Chris Hedges sometimes misses, but he often also rings the bell.
He has nailed it on the topic of what you get at the nation’s elite colleges, along with your entitlement to be first hired, last fired:
The nation’s elite universities disdain honest intellectual inquiry, which is by its nature distrustful of authority, fiercely independent and often subversive. They organize learning around minutely specialized disciplines, narrow answers and rigid structures that are designed to produce certain answers. The established corporate hierarchies these institutions service — economic, political and social — come with clear parameters, such as the primacy of an unfettered free market, and with a highly specialized vocabulary. This vocabulary, a sign of the “specialist” and of course the elitist, thwarts universal understanding. It keeps the uninitiated from asking unpleasant questions. It destroys the search for the common good. It dices disciplines, faculty, students and finally experts into tiny, specialized fragments. It allows students and faculty to retreat into these self-imposed fiefdoms and neglect the most pressing moral, political and cultural questions. Those who defy the system—people like Ralph Nader—are branded as irrational and irrelevant. These elite universities have banished self-criticism. They refuse to question a self-justifying system. Organization, technology, self-advancement and information systems are the only things that matter.
Alas, I can attest that the nation’s second-tier colleges — now tellingly rebranded, one and all, as “universities” — are peopled with managers and gatekeepers steeped in the elite disease. As a result, they devote their core efforts to replicating rather than transcending the sickness. Despite the times, this socially suicidal squandering of the most precious resources shows no sign of changing.
As Chris Hedges noted yesterday, “[o]ur oligarchic class is incompetent at governing, managing the economy, coping with natural disasters, educating our young, handling foreign affairs, providing basic services like health care and safeguarding individual rights.” And, I would add, that’s just the short list.
And, now that their system has spent its latest and greatest upswing phase, the overclass hasn’t got a clue what to do about the coming downswing. As Hedges puts it, “the corporate managers and government officials trying to fix the economic meltdown are pouring money and resources into the financial sector because they only know how to manage and sustain established systems, not change them.”
Indeed, consider what Business Week calls “the next meltdown.” That is the coming implosion of the securitized ocean of credit-card debt in the United States. As Business Week explains, in the terminology of the times:
The troubles sound familiar. Borrowers falling behind on their payments. Defaults rising. Huge swaths of loans souring. Investors getting burned. But forget the now-familiar tales of mortgages gone bad. The next horror for beaten-down financial firms is…outstanding credit-card debt—much of it toxic.
That’s bad news for players like JPMorgan Chase (JPM) and Bank of America (BAC) that have largely sidestepped—and even benefited from—the mortgage mess but have major credit-card operations. They’re hardly alone. The consumer debt bomb is already beginning to spray shrapnel throughout the financial markets, further weakening the U.S. economy.
“The next meltdown will be in credit cards,” says Gregory Larkin, senior analyst at research firm Innovest Strategic Value Advisors. Adds William Black, senior vice-president of Moody’s Investors Service’s structured finance team: “We still haven’t hit the post-recessionary peaks [in credit-card losses], so things will get worse before they get better.” What’s more, the U.S. Treasury Dept.’s $700 billion mortgage bailout won’t be a lifeline for credit-card issuers.
But some banks and credit-card companies may be exacerbating their problems. To boost profits and get ahead of coming regulation, they’re hiking interest rates. But that’s making it harder for consumers to keep up. That’ll only make tomorrow’s pain worse. Innovest estimates that credit-card issuers will take a $41 billion hit from rotten debt this year and a $96 billion blow in 2009.
Those losses, in turn, will wend their way through the $365 billion market for securities backed by credit-card debt. As with mortgages, banks bundle groups of so-called credit-card receivables, essentially consumers’ outstanding balances, and sell them to big investors such as hedge funds and pension funds. Big issuers offload roughly 70% of their credit-card debt.
Making matters worse, the subprime threat is also greater in credit-card land. Risky borrowers with low credit scores account for roughly 30% of outstanding credit-card debt, compared with 11% of mortgage debt. More than 45% of Washington Mutual’s credit-card portfolio is subprime, according to Innovest. That could become a headache for JPMorgan Chase, which agreed on Sept. 25 to buy the troubled thrift’s credit-card business and other assets for $1.9 billion.
“Subprime,” of course, is the overclass label for all those who live in conditions below those enjoyed by the upper-middle-class and the overclass. What Business Week is trying to say is that the same problems that killed the housing gambit are about to devastate the long-running credit-card push.
And that figures, since it’s much easier to get a credit card than a mortgage, and, just as they did via the “home equity” delusion, the masters of the system have been enjoying the long-running substitution of credit cards for wage and salary increases among the peons. But people can’t not pay debts forever. That, in turn, means that credit cards can only compensate for class polarization for so long, even in the most aggressive, creative market-totalitarian conditions (a.k.a. “even in America”).
But the real lesson of the coming trouble is to realize that, despite the strong memories of the last Great Depression, the egregious even-more-of-the-same anti-solutions being fobbed off as “solutions” remain exactly the same as they were last time around: help the rich and wait for them to re-start the economy. After all, they’re entrepreneurs!
Want proof that that’s the going policy? Guess what the amount of outstanding credit-card debt is in the USA? $950 billion.
Hence, one massively obvious answer to the question of how to stimulate the economy was to aid its victims rather than its victimizers. And one massively obvious way to have done that would have been to pay off all the credit cards, instead of bailing out the Wall Street speculators.
Our elites—the ones in Congress, the ones on Wall Street and the ones being produced at prestigious universities and business schools—do not have the capacity to fix our financial mess. Indeed, they will make it worse. They have no concept, thanks to the educations they have received, of the common good. They are stunted, timid and uncreative bureaucrats who are trained to carry out systems management. They see only piecemeal solutions which will satisfy the corporate structure. They are about numbers, profits and personal advancement. They are as able to deny gravely ill people medical coverage to increase company profits as they are able to use taxpayer dollars to peddle costly weapons systems to blood-soaked dictatorships. The human consequences never figure into their balance sheets. The democratic system, they think, is a secondary product of the free market. And they slavishly serve the market.
We may elect representatives to Congress to end the war in Iraq, but the war goes on. We may plead with these representatives to halt Bush’s illegal wiretapping but the telecommunications lobbyists make sure it remains in place. We may beg them not to pass the bailout but 850 billion taxpayer dollars are funneled upward to the elites on Wall Street. We may want single-payer, not-for-profit health care but it is not even discussed as a possibility in presidential debates. We, as individuals in this system, are irrelevant.
[W]hat is coming, as long as our oligarchy remains in charge, will not be good. We will either recover the concept of the public good, and this means a revolt against our bankrupt elite and the dynamiting of the corporatist structure, or we will extinguish our democracy.