One Last Gift From Obama to Wall Street

November/05/2010 16:03PM
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In case you haven’t noticed the big banks on Wall Street have done very well in their close partnership with Obama. Sure, they have endured being called “fat cats” and had a bill called financial reform aimed at them. But, that’s a small price to pay for what may well be the biggest bonus year in history for them and their key employees.(2009) They tell us they are earning it the “old fashioned” way, but it’s not true. They are earning it because of low interest rates and growing government size. They borrow from the Fed at almost zero interest and speculate with borrowed money from the tax payer and run their casinos like they have for years. They are the middlemen who issue government debt and take a piece. They find buyers for the government debt. It’s a no brainer. And, financial reform, it insures their losses. To big to fail is institutionalized in the bill. The big boys all qualify.

None are really lending to small business. Why should they take that risk? They can do their high risk trading and make far more.

Now comes QE2. Not the ocean liner, but the Fed’s big plan to sell itself $600 billion in Tbills. This is to keep deflation down and keep interest rates low. Goldman can’t wait. More money to borrow at low rates. More tbills to sell. More turmoil in the bond market to trade against. It’s like a big early Christmas bonus on top of what will be a big year-end bonus. No one can say Obama didn’t deliver on his promises to Wall Street when they financed his defeat of Hillary and his ultimate rise to the Presidency. He may have screwed over the country but not his good friends at Goldman, Citi, Morgan, and Chase. A big chunk of those bonus dollars will go back to help Obama in his 2012 campaign. It’s a symbiotic relationship. Big government means bigger big banks. Big government debt means more commissions for those bigger big banks. More commissions and trading profits from low interest rates means big bonus checks. Big bonus checks insure big campaign contributions to Obama. Just like the ibis that lives in the crocodile’s mouth eating bugs. But, who is the ibis and who is the crocodile here?

So many good people who advise the president came from and will return to Wall Street. What type of advice will they give Obama? Do they strike you as patriots who care deeply about Main Street, construction workers out of work, or your 401K? Like Robert Rubin, who returned to Wall Street, had a big role in getting the Glass-Steagall Act revoked and opened the floodgates to the housing crash? He made several millions for CitiGroup while he did his mischief. Where do you think Geithner will go next and what will he make?

How much inside information gets passed from this motley group of ex-Wall Streeters now insiders in the Obama White House back to their respective banks?

So, is the QE2 really needed, or do the big boys on the Street really need one last stimulus to their record 2010 bonus plans?

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