The Light: Hillary

It should, if the media had done their job, that is. Well, the Wall Street Journal did a while back, and I did a piece back in November on her. Her name should be familiar because she was a whistleblower on ACORN. And, she was having conversations with the New York Times about ACORN and Obama, a story on which the Times chose to sit before the election. Kinda like when the LA Times refused to release videos of Obama attending an anti-Israel testimonial for a professor friend of his. But I digress…

The Bulletin, one of the oldest newspapers in the country, had this story on Monday,‘New York Times’ Spiked Obama Donor Story:Congressional Testimony: ‘Game-Changer’ Article Would Have Connected Campaign With ACORN. The title pretty much says it all, and what it says is that the NY Times has completely ceased to be a reputable news reporting organization, and has revealed itself to be nothing more than a propaganda arm for Barack Obama. Sure, sure, it still pretends to report stories, and yes, it even has Paul Krugman, the Nobel Prize winner, Princeton Economics professor as a columnist, who is often critical of Obama’s whacked out ideas, but he is a voice crying in the NY Times wilderness, for all intents and purposes.

But let’s get into the nuts and bolts of the article - honestly, this does not require a lot of commentary for me as it is plain, in my humble opinion, that the NY Times has failed MISERABLY as any kind of reputable news source:

A lawyer involved with legal action against Association of Community Organizations for Reform Now (ACORN) told a House Judiciary subcommittee on March 19 The New York Times had killed a story in October that would have shown a close link between ACORN, Project Vote and the Obama campaign because it would have been a “a game changer.”

Heather Heidelbaugh, who represented the Pennsylvania Republican State Committee in the lawsuit against the group, recounted for the committee what she had been told by a former ACORN worker who had worked in the group’s Washington, D.C. office. The former worker, Anita Moncrief, told Ms. Heidelbaugh last October, during the state committee’s litigation against ACORN, she had been a “confidential informant for several months to The New York Times reporter, Stephanie Strom.”

Ms. Moncrief had been providing Ms. Strom with information about ACORN’s election activities. Ms. Strom had written several stories based on information Ms. Moncrief had given her.

During her testimony, Ms. Heidelbaugh said Ms. Moncrief had told her The New York Times articles stopped when she revealed that the Obama presidential campaign had sent its maxed-out donor list to ACORN’s Washington, D.C. office.

Ms. Moncrief told Ms. Heidelbaugh the campaign had asked her and her boss to “reach out to the maxed-out donors and solicit donations from them for Get Out the Vote efforts to be run by ACORN.”

Ms. Heidelbaugh then told the congressional panel:

“Upon learning this information and receiving the list of donors from the Obama campaign, Ms. Strom reported to Ms. Moncrief that her editors at The New York Times wanted her to kill the story because, and I quote, “it was a game changer.”’

“IT WAS A GAME CHANGER.” Emphasis mine, obviously. The NY Times withheld a critical story regarding Barack Obama because it would impact the election. How can that be viewed as anything less than unethical,immoral, and as a complete and utter failure to do the work the Fourth Estate has been entrusted to do?

There is more:

Ms. Moncrief made her first overture to Ms. Heidelbaugh after The New York Times allegedly spiked the story — on Oct. 21, 2008. Last fall, she testified under oath about what she had learned about ACORN from her years in its Washington, D.C. office. Although she was present at the congressional hearing, she did not testify.

U.S. Rep. James Sensenbrenner, R-Wisc., the ranking Republican on the committee, said the interactions between the Obama campaign and ACORN, as described by Ms. Moncrief, and attested to before the committee by Ms. Heidelbaugh, could possibly violate federal election law, and “ACORN has a pattern of getting in trouble for violating federal election laws.”

He also voiced criticism of The New York Times.

“If true, The New York Times is showing once again that it is a not an impartial observer of the political scene,” he said. “If they want to be a mouthpiece for the Democratic Party, they should put Barack Obama approves of this in their newspaper.”

Academicians and journalism experts expressed similar criticism of the Times.

