de Borchgrave: Look at the Crowd Obama’s Team Bailed Out and the Folks Left Behind — Again


What follows is a powerful snapshot of the moral and political dilemma progressives face today. President Obama and his team bailed out Wall Street, richly depicted in Arnaud de Borchgrave‘s commentary “Bonus Pool Party” below.
I recommend the entire piece, but this will get you going:
fat cat cigar.jpg

In his classic “Bonfire of the Vanities,” Tom Wolfe’s Masters of the Universe were thinly disguised Wall Street megalomaniacs suffering from gluttonous edacity. Today, there is no longer any need for disguise. They flaunt it openly before congressional committees, oblivious to growing public anger about what retired Master of the Universe investment banker Peter G. Peterson calls their “carnivorous, animalistic greed.” This time, the race to the trough supersedes party labels. Democrats and Republicans slurped in almost equal measure.
The total bonus pool at the end of 2009 for the nation’s six biggest banks was $130 billion. (Goldman Sachs’ alone was $23 billion.) Chief executives plead the need to pay staggering amounts to partners so they won’t be poached by rival houses. Yet about 200,000 jobs were lost in financial houses during the worst economic crisis since the Great Depression, including those of many senior executives. Others compare themselves to movie and sports stars, candidly confiding that they also have to maximize their peak earning years.
Treasury estimates that total bank repayments of Troubled Asset Relief Program (TARP) money, drawn from U.S. taxpayers, should exceed $175 billion by the end of this year. That would cut total taxpayer exposure to the banks by three quarters. But Wall Street’s captains are in high dudgeon over a government levy on the banking industry for losses Treasury says it will incur in the melee, or minus $120 billion to the taxpayer on the $700 billion in TARP lending to 21 financial institutions. Some of the major houses – e.g., JPMorgan, Morgan Stanley and Bank of America – have long since repaid everything with interest.
Michael J. Boskin, one-time economic adviser to President George H.W. Bush, says investors no longer trust economic and fiscal statistics and are “increasingly inclined to disbelieve them.” To base decisions on misleading, biased or manufactured numbers, Mr. Boskin says, is “dangerous.” Cynicism over official statistics is growing.
The lobbyists in orbit around Capitol Hill are making sure that whatever comes out of Congress to curb the Obama administration’s levy appetite will also be a no-lobbyist-left-behind act, including the 3,000 (out of 13,200) who suddenly became consultants rather than face more elaborate reporting requirements – and potential criminal liabilities. It is now a crime for lobbyists to buy meals for or provide gifts to lawmakers or their aides.
Meanwhile, the ranks of the unemployed and underemployed and those whose jobless benefits expired were around 27 million. These days, low-pay-no-benefits jobs are considered good deals.
The widening gap between “les miserables” and what looks like the old Soviet caricature of America’s ubercapitalist, chomping on a Havana cigar and flashing a pinky diamond, doesn’t seem to bother high-powered executives testifying before congressional committees. Some Wall Street CEOs even admitted their mistakes were partly responsible for the worst economic and financial conditions since the Great Depression.

The rest here.
— Steve Clemons


20 comments on “de Borchgrave: Look at the Crowd Obama’s Team Bailed Out and the Folks Left Behind — Again

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  8. Scott says:

    Under which administration was the so called FAT CATS feed…i wonder? Obama did not make these FAT cats FAT. All the way back to Reagan America rewarded greed. Poor Obama was a kid in Junior High School when the FAT CATS got FAT…


  9. Carroll says:

    Posted by JamesL, Jan 25 2010, 10:11PM – Link
    John H: Obama– freeze domestic programs, increase Pentagon spending, increase debt. As you say, nauseating.
    Carroll: I request that you repost your message of 3:17 on every thread Steve puts up. And everywhere else you can tack it. Think Martin Luther. No, the German>>>>>>>>>>>>>>>
    I would but no one ever answers….they are too busy describing the exact size,color, shape and wonderment of all the government pimples to have a thought as to how to cure them. Glen Greenwald on the Freeze….it is as I thought…a prelude to cutting the “entitlements” SS and medicare and etc…
    Like the drip, drip, drip of water torture, they think if they get the public use to ‘cuts”..they can finally finish what they started with Bush and return us to the Feudal Lords and serfs
    of yore.
    The current freeze is meaningless it’s the next steps that come after we accept the freeze that is their prize.
    BTW take a look at the IRS pie chart ‘outlays’.
    National Defense 24%
    Interest on the debt 8%
    Then the 15% of total ‘income’ borrowed last year.
    BWTTGASO…except for Steve’s house.


