Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History

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The Grifter Archipelago; or, Why the Tea Party Doesn’t Matter

MR. CHAIRMAN, DELEGATES, and fellow citizens …

The roar of the crowd is deafening. Arms akimbo as the crowd pushes and shoves in violent excitement, I manage to scribble in my notebook: Place going … absolutely apeshit!

It’s September 3, 2008. I’m at the Xcel Center in St. Paul, Minnesota, listening to the acceptance speech by the new Republican vice-presidential nominee, Sarah Palin. The speech is the emotional climax of the entire 2008 presidential campaign, a campaign marked by bouts of rage and incoherent tribalism on both sides of the aisle. After eighteen long months covering this dreary business, the whole campaign appears in my mind’s eye as one long, protracted scratch-fight over Internet-fueled nonsense.

Like most reporters, I’ve had to expend all the energy I have just keeping track of who compared whom to Bob Dole, whose minister got caught griping about America on tape, who sent a picture of whom in African ceremonial garb to Matt Drudge … and because of this I’ve made it all the way to this historic Palin speech tonight not having the faintest idea that within two weeks from this evening, the American economy will implode in the worst financial disaster since the Great Depression.

Like most Americans, I don’t know a damn thing about high finance. The rumblings of financial doom have been sounding for months now—the first half of 2008 had already seen the death of Bear Stearns, one of America’s top five investment banks, and a second, Lehman Brothers, had lost 73 percent of its value in the first six months of the year and was less than two weeks away from a bankruptcy that would trigger the worldwide crisis. Within the same two-week time frame, a third top-five investment bank, Merrill Lynch, would sink to the bottom alongside Lehman Brothers thanks to a hole blown in its side by years of reckless gambling debts; Merrill would be swallowed up in a shady state-aided backroom shotgun wedding to Bank of America that would never become anything like a major issue in this presidential race. The root cause of all these disasters was the unraveling of a massive Ponzi scheme centered around the American real estate market, a huge bubble of investment fraud that floated the American economy for the better part of a decade. This is a pretty big story, but at the moment I know nothing about it. Take it as a powerful indictment of American journalism that I’m far from alone in this among the campaign press corps charged with covering the 2008 election. None of us understands this stuff. We’re all way too busy watching to make sure X candidate keeps his hand over his heart during the Pledge of Allegiance, and Y candidate goes to church as often as he says he does, and so on.

Just looking at Palin up on the podium doesn’t impress me. She looks like a chief flight attendant on a Piedmont flight from Winston-Salem to Cleveland, with only the bag of almonds and the polyester kerchief missing from the picture. With the Junior Anti-Sex League rimless glasses and a half updo with a Bumpit she comes across like she’s wearing a cheap Halloween getup McCain’s vice-presidential search party bought in a bag at Walgreens after midnight—four-piece costume, Pissed-Off White Suburban Female, $19.99 plus tax.

Just going by the crude sportswriter-think that can get any campaign journalist through a whole presidential race from start to finish if he feels like winging it, my initial conclusion here is that John McCain is desperate and he’s taking one last heave at the end zone by serving up this overmatched electoral gimmick in a ploy for … what? Women? Extra-horny older married men? Frequent Piedmont fliers?

I’m not sure what the endgame is, but just going by the McCain campaign’s hilariously maladroit strategic performance so far, it can’t be very sophisticated. So I figure I’ll catch a little of this cookie-cutter political stump act, snatch a few quotes for my magazine piece, then head to the exits and grab a cheesesteak on the way back to the hotel. But will my car still be there when I get out? That’s where my head is, as Sarah Palin begins her speech.

Then I start listening.

She starts off reading her credentials. She’s got the kid and nephew in uniform—check. Troop of milk-fed patriotic kiddies with Hallmark Channel names (a Bristol, a Willow, and a Piper, a rare Martin Mull–caliber whiteness trifecta)—check. Mute macho husband on a snow machine—check. This is all standard-issue campaign decoration so far, but then she starts in with this thing about Harry Truman:

My parents are here tonight, and I am so proud to be the daughter of Chuck and Sally Heath. Long ago, a young farmer and haberdasher from Missouri followed an unlikely path to the vice presidency.

A writer observed: We grow good people in our small towns, with honesty, sincerity, and dignity. I know just the kind of people that writer had in mind when he praised Harry Truman.

I grew up with those people.

They are the ones who do some of the hardest work in America, who grow our food, run our factories, and fight our wars.

