Marla R. Stevens

Financial Crisis Meets Queer Politics: Seeking the Wisdom of the Elders or ... Wild Women Don't Get the Blues

Filed By Marla R. Stevens | October 14, 2008 12:00 PM | comments

Filed in: Politics, The Movement
Tags: culture wars, Federalist Society, financial crisis, Henry Paulson, neoliberal, Palin interviews, Robert Bork, Robert Rubin, Wall Street, William O. Douglas

That my inbox overflowing with erudite analyses of the sorry state of our nation's financial system has left me in a state not unusual in the waxing of the information age - simultaneously better informed about the details, a bit confused from all the conflicting certitude of the various experts, and absolutely bereft of the sort of ethically and spiritually well-groundedness that served my forebears well in their own troubled times.

So, while our own wise ones are still making their way through the trees in search of the forest, why not seek the wisdom of the elders?

I think I'll let the late Supreme Court Justice William O. Douglas, an early chairman of the SEC during the New Deal, answer the question about the inevitability of corporate temptation for me. It was his opinion that, ultimately, greed and cunning are inevitable - that they are based in human foibles that, like any other primally-driven ethics breaches and crimes, cannot be outlawed out of existence, much less out of temptation. As the story goes, he likened average innocent investors to "ground squirrels" that were the natural prey of Wall Street's "coyotes." But he didn't just give up in the face of that inevitability. No, he said that that's why tough regulation is essential.

Lately, absent regulatory strength, we've become overly dependent in the task of putting the brakes on corporate abuses on courts increasingly unsuited to the task because they've been overtaken by appointees schooled and placed by the consumers' most tireless adversary, Robert Bork and his Federalist Society's dedication to inflicting on us all the soullessness of the philosophical heirs of Frank Knight and his Chicago School of Economics. (It should come as no surprise that, typically, Bork's devotees are not often a queer's best friend, legally speaking.)

The courts just aren't up to the job anymore and won't be again for, at minimum, a couple of decades - and then only if we're politically very lucky.

Thus I'm not alone, especially now that the financial crisis has shone a light on the devastating effects of deregulation, in hoping that leaders with toughness enough to satisfy the likes of Douglas, a man described in his regulatory role as "an avid skeptic" with "due regard for the public's well-being," will resurface elsewhere in our government, bringing honesty and transparency into Wall Street's dealings as well as making the case for effective regulation in Washington's halls of power.

But will we get there? Two pieces in last week's news have given me pause.

The first was one that touched on the answer Gov. Sarah Palin recently gave (either in the debate with Sen. Biden or in an interview - I don't remember which) to a question asking if there was anything the current administration had done that she could find fault with. She responded that there was one thing - that they had let government grow too much. There was no follow-up and she didn't go into details (surprise, surprise) so I don't know exactly what aspect of government growth to which she referred. But, in the face of the many recent crises that could have been averted had regulatory oversight not been woefully underfunded to the point of having nowhere near the regulatory personnel, etc., needed, it was a remark that raised a huge red flag for me.

The second was an article from last Sunday from the Miami Herald's website section for also-rans that didn't make the publication cut for the print edition but which they found too valuable not to make available to the public, "Government by Goldman Sachs," which discussed "neoliberalism" (a term theretofore "neo" to me) and how even sweeping partisan change will not necessarily create a fertile climate for regulatory restoration.

The author particularly speaks to those of us who've been the pawns in the great partisan culture wars and, while intending to speak to the financial system crisis, explains with elegant simplicity why our slavish party loyalties have so often heartbreakingly not paid off for us: "Shadow boxing over values enabled the two parties to retain their separate brands despite the similarity in their basic philosophies" - that "public policies were those that won the confidence of the markets," meaning, in practice, they "let financial power set the parameters of public policy."

