Thursday, April 29, 2010

The Eurozone is Imploding

http://usawatchdog.com/bernanke-admits-printing-1-3-trillion-out-of-thin-air/

You might assume that the reason for the implosion in the Eurozone is a mystery.

But it's not.... We need to get to know and run our own communities and not compete as wage slaves in a global gulag.....

There Wouldn't Be a Crisis Among Nations If Banks' Toxic Gambling Debts Hadn't Been Assumed by the World's Central Banks

There wouldn't be a crisis among nations if banks' toxic gambling debts hadn't been assumed by the world's central banks.

As pointed out in December 2008:

The Bank for International Settlements (BIS) is often called the "central banks' central bank", as it coordinates transactions between central banks.

BIS points out in a new report that the bank rescue packages have transferred significant risks onto government balance sheets, which is reflected in the corresponding widening of sovereign credit default swaps:

The scope and magnitude of the bank rescue packages also meant that significant risks had been transferred onto government balance sheets. This was particularly apparent in the market for CDS referencing sovereigns involved either in large individual bank rescues or in broad-based support packages for the financial sector, including the United States. While such CDS were thinly traded prior to the announced rescue packages, spreads widened suddenly on increased demand for credit protection, while corresponding financial sector spreads tightened.
In other words, by assuming huge portions of the risk from banks trading in toxic derivatives, and by spending trillions that they don't have, central banks have put their countries at risk from default.
No wonder Greece, Portugal, Spain and many other European countries - as well as the U.S. and Japan - are facing serious debt crises.

But They Had No Choice ... Did They?

But nations had no choice but to bail out their banks, did they?

Well, actually, they did.

The leading monetary economist told the Wall Street Journal that this was not a liquidity crisis, but an insolvency crisis. She said that Bernanke is fighting the last war, and is taking the wrong approach (as are other central bankers).

Nobel economist Paul Krugman and leading economist James Galbraith agree. They say that the government's attempts to prop up the price of toxic assets no one wants is not helpful.

BIS slammed the easy credit policy of the Fed and other central banks, the failure to regulate the shadow banking system, "the use of gimmicks and palliatives", and said that anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts "will only make things worse".

Remember, America wasn't the only country with a housing bubble. The world's central bankers let a global housing bubble development. As I noted in December 2008:
The price of Southern California homes is already down 41%, Southern California hasn't fallen as fast as some other areas, and we're nowhere near the bottom of the market.

Moreover, the bubble was not confined to the U.S. There was a worldwide bubble in real estate.

Indeed, the Economist magazine wrote in 2005 that the worldwide boom in residential real estate prices in this decade was "the biggest bubble in history". The Economist noted that - at that time - the total value of residential property in developed countries rose by more than $30 trillion, to $70 trillion, over the past five years – an increase equal to the combined GDPs of those nations.

Housing bubbles are now bursting in China, France, Spain, Ireland, the United Kingdom, Eastern Europe, and many other regions.

And the bubble in commercial real estate is also bursting world-wide. See this.

***

Moreover, the real estate bubble formed the base upon which a series of bubbles in derivatives were built. Specifically, mortgages were packaged in "collateralized debt obligations" (CDOs), which were sold in enormous volumes all over the world. Credit default swaps were then bet against the companies which bought and sold the CDOs.

Now, with housing prices crashing, the CDO bubble is crashing, as is the CDS bubble.

A series of other derivatives bubbles are also crashing. For example, the "collateralized fund obligations" - sort of like CDOs, but where the assets of a hedge fund are the asset being bet on - are getting creamed as hedge funds are forced to sell off many hundreds of billions in assets to cover margin calls.

As everyone knows, the size of the global derivatives bubble was almost 10 times the size of the world economy. And many areas of derivatives are still hidden and murky.

So the bust of the derivatives bubble could even be bigger than the bust of the housing bubble.

BIS also cautioned that bailouts could harm the economy (as did the former head of the Fed's open market operations). Indeed, the bailouts create a climate of moral hazard which encourages more risky behavior. Nobel prize winning economist George Akerlof predicted in 1993 that credit default swaps would lead to a major crash, and that future crashes were guaranteed unless the government stopped letting big financial players loot by placing bets they could never pay off when things started to go wrong, and by continuing to bail out the gamblers.

These truths are as applicable in Europe as in America. The central bankers have done the wrong things. They haven't fixed anything, but simply transferred the cancerous toxic derivatives and other financial bombs from the giant banks to the nations themselves.

Are Debt-Based Economies Sustainable?

Of course, Eurozone countries like Greece and Italy have been living beyond their means and masking their real debt levels for years (with a little help from Goldman Sachs, JP Morgan and the boys) - just like the U.S.

And of course, Eurozone central banks - like America's Federal Reserve - create fiat money out of thin air. As I argued in March, one or the primary problems is that Europe and America have debt-based economies, and the debt-based ponzi scheme has reached it's maximum limit:

Private banks don't make loans because they have extra deposits lying around. The process is the exact opposite:

(1) Each private bank "creates" loans out of thin air by entering into binding loan commitments with borrowers (of course, corresponding liabilities are created on their books at the same time. But see below); then

(2) If the bank doesn't have the required level of reserves, it simply borrows them after the fact from the central bank (or from another bank);

(3) The central bank, in turn, creates the money which it lends to the private banks out of thin air.

It's not just Bernanke ... the central banks and their owners - the private commercial banks - have been running the printing presses for hundreds of years.

Of course, as I pointed out Tuesday, Bernanke is pushing to eliminate all reserve requirements in the U.S. If Bernanke has his way, American banks won't even have to borrow from the Fed or other banks after the fact to have reserves. Instead, they can just enter into as many loans as they want and create endless money out of thin air (within Basel I and Basel II's capital requirements - but since governments are backstopping their giant banks by overtly and covertly throwing bailout money, guarantees and various insider opportunities at them, capital requirements are somewhat meaningless).

The system is no longer based on assets (and remember that the giant banks have repeatedly become insolvent) It is based on creating new debts, and then backfilling from there.

It is - in fact - a monopoly system. Specifically, only private banks and their wholly-owned central banks can run printing presses. Governments and people do not have access to the printing presses (with some limited exceptions, like North Dakota), and thus have to pay the monopolists to run them (in the form of interest on the loans).

See this and this.

At the very least, the system must be changed so that it is not - by definition - perched atop a mountain of debt, and the monetary base must be maintained by an authority that is accountable to the people.

Tuesday, April 27, 2010

James Bond's most vicious villain ever: George Soros


James Bond's most vicious villain ever: George Soros

James Bond, agent 007 for Britain's MI-6 foreign intelligence service, has taken on villains ranging from Ernst Stavro Blofeld and Dr. Julius No to Auric Goldfinger and the Rupert Murdoch-like Elliot Carver. However, it seems that Bond, after a storied career, has now met his match in George Soros, a Bond-like villain if there ever was one.

