21st Century Society: The Empathy Deficit, Children & The Rise of Narcissism...

"A morality practiced without empathy squanders the conscience." -Howard Hall

College students who hit campus after 2000 have empathy levels that are 40% lower than those who came before them, according to a stunning new meta-analysis presented to at the annual meeting of the Association for Psychological Science by University of Michigan researchers. It includes data from over 14,000 students.

Although we argue in "Born for Love: Why Empathy Is Essential--and Endangered" that modern child-rearing practices are putting empathy at risk, this is the largest study presented so far to quantify the decline.

Previous research done by psychologist Jean Twenge had measured what she labeled a "narcissism epidemic," with more students showing selfish qualities and with increases in traits that can lead to a diagnosis of narcissistic personality disorder. That is a condition in which people are so self-involved that other people are no more than objects to reflect their glory.

But I was less than convinced by that data because some of the measures of narcissism--statements like "I am a special person," might reflect a lifetime spent in classrooms aimed at raising self-esteem rather than a true increase in self-centeredness. The survey on empathy used in this study--which you can take for yourself: HERE however, is another matter.

While it so obviously measures empathy that you could easily game it to make yourself look kinder and nicer, the fact that today's college students don't even feel compelled to do that suggests that the study is measuring something real. If young people don't even care about seeming uncaring, something is seriously wrong. Another survey in the research found that people also think that others around them are less compassionate.

Why might today's students be less empathetic than their elders?

One of the culprits we identify in "Born for Love" is the way that they spent most of their time early in life. Today's kids play outdoors much less, and they spend far less time in unstructured activity with others than prior generations.

Without unstructured free time with playmates, children simply don't get to know each other very well. And you can't learn to connect and care if you don't practice these things. Free play declined by at least a third between 1981 and 2003, right when the kids who hit college in 2000 and later were growing up.

Worse, much of the time that used to be spent playing outdoors is now spent in front of screens. Television, obviously cannot teach empathy. Even nonviolent kids' TV, research finds, is filled with indirect aggression and linked to increased real-world bullying. Though social media is an improvement on passive TV viewing and can sometimes aid real friendships, it is still less rich than face to face interaction. This is especially important for the youngest children whose brains are absorbing social information that will shape the way they connect for the rest of their lives.

Another factor is the "self esteem movement" and its pernicious notion that "you can't love anyone else until you love yourself." Today's kids grew up with parents who were taught by therapists and self help groups attended by millions that caring too much for other people or having your happiness tied to theirs was "co dependence," and that people should be able to be happy on their own, needing no one.

In reality, we need each other to be both mentally and physically healthy. Solitary confinement, in fact, is one of the most stressful experiences someone can undergo: this wouldn't be true if most people were happy without social contact. Normal people kept in complete isolation can become psychotic in as little as a few days.

Further, unless you have been loved well from infancy, loving others is difficult--children who are resilient to early trauma are those who find others to care for them to make up for abusive or neglectful caregivers. If the only love they get is from a therapist or teacher who tells them to love themselves before trying to make other connections, they are extremely unlikely to recover.

Perhaps an even larger factor is the merging of the left's "do your own thing" individualism with the right's glorification of brutal competition and unfettered markets. You wind up with a society that teaches kids that "you're on your own" and that helping others is for suckers. A country where the mystical new age "Secret" is that the rich deserve their wealth and got it by being positive and good--while the poor, too, get what's coming to them because they didn't try hard enough.

At the same time, deregulation and reduced taxes on the wealthy from Reagan onwards produced massive growth in economic inequality, which is probably also a critical part of empathy's decline. Empathy requires an ability to understand others--it's easiest to do this when you spend time them regularly and know how to read them.

Economic inequality, however, by radically separating the rich from the poor and shrinking the middle class, literally physically isolates us from each other and provides few opportunities for connection or understanding. If you spend your time in limos and gated communities and first class, you aren't likely ever to meet poor people who aren't there to serve you; outside that context, you won't know how to relate to them.

And then, if you know nothing about someone's real situation, it's easy to caricature it as being defined by bad choices and laziness, rather than understand the constraints and limits the economy itself imposes. Seeing yourself doing so well and others doing poorly tends to bolster ideas that "you deserve your wealth," simply because guilt otherwise becomes uncomfortable, even unbearable.

In reality, self esteem doesn't come from thinking positive or telling yourself that you are special or worthy, though telling kids they are rotten and selfish can surely destroy it. And, sadly, you can be optimistic all you like in an economy with 20% unemployment and still not get a job through no fault of your own.

So what can be done about what President Obama as a candidate presciently labeled the "empathy deficit"?

The key thing is to recognize the value of relationships and the fact that we are not independent but interdependent. We all need each other. We're actually both happier and healthier if we're kind.

Countries with high economic inequality tend to have high crime, high corruption, low levels of trust, high infant mortality and lowered life expectancy-- as well as difficulty growing their economies. In contrast, those with lower inequality have higher happiness, greater health, lower crime, better growth and longer life.

And so, if, say, health care for all or better unemployment benefits or higher quality schools means that those lucky enough to have well-paying jobs have to pay higher taxes, well, is that really so terrible?

If we continue to believe that it is, if we continue to split into "us" v. "them," "haves" v. "have nots," the empathy decline will undoubtedly continue and we will face a meaner, nastier world in which ideas about humans being selfish and competitive rather than caring become a self fulfilling prophecy by crushing the tendency toward kindness with which we are all born.

CREDITS: -Maia Szalavitz, ("Shocker: Empathy Dropped 40% in College Students Since 2000", Psychology Today, 5.28.2010. Image:- LitteredGlass, "Children Playing Marbles, Flickr, 1970).

Pythagoras: Mysticism: The DNA Of Economics...

