Obama’s Presidential Re-Election Campaign: Has the Strategy of the Politics of Divide been working?

I recently observed that Occupy Wall Street seem to be a part of President Obama’s re-election campaign strategy which fundamentally revolves around the groupthink “us against them” gimmickry.

Has this been working?

Current evidence indicates that there has been little impact in swaying the tide to favor President Obama.

Professor Brad Smith at the Division of Labor writes

In a column today in the Washington Post, Charles Krauthammer excoriates President Obama's new style of more aggressively "scapegoating" Republicans and "the rich," and giving succor to the OWS crowd. But while Krauthammer calls it "dangerous," he concludes, "it's working."

Is it? In it's August monthly poll, Gallup showed the President leading a generic Republican by 45-39%. On September 8, the President kicked off his re-election campaign with his call for the "American Jobs Act," (the AJA) and spent the next several days pushing for it. Gallup conducted its September monthly from September 8 through the 11th. The result: Generic Republican led the President by 46% to 38%. In late September, Occupy Wall Street began to garner attention - it crowded the Brooklyn Bridge on the last weekend of the month and has been almost non-stop in the news since. But Gallup's October poll, released today, shows a generic Republican leading the President by 46-38% - exactly the same as a month before.

Amongst Independent voters, the generic Republican edge has grown from 40-35% in August to 43-30% in October (though down slightly from September).

When he gave his AJA speech in September, Obama's average approval was 43.8, per Real Clear Politics. Today it stands at 43.6, though with a slight uptick in the last week - almost entirely the result of a surprisingly strong (for the President) poll from Rasmussen, the pollster liberals love to hate. The most recent polls from other pollsters in the field since OWS briefly seized the Brooklyn Bridge, compared to their prior poll, show him down in Gallup, flat in Ipsos/Reuters, down in ABC/Washington Post, and down in Fox New.

The politics of promoting guilt, envy, hate, blame and anger will unlikely help advance Mr. Obama’s re-election chances, unless this has been more than just a re-election agenda.

Maybe sowing social divisiveness has been meant to promote a popular revolution that would justify the imposition of socialism, if not despotism.

As Ludwig von Mises wrote,

The worst consequence of the antidemocratic spirit is that it divides the nation into hostile camps. The citizenry lose confidence in the working of democratic government. They fear that some day one of the antidemocratic minority groups may actually succeed in seizing power. Thus they think it necessary to arm and defend their rights against the menace of an armed minority.

Occupy Wall Street: More Evidence of President Obama’s Re-election Campaign

I harbored suspicions that Occupy Wall Street could be part of President Obama’s re-election campaign strategy. And the unfolding events seem to be validating my position.

From Intelhub.com

As the Occupy Wall Street protests have grown and evolved we have seen a major change in overall direction coming from the most vocal supporters.

While many still claim that this is not a political movement, the unfortunate fact is that everyday we see more and more evidence that the establishment left has, at least in part, co opted the movement.

Yesterday’s so called Millionaires March has drawn major media attention around the world, with support popping up in places that most wouldn’t think would support protesters targeting the financial district.

Linette Lopez, writing for the Business Insider, revealed that the real powers behind the march were numerous extreme leftist organizations with open socialist and communist ties.

Now here’s who they are specifically:

-The Working Families Party

-UnitedNY

-New York Communities for Change

-Strong Economy For All Coalition

-VOCAL-NY

-Community Voices Heard

Those are some pretty established New York groups that span across the state, and they have some powerful people behind them.

So we have super leftist organizations running large scale protests for the Occupy Wall Street protesters yet we are supposed to believe that this is not a political movement?

While it is clear that these organizations do not speak for ALL the protesters, a growing majority are seemingly falling in line with groups who openly support one of Wall Streets biggest supporters, President Barack Obama.

Read the rest here

Considering that President Obama’s approval rating has been drifting at a nadir (record low from many polls as gallup or Quinnipiac University), thereby diminishing his chance of re-election...

From Gallup

And considering that the tea party movement has served as an influential force in shifting the political tide as revealed by the last Congressional elections…

From Reuters.com

President Obama desperately needs a gimmick…and real quick

And there’s no easier way to pander to the masses than to resort to groupthink gimmickry which have mostly been based on class warfare (Buffett Taxes), nationalism (via protectionism also here) and racism.

