Thread: The Quiet Coup

The Quiet Coup
by Simon Johnson

One thing you learn rather quickly when working at the International Monetary Fund is that no one is ever very happy to see you. Typically, your “clients” come in only after private capital has abandoned them, after regional trading-bloc partners have been unable to throw a strong enough lifeline, after last-ditch attempts to borrow from powerful friends like China or the European Union have fallen through. You’re never at the top of anyone’s dance card.
The reason, of course, is that the IMF specializes in telling its clients what they don’t want to hear. I should know; I pressed painful changes on many foreign officials during my time there as chief economist in 2007 and 2008. And I felt the effects of IMF pressure, at least indirectly, when I worked with governments in Eastern Europe as they struggled after 1989, and with the private sector in Asia and Latin America during the crises of the late 1990s and early 2000s. Over that time, from every vantage point, I saw firsthand the steady flow of officials—from Ukraine, Russia, Thailand, Indonesia, South Korea, and elsewhere—trudging to the fund when circumstances were dire and all else had failed.
Every crisis is different, of course. Ukraine faced hyperinflation in 1994; Russia desperately needed help when its short-term-debt rollover scheme exploded in the summer of 1998; the Indonesian rupiah plunged in 1997, nearly leveling the corporate economy; that same year, South Korea’s 30-year economic miracle ground to a halt when foreign banks suddenly refused to extend new credit.
But I must tell you, to IMF officials, all of these crises looked depressingly similar. Each country, of course, needed a loan, but more than that, each needed to make big changes so that the loan could really work. Almost always, countries in crisis need to learn to live within their means after a period of excess—exports must be increased, and imports cut—and the goal is to do this without the most horrible of recessions. Naturally, the fund’s economists spend time figuring out the policies—budget, money supply, and the like—that make sense in this context. Yet the economic solution is seldom very hard to work out.
No, the real concern of the fund’s senior staff, and the biggest obstacle to recovery, is almost invariably the politics of countries in crisis.
Typically, these countries are in a desperate economic situation for one simple reason—the powerful elites within them overreached in good times and took too many risks. Emerging-market governments and their private-sector allies commonly form a tight-knit—and, most of the time, genteel—oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders. When a country like Indonesia or South Korea or Russia grows, so do the ambitions of its captains of industry. As masters of their mini-universe, these people make some investments that clearly benefit the broader economy, but they also start making bigger and riskier bets. They reckon—correctly, in most cases—that their political connections will allow them to push onto the government any substantial problems that arise.
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http://www.theatlantic.com/doc/200905/imf-advice



In order to understand where this thread is going, we must first develop some common language and common understanding of what words mean. An Oligarch is a member of the oligarchy (“oligarchy - the ruling class. Usually a small group of wealthy individuals.”) http://oregonstate.edu/instruct/anth370/gloss.html#O

Generally Oligarchs were considered to have arisen from minor nobility, (usually a group of patriarchies) who were not permanently in power and who were not selected as a result of their VIRTUE (in the classical Greek sense). This group of “lesser nobles” (let’s call them the mega-rich for now), typically had close ties to business and industry. These ties, typically served to get the oligarchs into a position where they could repay the “largesse” and “favors” with a form of crony patronage. This patronage would be used to grant tax breaks, access to special funding (or a financial bail out), and the dismantling of regulations and oversight which would “cramp the style” of their “patrons”. While one could argue that several politicians appear to fit this criteria, I would suggest that the most egregious oligarch is one whose personal, business, and political life shows a pattern of being rescued and supported by business interests. A man who was bailed out of his several business failures and bad business decisions by family “friends” representing these businesses. These were businesses who would later come to benefit from his election to the highest office in the land. A man whose family has shown long standing and profound ties to the financial and securities industries. A man who was supported, in his presidency, by representatives of the very industries who had “rescued” him earlier in his life, and to whom he owed a great deal in the way of political favors.

