The Banality of (Financial) Evil


The Banality Of (Financial) Evil

The financialized American economy and Central State are now totally dependent on a steady flow of lies and propaganda for their very survival. Were the truth told, the status quo would collapse in a foul, rotten heap.

Google’s famous “don’t be evil” is reversed in the American Central State and financial “industry”: be evil, because everyone else is evil, too. In other words, lying, fraud, embezzlement, mispresentation of risk, material misrepresentation of facts, the cloaking of truth with half-truths, the replacement of statements of fact with propaganda and spin: these are not the work of a scattered handful of sociopaths: they represent the very essence and heart of the entire status quo.

Hannah Arendt coined the phrase the banality of evil to capture the essence of the Nazi regime in Germany: doing evil wasn’t abnormal, it was normal. Doing evil wasn’t an outlier of sociopaths, it was the everyday “job” of millions of people, Nazi Party members or not.

Not naming evil is the key to normalizing evil. Evil must first and foremost be derealized (a key concept in the Survival+ critique), detached from our realization and awareness by naming it something innocuous.

Here is a telling excerpt from the book Triumph of the Market:

Normalization of the unthinkable comes easily when money, status, power, and jobs are at stake…. Intellectuals will be dredged up to justify their (actions). The rationalizations are hoary with age: government knows best, ours is a strictly defensive effort, or, if it wasn’t me somebody else would do it. There is also the retreat to ignorance, real, cultivated, or feigned.

Can any of the tens of thousands of people working on Wall Street or in the bowels of the Federal Reserve, Treasury, Pentagon, etc. truthfully claim they “didn’t know it was wrong” to mislead the citizenry, the soldiers, the investors and the buyers of their fraud? On the contrary, every one of those tens of thousands of worker bees and managers knows full well the institution they toil for is doing evil simply by hiding the truth of its operations.

The entire status quo of the American Empire is built on lies.
Now the dependence on lies, fraud and misrepresentaion is complete; Wall Street and the Empire itself would fall if the truth were finally revealed and properly identified as evil.

Lying has been derealized; it is now the expected norm.
To tell the truth–on your resume, on your loan application, on your tax form, and about your own actions– is now tainted and suspicious; the truth-teller is reviled as “putting on airs” of moral superiority, and they will be shunned and cut off by the liars around them.

Cheating on tests no longer carries any stain of ethical corruption; “everyone” cheats lest they fail to get into the university of their choice, the one that represents “the short cut” to a “good job” with excellent pay: yes, a job doing evil every day. But we no longer care about doing evil; we avoid it as a moral slaughterhouse we prefer not to see. Let the butchering of the moral heart of the nation be hidden from our delicate eyes and quivering guilty consciences.

The idea that we might not be able to buy the McMansion/auto/tattoo/toy we “deserve” enabled our killing of truth on the application.
Deprivation is a greater evil than the loss of personal integrity, and so hundreds of thousands, if not millions, of Americans went along with the lie and sacrificed their integrity to support it, feed it, breathe life into it and then pass it on to the next liar.

So the mortgage applicant lied, and the mortgage broker lied by accepting a document he/she knew was false. And so the lie grew heavier as it passed from hand to hand, and the truth became lighter than air and floated away long before the falsified mortgage was originated, packaged, tranched and sold as a AAA “safe” investment.

We now say and vouch for whatever it necessary to “win,” whatever “winning” is in a universe with no moral compass. When the entire system depends on the steady relentless flow of lies–from the Federal Reserve, the Treasury, the Pentagon, the banks and Wall Street, the ratings agencies, the accounting depeartments, every nook and cranny of the American economy and empire–then no one is willing to sacrifice their own livelihood because they know it wouldn’t stop anything. The machine would continue on, processing lies, fraud and propaganda, without them. but they would be outside the lucrative heart of darkness, and no longer able to buy their coveted McMansion/auto/tattoo/toy that defined who they are.

Integrity has become as light as the truth itself, and both have floated away, unnoticed and unmourned. Hannah Arendt wrote about the Great Evil, Nazi Germany, and “The Final Solution” of death camps. But the Nazi machine spewed plentiful opportunities to practice the banality of evil, and the death camps were simply one division of the daily grind of pressing one’s palms on evil and passing it on to the next “good German.”

