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TechnoratiObama Financial Team to Taxpayers: You’ll Get Nothing, and Like It
As a business person, Warren Buffet quite rightly wanted something for his money
when he bought up failed banks that couldn't get help anywhere else. In
fact, he wanted a lot. He expected to have the ability to make sure the
same crooks executives weren't pulling down the same
salaries for making the same mistakes, and that the business plan
changed. It was pretty basic, a bedrock principle of capitalism, the
ability to exercise control appropriate to one's share of ownership.
We're about to buy ourselves some failed banks, but we can't get what Warren Buffet gets because nobody wants to mention the "n" word, nationalization:
One part of that strategy will be addressing the toxic assets that are clogging lenders' balance sheets and preventing them from expanding credit, people familiar with the matter said last week. Likely approaches include a government-run bad bank to buy and hold some of the securities, and insurance of other assets that remain on banks' books.
As Dean Baker says, "many, if not most, of our banks are in fact bankrupt... the scope of the toxic asset 'problem' has reached $2 trillion... this sum vastly exceeds the capital of the banking system."
But our money somehow isn't as good as Warren Buffet's -- all we get for it is the "toxic assets":
[T]he Obama administration is looking to hand taxpayer dollars to the banks through a variety of complex mechanisms. The main reason for using complex mechanisms (rather than simply seizing bankrupt institutions) seems to be to conceal the fact that we are handing taxpayer dollars to bank shareholders and the wealthy executives who run them.
Krugman calls it "lemon socialism": "taxpayers bear the cost if things go wrong, but stockholders and executives get the benefits if things go right." Or as Joseph Stiglitz says, it's "trash for cash."
It's almost inconceivable that anyone would try to sell this as a good deal for taxpayers, but that's where we are. Krugman:
"We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system," says Timothy Geithner, the Treasury secretary - as he prepares to put taxpayers on the hook for that system's immense losses.
Meanwhile, a Washington Post report based on administration sources says that Mr. Geithner and Lawrence Summers, President Obama's top economic adviser, "think governments make poor bank managers" - as opposed, presumably, to the private-sector geniuses who managed to lose more than a trillion dollars in the space of a few years.
And this prejudice in favor of private control, even when the government is putting up all the money, seems to be warping the administration's response to the financial crisis.
So Ronald Reagan tells us that government is the "problem," and George Bush proves it's true by running the country into the ground. What that really means is that you should never put people in charge of something who philosophically don't believe that it's possible to do their jobs well. It doesn't mean we should be making irrational business deals out of a commitment to the failed ideologies of people who, you know, failed.
We're paying to nationalize the banks all right, we just can't talk about it -- nor can we profit from it -- because the very idea is "socialist" and sits firmly within Jay Rosen's "sphere of deviance."
According to Rebecca Christie at Bloomberg, they'll try to put a few band aids on the bill limiting executive "pay" (not compensation) and dividends, and require banks to step-up lending. But when Timothy Geitner appears before the Senate Banking Committee on February 10, or the House Financial Services Committee shortly thereafter, don't expect anyone to be offering the Americans footing the bill for this deal anything other than the unwanted detritus of the banks. Our representatives don't think we deserve to get for our money what Warren Buffet gets for his.
If his banks make money, Warren Buffet makes money. He gets to be richer and his shareholders get to be richer. If our banks get richer, we don't get to have the schools and green energy and healthcare and SUPERTRAINS that the profits could (and should) pay for -- that goes to fois gras and Cristal and Gulf Stream jets for the bankers who created this mess. We just get to keep a big pile of shit. Because suggesting anything else is "deviant."
57 Comments so far
Show AllIf the banks are nationalized, the government will become the owner of the banks’ good and bad assets and it will have to assume the banks’ contractual obligations towards their creditors, investors, and account holders. In particular, any contractual guarantees given by the banks to the owners of now-worthless risky “innovative” financial vaporware will become de facto contractual obligations of the government towards these owners.
If we ignore small-fry investors, pension funds etc., these owners are greedy trillionaires who bought the financial vapor ware with full knowledge of its risks. If the “financial system” goes bankrupt the trillionaires of the country (and of the world) will lose humongous amounts of money and hence will lose much, if not most, of their economic and political power (but they won’t be reduced to misery, far from it; yes, smaller investors who chose "risk" will also go down in flames and they will deserve it, even if not as badly).
