Two Years in Office: Obama, Fiasco President (Part I)
Published in Argenpress
(Argentina) on 01 February 2011
by Juan Luis Berterretche (link to original)
(Argentina) on 01 February 2011
by Juan Luis Berterretche (link to original)
Translated from
by Jessica Moore.
Edited by .
For most of his constituents, the first two years of Barack Obama’s presidency were an unexpected disappointment. Yet when he appointed Timothy Franz Geithner as secretary of the Treasury and kept Robert Gates as secretary of Defense at the beginning of his administration, the fundamental political and economic orientation of his government was defined. From that moment, Wall Street, the Pentagon and the arms industry knew that in the years to come, the party would carry on.
Tim “Derivatives” Geithner
After obtaining his master’s degree in International Economics and East Asian Studies, T. Geithner, then 24 years old, started at Kissinger Associates, where he worked from 1985-1988. Kissinger Associates was the springboard for his entrance into the International Affairs Division of the Treasury Department. From 1988, Tim Geithner worked in various positions in the Treasury Department under three administrations: Reagan, Bush Senior and Clinton. In 1999, at age 38, he was promoted to undersecretary of the Treasury for International Affairs under Treasury Secretaries Robert “Prophet” Rubin and Lawrence Summers. He collaborated with Rubin and Summers to pass the Gramm-Leach-Bliley Act, a financial liberalization law that revoked the Glass-Steagall Act and allowed commercial banks to act as holding companies (financial supermarkets).
The Glass-Steagall Act prohibited banks from simultaneously offering investment banking (stock acquisitions, bonds, securities, mergers, etc.) and commercial banking (deposits, checking accounts, etc.) services, and from affiliating with insurance companies (insurance services and derivatives). The Gramm-Leach-Bliley Act reauthorized the same concoctions that lead to the crash of the stock market in 1929 and the subsequent Great Depression. This placed Geithner among Bill Clinton’s team of neoliberal economists who accelerated financial deregulation.
In 2001, he left the Treasury and joined the Council on Foreign Relations as a senior fellow in the International Economics Department. The Council on Foreign Relations is an independent, nonpartisan organization that integrates prominent U.S. corporations with distinguished political leaders, activists and journalists, both Democrats and Republicans. His entry into the CFR was the impetus for his nomination as an official of the International Monetary Fund, where he served from 2001 to 2003 as director of the Development Policy and Analysis Division. Geithner’s entry into the IMF was founded on his neoliberal orthodoxy. He was later appointed president and chief executive of the Federal Reserve Bank in New York, the central bank of the eyes and ears of Wall Street, which he managed from November 2003 until the end of Bush Junior’s administration.
In 2006, Geithner became a member of the influential Washington-based financial advisory body, the Group of Thirty (G30), chaired by Paul Volcker. The G30 was created in 1978 by the Rockefeller Foundation, which provided the initial funding. In 1993, the G30 published a report entitled Derivatives: Practices and Principals, divulging recommendations on the appropriate management of credit derivatives. It was a manual on how to administer an aspect of the economy that had become standard. From 1980, it was common for corporations to bear production losses that were compensated by profits obtained through financial transactions, from credit and insurance deals, right up to speculation in futures markets and unstable currencies. The G30 catalog had a direct influence on the growth of speculation in credit derivatives and futures markets.
In February 2007, Jenny Anderson published an article on Timothy F. Geithner’s leadership of the Federal Reserve Bank of New York, foreboding the economic and financial collapse based on an observation of the unusual growth of credit derivatives. “High on Mr. Geithner’s to-do list is understanding and monitoring the U.S. $26 trillion credit derivatives market — twice the size of the U.S. economy — the fastest-growing financial market there is. Its explosive growth has greased the wheels of the global economy, increasing liquidity, spreading risk and minting money for Wall Street along the way... When this market gets tested, no one knows for certain how it may react.” After quoting Robert “Prophet” Rubin saying that Mr. Geithner “is really remarkable,” Anderson explains: “This has been amply illustrated in how he has persuaded Wall Street to take ownership of the issues surrounding credit derivatives... His approach has aimed at helping them believe that they are masters of their own destiny rather than miscreants who need to be punished, while extracting improvements in the financial system along the way.” In response to the huge threats posed by the explosion of fictitious capital, Geithner said in an interview: “The fact that banks are stronger and the risk is spread more broadly should make the system more stable.” There is no doubt that Rubin and his protégés have (inversely) oracle inclinations.
