Propaganda Wars : Their Version – “Markets Don’t Fail”.

By David Malone

February 10, 2012 "Information Clearing House" ---  History is written by the victors. It should be no surprise then, that the bankers have developed a very clear story of how the financial debacle happened and who should be blamed, and are now engaged in a campaign to have their version of events accepted and all others declared as dangerous demagoguery. What the bankers realize and so must we, is that unless you write the history, and so control the story,  you won’t be the victors.

It is imperative therefore that we expose the bankers’ narrative for the strait jacket of self-serving lies it is, and that we have our own.

The bankers’ version has the advantage that it is already accepted and endorsed by all wings of our political class, that the mainstream media lap up anything the super wealthy and their bankers say, and of course that the banking lobby has more heads than a hydra.

What is their version? Let’s look at one of the more recently created lobby groups the Job Creators Alliance.  According to their web site they were set up by ten of America’s present or former CEOs  for ‘…the defence of the free enterprise system…in the court of public opinion.” The web site goes on to say that it is their aim to “educate the public and policy makers…” and “…shape the national agenda….”

What is that agenda? Well its made quite clear on their web site in an article called “Markets don’t fail” in which it is declared that,

…the onset of the financial crisis three or four years ago was largely due in the US and the UK to excessive demand for mortgages from people who couldn’t afford them.

There, simple as that. Nothing to do with the banks or bankers, nothing to do with robo-signing, selling CDOs which were designed to fail so others could profit by betting against them. Nothing to do with banks lying about the worth of their assets or having a fundamentally stupid and unstable funding model. Nothing to do with insane leverage levels or ‘To Big To Fail’ institutions gambling with client’s money. None of that is to be allowed in to the public discussion. The entire discussion must be, from the bankers point of view, carefully managed.  The discussion, in so far as the public are to be allowed to partake at all, must be carefully shaped and steered, and above all, the assumptions from which it starts and by which its eventual outcome will be determined, must be set and controlled by the Bankers.

Thus it’s worth noting that the article I quoted from the Job Creators Alliance, in America, was also posted on the Adam Smith Insititute in the UK. A ‘think tank’ whose aim is, “… to promote libertarian and free market ideas.”   The  Insititute was very influential in the Thatcher Privatizations and has close links with the libertarian and Free Market US think tank, The Heritage Foundation.

The author of the article, Mr Jan Boucek, is not from either The Job Creators Alliance nor the Adam Smith Institute but from a company called  ECD which describes itself as ,

Mr Boucek is described as, “…an expert in international business communication and the finance media. He has extensive experience in message development, editing skills, coaching and personal development.” In other words he is a spin doctor.  Now anyone can write an article for another organization whose aims they share, but it does change how  we read his opinions when we know who he works for. None of this, however,  is mentioned by either The Adam Smith Insitute or the Job Creators Alliance. It seems to me there is a campaign but that those running it would prefer we not see it as such.

So the bank narrative is that the credit crisis was due to people demanding mortgages they couldn’t afford.  However, are ordinary people in a position to ‘demand’ a mortgage from a bank? It’s like that other phrase much used and approved of by the banks, ‘…people took on debts they couldn’t afford’. ‘Demand’ and ‘Took’ both try to make ordinary people the culprits and the banks the vicitms. But can ordinary people ‘demand’ and then ‘take’ a mortgage from a bank?

Al Capone took money from banks. You and I can demand all we like, but we can’t ‘take’ a loan unless the bank offers it. The fact is, the loans people couldn’t afford were  offered, advised and approved by the banks. It is the bank’s line of business to know if someone can afford a loan or not. That is what bankers do for a living. The bankers knew they were offering and ‘extending’ loans to people above what those people could really afford but did so anyway. And the bankers above them in the bonus pyramid approved.  Our guilt and greed was to ‘accept’ loans that were unwise and unstable. But we did not ‘take’ them from innocent bankers against their better judgement and advice.

Nevertheless the Bankers narrative of events is that markets don’t fail only people. Of course there have been some difficult cases of bank failure and even some cases of outright fraud. How to deal with those? Ah, well there we have the “One Bad Apple’ argument, which is usually teamed with the, ‘now under new management’, message development strategy.

One Bad Apple is from the same stable as ‘rogue trader’. Both are important strategies to ensure that any potentially damaging criticism of the system itself is deflected on to a lone or rogue element which we can then be assured, has been replaced.  Phew! Problen identified, corrected and now , if you please ladies and gentlement, just move along quietly.