After the last Bond film Quantum of Solace, in which a shadowy network of deep-pocketed financiers attempt to stage a coup in a progressive-led Latin American country -- Bolivia -- it appears that Soros found the film's villain -- Quantum -- a bit too close to his Quantum Group of Funds, based in Curacao, and which is flush with Rothschild family investments.

James Bond always takes on Britain's enemies of the day and there is ample evidence that the real MI-6 has cooperated with the Bond script writers to ensure that Bond is taking on very true-to-life fictional enemies. In 1992, Soros broke the Bank of England by shorting the pound sterling. Soros is up to his same tricks again and undermining the pound.

Soros's activities ensured that there would be a sequel to Quantum of Solace, in which the head of the Quantum global crime organization would finally emerge.

However, something funny happened on the way to the Bond movie set. MGM, the Bond series' production firm, suddenly found itself in financial trouble. WMR's intelligence sources report that Leonard Blavatnik, a one-time Soviet Jewish refusenik who emigrated to the United States and a Soros ally -- is pressuring MGM to sell to him. Production has ceased on the Quantum sequel, given the working title of "Bond 23," even after a major script re-writing, said also be as a result of pressure from Soros, which would have featured actress Rachel Weisz playing the head of the Quantum criminal syndicate.

However, EON Production of London, which is the Bond production company of Barbara Broccoli and Michael Wilson, halted production on the film that was due to star once again actor Daniel Craig in the leading role of James Bond. Broccoli is the daughter of famed Bond film producer Albert Broccoli, who narrowly escaped dying after he canceled his ticket on BOAC flight 911 from Tokyo. Flight 911 crashed near Mount Fuji shortly after takeoff, killing everyone on board. Broccoli was in Japan scouting locations for the next Bond movie, which was, interestingly, You Only Live Twice.

Although Time Warner Inc. and Lions Gate Entertainment Corp. are also making bids for MGM, Blavatnik appears to have a leg up because of the financial assets he has at the ready. MGM was bought by a group of investors in 2005 for $5 billion. They stand to take a financial bath because MGM is not expected to fetch more than $2 billion. Two of the MGM investors, Sony Corporation and Comcast, have written off their investments as losses.

It appears that with Bond, the fictional Quantum has met the real Quantum. Blavatnik, who shies away from media attention, After earning an MBA from Harvard, Blavatnik started the secretive investment firm Access Industries. Blavatnik combined forces with his old Moscow Institute chum Viktor Vekselberg's Renova company to capture control of the collapsed Soviet Union's oil and aluminum resources. Blavatnik was one of a number of Russian Jews who took advantage of the defunct USSR to prey on what was left in order to enrich themselves. You don't have to be James Bond to figure out that these Russian Jewish tycoons were engaged in wholesale looting of the Soviet and, subsequently, the Russian treasuries.

Blavatnik and Vekselberg eventually ended up with significant stakes in Russia's number three oil firm, TNK-BP, the world's largest aluminum company, as well as in Russian media, telecommunication, coal, and real estate firms. In 2006, Blavatnik bought 25 percent of the shares in the Russian telecommunication firm Svyaz invest from Soros, who originally bought the stake eight years prior for $1.87 billion. It turns out having friends like Soros paid off for Blavatnik -- Blavatnik flipped the investment later by selling his stake to Russian billionaire Vladimir Yevtushenkov for $1.3 billion, thus doubling his initial investment.

Although he avoids the media, Blavatnik does not avoid board memberships. He sits on academic boards at Cambridge University, Harvard Business School, and Tel Aviv University, as well as on the board of the Russian aluminum giant, United Company RUSAL. Blavatnik also serves on the board of the New York Academy of Sciences along with Mehmood Khan, senior vice president of another worthy Bond villain, Goldman Sachs.

Blavatnik, along with Mikhail Fridman and Vekselberg, continue to hold a major stake in TNK-BP and Prime Minister Vladimir Putin has made no secret of his desire for the Russian Jewish oligarchs to be bought out of their interests in TNK-BP by the Russian state. However, the oil tycoon troika is holding out.

In 2007, Lady Lynn Forester de Rothschild hosted a swank and ritzy reception in London for outgoing British Prime Minister Tony Blair and his wife Cherie. Blair hob-nobbed with a select group of American and other billionaires hoping to land lucrative work after his success in steering Britain into a bloody occupation of Iraq as a favor for George W. Bush. Among the billionaires present were Blavatnik; Ron Burkle, the grocery chain magnate who gave Bill Clinton work after he left office; oilman Sid Bass, Lehman Brothers' manipulative CEO Richard Fuld -- who was busy setting up shadow Lehman business deals through Hudson Castle, fashion mogul Calvin Klein, billionaire cosmetic heirs Leonard and Ronald Lauder -- a few months later Ronald Lauder was elected president of the World Jewish Congress, and Mexican telecommunication billionaire Carlos Slim Helu.

One can understand why the "new Bond" played by Craig irked the moneyed classes around the world. Craig's Bond was taking on the secretive world's elite -- which use proxies to capitalize from wars, coups, assassinations, and other mayhem. James Bond, who saved the world from KGB and North Korean renegade officers, the minions of the criminal organization SPECTRE, and an insane media tycoon, could not save the world from real life villains like Quantum. Today's James Bond died in a heroic battle with the Soros-Rothschild-Blavatnik ilk that really runs the world. Possibly, another, dandier, Bond will take his place But for James Bond, vanquisher of the world's secret money cabals, it is adieu. RIP 007 as we most recently knew you.

As for Craig, who bears an uncanny resemblance to Putin, perhaps he can take on a new role. A young KGB Colonel Vladimir Putin, a judo expert, who battles, from his East Berlin headquarters, the Rothschild-Soros-Blavatnik cabal who are working through NATO to bring about the financial and political collapse of the Soviet Union to permit the wholesale looting of the USSR's valuable resources by the evil capitalist robber barons....


...And everything goes according to CIA/MOSSAD/MI6 plans...????



is an article claiming that the 'revolutions' sweeping the Moslem world are motivated by Rothschild/Soros interests which want to prevent Islamic banking from getting a bigger share of increasingly lucrative markets....

Elsewhere it was reported that the American airforce has bought software which makes it easy to handle multiple false personas on electronic media, so a few spooks can appear to be a vast crowd of indignant people....
Here's a reference for the fake people story....


