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31 января, 22:23

Donald Trump Is Breaking His Promise To Be Tough On Wall Street

If there was ever doubt that President Donald Trump’s tough talk on big banks was an empty show, his first 12 days in office have put it to rest. Trump is governing like a run-of-the-mill, deregulating Wall Street crony, despite his populist campaign rhetoric: His party’s platform pledged to return to the Depression-era Glass-Steagall Act, which broke up big financial institutions by separating investment and commercial banking; he vowed to close a tax provision that saves private equity managers billions of dollars; he lambasted his opponent for her ties to Goldman Sachs, and he assailed the bank’s CEO in an election ad. On Monday, Trump made his first direct comments since his inauguration about the post-financial crisis bank regulation reform bill. “Dodd-Frank is a disaster,” he said. “We’re going to be doing a big number on Dodd-Frank.” Tossing out Dodd-Frank would mean gutting huge swathes of rules restricting big banks, including intricate capital standards and the annual stress tests regulators use to make sure banks won’t need to be bailed out to the independent Consumer Financial Bureau. Indeed, the financial industry’s antipathy to the CFPB ― the brainchild of bank foe Sen. Elizabeth Warren (D-Mass.) ― has Democratic aides and consumer advocates increasingly worried that Trump will fire its director, Richard Cordray. A mortgage company has brought forth a lawsuit questioning the president’s authority to do so. A three-judge federal appeals court panel ruled in October that the president could fire the agency’s head for any reason. (The agency has asked for the full D.C. Circuit Court of Appeals to rehear the case.) The White House did not immediately respond to a request for comment.  In between claiming his rivals Sen. Ted Cruz (R-Texas) and former Secretary of State Hillary Clinton were controlled by Wall Street, Trump peppered his campaign with pledges to undo Obama-era financial reform. But he undercut the idea that he would enact tough new oversight to replace Dodd-Frank even before being inaugurated ― by filling his new administration with a cadre of Goldman Sachs alumni.  Steven Mnuchin, a former second-generation Goldman partner who founded a hedge fund and bought and ran a bank that foreclosed on tens of thousands of Americans during the housing crisis, was Trump’s pick to run the Treasury Department. Mnuchin was asked in his confirmation hearing what Trump’s idea of a new Glass-Steagall meant, specifically. His muddled response indicated that it simply referred to what, if anything, Trump ended up replacing Dodd-Frank with. (Senate Democrats are currently holding up Mnuchin’s nomination because he said in his confirmation hearing his bank didn’t use robo-signing. A Columbus Dispatch report used public documents to show Mnuchin’s claim was false.) Trump chose Gary Cohn, who spent a decade as Goldman Sach’s president and chief operating officer, to serve as his director of the National Economic Council ― a job generally seen as the No. 2 economic policy role, after the Treasury Secretary. And Anthony Scaramucci, a hedge fund salesman, event promoter and Goldman Sachs alum, was brought into the White House as a public liaison to government agencies and businesses. Scaramucci said in October that the Obama administration’s rule that cracked down on fees and bad advice to people saving for retirement was the equivalent to the Dred Scott decision. (He later called the comparison “a Dog Whistle for the media to demonstrate mock outrage.”) Steve Bannon, Trump’s chief strategist, was also an investment banker at Goldman Sachs in the late 1980s. Indeed, what appears to be the first action of the new Trump administration ― reversing a planned decrease in the cost of a federal mortgage insurance program that helps working- and middle-class Americans buy homes ― will mean hundreds of thousands of Americans will pay more money every month and tens of thousands may not be able to buy homes at all. The price hike, however, is a helpful boost to anyone selling private mortgage insurance and investors in mortgage-backed securities.  -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

31 января, 18:55

Another Goldman Sachs Administration?

Another Goldman Sachs Administration? Nomi Prins says that based on the past history of Goldman Sachs executives in public service, President Trump’s appointment of Goldman Sachs alumni Steven Mnuchin and Gary Cohn means that the one percent of the one percent will continue to feast on the rest of us. The Goldman Sachs Effect How… The post Another Goldman Sachs Administration? appeared first on PaulCraigRoberts.org.

30 января, 15:34

Only Glass-Steagall Can Save the U.S. from Another Epic Crash — Pam Martens

Only Glass-Steagall Can Save the U.S. from Another Epic Crash Pam Martens Allowing the largest Wall Street banks to brazenly loot the public is now the official policy of Congress. Following the worst financial crash since the Great Depression in 2008, Congress and the Obama administration engaged in the greatest legislative hoax in history in… The post Only Glass-Steagall Can Save the U.S. from Another Epic Crash — Pam Martens appeared first on PaulCraigRoberts.org.

