Matt Taibbi strikes again. This is a must read.

Obama's Big Sellout
The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway

"Barack Obama ran for president as a man of the people, standing up to Wall Street as the global economy melted down in that fateful fall of 2008. He pushed a tax plan to soak the rich, ripped NAFTA for hurting the middle class and tore into John McCain for supporting a bankruptcy bill that sided with wealthy bankers "at the expense of hardworking Americans." Obama may not have run to the left of Samuel Gompers or Cesar Chavez, but it's not like you saw him on the campaign trail flanked by bankers from Citigroup and Goldman Sachs. What inspired supporters who pushed him to his historic win was the sense that a genuine outsider was finally breaking into an exclusive club, that walls were being torn down, that things were, for lack of a better or more specific term, changing.

"Then he got elected.

"What's taken place in the year since Obama won the presidency has turned out to be one of the most dramatic political about-faces in our history. Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place. This new team of bubble-fattened ex-bankers and laissez-faire intellectuals then proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside.

"How could Obama let this happen? Is he just a rookie in the political big leagues, hoodwinked by Beltway old-timers? Or is the vacillating, ineffectual servant of banking interests we've been seeing on TV this fall who Obama really is?

"Whatever the president's real motives are, the extensive series of loophole-rich financial "reforms" that the Democrats are currently pushing may ultimately do more harm than good. In fact, some parts of the new reforms border on insanity, threatening to vastly amplify Wall Street's political power by institutionalizing the taxpayer's role as a welfare provider for the financial-services industry. At one point in the debate, Obama's top economic advisers demanded the power to award future bailouts without even going to Congress for approval — and without providing taxpayers a single dime in equity on the deals.

"How did we get here? It started just moments after the election — and almost nobody noticed."

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If you watch television and think the recession is over you might not want to read this.

Lurking dangers
Flashpoints in the US top Desmond Lachman’s list of potential threats to the global economy in 2010

"The year 2010 threatens to be challenging for the global economy. Not only are leading industrialised economies entering it with very fragile recoveries, extraordinarily high unemployment rates and still-dysfunctional financial systems, but there remain too many risks inmuch of the global economy. Should any of these risks materialise, they could derail the incipient global recovery and set back the slow healing of the financial system.

"In considering the various risks, it is well to recall the poor state in which the global economy still finds itself. It is also well to remember how vulnerable and inter-connected the global financial system has become. In late-2007, a butterfly that flapped its wings in an economy as small as Iceland’s sent ripples throughout the world’s financial markets. Another that flapped its wings in Ireland had a big impact on the whole of the European banking system.

"In 2010, it is all but certain that butterflies will be vigorously flapping their wings in the hapless Baltic economies. Already during 2009, as their outsized property and credit market bubbles started to burst, the Estonian, Lithuanian and Latvian economies contracted by nearly 20 per cent. At the same time, the public deficits of these countries ballooned to unsustainable levels as their tax collections collapsed along with their economies. Attempting to correct these budget deficits within the straitjacket of fixed currency arrangements, especially at a time of housing market busts, is all but certain to deepen those countries’ economic depressions and to heighten their social tensions. It is also all but certain to undermine fatally the political support for maintaining their fixed exchange rate pegs."

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The Wealthy are "Getting Ready"

"At financial centers around the world bankers, brokers, and “the other rich” are getting ready to handle those people who might decide that enough is enough and attack them or their edifices. This is either a sign of good thinking on their part or overreacting to the realization that the “proles”, often throughout history, get pretty worked up when they find themselves without jobs, homeless, working for slave wages, or burying their kids. Alice Schroeder wrote a significant piece at Bloomberg on the number of gun permits being issued to high rolling investment bankers, et al this week and it piqued my interest to write a bit more on corresponding subjects.

"Thinking about the problem of Americans engaged in some form of fiscal civil war labeled “the haves against the have-nots” is not a painless task. I know many rich folks who would find it hard to take a shot at some dirt-poor homeless father and his teenage sons who are “borrowing” a couple of Picasso prints from the home theater on East 72nd Street. I know others who are better armed than the FBI or the NYPD and smacking their lips in anticipation of defeating anyone invading their usually un-earned fortunes.

"But these days are a far cry from the 1960s when those of old enough to remember many of our biggest cities set afire by minorities who had simply had enough. They began by burning their own neighborhoods and then moved on to wealthier areas, looting shopping centers, overturning cars, and committing other crimes using poverty as a beard. The latter, the petty criminals, did not care about who had more – they just wanted it all. Yet most simply wanted America’s promise which they had theretofore been denied.

"In that sense the richest among us were as bad as or worse than the thugs who nearly caused international chaos toward the late middle 20th Century. Why? Because it was the richest among us during those sad post WW II times that had not reached out to help those “less fortunate” – which is a grand term hinting that “fate” or “luck” is the basis for most wealth – not, as we were told, working oneself to death “for the man” so assuredly pounded into our little brains as children as the “way to get rich.” "

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