Steven Gaal Posted March 22, 2013 Author Share Posted March 22, 2013 The Cyprus Bank Battle: The Long-planned Deposit Confiscation Scheme A Safe and a Shotgun or Public Sector Banks? By Ellen Brown Global Research, March 22, 2013 =================================================== “If these worries become really serious, . . . mall savers will take their money out of banks and resort to household safes and a shotgun.” — Martin Hutchinson on the attempted EU raid on private deposits in Cyprus banks The deposit confiscation scheme has long been in the making. US depositors could be next … On Tuesday, March 19, the national legislature of Cyprus overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout. Reuters called it “a stunning setback for the 17-nation currency bloc,” but it was a stunning victory for democracy. As Reuters quoted one 65-year-old pensioner, “The voice of the people was heard.” The EU had warned that it would withhold €10 billion in bailout loans, and the European Central Bank (ECB) had threatened to end emergency lending assistance for distressed Cypriot banks, unless depositors – including small savers – shared the cost of the rescue. In the deal rejected by the legislature, a one-time levy on depositors would be required in return for a bailout of the banking system. Deposits below €100,000 would be subject to a 6.75% levy or “haircut”, while those over €100,000 would have been subject to a 9.99% “fine.” The move was bold, but the battle isn’t over yet. The EU has now given Cyprus until Monday to raise the billions of euros it needs to clinch an international bailout or face the threatened collapse of its financial system and likely exit from the euro currency zone. The Long-planned Confiscation Scheme The deal pushed by the “troika” – the EU, ECB and IMF – has been characterized as a one-off event devised as an emergency measure in this one extreme case. But the confiscation plan has long been in the making, and it isn’t limited to Cyprus. In a September 2011 article in the Bulletin of the Reserve Bank of New Zealand titled “A Primer on Open Bank Resolution,” Kevin Hoskin and Ian Woolford discussed a very similar haircut plan that had been in the works, they said, since the 1997 Asian financial crisis. The article referenced recommendations made in 2010 and 2011 by the Basel Committee of the Bank for International Settlements, the “central bankers’ central bank” in Switzerland. The purpose of the plan, called the Open Bank Resolution (OBR) , is to deal with bank failures when they have become so expensive that governments are no longer willing to bail out the lenders. The authors wrote that the primary objectives of OBR are to: ensure that, as far as possible, any losses are ultimately borne by the bank’s shareholders and creditors . . . . The spectrum of “creditors” is defined to include depositors: At one end of the spectrum, there are large international financial institutions that invest in debt issued by the bank (commonly referred to as wholesale funding). At the other end of the spectrum, are customers with cheque and savings accounts and term deposits. Most people would be surprised to learn that they are legally considered “creditors” of their banks rather than customers who have trusted the bank with their money for safekeeping, but that seems to be the case. According to Wikipedia: In most legal systems, . . . the funds deposited are no longer the property of the customer. The funds become the property of the bank, and the customer in turn receives an asset called a deposit account (a checking or savings account). That deposit account is a liability of the bank on the bank’s books and on its balance sheet. Because the bank is authorized by law to make loans up to a multiple of its reserves, the bank’s reserves on hand to satisfy payment of deposit liabilities amounts to only a fraction of the total which the bank is obligated to pay in satisfaction of its demand deposits. The bank gets the money. The depositor becomes only a creditor with an IOU. The bank is not required to keep the deposits available for withdrawal but can lend them out, keeping only a “fraction” on reserve, following accepted fractional reserve banking principles. When too many creditors come for their money at once, the result can be a run on the banks and bank failure. The New Zealand OBR said the creditors had all enjoyed a return on their investments and had freely accepted the risk, but most people would be surprised to learn that too. What return do you get from a bank on a deposit account these days? And isn’t your deposit protected against risk by FDIC deposit insurance? Not anymore, apparently. As Martin Hutchinson observed in Money Morning, “if governments can just seize deposits by means of a ‘tax’ then deposit insurance is worth absolutely zippo.” The Real Profiteers Get Off Scot-Free Felix Salmon wrote in Reuters of the Cyprus confiscation: Meanwhile, people who deserve to lose money here, won’t. If you lent money to Cyprus’s banks by buying their debt rather than by depositing money, you will suffer no losses at all. And if you lent money to the insolvent Cypriot government, then you too will be paid off at 100 cents on the euro. . . . The big winner here is the ECB, which has extended a lot of credit to dubiously-solvent Cypriot banks and which is taking no losses at all. It is the ECB that can most afford to take the hit, because it has the power to print euros. It could simply create the money to bail out the Cyprus banks and take no loss at all. But imposing austerity on the people is apparently part of the plan. Salmon writes: From a drily technocratic perspective, this move can be seen as simply being part of a standard Euro-austerity program: the EU wants tax hikes and spending cuts, and this is a kind of tax . . . . The big losers are working-class Cypriots, whose elected government has proved powerless . . . . The Eurozone has always had a democratic deficit: monetary union was imposed by the elite on unthankful and unwilling citizens. Now the citizens are revolting: just look at Beppe Grillo. But that was before the Cyprus government stood up for the depositors and refused to go along with the plan, in what will be a stunning victory for democracy if they can hold their ground. It CAN Happen Here Cyprus is a small island, of little apparent significance. But one day, the bold move of its legislators may be compared to the Battle of Marathon, the pivotal moment in European history when their Greek forebears fended off the Persians, allowing classical Greek civilization to flourish. The current battle on this tiny island has taken on global significance. If the technocrat bankers can push through their confiscation scheme there, precedent will be established for doing it elsewhere when bank bailouts become prohibitive for governments. That situation could be looming even now in the United States. As Gretchen Morgenson warned in a recent article on the 307-page Senate report detailing last year’s $6.2 billion trading fiasco at JPMorganChase: “Be afraid.” The report resoundingly disproves the premise that the Dodd-Frank legislation has made our system safe from the reckless banking activities that brought the economy to its knees in 2008. Writes Morgenson: JPMorgan . . . Is the largest derivatives dealer in the world. Trillions of dollars in such instruments sit on its and other big banks’ balance sheets. The ease with which the bank hid losses and fiddled with valuations should be a major concern to investors. Pam Martens observed in a March 18th article that JPMorgan was gambling in the stock market with depositor funds. She writes, “trading stocks with customers’ savings deposits – that truly has the ring of the excesses of 1929 . . . .” The large institutional banks not only could fail; they are likely to fail. When the derivative scheme collapses and the US government refuses a bailout, JPMorgan could be giving its depositors’ accounts sizeable “haircuts” along guidelines established by the BIS and Reserve Bank of New Zealand. Time for Some Public Sector Banks? The bold moves of the Cypriots and such firebrand political activists as Italy’s Grillo are not the only bulwarks against bankster confiscation. While the credit crisis is strangling the Western banking system, the BRIC countries – Brazil, Russia, India and China – have sailed through largely unscathed. According to a May 2010 article in The Economist, what has allowed them to escape are their strong and stable publicly-owned banks. Professor Kurt von Mettenheim of the Sao Paulo Business School of Brazil writes, “The credit policies of BRIC government banks help explain why these countries experienced shorter and milder economic downturns during 2007-2008.” Government banks countered the effects of the financial crisis by providing counter-cyclical credit and greater client confidence. Russia is an Eastern European country that weathered the credit crisis although being very close to the Eurozone. According to a March 2010 article in Forbes: As in other countries, the [2008] crisis prompted the state to take on a greater role in the banking system. State-owned systemic banks . . . have been used to carry out anticrisis measures, such as driving growth in lending (however limited) and supporting private institutions. In the 1998 Asian crisis, many Russians who had put all their savings in private banks lost everything; and the credit crisis of 2008 has reinforced their distrust of private banks. Russian businesses as well as individuals have turned to their government-owned banks as the more trustworthy alternative. As a result, state-owned banks are expected to continue dominating the Russian banking industry for the foreseeable future. The entire Eurozone conundrum is unnecessary. It is the result of too little money in a system in which the money supply is fixed, and the Eurozone governments and their central banks cannot issue their own currencies. There are insufficient euros to pay principal plus interest in a pyramid scheme in which only the principal is injected by the banks that create money as “bank credit” on their books. A central bank with the power to issue money could remedy that systemic flaw, by injecting the liquidity needed to jumpstart the economy and turn back the tide of austerity choking the people. The push to confiscate the savings of hard-working Cypriot citizens is a shot across the bow for every working person in the world, a wake-up call to the perils of a system in which tiny cadres of elites call the shots and the rest of us pay the price. When we finally pull back the veils of power to expose the men pulling the levers in an age-old game they devised, we will see that prosperity is indeed possible for all. For more on the public bank solution and for details of the June 2013 Public Banking Institute conference in San Rafael, California, see here. Ellen Brown is an attorney, chairman of the Public Banking Institute, and the author of eleven books, includingWeb of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are webofdebt.com and ellenbrown.com. Link to comment Share on other sites More sharing options...
