Today, Marco Rubio is the Trump administration’s most formidable liar. When Pam Bondi or Pete Hegseth or Karoline Leavitt or Stephen Miller refers to an anti-genocide protester or a day laborer or a sandwich hurler or a fisherman clinging to the wreckage of a fishing boat that has just been struck by a Hellfire missile as a “terrorist,” they come off as pathological. But Rubio’s approval ratings are the highest in the Republican Party, even as he is the architect of what is arguably Trump’s single most cynical policy: the scheme to appoint drug cartel bosses and their cronies atop the governments of every Latin American country, in the name of fighting drug cartels.
In September, Rubio hailed Ecuadoran President Daniel Noboa, who leads a country whose homicide rate has risen eightfold since 2016, as an “incredibly willing partner” who “has done more just in the last couple years to take the fight to these narco-terrorists and these threats to the security and stability of Ecuador than any previous administration.” Just five months earlier, a damning investigation revealed that Noboa’s family fruit business had trafficked 700 kilos of cocaine to Europe in banana crates between 2020 and 2022. Rubio has tirelessly promoted the cause of convicted (alas, just-pardoned) drug trafficker Juan Orlando Hernández. In 2018, Rubio personally and publicly commended Hernández, then president of Honduras, for combating drug traffickers (and supporting Israel), just seven months before his brother was indicted for trafficking 158 tons of cocaine in containers stamped “TH,” for Tony Hernández.
“The Fagin figure leading Elon Musk’s merry band of pubescent sovereignty pickpockets”
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While we truly live in an age of ascendant monsters who have hijacked our country, our economy, and our imaginations, there is one consolation: the small cohort of brilliant, driven writers who have these monsters' number, and will share it with us. Writers like Maureen Tkacik:
https://prospect.org/topics/maureen-tkacik/
Journalists like Wired's Vittoria Elliott, Leah Feiger, and Tim Marchman are absolutely crushing it when it comes to Musk's DOGE coup:
https://www.wired.com/author/vittoria-elliott/
And Nathan Tankus is doing incredible work all on his own, just blasting out scoop after scoop:
https://www.crisesnotes.com/
But for me, it was Tkacik – as usual – in the pages of The American Prospect who pulled it all together in a way that finally made it make sense, transforming the blitzkreig Muskian chaos into a recognizable playbook. While most of the coverage of Musk's wrecking crew has focused on the broccoli-haired Gen Z brownshirts who are wilding through the server rooms at giant, critical government agencies, Tkacik homes in on their boss, Tom Krause, whom she memorably dubs "the Fagin figure leading Elon Musk’s merry band of pubescent sovereignty pickpockets" (I told you she was a great writer!):
Krause is a private equity looter. He's the guy who basically invented the playbook for PE takeovers of large tech companies, from Broadcom to Citrix to VMWare, converting their businesses from selling things to renting them out, loading them up with junk fees, slashing quality, jacking up prices over and over, and firing everyone who was good at their jobs. He is a master enshittifier, an enshittification ninja.
Krause has an unerring instinct for making people miserable while making money. He oversaw the merger of Citrix and VMWare, creating a ghastly company called The Cloud Software Group, which sold remote working tools. Despite this, of his first official acts was to order all of his employees to stop working remotely. But then, after forcing his workers to drag their butts into work, move back across the country, etc, he reversed himself because he figured out he could sell off all of the company's office space for a tidy profit.
Krause canceled employee benefits, like thank you days for managers who pulled a lot of unpaid overtime, or bonuses for workers who upgraded their credentials. He also ended the company's practice of handing out swag as small gifts to workers, and then stiffed the company that made the swag, wontpaying a $437,574.97 invoice for all the tchotchkes the company had ordered. That's not the only supplier Krause stiffed: FinLync, a fintech company with a three-year contract with Krause's company, also had to sue to get paid.
Krause's isn't a canny operator who roots out waste: he's a guy who tears out all the wiring and then grudgingly restores the minimum needed to keep the machine running (no wonder Musk loves him, this is the Twitter playbook). As Tkacik reports, Krause fucked up the customer service and reliability systems that served Citrix's extremely large, corporate customers – the giant businesses that cut huge monthly checks to Citrix, whose CIOs received daily sales calls from his competitors.
Workers who serviced these customers, like disabled Air Force veteran David Morgan, who worked with big public agencies, were fired on one hour's notice, just before their stock options vested. The giant public agency customers he'd serviced later called him to complain that the only people they could get on the phone were subcontractors in Indian call centers who lacked the knowledge and authority to resolve their problems.
Last month, Citrix fired all of its customer support engineers. Citrix's military customers are being illegally routed to offshore customer support teams who are prohibited from working with the US military.
Citrix/VMWare isn't an exception. The carnage at these companies is indistinguishable from the wreck Krause made of Broadcom. In all these cases, Krause was parachuted in by private equity bosses, and he destroyed something useful to extract a giant, one-time profit, leaving behind a husk that no longer provides value to its customers or its employees.
This is the DOGE playbook. It's all about plunder: take something that was patiently, carefully built up over generations and burn it to the ground, warming yourself in the pyre, leaving nothing behind but ash. This is what private equity plunderers have been doing to the world's "advanced" economies since the Reagan years. They did it to airlines, family restaurants, funeral homes, dog groomers, toy stores, pharma, palliative care, dialysis, hospital beds, groceries, cars, and the internet.
Trump's a plunderer. He was elected by the plunderer class – like the crypto bros who want to run wild, transforming workers' carefully shepherded retirement savings into useless shitcoins, while the crypto bros run off with their perfectly cromulent "fiat" money. Musk is the apotheosis of this mindset, a guy who claims credit for other peoples' productive and useful businesses, replacing real engineering with financial engineering. Musk and Krause, they're like two peas in a pod.
That's why – according to anonymous DOGE employees cited by Tckacik – DOGE managers are hired for their capacity for cruelty: "The criteria for DOGE is how many you have fired, how much you enjoy firing people, and how little you care about the impact on peoples well being…No wonder Tom Krause was tapped for this. He’s their dream employee!"
