Posts Tagged ‘american taxpayers’

Obama Fiscal Management- How To Spend a Half Billion Dollars On Syrian Rebels Without Even Trying

September 16th, 2015 Comments off

Do you recall how the Obama administration refused to support mainstream opponents to the Assad regime in Syria for years, until Islamist extremists came to dominate the forces fighting against the Syrian president? President Obama then said he would counter ISIS influence in Syria with a half billion dollar training program for “moderate” Syrian opponents of Assad. Ever wonder what happened with Washington’s major investment in moderate Syrian fighters? Wonder no more.

In stunning testimony before the Senate Armed Services Committee, Pentagon officials informed shocked senators that the $500 million investment from the coffers of American taxpayers led to “4 or 5” Syrian fighters being trained and deployed in the fight against ISIS. And they are uncertain if the number was either four or five? The answer is fiscally important, for in a best case scenario America spent a mere one hundred million dollars per moderate freedom-fighter; worst case, the tab rises to $125 million per fighter.

The statement on the paltry results achieved from such a major investment by the Obama administration drew gasps of horror and stunned laughter from the senators. This is more than a failure of President Obama’s Syria policy; it is a manifestation of total incapacity to manage and steward the funds provided to the government by the nation’s taxpayers. But don’t expect any resignations over this dismal “return on investment.” As shocking as this episode is, many American citizens will not be surprised. In fact, the training program for moderate Syrian fighters can serve as a metaphor for so many fiscal aberrations that far too often are the rule rather than the exception when it comes to the fiscal probity of the federal government.

If you want an explanation for the reason America is in such bad fiscal health–and why a majority of Americans view their government as corrupt and incompetent–here is a prime example for the ages.



DONALD TRUMP 2016: America’s Next President? Kindle Edition


AIG To American Taxpayers: Drop Dead

March 17th, 2009 Comments off

AIG and its recklessly greedy and stupid executives are ample proof that modern American capitalism is not an impartial economic system based on rewards for performance, with no guarantees and safety nets for risk takers. Winners take all; losers surrender everything. That was the story we have all been told, but it has been proven time and time again during the Global Economic Crisis that this is a myth. If anything, the reverse is the case. AIG is a textbook study in how communism has infected the boardroom suites of corporate America, with the old-fashioned cold capitalism left for just the dumb middle-class taxpayers. Privatize the obscene profits, but socialize the corporate losses, especially if they are the result of reckless stupidity and massive greed.

Greed and recklessness are certainly at the root cause of the AIG implosion. Though the insurance arm of the company was solvent, a derivatives trading unit of AIG, based in London, came up with the ingenious idea of selling credit default swaps as insurance to banks, Wall Street, pension funds and other investors, public and private. These CDS products were, among other things, insurance against losses on investments in mortgage-backed securities. The AIG geniuses thought they had a whopper of an idea; mortgage-backed securities will never lose money, so therefore the insurance premiums will be an easy cash flow for AIG. Accordingly, since these CDS products will never fail, AIG had no need for a substantial reserve against losses. That was the theory. In practice, we all know what happened with mortgage-backed securities, and AIG’s unique strategy of not maintaining reserves to cover claims.

Unfortunately for the American taxpayers, the Federal Reserve, utilizing its massive powers, deemed that AIG was too big to fail, concluding that its collapse would create systemic risks to the entire global financial system. In essence, the Fed decided that AIG must be propped up at any price, and that decision was made with no input from Congress or the American people. At first, the American people were told that AIG required a “loan” of $85 billion, and that the taxpayers would get their money back-some day- when the “healthy” parts of AIG could be sold for reasonable market value. Now, however, the AIG bailout cost has climbed to $185 billion, and it should be clear to us all that the American taxpayers are not “loaning” their money to AIG. They are funding a flow-through of payments to clients of all kinds of insurance “products” and bets that the brilliant executives at AIG chose to underwrite, with the end nowhere in sight. Not even the Federal Reserve and U.S. Treasury knows what the final bill will be, but it is likely to exceed a half-trillion dollars.

The same brilliant executives at AIG who were the architects of the near-meltdown of the financial world, the acceleration of the Global Economic Crisis and the transformation of their company into a zombie entity, only kept alive by transfusions of taxpayers cash, still think they are entitled to large bonuses for their masterful work. Bonuses beyond their already excessive compensation. With the same temerity they displayed in conceiving of their credit default swaps, the top management of AIG decreed hundreds of millions of dollars in bonus payments be made to the firm’s executives. This included $165 million in bonuses to the derivative traders at the AIG business unit responsible for our current global financial calamity. However, not even the arrogant management of AIG could justify these bonuses as “performance payments.” So, in their typically dexterous mode, they simply did a word substitution and called these bonuses “retention awards.”

Paying $165 million to retain the reckless, incompetent and greedy architects of a major cause of the Global Economic Crisis? It would appear that the AIG executives either think the American taxpayers are utterly dull-witted and stupid, or they simply could not care less.

With corporate leadership of the caliber being displayed at AIG, does anyone still wonder why American capitalism is in trouble?