Last year Lawrence H. Summers, President Obama's economic point man, collected over $5 million from hedge fund D.E. Shaw and more than $2.7 million in speaking fees by a basket of troubled Wall Street firms.
JP Morgan Chase, Citigroup, Goldman Sachs, Lehman Brothers and Merrill Lynch and others paid Summers fees ranging from $45,000 for a Nov. 12 Merrill Lynch appearance to $135,000 for an April 16 visit to Goldman Sachs.
Now Goldman Sachs announces it highest profits in history months after being gifted with hundreds of billions in taxpayer money. The stink of our government's corruption is upsetting French digestions.
"Goldman Sachs Group Inc.’s decision to boost compensation after posting record second-quarter sales yesterday should prompt politicians to revise pay rules, French President Nicolas Sarkozy’s top adviser, Henri Guaino, said.
“The question now is whether we decide to do something to fix that,” Guaino said today in an interview on France2 television. “No one in the U.S. or elsewhere can tolerate such a situation. Goldman Sachs wouldn’t exist had American taxpayers not come to its aid. To be drowning in dollars and bonus money today is utterly scandalous."
Meanwhile the Chinese are biding their time before they finally sink the dollar and go about their business:
LONDON (MarketWatch) -- A U.S.-China détente over the role of the dollar in international monetary system was called into question Friday as China's central bank repeated its assertion that a new global reserve currency is needed.
"To prevent the deficiencies in the main reserve currency, there's a need to create a new currency that's de-linked from the economies of the issuers," the People's Bank of China
Is Obama really this craven or is 'el negrito' really that powerless? We already know about Congress...
For time it seemed that President Obama was poised to really "shake up the system". During his run to the White House many (myself included) anticipated that his administration would have "new New Deal" prize- winning economists like Jeffrey Sachs and Joseph Stiglitz leading an old-fashioned populist revolt against the corporate banksters.
Alas we had forgotten that after he was a community organizer Obama went to Harvard where good rebels go to die-- or come out with a deeper appreciation for Capitalism with a capital C. (the C stands for Collusion, Cronyism or Corruption-- take your pick or just go with all three.)
Eliot Spitzer elaborates in Slate Magazine: "the New York Federal Reserve is the first among equals. Unlike the Washington board of governors or the other regional fed branches, the N.Y. Fed is active virtually every day, changing the critical interest rates that determine the liquidity of the markets and the profitability of banks.
And who sat on the committee of this august financial chamber that appointed Tim Geithner? Why none other than Hank Greenberg, the then not-yet-disgraced chairman of AIG. Joining him were John Whitehead, chairman of Goldman Sachs; Walter Shipley, a former chairman of Chase Manhattan Bank, now JPMorgan Chase; and Pete Peterson, former chairman of Lehman Bros. No doubt these eminent personages have our national interests embedded in their altruistic psyches.
Which explains why when faced with the financial crisis born of the post-Enron virus the reserve board also brought in Dick Fuld, the former chairman of Lehman; Jeff Immelt, the chairman of GE; Gene McGrath, the chairman of Con Edison; Ronay Menschel, the chairwoman of Phipps Houses and the wife of Richard Menschel, a former senior partner at Goldman Sachs. Makes you feel all warm and cuddly, doesn't it, knowing these egalitarian public servants are safeguarding the Treasury as well as our pensions and 401k's.
Among the many shady operations that went on at AIG under Greenberg's chairmanship was the use off shore entities to escape even the lax enforcement of U.S. insurance regulators and the Securities and Exchange Commission (SEC). Offshore tax havens such as Barbados and Bermuda were used to hide insider connections in supposedly "arms-length" deals shield profits from U.S. taxes.
As Naomi Klein, author of the must-read "Shock Doctrine", resignedly bewails: no matter how you slice it "we the people" have been been robbed by our royal princes yet again and we still can't afford the upkeep.
There is a gangster-like irrationality to our country's version of democracy. When Hank Paulson came a-begging, bowing to Nancy Pelosi on bended knee, our Congress, in its slavish devotion to the rich failed to extract even the most basic guarantees for us, the unwashed and lowly ... you know ... the ones who are footing the bill.
Where the Brits insisted that any bailout earn them voting rights with seats on their bankers' boards, a 12 percent annual dividend paid to the government, a suspension of dividend payments to shareholders, restrictions on executive bonuses, and a legal requirement that the banks lend money to homeowners and small businesses, we American nitwits won the right to get stiffed.
If we are to believe our servile Congress, we taxpayers deserve no controlling interest in return for those 700 billions of dollars, no votes nor seats on the board, and a mere five percent in dividend payouts even as Wall St. shareholders continue to make billions and its executives don their golden parachutes while pocketing end of year bonuses for having frittered away staggering amounts of money.
Congress' spineless sell-out was so disturbing even Bloomberg News is asking the courts to force the Federal Reserve to disclose the securities the central bank is accepting on behalf of American taxpayers as collateral for $1.5 trillion of loans to banks.
As Bloomberg rightly points out:``The American taxpayer is entitled to know the risks, costs and methodology associated with the unprecedented government bailout of the U.S. financial industry,''
The Great American Swindle: Private profits and Socialized losses
If President Obama is serious about reforming the way America does business he would be advised to learn from our friends up North.
In Canada for a commercial bank to acquire an investment dealer-- like say Goldman Sachs-- it must adhere to strict regulations. Naturally their banks howled about "losing competitiveness" until the crisis hit and those sensible government policies kept them solvent. You see for Canadians the notion of democracy is not to screw one's neighbor out of house and home, but to form a more perfect union. Radical notion that-- too bad it's not in our own Constitution... oh wait...
