Dr. Felix Bronner "How I Got Here" art exhibit at the New Haven Free Public Library - by Donna Joyce
After receiving several art invitations this fall, I’m sorry I was unable to attend the final art opening before renovation of the gallery area in the New Haven Public Library and reopening in spring 2010.
Nonetheless, I did stop by to view the Dr. Felix Bronner exhibit this past week. As usual, it was another inspiring set of works. I noted a palpable feeling of particles/ matter/ energy in all of the works. With the restful and calming primary color of seafoam green, “Seascape” was a great way to start the exhibit. “Roaring Over Print” is fantastic to me – it’s an apt metaphor these days for my state of mind, and equally well depicts my office space.
Finally, I enjoyed “And What Can You See?” .. I’m still not precisely sure what I did see .. Every time I glanced at the work during my short visit, the experience was different – but it was a great adventure!
Hope to see you in 2010! Thanks again for continuing to include me on your art opening invitations list.
All the Best,
Donna Marie Joyce
November 16, 2009
Going Home: Reviewing the “Wheel” painting of the late Philip Guston -- essay by Ellen Hackl Fagan
Home is where the truth lives. Where all affects are removed,we live with ourselves (and possibly others) along with our flaws and our triumphs. For many, this is a place inside a building. For others, this is a feeling deep inside our conscious. When pondering the topic of“home,” in the context of a gallery, it seemed opportune to discuss the work of an artist whose attempt to depict this subject transcended particular places, but speaks of the internalized meaning of “home.” The artist who really “hits home” for me is Philip Guston, and I want to discuss one of his final paintings, “Wheel” painted a year before his death in 1979.
In Guston’s later works we see his self-portrait emerge as a Sad Sack, schlumping along the surface of the earth, his stubbly bandaged face,his Cyclopean stare. His gaze sees his world, his problems with himself and with the act of painting. He also looks at the problems in our world in its time. If you’ve ever painted or struggled with creating something, Guston’s hand will tear at your heart. Gooey, thick pink blobs, peach and red, crudely rendered black lines and tan mushy, gushy paint resists casual flow and shows us that the artist has been humbled in making his mark. I could wear his reddened paint as a skin, or I could dive into its viscous depths, traveling to the internal workings of his all-too-human heart. It’s his self-portrait, but it speaks to anyone who has ever felt like that Sad Sack, unable to ignore the siren’s call of paint and surface, to attempt transforming the intangible into the palpably tangible over and over again.
Guston’s Everyman is a trusted observer, reporting on the way it feels to question one’s own abilities as well as the authorities in charge of our lives. Fearlessly honest about his position in this life, underwhelming on the outside, this grubby, stubbly man goes along unnoticed and unhampered. We are invited to take the journey with him, through the course of his ugly, raw paintings. To paint about the life of Everyman, and possess an ounce of truth, we have to submit to showing it’s ugly side. Guston shares the company of history’s heavyweights: Hugo, Goya, Bosch, Joyce, Bukowski and Kerouac. We know his Sad Sack to be, atleast in some small way, ourselves.
As Guston’s paintings evolved, the self-portrait externalized and became more universal. Symbolism is the way to abstraction and Guston’s Everyman became a Wheel. After working my way through his oeuvre at the Met years ago, the last canvases stopped me cold. The simplicity, the palette – born of flesh,blood and bone, and his beating heart, rang so true that I couldn’t stop my tears. These canvases, printed themselves upon me and gratefully, have never left my memory, still remaining powerful and immediate.
That wheel was going “home.” Guston suffered from a near heart attack that same year and death was a question he undoubtedly explored. The sky is darkening in this painting. The wheel is monolithic, its rustic bolts and crude wooden construction heavily outlined in black. The rough wood glows yellow (like a halo?). The moon rises to the left of the half-buried wheel from the horizon line of a deep scarlet earthen road (or is that a turbulent sea?). The moon rising is reminiscent of mythology. The reflection of the moon on the earth/sea surface shows us the path to the Underworld or the Spirit World or redemption. It signals that death is imminent.
Going “home” might entail a final judgment before God prior to being granted entry into
Ellen Hackl Fagan
efagan4@optonline.net
VALERIU BOBORELU Mystical abstraction & musical Syncopation in painting
Creative writer; Independent curator, since 1988.
Art Director New Haven Free Public Library.
On a recent studio visit to Valeriu Boborelu’s studio on Roosevelt Island, NYC, I was fascinated to view and analyze the direction and concepts in his new art pieces: A large new diptych was absorbing and mesmerizing…
To preface an understanding of his new work, Mr. Boborelu had sent me an outline and diagram of the 5 Buddha Families and the 5 Realms of Samsara, representing the transcendent, brilliant, & compassionate states of Mind and Reality . . .
In a large diptych of four fitted panels in black and white only, totaling 8 feet high by 12 feet wide, Boborelu has created what I’d describe as a "geometric object field” : a painting in which black fractal objects on a white ground vibrate beyond the visible animation of objects into a deep spiritual contemplation. These forms capture a momentary / instantaneous Space / Time Continuum.
In another painting, measuring 40" x 40", flowing currents of bright red, green, yellow, and blue
paint move diagonally downhill across the canvas from upper left to lower right. This motion seemed to create a flowing bridge of colored space which juxtaposed this piece and the diptych
together.
The sensation of this bridge connected over a kind of open space, and this space seemed to occur in the time frame between my initial impression of the artwork and the moment in which the smaller painting then carried me into the threshold of a Buddhist state of Contemplation. This sensation then proceeded to a second threshold, in which the black and white fractals and the colored animation took on an energy of Matter, such as a vision of the conception of Life.
It would appear that in his spiritual explorations Mr. Boborelu has discovered a means to trace, and in many instances, create a syncopation in the flow of Time. His artwork in this way orchestrates a form of music.
~ Johnes Ruta, independent curator
Art Review: "GREAT ESCAPES" Pastel Paintings by Georgette Sinclair.
azothgallery@comcast.net
and impressive exhibition of small pastel landscape paintings, in which she shows a distinct
and diverse talent to transport the viewer into peaceful dimensions of soft pastel light, using
Georgette Sinclair "Burgundy France" pastels on paper, 15"w x 11"h.
and well-supported artists collective. But as the sole artist on display, Sinclair's work poetically
"Mists of Burgundy," "Corn Field in November," and "Nocturne -- Queady Lake, NY," visible
strokes of the artist's pastel brush upon white paper provide a subtle undertone which
seeps into the viewer's consciousness rather as reflected surfaces of light.
Georgette Sinclair "Island of Skye, Scotland" pastels on paper, 15"w x 11"h.
In "Sacre Coeur, Paris" a cathedral rises against a darkening sky, shadowy trees line
blue and turquoise mountains. In "Pasture," a S-shaped bright green field curves between
Thoughts on the Sublime
Dr. Janice E. Patten, University of San Jose'
http://www.sjsu.edu/faculty/patten/sublime.html
This URL is linked as a literary resource on AzothGallery.com
and precipitated a series of philosophical Comments which follow.
