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Tuesday, November 29, 2011

Secret Bailouts, Crony Capitalism, and Greedy Bastard$

If you read the steady drip, drip, drip of information coming out about the secret Wall Street bailouts by the Federal Reserve and the rotten corruption of U.S. officials like former Treasury Secretary Hank Paulson it's easy to take the side of the #OccupyWallStreet movement.

Wall Street is infested with a rotten nest of crooks.

Bloomberg:
Secret Fed Loans Gave U.S. Banks Undisclosed $13B  —  The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret.  Now, the rest of the world can see what it was missing.  —  The Fed didn't tell anyone which banks …


Steve Randy Waldman / interfluidity:
Yes, Virginia. The banks really were bailed out --
After assuming the banking system’s downside risk, the US government engineered a wide variety of favorable circumstances that helped banks “earn” their way back to quasi-health. The government provided famous and obvious transfers like paying unwinding AIG swaps at 100¢ on the dollar. It forced short-term yields to zero and created an environment in which medium-term interest rates would be capped for several years, granting banks a near-risk-free arbitrage for a while. It emitted trillions in excess reserves on which it continues to pay interest. It forewent investigations and prosecutions that by law it should actively pursue, and settled what enforcement it could not avoid for token fees. Then there are the things conspiracy theorists and cranks like me suspect but cannot prove...
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Hank Paulson tipped off his Wall Street buddies first about the pending takeover of Fannie Mae and Freddie Mac. Isn't this the definition of insider trading? Of crony capitalism? Why isn't this a criminal abuse of power?

Richard Teitelbaum / Bloomberg:
How Paulson Gave Hedge Funds Advance Word  —  Treasury Secretary Henry Paulson stepped off the elevator into the Third Avenue offices of hedge fund Eton Park Capital Management LP in Manhattan.  It was July 21, 2008, and market fears were mounting.  Four months earlier …

On the morning of July 21, before the Eton Park meeting, Paulson had spoken to New York Times reporters and editors, according to his Treasury Department schedule. A Times article the next day said the Federal Reserve and the Office of the Comptroller of the Currency were inspecting Fannie and Freddie’s books and cited Paulson as saying he expected their examination would give a signal of confidence to the markets.

A Different Message

At the Eton Park meeting, he sent a different message, according to a fund manager who attended. Over sandwiches and pasta salad, he delivered that information to a group of men capable of profiting from any disclosure.

Around the conference room table were a dozen or so hedge- fund managers and other Wall Street executives -- at least five of them alumni of Goldman Sachs Group Inc. (GS), of which Paulson was chief executive officer and chairman from 1999 to 2006...
discussion:
Michael Shedlock / Mish's Global Economic …:   Treasury Secretary Henry Paulson Tipped Off Prominent Hedge Funds Regarding Fannie Mae While Telling …
Lisa Du / Business Insider:   You Won't Believe What Hank Paulson Revealed To Hedge Funders Right Before The Height Of The Financial Crisis
AngryBear: Hank Paulson and Some Animals Are More Equal than Others
ZeroHedge.com:
Hank Paulson Tipped Off The Goldman-Led "Plunge Protection Team" About Fannie Bankruptcy 7 Weeks In Advance --
Today, BusinessWeek's Michael Serrill and Jonathan Neumann have released a blockbuster report based on a FOIA response by the Treasury, which proves that in America rules are only for little people, that this country has been a banana republic for years, that Animal Farm was spot on, and gives excruciating detail of how Hank Paulson tipped off a select group of Goldman diaspora hedge fund managers about the eventual failure of Fannie and Freddie 7 weeks ahead of this information becoming public knowledge. The report basically is a summary of a meeting that took place at the offices of Eton Mindich's Eton Park headquarters on July 21, 2008, 7 days after his famous '“If you have a bazooka, and people know you have it, you're not likely to take it out," speech and 7 weeks before both GSEs effectively filed for bankruptcy and were put into conservatorship...
-----
Judge finally says enough and blocks crony deal between SEC and Citigroup.

