Causing $64 trillion of liquidity to vanish from the world financial system and then manipulating the US government to reward the perpetrators with bailout money requires the presence of the “right people” in government, academia, and finance industries.
In The Shock Doctrine Naomi Klein argues that Milton Friedman or Chicago School influenced policy makers routinely used catastrophes to facilitate rewriting of national economic rules to benefit a select subset of the world’s hyperwealthy.
President Obama, whose economic background is all Chicago School, brought the Friedmanites including National Economic Council Director Larry Summers back into government.
Summers came under recent public scrutiny because 2008 White House financial disclosure reports reveal he collected favours from the very financial institutions that received huge taxpayer bailouts. “The document provided for Summers, who serves as one of the president’s closest confidants, underscores just how close some of these officials are to the industry over which they now have oversight,” writes Sam Stein in the Huffington Post.
J.P. Morgan Chase, which received $25 billion in government bailout funds, had paid Summers $67,500 for a single speaking engagement. Citigroup, which received $50 billion in “emergency” taxpayer aid, had paid Summers $99,000. Goldman Sachs, which received a $12 billion bailout, had paid Summers $202,500.
Glenn Greenwald of Salon explains that people like Summers and friends “shuffle back and forth from the public to the private sector and back again, repeatedly switching places with their GOP counterparts in this endless public/private sector looting.”
During the Clinton administration, as Secretaries of the Treasury, Bob Rubin and Larry Summers deregulated derivative trading. After leaving government service, Rubin became a Citigroup director and used deregulation to ruin that Bank by recommending investments in derivatives like
CDOs (Collateralized Debt Obligations). For eight years of service Rubin received approximately $126 million in cash and stock.
Investors from Saudi Arabia, Kuwait and UAE were effectively swindled out of billions as Citigroup value crashed because of the CDO meltdown during the Bush administration. Larry Summers became president of Harvard University in 2001. Rubin was Summers’ main booster at the Harvard Corporation, which chooses the president.
Summer’s Harvard presidency erupted into scandal when the US government accused Summers’ associate, economics professor Andrei Shleifer of financial improprieties during work on a Harvard USAID grant to create a Russian stock market. The government suspected Shleifer’s wife Nancy Zimmerman of insider stock trading.
Because Shleifer put Harvard in breach of Federal regulations regarding grant money, Harvard had to pay $27 million to the US government while Summers protected Shleifer and his job. Additional questions arose over the management of the Harvard endowment, employee compensation, and suspected middle market restraint of trade involving university real
During this turbulent period in his career, Summers worked hard to improve his Jewish credentials. He badmouthed anti-Israel divestment activists on campus but supported Darfur-related divestment.. He dumped his Christian wife Victoria Perry for Holocaust Literature professor Elisa New, a close friend of Jewish Studies professor Ruth Wisse, whose husband is chairman of board of directors of CAMERA, a professional Israel advocacy organisation.
In a disastrous blow to Harvard’s academic stature, Summers rejected former UAE president Shaikh Zayed bin Sultan Al Nahyan’s $2 million donation for an Islamic Studies chair at the Harvard Divinity School under pressure from Rachel Fish of the David Project, which is another Israel advocacy group with connections to CAMERA.
The Harvard Faculty of Arts and Sciences twice voted “no confidence” in Summers, who resigned as Harvard president in 2006 amidst rumours of refusal to testify in an internal investigation of financial fraud. Shortly thereafter the D.E. Shaw hedge fund hired Summers with Rubin’s recommendation and paid Summers $5.2 million for approximately 50 working days.
Obama’s Chief of Staff Rahm Emanuel trod a similar career path perhaps more quickly because of superior Jewish Zionist credentials resulting from an Irgunist father and civilian IDF service during Iraq War I.
Boutique investment bank Wasserstein Perella, whose founder Bruce Wasserstein is heavily involved in Zionist politics, hired Emanuel in 1999 and paid him $16 million for two years of work, despite his having zero background in economics or finance.
Now this corrupt network is pushing through Congress another huge gift for their friends: the Summers-Geithner Plan, which enables banks to make their own valuation of toxic assets and then buy them with taxpayer money without restoring the lost liquidity.
Paul Krugman writes in the New York Times, “In effect, Treasury will be creating — deliberately! — the functional equivalent of Texas S&Ls in the 1980s: financial operations with very little capital but lots of government-guaranteed liabilities.”
Dean Baker of Truthout points out: “Some hedge and equity fund managers could make hundreds of millions or even billions off the Geithner plan.” This Plan looks like a premeditated attempt to loot and destroy the US
Karin Friedemann is a Boston-based writer on the Middle East affairs and US politics