Too Big to Fail

[sidecross]

This has to be the biggest lie and misrepresentation to have ever been given to the American people.

Are they really saying ‘Capitalism is too big to fail?’ or ‘The Free Market Economy is too big to fail?’ or did anyone say ‘Communism is too big to fail?’

Where dinosaurs too big to become extinct?

[willoweyes]

Yes, if you saw Larry Summers on Face the Nation Sunday, he indicated that many "begged" AIG to modestly relinquish its big bonuses; "they would not."

Those bonuses were not about "too big to fail" they were about "getting while the getting is good."

For a brief moment, I felt a quiver of conservatism in my soul.

[suebee]

i hate to admit what im feeling. talk about buddah-nature training.

[craazyman]

They'll bolth be voting republican by the 2010 congressional elections!

bowahahahahahahah:p:p

I will vote for whoever sticks it to Wall Street. I don't care if they're demogogues or republicons.

[suebee]

IOWA CITY, Iowa – Iowa Sen. Charles Grassley suggested that AIG executives should take a Japanese approach toward accepting responsibility for the collapse of the insurance giant by resigning or killing themselves.


what im afraid to voice, the low dog repubs can sing to the world. doesnt look like any hope of lizard brain evolution with grassley.
but obama will try to keep bringing low dogs into the fold anyway. like the lost children from the lord of the flies.

[sidecross]

Those Hit Hardest Get No Bailout

by Amy Goodman

Taxpayers' bailout money for AIG bonuses has rightfully provoked a massive backlash against AIG, Wall Street, President Barack Obama and his economic advisers, Treasury Secretary Timothy Geithner and Larry Summers. The U.S. public now owns 80 percent of AIG. The outrage is bipartisan: Iowa Republican Sen. Charles Grassley even suggested that AIG executives "resign or go commit suicide." New York State Attorney General Andrew Cuomo just released details on the bonuses, exposing AIG's ridiculous claim that they are "retention bonuses" aimed at keeping key employees, since 11 of those who received bonuses of $1 million or more are no longer employed by AIG.

These AIG millionaires may need to return their unearned millions (Congress may pass a tax law aimed just at them, taxing their bonuses at 100 percent). But will the outrage help those who have been hardest hit by the economic meltdown? Will the hundreds of millions of dollars in various stimulus packages and bailouts find its way to regular people who are trying to get by, or will it go only to corporations deemed "too big to fail," leaving behind millions of people who are, apparently, small enough to fail?

The Center for Social Inclusion has just issued a report on the economic meltdown and how best to solve the problem. It links race to the lack of opportunity and to the prevalence of the notorious subprime mortgages that triggered the economic crisis.

CSI Executive Director Maya Wiley told me, "We have to stimulate equality in order to stimulate the economy." Access to education, transportation, housing and a clean environment give people a firm footing to respond to crisis and to succeed. Noting that "shovel-ready" stimulus jobs in construction will disproportionately favor those who are already in that industry, predominantly white males, Wiley is pushing for "community benefits agreements for construction jobs [that] ensure when the government has construction contracts, low-income people, people of color, women, are going to have their fair share of those jobs." Since people of color are more likely to live far from available jobs and are less likely to have cars, Wiley says, "we must ensure that the way transportation dollars get spent go to transit ... to connect people who need jobs to the places where there are jobs."

The group United for a Fair Economy also highlights the racial wealth divide, noting that "24 percent of blacks and 21 percent of Latinos are in poverty, versus 8 percent of whites. In the corporate world, we are seeing the highest executive pay and the biggest bailouts in history. CEO pay is 344 times that of the average worker."

Prevailing wisdom posits that freeing up credit will save the economy, thus these huge banks need hundreds of billions of dollars in taxpayer bailouts. But the crisis was initially caused by defaults on subprime mortgages. One option at the outset would have been to support the distressed homeowners, helping them avoid foreclosure. Wiley points out that "35 percent of subprime mortgage holders were actually eligible for prime-rate loans. ... Most of those were people of color ... communities of color did not have fair access to credit."

The banks and the mortgage lenders pushed bad loans on poor and minority borrowers. The NAACP has just filed lawsuits against Wells Fargo and HSBC, alleging "systematic, institutionalized racism in subprime home mortgage lending."

The banks bundled the bad loans into securities and sold them, then created derivatives based on these securities that are impossible to understand, let alone value. AIG insured the investment banks against potential losses from these complex derivatives. The U.S. Treasury bailed out the banks along with AIG. AIG then paid out tens of billions of its bailout money to the very large banks that already received billions in bailout funds: Bank of America and Goldman Sachs. Yet, despite the hundreds of billions being siphoned off by these megabanks, we are told that the credit market is still frozen. Many European banks also received funds this way, including Swiss bank UBS, which offers secret bank accounts that allow the richest Americans to avoid taxes. In effect, beleaguered U.S. taxpayers are bailing out wealthy U.S. tax dodgers.

Obama has surrounded himself with financial advisers who are too cozy with Wall Street, like Summers and Geithner. It's time to direct the stimulus to the people who need it, to those whose tax dollars are funding it.

Denis Moynihan contributed research to this column.

Amy Goodman is the host of "Democracy Now!," a daily international TV/radio news hour airing on 700 stations in North America. She was awarded the 2008 Right Livelihood Award, dubbed the “Alternative Nobel” prize, and received the award in the Swedish Parliament in December.

http://www.commondreams.org/view/2009/03/18-3

[Isaiah Mpski]

What about all the money going to the military?:(
I'd just as soon get the 10 grand big brother is spending for me over there every month.:eek:

First they tell us we are fighting the end of all wars-II
then they say if we don't stop the commies in SE Asia they'll be in California next.
We get our asses kicked over there and the commies still fail there.
Crazy isn't it.
We are spending money on worn out men and junk,and like before,
getting alot of beautiful young Americans ruined for life.

Let Us first live via the Monroe Doctrine and learn from our mistakes.:skeptic:

FOR GOTT IS THE UNIVERSE AND THE UNIVERSE GOD,
LASTING FOREVER,GOING ON FOREVER,
WITHOUT END.
AS IT WAS IN THE BEGINNING.

JD SON
mARCH 18,2008

[bopes]

This bonus hoo-ha is yet another distraction (http://www.slate.com/id/2213942/).

The Real AIG Scandal
It's not the bonuses. It's that AIG's counterparties are getting paid back in full.
By Eliot Spitzer
Posted Tuesday, March 17, 2009, at 10:41 AM ET

Everybody is rushing to condemn AIG's bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG's counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?

For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman's collapse, they feared a systemic failure could be triggered by AIG's inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG's trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.

It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure. The payments to AIG's counterparties are justified with an appeal to the sanctity of contract. If AIG's contracts turned out to be shaky, the theory goes, then the whole edifice of the financial system would collapse.

But wait a moment, aren't we in the midst of reopening contracts all over the place to share the burden of this crisis? From raising taxes—income taxes to sales taxes—to properly reopening labor contracts, we are all being asked to pitch in and carry our share of the burden. Workers around the country are being asked to take pay cuts and accept shorter work weeks so that colleagues won't be laid off. Why can't Wall Street royalty shoulder some of the burden? Why did Goldman have to get back 100 cents on the dollar? Didn't we already give Goldman a $25 billion capital infusion, and aren't they sitting on more than $100 billion in cash? Haven't we been told recently that they are beginning to come back to fiscal stability? If that is so, couldn't they have accepted a discount, and couldn't they have agreed to certain conditions before the AIG dollars—that is, our dollars—flowed?

The appearance that this was all an inside job is overwhelming. AIG was nothing more than a conduit for huge capital flows to the same old suspects, with no reason or explanation.

So here are several questions that should be answered, in public, under oath, to clear the air:

What was the precise conversation among Bernanke, Geithner, Paulson, and Blankfein that preceded the initial $80 billion grant?

Was it already known who the counterparties were and what the exposure was for each of the counterparties?

What did Goldman, and all the other counterparties, know about AIG's financial condition at the time they executed the swaps or other contracts? Had they done adequate due diligence to see whether they were buying real protection? And why shouldn't they bear a percentage of the risk of failure of their own counterparty?

What is the deeper relationship between Goldman and AIG? Didn't they almost merge a few years ago but did not because Goldman couldn't get its arms around the black box that is AIG? If that is true, why should Goldman get bailed out? After all, they should have known as well as anybody that a big part of AIG's business model was not to pay on insurance it had issued.

Why weren't the counterparties immediately and fully disclosed?

Failure to answer these questions will feed the populist rage that is metastasizing very quickly. And it will raise basic questions about the competence of those who are supposedly guiding this economic policy.

Eliot Spitzer is the former governor of the state of New York.

Article URL: http://www.slate.com/id/2213942/

[sidecross]

This bonus hoo-ha is yet another distraction (http://www.slate.com/id/2213942/).


A good point, they should void the contracts.

[craazyman]

Go Eliot go!

He is so right. The bonuses are chump change compared to the money being handed out to Goldman Sachs and it's ilk. And none of those geniuses has taken a red cent of bailout money. It just makes me puke.

Seriously, I'd like to let him loose on the securities industry for Round Two.

I bet he's just itching, itching. I bet he's thinking he might just have a chance.

Ha ha, What a comeback. I bet he's getting advice from Bill Clinton right now. ha ha ha. Keep your head down "Kristen" and shut up!

