Why Visiting Pompeii Has Me Thinking About the Smoke Billowing Out of Our Economic Mt. Vesuvius
POMPEII -- I was in Pompeii a couple of days ago. Walking around the ancient city, reading up on its history, and thinking of its people -- wiped out in 79 A.D. by a volcanic eruption -- has me thinking a lot about warning signs.
Warning signs fall into two categories: those that are recognized while there is still time to heed the warning, and those that are acknowledged as "warning signs" only after the fact, when it's too late to do anything but sift through the ashes and wonder why we didn't do something when we had the chance.
In the case of Pompeii, the warning signs included a severe earthquake in 62 A.D., continued tremors over the ensuing years, springs and wells drying up, dogs running away, and birds no longer singing. And then the most obvious warning sign of all: columns of smoke belching out of Mount Vesuvius before the volcano blew its top, burying the city and its inhabitants under 60 feet of ash and volcanic rock.
But the warning tremors were dismissed as "not particularly alarming because they are frequent in Campania." And the billowing smoke was quaintly described as looking like an "umbrella pine."
There is currently plenty of alarming smoke pouring out of our economic Vesuvius, but it too is being dismissed. Instead of "umbrella pines," we are being lulled with the sightings of green shoots. Don't worry about those economic tremors, we are told, our financial system is back on track, the worst is over, the bailout worked and we just need to sit tight and wait for the bottom to be hit (some are arguing it's already been hit), after which we'll start our slow but steady climb to recovery.
But the warning signs are all around us:
-- Unemployment has hit a level beyond the administration's worst projections, and last month reached record highs in Rhode Island (12.4 percent), South Carolina (12.1 percent), and Nevada (12 percent), while Michigan, at 15.2 percent, still has the highest jobless rate of any state. Meanwhile, over 650,000 workers will run out of unemployment benefits come September.
-- Credit card defaults have surpassed 10 percent, and in May hit a record high -- the sixth straight month that dubious achievement has been reached.
-- Foreclosure numbers continue to shatter records. There were more than 336,000 foreclosure filings in June, the fourth month in a row with over 300,000. That meant that, as of July 1, one in every 84 homes had been -- or was in danger of being -- lost. And more than 15 million homeowners now owe more on their homes than they are worth.
-- In the first six months of 2009, 675,351 individuals filed for bankruptcy. In June alone, there were 116,365 bankruptcy filings -- a 40 percent increase over June 2008.
-- Since the recession began, an estimated 2.4 million workers have lost their health care benefits.
And the biggest warning sign that the natural order of things has been disturbed is how many of the very people responsible for the economic collapse not only are still in power, but are still lining their pockets with outrageous windfalls -- courtesy of the American taxpayer.
According to last week's earnings reports, Goldman Sachs posted a $3.44 billion second-quarter profit, Citigroup earned $3 billion, and Bank of America earned $2.4 billion.
On top of this, Goldman Sachs just announced that it was setting aside $11.36 billion for employee compensation through the first half of the year.
And AIG -- which we bailed out to the tune of $150 billion -- is apparently doing so well they're ready to set aside $235 million in bonuses.
After the earthquake that severely damaged Pompeii in 62 A.D., it is said that among the first buildings repaired were Pompeii's famous brothels. The metaphor holds. Only in 2009, we call them Goldman, AIG, Bank of America, and Citi. Though that is probably unfair. To the brothels.
But wait, you might ask, isn't the government reacting to the warning signs? Isn't Congress currently redesigning our financial regulatory structure? Yes, but the redesign will give greater authority to the Fed -- which missed all the warning signs leading up to the meltdown. As Mark Williams, finance professor at Boston University and a former Fed bank examiner put it, "giving the Fed more responsibility at this point is like a parent giving his son a bigger and faster car right after he crashed the family station wagon."
