This is the 3rd and probably last time we’ll give a shout out to Senator Warren, who as we always have to note is wrong on many many things. But on the embedded “pre-bailout” in the Cromnibus bill she is absolutely right. We should not be on the hook for big bank derivatives which go south. And we are talking about trillions in derivatives. (For those who are unclear as to what derivatives are here is a good explanation.)
In a recent post we highlighted a piece by Charles Hugh Smith where he asserted that. “The 35% drop in the price of oil is the first domino.” He warned that the world was floating on a sea of fossil fuel derivatives that were about to go bad.
Funny that the pre-bailout bit got put into the Cromnibus at the last second. It reminds me of when the banks got the bankruptcy laws more to their liking right before the Great Recession started. Let’s hope the pre-bailout isn’t a direct countermeasure to immediate developments in the world economy. That would be bad news.
This is one of the frustrating things about people who I believe legitimately care about reining in crony capitalism on what is called the “Left” in this country. They seem always to want more of the thing which enables crony capitalism – government.
Crony capitalism can not happen without government. Government is the lever which cronies use to expand their power and wealth.
My friends on the “Left” fret about “corporations taking things over” if government is reduced. As if government is some kind of counterweight to corporate power. It is not. For the most part government is a tool of special interest power (and about equally the reverse). It’s a partnership.
The key is to decentralize. Diffuse the power in Washington (and other capitals) and move it as much as humanly possible back to real live humans.
We don’t really need much government at all.
By Ron Paul
The political class breathed a sigh of relief Saturday when the US Senate averted a government shutdown by passing the $1.1 trillion omnibus spending bill. This year’s omnibus resembles omnibuses of Christmas past in that it was drafted in secret, was full of special interest deals and disguised spending increases, and was voted on before most members could read it.
The debate over the omnibus may have made for entertaining political theater, but the outcome was never in doubt. Most House and Senate members are so terrified of another government shutdown that they would rather vote for a 1,774-page bill they have not read than risk even a one or two-day government shutdown.
Those who voted for the omnibus to avoid a shutdown fail to grasp that the consequences of blindly expanding government are far worse than the consequences of a temporary government shutdown. A short or even long-term government shutdown is a small price to pay to avoid an economic calamity caused by Congress’ failure to reduce spending and debt.
Oil sends a shudder through the world economy. Japan goes for broke (probably literally) with the Japanese citizenry on board. China fears being sucked into a debasement black hole. Europe clings. We watch.
“I don’t like journalism,” – Sheldon Adelson
The old boys with giant checkbooks want Jeb, Christie, or Romney in the White House. (Romney!) You know the guys who are completely interchangeable with Hillary. The fat felines don’t want anything new. They want the same tired GOP which they can manipulate. They don’t want questions. They don’t want discussion of foreign policy. They don’t want questions about the role of the state in modern America. They sure as shinola don’t want to talk about crony capitalism on a national stage. Crony capitalism has served many of these guys well.
David Stockman asks this question, though he knows the answer.
That constellation of trillions of dollars of credit derivatives which floats around the globe? The one generated by the big banks? Looks like we’re now the ones responsible for them when they come crashing through the atmosphere.
Interesting bit of politics. The consternation is not driven as much by Elizabeth Warren as the article makes out. Opposition to CROMNIBUS for the most part is coming from the grass roots libertarian/conservative coalition in the provinces. Ms. Warren’s concern has however opened another front in the pre-Christmas lightning war on Capitol Hill and that is a good thing.
We’ve discussed this before. Why are the behemoths of Wall Street paying bonuses to executives who do tours in Washington?
Could it be that the banks see it akin to serving in the National Guard or something, that these executives are helping their fellow man and so deserve a little something extra?
No. More likely they are paying these guys extra money because the banks know that having representatives at the very highest levels of government is very profitable and a good form of insurance.
Goldman and the Fed are very close. Let’s just say they vacation together. Share a beach house in the Hamptons.