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Today's Top News
Obama’s Toxic Advisers
Bernie Sanders, the senator from Vermont
who is independent in spirit as well as party label, has placed a hold
on President Obama's nomination of Gary Gensler to head the Commodity
Futures Trading Commission. Sounds like a minor issue to get worked up
about, but the senator is right. Like most Americans, I am eager for
Barack Obama to succeed, but I see this appointment as further evidence
that the president has entrusted his economic policy to the wrong
people.
Gensler helped create this financial crisis when he was in the Treasury
Department back in the Clinton era, when bipartisan cooperation with
Wall Street lobbyists was all the rage. Sanders gets right to the
point: "Mr. Gensler worked with Senator Phil Gramm and Alan Greenspan
to exempt credit default swaps from regulation, which led to the
collapse of A.I.G. and has resulted in the largest taxpayer bailout in
U.S. history."
Sanders' hold will not stop the Gensler nomination, because Congress and the president, recognizing the nation's mood, want to give Wall Street whatever it wants to make the stock market go up. And Gensler is a reassuring figure to the moguls of finance; he was a partner at Goldman Sachs before being brought by Goldman honcho Robert Rubin to the Clinton Treasury Department.
After Rubin left to take a $20-million-a-year job at Citigroup, which he helped run into the ground, Lawrence Summers, his protégé and replacement at Treasury, elevated Gensler to be an undersecretary. Gensler then performed as Summers' point man in advocating for deregulation legislation that enabled the current debacle.
The explosion of toxic assets is a direct result of the laws pushed through by Rubin and his followers, and in the decade since, we have had a 20-fold increase, to more than $530 trillion, in the value of those newfangled financial instruments, which Warren Buffett in February 2003 correctly termed "financial weapons of mass destruction."
Yet when one member of the Clinton administration, Brooksley Born, then head of the Commodity Futures Trading Commission, attempted to sound a warning, she was treated by the rest of Clinton's economic team as the enemy.
In response to Born's warning, they drove her from government and pushed through the Commodity Futures Modernization Act, which summarily exempted from regulation the derivatives that now haunt us. The claim at the time by Summers, now top economic adviser in the Obama White House, was that "[t]his legislation promotes innovation and competition in the U.S. financial markets and may help to reduce systemic risk." Of course now we know, as Born predicted, that it did quite the opposite. What irony that Gensler is being rewarded with Born's old job for getting it wrong.
In congressional testimony supporting the radical deregulation of the financial derivatives market, Gensler had insisted with great enthusiasm that "OTC derivatives directly and indirectly support higher investment and growth in living standards in the United States and around the world." As to the many trillions of dollars in credit swaps that now afflict the world economy, Gensler specifically called for freeing swaps of this kind from existing government regulation in the Commodity Exchange Act, which regulated other futures such as wheat sales. He said, "...[S]wap transactions should not be regulated under the CEA. ..."
His key argument, and that of Summers as well, was that even raising the prospect of regulating what have proved to be toxic derivatives would deny these financial instruments the "legal certainty" they needed to thrive. What a loss that would be, warned Summers, who called the financial derivatives market "a powerful symbol of the kind of innovation and technology that has made the American financial system as strong as it is today."
So "they"-Summers, Gensler, Treasury Secretary Timothy Geithner and their über mentor, Rubin--were as wrong as anyone could be. Perhaps such error is human, but aren't there folks out there with a better prospect of getting it right that Obama can rely on?
A great deal is at stake, and we are being asked to support the president's plans as a matter of trust in a hopeful new leader. But the latest administration plan, announced by Geithner on Monday, seems to be more of the same. We taxpayers are being asked to buy back from the banks the very toxic assets that the members of Obama's economic team once celebrated as an unmitigated blessing. Only this time, instead of trusting the banks, we will turn over control, but little risk, to hedge funds that are totally unregulated. Here we go again.
- Posted in
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50 Comments so far
Show AllDoes anyone seriously believe that Gensler's appointment is some kind of miscalculation or error?...like all the other appointments...PULLLEASSE!
The US financial system will only be sustainable if it is rebuilt...now.
Genslers appointment is another case of Obama not only hiring foxes to guard the hen house, but also hiring foxes to rebuild the hen house to assure that the foxes will always have access.
Tips for the "fox door" installation comment!