30 января, 06:09

The Goldman Sachs Effect

Cross-posted with TomDispatch.com Irony isn’t a concept with which President Donald J. Trump is familiar. In his Inaugural Address, having nominated the wealthiest cabinet in American history, he proclaimed, “For too long, a small group in our nation’s capital has reaped the rewards of government while the people have borne the cost. Washington flourished ― but the people did not share in its wealth.”  Under Trump, an even smaller group will flourish ― in particular, a cadre of former Goldman Sachs executives. To put the matter bluntly, two of them (along with the Federal Reserve) are likely to control our economy and financial system in the years to come. Infusing Washington with Goldman alums isn’t exactly an original idea. Three of the last four presidents, including The Donald, have handed the wheel of the U.S. economy to ex-Goldmanites. But in true Trumpian style, after attacking Hillary Clinton for her Goldman ties, he wasn’t satisfied to do just that.  He had to do it bigger and better.  Unlike Bill Clinton and George W. Bush, just a sole Goldman figure lording it over economic policy wasn’t enough for him. Only two would do. The Great Vampire Squid Revisited Whether you voted for or against Donald Trump, whether you’re gearing up for the revolution or waiting for his next tweet to drop, rest assured that, in the years to come, the ideology that matters most won’t be that of the “forgotten” Americans of his Inaugural Address. It will be that of Goldman Sachs and it will dominate the domestic economy and, by extension, the global one. At the dawn of the twentieth century, when President Teddy Roosevelt governed the country on a platform of trust busting aimed at reducing corporate power, even he could not bring himself to bust up the banks.  That was a mistake born of his collaboration with the financier J.P. Morgan to mitigate the effects of the Bank Panic of 1907. Roosevelt feared that if he didn’t enlist the influence of the country’s major banker, the crisis would be even longer and more disastrous.  It’s an error he might not have made had he foreseen the effect that one particular investment bank would have on America’s economy and political system. There have been hundreds of articles written about the “world’s most powerful investment bank,” or as journalist Matt Taibbi famously called it back in 2010, the “great vampire squid.” That squid is now about to wrap its tentacles around our world in a way previously not imagined by Bill Clinton or George W. Bush. No less than six Trump administration appointments already hail from that single banking outfit. Of those, two will impact your life strikingly: former Goldman partner and soon-to-be Treasury Secretary Steven Mnuchin and incoming top economic adviser and National Economic Council Chair Gary Cohn, former president and “number two” at Goldman.  (The Council he will head has been responsible for “policy-making for domestic and international economic issues.”) Now, let’s take a step into history to get the full Monty on why this matters more than you might imagine.  In New York, circa 1932, then-Governor Franklin Delano Roosevelt announced his bid for the presidency. At the time, our nation was in the throes of the Great Depression.  Goldman Sachs had, in fact, been one of the banks at the core of the infamous crash of 1929 that crippled the financial system and nearly destroyed the economy. It was then run by a dynamic figure, Sidney Weinberg, dubbed “the Politician” by Roosevelt because of his smooth tongue and “Mr. Wall Street” by the New York Times because of his range of connections there. Weinberg quickly grasped that, to have a chance of redeeming his firm’s reputation from the ashes of public opinion, he would need to aim high indeed. So he made himself indispensable to Roosevelt’s campaign for the presidency, soon embedding himself on the Democratic National Campaign Executive Committee. After victory, he was not forgotten. FDR named him to the Business Advisory Council of the Department of Commerce, even as he continued to run Goldman Sachs. He would, in fact, go on to serve as an advisor to five more presidents, while Goldman would be transformed from a boutique banking operation into a global leviathan with a direct phone line to whichever president held office and a permanent seat at the table in political and financial Washington. Now, let’s jump forward to the 1990s when Robert Rubin, co-chairman of Goldman Sachs, took a page from Weinberg’s playbook.  He recognized the potential in a young, charismatic governor from Arkansas with a favorable attitude toward banks. Since Bill Clinton was far less well known than FDR had been, Rubin didn’t actually cozy up to him from the get-go. It was another Goldman Sachs executive, Ken Brody, who introduced them, but Rubin would eventually help Clinton gain Wall Street cred and the kind of funding that would make his successful 1992 run for the presidency possible.  Those were favors that the new president wouldn’t forget. As a reward, and because he felt comfortable with Rubin’s economic philosophy, Clinton created a special post just for him: first chair of the new National Economic Council. It was then only a matter of time until he was elevated to Treasury Secretary. In that position, he would accomplish something Ronald Reagan ― the first president to appoint a Treasury Secretary directly from Wall Street (former CEO of Merrill Lynch Donald Regan) ― and George H.W. Bush failed to do.  