“The New York Times keeps going over the line in every single campaign and last year was the worst, easily,” said Mal Kline of the American Journalism Center. “They would ignore real questions worth examining about Obama, the questions about Bill Ayers or about how he got his house. Then on the other side they would try to manufacture scandals.”

Mr. Kline mentioned Gov. Sarah Palin was cleared by investigators of improperly firing an Alaska State Trooper, but went unnoticed by The Times.

“How many stories about this were in The New York Times,” he asked.

“If this is true, it would not surprise me at all. The New York Times is a liberal newspaper. It is dedicated to furthering the Democratic Party,” said Dr. Paul Kengor, professor of Political Science at Grove City College. “People think The New York Times is an objective news source and it is not. It would not surprise me that if they had a news story that would have swayed the election into McCain’s favor they would not have used it.”

Liberal or not, the issue is their integrity as a reputable news organization. That lack of integrity is most troubling.

Naturally, the ACORN people had something to say about all of this:

ACORN has issued statements claiming that Ms. Moncrief is merely a disgruntled former worker.

“None of this wild and varied list of charges has any credibility and we’re not going to spend our time on it,” said Kevin Whelan, ACORN deputy political director in a statement issued last week.

Yeah, okay. Just like ACORN is a NON-PARTISAN organization, too, right, Kevin? That was completely unbiased int his past election? Like this?

Ahem. Just save it already. We’re not buying what you’re selling.

And finally, here is the response from the NY Times:

Stephanie Strom was contacted for a comment, and The New York Times’ Senior Vice President for Corporate Communications Catherine Mathis replied with an e-mail in her place.

Ms. Mathis wrote, “In response to your questions to our reporter, Stephanie Strom, we do not discuss our newsgathering and won’t comment except to say that political considerations played no role in our decisions about how to cover this story or any other story about President Obama.” (Michael P. Tremoglie can be reached at mtremoglie@thebulletin.us)

Yeah, I bet you don’t discuss your “newsgathering” because then you would have to discuss your “newsDUMPING,” Ms. Mathis!

Between the LA Times and the NY Times, with a whole bunch of “news sources” in between, our media has made it blatantly obvious that reporting critical stories that might actually reveal important, RELEVANT information to the people, is squashed. Our Fourth Estate is no more. It is now a part of the Executive Branch.

Lou Dobbs is right: this is “obscene and outrageous.” And an affront to our democracy, such as it is since the “game changer” information was suppressed. The NY Times needs to change its saying from “All the news that’s fit to print” to “all the news we deem fit to print that best protects our chosen candidate(s).” And that makes them a propaganda rag, nothing more.

Each and every time I read a review of the Auction Rate Preferred Securities market, I come away thinking it was one enormous Ponzi scheme. Let’s review the facts as reported from a just published Bloomberg story of a $4.7 BILLION Settlement by Citigroup and Wachovia with California Auction Rate Investors:

States, student-loan agencies and closed-end mutual funds were the primary issuers of the securities, long-term bonds with interest rates set at weekly or monthly auctions.

1. Issuers have long term projects funded by long term loans or preferred shares. Those loans or shares are the underlying collateral in an auction rate preferred transaction. While people investing in a pure Ponzi scheme believed they were investing in a legitimate money manager’s business, investors in ARPS believed they were investing in a money market fund. The key here is MISREPRESENTATION.

   The debt, marketed by bankers as cash equivalents, offered investors yields of a quarter-percentage point or more above conventional money-market funds, indexes show.

2. In both a Ponzi scheme and ARPS, the allure of regular liquidity with solid returns draws new money into the game. With a Ponzi scheme, the returns are better than a benchmark index. With ARPS, the returns were better than other cash alternatives or money market funds.
   

   When the market flourished, borrowers paid dealers on average quarter-percentage point a year of the par value of the debt to run the auctions, generating about $825 million annually based on the amount of sales. Citigroup increased the commission its financial advisers earned selling the bonds to investors as the market stalled.