[willoweyes]

If anyone cares to check my past postings, they will find me firmly in Eliot's corner. The boy was royally screwed.

in other action, the Fed creates money out of Nowhere:

The New York Times
March 19, 2009
Fed to Buy $1 Trillion in Securities to Aid Economy
By EDMUND L. ANDREWS

WASHINGTON — Saying that the recession continues to deepen, the Federal Reserve announced Wednesday that it would pump an extra $1 trillion into the mortgage market and longer-term Treasury securities in order to revive the economy. . . . .As expected, the Fed kept its benchmark interest rate at virtually zero. But in a surprise, it dramatically increased the amount of money IT WILL CREATE OUT OF THIN AIR [my emphasis] to thaw out the still-frozen credit markets that have cramped lending to consumers and businesses alike.

Indeed, the immediate effect on the bond markets was striking, with prices rising and yields dropping sharply on the news. The yield on the 30-year Treasury bond, about 3.75 percent before the announcement, fell quickly to 3.4 percent and remained volatile. At the same time, the dollar plunged about 3 percent against other major currencies.

Stocks moved higher on the Fed action. The Dow Jones industrial average was down about 50 points before the 2:15 p.m. announcement, but ended the day up about 90 points.

The Fed said it would purchase an additional $750 billion worth of government-guaranteed mortgage-backed securities, on top of the $500 billion that it is currently in the process of buying. In addition, the Fed said it would buy up to $300 billion worth of longer-term Treasury securities over the next six months. That would tend to push down longer-term interest rates on loans of all types.

All of the Fed’s measures would come in addition to what has already been an unprecedented expansion of lending by the Fed. Since last September, the central bank has roughly doubled the size of its balance sheet to nearly $2 trillion from $900 billion — even before Wednesday’s action — mainly because of its efforts to rescue credit markets. . . . .

Since last September, new lending programs — including money for bailouts of individual companies like Citigroup, American International Group and Bank of America — have caused the Fed to PRINT NEW MONEY AT THE FASTEST PACE IN HISTORY [my emphasis]. . . .

and the market climbs. Good night, and good luck, America.

[sidecross]

Published on Monday, April 27, 2009 by TruthDig.com

Obama Has Missed His Moment
by Chris Hedges

Barack Obama has squandered his presidency. He had a fleeting moment to challenge the casino capitalism and financial recklessness of our economic and political elite. He could have orchestrated a state socialism that would have provided a safety net for tens of millions of Americans faced with dislocation and misery. The sums he has doled out to Wall Street could have been used to force companies to keep workers on the job or create new banks to open up credit. But he lacked the foresight and the courage to challenge entrenched power. And now we are headed down one of two frightening roads-massive deflation or hyperinflation. Neither will be pleasant.

Hyman Minsky-an economist largely ignored during his lifetime and now held up as something of a prophet-argued that speculative bubbles, and the financial collapses that follow them, are an inevitable consequence of unregulated capitalism. Minsky, an economics professor at Washington University in St. Louis who died in 1996, warned: "The normal functioning of our economy leads to financial trauma and crises, inflation, currency depreciations, unemployment and poverty in the middle of what could be virtually universal affluence-in short ... financially complex capitalism is inherently flawed." He called for socialized banking and stimulus packages to protect workers.

Our Minsky moment, however, has passed. Obama did not introduce radical measures to change our financial structures. And the outlook, even from Obama's chief financial advisers, is very gloomy. The U.S. economy will continue to contract "for some time to come," said Lawrence Summers, director of the White House National Economic Council. "I expect the economy will continue to decline," with "sharp declines in employment for quite some time this year," Summers said Sunday on "Fox News Sunday."

The International Monetary Fund has forecast that the U.S. economy will shrink 2.8 percent this year and have no growth in 2010, with unemployment rising to 10.1 percent.

Deflation, for the moment, remains our most immediate threat. The Labor Department reported that in March the consumer price index fell 0.4 percent over the last year, the first decline in over 50 years. Home values have fallen in the last year by 18 percent. Our current deflation is not the massive deflation endured during the Great Depression, but if it continues, and it becomes sustained, it will wreck our economy. I suspect that the few trillion dollars thrown at an economy that may have lost as much as $40 trillion in wealth means deflation will win out.

A sustained deflation, such as the one that has afflicted Japan, would make it much harder for borrowers, who would have less cash, to pay off debt. It would fuel more defaults, see more bankruptcies and dry up credit. It would lead to a fall in wages. Those attempting to sell houses, or any other products, would watch helplessly as the value of what they own evaporated.

Classical economic theory states that when you pump huge sums of money into the economy you produce inflation. And Fed Chairman Ben Bernanke would like to trigger inflation to relieve the heavy debts weighing on many banks and investment houses. Inflation, because it reduces the value of the dollar, effectively devalues debts and reduces what many owe. This push toward inflation is why we have low interest rates. This is why we are printing and borrowing hundreds of billions of dollars. And this is why projected deficits are almost beyond comprehension.

The Congressional Budget Office recently released its analysis of the Obama administration's 10-year budget proposal. The projected deficit for fiscal year 2009 is $1.8 trillion. And the CBO projects deficits over the next 10 years that annually are between about $650 billion and $1 trillion. The CBO also projects that the outstanding federal debt held by the public will increase from 40.8 percent of GDP in 2008 to 82.4 percent in 2019. This is a doubling of the national debt over the next 10 years. These deficits are being produced to jump-start the economy, to prevent deflation and to produce inflation.

Inflation, which may look good if you are a Wall Street firm overloaded with bad debt, is as risky as deflation, however. It can easily morph into hyperinflation and bring, like deflation, political and economic instability. It can lead to runs on banks. It can make your currency worthless. It discourages investment and thrift. And when you borrow at the level we are borrowing at you frequently debauch your currency. This could lead to the dollar being abandoned as a global currency. Why would the Chinese, or anyone else, want to keep buying our debt while we work overtime to devalue our currency? It means, in essence, that they can never make a profit and what they own is being reduced daily in value.

Hyperinflation is never controlled domestically. It is created by outside forces. If China and other buyers of our debt view the endlessly increasing American deficit spending as a threat to the viability of the U.S. dollar they will abandon the dollar and reduce their purchases of treasury bills. Chinese leaders have already questioned the wisdom of keeping foreign reserves predominantly in the form of U.S. dollar-denominated treasury bills and bonds. And if they walk away from the dollar our currency will become junk and hyperinflation will race through the society like a plague.

Deflation or hyperinflation will be our nemesis. These are the only two options left. The speculators on Wall Street and in the White House are again rolling the dice. But be assured that no matter what combination comes up we are going to be fleeced.

© 2009 TruthDig.com

Chris Hedges writes a regular column for Truthdig.com. Hedges graduated from Harvard Divinity School and was for nearly two decades a foreign correspondent for The New York Times. He is the author of "American Fascists: The Christian Right and the War on America."

http://www.commondreams.org/view/2009/04/27-1

[willoweyes]

Sidecross, did you see Bill Moyers last Friday? (you can see it today on your fast-speed computer)

His guest Simon Johnson (a professor at MIT's Sloan School of Management, and the chief economist at the International Monetary Fund during 2007 and 2008. ...)

said:

"... to hear a Federal Reserve regional bank president say that any time you have banks that are too big to fail, you are going to have oligarchs. I thought it was brilliant." (Oligarchy is the rule of the few by some means of hegemony; including, in that definition, financial).

He also said, (i paraphrase here: "the final result of all this, is that the big banks are in a stronger position than ever--they hold the reins."

Obama i am afraid, has discovered that he is only a very very smart mouse-man, and that the fat cats are still the real power.

[willoweyes]

Simon Johnson has a very very must-read article in the Atlantic May issue that is available online.

Here is the send-up to the article:

"The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time."

by Simon Johnson

[sidecross]

Thank you willoweyes, I did see Bill Moyer's with Simon Johnson and the Atlantic article by Simon Johnson was worth the time. :cool:

[Isaiah Mpski]

Gather it is time to start squriling(sp) away something to survive the nest few years.
Garden here is doing great.
Can catch enough fish in a week that would last a family a year.
Just need a liitle money to build my perfect home-you know-one that pays you to live in it.
Gas well,shallow coal,prime wind power,deep well water.And two mountainsides of 100-150 yr old growth hardwood that I am going to cut down if you don't buy my mineral interests in Cater County Willow.
I am tired of being poor again.:hmm:

[sidecross]

June 7, 2009

The Economy Is Still at the Brink

By SANDY B. LEWIS and WILLIAM D. COHAN

WHETHER at a fund-raising dinner for wealthy supporters in Beverly Hills, or at an Air Force base in Nevada, or at Charlie Rose’s table in New York City, President Obama is conducting an all-out campaign to try to make us feel a whole lot better about the economy as quickly as possible. “It’s safe to say we have stepped back from the brink, that there is some calm that didn’t exist before,” he told donors at the Beverly Hilton Hotel late last month.

Mr. Obama thinks that the way to revive the economy is to restore confidence in it. If the mood is right, the capital will flow. But this belief is dangerously misguided. We are sympathetic to the extraordinary challenge the president faces, but if we’ve learned anything at all two years into the worst financial crisis of our lifetimes, it is that a capital-markets system this dependent on public confidence is a shockingly inadequate foundation upon which to rest our economy.

We have both spent large chunks of our lives working on Wall Street, absorbing its ethic and mores. We’re concerned that nothing has really been fixed. We’re doubly concerned that people appear to feel the worst of the storm is over — and in this, they are aided and abetted by a hugely popular and charismatic president and by the fact that the Dow has increased by 35 percent or so since Mr. Obama started to lay out his economic plans in March. But wishing for improvement and managing by the Dow’s swings are a fool’s game. (Disclosure: One of us, Mr. Lewis, was convicted on federal charges of stock manipulation in 1989, pardoned by President Bill Clinton in 2001 and had his lifetime trading ban overturned by the Securities and Exchange Commission in 2006; documents relating to the case can be found at sblewis.net.)