The hens were all killed and eaten long ago by the likes of Richard Fuld, John Thain, Joseph Cassano, etc., the Ted Bundys of finance. The henhouse is empty. The fox guards nothing but a patch of dirt clogged with chickenshit. George Wanker Obama is president. :-)
Yes, Robert Scheer and legions of Obama worshipers believe that. Just listen to the tone of Scheer's comment: "I see this appointment as further evidence that the president has entrusted his economic policy to the wrong people." Apparently, Scheer cannot bring himself to believe that Obama IS one of the "wrong people".
Scheer sez: "(When) Brooksley Born, then head of the Commodity Futures Trading Commission, attempted to sound a warning, she was treated by the rest of Clinton's economic team as the enemy."
***
She WAS the enemy.
Enemy of the State, you might even say.
Good thing Sen. Sanders is so easy to marginalize, what with being a "Socialist" and all. Why, he's probably as loony as Kucinich, McKinney and He Who Must Not Be Named.
Geithner's plan was written by Blackstone and PIMCO: http://washingtontimes.com/news/2009/mar/24/investment-firms-stand-to-profit-in-treasury-plan/
Good reference. Note the last paragraph:
"Mr. Gross [PIMCO's co-chief investment officer] later told Bloomberg News that he expects Treasury will have to spend much more than it is budgeting on the program. 'There is probably a few more trillions to go in terms of cleansing the balance sheets of banks,' he said."
Also note that "a few trillions" amounts to roughly $40,000 per family of four. It's no wonder that the stock market rose on news of Obama's latest bailout plan.
"Like most Americans, I am eager for Barack Obama to succeed"
Define success.
--
Eric Patton
Cincinnati, OH
ebpatton@yahoo.com
At least 2% of the US population considers Dubya the most successful president ever ! In eight years Dubya transferred more wealth from the 98% to the 2% than any ten presidents combined.
When it comes to the financial and health care industries, Obama appears to be trying to match Dubya's record.
The notorious "revolving door" between gov't and industry used to involve such dependent corporations as Raytheon, McDonnell/Douglas and General Dynamics.
Now the one we have to watch out for is Golem-Sachs.
General Dynamics isn't left out of the loop. Even though Goldman Sachs employees were Obama's biggest support - before the ink cloud of little donors was detonated, Obama owes the presidency to the Crown family of General Dynamics fame. Crown paid for his books to be published and James Crown sat on the board of U of C that tripled Michele's salary. Obama said that the first person he went to talk to when he thought about running for president was James Crown. General Dynamics made a lot of money from the Iraq War and they don't plan to go out of business.
The oval office is now located in the Goldman Sachs highrise.
The only excuse for all this pandering by Obama would be a stunning economic recovery.
Sioux Rose
GF: How would such a recovery be possible when the CAUSES for the problem have not been fixed, and when only the EFFECTS are being treated, all with the wrong "medicine." Had the masters of power instead elected to alter the loans to keep persons in their homes, there would be less toxic assets on the books. Home values would not fall so precipitously, and property taxes collected would mean more revenues for communities.
Just as Henry Ford figured out a long time ago, to be successful as a merchant, he had to pay his own employees enough to spend the wages of their labors on HIS product. In the U.S. the merchant class wants it all... the only thing trickling down is a dizzying array of toxic wastes, some of them now in the form of fiduciary instruments that take ZERO to represent a BASIS for wealth trades!
To date nobody has disclosed what the toxic assets are.
If we don't know what they are, how can we assign a value to them ?
The financial industry is no more regulated or transparent today than it was when it committed the crimes the US taxpayers are now paying it to fix.
Recovery into what?? The economy was/is itself toxic, and will continue to be until the big ones do fall and the little locals spring up and flourish in their place.
seems like all you have to do to get with brother obama is show your wall street undies
oh and pay your back taxes before cnbc blabs on you
consider it a down payment on all the cash you get to steal once you are in office
btw: it would not be imprudent to request your remittance in dollars but your payoffs in euros
you probably wouldn't want to live in a bankrupt us anyways
I agree with your sentiments, but use of terms like "lib-tard" do nothing but alienate people who may otherwise agree with you. I suppose it strokes your ego to think in those terms but it really is not otherwise helpful.
Ekaton, I find the word Lib-tard very descriptive and communicative. If we just had friken and sonofabitch added before and after it would have even more impact. You expect someone being eviscerated by a bear to politely say, "gee I hope I taste good." It's time for the oversensitive to get out of the kitchen. There's a war going on. Also, I could care less about ego, I just want to end up with my pants, a tee shirt, and some tennis shoes without having to beg for them.
"Ekaton, I find the word Lib-tard very descriptive and communicative."
