by Robert Scheer
from HUSTLER Magazine January 2011

ROBERT RUBIN GIVEN PASS FOR KEY ROLE IN DESTROYING ECONOMY

One of the hallmarks of American power elites—in contrast to those of, say, Japan—is that they never seem to be held accountable for their crimes and incompetence. Instead of committing hara-kiri, they just lay low for a few months and then pretend they had nothing to do with any of it.

So it is that CNN pundit Fareed Zakaria, who suffered no apparent shame or career consequences for initially backing the biggest U.S. foreign-policy blunder since Vietnam—the invasion of Iraq, can be paid to blithely toss softball questions on national television to Robert Rubin, key backer of the most destructive domestic policies in the same time period: the deregulation of the banking industry.

Ah, television “journalism.”

On this particular Sunday, I was trapped on a treadmill in front of an overhead television and unable to turn the thing off in time to avoid this assault on my mental and physical health. As a result I was forced to hear Rubin, Treasury secretary under President Clinton, insist he always favored regulating toxic derivatives and is therefore not at all responsible for the ensuing economic meltdown.

Rubin was responding to the sole critical question from the CNN host, who quoted a question by New York Times columnist Paul Krugman: “Did all the senior members of the [Obama] economics team have to be protégés of Robert Rubin, the apostle of financial deregulation?”

Unfortunately, Zakaria just rolled over when his guest simply lied in response: “First of all,” Rubin said, “I am not the apostle of financial deregulation. Quite the contrary. On derivatives…I developed a deep concern about the systemic problem that was created. When I was back at Goldman Sachs, it was a concern I had…a concern I had when I was in government. And, in fact, when I wrote my book in 2003, I was so concerned about it that I actually included that discussion in there.”

Zakaria ended the show recommending it as his book of the week: “He [Rubin] wrote a great memoir that covered his two distinguished careers, both…on Wall Street and in Washington. … It was written with Jacob Weisberg, a great writer, the [former] editor of Slate, and the two men weave a compelling tale that has many lessons for today.”

To be charitable, I will assume that Zakaria has not actually read that book, which omits any discussion of the radical deregulation legislation that Rubin ushered through Congress and got the President to sign. Clinton is on record stating he got bad advice from Rubin and his handpicked successor, Lawrence Summers, on derivatives regulation: “On derivatives, yeah, I think they were wrong, and I think I was wrong to take [their advice],” Clinton told ABC News in April 2010.

Rubin and Summers were responsible for forcing Brooksley Born out of the Clinton Administration because, as chair of the Commodity Futures Trading Commission, she had the temerity to suggest regulating the mortgage- backed securities that eventually proved to be so toxic. Instead, Rubin and Summers pushed the Commodity Futures Modernization Act, which Clinton signed into law before his last month in office, categorically exempting those suspect derivatives from any government regulation.

By then, Rubin had moved on to a $15- million-a-year job at Citigroup, which became a prime exploiter of the subprime housing market. As a result of its massive involvement with toxic securities, Citigroup— with Rubin in a leading role until early 2009—had to be bailed out by the federal government with a $45-billion direct investment and a guaranteed Fed protection for $306 billion in potentially toxic assets.

Citigroup, a merger of the old Citicorp and Travelers Group, was made legal only by the Financial Services Modernization Act, which Rubin backed while serving as Treasury secretary.

Then, in one of the most egregious conflicts of interest in U.S. history, Rubin went to work for the new bank, which took advantage of the changes in the law to buy up the infamous subprime lenders, beginning with Associates First Capital. The Economist magazine questioned whether investors would see Citi’s bold new venture “as something smart, such as ‘evolved credit extension,’ or something seamy, such as loan-sharking.”

Rubin was a major proponent of the firm’s seamy expansion into the mortgages that proved to be toxic, and by 2007 Citigroup was the second-largest subprime servicer, after the only slightly more infamous Countrywide.

There is much more, and I haven’t even touched on Rubin’s shameful role in Enron’s shenanigans. Enough said, though, to question not only Fareed Zakaria’s journalism but, far more important, Barack Obama’s leadership in first turning to Rubin as a key campaign adviser and then putting his disciples in charge of the U.S. economy.

Before serving 30 years as a columnist for the Los Angeles Times, Robert Scheer spent the late 1960s as Vietnam correspondent, managing editor and editor in chief of Ramparts magazine. Now editor of TruthDig.com, Scheer has written such hard-hitting books as The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America and his latest, The Great American Stick-Up: Greedy Bankers and the Politicians Who Love Them.

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A LAWMAKER DEMANDS AN AUDIT OF THE FEDERAL RESERVE BANK, BUT OBAMA AND HIS BRAIN TRUST REFUSE TO MAKE THE FINANCIAL INDUSTRY “NERVOUS.”

by Robert Scheer
From HUSTLER MAGAZINE March 2010

You don’t have to salute every time Ron Paul raises the libertarian flag, and personally I don’t like leaving education, health and Social Security to the tender mercies of the inevitably rapacious capitalist markets. But the Republican congressman from Texas is on target with his bill demanding a full public audit of the Federal Reserve, the government monster that has a power over the economy that many dictators would envy and operates under a cloak of secrecy that even the CIA rarely attains.