The Sublime
Longinus: "On the Sublime"
Longinus, writing in the classical historical tradition says that the sublime implies that man can, in emotions and in language, transcend the limits of the human condition. Longinus's approach is contradistinguished from Plato's declaration of poetic inspiration as dangerous divine madness or the poet as liar. Yet like Plato, Longinus feels that the human was the art or technical aspects, while the sublime was the "soul" or that which eluded our experience of art. In order to understand the sublime, we must have some notion of what exists beyond the human, empirical experience. Longinus explains that this "beyond" is comprehended in terms of metaphor, or in terms of what is absent from the empirical world. Our sense of the sublime is an illusion, which draws the reader to new heights, to the realization that there is something more to human life than the mundane, the ordinary. In fact, the sublime entails a kind of mystery. The sublime is that which defeats every effort of sense and imagination to picture it. It is that whose presence reduces all else to nothingness. It can be defined and described only in symbolic terms, which ironically defies the pictorial arts to sketch it. It remains only for the art of the metaphorical language of poetry to give the suggestion of the sublime.
Longinus's contribution to conceptions of the beautiful/sublime also includes the poet's "joining" with this vision of greatness. We gain a greater sense of freedom, by our sense of our capacity to join in this greatness. Hence when we speak of Longinus we think of verbs such as "transport," "transcend," "awe-full," "flight," "amazement," and "astonishment." One particular quotation summarizes this idea: "For, as if instinctively, our soul is uplifted by the true sublime; it takes a proud flight, and is filled with joy and vaunting, as though it had itself produced what it has heard."
Longinus centers also on figurative language, discussing the great writers of the past and their importance, our "possession 'by a spirit not one's own. . . . The genius of the ancients acts as a kind of oracular cavern, and effluences flow from it into the minds of their imitators." He holds Plato up as a model and an ideal of great literature, thereby answering and defending Plato's style against his critics. The decline of letters in his day is due not to despotism, but slavery to pleasure and greed. He shows us that great thoughts have been uttered by men of the past and can be uttered again. Sublimity becomes, for him, the source of the distinction of the greatest poets and prose writers, something like a thunderbolt that could strike anywhere. Because of his belief in sublimity, he also believes in the privileging of mental processes. He holds in an almost mystical way that the composer is identified with what he describes; and because of the excitement of the moment of inspiration, the hearer or reader is also a participant in the feeling of sublimity. And so it was that Longinus first brought passion and the concept of readerly complementation to the study of literature.
Edmund Burke: "A Philosophical Inquiry into the Origin of our Ideas of the Sublime and Beautiful
Burke is clearly in the debt of Longinus, but his fundamental orientation is different. Drawing from the empiricism of John Locke, Burke assumes all our knowledge comes by way of sense experience, combing simple impressions into more complex ones. Imagination, for Burke, is more closely aligned with Coleridge's conception of "fancy." It operates in two ways, by "representing at pleasure the images of things in the order and manner in which they were received by the senses" and by "combining those images in anew manner, and according to a different order." Therefore, according to Burke, the imagination cannot create anything "new"; it can only reorder and combine basic sense perceptions.
More important than taste are distinctions involving the sublime. The sublime applies to large, grand parts of nature while the beautiful is evident in small parts. In addition, Burke associates the fear of death, dismemberment, terror, and darkness (e.g., a howling wilderness) with feelings of sublime. Locke does not think that darkness is sign of terror, but Burke feels an association of utter darkness makes it impossible to ascertain one's safety, sensing immanent danger evokes a feeling of the sublime. He sees a difference between what the mind expects and what occurs in any given situation. Part of his thesis involves the fact that fear robs the mind of reason, hence evoking the sublime. He says:
Whatever is fitted in any sort to excite the ideas of pain, and danger, that is to say, whatever is in any sort terrible, or is conversant about terrible objects, or operates in a manner analogous to terror, is a source of the sublime; that is, it is productive of the strongest emotion which the mind is capable of feeling. I say the strongest emotion, because I am satisfied the ideas of pain are much more powerful than those which enter on the part of pleasure.
In Burke's terminology, the "passions which concern self-preservation, turn mostly on pain and danger" (55). To make circumstances appear terrible, however, obscurity is necessary. "All privation is great because they are all terrible: Vacuity, darkness, solitude, and silence. Low and intermittent sounds and shadows bring about feelings of the sublime. Above all, the actions of the mind are affected by the sublime."
Sir Uvedale Price considered the nature of the sublime, but argued in a line consistent with ideas of the picturesque.
Kant says that sublimity does not reside in anything of nature, but only in our mind, insofar as we can become conscious that we are superior to nature within, and therefore also to nature without us (so far as it influences us). Everything that excites this feeling in us, e.g., the might of nature that calls forth our forces, is called then (although improperly) sublime. Only by supposing this idea of the sublimity of that Being which produces respect in us, not merely by the might that it displays in nature, but rather by means of the faculty which resides in us of judging it fearlessly and of regarding our destination as sublime in respect of it. ("Of the Dynamically Sublime in Nature"; Adams, Critical 396). In Kant, "the mind feels itself set in motion in representation of the sublime in nature; this movement, especially in it inception, may be compared with a vibration with a rapidly alternating repulsion and attraction produced by one and the same Object. The point of excess for the imagination is like an abyss in which it fears to lose itself." ("Analytic of the Sublime" 107, qt'd in Thomas Weiskel's The Romantic Sublime 105)
Wordsworth on the sublime and the Beautiful: in speaking of seeing the mountains of Langdale pike--
Let me then invite the Reader to turn his eyes with me towards that cluster of Mountains at the Head of Windermere; it is probable that they will settle ere long upon the Pikes of Langdale and the black precipice contiguous to them. If these objects be so distant that, while we look at them, they are only thought of as the crown a comprehensive Landscape; if our minds be not perverted by false theories, unless those mountains be seen under some accidents of nature, we shall receive from them a grand impression, and nothing more. But if they be looked at from a point which has brought us so near that the mountain is almost the sole object before our eyes, yet not so near but that the whole of it is visible, we shall be impressed with a sensation of sublimity.--And if this analyzed, the body of this sensation would be found to resolve itself into three component parts: a sense of individual form or forms; a sense of duration; and a sense of power. . . . A mountain being a stationary object is enabled to effect this in connection with duration and individual form, by the sense of motion which in the midst accompanies the lines by which the Mountain itself is shaped out" (351-2). . . .Individuality of form is the primary requisite; and the form must be of that character that deeply impresses the sense of power. And power produces the sublime whether as it is thought of as a thing to be feared, to be resisted, or that can be participated. To what degree consistent with sublimity power may be dreaded has been ascertained; but as power, contemplated as something to be opposed or resisted, implies a twofold agency of which the mind is conscious, this state seems to be irreconcilable to what has been determined, exists in the extinction of the comparing power of the mind, & in intense unity.(356).
"Imagination . . . so called / Through sad incompetence of human speech" (Prelude 6.592-93). Human sight rises in intensity from memory through salience tot he occlusion of the visible. Imagination also rises "like an unfather'd vapour" to target man's fight to remain autonomous and self-reliant.
