Alexander Hamilton's Scorn: Reflecting on AIG, Goldman, Hank Paulson and Bob Rubin
The Hamilton Project's early objectives were to promote a variant of neoliberal economic policy -- free and fast trade, fiscal conservatism and budget hawkishness, and a rejection of national economic strategies that would maximize American worker and producer interests over the interests of other states.
The real Alexander Hamilton who was the key conceptualizer and organizer of the American government and who laid the foundation of the nation's strong financial architecture believed in promoting manufacturing via tariffs; promulgated the expansion of credit as long as integrity, credibility and confidence were maintained; and was America's most sophisticated and essential economic nationalist.
But whereas our immediate past Secretary of the Treasury Hank Paulson and another Secretary of the Treasury during a Democratic White House Robert Rubin made hundreds of millions of dollars flitting between private sector responsibilities and objectives and government roles, Hamilton -- even in his private life -- studiously avoided financial conflicts of interest.
Hamilton believed in banks and finance and built, wrote the corporate charter for and co-founded the Bank of New York -- the first firm in the new nation whose stock was traded on the New York Stock Exchange.
But to avoid the appearance of conflict, Pulitzer Prize winning author Ron Chernow reports that Hamilton -- who was at the time of the Bank of New York's founding in 1784 a private lawyer -- "held in his own name only a single share of the bank that was long to be associated with his memory."
Rubin is a mega-share/mega-option guy. Hank Paulson too.
And while Tom Daschle and Nancy Killifer have been castigated for errors in tax reporting and essentially barred from serving their government, a deeper, more profound structural corruption has fixed itself in the superstructures of government that is drawing almost no attention.
While many are criticizing the gross and wrong AIG taxpayer-funded bonuses of senior executives, the truth is that that kind of corruption is relatively small time -- even at $165 million -- and was predictable. The outrage expressed by Obama, Lawrence Summers and Tim Geithner must be feigned -- or they don't know what they are doing in the positions they have acquired.
But what is serious is that Goldman Sachs executives seem to have lied or at best seriously misled the media and public during the early stages of the AIG financial crisis stating that their firm did not have significant exposure to AIG's collapsing financial position.
But after AIG published its roster of financial distributions, Goldman Sachs comes in on the top of the list at $12.9 billiion.
Treasury Secretary Paulson and former Treasury Secretary Bob Rubin both served as top executives at Goldman Sachs -- and in the end, they wouldn't let Goldman collapse despite allowing Lehman Brothers to die.
Rubin and Paulson have had major conflicts of interest that make Tim Geithner's tax manipulations while an IMF employee look pathetically insignficant. Tom Daschle's rides in a town car, Killifer's failure to pay taxes on domestic help, and others who have avoided government because of the very high hurdles Obama has set for those who join his team simply pale in comparison to what we have learned about Bob Rubin's ties to Citibank, Goldman and the Treasury; Hank Paulson to both Treasury and Goldman -- and which have implications as well for their chief acolytes Lawrence Summers and Timothy Geithner.
AIG and Goldman both lied about their positions last September. And Hank Paulson and other major financial elites involved in the AIG bailout knew it also.
That is the story we should be following -- but few are paying attention.
And we should remember that the great economic genius of the early United States, Alexander Hamilton -- the man who hatched the great Bank of New York -- possessed just 'one share' of that bank.
We should be re-reading about Alexander Hamilton's life and deeds. Soon it is easy to see how he would have been fairly disgusted by those who have recently held his position and pretended to carry on his brand of national interest public service.
-- Steve Clemons publishes the popular political blog, The Washington Note.
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A small correction: Ron Chernow is my favorite author but I do not believe he has won a Pulitzer Prize--yet.
He is long overdue to win but as of April 2009 he has not yet won.
Hamilton was a traitor
In 1791, less than 3 years after the Constitution had been signed, the newly appointed First Secretary of the Treasury, Alexander Hamilton, (ne Levine, a bastard and a foreigner, born to a Creole woman in the West Indies) in direct opposition to the wishes of the deceased Ben Franklin and the First Continental Congress, pushed through legislation that allowed the Rothchild bankers to set up what they called “The First Bank of the United States”, which would control all financial activity between banks in America.