The idea that America's "union" was in part conceived specifically to "promote the general welfare" has been discarded since the "Reagan Revolution". Instead, it has become an article of faith that government policies such as a progressive tax rate are somehow anti-democratic. As a result, even as unmanaged speculation threatens to sink our entire economy, Paulson and his Wall Street cronies are determined to drain the nation's coffers to feed the private sector's addictive habit.
A Quiet Windfall For U.S. Banks With Attention on Bailout Debate, Treasury Made Change to Tax Policy By Amit R. Paley Washington Post Staff Writer Monday, November 10, 2008; Page A01
The financial world was fixated on Capitol Hill as Congress battled over the Bush administration's request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.
But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion. The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill.
As Naomi Klein observes in the upcoming edition of The RollingStone: The Wall Street bailout looks a lot like Iraq — a "free-fraud zone" where private contractors cash in on the mess they helped create.
There are over 10 weeks left before the Obama inauguration. If it is not yet clear that the neocons intend to effectively cripple the next administration consider this: On the same day that he allocated the first $125 billion to the banks, Secretary Paulson hinted -- not that the markets required greater regulation but that the crisis demanded "greater fiscal responsibility and entitlement reform". In other words good-bye, Medicare and Social Security. If the Wall St. wizards stole your pension, shipped your job to Brisbane and left you in debt with a case of ulcers-- maybe you can head South and join up with the 'wise guys'.
NYSE Chairman Richard Grasso Embracing A FARC Commander
Back in 2005, days before Christmas, I wrote this:
Bush's push to "privatize" social security is a desperate attempt to revalue the stock market and give a temporary boost to the dollar (while rewarding his cronies). It is another short-sighted "fix" that could not only destroy what is left of our middle class but in the long run the market itself.
I'm convinced (as I mentioned previously) that Kerry rushed to concede because the markets were tumbling after our fraudulent presidential election. Bottom line:- ever since Reagan destroyed the U.S. manufacturing base to usher in "free markets" and transform US into a military Brobdingnagian we have become a nation of gangsters.
(update 2) What I should have said was that the entire international finance system was being managed by crooks and scoundrels.
Is Financial Innovation just another word for excessive and reckless leverage? Apparently so. As we learn this morning via Julie Satow of the NY Sun, special exemptions from the SEC are in large part responsible for the huge build up in financial sector leverage over the past 4 years -- as well as the massive current unwind Satow interviews the above quoted former SEC director, and he spits out the blunt truth: The current excess leverage now unwinding was the result of a purposeful SEC exemption given to five firms. You read that right -- the events of the past year are not a mere accident, but are the results of a conscious and willful SEC decision to allow these firms to legally violate existing net capital rules that, in the past 30 years, had limited broker dealers debt-to-net capital ratio to 12-to-1.
So almost three years later, here we are. After scamming the public by pretending to create value out of air through means of spurious instruments comprised of esoteric bundles and magic-market derivatives, the Secretary of the U.S. Treasury (the man Goldman Sachs paid 18 and a 1/2 million dollars when he was nominated) proposes that we, the taxpayers, ameliorate the debt threatening to swallow the financial markets and cover for Bush's hand-picked cronies and thugs.
Sept. 22 (Bloomberg) -- Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid, according to Bank of America Corp.
``Its benefits, in its current form, will be largely limited to investment banks and other banks that have aggressively written down the value of their holdings and have already recognized the attendant capital impairment,'' Jeffrey Rosenberg, Bank of America's head of credit strategy research, wrote in a report dated yesterday, without identifying particular banks.
The last time a government tried a move this criminal it sparked a second Revolution. Karl Marx, in describing the 1871 civil war in France, explained that all but the elite felt compelled to rally around the outraged working classes. The empire had ruined the country's economy by the wholesale swindling it had fostered and by the props it lent to the artificially accelerated centralization of capital and concomitant expropriations for its foreign adventures.
Now surely, if ever a system cried out for destruction, it is the Ponzi scheme that passes for financial wizardry on Wall Street. When the French chose to throw off their corrupted masters the workers made up the bulk of the Paris Guard and could stand in battle against the Bonapartist army. Unfortunately for us, whether by luck or sinister design, our National Guards are off fighting our imperial war in Iraq, and despite the separate loyalties of our quasi-autonomous states, I suspect that few, if any, would consider confronting the United States Army.
Given that reality, it seems that either our Democrats in Congress will discover the spines they misplaced in the early 80's or not only will we be saying "we are all socialists now" as Jonathan Alter of Newsweek quipped to Rachel Maddow on MSNBC, but we will be begging to trade our dollars for yuan.
A year ago I regretted not having bought more euros, but now the rot has been spread through the entire system. So while some say Prussia, by annexing part of France in the 1870's, saved the French Commune and its valiant workers, our new Germans will not be offering much of a counter as they seem no less prone to a blind fling with Wall Street than our die-hard libertarians who see transparency as a plot against free enterprise.
Sadly, this is no longer 2005 and for the last eight years we have pretended a country can be run without competent management. Now the entire world is about to discover that wealth is neither produced by sheer might nor right out of thin air.
From Joseph Stiglitz, Nobel-Prize-winning Economist:
"America's financial system failed in its two crucial responsibilities: managing risk and allocating capital. The industry as a whole has not been doing what it should be doing - for instance creating products that help Americans manage critical risks, such as staying in their homes when interest rates rise or house prices fall - and it must now face change in its regulatory structures. Regrettably, many of the worst elements of the US financial system - toxic mortgages and the practices that led to them - were exported to the rest of the world."
Yet here comes Treasure Secretary, Paulson, after saying just last week that "no further bail-outs were warranted" seeking to extort 700 billion dollars from the government's coffers to be applied at his sole discretion: His proposal's crowning paragraph reads like a bad joke: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."
We'll have to wait and see if Congress falls for it.