The Views and Visions of Thomas Cole by Carl Pfluger
"Mount Etna from Taormina" Wadsworth Athenaenum, Hartford, CT, USA
When Thomas Cole died in 1848, his reputation, both in the art world and among the general public, was enormous: probably higher than has been attained by any other American painter, before or since. Generally recognized as the founder of the "Hudson River School", the first really distinctively American movement in the visual arts, he had (largely by his own untutored efforts) virtually invented a new style of landscape, specializing in views of the wilderness which in those days could still be seen (though already requiring some effort to get around the touristy trappings) in the Northeastern States: especially in the valleys of the Hudson and Connecticut Rivers, and in the White Mountains of New Hampshire. At the same time, Cole (who was always working restlessly at improving his technique and diversifying his subjects) had also produced a large body of work more obviously derived from older European models: "Arcadian" pastorals in the tradition of Claude Lorrain; melodramatic renditions of Biblical and other literary themes, which owed a lot to John Martin; elegiac views of Antique ruins, mostly in Italy; and a handful of unclassifiable paintings which (at least to this untutored eye) look like uncanny anticipations of Surrealism. Yet more significant than all these, in the estimation of both Cole himself and most of his contemporaries, were those works generally described, for want of a better word, as allegories -- which Cole sometimes called "epico-historical", and which he always regarded as "the higher style of landscape". These were groups of pictures conceived and executed as consecutive series, illustrating in a clearly sequential narrative mode some moral, philosophical, religious or historical lesson. Pre-eminent among these sequences are The Course of Empire, The Voyage of Life, and The Cross and the World. These widely admired works were, Cole felt, his highest achievements, the strongest supports of his standing as an artist and a visionary.
But hardly less phenomenal than the scale of Cole's reputation during his life was its steep and sudden decline shortly after his death. (I can't help feeling that Cole himself would have derived some melancholy enjoyment from this, pre-occupied as he so often was with spectacles of the transience of human accomplishment.) He was, to be sure, never completely forgotten; but in respectable opinion Cole's work was soon taken seriously in only one of its many facets - the "pure" landscapes, especially of "wild" scenes - and even these were often treated with a patronizing benevolence not far short of contempt. As for the paintings dearest to Cole's heart -- the religious allegories, the historical epics - they were dismissed or ignored as an embarrassment, just the kind of faux pas likely to be committed by an awkward bumpkin unaware of the true nature of his own genius - or of his proper station in life. By the beginning of this century the 11th Edition of the Encyclopedia Britannica, that priceless repository of Late-Victorian wisdom, summed up the prevailing view of Cole's "higher style" thus:
"The work, however, was meretricious, the sentiment false, artificial and conventional, and the artist's genuine fame must rest on his landscapes, which, though thin in the painting, hard in the handling, and not infrequently painful in detail, were at least earnest endeavours to portray the world out of doors as it appeared to the painter; the failings were the result of Cole's environment and training."
Of course, none of the modernisms that emerged in the second half of the nineteenth century and the first half of the twentieth had much use for the programmatic, narrative or illustrative dimensions of painting, tending to view them as a kind of contaminant to the purely formal, and increasingly abstract, visual or "painterly" elements. So it is understandable that Cole's reputation suffered from this change in the climate of artistic fashion, because he always was, in the manner fashionable in his own time, a thoroughly literary painter, who always assumed that the visual arts refer to some range of concerns beyond themselves - and who had no problem, by the way, in sometimes addressing those concerns in writing as well as in painting. As recently as 1962 James Thomas Flexner clucked disapprovingly over Cole's "dangerous literary gifts" - as if he would have been a better painter had he been illiterate, a kind of idiot savant!
But more recently, fashions have been changing again -- is this one of the more beneficent effects of post-modernism? - making possible some steps toward rehabilitation. The most recent of such steps (and probably the biggest so far) is Thomas Cole: Landscape into History, a major exhibition organized at the National Museum of American Art in Washington, DC by William H. Truettner and Alan Wallach, displaying about 70 of Cole's paintings and accompanied by an illustrated catalogue (more useful and informative than such publications often are) including essays by J. Gray Sweeney, Christine Stansall and Sean Wilentz, as well as by Wallach and Truettner themselves.
This exhibit is especially welcome because it makes a serious effort to get beyond that conventional wisdom of the past century or so, and to consider all facets of Cole's work with a more integrated and comprehensive view - closer at least to the painter's own intentions. Wallach, Truettner and their colleagues have also done much to place Cole in his social, political and cultural context in early nineteenth-century America. Their particular interpretations here must still be regarded as limited and tentative - no single formula could encapsulate so protean an artist as Thomas Cole - but there is no question, I think, that they are on the right track in trying to re-integrate "the two Thomas Coles" (as Professor Truettner titles his essay) and in taking Cole seriously as that rarity of the modern world, an artist who actually thinks: about nature and history, life and literature: about humankind and its place in the world.
And as for how all that thinking inflected Cole's work as a painter - well of course, some of his works are technically better than others, and some are more derivative than others; and yes (the conventional wisdom was right to this extent) he developed his most original insights by working closely with some of the particular features of American scenery - features which were then still largely new to European eyes - but then going beyond this, he applied that insight to something both wider and deeper, developing (to invoke a pair of Cole's own favorite terms) a historical "vision" as well as a painterly "view." And that, one might say, is what landscape art, in its most authentic sense, is always trying to be about. For although landscape may sometimes seem to be a naive genre of painting, in reality it is not. Historically, both in China and in Europe (the only two cultures so far to have fully developed landscape at all) it arose very late in the artistic tradition. Only after many centuries of representing more or less distinct individual figures did people begin paying serious attention to the background in which those figures were placed, to the connecting spaces between them: in short, to their total environment. And it seems probable that such developments always depend on, but in turn contribute back to, parallel developments in such other fields as science, philosophy, religion, history and literature. In China, where painters were at least officially expected to be literati, a relation between landscape painting and both religious and philosophical Taoism, for example, has long been taken for granted. In the West (where of course our whole landscape tradition is much younger) such connections have been more problematic; but it is helpful to keep them in mind when trying to understand Thomas Cole, who was so passionately (and sometimes profoundly) religious, literary, and historically-minded a painter: in all of his work, even the most superficially "naive" of his wilderness scenes.
No, there were not "two Thomas Coles"; but there is an unresolved duality within Cole himself, and within his work: a division too glaring to be ignored. Toward the end of his own essay in the catalogue Professor Wallach approaches this division, rather diffidently, when he writes:
" . . . if a fault line runs through Cole's art, it lies between the historical and
the ahistorical, between the landscapes and allegories that in a more or less
fragmentary way evoke the stages of history and 'mutation of earthly things'
and the religious allegories and related paintings. Yet even this division is in
a sense unnecessary since, as we have seen, the historical and the ahistorical
were themselves closely connected.."
I would put it rather differently. Virtually all of Cole's work is historical; but the difference between, say, The Course of Empire and The Cross and the World is between "natural history" and "supernatural history" - what German theologians in the nineteenth century were already beginning to call Heilsgeschichte ("the History of Salvation") and which they represented as the central theme of all Biblical religion. Another way of describing this "fault line" might be to say that his work was always religious - but that Cole actually believed in (or at least tried to believe in) two different religions at the same time. Christianity (to which, given his own historical origins, Cole could scarcely escape having at least a nominal commitment) co-existed in him with his personal version of that fully religious reverence for Nature which he seems to have believed in most strongly - which has actually been around, in one form or another, a good while longer than Christianity itself, but which was just re-emerging with special force and intensity in Cole's own Romantic period - and which was the real source of Cole's strength and originality as a landscapist.
