On 30 March 2011, Neil Borofsky stepped down from his post as the special inspector for the Troubled Asset Relief Programme, or TARP. More widely and ignominiously known as “the bailout,” TARP was a result of the Emergency Economic Stabilization Act of 2008, designed to purchase equity and assets from a host of American companies – financial, automotive or other – that were “too big to fail.” The day of his resignation, Barofksy wrote an op-ed piece for The New York Times. It’s a well-tuned, taut exercise in outrage, and it speaks to a literary genre that deserves appraisal. If nothing else, the Great Recession has provoked a boom in letters. We’re here to take, um, stock of it. By RICHARD POPLAK.
Borofsky’s op-ed, entitled “Where the bailout went wrong”, has a rhythm and timbre that is practically Wagnerian in scope. It begins angrily, ends up dripping with the snake venom of its indignation and becomes a piece of writing that will one day be required reading in history classes, should we be able to afford schools in the future. It’s worth quoting the final paragraph in full, which is as thorough an indictment of the US Congress’s bi-partisan bailout policy as one could hope to read.
“Treasury’s mismanagement of TARP and its disregard for TARP’s Main Street goals – whether born of incompetence, timidity in the face of a crisis or a mindset too closely aligned with the banks it was supposed to rein in – may have so damaged the credibility of the government as a whole that future policy makers may be politically unable to take the necessary steps to save the system the next time a crisis arises. This avoidable political reality might just be TARP’s most lasting, and unfortunate, legacy,” Borofsky wrote.
Granted, this isn’t Nabokov. But it’s precise, pointed and dead on the money, not that there’s any left. TARP’s special inspector will now be spending “more time with his family” (as gently mendacious an opt-out as a Hollywood star quitting a movie for “exhaustion”.) Borofsky left TARP because his job was a sham in a long series of shams, most of which originate on Wall Street. His op-ed piece now joins a host of other Great Recession writing in the admittedly small, but powerful, pantheon.
That pantheon could well find its place in a larger literary genre, that of financial disaster writing. Few writers have managed Tolstoy’s widescreen toggle between rich and poor and everyone in between; Americans in particular tend to stick to one or the other. No crash in history provoked as much literary fallout as the Great Depression; it wasn’t the first period in history to inform a literature of penury, but it was the most significant. John Steinbeck’s “In Dubious Battle”, “Of Mice and Men” and “The Grapes of Wrath” turned the California dustbowl into a proxy for an America hobbled by a financial crisis placed squarely on the backs of the Everyman. In his day, Steinbeck was considered to be a spokesperson for Franklin D Roosevelt’s New Deal policies. “The Grapes of Wrath” was dismissed by the right as a socialist manifesto, and in some cases banned in schools. But Great Depression writing is wide and deep, and still produces the odd classic. “Seabiscuit: An American Legend”, by Laura Hillenbrand, is a fine piece of historical reportage, detailing the winning journey of a plucky horse and its ornery jockey through the dustbowl.
If there’s crash writing, so too is there boom writing. This genre is often all the more poignant for being written during crashes and is, therefore, a meditation on the twin and never flagging human follies of myopia and cupidity. F Scott Fitzgerald’s “The Great Gatsby” was a book about the roaring twenties written during the roaring twenties, and it is as definitive a text about a boom-era society as has ever been published. Flash forward to Tom Wolfe’s “Bonfire of the Vanities”, and we have the best book written about the venal eighties, closely followed by Michael Lewis’s astounding non-fiction account of his few years with the Salomon Brothers, in “Liar’s Poker”. South Africa produced two fine explications of the recent boom in Carel van de Merwe’s “Shark”, and Zakes Mda’s “Black Diamond”. The latter is a sharp, if underwritten, satire on the black parvenu class, as grasping and acquisitive as the white elite who came before them.
Crash writing and boom writing have one striking difference. During booms, the press more often than not acts as a shill for corporate interests, sprouting the company line and insisting that all is peachy, based on Q3 reports and the nonsense proclamations of CEOs and COOs and CFOs, all of whom have vested interests until the pyramid lists, when they make a run for it. This isn’t collusion in the proper sense; it is genuine, A-grade ignorance. On paper, every boom looks airtight. Finding the cracks, yawning as they sometimes may be, takes time and resources, something business newsrooms no longer have, if ever they did. Post crash, they suddenly find that time, working with hindsight, retrospect and a host of individuals who are suddenly free to speak the truth, to cobble together the cycle of greed and stupidity that led to the collapse they insisted was unlikely.
