Enron, and Nationalizing Sherrod Brown in 2008

Economic populism is doing well right now for a reason.  Whether it's the generation of overeducated temps being put to work doing stupid and pointless tasks, or families bankrupted by mortgages adn a falling real estate market, or massive poverty, or Mexicans thrown into poverty by NAFTA and coming over the border, what's going on is that political and business elites are cooperating in stealing from everyone else.  It's really that simple.

For instance, corporate fraud is now only sort of illegal because of the Federalist Society's 30 year-long legal racket.  A few weeks ago, three strict constructionist judges legalized corporate fraud.  They found that the banks that advised Enron overtly aided in defrauding investors out of $40 billion and made money from the transactions, but that they owed nothing to Enron shareholders and so were not part of the suit.

A federal appeals panel ruled yesterday that a class-action lawsuit against investment banks over their role as advisers to Enron cannot go ahead, dealing a blow to shareholders who lost billions of dollars after the company collapsed in 2001.

While shareholders can still pursue individual claims against the banks, the decision stymies any mass effort by shareholders to recoup $40 billion in losses from the Wall Street banks that had earned millions of dollars in banking fees from Enron.

"This is a devastating ruling for shareholders," said Thomas R. Ajamie, a Houston securities lawyer. "It's hard to believe that shareholders won't recovery money from an admitted fraud, but this U.S. Court of Appeals circuit has been more hostile to investors than other circuits have been."

In its opinion, a three-judge panel of the United States Court of Appeals for the Fifth Circuit in New Orleans, said: "Presuming plaintiffs' allegations to be true, Enron committed fraud by misstating its accounts, but the banks only aided and abetted that fraud by engaging in transactions to make it more plausible; they owed no duty to Enron's shareholders."

The suit was so clear-cut, and this ruling was so surprising, that several banks had already settled because they assumed they'd lose.  The decision was just outrageous.

"Enron had a duty to its shareholders, but the banks did not," the opinion stated. "The transactions in which the banks engaged at most aided and abetted Enron's deceit by making its misrepresentations more plausible."

Over the next ten years, economic populism is going to be a strong part of the equation in our politics.  The powers that be are gathering together to stop the renewal of Fast Track trade authority for Bush this summer, and you're going to watch a very anti-free trade Democratic Party.  Party leaders were watching Ohio in 2006.

First the argument against plutocracy must be made, and some piece of neoliberal trade legislation must die.  That's Free Trade.  And then the rollbacks will begin.  It needn't have happened this way for business elites, but they just had to have more and more and more, until there was nothing left for anyone else.



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Re: Enron, and Nationalizing Sherrod Brown in 2008 (3.00 / 5)

I think the logical extension of nationalizing Sherrod Brown is the presidential candidacy of John Edwards.


by adamterando on Sat Mar 31, 2007 at 11:37:05 AM EST

Re: Enron, and Nationalizing Sherrod Brown in 2008 (2.00 / 0)

If you ask me, I think Obama and Edwards are almost the same candidate.  Their positions on the issues are almost exactly the same.  

The biggest discrepencies lie within their policies, (Not all of their policies are out yet, since it's still VERY early.) Obama is black (technically half black but most people won't see it that way), Edwards is white. Obama focuses on Iraq more and Edwards focuses more on poverty.  Edwards had a 2nd hand run at it and didn't do a ton in 2004, Obama is great at delivering speeches.  American people love a president who can speak, (Examples being Theodore Roosevelt, Franklin Roosevelt, Ronald Reagan to name a few.)  

It makes me scared for Edwards in 2008. Republicans already have some of their arsenal set for him I'm sure.  


by JeremiahTheMessiah on Sat Mar 31, 2007 at 11:55:38 AM EST
[ Parent ]

Re: Enron, and Nationalizing Sherrod Brown in 2008 (3.00 / 4)

Glad to know that you're concerned.

Unfortunately, I think that you are missing a very key distinction between Obama and Edwards.

Obama is Clinton '92, Edwards harkens back to FDR and Truman.

The key distinction is this:

Does the market exist to serve people, or do people exist to serve the market?  

What comes first people or profits?