A SWISS BANK, A PRESIDENT, AND THE PERMANENT GOVERNMENT


THE GAME THAT GOES ON AND ON...:
A SWISS BANK, A PRESIDENT, AND THE PERMANENT GOVERNMENT

By RUSS BAKER
Published: April , 2010

http://www.whowhatwhy.com/the-game-that-goes-on-and-on.html

Last August, the presidential press corps followed Barack Obama and his family to Martha's Vineyard for their brief vacation. The coverage focused on summery fare—a visit to an ice cream parlor, the books the president had brought along. Nearly everyone mentioned his few rounds of golf, including his swing, and the enthusiasm of onlookers. What caught my eye, though, was the makeup of his foursome. The president was joined by an old friend from Chicago; a young aide; and Robert Wolf, Chairman and CEO, UBS Group Americas. In a decidedly incurious piece, a New York Times reporter made light of Wolf's presence:

"The president has told friends that to truly relax he prefers golfing with young aides...But he departed from that pattern Monday when he invited a top campaign contributor, Robert Wolf, president of UBS Investment Bank, to join him for 18 holes. Call it donor maintenance."

Wolf, however, is hardly—as the Times suggested— just another donor. For one thing, he is a leading figure in an industry that almost brought down the entire financial system—and then was the recipient of astonishing government largesse. UBS, along with other banks, benefited directly from the backdoor bailout of the insurance giant AIG.

But UBS stands alone in one rather formidable respect—it was the defendant in the largest offshore tax evasion case in U.S. history, accused of helping wealthy Americans hide their income in secret offshore accounts. To settle a massive investigation, UBS forked over $780 million to the US treasury. This settlement came shortly before Wolf rounded out Obama’s golfing party. Given this rather problematical situation, why then would the President choose UBS’s Wolf of all people for this honor?


Wolf declined a request for an interview about his relationship with the President, so it was not possible to pose that question to him. This hardly matters, though, for the story goes far beyond Wolf and UBS. It involves Republicans as well as Democrats, the Bush Administration as well as Obama’s. More importantly, behind the trivialized golf outing on Martha’s Vineyard, lie the interests that increasingly set the course for every administration. And that now game the system so well that the rest of us—wherever we live in the world—are kept fighting for the scraps.

BOTH SIDES NOW

When most people criticize those aspects of government that seem most impervious to the democratic process, they cite the permanency and perceived self-interest of the mandarins of the Washington bureaucracy. But when it comes to real power, an ability to come out ahead no matter which party is in power, it’s hard to top certain financial institutions.

UBS is very much a part of that permanent government. Though not a household name in the United States, UBS is a major player in the Beltway game. During the 2008 campaign, while Robert Wolf was courting Democratic hopeful Obama, his UBS cohort, former Senator Phil Gramm, was working the other side of the street. As chairman of the Senate Banking Committee in the 1990s, Gramm, a corporate-friendly Texas Republican, played a key role in the deregulation of the banking industry, an act so central to the nation’s financial collapse. Since 2002, Gramm has been UBS Americas’ vice chairman. In 2008, he was the leading economics adviser for Obama’s opponent, John McCain—and even touted as a possible treasury secretary in a McCain administration.

The bottom line: UBS hedged its bets, and so had an inside track no matter which party took the White House. Thus, when Obama won, it was Wolf who ascended. The new president named the banker-donor to his White House Economic Advisory Board.

The important machinations behind this accrual of influence rarely get attention in the frenzied hustle of the news cycle. One reason is that they do not seem like news at all, since they are essentially woven deeply into the fabric of politics and government, thus hidden in plain sight. Another is that they are dauntingly complex.

Some things are simple, though. Like the fact that a UBS executive is a dubious candidate to serve as an economic advisor to the president. For one thing, the company’s track record at the time of the election was distinctly underwhelming. UBS suffered major losses on subprime lending, and had to raise money from the Singapore government and other entities. As Slate’s money columnist Daniel Gross quipped back in 2008, “UBS used to stand for Union Bank of Switzerland. But perhaps it should stand for Untold Billions Squandered. Or Underwater Bi-Lingual Schleppers.” Furthermore, UBS’ stock lost nearly 70 percent of its value even before the recession really kicked in—making it the worst performing foreign bank operating here.

Given this damning set of facts, Wolf made both an odd choice as a presidential adviser and a peculiar pick for that intimate round of golf.

“HIDE FUNDS HERE”

Despite being the world’s biggest manager of private assets, UBS has stayed pretty much below the domestic radar. The Alpine quiet surrounding its activities was, however, quietly shattered in mid-2007, when an IRS audit of a US citizen led to a UBS banker who then revealed certain UBS practices that encouraged wealthy Americans to hide taxable income. UBS bankers had apparently used every trick in the book—including giving customers code names and assisting them with or providing them with untraceable pay phones, encrypted computers, fake trusts, document-shredding and even counter-surveillance training.

The feds did not move quickly on the revelations—but when they did, in good measure thanks to a kick from July 2008 Senate Permanent Subcommittee on Investigations hearings chaired by Senator Carl Levin and the report released in conjunction with the hearings, the UBS affair grew into the largest offshore tax evasion case in US history.

It is worth pointing out that one of three Senate co-sponsors of the Stop Tax Haven Abuse Act of 2007, introduced even before the UBS situation was known, was none other than a then-senator named…Barack Obama. The House sponsor was Rahm Emanuel—who would go on to be President Obama’s Chief of Staff. Another, weaker bill was proffered by Sen. Max Baucus of the Finance Committee—parts of which did just quietly become law as part of an employment stimulus bill signed by Obama in March, 2010, with the goal of capturing lost tax income as a way of financing job creation.

In any case, it has become increasingly clear that tax evasion is but a piece of a troubling larger picture. The states of New York, Texas and Massachusetts sued the bank in 2008, accusing it of misleading investors about risks in its auction-rate securities market. UBS executives dumped their own holdings when the supposedly safe investments took a nosedive, yet continued to recommend them to customers. In Puerto Rico, a Bloomberg News reporter found, UBS had created its own closed-loop system for generating profits —it advised the Commonwealth to issue bonds, marketed the bonds to investors through UBS mutual funds, and then loaned the mutual funds money so they could buy the bonds. As James Cox, a Duke law professor and expert on finance and law said at the time, “I’ve never seen such a blatant series of conflicts of interest.”

In a filing last June, New Hampshire's securities regulator charged UBS with "dishonest and unethical" practices in selling notes from the now-defunct Lehman Brothers, causing New Hampshire investors $2.5 million in losses. Wrote one securities lawyer on Forbes’ website: “UBS is going to have to account for why it continued to aggressively market Lehman notes to retail customers as highly conservative investments at the very same time its institutional side was facilitating transactions designed to mask Lehman's financial troubles.”

Further south, Brazilian police arrested officials of both UBS and the insurance giant AIG as part of a half-billion-dollar tax avoidance scheme, alleging that the companies used suspected black market money-changers to spirit the funds out of Brazil to Switzerland. At the time, the daily newspaper O Estado de Sao Paulo published a picture of a man in handcuffs, identified as a UBS executive, and reported that he told one of the arresting officers: "I'm not going to stay in custody. Anyone who has money in [Brazil] does not stay in custody." Things are not necessarily so different up north. The only company official sent to jail in the United States thus far in connection with the massive tax evasion case was, remarkably, the former employee who blew the whistle on the scheme in the first place.

