PAUL B. FARRELL
Warning: King Henry's bailout like Rummy's Iraq
Reaganomics hidden in 'sleeper cell' armed with lethal 'financial WMDs'
By Paul B. Farrell, MarketWatch
Last update: 6:47 p.m. EST Nov. 10, 2008
Comments: 100
ARROYO GRANDE, Calif. (MarketWatch) -- So you thought Barack Obama's victory signaled the death of Reaganomics? Wrong, wrong: Reaganomics is very much alive.
In a subtle, bloodless coup, the Reaganomics ideology magically pulled victory out of the jaws of defeat in the meltdown. The magic happened fast and quietly, in the shadows, while you were in a trance, distracted by the election drama.
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Recently Naomi Klein, author of "The Shock Doctrine: The Rise of Disaster Capitalism," framed the issue perfectly: "Has the Treasury partially nationalized the private banks, as we have been told? Or is it the other way around?" The question was rhetorical, the answer painfully clear. In a few weeks Wall Street did the old bait and switch, emerging from an economic and market disaster with new powers, in total control of America.
And thanks to Treasury Secretary Henry Paulson's brilliant bailout coup, Reaganomics is now the new "sleeper cell" quietly hidden inside the Obama White House and America's Treasury, where it will be for a long time to come, armed with what Warren Buffett calls financial weapons of mass destruction, guaranteed to sabotage the new president, taxpayers and the future of America.
Listen closely folks: You and your government are and will continue being conned out of trillions. Better that we should have taken care of ourselves first and cleaned house, not bailed out Wall Street financiers -- let them pay for their sins and feel the pain.
Unfortunately, while you were distracted by the election, Wall Street gained control of our Treasury using a Trojan Horse, Hank Paulson, who filled Treasury with Goldman Sachs alums and pulled off one of the greatest inside heists in the history of the world.
While you were distracted, Wall Street privatized the U.S. Treasury, got the keys to Fort Knox and will be stealing trillions for years to come, through a secret "sleeper cell," a "virus" installed in the $700 billion Wall Street bailout. They're laughing: All you got was a heavily discounted paper IOU for you, your kids and generations to pay off. The winners: Paulson, Goldman, Wall Street banks and Reaganomics. The losers: America.
Wall Street and its buddies in Washington (all those politicians bankrolled by 41,000 lobbyists) know two things the voters never, never learn: that no matter how incompetent they are -- how greedy, how stupid and how destructive -- America's naive voters will always bail them out of a crisis
At the trough
Klein further exposed this insanity in a recent Rolling Stone article, "The New Trough: The Wall Street bailout looks a lot like Iraq, a 'free-fraud zone' where private contractors cash in on the mess they helped create." Paulson's privatization, outsourcing and management of the $700 billion bailout has the exact same Reaganomics ideological, strategic and deceptive footprints that President George W. Bush and former Defense Secretary Donald Rumsfeld used to privatize, outsource and mismanage the costly Iraq War blunder. Yes, Paulson is America's new Rumsfeld!
The American taxpayer is being royally screwed by the Wall Street bailout giveaway. According to Klein, they're adding insult to injury, rubbing salt in our wounds:
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"Many of the banks appear to have no intention of wasting the money on loans."
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Merrill CEO John Thain said "it's just going to be a cushion."
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Citigroup CFO Gary Crittenden "hinted that his company would use its share of the cash, $25 billion, to buy up competitors and swell even bigger," giving them the "possibility of taking advantage of opportunities that might otherwise be closed to us."
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And my old colleagues at Morgan Stanley are "planning to pay themselves $10.7 billion this year, much of it in bonuses." So screw the taxpayers and Main Street homeowners.
Want to know how badly America's taxpayers are getting screwed? Listen as Klein compares the American bailout to the British bailout which was negotiated just five days before Paulson "negotiated" our historic $125 billion deal with nine Wall Street banks:
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United Kingdom. Prime Minister Gordon Brown negotiated "meaningful guarantees for taxpayers -- voting rights at the banks, seats on their boards, 12% in annual dividend payments to the government, a suspension of dividend payments to shareholders, restrictions on executive bonuses, and a legal requirement that the banks lend money to homeowners and small businesses." Brown took advantage of his negotiation position of strength.
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United States. What did the American taxpayers? A bad deal negotiated by a former Wall Street CEO loaded with conflicts of interest: We got "no controlling interest, no voting rights, no seats on the bank boards and just 5% in dividend payouts to the government, while [bank] shareholders continue to collect billions in dividends every quarter. What's more, golden parachutes and bonuses already promised by the banks will still be paid out to executives -- all before taxpayers are paid back. No wonder it took just one hour for Paulson to convince all nine CEOs to accept his offer, less than seven minutes per bank for one of the sweetest taxpayer giveaways in history.
Our pain, Wall Street's gain
It gets even worse: The day after Paulson's nine-bank deal, he announced his selection of Bank of New York Mellon as the "master custodian" coordinating all phases of the Wall Street bank bailout. BNYM's role as "the contractor of contractors" is to the $700 billion bailout what Vice President Dick Cheney's old firm Halliburton was to all the mercenary and private contractor operations in Iraq. Plus the new president's locked into a three-year contract.
BNYM's boss can outsource to friendly Wall Street "subcontractors," handing out billions of taxpayer money with little oversight much as Halliburton did in Iraq. They will "purchase toxic debts from Wall Street, service them and auction them off in the future." BNYM's boss called this plum "the ultimate outsourcing." An opportunity for his bank, because there's "a lot of new business that's going on even in this chaotic marketplace."
Main Street's suffering because of Wall Street's "sins," and Wall Street sees our pain as just an "opportunity" for them. That's textbook "disaster capitalism."
So now you know the truth: The Treasury did not nationalize America's banks. The fact is, Wall Street privatized the U.S. Treasury with a $700 billion rescue plan being controlled by the very banks that created the mess. You were distracted by the election, hoping for a savior, while Wall Street was turning defeat into victory using a classic "disaster capitalism" strategy.
That's right, Wall Street's Trojan Horse, Hank Paulson, operated quietly inside Treasury, protecting his old Wall Street buddies before they'd go bankrupt. He pulled the classic "disaster capitalism" stunt relieving the banks of the pain of their "sins." Ironically, that only leads to more "sinning," faster, bigger, sooner.
That's classic "moral hazard" and with Wall Street's new "business as usual" attitudes about mergers, bonuses, CEO pay and cash cushions, you just know those Reaganomics "financial WMDs" that Paulson's leaving behind in the bailout funds "sleeper cell" will ultimately trigger an even bigger financial meltdown soon, by 2011. End of Story |
