There's an old saying that has become more apropos than ever in these turbulent times: the greatest danger to capitalism is capitalists. Not genuine free-market capitalists. The crony capitalists, as in the cockroaches who have infested the system with a corrupt level of self-interest that is exacerbated by an ethics-free worldview.
This is quintessential boob bait for economically-illiterate dim bulbs who live for scandals like these. For them it is one more piece of "incontrovertible evidence" that capitalism is a system designed to reward the greedy even as it deprives the needy. Weak thinkers are always prone to attack the "system," because it is easier to condemn something as whole than it is to examine nuance and detail. For these people, the all-purpose incoherence of "speaking truth to power" is a more than viable substitute for cogent thinking.
Yet the kernel of truth in the sea of that incoherence is undeniable. So is the reality that the same disease infecting the general population is as manifest among the people who ought to know better as it is among the people who are incapable of knowing better. To wit: when one's entire worldview is framed by legal or illegal — instead of moral or immoral — you get what you got.
Want to know why, after the economic meltdown of 2007, no one of any significance in banking, finance or government has been prosecuted, much less convicted of a crime? Because, despite the fact these people were behaving like world-class degenerates morally speaking, technically speaking, as in legal vs. illegal, most of them didn't commit any crimes. "Flaws in the way Libor is set allowed individual banks to manipulate the key global interest rate for profit for years, according to traders," writes Liam Vaughan and Katie Linsell for
Bloomberg.com.
Got that? "Flaws" in the law, as in here's what we can get away with, even when we know we're screwing with the lives of millions of investors in the process.
Time magazine's Peter Gumbel asks "Why weren't the first signs taken more seriously? Has there been a serious failure of regulation, or are there strong mitigating circumstances that could explain and justify the lack of resolute action?"
Let me answer these questions for you, Pete. Why no seriousness? Because these reprobates were only doing a "little bit" of rate manipulation that they have so far "justified" by saying if the world knew how much it really cost us to borrow money, it would have undermined confidence in the banking system as a whole. A failure of regulation? That happened a long time ago when Glass-Steagall, the law the kept a firewall between commercial banking and investment banking, was kicked to the curb. The main consequence of that was the emergence of the mega-banks that became the poster children of "too big to fail." The lack of resolute action? By whom, the bankers themselves, or the politicians they bought with campaign funds, sweetheart mortgages, or insider information allowing them to enrich themselves?
I've said it before, but it needs to be hammered home again and again: in what rational universe does the banking community come hat in hand to Congress for $700 billion in TARP rescue funds — courtesy of the American taxpayer — and come away without so much as a single resignation, much less any prosecutions, in return for the dough?
Fast forward to the present. We are now dealing with the third major banking scandal in the last 30 years. Yet the savings and loan crisis of the 80s, and the meltdown of 2007, are small beans compared to this one. This is, to use a familiar expression, the Mother of All Banking Scandals. So what does ones read in the media? From Bloomberg: "Regulators in the U.S. and Europe are probing more than a dozen banks worldwide over alleged rate-fixing, with British prosecutors opening a criminal investigation on July 6. Barclays paid a record fine to settle the claims, and others are poised to follow. Deutsche Bank AG (DBK), Germany's largest lender, may pay as much as $1.57 billion in penalties and legal costs and Edinburgh-based Royal Bank of Scotland Group Plc (RBS) $1.48 billion, according to estimates published last week by Morgan Stanley analysts Betsy Graseck and Huw van Steenis."
Penalties and legal costs? If no one gets serious jail time, bet the farm on two things: one, a fourth banking scandal will only be a matter of when, not if. Two, and far more daunting, the red carpet will be rolled out for every socialist/Marxist crackpot scheme ever devised.
In other words, stop wondering why, despite his colossal failures, our Marxist/socialist, thumb-his-nose-at-the-Constitution, Re-distributionist-in-Chief resonates with those who can't make the distinction between execrable human beings who have totally abused the capitalist system, and the system itself. He also resonates with the abusers of the system who know that Mr. Obama, despite all his hopey-changey b.s., is crony capitalism's best defender, in all its status quo, stifle-the-competition glory.
I have no magic solutions for the current scandal, other than the most obvious one of all: break up the big banks into smaller separate entities, no matter how loud the moaning and gnashing of teeth becomes. The idea that a relatively small number of gargantuan financial institutions can pose a threat to the entire global banking system is the only reason necessary to implement that idea. And the next time one of them screws up, by all means let them go under. If there's criminality involved, prosecute to the fullest extend of the law, which ought to include lifetime bans on working in the securities industry for those who commit transgressions that don't merit jail time, but are still serious enough to impact thousands, perhaps millions of people.
That's the small picture. The big picture? If we can't re-introduce some kind of moral clarity back into our culture, nothing else will matter in the long run. No system of government, finance or culture can withstand wholesale numbers of people who see right and wrong as situational, negotiable, or infinitely flexible. And before the usual suspects get started, a couple of things: first, I'm not advocating religious totalitarianism or any other zero-tolerance system. On the other hand I am saying that despite years of Americans being subjected to the worst adage ever devised, as in, "there is no black and white, everything is a shade of grey," the most important decisions people make about their lives are overwhelmingly black and white. You either get married or you don't. You have children or you don't. You get a job or you live off the state. You decide to live a life of honesty and integrity, or you don't, etc. etc.
Moral Relativity: Everything is tolerated under the ludicrous banner of non-judgmentalism
We've tried moral relativity and it isn't working. People have an infinite capacity for rationalization that can only flourish in a society where virtually everything is tolerated under the ludicrous banner of non-judgmentalism. Yet somehow the same people who embrace that odious philosophy think people in positions of power should be held to a higher standard. Really? Based on what, immunity? Moral relativism is an equal-opportunity affliction. The privileges of wealth? In a morally relative society, people with more money and a better education do indeed have a greater capacity — for self-rationalization, among other things.
For those who follow me regularly, I well aware that this piece sounds like a record with the needle stuck in the same place. Yet as long as most Americans keep pointing fingers at the almost infinite number of symptoms of the disease afflicting our society — instead of the disease itself — I will continue to annoy. It is my hope, quixotic as it may be, that concepts such as shame, honesty, courtesy, common decency and integrity are poised for a big comeback, and that moral relativity, in all its non-judgmental insanity, is eventually consigned to the ash heap of history where it truly belongs.
We've been willfully oblivious long enough.
