Heads up, Obama!

The Worker-Capitalist Con

Wall Street's Collapse and the Ownership Society

By PAM MARTENS
CounterPunch
December 31, 2008

On February 24, 2005, I clicked on the evening news to see President Bush finishing his European tour in Slovakia, surrounded by children waving little American flags. It had the feel of a Macy’s holiday window designed by Karl Rove. I recalled a recent news item about Slovakia. Just two months prior to the President’s visit, Slovakia initiated a plan to divert nine per cent of worker’s wages into private investment accounts laden with corporate stocks and bonds as an alternative to a government run social security program.

This was similar to a plan that President Bush had peddled under the banner of the “ownership society.” Fortunately, this was one of the rare occasions when the President was rebuked by Congress.

Today in the U.S., with both corporate bonds and stocks suffering massive losses and over $2 trillion of taxpayers’ dollars doled out by the Federal Reserve to shore up Wall Street firms in various stages of insolvency, we finally grasp the true meaning of “the ownership society:” the Wall Street execs absconded with the so-called profits; the little people own the losses; the next generation owns the bailout debt. This scheme makes Ponzi artist Bernie Madofflook like a piker.

The Slovakia plan was modeled after the program set up in Chile in 1980 and 28 other countries thereafter. According to actuarial studies of the plans in Chile and Mexico, it was an asset stripping operation that allowed Wall Street firms like Citigroup to strip away as much as 20 to 25 per cent of the workers’ wages in fees to “manage” the money.

The Chilean plan was the brainchild of Jose Pinera, who served as Labor Minister under the brutal military dictatorship of General Augusto Pinochet. Pinera later emerged as the global pied piper of private accounts to replace government run social security systems and peddled his pension reform mantra around the globe.

In testimony before the U.S. Senate on June 26, 1997, Pinera explained how private accounts move workers to the corporate side of the table: “A typical Chilean worker is not indifferent to the behavior of the stock market or interest rates. Intuitively, he knows that his old age security depends on the well being of the companies that represent the backbone of the economy.” In Pinera’s book, The Bull by the Horns, he says the whole working population can become “shareholder capitalists.”

According to Pinera’s web site, www.pensionreform.org, (which is registered not to him but to the Cato Institute, a free market think tank) Pinera sat down in the Austin home of George W. Bush, then Governor of Texas, and mapped out his vision.

CONTINUED...

Press reports document criminality of US financial elite

WSWS.org
24 December 2008

Fallout from the Madoff scandal continues to batter investors, banks and private charities in the US, Europe and Japan. The massive fraud carried out by a prominent Wall Street insider, Bernard Madoff, the former head of the Nasdaq stock exchange, has exposed clients to as much as $50 billion in losses.

Recent press reports make clear that the Madoff affair is not an aberration. It is indicative of pervasive fraud and criminality in the highest echelons of the financial establishment, aided and abetted by government regulatory agencies.

On Monday, Truthout, an independent internet news service, published an interview with former Securities and Exchange Commission (SEC) investigative attorney Gary Aguirre. The SEC is the federal regulatory agency tasked with enforcing securities law and regulating stock exchanges and the securities industry.

As an attorney for the SEC, Aguirre launched an investigation several years ago into insider trading by the hedge fund Pequot Capital Management. Aguirre sought to subpoena one of Wall Street's most formidable figures, John Mack, then CEO of Credit Suisse and now the head of Morgan Stanley. But Aguirre "was told that Mack had ‘juice' (meaning he had access to senior-level SEC officers) and that he had heavy political connections to the Bush White House," according to San Diego Magazine. "In the middle of June 2005, his superiors told him to take a week's vacation. ... Before the week was up, he was unceremoniously fired, and the investigation was scuttled."

According to the Truthout account, the internal SEC watchdog found that Aguirre's supervisors acted improperly in firing Aguirre and shutting down the investigation, and recommended punishment against four SEC officials. But SEC Chairman Christopher Cox "refused to hold them accountable."

Aguirre told Truthout that the SEC "has been reluctant to apply the securities laws to the big players, to Wall Street's elite." Instead, it is "focused on the small players."

Commenting on the revolving door between government regulatory agencies and Wall Street, he noted that then-SEC Associate Director Paul Berger, who fired him and derailed the investigation he was conducting, subsequently took a job with the well-connected New York corporate law firm Debevoise & Plimpton.

The sums of personal wealth generated through such financial skullduggery, under the protective arm of the government, are staggering. An Associated Press report published Sunday reveals that financial institutions which have to date received a total of $188 billion in taxpayer money through the $700 billion Troubled Assets Relief Program (TARP) paid their CEOs nearly $1.6 billion last year, or $2.6 million on average. In addition to TARP funds, the banks have been handed trillions in direct loans through the Federal Reserve.

The CON's CONTINUED...

http://www.wsws.org/articles/2008/dec2008/pers-d24.shtml