I’m on with Paul Jay of the Real News Network breaking down Trump’s latest bid to be recognized as a more thoughtful candidate – his economic team. Well, outside of the usual Cipriani brunch bunch, there’s a name that I recognize – and you might too if you’ve been reading my work. That name is John Paulson – he made billions off of making millions of Americans homeless.
Paulson is the guy who crashed the mortgage market in the U.S., he brought the Royal Bank of Scotland to its knees, where it went bankrupt. And the Times of London, hardly a Marxist rag, it’s owned by Murdoch and very right-wing, the Times of London said that JP, John Paulson, should be paraded through the streets of London naked while people throw rotten fruit at him for what he’s done. Just in England. And that was nothing compared to what he’s done in the U.S.
Watch and learn about who might be running your economy in 6 months.
Trump desperately needs to get his tiny hands on some cash to fund his presidential campaign. On TV, Trump may play the role of a gazillionaire, but the reality of his reality TV persona is that it’s all paid for with other people’s money. His self-funding pledge is going the way of all Trump’s promises – down the gilded crapper. This week on The Best Democracy Money Can Buy: Election Crimes Bulletin, we focus on where and how Trump is going to get his campaign funds – and the deal he’s made with Wall Street’s devils in order to get it.
TRANSCRIPT (Originally broadcast on June 22, 2016)
Dennis J. Bernstein: All the news is about how Hillary has raised zillions and Donald has a mere one or two million dollars. I thought Donald Trump was a billionaire – he could pay for anything!
Greg Palast: Yeah, that’s the TV show, isn’t it? As he says, he loves debt. So, yes, he has a lot of money, OPM, other people’s money. He’s an OPM addict, an other peoples’ money addict. But as far as using it for himself, there’s very good reason he doesn’t have close to what he’s talking about. So just like bank robbers, he’s going where the money is.
DB: He’s got some cagey friends?
Palast: Yes. The guy who is now raising money for the guy who doesn’t supposedly need it and who said he will self-finance his own campaign. Where would you go if you needed to suddenly get bazillions and millions of dollars as a politician? It’s a quiz. What’s your answer?
[Thursday February 23] Republican Presidential candidate Mitt Romney called the federal government’s 2009 bail-out of the auto industry, “nothing more than crony capitalism, Obama style… a reward for his big donors to his campaign.” In fact, the biggest rewards - a windfall of more than two billion dollars care of US taxpayers – went to Romney’s two top contributors.
John Paulson of Paulson & Co and Paul Singer of Elliott International, known on Wall Street as “vulture” investors, have each written checks for one million dollars to Restore Our Future, the Super PAC supporting Romney’s candidacy.
Gov. Romney last week asserted that the Obama Administration’s support for General Motors was a, “payoff for the auto workers union.” However, union workers in GM’s former auto parts division, Delphi, the unit taken over by Romney’s funders, did not fare so well. The speculators eliminated every single union job from the parts factories once manned by 25,200 UAW members.
The two hedge fund operators turned a breathtaking three-thousand percent profit on a relatively negligible investment by using hardball tactics against the US Treasury and their own employees.
Under the control of the speculators, Delphi, which had 45 plants in the US and Canada, is now reduced to just four factories with only 1,500 hourly workers, none of them UAW members, despite the union agreeing to cut contract wages by two thirds.
It wasn’t supposed to be quite so bad. The Obama Administration and GM had arranged for a private equity investor to provide half a billion dollars in new capital for Delphi, but that would have cut the pay-out to Singer and Paulson. The speculators blocked the Obama-GM plan, taking the entire government bail-out hostage. Even the Wall Street Journal’s Dealmaker column was outraged, accusing Paul Singer of treating the auto company, “like a third world country.”
But it worked. Singer and Paulson got what they demanded. Using US Treasury funds:
GM agreed to pay off $1.1 billion of Delphi’s debts,
forgave $2.15 billion owed GM by Delphi (which had been spun off as an independent company)
pumped $1.75 billion into Delphi operations, and
took over four money-losing plants that the speculators didn’t want.
If those plants had been closed, GM factories would have shut down cold for lack of parts.
Then there was the big one: The US government agreed to take over $6.2 billion in pension benefits due Delphi workers under US labor law.
Governor Romney, while opposing the bail-out of GM, accused Obama of eliminating the pensions of 21,000 non-union employees at Delphi. In fact, it was Romney’s funders who wiped out 100% of the pensions and health care accounts of Delphi salaried retirees.
Paulson and Singer paid an average of about 67 cents a share for Delphi. In November, 2011, Paulson sold a chunk of his holdings for $22 a share. Paulson’s gain totals a billion and a half dollars ($1,499,499,000), and Singer gained nearly a billion ($899,751,000) — thirty-two times their investment.
One-hundred percent of this gain for the Paulson and Singer hedge funds is accounted for by taxpayer bail-out support.
But, unlike the government loans and worker concessions given to GM, the US Treasury and workers get nothing in return from Delphi.
From GM, the US Treasury got warrants for common stock (similar to options) that have already produced billions in profit.
And Delphi? It’s doing well for Paulson and Singer. GM and Chrysler, still in business by the grace of the US Treasury, remain Delphi’s main customers, buying parts now made almost entirely in China and other cheap-labor nations.
And exactly who are Paulson and Singer?
Billionaire John Paulson became the first man in history to earn over $3 billion in a single year — not for his hedge fund, but for himself, personally. At the core of this huge payday was a 2007 scheme by which, via Goldman Sachs, he sold “insurance” on subprime mortgage loans. According to a lawsuit filed by the Securities Exchange Commission, Goldman defrauded European banks by pretending that Paulson was investing in the insurance. In fact, Paulson was, secretly, the beneficiary of the insurance, reaping billions when the mortgage market collapsed.
Goldman paid half a billion dollars in civil fines for the fraud. While the SEC states that Paulson knowingly participated in the scheme, he was not fined and denies he defrauded the banks.
Multi-billionaire Singer is known as Wall Street’s toughest “vulture” speculator. Vulture fund financial attacks on the world’s poorest nations have been effectively outlawed in much of Europe and excoriated by human rights groups, conduct Britain’s former Prime Minister Gordon Brown described as, “morally outrageous.”