Political Risk Management
“Caligula was serious, and he
had no use for journalists.”
- Hunter S. Thompson: Better than Sex, Confessions of a Political
Junkie
By J.M. Hamilton 4-14-2016
Presumably Mr. Caligula had no use for
whistle-blowers either, but that’s beside the point. If you get a chance, I recommend that you
read Mr. Thompson’s highly illuminating book about the ’92 Presidential
campaign, a campaign that ushered in the
Clinton era. Admittedly, Mr. Thompson was
past his prime in ‘92, but his insights and wisdom were often spot on. Hunter pegged Mr. Clinton right from the
get-go as a hustler, and in the political arena, purely out for himself; but
when it comes to politicians is that really such a hard guess or news? Take a close look at Madame Hillary Clinton
and you’ll find yourself staring into the eyes of a stone cold superpredator and a
political opportunist, rivaled by none. The handful of politicians that actually give a damn about the people are few and far
between, and usually get run over in the passing lane (witness the pounding Mr.
McGovern took at the hands of then President Richard Milhous Nixon, Circa
1972). And surely that defeat was on
Hunter’s mind as he wrote this book.
H.S.T. and Candidate, Mr. McGovern, via the Washington Post.
It must have also been of Mr. Clinton’s
(aka Slick William’s) mind, as well. Mr.
Clinton was no fool, and despite all the ‘90s GOP bashing about Bill being a
“liberal,” he ushered in an entirely new era for the Democratic Party. Clinton personified Mr. Thompson’s famous
maxim, from the aforementioned book: “Politics is the art
of controlling your environment.” You better believe it, Bubba. Many have died trying to do that very thing,
the majority of course, have crashed and burned. The Lords of Karma have a way of totally
ripping up the script, the best laid plans of both mice and men, and the graveyards are
filled with indispensable men. Fate has
a really nasty way of humbling the greatest among us…. So always keep a careful
watch over both shoulders, at all times.
There is no such thing as paranoia, and as any citizen who has run in a
U.S. Presidential election will attest to… they really are coming to get you.
That’s why only true adrenaline junkies
run for the White House.
But enough about all that because I have
been writing about politics way too much, when J.M.H., as my readers are aware,
likes to go deep on finance on occasion.
With that intro, today’s topic is risk management. Yeah, please bear with me as we Tee this
up. Risk management is actually an old
school business, some might say insurance, term, whereby a manager is constantly
analyzing the various risks the enterprise they are managing may come across. Moreover, how should those risks be managed, priced for, mitigated, and/or eliminated. The term, risk management, really took off
after the 2008 financial crash. You
remember, the 2008 crash when bankers and financial types under-priced debt securitization (such as CDOs and MBS), derivatives and swaps, and many other
financial products in general.
How do we know the bankers and
said financial types under-priced these products? Because they had to be freaking bailed out -
that’s how we know. Wall Street had
become Too Big to Fail, and the taxpayer and the Federal Reserve came calling,
after the financial Hiroshima hit. The
key takeaway here, is that in a sense Wall Street had been practicing a form of
risk management all along. That is to say, the
Street/Banks took the profits of the under-priced and under-collateralized financial
products they sold, and the taxpayer assumed the risk and the bailout of said
under-priced financial products. In short,
all went according to plan, as The Street essentially owns both political parties.
An alternative risk management play, one
our hapless Congress and their owners – The Wall Street banks – halfheartedly
attempted to put into place, post-Crash, was where The Street actually would
price their products at an appropriate level for the risk assumed; true risk
management, also, attempted to set up a cash buffer or equity position (aka
collateral), so that the risk was incurred by the banks & their ownership – instead of the
taxpayer – should it hit the fan,
again. But where’s the fun in that? Where indeed?
Do you think for one nanosecond Wall Street banks are going to forego one fraction of a cent in profits (actually
practice real risk management), by actually appropriately pricing and setting
up collateral, or an equity buffer, for the financial fraud they sell daily? Why would they do that when they own the
Congress of the United States? The banks like the way 2008 played out…. The banks are practicing risk
management: They pocket the profits, and
you, dear taxpayer, get to bend over and assume the risk. It’s called socializing the costs of Wall
Street fraud, while profits are privatized; and it happens 24/7/365.
In short, Wall Street’s risk management,
indeed the wealthy’s risk management plan, is best summed up in Mr. Thompson’s
famous maxim: Once again…. Bueller? Bueller? Bueller? … Politics/Finance is the
art of controlling your environment.
And the environment Wall Street controls is the political environment:
The U.S. Congress, the Executive Branch, and increasingly the courts,
themselves.
That said, the GOP has always been owned
by Wall Street, but the Democratic Party, with its liberals and progressives,
was an entirely different animal, particularly in the late 60s, 70s and very
early 80s. It wasn’t until President
Reagan pointed the country hard right, less than a decade after Mr. McGovern
took his savage beating, and Mr. Carter’s dreams were limited to one term, that
the Democratic Party turned, as well, hard right.
Enter President William
Jefferson Clinton.
Sly Willy traded in the progressivism of the New Deal and Great Society for “Triangulation,” which is fancy way of
saying Mr. Clinton adopted/co-opted GOP policy. Suddenly gone were the days when Dems looked
out for ordinary Americans, the poor, and the disenfranchised. In the 90s, the new Dems were looking out for
themselves and the wealthy. Besides, who
were blacks, minorities, and lower rung whites going to turn to, if the Dems
started adopting polices that were antithetical to middle class interests? The Republicans?
Just as it took Nixon, a right- wing
anticommunist, to embrace Red-China – pulling off perhaps the biggest foreign
policy coup of the 20th Century, it took an allegedly, Liberal-Dem to
gut welfare, at the very same time the Clintons were pushing NAFTA and free
trade.