Hamilton’s mercantilist agenda was a national bank (the precursor of today’s infamous Federal Reserve) and an enduring national debt — the latter of which Hamilton actually considered a “blessing.
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"Alexander Hamilton, (ne Levine,")
WRONG, AH son of James Hamilton (Levine, Lavian, - varied spellings, was his mother's married name.
"born to a Creole woman in the West Indies" - Wrong: she was a French Huguenot, runaway from an abusive Dutch husband
"a bastard and a foreigner", , yes and he paid the price with more lies when he got to NY.
p.s. all the immigrants to America (besides the native Americans) were foreigners
"pushed through legislation that allowed the Rothchild bankers to set up what they called "The First Bank of the United States", which would control all financial activity between banks in America." PATENTLY WRONG He founded the Bank of NY which gave America it's first loan. In 1791 there were 3 banks, there were 80 banks by 1795 and the economy was healthy and US bonds were "A" rated aboard. We were bankrupt after the Rev. war with no stable currency or credit. By 1795 Hamilton's programs had restored the country's credit and economic stability. Most revolutions dissolve into chaos and tyranny because of economic collapse.
You can thank Hamilton for allowing the promise of the Revolution to succeed into the next century and not engendering a Bonaparte or Stalin.
Hamilton was opposed by some of the most brilliant minds of his day. They had seen the power of the financial elites in Europe--especially Britain with the Bank of England--and foresaw the time when they would be more powerful than the government.
Many other Patriots fought against the banking interests for the next 200 years. Many were assassinated for their trouble. Lincoln is famously quoted as having felt that between the Confederate army on one front and the bankers at his rear, he feared the bankers more.
While Hamilton may have been scrupulously honest in his dealings, he was still a closet Royalist, an admirer of things British, who fashioned our banking system after the one that had tried to enslave us. We pay the price for that today.
From Robert Sheer's article today:
"Consider the $12.8 billion of the $170 billion that taxpayers gave AIG in bailout funds that AIG then secretly diverted to Goldman Sachs, a company that evidently has a lock on both the Treasury Department and the Federal Reserve no matter which political party is in power. It was the biggest payoff among those that AIG made to a score of foreign and domestic financial giants."
Goldman-Sachs!
That name keeps coming up.
"Goldman Sachs was into AIG insurance policies for at least $20 billion, which is why the firm got that $12.8 billion while Paulson was in charge. It took six months for the embarrassing facts to finally come out. The bailout program was administered by Neel Kashkari, a former Goldman Sachs VP; why are we not surprised at that?"
Geithner's the guy Obama just had to have, and he just had to have the Goldman home-boy Kashkari.
Does anyone truly think we have a working democracy in this country anymore?
Goldman Sachs has a lock into any and all administrations; the leadership and ownership are part of the tribe and will never loose power.
This seems to have gone missing--
Rothschild bank?
Thank you! Hamilton said it time and time again: "Corruption is the enemy of good government
As I read the federalist papers...o
Do we really want to live in a country where our federal government demands half of what we earn...or we go to jail?
Arent we protected in the constitution from having give half our labor away to others???
The more our government want to take from the citizens..
"The sky is falling! The Sky is falling!" I guess you're right, maybe we shouldn't live in a country that FINALLY makes those pay that have been cheating by for so many years. (not just the last 8, but at the very least, the last 80) You're absolutely correct! Look, YOU leave first! Then we'll follow you later! K?
You think these fat-cats on Wall Street EARNED their millions (or billions)??? See for me, in order to EARN something, you have to do something to deserve it. Make sense? Now tell me what these fat-cats have done to deserve millions upon millions of dollars at the expense of the working poor and middle-class?
PatRea said:
> Arent we protected in the constitution from
> having give half our labor away to others???
You'll have to refresh my memory as to exactly where that right is in the constitution.
You know, one of the areas where the Founding Fathers really missed the boat was when they listed the rights of citizenship without listing their corresponding responsibilities.
I'm so sick of those who benefit THE MOST from the rights, liberties and opportunities GIVEN to them by this country, insisting that they don't have a responsibility to support the very nation that has allowed them to prosper. And support it proportionately to the benefits they derive from it.
