Is Mitt Romney a Financial Parasite?

“Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”. -- Abraham Lincoln

How does the good of a few greedy parasites, beholden to nothing, outweigh the good of the nation? How does anyone justify legislation and policy that further lines the pockets of these parasites? Even if parasitic wealth was taxed at the same rate as the rest of us, they would still be filthy rich! And, they don't create jobs. Hell, most of them never worked a day in their life. But apparently, enough of us believe in their speculative finance economy that has made them obscenely wealthy, and the propaganda that they spew that we are willing to risk an economic catastrophe to protect that obscene wealth.

Which brings me to presidential candidate, Mitt Romney, whose fiscal plan delivers huge tax cuts to the wealthiest Americans while simultaneously forcing massive cuts to public services and social security on which the middle class rely. Then, there is the matter of his personal finances...

Not only, according to his released tax returns, did Romney make $42.7 million over the past two years, paying only $6.2 million in taxes - that’s an effective tax rate of less than 13.9% for doing nothing - he took advantage of a giant tax loophole that's available to only a very select few. It's called the carried interest loophole, or as it's often called the hedge fund manager tax loophole (in 2009 Top 10 Hedge Fund Honchos Averaged $900,000/Hr). Why hedge-fund tax loophole? Because hedge fund managers, partners in real estate ventures, and private equity kingpins are the select few who can use this legal provision to escape paying what the 99.9999 of the population are forced to pay.

What exactly is carried interest? 

Well, aside from the fact that closing this loophole could save taxpayers and the deficit $15 billion by 2015, it is the percentage - usually 20% - that  hedge fund managers and private equity kingpins can claim as investment,  taxed at the long-term capital gain of 15% rate,  instead of claiming what it actually is, fees or income,  which would be taxed at what the rest of us pay, 35%.

Wait, it gets better.  The maximum amount a married couple can pass to their children without paying gift taxes is $10 million, but Romney paid zero gift tax on the $100 million trust funds he set up for his sons. That's right, they avoided $31 million in gift tax that 99.9999% of the population would've had to pay if they did the same thing! According to David Cay Johnston, they "gave their sons some of their carried interest. And because the carried interest is not an ownership, it is a right to receive profits, Congress lets you value that gift at zero". 

In a nutshell, top hedge fund managers, gifted with a much lower tax rate, who do not produce anything tangible, or, some might argue, anything of any value whatsoever, make  more hourly, than most Americans will earn in a lifetime,  and financial parasites presidential candidates, who left their company 13 years ago,  still receives a share of the firm’s “carried interest” profits – taxed at the same low rate. It's the gift that keeps on giving to those with ghastly gobs of power and privilege.

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Jackpot Capitalism: Great Fortunes Made Gambling With Other People's Money

Never before in history, have so many, amassed such spectacular fortunes in such a short period of time. Sure, during the Industrial Revolution, the robber barons became tremendously wealthy over a span of about 45-50 years. However, at the very least, this great wealth resulted from exploring new technology and/or finding new resources that did benefit society, despite the extraordinary suffering these men of spectacular fortunes caused.

Fast forward a century, and people are literally profiting immensely from the turmoil that they created. The same cannot be said of this new crop of even faster growing fortunes (approx. 10 year span). Oh, these "jackpot capitalists" have contributed more than their fair share of suffering on a global scale; however, unlike their predecessors, the robber barons, they have produced very little, if any benefit at all, to society. In fact, the opposite can be said. With access to a bull market, and the bank's capital, these new "robber barons" have single-handedly collapsed our economy with their one-way, no risk bets.

How did these individuals become wealthier than some nations? Well, engineered by the Federal Reserve, itself, most of their wealth was made on the sharp fall in the cost of money. After all, the Federal Reserve sets the interest rates for America, as well as greatly influencing global rates.


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Longevity Swaps: Betting on How Long You Will Live

By 2007, the derivatives market had grown globally into a $516 trillion industry,  and, at the time, Warren Buffet warned of the "ticking time bomb".