They love their country, in good times and bad, and they’re always proud of America. I had the privilege of living most of my life in a small town.

I’m on the floor for the speech—stuck in the middle of a bunch of delegates from, I believe, Colorado—and at the line They are the ones who do some of the hardest work, the section explodes in cheers.

I look back up at Palin and she has a bit of a confident grin on her face now. Not quite a smirk, that would be unfair to say, but she’s oozing confidence after delivering these loaded lines. From now through the end of her speech there will be a definite edge to her voice.

Before I have any chance of noticing it she’s moved beyond the speaking part of the program and is suddenly, effortlessly, deep into the signaling process, a place most politicians only reach with great effort, and clumsily, if at all. But Palin is the opposite of clumsy: she’s in the dog-whistle portion of the speech and doing triple lutzes and back-flips.

She starts talking about her experience as mayor of Wasilla, Alaska:

I guess a small-town mayor is sort of like a community organizer, except that you have actual responsibilities. I might add that in small towns, we don’t quite know what to make of a candidate who lavishes praise on working people when they are listening and then talks about how bitterly they cling to their religion and guns when those people aren’t listening.

We tend to prefer candidates who don’t talk about us one way in Scranton and another way in San Francisco.

The TV talking heads here will surely focus on the insult to Barack Obama and will miss the far more important part of this speech—the fact that Palin has moved from talking about small-town folks as They a few seconds ago to We now—We don’t know what to make of this, We prefer this. It doesn’t take a whole lot of thought to figure out who this We is. Certainly, to those listening, if you’re part of this We, you know. If you’re not part of it, as I’m not, you know even more.

Sarah Palin’s We is a very unusual character to make an appearance in a national presidential campaign, where candidates almost to the last tend to scrupulously avoid any hint that they are not talking to all Americans. Inclusiveness, telegenic warmth, and inoffensiveness are the usual currency of national-campaign candidates. Say as little as possible, hope some of the undecideds like your teeth better than the other guy’s—that’s usually the way this business works.

But Palin, boldly, has tossed all that aside: she is making an impassioned bunker speech to a highly self-aware We that defines itself by the enemies surrounding it, enemies Palin is now haughtily rattling off one by one in this increasingly brazen and inspired address.

She’s already gone after the experts and pollsters and pundits who dismissed McCain, the community organizer Obama, even the city of San Francisco (We are more likely to live in Scranton), but the more important bit came with the line about how people in small towns are the ones who do some of the hardest work. The cheer at that line was one of recognition, because what Palin is clearly talking about there are the people this crowd thinks don’t do the hardest work, don’t fight our wars, don’t love our country.

And We know who They are.

What Palin is doing is nothing new. It’s a virtual copy of Dick Nixon’s forgotten Americans gambit targeting the so-called silent majority—the poor and middle-class suburban (and especially southern) whites who had stayed on the sidelines during the sixties culture wars. That strategy won Nixon the election against Humphrey by stealing the South away from the Democrats and has been the cornerstone of Republican electoral planning ever since.

The strategy of stoking exurban white resentment against encroaching immigration, against the disappearance of old values, against pop-culture glitz, against government power, it all worked so well for the Republicans over the years that even Hillary Clinton borrowed it in her primary race against Obama.

Now Palin’s We in St. Paul is, in substance, no different from anything that half a dozen politicians before her have come up with. But neither Nixon nor Hillary nor even Ronald Reagan—whose natural goofball cheerfulness blunted his ability to whip up divisive mobs—had ever executed this message with the political skill and magnetism of this suddenly metamorphosed Piedmont flight attendant at the Xcel Center lectern.

Being in the building with Palin that night is a transformative and oddly unsettling experience. It’s a little like having live cave-level access for the ripping-the-heart-out-with-the-bare-hands scene in Indiana Jones and the Temple of Doom. A scary-as-hell situation: thousands of pudgy Midwestern conservatives worshipping at the Altar of the Economic Producer, led by a charismatic arch-priestess letting lose a grade-A war cry. The clear subtext of Palin’s speech is this: other politicians only talk about fighting these assholes, I actually will.

Palin is talking to voters whose country is despised internationally, no longer an industrial manufacturing power, fast becoming an economic vassal to the Chinese and the Saudis, and just a week away from an almost-total financial collapse. Nobody here is likely to genuinely believe a speech that promises better things.

