GE: Crony Capitalism Made Easy

It’s good to be the king. It’s equally good to be a friend of the king (“FOK”), as GE can attest. Indeed, you may recall GE CEO Jeffrey Immelt, was recently appointed to lead Obama’s President's Council on Jobs and Competitiveness. You may also recall that Immelt spent the last two years trying to foist cap and trade rules on the rest of us so we would be forced to buy his company’s products. Well, it gets better.

It was reported the other day that GE received a waiver from the EPA’s new greenhouse gas emissions rules for a power plant GE is building in California. Yes, the same greenhouse gas rules GE has been lobbying Congress to force upon the rest of us. That’s how you do it when you’re a FOKer.

Of course, GE wants to distance itself from the bad press this generates, so GE issued a press release, in which it claims that it did not request a waiver, nor was it given one. In fact, it says, it’s not even building the project! GE has only offered to provide turbines to the project but its offer hasn't even been accepted yet. So there, nothing to see here. Moreover, the project manager, not GE, requested the waiver.

So who is right? Well, let me say that I have no doubt that everything GE says in its press release is absolutely, technically true. But there’s a problem with GE’s claim. I spent years involved in government contracts, including construction contracts just like this one. And what GE says here is misleading.

When a company submits a bid on such a project, it already has its subcontractors lined up. Indeed, these bids are essentially the work of teams of contractors, whose efforts are coordinated by a single general contractor, who assembles and submits the final bid. Each contractor participating in the team will submit their own bid to the general contractor, usually on the condition that the bid is binding on both parties but only if the team is chosen to handle the contract. What this does is it allows the general contractor to know their costs and what capabilities they can offer, but doesn't require anyone to agree to anything unless they end up winning the overall contract, at which point everything automatically falls into place.

This is how it's always done. Indeed, it’s inconceivable that anyone would submit a bid to build a power station without having an agreement in place for GE (or some competitor) to supply the turbines at a certain price. Thus, while I don't doubt for a moment that GE is being legally correct when it claims that its offer has not been accepted, I have little doubt this is also highly misleading. The technical acceptance is a formality.

What’s more, it's also inconceivable that a project manager would request such a waiver without the full knowledge, support and participation of GE. Indeed, they would have needed GE to identify the issue for them and to guide them through the process. Thus, while it is probably technically correct that the general contractor made the request rather than GE, the general contractor would only make the request at GE’s direction.

Why would GE try to mislead the public on this? Because this is crony capitalism. GE spent $32,050,000 lobbying in 2010 and now it’s calling in those markers to get its politicians to put harmful anti-competitive regulations in place, and then to get exemptions from those regulations for itself. Keep this in mind, along with the 25,000 jobs GE shipped overseas during the last two years the next time you see a GE ad telling you about all of the good things they are doing for America and the world. And even more importantly, keep this in mind the next time some politician (Republican or Democrat) tries to tell you why we should be doing something GE wants. . . because they're FOKers.

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SOTU: Why Obama Is Doomed

Last night, Obama gave the single worst State of the Union speech I’ve ever heard and the worst speech of his career. There was nothing inspiring or memorable. His canned applause lines stunk, his “off the cuff” jokes were poorly scripted, and the rest of the speech can be summed up thusly: anger, accusation, blame shifting, political payoffs to interest groups and “admissions” that everyone else has served him poorly. This speech was meant to hit the reset button. . . it missed. It also tells us that he is doomed to failure.

Obama has a serious problem. Unlike other presidents whose approval ratings have risen and fallen with events, Obama’s have been on a steady downward course. This indicates a man who has lost the public. Thus, his objective last night was to reconnect with the public, to pull a mea culpa, to assure the public he will change, and to convince the public to give him a second chance. He failed. Instead, last night just highlighted why he lost the public in the first place.

Technical Problems: Lack of Inspiration

Obama is a poor speaker and his speech writers stink. He has yet to give a memorable speech, and last night was no exception. There were no memorable quotes, no incredible moments of truth, no compelling arguments, and no moment where he made a genuine call for all of us to come together. Instead, his speech was bland, with angry emphasis substituting for passion, half-hearted praise for America substituting for inspiration, an abundance of “too-perfect-to-be-true” letters from widows and orphans that felt like blatant manipulation, and “I” substituting liberally for “we.” He was snide, unpleasant, insulting and combative. He read poorly. His self-deprecating jokes were all backhanded slaps at his opponents, and he just wasn’t presidential at any point.