This revealing interview (which is never cited in international business news) demonstrates that he — along with Alan Greenspan — is one of the figures directly responsible for forming the bubble of fictitious capital and the 2007-2008 United States financial crisis that evolved into an international economic disaster.
In March 2008, Geithner acted as an intermediary in the deal that allowed JP Morgan Chase to acquire Bear Stearns, greasing the operation with a $29 billion loan from the Federal Reserve. At the time, the terms of the agreement were described as “very generous” and it was pointed out that Geithner acted with “reliability” to Wall Street executives. From September 2008, during the Bush administration, Geithner, along with Ben S. Bernanke, president of the Federal Reserve, and Henry Paulson Jr., secretary of the Treasury, managed the mortgage companies Fannie Mae and Freddie Mac, the “rescue” of American International Group (AIG) and a series of other financial institutions, as well as participating in designing the billionaire “relief” program to finance capital with taxpayers’ money.
As a reward for his successful career, Obama nominated him secretary of the Treasury in 2009. When the president was elected in November 2008, we said that “he did not announce anything good for the planet.” And on Wall Street the party carried on.
The Deceptive “Regulation” of the Financial Market
Financial capital represents about one-fifth of U.S. Gross Domestic Product and controls $8.5 billion in assets, or 63 percent of the country’s GDP. Wall Street controls Washington and acts as a submissive arm of the bankers. Consequently, the Obama administration’s alleged financial regulation reform was a mere illusion.
The favored mechanism of capitalist speculation is always based on the creation of fictitious capital. At best, fictitious capital is a representation of real capital in the form of a title deed to the aforementioned capital, or on the surplus (shares) it can generate, or as a title deed to installment payments made by the debtor of a mortgage, or to premiums on an insurance policy, or to the right to receive interest that the state undertakes to pay on a public debt security. At worst, it can be shares of Enron, sub-prime mortgages, AIG insurance or bonds from a country in default. And it always manifests as fetishism and the alienation of interest-bearing capital. The fetishization of interest makes it appear as a capital surplus that is produced in and for itself, without being used productively. It is on this fetishization that the dangerous New Economy is based.
In the global economy, the crisis that began in 2007-2008 initially expressed itself as a juxtaposition between real and fictitious capital. A decanting in order to determine when fictitious capital really represents real capital. During 2008, half of the fictitious capital represented in the global equity portfolio disappeared. “The value of global stock markets fell by about $30 billion in about a year and a half.” In other words, in 2008, the world stock portfolio depreciated by a sum equivalent to more than 50 percent of global GDP.
The clean-up with respect to mortgages has not yet been consummated because those irrecoverable bonds were mixed in with other more dependable ones and “packages” were “securitized” as large pools of assets, known as collateralized debt obligations to internationally disseminate the “fake” mortgages. “At the same time, a credit default swap was acquired to cover the failed mortgage derivatives. With this, Goldman Sachs pushed the American International Group into the abyss. The international banking system, particularly in Europe and the United States, is contaminated with these and other ‘credit derivatives.’”
While the largest U.S. banks take advantage of taxpayers’ money to re-capitalize, bankers are devoted to inventing new financial products as speculative as those that provoked the financial collapse.
On one side are “securitized” life settlements, which are gathered and presented as investment bonds. “The bankers plan to buy ‘life settlements,’ life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to ‘securitize’ these policies, in Wall Street jargon, by packaging hundreds or thousands together in boxes. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.” Those bonds implicate a tax in favor of death: The earlier policyholders die, the greater the return; the longer they live, by having to continue paying premiums, the more the profit decreases, causing the direct loss of investments. In all cases, Wall Street always wins by collecting their commissions to create and trade the bonds. For the investor it is a form of gambling on death that is less grim than buying shares in the arms industry.
As there are $26 trillion in U.S. insurance policies, it is expected that the market for these securities could reach $500,000 million. Goldman Sachs already possesses a “tradable index of life settlements,” where investors can bet on “whether people will live longer than expected or die sooner than planned”; in other words, it is a lottery that allows one to place bets on the uncertainty of death.
Some banks cannot be bothered to invent new financial products. They took their poisoned mortgage securities, “renamed” them and paid the rating agencies to reclassify the phony securities. Morgan Stanley affirms that in 2009, $30,000 million in re-remics were obtained.
Before signing the reform, Obama announced, “I’m about to sign Wall Street reform into law — to protect consumers and lay the foundation for a stronger and safer financial system — one that is innovative, creative, competitive, and far less prone to panic and collapse.”