He would get the Glass-Steagall Act of 1933 repealed by hustling President Clinton into backing such a move. FDR had signed the act in order to separate investment banks from commercial banks, ensuring that risky and speculative banking practices would not be funded with the deposits of hard-working Americans. The act did what it was intended to do.  It inoculated the nation against the previously reckless behavior of its biggest banks. Rubin, who had left government service six months earlier, wasn’t even in Washington when, on November 12, 1999, Clinton signed the Gramm-Leach-Bliley Act that repealed Glass-Steagall. He had, however, become a board member of Citigroup, one of the key beneficiaries of that repeal, about two weeks earlier. As Treasury Secretary, Rubin also helped craft the North American Free Trade Agreement (NAFTA). He subsequently convinced both President Clinton and Congress to raid U.S. taxpayer coffers to “help” Mexico when its banking system and peso crashed thanks to NAFTA.  In reality, of course, he was lending a hand to American banks with exposure in Mexico.  The subsequent $25 billion bailout would protect Goldman Sachs, as well as other big Wall Street banks, from losing boatloads of money. Think of it as a test run for the great bailout of 2008. A World Made by and for Goldman Sachs Moving on to more recent history, consider a moment when yet another Goldmanite was at the helm of the economy.  From 1970 to 1973, Henry (“Hank”) Paulson had worked in various positions in the Nixon administration. In 1974, he joined Goldman Sachs, becoming its chairman and CEO in 1999.  I was at Goldman at the time.  (I left in 2002.)  I remember the constant internal chatter about whether an investment bank like Goldman could continue to compete against the super banks that the Glass-Steagall repeal had created. The buzz was that if Goldman and similar investment banks were allowed to borrow more against their assets (“leverage themselves” in banking-speak), they wouldn’t need to use individual deposits as collateral for their riskier deals. In 2004, Paulson helped convince the Securities and Exchange Commission (SEC) to change its regulations so that investment banks could operate as if they had the kind of collateral or backing for their trades that goliaths like Citigroup and JPMorgan Chase had. As a result, Goldman Sachs, Lehman Brothers, and Bear Stearns, to name three that would become notorious in the economic meltdown only four years later (and all ones for which I once worked) promptly leveraged themselves to the hilt. As they were doing so, George W. Bush made Paulson his third and final Treasury Secretary.  In that capacity, Paulson managed to completely ignore the crisis brewing as a direct result of the repeal of Glass-Steagall, the one I predicted was coming in Other People’s Money, the book I wrote when I left Goldman. In 2006, Paulson was questioned on his obvious conflicts of interest and responded, “Conflicts are a fact of life in many, if not most, institutions, ranging from the political arena and government to media and industry. The key is how we manage them.” At the time, I wrote, “The question isn’t how it’s a conflict of interest for Paulson to preside over our country’s economy but how it’s not?” For men like Paulson, after all, such conflicts don’t just involve their business holdings.  They also involve the ideology associated with those holdings, which for him at that time came down to a deep belief in pursuing the full-scale deregulation of banking. Paulson was, of course, Treasury Secretary for the period in which the 2008 financial crisis was brewing and then erupted. When it happened, he was the one who got to decide which banks survived and which died. Under his ministrations, Lehman Brothers died; Bear Stearns was given to JPMorgan Chase (along with plenty of government financial support); and you won’t be surprised to learn that Goldman Sachs thrived.  While designing that outcome under the pressure of the moment, Paulson pled with Nancy Pelosi to press the Democrats in the House of Representatives to support a staggering $700 billion bailout.  All those taxpayer dollars went with the 2008 Emergency Financial Stability Act that would save the banking system (under the auspices of saving the economy) and leave it resplendently triumphant, bonuses included), even as foreclosures rose by 21% the following year. Once again, it was a world made by and for Goldman Sachs. Goldman Back in the (White) House Running for office as an outsider is one thing. Instantly inviting Wall Street into that office once you arrive is another. Now, it seems that Donald Trump is bringing us the newest chapter in the long-running White House-Goldman Sachs saga. And count on Steven Mnuchin and Gary Cohn to offer a few fresh wrinkles on that old alliance. Cohn was one of the partners who ran the Fixed Income, Currency and Commodity (FICC) division of Goldman. It was the one that benefited the most from leverage, trading, and the complexity of Wall Street’s financial concoctions like collateralized debt obligations (CDOs) stuffed with derivatives attached to subprime mortgages. You could say, it was leverage that helped propel Cohn up the Goldman food chain. Steven Mnuchin has proven particularly adept at understanding such concoctions. He left Goldman in 2002.  In 2004, with two other ex-Goldman partners, he formed the hedge fund Dune Capital Management.  In the wake of the 2008 financial crisis, Dune went shopping, as Wall Street likes to do, for cheap buys it could convert into big profits. Mnuchin and his pals found the perfect prey in a Pasadena-based bank, IndyMac, that had failed in July 2008 before the financial crisis kicked into high gear, and had been seized by the Federal Deposit Insurance Corporation (FDIC).  