The contrast with Virginia Governor McDonnell could not have been starker.

Obama’s failure, by the way, was obvious in two facts from last night. First, the leftists hired by CNN to act as analysts were amazingly subdued. “He did what he had to do” was about the highest praise they could muster (even David Axelrod was subdued). They questioned his priorities (or lack thereof) and even scoffed at some of what he said. Not one person suggested this was a great speech or a memorable speech or that he’d “hit a homerun.” When your own PR people can’t praise your speech, something is wrong. Secondly, CNN’s instant poll showed a 20% drop in the number of people who gave this speech high marks compared to last year. Given that this poll would likely include a higher proportion of Democrats than last year’s, this was a horrible result for Obama.

Political Payoff Smorgasbord

Aside from poor writing and delivery, the main reason Obama’s speech will not resonate with the public is that it ultimately was not meant for the public, it was aimed at his special interest. As I’ve said before, the Democratic Party is no longer a party, it has become an alliance of tribes, each of whom want their share. Last night, emphasized that:

• Unions: Obama promised a second stimulus, aimed at putting “America” back to work. . . targeted at unionized jobs. Further, while he seemed to talk about free trade last night with South Korea, Panama and Columbia, he never said he would push the free trade deals already negotiated with those countries that are languishing in Congress. Instead, he talked about “enforcement,” which is the same anti-free trade garbage his side has been spewing about imposing environmental and labor regulations on our trading partners.

• Environmentalists: Obama promised to get a carbon tax, i.e. cap and trade, even if he had to bribe a handful of Republicans (like Lindsey Graham) to get it, by offering to include subsidies for nuclear power and limited off-shore drilling.

• Gays: He promised to end “don’t ask, don’t tell,” and he promised “increased” civil rights office enforcement, i.e. more lawsuits.

• Feminists: He promised to fight for the feminist panacea “equal pay.”

• Blacks: He promised a national hate crimes law.

The middle class? You get to pay for these promises, and he repeated the silly plan I discussed the other day -- though he shifted the blame on that one to Biden. (FYI, that plan is actually aimed at feminists and college students and the poor, not the middle class.)

To cover his giveaways, he paid lip service to the public’s complaints. For example,

• Obama’s Deficits: He acknowledged the deficit problem, by blaming it on Bush. He then promised a “total spending freeze.” What he did not say was that this would only cover 17% of spending and that Pelosi has already said it won’t get through the House. He then tried to make this sound impressive by talking about the savings this would generate over the next TWO decades. Wally from Dilbert tried this once, claiming his plan would save the company one million dollars. . . over a million years.

• Job Destruction: Obama acknowledged that people remain unemployed, a problem he blamed on Bush. First, he tried to lump the 6.3 million jobs that vanished under his policies on Bush by claiming that the economy had lost seven million jobs in the past two years. Then he blamed lobbyists (which made no sense). Then he bragged about his stimulus bill creating two million jobs -- a well documented lie. (See here and here.)

Now he’s promising targeted tax cuts for small business “for job creation.” No one has any idea what he’s talking about here -- he probably doesn’t even know himself -- but if this is nothing more than a “one time tax cut for hiring” (a new favorite among Democrats) then this is doomed to fail.

• Terrorism: Obama acknowledged that terrorism exists, a big step for him. But he blamed the failure to stop it on Bush, and he specifically blamed the Detroit near-bombing on policies put in place by Bush. Yet, while he acknowledged Bush’s failures he offered no plan to address terrorism other than more of the same. He then, amazingly, made the childish claim that he had “killed more terrorists” than Bush did in 2008. This brought near eye-rolls from the Joint Chiefs.

• Health Care: Obama also whined about the opposition to his health care bill, which he blamed on obstructionist Republicans, corrupt lobbyists, and cowardly Democrats who are worried about elections, i.e. public opinion. Then he said, “I’m no quitter” (another demonstrable falsehood). He then reformulated his plan as “health insurance reform” because no one likes insurance companies, and he challenged anyone who would oppose him to come up with their own plan -- something many have done, though he wouldn’t know that because he refuses to listen. But he waited 27 minutes into his speech to raise this issue, leading one CNN pundit to declare: “he won’t give up on health care, but he’s signaled that he won’t fight for it either.”

