Friday, December 23, 2011

Economic Hitmen Under My Bed

Either I’m going to start seeing economic hitmen under my bed, or the narrative is more common, the strategy more versatile than I ever imagined. That idea is being fostered by a piece titled A Christmas Message From America’s Rich penned by Matt Taibbi for Rolling Stone in which he highlights the indifference, nay the complete disdain that America’s elites have for the 99%. In the course of that article, Taibbi skewers, among others, Jaime Dimon of Chase Bank infamy for complaining that people hate him because he’s rich and successful. Taibbi rightly points out that people don’t hate Dimon because he’s wealthy and successful. They hate him because he and his banking buddies are a bunch of conniving, unrepentant, pricks. As evidence of this, Taibbi points to happenings in Jefferson County, Alabama.

“That particular locality is now in bankruptcy proceedings primarily because Dimon’s bank, Chase, used middlemen to bribe local officials – literally bribe, with cash and watches and new suits – to sign on to a series of onerous interest-rate swap deals that vastly expanded the county’s debt burden.

Essentially, Jamie Dimon handed Birmingham, Alabama a Chase credit card and then bribed its local officials to run up a gigantic balance, leaving future residents and those residents’ children with the bill. As a result, the citizens of Jefferson County will now be making payments to Chase until the end of time.

Do you think Jamie Dimon would have done that deal if he lived in Jefferson County? Put it this way: if he was trying to support two kids on $30,000 a year, and lived in a Birmingham neighborhood full of people in the same boat, would he sign off on a deal that jacked up everyone’s sewer bills 400% for the next thirty years?”

Translation: Dimon’s bank handed Jefferson County the means to commit financial suicide and then bribed its leadership to pull the trigger. And who primarily benefitted from Jefferson County’s mountain of lethal and bloody debt? Chase Bank, of course.

But wait, there’s more. Chase also pulled a similar stunt it seems with the Greeks. Again, Taibbi:

“Having seen how well interest-rate swaps worked for Jefferson County, Alabama, Chase ‘helped’ Greece mask its debt problem for years by selling a similar series of swaps to the Greek government. The bank then turned around and worked with banks like Goldman, Sachs to create a thing called the iTraxx SovX Western Europe index, which allowed investors to bet against Greek debt.

In other words, Chase knowingly larded up the nation of Greece with a crippling future debt burden, then turned around and helped the world bet against Greek debt.

Does a citizen of Greece do that deal? Forget that: does a human being do that deal?”

That, my friends, is exactly why guys like Dimon are now despised to the point that they must fend off vitriolic attacks by “imbeciles” in the debtor class. But that really is neither my point nor current fixation. No, my interest in Taibbi’s Rolling Stone rant is the evidence it contains of the economic hitmen narrative at play. The strategy employed by Chase Bank in its dealing with both Jefferson County, Alabama and Greece is the exact same strategy, writ small, that John Perkins persuasively claims was employed by the United States to financially enslave developing nations. It is the strategy I see being employed by banks and educational institutions to financially subjugate students for years on end through massive student loan debt. And it is a strategy that I now suspect could very well be at play in a variety of other contexts where the promise of a better financial tomorrow derives not from hard word, intelligence and talent, but from debt instruments hyped and sold by economic hitmen like Jamie Dimon and his bank.

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