Truthdig - Reports - Slap Down ‘Free Market’ Pirates

			May 17, 2008 Log in / Register
			Text Size

Trading Spaces, Iraq Edition
By Anna Badkhen

I’m From the Government and I’m Here to Help
By Eugene Robinson

A Lesson for Republicans
By E.J. Dionne

Toward a New Washington Consensus
By David Sirota

Chalmers Johnson on Our ‘Managed Democracy’
By Chalmers Johnson

Sean Penn Talks Politics at Cannes

Geoffrey Wheatcroft on ‘Muqtada’
By Geoffrey Wheatcroft

Movie Mogul Weinstein Reportedly Pressured Pelosi

President Jonah, Meet Oliver Cromwell!

Dig led by Gore Vidal

Inside the Data Mine

Dig led by Onnesha Roychoudhuri

Newsroom Carnage Continues at The Washington Post

Burma Death Toll Now at 78,000

U.S. Sergeant Refuses to Serve in ‘Illegal’ War

A Rough Day for Reactionaries

U.S. Consumer Confidence at 28-Year Low

Democrats Condemn Bush’s ‘Appeaser’ Comment

Huckabee’s Major Misfire

Bill O’Reilly Off the Hook: The Dance Remix

Somebody Get the Man a Jet Ski

DeGeneres: ‘I’m Getting Married!’

Citizen Stan

By Patty Sharaf with Robert Scheer
$15.00

The Election of 2000: Reports and Interpretations

E.J. Dionne
$29.95

Slap Down ‘Free Market’ Pirates

Posted on Mar 26, 2008

By Joe Conason

For many years, Robert Morgenthau has warned America that the nexus of capitalism and criminality poses a serious threat to our prosperity, security and growth. Now in the wake of the collapse of Bear Stearns, which pushed global markets closer to the brink, perhaps the nation will listen to the Manhattan district attorney, whose scrutinizing gaze is fixed on targets well beyond New York.

As a legendary prosecutor of international financial crime, Morgenthau has long kept a watchful eye on the buccaneering crew at Bear, the firm that now symbolizes the worst in amoral capital. Its executives were notorious for testing the limits of the law by sheltering shady stock promoters and bucket-shop brokerages, and by swelling the assets of its hedge funds with dubious mortgage-backed assets.

When a pair of Bear hedge funds based in the Cayman Islands fell last summer, after their subprime mortgage investments went sour, Morgenthau sounded an early alarm. He urged the federal government to remember the fall of Long-Term Capital Management, the huge Cayman-based hedge fund whose implosion 10 years ago came close to sinking several major U.S. banks. The inevitable multibillion-dollar federal bailout prevented or postponed financial disaster—but we were not ready then to absorb the real meaning of that costly experience. That lesson, as Morgenthau explains, was simple: “Markets, like the hedge fund market, that are unsupervised and conduct business in secret, in tax havens, will eventually cause serious problems.” He has always possessed a talent for understatement.

Ironically, Bear Stearns executives shunned any participation in the rescue of Long-Term Capital in 1998—and indeed mocked the government intervention that they now covet. Like so many corporate leaders who proclaim strict adherence to free market principles and standards, the Bear gang doesn’t stand up too well under close examination. When those Cayman-based funds—wonderfully named the “High Grade Structured Credit Strategies Fund” and the “High Grade Structured Master Credit Strategies Enhanced Leverage Fund”—nose-dived last year, Bear’s clients lost billions.

Of course Bear’s poor performance didn’t dissuade James Cayne, its recently departed boss, from the gross display of buying himself a $28-million home weeks before his corrupted firm finally tanked. There he sits in diminished splendor, while lawyers and economists bargain with the Treasury Department over the price of his company’s distressed shares.

If we must preserve Bear and its profligate executives to protect ourselves, we should make comparable efforts to save the homeowners, cities and states that stand to lose so much in this deluge of stinking paper. There is no moral excuse to subsidize the losses of the super-rich, while leaving everyone else to the mercies of the market. What’s good for the country club Republicans is good for the working-family Democrats, too.

