Wednesday, March 25, 2009

Wall Street coup d'etat

The news out of Washington and Wall Street is getting to the point of the absurd. People are rightly enraged at a system that seems to be set up to reward the very people who got us into this financial mess. Stephen Colbert has been sharpening his pitchfork (plus he had a great idea about a Thunderdome type of tournament to weed out execs, vid below) and people have started staking out the homes of AIG executives, even putting together a bus tour of shame to see how these dirtbags live. I always find it amusing when the rich and their lackeys in the press try to either a) play off the sickening amounts of money these guys make, and are STILL making from taxpayer dollars, or b) pull the ‘oh, you little people don’t understand how all of this works. Don’t worry your pretty little heads about the $30 million dollar bonuses and the brand new corporate jets.’ There is more bullshit flying around these days than you can find at the Denver Stockshow.

If you haven’t read this article by Matt Taibbi over at Rolling Stone, you should take a few minutes to do so. Here’s the lede, just to give you an idea:

‘It's over — we're officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.’

And our national story goes downhill from there. It’s a long article, but it’s a fascinating read, in which Taibbi breaks down the AIG mess created by so-called ‘credit default swaps’ and other arcane financial instruments that led us to this weird place. All those terms you don’t quite understand are laid out here in clear, if simplified form. These too-big-to-fail giants -- AIG, Citigroup, Bank of America -- are certainly responsible for their own demise, as they chose to bet long on extremely dubious securities while pretending that it was all hunky-dory. And although our leaders like to pretend that some mysterious perfect storm arose out of nowhere to create the housing bubble and the subsequent crash, the tricky part you’re not hearing about out of the mainstream media is that our elected officials helped to create the atmosphere in which this could even have a possibility of happening. Hell, it could be said that they engineered it.

Read about the Glass-Steagall Act, a sensible law put in place after the (first) Great Depression in order to prevent normal, every-town USA banks from engaging in the risks undertaken at investment banks, and how then-Senator 'nation of whiners' Phil Gramm engineered its repeal, opening the floodgate for the too-big-to-fail guys to get that big. And guess how Wall Street got that done? Using both Reps and Dems, and whole big-ass pile of cash:

‘Wall Street responded by flooding Washington with money, buying allies in both parties. In the 10-year period beginning in 1998, financial companies spent $1.7 billion on federal campaign contributions and another $3.4 billion on lobbyists. They quickly got what they paid for. In 1999, Gramm co-sponsored a bill that repealed key aspects of the Glass-Steagall Act, smoothing the way for the creation of financial megafirms like Citigroup. The move did away with the built-in protections afforded by smaller banks.’

So, knowing the history is a good thing, knowing that these people in Washington -- many of whom are still in Congress, or who have migrated from Wall Street to Washington, and thus are tasked with cleaning up the very mess they so idiotically made -- bent over for a few thousand dollars in campaign contributions and in the process fucked the rest of us. But another piece you don’t hear about on the MSM news is that the so-called ‘bailout’ is but a drop in the bucket. Under Bush, going back to 2007, the Fed has been shoveling tons of money at these guys, by some estimates trillions of dollars, long before Congress approved (former Goldman-Sachs CEO and Bush Treasury Secretary) Hank Paulson’s original TARP funds:

‘While the rest of America, and most of Congress, have been bugging out about the $700 billion bailout program called TARP, all of these newly created organisms in the Federal Reserve zoo have quietly been pumping not billions but trillions of dollars into the hands of private companies (at least $3 trillion so far in loans, with as much as $5.7 trillion more in guarantees of private investments).’

And Taibbi also illustrates quite nicely how this is a game played by those in the inner circle, while the rest of us can go fuck ourselves:

‘Another member of Congress, who asked not to be named, offers his own theory about the TARP process. "I think basically if you knew Hank Paulson, you got the money," he says.’

And you wondered why Congress was so quick to sign off on untold trillions of dollars to be tossed into the banks while the big three automakers had to scrounge for a measly $15 billion -- money which, incidentally, may keep actual human beings doing things like, oh, I don’t know, making cars (that is, WORKING) and ordering steel and parts from other manufacturers, etc. What these guys on Wall Street actually create plainly amounts to two products: wealth for themselves, and misery for everyone else.

At any rate, there’s lots more in there. Kudos to the president, going on TV last night despite the idiocy of the MSM press (really, Chuck Todd? You think the American people should be asked to sacrifice more? Tell you what, I’ll give up the planned $10 million makeover I was going to get for my office, how’s that?). Obama is trying to get people to calm down and allow time for his program to work. Unfortunately the program, such as it is, does little to alleviate the underlying problems of the system as a whole, and simply props up the insiders who have already screwed the pooch, over and over again. As Taibbi calls it, we have just witnessed a bloodless coup d’etat, in which Wall Street has taken the reins of the country.

Frankly, if anything, people aren’t pissed-off enough.

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