The fact that Krause isn't well known outside of plunderer circles is absolutely a feature for him, not a bug. Scammers like Krause want to be admitted to polite society. This is why the Sacklers – the opioid crime family that kicked off the Oxy pandemic that's murdered more than 800,000 Americans so far – were so aggressive about keeping their association with their family business, Purdue Pharma, a secret. The Sacklers only wanted to be associated with the art galleries and museums they put their names over, and their lawyers threatened journalists for writing about their lives as billionaire drug pushers (I got one of those threats).
There's plenty of good reasons to be anonymous – if you're a whistleblower, say. But if you ever encounter a corporate executive who insists on anonymity, that's a wild danger sign. Take Pixsy, the scam "copyleft trolls" whose business depends on baiting people into making small errors when using images licensed under very early versions of the Creative Common licenses, and then threatening to sue them unless they pay hundreds or thousands of dollars:
Kain Jones, the CEO of Pixsy, tried to threaten me under the EU's GDPR for revealing the names of the scammer on his payroll who sent me a legal threat, and the executive who ran the scam for his business (I say he tried to threaten me because I helped lobby for the GDPR and I know for a fact that this isn't a GDPR violation):
These people understand that they are in the business of ripping people off, causing them grave and wholly unjust financial injury. They value their secrecy because they are in the business of making strangers righteously furious, and they understand that one of these strangers might just show up in their lives someday to confront them about their transgressions.
This is why Unitedhealthcare freaked out so hard about Luigi Mangione's assassination of CEO Brian Thompson – that's not how the game is supposed to be played. The people who sit in on executive row, destroying your lives, are supposed to be wholly insulated from the consequences of their actions. You're not supposed to know who they are, you're not supposed to be able to find them – of course.
But even more importantly, you're not supposed to be angry at them. They pose as mere software agents in an immortal colony organism called a Limited Liability Corporation, bound by the iron law of shareholder supremacy to destroy your life while getting very, very rich. It's not supposed to be personal. That's why Unitedhealthcare is threatening to sue a doctor who was yanked out of surgery on a cancer patient to be berated by a UHC rep for ordering a hospital stay for her patient:
UHC is angry that this surgeon, Austin's Dr Elisabeth Potter, went Tiktok-viral with her true story of how how chaotic and depraved and uncaring UHC is. UHC execs fear that Mangione made it personal, that he obliterated the accountability sink of the corporation and put the blame squarely where it belongs – on the (mostly) men at the top who make this call.
This is a point Adam Conover made in his latest Factually podcast, where he interviewed Propublica's T Christian Miller and Patrick Rucker:
https://www.youtube.com/watch?v=Y_5tDXRw8kg
Miller and Rucker published a blockbuster investigative report into Cigna's Evocore, a secret company that offers claims-denials as a service to America's biggest health insurers:
If you're the CEO of a health insurance company and you don't like how much you're paying out for MRIs or cancer treatment, you tell Evocore (which processes all your claim authorizations) and they turn a virtual dial that starts to reduce the number of MRIs your customers are allowed to have. This dial increases the likelihood that a claim or pre-authorization will be denied, which, in turn, makes doctors less willing to order them (even if they're medically necessary) and makes patients more likely to pay for them out of pocket.
Towards the end of the conversation, Miller and Rucker talk about how the rank-and-file people at an insurer don't get involved with the industry to murder people in order to enrich their shareholders. They genuinely want to help people. But executive row is different: those very wealthy people do believe their job is to kill people to save money, and get richer. Those people are personally to blame for the systemic problem. They are the ones who design and operate the system.
That's why naming the people who are personally responsible for these immoral, vicious acts is so important. That's why it's important that Wired and Propublica are unmasking the "pubescent sovereignty pickpockets" who are raiding the federal government under Krause's leadership:
These people are committing grave crimes against the nation and its people. They should be known for this. It should follow them for the rest of their lives. It should be the lead in their obituaries. People who are introduced to them at parties should have a flash of recognition, hastily end the handshake, then turn on their heels and race to the bathroom to scrub their hands. For the rest of their lives.
Naming these people isn't enough to stop the plunder, but it helps. Yesterday, Marko Elez, the 25 year old avowed "eugenicist" who wanted to "normalize Indian hate" and could not be "[paid] to marry outside of my ethnicity," was shown the door. He's off the job. For the rest of his life, he will be the broccoli-haired brownshirt who got fired for his asinine, racist shitposting:
After Krause's identity as the chief wrecker at DOGE was revealed, the brilliant Anna Merlan (author of Republic of Lies, the best book on conspiratorialism), wrote that "Now the whole country gets the experience of what it’s like when private equity buys the place you work":
That's exactly it. We are witnessing a private equity-style plunder of the entire US government – of the USA itself. No one is better poised to write about this than Tkacik, because no one has private equity's number like Tkacik does:
Ironically, all this came down just as Trump announced that he was going to finally get rid of private equity's scammiest trick, the "carried interest" loophole that lets PE bosses (and, to a lesser extent, hedge fund managers) avoid billions in personal taxes:
https://archive.is/yKhvD
"Carried interest" has nothing to do with the interest rate – it's a law that was designed for 16th century sea captains who had an "interest" in the cargo they "carried":
Trump campaigned on killing this loophole in 2017, but Congress stopped him, after a lobbying blitz by the looter industry. It's possible that he genuinely wants to get rid of the carried interest loophole – he's nothing if not idiosyncratic, as the residents of Greenland can attest:
Even if he succeeds, looters and the "investor class" will get a huge giveaway under Trump, in the form of more tax giveaways and the dismantling of labor and environmental regulation. But it's far more likely that he won't succeed. Rather – as Yves Smith writes for Naked Capitalism – he'll do what he did with the Canada and Mexico tariffs: make a tiny, unimportant change and then lie and say he had done something revolutionary:
This has been a shitty month, and it's not gonna get better for a while. On my dark days, I worry that it won't get better during my lifetime. But at least we have people like Tkacik to chronicle it, explain it, put it in context. She's amazing, a whirlwind. The same day that her report on Krause dropped, the Prospect published another must-read piece by her, digging deep into Alex Jones's convoluted bankruptcy gambit:
It lays bare the wild world of elite bankruptcy court, another critical conduit for protecting the immoral rich from their victims. The fact that Tkacik can explain both Krause and the elite bankruptcy system on the same day is beyond impressive.