Here is a memorial outside the village where my brother lives in France. It is a typical village, quite small, perhaps a few hundred residents. The memorial commemorates three young French civilians who were taken out and shot by Nazi soldiers, either for suspected “crimes” or as a “lesson” to the civilian populace.

The routine killing of civilians went on day after day; it was the “day job” of the occupying troops.

Americans toiling away in their various departments of evil excuse their complicity by telling themselves, “nobody died because I lied” (except in Afghanistan and Iraq, and who am I to stop what goes on there?). Hiding the truth carries no penalties or remorse because it is SOP now, standard operating procedure.

The moral slaughterhouse is filled with corpses.
We don’t really know what our Central State is doing in the world, in the Mideast or Afghanistan. We also don’t know what the Central State/Wall Street partnership is doing, either. Those inside know, of course, but very few are telling, because the see-saw is just so imbalanced in a system which depends on lies and the distortion of truth to continue its domination.

The truth-teller will lose their prestigious position, their generous salary and the acceptance of their peers. In exchange for this sacrifice, the truth-teller receives only the glowing, ephemeral shards of his/her integrity: in the American culture and economy, that literally has no value. The machine will grind on without them, impervious to the tiny pricks of truth; the machinery of propaganda, artifice, misdirection and misrepresentation is well-oiled and masterful in the reach and scope of its operation.

Lest you think this an exaggeration, please watch The Most Dangerous Man in America: Daniel Ellsberg and the Pentagon Papers. Daniel Ellsberg was only one of thousands of “good Americans” doing their job in a war machine built entirely on lies and propaganda. Only one citizen out of those thousands, or tens of thousands, was willing to trade his career for his integrity and conscience.

That’s how the banality of evil works. Maybe someday someone will break free of the culture of lies and propaganda in the Federal Reserve, the Treasury, Wall Street and the “too big to fail banks” and tell the truth. They will be hounded, discredited, scorned and reviled for telling the truth, and the truth will quickly be covered up or shredded.

That’s how the banality of evil works. Truth has become too dangerous to the status quo, so it must be strangled every day, by tens of thousands of people, and its limp corpse hidden away.

Fraud and Complicity Are Now the Lifeblood of the Status Quo (Banality of Financial Evil, Part 2)

Fraud and Complicity Are Now the Lifeblood of the Status Quo (Banality of Financial Evil, Part 2) 

The status quo would collapse were systemic fraud and complicity banished. Rather than the acts of evil conspirators, they have become the foundation of the U.S. economy and financial system.

Though fraud and complicity are presented in the mainstream media as isolated conspiracies outside the status quo, the truth is that the status quo is now entirely dependent on fraud and complicity for its very survival. Every level of the status quo would immediately implode were fraud and complicity suddenly withdrawn from the system.

How is this true? let me count the ways.

1. The mortgage market. As I reported recently in this Daily Finance story, the private market for mortgage-backed securities is dead. Now that we all understand the entire mortgage is not just riddled with fraud and misrepresentation of risk, but it is entirely dependent on fraud and misrepresentation of risk to function, no one is willing to touch any of this debt–except if it is guaranteed by the Federal government (and thus by its taxpayers).

Now that the systemic fraud and misrepresentation of risk have been exposed, the $10 trillion mortgage market has ceased to function except as a dumping ground where private players can dump 100% of their losses on the taxpayers (profits were privatized, losses are socialized).

2. Foreclosures and our Banana Republic system of “law”. There are two sets of laws (and two sets of books) in status quo America: one set of laws for “too big to fail” banks and Wall Street, and one for the rest of us peons.

Courts Helping Banks Screw Over Homeowners.

3. Housing and commercial real estate (CRE). Does anyone seriously think housing is recovering from organic demand? Does anyone seriously think housing wouldn’t fall off a cliff if the Central State withdrew its collusive propping-up of the real estate market?

As I reported in These Numbers Paint a Bleak Picture for Housing, there is essentially no evidence that housing is recovering due to “organic” (that is, non-State-manipulated) supply and demand.