It was the Federal Reserve, under the leadership of the once exuberantly honored but now disgraced Alan Greenspan, that got us into this banking mess. The Fed looked the other way while the finaglers of Wall Street packaged and sold those mysterious Collateralized Debt Obligations and Credit Default Swaps that brought the economy to near death when they exploded with a destructive force and then were covered by trillions of taxpayer dollars.

The Federal Reserve—more than any other institution, public or private— deserves blame for shoving the world economy into the huge financial hole it now inhabits. The Fed, most definitely including the New York Federal Reserve Bank—headed for the five years prior to the Wall Street meltdown by Timothy Geithner until Obama named him Treasury secretary—miserably failed in its regulatory obligations while the bankers looted the banks. But where the libertarians and Ron Paul are wrong is to resist any meaningful regulation, and where Obama is equally wrong is his belief that we can get it from the Fed.

Despite Obama’s sorry record of enabling Wall Street greed, choosing Geithner to run the Treasury Department may be his biggest mistake. And it is not only Geithner but also every other major appointment of those who formulate economic policy—notably deferring to the Fed—that demonstrates the President’s fawning response to the financial hustlers.

Take key White House economic adviser Lawrence Summers, who during his tenure as Clinton’s Treasury secretary pushed through the deregulation of mortgages and other derivatives that made the housing collapse inevitable. After the collapse it was the Federal Reserve that orchestrated a bailout package under George W. Bush and continued under Obama to save—indeed reward— the “too big to fail bankers” whose destructive greed the Fed had promoted.

Paul is right with his legislation, which as of this writing had the support of hundreds of lawmakers but had already been gutted by Democrats on the key House Banking Committee in response to signals from the White House. Not only was the administration opposed to transparency for the Federal Reserve to check its unbridled power, but Obama also compounded the error by advocating an even larger role for the Fed in new legislation designed ostensibly to prevent another banking meltdown.

When Chris Dodd (D-Connecticut), chairman of the Senate Banking Committee, proposed to take major banking oversight power away from the Fed and put it in the hands of a new agency to regulate all federally chartered financial institutions, the Obama Administration treated it as a dangerously subversive proposal. In the words of White House economic adviser Austan Goolsbee, it would cause financial industry “nervousness.”

Isn’t that what we ordinary folk want? Shouldn’t the banking bandits with their proven record of chicanery be made just the least bit nervous when they cook up their next series of scams? Not so, in the view of Neal Wolin, Obama’s choice as deputy Treasury secretary. Despite massive evidence to the contrary,Wolin insisted that the Federal Reserve “is the agency best equipped for the task of supervising the largest, most complex firms.”

Consider the source: Wolin, as the Treasury’s top lawyer during the Clinton years, drafted the language of the infamous Gramm-Leach-Bliley Act, which allowed the merger of investment and commercial banks with insurance companies to create the toolarge- to-fail monstrosities like Citigroup, with which the taxpayers are now saddled.

Between his government stints under Clinton and now Obama, Wolin benefited from those breakthrough mergers. He served as general counsel at The Hartford insurance company, which—thanks to the deregulatory legislation Wolin had helped draft—was allowed to buy up troubled banks and qualify for federal TARP funds.

Even the conservative Washington Times voiced skepticism in an editorial on Wolin: “Revolving doors between industry and the administration and fat-cat political contributors getting bailed out at taxpayer expense sound like business as usual. This certainly isn’t change we can believe in.” Painful as it is to admit, the Right got that right.

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Before serving 30 years as a columnist for the Los Angeles Times, Robert Scheer spent the late 1960s as Vietnam correspondent, managing editor and editor in chief of Ramparts magazine. Now editor of TruthDig.com, Scheer has written such hard-hitting books as The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America and his latest, The Great American Stick-Up: Greedy Bankers and the Politicians Who Love Them.

You may purchase the hard copy of the March 2010 Issue of HUSTLER Magazine (with free shipping) at HustlerMagazine.com. Comes with full length DVD and free shipping!

You may purchase a digital copy of the March 2010 Issue of HUSTLER Magazine at UnderCoverMags.com.

THE GAPING DIVIDE BETWEEN THE RICH AND THE POOR CAN NO LONGER BE IGNORED; IT’S TIME TO IDENTIFY THE REAL ENEMY.

by Paul Craig Roberts
From HUSTLER MAGAZINE February 2010

Americans think that they have “freedom and democracy” and that politicians are held accountable by elections. The fact of the matter is that the U.S. is ruled by powerful interest groups that control politicians with campaign contributions. Our real rulers are an oligarchy of financial and military/security interests and the lobbying group AIPAC, which influences U.S. foreign policy for the benefit of Israel.