They would pick up its assets on the cheap. At his confirmation hearings, Mnuchin downplayed his role in throwing homeowners (including members of the military) out of their heavily mortgaged homes as a result of that purchase. He cast himself instead as a genuine hero, the guy who convened a cadre of financial sharks to help, not harm, the bank’s customers who, without their benevolence, would have fared so much worse. He looked deeply earnest as he spoke of his role as the savior of the common ― or perhaps in the age of Trump “forgotten” ― man and woman. Maybe he even believed it. But the philosophy of swooping in, attacking an IndyMac-like target of opportunity and converting it into a fortune for himself (and problems for everyone else), has been a hallmark of his career. To transfer this version of over-amped 1% opportunism to the halls of political power is certainly a new definition of, in Trumpian terms, giving the government back to “the people.” Perhaps what our new president meant was “the people at Goldman Sachs.” Think of it, in any case, as the supercharging of a vulture mentality in a designer suit, the very attitude that once fueled the rise to power of Goldman Sachs. Mnuchin repeatedly blamed the FDIC and other government agencies for not helping him help homeowners. “In the press it has been said that I ran a ‘foreclosure machine,’” he said, “On the contrary, I was committed to loan modifications intended to stop foreclosures. I ran a ‘Loan Modification Machine.’ Whenever we could do loan modifications we did them, but many times, the FDIC, FNMA, FHLMC, and bank trustees imposed strict rules governing the processing of these loans.” Nothing, that is, was or ever is his fault ― reflecting his inability to take the slightest responsibility for his undeniable role in kicking people out of their homes when they could have remained.  It’s undoubtedly the perfect trait for a Treasury secretary in a government of the 1% of the 1%. Mnuchin also blamed the Federal Reserve for suggesting that the Volcker Rule ― part of the Dodd-Frank Act of 2010 designed to limit risky trading activities ― was harming bank liquidity and could be a problem. The way he did that was typically slick. He claimed to support the Volcker Rule, even as he underscored the Fed’s concern with it. In this way, he managed both to make himself look squeaky clean and very publicly open the door to a possible Trumpian “revision” of that rule that would be aimed at weakening its intent and once again deregulating bank trading activities. Similarly, at those confirmation hearings he said (as Trump had previously) that we needed to help community banks compete against the bigger ones through less onerous regulations. Even though this may indeed be true, it is also guaranteed to be another bait-and-switch move likely to lead to the deregulation of the big banks, too, ultimately rendering them even bigger and more dangerous not just to those community banks but to all of us. Indeed, any proposition to reduce the size of big banks was sidestepped. Although Mnuchin did say that four monster banks shouldn’t run the country, he didn’t say that they should be broken up. He won’t. Nor will Cohn. In response to a question from Democratic Senator Maria Cantwell, he added, “No, I don’t support going back to Glass-Steagall as is. What we’ve talked about with the president-elect is that perhaps we need a twenty-first-century Glass-Steagall. But, no I don’t support taking a very old law and saying we should adhere to it as is.” So, although the reinstatement of Glass-Steagall was part of the 2016 Republican election platform, it’s likely to prove just another of Trump’s many tactics to gain votes ― in this case, from Bernie Sanders supporters and libertarians who see too-big-to-fail institutions and a big-bank bailout policy as wrong and dangerous. Rest assured, though, Mnuchin and his Goldman Sachs pals will allow the largest Wall Street players to remain as virulent and parasitic as they are now, if not more so. Goldman itself just announced that it was the world’s top merger and acquisitions adviser for the sixth consecutive year. In other words, the real deal-maker isn’t the former ruler of The Celebrity Apprentice, but Goldman Sachs. The government might change, but Goldman stays the same. And the traffic pile up of Goldman personalities in Trump’s corner made their fortunes doing deals ― and not the kind that benefited the public either. A former Goldman colleague recently asked me whether it was just possible that Mnuchin was a good person. I can’t answer that. It’s something only he knows for sure. But no matter how earnest or sympathetic to the little guy he tried to be before that Senate confirmation committee, I do know one thing: he’s also a shark. And sharks do what they’re best at and what’s best for them. They smell blood in the water and go in for the kill. Think of it as the Goldman Sachs effect.  In the waters of the Trump-Goldman era, don’t doubt for a second that the blood will be our own. Nomi Prins, a TomDispatch regular, is the author of six books. Her most recent is All the Presidents’ Bankers: The Hidden Alliances That Drive American Power (Nation Books). She is a former Wall Street executive. Special thanks go to researcher Craig Wilson for his superb work on this piece. Follow TomDispatch on Twitter and join us on Facebook. Check out the newest Dispatch Book, John Feffer’s dystopian novel Splinterlands, as well as Nick Turse’s Next Time They’ll Come to Count the Dead, and Tom Engelhardt’s latest book, Shadow Government: Surveillance, Secret Wars, and a Global Security State in a Single-Superpower World. -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

