In a moment of high panic in late September, the US Treasury unilaterally pushed through a radical change in how bank mergers are taxed--a change long sought by the industry. Despite the fact that this move will deprive the government of as much as $140 billion in tax revenue, lawmakers found out only after the fact. According to the Washington Post, more than a dozen tax attorneys agree that "Treasury had no authority to issue the [tax change] notice."
Of equally dubious legality are the equity deals Treasury has negotiated with many of the country's banks. According to Congressman Barney Frank, one of the architects of the legislation that enables the deals, "Any use of these funds for any purpose other than lending--for bonuses, for severance pay, for dividends, for acquisitions of other institutions, etc.--is a violation of the act." Yet this is exactly how the funds are being used.
Then there is the nearly $2 trillion the Federal Reserve has handed out in emergency loans. Incredibly, the Fed will not reveal which corporations have received these loans or what it has accepted as collateral. Bloomberg News believes that this secrecy violates the law and has filed a federal suit demanding full disclosure.
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Since I already sent my serious post
, I just wanted to chime in with an anecdote. I was in Washington D.C. last night, staying two blocks from the White House. At 11:30 pm, a half hour after the results were announced, I happened to walk past a very stuffy private club, one that, as far as I can tell, is populated exclusively by hardcore Republican men in their later years. It's the kind of place where you can imagine lobbyists slipping bribes to judges, and Central American coups being plotted... or maybe it's just me. Anyway, as I passed by, two men in black uniforms were high-fiving each other and hooting with delight. From what I could tell, one man was the doorman at the club, the other the chauffeur for one of the club members. Both were African American.
To understand the meaning of the U.S. election results, it is worth looking back to the moment when everything changed for the Obama campaign. It was, without question, the moment when the economic crisis hit Wall Street.
Up to that point, things weren’t looking all that good for Barack Obama. The Democratic National Convention barely delivered a bump, while the appointment of Sarah Palin seemed to have shifted the momentum decisively over to John McCain.
Editor’s note: The online version of this story has been amended to reflect developments since the publication of the print edition.
On October 13th, when the U.S. Treasury Department announced the team of "seasoned financial veterans" that will be handling the $700 billion bailout of Wall Street, one name jumped out: Reuben Jeffery III, who was initially tapped to serve as chief investment officer for the massive new program.
On the surface, Jeffery looks like a classic Bush appointment. Like Treasury Secretary Henry Paulson, he's an alum of Goldman Sachs, having worked on Wall Street for 18 years. And as chairman of the Commodity Futures Trading Commission from 2005 to 2007, he proudly advocated "flexibility" in regulation — a laissez-faire approach that failed to rein in the high-risk trading at the heart of the meltdown.
In the final days of the election, many Republicans seem to have given up the fight for power. But don’t be fooled: that doesn’t mean they are relaxing. If you want to see real Republican elbow grease, check out the energy going into chucking great chunks of the $700 billion bailout out the door. At a recent Senate Banking Committee hearing, Republican Senator Bob Corker was fixated on this task, and with a clear deadline in mind: inauguration. “How much of it do you think may be actually spent by January 20 or so?” Corker asked Neel Kashkari, the 35-year-old former banker in charge of the bailout.
When European colonialists realized that they had no choice but to hand over power to the indigenous citizens, they would often turn their attention to stripping the local treasury of its gold and grabbing valuable livestock. If they were really nasty, like the Portuguese in Mozambique in the mid-1970s, they poured concrete down the elevator shafts.
NOTE TO JOURNALISTS ABOUT FALSE QUOTATION:
A September 26 AFP wire story incorrectly attributed a quote to Naomi Klein that should have been attributed to Arun Gupta. The error has been corrected by AFP but please note that the call-out below
was NOT written by Naomi Klein and though she supported the original protest call, the statement is correctly attributed to Gupta, as stated in the corrected AFP article
also posted below. We would greatly appreciate if this error was not repeated.
Call-Out by Arun Gupta
This week the White House is going to try to push through the biggest robbery in world history with nary a stitch of debate to bail out the Wall Street bastards who created this economic apocalypse in the first place.
This is the financial equivalent of September 11. They think, just like with the Patriot Act, they can use the shock to force through the “therapy,” and we’ll just roll over!
I wrote The Shock Doctrine
in the hopes that it would make us all better prepared for the next big shock. Well, that shock has certainly arrived, along with gloves-off attempts to use it to push through radical pro-corporate policies (which of course will further enrich the very players who created the market crisis in the first place...).
The best summary of how the right plans to use the economic crisis to push through their policy wish list comes from Former Republican House Speaker Newt Gingrich. On Sunday, Gingrich laid out 18 policy prescriptions
for Congress to take in order to "return to a Reagan-Thatcher policy of economic growth through fundamental reforms." In the midst of this economic crisis, he is actually demanding the repeal of the Sarbanes-Oxley Act, which would lead to further deregulation of the financial industry. Gingrich is also calling for reforming the education system to allow "competition" (a.k.a. vouchers), strengthening border enforcement, cutting corporate taxes and his signature move: allowing offshore drilling.
Whatever the events of this week mean, nobody should believe the overblown claims that the market crisis signals the death of "free market" ideology. Free market ideology has always been a servant to the interests of capital, and its presence ebbs and flows depending on its usefulness to those interests.
During boom times, it's profitable to preach laissez faire, because an absentee government allows speculative bubbles to inflate. When those bubbles burst, the ideology becomes a hindrance, and it goes dormant while big government rides to the rescue. But rest assured: the ideology will come roaring back when the bailouts are done. The massive debts the public is accumulating to bail out the speculators will then become part of a global budget crisis that will be the rationalization for deep cuts to social programs, and for a renewed push to privatize what is left of the public sector. We will also be told that our hopes for a green future are, sadly, too costly.
Naomi has signed this public letter to the U.S. Secretary of State about potential U.S. involvement in recent violence in Bolivia.
An Open Letter to the U.S. State Department Regarding Recent Violence in Bolivia
To Dr. Condoleezza Rice, U.S. Secretary of State
Cc: Phillip Goldberg, U.S. Ambassador to Bolivia
Henrietta Fore, Administrator, U.S. Agency for International Development
Representative Eliot Engel, Chair, Subcommittee on Western Hemisphere, Committee of Foreign Affairs
Senator John McCain
Senator Barack Obama
Dear Dr. Rice,
We are writing out of deep concern over recent events in Bolivia that have left dozens dead and cost millions of dollars in lost revenue to the Bolivian government and the Bolivian people. We are especially concerned that the United States government, by its own admission, is supporting opposition groups and individuals in Bolivia that have been involved in the recent whole-scale destruction, violence, and killings, above all in the departments of Santa Cruz, Pando, and Chuquisaca.
The early results are in: Hurricane Gustav has helped John McCain's bid for the White House. This is nothing short of incredible.
In the combination of New Orleans and hurricanes, we have the most powerful argument possible for the necessity of "change." It's all there: gaping inequality, deep racism, crumbling public infrastructure, global warming, rampant corruption, the Blackwater-ization of the public sector. And none of it is in the past tense. In New Orleans whole neighborhoods have gone to seed, Charity Hospital remains shuttered, public housing has been deliberately destroyed--and the levee system is still far from repaired.
Gustav should have been political rat poison for the Republicans, no matter how well it was managed. Yet, as Peter Baker noted in the New York Times, "rather than run away from the hurricane and its political risks, Mr. McCain ran toward it." If this strategy worked, it was at least partly because Barack Obama has been running away from New Orleans for his entire campaign.