Obama is excessively friendly to Robert Rubin and his merry band of neoliberals promoting policies that steal from the poor and give to the rich.

A recent report in the Hill that Obama's campaign is running back channel funding from lobbyist's wives at the same time as he's publicly refusing funds from K Street is at least unethical, and potentially illegal if the wives are compensated by their lobbyist husbands for their contribution.

In a fundraising e-mail distributed yesterday, Obama emphasized his stance against taking money from lobbyists and PACs.
Two lobbyists who are supporting another candidate and spoke to The Hill on condition of anonymity said that Obama's campaign contacted them asking to be put in touch with their networks of business clients and acquaintances.

One of the lobbyists, who supports Clinton, said that Shomik Dutta, a fundraiser for Obama's campaign, called to ask if the lobbyist's wife would be interested in making a political contribution.

"I was quite taken aback," he said. "He was very direct in saying that you're a lobbyist and we don't want contributions from lobbyists. But your wife can contribute and we like your network."

Obama's getting the payback for his support of Rubin's efforts to maintain the neo-liberal understanding in Washington.  Instead of making the market work for people, the story is that workers are lazy are falling into poverty because they are morally suspect.  If only they had the right education, they would have good jobs...  Or so is the story coming from Obama and the Rubinites.

John Edwards is a flawed human being like the rest of us, but he understands that markets exist to serve people, not the other way around.


by ManfromMiddletown on Sat Mar 31, 2007 at 01:13:02 PM EST
[ Parent ]

Well said, ManFromMiddletown (3.00 / 3)

Edwards is the right man for this moment, someone who firmly rejects Clintonomics in favor of economic populism. He wants no part of the balanced-budget fetishizing, "Free" Trade worshipping, austerity program that hurts workers and inhibits Dems from delivering important (and politically potent) social programs.

I've been watching very carefully to see what kind of Democrat Obama decides he wants to be. So far he's put no distance between himself and the neo-liberals. I don't know if this is conviction or calculation (positioning himself as a moderate for the General), and I don't know that it matters.

We're in the midst of an ideological battle between Third Way Dems and First Way Dems, between free traders and fair traders, between the Hamilton Group and the AFL-CIO, between the DLCers and the populists, Joe Lieberman and Jim Webb, between Rubin and Reich, Thomas Friedman and Thomas Frank, Joe Klein and Ezra Klein, Greenspan and Galbraith, the Nation and the New Republic...and it seems that Obama is on the wrong side.


by david mizner on Sat Mar 31, 2007 at 02:04:03 PM EST
[ Parent ]

The Hamilton Project (3.00 / 1)

is a big difference.  Edwards does not support it.  Obama gave a keynote address and is featured on the website.

Edwards is with working people.  He called over a month ago to suspend the new NFTA -- free trade negotiations with South Korea.


by littafi on Sat Mar 31, 2007 at 02:39:52 PM EST
[ Parent ]

Re: Enron, and Nationalizing Sherrod Brown in 2008 (3.00 / 5)

The part of the discussion that is overlooked is that the move to plutocracy is actually the work of a very small group of super wealthy families.

We are not used to the concept of the political landscape being determined by 50+ families, we think we live in a democracy. These families are, in many cases, not household names and take great pains to stay out of the media.

A good place to start is at the Source Watch web site.

As an example here is part of their listing for the Cato Institute:

"Between 1985 and 2001, the Institute received $15,633,540 in 108 separate grants from only nine different foundations:

   * Castle Rock Foundation
    * Charles G. Koch Charitable Foundation
    * Earhart Foundation
    * JM Foundation
    * John M. Olin Foundation, Inc.
    * Claude R. Lambe Charitable Foundation
    * Lynde and Harry Bradley Foundation
    * Scaife Foundations (Sarah Mellon Scaife, Carthage)"

Another example is the 18 families who have underwritten the campaign to abolish the estate tax. Just the Walton family (Walmart) alone stands to save something on the order of $40 billion in taxes if the tax is eliminated.

So the estimated $250 million these families have spent on think tanks, politicians and other actions is a good investment for them.

