Gold News

Don't Forget the Garchs

Eric Cantor worked the rich, but forgot the rest to his cost...
ERIC CANTOR, in the news last week, was the best sort of politician, writes Bill Bonner in his Diary of a Rogue Economist.
When Cantor was bought, he stayed bought.
When campaign season came around, the oligarchs wouldn't forget him. The trouble was, he forgot the poor little "garchs". He was so sure he had the election in the bag, he forgot to lie to the voters.
Some say Goldman Sachs owned him. That is an overstatement; Wall Street only had a leasehold, which expired when his grip on House Republicans gave out.
Besides, most leading industries had a piece of him, too; the defense industry, for example, rented major parts of his heart and brain.
Many are the explanations for Cantor's surprise defeat. We put it down to a failure to run a balanced campaign.
He forgot that political commerce in a modern democracy is a two-way street. You have to buy as well as sell. All very well to offer your services to the 1%. But don't forget the 99% who will decide an election.
Conservatism in the US took a nasty turn in the 1980s. A generation had grown up since Ike Eisenhower was president. This new generation, much of it slipping into Washington along with Ronald Reagan, had come to see Washington as a force for good in the world – especially outside the fifty states. And even if Washington didn't always do good, a sharp politician could always do well.
The trick was to talk the old conservative talk for the rubes back home, but to vote for every money-guzzling boondoggle that came along.
Cantor talked the talk too. But it was a mushy talk – full of mindless platitudes and empty phrases.
That would have worked fine had his district been a little farther north. Squeeze up nearer to DC and blah blah is all the voters want to hear. They know how it works.
The nation is tilted towards the Potomac. The money rolls towards its denizens like loose change down a storm drain. The last thing they want is a candidate who speaks clearly about the need to change things.
But poor Mr.Cantor's district is on the James River, not the Potomac. Around Richmond, voters are less sympathetic to crony democracy.
This is not because they are more high-minded; far from it. It is simply because they get less from it. They don't necessarily want more of other people's money; but they definitely want to keep more of their own.
And they knew that their man in Washington wasn't helping. Congress reacted to the crisis of 2008-09 with the TARP. It transferred $700 billion to the banks...and gave them $23 trillion worth of credit guarantees to boot.
The first time it was proposed in the House, Republicans voted no. But Cantor – leader of the pack – turned them around. The second vote put the TARP in business and began the greasiest fix the world has ever seen.
Five years later, the voters of central Virginia are still puzzled by it.
How come, after five years of "recovery," are there so few good jobs?
Why is the Fed still handing out free money to Wall Street?
Does it have something to do with Goldman Sachs' generous contributions to Mr. Cantor's political campaigns?
And might it help him secure a nice position – maybe like former secretary of the Treasury Timothy Geithner at a private equity firm – after his political career is over?
Cantor raised $5.4 million from his cronies for this year's campaign. At the time, it seemed like overkill. He was the leader of his party in the House...and a household name in Republican circles. He was on the escalator – set to become speaker when John Boehner left.
His opponent on the other hand, David Brat, was unknown...and had only $200,000 to work with. The oligarchs had nothing for him, because he had nothing to offer them.
Now Brat's stock is rising fast. Goldman should have made a bid sooner.

New York Times best-selling finance author Bill Bonner founded The Agora, a worldwide community for private researchers and publishers, in 1979. Financial analysts within the group exposed and predicted some of the world's biggest shifts since, starting with the fall of the Soviet Union back in the late 1980s, to the collapse of the Dot Com (2000) and then mortgage finance (2008) bubbles, and the election of President Trump (2016). Sharing his personal thoughts and opinions each day from 1999 in the globally successful Daily Reckoning and then his Diary of a Rogue Economist, Bonner now makes his views and ideas available alongside analysis from a small hand-picked team of specialists through Bonner Private Research.

See full archive of Bill Bonner articles

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