"At its heart, therefore, the financial crisis was a breakdown in the rule of
law in America."
-- James Galbraith
In philosophical, theological, or moral discussions, corruption is spiritual
or moral impurity or deviation from an ideal. Corruption may include many activities including
bribery and embezzlement. Government, or 'political', corruption occurs when an office-holder
or other governmental employee acts in an official capacity for personal gain.
Systemic fraud was the second nature of corporatist regimes from its humble beginning in the first
half of the XX century in Mussolini Italy to reincarnation of corporatism by Reagan. In this sense the
terms corporatism and the term crony capitalism reflect the same social phenomenon. Both means the elimination
of accountability. And first and foremost elimination of accountability for the financial sector, as
fish rots from the top. According to Wikipedia corruption occurred on several different scales:
Scales of corruption
Corruption can occur on different scales. There is corruption that occurs as small favors between
a small number of people (petty corruption), corruption that affects the government on a large scale
(grand corruption), and corruption that is so prevalent that it is part of the every day structure of
society, including corruption as one of the symptoms of organized crime (systemic
Petty corruption occurs at a smaller scale and within established social frameworks and
governing norms. Examples include the exchange of small improper gifts or use of personal connections
to obtain favors. This form of corruption is particularly common in developing countries and where
public servants are significantly underpaid.
Grand corruption is defined as corruption occurring at the highest levels of government
in a way that requires significant subversion of the political, legal and economic systems. Such
corruption is commonly found in countries with authoritarian or dictatorial governments but also
in those without adequate policing of corruption.
The government system in many countries is divided into the
and judiciary branches in
an attempt to provide independent services that are less prone to corruption due to their independence.
Systemic corruption (or endemic corruption)
is corruption which is primarily due to the weaknesses of an organization or process. It can be
contrasted with individual officials or agents who act corruptly within the system. Factors which
encourage systemic corruption include
powers; lack of
low pay; and a culture of impunity.
Specific acts of corruption include "bribery, extortion, and embezzlement" in a system where "corruption
becomes the rule rather than the exception."
Scholars distinguish between centralized and decentralized systemic corruption, depending on which
level of state or government corruption takes place; in countries such as the
both types occur.
Wikipedia conveniently omitted neoliberalism as the source of system corruption. At a deeper
level it is corruption that form the backbone to globalization. As neoliberal regimes enforce deregulation,
privatization, and structural adjustment policies, requiring civil service to shrink, the side effect
of externality of this policies is outflow of money iether to G7 countries (for the third worlds) or
to offshore jurisdictions (for the USA and other G7 countries). While Western governments, the World
Bank and IMF denounce corruption, their own policies promote it on a systemic level.
Like Mussolini used to say (or was it attributed to him) the essence of corporatism is
to [corporate] friends everything, to enemies the law. And that's the essence of Clinton-Bush-Obama
regime if we are talking about high level executives. Small fish still can be fried, but big sharks
are untouchable. No executives went to jail after 2008 financial crisis. No executives went to jail
due to deception of people before Iraq war or due to incompetence or worse during 9/11.
Mussolini claimed that by elimination of accountability the dynamic (or heroic) capitalism
based on private initiative could be prevented from degenerating into stale crony capitalism.
But opposite is actually true. There is a short initial period when deregulation unleashed private energy,
but after that corruption emerges and the situation can deteriorate deeper that it was under stale state
Many analysts assert that China is one of the main examples of state capitalism in the 21st century.
But this is only partially true as elements of corporatism in China are very strong. The same was actually
true for the USSR. All those three regimes are just different flavor of general corporatist model. As
Margaret Thatcher used to say "There is no alternative".
In this system, governments use various kinds of state-owned companies to manage the exploitation
of resources that they consider the state's crown jewels and to create and maintain large numbers
of jobs. They use select privately owned companies to dominate certain economic sectors. They
use so-called sovereign wealth funds to invest their extra cash in ways that maximize the state's
profits. In all three cases, the state is using markets to create wealth that can be directed as
political officials see fit. And in all three cases, the ultimate motive is not economic (maximizing
growth) but political (maximizing the state's power and the leadership's chances of survival).
This is a form of capitalism, but one in which the state acts as the dominant economic player
and uses markets primarily for political gain.
Just replace the word capitalism with corporatism in the last sentence and you will get pretty apt
definition of both China and USSR social models.
Mussolini also aptly characterized corporatism as "state
socialism turned on its head": instead of state controlling the corporations, in corporatism
corporations are controlling the state.
In the last half of the 19th century people of the working class in Europe were beginning to show
interest in the ideas of socialism and syndicalism. Some members of the intelligentsia, particularly
the Catholic intelligentsia, decided to formulate an alternative to socialism which would emphasize
social justice without the abolition of private property. It was this intellectual tradition that led
to Corporatism, as the key is the attempt to merge corporate power with the state power. Such
a system does not nessesary need to take form of national socialism. It became dominant in XX century
in various, often milder forms (including BTW the "New Deal" in the USA).
Due to its origin Corporatism has been attractive social model in the Latin countries of Europe (Portugal,
Spain, Italy and France) and Latin America, where it resonated with Catolisism. Germany also has significant
catholic population which, by some accounts, was the core of the NSDP. The connection between Catholicism
and the Continental corporatism movements is also obvious in the various Christian Democrat parties
(where for ‘Christian’ we should read ‘Roman Catholic’). In USA corporatism initially got fertile ground
in states with significant Catholic population such as Wisconsin with its high percentage of German
Catholics (senator McCartney represented Wisconsin in the US senate). However, its influence goes much
The key idea of corporatism is to eliminate or at least lessen the inherent
conflict between the owners of capital represented by management and labor represented by unions.
And one way to do it and to institualize trade unions as the only legitimate representatives
of workers and work with its corrupted leadership, not with charismatic leaders of the strikes or, worse,
communists. This way demands of workers were partially accommodated in a form that was acceptable to
large capital. And the key here are interest of large capital as it is the
primary political force in any corporatist regime. Quoting Benito Mussolini: "Fascism
should more appropriately be called
Corporatism because it
is a merger of State and corporate power.
Later in the USA large corporations understood that outsourcing of labor represents a lever that
makes negotiation with trade union unnecessary. Globalization makes possible by-and-large ignore labor
demand using outsourcing as a powerful wedge issue. Due to this development, in core of which was the
dramatic rise of international communication and Internet, corporatism mutated into a different form
in which demands of lower classes were just ideologically suppressed in a way that was done under communist
dictatorships using Marxist ideology and labor was split using verge issues and brainwashed to vote
against its own political interests. Paradoxically part of organized labor especially in mid-Western
states became a staunch supporter of Republican Party (What's
the matter with Kansas)
The resulting social order took a very specific form of "free market capitalism" (aka
Neoliberalism) which like some previous forms of corporatism
such as national socialism has very strong ideological component. Actually so strong that was able to
defeat Marxism on international arena and series of neolibral revolutions shook former Soviet camp.
Some states like China internally transformed into neoliberal form, avoiding "color revolution" stage.
As an ideology neoliberalism represent eclectic set of pseudoscience theories that somewhat mirror
of Hitler theories of superiority of Arian race in economic terms (replace the Arian race with
corporations and "free market"). Like Marxism it became powerful global in its reach secular religion,
with its own set of prophets, martyrs, holy books, and the plan of salvation.
In reality free market plays the role of Heaven in Christianity, an idealized but unachievable construction.
There was never was and will never be any real "free market" in any neoliberal states for a simple
reason as it is impossible and contracts the fact that neoliberalism as a form of corporatism is a merge
of power of large corporations and the state. As such large corporation, and under neoliberalism especially
large financial players are always subsidized (and rescued) by state because they control the state.
It is the same merger of state power and corporations as in classic corporatism but with more
prominent role of financial oligarchy in the mix: Johnson (The
Quiet Coup - Magazine - The Atlantic) called acquiring by financial oligarchy dominant influence
on the state a "Quiet coup" (not very dissimilar to NSDP takeover of power in Germany).
But religious component of neoliberalism are so strong that all concerns about this issue are suppressed
in "true believers" (which constitute the majority of population in major Western countries).
That's why corruption of government is an immanent feature of corporatist regimes and it instantly
became a prominent feature of the US capitalism (and a real problem) immediately after election of Reagan,
which signifies political victory of neoliberalism in the USA (with Saving and Loan Crisis was the first
act of this corruption drama). And it goes without saying that it became pervasive under Clinton-Bush-Obama
regimes. Paradoxically it was especially acute under Clinton administration during which all "socialist"
elements of "New Deal" (government regulation of private sector) were completely dismantled.
You guys should wake up and smell what country you live in. Here is a good place to start.
"Campaigning for president in 1980, Ronald Reagan told stories of Cadillac-driving "welfare
queens" and "strapping young bucks" buying T-bone steaks with food stamps. In trumpeting these
tales of welfare run amok, Reagan never needed to mention race, because he was blowing a dog
whistle: sending a message about racial minorities inaudible on one level, but clearly heard
on another. In doing so, he tapped into a long political tradition that started with George
Wallace and Richard Nixon, and is more relevant than ever in the age of the Tea Party and the
first black president.
In Dog Whistle Politics, Ian Haney L?pez offers a sweeping account of how politicians and
plutocrats deploy veiled racial appeals to persuade white voters to support policies that favor
the extremely rich yet threaten their own interests. Dog whistle appeals generate middle-class
enthusiasm for political candidates who promise to crack down on crime, curb undocumented immigration,
and protect the heartland against Islamic infiltration, but ultimately vote to slash taxes
for the rich, give corporations regulatory control over industry and financial markets, and
aggressively curtail social services. White voters, convinced by powerful interests that minorities
are their true enemies, fail to see the connection between the political agendas they support
and the surging wealth inequality that takes an increasing toll on their lives. The tactic
continues at full force, with the Republican Party using racial provocations to drum up enthusiasm
for weakening unions and public pensions, defunding public schools, and opposing health care
Rejecting any simple story of malevolent and obvious racism, Haney L?pez links as never
before the two central themes that dominate American politics today: the decline of the middle
class and the Republican Party's increasing reliance on white voters. Dog Whistle Politics
will generate a lively and much-needed debate about how racial politics has destabilized the
American middle class -- white and nonwhite members alike."
Reading the above posts I am reminded that in November there was ONE Election with TWO Results:
Electoral Vote for Donald Trump by the margin of 3 formerly Democratic Voting states Michigan,
Ohio, and Pennsylvania
Popular Vote for Hillary Clinton by over 2.8 Million
The Democratic Party and its Candidates OBVIOUSLY need to get more votes in the Electoral States
that they lost in 2016, not change what they stand for, the principles of fair and equal play
And, in the 3 States that turned the Electoral Vote in Trump's favor and against Hillary, all
that is needed are 125,000 or more votes, probably fewer, and the DEMS win the Electoral vote
It is not any more complex than that.
So how does the Democratic Party get more votes in those States?
PANDER to their voters by delivering on KISS, not talking about it.
That is create living wage jobs and not taking them away as the Republican Party of 'Free Trade'
and the Clinton Democratic Party 'Free Trade' Elites did.
Understand this: It is not the responsibility of the USA, or in its best interests, to create
jobs in other nations (Mexico, Japan, China, Canada, Israel, etc.) that do not create jobs in
the USA equivalently, especially if the gain is offset by costly overseas confrontations and involvements
that would not otherwise exist.
"The Democratic Party and its Candidates OBVIOUSLY need to get more votes in the Electoral
States that they lost in 2016, not change what they stand for, the principles of fair and equal
play for all. "
The Democratic Party as a Party (Sanders was an outlier) has nothing to do with "fair and equal
play for all".
This is a party of soft neoliberals and it adheres to Washington consensus no less then Republicans.
If you read the key postulates it is clear that that they essentially behaved like an occupier
in this country. In this sense "Occupy Wall street" movement should actually be called "Liberation
from Wall Street occupation" movement.
Bill Clinton realized that he can betray working class with impunity as "they have nowhere
to go" and will vote for Democrat anyway.
In this sense Bill Clinton is a godfather of the right wing nationalism in the USA. He sowed
the "Teeth's of Dragon" and now we have, what we have.
Blast from the past. Bill Clinton position on illegal immegtation.
"... Today's Democratic Party also believes we must remain a nation of laws. We cannot tolerate illegal immigration and we must stop it. For years before Bill Clinton became President, Washington talked tough but failed to act. In 1992, our borders might as well not have existed. The border was under-patrolled, and what patrols there were, were under-equipped. Drugs flowed freely. Illegal immigration was rampant. Criminal immigrants, deported after committing crimes in America, returned the very next day to commit crimes again. ..."
"... President Clinton is making our border a place where the law is respected and drugs and illegal immigrants are turned away. We have increased the Border Patrol by over 40 percent; in El Paso, our Border Patrol agents are so close together they can see each other. Last year alone, the Clinton Administration removed thousands of illegal workers from jobs across the country. Just since January of 1995, we have arrested more than 1,700 criminal aliens and prosecuted them on federal felony charges because they returned to America after having been deported. ..."
"... However, as we work to stop illegal immigration, we call on all Americans to avoid the temptation to use this issue to divide people from each other. We deplore those who use the need to stop illegal immigration as a pretext for discrimination . And we applaud the wisdom of Republicans like Mayor Giuliani and Senator Domenici who oppose the mean-spirited and short-sighted effort of Republicans in Congress to bar the children of illegal immigrants from schools - it is wrong, and forcing children onto the streets is an invitation for them to join gangs and turn to crime. ..."
Democrats remember that we are a nation of immigrants. We recognize the extraordinary contribution
of immigrants to America throughout our history. We welcome legal immigrants to America. We support
a legal immigration policy that is pro-family, pro-work, pro-responsibility, and pro-citizenship
, and we deplore those who blame immigrants for economic and social problems.
We know that citizenship is the cornerstone of full participation in American life. We are
proud that the President launched Citizenship USA to help eligible immigrants become United States
citizens. The Immigration and Naturalization Service is streamlining procedures, cutting red tape,
and using new technology to make it easier for legal immigrants to accept the responsibilities
of citizenship and truly call America their home.
Today's Democratic Party also believes we must remain a nation of laws. We cannot tolerate
illegal immigration and we must stop it. For years before Bill Clinton became President, Washington
talked tough but failed to act. In 1992, our borders might as well not have existed. The border
was under-patrolled, and what patrols there were, were under-equipped. Drugs flowed freely. Illegal
immigration was rampant. Criminal immigrants, deported after committing crimes in America, returned
the very next day to commit crimes again.
President Clinton is making our border a place where the law is respected and drugs and
illegal immigrants are turned away. We have increased the Border Patrol by over 40 percent; in
El Paso, our Border Patrol agents are so close together they can see each other. Last year alone,
the Clinton Administration removed thousands of illegal workers from jobs across the country.
Just since January of 1995, we have arrested more than 1,700 criminal aliens and prosecuted them
on federal felony charges because they returned to America after having been deported.
However, as we work to stop illegal immigration, we call on all Americans to avoid the
temptation to use this issue to divide people from each other. We deplore those who use the need
to stop illegal immigration as a pretext for discrimination . And we applaud the wisdom of Republicans
like Mayor Giuliani and Senator Domenici who oppose the mean-spirited and short-sighted effort
of Republicans in Congress to bar the children of illegal immigrants from schools - it is wrong,
and forcing children onto the streets is an invitation for them to join gangs and turn to crime.
Democrats want to protect American jobs by increasing criminal and civil sanctions against
employers who hire illegal workers , but Republicans continue to favor inflammatory rhetoric over
real action. We will continue to enforce labor standards to protect workers in vulnerable industries.
We continue to firmly oppose welfare benefits for illegal immigrants. We believe family members
who sponsor immigrants into this country should take financial responsibility for them, and be
held legally responsible for supporting them.
"... The New Deal did not seek to overthrow the plutocracy, but it did seek to side-step and disable
their dominance. ..."
"... It seems to me that while neoliberalism on the right was much the same old same old, the neoliberal
turn on the left was marked by a measured abandonment of this struggle over the distribution of income
between the classes. In the U.S., the Democrats gradually abandoned their populist commitments. In Europe,
the labour and socialist parties gradually abandoned class struggle. ..."
"... When Obama came in, in 2008 amid the unfolding GFC, one of the most remarkable features of
his economic team was the extent to which it conceded control of policy entirely to the leading money
center banks. Geithner and Bernanke continued in power with Geithner moving from the New York Federal
Reserve (where he served as I recall under a Chair from Goldman Sachs) to Treasury in the Obama Administration,
but Geithner's Treasury was staffed from Goldman Sachs, JP Morgan Chase and Citibank. The crisis served
to concentrate banking assets in the hands of the top five banks, but it seemed also to transfer political
power entirely into their hands as well. Simon Johnson called it a coup. ..."
"... Here's the thing: the globalization and financialization of the economy from roughly 1980 drove
both increasingly extreme distribution of income and de-industrialization. ..."
"... It was characteristic of neoliberalism that the policy, policy intention and policy consequences
were hidden behind a rhetoric of markets and technological inevitability. Matt Stoller has identified
this as the statecraft of neoliberalism: the elimination of political agency and responsibility for
economic performance and outcomes. Globalization and financialization were just "forces" that just happened,
in a meteorological economics. ..."
"... This was not your grandfather's Democratic Party and it was a Democratic Party that could aid
the working class and the Rust Belt only within fairly severe and sometimes sharply conflicting constraints.
"... No one in the Democratic Party had much institutional incentive to connect the dots, and draw
attention to the acute conflicts over the distribution of income and wealth involved in financialization
of the economy (including financialization as a driver of health care costs). And, that makes the political
problem that much harder, because there are no resources for rhetorical and informational clarity or
"... If Obama could not get a very big stimulus indeed thru a Democratic Congress long out of power,
Obama wasn't really trying. And, well-chosen spending on pork barrel projects is popular and gets Congressional
critters re-elected. So, again, if the stimulus is small and the Democratic Congress doesn't get re-elected,
Obama isn't really trying. ..."
"... Again, it comes down to: by 2008, the Democratic Party is not a fit vehicle for populism, because
it has become a neoliberal vehicle for giant banks. Turns out that makes a policy difference. ..."
At the center of Great Depression politics was a political struggle over the distribution of
income, a struggle that was only decisively resolved during the War, by the Great Compression.
It was at center of farm policy where policymakers struggled to find ways to support farm incomes.
It was at the center of industrial relations politics, where rapidly expanding unions were seeking
higher industrial wages. It was at the center of banking policy, where predatory financial practices
were under attack. It was at the center of efforts to regulate electric utility rates and establish
public power projects. And, everywhere, the clear subtext was a struggle between rich and poor,
the economic royalists as FDR once called them and everyone else.
FDR, an unmistakeable patrician in manner and pedigree, was leading a not-quite-revolutionary
politics, which was nevertheless hostile to and suspicious of business elites, as a source of
economic pathology. The New Deal did not seek to overthrow the plutocracy, but it did seek
to side-step and disable their dominance.
It seems to me that while neoliberalism on the right was much the same old same old, the
neoliberal turn on the left was marked by a measured abandonment of this struggle over the distribution
of income between the classes. In the U.S., the Democrats gradually abandoned their populist commitments.
In Europe, the labour and socialist parties gradually abandoned class struggle.
In retrospect, though the New Deal did use direct employment as a means of relief to good effect
economically and politically, it never undertook anything like a Keynesian stimulus on a Keynesian
scale - at least until the War.
Where the New Deal witnessed the institution of an elaborate system of financial repression,
accomplished in large part by imposing on the financial sector an explicitly mandated structure,
with types of firms and effective limits on firm size and scope, a series of regulatory reforms
and financial crises beginning with Carter and Reagan served to wipe this structure away.
When Obama came in, in 2008 amid the unfolding GFC, one of the most remarkable features
of his economic team was the extent to which it conceded control of policy entirely to the leading
money center banks. Geithner and Bernanke continued in power with Geithner moving from the New
York Federal Reserve (where he served as I recall under a Chair from Goldman Sachs) to Treasury
in the Obama Administration, but Geithner's Treasury was staffed from Goldman Sachs, JP Morgan
Chase and Citibank. The crisis served to concentrate banking assets in the hands of the top five
banks, but it seemed also to transfer political power entirely into their hands as well. Simon
Johnson called it a coup.
I don't know what considerations guided Obama in choosing the size of the stimulus or its composition
(as spending and tax cuts). Larry Summers was identified at the time as a voice of caution, not
"gambling", but not much is known about his detailed reasoning in severely trimming Christina
Romer's entirely conventional calculations. (One consideration might well have been worldwide
resource shortages, which had made themselves felt in 2007-8 as an inflationary spike in commodity
prices.) I do not see a case for connecting stimulus size policy to the health care reform. At
the time the stimulus was proposed, the Administration had also been considering whether various
big banks and other financial institutions should be nationalized, forced to insolvency or otherwise
restructured as part of a regulatory reform.
Here's the thing: the globalization and financialization of the economy from roughly 1980
drove both increasingly extreme distribution of income and de-industrialization. Accelerating
the financialization of the economy from 1999 on made New York and Washington rich, but the same
economic policies and process were devastating the Rust Belt as de-industrialization. They were
two aspects of the same complex of economic trends and policies. The rise of China as a manufacturing
center was, in critical respects, a financial operation within the context of globalized trade
that made investment in new manufacturing plant in China, as part of globalized supply chains
and global brand management, (arguably artificially) low-risk and high-profit, while reinvestment
in manufacturing in the American mid-west became unattractive, except as a game of extracting
tax subsidies or ripping off workers.
It was characteristic of neoliberalism that the policy, policy intention and policy consequences
were hidden behind a rhetoric of markets and technological inevitability. Matt Stoller has identified
this as the statecraft of neoliberalism: the elimination of political agency and responsibility
for economic performance and outcomes. Globalization and financialization were just "forces" that
just happened, in a meteorological economics.
It is conceding too many good intentions to the Obama Administration to tie an inadequate stimulus
to a Rube Goldberg health care reform as the origin story for the final debacle of Democratic
neoliberal politics. There was a delicate balancing act going on, but they were not balancing
the recovery of the economy in general so much as they were balancing the recovery from insolvency
of a highly inefficient and arguably predatory financial sector, which was also not incidentally
financing the institutional core of the Democratic Party and staffing many key positions in the
Administration and in the regulatory apparatus.
This was not your grandfather's Democratic Party and it was a Democratic Party that could
aid the working class and the Rust Belt only within fairly severe and sometimes sharply conflicting
No one in the Democratic Party had much institutional incentive to connect the dots, and
draw attention to the acute conflicts over the distribution of income and wealth involved in financialization
of the economy (including financialization as a driver of health care costs). And, that makes
the political problem that much harder, because there are no resources for rhetorical and informational
clarity or coherence.
The short version of my thinking on the Obama stimulus is this: Keynesian stimulus spending is
a free lunch; it doesn't really matter what you spend money on up to a very generous point, so
it seems ready-made for legislative log-rolling. If Obama could not get a very big stimulus
indeed thru a Democratic Congress long out of power, Obama wasn't really trying. And, well-chosen
spending on pork barrel projects is popular and gets Congressional critters re-elected. So, again,
if the stimulus is small and the Democratic Congress doesn't get re-elected, Obama isn't really
Again, it comes down to: by 2008, the Democratic Party is not a fit vehicle for populism,
because it has become a neoliberal vehicle for giant banks. Turns out that makes a policy difference.
Great comment. Simply great. Hat tip to the author !
“… The New Deal did not seek to overthrow the plutocracy, but it did seek to side-step and
disable their dominance. …”
“… It seems to me that while neoliberalism on the right was much the same old same old, the
neoliberal turn on the left was marked by a measured abandonment of this struggle over the distribution
of income between the classes. In the U.S., the Democrats gradually abandoned their populist
commitments. In Europe, the labour and socialist parties gradually abandoned class struggle. …“
“… When Obama came in, in 2008 amid the unfolding GFC, one of the most remarkable features
of his economic team was the extent to which it conceded control of policy entirely to the leading
money center banks. Geithner and Bernanke continued in power with Geithner moving from the
New York Federal Reserve (where he served as I recall under a Chair from Goldman Sachs) to Treasury
in the Obama Administration, but Geithner’s Treasury was staffed from Goldman Sachs, JP Morgan
Chase and Citibank. The crisis served to concentrate banking assets in the hands of the top
five banks, but it seemed also to transfer political power entirely into their hands as well.
Simon Johnson called it a coup. … “
“… Here’s the thing: the globalization and financialization of the economy from roughly 1980
drove both increasingly extreme distribution of income and de-industrialization. …”
“… It was characteristic of neoliberalism that the policy, policy intention and policy consequences
were hidden behind a rhetoric of markets and technological inevitability. Matt Stoller has identified
this as the statecraft of neoliberalism: the elimination of political agency and responsibility
for economic performance and outcomes. Globalization and financialization were just “forces”
that just happened, in a meteorological economics. …”
“… This was not your grandfather’s Democratic Party and it was a Democratic Party that could
aid the working class and the Rust Belt only within fairly severe and sometimes sharply conflicting
“… No one in the Democratic Party had much institutional incentive to connect the dots, and
draw attention to the acute conflicts over the distribution of income and wealth involved in financialization
of the economy (including financialization as a driver of health care costs). And, that makes
the political problem that much harder, because there are no resources for rhetorical and informational
clarity or coherence. …”
“… If Obama could not get a very big stimulus indeed thru a Democratic Congress long out of
power, Obama wasn’t really trying. And, well-chosen spending on pork barrel projects is popular
and gets Congressional critters re-elected. So, again, if the stimulus is small and the Democratic
Congress doesn’t get re-elected, Obama isn’t really trying. …”
“… Again, it comes down to: by 2008, the Democratic Party is not a fit vehicle for populism,
because it has become a neoliberal vehicle for giant banks. Turns out that makes a policy difference.
"... My observation is that the New Class (professionals, lobbyists, financiers, teachers, engineers, etc.) have ruled the country in recent decades. ..."
"... However, somewhere around 1970 I think this tension collapsed, since corporate managers and professionals realized that they shared the same education, background and interests. ..."
"... This "peace treaty" between former rivals allowed the whole newly enlarged New Class to swing to the right, since they really didn't particularly need the working class politically anymore. And since it is the hallmark of this class to seek prestige, power and money while transferring risk away from themselves, the middle class and blue collar community has been the natural recipient. Free trade (well, for non-professionals, anyway), neoliberalism, ruthless private equity job cutting, etc., etc. all followed very naturally. The re-alignment of the Democratic Party towards the right was a natural part of this evolution. ..."
"... They also sense that organized politics in this country – being chiefly the province of the New Class – has left them with little leverage to change any of this. ..."
"... the New Class has very strong internal solidarity – and since somebody has to pay for these little mistakes, everyone outside that class is "fair game." ..."
"... So in that sense–to the extent that you define liberal as the ideology of the New Class (neoliberal, financial-capitalistic, big corporate-friendly but opposed to non-meritocratic biases like racism, sexism, etc.) is "liberalism", I think it is reasonable to say that it has bred resistance and anger among the "losers." As far as having "failed", well, we'll see: the New Class still controls almost all the levers of power. It has many strategies for channeling lower-class anger and I think under Trump we'll see those rolled out. ..."
"... Perhaps some evolution in "the means of production" or in how governments are influenced will ultimately develop to divide or downgrade the New Class, and break its lock on the corridors of power, but I don't see it on the horizon just yet. If anyone else does, I'd love to hear more about it. ..."
"... A little puzzled by the inclusion of teachers, alongside financiers and the like, in William Meyer's list of the New Class rulers. Enablers of those rulers, no doubt, but not visibly calling the shots. But then I'm probably just another liberal elitist failing to recognize my own hegemony, like Chris. ..."
"... I assume he meant certain professors. ..."
"... there's a good chapter on the topic in a Thomas Franks latest. ..."
Obviously Mr. Deerin is, on its face, utilizing a very disputable definition of "liberal."
However, I think a stronger case could be made for something like Mr. Deerin's argument, although
it doesn't necessarily get to the same conclusion.
My observation is that the New Class (professionals, lobbyists, financiers, teachers, engineers,
etc.) have ruled the country in recent decades. For much of the twentieth century this class
was in some tension with corporations, and used their skills at influencing government policy
to help develop and protect the welfare state, since they needed the working class as a counterweight
to the natural influence of corporate money and power. However, somewhere around 1970 I think
this tension collapsed, since corporate managers and professionals realized that they shared the
same education, background and interests.
Vive la meritocracy. This "peace treaty" between former rivals allowed the whole newly
enlarged New Class to swing to the right, since they really didn't particularly need the working
class politically anymore. And since it is the hallmark of this class to seek prestige, power
and money while transferring risk away from themselves, the middle class and blue collar community
has been the natural recipient. Free trade (well, for non-professionals, anyway), neoliberalism,
ruthless private equity job cutting, etc., etc. all followed very naturally. The re-alignment
of the Democratic Party towards the right was a natural part of this evolution.
I think the 90% or so of the community who are not included in this class are confused and
bewildered and of course rather angry about it. They also sense that organized politics in
this country – being chiefly the province of the New Class – has left them with little leverage
to change any of this. Watching the bailouts and lack of prosecutions during the GFC made
them dimly realize that the New Class has very strong internal solidarity – and since somebody
has to pay for these little mistakes, everyone outside that class is "fair game."
So in that sense–to the extent that you define liberal as the ideology of the New Class
(neoliberal, financial-capitalistic, big corporate-friendly but opposed to non-meritocratic biases
like racism, sexism, etc.) is "liberalism", I think it is reasonable to say that it has bred resistance
and anger among the "losers." As far as having "failed", well, we'll see: the New Class still
controls almost all the levers of power. It has many strategies for channeling lower-class anger
and I think under Trump we'll see those rolled out.
Let me be clear, I'm not saying Donald Trump is leading an insurgency against the New Class
– but I think he tapped into something like one and is riding it for all he can, while not really
having the slightest idea what he's doing.
Perhaps some evolution in "the means of production" or in how governments are influenced
will ultimately develop to divide or downgrade the New Class, and break its lock on the corridors
of power, but I don't see it on the horizon just yet. If anyone else does, I'd love to hear more
A little puzzled by the inclusion of teachers, alongside financiers and the like, in William
Meyer's list of the New Class rulers. Enablers of those rulers, no doubt, but not visibly calling
the shots. But then I'm probably just another liberal elitist failing to recognize my own hegemony,
Lost control of the Senate
Lost control of the House of Representatives
Lost control of dozens of state legislatures and Governorships.
The Republicans control 36 States of America - One more and they could in theory amend the Constitution.
In Wisconsin (notionally Democrat) the Legislature and Governor are both Republican controlled.
And Clinton didn't even campaign there when it was pretty obvious the State was not trending towards
@138 The woman is wrong. Chelsea Clinton was not paid $600 k from the Clinton Foundation.
Chelsea Clinton was paid $600 k per year from 2011 by NBC for 'work' as a special correspondent,
whilst also pocketing $300 k per year plus stock options as a 'board member' of IAC. Chelsea's
speaking fees were a mere $65 k per.
The NYT offers a more severe critique of the IAC board deal readable by clicking through
the links. There will be those who see nothing improper about a fifth-estate firm paying a 31
year-old graduate student $600 k, or awarding her a board seat and stock options at $300k. Others
may disagree, and perhaps with some good reason.
The defeat of the democratic candidate by a rodeo clown is a slap in the face. Contra Manta
@71 I do not believe that anything less than a slap in the face of this order would be enough
to jar the successful and well-fed out of their state of complacency and indifference to the plight
of both the blacks and whites left behind by 8 years of Democratic rule, and far longer when we're
talking about urban African-Americans.
As noted, I believe the Republican candidate to be far and away the more sober, safer choice
both on domestic and foreign policy. Now we'll find out.
Thanks for the kind words to Rich, Bruce, T, bob mc, and others.
Disgusting as it is, yes, my understanding is Obama can do
exactly that. My guess is, want to or not, he probably will come under so much pressure
he will have to pass out plenty of pardons. Or maybe Lynch will give everyone involved
in the Clinton Foundation immunity to testify and then seal the testimony -- or never
bother to get any testimony. So many games.
For Obama, it might not even take all that much pressure. From about his second day
in office, from his body language, he's always looked like he was scared.
Instead of keeping his mouth shut, which he would do, being the lawyer he is,
Giuliani has been screaming for the Clintons' scalps. That's exactly what a sharp lawyer
would do if he was trying to force Obama to pardon them. If he really meant to get them
he would be agreeing with the FBI, saying there doesn't seem to be any evidence of wrong
doing, and then change his mind once (if) he's AG and it's too late for deals.
With so many lawyers, Obama, the Clintons, Lynch, Giuliani, Comey, no justice is
likely to come out of this.
@ Posted by: Ken Nari | Nov 11, 2016 2:51:53 PM | 55
I heard a podcast on Batchelor
with Charles Ortel which explained some things -- even if there are no obvious likely
criminal smoking guns -- given that foundations get away with a lot of "leniency"
because they are charities, incomplete financial statements and chartering documents, as
I recall. I was most interested in his description of the number of jurisdictions the
Foundation was operating under, some of whom, like New York were already investigating;
and others, foreign who might or might be, who also have very serious regulations,
opening the possibility that if the Feds drop their investigation, New York (with very
very strict law) might proceed, and that they might well be investigated
(prosecuted/banned??) in Europe.
The most recent leak wrt internal practices was just damning ... it sounded like a
playground of favors and sinecures ... no human resources department, no written
policies on many practices ...
This was an internal audit and OLD (2008, called "the Gibson Review") so corrective
action may have been taken, but I thought was damning enough to deter many donors (even
before Hillary's loss removed that incentive) particularly on top of the Band (2011)
memo. Unprofessional to the extreme.
It's part of my vast relief that Clinton lost and will not be in our lives 24/7/365
for the next 4 years. (I think Trump is an unprincipled horror, but that's as may be,
I'm not looking for a fight). After the mess Clinton made of Haiti (and the
accusations/recriminations) I somehow thought they'd have been more careful with their
"legacy" -- given that it was founded in 1997, 2008 is a very long time to be operating
without written procedures wrt donations, employment
A couple of remarks in
McWillams' recent Modern Age piece celebrating the 25th anniversary of Christopher Lasch's
The True and Only Heaven , which analyzed the cult of progress in its American manifestation,
have stuck in my mind. Here's the first one:
McWilliams adds a footnote to that: The 19 percent figure is from 2012, she says. Then she tells
us that in 1964, 64 percent of Americans agreed with the same statement.
Wow. You have to think that those two numbers, from 64 percent down to 19 percent in two generations,
tell us something important and disturbing about our political life.
Second McWilliams quote:
In 2016 if you type the words "Democrats and Republicans" or "Republicans and Democrats" into
Google, the algorithms predict your next words will be "are the same".
I just tried this, and she's right.
These guesses are of course based on the frequency with which complete sentences show up all over
An awful lot of people out there think we live in a one-party state-that we're ruled by what is
coming to be called the "Uniparty."
There is a dawning realization, ever more widespread among ordinary Americans, that our national
politics is not Left versus Right or Republican versus Democrat; it's we the people
versus the politicians.
Which leads me to a different lady commentator: Peggy Noonan, in her October 20th Wall Street
title of Peggy's piece was:
a Sane Donald Trump . [
Alternate link ]Its gravamen:
Donald Trump has shown up the Republican Party Establishment as totally out of touch with their base,
which is good; but that he's bat-poop crazy, which is bad. If a sane Donald Trump had done
the good thing, the showing-up, we'd be on course to a major beneficial correction in our national
It's a good clever piece. A couple of months ago on Radio Derb I offered up one and a half cheers
for Peggy, who gets a lot right in spite of being a longtime Establishment Insider. So it
was here. Sample of what she got right last week:
Mr. Trump's great historical role was to reveal to the Republican Party what half of its
own base really thinks about the big issues. The party's leaders didn't know! They were shocked,
so much that they indulged in sheer denial and made believe it wasn't happening.
The party's leaders accept more or less open borders and like big trade deals. Half the base
does not! It is longtime GOP doctrine to cut entitlement spending. Half the base doesn't want
to, not right now! Republican leaders have what might be called assertive foreign-policy impulses.
When Mr. Trump insulted George W. Bush and nation-building and said he'd opposed the Iraq invasion,
the crowds, taking him at his word, cheered. He was, as they say, declaring that he didn't want
to invade the world and invite the world. Not only did half the base cheer him, at least half
the remaining half joined in when the primaries ended.
End of pause. OK, so Peggy got some things right there. She got a lot wrong, though
Start with the notion that Trump is crazy. He's a nut, she says, five times. His brain is "a TV
Well, Trump has some colorful quirks of personality, to be sure, as we all do. But he's no nut.
A nut can't be as successful in business as Trump has been.
I spent 32 years as an employee or contractor, mostly in private businesses but for two years
in a government department. Private businesses are intensely rational, as human affairs go-much more
rational than government departments. The price of irrationality in business is immediate and plainly
financial. Sanity-wise, Trump is a better bet than most people in high government positions.
Sure, politicians talk a good rational game. They present as sober and thoughtful on the Sunday
Look at the stuff they believe, though. Was it rational to respond to the collapse of the U.S.S.R.
by moving NATO right up to Russia's borders? Was it rational to expect that post-Saddam Iraq would
turn into a constitutional democracy? Was it rational to order insurance companies to sell healthcare
policies to people who are already sick? Was the Vietnam War a rational enterprise? Was it rational
to respond to the 9/11 attacks by massively increasing Muslim immigration?
Make your own list.
Donald Trump displays good healthy patriotic instincts. I'll take that, with the personality quirks
and all, over some earnest, careful, sober-sided guy whose head contains fantasies of putting the
world to rights, or flooding our country with unassimilable foreigners.
I'd add the point, made by many commentators, that belongs under the general heading: "You don't
have to be crazy to work here, but it helps." If Donald Trump was not so very different from run-of-the-mill
politicians-which I suspect is a big part of what Peggy means by calling him a nut-would he have
entered into the political adventure he's on?
Thor Heyerdahl sailed across the Pacific on a hand-built wooden raft to prove a point, which
is not the kind of thing your average ethnographer would do. Was he crazy? No, he wasn't. It was
only that some feature of his personality drove him to use that way to prove the point he
hoped to prove.
And then there is Peggy's assertion that the Republican Party's leaders didn't know that half
the party's base were at odds with them.
Did they really not? Didn't they get a clue when the GOP lost in 2012, mainly because millions
of Republican voters didn't turn out for Mitt Romney? Didn't they, come to think of it, get the glimmering
of a clue back in 1996, when Pat Buchanan won the New Hampshire primary?
Pat Buchanan is in fact a living counter-argument to Peggy's thesis-the "sane Donald Trump" that
she claims would win the hearts of GOP managers. Pat is Trump without the personality quirks. How
has the Republican Party treated him ?
Brad Griffin , here at VDARE.com on October 24th, offered a couple more "sane Donald Trumps":
Ron Paul and Mike Huckabee. How did they fare with the GOP Establishment?
Donald Trump is no nut. If he were a nut, he would not have amassed the fortune he has,
nor nurtured the capable and affectionate family he has.
That's secondary, though. A President has people to look up that stuff for him.
The question that's been asked more than any other about Donald Trump is not, pace Peggy
Noonan, "Is he nuts?" but, "
Is he conservative? "
I'm sure he is. But my definition of "conservative" is temperamental, not political. My touchstone
here is the sketch of the conservative temperament given to us by the English political philosopher
Michael Oakeshott :
To be conservative, then, is to prefer the familiar to the unknown, to prefer the tried to
the untried, fact to mystery, the actual to the possible, the limited to the unbounded, the near
to the distant, the sufficient to the superabundant, the convenient to the perfect, present laughter
to utopian bliss.
That fits Trump better than it fits any liberal you can think of-better also than many senior
For example, it was one of George W. Bush's senior associates-probably Karl Rove-who scoffed at opponents
of Bush's delusional foreign policy as "the reality-based community." It would be hard to think of
a more un -Oakeshottian turn of phrase.
Trump has all the right instincts. And he's had the guts and courage-and, just as important, the
money -to do a thing that has badly needed doing for twenty years: to smash the power of the
real nuts in the GOP Establishment.
I thank him for that, and look forward to his Presidency.
Two sources with intimate knowledge of the FBI's investigations told
Fox News Wednesday that a probe of the Clinton Foundation is likely to lead to an indictment.
Fox News's Bret Baier said Wednesday that the FBI probe into a possible pay-to-play scheme between
Democratic presidential nominee and the Clinton Foundation
has been going on for over a year. Sources told the news network that the investigation, which is
conducted by the White Collar Crime division of the FBI, is a "very high priority."
One source further
stated that the bureau collected "a lot of" evidence, adding that "there is an avalanche of new information
coming every day." Baier also said that the Clinton Foundation probe is more expansive than previously
thought, and that many individuals have been interviewed several times throughout the course of the
investigation. Sources said that they are "actively and aggressively pursuing this case" and that
investigations are likely to continue. Baier added that when he pressed the sources about the details
of both probes, they told him that they are likely to lead to an indictment. Additionally, Baier
reported that according to Fox News's sources, Clinton's private email server had been breached by
at least five foreign intelligence hackers. FBI Director James Comey said in July that he could not
say definitively whether her server had been breached.
It's looking increasingly like there is an ongoing mutiny underway within the FBI as the
Wall Street Journal is reporting that, according to "officials at multiple agencies", FBI agents
felt they had adequate evidence, including "secret recordings of a suspect talking about the Clinton
Foundation" , to pursue an investigation of the Clinton Foundation but were repeatedly obstructed
by officials at the Department of Justice.
Secret recordings of a suspect talking about the Clinton Foundation fueled an internal battle
between FBI agents who wanted to pursue the case and corruption prosecutors who viewed the statements
as worthless hearsay, people familiar with the matter said.
The roots of the dispute lie in a disagreement over the strength of the case, these people
said, which broadly centered on whether Clinton Foundation contributors received favorable treatment
from the State Department under Hillary Clinton.
Senior officials in the Justice Department and the FBI didn't think much of the evidence, while
investigators believed they had promising leads their bosses wouldn't let them pursue , they said.
Despite clear signals from the Justice Department to abandon the Clinton Foundation inquiries,
many FBI agents refused to stand down. Then, earlier this year in February 2016, the FBI presented
initial evidence at a meeting with Leslie Caldwell, the head of the DOJ's criminal division, after
which agents were delivered a clear message that "we're done here." But, as the WSJ points out, DOJ
became increasing frustrated with FBI agents that were " disregarding or disobeying their instructions"
which subsequently prompted an emphatic "stand down" message from the DOJ to "all the offices involved."
As 2015 came to a close, the FBI and Justice Department had a general understanding that neither
side would take major action on Clinton Foundation matters without meeting and discussing it first.
In February, a meeting was held in Washington among FBI officials, public-integrity prosecutors
and Leslie Caldwell, the head of the Justice Department's criminal division. Prosecutors from
the Eastern District of New York-Mr. Capers' office-didn't attend, these people said.
The public-integrity prosecutors weren't impressed with the FBI presentation, people familiar
with the discussion said. "The message was, 'We're done here,' " a person familiar with the matter
Justice Department officials became increasingly frustrated that the agents seemed to be disregarding
or disobeying their instructions.
Following the February meeting, officials at Justice Department headquarters sent a message
to all the offices involved to " stand down ,'' a person familiar with the matter said.
The FBI had secretly recorded conversations of a suspect in a public-corruption case talking
about alleged deals the Clintons made , these people said. The agents listening to the recordings
couldn't tell from the conversations if what the suspect was describing was accurate, but it was,
they thought, worth checking out.
interview with House magazine, Lord Richards of Herstmonceux – the former Chief of the Defence
staff – said Mr. Trump is "wise enough to get good people round him and probably knows that he's
got to listen to them and therefore I think we should not automatically think it will be less safe".
He added: "It's non-state actors like Isis that are the biggest threat to our security. If
countries and states could coalesce better to deal with these people – and I think Trump's instinct
is to go down that route – then I think there's the case for saying that the world certainly won't
be any less safe.
"It's that lack of understanding and empathy with each other as big power players that is a
risk to us all at the moment.
"Therefore I think he would reinvigorate big power relationships, which might make the world
During the interview Lord Richards also discussed the somewhat controversial view that the
West should partner with Russia and Bashar al-Assad to take back the Syrian city of Aleppo.
He said: "If the humanitarian situation in Syria is our major concern, which it should be –
millions of lives have been ruined, hundreds of thousands have been killed – I believe there is
a strong case for allowing Assad to get in there and take the city back.
"The opposition groups – many of whom are not friends of ours, they're extremists – are now
intermingled with the original good opposition groups, are fighting from amongst the people. The
only quick way of solving it is to allow Assad to win. There's no way the opposition groups are
going to win."
Lord Richards added: "We want the humanitarian horror of Aleppo to come to a rapid halt. The
best and quickest way of doing that is to encourage the opposition groups to leave. The Russians
are undoubtedly using their weapons indiscriminately. If they're going to attack those groups
then there is inevitably going to be civilian casualties.
"The alternative is for the West to declare a no-fly zone and that means you've got to be prepared
to go to war with Russia ultimately. I see no appetite for that and nor, frankly, do I see much
sense in it. It sticks in my throat to say it because I have no love for Assad.
"The fact is, the only way to get it to stop now is to allow Assad to win and win quickly and
then turn on Isis with the Russians."
Fox News Channel's Bret Baier reports the latest news about the Clinton Foundation
investigation from two sources inside the FBI. He reveals five important new pieces of
information in these two short clips:
"... In the latest update from Fox's Bret Baier , we learn that the Clinton Foundation investigation has now taken a "very high priority," perhaps courtesy of new documents revealed by Wikileaks which expressed not only a collusive element between Teneo, the Clinton Foundation and the "charitable foundation's" donors, which included the use of funds for personal gain, but also revealed deep reservations by people within the foundation about ongoing conflicts of interest. ..."
"... FBI agents are "actively and aggressively pursuing this case," and will be going back and interviewing the same people again, some for the third time, Baier's sources said. Agents also are going through what Clinton and top aides have said in previous interviews as well as the FBI 302 documents, which agents use to report interviews they conduct, to make sure notes line up, according to sources. ..."
"... As expected, the Clinton Foundation denied everything, and Foundation spokesman, Craig Minassian, told Fox news a statement: "We're not aware of any investigation into the Foundation by the Department of Justice, Federal Bureau of Investigation, or any United States Attorney's Office and we have not received a subpoena from any of those agencies." ..."
"... Now that details of the infighting between the DOJ and FBI regarding the Foundation probe have been made public, Loretta Lynch may have no choice but to launch an official probe, including subpoeans. ..."
"... The information follows a report over the weekend by The Wall Street Journal that four FBI field offices have been collecting information about the foundation. The probes – in addition to the revived email investigation – have fueled renewed warnings from Republicans that if Clinton is elected next week, she could take office under a cloud of investigations. ..."
"... Separately, Fox News reports that authorities also are virtually certain, i.e., "there is about a 99 percent chance", that up to five foreign intelligence agencies may have accessed and taken emails from Hillary Clinton's private server, two separate sources with intimate knowledge of the FBI investigations told Fox News. If so, it would suggest that the original FBI probe - which found no evidence of breach - was either incomplete or tampered with. ..."
"... In other words, Anthony Weiner may be ultimately responsible not only for the downfall of Hillary Clinton's presidential candidacy, but also the collapse of the entire Clinton Foundation... which incidentally is just what Donald Trump warned could happen over a year ago. ..."
Now that thanks to first the
WSJ, and then
Fox News, the public is aware that a probe into the Clinton Foundation is not only a hot topic
for both the FBI and the DOJ (and has managed to split the law enforcement organizations along ideological
party lines), but is also actively ongoing despite the DOJ's attempts to squash it.
In the latest update from
Fox's Bret Baier, we learn that the Clinton Foundation investigation has now taken a "very high
priority," perhaps courtesy of new documents revealed by Wikileaks which expressed not only a collusive
element between Teneo, the Clinton Foundation and the "charitable foundation's" donors, which included
the use of funds for personal gain, but also revealed deep reservations by people within the foundation
about ongoing conflicts of interest.
As Baier also notes, the Clinton Foundation probe has been proceeding for more than a year, led
by the White-Collar Crime division.
Fox adds that even before the WikiLeaks dumps of alleged emails linked to the Clinton campaign,
FBI agents had collected a great deal of evidence, and FBI agents have interviewed and re-interviewed
multiple people regarding the case.
"There is an avalanche of new information coming in every day," one source told
Fox News, adding some of the new information is coming from the WikiLeaks documents and new emails.
FBI agents are "actively and aggressively pursuing this case," and will be going back and
interviewing the same people again, some for the third time, Baier's sources said. Agents also
are going through what Clinton and top aides have said in previous interviews as well as the FBI
302 documents, which agents use to report interviews they conduct, to make sure notes line up,
according to sources.
As expected, the Clinton Foundation denied everything, and Foundation spokesman, Craig Minassian,
told Fox news a statement: "We're not aware of any investigation into the Foundation by the
Department of Justice, Federal Bureau of Investigation, or any United States Attorney's Office and
we have not received a subpoena from any of those agencies."
Now that details of the infighting between the DOJ and FBI regarding the Foundation probe have
been made public, Loretta Lynch may have no choice but to launch an official probe, including subpoeans.
The information follows a report over the weekend by The Wall Street Journal that four
FBI field offices have been collecting information about the foundation. The probes – in
addition to the revived email investigation – have fueled renewed warnings from Republicans that
if Clinton is elected next week, she could take office under a cloud of investigations.
"This is not just going to go away … if she ends up winning the election," Rep. Ron DeSantis,
R-Fla., told Fox News' "America's Newsroom" earlier this week.
Donald Trump has referenced this scenario, repeatedly saying on the stump this past week that
her election could trigger a "crisis."
Separately, Fox News reports that authorities also are virtually certain, i.e., "there is about
a 99 percent chance", that up to five foreign intelligence agencies may have accessed and
taken emails from Hillary Clinton's private server, two separate sources with intimate knowledge
of the FBI investigations told Fox News. If so, it would suggest that the original FBI probe - which
found no evidence of breach - was either incomplete or tampered with.
The revelation led House Homeland Security Committee Chairman Michael McCaul to describe Clinton's
handling of her email system during her tenure as secretary of state as "treason."
"She exposed [information] to our enemies," McCaul said on "Fox & Friends" Thursday morning. "Our
adversaries have this very sensitive information. … In my opinion, quite frankly, it's treason."
McCaul, R-Texas, said that FBI Director James Comey told him previously that foreign adversaries
likely had gotten into her server. When Comey publicly discussed the Clinton email case back in
July, he also said that while there was no evidence hostile actors breached the server, it was
"possible" they had gained access.
Clinton herself later pushed back, saying the director was merely "speculating."
But sources told Fox News that Comey should have said at the time there is an "almost certainty"
that several foreign intelligence agencies hacked into the server.
The claims come as Comey's FBI not only revisits the email investigation following the discovery
of additional emails on the laptop of ex-Rep. Anthony Weiner – the estranged husband of Clinton aide
Huma Abedin – but is proceeding in its investigation of the Clinton Foundation.
In other words, Anthony Weiner may be ultimately responsible not only for the downfall of Hillary
Clinton's presidential candidacy, but also the collapse of the entire Clinton Foundation... which
incidentally is just what Donald Trump warned could happen over a year ago.
A summary of Baier's latest reporting is in the clip below...
The FBI has unexpectedly published papers from an over ten-year-old investigation of former president
Bill Clinton's controversial pardon of a financier, reports
The case against Clinton was dismissed without charges in 2005, and several Democrats therefore question
why the 129-page report of the investigation is published right now, a few days before the election,
in which Bill Clinton's wife Hillary Clinton is trying to become president.
The rage against the FBI is already great in the Democratic Party after the federal police last week
announced they will investigate new emails relating to Hillary Clinton.
Financier Marc Rich was indicted for tax fraud and lived in exile in Switzerland when Bill Clinton
pardoned him on his last day as president on January 20, 2001. Several reacted to the pardon, especially
since Rich's ex-wife was a major donor to the Democratic Party.
The FBI started to investigate the pardon the year after.
"... FBI agents have interviewed and re-interviewed multiple people on the foundation case, which is looking into possible pay for play interaction between then-Secretary of State Hillary Clinton and the Clinton Foundation. The FBI's White Collar Crime Division is handling the investigation. ..."
"... Even before the WikiLeaks dumps of alleged emails linked to the Clinton campaign, FBI agents had collected a great deal of evidence, law enforcement sources tell Fox News. ..."
"... "There is an avalanche of new information coming in every day," one source told Fox News, who added some of the new information is coming from the WikiLeaks documents and new emails. ..."
A second FBI investigation involving Hillary Clinton is ongoing. The investigation to uncover
corruption by the Clinton Foundation and Hillary Clinton, is given high priority and now runs parallel
with the reopened FBI case of her using a private email server to avoid the Federal Records Act.
The FBI's investigation into the Clinton Foundation that has been going on for more than a year
has now taken a "very high priority," separate sources with intimate knowledge of the probe tell
Fox News .
FBI agents have interviewed and re-interviewed multiple people on the foundation case, which
is looking into possible pay for play interaction between then-Secretary of State Hillary Clinton
and the Clinton Foundation. The FBI's White Collar Crime Division is handling the investigation.
Even before the WikiLeaks dumps of alleged emails linked to the Clinton campaign, FBI agents
had collected a great deal of evidence, law enforcement sources tell Fox News.
"There is an avalanche of new information coming in every day," one source told Fox News,
who added some of the new information is coming from the WikiLeaks documents and new emails.
FBI agents are "actively and aggressively pursuing this case," and will be going back and interviewing
the same people again, some for the third time, sources said.
Agents are also going through what Clinton and top aides have said in previous interviews and
the FBI 302, documents agents use to report interviews they conduct, to make sure notes line up,
according to sources.
"... It appears there was rift between the FBI and the DOJ with how to move forward with the investigation. Agents in the Washington office were directed to focus on a separate issue relating to the actions of former Virginia Governor and Clinton Foundation Board Member Terry McAuliffe. Agents inside the FBI believed they could build a stronger case if the investigation of McAuliffe and the foundation were combined. ..."
"... FBI Deputy Director Andrew McCabe seemed to be caught in the middle of the fight between DOJ officials who appeared to want to slow down or shut down the investigation and FBI agents who were eager to pour more resources into the investigation. ..."
"... The story gets more complicated when you factor in that McCabe's wife, Dr. Jill McCabe had received a $467,500 campaign contribution in 2015 for a state senate race from McAuliffe . ..."
"... CNN also reported that multiple field offices were "in agreement a public corruption investigation should be launched" with Clinton Foundation officials as a target. The cable news network reported the investigation would have looked at "conflicts of interest by foreign donors and official acts by Hillary Clinton as Secretary of State. ..."
FBI investigators from across the country have been following leads into reports of bribery
involving the Clinton Foundation. Multiple field offices have been involved in the investigation.
A report in Sunday's Wall Street Journal (WSJ) by Devlin Barrett revealed that agents assigned
to the New York field office have been carrying the bulk of the work in investigating the Clinton
Foundations. They have received assistance from the FBI field office in Little Rock according to
"people familiar with the matter, the WSJ reported. Other offices, including Los Angeles and
Washington, D.C., have been collecting evidence to regarding "financial crimes or influence-peddling."
As far back as February 2016, FBI agents made presentation to the Department of Justice (DOJ),
the WSJ's sources stated. "The meeting didn't go well," they wrote. While some sources said
the FBI's evidence was not strong enough, others believed the DOJ had no intention from the start
of going any further. Barrett wrote that the DOJ officials were "stern, icy and dismissive of the
Barrett wrote, "'That was one of the weirdest meetings I've ever been to,' one participant told
others afterward, according to people familiar with the matter."
