01/10/2011 02:24 pm ET | Updated May 25, 2011

The Path to Third World Status

Although Arianna Huffington's recent book Third World America was mostly about economics, my great fear is that her idea that this great country is moving too far in the direction of a third world nation was eerily prescient in more ways than one.

When members of Congress start being assassinated, when the rhetoric about politics and politicians becomes increasingly violent and extreme in nature, and when corrupt oligarchs with way too economic and political power assume they can operate outside the bounds of the law, you have the hallmarks of a Third World country. I have been focusing more and more on the incredible crisis brewing in the financial sector because the corruption there is at the core of so much that is messing up our country's economy, but the assassination attempt on Gabby Giffords this weekend was a deadly and tragic reminder of how we have the potential to slide more and more toward Third World status in more than just economics. When media figures like Beck and Limbaugh, politicians like Palin, and way too many others so loosely talk about "death panels", or the President being "friends with terrorists", or the need to reload, we have a big problem in our democracy: the mentally ill who are close to the edge can easily go over the edge, and the far right borderline violent militia types start seeming like they are mainstream.

I am not an alarmist, a conspiracy theorist, or a pessimist about all this. I don't think we are on the verge of a Third World dictatorship. This country has seen waves of political violence and terrorism repeatedly in its history, including assassinations, bombings of churches and clinics, and lynchings, and we have survived and overcome. This country has seen waves of economic concentration of wealth and power in the late 1800s and the 1920s before the Great Depression, and we survived that too, making the reforms we needed to make to get stronger. But we are at a very dangerous moment, and not just because of the threat of violence we saw play out this weekend.

What troubles me the most is the combination of violent and extreme rhetoric, increasing incidents of violent actions (including the shooting this weekend, the shooting of an abortion doctor, the shooting at the Holocaust Museum, the attempted assassination of people at the Tides Foundation), and the economic signs of a Third World mentality by the big banks who have become so powerful in this economy. Unnoticed this weekend in all the focus on the Giffords assassination attempt was the massively important Massachusetts Supreme Court decision US Bank National Association vs. Antonio Ibanez, which essentially and decisively laid bare the big banks' economic strategy on foreclosures.

Check out this piece by Numerian at The Agonist for a great explanation of the stakes in this case. As Numerian says, "all it took for the banks to win was to show up in court with the proper legal documents", and the bankers weren't even close to being able to do that. In fact, if you read the growing literature -- including a ton of great books, blog posts, magazine and newspaper articles -- on the behavior of the big bankers leading up to the financial crisis and in terms of this rapidly mushrooming mortgage and foreclosure crisis, it is impossible to escape the sense of these big banks as feeling so powerful and wealthy that they no longer need to worry about following the law. They can create massive bubbles they know will pop, set up and bet against their own clients, create real estate securities they know are toxic, and recklessly obliterate existing law on mortgage documents while all the while assuming they will always be bailed out through the power of being too big to fail.

Political leaders engaging in rhetoric with violent undertones and economic elites deciding they can pretty much ignore the law and run roughshod over anyone they want to is a formula for political violence and instability plus an economy that looks like a banana republic. We need to step back from the brink of Third World America before it is too late.

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