“Tonight’s decision by S&P to downgrade our credit rating to AA+ is a historically significant and serious event for the United States. The United States has had a AAA credit rating since 1917. That rating has endured the great depression, World War II, Korea, Vietnam and the terrorist attacks on 9/11. This president has destroyed the credit rating of the United States through his failed economic policies and his inability to control government spending by raising the debt ceiling.” — GOP presidential candidate Michelle Bachmann, a Minnesota congresswoman.”
Yes, these are Congresswoman Bachmann’s words, “The President has destroyed the credit rating of the United States”. That is a very, very strong statement. We all know what caused the economic malaise we are now in, Wall Street turning our economy into a speculative playground to enhance their individual pocket books, at the expense of the rest of us.
Here are the facts. Congresswoman Bachmann, leader of the Tea Party caucus received millions during her re-election campaign from hedge funds to get the Democrats out of office, so Dodd-Frank could be neutered to permit ongoing speculation in OTC derivatives, at every American taxpayer’s expense.
- Minnesota Public Radio reported recently, “According to Federal Election Commission records, Bachmann raised more than $13.5 million for her 2010 re-election campaign, more than any other incumbent member of Congress in the country. A separate “Michele PAC” political action committee took in an additional several hundred thousand dollars.”
- Congresswoman Bachmann is a member of the House Financial Services Committee and is the chosen pawn of those seeking to continue the speculative income stream of OTC derivatives. As noted in our last blog Post, she pushed for a technical default of U.S. debt, so those speculators in credit default swaps could earn a quick $4.5 billion in profits through their speculation on the demise of the United States.
- Congresswoman Bachmann was the first in Congress to introduce a bill to repeal Dodd-Frank, January 6, 2011.
- Congresswoman Bachmann’s past voting record shows no leadership in economic and debt policy issues. It was a new found “interest” after a sudden increase in campaign contributions during her 2010 re-election bid.
- Congresswoman Bachman stated yesterday, according to the Star Tribune, “Earlier in the day in Newton, IA, Bachmann told reporters the economy would start to improve almost immediately after she becomes president because she would implement conservative economic policies to slash the nation’s debt, stop tax increases and cut regulations.” “Cut regulations” is Congresswoman Bachmann’s marching orders from the derivative speculators. The debt and taxes is secondary. The first objective is to create enough pain for every American through a decline in the stock markets to vote President Obama out of office. Remember, the speculators are hedged against this decline, so it doesn’t impact their portfolios, just those of main street.
- The other Minnesota Congresswoman, Betty McCollum, (D MN) issued a press release blaming the Tea Party on the 500 point drop last week: Congresswoman McCollum blames Tea Party for Dow Drop.
Further, The Derivative Project, also from Minnesota, has met in earnest with Congresswoman Bachmann’s office on the seriousness of the repeal of Dodd-Frank. They refuse to debate the factual and significant issues that the de-regulation in derivative markets have caused millions of Americans through a stalled economy, loss of retirement savings and high unemployment. They refuse to debate what financial reforms could be in every American’s best interest.
The damage the Tea Party has done, by acting as a pawn of Wall Street speculators, in forcing this S&P downgrade, will be significant to every American. The consequences could be devastating.
If one questions the wisdom of this logic, here is a quote from one of the hedge fund players who is manipulating the Tea Party crew to effect their Agenda and Thursday’s 500 point drop in the Dow. from one of Wall Street’s insider Blogs, Clusterstock:
“A fund of hedge funds manager told us they made money yesterday, meaning that a number of hedge funds were well prepared and hedged. They might have flocked to cash and Treasuries, which had a great day yesterday), before the crash.”
“August 6, 2011, 10:00 AM
The Best Summary of the S&P Downgrade
Apparently we’re supposed to care about what some idiots at some corrupt organization think about anything.”
Unfortunately, those “idiots” have caused irreversible damage to our economy and all our lives in the next decade and decades to come. The powerful lobby, the regulatory capture and the lack of main street America’s access to the true facts on financial reform are causing our democracy to rot from within.
The Derivative Lobby Continues to Distort the Real Agenda
The Wall Street Journal
led this morning on the 74% increase in Berkshire profits from derivatives last quarter, as if this is a rationale to continue the reckless abandon in derivative speculation, at the expense of a singular focus on real economic growth that will benefit every American, not just a few.
Ironically, as of last week, those profits have all evaporated. That is what one would call unsustainable economic growth, that contributes nothing to a stable, growing GDP. That is what Congresswoman Bachmann is fighting to maintain.
Also. please note, this Wall Street Journal article is significantly misleading reporting. Berkshire did not realize these profits. It was simply a decrease in their losses on their derivative positions, which were still not profitable and a drag on sustainable economic job creation. These profits were not realized.
“Credit-default swaps, in which Buffett bets on the solvency of borrowers, gained $142 million after posting a $320 million loss a year earlier. The loss on equity derivatives narrowed to $271 million from $1.8 billion in last year’s second quarter.,” according to Bloomberg Business Week.
Attention Berkshire Investors, the solvency of Berkshire’s bets on these borrowers will be more at risk now that we move into uncharted territory of a downgrade and potential higher interest rates that will threaten the solvency of these borrowers and Berkshire’s speculative plays. No one knows how low the equity markets will fall on this unprecedented downgrade, threatening significant losses in Berkshire’s speculative equity puts, as outlined here in The Derivative Project’s blog posts.
As long as Wall Street manipulates the Washington Agenda to focus on speculative profits, the deeper we will move into higher and higher unemployment and a stalled economic scenario for all but the few speculators that pushed for a technical default and lower U.S. debt rating to get President Obama out of office.
It is time for Tea Partiers to take responsibility for this nonsense. Congress and President Obama must take the lead to restore sanity in our financial markets. S&P was but a pawn of those that sought to keep the gravy train going on the mortgage securitizations and now the pawn in maintaining the gravy train in derivative speculation. Credit rating agencies must be banned outright. They are conflicted and are a key contributor to our current economic mess.
Congresswoman Bachmann’s statement yesterday that she will restore the economy immediately by “cutting regulations” is but a pawn of Wall Street that has moved a political game into unprecedented territory to the detriment of every American.