Here's a link to a report on their effort:
Estate Tax Report (PDF)

The point that I'm making is that we need to shine some light onto these efforts. They didn't just "happen" and they don't actually represent the desires or interests of the vast majority of the population. What these people can't stand is having their efforts revealed, that's why they operate behind the scenes.


---Policies not Politics
Daily Quiet Image
by rdf on Sat Mar 31, 2007 at 11:53:40 AM EST

Re: Enron, and Nationalizing Sherrod Brown in 2008 (3.00 / 1)

It's more than just a small group of families.  This is a neo-Confederate impulse.


by Matt Stoller on Sat Mar 31, 2007 at 12:38:55 PM EST
[ Parent ]

Re: Enron, and Nationalizing Sherrod Brown in 2008 (3.00 / 3)

It's about ideas, Stoller. Ideas are weapons.

The neoliberals know that a financial crisis is on the horizon, and they know that they were able to create the current market fetishism in American poltics by captializing on the perceived failure of the post war social state.  

By portraying economic malaise as the result of organized labor, and state intervention in the economy, they were able to use thinktanks and foundations to create the idea that it's big goverments fault that you're suffering.  You can thank the Saudis for creating the neccesary conditions for this break with the past.

I don't know how much you read but Mark Blythe's Great Tranformations is a very good read on this.  The basic concept is this:

A nation's economic life is predicated on understandings of the way economies work.  In the postwar period, the state had to tame capitalism to make it work.  This understanding came out of the Great Depression.  After these understandings become set, they are stable until there's a large shock, like the Energy Crisis of the 70's.  Once the economic ideas that form the public understaning of the way the economy works are shaken, new ideas have to be creatd to stablize the economy.  These ideas are the antecedents to insitutions, which serve to perpetuate the new understanding until a new shock disturbs the existing order.

This is why the neo-liberals are panicked, and this I believe is the reason the media aren't covering John Edwards.  Networks have to make money to survive, and so long as they believe the presenting news that favors their advertisers doesn't cost them viewers, they will favor the people who pay the bills.  

So it's all Obama/Clinton, because both of these candidates aren't threatening to offer new ideas that can serve to transform the way the nation conceives of the economy.  Edwards talks about Two Americas, and at the very least he seems to understand that people come before profits.  The market exists to serve people not the other way around.

We need new ideas, the phrase "tranformational change" comes to mind, even though it's use and misuse has made it almost as annoying as "meme".  One of the truly great lines from early on in this campaign, was when Edwards made a point of saying "It doesn't have to be this way."  Change is possible, we are capable as a nation of far great things than the media and the people who benefit from the current economic understanding would have us believe.

Political economy will be the issue of 2008.


by ManfromMiddletown on Sat Mar 31, 2007 at 01:36:58 PM EST
[ Parent ]

Re: Enron, and Nationalizing Sherrod Brown in 2008 (3.00 / 3)

There is a difference between the (large) number of followers and the (small) number of leaders.

My contention is that the leaders are a small, self-interested, wealthy group. They buy the next level down, the pundits and politicians, who then spread the creed to the compliant public.

Psychologist Robert Altemeyer, whose work was the basis of John Dean's recent book "Conservatives without Conscience" has just written his own book. It is available free, online:

The Authoritarians

He explains by means of his 40+ years of research just how the association of those who believe in a strong leader in a hierarchical society and those with a right wing political/social outlook tend to coincide.

If you want to understand how to deal with the conservative movement it is useful to understand what makes them tick. Have a look at the book.


---Policies not Politics
Daily Quiet Image
by rdf on Sat Mar 31, 2007 at 02:22:52 PM EST
[ Parent ]

Re: Enron, and Nationalizing Sherrod Brown in 2008 (3.00 / 2)

You might appreciate the book I mentioned above to Stoller.  Mark Blyth's Great Tranformations, it talkes about the role of ideas in creating public understandings of the way the economy works.

