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Runaway Wall Street
It is instructional that only one of the three tax-challenged Obama appointees has survived public scorn to retain a high position in the new administration. Oddly enough, it is Treasury Secretary Timothy Geithner, the man who will collect our taxes, whose career has not been stunted by his failure to pay them.
What makes Geithner so special? The answer, provided by everyone from the president to the media pundits, is that his services are indispensable because he has the expertise in regulating markets needed to preside over the most massive government intervention in the economy. Are they kidding?
Both in his years in the Clinton treasury and as chair of the New York Federal Reserve Bank, Geithner has been paving the way for a runaway Wall Street. Nor has he changed his ways, as was evidenced once again last week with his appointment of Mark Peterson, a Goldman Sachs vice president and lobbyist, to be his top aide. Peterson had lobbied strenuously for precisely the deregulation that the Obama administration now concedes needs reversing. It was confirmation that Goldman Sachs runs the Treasury Department-no matter which party is in power.
Last October the New York Times ran a devastating story entitled "The Guys from ‘Government Sachs,'" spotlighting the many Goldman Sachs alums operating under the firm's former head, Henry Paulson, after he was named Treasury Secretary. The problem is that Geithner, whom Obama appointed as Paulson's replacement, was totally enmeshed in Paulson's handout to Wall Street while chair of the New York Fed. In that capacity, Geithner was intimately involved in the highly questionable negotiations to bail out AIG, in which Goldman had a $20 billion partnership at risk.
Goldman Sachs CEO Lloyd C. Blankfein was present for those rushed and highly guarded weekend meetings which resulted in an initial $85 billion bailout for AIG, and has since grown to $122 billion. As the Times reported, "Mr. Paulson helped select a director form Goldman's own board to lead AIG." That decision to save AIG came after the New York Fed, led by Geithner, summarily spurned requests to save Goldman competitor Lehman Brothers. While he opposed Lehman's attempt to reconstitute as a bank holding company and therefore obtain federal financing, he later supported a similar request by Goldman Sachs.
Another major player in those machinations was Robert Rubin, who headed Goldman Sachs before becoming treasury secretary under Clinton and who pushed for the radical deregulation that is at the center of the banking crisis. Geithner was a protégé of Rubin's in that effort, as was Lawrence Summers, who went on to be Clinton's treasury secretary after Rubin moved on to head Citigroup. Regrettably, Summers is now the key White House economics adviser.
Rubin, Geithner and Summers are hell-bent on denying the responsibility of their deregulation initiatives for the economic crisis. But the reality is that the merger of investment and commercial banks with insurance companies and stock brokers was illegal before the approval of their legislation, which reversed the Glass-Steagall Act passed under Franklin Delano Roosevelt. So, too, the newfangled financial instruments exempted from any government regulation, thanks to the Commodity Futures Modernization Act that Summers got Clinton to sign into law a month before he left office.
The reversal of Glass-Steagall unleashed the robber barons, as was freely conceded by Goldman CEO Blankfein in an interview he gave to the New York Times in June of 2007. "If you take an historical perspective," Blankfein said, gloating back then about the vast expansion of Goldman Sachs, "We've come full circle, because that is exactly what the Rothchilds or J.P. Morgan the banker were doing in their heyday. What caused an aberration was the Glass-Steagall Act."
The "aberration" being the sensible regulation of Wall Street to prevent another depression, which now seems dangerously close at hand. Since Glass-Steagall was repealed in 1999, Goldman Sachs experienced a 265 percent growth in its balance sheet, totaling $1 trillion in 2007.
What we need is an honest accounting of how we got into this mess, beginning with an investigation of the role of Goldman Sachs as the most insidious Wall Street player. But we are not likely to get that from an administration populated by Goldman's Washington allies.
On Tuesday, the new Attorney General Eric Holder assured Wall Street that "We're not going to go out on any witch hunts." But what if the once-celebrated financial wizards, still allowed to dominate our economic policies, are indeed wicked witches?
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26 Comments so far
Show AllThese articles are written about the corruption in our government, which includes absolute corruption coming up in the Obama camp, as if they are of any interest?
I think this desperate intellectualizing that has gone on in response to the absolute despotism that is crashing after hitting it's limits, has had it's day in the sun for far too long.
Time is past due to move on to what we can do about these horrendous issues, rather than what the criminals are doing about them. I think we get it, thank you Robert Scheer for driving it way past home base, and missing the new target.
