Fund Your Community Wizards

Speaking of the forces of decentralization, as opposed to those of the centralizing Superclass, here is C.A. Fitts on Community Wizards, those local can do people from all walks of life who keep a community vibrant. To the grant makers she adds,

In the interests of enhancing the return on investment of your philanthropic dollar, I would recommend the next time you want to invest money in creating positive anything in a place, you go ask the Community Wizards what you, your power and your money can do to help reverse the drain on them and their community. Start with the short run. Every day that the drain on the Community Wizards reverses, is a day that countless possibilities grow.

A view of local face to face grant-making much like that of Bill Somerville or Bill Schambra. 

Comments

[tom]

Not sure if I get why the local can do wizard of Sebastopol has to remain unidentified. In Florida, we have a local can-do vibrant type, Vern Buchanan. His Ford dealership flies the largest USian flag many will ever live to see. He's so vibrant the Chamber of Commerce building is named after him. Now after a louche election, he's in Congress, making sure the Bush agenda is forwarded on all fronts, and that Mexicans stay outta our great nation.

[Phil]

You got the sociological co-ordinates pretty well right. Bebe Rebozo. What can I say, these car dealers are among my firm's best clients. We had an actual client in a southern state who had several such car dealerships. He had started out working for a Rotor Rooter franchise as a Field Representative. Then he bought a franchise. I don't recall if he made it into Congress. So, yes, imagine people like that. Now imagine encouraging positive things they do. They hate pointy heads. But we can pass for stupid. After what we have accomplished with our elite educations that should not be hard.

[tom]

A while back people who reached the level of making public policy made their bones through long apprenticeships in civic offices (e.g., Rome, aedile, praetor, consul, etc.) and/or in military service and provincial governance. Today the Roto Rooter or Ford franchise is deemed sufficient. Direct experience of used car sales tactics at Vern's suggests that if nothing else your future congressman receives a proper dose of contempt for the sucker/customer/client/voter which stands him in good stead when he steps into pre-lobbyist public service role playing.

[Phil]

Sounds like you had some problems with your pre-owned vehicle? Time was when the rulers were expected to have training in the liberal arts, right? That was where the term came from, training for the Roman free men, the leaders? Now, all it does is get us the down payment on a pre-owned repossessed Hyundai. We can't blame Vern, though. I recommend the warranty and the rust coating.

[JJ Commoner]

I'm guessing I would not be surprised to learn that Tom Delay was seen to be a Community Wizard (not saying he was, but may have been seen to be).

[ikorush sikorsky]

Tell me where I'm going wrong here:

1. Catherine Austin Fitts was a Republican flack at HUD, which is a liberal LBJ-era project intended to deal with the financial challenges of low-income homeowners.

2. Observing incompetence and mismanagement in the way HUD handled defaulted mortgages of the poor homeowners indebted to HUD, she came up with a worse solution to a bad problem: creating markets for the sale of working-class debt.

3. She was accused of steering bids to for this debt to her former cronies on Wall Street.

4. Caught, she elaborated a vast CIA conspiracy against herself, based on the co-incidence that a federal judge involved in her case had long ago in his career had dealt with CIA matters.

5. Andrew Cuomo, because he happened to become HUD chief around the same time, knew every detail of the plot against her.

Does that sound right?

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[Phil]

Ike, thanks for connecting the dots in an alternative pattern. Where did you do the research? I do think she created a market in debt. The point was to create, I believe, a more transparent market, and so increase the take for the government. The idea was to prevent sweetheart deals. The thing has wended its way through the court system and as far as I know she has come out clean from a legal point of view, while losing her foothold on the ladder of success, and starting over in Hickory Valley, TN. Based on my personal experience of her, I have a hard time connecting her to financial fraud. Her sense of ethics is Quaker, as much as Evangelical.

What I am enjoying in the recent threads here is the outrage at my crossing the red/blue line. Truth is, I work in the red zone every day and have for 26 years. I can't help but have many red, main street friends. I don't see them as a big problem. I see as the problem those with Yale educations who create the propaganda that takes these small town beliefs and twists them into a fabric of obedience, fear, and vindictiveness.