This is the way they killed the social state.  The market no longer constrained by notions of being subject to rules and regulations to maintain the dignity of human beings and society, is left to its own devices.  And the "self regulating market" a concept shown never to work in the long term emerges.  And it continues, until eventually its excesses create a crisis in which regulation external to the market is again imposed to ensure it doesn't destroy society.


by ManfromMiddletown on Sat Mar 31, 2007 at 02:43:10 PM EST
[ Parent ]

Neo-Confederate impulse. (none / 0)

I like the phrase.  Some day when you have time, it would be interesting to see you expand on that phrase, and the thinking behind it, in a front page diary.  An interesting thought.


by littafi on Sat Mar 31, 2007 at 02:47:29 PM EST
[ Parent ]

is there a Federalists Society Watch blog? (3.00 / 1)

because we could use one


by Alice Marshall on Sat Mar 31, 2007 at 12:03:20 PM EST

Don't you wonder just how much the judges got? (none / 0)

And in what form? (I am assuming they are smart enough not to accept crude, traceable cash.)

It's breathtaking that the opinion itself admits that the investment banks "aided and abetted" wrongdoing, but are not implicated in the wrongdoing.  Recalls BCCI rather forcefully, doesn't it?

Is an appeal possible?  Likely?


by clio on Sat Mar 31, 2007 at 01:04:27 PM EST

Re: Enron, and Nationalizing Sherrod Brown in 2008 (none / 0)

Matt, a couple weeks ago you asked if the Democratic Party was pro-war.  It isn't, and neither is it anti-war.  The most consistent thing about the Democratic Party is that it has stood against wealth and big finance, and stood with regular people.


"And so in the place of the palace of privilege, we seek to build a temple out of faith and hope and charity."-FDR
by jallen on Sat Mar 31, 2007 at 01:36:51 PM EST

HUH!? (none / 0)

Woah, what the hell is this:

Mexicans thrown into poverty by NAFTA and coming over the border

Mexicans thrown into poverty by NAFTA!? Wtf? How could NAFTA possibly hurt Mexicans? I thought the whole idea was that Nafta was going to take US jobs and move them to Mexico.

The whole anti-NAFTA thing is just so tiresome.


by delmoi on Sat Mar 31, 2007 at 01:53:21 PM EST

Re: HUH!? (3.00 / 2)

As of a few years ago, since NAFTA the number of Mexicans living in intense poverty has increased from 17 million to 27 million, IIRC.  That's intense poverty.


"And so in the place of the palace of privilege, we seek to build a temple out of faith and hope and charity."-FDR
by jallen on Sat Mar 31, 2007 at 02:01:18 PM EST
[ Parent ]

That dosn't mean they are related. (none / 0)

Just because two things happen at the same time doesn't mean they are related. Is the housing crunch related to the Iraq war? There was a whole package of economic neo-connism in Mexico over the past few years under Fox, so problems may be related to those guys, not just NAFTA, which is one small part.


by delmoi on Sat Mar 31, 2007 at 04:28:00 PM EST
[ Parent ]

Re: That dosn't mean they are related. (none / 0)

I think you mean neo-liberalism, not neoconservatism.  PAN and Fox are neoliberals.  And by making a statement like that, you are only helping the case against economic liberalism.


"And so in the place of the palace of privilege, we seek to build a temple out of faith and hope and charity."-FDR
by jallen on Sat Mar 31, 2007 at 06:13:37 PM EST
[ Parent ]

Re: That dosn't mean they are related. (3.00 / 1)

NAFTA had clear negative effects on Mexico and this is widely accepted by people who study it.  If you want to see what's going on google mexican tortilla crisis and google Mexican telecom.

US and (to a lesser extent) Canadian firms walked in, bought up chunks of infrastructure, used them to form monopolies or oligopilies (private as opposed to the prior public ones) and then used those to extract monopolistic prices.

Mexican agriculture also crashed, and this was a direct result of NAFTA.

No, Nafta was a failure for Mexico, because the jobs they were supposed to get wound up going to Asian very quickly, while they got punked by US financial and farm interests.


by Ian Welsh on Sat Mar 31, 2007 at 07:56:12 PM EST
[ Parent ]

Re: HUH!? (3.00 / 5)

Woah, what the hell is this:

Mexicans thrown into poverty by NAFTA and coming over the border

Mexicans thrown into poverty by NAFTA!? Wtf? How could NAFTA possibly hurt Mexicans? I thought the whole idea was that Nafta was going to take US jobs and move them to Mexico.

