Friday, April 30, 2010

Predator Nation "Shut the F Up US" - Goldman Sachs & Monster's Ball: Drawing Back the Veil on the 'Death State' - The Players Revealed In Their Glory

(EXTRA: If anyone could make a contribution to my PayPal account (or otherwise - contact me for further info), it would be sincerely appreciated as I've just gone off the cliff financially. I really appreciate everything that my kind readers have done for me in the past financially and otherwise. Now . . . back to your regular viewing.) Okay, first off (and I did not mean to talk about this again today, but I have no choice - and remember I said long ago that this could not go on forever - and I apologize that this essay is soooooo long - not my fault - everything's happening today!) Simon Johnson (author of 13 Bankers) says to please "Wake Up" Obama and this administration NOW (just skip this one if you're not worried about your money). I'm wondering if we can use our much-feared "nuclear terrorism" illuminated in the next article so well as a weapon against this Eurozone fever (emphasis marks added - Ed.).

Baseline Scenario - Most days we can coast along, confident that tomorrow will be much like yesterday. On a very few days we need to look hard at the news headlines, click through to read the whole story, and then completely change a large chunk of how we thought the world worked. Today is such a day.

Everything you knew or thought you believed about the European economy – and the Eurozone, which lies at its heart – was just ripped up by financial markets and thrown out of the proverbial window.

While you slept, there was a fundamental repricing of risk in financial markets around Europe – we’ll see shortly about the rest of the world. You may see this called a “panic” and the term conveys the emotions involved, but do not be misled – this is not a flash in a pan; financial markets have taken a long hard view at the fiscal and banking realities in Europe. They have also looked long and hard into the eyes - and, they think, the souls – of politicians and policymakers, including in Washington this weekend.

The conclusion: large parts of Europe are no longer “investment grade” – they are more like “emerging markets”, meaning higher yield, more risky, and in the descriptive if overly evocative term: “junk”.

This is not now about Greece (with 2 year yields reported around 20 percent today) or Portugal (up 7 basis points) or even Spain (2 year yields up 27 basis points; wake up please) or even Italy (up 6 basis points). This is no longer about an IMF package for Greece or even ring fencing other weaker eurozone economies.

This is about the fundamental structure of the eurozone, about the ability and willingness of the international community to restructure government debt in an orderly manner, about the need for currency depreciation within (or across) the eurozone. It is presumably also about shared fiscal authority within the Eurozone – i.e., who will support whom and on what basis?

It is also, crucially, about stabilizing the macroeconomic situation without resorting to more unconditional bailouts. Bankers are pounding tables all across Europe, demanding that governments buy out their position – or bring in the IMF to do the same. We again find ourselves approaching the point when the financial sector will scream: rescue us all or face global economic collapse.The White House did not see this coming – and the Treasury’s attention was elsewhere. The idea that we can leave this to the Europeans to sort out is an idea of yesterday. Today is very different and much more scary.

_ _ _ _ _ _ _ If you've been confused about how our "socialist" champion has been allowing Hillary to shake the death rattle hard about nonexistent Iranian threats of world domination (another reason for the early awarding of the Nobel Peace Prize?), this essay may be the best thing you've ever read about USA political corruption and many of its correlative ventures, leading me to ask: Why is the CIA (run by GHW Bush in the 60's, who had been recruited out of Yale in the 50's) always wrong or misled by bad intelligence or bad people or acting in criminally culpable ways under international law which made Cheney/Bush decide that the USA now must operate outside of all international agreements where it would be liable to the World Court? The answers are not difficult to grasp. I have several thoughts to share with you today on where we are financially as well as politically. I think you will be stimulated by the discussion. Please click on the links and go to the original sources for more information. I've also seen Jenna Bush's stating on The Today Show in adoring tones that Bill Clinton was her grandfather's favorite stepson. Now that'll stop you in your tracks if you haven't been keeping up since the 90's, but our wise group of readers knows that all the major players have been in the game together for a very long time (unbeknownst to us until the recent crash which gave away the secrets - not that it matters though as they've already spent all our money). And if you wondered why all those people blanched in dismay and resigned in droves before the Cheney/Bush tornado (giving a bad name to tornadoes):
And thus the Nobel Peace Laureate who is temporarily managing the Death State is now pushing hard for even more sanctions on the Iranians for the crime of . . . developing a nuclear energy program as allowed by international treaty and inspected to a fare-thee-well by international observers. The defenders of the Nobelist - I suppose we must call him the Death Laureate - point to his push for sanctions as proof of his "different" approach to the "threat" of Iran.