Credit derivatives, models of “innovation, creativity, and competitiveness,” along with futures markets that permit speculation on future prices, especially commodities, were the epicenter of the economic crisis and have not been affected by the financial reforms passed by the Obama administration. Moreover, the unanimous call to pass a monitoring mechanism on financial capital that would protect American citizens from new frauds was mocked. Control of the financial market was handed over to the Federal Reserve Bank, which is chiefly responsible for the bubbles through which enormous capital is delivered to financial institutions at negative interest rates. At the beginning of Obama’s presidency, the Fed put $787 billion in the market and returned to inject another $600 billion in November 2010 by purchasing Treasury bonds. In both cases, the “motive” was to “reactivate the economy.”
In addition, the rescue of Bush-Paulson-Bernanke continued to expand under Obama-Bernanke-Geithner with loans from the Federal Reserve discount window. Since the end of March 2009, the Fed has either lent or guaranteed at least $8.7 trillion through a series of new relief programs. Furthermore, thanks to a law that allows one to hide both the amount and recipient of funds granted by the Fed and to block most congressional audits, the beneficiaries remain almost entirely anonymous.
U.S. banks are in charge of the economic orientation of the Obama administration. They imposed the reelection of the monetary fundamentalist Ben Bernanke as president of the U.S. Federal Reserve Bank. At the Federal Reserve, the Alan Greenspan/Ben Bernanke duo acted as a direct agent of the banks, “perpetrating fraud, protecting their sale of toxic mortgage products against consumer interests and indeed, the solvency of the economy itself.”
Through lobbying and contributions, banks can shape their own rules and lead the economy through cycles of fictitious capital bubbles, financial crises that benefit the big bankers, and backward adjustments of both goods and labor markets.
Health Care Reform: Obama Lying to Wall Street
With this law, which sought to present itself as a landmark decision, “Insurance firms will be handed at least $447 billion in taxpayer money to subsidize the purchase of their shoddy products. This money will enhance their financial and political power, and with it their ability to block future reform.” Not coincidentally, share prices of the largest health insurance companies soared the day after Obama signed the Health Reform Act. “About 23 million people will remain uninsured nine years out. This figure translates into an estimated 23,000 unnecessary deaths annually and an incalculable toll of suffering.” Or, in other words, it translates to more than seven annual “September 11ths”, minus the national anthem, hands over hearts and fervent waves of American flags. “People with employer-based coverage will be locked into their plan’s limited network of providers, face ever-rising costs and erosion of their health benefits.”
According to the World Health Organization, the United States ranks 37th in the world for the quality of its health care system. It was not a part of the list of the 25 most “advanced” countries. The waste in the U.S. health care system is outrageous. So far, it has amounted to more than $6,000 per capita per year, notwithstanding the fact that it did not pay service to more than 50 million people. In none of the 20 countries with the highest levels of human development does the average health expenditure per person per year amount to $3,029. In no hospital in any of these 20 countries would a sick person be thrown in a taxi and abandoned in the suburbs, barefoot and in a hospital gown, as so often happens with Health Maintenance Organizations (HMOs), or private health insurance companies, when they have stopped covering the hospital stay.
Pharmaceutical companies also come through with flying colors: The law prevents the importation of identical, cheaper drugs; does not authorize the government to negotiate price cuts; and extends the patent protection monopoly for biological drugs against competition from generics. According to the American Association of Physicians for a National Health Program, “By replacing the private insurers with a streamlined system of public financing, our nation could save $400 billion annually in unnecessary, wasteful administrative costs. That’s enough to cover all the uninsured and to upgrade everyone else’s coverage without having to increase overall U.S. health spending by one penny. Moreover, a single-payer system allows one to utilize effective tools for cost control, like bulk purchasing, negotiated fees, global hospital budgeting and capital planning.”
Obama Is Responsible for the Massive BP Oil Spill
On Wednesday, March 31, 2010, President Barack Obama publicized a new strategy for offshore drilling that expanded exploration of oil and natural gas along the coast of the Atlantic, the eastern Gulf of Mexico and northern Alaska. In a speech at Andrews Air Force Base in Maryland, the president responded to the Republican oil company lobbyists who came to insist on the need to explore new paths for oil; “I know we can come together to pass comprehensive energy and climate legislation that’s going to foster new energy — new industries, create millions of new jobs, protect our planet and help us become more energy independent.”