Current TV:
Matt Taibbi on Judge Rakoff’s decision to reject the SEC’s latest settlement with Citigroup
Keith and “Countdown” contributor Matt Taibbi of Rolling Stone discuss the remarkable decision by U.S. District Judge Jed Rakoff to reject a $285 million settlement between Citigroup and the Securities and Exchange Commission for misleading investors. Taibbi points out that banks take punitive settlements in stride, saying, “They recognize that every now and then they’re going to get dragged into court, they’re going to have to give a little bit of money to somebody, and then they get to walk away and keep doing it.”


discussion:
John Cassidy / NewYorker.com:
Why Judge Rakoff Was Right to Block the Citigroup Settlement
-----
The current system has incentives to create corrupt Greedy Bastard$.


Amazon.com:
Greedy Bastards: How We Can Stop Corporate Communists, Banksters, and Other Vampires from Sucking America Dry by Dylan Ratigan

William K. Black / New Economic Perspectives:
"Greedy Bastards": A Review of Dylan Ratigan's Views on the Financial Crisis --
As Ratigan demonstrates, our most elite financial CEOs typically created and maintained grotesquely perverse incentive structures that encouraged their officers and employees as well as “independent” professionals to act criminally in a manner that harmed customers, the public, and shareholders – but made the controlling officers wealthy...

Second, cheating is dominant because finance CEOs create such intensely perverse incentives that fraud becomes endemic...

-----
Rep. Alan Grayson (former Democrat/Florida) asks in a Congressional hearing if anyone is minding the store at the Federal Reserve? The answer is no. The Federal Reserve and their crony banker pals have an open license to create and distribute money for their own enrichment.

Thursday, November 17, 2011

Monetary Mamma Jamma

Here is one very interesting take on the economy that actually incorporates a few concepts from Modern Monetary Theory (MMT). When rappers start rapping about bailouts, IOU's, credit, and debt it's because we are in one big monetary mamma jamma.

The economy explained by Tay Zonday: Mama Economy



Lyrics:
Are you confused about the Economy?
Well have no fear!
I'm going to explain the American Economy right now!
The dollar? Just think of it like a promise from the government,
but the value of the dollar has to be there to be relevant...
The value of the dollar comes from China and Iran,
When they put their cash reserves in a U.S. dollar plan,
They buy treasury bonds from the Federal Reserve,
We say "we owe you extra money cause you gave us some of yours,
That's a big part of the national debt,
All the interest that we haven't paid to China quite yet,
And a hundred other countries cause we're such a good investment,
The whole world gives us money we say "hey we'll pay you interest!"
This is how money is created from air...
Bank Bailouts? Federal Budgets? Money isn't really there,
It's an I.O.U. -- Remember, dollars are a promise?
When you borrow from a bank it's not from other depositors,
The money for your loan gets created on-the-spot,
Then they put it in your name, gamble on your life and body,
But if you lose your job then you were a bad bet,
If a million lose their jobs then we have a recession,
Here's the dirty secret: your labor's too expensive,
Wall Street wants you spending money but the never want to pay you,
In your life cash and credit -- they are very different things,
But your credit's someone else's cash once it leaves your name,
This is why money is debt and your debt is good for Wall Street prosperity,
And economic growth since the 1970's,
Is consumers gettin' credit without wages increasing,
So when they talk about the housing crisis,
They never say "we need to lower housing prices,"
"We need better devices to afford high prices,"
Meaning higher debt / lower interest,
Cause you're underpaid to begin with,
That's the cycle we're in,
We don't understand so all we can do is question,

Chorus:
Mama economy make me understand,
All the numbers,
Why daddy's on a welfare plan,
Turnin' thirty forty fifty,
Gotta move in with my parents,
And the stocks go up,
But the jobs disappear,

Yeah,
Mama economy make me understand,
All the numbers,
Why daddy's on a welfare plan,
Turnin' thirty forty fifty,
Gotta move in with my parents,
And the stocks go up,
But the jobs disappear,