“As soon as laws are necessary for men, they are no longer fit for freedom.”

“There is geometry in the humming of the strings, there is music in the spacing of the spheres.” -Pythagoras

THE PHILOSOPHY:

"The Pythagoreans: the main difficulty in life to overcome: the body and its necessities which subdue man. It is necessary to free oneself from these. The body is a tomb -- one must triumph over it, but not lose it. To so so requires that one attain the state of enthusiasm (en- theos). In this way, one attains a self-sufficient, theoretic life -- a life not tied to the necessities of the body, a divine life. Such a man is a wise man, a sophos. (The term philosophia, "love of wisdom," is first used in Pythagorean circles.)" -K&R, pp. 257ff.

THE IDEA:

The Greek philosopher and mystic Pythagoras was born around 570 BC. He spent his youth traveling to Egypt, Syria and Babylon, where he immersed himself in the mystical teachings of the East. At the age of 40, he established his own quasi-religious cult in Crotona, southern Italy. His teachings attracted hundreds of followers, some of whom suffered severe privations – including a five-year vow of silence – to become a part of his inner circle, known as the Mathematikoi.

The cult’s philosophy was based on reason and number. To the Pythagoreans, number was all. Each number had a special, almost magical meaning. The monad, unity, represented the original unity from which the universe was created, and was associated with divine intelligence. The dyad, two, represented the division of this unity into duality. (The even numbers, which contained the number two, were therefore seen as representing weakness and mutability.) Three represented all things with a beginning, middle and end. Four represented completion – like the four seasons.

The most perfect number was the decade, ten. The sum of one, two, three and four, it represented the totality of forces that make up the universe. In reference to the decade, the Pythagoreans compiled a list of ten opposing principles, which divided phenomena into two classes:

good • evil
limited • unlimited
odd • even
one • plurality
right • left
MALE • FEMALE ( remember this philosophy stems from the male point of view).
at rest • in motion
straight • crooked
light • darkness
square • oblong

By aligning themselves with the qualities in the first column, the Pythagoreans believed they could achieve purity and become closer to the gods.

The reasons why they chose these ten pairs has puzzled scholars from Aristotle on, but some can be guessed at. In Pythagoras’s philosophy, for example, the universe consisted of two components: the Limited, which signified order, and the Unlimited, which represented chaos and plurality. The former was associated with the monad and odd numbers, the latter with the dyad and even numbers. Pythagoras’s biographer, Iamblichus, wrote:

“The right hand he called the principle of the odd number, and is divine, but the left hand is the symbol of the even number and of that which is dissolved.”

The right hand is controlled by the left side of the brain, which we now associate with linear, logical reasoning of the sort championed by the Pythagoreans. This preference for the right hand has passed on through language – the word “sinister” comes from the Latin sinestra, meaning left.

THE CONCLUSION:

So what does this ancient mysticism have to do with the hard, cold logic of neoclassical economics – which views humanity as a mere aggregate of rational, self-interested actors? The model for economists has long been Newtonian, mechanistic physics, which, in turn, is explicitly based on Pythagorean thought. So this list of pairs is like two complementary strands of the DNA of economics.

Consider that neoclassical economics:

* is based on the idea of scarcity and emphasizes limited resources like oil at the expense of unlimited resources like wind;

* rejects uncertainty and duality (symbolized to the Pythagoreans by evenness);

* is based on the primacy of the individual (one) over society (plurality);

* values right-handed logic, ignoring emotion and left-handed thought;

* is based on a male paradigm that undervalues things like childcare;

* sees the economy as a static system, maintained at rest by the invisible hand of capitalism;

* uses a simplistic, linear (straight) approach to model complex, nonlinear (crooked) phenomena;

* attempts to shine the light of reason and observation over the economy, rejecting the indeterminacy (darkness) of human systems;

* reduces complex and often strongly biased social and political systems to the simple symmetry (squareness) of mathematics.

Neoclassical economists are Pythagoreans. They still think that number is all. And they are still trying to find good and attain Utopia by aligning themselves with the first column of this ancient list. Since the 1960s, a number of new sciences have emerged that directly challenge the Pythagorean paradigm. Fuzzy logic, fractals, network theory and nonlinear dynamics deal with systems that are indeterminate, crooked, plural and in motion. Feminists and ecologists have also pointed out the defects in the neoclassical system. As economists incorporate these voices and developments, we will come nearer to an economics that is not just post-autistic, but post-Pythagorean.

-David Orrell ( "Post- Pythagorean Economics", Ad Busters, 7.15.09. Image: -Michelangelo, The Creation of Adam, Sistine Chapel, The Vatician, Rome, Completed: 1512 ).

Statistical Destroyers: Irrational Patriotism & The RAND Corporation

"You probably never heard of the RAND Corporation but it's indirectly influenced your life more than any government or institution in North America.

Early in its 60 years, this Santa Monica-based nonprofit corporation taught the U.S. Air Force how to fight a nuclear war while assuring the rest of us that such a war would be kind of OK. But it's done much more. Early on, RAND economist Kenneth Arrow argued mathematically that individuals always act rationally in their own interest, not in the interest of groups. This philosophy developed into Reaganism (government is the problem) and Thatcherism (society doesn't exist). It guided the policies of George W. Bush.

RAND developed "systems analysis," a logical, mathematical approach to problems. Its analysts argued, for example, that fallout shelters and evacuation into deep mines could save millions of American lives. That would make a nuclear war not just fightable, but winnable. Herman Kahn, an advocate of such wars, became the model for Stanley Kubrick's Dr. Strangelove. Paul Baran, another RAND analyst, thinking about surviving a Soviet nuclear attack, invented a way to use digital communications. His information packets are the foundation of the modern internet.