We've got a lot of work ahead of ourselves. The people in charge of this system – whose names you must learn and never forget – aren't going to go easily. But at least we know who they are. We know what they're doing. We know how the scam works. It's not a flurry of incomprehensible actions – it's a playbook that killed Red Lobster, Toys R Us, and Sears. We don't have to follow that playbook.
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
Boeing’s deliberately defective fleet of flying sky-wreckage
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Boeing's 787 "Dreamliner" is manufactured far from the company's Seattle facility, in a non-union shop in Charleston, South Carolina. At that shop, there is a cage full of defective parts that have been pulled from production because they are not airworthy.
Hundreds of parts from that Material Review Segregation Area (MRSA) were secretly pulled from that cage and installed on aircraft that are currently plying the world's skies. Among them, sections 47/48 of a 787 – the last four rows of the plane, along with its galley and rear toilets. As Moe Tkacik writes in her excellent piece on Boeing's lethally corrupt culture of financialization and whistleblower intimidation, this is a big ass chunk of an airplane, and there's no way it could go missing from the MRSA cage without a lot of people knowing about it:
More: MRSA parts are prominently emblazoned with red marks denoting them as defective and unsafe. For a plane to escape Boeing's production line and find its way to a civilian airport near you with these defective parts installed, many people will have to see and ignore this literal red flag.
The MRSA cage was a special concern of John "Swampy" Barnett, the Boeing whistleblower who is alleged to have killed himself in March. Tkacik's earlier profile of Swampy paints a picture of a fearless, stubborn engineer who refused to go along to get along, refused to allow himself to become inured to Boeing's growing culture of profits over safety:
Boeing is America's last aviation company and its single largest exporter. After the company was allowed to merge with its rival McDonnell-Douglas in 1997, the combined company came under MDD's notoriously financially oriented management culture. MDD CEO Harry Stonecipher became Boeing's CEO in the early 2000s. Stonecipher was a protege of Jack Welch, the man who destroyed General Electric with cuts to quality and workforce and aggressive union-busting, a classic Mafia-style "bust-out" that devoured the company's seed corn and left it a barren wasteland:
Post-merger, Boeing became increasingly infected with MDD's culture. The company chased cheap, less-skilled labor to other countries and to America's great onshore-offshore sacrifice zone, the "right-to-work" American south, where bosses can fire uppity workers who balked at criminal orders, without the hassle of a union grievance.
Stonecipher was succeeded by Jim "Prince Jim" McNerney, ex-3M CEO, another Jack Welch protege (Welch spawned a botnet of sociopath looters who seized control of the country's largest, most successful firms, and drove them into the ground). McNerney had a cute name for the company's senior engineers: "phenomenally talented assholes." He created a program to help his managers force these skilled workers – everyone a Boeing who knew how to build a plane – out of the company.
McNerney's big idea was to get rid of "phenomenally talented assholes" and outsource the Dreamliner's design to Boeing's suppliers, who were utterly dependent on the company and could easily be pushed around (McNerney didn't care that most of these companies lacked engineering departments). This resulted in a $80b cost overrun, and a last-minute scramble to save the 787 by shipping a "cleanup crew" from Seattle to South Carolina, in the hopes that those "phenomenally talented assholes" could save McNerney's ass.
Swampy was part of the cleanup crew. He was terrified by what he saw there. Boeing had convinced the FAA to let them company perform its own inspections, replacing independent government inspectors with Boeing employees. The company would mark its own homework, and it swore that it wouldn't cheat.
Boeing cheated. Swampy dutifully reported the legion of safety violations he witnessed and was banished to babysit the MRSA, an assignment his managers viewed as a punishment that would isolate Swampy from the criminality he refused to stop reporting. Instead, Swampy audited the MRSA, and discovered that at least 420 defective aviation components had gone missing from the cage, presumably to be installed in planes that were behind schedule. Swampy then audited the keys to the MRSA and learned that hundreds of keys were "floating around" the Charleston facility. Virtually anyone could liberate a defective part and install it into an airplane without any paper trail.
Swampy's bosses had a plan for dealing with this. They ordered Swampy to "pencil whip" the investigations of 420 missing defective components and close the cases without actually figuring out what happened to them. Swampy refused.
Instead, Swampy took his concerns to a departmental meeting where 12 managers were present and announced that "if we can’t find them, any that we can’t find, we need to report it to the FAA." The only response came from a supervisor, who said, "We’re not going to report anything to the FAA."
The thing is, Swampy wasn't just protecting the lives of the passengers in those defective aircraft – he was also protecting Boeing employees. Under Sec 38 of the US Criminal Code, it's a 15-year felony to make any "materially false writing, entry, certification, document, record, data plate, label, or electronic communication concerning any aircraft or space vehicle part."
(When Swampy told a meeting that he took this seriously because "the paperwork is just as important as the aircraft" the room erupted in laughter.)
Swampy sent his own inspectors to the factory floor, and they discovered "dozens of red-painted defective parts installed on planes."
Swampy blew the whistle. How did the 787 – and the rest of Boeing's defective flying turkeys – escape the hangar and find their way into commercial airlines' fleets? Tkacik blames a 2000 whistleblower law called AIR21 that:
creates such byzantine procedures, locates adjudication power in such an outgunned federal agency, and gives whistleblowers such a narrow chance of success that it effectively immunizes airplane manufacturers, of which there is one in the United States, from suffering any legal repercussions from the testimony of their own workers.
By his own estimation, Swampy was ordered to commit two felonies per week for six years. Tkacik explains that this kind of operation relies on a culture of ignorance – managers must not document their orders, and workers must not be made aware of the law. Whistleblowers like Swampy, who spoke the unspeakable, were sidelined (an assessment by one of Swampy's managers called him "one of the best" and finished that "leadership would give hugs and high fives all around at his departure").
Multiple whistleblowers were singled out for retaliation and forced departure. William Hobek, a quality manager who refused to "pencil whip" the missing, massive 47-48 assembly that had wandered away from the MRSA cage, was given a "weak" performance review and fired despite an HR manager admitting that it was bogus.
Another quality manager, Cynthia Kitchens, filed an ethics complaint against manager Elton Wright who responded to her persistent reporting of defects on the line by shoving her against a wall and shouting that Boeing was "a good ol’ boys’ club and you need to get on board." Kitchens was fired in 2016. She had cancer at the time.