Rather, Home Prices Fall in Nearly Half of U.S. Metro Areas and the percentage of underwater homeowners rises.

4. Wall Street. Perhaps no finer example of a system totally dependent on fraud and misrepresentation of risk exists than Wall Street. To pluck but a few from dozens of recent examples:

J.P. Morgan, BofA Report Perfect Trading Quarters.

Proprietary Trading Goes Under Cover: Michael Lewis.

Want to get away with murder? Become a bank.

SIGTARP Report: Treasury Hid AIG Losses.

5. The stock market. As I outlined in Dependency, The Fed and the Market (November 8, 2010), the stock market would roll over and crater without constant intervention and manipulation by the Federal Reserve and other Power Elite/Central State agencies.

Astute reader Russ R. and Zero Hedge pointed me to this interview with Jeremy Grantham in which he rightly identifies the Fed’s goal as controlling the economy rather than the money supply, and the Fed’s only avenue for this manipulation is the “wealth effect” which it believes is triggered by a rising stock market.

But as I laid out in Are the Fed’s Honchos Simpletons, Or Are They Just Taking Orders? (November 1, 2010), the “wealth effect” and its discredited cousin, the “trickle-down” theory, are both doomed to fail.

The stock market gained over 50% in 2009, adding trillions of dollars in “wealth effect,” yet the median household income fell 0.7% to $49,777 in 2009. So much for the “wealth effect” from rising stocks having any positive effect on actual household incomes.

In essence, the Fed is counting on an illusion of temporary wealth to ignite a firestorm of new borrowing and spending. Unfortunately for the Fed, 90% of American households don’t own enough financial assets to feel even the illusion of newfound wealth, and those that do have been burned twice this decade when all that “wealth” in stocks vanishes (NASDAQ down almost 80% in 2000-02, S&P 500 down 45% from October 2008 to March 2009).

6. Corporate accounting. With pro-forma earnings, off-balance sheet assets, derivatives booked as “mark to fantasy,” much of Corporate America’s accounting is dependent on fraud and misrepresentation of risk to plump up the all-important quarterly earnings.

I have written extensively on this recently:

U.S. Financial Markets: The Well Has Been Poisoned (Anger of the Honest Part II) (October 23, 2010)

The Loss of Trust and the Great Unraveling To Come (October 18, 2010)

The Normalization of Sociopathology in America (October 16, 2010)

The Rot Within: Our Culture of Financial Fraud and the Anger of the Honest (October 15, 2010)

7. Politics. I addressed this recently in two entries:

Concentrated Wealth and the Purchase of Political Power: Democracy’s Death Spiral (October 29, 2010)

The Stealth Coup D’Etat: U.S.A. 2008-2010 (October 28, 2010)

8. The entire status quo, from worker bees to Power Elites and the Political Class.

The Banality of (Financial) Evil (November 9, 2010)

The Strain of Being Evil

(The present) state is marked by the rise of the pygmy leader, the sovereign as dolt, the CEO as figurehead that knows little, who has no real need of knowing. It is in this gimlet-eyed tone that Hegel should be read when he says that “no reference to particularity of character” is necessary in the leader of an advanced state or in this case, large bank in an advanced money economy. Hegel continues:

“In a completed organization we have to do with nothing but the extreme of formal decision, and that for this office is needed only a man who says ‘Yes,’ and so puts the dot upon the ‘i.’ The pinnacle of state must be such that the private character of its occupant shall be of no significance.”

What is known in the literature as “moral hazard” creates an ecology that results in moral lassitude rather than evil. Thus our bankers are no robber barons, no blood suckers, but rather “dot the i” dolts, and at their best, their very best, they are performers who pantomime what a leader should look like in order to “dot the i” or appear to.

I think that sums up the foreclosure crisis, the banks, the courts, the regulatory agencies, Wall Street, the Fed, the Treasury, and the rest of the Political Class.

When a system becomes dependent on fraud and misrepresentation of risk for “business as usual,” then all that is required of the complicit is to “dot the i’s” and fill out the report, court order, balance sheet, act of Congress, etc., just like everyone else does.

Thus does the banality of (financial) evil come to full flower.

Charles Hugh Smith – Of Two Minds