For the left, desperate times call for desperate measures

Occupy Wall Street French Edition: Arnaud Montebourg

Riding on the Occupy Wall Street’s theme, aspiring French politician Arnaud Montebourg appears to be making headway in French politics.

From Reuters, (bold emphasis mine)

French Socialist Arnaud Montebourg was eliminated in round one of his party's presidential primary Sunday, but his campaign against globalization, greedy banks and trash TV was such a hit that mainstream leftists may ignore it at their peril.

A 48-year-old lawyer and member of parliament, Montebourg scored a surprise 17 percent in Sunday's vote after proposing during televised Socialist Party debates to put banks on a tight leash and ramp up protectionism…

Montebourg's main proposition is that it is time to do away with the idea that France has no choice but to compete with the likes of China on prices when the latter is unbeatable because of lower social and environmental standards.

At a time when European governments are under pressure to yet again bail out the financial industry, Montebourg has struck a chord in proposing that banks be brought to heel by having the state buy stakes in them and put vote-wielding government officials on their boards.

"All those who have lost out from globalization have heard the proposals for a new France," Montebourg said Sunday.

Mr. Montebourg has essentially not been saying anything new when it comes to French politics, which have long been steeped in socialist democracy, except for imputing the culpability of banks to the ongoing crisis.

In the Eurozone or in the world, France has not been known as a political haven for capitalism (see Economist chart above)

But as this Economist April article says (bold emphasis mine)

Like their politicians, the French always sound defiantly anti-globalisation. In polls they are far more hostile to free markets than Germans, Chinese or Russians. Yet when it comes to buying or eating foreign stuff, they are as enthusiastic. France is one of the most profitable markets for McDonald’s. Judging by the dress code of French teenagers, there will be long queues outside Abercrombie & Fitch—though whether to buy the hooded tops or to eye up the sales staff may be another question.

Again this serves as another example of “do as I say but not as I do”

This means that for an aspiring politician like Mr. Montebourg, the way to get elected would require staple adherence to socialist rhetoric with a little populist twist—blame capitalist greed on politically privileged banks.

Besides, for Mr. Montebourg to propose more government presence in the banking system is hardly any change. What this does is to formalize or embed what has already been in place, an unsustainable welfare state financed by government protected towards government controlled banks.

Chart from Philipp Bagus

Yes banks, like in the US, have complicit roles played to the respective lingering political economic problem alright, but what Mr. Mountebourg has been missing is that overspending and bubble policies of the welfare state has functioned as the primary reasons for this unfolding crisis.

And institutionalizing government’s presence in the banking system will hardly be the solution; to the contrary this will even exacerbate the existing problems.

Yet despite Mr.Mountebourg’s emergent popularity, French politics has not been representative of the dominant political trend of the Eurozone.

From the Economist (dated June 7, 2011)

Graphic: Differences and Shared Interests of Occupy Wall Street and the TEA Party

A Venn Diagram showing the differences and shared interests of the Occupy Wall Street and the Tea Party movements

(hat tip Professor Steve Horwitz. Source here)

Occupy Wall Street: Do as I say but NOT as I do

hat tip Prof Mark Perry

The policy of democracies is suicidal. Turbulent mobs demand acts which are contrary to society’s and their own best interests. They return to Parliament corrupt demagogues, adventurers, and quacks who praise patent medicines and idiotic remedies. Democracy has resulted in an upheaval of the domestic barbarians against reason, sound policies, and civilization. The masses have firmly established the dictators in many European countries. They may succeed very soon in America too. The great experiment of liberalism and democracy has proved to be self-liquidating. It has brought about the worst of all tyrannies.

This pertinent quote from the great Ludwig von Mises in Omnipotent Government: The Rise of the Total State and Total War [1944] (hat tip Prof Don Boudreaux)

Occupy Wall Street: President Obama’s Stealth Re-election Strategy?

There has been a brewing grassroots discontent at Wall Street, and they are partly right, Wall Street has been party to America’s social woes.

But the political solution to this has been divided; on the one hand, one camp blame Wall Street as inextricably tied to the US government and the US Federal Reserve. The other believes in the socialist resolution.