John Woods, yet another quality engineer, was fired after he refused to sign off on a corner-cutting process to repair a fuselage – the FAA later backed up his judgment.
Then there's Sam Salehpour, the 787 quality engineer whose tearful Congressional testimony described more corner-cutting on fuselage repairs:
https://www.youtube.com/watch?v=PP0xhIe1LFE
Salehpour's boss followed the Boeing playbook to the letter: Salehpour was constantly harangued and bullied, and he was isolated from colleagues who might concur with his assessment. When Salehpour announced that he would give Congressional testimony, his car was sabotaged under mysterious circumstances.
It's a playbook. Salehpour's experience isn't unusual at Boeing. Two other engineers, working on the 787 Organization Designation Authorization, held up production by insisting that the company fix the planes' onboard navigation computers. Their boss gave them a terrible performance review, admitting that top management was furious at the delays and had ordered him to punish the engineers. The engineers' union grievance failed, with Boeing concluding that this conduct – which they admitted to – didn't rise to the level of retaliation.
As Tkacik points out, these engineers and managers that Boeing targeted for intimidation and retaliation are the very same staff who are supposed to be performing inspections of behalf of the FAA. In other words, Boeing has spent years attacking its own regulator, with total impunity.
But it's not just the FAA who've failed to take action – it's also the DOJ, who have consistently declined to bring prosecutions in most cases, and who settled the rare case they did bring with "deferred prosecution agreements." This pattern was true under Trump's DOJ and continued under Biden's tenure. Biden's prosecutors have been so lackluster that a federal judge "publicly rebuked the DOJ for failing to take seriously the reputational damage its conduct throughout the Boeing case was inflicting on the agency."
Meanwhile, there's the AIR21 rule, a "whistleblower" rule that actually protects Boeing from whistleblowers. Under AIR21, an aviation whistleblower who is retaliated against by their employer must first try to resolve their problem internally. If that fails, the whistleblower has only one course of action: file an OSHA complaint within 90 days (if HR takes more than 90 days to resolve your internal complaint, you can no have no further recourse). If you manage to raise a complaint with OSHA, it is heard by a secret tribunal that has no subpoena power and routinely takes five years to rule on cases, and rules against whistleblowers 97% of the time.
Boeing whistleblowers who missed the 90-day cutoff have filled the South Carolina courts with last-ditch attempts to hold the company to account. When they lose these cases – as is routine, given Boeing's enormous legal muscle and AIR21's legal handcuffs – they are often ordered to pay Boeing's legal costs.
Tkacik cites Swampy's lawyer, Rob Turkewitz, who says Swampy was the only one of Boeing's whistleblowers who was "savvy, meticulous, and fast-moving enough to bring an AIR 21 case capable of jumping through all the hoops" to file an AIR21 case, which then took seven years. Turkewitz calls Boeing South Carolina "a criminal enterprise."
That's a conclusion that's hard to argue with. Take Boeing's excuse for not producing the documentation of its slapdash reinstallation of the Alaska Air door plug that fell off its plane in flight: the company says it's not criminally liable for failing to provide the paperwork, because it never documented the repair. Not documenting the repair is also a crime.
You might have heard that there's some accountability coming to the Boeing boardroom, with the ouster of CEO David Calhoun. Calhoun's likely successor is Patrick Shanahan, whom Tkacik describes as "the architect of the ethos that governed the 787 program" and whom her source called "a classic schoolyard bully."
If Shanahan's name rings a bell, it might be because he was almost Trump's Secretary of Defense, but that was derailed by the news that he had "emphatically defended" his 17 year old son after the boy nearly beat his mother to death with a baseball bat. Shanahan is presently CEO of Spirit Aerospace, who made the door-plug that fell out of the Alaska Airlines 737 Max.
Boeing is a company where senior managers only fail up and where whistleblowers are terrorized in and out of the workplace. One of Tkacik's sources noticed his car shimmying. The source, an ex-787 worker who'd been fired after raising safety complaints, had tried to bring an AIR21 complaint, but withdrew it out of fear of being bankrupted if he was ordered to pay Boeing's legal costs. When the whistleblower pulled over, he discovered that two of the lug-nuts had been removed from one of his wheels.
The whistleblower texted Tkcacik to say (not for the first time): "If anything happens, I'm not suicidal."
Boeing is a primary aerospace contractor to the US government. It's clear that its management – and investors – consider it too big to jail. It's also clear that they know it's too big to fail – after all, the company did a $43b stock buyback, then got billions in a publicly funded buyback.
Boeing is, effectively, a government agency that is run for the benefit of its investors. It performs its own safety inspections. It investigates its own criminal violations of safety rules. It loots its own coffers and then refills them at public expense.
Meanwhile, the company has filled our skies with at least 420 airplanes with defective, red-painted parts that were locked up in the MRSA cage, then snuck out and fitted to an airplane that you or someone you love could fly on the next time you take your family on vacation or fly somewhere for work.
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
How finfluencers destroyed the housing and lives of thousands of people
For the rest of May, my bestselling solarpunk utopian novel THE LOST CAUSE (2023) is available as a $2.99, DRM-free ebook!
The crash of 2008 imparted many lessons to those of us who were only dimly aware of finance, especially the problems of complexity as a way of disguising fraud and recklessness. That was really the first lesson of 2008: "financial engineering" is mostly a way of obscuring crime behind a screen of technical jargon.
This is a vital principle to keep in mind, because obscenely well-resourced "financial engineers" are on a tireless, perennial search for opportunities to disguise fraud as innovation. As Riley Quinn says, "Any time you hear 'fintech,' substitute 'unlicensed bank'":
But there's another important lesson to learn from the 2008 disaster, a lesson that's as old as the South Seas Bubble: "leverage" (that is, debt) is a force multiplier for fraud. Easy credit for financial speculation turns local scams into regional crime waves; it turns regional crime into national crises; it turns national crises into destabilizing global meltdowns.
