the coal can not be mined, preventing their mining is a taking because it is tantamount to destroying it. If the police power of the states is allowed to abridge the contract rights of parties, it will continue until private property disappears completely. In general, while property may be regulated to a certain extent, if regulation goes too far, it will be recognized as a taking.The loss should not fall on the coal company who provided for this very risk contractually. If the state wants more protection for its citizens,it can pay for it."

How Holmes logically juggled his argument that the slippery slope was inevitable, but that "property may be regulated to a certain extent," I leave to the psychologists. If, indeed, there are gradiants of regulation such that we can understand the phrase "a certain extent," then the force of the idea that abridging contract rights, i.e., regulation of property use, is such that "it will continue until private property disappears completely," is, to say the least, weakened.

Brandeis dissented in this case. Here's his dissent

"A restriction imposed to protect the public health, safety or morals from danger is not a taking. The restriction here is merely the prohibition of a noxious use. Just because a few private citizens are enriched does not make the law non-public. If the mining were to set free noxious gas, there would be noquestion that the state could prohibit it for the safety of the citizens, without paying the miner."

In LI's opinion, the Brandeis dissent is obvious. LI's opinion has been the opinion of the Federal Government, and of state governments, since the 1930s. The throwback position reminds us of why, originally, FDR tried to pack the court -- since the Court periodically feels called upon to play the avant garde for the reactionary cenacle among the ruling classs. Let's sum up: the robbery of the commons isn't justified by the enrichment of the property owner. And this isn't inessential robbery -- we are interested, as a society, in punishing individual robbery (instead of letting that duty devolve upon the victims as it may) because, theoretically, any robbery is an assault against a common good.

So, the court didn't do anything particularly lunatic yesterday. Good news. We are waggling our claws for joy. Dance dance dance.

Correspondence

LI has received, by way of a friend of a friend, a reply to our last post. Here it is:

"Where to begin...

First of all, the cretin in France would find no home in mainstream American conservative politics. Remember: today's right in America is for less government involvement and control over citizens. When confronted with a choice of citizens overcoming corporations and citizens overcoming governments (with police and armies...) they overwhelmingly choose to take their chances with corporations. A unilateralist, big government socialist like Jospin in an anethma to the mainstream American right. Quite frankly,
Gore and Daschle are the closest equivalents available in mainstream American politics. Their issues are not Jospin's (and I don't mean to slander them in that way) - but they are the politicians practicing
minority rule in America on their big issues (Environment and Taxation).

As for why The 3rd Way buried traditional leftist politics: that's easy. Their politics impoverished all who submitted to them. It happened 100% of the time to 100% of those afflicted (usually by force perpetrated by a small minority of people who chose themselves to be the government of the people afflicted...). The only variation was the rate and pace of the economic decay in the afflicted societies. France and many of EU-niks felt really good about their socialist tilt of the past 30 years while it was happening - but as a result they've (collectively) gone from the premier power on earth to an afterthought begging for attention and a voice on the world stage.

Finally: all the Enron comments are just tripe. Enron owns as many Democrats as Republicans. That's why the Dem's aren't (can't actually...) making a big issue out of it..."

Dope

In a decade, the Third Way has effectually buried every left wing party that embraced it, except for Tony Blair's Labour Party -- and for Mr. Blair, the hens, or is it the vultures, are coming home to roost. Especially in the aftermath of his poodle act for Mr. Bush. The British have traditionally, and inexplicably, imagined themselves collectively as a bull-dog -- but even the British don't necessarily want to see their leader flaunt a fetch it boy attitude, which Mr. Blair displayed in his pow-wow with his master in Crawford, Texas (not exactly Yalta. More like, Y'allta).

