Can We Greenmail President Obama?

What is wrong with the world? Politicians have ruined the world’s major economies almost to the point of no return, and the world does not know it yet.

How do we fix it? The world’s largest economy can only be improved by wholesale changes to its laws. Any party in power will keep kicking the can down the road. However, if the Republicans actually understood what is at stake, and had enough courage, they would be willing to use any tactic to circumvent President Obama to get the right things done, even at the cost of pushing the economy into a depression (yes that’s right, a depression, not a mild recession).

In investment banking parlance, greenmail is the practice of a company buying sufficient shares in another company to threaten takeover and making a quick profit as a result of the threatened company buying back its shares at a higher price. Greenmail comes from green (money) and blackmail. Why is there a need to blackmail Obama with money?

Greenmail comes from green (money) and blackmail. Why is there a need to blackmail Obama with money?

The world’s major economies have issued over $60 trillion of federal debt. Other federal commitments and state-level debt only adds to the world’s burden. The U.S. contributes about a third of that (almost $18 trillion). The interest component of the federal debt will be rising rapidly, even as per the conservative CBO projections. We know what happens to countries with runaway deficits. Nevertheless, this Administration and its economists are good at deceiving themselves and the people as well. “Once growth gets back on track, revenues will grow, the deficit will begin to fall, and everything will be hunky dory,” is what they say to delude themselves. Except that, with the stranglehold of regulation, the forced higher costs of feel-good environmentalism and expensive energy, a similarly deluded world economy, and escalating fiscal and trade deficits, growth is never going to get back on track. What growth they think they do see right now is consumption caused by Federal pump-priming. The Republican Congressmen and Senators need to understand that unless extremely radical steps are taken, the economy will eventually go into a depression anyway. It will remain broken for a very long time. If radical steps are taken, the economy will nevertheless rapidly go into a depression, but if the steps are the right ones, it will not stay broken for a long time. Those are now the only choices left. This is because the process of liquidating uneconomic investments caused by runaway Government spending and reinvesting the funds in profitable projects is not instantaneous. It will take time—two, maybe three years at best, and that if the economy is free to make swift adjustments.

The smart thing the Republicans did on the last debt ceiling negotiation was to give Barack Obama only thirteen months of respite. Midnight, March 15, 2015 is the witching hour. But, like so many presidents before him, President Obama is a political huckster. He knows his counter. He will mercilessly stab their soft tissue.

Stop paying ordinary folk, blame the opposition for a shutdown that need not be, and letters land on the doorsteps of Congressmen by the thousands. If that does not do it, stop the social security checks for seniors first, then for all, then stop the disability checks. This is how he will do it again. He has a winning formula. Stare the Republicans down; they always blink first. He plays them like a cheap fiddle. One of the smartest pieces of advice I ever received was to “never make empty threats.” The GOP has thrice indulged in brinksmanship, and taken the issue to the wire, forcing Treasury to undertake extraordinary measures to keep the U.S. from defaulting, only to capitulate at the last moment. The extraordinary measures buy a few weeks for both sides. There really is no point in going down to the wire, if the Republicans throw in the towel just when the bell sounds for the final round.

Ending the Federal Reserve, or repealing all forms of anti-trust legislation, would be excellent principled causes to fight to the death for. As bad as Obamacare is, this time however, the GOP needs to pick a cause many of their own believe in. 58% of Republicans believe, or you could say have knowledge of the fact that, the man-made global warming movement is a sham. Even some environmentalists agree that ethanol subsidies increase food prices and simultaneously harm the environment. Increased food prices are a dangerous catalyst for food riots in the poorer parts of the world. Laws and regulations catering to the hysteria caused by climate scientology can easily wreck an economy; extensive damage is already under way. The greens are President Obama’s closest philosophical allies. But for them, he may well have signed up by now to the Keystone project, something the GOP can have as a first item on the demand list by requiring that eminent domain objections still be attended to, while brushing aside vacuous alarms raised by the men and women in green.

Explaining this to the American public will be very hard. Mainstream media is not an independent referee. Prominent market commentators, like Warren Buffett, will call such measures asinine. In one sense though, Buffett is right—the debt ceiling is a weapon of mass destruction. It can be used to destruct the asinine laws that the country has adopted.

Extraordinary measures will allow Treasury to keep paying debt till July 2015 as the IRS can delay tax refunds using the debt ceiling impasse as an excuse. But, like blackmail, greenmail only works when the threat is credible. Only a sound philosophical basis will allow convictions to form, and give the Republicans the requisite courage to make credible threats.

President Obama, however, is unlikely to give any ground even if the threat is fully carried out. He is likely to see in it an opportunity to demolish the GOP. Many more millions will be rendered jobless if the U.S. does default.

More than likely, this president will take the law into his own hands to keep up debt servicing to postpone a crash, and potentially facilitate an impeachment action to remove him and his successor Joe Biden, for this scenario can be played out repeatedly.That too, must be done if required. Almost surely, mainstream media will then blame the GOP and possibly cost it more than the 2016 election—the tide will turn permanently against one or the other major party.

That is the scope of this battle—an all-out gamble. The question is, with the mid-term elections behind them, and the control of the Senate wrested, do the Republicans have the nerve, the providence, the fortitude, for a fight of this magnitude? We would not be in this position if they did.

Related Posts:

1. Nancy Pelosi Betrays Public School Teachers
2. The Birth and Upbringing of a Mixed-Economy Nation
3. Will Sovereign Defaults Trigger the Next Financial Crisis?

   

About the Author: Vinay Kolhatkar

Vinay Kolhatkar is a freelance journalist, novelist, screenwriter, and finance professional. He is the Chief Editor of The Savvy Street. Vinay has authored a TV pilot screenplay Undercover: The Story of Jamila, and two literary thrillers A Sharia London and The Frankenstein Candidate.. He is also the co-author of Media Wars: The Battle to Shape Our Minds. More about Vinay is at the Founder page.