So then you agree its more important to stroke your ego, in spite of what you say, by using these kinds of terms. Its more important to alienate possible allies than it is to try to find common ground. Fine. No problem.
I find that I am liberal on some issues and conservative on others. So what does that make me? Its not "black and white" in spite of what the Ann Coulters and Rush Limbaughs and Sean Hannitys of the world would like you to believe.
No, he's just attempting to clarify that the moniker is appropriate. Who in this choir would be offended, anyway, other than you, perhaps?
Who would be offended you ask?
I might offer that anyone seeking to find commonality, anyone interested in moving forward, anyone understanding that change requires a mass movement and thus a broad base, might actually take umbrage at words that really only serve to make one feel better while alienating far too many.
Sioux Rose
DAVE B: You nailed what I was thinking in terms of mathematical probabilities. If Obama had ONE member of the team with peripheral involvement in the fiscal debauchery of our times, it would be one thing, but HIS is a CHOSEN all-star cast of monetary hijackers. That points to motive and opportunity; or as some in this forum have pointed out at length: follow the $ trail.
It seems obvious to me.
You can't be tapped for an Obama administration job if you didn't help create and get rich from the problem you are being hired to solve.
But I could be wrong !
Where is the action behind the rants and raving comments or is this pure rhetoric?
I've heard people call for a general strike on several posts. What do you say... one day a week?
Which day would be the most productive and least or most noticeable to your boss?
Maybe just use a sick day here or there?
Forgetting to pay your federal taxes?
A voluntary layoff or reduction in work hours to zero out your tax liability?
On your “day off” hold up a very large sign on a bridge with a sign stating, "Jail the Bankers" or 'Jail Geithner and Barnecke"?
Boycott US/Citigroup/etc (does not really matter which Bank) by pulling your money out?
Place your money in a credit union instead.
Boycott Wall Street by transfering out of your 401k investments.
Write a letter to the editor a couple times a month.
Boycott foreclosures by supporting squatter’s rights? Put your body, mind or greenbacks to work by helping those who are hurting the most.
Go out and start a garden to feed yourself and your neighbors, rebuild or get a really good used bicycle or two, do some gathering and get ready for a long hard winter and summer. We may no longer be able to live like 21st-century royalty anymore. Maybe 19th-century royalty will do?
I am sure there are plenty more tangible things that people could come up with.
Rants are just rhetoric and thus meaningless without actions to back them up.
Have fun (literally) prying your freedoms back from the banksters and the elite.
Sioux Rose
Where's the casting call for Brad Pitt? The Obama "financial team" has all the makings of an all-star production of "Oceans 14: Target: All US banks!"
President Obama must surround himself with people who understand that the public doesn't depend on the financial industry, rather that the financial industry depends on the public. Until he does his risks losing support for his worthwhile goals.
Come on now. Let's just wait a while. Besides, we've lived through these tough times for the last 8 years. Obama needs your help and I say the best way we can win is for everyone to drop their bank accounts and switch to credit unions. The banks will collapse and the credit unions will be shining just like during the days of the Great Depression. Geithner will have nothing to screw us with and Obama won't be persecuted. Come on people !!
Terrance Mitchell
Redfield, South Dakota
If consumer spending is truly 70% of the GDP, then it is obvious that boycotts are the potentially most powerful political tool available.
From http://online.wsj.com/article/SB123759196056600541.html:
"... regulators late Friday seized control of the two largest wholesale credit unions in the U.S. after finding that their losses on mortgage-related securities were larger than previously thought.
U.S. Central Corporate Federal Credit Union ... and Western Corporate Federal Credit Union ..., which have a total $57 billion in assets, were taken into conservatorship by federal regulators."
imagine a citizens initiative put togeather by progressives.
this i have to see,
From what I understand a citizen's initiative will be posted in all the progressive sites within the next few days.
I think it deals with the issues that were posted on this discussion page as well as others that have been recurring themes since Obama's election.
Anyway - should be interesting to see if the real progressive left in this country can finally get out of its own way and actually get behind something
again.
The last time I felt this way was in 1968.
I think we should be like the republican machine and suddenly have a thousand people reading from the same talking points page.Can you imagine the news media and Obama's people running around like crazy trying to find out whats going on
"PROGRESSIVE LIBERAL GROUPS TO PRESENT LAUNDRY LIST TO PRESIDENT AND CONGRESS,
TAKE THESE ACTIONS OR FACE IMMEDIATE RECALL"
I can't wait to see senators and congress people faces when they are actually
commanded by ordinary citizen's to enact specific legislation.