That is the greatest irony of President
Clinton’s two terms: many of Clinton’s economic, social, and fiscal policies
were conservative in nature, despite continuous vilification from the Republican
Party.
Caught in the middle – with no one to
champion their cause – were the poor and minorities. Jobs being shipped offshore, via Free Trade,
heh – no problem, let’s gut the social safety net. President Reagan and the CIA looked the other
way, as crack cocaine was sold to minorities in Southern California to finance
Reagan’s proxy wars in Latin America…..
What a great time for President Clinton – in the midst of a crack
cocaine epidemic – to clamp down on crime, ramp up the war on drugs, help
establish the criminal justice industrial complex, and embrace mass
incarceration. Besides, the country had to house the unemployed somewhere after all the jobs were shipped offshore – via
free trade – so why not institutionalize broad swaths of the minority
community (w/in privatized prisons)? Particularly,
African-American men. It’s no
coincidence that just as Mr. Clinton had words with #BlackLivesMatter protestors
this week, in the 90s, Mr. Clinton also had a Sister Souljah moment. And it’s good to remember that Mr. Clinton attacked
candidate Obama in 2008, as unelectable.
In short, our so-called “first black president (aka Mr. Clinton)” isn’t above playing the
race card to obtain the white vote.
If it all sounds very Republican, that’s
because it was. Riding shot gun with
President Clinton was the Speaker of the House, the beady-eyed, Newt
Gingrich. And President Clinton would
score three, coveted, annual balanced budgets, an event that has not been
achieved since. Meanwhile, much of the
Reagan and Bush tax cuts for the wealthy remained in place for President
Clinton’s two terms. To his credit, and true to the Keynesian model, Mr.
Clinton did raise taxes ever so slightly.
The Clinton tax increase, coupled w/ the unprecedented Dot.com boom,
helped in no small way to balance the federal budget.
President Clinton blazed a trail, and the
economic and political elite couldn’t have been happier. Now, the wealthy had two political parties
working for them. The Plutocracy owned
both political establishments, and hence, the government itself. It is also no coincidence that the 2008 financial
crisis struck under President Bush’s (W) watch, but President Obama – beholden
to Wall Street – and the current incarnation of Clintonian politics – continued
with the Wall Street bank bailouts set in motion by a Republican
administration. And the beneficiaries
of the Bush/Obama bailouts? Well, that’s
obvious… thanks to the bailouts and the
Federal Reserve, wage and wealth inequality have reached proportions last seen
during the Gilded Age. The Wall Street
banks are more concentrated and powerful than ever before. The banks, private equity, and shadow banking own everything, including the souls of politicians.
As with all things extreme, and
in line with Newton’s third law, there was eventually blowback. Blowback in the form of an anti-establishment
backlash seen during this 2016 Presidential campaign season, where outsider
candidates, Sanders and Trump, are leading insurgencies that the American
public has largely embraced. Both
Sanders and Trump stomping all over formerly sacrosanct free trade agreements;
both Sanders and Trump calling for America to pull back from its many - go it alone - wars, and
a Pax Americana foreign policy. And the American public – much to the
frustration and fear of the establishment – is eating it up. Hillary, stuck in the 90s, cannot believe her
eyes. Volumes could be written about how
the “mainstream” GOP candidate is now the Molotov Cocktail devotee, U.S. Senator from Texas,
Ted Cruz.
In the parlance of our times, WTF(reak)!
Which brings us to my final point. Mr. Thompson was 100% correct, politics is
the art of controlling one’s environment, and good political risk management –
in the year of our Lord 2016 - calls for
dramatic action. That’s why President
Obama, a cold hearted pragmatist, must throw Madame Hillary Clinton under the
wheels of the populist bus, running at preternatural speed towards destiny.
Grandma Clinton has reversed herself on
so many of her 90s Establishment policies that she is literally morphing into
Senator Sanders before our very eyes. Why the sudden change within the Clintonian heart? In short, the public has woken to realize the political interests of the plutocracy are absolutely crushing the middle class. Sorry to say, no one, and I mean no one, believes Madame Clinton is
going to “get ‘er done,” with a Republican held House of Representatives
(unless “getting ‘er done” means bringing back Slick Willy’s Pro- Plutocracy
agenda). Moreover, Hillary attracts
voters, who will likely be dead w/in the next generation (then again, the Clintons aren't above digging up the dead to increase voter turnout). I know that’s cold, but the calculus of political reality is colder still. Besides POTUS Obama's legacy is at stake. Meanwhile, Senator Sanders is the future… not
only does he attract the youth vote by both exceptional and extraordinary
margins, but women (particularly single-women), and increasingly minority voters, too.
Does President Obama want to saddle his
legacy with the GOP loving Clinton? Or does he go
with the future, POTUS Sanders? Cool,
analytical risk management, and poll after poll, demonstrates the obvious
choice. As events have overtaken the GOP
Establishment in real time, the Democratic Party’s civil-war is already underway and being waged. And it’s long
overdue… call it blowback for neglecting and screwing over the nation, to further profits for the few. What Mr. Romney, I believe, referred to as
the "takers." The only "takers" I know – the true socialist – are the 1%, caught w/ their hand in the government till, time and time again.
Sorry Bill and Hillary, but you are a political liability, a liability that should be subject to prudent political risk management. The Establishment’s time, to run this country into the ground, has reached its
inevitable conclusion, and a political revolution is overtaking both political parties. That leaves us
with the question of the moment, one of great import: Does Obama possess the courage to pull the indictment trigger?
Many would say count the indictment out, but this campaign season - and the great chess game that is presidential politics - has been turned on its head.
Many would say count the indictment out, but this campaign season - and the great chess game that is presidential politics - has been turned on its head.
Copyright JM Hamilton Publishing 2016
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