The Obama Bubble: Why Wall Street Needs a Presidential Brand
by Pam Martens
This article originally appeared in the print edition of
Counterpunch.org.
"We are asked to believe
that those white executives at all the biggest Wall Street firms now want a black
populist president because they crave a level playing field for the American
people.”
The Obama phenomenon has been likened to that of cults,
celebrity groupies and Messiah worshipers. But what we're actually witnessing
is Obama mania (as in
tulip mania),
the third and final bubble orchestrated and financed by the wonderful Wall
Street folks who brought us the first two: the Nasdaq/tech bubble and a
subprime-mortgage-in-every-pot bubble.
To understand why Wall Street desperately needs this final
bubble, we need to first review how the first two bubbles were orchestrated and
why.
In March of 2000, the Nasdaq stock market, hyped with
spurious claims for startup tech and dot.com companies, reached a peak of over
5,000. Eight years later, it's trading in the 2,300 range and most of those
companies no longer exist. From peak to trough, Nasdaq transferred over $4
trillion from the pockets of small mania-gripped investors to the wealthy and
elite market manipulators.
The highest monetary authority during those bubble days,
Alan Greenspan, chairman of the Federal Reserve, consistently told us that the
market was efficient and stock prices were being set by the judgment of
millions of "highly knowledgeable" investors.
Mr. Greenspan was the wind beneath the wings of a carefully
orchestrated wealth transfer system known as "pump and dump" on Wall
Street. As hundreds of court cases, internal emails, and insider testimony now
confirm, this bubble was no naturally occurring phenomenon any more than the
Obama bubble is.
"Nasdaq transferred over $4 trillion from the pockets of
small mania-gripped investors to the wealthy and elite market manipulators."
First, Wall Street firms issued knowingly false research
reports to trumpet the growth prospects for the company and stock price;
second, they lined up big institutional clients who were instructed how and
when to buy at escalating prices to make the stock price skyrocket (laddering);
third, the firms instructed the hundreds of thousands of stockbrokers serving
the mom-and-pop market to advise their clients to sit still as the stock price
flew to the moon or else the broker would have his commissions taken away
(penalty bid). While the little folks' money served as a prop under prices, the
wealthy elite on Wall Street and corporate insiders were allowed to sell at the
top of the market (pump-and-dump wealth transfer).
Why did people buy into this mania for brand new, untested
companies when there is a basic caveat that most people in this country know,
i.e., the majority of all new businesses fail? Common sense failed and mania
prevailed because of massive hype pumped by big media, big public relations,
and shielded from regulation by big law firms, all eager to collect their share
of Wall Street's rigged cash cow.
The current housing bubble bust is just a freshly minted
version of Wall Street's real estate limited partnership frauds of the '80s,
but on a grander scale. In the 1980s version, the firms packaged real estate
into limited partnerships and peddled it as secure investments to moms and
pops. The major underpinning of this wealth transfer mechanism was that
regulators turned a blind eye to the fact that the investments were listed at
the original face amount on the clients' brokerage statements long after they
had lost most of their value.
Today's real estate related securities (CDOs and SIVs) that
are blowing up around the globe are simply the above scheme with more billable
hours for corporate law firms.
"The major underpinning of this wealth transfer mechanism
was that regulators turned a blind eye."
Wall Street created an artificial demand for housing (a
bubble) by soliciting high interest rate mortgages (subprime) because they
could be bundled and quickly resold for big fees to yield-hungry hedge funds
and institutions. A major underpinning of this scheme was that Wall Street
secured an artificial rating of AAA from rating agencies that were paid by Wall
Street to provide the rating. When demand from institutions was saturated, Wall
Street kept the scheme going by hiding the debt off its balance sheets and
stuffed this long-term product into mom-and-pop money markets, notwithstanding
that money markets are required by law to hold only short-term investments. To
further perpetuate the bubble as long as possible, Wall Street prevented
pricing transparency by keeping the trading off regulated exchanges and used
unregulated over-the-counter contracts instead. (All of this required lots of
lobbyist hours in Washington.)
But how could there be a genuine national housing price boom
propelled by massive consumer demand at the same time there was the largest
income and wealth disparity in the nation's history? Rational thought is no
match for manias.
