10 signs we live in a Banana Republic

As the Republic’s eyes continue their glossy stare at the trillions (with a T) being poured into the financial bailout by this thing they mention on TV called “the FED,” we at The Barricade, with a fair-use tip-of-the-hat to Letterman submit a TOP TEN LIST: Top Ten Signs You Are Living in a Banana Republic.

Why only ten? While there are certainly other signs that our country is a banana republic worthy of comparison to other ignominious, run-down, despotic regimes where the plutocracy plunders the treasury for its own interest, the American audience has an attention span of less than 30 seconds, is addicted to Ritalin and Adderall, and therefore has a penchant for lazy summaries and cliff notes. Have we lost you yet? Without further adieu:

10. Zimbabwe–the archetypal banana republic and the home of the $100 Billion omelet–praises recent US FED action. So the FED–an institution of which most Americans have no true comprehension–prints over $1.2 trillion (with a T), and Zimbabwe declares, “Banks, including those in the USA and the UK, are now not just talking of, but also actually implementing flexible and pragmatic central bank support programmes where these are deemed necessary in their national interests. That is precisely the path that we began over 4 years ago in pursuit of our own national interest and we have not wavered on that critical path despite the untold misunderstanding, vilification and demonization we have endured from across the political divide.” Not the kind of endorsement we desire to restore confidence in our financial system.

9. The Department of Energy was run by a dentist and never by anyone who has ever worked in the energy industry. Ever you wonder why we don’t have a national energy policy? Jimmy Carter named James Schlesinger—an apparatchik with no history in the energy sector—as the nation’s first Energy secretary. Ronald Reagan claimed he was going to dismantle the Department of Energy. His pick for Energy secretary was James B. Edwards, a man who understood drilling—he was a dentist. GHWB named former chief of naval operations Admiral James David Watkins as his energy secretary. Bill Clinton’s choices for the top Energy spot were: Hazel O’Leary, a lawyer; Federico Pena, another lawyer; and finally Bill Richardson, a politico and diplomat. George W. Bush’s choices to head the Department of Energy included Spencer Abraham, a lawyer who’d just lost his seat in the U.S. Senate, and Samuel Bodman, an engineer whose professional career was in investments and chemical production. Finally, Obama’s secretary of energy is Steven Chu, a Nobel Prize-winning physicist. Chu has experience in energy-related issues, including his job as director of the Lawrence Berkeley National Laboratory, but he’s never been in the energy business. “It’s the mythology of the Beltway,” one Houston energy analyst told me recently. “You are hopelessly compromised if you are anywhere close to the oil industry.” Ask yourself this simple question, would the Secretary of Treasury ever be nominated if he did NOT have extremely close ties to and was NOT captured by wall street? Which leads us directly to………

8. The Treasury Department is a wholly owned subsidiary of Goldman Sachs and the other Wall Street mega-firms that are too big (or too connected) to fail. No explanation needed here. This is obvious to even the dopiest of Americans which leads us to …

7. The complicit failure of the national media to call out the Treasury Department’s clear conflicts of interest when it comes defrauding the Treasury at the expense of the US Taxpayer. Rachel Madow, Keith Olbermann, Daily Kos, Huffington Post, Fox News, anyone? Is there anybody out there? Just nod if you can hear me. This is easy and it makes the KBR/Haliburton/Iraqi war connection look complicated by comparison. When KBR was a wholly owned subsidiary of Haliburton and Cheney was the former CEO of Haliburton, we were confused with the KBR/Haliburton relationship and Cheney’s ties (people had a hard time making that second jump, not sure how we were confused, but we were). This one is so simple even my almost two year old niece understands it: Sec. of Treasury and former CEO of Goldman Sachs Hank Paulson has funneled billions to his old firm and his friends via DIRECT CHECKS and checks to AIG which is run by a former director of Goldman Sachs Edward Liddy. The money spent “bailing out” AIG will be shuffled over mostly to the CDS counterparites, GS et al. Liddy is only taking $1 of salary because he is such a public service saint. He has an acute financial stake in one of AIG’s counterparties—namely, his $3.2 million personal investment in Goldman Sachs stock. Mainstream Media, please call me and I will help you connect the dots…finance is not that complicated, just ask my adorable niece.

6. Only 53% of Americans feel capitalism is better than socialism. Two main points to note here: (1) We have never had free market capitalism in this country, because our government has always encouraged obfuscation and lack of transparency, by selective disclosure and favoritism; and (2) failure of large institutions is not allowed (even though it is an essential part of capitalism). So, we don’t have failure in America. Failure would be upsetting. We are all living in one big Lake Wobegon - where all of our businesses are above average. I didn’t get a chance to vote in this poll, but if I had to choose I would prefer the Scandinavian Socialist model over the Latin American version that we seem to be veering into. Instead, the U.S. gets the worst of both worlds - no public education or health care, high taxes, privatized gains shared by plutocrats and socialized losses shared by taxpayers. If that is your definition of American capitalism - I am amazed the polling numbers were as close as they were.