His statement on “protecting the planet” was an immediate reverse premonition. Three weeks later, the BP-owned Deepwater Horizon oil rig in the Gulf of Mexico exploded, caught fire and sank, killing eleven workers. Far from “fostering new industries and creating millions of new jobs” the aftermath of the oil spill polluted the coasts of Louisiana, Alabama, Mississippi and Florida; their wildlife refuges; and their fish, shrimp and oyster farms.
To offset the 4.9 million barrel Gulf oil spill, BP admitted to having used 7.18 million gallons of Corexit solvent — banned in 19 countries — to degrade the oil. Corexit dispersants contain chemicals that many scientists and toxicologists have identified as hazards to human health, marine life and wildlife. According to a report published by the National Institute for Occupational Safety and Health, the serious neurotoxic consequences on workers and laboratory animals include narcosis, anesthesia, central nervous system depression, difficulty breathing, unconsciousness and death. A number of chemical compounds that appear in the document, such as styrene, toluene and xylene, are currently in the Gulf of Mexico.
According to federal data, since the beginning of the spill in April 2010, nearly 2,200 birds have been found dead, mostly in Louisiana, along with nearly 500 turtles, half of them in Mississippi. Nearly 950 kilometers of Gulf coastline is impregnated with oil, primarily in Louisiana marshes. This imperils the shrimp and crab farms that have vital economic importance to the region. In the sea, scientists have found submerged oil and methane. Some believe that these toxic columns are decreasing oxygen levels in the water, and this endangers marine flora and fauna. A group of scientists from the University of Georgia states that 70 to 80 percent of the oil came from the burning oil rig that is still submerged off the coast of Louisiana.
Meanwhile, research indicates that the oil has already entered the food chain in the Gulf. Scientists at the University of Southern Mississippi and Tulane University have found particles of oil in young crabs in various parts of the Gulf Coast. The crabs are food for many fish, crabs, and other sea birds and species that eat the oil through the crabs.
About 35 percent of U.S. federal waters and 55 percent of commercial fishing operations areas in the salt waters of Louisiana were initially closed. However, the restrictions were soon lifted, and numerous cases of toxic chemical poisoning immediately appeared. Currently, there is a health crisis in the Gulf, and its inhabitants are suffering from diseases attributed to the fuel and toxic dispersants used to sink the oil into the depths of the ocean. Meanwhile, both Obama and various government agencies have ignored the health crisis and have stated that they consider the Gulf waters safe.
The primary responsibility for this disaster points to the president who promised “change” and provoked the greatest environmental disaster the country has faced in its history.
Obama Maintains Tax Cuts for the Rich
An agreement with the Republican Congress, approved on December 17, maintains the tax cuts that were to expire on December 31, 2010. This extends them for two more years for all Americans, without excluding the two percent with the highest incomes. In exchange for granting this shameful concession, Obama won the allegiance of the Republicans to approve the extension of unemployment insurance.
By giving in to Republican desires, Obama directly contradicts his electoral promises; in 2008 he promised an increase in taxes on the wealthy that directly affected his Democratic voters. Furthermore, since the Republicans refused to differentiate between categories of taxes, the flawed argument of the president was to compromise because Democrats did not want to raise taxes on the middle class.
In the Republican agreement, Obama negotiated the continuation of tax cuts for the rich for the next two years in exchange for the extension of unemployment insurance for 2 million Americans for a period of 13 months, at a cost of $25 billion. The tax cuts for the rich, sanctioned by Bush Junior, are likely to continue beyond 2012, since the chances of a Republican victory on that date become stronger every day. Additionally, with this agreement, the state will actually raise $14 billion. It’s a brilliant business.
Republicans propose replacing the progressive income tax with a tax that only impacts the employed, and does not affect income from property, finance, insurance or real estate; and a tax on aggregate value that affects the poor and the rich inversely. The percentage of consumption of basic necessities is much higher in the low-income bracket than it is at the top.
Tax revenues from workers decreased by $120,000 million, reducing the tax that funds Social Security by 2 percent. It’s a sneak attack on Social Security to instigate a crisis and promote privatization. Wall Street schemes to seize their funds.
Obama has adopted the same faulty logic as the Republicans to defend the agreement: Reducing taxes on the wealthy will allow them to consume more and will therefore create more jobs. A thesis faker than a two-dollar bill. The tax cut frees up money for capitalists to invest large stock holds in the circuit of financial capital suicide. At the same time, tax cuts worsen the federal public deficit and payment balance deficits. National debt today is around the $14 trillion mark, and the budget deficit is around the $1 trillion mark.