It appears there was rift between the FBI and the DOJ with how to move forward with the investigation.
Agents in the Washington office were directed to focus on a separate issue relating to the actions
of former Virginia Governor and Clinton Foundation Board Member Terry McAuliffe. Agents inside the
FBI believed they could build a stronger case if the investigation of McAuliffe and the foundation
FBI Deputy Director Andrew McCabe seemed to be caught in the middle of the fight between DOJ officials
who appeared to want to slow down or shut down the investigation and FBI agents who were eager to
pour more resources into the investigation.
Barrett wrote, "'Are you telling me that I need to shut down a validly predicated investigation?'
Mr. McCabe asked, according to people familiar with the conversation. After a pause, the official
replied, 'Of course not,' these people said."
Some of the WSJ sources told Barrett that a "stand down" order had been given to the FBI
agents by McCabe. Others denied that no such order was given.
Preet Bharara, an assistant U.S. Attorney for the Southern District of New York, appears to have
taken in interest in moving forward from the DOJ side, the Daily Caller's Richard Pollock
reported in August.
The New York-based probe is being led by Preet Bharara, the U.S. attorney for the Southern District
of New York. Bharara's prosecutorial aggressiveness has resulted in a large number of convictions
of banks, hedge funds and Wall Street insiders.
He said prosecutorial support could come from multiple U.S. Attorneys Offices and stated this
was a major departure from other "centralized FBI investigations."
CNN also reported that multiple field offices were "in agreement a public corruption investigation
should be launched" with Clinton Foundation officials as a target. The cable news network reported
the investigation would have looked at "conflicts of interest by foreign donors and official acts
by Hillary Clinton as Secretary of State.
"... "The problem here is this investigation was never a real investigation," he said. "That's the problem. They never had a grand jury empanelled, and the reason they never had a grand jury empanelled, I'm sure, is Loretta Lynch would not go along with that." ..."
"... Kallstrom blamed the FBI leadership under FBI Director James Comey as the reason the investigation was held back, but not the rest of the bureau. ..."
"... "The agents are furious with what's going on, I know that for a fact," he said. ..."
A former FBI official said Sunday that Bill and Hillary Clinton are part of a "crime family"
and added that top officials impeded the investigation into Clinton's email server while she was
secretary of state.
Former assistant FBI director James Kallstrom praised Donald Trump before he offered a take down
of the Clintons in a radio interview with John Catsimatidis,
The Hill reported.
"The Clintons, that's a crime family, basically," Kallstrom said. "It's like organized crime.
I mean the Clinton Foundation is a cesspool."
Kallstrom, best known for spearheading the investigation into the explosion of TWA flight 800
in the late '90s, called Clinton a "pathological liar" and blamed Attorney General Loretta Lynch
for botching the Clinton email server investigation.
"The problem here is this investigation was never a real investigation," he said. "That's the
problem. They never had a grand jury empanelled, and the reason they never had a grand jury empanelled,
I'm sure, is Loretta Lynch would not go along with that."
"God forbid we put someone like that in the White House," he added of Clinton.
Kallstrom blamed the FBI leadership under FBI Director James Comey as the reason the investigation
was held back, but not the rest of the bureau.
"The agents are furious with what's going on, I know that for a fact," he said.
Saturday on CNN while discussing the FBI reopening the investigation into Democratic presidential
nominee Hillary Clinton's use of a private unsecured email server during her tenure as secretary
of state, former Assistant Director of the FBI Thomas Fuentes said, "The FBI has an intensive investigation
ongoing into the Clinton Foundation."
He added, "The FBI made the determination that the investigation would go forward as a comprehensive
unified case and be coordinated, so that investigation is ongoing and Huma Abedin and her role and
activities concerning secretary of state in the nature of the foundation and possible pay to play,
that's still being looked at and now."
"... After weeks of revealing information behind the Clinton Foundation and their self-motivated fundraising tactics, there is no other word to describe the Democratic nominee for President of the United States. She's engaged in behavior that is disqualifying to be a candidate for the highest office, and yet dozens of American legislators, leaders and even media outlets have endorsed her candidacy. ..."
"... She's swindled countries out of donations, she's swindled corporate America with her lofty promises and she's swindled the American people – over and over and over again. ..."
"... So why now, after the knowledge that top-tier corporations and other wealthy supporters paid to meet with both the former president and the now Democratic presidential nominee should we believe that she would change her behavior to act in the best interest of the country? In fact, one could argue that this information is a window into how Clinton would rule the land. She'd have an eye out for only herself and her family, while leaving the American people - who so desperately want a change - with the same old Clinton-first approach. ..."
"... Beyond her blatant disregard for the American public, Clinton's cavalier approach to national security has come into question from a myriad of angles. From the secret server in her home basement that received hundreds of confidential email communications, to the lack of response she paid to the Congress when asked about the issue, to the suggestion that she made promises to the FBI that would cause them to "look the other way" when ruling on the secret email server. And then how about the millions of dollars the Clinton Foundation took from countries that are of disrepute, not to mention those that show little concern for women's rights. ..."
It was 25 years ago that Martin Scorsese delighted audiences with his movie rendition of the Jim
Thompson novel, "The Grifters."
The story is an ingenious tale of deception and betrayal. By definition a grifter is someone who
has made money dishonestly, in a swindle or a confidence game.
After weeks of revealing information behind the Clinton Foundation and their self-motivated fundraising
tactics, there is no other word to describe the Democratic nominee for President of the United States.
She's engaged in behavior that is disqualifying to be a candidate for the highest office, and yet
dozens of American legislators, leaders and even media outlets have endorsed her candidacy.
She's swindled countries out of donations, she's swindled corporate America with her lofty promises
and she's swindled the American people – over and over and over again.
So why now, after the knowledge that top-tier corporations and other wealthy supporters paid to
meet with both the former president and the now Democratic presidential nominee should we believe
that she would change her behavior to act in the best interest of the country? In fact, one could
argue that this information is a window into how Clinton would rule the land. She'd have an eye out
for only herself and her family, while leaving the American people - who so desperately want a change
- with the same old Clinton-first approach.
Beyond her blatant disregard for the American public, Clinton's cavalier approach to national
security has come into question from a myriad of angles. From the secret server in her home basement
that received hundreds of confidential email communications, to the lack of response she paid to
the Congress when asked about the issue, to the suggestion that she made promises to the FBI that
would cause them to "look the other way" when ruling on the secret email server. And then how about
the millions of dollars the Clinton Foundation took from countries that are of disrepute, not to
mention those that show little concern for women's rights.
The most recent set of Clinton emails that have come to light are of such great concern to national
security that the FBI has announced they will conduct a new investigation of Clinton's emails. This
is just ELEVEN days before the country goes to the polls and decides on our next president.
Where has the leadership gone in this country? Since when do reputable news outlets stand behind
candidates who have proven themselves over and over to be out for themselves and dangerous, even?
It used to be that newspapers and legislators and leaders who speak from a platform would find themselves
offering wisdom. Wisdom about which candidate was best for the job – based on the facts. Instead
we find ourselves sifting through the list of endorsements for Clinton with little or no mention
of her disregard for the law, her lack of concern for those she serves, and the careless nature in
which she has proven herself to lead.
Now that the newspapers know better and have written about the truth in their own words, how can
the media and elected officials stand by their decision to endorse her? They need to rescind their
endorsement. That includes President Barack Obama and First Lady Michelle Obama.
In a quote from his book Thompson describes one of the characters, "Anyone who deprived her of
something she wanted, deserved what he got."
Sounds all too familiar to the Democratic nominee for grifter-in-chief. If she's not changed by
now, who is to say she'd be any different when she was the most powerful elected official in the
United States. Once a grifter, always a grifter.
Sharon Day is the Republican National Committee Co-Chair.
"... Wow, they clearly state Bill Clinton uses golfing to establish communication with donors ..."
"... "People with knowledge of the call in both camps said it was one of many that Clinton and Trump have had over the years, whether about golf or donations to the Clinton Foundation. But the call in May was considered especially sensitive, coming soon after Hillary Rodham Clinton had declared her own presidential run the month before." - source ..."
"... In total, The Wall Street Journal reports, two dozen companies and groups, plus the Abu Dhabi government, gave Bill more than $8 million for speeches, even as they were hoping for favorable treatment from Hillary's bureaucracy. And 15 of them also gave at least $5 million total to the foundation. ..."
"... Can someone help me see the shadiness, what am I missing? unless the "foundation donors require significant maintenance to keep them engaged and supportive of the foundation" means they are giving them political favors then it just looks like the clinton foundation is accepting donations and that is it. ..."
"... so pro-clinton sources have been propping up the Clinton Foundation for years as the pinnacle of charity while not really being able to explain where all the money goes; ..."
"... This shows that they require 20 million a year to operate with 8 employees. It shows they have to raid the Clinton Global Initiative for $6M to $11M every year to cover that budget hole... ..."
"... This is useful information that is probably not reflected on tax returns. Most importantly it shows that when Bill was offered a shady $8 million dollar over 2 year deal that would appear to be a conflict of interest while Hillary was Sect of State, Podesta and Band suggested hiding the money as payment for speeches. This boosts the accusation that the speeches are payments for quid pro quo. ..."
"... Does any of it contradict the MOU she signed when appointed Sec State? https://wikileaks.org/podesta-emails/emailid/34993 ..."
He also said they were talking about golf when he called Donald trump last year before trump decided
"People with knowledge of the call in both camps said it was one of many that Clinton
and Trump have had over the years, whether about golf or donations to the Clinton Foundation.
But the call in May was considered especially sensitive, coming soon after Hillary Rodham Clinton
had declared her own presidential run the month before." -
Question-Are we to assume that any OTHER speaking engagements that WJC did were not because of
the foundation, but from when his wife was SOS?
In total, The Wall Street Journal reports, two dozen companies and groups, plus the
Abu Dhabi government, gave Bill more than $8 million for speeches, even as they were hoping
for favorable treatment from Hillary's bureaucracy. And 15 of them also gave at least $5 million
total to the foundation.
Can someone help me see the shadiness, what am I missing? unless the "foundation donors require
significant maintenance to keep them engaged and supportive of the foundation" means they are
giving them political favors then it just looks like the clinton foundation is accepting donations
and that is it.
so pro-clinton sources have been propping up the Clinton Foundation for years as the pinnacle
of charity while not really being able to explain where all the money goes; because it sure
doesn't seem to be going to Haiti or many other charities.
This shows that they require 20 million a year to operate with 8 employees. It shows they
have to raid the Clinton Global Initiative for $6M to $11M every year to cover that budget hole...
so this gives credence to the suspicion that the CF is hiding money somewhere (laundering money
to Clintons and friends). Also this document shows how teneo made Bill Clinton " more than $50
million in for-profit activity we have personally helped to secure for President Clinton to date
or the $66 million in future contracts" as of 2011.
This is useful information that is probably not reflected on tax returns. Most importantly
it shows that when Bill was offered a shady $8 million dollar over 2 year deal that would appear
to be a conflict of interest while Hillary was Sect of State, Podesta and Band suggested hiding
the money as payment for speeches. This boosts the accusation that the speeches are payments for
quid pro quo.
"... Pretty consistent, I agree. IMHO Sanjait might belong to the category that some people call the "Vichy left" – essentially people who are ready to sacrifice all principles to ensure their 'own' prosperity and support the candidate who intends to protect it, everybody else be damned. ..."
"... Very neoliberal approach if you ask me. Ann Rand would probably be proud for this representative of "creative class". ..."
"... Essentially the behavior that we've had for the last 8 years with the king of "bait and switch". ..."
Some paranoid claptrap to go along with your usual anti intellectualism.
Interestingly, with your completely unrelated non sequitur, you've actually illustrated something
that does relate to Krugmans post. Namely that there are wingnuts among us. They've taken over
the Republican Party, but the left has some too. Fortunately though the Democratic Party hasn't
been taken over by them yet, and is still mostly run by grown ups.
"I am confident that what you say here is consistent with your methods and motivations."
Pretty consistent, I agree. IMHO Sanjait might belong to the category that some people
call the "Vichy left" – essentially people who are ready to sacrifice all principles to ensure
their 'own' prosperity and support the candidate who intends to protect it, everybody else be
Very neoliberal approach if you ask me. Ann Rand would probably be proud for this representative
of "creative class".
Essentially the behavior that we've had for the last 8 years with the king of "bait and
"... It has recently turned out that Ukrainian oligarch Viktor Pinchuk, a vocal proponent of Ukraine's European integration, made huge contributions to the Clinton Foundation, while Hillary Clinton was the US Secretary of State. Although the foundation swore off donations from foreign governments while Mrs. Clinton was serving as a state official, it continued accepting money from private donors. Many of them had certain ties to their national governments like Viktor Pinchuk, a Ukrainian businessman and ex-parliamentarian. ..."
"... Viktor Pinchuk has always been one of the most vocal proponents of Ukraine's European integration. In 2004 Pinchuk founded the Yalta European Strategy (YES) platform in Kiev. YES is led by the board including ex-president of Poland Aleksander Kwasniewski and former NATO Secretary General Javier Solana. According to the website of the platform, Bill Clinton, Hillary Clinton, Condoleezza Rice, Kofi Annan, Radoslaw Sikorski, Vitaliy Klitschko, Arseniy Yatsenyuk, Petro Poroshenko and other prominent figures have participated in annual meetings of YES since 2004. ..."
"... Experts note that after the coup, the Ukrainian leadership has actually become Washington's puppet government. Several foreign citizens, including American civilian Natalie Jaresko, Lithuanian investment banker Aivaras Abromavicius and Georgia-born Alexander Kvitashvili have assumed high posts in the Ukrainian government. It should be noted that Natalie Jaresko, Ukraine's Financial Minister, have previously worked in the US State Department and has also been linked to oligarch Viktor Pinchuk. ..."
A sinister atmosphere surrounds the Clinton Foundation's role in Ukrainian military coup of February
2014, experts point out.
It has recently turned out that Ukrainian oligarch Viktor Pinchuk, a vocal proponent of Ukraine's
European integration, made huge contributions to the Clinton Foundation, while Hillary Clinton was
the US Secretary of State. Although the foundation swore off donations from foreign governments while
Mrs. Clinton was serving as a state official, it continued accepting money from private donors. Many
of them had certain ties to their national governments like Viktor Pinchuk, a Ukrainian businessman
Remarkably, among individual donors contributing to the Clinton Foundation in the period between
1999 and 2014, Ukrainian sponsors took first place in the list, providing the charity with almost
$10 million and pushing England and Saudi Arabia to second and third places respectively.
It is worth mentioning that the Viktor Pinchuk Foundation alone transferred at least $8.6 million
to the Clinton charity between 2009 and 2013. Pinchuk, who acquired his fortune from a pipe-making
business, served twice as a parliamentarian in Ukraine's Verkhovna Rada and was married to the daughter
of ex-president of Ukraine Leonid Kuchma.
Although the Clinton's charity denies that the donations were somehow connected with political
matters, experts doubt that international private sponsors received no political support in return.
In 2008 Pinchuk pledged to make a five-year $29 million contribution to the Clinton Global Initiative
in order to fund a program aimed at training future Ukrainian leaders and "modernizers." Remarkably,
several alumni of these courses are current members of Ukrainian parliament. Because of the global
financial crisis, the Pinchuk Foundation sent only $1.8 million.
Experts note that during Mrs. Clinton's tenure as Secretary of State, Viktor Pinchuk was introduced
to some influential American lobbyists. Curiously enough, he tried to use his powerful "friends"
to pressure Ukraine's then-President Viktor Yanukovych to free Yulia Tymoshenko, who served a jail
Viktor Pinchuk has always been one of the most vocal proponents of Ukraine's European integration.
In 2004 Pinchuk founded the Yalta European Strategy (YES) platform in Kiev. YES is led by the board
including ex-president of Poland Aleksander Kwasniewski and former NATO Secretary General Javier
Solana. According to the website of the platform, Bill Clinton, Hillary Clinton, Condoleezza Rice,
Kofi Annan, Radoslaw Sikorski, Vitaliy Klitschko, Arseniy Yatsenyuk, Petro Poroshenko and other prominent
figures have participated in annual meetings of YES since 2004.
No one would argue that proponents of Ukraine's pro-Western course played the main role in organizing
the coup of February 2014 in Kiev. Furthermore, the exceptional role of the United States in ousting
then-president Viktor Yanukovich has also been recognized by political analysts, participants of
Euromaidan and even by Barack Obama, the US President.
Experts note that after the coup, the Ukrainian leadership has actually become Washington's puppet
government. Several foreign citizens, including American civilian Natalie Jaresko, Lithuanian investment
banker Aivaras Abromavicius and Georgia-born Alexander Kvitashvili have assumed high posts in the
Ukrainian government. It should be noted that Natalie Jaresko, Ukraine's Financial Minister, have
previously worked in the US State Department and has also been linked to oligarch Viktor Pinchuk.
So far, experts note, the recent "game of thrones" in Ukraine has been apparently instigated by
a few powerful clans of the US and Ukraine, who are evidently benefitting from the ongoing turmoil.
In this light the Clinton Foundation looks like something more than just a charity: in today's world
of fraudulent oligopoly we are facing with global cronyism, experts point out, warning against its
Qatar, like most Muslim countries, treats women as second-class citizens, but
champion-of-women Hillary never lets a little thing like that stop her from doing business. (See:
"On favors.") And a far greater threat than murderous Muslims adhering to a fanatical 7th-century
religious ideology lurks right here at home - those pesky Roman Catholics and their silly
2,000-year-old faith. (See: "On Catholics.")
That's explains vicious campaign by neoliberal MSM against Trump and swiping under the carpet all
criminal deeds of Clinton family. They feel the threat...
"... It should be remembered that fascism does not succeed in the real world as a crusade by race-obsessed lumpen. It succeeds when fascists are co-opted by capitalists, as was unambiguously the case in Nazi Germany and Italy. And big business supported fascism because it feared the alternatives: socialism and communism. ..."
"... That's because there is no more effective counter to class consciousness than race consciousness. That's one reason why, in my opinion, socialism hasn't done a better job of catching on in the United States. The contradictions between black and white labor formed a ready-made wedge. ..."
It should be remembered that fascism does not succeed in the real world as a crusade by
race-obsessed lumpen. It succeeds when fascists are co-opted by capitalists, as was unambiguously
the case in Nazi Germany and Italy. And big business supported fascism because it feared the alternatives:
socialism and communism.
That's because there is no more effective counter to class consciousness than race consciousness.
That's one reason why, in my opinion, socialism hasn't done a better job of catching on in the
United States. The contradictions between black and white labor formed a ready-made wedge.
The North's abhorrence at the spread of slavery into the American West before the Civil War
had more to do a desire to preserve these new realms for "free" labor-"free" in one context, from
the competition of slave labor-than egalitarian principle.[…]
There is more to Clintonism, I think, than simply playing the "identity politics" card to
screw Bernie Sanders or discombobulate the Trump campaign. "Identity politics" is near the core
of the Clintonian agenda as a bulwark against any class/populist upheaval that might threaten
her brand of billionaire-friendly liberalism.
In other words it's all part of a grand plan when the Clintonoids aren't busy debating the finer
points of her marketing and "mark"–a term normally applied to the graphic logo on a commercial product.
Its from World Socialist
Web Site by thier analysys does contain some valid points. Especially about betrayal of nomenklatura,
and, especially, KGB nomenklatura,which was wholesale bought by the USA for cash.
Note that the author is unable or unwilling to use the tterm "neoliberalism". Looks like orthodox
Marxism has problem with this notion as it contradict Marxism dogma that capitalism as an economic doctrine
is final stage before arrival of socialism. Looks like it is not the final ;-)
"... Russia Since 1980 ..."
"... History reveals that the grandsons of the Bolshevik coup d'état didn't destroy the Soviet Union in a valiant effort to advance the cause of communist prosperity or even to return to their common European home; instead, it transformed Soviet managers and ministers into roving bandits (asset-grabbing privateers) with a tacit presidential charter to privatize the people's assets and revenues to themselves under the new Muscovite rule of men ..."
"... The scale of this plunder was astounding. It not only bankrupted the Soviet Union, forcing Russian President Boris Yeltsin to appeal to the G-7 for $6 billion of assistance on December 6, 1991, but triggered a free fall in aggregate production commencing in 1990, aptly known as catastroika. ..."
"... In retrospect, the Soviet economy didn't collapse because the liberalized command economy devised after 1953 was marked for death. The system was inefficient, corrupt and reprehensible in a myriad of ways, but sustainable, as the CIA and most Sovietologists maintained. It was destroyed by Gorbachev's tolerance and complicity in allowing privateers to misappropriate state revenues, pilfer materials, spontaneously privatize, and hotwire their ill-gotten gains abroad, all of which disorganized production. ..."
"... The rapid growth and increasing complexity of the Soviet economy required access to the resources of the world economy. ..."
"... For the Soviet bureaucracy, a parasitic social caste committed to the defense of its privileges and terrified of the working class, the revolutionary solution to the contradictions of the Soviet economy was absolutely unthinkable. The only course that it could contemplate was the second-capitulation to imperialism. ..."
"... In other words, the integration of the USSR into the structure of the world capitalist economy on a capitalist basis means not the slow development of a backward national economy, but the rapid destruction of one which has sustained living conditions which are, at least for the working class, far closer to those that exist in the advanced countries than in the third world. ..."
"... The Fourth International ..."
"... The End of the USSR, ..."
"... The report related the destruction of the USSR by the ruling bureaucracy to a broader international phenomenon. The smashing up of the USSR was mirrored in the United States by the destruction of the trade unions as even partial instruments of working-class defense. ..."
"... Millions of people are going to see imperialism for what it really is. The democratic mask is going to be torn off. The idea that imperialism is compatible with peace is going to be exposed. The very elements which drove masses into revolutionary struggle in the past are once again present. The workers of Russia and the Ukraine are going to be reminded why they made a revolution in the first place. The American workers are going to be reminded why they themselves in an earlier period engaged in the most massive struggles against the corporations. The workers of Europe are going to be reminded why their continent was the birthplace of socialism and Karl Marx. [p. 25] ..."
This analysis has been vindicated by scholarly investigations into the causes of the Soviet economic
collapse that facilitated the bureaucracy's dissolution of the USSR. In Russia Since 1980,
published in 2008 by Cambridge University Press, Professors Steven Rosefielde and Stefan Hedlund
present evidence that Gorbachev introduced measures that appear, in retrospect, to have been aimed
at sabotaging the Soviet economy. "Gorbachev and his entourage," they write, "seem to have had a
venal hidden agenda that caused things to get out of hand quickly." [p. 38] In a devastating appraisal
of Gorbachev's policies, Rosefielde and Hedlund state:
History reveals that the grandsons of the Bolshevik coup d'état didn't destroy the Soviet
Union in a valiant effort to advance the cause of communist prosperity or even to return to their
common European home; instead, it transformed Soviet managers and ministers into roving bandits (asset-grabbing
privateers) with a tacit presidential charter to privatize the people's assets and revenues to themselves
under the new Muscovite rule of men. [p. 40]
Instead of displaying due diligence over personal use of state revenues, materials and property,
inculcated in every Bolshevik since 1917, Gorbachev winked at a counterrevolution from below opening
Pandora's Box. He allowed enterprises and others not only to profit maximize for the state in various
ways, which was beneficial, but also to misappropriate state assets, and export the proceeds abroad.
In the process, red directors disregarded state contracts and obligations, disorganizing inter-industrial
intermediate input flows, and triggering a depression from which the Soviet Union never recovered
and Russia has barely emerged. [p. 47]
Given all the heated debates that would later ensue about how Yeltsin and his shock therapy engendered
mass plunder, it should be noted that the looting began under Gorbachev's watch. It was his malign
neglect that transformed the rhetoric of Market Communism into the pillage of the nation's assets.
The scale of this plunder was astounding. It not only bankrupted the Soviet Union, forcing
Russian President Boris Yeltsin to appeal to the G-7 for $6 billion of assistance on December 6,
1991, but triggered a free fall in aggregate production commencing in 1990, aptly known as catastroika.
In retrospect, the Soviet economy didn't collapse because the liberalized command economy
devised after 1953 was marked for death. The system was inefficient, corrupt and reprehensible in
a myriad of ways, but sustainable, as the CIA and most Sovietologists maintained. It was destroyed
by Gorbachev's tolerance and complicity in allowing privateers to misappropriate state revenues,
pilfer materials, spontaneously privatize, and hotwire their ill-gotten gains abroad, all of which
disorganized production. [p. 49]
The analysis of Rosefielde and Hedlund, while accurate in its assessment of Gorbachev's actions,
is simplistic. Gorbachev's policies can be understood only within the framework of more fundamental
political and socioeconomic factors. First, and most important, the real objective crisis of the
Soviet economy (which existed and preceded by many decades the accession of Gorbachev to power) developed
out of the contradictions of the autarkic nationalist policies pursued by the Soviet regime since
Stalin and Bukharin introduced the program of "socialism in one country" in 1924. The rapid growth
and increasing complexity of the Soviet economy required access to the resources of the world economy.
This access could be achieved only in one of two ways: either through the spread of socialist
revolution into the advanced capitalist countries, or through the counterrevolutionary integration
of the USSR into the economic structures of world capitalism.
For the Soviet bureaucracy, a parasitic social caste committed to the defense of its privileges
and terrified of the working class, the revolutionary solution to the contradictions of the Soviet
economy was absolutely unthinkable. The only course that it could contemplate was the second-capitulation
to imperialism. This second course, moreover, opened for the leading sections of the bureaucracy
the possibility of permanently securing their privileges and vastly expanding their wealth. The privileged
caste would become a ruling class. The corruption of Gorbachev, Yeltsin and their associates was
merely the necessary means employed by the bureaucracy to achieve this utterly reactionary and immensely
On October 3, 1991, less than three months before the dissolution of the USSR, I delivered a lecture
in Kiev in which I challenged the argument-which was widely propagated by the Stalinist regime-that
the restoration of capitalism would bring immense benefits to the people. I stated:
In this country, capitalist restoration can only take place on the basis of the widespread destruction
of the already existing productive forces and the social- cultural institutions that depended upon
them. In other words, the integration of the USSR into the structure of the world capitalist
economy on a capitalist basis means not the slow development of a backward national economy, but
the rapid destruction of one which has sustained living conditions which are, at least for the working
class, far closer to those that exist in the advanced countries than in the third world. When
one examines the various schemes hatched by proponents of capitalist restoration, one cannot but
conclude that they are no less ignorant than Stalin of the real workings of the world capitalist
economy. And they are preparing the ground for a social tragedy that will eclipse that produced by
the pragmatic and nationalistic policies of Stalin. ["Soviet Union at the Crossroads," published
in The Fourth International (Fall- Winter 1992, Volume 19, No. 1, p. 109), Emphasis in the
Almost exactly 20 years ago, on January 4, 1992, the Workers League held a party membership meeting
in Detroit to consider the historical, political and social implications of the dissolution of the
USSR. Rereading this report so many years later, I believe that it has stood the test of time. It
stated that the dissolution of the USSR "represents the juridical liquidation of the workers' state
and its replacement with regimes that are openly and unequivocally devoted to the destruction of
the remnants of the national economy and the planning system that issued from the October Revolution.
To define the CIS [Confederation of Independent States] or its independent republics as workers states
would be to completely separate the definition from the concrete content which it expressed during
the previous period." [David North, The End of the USSR, Labor Publications, 1992, p. 6]
The report continued:
"A revolutionary party must face reality and state what is. The Soviet working class has suffered
a serious defeat. The bureaucracy has devoured the workers state before the working class was able
to clean out the bureaucracy. This fact, however unpleasant, does not refute the perspective of the
Fourth International. Since it was founded in 1938, our movement has repeatedly said that if the
working class was not able to destroy this bureaucracy, then the Soviet Union would suffer a shipwreck.
Trotsky did not call for political revolution as some sort of exaggerated response to this or that
act of bureaucratic malfeasance. He said that a political revolution was necessary because only in
that way could the Soviet Union, as a workers state, be defended against imperialism." [p. 6]
I sought to explain why the Soviet working class had failed to rise up in opposition to the bureaucracy's
liquidation of the Soviet Union. How was it possible that the destruction of the Soviet Union-having
survived the horrors of the Nazi invasion-could be carried out "by a miserable group of petty gangsters,
acting in the interests of the scum of Soviet society?" I offered the following answer:
We must reply to these questions by stressing the implications of the massive destruction of revolutionary
cadre carried out within the Soviet Union by the Stalinist regime. Virtually all the human representatives
of the revolutionary tradition who consciously prepared and led that revolution were wiped out. And
along with the political leaders of the revolution, the most creative representatives of the intelligentsia
who had flourished in the early years of the Soviet state were also annihilated or terrorized into
Furthermore, we must point to the deep-going alienation of the working class itself from state
property. Property belonged to the state, but the state "belonged" to the bureaucracy, as Trotsky
noted. The fundamental distinction between state property and bourgeois property-however important
from a theoretical standpoint-became less and less relevant from a practical standpoint. It is true
that capitalist exploitation did not exist in the scientific sense of the term, but that did not
alter the fact that the day-to-day conditions of life in factories and mines and other workplaces
were as miserable as are to be found in any of the advanced capitalist countries, and, in many cases,
Finally, we must consider the consequences of the protracted decay of the international socialist
Especially during the past decade, the collapse of effective working class resistance in any part
of the world to the bourgeois offensive had a demoralizing effect on Soviet workers. Capitalism assumed
an aura of "invincibility," although this aura was merely the illusory reflection of the spinelessness
of the labor bureaucracies all over the world, which have on every occasion betrayed the workers
and capitulated to the bourgeoisie. What the Soviet workers saw was not the bitter resistance of
sections of workers to the international offensive of capital, but defeats and their consequences.
The report related the destruction of the USSR by the ruling bureaucracy to a broader international
phenomenon. The smashing up of the USSR was mirrored in the United States by the destruction of the
trade unions as even partial instruments of working-class defense.
In every part of the world, including the advanced countries, the workers are discovering that
their own parties and their own trade union organizations are engaged in the related task of systematically
lowering and impoverishing the working class. [p. 22]
Finally, the report dismissed any notion that the dissolution of the USSR signified a new era
of progressive capitalist development.
Millions of people are going to see imperialism for what it really is. The democratic mask
is going to be torn off. The idea that imperialism is compatible with peace is going to be exposed.
The very elements which drove masses into revolutionary struggle in the past are once again present.
The workers of Russia and the Ukraine are going to be reminded why they made a revolution in the
first place. The American workers are going to be reminded why they themselves in an earlier period
engaged in the most massive struggles against the corporations. The workers of Europe are going to
be reminded why their continent was the birthplace of socialism and Karl Marx. [p. 25]
The aftermath of the dissolution of the USSR: 20 years of economic crisis, social decay, and
According to liberal theory, the dissolution of the Soviet Union ought to have produced a new
flowering of democracy. Of course, nothing of the sort occurred-not in the former USSR or, for that
matter, in the United States. Moreover, the breakup of the Soviet Union-the so-called defeat of communism-was
not followed by a triumphant resurgence of its irreconcilable enemies in the international workers'
movement, the social democratic and reformist trade unions and political parties. The opposite occurred.
All these organizations experienced, in the aftermath of the breakup of the USSR, a devastating and
even terminal crisis. In the United States, the trade union movement-whose principal preoccupation
during the entire Cold War had been the defeat of Communism-has all but collapsed. During the two
decades that followed the collapse of the Soviet Union, the AFL-CIO lost a substantial portion of
its membership, was reduced to a state of utter impotence, and ceased to exist as a workers' organization
in any socially significant sense of the term. At the same time, everywhere in the world, the social
position of the working class-from the standpoint of its influence on the direction of state policy
and its ability to increase its share of the surplus value produced by its own labor-deteriorated
Certain important conclusions flow from this fact. First, the breakup of the Soviet Union did
not flow from the supposed failure of Marxism and socialism. If that had been the case, the anti-Marxist
and antisocialist labor organizations should have thrived in the post-Soviet era. The fact that these
organizations experienced ignominious failure compels one to uncover the common feature in the program
and orientation of all the so-called labor organizations, "communist" and anticommunist alike. What
was the common element in the political DNA of all these organization? The answer is that regardless
of their names, conflicting political alignments and superficial ideological differences, the large
labor organizations of the post-World War II period pursued essentially nationalist policies. They
tied the fate of the working class to one or another nation-state. This left them incapable of responding
to the increasing integration of the world economy. The emergence of transnational corporations and
the associated phenomena of capitalist globalization shattered all labor organizations that based
themselves on a nationalist program.
The second conclusion is that the improvement of conditions of the international working class
was linked, to one degree or another, to the existence of the Soviet Union. Despite the treachery
and crimes of the Stalinist bureaucracy, the existence of the USSR, a state that arose on the basis
of a socialist revolution, imposed upon American and European imperialism certain political and social
restraints that would otherwise have been unacceptable. The political environment of the past two
decades-characterized by unrestrained imperialist militarism, the violations of international law,
and the repudiation of essential principles of bourgeois democracy-is the direct outcome of the dissolution
of the Soviet Union.
The breakup of the USSR was, for the great masses of its former citizens, an unmitigated disaster.
Twenty years after the October Revolution, despite all the political crimes of the Stalinist regime,
the new property relations established in the aftermath of the October Revolution made possible an
extraordinary social transformation of backward Russia. And even after suffering horrifying losses
during the four years of war with Nazi Germany, the Soviet Union experienced in the 20 years that
followed the war a stupendous growth of its economy, which was accompanied by advances in science
and culture that astonished the entire world.
But what is the verdict on the post-Soviet experience of the Russian people? First and foremost,
the dissolution of the USSR set into motion a demographic catastrophe. Ten years after the breakup
of the Soviet Union, the Russian population was shrinking at an annual rate of 750,000. Between 1983
and 2001, the number of annual births dropped by one half. 75 percent of pregnant women in Russia
suffered some form of illness that endangered their unborn child. Only one quarter of infants were
The overall health of the Russian people deteriorated dramatically after the restoration of capitalism.
There was a staggering rise in alcoholism, heart disease, cancer and sexually transmitted diseases.
All this occurred against the backdrop of a catastrophic breakdown of the economy of the former USSR
and a dramatic rise in mass poverty.
As for democracy, the post-Soviet system was consolidated on the basis of mass murder. For more
than 70 years, the Bolshevik regime's dissolution of the Constituent Assembly in January 1918-an
event that did not entail the loss of a single life-was trumpeted as an unforgettable and unforgivable
violation of democratic principles. But in October 1993, having lost a majority in the popularly
elected parliament, the Yeltsin regime ordered the bombardment of the White House-the seat of the
Russian parliament-located in the middle of Moscow. Estimates of the number of people who were killed
in the military assault run as high as 2,000. On the basis of this carnage, the Yeltsin regime was
effectively transformed into a dictatorship, based on the military and security forces. The regime
of Putin-Medvedev continues along the same dictatorial lines. The assault on the White House was
supported by the Clinton administration. Unlike the dissolution of the Constituent Assembly, the
bombardment of the Russian parliament is an event that has been all but forgotten.
What is there to be said of post-Soviet Russian culture? As always, there are talented people
who do their best to produce serious work. But the general picture is one of desolation. The words
that have emerged from the breakup of the USSR and that define modern Russian culture, or what is
left of it, are "mafia," "biznessman" and "oligarch."
What has occurred in Russia is only an extreme expression of a social and cultural breakdown that
is to be observed in all capitalist countries. Can it even be said with certainty that the economic
system devised in Russia is more corrupt that that which exists in Britain or the United States?
The Russian oligarchs are probably cruder and more vulgar in the methods they employ. However, the
argument could be plausibly made that their methods of plunder are less efficient than those employed
by their counterparts in the summits of American finance. After all, the American financial oligarchs,
whose speculative operations brought about the near-collapse of the US and global economy in the
autumn of 2008, were able to orchestrate, within a matter of days, the transfer of the full burden
of their losses to the public.
It is undoubtedly true that the dissolution of the USSR at the end of 1991 opened up endless opportunities
for the use of American power-in the Balkans, the Middle East and Central Asia. But the eruption
of American militarism was, in the final analysis, the expression of a more profound and historically
significant tendency-the long-term decline of the economic position of American capitalism. This
tendency was not reversed by the breakup of the USSR. The history of American capitalism during the
past two decades has been one of decay. The brief episodes of economic growth have been based on
reckless and unsustainable speculation. The Clinton boom of the 1990s was fueled by the "irrational
exuberance" of Wall Street speculation, the so-called dot.com bubble. The great corporate icons of
the decade-of which Enron was the shining symbol-were assigned staggering valuations on the basis
of thoroughly criminal operations. It all collapsed in 2000-2001. The subsequent revival was fueled
by frenzied speculation in housing. And, finally, the collapse in 2008, from which there has been
When historians begin to recover from their intellectual stupor, they will see the collapse of
the USSR and the protracted decline of American capitalism as interrelated episodes of a global crisis,
arising from the inability to develop the massive productive forces developed by mankind on the basis
of private ownership of the means of production and within the framework of the nation-state system.
"... [Qatar] would like to see WJC 'for five minutes' in NYC, to present $1 million check that Qatar promised for WJC's birthday in 2011," an employee at The Clinton Foundation said to numerous aides, including Doug Brand ..."
"... No doubt! The Clintons sure were working the Haiti angle any way that they could. I wonder how that's playing in Florida? ..."
"[Qatar] would like to see WJC 'for five minutes' in NYC, to present $1 million check that
Qatar promised for WJC's birthday in 2011," an employee at The Clinton Foundation said to numerous
aides, including Doug Brand [isc]. "Qatar would welcome our suggestions for investments in Haiti
- particularly on education and health. They have allocated most of their $20 million but are
happy to consider projects we suggest. I'm collecting input from CF Haiti team."
No doubt! The Clintons sure were working the Haiti angle any way that they could. I wonder how
that's playing in Florida?
Donald Trump is accusing the Clintons of cashing in on Haiti's deadly 2010 earthquake.
The Republican nominee cited State Department emails obtained by the Republican National
Committee through a public records request and detailed in an ABC News story.
At issue is whether friends of former President Bill Clinton, referred to as "friends of Bill,"
or "FOB," in the emails, received preferential treatment or contracts from the State Department
in the immediate aftermath of the 7.0-magnitude earthquake on Jan. 12, 2010. More than 230,000
people died, the U.S. has said.
Imagine that while George W. Bush was governor of
Texas and president of the United States, various people and companies decided
to write him checks for hundreds of thousands of dollars, just because they
thought he was a great guy. Those people and companies, just coincidentally,
happened to have interests that were affected by the policies of Texas and the
United States. But when he thanked them for their money, Bush never promised to
do anything in particular for them. You would be suspicious, right?
Now, that's roughly what has been happening with the Clinton Foundation.
Various people and companies have been writing checks for millions of dollars
to the Foundation during the same time that Hillary Clinton was secretary of
state and, following that, the most likely next president of the United
States-a title she has held since the day Barack Obama's second term began.
(The Clintons finally decided to
scale back the Foundation
earlier this week.)
... ... ...
So the real question is this: Do you think it would be appropriate for people and companies
affected by U.S. policy to be writing $1 million checks directly to the Clintons? If the answer
is yes, then you should be against any campaign finance rules whatsoever. If the answer is no,
you should be worried about the Clinton Foundation.
August 25, 2016 at 8:02 pm
I disagree whole heartedly with this post. The clinton foundation is a
big deal, because its proof positive that America was founded on Money
laundering, the elite that run this country make and made their money
through money laundering; and no one wants that in the White House. Thats
ok for the rest of America sociery, but not the government where peoples
lives hang on the balance through every speech, law and policy that is
conducted on capitol hill.
The Clintons destroyed Libya, Honduras, Haiti through their money
laundering scheme called the clinton foundation. Theres no justification
August 26, 2016 at 12:40 am
Trump thinks very highly of Reagan, but very lowly of Mexicans, so if
Trump were to win I suspect he will secretly sell some of our nukes, this
finally giving him the financial boost needed to overtake Carlos Slim on
the list of the world's richest men. This 'deal of deals' then also
harkens back to another historical 'deal' (Iran/Contra), and of course
Reagan, while simultaneously eliminating Trump's deepest regret which is
that of being bested by a Mexican. This being the real reason that he
decided to run in the first place.
Probably though, HRC will win. The
problem there being that all of the scrutiny that she has been receiving
for so long, coupled with Bills' infidelities, and other various setbacks
and slights, have left her very angry and bitter. Combining this seething
hatred of all humans, especially men, with the fact that there has never
been a women president to look up to, HRC's only influence is a secretary
who worked for Woodrow Wilson by the name of Mildred Jingowitz, or Ms.
Jingo as she was called. Ms. Jingo stands out for HRC because she
actually wrote the Espionage Act of 1917 and the the Sedition Act of
1918. Those combining to "cover a broader range of offenses, notably
speech and the expression of opinion that cast the government or the war
effort in a negative light or interfered with the sale of government
"The Sedition Act of 1918 stated that people or countries cannot say
negative things about the government or the war."
"It forbade the use of "disloyal, profane, scurrilous, or abusive
language" about the United States government, its flag, or its armed
forces or that caused others to view the American government or its
institutions with contempt." Most importantly though, these acts gave the
Government the legal right to prosecute draft dodgers, and …these could
bring an end to at least some of the scrutiny that has plagued HRC for so
long just so long as we remain at war.
So, if you are wondering what any of this has to do with the Clinton
Foundation, well, HRC used the Foundation to facilitate at least one very
large arms deal with at least one Royal Gulfie. But it matters little
whether she used the foundation or not, HRC used her tenure at Foggy
Bottom to arrange a record number of weapons deals, and of course she is
mad as hell and determined to prove just how tough women can be (and
there is of course one man who she respects, H. Kissinger).
Anyway, it doesn't take a historian specializing in the build-up
leading to the two World Wars to figure out the rest. BOOM!!!
I'm a long-time reader. I admire what you and Simon have
done educating us about the financial crisis and its aftermath, and I
agree with most of your political positions, especially related to the
corrupting influence of money in politics. I have seen this first hand
over my years in politics and government, and I believe it is the single
most important issue we face because progress on all others depends on
But in taking yet another hack at Hillary Clinton in this post, you've
contradicted yourself in a way that unravels your argument, while
engaging in false equivalencies and blowing a key fact out of proportion.
First, the internal contradiction:
"Bill and Hillary are getting on in years, they only have one child,
and she is married to a hedge fund manager. When you have that much
money, a dollar in your foundation is as good as a dollar in your bank
account. Once you have all your consumption needs covered, what do you
need money for?"
You imply, here, that the Clintons' wealth and Marc Mezvinsky's hedge
fund income have made the marginal value of another dollar in income de
minimis for the Clintons' personal finances. Then you write,
paraphrasing, that a dollar donated to the Foundation is as good as a
dollar deposited in their personal bank account; therefore, you imply,
money that goes to their foundation is as corrupting as money that goes
into their personal accounts.
You see the problem in claiming that a contribution to the Clinton
Foundation is a powerful incentive for HRC to tilt her foreign policy
positions, right? You just made the case for why a donation to the
Foundation has little personal value to the Clintons:
MV of $ to bank account = 0.
MV of $ to Foundation = MV of $ to bank account.
But you don't proceed to: Therefore, MV of $ to Foundation = 0. So,
according to your logic, there can be no corrupting influence.
You follow this, writing:
"If you're a Clinton, you want to have an impact in the world, reward
your friends, and burnish your legacy. A foundation is an excellent
vehicle for all of those purposes, for obvious reasons. It is also an
excellent way to transfer money to your daughter free of estate tax,
since she can control it after you die."
Your imply that the Clintons give equal weight to their desires to
reward their friends, burnish their legacy, and have an impact on the
world. What evidence do you have of this? Also, you implicitly denigrate
their charitable motives by describing them as a desire "to have an
impact on the world" without a nod to their clear intent to have an
impact that is profoundly constructive. You also speculate, without
providing any support, that the Foundation is a tax avoidance scheme to
enrich their daughter. I think you've crossed a line here.
Now for the false equivalencies:
"Imagine that while George W. Bush was governor of Texas and president
of the United States, various people and companies decided to write him
checks for hundreds of thousands of dollars, just because they thought he
was a great guy. Those people and companies, just coincidentally,
happened to have interests that were affected by the policies of Texas
and the United States. But when he thanked them for their money, Bush
never promised to do anything in particular for them. You would be
Why imagine? We have the real-world case of the Saudis bailing out
George W's Harken Energy while his father was president. Of course, this
is only one example of how the lucrative Bush-Saudi relationship
generated income that went straight into the Bush "coffers".
So you implicitly compare HRC's alleged conflict related to the
family's charity with the Bush family conflict related to their own
personal bank accounts. While HW Bush, as president, made use of his long
friendship with the Saudis for the family's personal gain, HRC gave
access to the likes of the crown prince of Bahrain and Nobel Peace Prize
Winner Muhammad Yunus. Not equivalent. Not even close. I wonder how
routine it is for a Secretary of State to meet with the crown prince of
an oil-producing nation or a Nobel Prize winner versus how routine is it
for foreign oligarchs friendly to a president to bailout his son.
But at least the Saudis were allies of the US. Today, the GOP nominee
has undisclosed but apparently significant business ties to close allies
of the president of our greatest strategic adversary, and expresses his
admiration for an autocrat who is seizing territory in Europe and
terminating his opponents. I've missed your post on this one, though I'm
sure there is one.
One last point: This controversy involved some 85 meetings or
telephone calls HRC granted to Foundation donors. The media have morphed
this into 85 meetings, dropping the "and telephone calls," and made this
out to be a pretty big number. Naive readers and Hillary haters have
accepted it as such. If fact, 85 meetings and telephone calls over four
years are, well, de minimis.
Many of these donors had standing sufficient to get them in the door
whether they gave to the Foundation or not. But let's say all of them
gained access solely as a result of their donations. Over the four years
HRC was Secretary of State, 85 meetings and telephone calls work out to
1.8 meetings/calls per month. Let's make a guess that she met or talked
on the phone with an average of 15 people a day. So, one of every 250
people HRC met or had a phone call with each month, or 21 out of 3000
each year, would have secured their contact with her by donating to the
Foundation. 85 doesn't look so big in context, especially since no one
has presented any evidence of any quid pro quos.
August 26, 2016 at 2:42 am
The 85 meetings occurred during about half of HRC's term and I've not
heard anyone else dilute things with "phone calls".
Plus, the Bahrainis
were approved for a major arms deal after donating. The Prince tried to
make an appointment with HRC privately, but was made to go through State
Dept. channels before being allowed a meeting.
HRC was also involved in the selling of more weapons in her term than
all of those occurring during the Bush 43 terms combined.
August 26, 2016 at 2:50 am
Also, there is this:
"You had a situation, that The Wall Street Journal reported, where
Hillary Clinton herself intervened in a case dealing with taxes with UBS,
a Swiss bank, and then, suddenly, after that, UBS began donating big to
the Clinton Foundation. So there are many examples of-I mean, there's oil
companies-that's another one I should mention right now, which is that
oil companies were giving big to the Clinton Foundation while lobbying
the State Department-successfully-for the passage of the Alberta Clipper,
the tar sands pipeline."
David Sarota, interview:
First, I'd appreciate it if you could provide a cite
supporting the statement that move arms sales occurred during HRC's four
years than during W's eight years. I'd like to look under the cover of
Also, it's important to note that a lot more people are involved in
approving arms sales than the SoS, including Republicans on the Hill.
Second, the AP touted its original story as being "meetings" but when
you read the story itself you found it was "meetings and phone calls."
Subsequently, the media and commentariat referred to 85 meetings,
dropping reference to phone calls.
Now for the arms sales to Bahrain. This one is especially juicy
because it's an excellent example of how HRC is being tarred.
The US has massive military assets in Bahrain, which hosts the largest
US military outpost in the Gulf. We've been making massive arms sale to
Bahrain for many years. So no surprise that we'd make some when HRC was
And considering the strategic importance of Bahrain, there's no
surprise in HRC meeting with the crown prince. The surprise would be if
she declined to do so.
Now, if memory serves, and I encourage you to check me on this, the US
suspended arms sales to Bahrain while HRC was SoS in response to the
Bahrain's suppression of dissent among its Shia minority. Later, we
partially lifted the suspension to allow sales of arms Related to
protecting our huge naval base in Bahrain. I think this decision also
came while HRC was SoS.
So, the arm sales to Bahrain illustrates my objections to the facile
claims that contributions to the CF suggest that HRC is corrupt. These
claims bring one sliver of information to the discussion: so and so
donated money to the CF and then talked to HRC on the phone (or got a
meeting). No evidence is produced that there's a causal relationship
between the two much less a quid pro quo in which the donation and
meeting led HRC to act in an official capacity to benefit the
All of the examples I've seen so far, the oil companies, UBS, etc. are
like this. No context, no evidence of a quid pro quo, all inuendo.
August 26, 2016 at 10:20 am
I consider some of these contributors to be unsavory, and I wish they'd
give the Clinton Foundation a lot more money so they'd have less to sink
into GOP House and Senate races.
'DAVID SIROTA: Well, my reaction to it is that
I think that if you look at some of these individual examples, I think
Paul is right that it's hard to argue that their donations to the
foundation got them access. They are - a lot of these people in the AP
story are people who knew her."
August 26, 2016 at 11:21 am
I can't remember where I saw the comparison between the arms sales of HRC
and the shrub. But, if it comes to me I'll add it later. Meanwhile, here
is a link to lots of related info:
And yes, "no context, no evidence of a quid pro quo", and almost as if
she knew she might run for the prez job.
August 26, 2016 at 11:41 am
Sorry Phillip, but gee whiz, am I to assume that nobody else has any
'context' on a story that is difficult to miss. Where does one draw such
lines? And the spin you are hoping for is somewhat unwound by David using
the phrase "hard to argue". That could be interpreted to simply mean that
the CF is good at obfuscating. And as someone who has worked in politics
and even for a large NPO, I can atably assure you
August 26, 2016 at 11:59 am
….!!!!!! my cursor got stuck on the previous comment as I tried to use
Anyway, I was trying to comfratably assure you that these organizations
are commonly structured to allow for deceptive practices. The Sierra Club
for example has affiliates that collect donations and then those funds
are used to pay the overhead of the affiliate 'before' any money is
donated to the Sierra Club. Thus, the Sierra club's solicitation costs
are not reflected in the percentage of funds used toward whatever cause.
This is not of course very subtle, and a Foundation such the CF could not
likely get away something this obvious, but…schemes such those exposed by
the Panama Papers should make us all hesitant to assume anything.
I'm a long-time fan of your smart writing and the important work that
you (and Simon) do. But what's with this constant Clinton Derangement
Syndrome? Why look so hard to find some morsel of "scandal" with the
Clintons when there's an entire herd of elephants in the room with the
As a wealth manager of many years, I must disagree with your
dismissive assessment of the Clintons' personal philanthropy as a
personal piggy bank. For sure, in a regular family foundation (many of my
clients!) the grants and donations are entirely at the discretion of the
controlling family, and very often it's all about shiny brass plaques and
photo ops with museum directors or mayors. Fine, that's our system, and
at least something gets done. And then the donors die and the plaques
fade. A shawl has no pockets.
But the Clinton operation is unique: they choose specific issues,
partner with competent outside groups, and then direct enormous extra
outside funds - not just their own meager foundation money - to tackle
the problems. This is only possible because of their international
status; not a Gates nor a Slim nor a Zuckerberg could engineer the same.
One can certainly speculate about who got access (a phone call,
seriously?) or who was schmoozed in what way in order to secure their
donations. But to broad-brush the whole of the Clinton philanthropy as
personal corruption is truly unfair. And it sure doesn't make sense when
there's so much worse and genuinely scandalous material on the other side
just waiting to be uncovered.
Keep the faith!
Bruce E. Woych
August 27, 2016 at 2:39 pm
Note: (from Global Research critique @ (eg:
) cited above:
"Philosopher, novelist, filmmaker and investigative journalist, Andre
Vltchek has covered wars and conflicts in dozens of countries. His latest
books are: "Exposing Lies Of The Empire" and "Fighting Against Western
Imperialism". Discussion with Noam Chomsky: On Western Terrorism. Point
of No Return is his critically acclaimed political novel. Oceania – a
book on Western imperialism in the South Pacific. His provocative book
about Indonesia: "Indonesia – The Archipelago of Fear". Andre is making
films for teleSUR and Press TV.
August 27, 2016 at 3:42 pm
Bruce, (been awhile),
High grade stuff there. Yet, I'm not as taken by Caros' comment as you
seem to be. Near the end, this part: "The Clinton family business is
benefiting themselves AND OTHERS by way of their prominence."
To begin with, the Clinton's influence in arming the royal gulfies may
get us all killed, and so his comparison to the Bushs, while apt in a
current sense, it may well be…dangerously premature. Then too, Caro is of
course taking sides as if the Clintons don't fully realize the P.R.
benefits of giving away other peoples money. Which segs the question of
how could the Clintons have put so much time and effort into Hillary's
run, while creating so many pitfalls for themselves? Did they think the
Repubs might get nice? Are they stupid, arrogant maybe? Or just so
corrupt that they just can't stop like so many kleptomaniacs? In any
case, it isn't only Trump's fitness that we should be questioning.
"... "State Department Delays Records Request About Clinton-Linked Firm Until After The 2016 Election" [ International Business Times ]. "Beacon Global Strategies is a shadowy consulting firm that's stacked with former Obama administration officials, high profile Republicans and a number of Hillary Clinton's closest foreign policy advisers. But beyond its billing as a firm that works with the defense industry, it is unclear for whom specifically the company works, exactly what it does, and if Beacon employees have tried to influence national security policy since the firm's founding in 2013. ..."
"... UPDATE "New York-based Teneo, with 575 employees, markets itself as a one-stop shop for CEOs to get advice on a wide range of issues, including mergers and acquisitions, handling crises and managing public relations. For its services, it generally charges clients monthly retainer fees of $100,000 to $300,000." [ Wall Street Journal , "Teneo, Consulting Firm with Clinton Ties, Eyes $1 Billion IPO"]. Founder Douglas Band was Bill Clinton's body man . One can only wonder what a body man does to become worth $1 billion to, well, the people who made him worth a billion. ..."
"... The donors expect that their support of the Clinton Foundation will help them get access to the State Department, [Doug] Band see above] expects that he can count on [Huma] Abedin to help, and Abedin seems to understand that she needs to be responsive to Band. This would be a lot of effort for powerful people to expend, if it led to nothing at all. ..."
"... UPDATE "Even as the Clintons are touting plans to distance themselves from their foundation and limit its fundraising if Hillary Clinton is elected president, they're planning one last glitzy fundraising bash on Friday to belatedly celebrate Bill Clinton's 70th birthday" [ Politico ]. ..."
"... "Plans called for performances by Wynton Marsalis, Jon Bon Jovi and Barbra Streisand, according to people briefed on the planning. They said that major donors are being asked to give $250,000 to be listed as a chair for the party, $100,000 to be listed a co-chair and $50,000 to be listed as a vice-chair." Sounds lovely! How I wish I could go… ..."
"State Department Delays Records Request About Clinton-Linked Firm Until
After The 2016 Election" [
International Business Times ]. "Beacon Global Strategies is a shadowy consulting
firm that's stacked with former Obama administration officials, high profile
Republicans and a number of Hillary Clinton's closest foreign policy advisers.
But beyond its billing as a firm that works with the defense industry, it is
unclear for whom specifically the company works, exactly what it does, and if
Beacon employees have tried to influence national security policy since the
firm's founding in 2013.