The storm is not over, not by a long shot. Huge structural flaws remain in the architecture of our financial system, and many of the fixes that the Obama administration has proposed will do little to address them and may make them worse. At another fund-raising event, for Senator Harry Reid, President Obama said: “We didn’t ask for the challenges that we face. But we are determined to answer the call to meet those challenges, to cast aside the old arguments and overcome the stubborn divisions and move forward as one people and one nation .... It will take time but I promise you, I promise you, I’ll always tell you the truth about the challenges we face.”

Keeping that statement in mind — as well as an abiding faith in the importance of properly functioning capital markets — we have come up with a set of questions meant to challenge a popular president, with vast majorities in Congress, to find the flaws in the system, to figure out what’s being done to fix them and to get to the truth about the difficulties we face as we set out to restore the proper functioning of our markets and our standing in the world.

•

Six months ago, nobody believed that our banking system was well designed, functioning smoothly or properly regulated — so why then are we so desperately anxious to restore that model as the status quo? Nearly every new program emanating these days from the Treasury Department — the Term Asset-Backed Securities Loan Facility, the Public Private Investment Program, the “stress tests” of major banks — appears to have been designed to either paper over or to prop up a system that has clearly failed.

Instead of hauling out the new drywall to cover up the existing studs, let’s seriously consider ripping down the entire structure, dynamiting the foundation and building a new system that rewards taking prudent risks, allocates capital where it is needed, allows all investors to get accurate and timely financial information and increases value to shareholders and creditors.

As a start, the best-compensated executives at the top of these big banks, hedge funds and private-equity firms should be treated like general partners of yore. If a firm takes prudent risks that pay off, this top layer of management should be well compensated. But if the risks these people take are imprudent and the losses grave, they should expect to lose their jobs. Instead of getting guaranteed salaries or huge bonuses, they should have the bulk of their net worth completely at risk for a long stretch of time — 10 years come to mind — for the decisions they make while in charge. This would go a long way toward re-aligning the interests of these firms with those of their shareholders and clients and the American people, who have been saddled with their risks and mistakes.

•

Why is so much effort being put into propping up those at the top of the economic pyramid — the money-center banks, the insurance companies, the hedge funds and so forth — when during a period of deflation like the one we are in, any recovery will come only by restoring the confidence of the people down at the bottom of the pyramid?

Confidence will return only when jobs can be found and mortgage payments are made. Even if Mr. Obama’s claim is true that his $780 billion stimulus package “saved or created” some 150,000 jobs, we seem a long way away from the point where those struggling to get by will feel like spending again. What happens when people buy a car once every 10 years instead of once every two or three, especially now that we taxpayers own such a big percentage of the American auto industry?

•

Instead of promising the imminent return of good times, why isn’t Mr. Obama talking more about the importance of living within our means and not spending money we don’t have on things we don’t need? We used to be a frugal nation. The president should be talking about kicking our addictions to easy credit, to quick fixes and to a culture of more is better (and Congress’s new credit-card legislation, while perhaps eliminating some of the worst aspects of that industry, certainly didn’t send the right message about personal finance).

Gas-guzzling S.U.V.’s, cigarette boats, no-income mortgages and private jets should be relegated to the junk heaps of history, or better yet, put in a museum dedicated to never forgetting the greed and avarice that led us so far astray.

•

Why is the morphine drip still in the veins of the financial system? These trillions in profligate federal spending are intended to make us feel better again even though feeling pain, and dealing with it responsibly, would be healthier in the long run. It is time to stop rescuing the banks that got us into this mess. If that means more bank failures on a grander scale or the dismemberment of Citigroup, so be it. Depositors will be protected — up to $250,000 per account — but shareholders, creditors and, sadly, many employees will, for the long-term health of the system, need to feel the market’s wrath.

•

Is there to be any limit on bailouts? We have now thrown money at the big banks, any number of regional ones, insurance companies, General Motors, Chrysler and state and local governments. Will we soon be bailing out Dartmouth, which just lost its AAA bond rating? Is there no room left for what the Austrian economist Joseph Schumpeter termed “creative destruction”? And what is the plan to get the American people out of all these equity stakes we now own and don’t want?

Furthermore, for government leaders to decide who shall live and who shall die in an economic sense opens them up to legitimate charges of crony capitalism and favoritism. We will benefit in the long run from a return to market discipline.

•

Why has Mr. Obama surrounded himself largely with economic advisers who are theoreticians and academics — distinguished though they may be — but not those who have sat on a trading desk, made a market, managed a portfolio or set a spread?

In our view, one of the ways out of this economic conundrum is to have experienced traders — not hothouse flowers — design incentives that will encourage the market to have buyers and sellers meet anew around the proper valuations of assets, not some artificial construct of a market propped up by a pliant Financial Accounting Standards Board or government-sponsored programs that appear to be virtually giving money away to hedge funds and private-equity firms so that they will buy assets they would not ordinarily buy. We’re not talking about putting the fox in charge of the henhouse, just putting people who know how markets function in the real world into the important seats in Washington.

•

Why isn’t the Obama administration working night and day to give the public a vastly increased amount of detailed information about what happens in financial markets? Ever since traders started disappearing from the floor of the New York Stock Exchange in the last decade of the 20th century, there has been less and less transparency about the price and volume of trades. The New York Stock Exchange really exists in name only, as computers execute a very large percentage of all trades, far away from any exchange.

As a result, there is little flow of information, and small investors are paying the price. The beneficiaries, no surprise, are the remains of the old Wall Street broker-dealers — now bank-holding companies like Goldman Sachs and Morgan Stanley — that can see in advance what their clients are interested in buying, and might trade the same stocks for their own accounts. Incredibly, despite the events of last fall, nearly every one of Wall Street’s proprietary trading desks can still take huge risks and then, if they get into trouble, head to the Federal Reserve for short-term rescue financing.

Here’s something that should change in terms of transparency. The most recent price that any stock traded for should be published online in real time for all to see. And the public should have access to a new type of electronic ticker that provides market information in language that all can understand, not just the insiders.

As for those impossibly complex securities that caused so much of the trouble — among them derivatives, credit-default swaps and asset-backed securities — the S.E.C. should have the power to make public all the documentation surrounding these weapons of mass financial destruction, including all data about the current costs of buying and selling them and the cash flow underlying them. We also need widely accessible, real-time reporting of all trades in the bond market. We bet Mike Bloomberg’s company could help design such a system for our benefit.

•

Why is the government still complicit in making the system ever less transparent, even when it comes to what should clearly be considered public information? For instance, it took more than a year for the Federal Reserve to disclose that it had agreed to pay BlackRock — the huge money manager that is 45 percent owned by Bank of America — and others $71 million in a no-bid contract to manage the $30 billion of toxic assets that JPMorgan did not want when it bought Bear Stearns in March 2008. And that is only one of the five contracts BlackRock has with the government as a result of this crisis — the nature of the other contracts remains secret.

Treasury Secretary Timothy Geithner has made much of financialstability.gov, the Treasury’s new Web site dedicated to “transparency, oversight and accountability.” But look it over and try to find, for example, just one record of a bona fide credit-default swap, or the names of the hedge-fund and private-equity investors who have participated in the Term Asset-Backed Securities Loan Facility bonanza. It was only a lawsuit filed by a watchdog group that convinced the Treasury to divulge details of former Secretary Henry Paulson’s October meeting with the chief executives of the 10 largest Wall Street firms to force them to take money from the Troubled Asset Relief Program. A lawsuit filed last November by Bloomberg News to force the Federal Reserve to reveal the details on more than $2 trillion in loans that went to banks including Citigroup and Goldman Sachs is still pending in federal court.

And what has become of the S.E.C.’s year-old investigation into who made short-dated, out-of-the-money bets in March 2008 hoping Bear Stearns would fail — bets that were suddenly worth millions of dollars when the company did collapse later that month?

Why do we still not know why Mr. Paulson, Mr. Geithner and the Federal Reserve chairman, Ben Bernanke, allowed Lehman Brothers to file bankruptcy last Sept. 15 but then, a day later, saved A.I.G.? Or why last November this trio decided to absorb potential losses on $301 billion of Citigroup’s shaky assets, when conventional wisdom among insiders held that they were worth only $150 billion at best?

Also, before Dick Fuld, Lehman Brothers’ chief executive, appeared before the House Committee on Oversight and Government Reform last October, it demanded from company executives boxes of documents about what happened at Lehman and why. Where are those documents?

•

Why hasn’t President Obama insisted on public hearings over what happened during this financial crisis?

Nota single top executive of a Wall Street securities firm responsible for causing the financial crisis has had the courage or the decency to step forward in front of the cameras and explain to the American people in his own words exactly how and why he allowed his firm to cause the crisis. Both Mr. Fuld and Alan Schwartz, the chief executive of Bear Stearns at the end, in their Congressional testimony blamed the proverbial once-in-a-century financial tsunami. Do they or any of their peers really think this is true?

There may be a way to find out. There is much talk nowadays coming from top bankers — Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JPMorganChase, John Mack of Morgan Stanley and even Ken Lewis of Bank of America — about seeing how quickly they can repay to the Treasury the TARP money Mr. Paulson forced on them. One precondition of their being allowed to repay the funds should be a requirement that each gives a public deposition and explains, under oath, what truly happened and why.