Catherine's dichotomy of Centralizer versus Decentralizer seems to be very productive. On that scale I am a decentralizer by experience, though a centralizer by traiing (philosophy, theory etc.)

I believe in making "common sense" in conversation with people who embedded in their own lifeworld know how to get around in it better than I. I may not ascribe to their mythology, but I watch their hands and feet, to see what skills and adroitness they bring to the tasks at hand, and try to spread from one to another what works.

That is what Bill Schambra is calling for too. You might call it conservative, but it is also what Paolo Freire, a the south american revolutionary teacher calls for as well.

We have to speak with people before we really can speak for them or about them. We almost have to become native speakers of their mythology. With the main street types I have done that. In fact, in 2 seconds I am off the another day doing it again.

I consider this working from within another persons self understanding with an eye to enhancing that persons life from that person's own perspective to be the essence of liberalism. I could quote Kant, etc.

Yes, it has limits. Bigotry and xenophophia and jingoism are blights. Again, for that I mainly blame those who knowing better from above exacerbate and exploit these sins.

[ikorush sikorsky]

"Ike, thanks for connecting the dots in an alternative pattern. Where did you do the research? "

Interesting question. Almost all the info that is available for free on the internet regarding the Hamilton Securities Group/HUD case is from sources connected to Ms. Fitts, or from sources which she was the primary source of information in the article, and are written from a sympathetic point of view. There are many articles on conspiracy sites.

The New York Times didn't cover it, and the Journal and the Post only gave cursory coverage. US News and World report has two articles in its archives that shed some light, or some murk, depending on your point of view.

The Washington Times, the conservative newspaper owned by the good rev. Moon, gave it the most extensive coverage. You can access their articles online for free via your public library, if your library has a Newsbank account, or pay for them. The WT articles are well-sourced, including HUD people, DOJ people, unnamed Hamilton employees, the Ervin guy who initiated the lawsuit, and Hamilton Group lawyers, although Ms. Fitts was not available for comment in them. Their content is what you'd expect from standard professional journalism; if your expectations are high for that type of reporting, you'll appreciate them; if not, you won't. They do seem to be the best source for the unvarnished facts of the case.

Interestingly, another Moon-owned property, Insight magazine, has several sympathetic articles on the issue for which Ms. Fitts was interviewed.

The gist of the case seems to be this:

1. Hamilton was hired to create an open bidding market for defaulted HUD loans. HUD had been selling the loans at a big loss, only $0.35 on the dollar, to a limited group of buyers.

2. Hamilton's bidding software was a key element in handling the creation and exetution of this new open market.

3. The bidding software had an "error": it was evaluating bids and awarding sales via a completely different criteria than that which the bidders had been told.

4. This error was operative, undiscovered, during multiple sales totalling billions of dollars.

5. The error was discovered after the initial investigation of bid-rigging had already started.

6. The error was discovered shortly before another sale was to take place. There was not time to correct the software, so instead of postponing the sale, Hamilton came up with a mathematical formula to convert the bids on a pro-rated basis to appropriate value, and the bids were entered manully instead of electronically.

7. This resulting in the redirected awarding of a large number of mortgage notes to Goldman Sachs.

8. Hamilton informed its contact at HUD of this error, and that contact kept that info to himself.

9. A year later, Andrew Cuomo learned that the info about the flawed bids had not been passed up to him, went ballistic and fired Hamilton.

10. There was also controversy that another winning bidder, Blackrock, which had ties to Goldman, was also closely connected to Hamilton, and even ha employees working in Hamilton's office.

11. Numerous subpeonas were issued to Hamilton to to Ms. Fitts personally, which they did not comply with, prolonging the duration of the case. A Hamilton employee admitted to destroying documents. That eventually resulted in the infamous "SWAT" team invasion of their offices, shortly before Hamilton had scheduled a going-out-of-business sale of all its computer equipment.

12. Yes, Judge Sporkin did keep granting extensions to the HUD and DOJ investigators, also resulting in the extension of the investigation. He did this out of frustration because the investigators seemed to lack the expertise in analyzing the operations of financial markets and securities which would allow them to evaluate the evidence they were collecting. He even suggested they find outside help from the SEC or some other source of expertise so it could be determined whether the allegations were true or not.

