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I had to chortle darkly when I heard that Obama had "chosen" Daley to be his new Chief of Staff (replacement for Rahm Emanuel actually after an interim figure was run off into the sunset) and then my reactions went straight to fear (not as scared since Geithner and Summers were "chosen" as his financial gurus (and isn't Morgan Chase pal Jamie Dimond's Rockefellerian pearl?). As a devoted reader of Driftglass (who has been expecting something like this since Rahm announced his run for mayor of Chicago) I guess I knew this was coming long before they dropped the trial balloon. (Yep. It floated to the top of the . . . .) From a speech given by this Daley in 2009:
All that is required for the Democratic Party to recover its political footing is to acknowledge that the agenda of the party's most liberal supporters has not won the support of a majority of Americans - and, based on that recognition, to steer a more moderate course on the key issues of the day, from health care to the economy to the environment to Afghanistan.
. . . The party's moment of choosing is drawing close. While it may be too late to avoid some losses in 2010, it is not too late to avoid the kind of rout that redraws the political map. The leaders of the Democratic Party need to move back toward the center - and in doing so, set the stage for the many years' worth of leadership necessary to produce the sort of pragmatic change the American people actually want.
Russ Baker has put all the details together for our gentle edification as to exactly where we are now in the process of de-mythication about the USA comprising anything except a very rich, powerful upper class defended by a fear-inspiring, drone-dropping military machine.
So, Chicago is really the stronghold of (what are we calling it now?) democracy? (Emphasis marks added - Ed.)
How can they tell? Oh, he must not have been "Rethuglican Enough?" Daley'll staighten him out. Maybe sell the rest of the nation's parking meters to Dubai for quick commissions?January 7, 2011
A few days ago, the Obama Administration floated a trial balloon to see if there would be any opposition to the appointment of William Daley as the President’s Chief of Staff. There wasn’t, and so they’ve gone ahead and made it official.
That they were concerned about a backlash is evident from the original reporting. Look [1] at the framing in the New York Times:
President Obama has approached William Daley, the brother of Chicago’s mayor and a former commerce secretary, about the possibility of becoming White House chief of staff as one part of a reorganization plan in the West Wing, according to people familiar with the conversation, which took place around the holidays. [emphasis added]Realistically, how many people would be “familiar with the conversation,” besides Obama and Daley, and a small circle around them? And what is the likelihood one of that tiny group would risk banishment for leaking? Pretty remote. Therefore, it’s probable they were trying to gauge any possible problems. And what might those be?
Daley is from the old Chicago political machine. Evidence that it’s kind of a revolving door are that the man Daley would be replacing, Rahm Emanuel, has left the White House in a bid to replace Daley’s brother as mayor of Chicago.
Daley works for JPMorgan Chase. This of course is a bank that already has clout with the administration. The head of JPMorgan Chase, Jamie Dimon, made his name in Chicago, where he got to know Obama — before being picked to run the powerful bank. The Chase-side of JP Morgan bank has long been known as “David Rockefeller’s bank” and the Rockefeller influence has continued after Chase merged with JP Morgan in 2000. Dimon was an early supporter of Obama. Dimon is wired into Treasury Secretary Timothy Geithner, who has had private lunches with Dimon since leaving the New York Federal Reserve Bank and going to Washington.
Rockefeller-led interests have had profound influence with the White House over the years, even shaping many candidates on their way up (including Richard Nixon and Jimmy Carter — whose national security advisers — Henry Kissinger and Zbigniew Brzezinski, respectively — came straight out of the Rockefeller orbit, as well as President Clinton, who, like Carter and Obama, was groomed for power by David Rockefeller’s Trilateral Commission. A recent Rockefeller Foundation Report shows Dimon, President Clinton and Rockefeller Foundation President Judith Rodin together, extolling the virtues of “smart” globalization.
Here’s the more subtle way the Times states what is going on:
While Mr. Obama and Mr. Daley have known one another for years, with Mr. Obama often turning to Mr. Daley for advice in the 2008 presidential campaign, associates said the men were not extraordinarily close. But hiring Mr. Daley, who served as Commerce Secretary under President Bill Clinton, would almost certainly improve icy relations between the Obama administration and business leaders.
And on the Geither/Summers taxpayer-failure front, one of my favorite economists, Simon Johnson, unloads the facts about what's in the making financially for US (emphasis marks added - Ed.):It’s really interesting to witness the reticence of the media to openly discuss corporate muscle and how it might affect our world and our daily lives. They seem to regard it as impolite to even mention such matters, the kind of thing you don’t do in respectable company. Harrumph!Mr. Daley . . . thought the president and Democratic leaders in Congress overreached on some of their priorities in the last two years. “They miscalculated on health care,” Mr. Daley said in an interview last year with The New York Times . . . .