But cultural civil war, you have that no matter how broke you are. And if you want that, I, Sarah Palin, can give it to you. It’s a powerful, galvanizing speech, but the strange thing about it is its seeming lack of electoral calculation. It’s a transparent attempt to massmarket militancy and frustration, consolidate the group identity of an aggrieved demographic, and work that crowd up into a lather. This represents a further degrading of the already degraded electoral process. Now, not only are the long-term results of elections irrelevant, but for a new set of players like Palin, the outcome of the election itself is irrelevant. This speech wasn’t designed to win a general election, it was designed to introduce a new celebrity, a make-believe servant of the people so phony that later in her new career she will not even bother to hold an elective office.

The speech was a tremendous success. On my way out of the building I’m stuck behind a pair of delegates who are joyously rehashing Palin’s money quotes:

BUTT-HEAD: You know what they say the difference is between a hockey mom and a pit bull?

BEAVIS: Yeah.

BUTT-HEAD: No, I mean, you remember?

BEAVIS: Oh, yeah!

BUTT-HEAD: She’s like, Lipstick!

BEAVIS: Yeah, lipstick! (both explode in laughter)

I reach out and tap one of them on the shoulder.

Hey, I say. Can I ask you two what you think Sarah Palin will actually accomplish, if she gets elected?

Beavis stares at me. I think she’s gonna take America back, he says.

Getting this kind of answer on campaign jaunts is like asking someone why they like Pepsi and having them answer, Because I believe it’s the choice of a new generation.

Yeah, okay, I say. But what actual policies do you want her to enact, or what laws do you think she’s going to pass?

They both frown and glance down at my press pass, and I realize instantly the game is up. I’m not part of the We. Butt-Head steps forward in a defensive posture, shielding his buddy from the liberal-media Ausländer.

Wait a minute, he says. Who do you work for, exactly?

Here’s the big difference between America and the third world: in America, our leaders put on a hell of a show for us voters, while in the third world, the bulk of the population gets squat. In the third world, most people know where they stand and don’t have any illusions about it.

Maybe they get a parade every now and then, get to wave at shock troops carrying order colors in an eyes-right salute. Or maybe, if they’re lucky, the leader will spring for a piece of mainstream entertainment—he’ll host a heavyweight title fight at the local Palace of Beheading. Something that puts the country on the map, cheers the national mood, distracts folks from their status as barefoot scrapers of the bottom of the international capitalist barrel.

But mostly your third-world schmuck gets the shaft. He gets to live in dusty, unpaved dumps, eat expired food, scratch and claw his way to an old enough age to reproduce, and then die unnecessarily of industrial accidents, malnutrition, or some long-forgotten disease of antiquity. Meanwhile, drawing upon the collective whole-life economic output of this worthy fellow and 47 million of his fellow citizens, the leader and about eighteen of his luckiest friends get to live in villas in Ibiza or the south of France, with enough money for a couple of impressive-looking ocean cruisers and a dozen sports cars.

We get more than that in America. We get a beautifully choreographed eighteen-month entertainment put on once every four years, a beast called the presidential election that engrosses the population to the point of obsession. This ongoing drama allows everyone to subsume their hopes and dreams for the future into one all-out, all-or-nothing battle for the White House, a big alabaster symbol of power we see on television a lot. Who wins and who loses this contest is a matter of utmost importance to a hell of a lot of people in this country.

But why it’s so important to them is one of the great unexplored mysteries of our time. It’s a mystery rooted in the central, horrifying truth about our national politics.

Which is this: none of it really matters to us. The presidential election is a drama that we Americans have learned to wholly consume as entertainment, divorced completely from any expectations about concrete changes in our own lives. For the vast majority of people who follow national elections in this country, the payoff they’re looking for when they campaign for this or that political figure is that warm and fuzzy feeling you get when the home team wins the big game. Or, more important, when a hated rival loses. Their stake in the electoral game isn’t a citizen’s interest, but a rooting interest.

Voters who throw their emotional weight into elections they know deep down inside won’t produce real change in their lives are also indulging in a kind of fantasy. That’s why voters still dream of politicians whose primary goal is to effectively govern and maintain a thriving first world society with great international ambitions. What voters don’t realize, or don’t want to realize, is that that dream was abandoned long ago by this country’s leaders, who know the more prosaic reality and are looking beyond the fantasy, into the future, at an America plummeted into third world status.

These leaders are like the drug lords who ruled America’s ghettos in the crack age, men (and some women) interested in just two things: staying in power, and hoovering up enough of what’s left of the cash on their blocks to drive around in an Escalade or a 633i for however long they have left. Our leaders know we’re turning into a giant ghetto and they are taking every last hubcap they can get their hands on before the rest of us wake up and realize what’s happened.