And what about the new "Pecora" commission, which has been charged with investigating how the financial collapse happened and how to prevent another one -- won't it point out the warning signs? Its chairman, Phil Angelides, certainly seems determined to. But look at its vice-chairman and the restrictions the commission is operating under. The vice chairman is Bill Thomas, the former GOP congressman from California, who earlier this decade chaired the House Ways and Means Committee. Even among shills for big business, he stands out. What's more, Mitch McConnell and John Boehner ensured the committee won't have much clout by forcing Democrats to agree to a provision that allows the committee to issue subpoenas only if one of its Republican appointees votes to issue one.
Then there is the proposed Consumer Financial Protection Agency, which is supposed to protect consumers from the vultures that helped destroy our economy. But its ability to monitor warning signs is being undermined by Wall Street, with the charmingly named Financial Services Roundtable leading the charge. "Politically, it would be difficult to kill it outright," says Scott E. Talbott, the Roundtable's Senior VP for government affairs. "Our goal is to change the agency, change the proposal, to where the benefits outweigh the costs.... We're not for the status quo. We're for protecting consumers. The question is, what's the best way to do it?"
I'm going to guess that, for Talbott's group, the "best way" to protect consumers will be a way that somehow does not protect consumers.
And then we have today's blistering report from Neil Barofsky, the special inspector general overseeing the TARP program, showing that many of the banks -- instead of using the bailout money they received to boost lending -- have used it to make investments, repay debts, or buy other banks. The report also takes on the Treasury Department for its ongoing lack of transparency when it comes to requiring bailed out banks to let the public know what they have done with our money. It's hard to heed warning signs that are so deliberately kept out of view.
Walking around Pompeii my friends and I kept wondering: "How could they miss the birds not singing, the water not flowing, the earth trembling, and the smoke billowing?" The list of today's warning signs, which future generations may similarly marvel at, grows longer with each passing day.
So the tremors continue to rumble beneath our feet and the plumes of smoke continue to belch overhead.
Follow Arianna Huffington on Twitter: www.twitter.com/ariannahuff
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There is much talk about a second stimulous package to treat our sagging economy, yet many homeowners could refinance their mortgages if the long term interest rates were, perhaps, 4%. This would be a significant stimulous, without putting the taxpayer, and future generations, at risk. Now, can you tell me how saving upwards of $450 per month is not a something to emphasize. Think about it. Do you think that $5400 savings a year is a worthwhile stimulous package for many millions od homeowners? What is the downside? I remember when 3% was considered and REJECTED, early in 2009.
What we are ignoring is WHO is calling for a takeover. It is the John Ensigns and Mark Sanford's of the World. I was just reading last night about George Bush and who he listened to.... all evangelicals. And wonder which of their crowd of evangelical and evangelical crowds will take over. Whichever ones they all want you to have a little different job Arianna. They really don't think that women have any place outside the home. The most right wing of these actually thinks women and little girls are property of their husbands and fathers. Don't thing that cold happen? Anyone who gets you mad at our current situation (have you looked at the kind of comments you generate these days... quite a few talk about taking over by force). Litsten to Ann Coulter who doesn't think women should vote. If Palin ever won, I'd taste my food if I were her and (thre women they do elevate are idiots like Palin). There is a growing crow of men out there who are feeling like they are "robbed". Some foreigner or woman is taking all the good jobs. And what do men like this do when they get angry... they go buy a gun. (See below.)
So, Arianna, get ready to give up the blog. Women won't be allowed this kind of power if John Ensign, Mark Sandford, and don't forget Rush "all women are babes" Limbaugh get in power you'll be home baking cookies.
How easy it is to forget (link to original post below) as this is a copy: These are Bush TAX cuts for the RICH.