UPDATE "New York-based Teneo, with 575 employees, markets itself as a one-stop
shop for CEOs to get advice on a wide range of issues, including mergers and
acquisitions, handling crises and managing public relations. For its services,
it generally charges clients monthly retainer fees of $100,000 to $300,000."
Wall Street Journal , "Teneo, Consulting Firm with Clinton Ties, Eyes $1
Billion IPO"]. Founder Douglas Band was Bill Clinton's
. One can only wonder what a body man does to become worth $1 billion to,
well, the people who made him worth a billion.
"[I]n many of these [Clinton Foundation] episodes you can see expectations
operating like an electrical circuit. The donors expect that their support of
the Clinton Foundation will help them get access to the State Department, [Doug]
Band see above] expects that he can count on [Huma] Abedin to help, and Abedin
seems to understand that she needs to be responsive to Band. This would be a
lot of effort for powerful people to expend, if it led to nothing at all. There
are two obvious possibilities. One is that the State Department actually was
granting important favors to Clinton Foundation donors that the many sustained
investigations have somehow failed to detect. The other, which is more likely,
is that someone, somewhere along the line, was getting played" [
The New Yorker ]. Surely those two possibilities are not mutually exclusive?
And public office is being used for private gain in either case?
UPDATE "Even as the Clintons are touting plans to distance themselves from
their foundation and limit its fundraising if Hillary Clinton is elected president,
they're planning one last glitzy fundraising bash on Friday to belatedly celebrate
Bill Clinton's 70th birthday" [
"Plans called for performances by Wynton Marsalis, Jon Bon Jovi
and Barbra Streisand, according to people briefed on the planning. They said
that major donors are being asked to give $250,000 to be listed as a chair for
the party, $100,000 to be listed a co-chair and $50,000 to be listed as a vice-chair."
Sounds lovely! How I wish I could go…
Is such incompetence in messaging a reflection of Hillary Clinton
own confusion? Or are the categories "terrorist and dictator" versus
"crucial allies" solely depending on the size of payments to the
I recognize election season is always crazy in the states,
especially as an outside observer looking in, but this cycle
seems so far beyond that norm compared even to 4 years ago it
makes me quite uncomfortable. It reeks of a growing desperation
by the elites to me. The 2012 campaigns of the two major parties
were a circus by any measure, but they seem completely measured
and intellectual by this year's standards.
I understand American culture dwells a lot on violence, but
the new standards of political rhetoric disturb me greatly. It
seems most of the country's population is either willfully
ignorant of the destruction their country creates or cheers it
on wildly and willingly. How anybody could advocate carpet
bombing without irony or rebuttal is frightenening. That it
could drum up support - well that's just depressing.
The two most important topics in this election, nuclear
weapons and global warming, both candidates have been decidedly
silent about. It scares me that neither party even attempts to
appeal to the left anymore, except by manipulating them by fear
and non existent 'security' issues. If it's all about PR and
perception management anyways, I wonder why Clinton wears her
right leaning nature and war mongering history on her sleeve?
Maybe content and debate matters less than I assume it does to
the average American voter. Maybe it's totally about spectacle
and personality now and nothing else. Sad, sad days for those
who live in the middle of the Empire but it's hard to be
sympathetic sometimes. It seems the hot new consumer electronic
device gets more of a thorough analysis and debate than does
either major party candidates' platform (if you could even call
Vote republican and catastrophic, irreversible climate change
is almost guaranteed, with a hearty chance of more war and more
regime change operations (despite attempts to paint the
candidate as 'isolationist').
Vote democrat for more wars and regime change, with the
status quo of environmental destruction happily maintained
(despite the attempts to paint the candidate as an
this us election is much more pathetic then usual... witnessing
the standing president refer to putin akin to saddam hussain is
frankly insane, but shows how depraved the usa has gotten...
and, besides that, since when did the average usa person even
know where any place outside the usa was on a map, let alone
having actually been their? oh - i guess it doesn't matter...
as @1 originalone says basically 'putin did it'...
The Obama administration authorized CIA backing of the
rebellion almost before it started. In all likelihood, it
started several years before the revolt, and the authorization
was to provide legal cover for activity that was already
Unfortunately, your observations are sharp,
correct and to the point. All I can weakly offer is something
Ralph Nader said. Ralph Nader once noted that the difference
between the democrats and republicans is the difference between
a car hitting a wall at 60 miles per hour versus 120 miles per
hour. Not so anymore. Now both cars will hit the wall going as
fast as they can. And the passengers will jump for joy at the
This is Christopher Hitchens biting analysis from previous Presidential elections,
but still relevant
"... The last time that Clinton foreign-policy associations came up for congressional review, the investigations ended in a cloud of murk that still has not been dispelled. ..."
"... the real problem is otherwise. Both President and Sen. Clinton, while in office, made it obvious to foreign powers that they and their relatives were wide open to suggestions from lobbyists and middlemen. ..."
"... If you recall the names John Huang, James Riady, Johnny Chung, Charlie Trie, and others, you will remember the pattern of acquired amnesia syndrome and stubborn reluctance to testify, followed by sudden willingness on the part of the Democratic National Committee to return quite large sums of money from foreign sources. Much of this cash had been raised at political events held in the public rooms of the White House, the sort of events that featured the adorable Roger Tamraz , for another example. ..."
"... It found that the Clinton administration's attitude toward Chinese penetration had been abysmally lax (as lax, I would say, as its attitude toward easy money from businessmen with Chinese military-industrial associations). ..."
"... Many quids and many quos were mooted by these investigations (still incomplete at the time of writing) though perhaps not enough un-ambivalent pros . You can't say that about the Marc Rich and other pardons-the vulgar bonanza with which the last Clinton era came to an end. Rich's ex-wife, Denise Rich, gave large sums to Hillary Clinton's re-election campaign and to Bill Clinton's library, and Marc Rich got a pardon. ..."
"... Edgar and Vonna Jo Gregory, convicted of bank fraud, hired Hillary Clinton's brother Tony and paid him $250,000, and they got a pardon. Carlos Vignali Jr. and Almon Glenn Braswell paid $400,000 to Hillary Clinton's other brother, Hugh , and, hey, they , respectively, got a presidential commutation and a presidential pardon, too. ..."
"... Does this sibling and fraternal squalor have foreign-policy implications, too? Yes. Until late 1999, the fabulous Rodham boys were toiling on another scheme to get the hazelnut concession from the newly independent republic of Georgia. There was something quixotically awful about this scheme-something simultaneously too small-time and too big-time-but it also involved a partnership with the main political foe of the then-Georgian president (who may conceivably have had political aspirations), so once again the United States was made to look as if its extended first family were operating like a banana republic. ..."
"... In matters of foreign policy, it has been proved time and again, the Clintons are devoted to no interest other than their own. ..."
"... Who can say with a straight face that this is true of a woman whose personal ambition is without limit; whose second loyalty is to an impeached and disbarred and discredited former president; and who is ready at any moment, and on government time, to take a wheedling call from either of her bulbous brothers? This is also the unscrupulous female who until recently was willing to play the race card on President-elect Obama and (in spite of her own complete want of any foreign-policy qualifications) to ridicule him for lacking what she only knew about by way of sordid backstairs dealing. What may look like wound-healing and magnanimity to some looks like foolhardiness and masochism to me. ..."
It was apt in a small way that the first
endorser of Hillary Rodham Clinton for secretary of state should have been
Henry Kissinger. The last time he was nominated for any position of responsibility-the
chairmanship of the 9/11 commission-he accepted with many florid words about
the great honor and responsibility, and then he withdrew when it became clear
that he would have to disclose the client list of Kissinger Associates. (See,
for the article that began this embarrassing process for him, my Slate
Latest Kissinger Outrage.")
It is possible that the Senate will be as much of a club as the undistinguished
fraternity/sorority of our ex-secretaries of state, but even so, it's difficult
to see Sen. Clinton achieving confirmation unless our elected representatives
are ready to ask a few questions about conflict of interest along similar lines.
And how can they not? The last time that Clinton foreign-policy associations
came up for congressional review, the investigations ended in a cloud of murk
that still has not been dispelled. Former President Bill Clinton has recently
and rather disingenuously offered to submit his own foundation to scrutiny (see
work of my Vanity Fair colleague Todd Purdum on the delightful friends
and associates that Clinton has acquired since he left office), but
the real problem is otherwise. Both President and Sen. Clinton, while in
office, made it obvious to foreign powers that they and their relatives were
wide open to suggestions from lobbyists and middlemen.
Just to give the most salient examples from the Clinton fundraising scandals
of the late 1990s: The House Committee on Government Reform and Oversight published
a list of witnesses called before it who had either "fled
or pled"-in other words, who had left the country to avoid testifying or
invoked the Fifth Amendment to avoid self-incrimination. Some Democratic members
of the committee said that this was unfair to, say, the Buddhist nuns who raised
the unlawful California temple dough for then-Vice President
Al Gore, but however fair you want to be, the number of those who found
it highly inconvenient to testify fluctuates between 94 and 120. If you
recall the names John Huang, James Riady, Johnny Chung, Charlie Trie, and others,
you will remember the pattern of acquired amnesia syndrome and stubborn reluctance
to testify, followed by sudden willingness on the part of the Democratic National
Committee to return quite large sums of money from foreign sources. Much of
this cash had been raised at political events held in the public rooms of the
White House, the sort of events that featured the adorable
Roger Tamraz, for another example.
Related was the result of a House select
on Chinese espionage in the United States and the illegal transfer to China
of advanced military technology. Chaired by Christopher Cox, R-Calif., the committee
in 1999 with no dissenting or "minority" signature. It found that the Clinton
administration's attitude toward Chinese penetration had been abysmally lax
(as lax, I would say, as its attitude toward easy money from businessmen with
Chinese military-industrial associations).
Many quids and many quos were mooted by these investigations
(still incomplete at the time of writing) though perhaps not enough un-ambivalent
pros. You can't say that about the Marc Rich and other pardons-the vulgar
bonanza with which the last Clinton era came to an end. Rich's ex-wife, Denise
Rich, gave large sums to Hillary Clinton's re-election campaign and to Bill
Clinton's library, and Marc Rich got a pardon.
Edgar and Vonna Jo Gregory, convicted of bank fraud,
hired Hillary Clinton's brother Tony and paid him $250,000, and they
got a pardon. Carlos Vignali Jr. and Almon Glenn Braswell paid $400,000 to Hillary
Clinton's other brother,
Hugh, and, hey, they, respectively, got a presidential commutation
and a presidential pardon, too. In the Hugh case, the money was returned
as being too embarrassing for words (and as though following the hallowed custom,
when busted or flustered, of the Clinton-era DNC). But I would say that it was
more embarrassing to realize that a former first lady, and a candidate for secretary
of state, was a full partner in years of seedy overseas money-grubbing and has
two greedy brothers to whom she cannot say no.
Does this sibling and fraternal squalor have foreign-policy implications,
too? Yes. Until late 1999, the fabulous Rodham boys were toiling on another
scheme to get the hazelnut concession from the newly independent republic of
Georgia. There was something quixotically awful about this scheme-something
simultaneously too small-time and too big-time-but it also involved a partnership
with the main political foe of the then-Georgian president (who may conceivably
have had political aspirations), so once again the United States was made to
look as if its extended first family were operating like a banana republic.
China, Indonesia, Georgia-these are not exactly negligible countries on our
defense and financial and ideological peripheries. In each country, there are
important special interests that equate the name Clinton with the word pushover.
And did I forget to add what President Clinton pleaded when the revulsion at
the Rich pardons became too acute? He claimed that he had concerted the deal
with the government of Israel in the intervals of the Camp David "agreement"!
So anyone who criticized the pardons had better have been careful if they didn't
want to hear from the Anti-Defamation League. Another splendid way of showing
that all is aboveboard and of convincing the Muslim world of our evenhandedness.
In matters of foreign policy, it has been proved time and again, the
Clintons are devoted to no interest other than their own. A president absolutely
has to know of his chief foreign-policy executive that he or she has no other
agenda than the one he has set. Who can say with a straight face that this
is true of a woman whose personal ambition is without limit; whose second loyalty
is to an impeached and disbarred and discredited former president; and who is
ready at any moment, and on government time, to take a wheedling call from either
of her bulbous brothers? This is also the unscrupulous female who until recently
was willing to play the race card on President-elect Obama and (in spite of
her own complete want of any foreign-policy qualifications) to ridicule him
for lacking what she only knew about by way of sordid backstairs dealing. What
may look like wound-healing and magnanimity to some looks like foolhardiness
and masochism to me.
Christopher Hitchens (1949-2011) was a columnist for Vanity Fair and
the author, most recently, of
Arguably, a collection of essays.
Bill Clinton was a regular neoliberal bottom feeder (in essence not that different from drunkard
Yeltsin) without any strategical vision or political courage, He destroyed the golden possibility of
rapprochement of the USA and Russia (which would require something like Marshall plan to help Russia).
Instead he decided to plunder the country. It's sad that now Hillary will continue his policies, only
in more jingoistic, dangerous fashion. She learn nothing.
"... However, according to Simes in the years immediately following the dissolution of the USSR,
Washington has made perhaps the greatest error of a winner: sold for complacency. ..."
"... Russia simply ceased to be a U.S. geopolitical variable in the equation, Moscow was irrevocably
excluded from the strategic horizon. ..."
"... The result was that the former Deputy Secretary of State Strobe Talbott called at the time
the policy of "eat and shut up": the Russian economy was collapsing, the Red Army reduced the ghost
of the past and Yeltsin's entourage welcomed with open arms of the IMF aid. In short, Russia is a power
failure and as such was treated by administering liberal economic recipes and submitting its projection
to a geopolitical drastic weight loss. Everything apart from the feeling of the Russian leadership.
"... This approach found its full realization, between 1999 and 2004, the expansion of NATO eastward:
they were including Poland, Hungary, Czech Republic, Slovakia, Slovenia, Bulgaria, Romania, Estonia,
Latvia and Lithuania. Together with the U.S. intervention in Serbia during the Kosovo war (1999), this
move Russia convinced that the cost of the American loans -- a dramatic and permanent reduction of the
area of security and its own geopolitical ambitions - was too high . ..."
America won the Cold War. But in addition to the USSR, has it defeated Russia? This question,
which is still in the nineties sounded absurd to most people, began to appear in the last decade,
thanks to the work of historians such as Dimitri Simes, John Lewis Gaddis, or in Italy, Adriano Roccucci.
In the United States is widely believed that the collapse of the Soviet Union was caused in large
part by strategic decisions of the Reagan administration. Surely the military and economic pressure
exerted by these contributed to the disintegration of the Warsaw Pact and then the final crisis of
the Soviet system. However, according to Simes in the years immediately following the dissolution
of the USSR, Washington has made perhaps the greatest error of a winner: sold for complacency.
This has resulted, in retrospect, in an overestimation of U.S. policy choices in the mid-eighties
onwards, and in a parallel underestimation of the role played by the Soviet leadership. Gorbachev
came to power in 1985 determined to solve the problems left behind by Brezhnev: overexposure military
in Afghanistan and subsequent explosion of spending on defense, imposed on an economy tremendously
inefficient. But if Reagan pushed the USSR on the edge of the precipice, Gorbachev was disposable,
albeit unwittingly, triggering reforms that escaped the hands of his own theorist.
That fact has been largely removed from public debate and U.S. historiography which has led America
in the second mistake: underestimating the enemy defeated, confusing the defunct Soviet Union with
what was left of his heart - Russia.
In fact, Reagan and Bush Sr. after him fully understand the dangers inherent in the collapse of
the superpower enemy, dealing with Gorbachev touch, even without discounts: the Soviet leader was
refused the pressing demands for economic aid, incompatible with the military escalation Reagan once
to crush the Soviet Union under the weight of war spending.
Even the first Gulf War (1990-91), who saw the massive American intervention in a country (Iraq)
at the time near the borders of the USSR, did not provoke a diplomatic rupture between the two superpowers.
This Soviet weakness undoubtedly was the result of an empire in decline, but remember that even in
1990 no one - least of all, the leadership in Moscow - the Soviet Union finally gave up on us yet.
Despite an election campaign played on the charge to GH Bush to focus too much on foreign policy,
ignoring the economics (It's the economy, stupid), newly installed in the White House Bill Clinton
was not spared aid to Russia, agreeing to this line of credit to be logged on to the International
Monetary Fund (IMF), from June 1992. Clinton's support was directed mainly toward the figure of Yeltsin
and his policies, with the exception of waging war against Chechen separatism, in 1994.
If Clinton with these moves proved to understand, like its two predecessors, the importance of
"accompany" the Russian transition, avoiding - or at least contain - the chaos following the collapse
of a continental empire, the other part of his administration demonstrated sinful paternalism and,
above all, acquired the illusion of omnipotence that he saw in the "unipolar moment" end not only
the U.S. opposed the US-USSR, but also of any power ambitions of Russia. Russia simply ceased
to be a U.S. geopolitical variable in the equation, Moscow was irrevocably excluded from the strategic
The result was that the former Deputy Secretary of State Strobe Talbott called at the time
the policy of "eat and shut up": the Russian economy was collapsing, the Red Army reduced the ghost
of the past and Yeltsin's entourage welcomed with open arms of the IMF aid. In short, Russia is a
power failure and as such was treated by administering liberal economic recipes and submitting its
projection to a geopolitical drastic weight loss. Everything apart from the feeling of the Russian
This went hand in hand with growing resentment for the permanent position of inferiority which
they were relegated by Washington. To the point that even the then Foreign Minister Andrei Kozyrev,
known by the nickname "Yes sir" for his acquiescence to the dictates of Americans, showed growing
impatience with the brutal Russian downgrading by America.
Indeed, the United States administration did not lack critics: former President Nixon, a number
of businessmen and experts of Russia expressed skepticism or opposition to the Clinton administration
attitude that did not seem to pay particular attention to wounded pride and the strategic interests
of a nation that continued to think of itself as empire. However, these positions does not affect
the dominant view in the administration of the establishment and much of the U.S., where consencus
was that Russia in no longer entitled to have an independent foreign policy.
This approach found its full realization, between 1999 and 2004, the expansion of NATO eastward:
they were including Poland, Hungary, Czech Republic, Slovakia, Slovenia, Bulgaria, Romania, Estonia,
Latvia and Lithuania. Together with the U.S. intervention in Serbia during the Kosovo war (1999),
this move Russia convinced that the cost of the American loans -- a dramatic and permanent reduction
of the area of security and its own geopolitical ambitions - was too high .
The whole thing smells to high heaven. The only reason to
trust that there are no direct quid pro quos is, perversely,
that there are so many donations and so many speeches and
interactions that they all begin to seem normal.
Yes, there may be smoke and no fire, in the legal sense,
but let us not pretend there are no issues here.
"... Does it get money because of the Clintons involvement in raising money? Undoubtedly, without their participation it can't raise anywhere near that amount of money, and the reason is that their high public profile means that people believe that by giving to them they can influence policy, ..."
Low level personnel in the US government are expected to reject gifts, or if culturally they cannot,
then they turn them over to their agency, unless it is something like a coffee or a sandwich.
There is an expectation that people are going to not just not actually corrupt their job by doing
favors for people who give them gifts or do them favors, but that they will avoid the appearance of
corruption that is generated by accepting gifts.
The supreme court doesn't agree with that anymore. Anyone can accept any kind of bribe as long as
they don't let it influence their actions. You can't see the desk for the treasure that's being dumped
onto political tables to fund campaigns and line their personal pockets.
This is a foreign practice, one that is corrupt and should be rooted out nationally. Accepting gifts
creates a corrupting environment, no matter what the recipient does, because EVERYONE understands that
the gift is intended to influence policy or gain access so that the person can influence policy. The
person giving the gift knows it, or they wouldn't give it, the person receiving the gift knows it, but
"deep down in their honest hearts" they're not going to allow it to influence their work and decisions?
No of course not. Buying access is the same as putting a stack of cash into someone's pocket to get
them to vote one way or another on a bill of interest.
Does the Clinton foundation do good work? Sure. Does it get money because of the Clintons involvement
in raising money? Undoubtedly, without their participation it can't raise anywhere near that amount
of money, and the reason is that their high public profile means that people believe that by giving
to them they can influence policy, even if those people are not in office (through backchannels
and whispers and introductions).
Does every person donating to the Clinton foundation want to influence policy, or are they primarily
motivated by wanting to fund it's good works? This is impossible to tell. Even someone as prominent
and perhaps morally blameless Elie Wiesel isn't there to eat cookies and have tea and talk about the
weather if he's in Hillary Clinton's office. That is not what he is there for. That kind of meeting
is not purely a social call, it's an effort to influence policy, whether it is related to statements
on the Armenian genocide or the Sudan or god knows what.
Is he a person that she should meet with, whether he gives a donation to her foundation or not? Maybe
that is her job. Probably most of these meetings are that way. That's why public officials are expected
to put investments and charities into trusts and blinds and under separate management when they're in
office, to help establish the boundary between their public responsibilities and their private interests
including their charitable interests.
It doesn't matter to me whether she did anything that she shouldn't have done, legally. The letter
of the law is insufficient to dictate the actions of moral people. Is it disqualifying? She's already
been disqualified in my mind, this is just another thing.
Is it disturbing and annoying to me to see the double standard where promoters are willing to weasel
and explain away whatever the Clintons have done that for any person on the other side of the aisle
would be moral issues that disqualify them from office?
"... A top aide to Hillary Clinton at the State Department agreed to try to obtain a special diplomatic passport for an adviser to former President Bill Clinton in 2009, according to emails released Thursday, raising new questions about whether people tied to the Clinton Foundation received special access at the department. ..."
"... The exchange about the passport, between Mr. Band and Huma Abedin, who was then a top State Department aide to Mrs. Clinton, was included in a set of more than 500 pages of emails made public by Judicial Watch, a conservative legal group that sued for their release. ..."
"... "Need get me/justy and jd dip passports," Mr. Band wrote to Ms. Abedin on July 27, 2009, referring to passports for himself and two other aides to Mr. Clinton, Justin Cooper and John Davidson. ..."
"... Traveling with a former president does not convey any special diplomatic status, the State Department indicated in a statement regarding the emails. "Diplomatic passports are issued to Foreign Service officers or a person having diplomatic or comparable status," the statement said. ..."
"... "Any individuals who do not have this status are not issued diplomatic passports," it said, adding that "the staff of former presidents are not included among those eligible to be issued a diplomatic passport." ..."
A top aide to Hillary Clinton at the State Department agreed to try to obtain a special diplomatic
passport for an adviser to former President Bill Clinton in 2009, according to emails released Thursday,
raising new questions about whether people tied to the Clinton Foundation received special access
at the department.
The request by the adviser, Douglas J. Band, who started one arm of the Clintons' charitable foundation,
was unusual, and the State Department never issued the passport. Only department employees and others
with diplomatic status are eligible for the special passports, which help envoys facilitate travel,
... ... ...
The exchange about the passport, between Mr. Band and Huma Abedin, who was then a top State Department
aide to Mrs. Clinton, was included in a set of more than 500 pages of emails made public by Judicial
Watch, a conservative legal group that sued for their release.
"Need get me/justy and jd dip passports," Mr. Band wrote to Ms. Abedin on July 27, 2009, referring
to passports for himself and two other aides to Mr. Clinton, Justin Cooper and John Davidson.
... ... ...
But a person with knowledge of the issue, who spoke on the condition of anonymity, said that the
three men were arranging to travel with Mr. Clinton to Pyongyang less than a week later for the former
president's secret negotiations. Mr. Clinton already had a diplomatic passport as a former president.
... ... ...
Traveling with a former president does not convey any special diplomatic status, the State Department
indicated in a statement regarding the emails. "Diplomatic passports are issued to Foreign Service officers or a person having diplomatic or
comparable status," the statement said.
"Any individuals who do not have this status are not issued diplomatic passports," it said, adding
that "the staff of former presidents are not included among those eligible to be issued a diplomatic
The emails released by Judicial Watch also include discussions about meetings between Mrs. Clinton
and a number of people involved in major donations to the Clinton Foundation.
In one exchange in July 2009, Ms. Abedin told Mrs. Clinton's scheduler that Mr. Clinton "wants
to be sure" that Mrs. Clinton would be able to see Andrew Liveris, the chief executive of Dow Chemical,
at an event the next night. Dow Chemical has been one of the biggest donors to the Clinton Foundation,
giving $1 million to $5 million, records show.
Ms. Abedin arranged what she called "a pull-aside" for Mr. Liveris to speak with Mrs. Clinton
in a private room after she arrived to give a speech, according to the emails, which did not explain
the reason for the meeting.
The person with knowledge of the issue said that this email chain also related to Mr. Clinton's
North Korea trip because Mr. Liveris had offered to let Mr. Clinton use his private plane.
A separate batch of State Department documents
released by Judicial Watch last month also revealed contacts between the State Department and Clinton
Foundation donors. In one such exchange, Mr. Band sought to put a billionaire donor in touch with
the department's former ambassador to Lebanon.
Donald J. Trump, Mrs. Clinton's Republican opponent, has seized on the documents, saying they
revealed a "pay to play" operation.
"... "When I was the chief White House ethics lawyer for President George W. Bush," You knew exactly where this article was going once you read the first 14 words. ..."
"... The author was chief ethics lawyer for the George W. Bush Administration. Why does that bother me? I realize this guy's term was from 2005 to 2007 and the Abu Ghraib story pretty much broke in early 2005, ..."
"... How much did the Clinton campaign pay for this Op-Ed? 'Every one does it' and 'it's not illegal'. 'It's how business is done.' How about doing a real in-depth investigation on the Clinton Foundation and perceived favors to donors NYT, instead of more opinion? ..."
"... Clearly a planted article. Nice try. Is everyone aware that the Foundation paid off Clinton's '08 campaign debt? They gave $400,000 and considered "payment for the campaign's mailing lists" ..."
"... According to former Justice Department Deputy Assistant Attorney General Shannen Coffin, there are at least three different categories of federal laws which may be implicated. ..."
"... One, the ethics and government act, which says you can't use a public office for private gain for yourself or even for a charity. So in giving special access to the donors for the Clinton Foundation, the ethics and government act is implicated. So perhaps Mr. Painter is a bit hasty dismissing such claims. ..."
"... If it was only about getting a government post or an arranged meeting, I would agree. But this seems different because significant amounts of money changed hands as a result of State Department intervention. And a lot of that money ended up at the Foundation or as speaking fees to Bill Clinton. How is this not seen as foreign donations effecting an American election - which I believe is illegal. ..."
"... Mr. Painter: You say "There is little if any evidence that federal ethics laws were broken by Mrs. Clinton". So if there is even "little" evidence that the laws were broken, then shouldn't American electorate consider it when making their election day decisions? ..."
"... You did not mention that there was no independent investigation on this subject, so there is no way to know whether there was "little" or "significant" or "overwhelming" evidence that the laws were broken. ..."
"... And finally, even if the written laws were not broken, what about the immorality of what Clintons did? Has morality been completely removed from the public square in this once great country? ..."
"... If there was no evidence of corruption at the Clinton Foundation, then why did Bill Clinton's speaking fees increase astronomically (from roughly $100,000 to $850,000) during Hillary's tenure at the State Department? ..."
"... as the neocons and neolibs in power withdraw from the govt's former "general welfare" Constitutional role and concentrate on enriching themselves and their friends - it would pay for citizens to become more aware of how the sector works. ..."
"... the system they devised inevitably empowers some groups more than others. Since democratic theory defines government officials as representatives of the voters, it encourages constituents to influence the decisions of those agents. Ideally, politicians should not favor the interests of some groups over others, but reality dictates otherwise. ..."
"... In the contest for influence, money inevitably plays a major, although not always decisive, role. In an effort to limit this role, we have developed both formal and informal methods to constrain human greed. The law prohibits bribery, for example. To discourage subtler forms of influence-buying, we have developed codes of ethics that pressure officials to limit financial connections with groups or individuals who might seek their help. ..."
"... Public opinion can serve as a powerful tool to enforce these codes. This explains the informal requirement that a president divest herself of financial connections that might affect her decisions. If Clinton rejects this tradition, she will undermine an important method of limiting the influence of moneyed interests in government. We have too few such tools as it is. ..."
"... Our laws are relatively stringent and prevent the crassest forms of corruption, and our culture makes lesser but legal offenses dangerous politically. But to imagine that any government, anywhere, could function without either those sorts of alliances or some equally corruptible strongman central oversight is is as naive and dangerously idealistic. ..."
"... How would someone feel if they found out that a doctor who prescribed them a medication is also paid large sums by a pharmaceutical company to promote the drug? Or, if the doctors owns substantial amount of stock in the company? Appearances do matter and it is likely that such conflicts do impact judgement. These kinds of allowances are being cleaned up across the country, at least in medicine. ..."
"... I am fine if they get higher salaries, but it is time to clean up the political corruption and crony capitalism. It is a shame that we hold our politicians to such incredible low standards and it is not a surprise that so many people don't bother to vote. ..."
"... It doesn't matter how good or bad the work of the Clinton Foundation is. That is not the question. The question is the motivation of many who contribute to the foundation. Are they motivated by altruism or is donating in a big way a ploy to gain access to Mrs. Clinton. ..."
"... I doubt that Clinton breached a fundamental legal boundary. However, the Clinton's have always seen the bright line and have decided to test the boundaries. From using police to secure women while governor to taking money from Walmart to major financial institutions to the email scandal, the Clinton's do it again and again and blame a vast right wing conspiracy. The Clinton foundation used Doug Band as a bag man securing commercial contracts for Bill and Hilary while he had a senior role at the foundation (flashing red lights). Huma took money off the state department books as did other Clinton confidants (flashing red lights), etc. They can't help themselves. Are these actives illegal? Probably not. However, we seek to be inspired by our leaders, we want leaders who are better than the average, better than us. ..."
"... When Bill can trot off to Russia, get 750k for a speech at the same time that business interests of the donor is before the State Department, it smells. The crux of the matter is the rotten judgement. ..."
"... You want a POTUS who has good judgement. The relentless chasing of a buck mixed with the appearance of impropriety, real or imagined, is the problem. When mixed with her poor judgement on the emails and her poor judgement on invading Iraq and disrupting Libya, you have a problem which explains her low approval rating. She is just fortunate that she has Trump to run against. ..."
"... If we look back to the Bill Clinton and Monica Lewinsky scandal, those that were screaming the loudest for justice were having extramarital affairs during the "investigation". Newt Gingrich, Bob Livingston, Henry Hyde. And then there was Dennis Hastert. ..."
"... You bring up yet another problem with Hilary. She has covered for her sexual predator husband for decades, including harassing and publicly shaming her husband's sexual assault victims. And there are many going back to his Oxford days. How is that ok? ..."
"... The Trumpster won the Republican nomination precisely because of voter disgust over the in-crowd culture of politicians and donors. Bernie Sanders came close to winning the Democratic nomination for much of the same reason. Hilary and her entire family need to wake up fast if she has any hope or desire to get elected. We all know where Hilary's money is coming from. Does Hilary know where her voters are coming from and where they are now? ..."
"... To put this in a nutshell, The Clinton's self-enriching behavior- and use of public office for private gain - is troubling in the extreme ..."
"... During her tenure as Secretary of State (as reported by the AP) of the 154 non-official meetings at least 85 of those individuals were private-sector donors who contributed up to $156 million to Clinton Foundation initiatives. ..."
"... The report comes on top of other far more incriminating investigations revealing the appearance of quid pro quo with foreign donors to the Clinton Foundation. Perhaps the worst example was when investors who profited from the Clinton State Department's approval of a deal for Russia's atomic energy agency's acquisition of a fifth of America's uranium mining rights subsequently pumped money into the Clinton Foundation. ..."
"... I hate to say this but the Clintons are America's version of Russian Oligarchs - and their Foundation almost a glorified form of money laundering. I can only pray that in 2020, us Dems may find a better president ,and that the Clintons be soon forgotten. ..."
"... Without seeing the 30,000 deleted emails, how is anyone qualified to say no laws were broken? Besides, who cares what the chief ethics lawyer for a president who authorized torture thinks? ..."
This is not the typical foundation funded by family wealth earned by
an industrialist or financier. This foundation was funded almost entirely by donors, and to the
extent anyone in the Clinton family "earned" the money, it was largely through speaking fees for
former President Bill Clinton or Hillary Clinton when she was not secretary of state. This
dependence on donations - a scenario remarkably similar to that of many political campaigns -
means that the motivations of every single donor will be questioned whenever a President Clinton
does anything that could conceivably benefit such donors.
... ... ...
This kind of access is the most corrupting brand of favoritism and
pervades the entire government. Under both Republican and Democratic presidents, top
ambassadorial posts routinely go to campaign contributors. Yet more campaign contributors hound
these and other State Department employees for introductions abroad, preferred access and
advancement of trade and other policy agendas. More often than not the State Department does
... ... ...
The problem is that it does not matter that no laws were broken, or
that the Clinton Foundation is principally about doing good deeds. It does not matter that
favoritism is inescapable in the federal government and that the Clinton Foundation stories are
really nothing new. The appearances surrounding the foundation are problematic, and it is and
will be an albatross around Mrs. Clinton's neck.
... ... ...
As for Chelsea Clinton, anti-nepotism laws, strengthened after
President Kennedy appointed his brother Robert as attorney general, could prevent her mother from
appointing her to some of the highest government positions. But she could give her mother
informal advice, and there are a great many government jobs for which she would be eligible. She
does not need the Clinton Foundation to succeed in life.
Richard W. Painter, a professor of law at the University of
Minnesota, was the chief White House ethics lawyer from 2005 to 2007.
Majortrout, is a trusted commenter Montreal 2 days ago
"When I was the chief White House ethics lawyer for President George W. Bush," You knew
exactly where this article was going once you read the first 14 words.
chichimax, albany, ny 2 days ago
I have a hard time focusing on this article. The author was chief ethics lawyer for the
George W. Bush Administration. Why does that bother me? I realize this guy's term was from
2005 to 2007 and the Abu Ghraib story pretty much broke in early 2005, but, thinking
about those other lawyers for that Bush and what they said was okay, it really gives me the
creeps to think about focusing on anything this guy might say about ethics. Just sayin'.
Lori, San Francisco 2 days ago
How much did the Clinton campaign pay for this Op-Ed? 'Every
one does it' and 'it's not illegal'. 'It's how business is done.' How about doing a real
in-depth investigation on the Clinton Foundation and perceived favors to donors NYT, instead
of more opinion?
If the foundation is so squeaky clean there should be no problem.
Or has Hilary made it clear you won't get a front row seat at her next mythical press
conference? Or has she threatened to stop sending you the press releases from her campaign you
report as news?
Ange, Boston 2 days ago
Clearly a planted article. Nice try. Is everyone aware that
the Foundation paid off Clinton's '08 campaign debt? They gave $400,000 and considered
"payment for the campaign's mailing lists"
Crabby Hayes, Virginia 2 days ago
According to former Justice Department Deputy Assistant
Attorney General Shannen Coffin, there are at least three different categories of federal laws
which may be implicated.
One, the ethics and government act, which says you can't use
a public office for private gain for yourself or even for a charity. So in giving special
access to the donors for the Clinton Foundation, the ethics and government act is implicated.
So perhaps Mr. Painter is a bit hasty dismissing such claims.
Randy, Largent 2 days ago
If it was only about getting a government post or an arranged
meeting, I would agree. But this seems different because significant amounts of money changed
hands as a result of State Department intervention. And a lot of that money ended up at the
Foundation or as speaking fees to Bill Clinton. How is this not seen as foreign donations
effecting an American election - which I believe is illegal.
Isa Ten, CA 2 days ago
Mr. Painter: You say "There is little if any evidence that
federal ethics laws were broken by Mrs. Clinton". So if there is even "little" evidence that
the laws were broken, then shouldn't American electorate consider it when making their
election day decisions?
You did not mention that there was no independent
investigation on this subject, so there is no way to know whether there was "little" or
"significant" or "overwhelming" evidence that the laws were broken.
Your main argument is that "everyone" does that. Perhaps, it is
time to change that and Trump is the man who can do it. Is it fear of this kind of change that
frightens so many NeverTrumpsters into rejecting him?
And finally, even if the written laws were not broken, what
about the immorality of what Clintons did? Has morality been completely removed from the
public square in this once great country?
David Keltz, Brooklyn 2 days ago
If there was no evidence of corruption at the Clinton Foundation, then why did Bill
Clinton's speaking fees increase astronomically (from roughly $100,000 to $850,000) during
Hillary's tenure at the State Department?
Did he suddenly become more sought after, nearly 8 or 9 years after his presidency? If
there was no evidence of corruption, then why did Hillary Clinton use her authority to appoint
herself onto the Haiti Relief Fund Board, where her sole relief efforts entailed asking people
not to donate to the Red Cross, but to the Clinton Foundation?
John D., Out West 2 days ago
One thing that comes through loud & clear in the comments: a lot
of people don't have a clue how non-profit organizations work. For a sector that's responsible
for most of the good things in this country these days - as the neocons and neolibs in
power withdraw from the govt's former "general welfare" Constitutional role and concentrate on
enriching themselves and their friends - it would pay for citizens to become more aware of how
the sector works.
James Lee, Arlington, Texas August 31, 2016
The framers of our Constitution had no illusions about the weaknesses of human nature. They
carefully crafted our charter of government to pit the officials of each branch against each
other, to obstruct the kind of collusion that could undermine the foundations of a free
Despite their best efforts, however, the system they devised inevitably empowers some
groups more than others. Since democratic theory defines government officials as
representatives of the voters, it encourages constituents to influence the decisions of those
agents. Ideally, politicians should not favor the interests of some groups over others, but
reality dictates otherwise.
In the contest for influence, money inevitably plays a major, although not always
decisive, role. In an effort to limit this role, we have developed both formal and informal
methods to constrain human greed. The law prohibits bribery, for example. To discourage
subtler forms of influence-buying, we have developed codes of ethics that pressure officials
to limit financial connections with groups or individuals who might seek their help.
Public opinion can serve as a powerful tool to enforce these codes. This explains the
informal requirement that a president divest herself of financial connections that might
affect her decisions. If Clinton rejects this tradition, she will undermine an important
method of limiting the influence of moneyed interests in government. We have too few such
tools as it is.
confetti, MD August 31, 2016
I don't think that favoritism in political life will ever go
away, for the simple reason that political power isn't attained in a vacuum. It requires
sturdy alliances by definition, and those are forged via exchange of valued items - material
goods, policy compromises, position, status, assistance and other durable support. Our
laws are relatively stringent and prevent the crassest forms of corruption, and our culture
makes lesser but legal offenses dangerous politically. But to imagine that any government,
anywhere, could function without either those sorts of alliances or some equally corruptible
strongman central oversight is is as naive and dangerously idealistic.
Of course the Clintons wheeled and dealed - but well within the
I'm more interested in what end that served and the real
consequences than the fact that it occurred. In their case, an effective charity that aided
many very vulnerable people was sustained, and no demonstrable compromises that negatively
affected global policies occurred.
It's the Republicans and truly sold out Democrats, who have
forever been deep in the pocket of big money and whose 'deals' in that department cause
tangible harm to the populace, that I'm more concerned with. This is their smoke and mirrors
Alexander K., Minnesota August 31, 2016
How would someone feel if they found out that a doctor who prescribed them a medication
is also paid large sums by a pharmaceutical company to promote the drug? Or, if the doctors
owns substantial amount of stock in the company? Appearances do matter and it is likely that
such conflicts do impact judgement. These kinds of allowances are being cleaned up across the
country, at least in medicine.
It is time that conflict of interest for politicians at all levels is taken seriously by
the public. I am fine if they get higher salaries, but it is time to clean up the
political corruption and crony capitalism. It is a shame that we hold our politicians to such
incredible low standards and it is not a surprise that so many people don't bother to vote.
Michael Belmont, Hewitt, New Jersey 2 days ago
It doesn't matter how good or bad the work of the Clinton
Foundation is. That is not the question. The question is the motivation of many who contribute
to the foundation. Are they motivated by altruism or is donating in a big way a ploy to gain
access to Mrs. Clinton. The AP analysis suggests that is just what went on. At the very
least it looks bad. Appearances are everything in politics.
Hillary doesn't need to appear to be unethical should she
be elected. Bad enough she has Bill by her side. She doesn't need a special prosecutor
investigator distracting her presidency with an influence peddling scandal. Like it or not,
Republicans will be hunting for her political hide. Hillary doesn't need to paint a bulls-eye
Chris, 10013 2 days ago
I doubt that Clinton breached a fundamental legal boundary. However, the Clinton's have
always seen the bright line and have decided to test the boundaries. From using police to
secure women while governor to taking money from Walmart to major financial institutions to
the email scandal, the Clinton's do it again and again and blame a vast right wing conspiracy.
The Clinton foundation used Doug Band as a bag man securing commercial contracts for Bill and
Hilary while he had a senior role at the foundation (flashing red lights). Huma took money off
the state department books as did other Clinton confidants (flashing red lights), etc. They
can't help themselves. Are these actives illegal? Probably not. However, we seek to be
inspired by our leaders, we want leaders who are better than the average, better than us.
In the Clintons, we have highly competent, experienced, politicians who have repeated
shown deep ethical problems. She is the best candidate by far. It's unfortunate that our
future President never learned what ethics are.
Robert, Minneapolis 2 days ago
An interesting article. It is probably true that many, if not most, politicians are
influence sellers to a degree. I suspect that the Clintons are just better at it. It is fair
to say that we do not know if laws have been broken. But it is also fair to say that
appearances matter, and that the Clintons are very good at lining their own pockets at the
same time the foundation does it's good work.
When Bill can trot off to Russia, get 750k for a speech at the same time that business
interests of the donor is before the State Department, it smells. The crux of the matter is
the rotten judgement.
You want a POTUS who has good judgement. The relentless chasing of a buck mixed with
the appearance of impropriety, real or imagined, is the problem. When mixed with her poor
judgement on the emails and her poor judgement on invading Iraq and disrupting Libya, you have
a problem which explains her low approval rating. She is just fortunate that she has Trump to
Madelyn Harris, Portland, OR 2 days ago
So glad to see many NYT readers here recognize the hypocrisy in this opinion piece. The
message is "All of them do it, it's mostly legal, though it's distasteful and problematic.
However, Hillary is the only one who should stop doing it because it looks bad."
The loudest voices of this partisan attack should be under the same scrutiny and be
compelled to practice what they preach. If we look back to the Bill Clinton and Monica
Lewinsky scandal, those that were screaming the loudest for justice were having extramarital
affairs during the "investigation". Newt Gingrich, Bob Livingston, Henry Hyde. And then there
was Dennis Hastert.
Let's start looking into the personal emails of Paul Ryan, Jason Chaffetz, Donald Trump,
Trey Gowdy, Marco Rubio, Ted Cruz. Imagine what we would find! Legal, but ethically
problematic exchanges and clearly illegal exchanges that would justify imprisonment. If they
ask for justice, we should provide it.
Lori, San Francisco 2 days ago
You bring up yet another problem with Hilary. She has covered for her sexual predator
husband for decades, including harassing and publicly shaming her husband's sexual assault
victims. And there are many going back to his Oxford days. How is that ok?
John D., Out West 2 days ago
An excellent piece, actually tethered to reality and non-profit law and practice ...
finally! Yes, all the Clinton clan needs to divorce themselves from the foundation, and I'm
not sure why they would wait until after the election to do so.
It seems the loudest critics are of the tribe that created campaign finance law as it
stands today, with the CU case having created a legal system of bribery across the board in
government. C'mon guys, be consistent, or it's the big H word for you!
RNW, Albany, CA 2 days ago
When it comes to ethics and public officials, appearances do in indeed MATTER! Cronyism and
conflicts of interest might elicit a big yawn from the political class, their fellow travelers
and camp followers but arouse anger and indignation from voters. Remember those guys?
We're the ones that politicians suddenly remember every few years with they come. hats in
hand, begging for donations and, most of all, our votes. (The plea for donations is a farce.
Except for a few outliers, they don't really need or want OUR donations.)
The Trumpster won the Republican nomination precisely because of voter disgust over the
in-crowd culture of politicians and donors. Bernie Sanders came close to winning the
Democratic nomination for much of the same reason. Hilary and her entire family need to wake
up fast if she has any hope or desire to get elected. We all know where Hilary's money is
coming from. Does Hilary know where her voters are coming from and where they are now?
Tembrach, Connecticut 2 days ago
I preface this by saying that I am proud Democrat & will vote for Mrs. Clinton, as Mr.
Trump is beyond the pale of decency
To put this in a nutshell, The Clinton's self-enriching behavior- and use of public
office for private gain - is troubling in the extreme
During her tenure as Secretary of State (as reported by the AP) of the 154 non-official
meetings at least 85 of those individuals were private-sector donors who contributed up to
$156 million to Clinton Foundation initiatives.
The report comes on top of other far more incriminating investigations revealing the
appearance of quid pro quo with foreign donors to the Clinton Foundation. Perhaps the worst
example was when investors who profited from the Clinton State Department's approval of a deal
for Russia's atomic energy agency's acquisition of a fifth of America's uranium mining rights
subsequently pumped money into the Clinton Foundation.
Mrs Clinton rightly condemns Trump for playing footsy with Putin. But pray tell, what
exactly was this?
I hate to say this but the Clintons are America's version of Russian Oligarchs - and
their Foundation almost a glorified form of money laundering. I can only pray that in 2020, us
Dems may find a better president ,and that the Clintons be soon forgotten.
Thought Bubble, New Jersey 2 days ago
Without seeing the 30,000 deleted emails, how is anyone qualified to say no laws were
broken? Besides, who cares what the chief ethics lawyer for a president who authorized torture
More than half of the people who managed to score a personal one on one meeting with Hillary Clinton
while she was Secretary of State donated money to the Clinton Foundation, either as an individual
or through a company where they worked. "Combined, the 85 donors contributed as much as $156 million.
At least 40 donated more than $100,000 each, and 20 gave more than $1 million," the Associated Press
Does that make Hillary corrupt? Yes. It does.
At this writing, there is
no evidence that anyone received any special favors as a result of their special access to Clinton.
Not that treats were not requested. They were. (The most amusing was Bono's
request to stream his band's music into the international space station, which was mercifully
That's irrelevant. She's still corrupt.
Clinton's defenders like to point out that neither she nor her husband
draw a salary from their foundation. But that's a technicality.
extract millions of dollars in travel expenditures, including luxurious airplane accommodations
and hotel suites, from their purported do-gooder outfit. They exploit the foundation as a patronage
mill, arranging for it to hire their loyalists at extravagant six-figure salaries. Charity Navigator,
the Yelp of non-profits, doesn't bother to issue a rating for the Clinton foundation due to the pathetically
low portion of money
($9 million out of $140 million in 2013) that makes its way to someone who needs it.
"It seems like the Clinton Foundation operates as a
slush fund for the Clintons," says Bill Allison of the Sunlight Foundation, a government watchdog
As a measure of how institutionally bankrupt American politics is, all this
crap is technically
legal. But that doesn't mean it's not corrupt.
Public relations experts
caution politicians like the Clintons that the
appearance of impropriety is almost as bad as its actuality. If it looks
bad, it will hurt you with the polls. True, but that's not really the point.
The point is: access is corruption.
It doesn't matter that the lead singer of U2 didn't get to live out his rocker
astronaut fantasy. It's disgusting that he was ever in a position to have it
considered. To put a finer point on it, ethics require that someone in Hillary
Clinton's position never, ever take a meeting or correspond by email or offer a
job to someone who donated money to her and her husband's foundation. Failure
to build an unscalable wall between government and money necessarily creates a
corrupt quid pro quo:
"Just got a call from the Clinton Foundation. They're
shaking us down for a donation. Should we cough up a few bucks?"
"Hillary could be president someday. Chelsea could end up in the Senate. It
couldn't hurt to be remembered as someone who threw them some money when they
This, I 100% guarantee you, was the calculus when Wall Street firms like Goldman Sachs paid hundreds of thousands of dollars to Hillary for a one- or two-hour speech. She doesn't have anything new to say that everyone hasn't already heard million times before. It's not like she shared any valuable stock tips during those talks. Wealthy individuals and corporations pay politicians for one thing: access.
Ted Rall, syndicated writer and the cartoonist for ANewDomain.net, is the author of the
book "Snowden," the biography of the NSA whistleblower.
Good question, this NC reader is just pretty fed up with the status quo (maybe others want
to chime in):
– Unlimited immunity from prosecution for banking executive criminals
More shiny new undeclared "nation-building" and "RTP" wars
– Globalist trade deals that
enshrine unaccountable corporate tribunals over national sovereignty, environmental and worker
protection, and self-determination
– America's national business conducted in secrecy at
the behest of corporate donors to tax-exempt foundations
– Paid-for quid-pro-quo media
manipulation of candidate and election coverage
– Health care system reform designed to
benefit entrenched insurance providers over providing access to reasonable-cost basic care.
Based on the above I'd say the 11:2 ratio looks about right.
Breezy is right. It does lead me to ask if this were not the Clinton
Foundation but was the Bush Foundation or the Rubio Foundation or…would this
still be just be the way things work? I do not think so.
Don't get me wrong I have great admiration for Atrios (he is right on the
money regarding Social Security and self-driving cars), but the double
standard where both Obama and Clinton are concerned is strong at Eschaton,
and I'm sorry to say with him as well.
Accepting this as the way things work is just accepting that corruption
is the norm and there is nothing to be done about it. So unless you are
willing to shut up about supposed misdeeds of all elected officials and
political candidates because this is the way it is done, you need to get the
f*ck over the idea that this is NORMAL and ACCEPTABLE.
And I don't see that happening over there, or at Daily Kos, or… once the
subject is out is out of the tribe.
I can understand the "it's OK when
do it" double
standard. Family/tribe/team, we are all trained to do that. What I don't
understand is how one could ever arrive at Clinton Foundation = our
people prerequisite to applying it in this instance. WT actual F?
I think you are coming at this from far too realistic a point of
view. You aren't looking at this as the Foundation is a tool, like a
speech or a fundraiser, in order to provide
individuals/groups/corporations/nations a means to expedite access to
the government official, in this case Clinton. You think of it as a
false charity. But for the greasing the wheels is normal operating
procedure, what this was was a gift to open more avenues for the
wheels to be greased. It's up to you…or me…or even the people of Flint
among others to use that opportunity.
Breezy is right. It does lead me to ask if this were not the
Clinton War With Russia
but was the
Bush War With Iraq
Rubio War With Syria
or…would this still be just
be the way things work? I do not think so.
Don't get me wrong I have great admiration for Atrios (he is right on
the money regarding Social Security and self-driving cars), but the
double standard where both Obama and Clinton are concerned is strong at
Eschaton, and I'm sorry to say with him as well.
Accepting this as the way things work is just accepting that
endless and new wars
is the norm and there is nothing to be done
about it. So unless you are willing to shut up about supposed
endless new wars
of all elected officials and political
candidates because this is the way it is done, you need to get the f*ck
over the idea that this is NORMAL and ACCEPTABLE.
And I don't see that happening over there, or at Daily Kos, or… once
the subject is out is out of the tribe.
Excellent interview. I've bookmarked Ortel's website and am looking
forward to his forthcoming writings. I was not aware of the differences
between laws regulating charities versus other forms of organizations, so
the interview as a starting point was very useful for me.
Hillary Clinton's pay-for-play scandal is threatening to derail her campaign.
Public outrage follows revelations that the Foundation took foreign cash during
Clinton's tenure as Secretary of State, that Clinton aide Huma Abedin was
helping Foundation donors get favors and access from the State Department, and
that Clinton aide Cheryl Mills was doing assignments for the Clinton Foundation
while on the State Department payroll.
In a letter Monday to Foundation president Donna Shalala, Priebus demands
"I am writing to you to call on the Clinton Foundation and all of the entities
under its umbrella to release all correspondence its officials had with the State
Department during Hillary Clinton's tenure as secretary of state," Priebus added.
As I am sure you are well aware, a spate of recent news reports involving
the Clinton Foundation's relationship with the Clinton State Department has
renewed serious concerns about conflicts of interest and whether donors to the
foundation benefitted from official acts under then-Secretary Clinton.
"It isn't just "suspicious." It's influence peddling, which is corrupt
by definition. And there's a whole infrastructure, institutional and technical, to support it." Lambert Strether of
"... here you have Hillary Clinton and Bill Clinton having this Clinton Foundation, with billions of dollars pouring into it from some of the world's worst tyrannies ..."
"... Bill and Hillary Clinton are being personally enriched by those same people, doing speeches, for many hundreds of thousands of dollars, in front of them, at the same time that she's running the State Department, getting ready to run for president, and soon will be running the executive branch. ..."
"... the problem here is that the Clintons have essentially become the pioneers of eliminating all of these lines, of amassing massive wealth from around the world, and using that to boost their own political power, and then using that political power to boost the interests of the people who are enriching them in all kinds of ways. ..."
[W]hat Donna Brazile said in that video that you played is nothing short of laughable. It's not
questioned when Republicans do favors for their donors? Of course it is. In fact, it's been a core,
central critique of the Democratic Party, both Barack Obama and Hillary Clinton, for years, that
Republicans are corrupt because they serve the interest of their big donors. One of the primary positions
of the Democratic Party is that the Citizens United decision of the Supreme Court has corrupted politics
because it allows huge money to flow into the political process in a way that ensures, or at least
creates the appearance, that people are doing favors for donors.
And so, here you have Hillary Clinton and Bill Clinton having this Clinton Foundation, with billions
of dollars pouring into it from some of the world's worst tyrannies, like Saudi Arabia and the United
Arab Emirates and Qatar and other Gulf states, other people who have all kinds of vested interests
in the policies of the United States government. And at the same time, in many cases, both Bill and
Hillary Clinton are being personally enriched by those same people, doing speeches, for many hundreds
of thousands of dollars, in front of them, at the same time that she's running the State Department,
getting ready to run for president, and soon will be running the executive branch. …
And so, the problem here is that the Clintons have essentially become the pioneers of eliminating
all of these lines, of amassing massive wealth from around the world, and using that to boost their
own political power, and then using that political power to boost the interests of the people who
are enriching them in all kinds of ways. And of course questions need to be asked, and suspicions
are necessarily raised, because this kind of behavior is inherently suspicious. And it needs a lot
of media scrutiny and a lot of attention, and I'm glad it's getting that.
"... On numerous occasions we have recognized Congress' legitimate interest in preventing the money that is spent on elections from exerting an "'undue influence on an officeholder's judgment"' and from creating "4he appearance of such influence,"' beyond the sphere of quid pro quo relationships. I ..."
"... Corruption can take many forms. Bribery may be the paradigm case. But the difference between selling a vote and selling access is a matter of degree, not kind. And selling access is not qualitatively different from giving special preference to those who spent money on one's behalf. ..."
"... Corruption operates along a spectrum, and the majority's apparent belief that quid pro quo arrangements can be neatly demarcated from other improper influences docs not accord with the theory or reality of politics. ..."
On numerous occasions we have recognized Congress' legitimate interest in preventing the money that
is spent on elections from exerting an "'undue influence on an officeholder's judgment"' and from
creating "4he appearance of such influence,"' beyond the sphere of quid pro quo relationships. Id.,
at 150; see also. e.g., id., at 143-144. 152-154; Colorado II, 533 U. S.. at 441; Shrink Missouri.
528 U. S., at 389.
Corruption can take many forms. Bribery may be the paradigm case. But the difference
between selling a vote and selling access is a matter of degree, not kind. And selling access is
not qualitatively different from giving special preference to those who spent money on one's behalf.