What happens when snowflakes stick together?...............friends come together and have snow ball fights. :)
Leea
I hope that some one such as M. Moore will soon do a film on this because that will get the issue more into the public discussion and put some pressure on the Democrats to make some changes.
I think we have ran out of time for documentaries, these crimes against the American People needed to be stopped yesterday. I really don't think we get it, not even those saying they get it seem to really get the dire straights we are now moving into.
Total reversal of direction is the key to change.
What happens when snowflakes stick together?...............friends come together and have snow ball fights. :)
Leea
Without progressives having access to the msm how is the average person on the street to know about these crimes? Seems that the most successful method of communicating with them is through the internet and through documentaries, and much of the internet blogging is affected by the documentaries. How do you propose to co-ordinate a "total reversal of direction" to get change? Seems to me that trustworthy communication with the person on the street is needed. That takes time regardless of the urgency and I am skeptical that you have a faster and more reliable and more effective method of communicating on this matter with the person on the street than can be obtained with a documentary.
The word our own President Obama recently spoke is "catastrophe" which literally means to turn over. I think it is what is going to happen for good change to come about as it appears that our change agent does not have the clarity of purpose we hoped he might to bring it in another form.
This catastrophe that we all want to avoid cannot be avoided unless we immediately change direction, and you are right even I seem clueless as to what that is. However I can say what it is not, and new documentaries and President Obama's plans for recovery is not it.
I could be wrong. I hope I am. I hope documentaries will be done if they are the way and bailouts abound for the hogs in our country if they are the way.
What happens when snowflakes stick together?...............friends come together and have snow ball fights. :)
Leea
I think this nation could collapse in a heap, with everyone standing naked in the gutter, completely dispossessed, with their thumbs up their asses, and still there would be no true reform and no real justice. Someone nearby would have a television running off a generator and everyone would congregate there to watch it all day. Jean-Paul Sartre said, "Hell is other people" and damn if that isn't true.
I couldn't help but laugh at this comment. Sigh. I was just listening to President Obama giving his admonitions to the heist masters in our country about how they need to offer up some "restraint" in their use of the bail out money. He says, you turned to the American People hat in hand and were given billions of dollars. Well that is a lie, they turned to the white house hat in hand and against the charge of the people who resoundingly wrote to their representatives and said no, our representatives which included Obama at that time as US senator of Illinois then ignored our voice and said yes.
President Obama colluded to commit the biggest crime against the American People yet. Utter despotism in taxation without representation. The very incident that started the war which originally freed our country.
Though President Obama means well, he is as blind as any tyrant King to his own abuses, and unless this blindness is unveiled, we will all crash in the vehicle he is directing.
What happens when snowflakes stick together?...............friends come together and have snow ball fights. :)
Leea
Mordechai Shiblikov February 4th, 2009 1:35 pm, I'd amend Sartre's remark to "Hell is other people with money."
In other countries, citizens are taking to the sytreets and disrupting the halls of power to make their anger felt.
Outside of a meeting in NY of Bloomberg's that was interrupted, I see no comparable behavior amongst the 'sheepies' of the good ol' US of A ( United States of Apathy).
But I could be wrong !
curmudgeon99
stay tuned. Amy Goodman reported yesterday on Congresswoman Marcie Kaptur's call for her Ohio constituents to resist foreclosure and stay in their homes. Direct action by NACA and Bruce Marks pressured Fannie Mac to restructure thousands of mortgages and Marks plans to visit the homes of the Wall Street hots shots with thousands of distressed home owners so people like Jamie Dimon, et alia, can experience first hand the results of their greed and incompetence.
Popular discontent is just beginning to take form. Like the corruption on Wall Street, the reaction will grow inevitably and reach a crisis point.
Putin's speech at Davos on 1/28 was a clear signal that the international community of financial insiders is increasingly displeased with the management and leadership of the US. Geithner and the crew are doing all they can to prevent their wealthy friends from suffering the consequences of their stupidity and resisting the obvious course of action, which is to write down their debt, take the hit, get rid of the egregious speculation and virtual money and rededicate themselves to more traditional economic activity, such as loaning money to productive enterprises rather than playing in phony derivative markets.
All Obama's rhetorical concern for the welfare of the people does not override his concern for the wealthy constituency that put him in office. Just as he must face down a rebellious military faction that doesn't want to leave Iraq, he must also confront the community of financial insiders and force them to take some medicine they don't want. Does he have the cohones for it? We'll see.
It is the people that must lead the way, ultimately, if the factional influence is to be defeated. Obama can't do it alone. It's just two weeks and aleady the blush is off the rose....
