Posts Tagged Wall Street

Wall Street’s Likely Strategy for Financial Reform

 

Citigroup – another Wall Street financial behemoth – has just released estimates regarding how hard financial reform might negatively effect Wall Street banks’ earnings.

I have news for Citigroup.  One of your own – a Wall Street investment banker – seems to think differently. 

If you recall back in January of this year, Goldman Sachs CEO, Lloyd Blankfein, and several of his fellow Wall Street CEO’s testified before the Financial Crisis Inquiry Commission regarding their complicity in the global financial crisis. First, Lloyd “Doing God’s Work” Blankfein had the audacity to claim that these events will not happen again in my lifetime.” 

So Lloyd, we can disregard the Long Term Capital Management hedge fund financial collapse in 1998 that almost resulted in a global economic meltdown – click here, here, here, or here.  Or how about the dot.com bubble of 2000 – click here or here.  And now this more recent Global Financial Crisis?  Even though they all three occurred over the course of a mere 10 years? 

Lloyd, are you saying you only have a couple of years to live?  Has Hell been put on notice to reserve a room?

After that self-serving testimony, the closest any one of them came to admitting that they completely screwed-up the financial system was the statement of Morgan Stanley CEO, John Mack:  “We did our own cooking and we choked on it.”  Well not exactly John; you did your own cooking, the American public choked on it, all while you and Blankfein continue to dine on caviar, Oysters Rockefeller, Fillet Mignon and lobster.

So while doing the usual “deep research” into that day’s Congressional hearing, I stumbled upon an investment banker’s blog, and referenced some of his brash and flippant statements in this post - Inside the Mind of an Unapologetic Wall Street Investment Banker.  Let’s revisit some of his comments:

Investment bankers “have absolutely no interest whatsoever in the whys and wherefores of the financial crisis, the proper size and role of banks and investment banks in the domestic economy, or the moral imperatives inherent in stewarding the financial plumbing under-girding the daily lives and livelihoods of six billion people . . . [i]nvestment bankers have almost no interest in why things are the way they are. Rather, they spend all their considerable intellectual and psychological resources on understanding how they can take advantage of the way things are.”

Moreover, “their obvious lack of intellectual curiosity about the sources of the crisis  . . . [explains] their resistance to any major change in the way the industry or the markets are regulated . . .  changing regulations will [not]necessarily make the industry less profitable . . . [since they] have well-justified confidence in their ability to turn new regulations to their advantage.”

He goes on to conclude, “Don’t look to investment bankers for answers on how we got here. We don’t know and we don’t care [emphasis added]. We take the world as we find it and try to make money.”

After reading that, you should know beyond a shadow of a doubt that nothing will change after financial reform.  Absolutely nothing.  Except Wall Street investment bankers will become even richer, while they unapologetically watch the rest of us slowly go to Hell in a hand-basket.

If that is ”doing God’s work”, Hell is fine with me.

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Massive Document Spill in Washington by Goldman Sachs

 

 

 

 

 

 

 

 

 

 

 

WHERE’S WALDO?

 

Lost in the news cycle that has been inundated with stories regarding the Gulf oil spill, there was another giant “spill” that is overwhelming Congressional and SEC watchdogs.

Goldman Sachs is playing a classic legal game of “Where’s Waldo” with the Congressional Financial Crisis Inquiry Commission by first refusing requests for documents related to the commission’s inquiry, and then suddenly dumping (delivering) hundreds of millions of documents all at one time - a legal maneuver intended to obfuscate and hide the proverbial “smoking gun” documents that may be lurking beneath that mountain of paper. 

You can be certain most of those documents that were delivered have nothing to do with the Congressional inquiry.  Moreover, it will take years to scour through them to find the one’s that really matter - assuming they haven’t already been quietly deleted and/or shredded.  By the time this thing is over – years from now - Goldman Sachs will have likely have made enough money to pay a “small fine”, and then buy the remaining portion of Congress that they and the rest of Corporate America don’t already own.

The message from Goldman Sachs:  we worked diligently at providing the documentation that you have requested, and we can ensure you that we left nothing out (except maybe the sh!t that really matters).  Oh, and good luck finding what you are looking for,

If this was the Pecora Commission, you could bet that Lloyd Blankfein and Company – you know, those guys on Wall Street that are doing “God’s work”- would be a lot more cooperative.   Yet, Lloyd’s betting this dog ain’t got no teeth.  I hate to admit it, but Blankfein is probably right.