The tag line, "We would have realized the silliness of complaining about political polarization in Washington when, in matters of fundamental import, the choice was between the Democratic former CEO of Goldman Sachs and the Republican former CEO of Goldman Sachs: Robert Rubin or Hank Paulson," both explains the op-ed's title and my growing fears that no amount of partisan change will bring the policy changes we really need either in our nation's financial crisis nor for us as queers dependent on a het majority that has yet to see us as equally fully human.

Perhaps less of a true believer would throw up hands in disgust, claiming something like, "you can't fight city hall," but I've bitten the eternal vigilance bullet and, like Justice Douglas, think it's possible, despite the inevitability of the excesses, to curb them as long as we don't, in our desperate need for love, equality and security, succumb to virtual versions of them instead.

As those who've come before us in the quest for civil rights advised, we must "keep our eyes on the prize." And to do that, as the crones say, "Can we be like drops of water falling on a stone - splashing, breaking, dispersing in air - weaker than the stone by far but be aware that, as time goes by, the rock will wear away."

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I heard an interview with the Nobel Prize winning economist yesterday on "Fresh Air" with Terry Gross. He doesn't know the outcome of this crises.

Neither does this man known for his insights on global investing, Grantham, 70, co-founded GMO, which has a value framework combining quantitative and fundamental analysis. It oversees assets of about $120 billion.
Excerpts from an interview from Barrons.

Is this crisis playing out the way you thought it would?

No. I threw in the towel three months ago, and wrote a quarterly letter saying I thought I was the bear around this joint.

But this is much worse than I thought. All the fundamentals are turning out worse than I thought they would. All the competencies of the senior people at the Fed, Treasury and [firms like Merrill Lynch and Lehman Brothers] have turned out to be much less than I had expected; that's very disappointing.

And, therefore, how could one's confidence that the senior people would get us through the storm be very high?


Do you have any closing thoughts about how we got into this financial state?

I ask myself, "Why is it that several dozen people saw this crisis coming for years?" I described it as being like watching a train wreck in very slow motion. It seemed so inevitable and so merciless, and yet the bosses of Merrill Lynch and Citi and even [U.S. Treasury Secretary] Hank Paulson and [Fed Chairman Ben] Bernanke -- none of them seemed to see it coming.

I have a theory that people who find themselves running major-league companies are real organization-management types who focus on what they are doing this quarter or this annual budget. They are somewhat impatient, and focused on the present. Seeing these things requires more people with a historical perspective who are more thoughtful and more right-brained -- but we end up with an army of left-brained immediate doers.

So it's more or less guaranteed that every time we get an outlying, obscure event that has never happened before in history, they are always going to miss it. And the three or four-dozen-odd characters screaming about it are always going to be ignored.

If you look at the people who have been screaming about impending doom, and you added all of those several dozen people together, I don't suppose that collectively they could run a single firm without dragging it into bankruptcy in two weeks. They are just a different kind of person.

So we kept putting organization people -- people who can influence and persuade and cajole -- into top jobs that once-in-a-blue-moon take great creativity and historical insight. But they don't have those skills.

Where do you see all of this going?

I want to emphasize how little I understand all of the intricate workings of the global financial system. I hope that someone else gets it, because I don't. And I have no idea, really, how this will work out. I certainly wish it hadn't happened. It is just so intricate that all I can conclude, by instinct and by reading the history books, is that it will be longer, harder and more than we expect.

Robert Ganshorn Robert Ganshorn | October 15, 2008 12:47 AM

I think one of the major reasons that people who call for economic problems are so frequently ignored is that there always seem to be such people and they are so frequently wrong.

You make a very good point about the mentality of management types who operate large companies. American retail, as an example, is so oriented around quarterly results as to be laughable. Part of the problem as well is that old chestnut: "The Peter Principle" which dictates that all managers are promoted to their level of incompetence. Having known many I can attest the the truthfulness of this.

Another problem is the strong tendency in business to promote those with strong sales and optimistic personality skills. Optimists do not want to even think about downturns.

Thank you Marla, it has been too long.