As Anthony Gregory writes,

Although there is no single ideology uniting the movement, it does seem to have a general philosophical thrust, and not a very good one at that. OccupyWallStreet.org has a list of demands, and while the website does not represent all of the protesters, one could safely bet that it lines up with the views of most of them: A "living-wage" guarantee for workers and the unemployed, universal healthcare, free college for everyone, a ban on fossil fuels, a trillion dollars in new infrastructure, another trillion in "ecological restoration," racial and gender "rights," election reform, universal debt forgiveness, a ban on credit reporting agencies, and more power for the unions. Out of over a dozen demands there is only one I agree with — open borders — and, ironically, many on Wall Street probably favor that as well.

All in all, this wish list is a terrible recipe for moving far down the road toward socialism. On the way to achieving these goals, totalitarian controls on the population would be necessary. Some of these demands are merely horrible ideas that would injure the economy severely — such as the huge expansion of public infrastructure. But others are so fancifully utopian — such as a living wage guaranteed to all, especially when combined with free immigration — that their attempted implementation would confront the many disasters and horrors we have seen in every nation that has seriously attempted socialism. Such policies would vastly expand the government, including its manifestations in the corporate state and police power that these protesters find so unsavory. All of the corruption and brutality they think they oppose are symptoms of the same essential political ideology they favor.

It must NOT be forgotten that Wall Street’s political and economic privileges emanates from the role it plays in the current political economy of the US.

Fundamentally, Wall Street functions as the major conduit in the financing of the US government.

As explained by Professor Philipp Bagus,

For governments, the mechanism works out pretty well. They usually spend more than they receive in taxes, i.e., they run a deficit. No one likes taxes. Yet, most voters like to receive gifts from their governments. The solution for politicians is simple. They promise gifts to voters and finance them by deficits rather than with taxes. To pay for the deficit, governments issue paper tickets called government bonds such as US Treasuries.

An huge portion of the Treasuries are bought by the banking system, not only because the US government is conceived as a solvent debtor, thanks to its capacity to use violence to appropriate resources, but also because the Fed buys Treasuries in its open-market operations. The Fed, thereby, monetizes the deficit in a way that does not hurt politicians.

In other words, the incumbent architecture of the welfare state applies Financial Repression by channeling the savings of the private sector to the US government via the banking system which has been backed, coordinated and supervised by the US Federal Reserve.

I would like to add that capital adequacy laws have likewise been designed to designate US sovereign liabilities as ‘risk free’ which ‘incentivizes’ banks to hold government securities as its main assets.

Not only that, major Too Big to Fail Banks of Wall Street are the chief conductors of the US Fed’s monetary policy, which goes to show the depth of their intertwined relationships. A list of Primary dealers here.

And further proof that Wall Street benefits from the welfare state is the example of JP Morgan’s role as processor of food stamp benefits.

From the Economic Collapse Blog

JP Morgan is the largest processor of food stamp benefits in the United States. JP Morgan has contracted to provide food stamp debit cards in 26 U.S. states and the District of Columbia. JP Morgan is paid for each case that it handles, so that means that the more Americans that go on food stamps, the more profits JP Morgan makes. Yes, you read that correctly. When the number of Americans on food stamps goes up, JP Morgan makes more money.

And it is no doubt that such cozy relationship represents a classic text book example of regulatory capture —when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating (Wikipedia.org)

And an ostensible symptom of this has been the revolving door relationships—the movement of personnel between roles as legislators and regulators and the industries affected by the legislation and regulation and on within lobbying companies (Wikipedia.org)—between Wall Street and the US government.

The Business Insider shows 29 famous revolving door cases where Wall Street personalities went on to work for the government and vice versa, and the list includes Hank Paulson, Robert Rubin, Lawrence Summers, Martin Feldstein and many more

Bottom line: While it would seem right to put the load of the blame to the financiers of the government, solutions that further socializes Wall Street would only serve to perpetuate the current malaise or even worsen them.

And given the penchant of the emerging grassroot’s movement for bigger government, it would seem that such actions could signify as a stealth political strategy to promote President Obama’s re-elections. After all, Wall Street as scapegoat has been used before and at the end of the day had been settled amicably.

Looks and smells like the same old trick.

