Belmont Club

In God We Trust; All Others Must Pay Cash

The NYT describes why Wall Street is turning against President Obama. It claims that Wall Street’s overwhelming support for Obama in 2008 (70:30 D-R) has flipped (32:68 D-R) because of 1) Obama’s new financial regulations and 2) a realization that while “bankers, hedge fund mangers and traders supported the Obama candidacy because he [once] appealed to their egos” they’ve suddenly realized they were being set up all along to become the “villains”.

The zig-zag relationship between the White House and Wall Street is a story of partnership and betrayal. Daniel Loeb, one of Obama’s new critics said “it is easy to see why so many people have concluded that the entire system is rigged.” Sure, because it was a case of Wall Street scratching the politician’s backs while the politicians scratched theirs.  But now that things are going bad, somebody has to hold the bag and Wall Street resents having to do it.

Stephen Schwarzman, the founder of the Blackstone Group made a telling slip when he compared Obama’s decision to increase taxes on private equity firms to Hitler’s invasion of Poland. “It’s a war. It’s like when Hitler invaded Poland in 1939.” Schwarzman later was criticized for comparing Obama to Hitler. But the really telling comparison isn’t to Hitler, but to the invasion of Poland. The invasion of Poland was an act of betrayal. The Nazis promised at Munich that Czechkoslovakia would be their last victim: they lied. In using the comparison to Hitler, Schwarzman appears to be suggesting that Obama failed to keep his part of some bargain.

Andrew Leonard of Salon says Wall Street is only getting what’s coming. He says “and now they are are upset about higher taxes? What they should really be nervous about is the prospect of 20 years in prison.” Yeah they’re upset because because Obama took 70% of its donations and now makes like Wall Street did it because they liked his suits.

Betrayal usually leads to counter-betrayal. The Munich Pact was seen by Stalin as an attempt by the West to pay off Hitler with parts of Eastern Europe, which Stalin regarded as being in his sphere of influence. Incensed, he repaid Chamberlain with a betrayal of his own. By executing the Molotov-Ribbentrop pact, Stalin threw in with Hitler and World War 2 become unavoidable.

I and the public know
What all schoolchildren learn,
Those to whom evil is done
Do evil in return.

The administration has a distressing ability to throw people under the bus, a practice based not on high idealism but pure opportunism. One day it is going to come back to haunt them with unforeseen consequences. Betrayals are not confined to Washington. Recently Lebanon found out what it had long suspected. The Special Tribunal for Lebanon, which had been set up to indict the killers of former Prime Minister Rafik Hariri is not going to indict anyone any time soon. Not even after five years of investigation. The chief prosecutor, Daniel Bellemare, has a message for all. Don’t hold your breath.

Q: When will the indictment be handed in?

Daniel Bellemare: I have read articles saying that some people had already seen the indictment. Let me state clearly that the indictment has not been drafted yet. As I have previously said, I will only file the indictment when I am satisfied that there is enough evidence

Q: So you are still not satisfied? We are now in 2010, more than five years after the assassination of Prime Minister Rafik Hariri. How much more time do you need?

Bellemare: I have a very impressive team that has been working in the past months with all their energies to generate the evidence. Currently I am working on what I would call the evidentiary process; I have to make sure that the evidence I will produce is admissible in court. That is exactly the key. If I file an indictment and there is no evidence, the whole structure collapses, and we will [have] found ourselves in trouble.

The Lebanese were told to rely on the Tribunal in the tumultuous days after the Hariri murder. It’s hard to believe that in those early days people actually believed the President of Syria was going to be indicted. They hoped, they believed. And now, five years later, they’ve got a zombielike prosecution shuffling around aimlessly like extras from Dawn of the Dead. This is a betrayal which once again may have consequences, not in the least to the credibility of Special Tribunals, but more importantly in the message it sends to the region. You know what, don’t trust us. It’s okay to betray as long you know there are consequences.

One of the factors which dragged Julia Gillard down in the recent Australian elections and which may cost her the position of Prime Minister is the wide perception that she stabbed her predecessor in the back, the by-then-unloved Kevin Rudd. People have an intuitive fear of double-crossers. Everyone knows that if Julia could shaft Kevin, her long time colleague and ‘friend’, then she could shaft anyone.

Kim Philby once wrote that “to betray you must first belong”. But those who deal in this currency must remember that in the coin of betrayal salvation is always on the flip side.