30 января, 06:09

The Goldman Sachs Effect

Cross-posted with TomDispatch.com Irony isn’t a concept with which President Donald J. Trump is familiar. In his Inaugural Address, having nominated the wealthiest cabinet in American history, he proclaimed, “For too long, a small group in our nation’s capital has reaped the rewards of government while the people have borne the cost. Washington flourished ― but the people did not share in its wealth.”  Under Trump, an even smaller group will flourish ― in particular, a cadre of former Goldman Sachs executives. To put the matter bluntly, two of them (along with the Federal Reserve) are likely to control our economy and financial system in the years to come. Infusing Washington with Goldman alums isn’t exactly an original idea. Three of the last four presidents, including The Donald, have handed the wheel of the U.S. economy to ex-Goldmanites. But in true Trumpian style, after attacking Hillary Clinton for her Goldman ties, he wasn’t satisfied to do just that.  He had to do it bigger and better.  Unlike Bill Clinton and George W. Bush, just a sole Goldman figure lording it over economic policy wasn’t enough for him. Only two would do. The Great Vampire Squid Revisited Whether you voted for or against Donald Trump, whether you’re gearing up for the revolution or waiting for his next tweet to drop, rest assured that, in the years to come, the ideology that matters most won’t be that of the “forgotten” Americans of his Inaugural Address. It will be that of Goldman Sachs and it will dominate the domestic economy and, by extension, the global one. At the dawn of the twentieth century, when President Teddy Roosevelt governed the country on a platform of trust busting aimed at reducing corporate power, even he could not bring himself to bust up the banks.  That was a mistake born of his collaboration with the financier J.P. Morgan to mitigate the effects of the Bank Panic of 1907. Roosevelt feared that if he didn’t enlist the influence of the country’s major banker, the crisis would be even longer and more disastrous.  It’s an error he might not have made had he foreseen the effect that one particular investment bank would have on America’s economy and political system. There have been hundreds of articles written about the “world’s most powerful investment bank,” or as journalist Matt Taibbi famously called it back in 2010, the “great vampire squid.” That squid is now about to wrap its tentacles around our world in a way previously not imagined by Bill Clinton or George W. Bush. No less than six Trump administration appointments already hail from that single banking outfit. Of those, two will impact your life strikingly: former Goldman partner and soon-to-be Treasury Secretary Steven Mnuchin and incoming top economic adviser and National Economic Council Chair Gary Cohn, former president and “number two” at Goldman.  (The Council he will head has been responsible for “policy-making for domestic and international economic issues.”) Now, let’s take a step into history to get the full Monty on why this matters more than you might imagine.  In New York, circa 1932, then-Governor Franklin Delano Roosevelt announced his bid for the presidency. At the time, our nation was in the throes of the Great Depression.  Goldman Sachs had, in fact, been one of the banks at the core of the infamous crash of 1929 that crippled the financial system and nearly destroyed the economy. It was then run by a dynamic figure, Sidney Weinberg, dubbed “the Politician” by Roosevelt because of his smooth tongue and “Mr. Wall Street” by the New York Times because of his range of connections there. Weinberg quickly grasped that, to have a chance of redeeming his firm’s reputation from the ashes of public opinion, he would need to aim high indeed. So he made himself indispensable to Roosevelt’s campaign for the presidency, soon embedding himself on the Democratic National Campaign Executive Committee. After victory, he was not forgotten. FDR named him to the Business Advisory Council of the Department of Commerce, even as he continued to run Goldman Sachs. He would, in fact, go on to serve as an advisor to five more presidents, while Goldman would be transformed from a boutique banking operation into a global leviathan with a direct phone line to whichever president held office and a permanent seat at the table in political and financial Washington. Now, let’s jump forward to the 1990s when Robert Rubin, co-chairman of Goldman Sachs, took a page from Weinberg’s playbook.  He recognized the potential in a young, charismatic governor from Arkansas with a favorable attitude toward banks. Since Bill Clinton was far less well known than FDR had been, Rubin didn’t actually cozy up to him from the get-go. It was another Goldman Sachs executive, Ken Brody, who introduced them, but Rubin would eventually help Clinton gain Wall Street cred and the kind of funding that would make his successful 1992 run for the presidency possible.  Those were favors that the new president wouldn’t forget. As a reward, and because he felt comfortable with Rubin’s economic philosophy, Clinton created a special post just for him: first chair of the new National Economic Council. It was then only a matter of time until he was elevated to Treasury Secretary. In that position, he would accomplish something Ronald Reagan ― the first president to appoint a Treasury Secretary directly from Wall Street (former CEO of Merrill Lynch Donald Regan) ― and George H.W. Bush failed to do.  He would get the Glass-Steagall Act of 1933 repealed by hustling President Clinton into backing such a move. FDR had signed the act in order to separate investment banks from commercial banks, ensuring that risky and speculative banking practices would not be funded with the deposits of hard-working Americans. The act did what it was intended to do.  It inoculated the nation against the previously reckless behavior of its biggest banks. Rubin, who had left government service six months earlier, wasn’t even in Washington when, on November 12, 1999, Clinton signed the Gramm-Leach-Bliley Act that repealed Glass-Steagall. He had, however, become a board member of Citigroup, one of the key beneficiaries of that repeal, about two weeks earlier. As Treasury Secretary, Rubin also helped craft the North American Free Trade Agreement (NAFTA). He subsequently convinced both President Clinton and Congress to raid U.S. taxpayer coffers to “help” Mexico when its banking system and peso crashed thanks to NAFTA.  In reality, of course, he was lending a hand to American banks with exposure in Mexico.  The subsequent $25 billion bailout would protect Goldman Sachs, as well as other big Wall Street banks, from losing boatloads of money. Think of it as a test run for the great bailout of 2008. A World Made by and for Goldman Sachs Moving on to more recent history, consider a moment when yet another Goldmanite was at the helm of the economy.  From 1970 to 1973, Henry (“Hank”) Paulson had worked in various positions in the Nixon administration. In 1974, he joined Goldman Sachs, becoming its chairman and CEO in 1999.  I was at Goldman at the time.  (I left in 2002.)  I remember the constant internal chatter about whether an investment bank like Goldman could continue to compete against the super banks that the Glass-Steagall repeal had created. The buzz was that if Goldman and similar investment banks were allowed to borrow more against their assets (“leverage themselves” in banking-speak), they wouldn’t need to use individual deposits as collateral for their riskier deals. In 2004, Paulson helped convince the Securities and Exchange Commission (SEC) to change its regulations so that investment banks could operate as if they had the kind of collateral or backing for their trades that goliaths like Citigroup and JPMorgan Chase had. As a result, Goldman Sachs, Lehman Brothers, and Bear Stearns, to name three that would become notorious in the economic meltdown only four years later (and all ones for which I once worked) promptly leveraged themselves to the hilt. As they were doing so, George W. Bush made Paulson his third and final Treasury Secretary.  