Because wages barely grew for ... forty years,
When you buy stuff they delay the cost of ownership,
You can't afford it so they make it to depend on,
Endless small transactions which is like renting,
You pay more for printer ink than you do for gold,
And more for bottled water than you do for oil,
Razor blades are made to oxidate,
So you're forever in debt to them -- just to shave,
It's a type of socialism called "market socialism."
The best-designed product meets a need and doesn't last,
We subsidize waste with landfills and holidays like earth day,
Teachin' kids -- "Recycle Please!"
But kids don't learn in school we live one worldview --
Neoliberal economics in all their politics,
They don't ask why corporations are human citizens,
Or why grandma pays more taxes cause she lacks stock dividends,
Or why private bankers print the public money,
Or why democracy is broken cause their leaders won't be cutting,
Loopholes or subsidies for constituent industries,
Putting legislative bodies in a deep freeze,
So the Ph.D.'s and the G.E.D.'s cry with Ayn Rand down at the temp agency,
Sayin' "We believed in meritocracy..."
"But there's more to the story -- Answer me!"

Chorus:
Mama economy make me understand,
All the numbers,
Why daddy's on a welfare plan,
Turnin' thirty forty fifty,
Gotta move in with my parents,
And the stocks go up,
But the jobs disappear,

Yeah,
Mama economy make me understand,
All the numbers,
Why daddy's on a welfare plan,
Turnin' thirty forty fifty,
Gotta move in with my parents,
And the stocks go up,
But the jobs disappear,

Mama economy make me understand,
All the numbers,
Why daddy's on a welfare plan,
Turnin' thirty forty fifty,
Gotta move in with my parents,
And the stocks go up,
But the jobs disappear.
----
Violin: Lindsey 'Stomp' Stirling
Other stuff: Tay Zonday

Wednesday, November 16, 2011

The Assassins of European Democracy

Once again Nigel Farage of the United Kingdom's Independent Party (UKIP) calls out the faceless bureaucrats of the European Union who want to subvert democracy and who have installed their own puppet governments in Greece and Italy.

Farage:

Van Rompuy is no longer the quiet assassin of European democracy

What gives you the right to dictate to the Italian people? ...


related:
TJN: Euro Cabal Works to Crush Democracy

Monday, November 14, 2011

Euro Cabal Works to Crush Democracy

The developments coming out of Europe show that democracy is systematically being destroyed by a cabal of mostly unelected European bureaucrats. This cabal is working to preserve the cozy banking relationships and status quo that are the foundation of a Europe that is dominated by a rotting system of crony capitalism.

Two democratically elected governments have been toppled by this Euro cabal in the last week.

The Greek government headed by former Prime Minister George Papandreou was terminated when Papandreou stepped down on November 10th under pressure from cabal enablers. A provisional coalition government was formed with the task of taking Greece out of the major political crisis caused by the country's debt crisis. The real purpose of this new government is to protect the euro banking interests. In fact, the new government of national unity is headed by former European Central Bank vice-president Lucas Papademos. So the bankers now have their own man at the helm of the Greek government. It was in effect a bloodless coup d'état.

In Italy, Silvio Berlusconi was pressured to resign as Prime Minister on November 8th after the bond markets started dumping Italian sovereign bonds and driving up Italy's cost of borrowing money. The banker owned cabal acted quickly and paved the way for former European Commission insider and Goldman Sachs advisor Mario Monti to be named as the new Italian Prime Minister on Sunday, November 13th.

Mild mannered economist and banker pawn Mario Monti, the new leader of Italy, is a free market assassin. When he was head of the European Commission for Competition back in 2001 he blocked an attempt by two U.S. companies, GE and Honeywell, to merge. Their combination would have formed a more formidable U.S. competitor to the European manufacturers of aircraft systems. This crony capitalist bureaucrat humbled GE's CEO Jack Welch and sent him off into retirement as a loser under the new rules of a Europe run for the benefit of the power elite. He also took anti-trust legal action against Microsoft and shook them down for a $613 million fine. After leaving his EU post he became an international adviser to Goldman Sachs. No one is Europe has ever voted for Monti. Monti's career is an example of how Europe is now run by faceless bureaucrats, who are enablers of crony capitalism and pawns of the bankers.