Systems analysis had an eager ally in Robert McNamara, who died Monday. When McNamara was U.S. defense secretary, he told his boss, President Lyndon Johnson, that Vietnam was a winnable war. Then RAND analysts interviewed Vietcong prisoners and found them alarmingly irrational and unconcerned about their individual interests. Instead, they were patriots determined to unify their country at any cost. The analysts decided the U.S. had put itself on the losing side of the war, but by then it was too late. It was a RAND analyst, Daniel Ellsberg, who secretly photocopied the top-secret history of the Vietnam War and released it to the U.S. media. As The Pentagon Papers, that leak discredited a generation of America's best and brightest.

Alex Abella's new book, "Soldiers of Reason" is a disturbing history of very smart people putting their brains at the service of very stupid ideas. He managed to interview many of the key persons in the organizations, as well as friends and relatives of those who launched RAND after World War II. The result is a book rich in ironies. Perhaps the richest irony is that RAND owes much of its success to an ex-communist who kept his radical youth a secret. Albert Wohlstetter had been part of a 1930s generation -- the brightest and poorest.

AT CCNY, Wohlstetter, a brilliant young mathematician, knew the Reds who sat at separate cafeteria tables -- the Stalinists at one, the Trotskyites at another. Some of the names of the CCNY Trots still resonate today: Irving Howe, Irving Kristol, Daniel Bell. They soon migrated from the left to the anti-Soviet right, and flourished in Cold War America. Kristol's son William is a Neoconservative. Not yet political, Wohlstetter left CCNY in 1934 and managed to study law at Columbia. There he applied his math skills to politics and philosophy. His mathematics and logic led him to join a Neo-Trotskyite splinter group called the "League for a Revolutionary Workers Party."

Fortunately for him, his party records were lost in a traffic accident. While he left the League, he never abandoned his view of the Soviet Union as a system determined to conquer the world. His mission in life was to thwart that system. Wohlstetter spent World War II as a government bureaucrat, and then, in postwar Los Angeles, bumped into an old colleague who invited him to apply for a job with the new RAND Corporation. With his communist past well concealed, he got the job -- and, Abella suggests, prevented the possibility of a Soviet first strike on American air bases.

Wohlstetter's analysis of the vulnerability of the Strategic Air Command didn't just teach the Air Force to disperse its bases. It also made him a major force in U.S. strategic thinking. RAND's systems analysis approach has dominated American policy-making ever since. Wohlstetter strongly influenced John F. Kennedy, Lyndon Johnson, and Richard Nixon. He eventually left RAND, but his impact endured. By the time he died in 1996, at the age of 86, he had inspired and advanced a new generation of apprentices who would become the Neocons: Richard Perle, Paul Wolfowitz, Donald Rumsfeld, Dick Cheney, Zalmay Khalilzad.

As soldiers of reason, the neocons believed in numbers and systems and individualism. Trotsky's bastards, they imagined themselves "scientific" just as the Bolsheviks had. Like the Bolsheviks, they believed in reason yet never examined their basic premises. Their patriotism was as irrational as that of the Vietcong, but far more destructive. It didn't matter. As long as they had access to the billions in the US defense budget, and they could invoke a Soviet or terrorist threat, they flourished.

Many who worked with RAND, including Wohlstetter and Kahn, emerge as genuinely likable men with charm and wit. That makes them all the more disturbing. RAND's greatest triumphs were the war in Iraq and the economic policies of the Bush administration. Now both are in ruins. But for the foreseeable future we will live with the consequences of RAND’s thinking, just as we have for the past 60 years.

-Crawford Kilian (Exerpt: “Cold War Cult,” thtyee.ca, 7.8.2009. Image:Westinghouse Advertisement, 1960s).

The American Theory Of Life: A Crisis Of Belief...

"So we beat on, boats against the current, borne back ceaselessly into the past." -F. Scott Fitzgerald (The Great Gatsby, 1925).

In the fall of 1933, Sherwood Anderson left his home in New York City and set out on a series of journeys that would take him across large sections of the American South and Midwest. He was engaged in a project shared by many of his fellow writers -- including James Agee, Edmund Wilson, John Dos Passos, and Louis Adamic -- all of whom responded to the Great Depression by traveling the nation's back roads and hinterlands hoping to discover how economic disaster had affected the common people. Like many of his peers, Anderson had anticipated anger and radicalism among the poor and unemployed. Instead, he discovered a people stunned by the collapse of their most cherished beliefs. "Puzzled America," the title of the book he composed out of his journeys, said it all.

In particular, Anderson found the people he met to be imprisoned by what he called the "American theory of life" -- a celebration of personal ambition that now seemed cruelly inappropriate:

"We Americans have all been taught from childhood that it is a sort of moral obligation for each of us to rise, to get up in the world." In the crisis of the Depression, however, that belief appeared absurd. The United States now confronted what Anderson called "a crisis of belief."

As Anderson knew, the notion that the United States is a uniquely open society, where the talented and industrious always have the chance to better their lot, is a central element of American self-understanding. The notion has been a prominent feature of American culture since the days of Ben Franklin, and it remains a core feature of the national ethos to this day. Indeed, in recent months the election of Barack Obama has reminded Americans of the promise that in the United States opportunity can be open to all.

The Great Depression, however, subjected even the strongest convictions to stark challenge, revealing cracks in the vision of social mobility that the recent prosperity of the nineteen-twenties had managed to obscure. In truth, the notion that the U.S. was an open and fluid society had always been nearly as much myth as reality -- even when, as was necessarily the case, it was assumed to apply to white men alone. But the myth had come to an especially paradoxical stage in its development in the years leading up to the crash.

