Share on Google Plus Share on Twitter Share on Facebook
  2
Share on LinkedIn Share on PInterest Share on StumbleUpon
  1
Tell A Friend 3 Shares     
Printer Friendly Page Save As Favorite View Favorites View Article Stats
61 comments

OpEdNews Op Eds

Was the Bailout Itself a Scam?

By (about the author)     Permalink       (Page 1 of 1 pages)
Related Topic(s): , Add Tags Add to My Group(s)

Must Read 11   Well Said 6   Valuable 6  
View Ratings | Rate It

Become a Fan
  (382 fans)

opednews.com

Professor Michael Hudson (CounterPunch, March 18) is correct that the orchestrated outrage over the $165 million AIG bonuses is a diversion from the thousand times greater theft from taxpayers of the approximately $200 billion “bailout” of AIG. Nevertheless, it is a diversion that serves an important purpose. It has taught an inattentive American public that the elites run the government in their own private interests.

Americans are angry that AIG executives are paying themselves millions of dollars in bonuses after having cost the taxpayers an exorbitant sum. Senator Charles Grassley put a proper face on the anger when he suggested that the AIG executives “follow the Japanese example and resign or go commit suicide.”

Yet, Obama’s White House economist, Larry Summers, on whose watch as Treasury Secretary in the Clinton administration financial deregulation got out of control, invoked the “sanctity of contracts” in defense of the AIG bonuses.

But the Obama administration does not regard other contracts as sacred. Specifically: labor unions had to agree to give-backs in order for the auto companies to obtain federal help; CNN reports that “Veterans Affairs Secretary Eric Shinseki confirmed Tuesday [March 10] that the Obama administration is considering a controversial plan to make veterans pay for treatment of service-related injuries with private insurance” [ click here ]; the Washington Post reports that the Obama team has set its sights on downsizing Social Security and Medicare.  

According to the Post, Obama said that “it is impossible to separate the country’s financial ills from the long-term need to rein in health-care costs, stabilize Social Security and prevent the Medicare program from bankrupting the government.” [ click here ]

After Washington’s trillion dollar bank bailouts and trillion dollar gratuitous wars for the sake of the military industry’s profits and Israeli territorial expansion, there is no money for Social Security and Medicare.


The US government breaks its contracts with US citizens on a daily basis, but AIG’s bonus contracts are sacrosanct. The Social Security contract was broken when the government decided to tax 85% of the benefits. It was broken again when the Clinton administration rigged the inflation measure in order to beat retirees out of their cost-of-living adjustments. To have any real Medicare coverage, a person has to give up part of his Social Security check to pay Medicare Part B premium and then take out a private supplemental policy. The true cost of Medicare to beneficiaries is about $6,000 annually in premiums, plus deductibles and the Medicare tax if the person is still earning.

Treasury Secretary Geithner, the fox in charge of the hen house, has resolved the problem for us. He is going to withhold $165 million (the amount of the AIG bonuses) from the next taxpayer payment to AIG of $30,000 million. If someone handed you $30,000 dollars, would you mind if they held back $165?

PR flaks have rechristened the bonus payments “retention payments” necessary if AIG is to retain crucial employees. This lie was shot down by New York Attorney General Andrew Cuomo, who informed the House Committee on Financial Services that the payments went to members of AIG’s Financial Products subsidiary, “the unit of AIG that was principally responsible for the firm’s meltdown.” As for retention, Cuomo pointed out that ”numerous individuals who received large ‘retention’ bonuses are no longer at the firm” [click here ].

Eliot Spitzer, the former New York Governor who was set-up in a sex scandal to prevent him investigating Wall Street’s financial gangsterism, pointed out on March 17 that the real scandal is the billions of taxpayer dollars paid to the counter-parties of AIG’s financial deals. These payments, Spitzer writes, [ http://www.slate.com/id/2213942/ ] are “a way to hide an enormous second round of cash to the same group that had received TARP money already.”

Goldman Sachs, for example, had already received a taxpayer cash infusion of $25 billion and was sitting on more than $100 billion in cash when the Wall Street firm received another $13 billion via the AIG bailout.

Moreover, in my opinion, most of the billions of dollars in AIG counter-party payments were unnecessary. They represent gravy paid to firms that had made risk-free bets, the non-payment of which constituted no threat to financial solvency.

Spitzer identifies a conflict of interest that could possibly be criminal self-dealing. According to reports, the AIG bailout decision involved Bush Treasury Secretary Henry Paulson, formerly of Goldman Sachs, Goldman Sachs CEO Lloyd Blankfein, Fed Chairman Ben Bernanke, and Timothy Geithner, former New York Federal Reserve president and currently Secretary of the Treasury. No doubt the incestuous relationships are the reason the original bailout deal had no oversight or transparency.