AN ATTRACTIVE FELLOW

The Obama-UBS relationship began on a December day in 2006. According to his calendar, the presidential hopeful was visiting New York City to speak at a fundraising dinner for children in poverty. Beforehand, though, he attended a much more exclusive gathering—in the midtown Manhattan conference room of billionaire George Soros—for a dozen wealthy figures eager to have a closer look at the prospect.

One attendee was UBS executive Robert Wolf. Then just 45, he had already been a major fundraiser for John Kerry’s 2004 presidential bid and for congressional Democrats in 2006. For 2008, he had initially backed a moderate, Mark Warner, the former governor of Virginia. But when Warner decided not to run, Wolf turned to Obama, liked what he saw, and signed on.

His motivation, Wolf told New York Magazine in 2007, was simple: “I’d like my children to soon see a president give a State of the Union address and have both parties applaud.” He praised Obama’s early opposition to the invasion of Iraq. And he told Business Week: “I found him to be unbelievably refreshing and smart and thoughtful.” Wolf soon became a top fundraiser. By the time of the New York article, he had already hosted two big cocktail parties, made a lot of calls, and brought in more than $500,000. It was through people like Wolf that Obama was able to match and then pass Hillary Clinton in fundraising for the primaries.

Another person who attended that exclusive session with Obama was a financier by the name of Hassan Nemazee. Nemazee’s story circles back to UBS, through his involvement with Harken Energy, an obscure but supremely well-connected company that UBS took an unusual interest in keeping afloat. In the process, it illustrates how byzantine and pervasive the new trans-partisan money world has become. The complexity helps explain why reporters so often shrug and move on. They should pause more often; within that complexity resides an important truth about American democracy.

THE CLINTONS’ HOT MONEY MAN

Over the years, Hassan Nemazee had become, like Wolf, a major Democratic fundraiser and insider. More importantly, he was deep into the Clinton inner circle. So much so, that he and a partner used an investment firm they had recently acquired, Carret Asset Management, to provide a lucrative perch to Terry McAuliffe, the Clintons’ confidante and money man. (This was in the period between McAuliffe’s chairmanship of the Democratic National Committee and his chairmanship of Hillary Clinton’s presidential campaign.)

This indebted the Clintons further to Nemazee, who had been an avid supporter of Bill Clinton’s presidency and major donor to his defense fund during the Monica Lewinsky/impeachment saga. Nemazee for his part was rewarded with appointment as ambassador to Argentina—an offer that was withdrawn, however, when Forbes reported that he had improperly represented himself as a “Latino” in order to secure targeted bond business from the state of California.

As with UBS’s Wolf, Nemazee’s substantial fundraising soon begot true insider status. The campaign even asked Nemazee to publicly defend Ms. Clinton when another top donor, Norman Hsu, was arrested as an alleged swindler and campaign finance fraudster (Hsu was later convicted.)

Nemazee was frequently characterized as a “top foreign policy adviser” to Ms. Clinton. Probably his closest thing to real foreign policy credentials was the fact that his father was one of the richest men in Iran under the dictatorship of the Shah Reza Pahlavi, and a close ally of the deposed leader. At the time of the meeting to size up Obama in Soros’s office, Nemazee was simply window-shopping, as he remained committed to Hillary. But when Hillary dropped out of the race, Nemazee became a major Obama fundraiser. And once Hillary became Obama’s secretary of state, according to insiders, she pushed the administration to take a tougher line with Iran’s revolutionary Islamic government than Obama preferred. In so doing she renewed the appreciation of the retinue around the exiled Pahlavi faction, which still hopes to return to power one day, directly or indirectly.

Notwithstanding Nemazee’s largesse, both Clinton and Obama must have had second thoughts this past September, when the financier was arrested on charges of bank fraud. Since then, Nemazee has pled guilty to defrauding several banks over the course of a decade, through the use of false collateral documentation, to the tune of $292 million. In a brief flurry of coverage, Nemazee’s downfall was smirkily dismissed as just another day in the hothouse of Democratic corruption. The media has shown little further interest in Nemazee, and in what his arc signified.

This is unfortunate as it was not just a story about Democrats—or Republicans either, although they were involved. Rather it was the edge of an amoral iceberg that is essentially trans-partisan and that constantly exerts influence on presidents and would-be presidents of all stripes.

The outline of that larger reality becomes apparent when one traces Nemazee’s path back more than two decades. In that earlier epoch, we find Nemazee mixed up again with Soros and UBS and a would-be president. At that point the rising star was not Barack Obama, but George W. Bush.

GROWING A BUSH

For many years, Hassan Nemazee has been a business partner of, and shared offices with, a man named Alan Quasha. And both of them have been involved with a company called Harken Energy, a mysterious outfit with links to some of the world’s most powerful and odiferous regimes.

Harken, Nemazee, Quasha (and UBS) first came to my attention while I was researching my 2009 book, Family of Secrets, which is an investigative history of the rise of the Bush family and the special interests behind them. I was examining George W. Bush’s run of good fortune in the 1980s when his failed oil ventures repeatedly became golden as larger ventures scooped them up and increased his remuneration. Texas-based Harken Energy, the biggest of these, paid Bush more than he had ever earned, gave him a nice board position, and basically freed him up to move to Washington and work on his father’s 1988 White House race.

Just as Nemazee and Quasha would later take care of Hillary Clinton’s guy—McAuliffe—so he could concentrate on preparing for her campaign, years earlier they had supported George W. Bush while he helped develop strategy for his father’s campaign. In the process Harken took Bush, a man without much to show for himself as a businessman, and gave him the credibility and financial means with which to embark upon a political career—which he did soon thereafter.

Why had Harken adopted Bush? The few media organizations—Time and The Wall Street Journal among them— that looked into Harken concluded that something was fishy about the venture itself. The company’s structure and transactions were unnecessarily convoluted. It violated most of the rules of sound business practice yet somehow continued to exist despite the fact that it rarely made money for its public shareholders.

It was nigh impossible to figure out where the funding for Harken originated, beyond shell companies in offshore tax havens such as the Netherlands Antilles. But what it actually did was nothing short of astonishing. In 1986, the year George W. Bush entered the picture, Harken had total revenue of four million dollars. Three years later, thanks to a flurry of acquisitions and infinitely complicated transactions, revenue would exceed a billion dollars.