Corruption operates along a spectrum, and the majority's apparent belief that quid pro quo arrangements
can be neatly demarcated from other improper influences docs not accord with the theory or reality
It certainly does not accord with the record Congress developed in passing BCRA. a record
that stands as a remarkable testament to the energy and ingenuity with which corporations, unions,
lobbyists, and politicians may go about scratching each other's backs - and which amply supported
Congress' determination to target a limited set of especially destructive
"... Hillary will win, and it will be more than business as usual. Influence peddling and pay to play will accelerate. The neocon money will flow into the system and foreign policy will be a debacle. We may very well be approaching WWIII. ..."
"... Under a Clinton II presidency, long-term international turmoil and confrontation lie ahead no matter what their family foundation may attempt to achieve. ..."
If Clinton gets elected, she will be under investigation prior to the inauguration. The Republicans
will use their hold on the house to start several investigations on November 9.
However, the GOP (continuing a party tradition) will cruise right past several true issues,
and lock onto the one thing they believe will hold the most shock value. This will turn out to
not be provable, or not be all that interesting to anyone but die-hard GOP supporters, and she
will exit the investigations as powerful, if not more so, than before.
There are plenty of reasons to investigate the Clinton machine, but if you expect this clown
show to do it competently I have a bridge to sell you…
No this one is backfiring already as most of the donors were people HRC would have met anyway,
including Nobel Peace winners! and the 89 out of 154 people has not been released. And the article
does not note any mischief but that there were meetings!
Or that there are a ton of other government officials have spouses that run well run charities.
Matt Yglesias has de-bunked this one a lot and my guess disappears relatively quickly.
This is as worthless evidence as Michael Moore's Fahrenheit 9/11.
Hillary will win, and it will be more than business as usual. Influence peddling and pay to
play will accelerate. The neocon money will flow into the system and foreign policy will be a
debacle. We may very well be approaching WWIII.
The economy will continue to hollow out due to central bank hubris, government stimulus, and
non-free trade deals. Income inequality will get worse. The middle class will continue to shrink.
After leaving office, Bill Clinton could have devoted his energies to Habitat for Humanity (like
Jimmy Carter) or thrown his energies into helping an existing organisation (like the Bill & Melinda
Gates foundation). He didn't, because he wanted the "fruits" of his philanthropic work to accrue
to him and his family. And so it is not unreasonable to ask exactly what those fruits are, especially
those gained while Hillary Clinton was serving as the nation's chief diplomat.
The two sources of her problems are beginning to merge much as two weather depressions might
collide and become a hurricane. One is the already well-trodden matter of her use of a private
email server while Secretary of State. The other relates to the Clinton Foundation and whether
donors received preferential access to her while she served in that post.
Two bombs dropped on the Clinton campaign at once on Monday. First it emerged that the FBI has
collected and delivered to the State Department almost 15,000 new emails not previously seen and
a federal judge ordered the department to accelerate their release to the public. Meanwhile, a
conservative group called Judicial Watch released details of still more emails detailing exactly
how donors to the foundation set about trying to get Ms Clinton's attention.
... ... ...
Questions have been swirling for weeks about whether or not Ms Clinton was drawn into giving
special favours to some of her husband's pals in return for their giving generously to the
charitable foundation he set up after leaving the presidency – a pay and play arrangement. On
Monday, Judicial Watch unveiled details that showed exactly how that might have happened thanks
to emails it had accessed through the courts sent to and from Huma Abedin, a close Clinton
confidante and her deputy chief of staff during her four years at the State Department.
... ... ...
In attempt to forestall the trouble that is already upon his wife, Mr Clinton announced this
week that should she win the presidency, several things will change at his Foundation. First and
foremost it would cease to take money from any foreign governments and donors and only from
US-based charities and individuals. He would also step down from the foundation entirely and
cease personally to raise funds for it.
...many voters are simply afraid that with Ms Clinton in the White House the whole tawdry
cycle will just start all over again and nothing else with get done in Washington
It was only one in a long parade of late-August fundraisers Ms Clinton has attended, but it
stands out for the generosity required of those who attended. The price of admission for the
20-odd guests who obliged was a stunning $200,000. That was double the $100,000 charged for
guests who mingled recently with Ms Clinton in Omaha at the home of Susan Buffett, the daughter
of Warren Buffett, the veteran investment oracle.
... ... ...
As of Monday, she and Mr Kaine had harvested no less than $32 million for the Hillary Victory
Fund, which will be distributed to her campaign, the Democratic National Committee and state
parties. A lot of was raised in last week as Ms Clinton hopscotched from party to party on
Martha's Vineyard and Cape Code in Massachusetts.
Is that Huma in a blue dress under the Resolute desk?
Pairadimes d Here2Go •Aug 27, 2016 9:14 PM
Ramirez is a genius.
zeronetwork d debtor of last resort •Aug 27, 2016 8:15 PM
The thought process Donald has started is not going to fade very soon. Still
few weeks before election. I am sure Donald got some more cards in his sleeve.
are we there yet •Aug 27, 2016 8:36 PM
I have a solution for Hillary's in-continuance and mobility declining problems.
The chair behind the presidents desk should be a wheelchair with a bedpan.
Otherwise the term 'campaign trail' will take on a whole new meaning.
"... If Hillary Clinton wins, within a year of her inauguration, she will be under investigation by a special prosecutor on charges of political corruption, thereby continuing a family tradition. ..."
"... Of 154 outsiders whom Clinton phoned or met with in her first two years at State, 85 had made contributions to the Clinton Foundation, and their contributions, taken together, totaled $156 million. ..."
"... Conclusion: access to Secretary of State Clinton could be bought, but it was not cheap. Forty of the 85 donors gave $100,000 or more. Twenty of those whom Clinton met with or phoned dumped in $1 million or more. ..."
"... On his last day in office, January 20, 2001, Bill Clinton issued a presidential pardon to financier-crook and fugitive from justice Marc Rich, whose wife, Denise, had contributed $450,000 to the Clinton Library. ..."
Prediction: If Hillary Clinton wins, within a year of her inauguration, she will be under
investigation by a special prosecutor on charges of political corruption, thereby continuing a family
... ... ...
Of 154 outsiders whom Clinton phoned or met with in her first two years at State, 85 had made
contributions to the Clinton Foundation, and their contributions, taken together, totaled $156 million.
Conclusion: access to Secretary of State Clinton could be bought, but it was not cheap. Forty
of the 85 donors gave $100,000 or more. Twenty of those whom Clinton met with or phoned dumped in
$1 million or more.
To get to the seventh floor of the Clinton State Department for a hearing for one's plea, the
cover charge was high. Among those who got face time with Hillary Clinton were a Ukrainian oligarch
and steel magnate who shipped oil pipe to Iran in violation of U.S. sanctions and a Bangladeshi economist
who was under investigation by his government and was eventually pressured to leave his own bank.
The stench is familiar, and all too Clintonian in character.
Recall. On his last day in office, January 20, 2001, Bill Clinton issued a presidential pardon
to financier-crook and fugitive from justice Marc Rich, whose wife, Denise, had contributed $450,000
to the Clinton Library.
The Clintons appear belatedly to have recognized their political peril.
Bill has promised that, if Hillary is elected, he will end his big-dog days at the foundation
and stop taking checks from foreign regimes and entities, and corporate donors. Cash contributions
from wealthy Americans will still be gratefully accepted.
One wonders: will Bill be writing thank-you notes for the millions that will roll in to the family
foundation-on White House stationery?
What a bunch of neoliberal piranha, devouring the poorest country in Europe, where pernneers exist
on $1 a day or less, with the help of installed by Washington corrupt oligarchs (Yanukovich was installed
with Washington blessing and was controlled by Washington, who was fully aware about the level of corruption
of its government; especially his big friend vice-president Biden).
"... Mr. Kalyuzhny was also a founding board member of a Brussels-based nongovernmental organization, the European Center for a Modern Ukraine, that hired the Podesta Group, a Washington lobbying firm that received $1.02 million to promote an agenda generally aligned with the Party of Regions. ..."
"... Because the payment was made through a nongovernmental organization, the Podesta Group did not register as a lobbyist for a foreign entity. A co-founder of the Podesta Group, John D. Podesta, is chairman of Hillary Clinton's campaign, and his brother, Tony Podesta, runs the firm now. ..."
"... The Podesta Group, in a statement, said its in-house counsel determined the company had no obligation to register as a representative of a foreign entity in part because the nonprofit offered assurances it was not "directly or indirectly supervised, directed, controlled, financed or subsidized in whole or in part by a government of a foreign country or a foreign political party." ..."
"... On Monday, Mr. Manafort issued a heated statement in response to an article in The New York Times that first disclosed that the ledgers - a document described by Ukrainian investigators as an under-the-table payment system for the Party of Regions - referenced a total of $12.7 million in cash payments to him over a five-year period. ..."
"... In that statement, Mr. Manafort, who was removed from day-to-day management of the Trump campaign on Wednesday though he retained his title, denied that he had personally received any off-the-books cash payments. "The suggestion that I accepted cash payments is unfounded, silly and nonsensical," he said. ..."
MOSCOW - The Ukrainian authorities, under pressure to bolster their assertion that once-secret
accounting documents show cash payments from a pro-Russian political party earmarked for Donald J.
Trump's campaign chairman, on Thursday released line-item entries, some for millions of dollars.
The revelations also point to an outsize role for a former senior member of the pro-Russian political
party, the Party of Regions, in directing money to both Republican and Democratic advisers and lobbyists
from the United States as the party tried to burnish its image in Washington.
The former party member, Vitaly A. Kalyuzhny, for a time chairman of the Ukraine Parliament's
International Relations Committee, had signed nine times for receipt of payments designated for the
Trump campaign chairman, Paul Manafort, according to Serhiy A. Leshchenko, a member of Parliament
who has studied the documents. The ledger covered payments from 2007 to 2012, when Mr. Manafort worked
for the party and its leader, Viktor F. Yanukovych, Ukraine's former president who was deposed.
Mr. Kalyuzhny was also a founding board member of a Brussels-based nongovernmental organization,
the European Center for a Modern Ukraine, that hired the Podesta Group, a Washington lobbying firm
that received $1.02 million to promote an agenda generally aligned with the Party of Regions.
Because the payment was made through a nongovernmental organization, the Podesta Group did
not register as a lobbyist for a foreign entity. A co-founder of the Podesta Group, John D. Podesta,
is chairman of Hillary Clinton's campaign, and his brother, Tony Podesta, runs the firm now.
The role of Mr. Kalyuzhny, a onetime computer programmer from the eastern Ukrainian city of Donetsk,
in directing funds to the companies of the chairmen of both presidential campaigns, had not previously
been reported. Mr. Kalyuzhny was one of three Party of Regions members of Parliament who founded
The Associated Press, citing emails it had obtained, also reported Thursday that Mr. Manafort's
work for Ukraine included a secret lobbying effort in Washington that he operated with an associate,
Rick Gates, and that was aimed at influencing American news organizations and government officials.
Mr. Gates noted in the emails that he conducted the work through two lobbying firms, including
the Podesta Group, because Ukraine's foreign minister did not want the country's embassy involved.
The A.P. said one of Mr. Gates's campaigns sought to turn public opinion in the West against Yulia
Tymoshenko, a former Ukrainian prime minister who was imprisoned during Mr. Yanukovych's administration.
The Podesta Group, in a statement, said its in-house counsel determined the company had no
obligation to register as a representative of a foreign entity in part because the nonprofit offered
assurances it was not "directly or indirectly supervised, directed, controlled, financed or subsidized
in whole or in part by a government of a foreign country or a foreign political party."
Reached by phone on Thursday, a former aide to Mr. Kalyuzhny said he had lost contact with the
politician and was unsure whether he remained in Kiev or had returned to Donetsk, now the capital
of a Russian-backed separatist enclave.
Ukrainian officials emphasized that they did not know as yet if the cash payments reflected in
the ledgers were actually made. In all 22 instances, people other than Mr. Manafort appear to have
signed for the money. But the ledger entries are highly specific with funds earmarked for services
such as exit polling, equipment and other services.
On Monday, Mr. Manafort issued a heated statement in response to an article in The New York
Times that first disclosed that the ledgers - a document described by Ukrainian investigators as
an under-the-table payment system for the Party of Regions - referenced a total of $12.7 million
in cash payments to him over a five-year period.
In that statement, Mr. Manafort, who was removed from day-to-day management of the Trump campaign
on Wednesday though he retained his title, denied that he had personally received any off-the-books
cash payments. "The suggestion that I accepted cash payments is unfounded, silly and nonsensical,"
Mr. Manafort's statement, however, left open the possibility that cash payments had been made
to his firm or associates. And details from the ledgers released Thursday by anticorruption investigators
suggest that may have occurred. Three separate payments, for example, totaling nearly $5.7 million
are earmarked for Mr. Manafort's "contract."
Another, from October 2012, suggests a payment to Mr. Manafort of $400,000 for exit polling, a
legitimate campaign outlay.
Two smaller entries, for $4,632 and $854, show payments for seven personal computers and a computer
The payments do not appear to have been reported by the Party of Regions in campaign finance disclosures
in Ukraine. The party's 2012 filing indicates outlays for expenses other than advertising of just
under $2 million, at the exchange rate at the time. This is less than a single payment in the black
ledger designated for "Paul Manafort contract" in June of that year for $3.4 million.
Ukrainian investigators say they consider any under-the-table payments illegal, and that the ledger
also describes disbursements to members of the central election committee, the group that counts
Correction: August 20, 2016
Because of an editing error, an article on Friday about the political activities in Ukraine of
Donald J. Trump's former campaign chairman, Paul Manafort, misidentified the office once held by
Yulia V. Tymoshenko, a rival of Mr. Manafort's client, the former president Viktor F. Yanukovych.
Ms. Tymoshenko served as prime minister of Ukraine, not its president.
Progressives who are fed up with the Democratic leadership's adherence to the status quo are
calling for a major #DemExit on July 29. However, progressive groups, such as Black Men for
Bernie, are urging voters to stay in the party until they have a chance to vote in their states'
primaries, especially if they live in closed or semi-closed primary states.
Abstaining from #DemExit until after state and local primaries is especially important for Florida,
which has a closed primary. On August 30, Professor and legal expert Tim Canova has a chance to unseat
Democratic National Committee Chair Debbie Wasserman-Schultz, whose tenure as the head of the Democratic
Party has been fraught with controversy and more recently, allegations of election fraud and rigging.
A mass exodus, therefore, could sabotage progressives' own agenda to elect officials who are challenging
incumbents and establishment candidates. As of now, 23 states and territories have local and state
primaries up until September 13, so it is imperative for current members of the Democratic party
to stay until they've voted and then commit to #DemExit.
It is impossible to deal with cockroaches in one room while at the same time laying out
little plates of bread crumbs on the other side of the wall.
Translated from Russian by Tom Winter
Translator's note: this press account is based on a post on Maria Zakharova's facebook page,
and I have changed this account slightly in alignment with
text. It was not clear in KP what was Zakharova and what was KP. I think it is in this translation...
Head of the Information Department of the Russian Foreign Ministry wrote a "critical review" on
the "Yalta speech" of the assistant US Secretary of State.
In Kiev, there was a conference "Yalta European Strategy". Already amazing. Yalta is in the Russian
Crimea, and the "Yalta" conference was held in the Ukrainian capital. Well and good -- you couldn't
miss that one!. But at this Yalta conference came the assistant US Secretary of State Victoria Nuland.
Yes, the same one that passed out the cookies. But now, considered a shadow ruler of Ukraine, she
points out to the Kiev authorities what to do. This time, Nuland said in a public speech:
- There should be no tolerance for those oligarchs who do not pay taxes. There must be zero tolerance
for bribery and corruption, to those who would use violence for political ends.
And these words
of the grande dame of the State Department could not be overlooked. Just think, Americans don't like
it when their loans to Ukraine get stolen. And anti-oligarchic Maidan brought the very
to power, and corruption in the country has become even greater. Some of us have grown weary of this
talk. But, let Nuland drone on ...
But then Russian Foreign Ministry official spokesman Maria Zakharova replied. So much so that
not a stone was left on stone in the American's "Yalta speech":
"All this a little bit, just a little, looks like a lecture to the fox about how bad it is to
steal chickens, but actually it surprised in other ways. As soon as Russian authorities began exposing
the tax evasion, bribery, or corruption of the oligarchs, Victoria Nuland's office hastened to call
zero tolerance "political repression" - Zakharova wrote on her facebook page.
It would be great to see the Department of State "show that same zero tolerance and inquire a bit
about how the initial capital of the Russian (and Ukrainian would not hurt) oligarchs got started,
those oligarchs who have been accused of corruption at home, but who, once in London, feel protected
by the authorities, enjoying all the benefits of membership in the Club of Victims of Political Persecution"
- continued Zakharova.
"It is impossible to deal with cockroaches in one room while at the
same time laying out little plates of bread crumbs on the other side of the wall. Giving the green
light to the dirty money from Russia and the former Soviet Union, the Western world is only boosting
the zeal with which the domestic thieves shove their loot in foreign bins."
"Though perhaps," wonders the Foreign Minstiry spokesman "this is the actual purpose of the imaginary
"Why do people on Interpol's lists, by the decision of the Russian courts, prove their financial
immorality, as they thrive in the Western capitals, and no alarm bells go off in the State Department?"
It turns out to be an interesting story: Taking fetid streams of notes, the West has just one
requirement at the border crossing. Scream "victim of the regime." That's it! and you're in spades!
This calls to mind the old Soviet bribery password translated into modern American:
- In Soviet times, it was common phrase, revealing corrupt intent to proceed with plans insidious
in varying degrees: "I'm from Ivan Ivanovich." Today the corresponding "Open Sesame" that opens the
doors "in Europe and the best houses in Philadelphia," is the phrase "I'm running away from Vladimir".
Victoria, if you're going to start cleaning out the cockroaches, stop feeding them on your side.
CRONY CAPITALISM is the name of the Republican game. Their slogan is
"take care of your friends and leave the risks of the free market
for the suckers." That would be John Q. Public.
From Halliburton's overcharging in Iraq to Enron's manipulation of
the California energy crisis and now the emerging hurricane
reconstruction boondoggle, we witness what happens when the federal
government is turned into a glorified help desk and ATM machine for
politically connected corporations.
But the defining case study on the deep corruption of the Bush
administration and the GOP is emerging from the myriad
investigations of well-connected Republican fundraiser and lobbyist
Jack Abramoff. For starters, Abramoff, a $100,000-plus fundraiser
for George W. Bush's presidential campaigns, is under federal
indictment on wire fraud and conspiracy charges. He is also under
congressional and FBI investigations.
In the last fortnight alone, the spreading stain of Abramoff's
legacy is seen in the possible undoing of Bush's nominee to the
nation's No. 2 law enforcement position, the resignation and arrest
of the Office of Management and Budget's former procurement chief
and another blow to the already tawdry reputation of top Bush
political advisor Karl Rove.
It was reported last week that Timothy Flanigan, Tyco International
Ltd. general counsel and Bush's nominee for deputy attorney general,
stated that Abramoff's lobbying firm had boasted that his access to
the highest levels of Congress could help Tyco fight tax liability
legislation and that Abramoff later said he "had contact with Mr.
Karl Rove" about the issue.
Flanigan's statement was in response to scathing criticism from
Democrats on the Senate Judiciary Committee — which is considering
his nomination — that he had not been sufficiently responsive in his
testimony. Records and interviews show that Flanigan supervised
Abramoff's successful efforts two years ago to lobby Congress to
kill the legislation, which would have penalized companies such as
Bermuda-based Tyco that avoid taxes by moving offshore. Abramoff's
firm was paid $1.7 million by Tyco in 2003 and 2004.
In his statement, Flanigan said Abramoff also boasted of his ties to
Tom DeLay, the House majority leader. DeLay once described Abramoff
as "one of my closest and dearest friends" and accompanied him on
several foreign junkets. DeLay denies that the Abramoff-arranged
trips were political favors. DeLay continues to be tangled in myriad
ethics investigations, many of them linked to his relationship with
Another episode in the rapidly evolving Abramoff scandal involves
David Safavian, one of the Bush administration's top federal
procurement officials. He resigned shortly before being arrested
last week for allegedly lying to officials and obstructing a Justice
Department investigation in connection with his relationship with
Abramoff. Safavian received a golf trip to Scotland with the
lobbyist, allegedly as a quid pro quo for helping Abramoff in his
efforts to buy federal properties. Safavian and Abramoff once worked
together at a powerful Washington lobbying firm.
Before Safavian resigned, he reportedly was working on contracting
policies for Hurricane Katrina recovery efforts. Don't expect the
GOP Congress to look askance at this. Safavian's wife is chief
counsel for oversight and investigations on the House Government
Reform Committee, which oversees procurement matters, although she's
said she'll recuse herself.
The hurricane season is proving to be a windfall for GOP-connected
companies such as Halliburton, which are being rewarded with
lucrative contracts despite their shoddy performance in Iraq. In the
vocabulary of crony capitalism, the word "shame" does not exist.
The players may change, given the occasional criminal indictment,
but the game goes on. On the day of Safavian's arrest, former Tyco
Chief Executive L. Dennis Kozlowski was sentenced to eight to 25
years in prison for bilking millions from the company, which we are
now expected to believe has been reborn virtuous.
Tyco's current lobbyist, Edward P. Ayoob, who once worked with
Abramoff at a Washington law firm, is lobbying for another cause
these days: Flanigan's confirmation as the nation's second-highest
law enforcement officer. Ayoob insisted last week that he is acting
on his own and not on behalf of Tyco. And, oh yes, Flanigan promises
that, if confirmed, he will recuse himself from any Abramoff
investigation involving Tyco. Sure.
The content should be familiar to AngryBear
readers. A majority of Americans are alarmed by high and increasing inequality and support government
action to reduce inequality. However, none of the important 2016 candidates has expressed any willingness
to raise taxes on the rich. The Republicans want to cut them and Clinton (and a spokesperson) dodge
Rich individuals (who are willing to be interviewed) also express concern about inequality but
generally oppose using higher taxes on the rich to fight it. Scheiber is very willing to bluntly
state his guess (and everyone's) that candidates are eager to please the rich, because they spend
much of their time begging the rich for contributions.
No suprise to anyone who has been paying attention except for the fact that it is on the front
page of www.nytimes.com and the article is printed in the business section not the opinion section.
Do click the link — it is brief, to the point, solid, alarming and a must read.
I clicked one of the links and found weaker evidence than I expected for Scheiber's view (which
of course I share
"By contrast, more than half of Americans and three-quarters of Democrats believe the "government
should redistribute wealth by heavy taxes on the rich," according to a
Gallup poll of about 1,000 adults in April 2013."
It is a small majority 52% favor and 47% oppose. This 52 % is noticeably smaller than the solid
majorities who have been telling Gallup that high income individuals pay less than their fair share
of taxes (click and search
for Gallup on the page).
I guess this isn't really surprising — the word "heavy" is heavy maaaan and "redistribute" evokes
the dreaded welfare (and conservatives have devoted gigantic effort to giving it pejorative connotations).
The 52% majority is remarkable given the phrasing of the question. But it isn't enough to win elections,
since it is 52% of adults which corresponds to well under 52% of actual voters.
My reading is that it is important for egalitarians to stress the tax cuts for the non rich and
that higher taxes on the rich are, unfortunately, necessary if we are to have lower taxes on the
non rich without huge budget deficits. This is exactly Obama's approach.
Comments (87) Jerry Critter
March 29, 2015 10:40 pm
Get rid of tax breaks that only the wealthy can take advantage of and perhaps everyone will
pay their fair share. The same goes for corporations.
March 30, 2015 11:42 am
Of course another way to reduce inequality is to raise wages. Buried way down around paragraph
9 I found this gem: "Forty percent of the wealthy, versus 78 percent of the public, said the government
should make the minimum wage "high enough so that no family with a full-time worker falls below
the official poverty line."
I'm fine with raising people's taxes by increasing their wages. A story I heard on NPR recently
indicated that a single person needs to make about $17-19 an hour to cover most basic necessities
nowadays (the story went on to say that most people in that situation are working 2 or more jobs
to get enough income, a "solution" that creates more problems with health/stress etc.). A full
time worker supporting kids needs more than $20.
You double the minimum wage and strengthen people's rights to organize union representation.
Tax revenues go up (including SS contributions btw) and we add significant growth to the economy
with the increased purchasing power of workers. People can go back to working 40-50 hours a week
and cut back on moonlighting which creates new job opportunities for the younger folks decimated
by this so called recovery.
Win Win Win Win. And the poor overburdened millionaires don't have to have their poor tax fee
Mark Jamison, March 30, 2015 8:09 pm
How about if we get rid of the "re" and call it what it is "distribution". The current
foundational rules embedded in tax law, intellectual property law, corporate construction law,
and other elements of our legal and regulatory system result in distributions that favor those
with capital or in a position to seek rents.
This isn't a situation that calls for a Robin Hood who takes from the rich and gives to the
poor. It is more a question of how elites have rigged the system to work primarily for them.
Democrats cede the rhetoric to the Right when they allow the discussion to be about redistribution.
Even talk of inequality without reference to the basic legal constructs that are rigged to create
slanted outcomes tend to accepted premises that are in and of themselves false.
The issue shouldn't be rejiggering things after the the initial distribution but creating a
system with basic rules that level the opportunity playing field.
coberly, March 30, 2015 11:03 pm
Thank You Mark Jamison!
An elegant, informed writer who says it better than I can.
But here is how I would say it:
Addressing "inequality" by "tax the rich" is the wrong answer and a political loser.
Address inequality by re-criminalizing the criminal practices of the criminal rich. Address
inequality by creating well paying jobs… with government jobs if necessary (and there is necessary
work to be done by the government), with government protection for unions, with government policies
that make it less profitable to off shore…
etc. the direction to take is to make the economy more fair…. actually more "free" though you'll
never get the free enterprise fundamentalists to admit that's what it is. You WILL get the honest
rich on your side. They don't like being robbed any more than you do.
But you will not, in America, get even poor people to vote to "take from the rich to give to
the poor." It has something to do with the "story" Americans have been telling themselves since
1776. A story heard round the world.
That said, there is nothing wrong with raising taxes on the rich… to pay for the government
THEY need as well as you. But don't raise taxes to give the money to the poor. They won't do it,
and even the poor don't want it… except as a last resort, which we hope we are not at yet.
urban legend, March 31, 2015 2:07 am
Coberly, you are dead-on. Right now, taxation is the least issue. Listen to Jared Bernstein
and Dean Baker: the problem is incomes and demand, and the first and best answer for creating
demand for workers and higher wages to compete for those workers is full employment. Minimum
wage will help at the margins to push incomes up, and it's the easiest initial legislative sell,
but the public will support policies — mainly big-big infrastructure modernization in a country
that has neglected its infrastructure for a generation — that signal a firm commitment to full
It's laying right there for the Democrats to pick it up. Will they? Having policies that are
traditional Democratic policies will not do the job. For believability — for convincing voters
they actually have a handle on what has been wrong and how to fix it — they need to have a story
for why we have seem unable to generate enough jobs for over a decade. The neglect of infrastructure
— the unfilled millions of jobs that should have gone to keeping it up to date and up to major-country
standards — should be a big part of that story. Trade and manufacturing, to be sure, is the other
big element that will connect with voters. Many Democrats (including you know who) are severely
compromised on trade, but they need to find a way to come own on the right side with the voters.
coberly, March 31, 2015 10:52 am
i wish you'd give some thought to the other comments on this post.
if you are proposing raising taxes on the rich SO THAT you can cut taxes on the non rich you
are simply proposing theft. if you were proposing raising taxes on the rich to provide reasonable
welfare to those who need it you would be asking the rich to contribute to the strength of their
own country and ultimately their own wealth.
i hope you can see the difference.
it is especially irritating to me because many of the "non rich" who want their taxes cut make
more than twice as much as i do. what we are looking at here is simple old fashioned greed… just
as stupid and ugly among the "non rich" as it is among the rich.
"the poor" in this country do not pay a significant amount of taxes (Social Security and Medicare
are not "taxes," merely an efficient way for us to pay for our own direct needs…. as long as you
call them taxes you play into the hands of the Petersons who want to "cut taxes" and leave the
poor elderly to die on the streets, and the poor non-elderly to spend their lives in anxiety and
fear-driven greed trying to provide against desperate poverty in old age absent any reliable security
for their savings.)
Kai-HK, April 4, 2015 12:23 am
Thanks for your well-reasoned response.
You state, 'i personally am not much interested in the "poor capitalist will flee the country
if you tax him too much." in fact i'd say good riddance, and by the way watch out for that
tarriff when you try to sell your stuff here.'
(a) What happens after thy leave? Sure you can get one-time 'exit tax' but you lose all the
intellectual capital (think of Bill Gates, Warren Buffet, or Steve Jobs leaving and taking
their intellectual property and human capital with them). These guys are great jobs
creators…it will not only be the 'bad capitalists' that leave but also many of the 'job
creating' good ones.
(b) I am less worried about existing job creating capitalists in America; what about the
future ones? The ones that either flee overseas and make their wealth there or are already
overseas and then have a plethora of places they can invest but why bother investing in the US
if all they are going to do is call me a predator and then seize my assets and or penalise me
for investing there? Right? It is the future investment that gets impacted not current wealth
You also make a great point, 'the poor are in the worst position with respect to shifting
their tax burden on to others. the rich do it as a matter of course. it would be simpler just
to tax the rich… there are fewer of them, and they know what is at stake, and they can afford
accountants. the rest of us would pay our "taxes" in the form of higher prices for what we
Investment capital will go where it is best treated and to attract investment capital a
market must provide a competitive return (profit margin or return on investment). Those
companies and investment that stay will do so because they are able to maintain that
margin….and they will do so by either reducing wages or increasing prices. Where they can do
neither, their will exit the market.
That is why, according to research, a bulk of the corporate taxation falls on workers and
consumers as a pass-on effect. The optimum corporate tax is 0. This will be the case as
taxation increases on the owners of businesses and capital….workers, the middle class, and the
poor pay it. The margins stay competitive for the owners of capital since capital is highly
mobile and fungible.Workers and the poor less so.
But thanks again for the tone and content of your response. I often get attacked personally
for my views instead of people focusing on the issue. I appreciate the respite.
coberly, April 4, 2015 12:34 pm
yes, but you missed the point.
i am sick of the whining about taxes. it takes so much money to run the country (including the
kind of pernicious poverty that will turn the US into sub-saharan africa. and then who will
buy their products.
i can't do much about the poor whining about taxes. they are just people with limited
understanding, except for their own pressing needs. the rich know what the taxes are needed
for, they are just stupid about paying them. of course they would pass the taxes through to
their customers. the customers would still buy what they need/want at the new price. leaving
everyone pretty much where they are today financially. but the rich would be forced to be
grownup about "paying" the taxes, and maybe the politics of "don't tax me tax the other guy"
would go away.
as for the sainted bill gates. there are plenty of other people in this country as smart as he
is and would be happy to sell us computer operating systems and pay the taxes on their billion
dollars a year profits.
nothing breaks my heart more than a whining millionaire.
April 4, 2015 11:32 pm
Sure I got YOUR point,…it just didn't address MY points as put forth in MY original post. And
it still doesn't.
More importantly, you have failed to defend YOUR point against even a rudimentary challenge.
coberly, April 5, 2015 12:45 pm
rudimentary is right.
i have read your "points" about sixteen hundred times in the last year alone. made by the
ayn rand faithful. it is wearisome.
and i have learned there is no point in trying to talk to true believers.
William Ryan, May 13, 2015 4:43 pm
Thanks again Coberly for your and K's very thoughtful insight. You guys really made me
think hard today and I do see your points about perverted capitalism being a big problem in
US. I still do like the progressive tax structure and balanced trade agenda better.
I realize as you say that we cannot compare US to Hong Kong just on size and scale alone.
Without all the obfuscation going Lean by building cultures that makes people want to take
ownership and sharing learning and growing together is a big part of the solution… Ford once
said "you cannot learn in school what the world is going to do next".
Also never argue with an idiot. They will bring you down to their level then beat you with
experience. The only cure for organized greed is organized labor. It's because no
matter what they do nothing get done about it. With all this manure around there must be a
pony somewhere! "
A typical voice of American politics is the avoidance of saying anything real on
real issues". FDR.
Rich people pay rich people to tell middle class people to blame poor people…
Earth doesn't matter, people don't matter, even economy doesn't matter . The only thing
that matters is R.W. nut bar total ownership of everything.
I'm sorry I put profits ahead of people, greed above need and the rule of gold above
God's golden rules.
I try to stay away from negative people who have a problem for every solution…
We need capitalism that is based on justice and greater corporate responsibility. I do
not speak nor do I comprehend assholian.
"If you don't change direction , you may end up where you are headed". Lao-Tzu.
"The true strength of our nation comes not from our arm or wealth but from our ideas".
"If the soul is left to darkness, sins will be committed. The guilty one is not the one
who commits the sins, but the one who caused the darkness". Victor Hugo.
coberly , May 16, 2015 9:57 pm
as a matter of fact i disagree with the current "equality" fad… at least insofar as it implies
taking from the rich and giving to the poor directly.
i don't believe people are "equal" in terms of their economic potential. i do beleive they are
equal in terms of being due the respect of human beings.
i also believe your simple view of "equality" is a closet way of guarantee that the rich can
prey upon the poor without interruption.
humans made their first big step in evolution when they learned to cooperate with each other
against the big predators.
Jerry Critter, May 17, 2015 12:10 am
it is mildly progressive up to about $75,000 per year where the rate hits 30%. But from
there up to $1.542 million the rate only increases to 33.3%.
I call that very flat!
Jerry Critter, May 17, 2015 11:20 am
"i assume there are people in this country who are truly poor. as far as i know they
don't pay taxes."
Read my reference and you will see that the "poor" indeed pay taxes, just not much income
tax because they don't have much income. You are fixated on income when we should be
considering all forms of taxation.
Jerry Critter, May 17, 2015 9:25 pm
Oh Kai, cut the crap. Paying taxes Is nothing like slavery. My oh my, how did we ever
survive with a top tax rate of around 90%, nearly 3 times the current rate? Some people would
even say that the economy then was pretty great and the middle class was doing terrific. So
stop the deflection and redirection. I think you just like to see how many words you can
write. Sorry, but history is not on your side.
Lucrative stints as corporate director, adviser earned Bush millions, may invite 2016 scrutiny
During his transition from Florida governor to likely presidential candidate, Jeb Bush served
on the boards of or as an adviser to at least 15 companies and nonprofits, a dizzying array of corporate
connections that earned him millions of dollars and occasional headaches.
Bush returned to corporate America after leaving the governor's mansion in early 2007, and his
industry portfolio expanded steadily until he began shedding ties late last year to prepare a run
Executives who worked alongside Bush describe him as an engaged adviser with an eye for detail.
Yet experts question how anyone could serve so many boards at once effectively.
"Board of directors and advisory boards are in charge of high-level oversight," said law professor
Elizabeth Nowicki, a former Securities and Exchange Commission lawyer. "You cannot possibly do
that simultaneously for 10 or 15 entities."
There is no formal rule limiting the number of boards one person can serve. But in the wake of
the Enron scandal, where flimsy board oversight contributed to the company's infamous meltdown, and
a federal law that increased liability for a public company's director, common sense dictates a small
number, Nowicki said.
"If somebody starts serving on more than three or four boards that's a problem," she said.
Three boards should be the maximum, agreed Zabihollah Rezaee, a University of Memphis accounting
professor who has authored books about corporate governance.
"Board members are representing shareholders, and they are responsible to shareholders for
financial integrity," said Rezaee. "Best practices" dictate a small number, he said, "because of
the amount of time it requires to be effective."
Bush served on the boards of or as an adviser to 11 companies or nonprofits at a time each year
from 2010 to 2013, The Associated Press found. Those ties were in addition to his own businesses,
such as Jeb Bush & Associates, and the educational foundations he created.
In 2010 Bush served on the board of directors of eight different entities, as adviser to a
ninth company and advisory board member for two others. In 2013, he served on six boards, as an adviser
to another company and on the advisory board of four more entities.
Bush answered curtly Thursday when asked about the positions after visiting a lab in Lansing,
Michigan, that makes antidotes and vaccinations for poisons such as anthrax.
"I had two public boards," he said. "And I did my fiduciary duty quite well, I think. You'll have
to ask them."
Bush was apparently referring to his standing only in 2014, when he shed his corporate ties. At
that time he was on the board of two publicly held companies, Tenet Healthcare and Rayonier Inc.
In 2013, he was on the board of four public companies, including the international advisory board
of Barrick Gold Corp.
Bush spokeswoman Kristy Campbell said not all the corporate entities were the same — some were
board slots, some advisory positions and others nonprofits — and suggested it was unfair to put them
all in the same basket. AP's review found that Bush served on the board of directors of as many as
seven for-profit companies at a time — while also serving as an adviser to other companies and nonprofits.
Bush's experience on corporate boardrooms could evolve into a theme during the 2016 race for the
presidency. Among the issues the Florida Republican could be asked to explain:
One company that paid Bush $15,000 a month as a board member and consultant, InnoVida Holdings,
collapsed in fraud and bankruptcy, with the company's CEO, Claudio Osorio, now serving 12½ years
in prison. Bush joined InnoVida despite warning signs that Osorio's prior company dissolved amid
bankruptcy and allegations of fraud.
At least five companies where Bush served on the board or as adviser faced class-action lawsuits
from shareholders or legal action by the government. Some of the most sweeping cases, involving
allegations of fraud or environmental damage, remain active. The Securities and Exchange Commission
subpoenaed one of the companies, Rayonier Inc., in November, shortly before Bush's exit.
Bush earned $3.9 million from four companies alone since 2007, the AP found, plus $25,000
a year more from a medical company in Georgia, $9,600 annually from Bloomberg Philanthropies and
zero pay from a drug addiction nonprofit. His earnings from eight other companies are unknown,
and Bush has declined AP's requests to disclose his compensation — raising questions about how
open he would be as a presidential candidate.
Bush was a board member or adviser to publicly traded health care, timber, gold mining and sanitation
companies; for private firms involved in housing, finance, medicine, higher education and decontamination;
and for nonprofits focused on drug addiction and philanthropy. He served on the board of directors
for nine of the 15, and as an adviser or advisory board member for the others. Two of the 15 are
Once Bush officially declares for president, he will have 45 days to file a public disclosure
form listing his sources of income for the prior year. Those forms include broad ranges for the values
of assets or salaries that can be used to estimate a politician's net worth, but they will not be
precise totals and will capture just the prior year.
... ... ...
Re-joining the corporate world
Bush returned to corporate America less wealthy than when he took office. Bush's net worth, $2
million when he was elected Florida governor in 1998, dipped to less than $1.3 million by the time
he left office in the first days of 2007, his financial disclosure forms show. The decline came largely
from a diminished investment portfolio. He also earned less as governor — $129,000 his last year
in office — than in the private sector, where he had been paid $755,000 annually by the Codina Group,
a development company in Coral Gables, Florida, before taking office.
Out of office, Bush began quickly making up time, becoming an adviser or board member for at least
five companies in 2007.
One was Tenet Healthcare Corp., a publicly held company where Bush served on the board of directors
from 2007 to 2014, earning $2,375,870 in pay and stock, the company's SEC filings show.
Tenet declined to make a board member available for an interview, but spokesman Donn Walker said
Bush challenged management to deliver for patients and consumers. Bush attended 94 percent of board
meetings and 99 percent of committee meetings, Walker said.
In a statement, Trevor Fetter, the company's president and CEO, said his fellow board member "made
innumerable contributions to Tenet's transformation into a national diversified health care services
That year Bush also became an adviser for Lehman Brothers, which, after its collapse, was
absorbed by Barclays Capital. Bush worked for Barclays through 2014, advising clients on the
regulatory landscape in the U.S. The New York Times reported last year that Barclays paid Bush $1
million a year. The company declined comment on Bush's pay and tenure.
Later in 2007, Bush took on what became his most troublesome board position, joining Miami Beach's
InnoVida Holdings. Founder Osorio is now serving a prison sentence for orchestrating a global fraud
that cost investors millions.
Bush conducted a thorough review before joining InnoVida's board, Campbell said. That included
commissioning a background check of Osorio, conducted by a former federal agent whom she declined
"Based on the report that was shared with the governor by the company that was hired to do the
background check, there were not red flags to indicate financial or criminal wrongdoing," Campbell
said. The campaign declined to share the report.
But financial red flags did exist, public court records show.
Thirteen years before creating InnoVida in 2006, Osorio had founded another South Florida business,
CHS Electronics, which sold computer products in Latin America and Europe from its headquarters west
of the Miami International Airport.
In 1999, just as Bush was beginning his first term as Florida governor, scores of CHS investors
filed suit in federal court in Miami accusing Osorio and CHS of inflating the company's income and
profits. In all, 36 separate actions were consolidated into one class-action lawsuit that said CHS
overstated its profits in 1998 by 50 percent.
After CHS admitted in 1999 that it overstated vendor rebates, a financial chess move that led
the company to issue a misleadingly rosy financial picture, the price of its common stock plummeted
35 percent in one day.
The lawsuit cited analyst Robert Damron who urged investors not to buy. "There was fraud, and
when I see fraud I walk away," he said.
CHS filed for bankruptcy protection in 2000, and, a year later, entered into an $11.5 million
settlement with shareholders, federal court records show.
In September 2007, the SEC revoked CHS' securities registration.
Three months later, Bush joined Osorio's InnoVida, a South Florida manufacturer that said its
unique fiber composite panel construction could withstand fires and hurricanes. But instead of building
homes, including a U.S. government-financed project in earthquake-stricken Haiti, Osorio used investors'
money to bankroll a Miami Beach mansion, Colorado mountain retreat home, Maserati and country club
dues, the SEC said.
Bush's role on InnoVida's board helped build the company's image and attract business.
One businessman who hired InnoVida as a contractor said that, when he visited Osorio at the company's
Miami Beach offices, Bush's pictures were all over the wall.
"He drops his name repeatedly. 'Jeb Bush this, Jeb Bush that.' And you just say, OK, there's
credibility there," said Troy Von Otnott, founder of Massive Technologies, a CleanTech consulting
firm in Atlanta.
InnoVida never delivered on its promises to build housing in Africa, despite receiving $3 million
for the job from Von Otnott's partners. "They delivered false promises and hot air and lies," he
Now Von Otnott is among creditors trying to collect pennies on the dollar — and questioning
how Bush could have put his name behind the company.
"We bought into their whole sales push because Jeb Bush was on their board of directors and had
his picture all over their office," said Von Otnott, a onetime volunteer with Citizens Climate Lobby
who describes himself as a political independent.
"At the very least, it just demonstrates poor judgment. If you are running for the president of
the United States of America, you need to show that you have judgment."
A major InnoVida investor, Miami lawyer Chris Korge, said Bush "showed true concern" about the
losses investors suffered.
Bush left InnoVida in September 2010. In 2013, as part of the company's bankruptcy proceedings,
Bush agreed to repay $270,000 of the $468,902 InnoVida paid Jeb Bush & Associates LLC over the 33
months he worked for InnoVida. From his Miami prison, Osorio declined an AP interview request.
"As soon as concerns regarding InnoVida were brought to Gov. Bush's attention, he took action
to address them immediately," Campbell said.
"He shows you how to become as gods. Then he laughs and jokes with you, and gets intimate with
you; he takes your hand, and gets his fingers between yours, and grasps them, and then you are
J.H.Newman, The Times of Antichrist
People do not wake up one day and suddenly decide to become monsters, giving birth to unspeakable
And yet throughout history, different peoples have done truly monstrous things. The Americans
were pioneers in forced sterilization and state propaganda. The British invented concentration camps,
and were masters of predatory colonization. They even turned a large portion of the capital of their
Empire into a festering ghetto through the Darwinian economics of neglect. None have clean hands.
No one is exceptional.
What do they have in common? They all take a walk down a long and twisted path, one cold-hearted
and 'expedient' decision at a time, shifting responsibility by deflecting the choice for their actions
on their leaders.
There is always some crackpot theory. some law of nature, from scientists or economists to support
it. What else could they do? It is always difficult, but necessary.
They cope with their actions by making their victims the other, objectified, different, marginalized.
And what they marginalize they cannot see. What they cannot see, by choice, is easily ignored.
And so they destroy and they kill, first by neglect and then by more efficient and decisive actions.
They walk slowly, but almost determinedly, into an abyss of their own creation.
But they all seem to have one thing in common. First they come for the old, the weak, the disabled,
and the different, in a widening circle of scapegoats for their plunder.
"There is one beautiful sight in the East End, and only one, and it is the children dancing in
the street when the organ-grinder goes his round. It is fascinating to watch them, the new-born,
the next generation, swaying and stepping, with pretty little mimicries and graceful inventions
all their own, with muscles that move swiftly and easily, and bodies that leap airily, weaving
rhythms never taught in dancing school.
I have talked with these children, here, there, and everywhere, and they struck me as being
bright as other children, and in many ways even brighter. They have most active little imaginations.
Their capacity for projecting themselves into the realm of romance and fantasy is remarkable.
A joyous life is romping in their blood. They delight in music, and motion, and colour, and very
often they betray a startling beauty of face and form under their filth and rags.
But there is a Pied Piper of London Town who steals them all away. They disappear. One never
sees them again, or anything that suggests them. You may look for them in vain amongst the generation
of grown-ups. Here you will find stunted forms, ugly faces, and blunt and stolid minds. Grace,
beauty, imagination, all the resiliency of mind and muscle, are gone. Sometimes, however, you
may see a woman, not necessarily old, but twisted and deformed out of all womanhood, bloated and
drunken, lift her draggled skirts and execute a few grotesque and lumbering steps upon the pavement.
It is a hint that she was once one of those children who danced to the organ-grinder. Those grotesque
and lumbering steps are all that is left of the promise of childhood. In the befogged recesses
of her brain has arisen a fleeting memory that she was once a girl. The crowd closes in. Little
girls are dancing beside her, about her, with all the pretty graces she dimly recollects, but
can no more than parody with her body. Then she pants for breath, exhausted, and stumbles out
through the circle. But the little girls dance on.
The children of the Ghetto possess all the qualities which make for noble manhood and womanhood;
but the Ghetto itself, like an infuriated tigress turning on its young, turns upon and destroys
all these qualities, blots out the light and laughter, and moulds those it does not kill into
sodden and forlorn creatures, uncouth, degraded, and wretched below the beasts of the field.
As to the manner in which this is done, I have in previous chapters described it at length;
here let Professor Huxley describe it in brief:-
"Any one who is acquainted with the state of the population of all great industrial centres,
whether in this or other countries, is aware that amidst a large and increasing body of that population
there reigns supreme . . . that condition which the French call la misere, a
word for which I do not think there is any exact English equivalent. It is a condition in which
the food, warmth, and clothing which are necessary for the mere maintenance of the functions of
the body in their normal state cannot be obtained; in which men, women, and children are forced
to crowd into dens wherein decency is abolished, and the most ordinary conditions of healthful
existence are impossible of attainment; in which the pleasures within reach are reduced to brutality
and drunkenness; in which the pains accumulate at compound interest in the shape of starvation,
disease, stunted development, and moral degradation; in which the prospect of even steady and
honest industry is a life of unsuccessful battling with hunger, rounded by a pauper's grave."
In such conditions, the outlook for children is hopeless. They die like flies, and those that
survive, survive because they possess excessive vitality and a capacity of adaptation to the degradation
with which they are surrounded. They have no home life. In the dens and lairs in which they live
they are exposed to all that is obscene and indecent. And as their minds are made rotten, so are
their bodies made rotten by bad sanitation, overcrowding, and underfeeding. When a father and
mother live with three or four children in a room where the children take turn about in sitting
up to drive the rats away from the sleepers, when those children never have enough to eat and
are preyed upon and made miserable and weak by swarming vermin, the sort of men and women the
survivors will make can readily be imagined."
In the coming months, however many hours Clinton spends introducing herself to voters in small-town
America, she will spend hundreds more raising money in four-star hotels and multimillion-dollar homes
around the nation. The question is: "Can Clinton claim to stand for 'everyday Americans,' while
hauling in huge sums of cash from the very wealthiest of us?" This much cannot be disputed:
Clinton's connections to the financiers and bankers of this country - and this country's campaigns
- run deep. As Nomi Prins questions, who counts more to such a candidate, the person
you met over that chicken burrito bowl or the Citigroup partner you met over crudités and caviar?
The past, especially the political past, doesn’t just provide clues to the present. In
the realm of the presidency and Wall Street, it provides an ongoing pathway for political-financial
relationships and policies that remain a threat to the American economy going forward.
When Hillary Clinton video-announced
her bid for the Oval Office, she claimed she wanted to be a “champion” for the American people. Since
then, she has attempted to recast herself as a populist and distance herself from some of the policies
of her husband. But Bill Clinton did not become president without sharing the friendships, associations,
and ideologies of the elite banking sect, nor will Hillary Clinton. Such relationships run
too deep and are too longstanding.
To grasp the dangers that the
Big Six banks (JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, Goldman Sachs, and Morgan
Stanley) presently pose to the financial stability of our nation and the world, you need to understand
their history in Washington, starting with the Clinton years of the 1990s. Alliances established
then (not exclusively with Democrats, since bankers are bipartisan by nature) enabled these firms
to become as politically powerful as they are today and to exert that power over an unprecedented
amount of capital. Rest assured of one thing: their past and present CEOs will prove as critical
in backing a Hillary Clinton presidency as they were in enabling her husband’s years in office.
In return, today’s titans of finance and their hordes of lobbyists, more than half of
whom held prior positions in the government, exact certain requirements from Washington.
They need to know that a safety net or bailout will always be available in times of emergency and
that the regulatory road will be open to whatever practices they deem most profitable.
Whatever her populist pitch may be in the 2016 campaign -- and she will have one -- note
that, in all these years, Hillary Clinton has not publicly condemned Wall Street or any individual
Wall Street leader. Though she may, in the heat of that campaign, raise the bad-apples
or bad-situation explanation for Wall Street’s role in the financial crisis of 2007-2008, rest assured
that she will not point fingers at her friends. She will not chastise the people that pay her hundreds
of thousands of dollars a pop to speak or the ones that have long shared the social circles in which
she and her husband move. She is an undeniable component of the Clinton political-financial
legacy that came to national fruition more than 23 years ago, which is why looking back at the history
of the first Clinton presidency is likely to tell you so much about the shape and character of the
possible second one.
The 1992 Election and the Rise of Bill Clinton
Challenging President George H.W. Bush, who was seeking a second term, Arkansas Governor Bill
Clinton announced he would seek the 1992 Democratic nomination for the presidency on October 2, 1991.
The upcoming presidential election would not, however, turn out to alter the path of mergers or White
House support for deregulation that was already in play one iota.
First, though, Clinton needed money. A consummate fundraiser in his home state, he cleverly amassed
backing and established early alliances with Wall Street. One of his key supporters would later change
American banking forever. As Clinton put it, he received “invaluable early support” from Ken Brody,
a Goldman Sachs executive seeking to delve into Democratic politics. Brody took Clinton “to a dinner
with high-powered New York businesspeople, including Bob Rubin, whose tightly reasoned arguments
for a new economic policy,” Clinton later wrote, “made a lasting impression on me.”
The battle for the White House kicked into high gear the following fall. William Schreyer, chairman
and CEO of Merrill Lynch, showed his support for Bush by giving the maximum personal contribution
to his campaign committee permitted by law: $1,000. But he wanted to do more. So when one of Bush’s
fundraisers solicited him to contribute to the Republican National Committee’s nonfederal, or “soft
money,” account, Schreyer made a $100,000 donation.
The bankers’ alliances remained divided among the candidates at first, as they considered which
man would be best for their own power trajectories, but their donations were plentiful: mortgage
and broker company contributions were $1.2 million; 46% to the GOP and 54% to the Democrats. Commercial
banks poured in $14.8 million to the 1992 campaigns at a near 50-50 split.
Clinton, like every good Democrat, campaigned publicly against the bankers: “It’s time to end
the greed that consumed Wall Street and ruined our S&Ls [Savings and Loans] in the last decade,”
he said. But equally, he had no qualms about taking money from the financial sector. In the early
months of his campaign, BusinessWeek estimated that he received $2 million of his initial
$8.5 million in contributions from New York, under the care of Ken Brody.
“If I had a Ken Brody working for me in every state, I’d be like the Maytag man with nothing to
do,” said Rahm Emanuel, who ran Clinton’s nationwide fundraising committee and later became Barack
Obama’s chief of staff. Wealthy donors and prospective fundraisers were invited to a select series
of intimate meetings with Clinton at the plush Manhattan office of the prestigious private equity
Robert Rubin Comes to Washington
Clinton knew that embracing the bankers would help him get things done in Washington, and what
he wanted to get done dovetailed nicely with their desires anyway. To facilitate his policies and
maintain ties to Wall Street, he selected a man who had been instrumental to his campaign, Robert
Rubin, as his economic adviser.
In 1980, Rubin had landed on Goldman Sachs' management committee alongside fellow Democrat Jon
Corzine. A decade later, Rubin and Stephen Friedman were appointed cochairmen of Goldman Sachs. Rubin’s
political aspirations met an appropriate opportunity when Clinton captured the White House.
On January 25, 1993, Clinton appointed him as assistant to the president for economic policy.
Shortly thereafter, the president created a unique role for his comrade, head of the newly created
National Economic Council. “I asked Bob Rubin to take on a new job,” Clinton later wrote, “coordinating
economic policy in the White House as Chairman of the National Economic Council, which would operate
in much the same way the National Security Council did, bringing all the relevant agencies together
to formulate and implement policy... [I]f he could balance all of [Goldman Sachs’] egos and interests,
he had a good chance to succeed with the job.” (Ten years later, President George W. Bush gave the
same position to Rubin’s old partner, Friedman.)
Back at Goldman, Jon Corzine, co-head of fixed income, and Henry Paulson, co-head of investment
banking, were ascending through the ranks. They became co-CEOs when Friedman retired at the end of
Those two men were the perfect bipartisan duo. Corzine was a staunch Democrat serving on the International
Capital Markets Advisory Committee of the Federal Reserve Bank of New York (from 1989 to 1999). He
would co-chair a presidential commission for Clinton on capital budgeting between 1997 and 1999,
while serving in a key role on the Borrowing Advisory Committee of the Treasury Department. Paulson
was a well connected Republican and Harvard graduate who had served on the White House Domestic Council
as staff assistant to the president in the Nixon administration.
Bankers Forge Ahead
By May 1995, Rubin was impatiently warning Congress that the Glass-Steagall Act could “conceivably
impede safety and soundness by limiting revenue diversification.” Banking deregulation was then inching
through Congress. As they had during the previous Bush administration, both the House and Senate
Banking Committees had approved separate versions of legislation to repeal Glass-Steagall, the 1933
Act passed by the administration of Franklin Delano Roosevelt that had separated deposit-taking and
lending or “commercial” bank activities from speculative or “investment bank” activities, such as
securities creation and trading. Conference negotiations had fallen apart, though, and the effort
By 1996, however, other industries, representing core clients of the banking sector, were already
being deregulated. On February 8, 1996, Clinton signed the Telecom Act, which killed many independent
and smaller broadcasting companies by opening a national market for “cross-ownership.” The result
was mass mergers in that sector advised by banks.
Deregulation of companies that could transport energy across state lines came next. Before such
deregulation, state commissions had regulated companies that owned power plants and transmission
lines, which worked together to distribute power. Afterward, these could be divided and effectively
traded without uniform regulation or responsibility to regional customers. This would lead to blackouts
in California and a slew of energy derivatives, as well as trades at firms such as Enron that used
the energy business as a front for fraudulent deals.