So the question should not be ”Where’s Waldo”? 

Americans should all be asking “Where’s Percora“?

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Message to British Regarding American Criticism of BP’s Monumental Screw Up . . .

 

 

 

 

 

 

 

 

 

 

ENGLAND vs. U.S.A – WORLD CUP SOCCER or BP OIL FIASCO?

Help Americans understand this:

So you are distressed over the fact that Americans are extremely outraged at BP’s (formerly called British Petroleum) environmental disaster which is wrecking havoc on our Gulf Coast region; that our fury over this corporation’s massive blunder is somehow to blame for the precipitous drop in it’s stock price; that this drop in the value of BP’s stock has effected the value of many of your citizens’ pensions; therefore Americans need to “ratchet down” criticism of the company so that the stock price can go up again?

Interesting.

So when our Wall Street banks screwed up the world economy, thereby effecting the value of your citizens’ pension funds because they bought some of the over-rated collateralized debt obligations (CDO’s) these financial terrorists were selling, it was OK for you to whip them like the worthless dogs they are.  However, when one of your energy corporations screws up, effecting the lives of millions of Americans living on the Gulf coast, we have to bite our tongues because that too negatively affects your retirement accounts?

Locke, HobbesBentham, John Stewart Mills, Bertrand Russell - all great British philosphers.  Men of extraordinary reason and intelligence.  Did present day British citizens skip the class in Logic and Critical Thinking?  These great British philosophers must be rolling over in their graves.

My ancestors left England (and Scotland) in order to come to the United States over 300 years ago. 

Maybe for good reason . . . no pun intended.

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Rand Paul’s First Slip & Fall – Down the Rabbit Hole of the American Political Landscape

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBERTARIAN DUALITY SYMBOL

Within 24 hours of getting the first Tea Party nomination for a major political office in the United States, Kentucky Senatorial candidate Rand Paul already committed his first political faux pas in his equivocation regarding a key component of the 1964 Civil Rights Act.

In an interview last night on MSNBC’s Rachel Maddow Show, Rand was pressed by Maddow to state whether or not he would oppose the key provision under the landmark legislation prohibiting private sector discrimination based on race.  Rand categorically denied that he was a racist and insisted that this position, based on Libertarian principles which philosophically oppose government intervention in the private sector, was the basis for his argument that this portion of the legislation was flawed and that he would not support it. 

Today, Rand backtracked from his political posture last night, now saying that he would not advocate for the repeal of the legislation, in whole or part.  He said that appearing on Maddow’s show was a “poor political decision” – inferring that her questioning was another Sarah Palin, liberal media “gotcha” moment.  He complained to Maddow about her line of questioning during the interview, claiming that the issue of private property owners’ rights under the law was “an abstract, obscure conversation from 1964 that you bring up … You bring up something that really is not an issue.”

I like Rand Paul.  I don’t believe for one moment that he is a racist.  Neither does Rachel Maddow, and her questioning was not a hatchet job.  She is sincerely interested in how Libertarian purists might dismantle 235 years of constitutional interpretation and legislation.  I watched the interview, and her questions were fair.  Moreover, I think both Rand and his father, Ron Paul, are well-intentioned, intelligent anti-establishment politicians.  There is ample room for men of their intellectual and philosophical stature under the tent of American politics.  But their positions on serious political and legislative matters must be explored.

Unfortunately for Rand, that is why his alignment with principles of Libertarianism, and the Tea Party’s deep criticism of prior legislation like the Civil Rights Act of 1964 does make it an issue.  If the Tea Party candidates are going to run on a platform that advocates for the dismantling of any and all government regulation affecting private property rights, they have to accept the fact that critics have good reason to question their intentions regarding repeal of prior legislation, and what those actions would mean for ten’s of millions of Americans.

Most people are not familiar with Libertarianism – a modern, free market philosophy – it eschews government interference in any aspect of private life, while advocating for freedom of speech and behavior, so long as it does not harm anyone.  Of course, in theory, it all sounds very enticing.  I personally considered myself to once be a Libertarian. 