3. In a Ponzi scheme and ARPS, new money is attracted by marketers or salesmen. In the Ponzi scheme, marketers or salesmen could work directly or indirectly for the manager. With ARPS, similarly the marketers or salesmen could work for the primary underwriter or within a selling group. It is likely that many of the marketers and salesmen were not aware of the very nature of the true essence of the scheme.
4. In successful Ponzi schemes, a la Madoff, and ARPS, the regulators who are supposed to protect investors are hoodwinked. It is not a reach to say that the regulators, the SEC and FINRA, were so close to the perpetrators as to be oblivious to the scheme. In fact with ARPS, the regulator FINRA was an investor.
   

   The market unraveled when banks that supported auctions of the securities for two decades with their own money as buyers of last resort pulled back to preserve capital amid the mortgage market collapse that has led to $1.3 trillion of credit losses and writedowns worldwide.

5. The Ponzi scheme and ARPS both crashed when new money did not continue to come in to support the effort. The manager of the Ponzi scheme can continue to carry out the fraud for a period of time until his own capital is depleted. Similarly, ARPS continued to operate for a short period while Wall Street banks supported the regular auctions with their own capital. After a short period, the banks backed away and the auctions failed.

One may say that ARPS were legitimized because the auction process ran for close to two decades. I would respond that the Madoff scam supposedly ran for longer than that.

Madoff’s final supposed market value of funds brought in was $64 billion. The ARPS market was a $300+ billion market. Some investors have been made whole, but there are still tens of billions if not a hundred billion dollars of investor funds that have not been repaid. State attorneys general have pressured issuers and underwriters to repay investors. The securities regulators have been less helpful. For regular readers at NoQuarter and Sense on Cents, I have highlighted the fact that FINRA, at one time, owned $647 million ARPS.

Many investors whose funds are in those billions still outstanding wonder if their money will ever be repaid.

LD

Sy Hersh is back in the news with allegations that Dick Cheney had a military execution squad. I love Sy and the work he does but on this one he is wrong. Check out the following CNN report, which provides a good overview:

Embedded video from CNN Video

Fran Townsend and John Hannah are not entirely correct either.

It is not true that there is a “coordinated” list of terrorist targets. The opposite in fact is true–the CIA, the FBI and DOD each have their own lists. That has been one of the problems. I suspect Sy’s confusion stems from a loophole the Bush Administration cleverly exploited. It is called Title 10 versus Title 50. Title 10 of the U.S. Code covers Department of Defense/military operations. Title 50 deals with intelligence operations. The President is obligated to report to Congress Title 50 activities. There is no comparable obligation to report Title 10 activities being carried out in the context of a war.

I know this much for sure–Dick Cheney did not control any military unit and did not have his own band of killers at his beck and call. I am a stalwart opponent of Dick Cheney and the abuses he promoted and encouraged, but on this count he is being unfairly accused.

Used Idea Salesman

If GM fails it won’t be because Washington did not try to give it every advantage imaginable. One advantage, not withstanding the formidable Obama marketing machine’s vast resources, not easily attainable is consumer trust.   Following the first bailout last year several studies of consumer perceptions have been conducted. These studies’ results are now validated by the market data that has emerged. Keep in mind that GM and Chrysler took government money last year. Ford did not.

A survey released this month (March 2009) by polling firm Rasmussen Reports found that 88 percent of Americans would prefer not to buy a car from an automaker receiving government aid. That’s worse than the 63 percent who said they would eschew buying from a bankrupt car company. Isn’t that the same percentage (88%) that think congress is doing a poor job?

According to CNW Marketing Research, which specializes in the auto industry, in the first two months of the year, the number of buyers considering a GM or Chrysler vehicle fell 12 percent and 33 percent, respectively,. At the same time, Ford saw a 12% increase in consideration.

Since the first congressional hearings on the auto industry in November, U.S. sales by GM and Chrysler have fallen a combined 45 percent compared with the year-earlier period. Taking federal money is keeping people away from their lots, these consumer surveys suggest.

“GM and Chrysler are sending out messages that are very definitely in conflict with each other,” said Kelly O’Keefe, a professor at Virginia Commonwealth University’s Brandcenter and the son of a former Chrysler executive. “On the one hand they’re saying they’re in trouble, and on the other they want consumers to keep buying. It’s a marketing nightmare.”

