On Wednesday of last week, I wrote these words in an Alert:
Given the recent revelations that Goldman Sachs and other well-connected players in the AIG scandal got billions of dollars directly from the US taxpayers for their side-bets with AIG, I will not be at all surprised to find out in a few weeks or months that Goldman Sachs, JPM, and others were magically positioned to make a killing off of this move.
That’s just raw speculation, but it fits with the general pattern of conflicted enrichment that has stalked every move in this grand looting operation so far.
In fact, the constant drip-drip-drip of news about self-dealing by insiders with zero legal consequences for the perpetrators leaves me with the queasy feeling that every attempt at finding a legitimate resolution to this crisis will be thwarted by a crowd of Wall Street insiders who simply cannot resist an opportunity to redirect money into their own pockets. But that’s another story.
Yesterday that story got published in Rolling Stone Magazine.
Matt Taibbi, the author, deserves a standing ovation for the most outstanding explanation of how truly corrupt the situation is, and capturing the hubris and entitlement that infuse our entire power structure.
It is the best I’ve yet read on the subject. You must read it. The whole thing.
It is maddening, infuriating, accurate, well researched and incisive.
Here’s the link again. Read it. Please.
It points out why anybody with any hope had better abandon it fast and get busy preparing at their own community level – due to rampant conflicted self-dealing by insiders, there’s practically no chance at all that any useful solutions will come out of the Washington DC/Wall Street axis of weevil.
The most likely outcome is the complete destruction of the dollar.
Here are a few snippets:
There are plenty of people who have noticed, in recent years, that when they lost their homes to foreclosure or were forced into bankruptcy because of crippling credit-card debt, no one in the government was there to rescue them. But when Goldman Sachs — a company whose average employee still made more than $350,000 last year, even in the midst of a depression — was suddenly faced with the possibility of losing money on the unregulated insurance deals it bought for its insane housing bets, the government was there in an instant to patch the hole. That’s the essence of the bailout: rich bankers bailing out rich bankers, using the taxpayers’ credit card.
The people who have spent their lives cloistered in this Wall Street community aren’t much for sharing information with the great unwashed. Because all of this [stuff] is complicated, because most of us mortals don’t know what the hell LIBOR is or how a REIT works or how to use the word "zero coupon bond" in a sentence without sounding stupid — well, then, the people who do speak this idiotic language cannot under any circumstances be bothered to explain it to us and instead spend a lot of time rolling their eyes and asking us to trust them.
In essence, the game is to make the system just slightly too complicated to understand and then rake in the dough while the good times last knowing that you can stick the bill to the taxpayer later on. Absolutely nothing done by the past or current administration has indicated even the slightest departure from this model.
This tells me that our entire system is now entirely too intertwined, too full of conflicts of interest to self regulate the outcome. Like the AIG bonuses (which were 1/1000th the size of the AIG bailout), any notion of "needing better government regulation" is a red herring designed to distract attention away from the fact that the government has never displayed any interest at all in regulating the same people that give massive campaign donations. Or the fact that nearly every position of regulatory power is filled by someone who came out of a long career in the same industries they are supposed to regulate.
It is just not possible for people to effectively regulate the very same people with whom they worked for the past 20 years. In theory it is, I suppose, but in practice it never quite works out that way.
When one considers the comparatively extensive system of congressional checks and balances that goes into the spending of every dollar in the budget via the normal appropriations process, what’s happening in the Fed amounts to something truly revolutionary — a kind of shadow government with a budget many times the size of the normal federal outlay, administered dictatorially by one man, Fed chairman Ben Bernanke. "We spend hours and hours and hours arguing over $10 million amendments on the floor of the Senate, but there has been no discussion about who has been receiving this $3 trillion," says Sen. Bernie Sanders. "It is beyond comprehension."
Count Sanders among those who don’t buy the argument that Wall Street firms shouldn’t have to face being outed as recipients of public funds, that making this information public might cause investors to panic and dump their holdings in these firms. "I guess if we made that public, they’d go on strike or something," he muses.
And the Fed isn’t the only arm of the bailout that has closed ranks. The Treasury, too, has maintained incredible secrecy surrounding its implementation even of the TARP program, which was mandated by Congress. To this date, no one knows exactly what criteria the Treasury Department used to determine which banks received bailout funds and which didn’t — particularly the first $350 billion given out under Bush appointee Hank Paulson.
The situation with the first TARP payments grew so absurd that when the Congressional Oversight Panel, charged with monitoring the bailout money, sent a query to Paulson asking how he decided whom to give money to, Treasury responded — and this isn’t a joke — by directing the panel to a copy of the TARP application form on its website. Elizabeth Warren, the chair of the Congressional Oversight Panel, was struck nearly speechless by the response.
"Do you believe that?" she says incredulously.
This is your "must read" article of the weekend.