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Finding Bottom
By David Glenn Cox
Finding the bottom in mud is a matter of degree. There is the bottom but it's not the bottom, it's only the top of the bottom. The organs of Capitalism are dealing with a King Kong of the Apocalypse; they feed it billions of dollars the way they would throw it Oreos, trying to keep it happy and satiated. Knowing full well that the wise thing to do would be to get out while the getting is good, but they can’t resist trying to make some money on the way out of the burning building.
The Bear Stearns buyout is a perfect example: a $30 billion transaction guaranteed by the full faith and confidence of US currency. The purchaser, JP Morgan, will be responsible for the first billion dollars in losses. After that, it's on the taxpayer. A fund of $650 million has been set up for potential litigation (potential?). But JP Morgan gets the deed to the Bear Stearns building in Manhattan, estimated to be worth more than a billion dollars.
Both John McCain and the President refuse to call this a bailout; this is a business deal, fair and true. Just a simple business deal where the purchaser’s potential losses are covered and the taxpayers' potential losses are not covered. A heads I win, tails you lose bargain. Estimates based on the last banking bailouts from the Resolution Trust Corporation of the 1980’s showed that only 40% of potential losses are ever made good. Or, $17.4 billion out the window, JP Morgan gets the building, the customer list, and all the assets, while the treasury gets the bill.
But we live in a two-tiered society; the bottom for them is not the same bottom for you. The bottom for you is unthinkable to them; “Honey, pass me the handgun.” The bonuses passed out at Bear Stearns just six weeks before floating upside-down in the fish bowl make the upper management executives hesitant to complain. Take the money, shut up, and put on your resume: team player. Meanwhile, the traders and office workers are out on their ass, joining the ranks of thousands of other financial workers laid off since the onset of the subprime crises.
Living now in that other America, with its separate and unequal bottom. We welcome you to our world; you thought that you were house servants and thus better than us field hands. The boss man, he likes you and values your service and loyalty, and "have your desk cleaned out by five." A golden parachute or a hard fall. But in a way this explains Barrack Obama’s comments about small-town America’s “bitterness.” I understood his comments and they weren’t incorrect but they were politically non-astute. It’s a matter of perception. For a rich man, with fancy clothes, a six-figure income, servants cutting the grass and cleaning the house, it becomes easy enough to say that they are just bitter about losing their jobs.
The Bear Stearns deal has a $650 million legal fund to deal with those, dare I say it, bitter folks. But they aren’t called bitter, they’re just fighting for their legitimate rights in the legal system. But you? You are just bitter. On the one hand, American workers should just take a hit in the head and like it, but when they complain, they are called bitter. On the other hand, if we don’t bail out Bear Stearns the economic calamity will cascade downhill, until eventually the man on the street suffers. They don’t understand our bitterness because they are only trying to help us.
Funny the way life works though. A year ago Hillary Clinton was the presumptive nominee of the Democratic Party. The nomination was hers to lose, and that’s just what she did. The Clinton campaign has fired managers faster than George Steinbrenner and there is a definite sense of panic, and dare I say it, bitterness? Why won’t she just do as we tell middle America? Take your lumps, pack your bags, its over for you here. You see, Hillary’s bottom isn’t the same as your bottom. Hers is still on a level with Obama’s bottom, or Bush's, or McCain’s. They read about inflation in the Wall Street Journal; you read about inflation at the Kroger check-out aisle.
The other day the G7 meetings pushed for intervention to prevent the dollar from falling any further against the Euro. When the news hit the markets, traders bought dollar futures hoping to ride the wave but the wave never materialized. Bad GE news and bad financial news in the US economy held the rise to less than a penny against the Euro. Meanwhile, oil prices spiked so the money ran to oil futures, leaving the dollar to fall to a new record low of $159.33 to the Euro, less than 24 hours after the ECB promised intervention and oil reached a new record high.
Our economic structure is well-involved and the wheeler-dealers are still looking through the smoke for one more killing before running for it. The derivatives market was recently called the next bubble by the Wall Street Journal, but Warren Buffet added that it's only a bubble if you don’t know when to get out. You see, that’s the difference between their bottom and your bottom: they have the choice to opt out. They won’t go hungry or lose their homes and when little Eggbert III calls from Yale and cries because he needs a new car, daddy will just write the check.
They are not so much out of touch as never having been in touch in the first place, and for proof I offer, again, the Middle-Class Challenge. The candidates must cut the grass at an average American home, change the oil in a car and shop for groceries and prepare a meal, with only $20 for a family of four. The candidates will be judged on speed, accuracy, and bitterness, for this will be a frustrating affair. They would most assuredly claim the challenge is not relevant to the highest office in the land. Because that’s your bottom, not theirs!
They explain to you why your jobs must be shipped overseas and why we must let your home be foreclosed upon: because it is unavoidable. Because, you see, your government isn’t designed to protect you! It is designed to protect the top from ever meeting the bottom. Katrina should have taught us that. People drowning in the streets, what a pity. The power is out at the refinery, My God! We’ll get right on that! The value of the dollar declines by almost 50% and it is hailed as good news, it will help our foreign debt! Oil prices quadruple and it is called market forces, and inevitable. But those market forces are speculation and they profit while you pay.
The economy is literally strangling itself on speculation and as long as the top can profit then the bottom can just go to hell, those bitter, little people. Footlocker is closing over 100 stores as are Linens and Things and Zales Jewelry. California home prices fell 24%, year to date, and houses can be purchased for as little as $50 in Detroit. The media glosses over employment numbers by saying the economy only lost 39,000 jobs last month. But this country adds 150,000 legal workers to the economy each month. When they say we lost 39,000 jobs that’s actually 189,000 jobs.
But that’s just middle-class, small town bitterness speaking. To be President of the United States the candidate must be at least forty-five years of age and a natural-born citizen of the United States. Wouldn’t you call that protectionism? It was protectionism for American workers, why not for the President? I’m being facetious, of course, but it makes clear the distinction between the top and the bottom. We will elect the best President money can buy; the top will be protected regardless of party affiliation. They will tinker in the margins, and in the end, change little at all. Bear Stearns will be protected; Exxon will be protected. But you, what do you think you will get?
Roosevelt’s New Deal was created not because FDR held working-America in such high regard, but because he feared that the bottom was about to eat the top, raw, and spit out the bones. Even the name New Deal was an expression to pacify the American working class. Greed knows no bounds, but neither does anger and hunger is the fuel of the hottest type of anger. The arrogance of using food to make fuel is case in point. Trading cheap food prices for another tank of gas in the Hummer proves what Churchill once said about America, “America can always be counted on to do the right thing, after they’ve tried everything else first.”
The pundits, the candidates and the media are looking for the bottom in this economic quicksand. But they don’t care to look or to ask in the right places. Ask around Detroit, they can tell you. Ask in California or Nevada, they can tell you. But the truth is, they don’t want to know. I got my gas bill in the mail which said: we will disconnect if not paid by the 21st, last notice. Strange, I wondered, why did they send me three copies with different amounts. Then I noticed that they were my neighbors' up and down the street. Is this what the experts would call a random sample? What would you call it? I guess that just depends on where you live. Bitter deadbeats? Or struggling Americans?
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