And the ‘liberal’ press readily swallows both strategies. The New York Times ran an article in October 2011 in which it talked about how Citigroup had been found guilty of fraud and

“.. had to pay a $285 million fine to settle a case in which, with one hand, Citibank sold a package of toxic mortgage-backed securities to unsuspecting customers — securities that it knew were likely to go bust — and, with the other hand, shorted the same securities — that is, bet millions of dollars that they would go bust.”

As the article said, “It doesn’t get any more immoral than this.” But then just one paragraph later the author reassures us not to worry because that that was then but,

“Citigroup is under new and better management now,..”

Of course you might remember Goldman Sachs did almost the same thing and had to pay $550 Million to settle its case. But importantly for the banks and bankers I cannot say Goldman was ‘guilty’ of anything because it was not found guilty. Instead it was allowed to settle the fraud case with a $550 million fine which is far less than it would have made from its trading practices.  Far more importantly, the settlement allowed Goldman to walk away “neither admitting nor denying wrongdoing”. A careful peice of ‘message management’.

Now is Goldman under new and better management? NO. But no one mentions that. Just as they don’t mention that Deutsche Bank is also up on fraud charges. So is Bank of America. All the big four accountant firms were recently or still are under investigation. I could go on.

But instead I’ll just quote US liberal magazine Mother Jones from December 2011 which said,

“…the ‘few bad apples’ argument really is worth acknowledging…”

So the bankers’ sanitized narrative is that markets don’t fail, people do and when a bank or a banker is caught doing something fraudulent or immoral it is just a bad apple which is neatly replaced. Imperative is the message that there is NOTHING intrinsically wrong with the banking/finance system as it is now constituted. THAT is their central concern and version of reality.

The other side of their strategy, which I suggest we”ll see more of in the coming months, is to suggest those who oppose them are suspect or even dangerous. Note how Jamie Dimon, CEO of JP Morgan, took time before flying to Davos to give an interview in which he said, that anti-banking sentiment was,

“…a form of discrimination that should be stopped.”

How to stop it? Well one suggestion came from US lobbying firm, Clark Lytle Geduldig & Cranford in a memo sent to the American Bank’s Association on how to discredit the Occupy Movement. According to Reuters,

The four-page memo outlined how the firm could analyze the source of protesters’ money, as well as their rhetoric and the backgrounds of protest leaders.

“If we can show they have the same cynical motivation as a political opponent, it will undermine their credibility in a profound way,” said the memo,

Now the American Banks Association (ABA) was quick to say the suggestion had not been taken up. The banks have tried to suggest that this was an unsollicted, even perhaps a ‘rogue’ memo. In a word – bollocks.  Clark Lytle Geduldig & Cranford are not fly by night chancers who send off-the-wall suggestions on spec. They are a Washington institution. They are very, very well connected. The ABA are long standing clients. Their business is lobbying. They know their clients. They know what they are thinking, what they need and what they might like to hear. Memo’s don’t get sent out to America’s bank lobby on spec by the work experience intern.

The memo would not exist at all and certainly not suggest what it does if  the partners of Clark Lytle Geduldig & Cranford did not think this was already in their clients minds.

So I think we now have a rough outline of the narrative the bankers want endorsed and promoted. I think we also have an inkling of the measures they are going to deploy against those who oppose them.

That’s ‘Them’. What about ‘Us’ and our narrative?

Well here I find I agree with Jamie Dimon on one thing. He said generalized banker bashing was wrong. I agree. Blunt generalizations are not good enough. What we need are stout reasons that can be sharpened to a fine point and then used to stab (metaphorically only of course) deserving bankers through the heart.  Fortunately there are many such reasons and an almost equal number of thoroughly deserving bankers.

David Malone is author of the "The Debt Generation". David has a career spanning nearly twenty years producing and directing documentaries for both the BBC and Channel4. His series Testing God was shortlisted for the Royal Television Society best documentary series and was described by The Times as "moving and startling - as close to poetry as television gets." For the last three years David has focused considerable attention on the financial system. His BBC documentary High Anxieties- The Mathematics of Chaos, first broadcast in September 2008, was one of the first films to be made about the financial crisis accurately anticipating the problems that were to unfold in the economy. The Debt Generation was published in November 2010. He blogs at Golem XIV




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