However, that all began to change after recognizing that those among us who have more “freedom” – as in money or power - will utilize that advantage in order to quash or interfere with the freedom of others to pursue their own goals and dreams.  What I often hear in response is that “life isn’t fair” – inequities will always exist.

If that is so, we are headed back to a time when robber barons and monopolists are allowed to manipulate and “game the system” for their own devices.  Wall Street’s domination of the finanical landscape is a case in point.  Once they have wrested complete control or dominated an intolerable degree of economic and political life in America, social unrest and anarchy will inevitably rule the day.  Case in point:  the colonial revolt against England in 1776.  I would think Rand Paul and the Tea Party might see the irony in that.

Even Adam Smith – author of Wealth of Nations, and the father of free markets – recognized that government intervention was a necessary evil.  For those of you who doubt this, read the book (here is a free online edition).  I did over thirty years ago. And I have read it several times since then.  Smith was a closet “socialist” (with a small “s”).  The principle underlying his whole theory was the overall social good would be elevated by HARNESSING – as in placing a bridle on – greed.  When you harness a horse – you keep it under control.  You do not let it run completely free. 

Libertarians think the horse should never be bridled; under any circumstances.  The law of unintended consequences will always come into play when you let a horse run wild.

For that reason alone, Rand Paul must accept the reality of having to go down the rabbit hole of American politics. 

 Just go ask Alice . . . or Barry Goldwater.

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Republicans Suddenly “Get Religion” On Financial Reform?

Several weeks ago Senate Minority leader Mitch McConnell and Senator John Cornyn, leader of the National Republican Senatorial Committee – a principle Republican campaign fund-raising organization – flew to New York City to meet with Wall Street.  Looming on the “dark horizon” was another long and bitter battle with President Obama and the Democrats over the proposed financial reform bill.  It was safe to assume that Republicans would drag this one out like they did health care reform so as to impact the coming Fall mid-term elections.

True to form, McConnell and Cornyn made their pitch to the money-changers sitting in the temple – which was 25 Wall Street executives and hedge fund managers.  The two powerful Senators made it very clear that in order for the Republicans to have any chance to take back control of the Senate and the House, they would need Wall Street’s assistance.  As one anonymous Wall Street executive in attendance so eloquently put it, “There was no arm twisting, but they did say that we should feel uncomfortable living in any country where one party has unfettered ability to pass anything [legislation] . . . President Obama dreams up.”

I hope I don’t have to spell out what the Republicans quid pro quo was?   $$$$$$$$$$$$$$$$$ . . . and lots of it.

So upon the Senator’s return to Washington, McConnell immediately announces that the Republicans are united in their oppostion to the Democrats’ financial reform bill, and they will utilize every procedural move to block the proposed regulatory-laden legislation because it will risk future tax-payer bailouts.  That was just two weeks ago.

Fast forward one week, with one big freakin’ revelation about Goldman Sachs’ “gaming the system” to the $1 Billion detriment of several of their institutional clients, as well as proposals for much stronger derivatives regulation coming out of another Senate committee – and the Republicans are caught in a trap that they set for themselves.  

Yet, in spite of the fact that the Republicans suddenly reversed course and were quickly backing away from supporting their Wall Street financiers, appearing more conciliatory towards President Obama and the Democrats than they have in more than 14 months, Mitch McConnell would have you believe that he has the Democrats on the ropes.  

McConnell seems to think he should get credit for forcing the Democrats to negotiate.   Senator Chris Dodd, Chairman of the Senate Banking Committee and author of the pending legislation, responded to McConnell’s baseless bragging, saying this:

That is like a rooster taking credit for the sunrise.”

YEP!

UPDATE:  Now after two days of filbustering and holding up floor debate on financial reform, McConnell got those Democrats to negotiate again – or was it get the voters to forget about the GOP’s siding with Wall Street by November?

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Goldman Sachs’ “Fabulous Fab’s” Fabulous Fraud

 

 

 

 

 

 

 

 

 

“THERE IS A SUCKER BORN EVERY MINUTE”

                                - David Hannum [no, it was not P.T. Barnum]

Confidence is the single most important element of any fraud.