With Obama, the regressive past of the tributary system set up by Bush Junior has been consolidated. With the economic direction that Obama’s government has taken so far, can anyone still believe that the president and his party were sincerely interested in raising taxes on the rich?
Tim “Derivatives” Geithner
After obtaining his master’s degree in International Economics and East Asian Studies, T. Geithner, then 24 years old, started at Kissinger Associates, where he worked from 1985-1988. Kissinger Associates was the springboard for his entrance into the International Affairs Division of the Treasury Department. From 1988, Tim Geithner worked in various positions in the Treasury Department under three administrations: Reagan, Bush Senior and Clinton. In 1999, at age 38, he was promoted to undersecretary of the Treasury for International Affairs under Treasury Secretaries Robert “Prophet” Rubin and Lawrence Summers. He collaborated with Rubin and Summers to pass the Gramm-Leach-Bliley Act, a financial liberalization law that revoked the Glass-Steagall Act and allowed commercial banks to act as holding companies (financial supermarkets).
The Glass-Steagall Act prohibited banks from simultaneously offering investment banking (stock acquisitions, bonds, securities, mergers, etc.) and commercial banking (deposits, checking accounts, etc.) services, and from affiliating with insurance companies (insurance services and derivatives). The Gramm-Leach-Bliley Act reauthorized the same concoctions that lead to the crash of the stock market in 1929 and the subsequent Great Depression. This placed Geithner among Bill Clinton’s team of neoliberal economists who accelerated financial deregulation.
In 2001, he left the Treasury and joined the Council on Foreign Relations as a senior fellow in the International Economics Department. The Council on Foreign Relations is an independent, nonpartisan organization that integrates prominent U.S. corporations with distinguished political leaders, activists and journalists, both Democrats and Republicans. His entry into the CFR was the impetus for his nomination as an official of the International Monetary Fund, where he served from 2001 to 2003 as director of the Development Policy and Analysis Division. Geithner’s entry into the IMF was founded on his neoliberal orthodoxy. He was later appointed president and chief executive of the Federal Reserve Bank in New York, the central bank of the eyes and ears of Wall Street, which he managed from November 2003 until the end of Bush Junior’s administration.
In 2006, Geithner became a member of the influential Washington-based financial advisory body, the Group of Thirty (G30), chaired by Paul Volcker. The G30 was created in 1978 by the Rockefeller Foundation, which provided the initial funding. In 1993, the G30 published a report entitled Derivatives: Practices and Principals, divulging recommendations on the appropriate management of credit derivatives. It was a manual on how to administer an aspect of the economy that had become standard. From 1980, it was common for corporations to bear production losses that were compensated by profits obtained through financial transactions, from credit and insurance deals, right up to speculation in futures markets and unstable currencies. The G30 catalog had a direct influence on the growth of speculation in credit derivatives and futures markets.
In February 2007, Jenny Anderson published an article on Timothy F. Geithner’s leadership of the Federal Reserve Bank of New York, foreboding the economic and financial collapse based on an observation of the unusual growth of credit derivatives. “High on Mr. Geithner’s to-do list is understanding and monitoring the U.S. $26 trillion credit derivatives market — twice the size of the U.S. economy — the fastest-growing financial market there is. Its explosive growth has greased the wheels of the global economy, increasing liquidity, spreading risk and minting money for Wall Street along the way... When this market gets tested, no one knows for certain how it may react.” After quoting Robert “Prophet” Rubin saying that Mr. Geithner “is really remarkable,” Anderson explains: “This has been amply illustrated in how he has persuaded Wall Street to take ownership of the issues surrounding credit derivatives... His approach has aimed at helping them believe that they are masters of their own destiny rather than miscreants who need to be punished, while extracting improvements in the financial system along the way.” In response to the huge threats posed by the explosion of fictitious capital, Geithner said in an interview: “The fact that banks are stronger and the risk is spread more broadly should make the system more stable.” There is no doubt that Rubin and his protégés have (inversely) oracle inclinations.
This revealing interview (which is never cited in international business news) demonstrates that he — along with Alan Greenspan — is one of the figures directly responsible for forming the bubble of fictitious capital and the 2007-2008 United States financial crisis that evolved into an international economic disaster.