In that capacity, Paulson managed to completely ignore the crisis brewing as a direct result of the repeal of Glass-Steagall, the one I predicted was coming in Other People’s Money, the book I wrote when I left Goldman. In 2006, Paulson was questioned on his obvious conflicts of interest and responded, “Conflicts are a fact of life in many, if not most, institutions, ranging from the political arena and government to media and industry. The key is how we manage them.” At the time, I wrote, “The question isn’t how it’s a conflict of interest for Paulson to preside over our country’s economy but how it’s not?” For men like Paulson, after all, such conflicts don’t just involve their business holdings.  They also involve the ideology associated with those holdings, which for him at that time came down to a deep belief in pursuing the full-scale deregulation of banking. Paulson was, of course, Treasury Secretary for the period in which the 2008 financial crisis was brewing and then erupted. When it happened, he was the one who got to decide which banks survived and which died. Under his ministrations, Lehman Brothers died; Bear Stearns was given to JPMorgan Chase (along with plenty of government financial support); and you won’t be surprised to learn that Goldman Sachs thrived.  While designing that outcome under the pressure of the moment, Paulson pled with Nancy Pelosi to press the Democrats in the House of Representatives to support a staggering $700 billion bailout.  All those taxpayer dollars went with the 2008 Emergency Financial Stability Act that would save the banking system (under the auspices of saving the economy) and leave it resplendently triumphant, bonuses included), even as foreclosures rose by 21% the following year. Once again, it was a world made by and for Goldman Sachs. Goldman Back in the (White) House Running for office as an outsider is one thing. Instantly inviting Wall Street into that office once you arrive is another. Now, it seems that Donald Trump is bringing us the newest chapter in the long-running White House-Goldman Sachs saga. And count on Steven Mnuchin and Gary Cohn to offer a few fresh wrinkles on that old alliance. Cohn was one of the partners who ran the Fixed Income, Currency and Commodity (FICC) division of Goldman. It was the one that benefited the most from leverage, trading, and the complexity of Wall Street’s financial concoctions like collateralized debt obligations (CDOs) stuffed with derivatives attached to subprime mortgages. You could say, it was leverage that helped propel Cohn up the Goldman food chain. Steven Mnuchin has proven particularly adept at understanding such concoctions. He left Goldman in 2002.  In 2004, with two other ex-Goldman partners, he formed the hedge fund Dune Capital Management.  In the wake of the 2008 financial crisis, Dune went shopping, as Wall Street likes to do, for cheap buys it could convert into big profits. Mnuchin and his pals found the perfect prey in a Pasadena-based bank, IndyMac, that had failed in July 2008 before the financial crisis kicked into high gear, and had been seized by the Federal Deposit Insurance Corporation (FDIC).  They would pick up its assets on the cheap. At his confirmation hearings, Mnuchin downplayed his role in throwing homeowners (including members of the military) out of their heavily mortgaged homes as a result of that purchase. He cast himself instead as a genuine hero, the guy who convened a cadre of financial sharks to help, not harm, the bank’s customers who, without their benevolence, would have fared so much worse. He looked deeply earnest as he spoke of his role as the savior of the common ― or perhaps in the age of Trump “forgotten” ― man and woman. Maybe he even believed it. But the philosophy of swooping in, attacking an IndyMac-like target of opportunity and converting it into a fortune for himself (and problems for everyone else), has been a hallmark of his career. To transfer this version of over-amped 1% opportunism to the halls of political power is certainly a new definition of, in Trumpian terms, giving the government back to “the people.” Perhaps what our new president meant was “the people at Goldman Sachs.” Think of it, in any case, as the supercharging of a vulture mentality in a designer suit, the very attitude that once fueled the rise to power of Goldman Sachs. Mnuchin repeatedly blamed the FDIC and other government agencies for not helping him help homeowners. “In the press it has been said that I ran a ‘foreclosure machine,’” he said, “On the contrary, I was committed to loan modifications intended to stop foreclosures. I ran a ‘Loan Modification Machine.’ Whenever we could do loan modifications we did them, but many times, the FDIC, FNMA, FHLMC, and bank trustees imposed strict rules governing the processing of these loans.” Nothing, that is, was or ever is his fault ― reflecting his inability to take the slightest responsibility for his undeniable role in kicking people out of their homes when they could have remained.  It’s undoubtedly the perfect trait for a Treasury secretary in a government of the 1% of the 1%. Mnuchin also blamed the Federal Reserve for suggesting that the Volcker Rule ― part of the Dodd-Frank Act of 2010 designed to limit risky trading activities ― was harming bank liquidity and could be a problem. The way he did that was typically slick. He claimed to support the Volcker Rule, even as he underscored the Fed’s concern with it. In this way, he managed both to make himself look squeaky clean and very publicly open the door to a possible Trumpian “revision” of that rule that would be aimed at weakening its intent and once again deregulating bank trading activities. Similarly, at those confirmation hearings he said (as Trump had previously) that we needed to help community banks compete against the bigger ones through less onerous regulations. Even though this may indeed be true, it is also guaranteed to be another bait-and-switch move likely to lead to the deregulation of the big banks, too, ultimately rendering them even bigger and more dangerous not just to those community banks but to all of us. Indeed, any proposition to reduce the size of big banks was sidestepped. Although Mnuchin did say that four monster banks shouldn’t run the country, he didn’t say that they should be broken up. He won’t. Nor will Cohn. In response to a question from Democratic Senator Maria Cantwell, he added, “No, I don’t support going back to Glass-Steagall as is. What we’ve talked about with the president-elect is that perhaps we need a twenty-first-century Glass-Steagall. But, no I don’t support taking a very old law and saying we should adhere to it as is.” So, although the reinstatement of Glass-Steagall was part of the 2016 Republican election platform, it’s likely to prove just another of Trump’s many tactics to gain votes ― in this case, from Bernie Sanders supporters and libertarians who see too-big-to-fail institutions and a big-bank bailout policy as wrong and dangerous. Rest assured, though, Mnuchin and his Goldman Sachs pals will allow the largest Wall Street players to remain as virulent and parasitic as they are now, if not more so. Goldman itself just announced that it was the world’s top merger and acquisitions adviser for the sixth consecutive year. In other words, the real deal-maker isn’t the former ruler of The Celebrity Apprentice, but Goldman Sachs. The government might change, but Goldman stays the same. And the traffic pile up of Goldman personalities in Trump’s corner made their fortunes doing deals ― and not the kind that benefited the public either. A former Goldman colleague recently asked me whether it was just possible that Mnuchin was a good person. I can’t answer that. It’s something only he knows for sure. But no matter how earnest or sympathetic to the little guy he tried to be before that Senate confirmation committee, I do know one thing: he’s also a shark. And sharks do what they’re best at and what’s best for them. They smell blood in the water and go in for the kill. Think of it as the Goldman Sachs effect.  In the waters of the Trump-Goldman era, don’t doubt for a second that the blood will be our own. Nomi Prins, a TomDispatch regular, is the author of six books. Her most recent is All the Presidents’ Bankers: The Hidden Alliances That Drive American Power (Nation Books). She is a former Wall Street executive. Special thanks go to researcher Craig Wilson for his superb work on this piece. Follow TomDispatch on Twitter and join us on Facebook. Check out the newest Dispatch Book, John Feffer’s dystopian novel Splinterlands, as well as Nick Turse’s Next Time They’ll Come to Count the Dead, and Tom Engelhardt’s latest book, Shadow Government: Surveillance, Secret Wars, and a Global Security State in a Single-Superpower World. -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