When financial speculators have easy access to credit, they "lever up" their wagers. A speculator buys your house and uses it for collateral for a loan to buy another house, then they make a bet using that house as collateral and buy a third house, and so on. This is an obviously terrible practice and lenders who extend credit on this basis end up riddling the real economy with rot – a single default in the chain can ripple up and down it and take down a whole neighborhood, town or city. Any time you see this behavior in debt markets, you should batten your hatches for the coming collapse. Unsurprisingly, this is very common in crypto speculation, where it's obscured behind the bland, unpronounceable euphemism of "re-hypothecation":
Loose credit markets often originate with central banks. The dogma that holds that the only role the government has to play in tuning the economy is in setting interest rates at the Fed means the answer to a cooling economy is cranking down the prime rate, meaning that everyone earns less money on their savings and are therefore incentivized to go and risk their retirement playing at Wall Street's casino.
The "zero interest rate policy" shows what happens when this tactic is carried out for long enough. When the economy is built upon mountains of low-interest debt, when every business, every stick of physical plant, every car and every home is leveraged to the brim and cross-collateralized with one another, central bankers have to keep interest rates low. Raising them, even a little, could trigger waves of defaults and blow up the whole economy.
Holding interest rates at zero – or even flipping them to negative, so that your savings lose value every day you refuse to flush them into the finance casino – results in still more reckless betting, and that results in even more risk, which makes it even harder to put interest rates back up again.
This is a morally and economically complicated phenomenon. On the one hand, when the government provides risk-free bonds to investors (that is, when the Fed rate is over 0%), they're providing "universal basic income for people with money." If you have money, you can park it in T-Bills (Treasury bonds) and the US government will give you more money:
On the other hand, while T-Bills exist and are foundational to the borrowing picture for speculators, ZIRP creates free debt for people with money – it allows for ever-greater, ever-deadlier forms of leverage, with ever-worsening consequences for turning off the tap. As 2008 forcibly reminded us, the vast mountains of complex derivatives and other forms of exotic debt only seems like an abstraction. In reality, these exotic financial instruments are directly tethered to real things in the real economy, and when the faery gold disappears, it takes down your home, your job, your community center, your schools, and your whole country's access to cancer medication:
Being a billionaire automatically lowers your IQ by 30 points, as you are insulated from the consequences of your follies, lapses, prejudices and superstitions. As @[email protected] says, Elon Musk is what Howard Hughes would have turned into if he hadn't been a recluse:
The same goes for financiers during periods of loose credit. Loose Fed money created an "everything bubble" that saw the prices of every asset explode, from housing to stocks, from wine to baseball cards. When every bet pays off, you win the game by betting on everything:
https://en.wikipedia.org/wiki/Everything_bubble
That meant that the ZIRPocene was an era in which ever-stupider people were given ever-larger sums of money to gamble with. This was the golden age of the "finfluencer" – a Tiktok dolt with a surefire way for you to get rich by making reckless bets that endanger the livelihoods, homes and wellbeing of your neighbors.
Finfluencers are dolts, but they're also dangerous. Writing for The American Prospect, the always-amazing Maureen Tkacik describes how a small clutch of passive-income-brainworm gurus created a financial weapon of mass destruction, buying swathes of apartment buildings and then destroying them, ruining the lives of their tenants, and their investors:
Tcacik's main characters are Matt Picheny, Brent Ritchie and Koteswar “Jay” Gajavelli, who ran a scheme to flip apartment buildings, primarily in Houston, America's fastest growing metro, which also boasts some of America's weakest protections for tenants. These finance bros worked through Gajavelli's company Applesway Investment Group, which levered up his investors' money with massive loans from Arbor Realty Trust, who also originated loans to many other speculators and flippers.
For investors, the scheme was a classic heads-I-win/tails-you-lose: Gajavelli paid himself a percentage of the price of every building he bought, a percentage of monthly rental income, and a percentage of the resale price. This is typical of the "syndicating" sector, which raised $111 billion on this basis:
Gajavelli and co bought up whole swathes of Houston and other cities, apartment blocks both modest and luxurious, including buildings that had already been looted by previous speculators. As interest rates crept up and the payments for the adjustable-rate loans supporting these investments exploded, Gajavell's Applesway and its subsidiary LLCs started to stiff their suppliers. Garbage collection dwindled, then ceased. Water outages became common – first weekly, then daily. Community rooms and pools shuttered. Lawns grew to waist-high gardens of weeds, fouled with mounds of fossil dogshit. Crime ran rampant, including murders. Buildings filled with rats and bedbugs. Ceilings caved in. Toilets backed up. Hallways filled with raw sewage:
https://pluralistic.net/timberridge
Meanwhile, the value of these buildings was plummeting, and not just because of their terrible condition – the whole market was cooling off, in part thanks to those same interest-rate hikes. Because the loans were daisy-chained, problems with a single building threatened every building in the portfolio – and there were problems with a lot more than one building.
This ruination wasn't limited to Gajavelli's holdings. Arbor lent to multiple finfluencer grifters, providing the leverage for every Tiktok dolt to ruin a neighborhood of their choosing. Arbor's founder, the "flamboyant" Ivan Kaufman, is associated with a long list of bizarre pop-culture and financial freak incidents. These have somehow eclipsed his scandals, involving – you guessed it – buying up apartment buildings and turning them into dangerous slums. Two of his buildings in Hyattsville, MD accumulated 2,162 violations in less than three years.
Arbor graduated from owning slums to creating them, lending out money to grifters via a "crowdfunding" platform that rooked retail investors into the scam, taking advantage of Obama-era deregulation of "qualified investor" restrictions to sucker unsophisticated savers into handing over money that was funneled to dolts like Gajavelli. Arbor ran the loosest book in town, originating mortgages that wouldn't pass the (relatively lax) criteria of Fannie Mae and Freddie Mac. This created an ever-enlarging pool of apartments run by dolts, without the benefit of federal insurance. As one short-seller's report on Arbor put it, they were the origin of an epidemic of "Slumlord Millionaires":
The private equity grift is hard to understand from the outside, because it appears that a bunch of sober-sided, responsible institutions lose out big when PE firms default on their loans. But the story of the Slumlord Millionaires shows how such a scam could be durable over such long timescales: remember that the "syndicating" sector pays itself giant amounts of money whether it wins or loses. The consider that they finance this with investor capital from "crowdfunding" platforms that rope in naive investors. The owners of these crowdfunding platforms are conduits for the money to make the loans to make the bets – but it's not their money. Quite the contrary: they get a fee on every loan they originate, and a share of the interest payments, but they're not on the hook for loans that default. Heads they win, tails we lose.