  10. PissedOffAmerican says:
    AIPAC: Israel exempted from Obama’s across the board spending cuts
    I knew, as soon as I heard that President Obama was proposing an across-the-board spending cut, that it would apply exclusively to domestic programs and not to any programs overseas.
    That is not only because of the wars we are waging in Iraq or Afghanistan and certainly not because of humanitarian concern for poor Africans or Asians or even Haitians. It is because the biggest foreign aid recipient, by far, is Israel.
    The fact is that historically all proposals for across-the-board cuts have carefully exempted the Israel aid package to ensure that that AIPAC will not lobby against them. The pattern is decades old. No matter who (except Ron Paul) proposes the sledgehammer cuts, he is careful to exempt Israel.
    It’s a pity too. If only the budget cuts included Israel. there would be a strong, intimidating, lobby to oppose them.
    Personally, I do not favor cuts in the foreign aid package. America is notoriously stingy when it comes to helping the world’s poor and we should be providing more aid, not less. USAID operates on a shoestring and always has. We are not the generous people we think we are, not by a long shot.
    As for the Israel aid package, it is the locomotive that pulls the whole foreign aid package to enactment. If the Israel aid was a stand-alone bill, it would pass overwhelmingly (thanks to AIPAC) while aid to the rest of the world would be slashed to nothing.
    So I’m not complaining about the Israel aid per se although I sure as heck would put strings on it (like making aid conditional on Israel not telling the United States to drop dead when we ask for something).
    Nonetheless, it is striking that thanks to the lobby, nobody dares suggest that Israelis suffer the budget cuts that Americans will suffer. It only makes one wish that working Americans (and the poor, and the sick. and kids) had a lobby half as overbearing as AIPAC.
    MJ Rosenberg


  11. JamesL says:

    John H: Obama– freeze domestic programs, increase Pentagon spending, increase debt. As you say, nauseating.
    Carroll: I request that you repost your message of 3:17 on every thread Steve puts up. And everywhere else you can tack it. Think Martin Luther. No, the German.
    I don’t know what it takes to get people (excluding Nadine, if she is a person, which decreasingly appears likely, and someone’s computer program named Kostplusbasis) to agree that in order to halt the march to make humans slaves of corporations, people might actually have to speak up and do something. A democracy if you can keep it said old Ben, but the speed with which democracy is gleefully being tossed aside in favor of a finding a new gizmo or personal corporate king is astonishing. We have no knights now, only feif kingslets and clueless peasants.
    The blogosphere may be a tool of change or it may be nothing more than a meaningless, endless pissing contest in a virtual outhouse. Steve wishes the blog globe to be an agent of change, but he has yet to figure out how to get it out of the virtual outhouse. He wants the blog-sphere to be an agent of change but the leading agents of change now are in control of the process, ensconced in Congress and corporate comfies and creating laws/regs/papers/reports/opeds/younameit 25 hours a day via no-bid Kostplusbasis contracts to ensure that humans will in the future have increasingly less say than an elite cadre of non-humans. It is as if a race of aliens exuding the “trust” chemical had landed on earth and because their particular pheramone was so powerful and hypnotic, no one within radio range gave a shit that they were taking over.
    I wonder what Toqueville would have said about blogs.
    “All those who seek to destroy the liberties of a democratic nation ought to know that war is the surest and shortest means to accomplish it. “
    “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.”
    “What is most important for democracy is not that great fortunes should not exist, but that great fortunes should not remain in the same hands. In that way there are rich men, but they do not form a class.”
    Alexis de Tocqueville


  12. JohnH says:

    “Obama Seeks Freeze on Many Domestic Programs.” Pentagon excluded. Submits 11% budget increase.


  13. Dan Kervick says:

    Should have said:
    “…without taking any responsibility for practical and effective measures to check or eliminate inequality.”


