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Saturday, July 04, 2009

Obama Takes Bush’s Plutocratic-Socialism to the Next Level

(By Chris Moore,

It has been noted by observers of both Left and Right that the Obama administration has adopted nearly exact duplications of the Bush administration’s authoritarian policies in a multitude of areas, both foreign and domestic. And now it appears that Obama and the Democrats are only going to accelerate the economic plutocratic-socialism which became a problem during the Clinton administration, increased exponentially in the Bush years, and is poised to consume the entire country and its economy under the Obama presidency.

Matt Taibbi has a deeply disturbing article at Rolling Stone that serves as a microcosm for the problem of plutocratic socialism and crony capitalism revolving around how mega-bank Goldman Sachs has had its hand in helping the U.S. federal government engineer a succession of economic bubbles that both knew would inevitably burst (most recently the housing and commodity bubbles, for example), in a partnership that has lasted decades:

“The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s…”

In more recent times, however, as both the Democratic and Republican parties have sealed their tacit agreement for each not to penalize the other on this joint plutocrat-socialist corruption, the bubbles have become ever larger and more frequent. These modern bubbles started in the 1990’s, when President Clinton and his Goldman Sachs-alumn Treasury Secretary Robert Rubin allowed investment banks to engineer the Internet bubble. Writes Taibbi:

“Companies that weren't much more than pot-fueled ideas scrawled on napkins by up-too-late bong-smokers were taken public via IPOs, hyped in the media and sold to the public for megamillions…[bankers] did this by setting up what was, in reality, a two-tiered investment system — one for the insiders who knew the real numbers, and another for the lay investor who was invited to chase soaring prices the banks themselves knew were irrational. While Goldman's later pattern would be to capitalize on changes in the regulatory environment, its key innovation in the Internet years was to abandon its own industry's standards of quality control.”

And banks like Goldman relied on inside-men like Rubin to see to it that they were never penalized or prosecuted for their fraud.

So how is a failure to properly regulate the banks and the markets to prevent this kind of fraud plutocratic-socialism? Essentially it arranges a transfer of wealth from average Americans to a highly-centralized, government-connected elite that cycles in and out of government regulatory and upper level policy-setting positions. In addition to using government regulators to rig markets, this elite relies on the largesse of government itself to buy-off potential "oppositional" party opponents and critics with pork. It also relies on the moral authority of and intimidation factor of big government to convince average Americans that the corrupt enterprise is legitimate. ‘After all,’ the average American thinks to himself, ‘if anything was remiss, the government would step in. That’s why we pay for this vast government bureaucracy.’ The vast size and scope of government itself essentially becomes a party to the enterprise and helps convince Americans that all is above board, and if it's not, it's all too big to fight, anyway. Moreover, the vast size and scope of the government is maintained by charging much of its expense (the deficit and national debt) on the national credit card, which is essentially a process of selling future generations of Americans into debt servitude -- which is itself a profitable enterprise for bankers and the big-spending politicians who partner with them.

As the federal government and the two-party regime running it have become ever more corrupt, the bubbles have become ever larger and more frequent. And it is these successively more frequent bubbles that have destroyed the American economy, bankrupted Americans, and simultaneously made these revolving-door federal government elite/plutocrat-socialists in both parties rich -- wealth recycled back to politicians who then use it to reinforce the corrupt system and ensure their own re-election.

Taibbi says following the engineered Internet bubble was the housing bubble, and most recently, the commodities bubble, all following the same basic template of elected, big government "regulators" working with their big business cronies to write legislation conducive to the successful perpetration of the fraud.

So according to Taibbi, what bubble is up next for the Obama regime and the financial sector cronies who played such a huge role in financing both his and Hillary Clinton’s presidential campaigns? Listen up, lefties: the scam is “green,” and known as Cap and Trade, which will create a government engineered carbon credit “market” ripe for abuse by the crony capitalists and plutocrat-socialists who are initiating the entire scheme -- including former vice president Al Gore.

Concludes Taibbi: "Gone are Hank Paulson and Neel Kashkari; in their place are Treasury chief of staff Mark Patterson and CFTC chief Gary Gensler, both former Goldmanites. (Gensler was the firm's co-head of finance.) And instead of credit derivatives or oil futures or mortgage-backed CDOs, the new game in town, the next bubble, is in carbon credits — a booming trillion- dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an "environmental plan," called cap-and-trade. The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance."

Actually, Taibbi should note that former Bush Treasury Secretary Paulson isn’t really “gone” at all. He’s part of a partnership that owns the Chicago Climate Exchange (CCX), a “commodity” marketplace where buyers and sellers of carbon credits and permits do business, paying CCX a commission on each transaction.

*Chris Moore is publisher of