Mr. Daley . . . helped Mr. Clinton pass the North America Free Trade Agreement, which is blamed by many union workers and liberals for helping to move jobs overseas.
Mr. Daley is also the Midwest chairman of JPMorgan Chase & Co., who also serves as the bank’s head of corporate responsibility. If selected to join the Obama administration, his ties to Wall Street are among the elements of his background that would likely be criticized by left-leaning groups.
President Barack Obama is receiving congratulations for moving to the center on the tax agreement with Republicans last week. Both sides think they got something: Democrats feel this will nudge unemployment below 8.5 percent in 2012, helping the president get reelected; Republicans achieved longstanding goals on measures such as the estate tax and think they will get most of the credit for an economic recovery that’s already under way.
The truth is, the deal moved us closer to a fiscal crisis, just as the euro zone now is experiencing.
Who will emerge on top in the U.S. version is harder to predict; at the moment, Republicans have the edge. But it’s not clear even they will be happy with what they wished for - an opportunity to enact massive federal government spending cuts.
The central conceit behind official thinking about fiscal policy on both sides of the aisle is that investors will buy almost all U.S. government debt without blinking an eye or increasing Treasury yields. This is an endearing and heart- warming notion, rather like a seasonal showing of Jimmy Stewart in “It’s a Wonderful Life.”
What it should do is force us to think about how much the world has changed and how antiquated such ideas are today.
The U.S. is steadily losing its global economic and financial predominance. To be sure, we offer the largest amount of government debt on the market, but investors have plenty of choices around the world, both in terms of debt and other assets. The idea that our Treasury market will be buoyed by captive investors, whether the Chinese central bank or anyone else, is quaint and at odds with today’s reality.
Debt Dream
Remember that we run a large current account deficit, so we need to take in new foreign capital every day just to maintain our lifestyle. So this isn’t just about foreigners refusing to understand the American debt dream.
It’s true that the euro zone has had a rocky ride in recent months and we shouldn’t expect those countries to sort out their problems soon. Another round of serious euro sovereign debt issues is likely as we head into the spring.
But the euro leadership will sort itself out; there is too much on the line. A stronger and more Germanic core of the euro zone will establish its fiscal credibility and its resilience.
The key to debt sustainability isn’t how much revenue the government can raise relative to gross domestic product or some other economic characteristic. It’s whether a country has the political will to raise taxes or cut spending when under pressure from the financial markets.
This is where Greece and Ireland were found wanting in 2010; we’ll see how Portugal, Spain, Italy, Belgium and perhaps even France do in 2011. Then it will be the U.S.’s turn.
It’s Easy
The issue isn’t whether we can muster a bipartisan consensus to cut taxes; this is easy to do. But can our politicians agree on what to do when 10-year Treasury yields surge, interest payments soar and there are concerns about the rollover of our relatively short-term government debt?
One response is: The Federal Reserve won’t let this happen and will use another round of quantitative easing or some other innovation to hold down long rates. Maybe so, but 10-year benchmark rates have spiked in the past month or so, and mortgage rates -- presumed to be the Fed’s target -- have gained more than half a percentage point from recent lows.
Some people, like my colleague Joseph Gagnon at the Peterson Institute for International Economics, think this reflects the success of the current round of quantitative easing. Others feel that it shows global sentiment already turning against U.S. fiscal policy. Either way, it suggests the U.S. has only a limited ability to finance its growing debt at very low interest rates.
Three Developments
When this kind of fiscal pressure builds, we typically see three developments. First, there is a fuller accounting of off-balance-sheet and contingent liabilities. We will hear a great deal about what the U.S. government really owes over the next 10 or 20 years in terms of its support for everything from public pensions to banks that are too big to fail.
Second, a state or other entity will get into serious trouble and threaten to default, creating a potential Lehman- type moment. The question is, just how much is the federal government on the hook?
Third, expectations become self-fulfilling. As interest rates rise, fiscal policy makers flounder. Unlike weaker European countries, the U.S. can’t use an outside fiscal authority to break this kind of spiral. Even China, holding perhaps around $2.6 trillion dollars, doesn’t have enough financial firepower to make a difference - and remember that most of its assets are in the very U.S. Treasury securities that will be under pressure.
Two Choices
At this point, we will have only two choices: Raise taxes or cut spending. Given that the Obama administration is unprepared for this scenario, and has no sensible tax-reform plans under way, this gives an opportunity to Republicans intent on big spending cuts. For anyone hoping to “starve the beast,” this will be a historic opportunity.
But there’s a problem. The U.S. government doesn’t take in much tax revenue -- at least 10 percentage points of GDP less than comparable developed economies -- and it also doesn’t spend much except on the military, Social Security and Medicare. Other parts of government spending can be frozen or even slashed, but it just won’t make that much difference.
