GOPCons - How To Make Money On the Credit Default

Credit Default Swaps Without the Training Wheels

When oligarch children grow up to the age of majority, they naturally want to follow in the footsteps of their parents.  Of course, the little tykes have had a chance to play with things such as credit default swaps, CDO's and fraudulent securitized mortgage blocks while they were running about the mansion grounds on their tricycles.

Oh my goodness.  The "little people" are defaulting. (image source)

But once the "terrible teens" set in, all that "starter package" looting and pillaging quickly loses its glitter and the youngsters are ready for some of the real stuff.  Mommy and Daddy might give them a railroad or a "starter corporation" to dismember, but even such larger presents still leave them challenged when they look in awe at the gigantic looting schemes the parents are pulling off right and left.

The kids have seen the autocracy slice down the tax rates for the oligarchs, Big Phama luxuriating in non-negotiable rates for Medicare Part D and the health insurance companies raising rates to welcome in the Affordable Care Act, so they, quite predictably are "chomping at the bit" for the next big move.

Even if they are still too young to drive and have to take the family limousine to the Summer Looting Festival.

The Summer Looting Festival

So, exactly how will Mom and Dad rake in the bucks from the nation's credit default?

We have to look at a couple of the examples mentioned above to get the "lay of the land."

1.) Let's take a look at the non-negotiable Medicare Part D bill that got passed at 3 AM.  What "goes missing" right away is any discussion of exactly why all those drugs wind up costing so much.  No need to even think about it.  The deal was solid.  

The GOPCons would vote for the socialistic drug bill with the grinning assistance of the lobbyists of the Big PHARMA oligarchs who were promised that they would never have to compete for prices again in this century.  

There was no imaginable reason why the federal government (under the autocrat) should ever so much as "blink an eye" at the prospect of outright price fixing, windfall profits and back room cronyism.

Since then, PHARMAgarchs have pocketed hundreds of billions of dollars of "profit."  Totally legal.

It's been paradise.  Republicans helping the old and infirm, uh, to get the medicine they need.   No need to note that the money to pay for it was borrowed.

2.) Next, let's consider the premium rate increases the HEALTHCAREgarchs have imposed -- utterly without any basis in cost whatsoever -- very, very quickly before the Affordable Care Act had a chance to come into effect and stop them.

A "new word" was quickly introduced into the "talking points."  "Uncertainty."  Although the entire Affordable Care Act is written in black and white for business planners to read, health care costs have become "uncertain."  And, since "uncertainty" validates any money hoarding or savage price fixing, business could hardly be expected to spend any of the estimated $2 Trillion they have on their books and anyone -- such as an employer -- who might have to actually buy health insurance immediately raised all prices because of the "uncertainty."

You guessed it.  Since the business agents of the oligarchs "don't know how expensive health insurance will become," the situation will become "uncertain."

Premium rates went up around 35% on average since then, even though actual health care costs only increased around 6%.

Making Money From the National Debt Default

Let's lay out the plan.

The oligarchs' GOPCon servants follow their orders and block the moves to raise the debt ceiling -- even though the same people who are now ranting and raving about not raising the debt ceiling have already raised the debt ceiling seven times in the last decade -- making the country's credit rating go down and interest payments go up.

Borrowing money will become more expensive.

However, among the oligarchs, very conveniently, no one knows how expensive.  But, remember, the corporatist crowd doesn't need to borrow any money -- they already have $2 trillion on the books from the looting during the autocracy.

So....

You guessed it.  Since the business agents of the oligarchs "don't know how expensive borrowing will become," the situation will become "uncertain."

Then, following the path set down by PHARMA and the Health Care insurance industry, prices can be raised immediately without any possible corresponding reason such as the costs of anything.  This means that, if you are a corporation or an oligarch, you can raise prices as much as you want even if you don't have to borrow any money at all because you have trillions of dollars in the bank already.