23 января, 00:01

Orwell, Hitler And Trump

Last week, I reached for my Philip Roth ― his splendid novel, The Plot Against America. This week, I reached for my George Orwell. In 1946, as Europe was digging out from the ruin of World War II – a genuine case of mass carnage as opposed to Donald Trump’s fantasy carnage – Orwell wrote the classic essay on the seductions of propaganda, “Politics and the English Language.” Much of the essay, widely assigned in English classes, warns how stale writing leads to sloppy thinking. But the most original part is Orwell’s evisceration of propaganda. Combined with his great novel 1984, written in 1949 as a dystopian warning about the way totalitarian practice becomes internalized in totalitarian thinking, these two great works gave us the adjective, Orwellian. In 1984, we learned the official slogans of the Party: “War is Peace. Freedom is Slavery. Ignorance is Strength,” only slight parodies of communism and Nazism. “Freedom is Slavery” was not far from the infamous greeting at the gates of Auschwitz, Arbeit Macht Frei. And Ignorance is Strength seems to be Donald Trump’s credo and operating premise — ignorance for both himself and his public. Orwell’s target was the prettified euphemism, used mostly by extreme leftwing and rightwing parties and governments. If people could be persuaded to accept the re-framing, they might well alter their conception of reality. In “Politics and the English Language,” Orwell made great sport of pretentious writing and mixed metaphors, such as “The capitalist octopus has sung its swan song.” But he was dead serious about the political point. He wrote:  Defenseless villages are bombed from the air, their inhabitants driven out into the countryside, the cattle machine-gunned, the huts sent on fire with incendiary bullets: this is called pacification. Millions of peasants are robbed of their land and sent trudging along the roads with no more than they can carry: this is called transfer of population… Note that Orwell was writing two full decades before the Vietnam War. Even before the advent of Donald Trump, the misuse of language in our own day has been in many respects more insidious and more corrosive than the plague against which Orwell was warning. Orwell’s examples came from either totalitarian governments or far-left and far-right parties in the democracies. In America, a democracy, both major parties have increasingly used Orwellian language, Republicans far more than Democrats. Trump has taken the maneuver to a whole new low. But the earlier Orwellian efforts softened the ground. There was a time when most laws had descriptive or technical names, such as the Glass-Steagall Act, the National Labor Relations Act, or the Elementary and Secondary Education Act. Since George W. Bush, pieces of legislation have been treated as branding and marketing opportunities. After the attacks of September 11, 2001, The Bush Administration hastily assembled a wish list of every over-zealous prosecutor and surveillance agent. The initials of the legislation were tortured until they spelled out the U.S.A. P.A.T.R.I.O.T Act, the Patriot Act for short. What patriot could be against the Patriot Act? And speaking of torture, that activity, prohibited by the Geneva Conventions, was rebranded as enhanced interrogation. Sending American captives off to prisons in allied nations where there were no limits on torture was called a rendition. If a document was censored, that was now termed redacted. Even the mainstream press, shamefully, has succumbed to that usage. As Orwell would have appreciated, “censored,” is plain English. Censorship sounds like something we might want to oppose or at least suspect. “Redacted” is a bland, unfamiliar and bureaucratic word that suggests a neutral and presumably defensible process. And the Obama Administration found the word just as convenient as Cheney, Bush and company did. After the USA Patriot Act, it became standard procedure for both parties to give laws propagandistic names, though the Republicans were the repeat offenders. One of the worst pieces of bipartisan education legislation ever, later repudiated by both parties because of its over-reliance on teach-to-the-test, was called “The No Child Left Behind Act.” (Who could be against that?) Republican advocates of school vouchers, mindful of the well-established support for public schools, began rebranding them as the more sinister sounding “government schools.” When President George W. Bush sponsored a tax-subsidized drug insurance program run by private insurance companies, he made sure to brand it “Medicare Part D,” since Medicare was a broadly supported public program ― even though his drug program was pure windfall to the drug industry and had nothing whatever to do with Medicare. This may seem like small beer, but it is one of several trends on the use of language that has misled and cheapened public discourse ― and laid the ground for Trumpism. At the extreme, the trend feeds the ability of demagogues to persuade citizens that up is down, or black is white. Fox News, the most flagrantly biased of the cable channels, pioneered the trend with its slogan, “Fair and Balanced.” As any serious person knows, Fox is a propaganda organ, while the reputable news organs, from the New York Times to NPR, really do make an effort to separate fact from opinion. Long before Trump, the “mainstream” Republican Party made lies a staple of its arsenal, from its lies about Obamacare to its bogus budget numbers to its false contentions of fraudulent voting. Trump has embellished this technique by lying, then accusing his critics of lying, until the debate is hopelessly scrambled. Trump manufactures phony stories, then accuses the media of “fake news.” Hitler was the first to describe the technique of repeating a lie so often that people would come to believe it. He called it the Big Lie. From his denial of climate change to his denial that Obama was born in Hawaii, Trump has dusted off the Big Lie. But then he goes classic Big Liars one better―by denying the denial. As Jonathan Swift wrote in 1710, “Falsehood flies, and truth comes limping after it, so that when men come to be undeceived, it is too late.” (A version misattributed to Mark Twain has it that “a lie is halfway around the world while the truth is putting its boots on.”) You get the point. Trump’s strategy is to flood the zone — to proliferate so many lies that by the time one lie is rebutted he has put out several more, and he seems to believe even the lies that contradict previous lies. Ignorance really is Trump’s strength. In his Inaugural Address, Trump claimed that America is succumbing to a horrible crime wave, when if fact serious crime is at a 30-year low. Republican demonizers of the Affordable Care Act bemoan the high out-of-pocket expenses, when in fact all the Republican replacements would raise deductibles and co-pays. And so on. Trump has resurrected the Big Lie. But, pathetically, he also resorts to the Little Lie. On his first full day in office Trump’s main concern was whether his was bigger―his inaugural crowd. Though it was easily verified that Obama’s inaugural had a larger crowd, as did the women’s march the next day after Trump’s show, a livid Trump sent out his press secretary to rail at the press for understating Trump’s size. The press spokesman, Sean Spicer, himself told at least seven easily verifiable lies. I am feeling a little better than I did on Inauguration Day, in part because of the good cheer and political resolve modeled at the several women’s marches ― but also because you can sense the wheels starting to come off the Trump bus. Call it the New Separation of Powers. Trump’s inner circle is a snake pit of intrigue between the likes of Bannon, Priebus, and Trump’s son-in-law Jared Kushner. Trump is at odds with senior members of his own cabinet, who are at odds with each other. Trump’s ad libs, like his abrupt support for universal health coverage, regularly cut the legs out from under his Republican Congress. Trump may wish he were a total dictator, but this is still a democracy. Lies can work during campaigns but at some point, when you try to govern, reality has a way of intruding. Eventually, the truth does get its boots on.   Robert Kuttner is co-editor of The American Prospect and professor at Brandeis University’s Heller School. His latest book is Debtors’ Prison: The Politics of Austerity Versus Possibility.  Like Robert Kuttner on Facebook.  function onPlayerReadyVidible(e){'undefined'!=typeof HPTrack&&HPTrack.Vid.Vidible_track(e)}!function(e,i){if(e.vdb_Player){if('object'==typeof commercial_video){var a='',o='m.fwsitesection='+commercial_video.site_and_category;if(a+=o,commercial_video['package']){var c='&m.fwkeyvalues=sponsorship%3D'+commercial_video['package'];a+=c}e.setAttribute('vdb_params',a)}i(e.vdb_Player)}else{var t=arguments.callee;setTimeout(function(){t(e,i)},0)}}(document.getElementById('vidible_1'),onPlayerReadyVidible); -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

19 января, 19:45

Mnuchin weathers attacks on funds, foreclosures

Democrats went after Trump’s pick for Treasury secretary but barely laid a glove on him.

16 января, 23:23

Who Killed The Middle Class?