That is why fraud schemes are called confidence games or confidence tricks

Ever heard of a “Three Card Monte“?  It is the most classic con game run on the streets.  This is a card game that initially inspires confidence in the “mark” – the person who is the target of the fraud - by showing them how easy it is to make money by making the correct bet.  Both the dealer and another person pretending to play the game conspire together in order to make the “mark” feel confident that he will win game.  In other words, the game is already rigged before the “mark” even plays.

Moreover, it preys on several elemental human flaws:  greed and ego.  That is why it works.  We always think we can do better than other people – that we are smarter than them; and, once we start we cannot stand to lose money, so we keep upping the bet to make up for our rising losses.  That’s why Vegas makes so much money.  They rely on our greed and ego to lead us to the tables.  As does Goldman Sachs (GS) down on Wall Street.

Except in Goldman Sachs’ case – just like a “3 Card Monte” - they create a fraud.  At least that’s what the SEC is now alleging.  And the allegations are not looking too good on paper.  Nor in the national business media, as numerous business journalists - here, here and here - weigh in on the matter, gleefully watching as GS twists in the firestorm of their own creation that appears to be developing.

The best response came from Dylan Ratigan, former business journalist for CNBC and current host of The Dylan Ratigan Show on MSNBC.  After GS posted its press release authored by company spokesman Lucas van Praag, Ratigan fired-off a serious of questions for Goldman Sachs to answer. If you want a preview of the cross-examination in this case, this will be as good a template as you will see.

What’s even worse are the emails that the young Goldman executive who was setting up these deals was sending when the parties were deep in the midst of putting this together;  deals designed to benefit his company – resulting in a very large bonus for him – and virtually ensuring that many of Goldman’s own clients were going to be left holding the bag, while one client profited handsomely .  Fabrice Tourre, the self-proclaimed “Fabulous Fab”, sent the following message to someone:

“Only potential survivor, the fabulous Fab standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrousities!!!”

So Goldman is circling the wagons, and denying any wrong-doing.  However, what Goldman is conveniently omitting – not ironically, given their business practices at issue - is that they failed to disclose to clients investing on one side of the “confidence game”, that Goldman was actively working for another client on the other side of the confidence game whose interests were diametrically opposed to the first parties’.  And they said nothing, while making huge fees off both clients.  It’s a classic conflict of interest scenario – which is tantamount to fraud if they breached a duty to disclose that fact – and the fact was a material issue central to the transaction.

Moreover, Goldman Sachs’ claim that they “lost money” on this deal may be tenuous, at best.  The fact that the value of the investment may have dropped over time does not account for the fact that GS had purchased huge insurance policies to mitigate those losses, as well as buying “shorts” in order to make money as the value dropped – which could actually result in a hefty profit.

Nevertheless, Goldman Sachs insinuates that it will never admit they have done anything wrong; that “it will be a cold day in Hell.  After all, it was Goldman Sachs’ CEO, Lloyd Blankfein, who was quoted in The Times :

“I’M DOING GOD’S WORK.”

Frankly, Lloyd, I think it was Satan’s work. 

And maybe Hell will freeze over . . .

UPDATE:  Here is a guide to the Goldman Sachs issue from U.S. News and World Report.

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Wonder Why President Obama Raised His Own Taxes?

 

In case you forgot – and I am almost certain you didn’t – today is April 15th.  Tax day.  Not that you needed or wanted any reminder.

But there are a few things you might not have considered, and a way to re-frame the notion of taxes in order to understand why we pay them – albeit reluctantly.

As was reported today in the Wall Street Journal, the Obamas just paid $1.8 MILLION in income taxes the year.  FYI:  that is NOT a typo. 

Want to put that in perspective?  In 2008, George Bush paid just shy of $204,000 in income taxes;  and Dick Cheney paid approximately $600,000 in taxes that same year.  That means that President Obama paid over twice as much in income taxes his first year in office than George Bush and Dick Cheney did combined in their last year in office.

So when President Obama increased Medicare contributions on the top 1% of wage earners in this country in order to help fund health care reform, he raised his own taxes.  Not your taxes – unless you make in excess of $250,000 a year.  His taxes.  That is something only one President – George Bush I – has ever agreed to do in almost thirty years.

And the President may later propose to raise taxes again on himself and the very rich.  Why, you might ask?

