Third World America: 'Fast-Tracking to Anarchy'

By: Janet_Tavakoli

My last post about Arianna Huffington's new book, Third World America: How Our Politicians are Abandoning the Middle Class and Betraying the American Dream talked about the Great Recession, the Great Bailout, and the Great Cover-Up of financial crimes.

Among the future consequences of not fixing our national problems will likely be an increase in social unrest and an increase in crime. A look at Chicago's problems may serve as a call to action for America's middle class. Chicago's city budget is in dire straits. That's also true of the state of Illinois, California, New York and other areas. In Chicago, the same mismanagement that deepened our fiscal crisis has caused a crisis in essential city services.

The police department provides just one example. Sunday's Chicago Tribune reported that in 31 days, there were 303 shot and 33 dead:

"Crime has been holding steady in Chicago in recent years. Through July, there have been 1,089 shootings in the city, a 2.4 percent decrease over last year."

According to the newspaper, it's a "typical" July. Yet there is nothing typical about it when you look beyond the numbers. The first problem is that the numbers are flat-out unacceptable in any year in any city in the U.S. It is inexplicable that citizens of Chicago have tolerated this situation in poorer neighborhoods for decades. The second problem is a new problem. Years of complacency by Chicago's middle and upper classes have brought the crisis to their doorstep.

In recent years, incompetent and ill-qualified people have been promoted to "leadership" positions. Hiring and exam giving has declined, and the police department is undermanned and demoralized. Even worse is the fragging officers take from politicians, unqualified people in police "administration," and from the local media.

Spiraling Out of Control: Open Season on Cops

The title of this post comes from "A City at War With Itself," a commentary written by Lt. John Andrews, a 25-year veteran of the Chicago Police Department:

Most horrific for Chicago is that in less than 60 days, Chicago has lost 3 of its police officers, killed by gunfire as victims of robberies. It seems no one is safe in our city anymore.

Chicago's homicide rate this year currently stands toe-to-toe with the total number of military forces killed in both Afghanistan and Iraq.

Thugs, gangs and renegade groups run the streets and neighborhoods, intimidating and victimizing the decent citizens of this city. They go mostly unchallenged and unchecked by a totally demoralized police force that is dangerously understaffed and still out-gunned on the streets.

Lt. Andrews describes in detail a police department demoralized by scandals and corruption. He names those who received promotions based on political pull rather than merit or suitability for responsibility. Moreover, police fear reprisals from political special interest groups when using necessary force:

When asked, most will freely tell you that they do not want to place themselves, their families and livelihoods at risk from a perceived Machiavellian police superintendent or other incompetent "bosses" that could lead them into legal trouble that would risk their liberty and freedom (jail).

Even during televised speeches at the recent funerals of police officers, public officials speak out of both sides of their mouths. On the one hand, they decry the apparent targeted shootings of police officers -- one of whom, Michael Bailey, was wearing his uniform after just coming off duty from a night of guarding the mayor's house -- and on the other hand, they say that of course, police must follow proper procedures and work within the law (and often pause for effect).

Of course, everyone agrees the police must follow proper procedures, but the subtext of the message delivered at an officer's funeral is repellant. These thinly-disguised campaign speeches suggest the police force needs to be careful not to bring these tragedies upon themselves. Perhaps they think police should round up suspects and put them in Monty Python's comfy chair.

If the goal is to help police officers follow proper procedures at all times, then politicians and the police superintendent have to staff the force with well-qualified recruits (this means creating a reasonable qualification exam), remove corrupt "leaders" by reversing ridiculous promotions, and promote qualified officers based on merit. The police force desperately needs manpower and both physical and leadership back-up. Officers confident that their authority is respected, their judgment is trusted, and their tools are equal to a dangerous and difficult job will produce better results than people who have been left hanging out to dry, while their colleagues are massacred.

Media Strafing

Local media has lost the plot. A couple of days ago, an off-duty police officer shot and killed an armed home invader who had kicked in his door. The officer reportedly lives on a block with five or six other police officers. The intruder allegedly has a history of wrongdoing and invaded a suburban home with another man. He posed as a cable worker and bound and gagged his victims. Yet, some news reports described the intruder as a "victim" and said the off-duty officer was not charged, as if charges should have even been an issue. According to comments posted at Second City Cop, WGN's televised news unwisely showed the police officer's home, identified his neighborhood, and zoomed in on his home address.

Mug Mile

Formerly "safe" and "upscale" neighborhoods have become the targets of "wildings." James Carlini, an editor for Wisconsin Technology News, gave an eyewitness account of his experience of Chicago's "land sharks" at the premier shopping district known as the Magnificent Mile, or Mag Mile:

Coming back to the John Hancock to pick up my car at around 9PM, I noticed several little bands of four to five juveniles walking around sizing up people as they walked down the streets. Luckily we were already in our car, but I could sense that these "gangsta wannabes" were up to no good.

There were some arrests made that night but very suspicious that there was no mention in the mainstream media. There have been incidences like this before but never a mention or a caution. Why? Afraid to report on the truth or were you told not to report on the truth?

One of Carlini's readers noted that Mayor Richard Daley seems to live in a bubble:

I think [Mayor Daley] should go out in the evening without his hit squad protecting him with the firearms he professes to hate so much. That would be six more highly-paid police officers who could patrol the downtown streets that you and I walk down -- unarmed.

Buy Back America

If nothing else good comes out of our crisis, perhaps it will serve as a wake-up call for the entire nation. It's time to put our shoulders to the wheel to solve our problems.

Doing nothing is not an option for America. Much of poor America, especially in our major cities, has been Third World America for decades. Soon the urban middle classes and even upper classes will become better acquainted with that world.

Washington's political corruption and mismanagement has the same roots as Chicago's. As Arianna points out, on a national level, we need "the mother of all reforms:"

"That is why the first step toward stopping our relentless transformation into Third World America has to be breaking the choke hold that special interest money has on our politicians." (Third World America, 172)

On a local level, Chicago will have to fix its own problems by breaking the choke hold of special interest groups. On a national level, it will take a Constitutional amendment requiring full public financing for political campaigns (for starters). Our politicians have shown us how willing they are to be owned by special interest groups that will buy votes, buy a campaign, or just buy them off. As Arianna explains: "If someone's going to own the politicians, it might as well be the American people."

Third World America will be published September 7 and is available here.

By Janet Tavakoli

web site: www.tavakolistructuredfinance.com

Janet Tavakoli is the president of Tavakoli Structured Finance, a Chicago-based firm that provides consulting to financial institutions and institutional investors. Ms. Tavakoli has more than 20 years of experience in senior investment banking positions, trading, structuring and marketing structured financial products. She is a former adjunct associate professor of derivatives at the University of Chicago's Graduate School of Business. Author of: Credit Derivatives & Synthetic Structures (1998, 2001), Collateralized Debt Obligations & Structured Finance (2003), Structured Finance & Collateralized Debt Obligations (John Wiley & Sons, September 2008). Tavakoli’s book on the causes of the global financial meltdown and how to fix it is: Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street (Wiley, 2009).

© 2010 Copyright Janet Tavakoli- All Rights Reserved
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