But what is the reality of such sanctions? Again, Arthur Silber nailed it well, in a piece from 2009: A sanctions regime is not an alternative to war: it is the prelude to attack or invasion. Moreover, sanctions murder a hideous number of innocent people as surely as more overt acts of war.

Silber then pointed to an excellent article by Stanley Kutler, detailing the last sanctions regime enforced in the Middle East by a hip, progressive president, a topic we touched upon here the other day. From Kutler:

We estimate between 500,000 to 1 million Iraqis died in the 1990s, a very large proportion being children. To what end? Not, Lando maintains, to destroy Saddam Hussein's WMDs but to force him out. . . . The CIA badly miscalculated that sanctions, coupled with Iraq's devastating defeat, would result in a military coup, toppling Saddam. Anything but. The sanctions and Saddam's heightened repression insured his survival - much to the frustration of Western leaders. . . . The sanctions worked only as partly intended: They imposed untold suffering on the population. Americans at the UN blocked a request to ship baby food because adults might use it. They vetoed sending a heart pill that contained a milligram of cyanide because tens of thousands of such pills could become a lethal weapon.

The banned list included filters for water treatment plants, vaccines, cotton swabs and gauze, children's clothes, funeral shrouds. Somehow, even Vietnamese pingpong balls found their way to the proscribed list. Sanctions devastated the country's medical system, once one of the best in the region. Sanctions insured that malnutrition would morph into virtual death sentences, as Lando notes. Babies died in incubators because of power failures; others were crippled with cerebral palsy because of insufficient oxygen supplies. . . . In late 1994 the New York Times reported on children in filthy hospitals, dying with diarrhea and pneumonia, people desperately seeking food, and Iraq's inability to sell its oil - the country faced "famine and economic collapse." Without doubt, the sanctions consolidated Saddam's power. UN Administrator Denis Halliday wrote that the people blamed the United States and the UN for their travails, not Saddam Hussein. Halliday resigned, refusing to administer a program that he called "genocide."

This is what "tough" sanctions by a progressive, humanitarian interventionist can do.

Colonel, U.S. Army (Retired) Lawrence Wilkerson, who was Chief of Staff at the Department of State from August 2002 to January 2005 (working for Colin Powell), thinks we shouldn't "forfeit our democracy" out of fear, and is not afraid (let's go viral with this one) to tell us the truth about what has happened within the government (and I don't want to get into an anti-Zionist rant today but it occurs to me that the government is top-heavy with people having dual citizenship and/or are outright members of the Likud party (like NeoCon war fixers Elliot Abrams (who is making speeches now saying the US should go to war against Iran before Israel does (and, of course, Israel (with its estimated 250 warheads) hasn't signed the NPT - but whatever)), Douglas Feith, Richard Perle and Rahm Emanuel who served in the Israeli army), who just may - may - have an agenda of their own - not to mention the financial institutions who have received all the "extra" taxpayer largesse for their various causes and will receive much more very soon):
Arthur Silber is back, with piercing insights that rip the veil which even self-proclaimed dissenters still draw across the blood-soaked reality of what Silber aptly calls the "Death State" that has long "wrapped the world in flames" (to quote the preferred method of resolving diplomatic conflicts famously voiced by Abe Lincoln's secretary of state) from its mephitic base on the Potomac. As always with Silber, you must read the whole piece (and follow the links) to get the full force of the argument, which is nuanced, multifarious and deeply considered, but here is just the briefest excerpt to send you on your way:
I repeat a few words I first wrote at the beginning of 2009. . .
For more than a hundred years, the foreign policy of the United States government has been directed to the establishment and maintenance of global dominance. To this end, violence, overthrow, conquest and murder have been utilized as required. . . . More and more, oppression and brutalization have become the bywords of domestic policy as well. Today, the United States as a political entity is a corporatist-authoritarian-militarist monstrosity: its major products are suffering, torture, barbarism and death on a huge scale.
I repeat the fundamental point to make certain there is no misunderstanding as to where I stand on this question: as a political entity, the United States is an endlessly destructive monstrosity. The overwhelming majority of people - including, I regret to say, even many of those who are severely critical of the United States government - fail to understand this point in anything close to the thorough and consistent manner required. This failure is the result of an earlier one: an inability to grasp fully what it means to revere the sacred value of a single human life.