I'm not sure how conscious Cole was of the tension between his two religious loyalties - my suspicion is that he could not admit it to himself, and kept trying, out of a dogged sense of duty, to impose his familiar but somewhat shop-worn Christianity onto his more impassioned but less articulated Naturalism - but its effects show, often quite painfully, in his more didactically Christian pictures. Few things in the history of art can be more literally excruciating than those crosses glowing like neon signs in the desert -- a "prophecy" come literally true in our time, which Cole, had he lived to see it with his eyes of flesh, would certainly have abhorred! - or those insipidly phosphorescent figures of Christ and of angels (anemic, attenuated derivatives of Raphael and his successors, the bane of so much post-Renaissance Christian art . . . ) which seem to have dropped down like aliens out of a UFO (often accompanied by unnatural laser-like light effects) into an otherwise passably naturalistic landscape in such paintings as The Pilgrim of the Cross at the End of his Journey, or the Angels Ministering to Christ in the Wilderness. Of course one could always argue that such gauche intrusiveness is a respectable artistic convention, meant to suggest the absolutely transcendent and supernal power of the Divine; but such an argument would have already conceded the most important point: that at least in its symbolic language, Cole's Christianity is always referring ultimately to some source of value which does not co-exist comfortably or harmoniously with anything we can readily recognize as "nature", that is, with the world as we know it on Earth. And it could also be argued that much of the awkwardness in these Christian paintings results from a much simpler and more technical cause: Cole's notorious weakness in handling the human figure. It is true that his figures are often inept; but not uniformly so. Generally they are at their worst when Cole seems not to have a clear sense of how his humans fit naturally into their surroundings, when he just sticks them in for more or less clearly arbitrary and symbolic purposes. He sometimes did this even in his "pure" wilderness scenes. (Truettner and Wallach give one especially egregious instance of this: when Cole painted The Falls of the Kaaterskill in 1826 it was already a busy tourist attraction, with the usual clutter of hotels, walkways and protected bridges overlooking the Falls. Cole omitted all that from his painting; instead, he placed a solitary Native American in the scene. This poor Indian is stuck there, quite awkwardly and unaesthetically, leaning against his bow on a bare ledge right in the middle of the painting. Clearly, he serves here only as a self-conscious sign or label, as if one had written a caption: "THIS PICTURE REPRESENTS AMERICA BEFORE THE WHITE MAN".) But cases like that are extreme, and rare. Cole's level of technical accomplishment varied considerably from time to time, but he could and did paint human figures credibly enough when he had reason to: when this was clearly demanded by his conception, and supported by what we would call the "human ecology" of his design.
In his Arcadian pastorals, for instance, human beings (and their artifacts) tend to fit happily into their natural settings. These pictures probably represent Cole's most Utopian vision, the clearest personal declaration of his idea of the Good Life, the True and the Beautiful. For although Cole fully deserves to be recognized as one of the nineteenth century godfathers of the modern environmental movement; although he genuinely loved his wilderness scenes, and certainly contributed largely to that positive re-evaluation of the very idea of "the wilderness" which (in such contrast to the Biblical attitudes of dread and hostility) has been one of the great revolutions in values accomplished over the past couple of centuries; still, Cole would not have qualified as an "environmental extremist", even by the most polemical of definitions current today. He did not assume an irreconcilable antipathy between "Man" and "Nature"; he had none of the misanthropy that sometimes infects the wilder fringes of Deep Ecology. Wallach and Truettner characterize his general attitude as "pessimist conservatism", which is fair enough as far as it goes; but it really doesn't take us very far toward understanding the deepest ranges of Cole's yearnings, his aspirations or his fears. He did fulminate, in writings such as American Scenery, against the "ravages of the axe" in his beloved woods, but his "conservatism" always allowed for a fitting measure of progress, and held out the hope for a harmonious co-existence of the human and the natural: a vision, finally, of Man as an essential (but not tyrannically domineering) part of Nature, hopefully respectful of, and always subject to, the limits of the natural world. This is the vision realized most idyllically in those Arcadian or pastoral scenes, where the boundaries between the natural and the human worlds are shown clearly enough, but generally in soft and mutually yielding contours, not in the harsh lines of a radical confrontation. (Such softness of outline, we should notice, is both a real physical feature of the geologically ancient mountains of Eastern North America, and an instantly recognizable visual signature in most of Cole's paintings; just as those almost incredibly vertical - but equally real - Chinese mountains portrayed by the painters of the Northern Sung School are an equally characteristic "signature" of their work.) In these pictures, Cole's painterly vocabulary begins to express something of the idea of "bio-regionalism" - a term perhaps more familiar to ecologists than to art critics, but one which seems singularly appropriate to the vision of Thomas Cole. These landscapes have been "humanized", it's true, compared to the "wild scenes"; but the humans in them (and their works, especially in the pictures of ruins) have themselves become more integrally a part of the natural scene. And in The Course of Empire - which after all is teeming with human figures - the "fit" is accomplished even more effectively: because it is the over-arching theme of the whole series.
One might almost say that Cole handled his human subjects best when he was able to treat them -- legitimately - as part of the scenery. "Scenery" always was a favorite word of his; and while its theatrical connotations may make some of us uncomfortable, there really is no way around it: Cole's art was theatrical in almost every way. He was well aware of this trait in himself and, not without humor, he sometimes indulged in some fairly broad self-parody about it. In The Architect's Dream (unfortunately not included in this exhibit) he presents us with a fantastic heap of conflicting architectural styles - all framed by a mass of tasselled ropes and drapery clearly suggestive of a stage-curtain. Looking at this picture, I find it impossible not to believe that Cole was having a bit of fun, both with himself and with Ithiel Towne, the architect who commissioned it. (Towne seems to have thought so, too; but lacking Cole's humor, he refused to pay for the picture.) The Architect's Dream is not really typical of Cole's work -- and yet the picture of his which it most closely resembles, in its proto-Cecil B. de Mille monumentality, is The Consummation of Empire, the oversized centerpiece of Cole's best and most personally characteristic series, The Course of Empire - which Wallach and Truettner justly offer as the pièce de résistance of their exhibition.
In this grandest and most completely realized of his "epico-historical works, Cole presented his synoptic and secular vision of the situation of Man-in-Nature, bringing together nearly all his familiar themes and deploying all his painterly styles and vocabularies. In five successive scenes he shows us a civilization progressing from the condition of primitive hunters in the wilderness, through an agrarian/pastoral Arcadia to the megalopolitan pomp of the Consummation - a neo-Classical nightmare suggesting Washington, DC, as it might have been re-designed by Albert Speer - which is then destroyed by war in the fourth scene, to subside into a remarkably tranquil and beautiful set of ruins in the fifth, the only picture of the set from which living human beings are entirely absent. ("Desolation" is the title of this piece, but somehow one does not feel that Cole really felt all that desolate while painting it: this view of the natural world placidly reclaiming its territory from the fallen city is the most hauntingly beautiful picture of the series.) Constant through all these scenes are two features of the natural setting: a precipitous mountain, always visible in the distance, and the long narrow bay around which the city eventually grows. "Mountains and water" - clear symbols of an elemental duality; and, according to Chinese ideas (which Cole may never have heard of, but which he so often seems to have paralleled in his own way) the defining terms of landscape itself. . . .
