While the national economy struggles under the weight of a massive bank bailout effort, the banking lobby's ability to influence public policy is more problematic than ever. The too-big-to-fail bankers may be dependent on U.S. taxpayers for their survival, but corporate lobbyists still have members of Congress, the Treasury Department and the Federal Reserve asking the banks' permission to bring the Big Finance behemoths under control. The relationship between Wall Street and the government is so out of whack that it's difficult to distinguish the political players from the panhandlers.
Financial derivatives and their friends have disappeared so many trillions of dollars from banks that nobody even knows how many, and nobody is going to jail.
For Mr. Obama it's all more or less a joke, and he naturally chose late-night comedy as an appropriate venue for his "expert" opinion...
Here's the dirty little secret, though. Most of the stuff that got us into trouble was perfectly legal.
Now we know, since we heard it from Barack Obama, a "lawyer" who never tried a case in court or published an article in a legal journal.
But words like "fraud" and "bribery" also have a plain English meaning, however much they may have been distorted by judges intent of keeping people like themselves out of jail.
Kenny Lay died in his mansion, while a thousand kangaroos in long black robes made it almost impossible to convict a white-collar criminal of anything, because...
People like us must not go to jail!
Kenny Lay dumped his stock in a bankrupt corporation while thousands of his employees were locked into worthless Individual Retirement Accounts composed entirely of stock in Enron, but Kenny Lay never went to jail, because...
People like us must not go to jail!
And if you pulled off their long black robes, and put fifty federal judges on one bus, and fifty bankers on another, you would never know which bus was which without a score-card.
People like us must not go to jail!
So before you can convict Kenny Lay or Richard Fuld of fraud, you have to jump through so many hoops that Dick and Kenny will probably die at home, surrounded by all the good things of this world... except justice.
Phil Gramm devised the law that exposed bank deposits to incomprehensible manipulation and eventual disappearance into the void, and Gramm-Leach-Bliely made a lot of bankers very, very happy!
So when Phil Gramm left the Senate he got a multi-million-dollar job at UBS, and that very good job was a bribe.
There wasn't any mystery about how Phil Gramm got that beautiful job and all those millions of dollars. It was just a delayed payoff. It was nothing but a bribe, and a bribe so screamingly obvious that anyone who doubts it was a bribe is ape-shit crazy!
But public corruption has been defined so narrowly by courts and legislatures that you would have to have a video-recording of somebody delivering a suitcase full of money to Phil Gramm before you could convict him of accepting a bribe, and when the bag-man handed the bag of money to Phil Gramm, the bag-man would have to say "I am giving you this money specifically as a payoff for breaking down the barriers between banking and speculation," and then Phil Gramm would have to say "I am accepting this money specifically as a payoff for Gramm-Leach-Bliley," and still, unless every "i" in every warrant was dotted and every "t" was crossed, Phil Gramm would walk out of court rich and free, and no judge would convict him, because...
After reading Deviltower's cogent summary of the last several boom-bust conservative economic collapses, I began to ponder the pattern at work here. What is a "bubble" anyway? How does this keep happening? I've realized it is because conservative economics is really a repeating effort to thwart economic thermodynamics and create some kind of free lunch of magical wealth beyond what the economy can create with any rational mechanism. This is what we must work to prevent, and what should be the goal of any regulations that are imposed going forward.
The unregulated and poorly reported credit default swaps may have actually passed $70 trillion last year, or about $5 trillion more than the GDP of the entire world.
So, are you starting to get an idea of just how big a genie Phil Gramm and his pals unleashed?
Hope walks arm in arm with fear, and so naturally enough Candidate Barack Obama is now reminding us, a la Roosevelt, that we have nothing to fear but fear itself and we must all pull together in a spirit of bipartisanship. Wrong. We have many identifiable things to be frightened of, starting with a bailout program designed to bail out the thieves running our financial system, and stick middle America with the pricetag - heftier than you can imagine. Why pull together with the licensed thug who just stole your money with the pledge that he would be doing it again to your kids? . . .
By all rights, this last crisis has brought us to the crossroads where neoliberalism should be buried with a stake through its heart.
We've had thirty years worth of deregulation - the loosening of government supervision. This has been the neoliberal mantra preached by both major parties, the whole of the establishment press and almost every university economics department in the country. It is central to the current disasters. And if you want to identify symbolic figures in the legislated career of deregulation, there are no more resplendent culprits than the man at McCain's elbow, Phil Gramm, and the man standing at Obama's elbow at his press conference, Robert Rubin.