In March 2008, Geithner acted as an intermediary in the deal that allowed JP Morgan Chase to acquire Bear Stearns, greasing the operation with a $29 billion loan from the Federal Reserve. At the time, the terms of the agreement were described as “very generous” and it was pointed out that Geithner acted with “reliability” to Wall Street executives. From September 2008, during the Bush administration, Geithner, along with Ben S. Bernanke, president of the Federal Reserve, and Henry Paulson Jr., secretary of the Treasury, managed the mortgage companies Fannie Mae and Freddie Mac, the “rescue” of American International Group (AIG) and a series of other financial institutions, as well as participating in designing the billionaire “relief” program to finance capital with taxpayers’ money.
As a reward for his successful career, Obama nominated him secretary of the Treasury in 2009. When the president was elected in November 2008, we said that “he did not announce anything good for the planet.” And on Wall Street the party carried on.
The Deceptive “Regulation” of the Financial Market
Financial capital represents about one-fifth of U.S. Gross Domestic Product and controls $8.5 billion in assets, or 63 percent of the country’s GDP. Wall Street controls Washington and acts as a submissive arm of the bankers. Consequently, the Obama administration’s alleged financial regulation reform was a mere illusion.
The favored mechanism of capitalist speculation is always based on the creation of fictitious capital. At best, fictitious capital is a representation of real capital in the form of a title deed to the aforementioned capital, or on the surplus (shares) it can generate, or as a title deed to installment payments made by the debtor of a mortgage, or to premiums on an insurance policy, or to the right to receive interest that the state undertakes to pay on a public debt security. At worst, it can be shares of Enron, sub-prime mortgages, AIG insurance or bonds from a country in default. And it always manifests as fetishism and the alienation of interest-bearing capital. The fetishization of interest makes it appear as a capital surplus that is produced in and for itself, without being used productively. It is on this fetishization that the dangerous New Economy is based.
In the global economy, the crisis that began in 2007-2008 initially expressed itself as a juxtaposition between real and fictitious capital. A decanting in order to determine when fictitious capital really represents real capital. During 2008, half of the fictitious capital represented in the global equity portfolio disappeared. “The value of global stock markets fell by about $30 billion in about a year and a half.” In other words, in 2008, the world stock portfolio depreciated by a sum equivalent to more than 50 percent of global GDP.
The clean-up with respect to mortgages has not yet been consummated because those irrecoverable bonds were mixed in with other more dependable ones and “packages” were “securitized” as large pools of assets, known as collateralized debt obligations to internationally disseminate the “fake” mortgages. “At the same time, a credit default swap was acquired to cover the failed mortgage derivatives. With this, Goldman Sachs pushed the American International Group into the abyss. The international banking system, particularly in Europe and the United States, is contaminated with these and other ‘credit derivatives.’”
While the largest U.S. banks take advantage of taxpayers’ money to re-capitalize, bankers are devoted to inventing new financial products as speculative as those that provoked the financial collapse.
On one side are “securitized” life settlements, which are gathered and presented as investment bonds. “The bankers plan to buy ‘life settlements,’ life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to ‘securitize’ these policies, in Wall Street jargon, by packaging hundreds or thousands together in boxes. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.” Those bonds implicate a tax in favor of death: The earlier policyholders die, the greater the return; the longer they live, by having to continue paying premiums, the more the profit decreases, causing the direct loss of investments. In all cases, Wall Street always wins by collecting their commissions to create and trade the bonds. For the investor it is a form of gambling on death that is less grim than buying shares in the arms industry.
As there are $26 trillion in U.S. insurance policies, it is expected that the market for these securities could reach $500,000 million. Goldman Sachs already possesses a “tradable index of life settlements,” where investors can bet on “whether people will live longer than expected or die sooner than planned”; in other words, it is a lottery that allows one to place bets on the uncertainty of death.
Some banks cannot be bothered to invent new financial products. They took their poisoned mortgage securities, “renamed” them and paid the rating agencies to reclassify the phony securities. Morgan Stanley affirms that in 2009, $30,000 million in re-remics were obtained.
Before signing the reform, Obama announced, “I’m about to sign Wall Street reform into law — to protect consumers and lay the foundation for a stronger and safer financial system — one that is innovative, creative, competitive, and far less prone to panic and collapse.”