The number of mergers and stock and debt issuances ballooned on the back of all the deregulation
that eliminated barriers that had kept companies separated. As industries consolidated, they also
ramped up their complex transactions and special purpose vehicles (off-balance-sheet, offshore constructions
tailored by the banking community to hide the true nature of their debts and shield their profits
from taxes). Bankers kicked into overdrive to generate fees and create related deals. Many of these
blew up in the early 2000s in a spate of scandals and bankruptcies, causing an earlier millennium
Meanwhile, though, bankers plowed ahead with their advisory services, speculative enterprises,
and deregulation pursuits. President Clinton and his team would soon provide them an epic gift, all
in the name of U.S. global power and competitiveness. Robert Rubin would steer the White House ship
to that goal.
On February 12, 1999, Rubin found a fresh angle to argue on behalf of banking deregulation. He
addressed the House Committee on Banking and Financial Services, claiming that, “the problem U.S.
financial services firms face abroad is more one of access than lack of competitiveness.”
He was referring to the European banks’ increasing control of distribution channels into the European
institutional and retail client base. Unlike U.S. commercial banks, European banks had no restrictions
keeping them from buying and teaming up with U.S. or other securities firms and investment banks
to create or distribute their products. He did not appear concerned about the destruction caused
by sizeable financial bets throughout Europe. The international competitiveness argument allowed
him to focus the committee on what needed to be done domestically in the banking sector to remain
Rubin stressed the necessity of HR 665, the Financial Services Modernization Act of 1999, or the
Gramm-Leach-Bliley Act, that was officially introduced on February 10, 1999. He said it took “fundamental
actions to modernize our financial system by repealing the Glass-Steagall Act prohibitions on banks
affiliating with securities firms and repealing the Bank Holding Company Act prohibitions on insurance
The Gramm-Leach-Bliley Act Marches Forward
On February 24, 1999, in more testimony before the Senate Banking Committee, Rubin pushed for
fewer prohibitions on bank affiliates that wanted to perform the same functions as their larger bank
holding company, once the different types of financial firms could legally merge. That minor distinction
would enable subsidiaries to place all sorts of bets and house all sorts of junk under the false
premise that they had the same capital beneath them as their parent. The idea that a subsidiary’s
problems can’t taint or destroy the host, or bank holding company, or create “catastrophic” risk,
is a myth perpetuated by bankers and political enablers that continues to this day.
Rubin had no qualms with mega-consolidations across multiple service lines. His real problems
were those of his banker friends, which lay with the financial modernization bill’s “prohibition
on the use of subsidiaries by larger banks.” The bankers wanted the right to establish off-book
subsidiaries where they could hide risks, and profits, as needed.
Again, Rubin decided to use the notion of remaining competitive with foreign banks to make his
point. This technicality was “unacceptable to the administration,” he said, not least because “foreign
banks underwrite and deal in securities through subsidiaries in the United States, and U.S. banks
[already] conduct securities and merchant banking activities abroad through so-called Edge subsidiaries.”
Rubin got his way. These off-book, risky, and barely regulated subsidiaries would be at the forefront
of the 2008 financial crisis.
On March 1, 1999, Senator Phil Gramm released a final draft of the Financial Services Modernization
Act of 1999 and scheduled committee consideration for March 4th. A bevy of excited financial titans
who were close to Clinton, including Travelers CEO Sandy Weill, Bank of America CEO, Hugh McColl,
and American Express CEO Harvey Golub, called for “swift congressional action.”
The Quintessential Revolving-Door Man
The stock market continued its meteoric rise in anticipation of a banker-friendly conclusion to
the legislation that would deregulate their industry. Rising consumer confidence reflected the nation’s
fondness for the markets and lack of empathy with the rest of the world’s economic plight. On March
29, 1999, the Dow Jones Industrial Average closed above 10,000 for the first time. Six weeks later,
on May 6th, the Financial Services Modernization Act passed the Senate. It legalized, after
the fact, the merger that created the nation’s biggest bank. Citigroup, the marriage of Citibank
and Travelers, had been finalized the previous October.
It was not until that point that one of Glass-Steagall’s main assassins decided to leave Washington.
Six days after the bill passed the Senate, on May 12, 1999, Robert Rubin abruptly announced his resignation.
As Clinton wrote, “I believed he had been the best and most important treasury secretary since Alexander
Hamilton... He had played a decisive role in our efforts to restore economic growth and spread its
benefits to more Americans.”
Clinton named Larry Summers to succeed Rubin. Two weeks later, BusinessWeek reported
signs of trouble in merger paradise -- in the form of a growing rift between John Reed, the former
Chairman of Citibank, and Sandy Weill at the new Citigroup. As Reed said, “Co-CEOs are hard.” Perhaps
to patch their rift, or simply to take advantage of a political opportunity, the two men enlisted
a third person to join their relationship -- none other than Robert Rubin.
Rubin’s resignation from Treasury became effective on July 2nd. At that time, he announced, “This
almost six and a half years has been all-consuming, and I think it is time for me to go home to New
York and to do whatever I’m going to do next.” Rubin became chairman of Citigroup’s executive committee
and a member of the newly created “office of the chairman.” His initial annual compensation package
was worth around $40 million. It was more than worth the “hit” he took when he left Goldman
for the Treasury post.
Three days after the conference committee endorsed the Gramm-Leach-Bliley bill, Rubin assumed
his Citigroup position, joining the institution destined to dominate the financial industry. That
very same day, Reed and Weill issued a joint statement praising Washington for “liberating our financial
companies from an antiquated regulatory structure,” stating that “this legislation will unleash the
creativity of our industry and ensure our global competitiveness.”
On November 4th, the Senate approved the Gramm-Leach-Bliley Act by a vote of 90 to 8. (The
House voted 362–57 in favor.) Critics famously referred to it as the Citigroup Authorization Act.
Mirth abounded in Clinton’s White House. “Today Congress voted to update the rules that have governed
financial services since the Great Depression and replace them with a system for the twenty-first
century,” Summers said. “This historic legislation will better enable American companies to compete
in the new economy.”
But the happiness was misguided. Deregulating the banking industry might have helped the titans
of Wall Street but not people on Main Street. The Clinton era epitomized the vast difference between
appearance and reality, spin and actuality. As the decade drew to a close, Clinton basked in the
glow of a lofty stock market, a budget surplus, and the passage of this key banking “modernization.”
It would be revealed in the 2000s that many corporate profits of the 1990s were based on inflated
evaluations, manipulation, and fraud. When Clinton left office, the gap between rich and poor was
greater than it had been in 1992, and yet the Democrats heralded him as some sort of prosperity hero.
When he resigned in 1997, Robert Reich, Clinton’s labor secretary, said, “America is prospering,
but the prosperity is not being widely shared, certainly not as widely shared as it once was... We
have made progress in growing the economy. But growing together again must be our central goal in
the future.” Instead, the growth of wealth inequality in the United States accelerated, as
the men yielding the most financial power wielded it with increasingly less culpability or restriction.
By 2015, that wealth or prosperity gap would stand near historic highs.
The power of the bankers increased dramatically in the wake of the repeal of Glass-Steagall. The
Clinton administration had rendered twenty-first-century banking practices similar to those of the
pre-1929 crash. But worse. “Modernizing” meant utilizing government-backed depositors’ funds as collateral
for the creation and distribution of all types of complex securities and derivatives whose proliferation
would be increasingly quick and dangerous.
Eviscerating Glass-Steagall allowed big banks to compete against Europe and also enabled them
to go on a rampage: more acquisitions, greater speculation, and more risky products. The big banks
used their bloated balance sheets to engage in more complex activity, while counting on customer
deposits and loans as capital chips on the global betting table. Bankers used hefty trading profits
and wealth to increase lobbying funds and campaign donations, creating an endless circle of influence
and mutual reinforcement of boundary-less speculation, endorsed by the White House.
Deposits could be used to garner larger windfalls, just as cheap labor and commodities in developing
countries were used to formulate more expensive goods for profit in the upper echelons of the global
financial hierarchy. Energy and telecoms proved especially fertile ground for the investment banking
fee business (and later for fraud, extensive lawsuits, and bankruptcies). Deregulation greased the
wheels of complex financial instruments such as collateralized debt obligations, junk bonds, toxic
assets, and unregulated derivatives.
The Glass-Steagall repeal led to unfettered derivatives growth and unstable balance sheets at
commercial banks that merged with investment banks and at investment banks that preferred to remain
solo but engaged in dodgier practices to remain “competitive.” In conjunction with the tight political-financial
alignment and associated collaboration that began with Bush and increased under Clinton, bankers
channeled the 1920s, only with more power over an immense and growing pile of global financial assets
and increasingly "open” markets. In the process, accountability would evaporate.
Every bank accelerated its hunt for acquisitions and deposits to amass global influence while
creating, trading, and distributing increasingly convoluted securities and derivatives. These practices
would foster the kind of shaky, interconnected, and opaque financial environment that provided the
backdrop and conditions leading up to the financial meltdown of 2008.
The Realities of 2016
Hillary Clinton is, of course, not her husband. But her access to his past banker alliances, amplified
by the ones that she has formed herself, makes her more of a friend than an adversary to the banking
industry. In her brief 2008 candidacy, all four of the New York-based Big Six banks ranked
top 10 corporate donors. They have also contributed to the
Clinton Foundation. She needs them to win, just as both Barack Obama and Bill Clinton did.
No matter what spin is used for campaigning purposes, the idea that a critical distance
can be maintained between the White House and Wall Street is naïve given the multiple channels of
money and favors that flow between the two. It is even more improbable, given the
history of connections that Hillary Clinton has established through her associations with key bank
leaders in the early 1990s, during her time as a senator from New York, and given their contributions
to the Clinton foundation while she was secretary of state. At some level, the situation
couldn’t be less complicated: her path aligns with that of the country’s most powerful bankers. If
she becomes president, that will remain the case.
In an interview with the sympathetic Fox News (owned by Rupert Murdoch, who also owns
Harper, the publisher of Clinton Cash) it was put to Schweizer that he hadn’t “nailed”
his thesis. “It’s hard for any author to nail it – one of the strategies of the Clinton
camp is to set a bar for me as an author that is impossible to meet,” he replied.
... ... ...
Certainly, pundits were warning about the problem of the large sums of money flowing
into the Clinton Foundation’s coffers even before Hillary Clinton took up her position
as Obama’s global emissary-in-chief. A month before she became secretary of state,
the Washington Post warned in an editorial that her husband’s fundraising activities
were problematic. “Even if Ms Clinton is not influenced by gifts to her husband’s
charity, the appearance of conflict is unavoidable.”
Since the foundation was formed in 2001, some $2bn has been donated, mainly in
big lump sums. Fully a third of the donors giving more than $1m, and more than a half
of those handing over more than $5m, have been foreign governments, corporations or
tycoons. (The foundation stresses that such largesse has been put to very good use
– fighting obesity around the globe, combating climate change, helping millions of
people with HIV/Aids obtain antiretroviral drugs at affordable prices.)
Schweizer may have made mistakes about aspects of Bill Clinton’s fees on the speaker
circuit, but one of his main contentions – that the former president’s rates skyrocketed
after his wife became secretary of state – is correct.
Politifact confirmed that since leaving the White House in 2001 and 2013, Bill
Clinton made 13 speeches for which he commanded more than $500,000; all but two of
those mega-money earners occurred in the period when Hillary was at the State Department.
Though Schweizer has failed to prove actual corruption in the arrangement – at
no point in the book does he produce evidence showing that Bill’s exorbitant speaker
fees were directly tied to policy concessions from Hillary – he does point to several
glaring conflicts of interest. Bill Clinton did accept large speaker fees accumulating
to more than $1m from TD Bank, a major shareholder in the Keystone XL pipeline, at
precisely the time that the Obama administration, and Hillary Clinton within it, was
wrestling with the vexed issue of whether to approve it.
It is also true that large donations to the foundation from the chairman of Uranium
One, Ian Telfer, at around the time of the Russian purchase of the company and while
Hillary Clinton was secretary of state, were never disclosed to the public. The multimillion
sums were channeled through a subsidiary of the Clinton Foundation, CGSCI, which did
not reveal its individual donors.
Such awkward collisions between Bill’s fundraising activities and Hillary’s public
service have raised concerns not just among those who might be dismissed as part of
a vast rightwing conspiracy. Take Zephyr Teachout, a law professor at Fordham university
who has written extensively on political corruption in the US.
Teachout, who last year stood against Andrew Cuomo for the Democratic party nomination
for New York governor, points out that you don’t have to be able to prove quid pro
quo for alarm bells to ring. “Our whole system of rules is built upon the concept
that you must prevent conflicts of interests if you are to resist corruption in its
many forms. Conflicts like that can infect us in ways we don’t even see.”
Teachout said that the Clintons presented the US political world with a totally
new challenge. “We have never had somebody running for president whose spouse – himself
a former president – is running around the world raising money in these vast sums.”
Bill Clinton insisted this week that his charity has done nothing “knowingly inappropriate”,
that is unlikely to satisfy the skeptics from left or right. They say that a family
in which one member is vying for the most powerful office on Earth must avoid straying
into even the unintentionally inappropriate.
In the wake of Clinton Cash, the foundation has admitted that it
made mistakes in disclosing some of its contributions. It has also implemented
new rules that will see its financial reporting increase from once annually to
four times a year, while large donations from foreign governments will be limited
in future to six countries including the UK and Germany.
But with Bill refusing doggedly to give up his speaker engagements – “I gotta pay
our bills” – and foreign corporations and super-rich individuals still able to donate
to the family charity, it looks like this controversy may run and run. Politically,
too, Hillary Clinton is confronted with a potential credibility gap between her appeal
to ordinary Americans on the presidential campaign trail and the millions that continue
to flow to the foundation.
“Is she going to be in touch with the needs and dreams of poor America when her
spouse and daughter are working with the world’s global elite?” said Dave Levinthal
of the anti-corruption investigative organization, the Center for Public Integrity.
“That’s a question she will have to answer, every step of the way.”
mkenney63 5 May 2015 20:39
It would be nice to know how much Saudi and Chinese money her "Foundation" has taken-in. I can tell you how much Bernie has taken - $0. Bernie, the only truly progressive in the race, raised $1.5 million in one day from ordinary working people like you and me who have the smarts to know who's really in their corner. When I look at Hillary I ask myself, do we really want parasitic people like this running our country? Is there anything she has ever touched that isn't tainted by a lust for money?
foggy2 gixxerman006 5 May 2015 20:38
I am in the process of reading the actual book. He does have actual sources for many things but what is missing is the information controlled by that now cleaned off server and the details of just who contributed to them, their foundation, and who hired them for those gold plated speeches. Those names never were made public and now the related tax forms are being "redone." Wonder how long that will take.
The author was able to get pertinent data from the Canadian tax base information and that is important because some of the heavier hitters are Canadians who needed help in the US and other places to make piles of money on their investments. And many statements made by people are documented as are some cables sent TO the state department.
AlfredHerring raffine 5 May 2015 20:33
It's funny that free-market Tea Party Republicans criticize the Clintons
There's a broad populist streak in the Tea Party. They may be social conservatives and
opposed to government telling them they MUST buy health insurance from a private company
(that's where it started) but on many issues they're part of the Teddy Roosevelt trust
busting and Franklin Roosevelt New Deal traditions.
It's a pay off for doing what Big Finance wants. It's ironic that Bernanke, who didn't recognize the
biggest bubble in financial history until it popped is being paid millions of dollars for uncovering
Bernanke's bad example, by Mark Thoma: The recent announcements
that former Federal Reserve Chairman Ben Bernanke has accepted a
position as a
senior adviser at Pimco and a similar position at hedge fund
Citadel have raised questions about whether the "revolving door"
between government and private sector jobs ought to be restricted.
Perhaps, for example, Federal Reserve officials should be subject
a five-year waiting period before they can take jobs in the
financial sector. The idea would be to reduce the chance that bank
regulators could be influenced through formal and informal ties to
previous Fed officials.
My concern is somewhat different: The incentive for Federal Reserve
Board members to step down before their terms are up and accept
lucrative private sector positions has the potential to damage the
Fed as an independent institution...
Syaloch -> pgl...
"For 2014, the Chairman's annual salary is $201,700. The annual
salary of the other Board members (including the Vice Chairman) is
$201,700 isn't a good salary? Sure, maybe it's peanuts to someone
working on Wall Street, but doesn't that kinda go to the point that
Thoma was making?
"[Bernanke's] stepping down isn't the main problem. It's the idea
that it's OK for a former Fed member -- and its chair, no less --
to take these kinds of jobs once you leave. If Bernanke had
returned to academia or limited himself to his position at the
Brookings Institution, that wouldn't be a problem.
"However, if the chair can cash out, then other board members will
also have an incentive to resign their positions as Fed governors
after a few years to pursue financial interests in the private
sector. Bernanke's acceptance of positions at Citadel and Pimco
sets a bad precedent because it encourages other board members to
do the same."
pgl -> Syaloch...
Where on earth did I say he made minimum wages? I said he did a
good job and $200,000 a year was a bargain even if it was not slave
DrDick -> pgl...
It is much more than most academic economists make. It is, in
fact, a very good salary by any reasonable standard. The fact that
people on Wall Street are paid obscene amounts for no useful
product is beside the point.
Dean Baker and Nouriel Roubini, off the top of my head.
You could see it coming a mile away, especially given the worsening
financialization and boom-bust pattern over the last four decades.
Of course, Bernanke said the exact opposite, that we were in the
middle of the Great Moderation. Like most politicians, he's a liar,
covering for the banks that made a fortune off the bubble, and then
insulated from the catastrophe by the government and Fed.
Ellis -> pgl...
Dean Baker and Nouriel Roubini, off the top of my head.
You could see it coming a mile away, especially given the worsening
financialization and boom-bust pattern over the last four decades.
Of course, Bernanke said the exact opposite, that we were in the
middle of the Great Moderation. Like most politicians, he's a liar,
covering for the banks that made a fortune off the bubble, and then
insulated from the catastrophe by the government and Fed.
pgl -> Ellis...
The trio was also mocked by many at the time. Yes - they got it
right and they deserve credit for doing so. But none of them have
ever attacked Bernanke for not being as fore sighted.
But hey - I guess it is beat up on Ben day so have at it!
DrDick -> pgl...
While I think he could have done better at the Fed, I think he
was decent in that position. He should not be allowed to take this
Ellis -> pgl...
Yes, they were mocked -- which is not surprising, given the
financial and career advancement incentives -- which is exactly the
point. Have you seen the documentary "Inside Job"? It has a good
section on corruption among top economists.
Your wrong on your second point: Check out the post by Dean Baker
in Beat the Press, April 30, "The Man Who Completely Missed the
Housing Bubble and Was Convinced Financial Disruption Would be
Restricted to the Subprime Market Deserves Two Seven-Figure
Sorry for being so "mean and nasty" about Bernanke. But compare
that to all those who lost everything, as a result of the crisis
that he oversaw? His big salaries, of course, are little more than
a tip from the big boys, who made out so well.
Roger Gathmann -> pgl...
You really see no difference between economic journalists and
the head of the FED? Uh, that is pretty incredible.
How could Bernanke have found out more? Well, maybe he could
have operated a bit more like Steve Eisman at frontpoint who did
the math, as reported by Michael Lewis in The Big Short.
Really, to pretend that the FED has the same capacities as a
newspaper columnist or economics professor, that the voices, and
there were more than two or three, in the financial industry
warning that there was something deeply wrong, is to apologize for
Bernanke by saying, hey, he was a complete doofus, but he did all
right after he sank the ship.
Greenspan and Bernanke were the worst FED chairmen in the Fed's
history. The record, which should be read in terms of the health of
the general economy, bears this out. Granted, after three crashes
that seemed not to result in Depressions, Greenspan might not seem
as bad, but it was his spirit and ideas that created the
de-regulatory box and the market can do no wrong ethos at the Fed,
which Bernanke continued. Bernanke even got a second chance after
Bear Stearns fell. But no, between May and September, 2008, the Fed
pretty much sat on its hands.
Bernanke served the hedge fund sector well during his reign of
terror at the Fed. Who can forget the loans to even a semi-criminal
hedge fund like Yorkville from the ever understanding Fed, once the
roof fell in? Or to all the other moneyed interests?
And who can forget the prophet Bernanke? The one who, in 2005,
looked about and said yeah, there is no housing bubble, and anyway,
housing prices don't decline:
"U.S. house prices have risen by nearly 25 percent over the past
two years, noted Bernanke, currently chairman of the president's
Council of Economic Advisers, in testimony to Congress's Joint
Economic Committee. But these increases, he said, "largely reflect
strong economic fundamentals," such as strong growth in jobs,
incomes and the number of new households."
I like the strong increase in incomes remark particularly. No
wonder Bush, who had shown an eye for characters like Bernanke -
Wolfowitz, Rumsfeld and Cheney shared a similar bogus confidence in
their "facts" - appointed him. And he didn't disappoint. This is
the guy who said that the Fed shouldn't be second guessing on the
price of assets - free market, don't you know? - whose response to
Stock market declines in 2006 and 2007 with a series of cuts was
all about - keeping up the price of assets. But these were special
assets, the kind of assets mainly held by the upper 20 percent
income group. Not the tawdry assets held by the lower 80 with their
Here he is, in his speech on the state of the economy in March,
2007, giving us more prophetic Ben:
Although the turmoil in the subprime mortgage market has created
severe financial problems for many individuals and families, the
implications of these developments for the housing market as a
whole are less clear. The ongoing tightening of lending standards,
although an appropriate market response, will reduce somewhat the
effective demand for housing, and foreclosed properties will add to
the inventories of unsold homes. At this juncture, however, the
impact on the broader economy and financial markets of the problems
in the subprime market seems likely to be contained. In particular,
mortgages to prime borrowers and fixed-rate mortgages to all
classes of borrowers continue to perform well, with low rates of
Bear Stearns collapsed two months after everything was contained,
in May. Now, did Mr Bernanke think maybe there needed to be some
urgent work done to make sure other big banks weren't at risk? Were
he and his friend in Treasury in firefighing mode? Of course not.
That would not be serving the hedge fund community well.
Not that he was without ideas. Obviously, you wouldn't want to
regulate a market in CDOs - it would be irresponsible to suggest
such things! - but you could recommend that the bottom 80 percent
be better informed about the risks they were taking.
Ace idea. Maybe even the top 1 percent should have been informed
about the risks they were running? oh, but they have the computers
and the smarts, of course. No need to rush right in.
Of course, I'm just a crazy leftist with these views. And the crazy
leftists who issued the Financial Crisis Inquiry report in 2011
"The majority report finds fault with two Fed chairmen: Alan
Greenspan, who led the central bank as the housing bubble expanded,
and his successor, Ben S. Bernanke, who did not foresee the crisis
but played a crucial role in the response. It criticizes Mr.
Greenspan for advocating deregulation and cites a “pivotal failure
to stem the flow of toxic mortgages” under his leadership as a
“prime example” of negligence.
It also criticizes the Bush administration’s “inconsistent
response” to the crisis — allowing Lehman Brothers to collapse in
September 2008 after earlier bailing out another bank, Bear
Stearns, with Fed help — as having “added to the uncertainty and
panic in the financial markets.”
Like Mr. Bernanke, Mr. Bush’s Treasury secretary, Henry M. Paulson
Jr., predicted in 2007 — wrongly, it turned out — that the subprime
collapse would be contained, the report notes."
Bernanke like his companeros in the Bush administration was smug,
incompetent, and a key player in a disaster that impacted
negatively on most Americans and the world at large. The result of
his continuation of Greenspan's policies and his reaction to the
onset of the crisis contributed to the reduction of the median net
worth of American households by a third:
Salut, Ben! You deserve every penny.
I mentioned rather cryptically the Yorkville hedge fund that was
helped out by the ever hedge friendly Ben Bernanke. In the dark
winter of 2008 - 2009, some people thought of the retirement funds
that were evaporating, the foreclosures, the unemployment. But the
Fed was thinking in larger terms about who should get premium loans
at Uncle Ben's We loan for less window. Yorkville was one of them.
“A Jersey City, N.J., hedge fund under Securities and Exchange
Commission investigation received more than $230 million in federal
loans as part of a government bailout program.
Yorkville Advisors has been part of the Term Asset-Backed
Securities Loan Facility Program since last year. Under TALF, the
Federal Reserve Bank of New York has up to $1 billion to lend as
part of an effort to inject liquidity into the ABS market.
Yorkville received some $233 million of that financing, using it to
buy $253 million in securities last year for its flagship, YA
Global Investments. The TALF deals were made via a subsidiary of
the fund, New Earthshell Corp., and placed with a special-purpose
entity called YA TALF Holdings, Forbes reports. The hedge fund
still owes the Fed $162 million.”
This is of course a pennyante amount. You, my friend, may not be
able to get one cent from the Fed even if you write them and ask
pretty please and include pics of your starving kids, but to other
of the higher players in the Wallfare world, that loan is pocket
Since it isn’t pocket change to me, though (if I and one thousand
of my clones worked one thousand years at the rate in which I make
money, we would not have collected anything near 230 million
dollars), I figure that it might be a good idea to poke around
Yorkville Associates, and see what they are about.
So what does Yorkville do, and why would we want to loan it money?
Here’s a good summary of one of Yorkville’s big money makers:
“Yorkville Advisors, founded by 38-year-old Mark Angelo in 2001, is
one of the largest hedge fund firms specializing in investing in
thinly-traded and often illiquid outfits by making private
investments in public equities, also known as PIPEs. The hedge fund
firm reported nearly $1 billion in assets as recently as 2008.
Angelo’s variation on PIPEs is a structured product called a
standby equity distribution agreement, which like most PIPEs often
causes the stock of the company receiving the investment to drop
because it results in Yorkville’s funds collecting discounted
A report prepared by Sagient Research’s PlacementTracker shows that
Yorkville has entered into $762 million in PIPE deals since 2001,
causing the underlying stocks to drop 38% on average in the first
year. Most of those investments were made by Yorkville’s Cornell
Capital Partners, which later changed its name to YA Global
YA Global Investments reported a total return of 6.04% in 2009 and
6.22% in 2008, its financial statements say. It reported a net
investment loss of 0.09% in 2009 and net investment income of 5.43%
According to the one-page independent auditor’s report prepared on
August 13 by McGladrey & Pullen, YA Global Investments’
consolidated financial statements include investments valued at
$804 million, representing 94% of its partners’ capital plus the
amounts due to certain Yorkville special purpose vehicles, “whose
fair values have been estimated” by Yorkville Advisors “in the
absence of readily ascertainable fair values.”
Now, that seems a bit curious. We gave this outfit money so that it
could use the money to mount a play to make selected stock prices
drop, which made it money.
Hmm, how is this possible? Well, here’s an explanation of PIPE
action as it pertains to another fund, the NIR group, written by
Matthew Goldstein at Reuters:
"But what’s surprising to me is why the SEC is just looking into
the NIR funds now, given that it has been a dominant player in
so-called “death spiral” convertible market. These securities have
gotten a bad rap over the years because they include a trigger that
permits bonds to be converted into common shares whenever there is
a precipitous drop in the prices of a company’s stock.
Roger Gathmann -> pete...
The accusation is that the loose set up of Talf was Bernanke's
baby, not that he was personally on the phone to Yorkville
The Bureau of Mine head wasn't personally in contact with BP
when Deep Horizon blew, he had simply helped produced the
regulatory environment that made it possible.
Checking out Citadel's history of tax avoidance and taking
advantage of loopholes in regulation, Bernanke obviously saw a
corporate culture he could admire. As early as 2007, the NYT
featured an article about their innovative program of helping
employees avoid tax through a system of off shore accounts.
One of the flagship funds at Citadel, a $13.5 billion hedge fund,
for example, has deferred at least $1.7 billion since it was
founded at the end of 1990. And that does not count what might have
been taken out already. Citadel declined to comment.
“We pile advantage on advantage for these managers and
there doesn’t seem to be any economically logical basis for it,”
said John C. Bogle, the founder of the Vanguard Group. “It’s a
very well-gilded lily to allow these tax deferrals.”
This tax advantage is now coming under scrutiny in Washington,
where Congress is looking for ways to reduce the budget deficit, to
pay for the Iraq war and to help cover the exploding retirement and
health care costs of aging baby boomers.
For now, many hedge fund managers are enjoying not only
extraordinary profits but the extra benefit of a system almost
encouraging them to set up offshore accounts.
Most hedge funds are private partnerships; managers are usually
paid 2 percent of the money they manage plus 20 percent of the
profits the partnership earns. If the fund operates in the United
States, any deferral of the pay of the managers means investors
lose the tax deduction associated with the compensation expense. As
a result, deferred compensation in domestic funds is very uncommon.
By setting up an offshore fund, though, hedge fund managers avoid
socking their investors with extra taxes. At the same time, it
serves to attract tax-exempt investors like pension funds and
endowments, as well as foreign investors, two of the most active
groups investing in hedge funds today."
Life is sweet. True, what's 200 million between friends?
after all, citadel's ceo made 900 million dollars in 2009. That's
how they roll.
After the senate report on the financial meltdown, Bernanke,
in a country where the elite were more vulnerable to shame, would
have stepped down. Actually, if a cashier at a grocery store
had a record that was comparably as bad as Bernanke's at the Fed,
that cashier would have been fired, with no reference.
But cashiers are peons and proles - they have to take
responsibility for what they do. Sweetly enough, our elite has
liquidated that notion as far as it refers to themselves.
America is such a lovely place to live in like that - if you have
an income of above 500 thou a year.
For the rest, well, in an ownership society you gotta take your
Excerpts from the book The Power Elite by C.Wright Mills Oxford Press, 1956
The higher immorality can neither be narrowed to the political sphere nor understood as
primarily a matter of corrupt men in fundamentally sound institutions. Political corruption is
one aspect of a more general immorality; the level of moral sensibility that now prevails is not
merely a matter of corrupt men. The higher immorality is a systematic feature of the American
elite; its general acceptance is an essential feature of the mass society.
Of course, there may be corrupt men in sound institutions, but when institutions are
corrupting, many of the men who live and work in them are necessarily corrupted. In the corporate
era, economic relations become impersonal-and the executive feels less personal responsibility.
Within the corporate worlds of business, war-making and politics, the private conscience is
attenuated-and the higher immorality is institutionalized. It is not merely a question of a
corrupt administration in corporation, army, or state; it is a feature of the corporate rich, as
a capitalist stratum, deeply intertwined with the politics of the military state.
There is still one old American value that has not markedly declined: the value of money and
of the things money can buy-these, even in inflated times, seem as solid and enduring as
stainless steel. 'I've been rich and I've been poor,' Sophie Tucker has said, 'and believe me,
rich is best.' As many other values are weakened, the question for Americans becomes not Is there
anything that money, used with intelligence, will not buy?' but, 'How many of the things that
money will not buy are valued and desired more than what money will buy?' Money is the one
unambiguous criterion of success, and such success is still the sovereign American value.
Whenever the standards of the moneyed life prevail, the man with money, no matter how he got
it, will eventually be respected. A million dollars, it is said, covers a multitude of sins. It
is not only that men want money; it is that their very standards are pecuniary. In a society in
which the money-maker has had no serious rival for repute and honor, the word 'practical' comes
to mean useful for private gain, and 'common sense,' the sense to get ahead financially. The
pursuit of the moneyed life is the commanding value, in relation to which the influence of other
values has declined, so men easily become morally ruthless in the pursuit of easy money and fast
A great deal of corruption is simply a part of the old effort to get rich and then to become
richer. But today the context in which the old drive must operate has changed. When both economic
and political institutions were small and scattered-as in the simpler models of classical
economics and Jeffersonian democracy-no man had it in his power to bestow or to receive great
favors. But when political institutions and economic opportunities are at once concentrated and
linked, then public office can be used for private gain.
Governmental agencies contain no more of the higher immorality than do business corporations.
Political men can grant financial favors only when there are economic men ready and willing to
take them. And economic men can seek political favors only when there are political agents who
can bestow such favors. The publicity spotlight, of course, shines brighter upon the transactions
of the men in government, for which there is good reason. Expectations being higher, publics are
more easily disappointed by public officials. Businessmen are supposed to be out for themselves,
and if they successfully skate on legally thin ice, Americans generally honor them for having
gotten away with it. But in a civilization so thoroughly business-penetrated as America, the
rules of business are carried over into government-especially when so many businessmen have gone
into government. How many executives would really fight for a law requiring a careful and public
accounting of all executive contracts and 'expense accounts'? High income taxes have resulted in
a network of collusion between big firm and higher employee. There are many ingenious ways to
cheat the spirit of the tax laws, as we have seen, and the standards of consumption of many
high-priced men are determined more by complicated expense accounts than by simple take-home pay.
Like prohibition, the laws of income taxes and the regulations of wartime exist without the
support of firm business convention. It is merely illegal to cheat them, but it is smart to get
away with it. Laws without supporting moral conventions invite crime, but much more importantly,
they spur the growth of an expedient, amoral attitude.
A society that is in its higher circles and on its middle levels widely believed to be a
network of smart rackets does not produce men with an inner moral sense; a society that is merely
expedient does not produce men of conscience. A society that narrows the meaning of 'success' to
the big money and in its terms condemns failure as the chief vice, raising money to the plane of
absolute value, will produce the sharp operator and the shady deal. Blessed are the cynical, for
only they have what it takes to succeed.
It is the proud claim of the higher circles in America that their members are entirely
self-made. That is their self-image and their well-publicized myth. Popular proof of this is
based on anecdotes its scholarly proof is supposed to rest upon statistical rituals whereby it is
shown that varying proportions of the men at the top are sons of men of lower rank. We have
already seen the proportions of given elite circles composed of the men who have risen. But what
is more important than the proportions of the sons of wage workers among these higher circles is
the criteria of admission to them, and the question of who applies these criteria. We cannot from
upward mobility infer higher merit. Even if the rough figures that now generally hold were
reversed, and 90 per cent of the elite were sons of wage workers-but the criteria of co-optation
by the elite remained what they now are-we could not from that mobility necessarily infer merit.
Only if the criteria of the top positions were meritorious, and only if they were self-applied,
as in a purely entrepreneurial manner, could we smuggle merit into such statistics-from any
statistics-of mobility. The idea that the self-made man is somehow 'good' and that the
family-made man is not good makes moral sense only when the career is independent, when one is on
one's own as an entrepreneur. It would also make sense in a strict bureaucracy where examinations
control advancement. It makes little sense in the system of corporate co-optation.
There is, in psychological fact, no such thing as a self-made man. No man makes himself, least
of all the members of the American elite. In a world of corporate hierarchies, men are selected
by those above them in the hierarchy in accordance with whatever criteria they use. In connection
with the corporations of America, we have seen the current criteria. Men shape themselves to fit
them, and are thus made by the criteria, the social premiums that prevail. If there is no such
thing as a self-made man, there is such a thing as a self-used man, and there are many such men
among the American elite.
Under such conditions of success, there is no virtue in starting out poor and becoming rich.
Only where the ways of becoming rich are such as to require virtue or to lead to virtue does
personal enrichment imply virtue. In a system of co-optation from above, whether you began rich
or poor seems less relevant in revealing what kind of man you are when you have arrived than in
revealing the principles of those in charge of selecting the ones who succeed.
All this is sensed by enough people below the higher circles to lead to cynical views of the
lack of connection between merit and mobility, between virtue and success. It is a sense of the
immorality of accomplishment, and it is revealed in the prevalence of such views as: 'it's all
just another racket,' and 'it's not what you know but who you know.' Considerable numbers of
people now accept the immorality of accomplishment as a going fact
Moral distrust of the American elite-as well as the fact of organized irresponsibility-rests
upon the higher immorality, but also upon vague feelings about the higher ignorance. Once upon a
time in the United States, men of affairs were also men of sensibility: to a considerable extent
the elite of power and the elite of culture coincided, and where they did not coincide they often
overlapped as circles. Within the compass of a knowledgeable and effective public, knowledge and
power were in effective touch; and more than that, this public decided much that was decided.
'Nothing is more revealing,' James Reston has written, 'than to read the debate in the House
of Representatives in the Eighteen Thirties on Greece's fight with Turkey for independence and
the Greek-Turkish debate in the Congress in 1947. The first is dignified and eloquent, the
argument marching from principle through illustration to conclusion; the second is a dreary
garble of debating points, full of irrelevancies and bad history. George Washington in 1783
relaxed with Voltaire's 'letters' and Locke's 'On Human Understanding'; Eisenhower read cowboy
tales and detective stories. For such men as now typically arrive in the higher political,
economic and military circles, the briefing and the memorandum seem to have pretty well replaced
not only the serious book, but the newspaper as well. Given the immorality of accomplishment,
this is perhaps as it must be, but what is somewhat disconcerting about it is that they are below
the level on which they might feel a little bit ashamed of the uncultivated style of their
relaxation and of their mental fare, and that no self-cultivated public is in a position by its
reactions to educate them to such uneasiness.
By the middle of the twentieth century, the American elite have become an entirely different
breed of men from those who could on any reasonable grounds be considered a cultural elite, or
even for that matter cultivated men of sensibility. Knowledge and power are not truly united
inside the ruling circles; and when men of knowledge do come in contact with the circles of
powerful men, they come not as peers but as hired men. The elite of power, wealth, and celebrity
do not have even a passing acquaintance with the elite of culture, knowledge and sensibility;
they are not in touch with them-although the ostentatious fringes of the two worlds sometimes
overlap in the world of the celebrity.
Most men are encouraged to assume that, in general, the most powerful and the wealthiest are
also the most knowledgeable or, as they might say, 'the smartest.' Such ideas are propped up by
many little slogans about those who 'teach because they can't do,' and about 'if you're so smart,
why aren't you rich?' But all that such wisecracks mean is that those who use them assume that
power and wealth are sovereign values for all men and especially for men 'who are smart.' They
assume also that knowledge always pays off in such ways, or surely ought to, and that the test of
genuine knowledge is just such pay-offs. The powerful and the wealthy must be the men of most
knowledge, otherwise how could they be where they are? But to say that those who succeed to power
must be 'smart,' is to say that power is knowledge. To say that those who succeed to wealth must
be smart, is to say that wealth is knowledge.
The prevalence of such assumptions does reveal something that is true: that ordinary men, even
today, are prone to explain and to justify power and wealth in terms of knowledge or ability.
Such assumptions also reveal something of what has happened to the kind of experience that
knowledge has come to be. Knowledge is t no longer widely felt as an ideal; it is seen as an
instrument. In a society of power and wealth, knowledge is valued as an instrument of power and
wealth, and also, of course, as an ornament in conversation.
The American elite is not composed of representative men whose conduct and character
constitute models for American imitation and aspiration. There is no set of men with whom members
of the mass public can rightfully and gladly identify. In this fundamental sense, America is
indeed without leaders. Yet such is the nature of the mass public's morally cynical and
politically unspecified distrust that it is readily drained off without real political effect.
That this is so, after the men and events of the last thirty years, is further proof of the
extreme difficulty of finding and of using in America today the political means of sanity for
morally sane objectives.
America - a conservative country without any conservative ideology-appears now before the
world a naked and arbitrary power, as, in the name of realism, its men of decision enforce their
often crackpot definitions upon world reality. The second-rate mind is in command of the
ponderously spoken platitude. In the liberal rhetoric, vagueness, and in the conservative mood,
irrationality, are raised to principle. Public relations and the official secret, the
trivializing campaign and the terrible fact clumsily accomplished, are replacing the reasoned
debate of political ideas in the privately incorporated economy, the military ascendancy, and the
political vacuum of modern America.
The men of the higher circles are not representative men; their high position is not a result
of moral virtue; their fabulous success is not firmly connected with meritorious ability. Those
who sit in the seats of the high and the mighty are selected and formed by the means of power,
the sources of wealth, the mechanics of celebrity, which prevail in their society. They are not
men selected and formed by a civil service that is linked with the world of knowledge and
sensibility. They are not men shaped by nationally responsible parties that debate openly and
clearly the issues this nation now so unintelligently confronts. They are not men held in
responsible check by a plurality of voluntary associations which connect debating publics with
the pinnacles of decision. Commanders of power unequaled in human history, they have succeeded
within the American system of organized irresponsibility.
Suicide is a prohibited form of violence in my own belief, as are all other forms of murder. Therefore
I would not hold this type of protest up as an example to anyone.
However, an even worse offense would be to completely ignore the message which this young man delivered,
as most of the mainstream media has done in the US.
I did not even know what really happened until I read this article below from Wall Street On Parade
today. The police and media referred to it as a
Before he killed himself, the young man held up a sign that said "Tax the One Percent."
Perhaps an even more pointed message might be 'shut down the loopholes for the Top .01%.' Those who
make their money from wages and ordinary income pay fairly significant taxes.
However, the uber-rich have so many loopholes and tax avoidance schemes that they often pay much
lower percentage than even those in the lowest income levels. The top .01% use the upper middle class
as shields for their antics.
Rather than one young light be extinguished and quickly overlooked by the powerful, perhaps it would
be better if a million people were to march on the Capitol, and effective shut it down in protest this
Summer. That might get their attention. Alas, the apathy in the people is pervasive, at least for now.
22-Year Old Commits Suicide at Capitol to Send Congress
By Pam Martens: April 14, 2015
At approximately 1:07 p.m. on Saturday afternoon, April 11, during the annual Cherry Blossom Festival
celebrating springtime in the Nation's Capitol, a 22-year old man took his own life with a gun on
the Capitol grounds with a protest sign taped to his hand. According to the Washington Post, the
sign read: "Tax the one percent."
Yesterday, the Metropolitan Police Department released the young man's name. He was Leo P. Thornton
of Lincolnwood, Illinois. Based on what is currently known, the young man had traveled to Washington,
D.C. for the express purpose of making a political statement with his sign and then ending his young
The Chicago Tribune reported that "Thornton's parents filed a missing persons report on the morning
of April 11 after he never came home from work on April 10, Lincolnwood Deputy Police Chief John
Those are the tragic facts of the incident itself. But there is a broader tragedy: the vacuous
handling of this story by corporate media. The Washington Post headlined the story with this: "Rhythms
of Washington Return after Illinois Man's Suicide Outside Capitol." The message he delivered to his
Congress – tax the one percent – has yet to be explored by any major news outlet in America in connection
with this tragedy.
Was the message of Leo P. Thornton of Lincolnwood, Illinois a critical piece of information for
this Congress to hear at this moment in American history. You're damn right it was. Outside of Wall
Street's wealth transfer system, provisions in the U.S. tax code are the second biggest wealth transfer
system to the one percent. Together, these two systems have created the greatest income and wealth
inequality since the economic collapse in the Great Depression. They threaten a repeat of the 2008
financial collapse because the majority of Americans do not have the wages or savings to support
the broader economy...
"The only vice that cannot be forgiven is hypocrisy. The repentance of a hypocrite is itself
"The U.S. went off the gold standard in August 1971. With no benchmark, central banks could
print money and debase currencies. That opened the door for huge bailouts after big banks screwed
up in a big way. Taxpayers—not incompetent bankers—paid the price.
By [the late 1980's], the Federal Reserve Bank and large U.S. banks had established a
pattern to control the public relations damage each time banks had a major screw-up: accountants
and regulators let banks lie about the size of the problem to stall for time; the Federal Reserve
blew smoke at the media; finally, the Fed would bail out the banks in a way that most taxpayers
would not understand.
Banks didn't have to get smarter or more competent. The Fed trained the banks that
uninformed taxpayers would eat the losses, and fake accounting would let bank officers keep their
positions and their money."
Janet Tavakoli, Decisions: Life and Death on Wall Street
Gold and silver were pushed back to their assigned round numbers, with gold barely holding
above 1200 and silver pushed well below the 17 handle.
Ted Butler has a rather striking piece about the rigging in the silver market which you can
Speaking of silver it appears that Turkey had record imports of silver bullion in March.
You can read about that
here. I am not sure how significant that is. We can certainly keep an eye on it to see if
this is a one time thing or a trend.
Thoughts of silver drachmas and dirhams come to mind, but it is most likely improbably
premature. Still, this is a currency war and things seem to be building to a reckoning of sorts.
Who can say what desperate people might do to end repression?
Nothing really happened at the Bucket Shop on the Hudson. A few contracts of silver were
claimed, and inventory was shoved around the plate in the warehouses. The real action is taking
place in the Mideast and Asia.
We have become a coarse and careless people, smugly confident in our 'Exceptionalism.' We
are no longer shocked about lies, but instead critique the style and performance of the liars, and
try to emulate them in our own professions.
How can we not cringe at some of the more shocking abuses that pass for generally acceptable
behavior in public figures these days? And we encourage it, by both our silence and our acceptance.
Oh yes, we recoil in horror at any kind of sex, at the human form, with great puritanical umbrage,
but stealing and cheating, and abusing the poor and the defenseless in even the most petty and
vicious ways is looked upon with admiration, because we are in love with power.
Power is our new golden calf. Even some so-called 'reformers' are falling all over themselves at a
chance to move near the circles of power, to have influence, to be seen as connected. All we seem
to want is to get paid, to get ahead, to 'win.'
And the example of our cultural and societal icons are certainly leading to a general
corrosion of all morals and civilities. And that is a shame, which eventually will have significant
repercussions and consequences for us as a people and a society.
Where will we finally draw the line and come to our senses? How far are we willing to go? How
many crimes and abuses, how much theft and torture are we willing to overlook? Why do we allow our
society to be defined by sociopaths?
When will we finally look about, and see that we too, despite all our smug superiority, have
created our own garden of beasts?
One of the primary purposes of Liberty Blitzkrieg
is to dispel the myth that America is politically a democracy and economically a free market,
and prove that it is in fact a centrally planned oligarchy. If the people were well aware
of this and fine with it, that's one thing, but my contention is that the vast majority of the public
is merely buying into the myth. This is why the population is so passive and easily controlled. They
simply don't understand what is happening to them. The proverbial frog slowing boiling to death.
Whenever I note that real median incomes in America haven't increased for decades, many
people have a hard time believing it. Nevertheless, as John Adams famously proclaimed: "facts
are stubborn things." Indeed they are, and an
article published today by Bloomberg View provides some disturbingly stubborn facts
that must be admitted to and faced. We learn that:
If you worry about the declining fortunes of the U.S. middle class, take heed:
It might be worse than you realized.
Tracking the middle class can be difficult, because the group is hard to define. Typically,
researchers look at households with incomes or net worth in the middle of the entire population.
This approach, though, might provide a falsely rosy picture.
Two economists at the Federal Reserve Bank of St. Louis — William Emmons and Bryan Noeth
sought to address this shortcoming by focusing on households' demographic characteristics,
rather than income or wealth. Specifically, they looked at families whose breadwinner was at least
40 years old and had achieved a level of education that would typically allow a middle-class standard
of living. Whites and Asians needed exactly a high-school diploma to qualify. For blacks and Hispanics,
it took a two-year or four-year college degree — a stark recognition of persistent racial inequality.
The results are not pretty. As of 2013, this group's median annual income stood
at about $45,000, down 16 percent in inflation-adjusted terms from 1989, with a big part of the
drop occurring since 2001. Over the same period, a more commonly used measure of the middle class's
fortunes — the median income for all families — declined just 1 percent.
Yep, since 2001. This is not a coincidence. This is when America reacted like a bunch of scared
imbeciles to a terrifying terrorist attack, and squandered what was left of freedom, civil liberties
and common sense (see:
How I Remember September 11, 2001). But moving along…
The picture for wealth is no better. The group's median net worth (assets minus
debt) was about $127,000 in 2013, down an inflation-adjusted 27 percent from 1989 and 38 percent
from 2007, just before the financial crisis hit. By comparison, the median net worth for all families
declined just 4 percent over the whole period (it's also lower overall because it includes younger
families that haven't yet saved much).
While the numbers revealed by this alternative methodology are downright devastating, I'd note
that even by the conventional measurement income and wealth are still DOWN since 1989. Don't worry
though, oligarchs are more wealthy and more powerful than ever. This is no accident, it's
baked into the system.
Former employees of federal agencies can often find good (and lucrative) jobs as lobbyists,
capitalizing on the connections that they forged while in public service.As OpenSecrets exposes, the
numbers of revolving-door-enthusiasts is reminiscent of the Ebola epidemic as this deadly-to-democracy
disease spreads from department to department ripping away 'hope and change' wherever it appears.
"Revolvers" include those as powerful - and well connected - as secretaries of state
and as far from Washington as Peace Corps volunteers... but The Department of Commerce tops the list...
The agencies shown here have employed the greatest number of former lobbyists - or sent
the greatest number of former employees to lobbying firms and interest groups.
Holding the public in contempt is a bipartisan effort. Consider the following stories.
involves Republican Governor Rick Perry of Texas:
Information contained in a blistering state audit shows that at least five of the recipients…
which got tens of millions of dollars from the fund — never actually submitted formal applications.
At issue are at least five recipients of Texas Enterprise Fund money: Vought Aircraft…
Texas Governor Rick Perry gave Vought, a Carlyle Group affiliate, $35 million for fifteen years.
Ten years later it's unclear if Vought provided even one additional new job. Governor Perry's
job number is fanciful and the
recent audit gives
no overall job number. In 2010 Carlyle sold Vought for $1.44 billion but not one penny was
returned to Texas taxpayers.
Chicago's Democratic Mayor Rahm Emanuel is as free with taxpayer money for his political benefactors
purposely evasive about those relationships:
Emanuel's administration has for weeks blocked the release of correspondence between
his administration and one of the Democratic mayor's top donors, Michael Sacks. The administration
has also refused to release details about tens of millions of dollars in shadowy no-bid
city payments to some of Emanuel's largest campaign contributors.
Rahm's top donor is a private equity underwriter (PEU):
The CEO of the Chicago private equity firm Grosvenor, Sacks has been described as
Emanuel's closest ally in the private sector, and has been called Emanuel's "go-to guy" and
his "top troubleshooter."
PEU sponsored politicians are above the law:
Illinois' open records law mandates that communications to and from public officials
like Emanuel be made available for public inspection.
…firms that have received tens of millions of dollars' worth of shadowy "direct voucher
payments" (DVPs) from the Emanuel administration have given more than $775,000 worth of campaign
contributions to the mayor's political organizations.
Chicago's DVP process is permitted thanks to loopholes in Illinois' procurement law that allow
municipal officials to circumvent the traditional contracting process. Unlike standard
government contracts, DVP payouts do not require any type of public documentation. Emanuel appointees
retain substantial discretionary authority to approve DVPs. The payments are not required to go
to the lowest bidder; vendors receiving the payments do not have to list their qualifications
and never need to document the services they provide to the city in return for the money.
The DVPs appear to have been used for everything from phone service to interest payments to financial
firms, but unlike the George W. Bush administration's no-bid contracts, DVP payments do not
even require a formal contract, so it is impossible to verify what the money purchased.
No application, no contract and no accountability. It's our PEU world, where
politicians Red and Blue love PEU.
The most shocking, if already completely buried, news of the day was that - in yet another confirmation
that Goldman Sachs is in charge of the New York Fed - a NY Fed staffer was colluding and leaking
confidential, material information to a 29-year-old Goldman vice president, himself a former Federal
This only happened because on the day Carmen Segarra disclosed her 47 hours of "secret Goldman
tapes" on This American Life, Goldman executives asked the former Fed staffer where he had gotten
what appeared to be confidential information from.
To nobody's surprise the answer was: The New York Fed. So as the latter, also known as the biggest
hedge fund of the western world with $2.7 trillion in AUM, is scrambling to once again prove it
is shocked, shocked, that it has become merely the latest subsidiary
of Goldman Sachs, Inc., it released the following statement explaining what "really" happened.
As soon as we learned that Goldman Sachs suspected one of its employees may have inappropriately
obtained confidential supervisory information, we alerted law enforcement authorities.
We have been working with law enforcement authorities since then. Because any public statement
about the investigation could be prejudicial to a potential future criminal case, we are unable
to comment on the specific facts that are under investigation.
As a general matter, we have detailed rules and controls protecting confidential information.
All employees with access to confidential supervisory information need to agree to safeguard
that information appropriately, and not to disclose it without the necessary approval.
Employees receive training relating to the handling and protection of confidential supervisory
information and other information security matters. Employees are informed that
a violation of these restrictions could lead to criminal prosecution.
Employees also receive ongoing ethics training and are required to do an annual certification
that they understand and will adhere to the Bank’s Code of Conduct. In addition, we use
off-boarding procedures to confirm with departing employees that no confidential information
may be taken. With respect to all New York Fed staff, departing Officers may have
no official contact with the Federal Reserve System for a period of one year.
In addition, all departing New York Fed employees may not have substantive business contacts
with the New York Fed relating to any particular matter that he or she had worked on when employed
by the New York Fed. Further, with respect to employees departing from the financial institution
supervision group, if the departing employee had served as a senior supervisory officer or central
point of contact at a large and complex banking organization, that employee may not receive
compensation from the supervised organization as an employee, officer, director or consultant
for a period of one year. Finally, the New York Fed has in place technology to
help identify and prevent the forwarding of confidential information in violation of our rules.
So did this technology fail? Or is Goldman simply one of the exempted parties?
Is the NY FED trying to say that Goldman Sachs does not
own shares in the New York Federal Reserve Bank?
The 12 regional Federal Reserve Banks, which were
established by the
Congress as the operating arms of the nation's central
are organized similarly to private corporations--possibly
some confusion about "ownership." For example, the Reserve
shares of stock to member banks. However, owning Reserve
Bank stock is
quite different from owning stock in a private company.
Banks are not operated for profit, and ownership
of a certain amount of
stock is, by law, a condition of membership in the System.
The stock may
not be sold, traded, or pledged as security for a loan;
by law, 6 percent per year.
Which is why it is a complete farce and racket to have
The NY Federal Reserve Bank be responsible for regulating
the member banks that own it.
The Board of Governors of the Federal Reserve System
has supervisory and regulatory authority over a wide
range of financial institutions, including state-chartered
banks that are members of the Federal Reserve System
(state member banks), bank holding companies, thrift
holding companies and foreign banking organizations
that have a branch, agency, a commercial lending company
subsidiary or a bank subsidiary in the United States...
To understand Goldman’s ticket to monopoly, the key is the Fed’s chain of
Since the days of Alexander Hamilton the investment banks have made their home
and impact in the Empire State. There, the concentration of big banks has made the NY Federal
Reserve Bank powerful enough to outmaneuver, outvote and override all other regional interests. Its
Fed ownership position, extensive size, holdings, insiders operating in the Fed and its New York
contacts guarantees Goldman Sachs the leverage when needed to direct the Federal Reserve System.
It boils down to this: when you have the kind of leverage Goldman and the
TBTFs have, this Wall Street money trust can make the critical decisions. One consortium,
Goldman Sachs, tells the NY Fed what to do; it tells the FOMC and it relays its decision to Janet
Yellen, representing 90 percent of the banking power. It means the government of the United States
is under the direction of the Wall Street money trust.
The Federal Reserve Bank of New York is the feature of how centralized,
incestuous and tyrannical America’s financial system has become. It is the New York
Fed that literally gives the first and last word on who gets what and when in financial America.
In other words, when the money trust picks its winners and losers, it’s here’s where the decisions
Because of the extensive holdings and connections of New York based investment banks, what
influence could a St. Louis or Dallas banker possible make on Fed policy? And since the domination
of the Fed by Ben Strong of J.P. Morgan Trust and Governor of the New York Fed from 1914 until his
death in 1928, no Fed decision is made without the New York stamp.