That brings us to today's bubble. We are being asked to
accept at face value the notion that after more than two centuries of
entrenched racism in this country, which saw only five black members of the
U.S. Senate, it's all being eradicated with some rousing stump speeches.
We are asked to believe that those white executives at all
the biggest Wall Street firms, which rank in the top 20 donors to the Obama
presidential campaign, after failing to achieve more than 3.5 per cent black
stockbrokers over 30 years, now want a black populist president because they
crave a level playing field for the American people.
The number one industry supporting the Obama presidential
bid, according to the widely respected, nonpartisan Center for Responsive
Politics, is "lawyers/law firms" (most on Wall Street's payroll),
giving a total of $11,246,596.
"Other leading presidential candidates are taking money
from lawyers/law firms/lobbyists, but Senator Obama is the only one rallying
with the populist cry that he isn't."
This presents three unique credibility problems for the
yes-we-can, little-choo-choo-that-could campaign: (1) these are not just
"lawyers/law firms"; the vast majority of these firms are also
registered lobbyists at the Federal level; (2) Senator Obama has made it a core
tenet of his campaign platform that the way he is gong to bring the country
hope and change is not taking money from federal lobbyists; and (3) with
the past seven ignoble years of lies and distortions fresh in the minds of
voters, building a candidacy based on half-truths is not a sustainable strategy
to secure the west wing from the right wing.
Yes, the other leading presidential candidates are taking
money from lawyers/law firms/lobbyists, but Senator Obama is the only one
rallying with the populist cry that he isn't. That makes it not only a
legitimate but a necessary line of inquiry.
The Obama campaign's populist bubble is underpinned by what,
on the surface, seems to be a real snoozer of a story. It all centers around
business classification codes developed by the U.S. government and used by the
Center for Responsive Politics to classify contributions. Here's how the Center
explained its classifications in 2003:
"The codes used for business groups follow the general
guidelines of the Standard Industrial Classification (SIC) codes initially
designed by the Office of Management and Budget and later replaced by the North
American Industry Classification System (NAICS)..."
The Akin Gump law firm is a prime example of how something
as mundane as a business classification code can be gamed for political
advantage. According to the Center for Responsive Politics, Akin Gump ranks
third among all Federal lobbyists, raking in $205,225,000 to lobby our elected
officials in Washington from 1998 through 2007. The firm is listed as a
registered federal lobbyist with the House of Representatives and the Senate;
the firm held lobbying retainer contracts for more than 100 corporate clients
in 2007. But when its non-registered law partners, the people who own this
business and profit from its lobbying operations, give to the Obama campaign,
the contribution is classified as coming from a law firm, not a lobbyist.
The same holds true for Greenberg Traurig, the law firm that
employed the criminally inclined lobbyist, Jack Abramoff. Greenberg Traurig
ranks ninth among all lobbyists for the same period, with lobbying revenues of
$96,708,249. Its partners and employee donations to the Obama campaign of
$70,650 appear not under lobbyist but the classification lawyers/law firms, as
do 30 other corporate law firm/lobbyists.
"The
total sum raised February 16-29, 2008 by bundlers for Obama from 27 law firms that engage in lobbying:
$2,650,000."
Additionally, looking at Public Citizen's list of bundlers
for the Obama campaign (people soliciting donations from others), 27 are
employed by law firms registered as federal lobbyists. The total sum raised February
16-29, 2008 by bundlers for Obama from these 27 firms: $2,650,000. (There are
also dozens of high powered bundlers from Wall Street working the Armani-suit
and red-suspenders cocktail circuits, like Bruce Heyman, managing director at
Goldman Sachs; J. Michael Schell, vice chairman of Global Banking at Citigroup;
Louis Susman, managing director, Citigroup; Robert Wolf, CEO, UBS Americas.
Each raised over $200,000 for the Obama campaign.)