By comparison, Ford Motor Co. has seen its share of the retail car market rise for four consecutive months, the first time that’s happened in 14 years.

Are they making better cars? Are they offering more attractive deals? Are they conducting a brighter advertising campaign? Or are they benefiting from accidental PR brilliance?

The government can’t honestly bestow upon GM and Chrysler unfair advantages. If they allow sales tax deductions and if congress goes forth with their plan to grant up to a $5,000 stimulus rebate to new car buyers, those perks will have to be awarded to consumers without regard to the brand they select. Hello Tata! If just the big six automakers hit their 2007 mark of 16 million cars sold in the U.S. that is around $80 billion a year of new stimulus spending our country will have to borrow until Obama is gone.

Who will pay the taxes for this loan, if the world affords it to us? Will a charismatic Obama convince the kool-aide drinkers to only buy GM so his car company will succeed? I don’t know. What do you think.

Some of the sources and quotes for this story came from the Charleston Daily Mail Newspaper, March 30, 2009.

The boys and girls at the Daily Show nailed this. If you were afraid that the Obama White House would not provide comedy gold, fear not:

Obama, a used car salesman? Who would of thought it possible? Within the humor is a serious message–Obama, for better or worse, has now taken responsibility for the domestic automobile industry. Layoffs and plant closures will be on him. No place to hide.

We’ve bumped up this poll from March 29th. NOTE that this is your last chance to vote before the show tonight! VOTE before 8 p.m. ET.

The cream certainly rose to the top in the second round in the battle for the No Quarter Trophy. The second round of our March Madness tournament had few suprises and almost every match was a blowout. With the field narrowed to 16, we are down to the best of the best. To become our National Champion and wear the title of Biggest Ass on the American Political Landscape, someone will have to rise to the top over some of the most reprehensible people of our time.

BELOW, the scoop on the most suspenseful race last week (Michelle Obama vs. David Axelrod) and your virtual voting booth:

It was a surprising second round as three former National Champions were eliminated in matches that were not even close. Dick Cheney, Ann Coulter and Ted Kennedy (in a likely farewell performance) were all sent packing. The 12th seed in the Capitol Hill Bracket, Senator Claire McCaskill is the lone long shot left in the field as she easily disposed of the 4th seed John Boehner. The most exciting match occurred in the White House Bracket where number two seed Michelle Obama had her hands full with the 7th seed, David Axelrod.

Mrs. Obama pulled it out 54-46.

Your chance to vote in our Sweet 16 starts now. The polls will be open until 8:00 PM EDT on Tuesday. Here are the matchups.

White House Bracket
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Capitol Hill Bracket
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Media Bracket
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At Large Bracket
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Just vote for who you think is the biggest ass in each matchup. Feel free to post additional comments below. Have fun with this. Don’t forget to join us on the Nocturnal Warrior Show on No Quarter Radio this Tuesday night at 9:00 PM EDT for the Sweet 16 results and Elite Eight preview.

We’re proud (always proud) to promote the One & Only Nocturnal Warrior on No Quarter Radio. Warrior’s a real-life radio pro whose show is as humorous as it’s entertaining, with top-drawer professional production values.

Tune in to NQR tonight — 9:00 to 10:00 p.m. ET! Join the live chat and call in to the show via (347) 677-0792.

The Warrior e-mailed me, and revealed tonight’s plans …

“March Madness reigns supreme tonight on No Quarter Radio with the Nocturnal Warrior Show.  The Warrior is worried.  As a recipient of federal funding, (tax returns, college loans and energy rebates) the Government could fire him as the host of his own show.  Barack Obama could be hosting this hour as soon as next week.  You better join in the fun while you can.  We’ll have a message from our special correspondent Raoul Castro who is very pleased with the latest developments in Washington.  The Warrior, Puma Pam and Jay will also kick around the governing style of the Obama administration.
 
