- Jeremy Agar


By Michael Lewis, Allen Lane, Australia, 2011

The “meltdown tour”, as Michael Lewis subtitles this breezy jaunt around some of the world’s collapsed economies, is a sort of disaster tourism. Lewis’ title, which has nothing to do with Australia, tips off the tone. What goes around comes around; boom is followed by bust. Lewis is a financial journalist, rather than being an economist who might write, or a writer who might put out occasional pieces on the economy. It’s not often that those who comment on the dismal science do so entertainingly. Lewis does. The tour is as amusing as it is insightful.

Neo-liberal orthodoxy seems at last to be in disrepute, its failure being in part the result of its delusion that people make economic decisions based on what classical theory sees as rational self-interest. The basic idea is that individuals seek to maximise wealth. In fact we’re not like that. We act out of habit or hope or from a variety of emotions and assumptions and we’re not alike. The problem the classical economists had is that, like religious fundamentalists, they started from a single major premise, and based all on that assumption. If that’s false, then all that flows from it is dodgy. And the classical economists had a perverted view of human nature.

John Kenneth Galbraith was probably the most influential economist of the latter 20th Century, his popularity deriving from his fluency - and from his more accurate take on human nature. In his study of the Great Depression (“The Great Crash, 1929”, reviewed by Jeremy in Watchdog 120, May 2009, Ed.) Galbraith pointed out that top policy makers repeatedly made bad choices because they listened to men they liked rather than people who might tell them what they didn’t want to hear. It shouldn’t be a surprise that, in being influenced more by social and personal factors than by textbooks, economists are like the rest of us, but Galbraith’s moderation, and his understanding that financial matters were best seen in a wider context, went out of fashion as the ideologues insisted on imposing ‘archetypal’ solutions (for a current example, see my article on the Productivity Commission in Watchdog 128, December 2011,

Like Galbraith, Lewis understands that economists are as likely as anyone else to follow fashion and seek popularity. Misguided “expert” knowledge and crowd psychology are a dangerous pair. That’s how we get financial bubbles. Like Galbraith with the Great Depression, Lewis narrates the Global Financial Meltdown as being an explosion of bursting bubbles and melting economies (when it comes to talk of big money, extravagant and mixed metaphors are the norm). The disaster tour took him to Iceland, Ireland, Greece, Germany and California, destinations which exemplify the various pathologies at work. Lewis’ reputation gave him access to VIPs, but he spends as much time looking around and talking to ordinary people as he does interviewing big shots. Along the way he chats about cultures and how they have influenced outcomes.

Small Country Syndrome

Iceland melted as vigorously as any, a result of its being a distant homogenous island with a citizenry prone to national navel gazing. “Icelanders - or at any rate Icelandic men - had their own explanations for why, when they leapt into global finance, they broke world records”. Lewis likes the Icelanders but that doesn’t deter him from thinking that they tend to assume “the natural superiority of Icelanders”. A common reaction was that of the person who told Lewis that “[w]e were always told that the Icelandic businessman was so clever”. Lewis suggests that “one reason they all feel important is that they all can go see the Prime Minister anytime they like”. A student leader thought that “the smaller the country gets, the bigger the national pride, the bigger the soul” (for more on the Icelandic follies, see my review of Charles Ferguson’s film “Inside Job”, in Watchdog 125, December 2010, Ferguson’s take is similar to Lewis’).

Ireland’s troubles, like Iceland’s, were brought on by financial speculation, one bank alone, in a country with a population about the same as NZ’s, having lost €34 billion. And here, too, Lewis detected a self-flattering national “Irish conceit that they are more devoted to their homeland” than other people. Again, smugness fostered over-confidence. By the time he got to check out the Greeks, Lewis had lost any tolerance for foreign inadequacies. Or perhaps he just didn’t like a place where “mutual sympathy had broken down amid opportunism, cynicism and a total absence of faith.... The epidemic of lying and cheating and stealing makes any sort of civic life impossible.... Lacking faith in one another, they fall back on themselves and their families”.

When Greece joined the euro, the continent-wide currency, it fudged the figures. Had the true state of the country’s finances been revealed, it would have been seen that Greece would struggle within an economy designed for the larger, richer countries to its north and west. Public dishonesty had become the norm. Tax cheating has always been epidemic and benefits generous. In NZ - in all the liberal democracies - it’s routinely said that the country is “living beyond its means”. This is usually disingenuous, a ruse to cut social spending for instance, but in the case of Greece, it’s a more credible claim, and neither of the dominant political alliances had tried to change course. Inevitably a crisis has resulted. As is always the case, the slash and burn policies that are now being imposed will impact most on those who have done least to cause the trouble and who can least afford the punishment.