What organization worth belonging to does not require the payment of dues to support itself?
What organization, apart from the salad bar at the Sizzler, allows it's members unlimited access to all it's benefits when they are unwilling to pay more than the bare minimum to support it?
These people seem to believe that they are due all the rights and privileges derived from citizenship without any responsibility to help support the very entity that has allowed them to become wealthy and powerful. Like the rest of us should be grateful for just being allowed in THEIR country.
The economy has its own internal logic that tends to work out despite our fonder illusions. When we tax one class, that class must be paid more so as to maintain a life style. For example, since children use schools and libraries, they might arguably be taxed to keep those. Since children may have no money of their own, they must be paid more (allowances, what ever) to meet their tax obligation. You might say, it becomes a tax on parents; but, then, you might as fairly say it becomes a tax on their parent's employers. The economy adjusts the tax burden by its necessary recompense. All of this is to say, taxing the wealthy means the wealthy get more, cover their taxes, and their employees -- being taxed less or not at all -- will get by on less income.
Of course, it takes a day or two to adjust pays and benefits. When an established tax is revised, there are windfalls and hardships pending the next adjustment. The Bush tax cuts amount to permitting the wealthy to collect their taxes from all of us and keep them themselves. It's tough but the way things are. Naturally, the disparities of wealth swelled.
A bird in the hand is worth two in the bushes. Otherwise, taxing the wealthiest citizens is the best idea. 1) They have extra wealth and can survive an injustice. 2) Just touching the money as it goes by enhances their security. 3) Tax collectors can concentrate on collecting larger sums. This is why big banks like to deal with nations. This provides a kind of fine point flexibility.
Long ago when the top bracket was 91%, the United States had the reputation of being a country where the taxes were paid. The wealthy do make excellent tax collectors. They do OK now with greed as the motivation.
Such a system is, necessarily, a system of wealth redistribution. As pointed out previously, the national economy takes it all into account. So, England's Fabian Socialists were said to favor support for the working class since, with vital expenses met, they could work for less. Neither did they squander all of their resources at a pub.
There are all kinds of ways to regard this...
There are other theories. Bourbon France argued that taxing the poor enriched the poor. They had to take work in order to pay their taxes, and their gain from the work exceeded the taxes.
Henry George promoted a single tax, the property tax. Such a tax has been said to be the reason San Francisco rebuilt so quickly after the earthquake and fire. The landowners had to put the land to making money quickly so they could cover the taxes. I suspect doubling property taxes in your home town would not turn it into a tighter more prosperous little city.
Jesus did it both ways: He praised the widow's mite and told the rich young man to hand over all his wealth. On one thing he was very clear, render to Caesar.
No need to be surprised. Even Brookings Institution is run and owned by the Goldman Sachs Alumni... They control all vital part of US, and just all lie as they please...
Another issue that needs addressing are the number of unsettled trades floating around as IOU's, and look like real shares in some poor schmucks portfolio. This is all due to rampant naked short selling these past few years. I've seen little reported on it although Jon Stewart nearly cracked it wide open. Jim Cramer openly admitted to and described naked short selling and that should be greatly discussed. It's time to start discussing the actual crimes committed by this Hedge Fund gang of thieves, the SEC complicity, and the financial media looking the other way.
Disgorgement from AIG and Others
I've heard a lot of hand-wringing from the punditry: How do we do this legally? Won't it be a bill of attainder? What about the sanctity of contracts? What about those who only got a few thousand? Why punish AIG only, what about Merrill Lynch? Etc, etc.
There's a solution to all of the above. The marginal tax rate at the end of the Eisenhower administration was 90%, a period of enormous prosperity, so those marginal rates obviously didn't stifle US economic growth. And it's true, the Wall Street CEOs are not really much worse than other corporate CEOs. Why should corporate executives in the US earn millions for destroying our economy through off-shoring? We need to reintroduce steeply graduated tax rates, indexed for inflation, with a top rate of 90% for incomes over $1 million in today's dollars, with no tax preference for capital gains and dividends.