Just to see this scene of crazed citizens with pitchforks and broom handles
on the steps of the capital would let me leave this world with a smile tattooed on my face.Something I thought I would never see in my lifetime again public dissent.
In fact I think I will become a talking points guy for the next couple of days
I hope no one got to Rush yet, this is going to be fun
Hedge funds were created to get around regulations. That was the whole point, and they were allowed on the theory that sophisticated rich people were the clients. They knew what they were doing and could afford to take more risks. But they also knew they were too rich to fail.
We now know for a fact (as if we didn't before) that letting people circumvent the rules put in place to prevent the problems we now have was a bad idea. Giving them more of our money to continue to operate in private is beyond stupid. It is criminal. What is going on today in Washington is beyond any definition of Democracy (if you're liberal) or a Republic (if you're a conservative who now objects to calling our government a democracy). And what is going on in New York (and Chicago) is beyond any definition of a free market.
Sioux Rose
PITCH FORK: You put the complex truth into simple terms. Bravo!
It is to be hoped that they will all see the errors of their old ways...
Change we can believe in?
Sorry, har har.
-30-
is not about advisers and the bailout money is not "for failed banks". here is what a famous progressive economist told me today about who has been and will keep getting most of the bailout money.
"...the Congressional Research Service states that the wealthiest 1% increased their share of the returns from wealth from 37% ten years ago to
57% five years ago, [so] my estimate is 70% of the derivatives and other gambles are by the richest 1% today. And [...] my guess is that about 50% accrue to the top 0.1%."
the demoblicans are "saving the financial system" to save their billionaire friends....
only once the citizenry will start saying that it does not want to pay for the financial gambling follies of the richest 0.1%, etc., it will become feasible for obama to go against the billionaires, since at that point taking him out won’t make any difference for the billionaires.
but note that both the top demoblicans and their billionarie friends are people of the finest taste. so it's much better that they get to use our money than that we misuse it to buy tacky products...
upsetting you aside, it helps obama politically to have his minions come up with more and more proposals "to save the financial system" that are transparently outrageous in their trying to save the ultra-rich who are financially exposed to trillions in toxic investments.
and the left should welcome geithner's proposal as a great teaching moment regarding the fortunes the demoblicans are truly trying to save.
leftists should stop proposing personnel to obama and finally make the effort to find out and publicize the names of the billionaires whom the demoblicans are trying to save with our taxpayer money.
this is a once-in-a-lifetime chance offered to americans to learn who are the billionaires that wag the usa dog and to rebel against them and their bribed politicians, journalists, and economists.
the left should stop complaining about "WS and the banks" and ask the american people if they really want to bail out this or that individual billionaire.
even publicizing the crude macro-economic data above about how many trillions in toxic assets are in the hands of say the richest 0.1% would be very game-changing as it would make it impossible for the demoblicans to continue saying that they are acting for the public good.
demoblicans blackmail americans by crying wolf about "saving the financial system" but they won't be able to blackmail anybody anymore if they are compelled to cry wolf about "saving the billionaires".
even conservatives will find it hard to defend spending trillions in "welfare programs" for gambling billionaires.
"the left should ... ask the american people if they really want to bail out this or that individual billionaire."
Based on the few conversations I've had about this, all with liberal friends and relatives, the answer would be a resounding "YES!"
The idolization of wealth seems to have taken root in every neuron in the brains of the American electorate. A strange, almost gleeful masochism seems to have taken hold of the people. "We need to give them more, and more, and more of our money!"
"...but aren't there folks out there with a better prospect of getting it right that Obama can rely on?"
Answer: no, there aren't. The money-mongers will pay off their favorite politicians to ensure that any "good guys" are keep out of the mix - and if one or two happened to slip through, they would be offered millions to shut the f**k and do what they're told.
How many of us wouldn't take, say, $10 million to waive a rule here, or add a midnight clause there, without any worry of ever having answer for your actions?
Answer: 99%.
Scheer detects irony in the choice of Gensler to take Born's chair. I'd call it "apparent irony", but not the real thing. First of all there is no irony in the USA anymore. We are incapable of it. We wouldn't know it if somebody slapped us in the face with Samuel Clemens later works. Second, there is no memory. "Who is Brooksley Born"? Third it isn't really ironic to start with. In American politics no good deed goes unpunished and no crime goes unrewarded.