Never in American history had the vision of social mobility been more forcefully asserted than in the 1920s. And rarely had the image been so far out of keeping with reality. The Republican Party, which dominated national politics throughout the decade, extolled the twin virtues of economic competition and personal ambition, reminding Americans often that they lived, as Herbert Hoover remarked, in "a fluid classless society...unique in the world." That rhetoric was redoubled by a booming new advertising industry which promised that consumers might vault up the ladder of social status through carefully chosen purchases (often with consumer credit, a recent invention).

And yet, the United States actually became less equal and less fluid in the 1920s, as the era's prosperity increasingly benefited the wealthiest. By the end of the decade, the top 1% of the population received nearly a quarter of the national income, an historic peak that would not be approached again until this past decade. Indeed, the term "social mobility" was coined in 1925 by the sociologist Pitrim Sorokin, who used the phrase to identify a phenomenon in apparent decline.

"The wealthy class of the United States is becoming less and less open, and is tending to be transformed into a caste-like group."

The conflict between the American myth of a classless society and the reality of the nation's deepening caste divisions was the irony at the core of some of the greatest literary works of the 1920s, including Theodore Dreiser's "An American Tragedy" and F. Scott Fitzgerald's "The Great Gatsby." But it was not until the Great Depression that the traditional vision of social mobility imploded.

Traveling the country, Anderson and his fellow observers found a populace confused by a collapse they could not understand. Everywhere he turned, Anderson noted, he heard the same refrain, "I failed. I failed. It's my own fault." The documentary books that he and his contemporaries created provided a kind of counter-narrative to the conventional American story of personal freedom and individual ambition. These works featured a journey not upward toward wealth and progress, but back into the hinterlands of a confused and immobilized nation.

That journey was echoed by a whole genre of "road" novels, written by angry young writers like Nelson Algren, who depicted an itinerant population of bottom dogs lurching from one disaster to the next. These novels answered the classic American vision of opportunity by imagining a nation of wanderers rapidly going nowhere.

So, too, did the cycle of gangster films -- "Little Caesar," "Scarface," "Public Enemy" -- which reached the peak of their popularity in the early '30s. Depicting boldly ruthless young men whose quests for wealth and power were doomed to end in self-destruction, the gangster film cast personal ambition as a cruel delusion. Even the era's light-hearted "screwball comedies," such as "It Happened One Night" and "My Man Godfrey," were sometimes fables of downward mobility, where arrogant socialites were brought down a notch by their encounters with ordinary people.

The road novels, documentary books and gangster films of the 1930s depicted the myth of social mobility as a bitter cheat. The era's screwball comedies viewed it merely as delightfully laughable. But all suggested that the Depression had left a core feature of American ideology in disarray, and thus emphasized the extent to which the traditional American language of personal ambition was open to redefinition. That opportunity would be seized on by a cohort of artists and intellectuals who took the crisis of the Depression as a chance to cast the idea of social mobility less as a framework for individual striving and more as an occasion for collective action.

John Steinbeck's novel "The Grapes of Wrath" made the Joad family's flight from the dust bowl into an emblem of people coming together to remake their world. A similar image was implicit in the very title of Dorothea Lange and Paul Taylor's documentary book "An American Exodus." Even works of light entertainment like the massively popular "Gone With the Wind" or John Ford's landmark Western "Stagecoach" were in keeping with the prevailing message of the times. All these works told of epic journeys in which a group of people overcame destructive competition in their discovery of a common destiny. Each called for Americans to act collectively to remake a democratic society where opportunity would be open to all.

In effect, such declarations helped lay the cultural groundwork for the New Deal, providing the ideological infrastructure for the new governmental institutions created during the '30s. It is not yet clear whether the current economic disaster will produce anything like the profound transformation that shook the U.S. during the Great Depression. Our own crises of belief are likely just beginning. If we are fortunate, however, we will have a generation of artists and intellectuals like those of the 1930s to help us imagine our way past confusion.

-Sean McCann, PhD ("Will This Crisis Produce a 'Gatsby'?", Wall Street Journal, 2.21.2009. Image: -Robert Redford as F. Scott Fitzgerald's Jay Gatsby, "The Great Gatsby," directed by Jack Clayton, 1974 ).

11 Reasons Why Bernard Madoff aka "The Swindler" Is America's Unconscious Superhero

“In today’s regulatory environment, it’s virtually impossible to violate rules.” -Bernard Madoff (2007).

The Inadvertent Hand of Justice:

While it is understandable that the super-rich and wealthy, who have lost a large portion of their retirement and investment funds are unanimous in their condemnation and cries of betrayal of trust, and the editorials of all the prestigious newspapers and weeklies have joined the chorus of moral critics, there is much to praise in Madoff’s deeds, even if such praise was not at the heart of his fraudulent endeavor.

1. The swindle of $50 plus billion dollars may make a big dent on US Zionist funding of illegal Israeli colonial settlements in the Occupied Territories, lessen funding for AIPAC’s purchase of Congressional influence and financing of propaganda campaigns in favor of a pre-emptive US military attack against Iran. Most investors will have to lower or eliminate their purchase of Israel bonds, which subsidize the Jewish State’s military budget.

2. The swindle has further discredited the highly speculative hedge funds already reeling from massive withdrawals because of deep losses. Madoff’s funds were one of the last ‘respected’ operations still drawing new investors, but with the latest revelations it may accelerate their demise. The dismissed promoters may finally have to perform an honest, productive day’s work.

3. Madoff’s long-term, large-scale fraud was not detected by the Securities and Exchange Commission (SEC) despite its claims of at least two investigations. As a result, there is a total loss of credibility. More generally, the SEC’s failure demonstrates the incapacity of capitalist government regulatory agencies to detect mega frauds. This failure raises the question of whether alternatives to investing in Wall Street are better suited to protect savings and pension funds.