• Iran: He acknowledged that Iran hadn’t been fixed yet, which he blamed on the Iranians and prior administrations, i.e. Bush. He then swore that there would be real consequences if they didn’t comply this time. Of course, he couldn’t think of any consequence to mention, nor did he say who would bear them.

• Iraq: He promised again to bring home all of the (combat) troops from Iraq at some point in time, it’s just taking longer than expected because the “three” (formerly “two”) wars Bush left him were such disasters.

• Corruption: Recognizing that most polls put corruption at the top of the public’s concerns about his administration, he (1) promised “to fight corruption”. . . in Afghanistan, (2) he demonized lobbyists and claimed to have kicked them out of his administration -- another lie, (3) he talked about undoing the Supreme Court’s decision that allows corporations to donate money to causes, something recent polls show the public considers a matter of free speech, and (4) swore he would highlighting earmarks to the public. . . as compared to his campaign promise to stop them. He made no mention of his awarding a no-bid contract to a supporter (something he once called “corrupt”) or of the massive amounts of corruption in his administration and in Congress (see here, here and here).

In other words, he paid lip service to the public’s concerns, and he showed that he refuses to accept any responsibility for the public’s concerns and he doesn’t intend to actually address them except with more lip service.

Angry Obama Gives Way To Nasty Obama

Finally, we come to Obama’s biggest problem: his paranoid hatred of “those who oppose.” In a nod to Rodney King’s “can’t we all just get along,” Obama mentioned the word bipartisanship and he spoke of the need to change the tenor in Washington. But then, like a petulant child, he set about settling scores.

He attacked the Republicans over and over, using any falsehood he thought would help him. He tried to blame them for his own failures and then, like a cartoon villain, he incredibly warned them that they would be held responsible for any further failure on his part. He called his own party cowards for trying to hear the message of the people. He blamed Bush for every single one of his faults and failures. And, as noted before, he petulantly tried to sound tough by claiming that he killed more terrorists than Bush did in 2008.

He demonized bankers and lobbyists, in ways not heard since the 1930s -- all the while ignoring the fact that they are his biggest contributors, that they are his closest advisors, and that he appointed them to serve in his cabinet and to run his treasury department.

He even tried to play the self-pity, phony-acceptance-of-responsibility game by taking “my share of the blame” only to twist that into accepting the blame for being stopped by the self-interested and politically motivated acts of others.

Incredibly, he made a highly inappropriate attack on the Supreme Court, in their presence. It is not that he criticized a court decision, but that he attacked the court personally, when he angrily accused the court of destroying “a century of settled law” in favor of special interests (impugning their motives). This caused Justice Alito to mouth the words “not true”. . . giving Obama a second “you lie” moment in as many trips to Congress. And, indeed, it was not true. By the way, as an active attorney, his attack on the Court is an ethics violation and he should be sanctioned.

Finally, he thanked no one for anything.

This man is a child. He knows nothing, and it shows. He out hates Nixon as a paranoid gatherer of enemies and a serial assigner of blame. He out wimps Carter as an effete warrior. He makes the obviously stupid Bush II look like Einstein, and the smarmy insider Bush I look like a zealous reformer. And he makes the dishonest and dishonorable Bill Clinton look like George Washington.

Obama is finished. Not because he doesn’t have time to change, but because he’s not willing or able to change.

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Obama Agenda: The Environment

Let's continue our discussion of Obama’s agenda. Obama is not an environmentalist, that's obvious from his lack of passion and his fealty to the unions. Though, he must placate his base, which includes environmentalists. However, as previously discussed, the environmental movement has been partially co-opted by socialists who want to remake the American economy. Hence, his policies are a mix of liberal environmentalism (forced conservation, massive subsidies, pet projects) and down right socialism masquerading as environmental policy.

Obama's environmental policies come in four parts. The first two are premised on liberal environmentalism. The other two are pure socialism.


Part One: Alternative Energies

Obama's stated goal is to ensure that by 2025, 25% of our energy comes from solar, wind, biofuel, and geothermal sources (note the absence of natural gas and nuclear). To achieve this, he proposes:

• Weatherizing one million homes annually.