Steven Gaal Posted March 30, 2013 Author Share Posted March 30, 2013 (edited) LINK BELOW WORLD BANK AND WALL STREET SUPPORT LAND GRABBING IN DEVELOPING COUNTRIES GRAIN Media Advisory | 20 April 2012 Farmers demand the World Bank and Wall Street stop grabbing their lands, at opening of the Bank’s annual conference in Washington, DC. The World Bank is playing a leading role in a global… Edited March 30, 2013 by Steven Gaal Link to comment Share on other sites More sharing options...
Steven Gaal Posted April 7, 2013 Author Share Posted April 7, 2013 (edited) HOW TO STOP THE BANKERS ?? JUST SAY NO !!!! (Gaal) ========================== Solution to the Debt Crisis in the European Union: Outstanding Debts are Illegitimate. They Must be Cancelled By Eric Toussaint and Marie Dufaux Global Research, April 06, 2013 CADTM ==================o0o====================== Eric Toussaint in Tunis: “The creditor’s must be disobeyed and their demands for reimbursement of illegitimate debt refused !” This is a historical moment. On 23 and 24 March 2013, a coalition of left secular Tunisian political parties (in which there are 11 political formations) organised a meeting of Mediterranean region progressive parties to call for the abolition of the odious and illegitimate debts of Northern and Southern Mediterranean countries. Two half-days of debate produced a final declaration and were followed by a grand public conference bringing together over one thousand people and all the strength of the left-wing groups united for a common cause. |1| Below are highlights of Eric Toussaint’s speech at this first Mediterranean coordination meeting against debt, austerity policies, and foreign domination, and for a free, united, democratic, social, solidarity-based, feminist, and environmentally responsible Mediterranean region. Eric Toussaint, President of CADTM Belgium stressed that this budding political alliance is the continuation of the struggle initiated by Thomas Sankara, President of Burkina Faso, who was assassinated on the 15 October 1987, after he called on the people of Africa and the rest of the World to unite in a common combat for the non-payment of the illegitimate debt. It also extends the struggle of the martyrs of the Arab Spring, including Chokry Belaid, assassinated on 6 February 2013, not to forget Ahmed Ben Bella, the first President of independent Algeria, who died in April 2012, |2| and who, towards the end of his life, had made the abolition of illegitimate debt one of his principal struggles. This new coordination is facing another major challenge. All too often, left-wing parties limit their engagement to a radical denouncement of illegitimate debt without giving the question further importance in their day to day public activities. Once they start to approach positions of power, some of them abandon their promises to put an end to illegitimate debt, and end up agreeing with the terms of repayment. Eric Toussaint presented the initial definition of odious debt as debt taken on by a dictatorial regime such as that of Ben Ali. According to international law, when such a regime falls, the part of the debt that is odious falls with it, and therefore should not in any case be repaid. Of course, we must often fight for international law to be respected. To achieve this goal, only a strong social movement can convince a government to suspend payments and repudiate odious debt. It is therefore essential to create a favourable balance of power in order to defy the creditors. Marie Dufaux Introduction Today, international law defines odious debt in terms of three criteria: |3| the non-consent of the people in the indebted state; the lack of advantages for the people in the indebted state; the creditors were aware that the loans they consented were not in the interest of the people and were not approved by them. The debt “owed” to the Troika (European Central Bank, European Commission and the IMF) by countries like Greece, Ireland, and Portugal should be denounced because it corresponds to these criteria: 1. The people in the countries concerned did not give their consent, and many governments elected on anti-austerity programmes bend to the will of the Troika once they are in power; 2. This debt is not favourable to the people, on the contrary, it is linked to violations of their economic, social, and civil rights (reductions in social services and wages, large scale lay-offs, difficulty in gaining access to health services and education, repeal of collective bargaining agreements, disregard for the democratic choices made by electors, legislative power that bows down to the executive); 3. The creditors (the Troika and bankers), know perfectly well that the loans they advance are not in the interest of the people, because they are made in order to pay off the debt and in exchange for drastic austerity measures. It is the Troika itself that imposes these violations of human rights and dictates its conditions to governments and parliaments of indebted countries. As for the governments that have come into power since 2011 after the dictators Ben Ali and Mubarak, they have themselves taken on new debt, which is much more to the advantage of the creditors than to the people. This is done to pay back the odious debts inherited from the previous dictatorial regimes and to pursue policies weakening their countries. Therefore, this new debt is also odious. Tunisia and Egypt are currently negotiating new arrangements with the IMF. |4| This is a fruitless process. If these loans are granted, they will be illegitimate for at least two reasons: they will be used to continue making repayments on inherited odious debt, and they will be linked to policies that are contrary to the interests of the people in these countries. Other elements that may make a debt illegitimate On the one hand, the debt may be the consequence of unjust fiscal policies. In real terms, states accord fiscal advantages to big (national and international) companies and the wealthiest households, this reduces tax revenues and deepens public budget deficits. These practices increase public debt, because the governments must again borrow in order to finance their budget. Debt taken on in these conditions is illegitimate to begin with because it is socially unjust. On the other hand, it may derive from bank bail-outs. Since 2007, governments of the most industrialised countries have flown to the assistance of private banks, that are responsible for the crisis, injecting billions of euros into their capital and/or providing other guarantees. Any debt taken on to finance these bail-outs is equally illegitimate. Creditors and governments maintain that debt must always be repaid without questioning its origins, even if they are illegitimate. Then they justify the imposition of anti-social austerity policies by insisting on the effort necessary to balance the budget. It is within this context that a growing percentage of the people in Mediterranean countries (and beyond) are rejecting the repayment of illegitimate debt. In some countries (Tunisia, Greece, Portugal, Spain, and France) citizens audits have been called for in order to identify the illegitimate part of public debt. They are seeking to establish how, why, and by whom the debt was taken on, and if it has really been used in the interest of the people. These citizens audit committees are seeking to convince as many people as possible that illegitimate debt must be repudiated. Saying “NO” to the Creditors It is possible and necessary to defy the International Financial Institutions and the Troika, to refuse the diktats of the private creditors in order to create leeway for improving the situation of a country and its people. As we can see in the following examples of several countries that have dared to say “No” to their creditors, it is worth being adamant. Argentina’s suspension of debt repayments At the end of December 2001, after three years of economic recession (1999 – 2001) and pressure from a massive popular rebellion that caused the fall of President De La Rua, Argentina decided to suspend payments, amounting to about $90 billion. This represented an important portion of its commercial debt. Part of the money freed up was reinvested in the social sector, particularly in benefits paid to unemployed ’Piqueteros’. Some would claim that the real reason why Argentina recovered as of 2003-2004 is only because of the increase in the prices of its exports. This affirmation is, however, false, because if Argentina had not suspended its debt repayments, the revenue from exports would have been swallowed up by them. The government would not have had the means necessary to stimulate economic activity. In addition, thanks to this suspension of payments that lasted until March 2005, Argentina was able to impose a 50% reduction of this debt on its creditors. The CADTM, as well as numerous social movements and leftist parties proposed to Argentina to abolish, not only the debt that concerned private creditors, but also the IMF and other public creditors. The Argentine government did not follow this recommendation. It is important to note that Argentina has also suspended payment of $6.5 billion to the Paris Club since 2001. So we see that twelve years later Argentina is still holding out against the Paris Club. In spite of the 44 law suits brought before the World Bank and recent threats of expulsion from