Such a public hearing would be meant only to offer a truthful assessment of the errors in judgment made at each firm and to promote understanding, so that we — somehow — can avoid repeating the same mistakes again. It would not be about indictments. These men should be offered use immunity from prosecution for their honest testimony, but only with a clear understanding that the failure to tell the truth at any point would result in serious legal consequences. The hearing could be complemented by a truth-seeking commission established to hear the accounts of several people who have departed the scene, including, among others, Mr. Paulson, former Treasury Secretary Robert Rubin and former Wall Street chiefs like Mr. Fuld, Hank Greenberg of A.I.G., Sanford Weill of Citigroup, Jimmy Cayne of Bear Stearns and Stan O’Neal of Merrill Lynch. While far removed from their positions of authority, these men have tales to tell about how this crisis got started and why.

•

Why are we not looking to change our current civil and criminal racketeering statutes, which are playing a perverse role in investigations of the crisis? Statutes meant to give prosecutors extraordinary powers of seizure before an indictment is handed up, or to impose treble damages, are appropriately used to break up rings of criminal behavior like the Mafia or drug cartels.

Buta few clever prosecutors could use such laws to bring charges against people or firms in the financial services industry whose pattern of bad behavior played important roles in the collapse. Such outright seizure of capital or assets through use of the racketeering statutes can do much harm by giving prosecutors an unnecessarily powerful role in our capital markets. There must be a way to keep what is good about the statutes and to make sure they are not used for ill in trying to get to the bottom of the financial meltdown.

We are in one of those “generational revolutions” that Jefferson said were as important as anything else to the proper functioning of our democracy. We can no longer pretend that our collective behavior as a nation for the past 25 years has been worthy of us as a people. Many of us hoped that Barack Obama’s election would redress the dire decline in our collective ethic. We are 139 days into his presidency, and while there is still plenty of hope that Mr. Obama will fulfill his mandate, his record on searching out the causes of the financial crisis has not been reassuring. He must do what is necessary to restore the American people’s — and the world’s — faith in American capitalism and in our nation. Answering our questions may help us get back on track. But time is wasting.

Sandy B. Lewis, an organic farmer, founded S B Lewis & Co., a brokerage house. William D. Cohan, a contributing editor at Fortune and former Wall Street banker, is the author of “House of Cards: A Tale of Hubris and Wretched Excess on Wall Street.”


http://www.nytimes.com/2009/06/07/opinion/07cohanWEB.html?pagewanted=print

[Isaiah Mpski]

The key word to your supost sidey is collective behaviour and to US transcendentalists the in person spirit of President Jefferson and his men now.EmmersesoonthoureaylyMonroesonskiism.
Collective behaviour is most important to us as a nation now more than ever or could soon be.
Jefferson believed in the Gold Standard and the exploitation of the South and West and so do We.
If we could convince the 17 states of Mexico and hoipefully to extend the the same rights and privs we give to Puerto Rico and the like,I think they would favor joinging our Union.
Witht he way they are evolving they could elect a President in a few Generations.

Did you know,they don't have a Food Stamp program and the like in Mexico.
Sinfull.

[sidecross]

Published on Monday, June 15, 2009 by TruthDig.com

The American Empire Is Bankrupt

by Chris Hedges

This week marks the end of the dollar’s reign as the world’s reserve currency. It marks the start of a terrible period of economic and political decline in the United States. And it signals the last gasp of the American imperium. That’s over. It is not coming back. And what is to come will be very, very painful.

Barack Obama, and the criminal class on Wall Street, aided by a corporate media that continues to peddle fatuous gossip and trash talk as news while we endure the greatest economic crisis in our history, may have fooled us, but the rest of the world knows we are bankrupt. And these nations are damned if they are going to continue to prop up an inflated dollar and sustain the massive federal budget deficits, swollen to over $2 trillion, which fund America’s imperial expansion in Eurasia and our system of casino capitalism. They have us by the throat. They are about to squeeze.

There are meetings being held Monday and Tuesday in Yekaterinburg, Russia, (formerly Sverdlovsk) among Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization. The United States, which asked to attend, was denied admittance. Watch what happens there carefully. The gathering is, in the words of economist Michael Hudson, “the most important meeting of the 21st century so far.”

It is the first formal step by our major trading partners to replace the dollar as the world’s reserve currency. If they succeed, the dollar will dramatically plummet in value, the cost of imports, including oil, will skyrocket, interest rates will climb and jobs will hemorrhage at a rate that will make the last few months look like boom times. State and federal services will be reduced or shut down for lack of funds. The United States will begin to resemble the Weimar Republic or Zimbabwe. Obama, endowed by many with the qualities of a savior, will suddenly look pitiful, inept and weak. And the rage that has kindled a handful of shootings and hate crimes in the past few weeks will engulf vast segments of a disenfranchised and bewildered working and middle class. The people of this class will demand vengeance, radical change, order and moral renewal, which an array of proto-fascists, from the Christian right to the goons who disseminate hate talk on Fox News, will assure the country they will impose.

I called Hudson, who has an article in Monday’s Financial Times called “The Yekaterinburg Turning Point: De-Dollarization and the Ending of America’s Financial-Military Hegemony.” “Yekaterinburg,” Hudson writes, “may become known not only as the death place of the czars but of the American empire as well.” His article is worth reading, along with John Lanchester’s disturbing exposé of the world’s banking system, titled “It’s Finished,” which appeared in the May 28 issue of the London Review of Books.

“This means the end of the dollar,” Hudson told me. “It means China, Russia, India, Pakistan, Iran are forming an official financial and military area to get America out of Eurasia. The balance-of-payments deficit is mainly military in nature. Half of America’s discretionary spending is military. The deficit ends up in the hands of foreign banks, central banks. They don’t have any choice but to recycle the money to buy U.S. government debt. The Asian countries have been financing their own military encirclement. They have been forced to accept dollars that have no chance of being repaid. They are paying for America’s military aggression against them. They want to get rid of this.”

China, as Hudson points out, has already struck bilateral trade deals with Brazil and Malaysia to denominate their trade in China’s yuan rather than the dollar, pound or euro. Russia promises to begin trading in the ruble and local currencies. The governor of China’s central bank has openly called for the abandonment of the dollar as reserve currency, suggesting in its place the use of the International Monetary Fund’s Special Drawing Rights. What the new system will be remains unclear, but the flight from the dollar has clearly begun. The goal, in the words of the Russian president, is to build a “multipolar world order” which will break the economic and, by extension, military domination by the United States. China is frantically spending its dollar reserves to buy factories and property around the globe so it can unload its U.S. currency. This is why Aluminum Corp. of China made so many major concessions in the failed attempt to salvage its $19.5 billion alliance with the Rio Tinto mining concern in Australia. It desperately needs to shed its dollars.


“China is trying to get rid of all the dollars they can in a trash-for-resource deal,” Hudson said. “They will give the dollars to countries willing to sell off their resources since America refuses to sell any of its high-tech industries, even Unocal, to the yellow peril. It realizes these dollars are going to be worthless pretty quickly.”

The architects of this new global exchange realize that if they break the dollar they also break America’s military domination. Our military spending cannot be sustained without this cycle of heavy borrowing. The official U.S. defense budget for fiscal year 2008 is $623 billion, before we add on things like nuclear research. The next closest national military budget is China’s, at $65 billion, according to the Central Intelligence Agency.

There are three categories of the balance-of-payment deficits. America imports more than it exports. This is trade. Wall Street and American corporations buy up foreign companies. This is capital movement. The third and most important balance-of-payment deficit for the past 50 years has been Pentagon spending abroad. It is primarily military spending that has been responsible for the balance-of-payments deficit for the last five decades. Look at table five in the Balance of Payments Report, published in the Survey of Current Business quarterly, and check under military spending. There you can see the deficit.

To fund our permanent war economy, we have been flooding the world with dollars. The foreign recipients turn the dollars over to their central banks for local currency. The central banks then have a problem. If a central bank does not spend the money in the United States then the exchange rate against the dollar will go up. This will penalize exporters. This has allowed America to print money without restraint to buy imports and foreign companies, fund our military expansion and ensure that foreign nations like China continue to buy our treasury bonds. This cycle appears now to be over. Once the dollar cannot flood central banks and no one buys our treasury bonds, our empire collapses. The profligate spending on the military, some $1 trillion when everything is counted, will be unsustainable.

“We will have to finance our own military spending,” Hudson warned, “and the only way to do this will be to sharply cut back wage rates. The class war is back in business. Wall Street understands that. This is why it had Bush and Obama give it $10 trillion in a huge rip-off so it can have enough money to survive.”

The desperate effort to borrow our way out of financial collapse has promoted a level of state intervention unseen since World War II. It has also led us into uncharted territory.

“We have in effect had to declare war to get us out of the hole created by our economic system,” Lanchester wrote in the London Review of Books. “There is no model or precedent for this, and no way to argue that it’s all right really, because under such-and-such a model of capitalism ... there is no such model. It isn’t supposed to work like this, and there is no road-map for what’s happened.”

The cost of daily living, from buying food to getting medical care, will become difficult for all but a few as the dollar plunges. States and cities will see their pension funds drained and finally shut down. The government will be forced to sell off infrastructure, including roads and transport, to private corporations. We will be increasingly charged by privatized utilities—think Enron—for what was once regulated and subsidized. Commercial and private real estate will be worth less than half its current value. The negative equity that already plagues 25 percent of American homes will expand to include nearly all property owners. It will be difficult to borrow and impossible to sell real estate unless we accept massive losses. There will be block after block of empty stores and boarded-up houses. Foreclosures will be epidemic. There will be long lines at soup kitchens and many, many homeless. Our corporate-controlled media, already banal and trivial, will work overtime to anesthetize us with useless gossip, spectacles, sex, gratuitous violence, fear and tawdry junk politics. America will be composed of a large dispossessed underclass and a tiny empowered oligarchy that will run a ruthless and brutal system of neo-feudalism from secure compounds. Those who resist will be silenced, many by force. We will pay a terrible price, and we will pay this price soon, for the gross malfeasance of our power elite.

