Local Stories, Events
Ref. : Civic Events
Ref. : Arts & Education Events
Ref. : Public Service Notices
Books, Films, Arts & Education
Ref. : Letters to the editor
Health Care & Environment
02.16 Toxic black snow covers Siberian coalmining region [0:49 video; If its killing us, stop doing it]
02.16 Renewable energy will be world's main power source by 2040, says BP [But in America's capitalistic bubble, bribed-to-be-biased media and government defy reality]
02.16 What the pesticides in our urine tell us about organic food [What does inaction tell us about capitalism and our government?]
02.14 Exposure to Glyphosate-Based Herbicides and Risk for Non-Hodgkin Lymphoma: A Meta-Analysis and Supporting Evidence [If its killing us, make it illegal]
02.14 To avoid environmental catastrophe, everything must change [Consider why this headline is laughable or confusing to many, if not most, Americans...]02.13 Study Shows Toxic Pesticide Levels in Families Dropped by 60% After One-Week Organic Diet [2:10 video; Produce and canned vegetables laced with toxic chemicals—from fertilizers and herbicides, too—must be quickly phased out to use safe organic alternatives]
News Media Matters
US Politics, Policy & 'Culture'
02.20 ‘Sustained and ongoing’ disinformation assault targets Dem presidential candidates [If you can sense them, block them!]
02.20 Despite the slaughter in Yemen, Britain is still chasing arms sales [and the Great-Again-America is too...Capitalism without morality is horrible]
Economics & Corrupting-Capitalism
International & Futurism
02.21 John Oliver Compares Brexit ‘Disaster’ to Will Smith’s Genie in Live-Action ‘Aladdin’ (Video) [21:26 video; we’re approaching an Idiocracy-type of society, where stupidity is “normal”]
02.20 House report lays bare White House feud over Saudi nuclear push [Its hard to keep up with all the criminal crap going on...]
02.18 Hate-Fest in Warsaw
'One More Bubble!'4 May 2009
When I took an editing job at Bloomberg News in March 2000, my arrival coincided with the bursting of the Internet bubble. As once-hot IPOs tanked and the Nasdaq crashed. I would joke to other editors that what the U.S. economy needed was “to build a better bubble.”
Then, to my amazement that was pretty much what happened, except that the bubble moved from the peripheral world of dot.com startups to a cornerstone of the economy, the real-estate sector. Low interest rates, exotic financial instruments and speculation pumped up the economy again, with Wall Street operatives enriching themselves as never before.
Now, as the housing bubble has burst and taken with it trillions of dollars in wealth, President Barack Obama may be right that the future U.S. economy cannot be built on another bubble, that America must get back to manufacturing products that people need.
The goal to avoid bubbles is endangered not only by Republicans, who seem determined to sink whatever Obama proposes, but by Wall Street bankers who want to continue receiving obscene Wall Street bonuses in the millions of dollars a year.
However, that goal is endangered not only by Republicans, who seem determined to sink whatever Obama proposes, but by the fact that speculative bubbles are what make possible the obscene levels of compensation – and Wall Street is not about to give up on the golden payday.
Without bubbles, Wall Street bankers and their many cohorts could make solid salaries – as they have historically – but not bonuses in the millions of dollars a year. So, there is a powerful incentive for Wall Street to push for a continuation of the bubble economy. Perhaps the new slogan could be, “One more bubble!”
The corrupting influence of the bubble economy also is not confined to Wall Street. While it’s true that Wall Street bigwigs have sipped at this giant champagne glass of riches the most, some wealth has trickled down – not to the average Americans, of course, but to other insiders from the worlds of politics and media.
In that way, former President Bill Clinton could leave office in 2001 – having overseen the expansion of “free trade” agreements and banking deregulation – and then make millions of dollars from speaking to corporate and leadership groups, plus millions more for serving as a front man for billionaire investor Ronald Burkle and other super-rich financiers.
Wall Street analysts for CNBC and other news outlets also can duck in and out of the banking and hedge fund worlds, a la Jim Cramer, sometimes leveraging their on-air advice to the benefit of their investments or their clients. CNBC often behaves more like a booster of Wall Street interests (and a defender of lucrative compensation) than a public watchdog.
This insider world of the big bonuses, fat salaries and hot stock tips has other corrosive effects, as financial regulators and political advisers are tempted by the princely sums that might become available to them if they play their cards the right way.
Much like Pentagon bureaucrats who sign off on unnecessary weapons systems waiting for retirement day and a seat on the corporate board of a grateful military contractor, government overseers of the financial industry have similar – and arguably greater – temptations.
In recent weeks, for instance, the public has learned that key figures in devising Obama’s strategy for combating the financial crisis have been offered – or have received – enticements from this grand world of big money.