Then the fun really cranks up in the second half of the show.  We will go live to our March Madness studios to reveal the Elite Eight in the battle for the No Quarter Trophy.  Just 8 participants left to duke it out for the crown of Biggest Ass on the American Political Landscape.  We will review the results of your votes in the Sweet 16  and handicap the match ups for the Quarter Finals.  As always,  you are strongly encouraged to participate in the program by calling the show and via the chat room.  Communicate with us, while you still can!”

JOIN US on tonight at 9:00 on the Nocturnal Warrior Show.

Audio archives of The Nocturnal Warrior’s past shows are available at NQR immediately following the broadcast. You can also listen via iTunes (see the right column for instructions).

If you love great humor: Listen to the archived 3/18 and 3/25 shows. While you’re laughing yourself silly, you’ll also note that the production is VERY professional and perfectly executed by the Warrior. His years of professional radio experience are clearly evident.

For the last 8 years, science has been distorted and minimized by the radical Religious Right that vowed, among other things, to push Darwin off the plank and instill “intelligent design” (a euphemism for “creationism”) in its stead. Whereas we are all free to believe whatever we wish, forcing students to learn about creationism in science classes not only violates the intent of separation of church and state but dummies us down on global scientific literacy rankings. One hoped that when George W. left office, science would get a lot more respect.

Looks like that may not happen, and it’s a crying shame because the religious right needs to scrutinize the Bible a little more carefully. They might be in for a big surprise.

Trina Hoaks reports that new Texas science guidelines require teachers to scrutinize “all sides of scientific theories,” and that includes the creationism disguised in its intelligent design costume. Oh, you don’t live in Texas? No matter. Texas bullies all of our children when it comes to what they want them to learn (or not learn).

The [Texas] Board reviews each textbook’s content, and if they don’t like it, they can hold the book hostage until the publisher agrees to change the content. Most publishers comply with this extortion and censorship, since with an annual budget for textbooks of $570 million, Texas “is clearly one of the most dominant states in setting textbook adoption standards,” says Stephen Driesler, executive director of the American Association of Publishers’ school division. Publishers will often have their books written to appeal to the Texas market, because it is so enormous, and thus “Texas-vetted” textbooks will appear in the public schools of most other states.

So why is this whole argument stupid in the first place? Because the Bible itself is downright Darwinian! Bear with me—this is interesting. Honest, it really is.

Using the King James version of the Bible, there is not one but two stories of the creation. The Religious Right ignores Book 1 and focuses exclusively on Book 2, a somewhat muddled tale wherein man comes first and all of the animals and other living beings follow along later.

Book 1 may actually be where Darwin got some of his ideas! Here we go.

1. In the beginning God created the heaven and the earth.
2: And the earth was without form, and void; and darkness was upon the face of the deep. And the Spirit of God moved upon the face of the waters.

OK—we started with nothing.

3: And God said, Let there be light: and there was light.
4: And God saw the light, that it was good: and God divided the light from the darkness.
5: And God called the light Day, and the darkness he called Night. And the evening and the morning were the first day.

OK—we have night and day, nothing else.

6: And God said, Let there be a firmament in the midst of the waters, and let it divide the waters from the waters.
7: And God made the firmament, and divided the waters which were under the firmament from the waters which were above the firmament: and it was so.
8: And God called the firmament Heaven. And the evening and the morning were the second day.

Ah ha! Firmament and water. Little stuff is…uh…evolving.

9: And God said, Let the waters under the heaven be gathered together unto one place, and let the dry land appear: and it was so.
10: And God called the dry land Earth; and the gathering together of the waters called the Seas: and God saw that it was good.

Yay, land and water.

11: And God said, Let the earth bring forth grass, the herb yielding seed, and the fruit tree yielding fruit after his kind, whose seed is in itself, upon the earth: and it was so.
12: And the earth brought forth grass, and herb yielding seed after his kind, and the tree yielding fruit, whose seed was in itself, after his kind: and God saw that it was good.
13: And the evening and the morning were the third day.

OK, plants are growing on the land. No animals in sight yet though.