The engine for looting the old ghetto neighborhoods was the drug trade, which served two purposes with brutal efficiency. Narco-business was the mechanism for concentrating all the money on the block into that Escalade-hungry dealer’s hands, while narco-chemistry was the mechanism for keeping the people on his block too weak and hopeless to do anything about it. The more dope you push into the neighborhood, the more weak, strung-out, and dominated the people who live there will be.

In the new American ghetto, the nightmare engine is bubble economics, a kind of high-tech casino scam that kills neighborhoods just like dope does, only the product is credit, not crack or heroin. It concentrates the money of the population in just a few hands with brutal efficiency, just like narco-business, and just as in narco-business the product itself, debt, steadily demoralizes the customer to the point where he’s unable to prevent himself from being continually dominated.

In the ghetto, nobody gets real dreams. What they get are short-term rip-off versions of real dreams. You don’t get real wealth, with a home, credit, a yard, money for your kids’ college—you get a fake symbol of wealth, a gold chain, a Fendi bag, a tricked-out car you bought with cash. Nobody gets to be really rich for long, but you do get to be pretend rich, for a few days, weeks, maybe even a few months. It makes you feel better to wear that gold, but when real criminals drive by on the overpass, they laugh.

It’s the same in our new ghetto. We don’t get real political movements and real change; what we get, instead, are crass show-business manipulations whose followers’ aspirations are every bit as laughable and desperate as the wealth dreams of the street hustler with his gold rope. What we get, in other words, are moderates who don’t question the corporate consensus dressed up as revolutionary leaders, like Barack Obama, and wonderfully captive opposition diversions like the Tea Party—the latter a fake movement for real peasants that was born that night in St. Paul, when Sarah Palin addressed her We.

If American politics made any sense at all, we wouldn’t have two giant political parties of roughly equal size perpetually fighting over the same 5–10 percent swatch of undecided voters, blues versus reds. Instead, the parties should be broken down into haves and have-nots—a couple of obnoxious bankers on the Upper East Side running for office against 280 million pissed-off credit card and mortgage customers. That’s the more accurate demographic divide in a country in which the top 1 percent has seen its share of the nation’s overall wealth jump from 34.6 percent before the crisis, in 2007, to over 37.1 percent in 2009. Moreover, the wealth of the average American plummeted during the crisis—the median American household net worth was $102,500 in 2007, and went down to $65,400 in 2009—while the top 1 percent saw its net worth hold relatively steady, dropping from $19.5 million to $16.5 million.

But we’ll never see our political parties sensibly aligned according to these obvious economic divisions, mainly because it’s so pathetically easy to set big groups of voters off angrily chasing their own tails in response to media-manufactured nonsense, with the Tea Party being a classic example of the phenomenon. If you want to understand why America is such a paradise for high-class thieves, just look at the way a manufactured movement like the Tea Party corrals and neutralizes public anger that otherwise should be sending pitchforks in the direction of downtown Manhattan.

There are two reasons why Tea Party voters will probably never get wise to the Ponzi-scheme reality of bubble economics. One has to do with the sales pitch of Tea Party rhetoric, which cleverly exploits Main Street frustrations over genuinely intrusive state and local governments that are constantly in the pockets of small businesses for fees and fines and permits.

The other reason is obvious: the bubble economy is hard as hell to understand. To even have a chance at grasping how it works, you need to commit large chunks of time to learning about things like securitization, credit default swaps, collateralized debt obligations, etc., stuff that’s fiendishly complicated and that if ingested too quickly can feature a truly toxic boredom factor.

So long as this stuff is not widely understood by the public, the Grifter class is going to skate on almost anything it does—because the tendency of most voters, in particular conservative voters, is to assume that Wall Street makes its money engaging in normal capitalist business and that any attempt to restrain that sector of the economy is thinly disguised socialism.

That’s why it’s so brilliant for the Tea Party to put forward as its leaders some of the most egregiously stupid morons on our great green earth. By rallying behind dingbats like Palin and Michele Bachmann—the Minnesota congresswoman who thought the movie Aladdin promoted witchcraft and insisted global warming wasn’t a threat because carbon dioxide is natural—the Tea Party has made anti-intellectualism itself a rallying cry. The Tea Party is arguing against the very idea that it’s even necessary to ask the kinds of questions you need to ask to grasp bubble economics.

