I’m hooked on the economics blogs these days. Blame Dakinikat for starting me on a (probably hopeless) quest to understand the economic meltdown. I have been mathphobic since the eighth grade when I was horribly traumatized by algebra. And geometry! Don’t even get me started. When I was an undergrad, I was forced to take two math classes–basic math and statistics. Fortunately, those of us in the psych department were assigned a good humored, patient professor who cracked jokes about our having post-traumatic stress from high school math and had developed simple ways to explain mathematical concepts. Thanks to that kind and supportive professor, I was also able to survive two mind-numbing semesters of graduate statistics without too much anxiety.
Despite my lifelong troubled relationship with numbers, I am determined to understand what is happening to our economic and political systems to the best of my ability. These days, when I first get up, I open up The Confluence (my home page), quickly see what’s happening and then I check all my favorite econ blogs to find out the latest news and views.
This morning via The Market Ticker, I found this ABC News story on Joseph Cassano. (By the way, Cassano donated $2,500 to Obama’s primary campaign and $2,300 to his presidential campaigns. Isn’t $2,300 the maximum?) But back to ABC News:
The FBI and federal prosecutors are reportedly closing in on the AIG executive whose suspect investments cost the insurance giant hundreds of billions of dollars. The government is investigating whether or not 54-year old Brooklyn-native Joseph Cassano committed criminal fraud in virtually bankrupting the company.
“He almost single-handedly is responsible for bringing AIG down and by reference the economy of this country,” said Rep. Jackie Speier (D-Ca.)
Cassano, who lives in London, made more than $300 million running the infamous Financial Products Division of AIG where he, with about a dozen others, committed AIG to insure what turned out to be more than a trillion dollars worth of junk quality loans held by banks.
“He is the golden boy of the casino,” said Rep. Speier. “They basically took peoples’ hard earned money and threw it away, gambled it and lost everything. And he must be held accountable for the fraud, for the dereliction of his duty, and for the havoc that he’s wrought on America.”
The story goes on to say that Cassano was paid $1 million per month (!), (yes, you read that right) even after being fired for wrecking the company. During his tenure at AIG, Cassano
set up some dozens of separate companies, some off-shore, to handle the transactions, effectively keeping them off the books of AIG and out of sight of regulators in the U.S. and the United Kingdom.
“This is the other very important issue underneath the AIG scandal,” said Blum. “All of these contracts were moved offshore for the express purpose of getting out from under regulation and tax evasion.”
Despite warnings from Joseph St. Dennis, an accountant who worked with Cassano, AIG management stood by and let all this go on. Don’t tell me no one knew what Cassano was up to. And the new boss of AIG (formerly of Goldman Sachs, natch) thinks Cassano did nothing wrong.
Read it and weep. And be sure to read the piece at Market Ticker. There are more shocking details there. This is where our taxpayer money is going folks.
Yesterday, we were talking about the possibility that Obama, Geithner, and Summers are using AIG as a money laundering operation to funnel money into other banks like Goldman Sachs, which got an intial $25 billion from taxpayers and another backdoor infusion of $13 billion through payments from AIG. But why did Goldman Sachs and other creditors of AIG get paid in full when they were essentially bankrupt and operating with taxpayer’s money? Paul Craig Roberts thinks the entire government bailout of the big financial firms is just another scam:
…Obama’s White House economist, Larry Summers, on whose watch as treasury secretary in the Clinton administration financial deregulation got out of control, invoked the “sanctity of contracts” in defense of the AIG bonuses.
But the Obama administration does not regard other contracts as sacred. Specifically: Labor unions had to agree to give-backs in order for the auto companies to obtain federal help; CNN reports that “Veterans Affairs Secretary Eric Shinseki confirmed Tuesday (March 10) that the Obama administration is considering a controversial plan to make veterans pay for treatment of service-related injuries with private insurance”; The Washington Post reports that the Obama team has set its sights on downsizing Social Security and Medicare.
According to the Post, Obama said that “it is impossible to separate the country’s financial ills from the long-term need to rein in health-care costs, stabilize Social Security and prevent the Medicare program from bankrupting the government.”
So the contracts the government has made with its citizens are not “sacrosact,” like the contracts with banksters and their creditors.
According to The New York Times, thirteen firms got bailout money through AIG; eight are listed in the article:
Financial companies that received multibillion-dollar payments owed by A.I.G. include Goldman Sachs ($12.9 billion), Merrill Lynch ($6.8 billion), Bank of America ($5.2 billion), Citigroup ($2.3 billion) and Wachovia ($1.5 billion).
Big foreign banks also received large sums from the rescue, including Société Générale of France and Deutsche Bank of Germany, which each received nearly $12 billion; Barclays of Britain ($8.5 billion); and UBS of Switzerland ($5 billion).
Goldman Sachs – $980,945
Citigroup – $657,268
J.P. Morgan Chase – $650,758
UBS AG – $522,019
Bank of America – $274,493
Merrill Lynch – $257,949
Wachovia – $214,151
Deutche Bank – $4,600
From the Financial, Insurance, and Real Estate sector, Obama got $38,089,102 in campaign contributions.
Yesterday, President Obama announced that he is not satisfied with the efforts of General Motors and Chrysler to streamline their operations and create efficient plans for the future. How many auto workers have to lose their jobs or take less pay and benefits, how many retirees have to lose their health care and pensions (these contracts are not so sacrosact, apparently) before Barack Obama will help them out with public funds? No one knows. Hmmm…I wonder how much the auto companies and auto workers contributed to Obama’s campaign war chest?
From the entire Labor sector, (biggest contributor SEIU).
Obama received $466,324
From individual auto company employees and employees of the UAW:
General Motors – $40,992
Chrysler – $20,391
Ford Motor Co. – $19,405
United Auto Workers employees – $4,800
The difference is stark. Now why do you suppose Obama is being so very supportive of the giant finance and insurance firms and so very punitive to the automotive industry and it’s workers? Something tells me it’s not about what’s best for our country.
Filed under: Barack Obama, corruption, Economic Blogs, Economy, financial bailout, Financial Meltdown of 2008 | Tagged: AIG, Bank of America, Chrysler, Citigroup, Ford Motor Company, General Motors, Goldman Sachs, Joseph Cassano, JP Morgan Chase, Merrill Lynch, UBS AG, United Auto Workers, Wachovia |