In other words, these crooks are intermediaries – they're platforms. When you're on the customer side of the platform, it's easy to think that your misery benefits the sellers on the platform's other side. For example, it's easy to believe that as your Facebook feed becomes enshittified with ads, that advertisers are the beneficiaries of this enshittification.
But the reason you're seeing so many ads in your feed is that Facebook is also ripping off advertisers: charging them more, spending less to police ad-fraud, being sloppier with ad-targeting. If you're not paying for the product, you're the product. But if you are paying for the product? You're still the product:
In the same way: the private equity slumlord who raises your rent, loads up on junk fees, and lets your building disintegrate into a crime-riddled, sewage-tainted, rat-infested literal pile of garbage is absolutely fucking you over. But they're also fucking over their investors. They didn't buy the building with their own money, so they're not on the hook when it's condemned or when there's a forced sale. They got a share of the initial sale price, they get a percentage of your rental payments, so any upside they miss out on from a successful sale is just a little extra they're not getting. If they squeeze you hard enough, they can probably make up the difference.
The fact that this criminal playbook has wormed its way into every corner of the housing market makes it especially urgent and visible. Housing – shelter – is a human right, and no person can thrive without a stable home. The conversion of housing, from human right to speculative asset, has been a catastrophe:
Of course, that's not the only "asset class" that has been enshittified by private equity looters. They love any kind of business that you must patronize. Capitalists hate capitalism, so they love a captive audience, which is why PE took over your local nursing home and murdered your gran:
Homes are the last asset of the middle class, and the grifter class know it, so they're coming for your house. Willie Sutton robbed banks because "that's where the money is" and We Buy Ugly Houses defrauds your parents out of their family home because that's where their money is:
The fight for decent housing is the fight for a decent world. That's why unions have joined the fight for better, de-financialized housing. When a union member spends two hours commuting every day from a black-mold-filled apartment that costs 50% of their paycheck, they suffer just as surely as if their boss cut their wage:
The solutions to our housing crises aren't all that complicated – they just run counter to the interests of speculators and the ruling class. Rent control, which neoliberal economists have long dismissed as an impossible, inevitable disaster, actually works very well:
There are ways to have a decent home and a decent life without being burdened with debt, and without being a pawn in someone else's highly leveraged casino bet.
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
I'm on tour with my new, nationally bestselling novel The Bezzle! Catch me TOMORROW in ANAHEIM at WONDERCON: YA Fantasy, Room 207, 10 a.m.; Signing, 11 a.m.; Teaching Writing, 2 p.m., Room 213CD.
For 20+ years, I've processed all the information that came over my transom by blogging – mulling on why something I saw in the world caught my attention and trying to summarize it for strangers. This turns out to be a very powerful way to do a lot of different kinds of mental work:
With Pluralistic, the solo blog I founded 4 years ago, I've moved into longer, more synthetic essays that try to connect the things that caught my attention today with all those things I've written about for the past two decades. That's also proven very fruitful:
But this move to longer works has a downside: sometimes I'll arrive at the week's end and have a list of things that caught my attention without there being any obvious way to connect them, and when that happens, I devote a Saturday edition to a linkdump. There's been 15 of these so far:
https://pluralistic.net/tag/linkdump/
Welcome, then, to the 16th Pluralistic linkdump, and a warning, this one starts with an obituary.
Ross Anderson was one of the heroes of the cryptographic revolution, a brilliant scientist and communicator, a fantastic activist, and a scorching curmudgeon. Ross died this week. He was 67, and had chronic heart issues as well as long covid:
There's so much that's been written about Ross and his legacy already, and there's doubtless more to come, but I've picked out two pieces to point you to. The first is from Danny O'Brien, who was also the guy who talked me down off the ledge the first time Ross flamed me on a public mailing list, leaving me bleeding and furious:
https://news.ycombinator.com/item?id=39868983
As Danny says, Ross was "the model of a politically and socially involved computer scientist," a man whose blazing intellect, fierce moral center and relentless curiosity inspired a generation of technologists to think about politics, and a generation of political activists to think about technology. Few of Ross's eulogizers (thus far) have mentioned how Ross's passion came out as fury, and – as someone who counted Ross as a friend and inspiration – I think this is a serious omission. It's hard to imagine Ross doing all that he did without understanding the anger that – along with his ethics – fueled his passion.
(Compare with @neil-gaiman's classic essay on the anger of Terry Pratchett:)
The other obit that I want to point you to comes from Bill Buchanan, one of Ross's closest collaborators. Buchanan's memorial for Ross does a superb job of rounding up Ross's technical contributions to the field of security engineering:
Buchanan embeds videos for some of Ross's best speeches, links to his key papers (including the classic "Programming Satan's Computer," on "programming a computer which gives answers that are subtly and maliciously wrong at the most inconvenient moment possible), reminiscences of Great Moments In Ross Anderson, and terrific, lay-friendly breakdowns of some of Ross's key mathematical work.
As an unreasonable, angry person, I take great inspiration from people who channel their unreasonable anger to socially beneficial conduct – like whistleblowers. After Baltimore's Francis Scott Key Bridge was totaled by the 95,000-ton cargo ship MV *Dali(, a vast cohort of instant experts in structural engineering, sea freight and shipbuilding has taken to the internet with a slurry of takes on the Meaning Of the Bridge.
Some of these are very stupid indeed, like the idea that somehow "DEI" caused the collision. But you don't have to be an expert in maritime issues or civil engineering to understand the importance of this report from The Lever about shipping giant Maersk's culture of retaliation against whistleblowers:
Maersk is the company that chartered the MV Dali; Maersk is also a key player in the cartel that controls the world's shipping. Maersk was just sanctioned by the Labor Department for retaliating against a whistleblower who complained of unsafe conditions on the ships that Maersk chartered:
Maersk's policy required employees to bring concerns to their supervisors before alerting the Coast Guard or others. This is not how that stuff is supposed to work. OSHA called this policy “repugnant” and a “reprehensible and an egregious violation of the rights of employees,” which “chills them from contacting the [Coast Guard] or other authorities without contacting the company first.”
The whistleblower – chief mate on the Safmarine Mafadi – complained of "unrepaired leaks, unpermitted alcohol consumption onboard, inoperable lifeboats, faulty emergency fire suppression equipment, and other issues." We don't know (yet) what happened on the Dali, but it's obvious that a company that retaliates against whistleblowers, rather than heeding their warnings, is prioritizing covering its ass, not operating safely.