© 2009 TruthDig.com

Chris Hedges writes a regular column for Truthdig.com. Hedges graduated from Harvard Divinity School and was for nearly two decades a foreign correspondent for The New York Times. He is the author of many books, including: War Is A Force That Gives Us Meaning, What Every Person Should Know About War, and American Fascists: The Christian Right and the War on America. His most recent book, Empire of Illusion: The End of Literacy and the Triumph of Spectacle, will be out in July, but is available for pre-order.

http://www.commondreams.org/view/2009/06/15-0

[sidecross]

Chris Hedges may have jumped the gun, but a restart is up coming.


http://www.ft.com/cms/s/0/fc9a83b6-5990-11de-b687-00144feabdc0.html

[craazyman]

India AND Pakistan?

any day now, any day ;)

[Isaiah Mpski]

What will land in Mexico be worth?
Has anyone subscribed to Daniel's latest attempt to fund his revolution.

God Damn.And it's getting hot too.

Seriously Sidey,if it gets that bad,it is because,just like the economy in Russia was ruined when they tried to put the Afgani's out of business,the economy at home suffers also.They didn't have drones and bunker buster bombs though.and your quoted author is dealing with a far different type of Government than "strict" Communism.When Russia reached the appx state we find ourselves the big bosses tried to grab all they could and it was a scene such as Hedges describes that ensued.
As long as the Treasury Dept keeps printing dollar bill,Sidey,a dollar is always going to be worth a dollar in the "good ole USA".
To hell with the other half of the world if that's what they want.

Crazzy.
Am I reading you right when you say 'the big burn" will occur in Asia?
I think Israel will burn a few more centrifuges first though.

Most people don't understand modern nuclear warfare.Most of the armaments are for wiping out a small area,not burn up whole cities like we did in Japan.That is the reason why all American military personel have been moved back 50 miles from the DMZ.
The real problem with modern warfare is that it can get out of hand so quickly or accidently that UNLESS we learn to meet other nations needs,those nations,just as it has always happened,will try to,somehow to take what ever they need away from you.

If on the other hand there are those of you who feel frightened enough by Sidey's post to make way to a safe place to kinda see what happens over the next few years,my farm in Oklahoma,and garden,need all the help we can get.


The plan has to be this.We get our armies and as much materials as we can and bring all our people back to the good ole US of A.

[sidecross]

The three steps to financial reform

By George Soros

Published: June 16 2009 19:47 | Last updated: June 16 2009 19:47

The Obama administration is expected on Wednesday to propose a reorganisation of the way we regulate financial markets. I am not an advocate of too much regulation. Having gone too far in deregulating – which contributed to the current crisis – we must resist the temptation to go too far in the opposite direction. While markets are imperfect, regulators are even more so. Not only are they human, they are also bureaucratic and subject to political influences, therefore regulations should be kept to a minimum.

Three principles should guide reform. First, since markets are bubble-prone, regulators must accept responsibility for preventing bubbles from growing too big. Alan Greenspan, the former chairman of the Federal Reserve, and others have expressly refused that responsibility. If markets cannot recognise bubbles, they argued, neither can regulators. They were right and yet the authorities must accept the assignment, even knowing that they are bound to be wrong. They will, however, have the benefit of feedback from the markets so they can and must continually recalibrate to correct their mistakes.

Second, to control asset bubbles it is not enough to control the money supply; we must also control the availability of credit. This cannot be done with monetary tools alone – we must also use credit controls such as margin requirements and minimum capital requirements. Currently these tend to be fixed irrespective of the market’s mood. Part of the authorities’ job is to counteract these moods. Margin and minimum capital requirements should be adjusted to suit market conditions. Regulators should vary the loan-to-value ratio on commercial and residential mortgages for risk-weighting purposes to forestall real estate bubbles.

Third, we must reconceptualise the meaning of market risk. The efficient market hypothesis postulates that markets tend towards equilibrium and deviations occur in a random fashion; moreover, markets are supposed to function without any discontinuity in the sequence of prices. Under these conditions market risks can be equated with the risks affecting individual market participants. As long as they manage their risks properly, regulators ought to be happy.

But the efficient market hypothesis is unrealistic. Markets are subject to imbalances that individual participants may ignore if they think they can liquidate their positions. Regulators cannot ignore these imbalances. If too many participants are on the same side, positions cannot be liquidated without causing a discontinuity or, worse, a collapse. In that case the authorities may have to come to the rescue. That means that there is systemic risk in the market in addition to the risks most market participants perceived prior to the crisis.

The securitisation of mortgages added a new dimension of systemic risk. Financial engineers claimed they were reducing risks through geographic diversification: in fact they were increasing them by creating an agency problem. The agents were more interested in maximising fee income than in protecting the interests of bondholders. That is the verity that was ignored by regulators and market participants alike.

To avert a repetition, the agents must have “skin in the game” but the 5 per cent proposed by the administration is more symbolic than substantive. I would consider 10 per cent as the minimum requirement. To allow for possible discontinuities in markets securities held by banks should carry a higher risk rating than they do under the Basel Accords. Banks should pay for the implicit guarantee they enjoy by using less leverage and accepting restrictions on how they invest depositors’ money; they should not be allowed to speculate for their own account with other people’s money.

It is probably impractical to separate investment banking from commercial banking as the US did with the Glass-Steagall Act of 1933. But there has to be an internal firewall that separates proprietary trading from commercial banking. Proprietary trading ought to be financed out of a bank’s own capital. If a bank is too big to fail, regulators must go even further to protect its capital from undue risk. They must regulate the compensation packages of proprietary traders so that risks and rewards are properly aligned. This may push proprietary trading out of banks into hedge funds. That is where it properly belongs. Hedge funds and other large investors must also be closely monitored to ensure that they do not build up dangerous imbalances.

Finally, I have strong views on the regulation of derivatives. The prevailing opinion is that they ought to be traded on regulated exchanges. That is not enough. The issuance and trading of derivatives ought to be as strictly regulated as stocks. Regulators ought to insist that derivatives be homogenous, standardised and transparent.

Custom-made derivatives only serve to improve the profit margin of the financial engineers designing them. In fact, some derivatives ought not to be traded at all. I have in mind credit default swaps. Consider the recent bankruptcy of AbitibiBowater and that of General Motors. In both cases, some bondholders owned CDS and stood to gain more by bankruptcy than by reorganisation. It is like buying life insurance on someone else’s life and owning a licence to kill him. CDS are instruments of destruction that ought to be outlawed.


The writer is chairman of Soros Fund Management and author of The Crash of 2008 (PublicAffairs 2009)


.Copyright The Financial Times Limited 2009


http://www.ft.com/cms/s/0/b62b1bd4-5aa3-11de-8c14-00144feabdc0.html

[bopes]

too big to fit in a suitcase (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a62_boqkurbI) . . .

Suitcase With $134 Billion Puts Dollar on Edge: William Pesek

Commentary by William Pesek

June 17 (Bloomberg) -- It’s a plot better suited for a John Le Carre novel.

Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear.

Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit?

The implications of the securities being legitimate would be bigger than investors may realize. At a minimum, it would suggest that the U.S. risks losing control over its monetary supply on a massive scale.

The trillions of dollars of debt the U.S. will issue in the next couple of years needs buyers. Attracting them will require making sure that existing ones aren’t losing faith in the U.S.’s ability to control the dollar.

The dollar is, for better or worse, the core of our world economy and it’s best to keep it stable. News that’s more fitting for international spy novels than the financial pages won’t help that effort. It is incumbent upon the U.S. Treasury to get to the bottom of this tale and keep markets informed.

GDP Carriers

Think about it: These two guys were carrying the gross domestic product of New Zealand or enough for three Beijing Olympics. If economies were for sale, the men could buy Slovakia and Croatia and have plenty left over for Mongolia or Cambodia. Yes, they could have built vacation homes amidst Genghis Khan’s Gobi Desert or the famed Temples of Angkor. Bernard Madoff who?

These men carrying bonds concealed in the bottom of their luggage also would be the fourth-largest U.S. creditors. It makes you wonder if some of the time Treasury Secretary Timothy Geithner spends keeping the Chinese and Japanese invested in dollars should be devoted to well-financed men crossing the Italian-Swiss border.

This tale has gotten little attention in markets, perhaps because of the absurdity of our times. The last year has been a decidedly disorienting one for capitalists who once knew up from down, red from black and risk from reward. It almost fits with the surreal nature of today that a couple of travelers have more U.S. debt than Brazil in a suitcase and, well, that’s life.

Clancy Bestseller

You can almost picture Tom Clancy sitting in his study thinking: “Damn! Why didn’t I think of this yarn and novelize it years ago?” He could have sprinkled in a Chinese angle, a pinch of Russian intrigue, a dose of Pyongyang and a bit of Taiwan-Strait tension into the mix. Presto, a sure bestseller.

Daniel Craig may be thinking this is a great story on which to base the next James Bond flick. Perhaps Don Johnson could buy the rights to this tale. In 2002, the “Miami Vice” star was stopped by German customs officers as he was traveling in a car carrying credit notes and other securities worth as much as $8 billion. Now he could claim it was all, uh, research.

