Crony Capitalism & How do you know a politician is lying

Posted By on November 16, 2011

How do you know a politician is lying? Well we’ve all heard the old “lips are moving” answer … it is even more true today than in the past. As someone who really wanted to believe that people – voters – could make a change … I’m becoming more and more disheartened. (Disclosure: I didn’t vote for President Obama, but admittedly want to believe we were getting a different kind of President focused on transparency)

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Besides the November 13, 2011  “60 Minutes” follow up on insider trading and how congress has exempted itself from the rules governing about everybody else with inside information as it pertains to the financial markets, we get a peek at how the Obama administration is playing the game too. This is the the same politician who’s campaign promise in 2007 would be to “change in the way business is done in Washington, DC.” Obviously after 3 years President Obama didn’t even give lip service to “changing the way business is done” and is even more in-bed with donors and the left’s political agenda

More than two years after President Obama took office vowing to banish “special interests” from his administration, nearly 200 of his biggest donors have landed plum government jobs and advisory posts, won federal contracts worth millions of dollars for their business interests or attended numerous elite White House meetings and social events, an investigation by iWatch News has found.

These “bundlers” raised at least $50,000 and sometimes more than $500,000 in campaign donations for Obama’s campaign. Many of those in the “Class of 2008” are now being asked to bundle contributions for Obama’s re-election, an effort that could cost $1 billion. (link)

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As for their business dealing … just look at who 80% of all the DOE loans went to …  Obama backers.

… $16.4 billion of the $20.5 billion in loans granted as of Sept. 15 went to companies either run by or primarily owned by Obama financial backers … (link)

To top this, the folksy billionaire investor and Obama supporter Warren Buffett shrewdly bent the ear of those in Washington DC to benefit his large bets on American banks and even brought insiders (congressmen and women) along for the ride.

As the political debates surrounding the proposed $700 billion TARP bailout bill heated up, Buffett maintained an appearance of naivete, an “aw shucks” shtick that deferred to the judgment of politicians.  “I’m not brave enough to try to influence the Congress,” Buffett told the New York Times.

Behind closed doors, however, Buffett had become a shrewd political entrepreneur. With his Goldman bet in place, the billionaire exerted his considerable political influence in a private conference call with then-Speaker of the House Nancy Pelosi and House Democrats. During the meeting, Buffett strongly urged Democratic members to pass the $700 billion TARP bill to avert what he warned would otherwise be “the biggest financial meltdown in American history.”

Throw-Them-All-Out-by-Peter-Schweizer4Buffett had a strong financial interest in the bailout’s passage, says Schweizer. “If the bailout went through, it would be a windfall for Goldman. If it failed, it would be disastrous for Berkshire Hathaway.”

Yet Buffett had little reason to worry; his insider political connections afforded him two guarantees. First, many members of Congress were themselves investing heavily in Berkshire Hathaway throughout the bailout talks–a move that may simply have been a good investment in an unsteady time, or else a shrewd exploitation of unique information. Senator Dick Durbin (D-IL), for example, snatched up $130,000 worth of Berkshire Hathaway stock.  Senator Orrin Hatch (R-UT) also bought shares in Berkshire Hathaway, as did Senator Claire McCaskill (D-MO), who purchased half a million dollars’ worth just days after the Wall Street bailout bill was signed.  Second, Buffett knew he had an ally in the surging Barack Obama. Buffett had backed Obama in 2008. And as Obama has himself conceded, “Warren Buffett is one of those people that I listen to.”

When the TARP bailout passed, Berkshire Hathaway firms received a staggering $95 billion in bailout cash from U.S. taxpayers. In total, TARP-assisted companies made up almost a third (30%) of Buffett’s entire publicly disclosed stock portfolio. The payoff:  by July 2009, Buffett’s Goldman bet and his congressional jawboning had yielded profits as high as $3.7 billion.

A new book from Peter Schweizer, Throw Them All Out, exposes much of the inside Washington game. This being highlighted, along with recent stories, has me thinking that the Occupy Wall Street movement needs to cast a wider net and re-focus their anger. It’s not capitalism that is the problem … it’s the crony capitalism.

Comments

Desultory - des-uhl-tawr-ee, -tohr-ee

  1. lacking in consistency, constancy, or visible order, disconnected; fitful: desultory conversation.
  2. digressing from or unconnected with the main subject; random: a desultory remark.