13. After four years, with a cold case and limited evidence, it was dropped.

[Phil]

Thanks, Ike, I do appreciate the leg work. I may point C.A. Fitts here and see if she wishes to comment. I can only go on my personal intuitions, since I have not delved into the "Case." I read Catherine as a straight arrow to a fault. If you have personal dealings with her, you will find that she is going to bust your chops for cutting any corners.

Turn the table 180 degrees. Assume Hamilton introduced a bidding process that was more transparent than the status quo and returned a higher yield to the government. Who was the loser? Take that line of thought forward.

In general C.A. is the only person I know personally who is willing to cite chapter and verse from conversations inside the firewall. Dates, names, places.

I have a feeling, Ike, that she would welcome your skepticism. Anyway, I will point her here, and perhaps she will respond.

[ikorush sikorsky]

My impression of Fitts is also that she is a straight arrow to a fault. There is no character issue here, at least in regards to her professional career. I would suggest, however, that her renegade impulses are untutored and unimaginative. Not in the sense that she is unable to imagine vast conspiracies of connected dots where the connection is slight - she can certainly do that - but that in that despite her best impulses, she has accepted a certain framework -let's call that, um, capitalism, within which her experiences have distorted her judgment and interpretation of events, due to her ultimate marginalization within that framework, yet which remains her only tool with which she can imagine the construction of a greater good, the consequence of which is the offering of false solutions and conspiracy theories.

[Catherine Austin Fitts]

The simple way to understand what happened is to simply calculate out the money.

When Hamilton started working for HUD, HUD had $12 billion of HUD-held mortgages. Their recovery rate was 35%. That is for every defaulted mortgage, they got 35 cents on the dollar. Our survey of industry standard at the time was 75 cents on the dollar. That means that 45 cents was being lost or going to insiders, resulting in millions of dollars of losses to both the FHA funds at HUD as well as corresponding losses in communities.

Hamilton assisted HUD as financial advisor in designing resolutions that improved the recovery rate to 70-90% or 70-90 cents on the dollar. That means that the parties who were getting that inside 45 cents stopped getting it. A lot of people were not happy with that, including Wall Street.

Timely, competitive resolutions resulted in $2.2 billion of savings to the FHA funds. This saving calculation was generated by HUD and was reviewed and audited by the GAO, who also found that it was understated. The GAO also found the resolutions were good for communities.

When Cuomo cancelled the loan sales, he said the reason was that HUD could not do them without Hamilton. That is not accurate. Hamilton has specifically designed them so that HUD had hired additional highly competent financial advisors who had detailed design books documenting every aspect of how to do a HUD loan sales.

When the sales were cancelled, HUD returned to methods of resolution that had traditionally had the 35% recovery rate. At the same time, HUD assumed for the budget that they still had a 35% recovery rate for purposes of calculating the appropriations they needed to fund new insurance.

What does this mean in plain english? It means they could keep channeling the 45 cents in traditional pork, losing billions, yet issue significant amounts of new insurance by rigging the recovery rate assumptions in the budget.

This cancellation took effect in fiscal 1998, the year that HUD refused to produce audited financial statements -- a violation of the law -- and reported undocumentable transactions of $59 billion. The contractor who was responsible for the financial software and systems was not fired, nor were they asked to return payments.

Ultimately, the truth comes out. Over the last year, accelerating into last week, homeowners, investors and communities have lost trillions of dollars as a result of the complete break down of the financial controls and standards at HUD and in the US governments management of the mortgage credit operations of the US government, agencies and GSEs.

I was one of many fine government officials, career government staff, and government contractors who tried to stop or slow down that break down.

The breakdown speaks for itself.

[Catherine Austin Fitts]

Make that 40 cents.

[Huck Fope]

I am all for furtive cooperation among individuals for mutual benefit, and even condone creative interpretation of legal guidelines toward that end.

Conspiracy, however, is outlandish, unsupportable, and certainly almost never exists. When it does, it is quickly exposed and dismantled, its perpetrators subject to a quick and severe justice, the equilibrium of good will restored.