The Great Depression; the oil crisis of the seventies; the eighties bust; the dot.com bubble burst: all of these were covered marvellously. In the case of the Great Recession, no piece of writing has been more influential and contested than an article that appeared in Rolling Stone magazine in July 2009. Entitled “The Great American Bubble Machine”, written by contributor Matt Taibbi, the essay is an indictment of investment bank Goldman Sachs so visceral, powerful and enraged that it became an instant classic. The first paragraph sums it up: “The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who’s Who of Goldman Sachs graduates.”
If that sounds like the opening graph of a paranoid’s manifesto, it surely is. Taibbi’s screed was well-researched, but hyperbolic – hardly a piece of top-notch journalism. Instead, it tapped into the bafflement and anger that we all felt – this sense that the bad guys had got away with murder, and were enjoying the spoils on million-dollar yachts in the Antilles. Which they had, and they were. Goldman Sachs, normally quiet on the burst of bad press that does no damage to their bottom line, made the unusual move of commenting on the piece. Lucas von Praag, the James Bond villain who acts as the company’s PR flak, said: “Taibbi’s article is a compilation of just about every conspiracy theory ever dreamed up about Goldman Sachs, but what real substance is there to support the theories? We reject the assertion that we are inflators of bubbles and profiteers in busts, and we are painfully conscious of the importance of being a force for good.”
Taibbi wraps up in the following manner: “It’s a gangster state, running on gangster economics, and even prices can’t be trusted anymore; there are hidden taxes in every buck you pay. And maybe we can’t stop it, but we should at least know where it’s all going.” Indeed. Michael Lewis, Vanity Fair editor, bestselling author and perhaps the finest writer on financial disasters in the history of busts, reliably produces a bestseller every time the economy tanks. His Great Recession contribution is “The Big Short”, which could easily be subtitled “Chronicle of a Crash Foretold”. Lewis sums up his working model with a epigraph from Tolstoy: “The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of a doubt, what is laid before him.”
Embedded in Lewis’s work is the notion that at least two generations of America’s best and brightest have applied themselves exclusively to accumulation of wealth on Wall Street, while not knowing the machinations behind how that wealth is accumulated. This doesn’t give anyone a free pass – a day on Wall Street allows that this is, at best, the capital of the amoral. And it takes a significant holding of the nose to work at a place like Goldman Sachs, given its reputation. But no one really knows how the game works, least of all those who are supposed to protect middle class investors from their natural predators. Every step of the way, the American government has caved in to calls for deregulation. You and I, ostensibly safe at the bottom of Africa, get bilked along with the rest of the world.
But we must ask the following: What, one wonders, besides selling magazines and propping up Amazon’s bottom line, has all this powerful prose amounted to? What, in Wall Street speak, is the net gain of Writing the Crash? Has it changed policy? Are the financial markets better regulated, and is the possibility of another crash the province of Hollywood screenwriters rather than hardnosed journos and hard-done-by ex-insiders. The answer, of course, is no.
Taibbi’s article, long on fury as it may be, is short on what to do with that fury. It wallowed in its own doom, like one of the hogs depicted in the story’s fabled artwork, and refused to suggest a way forward. There’s an imprecation buried in there somewhere: “For Chrissakes, and for the love of God, please regulate the financial sector!” But it didn’t leave readers much to work with. It’s raison d’etre is thus to incite outrage, which is a sibling of frustration, and reasonably within the province of propaganda. Michael Lewis does a fine job cutting through the incomprehensible guff of how the markets work, but it’s still Greek to most of us. His most plangent call is for regulation, but regulation for what, exactly. Derivatives? Securities? The bond market? It’s all so damned confusing.
Barofsky, now spending more time with his family, may ponder writing the book we need. A 12-step programme to reform the capitalist system, so that the taxpayers of the world aren’t its lone saviours every time it wipes those same taxpayers out. Now that, folks, would be an enduring classic. DM
Main photo: Traders work on the floor of the New York Stock Exchange in this March 18, 2009 file photo. The Bank of England estimated governments the world over have spent or committed a staggering $14 trillion to prop up the financial system following the fall of Lehman Brothers in September 2008. Despite the protestations by politicians that such a large-scale rescue should never be allowed to happen again, their actions over the past two years suggest the opposite. Picture taken March 18, 2009. REUTERS/Brendan McDermid
While we have your attention...
An increasingly rare commodity, quality independent journalism costs money, though not nearly as much as its absence can cost global community. No country can live and prosper without truth - that's why it matters.
Every Daily Maverick article and every Scorpio exposé are our contribution to this unshakeable mission. It is by far the most effective investment into South Africa's future.
Join our mission to become a Maverick Insider. Together we can Defend Truth.
Speaking Kurdish in Turkey was illegal until the 1990s.