  14. Dan Kervick says:

    I’m still waiting for members of the punditocracy to move beyond moralistic diatribes about inequality, and to make the move to advancing actual proposals for doing something about inequality.
    Moralism is predominantly vain. We need to limit the prevalence of extravagant compensation and gross inequality in America BY LAW. There are any number of intriguing proposals out there for the regulation of compensation and the leveling of wealth, proposals that if enacted would have the simultaneous effect of strengthening democracy, improving the living standards of the majority of Americans, abating economic waste and inefficiency and liberating the productive energies of America’s armies of under-compensated and demoralized workers. We could start with something simple, like a 20-to-1 law.
    For some time, our sputtering and stagnant economy has been hindered by the siphoning of massive amounts of potentially productive wealth into the unproductive pockets of over-compensated moguls, and into their side-economies, off-shore mattresses, and shelters. This bleeding of funds that could be recycled into more productive forms of spending is the equivalent of the pre-modern practice of bleeding already unhealthy patients, and is justified by theories that are just as dotty. It is a shame, because based on what I have seen and know of other countries, Americans are among the most industrious, work-loving people in the world, and could do wonders with all the cash that is being frittered away on the excessive compensation of the affluent and super-affluent, and that is raked in by their dodgy strategems.
    There are two main ideological hindrances standing in the way of a more rational economy:
    One is the Hayekian notion that the free market’s price-setting mechanisms bring about the most efficient distributions of resources. Obviously, well-tuned market mechanisms have proved effective in the production of wealth. But the extrapolation of this observation into an absolutistic universal doctrine is an absurd doctrine of faith, not an empirically confirmed fact. Especially in the financial industry we have seen that the unregulated activity of money men has led to ridiculously and catastrophically uneconomic outcomes. This isn’t some sort of anomaly; or the result of the moral breakdown of a formerly virtuous and economically healthy order. The accelerating proliferation of Ponzi activity, confidence scams, flim-flam, rip-offs and stupidity is the natural outcome of the permission of unregulated market activity among us craven and ignorant human beings, including unregulated market activity in the exchange of skill and labor for compensation. Economic activity is just like any other human activity: in the absence of effective and sturdy systems of law, most of what is worth promoting and preserving falls apart rapidly.
    The other justification for unregulated compensation-setting is the plaint DeBorchgrave alludes to: that firms are driven to set salaries at ever higher levels to hang onto their talent. There is obviously truth in this. But clearly this mechanism is only operative in an environment in which the uber-talented are permitted to set up no-ceiling bidding wars for their services. Regulating the salaries in one business or sector while others are left unregulated does indeed mean a talent drain from the regulated sectors. But if everyone has to play by the same rules on the same playing field, with the same national salary caps, the bidding war cannot take place. Certain kinds of important jobs require special talents that only a few possess. But many of the people who possess those talents are absurdly over-compensated in the current system, and could be induced to provide more-or-less their current levels of service for lower rates of compensation, so long as we limit their options for going elsewhere.
    We have institutionalized a compensation racket in America, where the individuals possessing the choicest talents, even while competing among themselves, also function and collude as a group to draw ever larger shares of the nations wealth in their own direction. We can put a stop to this. We just have to decide to do it.
    I’m glad De Borchgrave bitches about the bankers. But bitching accompanied by zero willingness to advocate the logical legal steps that should follow doesn’t get us far. Unfortunately, we see these outrage-rich but policy-neutral diatribes far too often these days. This allows the writer to assume the comfortable and self-indulgent pose as the outraged moralist, without taking any responsibility for practical and effective to check or eliminate. These writers usually put the burden of badness on “greed”, and suggest in some way that there was once some purer golden age when Wall Street was less greedy, more public-spirited and more virtuous. The implicit conclusion is that we don’t need law and politics to come to our aid, but only more moral exhortation from the pulpit and a rectification of declining public morals.
    But the only thing that really worked somewhat better in those all-too-brief passages of American history when the country was not ruled by robber-barons is that the people’s government was sometimes a bit more aggressive about taxing away wasteful and superfluous income, about breaking up businesses that had grown too large and powerful, about giving labor more legal ammunition to use in their never-ending battle against ownership and about inserting public reason and unembarrassed considerations of public utility into the allocation of wealth and resources. it wasn’t only a reliance on public morals that did the trick; they leaned heavily on public policy.
    Democracy is not some kind of natural ground state in play of of human dynamics. The tendency toward self-interested conquest and domination in the war of all against all is naturally destructive of the social equality that underpins democracy, and quickly does away with it when left to its own destructive devices. Democracy needs to be preserved by vigorous, tireless and vigilant efforts to preserve substantive equality – and not just equality of “opportunity”, but real equality of condition and outcome as well. In any case, really genuine equality of opportunity can only exist where there is broad equality of condition in the first place.
    We are not going to put a dent in inequality by wagging our fingers. As long as the decisions about compensation are left in unfettered private hands, larger and larger shares of the wealth will flow into fewer and fewer pockets, and the caste of individuals who actually supervise our government will grow tinier and more dangerous.
    That spectacularly decadent and dysfunctional government routinely conspires with the corporate nobility to take money from the strapped and declining middle classes, while treating the unregulated business of salary setting as sacrosanct. So, when it was revealed during the health care debate this past year that a CEO from one of the health maintenance conglomerates makes $10 million dollars a year, hardly anyone in Congress took notice or batted an eye. And yet they express shock and puzzlement when they learn that people don’t trust free-market health to drive down costs and improve product, and don’t want to be taxed more to pay for social programs, while the plutocrat’s chief political instrument – the US Senate – leaves all the real money on the table.
    I wish the country would recover some of the wisdom of the Roosevelt family. Both Teddy and Franklin Roosevelt – perhaps our two greatest presidents – understood monopoly, competition, stupidity, inefficiency and and the real-world workings of wealth in its interplay with human nature. Perhaps because of their native intelligences, independent spirits and well-heeled backgrounds, they were less intimidated by the wealthy, and less likely to be snowed by the ridiculous, unfounded and self-serving rationalizations and claptrap of their self-satisfied but frequently less intelligent peers in the worlds of business and inherited treasure.
    The pundit class in our time, however, is ignobly drawn to money like the bumbling philistines they are. They envy it, admire it and want to get close to it. They grow wide-eyed and childlike in the presence of it. They rub their hind-quarters against it. They are intimidated by it, and their reason is overthrown by the words emitted by moneyed mouths. They hang on to those words like thumb-sucking monkeys hanging on vines. They are dazzled by the superficial urbanity of wealth, by its well-crafted plumage and accouterments and ornaments.