The Bush/Obama bailouts require serious investigation. Were these bailouts necessary, or were they a scam, like “weapons of mass destruction,” used to advance a private agenda behind a wall of fear? Recently I heard Harvard Law professor Elizabeth Warren, a member of a congressional bailout oversight panel, say on NPR that the US has far too many banks. Out of the financial crisis, she said, should come consolidation with the financial sector consisting of a few mega-banks. Was the whole point of the bailout to supply taxpayer money for a program of financial concentration?

 

http://www.paulcraigroberts.org/

Dr. Roberts was Assistant Secretary of the US Treasury for Economic Policy in the Reagan Administration. He was associate editor and columnist with the Wall Street Journal, columnist for Business Week and the Scripps Howard News Service. He is a contributing editor to Gerald Celente's Trends Journal. He has had numerous university appointments. His book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is available here. His latest book,  How America Was Lost, has just been released and can be ordered here.

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Submit to Stumble Upon

The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact Author Contact Editor View Authors' Articles
Related Topic(s): , Add Tags

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Libya - The DC/NATO Agenda And The Next Great War

The Road to Armageddon

American Job Loss Is Permanent

A Story...The Last Whistleblower

Pakistan TV Report Contradicts US Claim of Bin Laden's Death

Comments

The time limit for entering new comments on this article has expired.

This limit can be removed. Our paid membership program is designed to give you many benefits, such as removing this time limit. To learn more, please click here.

Comments: Expand   Shrink   Hide  
35 people are discussing this page, with 61 comments
To view all comments:
Expand Comments
(Or you can set your preferences to show all comments, always)