Have a look at economic policy. It is being run for the benefit of large financial concerns such as Goldman Sachs.

It was the banks—not the millions of Americans who have lost homes, jobs, health insurance and pensions—that received $700 billion in TARP funds. The banks used this gift of capital to make more profits. In the middle of the worst economic downturn since the Great Depression, Goldman Sachs announced record second-quarter profits and large six-figure bonuses for its upper-echelon executives.

The Federal Reserve’s low-interest-rate policy is another gift to the banks. It lowers their cost of borrowing funds and thereby increases profits. With the repeal of the Glass-Steagall Act in 1999, banks became high-risk investment houses that trade financial instruments such as interest rate derivatives and mortgage-backed securities. With abundant funds supplied virtually free by the Federal Reserve [in the form of low-interest loans], banks are paying depositors virtually nothing on their savings.

Despite the Federal Reserve’s low-interest- rate policy, banks are raising the annual percentage rate (APR) on credit card purchases and cash advances and on balances that have a penalty rate because of late payment. Banks are also raising late fees. In the midst of the worst economy since the 1930s, heavily indebted Americans—who are losing their jobs and their homes—are to be bled into bankruptcy by the very banks that are being subsidized with TARP funds—our bailout tax dollars—and low interest rates.
What we are experiencing is a massive redistribution of income from the American public to the financial sector. And this is occurring during a Democratic administration headed by America’s first black President, with a Democratic majority in the House and Senate. Is there a government anywhere that less represents its citizens than the U.S. government?

Consider America’s wars. As of this writing, the out-of-pocket cost of America’s wars in Iraq and Afghanistan is $900 billion. Then add in the already-incurred future costs of veterans benefits, interest on the debt, the failure to use resources for productive purposes and such other costs as computed by Nobel economist Joseph Stiglitz and Harvard University budget expert Linda Bilmes. In all, “our” government has wasted $3 trillion on two wars that have no benefit whatsoever for any American whose income does not derive from the military/industrial complex—about which five-star general President Eisenhower warned us.

No one else benefited. Iraq was a threat to no one, and finding Saddam Hussein and executing him after a kangaroo trial had no effect whatsoever on ending the war or preventing the start of others.

The cost of America’s wars is a huge burden on a bankrupt country, but the cost incurred by veterans might be even higher. Homelessness is a prevalent condition of veterans, as is post-traumatic stress disorder. American soldiers—who naively fought for the munitions industry’s wars, for high CEO compensation and for dividends and capital gains for shareholders—paid not only with lives and lost limbs, but also with broken marriages, ruined careers, psychiatric disorders and prison sentences for failing to make child support payments.

What did Americans gain from an unaffordable war in Iraq that lasted far longer than World War II and that put into power Shiites allied with Iran? The answer is obvious: nothing whatsoever.

What did the armaments industry gain? Billions of dollars in profits.

What about President Obama? “A corporate marketing creation,” sums up the distinguished British journalist John Pilger.

Obama is the Presidential candidate who promised to end the war in Iraq. He hasn’t. But he has escalated the war in Afghanistan, started a new war in Pakistan and appears determined to start a war in South America. Why does any American care who rules Afghanistan? The country has nothing to do with us.

Did the armed services committees of the House and Senate calculate the risk of destabilizing nuclear-armed Pakistan when they acquiesced to Obama’s new war there, a war that has already displaced two million Pakistanis? No, of course not. The whores took their orders from the same military/security oligarchy that instructed Obama.

The great American superpower and its 300 million people are being driven straight into the ground by the narrow interests of the big banks and the munitions industry. People, and not only Americans, are losing their sons, husbands, brothers and fathers for no other reason than the profits of U.S. armaments corporations, and the gullible American people seem proud of it. Those ribbon decals on their cars, SUVs and monster trucks proclaim their naive loyalty to the armaments industries and to the whores in Washington who promote wars.

Will Americans, smashed and destroyed by “their” government’s policies, which always put Americans last, ever understand who their real enemies are? Will Americans realize that they are not ruled by elected representatives but by an oligarchy that owns the Washington whorehouse? Will Americans ever understand that they are impotent serfs?

PRINTED BY PERMISSION OF PAUL CRAIG ROBERTS AND CREATORS SYNDICATE.

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Paul Craig Roberts is a former assistant secretary of the U.S. Treasury and onetime associate editor of the Wall Street Journal. The syndicated columnist’s books include The War of the Worlds: How the Economy Was Lost and The Tyranny of Good Intentions.

You may purchase the hard copy of the February 2010 Issue of HUSTLER Magazine (with free shipping) at HustlerMagazine.com. Comes with full length DVD and free shipping!

You may purchase a digital copy of the February 2010 Issue of HUSTLER Magazine at UnderCoverMags.com.