Empire, Oligarchy and Democracy

By Ralph Nader

The twin swelling heads of Empire and Oligarchy are driving our country into an ever-deepening corporate state, wholly incompatible with democracy and the rule of law.
Once again the New York Times offers its readers the evidence. In its February 25, 2010 issue, two page-one stories confirm this relentless deterioration at the expense of so many innocent people.

The lead story illustrates that the type of massive speculation—casino capitalism, Business Week once called it—in complex derivatives is still going strong and exploiting the weak and powerless who pay the ultimate bill.

Titled “Banks Bet Greece Defaults on Debt They Helped Hide,” the article shocks even readers hardened to tales of greed and abuse of power. Here are the opening paragraphs: “Bets by some of the same banks that helped Greece shroud its mounting debts may actually now be pushing the nation closer to the brink of financial ruin.”

“Echoing the kind of trades that nearly toppled the American Insurance International Group /AIG/, the increasingly popular insurance against the risk of a Greek default is making it harder for Athens to raise the money it needs to pay its bills, according to traders and money managers.”

“These contracts, known as credit-default swaps, effectively let banks and hedge funds wager on the financial equivalent of a four-alarm fire: a default by a company, or in the case of Greece, an entire country. If Greece reneges on its debts, traders who own these swaps stand to profit.”

“It’s like buying fire insurance on your neighbor’s house—you create an incentive to burn down the house,” said Philip Gisdakis, head of credit strategy at UniCredit in Munich.

These credit-default swaps increase the dreaded “systemic risk” that proliferates until it lands on the backs of taxpayers, workers and savers who pay the price. And if Greece goes, Spain or Portugal or Italy may be next and globalization will eventually bring the rapacious effects of mindless speculation to our shores.

Greece got into financial trouble for a variety of reasons, but it was widely reported that Goldman Sachs and other big banks showed them, for generous fees, how to hide the country’s true financial condition. Avarice at work.

Note two points. These derivatives are contracts involving hundreds of billions of dollars and are essentially unregulated. These transactions are also essentially untaxed, unlike Europe’s value added tax on manufacturing, wholesale and retail purchases. The absence of government restraints produces unlimited predation.

As astute investors in the real economy have said, when money for speculation replaces money for investment, the real economy suffers and so do real people. Remember the Wall Street collapse of 2008 and who is paying for the huge Washington bailout…….

The American people must realize that their reckless government and corporate contractors are banking lots of revenge among the occupied regions that may come back to haunt. We have much more to lose by flouting international law than the suicidal terrorists reacting to what they believe is the West’s state terrorism against their people and the West’s historical backing of dictatorships which oppress their own population.

American was not designed for Kings and their runaway military pursuits. How tragic that we have now come to this entrenched imperium so loathed by the founding fathers and so forewarned by George Washington’s enduring farewell address.

Where are “We the People”?

Moderator Comment:

Corporations have taken full advantage of the power of money.  Since banks control and create all of our money, they are experts in using it to bribe government officials, pay for powerful lobbyists and manipulate elections.  Therefore the electorial process becomes a sham; a revolving door of republican and democrat candidates who are both owned by the same pay masters, the money changers aka the private banking money pimps.   Forget the promises, regulations,  platforms and the pablum.  Follow the money flow to find out who your leaders really serve and where they really stand.  Americans need to follow the money and follow the insider trades.  The money flows show a consistent and undeniable pattern of pandering to crooked private banks that aim to steal all of our wealth while our heads are turned the other way.