Which brings me (inevitably) to Boeing, and to poor John "Swampy" Barnett, the Boeing whistleblower who took his own life earlier this month. Barnett's suicide has stirred up similar low-yield online chatter focused on whether Boeing assassinated Barnett, a question that categorically cannot be answered through the method of arguing with internet strangers.
But there is a lot to say about Barnett: in particular, there's the substance of his whistleblowing, the specifics of his complaints about Boeing. For that, we can turn to the always-fantastic Maureen Tkacik, whose American Prospect piece "Suicide Mission" is definitive:
Tkacik does a great job of painting a picture of Swampy as a member of the tribe of unreasonable and angry people who refuse to sideline principle in order to get along. More importantly, Tkacik shows us what made Swampy so angry: a company that was hell-bent on lobotimizing itself by forcing out any technical expert who might point out inconvenient truths about the safety risks of high-profit strategies.
As Tkacik writes, Boeing once thought about "knowledge" in terms of expertise that could be brought to bear on the unimaginably complex task of making reliable, airworthy jets. But under the "value-engineering" financialized culture that arose after the McDonnell-Douglas merger, the company viewed knowledge as "intellectual property, trade secrets, and data." In other words, the point of knowledge was rent-extraction, not safety.
At the root of this transformation was the Jack Welch protege Jim "Prince Jim" McNerney, the former 3M CEO who took the helm at Boeing. McNerney was openly contemptuous of the company's senior engineers, branding them "phenomenally talented assholes" and rewarding managers who found ways to force them out of the company. It was McNerney who decided to produce the 787 "Dreamliner" in non-union shops, far from Seattle and its phenomenally talented assholes. Instead of these engineers, McNerney turned to Boeing suppliers to do the major engineering work on the 787 – despite the fact that many of these suppliers "lacked engineering departments."
The 787 was, infamously, a $80b-over-budget boondoggle, haunted by technical failures. Swampy was part of the "cleanup crew" that tried to salvage the 787, and witnessed first-hand how the company purged all the engineers who managed to ship the 787 despite McNerney and his "value engineers" and retaliated against workers who tried to unionize the South Carolina facility.
In particular, it was safety inspector who came in for the most savage punishment. When the FAA decided to let Boeing mark its own homework – hiring in-house safety inspectors to replace government inspectors – they pretended to believe that these Boeing-payrolled inspectors would be able to operate independently of Boeing's leadership. The inspectors tried to operate this way (not least because they were criminally liable for oversights that occurred on their watch) and McNerney's Boeing came down on them like a ton of aviation-grade aluminum.
To further neuter these inspectors, Boeing management ordered the inspectors to outsource their work to the mechanics they were supposed to be supervising – that is, the FAA outsourced safety checks to Boeing inspectors, and the inspectors outsourced those checks to the mechanics themselves. Tkacik: "Swampy believed relying on mechanics to self-inspect their work was not only insane but illegal under the Federal Aviation Administration charter."
Swampy kept careful records of every way in which this system produced unsafe aircraft and an unsafe workplace – including the day he discovered that someone had removed 400+ defective parts from the rejects box and installed them in aircraft in order to meet deadlines. Swampy's reports were key to establishing that the company's much-trumpeted "improvements" in safety reports were down to a culture of "bullying" – not any improvement in safety itself.
When Boeing went to war against Swampy, they barely bothered to pretend that they were playing by the rules. He was told one day that he was four-weeks into a 60-day "corrective action" that no one had told him about. The "corrective action" paperwork had a blank for Swampy's comments. He wrote, "Leadership wants nothing in email so they maintain plausible deniability. It is obvious leadership is just looking for items to criticize me on so I stop identifying issues. I will conform!"
Shortly thereafter, he was forced out altogether. Managers who tried to bring him on their teams were told that no one was allowed to hire John Barnett. His name appeared on a secret internal memo entitled "Quality Managers to Fire." Meanwhile, the value of Boeing shares had tripled.
After Boeing's 737 Maxes started falling out of the sky, Swampy's painstaking documentation of the flaws in the 787's production took on a new urgency. A program of random inspections of 787s found major defects in all of them ("Boeing Looked for Flaws in Its Dreamliner and Couldn’t Stop Finding Them" –WSJ). An Aviation Week diagram of problem spots with the 787 marked red arrows over "every single section, from the tip of the nose to the horizontal stabilizers":
Boeing's war on "brilliance" did its work: after everyone who understood how to make a safe aircraft was forced out of the company, financialized CEOs were able to cut corners on safety, triple the share-price, scoop up billions in government subsidies and bailouts, all without those pesky "phenomenally talented assholes" pointing out that they were going get (lots of) people killed.
Tkacik closes by saying that Swampy's former work colleagues refuse to believe he killed himself. A former executive told her "I don’t think one can be cynical enough when it comes to these guys…It’s a top-secret military contractor, remember; there are spies everywhere." I confess that I don't know what to make of that, but I'll say this: if Boeing killed Swampy, that's just one of hundreds of murders they committed. Whether or not Swampy's death was their fault, the deaths of everyone who went down on the 737 Maxes that crashed is on their hands.
That's what "profits before people" means, after all: sacrificing human lives to make yourself richer. It's the foundational tenet of the conservative movement, though that impulse is often checked by other factors, like human decency. It's only when sociopaths get a sustained run at leadership that you see what they really want.
Which brings me to the UK, which has been governed by the Conservative Party for 14 years. The Tories are tipped to get destroyed in the next election, and a long article in the New Yorker by Sam Knight catalogs the many ways in which Tory rule has devastated the UK:
The thing is, after 14 years, it's impossible for the Tories to blame anyone else for the state of the UK. With strong Parliamentary majorities, Conservatives were able to govern as they pleased – the only compromises they made were between their own internal factions. The ideological commitment to making the rich richer, privatizing everything, subordinating governance to market forces – that's all them.
It's all them: the worst period for wage growth since the Napoleonic Wars, on them. The catastrophic traffic, housing, jobs market, and precarity, on them. Plummeting health, on them. The austerity, on them. The withering of the country's courts and prisons and police, its wilderness, its programs for young people and pensioners, its public health, its diplomatic corps, its road maintenance – on them.