Quite a few bloggers are saying in many words the following, stated succinctly by Big Tent Democrat on talkleft:
This is a 3 AM moment. The time to lead is now. We will find out a lot about Barack Obama in the coming days.
I disagree and think we know who Obama is, and I think Cockburn agrees. Here's Cockburn's what you see is what you get Obama:
Here we are, in the non-regulated bank economy which we were gifted with when Phil Gramm was in Congress (and before he left to be a big-time bank lobbyist... and financial advisor to McCain) that has left us with a 500 point drop in the Dow today, with Lehman Brothers going belly-up and with Bank of America swallowing Merrill Lynch.
There's a summary of the whole works on Olbermann with a commentary about halfway in by Paul Krugman. Just go to
http://www.msnbc.msn.com/id/21... to view it.
Note... without the Republicans over the last decade or so, we would never be in the worse mess since the era of Herbert Hoover (who McCain seems to imitate) and the start of the Great Depression. Right now we seem to be up the creek, an Obama may be the last available paddle.
Sarah Palin apparently has a limited understanding of the troubled mortgage finance industry, as she told voters in Colorado Springs (9/6) that lending giants Fannie Mae and Freddie Mac had "gotten too big and too expensive to the taxpayers." She promised that "The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help." Perhaps Gov. Palin may be forgiven for her shallow knowledge of the secondary mortgage market. Andrew Leonard of Salon.com noted (9/8) that Fannie and Freddie have been private entities and haven't cost the taxpayer a dime-so far. Ironically, the lack of regulation of mortgage bankers brought on the abuses that forced the government takeover. But taxpayers likely will end up picking up a substantial tab.
"The Meanest Man in the United States" - Molly Ivins, after Gramm blocked legislation that would restore food stamps to elderly legal migrants. Let them eat capitalism.
It seems Gramm, like most nightmares, isn't stopped just because he's horrifying. Larry Kudlow:
While McCain clearly disowned Gramm's remarks, Holtz-Eakin and Fiorina were wrong, at least at that point, to throw Gramm out of the campaign. In fact, McCain spoke to Gramm after dissing him, and asked him to stay in the campaign and continue to be a surrogate speaker. This was not widely reported, but several sources confirm the conversation. However, it was no secret that Holtz-Eakin in particular has been a Gramm adversary inside the campaign.
This is weird. I get that McCain would still want the advice of the ultimate e. coli conservative to prove his bridge-collapsing bona-fides to the right, but wouldn't it be better to keep him on in a silent-but-deadly advisory capacity? Does McCain like being represented by such a despicable sociopath?
[Gramm] calls for "ruthlessly" slashing government spending - but only focuses on spending on the poor. When he was told paying for healthcare plunged many 80-year-olds into poverty, he said: "Most of us don't have the luxury of living to be 80 years old, so it's hard for me to feel sorry for them."
Later, one of those very 80-year-olds approached him because she was terrified she wouldn't be able to pay her medical bills. Gramm laughed and told her to find herself a rich husband. He chuckled: "People say I don't have a heart. I do. I keep it in a quart jar on my desk."
Oh, it gets better:
Gramm says government regulation of the economy is "akin to communism", and must be destroyed. His first great step towards this goal came in the 1990s, when he championed and pushed through the law that exempted Enron from both government regulation and public disclosure, on the grounds these were "unacceptable fetters on the free market". Enron was his biggest campaign contributor, and employing his wife to the tune of a million bucks.
So thanks to Gramm, nobody was watching over Enron any more. As a result, they embarked on a massive programme of fraud and pillage. After taking over the electricity market in California, they deliberately engineered blackouts in entire cities to drive up the price for power. In a surreal move, Gramm blamed "environmental extremists" - the nearest bogeyman to hand - even after it was proven Enron execs had paid the power plants to "get creative" in turning out the lights.
If you read last night's Texas-themed installment you would have learned Bush was behind Texas' current electricity woes. Can't seem to lift a rock these days without uncovering another Texas conservative cockroach literally behind just about every bad thing that has happened in America since about 1980. Maybe tomorrow we'll learn how Gonzales lost the Alamo or perhaps Rove caused stagflation.
Former White House Press Secretary Scott McClellan betrays his former boss and says the war in Iraq was based on lies. In 2008. Really, that's how long it took?
Phil Gramm, McCain's advisor on subprime loans, is working with UBS, which is tens of billions of dollars deep into the mess.
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