• Pouring $150 billion into alternative fuel technology.

This is fairly standard liberal environmentalism. Obama believes that by picking "winners" and subsidizing them, he can bend the laws of physics and economics. But reality tells us otherwise. Physics bends for no one and the history of subsidies is a history of waste, fraud, and failure. Indeed, subsidies keep better solutions from emerging, and thus ultimately prove entirely counter productive. But that's the kind of solution you get from the left.

Undeterred, Obama has already spent considerable amounts toward these goals. For example, the stimulus bill included five billion dollars to weatherize low-income homes. This may cover 500,000 homes by the end of 2009, if you believe the estimates. More insidiously, cap and trade, currently D.O.A. in the Senate, includes a provision that would require an environmental inspection for all homes prior to sale, with the homeowner being required to raise the energy efficiency of the home before a sale would be allowed. If this passes, look for home sales to plummet, fixer-uper’s to disappear, and poor people to be priced out of the housing market.

The stimulus also included $18 billion in grants and loans to renewable energy companies, $100 billion in tax credits, and $6 billion to modernize the nation’s electricity grid. The FY2010 budget inclues another $39 billion in spending and $20 billion in tax incentives on renewable energy.

Obama claims this will generate five million "green" jobs, though the history of subsidies says otherwise.

The cap and trade bill also includes a requirement that utility companies produce 20% of their electricity from renewable sources by 2020.

Despite all of this, the Energy Information Administration estimates that all of the above will only increase the share of electricity generated from renewable sources to 15.8% by 2030 from its current 7%.


Part Two: End Dependence on Foreign Oil

Obama next proposes to reduce our oil consumption by 35% by 2030. That would represent an amount equal to what we currently import from the Middle East and Venezuela (combined). Here's how:

• Increasing fuel economy (CAFE) standards for vehicle fleets.

• Putting one million plug-in hybrid (American made) cars on the road by 2015.

• Implementing a $7,000 tax credit for buying a hybrid.

Obama’s Dept. of Transporation is drafting rules that will require cars and trucks (not previously included) to be 5% more efficient each year until 2016. They will also require that the amount of ethanol or biodiesel used in the US increases from 9 billion blended gallons to 36 billion gallons by 2022.

As for Obama’s hybrid goal, current hybrid sales rates are approximately 175,000 a year, so he may just get his wish. But none of them are American made.


Part Three: Stop “climate change”

This is where Obama's environmental policy loses touch with environmentalism and drives fully into socialism. Obama's goal here is to save the world from "climate change" by:

• Implementing an economy-wide cap and trade program to reduce “greenhouse gas” emissions by 80% by 2050.

• Developing and deploying clean coal technology.

The undistorted scientific evidence is clear that all of the claims that the Earth is heating up are wrong, the assertions that "carbon causes warming" are false, and the idea that mankind contributes significantly to carbon emissions is an obvious lie. Indeed, as we pointed out before, everything mankind does represents around 3% of all carbon emissions. It is thus logically impossible to rationally conclude that capping carbon will have any effect on global temperatures.

Obama knows this. Yet he's proposing a cap and trade bill, that will severely damage or retard the American economy. Why would he propose a painful cure, that can't work, for a disease that isn't real? Because the socialists in the environmental lobby want to remake the American economy along European-socialist lines.

Not coincidentally, 65% of Americans oppose cap and trade.


Part Four: Punish oil companies and speculators

Finally, Obama proposes a little classic socialism, consisting of class warfare and redistribution. This has never worked before, but, like a typical liberal, he thinks he can make it work. Go figure? Here's his plan:

• Enact a “windfall profits” tax and redistribute the proceeds to poor people in the form of $1,000 energy rebates.

• End tax loopholes (read: deductions) for oil and gas companies.

• Limit “excessive energy speculation.”

• Implement a “use it or lose” it approach to existing oil and gas leases.

Obama’s FY2010 budget ended around $30 billion (over ten years) in tax deductions for oil and gas companies. Beyond that, he hasn’t bothered with any of these promises.


So that’s Obama’s environmental agenda, a mixture of heavy-handed, ineffective and stupid environmental ideas (with obvious “unintented consequences” that they are overlooking) and flat out socialism. That’s why Obama has only a 43% approval rating on environmental issues.


