The Crash of 2016

by Thom Hartmann

  And, in fact, the court chose to stay with its previous precedent. It ruled on the tax aspects of the case, but explicitly avoided any decision on whether or not corporations were persons.

  “There will be no occasion to consider the grave questions of constitutional law” raised by the railroad, the court ruled in its majority opinion. The case was about property taxes and not personhood, and “As the judgment can be sustained upon this ground, it is not necessary to consider any other questions raised by the pleadings.”

  In other words, corporations are not “persons” for purposes of constitutional protections.

  While the court had not ruled in Santa Clara that corporations should have rights under the Fourteenth Amendment, which can be easily seen from a reading of the case itself, the clerk of the court had a different idea. John Chandler Bancroft Davis wrote in the decision’s headnote that the chief justice had said that corporations were persons under the Fourteenth Amendment. It was published after the death of the chief justice, and although headnotes have no legal or precedential status, it was grabbed generations later by corporate lawyers to advance their own causes.

  Indeed, as Justice Hugo Black noted in 1938, “Of the cases in this court in which the Fourteenth Amendment was applied during its first fifty years after its adoption, less than one half of one percent invoked it in protection of the Negro race, and more than fifty percent asked that its benefits be extended to corporations.”

  Thus began in a big way (it actually started a half century earlier in a much smaller way with a case involving Dartmouth University) the corruption of American democracy and the shift, over the 125 years since then, to our modern corporate oligarchy.

  The Roberts Court Rules

  On January 21, 2010, in another five-to-four decision with the Republican five Justices on the winning side, the Supreme Court ruled that it is unconstitutional for Congress to pass or the president to sign into law any restrictions on the “right” of a corporation to pour money into political campaigns so long as the money isn’t directly given to the politicians, their campaigns, or their parties.

  The majority decision, written by Justice Anthony Kennedy, was quite explicit in saying that the government has no right to limit corporate power or corporate “free speech.”

  Kennedy began this line of reasoning by positing, “Premised on mistrust of governmental power, the First Amendment stands against attempts to disfavor certain subjects or viewpoints.”

  He lays it out bluntly, writing, “The Court has recognized that First Amendment protection extends to corporations… Under that rationale of these precedents, political speech does not lose First Amendment protection ‘simply because its source is a corporation.’ ”

  Two sentences later he nails it home: “The Court has thus rejected the argument that political speech of corporations or other associations should be treated differently under the First Amendment simply because such associations are not ‘natural persons.’ ”

  Corporate executives and their lobbyists saw the value to them of this Supreme Court decision immediately. On February 7, 2010, the New York Times published an article by David D. Kirkpatrick titled “In a Message to Democrats, Wall St. Sends Cash to G.O.P.” The article explicitly quoted banking-industry sources who said that now that they could use their considerable financial power politically, they were experiencing “buyer’s remorse” over having given Obama’s presidential campaign $89 million in 2008: “Republicans are rushing to capitalize on what they call Wall Street’s ‘buyer’s remorse’ with the Democrats. And industry executives and lobbyists are warning Democrats that if Mr. Obama keeps attacking Wall Street ‘fat cats,’ they may fight back by withholding their cash.”

  The article quoted several banking sources as saying they were outraged that the president had criticized their industry for the financial meltdown of 2008 and for their big bonuses. It wrapped up with a quote from Texas Republican John Cornyn, the senator tasked with raising money for the National Republican Senatorial Committee, noting that he was now making regular visits to Wall Street in New York City, because “I just don’t know how long you can expect people to contribute money to a political party whose main plank of their platform is to punish you.”

  It was a loud shot across Obama’s bow, and within two weeks Obama had, just like Clinton, changed his tune on a wide variety of initiatives, ranging from taxes on the wealthy to banking, insurance, and pharmaceutical industry reforms.

  Our democracy died thanks to Citizens United. Justices John Paul Stevens, Ruth Bader Ginsburg, Stephen Breyer, and Sonia Sotomayor—all of whom dissented from the Roberts majority in the Citizens United case—knew it, too. Justice Stevens wrote the main dissent in the Citizens United case.

  Calling the decision “misguided” in the first paragraph of his ninety-page dissent, Stevens (and colleagues) pointed out that the majority on the court had just handed our country over to any foreign interest willing to incorporate here and spend money on political TV ads.

  “If taken seriously, our colleagues’ assumption that the identity of a speaker has no relevance to the Government’s ability to regulate political speech would lead to some remarkable conclusions,” wrote Stevens. “Such an assumption would have accorded the propaganda broadcasts to our troops by ‘Tokyo Rose’ during World War II the same protection as speech by Allied commanders.” Stevens then pointed out a dangerous consequence of John Roberts’s ruling, writing, “More pertinently, it would appear to afford the same protection to multinational corporations controlled by foreigners as to individual Americans: To do otherwise, after all, could ‘enhance the relative voice’ of some (i.e., humans) over others (i.e., corporations).”