The increased prices, all carefully justified by the imaginary extra cost of borrowing even when there is no borrowing taking place or necessary, suddenly boost the amount of consumer money flowing into your money bin, complaints about the price increases can be dispatched easily as merely another effect of the default and higher interest rates, no problem that they are utterly inflationary.  

If that excuse doesn't shut up the whining, starving middle class consumers, there's always the "uncertainty" issue.

And, bonus-wise, if anybody does actually have to borrow money, they can borrow it from you!  But wait, what interest will you be charging?  The national credit rate has gone up, because of the uncertainty!

Oh darn.  Mom and Dad certainly didn't want to have to raise the interest rates they charge, just willy nilly, but in the atmosphere of national default, higher rates and, of course, the uncertainty, they had no choice.

If you are one of the "chosen few," that is, one of the oligarchs, you will be forced to increase the interest rates on the loans you make because the credit rating of the entire country has caused national debt interest rates to increase.  Once this is in place, your "take" will, naturally, also increase.  That, dear visitors, is "how you do it."

You get the idea.  This is currently the "dinner topic" in our oligarch family mansion.

Creating the Royal Dynasty in the Neo-Con Paradise

Will this be the last decade of the economic miracle which was America?

Miracle?

Yes, the United States gained a reputation eagerly offered by the down trodden of the world when its promise was first unfurled.  Here was a land where even the most modest of men could work hard, be clever, solicit only a smattering of good fortune from the gods in play and, although previously unthinkable in the old world, prosper.

Now, the Eighteenth Century was hardly the first appearance of the remarkable middle class in the long history of the world's economies.  The ancient Greeks admired the vivacity of a trading class of freed men in old Athens.  Even before them, we must assume that Babylon was also fairly endowed with the ancient Sumerian equivalent of used car salesmen, tort lawyers and other brave opportunists who managed to court comfort, security and wealth in roughly the usual, albeit somewhat alien, success stories of the day.

However, these previous successes had been exceptional.  For every well heeled middle class exception there had been hordes of slaves doomed to toil to their early deaths and even rarer pockets of unimaginable, dynastic wealth for the noble families who were friends of the Pharaoh, Emperor, Sheik or recently victorious invader.

Not so in the United States.  Here, the exceptions flourished like flies at a messy picnic.  Further, however unlike the previous models, a fortress nobility, ensconced in unassailable inheritances of birth to death money was crowded out of the economies of the masses.  Instead, innovation, invention and efficiency were the constant origins of such a wide spread "new wealth."

There is an educational note to be attached to those old Crassus and Hapsburgs, unfathomably rich elitists who were not always so rich.  For example, the Crown of the Austrian Hungarian Empire began as a family of highway robbers, slowly amassing wealth at first by outright crimes, then later as "toll collectors" on the main arteries of Medieval commerce.

However, only decades later, the Hapsburg wealth had grown so great as to legitimize these old Dark Ages crooks into a royal family, all aglitter and equipped with a formidable army.  Once the crucial pivot point -- a sort of critical mass of wealth -- had been crossed, all became valid, royal, pure, and convincingly derived from the Divine Rights of Kings.

Ooops. It seems there are those among us who dream of this plutocratic obscenity repeating itself once again even in this distant, future century.

What is their socially recidivist plan to accomplish this retreat to medieval economic brutality?

It turns out to be discouragingly similar to the mechanism employed so successfully by the Hapsburgs.  These economic reactionaries believe that they can follow the pattern of their brutally checkered forebears with a scheme to accomplish the same goals.

The outline is simple enough.  Do business for a time, not with the goal of necessarily being competitive and successful, but rather with the sole intention of accumulating enough money to finally obscure the free market discipline by artfully purchasing sufficient influence in the government to establish an unassailable monopoly.

Exagerrating again?

Hardly.  The examples are compelling and undeniable.  We have seen the story unfold in some highly visible encounters already, and there are undoubtedly many more still in the carefully crafted and sustained shadows.

