Fiddle, Burn, Repeat

The oval office is no place for a decent man. Instead, ‘ruthlessness’ is the key to a successful politician, said UK prime minister Harold MacMillan.

That is probably why so many people regard Jimmy Carter as a ‘weak’ president, and Donald Trump as a ‘strong’ one. Insulting reporters…ordering assassinations…threatening invasions…trading pardons for cash…calling whole groups of people ‘garbage’ — the strongman Trump is ruthlessly indecent.

He is also willing to stab his own team in the back. You’d think that, if you were charged by Pam Bondi and Kash Patel with rigging the bidding on a $375 million stadium, a pardon from their boss would be out of the question.

But no. Hire former Congressman Trey Gowdy to play golf with POTUS. The New York Times and the Wall Street Journal both tell us that after the game, Trump asked Gowdy if there was anything he could do for him. Gowdy mentioned his client. A few days later, the pardon came through.

It was Alan Greenspan who first gave Wall Street a ‘put option.’ In case of a sell-off, the Fed would come to investors’ aid with lower interest rates.

Now, Donald Trump seems to provide a safety net for rascals. If they get in trouble with the law, he’ll pardon them.

But corruption begets corruption. And it wasn’t Donald Trump who begat all of today’s rampant grifting. Joe Biden’s son, Hunter, was implausibly paid a lot of money for serving on the board of a big Ukrainian energy company. What he was really selling was probably not his insights into the oil business. It was influence.

Donald Trump has merely continued along the downhill path of a declining empire…and picked up speed.

Washington Monthly:

From February through the first week of December, Trump issued 61 pardons and commutations. Nearly half, 27, benefited white-collar criminals who had committed securities fraud, wire fraud, money laundering, tax evasion, and similar offenses. Two of these clemencies were granted to corporations, not individuals, an unprecedented act. An additional 14 were about political corruption. (Nine others were given to drug dealers and traffickers, some of whom I highlighted in a column last week.)

Then, there are cases such as that of Justin Sun. The crypto billionaire was charged by the SEC with multiple counts of fraud. But after the 2024 election, he ‘invested heavily,’ according the Washington Monthly report, in Trump’s World Liberty Financial. The SEC then lost interest in his case. Maybe a coincidence. And here’s another one:

As reported by The New York Times, in December, World Liberty Financial bought $5 million in cryptocurrency from Ethena Labs. A few months later, one of Ethena’s investors—BitMEX co-founder Arthur Hayes—was pardoned by Trump.

Apart from those who are widely regarded as shady characters, there are those upon whom the sun never seems to set. Successful…and well connected, they don’t need a pardon. They’ve done nothing illegal. Here’s an example:

Some of the biggest names in finance saw an opportunity when the feds bailed out Fannie and Freddie in 2008. John Paulson, Bill Ackman, Carl Icahn and Bruce Berkowitz loaded up on their shares at ‘pennies on the dollar.’ Now they are set to make billions as the two mortgage lenders are returned to private hands. David Stockman:

It’s an out-and-out gift to a handful of billionaire speculators and nothing more. It amounts to a crony capitalist stink bomb.

And here we have an illustration of the general rule: The more the feds fiddle with the economy, the worse the economy gets…and the more opportunities it presents for rip-offs.

The set up came in the mortgage finance bust of 2008, which was caused by the Fed’s artificially low lending rates. In the crisis, house prices were falling and Fannie and Freddie were running out of money. The feds came to the rescue, committing to invest as much as $200 billion in each enterprise, in exchange for a controlling interest in the businesses.

It was an insider deal from the get-go. The mortgage lenders traded on federal credit guarantees…and scraped a huge profit from the narrow difference between wholesale borrowing (selling bonds to Wall Street) and retail lending (mortgage lending to ordinary people). That profit should be returned to its real source — the US government and its taxpayers. But the way it works now is for the gains to go into private pockets while the losses get put to taxpayers.

The four billionaires (and others) saw how they could get their hands on the profit.

The coast was clear during the first Trump administration. But the transaction – selling Fannie and Freddie back into the public markets — “didn’t materialize because of the complexity,” said a CNBC report.

Now that Trump is back, however, the opportunity is back on the table. The four mega speculators mentioned above have the expertise to cut through the complexity…and the money to take advantage of it.

The stock has already soared in anticipation of an IPO. David Stockman calculates that each of those billionaires will be about $3 billion richer…when the deal finally goes through.

Then, other investors will have a chance to make more money from Fannie and Freddie…until it causes another crisis…

When the losses will again be put to the taxpayers.