4. Madoff’s long-term association with NASDAQ, including his chairmanship, while he was defrauding his clients of billions, strongly suggests that the members and leaders of this stock exchange are incapable of recognizing a crook, and are prone to overlook felonious behavior of ‘one of their own’. In other words, the investing public can no longer look to holders of high posts in NASDAQ as a sign of probity. After Madoff, it may signal time to look for a king-size mattress for safe keeping of what remains of a family’s wealth.

5. The investment advisors from top banks in Europe, Asia and the US managing billions of funds did not carry out the most elementary due diligence of Madoff’s operation. Apart from severe bank losses, tens of thousands of influential, affluent and super-rich lost their entire accumulated wealth. The result is total loss of confidence in the leading banks and financial instruments as well as the general discrediting of ‘expert knowledge’. The result is a weakening of the financial stranglehold over investor behavior and the demise of an important sector of the parasitic ‘rentier’ class, which gains without producing any useful commodities or providing needed services.

6. Since most of the money stolen by Madoff came from the upper classes around the world, his behavior has reduced inequalities – he is the ‘greatest leveler’ since the introduction of the progressive income tax. By ruining billionaires and bankrupting millionaires, Madoff has lessened their capacity to use their wealth to influence politicians in their favor – thus increasing the potential political influence of the less affluent sectors of class society…and inadvertently strengthening democracy against the financial oligarchs.

7. By swindling life-long friends, self-same ethno-religious investors, narrow ethnically defined country club members and close family members, Madoff demonstrates that finance capital shows no respect for any of the pieties of everyday life: Great and small, holy and profane, all are subordinated to the rule of capital.


8. Among the many ruined investors in New York and New England, there are a number of mega slumlords (real estate moguls), sweatshop owners (fancy name-brand clothes and toy manufacturers) and others who barely paid the minimum wage to their women and immigrant laborers, evicted poor tenants and swindled employees out of their pensions before moving their operations to China. In other words, Madoff’s swindle was a kind of secular ‘divine’ retribution for past and present crimes against labor and the poor. Needless to say, this ‘unconscious Robin Hood’ did not redistribute the money fleeced from the employers to their workers, he reinvested part of it in charities which enhanced his philanthropic image and to payout to some of his early investors so sustain the overall Ponzi scam.

9. Madoff struck a severe blow against anti-Semites who claim that there is a ‘close-knit Jewish conspiracy to defraud the Gentiles’, laying that canard to rest once and for all. Among Bernard Madoff’s principle victims were his closest Jewish friends and colleagues, people who shared Seder meals and frequented the same upscale temples in Long Island and Palm Beach.

Bernie was discriminating in accepting clients, but it was on the basis of their wealth and not their national origin, race, religion or sexual preference. He was very ecumenical and a strong backer of globalization. There was nothing ethnocentric about Madoff: He defrauded the Anglo-Chinese bank HSBC of $1 billion dollars and several billions from the Dutch arm of the Belgian bank Fortes. $1.4 billion was from the Royal Bank of Scotland, the French bank BNP Paribas, the Spanish bank, Banco Santander, the Japanese Nomura; not to mention hedge funds in London and the US, which have admitted holdings in Bernard Madoff Investment Securities. Indeed Bernie was emblematic of the modern up-to-date, politically correct, multicultural, international…swindler. The ease with which the super rich of Europe forked their fortunes over caused one Madrid-based business consultant to observe that, “picking off Spain’s wealthiest was like clubbing seals…” (Financial Times, December 18, 2008 p.16)

10. Madoff’s swindle will likely promote greater self-criticism and a more distrustful attitude toward other potential confidence people posing as reliable financial know-it-alls. Among self-critical Jews, they are less likely to confide in brokers simply because they are zealous backers of Israel and generous contributors to Zionist fund drives. That is no longer an adequate guarantee of ethical behavior and a certificate of good conduct. In fact it may raise suspicion of brokers who are excessively ardent boosters of Israel and promise consistent high returns to local Zionist affiliates – asking themselves whether this business about ‘what is good for the …’ is really a cover for another scam.

11. The demise of Madoff’s enterprise and his wealthy liberal Jewish victims will adversely affect contributions to the 52 Major Jewish American Organizations, numerous foundations in Boston, Los Angeles, New York and elsewhere, as well as the Clinton/Schumer militarist wing of the Democratic Party (Madoff bankrolled both of them as well as other unconditional Congressional supporters of Israel). This may open Congress to greater debate on Middle East policy without the usual high volume attacks.

Conclusion:

Madoff’s swindle and fraudulent behavior is not the result of a personal moral failure. It is the product of a systemic imperative and the economic culture, which informs the highest circles of our class structure. The paper economy, hedge funds and all the ‘sophisticated financial instruments’ are all ‘Ponzi schemes’ – they are not based on producing and selling goods and services. They are financial bets on future financial paper growth based on securing future buyers to pay off earlier cash ins.

The ‘failure’ of the SEC is totally predictable and systemic: The regulators are selected from the regulatees, are beholden to them and defer to their judgments, claims and audit sheets. They are structured to ‘miss the signs’ and to avoid ‘over-regulating’ their financial superiors. Madoff operated in a milieu of a Wall Street where everything goes, where impunity for mega-bailouts for mega swindlers is the norm. As an individual swindler, he out-defrauded some of his bigger institutional competitors on the Street. The whole system of rewards and prestige goes to those best able to juggle the books, to cover the paper trails and who have willing victims begging to get fleeced. What a mensch, this Madoff!

In a few days, one individual, Bernard Madoff, has struck a bigger blow against global financial capital, Wall Street and the US Zionist Lobby/Israel-First Agenda than the entire US and European left combined over the past half century! He has been more successful in reducing vast wealth disparities in New York than all the white, black, Christian and Jewish, reform and mainline Democratic and Republican governors and Mayors over the past two centuries.

