In The Shock Doctrine, Naomi Klein brought to light the neoliberal tactic of crisis capitalism, unleashed in circumstances (as in Chile, Argentina, Poland, Russia, South Africa) where political powers have exploited (or even created) extreme conditions–such as coups, natural disasters, or economic crises–during which the local population is disoriented and their defenses are down, to instigate corporation- and “investment”-friendly policies like lowered taxes and the cutting and privatization of government services. The justification given for such maneuvers is to bring the target economy in line with the global economy, but, of course, very few people (only a tiny few) in the world actually benefit from these capitalistic incursions. One of the most obscene instances of the Shock Doctrine in action resulted in the rape of the former Soviet Union”s assets by the oligarchs in the name of Boris Yelstin’s economic “reforms.” But that’s only one of the most obvious and well known cases.
During the Clinton years, as former communist apparatchiks were helping themselves to radically discounted oil fields and other rich resources in Russia, Catherine Austin Fitts says she witnessed a similar feeding frenzy much closer to home. A former managing director and board member at the Wall Street firm Dillon Read who served as Assistant Secretary at HUD in the first Bush administration, Fitts started a financial company of her own, The Hamilton Securities Group of Washington, D.C., to help communities make the most of federal monies and improve their standing in what she calls the Popsicle Index, which measures the confidence families in a community feel to send a six-year-old by herself to the corner store and back. Fitts witnessed firsthand the collusion between Washington and Wall Street insiders (often the same people on opposite sides of a revolving door) to employ crisis capitalism techniques in the US as part of the daily repertoire of government actions (my emphasis):
Our efforts at The Hamilton Securities Group to help HUD achieve maximum return on the sale of its defaulted mortgage assets coincided with a widespread process of “privatization” in which assets were, in fact, being transferred out of governments worldwide at significantly below market value in a manner providing extraordinary windfall profits, capital gains and financial equity to private corporations and investors. In addition, government functions were being outsourced at prices way above what should have been market price or government costs — again stripping governmental and community resources in a manner that subsidized private interests. The financial equity gained by private interests was often the result of financial, human, environmental and living equity stripped and stolen from communities — often without communities being able to understand what had happened or to clearly identify their loss. This is why I now refer to privatization as “piratization.”
One of the consequences was to steadily increase the political power of companies and investors who were increasingly dependent on lucrative back door subsidies — thus lowering overall social and economic productivity. Hence, the doubling of FHA’s mortgage recovery rates from 35% to 70-90% ran counter to global trends and ruffled feathers….
Damon Vrabel, whom I featured in my last couple of posts, cites Fitts as the inspiration for his critique of the financial Empire. Fitts considers herself one of its victims: she believes the HUD hierarchy targeted her and Hudson Securities for not playing the agency’s usual corrupt games. “For many years,” she says, “I and those helping me lived with serious physical harassment and surveillance at the hands of mostly unseen, dark forces. Events such as home break-ins, stalking, poisonings, having houseguests followed, friends, colleagues and family warned to not associate with me, a dead animal left on the doormat, and worse became commonplace.”
So dark is Fitts’s view of the government and its corporate collaborators that she is an outspoken proponent of the belief, as a well known conspiracy theory famously puts it, that 9/11 was some kind of inside job. I want to bring this out and lay it on the table because, again, I know many will be tempted to reject everything Fitts says based on this and other, shall we say, unflattering (some might say, paranoid) views of the US government. For the record, I am agnostic on the more “extreme” of Fitts’ charges, for example, that around the time of Iran-Contra (at least), the government was involved in selling drugs to finance covert operations and laundering its drug money through, for example, real estate deals in depressed neighborhoods. That’s just scratching the surface of her charges. If you’re interested, read all of her thirteenth chapter (or this timeline) for some of her highly specific bipartisan accusations. (Fitts names names!) On the other hand, I have to confess my own discomfort with her apparent propensity to credit every accusation of government corruption, no matter how extreme the accusation or how partisan the source.
What is indisputable is that Fitts herself was subpoenaed, sued and audited repeatedly by HUD, and in the process, she lost her securities company and much of her own wealth to pay her legal fees. What brought the wrath of HUD down on her? She claims that her company’s mission to use government money more efficiently and increase transparency for buyers of HUD mortgages (particularly through a software program called Community Wizard that tracked federal spending in localities) did not sit well with certain powerful contractors who had an interest in lucrative privatization schemes that depended on government opacity and community dysfunction. In particular, she cites her own former firm Dillon Read’s financial stake in for-profit prisons, a growth industry in the 1990s that was in competition for more socially productive forms of community development funds, such as the job training centers Fitts’s company championed as a means of helping low-income buyers of federally funded housing afford their mortgages.
It’s a highly complex history that I’ve yet to get a firm handle on myself. It is important to consider the source of the accusations I’m citing here, surely. But that means considering not only those aspects of her “testimony” that concern events she wasn’t witness to, but also those that draw on her real experience as a member of the elite both on Wall Street and in Washington, D.C.
All this is prelude to my next post, which will take a closer look at Fitts’s worldview as it might relate to the #occupyWallStreet or any concerned American wondering what is to be done about the state of the nation.