National Myths & National Stereotypes

As with Iceland and Ireland, Greece has a strong national myth of being different. Athenians are seldom slow to tell the world that they inhabit the birthplace of democracy, but, as Lewis puts it, “the structure of the Greek economy is collectivist, but the country, in spirit… is every man for himself”. Weekly, or so it seems, the world news carries pictures of French President Sarkozy and German Chancellor Angela Merkel greeting each other as they meet to discuss a Greek bailout. The German economy is Europe’s strongest, and talk of the euro is basically talk of Germany. The questions have been: Will Germany lend Greece enough of the billions needed for it to avoid defaulting? Should it? Will Greece accept the haircut? If they don’t strike a deal, will the world economy falter?

Lewis went to Germany to see what people there thought about the situation. While most of us have few assumptions about Icelanders or Greeks, stereotyping Germans has long been a global sport. Lewis doesn’t disappoint. Among the facts he selects for his analysis of the crisis in Europe’s money markets, he tells us that Germany opened the world’s first toilet museum. Germans, he says, citing Mozart as an example, are obsessed with matters excremental. Apparently it was once the norm for lovers to declare their partner “my little shitbag”. Martin Luther, as Teutonic a Teuton as any, explained his theology: “I am like ripe shit”, said the founder of Protestantism, “and the world is a gigantic ass-hole”. To find the essence of this ethic Lewis went to Hamburg, home to vast areas of prostitution, in search of mud wrestling women, but here lay disappointment. The business had closed down. Had he seen the wrestlers, Lewis would have been provided with a plastic cap, “a sort of a head condom”, to avoid being splattered.

These illustrations are good fun, but to see them as a reliable guide to understanding the Finance Ministry’s practices is a stretch. Lewis’ point is that Germans like things to be clean and orderly, but, as long as the outside looks good, the inside can be dirty. This is by way of explaining how German banks came to lend billions of euros to dodgy customers, an unexpected failing when (more stereotypes confirmed) German civil servants act with integrity and German culture frowns on frivolity. Unlike most other rich countries, Germany has never encouraged debt. If you want to buy something, you save up for it.

Explanation for the anomalous gap between sober German behaviour at home and reckless behaviour abroad is that bankers there had thought that the Americans must know how modern money goes around. German banks aped the new American policies but American banks, which were fusing traditionally conservative banking with the mad new “investment” banking, were the very people who had designed the chaos. Global finance had come to have little connection to the traditional banking that Germans practised. Rather, “the global financial system has become ... a tool for maximising the number of encounters between the strong and the weak, so that the one might exploit the other. Extremely smart traders inside Wall Street investment banks devise diabolically complicated bets, and then send their sale forces out to scour the world for some idiot who will take the other side of those bets”.

Of course the whole theory behind the ravages of the classical economists was that markets should rule because in the marketplace everyone had equal and free access to the best information. This was said despite the fact, that even the people who bought and sold deliberately opaque financial derivatives have admitted that they didn’t understand them. So the upright German bankers trusted snake oil salesmen. George Soros, who made billions from currency gambling, knows global finance as well as anyone. He has recently pointed out that “the European authorities had little understanding off how financial markets really work. Far from combining all the available knowledge in the market’s movements, as economic theory claims, ‘financial markets are ruled by impressions and emotions and they abhor uncertainty’”.

Geeks, Big Swinging Dicks, Human Piranhas & Fuckspeak

The governments that allowed the carnage now claim to have learned lessons, and all that malarkey, as though they could not have acted sooner because it was all too hard, but 22 years ago Lewis himself had already exposed the speculators. Bill Rosenberg’s review of his 1990 book began: “Does the title ‘investment banker’ fill your mind ... with an image of a powerful, impeccably expert, dark suited man at the pinnacle of all the business expertise that drives capitalism? Forget it. Think instead of Geeks, Big Swinging Dicks, blowing up customers, and Human Piranhas and Fuckspeak. Think of gambling and speculation beyond your wildest imaginings. Think of a single-minded obsession for money” (“Liar’s Poker”, reviewed by Bill Rosenberg, Watchdog 70, August 1992,

The language isn’t that of either Rosenberg or of Lewis. The capitalised terms were those of the bond traders at Salomon Brothers, a New York outfit which hired a young and unqualified Lewis and paid him heaps for making them mega heaps more. Lewis quoted a Human Piranha economics lecture: “If you fuckin’ buy this bond in a fuckin’ trade, you’ve fuckin’ fucked. If you don’t pay fuckin’ attention to the fuckin’ two year, you get your fuckin’ face ripped off”. A Massachusetts Institute of Technology study that Lewis now mentions points out what he knew from personal experience: that the gamblers are mostly young single men. “Investment banking” has been alpha males at play, driven by greed and testosterone and - always too late - panic and fear. The burghers of Frankfurt did not imagine this culture, but had they read Watchdog, Europe might have saved itself trillions.