It's becoming clear that our Middle Class -- the midsection of U.S. earners and consumers -- has shrunk alarmingly. And this is the main reason for the political polarization today that in the words of journalist Christopher Hedges, has driven the Republican Party "insane". Our society has become so polarized that Donald Trump needed the support of the Ku Klux Klan, white nationalists, and Vladimir Putin to become President-Elect. Whereas it has been such middle class values of probity, honesty and science, first satirized in Moliere's Le Bourgeois gentilhomme, (The Middle Class Gentleman), that has been the stabilizing influence in American politics since WWII. The main difference between poverty and middle class and between middle class and wealthy, noted one researcher, "is belief in, and planning for, moving up as a working assumption." A report from the Pew Research Center found that, for the first time since the 1970s, families defined as "middle income" are actually in a minority in the US - squeezed from both ends by an enlarged poverty-stricken group below them, and an enriched group above them. Graph: Fortune Magazine This graph shows the shrinkage of those defined as middle class from 1979 to 2014 -- from 38.8 percent (gray line) to 32.09 percent (blue line), according to a Pew research study. The shrinkage reads like a textbook example of the future that French economist Thomas Piketty predicts for the world in his best-selling, Capital in the Twenty-First Century. In 1971, there were 80 million households in the US defined as middle income - compared with a combined 52 million in the groups above and below. Now, there are 120 million middle-class families, but 121 million rich and poor - "A demographic shift that could signal a tipping point," says Pew. So who or what is at fault for the result; record income inequality last reached in 1929 that led to the Great Depression? We can fault President Reagan, who was first to break the unions with his firing of all federally employed Air Traffic Controllers that belonged to PATCO, the traffic controllers union. Or, conservatives' espousal of the Reagan motto, "government is the problem," which caused massive downsizing of government regulation, as well as regulators, as well as the ensuing de-regulation of whole industries, such as the airlines, telecommunications, and financial markets. But the truth may be much closer to the present -- in fact, from the Presidency of Bill Clinton. For it was President Clinton who veered so far to the right in his 1966 reelection campaign (thanks to Republican strategist Dick Morris) that he preempted the Republican platform by continuing to deregulate the financial markets with the repeal of the Glass-Steagall Act that separated FDIC depositor-insured banking from higher risk investment banking, financing the addition of 100,000 more police to combat the drug epidemic, and downsizing poverty programs with welfare reforms that took tens of thousands off the welfare rolls, which required them to take low-paying menial jobs to receive even a limited amount of financial support. The Republicans, as Chris Hedges said, were thus driven politically insane. They no longer had those bread and butter issues (such as law and order, smaller government) that were once their own, which led to formation of the Tea Party, and a new political civil war declared on Big Government ruled by the northern elite that had ruled for so long. It was our 150 year-old Civil War taking a new form, in other words, but with almost the same mix of combatants. Hillary Clinton, unfortunately, wasn't able to break away from the Clinton mix of conservative economics (e.g.,balancing the federal budget) and social liberalism that resulted. The culture wars against abortion, civil rights, and welfare (including Obamacare) were the only issues the Republican Party had left. The result was and is President-elect Trump, an ideologist of neither party. Trump is an advocate of no government, where possible, who can count on the loyalty of only his most trusted associates and family. Sound familiar? It is politics of the tribe, the close=knit family, held by gangsters and Oligarchs, with everyone else to be treated with obfuscation and outright deceptions. Even more significant is the record inequality since 1979, resulting from the loss of those policies that built up the middle class after WWII, policies from the New Deal, such as social security and Medicare, entitlements, unionization of whole industries, leading to the unparalleled prosperity of the 1950s and 60s. So lt us hope a majority of our politicians realize, as a majority of Americans still do, that our prosperity and stability rest on a middle class that hasn't given up hope for a better life. Harlan Green © 2016 Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

05 января, 21:04

More Brilliance from Larry Summers

This post and full archives can be viewed at Trader Scott's Market Blog. The brilliant PHD economist Lawrence Henry "Larry" Summers has come out with a scathing criticism of Donald Trump's economic policy:   “The Navarro-Ross paper is well beyond voodoo economics,” Summers said of the September report on Trump’s growth plans. “The logic of it, the arguments made, are so far out of the mainstream of any kind of responsible economic thinking that they are the economic equivalent of creationism.” Summers dismissed the idea that any tax policy introduced to encourage U.S. companies to repatriate profits would boost investment and hiring.“The vast majority of the companies who have large overseas cash also have substantial amounts of domestic cash,” he said. “The reality is that cash that is brought home will be used to pay dividends, to buy back shares, to engage in mergers and acquisitions, to rearrange the financial chessboard, not to invest in large amounts of new capital. It is a chimera to suppose that there will be large increases in capital investment as a consequence of that repatriation.” Lawrence Henry's amazing analytical abilities regarding economic issues are beyond reproach, so we should all heed his brilliant pronouncements. And since he believes Trump's economic ideas "are so far out of the mainstream of any kind of responsible economic thinking that they are the economic equivalent of creationism", let's take a look at what a "responsible" Harvard PHD economist believes. Larry is one of the founding members of the Committee for the Advancement of Negative Interest Rates. Larry concocted, excuse me, developed this brilliant economic policy with his three brothers, Moe, Curly, and Schemp. And it has certainly been a roaring success worldwide, as can be evidenced by the booming growth in all of the countries which have unleashed, excuse me, enacted his crack economic team's policy. Larry, Moe, Curly, and Schemp also have another foundation - The Society for the Complete Banning of Physical Cash, a.k.a., The War on Cash Society. Henry's magnificent abilities as a hedge fund manager allowed him to have great input into Harvard's endowment fund. Professor Summer's acumen led to a mere $1.8 billion loss in the financial crisis, but who's counting. And Lawrence loves the idea of big banks, and he trusts them to understand complex economic and market situations. In 1998 he testified before the Senate that derivatives regulation wasn't necessary because Wall Street could be trusted to regulate itself - no prob. He also pushed to repeal the Glass-Steagall Act, because, well you know, we can trust Wall Street to regulate itself. So these are the views, theories, and actions of another "responsible" PHD economist who has never accomplished a darn thing in his life.