Notwithstanding its general precariousness and obscurity, Harken somehow managed to assemble backing from global superstars, ranging from the billionaire investor Soros (at one point the largest Harken shareholder), and Harvard University’s endowment, to interests tied to the Saudi elite, to then-Philippine dictator Ferdinand Marcos, and to the deposed Shah of Iran. In other words, this obscure company somehow was catnip to brutal and corrupt foreign leaders who had grown fabulously wealthy at the expense of their people—and who collaborated closely with the highest levels of the US military-intelligence-corporate establishment. (Soros’s role seems especially strange; he went on to become the leading single funder of efforts to deny President George W. Bush a second term.) UBS was among the banks that profited from this dubious funding.

UBS had taken a position in Harken at a moment when the company was on the shoals. Coincidentally or not, this also was when George W. Bush—son of vice president George H.W. Bush—was part of the corporate board. UBS’s role struck the Wall Street Journal as odd, in part because UBS was not known for investing in small American firms like Harken.

Facing regulatory difficulties over its investment in Harken, UBS ended up unloading its stock to Abdullah Taha Bakhsh, a Saudi tycoon with separate business ties to James Bath, a key Bush family operative who fronted for Saudi interests in Houston. Bakhsh was also a business partner with a Saudi royal family favorite labeled by the Federal Reserve as a “front man” for BCCI, or Bank of Credit and Commerce International. For those who have forgotten, BCCI was a criminal banking operation whose customers ranged from Western intelligence agencies to drug cartels and terrorist organizations.

Shortly before UBS helped bail out Harken, it had partnered with BCCI in a Geneva-based bank. BCCI was eventually shut down in raids commenced by the British government, after intense investigations by Senator John Kerry’s Foreign Relations terrorism subcommittee and the Manhattan DA. But evidence of its ties to the highest levels of the US government under Ronald Reagan and George H.W. Bush, extensively uncovered by investigators, was repeatedly rebuffed by superiors and by regulators. It is worth noting that the Treasury Department official responsible for scrutinizing BCCI’s affairs in the Reagan-Bush administration was assistant secretary for enforcement John M. Walker Jr.—who happened to be the cousin of George H.W. Bush. (Bushes have for generations been involved both in government and banking, with another close relative serving as a top official at Lehman Brothers before it precipitously failed. More on this topic, and on George H.W. Bush’s secret past in deep covert intelligence work, can be found in my book, Family of Secrets. )

Keep in mind that such is the business milieu of Nemazee and Quasha, who jumped with apparently little effort from the Bush to Clinton camps when the moment was opportune—and one of whom ended up a player in the Obama campaign.

Scenarios like this cause the mind to reel. Yet where Ferdinand Marcos, the Saudi royal family, and the Shah converge with the son of an American president, in a deal involving large amounts of money, it is not necessary to untangle all the spaghetti strands to sense that something is amiss. Why, to begin with, would a major international bank get involved with a shadowy operation such as Harken? Whatever the reasons, the bank clearly gained influence with a White House that had family connections to the company.

Clues may be found in 1986, which is when George W. Bush joined the Harken board. It also is the year that Harken’s chairman, Alan Quasha, hooked up with something called Rembrandt Group Holdings, a Swiss-based company headed by a South African billionaire, Anton Rupert. Rembrandt’s vast portfolio included tobacco, financial services, wines and spirits, gold and diamond mining and luxury goods. Soon after that, Rembrandt took over a small, closely-held Denver company, Frontier Oil. Frontier then announced an $ 85-million "revolving credit facility" with….. Union Bank of Switzerland. UBS again.

Few expect international bankers to be paragons of virtue, but the South African connection highlights a particularly unsavory side. This was revealed in a series of reports produced by a coalition of Swiss organizations pushing for reparations to post-apartheid South Africa and cancellation of that country’s debt to Switzerland. The group took particular interest in two South African-controlled companies that were established in Switzerland at the time of global economic sanctions against the apartheid regime – and one of these was Rembrandt.

According to one of the reports from Koordination Südliches Afrika, Swiss banks had played an important role “in financing the apartheid state and its corporations from the very beginning” and that “… the two Swiss banks UBS and CS Group have played a special role.”

UBS’s former chairman, Nikolaus Senn, actually had a medal bestowed on him for service to the white regime. When it became inevitable that apartheid would crumble, Senn nevertheless pronounced his doubts about giving blacks the franchise: “‘One man–one vote’ to me is not a world religion.”

The connections here are worth considering. In 1988, while George W. Bush advised his father’s presidential campaign and sat on Harken’s board, Harken chairman Alan Quasha joined the board of Richemont, a new Swiss-based company controlled by the same South African Rupert family that controlled Rembrandt. UBS’s Senn became Richemont’s chairman.

So George W. Bush was joining an obscure company whose constituent parts were tied to the white power structure in South Africa, and also to the evasion of sanctions against that regime via Switzerland. And UBS played a central role in the arrangement.

The South African regime was not the only one that got in on this money game. Ferdinand Marcos, the late dictator of the Philippines, whose kleptocratic rule was marked by savage human rights abuses and martial law, had a seat at the table too. The father of Alan Quasha, Harken’s chairman, was an American lawyer who lived most of his adult life in the Philippines, and represented clients tied to US intelligence. He remained an advocate of Marcos to the end.

Marcos also was moving billions pillaged from the Philippine and American people (via aid to that country) into Swiss accounts. In fact, Phil Kendrick, who sold Harken Energy to Alan Quasha, recalls having heard rumors back then that the money to buy him out came from Marcos himself. The Bushes and Marcos were famously friendly. As vice president, George HW Bush visited Marcos’s Philippines during its protracted martial law and declared that country, to considerable subsequent ridicule, a great and vibrant example. “We love you, sir, we love your adherence to democratic principles,” vice president Bush said on that 1981 trip. And Marcos’s widow Imelda would speak, elliptically, of how the elder Bush had given her husband advice on how to invest “his” fortune. Bush and Marcos even took lessons from the same golf instructor.

***

It’s all about access—and golf has long played a crucial role. Back in the 1950s, Senator Prescott Bush, father of HW and a powerful former banker himself, used to have unique access to President Eisenhower as his regular golf partner. By the time of Barack Obama’s little-studied invitation to Robert Wolf to round out his foursome, Wolf (and UBS), too, were already on the inside. Early in the Obama administration, Wolf had quietly been appointed to Obama’s Economic Advisory Board. The fact that UBS is now playing a role in the administration of a liberal democratic “reformer” illustrates just how trans-partisan money interests can be. Though the board has engendered little media notice besides an Associated Press piece that subtly tried to spark broader curiosity, its makeup alone deserves attention—for what it tells us about the group that had the ear of the President as he embarked upon his change agenda.