There is more, much more in the original post -- "An Evil Monstrosity: Thoughts on the Death State," excerpting it actually does it an injustice. So go there, please, and read it. When you've done that, scoot on over to Truthdig, where you will find William Pfaff writing in a similar vein about the bloody deceptions of the Death State: past, present - and future. Some excerpts:

It is a dismaying reflection that the facilitators of major violence thus far in the 21st century have been lies told by democratic governments. The lies are continuing to be told, about the supposed “existential” menace posed by Iran to Israel, America and (if you believe some European leaders) Western Europe . . . Injustice and lies in the Middle East were responsible for unnecessary new wars in the new century, in which the United States took the lead. This time the lies were ideologically motivated and expedient lies — first, that Saddam Hussein bore responsibility for the September 2001 attacks on United States. He did not. Next was the fiction that Hussein’s government, during the period of U.N. sanctions before 2003, was able to secretly construct nuclear weapons, despite the efforts of Western intelligence to detect them or deter him, and the presence of U.N. inspectors. There were no such weapons. . . . U.S. Secretary of Defense Robert Gates reportedly sent a secret letter to President Barack Obama in January reviewing the military options available if diplomacy and the new American attempt to intensify international sanctions on Iran fail to produce the desired halt in Iran’s effort, if that is what it is, to build a nuclear deterrent. If Iran does pursue a nuclear capability, once again it is to deter attack. Precisely the same objection exists to theories of Iranian aggression as to those lies put forward in 2002-03 about Iraq posing a nuclear menace to the world. Once more, the threat is a polemical invention, intended to frighten American and Israeli (and European) voters and to prompt a preemptive attack on Iran

The release of Gates' memo was part of the usual factional cat-fighting among the militarist courtiers: some want to attack Iran now, some want to wait until later - or as that great liberal-progressive hero Admiral Fallon once said of the human beings in Iran: "These guys are ants. When the time comes, you crush them." For now, most of the factionalists lean toward the Fallon scenario: crush the insects later, when we don't have so much on our plate, and it will be more profitable.

And thus the Nobel Peace Laureate who is temporarily managing the Death State is now pushing hard for even more sanctions on the Iranians for the crime of . . . developing a nuclear energy program as allowed by international treaty and inspected to a fare-thee-well by international observers. The defenders of the Nobelist - I suppose we must call him the Death Laureate - point to his push for sanctions as proof of his "different" approach to the "threat" of Iran.

But what is the reality of such sanctions?

. . . For as we all know, Laureate Obama and his Pentagon warlord recently made the threatened nuclear destruction of the millions of human beings in Iran a centerpiece of their new, "more restrained" nuclear weapons doctrine. As John Caruso notes:

Obama is also on the record as stating that "I think we should keep all options on the table" with regard to Iran. That's the standard language in which US nuclear threats are couched, of course, and US politicians are careful to stick to that formulation in order to allow apologists to argue that they didn't mean what they clearly meant. But Obama's Secretary of Defense gave the game away in his remarks about the Nuclear Policy Review:
SEC. GATES: Well, I think that the - I actually think that the NPR has a very strong message for both Iran and North Korea, because whether it's in declaratory policy or in other elements of the NPR, we essentially carve out states like Iran and North Korea that are not in compliance with NPT. And basically, all options are on the table when it comes to countries in that category, along with non-state actors who might acquire nuclear weapons. So if there is a message for Iran and North Korea here, it is that if you're going to play by the rules, if you're going to join the international community, then we will undertake certain obligations to you, and that's covered in the NPR. But if you're not going to play by the rules, if you're going to be a proliferator, then all options are on the table in terms of how we deal with you.
To summarize: the Obama administration has just made an explicit nuclear threat against Iran and North Korea, for the political goal of coercing them into complying with the US interpretation of their NPT obligations. This is the Department of Defense's official definition of terrorism:
terrorism (DOD) The calculated use of unlawful violence or threat of unlawful violence to inculcate fear; intended to coerce or to intimidate governments or societies in the pursuit of goals that are generally political, religious, or ideological.

So the "threat of unlawful violence . . . intended to coerce or to intimidate governments or societies in the pursuit of goals that are generally political" is terrorism.

Or in other words, by the DoD's own definition, Barack Obama is a terrorist — and given that his threats involve the use of nuclear weapons, it follows straightforwardly that Obama is more specifically a nuclear terrorist. And not only is he a nuclear terrorist; as the one person who has access to a massive nuclear arsenal, the stated willingness to use it outside of the realm of direct self-defense, and the power to follow through on that threat, Barack Obama is currently the only nuclear terrorist on the entire planet.

_ _ _ _ _ _ _ Nuclear terrorism is of course the logical endpoint of a Death State. And as Caruso rightly notes, Barack Obama constantly, ceaselessly threatens Iran with nuclear destruction - and has done so from the very start of his campaign for the presidency. The continual, open threat to murder millions of innocent, defenseless human beings is indeed "an evil monstrosity" - one so gargantuan that very few people seem able to grasp its reality. But Silber sees through, and sees true. We are once more in his debt for fixing our eyes on the sulfurous essence of Death State, behind all the sound and fury of the factional squabbles of our most monstrous elites.

