I have been holding back on commenting on the customary Democrat hypocrisy when it comes to demonizing Wall Street for political ends. The straw that broke the camel's back for me was a story yesterday morning regarding a fellow, Paolo Pellegrini, who just happened to be the point man for Mr. Paulson and the middle man in the newly emerging scandal surrounding Goldman Sachs' role in playing both ends of the CDO game. Out of curiosity, and to see if my hunch was correct, I checked the OpenSecrets.org site to see Mr. Pellegrini's political leaning. In the 2008 election cycle, he donated to three candidates: Barrack Obama, Hillary Clinton, and Christopher Dodd. This was no surprise to me since it is mainly the Democrat party (although both parties benefit from their largesse) that is in the back pocket of Wall Street giants Goldman Sachs, JP Morgan, Citigroup, and Morgan Stanley. In fact, of the $23.1 million given by these four in the top ten donor category, Democrats were recipients of $14.8 million, or roughly two thirds. Now, to be fair, I am not absolving Republican's of cozying up to Wall Street because they, on a certain level, also do. That is the ugly face of importance of special interest money in American politics. Call it what it is: Crony capitalism, or fascism of sorts in an electoral system that requires raising massive quantities of money to ensure political longevity. However, the important difference is that Republican's are not the ones demonizing Wall Street.
This must be puzzling to the average political novice out there. How can a political party be so deeply in the pocket of Wall Street and yet taking aim at it at the same time. Well, to those who are savvy in the ways of the tired old Democrat tactic of demonizing groups, it is really simple. Demonization, distortion, and polarization (as currently being witnessed regarding the TEA Party movement as well) are three of the basics of Aulinsky (of Rules for Radicals fame) like tactics that the left has always been so fond of and practiced to perfection going all the way back to the Russian revolution. Take a President whose popularity has sunk from 70% to mid 40s, a Democrat congress whose approval is the lowest of any congress in recent memory, a public who by a margin of 4:1 thinks (yes, that is nearly 80%) the government has grown too big and intrusive, and the generic ballot that for the first time in a while clearly favors the opposition - and all of a sudden the reasons become much clearer. The answer for Democrats? Create a bogeyman, isolate it, spread distortions and pit the public against it, and you will divert the attention of the voters from your failings and real motives. As master of propaganda Joseph Goebbels said: if you repeat a lie enough times, it eventually becomes the truth in the public's mind. I could always be wrong, of course, but that is only if all this has a much more ominous underlying goal - one of dismantling the financial system, or effectively nationalizing it. I will be generous and attribute it to political survival although there is also a convincing case that can be made otherwise.
Just in case you were still not connecting the dots: It is true that low interest environment aided the creation of the real estate bubble, but then again, going back to post WWII days, the same interest rate environment also existed before. As the ex-CEO of Fannie Mae testified last week to the congress that competitive pressures, combined with the political goal of increasing homeownership, were to blame for the company's decision to back riskier mortgages that fueled the housing bubble. That is in their own words.
Just who were the most ardent political forces behind the critical elements (CRA in 1977 and ensuing enabling legislation in 1997 promoting home ownership for everyone at any cost, repeal of Glass-Stegal Act thus removing the barrier between investment and commercial banks, resistance to GOP led attempts to reform the system in 2003 and 2007 to list a few) of this financial crisis? Who were mired knee deep with Countrywide scandal - you know, friends of Angelo? And, while at it, who were the darlings of Wall Street as well as Fannie and Freddie who backed the candidates (Obama and Dodd being by far the top recipients of their generous donations) who would best serve their interests? You got it. The same folks who now have Wall Street in their cross hairs. Why in almost a year and a half in office, this administration has not called for an investigation? For that matter, why hasn't the Democrat controlled Congress done the same since 2006? Why are Congressmen Dodd and Franks crafting the so-called financial reform when their involvements in the financial crisis should be the subject of the biggest investigation in recent memory? These are hard questions that need answers; but when the party that is by far most culpable of creating the conditions that avelanched in to the most destructive financial crisis of the past 80 years is in position of having sole power, they will never be answered.