Some right-wing conspiracy theorists are claiming that Bernie is a secret Islamic-Palestinian agent (from Hamas) who set out to deliberately undermine the financial base of the Jewish State of Israel and its most powerful, affluent and generous US backers and foundations. Others claim that he is a closet Marxist whose swindles were carefully designed to discredit Wall Street and to funnel billions into clandestine radical organizations – after all…does anyone know where the lost billions have gone? Unlike the leftist pundits, bloggers and protest marchers, whose earnest and public activities have had no effect on the rich and powerful, Madoff has aimed his blows where it hurts the most: Their mega-bank accounts, their confidence in the
capitalist system, their self-esteem and, yes, even their cardiac well-being.

Does that mean we on the left should form a Bernie Madoff Defense Committee and call for a bailout in line with Paulson’s bailout of his Citibank cronies? Should we proclaim “Equal bailout for equal swindlers!”? Should we advocate his flight (or his right of return) to Israel to avoid a trial? It might not fly with his many Jewish victims to make the case for an Israeli retirement for Bernie.

There is no reason to mount the barricades for Bernard Madoff. It’s enough to recognize that he has inadvertently rendered an historic service to popular justice by undermining some of the financial props of a class-ridden injustice system.
-James Petras (Excerpt: "Bernard Madoff: Wall Street Swindler Strikes Powerful Blows for Social Justice", Information Clearinghouse, 12.20.2008. Image: -VioletPlanet, The Hero Factory, 2.26.09).

History Repeating: The 40-Year Cycle Of Change...Is Here...

Written in 2005:

"First, I want to take notice of D-Day, June 6, 1944, the battle which set the stage for the defeat of fascism in Europe. (Interestingly, the battle which turned the tide in the Pacific War occurred at roughly the same date, June 3 - 7, off Midway Island, in 1942. U.S. planes destroyed four Japanese aircraft carriers and even more importantly, the cream of Japanese naval aviation. But that's another story).

As we consider a day 61 years ago, it calls to mind the broad sweep of history, and various cyclical patterns of history--those posited by Nicolai Kondratieff and Ralph Nelson Elliott. For starters, let's consider 1893, 1932 and 1974. Interestingly enough, those bottoms of financial panics or depressions seem to operate on about 40-year cycles. If there is indeed a pattern there, we should get a humdinger of a depression around 2012.

Kondratieff posited that an economic cycle of debt buildup and repudiation repeats every 50-60 years. Given the enormous borrowing binge the world has gleefully embarked on during the past five years (M-3 expansion of around $2 trillion by some estimates, American homeowners tapping their equity to the tune of $1.6 trillion in new debt, Federal budget deficits on the order of $400 billion annually, etc.), it's difficult to dismiss Kondratieff's fundamental insight as entirely wrongheaded.

Many in his camp believe we are entering the "winter" phase which will culminate in a collapse or repudiation of all that debt. It's something to consider, given one irrefutable fact: no economy runs up forever in a straight line of unending growth.

"The low-interest-rate-fueled growth in the U.S. economy, says Robert Brusca, president of Fact and Opinion Research, has played out principally through reckless spending from refinanced real estate. I'm convinced that people have taken this money and blown it on gewgaws and junk," he says. "We're basically borrowing money to support our consumption, and we are living well beyond our means."

These "long waves" seem to suggest a severe and long-lasting downturn in the world economy is close at hand, based on the fundamental insight that the enormous mountains of debt which have been accumulated must now be repudiated in order to set up the next cycle of growth.

There is another eerily repetitive pattern of change which has occurred on 40-year cycles in the past century: one of social tumult and change. Consider the explosion of artistic freedoms in film and music of the 1920s, and the concurrent lifting of social constraints, and then note the similarity to the 1960s (ending either with the disasterous Rolling Stones concert at Altamont in 1969, or Watergate in 1974,depending on your taste in history). If the 40-year pattern holds, we are in the midst of, or at least entering, a similar decade of social turmoil.

We could posit that the cycle began on Septemebr 11, 2001, ushering in a period not of artistic expression but of new constraints and paranoia. The rise of the religious right as a political force could be seen as the penumbra of the 1960s, just as the rise of a radically reactionary Islam could be seen as a reverse analog of the big-power Communist threat the U.S. faced in the 60s.

Where the 60s were all about questioning the conformity which had dominated social and political life in the 1950s, this decade seems to be about reining in the chaos, both outside the national borders and within. A new "ownership" ethic has replaced the paternalistic state ideal of the 1960s, and each new excess in the popular culture (hideously violent Playstation games, crudely misogynist hip-hop music is matched by a shrill new constraint (banning medical marijuana, stem cells, etc.).

Even more troubling, the divide between the wealthy elites and the middle class is widening; as the economy stumbles toward breakdown, the wealth of the nation has flowed to the top 5% of citizenry. As the average Schmoe relentlessly taps his home equity to support a lavishly foolish "upper-middle class lifestyle" filled with the spiritual rot of gimcrack distractions and useless toys, (Wall Street Journal, May 17, 2005, "Lagging Behind the Wealthy, Many Use Debt to Catch Up") the real wealth of the nation aggregates in the elites' hands. As tax rates for the wealthiest plummet to all-time lows, medical insurance becomes a luxury for everyone not independently wealthy or employed by a government agency.

The nation careens down the path of a fiscal policy of endless deficit, transferring whatever wealth remains in the hands on the young to the elderly via unsustainably expensive Medicare benefits, and yet the citizenry are strangely complacent, as if their internal compasses have been scrambled. The events of the decade ahead may provide a lodestone for the dazed American citizenry; as things fall apart, they may find their internal compasses re-set, and the distractions of consumerism less mesmerizing. Can it happen too soon? I think not.

