Spieckerman Speaks

Saturday, June 25, 2016

Wall Street Santa Paulson Endorses Wall Street Tool Crooked Hillary

If a cabal of financiers were to have designed a strategy in '07 to prolong the Wall Street party, when they could clearly see that a huge financial and housing bubble had formed (to wit, Goldman Sachs secretly bet against the housing market as it concurrently pitched toxic mortgage securities), the "financial crisis" would have been an exquisite scheme. And who better to marshal its execution than former Goldman Sachs CEO, Secretary of the Treasury Hank Paulson?

Two major competitors - Bear Stearns & Lehman Bros. - were eliminated and the hated Lehman CEO Dick Fuld dispatched. A massive infusion of government funds poured into banks with no strings attached (something Franklin Roosevelt, a former Wall St. lawyer, didn't do during the far more profound and already advanced banking crisis in '33). Warren Buffett, not exactly a cowboy when it comes to investing, swooped in before the government bail-out had been enacted and scooped up Goldman Sachs preferred stock, yielding $500 million a year in dividends, and warrants to buy common stock at a big discount (which ended up yielding Berkshire Hathaway prodigious profits). A pretty wild move if there's any real chance of a financial implosion. Quite a soothsayer, that Warren.

The bail-out set a horrific precedent for our country but a wonderful one for Wall Street. The next time there's a crisis, it's actually more likely there will be another government bail-out ("It worked beautifully in '08...surely the politicians wouldn't be so reckless as to stand by as our economy collapses when we have a proven solution!" - good grief I can hear it now).

It was subsequently reported that Paulson lied about his reasoning for not bailing out Lehman Bros. - which catalyzed the "crisis." His lame and shifting rationalizations don't stand up to even cursory scrutiny. And Paulson and his minions unilaterally morphed what was disingenuously named the "Troubled Asset Relief Program" (TARP), sold as an appropriation to buy "toxic assets" from the big banks, into a pure transfer of over $400 billion in government cash to his former firm Goldman and his Wall Street buds' banking behemoths. Paulson, aided by well meaning but financial crisis phobic Fed chairman Ben Bernanke, alarmed and cajoled clueless and big bank-beholden Democratic politicians and the in-over-his-head George W. Bush with predictions of economic Armageddon - if they didn't enact what Paulson & Co. hatched. Right quick. Without any bothersome analysis of the plan or burdensome quid pro quos from the bailed out firms.

Not one Wall Street executive. Not. One. Was even seriously investigated much less indicted by the Obama Administration. What a coincidence, they were his and the Democrat Party's biggest contributors - and PBO's DOJ was also stocked with Wall Street lawyers on-leave and in-waiting. These rapacious Wall Street players continue to be to Crooked Hillary's most lavish campaign donors, after larding lucre on her and (The Other Famous Sexual Predator Named) Bill.

Dodd-Frank was crafted by Wall Street lobbyists and perfectly tailored to accommodate their clients' armies of lawyers - while choking community banks and smaller financial firms. This dug the competitive moat around big banks and investment firms even deeper. Deposits and financial power are more concentrated among the big Wall Street institutions than before the "crisis" - Too Big To Fail has become Too Bigger To Fail.

And the Fed under Bernanke and Janet Yellen has been even more financier-friendly than under Greenspan, commencing a Zero Interest Rate Policy (ZIP) that is both unprecedented and appears interminable. The sclerotic growth resulting from atrocious Fed and federal government policies has become the rationale for guaranteeing virtually no cost funds to the big banks, hedge funds and PE firms. This has bloated the prices of stocks - which, of course, are disproportionately held by the wealthiest Americans. Icing on the cake: since bank deposits and low risk financial instruments offer virtually no returns in a ZIP environment, Wall St. firms are flooded with an ocean of commissions and fees as investors flock to stocks.

Big Wall Street firm profits and executive and trader bonuses are through the roof. As the above-linked The Atlantic article aptly states, it's a "golden age" for the big banks.

Meanwhile hordes of average working people's jobs have evaporated as most families' incomes have imploded. They, small business owners who can't get loans and retirees who save are being crushed by the Paulson-Clinton paradigm. My earlier piece, Trump Threatens Clintons' Odious Economic Order lays out this sordid economic story. If you're grasping for a reason to vote for Donald Trump, Pernicious Paulson's endorsement of Crooked Hillary just gave you a "huge" one.


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