Sunday, November 8, 2009

The Obama Oligarchy

Salon had the first two paragraphs(Which I have edited) on one of their blogs but they attributed it solely to Bernanke and the reality is Obama is in charge and continuing this which is why I felt the need to correct it.

It was George Orwell who wrote (1984 ) ~ "The essence of oligarchical rule is not father-to-son inheritance, but the persistence of a certain world-view and a certain way of life ... A ruling group is a ruling group so long as it can nominate its successors... Who wields power is not important, provided that the hierarchical structure remains always the same."
Barack Obama is a stooge for the powerful few ~ which is the definition of an Oligarchy ( the tyranny of the Elites ). Wall Street owes the survival of it's recent near death experience to Bernanke who poured trillions of dollars into its rotting black hole of toxic debt to keep it afloat but OBAMA continues this tradition ~ in order to maintain a certain way of life for the financial elite of the Oligarchy.

Just SCROLL below and it will show you it pays to be one of Obama's Elites....

Even as Tim Geithner was boldly lying on national TV, claiming that he abhors the concept of too big to fail, and condemns moral hazard, behind everybody's back he, together with the entire Obama administration, was trying to pass a law that would shift TBTF from a temporary program into officially canonized law.

This is a scandal that has gotten little recognition in most of the MSM: in essence it guarantees that the massive mega banks like Goldman Sachs, BofA, and JPM will take on so much disproportionate risk the next time around (and with a moral-hazard encouraging Federal Reserve as risk regulator virtually guarantees their implosion) that not only will they blow up spectacularly once again, but that their bailout next time around will surely force America, already strapped with trillions of new upcoming debt courtesy of stimulus after stimulus, into sovereign insolvency.

One of the side effects of the TBTF policy is that it is essentially a subsidy of the mega banks at the expense of the smaller, regional ones, as the cost of capital of anyone perceived Too Big To Fail will approach zero due to their implicit guarantee by the US government in perpetuity: an unfortunate side effect of moral hazard becoming a national doctrine. An analysis by the Center For Economic and Policy Research has quantified the funding differential as one of 49 basis points, which translates into a bank subsidy of $34.1 billion per year for all banks with more than $100 billion in assets.

Comparing this thus quantified subsidy to other controversial programs as Foreign Aid Appropriations for 2009, indicates that the TBTF subsidy is 20% higher, and TBTF is more than double the projected budget allocated for the Temporary Assistance to Needy Families (TANF). What is more relevant for shareholders of these banks, is that the subsidy, when represented as a fraction of bank profits, accounts for nearly 50% of all bank profits. And as profits are a function almost exclusively of banker comp as the only substantial banking overhead (consisting of base and bonus) the sad conclusion is that the government directly is funding at least half the bonus pool for all the TBTF institutions. The table below highlights what portion of an institution's total profits is owed to OBAMA and Geithner.


This will make bo’s buddy warren buffet happy he is already making money on it.

Berkshire Hathaway’s (BRK) whopping $44 billion acquisition of Burlington Northern (BNI) is a tremendous endorsement of the US railroad industry.

Now, while Burlington Northern is highly profitable, US rail — especially passenger rail — is kind of the laughingstock of the world.

So what gives? Basically, Warren Buffett is betting on lots more government spending, particularly with respect to infrastructure, and specifically he hopes a lot will be allocated to rail. Obama is known to be rail friendly, and the first stimulus was expected to be highly infrastructure-based, but it wasn’t.

Buffett — who has the ear of the President — is guessing, safely, that we haven’t seen the end of that dream, that Obama will open up the government’s coffers for a major upgrade of the rail system. If we begin taxing carbon, thus making it more expensive to ship goods by truck, that’s another plus.

Remember this is de rigeur for Buffett. He made a lot of money betting the banks were too-big-to-fail during the crisis. He likes regulated industries like insurance and utilities. He’s benefitted from housing. He advocates a high estate tax, which makes it easier for him to acquire family-owned businesses when they have to sell for tax puporses. Plenty of examples just click below. And for you THE BILL! After all you don't expect Obama and his Elite friends to pick up the tab do you?
Please feel free to copy and circulate.

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