Buffet wasn't the only one who warned about derivatives. "One month after Henry Paulson left Goldman Sachs as CEO with a net worth of over $500 million to become the new Treasury secretary, he spoke to the White House staff at Camp David: “Paulson held up over-the-counter derivatives as an example of financial innovation that could, under certain circumstances, blow up in Wall Street’s face and affect the whole economy.”

So, after the explosion of complex mortgage-backed securities brought down our financial system in 2008, and the speculators have been bailed out at our expense, they have the balls to speculate on our mortality. That's right, one of Wall Street's latest innovations is longevity swaps...waging in death futures.

What are longevity swaps? Well, it's the practice of hedging people's lives.  Some refer to them as death bonds.

Essentially, they are unconventional assets (little connection to more conventional stock and bond prices). Like mortgage backed securities, longevity swaps, ideally, would consist of policies from those who have diseases such as Leukemia, diabetes, cancer, heart disease, etc., in which investors buy into those life insurance policies and are paid when individuals die. Obviously, in this case, when cures are developed, the value of the life settlement plummets.

Remember, there are no profits in finding cures.



Another type of transaction involves "mortality catastrophe bonds," in which bond buyers contribute to pots of money that insurers can tap into if large numbers of people die in a disaster.

The bonds help insurers limit their exposure. If disaster doesn't strike, the investors get their money back with a preset return, typically a premium above some benchmark interest rate.

Goldman Sachs, of course, has already entered this market. When sick or elderly Americans need cash, they can sell their life insurance policies to companies that will pay them a fraction of the value.

Wall Street pursues profits in life bundles.

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

The earlier the policyholder dies, the bigger the return — though if people live longer than expected, investors could get poor returns or even lose money.

Either way, Wall Street would profit by pocketing sizable fees for creating the bonds, reselling them and subsequently trading them. But some who have studied life settlements warn that insurers might have to raise premiums in the short term if they end up having to pay out more death claims than they had anticipated.

Risks in Derivatives Markets

Systemic risk is the aggregation of default risks; since default risk has been exaggerated, so has systemic risk. Finally, this debate seems to have ignored what we call "agency risk." Features of widely used incentive contracts for derivatives traders can induce them to take very risky positions, unless they are carefully monitored.

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Public Private Partnership Program Scheme

Will taxpayers end up owning even more of these troubled assets, thanks to the Public-Private Partnership Program introduced by Treasury Secretary Timothy Geithner?

This program intends to give out loans with very easy terms to hedge funds in order to encourage them to buy up toxic assets from banks. The addition of private investors will undoubtedly inflate the price of these assets well above the market price. Why can't we figure out the true cost of these toxic assets and pay the price? Could it be because the true price is not high enough for the almighty banks? This is just another attempt to subsidize the banks at the taxpayers expense.

How come the government forces out the CEO of General Motors, yet has no problem with the CEO of Citigroup? Why don't we treat the banks like we treat the auto makers?

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Hedge Fund Managers, Overpaid CEOs and Reaganomics: The True Axis of Evil.

As my grandmother always told me, every time I asked for more of something, after I had already gorged myself silly, "Your eyes are bigger than your stomach", we, the people's organs of vision, bulge out, the size of beach balls, either trying to fill an already overflowing pot or spinning our wheels, in hopes of "achieving" the means to do so.

The over abundance of wealth in the United States is sufficient to make sure everyone's basic necessities are more than met. Knowing this is true, then why do so many in this country go without essentials?

With the clear understanding that it is not the government's duty to provide a superior quality of life to its citizens, but only to go as far as to protect, secure and help to make strong the citizens, who for whatever reason, suffer from the lack of what an evolved society define as basic human rights, the answer is clear...

Wealth is never destroyed it is merely transferred. With the emergence of hedge fund managers and egregiously overpaid CEOs in the last thirty years, in an un-nuanced nutshell, our "wealth", the wealth we all work so hard to earn, has transferred in the pockets of those who need and deserve it least.

American decadence has blinded its citizens to the leeches among us, the leeches who are draining the essence and exhausting the resources of not only American society, but the world at large. Our government - commencing with the Reagan administration - laid out the red carpet for people willing and eager to "earn" their living gradually sucking the vitality and immunity from the veins of the middle class, the working class, the working poor and the misfortunate.