Note: Unless otherwise indicated, everything above comes from Obama’s own website.


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United States of America™, Property of Goldman Sachs

In 1873, Mark Twain co-authored a book called The Gilded Age: A Tale of Today, and thereby gave a name to era between Reconstruction and the Progressive Era. Were Twain alive today, he would likely name our present era “The Second Gilded Age.” And nothing illustrates this more than the many-tentacled creature known as Goldman Sachs.

The Gilded Age

Events today read like a repeat of the Gilded Age.

The Gilded Age is generally considered to have begun under the Grant administration. It was an era noted for massive corruption, dramatic social and economic upheaval, and a shocking incestuousness between big business and government. These two became so intertwined that the public came to see government action as nothing more than favoritism, bribery, kickbacks, inefficiency, waste, and corruption. Smart people.

The Gilded Age was the age of robber barons, like Andrew Carnegie, John Rockefeller, Cornelius Vanderbilt, and John Pierpont Morgan -- names that continue to mark our most powerful corporations today. It was the time of Tammany Hall and Boss Tweed, of corrupt local politics and election fraud, of Republican Mugwumps calling for an end to the spoils system in the civil service, of Bourbon Democrats calling for free market reforms, and of national parties ignoring all the cries for reform. And in 1889, this Age gave us the Billion Dollar Congress, an outrage that seems quaint compared to this year’s trillion dollar deficit.

The Gilded Age also gave us waves of immigrants to keep factory costs down, Chinese labor to build the nation’s railroads, and the birth of labor unions. The media too was changing, with the introduction of yellow press journalism, and the abandonment of factual news for sensationalism and sentimental stories. And the economy endured two depressions, the Panic of 1873, caused by the manipulation of the gold market by Jay Gould and James Fisk (“Black Friday”), and the Panic of 1893, a deep depression that ushered in the Progressive Era.

Sound familiar? Try substituting Goldman Sachs, ACORN, Tea Party, Mexicans, infrastructure, Madoff, Stafford, and reading this again.

By the 1890s, the Gilded Age was ending. Spurred on by reformers, the government imposed new regulations in response to corporate excesses, dangerous workplace and consumer conditions, exploitive labor practices, and anti-competitive behaviors. Many of those regulations remain with us today.

Goldman Sachs: The Corruption of the Revolving Door

It seems we are doomed to repeat the Gilded Age. And as history loves irony, the company at the center of this Second Gilded Age is a company formed at the tail end of the first Gilded Age: Goldman Sachs.

Goldman Sachs was founded as Marcus Goldman & Co. in 1869. It was renamed Goldman Sachs in 1882. The company made a name for itself in its pioneering use of commercial paper and it joined the New York Stock Exchange in 1896. Over the next 100+ years, it would grow to become one of the most influential companies in the world.

Now before I continue, let me be clear, I do not believe in conspiracies. There is no small group of illuminati that meet regularly to decide our fates and control the world. That said, I am not fool enough to believe that our government acts in the best interests of its citizens. It should be painfully clear to all of us that the government responds to those who have the most access to it. Thus, where we find access, and we find favored treatment for those with access, we must wonder whether the system is working or not. That is the point to this article.

Nor, is this article an attack on Goldman Sachs per se. Goldman is simply one of dozens of groups with too much influence. I have picked Goldman from the crowd only because they’ve made it very easy lately to see how they use their influence to help themselves at our expense.

How Much Influence Does Goldman Have?

How powerful is Goldman? Said one recent commenter: “It’s Goldman’s world, folks. We just live in it (at Goldman's discretion, of course).” Consider these facts. In October of last year, the New York Times reported that thirteen Goldman employees worked in senior positions with the George W. Bush administration. This included Treasury Secretary Hank Paulson, White House Chief of Staff Joshua Bolten, and the man who would oversee the TARP, Neel Kashkari. The Times called this “Government Sachs.”

The Clinton administration too was staffed with Goldman employees, including Treasure Secretary Robert Rubin. Obama, who received $918,000 from Goldman employees for his campaign, also has hired his share of Goldman alumni. Indeed, in a rather controversial move, Timothy Geithner hired former Goldman employee Mark Patterson to be the Treasury Department Chief of Staff, in direct violation of Obama’s “no lobbyists” policy.

