Friday, April 10, 2009

Bizarre Twist

In the latest bizarre twist to the sordid saga of elite bankers slavering at the public coffers, the banks are planning to use the latest Obama/Geithner bailout money to repurchase the same toxic assets they are getting rid of. Well, maybe not the very same ones, but the same type for sure.

It’s not hard to understand why they might be doing that. Many of those assets are now close to worthless. The plan includes a competitive bidding process that supposedly would give a true value to the assets, but since nearly all losses will be socialized and gains privatized, they will tend to bid high. After they are bought back the former toxic trash will come with a government guarantee. How convenient.

Personally, before I gave the banks another trillion dollars I’d kind of like to know what they did with the trillions they’ve already gotten, but, seemingly, that’s too much to ask of them so we’ll just have to trust they’re doing the right thing. They’re really smart and they certainly have the best interests of the country at heart so why would we want to press them on where the money is going. Just because the US government is majority owner of those banks doesn’t mean it is clever enough to rescue them. No it’s only the idiot (oops, brilliant) bankers who understand how to make everything peachy-keen again.

And we certainly wouldn’t want to place restrictions on executive pay for bailout receivers, else they might not be willing to join the program. If they can’t get their exorbitant (oops, entirely justified) compensation they just might let their firms fail and then where would we be?

After repeated badgering by a pesky congressman, AIG finally opened up on where some of its $173 billion bailout went. What a mistake, better not to know that, for instance, six billion plus went to Societe General, France’s largest bank, another six billion plus went to Deutche Bank, Germany’s largest, and that billions more went to Barclay’s and UBS and other foreign institutions, not to mention a mountain of cash to America’s biggest banks. Knowing that would only get people angry and irate and that might lead to protests and demonstrations and result in those bailout funds being cut off and then we’d really be in trouble. No, better not to know, better to trust the smart guys.

While we might want to regulate hedge funds and derivatives and clamp down on tax havens we wouldn’t want to reinstitute the separation between retail banks where Average Sally keeps her checking account and investment banks which are purely speculative. Even though it worked mighty fine from the thirties until 1998 when the smart guys, including Geithner and Summers and others on Obama’s economic team, had the banking system deregulated, it’s not in Obama’s plans today.

Unfortunately, I can’t think of one glib, sarcastic thing to say about why the separation should not be reinstituted; but then maybe I’m not smart enough. Separation would preclude the banks buying back their toxic assets in guaranteed form as mentioned in the beginning of this rant. Maybe somebody out there has a handle on why that’s not included in Obama’s financial regulation plans. Beats me.

Friday, April 3, 2009

Israel Disowns Two-State Solution

Israel’s new Foreign Minister, Avigdor Lieberman of a far-right party, started his tenure by saying Israel wasn’t bound by the latest peace-process agreement.

Three years ago when the Palestinian people elected Hamas by a wide margin, not just in Gaza but the whole of the occupied territories, it was shunned; ostensibly for three reasons.

One was that Hamas had to accept all past agreements with Israel. Possibly they refused because past agreements had delivered exactly nothing to the Palestinians. Possibly because Israel had never abided by its past agreements to stop confiscating Palestinian land and stop building or expanding Jewish cities in the territories. Israel’s insulting final offer to the Palestinians in 2000, a West Bank divided into three Bantustans completely surrounded by Israeli territory, undoubtedly was also an important factor. Those reasons are, in fact, a large part of why Hamas won those elections.

Another was that it had to renounce violence. Kind of laughable in light of the violent nature of the Israeli nation to hold them to that standard. And that’s besides the fact that, in international law, an occupied people has the right to resist foreign domination. Why is Israel not required to renounce violence? The important point is that Hamas proposed a long term truce, and held to the short term truce, which Israel broke, prior to the Gaza assault.

Israel is worried that Hamas will use the time of a truce to become strong and 50 years in the future will come back and try to drive the Jews into the sea. (Don’t laugh, I actually read that by a reputable columnist.) It’s true that if Israel refuses over the next half century to come to a fair and equitable agreement with the Palestinians, there will continue to be hostility and strife. Look at the Tibetans and Kurds, for instance, they’ll never stop fighting for self-determination.

Finally they needed to recognize Israel’s right to exist. As I understand it they want to wait until they too are recognized as a nation. Makes sense to me.

Netanyahu, Israel’s new prime minister, is for peace, so he says, but not a two-state solution. He wants to improve Palestinian life economically, but maintain the Bantustan concept that allows total control of everything that goes in or out of Palestinian territory. Maybe he thinks they will be so thrilled with their new prosperity they’ll submit happily to foreign domination: even as they see their land continue to be confiscated and given to Jews. Both Netanyahu and Lieberman are in favor of increased settlement construction.

For those of you unfamiliar with the Bantustan concept, it was a device tried by apartheid South Africa to put all of its blacks in their own ‘sovereign’ countries (there were ten, I believe) but all completely surrounded by South African territory. Needless to say, the minority whites retained the greater part of the land and resources and total control over the blacks in that scenario. Nobody outside South Africa recognized them.

Is Obama going to accede to this new dynamic lying down or will he finally force concessions from Israel? World boycotts helped to kill South African apartheid. All the US has to do is cut off Israel’s totally unwarranted foreign aid (the largest recipient though it is a rich country) and the settlement building stops and the Israelis become a lot more adaptable. If they can no longer use US aid to subsidize colonization and the military forces necessary to protect what are essentially outposts in hostile territory they will cease their illegal activity or make a real sacrifice to continue.