GDAE Podcast Episode 7

Episode 7 - March 1, 2009

• Breaking the Power of the Bankers. A once-in-a-lifetime chance.
• Music from Bela Fleck that might challenge the musical intellect.
• Prosecution of Bush: Mary Robinson, former President of Ireland and former UN High Commissioner on Human Rights shares her views.

Here's a Link to the GDAE Podcast Webpage.

Play GDAE Podcast Episode 7 Now.

Obama Talk'n Like a Populist

Under the headline "Obama challenges lobbyists to legislative duel" we hear some words form Obama that are supposed to comfort the angry masses:

The system we have now might work for the powerful and well-connected interests that have run Washington for far too long... But I don't. I work for the American people. [1]

We have reason to doubt that statement. In the context of setting the direction of the financial industry bailout, Obama sided with the Wall-streeters in his administration rather than the internal administration faction that urged taking a harder line. According to a February 10, 2009 New York Times article,

“The Obama administration’s new plan to bail out the nation’s banks was fashioned after a spirited internal debate that pitted the Treasury secretary, Timothy Geithner, against some of the president’s top political hands.

“In the end, Geithner largely prevailed in opposing tougher conditions on financial institutions that were sought by presidential aides, including David Axelrod, senior adviser to the president.” [2]

As featured in the upcoming Episode 7 of GDAE Podcast, even if the Obama administration takes the right technical steps, there are many subjective decisions yet to be made. These policy decisions will be subject to intense pressure from the powerful and now-desperate banking elite. Obama knows this and is talking tough:

I know these steps won't sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they're gearing up for a fight... My message to them is this: So am I. [1]

We are at a historical juncture that demands a historical level of public pressure on Obama, and other officials, to ensure they make decisions consistent with his populist rhetoric. This is a once-in-a-generation moment when our collective voices could change the course of the people's history. Let's make noise!

Psssst... Do Something

• Contact the Broadcast Media
  
• Contact the Newspapers
  
• Contact the US Senate
  
• Contact the House of Representatives

Sources:

1. Associated Press, Obama challenges lobbyists to legislative duel, February 28, 2009.

2. New York Times, Geithner Said to Have Prevailed on the Bailout, February 10, 2009.

Paulson: A Wall Street Guy

Some people might think it's unfair to accuse Treasury Secretary Henry Paulson of favoring his Wall Street friends, Goldman Sachs in particular. They would argue that, even though he had a 30-plus-year career on Wall Street, he can rise above that and render a fair and balanced recovery plan.

Even if Paulson's motives are pure, his deeply engrained biases apparently are not. This is revealed by what is being passed off as a "glitch" in the "rescue plan."

Treasury Department officials met with banking industry representatives to resolve a glitch in the rescue program that has temporarily prevented some 6,000 of the nation's 8,500 banks from applying for government support.

Treasury is buying preferred shares in banks as a way of injecting cash into the institutions. But about 6,000 of the nation's banks don't have publicly traded shares of stock and therefore are not set up in a way to meet Treasury's current qualifications.

The word "duh" comes to mind, followed by the thought, "Paulson is so Wall Street centric that he launched a historic buy-out of the banks, but only thought in terms of those that trade ownership shares on.... Wall Street

The critics of this view will say, "Hey, that's not fair. Paulson operates at a higher level of analysis. He has tasked Neel Kashkari, the Treasury's assistant secretary for international affairs, to be the interim head of Treasury's new Office of Financial Stability."

OK, aside from the fact that the 35-year old Kashkari (pronounced Cash Carry) may not have the years of experience needed to take on such a task, his experience is as a former Goldman Sachs banker at the former [speculative] investment firm once headed by Treasury Secretary Henry Paulson*. In other words, Paulson's selection of Kashkari is further evidence that Paulson is a Wall Street guy with Wall Street centric views and is producing a Wall Street Centric bailout plan.

* Yes, that is two "formers"... Goldman Sachs is a former investment bank, and now is just a commercial bank.

Sources:

Associated Press, White House to banks: Start lending now, Jennifer Loven, October 28, 2008.

Associated Press, Paulson picks interim head for rescue effort, Martin Crustsinger, October 6, 2008.

Dirty Sexy Bailout

On the same night the new TV series Dirty Sexy Money premiers, we watched the US Senate "sweeten" the $700 billion bailout legislation to lure principled politicians away from their ... principles.

Politics is an ugly business, and that was on display for the world to see this evening. Need votes from southern state congress critters? Sweeten the bailout bill with hurricane relief. Need votes from business-friendly congress critters? Sweeten the bailout bill with business tax breaks.

Never mind that we should own the institutions we're bailing out, and benefit from any future profits they make, if they survive. Never mind that we've now seen consolidation of the banking industry to three major banks, which are way too big to fail, and should be operated as public utilities because they've become monopolies. Never mind that the Senators voting on the legislation have major conflicts of interest because they are owned by the financial industry they're bailing out.

Few are saying "let 'em crash." But if we buy them, we own them. If these financial institutions survive, all the future profits accrue to us, the people. Not just until they get stabilized, but for a few generations. We're gonna milk those profits that have been going to the top 1% of the insiders, and we're going to fix our infrastructure, our schools, our healthcare and retirement systems. We're going to spread the wealth to the wider society, because we are now back in charge. And if the Congress doesn't get it, we'll select new representatives who do get it.