Here is a round-up of some various voices discussing the power of this sinister Euro cabal.

Australian economist Bill Michell:
Europe – the fierce urgency of tomorrow --

[On Thursday] the European Union put out its – European Economic Forecast – Autumn 2011 – which categorically demonstrates that after 3 years of crisis and one grand plan after another the leadership is failing. Some of the leadership tokens – the Greek and Italian prime ministers have been pushed aside – but not by the people – rather by the cabal that rules Europe. The situation will worsen while this lot hold the power...

The triumph was that the cabal captured governments completely and so now our so-called elected officials do the bidding for small elites and use public funds to lie to us about there being no alternative.

So who is in the cabal in Europe? ...

The cabal is a tight ideological unit that has shown a total disregard for the damage its policy positions are causing.
The UK Guardian’s Larry Elliot summarized it nicely:
The emergence of the Frankfurt Group has turned back the democratic clock --
Electorates are being bypassed as increasing austerity pushes Europe's weaker countries into an economic death spiral

The real decisions in Europe are now taken by the Frankfurt Group, an unelected cabal made of up eight people: Lagarde; Merkel; Sarkozy; Mario Draghi, the new president of the ECB; José Manuel Barroso, the president of the European Commission; Jean-Claude Juncker, chairman of the Eurogroup; Herman van Rompuy, the president of the European Council; and Olli Rehn, Europe’s economic and monetary affairs commissioner.

This group, which is accountable to no one, calls the shots in Europe. The cabal decides whether Greece should be allowed to hold a referendum and if and when Athens should get the next tranche of its bailout cash. What matters to this group is what the financial markets think not what voters might want. To the extent that governments had any power, it has been removed and placed in the hands of the European Commission, the European Central Bank and the IMF. It is as if the democratic clock has been turned back to the days when France was ruled by the Bourbons.
----
Marshall Auerback / New Economic Perspectives:
A Financial Coup d'etat in the Making? --
It is said that the European Union is a remarkably inefficient organization in terms of organizing economic rescue packages, but when it comes to subverting democracy, they are as ruthless and efficient as a well-oiled crime syndicate.

Consider the following: in the space of less than 2 weeks, the eurocrats have managed to eliminate two troublesome elected leaders, whose actions dared to interfere with their broader objectives of finalizing the “European Project” – a project which, to put it bluntly, is looking more and more like a financial coup d’etat...

How have we come to this pass within the EU? It is hard to point to one person. We have seen this vast project moved along by a handful of unelected bureaucrats for several decades or more. Jacques Delors was a truly seminal figure, but he did not act alone. The whole of the European project has been increasingly driven by these unelected tenured eurocrats, who have rotated in and out of various positions within the EU's governing structures and spent a few years' getting the requisite private sector training at a place like Goldman Sachs or JP Morgan...
----
UK Independent Party Leader Nigel Farage at 2011 Germany anti-EU - pro Democracy Rally

Wednesday, November 9, 2011

Democracy Means You Must Fight the Police State

The brutality and intimidation that has been directed against the #OccupyWallStreet movement demonstrates that democracy and personal freedom are once again on a slippery slope in this country. The police state must be fought every day if you want to preserve democracy.

If you don't keep up the pressure for democratic control, you lose it. It's use it or lose it. And that is something people find hard to understand. There is never a final victory for democracy. It's always a struggle, in every generation. And you have to take up the cause time, and time, and time again. — Tony Benn
Jeff Berwick / SafeHaven.com:
The US Is Fast Becoming a Third World Police State --

----
Big ideas that changed the world: Democracy

Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia