Wednesday, February 18, 2009

Does Anyone Care about Greenspan’s Opinion?

Alan Greenspan is at it again. After having pumped up the American economy with the theft of the Philippine (Ferdinand Marcos) treasury, and then having encouraged the financial markets into believing the risk of derivatives and the subprime market were being managed to the point of eliminating any risk, he is delivering his final coup d' grace. For anyone still listening to him, he urges the Obama administration to kneel at the altar of ‘senior debt’ and sacrifice generations of children to economic slavery.

"The former Fed chairman said temporary government ownership would "allow the government to transfer toxic assets to a bad bank without the problem of how to price them." But he cautioned that holders of senior debt – bonds that would be paid off before other claims – might have to be protected even in the event of nationalisation. "You would have to be very careful about imposing any loss on senior creditors of any bank taken under government control because it could impact the senior debt of all other banks," he said. "This is a credit crisis and it is essential to preserve an anchor for the financing of the system. That anchor is the senior debt."(1)

In other words, Alan Greenspan said “ we should be careful not to expose the names of those responsible for the bad debt by transferring these toxic assets with any semblance of transparency. ” Moreover, “taxpayers should provide Treasury securities to the ‘big’ investors who collaborated with these big banks so they can be held harmless.” Possibly, he could be paraphrased to be saying “it’s acceptable to fore go capitalist principle as long as we continue to hold sacred the principle of senior debt” without talking about who owns that senior debt.

The truth is, Greenspan bought prosperity and stumbled through several financial crises using the leverage of the stolen Marcos treasury, never contemplating the consequence of using illegal capital. No one can unwind this current debt crisis because at its bottom is a source of illegal financing that no President can admit to. Not being able to unwind it, the newest plan is to launder it by giving all the ‘big’ bankers squeaky-clean T-bills under a bank nationalization program.

The “anchor” for financing the system is trust, not the principle of senior debt. There are over 7,000 banks in the U.S., and about 10 that are bankrupt. The public hears about the 400 recipients of TARP, as if the system is collapsing, but most of those 400 admit they don’t need it. 95% of the money goes to the top 10. If trust is the anchor, let’s trust the 6,990 trustworthy banks who most of Americans deal with. If Obama wants to nationalize the top 10 in an effort to put a suffering, dying man out of his misery let’s not enrich the people who created that misery.

1. Greenspan backs bank nationalisation, Krishna Guha and Edward Luce, Financial Times, February 18, 2009.

Saturday, February 7, 2009

Leon Panetta - a Retracted Endorsement

During Leon's recent confirmation hearing, he went on record to state that the new administration's policy would differ from those of Bush & Cheney, and he would order an end to 'harsh' interrogation techniques, and allow the Red Cross access to CIA prisoners.(1) In my earlier commentary, I defended his lack of intelligence experience because I really believed that bringing in an outsider would foster change in one of the most corrupt institutions in the U.S: the CIA. Since his recent arrival Leon Panetta has not only publicly acknowledged his stance of "not" prosecuting war criminals, but has gone on to state that at times, the U.S. may need to resort to those tactics again "if we had a ticking bomb situation".
"I think they made some wrong decisions, I think they made mistakes," he said. "I think sometimes they believe the ends justifies the means, and that's where people sometimes go wrong." Panetta said he thinks that in the fear of another Sept. 11-style attack, Bush administration officials thought, "We can't be bothered with legalisms." Panetta said, however, that he believes the greatest weapon the United States has against terrorists is its moral authority and commitment to the rule of law." (2)
The CIA cannot be above the law, and yet his testimony suggests he believes it is. Torturers (past or future) must be brought to trial! A jury - not the President, not a Congressional panel - must decide their fate. A jury may find them innocent, but that is the role of the dice any one who breaks the law must face, regardless of their intentions. The argument "they were just following orders" has been pretty well stripped of any validity. The concept that the CIA director can go to the president for "authorization" to torture people is something he says the prior administration was wrong to do, but is a privilege he reserves for himself. Panetta now degrades the essence of "moral authority" he wants to reference.
About this time Obama is probably feeling a lot like the Biblical character Lot, who searched the city of Sodom for 10 righteous people. Mr President: take a clue from Lot - if you want to find good people - you have to look for people who haven't spent the last 20 years in New York and Washington.
1. Panetta is Open to Extreme Methods in Certain CIA Cases, Mark Mazetti, New York Times, February 6, 2009, p.A16.
2. Panetta Says CIA Interrogators Won't Face Prosecution, AP, February 06, 2009