The Fourteenth Banker Blog

August 26, 2010

NY Elites Worried about French Style Revolution

Filed under: Running Commentary — thefourteenthbanker @ 8:11 PM

Yves at Naked Capitalism reported today on some conversations with New York acquaintances that would either fall into or be familiar with the “elite” classes.  Here is the post in its entirety.

Normally, I don’t report on anecdotes from my immediate circle, but a set of conversations in less than a 24 hour period suggests that even those comparatively unaffected by the crisis are bracing themselves for the possibility of sudden, large-scale, adverse changes. And that sort of gnawing worry seems to be growing in New York despite being buoyed by TARP funds and covert bank subsidies.

When out on my rounds the day before yesterday, I ran into an old McKinsey colleague, who had subsequently had impressively titled jobs in Big Firms You Heard Of before semi-retiring to manage family money. He and his very accomplished wife were big Bush donors and had been invited to both inaugurations.

He made short order of niceties and got to the point: “We need more fiscal stimulus. Obama did too little and too much of what he spent on was liberal pork. We could and need to spend a lot on infrastructure. This is looking a lot like 1936. I’m afraid it could get really ugly. And I’m particularly worried that the Republicans will win big this fall. They’ll cut even deeper, that’s the last thing we need right now.”

No I am not making this up, and yes, this is one of the last people I would have expected to express this line of thinking.

Next day, I had lunch with a two long standing, keen observers and participants in the New York scene, as in very involved in some of the city’s important institutions. Both have witnessed the shift in values over the last thirty years and the rising stratification, particularly at the top end (New York has always been plutocratic, but it formerly had a large upper middle class and a much smaller and much less isolated upper crust).

They started by commenting on my Bill Gross post, which had mentioned the appalling Steve Schwarzman contention that taxing private equity overlords more on their carried interest was like HItler invading Poland. Schwarzman is not only not retreating from his remark, he is convinced that the reason the economy is so lousy is that rich men like him are not getting their way (this is if anything an understatement of their account. Both men expect his head to be the first on a pike).

The conversation turned to whether the US was going towards revolution or fascism. One argued for the a continuation of trends underway: that the continuing weakness of the Obama Administration (and the discrediting of other members of the elite) meant there was a power vacuum. The obvious group to exploit it is the most strident, uncompromising opportunists, an area where the extreme right has a monopoly. The other, who has ben reading up on the French Revolutions. took issue with the conventional idea that a revolution is impossible in America: “In France, the trigger was that people were hungry. We are close to that point than most think.” He stressed the desensitization to violence (video games, more and more violence) plus widespread gun ownership. And he pointed to rising and underreported crime in the city, for instance, assaults of cab drivers.

He also noted that he believed that there were a lot of people (and he meant in the upper income strata) who were barely holding on, keeping up appearances, and hoping something would break their way. Some might get lucky, but most will hit the wall financially.

This was an engaging and lively conversation, but it you stepped back, the content was grim. Another thread was the decay in values, that there has been two generations of parents not setting boundaries for their children. One lives next to one of the elite private schools and likes children, but called those in his ‘hood as “monsters,” describing how a boy was beating up on his nanny and he had to intercede.

These data points don’t converge neatly, but they suggest a deep-rooted anxiety that economic and social structures are near a breaking point, and whatever comes next is not likely to be pretty.

That these types of conversations are going on is a good thing. Admitting you have a problem is the first step to solving it.

5 Comments »

  1. To paraphrase Rousseau-
    Eat the Oligarchy

    Comment by just joe — August 27, 2010 @ 3:27 AM | Reply

  2. “We need more fiscal stimulus. Obama did too little and too much of what he spent on was liberal pork. We could and need to spend a lot on infrastructure. This is looking a lot like 1936. I’m afraid it could get really ugly. And I’m particularly worried that the Republicans will win big this fall. They’ll cut even deeper, that’s the last thing we need right now.”

    I find it fascinating how someone well-heeled enough to donate big money to Bush has been seduced by Keynesianism, and assumes that the Federal Government knows best what sort of infrastructure we need.

    Comment by Dave Narby — August 27, 2010 @ 11:56 PM | Reply

  3. Few people know but the reason Mao beat Chiang kai Shek is not because of his red book or Chinese communist ideals (half or more Chinese were illiterate), but the fact that Chiang Kai Shek destroyed Chinese currency. We would be lucky if we have a French revolution.

    Comment by parth vasa — August 28, 2010 @ 9:40 PM | Reply

  4. Recently one of the men appointed by Obama to examine the Social Security compared the program to a cow with 300 million ‘teats’. This attitude about a program that we are forced to pay into set the tone in my opinion as to exactly how the ‘upper crust’ feels about the rest of us.

    Fair warning to the elites; when the people get hungry enough you can bet you will be on the menu. A good time will be had by all.

    Comment by Strawman — September 5, 2010 @ 11:00 AM | Reply

  5. Looking back at this article,the elite seem naive at best and undoubtedly hard heated.Many not only see the risk of revolution,more Mao than French,but are actively tracking it via the security services.They,the services,assume their tactics of murder and arrest are enough to stop a revolution-again how naive.At first these services and their databases will be taken over and when people realise how they have been used against them,it will be turned on its head and used against the very elite it protects.How soon though?

    Comment by Maria dos Santos — April 17, 2011 @ 9:28 AM | Reply


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