18 April 2009

Politics of the bailout ~ Deepcaster

Simon Johnson, former Chief Economist at the IMF and current professor at MIT’s Sloan School of Management identifies The Root Cause:

“The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government…recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.” (emphasis added)

There is a Strategy which enables Investors to Prevail in their struggles for Protection and Profit, notwithstanding the endless stream of Outrages.

But in order to fully appreciate that Strategy it is important to understand key characteristics common to many of the Outrages. So lets consider certain recent ones.

Frank Rich in the New York Times writes:

“Lawrence Summers, the president’s chief economic adviser, made $5.2 million in 2008 from a hedge fund, D. E. Shaw, for a one-day-a-week job. He also earned $2.7 million in speaking fees from the likes of Citigroup and Goldman Sachs.

Those institutions are not merely the beneficiaries of taxpayers’ bailouts since the crash. They also benefited during the boom from government favors: the Wall Street deregulation that both Summers and Robert Rubin, his mentor and predecessor as Treasury secretary, championed in the Clinton administration.”

And as Chris Martenson in his superb article “America is Being Looted” quotes and notes:

“Rahm Emanuel, the current White House Chief of Staff, comes similarly burdened:

…the banking industry recently paid Rahm Emanuel $16 million for about two years of work. That investment was recently paid back when, as President Obama's chief of staff, Emanuel led the January campaign to release another $350 billion in bank bailout funds.”

But it goes deeper than that. Rahm Emanuel also took what I consider to be a lot of money serving on the board of Freddie Mac, a company that is certain to cost taxpayers hundreds of billions of dollars.

Before its portfolio of bad loans helped trigger the current housing crisis, mortgage giant Freddie Mac was the focus of a major accounting scandal that led to a management shake-up, huge fines and scalding condemnation of passive directors by a top federal regulator.

One of those allegedly asleep-at-the-switch board members was Chicago's Rahm Emanuel—now chief of staff to President Barack Obama—who made at least $320,000 for a 14-month stint at Freddie Mac that required little effort.”

Chris Martenson, April 14, 2009

The fundamental cause of the ongoing Financial and Economic crises is the policies of the private for-profit U.S. Federal Reserve


No comments: