Financial coup d’etat in U.S. – Part 3 – Who else has been at the trough?
By Peter Ewart
Thursday, September 25, 2008 03:45 AM
By Peter Ewart
The American people have sent a resounding No to the Bush government and Wall Street attempt to foist a $700 billion debt on the populace as a whole and allow the unelected Secretary of the Treasury to place himself above the law of the land.
Newsrooms have been flooded with angry messages across the country, and Congressional representatives have received a huge blast from their constituents. Poll after poll has revealed that Americans do not accept that there hard earned dollars should be squandered bailing out of the millionaires and billionaires of Wall Street.
Now that both presidential candidates are feeling the red hot rage of the American people, they are backing away from their original general support for the Bush government proposal, and are now saying that it cannot go through as currently drafted.
Thus, the financial crisis has morphed into a political one that is unprecedented in its scope. An entire people, from coast to coast, has stood up to the political and economic elite, and forced it into a humiliating step backwards.
But this issue is far from over. What the elite has not accomplished one way, it will try another. Both Barack Obama and John McCain are saying that the $700 billion bailout as it stands now is “unacceptable” and won’t pass Congress. Instead, they are proposing that provisions should be added to the bailout that will help “Main Street, rather than Wall Street.”
These provisions include the government getting a stake in the banks that are bailed out, limiting salaries of the CEOs involved, putting Congressional bodies in place to oversee the financing, and “helping” homeowners.
But there is one thing wrong with all of this. The big banks and financial institutions, that caused the mess in the first place, will still be getting the unprecedented $700 billion bailout. With their proposed amendments, both Republicans and Democrats leaders are simply trying to “sweeten” a poisonous cocktail, and using every political trick in the book to get Americans to drink it.
To justify their actions, the Republican and Democratic leadership in league with the Wall Street financiers are putting forward certain “truths” that are either very suspect or not true at all.
First of all, the idea is put forward repeatedly that the bailout proposal came about because of the immediate crisis that developed in the last few days. But Whitehouse Deputy Press Secretary Tony Fratto let slip out the shocking news that “the plan had not been slapped together” but “had been drawn up as a contingency over previous months and weeks by administration officials.”
In other words, this bailout plan has been worked on for a long time. Were the federal government and Wall Street bigwigs just looking for the ideal opportunity to spring it on the American people? That opportunity appears to have come last week when several Wall Street financial institutions had either failed or were in danger of failing. What better time to convince the American people that the “sky was falling in” and that they had no choice but to bailout the billionaires or else the whole economy would “collapse”?
Second, the implication is made that these financial institutions are either broke or near broke, that they have no access to funds, no assets, no holdings, and so on. Thus, they cannot be tapped to clean up the financial mess that they created. But such a view is not at all established. It may be true that a particular company may be close to bankruptcy, but there are many banks and financial institutions on Wall Street, and many of these were direct participants in the mortgage and security fraud.
It is not true, as some say, that banks only hold “debt,” and don’t have assets and holdings. In fact, as many business analysts have commented, one of the main characteristics of the last several decades is that these banks, hedge funds, and other financial institutions have been heavily involved in investments and holding outside the traditional banking sector. And the converse is true too - non-banking big business firms have been heavily involved with investments in the Wall Street banks. As a result today, it is in many cases impossible to separate the big banks from the big corporations.
Why is that important? Because it wasn’t just the big banks that were feeding at the bad mortgages and bad debt “trough.” Some of the biggest corporations in America have been sitting on the boards of the Wall Street banks and hedge funds. And, with full knowledge, they have been gorging themselves on the same plunder that the banks have.
If the directors and major shareholders of the big banks, such as Goldman Sachs and others, are examined, what unfolds is a complex web of connections and interconnections between the banks and auto, steel, retail, media and other non-bank monopolies.
Recently it was revealed that Goldman Sachs, while selling toxic securities to unsuspecting clients, was also selling these same securities “short,” i.e., betting that the price of the toxic securities would plunge. As a result, Goldman Sachs made billions of dollars. Does anyone really believe that these “non-bank” directors and major shareholders of Goldman Sachs were unaware about the toxic nature of the securities that the bank was selling?
These “non-bank” directors and major shareholders were also at the “trough” for many years. Why isn’t the government going after them and the big companies they represent to pay for the financial mess?
Obama and McCain have made statements about getting back the million dollar payouts for the CEOs of bankrupt and failing firms. Yes, that money should be taken back. But the salaries and payouts of these CEOs are only a small part of the huge haul that the directors and major shareholders have been taking out of these institutions for many years.
In addition, there is also reason to believe that all kinds of financial manipulation and shenanigans have been going on as this financial crisis has unfolded, as well as before. A lot of money has been made out of sub-prime mortgages and toxic securities over the last few years by both the banking and non-banking elite. But a lot of it appears to have disappeared into thin air. Where did that money go and who has it now?
We do know that there are literally dozens of criminal investigations going on into the dealings of various Wall Street financial institutions. So, instead of charging ahead and dumping the cost of the bailout onto the American taxpayer, why not track down where all that money went and how it can be returned? As “Deep Throat” advised during the Watergate scandal – “follow the money.”
Peter Ewart is a writer and college instructor based in Prince George, BC. He can be reached at: peter.ewart@shaw.ca
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Posted by: pisspulper on September 25 2008 5:57 AM
IMO the paper of paper casino market money that was made in the computer world of derivatives hedging, betting, and speculating with no personal risk to capital... this fake money was transformed into real money when these 'market' profits were re-invested to buy out the ownership of the real production economy in the great take over and consolidation buying frenzy of the last 20-years that saw goodwill go to all who had any ownership equity to sell or could facilitate such sales (privatization).
The sellers of the production and services economy then spent their money injecting a type of out of control hidden printing press inflation of the monetary supply. Its no different than a guy with a suitcase of counterfeit $100 bills that comes to town to buy up all the property and once his bills are spent and in circulation they are now no different then the real legal tender bills in circulation.
Fake money was created through the private contracts parties entered into with the banks selling these unregulated contracts (derivatives) and the casino effect of betting on what the real economy will do creating a managed market built entirely on speculation and not real world inputs. The effects of this were to create profits that are not backed up by any real world production or services and so in effect this serves as a way for billions of individual contracts to acts as individual fed reserves printing money that is not tracked or regulated in any way by the system that tracks monetary growth for managing inflation and the value of savings. This was the perfect laundering operation for the banksters and their corporate cartel brothers who then used the semi-legit money through the hedge funds to buy up and manipulate the real economy.
AIMHO