Latter day Swinging Dicks, like all swinging dicks, were lemming followers of the alpha male. As one Irish banker told Lewis, no-one wanted to know. An analyst said: “They’d all use this same phrase, ‘You’re either for us or against us’”. One of the few MPs trying to resist the charge over the cliff opposed a new measure to guarantee a Government bailout of banks, rightly seen as a further incitement to place losing bets. As a woman with a manner which Lewis was told “got on the nerves of every Irishman” she was ridiculed, even parodied on national radio. What would a whinging woman know about how to “invest”? If the Geeks and Swinging Dicks “liked the man they didn’t bother to evaluate his project”. Icelanders might argue that they have learned lessons and that Lewis should have written about their present recovery, but that’s not his topic. Besides, if he were to add an epilogue, he might not be any kinder. Even in 2012, after so much ice had flowed under the bridge, the Iceland President felt it was smart to say that “[w]e are succeeding because we are different”. He thought Iceland was bold enough to go where “other countries dare not enter” (Sunday Star Times, 22/1/12).

The good news is that this time New Zealand, so often the leading lemming, doesn’t get a mention. Yet the three countries principally on view, Ireland, Iceland and Greece, are comparable to NZ in terms of size. We’re all islands (Greece might be continental, but it’s insular in so far as it defines itself in part as being distinct from its neighbours.) And all four countries are given to self-congratulation. Offshore from Iceland’s mountains and fiords, which look like an extreme South Island, fishing is a key industry, but stocks are in strife. Onshore there’s an aluminium smelter where everything will be OK as long as Alcoa can certify that their exploitations will not displease any elves who might live underground. Sensitive readers might object to what they see as Lewis’ delight in generalisation, but this would spoil his yarn. Lewis’ persona as the iconoclast is what enabled him to see through the pieties of the neo-liberals and discern the cultural assumptions that lay undetected beneath. He might lay it on a bit thick, but is that a problem? Lewis would argue that if the behaviours on display are stereotypical it serves only to remind us of how experience has shaped our common humanity.

THE IRON LADY - A Film By Phyllida Lloyd, 2011

J. EDGAR - A Film By Clint Eastwood, 2011

One of the odder responses to Margaret Thatcher’s 1979-90 tenure as British Prime Minister was the several men with marked High Tory dispositions who let it be known that they found her sexy. They said they looked into her blue eyes and felt faint. People see what they want to see and when her admirers lusted after Thatcher they saw she was not just another compromised politician. They saw a woman of conviction who would share their values so that wealth could be redistributed upwards. Thatcher is one of those few politicians who inspire both adulation and contempt. In office during the neo-liberal 1980’s, she is one of the even fewer politicians whose name has entered the language. Even beyond Britain the sort of policies that in NZ are dubbed Rogernomics are sometimes called Thatcherism. To be a Thatcherite is more than to be a Rogernome. Locally, Roger Douglas might have given his name to the “free market” wrecking ball, but he’ll never be remembered for anything else. Thatcherism is about a vigorous social conservatism as well. And whereas only those who despise the 1984-90 Lange government’s economic ideas talk of Rogernomics, British Rightwingers are proud to be known as Thatcherites. The lady herself liked to call her policies “dry”, as opposed to the “wet” alternatives offered by Labour or softer Tories. To be wet is to be a wimp.

“The Iron Lady” is the nickname bestowed by her Soviet counterpart, Mikhail Gorbachev. Thatcher would have been flattered. As a cold warrior she hungered for more missiles to aim at the regime her mate, US President Ronald Reagan, called the Evil Empire. And when wet Tories wanted to have a cuppa and slow Thatcherism’s rush, she declared: “You turn if you want to. The lady’s not for turning”. How she must have enjoyed seeing that sound bite in replays. “The Iron Lady”, though, is not about this. The film is set in the present, where Thatcher is suffering from dementia, and looks back at her life through a series of flashbacks. The structure is cumbersome, and those who don’t know the history might find it confusing. The film is actually about one thing only, and that’s Meryl Streep’s brilliant Oscar winning performance. It’s significant that those who have known Thatcher seem unanimous in admiring the accuracy of Streep’s interpretation of a declining but still living subject who evokes devotion and hatred in more or less equal measure. That was a big ask, but Streep carries it off without a suggestion of either hostile caricature or sympathetic sentimentality.