It is pretty clear that Cole regarded the urban proliferation of the Consummation as a pathological excrescence on the face of the Earth. The really interesting question is, at what level - social, political, cultural, religious or technical - did he believe this pathology to be rooted? Wallach and Truettner stress the political dimension: a warning, rooted in Classical Republican theory, against the "excesses of democracy", mob rule and Caesarism in Andrew Jackson's America. In a way, this re-iterates (though of course with much more scholarly depth) the reviewers of Cole's own time, who tended to focus on the question, "What does this work say about the prospects for our Republic?" (Cole was, among other things, a nationalist artist, and himself a formidable symbol of national pride, at least to the more culturally minded of his compatriots. This accounts, after all, for a large part of the fame he enjoyed in his lifetime.) But while I'm convinced that Cole did devote some of his attention to such political concerns, that is really only the most parochial side of this truly ecumenical artist. Ultimately, The Course of Empire is a religious work, but not a Christian one. Christianity is an explicitly human-centered religion, and in some ways even an egotistical one, fixated on the fate of the individual soul. But if The Course of Empire preaches anything, it preaches something more like the ancient Greek admonitions against hubris, the baneful excess of human ambition, against which the only defense is a scrupulous observance of the intrinsic limits of all things. To mention only one poignant sign of this lesson, Cole plays a fascinating game with his own signature in The Course of Empire. He works it into each of the first four scenes as an inscription on one or another of the stones, growing larger and more elaborately self-assertive in each successive view, until at last in the Destruction it flares out in grotesque and agitated lettering on the base of the colossal headless statue which dominates that composition - and then, among the ruins of the Desolation, it is nowhere to be found. I read this as one of Cole's more transparent allegories: against the rampant egotism which can infect all of us, even Christians and artists. . . . Such moralizing was often enough typical of Cole, and not always accomplished with the same finesse; but at its strongest his vision went much deeper than his Whiggish politics, and deeper than his Evangelical Christianity: to an apprehension of humanity as a species fully embedded in its natural matrix, which we may violate in our arrogance and egotism, but only at the risk of our own extinction.
Copyright (c) 1995 by Carl Pfluger.
Piopolis, PQ Quebec, Canada GOY 1H0
This essay first appeared in THE HUDSON REVIEW, Winter 1995. Reproduced with permission.
Cynical SOCIAL ENGINEERING and/or SHAKE-DOWN the Poor/ Middle-Class?
April 20, 2009
Here It Comes Again!
Housing Bust Comes Roaring Back, Worse Than Ever
By MIKE WHITNEY
Due to the lifting of the foreclosure moratorium at the end of March, the downward slide in housing is gaining speed. The moratorium was initiated in January to give Obama's anti-foreclosure program -- a combination of mortgage modifications and refinancing -- a chance to succeed. The goal of the plan was to keep up to 9 million struggling homeowners in their homes. But it's clear now that the program will fall well-short of its objective. (Legislation for cram-downs, that is, allowing judges to reduce the face-value of the mortgage, is still bogged-down in Congress. Most economists believe that cramdowns are the only way to keep people from abandoning their homes when they are underwater on their loans.)
In March, housing prices fell faster than anytime in the last two years. Trend-lines are now steeper than ever before, nearly perpendicular. Housing prices are not falling, they're crashing and crashing hard. Now that the foreclosure moratorium has ended, Notices of Default (NOD) have spiked to an all-time high. These Notices will turn into foreclosures in 4 to 5 months time creating another cascade of foreclosures. Market analysts predict there will be 5 million more foreclosures between now and 2011. Soaring unemployment and rising foreclosures ensure that hundreds of banks and financial institutions will be forced into bankruptcy. 40 percent of delinquent homeowners have already vacated their homes. There's nothing Obama can do to make them stay. Worse still, only 30 per cent of foreclosures have been relisted for sale suggesting major hanky-panky at the banks. Where have the houses gone? Have they simply vanished?
Here's a excerpt from the SF Gate explaining the mystery:
"Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.
"We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market," said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. "California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You'd have further depreciation and carnage."
In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity - only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as "shadow inventory." ("Banks aren't Selling Many Foreclosed Homes" SF Gate)
If regulators were deployed to the banks that are keeping foreclosed homes off the market, they would probably find that the banks are actually servicing the mortgages on a monthly basis to conceal the extent of their losses. They'd also find that the banks are trying to keep housing prices artificially high to avoid heftier losses that would put them out of business. One thing is certain, 600,000 "disappeared" homes means that housing prices have a lot farther to fall and that an even larger segment of the banking system is insolvent.
Here is more on the story "California Foreclosures About to Soar...Again"
"Are you ready to see the future? Ten’s of thousands of foreclosures are only 1-5 months away from hitting that will take total foreclosure counts back to all-time highs. This will flood an already beaten-bloody real estate market with even more supply just in time for the Spring/Summer home selling season...Foreclosure start (NOD) and Trustee Sale (NTS) notices are going out at levels not seen since mid 2008. Once an NTS goes out, the property is taken to the courthouse and auctioned within 21-45 days....The bottom line is that there is a massive wave of actual foreclosures that will hit beginning in April that can’t be stopped without a national moratorium."
JP Morgan Chase, Wells Fargo and Fannie Mae have all stepped up their foreclosure activity in recent weeks. Delinquencies have skyrocketed. According to the Wall Street Journal:
"Ronald Temple, co-director of research at Lazard Asset Management, expects home prices to fall 22% to 27% from their January levels. More than 2.1 million homes will be lost this year because borrowers can't meet their loan payments, up from about 1.7 million in 2008." (Ruth Simon, "The housing crisis is about to take center stage once again" Wall Street Journal)
Another 20 percent carved off the aggregate value of US housing means another $4 trillion loss to homeowners. That means smaller retirement savings, less discretionary spending, and lower living standards. The next leg down in housing will be excruciating; every sector will feel the pain. Obama's $75 billion mortgage rescue plan is a mere pittance; it won't reduce the principle on mortgages and it won't stop the bleeding. Policymakers have decided they've done enough and refuse to lift a finger to help. They don't see the tsunami looming in front of them plain as day. The housing market is going under and it's going to drag a good part of the broader economy along with it. Stocks, too.
The Headless Chicken Keeps on Running…
The Fed's $12.8 trillion of monetary stimulus has triggered a six week-long surge in the stock market. Think of it as Bernanke's Bear Market Rally, a torrent of capital gushing from every leaky valve and rusty pipe in the financial system. The Fed's so-called "lending facilities" are a joke; stocks rocket into the stratosphere while the broader economy is stretched out corpse-like on a cold marble slab. Is this an economic recovery or just more of Bernanke's "no down" zero-percent "no doc" faux prosperity?
Bernanke has provided generous "100 cents on the dollar" loans for Triple A mortgage-backed collateral that is now worth 30 cents on the dollar. The Fed stands to lose trillions of dollars on these loans because the assets will never regain their original value. Eventually the taxpayer will have to pony up the difference in higher taxes, fewer public services and a weaker dollar.
