Sunday, January 30, 2011
How Obama is making the Depression Worse
When Obama stepped into the Oval Office, the train was on shaky footing threatening a full derailment because of the horrible governmental and financial mismanagement of the previous 10 years, both in the waning Clinton term and the debacle of the Bush years. When I like many other Americans stepped into the voting booth presented with the usual American choice of the lesser of two evils, in this case an over the hill geriatric and his inarticulate aging beauty queen bimbo and an untried but articulate black Harvard lawyer, I held my nose and filled in my ballot. Unlike many Americans I wasn’t expecting much from a political system owned and controlled by corporate elites but I held a wee little hope that the situation might not get worse with Bush gone. Wrong . Well before the election Obama had been assembling an economic team drawn from the same entrenched Wall Street financial crowd of the previous two administrations but there at least was a few old warhorses in the crowd, notably Paul Volker which gave me a sliver of hope. Wrong again.Whether Obama was captured well before, slightly before or just after his accession to the throne is irrelevant. That he is a tool of Wall Street against Main Street is undeniable. There are many factors contributing to this Great Depression which I and many folks far better than I have covered in great detail. The takeover of the American Government and the structural transformation of the American Economy from a mixed manufacturing, construction, technological and Service economy to one dominated by a non productive financialized economy is complete and for the moment an intact and rollicking kleptocracy. The TBTF banks and Insurance companies who caused this depression are stronger than ever aided and supported by by the financial elite who transferred their almost impossibly large losses to the impotent and withering middle class and their hapless children. The casino investment banks forced with devastating losses were converted to bank holding companies, which supposedly means full service banks but doesn’t under Obama. They are just continuing the bulk of their gambling with public funds. and in the process rolling up vast increases in national debt which has exploded under Obama. Under new FASFA rules the banks were allowed to change their accounting rules of realistic audits of assets and liabilities to a system where the liabilities became assets. All those mortgage backed securities went from being a few cents on the dollar to 100 cents on the dollar. How could that have happened? Well pardner, if you used truthful auditing principles, the banks would be bankrupt. Can’t have that. So banks like Citigroup and BOA are fine and dandy. Only they’re not but I guess they could eventually become solvent as long as the taxpayer courtesy of a Federal Reserve Banking Cartel who answers to no one continues to prop them up and allowing the bernank and his treasury Tonto Tim to keep feeding them chips from the Fed Casino. Much of Obama’s first team has left to be replaced by an absolutely outrageous second team of Aryan Pure Wall Streeters. JP Morgan bank gave us Bill Daley, GE gave us Jeff Immelt who we are told is going to give the jobs back to Americans that GE outsourced to the rest of the world,. This is the same GE that I pointed out in a previous blog who is one of the world’s largest companies but who normally pays little to no taxes because GE in the 1980’s rewrote the tax laws to benefit their business model. Jeff wants Obama to lower the corporate tax rate even though GE has never paid any where near the putative 35% rate. In fact in the disastrous year of 2009 GE, one of the world's largest companies still managed a profit of $11 billion and paid how much in taxes? Zip. In fact the government had to send a tax refund to old Jeff Immelt. The details of how this huge company can make money hand over fist decade after decade and pay little or no taxes is repeated endlessly with one globalized company after another who has outsourced production to slave labor rate countries like China. GE rigged the tax system to defer taxes on earnings overseas, in many cases indefinitely, while shifting losses to the US. It's the perfect scam and the globalized corporate world all do it, deducting the cost of overseas business and deferring profits. The actual tricks of how they use the tax code to swindle the US taxpayer and US workers would take a book. I have explored the scam at some length and may revisit this in the future but I am a big picture guy and I'd rather leave it to someone with business or accounting background. I should also state that the big TBTF banks are also at the top of the list of companies that pay little or no taxes, also courtesy of the tax system. These are the same companies that steal bailouts from the taxpayer's children who then go on like Lloyd Blankfein at Goldman Sachs to pay $16 billion in executive bonuses to himself and his apostles. Of course they can deduct these bonuses as employee compensation. That way they don't have to return these rapacious profits to the shareholders. Wouldn't it be a fair and simple matter to allow only limited deduction of employee compensation, say $100,000 per employee and not allow unlimited compensation? The other egregious tricks that most people are familiar with are shifting money for compensation to the much lower capital gains rate to compensate the oligarchs at for example, the hedge funds. That way you can avoid all those petty charges from social security and medicare. But to return to Jeff Immelt. Does he sound like a guy who will bring good paying manufacturing jobs back to main street? Conflict of interest is hardly a strong enough term to describe having a bona fide robber baron in charge of restoring American jobs that he and his ilk destroyed. If he were to do the unlikely, returning good jobs to our shores, he would be slitting his own throat. So it wont happen. I'm sure he would be happy to return slave labor to the United States at slave labor rates. There simply is no limit to what the corpocracy will do to maximize profits to themselves. I look at trends and try to extrapolate what I think could be the logical consequences of trends and trying to devise non violent and effective strategies to counter the pernicious influence of the ruling elites. It is difficult and discouraging in a nation of sheep who have shown no inclination to take to the streets and return the democracy that has been stealthily ripped from their hands(hoofs?) in the past thirty years. I am skeptical of any meaningful change until the society and the economy experiences and out and out train wreck.