Legislation created and destroyed over the last thirty years explains why the distribution of wealth is skewed toward those, already so wealthy, they wipe their a$$e$ with "paper" spun from the finest silk, after scarfing down fungus they bought at the local market, for the price of a small car. Hedge fund mangers, in particular, known to make upwards of billions of dollars annually, these vampires are the product of a society, transformed by the late, great Ronald Reagan - "Betsy Ross" reincarnated - who diligently wove greed and lust for an overabundance of all things tangible, into the fabric of American society.

Hedge fund managers and egregiously overpaid CEOs symbolize this group of bottom feeders or vapid black holes of greed. They refuse to evolve past the smug self-satisfaction, at the expense of the most vulnerable, that characterizes a society still trying to figure out how to meet their physiological and security needs. They would rather gain a surplus of wealth at the expense of hard working Americans

Are all of America's wealthy people bottom feeding, vapid black holes? Of course not. Bill Gate's contribution transformed the world..his philanthropic efforts, an added bonus. Bill Gates is an example of the kind of wealth capitalism was designed to create, as his hard work and superior talents served to enhance, rather than crush and destroy...that is, unless you dare to compete with him.

No, Bill Gates is not perfect...far from it. However, compared to those who contribute absolutely nothing, skimming the cream off the top of "regular" folk's hard earned savings, making more money than a couple of small nations combined, Bill Gates comes out a hero.

According to Maslow's hierarchy of needs, once we have satisfied our basic needs it's time to evolve to the next level. It's time we, the people put an end to gauging success by the attainment of wealth, position, honors, or the like, and instead start to measure our worth by what we contribute to our community, country and/or the world. We need to work on using the power we have to say "no" to ourselves and rather than spend that $10,000 burning a whole in our pocket, on a plate of fungus at lunchtime, take that money and feed more than $10,000 starving people who exist on mud cookies.

The leaders we choose reflect our values, morals and sense of who we are. If we are not able to apply the brakes on our own ravenous appetites for money, things, power and control, how can we expect our leaders to hit the breaks and evolve our country to another level? It won't happen.

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Vulture Funds Fund Rudy Giuliani's Run for the White House

Vulture funds buy up the debt of poverty-stricken nations at bottom of the barrel prices, when the debt is about to be wiped out, and then turn around and sue the poor nation for the full value of the debt plus whatever they feel like charging in interest.

Recently, Mr. Bush forgave Congo its outstanding balance; yet at the same time will not prevent vulture funds from massively profiting off Congo and countries like them, eradicating any benefit his debt relief would have provided. It appears as if George Bush is clearing the path for the vultures to swoop down on these ailing nations and finish them off.


Kevin Carter's winning photo above shows a heart-breaking scene of a starving child collapsed on the ground, struggling to get to a food center during a famine in the Sudan in 1993. In the background, a vulture stalks the emaciated child.

Haunted by the horrific images from Sudan, Carter committed suicide in 1994.


Empowered by the US Constitution, Mr. Bush can stop these heinous vultures from picking the bones of the poorest of the poor with the stroke of a pen, if they are interfering with America's foreign policy. Singer, who is suing Congo for many times the amount of the money owed to profit one-thousand times over, is interfering with Bush's attempt to relieve that part of the world its outstanding balance.

Rudy Giuliani's biggest contributor, is Paul Singer, who runs the hedge fund, Elliott Associates, founded in 1977 and one of the oldest hedge funds under continuous mangement. Elliott Associates came under fire in 2001 when it refused to accept Brady Bonds, (In the late '80s and early '90s, U.S. Treasury Secretary Nicholas Brady created a broad-based debt restructuring plan, in which the severely indebted nations agreed to issue a transitional bond, called a Brady bond, and many major private lenders agreed to accept these bonds in a swap for their outstanding loans.) instead of the full amount owed to them.

"Mr Bush has the power to block collection of debts by vulture funds, either individual ones or all of them, if he considers it to be at odds with US foreign policy, in this case debt relief for poor countries."

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