Don’t go to see this for a look at the politics or other figures from the 80s. You’d need a close knowledge of the era to recognise the people or pick up on events, and there’s little sense of how Thatcherism worked out or what Britain was like at the time. One vital episode, the 1982 Falklands War, does appear, as the Cabinet meets to plot a response to Argentina’s claim to what they call the Malvinas. The UK sank an Argentine battleship, the General Belgrano, with heavy loss of life. In perhaps the only scene which condemns Thatcher - although presented without editorialising - the Prime Minister is advised the ship is sailing back to the mainland, away from colonial UK waters. “Sink it”, comes the order.

The Iron Lady had been presented with her big chance to show how dry she was. For that moment she could show she was fit to follow Churchill, the great male warrior. She could show that choices could still be clear and absolute. The incident is apt for more than its moral and strategic significance. As a self-styled “conviction” politician, Thatcher is seen bewailing a Tory British practice of being guided by history. That way leads to muddle and bad habits. Better, she thought, was the American emphasis on philosophy. Within the conservative Anglo-American tradition, she was aligning herself with (the usually more extreme and simplistic) US Republicans. When her doctor asks her how she’s feeling, he gets an earful. It’s thoughts that matter, she lectures, not feelings.

Film Too Fair To Fundamentally Nasty Man

J. Edgar Hoover, director of the US Federal Bureau of Investigation (FBI) for 48 years, would also have seen himself as being guided by a detached rationality, and as we see him in Clint Eastwood’s biopic, he’s never as happy as when he’s showing off his filing system. Hoover’s admirers, who do exist, see him as the man who brought efficiency to American crime fighting, as though without him the Federal government over half a century would not have managed it. Like Lloyd in her convincing interpretation of Thatcher, Eastwood wants to be fair to his man. The trouble is that he’s more than fair. Hoover was much nastier, and achieved much less, than what Leonardo DiCaprio can show us.

Hoover was 24 when he was made boss of the new Federal police force, having impressed the right people as a keen young man anxious to please by an unquestioning commitment to repression. Hoover was lucky in his timing. In the years after 1918 US robber barons needed to put down the sort of progressive impulses that a shock like World War 1 might be expected to loosen up. Mindful of what had happened just the year before in Russia, the elites had found their agent. Hoover was not going to think for himself. He never had and never would.

The film starts with Hoover worrying about the hordes of anarchists, communists and Bolsheviks who were about to destroy America. J. Edgar and his hero, Attorney General Mitchell Palmer, arrested 10,000 and deported many, including the inspiring anarchist, Emma Goldman. The Palmer Raids set a tone that still pollutes public life. The Red Scare might have been aimed at Leftwingers but - deliberately - no distinction was made between legitimate and illegitimate dissent, let alone between the various factions or those who belonged to no group at all. This didn’t matter. The idea was to enforce conformity.

No plot was ever found - though the film passes quickly on, so that the audience can’t assess the cancer that had invaded the FBI from its birth. Hoover then had to find another way to make the FBI indispensable. More good luck: the 20s, the era of Prohibition, Bonny and Clyde, Al Capone and all the hoodlums, again opened opportunity wide. We’re shown the death mask of John Dillinger, a notorious gangster whose demise enabled the myth of the G Men*, celebrated from Washington to Hollywood. Hoover used to turn up with photographers after big name arrests so that he could invent a persona as the fearless crime fighter. In reality he was always at his desk or his favourite restaurant. * The G stood for Government. Ed.

Yet the Mafia are not so much as mentioned. In real life Hoover said that the Mafia did not exist, though he socialised in public with leading Mafioso. If Eastwood was guided by this denial, he shouldn’t have been. He might have asked: Why would the Director of the FBI say that the Mafia did not exist when everyone knew that it did? A biographer has provided one plausible explanation: Hoover was being blackmailed by the Mafia, who had a photo of him and his lover behaving inappropriately (as we might now express the matter).

Closeted Homophobe, Racist, Hater & Blackmailer

The lover was his long-serving deputy. Apart from showing J. Edgar and Clyde Tolson holding hands (which was already on the public record) Eastwood leaves the matter of Hoover’s sexuality in some doubt. Given his subject and his main audience, we can see why he might, but it’s more than a prurient curiosity that’s involved. Though this is another omission in the film, the historical J. Edgar tormented gays as nastily as he tormented progressives. A boss of the FBI in 20th Century America would need to lock himself in the closet. That much is inarguable. But, by taking the easy way, the nice way, Eastwood isn’t doing his film or his hero a favour. He’s not allowing his audience to understand J. Edgar, and he’s tacitly endorsing homophobia.