Was this man alone in his quest for personal aggrandizement and power for the few? No, in fact his predecessor in office was almost as bad. The problem here, of course, is in the word “almost.” You see Bill Clinton was involved, but NOWHERE did the plutocrats receive such a warm and eager helping hand as they did under the auspices of George W. Bush. If the Banking, Investment and Financial Services industry raped America, then the Bush administration cheerfully slipped us a roofie to make it all possible.

The combination of crony capitalism, ill advised tax breaks for the plutocrats, dismantling of the regulatory establishment (meant to check this kind of activity), huge amounts of waste (War in Iraq, contracts to KBR, etc, etc, etc) all played into the hands of the mega-wealthy. This is an action tantamount to the destruction of our government and our way of life, and it amazes me how any self-respecting person could not want to drag the neocon ideologues (and their dittohead followers) out into the streets to be tarred, feathered, and run out of town on a rail. I’m sick of the “pretend outrage” over a mess that was created by the Bushistas and then foisted onto the Obama administration as a “poison pill.” It’s time to grab the torches and the pitchforks and go after the real monsters of this piece… the Bush administration and its supporters.

But placing the blame where it belongs isn’t enough. What can be done to save America from the plutocrats and the oligarchs like former President George W. Bush and his cronies? First, we must nationalize the banks and force them to come clean. Second, re-institute the wall between banking and investment (stocks/bonds and other Wall Street marketables). Third, we must break apart the mega-banks and multi-national Wall Street firms to create a sustainable medium risk pool of vital, supportable businesses rather than having firms that are “too big to fail.” Fourth, we need to rescind the Bush tax cuts and undo the benefits of patronage that his administration brought to the plutocrats. Finally, we need transparency in these dealings. In the words of Boris Fyodorov, “ confusion and chaos are very much in the interests of the powerful.” In this case it’s the plutocrats and their oligarch lapdogs (who have screwed America) who are benefitting from the current financial mess. Let’s make sure that they don’t profit from their bad acts. okebrain:

I read this in the AM. Fascinating, and yet there is nothing done, spoken, or demonstrated. How how far down the rabbits hole have we gone as a nation???!!!

Originally Posted by johnlocke

But placing the blame where it belongs isn’t enough.

And wasn't done here. The unspoken premise that there are no greedy corrupt mega
rich Liberals like Soros is a common ploy.

What can be done to save America from the plutocrats and the oligarchs like former President George W. Bush and his cronies? First, we must nationalize the banks and force them to come clean.

Because of course there is no corruption, waste, or cronyism in government...

Second, re-institute the wall between banking and investment (stocks/bonds and other Wall Street marketables). Third, we must break apart the mega-banks and multi-national Wall Street firms to create a sustainable medium risk pool of vital, supportable businesses rather than having firms that are “too big to fail.”

Funny how it was Bill Clinton who signed the legislation breaking that wall
of separation down opening the up the way for "too big to fail" institutions.

Fourth, we need to rescind the Bush tax cuts and undo the benefits of patronage that his administration brought to the plutocrats.

Fair enough.

Finally, we need transparency in these dealings.

Like the kind the great and perfect Obama promised? Even he let those
words wither as soon as he gained office, now we have one massive bill
after another proposed of passed with out even the representatives
reading them let alone the public.

In the words of Boris Fyodorov, “ confusion and chaos are very much in the interests of the powerful.”

The Bush and Obama administrations are made very good use of a "crisis".

In this case it’s the plutocrats and their oligarch lapdogs (who have screwed America) who are benefitting from the current financial mess. Let’s make sure that they don’t profit from their bad acts.

So why are all the same suspects and Government Sachs cronies back in
Obama's Treasury?

Back in the treasury, hell man these pukes are the treasury!!!!

Shit if that ain't bad enough, we got one in the state department....Good grief, give me a freaking break!

Originally Posted by michaelr

I read this in the AM. Fascinating, and yet there is nothing done, spoken, or demonstrated. How how far down the rabbits hole have we gone as a nation???!!!