Credit derivatives, models of “innovation, creativity, and competitiveness,” along with futures markets that permit speculation on future prices, especially commodities, were the epicenter of the economic crisis and have not been affected by the financial reforms passed by the Obama administration. Moreover, the unanimous call to pass a monitoring mechanism on financial capital that would protect American citizens from new frauds was mocked. Control of the financial market was handed over to the Federal Reserve Bank, which is chiefly responsible for the bubbles through which enormous capital is delivered to financial institutions at negative interest rates. At the beginning of Obama’s presidency, the Fed put $787 billion in the market and returned to inject another $600 billion in November 2010 by purchasing Treasury bonds. In both cases, the “motive” was to “reactivate the economy.”
In addition, the rescue of Bush-Paulson-Bernanke continued to expand under Obama-Bernanke-Geithner with loans from the Federal Reserve discount window. Since the end of March 2009, the Fed has either lent or guaranteed at least $8.7 trillion through a series of new relief programs. Furthermore, thanks to a law that allows one to hide both the amount and recipient of funds granted by the Fed and to block most congressional audits, the beneficiaries remain almost entirely anonymous.
U.S. banks are in charge of the economic orientation of the Obama administration. They imposed the reelection of the monetary fundamentalist Ben Bernanke as president of the U.S. Federal Reserve Bank. At the Federal Reserve, the Alan Greenspan/Ben Bernanke duo acted as a direct agent of the banks, “perpetrating fraud, protecting their sale of toxic mortgage products against consumer interests and indeed, the solvency of the economy itself.”
Through lobbying and contributions, banks can shape their own rules and lead the economy through cycles of fictitious capital bubbles, financial crises that benefit the big bankers, and backward adjustments of both goods and labor markets.
Health Care Reform: Obama Lying to Wall Street
With this law, which sought to present itself as a landmark decision, “Insurance firms will be handed at least $447 billion in taxpayer money to subsidize the purchase of their shoddy products. This money will enhance their financial and political power, and with it their ability to block future reform.” Not coincidentally, share prices of the largest health insurance companies soared the day after Obama signed the Health Reform Act. “About 23 million people will remain uninsured nine years out. This figure translates into an estimated 23,000 unnecessary deaths annually and an incalculable toll of suffering.” Or, in other words, it translates to more than seven annual “September 11ths”, minus the national anthem, hands over hearts and fervent waves of American flags. “People with employer-based coverage will be locked into their plan’s limited network of providers, face ever-rising costs and erosion of their health benefits.”
According to the World Health Organization, the United States ranks 37th in the world for the quality of its health care system. It was not a part of the list of the 25 most “advanced” countries. The waste in the U.S. health care system is outrageous. So far, it has amounted to more than $6,000 per capita per year, notwithstanding the fact that it did not pay service to more than 50 million people. In none of the 20 countries with the highest levels of human development does the average health expenditure per person per year amount to $3,029. In no hospital in any of these 20 countries would a sick person be thrown in a taxi and abandoned in the suburbs, barefoot and in a hospital gown, as so often happens with Health Maintenance Organizations (HMOs), or private health insurance companies, when they have stopped covering the hospital stay.
Pharmaceutical companies also come through with flying colors: The law prevents the importation of identical, cheaper drugs; does not authorize the government to negotiate price cuts; and extends the patent protection monopoly for biological drugs against competition from generics. According to the American Association of Physicians for a National Health Program, “By replacing the private insurers with a streamlined system of public financing, our nation could save $400 billion annually in unnecessary, wasteful administrative costs. That’s enough to cover all the uninsured and to upgrade everyone else’s coverage without having to increase overall U.S. health spending by one penny. Moreover, a single-payer system allows one to utilize effective tools for cost control, like bulk purchasing, negotiated fees, global hospital budgeting and capital planning.”
Obama Is Responsible for the Massive BP Oil Spill
On Wednesday, March 31, 2010, President Barack Obama publicized a new strategy for offshore drilling that expanded exploration of oil and natural gas along the coast of the Atlantic, the eastern Gulf of Mexico and northern Alaska. In a speech at Andrews Air Force Base in Maryland, the president responded to the Republican oil company lobbyists who came to insist on the need to explore new paths for oil; “I know we can come together to pass comprehensive energy and climate legislation that’s going to foster new energy — new industries, create millions of new jobs, protect our planet and help us become more energy independent.”
His statement on “protecting the planet” was an immediate reverse premonition. Three weeks later, the BP-owned Deepwater Horizon oil rig in the Gulf of Mexico exploded, caught fire and sank, killing eleven workers. Far from “fostering new industries and creating millions of new jobs” the aftermath of the oil spill polluted the coasts of Louisiana, Alabama, Mississippi and Florida; their wildlife refuges; and their fish, shrimp and oyster farms.
