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Rescuing the Wealthy Idiots

The rich who made this mess are too greedy to be grateful we're saving their hides.

By Michael Fellman 12 Mar 2009 |

Michael Fellman comments on the American Parade for the Tyee. In December Yale University will publish his book, In the Name of God and Country: Reconsidering Terrorism in American History.

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Allan Greenspan, chief golden fleecer.

Barack Obama's dramatic new budget has begun the reversal of 30 years of Reaganomics.

Usually the differences between the two parties are small. Bill Clinton, for example, was an incrementalist who tinkered with the Gipper's enrich the wealthy and bugger everyone else mode of governing. And I believe that if the Bush Crash had not occurred, Barack Obama would have been another centrist nibbling at the edges of the so-called conservative agenda.

But Crash we are having, and this has liberated the forces of change, pushing the entire political spectrum to the left, meaning activist government and a regulated economy.

This is not Tweedledum and Tweedledee, but a basic change in direction. Obama, a truly masterful salesman, will appeal directly to the people in order to push congressional action on his agenda.

Once again, as during the New Deal, liberal Democrats will save the capitalist economy from the grips of the plutocracy, who are too stupefied with greed to understand that they will be the chief beneficiaries of the economic reconstruction. During the previous 30 years, the political economy of the United States was rigged on their behalf and now they will be rescued from the consequences of that re-rigging on which they were choking themselves.

Meltdown 101

I'm no economist but here is what the current collapse looks like to me.

The massive Reagan/Bush tax cuts for the wealthy wildly enriched the top five per cent of the populace (most especially the top one per cent), while the other 95 per cent stagnated, and in the case of the poor, declined. The tiny wealthy minority accumulated so much money so fast by the fleecing Republican tax policies enacted in their behalf that they did not know where to park their funds. After four houses, including perhaps a condo in Coal Harbour, and X number of cars and decadent banquets, it became such a vexing problem as to where to park that surplus.

In addition, the wealthy felt entitled to their money and deeply resented paying any taxes to buoy up the vast peasantry who lacked the guts to grab great wealth for themselves.

With their boundless greed, these children of the Second Gilded Age, having fleeced everyone else, set themselves up to be fleeced in turn. Why not invest in deposit accounts that promised and delivered a return of 15 per cent per annum. Enter Bernard Madoff and Robert Standard.

These two chaps set up Ponzi schemes that shouted out their crookedness by their steady and absurdly high rate of returns. (By the way, more Ponzites will be discovered.)

So if the wealthy are so smart, why did they invest millions with people promising them returns too good to be true?


Therefore, the fleecers got fleeced.

For Canadian content, perhaps I should say that the hosers got hosed.

Plutocracy was no meritocracy

Where was the Securities and Exchange Commission that had regulations on the books sufficient to discover, stop and punish such obvious crooks? Well, central to Republican economics was the deregulation of the financial system. So despite dozens of whistle blowers who presented the facts to the SEC, the ideologically driven political hacks in charge refused to take action. They believed that the market inevitably righted itself. Right. They never heard of fraud. They forgot the recent lessons of the Savings and Loan scandal -- exactly the same sort of obvious crookedness created when financial operators are let loose unregulated around other people's money.

Swiss banks, which first grew to enormous wealth as Hitler's money launderers, provided the second major place for the fleecers to put their loot. They sent agents over to the United States to help the plutocracy set up hidden accounts in order to evade their already radically diminished taxes. (Remember, they are entitled to wealth and owe nothing to the lazy masses or to the government they hate except when it is legislating on their behalf.)

So far, the new authorities at the U.S. Treasury have uncovered 53,000 such American accounts in one bank alone -- UBS. What about the other Swiss banks? What about numbered accounts in the Bahamas? And in Antigua, which Robert Standard purchased? And how many of these accounts will prove to have been fleeced? The disclosure of fraud and corruption will only grow.

So, with deregulation, income distribution upwards, and the massive hunger for more and more wealth by the wealthy, we have witnessed a two-tiered institutionalization of fleecing, with psychopathic wolves moving in to gobble up the wealth of their fellow wolves. Serves them right.

Rich to the lifeboats first!

The only problem with that resentment is that the American banks were playing yet another set of frauds, creating all that real estate paper grounded on the proposition that the housing market would always inflate. In this case, the Ponzi scheme was based on the greed of the poor, who lusted to cash in on that housing market by taking out all those fraudulent mortgages, not reading in the fine print that their rates would rise in a year or two and bite them in the ass. Millions of tiny would-be fleecers were fleeced by big bankers who then bundled their trash and resold it. This was the biggest Ponzi scheme of them all. And the bankers skimmed huge portions of the profits, stuffing them in their own pockets.

So with the crash we see the government bailing out the most golden of the fleecers at the big banks, the only alternative being a total financial collapse that would ruin us along with them.

By dint of necessity, the wealthy will be saved as the only means to save everyone else.

Don't expect any thanks

Will they be grateful? Not on your life. Just watch the congressional Republicans excoriate the Obama tax plan that will actually ask the wealthy to pay slightly higher taxes in order to fund at least part of the bail out that will save them. Just watch them rant against re-regulation.

That is the way fleecers think and behave. One hundred per cent of the time. As an historian I guarantee it.

Many would argue that this double-time fleecing just ought to be called capitalism. Barring a socialist revolution that would in the end just rename the corrupt elites in charge, the best we can hope for is better-regulated capitalism to prevent the recurrence of the systematized robbery of the last thirty years. The rich we shall always have among us, I am afraid.

After the banks are nationalized and saved, they will be denationalized but continue to be regulated. Until, that is, the plutocrats get the wind back in their sails and once more convince Americans that government is the enemy from which the Holy Hidden Hand of the Market will save them.

That is the political cycle, American style.

Should we laugh or cry?

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