Naturally, some of Bernanke's liquidity has made its way into the stock market where the prospects for maximizing profit are still the best. The Fed's debtors didn't borrow the money just to stick it in a dusty vault in their offices. They've put it where they think it will do them some good. At the same time, the relentless systemwide contraction continues apace and hasn't been eased by Bernanke's low interest rates or lending programs. All of the economic indicators point to a deepening recession that will last for two years or more. Here's a clip from a recent statement from the IMF:
"Recessions associated with financial crises have typically been severe and protracted. Financial crises typically follow periods of rapid expansion in lending and strong increases in asset prices. Recoveries from these recessions are often held back by weak private demand and credit reflecting, in part, households’ attempts to increase saving rates to restore balance sheets. They are typically led by improvements in net trade, following exchange rate depreciations and falls in unit costs.
Globally synchronized recessions are longer and deeper than others. Excluding the present, there have been three episodes since 1960 during which 10 or more of the 21 advanced economies in the sample were in recession at the same time: 1975, 1980 and 1992…Recoveries are usually sluggish, owing to weak external demand..."
The recession will be a long uphill slog regardless of developments in the stock market. Bernanke admitted as much last Thursday when he said that the collapse of U.S. lending will cause “long-lasting” damage to home prices, household wealth and borrowers’ credit scores.
“One would be forgiven for concluding that the assumed benefits of financial innovation are not all they were cracked up to be....The damage from this turn in the credit cycle -- in terms of lost wealth, lost homes, and blemished credit histories -- is likely to be long-lasting.”
Unlike Treasury Secretary Geithner, Bernanke has been surprisingly candid in his analysis of the crisis. That doesn't mean that his policies have been worker-friendly; far from it. But he has been honest about the shortcomings of deregulation and financial innovation. So far, the meltdown has wiped out more than $11 trillion of household wealth, ignited soaring unemployment, and pushed millions of people from their homes. As Bernanke admits, the country will not quickly bounce back.
Economists Kenneth Rogoff and Carmen Reinhart have conducted a study on the last 18 international financial crises and compiled their findings in a document called: "Is the 2007 U.S. Subprime Financial Crisis So Different?" What they discovered was that "rising public debt is a near universal precursor of other post-war crises" and that countries that experienced large capital inflows were particularly vulnerable to crises. By 2006, two-thirds of the world's surplus capital was flowing into the United States via its current account deficit. This flood of foreign capital kept interest rates low, housing and equity prices high, and Wall Street flush with money. Now foreign investment is drying up, housing prices are falling, the secondary market is frozen, and deflation is setting in across all sectors of the economy. Rogoff and Reinhart believe that "recessions that follow in the wake of big financial crises tend to last far longer than normal downturns, and to cause considerably more damage. If the United States follows the norm of recent crises, as it has until now, output may take four years to return to its pre-crisis level. Unemployment will continue to rise for three more years, reaching 11–12 percent in 2011." (Newsweek, "Don't Buy the Chirpy Forecasts")
The proliferation of opaque, unregulated debt-instruments (MBSs, CDOs, CDSs) also played a big role in the present crash by reducing transparency and increasing systemic instability. Here's Rogoff and Reinhart in their Newsweek article "Don't Buy the Chirpy Forecasts:
"Assuming the U.S. continues going down the tracks of past financial crises, perhaps the scariest prospect is the likely evolution of public debt, which tends to soar in the aftermath of a crisis. A base-line forecast, using the benchmark of recent past crises, suggests that U.S. national debt will rise by $8.5 trillion over the next three years. Debt rises for a variety of reasons, including bailout costs and fiscal stimulus. But the No. 1 factor is the collapse in tax revenues that inevitably accompanies a deep recession."
Tax revenues are already falling sharply across the country as the recession deepens. In fact, Bloomberg News reports that “State and local sales-tax revenue fell more sharply in the fourth quarter of 2008 than at any time in the past half century"… (Corporate and personal income taxes are also declining at a record pace.) This makes it impossible to predict the ultimate cost of the crisis. But what makes it even harder is that Treasury Secretary Timothy Geithner refuses to remove toxic assets from the banks balance sheets using the usual "tried and true" methods. A recent report from a congressional oversight committee (The Warren Report) revealed that there are three ways to fix the banking system; liquidation, reorganization and subsidization. Geithner has rejected all three of these preferring to implement his own make-shift Public Private Investment Program (PPIP) which is thoroughly untested, has no base of public or political support, and is clearly designed to shift the toxic debts of the banks onto the taxpayer through publicly-funded non recourse loans. (Geithner's plan will allow the banks to establish off-balance sheet operations so they can buy their own bad assets from themselves using 94 per cent public money) The whole thing is a obvious swindle papered-over with gibberish.
So far, less than $10 billion has been transacted through Giethner's PPIP; a mere drop in the bucket. The IMF estimates that the banks and other financial institutions may be holding up to $4 trillion in toxic assets. At the current rate, Geithner's strategy will take a century to succeed. The Treasury Secretary knows his plan won't fix the banking system; he's just hoping that the economy rebounds before the government is forced to nationalize the big banks. It's just a stalling ploy, but, even so, there are risks. As the economy worsens, the likelihood of another financial meltdown or a run on the dollar increases. Foreign central banks and investors are getting antsy and are starting to rattle Geithner's cage. In recent months China has slowed its purchases of US Treasuries, traded tens of billions of USD in currency swaps, and gone on a spending spree for raw materials; all to protect itself from weakness in the dollar. According to Bloomberg:
"People's Bank of China Zhou Xiaochuan called for the establishment of a "super-sovereign reserve currency" last month after Chinese Premier Wen Jiabao said he's worried a weaker US dollar may hurt China's investments. Inflation and a depreciating dollar would erode the value of US holdings owned by international investors."
Again, Bloomberg:
“China, Japan and Korea should establish a routine mechanism to diversify the region’s reserve currencies away from the dollar, the China Securities Journal reported, citing central bank adviser Fan Gang. The Asian countries need to consider setting up a transitional arrangement to help reduce reliance on the dollar before the problems in the international financial system are resolved."
Geithner's foot-dragging could be extremely costly for America's long-term economic prospects. The Treasury Secretary should be tackling the toxic assets problem head-on and stop the dilly-dallying.
NEWSPEAK 2009
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Got a Hopeover? A Dictionary for Disheartened Obama FansBy Naomi Klein, The Nation
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THE WAR TOY ACCOUNT
Quote from Dimitri Orlov:
The ship is on the rocks, water is rising, and the captain is shouting “Full steam ahead! We are sailing to Afghanistan!” Do you listen to Ahab up on the bridge, or do you desert your post in the engine room and go help deploy the lifeboats? If you thought that the previous episode of uncontrolled debt expansion, globalized Ponzi schemes, and economic hollowing-out was silly, then I predict that you will find this next episode of feckless grasping at macroeconomic straws even sillier. Except that it won’t be funny: what is crashing now is our life support system: all the systems and institutions that are keeping us alive. And so I don’t recommend passively standing around and watching the show – unless you happen to have a death wish.
Right now the Washington economic stimulus team is putting on their Scuba gear and diving down to the engine room to try to invent a way to get a diesel engine to run on seawater. They spoke of change, but in reality they are terrified of change and want to cling with all their might to the status quo. But this game will soon be over, and they don’t have any idea what to do next.