-Charles Hugh Smith ("Are We Poised on the Precipice of Another Age of Turmoil?" 6.2005. Image: - Martin Luther King Jr.'s Mug Shot, thesmokinggun.com, 4.16.1963).

"King was arrested and jailed in Birmingham Alabama after a peaceful protest of segregation. It is here that King wrote "The Letter from Birmingham Jail." The open letter was a response to a statement made by eight white Alabama clergymen entitled "A Call For Unity" which agreed that social injustices were taking place but believed that the battles should be taken solely to the court not to the streets in order to better the city of Birmingham. King responded that without forceful, direct actions such as his, true civil rights could never be achieved. As he put it, "This wait has almost always meant 'never.'" He held that Civil Disobedience is justified in the face of unjust laws."-NationMaster Encyclopedia, 2005).

On Wall Street: Let Them Hit Bottom, Let Them Go Bankrupt...

Legendary investor Jim Rogers warned during a CNBC interview this morning that global central banks are creating the environment for an inflationary holocaust by their ceaseless overprinting of currency, a measure that isn’t even successful in stabilizing the stock market.

Rogers said that the only solution to the market crisis was to let failing banks and speculators go bankrupt and stop pumping endless amounts of liquidity into the system, labeling it outrageous that responsible investors and taxpayers are being made to bail out crooks on Wall Street. “The way to solve this problem is to let people go bankrupt,” Rogers stressed, “All of this pumping money into the system is not going to save it - see what the market is saying, it’s saying we don’t buy that, let people go bankrupt...then you hit bottom and then you start over. The people who are sound will take over the assets from the people who aren’t sound and we'll start over. This is the way the world has worked for a few thousand years,” said Rogers.

Rogers warned that the reliance on governments printing money would not aid a recovery and would only lead to the problem becoming worse in the future. “We’re setting the stage for when we come out of this of a massive inflation holocaust,” he said.

Rogers said that excesses of credit and people becoming over-leveraged meant that they would now have to take some pain: “Never before in world history were people able to buy houses with no money down, many people bought four or five houses with no money down and no job and then they did it with cars and student loans and credit card loans, you just think we say well that’s too bad we’re gonna start over nobody loses his job….be realistic."

Rogers said that the G7 leaders, who are meeting this weekend, should “go down to the bar, have a beer and leave the rest of us alone, let the people who are sound succeed and let the other people fail. What I’m afraid of is they’re gonna keep doing what they’ve been doing - which the market hates, you can see the market hates it - because this is going to unleash rampant inflation around the world, rampant confusion in the currency markets and you’re gonna have currencies gyrating all over the world,” said Rogers, repeating that the central bankers were unleashing an “inflationary holocaust”.

A CNBC expert then expressed his confusion at Rogers’ argument that overprinting of currency caused hyper inflation, seemingly displaying less grasp of basic economic cause and effect principles than a 5-year-old would. Rogers again made the point: “When you print gigantic amounts of money and you flood the world with money, throughout history that has led to inflation.”

-Paul Joseph Watson, ("Rogers: Global Bankers Have Unleashed Inflationary Holocaust," PrisonPlanet.com, 10.10.08. Image: "Worthless," BillStClair.com, 2008).

Bailed Out: Financial Wise Guys & The Wall Street Casino...

"The Congress told the American people to go to hell."-Lou Dobbs, on the passage of the 700 billion dollar Wall Street bailout plan, 10.1.08.

PART I: REPEALING ROOSEVELT

"The federal reserve is still struggling to contain what is already the most severe credit contraction since the Great Depression. Yet in all of the press coverage, commentators have scarcely acknowledged that this old-fashioned panic is a child of deregulation. During the past decade, the financial economy has repeated the excesses of the 1920s -- too much borrowing to underwrite too many speculative bets with other people's money, too far beyond the reach of regulators, setting up the entire economy for a crash.

The Roosevelt schema of financial regulation was built around two principles -- disclosure and outright prohibition of inherent conflicts of interest. All publicly listed and traded companies were required to disclose to the Securities and Exchange Commission and to the public all financial information deemed "material" to investor decisions. The New Deal also prohibited stock trading based on insider information, and it created structural barriers against the kinds of temptations that ruined the economy in the 1920s. The most notable of these was the 1933 Glass-Steagall Act, which prohibited the same financial company from being both a commercial bank and an investment bank.

The Glass-Steagall wall was devised to prevent a repeat of the 1920s' scams, in which banks made speculative investments, turned the debts into securities, and sold them off to unsuspecting investors with the blessing of the bank. With Glass-Steagall, commercial banks were tightly supervised and given access to federal deposit insurance, to keep savings secure and prevent runs on banks. Investment banks, meanwhile, were not government-guaranteed and were free to do more speculative transactions for consenting adult customers. But Roosevelt's newly created SEC subjected securities markets to much tighter structures against self-dealing and insider conflicts of interest.

The New Deal also acted on the home mortgage front. Millions of people were losing their homes and farms to foreclosures, both creating human tragedies and deepening the Depression. In response, the Roosevelt administration literally invented the modern system of home finance. Pre–New Deal mortgages had typically been short-term notes, where most of the principal was due and payable at the end of a brief term, often just three to five years. The New Deal devised the modern long-term, fixed-rate, self-amortizing mortgage. Congress created the Federal Housing Administration to insure these mortgages and win their acceptance among lenders. It also created the Federal National Mortgage Association to sell bonds and buy mortgages, and thus replenish the funds of local lenders. And the New Deal devised a system of federal home loan banks to supervise and advance capital to savings and loan institutions. Deposit insurance was extended to government-supervised mortgage lenders.