A country where the police can't afford to prosecute burglaries – on them (4% of burglaries are prosecuted). The 2.5 year delay between a rape arrest and its trial? On them. Mass closures of schools that are literally crumbling? On them.
43% of the countries courts have closed. On them. Cuts to prison funding, coupled with longer sentences? On them.
And of course, Brexit – on them. Every part of it. The referendum. The referendum question. The failure to negotiate a deal with the EU. All on them. The collapse in British living standards, all on them. The fact that the 20% richest households in the UK have been untouched by all this? Also on them. But you might not notice it in London, where people earn an average of 400% more than people in Nottingham.
The only growth sector outside of London are the Citizens Advice Bureaux, whose client rosters are growing even as their funding is cut. Where the CAB once primarily catered to people who couldn't make ends meet due to disability, unemployment and other reliable predictors of economic distress, today, CAB advisors are seeing homeowners, people working two jobs. Desperation is "like a black hole, dragging more and more people in,"
More Conservative growth: Tories presided over a doubling in the rate of NHS antidepressant prescriptions, and a 20% rise in long-term health conditions. No wonder Tory Britain had the world's worst pandemic outcomes for a wealthy nation – that's on them, too.
Knight's article closes with a Tory MP who believes that "the key thing for the Conservatives now is to be more conservative…Toryism must have its day again."
We can't count on oligarchs to rescue us from oligarchy – not even when oligarchy's failures push society to the breaking point. There's always a rationalization explaining why we just had to lean harder into oligarchy.
You hear echoes of this in the pro-monopoly choir, whose squeals of outrage at the rise of a new anti-monopoly movement grow louder even as monopolism's failures grow clearer. One of the more tangible expressions of monopoly's failures is the Ticketmaster/Livenation octopus, which controls the entire live music industry – key venues, promotions, and ticketing. Ticketmaster fucks over music fans, but it also cheats famous musicians, the kinds of people with big microphones, so we know a lot about how bad it is:
Of course, the fact that Swifties hate Ticketmaster lets the pro-monopolists dismiss critics as foolish young girls, not Very Serious People Who Understand Economics and thus can see that Ticketmaster's monopoly is Good, Actually.
Last week, Congressman Bill Pascrell dumped a ton of litigation documents related to Ticketmaster's sleaze, and Matt Stoller broke them down:
The docs reveal how Ticketmaster's system of (formerly) secret kickbacks let it choke out any competitor, so that it could charge fans more and pay artists less. The mechanics of the scam are beautifully laid out in Stoller's post – as is the many ways in which it violated both the law and Ticketmaster's numerous consent decrees arising from its previous lawbreaking.
This kind of scam breakdown is essential. It's easy to think that we, as mere normies, can't hope to understand the machinations of the corporations that prey on us. But once you pierce the veil of performative complexity, what's left behind is a set of crude tricks and transparent ruses.
Here's one of those transparent ruses: Discord's terms of service require Discord users to actively opt out of its "binding arbitration" system. Binding arbitration is when you sign a contract saying you can't sue the company no matter how much it harms you – instead, you promise to have your disputes heard by an "arbitrator" (a fake judge paid by the company that screwed you). Unsurprisingly, these fake judges are awfully tolerant of their employers' crimes.
Discord says that once you click through its garbage legalese novella, you have just a few days to opt out of this binding arbitration clause – if you happen to miss that fine print, you have "consented" to giving up your legal rights.
But every time Discord changes its ToS, the clock for opting out starts ticking again, and Discord has just changed (that is, worsened) its ToS again:
https://discord.com/terms
That means that if you send an email right now to [email protected] with "I am confirming that as of the date of this email, I am choosing to opt out of binding arbitration to settle disputes with Discord" in the body, you can escape this consent theater:
Consent theater is a particularly galling corporate ruse – the idea that we chose to allow them to abuse us. Consent theater gets more outrageous by the day. Take Soofa, who operate streetside digital kiosks that identify you by grabbing your phone's unique wifi and Bluetooth identifiers:
Soofa sells this data to advertisers – claiming that by walking down a public street, you "consented" to being tracked and sold.
The only reason this flies is that the US hasn't passed a federal consumer privacy law since 1988's Video Privacy Protection Act, which bans video-store clerks from telling people which VHS cassettes you took home. Congress keeps on failing to pass a privacy law, despite garbage companies like Soofa.
But that hasn't stopped the administrative agencies from acting to defend your privacy! The FTC just dropped its latest Privacy and Data Security Update, a greatest hits list of the actions the Commission took while Congress failed:
One of the best things about the current administration is the number of extremely competent regulators who know exactly how much power they have and aren't afraid to use it to help the American people:
The new FTC report, which details how the Commission's existing powers let it go after the commercial surveillance industry from smart doorbells to review fraud, from kids' programming to medical data, from lax security to data-breaches, is a bright spot in an otherwise grim week.
One more bright spot, then, before I wind up this linkdump. All week, I've been humming a half-remembered lyric, "come on baby/you're a link in this chain/put your hands together/and get free of the pain." For the life of me, I couldn't place it.
Last night, I searched for it (using Kagi, the post-Google search engine I've been paying for for the past month, and which I'm loving) and discovered that I had somehow completely forgotten a whole-ass band that I once loved: Toronto's Bourbon Tabernacle Choir, whom I saw live on many occasions.
The mystery lyric came from "Death is the Great Awakener," a fucking banger of a post-gospel track that I've been listening to on nonstop repeat as I wrote this. It's a hell of a tune and I'm intensely grateful to have it back in my life:
https://www.youtube.com/watch?v=Q6RUb63Tx3w
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
Like most neoliberal institutions, Boeing had come under the spell of a seductive new theory of “knowledge” that essentially reduced the whole concept to a combination of intellectual property, trade secrets, and data, discarding “thought” and “understanding” and “complex reasoning” possessed by a skilled and experienced workforce as essentially not worth the increased health care costs.
"The Unwinding" commits something like the opposite of journalism, the literary embodiment of the status quo. On some level this is Mr. Packer’s point: rudderless, disconnected America needs a rudderless, disoriented book. Whatever; he’s a hack.
Moe Tkacik reviews George Packer's The Unwinding: An Inner History of the New America.