But as Morgenthau insists, we cannot sustain an economy of universal bailouts. A son of FDR’s treasury secretary, he understands how the New Deal saved democratic capitalism from mindless greed 75 years ago, and he knows that the undoing of those reforms during the past 25 years has led to our present troubles. More and more of our capital (including public pension funds) has moved into offshore havens, where banking and corporate secrecy laws allow hedge fund operators to avoid regulation and taxes. This escape from transparency will continue as long as it is permitted by law and rewarded by the tax code.

All that will soon have to end, or we will find ourselves again at the edge of disaster.

Obviously, we should hope that the Treasury Department and the Federal Reserve find a way through this crisis without severe damage to the U.S. and world economy. The question is whether we will make the necessary changes to our political economy—including a renewed regulatory regime and a new New Deal for the American people—without suffering hard times such as we have not seen for decades.

As we mark the end of a long era of conservative excess, we could do much worse than heed Morgenthau’s advice. In the name of free markets, we made ourselves and our economy vulnerable to the worst impulses of a greedy, remorseless few. He saw that on the horizon and tried to tell us. Now, perhaps we will listen.

Joe Conason writes for the New York Observer.

TAGS: business capitalism conason conservatives crime democrats disaster economy government greed law market mortgage republicans

SHARE THIS TRUTHDIG ARTICLE:
Del.icio.us Digg Facebook Reddit StumbleUpon Yahoo

Email Newsletter

Get truth delivered to your inbox every week.

Previous item: Nixon’s Heir

Next item: Iraq Exploding as Shiite Fights Shiite

Jump to Comments

Advertisement

Elsewhere: .

Comments

Are you a Truthdig member yet? Login now, or register with Truthdig.

COMMENT TOOLS:
Hide comments Show comments Comment on this article

Show: Help?

By Purple Girl, March 30 at 11:07 am #
(236 comments total)

We've Been Listening and Watching- but thats all

This hostile take over of our Economy (thus our Independence) began long ago...Grand daddy of the Swindlers The ‘Federal Reserve’
You need to reiterate that pint about if it’s good for the Corps then it should be good enough for US too. but on the other side of that coin. What we must face should we not pay our (illegally demanded) personal Income Tax on Wages (trade for labor) then Our assests are Frozen then Seized and we are left with what ever they tell US we still Owe them (penalities- financial & incarceration). So again wha tis good for the Goose, Is good for the ‘Ganders’ - Freeze & Seize their crap (right down to the drapes on their Windows)and throw them in Prison till they cough up the Rest of What they Owe US - Otherwise send them off to their Other Creditors for their brand of Justice (just like the secret prisons used for Detainees- Torture Friendly nations)

Reply to this | Report this

By Barry, March 28 at 10:02 pm #
(Unregistered commenter)

It appears that the asset price supports being generated or more probably “Godfather squeezed” from the Bush FED (Funds Eternally Delivered) appointee, Ben the Princeton Propellar Head Bernanke to try and prevent the “collapse” of the truly inflationary international debt bubble , will continue as planned by the Bushian Administration and usher in a 1923 Weimar Republic inflation unless We the Other People wake up and demand our Republic back.

This must include an economy based on a PHYSICAL economy with FAIR market practices through appropriate regulation as envisioned by one of Americas Founding Fathers and first secretary of the treasury, Alexander Hamilton rather than one based on a FINANCIAL economy with FREE markets (free to loot through unbridaled regulation) and run by Ponzi scheming corporativist crony capialists. Lyndon Larouche has been warning We the Other People for years about the corrupt and evil intending Corporativists who like our former British colonizers wish only “top down” Aristocratic (Elite) control of America and The World. It is time for another “tea party” and revolution. Throw the Federal Reserve in the ocean! Adopt the three (3) point plan and carry it out completely.

1. The Larouche Housing and Bankers Protection Act of 2007 must be adopted and set into motion immediately. If not, the situation of the U.S. becomes quickly hopeless.

2. A two-tier credit system, in which a.) U.S. government credit for physical-economic recovery programs is provided at between 1-2%, and b.) other utterances of credit-injections float more or less freely.

