[Peace-discuss] Decoys?

Wed Mar 18 21:58:27 CDT 2009

[A later version added three important paragraphs to his article, as follows.]

Let’s go after the REAL money given to AIG – the $183 billion! I realize that 
this has already been paid out, and we can’t get it back from the counterparties 
who knew that Alan Greenspan and George Bush and Hank Paulson were steering the 
U.S. economy off a real estate cliff, a derivatives cliff and a 
balance-of-payments cliff all wrapped up into one by betting against 
collateralized debt obligations (CDOs) and insuring these casino bets with AIG. 
That money has been siphoned off from the Treasury fair and square, by putting 
their own proxies in the key government slots, the better to serve them.

So let’s go after them altogether. Sen. Schumer said to the AIG bonus recipients 
that the I.R.S. can go after them and get the money back one way or another. And 
it can indeed go after the $183-billion bailout recipients. All it has to do is 
re-instate the estate tax and raise the marginal income and wealth-tax rates to 
the (already reduced) Clinton-era levels.

The money can be recovered. And that’s just what Mr. Schumer, Mr. Frank and 
others don’t want to see the public discussing. That’s why they’ve diverted 
attention onto this trivia. It’s the time-honored way to get people not to talk 
about the big picture and what’s really important.

[Michael Hudson is a former Wall Street economist. A Distinguished Research 
Professor at University of Missouri, Kansas City (UMKC), he is the author of 
many books, including Super Imperialism: The Economic Strategy of American 
Empire (new ed., Pluto Press, 2002) He can be reached via his website, 
mh at michael-hudson.com]

C. G. Estabrook wrote:
> [Wall Street has the USG (Obama and Bush) enrich them under cover of a 
> financial emergency.  -CGE]
> 
>     The Real AIG Conspiracy
>     Michael Hudson
>     March 18, 2009
> 
> It may seem odd, but the public outrage against $135 million in AIG 
> bonuses is a godsend to Wall Street, AID scoundrels included. How can 
> the media be so preoccupied with the discovery that there is 
> self-serving greed to be found in the financial sector? Every TV channel 
> and every newspaper in the country, from right to left, have made these 
> bonuses the lead story over the past two days.
> 
> What is wrong with this picture? Is there not something over-inflated 
> about the outrage led most vociferously by Senator Charles Schumer and 
> Rep. Barney Frank, the two leading shills for the bank giveaways over 
> the past year? And does Pres. Obama perhaps find it convenient that 
> finally, at long last, he has been able to criticize something that he 
> believes Wall Street has done wrong? Even the Wall Street Journal has 
> gotten into the act. The government's takeover of AIG, it pointed out, 
> "uses the firm as a conduit to bail out other institutions." So much 
> more greed is involved than just that of AIG employees. The firm owed 
> much more to other players – abroad as well as on Wall Street – than the 
> assets it had. That is what drove it to insolvency. And popular 
> opposition has been rising to how Mr. Obama and Mr. McCain could have 
> banded together to support the bailout that, in retrospect, amounts to 
> trillions and trillions of dollars thrown "down the drain." Not really 
> down the drain at all, of course – but given to financial speculators on 
> the winning "smart" side of AIG's bad financial gambles.
> 
> "The Washington crowd wants to focus on bonuses because it aims public 
> anger on private actors," it accused in a March 17 editorial. But 
> instead of explaining that the shift is away from Wall Street grabbers 
> of a thousand times the amount of bonuses being contested, it blames its 
> usual all-purpose bete noire: Congress. Where the right and left differ 
> is just whom the public should be directing its anger at!
> 
> Here's the problem with all the hoopla over the $135 million in AIG 
> bonuses: This sum is only less than 0.1% – one thousandth – of the $183 
> BILLION that the U.S. Treasury gave to AIG as a "pass-through" to its 
> counterparties. This sum, over a thousand times the magnitude of the 
> bonuses on which public attention is conveniently being focused by Wall 
> Street promoters, did not stay with AIG. For over six months, the public 
> media and Congressmen have been trying to find out just where this money 
> DID go. Bloomberg brought a lawsuit to find out. Only to be met with a 
> wall of silence.
> 
> Until finally, on Sunday night, March 15, the government finally 
> released the details. They were indeed highly embarrassing. The largest 
> recipient turned out to be just what earlier financial reporters had 
> said was rumored: Mr. Paulson's own firm, Goldman Sachs, headed the 
> list. It was owed $13 billion in counterparty claims. So here's the 
> picture that's emerging. Last September, Treasury Secretary Paulson, 
> from Goldman Sachs, drew up a terse 3-page memo outlining his bailout 
> proposal. The plan specified that whatever he and other Treasury 
> officials did (thus including his subordinates, also from Goldman 
> Sachs), could not be challenged legally or undone, much less prosecuted. 
> This condition enraged Congress, which rejected the bailout in its first 
> incarnation.
> 
> It now looks as if Mr. Paulson had good reason to put in a fatal legal 
> clause blocking any clawback of funds given by the Treasury to AIG's 
> counterparties. This is where public outrage should be focused.
> 
> Instead, the leading Congressional shepherds of the bailout legislation 
> – along with Mr. Obama, who came out in his final, Friday night 
> presidential debate with Sen. McCain strongly in favor of the bailout in 
> Mr. Paulson's awful "short" version – have been posing as conspicuously 
> as possible for the media to cover a deflected target – the AIG 
> executives receiving bonuses, not the company's counterparties.
> 
> There are two questions that one always must ask when a political 
> operation is being launched. First, cui bono? Who benefits? And second, 
> why now? In my experience, timing almost always is the key to figuring 
> out the dynamics at work.
> 
> Regarding cui bono, what does Sen. Schumer, Rep. Frank, Pres. Obama and 
> other Wall Street sponsors gain from this public outcry? For starters, 
> it depicts them as hard taskmasters of the banking and financial sector, 
> not its lobbyists carrying water for one giveaway after another. So the 
> AIG kafuffle has muddied the water about where their political loyalties 
> really lie. It enables them to strike a misleading pose – and hence to 
> pose as "honest brokers" next time they dishonestly give away the next 
> few trillion dollars to their major sponsors and campaign contributors.
> 
> Regarding the timing, I think I have answered that above. Talking about 
> AIG bonuses has effectively distracted attention from the AIG 
> counterparties who received the $183 billion in Treasury giveaways. The 
> "final" sum to be given to its counterparties has been rumored to be 
> $250 billion, do Sen. Schumer, Rep. Frank and Pres. Obama still have a 
> lot more work to do for Wall Street in the coming year or so.
> 
> To succeed in this work – while mitigating the public outrage already 
> rising against the bad bailouts – they need to strike precisely the pose 
> that they're striking now. It is an exercise in deception.
> 
> The moral should be: The wetter the crocodile tears shed over giving 
> bonuses to AIG individuals (who seem to be largely on the healthy, bona 
> fide insurance side of AIG's business, not its hedge-fund Ponzi-scheme 
> racket), the more they will distract public attention from the $180 
> billion giveaway, and the better they can position themselves to give 
> away yet more government money (Treasury bonds and Federal Reserve 
> deposits) to their favorite financial charities.
> 
>     
> URL of this article: www.globalresearch.ca/index.php?context=va&aid=12784
> 
> 
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