The president of the New York Fed is a permanent voting member of the FOMC and traditionally is
selected as its vice chairman. The other presidents serve one-year terms on a rotating basis. All of
the presidents participate in FOMC discussions, but only the five who are members of the Committee
vote on policy decisions.
The Federal Reserve Bank of New York has several unique responsibilities associated with its
presence in the financial capital of the United States.
At the direction of the Federal Open Market Committee (FOMC), the Federal Reserve's top monetary
policy-making group, the New York Fed executes domestic open market operations on behalf of the
Open market operations—the buying and selling of U.S. government securities in the
secondary market—are the principal means through which the System implements monetary policy.
Although the FOMC decides what policy to follow, the System's portfolio is directed, on a daily
basis, by the Manager of the System Open Market Account at the New York Fed. The Manager, along with
the rest of the Open Market Department, constantly monitors bank reserves and acts to ensure that
the FOMC's directive is being fulfilled.
In addition to its domestic trading desk responsibilities, the New York Fed, at
the direction of the FOMC and U.S. Treasury, conducts all foreign exchange trading for the Treasury
and the Federal Reserve System. In this role, the New York Fed intervenes in foreign exchange
markets to achieve dollar exchange rate policy objectives and to counter disorderly conditions in
foreign exchange markets.
The New York Fed also is responsible for maintaining relations with, and providing financial
services for, foreign central banks and international organizations. One of these services is the
New York Reserve Bank's unique custodial responsibility for the gold reserves of about five dozens
countries, central banks, and international organizations. The New York Fed's gold vault stores
approximately one-quarter of the world's official gold supply—the largest concentration of monetary
gold in the world.
Foreign official gold reserves have been held at the New York Fed since 1924 for numerous
reasons, including the stability of the U.S. political system, the concentration of international
trade and finance in New York City, and the convenience of centralizing gold holdings in a place
where international payments can be made quickly.
The truth is, Goldman Sachs is one of the Fed owners, but it is so big, it is
pushing everybody else around, at the moment.
The most recent information from observers says that just eight
families, four of which reside in the US, own 80 percent of the NY Federal Reserve Bank.
They are, according Dean Henderson of Global Research in 2011, Goldman Sachs, Rockefellers, Lehmans
and Kuhn Loebs of New York; the Rothschilds of Paris and London; the Warburgs of Hamburg; the
Lazards of Paris; and the Israel Moses Seifs of Rome.This ownership information was provided
by J.W. McCallister, an oil industry insider with House of Saud connections, writing in
"The Grime Reaper," information he acquired from Saudi bankers.
Yves here. You can also read Zephyr Teachout answering questions about her book at last weekend’s
Book Salon at Firedoglake.
By Matt Stoller, who writes for Salon and has contributed to Politico, Alternet,
The Nation and Reuters. You can reach him at stoller (at) gmail.com or follow him on Twitter at
Originally published at
Medium and Firedoglake
If there’s one way to summarize Zephyr Teachout’s extraordinary book
Corruption in America: From Benjamin Franklin’s Snuff Box to Citizens United,
it is that today we are living in Benjamin Franklin’s dystopia. Her basic contention, which is not
unfamiliar to most of us in sentiment if not in detail, is that the modern Supreme Court has engaged
in a revolutionary reinterpretation of corruption and therefore in American political life. This
outlook, written by Supreme Court Justice Anthony Kennedy in the famous Citizens United
case, understands and celebrates America as a brutal and Hobbesian competitive struggle among self-interested
actors attempting to use money to gain personal benefits in the public sphere.
What makes the book so remarkable is its scope and ability to link current debates
to our rich and forgotten history. Perhaps this has been done before, but if it has, I have never
seen it. Liberals tend to think that questions about electoral and political corruption started
in the 1970s, in the Watergate era. What Teachout shows is that these questions were foundational
in the American Revolution itself, and every epoch since. They are in fact questions fundamental
to the design of democracy.
Teachout starts her book by telling the story of a set of debates that took place
even before the Constitution was ratified — whether American officials could take gifts from foreign
kings. The French King, as a matter of diplomatic process, routinely gave diamond-encrusted snuff
boxes to foreign ambassadors. Americans, adopting a radical Dutch provision banning such gifts,
wrestled with the question of temptation to individual public servants versus international diplomatic
norms. The gifts ban, she argues, was evidence of a particular demanding notion of corruption at
the heart of American legal history. These rules, ‘bright-line’ rules versus ‘corrupt-intent’ rules,
govern temptation and structure. They cover innocent and illicit activity, as opposed to bribery
rules which are organized solely around quid pro quo corruption.
The Constitution is full of such bright-line rules. For instance, the residency requirement
was intended to protect against ‘adventurers’ and the takings clause protects private property and
has an anti-monopoly interpretive framework. The census, rules on representation of House members,
the regular electoral cycle of two year terms, age requirements (to prevent dynasties), requirements
for legislative journals, salary payments for legislators, and prohibitions on holding legislative
and other offices are all anti-corruption provisions. The founders, Teachout argues, were obsessed
with corruption. They had seen their beloved British system fall into the trap of corruption, with
‘place men’ (members of parliament dependent on the king) and rotten boroughs, and sought to prevent
a recurrence in America.
Teachout points out something fairly obvious, but not recognized today — the theoretical
underpinning of the American revolution was that a corrupt government had no legitimacy to govern.
This is something the founders well recognized. The debates they had — Madison, Jefferson, Adams,
Franklin, Washington, Hamilton, and people in the culture at large — reflected a divide between
political philosophers Thomas Hobbes versus Baron de Montesquieu. Hobbes’s vision, echoed today
among the Chicago school’s law and economics scholars, was that corruption as a concept made no
sense. Life was a brutal competition among selfish actors. In such a paradigm, a revolution would
simply be a question of raw power, rather than any set of principles.
The founders roundly repudiated this view, adopting Montesquieu’s arguments that
there is such a thing as a public interest and that people could orient themselves around it given
sufficient personal virtue and adequate structural incentives to do so. Montesquieu is best-known
for his promotion of the concept of different branches of government, but that concept came from
his moral view of human nature. Teachout shows that questions of bribery were fairly insignificant
in the dialogue over the structure of the new republic, whereas anti-corruption as a Montesquieu-influenced
deliberative design principle was the key animator of the shaping of the country.
This debate continued, in some sense, throughout the two hundred plus years of American
legal and cultural history. The first significant test of the revolutionary anti-corruption doctrine
was the 1795 ‘Yazoo’ controversy, when a Georgia legislature sold a massive d process never went
In her discussion of the 19th century robber baron era, she includes the critical
yet forgotten law of 19th century lobbying. Lobbying today is considered a Constitutionally protected
free speech activity, an unfortunate but necessarily tolerated side effect of the First Amendment.
That, however, is a relatively recent legal status.
In the 19th century, lobbying was perceived as an illegitimate and inherently
corrupt activity, a betrayal of one’s own citizenship. The Georgia draft Constitution in 1877
made lobbying a crime. ”Throughout the country, from the early 1830s through the early 1930s, the
sale of personal influence was treated as a civic wrong in the eyes of the law,” she writes.
“A citizen did not have a personal right to pay someone else to press his or her legislative agenda.”
This anti lobbying sentiment was not enforced through criminal law, but through civil law. Contracts
for lobbying were unenforceable by courts, as the case Trist vs Child showed.
In 1890, the first law requiring lobbyists to register was passed in Massachusetts.
This began the legitimization of lobbying as a profession. In 1927, the Supreme Court began chipping
away at the de fact prohibition on lobbying via contract law, but as late as 1941 it still upheld
Trist vs. Child.
Corruption in this era was widespread, as was the reaction against it. The Pendleton
Act, which created the civil service, and the secret ballot, were both bright-line rule innovations
to reduce the temptation of corruption. The country also began wrestling with the increasingly high
cost of campaigns, which was a pivotal factor in the election of 1896 contest between populist Democrat
William Jennings Bryan and Republican William McKinley. Banks were assessed a .25% charge on capital
to finance McKinley’s run, which amounted to roughly $5 billion in today’s money. This led to, among
other things, Teddy Roosevelt’s anti-monopoly crusades and his work to ban corporate contributions
in the early 20th century.
Corruption was more than just bribery, it was a threat to self-government and individual
citizenship. It was a moral problem. Mark Twain’s novel The Gilded Age, from which the
era took its namesake, was a story of an innocent woman turned sophisticated amoral lobbyist. Corruption
as a problem had religious overtones.
Gradually, this ardor has cooled. It was only in the post-World War II era that courts
began carving out a First Amendment right on lobbying. Lobbying in the post-war administrative state
was a necessity, and the increasing expense of public campaigns suggested that restrictions were
necessary. But in 1976, the Supreme Court ushered in the modern Hobbesian view of political economy
with its ruling in Buckley vs. Valeo. This case invalidated restrictions on campaign spending,
and began the reinterpretation of corruption to simply mean quid pro quo bribery. The court argued
that spending on elections in a First Amendment right, though the government had a valid anti-corruption
interest in limiting speech. Contribution limits were valid, but spending limits were not. Post
Buckley, the only limits on campaign spending became corruption-based, so scholars and lawyers began
defining their policy preferences in terms of corruption, twisting and warping the term.
The book’s final chapters are a discussion of Citizens United, the Supreme
Court’s makeup, and a legal proscription of how to restore the more appropriate conception of corruption
in our national life.
According to Teachout, Citizens United was a decision in which the Supreme
Court ignored the historic record to narrow the definition of corruption to mean a simple quid pro
quo transaction. It found that the First Amendment protects “political speech regardless of the
identity of the speaker,” and that the Court found no sufficient “government interest in limiting
corporate political advertising.” It equated favoratism and influence with ‘democratic responsiveness’.
This was, as Teachout shows earlier, what Benjamin Franklin saw to be a dystopian view of how the
American republic would be organized.
... ... ...
Minor Heretic, November 17, 2014 at 11:04 pm
A fallacy at the root of the modern 1st Amendment interpretation of campaign finance is just
that: money as speech. Consider that high spending candidates win congressional primaries 98%
of the time. That 98% is literal – see USPIRG’s work on this. That makes donating money analogous
to voting, not speaking. Last I checked, we were each supposed to have an equal number of votes,
Just throwing this out: Limit political donations (to candidates, parties, PACs, ballot initiative
movements, lobbying organizations, 501(c)4…) to a day’s wages at the federal minimum wage. It
would also be the annual maximum. That’s $58 at the present level. David Koch and the guy who
mows David Koch’s lawn would have equal clout.
Going further with the idea of money-as-vote, there should be a constituency restriction. Why
should a resident of Ohio be able to influence the outcome of an election or ballot initiative
in California? For that matter, why should a resident of Ohio congressional District 1 influence
the elections of a representative for Ohio District 2? In neither case would the donor have
legal party status.
I’m going to read Teachout’s book. I should note that her sister Woden co-wrote an excellent
book called “Slow Democracy,” about the practice of direct deliberative democracy, including
(but not limited to) town meetings.
Sam Kanu, November 18, 2014 at 8:54 am
“Money = free speech” is the ultimate fallacy. If money is equal to speech, then per definition,
speech cannot be free or equal, as we have huge disparities in wealth. And in turn that means
we dont have a democracy.
So basically the courts have dictated that democracy is dead. But that is not news on these
pages, where it has long been obvious that we live in an oligarchy….
Paul Tioxon, November 18, 2014 at 5:53 am
The corruption of the Gilded Age included the buying of US Senate offices. Mark
Twain in particular wrote against the practice whereby state legislatures picked the US Senators
for a state, without any direct election by the citizenry. One of the richest men in world,
William A. Clark, The Copper King of Montana, paid off the entire legislature of that state
to become its appointed Senator. Finally, the the 17th Amendment to the US Constitution provided
for the direct election of US Senators. Today, another institutional barrier to democratic elective
office is the Congressional District. When I vote for a Senator, we have state wide elections,
not 1 of 2 Senatorial Districts. When I vote in PA for my Congressional representation, I am
only voting for a tiny fraction of my full representation, due to my being forced to vote for
only one candidate in my congressional district. PA has 18 districts because it has to follow
the law that provides for this organization. I should get to vote for all 18 of the federal
representatives, because I am a citizen of Pennsylvania, which enter the Union of the USofA.
The districts are not hallowed institutions, because they keep changing with the growth in
population of the nation. And I, get to vote for some frequently redrawn district that keep
the amount of Republicans going to Washington DC in numbers greater than the total vote count
for their party for each of their district races. I want a vote fore each representative, no
matter how many there are for my state. Some small states with only 1 representative have a
statewide election. That is what I want for all of the citizens with more than 1 representative.
If I had 18 votes, I could vote 18 times for a Democratic slate of reps or maybe 12 Dems and
6 Green Party reps. As it stands now, 17 or the 18 people who represent my state get to go to
DC without my consent. I am not 1/18th Pennsylvanian and I don’t want 1/18th of a voice in Congress.
One person, One vote, for One Candidate. How come I can’t vote for the rest of my state’s delegation
to Congress. Oh yeah, we might take over the government mechanism of decision making.
beene, November 18, 2014 at 7:54 am
To me this is the most outrageous settle law that we have failed to address in over two hundred
years (to the Supreme Court, where in 1810, in Fletcher v Peck, the court said that the sanctity
of the contract must be upheld even in the face of corruption. In a nod to today’s logic of
brutal tolerance of corruption, the court argued that corruption may be problematic, but there
was nothing the state could do about it. This was a highly consequential decision, and prioritized
contract rights over anti-corruption.).
cabjoe mentioned voters being able to vote on approval of any new law passed by our representatives
seems like an excellent correction to a lot of corruption by law makers.
Linda Amick, November 18, 2014 at 8:30 am
As a post grad student of Historical Philosophy, I find it absolutely shocking that our societal
first principles are Hobbesian. His view of human dynamics and behaviors is MIGHT MAKES
RIGHT. Human beings are nothing more than brutes.
If our societal viewpoint was Aristotelian with man being a rational animal and part of the
living organism of the earth and solar system with a responsibility to respect all parts, maybe
our society would find its basis in something more akin to the Golden Rule.
Jim, November 18, 2014 at 5:25 pm
Mr. Hobbes, I believe, has inappropriately been maligned by many of the posts on this particular
thread when making allusions to his moral psychology.
If you take a more careful look at his writings you might notice that Hobbes is concerned with
cultivating a personality type concerned with honor. Hobbes says
“That which gives to human actions the relish of justice is a certain nobleness
or gallantness of courage, rarely found, by which a man scorns to be beholden for the contentment
of his life to fraud, or breach of promise. The justice of the manners is that which is
meant, where justice is called a virtue, and injustice a vice.” (Leviathan, Chapter 14).
When talking about the first steps in the transition from the state of nature to a social
contract Hobbes seems to believe that at least some members of the original society have to
be of a sufficiently magnanimous temperament that they are willing to take unprecedented risks
for the benefit of all.
Hobbes identifies magnanimity with the just conduct that springs from a “contempt” of injustice,
and he seems to recognize that men are often prepared to risk their lives rather than suffer
some sorts of shame. He also says that “magnanimity is a sign of power.”(Leviathan, Chapter
JTMcPhee , November 18, 2014 at 8:31 am
Speaking of corruption, moral hazard and all that related badness, years ago I was in the
man cave of a person busy in the open-outcry activity at the CME. Up on his wall in a florid
frame was the front page from a Chicago Tribune dated as I recall in august 1852. The headline
story reported he criminal conviction of two fellas for engaging in “speculation” on the future
price of corn, or maybe pork — back then, the stock in trade of the CBOT/CME today was totally
illegal, even barred by the Illinois constitution, for a lot of reasons that reflect the pain
that smartass “speculation” and derivatization have and continue to cause:
The Struggle for Legitimacy
Nineteenth century America was both fascinated and appalled by futures trading. This is apparent
from the litigation and many public debates surrounding its legitimacy (Baer and Saxon 1949,
55; Buck 1913, 131, 271; Hoffman 1932, 29, 351; Irwin 1954, 80; Lurie 1979, 53, 106). Many agricultural
producers, the lay community and, at times, legislatures and the courts, believed trading in
futures was tantamount to gambling. The difference between the latter and speculating, which
required the purchase or sale of a futures contract but not the shipment or delivery of the
commodity, was ostensibly lost on most Americans (Baer and Saxon 1949, 56; Ferris 1988, 88;
Hoffman 1932, 5; Lurie 1979, 53, 115).
Many Americans believed that futures traders frequently manipulated prices. From the end
of the Civil War until 1879 alone, corners – control of enough of the available supply of a
commodity to manipulate its price – allegedly occurred with varying degrees of success in wheat
(1868, 1871, 1878/9), corn (1868), oats (1868, 1871, 1874), rye (1868) and pork (1868) (Boyle
1920, 64-65). This manipulation continued throughout the century and culminated in the Three
Big Corners – the Hutchinson (1888), the Leiter (1898), and the Patten (1909). The Patten corner
was later debunked (Boyle 1920, 67-74), while the Leiter corner was the inspiration for Frank
Norris’s classic The Pit: A Story of Chicago (Norris 1903; Rothstein 1982, 60).14 In any case,
reports of market corners on America’s early futures exchanges were likely exaggerated (Boyle
1920, 62-74; Hieronymus 1977, 84), as were their long term effects on prices and hence consumer
welfare (Rothstein 1982, 60).
By 1892 thousands of petitions to Congress called for the prohibition of “speculative gambling
in grain” (Lurie, 1979, 109). And, attacks from state legislatures were seemingly unrelenting:
in 1812 a New York act made short sales illegal (the act was repealed in 1858); in 1841 a Pennsylvania
law made short sales, where the position was not covered in five days, a misdemeanor (the law
was repealed in 1862); in 1882 an Ohio law and a similar one in Illinois tried unsuccessfully
to restrict cash settlement of futures contracts; in 1867 the Illinois constitution forbade
dealing in futures contracts (this was repealed by 1869); in 1879 California’s constitution
invalidated futures contracts (this was effectively repealed in 1908); and, in 1882, 1883 and
1885, Mississippi, Arkansas, and Texas, respectively, passed laws that equated futures trading
with gambling, thus making the former a misdemeanor (Peterson 1933, 68-69).
Two nineteenth century challenges to futures trading are particularly noteworthy. The first
was the so-called Anti-Option movement. According to Lurie (1979), the movement was fueled by
agrarians and their sympathizers in Congress who wanted to end what they perceived as wanton
speculative abuses in futures trading (109). Although options were (are) not futures contracts,
and were nonetheless already outlawed on most exchanges by the 1890s, the legislation did not
distinguish between the two instruments and effectively sought to outlaw both (Lurie 1979, 109).
In 1890 the Butterworth Anti-Option Bill was introduced in Congress but never came to a vote.
However, in 1892 the Hatch (and Washburn) Anti-Option bills passed both houses of Congress,
and failed only on technicalities during reconciliation between the two houses. Had either bill
become law, it would have effectively ended options and futures trading in the United States
(Lurie 1979, 110).
A second notable challenge was the bucket shop controversy, which challenged the legitimacy
of the CBT in particular. A bucket shop was essentially an association of gamblers who met outside
the CBT and wagered on the direction of futures prices. These associations had legitimate-sounding
names such as the Christie Grain and Stock Company and the Public Grain Exchange. To most Americans,
these “exchanges” were no less legitimate than the CBT. That some CBT members were guilty of
“bucket shopping” only made matters worse!
The Players reported on in that Tribune article, as I recall, were convicted of multiple
felonies, and sentenced to something like 15 years each in pre-privatization Illinois prison.
I’m old enough and cynical enough to know that there’s an irreducible amount of corruption,
some cheerful but most perverse, in any social organization. The constant problem is managing
what I’d call “slack,” the apparently necessary “play” in the system, that like mechanical tolerances
in timepieces and transmissions, keeps friction and heat from locking up the mechanisms. I doubt
we humans will ever be very successful at keeping the “sharpest” among us from fattening themselves
via fraud, abuse, theft, combination and all that — there are no incorruptible mechanisms that
can keep the “slack” to a level that like, our gut bacteria population does not proliferate
and degenerate into a disease state that threatens to kill us, the organism of ordinary people
that keep all this going with our work and our little bits of wealth…
blucollarAl November 18, 2014 at 9:15 am
The entire philosophical and ideological foundation of modern capitalism, the almost always
unquestioned because unrecognized and assumed anthropological and moral premises of the system
of organizing economic and social life, is Hobbesian in its roots and accepts a Hobbesian picture
of the universe. What passes today for the “American Conservative Movement”, that collection
of foreign policy neo-cons and economic/social neo-liberals that deceptively calls itself “conservative”,
suggesting a respect for if not a reverence for the traditional and older ways, represents in
fact a radical, anti-American tradition of Hobbesian political philosophy as Treachout seems
to recognize in her book (I have not yet read it).
Still the best treatment of the Hobbes and modern capitalism are Hannah Arendt, “The Origins
of Totalitarianism”, Chapter 5, “The Political Emancipation of the Bourgeoise”, and C.B. McPherson,
“The Political Philosophy of Hobbes”. Read them and weep.
So we have a radical, anti-American, anti-human philosophy based on a picture of human nature
as pure passion, aggression, power-hungry greed, appealing to ordinary Americans under the guise
of “conservative” respect for their cherished (what’s left) customs, traditions, and respect
for decency. It is as if we have all fallen into a deep trance with no one, certainly not today’s
Democrat Party, there to wake us up.
Quote: "I believe that the fraudulent nature of the GWOT (Global War on Terror) should
be a key ingredient of any analysis of our political situation and it should be looked at as a part
of the massive financial fraud of that period–the two are not separate. "
Yves here. Bill Black discusses his favorite topic, fraud, with Marshall Auerback of the Institute
of New Economic Thinking. Some of this talk is familiar terrain for those who know Black’s work,
such as Black’s well-argued criticism of the failure of financial regulators to make criminal referrals
for misconduct in the runup to the financial crisis.
Even so, many readers are likely to find new information here, such as the number of FBI agents
assigned to handle white collar fraud, and how some regulators during the savings & loan crisis
defied Congressional pressure to go easy on failing and defrauded banks, and the career costs they
Watt4Bob, November 15, 2014 at 9:15 am
In retrospect it seems likely that taking the FBI off the financial crimes beat and putting
them on terrorism beat was a strategic move on the part of DOJ, at the behest of Wall$t interests.
After all, they passed the bankruptcy reform act well ahead of time because they foresaw the
need to prevent our escape from the coming crisis, evidence they have some overall understanding
of the likely results of their behavior.
Why then would we doubt they plan ahead to forestall prosecution for their crimes by systematic
gelding of regulators and Justice to create a backstop?
(Not mention the missing $ trillions Rumsfeld admitted to congress on 9/10/01, and the subsequent
attack on the Pentagon that managed to destroy only the offices of the guys auditing the MIC
Banger, November 15, 2014 at 10:02 am
The way officials dealt with the massive financial fraud during the aughts, particularly
the Obama Administration, was the final nail on the coffin of the U.S. government. There is
no way to argue that we have a legitimate government in Washington. First 9/11 and the Global
War on Terror a totally bogus and Orwellian enterprise that took FBI agents out of their jobs
chasing wild geese or focusing on dissidents like Occupy protesters. I believe that the
fraudulent nature of the GWOT should be a key ingredient of any analysis of our political situation
and it should be looked at as a part of the massive financial fraud of that period–the two are
The rest of the federal government will collapse into the most sordid kind of political corruption
eventually though this will take some time since most bureaucrats, dispirited as many of them
are, are not constitutionally corrupt or corruptable – but eventually the Washington maxim of
“no good deed goes unpunished” will win out. When I say corrupt, btw, I mean structural
corruption not a few people selling their services to the people they regulate – I mean the
corruption we have today is sytemic and incurable. Reform cannot happen at this time–there are
no political forces that have a) articulated how bad the situation actually is (if criminals
suffer no consequences then criminals will flourish); and b) know how to do anything to remedy
the situations. The mainstream media and even the financial press is an integral part of the
system that is focused on disinformation and misdirection with, at least, the occasional article
that shows a little glimpse of the ankle of this situation.
Anyone familiar with the work of Black and many others that does not grasp that a system that
rewards its worse criminals is, essentially, a criminal system. It is as if organized crime
has taken over the U.S. and we haven’t even noticed! Where is Batman?
fresno dan, November 15, 2014 at 12:09 pm
The one good line Kinsley has, “the outrage is not what’s illegal, its what’s legal”.
The 0.1% have 24/7 access, and no one else does. These government people cannot even
fathom what is wrong, because they are never actually exposed to another viewpoint…
susan the other, November 15, 2014 at 2:59 pm
That Holder said it might be “fraud” but he wasn’t touchin’ it with a 10-ft pole, is a quote
to die for. I must ask then, isn’t the US financial system a classic SOE? Indeed it
China eat your heart out. So it follows that MMT doesn’t necessarily apply in this case because
our system divvies up the money unequally by design and not equally (also by design) – ergo
corporatist design. Nevermind that 90% (?) of our corporations are terminal.
Giving the banksters (partners in crime) a lavish allotment mostly to allow them to then
support the MIC and etc. God praise private banking, er, agency banking. So what’s not
to love about Bill Black’s wonderfully graphic description about the authorities denying “fraud”
as “suddenly realizing you are in an elevator with a crazy person.”
And it then almost makes me think, in my entrenched paranoia, that the S&L crisis might
have merely been a dry run.
EconCCX, November 15, 2014 at 8:39 pm
I do not know “SOE”. What does it refer to?
State-owned enterprise, probs. “China eat your heart out.”
barbara gibbs, November 15, 2014 at 4:10 pm
When you have CEO’s like Jamie Diamon who goes before Congress wearing White House cufflinks,
he pretty much gave the finger to Congress. and Obama saying they did nothing wrong, is why
I lost my support for President Obama.
Obama why did you have to suck Diamon’s dick?
TedWa, November 15, 2014 at 5:22 pm
Even the Financial Crisis Inquiry Commission (FCIC) was told they could never use the word
“Fraud” in their investigations. Sick, isn’t it – and sickening.
I can’t wait to hear how Holder is going to answer the questions about Alayne Fleischmann, the
former JPMorgan Chase securities lawyer who tried to blow the whistle on “massive criminal securities
fraud” by the bank and Jamie Dimon, only to have the government try to silence her with a $9
Like we’ve been trying to say for years, you can prosecute the TBTF’s.
A few years ago, while still in law school, I was invited to write a chapter for a Tobin Project
book on regulatory capture. It was a bit intimidating, being part of a project that included luminaries
like David Moss, Dan Carpenter, Luigi Zingales, Richard Posner, Tino Cuellar, and the deans of two
of the best law schools in the country. I was asked to write something about an idea that I had
slipped into 13 Bankers, almost in
passing, about the cultural prestige of the financial industry and the political and regulatory
benefits the industry derived from that prestige. My chapter turned into a discussion of the various
mechanisms by which status and social networks can influence regulators, creating the equivalent
of regulatory capture even without traditional materialist incentives (cash under the table, promises
of future jobs, etc.).
Two weeks ago, an investigation by
This American Life illustrated the culture of deference, risk aversion, and general sucking-upitude
among New York Fed bank examiners that effectively resulted in the capture of regulators by the
banks they were supposed to be regulating. As David Beim wrote in a confidential report about the
New York Fed, the core problem was “what the culture expected of people and what the culture induced
people to do.”
I wrote about the story for the
Atlantic and referred to my book chapter, but at the time the chapter was not available for
free on the Internet (at least not legally). The good people at the Tobin Project have since put
it up on the book’s
website, from which you can download it (legally!). Note that they are only allowed to put up
one chapter at a time and they rotate them, so this is a limited-time offer.
Anonymous | October 9, 2014 at 10:20 am
Regulatory Capture is a very serious issue. When groups or individuals have a high-stakes
interest in the outcome of policy or regulatory they often focus their resources and energies
in attempting to gain the policy outcomes they prefer, while members of the public, each with
only a tiny individual stake in the outcome, are unable to do anything about it.
Cladia | October 9, 2014 at 10:23 am
When groups or individuals with a high-stakes interest in the outcome of policy they
often focus their resources and energies in attempting to gain the policy outcomes they
prefer, while members of the public, each with only a tiny individual stake in the outcome,
have no power to effect the outcome.
this is a pure form of hierarchy.
joebhed | October 9, 2014 at 9:35 pm
Sorry, the relevant paradigm goes far beyond the natural outcome of having a regulator work
within a bank, people being people and all.
But that administrative failure and its resulting Rolex-seeking bedfellows all pale in comparison
to the deeper realty present having to do with the dual mandate of the Fed to regulate the banks
while being in charge of the money system that those banks operate to maintain our economic
output and stability.
Be either the regulator or the promoter of the banking industry.
The Fed’s mandate to do both, from the same room, is morally perplexing to good people, and
is economically paralyzing.
We can’t have the money to put us back to work until bankers see robust creditwortiness for
lending and profit opportunities , which cannot happen without more money ….. to make them more
creditworthy.. Catch 22 of debt-based money.
This is why Martin Wolf says the government should issue the money.
One less moral hazard.
Henry | October 11, 2014 at 5:32 pm
It is sickening how regulators seek personal benefit, with complete disregard for the needs
of the many that should outweigh the needs of the very few. The fact that the same people have
to both regulate and promote banking activity is a recipe for corruption. Regardless of cultural
background of regulators and examiners, they should not have the power causing them to reach
a moral dilemma.
tonyforesta | October 13, 2014 at 1:30 am
Crimes were committed by all the financial oligarchs on an epic scale. Fraud, insidertrading,
price manipulation, tax evasion, naked massive theft, bribery, collusion, market rigging, and
the list is long and festering and putrid. The same crimes, by these same oligarchs, peopled
with the same den of vipers and thieves continue today unabated on an even more epic, epochal
scale.. There is nothing “unconscious” in the capture and conduct of the socalled regulators.
Both those pursuing the capture and the socalled captured are equally guilty of the same crimes,
for the same unholy pyshopathic reasons. Wealth and power.
Either regulators regulate and enforce existing laws. or there are no laws. The laws are reduced
to endless reams of meaningless words on worthless paper, full of sound and fury, signifying
nothing.” The conjuring of debt products into assets is a criminal activity, a Ponzi scheme.
Derivative products amount to (and the numbers are nebulous) a $600Billion exposure. 3/4′s of
a Quadrillion. How is this possible? How will this exposure ever be reconciled? The entire global
GDP is only 70+ trillion. There is no fixing this rank evil, there is no balm in Gilead. How
will this unholy and criminal math ever be reconciled???? I beg anyone to answer any of these
Part of the problem is the cognitive capture of academics, politicians, regulators, law enforcement,
and the dimsheeple these shaitans rob, pillage, incarcerate, murder, and otherwise abuse. The
language used itself deceptive and cloaked in the insular supremist ideologies and beliefs in
wealth and subsequent power as the singular measurements of status and greatness, of socalled
“masters of the universe”. Terms like captilalism, market efficiency, freemarkets, jobcreators,
patriotism, and christianity, freedom, democracy have been intentionally and ruthlessly mangled
and dismembered and redefined by decades of wingnut propaganda covens information domination
operations, and disinformation campaigns. For example. – I double dare any of you erudite experts
to define capitalism or democracy or freemarkets, or market efficiency and get back to me. The
definitions no longer apply to the realities or the facts. Fascists and oligarchs rule Amerika
and control the wealth and resources nation and all the conduct of the socalled government,
enforced by militarized mass murdering biggoted pigs, – I mean police, – excused and shielded
by partisan judges, including the fascists in the supreme court, and the captured regulatory
apparatus, who favor, shield, protect, advance and insulate the fascists predatorclass and their
mindless thugs – so obviously – we here in the land of Oz no longer inhabit a democracy,
Capitalism? Freemarkets? If there ever were such things, – they certainly does not exist today
The markets are better defined as bandit capitalism and certainly not free, or fair, – wherein
an entrenched predatorclass den of vipers and thieves are free, because of massive systemic
criminality and theft, and the ensuing absurd illgotten imponderable wealth, to wantonly rob
and pillage the people and manipulate markets, commodities, resources, the socalled judicial
system, the socalled regulatory apparatus, the mass murdering militarized pigs, – I mean socalled
law enforcement, and the socalled government, with absolute impunity and immunity, and zero
Market efficiency? The socalled mastersoftheuniverse were and are today wildly and dangerously
stupid and horribly inefficient, and are singularly responsible for the most catastrophic economic
FAILURE in the sordid history of the world, – a catastrophic FAILURE that is ongoing, and metastasizing
on an exponential level today.
Christianity? Personally loath all institutional religions, as they are all awash in oceans
of innocent blood, and seek only profit and power through the manipulation of religion – but
also a student of comparison religion, including the bible, the apocrypha, and the Nag Hamadi
texts. Any fiend or shaitan that would besmirch, bastardize, and claim the Nazarene to justify
their evils promoting wealth, and biggotry, racism, sexism, and homophobia – is obviously woefully
uneducated on the true teachings of christianity.
You are all victims of “pecuniary logic” and “pecuniary – psuedo truth” beliefs, – where in
lies are majikally shapeshifted into truths, and truths denounced and the babbling of conspiratorialists.
The EPA, note the key term ENVIRONMENTAL in the name of the agency should be “captured by ENVIRONMENTAL
types. That is the point the the purpose of in protection mandate in service of the people.
The creature from Jekyll Island, or the socalled FED is a horrific FAILURE, or a CRIMINAL CARTEL,
or both. Regardless of the incessant bruting of the complicit parrots in the MSM, and the spaniels
in the regulatory apparatus – there is no growth, there are and never will be any meaningful
jobs, and inflation (again setting aside the manipulated and intentionally deceptive conjured
numbers these shaitans and fiends pimp) is rampant and brutal, for the 99%. Price bacon, or
cheese, or any staple, or healthcare, or rent, or car insurance, and get to me biiiiiaaatches.
The fact is CRIMES were committed. The economy collapsed.to the great disadvantage and disregard
of the poor and middle class, while the predatorclass has absconded unfathomable wealth and
protections. And the shaitans and fiends in the socalled government and regulatory apparatus
chose to shield advance, protect, and immunize the den of vipers and thieves who are singularly
responsible and culpable for this horrorshow.
Insular supremists pimp and brute the fiction that if the banks were not bailed out at the taxpayer
expense, – the world would have come to an end.
Why would any intelligent free thinking individual, knowing what this den of vipers and thieves
were responsible for, recognizing how much imponderable wealth these shaitans absconded believe
this fiction and myth.
We’ll never know. But a resolutiontrustlikeentitiy could have commandeered the banks, dissolved
their criminal enterprizes, sold what was left in the open markets, sent those responsible to
court, and eventually jail, – and no of you could ever convince me – that those in my circles
would not be much better off.
Defenders of the predatorclass are pathological liars. CONSCIOUSLY, for inclusion and the grim
hope someday walking the earth as predatorclass.
This is psychopathic and sociopathic depravity, criminality and insanity, only possible when
one renounces every particle of humanity, decency, morality and compassion – and any concern
for their fellow man.
The reality predatorclass shaitans and fiends and vipers and thieves will face – beyond the
inevitable and certain collapse of the socalled global financial system – is that some of us
in the 99% will not forget or forgive, and there will be a reckoning, and there will be blood.
In a world where there are no laws, – there are no laws for anyone predatorclass biiiiiiaaaatches.
Burn it all down. Reset. It’s the only hope for the 99%.. .
At most, the estimate is that there are 400 billion stars in the Milky Way….
Any questions on why the price of oil is falling? LOL
Considering that the Federal Reserve Board (FRB) has never been audited, based on what they
DID is all we can go on to ascertain whether they are a criminal cabal. So there is no other
answer other than “Yes, they are” based on the 4 requirements for launching a “Just War” – since
we are all here repeating ourselves, I am also – you all know where to find the “list”….right?
The FRB keeps lording it that they have ABSOLUTE control over “employment” in USA – so that
clinches it that they DID conduct economic genocide when all those jobs disappeared as the Bush
Cabal packed up their derivative piece on the way out of town…
@Jeb – you wrote, “But that administrative failure and its resulting Rolex-seeking bedfellows
all pale in comparison to the deeper realty present having to do with the dual mandate of the
Fed to regulate the banks while being in charge of the money system that those banks operate
to maintain our economic output and stability.”
You have to add their manipulation of “employment”….no?
Totalitarian Nihilism…”cosmic insanity” — still just low life scum bag THEFT of real $$ by trillions
of Fiat $$$$s…a virtual cloud game for sadists and psychos….and they DO HAVE A LEADER, btw….The
Urantia Book has leveled the playing field – info in the Book approved for ALL of humanity by
none other than JC :-)
Page 759 – “….The Caligastia scheme for the immediate reconstruction of human society in accordance
with his own ideas of individual freedom and group liberties, proved a swift and more or less
complete failure. Society quickly sank back to its old biologic level, and the forward struggle
began all over, starting not very far in advance of where it was at the Caligastia regime, this
upheaval having left the world in confusion worse confounded.”
That was 250, 000 years ago – looks like “social media” is not all that….
Sill never bending my knee to the GLOBAL War, Drug and Slave Lords stood up by the FRB’s retarded
Math never was and never will be the paper that covers the rock that is SCIENCE…
400 BILLION stars from all that FIAT evergy :-)
Anonymouse | October 20, 2014 at 7:25 am
Frankly Annie, I have come to learn that over all, people are not KIND. Disbelief and denial
follow, but do not sooth the mind. And that same non kindness includes family and friends in
a tit for tat war that has no meaning or logical conclusion.
Sure we ask how it could have happened, but i’m certain if we got the chance somehow to do
it all over again, this family would top the charts, the talent was undeniable, the timing was
Another day, another major bank adjust its reported data based on 'all-new' information about
regulatory probes over its market manipulation.
Last week was Citi, this week it's JPMorgan... with a double-whammy:
*SEC SANCTIONS 13 FIRMS FOR SALES OF PUERTO RICO JUNK BONDS
*SEC INSTITUTES PROCEEDINGS VS JPMORGAN,INVESTMENT PROFESSIONALS
All municipal bond offerings include a “minimum denomination” that establishes the
smallest amount of the bonds that a dealer firm is allowed to sell an investor in a single transaction.
Municipal issuers often set high minimum denomination amounts for so-called “junk bonds”
that have a higher default risk that may make the investments inappropriate for retail investors.
Because retail investors tend to purchase securities in smaller amounts, this
minimum denomination standard helps ensure that dealer firms sell high-risk securities only
to investors who are capable of making sizeable investments and more prepared to bear the higher
In its surveillance of trading in the municipal bond market, the SEC Enforcement Division’s
Municipal Securities and Public Pensions Unit detected improper sales below a $100,000 minimum
denomination set in a $3.5 billion offering of junk bonds by the Commonwealth of Puerto Rico
earlier this year. The SEC’s subsequent investigation identified a total of
66 occasions when dealer firms sold the Puerto Rico bonds to investors in amounts below $100,000.
The agency instituted administrative proceedings against the firms behind those improper sales:
Charles Schwab & Co., Hapoalim Securities USA, Interactive Brokers LLC, Investment Professionals
Inc., J.P. Morgan Securities, Lebenthal & Co., National Securities Corporation, Oppenheimer
& Co., Riedl First Securities Co. of Kansas, Stifel Nicolaus & Co., TD Ameritrade, UBS Financial
Services, and Wedbush Securities.
The enforcement actions are the SEC’s first under Municipal Securities Rulemaking Board (MSRB)
Rule G-15(f), which establishes the minimum denomination requirement. Each firm agreed
to settle the SEC’s charges and pay penalties ranging from $54,000 to $130,000.
“These actions demonstrate our commitment to rigorous enforcement of all types of
violations in the municipal bond market,” said Andrew J. Ceresney, Director of the SEC’s Division
of Enforcement. “We will act quickly and use all available tools to protect investors
in municipal securities.”
LeeAnn G. Gaunt, Chief of the SEC’s Municipal Securities and Public Pensions Unit added,
“These firms violated a straightforward investor protection rule that prohibits the sale of
muni bonds in increments below a specified minimum. We conduct frequent surveillance of
trading in the municipal bond market and will penalize abuses that threaten retail investors.”
The SEC’s orders against the 13 dealers find that in addition to violating MSRB Rule G-15(f)
by executing sales below the minimum denomination, they violated Section 15B(c)(1) of the Securities
Exchange Act of 1934, which prohibits violations of any MSRB rule. Without admitting or
denying the findings, each of the firms agreed to be censured. They also agreed to review
their policies and procedures and make any changes that are necessary to ensure proper compliance
with MSRB Rule G-15(f).
The SEC’s investigation, which is continuing, is being conducted by Joseph Chimienti, Sue
Curtin, Heidi M. Mitza, and Jonathon Wilcox with assistance from Kathleen B. Shields.
The case is supervised by Kevin B. Currid and Mark R. Zehner. The SEC appreciates the
assistance of the MSRB.
* * *
• Charles Schwab & Co. – $61,800
• Hapoalim Securities USA – $54,000
• Interactive Brokers LLC – $56,000
• Investment Professionals Inc. – $67,800 • J.P. Morgan Securities – $54,000
• Lebenthal & Co. – $54,000
• National Securities Corporation – $60,000
• Oppenheimer & Co. – $61,200
• Riedl First Securities Co. of Kansas – $130,000
• Stifel Nicolaus & Co. – $60,000
• TD Ameritrade – $100,800
• UBS Financial Services – $56,400
• Wedbush Securities Inc. – $67,200
So that should teach them a lesson eh!!!
But then, second, JPMorgan was forced to admit to some more market manipulation was beinmg
*JPMORGAN: DOJ CONDUCTING CRIMINAL PROBE ON ITS FOREX TRADING
*JPM FX TRADING BEING PROBED BY U.K. FINANCIAL CONDUCT AUTHORITY
*JPM FX TRADING BEING PROBED BY U.S. BANKING REGULATORS, CFTC
*JPM CITES CIVIL PROBES BY OTHER FOREIGN GOVERNMENT AUTHORITIES
*JPMORGAN NOW SEES UP TO $5.9B POSSIBLE LEGAL LOSSES
*JPM SAW UP TO $4.6B POSSIBLE LEGAL LOSSES IN JUNE 30 FILING
From JPMorgan's 10-Q: Foreign Exchange Investigations and Litigation.
DOJ is conducting a criminal investigation, and various regulatory and civil enforcement
authorities, including U.S. banking regulators, the Commodity Futures Trading Commission (“CFTC”),
the U.K. Financial Conduct Authority (the “FCA”) and other foreign government authorities, are
conducting civil investigations, regarding the Firm’s foreign exchange ("FX") trading business.
These investigations are focused on the Firm's spot FX trading activities as well
as controls applicable to those activities. The Firm continues to cooperate with these
investigations and is currently engaged in discussions with DOJ, and various regulatory and
civil enforcement authorities, about resolving their respective investigations with respect
to the Firm. There is no assurance that such discussions will result in settlements.
Since November 2013, a number of class actions have been filed in the United States District
Court for the Southern District of New York against a number of foreign exchange dealers, including
the Firm, for alleged violations of federal and state antitrust laws and unjust enrichment
based on an alleged conspiracy to manipulate foreign exchange rates reported
on the WM/Reuters service. In March 2014, plaintiffs filed a consolidated amended class action
complaint, which defendants moved to dismiss in May 2014.
When the bank that has a fortress balance sheet has 7 pages of double sided tiny print
Litigation in its 10-Q, something is wrong!!
* * *
So back to the question at the start of the post... how much does it cost to keep
JPMorgan FX-riggers out of jail? The answer is - at least $24,341 per employee (243,388
employees and a $5.9 billion allocation)
"There is a lack of critical assessment of the past. But you have to understand that
the current ruling elite is actually the old ruling elite. So they are incapable of a self-critical
approach to the past."
Are they incapable, or merely unwilling? That is the credibility trap, the inability
to address the key problems because the ruling elite must risk or even undermine their own undeserved
power to do so.
I think this interview below highlights the false dichotomy between communism and free market
capitalism that was created in the 1980's largely by Thatcher's and Reagan's handlers. The
dichotomy was more properly between communist government and democracy, of the primacy of the individual
over the primacy of the organization and the state as embodied in fascism and the real world implementations
of communism in Russia and China.
But we never think of it that way any more, if at all. It is one of the greatest public relation
coups in history. One form of organizational oppression by the Russian nomenklatura was
replaced by the oppression by the oligarchs and their Corporations, in the name of freedom.
Free market capitalism, under the banner of the efficient markets hypothesis, has taken the place
of democratic ideals as the primary good as embodied in the original framing of the Declaration
of Independence and the US Constitution.
It is no accident that the individual and their concerns have become subordinated to the corporate
welfare and the profits of the upper one percent. We even see this in religion with the
'gospel of prosperity.' In their delusion they make friends of the mammon of unrighteousness,
so that after they may be received into their everlasting habitations.
The market as the highest good has stood on the shoulders of the 'greed is good' philosophy promulgated
by the pied pipers of the me generation, and has turned the Western democracies on their
heads, as a series of political leaders have capitulated to this false idol of money as the measure
of all things, and all virtue.
Policy is now crafted to maximize profits as an end to itself without regard to the overall impact
on freedom and the public good. It measures 'costs' in the most narrow and biased of terms,
and allocated wealth based on the subversion of good sense to false economy theories.
Greed is a portion of the will to power. And that madness serves none but itself.
This is a brief excerpt. You may read the entire interview
Henry Giroux on the Rise of Neoliberalism
19 October 2014
By Michael Nevradakis, Truthout
"...We're talking about an ideology marked by the selling off of public goods to private
interests; the attack on social provisions; the rise of the corporate state organized around
privatization, free trade, and deregulation; the celebration of self interests over social needs;
the celebration of profit-making as the essence of democracy coupled with the utterly reductionist
notion that consumption is the only applicable form of citizenship.
But even more than that, it upholds the notion that the market serves as a model for structuring
all social relations: not just the economy, but the governing of all of social life...
That's a key issue. I mean, this is a particular political and economic and social project
that not only consolidates class power in the hands of the one percent, but operates off the
assumption that economics can divorce itself from social costs, that it doesn't have to deal
with matters of ethical and social responsibility, that these things get in the way.
And I think the consequences of these policies across the globe have caused massive suffering,
misery, and the spread of a massive inequalities in wealth, power, and income. Moreover, increasingly,
we are witnessing a number of people who are committing suicide because they have lost their
pensions, jobs and dignity.
We see the attack on the welfare state; we see the privatization of public services,
the dismantling of the connection between private issues and public problems, the selling off
of state functions, deregulations, an unchecked emphasis on self-interest, the refusal to tax
the rich, and really the redistribution of wealth from the middle and working classes to the
ruling class, the elite class, what the Occupy movement called the one percent. It really has
created a very bleak emotional and economic landscape for the 99 percent of the population throughout
"This is a particular political and economic and social project that not only
consolidates class power in the hands of the one percent, but operates off the assumption
that economics can divorce itself from social costs, that it doesn't have to deal with
matters of ethical and social responsibility."
I think that as a mode of governance, it is really quite dreadful because it tends to produce
identities, subjects and ways of life driven by a kind of "survival of the fittest" ethic,
grounded in the notion of the free, possessive individual and committed to the right of individual
and ruling groups to accrue wealth removed from matters of ethics and social cost.
That's a key issue. I mean, this is a particular political and economic and social project
that not only consolidates class power in the hands of the one percent, but operates off the
assumption that economics can divorce itself from social costs, that it doesn't have to deal
with matters of ethical and social responsibility, that these things get in the way. And I think
the consequences of these policies across the globe have caused massive suffering, misery, and
the spread of a massive inequalities in wealth, power, and income. Moreover, increasingly, we
are witnessing a number of people who are committing suicide because they have lost their pensions,
jobs and dignity. We see the attack on the welfare state; we see the privatization of public
services, the dismantling of the connection between private issues and public problems, the
selling off of state functions, deregulations, an unchecked emphasis on self-interest, the refusal
to tax the rich, and really the redistribution of wealth from the middle and working classes
to the ruling class, the elite class, what the Occupy movement called the one percent. It really
has created a very bleak emotional and economic landscape for the 99 percent of the population
throughout the world.
And having mentioned this impact on the social state and the 99%, would you go as
far as to say that these ideologies have been the direct cause of the economic crisis the world
is presently experiencing?
Oh, absolutely. I think when you look at the crisis in 2007, what are you looking at? You're
looking at the merging of unchecked financial power and a pathological notion of greed that
implemented banking policies and deregulated the financial world and allowed the financial elite,
the one percent, to pursue a series of policies, particularly the selling of junk bonds and
the illegality of what we call subprime mortgages to people who couldn't pay for them. This
created a bubble and it exploded. This is directly related to the assumption that the market
should drive all aspects of political, economic, and social life and that the ruling elite can
exercise their ruthless power and financial tools in ways that defy accountability. And what
we saw is that it failed, and it not only failed, but it caused an enormous amount of cruelty
and hardship across the world. More importantly, it emerged from the crisis not only entirely
unapologetic about what it did, but reinvented itself, particularly in the United States under
the Rubin boys along with Larry Summers and others, by attempting to prevent any policies from
being implemented that would have overturned this massively failed policy of deregulation.
It gets worse. In the aftermath of this sordid crisis produced by the banks and financial
elite, we have also learned that the feudal politics of the rich was legitimated by the false
notion that they were too big to fail, an irrational conceit that gave way to the notion
that they were too big to jail, which is a more realistic measure of the criminogenic/zombie
culture that nourishes casino capitalism.
Quote: "That’s because of the persistent belief that the financial sector is functioning less like
the nerve system of the economy and more like an autoimmune disease feeding on its host. This perception
is not entirely unjustified."
Trust is an essential part of a functioning economy, yet it is often one of the least understood
variables in economics. That’s why the Institute for New Economic Thinking is supporting the
TRust index, which provides concrete metrics for understanding the level of trust in
the financial system using a benchmark of the top 50 global financial institutions as a proxy for
the sector as a whole.
While trust is difficult to understand and measure in the context of economics, this type
of innovative work enables new and important conversations about trust and how it affects the economy.
The Institute will be exploring this issue and the new economic thinking it facilitates In a series
of essays over the next week. Stay tuned for more.
In the aftermath of the 2008 financial crisis, distrust in the financial sector was widespread.
Even after the mess appeared to be cleaned up, the uncertainty over whether the worst was over remained
But since that time, financial institutions have shored up their balance sheets as their earnings
and capital cushions have improved and leverage ratios have shrunk. In short, banks today are safer
than they were before the crash. So surely trust should have returned as the likelihood of systemic
That, however, does not appear to be the case, as is demonstrated by the persistent negative
levels of trust shown by the
Many people in the financial sector feel this distrust. But they aren’t sure what to do about
it. How can they win back the public’s trust? Aren’t record profits enough?
Apparently, there are some things that money can’t buy.
Trust is an essential part of a functioning economy. It provides an antidote to the fundamental
uncertainty that is part of any economic decision. Without trust, you would likely spend all of
your energy and resources protecting yourself rather than working on productive activities.
For the financial sector, trust is especially important. Finance is the nerve center of our economy,
and trust is an essential component of the financial system. As we saw in 2008, without trust and
a properly functioning financial system the economy breaks down. If people don’t trust in financial
institutions, the entire economic system can be thrown out of balance.
This lack of trust leads to many dysfunctional symptoms. When people don’t trust where to
put their savings, they hoard cash, or commodities like gold, which reached its highest price in
history in the aftermath the 2008 crisis. Similarly, when trust in the financial sector is
low, corporations also are more likely to hoard cash and less likely to invest in expansion or hire
new employees, leading to stagnant economic growth and persistent unemployment.
Despite the financial sector’s economic resurgence, we are still dealing with these economic
problems today. The situation is a reflection of the distrust the public still feels for our financial
After 2008, when so many banks were rescued the public rightly felt that it was owed systemic
reform so it wouldn’t be put in the position of having to rescue the financial sector again. And
while there has been an increase in regulation with Dodd-Frank, none of the changes have addressed
the fundamental issues underpinning the lasting distrust in the financial system. I’m talking about
major obstacles such as too big to fail, derivatives regulation, and the revolving door between
regulators and those they are supposed to regulate. Eric Holder’s comment before the United States
Senate in March of this year that some banks are simply too big to effectively prosecute suggests
that the system is still very far out of balance.
So while profits have returned, if the financial sector wants to regain the public’s trust, it
needs to offer something more than earnings reports.
That’s because of the persistent belief that the financial sector is functioning less like
the nerve system of the economy and more like an autoimmune disease feeding on its host. This
perception is not entirely unjustified. Large multinational banks have been forced to pay billions
of dollars in fines for misdeeds leading up to and during the crisis. And yet fundamental change
remains illusive in the industry. As Holder’s comments suggest, the ungovernability of some of the
most powerful entities in our society is a big barrier to reestablishing trust in our financial
While some in the financial sector may profess dismay at this state of affairs, most of the leaders
of behemoth banks have shown themselves more eager to coerce the process rather than agreeing to
For example, consider the way underwater mortgage holders were treated when the housing market
collapsed. After already being bailed out by the public, the banks preached forbearance in mortgage
markets because of their still-fragile balance sheets. Yet, at the same time these same banks still
were offering their employees sizeable bonuses, even though the hole in the mortgage market could
have been substantially reduced by the more than $100 billion these firms handed out over the last
If our society had operated under a different set of priorities and required banks to put these
funds into helping underwater borrowers instead of toward bonuses for many of the same people who
helped sink the system in 2008, the hole in the mortgage market would no longer exist, there would
be no need for forbearance, and our economy would be in much better shape. But that’s not what happened.
As long as this Wall Street versus Main Street dynamic persists, so too will the belief that
the financial sector plays by a different set of rules, rules tilted in their favor at the expense
of the rest of us.
In order to regain the public’s trust, the financial sector must show itself willing to take
meaningful steps to address this concern. It must show the public that it is worthy of its trust
by accepting meaningful reform for the good of our society. Until that happens, all of the profits
and equity financing in the world won’t win back the kind of trust that is essential for the financial
sector to serve its role at the center of our economy.
This situation isn’t “heads I win, tails you lose.” In this scenario, we all lose. Persistent
anger and mistrust cannot be good for anyone. We can do better.
Neoliberal dogma is consistent only in rabid Russophobia. In all other respects they are,
as in the joke: Q: How much will be 2 x 2 ? A: Well, what you want. We can make it from anywhere
from 3 to 5...
Here's an example how it looks like a dispute with normal, sane blogger, who is writing under
the nick - voronkov_kirill whose position is close to the positions staunch neoliberals:
- What is happening now with oil is called "short squeeze". And market mechanisms are not involved.
Oil depreciates against the logic of the market, " says Cyril.
But wait a minute, I replied, there are two ways of pricing:
Market price inherent in democratic countries with "free market"
Administrative inherent in the totalitarian countries without the latter
Do I understand correctly that the countries that define the price of oil and the price of the
ruble, are mostly totalitarian?
"No, not right. Well, absolute market, as well as absolute democracy does not exist. The market
is "free" only for small players. Big players with serious financial or political-administrative
levers, can influence "free market" and even control the price....
Here is everything you need to know about neoliberalism. And about so called "free market".
Here Voltaire equality of free individuals. Here's to you and all the liberal government non-intervention
in private Affairs. There is a “small players” and there are agents that can (I wonder by what right?)
this element of control.