Remember: human beings are constitutionally incapable of keeping a secret and this is no accident. God, in his infinite wisdom, made us untrustworthy, for he knew this was the only way to protect us from our selves.

[Phil]

For the sake of making progress towards shared understanding, or mutually agreed upon disagreement, it seems that we agree that C.A. Fitts did a service within the framework of capitalism as we know it. We might also agree that for her capitalism includes honesty, fair dealing, transparent markets, and a framework of law. We can also agree, I believe, that in real life in the upper reaches of capitalism where it merges with government, that transparency has become secrecy, that fair dealing has often become sweetheart dealing, and that the rule of law applies mostly to those below a certain level. With a little thought, we might also agree that historically one of the mainstays of democracy has been the farmer with "twenty acres and a mule." Such a financially independent citizen forms his or her own views and is not beholden to the powers that be. Today, along with farmers and ranchers small locally owned businesses ("Main Street") play that role, though notably more red than blue. We might also agree that as money moves today, we are seeing the small business person pressured by global firms, what some call wealth bondage, and C.A. Fitts calls, "the tapeworm."

So, within the framework of an idealized capitalism, C.A. Fitts wants to see local firms, local control, local investment. In that respect she finds herself with many progressives in the local food movement, the alternative currency movement, and some who come from the old hippie commune movement. She wants to rupture the world of wealth bondage or the tapeworm and bring the rascals to justice, at least in the court of public opinion.

So far so good? Short of Bolvshevism, anarchy, socialism? Then you get to the conspiracy theories. My take on that is that C.A. has fallen down the ladder to the ground floor where her audience is talk radio, leaning right. You speak the language of your audience.

Also, you get to the question of "operating system." When very bright people go to school and follow a certain track, they can get hypersmart in specialized areas, like economics and finance, while not having a grounding in say sociology, political science, literature, philosophy. What you then get are interesting thoughts expressed in conceits and metaphors that are stretched too hard, for lack of a better tradition.

I often translate C.A.'s thoughts from her idiom into mine. Do I think we are ruled by conspiracy? I would say with Rothkopf that the Superclass consists of some 6,000 people who each know 500 of the others well enough to call them on a first name basis. When their interests align things move forward briskly. In many respects the interests of regulators, high government officials, CEOs, financiers, and media owners do align quite nicely. There is then a community above us, a global village of mandarins, who operate in another realm than do we. The world they want and the world we want are not aligned.

How to change that? Some here will say, political action, the withdrawal of the consent of the governed. The countermoves from those above are based on fear and coercion. Some will say philanthropy. A weak force but on that C.A. is learning; we talk about it a lot, and how it could do more. Then, there is C.A. Fitt's proposal, which is that we do not let the global elite get our money in the first place. We starve that beast. She shows quite specifically how that might be done, and she suggests this is how to hurt the beast right now, and also make money ourselves doing it.

Given the urgency of the situation, and the lack of credible strategies to reverse current trends, I pay deep attention to C.A. Starving the beast and making money locally would mean that the mavericks who comment here might have more options themselves.

We are not going to agree on Marx versus Adam Smith, but we can agree that the neocons and the Superclass are in line with neither socialism or democracy, they are oligarchs. We can at least make common cause, me thinks, against that "full spectrum dominance."

[ikorush sikorsky]

"Short of Bolvshevism, anarchy, socialism? Then you get to the conspiracy theories."

Here's the problem with that: all the ideologies that you mention are, um, ideologies: they attempt to offer an interpretation of events based on a social scientific analysis: that's the opposite of a conspiracy theory. Conspiracy is the imagining of connections in the absence of any attempt at a sound constructive analysis.

The present situation is that ideological interpretations are discredited: we are post-ideological: Capitalism is not an ideology, it's the natural state of things, or the negation of ideology. No sound interpretive framework remains. Things just happen, or in the absence of a sound analysis, the only workable explanation available to people without an ideological background is conspiracy.

That's not to say that there aren't socialists or anarchists who subscribe to conspiracy theories: to the extent to which they do, they are unsuccessfully socialists and anarchists.

That's in contrast to capitalism, where the only possible outlook, apart from believing in its natural supremacy, is conspiratorial.