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CounterPunch Diary
Thin Ice From Here to the Horizon April 17, 2009
By ALEXANDER COCKBURN
On any rational assessment the popular new president is skating on thin ice. Pollyanna bulletins about the economy puff up from the White House and Federal Reserve, like auguries of a new Pope through the Vatican chimney. “Habemus spem.” We have hope. We’ve just heard it from President Obama: "We are starting to see glimmers of hope across the economy." From Fed Chairman Ben Bernanke, who’s so far unleashed $12 trillion in booster money, we get the always sinister reassurance, like Death giving the Appointee in Samarra a friendly tap on the shoulder, "the foundations of our economy are strong".
The economic news in the near and medium term is ghastly, as Mike Whitney outlined on this site last Thursday. Retail sales crashed again in March, nowhere worse than in the car market, though electronics and building materials were way off too. They now reckon there’ll be just over two million housing foreclosures in 2009, up 400,000 from 2008. Industrial output is going through the floor at an annual rate of 20 per cent, the biggest quarterly drop since the end of the Second World War. US industry is now running at only 70 per cent of capacity, the worst number since they started tracking this stat in 1967. Job losses are currently running at 650,000 a month.
Round the next corner is credit card delinquency and the long-heralded slump in commercial real estate, where vacancy rates are already running at 15 per cent,. Capital One, a huge issuer of Visa and Mastercard, just said the annualized net charge-off rate for U.S. credit cards -- debts the company reckons will never be paid -- rose to 9.33 percent in March from 8.06 percent in February. In other words, Capital One – whose credit card promotions take up hefty space in the mailbag of every US postman – is in big trouble, and under one in ten of these credit card holders will have a messed up credit rating for several years to come.
Wall Street and its boosters are trying to pretend that indeed the worst is over. The Dow and S&P Index have been rallying for five weeks. Wells Fargo, the huge San Francisco-based bank, second biggest home lender, announced that first quarter net income rose 50 per cent to $3 billion. No one seriously believes the bank is in anything other than continuing huge trouble, and will soon need – so Blomberg News surmises - $50 billion to settle near-term commitments. The profit figure stems from newly relaxed rules about the valuation of Wells Fargo’s assets.
In other words it’s thin economic ice from here to the horizon. Robert Reich, now teaching economics at Berkeley and formerly labor secretary in the Clinton administration, wrote a piece recently, titled "Why We're Not at the Beginning of the End, and Probably Not Even At the End of the Beginning". There are huge problems with the whole orientation of the US economy. The “free market” outsourcing model has failed. Even at the best of times the US consumers who account for over 70 per cent of all economic activity in the country, don’t have purchasing power to keep the whole show on the road, unless they put it on the credit cards which are now maxed out and going into default, or borrow on houses they can’t afford.
Amid a hail of well founded criticism from liberal and conservative economists alike, Obama, with Geithner, Summers and Bernanke at his elbow, remains absolutely committed to giving the bankers everything they ask for, trillion upon trillion. As William Black, deputy director at the former Federal Savings and Loan Insurance Corp. during the thrift crisis of the 1980s, recently remarked in an acrid interview in Barron’s, (reprinted here last week) “ Unless the current administration changes course pretty drastically, the scandal will destroy Obama's administration, both economically and in terms of integrity. We have failed bankers giving advice to failed regulators on how to deal with failed assets. How can it result in anything but failure?”
In foreign policy the ice is just as treacherous. As the nation emerges from its disastrous adventure in Iraq, Obama redeploys to the Afghan-Pakistan theater. The administration delightedly touts claims that its remote-controlled missiles are decimating al-Q’aida. The Washington-based journalist Gareth Porter last Thursday cited here data leaked by the Pakistani government showing that only ten out of 60 drone attack in February and March hit al Qaida leaders and the rest did what bombs and missiles usually do, namely kill civilians, 537 of them – thus immeasurably strengthening the hand of the Taliban in the battle for hearts and minds.
Obama is no doubt unworried by this since the hearts and minds he’s mostly interested in belong to the American people and especially opinion-forming elites, who remain unflustered when high explosive falls on a wedding party in Waziristan. Failure in Iraq was re-labeled “victory” and in terms of domestic politics the chickens only come home to roost when there’s film of people climbing off the roof of the US embassy into a helicopter, or when the casualty rates among US soldiers start soaring. Soaring Pentagon budgets are popular with Congress, whose members nix any effort to cut back.
Where the ice is giving way for Obama is among those who thought he might strike out in a new direction in foreign policy. There’s not much sign of that. Whether it’s a sell-out of Haiti’s poor or acquiescence in Israel’s grim plans for the Palestinians, Obama’s game is strictly business as usual, up to and including the Cuban blockade whose damage, as Fidel Castro said here last week, “cannot be calculated only on the basis of its economic effects, for it constantly takes human lives and brings painful suffering to our people. Numerous diagnostic equipment and crucial medicines --made in Europe, Japan or any other country-- are not available to our patients if they carry U.S. components or software.”
Obama has welshed on promises that America will stop kidnapping its enemies and “rendering” them to secret prisons overseas. As under Bush, enemy combatants languish without rights or recourse in prisons like Bagram. The torturers who flourished in the Bush years will not be prosecuted. Electronic eavesdropping continues unabated. It seems, so CounterPunch’s Fred Gardner is reporting in exclusives on this site, he and his attorney general are welshing on commitments not to harass medical marijuana operations in states where local laws sanction such activity.
Will the liberal-left mutiny? Never. Remember, Bill Clinton bombed Yugoslavia and kicked away life supports of America’s poorest and most of the liberal-left stayed loyal to the end and cherish his memory. The labor movement has already seen defeat for its cherished “card check” bill, designed to win a level playing field for union organizers, thus presumptively boosting effective purchasing power among working people, vital to the nation’s economic well-being. They’re not really blaming this on Obama, even though it is his chief aide, Rahm Emmanuel who, in his years on the Hill, picked Democratic candidates who feel no loyalty to labor and refused to push for the card check bill, and though Obama recently stressed he is a “new” Democrat – transparent code for someone distancing himself from the labor movement.
Obama’s polling numbers remain good. He has only to say there are “glimmers of hope” and the pollsters duly find increasing sentiment among Americans that they feel the economy is moving in a “positive” direction. He gets good assessments from Democrats and Independents. Many Republicans don’t like him but here again Obama is lucky, just as he was lucky – at least in the near term - to have three Navy SEALS off the horn of Africa who were good shots. The Republican opposition is in appalling shape, lumbering from one ill-conceived stunt to the next.
Obama’s lucky to have succeeded a terrible president. He gets out a lot and talks a great game. His problem is the same as the country’s. The economic ice is cracking under his feet, and the “stimulus” is going to be about as efficacious as those cushions under the seats the flight attendants assure us are going to come in handy when the plane goes down in the North Atlantic.
Controlled CHAOS
How long will Obama be able to pretend that everything is going along just fine? Here is yet another damning article about the report of Elizabeth Warren who was appointed to lead the five-member Congressional Oversight Panel (COP) in November by Senate majority leader Harry Reid. These articles are now taking on the proportions of a tidal wave. Read this excellent and short piece, remembering that this is no idle chatter being reported on. This is getting bigger by the day. What is most telling is that the best and most critical analysis is coming from the very people who were Obama's staunchest supporters.
