a curious Yankee in Europe's court

In a seven-minute interview on Thursday for The Washington Note, Nobel Economics winner Joseph Stiglitz prescribes good sense remedies for the USA economy:

And in a two-minute talk to the public this week, Harvard law professor Lawrence Lessig explains why  Congress isn’t listening:

Learn more about the work of Change Congress here.

Who wrote this?

..He invests his property. He goes, in a condescending amateurish way, into the City, attends meetings of Directors, and has to do with the traffic in Shares. As is well known to the wise in their generation, traffic in Shares is the one thing to have to do with in this world. Have no antecedents, no established character, no cultivation, no ideas, no manners; have Shares. Have Shares enough to be on Boards of Directors in capital letters, oscillate on mysterious business between London and Paris, and be great. Where does he come from? Shares. Where is he going to? Shares. What are his tastes? Shares. Has he any principles? Shares. What squeezes him into Parliament? Shares. Perhaps he never of himself achieved success in anything, never originated anything, never produced anything? Sufficient answer to all; Shares. O mighty Shares! To set those blaring images so high, and to cause us smaller vermin, as under the influence of henbane or opium, to cry out, night and day, ‘Relieve us of our money, scatter it for us, buy us and sell us, ruin us, only we beseech ye take rank among the powers of the earth, and fatten on us!'”

Charles Dickens wrote this paragraph in describing a character in “Our Mutual Friend,” his novel first published in the years 1864-65. The book was written in the years leading up to the British financial crisis of 1866. A footnote from the paragraph explains:

“The 1850s saw an unprecedented boom in shareholding and speculation. The British financial crisis of 1866 and the spectacular failure of Overend and Gurney with other companies confirmed what many observers and moralists had prophesied. This passage shows Dickens aware of changing conditions…”

More about the financial crisis of 1866

Thanks Wikipedia:

Overend, Gurney & Company was a London wholesale discount bank, known as “the bankers’ bank”, which collapsed in 1866 owing about 11 million pounds (£828 million at 2003 prices). Until events at Northern Rock in September 2007, it was the last run on a British bank…

The bank’s core business was the buying and selling of bills of exchange at a discount. It was well respected, and expanded rapidly, reaching a turnover double its competitors combined. For forty years it was the greatest discounting-house in the world. During the financial crisis of 1825, the firm able to make short loans to many other bankers. The house indeed became known as “the bankers’ banker,” and secured many of the previous clients of the Bank of England. Samuel Gurney died in 1856…

After Samuel Gurney’s retirement, the bank expanded its investment portfolio, and took on substantial investments in railways and other long term investments rather than holding short term cash reserves as was necessary for their role. It found itself with liabilities of around £4 million, and liquid assets of only £1 million. In an effort to recover its liquidity, the business was incorporated as a limited company in July 1865 and sold its £15 shares at a £9 premium, taking advantage of the buoyant market during the years of 1864-66…

Overend Gurney’s monetary difficulties increased, and it requested assistance from the Bank of England, but this was refused. The bank suspended payments on 10 May 1866. Panic spread across London, Liverpool, Manchester, Norwich, Derby and Bristol the following day, with large crowds around Overend Gurney’s head offices at 65 Lombard Street. The failure of Overend Gurney was the most significant casualty of the credit crisis. The bank went into liquidation in June 1866. The financial crisis following the collapse saw the bank rate rise to 10 per cent for three months. More than 200 companies, including other banks, failed as a result.

The directors of the company were tried at the Old Bailey for fraud based on false statements in the prospectus for the 1865 offering of shares. However, the Lord Chief Justice Sir Alexander Cockburn said that they were guilty only of “grave error” rather than criminal behaviour, and the jury acquitted them. The advisor was found to be guilty. Although some of the Gurneys lost their fortunes in the bank’s collapse, the Norwich cousins succeeded in insulating themselves from the bank’s problems, and the Gurney bank escaped significant damage to its business and reputation.

The thing is…

And I mention this because it seems to me it’s a key underlying factor of the whole current Wall Street meltdown: it’s that we the citizenry can scream in accusatory outrage until the cows come home but the art and practice of fleecing the gullible and unwary is one of the oldest in human history. Just consider the ever popular shell game which has been around at least since the Middle Ages. And poor judgement and stupidity never seem to be in short supply in human behavior.

Why am I bringing this up? It’s this recent Washington Post story on government oversight of the $700 billion Wall Street bailout now underway. The article headline signals the bad news — “Bailout Oversight Lacking, GAO Says Investigators Find Few Safeguards or Gauges of Success.”

So for now…

It seems to be the same old same old — and by old I refer to those days of 1866, as well as to recent times. Some of the Wall Street whizzes who’ve been busily burning down the house for the past several years apparently think the $700 billion bailout is just a new supply of matches. They’re continuing their usual business practices, and happily continuing to fatten on us, as Dickens wrote.

They may even be humming along to the tune of “Everything old is new again” — (I offer this as a little laugh because we dare not cry relief from the dreariness of this post dose of righteous wrath).

But the good news is…

This isn’t 1866. It’s true we don’t have the eloquent and brilliant voice of the fiery Dickens to speak truth to the scoundrels and dimwitted among us, but we do have some pretty good voices of our own day that are fierce and strong, and so offer hope. They’re all telling us that we the people have to get smarter. That we have to read and listen more, read and listen better and more deeply, just as they are.

If  you don’t have your own list of such, I offer my short roster of favorites:

Activist Organizations:

• Save The Internet (SaveTheInternet.com)

• Change Congress (changecongress.org)

Some who see it and tell it like it is:

• Markos Moulitsas (DailyKos.com)

• Rachel Maddow (The Rachel Maddow Show, MSNBC)

• Glenn Greenwald (Salon Magazine columnist)

• Josh Marshall (Talking Points Memo)