And the Goldman execs (compliments of Lloyd Blankfein, the man who believes he has done "God's Work") say they have "No regrets" for deals that accelerated the financial crisis. Hey, they made big money. It's all good! Also, we've now learned how those "young, smart boys made all that money." They stole it! Funny how civilization used to mean that young people went out into the world to help others and increase the prosperity of all instead of just figuring out how to rip the world off as quickly as possible and claim no responsibility for the devastation that lay in their wake.

WASHINGTON — Goldman Sachs traders who helped the firm rack up billions of dollars in profits from secret bets against the housing market told a Senate investigating panel Tuesday that they'd done nothing wrong.

Among the four present and former traders was Fabrice Tourre, the 31-year-old Goldman vice president accused by the Securities and Exchange Commission on April 16 of fraudulently helping a Goldman client rig an offshore deal that cost two European banks $1 billion. "I am saddened and humbled by what happened in the market," said Tourre, a Frenchman who took time off last week from his London-based job. "But I believe my actions were proper."

Dan Sparks, the former head of Goldman's mortgage department, told the panel that his team had no legal duty to tell investors that it was betting against its own products.

"Regret to me is something that you did wrong, and I don't have that," Sparks said. "That doesn't mean we didn't make mistakes . . . That doesn't mean we didn't do deals that didn't turn out the way we hoped they would . . . These deals performed horribly."

"You've got no regrets? You ought to have plenty of regrets," Michigan Democratic Sen. Carl Levin, the chairman of the Permanent Subcommittee on Investigations, told the four witnesses. During what was shaping up to be a day-long hearing, Levin and other panel members confronted the witnesses with more than 170 subpoenaed e-mails and documents selected to show that the firm safely exited the subprime mortgage market before the housing crash and simultaneously made billions of dollars from negative or "short" bets.

The bets Goldman took out involved purchasing exotic instruments called credit-default swaps. They work like an insurance policy, with a buyer being compensated if the underlying deal goes sour.

Beginning in December 2006, Goldman began a strategy to reduce its subprime risks by selling off its dicey securities and secretly making exotic bets against the market and the products it was selling to its clients.

Levin, who cited the witnesses' recalcitrance in sworn testimony as another reason for regulatory reform, pointed to an Oct. 4, 2007, Goldman response to an SEC inquiry as evidence debunking the company's proclamations that it made major bets against the housing market. In it, Goldman's chief financial officer, David Viniar, said that through most of 2007 the firm "maintained a net short subprime position and therefore stood to benefit from declining prices in the mortgage market."

Former Goldman trader Joshua Birnbaum indicated in his 2007 personnel performance review that he could capitalize on the "fear" in the market of a coming mortgage market collapse to reap profits for the firm. Because "the world would think" Goldman would continue to invest in the mortgage market for the long term, he wrote, the firm should "flip our risk" and bet on an impending crisis.

"We could use that fear to our advantage if we could flip our risk," wrote Birnbaum, who left Goldman in 2008.

Held before a packed, standing-room only Senate room, the hearing met was classic Washington theater, complete with protesters in prison uniforms demanding that Goldman executives do jail time and dozens of cameras trailing witnesses as they walked into the room.

When the four men took seats at the witness table — the first of seven current and former Goldman execs to testify, they quickly learned what it means to be in the middle of a full-blown tempest in the nation's capital. A crush of photographers encircled them, setting off a rat-a-tat of clicking cameras.

Missouri Democratic Sen. Claire McCaskill told them: "We're trying to home in on why so many people are unemployed in my state and why so many people lost money in their pension funds."

. . . Much of the questioning echoed reports by McClatchy last November and December that Goldman had marketed $57 billion in risky mortgage securities in a series of deals in 2006 and 2007, including $39 billion backed by mortgages that it bought from lenders without telling investors that it was secretly making bets on a housing downturn.

Goldman also sold billions of dollars in offshore securities that included subprime mortgages. Securities experts told McClatchy at the time that the practice might have constituted fraud because investors might have opted not to buy the securities if they knew that Goldman was betting on their collapse.

. . . One of the testier exchanges thus far was between Sparks of Goldman and Levin. It surrounded one of the offshore deals Goldman peddled called "Timberwolf," which included securities backed by subprime mortgages that were most at risk if the housing market dropped.

Goldman documents show that the firm's sales force was told to make selling Timberwolf a priority. In 2007, Goldman sold about $300 million of Timberwolf securities to a hedge fund that collapsed later that year.

A senior Goldman executive later described the deal as follows: "boy that timeberwof (sic) deal was one shitty deal." According to the subcommittee, 94 percent of the securities in the deal were from other offshore deals.

