Legitimacy Dwindles

      Zounds! Public sentiment toward the accelerating economic fiasco
has shifted, seemingly overnight, from a mood of nauseated amazement to
one of panicked grievance as the United States moves closer to an
apparent comprehensive collapse — and so ill-timed, wouldn’t you know
it, to coincide with the annual rigors of Santa Claus. The tipping
point seems to be the Bernie Madoff $50 billion Ponzi scandal, which
represents the grossest failure of authority and hence legitimacy in
finance to date in as much as Mr. Madoff was a former chairman of the
NASDAQ, for godsake. It’s like discovering that Ben Bernanke is running
a meth lab inside the Federal Reserve. And out in the heartland, of
course, there is the spectacle of Illinois governor Rod Blagojevich
trying to desperately dodge a racketeering rap behind an implausible
hairdo.
     What seems to spook people now is the possibility that everybody
in charge of everything is a fraud or a crook. Legitimacy has left the
system. Not even the the legions of Obama are immune as his reliance on
Wall Street capos Robert Rubin, Tim Geithner, and Larry Summers seem
tainted by the same reckless thinking that brought on the fiasco. His
pick last week for chief of the SEC, Mary Shapiro, is already being
dissed as a shill for the Big Bank status quo. In a few days we’ll
discover what kind of bonuses are being ladled out by the remaining
Wall Street banks with TARP money and a new chorus of howls will ring
out.
     This is very dangerous territory. In dollar terms, the numbers
being applied to the various problems are so colossal — trillions! —
that the death of our currency seems assured. And in defiance of
congress’s express intentions, none of the TARP “money” has been
applied to its targeted purpose of buying up “toxic” (i.e. fraudulent)
securities hidden in the vaults of banks, pension funds, and municipal
portfolios.
     George W, Bush’s personal bailout of General Motors and Chrysler
is designed solely to postpone their bankruptcy and mass job layoffs
until after the holidays. Otherwise, the $17.4 billion will probably be
used by the companies to underwrite the extensive legal work required
for the moment they must declare bankruptcy — when Mr. Obama is in the
White House. Meanwhile, the President-elect has ramped up his
job-creation target overnight from two to three million, and some
observers are catching a whiff of Soviet-style economic engineering
(“…we pretend to work and they pretend to pay us….”).
     The years since Jimmy Carter have produced an astoundingly flaccid
public, sunk in various addictions and distractions, but this is about
to change. The darkling mood of political protest and violent activism
that saturated my own young adult years is scudding up again on the
horizon. Mr. Obama’s pick for attorney general, the mild-looking Eric
Holder, may be the key figure in the early months of the new
government. If he doesn’t commence some aggressive investigations and
prosecutions — beginning with Henry Paulson for insider trading when
he was in charge of Goldman Sachs and shorting his own company’s
mortgage-backed securities — then the whole Obama enterprise could
fall under suspicion of illegitimacy. The bums who ran the US banking
sector into a ditch have to account for their turpitudes. They can’t be
allowed to hide under a TARP.
      Unfortunately, the legal system, and probably the legislative
system, will be so buried in procedural bullshit from the unwind of
countless enterprises and institutions, and the sorting out of the
remnants, that it remains to be seen whether this generation of
people-in-charge can even embark on a fresh start of anything connected
to real everyday life in America. All this is starting to alarm the
tattered residue of the middle classes, and from here it’s a very short
path to them being really pissed off.
     When legitimacy erodes, anything goes. Nothing is respected
including rules and personalities. The center doesn’t hold and the new
vacuum there is a tumultuous place. The same crisis of authority and
legitimacy is spreading from nation to nation now. Soon, China will
contend with a discontented army of the unemployed. Greece has been in
an uproar for two weeks. Belgium’s government just collapsed. Trade
barriers are going up. Exports are falling away. The world’s energy
markets are not immune to these disorders. I would expect problems with
the currently seamless supply lines that bring America two-thirds of
the oil we use. Even a mild disruption of oil supplies could attach an
anvil to the ankle of an economy already falling off a cliff.
     Right now, the overwhelming sentiment is to get this country back
to where we were, say, ten years ago, when everything was humming nicely: Clinton
nostalgia. We’re definitely not gong back there, though. It’s an idle
wish. And any set of policies designed to lead in that direction will
prove very disappointing. Our destination is a land of much
smaller-scaled local economies. We could retain our federal ties if the
federal government can scale back appropriately from the bloated,
feckless enterprise it has become. Otherwise, it might only get in the
way and make matters worse, and the public in one region or another of
North America might reach a decision that they are better off without
it. That would be what’s called a revolution.

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My 2008 novel of the post-oil future, World Made By Hand, is available in paperback  at all booksellers.