the IMF, Buenos Aires maintains its position. Argentina has not borrowed on the financial markets since 2001, but the country continues to function! The Argentine experience must not be misinterpreted. It is not to be taken as an example, and we always need to adopt a frankly critical point of view. The Argentine government has maintained Argentina within the bounds of capitalism, no structural reforms have been undertaken, Argentine economic growth is largely based on the extraction and the exportation of primary products (genetically modified soya beans, ores,…). Nevertheless, what Argentina has demonstrated is that saying “No” to the creditors is possible. Elsewhere, an authentic left-wing government could go much further on the basis of this precedent. Ecuador: audit and suspension of payment Ecuador gives us another example. In July 2007, seven months after his election, the Ecuadorian President Raphael Correa decided to instigate an audit of the country’s debt and the conditions in which it was contracted. An audit commission, made up of 18 experts including the CADTM, was created for this purpose. Its final report was presented after 14 months of investigation. It showed in particular that numerous loans had been contracted in violation of basic rules. In November 2008, the new administration, on the basis of this report decided to suspend the repayment of bonds payable in 2012 and 2030. Finally, the government of this small country came out on top in the tussle with North American bankers and those holding Ecuadorian securities. It repurchased bonds for less than $1 billion, which had a nominal value of $3.2 billion. Public finance thus saved $2.2 billion dollars of debt stock to which must be added $200 million a year (between 2008 and 2030) in interest payments. This allowed the government to allocate more means to social projects in health, education, social assistance, and communication infrastructure development. The Ecuadorian constitution now prohibits private debt from being transformed into public debt and illegitimate debt from being contracted. |5| In addition, Ecuador no longer recognises the World Bank’s jurisdiction in international disputes court. It has rejected free trade treaty propositions from the US and UE. The Ecuadorian President has announced his intention to audit the current bi-lateral investment treaties. Finally, the Quito authorities have put an end to the US military presence on its territory. In the case of Ecuador, we must again be careful not to hold up this ongoing experience as a model to be emulated. Critical analysis remains indispensable. Nonetheless, the Ecuadorian audit and unilateral suspension of payments experience shows that saying “No” to creditors is perfectly possible, and there are advantages to be gained in terms of making more means available for public health, education, and other sectors. Iceland’: refusal to pay the demands made by the Netherlands and the UK After its banking system collapsed in 2008, Iceland refused to compensate the British and Dutch savers who had put deposits amounting to €3.9 billion into subsidiaries of Iceland’s failed private banks. The British and Dutch authorities covered the losses to their citizens and presented the bill to Iceland. Under popular pressure (demonstrations, occupations, and referendums), the Reykjavik authorities refused to pay. Britain put Iceland on its terrorist list, froze its assets and, in conjunction with the Netherlands, sued Iceland the EFTA court. |6| Meanwhile, Iceland has completely blocked the outflow of capital. In the end, Iceland is faring better than the other European countries that accepted the conditions imposed by creditors. Here again we must not present Iceland as a model to be imitated, but learn from its experience. These examples demonstrate that saying “NO” to creditors leads neither to catastrophe nor to the collapse of a country. We must also recall that these experiences were preceded or accompanied by a popular movement that put pressure on the governments concerned. It is therefore important, as Eric Toussaint reminded us, that knowledge of this at times, complex question must conveyed to the whole of the population. The task of a public audit is to raise public awareness. The illegitimacy of public debt must become visible to the majority of people. To conclude this workshop, Eric Toussaint repeated that the above examples are not to be taken to as political models to be followed, but that these experiences are a source of important political lessons! Translation : Mike Krolikowski and Charles La Via notes |1| See Pauline Imbach, “Tunis: Birth of a Common Front of Political Organisations Against Debt”, http://cadtm.org/Tun...-of-a-C…, published 25 March 2013. |2| See Eric Toussaint, “Remembering Ahmed Ben Bella, first President of independent Algeria who passed away on the 11th April, 2012 at 96”, http://cadtm.org/Rem...-Ahmed-…, 12 April 2012. |3| See CADTM, http://cadtm.org/Droits-devant, and in particular Stéphanie Jacquemont, “Que retenir du rapport de l’expert de l’ONU sur la dette et les droits humains ?”, http://cadtm.org/Que...-du-rap… , 25 January 2013 (articles in French only). |4| http://www.imf.org/e...np/sec/… |5| See Eric Toussaint, “La Constitution équatorienne : un modèle en matière d’endettement public”, http://cadtm.org/La-...tion-eq… , 27 December, 2010 (in French only). |6| The EFTA (European Free Trade Association) court, which is in no way a progressive organisation, has judged in favour of Iceland’s position. See CADTM, “EFTA court dismisses ’Icesave’ claims against Iceland and its people”, http://cadtm.org/EFT...dismiss…, 29 January 2013. Edited April 7, 2013 by Steven Gaal Link to comment Share on other sites More sharing options...
Steven Gaal Posted April 8, 2013 Author Share Posted April 8, 2013 America Is Ruled by Billionaires, and They Are Coming After the Last Shreds of Our Democracy America is a plutocracy through and through — what are we going to do about it? CounterPunch / By Michael Brenner April 4, 2013 | Plutocracy literally means rule by the rich. “Rule” can have various shades of meaning: those who exercise the authority of public office are wealthy; their wealth explains why they hold that office; they exercise that authority in the interests of the rich; they have the primary influence over who holds those offices and the actions they take. These aspects of “plutocracy” are not exclusive. Government of the rich and for the rich need not berun directly by the rich. Also, in some exceptional circumstances rich individuals who hold powerful positions may govern in the interests of the many, e.g. Franklin Roosevelt. The United States today qualifies as a plutocracy – on a number of grounds. Let’s look at some striking bits of evidence. Gross income redistribution upwards in the hierarchy has been a feature of American society for the past decades. The familiar statistics tell us that nearly 80% of the national wealth generated since 1973 has gone to the upper 2%, 65% to the upper 1 per cent. Estimates as to the rise in real income for salaried workers over the past 40 years range from 20% to 28 . In that period, real GDP has risen by 110 – it has more than doubled. To put it somewhat differently, according to the Congressional Budget Office, the top earning 1 percent of households gained about 8X more than those in the 60 percentile after federal taxes and income transfers over a period between 1979 and 2007; 10X those in lower percentiles. In short, the overwhelming fraction of all the wealth created over two generations has gone to those at the very top of the income pyramid. That pattern has been markedly accelerated since the financial crisis hit in 2008. Between 2000 and 2012, the real net worth of 90% of Americans has declined by 25%. Theoretically, there is the possibility that this change is due to structural economic features operating nationally and internationally. That argument won’t wash, though, for three reasons. First, there is no reason to think that such a process has accelerated over the past five years during which disparities have widened at a faster rate. Second, other countries (many even more enmeshed in the world economy) have seen nothing like the drastic phenomenon occurring in the United States. Third, the readiness of the country’s political class to ignore what has been happening, and the absence of remedial action that could have been taken, in themselves are clear indicators of who shapes thinking and determines public policy. In addition, several significant governmental actions have been taken that directly favor the moneyed interests. The latter include the dismantling of the apparatus to regulate financial activities specifically and big business generally. Runaway exploitation of the system by predatory banks was made possible by the Clinton “reforms” of the 1990s and the lax application of those rules that still prevailed. Attorney General Eric Holder just a few weeks ago went so far as to admit that the Department of Justice’s decisions on when to bring criminal charges against the biggest financial institutions will depend not on the question of legal violations alone but would include the hypothetical effects on economic stability of their prosecution. Earlier, Holder had extended blanket immunity to Bank of America and other mortgage lenders for their apparent criminality