Survivors of concentration camps report that the secret to staying alive was often simple: those who were near the kitchen made it; those who were not didn’t.
In our modern, degenerate form of capitalism the secret is the same: you want to be near the kitchen…the place where the food is handed out. You want to be near the government. That’s why there are so many lobbyists in Washington. And why the only city in America where property prices are going up is Washington, DC.
The politicians collect money from all over the country. They give much of it away in the Washington, DC metropolitan area. Montgomery County, Maryland and Fairfax County, Virginia are two of the richest counties in the country. Why? They’re right next to the kitchen.
Here’s a segment from 60 Minutes titled “Insiders”, which aired on November 13:
The next national election is now less than a year away and congressmen and senators are expending much of their time and their energy raising the millions of dollars in campaign funds they’ll need just to hold onto a job that pays $174,000 a year.
Few of them are doing it for the salary and all of them will say they are doing it to serve the public. But there are other benefits: Power, prestige, and the opportunity to become a Washington insider with access to information and connections that no one else has, in an environment of privilege where rules that govern the rest of the country, don’t always apply to them.
Peter Schweitzer: This is a venture opportunity. This is an opportunity to leverage your position in public service and use that position to enrich yourself, your friends, and your family.
Peter Schweizer…says he wanted to know why some congressmen and senators managed to accumulate significant wealth beyond their salaries, and proved particularly adept at buying and selling stocks.
Schweizer: There are all sorts of forms of honest grafts that congressmen engage in that allow them to become very, very wealthy. So it’s not illegal, but I think it’s highly unethical, I think it’s highly offensive, and wrong.
..For example insider trading on the stock market. If you are a member of Congress, those laws are deemed not to apply.
The fact is, if you sit on a healthcare committee and you know that Medicare, for example, is — is considering not reimbursing for a certain drug that’s market moving information. And if you can trade stock on — off of that information and do so legally, that’s a great profit making opportunity. And that sort of behavior goes on.
The buying and selling of stock by corporate insiders who have access to non-public information that could affect the stock price can be a criminal offense, just ask hedge fund manager Raj Rajaratnam who recently got 11 years in prison for doing it. But, congressional lawmakers have no corporate responsibilities and have long been considered exempt from insider trading laws, even though they have daily access to non-public information and plenty of opportunities to trade on it.
In mid-September 2008 with the Dow Jones Industrial average still above ten thousand, Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke were holding closed door briefings with congressional leaders, and privately warning them that a global financial meltdown could occur within a few days. One of those attending was Alabama Representative Spencer Bachus, then the ranking Republican member on the House Financial Services Committee and now its chairman.
These meetings were so sensitive — that they would actually confiscate cell phones and Blackberries going into those meetings. What we know is that those meetings were held one day and literally the next day Congressman Bachus would engage in buying stock options based on apocalyptic briefings he had the day before from the Fed chairman and treasury secretary. I mean, talk about a stock tip.
Of course, hanging around the kitchen is not the most productive thing you can do with your life. The more people who do it, the less productive the economy becomes.
for The Daily Reckoning Australia