The hearing room then erupted in laughter — low titters at first, and then bigger laughs — as Levin repeatedly asked Sparks about the "shitty" deal and the e-mail.

Levin asked: Did you tell your clients that "this was a shitty deal?" "Your top priority was to sell that shitty deal." "Should Goldman be trying to sell a shitty deal?"

Levin later grilled Viniar about the e-mails or comments in which Goldman employees referred to specific deals as "crap" or "shitty" or "junk." What did he think about such disparaging comments — and how would clients feel about them? Levin asked.

"I think that's very unfortunate to have on an e-mail," he said. The hearing room erupted in laughter. Viniar realized his mistake and clarified that he meant it was unfortunate to have said in any format. In his testimony, Birnbaum said there was a vigorous debate within Goldman about which way the housing market was headed. He said that nobody from senior management told him to make an overall "directional bet" against the subprime market, but simply to reduce risk overall.

He said he is "very proud" of his tenure at Goldman. "We provided significant liquidity to our customers in a difficult and challenging market while also managing to post a profit during this period," he said.

Comparing his panel's investigation to inquiries into the causes of the Great Depression, Levin said that what investigators see now is similar to what they saw in the 1930s. "The parallels are unmistakable to today's events," Levin said. In his opening statement, Levin directly took on Goldman's contention — made repeatedly in recent weeks — that it did not profit at its clients', or the nation's, expense.

"The evidence also shows that repeated public statements by the firm and its executives provide an inaccurate portrayal of Goldman's actions during 2007, the critical year when the housing bubble burst and the financial crisis took hold," Levin said. "The firm's own documents show that while it was marketing risky mortgage-related securities, it was placing large bets against the U.S. mortgage market."

He later added that the actions Goldman took undermine the pretense that it was acting as a mere "market-maker" on Wall Street — or simply working to match buyers and sellers. "They represented major bets that the mortgage securities market — a market Goldman helped create — was in for a major decline," Levin said.

Read more here. And, wouldn't you know it?

Daniel Sparks lied and:

As U.S. cities and towns wrestle with financial problems, investors are finding a new way to profit on their misery: by buying derivatives that essentially bet municipalities will default.

Hey, it's a CASINO guys! What else do they do in casinos? Not build countries surely.

Alas, then there's this detail - The Big Six Banks are Shorting the American Dream.

April 28, 2010 -- The Big Six investment banks, Goldman Sachs, Morgan Stanley, JP Morgan Chase, Citigroup, Bank of America and Wells Fargo, are “shorting the American Dream,” according to economist Simon Johnson and entrepreneur James Kwak in an interview on April 16, “Financial Regulation and Regulatory Capture” on Bill Moyers Journal.

. . . The big ideas that emerge from the title of their interview are that financial regulators are not enough to deal with the Big Six banks, whose employees are very smart people, very hungry for financial opportunity, legit or not legit. Thus, very often regulators are sucked into large investment banks or affiliated financial institutions like the distinguished Michael Oxley, co-author of the Sarbanes Oxley Act. Oxley has joined the financial industry, along with some 124 former other members of Congress and their aides.

To Oxley’s undying credit, the Sarbanes-Oxley Act grew out of the debacle of Enron and made it a law that CEOs and other top managers were and are responsible for the policies and actions of their companies on their watch and can’t just shrug their shoulders, saying they didn’t know what was happening. What Johnson and Kwak are really calling for are more laws on the books that can safeguard against financial abuse.

Unfortunately, we have, as they point out, former Clinton Treasury Chief Robert Rubin now getting $100 million a year to consult for Citibank and he can’t explain how the company came so incredibly close to financial collapse. Yet, when Newsweek wanted someone of note to explain all this, the job was given to, guess who, Robert Rubin. Suddenly, he found religion?

Charles Prince, another former Citi CEO said: “Let me start by saying I’m sorry. I’m sorry that our management team, starting with me, like so many others, could not see the unprecedented market collapse that lay before me.” He must have seen it for years before that if he wasn’t blind or deaf, because it was reported on Internet news services at the very least, particularly Citi’s huge derivatives debt.

Both Rubin and Prince were accused by Democratic Chairman of the Bipartisan Financial Enquiry Committee Phil Angelides, “of either pulling the levers or being asleep at the switch.” This writer’s money is on pulling the levers.

Also, there is Washington Mutual’s CEO Dave Beck appearing before Senator Carl Levin, investigating how so many bad loans were made at WaMu. After all, this was the biggest “meltdown belly-up of a major investment bank in US history.Yet a blasé Beck said when asked what happened, “It’s a very real possibility that the loans that went out were better quality than Mr. Shaw laid out.” Levin rebutted, “And there’s a very real good possibility that they were exactly the quality that he laid out, right? Is that right?” Beck wavered, “That’s right.” A frustrated Levin answered, “Okay. And you don’t know and apparently you don’t care. And the trouble is you should have cared.” So it goes.

