David Hirst's celebrated international column on the global financial crisis and its aftermath.



"In an age where most business journalists have become little more than cheerleaders for the Charles Ponzi Memorial Football Club, David Hirst calls the real shots in business with acerbic wit and Dickensian disdain for the financial follies of our modern age. He called the Subprime Crisis before the Bubble burst (and sold his own property at the peak), foresaw the carnage that would flow from the collapse of Bear Stearns, saw the manipulations beneath the 2009 rally as the TARP was pulled over the eyes of the herd, and has a deep sense of the real economic forces that lie beneeth the veneer.

Seldom wrong and always entertaning, David Hirst is my first point of call for the real news of our day."

Tuesday, February 2, 2010


The anger on her face took one on a journey to the darkness of the human soul. I was reminded of the “hate sessions” of Orwell’s 1984 when the public were brought, through a combination of dope and propaganda to express their hate of the enemy, Goldstein.

Before me was the face of a very dangerous and sick woman who would kill and kill again. At her left, her husband was almost on the same pitch of pure ferocity and rage. Both had the arms stretched before them their thumbs emphatically down. If they were not dressed as average, ordinary, white American working class stereotypes they might be passing judgment on the French aristocracy. They sure weren’t knitting. Wall Mart joins the Paris mob. Lower-middle class American’s reduced to howling anger over, of things health care reform.

The picture was selected by the BBC to illustrate popular sentiment against health care package that currently flounders in Washington.

But it seems to spring from George Orwell’s two minute hate sessions. Let us recall; “The Hate had started. ..In its second minute the Hate rose to a frenzy. People were leaping up and down in their places and shouting at the tops of their voices in an effort to drown the maddening bleating voice that came from the screen. The little sandy-haired woman had turned bright pink, and her mouth was opening and shutting like that of a landed fish. ..

The dark-haired girl behind Winston had begun crying out "Swine! Swine! Swine!" and suddenly she picked up a heavy newspeak dictionary and flung it at the screen. It struck Goldstein's nose and bounced off; the voice continued inexorably. In a lucid moment Winston found that he was shouting with the others and kicking his heel violently against the rung of his chair.”
But the photo was not of this imaginary event but of an ordinary part of ordinary America demonstrating, probably for the first time in their lives against, of all things, a system designed to improve the health of the nation and directed especially at working class American’s. Not that the demonstration involved standing in the burning sun or freezing rain while police practiced with their batons – I am sure there were off duty cops throughout this comfortably seated, deeply disturbed assembly.

Although Obama no doubt seeks to help the almost 50 million Americans without health the administration more profoundly want to reduce spending. With the health care system eating 17% of GDP and the prospect of reducing that to the average of 7% in the rest of the advanced world there is no better place to start. We all know the facts – but why the frenzy of hatred.
Texas is truly different but why with only two-thirds of the population having health insurance and over a fifth of all children have no cover at all, is opposition to the legislation is currently running at 87%.
Coverage by the BBC was of a “tea party” of the kind that have sprung up all over America at first is a testament to rejection of Obama and whatever it was they thought was happening in Washington. Some six months after the dawning of the “Tea Party” movement it has been galvanized to represent the face of American hatred of socialized medicine.

The specter of socialism, an anathema to the American political and financial class, the old Chamber of Commerce world where Government intrusion was acceptable only in the fields of taxation and regulation, (which most American businessmen accepted and in the later case had long feared) now seemed to stalk the country.

The middle class and working class in the year 2010 has galvanized to these tea parties (a bizarre parody of the events in Boston 235 years when, rather that throw out a dead Kennedy’s replacement in the Senate, revolutionaries to be, some disguised as Mohawk Indians, threw a few hundred of tea bags (big ones but without the string) into the drink. It was in important development on the road to overthrow of English rule and a terrible waste of tea.

Today’s lumpen bougesious (If that’s not a contradiction in terms) have gathered in “tea parties” sans the Mohawk attire - and their anger seems to exceed that of their forbears in Boston. The town hall type movements that had sprung up across the land have long been despised by the Liberal elite and the media scoffed at such ill-informed populism. Astonishingly the political punditry did not even smell the fires burning across the land. White rage was dismissed as a creation of the ravings of such as Russ Limbaugh, a fully paid up member of the establishment who made his living out of taunting it.