Which is just one reason why capital-oriented schemes for the greater good, conceived of by people of integrity and good-will - which can provisionally obtain good results - contain the seeds of their own undoing. It's not good enough to be good.

[Catherine Austin Fitts]

Oh my. The US financial system launders $500 billion-$1 trillion a year (Per the Department of Justice in 1998) and all without conspiracies.

I'm impressed!

[Phil]

If I may introject: One of Catherine's better lines is, "Don't ask if there are conspiracies, start one."

Ike, "Which is just one reason why capital-oriented schemes for the greater good, conceived of by people of integrity and good-will - which can provisionally obtain good results - contain the seeds of their own undoing. It's not good enough to be good." What you concede is a lot, enough for anyone really of good will.

Leaving aside conspiracies, concentrating on Catherine's constructive proposals, what do you think about the strategy of ordinary consumers cutting off the flow of funds to money center banks? Buying and investing locally? Supporting local farmers and business people? Is that an incremental change in a good direction?

I am taking your point about there being "no outside of capitalism" in Catherine's work. I am not sure she would deny that. I would be pleased to see her develop an account of public goods, as well as philanthropy.

I think it is important - a key event - when those deep inside key capitalistic systems, including investment banks or cabinet level posts in government cry foul. Adam Smith style capitalism has morphed into something much more virulent of late. Catherine is, as I read her, calling for capitalism to be true to its own best premises, including transparency and the rule of law. She is saying that what we have is not capitalism as it was supposed to work, but something that verges on criminal.

Have you read her piece on "Narco Dollars for Beginners"? http://tinyurl.com/yrv7rq

How does such an enormous amount of money reenter the daylight economy? That is quite a question. Then there is the question as to why so much of the government's budget is "black," meaning off limits to accountants.

These are questions she raises, and they don't get answered.

If you want to destablize the equanimity of actually existing "capitalism," her questions seem as good a way as any.

[ikorush sikorsky]

The fella at Chase, the clerk who helped me open my checking account, was originally from Bensonhurst, and he was Italian too! He was wearing a slick suit. I think he was a Mason, had some kind of weird ring, probably just trying to fit in. We got into a conversation about random stuff, world events, and he mentioned his boss reads Foreign Affairs. I guess he was trying to impress. I nearly jumped out of my skin. The CFR was my bete noire pre-Y2K. The family court judge who set me and my brothers and sister into seperate foster homes was a downwardly mobile Harvard grad with old ties to the Trilateral. He was known for making 3am calls to his former buds and berating them with tales of judiciously observed woe, according to the articles in the papers about his restraining order. His cousin was a partner at White & Case, the mega-firm that padded Guilliani's wallet prior to his mayoral run. White & Case's New York office is at 1166 Avenue of the Americas. 1166 was the year the Assize of Clerendon initiated the move towards trial by jury in common-law countries, which the Magna Carta unsuccessfully attempted to undo, in part, until the US Constitution arrived on the scene.

[ikorush sikorsky]

Funny you should mention the narco-dollars stuff. Gary Webb, who wrote Dark Alliance, had the misfortune, during the controversy over his articles, of having a guy named Michael Ruppert attach himself to Webb's media coverage. Ruppert's now a well-known 9/11 conspiracy theorist, but back then he was CIA/crack conspiratist whose omnipresence did a lot to obscure and discredit the real gist of Webb's reporting. I believe Ms. Fitts has done speaking engagements with him.

[Phil]

Right, so she has her crazy side. Do you have a problem with that? Most of my closest friends have a crazy streak. Present company excluded, of course. I myself have been seeing men parked outside my home in a black maria. Now they are here, now they are gone. I told my wife, and she said I was getting paranoid and should see a shrink. So, I go the shrink, and who comes out to greet me? The doctor wearing a dark suit. I swear he was the guy in the black maria. He says, "How long have you known we were tailing you?" I go home, tell my wife, and she says, "I hope he gave you some pills." Me, I am on the net checking for what cyanide looks like. I mean, yes, he gave me pills. I would have to be crazy to take them.

[ikorush sikorsky]

This is the point in the interaction in which I agree yes we're all crazy.