In keeping with Beck’s feigned ignorance, it’s interesting that the Johnson-Kwak interview aired the day before the NY Times broke the story U.S. Accuses Goldman Sachs of Fraud. The short version of the article is that Goldman profited from the sale of collateralized debt obligations (CDOs) that were packaged with garbage loans and peddled to hedge funds and investors.

This plan was the brainchild of Fabrice Tourre, a vice president at Goldman in London. The plan, cited in the SEC case as Abacus 2007-ACi, proved successful in having Wall Street hedge fund investors make a mountain of money on negative bets or “shorting,” betting on the bad loans to fail, which they did, thereby adding more disaster to the subprime lending market and helping to “short the American Dream,” that is, the market is not a level playing field for investors.

The follow-up Times article, Top Goldman Leaders Said to Have Overseen Mortgage Unit, indicates that “Mr. Tourre was the only person named in the SEC. suit. But according to interviews with eight former Goldman employees, senior bank executives played a pivotal role in overseeing the mortgage unit just as the housing market began to go south. These people spoke on the condition that they not be named so as not to jeopardize business relationships or to anger executives at Goldman, viewed as the most powerful bank on Wall Street.

“According to these people, executives up to and including Lloyd C. Blankfein, the chairman and chief executive, took an active role in overseeing the mortgage unit as the tremors in the housing market began to reverberate through the nation’s economy. It was Goldman’s top leadership, these people say, that finally ended the dispute on the mortgage desk by siding with those who, like Mr. Tourre and Mr. Egol, believed home prices would decline . . . .”

The reason for extending the chain of responsibility up to the top is precisely to invoke a law like the Sarbanes Oxley Act, so that Abacus is not seen as the random action of a greedy profiteer, which also occurs, according to Johnson and Kwak. Now, it is verified that Abacus was a corporate plan that had the blessings of the CEO and top management. Let’s see what shakes out of this or what dodges are made.

Another major problem that Johnson and Kwak see is that the six megabanks have become a financial oligarchy. In fact, their aggregate assets equal some 63 percent of GDP. Back in the 1990s, adjusted for inflation, their assets equated to less than 20 percent of GDP. This rise in financial power gives them the notion that they can go out and take more and more risks. After all, the taxpayer and Uncle Sam will be willing to bail them out if they fail. The Fed lending window is wide open to them. It encourages them to “distort the system . . . change the rules of the game to favor themselves. To that end, they spend a million dollars a day lobbying against reforms to fix the financial system.”

As asset power increases, the oligarchy’s power to twist arms in Congress increases. In fact, Johnson claims “the big banks got stronger as a result of the bailout . . . They’re turning that increased economic clout into more political power. And they’re using the political power to go out and take the same sort of risks that got us into disaster in September 2008,” when Lehman Brothers was allowed to fail and shook the international banking system.

The truth is Citibank alone, according to Johnson and Kwak, controls some $12.5 trillion in assets, so it can’t be allowed to fail without causing another catastrophe à la Lehman Brothers. Johnson and Kwak’s idea is to have the banks break themselves down to into entities with no more than a $100 billion cap each. That makes them and the other mega-banks small enough to fail. This is really a key point. And one wonders why the Glass-Steagall Act hasn’t been reinstituted as promised to help facilitate this division for break-down purposes.

. . . Or to have a toothier Commodities Futures Modernization Act, which former Commodities Futures Trading Commission Chair Brooksley Born wanted to protect against derivatives. The act was gutted by Senator Phil Gramm with Clinton’s blessings in 1999. The link above is to an article I wrote about Born’s travails, the intimidations by Greenspan, Rubin, and particularly Larry Summers, who called her, saying he had 13 bankers in the room who all said that if she proceeded with her CFMA, the financial system would totally collapse. She subsequently resigned, having done all she could to protect her fellow citizens from these financial predators.

Johnson and Kwak remind us to remember that fighting this fight is a long-term job and not a quick fix. As Johnson points out, Teddy Roosevelt faced the bankers for a decade and brought Morgan in tow as FDR did his corps of bankers. Early on Andrew Jackson faced down the national bank. It will take a president with backbone and conviction to tell these guys what to do, rather than seeking “consensus” in lieu of courage. I also believe there are intelligent Republicans out there who see and know what’s going on and need to act in unison with their Democratic counterparts.