But Goldman employees aren't just in the administration. Goldman employee Robert Zoellick is president of the World Bank. Mario Drahi is the governor of the Bank of Italy. Romano Prodi is the former Prime Minister of Italy. Mark Carney is the governor of the Bank of Canada. Michael Cohrs is the Head of Global Banking at Deutsche Bank. Malcolm Turnbull is the leader of Australia’s Liberal Party. Jim Cramer spends his days talking up Goldman Sachs on his show on CNBC, along with former Goldman alum Erin Burnett. Edward Lampert bought K-Mart in 2003. Ashwin Navin is President of BitTorrent. John Corzine, the former head of Goldman Sachs became a United States Senator and then governor of New Jersey. And there are many more.

Some are in key positions that regulate Goldman itself. Goldman alumnus Stephen Friedman and current Goldman board member, became an economic advisor to President Bush and Chairman of the Foreign Intelligence Advisory Board, before leaving the administration to become Chairman of the New York Federal Reserve Bank’s Board of Directors. . . the agency that regulates Goldman Sachs and which has a significant role in setting interest rates, which affect Goldman directly. Even worse, Friedman received a waiver, allowing him to remain on Goldman’s board during his time on the New York Fed. However, when it was learned in May 2009 that he purchased 52,000 shares of Goldman Sachs in January, he resigned from the Fed “to avoid the appearance of a conflict of interest.” Wouldn’t want that.

William Dudley, a former Goldman economist, was appointed as president of the New York Fed to replace Tim Geithner, who was mentored by former Goldman CEO and Treasury Secretary Robert Rubin. Rubin has been an economic advisor to President Obama.

Goldman executive Gary Gensler became the head of the Commodity Futures Trading Commission, replacing Brooksely Born, who was criticized for failing to regulate the derivatives market. Gensler himself stated that Born, “should have done more to reign in exotic financial instruments that have battered global markets.” What went unmentioned, however, was that Born’s efforts to regulate derivatives were blocked by Goldman alum Robert Rubin, who recommended to Congress in 1999 that the Congress strip the CFTC of its regulatory authority over derivatives. More on Goldman’s role in the derivative issue in a moment.

Goldman's Influence Equals Power

So what has Goldman gotten from all this influence? Remember cap and trade? Goldman Sachs, which gave $4,452,585 to the Democratic Party, has been pushing cap and trade because Goldman dominates the new carbon-credit market. Matt Tabbi of Rolling Stone notes that this

“is a virtual repeat of the commodities-market casino that’s been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won’t even have to rig the game. It will be rigged in advance.”

In an interview in July 2009, former Assistant Secretary of Treasury Paul Craig Roberts was asked “Does the US Secretary of the Treasury work for the people or does he work for the banking system on Wall Street?” He replied: “He works for Goldman Sachs.”

Do you remember the bailout? The bailout was designed by former Goldman leader Hank Paulson. Here’s what you might not know:

• Paulson let Goldman competitor Lehman Brothers go bankrupt. The very next day, Paulson established the bailout program.

• Paulson put Goldman employee Neel Kashkari in charge of administering the bailout (TARP) funds.

• Paulson gave $300 billion in taxpayer money to Citigroup, which was run by ex-Goldman head Robert Rubin.

• Paulson gave $138 billion to help Bank of America buy, and thus bailout, Merrill Lynch, then run by former Goldman employee John Thain. According to recent testimony by Bank of American president Ken Lucas, Paulson threatened Lucas to go through with the deal and to pay off bonuses to Thain and others. Thain, by the way, was rumored to be John McCain’s choice for Treasury Secretary had he won the election.

• Goldman/Treasury employee Robert Steel was put in charge of Wachovia, which he turned around and sold to Wells Fargo after a few months, triggering $225 million in golden parachutes that went to a handful of Wachovia executives, including Steel.

Now consider the AIG shell game. As we noted above, Goldman alumnus Robert Rubin stood in the way of the CFTC regulating derivatives. A derivative is basically insurance against a bond defaulting. When the derivatives market took off, AIG became heavily involved. Goldman was the first group to realize that AIG had underestimated the risks in issuing these derivatives and it bought lustily from AIG.