Unfortunately neoliberal thinking is not capable of a simple two-step, otherwise it inevitably
would come to the conclusion that the absence of free competition in the economy will lead to the
same state as in politics, where free competition of ideas and authorities only for small players,
but not for TBTF -- like top government and industrial leaders. That is all about this now fashionable
In 1988 one stubborn Communist (then he is the same stubborn nationalist (Latvia-forever), and
now no less staunch euro-emigrant ) promised to shoot me, because I argued that there were no socialism
in the USSR and the economic system was not consistent with the fundamental principle of socialism
is "from each according to his ability - to each according to his work"
Now here's the same thing with the market, with competition, with democracy. In reality like
in case with the pregnancy market is iether free or not. If the corruption rules in the "real"
market but illusions are force fed like in Guantanamo, sooner or later you will get full totalitarianism
and with it total corruption. This is where slowly but inexorably the West moves, and with it anyone
who tries to copy the Western model of the neoliberal economy. to this stable state called total
Gordon T. Long and I continue our discussion of the perverse incentives and consequences of
crony capitalism in a 25-minute video program.
Gordon argues that America's Crony Capitalism closely resembles the Roman Tribute System,
an arrangement that skims wealth and concentrates it at the top of the power pyramid.
Vast financial crimes are met with fines. Guilty parties do not go to jail but rather
the corporation pays a fine. Billion-dollar crimes are assessed million-dollar fines-- a percentage
that closely mirrors a Tribute System. The government makes money through enforcement but not prevention.
Corporations make illicit fortunes with the confidence that the government will settle for a small
slice of the wealth stripmined from the people.
The fines for financial skimming operations act as a form of tribute to the Central
State: the State and its corrupt elected officials and regulators turn a blind eye to the pillage
of the citizenry via financialization schemes, and then skim a tribute via fines and campaign contributions.
Everybody in the inner circle wins: the finance perps collect their millions in bonuses,
the legislators collect their millions in campaign contributions, and the regulators (who managed
to do nothing in the way of prevention) get to declare a toothless victory in announcing wrist-slap
This cozy arrangement might seem benign, but it's actually deadly to democracy and the real
economy. Let's call crony capitalism what it really is: Kryptonite to democracy and the
Concentrated wealth and State power form a self-reinforcing feedback loop that destroys democracy.
The more profitable buying influence and the revolving door between corporations and regulators
becomes, the more money the corporations have to spend on lobbying, which serves to further protect
their profits. The more money political toadies collect, the more beholden they are to entrenched
This feedback loop rewards crony capitalism and limits classical capitalism’s key features:
transparent markets and competition. An economy dominated by crony capitalism stagnates as competition
is suppressed and government enriches those who are “more equal than others” (to borrow a phrase
Money that might have once been invested in research and development is now devoted to bribing
politicos, lawsuits defending corporate turf and wrist-slap fines/Tribute to the State that enables
and protects crony skimming operations.
When the machinery of governance is ruled by the highest bidders, democracy is dead.
Selected Skeptical Comments
For sure, falcon, there is NO widely understood language to discuss what has been happening,
as has been expressed by Cognitive Dissonance in these ways:
"Control the Language and You Control the Mind! ... It is the effective manipulation of our
belief systems that enslaves us to the present day insanity. ... The absolute best controlled
opposition is one that doesn't know they are controlled."
The American democratic republic was destroyed as the international bankers took control over
the public "money" supply, and turned that inside-out and upside-down, so that the word "money"
now means pretty well the opposite of what it used to mean! The American money supply was supposed
to be backed by gold and silver, who value was set by Congress. Indeed, the word "dollar" originally
meant a particular amount of silver.
However, the banksters were able to systematically apply the methods of organized crime,
through bribery, intimidation, and assassination, in order to result in enough of the politicians
becoming the banksters' puppets, while enough the people could be fooled enough of the time,
in order to keep on replacing their representatives with one fresh crop of professional liars
and immaculate hypocrites after another.
As usual on Zero Hedge, this article grossly underestimates and understates how serious the
problems actually are!
It is beyond doubt that citizen democracy is dead in America. The Main Stream media investigates
nothing of importance and if something unfavorable to corporate interests emerges from other
sources, the Main Stream Media ignores it completely. A congress and President that accept money
bribes in public, as part of the political process, with Supreme Court approval, is a sign of
their arrogance. I just read a long study of Fracking Industry and US Foreign Policy. You literally
have corporations and the State Department as virtual departments within each other, not separate
entities. Where Frackers seek to go, American tax payer money, the CIA, State Department and
US Military lead the way. There is no revolving door, because corporate and government operate
together with all actions "in house" as it were.
Obama health care law, this was written by Insurance Company lobbyists and present to congress
by corporate health insurance companies to be passed in the interests of profits and nothing
The government and corporate contractors are one single entity when it comes to arms, war, spy
agencies and the police state. Even people in America's gulag are often held by for profit guards
who seek to make maximum profit by dealing with humans at the lowest level possible.
One could go on, Universities are money machines for their owners and top executives, not
to mention sports interests and television.
Here's the Jared Bernstein response to John Taylor that Roger Farmer is referring to:
Taylor v. Summers on Secular Stagnation: ... In a recent speech I’ve featured here in numerous
posts, Larry Summers raised the possibility that the economy is growing below its potential,
with all the ancillary problems that engenders (e.g., weak job and income growth), and not just
in recession, but in recovery. Stagnation is by definition expected in recession, but not in
Taylor argues, however, that secular stagnation is “hokem.” His argument rest on two points,
both of which seem obviously wrong.
First, he claims that the current recovery has been weak is not due to any underlying problems
in the private sector or lousy fiscal policy, but due to “policy uncertainty, increased regulation,
including through the Dodd Frank and Affordable Care Act.” But the recovery began in the second
half of 2009, well before either of those measures took effect. And, in fact, since they’ve
done so, if anything, growth and jobs have accelerated. Financial markets have done particularly
Taylor’s antipathy toward fiscal stimulus leads him to completely omit the fact of austerity
in the form of fiscal drag as a factor in the weak recovery. ...
His second argument is that if secular stagnation were a real problem, we would have seen it
in the 2000s expansion, yet instead we saw “boom-like conditions, especially in residential
Yes, there was a lot—too much—residential investment, but employment growth was terribly weak...,the
share of the population employed actually declined. Real GDP grew almost a point more slowly
per year over the 2000s business cycle relative to the prior two cycles. Business investment
grew less than half as fast in the 2000s than it did in the 1990s. In fact, after rising pretty
steeply in the 1990s, CBO’s estimate of potential GDP fell sharply in the 2000s..., a serious
cost of the problem Summers is raising and Taylor is wrongly debunking.
It’s also worth noting that middle-class incomes and poverty rates did much better in the 1990s,
thanks to full employment conditions in the latter half of that cycle, than in the 2000s, when
slack labor markets led to a flattening trend in real median income and increasing poverty rates.
I doubt any of this will convince Taylor and others who simply want to go after the ACA, the
Fed, stimulus measures, et al. But those of us interested in blazing the path back to full employment
should recognize these arguments as politically motivated distractions. ...
If one has been reading Taylor's blog - ECONOMICS ONE - none of his latest partisan garbage
in this oped would have come as a surprise. In the olden days - we would have to turn to Lawrence
Kudlow and those Jerry Bowyer Fuzzcharts for such insanity. I wonder if Stanford is proud of
its most famous macroeconomist. Cough, cough.
The thing that holds back businesses from deploying their stash of cash, is not “policy uncertainty”
or “increased regulation”. It is lack of demand.
If the demand is there then the product/service will be produced. When demand is not there
then the cash will sit idle or be used non-productively for things like stock buybacks or takeover
Any individual business owner who fail to meet demand (because of policy uncertainty
or regulation) will simply give up market share to those of his/her competitors that chose not
to be held back by those things.
DeDude -> Matt Young...
I am actually not talking about GDP. The issue is why do businesses not hire more people.
The explanation that right wing fools and smart business people love to give is that it's because
of regulations and policies that they don't like. However, as pointed out over on "calculated
risk" they always complain about regulations and there is no correlation between their complaining
(or not) and their actual hire of new employees. The only thing that determine whether a business
will hire more people is whether the demand for its products/services is in excess of what can
be delivered by its current workforce. And they will respond to such demand regardless of cumbersome
regulations - or they will lose market share to competitors that are more than happy to fill
Fred C. Dobbs:
(Found out on the web.)
Definition of the term secular stagnation theory is presented. It refers to the protracted economic
depression characterized by a falling population growth, low aggregate demand and a tendency
to save rather than invest.
Dictionary of Theories;2002, p478
I don't think the right word for Taylor's erroneous claims as chiefly "political". It's moral
prejudice. The absolute belief in totally unregulated markets is based on the belief that
1. The wealthy are more virtuous than the poor.
2. Only the strong should survive (see Abba's song "The winnner takes it all").
So it goes from a.Moral Prejudice to b. Political ideology to c. Economic chicanery.
Moral prejudices are the most deeply rooted in human beings because they don't only dictate
how the world is, but how it should be.
pgl -> David...
Aren't your comments better directed towards Greg Mankiw? Oh wait - they are both toadies
for Mitt Romney. Sorry about my question!
Taylor isn't right or wrong. Taylor is simply irrelevant to the largest social ill of 2014-
If one of the basic assumptions of your model is "Assume Full Employment" then employment doesn't
become a goal but a constant.
Under the Assumption of Full Employment, is secular stagnation even possible?
Taylor's model does not even look at Unemployment, and reducing unemployment is not his priority.
If as a policy maker, your goal is to reduce unemployment as quickly as possible, you should
find another model that addresses unemployment directly. Once unemployment is fixed, other models
may be more useful as new problems pop up.
On Nov. 22, Hoover welcomed Roosevelt to the White House. Throughout the meeting, he treated
his successor as though he were a thickheaded schoolboy who needed drilling on intransitive
verbs. He sought to bully the president-elect into endorsing the administration's policies at
home and abroad, especially sustaining the gold standard at whatever cost. Alert to Hoover's
intent, Roosevelt smiled, nodded, smiled again, but made no commitment. A frustrated Hoover
later vowed, "I'll have my way with Roosevelt yet."
Hoover returned to the attack in February. He sent the president-elect a hectoring 10-page handwritten
letter that misspelled Roosevelt's name (as "Roosvelt"). As a consequence of the flight of gold
and runs on banks, Hoover wrote, there was "steadily degenerating confidence in the future."
His wise policies, he claimed, had brought an upturn in the summer of 1932. Since then, though,
he said, there had been a sharp decline because the country was unnerved by Roosevelt's election,
for it feared that the new president would embark on radical experiments. Hoover concluded by
asking Roosevelt to restore confidence by stating publicly that there would be "no tampering"
with the currency and that "the budget will be unquestionably balanced, even if further taxation
Three days after writing this letter, Hoover told an archconservative senator that "if these
declarations be made by the president-elect, he will have ratified the whole major program of
the Republican administration; that is, it means the abandonment of 90 percent of the so-called
new deal." To another Republican senator, he spelled out what he demanded that his successor
renounce: aid to homeowners burdened with mortgages, public works projects and plans for a Tennessee
Valley Authority. He also wanted Roosevelt to raise tariff barriers and impose a national sales
Roosevelt, who regarded the letter as "cheeky," let days go by without replying, fibbing that
his response had miscarried. He would not let himself be trammeled by being identified with
an unpopular dying administration, so he refused to issue any statement. He would not permit
Hoover to rob him of the fruits of victory. On March 4, unfettered, he announced to the nation
a new beginning....
William E. Leuchtenburg is the William Rand Kenan, Jr. professor emeritus at the University
of North Carolina at Chapel Hill.
I wonder if Tyler Cowen, James Hamilton, and Steve Williamson will take John Taylor to task
for saying that Larry Summers and Ben Bernanke are just putting out a bunch of hokum to protect
the Obama administration from its policy errors? No, I don't think so, civility and treating
those who disagree with you with respect and deference is only something economists with liberal
political leanings, who kind of care what happens to the rest of the American people, and not
just the 1%, owe to their conservative, "scientific," betters.
It should not be forgotten that Professor Taylor was the Deputy Undersecretary of Treasury
for Economics and Financial Issues from 2001-2004. That economic growth was anemic during this
time is well documented.
How can Mark Thoma, Noah Smith, or Brue Bartlett have an honest argument with the likes of
John Taylor. I hope he finds his bubble comfortable in side the right wing machine. I am sure
he finds it lucrative.
P.S. Again, the evidence is that economic growth is picking up, just as both Dodd-Frank and
the Affordable Care Act are coming into full effect. Correlation or causation? Are more likely
This is an interesting topic which sadly attracted very few comments.
I think there are two issues not covered in comments:
That is politics, not economics and, clearly, as for Taylor, it comes down to the usual
question: "are Republicans more stupid or more evil" (see Robert Waldmann comment to the
post from Brad DeLong ).
The level of debt and the price of energy are two important variables that should probably
be taken into account in any discussion of secular stagnation.
As for Taylor personal legacy, I would suggest that the underlying assumption that there
is an exogenous NIARU (non-inflation-accelerating rate of unemployment) imposing an unavoidable
constraint on macroeconomic possibilities is wrong on both historical and analytical grounds.
From a historical standpoint, a NIARU, if it exists at all, must be regarded as highly variable
over time and place.
To me it smells with the desire to enlist the fear of inflation to justify the maintenance
of a "reserve army of the unemployed" in the society (which is a Marxist term, but probably
is applicable here). In a way high level of unemployment is a precondition to the fast redistribution
of wealth that we observed under the current neoliberal regime.
Which is another way to say that Taylor is a stooge of financial oligarchy. A Trojan
horse which plays the role of an academic economist.
Actually witnessing capture in the wild is different, though, and
the new This American Life episode with secret recordings of bank examiners at the Federal
Reserve Bank of New York going about their jobs is going to focus a lot more attention on the
phenomenon. It’s really well done, and you should
listen to it, read
read the story by ProPublica reporter Jake Bernstein.
Still, there is some context that’s inevitably missing, and as a former banking-regulation reporter
for the American Banker, I feel called to fill
some of it in. Much of it has to do with the structure of bank regulation in the U.S., which
actually seems designed to encourage capture. But to start, there are a couple of revelations
about Goldman Sachs in the story that are treated as smoking guns. One seems to have fired a
blank, while the other may be even more explosive than it’s made out to be. ...
Probably the biggest lesson that will be taken from this is Carmen's fate - she was fired,
so don't cross Goldman.
Wall Street Still Needs a Leader on Reform
By William D. Cohan
This is also the same New York Fed that fired Carmen M. Segarra, a former bank examiner,
after she questioned Goldman’s conflicts in connection with its role in advising a client, the
El Paso Corporation, on its merger with Kinder Morgan Inc., in which Goldman’s private-equity
fund had a large investment. When Ms. Segarra asked Goldman for its conflict-of-interest policy,
she discovered that it did not have one. She raised her concerns with her superiors at the New
York Fed but, she contended, her bosses asked her to alter her written views on the matter because
they could cause Goldman “substantial financial harm,” according to an article in The New York
Times. * Ms. Segarra was eventually fired. She sued the New York Fed, accusing it of retaliation;
a federal judge ruled against her in April....
Suit Revives Goldman Conflict Issue
By Susanne Craig and Jessica Silver-Greenberg
At a March 2012 meeting, a group of examiners at the Federal Reserve Bank of New York agreed
that Goldman Sachs had inadequate procedures to guard against conflicts of interest — guidelines
aimed at stopping firms from putting their pursuit of profit ahead of their clients’ best interests.
The examiners voted to downgrade a confidential rating assigned by the New York Fed that
could have spurred costly enforcement actions and other regulatory penalties. It is not known
whether the vote in fact led to a rating change. The former examiner who pushed for a downgrade,
Carmen M. Segarra, now contends in a lawsuit filed on Thursday that just weeks after the vote,
her superiors asked her to change her findings on Goldman and fired her after she refused.
The vote to downgrade, which has not been previously reported, could have been a big blow
“Goldman Sachs does not have a conflicts-of-interest policy, not firmwide, and not for any
divisions,” Ms. Segarra wrote to Michael F. Silva, a senior executive at the New York Fed. “I
would go so far as to say they have never had a policy on conflicts.”
The lawsuit, along with a review by The New York Times of confidential government documents
and internal e-mails, raises questions about the success of Goldman’s efforts to police potential
The bank has been buffeted by accusations that it has put its own interests ahead of its
clients, a contention it denies. Goldman, for instance, faced accusations that in the run-up
to the financial crisis that it sold billions of dollars in souring real estate assets to unsuspecting
clients. Just weeks before the examiners’ vote last year, the bank was publicly excoriated by
a federal judge who found that Goldman had conflicts in a huge energy deal.
The lawsuit also provides a look into the often-opaque relationship between federal regulators
and Wall Street. After the financial crisis, banking regulators faced criticism that they were
too cozy with the banks that they were overseeing — a familiarity that failed to thwart some
of the risky behavior precipitating the housing crisis and ensuing recession.
Even now, banks have sway over their regulators, especially those stationed at a bank’s headquarters,
according to two former regulators who spoke on the condition of anonymity. The banks, for example,
can work behind the scenes to avert a vote like the one to downgrade Goldman. The people said,
however, that once a vote to downgrade has taken place, it is difficult to reverse.
In the lawsuit, which was filed in Federal District Court in Manhattan, Ms. Segarra contends
she was wrongfully terminated in violation of a federal law that affords protections to bank
examiners who find wrongdoing in the course of doing their jobs. Mr. Silva, who is chief of
staff for the executive group at the New York Fed, is among the defendants named in the suit....
While they may be the worst offenders I doubt that the problem ends with Goldman. I have
heard too many horror stories from people who worked as regulators in the government over the
last thirty years to believe that this is an isolated case.
So long as we have a money driven political process it will be very difficult to avoid
Increasingly th U.S. resembles a Latin American country where bankers are at war with democracy
In the RollingStone, Taiibi described GS as the Great Vampire Squid:
"The first thing you need to know about Goldman Sachs is that it's everywhere. The world's
most powerful investment bank is a great vampire squid wrapped around the face of humanity,
relentlessly jamming its blood funnel into anything that smells like money. In fact, the
history of the recent financial crisis, which doubles as a history of the rapid decline
and fall of the suddenly swindled dry American empire, reads like a Who's Who of Goldman
GS makes money by manipulating the system in a quasi-legal, morally corrupt manner.
They challenge all the rules and use the Revolving Door between regulator and regulated to deliver
legal bribes. Society needs better regulators and regulations to protect themselves from
parasites like the GS Vampire Squid.
GS is one of the chief proponents of "Free Market" ideology.
Free Market" is short for "Free to rip off the "Market" . The words "to rip off"
are omitted when they sell the "Free Market" ideology and are reserved for the back rooms and
jokes in private email. The rubes are too dim to get it or else think they are the scammers
and not the scammed.
EE -> bakho...
"GS makes money by manipulating the system in a quasi-legal, morally corrupt manner.
They challenge all the rules and use the Revolving Door between regulator and regulated
to deliver legal bribes."
Well said, but its not just GS. Your description applies to much of corporate America. We're
living in a crony capitalist society.
"Much of it has to do with the structure of bank regulation in the U.S., which actually seems designed
to encourage capture."
Which is a feature and not a bug.
I don't want to spoil the revelations of "This American Life": It's far better to hear the actual
sounds on the radio, as so much of the meaning of the piece is in the tones of the voices -- and,
especially, in the breathtaking wussiness of the people at the Fed charged with regulating Goldman
Sachs. But once you have listened to it -- as when you were faced with the newly unignorable truth
of what actually happened to that NFL running back's fiancee in that elevator -- consider the following:
You sort of knew that the regulators were more or less controlled by the banks.
Now you know.
The only reason you know is that one woman, Carmen Segarra, has been brave enough
to fight the system. She has paid a great price to inform us all of the obvious. She has lost
her job, undermined her career, and will no doubt also endure a lifetime of lawsuits and slander.
So what are you going to do about it? At this moment the Fed is probably telling itself that,
like the financial crisis, this, too, will blow over. It shouldn't.
Yesterday, we looked at why bankers weren't
busted for crimes committed during the financial crisis. Political corruption, prosecutorial
malfeasance, rewritten legislation and cowardice on the part of government officials were among
the many reasons.
But I saved the biggest reason so many financial felons escaped justice for today: They dumped
the cost of their criminal activities on you, the shareholder (never mind the taxpayer).
Corporate executives theoretically work for the owners of the company, namely, the shareholders.
But there is an agency problem in that owners can't closely manage and object to the actions of
these executives. Collective owners, such as mutual funds, seem to have no interest in doing so.
What we end up with is a management class that works for itself instead of on behalf of the owners
of the publicly traded banks. Many of these executives committed crimes; got big bonuses for doing
so; and paid huge fines using shareholder assets (i.e., company cash), helping them avoid prosecution.
claims like those of white-collar crime defense attorney Mark F. Pomerantz, that “the executives
running companies like Bank of America, Citigroup and JP Morgan were not committing criminal acts,”
they simply are implausible if not laughable. Consider a brief survey of some of the more egregious
acts of wrongdoing:
Foreclosure fraud: Of all the crimes committed during the financial crisis and
in its aftermath, this is one that should have been the easiest to identify and prosecute.
Any bank that owns a mortgage with the debtor in default must follow a simple set of legal steps
in order to foreclose. The procedure is time consuming, specific to each state's laws and involves
lawyers, so foreclosures are expensive. Hey, it is the cost of issuing credit, and a simple reality
of the rule of law. There are no shortcuts.
Except the banks took many short cuts and did so on purpose and with the goal of improperly expediting
the process. They failed to review the documents of the mortgages they were foreclosing on, then
told courts they had. They didn't verify information, but claimed to have done so in sworn affidavits.
They hired $8 an hour burger-flippers to “robosign” these documents, pretending the underlying legal
work had been done. They knowingly used falsified records, some of which they bought en masse.
They were aided by a company called DocX, which had a price list of fabricated documents for use
in court. (DocX, by the way, was eventually indicted on charges of mortgage fraud).
After creating phony dossiers on borrowers, the banks signed and notarized affidavits stating
they had taken all of the legal steps. In many cases, even the notarizations were fakes. Submitting
a falsified notarized affidavit to a court is perjury and fraud.
Of course, the burger-flippers who did the paperwork didn’t think up the whole scheme -- someone
much higher did. Somewhere between these low-level workers and the chief executive officer were
managers who masterminded robosigning. So far, just one midlevel executive has been convicted at
Bank of America, while scores of others have gone untouched.
Mortgage underwriting: Then there are the crimes committed in mortgage underwriting,
where defects were
knowingly ignored. The
FBI investigated these cases early on, but investigators never moved forward with prosecutions.
Money Laundering: Banks have been laundering staggering sums of money for drug
dealers and terrorists. Hey, there are big bucks in high net worth narco-terrorists. Awash in cash,
relied on big banks to launder their ill-gotten money. Apparently, it was just good business
to grab a slice of that pie. However, these are deeply offensive, very illegal activities, and deserve
not just penalties, but jail time.
How much of this dirty money made its way through the banks? One
that $1.6 trillion of tainted proceeds has been laundered through major money-center banks around
Market manipulation: We haven’t even gotten to the manipulation of markets
in violation of U.S and international law. Whether it was
Libor rates, prices were either improperly manipulated or illegally rigged, with knowledge
of the bank executives and the traders they employed and supervised. Let’s not forget manipulating
multitrillion dollar derivatives market.
Paul Krugman continues the conversation on New Classical economics::
The New Classical
Wren-Lewis thinks some more about macroeconomics gone astray;
J. Waldmann weighs in. For those new to this conversation, the question is why starting
in the 1970s much of academic macroeconomics was taken over by a school of thought that began
by denying any useful role for policies to raise demand in a slump, and eventually coalesced
around denial that the demand side of the economy has any role in causing slumps.
I was a grad student and then an assistant professor as this was happening, albeit doing international
economics – and international macro went in a different direction, for reasons I’ll get to in
a bit. So I have some sense of what was really going on. And while both Wren-Lewis and Waldmann
hit on most of the main points, neither I think gets at the important role of personal self-interest.
New classical macro was and still is many things – an ideological bludgeon against liberals,
a showcase for fancy math, a haven for people who want some kind of intellectual purity in a
messy world. But it’s also a self-promoting clique. ...
Regarding Waldmann's remark about the ideological proclivities of, among others, Martin Feldstein,
at the recent NBER meetings in D.C. he presented a paper on reducing tax expenditures to lower
the deficit, wherein no tax expenditure favoring saving or investment fell to his axe. When
someone in the audience mentioned that tax expenditures for saving probably reduced saving more
than increased it (since the cost to the Gov exceeds the marginal effect on saving), he professed
ignorance of whether or not that is true. (It is.)
In the 70s models were started in a lot of fields in addition to economics including biology,
environmental science, ecology. In part it looks to have been physics envy. But the physicists
made models of systems that were far more simple than economics. Modelers in the 70s went to
work using computers that filled whole rooms but had less computing power than my laptop. By
necessity they had to make assumptions that made the models crude predictors. But computing
power was increasing and the optimists believed that eventually it would be possible to model
such complex systems as economics using micro foundations, a lifetimes work.............. Not.
Micro founded models make about as much sense as building a weather model based on individual
atoms. Computers still are not there yet and may never be. The modelers of the 70s were overoptimistic
about what they could deliver and buffaloed many people into thinking they were hot stuff. It
was an exclusive club with higher math skills required as a ticket to admission. It is most
difficult to cut losses on sunk costs, but that is their legacy.
Rather than detailed models that provide insights to the minutiae of economies, models have
many short cuts and assumptions that assume as givens what might be important insights. They
assumed the economy of the time: Full employment and supply limited. The models of the 70s fell
apart with the 80s recession but regained their footing after the recovery and great moderation
when the economy was in a sweet spot that required little action for the Fed. Thus the models
had several decades to coast along without major fail. We hit an economy that was demand limited
and high unemployment. The things many models simply assumed away were the very problems that
The 70s models belong on the dust heap of history in the company of many failed models in other
disciplines that have long since been abandoned. As the Nobel Laureate Max Planck noted, "Science
advances one funeral at a time."
bakho -> bakho...
SWL wonders why Keynes was dismissed in the 70s.
Very wealthy special interests disliked Keynes, disliked the New Deal and spent some of their
money to support academics and intellectuals that could dismiss Keynes or show that his policies
were in error. They funded people to work on the project of undermining Keynes and still do.
Wealthy elites were eager to support economists to work on economics projects that denounced
Keynes. Researchers of all striped try to keep their patrons happy. If refutation of Keynes
was the price demanded in order to build up a computer based economics from micro foundations
so be it. Keynes wasn't needed for micro foundations. Keynes was an impediment to funding. It
is not surprising that Keynes was jettisoned. When micro foundations sputtered, there was too
much crow to be eaten. Better to double down than die of embarrassment.
David Cay Johnston is an excellent lecturer, who can address economics and public policy in clear
and simple statements.
This is one of most informative talks I have heard about where we are, and how we got here, what
the crony kleptocracy is, and how it works.
Johnston's concept of a societal panic corresponds to the notion of national hysteria
which I have expressed on a number of occasions. But he fills out the idea more fluently and
fully. It is a dangerous period of time which can yield new ideas and concepts, depending on how
well we survive it.
A New York Times
investigation into the influence of foreign money on American thinktanks is causing a Twitter-storm
as I write this, and with good reason. In one particularly egregious example, the report details
an explicit agreement, signed by the principals, between the Center
for Global Development (CGD) and the government of Norway for the former to propagandize on
behalf of doubling a foreign aid program to Norway in exchange for a $5 million donation. Aside
from the brazen corruption of the CGD/Norway relationship, the report focuses on three other Washington
DC biggies: the Atlantic Council, the
and the Center for Strategic and International
Studies, all of which receive substantial chunks of cash from rich overseas donors, primarily
from the Middle East, Europe, and the Far East. For example, the Times notes:
"The United Arab Emirates, a major supporter of the Center for Strategic and International Studies,
quietly provided a donation of more than $1 million to help build the center’s gleaming new
glass and steel headquarters not far from the White House. Qatar, the small but wealthy Middle
East nation, agreed last year to make a $14.8 million, four-year donation to Brookings, which
has helped fund a Brookings affiliate in Qatar and a project on United States relations with
the Islamic world."
CSIS was a major supporter
of the Iraq war (both of them), as were the Gulf sheikdoms that have been funneling money into it:
CSIS has also been a major bulwark of the War Party when it comes to
Brookings, the grand old man of Washington thinktanks, denies all that cash has any meaning as far
as its "product" is concerned, but it’s hard to take this seriously when it publishes
papers like this and sponsors
events like this one,
where Qatar’s funding of jihadist groups like ISIS and other radical Syrian rebel factions is downplayed
in favor of putting the onus on Kuwait. Qatar has been a
major backer of the decidedly non-"moderate" wing of the Syrian rebel movement, and while Brookings
has published writers skeptical of the idea of arming and/or funding them, a bit of research shows
that their overwhelming bias has been pro-rebel, e.g. "Arm
the Syrian Rebels. Now."
Brookings has also been a major source of pro-Israel propaganda in the United States via their Saban
Center for Middle East Policy. Funded by
Haim Saban, an Israeli-American
television and film producer – originator of the "Mighty Morphin Power Rangers" – whose wealth is
estimated at $3 billion, the Saban Center has consistently supported the Israeli party line and
acted as a "nonpartisan"
complement to AIPAC’s Washington Institute for Near East Policy. Quite naturally, the Saban
Pollack was a major supporter of the Iraq war amongst the policy wonk crowd.
Dual Israeli-American citizen Saban
makes no bones about the
goal of his giving: he has said that his number one priority in giving money to thinktanks like
Brookings is to "strengthen the US-Israeli relationship." As a New Yorker
profile of Saban put it,
he counts "three ways to be influential in American politics": "make donations to political parties,
establish think tanks, and control media outlets." Saban owns
Univision and has repeatedly tried to buy the Los Angeles Times. He is also one of the
top donors to the Democratic party, and will
no doubt be a major contributor to Hillary Clinton’s presidential campaign.
At a recent Brookings Institution dinner, Saban engaged in a "two-cheeked
kiss" with Qatari Prime Minister Jaber Al Thani. What unites these two somewhat disparate figures
is their fulsome financial support for Brookings, which – like any whore – sells its services to
the highest bidder.
While Brookings, one of Washington’s most established courtesans, charges higher prices, and thus
relies on high-rollers like Qatar and Saban, the relatively new Atlantic Council takes the quantitative
approach: the Times
Council has accepted donations from at least 25 countries since 2008." Among the donors: Estonia,
Latvia, Lithuania, Macedonia, Hungary, the Czechs, the Slovaks, Sweden, Luxembourg, and the United
Kingdom. This donor list isn’t surprising: the Atlantic Council, as befits its name, is NATO’s unofficial
lobbyist in Washington. It has been particularly militant around the
Ukraine issue, pushing the NATO-crat party
line that the fascist coup leaders in Kiev are really
democrats and stoking the embers of the cold war.
CSIS, long a mainstay of interventionist policymaking, actually
posted a list of the governments that have
filled its coffers, including Saudi Arabia, United Arab Emirates, the United Kingdom, NATO – and
the United States of America! Yes, your tax dollars are going to fund the efforts of CSIS co-director
and senior fellow Thomas Sanderson and CSIS "Transnational Threats" head honcho Arnaud de Borchgrave
to torpedo a possible peace agreement with Iran. We don’t know how much Uncle Sam doles out
to CSIS because they refuse to divulge specific amounts – and of course we peons have no right to
The extent of the problem of foreign governments buying up American thinktanks like house flippers
buy up foreclosures is bigger than even I imagined. As the Times puts it:
"The scope of foreign financing for American think tanks is difficult to determine. But since
2011, at least 64 foreign governments, state-controlled entities or government officials have
contributed to a group of 28 major United States-based research organizations, according to
disclosures by the institutions and government documents. What little information the organizations
volunteer about their donors, along with public records and lobbying reports filed with American
officials by foreign representatives, indicates a minimum of $92 million in contributions or
commitments from overseas government interests over the last four years. The total is certainly
As Todd Moss, COO of CGD, said "after being
shown dozens of pages of emails between his organization and the government of Norway": "Yikes"!
The Foreign Agents Registration Act (FARA), which requires foreign lobbyists to register and report
their activities to the federal government, has never been enforced except
selectively: US allies are given a free
pass, and the "foreign aid" gravy train flows freely and fast. This makes perfect sense, given our
status as a global empire on which the sun never
sets: our foreign clients and protectorates are constantly begging for handouts, intervention
against their enemies, and special economic privileges of one sort or another, and the government
would no more shut down this profitable industry than it would voluntarily dismantle the Empire
NATO’s eastern European members
want US troops and bases on their soil, ostensibly to "protect" against the nonexistent threat
of a Russian invasion – and it’s only natural for them to go running to the Atlantic Council to
lobby on their behalf. Qatar wants US aid to Syria’s jihadist rebels – and off they go to their
bought-and-paid-for "scholars" at
to write policy papers and sponsor events pushing US intervention in the Syrian snake-pit.
Corruption – there is no other word for the buying of America’s thinktanks by rich foreigners –
is part of the price we pay for our empire. It won’t stop until we return to our
roots as a republic
that "seeks honest friendship with all nations – entangling alliances with none."
The core assumption of our neoliberal moment, of course, is that markets are the best ways to
distribute goods and organize society. Right-neoliberals end there, and declare war on all public
goods and any attempt whatsoever to regulate that market. Left-neoliberals maintain that individuals
should have access to some basic social welfare, but always reject the idea that the state should
be in charge of distributing it. Thus you end up with bizarre, hideously complicated, and inefficient
systems like Obama’s health care plan. Since it is almost literally unthinkable that the state could
provide a good better than the Market could (every time you say the word Market, by the way, an
angel should be playing flutes inside your brain), left-neoliberals have to invent complicated ways
to bribe, coerce, and manage the Market God into sort-of-kind-of-not-really
providing the resource that left-neoliberals admit is essential.
This critique of neoliberalism is well known. Two recent stories, though, have reminded me just
how much this brand of brain-dead market worship isn’t just inefficient and wasteful, but contributes
directly to corruption and the erosion of our democracy. First, this
one from Albany. Charter schools are, of course, neoliberalism’s wet dreams– you get abundant
public money, little oversight, and, best of all, get to hide behind cute disadvantaged kids, all
Goldman Sachs’ bidding. Problem is, of course, they
don’t actually perform any better than most public schools, so given a choice parents might
not send their children to charter schools. The first solution, of course, is to spend money on
a horrible waste of public money, which doesn’t in any way contribute to a better educational experience.
The second option we see in Albany, where Charter Schools are spending their money, which comes,
remember, from the taxpayers, to advertise against the local school budget. Why? Well, the budget
didn’t affect them at all, but it would increase support for the city’s public schools. So they
used public money, in order to try to lower the funding for their competitors, who happen to be
public schools. Cute, huh? Public money in order to hollow out public institutions.
Next, we have the prison industry, where the
New York Times
reports that private prisons are no cheaper, and often more expensive, then public government run
prison. If Dostoevsky famously said that the conditions of prisons demonstrates the level of your
civilization, then the fact that we have turned our prisons over to faceless, unaccountable corporations
seems appropriate. But even more appropriate to our time, is that the prison industry often uses
their money, which comes from the public, to
advocate for brutal racist immigration policies that are guaranteed to produce more prisoners.
Specifically, they were behind the push for Arizona’s notorious SB 1070 law, cracking down on undocumented
Connecting both stories, obviously, is that fact that the market is not some neutral “tool” that
can be manipulated to serve the ends of the state. By turning public goods over to private entities,
we empower people who have a particular interest in public policy. The (attempted) underfunding
of Albany schools and the racist immigration laws of Arizona, then, are partly the product of seemingly
separate political decisions about how to provide certain services.
In 1997, the World Bank asserted that: any reform that increases the competitiveness of the economy
will reduce incentives for corrupt behavior. Thus policies that lower controls on foreign trade,
remove entry barriers to private industry, and privatize state firms in a way that ensure competition
will all support the fight.
The Bank has so far shown no signs of taking back this view. It continues to claim that corruption
can be battled through deregulation of the economy; public sector reform in areas such as customs,
tax administration and civil service; strengthening of anti-corruption and audit bodies; and decentralization.
Yet the empirical evidence, much of it from the World Bank itself, suggests that, far from reducing
corruption, such policies, and the manner in which they have been implemented, have in some circumstances
increased it. — Dr Susan Hawley,
Privatization, Multinationals and Bribery, The Corner House, June 2000 Jubilee Research (formerly
the prominent Jubilee 2000 debt relief campaign organization) has similar criticisms, and is also
worth quoting at length:
Rich country politicians and bank officials argue that because dictators like Marcos, Suharto,
and Mobutu were kept in power with western arms and were given loans to squander on ill-judged and
repressive schemes, that the people of those countries—who often fought valiantly against those
dictators—cannot be trusted not to waste the money released by debt cancellation. This may seem
confusing to people not familiar with the logic of the IMF and World Bank.
Creditors colluded with, and gave loans to dictators they knew were corrupt and who would
squander the money.
Creditors gave military and political aid to those dictators — knowing arms might be used
to suppress popular opposition
Therefore, successor democratic governments and their supporters, who may have been victims
of corruption and oppression, cannot be trusted.
To many people in the South, this seems irrational and illogical—the logic of blaming the victim.
It is the logic of power rather than of integrity, and is used to benefit the rich rather than the
poor in developing countries.
A similar logic argues that if the World Bank and government export credit agencies promoted
inappropriate and unprofitable projects, then southern governments proved their inability to control
money because they accepted the ill-advised projects in the first place. Thus, if money is released
by debt cancellation, it must be controlled by agencies which promoted those failed projects.
This is the logic that says if people were stupid enough to believe cigarette advertising, then
they are too stupid to take care of themselves and the “reformed” cigarette companies should be
put in charge of their health care.
The same institutions who made the corrupt loans to Zaire and lent for projects in Africa that
failed repeatedly are still in charge, but their role has been enhanced because of their success
in pushing loans. Can we trust these institutions to suddenly only lend wisely; to not give loans
when the money might be wasted?
Preventing new wasted loans and new debt crises, and ensuring that there is not another debt
crisis, means that the people who pushed the loans and caused this crisis cannot be left in charge.
The creditors or loan pushers cannot be left in charge, no matter how heartfelt their protestations
that they have changed. Pushers and addicts need to work together, to bring to an end the entire
reckless and corrupt lending and borrowing habit. — Joseph Hanlon and Ann Pettifor,
the Habit; Finding a lasting solution to addictive lending and borrowing—and its corrupting side-effects,
Jubilee Research, March 2000
And in terms of how lack of transparency by the international institutions contributes to so
much corruption structured into the system, Hanlon and Pettifor continue in the same report as cited
above: Structural adjustment programs cover most of a country’s economic governance.
… The most striking aspect of IMF/World Bank conditionality [for aid, debt relief, etc] is that
the civil servants of these institutions, the staff members, have virtual dictatorial powers to
impose their whims on recipient countries. This comes about because poor countries must have IMF
and World Bank programs, but staff can decline to submit programs to the boards of those institutions
until the poor country accepts conditions demanded by IMF civil servants.
There is much talk of transparency and participation, but the crunch comes in final negotiations
between ministers and World Bank and IMF civil servants The country manager can say to the Prime
Minister, “unless you accept condition X, I will not submit this program to the board”. No agreed
program means a sudden halt to essential aid and no debt relief, so few ministers are prepared to
hold out. Instead Prime Ministers and presidents bow to the diktat of foreign civil servants. Joseph
Stiglitz also notes that “reforms often bring advantages to some groups while disadvantaging others,”
and one of the problems with policies agreed in secret is that a governing elite may accept an imposed
policy which does not harm the elite but harms others. An example is the elimination of food subsidies.
— Joseph Hanlon and Ann Pettifor,
the Habit; Finding a lasting solution to addictive lending and borrowing—and its corrupting side-effects,
Jubilee Research, March 2000
As further detailed by Hanlon and Pettifor, Christian Aid partners (a coalition of development
organizations), argued that top-down “conditionality has undermined democracy by making elected
governments accountable to Washington-based institutions instead of to their own people.” The potential
for unaccountability and corruption therefore increases as well. http://www.thestreetspirit.org/June2006/bank.htm
World Bank battles corruption — but only in some countries.
Observing the struggles of its sister organization (the IMF), the World Bank has taken a proactive
approach to its own crisis of legitimacy by considering extending invitations to Mexico, Turkey,
South Korea and China to become full voting members. The World Bank is also investing $30 million
in a public relations campaign in an effort to position itself as the premiere lending institution
for global efforts to end poverty, protect the environment and address the global AIDS pandemic,
as well as to reiterate that it is the world’s largest “development” research organization.
At the heart of this new media campaign is World Bank President Paul Wolfowitz’s new anti-corruption
campaign. Given Wolfowitz’s recent history as the architect of the Iraq war and occupation — an
undertaking literally drowning under allegations of mismanagement and nepotism — many see this anti-corruption
campaign as grossly hypocritical.
Many African leaders have long said that they need Western institutions to aid them in rooting
out corruption and ensure transparent governance, since international institutions based in
the Global North are complicit in corruption. Recently, European countries have pressured Wolfowitz
to put greater emphasis on building institutions to fight corruption in the developing world, rather
than simply suspending loans where corruption is suspected. As a result, he began working with shareholders
to develop a framework to fight and monitor corruption. The framework will be considered at the
next IMF/WB meetings in the Fall of 2006 in Singapore. While welcoming this needed reform, many
argue that the World Bank is not applying the same scrutiny to Iraq and Indonesia (where Wolfowitz
worked prior to his work in the Bush administration) that is being applied to Chad and the Democratic
Republic of Congo.
In January, the World Bank cut off $124 million in loans after Chad changed its laws to siphon
oil pipeline revenues away from anti-poverty programs; and in March, the Bank imposed rigid conditions
on Congo’s oil-exporting capacity. The World Bank maintains that Chad, Congo and Sudan may all be
eligible for debt relief in the coming months, provided they show proof of economic stability and
government reform. Civil society reactions Addressing corruption and the need for basic standards
applied to loans and disbursements has been one of the main campaign points of civil society in
the Global South for the last 30 years. Campaigners are pleased to see the financial institutions
that are the source of so much corruption taking this life-threatening issue seriously. However,
ensuring that debt-servicing funds are properly reallocated to address human needs (education, health,
etc.) is a process that must involve partnerships between civil society and governments in indebted
countries. This process cannot be achieved solely vis-a-vis international institutions. At present,
there are seven international bodies that address accountability and transparency in international
fund management. If the World Bank wants to add itself to this list, there must first be a proper
analysis of why these existing institutions and bodies have not been wholly effective.
rich and poor countries, international institutions
It goes without saying, almost, that corruption is everywhere. Corruption in poor countries is
well commented on (sometimes used dismissively to explain away problems caused by other issues,
too). It would be futile to provide examples here (see also the sources of information at the end
of this document for more on this).
Rich countries, also suffer from corruption. Examples are also numerous and beyond the scope
of this page to list them here. However, a few recent examples are worth mentioning because they
are varied on the type of corruption involved, and are very recent, implying this is a massive problem
in rich countries as well as poor.
Another example is Italy, where former Italian Prime Minister
Silvio Berlusconi and
some of his close associates were held on trial for various crimes and corruption cases (though
Berlusconi himself has not, to date, been found guilty of any charges). Many key teams in the massive
Italian soccer league, Serie A were also found to be involved in a massive corruption ring.
International institutions, such as the United Nations and World Bank have also recently come
under criticism for corruption, ironically while presenting themselves in the forefront fighting
The recent example with the UN has been the oil for food scandal, where the headlines were about
the corruption in the UN. In reality, the figures of $21 billion or so of illicit funds blamed on
the UN were exaggerations; it was $2 billion; it was the UN Security Council (primarily US and UK)
responsible for much of the monitoring; US kickbacks for corrupt oil sales were higher, for example.
(This is discussed in more detail on this site’s
oil for food scandal section.)
At the World Bank, headlines were made when its recent president, Paul Wolfowitz, was forced
to resign after it was revealed he had moved his girlfriend to a new government post with an extremely
high salary without review by its ethics committee.
Paul Wolfowitz’s appointment was also controversial, due to his influential role in architecting
the US invasion of Iraq. A former member of staff at the World Bank also noted
concerns of cronyism related
to Wolfowitz’s appointment way before the scandal that forced him to resign.
While the US typically gets its preferred nomination to head the World Bank, Europe has typically
got its preferred person to head the IMF. Critics have long argued that this lacks transparency
and is not democratic. While not illegal as such, it does feel like a form of corruption.
Address weaknesses in the global system
The Bretton Woods Project organization notes that
the World Bank, under pressure of late, has suspended a number of loans due to concerns of corruption.
These include loans to Chad, Kenya, Congo, India, Bangladesh, Uzbekistan, Yemen, and Argentina.
The Bank has also started internal investigations of Bank corruption. However, “despite high-profile
moves by president Paul Wolfowitz, the root causes of corruption—underpaid civil servants, an acceptance
of bribery by big business, and dirty money—remain largely unaddressed.”
The Bretton Woods Project adds that the “normalization of petty corruption in developing
countries has in part been driven by”
The aid industry for “overpaying consultants” and turning a blind eye to corruption in some
The “World Bank’s ‘pressure to lend’ culture where staff are rewarded for the volume of
the portfolio they manage;”
The World Bank’s slow pace in investigating and disbarring companies found guilty of corrupt
practices such as bribery, fraud or malpractice;
Failing to increase transparency of some of its own procedures;
The IFI’s “central part of an international financial system which has both actively and
tacitly supported the global proliferation of dirty money flows” including, for example, the
financing of various despotic rulers that have siphoned off a lot of money to personal offshore
To help address these problems, the Bretton Woods Project suggests a few steps:
Greater transparency of World Bank processes, allowing greater visibility for elected officials
and civil society in recipient countries;
Strengthening internal mechanisms within the Bank itself, to monitor integrity of Bank functions,
and allow truly independent audits of Bank operations;
Minimum standards in governance, transparency and human rights that must be fulfilled before
approving oil, gas and mining projects in institutionally weak countries.
Not always tying loans with economic policy conditions in such a way that some governments
surrender their policy-making space.
2002 World Summit on Sustainable Development, the BBC broadcast a mini debate on
globalization, poverty, and related issues, and had a panel of around 30 experts, from both the
developing and rich countries. One person on that panel was Vandana Shiva, a vocal critic of the
current form of globalization and its impact on the environment and people in the third world. She
was asked why people should listen to concerns from the third world when they cannot sort out the
rampant corruption first. Her answer was simple: rich countries need to stop dictating policies
that encourage corruption in the first place.
Like Shiva, Professor Neild feels that the solution is philosophically simple. However, as Neild
acknowledges, in reality it is far harder to do, due to the power interests involved:
It is hard to see how the international economic agencies and their member governments can
introduce incentives that would cause corrupt rulers to [attack corruption]… Not only are the
rich countries and their agencies in this respect impotent, they commonly have been and are
accomplices in corruption abroad, encouraging it by their action rather than impeding it.
… It is hard to see any solution other than transparency and criticism. It would take an
unprecedented degree of united dedication to the checking of corruption for the international
community to agree that the oil and mining companies of the world should boycott corrupt regimes,
somehow defined, let alone manage to enforce an agreement.
— Robert Neild, Public Corruption; The Dark Side of Social Evolution, (London:
Anthem Press, 2002), pp. 208-210, [Emphasis added]
I have been meaning to write something on faux Libertarians of the corporatist ilk for a while.
However, since I
switched to forecasting mode instead of advocacy, I have tried to leave the political element
out of my posts as much as possible. I’ll leave the politics to those who enjoy it; I don’t. But,
I think this is an important topic so I am going to give it a go here.
If you do a search
for the word ‘liberty’ on the Internet, invariably you find the Wikipedia entry for that word. I
think the definition used there is a good one. Here’s
what Wikipedia says about Liberty:
Liberty is the concept of ideological and political philosophy that identifies
the condition to which an individual has the right to behave according to one’s own personal
responsibility and free will. The conception of liberty is influenced by ideals concerning the
social contract as well as arguments that are concerned with the state of nature.
Individualist and classical liberal conceptions of liberty relate to the freedom of the individual
from outside compulsion or coercion and this is defined as negative liberty.
What you will notice is there is nothing in this definition regarding corporations. It is all
about individual liberty and the freedoms of
individuals. Individuals are born with innate,
natural and inalienable
rights to liberty that are self-evident. This philosophical view of humankind gained currency
during the enlightenment and is now universally accepted. It also underpins the very concept of
democracy and is the origin of the founding of the United States of America.
For example, the U.S. Declaration of Independence begins [highlighting added]:
When in the Course of human events it becomes necessary for one people to dissolve the political
bands which have connected them withpowers of the earth, the separate and equal sta
We hold these truths to be self-evident, that all
men are created equal, that they are endowed by their Creator with certain unalienable Rights,
that among these are Life, Liberty and the pursuit of Happiness. — That to secure these
rights, Governments are instituted among Men, deriving their just powers from the consent of
the governed, — That whenever any Form of Government becomes destructive of these ends, it is
the Right of the People to alter or to abolish it, and to institute new Government, laying its
foundation on such principles and organizing its powers in such form, as to them shall seem
most likely to effect their Safety and Happiness.
As always, I have to note that the writer of the Declaration was a slaveholder in a country in
which government killed the indigenous population. So, there is certainly a gap between the high-mindedness
of this wonderful document and actual events on the ground. Don’t let that detract from the aspirational
quality of the words.This is exactly what individual liberty is all about.
On the other hand, a corporation
is a societal construct codified into legal existence to further the mutual interests of individuals.
A corporation is “an artificial being, invisible, intangible, and existing only in contemplation
of the law,” according
to Chief Justice Marshall in the Dartmouth College Case of 1819. Trustees of
Dartmouth College v. Woodward, won by
Websterwhen the state of New Hampshire attempted to turn the college into The
University of New Hampshire, was an early American test of eminent domain-type property seizure.
A corporation has no inalienable or natural rights. Nevertheless, it is the fact that corporations
represent a group of individuals that allows the ‘corporatist’ to claim that these fictional legal
entities should enjoy the same natural and legal liberties and rights with which individuals are
Let me be bold here: The ‘Corporatist’ is a kleptocrat masquerading as a believer in
liberty. He uses terminology based in liberty to construct an ideology solely as a means of furthering
the gains of a specific strata of
society allied with the
corporatist and at the expense of other strata, by coercion if necessary.
post on kleptocracy from 2008? If not, here are the four methods Jared Diamond says ruling elites
use to maintain power:
Disarm the populace, and arm the elite.
Make the masses happy by redistributing much of the tribute received, in popular ways.
Use the monopoly of force to promote happiness, by maintaining public order and curbing
violence. This is potentially a big and underappreciated advantage of centralized societies
over noncentralized ones.
The remaining way for kleptocrats to gain public support is to construct an ideology or
religion justifying kleptocracy.
The last (and perhaps most important) issue [of the four ways elites maintain power], in
my view, has to do with the unabiding faith in free markets that many now have. It is with religious
zeal that these so-called Libertarians defend the primacy of markets over all else when in reality
common sense would tell you that those with the greatest influence and money will always be
at an advantage without some check on that influence and power.
This is the corporatism, the faux Libertarianism, to which I refer. The logic goes like this:
Individuals have inalienable rights to freedom. This is a fundamental right that all individuals
have and efforts by government to undermine these rights must be resisted at all costs.
Corporations are groups of individuals which have banded together for mutual benefit. In
so doing, they can express their individual natural rights more effectively than they could
As such, corporations must retain the same rights as individuals legally in order to allow
those individuals the corporation represents to express there natural rights. Therefore,
the same resistance to denying the rights of individuals must also be transferred to the corporations
which represent them.
This logic will take you much further in furthering the aims of corporations, the point being
that corporations, businesses, should enjoy the same rights that individuals have.
That is not to say that businesses should not have rights. They should; and we should grant them
as much liberty as is reasonable and warranted. But let’s be clear, corporations are not
individuals; they are collections of individuals. Often, individuals hide behind this collective
using the corporate veil to shield themselves from sanction for behaviour that abuses individual
liberties. In a very real sense, the rights and liberties of businesses and individuals often come
into conflict. A real libertarian would always
favour the individual in that conflict. A corporatist would favour the corporation. That’s
Let me give you an example. Say I was walking down the street in Louisville, Kentucky and saw
a cute little shop that sold Kettle Korn. For those of you who don’t know kettle korn, it is salted
and sweetened popcorn that was brought to the U.S. by German immigrant farmers in Pennsylvania,
Maryland and into the Midwest over two hundred years ago. In Germany, popcorn is sweet not salty
like it is in the U.S. So, I see this store and I am thinking, “They have Kettle Korn in Kentucky?
Wow, who knew. I love this stuff. Let me go get some.” Here’s the problem: the owner of the store
has a business policy that no black people are allowed inside. Mind you, this isn’t a government
policy because government discrimination based on race or ethnicity is illegal in the United States.
But, this business owner doesn’t want Blacks in his store. So when I enter, he tells me to leave
because I am violating his store’s liberty to choose its own policies.
I would say the individual liberty trumps the business liberty in this case, especially since
the owner is violating his own government’s business policy as well as societal norms. A corporatist
would say that the business owner wins since it is his business. Again, that’s the difference.
There are lots of other examples of corporatism at work in the U.S. legal system regarding property
rights in particular. My November 2009 post “New
York to use eminent domain to build a basketball stadium” showed the New York State Court of
Appeals ruling that the
Atlantic Yards basketball project can go forward as planned, dislocating the residents in the
Brooklyn, NY area where the stadium is to be built. The decision means that government can evict
you from your own home, seize your property, and give you what it believes is a fair price without
your consent to build a sports
arena, ostensibly for the public good but certainly for state and private profit.
This and other cases like it are occurring because of the decision in Kelo v. City of New
London, Conn. If a state or local government deems a private project – funded by private monies
and profiting private enterprises – to be in the public interest, it can seize your property to
allow this project to occur. In the New London case, residents were evicted to make way for a luxury
hotel and up-scale condos, from which private developers would profit handsomely. Kelo
was an outrageous example of cronyism completely at odds with the ethos of the Dartmouth College
Case of 1819. Because of Kelo, government can now abuse its power to enrich specific private
interests. That’s corporatism at work.
Corporatism has nothing to do with liberty. It is all about power and coercion. It’s about favouring
the big guy over the little guy, the more well-connected over the less well-connected, the insider
over the outsider. And in
society that means favouring large, incumbent businesses over smaller businesses, new entrants
How does deregulation and free market ideology fit into this?
“Obviously, if some always have more power and wealth than others, there is never a situation
in which the economic playing field is level. Moreover, it is axiomatic that those with the means
and access will always have greater influence over government than those without. So, in a very
real sense, the socioeconomic elite of any advanced, stratified society will always have disproportionate
control of the economic and political system.
“Now, I happen to be a Libertarian-minded individual, so I have nothing against the free markets
or the concept of limited government and deregulation. Freer markets and more limited government
are my preferred ideal. However, I am a realist. I understand that markets are never truly free
government fulfils a necessary function.
“So, when you hear someone talking about getting government out of the way and allowing the free
markets to work, you should be thinking about the influence and control this would naturally engender.
“Think crony capitalism
“In fact, I would argue that the deregulation and free market capitalism that these individuals
refer to is really crony capitalism in disguise. I will explain.
“When I think of deregulation, I think of two related but distinct concepts. The one is the actual
de-regulation, which is the permission of economic actors to compete in markets previously unavailable
to them by order of legislation or de facto government intervention and coercion. The other is regulatory
oversight, which is the maintenance of specific rules of engagement under threat of penalty on economic
actors by government. De-regulation and regulatory oversight are related concepts but they are not
belief, writes Dalrymple, that the idea of public service
was…a mask for private rent-seeking, which could be avoided only by the introduction of the
management techniques of the…private sector, paved the way for the…corporatist corruption of…Blair…and
Brown….She helped create a…large class of apparatchiks posing as businessmen, who…learned how
to loot the public purse….Blair and Brown…expanded the public sector to secure votes…and increased…dependency
on the state….They did so by…borrowing.