Rich and powerful elite are the same, red or blue, they look the other way
when it comes to their kind.

We will never be able to break up the strangle hold the oligarchs have on this nation and the world until we break up the FRB. Until control of the government is rested from these moneyed interests America is doomed to become a slave nation governed by unelected simple minded plebes concerned only with their self gratification.

Originally Posted by anonnymous

We will never be able to break up the strangle hold the oligarchs have on this nation and the world until we break up the FRB. Until control of the government is rested from these moneyed interests America is doomed to become a slave nation governed by unelected simple minded plebes concerned only with their self gratification.

The member banks of the Federal Reserve are huge contributors to both
parties. The first step to getting your government back is changing how
polititions gain and keep their office.

I read this article a while back. I had to read it in pieces because I couldn't take more than a few paragraphs at a time without throwing up in my mouth a little. The incestuous clusterfuck that is Washington and Big Finance is an affront to us all. We had one president who fought off the central bank. That was what, 200 years ago? We need another one, and for all the same reasons we needed one back then.

Which is kind of interesting when you look at it that way, isn't it?

Originally Posted by bla bla

And wasn't done here. The unspoken premise that there are no greedy corrupt mega
rich Liberals like Soros is a common ploy.

[/font]

Because of course there is no corruption, waste, or cronyism in government...



Funny how it was Bill Clinton who signed the legislation breaking that wall
of separation down opening the up the way for "too big to fail" institutions.




Fair enough.



Like the kind the great and perfect Obama promised? Even he let those
words wither as soon as he gained office, now we have one massive bill
after another proposed of passed with out even the representatives
reading them let alone the public.



The Bush and Obama administrations are made very good use of a "crisis".



So why are all the same suspects and Government Sachs cronies back in
Obama's Treasury?

Ah, but I didn't say the Dems were blameless... I said that the administration that made this type of crony capitalism its centerpiece was the Bush administration.

Yes the Obama administration HAS made use of the "crisis" to its own ends. It's hard to describe Obama as an Oligarch, however, because he doesn't appear to have the same personal ties to the plutocrats. He is just an overly ambitious political "thug" from Chicago who is willing to exploit the machine to get his fifteen minutes of fame. And let's be realistic, Soros really DOESN'T care who wins (Dem or Rep) as long as HIS financial interest is protected and advanced. This is why the Banking, Investment, and Financial Services industries support BOTH candidates... because they want whomever wins to be thoroughly indebted to them. It's also why the American public hasn't got a prayer of seeeing their agenda passed, because this isn't their government anymore, it's a government for Goldman Sachs, Citibank, GM and the mega-rich.

Originally Posted by johnlocke

Ah, but I didn't say the Dems were blameless... I said that the administration that made this type of crony capitalism its centerpiece was the Bush administration.

I get what your saying but it hardly started with Bush.

Yes the Obama administration HAS made use of the "crisis" to its own ends.

It's sad to see how transparent the manipulation/abuse of government
power has become.

It's hard to describe Obama as an Oligarch, however, because he doesn't appear to have the same personal ties to the plutocrats.

He's a smiley face socialist.

He is just an overly ambitious political "thug" from Chicago who is willing to exploit the machine to get his fifteen minutes of fame.

I do think he is an ideologue. There are many examples to point to that
demonstrate his far Left agenda despite his constant droning centrist
rhetoric.

And let's be realistic, Soros really DOESN'T care who wins (Dem or Rep) as long as HIS financial interest is protected and advanced.
This is why the Banking, Investment, and Financial Services industries support BOTH candidates... because they want whomever wins to be thoroughly indebted to them.

What Right Wing activist group does he support that would compare to
Media Matters? Wouldn't a Machiavellian manipulator play both sides like
the Fed banks do?

It's also why the American public hasn't got a prayer of seeeing their agenda passed, because this isn't their government anymore, it's a government for Goldman Sachs, Citibank, GM and the mega-rich.

Can we go as far as the Bilderberg group... OK, maybe not in public, lol.