Commemorating the Financial Crisis: It Ain’t Over Yet

Lehman Brothers Headquarters on Bankruptcy Day. Photo:Robert Scoble (CC)

Lehman Brothers Headquarters on Bankruptcy Day. Photo: Robert Scoble (CC)

Media outlets love anniversaries. They become the makers and newspegs for one day stories that become pretexts for episodic coverage of key issues that substitute for ongoing critical reporting.

It’s a ‘how are we doing coverage ‘ that aims to give us a grade but not look too closely at the causes..

So, no surprise, the President will mark the occasion this week, with, what else—a speech, really remarks aimed at providing a positive spin for a series of economic disasters that we have yet to climb out of.

Reuters reports:

“A White House official said Obama will deliver remarks in the White House Rose Garden on Monday to mark the fifth anniversary of the financial crisis, which was accelerated on September 15, 2008 when the Lehman Brothers firm filed for bankruptcy protection.

The Democratic president will focus on the positive, discussing progress made and highlighting his prescriptions for boosting job creation amid budget battles expected with Republicans in Congress in the weeks ahead.”

Never mind that that venerable bank, Bear Stearns went down a year earlier in 2007, and that consumers were being targeted by financial predators pedaling subprime loans and other financial frauds for many years earlier.

To have a celebratable anniversary, you need a date, even if it is not precise, and, so, the Mensas in our media have decided that the collapse of the Lehman  Brothers investment bank in 2008–an event that is still mostly murky–with many saying that the government acted irresponsibly in letting this “too big to fail” financial institution fail has been identified as the tipping point.

The London-based Guardian, unlike most of the American press has revisited just what brought Lehman down, a bank incidentally that was one third owned by its employees. They interviewed Michele Nicoletta, then chief of “Latin American flow credit trading” at Lehman, and the person in charge of he firm’s trading of bonds and credit derivatives in emerging markets.

Heidi Moore reports,

“The public recriminations against the firm were difficult to bear, she says, knowing that Lehman was paying the price for the risk-taking culture most veterans considered normal at all Wall Street firms. “I think Lehman was a bit of a scapegoat. It got singled out. There was a lot of speculation as to why Lehman was the chosen one as opposed to anyone else. I don’t think Lehman was the house of greed; I think Lehman was made an example of, and it was unfortunate.”

Lehman’s fall, reports many of studies of that volatile period, was facilitated by then Treasury Secretary Hank Paulson, who when heading Goldman Sachs was a prime competitor. His animus towards  Lehman was reportedly bitter and very personal.

Lehman was headed by another brass knuckles Wall Street warrior, Dick Fuld,  who later referred to himself as “the most hated man in America.” Like his competitors he rode the fraud intensive subprime mortgage market to glory until it imploded over one of Americas most prestigious banks and made him the financial equivalent of Dante’s inferno.

He became Scapegoat #1 in part because of his arrogance  and lousy PR skills, but he was hardly alone in defrauding customers and short-changing our economy.

Another Guardian article puts the date of this “anniversary” in doubt, too,after talking with Lord Turner who took over as chairman of Britain’s SEC, the Financial Services Authority,  a week after the American authorities failed to find a buyer for Lehman.

“(He) believes the crisis pre-dated the collapse of Lehman, and even the run on Northern Rock in September 2007. “For me the lesson learnt is that the roots of this crisis go back very deep. Over a number of decades we allowed too much leverage to grow in the real economy, and we allowed the banking system to become over-leveraged. I think we were running a system with such small buffers of capital and liquidity that by 2006-07 a crisis was bound to occur.

…”We created an over-leveraged financial system and an over-leveraged real economy.”

So much for the idea of this “fifth anniversary” that the media is turning into a news event.

Another British paper, The Independent writes:

“Amid hours of television and acres of newsprint devoted to the inauspicious anniversary of the banking crisis’s defining moment, there really remains only one question: have we changed enough to stop it happening again?

To put it another way, has Washington created a safe banking system, forcing Wall Street to take fewer risks, or have the bankers won again, lobbying the politicians to retain the status quo? Unfortunately for taxpayers, the answer is: mainly the latter.”