One of Wolf’s fellow board members is William H. Donaldson, an old friend of the Bush family who served on the board of the tobacco company Philip Morris for two decades. Donaldson headed the investment bank Donaldson, Lufkin & Jenrette, which looked after the financial affairs of George W. Bush over the years. Donaldson was one of the directors brought into Frontier Oil when it was taken over by the Quasha-Rembrandt-Bush-UBS group. President George W. Bush named Donaldson head of the Securities and Exchange Commission (SEC), where he served from 2001-2005. During that period, he presided over changes requested by investment banks that lessened regulation; among other things, the SEC chose to rely on the banks’ own computer models for risk assessments. "If anything goes wrong," said Harvey Goldschmid, another commissioner at the time, "it's going to be an awfully big mess."

And indeed it is.

The staff director for Obama’s Economic Advisory Board, who also serves as a member of the president’s powerful Council of Economic Advisers, is Austan Goolsbee, who along with Donaldson and Bush shared membership in the exclusive Yale secret society, Skull and Bones. Goolsbee has pretty much stayed out of the news, except for a brief scandal during the 2008 campaign when a Canadian government internal memo characterized Goolsbee as reassuring our Northern neighbors that Obama’s anti-NAFTA rhetoric was just that, “political positioning” that did not reflect the candidate’s real position on globalization.

***

People wonder why, year after year, promise after promise, so little seems to change in Washington. But it is usually left to academics and theoreticians to explain, somewhat abstractly and historically, how powerful institutions continue to influence the course of public affairs irrespective of who is in the White House and what party is in charge. Meanwhile, polls show that most Americans think that banks got a much better deal out of the Bush-Obama rescue-stimulus than the average Joe. And they’re right—but they don’t quite get the real story on how such deals come about.

Supporters of Barack Obama argue that reporting on his connections to the powerful “permanent government” can only impede his sincere efforts to reform health care, the financial industry and so on. But such revelations carry an important message: that American presidents, no matter how good their intentions, are inevitably enmeshed in a self-reinforcing web of interests and influences that permits the wealthy to shape our national destiny no matter who controls the government in Washington. Shining a light on the UBS-Obama link can serve as yet another warning beacon to anyone who underestimates the nature of the challenge facing American democracy. Figuring out how our world works—actually works —requires a skeptical eye and a willingness to follow the facts wherever they lead. After all, sometimes a good golf story is just a story about some guys playing golf. And sometimes it isn’t.

Monday, April 26, 2010

Reform Of Export Controls Is Part Of The Gates Grand Design



Secretary of Defense Robert Gates is continuing his crusade to transform the way in which the United States conducts national security affairs. The most revolutionary Secretary of Defense since Robert McNamara (and a much better one), Gates’ vision encompasses changing the way the Department of Defense organizes, trains, equips and employs military forces, altering the relationship between his department and the other departments and agencies involved in national security and, perhaps most important, changing the relationship between America and its allies by, in particular, enhancing their abilities to operate alongside U.S. forces and provide for their own defense.

All these changes appear to reflect a grand design. As Secretary Gates himself acknowledged the other day in his speech announcing his proposed export control reforms, all the institutional changes he is pursuing are “to one degree or another aimed at improving the way the United States works with and through other countries to confront shared security challenges.” Not only has Secretary Gates been managing two major wars, he has been creating the elements of a new global security architecture and attempting to reshape the U.S. national security establishment to integrate with that new architecture.

His most recent effort is a proposal to reform the U.S. export control system. Anyone who has had to deal with the U.S. export control bureaucracy and its antiquated set of rules will agree with the Secretary’s characterization of the system as Byzantine. The current system requires an export license for commonly available items associated with military systems such as spare tires, batteries and electric generators. In his speech announcing the proposed reforms, Secretary Gates used the example of a British-owned C-17 disabled in Australia that could not be repaired for many hours because the government in London first had to obtain a license to make the needed repair. This is crazy and does nothing to prevent our adversaries from getting really dangerous technologies.

So draconian are the rules that they have crippled the ability of U.S. satellite makers to compete in the commercial marketplace. The result has been the loss of foreign sales, a shrinking of the U.S. satellite industrial base, the expansion of foreign makers of these systems and less control over sensitive satellite technologies, not more.

The practical aspects of the Secretary’s proposal, a single agency responsible for licensing and enforcement, with one all-encompassing list of controlled items (right now there are several lists that are the responsibility of different agencies) and a unified information system for tracking license requests and licensed items, makes eminent sense. A simpler process, one with fewer steps, less bureaucracy and greater clarity, would be an obvious improvement.

Equally important are the strategic aspects of the Secretary’s proposal. If the United States is going to create a new strategic architecture, one in which it operates more consistently with and through other countries, it must both trust those countries and enable them to do more in their own defense and to address common strategic challenges. Traditional allies need and deserve our trust. It is important, therefore, that the Obama Administration move forward on the security treaties with the U.K. and Australia. In addition, key allies need to be given access to more advanced U.S. military technologies and to be allowed to acquire the best U.S. weapons systems. There are some examples of this, such as the international partnership on the Joint Strike Fighter and international sales of the Aegis missile defense system. Secretary Gates needs to provide more specificity regarding his vision for U.S. friends and allies and encourage them to acquire the needed capabilities so as to play a greater role in meeting those shared security challenges.

Putin's Choice: Reform or Go Down With the Ship...?


Vladimir Putin has an interesting way of dealing with Oleg Deripaska....

Putin's Choice: Reform or Go Down With the Ship...?

The political shakeup to come from the U.S. shale gas boom. I expand on the scenario this week in The New Republic, which titled the piece, Kaboom! For those lacking a TNR subscription, the gist is that the shale gas, having already disturbed the political calculus in Europe and Russia, is likely also to help shift the ground underneath the Organization of Petroleum Exporting Countries. Among the winners will be liquid natural gas giants such as Qatar and Australia; losers will be Iran and Venezuela. In the middle will be Saudi Arabia, which will sustain itself, but lack much of the disposable income with which its princes currently bankroll militant Islamic groups.

In the interest of discussion, a different conclusion from my own on Russia appears in the just-out Spring/Summer volume of the Journal of International Affairs, published by Columbia University’s School of International and Public Affairs. Notwithstanding the hot air and hand-wringing standard in such journals, the 257-page issue, “Rethinking Russia,” includes a half-dozen highly interesting pieces.

The one to which I refer -- by Sergei Guriev, rector of the New Economic School in Moscow; and Ekaterina Zhuravskaya, an economics professor at the school -- is about as gloomy as projections come. Titled “Why Russia is Not South Korea,” it jumps off from suggestions by some economists that Russia is following the economic trajectory of South Korea, with an 11-year lag. Meaning that Russia is on its way up, in a big way. For a striking snapshot of why this theory has broad traction, look at the chart on page 2 of the link.

Guriev and Zhuravskaya, however, dismantle that interesting theory and conclude that the comparison is specious. They project that Russia's economy "will revert to stagnation and will not catch up with the economic level [of industrial countries] in the next ten to twenty years unless its political institutions undergo a drastic change."