Like the Marines, we need a few good men, maybe more than a few, to stand up and fight the Blankfeins, the Rubins, the Princes, etc. Kwak suggested that some people should go to jail for fraud. I’m for that, the more the merrier to make an example and save the financial system. Both Johnson and Kwak are practicing financial professionals who believe in the system, which can’t be run with a totally unregulated free-market hand, but with laws that keep the playing field level.

As a closer, Moyers pointed to the Republican leader in Congress, Senator Mitch McConnell from Kentucky who was being taken to task by reporters recently for “attending a fundraiser with hedge funds and other Wall Street poobahs.”\

This came, as Johnson shredded a recent statement by McConnell: “He [McConnell] says let the biggest banks fail, go bankrupt, don’t do anything, leave the situation as it is now and when they get in trouble, let them fail. If you do that, you’ll have catastrophe. The bankruptcy system clearly and manifestly cannot deal with the failure of a complex, global, financial institution. And we have the evidence before us in what happened after Lehman Brothers failed. That was bankruptcy. It caused chaos around the world, Bill. That’s what the Republicans are advocating. If we just leave things as they are and next time we’ll take that chaos and we’ll get a second Great Depression. We’re arguing for reform. We’re arguing for change. We’re arguing for ways to make those biggest banks smaller and safer. If they were small enough to fail, that’s a very different story. And that’s a much safer place to be.

When Moyers asked, “What do these big six banks think about what Senator McConnell is saying?” Kwak nailed it: “Well, the big six banks don’t want any reform at all, essentially. So, I think . . . there’s some evidence that Senator McConnell has been talking to the big banks and to other people on Wall Street.” So let’s leave it at another regulatory capture.

Hopefully, you’ve gotten an idea of what a brilliant and important interview this was. See or read it for yourself, before your American Dream gets shorted again in a new financial collapse.

Jerry Mazza is a freelance writer and life-long resident of New York City. Reach him at gvmaz@verizon.net. His new book, “State Of Shock: Poems from 9/11 on” is available at http://www.jerrymazza.com/

Is this Kabuki Theater? Didn't these same hearings go on before looting the Treasury the first time? As you probably saw this before, here's the link and the video is below. These boys are great actors aren't they? In addition to all the dough, they all should get Academy Awards for Best Actor.

Carl Levin goes "Mano a Mano" with Lloyd Blankfein

Mike Whitney

Tuesday's hearings of the Permanent Subcommittee on Investigations laid the groundwork for future criminal prosecutions of Goldman Sachs Chief Executive Lloyd Blankfein and his chief lieutenants whose reckless and self-serving actions helped to precipitate the financial crisis. Committee chairman Senator Carl Levin adroitly managed the proceedings in a way that narrowed their scope and focused on four main areas of concern. Through persistent questioning, which bordered on hectoring, Levin was able to prove his central thesis:

1 - That Goldman puts its own interests before those of its clients.

2 - That Goldman knowingly misled it clients and sold them "crap" that it was betting against.

3 - That Goldman made billions trading securities that pumped up the housing bubble.

4 - That Goldman made money trading securities that triggered a market crash and led to the deepest recession in 80 years.

The hearings lasted for 8 hours and included interviews with 7 Goldman executives. Every senator had the opportunity to make a statement and question the Goldman employees. But the day belonged to Carl Levin. Levin was well-prepared, articulate and relentless. He had a game-plan and he stuck to it. He peppered Goldman's Blankfein with question after question like a prosecuting attorney cross-examining a witness. He never let up and never veered off topic. He knew what he wanted to achieve and he succeeded.

Here's a typical exchange between Levin and the former head of Goldman's mortgage department, Dan Sparks:

SEN. CARL LEVIN: June 22 is the date of this e-mail. "Boy, that Timberwolf was one shitty deal."How much of that "shitty deal" did you sell to your clients after June 22, 2007?

DAN SPARKS: Mr. Chairman, I don't know the answer to that. But the price would have reflected levels that they wanted to invest...

SEN. CARL LEVIN: Oh, of course.

DAN SPARKS: ... at that time.

SEN. CARL LEVIN: But you didn't tell them you thought it was a shitty deal.

DAN SPARKS: Well, I didn't say that.

SEN. CARL LEVIN: Who did? Your people, internally. You knew it was a shitty deal, and that's what your...

DAN SPARKS: I think the context, the message that I took from the e-mail from Mr. Montag, was that my performance on that deal wasn't good.

SEN. CARL LEVIN: How about the fact that you sold hundreds of millions of that deal after your people knew it was a shitty deal? Does that bother you at all; you sold the customers something?

DAN SPARKS: I don't recall selling hundreds of millions of that deal after that.

Levin was just as tough on Blankfein, reiterating the same question over and over again: "Is there not a conflict when you sell something to somebody, and then you bet against that same security, and you don't disclose that to the person you're selling it to? Do you see a problem?"

