Many have correctly indicated that Obama is woefully beholden to the banks. It's true: he has not only accepted money from banks, but he has also advocated policies that enriched bankers at the expense of the general public.
However, Obama is not a simple character to analyze. He has perhaps given the banks a, "kiss of death."
Despite given the banks carte blanche to rob the nation, Obama has in fact trapped them and made them instruments of his policy. The banks are now force-multipliers for Obama's objectives, and they will be powerful weapons in his arsenal, especially since their management is at his mercy, if he had the courage to assail them (again, this is all very hypothetical, as management shoot back, unlike Somali pirates).
By forestalling nationalization, Obama has avoided making the bank problems HIS problem: he will keep the banks private, allow the banks to "operate" at his sufferance, and he will damn well make sure that the banks, if/when they implode, do so on someone else's lap, not his own. His relationship with the banks is now akin to that of a cash-business with the Mafia: they both use each other, but at the end of the day, the Mafia decides when to either bury you or burn down the shop.
How does this relate to banks, nationalization, and their common stock? Well, Obama wants to make sure that ANYONE but him and his cronies get pinned for this debacle: he needs to arrange baskets and labels them for the heads of the cronies that will get guilltoined in the coming purge.
And there will be a purge... do not doubt that.
Monday, April 13, 2009
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1 comments:
For me it's hard to decide if Obama wants to put a leash on banks or simply he is defending (with taxpayer money) a select group of bondholders.
We have moved from the post Glass_Steagall paradigm of commercial banks and investment banks, and went back to the ante 1929 moment, of pure private equity banking capital of the original JP Morgan & Co. Today's banks are just empty (and insolvent) shells acting as gloves for that select group of private equity capital known as smart money.
The last sequence of bubbles had contaminated the wealth acquired by the smart money bondholders which are the main underwriters of of Gov Inc. The new charismatic CEO of Gov. Inc, (Obama) seems to be focused on laundering the bad assets portfolio of smart money bondholders. If dumb bondholders (pension funds, wannabe hedgies and clueless funds) take a hit and the peasant taxpayers are forced to pay for this laundering operation, it doesn't seem to be a problem.
Banks acting as financial gloves for the smart money hand cannot be allowed to fail yet. Only after the hand is out of the banking glove, banks can be allowed to fail as empty shells with dilapidated vaults.
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