This Bush tax cut is for $350 BILLION IN TAX CUTS FOR THE RICH:
Senator Vote on Bush 2003 Tax Cut
Bayh (D-IN) Yea
Nelson (D-NE) Yea
Specter* (D-PA) Yea
* Republican at time of vote
link to original article:
http://www
You look at it this. It is what we were. What Goldman made ten times what they do now under Bush. We have Nelson and Bayh who are holding up healthcare. They are not democrats. It is sickening to think of how many times they voted this way over the last eight years. Goldman is a business. These are the PEOPLE who are doing this to you. All they want is to scare you into voting against yourself so that they can do nothing for you. They didn't argue about this tax cut. And you can bet it was done in secret. I'd call their office. I have called mine at least 20 times each. I'd tell them to be Democrats or they'll be voted out.
Good call Mame.
We are getting the same sham from the same people, and it seems to be happening whether we like it or not.
Business as usuall.
This is Democracy?
This is what sons and daughters die for in Military service?
So that corrupt politicians, and business men can fleece/ loot/ pillage the entire country in the name of the "ultimate" religious American family value - MONEY..
It is really just a big Ponzie scheme.
America - 21st Century Titanic. Grab your life vest while you still have the time.
We did all this groundwork to get Obama elected and he goes and installs the very clowns who caused this mess to guide the "recovery". What a shame.
Very well said, and I thank you, Arianna Huffington.
I think Arianna's column is a useful and informative read. But it's not enough to say that the current policies are not working. We also need to take up the subject of what will.
That's the same complaint I always level at Limbaugh. It's easy to sit on the radio and point out very real problems, and assign blame to this group or that.
Offering a workable solution is a lot tougher.
Arianna I am glad this site bears your name. It seems the warnings are frequent and serious, and yet none of them have been heeded in any substantial way. It's like trying to stop a volcano by throwing a lot of mud, sticks, and leaves into it, and then some water to cool it down and expecting to stop the magma. It's almost as if they want the economy to completely crash.
Well, we are in this together. And no one will be left unaffected by this crisis opportunity. And I do believe that this is both a crisis and an opportunity. The question is how exactly will the transformation of our economy happen? Can we transition smoothly, or will it be a creative destruction?
Great analogy Arriana. Our modern day Nero ( Obama ) continues to fiddle while Rome ( America ) burns,
and yes there is a pattern that repeats that is as old as history. When the final days of the Roman empire were coming to and end, those at the top of the food chain begged, borrowed and stole everything they could get their hands on before the collapse, and that is what the fat cat elites are doing now. Rape the system for every last dime you can get your hands on and then let the unclean masses care for themselves.
We are witnessing the end of the American Empire that has stretched itself to this with its military and has debased its currency. Rather than dollars backed by something of value, the Federal Reserve provides monopoly money that isn't worth the paper it's printed on.
This will not end well for most Americans, and the thieves will sneak off into the night with their riches lying in wait to plunder another apathetic populace.
Her postings follow a similar pattern: dissect big problems with questionable logic (regulatory reform with more power to the Fed, and missed opportunity to suggest a solution.
Arianna's post was concise, rational, truthful, and brilliant. Where's the questionable logic, Rush? And what's YOUR solution? Republicans NEVER have any, but 'cut taxes,' 'regulation is communism,' 'i got mine and if you don't have yours, tough luck.' Very, very tiresome indeed.
BTW, when your check runs out from the RNC (or the CATO institute, whomever..
Once again as always Arianna great post. And for all those stupid birthers out there don't they know that even if Obama was born over seas that doesn't mean he isn't one of the most patriotic caring americans we have. And Arianna proves this too! Birthplace means nothing. Who you are today means everything. If I could revoke the citizenship of the birthers and deport them to the pakistan tribal areas not only would I...it would be a patriotic act!
You always hit the nail on the head Arianna and have a wonderful way of writing it! From your mouth to ...SOMEONE
It's interesting to note the similarities of modern America to 1789 France, when the French revolted against the corrupt and absolute rule of the aristocracy. American financial and oil elites are acting pretty much like the French elite did. Let's see how they compare:
- The king, Louis XV, fought a lot of wars and almost bankrupted the country. His successor, Louis XVI continued to spend on wars, helping American colonists to free themselves from British rule, for one thing (something Americans should never forget, but they do).