When the market turned and it became clear that AIG had over extended itself and likely could not pay off these derivatives (in fact, the company appeared ready to fail), Paulson stepped in. He not only agreed to bail out AIG to the tune of $85 billion, but he put former Goldman employee Ed Liddy in charge of AIG. Liddy paid $13 billion of these moneys over to Goldman, paying off 100% of AIG’s debt to Goldman. No other institution received 100 cents on the dollar from AIG.

But this is nothing new for Goldman. According to Matt Tabbi, Goldman has been heavily involved in inflating every bubble and then profiting from the bailouts that follow the busting of those bubbles.

Nor is Goldman’s influence limited to the national level. Do you remember Goldman head John Corzine? He’s now the governor of New Jersey. Guess what company floats bonds for New Jersey? More interestingly, in November 2008, it was revealed that at the same time that Goldman was selling bonds for New Jersey, it was telling its wealthiest customers that they should short those bonds. This advice would make those bonds appear riskier than they actually were and would increase the interest rates the state needed to pay on future bonds (and Goldman profits).

At the same time, the Los Angeles Times accused Goldman of doing the same thing in California.

Conclusion

This is not an issue of Republicans or Democrats. Both sides are equally guilty. Nor is this an issue of Goldman Sachs being evil or running the world. Goldman is simply taking advantage of a system that lets people move between government and industry with amazing easy, that lets people profit from conflicts of interest, and that converts our government from a referee into a cash machine. It is time for serious ethics reform to prevent the types of arrangements that make the above possible.


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Democrats Bust A Cap In Prosperity’s As~

Friday, Congressional Democrats, with the help of eight “Republican” stooges sold out the United States economy, middle America, and the nation’s poor in the name of not-fixing a non-problem. Here is what you need to know about the euphemistically titled American Clean Energy and Security Act (aka cap and trade).

Why did they do this?

Short answer: they don’t like you. Longer answer: Environmental theologians, like Al Gore the Prophet, believe that carbon dioxide, a heat-trapping "greenhouse" gas, is the primary cause of global warming.

They note that carbon dioxide emissions from the burning of oil, coal, and natural gas constitute about 80% of all man-made greenhouse gasses in the United States. Moreover, they note that man-made carbon emissions have increased worldwide more than 70 percent since 1970, and are now 40-45% higher than they were at the start of the Industrial Revolution. And they want this stopped. The Democrat’s cap and trade system, supposedly, will cut those emission, which will reduce the amount of greenhouse gas in the air, and will therefore prevent global warming.

So will it work?

Many people think it will. Indeed, a full 63% of Americans believe that human activity is the greatest source of carbon-dioxide emissions. But then, a 2006 survey found that 70% of Americans couldn’t find Iraq on the map, despite that whole war thing, and 33% couldn’t find Louisiana, despite that whole Katrina thing.

Perhaps we should ignore uninformed opinion and instead look at some facts? And here is one: human-caused carbon emissions come to a grand total of 3.27% of all carbon emissions. That’s right, 3.27%. The rest are caused by the decay of “biomass” (i.e. dead trees, leaves, etc.) or are released through volcanic activity. Thus, cap and trade will only affect a maximum of 3.27% of the problem.

Can reducing that 3.27% solve this problem? No. Ask yourself, if you are ten feet under water, with an additional foot of water being added every minute by a waterfall and an additional inch of water being added by your friend with a bucket, do you really think you can solve the problem by asking your friend to switch to a smaller bucket?

(For our congressional readers, we have a crayon-ready picture version of this last paragraph available upon request.)

But wait. . . there’s more!

They’re not even trying to fix the full 3.27%. No, indeed. Why? Because the Kyoto treaty, which is what Obama is trying to implement through this cap and trade scam, excluded developing countries (i.e. real polluters) from having to cut back their own emissions. Thus, China and India don’t need to make any cuts at all. Guess which country is the world’s biggest polluter? If you said China, then you’re too smart to be a Congressman. China accounts for 28% of the world’s pollution, and is growing rapidly.

So now we’re not even talking about fixing the 3.27%, we’re talking about fixing some portion of about twenty percent of that 3.27%.

Think of it this way: your neighbors’ cars belch out black smoke all day, but we’re going to “fix” the air quality problem in your neighborhood by making you drive your new Prius 10% slower.