Because this President understands that sublimating his own financial self-interests to that of the greater social good is something Americans have always expected from those who could most afford it – a notion that seems quaint and antiquated in this era of repacious greed and obscene self-interest.  Sacrificing a portion of one’s wealth for the good of America was one of the principle things that made this country so great. 

Want proof?  Read it and weep . . .

This chart from the Citizens for Tax Justice outlines the income tax rates for the top 1% of taxpayers in the United States since 1916.  Take note of several very salient facts:

1)  It may surprise you to learn that with the exception of 1916 (%15), 1925-31 (25%), and 1988-92 (30% +/-), the current tax rates for the wealthiest Americans has never been lower (35%);

2)  In the past, high tax rates on the very rich were able to offset severe economic conditions (The Great Depression), the high costs of war (WW II, Korea, and Vietnam), and helped financed the greatest economic expansion in this country’s history (The Go-Go Years of Wall Street – late 1950’s to mid 1960’s);

3)  The reason most Americans now pay a higher rate of taxes in relation to inflation-adjusted income is that the very rich have paid far less in taxes since 1988 – a policy that should not be lost on anyone, Republican or Democrat; the rich DO keep getting richer.  Unfortunately, political rhetoric and economic propoganda trumps truth virtually every time. 

Here is the reality, America:  If you want to reduce deficits, balance the budget for future generations, keep entitlements at their present levels (Social Security and Medicare), and reinforce the middle-class, taxes on the very wealthy are going to have to go up.  Significantly

Call it what you may – “transferring wealth”, Socialism, etc.  This is a zero-sum game.  Otherwise, many of us will go broke over time while they grow ever richer.  It’s that simple.  This is not class warfare.  This is not social engineering.  This is reality, people.

But based on some silly twisted philosophical perception that imposing disporportionately “higher” taxes on the rich is inherently unfair and “Socialist” in nature –  which even Warren Buffet, the richest man in America, agrees is nonsense -  we vote against our own self-interests, and vicariously support the ultra-rich getting richer.  Why?  Because we no longer recognize the fact that in the past, America always imposed a proportionally greater financial burden on it’s citizens who have prospered most from her bounty, and were blessed with the gift of wealth.

Against his own self-interest, President Obama readily accepts that duty, as well as the additional burden it imposes on his family, based on the time-honored American principle of self-sacrifice . . .

All for the good of the country.

NOTE:  The gentleman pictured at the top of this post is none other than the richest man in America – Warren Buffet.

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Harry Markopolos’ $50 Billion Dollar Failure

3stooges dumb and dumber [2]

 

 

 

 

 

 

 

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S.E.C. LAWYERS’ GRADUATION CLASSES: 1999-2008

 

If you hired a security guard to watch your house, and it kept getting burglarized – even after someone told him countless times who the thief was – would you let him keep his job?

Stupid question, you say?  Really? 

So why do we keep the same morons on our government payroll to watch the financial markets?  Now that is a good question.  And there really is a simple answer.  The foxes make sure to instruct their under-lords to have those dumb sharecropper farmers whom they pay beggars wages to for working their land, to keep that same old deaf and blind dog guarding the chicken coop.  This metaphor should not be lost on anyone.

Bernie Madoff may be a household word – and one of Time magazines 2009 Top 100 people who affected the world.  But Harry Markopolus is just another quiet hero in a global financial market run by pimps and whores.  Markopolus has a new book coming out today called, “No One Would Listen“.  The book chronicles the story of how Markopolus doggedly pursued a fraud case against Bernie Madoff from 1999 through 2008 by trying to get the Securities and Exchange Commission (SEC) lawyers to investigate Madoff’s House of Cards.  All to no avail. 

WTF you might ask?  At least that’s what I have been saying since this story first broke in early 2009 when Markopolus testified before Congress (you can read his testimony right here), and then was interviewed by CBS’s 60 Minutes. 

 This is beyond a comedy of errors.  This is Dumb and Dumber, The Three Stooges, and Beevis and Butthead all working in concert to unwittingly thwart one another while the criminals continued to steal from us with unbridled impunity.  Now is that not a terrifying image?  Meet your S.E.C., America.  Wall Street owns these guys.