A very interesting use of the concept of corruption as a tool to blackmail "resource nationalists"
and enforce neoliberal regime in countries like Russia.
Transparency International, a non-governmental anti-corruption organization in Berlin, classifies
Russia as one of the most corrupt nations in the world. The organization defines corruption explicitly:
"The abuse of entrusted power for private gain." Transparency International's 2010 Corruption Perception
Index, an assessment administrated by independent institutions on corruption in the public sector,
ranked Russia 154th out of 178 nations, below Iran, Kenya, Cambodia, and Pakistan. The CPI measures
corruption in the following way:
The surveys and assessments used to compile the index include questions relating to bribery
of public officials, kickbacks in public procurement, embezzlement of public funds, and questions
that probe the strength and effectiveness of public sector anti-corruption efforts...It captures
information about the administrative and political aspects of corruption.
In response to global distrust, the Anti-Corruption Council meeting on January 13, chaired by
Russian President Dmitry Medvedev, outlined Russia's emphatic difficulties with bureaucracy. The
President sketched out a plan for reform, while emphasizing the need for civilian cooperation in
all anti-corruption initiatives.
Much of this is nonsense. The idea that Larry Summers was opposed by "The left wing of the
Democratic party..". is pure nonsense. Clinton, Robert Rubin, and, Larry Summers led the Wall
Street wing of the Democratic party to join with right wing Republicans such as Alan Greenspan,
Phil Gramm, Newt Gingrich, and, Thomas Bliley to eviscerate the "strict supervision" of the
financial system and return to the Laissez Faire approach of Warren G. Harding, Calvin Coolidge,
Herbert Hoover and their Treasury Secretary, Andrew W. Mellon. The New Dealers referred to Harding,
Coolidge, Hoover, and, Mellon as "Lazy Fairies". You could make the case that Clinton, Rubin,
and, Summers were even lazier Lazy Farries than President Calvin Coolidge, his Treasury Secretary
Andrew W. Mellon, and, Commerce Secretary Herbert Hoover, since, in 1927 Coolidge signed into
law the McFadden Act which place restrictions on interstate branch banking. Small banks wanted
the McFadden Act but there was also a recognition that the economic and political power of the
Wall Street banks should be curbed. Eisenhower signed the Bank Holding Company Act of 1956 which
extended McFadden Act restrictions to bank holding companies. In 1994, Clinton signed the Reigel-Neal
Act which repealed the McFadden and Bank Holding Company Act of 1956, thus, creating "Too Big
To Fail" financial institutions. In 1999 Clinton signed the Gramm-Leach-Bliley law which removed
the restriction on commercial banks from joining with investment banks prohibited by Glass-Steagall
while retaining the deposit insurance liability of the Federal government signed into law by
FDR on June 16, 1933. In 2000 Clinton signed the Commodities Futures Modernization Act prohibiting
any regulation of derivatives.
When does a set of policies that have proved successful, such as the "strict supervision"
of finance which provided the longest period of financial stability in American history, suddenly
become "extreme" advocated by "Left wing" Democrats? I would argue they are not "extreme" but
conservative. As we have seen again Laissez Faire doesn't work too well.
Gibbon -> Dryly 41...
That is absolutely true, strict supervision, and interstate firewalls to prevent financial
contagion, limits on the size of finance companies to prevent 'too big to fail' are pragmatically
conservative not looney liberal. Point mostly excellently argued.
Also one of observations, conservative policy in the US aren't conservative at all. So
much conservative policy to me these days seems like just a bunch of threadbare and moldy
fig leaves covering superstition, fear, and greed.
One comment I also have is that plutocracy as currently encultured can't bring itself
to offer up anything to the middle classes and the poors. So they have nothing they are
willing to offer, more the demands they're making on the economic distribution means that
there gains have to come from at the expense of the rest of us. Not just a lower percentage
share, but lower in absolute terms. I think more than anything, this is what's driving things.
Dryly 41 -> Gibbon...
I agree that the use of terms is incomprehensible in this era. One striking example;
"supply side" tax cuts for the wealthy by Ronald Reagan were denominated as conservative.
No! In fact that was a radical, radical departure from traditional Republican party orthodoxy
from its inception in 1860 through 1980. In the twenty years of Reagan and Bush family presidencies
not one budget was balanced and the Gross Federal Debt was increased from 32.5% to 85.1%-and
this notwithstanding Clinton raised taxes and reduced the debt by 9.7%.
Not only was "supply side" radical for the Republican party, it was radical for any party
in American history. Nothing like it has ever been done, and, it was not done for any great
national purpose such as incurring debt for the Revolutionary War, the Civil War, WW I,
or, WW II. All those trillions were borrowed to fund tax cuts for the wealthy.
Sophie Shevardnadze: Our guest today is whistleblower Karen Hudes, former senior
counsel at the World Bank. Karen, it’s great to have you on a show today.
SS:So, the government shutdown. Is the move on the part of the Republicans justified?
Is fighting off Obamacare worth all this mess?
KH: I think there is something more going on behind the scenes. A lot more, actually.
SS:What do you mean?
KH: Well, there is terrible currency problem. We’re on the verge of the currency war.
The Federal Reserve is printing dollars like there is no tomorrow, and if they keep going, the rest
of the world is not going to accept them. As it is, the BRICS countries – Brazil, Russia, India,
China and South Africa – have decided that they are going to finance the trade among these countries
with assets and pay for the difference in gold. And this is the right move for them...
SS:But how is that connected with a shutdown though?
KH: The US Congress has been fighting with the presidency, because the presidency have
been in total contempt, and the highest legal officer of the United States government has also been
in contempt of Congress in fighting this international corruption that is ruining the dollar as
an international reserve currency.
SS:But you know, economists have been predicting the dollar will fall ever
since the crisis in 2008. But the Government has managed to keep it afloat.
KH: Well, not for long. If you look at what’s going in the gold and other precious metals
markets, silver as well, we’re headed towards something called “permanent gold backwardation”- that
means there is a loss in confidence in the fiat currencies that are issued by those private banks.
They like to consider themselves as ‘public banks’ but they really are owned by private entities.
And these currencies are about to crash because they are valueless, that’s what always happens to
paper currencies that aren’t backed by assets.
SS:Like you’ve mentioned - “gold backwardation”, gold is often chanted as perfectly
safe investment and alternative to the dollar, even. But how come the price of gold is falling?
KH: Because of market manipulation - but that can only continue for so long because
the Central Banks are running out of gold and the rest of the world are lining up to buy them. If
you want to buy gold today, you have to pay a premium. What they are offering in the future is called
‘a naked short’. They don’t have the gold to back those offers, that’s illegal what they are doing.
SS:I will get back to gold in a bit. But for now I would like to focus on Obamacare.
In your opinion, is Obamacare really that crucial for the US economy?
KH: What you have is something that’s very good for the medical insurers because most
of the other countries that offer medical coverage do this through a single issuer. And that’s not
what we have here. What we have here is a bill that was drafted by the medical insurance companies.
It’s not good for this economy. It never was.
SS: Why do you say it’s not good?
KH: Because what’s happening is that workers that worked full-time are being put deliberately
on part-time basis, so that the companies can avoid giving the medical insurance coverage under
the provisions of the law.
SS:You know this Obamacare thing.. I’ve heard it many times being compared to Socialism,
Communism sometimes even. Do you trace the resemblance?
KH: That’s just because the mainstream media, when they report about what’s going on,
are doing it by telling lies and anything that’s good for the powers that be. The mainstream media
is completely owned and controlled by the same companies, private companies that own the Federal
Reserve System. Most of the American citizens are clueless about the corruption that’s rifling their
SS: But just to make sure - are you saying that everything about Obamacare is bad?
Or are there good things about it?
KH: No, of course, there are good things about it. But the problem is that the people
that wanted to get up decent coverage were not given the tools, they were not given the equipment,
they were not given the press coverage – the honest press coverage, that society needs to enact
just legislation. The Congress people are all bribed by these corrupt forces and the American citizens
have zero confidence in their Congress.
SS:So, at this point you side with the Republicans for blocking the medicare.
KH: I’m not siding with Democrats or Republicans, because both of those parties have
been co-opted by these terrible corrupt forces I’m talking about.
SS:What we have right now is Americans being forced to get health insurance. How
does it go with their love of liberties and freedom of choice?
KH: It’s not so much a question of being forced; you have to look at those parts of
the society that have been thrown under the bus. The uneducated children, who are not given superior
education, like we used to have. We are society that is giving short shrift to the people that need
us. I’m not saying that we ignore the health needs of our country. I’m saying that we ignore the
mainstream media, because they are not telling us the truth.
SS:You know, I’ve also heard Obama supporters argue that the American Capitalism
is on the verge of death in its present form, the way it is existing now, and the social injections,
meaning the medical care and Obamacare, are needed as the only way to reform it or save it. Do you
agree or disagree with that?
KH: The problem is not with the American citizens, they are a wonderful group, their
values are good. It’s just that they are not given the tools that they need to have a just society.
They are not given the basic information about what is really going on and who is benefiting from
the economies that they are being told… they are being told that they have no money, they have taken
an entire city, Detroit, and declared it bankrupt. When what’s actually happening is their tax dollars
are not even staying in the society, their tax dollars are going by treaty to the United Kingdom,
and then they are being transferred to the Vatican, to the bank of the Vatican. This is not a society
that is going to be sustainable on any basis, for any reason.
SS:Do you feel like American economy is picking up because we hear President Obama
saying the shutdown hurts American economy but at the very sensitive moment, word is it has just
started to catch up. Do you feel like it’s catching up really?
KH: Those numbers about the employment are completely fabricated because they are not
counting those people who have given up ever finding a job as unemployed. That’s ridiculous! The
real rate is just about double what they reported as being.
SS: So the American debt looks like a doomed patient. Is there any other possibility
for it than just grow into eternity forever? I mean raising debt ceiling once or twice a year, what’s
KH: The problem is actually when you talk about debt, is that our currency is financed
by debt; our currency is issued by the Federal Reserve instead of the Treasury which is unconstitutional.
When the Federal Reserve System was instituted in 1913 most of the Congress was on break, they sneaked
that legislation through. So the debt is there simply for those bankers to put in interest on it
and have it grow and compound every year. The debt is a fabrication, it’s probably should be repudiated.
But it can be repudiated until you’ll have looked that all of the implications.
SS: Do you think it’s going to go on and on forever?
KH: No, what I think it’s going to happen is that at the upcoming Bretton Woods meeting
on October 9th the countries of the world, the foreign ministers of the world are going to sit down
and have a rational basis for currency rather than this fiat currency which is absolutely... what
can I say, it makes no sense to anyone but the bankers that are issuing it.
SS:So, when you look at the concept of the debt, it’s much more than just borrowing
money - it makes you controllable. For example, in the case of US - who controls it, you mean the
big corporations, or countries like China and Japan, who control large chunks of the debt?
KH: Well, that’s a very good question and, fortunately, some mathematicians at the Swiss
Federal Institute of Technology have given us a very precise answer. They did a study of who owns
and controls the companies on the capital markets - 43 000 companies. They found out that there
is «a secret super-entity», they call it, that owns 60% of the earnings every year and 40% of the
assets. They did this by putting the same people on the boards of these companies. So, they have
ten times the economic power than there are entitled to. And they thought that none would catch
them at it. This is a huge conglomerate that has been rigging the labor prices, it has been rigging
all of the commodity’s prices, and it has been trading in the securities markets with the insider
information. It has got to be stopped. It also bought up the media and has been lying to people
deliberately. This is going to stop.
SS:So just to answer my question - the government is controlled by the conglomerate
or the corporations rather than countries that are up and coming economically, right? Why haven’t
these corporations or conglomerate, as you call it, been caught? Why is nothing changing?
KH: That’s the whole point about it. They’d like to think they are in control but they
are not, they are not above the law. And we, citizens, know exactly what they are up to, we’ve been
working on this problem, all of the governors of the States have been working on this terrible corruption,
so have the Attorneys-General, so have the Sheriffs, and it’s not going to continue. The American
people are taking back their government and they are stopping this terrible corruption.
SS:As of today, the United States is a financial heart of the world. Whether it
collapses or keeps on going, it’s obviously wrong – this much power is concentrated in one place.
Asia is a rising monster right now; could it be stealing this financial role from the US? Do you
think China, for example, could steal its financial role from the US? Or are they also controlled
by that same financial elite you’re mentioning?
KH: Well, I can tell you that the Jesuits have a very strong stranglehold on China as
well but I can also tell you that the transition of economic strengths from the western countries
to the east is going to happen, but it’s going to happen in a smooth way. It’s not going to be a
transition through a currency war like that terrible corrupt group is trying to manipulate everyone
into. No, we’re going to have a peaceful power transition this time around; we’re not going to have
the World War III. They try to pull it off in Syria, they are now thinking they can pull it off
in Iran, it’s not happening. The citizens of the world see what they are doing and we’re not letting
them get away with it this time.
SS: Foreign governments keep buying US Treasury bonds despite obvious problems US
economy is facing. What’s making them do that, in your opinion?
KH: I think the biggest market for the Federal Reserve notes is the US Treasury and
there is a gut of dollars right now. But, yes, there is also a small market, unfortunately, the
market is weakening as the dollar weakens because of all of this, what they call quantitative easing,
where every month so many additional dollars are printed with absolutely no backing.
SS:Should we be buying gold?
KH: Well, yes and no, I think gold is probably a wise purchase right now, but more as
insurance than investment, because there is actually a great deal of gold, there is even more gold
than people know about. For example, the amount of gold in the deposit in the Bank of Hawaii is
170 000 tonnes, this is more than the World Gold Council says is available for all the gold on the
Earth. People don’t know how much gold there is, there is a lot of gold.
SS:Are you buying gold?
KH: I did actually, yes. But not because it’s an investment, but because I’m not 100%
certain that we’re going to get to act together before all of the paper fiat currency falls apart.
So I see it as insurance, but because of the amount of gold that’s actually around in the world
in deposit all over the world I’m not so sure it’s a great investment.
SS:So you think the return to the gold standard is a realistic thing? It could be
KH: Well, actually, that’s not such a good thing. The currency ought to be backed by
value, but there is no reason why it should be restricted to precious metals, it could be any of
the commodities that are valuable. The important thing is that, yes, the currency should be backed
by assets rather than by debt as we now have.
SS:But if a financial collapse happens , let’s say, will gold be of any use? I mean,
there is shortage of food, look at the world today, the biggest problem we’re facing is the clean
drinking water. What gold is going to do about that?
KH: First of all, I think that we’re going to manage to get our act together; I’m not
expecting a collapse. Very accurate game-theory model is showing that we’re going to manage to make
a transition in a very smooth way; maybe there’ll be a few fits and starts, but I think most of
the countries in the world are in favor of working together and not to have a collapse. The only
thing that you’re saying is that some of these crooks haven’t figured out, they haven’t seen the
writing on the wall, they haven’t seen that we understand that there is a way to work together and
avoid these problems, which are definitely avoidable.
SS:So, Karen, you were a senior counsel at the World Bank. Tell me something, honest
banking is this an oxymoron?
KH: No, we have examples all over the place - in the United States, the state of North
Dakota has its own state bank and many of the other states are looking at that - at the moment 22
other states are looking at it, and we’re urging the other 28 states to look at it. There was a
bank in Amsterdam that, I think, went on for 300 years with no problem. We know how to do banking,
it should be like infrastructure to support the economy, it shouldn’t be for the benefit of elites
that think they are above the law as we currently have. If you look at the Bank for International
Settlements (BIS) - that institution was established when the war reparations were being exacted
from Germany after the World War I. That’s when it was started in 1930 and I believe its 60 central
banks, that are members of the BIS - those are the corporates, those are the ones that really needs
to go out of business.
Is the drama in Washington, a comedy or a tragedy? What's a better term for American democracy?
When will the debt time bomb detonate? Who can stand up against American exceptionalism? We discuss
this and more with National Security whistleblower, Mark Novitsky
.Sophie Shevardnadze:Our guest today is another national security whistleblower,
and no it’s not Edward Snowden – his name is Mark Novitsky and he joins us from the American city
So the drama in Washington – what was it? Is it a comedy or a tragedy?
Mark Novitsky: It’s really disturbing to refer to what’s happening in Washington as
a joke, and on behalf of all critical, clear-thinking Americans I want to apologize to the rest
of the world for our Circus Clown College in Congress, and only the American Congress could pat
themselves on the back and break their elbows for kicking the can down the road instead of actually
doing their job, and delaying this for another three months on an issue that they should have handled
couple years ago.
SS:There is no default this time, but only for now, the root causes aren’t really
going away, be they political or economic, don’t you think?
MN: The situation is that actually there was a default, we went into default in May,
and the Treasury department actually started dipping into US government pension funds to make up
for that deficit. All of these things are really scary and I think that we would have to take a
look at these issues as if what would be the consequences for the average person if they were to
pile up their credit card debt to the point where they can’t afford to pay their mortgage and going
to get another credit card – there has to be some type of resolution to all of this nonsense from
an economic perspective. I think the first thing you do when you’re in the bottom of the hole is
SS:Why is it that every draft bill turns into existential crisis for Congress? I
mean, beforehandCongress was somewhat able to make more pragmatic decisions, come to an accord –
but now it’s all about life and death struggle..
MN: Because the concept of social control being best managed through fear predates Christ
from a political perspective, and in order for there to be fear so that one may have social control
have to have a crisis. People often tend to refer to me, saying “Mark, you’re so negative!” That’s
because we have a new crisis every week that we need to deal with and the way that we end up dealing
with this crises is piling them on top of each other and nothing ever gets resolved. We need to
hold our government officials accountable to the rule of law, to the Constitution, and I want to
thank Russia Today for having me on, because the media is such a big component of that – and, tragically,
Americans find themselves the best-entertained people on the planet and the least informed. But
I think that that tide is turning, people are starting to understand the use propaganda, and being
a little bit more selective.
I’ll be honest with you – when I told people that I was going to do a program on Russia Today
people were saying “why would you do that? You’re going to look like a Commie!” And I said, “Listen,
you need to broaden your perspective. You need to find a news source or news service that doesn’t
just tell you what you want to hear.” You have to be critical, you have to think about what they
are trying to sell you, when you’re talking about the news. What becomes news here in America is
when a teen actress named Miley Cyrus sticks her tongue out and gets more naked and there’s three
hours’ programmed on CNN.
SS:Well, thank you very much for being so positive about Russia Today, but talking
about narrowing things down or broadening them – American Democracy is narrowed down to two parties
and even then the Congress fails to agree on things. Is there a better term than “democracy” to
MN:Feudalism, I guess. Pseudo-democracy. We are in the United States of America
and we ended up coming down to having a choice between two pre-selected candidates who spend the
most money. A look at what just transpired with our country and our government with regards
to this “every six month debt limit increase” or it’s a fiscal cliff, or it’s austerity – there’s
always something to be afraid of, but at this point in time if we look at the television and see
these two idiot teams bickering and fighting back and forth.
I’ll be candid with you, when I have a mental image of American politics I see two warring factions
of chimpanzees baring their teeth and screaming at each other and waving and flailing their hands
above them and throwing feces at each other. That’s where we are at. We got to get back to being
the beacon of freedom, the beacon of democracy, the beacon of common sense.
SS:The American debt looks increasingly insane with no improvements or even signs
of desire to pay down. Where is the US going with it?
MN: That’s a situation that we are afforded having a luxury being the international
reserve currency of the world, and with that should come a certain responsibility. There have been
periods of time when governments have been the international reserve currency of the world, you
know, pre-World War II it was the UK, before that that was Spain, before it was Portugal – so a
country being in the position of holding an international reserve currency is not a static thing.
What we have to take a look at is getting our spending under control, eliminating useless and severely
detrimental wars that we’re involving ourselves in relation to support of the military industrial
complex. We should be like a responsible adult, pay what we own and live within our means.
SS:The US is printing money in enormous amounts to serve its financial purposes
– it is their national currency, of course, but it’s also an international commodity, whose consequences
resonate through every corner of the world, including riots and revolts in countries with destroyed
economies. Is this an American exceptionalism at play?
MN: I’m troubled by the fact that president Obama mentioned the word “American exceptionalism”,
because I think that God created us all equal. That’s kind of a point that I would not have made,
especially to the UN General Assembly. Somebody has to do it. Somebody has to be the international
reserve currency, there has to be oversight, there has to be transparency and that’s where the process
or procedure of improvements needs to be made.
We have a system that’s broken. We have to find the best and the brightest people in the US and
internationally, that have the resolve to correct the problem. We’re off the tracks, we’re off the
rails and so we can’t go back to continuously doing the same thing. So we need to put a team of
objective independent critical thinkers behind the problem and address these concerns.
SS:But do you personally think America is exceptional?
MN: Well yes, I do. And I think that we have a potential for being exceptional. But
again, do we have problems? Yes, we do. But do we have the capacity to address these problems? Yes
we do. I think a sense of nationalism is something inherent in every society and that’s a good thing.
But what we have to do is to be grown ups and understand that not everything we do is in the public’s
best interest and rein in those people that are taking us off the rails.
SS:Is there any valid force to stand up to this exceptionalism in the form we have
MN: The people, the American people and the people of the world. You know, the internet,
in what you’re doing here has changed so much, because information is power, and the fact that we
have so many avenues for information and sharing information. I really have not been allowed, and
nor has Karen Hudes, nor have many people been allowed, to say the types of things we’re saying
to the American media. That has to change and that’s why I thank Russia Today for having the opportunity
to express this opinion and to say that this can no longer be confrontational, we’re all in the
same team and we all need to work together. This is a crisis of epic proportions – if the US goes
down, tragically, we’re going to take the rest of the world down with us, and so we have to look
at this as a global concern.
SS:You are a national security whistleblower – tell us your story. Has your story
resonated at all?
MN: Yes and in fact, I’d like to lead off with the fact there’s a national security
whistleblower coalition, and the senior academic advisor - his name is William Weaver - actually
advises people against being a national security whistleblower, that if you do that you’ll be destroyed,
you’ll go through character assassination, you will lose your family, your job, you’ll lose your
credibility and that goes back to the way that you can tell a society is in decline by how they
treat their truth-tellers.
Now, this whole issue of Ed Snowden and national security and domestic surveillance – as everyone
knows, this is international surveillance issues and concerns. I worked for a company called Teletech
Holdings, which is headquartered in Denver, Colorado. I was illegally and maliciously sued by this
company in federal court. Against all odds and unlimited resources of Teletech’s legal coffers and
basically pro se, I managed to fight Teletech’s illegal and malicious accusations and charges against
me, to win a dismissal with prejudice. And in the end of that term I thought that that was a victory
and it really was it, because early on in the situation I was warned by the former CIO – its chief
information officer at the Teletech subsidiary I used to work for – that Teletech had the capacity
to wiretap my phones and ISP and they would see to it that I would never work again.
Now, at that point in time I had no idea that this company was involved internationally and had
a special subsidiary called Teletech Government Solutions. It was couple of weeks after that warning
that my son found two people in the house, that I presumed to be people that were setting up to
attach wiretaps to the phones. We know that they don’t need that information now, but what I understood
was that Teletech had friends in very high places and they would see to it that I would never work
again, and tragically that was the case.
The further along I got, I realized I was on the receiving end of the domestic surveillance,
and that this was a government contractor, and they seem to be receiving preferential treatment
and cover by the government. So I did everything the whistleblower is supposed to do. I went to
the media, I went to lawyers, I went to, then, my Congress people…
SS:But did your story got out, did people listen to you?
MN: None whatsoever. I mean, I handed people a Pulitzer Prize-winning story on a golden
platter, and people in the media would say “Oh my God, I can’t believe what you’re telling us!”
I came to them with everything that I’m going to tell you and everything that I’ve got is public
record information. I’m not telling any top-secret information.
See, there is the thing of the internet that if Congress and their staff actually wanted to,
they could find a whole lot of information. So when President Obama and members of the Congress
say “this isn’t about spying on the American citizens,” that is blatantly untrue. And I am a victim
Based on the information and belief, on everything that I’ve gone through, I’ve been blowing
the whistle on the fact that the government is going after whistleblowers, they’re going after journalists,
they’re going after government employees, they’re going after lawyers and judges. Think of the ramifications
of all of this. If George Orwell was alive today, he’d do a spit-take about what’s going on. One
of the points that I wanted to try to make was just how long has this been going on and sent you
some information, with respect to some of the programs the government has been involved into. That
goes back to ’60s!
SS:Mark, you’re saying that no one will hire you, you’re being tapped, no media
will take your story. Are you reaching your goals? Is whistleblowing worth it?
MN: You know, somebody has to do it. If not me or us, then who? What I advocate is...
I mean, was it my life goal to become a martyr? Absolutely not, I had unrealistic expectations of
how I would be treated by the media, by the government officials. I figured that if I went and provided
all of these documents and the information to the government officials, about domestic surveillance
perpetrated against the American citizens that is being covered up. And I was essentially told that
under the Patriot Act, it’s against the law for the government officials to tell you if you are
under surveillance. In fact, my senator Al Franken recently commented in a CNN op-ed, and I’m going
to paraphrase what he said: “If we told the American people what the NSA was doing, then Congress
could face federal charges for leaking information.”
SS:To get back to whistleblowing. Do you believe people can fight back their right
to know what is going on and to govern the process? What needs to happen to make them actually start
MN: In the US we’re presumed to have equal access to courts and equal access to due
process of the law –if you can afford it. The way that our – I don’t call it “justice system” –
our legal system works, it a for-profit enterprise. And so, here I went to the majority of the largest
local and national associated law-firms, and I laid down my case for them about this hostile abuse.
I took this to the state attorney-general, and at the time the deputy attorney-general looked at
me and said that this is one of the most egregious acts of civil injustice that he had ever seen,
but there was nothing he could do.
When I went to a variety of lawyers, they looked at this and said “Oh my God, this is horrible.
This was a travesty of justice. This was a lawsuit brought against you with no evidential support
and this was a hostile and malicious attack!” But they said there’s nothing they could do, unless
I could afford to pay them $250,000 upfront for the retainer.
A corporation of the size of the Teletech is just going to outspend you. That’s not a justice
system. Also, we have a real big problem with a judiciary and the rulings of the court. I think
it would be in the best interest of the US and the world that if we actually had a whistleblower
protection program to be in place and afford credible national security whistleblowers and financial
I am also a financial security whistleblower, in 2007 and 2009 associated with my case with the
Teletech, I found out that there was a hotline in the SEC, the Security Exchange Commission, to
stop or stall investigations and this in fact happened to me. So I went to Congress and told them
first in 2007 about this hotline and showed them the evidence. I also warned about the 2008 financial
collapse - hundreds and thousands of people actually warned about the 2008 collapse – and nothing
happened. Because as I said earlier in the conversation, there is a need to have a crisis.
I think it was Mayer Rothschild who said that the best time to buy is when it’s blood in the
streets, and so we create this crisis and these bubbles, and bubbles are built to explode, and we
start the whole process all over again. What we need to do with the whistleblowers, and this was
a promise that Obama made when he was a senator and when he was candidate – that whistleblowers
represent the best of the US and we need to do everything in our power to protect whistleblowers
– when in fact he had done specifically the opposite, and had seemingly attacked whistleblowers
with a bloodlust, and keeping things private and secret. That’s getting back to “you can tell where
society is headed towards how they attack their truth-tellers”
SS:Mark, I want to talk to you a little bit about the credit crunch of 2008 and
its consequences. We’ve seen stocks drop, bailouts, bankruptcies, riots – most agree the major financial
institutions were to blame, but nobody really bore the responsibility for that. Can you explain
to our viewers, who you see as the main players – banksters you’ve talked about?
MN: That’s the problem. Everything you talk about can be fixed and should have been
fixed. I could take American 5th-graders and show to them and demonstrate really to them
that these financial crises were not only preventable, by all appearances they look like they were
intentional! Again, what happens here impacts the whole world’s economy.
In 2005, mortgage companies and banking institutions and rating agencies coalesced together into
this massive concept of fraud and were pushing this fraudulent mortgages on to people and signing
people up for houses that they couldn’t afford, knowing that this was going to be a big problem,
and then bundling those packages together and selling them on international market, knowing that
they were going to default, and then, against the advice that were giving to their customers, actually
shorting the investments and securities that they were marketing and promoting to their customers
that were not in the loop.
There was information with respect to Fannie Mae and the massive and systemic fraud and abuse
by Fannie Mae, but the chairman of Fannie Mae at the time – it was a guy named Franklin Raines –
he ended up getting a $2million bonus! So tragically with President Obama and Attorney-General Holder,
who comes from the Defense industry, protecting the white-collar criminals, they haven’t grasped
the concept that crime expands to our willingness to tolerate it.
The system seems to be gamed for the incentive of fraud and corruption and abuse. Until we start
putting bankers in jail for their crimes against humanity we’re going to continue with the same
problems. But when we go to our congresspeople, to the regulators, when we go to the FBI - all things
I’ve done – I was not only shunned, these people started working against me, and that’s not how
the program should work.
Are you tired of yet another revelation of fraud in the food industry or the banks? Are you paying
less attention to those stories? Are you getting numb, thinking more and more "that's just how the
If so, congratulations! You're learning to lower your expectations to meet the new normal: pervasive,
institutional economic fraud. This used to be the sort of thing you read about in income-poor countries
in Africa and South America. Nowadays, though, it turns out (yet again) that We Do It Too, and not
just the usual suspects in the shadowy corners of the arms trade. Supermarkets and the rest of the
food industry, pharmaceutical firms, hospitals and care homes, housing and construction, great swaths
of the financial sector - tales from all of these show that fraud and trickery are in the mainstream,
the New Black of commercial life. In particular, there appears to be an expansion of organized fraud
in the economies and markets for legal, everyday goods and services; the recent horsemeat scandal
in Europe is one example of this. And it is not just companies. There's corruption and crime in
governments here and around the world: crony capitalism, powerful oligarchies, elite criminality.
All of this raises crucial questions about contemporary capitalist societies. What norms, values,
beliefs and attitudes, what ways of thinking and reasoning, shape these practices? What brought
these about, and encouraged so many people to take so much from the rest of us?
It seems as though Margaret Thatcher and Ronald Reagan and their powerful backers have a lot
to answer for. I say that because my research into fraud points to the importance of the neoliberal
talk, policies, programmes and transformations that became important starting in the 1980s. This
neoliberal economic and political transformation brought with it a moral transformation. High levels
of fraud and trickery, it appears, are the result of the extensive changes in political and moral
economies that occurred across economic sectors, the state and communities in those countries that
experienced neoliberal transformation.
If the conclusions I have drawn from my own research are generally correct, then dealing with
that fraud and trickery is more complicated than many people seem to think. Talk of social enterprise,
responsible capitalism, corporate responsibility and the rest might sound nice (to some). But unless
we investigate and think carefully about the moral-economic and interrelated political-economic
aspects of neoliberalism, that talk is likely to be little more than campaign promises from a tainted
political class and hot air from a tainted corporate class.
For scholars interested in economic fraud in the West, the past few years have provided a vast
number of cases and huge amounts of information. And yet, few academics are prepared to collect
and analyze the data on this historical shift to "fake capitalism" in the West. We have scholars
discussing the current economic crisis in conventional terms, but we have few who are concerned
with that fraud and what it tells us about social change, power, accumulation and democracy. For
most, it seems to be scholarly business as usual post-2008, and that is not good enough. We need
a strong scholarly engagement with the realities of fraud and the related bundle of norms, values,
practices and systems of power. With that, we can begin to challenge conventional narratives and
models of the capitalist market, the sources of wealth, poverty and power, and the bases of people's
culture and practices.
If we are going to try to fix things, we need to recognize that fraud is not simply a manifestation
of culture. That is because that culture is shaped by the political economy that gives it force.
Those who tell us that they want to change the culture in, say, the banking sector are fooling us,
and maybe themselves, if they ignore the ways that cultural change works via political-economic
change. That is because of a simple truth: if you want to change existing practice, you have to
change existing structures of power. Hence, whoever wants to combat commercial fraud has to address
commercial power. It is far from clear that our rulers are up for that.
However, if we are going to try to fix things, we also need to remember that fighting fraud does
not mean giving morality to the amoral fraudsters and deceivers. Since Mandeville and The Fable
of the Bees, we have been told that greed is good, that each of us serving our own interests serves
the common weal. The current economic crisis shows how empty that fable is. But it should not blind
us to the fact that all economic actors have a moral compass, even the fraudsters. They are guided
by moral norms and codes of one sort or another. Those are the codes that lead people to say, perhaps,
"Everybody tricks these days," "If I don't do it somebody else will," "Who cares?," "In business
you have to be though - I can't afford to be nice," "I wouldn't be paid this much if I didn't make
good decisions," "Looking after my family is more important than looking after strangers," or "If
we all look out for ourselves, everyone will be better off." Economic fraud, then, signifies not
the absence of moral norms, views and codes, but their presence. In other words, a moral norm does
not automatically prescribe a pro-social practice such as solidarity, cooperation, honesty or justice.
In a particular case, the actually existing moral norm - i.e. notions of standards of interaction
regarding others' welfare and of what constitutes acceptable/unacceptable practice - among the actors
involved can also be that it is OK, proper, or necessary to defraud (and therefore harm) another
human being or social group (say, the poor, elderly, vulnerable, workers, customers and so on),
for example to meet the corporation's target, to keep one's job, to survive, to defend or advance
one's own power and wealth position or that of one's own family, social group, corporation, or country
and so on.
That said, to combat fraud we need to understand it. We need to understand the systems of economic
and political power that facilitate it and of the values and norms that justify it. Ignorance will
not help us to see where the fraud comes from, and if we can not see where it comes from we can
not even begin to see how to restrain it.
This piece was reprinted by Truthout with permission or license. It may not be reproduced
in any form without permission or license from the source.
It is important to distinguish "micro corruption" (corruption on loser levels of goverment hierachy)
and macro corruption -- Corruption of Congress.
I Know the Congressional Culture of Corruption, by Jack Abramoff: ...No one would seriously
propose visiting a judge before a trial and offering a financial gratuity, or choice tickets
to an athletic event, in exchange for special consideration from the bench. Yet no inside-the-Beltway
hackles are raised when a legislative jurist -- also known as a congressman -- receives a campaign
contribution even as he contemplates action on an issue of vital importance to the donor.
During the years I was lobbying, I purveyed millions of my own and clients' dollars to congressmen,
especially at such decisive moments. I never contemplated that these payments were really just
bribes, but they were. Like most dissembling Washington hacks, I viewed these payments as legitimate
political contributions, expressions of my admiration of and fealty to the venerable statesman
I needed to influence.
Outside our capital city (and its ever-prosperous contiguous counties), the campaign contributions
of special interests are rightly seen as nothing but bribes. The purposeful dissonance of the
political class enables congressmen to accept donations and solemnly recite their real oath
of office: My vote is not for sale for a mere contribution. They are wrong. Their votes are
very much for sale, only they don't wish to admit it. ...
The Theory of Kleptocracy
First, let's use a theory from
Guns, Germs, and Steel by Jared Diamond as the center-piece for this little theory. In Chapter
14, entitled "From Egalitarianism to
postulates that more stratified societies are by definition less egalitarian, but more efficient
and are, thus, able to eradicate or conquer more egalitarian, less stratified societies. Thus, all
'advanced' societies with high levels of GDP are complex and hierarchical.
The problem is: these more stratified, more complex societies are in essence
where those in power re-distribute societal wealth to themselves. Those at the bottom of the society's
pyramid accept this unequal, non-egalitarian state of affairs because they too benefit from their
society's relative advancement. It's a case of a rising tide lifting all boats.
Diamond says the Kleptocrats maintain power using 4 different methods:
"1. Disarm the populace, and arm the elite."
"2. Make the masses happy by redistributing much of the tribute received, in popular ways."
"3. Use the monopoly of force to promote happiness, by maintaining public order and curbing
violence. This is potentially a big and underappreciated advantage of centralized societies
over noncentralized ones."
"4. The remaining way for kleptocrats to gain public support is to construct an ideology or
religion justifying kleptocracy."
Kleptocracy in America?
The obvious corollary of this theory is that most
successful modern societies
are, in fact, kleptocracies. The key is to use the four methods to gain popular support in order
to re-distribute as much wealth to the ruling class as the populace will support. If the ruling
class takes too much, it will be overthrown and replaced by a new ruling class (which in turn will
re-distribute wealth to itself using the same four methods).
While this angle seems cynical, it is a a line of argument that has great internal consistency.
So, is the United States a kleptocracy? Of course it is! Is that bad? Well, it obviously depends
on who you are in society. But, it also depends on whether the kleptocracy is efficient and fair
over the long term. Let me explain this last statement a bit more.
First, let’s get something very clearly understood: More than three years after the Great
Recession, all of our major banks, as well as the major banks in Europe, remain insolvent.
From Yves Smith’s brilliant book, Econned, How Unenlightened Self Interest Undermined Democracy
and Corrupted Capitalism.
“Andrew Haldane, the Executive Director for Financial Stability at the Bank of England, concluded
that it was impossible for the financial services industry to pay for the damage it wrought
in the global debacle. The lowest plausible estimate of the total costs that he could
come up with, amortized over 20 years, still resulted in a first year’s bill that exceeded the
total market capitalization of the biggest banks.”
It took 40 years to unwind a regulatory structure that was the envy of the world. That
regulatory discipline allowed America to become the world’s greatest manufacturer. Common
sense regulations, forged in the heat of the Great Depression and responsible for a long period
of economic growth widely shared by the majority of citizens, were systematically dismantled.
As the dismantling progressed the nation’s financial industry grew in size and profitability.
Once only 8% of the economy, it soared to 25%. In terms of total corporate profits,
finance grabbed more than 40% of profits. At the core of this expansion were a new class of
financial ‘innovations’ called derivatives. Layered over traditional financial instruments
like bonds, stocks, insurance contracts, commodity futures and related options, these derivatives
exponentially increased the amount of money going into finance and, for all intents and purposes,
dramatically under-priced risk. Derivatives had the nefarious effect of funding debt that
was hugely under-priced, causing trillions of dollars in ‘bets’ to be made on all aspects of finance.
It wasn’t just in housing mortgages either. This surge in under-priced debt went everywhere:
Student loans, car loans, merger and acquisition funding, sovereign debt, insurance contracts–everywhere–you
name the financial function and this explosion of liquidity drove down interest rates to the point
where those rates couldn’t come close to covering repayment problems or other risks.
The only solution is structural change that reduces the size and interconnectedness of the major
actors. Given the fact that these ‘major actors’ provide the primary funding for political
campaigns, including millions of dollars in political advertising aimed at influencing the public’s
understanding and perception of events, efforts to make structural changes face huge political hurdles.
Shrink the use of derivatives, most specifically so-called credit default swaps (CDS).
These instruments are pure bets on insurance contracts. They avoid the ‘insurable interest’
rule of insurance (you can’t pay for insurance on your neighbor’s house, for one obvious example,
because you have an incentive to burn it down!) and have no legitimate economic purpose other
than being a fee generating machine for the financial services industry. These derivatives
still exist and are still exempt from regulation, believe it or not. They are so pervasive
inside bank balance sheets, an outright ban is probably not wise. Regulating them, however,
will end the cowboy type of behaviour common with their use. Regulating them will increase
their cost, in other words, and limit their use. This will also restore more accurate
Limit guarantees to critically important banking and capital market activities by installing
a modified version of the Great Depression era, Glass Steagall legislation. Commercial
banks would be limited to making traditional loans and using plain vanilla hedges. They
could also engage in pure fee businesses such as those of being custodians or trustees.
Any use of CDS derivatives would be limited to regulated CDS insurance subsidiaries. Investment
banks would become more strictly regulated although their traditional functions would remain
unchanged: Underwriting and distributing equities and bonds and market making; CDS activity
limited to regulated insurance subsidiaries; mergers and acquisitions; asset management providing
the asset manager does not rely in any way on funding from the investment bank. Proprietary
trading and the trading and sale of over the counter (OTC) derivatives would be prohibited,
however. Lending to hedge funds, save against specific positions on conservative terms,
would be barred, as would warehouse facilities and bridge loans.
Tighten other regulations to close gaps and extend liability to responsible parties.
These regulations should not be rules-based, but principles-based, a.k.a. ‘if it walks like
a duck and quacks like a duck, it’s probably a duck.’ A low tolerance policy towards ‘innovation’
designed to evade standards would be more effective than any attempts to craft airtight regulations.
Restore secondary liability. In 1994 the US Supreme Court disallowed suits
against advisors like accountants and lawyers aiding and abetting frauds. In criminal
law the guy who drives the getaway vehicle is an accessory, why isn’t an accounting firm who
prepared misleading financial statements an accessory to fraud?
Increase the budgets of regulators. More auditors are needed who can sniff
out that something is not right. The claim that everyone who knows the inner workings
will be in the private sector and won’t want to be a regulator is specious. There are
many examples of experienced private market actors who decide to become regulators. Sometimes
for, God forbid, altruistic reasons! The enforcement team would need to attract
only a few of these experienced individuals to make a great difference.
End ‘Free market’ mania, quoted from Econned:
“Powerful business interests, largely captive regulators and officials, and a lapdog
media took up this amorphous, malleable idea and made it a Trojan horse for a three-decades
long campaign to tear down the rules that constrained the finance sector. The result
has been a massive transfer of wealth, with its centerpiece the greatest theft from the
public purse in history. This campaign has been far too consistent and calculated
to brand it with the traditional label, ‘spin.’ This manipulation of public perception
can only be called propaganda. Only when we, the public, are able to
call the underlying realities by their proper names–extortion, capture, looting, propaganda–can
we begin to root them out.”
Beezer here. Econned is the best book I’ve read so far, and I’ve read many, that explains
in terms the average person can understand just how we got into this mess–and explain how we might
be able to extricate ourselves without burning the whole house down. In our opinion
the last bullet is obviously the most important. The public has to be better informed in order
to understand that what we have now is decidedly not capitalism and the markets we have now are
decidedly not ‘free.’ The first job is to take on the propaganda machine. It’s
giving the public a Potemkin Village version of reality. What we need is reality.
Financial parasitism and looting are the “new normal.”
The decision by the US Federal Reserve Board to provide indefinite support to financial markets
under a third round of so-called quantitative easing (QE3), announced last week, coupled with the
earlier decision by the European Central Bank (ECB) to intervene in the bond markets, marks a new
stage in the breakdown of the global capitalist economy that began with the collapse of Lehman Brothers.
The moves by the world’s major central banks to pump more money into the global financial system
signify that four years after financial markets stood on the brink of collapse in September 2008,
there is no prospect of a return to what were once considered “normal” conditions.
Far from lessening its support to the banks and financial institutions, the Fed is increasing
it. The earlier interventions were implemented with time limits. In its latest decision, the Fed
has given an indefinite commitment. As the headline of one article in the Financial Times
put it, “Fed Sets Its Sights on Infinity and Beyond.”
Moreover, the form of the commitment marks a major turn. Rather than buying up Treasury bonds,
the Fed is going to intervene to the tune of $40 billion a month to buy up mortgage-backed securities
from the banks and investment houses. It will thereby enable the banks to offload some of the “toxic
assets” that provided the trigger for the breakdown.
It used to be said that the task of the Fed was to take away the punch bowl just as the party
was about to get going. No longer. Now the Fed is committed to increasing the alcohol content, with
a pledge that it will keep topping up the supply indefinitely.
In providing a rationale for the decision, Fed Chairman Ben Bernanke cited the continuing high
levels of US unemployment—job growth, even at the lower wage levels now prevailing in the US, is
failing to keep pace with population growth—and the anaemic growth in the US economy. According
to conventional theory, the Fed’s actions will lower interest rates across the board, making investment
decisions more attractive to corporations and leading to economic growth and increased employment.
But as Bernanke well knows, as does everyone else in financial circles, those conditions do not
apply. Corporations, above all financial institutions, are continuing to accumulate profits, but
they are not being used to finance new productive investments. Rather, they are being funnelled
into large cash reserves to be deployed in speculation.
Moreover, cuts in government spending both in Europe and the US are lowering wages and increasing
unemployment, thereby reducing consumer demand. The ECB has made it a condition that governments
whose bonds it buys must put in place austerity programs aimed at cutting spending and increasing
unemployment. In the US, government spending is contracting and may decline even further at the
end of the year with the arrival of the so-called “fiscal cliff,” when earlier decisions by Congress
to automatically initiate cuts come into effect.
The Fed’s decision is not aimed at bringing about economic “recovery” in any meaningful sense
of the term. Rather, its market intervention is intended to raise the price of stocks and asset-backed
securities, lifting the profits of corporations, above all the banks and finance houses, not through
investment in the real economy but via financial operations. In other words, the very financial
parasitism that led to the collapse of Lehman Brothers and the near-meltdown of the US and global
financial system has become the official policy of the Fed.
The class interests served by this policy can be seen both in the manner of its implementation
and its consequences.
Financial journalist Michael West accurately summed the circumstances of its introduction in
an article published in Saturday’s Sydney Morning Herald.
“They demanded the Fed ‘deliver’,” he wrote. “The consequences of ‘failure’ were ‘dire’, they
cried.” Bernanke then “obliged the denizens of Wall Street” with the “ultimate money-printing bonanza.
And they then had the cheek to dress it up as a boon for the jobless. In reality, the banks get
to shovel their lame mortgage debts plumb into the lap of the taxpayers at $40 billion a month.”
As he noted, the Fed is buying not just government bonds, but the “mortgage-backed securities
which are clogging up Wall Street balance sheets.”
The Fed’s decision will have global consequences, all of which will impact adversely on the social
and economic circumstances of workers as well as the world’s poorest people. Immediately the decision
was announced, the prices of oil and gold jumped, signalling the start of a new round of commodity
This will impact the prices of fuels for transport as well as for cooking and heating, and set
off inflation in basic foodstuffs. Already the prices of corn, wheat and soybeans, crucial for the
well-being of billions of people, have started to increase.
By printing money, the Fed is also undermining the value of the US dollar in global currency
markets, which will have a significant impact in Europe as the euro rises. This will lead to further
cuts in exports and increased unemployment as firms find it increasingly difficult to compete.
Countries such as Brazil and Australia, where increases in currency values have already heavily
impacted on manufacturing, will also be adversely affected. Further downward pressure on the dollar
increases the prospect of “currency wars,” as national governments strive to maintain their export
There is also a political aspect to the Fed’s decision. In 2008, the collapse of Lehman Brothers
played a crucial role in swinging the support of key sections of the American ruling elite behind
the election of Barack Obama over his Republican opponent John McCain.
The Fed’s latest action in the run-up to this year’s election will similarly provide a boost
to the Obama re-election campaign.
But the most significant political conclusions are those that must be drawn by the working class.
The decision to promote financial parasitism at the expense of the jobs, livelihoods and social
position of the working class in the US and the world over is another powerful expression of the
historic crisis and bankruptcy of the capitalist system. There is no economic “recovery” waiting
around the corner.
The banks and financial interests represented by the US Federal Reserve and the ECB have a program:
parasitism accompanied by the systematic looting and impoverishment of the population.
The working class in the US and internationally must adopt its own independent program, thought
out and fought for to the end. It must initiate a struggle for workers’ governments committed to
the expropriation of the banks and finance houses as the first, and indispensable, step in the establishment
of a planned socialist economy, in which the resources created by the labour of billions are used
to meet human needs instead of profit.
I used to think that "civilized society" was defined as people collaborating and in the process
of doing so, providing each other with goods and services, mostly for reward but at times – either
through taxation or volunteerism – for free to those less fortunate. In the process of this collaborative
exchange, man was supposed to become more enlightened, thus ensuring optimum outcomes could be secured
with fewer natural resources and less labor, abetted by invention, cooperation and innovation. Each
generation was to leave behind a legacy of capital formation (roads, bridges, schools, etc.) as
well as an intellectual legacy in the arts and technology.
Over time, a compounding of these positive developments would endow each successive generation
with a higher standard of living, without the good earth being gutted and polluted beyond recognition.
But something, unfortunately, has gone wrong, and it may possibly
become far worse than we can imagine. What has been the source of this failure to
The answer is theft. Earthquakes, tsunamis and other such natural phenomena, as well as diseases,
are of miniscule consequence compared to theft. Theft throughout history has manifested itself in
the same forms again and again and each time it has resulted in resources either being destroyed
or re-distributed in the process.
It is my thesis, in this brief essay, that theft is supplanting value in both the medium of exchange
as well as in the exchange itself. Theft has become the manifestation of greed and moves in when
the conscience moves out. As a result, we are faced with the phenomenon of cascading theft – that
is, theft that leads to more theft. In the end, the concept of "value added" is transformed increasingly
into "value lost."
War, which has often been described as organized theft, most probably occupies equal top spot
in the rankings. History has repeatedly cast conquerors as liberators who bring some form of democracy/freedom
to the downtrodden, when in fact a closer examination shows that the conqueror either carts off
the spoils and/or leaves behind a corrupt and compliant democracy or dictator that allocates favorable
concessions to the bankers and capitalists of the conqueror.
War not only vanquishes the loser, but also has the effect of weakening the ally. A study of
how a financially cash-strapped Great Britain was made redundant as an Empire is fascinating as
it is telling about who your friends are. According to a recent article by economist and historian
Zachary Karabell, Great Britain in 1946 asked for a loan of $5 billion at zero percent interest
for 50 years. What she got was a $3.7 billion loan and a set of conditions which effectively installed
the United States and the U.S. dollar as the linchpins of power and finance. As someone once cleverly
quipped, "I want to thank the U.S.A. for coming to our assistance in 1941 when we really needed
them in 1939."
To maintain its Empire, the U.S.A. has installed bases all over the world. According to Hugh
Gusterson, professor of Anthropology at George Mason University, the United States has over 1,000
bases worldwide which constitute 95% of all foreign bases in the world. So we have the U.S. citizenry
largely footing the bill for human and material resources so that major corporations can extract
"profit" which is often not even taxed in the U.S.A. Can anyone estimate what those resources would
have yielded the American people had they been deployed in the U.S.A? Moreover, has there ever been
an instance in history where a nation has spent so much to make so many enemies? Perhaps it was
only a coincidence that the United States invaded Iraq a few months after it announced that it would
refuse U.S. dollars for the sale of its oil. It is clear here that business must be protected against
Unfortunately, the matter does not stop there and as part of the cascading effect, additional
theft is warranted through the implementation of the Department of Homeland Security and other such
The Banking System
The banking system, which is war's grotesque Siamese twin, is the greenhouse, factory and laboratory
of every paper alchemy known and unknown to man. Is there any wonder that this is the case? A recent
Wall Street Journal report stated that Wall Street firms would be paying out $140 billion in bonuses
this year as opposed to $130 billion a year before the meltdown. Amounts
of this size are neither payment nor reward; they are bribes to buy the intellect of America's best
without the inhibition of conscience. At least New York might be saved by the infusion
of these bonuses.
The credit creation system, which is the heart of banking, is by
all accounts nothing more than a debt pyramid that, in combination with opportunistic
mortgage brokers, accommodating government-sponsored enterprises (GSEs), clever bankers and gullible
investors, gave rise to an unprecedented orgy of buying, speculation
and manipulation. Manufactured income details and low upfront interest rates gave
the perpetrators of this theft the means to initially create dreams for the clueless home buyers
– and to subsequently substitute those dreams with nightmares.
The cascading effect of this theft has led not only to loss of homes, but also bankruptcy, loss
of jobs, breakdown of families and the gutting of so many industries that sprung up in the wake
of a building boom struggling to keep up with demand. The game was good while it lasted, but the
day arrived when even the banks were brought to the brink as a result of losses being generated
by the subprime fiasco. This was no doubt greatly complicated by derivatives, which still remain
more deadly than the unaccounted for nuclear-bomb briefcases of the USSR.
It is no secret that the Federal Reserve has more or less provided
astronomical amounts at a virtually zero rate of interest to a raft of top banks in an attempt to
counter horrendous losses, and to therefore save them from annihilation. Has the
Fed's largesse flowed to the struggling home owner? According to a recent Bloomberg News report,
a total of 937,840 homes received a default or auction notice or were repossessed by banks, which
represented a 23% increase from a year earlier. So there is your answer.
Fear not, as not all is lost. Goldman Sachs reported a $3 billion profit in three months just
days ago. Is this a sign of recovery or massaging the truth? I am afraid to say the latter after
reading various commentators and in particular the piece by Dylan Ratigan in the Huffington Post.
Some $64 billion received through the Trouble Asset Relief Program (TRAP),
AIG, the Fed and the FDIC was exponentially leveraged to buy distressed assets, which has
led to their reflation.
The taxpayers, of course, have received precious little in return but the politicians did better.
According to the Center for Responsive Politics, major banks and financial institutions in receipt
of $295 billion in TARP money reciprocated with $114 million to Washington for lobbying and campaign
contributions. As Andrew Cockburn puts it, "at 258,449 percent, it has
been called the single best investment in history."
The mutually parasitic relationship goes further, in that the major banks are also keen buyers
of U.S. Treasurys sold at auction. And what they cannot lend out, they ysts and commentators will
scratch their heads in disbelief at this fiasco which is so brazen that it defies any modicum of
Whether the assistance afforded by the Fed to banks can outrun the pace of foreclosures and rising
unemployment remains to be seen, although the signs are not encouraging. Either the unfolding internal
collapse or the external refusal to continue funding the United States while its dollar slides will
inevitably bring on a resolution unlikely to be palatable to anyone. In the meantime, depositors
are subjected to laughable rates of interest on their savings as well as the ignominy and insult
of potentially having their bank closed by the FDIC on a Friday afternoon.
If war and banking are the terrible Siamese twins then surely government is the mother of these
two creatures. Whilst I do not consider myself to be a member of some lunatic fringe advocating
the dismantling of government, I nevertheless consider most of its activities to be wasteful and
many without purpose and therefore a form of theft. (Here the astute reader will correctly point
out that war is their doing also).
Do I need to remind readers that Social Security contributions disappear into the unified budget
and replaced with increasingly worthless IOU's in the forms of government securities? Through inflation,
their value diminishes until retirement resembles imprisonment. Government will either tax or borrow
in increasingly larger vicious circles to both placate the masses but also to cement its position
and authority. As the vicious circle grows, so does the amount "skimmed" by corporate America which
provides the bulk of the services. Where otherwise would the Halliburtons of this world be without
Uncle Sam's generosity?
The final member in the quadriga of theft belongs to consumption. No doubt the Renaissance and
the Industrial Revolution transformed the world of consumption, but it has been in the last couple
of decades that consumption took on a hideous conspicuousness that has in its own right threatened
the viability and stability of the system. Whereas only the rich in previous generations could flaunt
their "toys," in the world of today, anyone armed with a credit card could create a veneer of affluence.
As Warren Buffet once exclaimed, "price is what you pay, value is what you get." It is clear that
whilst price and value are rarely identical, nevertheless the hiatus between the two has never been
so disturbingly wide.
Housing values up to the time of the bust were the major but not the only example of this rift.
No doubt the siren call of easy credit and the interest-ree loans of retailers also proved extremely
powerful and effective. The reality is that the real wages of Americans had not increased since
the 1970s, and in an effort to keep the lid on their wage demands and propensity to strike, credit
became a common currency. The ability to borrow not only gave the masses the ability to buy, but
also blurred the distinction between needs and wants. Consumpt