THIS IS THE FUNNIEST THING I HAVE EVER SEEN...... ... by Jeff Harris on Thursday, Mar 19, 2009 at 9:22:39 AM
I would say that if we go back to history and refe... by Mark Sashine on Thursday, Mar 19, 2009 at 9:45:17 AM
The Bank bailouts were always a scam ever since Pa... by Andrew Hughes on Thursday, Mar 19, 2009 at 9:55:56 AM
Everything you said ... spot on. Our national gove... by richard on Thursday, Mar 19, 2009 at 10:51:38 AM
I pretty much agree with you except for one small ... by Terry on Thursday, Mar 19, 2009 at 12:16:29 PM
No, it won't be me. Nor for many I know. When you ... by richard on Thursday, Mar 19, 2009 at 11:42:52 PM
Exactly Terry, but the question is, what are we go... by Glenn Lord on Saturday, Mar 21, 2009 at 9:04:04 PM
it's good that people are starting to catch on... by siamdave on Thursday, Mar 19, 2009 at 11:00:31 AM
This comment from this treasonous bimbo Harvard pr... by Mr M on Thursday, Mar 19, 2009 at 11:08:03 AM
amazing how everything you respond to is about NWO... by Rob Kall on Thursday, Mar 19, 2009 at 7:02:51 PM
First, you're right, everything I respond to is ab... by Mr M on Thursday, Mar 19, 2009 at 8:50:43 PM
As the greatest Scam in history begins to unravel,... by Gene Messick on Thursday, Mar 19, 2009 at 11:22:52 AM
Smart about "elites" who "run the g... by Carola Von Hoffmannstahl on Thursday, Mar 19, 2009 at 11:26:19 AM
Especially when compared to DC, Spitzer's were vic... by UncleSim on Thursday, Mar 19, 2009 at 3:52:20 PM
The media describes current government actions lik... by Richard Mynick on Thursday, Mar 19, 2009 at 11:35:05 AM
... us dry, they've killed the host and they thems... by Mr M on Thursday, Mar 19, 2009 at 11:46:24 AM
The very idea of bailing out the capitalist class ... by robert braunstein on Thursday, Mar 19, 2009 at 11:39:36 AM
If I'm not a capitalist, what am I?... by UncleSim on Thursday, Mar 19, 2009 at 2:02:49 PM
You betcha!  However, it's more of a fina... by jersey girl on Thursday, Mar 19, 2009 at 11:57:52 AM
That's exactly right. The fact that he speaks ... by Richard Mynick on Thursday, Mar 19, 2009 at 12:56:12 PM
Obama, I expected him to be more clever. The only ... by Patrick Lafferty on Thursday, Mar 19, 2009 at 10:11:12 PM
Both political parties are laughing at us. They ar... by Matthew Peters on Thursday, Mar 19, 2009 at 11:58:41 AM
that emotion. Can we vote on that? Have You seen o... by john riggs on Thursday, Mar 19, 2009 at 12:24:33 PM
...but I think he omits his own not insignificant ... by Terry on Thursday, Mar 19, 2009 at 12:07:31 PM
If you take a few moments to look up the Major Hol... by Edward Ulysses Cate on Thursday, Mar 19, 2009 at 12:10:03 PM
the CONgress had the bonuses sitting right there ... by steve scheetz on Thursday, Mar 19, 2009 at 12:35:12 PM
There have been 17 comments, which I have scanned ... by Margaret Bassett on Thursday, Mar 19, 2009 at 1:02:57 PM
It has taken years for the USA to catch on to what... by Dolores Jackson on Thursday, Mar 19, 2009 at 1:19:10 PM
Dear Mr. M, Don't you know THEY plan to reduce... by Dolores Jackson on Thursday, Mar 19, 2009 at 1:48:29 PM
... one of the fortunate, or unfortunate ones left... by Mr M on Thursday, Mar 19, 2009 at 3:10:32 PM
I would like to remind everybody of *COG--"Co... by William Whitten on Thursday, Mar 19, 2009 at 1:50:37 PM
I got an email from Bob Casey (D-PA) saying that h... by UncleSim on Thursday, Mar 19, 2009 at 1:51:10 PM
Frankly I think this whole thing was premeditated ... by Linda Schreiber on Thursday, Mar 19, 2009 at 2:00:17 PM
You think they did all that at the last minute? ... by UncleSim on Thursday, Mar 19, 2009 at 2:08:26 PM
I just want to add this: EVERYTHING this "gov... by William Whitten on Thursday, Mar 19, 2009 at 2:06:37 PM
The US government lost its legitimacy a long time ... by Richard Mynick on Thursday, Mar 19, 2009 at 3:08:12 PM
blueprinted it all in her book "The Shock Doctrine... by Jack Harrington on Thursday, Mar 19, 2009 at 9:19:56 PM
I will recommend you all read Tom Heneghan's a... by boomerang on Thursday, Mar 19, 2009 at 3:04:41 PM
Here is a two by four of reality up side the heads... by William Whitten on Thursday, Mar 19, 2009 at 3:32:31 PM
to the Restoration of Total Control by a Ruling Ar... by Mark Adams on Thursday, Mar 19, 2009 at 3:33:50 PM
Well, I thought, a couple days ago after a little ... by G Achin on Thursday, Mar 19, 2009 at 5:11:41 PM
Who makes the decisions in our society?Who writes ... by coyote on Thursday, Mar 19, 2009 at 6:02:03 PM
"Where is it? It is standing in defense of th... by jersey girl on Thursday, Mar 19, 2009 at 7:21:18 PM
THE LEFT RAN SO FAR LEFT THAT THEY CIRCUMNAVIGATED... by Patrick Lafferty on Thursday, Mar 19, 2009 at 8:23:50 PM
... thanks, I'll get right on it ... LOL... by Mr M on Thursday, Mar 19, 2009 at 9:00:46 PM
you would. Please fulfill our needs on this.... by Patrick Lafferty on Thursday, Mar 19, 2009 at 10:25:48 PM
 Obama hasn't kept any of his promises. H... by Larry McCombs on Thursday, Mar 19, 2009 at 6:51:37 PM
DIVERSIONS FOR SIMPLE MINDS TO TAKE YOUR EYE OFF T... by Patrick Lafferty on Thursday, Mar 19, 2009 at 7:53:49 PM
... see, this is why I like cartoons, I'm lazy ...... by Mr M on Thursday, Mar 19, 2009 at 9:03:01 PM
Again, a picture paints 8.2 trillion words.....(or... by jersey girl on Friday, Mar 20, 2009 at 5:50:17 AM
CNN reports that “Veterans Affairs Secretary... by Robert Arend on Thursday, Mar 19, 2009 at 8:38:24 PM
... order any of our troops to fight his nasty lit... by Mr M on Thursday, Mar 19, 2009 at 9:19:27 PM
They robbed us with the assistance of Congress.Ppl... by shirley reese on Thursday, Mar 19, 2009 at 8:39:20 PM
Why is it that working people bail out corporate s... by robert braunstein on Thursday, Mar 19, 2009 at 9:29:46 PM
Lost emails, BS investigations (9/11), faux transp... by boomerang on Friday, Mar 20, 2009 at 12:13:56 PM
        Ri... by mary sunshine on Friday, Mar 20, 2009 at 4:35:15 AM
I would say the bailouts are probably not a scam, ... by Perry Logan on Friday, Mar 20, 2009 at 6:05:23 AM
I have to admit Perry, your reasoning process is a... by William Whitten on Friday, Mar 20, 2009 at 6:42:50 AM
" The flap over the AIG bonuses does not fill the ... by richard on Friday, Mar 20, 2009 at 7:42:51 AM
 "We will have world government whether ... by William Whitten on Friday, Mar 20, 2009 at 8:39:06 PM
Does every Ivy League college in America now have ... by Paul Magill Smith on Thursday, Mar 26, 2009 at 12:59:42 AM