5. The bankruptcy process has becomes a political process. If this is the worst economy since the great depression, why aren’t there more bankruptcies? When did bondholders–which own a risky asset class called, ahem, “bonds”–become a guaranteed non risk asset class? It is obvious that my college professors were mistaken in teaching that the only RISK FREE asset class was US GOVERNMENT DEBT SECURITIES. They are going to have to rewrite a ton of economics and corporate finance textbooks to include Bear Stearns bondholders and preferred stock holders, Fannie and Freddie bondholders, any bond or preferred instrument held by Bill Gross/PIMCO (the official fourth branch of the US govt.) and any bonds or preferred stocks of the too-politically-connected-to-fail group of financials including AIG, GS, MS, WFC, C, JPM, et al as part of the risk-free asset classes in 21st century American capitalism. And, maybe they should hold off publishing until June because GM and Chrysler debt and preferred holders may be on that list as well. At least all of the rewriting of the books on financial institutions, markets, and money will stimulate the publishing industry. Which leads us directly to…

4. Both politcal parties are beholden to the financial oligarchs–And yes, that includes the Democratic Party. The Democratic Party, the party of FDR, Kennedy, LBJ, Carter and Obama, the party of the little people, the common man, the disadvantaged, the party of farmers, laborers, labor unions, and religious and ethnic minorities continues the same misguided policies and cronyism of the former Republican regime in BAILING OUT BANKERS and INDENTURING GENERATIONS for what will end up being tens of trillions (with a T). We are either in bizzarro world or a banana republic or both. “The Democrats have replaced the Republicans as the big benefactors to the financial community,” said Kevin Phillips, author of “Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism.” Philips writes, “The financial community is donating more to Democrats than ever before and you’ve got more Democrats in the financial community, creating a very powerful pattern there. I don’t think you’re going to see the Obama administration and Congress willing to be tough enough in dealing with these things.” So, let’s get this straight: none of the big banks and financial companies’ bondholders are taking any hit, and they refuse to go into bankruptcy or receivership, however GM and Chrysler may go into the not so delicate arms of bankruptcy. Is Obama more loyal to his wall street friends in the Democratic monopolies in the Northeast and California, or to his hard working lower/middle class constituents in the Midwest which is usually a coin flip in terms of party loyalty–see, Michigan, Ohio and Indiana? To quote John Lennon, strange days indeed, most peculiar momma. That or we are living in a banana republic. Which is easy to accept.

3. William Black, the former Chief Fraud Investigator at the Federal Home Lending Bank and Office of Thrift Supervision during the Savings and Loan scandal, calls the current bank stress tests ” A COMLETE SHAM.” The FHLB is a very big institution, with $1.3 trillion (with a T) in loans, and its Chief Fraud Investigator during the S&L scandal, says a pillar of Federal banking reform policy is “a complete sham.” A complete sham. In addition to comparing the stress tests of our nations’ financial system to a counterfeit, fraud, flimflam, ruse (is that emphatic enough for you America, or do I need naked women shooting you with lasers to make you pay attention? I know, I do. Can we get some graphics of naked ladies in here, please?)

Mr. Black also called the stress test “a Potemkin model. Built to fool people.” Like many others, Black believes the “worst case scenario” used in the stress test don’t go far enough. Black also said, “There is no real purpose [of the stress test] other than to fool us. To make us chumps,” Black says. Noting policymakers have long stated the problem is a lack of confidence, Black says Treasury Secretary Tim Geithner is now essentially saying: “’If we lie and they believe us, all will be well.’ It’s Orwellian.” “The fact bank stocks have been rising since Geithner unveiled his plan is “bad news for taxpayers,” he says. “It’s the subsidy of all history.”

2.William Black the former Chief Fraud Investigator and Federal Regulator during the S&L scandal uses the following words to describe the STRESS TEST of capital ratios for our NATIONS’ LARGEST BANKS:
(A)“A COMPLETE SHAM”
(b) “POTEMKIN MODEL” - fancy Russian word for SHAM
(c)“Reason for STRESS TESTS is to FOOL US and to make US CHUMPS”
(d) “’If we lie and they believe us, all will be well.’ It’s Orwellian.”
(e) the Geithner debt plan is “bad news for taxpayers”
If confidence is all we need to restore the financial system, then we should just nominate Tony Robbins as Secretary of Treasury.
OBTW, William Black’s book The Best Way to Rob a Bank is to Own One, is a must read about financial fraud and regulatory capture and for the glossy eyed it has a catchy and cool title. Paul Volker wrote this about the book, “Bill Black has detailed an alarming story about financial - and political - corruption. The specifics go back twenty years, but the lessons are as fresh as the morning newspaper. One of those lessons really sticks out: one brave man with a conscience could stand up for us all.” Robert Kuttner of Business Week proclaimed, “Black’s book is partly the definitive history of the savings-and-loan industry scandals of the early 1980s. More important, it is a general theory of how dishonest CEOs, crony directors, and corrupt middlemen can systematically defeat market discipline and conceal deliberate fraud for a long time — enough to create massive damage.”

Now, drum roll…

1. The People Don’t Know and Don’t Care to Know. The American people are quite aware of Malawian Adoption Law, can cite the California statutes on artificial insemination, and know Octomom’s middle name, but can’t or won’t listen to one word about who controls their institutions, nor can they find William Black on any other media outlet other than the Web or Bill Moyers. We have the former Chief Fraud Investigator screaming SHAM, SWINDLE, HEIST and we just sit there glassy-eyed, wondering if the blind guy was given a fair shot on Idol. No hour slot on Larry King, no lead story on 60 minutes, not even 5 minutes on The Daily Show, which is arguably the best financial and investigative journalist show on television.

My friends and dear readers, this is your representative republic. This is the product of your popular sovereignty. This is your AMERICA.

(Thanks to Robert Rapier, and Robert Bryce for some of their energy material and quotes.)

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