Ok, what’s this going to cost?

The Democrats have been pimping a cost figure produced by the Congressional Budget Office that found that this legislation will cost the average household only $175 a year by 2020. Or as Ed Markey (D-Twilight Zone) claims, this will “cost less than a postage stamp a day.” Of course, that’s a lie.

The CBO study looked only at the cost of operating a trading program, it did not examine “the potential decrease in gross domestic product that could result from the cap.”

In other words, it only counted what the government will spend administering the program, it did not count how the program will affect the rest of us. This is like me claiming that I can reduce your grocery bill to $120 a year if you pay me $10 a month to buy groceries for you with your credit card. See the problem? If not, send me your credit card.

So what will it really cost? The Heritage Foundation estimates that this law would

• cost the economy $9.4 trillion in lost GDP by 2035,
• destroy an average 1.2 million jobs per year,
• increase electricity rates by 90%,
• increase gasoline prices by 58%,
• increase natural gas prices by 55%, and
• will result in an overall cost to the average family of four of $6,800 per year (more than half of what they currently spend on health care).

And if you don’t want to believe the Heritage Foundation, consider that the prior version of this bill, the Lieberman-Warner bill, died after it was determined that bill would

• cost the average family $6,752 per year,
• increase the costs of gasoline 144%,
• increase the price of electricity 129%, and
• eliminate 4 million jobs.

Moreover, the Lieberman bill had significantly lower goals than the current bill (reducing emissions by only 70% instead of 83%). Thus, the Heritage Foundation’s report likely understates the costs.

Won’t this hurt the poor the most?

Sure. These costs will have their greatest impact on food and energy. Thus, the harm from this bill will be highly regressive in nature, meaning that the poor will suffer the most. Also, the poorest parts of the country will be hit hardest by the job loses because those states rely on coal, farming and manufacturing more than the enlightened states. And here I thought the Democrats were the party of the poor?

As an aside, when your liberal friends start complaining about the cost of gas or electricity, tell them that the Republicans offered three amendments to suspend the program if gas hits $5 a gallon, if electricity rates increased by more than 10% in 2009, or if unemployment exceeds 15%. The Democrats defeated each of these, because they care about the poor. . . unlike those job-saving, gas-cheapening Republicans.

But do you know what’s even better?

This bill won’t even work to reduce green house emissions! At least, that’s what Greenpeace says.

The Waxman-Markey bill sets emission reduction targets far lower than science demands, then undermines even those targets with massive offsets.

An offset is like an indulgence. You can sin all you want, you just need to pay over a little something special to the pope and all will be forgiven. Remember your friend with the bucket? If you allowed offsets, he could keep adding water, but he would need to pay some politically connected third-party a rental fee on the bucket. That will solve the problem.

Greenpeace continues. . .

Greenpeace has expressed tremendous concern about the role of offsets in this legislation. Unless strictly controlled, the abuse of offsets could prevent real emission reductions for more than a decade. The decision to move authority over offsets from EPA to the Department of Agriculture further reduces the likelihood that such controls will be maintained and increases the likelihood they will undermine real reductions.

Department of Agriculture? Seriously? The same people who keep the nonsensical ethanol program running because it helps huge industrial farms (science be damned) and who kept the food pyramid upside down for 30 years to please lobbyists? Nice choice. Was the Bureau of Corruption unavailable? How do I get one of these jobs. . . I like suitcases full of cash.

(For our Congressional readers, that’s called sarcasm. . . sarcasm . . . oh look it up, I’m not going to explain it to you.)

So who do we thank for this?

The vote was 219-212. To get the bill through, the Democrats relied on the support of eight useful idiots, as Stalin would have called them. Not only did they not read the bill (300 of the 1200 pages were added, unread, at the last minute), but these eight idiots allowed eight Democrats in vulnerable districts to vote no, to protect their re-election chance. Here are their names:

Chris Smith -- NJ
Dave Riechert, WA
John M. McHugh - NY
Frank A. Lobiondo - NJ
Leonard Lance, NJ
Mark Steven Kirk, Il
Mike Castle, Del
Mary Bono Mack, CA

If you see these “Republicans,” spit on them. . . unless you’re really tall, then replace the p with an h.
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