Mainly the authors are talking about corruption and the capricious way laws are enforced.

What sours them on Russia's prospects of making those drastic changes is how Prime Minister Vladimir Putin and President Dmitry Medvedev have responded to the global financial crisis. Their actions provide "another convincing piece of evidence that the government is more interested in preserving the status quo rather than using the crisis as an opportunity for restructuring the economy," Guriev and Zhuravskaya assert.

This grim appraisal has validity. Quite apart from the specific data and arguments that Guriev and Zhuravskaya bring to the table, oil prices in the long term -- contrary to the conventional wisdom -- are going to have a general downward trajectory, and eventually tank. This will be a direct result of the natural gas surplus -- the shale gas and LNG -- plus the motherlode of Iraqi oil to arrive on the market. Russia's main source of income would shrivel, and the country would be looking at a dire economic and social scenario resembling the 1990s.

Yet one cannot ignore Putin's instincts for survival. Given the unignorable presumption by Putin’s inner circle that they will remain in power through around 2030, it seems to me that, faced with the prospect of a bankrupt country and being thrown out of office, Putin’s team may very well finally embrace the fundamental reforms they’ve resisted – respect for the rule of law, economic diversification, and so on.

Putin certainly does not wish the Guriev-Zhuravskaya world....

Sunday, April 25, 2010

Putin Confident Enough To Reverse Position On Nabucco


[SEE: Russia vows not to impede NABUCCO project. ]
European  Nabucco gas pipeline "useless and dangerous" - Putin

Russian Prime Minister Vladimir Putin on Saturday dismissed as “useless and dangerous” Europe’s Nabucco pipeline project, which aims to alleviate dependence on Russian gas.

Putin made his comment in Vienna, shortly before Austrian Economics MinisterReinhold Mitterlehner signed on to Russia’s rival South Stream project. Austria is also part of the Nabucco consortium, dpa reported.

Nabucco is to supply Central Asian gas to Europe, while South Stream is to send Russian gas from the the Black Sea to south-eastern and Central Europe.

“We don’t see a conflict of interest,” Austrian Chancellor Werner Faymann said about his country’s double strategy.

His Russian counterpart said he did not understand why countries want to become independent from Russian gas, as Russia is able to satisfy the needs of its customers for years.

Taking a jab at Nabucco, Putin said: “It is useless and dangerous to build a pipeline without having supply contracts.”

The six countries involved have yet to conclude such agreements with Azerbaijan, Turkmenistan or Iraq.

The Nabucco consortium also includes energy companies in Germany, Hungary, Romania, Bulgaria and Turkey.

South Stream is a joint project between Russian gas giant Gazprom and Italian energy group ENI.


Club - K container missile system. Stills from an animated film being used to market a missile system that allows cruise missiles to be launched from a freight container. this can be loaded onto a lorry, ship, or train as desired to move into position before launching missiles....


Friday, April 23, 2010

Economist James Galbraith: Economists Should Move into the Background, and "Criminologists to the Forefront"

http://www.dailymotion.com/video/xa636d_john-perkins-confessions-dun-corrup_news

University of Texas economics professor James K. Galbraith previously said that fraud caused the financial crisis:

You had fraud in the origination of the mortgages, fraud in the underwriting, fraud in the ratings agencies.
Senator Kaufman said last month:
Fraud and potential criminal conduct are and will continue to be..... at the heart of the financial crisis...

http://www.lexingtoninstitute.org/jack-kemp-legacy-link-between-economics-and-security?a=1&c=1573

Congresswoman Marcy Kaptur says that there was rampant fraud leading up to the crash (see this and this).

TARP overseer Elizabeth Warren
suspects fraud as the cause of the crisis.

Yves Smith has
shown that fraud largely caused the subprime crisis.

Janet Tavakoli
says that rampant fraud and Ponzi schemes caused the financial crisis.

According to economist Max Wolff:
The securitization process worked by "packag(ing), sell(ing), repack(aging) and resell(ing) mortages making what was a small housing bubble, a gigantic (one) and making what became an American financial problem very much a global" one by selling mortgage bundles worldwide "without full disclosure of the lack of underlying assets or risks."

Buyers accepted them on good faith, failed in their due diligence, and rating agencies were negligent, even criminal, in overvaluing and endorsing junk assets that they knew were high-risk or toxic. "The whole process was corrupt at its core."
William Black - professor of economics and law, and former head of prosecution during the S&L crisis - says that massive fraud by is what caused this economic crisis. Specifically, he says that companies, auditors, rating agencies and regulators all committed fraud which helped blow the bubble and sowed the seeds of the inevitable crash. And see this.

Black and economist Simon Johnson also
state that the banks committed fraud by making loans to people that they knew would default, to make huge profits during the boom, knowing that the taxpayers would bail them out when things went bust.

As Black
told Congress on Tuesday:
Let’s start with the repos. We have known since the Enron in 2001 that this is a common scam, in which every major bank that was approached by Enron agreed to help them deceive creditors and investors by doing these kind of transactions.

And so what happened? There was a proposal in 2004 to stop it. And the regulatory heads — there was an interagency effort — killed it. They came out with something pathetic in 2006, and stalled its implication until 2007, but it ’s meaningless.

We have known for decades that these are frauds. We have known for a decade how to stop them. All of the major regulatory agencies were complicit in that statement, in destroying it. We have a self-fulfilling policy of regulatory failure
because of the leadership in this era.

We have the Fed, the Federal Reserve Bank of New York, finding that this is three card monty. Well what would you do, as a regulator, if you knew that one of the largest enterprises in the world, when the nation is on the brink of economic collapse, is engaged in fraud, three card monty? Would you continue business as usual?

That’s what was done.
So who should we talk to about fixing the economic crisis?

Not the economists.

As economist James Galbraith
told Dan Froomkin this week:

"Once you understand the implications of massively fraudulent practices, it changes the professional community that has the principal say about interpreting the crisis."

Economists, he said, should move into the background -- and "criminologists to the forefront."

Bill Black agrees:

Criminologists, Black said, are trained to identify the environments that produce epidemics of fraud -- and in the case of the financial crisis, the culprit is obvious.

"We're looking at incentive structures," he told HuffPost. "Not people suddenly becoming evil. Not people suddenly becoming crazy. But people reacting to perverse incentive structures."

CEOs can't send out a memo telling their front-line professionals to commit fraud, "but you can send the same message with your compensations system, and you can do it without going to jail," Black said.

Criminologists ask "fundamentally different types of question" than the ones being asked.

"First we ask: Does this business activity, the way they're conducting it, make any sense for an honest firm? And we see many activities that make no sense for an honest firm."

One example is the "liar's loans." With something like 90 percent of them turning out to be fraudulent, they are not profitable loans to make -- unless you're getting paid based on volume, and unless the idea is to sell them off to someone else.

