Kleptocracy

Our governing elite failed us. They set up a kleptocracy: “a government that extends the personal wealth and political power of government officials and the ruling class at the expense of the population.” Klepto is the Greek word for theft.

The crisis was brought on by the kleptomania of the wealthy and the powerful but it did not diminish their arrogance or greed. The bankers who brought us this crisis are in proud control of the response. They are writing the rules that will determine who has to eat the $5 trillion in losses (taxpayers) and who will control the post-crisis financial system (them).

The bankers, investment houses, and insurance companies stole the most, caused the most damage and, of course, have the most power in a restructuring. They are already sending drafts of legislation to their congressional committees.

The bankers would abolish or limit the power of the institutions they were not able to buy: the Office of Thrift Supervision, The Comptroller of the Currency and the Securities and Exchange Commission. The bankers would place all power in a strengthened and even more “independent” Federal Reserve.

Most people don’t know that the Federal Reserve banks are owned and controlled by the banking industry. The Fed manages our money and watches over the banking system but it is completely free of any political oversight, influence or audit.

There is nothing public, political or democratic about the Federal Reserve banks, they answer only to the banking industry. The banking industry chooses the officers and members of the board. The boards of the regional Fed banks are supposed to have three members to represent the public. At the New York Fed, two of those slots are empty and the third is held by the CEO of GE! You wouldn’t dare make that up.

Or get this: the banks use life insurance, Wachovia $12 billion, on hundreds of thousands of their employees to fund bonuses and pensions for their executives.

But the banks, however larcenous, did not do this alone. This theft by power and privilege is shared with the Congress and the other partners that they finance: the military-industrial complex, the healthcare-insurance complex, the pharmaceutical industry and all the rest on these open conspiracies that rip off the public. A lot of people had to steal a lot of money for us to be bankrupt.

The Congress funds major defense procurement programs that even the Pentagon does not want. The privatization of the war in Iraq made billions for private firms and got renewed contracts for firms that consistently underperformed. Why we maintain military bases on a Cold War scale (737 bases in 130 countries) cannot be explained except as kleptocracy at work.

A single-payer universal healthcare system would show that the insurance companies spend $400 billion a year to deny coverage or limit benefits. Insurance companies now decide on what doctors will be paid and the type and length of your treatment. Already these superfluous insurance companies are fighting the inclusion of a public option in the Obama healthcare plan.

The pharmaceutical industry made sure they got a huge cut of the Medicare prescription plan which thereby costs us almost twice what it should.

The American agricultural industry is dominated by a very small number of firms that are, by definition, oligopolies that control their customers and their prices.

It took prideful arrogance and contrived incompetence on the part of all of these groups to bring us to the catastrophe we are suffering. But special blame must go to the Congress and the banks. The banks bought a willing Congress that schmoozed up to hundreds of millions in campaign donations and lobbying. Actually, most congressmen are kinda cheap to buy.

We are about to reset the system. In that process, we cannot allow the bankers their claim that only they understand the financial system. We cannot let defense contractors decide what they are going to be paid. We cannot allow the insurance companies to choose our doctors and our healthcare.

But mostly we cannot allow the Congress to continue to distribute the loot on the basis of who gives them the biggest campaign contribution. The wealthy and the powerful bought this crisis and with the Congress they are making the most of it.

If we let President Obama continue with Geithner’s surrender to Goldman Sachs and the Fed; if we are satisfied with a minimal patch-up job on healthcare; and if we excuse and accept the Bush policies in regard to the wars, we and he will have let them steal our future.