14: And God said, Let there be lights in the firmament of the heaven to divide the day from the night; and let them be for signs, and for seasons, and for days, and years:
15: And let them be for lights in the firmament of the heaven to give light upon the earth: and it was so.
16: And God made two great lights; the greater light to rule the day, and the lesser light to rule the night: he made the stars also.
17: And God set them in the firmament of the heaven to give light upon the earth,
18: And to rule over the day and over the night, and to divide the light from the darkness: and God saw that it was good.
19: And the evening and the morning were the fourth day.

OK, He got a little distracted here, went into the stars.

20: And God said, Let the waters bring forth abundantly the moving creature that hath life, and fowl that may fly above the earth in the open firmament of heaven.
21: And God created great whales, and every living creature that moveth, which the waters brought forth abundantly, after their kind, and every winged fowl after his kind: and God saw that it was good.
22: And God blessed them, saying, Be fruitful, and multiply, and fill the waters in the seas, and let fowl multiply in the earth.
23: And the evening and the morning were the fifth day.

Back on track. Water life and birds. Coming right along up the evolutionary ladder.

24: And God said, Let the earth bring forth the living creature after his kind, cattle, and creeping thing, and beast of the earth after his kind: and it was so.
25: And God made the beast of the earth after his kind, and cattle after their kind, and every thing that creepeth upon the earth after his kind: and God saw that it was good.

Here they come—land critters! (But no sign of people yet.)

26: And God said, Let us make man in our image, after our likeness: and let them have dominion over the fish of the sea, and over the fowl of the air, and over the cattle, and over all the earth, and over every creeping thing that creepeth upon the earth.
27: So God created man in his own image, in the image of God created he him; male and female created he them.

And here we are—at the very, very end of the line! Evolved!

So, what’s the fuss about religion and science being at such great odds? I really never understood it since I was old enough to read.

Virtually every sector in the economy is faced with the same predicament: excessive debt. Whether residential housing, commercial real estate, consumer finance, automotive, municipal finance, or Uncle Sam, the current debt service along with future debt service is overwhelming.

In my opinion, the amount of influence with your lender (creditor) is directly related to the amount of debt and the terms of that debt. Regrettably for many taxpayers, the amount of debt from residential mortgage payments along with credit card bills and other household debts are not sufficient to create much influence. For larger corporations or municipalities, the influence is greater as these entities threaten to default.

Thus, we see ongoing games of “chicken” being played between debtors and creditors while debt service typically gets restructured.

What about the largest debtor of all, that being Uncle Sam? He can’t play the “default” card and expect the market to treat him with any degree of credibility. Thus, Uncle Sam does not have the option of restructuring or default. The only real option left to Uncle Sam is devaluation. How does that get played out? In the very manner that the Fed and Treasury are doing right now. Pump money into the system like there is no tomorrow.

What is the implication of that policy? Ultimately an informal devaluation of the currency will generate increased inflation, if not potentially hyper-inflation.

In my interview with Michael Panzner last evening on NoQuarter Radio, he projected double digit interest rates on 10 year U.S. government bonds driven by a double digit rate of inflation over the course of the next few years. One of Sense on Cents‘ Thought Leaders, Ken Rogoff, is projecting 8-10% inflation within 3 to 5 years and states in today’s WSJ, “all the elements are in place to pull the rug out from under investors.”

The WSJ highlights the threat of inflation extensively today:

1. Inflation Is Tempting For Indebted Nations

2. Reflation and How to Exploit It

3. Dethroning the Dollar: What If?

LD

(This compelling treatise on the oligarchs has been bumped up by Susan from the morning of March 29th.)

There’s been a lot of finger wagging at the unruly class recently. It seems we, the Main Street Taxpayers, have it all wrong. Our outrage over the AIG bonuses is class warfare. Our ignorance over the workings of government and finance is self evident. Our anger over our lost jobs, homes and 401k’s is understandable, but misplaced. Our bus tours are inappropriate. Our pitchforks and tea parties are political theater. Our whining over unfairness is unbecoming.

So, basically we’ve been told to sit down, shut up, and be patient. Because this was all our fault. We the underfunded, overspent, and irresponsible taxpayers are to blame for this financial crisis. Or so the story goes according to the Wall Street pork masters, politicians and pundits (a.k.a. the cowardly, corrupt and clueless.).