[Phil]

And the next point in the interaction is to ask what individual contributors add to the mix. I think you really did do that in your comments on Catherine. Within her frame of reference, which is that of the Scottish Englightenment and the Gospels, or Christianized Capitalism, she calls a lot of bluffs and draws attention to many shortfalls. She also within that framework to provide constructive practical suggestions for "Everyman and Everywoman on Main St." When I discuss her work in terms of moral and political theory, she always add, "Phil, I am trying to get rich, and help others do the same."

When we move from theory to practice, I read her alongside, say, Wendell Berry. As one who works in financial services, it is kind of refreshing to have a friend in bloggerville who will say, "Lets go make some serious money, honestly, and for the greater good," and say it knowing how much of the social venture stuff is bs. She does want to use capitalism to make our Main Street better.

Come the revolution, who knows. Maybe the Department of Main Street Management in the Central Planning Department will exile her to the Gulag.

[ikorush sikorsky]

I suppose if you've reconciled yourself to the practice of what amounts to a total incompatibility of means with ends, making serious money in pursuit of the greater good makes sense.

You can rationalize that by drawing a distinction between flows of money which need be "laundered" vs. those that are naturally clean, in the same manner a Calvinist experiences his dirtier impulses as emanating from outside himself.

[ikorush sikorsky]

Er, inside himself, I meant.

[Phil]

Working with ordinary people to get them to make changes that are good for society, do we pull the lever marked, "self interest"? If not, then the room will be mostly empty, when we speak, and those present will be heirs, misfits, dreamers, a poet or two. If the Plan B does not include making a living and a life, then Plan B has to be a kind of double life, with a living made in one way, and leisure spent in another; either that or you live on air. The rich make a virtue of wealth and the educated poor make a virtue of their poverty, as if they had taken an oath in a holy order. If we are going to get new results, I think we have to be willing to think outside our current dichotomies. I find that it helps me to localize "the wealthy" to specifics. A guy who owns a lumberyard or two can be worth $10-50 million. That is wealthy. He can still be found at the yard in coveralls; he may have a high school education. He votes republican, supports the troops, serves as selectman. He is a deacon in the church. He tithes. He pays decent wages. He has taught little league. He may decide to cash out, give his two kids a million each, and give the balance to the church, Rotary, and the local community foundation. Is he the enemy? I just can't see it that way. Would you be curious to have coffee with a guy like that? Listen to the world according to him? I would. He would have to forgive me for a lot, but he might.

[ikorush sikorsky]

I'd probably get along with him, having been a business owner and employer who had to make decisions about pay rates, and hiring and firing, while worrying over balance sheets, taxes, sales projections, my partners agendas and so forth; although there might be a disconnect because our business was incorporated in an unusual form in which everyone earned an equal wage and gained ownership shares based on hours worked, and there could be no outside investors who "owned" our company or our work, and which was paying a living wage when I moved on.

But personalizing it like that is just a distraction.

Money can't be laundered; it can't be dirty or clean; it's abstracted social capital, and has no qualities. The conspiratorial stuff about laundered money is just an inevitable expression of the system that posits a purity it always seeks and can never attain, and continuously produces its opposite.

[phil]

"Money can't be laundered; it can't be dirty or clean; it's abstracted social capital, and has no qualities. The conspiratorial stuff about laundered money is just an inevitable expression of the system that posits a purity it always seeks and can never attain, and continuously produces its opposite." Are you saying that money earned by selling drugs in the inner city, then laundered through a fast food franchise, then into a local bank branch, then into a shell company, and then into a political campaign, or into philanthropy, is no dirtier than money earned by a guy running a lumberyard and playing by the rules? That both are "abstracted social capital" and that no distinction should be made between illegal and legal, corrupt or within the rules? I don't think you mean that. Money extorted at gun point, or by intimidation, by usery or racketeering, or pillaged and plundered, or through human trafficking is not as clean, I think you would agree, as money earned by a carpenter who builds a house and charges fair value for it.