That’s why the trillionaires have mobilized bribed economists, journalists, and politicians and ordered them to call wolf about the horrors of letting the “financial system” fail. “Saving the financial system” is indeed the obfuscating phrase invented by these bribed economists, journalists, and politicians to try saving this neo-feudal class of trillionaires that is “essential“ to what “America stands for” and to “how things should be after we help them out”, as the “radical” Paul Krugman has put it in print repeatedly.
As you may remember, in the middle ages whenever the feudal class created a mess they “rescued themselves” for the “sake of the country” by taxing the hell out of the serfs and the bourgeois, but now with “the triumph of liberty” all of that has changed… yeah right!
Nationalizing the banks will open the gates to all kinds of pompous declarations by congress demoblicans about the government’s solemnial duty to honor the contractual commitments that came with the “act of nationalization” bla bla bla, so they can save their trillionaire friends amidst an apotheosis of self-righteous complacency and flag waving.
Let’s not give them that chance to demonstrate so much friendship. There is no need to save the trillionaires, regardless of how much money they have given to economists, journalists, and politicians and of whether the flow of bribes may stop if the trillionaires fail for good. The banks should be allowed to go through an orderly bankruptcy that preserve their real-economy presence and protect the savings of their non-reckless customers up to say 200k per account and up to say 1 million total net worth per person (IRS-declared), where a sliding scale could be used that reflect how "aggressive" the interest-gathering strategy chosen by each account holder was and the extent to which the account holder chose risky “lucrative’ financial-speculation products over investments in actual production. The necessary paper trail is available…
One should fire everybody in the *failed* banks' upper management (because they failed, duh!) except for whistle blowers and those essential to day-to-day operations, for those managing customer accounts, and for those having expertise in evaluating loans applications by companies that produce actual goods, be they trinkets, essential insurance products, etc.
Social criteria like protecting pensions could also be used by simply dividing the amount invested by each pension by the number of people the pension represents in order to determine what the pension can get in terms of protection and for which individual accounts (since pension-holders who chose especially reckless financial-speculation products should be protected less).
So it’s not time to nationalize the losses of this self-anointed neo-feudal class of trillionaires masters of the universe. Rather, it’s time to shut down their failed banks, to let the greediest investors bite the dust, to claw back any bailout money given so far to them and the banks, and to use this money to jump start the flow of credit into the economy after “nationalizing” (hiring back!) the banks’ existing experts in locating, evaluating, financing, and following-through worthy entrepreneurial ventures in real production and giving them a new institutional backing and responsibilities.
This crisis must teach harsh lessons to the most reckless of investors and bankers, and spare those investors and bankers who tried the hardest to stay away from the greedy madness of the last 30 years, even if only for moral reasons.
All this toxic debt that taxpayers are stuck with is already their "big pile of shit." They created it by buying homes and cars and running up their credit cards to purchase crap they could never afford.
...and because they won't get off their lazy, cowardly asses to fight for their country and throw the bums out like they used to.
Mr. President:
I'm a man who trusted your message of change. I voted for you and even gave money to your campaign. I wanted change from the past 8 years of corruption and lies to the American people. I wanted a Democrat in the White House again. I did not want a Bi-Partisan Presidentcy. I wanted the Democratic platform to protect and defend the working class of this country for a change. What I'm currently seeing however, does not encourage me that change is coming. I see you catering to the Republicans, we do not need them Mr. President, the rich need them. Wake up! You won! Tell the Republicans to go to hell! If they don't like what you are doing, believe me they will tell you!!!
I still have faith in you Mr. President, I mean you've only been in Office since the 20th of Jan. Its a little early to claim your Presidency is a failure as so many on this site believe. Remember, it was the working class that voted for you Mr. President, remind your economic team of that fact, also you need to raise hell with your vetting team, they seem to have made some serious errors in allowing a couple of your choices get in who have serious problems in their personal lives that cause them to appear like idiots to the rest of us.
Don't let the rich run your presidency! Believe me, they don't give a damn about you, but they are afraid of you! Use that power to get what you want for the rest of us. Be the Chicago man I think you are..fight them like a Chicago Politican!
Thanks for letting me vent Mr. President! Go get'em. And if any of the members of the Obama team read this, please, make a copy of my letter and let him read it....I think alot of us in main street feel like I do!!
Best Wishes and Good Hunting!
Tom
Sucker.
I hope you actually sent this letter to Obama!
What happens when snowflakes stick together?...............friends come together and have snow ball fights. :)
Leea
"Be the Chicago man I think you are..fight them like a Chicago Politican!"
Sorry Tom, but Obama is a Chicago politician first and foremost. The "pay-to-play" policies of Illinois politics makes all Illinois politicians guilty. Even if they don't actually take the bribe(campaign) money personally, they are still aware of it's origin. If you were in possession of stolen goods would you not be charged?
"....I think alot of us in main street feel like I do"
Not so much.
Socialism is the only solution. There cannot be a bunch of idiots (Greek for "private person") maximizing short term profits, the ecosystem will not bear it. Empirical evidence of laissez-faire capitalism's failure is undeniable. Interest producing credit is the basis of this system --maybe fine as a means to an end, but when it becomes an end in itself chases its tail into the vortex of a black hole.
I remember there was a guy in high school (he was kind of crazy) who kept watering a cactus he had. The cactus kept getting bigger and bigger until it exploded. A perfect metaphor for capitalism. A whole new meaning to "boom and bust".
Also, I understand that Islam does not use interest as monetary policy. Could this be at least part of the reason to go to war for the purposes of hegemony?
In her classic on urban planning "The Life and Death of the Great American City"
Jane Jacobs speaks of "catastrophic money", which is when large amounts of money are injected into a community form the outside. Buy up everything and change the whole organic dynamic-- urban renewal. The IMF and World Bank do the same. They put countries in debt. The rulers take the money to increase their power and bank accounts, and the people get austerity measures i.e. debt they cannot repay, especially having been uprooted by projects such as dams and privatization of the commons. That is the plan for, last but not least, the USA and with it the rest of the world. The ethos of capitalism and consumerism is no longer viable. The situation will degrade until a real fix evolves organically (biodynamic synthesis). Consider the financial crisis a blessing. It is a warning of ecosystem collapse doe to humanity exceeding the global carrying capacity. It would be nice if Pres. Obama could hire a person of wisdom, a real philosopher, not a propagandist, to get to the root (radical) of issues and promote "correct thinking" (not PC) whereby the mandate of heaven is secured. That is what the Chinese are doing, that is why they own us. Better them than the fools we can't get rid of.
davedcrat
Hey,
Lots of homeless people
Lots of renters
Lots of foreclosed houses
Taxpayers buying toxic assets
Why not another Homestead Act?
Have a lottery for homeless and renters who can manage payments on a no interest 30 year loan for foreclosed homes at the depressed market value.
Annual inspections to ensure that the properties are being well maintained.
Real estate brokers or developers need not apply.
Current home owners need not apply
Lucky buyers can't resell for at least 10 years without using the capital gains to make up for the missing interest payments.
For foreclosed McMansions that no one can afford, remodel (create jobs) them into two or three unit condos and the put them into the lottery
I own a home and this plan wouldn't benefit me but I'd rather see my money help deserving people (working poor) than bank execs.
Dave
What the hell is President Obama putting the right, right wing Senator Gregg in for Commerce Sec.? I didn't vote for him to be doing this. The Republicans don't want bi-partisan anything. They think they are still in power. The Senator told the Democratic Gov. in his State he wouldn't take the position unless he put in another Republican in his place. Sounds like they are still making the rules, and the Democrats are still following. Obama better wake up because the Repugs want to see him fail so they can get all their power back.
I saw on TV that Joe the Plummer was having a meeting with the Repugs and they were urging them to be sure and show up for it. They really are hurting when they give this guy the time of day.
I'm getting my tee-shirt ready ... "DON'T BLAME ME, I VOTED FOR RALPH."
Ooh, I like that idea, I could do that too ;)
What happens when snowflakes stick together?...............friends come together and have snow ball fights. :)
Leea
Cool! I'm selling Obama styled rose-colored glasses!!