But strangely enough, some other voices are starting to be heard above the din. And equally strange they are telling a far different story. One that points the fingers of blame not so much at the Main Street Taxpayers (although none of us remain completely blameless), as at the Wall Street Oligarchs.

And in case you don’t remember from your long ago civics classes… An Oligarchy, according to Merriam-Webster, is a government in which a small group exercises control especially for corrupt and selfish purposes.

In The Nation, Christopher Hayes warns us of what happens when Experts of the World Unite and weigh down one side of the balance sheet.

The outrage over the AIG bonuses occasioned a great deal of commentary about a resurgent populism, often in cluck-clucking tones of disapproval. But the rage, frustration and visceral sense of injustice associated with the bailouts are only part of the story. There’s also the sense that an implicit social contract–by which we assign complicated technical matters to a class of talented experts and in return they figure things out–has been torn to bits.

Remarkably, the small class of (mostly) men running these failed financial institutions seem just as aggrieved. Instead of reacting to their failure with shame or apologies, many exude distrust of and contempt for the great unwashed who don’t understand their brilliance.

-snip-

… the financial elites are ideologically bankrupt, intellectually discredited and morally debased. They have no reputational capital and inspire no confidence. And yet, just as the deftly named “legacy assets” continue to pollute the balance sheets of the major financial institutions, so too do these legacy elites continue to lurk on one side of the balance sheet of democracy. In other words, even if they aren’t worth listening to, they still wield power. They can still bring the whole thing down.

Which begs the question - if the financial elites are bankrupt, discredited and debased, why do they still wield so much power?

Well, it seems the key to their power is in the very nature of an Oligarchy. Oligarchs need enablers. Particularly, government and media enablers. The enablers are built into the foundation of the Oligarchy and then become embedded in the building blocks of all that transpires. So in the end, the enablers’ own survival requires that they endless serve and protect the Oligarchs.

And in the US, the Wall Street Oligarchs took over during The Quiet Coup explains Simon Johnson, former chief economist of the International Monetary Fund, in The Atlantic.

Of course, the U.S. is unique. And just as we have the world’s most advanced economy, military, and technology, we also have its most advanced oligarchy.

In a primitive political system, power is transmitted through violence, or the threat of violence: military coups, private militias, and so on. In a less primitive system more typical of emerging markets, power is transmitted via money: bribes, kickbacks, and offshore bank accounts. Although lobbying and campaign contributions certainly play major roles in the American political system, old-fashioned corruption—envelopes stuffed with $100 bills—is probably a sideshow today, Jack Abramoff notwithstanding.

Instead, the American financial industry gained political power by amassing a kind of cultural capital—a belief system. …Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world.

One channel of influence was, of course, the flow of individuals between Wall Street and Washington. Robert Rubin, … Henry Paulson, … John Snow, …Dan Quayle … Alan Greenspan.

These personal connections were multiplied many times over at the lower levels of the past three presidential administrations, strengthening the ties between Washington and Wall Street. …

…Throughout my time at the IMF, I was struck by the easy access of leading financiers to the highest U.S. government officials, and the interweaving of the two career tracks. …

A whole generation of policy makers has been mesmerized by Wall Street, always and utterly convinced that whatever the banks said was true. …

Of course, this was mostly an illusion. Regulators, legislators, and academics almost all assumed that the managers of these banks knew what they were doing. In retrospect, they didn’t. …To date, the U.S. government, in an effort to rescue the company, has committed about $180 billion in investments and loans to cover losses that AIG’s sophisticated risk modeling had said were virtually impossible.

Wall Street’s seductive power extended even (or especially) to finance and economics professors, historically confined to the cramped offices of universities and the pursuit of Nobel Prizes. As mathematical finance became more and more essential to practical finance, professors increasingly took positions as consultants or partners at financial institutions. … This migration gave the stamp of academic legitimacy (and the intimidating aura of intellectual rigor) to the burgeoning world of high finance.

And so the experts were all in place and the Wall Street Oligarchs took hold. Embedding themselves in the culture at large. Spinning a mystique of Wall Street that became celebrated and enshrined in books, movies and songs.