Example One - The Health Care Nobility

We have observed the health insurance monoliths and their wholly owned Senators gut what might have otherwise been a fairly rational health care reform proposal.  This would not have been possible if the Pharma and HMO benefactors had not previously fortified themselves with vast discretionary monies to lubricate the process.

Now, having established the initial base of the new health care economic autocracy where there will be no unpleasant alternatives, they quickly employed the fraudulent media pundits, their special Senators and their immense corporate image handlers to deflect the attention of the hill billies and bigots with incessantly repeated, supercilious psuedo-ideology.

The health insurance giants are already well established plutocrats.  Now they are "waiting in the wings" for an inauguration to the corporate equivalent of the Divine Right. MeanMesa has already posted a number of essays concerning health care, links to a few of them appear below.  There are more in our archives...

Who Killed Single Payer?

Free Market Health Care?

Health Care - Legislative Firepower

Ooooh! Health Care and the Senate

Example Two - The Royal Petroleum Families

Now, considering that America is packed full of almost more cars than people, one might think that producing petroleum products would be essentially a "no brainer" when it comes to generating a robust profit -- something akin to "selling whores in a lumber camp."  Even the most modest effort at corporate practices should, theoretically, find a vast market filled with willing buyers.

Teddy Roosevelt "downsized" a few petroleum fascists along with an equally rancid collection of steel makers and rail road tycoons, but this species seems to have "1,000 lives," always re-emerging as a hybrid Phoenix a few decades later.  Worse, these new little birds are born hungry, squealing and squawking for a nice meal of Federal subsidies ($16 Billion a year to Exxon), rapacious speculation ($4 per gallon gasoline) and, of course, ever deepening, constant de-regulation (the current Gulf disaster).

When the Texas dynasties of "good old boys" finally accumulated enough dough to start shopping for Senators the government was finally "renovated" to a state where the public interest was no more than a cynical, road weary campaign slogan to be trotted out at election time.

Example Three - Gangsters and Banksters, All Too Big To Fail

As the autocrat and his corporatist minions in the Senate patiently dismantled the regulations imposed at the end of the Republican Great Depression in the 1930's, the brokerage houses opened their bottomless "McDuck Money Bins" to unleash their own latest wave of "pseudo-ideological piracy."  No matter how fervently the population of American voters wanted regulation, their "wholly owned" GOP Senators began -- at once -- to feverishly pull the teeth from the new born legislation which might prevent future bubbles and future calamities.

The "free market" disciplines were left in the dust bin in favor of new investments in election campaigns, all designed to protect their burgeoning royal, Wall Street dynasties.  By the way, disabuse yourselves of any lingering hope that this plan didn't work.  These pimply little monkeys can now claim ownership of 60% of the total value of the nation, not to mention the $60 Trillion dollars worth of casino derivatives and other financial "doo-dads" they've embedded into a staggering world economy.

The monetary "fortress" of the financial nobility is defended by a continuing threat to wreck the entire economy should any demands of their fatwahs and fiats be resisted.

The Final Insult

We Will Destroy Any Politician Who Won't Play Along

... resistance is futile ...

Perhaps the most egregious outrage of the autocracy was the insertion of a majority gang of rabid neo-con ideologues to our Supreme Court.  The sketchily publicized decision of a few weeks ago empowers absolutely any of these well funded, reactionary plutocrats to contribute without limit to political campaigns which will destroy any candidate who might oppose their scheme.

For more reading, sample the following archived MeanMesa posts on the subject.

Finally - Quotes From the Decision

Raising the Corporate Toddler

Monday Morning With The Chief Justice

The Supreme Court Addresses THE WRONG PROBLEM!

The message is simple enough.  If you, MeanMesa visitor intend to live here,

RESIST!

Photo courtesy of http://britishreactionstotherevolution.files.wordpress.com/2009/02/tale_of_two_cities-16.jpg