When I first heard of the $134 billion story, I was tempted to glance at my calendar to make sure it didn’t read April 1.

Let’s assume for a moment that these U.S. bonds are real. That would make a mockery of Japanese Finance Minister Kaoru Yosano’s “absolutely unshakable” confidence in the credibility of the U.S. dollar. Yosano would have some explaining to do about Japan’s $686 billion of U.S. debt if more of these suitcase capers come to light.

‘Kennedy Bonds’

Counterfeit $100 bills are one thing; two guys with undeclared bonds including 249 certificates worth $500 million and 10 “Kennedy bonds” of $1 billion each is quite another.

The bust could be a boon for Italy. If the securities are found to be genuine, the smugglers could be fined 40 percent of the total value for attempting to take them out of the country. Not a bad payday for a government grappling with a widening budget deficit and rebuilding the town of L’Aquila, which was destroyed by an earthquake in April.

It would be terrible news for the White House. Other than the U.S., China or Japan, no other nation could theoretically move those amounts. In the absence of clear explanations coming from the Treasury, conspiracy theories are filling the void.

On his blog, the Market Ticker, Karl Denninger wonders if the Treasury “has been surreptitiously issuing bonds to, say, Japan, as a means of financing deficits that someone didn’t want reported over the last, oh, say 10 or 20 years.” Adds Denninger: “Let’s hope we get those answers, and this isn’t one of those ‘funny things’ that just disappears into the night.”

This is still a story with far more questions than answers. It’s odd, though, that it’s not garnering more media attention. Interest is likely to grow. The last thing Geithner and Federal Reserve Chairman Ben Bernanke need right now is tens of billions more of U.S. bonds -- or even high-quality fake ones -- suddenly popping up around the globe.

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net

[Isaiah Mpski]

Woopsy poopsy bopesi,there must be a whitey in the wood pile.
Excuse my melancholia.I get paid fer it.
The South shall rise again;
Joe Brown for Supreme Court Judge.

[sidecross]

June 18, 2009

Only a Hint of Roosevelt in Financial Overhaul

By JOE NOCERA

Three quarters of a century ago, President Franklin Roosevelt earned the undying enmity of Wall Street when he used his enormous popularity to push through a series of radical regulatory reforms that completely changed the norms of the financial industry.

Wall Street hated the reforms, of course, but Roosevelt didn’t care. Wall Street and the financial industry had engaged in practices they shouldn’t have, and had helped lead the country into the Great Depression. Those practices had to be stopped. To the president, that’s all that mattered.

On Wednesday, President Obama unveiled what he described as “a sweeping overhaul of the financial regulatory system, a transformation on a scale not seen since the reforms that followed the Great Depression.”

In terms of the sheer number of proposals, outlined in an 88-page document the administration released on Tuesday, that is undoubtedly true. But in terms of the scope and breadth of the Obama plan — and more important, in terms of its overall effect on Wall Street’s modus operandi — it’s not even close to what Roosevelt accomplished during the Great Depression.

Rather, the Obama plan is little more than an attempt to stick some new regulatory fingers into a very leaky financial dam rather than rebuild the dam itself. Without question, the latter would be more difficult, more contentious and probably more expensive. But it would also have more lasting value.

On the surface, there was no area of the financial industry the plan didn’t touch. “I was impressed by the real estate it covered,” said Daniel Alpert, the managing partner of Westwood Capital. The president’s proposal addresses derivatives, mortgages, capital, and even, in the wake of the American International Group fiasco, insurance companies. Among other things, it would give new regulatory powers to the Federal Reserve, create a new agency to help protect consumers of financial products, and make derivative-trading more transparent. It would give the government the power to take over large bank holding companies or troubled investment banks — powers it doesn’t have now — and would force banks to hold onto some of the mortgage-backed securities they create and sell to investors.

But it’s what the plan doesn’t do that is most notable.

Take, for instance, the handful of banks that are “too big to fail”— and which, in some cases, the government has had to spend tens of billions of dollars propping up. In a recent speech in China, the former Federal Reserve chairman — and current Obama adviser — Paul Volcker called on the government to limit the functions of any financial institution, like the big banks, that will always be reliant on the taxpayer should they get into trouble. Why, for instance, should they be allowed to trade for their own account — reaping huge profits and bonuses if they succeed — if the government has to bail them out if they make big mistakes, Mr. Volcker asked.

Many experts, even at the Federal Reserve, think that the country should not allow banks to become too big to fail. Some of them suggest specific economic disincentives to prevent growing too big and requirements that would break them up before reaching that point.

Yet the Obama plan accepts the notion of “too big to fail” — in the plan those institutions are labeled “Tier 1 Financial Holding Companies” — and proposes to regulate them more “robustly.” The idea of creating either market incentives or regulation that would effectively make banking safe and boring — and push risk-taking to institutions that are not too big to fail — isn’t even broached.

Or take derivatives. The Obama plan calls for plain vanilla derivatives to be traded on an exchange. But standard, plain vanilla derivatives are not what caused so much trouble for the world’s financial system. Rather it was the so-called bespoke derivatives — customized, one-of-a-kind products that generated enormous profits for institutions like A.I.G. that created them, and, in the end, generated enormous damage to the financial system. For these derivatives, the Treasury Department merely wants to set up a clearinghouse so that their price and trading activity can be more readily seen. But it doesn’t attempt to diminish the use of these bespoke derivatives.

“Derivatives should have to trade on an exchange in order to have lower capital requirements,” said Ari Bergmann, a managing principal with Penso Capital Markets. Mr. Bergmann also thought that another way to restrict the bespoke derivatives would be to strip them of their exemption from the antigambling statutes. In a recent article in The Financial Times, George Soros, the financier, wrote that “regulators ought to insist that derivatives be homogeneous, standardized and transparent.” Under the Obama plan, however, customized derivatives will remain an important part of the financial system.

Everywhere you look in the plan, you see the same thing: additional regulation on the margin, but nothing that amounts to a true overhaul. The new bank supervisor, for instance, is really nothing more than two smaller agencies combined into one. The plans calls for new regulations aimed at the ratings agencies, but offers nothing that would suggest radical revamping.

The plan places enormous trust in the judgment of the Federal Reserve — trust that critics say has not really been borne out by its actions during the Internet and housing bubbles. Firms will have to put up a little more capital, and deal with a little more oversight, but once the financial crisis is over, it will, in all likelihood, be back to business as usual.

The regulatory structure erected by Roosevelt during the Great Depression — including the creation of the Securities and Exchange Commission, the establishment of serious banking oversight, the guaranteeing of bank deposits and the passage of the Glass-Steagall Act, which separated banking from investment banking — lasted six decades before they started to crumble in the 1990s. In retrospect, it would be hard to envision even the best-constructed regulation lasting more than that. If Mr. Obama hopes to create a regulatory environment that stands for another six decades, he is going to have to do what Roosevelt did once upon a time. He is going to have make some bankers mad.


http://www.nytimes.com/2009/06/18/business/18nocera.html?pagewanted=print

[bopes]

the ($134B briefcase) plot thickens:
Strange Inconsistencies in the $134.5 Billion Bearer Bond Mystery (http://seekingalpha.com/article/143462-strange-inconsistencies-in-the-134-5-billion-bearer-bond-mystery)

excerpt:
Here are just a few fascinating facts about this case (at least they are being reported as “facts” at this current time):

(1) Though the smugglers have been identified in the press as “Japanese nationals” there has yet to be any confirmation if the smugglers were indeed Japanese or of some other ethnicity. How difficult is it to confirm the ethnicity of the smugglers and why is this information being kept secret?

(2) According to a brief Bloomberg article regarding this story, the seized bearer bonds allegedly were dated as of 1934. Since bearer bonds in denominations of $500 million did not exist in 1934, the bonds were deduced as fake, though the Italian police are still waiting for a declaration regarding the bonds’ authenticity from the SEC. There is something truly “off” about this declaration. How can the quality of the forged bearer bonds be so meticulous that they “are indistinguishable from the real ones”, yet the people involved in the alleged forgery so ill-informed as to not date the bearer bonds with a more recent year that would not immediately identify them as fraudulent? How hard would it have been to date the bearer bonds with a more recent year? An equivalent analogy would be if an expert art forger meticulously re-created a Picasso oil canvas and then erroneously signed the work with the wrong artist’s name. This story just does not add up.

(3) The Bloomberg story also reported that there is no known existence of the alleged 10 Kennedy bonds that were discovered in the smuggler’s suitcases, each with a denomination of $1 billion. Again, this discovery defies any logical explanation. Why would expert counterfeiters make 249 bearer bonds with denominations of $500 million apiece, each indistinguishable from the real thing, and then instead of just making 20 more such bonds, decide to make 10 bonds in denominations of $1 billion a piece in a bearer bond design that has never existed? Were the alleged counterfeiters just too lazy to confirm if Kennedy bearer bonds were ever a legitimately issued security? Again, this story makes no sense.

(4) On March 30, 2009, the US Treasury Department announced that USD $134.5 billion remained in its Troubled Asset Relief Program [TARP]. The stated amount of seized bearer bonds was $134.5 billion. Coincidence?

(5) The two well-dressed Japanese men opted to travel to Chiasso on a local train normally full of Italian manual laborers commuting to Switzerland. If they were really intent on successfully smuggling these bonds, counterfeit or real, why would they not take more care to select a travel route in which it was literally impossible for them not to stick out like two sore thumbs? Again, this part of the story defies all logic.