Is it because he is "Obambi"? Young and out of his depth? Being led down the primrose path? Is he just servicing his dept to the fixers and moneymen who got him there? Does he really believe that buying worthless debt from reckless mega-banks that deliberataly created it is "necessary", "good", or even "likely to succeed" in any meaningful way? Who knows what he thinks? The purpose of political speech is to obscure what the speaker actually thinks. Anyway, that's the way we use it here and now, in America, at the start of our precipitous decline into debt-vassal to China. Does it matter what Obama thinks? Does it matter what we think? I don't remember being asked if I wanted to load my children and theirs with a lifetime of debt to reward the very weasels who created it.
That low, mournful bell you hear is coming from the ship that is carrying our future out to sea, over the horizon, where we'll never see it again. A few of us are standing on the pier, gnashing our teeth, but that's about it. Everybody else is listening to Rush or dancing about in the Obama pixie dust, oblivious to all else.
"The manager displayed a beautiful resignation. I fretted and fumed, and took to arguing with myself whether or no I would talk openly... But before I could come to any conclusion, it occurred to me that my speech or my silence-- indeed, any action of mine-- would be a mere futility. What did it matter what anyone knew or ignored? What did it matter who was manager? One gets sometimes such a flash of insight. The essentials of this affair lay deep below the surface, beyond my reach and beyond my power of meddling."
-- Joseph Conrad, Heart of Darkness
Good comment, BTW.
· Yr Obd't Servant
Obama's no Obambi. His cabinet picks are too consistent for that. No, his picks reflect the malevolence of the Chicago School of Economics. They're Milton Friedmanites.
Plutocrats paid for Obama, and he's working for them. A deer in the headlights he isn't.
-TIA
Can't we jail all of these people and have them breaking stones until they keel over? I hate these people. They're professional poker players with public money at their disposal.
Who the fuck needs $20 million a year?!? Christ, give me that much, and I'll work for one year and retire! Or I'll just keep working and give the rest away.
This is such a big tangled knot. Throw it in the goddamn fire, give the money back to the people and start the hell over. Capitalism will never, ever be ethical and sustainable.
The Bernanke trio in front of Barney Frank had a sweet three hours of "it's not our fault" and "uh hmmm" as the investigators growled and stumbled and footsied--unbelievable amount of time spent for very little substance. It's this cultural vapidity wrapped in self-righteousness that now bleeds Obama's credibility. How about questions from us, from an audience? Including for the presidential press outing. A site devoted to our questions direct to these events vs. secondhandedly via commentators might be highly instructive. We could get down to some basic WHYs immediately. We could review performances. I give the Frank committee a D minus for its first two hours, all I could stomach.
"a powerful symbol of the kind of innovation and technology that has made the American financial system as strong as it is today."
- you have to admit that this phrase is both accurate and applicable! Most everybody with a brain knows that - except some Red-State hicks who think they'll be billionaires some day (there are a lot of delusional people in the US, especially in the South.) I think we should keep repeating that - kill them with their own smug words. A lot of us saw this coming - and predicted it would be global and unimaginable in scope - and we're not alone. The guys that did this had to know as well - but they also knew they owned the government and could expect rewards instead of sanctions. SOP in the USA.
We tried to tell you that Obama was 'their guy' BEFORE the elections (otherwise he wouldn't be a candidate, right? Keep ignoring the people who get it right - keep listening to the Goebbels Brigades. Everybody should experience Nazi Germany at least once in a lifetime - but my family already paid their dues. Those of us who were right shouldn't have to pay any taxes - we didn't bet on a dead horse. In fact, real conservatives are averse to gambling at all (we weren't even allowed to play cards, as kids) - it's the fascists who are doing us in. (Just like Zionism and Israel are giving Jews a bad name - again.)
ARMYBRAT: Good post!
"I see this appointment as further evidence that the president has entrusted his economic policy to the wrong people."
Duhh! As Obama intended. You think he's stupid? Only kinda. Stupid enough to think he can revive the economy to what it was before -- an ecological and social sinkhole.
Nanoo
From "The Shock Doctrine". But calling for law and order after the profits have all been moved offshore is really just a way of legalizing the theft ex post facto, much as the European colonizers locked in their land grabs with treaties. Lawlessness on the frontier, as Adam Smith understood, is not the problem but the point, as much a part of the game as the contrite hand-wringings and the pledges to do better next time.
The American people hired Marshal Oreobama to clean up Dodge and he went and deputized the James gang. Oh yeah, and they want to disarm the citizens.
...THANK YOU BERNIE SANDERS!!!