in forging, robo-signing, foreclosure documents on millions of home owners. In brief, equal protection and application of the law has been suspended. That is plutocracy. Moreover, the extreme of a regulatory culture that, in effect, turns public officials into tame accessories to financial abuse emerged in stark relief at the Levin Committee hearings on J P Morgan Chase’s ‘London Whale” scandal. Morgan officials stated baldly that they chose not to inform the Controller of the Currency about discrepancies in trading accounts, without the slightest regard that they might be breaking the law, in the conviction that it was Morgan’s privilege not to do so. Senior regulators explained that they did not see it as their job to monitor compliance or to check whether claims made by their Morgan counterparts were correct. They also accepted abusive treatment, e.g. being called “stupid” to their face by senior Morgan executives. That’s plutocracy at work. The Senate Finance Committee hearing drew only 3 senators – yet another sign of plutocracy at work. When mega-banks make illicit profits by money laundering for drug cartels and get off with a slap on the wrist, as has HSBC and others, that too is plutocracy. Continued from previous page When the system of law that is meant to order the workings of society without reference to ascriptive persons is made malleable in the hands of officials to serve the preferred interests of some, it ceases to be a neutral instrument for the common good. In today’s society, it is becoming the instrument of a plutocracy. There are myriad other examples of complicity between legislators or regulators, on the one hand, and special business interests on the other. EPA judgments that are reversed under the combined pressure of the commercial interests affected and beholden politicians is one. The government’s decision not to seek the power to bargain with pharmaceutical companies over the price of drugs paid for with public funds is another. Tolerance for the concealment of offshore profits in the tens of billions is a third. Relaxed interpretations of the tax laws by the IRS to the advantage of high income persons can be added to the list. So, too, can the give-away to sole source contractors of the tens of billions squandered in Iraq and Afghanistan. The number of such direct assists to big business and the wealthy is endless. The point is that government, at all levels, serves particular selfish interests no matter who holds high positions. While there is some difference between Republicans and Democrats on this score, it has narrowed on most major items to the point that the fundamental properties of the biased system are so entrenched as to be impervious to electoral outcomes. The most revealing experience that we have of that harsh reality is the Obama administration’s strategic decision to allow Wall Street to determine how and by whom the financial crisis would be handled. Systemic biases are the most crucial factor is creating and maintaining plutocratic orientations of government. They are confirmed, and reinforced, by the identities and identifications of the persons who actually hold high elected office. Our leaders are nearly all rich by any reasonable standard. Most are very rich. Those who weren’t have aspired to become so and have succeeded. The Clintons are the striking case in point. That aspiration is evinced in how they conduct themselves in office. Congress, for its part, is composed of two rich men/women’s clubs. In many cases, personal wealth helped win them their offices. In many others, they knit ties with lobbies that provided the necessary funds. Whether they are “bought off” in some sense or other, they surely are often coopted. The most insidious aspect of cooptation is to see the world from the vantage point of the advantaged and special economic interests. The devolution of the Democratic Party from being the representative of ordinary people to being just “another bunch of guys” is a telling commentary on how American politics has degenerated into a plutocracy. The party’s rolling over to accommodate the interests of the wealthy has been a theme of the past four years. From the Obama White House to the halls of Congress, party leaders (and most followers) have conceded the dominance of conservative ideas about macro-economic strategy (the austerity dogma), about retaining largely untouched the for-profit health care “non-system,” about bailing out the big financial players as the expense of everyone else and the economy’s stability, about degrading Social Security and Medicare. The last item is the most egregious – and revealing – of our plutocratic ways and means. For it entails a combination of intellectual deceit, blatant massaging of the numbers, and disregard for the human consequences in a time of growing distress for tens of millions. In other words, there is no way to conceal or spin the trade-offs made, who was being hurt and who would continue to enjoy the advantages of skewed fiscal policies. Continued from previous page There is another, absolutely crucial dimension to the consolidation of America’s plutocracy. It is controlling the means to shape how the populace understands public matters and, thereby, to channel thought and behavior in the desired direction. Our plutocratic guides, prophets and trainers have been enormously successful in accomplishing this. One object of their efforts has been to render the media into either conscious allies or to denature them as critics or skeptics. Their success is readily visible. Who has challenged the plutocracy serving falsehood that Social Security and Medicare are the main cause of our deficits whose imminent bankruptcy puts in jeopardy the American economy? Who even bothers to inform the public that those two programs’ trust funds draw on a separate revenue source from the rest of the budget? Answer: no one in or near the mainstream media. Who has performed the most elementary service in pointing out that of all the jobs created since 2009, small as the number has been, 60% at least have been either part-time or temporary? Answer: again, no one. Who has bothered to highlight the logical flaws in the market fundamentalist view of the world that has so deformed perceptions of what works and doesn’t work in macro-economic management? Yes, Paul Krugman, Joseph Stiglitz and a handful of others – although even Krugman’s colleagues writing on business and economics at the NYT seem not to have the time to read him or else lack the wit to comprehend what he is saying. A second objective in a similar vein has been to dominate the think tank/foundation world. Today, nearly every major Washington think tank depends on corporate money. Businessmen sit on the boards and shape research programs. Peter G. Peterson, the hedge fund billionaire, took the more direct route of acquiring the International Institute of Economics, renaming it after himself. He then set about using it as in instrument to carry on the campaign against Social Security which has become his life’s work. Then there is Robert Rubin. Rubin is the distilled essence of financial malpractice, and the embodiment of the government-Wall Street nexus that brought the country to wrack and ruin. Author of Clinton’s deregulation program while Secretary of the Treasury: later super lobbyist and Chairman of CITI bank in the years before it was pulled from the brink of bankruptcy by Ben Bernanke, Paulson and Tim Geithner; and adviser to Barack Obama who stocked the new administration with Rubin protégés. He since has ensconced himself as Chairman of the Council on Foreign Relations and Director of the highly prestigious, lavishly funded Hamilton Project at Brookings. By happenstance, both organizations late last year featured presentations by Jaime Dimon. The one billed as a forum for a leading global CEO to share priorities and insights before a high-level audience of CFR members. That is plutocracy in action. The third objective has been to weaken public education. We have witnessed the assault on our public elementary school system in the name of effectiveness, efficiency and innovation. Charter schools are the watchword. Teachers are the heart of the problem. So privatization, highly profitable privitization, is sold as the solution to save America’s youth in the face of ample evidence to the contrary. Cast aside is the historical truth that our public school system is the one institution, above all others, that made American democracy. It also is a bastion of enlightened social thinking. It thereby qualifies as a target. The same for the country’s proud network of public universities. From state to state, they are starved for funding and made sacrificial lambs on the altar of the austerity cult. They, too, are stigmatized as “behind the times,” as no longer doing the job of supplying the business world with the obedient, practical skilled workers it wants. Business schools, long a dependency of the corporate world, as held up as the model for private-public partnership in higher education. Distance learning, often managed by for-profit ‘expert” consultants or “entrepreneurs”, is advertised as the wave a bright future – a future with fewer liberal-leaning professors with fuzzy ideas about the good society. Distance learning is the higher education companion to the charter school fad. Lots of promises, little delivery but well conceived to advance a plutocracy friendly agenda. Continued from previous page Here, too, boards of regents are led by business men or women. The abortive coup at the University of Virginia was instigated by the Rector who is a real estate developer in Virginia Beach. The Chairman of the Board of Regents at the University of Texas system where tensions are at a combustible level is a real estate developer. The Chairman at the University of California is CEO of two private equity firms – and the husband of Senator Diane Feinstein. His pet project was to have the moneys of the California teacher’s pension fund placed in the custody of private financial houses. Two former directors of the fund currently are under criminal investigation for taking very large kick-backs from other private equity firms to whom they directed monies – and which later employed them as ‘placers.’ That’s plutocracy at work. The ultimate achievement of a plutocracy is to legitimize itself by fixing in the minds of society the idea that money is the measure of all things. It represents achievement, it is the sine qua non for giving people the material things they want. It is the gauge of an individual’s worth. It is the mark of status in a status anxious culture. That way of seeing the world describes the outlook of Bill Clinton and Barack Obama. It is Obama who, at the height of the financial meltdown, lauded Jaime Dimon and Lloyd Blankfein as “savvy and successful businessmen.” It is Obama who eagerly became Dimon’s golfing buddy – an Obama who twice in his career took jobs with corporate law firms. It was Bill Clinton who has been flying the world in corporate jets for the past twelve years. It is the two of them who promoted Alan Simpson and Erskine Bowles to press for the crippling of Social Security. That’s plutocracy pervading the leadership ranks in both parties of what used to be the American republic. Perhaps the most extraordinary achievement of the plutocracy’s financial wing has been to win acceptance from the country’s entire political class that its largely speculative activities are normal. Indeed, they are credited with being the economy’s principal engine of growth. It follows that their well-being is crucial to the well-being of the national economy and, therefore, they should be given privileged treatment. The American version of plutocracy is noteworthy for its crassness. Subtlety, discretion and restraint are foreign to it. It has a buccaneering quality. That style has roots in the country’s history and culture. Much of the behavior is impulsive, grasping. Individuals are greedy for vivid displays that they are top dog, of what they can get away with, as well as the riches themselves. There is little interest in building anything that might endure – no ‘new order,’ no new party, no new institutions. Not even physical monuments to themselves. Why bother when the existing set-up works so well to your advantage, to that of your like-minded and like-interested associates – when you can turn ideas, policies and money in your direction with ease. And while the public is blind to how they are being deluded and abused. After all, the more things appear to stay the same, the more they can change in a country whose civic ideology imbues everyone with the firm belief that its principles and institutions embody a unique virtue. To challenge any of that would be to run the risk of raising consciousness – which is the last thing that the plutocrats want. There are exceptions. The most stunning is Wall Street’s biggest players’ audacity in co-opting a part of the NYC Police Department in setting up a semi-autonomous unit to monitor the financial district. Funded by Goldman Sachs et. al., managed by private ban employees in key administrative positions, and with an explicit mandate to prevent, as well as to deal with any activity that threatens them, it operates with the latest high tech equipment out of a dedicated facility provided by its sponsors. The facility for years was kept “under the counter” so as not to tempt inquisitive parties to expose it. This is the unit that coordinated the squelching of theOccupy movement’s Manhattan demonstrations. It represents the appropriation of a public agency to serve and to serve under private interests. The post-9/11 hyper-anxiety provided political and ideological cover for a deal devised by Mayor Mike Bloomberg (himself a Wall Street billionaire who has gone down the line to defend it against all charges of financial abuse) in collusion with his former associates. Is this simply Bloomberg registering NYC’s fiscal dependency on financial sector jobs? Well, this is the same Bloomberg who killed a widely supported initiative to set a minimum decent wage of $10 an hour with health insurance ($11.50 without) on development projects that receive more than $1 million in taxpayer subsidies. He stigmatized the measure as “a throwback to the era when government viewed the private sector as a cash cow to be milked…. The last time we really had a big managed economy was the USSR and that didn’t work out so well.” That’s as plutocratic as it gets – and in liberal New York. Continued from previous page Furthermore, the moving forces of the plutocracy are not very organized. There is no conspiracy as such. It is the convergence of outlook among disparate persons in different parts of the system that has accomplished the revolution in American public life, public discourse, and public philosophy. Nobody had to indoctrinate Barack Obama in 2008-2009 or intimidate him or bribe him. He came to the plutocrats on his own volition with his mind-set and values already in conformity with the plutocracy’s view of itself and of America. This is the man who, for the first two years of his presidency, repeatedly misstated the coverage of the Social Security Act of 1935 – ignorant and not bothering to find out or willfully ignorant so as to create a convenient comparison with his fatally flawed health care pseudo-plan. This was the man, after all, who cited Ronald Reagan as model for what sort of presidency American needed. He has been living proof of how effectively Americans had been brought into line with the plutocratic vision. This is not to say that the plutocrats’ success was inevitable – or that they were diabolically clever in manipulating everything and everyone to their advantage. There has been a strong element of good fortune in their victory. Their most notable piece of luck has been the ineptitude and shortsightedness of their potential opposition – liberal Democrats, intellectuals, and their like. The plutocrats pursued their goals is a disorganized, diffuse way. However, the absence of an opponent on the contested terrain assured success. As to cleverness, the American plutocracy is actually a stupid plutocracy. First, it is overreaching. Far better to leave a few goodies on the table for the 99% and even a few crumbs for the 47% than to risk generating resentment and retaliation. Since the financial meltdown, financial and business interests have been unable to resist picking the pockets of the weak. Fishing out the small change in the wake of grand larceny is rubbing salt into wounds. Why fight a small rise in the minimum wage? Why ruthlessly exploit all those temps and part-timers who have so little in the way of economic power anyway? Why squeeze every last buck from the small depositors and credit card holders whom you already systematically fleece? In the broad perspective, that sort of behavior is stupid. To explain it, we must look to the status compulsions of America’s audacious corporate freebooters. These peculiar traits grow more intense the higher one goes in the hierarchy of riches. One is the impulse to show to everybody your superiority by displaying what you can get away with. “Sharp dealing” always has been prized by segments of American society. It’s the striving, insecure man who has to prove to the world – and to himself – that he can act with impunity. He is little different from the hoodlum showing off to his pals and to his moll. These people at heart are hustlers – they crave the thrill of pulling off a scam, not constructing something. Hence, Lloyd Blankfein not showing up for White House meetings yet having Obama thank him for letting the president know, albeit after the meeting already had begun, that Blankfein can’t make it. Hence, Jaime Dimon indignantly protesting his verbal mistreatment by the press, by the White House, by whomever. Then there is Jack Welch, the titan of American industry who struts sitting down, who holds the Guinness record for the most manufacturing jobs outsourced by one company – and yet impudently calls Barack Obama “anti-business” after the president appoints his hand-picked successor, Jeffrey Immelt, to head the White House’s Job Council. Or Bank of America’s faking compliance with the sweetheart deal it got from Obama on the felonious foreclosure scam. Continued from previous page The ultimate episode of egregious lawlessness is the MF Holdings affair – whereby under its chief, former Senator and Governor Jon Corzine, this hedge fund took the illegal action of looting a few billion from custodial accounts to cover losses incurred in its proprietary trading. JP Morgan, which held MF Global funds in several accounts and also processed the firm’s securities trades, resisted transferring the funds to MF’s customers until forced to by