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Commentary: Communist boogeyman

By ARNAUD DE BORCHGRAVE, UPI Editor at Large   |   Oct. 27, 2011 at 7:11 AM   |   Comments

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WASHINGTON, Oct. 27 (UPI) -- If Occupy Wall Street is "Marxist mobocracy," as some commentators on the right are suggesting, then what would they call Wall Street's, as labeled by billionaire Pete Peterson, "carnivorous and animalistic greed"? Have they already forgotten how the subprime predatory mortgage rackets circled the globe, triggered the 2007-08 crisis in which millions lost their homes -- and their jobs?

Earlier this week, Raj Rajaratnam, a Sri Lankan-American who co-founded the Galleon Management hedge fund was convicted on 14 different counts of security fraud and conspiracy in the largest insider trading scheme in U.S. history, netting him $70 million.

No sooner was Rajaratnam sentenced to 11 years in prison than one of Wall Street's most respected names surrendered to the FBI. Rajat K. Gupta, a former Goldman Sachs director and longtime chief executive officer of McKinsey and Co., one of the world's most respected management consultancies, now stands accused of being Rajaratnam's partner in crime.

Gupta had no problem ponying up $10 million for bail. Over a 34-year career at McKinsey, Gupta, an Indian-American, got to know the secrets of scores of companies in a wide variety of industries, from telecommunications to energy.

After McKinsey, he served on multiple boards, frequently as chairman: Goldman Sachs, Procter and Gamble, AMR Corp, Harman International, International Chamber of Commerce, special adviser to the secretary-general of the United Nations, Harvard Business School, MIT Sloan, the Gates Foundation, Global Fund for AIDS and Cornell Medical College.

Gupta also maintained an office, an executive assistant, e-mail account and phone at McKinsey after he retired in 2007, a firm where he was initially turned down because of inadequate work experience, a decision that was revoked after his Harvard Business School Professor Walter J. Salmon called the powers that be on Gupta's behalf.

He also founded and was the chairman of the Asia-focused $1.4 trillion private equity company Silk Route. His stellar reputation saw him elected to the American Academy of Arts and Sciences, as well as chairman of the largest business lobby in the world -- the International Chamber of Commerce.

Insider trading, a federal crime, is far more common than the unwashed public realizes. Two former university roommates, one in Geneva and the other in San Francisco, for example, talk in code frequently -- and with impunity.

Those who agitate the Marxist boogeyman to those who opt not to put a blind eye to the telescope, as Lord Nelson once did to ignore an order to break contact with the enemy, may have forgotten that Karl Marx predicted 162 years ago that capitalism would eventually sow the seeds of its own destruction.

Isn't that what the excesses of Czarist Russia produced? Followed by the long nightmare of Stalin's concentration camps and world communism?

And isn't "Marxist mobocracy," if that's what it is, the flip side of "carnivorous greed" on Wall Street and its ever-larger multimillion-dollar year-end bonuses for senior executives that never missed a beat while millions were being laid off?

Goldman Sachs has just experienced a dismal three months, losing $428 million in the third quarter of 2011 and yet it could still manage to pour billions into the year-end bonus pool -- $10 billion for openers. That's $333,000 per employee, though it never works out that way. In fact, 1,300 employees have been paid off this year. And another 1,000 are expected to join the ranks of unemployed before year's end.

Goldman Sachs still had to pay a half-billion-dollar fine after being accused by the SEC of duping its clients by "selling them shares of a mortgage-backed security secretly handpicked by a hedge firm."

In a learned post-mortem, Princeton's Markus K. Brunnermeier wrote that what banks referred to as "equity tranche" were actually known by insiders as "toxic waste." Buyers of top "tranches" protected themselves by purchasing "credit default swaps," which were new contracts insuring against the default of a particular bond or tranche. Go figure.

Estimates of the "gross notional" (not national) amount of outstanding credit default swaps in 2007 ranged from $45 trillion to $62 trillion. National debt: $15 trillion.

At nearly $1 trillion, federal and private student loans now exceed U.S. credit card debt. Surely it doesn't smack of socialism, as some voices on the right are suggesting, for U.S. President Barack Obama to launch a new plan to lower the cost of paying back student loans for millions of borrowers -- a move designed to bypass a dysfunctional Congress.

Some 1.6 million students can now cap their loan payments at 10 percent of their discretionary income starting next year.

In one survey of 395 mortgage counselors, 37 percent said they had worked with at least one homeowner in the previous month who was contemplating suicide.

As much as we would like to pooh-pooh the unacceptable face of free enterprise as the lucubrations of leftist agitators, the reality is there for anyone who cares to look.

The only surprise about the anti-capitalist "Occupy Wall Street" revolt is that it didn't happen before, generated by Hollywood's seemingly endless flicks "casting financiers as the demonic villains of society," writes Jay Epstein in his new book, "The Money Demons: True Fables of Wall Street."

As an example, Epstein cites the Warner Bros. political thriller "Syriana" in which "the villain is not al-Qaida, an enemy state, the mafia, or even a psychotic serial killer. Rather, it's the big oil companies that manipulate terrorism, wars and social unrest to drive up oil prices."

Two months after the left-leaning movement got under way, thousands of "Occupy Wall Street" protests had spread to America's major cities. They were already seen as splitting Democrats as the Tea Party had split Republicans.

© 2011 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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