To offset the 4.9 million barrel Gulf oil spill, BP admitted to having used 7.18 million gallons of Corexit solvent — banned in 19 countries — to degrade the oil. Corexit dispersants contain chemicals that many scientists and toxicologists have identified as hazards to human health, marine life and wildlife. According to a report published by the National Institute for Occupational Safety and Health, the serious neurotoxic consequences on workers and laboratory animals include narcosis, anesthesia, central nervous system depression, difficulty breathing, unconsciousness and death. A number of chemical compounds that appear in the document, such as styrene, toluene and xylene, are currently in the Gulf of Mexico.
According to federal data, since the beginning of the spill in April 2010, nearly 2,200 birds have been found dead, mostly in Louisiana, along with nearly 500 turtles, half of them in Mississippi. Nearly 950 kilometers of Gulf coastline is impregnated with oil, primarily in Louisiana marshes. This imperils the shrimp and crab farms that have vital economic importance to the region. In the sea, scientists have found submerged oil and methane. Some believe that these toxic columns are decreasing oxygen levels in the water, and this endangers marine flora and fauna. A group of scientists from the University of Georgia states that 70 to 80 percent of the oil came from the burning oil rig that is still submerged off the coast of Louisiana.
Meanwhile, research indicates that the oil has already entered the food chain in the Gulf. Scientists at the University of Southern Mississippi and Tulane University have found particles of oil in young crabs in various parts of the Gulf Coast. The crabs are food for many fish, crabs, and other sea birds and species that eat the oil through the crabs.
About 35 percent of U.S. federal waters and 55 percent of commercial fishing operations areas in the salt waters of Louisiana were initially closed. However, the restrictions were soon lifted, and numerous cases of toxic chemical poisoning immediately appeared. Currently, there is a health crisis in the Gulf, and its inhabitants are suffering from diseases attributed to the fuel and toxic dispersants used to sink the oil into the depths of the ocean. Meanwhile, both Obama and various government agencies have ignored the health crisis and have stated that they consider the Gulf waters safe.
The primary responsibility for this disaster points to the president who promised “change” and provoked the greatest environmental disaster the country has faced in its history.
Obama Maintains Tax Cuts for the Rich
An agreement with the Republican Congress, approved on December 17, maintains the tax cuts that were to expire on December 31, 2010. This extends them for two more years for all Americans, without excluding the two percent with the highest incomes. In exchange for granting this shameful concession, Obama won the allegiance of the Republicans to approve the extension of unemployment insurance.
By giving in to Republican desires, Obama directly contradicts his electoral promises; in 2008 he promised an increase in taxes on the wealthy that directly affected his Democratic voters. Furthermore, since the Republicans refused to differentiate between categories of taxes, the flawed argument of the president was to compromise because Democrats did not want to raise taxes on the middle class.
In the Republican agreement, Obama negotiated the continuation of tax cuts for the rich for the next two years in exchange for the extension of unemployment insurance for 2 million Americans for a period of 13 months, at a cost of $25 billion. The tax cuts for the rich, sanctioned by Bush Junior, are likely to continue beyond 2012, since the chances of a Republican victory on that date become stronger every day. Additionally, with this agreement, the state will actually raise $14 billion. It’s a brilliant business.
Republicans propose replacing the progressive income tax with a tax that only impacts the employed, and does not affect income from property, finance, insurance or real estate; and a tax on aggregate value that affects the poor and the rich inversely. The percentage of consumption of basic necessities is much higher in the low-income bracket than it is at the top.
Tax revenues from workers decreased by $120,000 million, reducing the tax that funds Social Security by 2 percent. It’s a sneak attack on Social Security to instigate a crisis and promote privatization. Wall Street schemes to seize their funds.
Obama has adopted the same faulty logic as the Republicans to defend the agreement: Reducing taxes on the wealthy will allow them to consume more and will therefore create more jobs. A thesis faker than a two-dollar bill. The tax cut frees up money for capitalists to invest large stock holds in the circuit of financial capital suicide. At the same time, tax cuts worsen the federal public deficit and payment balance deficits. National debt today is around the $14 trillion mark, and the budget deficit is around the $1 trillion mark.
With Obama, the regressive past of the tributary system set up by Bush Junior has been consolidated. With the economic direction that Obama’s government has taken so far, can anyone still believe that the president and his party were sincerely interested in raising taxes on the rich?
Look for the second installment of this article soon.