  Justice Stevens further points out the absurdity of granting corporations what are essentially citizenship rights under the Constitution, suggesting that perhaps the next SCOTUS decision will be to give corporations the right to vote: “Under the majority’s view, I suppose it may be a First Amendment problem that corporations are not permitted to vote, given that voting is, among other things, a form of speech.”

  Stevens recounted the history of the evolution of corporations in America, noting, “Corporations were created, supervised, and conceptualized as quasi-public entities, ‘designed to serve a social function for the state.’ It was ‘assumed that [they] were legally privileged organizations that had to be closely scrutinized by the legislature because their purposes had to be made consistent with public welfare.’ ”

  Quoting earlier Supreme Court cases and from the Founders, Stevens wrote, “The word ‘soulless’ constantly recurs in debates over corporations… Corporations, it was feared, could concentrate the worst urges of whole groups of men.” Stevens was right: Thomas Jefferson famously fretted that corporations would subvert the republic.

  In an incredible irony, Stevens even quoted Chief Justice John Marshall, the man who had first, in the 1803 Marbury case, given the court itself the power to overrule laws, such as McCain-Feingold, that had been passed by Congress: “A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being a mere creature of law, it possesses only those properties which the charter of its creation confers upon it.”

  This decision was a naked handoff of raw political power to corporate forces by five unelected judges. Indeed, with this decision in place and the law of the land, the First Amendment now protects the “free speech” rights of the presidents of Russia and China and Iran to form corporations in the United States and pour millions of dollars toward supporting or defeating the politicians of their choice.

  It protects the “right” of the largest polluting corporations on earth to politically destroy any politician who wants to give any more authority to the Environmental Protection Agency. It protects their “right” to elevate to elected status any politician who is willing to dismantle the EPA—or any other government agency that protects or defends the people of America from Royalist predation.

>   The behavior of the Roberts court in Citizens United eerily parallels the day in 1936 when Roosevelt said about the Economic Royalists, “In vain they seek to hide behind the flag and the Constitution. In their blindness they forget what the flag and the Constitution stand for.” Even before the Citizens United case blew open the doors to a corporate takeover of American politics, the corrosive influence of corporations’ having “rights” was already evident. Now these “unequal consequences” have been put on steroids.

  With the Supreme Court’s Citizens United decision, President Obama’s fledgling progressive agenda—already badly wounded by stimulus-act debate and the health reform debate—was dead. John Roberts killed it just one year after readministering the presidential oath in the Map Room.

  From that point forward, corporations, with their newly acquired golden key to our democracy, jammed the airwaves with hundreds of millions of dollars in campaign advertising to send a message to Congress that there would be political consequences to any decisions made that year.

  Only when the 2010 midterm elections finally did come around would the effects of this court decision really be known.

  As a result of Citizens United, outside political spending skyrocketed from just $68 million in the 2006 midterms, to over $304 million in the 2010 midterms. That’s a 400 percent increase in corporate cash influencing elections and buying politicians, just ten months after the Citizens United decision.

  Royalist Republicans, this time calling themselves Tea Partiers, retook the majority in the House of Representatives, significantly cut into the Democrats’ majority in the Senate, and most important turned a lot of blue state legislatures around the country—in states such as Wisconsin, Michigan, Ohio, and Pennsylvania—red.

  Barack Obama’s revolution was officially over after the 2010 midterm elections—the first national elections post-Citizens United.

  This is when the Crash of 2016 was sealed.

  Chapter 10

  Masters of the Universe

  What’s happened is something that even Marx wasn’t cynical enough to dream about. It’s a financial war of Wall Street not only against labor but against industrial capitalism, it destroys the market.

  —Michael Hudson

  In 1981, I had a conversation with my friend Dick Gregory. We were on an airplane high above the Atlantic Ocean on our way to Uganda to do relief work, and our conversation turned to America’s unfortunate wars abroad (mind you, this is twenty years before the start of our nation’s most recent decade of military misadventures). It was during that conversation that Dick gave me one of the best insights I’d ever heard on democracy and human nature.

  “I don’t know why America always thinks she has to run all around the world forcing people to take democracy at the barrel of a gun,” he said. He paused for a moment, and then added with a sly grin, “When you’ve got something really good, you don’t have to force it on people. They will steal it!”

  History proves Dick right. More than two hundred years ago, the American Revolution brought democratic government back to the world from a two-thousand-year exile, and ever since then people have been overthrowing kings, theocrats, and plutocrats across the planet—stealing back democracy. Most recently, it happened in 2011–12 in the Arab world.

  During times of crisis, however, this happens in reverse—democracy is surrendered.

  As mentioned in chapter 3, this happened in Chile when General Pinochet and the Chicago Boys took over and induced “shock treatment” economics that rapidly transformed Chile into a Royalist paradise.

  Before that, it happened in Spain, Italy, and Germany during the last Great Crash. And it nearly happened in America, too, in 1935, had the Business Plot not been foiled.

  After the Supreme Court’s Citizens United decision in 2010, our nation, just a few years removed from the 2007–08 financial panic, and on the precipice of the Crash of 2016, was thrust into a fight for its democratic life.