We want a new system. We don't want this to happen again, as in the S&L crisis, the dot-com bubble, the Enron et al phony energy deregulation. Never again.

Sources:

Contact Congress: We want a Family and People's Economy

We're witnessing a once-in-a-lifetime opportunity to remake the corporate economy into a family and people economy.

Contact your senators, US representative and others. Get on the phone with this
message and tell them that we hold them accountable.

Pass the word that our voices need to be heard in Washington or we risk having the Wall Street system more securely locked in for generations to come.

Contact Congress:

US House: E-mail Forms

US Senate: E-mail and Phone Numbers

Sources:

Lieberman: Fascist in Democrat Clothes

If you have not watched the "Lieberman Must Go" video, here's your chance.



Psst. Do Something! Sign the Petition - Lieberman Must Go!

Tax Payer Bailout Equals Ownership

Paul Krugman writes, in an essay entitled The B Word:

Last week, Robert Rubin, the former Treasury secretary, and John Lipsky, a top official at the International Monetary Fund, both suggested that public funds might be needed to rescue the U.S. financial system. Mr. Lipsky insisted that he wasn’t talking about a bailout. But he was.

OK. If we the tax payers have to bail out the financial titans, then we should become part owners. How does that happen? One way is to negotiate a partial nationalization of the corporation. Think of it as future profit sharing. These companies are dead if the tax payer doesn't come to their rescue. We could tax them in the future, but I'd rather have their books open to US government audits, and for we the tax payers to simply get our cut. Period.

I'm tired of watching the US tax payer get shafted in historic crisis after crisis. We're still paying for the 1980s Savings and Loan bail out. It's time to say enough is enough. "The King has now clothes," already. This isn't a free market, it's a free ride, and I'm sick and tired of underwriting the wealthy lifestyle of financial high fliers. Are you?

Lets do something about it. Write your US representatives and senators. We want partial ownership.

Beware the Bail Out on Our Backs, and Inflation

Julian Delasantellis, writing for the Asia Times, exposes the central banks via a funny analogy.

"There's an old story about the late British statesman Winston Churchill at a party. Probably on one of those many nights where never in the field of human excess had so much cognac, brandy and scotch been consumed by a person who historians now say was not an alcoholic, he staggered up to a socialite matron and posed a question:"

Churchill: "Madam, would you sleep with me for 5 million pounds?" (In the 1930s, when the British pound was worth more than twice as much to the US dollar than it is now, this was a particularly impressive sum over which to surrender one's virtue.)

Woman: "My goodness, Mr Churchill ... Well, I suppose ... we would have to discuss terms, of course."

Churchill: "Would you sleep with me for 5 pounds?"

Woman: "Mr Churchill, what kind of woman do you think I am?!"

Churchill: "Madam, we've already established that. Now we are haggling about the price."

"Thanks to last week's events in the financial markets, we now know the price at which the world's three largest central banks, the Bank of Japan, the European Central Bank and the Federal Reserve Bank of the United States, will drop their posturings about the importance of setting good examples regarding promoting sound banking, lending and credit usage policies and put their principles up for sale."

We are witnessing what happens when legislators change the rules to promote rampant capitalism, and the bubble it creates begins to deflate. In the US, the central bank (Federal Reserve) buys up bad debt (mortgage backed securities held by banks) thereby pumping new money into the phony "free market." Economics 101 tells us this monetary inflation will lead to price inflation as the value of the free flowing dollar drops.

But get ready to fight with Congress. The next thing we'll be hearing is that some of these banks and high-flying financial institutions, which give out six-figure bonuses, are "too big to let fail." Congress (read "the US tax payer") will be asked to bail them out. Our answer should be "No." Economics 101 says that businesses must be allowed to fail so that the word "risk" means something, and to clean out the dead wood.

Sources:

Asia Times, August 14, 2007,
Central banks' easy virtue, easy money

Julian Delasantellis is a management consultant, private investor and educator in international business in the US state of Washington. He can be reached at juliandelasantellis@yahoo.com.

Beware the Bail out on Our Backs, and Inflation

Julian Delasantellis, writing for the Asia Times, exposes the central banks via a funny analogy.

"There's an old story about the late British statesman Winston Churchill at a party. Probably on one of those many nights where never in the field of human excess had so much cognac, brandy and scotch been consumed by a person who historians now say was not an alcoholic, he staggered up to a socialite matron and posed a question:"

Churchill: "Madam, would you sleep with me for 5 million pounds?" (In the 1930s, when the British pound was worth more than twice as much to the US dollar than it is now, this was a particularly impressive sum over which to surrender one's virtue.)

Woman: "My goodness, Mr Churchill ... Well, I suppose ... we would have to discuss terms, of course."

Churchill: "Would you sleep with me for 5 pounds?"

Woman: "Mr Churchill, what kind of woman do you think I am?!"

Churchill: "Madam, we've already established that. Now we are haggling about the price."

Thanks to last week's events in the financial markets, we now know the price at which the world's three largest central banks, the Bank of Japan, the European Central Bank and the Federal Reserve Bank of the United States, will drop their posturings about the importance of setting good examples regarding promoting sound banking, lending and credit usage policies and put their principles up for sale.


Sources:


Central banks' easy virtue, easy money