Chief economic adviser Lawrence Summers, who as Clinton’s Treasury Secretary helped implement key deregulation of the banks, made $5.2 million in 2008 for a one-day-a-week job at the D.E. Shaw hedge fund, while also pulling in $2.7 million in speaking fees from Citigroup, Goldman Sachs and other Wall Street titans.
Even more shocking to some observers, Summers strayed from his fulltime job as president of Harvard University to do moonlighting from 2004 to 2006 as a consultant for another hedge fund, Taconic Capital Advisers.
The case of Treasury Secretary Tim Geithner is a bit different, since he has spent his career in government-related agencies as a “public servant,” including Clinton’s Treasury Department, the International Monetary Fund, and the New York Federal Reserve.
But Geithner appears to have had his head turned by the pleasant luxuries of the super-rich, too.
According to a New York Times article by Jo Becker and Gretchen Morgenson, his calendars from 2007 and 2008 were chocked full of professional and private contacts with executives of banks – Citigroup, Goldman Sachs and Morgan Stanley – whose activities were regulated by Geithner’s New York Fed.
The article reported that Geithner was especially tight with executives of Citigroup and that he met frequently with Sanford Weill, a major shareholder and former chairman.
“As the bank was entering a financial tailspin, Mr. Weill approached Mr. Geithner about taking over as Citi’s chief executive,” the Times said, adding:
Given the magnitude of compensation available to top executives, Weill was not just offering Geithner a job as CEO, but rather was dangling the keys to the jewelry vault at the castle, assuming that Citi did not collapse first.
Now, as Treasury secretary, Geithner is the point man for arranging massive infusions of taxpayer dollars into Citi and other major Wall Street banks to ensure that they don’t go under, that the old financial system survives.
Throwing Off the TARP
Geithner’s strategy for salvaging the banks has been criticized by some economists and many citizens as too generous with the taxpayers’ money and too lenient toward the chief culprits of the financial debacle.
But – combined with the Federal Reserve’s decision to lend the banks money at nearly zero percent interest and other emergency measures – the bailouts have put some banks in a strong enough position that they already are chafing under the federal government’s demand that they cut their compensation.
Some banks are offering to pay back the direct federal bailout money to evade the compensation constraints, while their media allies – from CNBC and Fox to the Wall Street Journal and the Washington Post’s editorial page – have complained about excessive government interference in the private sector.
By escaping from the Troubled Asset Relief Program, the bankers could return to the party-on days when they viewed themselves as “masters of the universe” who could buy pretty much anything or anyone they wanted.
The pressing question about Geithner is whether his personal contacts with Weill and other banking executives – and the prospect of landing a future job as CEO of Citi or some other major bank – influenced his policy decisions.
Given the staggering sums of money, it’s hard to believe that it wouldn’t have.
After four years as a Bloomberg News editor reading proxy filings that disclose executive compensation, I came away with a profound sense that the sums had gotten so crazy that almost everyone who could grab a piece would do whatever it took to get one.
Another one of my sayings became: “The closer you are to the money, the more you get to keep.”
The balance between integrity and compensation had gotten so far out of whack that it would require a saint to put doing the right thing over taking oodles of dough, so much money that it would mean you’d never have to worry about your personal finances again.
That’s why I disagree with some analysts – such as the editorial-page editors of the Washington Post – who keep insisting that compensation is only a small part of the problem and that the public is foolish to be so outraged about bailed-out companies like AIG continuing to dole out bonuses.
It’s true that the bonuses pale when viewed next to the total scope of the financial meltdown, but the compensation is the principal motive for the extraordinary risk-taking that started the meltdown.
The compensation also influences the policymakers and regulators whose job it is to stop the high-rollers from putting the economy in jeopardy. If some government bureaucrat sees the chance for a mammoth payday in the future, who’d be surprised if the money didn’t limit acts on the people’s behalf?
And there are also the campaign checks that financial industry PACs write to helpful legislators of both parties.
In short, the multi-million-dollar bonuses and all the other fat compensation packages have distorted the American system in big ways and small.
All that Wall Street money also has left many Americans wondering if anyone – in business, politics or media – cares about the larger fate of the nation or if the primary goal right now is to inflate “one more bubble.”
Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Neck Deep: The Disastrous Presidency of George W. Bush, was written with two of his sons, Sam and Nat, and can be ordered at neckdeepbook.com. His two previous books, Secrecy & Privilege: The Rise of the Bush Dynasty from Watergate to Iraq and Lost History: Contras, Cocaine, the Press & 'Project Truth' are also available there. Or go to Amazon.com.
This article is republished in the Baltimore Chronicle with permission of the author.
Copyright © 2009 The Baltimore News Network. All rights reserved.
Republication or redistribution of Baltimore Chronicle content is expressly prohibited without their prior written consent.
Baltimore News Network, Inc., sponsor of this web site, is a nonprofit organization and does not make political endorsements. The opinions expressed in stories posted on this web site are the authors' own.
This story was published on May 4, 2009.