The faces we see are of One thing’s for curtain – these people surely don’t like the expansion of public health.

The BBC captured the unrestrained fury, explosive and dangerous while trying to come to terms with a movement the US media would prefer to ignore. Naturally the BEEB dragged out some sociologists and people paid to understand other people to explain why these fold would fight with such ferocity something that is clearly in their interests. The BEEB wondered “why there is often such deep opposition to reforms that appear to be of obvious benefit to voters?”
The town halls meeting, we were told by the BBC, gave Americans the chance to debate President Obama's proposed healthcare reforms but what “what happened was an explosion of rage and barely suppressed violence”.

But why? Why can health care lead to rage and barely suppressed violence.
One pundit opined; “It is striking that the people who most dislike the whole idea of healthcare reform - the ones who think it is socialist, godless, a step on the road to a police state - are often the ones it seems designed to help.

Again why?

Another; “To many of those who lose out under the existing system, reform still seems like the ultimate betrayal.
Of what?

And in what seemed almost silly; “It might be tempting to put the whole thing down to what the historian Richard Hofstadter back in the 1960s called "the paranoid style" of American politics, in which God, guns and race get mixed into a toxic stew of resentment at anything coming out of Washington.”

I don’t think so.

Then we get the theory that people resent having their interests decided for them by politicians who think they know best.
Yet they send their kids to war!
Other reasons discovered by the BBBC are “there is nothing voters hate more than having things explained to them as though they were idiots… in politics, when you are explaining, you are losing.

But every other nation blessed with Democracy expects explanations.

The BEEB cited The Political Brain, a book by psychologist Drew Westen, an exasperated Democrat, who tried to show why the Right often wins the argument even when the Left is confident that it has the facts on its side.

He uses the following exchange from the first presidential debate between Al Gore and George Bush in 2000 to illustrate the perils of trying to explain to voters what will make them better off:
Gore: "Under the governor's plan, if you kept the same fee for service that you have now under Medicare, your premiums would go up by between 18% and 47%, and that is the study of the Congressional plan that he's modelled his proposal on by the Medicare actuaries."

Bush: "Look, this is a man who has great numbers. He talks about numbers.

Thomas Frank, the author of the best-selling book What's The Matter with Kansas is quoted saying, "You vote to strike a blow against elitism and you receive a social order in which wealth is more concentrated than ever before in our life times, workers have been stripped of power, and CEOs are rewarded in a manner that is beyond imagining.

"It's like a French Revolution in reverse in which the workers come pouring down the street screaming more power to the aristocracy."

About the best argument I found in the BBC report was that the Democratic Liberal left doesn’t fight dirty or even lift it’s dukes. That Obama from day one should have said; “we are fighting the Bush Depression – it will be tough. But we’ll get their.

But all Street bonuses would soon turn that argument against him.

None of the above explains the question of why people so violently hate something that is constructed over years for their deepest benefit.

So much has been taken from poor Americans that health care has come to mean much more than the sociologists can explain. It is almost synonymous with a good, steady job.

“Do you have health care?” is a defining question for working class Americans. It has become one of the last definitions of success. If you have it you have cause for pride – you are valued. Hand it out to all and your personal self esteem your very identity becomes unstuck. Without it you are no different from those at the bottom. The poor blacks and Hispanics and your fellow white trash.

And the more expensive health care becomes the more valuable you are. So telling people with health care, still the majority, money will be saved by handing a life giving benefit free to all strikes where it hurts most.

The subject of the 2 minute hate sessions, Goldstein, did not exist. The Party, Big Brother, created him to create an object of hate. Their interest was creating hate and thereby maintaining power. The Party had created a world where humanity was the enemy to be discovered and destroyed for Big Brother was capable of looking after all needs. To achieve this Big Brother had to teach the public to hate their own humanity.

As Goldstein talked the telescreen constantly showed the marching troops of the enemy of Eurasia – a reminder of the permanent state of war and the constant threat from a vague far away army that was made terrifyingly real for the hate session.