3. The U.S. government must now immediately approach the governments of Russia, China, India, and others for the prompt establishment of an international, emergency fixed-exchange-rate system, ending the presently hopelessly bankrupt floating exchange-rate system.
http://www.larouchepac.com/news/2008/03/17/doom-has-st uck-three-steps-survival.html

Barry

Reply to this | Report this

By SamSnedegar, March 28 at 4:31 pm #
(155 comments total)

“By the way: I would like to point out another proof that my position is much more reasonable than yours: you insist that the Iraq war was ONLY for oil and COULD NOT possibly have been for Israel, too. I only insist that the Iraq war was not entirely about oil, and that Israel’s security was a prime reason (and probably the most important on any short list of reasons) for the war.

You see: I have the facts on my side in claiming that Israel was an important reason, and I also do not take a ridiculously absolute position such as yours in claiming that oil was the ONLY reason.”

You miss the point completely . . . a LOT of people WANTED to go to war with Iraq to benefit Israel. The point is that no one would have been insane enough to do that for Israel, no one in charge, that is. Had we no oil there to steal, there would have been no war. Israel notwithstanding. There were many who APPROVED of the war for no reason save Israel’s benefit by eliminating Saddam before he got the cruel sanctions removed and was able to USE HIS OWN OIL to buy arms with which to return the bombing favor bestowed on his nuclear aspirations by Israel.

Put it this way: if there had been no oil, then there would have been no war. You can keep on pretending that Israel is important enough to go to war over, but they are not. No oil, no war. End of story.

Reply to this | Report this

By Non Credo, March 27 at 4:00 pm #
(1148 comments total)

Sam Snedagar scoffs at people who indulge in fantasies, “...Like pretending that the Iraq war is about something BESIDES oil.”

Oh really, Sam Snedegar? Do you know who Philip Zelikow is? He was the executive director of the body set up to investigate the terrorist attacks on the United States in September 2001—the “9/11 commission”. Zelikow certainly seems to think the Iraq war was about something besides oil:

”Why would Iraq attack America or use nuclear weapons against us? I’ll tell you what I think the real threat (is) and actually has been since 1990—it’s the threat against Israel,” Zelikow told a crowd at the University of Virginia on Sep. 10, 2002, speaking on a panel of foreign policy experts assessing the impact of 9/11 and the future of the war on the al-Qaeda terrorist organization.

”And this is the threat that dare not speak its name, because the Europeans don’t care deeply about that threat, I will tell you frankly. And the American government doesn’t want to lean too hard on it rhetorically, because it is not a popular sell,” said Zelikow.

Is Zelikow a” Jewish anti-Semite” perhaps? I guess you’ll have to claim some stupid thing of that sort.

Doesn’t it suck being you, having to fight the facts all the time, Sam?

Reply to this 3 replies not shown on this page. | Report this

By KISS, March 27 at 2:07 pm #
(152 comments total)

Thing Are So Bad

even the secretary of the treasury Henry M. Paulson, Jr. is asking for regulation of the investment banks. SamSnedegar is so right that most American’s have no idea what investment banks are or what functions they serve, but than that is why we have a government, sadly this is a government that is a willing participant in conivery and chicanery. And again Sam is right on the money when he says that the average stock-holder is being screwed along with the myriad of investors in mortgages. But not the CEO’s..Caynes is sitting in his new 25 million dollar condo enjoying the good life, paid by us tax-payers.

Reply to this | Report this

By blueshift, March 27 at 9:19 am #
(44 comments total)

we need to sue to get the bonuses

all those multi-million dollar payoffs to business barons who have lost millions and fired thousands need to be sued, by the government, to get back every dollar they can. billions of dollars have been wasted on these people, many (or most) of whom are in violation of their fiduciary responsibility. And the auditors who approved of all this should be suedas co-conspirators, under the theory of joint and several liability.

Reply to this | Report this

By SamSnedegar, March 27 at 5:35 am #
(155 comments total)

not your ordinary bear

I wonder how many ordinary Americans ever HEARD of Bear Stearns or know even now what they were and what they did (not in the old fashioned way) to make money the new fashioned way?

If I had to guess, I’d say it was all part of the misapplied inverted arrhythmic stock market abcess (MIASMA) syndrome. That is the one in which the stock market is a giant gambling hall for super players where the smaller players always eventually lose, and the giant players always win. (Yes, the same market where Harkin Energy traded for years and years without ever once paying a dividend, and the only stock split was a negative one to prop up the dollar value of the stock which (justifyably) had tanked.