We know that the people who were hurt the most for the most part were not on bankers on Wall Street, as Derek Thompson reports in the Atlantic in an article  called, “ Employmen is down and profits are up.”

“Six years after the recession started, five years after the crash, and four years after the recovery began, the share of the country with a job has declined by more than 7 percent.”

“And yet … corporate profits are crushing, again. The stock market is setting weekly nominal records, again. Home prices are rising, again. Finance is flush, again. The financial crisis supposedly “changed everything.” It really hasn’t.”

Meanwhile, the 1% on the top have done better. Alternet interviews Inequality experts Inequality experts Thomas Piketty and Emmanuel Saez who say we are now in the aftermath of a crisis that is being discussed, as if it is over, is facing  the biggest gap between rich and poor ever recorded by economists.

They say,

In the aftermath of the Great Recession, the top 1 percent has gobbled up nearly all of the income gains in the first three years of the “recovery” — a stupifying 95 percent. Economic inequality is even worse than it was before the crash. In fact, last year the rich took home the largest share of income since 1917 with the exception of only one year: 1928.”

President Obama has been so obsessed with the war victims in Syria that he seems to have forgotten the victims of the economic calamity in America. Tell me why he’s marking Wall Street’s penchant for disaster capitalism when he should be identifying with the people who are standing up to Wall Street.

As it happens, the day after President Oama, tsks about an arbitrary event five years ago, there will be a real anniversary  on September 17th  here in New York to commemorate the second anniversary  of Occupy Wall Street. Charles Blow of the New York Times reports that even as the movement flagged, its key slogan about the %99% versus the 1% has won broad acceptance,

He writes,

“There are signs that the narrative may have taken hold in some parts of the electorate beyond the protesters in the parks and beyond a presidential campaign between an up-from-the-bottom, charismatic incumbent and his awkward aristocratic competitor.”

He points to the victory of a populist politician as a candidate for Mayor—an Anti-Bloomberg in a city that watched Bloomberg use the police to attack the OWS.

“There are also national signs of unease. According to a Pew Research Center poll released Thursday, fewer than 8 percent of respondents thought that, after the recent recession, government policies have helped the poor, the middle class or small business a great deal. About five times as many believe they’ve helped the wealthy, large banks and other financial institutions, and large corporations.

And as the stock market soars for those with enough money to be in it, a Gallup poll released Thursday found that one in five Americans say they have struggled to afford food in the last year and that access to basic needs is near a record low.

We don’t need the New York Times to tell us this but at least they can’t bury the real economic blues any more.

The chief Investment officer of the Bank Of America fears the economy is still what he calls “crashy,” and warns “if the US economy does not significantly accelerate in coming quarters, it never will.”

His message to market boosters: “Curb Your Enthusiasm”

Read more:

What this and many similar articles are saying is a real economic recovery and more job creation is very unlikely, In fact, all the war talk over the last week and the new debt debate is just making things more uncertain.

What’s as bad is the fact that most of the reforms proposed to insure more stability were whittled away by legislators under heavy lobbying pressure from the banksters, Phil Angelides who ran the Financial Crisis Commission is warning we are not out of the woods.

He is not being listened to today any more than when he issued his damming report, (I wrote the foreword to the Cosimo Press edition of the illuminating study.)

So please don’t break out the bubbly to celebrate this phony anniversary. Instead do what you can to revive and reenergize Occupy Wall Street to fight the battle for economic justice that is far from won.

News Dissector Danny Schechter blogs at News and edits Danny wrote The Crime of Our Time on the financial frauds that deepened the crisis as a companion to his film: Plunder The Crime of Our Time (Disinformation Books.) His earlier film, In Debt We Trust, forecast an economic collapse in 2006. Comments to
  • BuzzCoastin

    in 2005 I saw the tsunami coming
    and I thought that would be the end
    I hadn’t counted on the Emperor pulling 17 trillion out of the hat
    since the entire whirled is using the $ as the gold standard
    no government is in a hurry to see it fall
    especially China which holding at least $2 trillion of it