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Eric Cantor’s Sleazy Conflict of Interest

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Eric Cantor stands to make a bundle—- if the United States defaults on its national debt.  Is that why he appears to be doing everything he can to block negotiations on reaching an agreement to raise the debt ceiling, thinking that failure will force America to default? Does that help to explain why he ostentatiously walked out of continued negotiations? According to Jonathan Easley, reporting in Salon.com, based on Congressman Cantor’s financial statement, he has between $1,000 and $15,000 invested in ProShares Trust Ultrashort 20+Year Treasury ETF.  This is a fund which “aggressively ‘shorts’ long-term U.S. Treasury bonds.”  In other words, the fund performs very well when U.S. debt is “undesirable,” and if you own ProShares you are betting that the U.S. will default, or come close to default—- the worse U.S. debt does in the market, the more money the owner of ProShares will earn.

We have been warned by many experts, including those who served Reagan and who are Republican to the core, that, unless the debt ceiling is raised immediately, America could begin defaulting on its debt as early as 2 August.  Here is a classic case of conflict of interest, I would say. It is to Congressman Cantor’s personal financial benefit to force the U.S. into default.  What we have here, in other words, is an example of the economic man so beloved of the profit-driven free market theory, where each individual by ruthlessly pursuing his own profit, will, by the magic of the market, produce good for everyone. No different, really from how Wall Street and global corporations operate on a daily basis, so how can you blame the Congressman, after all? Destroy America, but profit mightily.

On the other hand, there have been rumblings from constitutional scholars (not including our President, however), elected officials, and bloggers, that maybe this entire debt ceiling hysteria is one more manufactured wacko Republican tempest in an, ur, teapot. What if the debt ceiling itself is unconstitutional, according to the 14th Amendment to the Constitution (“…the validity of the public debt of the United States, authorized by law…shall not be questioned…”), so that the President can do whatever is necessary to see to it that America does not default, never mind being held hostage by the Republicans? See:

http://www.dailykos.com/story/…

What an irony if all of Mr. Cantor’s machinations and slithery attempts to enrich himself at America’s expense turn out to be utterly worthless. What a loser he is, how anti-American, an elected official betting that the United States will default on its debt, and seemingly doing everything he can to cause that default. He should have recused himself from the debt ceiling negotiations.  Better, in my opinion, he should be fired.

  • aznew

    This position was apparently a hedge to offset a large long treasury position he holds. According to the Salon article:

    Cantor spokesman Brad Dayspring noted that U.S. Treasury bonds make up a large portion of the congressman’s pension, and said investment in ProShares ETF serves to balance that investment and to diversify his portfolio.

    If that’s the case, I honestly don’t see the problem.

  • robertdiggs

    A recent Roll Call article mentioned Paul Hirschbiel as candidate for Congress against Scott “Make me a Deal” Rigell. After looking at his giving history, I’m left thinking, is Paul Hirschbiel any better than the used car salesman?

    Paul Hirschbiel has given:

    $4,000 to George W. Bush

    $5,000 to Bob McDonnell

    $5,000 to Opportunity Virginia (Bob McDonnell’s PAC)

    $2,000 to Mitt Romney

    $2,950 Will Sessoms

    $1,500 to Frank Wagner

    $1,000 to Jeff McWaters

    $250 to Nick Rerras

    Say “No” to this wolf in sheep’s clothing!

  • Teddy Goodson

    The Washington Monthly has picked up on the conflict of interest story, with much the same take and with comments both similar and a little different:

    http://www.washingtonmonthly.c