I bet they'll go great with your tees!
I want one of those tee-shirts too! I voted for Ralph, just as I've done since 2000. But I'm sensing a problem - as more and more people are becoming sick of B.O.
It's like that Woodstock thing. If as many people attended the Woodstock Festival as they say they did, the actual attendance figures would be somewhere around 12 million people.
As B.O. continues with his stinky appointments and poor decision-making, more and more people are going to declare that it isn't their fault - they voted for Ralph, or for Cynthia.
The really depressing fact is that if these sheeple had actually voted for either of the two 'we the people' people, 12 million would have been a very respectable number to focus attention on third parties.
The American sheeple will (hopefully) wake up as economic disaster strikes home. It's sad that this is what it will take.
It is a known historical fact that all social change was precipitated by a disaster.
What happens when snowflakes stick together?...............friends come together and have snow ball fights. :)
Leea
It's all a puppet government..... I have proof!
http://www.youtube.com/watch?v=Iw23N9xXM60
Well that's what happens when the political parties are conservative and more conservative while socialism is equivalent to communism among much of the US population. At least that is what I infer from most other sites.
Welcome to the Obushma era.
"Deviant" would be doing the right thing and giving each American citizen a million bucks. What better way to stimulate the economy?
"We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system,"
I think there might be some merit to inserting the word 'secret' in place of private in this quote.
Actually after further thought, there might even be more merit in replacing private with "segregated" in the above quote as well as calling it a "system" of segregation.
What happens when snowflakes stick together?...............friends come together and have snow ball fights. :)
Leea
This is starting to smell like another "Let Them Eat Cake" episode.
Please wake me when the revolution starts...
Me thinks that's the problem with the US - everyone waits for somebody else to start the revolution. This way nothing will ever change, you'll continue to have 'nothing' and plenty to complain about in forums like this one...
Obama is a bagman for the big-money boys downtown. Anyone surprised?
Not at all.
Obama is sinking fast.
Gees, that was fast.
Geithner and Summers are going to make Cheney and the rest of his gang of crooks look like petty thieves. The ruthless Bush/Cheney gang members were a bloodthirsty lot, but they were pikers in comparison when it comes to grand larceny.
FYI http://video.google.com/videoplay?docid=-9050474362583451279&q=money&hl=en
Time to shrink corporate power to the size where it can be dragged into the bathtub and drowned!!! " Start with the lobbyists, stupid! "
P.S. it was not by chance that it was Nixon that detached ties between gold and the dollar in the quest to concentrate power and wealth into the hands of republicans through corporate fascist policies.
You have no idea what you're talking about. Democrats are just as "corporate" as Republicans, & Nixon went off the gold standard because the US was running unsustainable balance-of-payments deficits. (This meant there wasn't enough gold left in Fort Knox to back the dollar any longer.) Going off the gold standard wasn't something he wanted to do; it was something he was FORCED to do.
Excellent.
Another great online video of the poisoned money shell game played by the corporatocracy is Zeitgeist the Addendum.
http://video.google.com/videoplay?docid=7065205277695921912
"trash for cash," and "lemon socialism," keep the profits private but socialize the pain.
Here's my deal:
Put all the CEOs and 1,000 of their upper-level lackeys in a Supermax prison for ten years (no parole and no protection) and televise it for the whole country to watch.
Do this and you can rob me blind.
Perfect. Great idea! Really!
The people of this country are losing their jobs every day and the Bank CEO's are buying new jets and remodeling their offices to the tune of $1 million. We finally have a president who is trying to be bipartisan and work a deal that everyone can at least live with. Wall Street and the big banks don't get it yet. It's a new world. If these banks don't start being accountable to the public, they'll find the public will pull their business from BOA, Chase, Wells Fargo, etc. and give it to their locally owned small banks.
We The People need to create a "Bad Government" where we put the likes of Obama, Geithner, Sumners and all the rest.
We need to get them off the "Balance Sheets" of our government so we can get some proper legislation flowing.
We'll never nationalize the banks until we nationalize our government.
you mean an "SPE" - a special purpose entity.