To a large extent, these obscene executive salaries are just a score-keeping device. It reminds me of when I was a kid. We modified the rules of our Monopoly game to allow players to "make deposits" and "borrow" from the bank beyond their property's mortgage value. The game could go on forever, with the "winner" becoming ever wealthier. My brother bragged about his record-breaking wealth, but it was just a number. Who can really spend that much money? But we were just kids and the loser didn't have to sleep on the street.
This Paulson- Bush-Rubin- Gietner- Summers Wall Street - Washington connection and billions upon billions going to Wall Street in the dark of night should be the story of the century. I only hope the reporters have the guts to print it. I'm so tired of Wall Street elites stealing our money. If it's not stopped we will go the way of the Roman Empire!!! Please reporters, have the courage to report this travesty!!!!
And if it wasn't enough that we have the Goldman Sachs guys Geithner and Summer, now they are going to appoint Lewis Alexander from Citigroup to Treasury. Is there no end to the tone deafness, stupidity, or corruption?
There is no way that the President did know about the bonses he just thought he would get away from everyone knowing some how.
He still thinks that this Illinois and he can do whatever he wants to do no matter what it might be and nobody will care well he sees we all care and that is a fact.
All outrage aside, the bailout, will not work. All discussion of its' management and disbursment is superfluous. The U.S. is in the middle of an monetary financial derivative debt based Global economic collapse. It's dead. Hamilton would be telling us now that we are suffering under the operation of the Imperial economic system disguised as Globalism. The paramount priority now is the survival of the population. The population must come to the realization that this Global debt based economy's cancer is accelerating the contraction of production in the populations life sustaining physical economy. This is a threat to the population as all out war. The population will need to organize to create the political power necessary to demand of government as to what is being done to ensure that survival. As per Lyndon LaRouche: Put the Fed into bankruptcy, create the Hamiltonian U.S. National Bank. Credits and currency can be issued to the populations life sustaining sectors. Introduce high paying jobs into the population's physical economy. Stop the foreclosures, no one is thrown out and made homeless. Expand Social Security and Medicaid.
It amazes me that people can quote Lyndon LaRouche without a shred of embarrassment.
Alexander Hamilton was not at all averse to using public money to help industry. In his 1791 report to Congress on manufactures, he wrote:
"In countries where there is great private wealth, much may be effected by the voluntary contributions of patriotic individuals; but in a community situated like that of the United States, the public purse must supply the deficiency of private resource. In what can it be so useful, as in prompting and improving the efforts of industry?"
Taxes on tariffs? Better read again. Alexander Hamilton proposed proportional taxation on the movement of all moneys. In Federalist Paper 12, he wrote:
"The ability of a country to pay taxes must always be proportioned, in a great degree, to the quantity of money in circulation, and to the celerity with which it circulates. Commerce, contributing to both these objects, must of necessity render the payment of taxes easier, and facilitate the requisite supplies to the treasury."
Thus, the $1.5 trillion banks launder a year in drug money would be subject to a transaction tax. It's like a toll on the economic highway.
Every time AIG made a swap or sold derivatives there'd be a proportional toll paid on the movement of the swaps and derivatives.
A proportional tax system starting at 0% and maxing out at 7% at $5.4 million and going on for infinity would snag the bank's $1.5 trillion in laundered drug money and the $531 trillion of the derivatives market.
Good words hempy. It could be THIS easy.
It's ironic how difficult AIG finds it to negotiate with the investment banks (and makes them whole) and its own executives on bonus pay, whereas Katrina victims had to find it necessary to file a class-action lawsuit to have it even acknowledge their claims. Maybe they were too busy underwriting asset-backed-krap and credit-def
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One little gem from that article:
"The suit alleges that AIG has completely failed to provide any way for its policyholders whose homes have been damaged to initiate a claim or even reach its offices to find out how to do that, or to provide temporary disaster relief provided under their policies."
How did Goldman get paid $1 on $1? Couldn't AIG simply pay the part of the bonds that was suspected to be overvalued? I know, maybe that's not how the bonds were underwritten, but then again none of what's written seems to matter when it's the little guy in the 9th Ward whose policy AIG has to make whole... Couldn't AIG just unplug the phones so Paulson's buddies wouldn't get away with the principal AND the hedge?
Better stop thinking now that I've written it, because it makes me ill to my stomach.
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