That means older Americans are going to get squeezed, while our ability to defend ourselves goes into decline. Just because there’s a bipartisan consensus on an idea, such as tax cuts, doesn’t mean it makes sense. Today’s tax cutters have set us up for tomorrow’s fiscal crisis and real damage to U.S. national security.
(Simon Johnson, co-author of 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, is a professor at MIT’s Sloan School of Management and a Bloomberg News columnist. The opinions expressed are his own.)
Wondering yet how we got here? Well, it's been a long road of poor choices based on very bad information (for the lower classes who actually pay the taxes). Raw Story imparts information about one rather large incidence of "bad reporting."Suppressed Details of Criminal Insider Trading Lead Directly into the CIA’s Highest Ranks CIA Executive Director “Buzzy” Krongard managed firm that handled “PUT” options on United Airline StockUpdate: Krongard on Blackwater Advisory Board October 9, 2001 – Although uniformly ignored by the mainstream U.S. media, there is abundant and clear evidence that a number of transactions in financial markets indicated specific (criminal) foreknowledge of the September 11 attacks on the World Trade Center and the Pentagon. In the case of at least one of these trades -- which has left a $2.5 million prize unclaimed -- the firm used to place the “put options” on United Airlines stock was, until 1998, managed by the man who is now in the number three Executive Director position at the Central Intelligence Agency. Until 1997 A.B. “Buzzy” Krongard had been Chairman of the investment bank A.B. Brown. A.B. Brown was acquired by Banker’s Trust in 1997. Krongard then became, as part of the merger, Vice Chairman of Banker’s Trust-AB Brown, one of 20 major U.S. banks named by Senator Carl Levin this year as being connected to money laundering. Krongard’s last position at Banker’s Trust (BT) was to oversee “private client relations.” In this capacity he had direct hands-on relations with some of the wealthiest people in the world in a kind of specialized banking operation that has been identified by the U.S. Senate and other investigators as being closely connected to the laundering of drug money. Krongard joined the CIA in 1998 as counsel to CIA Director George Tenet. He was promoted to CIA Executive Director by President Bush in March of this year. BT was acquired by Deutsche Bank in 1999. The combined firm is the single largest bank in Europe. And, as we shall see, Deutsche Bank played several key roles in events connected to the September 11 attacks.
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AIG Mortgage Bond Insuror Gets $4.3 Billion in New Financing from 36 Banks
Neil Garfield December 29, 2010
EDITOR'S NOTE: This deal was probably easier than it looks. The big question is whether AIG will pursue its claim that the insurance contracts on which it paid were procured by fraud. Neither the "mortgage bonds" nor the "loans" that were "backing" the mortgage bonds were real. Why isn't AIG getting back that money and giving back almost $200 billion to the U.S. taxpayers?
American International Group said on Monday that it had signed $4.3 billion worth of credit deals with 36 lenders — in yet another step by the insurer to get off government life support.In a filing with the Securities and Exchange Commission, A.I.G. disclosed that it had entered into a $1.5 billion credit agreement for three years on Dec. 23 and a $1.5 billion agreement for 364 days. Its subsidiary Chartis will get another $1.3 billion.“This success is another important vote of confidence by the market in A.I.G.,” the company’s chief executive, Robert Benmosche, said in a statement. “These credit facilities, combined with the debt offering and contingent liquidity facility, demonstrate that A.I.G. has momentum and has made substantial and impressive progress this year.”The deals come with several contingencies for the insurer, including an obligation to maintain a specific minimum net worth and to limit its total debt. Another condition of the credit: A.I.G. must repay it credit line with the Federal Reserve Bank of New York.In early December, A.I.G. disclosed in a S.E.C. filing that it had formalized a deal to repay the New York Fed, including some $20 billion of secured debt. The plan also paves the way for Treasury Department to sell its stake in the insurer.“Today’s announcement is a milestone in the government’s long-stated efforts to exit our investments in private companies as soon as practical while protecting taxpayers,” Tim Massad, acting assistant Treasury secretary for financial stability, said in a statement about the A.I.G. regulatory filing.In an effort to pay back taxpayers, A.I.G. has moved to sell assets and raise money over the past six months. The insurer penned a $4.3 billion deal in September to divest AIG Star and AIG Edison life insurance companies. The company has also tapped into the public markets, selling $2 billion of debt on Dec. 2.