Bachmann is the perfect symbol of the Dumb and Dumber approach to high finance. She makes a great show of saying things that would get a kindergartner busted to the special ed bus—shrieking, for instance, that AmeriCorps was a plot to force children into liberal reeducation camps (Bachmann’s own son, incidentally, was a teacher in an AmeriCorps program), or claiming that the U.S. economy was 100 percent private before Barack Obama’s election (she would later say Obama in his first year and a half managed to seize control of 51 percent of the American economy).

When the Chinese proposed replacing the dollar as the international reserve currency, Bachmann apparently thought this meant that the dollar itself was going to be replaced, that Americans would be shelling out yuan to buy six-packs of Sprite in the local 7-Eleven. So to combat this dire threat she sponsored a bill that would bar the dollar from being replaced by any foreign currency. When reporters like me besieged Bachmann’s office with calls to ask if the congresswoman, a former tax attorney, understood the difference between currency and reserve currency, and to ask generally what the hell she was talking about, her spokeswoman, Debbee Keller, was forced to issue a statement clarifying that she’s talking about the United States … The legislation would ensure that the dollar would remain the currency of the United States.

A Democratic staffer I know in the House called me up after he caught wind of Bachmann’s currency bill. We get a lot of yokels in here, small-town lawyers who’ve never been east of Indiana and so on, but Michele Bachmann … We’ve just never seen anything quite like her before.

Bachmann has a lot of critics, but they miss the genius of her political act. Even as she spends every day publicly flubbing political SAT questions, she’s always dead-on when it comes to her basic message, which is that government is always the problem and there are no issues the country has that can’t be worked out with basic common sense (there’s a reason why many Tea Party groups are called Common Sense Patriots and rally behind common sense campaigns).

Common sense sounds great, but if you’re too lazy to penetrate the mysteries of carbon dioxide—if you haven’t mastered the whole concept of breathing by the time you’re old enough to serve in the U.S. Congress—you’re not going to get the credit default swap, the synthetic collateralized debt obligation, the interest rate swap. And understanding these instruments and how they were used (or misused) is the difference between perceiving how Wall Street made its money in the last decades as normal capitalist business and seeing the truth of what it often was instead, which was simple fraud and crime. It’s not an accident that Bachmann emerged in the summer of 2010 (right as she was forming the House Tea Party Caucus) as one of the fiercest opponents of financial regulatory reform; her primary complaint with the deeply flawed reform bill sponsored by Senator Chris Dodd and Congressman Barney Frank was that it would end free checking accounts.

Our world isn’t about ideology anymore. It’s about complexity. We live in a complex bureaucratic state with complex laws and complex business practices, and the few organizations with the corporate willpower to master these complexities will inevitably own the political power. On the other hand, movements like the Tea Party more than anything else reflect a widespread longing for simpler times and simple solutions—just throw the U.S. Constitution at the whole mess and everything will be jake. For immigration, build a big fence. Abolish the Federal Reserve, the Department of Commerce, the Department of Education. At times the overt longing for simple answers that you get from Tea Party leaders is so earnest and touching, it almost makes you forget how insane most of them are.

It’s not in the enumerated powers of the U. S. Constitution, says Bill Parson, a Tea Party–friendly Republican Senate candidate in Nevada who was gracious enough to take me around the state in the spring of 2010. I’d asked him about his attitude toward certain proposed financial regulations, like a mandate that derivatives such as credit default swaps be traded and cleared on open exchanges, just like stocks.

Parson is a big, burly ex-marine with an affable disposition who, like a lot of retired military types, never learned that a flattop starts looking weird on men after the age of fifty or so. He and his campaign manager, a witty and sharp-tongued older woman named Karel Smith who works as a blackjack dealer, are my tour guides on a trip around the Nevada Republican primary race, which features multiple Tea Party candidates, including eventual nominee Sharron Angle.

My whole purpose in going to Nevada was to try to find someone in any of the races who had any interest at all in talking about the financial crisis. Everyone wanted to talk about health care and immigration, but the instant I even mentioned Wall Street I got blank stares at best (at one voter rally in suburban Vegas I had a guy literally spit on the ground in anger, apparently thinking I was trying to trick him, when I asked him his opinion on what caused AIG’s collapse). Parson, meanwhile, seemed obsessed with a whole host of intramural conservative issues that make absolutely no sense to me whatsoever—at one point he spent nearly an hour trying to explain to me the difference between people who call