oftwominds-Charles Hugh Smith

Obama's Secret Plan 

April 22, 2009 

In which we speculate that perhaps Obama has a secret plan to discredit the investment banker cabal and thus undermine their vast political power and reach. (Note new readers' essays below: "Madoffing the U.S. Financial System" and "Why We Are the Way We Are".)

Many observers, partisans non-partisans alike, have been mystified by President Obama's continuation of the Bush/bankers/Treasury's "privatize bonuses, socialize risks" campaign of taxpayer-funded bank bailouts, phony slight-of-hand "transparency" and political support for blatantly bogus accounting of banks' profits, assets and losses.

The failure of the Obama administration to pursue real regulatory "change" (such as actually enforcing regulations that are already on the books instead of throwing bankers new squeeze toys like "relaxed" mark-to-fantasy accounting) has moved many from mystification to outrage.

Where's the "change" in this continuation of Bush/bailout policies? What is the rationale of a supposedly "progressive" president in filling his financial administration with "investment banker Borgs"?

Let's begin our speculation with a question: if a new President (of either party) wanted to destroy the political power of the investment banker cabal which currently holds sway over Treasury and Congress, what path would actually lead to success?

Does anyone seriously believe that a new President could dent the vast political power of the Financial Aristocracy with a Jimmy Stewart-like speech excoriating the bankers and their minions for gutting the U.S. economy? The chances of that having any effect are zero.

How about tightening regulations? And what happens when lapdogs in Congress quickly rush to gut the regulations or the regulatory forces supposedly empowered to enforce them? If you doubt the power of bankers, please look at what has happened to attempts to limit the most egregious excesses of credit card usury and outrageous junk fees: they're thwarted or watered down every time.

Does anyone seriously believe an obstructionist opposition which supported Bush's giveaways and staggering deficits for eight long years has any credibility? The moment to do something about deficits was 2003, and the moment to vote down bailouts was last Fall (hmm, now there's an appropriate season) when the TARP debacle was shoved down the nation's throat by the Financial Aristocracy.

Does anyone seriously believe the Democrats who cheerily absorbed millions in donations from scalawags and crooks in Fannie Mae, Goldman Sachs et al. while obstructing regulations which might have limited the damage have a lick of credibility? To be a partisan in this age is to be either blind or brainwashed.

So let's face it: any President who sought to destroy the political power of the Investment Banker Aristocracy in a frontal assault would be defeated if not destroyed. Any president of either party who dares even mess around the edges of the real power structure gets "the treatment."

Is there any strategy would might actually work? How about "give them enough rope to hang themselves"? President Dwight Eisenhower has long been dismissed as a do-nothing who "got lucky" in his two terms. Perhaps--but he was also a canny politico who didn't say much because he preferred to give his opponents plenty of stout rope. And sure enough, most of the time they promptly hanged themselves with their own excesses.

If you set out to completely discredit the bankers and eviscerate their political power, you'd proceed exactly as Obama has done, enabling it to reach its reductio ad absurdum conclusion of fat bonuses and tax-funded bailouts in the trillions of dollars, at which point the public will rise up in fury, doing the work which was impossible for you, a new "liberal" president.

Imagine the uproar had Obama sought to send the bankers straight into deserved bankrupty and eliminated their looting; he would have been thwarted and second-guessed at every turn by politcos, pundits and the ultra-wealthy Aristocracy whose perks and privileges were threatened, not to mention a Republican Party spoiling to be spoilers.

What better way to discredit the bankers than to give them plenty of rope to complete their tarnished, fraudulent "plan to save Capitalism from itself"? How can they complain when their own bankrupt policies have been supported?

What better way to trigger "change" that even the banking Aristocracy are powerless to stop than to give them everything they want: no restrictions on stupendous bonuses, no punishment or prosecution, no mark-to-market rules with actual bite, no limits on accounting legerdemain, and on and on and on?

You want the sharks to gather? Then keep chumming the water with banker-designed policies; hey, even denounce the tax rebellion movement as "off base." Make like you're doing the banker/Plutocracy's bidding in every possible way. And what will be the result?

A complete repudiation of the entire Bush/Treasury/banker bailout and "free pass" to further plundering. And when the public rises up in righteous fury, then you appear to bend, almost reluctantly, to "the public will."

If you set out to gut the political power of the banker/financial Plutocracy which holds Congress on a tight leash, this is the only way to do so: goad the public to rise up with such fury that they cannot be denied, lest every politico who seeks to protect the status quo be swept aside in the next election, regardless of party, age, religion or any other bastion of "voter support" they were counting on to save their bacon from an aroused public's righteous wrath.

If Obama had refused to support the bailout, the screams that he was "destroying the foundation of the U.S. economy and our way of life" would have been ceaseless and deafening, for a stunned and stupefied public had failed to process what was actually happening beneath the MSM propaganda about "saving the banking system to save the nation."

Obama can now say, "I did everything you wanted." Is it a carefully craft Secret Plan or merely the fumbling of a status quo politico? Either way, it's brilliant because it's the only possible pathway to a future not dominated by trickery, fraud, collusion, obscurity, propaganda and the looting of what's left of the U.S. Treasury and economy.

Can abject, impoverished debt-serfs distracted by hundreds of channels of idiotbox TV, iPods, American Idle, oops, I mean Idol (now there's a Master's Thesis topic for ya), "professional sports" (a.k.a. gladiators and circuses) and all the other avenues of marketing which are sold as "entertainment" rather than what they really are, propaganda and distraction-- can a nation of debt-serfs actually awaken from their "entertainment" stupor long enough to register outrage at the looting of their nation and liberties by a small Plutocracy?

We shall see. If the looting which is finally sinking through the endless layers of propaganda doesn't spark a bloodless revolution demanding real change in who actually runs the nation's policies, money and regulatory structures, then nothing will.

Is there even a shred of evidence that Obama might have thought this out one layer deeper than 99.999% of the bankers, critics, pundits and opponents? perhaps one: Paul Volker. Volker--remember him? Where has he been? Trussed up and gagged in some Treasury basement? He'd slipped from the media radar until very recently, when he somehow escaped from the duct tape and Treasury guards and had the audacity to stand up and call inflation targets pure theft.

Whew. Was that a breath of fresh air or what? I see two possibilities: either Obama really is just another standard-issue tool of the Financial Plutocracy, and Volker resigns in disgust within a year to protect what's left of his once-sterling reputation, or Obama is giving the Banking Plutocracy all the rope it needs to hang itself. In that case Volker is the "Trojan Horse" in the system, the one who will emerge after the extremes have finally goaded the public to an anger which cannot be diverted by propaganda and "entertainments."

So watch Volker. If he resigns, then Obama truly believed the absurdity that bailing out the bankers and enabling their continued looting of the nation is "the fix we need." If Volker stays, even in the shadows, there may be more intelligence afoot in our leadership than has yet been revealed. 


Two new excellent readers' essays, both provocative must-reads:

Madoffing the U.S. Financial System (Zeus Y.)

Why We Are the Way We Are (Subuddh Parekh) 
Thank you, Norman W. ($10), for your very kind and generous contribution to this site. I am greatly honored by your support and readership.