Your point about the dream of purity producing "dirt" is well taken, though. It may well be that certain "demons" and "terrorists" and conspirators are the shadow cast by the attempt to be totally pure. They are the "other" of the equally phantasmal "pure good," a good as gold. Yet, still, there are terrorists. And there are criminals, some in high places. And there are those in high places no doubt who know that the funds in account X under their management derive from criminal activity. And they know that the owner of that account is funding a political campaign or a judge's campaign, and that dirty money may be funding a dirty law. To say that conspiracies are far-fetched is fine, but whatever Riggs Bank was, say, or BCCI, they were not according to Hoyle. Enron had, it is alleged, offshore subsidiaries in tax havens in which enforcement of anti-money laundering rules was lax. Does it matter if a Fortune 100 company was a) a laundromat for narco-dollars and b) a big funder of politicians at the highest level? Does it matter who sat on their finance committee, and what other boards that person sat on? What government jobs he or she may have held? Let's say the head of the stock exchange meets with a leader of a para-military force in South America, known for running drugs, is that within the acceptable range of business promotion? Let's say a politician keeps runways open for a drug dealer, and receives funding from shell companies? Let's say the CIA runs drugs and uses the proceeds to buy arms to give to para-military forces for which no congressional authorization has been given? Are we to accept all this as business as usual? Calling it a conspiracy may be too strong; what if we called it a consonance of interest, and pattern of cooperation, among those who lead us into Wealth Bondage?

So, do we say, "c'est la vie"? The world needs to recirulate drug money and stolen money and the plundered money from the Russian Oligarchs, etc. and the rules against that apply to the little guys, while the big players should and must find ways around it, lest the whole rotten system collapse?

I made that case satirically once, but it left a bad taste. http://tinyurl.com/5fgs6c

The alternative would be to defund the forces of centralization, and keep the money in the local community with players who respect the rule of law and who have a stake in the health of their neighborhoods. That is what Catherine proposes. I see that as a serious and thoughtful idea. For the conspiracy stuff, I prefer Rothkopf on The Superclass. No need for a conspiracy, he makes clear, when the world gets so small at the top and everyone knows one another, and everyone looks for the win/win situations. After a while an ethos evolves in which good things happen to good people and silence (by tacit agreement) reigns over the parts of the game that are not mentionable in polite society.

[ikorush sikorsky]

"Let's say the head of the stock exchange meets with a leader of a para-military force in South America, known for running drugs, is that within the acceptable range of business promotion?"

This is sort of a tangent, but Grasso met with FARC, who are not paramilitaries, they are (were) a Marxist-inspired guerilla army. The word "paramilitary" is usually reserved to denote right-wing groups. FARC weren't drug runners, their official policy was the eradication of coca, a goal that made them unpopular with some of the small farmers in the regions they controlled. In perhaps a not very well thought through attempt to avoid alienating those people, instead of destroying the crops, they imposed a tax as an economic disincentive to production, which of course also made them money. In Columbia, apart from the cartels, the paramilitaries were the forces largely involved in drug-running, and of course the paramilitaries have had strong ties to the US-supported government (look up "paragate" on wikipedia). In 1999, when Grasso and the former chief of AOL went to Columbia to meet FARC, it was part of a Columbian-government (US) sponsored initiative to evangelize and mainstream the Marxists, who were then then having some success, politcally/militarily. I think the point of the narco-dollars article was that the allegedly drug-trade dependent US financial system saw the possible success of the FARC movement as a threat to the flow of dollars, and were trying to bring them into the fold, based on some poor intelligence that led them to believe they were courting the new millionaire drug runners next door.

"Are you saying that money earned by selling drugs in the inner city, then laundered through a fast food franchise, then into a local bank branch, then into a shell company, and then into a political campaign, or into philanthropy, is no dirtier than money earned by a guy running a lumberyard and playing by the rules?"

Yes. In the case of the lumber-yard owner, or of the CEO of Home Depot, he earns his profits by siphoning off the surplus value of his employees' labor, just like the drug lord; the difference is, employees of drug lords work at a *really* steep discount and are not offered stock options, yet. That's rule #1. Totally legal. Emboldened by his success following that pre-eminent rule, he feels entitled to violate other rules that are less universally acknowledged: he breaks unions in manners both legal and illegal, he violates wage and hour laws, he pays workers under the table and underpays, correspondingly, his obligations to the government, he wants everyone to appreciate his bad puns and bar jokes, he has a reserved parking space in the parking lot (social capital isn't always converted to money, sometimes it manifests as perks and privileges), and his daughters are attractive and unattainable. If it wasn't for the well-known grief he receives from his pill-popping wife, who was last seen walking down Main Street on a sunny day wielding an umbrella with no hood, spokes askew, his employees would be inconsolable.