Starting in 1999, Markopolus made several attempts to give the most fundamental proof of Madoff’s fraud to numerous investigators at the S.E.C. - all of which was either willfully or woefully ignored (Markopolus calls them “idiots” – that is too kind, don’t you think, Sarah Palin? I would have called them retards).  By 2007, he was fed up with their wanton stupidity, and decided to document it by submitting a nineteen (19) page memorandum to the S.E.C. outlining the basis for his claim.  That too, was ignored.

View the complete 60 Minutes interview with Markopolos - or just watch the real BOMBSHELL from minute 7:25 to 8:18 of the interview.  That brief one minute segment is incomprehensible.   And you wonder why so many investors were “Madoffed” by Bernie?

So after all this, has anything changed?

Hell no! 

Harry Markopolus is still trying to settle his first big whistle-blower case, he has spent years living in fear, and yet he remains undeterred in his dogged pursuit of financial racketeers and corporate fraudsters.  Of course, his new book should help keep his wife and young boys fed until payday comes.  Ironically, Markopolus refers to himself as a “$50 Billion dollar failure”- because he could not get the S.E.C. to listen.  One might conclude that he is being flippant, since he all but beat them over the head with his evidence.  However, he is serious about characterizing this as his “failure” - he honestly takes it very personally that all these people were hurt by Madoff’s fraud in the face of the S.E.C.’s utter incompetence.  

You just have to love this man.  After all this, the crooks and the “police” shirk responsibility, and the hero feels guilty?  And you wonder why it seems the world has started spinning in the other direction?

Meanwhile, back at the S.E.C., they are still re-disorganizing the deck chairs on the U.S.S. Financial Titanic, and there should be smooth sailing on the calm seas of Neo-Capitalism all the way back to port.  No need to worry.  They have their securities regulation minions fast asleep on night watch while the next massive financial iceberg awaits in the darkness.  And brace yourself, because this next one’s really going to be a doozy folks. 

In the meantime, bring them some Dom Perignon, the exquisite pate’, and that rare Russian escargot they just had imported, all paid for with your financial bailouts.  And don’t forget to put that on a silver platter. 

Oh, they almost forgot to mention it.  You can ignore the water rising on the Italian marble dining room floor.  That’s just from the watered-down financial regulation reform we are about to get from Wall Street’s wholly-owned public subsidiary, Congress.  They have the S.E.C working on that minor leak down in the hull right now. 

One Final Note: please do not bother counting the number of lifeboats.  Those seats have all been reserved.

Enjoy the cruise.  :)

P.S.  They saved several seats in the lifeboats for the S.E.C. lawyers.  You didn’t really think the Financial Terrorists were going to row those things themselves, did you?

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Obama Does Not Begrudge Wall Street Terrorists’ Robbing the National Treasury to make a Profit?

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President Obama – you cannot be serious?!?

These Titans of Socialist Capitalism take the money we bailed them out with – including “rigging” the system with the help of Paulson and Geithner so that AIG’s TARP money was re-directed to them – go on to make an enormous profit by trading with that money (which was not the purpose of the bailouts), and you call them savvy businessmen?  

Now almost a year ago  to the day, you gave the following remarks at the White House:

“This is America. We don’t disparage wealth. We don’t begrudge anybody for achieving success. And we believe that success should be rewarded. But what gets people upset – and rightfully so – are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers.”

So are they failures?  Or savvy businessmen?  Or both? 

 This author recently pondered your failure to immediately regulate and reign-in Wall Street after your election when they were still on the ropes.  Here is the bottom line:  They screwed up, then they screwed us, and then you screwed up?

Do you see the problem here, Mr. President.  The cognitive dissonance regarding your words and deeds towards Wall Street is deeply disturbing to those who supported you in 2008, especially when you had the perfect combination of opportunity, power, and the political capital to reign in these financial terrorists right after you took an oath to protect the American people.  You did nothing, and now it is too late.  Was it intentional?  Or are you being obtuse?

When political rhetoric collides with inaction, people become dismayed.  Maybe the young voters who are stepping to the sidelines  are correct?   

Disillusionment is too mild a word for such a betrayal if it was just the “same old wine in a brand new bottle“, President Obama.

Meet the new Boss . . . Same as the Old Boss . . .We Won’t Get Fooled Again!”

Shame on us for ever having the audacity to hope?  I hope not.

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