  Like a blitzkrieg, the Royalists launched an unprecedented assault on democracy around the globe.

  In the United States, they’d learned what had happened after the last Great Crash, when they were banished to the political wilderness for two generations. So this time, they reasoned, if they seized power of the means to enact political and economic change, then nothing would get in their way as they completed their harvesting of the middle class and the entire wealth of the nation.

  They would become Masters of the Universe.

  First, Greece

  In October 2011, Greece’s democratically elected prime minister, George Papandreou, proposed a national referendum on the pending bailout package for his debt-ridden and bankster-conned nation.

  Ten years earlier, Goldman Sachs secretly helped Greece hide billions of dollars of debt through the use of complex financial instruments such as credit default swaps.127

  This allowed Greece to meet the baseline debt-to-GDP requirements to enter the Eurozone in the first place.128

  Goldman made similar deals here in the United States, masking the true value of investments, then selling those worthless investments to customers while placing bets that those same investments would eventually fail. The most notorious example was the Timberwolf129 deal, which brought down an Australian hedge fund, and which Goldman Sachs banksters e-mailed each other about, bragging, “Boy, that Timberwolf was one shitty deal.”130

  This sort of behavior by Goldman and other Royalist bankers through the “madness” period of the first decade of the twenty-first century helped inflate very profitable debt bubbles that all eventually popped, most notably the housing bubble in the United States.

  The shock wave of the debt bubbles bursting then crossed the Atlantic, hitting Europe and turning Goldman’s debt-masking deal with Greece years earlier sour, thus deepening the crisis.

  Always looking ahead, Goldman protected itself from this debt bubble by betting against Greek bonds, expecting that they would eventually fail.

  But the main crisis that Greece and other members of the Eurozone faced is that they can’t print their own currency, unlike in the United States.

  With only a finite amount of euros in the Greek economy, and hefty obligations to foreign and domestic bankers who’d saddled the Greek people with enormous amounts of debt, the government was facing a default crisis.

  Some obligations simply could not be met. Greece either had to tell the bankers to take a hit or tell their own people—their public servants, their pensioners, and their most vulnerable—they have to pony up to pay off the debts run up by the bankers. This is known as “austerity” today, even though it’s the exact same sort of harsh shock economics that the Chicago Boys were perfecting in the 1970s and 1980s.

  Greek Prime Minister Papandreou wanted to leave it up to the Greek people to decide if staying in the Eurozone, in exchange for harsh austerity measures, was in their national best interest.

  Global bankers panicked, and in less than a week, fearing that the Greek people would tell their creditors to go screw themselves, the bankers at the European Central Bank and the IMF took away democracy in Greece. They forced Papandreou to scrap the idea of a national referendum, and even kicked him out of office for good measure. He was replaced by the former vice president of the European Central Bank, Lucas Papademos.

  Even Italian Prime Minister Silvio Berlusconi, whose enormous wealth and national media empire ensured his reelection over and over again despite endless frauds and scandals, was no match for the European technocrats. Berlusconi, too, was forced out of office in 2011 to make sure Italy’s descent into austerity went off without any democratic hitches.

  The people of Europe and the world were meant to believe that these nations faced a debt crisis and that radical measures needed to be taken to lower debt-to-GDP levels. However, in nearly every case study in Europe, nations that have endured austerity have actually seen debt-to-GDP ratios increase.

  It’s simple to understand why. When you take money out of the han
ds of working people, as austerity does, then they don’t have as much money to spend in the economy, and everything slows down. When people have smaller paychecks, the government is then collecting even less revenue, thus making deficits worse.

  The real reason why austerity was enacted is so that the finite number of euros left in places such as Greece and Italy, as well as in Spain and Portugal and others, would without a doubt wind up in the hands of the wealthy.

  In Greece, they lost their health care system. In July 2011, the Royalists in technocratic suits put up some of their demands. They said they’d give Greece a bailout to ward off complete collapse, but in return they wanted a big chunk of the money that was being used to treat sick Greek citizens.

  And for the first time, unemployed Greeks who had lost their health benefits now had to pay out of their own pocket for any medical care they needed.

  As Dr. Kostas Syrigos, the head of Greece’s largest oncology department, told the New York Times, “We are moving to the same situation that the United States has been in, where when you lose your job and you are uninsured, you aren’t covered.”

  Today, that’s the case for roughly half of Greece’s 1.2 million long-term unemployed workers.

  One of those unemployed workers is a woman named Elena who was diagnosed with breast cancer a year ago, but under the new Greek law could not receive any medical care because her benefits had expired and she had no money. Without treatment, her tumor grew to the size of an orange and broke through her skin, leaving a gaping wound. At this point, any sort of medical treatment for Elena was hopeless.

  After seeing Elena, Dr. Syrigos told the Times, “Things like that are described in textbooks, but you never see them because until now, anybody who got sick in this country could always get help… In Greece right now, to be unemployed means death.”