[Phil]

Thanks for the lesson on FARC. That is helpful. As for the lumberyard's daughter being unattainable, you don't know her very well. The reason she got cut out of the will was.... Well, I can't say. What happens in Wealth Bondage stays in Wealth Bondage.

Are you are a contributor to FARC, or just an admirer? Seriously, where do you see an actually existing paradigm politically that compares favorably to Main Street? Cuba? Venezuela?

How about this? The Farm. They and Catherine are, as she likes to say, "in cahoots." http://www.thefarm.org/ If you visit there, read the section on the Hippie Museum. The Farm really was a hippie commune, with people arriving on a buses from San Francisco. They were apparently surveilled by Hoover.

I really am fascinated when you can see a business/movement shaping itself with equal parts hippie heritage and equal parts enlightened Main Street conservatism. That should not be possible, it makes no sense. But there it is.

Another thing Catherine taught me or showed me is how the mega churches are evolving into providers of all kinds of social services to take up the slack in public services. She took me to see T.D. Jakes's Cathedral, and we were shown the wall where her name is on a brick, for her gift. All over the building were theaters, music halls, dance studios, school rooms, Bible classes. It was more like a High School than a church. They were offering classes in managing money, in resisting drugs, etc. Aren't such churches building social capital? If you strike a balance, it would have two columns. For a black kid in Dallas the plusses might be more numerous than the minuses, and better he be in the minstry's building after school than a lot of other places. Tithing works almost like taxes for the organizations.

When you look at thriving organizational structures, you got your FARC, your gangs, your global corporations, your Freddie Mac, your Davos, and you got your T.D. Jakes's ministries, car dealerships, and that lumberyard. I did not go to Ivy schools to be this square, but I am ashamed of what the cosmopolitan MBAs and liberally trained pundits and spin doctors have made of this world. Working for the lumberyard guy is not that great, I am sure, but what if you started your own business and it panned out? Wouldn't that be more ok than not?

[Phil]

Now, one more point. Say, you agree, Ike, that starting a business, or as you did something like a co-op, would be a way to make a living and a life. One factor you would face is "cost of capital." Catherine has shown me how for Wealth Bondage capital costs 1% borrowed from Japan. Wealth Bondage is too big to fail, so when the loans go south, the government steps in. Your cost of capital to compete with WB, might be a 10% business loan from the Bank of Wealth Bondage. Now, who is getting drained? They borrow at 1%, lend at 10%. You then take the 10% and compete against Wealth Bondage Susbidiary X. That business has 1% cost of capital. How can you win? You barely can, and most often won't.

What is the solution? Do not borrow from the Bank of Wealth Bondage. Do not make deposits there. Do not buy stock in The Bank of Wealth Bondage. We lend to each other, for example. Or we set up a local bank, or thrift. Now you can get a lower cost of capital, get higher interest on your deposits, and maybe have stock in something that will go up, as you and others go local.

This is high finance applied to Main Street. The more I learn about it, the better it looks to me. Catherine points out that these Main Streets have been bled white, and housing and land and business are being foreclosed. She says the big money is now offshore, pulled out as the economic hit goes down. Then, when prices are sufficiently depressed, that money will come back in and buy out Main Street at depressed prices. She suggests we invest there first. Buy farm land, stuff like that.

In finance circles this is totally counterintuitive. The Brokerage House of Wealth Bondage wants to manage the money and trains reps to bring it in. They don't want to see it go out the door to invest in farm land, or to make philanthropic gifts. Investing locally is subversive, frankly. The more who do it, the more the foundations of Wealth Bondage as we know it are weakened. Yes, it is still capitalism, and the FARC, or Subcommidnate Marcos might not see this as a big improvement, but it does put the brakes on the out of control trends in globalism.