  15. Carroll says:

    No one ever answers this question but I’ll ask it again.
    Exactly what are “the people” willing to do to get rid of the Robber Barons and their whores in congress?
    Anything besides piss and moan and wait for another phony savior?
    I am open to all suggestions except:
    1) Appealing to congress
    2) Appealing to the WH
    3) Voting for change in the next election
    4) Whining that all we can do is the above.


  16. Mr.Murder says:

    Until people get into “I’m mad as hell and I’m not going to take it anymore!” mode and start wrenching blood from these types it will keep happening.
    By then Blackwater will have become America’s de facto Praetorian Guard.


  17. Paul Norheim says:

    Ditto, DonS.
    (but I’ve had 5 cups of cofee, so the “even-though”/”perhaps-because” factor is even


  18. DonS says:

    Even though I have had 2 cups of coffee this morning, or perhaps because of that, I am having a hard time ‘groking’ why the situation outlined in the De Borchgrave piece represents a ‘moral and political dilemma for progressives’. What am I missing?
    Maybe it has to do with the difference between progressives and faux progressives? Or that progressives are politicians too? Or something.


  19. ... says:

    rogue capitalism….. that was the term referred to back in 98 which has been applicable to the usa’s financial system all along…


  20. JohnH says:

    It’s not just the finance community. In case Steve hasn’t noticed, Democraps have been racing Republiscum to fill the trough on “defense” spending. Even though all combat troops have to be out of Iraq by August, the proposed 2011 “Defense” budget INCREASES SPENDING 11% to $708 Billion. I guess the brass were miffed at seeing the financial bailouts exceeding their budgets. Or maybe they just wanted to grab all the money that would have gone to fund health care (which BTW had to be budget neutral).
    At least the Wall Street gang had to make a perfunctory appearance before Congress to justify their greed. Where are the hearings and criminal prosecutions for defense fraud, waste and abuse?
    The Washington blogosphere’s silence about outrageous “defense” spending is astounding. But then again, these “defense” folks are armed and dangerous and have lots of spare change to fund hired pens and talking heads from think tanks.


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