Hey, it’s a house of cards: one day the wrong person will get access, and the house will fall down in a heap. Meanwhile, it is only part of the fabric of lies being told to the American public by the power structure who manipulate them just as badly as the old British mine owners used to do their esnes.

“I got stock today from TAIWAN!” some idiot brays in a tv ad. They understandably do not point out that you can be cheated in six languages and a dozen currencies.

Like in the old Nevada mining towns, the customers say, “sure the game is rigged, but what the hell, it’s the only game in town!” So they play because it is a way to pass the time and pretend.

Like pretending that the Iraq was is about something BESIDES oil.

Reply to this | Report this

By Wingnut, March 27 at 4:27 am #
(Unregistered commenter)

Felony Pyramid Schemes - Outside View

“Posts by unregistered readers are moderated. Posts by members are published immediately. Why wait? Register today!”

Nice discrimination there! Join or suffer. CUTE! I take it that you wanted to sell your database-o-names. Caps! Wonderful. Maybe admin will get something from my post, too, if its not censored. This sounds like a censoring joint, though. Control freak talk all over the place. Gestapo headquarters. maybe.

Anyway, Hi!

Lets take folks OUTSIDE-OF the felony called capitalism, instead of CONTINUOUSLY and EVERYWHERE talking about the arguing going-on inside. Can we? Or will I be censored? Lets find out.

Readers, you DO see the pyramid scheme symbol on the back of the USA one dollar bill, right? You DO see the servitude infestation in capitalism, right? And do you see the “pay up or lose your wellbeing” Chicago mob-like felony extortion widespread within capitalism? Do you see the “join or starve” felony extortion done to the 18 year olds… by this ugly competer’s church called capitalism?

See how forcing competer’s religions onto 18 year olds (get a job!!!)… kills membership in the cooperator’s church (Christianity/socialism)?? Do you understand that AmWay (American Way) (New World Order) got “the exclusive” on the TYPE of survival coupons (money) accepted in supply depots (stores) and leverages 18 years olds into the organization via that felony activity as well?

Do you understand how farmyard pyramids work… from your childhood?? Remember?? Upper 1/3 are “heads in the clouds” while the kids on the bottom ALWAYS GET HURT from the weight of the world’s knees in their backs? Still with me?

Do you see anything illegal, immoral, or just plain sick… in any of this pyramid scheme’s activities?

Us American Christian socialists are still patiently awaiting the natural fall of the pyramid-o-servitude, or the busting of the free marketeers felony… by the USA Dept of Justice. Us Christians are VERY CLOSE to issuing a cease and desist order on capitalism… until the servitude and inequality goes away… which means it turns into a commune. Commune is a word we LOVE when used in the word “community"… but its one the caps HATE when used in the term “commune-ism”. Go fig. PROGRAMMED!!

Time to level the felony pyramid scheme called capitalism. Abolish economies and ownershipism worldwide, and hurry. Economies just cause rat-racing, and rat-racing causes felony pyramiding. BUST IT, America! Look to the USA military supply/survival system… for socialism and morals done right. Equal, owner-less, money-less, bill-less, timecard-less, luxury-repositoried, and concerned with growth of value-criteria OTHER THAN money-value. There are MANY measurement criteria of “value"… not just dollars. Try morals, efficiency, discrimination-levels, repairability, etc etc. Economies are cancerous tumors, and to cheer for their growth… is just insane. Profiting causes inflation, so if capitalists LIKE inflation, and if caps LIKE a terrible time in afterlife when they meet the planet’s ORIGINAL OWNER before SOMETHING tried to squat it all with ownershipism, then keep it up with the felony pyramiding. I dare you.

While us Christians are finally bulldozing that pyramid scheme back to level, lets ALL make servitude and “join or starve” illegal in the USA, and lets level the architecture seen in USA courtrooms, too. Right now, USA courtrooms are church simulators or “fear chambers”, by special design. Sick.

Take care, everyone.
Larry “Wingnut” Wendlandt
MaStars - Mothers Against Stuff That Ain’t Right
(anti-capitalism-ists)
Bessemer MI USA

PS: By submitting, I don’t agree to NUTHIN’, but thanks for the attempt at controlism yet again. Gonna censor me? No probs, I’ll just post at sites that don’t censor or parent.

Reply to this | Report this