Federal Reserve’s Pandora’s Box: Some Wives of Wall Street’s Head Honchos Were Loan Beneficiaries Of Bailout Program

Today we seem on a roll with the subject of crony capitalism.

Now we turn to the US Federal Reserve.

Earlier we noted that ally turned adversary Libya’s Muammar Qaddafi had been one of the ‘unexpected’ beneficiaries of the Fed’s post Lehman stabilization programs.

It appears that more controversial recipients are surfacing from the opening of the Fed’s equivalent of the mythical Pandora’s box.

This time wives of some of Wall Street’s head honchos had reportedly been granted with political privileges in the form of ‘bailout’ loans.

From Rolling Stone Magazine’s Matt Tibbi, (bold highlights mine) [hat tip Bob Wenzel]

Now, following an act of Congress that has forced the Fed to open its books from the bailout era, this unofficial budget is for the first time becoming at least partially a matter of public record. Staffers in the Senate and the House, whose queries about Fed spending have been rebuffed for nearly a century, are now poring over 21,000 transactions and discovering a host of outrages and lunacies in the "other" budget. It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure. The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. "Our jaws are literally dropping as we're reading this," says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. "Every one of these transactions is outrageous."

But if you want to get a true sense of what the "shadow budget" is all about, all you have to do is look closely at the taxpayer money handed over to a single company that goes by a seemingly innocuous name: Waterfall TALF Opportunity. At first glance, Waterfall's haul doesn't seem all that huge — just nine loans totaling some $220 million, made through a Fed bailout program. That doesn't seem like a whole lot, considering that Goldman Sachs alone received roughly $800 billion in loans from the Fed. But upon closer inspection, Waterfall TALF Opportunity boasts a couple of interesting names among its chief investors: Christy Mack and Susan Karches.

Christy is the wife of John Mack, the chairman of Morgan Stanley. Susan is the widow of Peter Karches, a close friend of the Macks who served as president of Morgan Stanley's investment-banking division. Neither woman appears to have any serious history in business, apart from a few philanthropic experiences. Yet the Federal Reserve handed them both low-interest loans of nearly a quarter of a billion dollars through a complicated bailout program that virtually guaranteed them millions in risk-free income…

In August 2009, John Mack, at the time still the CEO of Morgan Stanley, made an interesting life decision. Despite the fact that he was earning the comparatively low salary of just $800,000, and had refused to give himself a bonus in the midst of the financial crisis, Mack decided to buy himself a gorgeous piece of property — a 107-year-old limestone carriage house on the Upper East Side of New York, complete with an indoor 12-car garage, that had just been sold by the prestigious Mellon family for $13.5 million. Either Mack had plenty of cash on hand to close the deal, or he got some help from his wife, Christy, who apparently bought the house with him…

It's hard to imagine a pair of people you would less want to hand a giant welfare check to — yet that's exactly what the Fed did. Just two months before the Macks bought their fancy carriage house in Manhattan, Christy and her pal Susan launched their investment initiative called Waterfall TALF. Neither seems to have any experience whatsoever in finance, beyond Susan's penchant for dabbling in thoroughbred racehorses. But with an upfront investment of $15 million, they quickly received $220 million in cash from the Fed, most of which they used to purchase student loans and commercial mortgages. The loans were set up so that Christy and Susan would keep 100 percent of any gains on the deals, while the Fed and the Treasury (read: the taxpayer) would eat 90 percent of the losses. Given out as part of a bailout program ostensibly designed to help ordinary people by kick-starting consumer lending, the deals were a classic heads-I-win, tails-you-lose investment….

This is the deal of a lifetime. Think about it: You borrow millions, buy a bunch of crap securities and stash them on the Fed's books. If the securities lose money, you leave them on the Fed's lap and the public eats the loss. But if they make money, you take them back, cash them in and repay the funds you borrowed from the Fed. "Remember that crazy guy in the commercials who ran around covered in dollar bills shouting, 'The government is giving out free money!' " says Black. "As crazy as he was, this is making it real."…

In the case of Waterfall TALF Opportunity, here's what we know: The company was founded in June 2009 with $14.87 million of investment capital, money that likely came from Christy Mack and Susan Karches. The two Wall Street wives then used the $220 million they got from the Fed to buy up a bunch of securities, including a large pool of commercial mortgages managed by Credit Suisse, a company John Mack once headed. Those securities were valued at $253.6 million, though the Fed refuses to explain how it arrived at that estimate. And here's the kicker: Of the $220 million the two wives got from the Fed, roughly $150 million had not been paid back as of last fall — meaning that you and I are still on the hook for most of whatever the Wall Street spouses bought on their government-funded shopping spree.