legal action. Punitive action: none. Why? The Justice Department and regulatory bodies came up with the lame excuse that the MF group’s decision-making was so opaque that they could not determine whose finger clicked the mouse. To pull capers like these and get off scot free, without chastisement, is the ultimate ego trip. Willie Sutton, the notorious bank robber of the 1940s, explained his targeting banks this way: “that’s where the money is.” Today’s financial swindlers go after the high risk gambles because that’s where the biggest kicks are. That is more important than the biggest bucks – although they add to the thrill. For the ever status striving, identity insecure financial baron is a compulsive gambler. He needs his fixes. Of winning, of celebrity, of respect. Of deference. All are transitory, though. For American culture provides few insignia of rank. No ‘Sirs,’ no seats in the House of Lords, no rites of passage that separate the heralded elite from all the rest. Oblivion shadows the most famous and acclaimed. Thus, the grasping for whatever badges of regard are within reach – however ludicrous they might be. When IR Magazine awarded JPMorgan the prize for “best crisis management” of 2012 for its handling of the London Whale trading debacle, at a black-tie awards ceremony in Manhattan, Morgan executives were there to express their appreciation, rather than bow out gracefully. The only Wall Street personage who has played the celebrity game without being marginalized in the public mind is Robert Rubin. Through nimbleness and political connection he has semi-institutionalized his celebrity status. Yes, there is Paul Volcker – but that is another world all together. His stature is built on an unmatched record of service to the commonweal and unchallenged integrity. The Blankfeins and Dimons and Welchs not only lack the critical attributes – they also lack the sense of what it means to serve the public from which they habitually distance themselves. The plutocrats’ compulsive denigration of the poor, the ill and the dispossessed is perhaps the most telling evidence of status obsession linked to insecurity that is at the core of their social personality. They find it necessary to stigmatize the latter as at best failures, at worst as moral degenerates – drug addicts, lazy, parasites, in part to highlight their superiority and in part to blur the human consequences of their rapacity. Behavior of this kind is the antithesis of what could be the cultivated image of the statesman of commerce – even though they pay a price in public esteem. They also pay in price in terms of the other aspect of their own self-image. Second, Americans have a craving to believe in their own virtue – as well as to have others recognize it. The perverse pride in beating the system cannot in and of itself compensate for the feeling that you’re a bad guy. Blankfein again: “I have been doing the Lord’s work.” No one laughs in public – so I’m right about that. Dimon swaggering through the Council On Foreign Relations or Brookings with the huddled masses in his audience – and on the dais – beaming their adulation as they bask in his fame and thirst for his wisdom on the great affairs of the world. Perhaps, his views on whether the BRICS can rig the LIBOR rate with the connivance of the Bank of England and the Federal Reserve – or ignore regulatory reporting rules when they threaten to reveal a madcap scheme that loses $6 billion? Continued from previous page Plutocracy in the current American style is having pernicious effects that go beyond the dominant influence of the rich on the nation’s economy and government. It is setting precedents and modeling the unaccountability and irresponsibility that is pervading executive power throughout the society. Two successive presidential administrations and two decades of rogue behavior by corporate elites have set norms now evident in institutions as diverse as universities and think tanks, the military and professional associations. The cumulative result is a widespread degrading of standards in the uses and abuses of power. Plutocracy also raises social tensions in society. Logically, the main line of tension should be between the plutocrats and the rest – or, at least, between them and all those with modest means. But that is not the case in the United States. While it is true that there were bitter words about the Wall Street moguls and their bailouts during the first year or so after the financial collapse, it never became the main line of political division. Today, outrage has abated and politics is all about austerity and debts rather than the distribution of wealth and the power that goes along with it.The deep-seated sense of anxiety and grievance that pervades the populace manifests in outbreaks of hostile competition among groups who are in fact themselves all victims of the plutocrats’ success in grabbing for themselves most of the country’s wealth – thereby leaving the rest of us to fight for the leftovers. So, it is private sector employees pitted against government employees because the latter have (some) health insurance, some pension and some security relative to the former who have been shorn of all three. It’s parents worried about their kids’ education against teachers. Both against cash strapped local authorities. Municipalities vs states. It’s the small businessman against unions and health insurance requirements. It’s doctors against patients against administrators. It’s university administrators against faculty and against students, faculty against students in competing for a much reduced appropriations. It’s all of those against boards of regents and state governors. It’s everyone frustrated by the ever sharpening contrast between hopes and aspirations and darkening realities of what they might expect for themselves and their children. Meanwhile, the folks at the top wait confidently and expectantly above the fray they have engineered – ever ready to swoop down to strip the remains of combat by way of privatized public assets, no-bid contracts, tax and regulatory havens, commercially owned toll roads, student loan monopolies, rapacious buying up of foreclosed properties with federal incentives, and myriad tax breaks. President Obama used his State of the Union Address to send the message loud and clear. “Let me put colleges and universities on notice” he warned, “If you can’t stop tuition from going up, the funding you get from taxpayers will go down.” He thereby set forth a line of reasoning that put him on the same wavelength as Rick Perry. For the reality is the exact opposite. It is because funding has gone down by 2/3 over the past few decades that colleges and universities are obliged to raise tuition – despite flat-lining faculty and staff salaries. This is the essence of intellectual conditioning to the plutocracy’s self-serving dogma and the suborning of public authorities by the plutocracy. Beyond capture, it is assimilation. Does this sort of perverse pride go before the fall? No sign of that happening yet. Plutocracy in America is more likely to be our destiny. The growing dynastic factor operating within the financial plutocracy militates in that direction. Wealth itself has always been transferred from one generation to another, of course; reduced inheritance taxes along with lower rates at upper income brackets generally accentuate that tendency. With socio-economic mobility in American society slipping, it gains further momentum. Something approaching a caste identity is forming among the financial elites – as personified by Jaime Dimon who is the third generation of Wall Street stockbrokers/financial managers in his family – his father an Executive Director at American Express where the young Dimon joined forces with Sandy Weill. As a revealing coda to this generational tale, Dimon, last year, hired his 81 year old father to work for JP Morgan Chase. His father’s first-year salary was $447,000; slated to rise to $1.6 million – now that he has some work experience under his belt, presumably. A sense of limits is not part of the financial plutocracy’s persona. Continued from previous page All that has been recounted here is on the public record. Facts are facts; the inferred attitudes of the plutocracy are confirmed by an abundance of data – including the players’ own statements. The consequences analyzed are also a matter of public record. The tepid reaction should be no surprise; that is exactly what is to be expected in a plutocracy. So what is to be done? Rectify the sins of commission by rescinding them and those of omission by restoring responsible, enlightened policies. A model? How about 1974? Inglorious year, but….Richard Nixon was well to the ‘Left’ of Barack Obama – civil liberties included; corporate power, especially that of big finance, was kept in check by effective regulation; and the integrity of American institutions was a paramount concern of most elected officials and the political elite in general. The Word awaits…but The script is small The preacher is blind The audience is deaf And the echoes ricochet off bare walls soundlessly Link to comment Share on other sites More sharing options...
Steven Gaal Posted April 14, 2013 Author Share Posted April 14, 2013 Bailed-Out Banks Using Government Aid To Pay Back Government Loans http://xrepublic.tv/node/2918 Link to comment Share on other sites More sharing options...