2 commenters:
Neva, on December 29, 2010 at 8:57 am said: What makes anybody think that the banks or AIG or our government are telling us the truth. A great deal of this money is phoney money that is made out of thin air by the Federal Reserve. Get rid of the phoney accounting systems in the banks, get rid of the Federal Reserve and give Americans back their homes and their money. http://www.challengingforeclosure.com/ Sirak@challengingforeclosure.com gwen caranchini, on December 29, 2010 at 7:57 am said: We still need to know where every dime of the first money went and where this money is going–we know what somehow this money was used to pay off claims from the banks for the belly up pools. What needs to happen is to make AIG prduce EVERY CLAIM for money for the insured pools to help trace the money. Why is no one asking for this?
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In Money-Changers We Trust
http://www.truthdig.com/report/item/in_money-changers_we_trust_20101228/
Dec 28, 2010
Two years into the Obama presidency and the economic data is still looking grim. Don’t be fooled by the gyrations of the stock market, where optimism is mostly a reflection of the ability of financial corporations—thanks to massive government largesse—to survive the mess they created. The basics are dismal: Unemployment is unacceptably high, the December consumer confidence index is down and housing prices have fallen for four months in a row. The number of Americans living in poverty has never been higher, and a majority in a Washington Post poll said they were worried about making their next mortgage or rent payment. In a parallel universe lives Peter Orszag, President Barack Obama’s former budget director and key adviser, who even faster than his mentor, Robert Rubin, has passed through that revolving platinum door linking the White House with Wall Street. The goal is to use your government position to advance the interests of your future employer, and Orszag and Rubin’s actions in the government and then at Citigroup provide stunning examples of the synergy between big government and high finance. As Bill Clinton’s treasury secretary, Rubin presided over the dismantling of Glass-Steagall, the New Deal legislation that would have prohibited the creation of the too-big-to-fail Citigroup. He was rewarded with a $15-million-a-year job at Citigroup, where he became a leader in the bank’s aggressive move into high-risk ventures. An SEC report in September claimed that Rubin as Citigroup chairman was aware that the bank failed to disclose $40 billion it held in subprime mortgages before the collapse. During those years at Citigroup, Rubin financed the Brookings Institution’s Hamilton Project, an economic policy program, and named Orszag, a Clinton economic adviser, as its director. The Hamilton Project continued to celebrate Rubin’s deregulation philosophy up to the point of utter embarrassment. Clearly, Orszag is not easily embarrassed, for upon taking his new job recently he boasted “I am pleased to be joining Citi, with its unmatched global platform and dedication to providing clients with service and advice.” The most damning comment on this corrupt syndrome was offered by former Citigroup co-chief executive John Reed, who had worked with Rubin to get Glass-Steagall reversed and now is a sharp critic of the result. “We continue to listen to the same people whose errors in judgment were central to the problem,” Reed told Bloomberg News. “I’m astounded because we basically dropped the world’s biggest economy because of an error in bank management.” Reed estimated that the financial deregulation proposals contained in the Dodd-Frank bill and other reforms of the Obama administration represent only 25 percent of the change needed. Advertisement --> google_protectAndRun("render_ads.js::google_render_ad", google_handleError, google_render_ad); The failure to provide serious regulation of the financial industry to avoid future downturns is documented in devastating detail in that Dec. 28 Bloomberg report, written by Christine Harper: “The U.S. government, promising to make the system safer, buckled under many of the financial industry’s protests. Lawmakers spurned changes that would wall off deposit-taking banks from riskier trading. They declined to limit the size of lenders or ban any form of derivatives.” The reason for that failure is obvious from the president’s choice of advisers featuring Rubin acolytes from the Clinton years. Harper writes: “While Obama vowed to change the system, he filled his economic team with people who helped create it,” referring to, among others, Timothy F. Geithner, who had gone from the Clinton Treasury Department to head the New York Fed, where he presided over the salvaging of Citigroup and AIG. As Obama’s treasury secretary he was quick to appoint a Goldman Sachs lobbyist as his chief of staff. Geithner’s subservience to Wall Street was reinforced by White House top economic adviser Lawrence Summers, Rubin’s deputy and then replacement in the Clinton administration who pushed through the repeal of Glass-Steagall and fought against the regulation of derivatives. And with the decisive assistance from both a Republican and Democratic president, all has worked out just as planned for the banks. Harper reports: “The last two years have been the best ever for combined investment-banking and trading revenue at Bank of America Corp., JPMorgan Chase & Co., Citigroup, Goldman Sachs Group Inc., and Morgan Stanley, according to data compiled by Bloomberg.” It’s all wonderfully bipartisan. Recently it was announced that Carlos Gutierrez, commerce secretary under George W. Bush, had been named to a high position at Citigroup. For President Obama, there’s no cause for worry about the loss of indispensable talent from his administration. Orszag’s replacement as head of the Office of Management and Budget, Jacob J. Lew, was both a member of Rubin’s Hamilton Project and a former Citigroup executive—thus ensuring that government of the banks, by the banks, for the banks shall not perish from the Earth.
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