Senator Obama's premise and credibility of not taking money
from federal lobbyists hangs on a carefully crafted distinction: he is taking
money, lots of it, from owners and employees of firms registered as federal
lobbyists but not the actual individual lobbyists. But is
that dealing honestly with the American people? According to the website of
Akin Gump, it takes a village to deliver a capital to the corporations:
"The public law and policy practice [lobbying] at Akin
Gump is integrated throughout the firm's offices in the United States and
abroad. As part of a full-service law firm, the group is able to draw upon the experience
of members of other Akin Gump practices - including bankruptcy, communications,
corporate, energy, environmental, labor and employment, health care,
intellectual property, international, real estate, tax and trade regulation -
that may have substantive, day-to-day experience with the issues that lie at
the heart of a client's situation. This is the internal component of Akin
Gump's team-based approach: matching the needs of clients with the appropriate
area of experience in the firm ... Akin Gump has a broad range of active
representations before every major committee of Congress and executive branch
department and agency."
"Obama
is taking money, lots of it, from owners and employees of firms registered as
federal lobbyists but not the actual individual lobbyists."
When queried about this, Massie Ritsch, communications
director at the Center for
Responsive Politics, says: "The wall between a firm's legal practice
and its lobbying shop can be low - the work of an attorney and a lobbyist trying
to influence regulations and laws can be so intertwined. So, if anything, the
influence of the lobbying industry in presidential campaigns is
undercounted."
Those critical thinkers over at the Black Agenda Report have
zeroed in on the making of the Obama bubble:
"The 2008 Obama presidential run may be the most slickly
orchestrated marketing machine in memory. That's not a good thing. Marketing is
not even distantly related to democracy or civic empowerment. Marketing is
about creating emotional, even irrational bonds between your product and your
target audience."
And slick it is. According to the Obama campaign's financial
filings with the Federal Election Commission (FEC) and aggregated at the Center
for Responsive Politics, the Obama campaign has spent over $52 million on
media, strategy consultants, image building, marketing research and
telemarketing.
The money has gone to firms like GMMB, whose website says
its "goal is to change minds and change hearts, win in the court of public
opinion and win votes" using "the power of branding - with principles
rooted in commercial marketing", and Elevation Ltd., which targets the
Hispanic population and has "a combined experience well over 50 years in
developing and implementing advertising and marketing solutions for Fortune 500
companies, political candidates, government agencies". Their client list
includes the Department of Homeland Security. There's also the Birmingham,
Alabama- based Parker Group which promises: "Valid research results are
assured given our extensive experience with testing, scripting, skip logic,
question rotation and quota control ... In-house list management and
maintenance services encompass sophisticated geo-coding, mapping and scrubbing
applications." Is it any wonder America's brains are scrambled?
"Who
better to sell this agenda to the millions of duped mortgage holders and
foreclosed homeowners in minority communities across America than our first,
beloved, black president of hope and change?"
The Wall Street plan for the Obama-bubble presidency is that
of the cleanup crew for the housing bubble: sweep all the corruption and
losses, would-be indictments, perp walks and prosecutions under the rug and get
on with an unprecedented taxpayer bailout of Wall Street. (The corporate law
firms have piled on to funding the plan because most were up to their eyeballs
in writing prospectuses or providing legal opinions for what has turned out to
be bogus AAA securities. Lawsuits naming the Wall Street firms will, no doubt,
shortly begin adding the law firms that rendered the legal guidance to issue
the securities.) Who better to sell this agenda to the millions of duped
mortgage holders and foreclosed homeowners in minority communities across
America than our first, beloved, black president of hope and change?
Why do Wall Street and the corporate law firms think they
will find a President Obama to be accommodating? As the Black Agenda Report
notes, "Evidently, the giant insurance companies, the airlines, oil
companies, Wall Street, military contractors and others had closely examined
and vetted Barack Obama and found him pleasing."
That vetting included his remarkable "yes" vote on
the Class Action Fairness Act of 2005, a five-year effort by 475 lobbyists,
despite appeals from the NAACP and every other major civil rights group. Thanks
to the passage of that legislation, when defrauded homeowners of the housing
bubble and defrauded investors of the bundled mortgages try to fight back
through the class-action vehicle, they will find a new layer of
corporate-friendly hurdles.
I personally admire Senator Obama. I want to believe Senator
Obama is not a party to the scheme. But corporate interests have had plenty of
time to do their vetting. Democracy demands no less of we, the people. CP
Pam Martens worked on Wall Street for 21 years;
she has no securities position, long or short, in any company mentioned in this
article. She writes on public interest issues from New Hampshire. She can be
reached at [email protected].