You'll get nothing,
you'll like it,
and you'll smile.
I have an idea, we should demand more nothing!
Typical of any dysfunctional democracy, we, as taxpayers, have nothing to say about where our tax money goes. We can petition our idiot congressmen until we're numb, and all they're going to do is shovel money to the banksters, as Bronstein says. It's our money but where it goes in no way involves what we demand or wish for. I doubt most Americans really want a trillion dollar military budget, but that's what we get. Obama will do everything Geithner, Summers, Paulson before them, and all the rest of the Wall Street economic team says he must do to prop up banksterism until the New York Fucking Stock Exchange financially and physically collapses. No pleadings from the plebs will ever disturb their bailout schemings. The peoples' will on this issue is incontrovertibly socialistic, but all we're going to get is that "big pile of shit" Hamsher identifies. Meanwhile, the thieves who caused ALL of this will keep taking their million dollar vacations, buying yachts, jets, handing out bonuses to their felonious friends, and we'll pay for all of it. Thanks, Barack, for this glorious Change!
re: it's not just the ruling class, unfortunately...
Ephraim February 3rd, 2009 12:44 pm
"Typical of any dysfunctional democracy, we, as taxpayers, have nothing to say about where our tax money goes...The peoples' will on this issue is incontrovertibly socialistic"
Regrettably, in the US particularly, I'm not sure it is. Historically, large parts of the petit bourgeoisie have been right wing, and they make up the greater part of the mass base of the US right, just as they were the mass base of fascism.
In the US, with its weaker labor and left wing traditions, the ruling classes - and the small bourgeoisie that identify with and support their interests - have, as a result, tended to be stronger, opposition weaker as well as more conservative. With the decline of industrial labor/unions and NAFTA, this is even more the case - since, even where unions were right wing vs. their European counterparts, a kind of limited class consciousness could preserve the weak New Deal compact.
Not to sound hopeless - gains have been made in service industry unionization (Justice for Janitors, e.g.) that have shifted local politics slightly left, urban groups like ACORN could be expanded, and, even within the petit bourgeois, there are dissenting subgroups...
It is pretty much hopeless. In the US the plutocracy has skillfully used the social/cultural issues, the pioneer-individualism myths, and corporate media consolidation to take virtually total control of the political system. The most likely future of the US appears to be a form of chaotic fascism which combines the worst of all worlds, making the well-ordered Chinese fascism seem like paradise by comparison.
Or as Sheldon Wolin has termed it, "inverted totalitarianism" may be our future. It's a type of fascism, somewhat like the "friendly fascism" described by Bertram Gross in the '80s, but one driven by economics more than politics. While the power elites have been busy amusing us to death with every kind of entertainment/infotainment kitsch, they've consolidated economic power into a fortress we don't even know how to approach, much less resist or overcome. However it might be described, we're nowhere near breaking it up or even challenging it. We have words, and not much else.
Yea, I read the article by Chris Hedges yesterday about that. I spent a little time in the Philippines once, and from my experience and from what I have read I would describe what they have as chaotic fascism, which could be a deviant type of inverted totalitarianism in that it is not so "friendly." The government and business elites together have control, and they consistently squash those who oppose them, but there is chaos everywhere. The streets are not safe, as it seems no place is really very safe. Though they have a "democracy," it is quite superficial and corrupt to the point of being fraudulent, as ours increasingly is, and it is difficult to impossible to figure out what is really going on, and who the real powers are or what they are trying to accomplish. And with all the poverty and untrustworthy information streams, though there are any number of well-armed guerrilla groups, it is difficult for people to organize and to come together to form any coherent and rational political movement with the numbers necessary to influence policy. We seem to be on the path to a chaotic fascism, as they have in the Philippines, and it will be living hell.
Hamsher writes, "...If our banks get richer, we don't get to have the schools and green energy and healthcare and SUPERTRAINS that the profits could (and should) pay for -- that goes to fois gras and Cristal and Gulf Stream jets for the bankers who created this mess. We just get to keep a big pile of shit..."
- In a nutshell, that's how capitalism works. When the ruling class is capitalist, the ethos of that group percolates through society, largely determining what can & can't be "talked about." Ideas that would harm ruling class interests (like really nationalizing the banks) are inevitably silenced.