…In a society that celebrates the idea of making money, it was easy to infer that the interests of the financial sector were the same as the interests of the country—and that the winners in the financial sector knew better what was good for America than did the career civil servants in Washington. Faith in free financial markets grew into conventional wisdom—trumpeted on the editorial pages of The Wall Street Journal and on the floor of Congress.

From this confluence of campaign finance, personal connections, and ideology there flowed, in just the past decade, a river of deregulatory policies that is, in hindsight, astonishing:

• insistence on free movement of capital across borders;
• the repeal of Depression-era regulations separating commercial and investment banking;
• a congressional ban on the regulation of credit-default swaps;
• major increases in the amount of leverage allowed to investment banks;
• a light (dare I say invisible?) hand at the Securities and Exchange Commission in its regulatory enforcement;
• an international agreement to allow banks to measure their own riskiness;
• and an intentional failure to update regulations so as to keep up with the tremendous pace of financial innovation.

The mood that accompanied these measures in Washington seemed to swing between nonchalance and outright celebration: finance unleashed, it was thought, would continue to propel the economy to greater heights.

A party mood settled in and the congo line was formed, sweeping everyone along in its wake. Occasionally someone stubbed a toe or stumbled briefly, but the rest of the revelers hardly noticed. The congo line grew bigger and bolder. The music player faster. The step became quicker. And then the inevitable happened. The line of thrill-seeking revelers became too large to manage and too unweildly to maintain. It began to swing wildly in every direction. The revelers could not keep up and congo line bust open spewing revelers in every direction.

And in the aftermath, we are facing signs that say Welcome to America, the World’s Scariest Emerging Market explains former deputy director of the International Monetary Fund’s Policy and Review Department, Desmond Lachman in The Washington Post. (The term Emerging Markets is used to describe a nation’s social or business activity in the process of rapid growth and industrialization. Political scientist Ian Bremmer defines an emerging market as “a country where politics matters at least as much as economics to the markets.”)

… despite their supreme arrogance, the country’s leaders never had a coherent economic strategy and that major decisions were always made on the run. I never thought that was how policy was made in the United States — until, that is, I saw how totally at sea Treasury Secretaries Henry Paulson and Timothy F. Geithner and Federal Reserve Chairman Ben S. Bernanke have appeared so many times during our country’s ongoing economic and financial storm.

The parallels between U.S. policymaking and what we see in emerging markets are clearest in how we’ve mishandled the banking crisis. We delude ourselves that our banks face liquidity problems, rather than deeper solvency problems, and we try to fix it all on the cheap just like any run-of-the-mill emerging market economy would try to do. And after years of lecturing Asian and Latin American leaders about the importance of consistency and transparency in sorting out financial crises, we fail on both counts…

…I thought then, that the United States was not similarly plagued by crony capitalism! However, watching Goldman Sachs’s seeming lock on high-level U.S. Treasury jobs as well as the way that Republicans and Democrats alike tiptoed around reforming Freddie Mac and Fannie Mae — among the largest campaign contributors to Congress — made me wonder if the differences between the United States and the Asian economies were only a matter of degree.

Yet how often do U.S. leaders respond to growing signs of economic dysfunctionality by spouting nationalistic rhetoric … instead of facing our problems we extol the resilience of the U.S. economy, praise the most productive workers in the world, and go on and on about America’s inherent ability to extricate itself from any crisis. And we ignore our proclivity as a nation to spend, year in year out, more than we produce, to put off dealing with long-term problems, and to engage in grandiose long-term programs that as a nation we can ill afford.

A singular characteristic of an emerging market heading for deep trouble is a seemingly suicidal tendency to become overly indebted to foreign creditors.

In part two, Facing Down the Wall Street Oligarchs, I’ll recap where the US now stands in this financial crisis and explore what needs to happen next with both the Main Street Taxpayers and the Wall Street Oligarchs.

Major H/T to LisaB and Mountainaires for bringing to my attention many of the articles used both directly and indirectly in part one & part two. All of these articles are well worth a full reading and I respectfully urge readers to find the time if at all possible.