Eastwood might have wanted to be even-handed, but by evading essential truths, he divests “J. Edgar” of any complexity or subtlety. Compounding this impression, the overly long film is too evenly paced. Eastwood could not entirely avoid the use to which Hoover’s extensive personal files were kept. He had damaging material on most of the power brokers. J. Edgar served eight Presidents, every one of whom was scared of him. Some thought about firing him. The movie highlights Bobby Kennedy, his brother Jack’s Attorney General, who tried unsuccessfully to get the FBI to prosecute the Mafia. Bobby never knew why it was so hard, but he did know why he had to accept Hoover’s reluctance. Hoover had the goods on Jack, who had been less than Presidential with Marilyn Monroe (among others, including the girlfriend of a leading Mafia boss).

Another target, against whom Hoover invested his most intense spite - and here Eastwood’s take accords with other accounts - was Martin Luther King. King was not just a progressive. He was black, and he enjoyed life, so Hoover sent him “anonymous” hate letters. But the film makes no mention of Eleanor Roosevelt, whom Hoover detested at least as much as he detested King. The First Lady had nothing going for her. She was a Democrat, female, intelligent, liberal, opinionated, socially confident, and thought to be lesbian. As an opportunity lost, this could be the least excusable of the film’s many evasions. As a deeply insecure man with unaccountable power, Hoover could give vent to his neurotic repressions. We see him as he’s setting up the FBI rejecting an applicant for having “facial hair”, but what ticked off Hoover even more than the moustache was the man’s assumption that he and the young Edgar were mates.

In fact Hoover was not just vindictive; he was a deeply ignorant man. For example, while he couldn’t cope with women (neither could Thatcher), he selected redheads for special condemnation, as he just knew they were more likely to be criminals. Eastwood spares us any such detail. Of the two films, “J. Edgar” has more to say about its times, but, given the wide sweep of its many well known characters, this was inevitable. Otherwise Eastwood avoided as much controversial material as possible, whereas it’s not in “The Iron Lady” because it wasn’t what the film was about. Both place the main character in old age, looking back. Both attempt neutrality, but “J. Edgar” achieves it only by being misleadingly bland, and while DiCaprio gives a good performance he can’t altogether rid himself of a certain roguish charm which Hoover could not have had.

Two Prototypes Of Reactionary Mind

A more interesting comparison comes to mind. Between them, Margaret Thatcher and J. Edgar Hoover exemplify two prototypes of the reactionary mind. Each one was motivated by resentment and rejection, products of societies which fostered class division. They became reactionaries by not allowing themselves to enjoy a variety of experience. The reactionary mind seeks confirmation from power, and power is always corrupting. The opening shots of “The Iron Lady” are of an anonymous old woman making her way to the store. It’s the PM and she knows the price of butter. Because of this and because, as a grocer’s daughter, she is despised by born-to-rule grandee Tories, Thatcher generates a measure of sympathy. “I will not go mad”, she mutters to herself in moments of clarity, inviting us to see her as a sort of King Lear figure. In her last Cabinet meeting, as the Ministers grow visibly restless, she’s shown as already incipiently losing her grip. To quell them she offers, “I’m the Prime Minister”. As if that would ever be enough. At the end, at home in suburban London, shuffling from room to room and out of sight, she can say only, “I’m not going anywhere”.

The final statement from J. Edgar (in his case it’s just before he dies) is noble, platitudinous and entirely false, along the lines of “love [being] the greatest force on Earth”, something “far more natural than the ... divisions of mankind”. What was Clintwood intending? If it was to cloak his hero with a Shakespearean aura, he should have known better. Hoover was not a good man who went wrong. He was a creep. Apart from his blackmail files and Clyde, he never loved anything or anyone. He’s not a tragic hero. And he’s not interesting enough to make a good villain.

How dated Thatcher looks, with her handbag and hats and her hectoring tone. She’s everyone’s eccentric grandmother or interfering mother-in-law. And the Conservatives have long thrown off the country squire look - it was anachronistic even in Maggie’s time. Thatcher was vicious all right, getting up to some FBI-type tricks by spying on Labour Leader Harold Wilson and harassing workers and the peace movement, but at least she believed in something. She held values which we can accept or reject, and she never quite tried to destroy democracy. Hoover is a different proposition. He’s a timeless type of sycophant. J. Edgar knew nothing and believed in nothing but repression and hatred.


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