And now Jospin. A socialist leader who couldn't find one single issue that would distinguish him from his conservative opponent. Not that the French socialist party has accrued a lot of credit since Mitterand was elected on the promise of breaking with the logic of capitalism, and was promptly broken by the logic of capitalism. Still, there is the 35 hour working week; there is the social service sector, embattled but still funtioning; and there is the rhetorical opposition to the avatar of the logic of capitalism in our time, the USA. Not that LI approves of that rhetoric very much -- in fact, its inhuman consequence in Rwanda remains to be explored. We'd like nothing better than to see the Mitterandish clique that encouraged the genocide in Rwanda marched into court in the Hague. Still, in the Middle East, and in Russia, and in Latin America, the French hesitancy about the American model has served as a hopeful corrective to those of us who think unleashing a pure market economy upon the helpless multitudes is a recipe for disaster.

The point is this, though: even as the leaders of the left were dismantling it, they were assuring us that they were merely modernizing it. The new face of the left, for the new millenium. In the film, Brazil, there is a recurring comic gag concerning older women getting their faces lifted. The face lifts involved swathing their heads in plastic sheeting for a period, and then cutting the sheeting off. The result was an ephemeral, goggly youthfulness, a grotesque contrast with their aging bodies, followed by a period in which the face would "leak." Meanwhile, the plastic surgeon would insist on the beauty of the warped faces, the drooping cheeks, the flacid noses and weird lips -- a congery of impressively hag-like features -- he'd produced.

That plastic surgeon is Jospin. He is Blair. He is Clinton. He is Schroeder. The collective direction of the lefty parties in the West has been lost not because the rank and file are suffering a crisis of faith. No, it is because the leadership longed for that respectability that comes from betraying every one of labor's ideals to Capital. In exchange, the leadership got touted by the editorialists of the world's leading newspapers. The leaders got to hang out at Davos. And they lost all credibility with their followers. It is a nightmarish situation. How can you vote for a liberal, in the United States, for instance, when your choice is between George Bush and Al Gore? Between a man owned lock stock and oil barrel by energy companies, and a man who shilled for the defense industry in the Arabian Peninsula, and never met a corporate contributor he wouldn't do a favor for. The choice is no choice. In the end, the policy of accomodation to the right serves only ... the right.

This is from Michelet's Le Peuple


Ce qu' on remarque le mieux sur une personne
qui est nue, c' est telle ou telle partie, qui sera
d�fectueuse. Le d�faut d' abord saute aux yeux.
Que serait-ce, si une main obligeante pla�ait sur
ce d�faut m�me un verre grossissant qui le rendrait
colossal, qui l' illuminerait d' un jour terrible,
impitoyable, au point que les accidents les plus
naturels de la peau ressortiraient � l' oeil
effray� !

Voil� pr�cis�ment ce qui est arriv� � la France.
Ses d�fauts incontestables, que l' activit�
croissante, le choc des int�r�ts, des id�es,
expliquent suffisamment, ont grossi sous la main de
ses puissants �crivains, et sont devenus des
monstres. Et voil� que l' Europe tout � l' heure la
voit comme un monstre elle-m�me...
Le peuple qu' on peint ainsi, n' est-ce pas l' effroi
du monde ? Y a-t-il assez d' arm�es, de forteresses,
pour le cerner, le surveiller, jusqu' � ce qu' un
moment favorable se pr�sente pour l' accabler ?

"What one sees first about a person who is nude is that such and such a part is defective. The faults leap immediately to the eye. But when over the faulty spot, someone obligingly places a magnifying glass to make it even more colossal, illuminating it with the pitiless, terrible light of day, to the point that the most natural accidents of the skin jump out at the terrified eye, how do you think you'd feel about that?

This is precisely what has happened to France. Its incontestable faults, which economic growth, the shock of interests, of ideas, sufficiently explains, have been enlarged under the hands of its most powerful writers and have become monsters. And thus, Europe soon sees it as a monster. The people that are so depicted, aren't they the horror of the world. Are there enough armies, fortresses, to surround them and watch them up to the favorable moment for destroying them?"

Michelet is employing reactionary tropes that will later come to political fruition under Stalin -- the idea of the critic as traitor, and the people as monstrously traduced. But the Le Pen vs. Chirac contest coming up is a product of Michelet's Peuple. And guess what? That series of writers -- Voltaire, Balzac, Flaubert, Zola -- they were right, they were a thousand times right: there's a monster in France, and it is stirring, stirring...