At first, Blankfein acted like he'd never considered the question before, as if "putting himself in his client's shoes" was something that never even entered his mind. His look of utter bewilderment was revealing. Then he launched into the excuses, the evasions, and the elaborate, long-winded ruminations that one expects from schoolboys and hucksters. But Levin never gave and inch. He kept pushing until Blankfein finally gave up and responded."No," he stammered, "In the context of market-making that's not a conflict." Blankfein's answer was a triumph for Levin, and he knew it. To the millions of people watching the sequence on TV, Blankfein's denial was as good as an admission of guilt. It showed that Wall Street kingpins don't share the same morals as everyone else.

In fact, Blankfein seemed genuinely confused that morality would even be an issue. After all, it wasn't for him. Levin covered some old ground, pointing to Goldman's dealings with Washington Mutual's Long Beach unit which was a "conveyor belt" for garbage subprimes which frequently blew up just months after they were issued. It's clear that Goldman knew the mortgages were junk that were “polluting the financial system”, but that made no difference.

Goldman feels that it's responsible to its shareholders alone, not the people who bailed it out.

All in all, it was a bad day for the holding company that's come to embody everything that's wrong with Wall Street. Goldman entered the hearings as the most successful financial institution in the country, and left with its reputation in tatters and its future uncertain. Its CEO came across as shifty and jesuitical while his executives seemed arrogant and uncooperative. At no point during the hearings did any of the Goldman throng look at ease with themselves or their answers. They remained rigid and sullen throughout. On top of that, they were unable to defend themselves against the main charge, that they don't mind sticking it to their clients if it means a bigger slice of the pie for themselves.

The truth is, the Golden boys were handled quite capably by an elderly statesman who took them to the woodshed and gave them a good hiding. Levin's stunning performance is likely to draw more attention to the upcoming SEC proceedings and, hopefully, build momentum for more subpoenas, indictments, arrests, and long prison sentences. Bob Chapman tells us that "Frauds And Scandals Follow The Collapse Of The Financial System" from "International Forecaster."

As the world faces an ongoing sovereign debt debacle we see an attempt to defuse an oncoming scandal involving Goldman Sachs, Paulson and perhaps others. The collapse of the fiat money system is underway and each day picks up momentum. The only question is how long it can survive? In the interim we are faced with inflation and perhaps hyperinflation as the privately owned Federal Reserve and other central banks add stimulus and money and credit into their financial systems.

Read on.

You don't have to read Bob and his brethren but you probably should just to protect yourself from the coming storm.

Suzan _____________

6 comments:

Greendayman said...

Geezus Flying Spag monst - I am so glad that I am unplugged from the financial matrix. Not having savings or investments or a credit rating above 300 is a real gift in these times.

Love you hun - keep up the good work. -g

RexTemples20144 said...

Well done!........................................

zeppo said...

It is my firm belief that the problems in this country are now too big to actually address. It's like the guy you see in some tabloid newspaper who weighs 650 pounds. O.K., realistically, there is no way in hell this person is every really going to be normal again. He's too far gone.

That's the way I feel about the United States right now. I think the flameout is going to be pretty damn spectacular. I just really hope I am not around to see it.

Suzan said...

You and me both, g. If only there were somewhere to go for safety.

I am so glad that I am unplugged from the financial matrix.

I fear those at the bottom are going to be reamed again as they have never experienced it before - whereas most of them think their own individual recovery is "just around the corner."

You are very welcome, Rex. And welcome aboard the good ship Pottersville2.

Zep, from your mouth to the true media's outlets - only then can we hope for any "real" change. And I truly fear the exact ending.

I think the flameout is going to be pretty damn spectacular. I just really hope I am not around to see it.
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Nance said...

You might have addressed this in a previous post and I missed it, so forgive me if I'm behind on this: I heard on NPR today that part of Greece's economic meltdown was due to short-selling of bonds within their financial markets and that American firms--such as Goldman Sachs--were part of that process. Don't know the facts, but if Spain and/or Italy joins Greece, then the EU is in serious trouble, which boomerangs right back on us. Oh, there are no woes like global woes and no villains like ours.

Suzan said...

Hi Nance,

Thanks for commenting. We've got to stay on top of this as it is prolly the most important thing going on right now internationally - ha - who would've guessed that anyone could have ever said that before?

And, yes, the very first mention I made of the Greek troubles was the Goldman Sach's connection where they hid the problems originally for them.

Gotta love those billionaires, don't we?

If only they had gotten any kind of comeuppance other than extremely large taxpayer-supported bonuses from our humble servants (Geithner/Summers/Obama).

Love ya,

S
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