The system worked like a watch, combining sound lending standards with expanded opportunity. The rate of home ownership rose from 44 percent in the late 1930s to 64 percent by the mid-1960s. Savings and loan associations almost always ran in the black, there were no serious scandals, and the government deposit-insurance funds regularly returned a profit.

If you fast forward to 2000, much of this protective apparatus has been repealed. Regulators who didn't believe in regulation and a compliant Congress have allowed financial engineers to evade what remains. In the 1980s, regulators began allowing exceptions to Glass-Steagall. In 1999, Congress finally repealed it outright, permitting financial supermarkets like Citigroup to operate ANY KIND OF FINANCIAL BUSINESS THEY DESIRED, and profit from multiple conflicts of interest. The scandals that pumped up the dot-com bubble of the late 1990s, as well as the most flagrant cases like Enron, and the crash that followed, were the result of the SEC and the bank regulators CEASING TO POLICE CONFLICTS OF INTEREST. In the scandals of the 1990s, corporate CEOs, their accountants, and stock analysts working for their bankers, all conspired to puff up corporate balance sheets and pump up stock prices on which executive bonuses depended. This is a little harder today, thanks to the honest accounting requirements of the 2002 Sarbanes-Oxley Act (which the Bush administration hopes to water down). But the same kinds of conflicts and potentials for abuse exist when a mega-bank underwrites a leveraged buyout by an affiliated hedge fund, and then hypes the sale of securities when the fund is ready to sell the company back to the public.

Meanwhile, the once staid and socially directed system of providing home mortgages was seized by financial wise guys and turned into another casino. In the early 1980s, exploiting the Reaganite theme of government-bashing, the savings and loan industry persuaded Congress to substantially deregulate S&Ls -- which then speculated with government-insured money and lost many hundreds of billions, costing taxpayers upward of $350 billion in less than a decade.

In 1989 when Congress reregulated S&Ls, the financial engineers just did another end run. Mortgage companies that were exempt from federal regulation came to dominate the mortgage lending business. This loop of the story begins in 1968 with the privatization of Roosevelt's Federal National Mortgage Association. In the wake of that move, investment bankers invented a daisy chain known as "securitization" of mortgage credit. Through securitization, a mortgage broker could originate a loan, sell it to a mortgage banker, who would then sell it to an investment bank like Salomon Brothers, who in turn would package the mortgages into securities. These were then evaluated and coded (for a fee) by private bond-rating agencies according to their supposed risk, and sold off to hedge funds or pension funds. Each of these worthies took their little cut, raising the cost of credit to the borrower. Rather than diffusing risks, securitization concentrated them, because everyone was making the same bet on real-estate inflation.

In the sub-prime sector, you could get a loan without a full credit check, or even without income verification. The initial "teaser" rate would be low, but after a few years the monthly payment would rise to unaffordable levels. Both borrower and lender were betting on rising real-estate prices to bail them out, by allowing an early refinancing. But when a soft housing market dashed those hopes, the whole sub-prime sector crashed, and the damage spilled over into other financial sectors.

How aggressively the Fed should move has been the subject of extensive commentary. If the Fed moves too slowly or doesn't cut enough, it ends up playing catch-up behind an advancing panic. If it moves too quickly or too generously, it just invites the next round of speculation with cheap money, and in passing might erode confidence in the none-too-robust dollar. But all of this commentary misses the larger point: If monetary policy is the only tool the government has at its disposal, the Fed can't possibly solve the larger crisis (or prevent the next one) by using interest rates alone.

Indeed, until Congress dismantled financial regulation, the Fed was not called upon to mount these heroic rescues, which have become so common in recent years. Until the 1960s, the central bank could keep interest rates low, confident that they would underwrite the growth of the real economy rather than risky financial speculation, for the simple reason that entire categories of speculation did not exist.

But during the past quarter-century, as deregulation has turned the economy into a casino, the Federal Reserve has had to mount major rescues at least six times. In the early 1980s, it bailed out the big New York banks, some of which lost more than the total amount of their capital in failed speculative third world loans; the money-center banks would have been adjudged insolvent if the Fed hadn't bent its usual capital-adequacy rules. Next, the Fed poured huge quantities of liquidity into financial markets after the stock market crash of 1987, in which the market lost more than 20 percent of its value in a single day. The Fed intervened again on several occasions after speculators destabilized several third world currencies and economies from Mexico to Malaysia. The Fed cleaned up after the aforementioned Long Term Capital Management collapse. It flooded markets with money after the dot-com crash and the attacks of September 11, and most recently in the credit crunch of summer 2007.

Indeed, markets have become so reliant on the Fed's bailouts that they even have a term for it -- "the Greenspan put." A put is a financial term meaning a right to sell a financial security at a predetermined price. The knowledge that the Fed would cheapen money in a crisis reassured speculators that they could always unload their paper. That awareness also influenced financial insiders to behave more recklessly."

PART II: WHOSE TO BLAME?

"There's plenty of blame to go around, and it doesn't fasten only on one party or even mainly on what Washington did or didn't do. As The Economist magazine noted recently, the problem is one of "layered irresponsibility ... with hard-working homeowners and billionaire villains each playing a role." Here's a partial list of those alleged to be at fault:

• The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.
• Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.
• Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.
• Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.
• The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.
• Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.
• Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.
• Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.
• The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.
• An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.
• Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.

The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation."

-Robert Kuttner, PART I: "The Bubble Economy," The American Prospect, 9.24.07 , Part II: –Joe Miller & Brooks Jackson "Who Caused the Economic Crisis?" Factcheck.org, 10.1.08. Image: -John Wardell, "Roulette Wheel," Flickr 1.1.06).