Steven Gaal Posted April 15, 2013 Author Share Posted April 15, 2013 How The Criminal Banking Cartel Is Destroying America dailybail Part Two: How Obama Surrendered Sovereignty to the Criminal Banking Cartel By John Titus --- Summary of Part One: The U.S. government openly conceded that its sovereign authority to enforce its own laws is gone when Attorney General Eric Holder testified that the Justice Department’s failure to prosecute any big banks is based on anonymous “expert” opinions that prosecutions would destabilize the financial system. This notion of “systemic importance” has been thoroughly discredited. According to Tim Geithner, it’s an intellectually bankrupt phrase. What’s more, it’s been debunked both legally and empirically, which is likely one reason the DOJ’s “experts” wish to remain anonymous. If it turns out that these “experts” are in fact agents of the big banks whose crimes are being immunized by the very entities whose discredited opinions the DOJ is relying on, then those “opinions” are nothing more than assertions of criminal sovereign immunity—a privilege that is legally limited to the President of the United States. Since “the King can do no wrong”—the legal foundation of sovereign immunity—the real King here is the criminally immune cartel of banks, not the President, since real sovereigns don’t surrender the right to enforce their laws. And following the long series of unprosecuted crimes by the cartel, in which the President’s own constituents are the undisputed victims, “surrender” is the most charitable description of the Obama’s acts before the banking cartel. -- Part Two: Inside The Criminal Banking Cartel There are two very big and related clues as to the identity of the anonymous experts behind whose opinions U.S. Attorney General Eric Holder hides whenever explaining away his failure to prosecute big banks on the basis of their “systemic importance.” The first, noted in an article last week by Golem XIV, is a list of international banks that parade under the rather obvious label of “Globally Systemically Important Financial Institutions,” or G-SIFIs. There are 28 banks in total, 9 of them headquartered in the U.S.: Citigroup Deustsche Bank HSBC JP Morgan Chase Barclays BNP Paribas Bank of America Bank of New York Mellon Credit Suisse Goldman Sachs Mitsubishi UFJ FG Morgan Stanley Royal Bank of Scotland UBS Bank of China BBVA Group BPCE Group Credit Agricole ING Bank Mizuho FG Nordea Santander Societe Generale Standard Chartered State Street Sumitomo Mitsui FG Unicredit Group Wells Fargo This list of cartel members is updated annually by the Financial Stability Board, a collection of international organizations. The FSB is a global meta-body of bankers. But the formal edifice, whether called the FSB or the NWO (hat tip Alex), really doesn’t matter, because, as Golem XIV states: “Guess which institutions provide the membership for all of the above international bodies? Yes, you got it—the big banks.” These are the banks that are above the law in the U.S. In Part One, we mentioned four banks—Citigroup, Wells Fargo, HSBC, and UBS—whose massive crimes had been taxed at a de minimis rate by the Department of Justice rather than prosecuted. All four are on the list of G-SIFIs above. So what, you may ask, that’s just a list compiled by some international convention of cokehead bankers, how do they make sure a rogue federal prosecutor doesn’t break ranks and haul a cartel member or two off to criminal trial? Enter clue no. 2: Covington & Burling, the law firm from which both the head of the DOJ (Eric Holder) and the DOJ’s head of criminal enforcement (Lanny Breuer) were recruited. Actually, Breuer is no longer with the DOJ. Following a four-year stint in which “the enforcer” failed to prosecute a single big bank, Breuer has returned to Covington & Burling, where he will earn be rewarded with $4 million in annual compensation. The significance of Covington & Burling lies in its list of current clients, which looks remarkably like the list of criminally immune cartel members above (particularly the more recognizable names): Citigroup, Deutsche Bank, JP Morgan Chase, Bank of America, Goldman Sachs, Morgan Stanley, UBS, Wells Fargo, and ING Bank. Not to put too fine a point on it, but Eric Holder and Lanny Breuer have the financial motivation not to prosecute their firm’s clients. In Breuer’s case, it turned out to be $4 million of motivation. Per year. Under any functioning system of law, of course, both Holder and Breuer would submit to screening procedures at the DOJ to insulate them from prosecutorial decisions involving their former clients. We're sure they did the same thing under our impotent system as well. But so what? When laws against crimes are a dead letter, who in his right mind would put any trust in a conflict screen? As Cheyenne told Jill in Once Upon a Time in the West, “when you’ve killed four, it’s easy to make it five.” Now commentators are starting to point out where the slippery slope of sovereign immunity for criminal banks will lead. Jim Chanos, who detected the fraud at Enron well before it destroyed the company and its shareholders, notes that not only are criminal cartel members now motivated to continue cheating and stealing, they have a fiduciary duty to do so. (Speaking of the Enron-ization of the U.S., Eric Holder is working to release CEO Jeff Skilling from prison early in yet another act of prostrate submission before his real masters, the criminal banks.) As Golem XIV points out, immunity extends not only to criminal behavior, but to assets that a cartel member bank acquires through crime: “if by doing those illegal things [the bank] makes out-sized profits for its shareholders and staff, that money, those profits are also above the law.” -- Cyprus Vs. MF Global: The Rule Of Law Is Dead Thus, anyone who thinks account confiscation a la Cyprus can’t happen in the U.S. is dreaming of a bygone republic. Not only is account seizure possible in the U.S., or even likely, it is guaranteed. Just ask MF Global’s segregated account holders or GM senior bondholders if you have any doubts. In the MF Global case, Jon Corzine "brazenly took liquid assets like Treasuries and warehouse receipts, but not cash which would have been more quickly missed, from customer accounts to post as illegal collateral for emergency funding with a lender who must have known that they were receiving stolen goods." The lender, of course, turned out to be JP Morgan--a prominent international cartel member. Jon Corzine was of course one of Obama's top fundraisers and an alumnus of Goldman Sachs--a cartel member. In the GM bankruptcy, the age-old pecking order of creditor priority was turned upside down, literally "rewriting law," when senior unsubordinated secured creditors' claims were trumped by payouts to junior unsecured creditors in a patently political sop to Obama's perceived union supporters. In both cases, the black letter law that's supposed to gird markets with trust and predictablity was trampled in favor of Obama's political allies. Now that Obama has altogether surrendered the DOJ's law enforcement functionality to the criminal international banking cartel, those dangerous precedents turn out to have been short-sighted in the extreme: there is nothing left to stop the plunder of customer accounts in Cyprus from crashing like a tidal wave across U.S. shores. The timing depends only on the restraint that the banking cartel elects to show. There is no remedy in sight, only more financial crime as Americans are robbed deeper into serfdom. The Executive Branch is merely an agent of the criminal banking cartel for the reasons given. That fact, in turn, has cut the Judiciary out of the equation altogether: a court cannot try criminals who are never brought before it to face charges. That leaves Congress, which in theory could initiate impeachment proceedings. But how likely is success when the Senate, which would try any impeachment cases, couldn’t even obtain the names of the DOJ’s so-called experts in the first place? As noted in Part One, Senator Grassley asked the DOJ for the experts’ names in a letter on January 29, 2013. Eric Holder testified on March 6, more than a month later. The issue of the experts’ identities was thus as ripe as could be, but rather than obtaining the names, the ranking member of the Judiciary Committee put on a clinic in how to conduct an incompetent examination: Q. On January 29, Senator Sherrod Brown and I requested details on who these so-called 'experts' are. So far we have not received any information. Maybe you're going to but why have we not yet been provided the names of experts the DOJ consults as we requested on January 29? We continue to find out why we aren't having these high-profile cases. A: We will endeavor to answer your letter, Senator. We did not, as I understand it, endeavor to obtain experts outside of the government in making determinations with regard to HSBC. Just putting that aside for a minute though, the concern that you have raised is one that I, frankly, share. I'm not talking about HSBC here, that would be inappropriate. But I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute — if we do bring a criminal charge — it will have a negative impact on the national economy, perhaps even the world economy. I think that is a function of the fact that some of these institutions have become too large. Again, I'm not talking about HSBC, this is more of a general comment. I think it has an inhibiting influence, impact on our ability to bring resolutions that I think would be more appropriate. I think that's something that we — you all [Congress] — need to consider. The concern that you raised is actually one that I share. Note that Senator Grassley asked one question: why haven’t you answered our letter? Holder doesn’t answer it. Instead, he promises to supply the names later. At that point, Grassley should have put two questions to Holder. First, answer my question by explaining why you ignored our letter. Second, when will you supply the names of the “so-called experts”? A mediocre first-year litigation associate would’ve gotten this information within seconds. But not Senator Grassley, who earned his masters degree during the Eisenhower Administration. Here is his completely irrelevant follow-up question: Q: Do you believe that the investment bankers that were repackaging bad mortgages that were AAA-rated are guilty of fraud or is it a case of just not being aggressive or effective enough to prove that they did something fraudulent and criminal? Huh? Not surprisingly, Eric Holder has been in no hurry to disclose the names of the “experts” retained by Covington & Burling’s clients since dancing around Grassley like a cigar store Indian. Holder has completely blown off the Senate, which has done nothing to follow up the issue. Frankly this disgusting charade has surprised no one who’s paying any attention, coming, as it does, from the same august body that exempted itself from insider trading laws and has failed to pass any meaningful reform legislation since the 2008 meltdown, an even worse repeat of which is on its way. On the contrary, both Congress and the Executive Branch are now just tools of fraud used by the criminal international banking cartel against the people, who for their part are drooling iDope dreams oblivious to their own last act, proving Edward Murrow right, a nation of sheep having begotten a government of wolves. *** Postscript: for an altogether different analysis that reaches the same conclusion (it's open season for international bankers on U.S. bank accounts), please see what Jesse has to say. Link to comment Share on other sites More sharing options...
Steven Gaal Posted April 17, 2013 Author Share Posted April 17, 2013 British banks engulfed in new scandals By Jordan Shilton http://www.wsws.org/en/articles/2013/04/16/hbos-a16.html 16 April 2013 A parliamentary report released April 5 on the collapse of HBOS (Halifax Bank of Scotland) points to acts of criminality and corruption that go well beyond one financial institution. Commissioned to provide an account of the bank’s demise in 2008, which resulted in a £20 billion taxpayer bailout and the bank being taken over by Lloyds, the report documents the responsibility of the bank’s leadership as well as the financial regulators for the collapse. The Parliamentary Commission on Banking declared that HBOS crashed after a lack of risk controls, rapid and aggressive expansion and poor management, which amounted to a “colossal failure” on the part of bank executives. Particular criticism was directed at HBOS’s former head Sir James Crosby, who led the bank until 2006. The inquiry described him as the “architect of the strategy that set the course for disaster.” His successor, Andy Hornby, and bank chairman Lord Stevenson were criticised for having been “unwilling or unable to change course” and, in the case of Stevenson, for having been “incapable of facing the realities of what placed the bank in jeopardy from that time until now.” The report touches on only some of the corrupt practices which took place in the financial sector. It notes the complicity of the regulators, including the Financial Services Authority (FSA), in failing to warn of the risks confronting HBOS due to its speculative operations. Although the FSA raised concerns as early as 2002 about the bank’s business model, nothing was done to alter HBOS’s activity. The report remarks, “From 2004 to the latter part of 2007, the FSA was not so much the dog that did not bark as a dog barking up the wrong tree.” This can be said not just for its treatment of HBOS. Britain’s famous “light-touch” regulation, introduced by Labour under Tony Blair and Gordon Brown, facilitated a dramatic expansion of financial speculation in the years prior to 2008. The report does not mention some of the largest swindles of this period, including the fixing of the Libor inter-bank rate, which involved the major banks and, as evidence last year suggested, even reached the Bank of England. On Friday, another executive at RBS (Royal Bank of Scotland) was forced to resign his post as head of the bank’s Japanese division, after being confronted with allegations that he helped organise the fixing of the Yen Libor. Nor does the report mention the involvement of the major financial institutions in the laundering of drug money, which acted as a source of liquidity for the banks during the crisis. The revolving door which exists between the banks, regulators and government has emerged clearly in the wake of the report. Crosby was appointed to the board of the FSA in 2003 by the Labour government, and was awarded his knighthood in 2006. Even in 2008, when it was clear that a crisis was developing, then Chancellor Alistair Darling appointed Crosby to organise a working group on mortgages. Between 2006 and 2008, following his retirement from HBOS, Crosby was deputy chair of the FSA. Unsurprisingly, when in 2004 allegations of high risk-taking were presented to the FSA by whistleblower Paul Moore, a manager at HBOS, they were ignored. This decision would have undoubtedly involved Crosby as a board member, who afterwards proceeded to fire Moore from his position as head of group regulatory risk at HBOS. John Griffith-Jones, the new head of the Financial Conduct Authority (FCA), one of the two successor organisations to the FSA, has come under mounting pressure to resign his post. Griffith-Jones was the head of accountants KPMG when they audited HBOS in the years prior to 2008 and gave it a clean bill of health. Crosby has agreed to give up his knighthood and forego 30 percent of his annual pension of £580,000. Pressure is building on Hornby and Stevenson to give up a portion of their large HBOS pension packages. Hornby, the chief executive at the time of the bank’s collapse, also received £251,000 in a so-called change of ownership arrangement when the bank was bailed out by the taxpayer. Presented by the media and Labour Party as an example of how bankers are being made to pay for their role in the financial crisis, the response to the commission’s report is a desperate attempt by the ruling class as a whole to conceal its involvement in vast levels of criminality and financial mismanagement. After it emerged last week that seven HBOS executives received bonuses of over £1 million in the same year the bank failed, several parliamentarians called for an inquiry. But such an investigation, should it ever takes place, would be another cover-up to divert attention away from the culpability of the political elite as well as the banks for the crisis. Labour MP John Mann, a member of parliament’s banking select committee, hailed Crosby’s actions as a magnanimous gesture which others should follow, even though he will continue to have a pension worth more than £400,000 and have no further action taken against him. A spokesman for Prime Minister David Cameron declared that it was “a matter for their (the bankers’) consciences” whether they followed Crosby’s example. Far from it being a matter “for their consciences”, the criminal actions of the financial elite are of deep concern to society and broad masses of working people. The fact that not one banking official has been prosecuted for practices that have brought the entire economy to the brink of collapse is an indictment of the corruption and criminality which pervades economic and political life in Britain and internationally. Instead of facing criminal investigations, the banks are again handing their executives massive bonuses. On March 20, Barclays announced it was awarding head of investment Rich Ricci £17.5 million of shares, which he immediately cashed in. The bank’s chief executive Antony Jenkins received £5.3 million in shares. This takes place as indications grow that a new crisis is just around the corner. At the end of March, a report by the Bank of England’s Financial Policy Committee (FPC) revealed a capital shortfall in Britain’s main banks of £25 billion which it warned needed to be filled by the end of 2013. An article in the Daily Telegraph cited anonymous officials at the bank, who “privately point out that dealing with the failure of a major clearing bank today remains as dangerous and difficult as it was back in 2008, when Royal Bank of Scotland and HBOS’s near-death experience brought the financial system as close to collapse as at any time in living memory.” The minutes of the latest FPC meeting were published on April 5, the same day as the HBOS report. They noted that concerns existed among some committee members that the figure of £25 billion would be insufficient, and they “were inclined to put in place additional upfront insurance.” As the wider economy continues to stagnate, and with deepening instability internationally, these concerns suggest that Britain’s financial institutions could be even more directly exposed to a financial crisis when it breaks out than they were in 2008. Link to comment Share on other sites More sharing options...
Steven Gaal Posted April 18, 2013 Author Share Posted April 18, 2013 (edited) ALL AROUND THE GLOBE CORRUPTION IN BANKING ............Gaal Senior R.B.S. Executive in Japan Expected to Resign in Libor Scandal dealbooknytimes 4/11/13 By MARK SCOTT Peter Macdiarmid/Getty ImagesJapanese authorities are seeking to punish Royal Bank of Scotland over its role in manipulating benchmark rates. LONDON – A senior executive at the Royal Bank of Scotland’s Japanese investment banking unit is expected to resign in the wake of a rate-rigging scandal, according to a person with direct knowledge of the matter. Ryusuke Otani, chief executive of RBS Securities Japan, will probably step down by the end of the week, added the person, who spoke on the condition of anonymity because he was not authorized to speak publicly. The resignation of Mr. Otani, a former Citigroup banker, follows moves by Japanese authorities to punish Royal Bank of Scotland over its role in the manipulation of the London interbank offered rate, or Libor. The Securities and Exchange Surveillance Commission of Japan asked local regulators last week to issue a so-called administrative action against R.B.S., which is based in Edinburgh, after some of its traders attempted to alter a key benchmark rate for financial gain. The Royal Bank of Scotland, in which the government holds a stake of about 81 percent after providing a bailout during the financial crisis, reached a $612 million settlement in February with American and British authorities in connection with the Libor scandal. As part of the agreement, the firm’s Japanese unit was required to plead guilty to criminal wrongdoing. Global authorities already have fined three banks – Barclays, UBS and Royal Bank of Scotland – a collective $2.6 billion for their roles in the manipulation of Libor. Other major financial institutions, including Citigroup and Deutsche Bank, are still under investigation in the rate-rigging scandal, which affected complex financial products worth trillions of dollars. In the latest regulatory action against Royal Bank of Scotland, Japanese authorities said on April 5 that some of the firm’s traders had tried to profit from altering rate submissions to yen Libor from 2006 to 2010. The British bank also was sanctioned for failing to spot the wrongdoing over the five-year period. Japanese regulators have taken similar steps against UBS and Citigroup after investigations found that some of the banks’ traders had attempted to manipulate key benchmark rates in the country. Royal Bank of Scotland’s chief executive, Stephen Hester, apologized in February for the bank’s role in the scandal, adding that six people had been fired because of their role in manipulating rates. An additional eight bankers left before the wrongdoing was discovered, while six other individuals have been disciplined but remain with the bank. A derivatives trader, Simon Green, was fired last month in connection to the Libor scandal, according to a person with direct knowledge of the matter. A spokesman for Royal Bank of Scotland declined to comment. Edited April 18, 2013 by Steven Gaal Link to comment Share on other sites More sharing options...
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