Weekend Edition
April 10 / 12, 2009
Elizabeth Warren's Devasting Report to Congress
"Liquidate the Banks; Fire the Executives!"
By MIKE WHITNEY
On Tuesday, a congressional panel headed by ex-Harvard law professor Elizabeth Warren released a report on Treasury Secretary Timothy Geithner's handling of the Troubled Assets Relief Program (TARP). Warren was appointed to lead the five-member Congressional Oversight Panel (COP) in November by Senate majority leader Harry Reid. From the opening paragraph on, the Warren report makes clear that Congress is frustrated with Geithner's so-called "Financial Rescue Plan" and doesn't have the foggiest idea of what he is trying to do. Here are the first few lines of "Assessing Treasury's Strategy: Six Months of TARP":
"With this report, the Congressional Oversight Panel examines Treasury’s current strategy and evaluates the progress it has achieved thus far. This report returns the Panel’s inquiry to a central question raised in its first report: What is Treasury’s strategy?"
Six months and $1 trillion later, and Congress still cannot figure out what Geithner is up to. It's a wonder the Treasury Secretary hasn't been fired already.
From the report:
"In addition to drawing on the $700 billion allocated to Treasury under the Emergency Economic Stabilization Act (EESA), economic stabilization efforts have depended heavily on the use of the Federal Reserve Board’s balance sheet. This approach has permitted Treasury to leverage TARP funds well beyond the funds appropriated by Congress. Thus, while Treasury has spent or committed $590.4 billion of TARP funds, according to Panel estimates, the Federal Reserve Board has expanded its balance sheet by more than $1.5 trillion in loans and purchases of government-sponsored enterprise (GSE) securities. The total value of all direct spending, loans and guarantees provided to date in conjunction with the federal government’s financial stability efforts (including those of the Federal Deposit Insurance Corporation (FDIC) as well as Treasury and the Federal Reserve Board) now exceeds $4 trillion."
So, while Congress approved a mere $700 billion in emergency funding for the TARP, Geithner and Bernanke deftly sidestepped the public opposition to more bailouts and shoveled another $3.3 trillion through the back door via loans and leverage for crappy mortgage paper that will never regain its value. Additionally, the Fed has made a deal with Treasury that when the financial crisis finally subsides, Treasury will assume the Fed's obligations vis a vis the "lending facilities", which means the taxpayer will then be responsible for unknown trillions in withering investments.
From the report:
"To deal with a troubled financial system, three fundamentally different policy alternatives are possible: liquidation, receivership, or subsidization. To place these alternatives in context, the report evaluates historical and contemporary efforts to confront financial crises and their relative success. The Panel focused on six historical experiences: (1) the U.S. Depression of the 1930s; (2) the bank run on and subsequent government seizure of Continental Illinois in 1984; (3) the savings and loan crisis of the late 1980s and establishment of the Resolution Trust Corporation; (4) the recapitalization of the FDIC bank insurance fund in 1991; (5) Sweden’s financial crisis of the early 1990s; and (6) what has become known as Japan’s “Lost Decade” of the 1990s. The report also surveys the approaches currently employed by Iceland, Ireland, the United Kingdom, and other European countries."
This statement shows that the congressional committee understands that Geithner's lunatic plan has no historic precedent and no prospect of succeeding. Geithner's circuitous Public-Private Investment Program (PPIP)--which is designed to remove toxic assets from bank balance sheets--is an end-run around "tried-and-true" methods for fixing the banking system. In the most restrained and diplomatic language, Warren is telling Geithner that she knows that he's up to no good.
From the report:
"Liquidation avoids the uncertainty and open-ended commitment that accompany subsidization. It can restore market confidence in the surviving banks, and it can potentially accelerate recovery by offering decisive and clear statements about the government’s evaluation of financial conditions and institutions."
The committee agrees with the vast majority of reputable economists who think the banks should be taken over (liquidated) and the bad assets put up for auction. This is the committee's number one recommendation.
The committee also explores the pros and cons of conservatorship (which entails a reorganization in which bad assets are removed, failed managers are replaced, and parts of the business are spun off) and government subsidization, which involves capital infusions or the purchasing of troubled assets. Subsidization, however, carries the risk of distorting the market (by keeping assets artificially high) and creating a constant drain on government resources. Subsidization tends to create hobbled banks that continue to languish as wards of the state.
Liquidation, conservatorship and government subsidization; these are the three ways to fix the banking system. There is no fourth way. Geithner's plan is not a plan at all; it's mumbo-jumbo dignified with an acronym; PPIP. The Treasury Secretary is being as opaque as possible to stall for time while he diverts trillions in public revenue to his scamster friends at the big banks through capital injections and nutty-sounding money laundering programs like the PPIP.
From the report:
"Treasury’s approach fails to acknowledge the depth of the current downturn and the degree to which the low valuation of troubled assets accurately reflects their worth. The actions undertaken by Treasury, the Federal Reserve Board and the FDIC are unprecedented. But if the economic crisis is deeper than anticipated, it is possible that Treasury will need to take very different actions in order to restore financial stability."
This is a crucial point; the toxic assets are not going to regain their value because their current market price--30 cents on the dollar for AAA mortgage-backed securities--accurately reflects the amount of risk they bear. The market is right and Geithner is wrong; it's that simple. Many of these securities are comprised of loans that were issued to people without sufficient income to make the payments. These "liar's loans" were bundled together with good loans into mortgage-backed securities. No one can say with any certainty what they are really worth. Naturally, there is a premium for uncertainty, which is why the assets are fetching a mere 30 cents on the dollar. This won't change no matter how much Geithner tries to prop up the market. The well has been already poisoned.
Also, according to this month’s Case-Schiller report, housing prices are falling at the fastest pace since their peak in 2006. That means that the market for mortgage-backed securities (MBS) will continue to plunge and the losses at the banks will continue to grow. The IMF recently increased its estimate of how much toxic mortgage-backed papaer the banks are holding to $4 trillion.
The banking system is underwater and needs to be resolved quickly before another Lehman-type crisis arises sending the economy into a protracted Depression. Geithner is clearly the wrong man for the job. His PPIP is nothing more than a stealth ripoff of public funds which uses confusing rules and guidelines to conceal the true objective, which is to shift toxic garbage onto the public's balance sheet while recapitalizing bankrupt financial institutions.
So, why is Geithner being kept on at Treasury when his plan has already been thoroughly discredited and his only goal is to bailout the banks through underhanded means?
That question was best answered by the former chief economist of the IMF, Simon Johnson, in an article which appeared in The Atlantic Monthly:
"The crash has laid bare many unpleasant truths about the United States. One of the most alarming... is that the finance industry has effectively captured our government - a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF's staff could speak freely about the U.S., it would tell us what it tells all countries in this situation; recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression we're running out of time." (The Atlantic Monthly, May 2009, by Simon Johnson)
The banks have a stranglehold on the political process. Many of their foot soldiers now occupy the highest offices in government. It's up to people like Elizabeth Warren to draw attention to the silent coup that has taken place and do whatever needs to be done to purge the moneylenders from the seat of power and restore representative government. It's a tall order and time is running out.
Mike Whitney lives in Washington state. He can be reached at fergiewhitney@msn.com