If we think of the tea parties as hate session we might understand what’s happening here. A class is losing the remnants of what it had, the dignity of labor, the dignity of retirement through generous pension funds, credits cards that had worked like magic wands all their lives, and lots of other things. They owe more on their house than they own and they seem to have been paying for it all their adult lives. The kids want to move back in. A polished gifted black man who is far more articulate then anyone they even know is telling them what’s best. And having established in the public mind the Government will determine who will be your doctor it’s not hard to have people believe that a black president will have a black doctor examining my white wife.
The mood of America has changed since Bill and Hill (two for the price of one) tried to bring health care to more American’s the rejection, manufactured by Madison Avenue, was more one built on frustration rather than anger and hate. The good jobs were going – but the real assault on jobs was yet to come. NAFTA was but a twinkle in Wall Streets eye. Bill and Hill finally rolled over. There was too much money at stake.

For if we look at health care costs being some 17% of the US GDP and consider they could be cut to 7% if a system like Canada or Australia was implemented that’s 10%of US GDP being lost to big Pharma, hospitals and HMO’s. Of that, if we deduct duplication of paperwork we still get at least 5% profit. That is a huge chunk of profit.

In a federal budget two numbers stand out as fearful, for the way they may change American politics and American power.

The first is the projected deficit in the coming year, nearly 11 percent of the country’s entire economic output. That is not unprecedented: During the Civil War, World War I and World War II, the United States ran soaring deficits, but usually with the expectation that they would come back down once peace was restored and war spending abated.

But the second number, buried deeper in the budget’s projections, is the one that really commands attention: By President Obama’s own optimistic projections, American deficits will not return to what are widely considered sustainable levels over the next 10 years.
Health care is the best place to attack – the other defense is a question for another time.
But this rejection of health care by many it is directed to help is not entirely contrived by those who will profit. I expect they are delighted with the current rejection for this time the Administration definitely had the mandate to implement change and a compelling economic reason to do so.

No one reckoned a home grown backlash by those the scheme was designed for.
That is why I think the BBC is barking up then wrong tree. The sociologists spotted the anger but not the hate.

When working class people scream about socialism they are taking slogans from the right wing shock jocks like Rush Limbaugh who know exactly why such people they hate free, universal health care. Because it is free and universal.

When I managed to break my neck in California 6 years ago I was on a gurney and being wheeled out to an ambulance having been “stabilized” at one of the finest hospital in the land but, as there was no evidence of insurance and I was unconscious I was ready from the scrap heap. In the US that is County Hospital and in my condition I would have been “toe tagged” and left to die. In my battle to drag myself across the desert I had lost my wallet and ID and my Blue Cross insurance card.

Minutes before I was unknowingly being passed into the land of the dead my partner arrived carrying a identical copy of my card.

The gurney immediately was reversed and I was returned to the emergency ward of the top private hospital where, under law, I had been sent to be “stabilized.” Once achieved the private hospitals can then thrown one out and they do – to all without these precious cards. Today I have one of the best broken necks in the world. Without that card I would almost certainly be dead. The cost was in the millions and I calculated about one third of that was profit, duplication and payments for the best surgeons money could buy. For the finest private hospitals compete for the terribly injured but well insured. With that Blue Cross card I was worth millions without it I was worthless.

I suggest these people do not want to see health insurance extended to everyone and, until they have more hope and certainty in their lives will continue to hate the idea.

Which makes Obama’s task that much harder. For now he must reverse thirty years of decline. Thirty years where the middle class has slipped to working class levels and the working class is far approaching the maxim “I’d be working class if I could get a job.”

And then these same people, or their children must be educated so they are not subject to the fear and prejudices that build the hate so they never think straight.

Health care reform means whole scale reform of America, the reversal of what has become a doctrine, that Government is Inherently bad and socialism inherently evil.

More importantly he must take America to a place where they see the advantage of their fellows as being their personal advantage. That no one is a rock or an island. Health care is the best way to do it for the advantages are so obvious so soon. The Government must be steadfast and drive through the reforms or future governments will not be able to survive. The costs of letting the health care industry look after America will prove too much for America.

Once America gets health care it will never give it up. No advanced nation ever has.

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