Through a Glass Darkly: Catherine Austin Fitts and the Capitalism of Crisis

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.

Catherine Austin Fitts

Catherine Austin Fitts

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…. Continue reading


Debt Society in Need of a Revolution

A couple of nights ago, as I was following links deeper into the blogosphere in search of a possible explanation for why #occupyWallStreet has sprung at this moment and where it might go, I came upon a series of videos by Damon Vrabel, a self-described “post-neoclassical economic philosopher”, for a “course” he calls Renaissance 2.0 that purports to explain money in a way it isn’t usually thought about by philosophers on the left or right. I’m not particularly clever with money or economics myself, so I was curious to see if Vrabel, whom I’d just watched in a very interesting interview with Max Keiser (it’s in three parts, with part 2 here and part 3 here), could help me get a handle on it. I recommend the whole series.

Here is the first part:

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