Read the rest here.

Another anecdotal evidence where government’s supposed public service is seemingly a fraud.

Quote of the Day on Wall Street: After Nearly A Century, Hardly Any Change

Here is Murray Rothbard on the predicament of the Fed's origin

``The bankers, however, faced a big public relations problem. What they wanted was the federal government creating and enforcing a banking cartel by means of a Central Bank. Yet they faced a political climate that was hostile to monopoly and centralization, and favored free competition. They also faced a public opinion hostile to Wall Street and to what they perceptively but inchoately saw as the "money power."" (bold highlights mine)

So the problem of nearly 100 years ago is basically the same as today! The difference is that the Federal Reserve- banking cartel has been realized, but is still under fire.

Wall Street's Agenda Seem to Dictate on US and Global Policies!

When faced with strong political pressures from the ongoing disorders of social, economic or financial nature, as we said, it is NEVER a question about governments NOT doing anything, but a question public expectations on the outcome of such actions.

Despite the passage of the $850 billion Emergency Economic Stabilization Act (yes Virginia, additional $150 billion on added porks! From Congressman Ron Paul ``In fact, it wasn't until the Senate had a chance to load it up with even MORE spending, when it was finally inflationary and horrible enough, at $850 billion instead of a mere $700 billion, that it passed – and with a comfortable margin, in spite of constituent calls still coming in overwhelmingly against it. 57 members switched their vote!” How Pork Barrels can easily switch votes is not only a Philippine phenomenon but elsewhere like in the US too!), markets continued to display brutal rioting yesterday and today.

So the Fed came up with even more actions; it doubled its auctions of cash lending to banks to as much as $900 billion, announced the changes in debt issuance which reintroduced 3 year notes and began implementing the paying of interest in bank reserves (Bloomberg).

Nonetheless pressures from various influential quarters of Wall Street “suggesting” to them on how to solve the problem. Example, William Gross of Pimco recently wrote, ``We believe that the Federal Reserve must now act as a clearing house, guaranteeing that institutional transactions clear (and investors receive) their Big Macs at the second window. They must also take another bold step: outright purchases of commercial paper. They should also cut interest rates to 1%, because we are experiencing asset deflation, and the threat of headline inflation is long past.”

From the New York Times today (emphasis mine), ``Under a proposal being discussed with the Treasury Department, the Fed could buy vast amounts of the unsecured short-term debt that companies rely on to finance their day-to-day activities, according to officials familiar with the discussions. If this were to happen, the central bank would come closer than ever to lending directly to businesses.

``While the move would put more taxpayer dollars at risk, it underscores the growing sense of urgency felt by policy makers in a climate where lending has virtually dried up.”

Nonetheless as the Bernanke's FED and Paulson's US Treasury deliberate on agreeing into Wall Street's formula to further use taxpayer money to thaw the frozen credit markets, Australia's central bank cut its interest rate benchmark by one percentage point to 6 percent from 7 percent signifying ``the biggest reduction since a recession in 1992, to cushion the nation's economy against fallout from a global credit freeze." (Bloomberg).

Most likely both the "suggestions" of lowering interest rates and FED buying of commercial paper will be effected with the former being a "common policy" adopted by most embattled OECD economies.

It's funny how global policymakers seem to tow the line of Wall Street's elixirs when the latter haven't been able to resolve their own problems, to borrow Kenneth Rogoff's quote on the bailout enactment, ``the central conceit is that government ingenuity can disentangle the trillion-dollar “sub-prime” mortgage loan market, even though Wall Street’s own rocket scientists have utterly failed to do so."

This basically serves as an example of regulatory capture where "a government regulatory agency created to act in the public interest instead acts in favor of the commercial or special interests that dominate in the industry or sector it is charged with regulating." (wikipedia.org )

Hopefully if the US government decides to abide by the recommendations of Wall Street despite the conflict of interest issues, global markets will finally embrace this for good.