(6) The bearer bonds were discovered in a hidden briefcase compartment after a customs inspection. Again, if the bonds were indeed authentic and owned by a nation state, they could have been transported in a diplomatic pouch exempt from customs searches that would have guaranteed transport without detection.
Thus, all of the above irreconcilable and illogical points, other than the coincidence of the amount of the bearer bonds exactly matching the remaining TARP fund amount declared on March 30th [:eek:], seem to indicate that not only were the seized bearer bonds counterfeit, but also that the smugglers were intent on being caught.

. . .

What possible reason would the smugglers have for wanting to be caught? One of the quickest ways to sabotage and usher in the death of a currency is to raise legitimate questions about its ability to withstand counterfeiting efforts. Prove that counterfeiting is not only possible but highly likely, and the world’s confidence in the sabotaged currency will undoubtedly plummet [:eek::eek::eek:].

[Isaiah Mpski]

Bopes,a dollar will always be worth a dollar here.
If that is not the case as in a country like China,
well then maybe our factories will return home and reopen here.

This is all part of a plan-some say the illuminati-I say Daniel thought it up so as to buy US a place in Mexico.

There are two land masses.We need to mind only our own.

Let me give you an analogous situation which existed here before the white man and his environmental toxicity.
There were two massive buffalo herds,a northern herd tended by the several tribes.
The southern herd was tended to by the Comanche and the Kiowa.
When the Comanche got horses from Coronado,they became tax collectors also.
Not many questioned it.They just accepted it and the Creeks and Comanche became hybrids.

Both herds streched horizon to horizon,at least 50-100 miles long.

The Indians had taken care of and lived in synchrony with the Buffalo for thousands of years.
It took the white hunters-interested only in the hides-about 10 years to make them almost extinct,and the Indians along with them.

[sidecross]

"Suck on Our Yachts": Goldman Sachs Issues Non-Apology for Destroying the World Economy

By Matt Taibbi, True/Slant


Anyone else out there find himself doubled over laughing after reading Goldman, Sachs chief Lloyd Blankfein's "apology" for his bank's behavior leading up to the financial crisis? Has an act of contrition ever in history been more worthless and insincere? Even Gary Ridgway did a better job of sounding genuinely sorry at his sentencing hearing -- and he was a guy who had sex with dead prostitutes because it was cheaper than paying live ones.

Looking at Blankfein's one-sentence apology, I'm struck in particular by a couple of phrases:

While we regret that we participated in the market euphoria...

Really, Lloyd? You "participated" in the market euphoria? You didn't, I don't know, cause the market euphoria? By almost any measurement, Goldman was a central, leading player in the subprime housing bubble story. Just yesterday I was talking to Guy Cecala at Inside Mortgage Finance, the trade publication that tracks statistics in the mortgage lending industry. He said that at the height of the boom, in 2006, Goldman Sachs underwrote $76.5 billion in mortgage-backed securities, or 7% of the entire market. Of that $76.5 billion, $29.3 billion was subprime, which is bad enough -- but another $29.8 billion was what's called "Alt-A" paper. Alt-A mortgages are characterized, mainly, by crappy documentation and lack of equity: no income verification, no asset verification, little-to-no cash down. So while "only" 38% of the mortgage-backed securities Goldman underwrote were subprime, more than three-fourths of their securities were what is called "non-prime," ie either subprime or Alt-A. "There's a lot of crap in there too," says Cecala.

Let's be clear about what that meant. These crap/sham mortgages, a lot of them adjustable-rate deals with teaser rates that featured sudden rate hikes two or three years after closing, they would never have been possible had not someone devised a method for selling them off to secondary buyers. No local bank is going to keep millions of dollars worth of Alt-A mortgages on its books, because no sensible company lends out money to very risky customers and actually keeps those loans on its balance sheet.

So this system depended almost entirely on banks like Goldman finding ways to securitize these instruments, ie chop the mortgages up into little bits, repackage them as mortgage-backed securities like CDOs and CMOs, and sell them to unsuspecting customers on the secondary market, most of them large institutional buyers like pensions and insurance companies and workers' unions, many of them foreigners. Most of those customers were snookered into buying this stuff because they had no idea what it was: in the case of pensions and unions particularly, a lot of these customers only bought this crap because the peculiar alchemy banks like Goldman used in devising their mortgage-backed securities made radioactive mortgages look like AAA-rated investments. (Or at least they were given these ratings by Moody's and Standard and Poor's, ratings agencies that were financially dependent upon the very banks they were supposed to be rating -- but that's another story).

So some Dutch teachers' union that a year before was buying ultra-safe U.S. Treasury bonds in 2006 runs into a Goldman salesman who offers them a different, "just as safe" AAA-rated investment that, at the moment anyway, just happens to be earning a much higher return than treasuries. Next thing you know, a bunch of teachers in Holland are betting their retirement nest eggs on a bunch of meth addicted "homeowners" in Texas and Arizona.

This isn't really commerce, but much more like organized crime: it was a gigantic fraud perpetrated on the economy that wouldn't have been possible without accomplices in the ratings agencies and regulators willing to turn a blind eye. Imagine a meat company that bred ten billion rats, fattened them on trash and sewage, ground their bodies into chuck, and then sold it all as grade-A ground beef to McDonald's and Burger King, right under the noses of the USDA: this is exactly the same thing, only with debt instead of food. We're eating it, they're counting the money.

Any way you slice it, Goldman was responsible for putting tens of billions of toxic mortgages on the market, resulting in mass foreclosures, mass depletion of retirement funds, and a monstrously over-leveraged financial system that we will now all be bailing out for the next half-century or so. All of this so that Goldman could make a few billion bucks acting as the middleman in all of these deadly transactions.

Anyway, I was also struck by this phrase:

...we are proud of the way our firm managed the risk for our clients...

First of all, generally speaking, when one apologizes for having done a bad thing (like for instance destroying the world economy), it is good form to wait at least until the end of the sentence to start bragging again.

Second of all, what is particularly obnoxious about this phrase is that Goldman is bragging about the fact that it actually made money while it was pumping the economy full of explosive leverage. While companies like Lehman and Bear were dumb enough to actually eat their own rat meat, Goldman knew what it was doing and was careful to bet against the same stuff it was selling, which makes its behavior many times worse than that of other banks, not better. I get into this more in a Rolling Stone piece coming out next week, but Goldman's continual bragging about its mortgage hedges is one of the more obnoxious phenomena in the recent history of Wall Street, given that it was selling this shit by the ton during that same period.

Beyond that, Goldman's "risk management" also involved buying massive hedges on its mortgage exposure from...drum roll please... AIG. In fact Goldman was AIGFP's single largest customer; while the bank was busy flooding the world financial system with doomed mortgages, it was also busy piling bets on the back of the insurance behemoth -- $20 billion worth, to be exact. And AIG's death spiral was triggered not so much by its bets going sour, but by companies like Goldman that demanded that AIG put up cash to show its ability to pay. These collateral calls were what killed AIG last September, and Goldman was one of those creditors pulling the trigger: what makes this fact even more obnoxious is that ex-Goldmanite Henry Paulson then stepped in and green-lighted an $80 billion taxpayer bailout. Ultimately another ex-Goldmanite named Ed Liddy was put in charge of AIG, and Goldman ended up getting paid 100 cents on the dollar for its AIG debt.

So basically Goldman helped kill AIG, necessitating a federal bailout, after which time it got paid off handsomely for bets that it certainly would not have been paid off completely for had AIG simply been liquidated. And again, AIG probably does not have a market to sell its CDS insurance to firms like Goldman, if firms like Goldman had not cooked up this insane scheme to underwrite billions upon billions of toxic debt and sell it off to secondary buyers as safe investments. Moreover AIG would not have even had this business of selling CDS insurance had not a bunch of ex-Goldman guys, in particular Bob Rubin, quietly pushed to deregulate the derivatives market back at the end of the Clinton administration.

So when Goldman says it is proud that it "managed the risk" for its clients, what it's really saying is, "We're proud that we kept the extreme crapness of our mortgage securities secret from everyone but our clients, and fobbed off the nightmare leverage they created on dumbass AIG and all the pensioners and teachers and other idiots who bought this stuff. Go fuck yourselves and suck on our yachts."

There's a much larger story about all of this coming out in the magazine next week, but in the meantime... hey, Lloyd, thanks for the apology. It makes us all feel a lot better.


Matt Taibbi is a writer for Rolling Stone.

http://www.alternet.org/workplace/140806/%22suck_on_our_yachts%22%3A_goldman_sachs_issues_n on-apology_for_destroying_the_world_economy/?page=entire

[craazyman]

Thank God Rolling Stone & Matt Taibbi are covering this.

And the news today is that Goldman first half 2009 bonuses are going to be sky high from all the "money" they made with your personal balance sheet backing them up.

What a bunch of heroes.

If the honorable people in the U.S. had any idea what the dishonorable people have done to rob them blind, there'd be a revolution in the streets like in Iran.

[sidecross]

Taibbi's Scream: Stop the Political System That Has Let Goldman Sachs Fleece Us for 90 Years

By Rob Johnson, AlterNet. Posted July 8, 2009.


The sordid story of how Goldman Sachs and Co. engineered bubbles in the economy and made a hefty profit.




I hold my hands in front of me to block my line of sight


It seems my eyes are growing tired of staring in the light


The more I see the more I feel the less I want to know


Because if you think to much you'll blow your mind


You might just lose control and scream


-Lyrics to "Scream," by Seven Nations (Kirk McLeod)




In Matt Taibbi's vivid and provocative new article in Rolling Stone, "The Great American Bubble Machine," the man absolutely screams. Evoking the image in Edvard Munch's famous Norwegian painting, Taibbi sounds the alarm to American readers as he explores the sordid story of Goldman Sachs and Co. Tracing 90 years of political and market history, Taibbi colorfully describes the firm headquartered at 85 Broad Street as: "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."

