The failure of one of America’s biggest retail banks undermined confidence in a fresh clutch of US household names today as investors digested the implications of the biggest collapse of a high-street bank on record. Washington Mutual, which was bought by the banking giant JP Morgan for $1.9bn after being seized by the US authorities late yesterday, had a stockpile of controversial mortgages known as “option ARMs” that allow borrowers huge flexibility in setting the level of their own repayments. While popular at the height of America’s housing boom, the mortgages have proven to be a huge liability for banks and other firms known to have exposure to them were struggling to stem an erosion in credibility…
But never fear: George II is here:
US lawmakers battle to salvage bailout, WASHINGTON (AFP) — US congressional leaders are back in talks Saturday to cobble a massive financial sector rescue deal as the White House called for urgent action and a new bank failure added to the gloom… “You were being asked to choose between financial meltdown on the one hand and taxpayer bankruptcy and the road to socialism on the other and you were told do it in 24 hours,” Republican Representative Jeb Hensarling of Texas was quoted by The New York Times as complaining. With lawmakers rolling up their sleeves to get back to work after days of drama and confusion, hopes were high that an accord could be forged by the time markets open on Monday. Bush voiced confidence to visiting British Prime Minister Gordon Brown. “I told him the plan is big enough to make a difference and I believe it is going to be passed,” Bush said as they met in the Oval Office. With the world’s largest economy in a tailspin, other governments are nervously watching the protracted talks, concerned their economies could fall victim to any contagion…
Mr Bush warned that “the market is not functioning properly” and that with a “widespread loss of confidence” major business sectors were at risk. More banks could fail, triggering a recession, pushing down houses prices and “millions of Americans could lose their jobs”. He added: “We must not let this happen.” In the long run, he said, Americans had good reason to be confident in their country’s economic strength. “Despite corrections in the marketplace and instances of abuse, democratic capitalism is the best system ever devised.”
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…if you go back to, say, the 1850s, the beginnings of the Industrial Revolution, right around the area where I live, in Eastern Massachusetts, in the textile plants and so on, the people working on those plants were, in part, young women coming off the farm. They were called “factory girls,” the women from the farms who worked in the textile plants. Some of them were Irish, immigrants in Boston and that group of people. They had an extremely rich and interesting culture. They’re kind of like my uncle who never went past fourth grade — very educated, reading modern literature. They didn’t bother with European radicalism, that had no effect on them, but the general literary culture, they were very much a part of. And they developed their own conceptions of how the world ought to be organized.
They had their own newspapers. In fact, the period of the freest press in the United States was probably around the 1850s. In the 1850s, the scale of the popular press, meaning run by the factory girls in Lowell and so on, was on the scale of the commercial press or even greater. These were independent newspapers — a lot of interesting scholarship on them, if you can read them now. They [arose] spontaneously, without any background. [The writers had] never heard of Marx or Bakunin or anyone else; they developed the same ideas. From their point of view, what they called “wage slavery,” renting yourself to an owner, was not very different from the chattel slavery that they were fighting a civil war about. You have to recall that in the mid-nineteenth century, that was a common view in the United States — for example, the position of the Republican Party, Abraham Lincoln’s position. It’s not an odd view, that there isn’t much difference between selling yourself and renting yourself. So the idea of renting yourself, meaning working for wages, was degrading. It was an attack on your personal integrity. They despised the industrial system that was developing, that was destroying their culture, destroying their independence, their individuality, constraining them to be subordinate to masters.
There was a tradition of what was called Republicanism in the United States. We’re free people, you know, the first free people in the world. This was destroying and undermining that freedom. This was the core of the labor movement all over, and included in it was the assumption, just taken for granted, that “those who work in the mills should own them.” In fact, one of the their main slogans, I’ll just quote it, was they condemned what they called the “new spirit of the age: gain wealth, forgetting all but self.” That new spirit, that you should only be interested in gaining wealth and forgetting about your relations to other people, they regarded it as a violation of fundamental human nature, and a degrading idea.
That was a strong, rich American culture, which was crushed by violence. The United States has a very violent labor history, much more so than Europe. It was wiped out over a long period, with extreme violence. By the time it picked up again in the 1930s, that’s when I personally came into the tail end of it. After the Second World War it was crushed. By now, it’s forgotten. But it’s very real. I don’t really think it’s forgotten, I think it’s just below the surface in people’s consciousness.
~ Noam Chomsky, ‘Activism, Anarchism, and Power: Noam Chomsky interviewed by Harry Kreisler’, Conversations with History, March 22, 2002