Instead, you get the political representatives of Wall St (like Obama, Geithner & Larry Summers) busily setting about to rob the taxpayers of their future, in order to keep their bankster friends firmly in control.
In capitalist society, the banksters pay no price for destroying the global economy. On the contrary, the crisis further ENRICHES the banksters -- because their political representatives use the crisis itself as the pretext for ramming through emergency measures like the bailout (& "Son of Bailout, the Sequel," coming in the next 1-2 weeks) to transfer yet more public money to the banksters' coffers.
Needless to say, this couldn't happen without the whores of the Democratic Party, & the clueless suckers who voted for them.
As I always tell my enemies "GET YOUR BLOODY HANDS OFF MY MONEY !!"
"If his banks make money, Warren Buffet makes money. He gets to be richer and his shareholders get to be richer.... We just get to keep a big pile of shit. Because suggesting anything else is "deviant."..."
And to add fuel to the fire, Congress wants to give "TOTAL CONTROL" of the U.S. Financial System and Markets to the privately-owned Federal Reserve Bank; the same bank(s) whose job it was/is to "maintain the stability" of the financial system and failed, and the same bank(s) that "We the Taxpayers" are currently bailing out.
What could be more devious than allowing the "Foxes to Guard the Hen House"?
"What that really means is that you should never put people in charge of something who philosophically don't believe that it's possible to do their jobs well."
What a GREAT line.
For more independent views you can visit:
http://www.cincinnatibeacon.com
http://chriscommons.blogspot.com
Can anyone imagine how much green Geithner and Summers will be able to stuff into their pockets, as payback from the crooks they are transferring our money to, after they leave their governmental "service" if they pull this off? I am sure their "friends" in the banking sector will be tickled pink if they manage to bamboozle enough people to make it happen.
Someone, somewhere said the Wall Street disaster wasn't really. Just one more set-up to scam the lower classes; destroy (or seem to) businesses so they dump the workers and get rid of the unions, and when we've all had a taste of joblessness, hunger, and homelessness; at the point where we'll do anything for just a little bit of what we once had - just as the power came back on in California back in the late '90s-2000 - everything will miraculously be "fixed" and we'll be just where they want us - slaves working for pennies and having the majority of that going to the top.
When will the rest of the country catch on???
My version of how money works: the government should buy a billion shares of a bank at current market rates. This would send market price a lot higher. Then let the private investors buy shares at higher rates. If the price falls again, let the bank die. If the value stabilizes at 200 per cent of original purchase price, put it on the market so the private investors buy it up, a million shares at a time.
One requirement for listing on the stock exchange should be for shareholders to have voting rights on executive appointments, pay, compensation, bonuses, stock options, and any other perks that come to mind. Control on these points, or the lack of it, has a strong impact on dividend payout.
Jane,that word shit says it all for me and I don't know you but I like you.Tony
President Obama needs to WAKE UP and remember just who put him in the White House. Otherwise, he'll get firsthand knowledge of what it's like to be a one-term President!!!
If he's going to be another "serve the rich, the heck with the taxpayers President," his days in the White House are definitely numbered.
Frank -- you've missed the memo! (read kivals comment (and wilmoor's)
President Obama IS remembering who put him in the whitehouse ...the same people that put Bush, Clinton, Bush and Reagan in ... CORPORATE AMERICA. Obama raised HUNDREDS OF MILLIONS OF DOLLARS. Do you think that money came from $10 and $25 donations on the internet? It came from the exact special interests that Obama is now serving (and doing an excellent job of).
If you want real change, you have to challenge the status quo -- not elect its standard bearer!
respectfully,
mariusP
Do we want to support this dead ended farce with our tax money???
The positive side of this policy is that it will accelerate the collapse of the empire into an unknowable abyss. ------- Thanks --------- Peace ---
Do we, short of a full-on revolution in the streets, really have a choice?
No. Every concession comes in response to the plutocratic fear of being shut down, cut off and eaten alive by true democracy. That's why we got the meager concession of an Obama presidency. They hope it will lance the boiling anger.
If you want more than nothing you have to take it back.