A trader reacts on the floor of the New

There has been plenty of well-deserved derision directed at the billionaire fretting in the Wall Street Journal that the super-duper-rich like him are headed for concentration camps. Paul Krugman fires an AK47 into the world’s smallest barrel here; while Josh Marshall has a must-read. Josh is actually trying to understand rather than simply excoriate the completely bizarre idea that the Obama administration is a populist, socialist threat to a capitalist system it all but saved from itself:

It is that mix of insecurity, a sense of the brittleness of one’s hold on wealth, power, privileges, combined with the reality of great wealth and power, that breeds a mix of aggressiveness and perceived embattlement.

I’ve been a little taken aback too by the attitude of the Wall Street class, after they royally fucked up the entire global economy, were bailed out by the rest of us, still get Dimon-style compensation, and have enjoyed one of the sharpest booms in stock prices since 2009. At some point, you have to ask: WTF? But here’s the empirical data on how hard the one percent have had it over the last few decades:

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Well, yes, they have returned to pre-Reagan levels of taxation. But the tax take is still roughly where it was in the mid-1990s and I don’t recall Clinton being perceived as a socialist or howls of protest from the wealthy as the economy boomed in the tech boom bubble. Josh notes, for example:

It’s worth remembering that Bill Clinton pushed through a reasonably substantial tax hike on upper income earners in 1993. President Obama meanwhile largely maintained the tax policies of George W. Bush, the guy who had in essence repealed Clinton’s tax increase. These are all facts that are hard to ignore.

So whence the anger and the panic? Josh thinks, as my shrink would say, that it is multi-determined. Is it adjusting to a president who, though he is a pragmatist in his record, is nonetheless more progressive in outlook than any president since the conservative revolution of the late 1970s (of which Carter, in some ways, was a part)? Is it classic in-group isolation that fosters ideological extremism? Yes and yes. But I’d add a couple of factors to the mix.

The first is the triumph of victimology in political discourse. It began on the hard left, of course, in the 1990s, as every member of a minority group was designated a victim, and all were allegedly on the verge of being targeted or discriminated against. Godwin’s Law had to be constantly invoked back then as well. But today, what began on the left is ubiquitous on the right: those denying marriage rights to gays are in fact the real victims of lefty intolerance; whites, not blacks, are the real victims of our racial politics; and men are now the real victims of the feminized, big government left (see Hume; Brit, et al.). If you want to free-base on far right victimology, just track down the rhetoric of Sarah Palin. According to her, Christians now live in constant fear of legions of Obama’s jack-booted thugs, i.e. Wal-Mart greeters wishing them “Happy Holidays.”

The second factor, I’d argue, is actually self-awareness. This is entirely speculative, but many of these extremist plutocrats must surely know, somewhere in their psyches, that they collectively failed – and failed terribly – in self-regulating and thereby protecting the very capitalist system they depend on for so much.

These masters of the universe had to go cap in hand to the federal government to bail out their sorry, incompetent asses. They were revealed not as brilliant engineers of our collective wealth, but as enablers of the debt-mania, tech-hubris and bubble-creating that destroyed so much from 2007 onwards. They were exposed as something much worse than greedy; they were revealed as incompetents whose mistakes and over-reach created untold misery and hardship for countless millions. Their own self-image – again, somewhere deep down – must have shattered a little.

People respond to revelations of their own incompetence in different ways. But the proudest – and this group of people are not exactly renowned for humility – can sometimes respond by internalizing an ever more extreme version of their own previous mindset. They cannot compute the fact that they failed, and so they have to construct a version of reality that insists it was all someone else’s fault, and then build Twitter Goes Public On The New York Stock Exchangeon that an ideology of their own unrelenting heroism, which is now, on their minds, unfairly impugned.

And the only target of blame that can plausibly fill the gap is the federal government. Anything lesser would actually diminish the one-percent’s self-perception as masters of the universe, and require some adjustment in an ideology that has been cast as eternal truth since 1980. Hence the early 2008 myth that the government alone created the economic crisis through too-cushy mortgages – when the vast majority of shady mortgages were in the private sector. And because the one percenters’ collective humiliation has been so great and so public – even the Pope won’t absolve Larry Kudlow of his heresies any longer! – you get the kind of anguished psychology behind Tom Perkins’ absurd paranoia (which makes the neocons’ habitual resort to the anti-Semite card look relatively mild).

You know who they remind me of? Dick Cheney and Don Rumsfeld after 9/11. Both were responsible for the collapse in national security that enabled 9/11 to take place. Both were sold to the public as safe hands behind a jejune young president. And both were anything but safe hands – in fact, they acted like reckless, panicked, and blinkered chickens with their heads cut off. Both simply could not internalize the obvious fact of their own failures – because both had long regarded themselves as national security “masters of the universe.” Their An Emirati trader looks at the prices ofself-understanding could not adjust; it was too fixed by then.

But they are both very intelligent men and knew, deep down, the extent of their incompetence. Their reaction was to up the ante, not unlike Tom Perkins’ crazy. So they did not rationally reflect on the reasons for the failure to protect Americans from 9/11, they assuaged their buried guilt by turning the fight into an even greater battle between good and evil, by putting their previous belief in an unfettered presidency on steroids, authorizing torture on a massive scale, and embracing policies, like the war in Iraq, that could both erase memories of their own incompetence and yet also project that incompetence onto an even larger stage, with even worse results in terms of human life and economic and security costs.

When cornered, the sequestered, guilt-ridden, but psychologically rigid mindset does not reflect. It cannot see the broader picture. It cannot even publicly acknowledge what it must internally understand somewhere: that it played a part in the catastrophe that has now led to public shaming. And they worry deeply that this buried truth, if embraced by the politically influential, could come back to bite them yet. That worry is as rational as their response to it is irrational. If only they could know it, Obama is the best friend they could have in times like these. He wants to defend the capitalist system from its fatal, unregulated flaws. And it’s only by doing that can the one percenters’ wealth-creating dreams have a chance of being realized. If only they could see that. And if only they could adjust.

(Photos: scenes from the crash of 2008 and from Twitter’s IPO from Getty Images.)