It's called real life, and it's what happens when you realize that sometimes economic theories have little or no basis in economic fact.

The principal means by which NAFTA has created poverty in Mexico is through opening the border to cheap corn.  The reduction in the price of corn lead to a situation in which millions of smallhold farmers from the south of Mexico were unable to produce corn at world market prices.  Left with the decision to either live in perpetual debt, or seek work in Mexico City and points further north, they came.  

This mass of workers in turn served to lower the cost of labor in Mexican cities and in the maquiladoras of the north.  Increasingly, left with few choices in their home country these economic migrants have found their way to the US and in lesser numbers Europe.

Having been driven off their farms in large numbers, and forced to buy imported American corn in their life as urban laborers, the recent rise in the price of American corn as ethanol production is sucking up swaths of American corn, is making life in the cities less tenable.  And so they come north.


by ManfromMiddletown on Sat Mar 31, 2007 at 02:10:07 PM EST
[ Parent ]

I see. (none / 0)

Mexican consumers get cheap American corn, but Mexican farmers don't get subsidies. That would cause problems.


by delmoi on Sat Mar 31, 2007 at 04:29:28 PM EST
[ Parent ]

Re: I see. (3.00 / 1)

It's more basic than this.

Markets are socially embedded.  That is the costs and prices of products and services reflect a political equilibrium antecedent to the construction of the market.

For most of history, the market did not exist.  Economic transactions didn't reflect rational transactions performed outside of the antecedent social context.  

For example, American subsidies for corn reflect a political equilibrium.  This is not to indicate that the market existed before hand, and that state intervention interferes with a natural market that exists outside of the political stucture that produces private property rights, the enforcement of contracts, and the limitation of liability to the capitalized value of the firm.

When products from other countries are allowed to enter countries they have the potential to disrupt the existing political equilibrium.  In the case of Mexico, this primarily takes the form of altering the social protection of smallhold farmers.  In the US, the importation of products produced under political economies where workers have few if any rights, and the environment is not protected, represents the importation of the political equilibrium antecedent to the market in that country.  

So the importation of products and labor from Mexico undermines existing political equilibriums in the United States that protected workers rights and the environment.

Markets only exist as institutions embedded in social contexts.  There is not a natural economic equilibirium that exists without the antecedent political context.  The idea that there is a weapon of those who hold power against those who do not.


by ManfromMiddletown on Sat Mar 31, 2007 at 06:27:03 PM EST
[ Parent ]

Re: HUH!? (none / 0)

I'll assume you are being ironic, but even if you aren't you may be interested in this short essay I put together which charts some of the stats about immigration and the effect of NAFTA.

Immigration "Facts" Debunked


---Policies not Politics
Daily Quiet Image
by rdf on Sat Mar 31, 2007 at 02:16:00 PM EST
[ Parent ]

Re: HUH!? (none / 0)

I read your link.  

Seldom have I seen such a collection of straw men and red herrings.  


by zak822 on Sun Apr 01, 2007 at 01:04:16 PM EST
[ Parent ]

Re: Enron, and Nationalizing Sherrod Brown in 2008 (none / 0)

   Free trade isn't a problem. If we didn't have it, then our current export industries would suffer at the hands of industries that are being outdone by foreign exporters. Things from abroad would get more expensive. You can say you hate free trade all you want until that car from abroad you wanted to get is unavailable except for way more money. Your options of consumer goods is reduced.
   What happened to our supposed nemisis Japan? Oh yeah, they went into a recession and ceased to be an issue. The same will be the case with China and India. If you have with globalization, that's fine. But free trade is not the problem.
"Our lives begin to end the day we become silent about things that matter." - Dr. Martin Luther King Jr.
by liberal2012 on Sun Apr 01, 2007 at 02:23:14 PM EST

Re: Enron, and Nationalizing Sherrod Brown in 2008 (none / 0)

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by jewepouter on Wed May 30, 2007 at 02:23:48 AM EST


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