FRONT PAGE CONTRIBUTOR
How The Banks Beat The President At Chess
A recent poll of investors found that 77% of them believed that President Obama saw business as a detriment to The United States of America. The Bloomberg Poll asked whether they believed Barack Obama was pro-business of anti-business. Thus, the leaders of any bank or financial institution, probably see this man as the enemy. They therefore cannot expect to be able to work with him and are looking for the best strategy to defeat his policies for as long as he remains in office. They have done so overwhelmingly, and therein lies a tale of great skullduggery.
The impact of the negative investor sentiment on our economy has been profound and deleterious. David “Spengler” Goldman describes how few jobs that it has created or saved.
Investors put $30.4 billion into venture capital during 2007 and $29.8 billion in 2008, according to the National Venture Capital Association. During the first three quarters of 2009 the total sank to only 12.4 billion, or an annual rate of 16.3 billion — half of the two prior years.
This, in turn, has led to a serious problem for The President and all of his supporters. We were told that Congress had to pass that stimulus package or unemployment might even get as bad as 8%. Since the stimulus passed, official unemployment reached 10%. The gradient of departure between official unemployment and labor force underutilization has pretty much gone to the moon. This leaves lots of bored people sitting around and preparing to vote against Democrats.
Thus, Barack Obama decided not to let these folks remain apathetic. In fact, he’s given them a new populist cause to work towards. The Obama Administration will now take down the Wall Street Fat Cats and get The Taxpayers’ Money back from the Evil TARP Banks. This even includes the Evil TARP Banks who didn’t want a loan from Hank Paulson to begin with.
So just how does The President intend to get our money back? He will charge 50 Banks a total $90 Billion over the next 10 years. He spoke of how the bonuses being paid to leading bank officials were obscene. It was almost as if they resented being bothered with suspending a golf game during a terrorist attack or something. The Wall Street Journal describes the confiscatory levy below.
The 10-year assessment on bank liabilities—dubbed the Financial Crisis Responsibility Fee—would fall most heavily on the nation’s top six banking companies: Citigroup Inc., J.P. Morgan Chase & Co., Bank of America Corp., Goldman Sachs Group Inc., Morgan Stanley and Wells Fargo & Co. Each would likely face an annual bill of $1 billion or more, with Citigroup and J.P. Morgan facing the largest liabilities, likely more than $2.4 billion apiece.
So this oughtta fix those Evil Banksters once and for all. It will shave 5% off their bottom line. It will hit them where they live. It will get them but good. Let’s all do a drunken sack dance in the ignorant populist end zone!
But wait…. It does none of those things. If the Federal Budget goes several $T in debt over the rest of the decade, what does President Obama need even more than a good astroturfing campaign? He needs revenue.
The people still able to provide that revenue obtain leverage. If you’ve ever wondered how the local public school system would stay open if the county went dry, you’ll understand the logic of Andrew Redleaf as he speaks out below on the futility of sin-taxing banks.
“The risk is that the big banks become like tobacco companies or casinos; the government starts by campaigning to eliminate vice and then finds it’s addicted to the revenue. Rather than creating more incentives for government to favor the big banks as revenue sources, the administration should focus on structural reforms to eliminate the huge too-big-to-fail subsidy.
Does anyone really think the people who charge Phillip Morris a sin-tax on every package of cigarettes sold want America to stop smoking? Or how about the people who charge Budweiser taxes to account for “the carnage of drunk driving and socially irresponsible drunken behavior?” How large of a cut do they get per 12-pack sold?
The Banksters, like Snidley Whiplash, have a useful stereotype to uphold. They will question the wisdom and the Constitutionality of the levy. But at the end of the day, the big banks want this to pass. It helps them destroy Barack Obama in two important ways.
The Bank Tax deflects political rage; it allows banks to demonstrate that they already are being punished. The onus then goes back on people who favor “strategic mortgage default” as a mode of punishment to prove once more they aren’t amoral, soul-sucking jerks.
But more importantly; this revenue stream from the sin tax hooks Barack Obama – and the rest of Official Washington. Nothing makes these banks too big to fail like making them a key source of government revenue. Once the economy withers under further Keynesian Stimulus, our Congress, like the she-male from Brokeback Mountain, won’t be able to quit JP Morgan or Bank of America.
By forking over this sin tax, the banks will have achieved Saudi Arabia status. The Left won’t be able to live with them; they won’t be able to fund their nationalization schemes without them. At that point, Barck Obama has been checkmated by his own populist stupidity. Snidely Whiplash will smile and twist his mustache. Being too big to fail is never having to say your sorry.