- National debt mounted to an unmanageable level, and a corrupt and inefficient financial system aggravated the crisis.
- High unemployment and food prices brought many people to the brink of personal financial disaster.
- Many of the common people resented that the privileges of the elite ensured they got treated better on all fronts, including making them almost above the law.
- Excessive conspicuous consumption, with the nobles wallowing in their wealth despite the hard times of the common people, continued despite the crisis.
All this was an explosive combination, to say the least. I'm not saying that Americans need a violent French style revolution, make no mistake. I'm pointing out just how much effort is needed to fix the current state of affairs in America. The days of expecting one man, like the President, to fix everything are over. The common people need to get politically active and work for the changes they want, or nothing will change.
I give the US one more year to straighten out the economic mess our capitalist system has created. If not, then a violent revolution may be in the offing. Just remember how well armed most Americans are these days. It won't be pretty.
That may be the volcano exploding that Arianna is referring to.
Did I understand your post correctly?
You are advocating for armed revolution? You do know you can rally and vote for change and then nobody has to be violent.
I hope you're just having a bad day and don't mean what you are saying.
Well they maybe well armed, but you can't compare that with the weaponry of the Federal Government. Basically, the U.S. spends more on defense than the entire rest of the world combined. This means that no rational, state power out there right now would even think of taking us on in a fire fight. So now you are telling me that the Hatfields and the McCoys can and will?
Well, maybe, but only if they fight like Bin Laden, and I don't see them having to the organizational skills, resources or out of the way hiding places necessary to do that.
But I think you are right, in the next year people are going to realize that the tragectory that FDR put us on is gone forever. Will American's revolt? I don't think so.
Speaking of high food prices, the local supermarket gets $1.50 for a cucumber, in the middle of summer. It is not even organic. A dollar is worth less than a cucumber !
Finally, something that I can agree with Arianna on. It's clear that our financial system, particularly the capital markets, needs a complete regulatory overhaul. Just as importantly, it needs to be a global overhaul with the cooperation coordination of all G20 countries. (Fyi, I sold AIG the risk management system they misused and was also a supplier to the derivatives industry for years so I have a very good understanding of the chicanery going on in OTC derivatives markets. Okay, back to the action.) Without the unified global regulation of both banks and capital markets (exchange traded and OTC) the players in world financial system will engage in what is euphemistically referred to as 'regulatory arbitrage' - read as gaming the system.
Now is the time as, finally, the citizenry of the U.S. have at least some understanding of how massive and important these flows of capital are to them and the time is ripe for real reform - across the board. I believe Obama is completely missing the boat here. Also, the Fed has no business as a general purpose regulator. They really aren't even the true bank regulator btw, that actually goes on at the state level or by the OCC (a federal agency) if a bank has a national charter. We need Fed reform too, btw. Their actions are far too opaque to be an accountable arm of public policy.
Many of us, as did you Arianna, saw the financial disaster on the horizen, the GOP had our country going toward, long before many ("the economy is fundamental sound") admitted it.
However, for any Democratic administration (especially with a non-white president) to move directly to precise "do what is best for America" actions (as you so elequently discribe in you opinion posts) may not be the best way to have progress toward making a more perfect union.
Change is a double-edged sword. It is needed as we learn facts and try to adjust to new understandings, but it scares the hell out of many people. I believe taking the "scare factor" into account is the main reason the Obama administration doesn't more closely follow your suggestions for getting our economy stabilized.
As we all can see, the GOP operatives use all available opportunities to turn the electorate against the Democrats, eg. birthers, deficits the GOP created, claiming nationalization when the Dems. save our manufacturing base, etc. With the DRASTIC "change" in direction, doing what is best for America, would require, I fear the GOP operatives could get the upper hand. I believe the Obama administration is stricking a decent balance.
I'm with you in hoping we don't fall off the cliff. I also hope more people learn how much the current GOP operatives are damaging America. Maybe then we can really get America going in a "more perfect" direction.
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