By common definition the US Governmnet has three branches. Those are the Executive, the Legislative and the Judiciary.
This must be expanded and added to that must be <, The Pentagon (now dictating policy) , The CIA and Intel agencies (a law unto their own), and The Corporations who dictate the policies to be enacted.
If people STILL dont have a clue has to how bad it has become. Two Judges in Pennsylvania plea bargained their way to 7 year prison terms for receiving kickbacks from Private Industry.
What was the nature of those Kickbacks?
A PRIVATE firm received State contracts to run Juvenile detention facilities. The Judges in question were receiving kickbacks for each Juvenile they sent to those prisons.
On Child received 90 days for doing a parody of one of his schools administrators on the Internet.
Is it possible that the take down of Wall St. warrior Eloit Spitzer was a coincidence or is this just to much of a conspiracy theory? Just wondering if their are any thoughts on this.
Many forget that Senator David Vitter of Louisiana paid no price for virtually identical behavior.
This thread makes me realize that most of these folks at the top have one skeleton in their closet, and that at any time that the other side wants to take down the other, they can and will. But the eye for an eye thing starts to happen and they all know this so they are careful to just throw the bone to the media and let the media turn it into a circus to which the person in question can bow out from or charge into. Either way it must suck to live in a glass house and be manipulated those who throw the first stone.
What happens when snowflakes stick together?...............friends come together and have snow ball fights. :)
Leea
This is true. And if we weren't such Jr. High School students we would be able to look at the totality of a person's behavior and not be stampeded and manipulated by ssssseeexxxx, ew. Martin Luther King and Gandhi were not always choir boys.
Joe
Coincidence? Doubt it, given how much the Wall Street scum hated and feared Spitzer; given the open gloating and celebrating in the WSJ when the Spitzer crap happened.
The Bush administration took down Spitzer for his work supporting States rights against the OCC (see links). Maybe the marching orders came from Wall Street. Amazing what can be done when everyone's electronic communications are being spied upon.
http://www.consumeraffairs.com/news04/2005/occ_spitzer2.html
http://www.projectcensored.org/top-stories/articles/25-bushs-real-problem-with-eliot-spitzer/
trippin February 4th, 2009 3:37 pm, I wouldn't doubt it -- Wall Street hated Spitzer and billionaire Mike Bloomberg, the current King -- Mayor -- of New York City, was definitely one of that crowd. Add to that the Hank Paulson's who didn't want the state government in NY grubbing around in their records and you have a recipe for Bush's DoJ sending the FBI on a fishing expedition to 'get something on this guy.'
Some scandal -- misdemeanor charge of paying for a prostitute -- pretty thin stuff, but it got rid of him. Of course, if had had fought back instead, he would have been reviled and turned into a cartoon character by the Big Media the way Blago has. Spitzer probably quit because he knew he couldn't win.
That was my immediate reaction. The guy made enemies on Wall Street.
Joe
Thanks, cruxpuppy. I just saw the posting. I have relatives in her district .
But I could be wrong !
Noam Chomsky has pointed out that the people of the United States are several steps to the left of their government. It's like we're Lilliputians, pulling at ropes, trying to tug a slow-moving Gullliver into action. Unfortunately, the press is also distinctly to the right of the populace. It's all part of the weirdness of being alive today.
Perry logan February 4th, 2009 8:17 pm, as much as I'd hate to be overly optimistic, we are pulling on a Gulliver without a brain -- it's all falling apart for the Top Dogs now and all they can do is borrow money via Washington from communist China (not so communist anymore) and hope Japan doesn't sink any further into financial disaster. It is weird as I think we are witnessing the fall of corrupt 'free market' capitalism in this world. Just as historian Barbara Tuchman predicted in "The March of Folly," this is what happens when organizations get too large and complex as have these multi-national corporate giants -- they inevitably work against their own interests.
When will natures law of limits be respected by humans?
What happens when snowflakes stick together?...............friends come together and have snow ball fights. :)
Leea
Leea February 5th, 2009 10:33 am, the essence of this kind of cancerous greed is that it has no limits -- it will consume everything in its path until there isn't a tree standing and then complain because there's no firewood.
Wall Street owns the Gov't. DOH! Move along folks nothing to see here.
On Tuesday, the new Attorney General Eric Holder assured Wall Street that "We're not going to go out on any witch hunts."
Fair enough. I don't care about witches. They are imaginary.
Just DO YOUR JOB: investigate possible crimes and then follow up with enforcment where warranted. If not, we will still be dealing with illegal behavior when we get our next President.
Joe