Such evocative imagery will surely be discounted by some as hysterical or exaggerated, particularly by those whose senses are deadened by the business press or CNBC-style babble. Rather than engage in a dissection of the details, I would like to explore why Taibbi is screaming and ask why he is screaming for all of us in a way we are not seeing elsewhere in the media. In addition to screaming for us, I wonder whether he is also screaming at us. One thing is certain: he is screaming in a way that a healthy press would do in a hysterical time. Goldman Sachs' uncontested success blurring the boundaries between market and state is symbolic of a tremendous malfunction in finance, politics and civil society. That the firm is well-managed by all measures and that some fine, well-meaning individuals work there is beside the point. Taibbi is telling us that the rules are rigged. That we are being abused.

This is a time for vivid outrage.

Taibbi's rage is filling an emotional void. It is a reaction to what is missing after this profound speculative episode that the IMF suggests will cost over $4 trillion in losses on balance sheets and untold trillions in lost output. It is fury over a crisis that is, by any measure, the most profoundly damaging episode since the 1930s (and the Bank for International Settlements Annual Report released this week strongly suggests that the burden on stockholders is far from over).

What is it that leads to screaming? A wonderful passage in John Kenneth Galbraith's A Short History of Financial Euphoria helps explain. Dr. Galbraith seeks to identify the common elements that recur organically in the buildup and aftermath of every financial boom-bust episode:

"The final and common feature of the speculative episode-in stock markets, real estate, art, or junk bonds-is what happens after the inevitable crash. This, invariably, will be a time of anger and recrimination and also of profoundly unsubtle introspection. The anger will fix upon the individuals who were previously most admired for their financial imagination and acuity. Some of them, having been persuaded of their own exemption from confining orthodoxy, will, as noted, have gone beyond the law, and their fall and, occasionally, their incarceration will now be viewed with righteous satisfaction.

There will also be scrutiny of the previously much-praised financial instruments and practices-paper money; implausible securities issues; insider trading; market rigging; more recently, program and index trading that have facilitated and financed the speculation. There will be talk of regulation and reform."


Note the elements: anger, recrimination, introspection, law breaking, incarceration, regulation and reform.

Despite the fact that our news media have been filled with financial stories from Bear Stearns failure in March '08 to the present, the elements listed above seem neglected, muted, or in short supply (Gretchen Morgenson is the exception that proves the rule). This is disturbing, particularly given the scale of losses that the taxpayer has been forced to absorb, along with disappearing funds for future roads, bridges, health care, schools and a tax drag on wealth creation. It is into the void created by the tepid media coverage of this horrid and costly episode that Mr. Taibbi has screamed.

There is an age-old tension that emerges in situations like this. You can feel it yourself. We know things are not right but do not exactly know why. Finance is complex. Since the progressive era, trust in "experts" has often been suggested as the best way for society to handle such complex phenomena. We are encouraged to delegate to the likes of leading academics, the Federal Reserve, the Treasury Secretary, and financiers themselves to keep an eye on the public interest. Public officials are explicitly employed to undertake this task on behalf of society. Those in the private sector often appeal to experts, encouraging public deference to their superior knowledge. Experts are thought to be the custodians of the nation's health.

As theologian Reinhold Niebuhr once described in Moral Man and Immoral Society:


"The stupidity of the average man will permit the oligarch, whether economic or political, to hide his real purpose from effective control .... Since the increasing complexity of society makes it impossible to bring all those who are in charge of its intricate techniques and processes, and who are therefore in possession of social power, under complete control, it will always be necessary to rely partly upon the honesty and self-restraint of those who are not socially restrained."

The problem now is that the experts and leaders from finance have failed us miserably. They have let us down and we know it. We do not trust in the system. No one thinks the Federal Reserve did a bang-up job in the years preceding this crisis. The failure is much more profound in the private sector, yet for the most part that failure goes unacknowledged. Even with losses and bailouts, we have to fight over bonus payments to those who feel entitled, despite the cost they have imposed on their stockholders and, more importantly, society.

What we are witnessing, as I have written elsewhere, is a perverse form of insurance pay off.

Let's call it political insurance. Ordinarily when insurance is offered, a premium is paid and, over time, the provider of insurance sets the rate on the premium so that they make a bit of money despite periodic payouts for accidents. What we have here is different. The financial sector, and other large patronage donors, spend billions of dollars on lobbyists and campaign contributions. Politicians then run their expensive election marketing campaigns with the proceeds. And finally, the contributors buy downside loss protection from the politicians and their appointees.

Who provides that downside protection? You and me. The taxpayer. The body politic. We get used by this refracted process, and our system is mislabeled as a representative democracy. And, to add insult to injury, we are forced to endure the the horror of the awful marketing campaigns of politicians using the their payoff money to protect donors with our the tax base. The media is on the take, too, collecting advertising revenue from financial companies and from political campaigns. Far be it for them to step outside this circular flow of funds that impedes our political system from incorporating feedback from evidence of its own dysfunction.

We are amidst a crisis of political legitimacy. The leaders of our complex financial firms have failed. They have failed as stewards of our nation's future. They have failed as protectors of our public Treasury. Now, with trillions guaranteed, hundreds of billions of bailouts paid, and very little in the way of investigation, firings, or prosecution of the perpetrators, we are all being asked to calm down, move on, and stop acting like populists (a pejorative term when used by elite media or financiers). In the mean time, the perpetrators of this disaster confidently pay their political soldiers for another round of lobbying/campaign contribution money. (For more details on the numbers and firms involved see "Sold Out: How Wall Street and Washington Betrayed America." See also Thomas Ferguson's fine work collected in his book, Golden Rule.)

Returning to Taibbi's startling article, there are many reasons for the amplified language he chooses to confront us with in rendering the social experience of Goldman Sachs (an experience that is certainly not unique to that firm). Perhaps it is illumination that Goldman Sachs and the leaders of finance have failed us as stewards and experts and that makes him mad. Or it could be that he is angry at the American people for trusting the financiers and enduring this abuse with little visible reaction. Or that the Bush and Obama Administrations and Congress have shown such little interest in investigating what happened, who did wrong, or who should be fired after drawing on the public purse to the tune of several hundred billion dollars!

It is hard to know what is in a writer's head and heart, but the Goldman Sachs piece is so intense in comparison to Taibbi's recent offerings that I sense a message of personal revulsion. For clues to what may have triggered this revulsion, I look back to his writings when he first returned to America and the book that acquainted me with his work: Spanking the Donkey: Dispatches from the Dumb Season. The book concerns the absurd carnival of the 2004 Democratic primaries. In the introduction, Taibbi describes how he had worked in Russia as a journalist for 10 years. He details the atrocities he saw, along with his sense of sympathy and fascination for the terrible things before his eyes. In Russia, he was an observer and not an accomplice, but when he returned to the USA in 2002, Taibbi felt less detached looking at his home country: "We are a country that has a large majority that on some level knows something is terribly wrong, but can't find any positive idea that it can follow and build upon..." He describes how he had no idea how to cover the presidental election but found the need to develop a strategy to move ahead: "...I did not see much that suggested to me that a groundswell of change is on the way. But I do believe there is a strategy to pursue in the meantime, and that is TO REFUSED TO BE LIED TO...." On the strength of that insight, Taibbi set out to write a book about lies -- how to recognize them and stop believing in them.

Taibbi's look at Goldman Sachs illuminates what is missing in our political energy as we prepare, as he suggests in the article, to get our lunch eaten again in the energy trading market. What's missing is a recognition that we have been violated by experts and leaders. What's needed is a proper cleansing of social misdeed through outrage.

It causes me great pain to think that this sensitive and brilliant young writer, who had a ringside seat for the grotesque rape of the body politic in 1990s Russia by rapacious private oligarchs, is sickened by what he sees in the USA now! Let me say that again. He watched the rape of the Russian people up close and he is sickened by what is happening in the USA right now.

Maybe when you see it happen in a foreign country, tragedy can be seen as comedy. Perhaps when it happens in your own country and devastates the people you love, things take on a darker tone. Or maybe it really is as objectively bad here as his scream indicates. Or at least becoming so. Whatever your interpretation, we all owe thanks to Taibbi for screaming. He is warning us, and it will do us all some good to feel his rage and connect it to the rage that resides within each of us.

Feeling Taibbi's outrage will help us refuse to be lied to by the experts in media, politics and finance. It will help us see through them when they pretend that they have not let us down or play the same old dysfunctional political patronage game to insure that things do not change. It will help us force them to give up some of their advantage to restore some balance and better serve the American people.


http://www.alternet.org/story/141163/taibbi%27s_scream%3A_stop_the_political_system_tha t_has_let_goldman_sachs_fleece_us_for_90_years/?page=entire

[Isaiah Mpski]

And the children suffer the most.
In Oct,1972,I along with other anti-Nixon people were rounded up and basically held by force so the "Democratic" election of a pure sociopath could proceed.
When I was finally released in 1974 I founf myself on an Indian Reservation in northern New Mexico.
We would wander the desert and high pains for days on ebd and my Brujho would show me different medicial plants and the like.
Sometimes we would come upon archeological sites that had been abandoned around 1000AD and as a student of human anatomy I could tell the place had been left suddenly and many of the dead left un or partially buried.Most were definitely children.
We are doing the same thing to our children today.Just in a little bit slower fashion.