"We also ask: How it is possible that they were able to sell this stuff?" When it comes to toxic assets -- or securities built on top of them -- "all standard economic explanations say it should have been impossible to sell them."

The answer, in this crisis, is "the financial version of Don't Ask Don't Tell," Black said. Incentives for short-term profits and the resulting bonuses were so great that buyers preferred booking the revenue than looking too closely at what they were buying.

Black is concerned that the financial legislation currently being debated on Capitol Hill doesn't change the rules enough. He's concerned about loopholes in derivative regulation and thinks that demanding "skin in the game" won't actually help curb fraud.

Yes, "skin in the game" means that companies could go bankrupt if they place bad bets. But, he said. "if the corporation gets destroyed, that's not a failure of the fraud scheme." Former Lehman Brother CEO Richard Fuld, for instance, "walked away with hundreds of millions of net worth that would never have been created but for the fraud."

Black would like to see reform that ends regulatory black holes and that "requires not just rules" but approving regulators with teeth, to enforce them. Regulators should not be cozy with the entities they regulate; they should be skeptical. "Some of us have to stay skeptical, so that everyone else can trust," he said.

He also thinks it's important to address compensation -- both for executives and professionals. Black isn't calling for limits on executive pay, just for executives to keep their own promises to make bonuses based on long-term success, rather than short term. And he means really long-term. "The big bonuses, they come after 10 years, when they show it's real," Black said.

"Professional compensation has to be changed to prevent conflicts of interest," he said. Appraisers, accountants, ratings agencies and the like need to be rewarded for accuracy rather than amenability. Right now, Black said, "cheaters prosper."

Forget the economists ... call in the criminologists....but the problem is that the whole USA Government is utterly corrupt and complicit to its core and beyond redemption.....

Thursday, April 22, 2010

'The SEC is a farce'

http://www.atimes.com/atimes/Global_Economy/LE15Dj04.html

'The SEC is a farce' - Bill Black:

"The SEC is a farce. And it's been a farce for a decade ... We got over 1,000 felony convictions in the Savings and Loan debacle of senior insiders. We have zero today -- of any of the senior lenders in non-prime. That's just an astonishing thing. There have been no criminal charges yet in this crisis. That's the dog that hasn't barked. Where is the Justice Department?

http://www.youtube.com/watch?v=l-YDjJZfcpI&feature=player_embedded

http://www.prisonplanet.com/bankers-prepare-to-assault-americans-with-vat-transaction-taxes.html

http://news.goldseek.com/GoldSeek/1272002460.php

http://globalresearch.ca/index.php?context=va&aid=18809

http://www.globalresearch.ca/index.php?context=viewArticle&code=WER20100422&articleId=18803

http://www.realclearpolitics.com/articles/2010/04/22/big_government_in_bed_with_big_business.html

Partisan GOP hacks say the financial crisis was caused by too much regulation, and government interference in the markets.

But Glass-Steagall was repealed, derivatives were left unregulated, and the regulators were watching porn instead of preventing fraud. Giant banks, hedge funds and other fat cat private players knowingly gamed the market and committed fraud in more ways than can be listed in a single post.

And remember, even the "father of economics" - Adam Smith - didn't believe in completely unfettered free markets.

On the other hand, partisan Democratic party hacks say that bad corporations caused the crisis, and that if more power is given to Summers, Bernanke, Geithner and the other governmental honchos, they'll fix everything.

But Summers, Bernanke, Geithner and the other meatheads largely caused the crisis through their actions. And as Simon Johnson points out, the government created the mega-giants, and they are not the product of free market competition.

As pointed out in February 2009, government fraud is pervasive:

In case you believe that there are only "a couple of bad apples" in the United States, here is an off-the-top-of-my-head list of corruption by leading pillars of American society:

  • Senior military officials stole approximately $125 billion dollars out of Iraq reconstruction funds, dwarfing Madoff's $50 billion Ponzi scheme (in turn, the looting which is now occurring under the bailout/stimulus programs will far surpass $150 billion)
  • The government-endorsed ratings agencies which were supposed to accurately rate the credit-worthiness of companies and nations committed massive fraud

There are hundreds of similar stories of corruption which have come out recently.

But surely government employees would have done something to stop such corruption if had known about it, right?

Well, actually:

  • Instead of insisting on accurate books, the government encouraged fraudulent bookkeeping. For example, as of 2006:
    "President George W. Bush has bestowed on his intelligence czar ... broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations."
  • The government knew about mortgage fraud a long time ago. For example, the FBI warned of an "epidemic" of mortgage fraud in 2004. However, the FBI, DOJ and other government agencies then stood down and did nothing. See this and this
These are just some of the many examples of the government aiding and abetting corruption.

A lot has come out since then about Geithner, Bernanke, and other officials. See this, this, this, this, this and this.

Indeed, government employees are mainly using their time in office to feather their own nests, rather than to do anything constructive.

So let's cut the partisan crap.

Both the fat cat players and the government are to blame for the financial crisis, and we need to rein in corruption and fraud in both....



With most political commentators spewing right wing garbage, it's always been refreshing to hear the intelligence and understanding of Bill Moyers...

BILL MOYERS: You've no doubt figured out my bias by now. I've hardly kept it a secret. In this regard, I take my cue from the late Edward R. Murrow, the Moses of broadcast news.

Ed Murrow told his generation of journalists bias is okay as long as you don't try to hide it. So here, one more time, is mine: plutocracy and democracy don't mix. Plutocracy, the rule of the rich, political power controlled by the wealthy.

Plutocracy is not an American word but it's become an American phenomenon. Back in the fall of 2005, the Wall Street giant Citigroup even coined a variation on it, plutonomy, an economic system where the privileged few make sure the rich get richer with government on their side. By the next spring, Citigroup decided the time had come to publicly "bang the drum on plutonomy."

And bang they did, with an "equity strategy" for their investors, entitled, "Revisiting Plutonomy: The Rich Getting Richer." Here are some excerpts:

"Asset booms, a rising profit share and favorable treatment by market-friendly governments have allowed the rich to prosper...[and] take an increasing share of income and wealth over the last 20 years..."

"...the top 10%, particularly the top 1% of the US-- the plutonomists in our parlance-- have benefited disproportionately from the recent productivity surge in the US...[and] from globalization and the productivity boom, at the relative expense of labor."

"...[and they] are likely to get even wealthier in the coming years. [Because] the dynamics of plutonomy are still intact."

And so they were, before the great collapse of 2008. And so they are, today, after the fall. While millions of people have lost their jobs, their homes, and their savings, the plutonomists are doing just fine. In some cases, even better, thanks to our bailout of the big banks which meant record profits and record bonuses for Wall Street.

Now why is this? Because over the past 30 years the plutocrats, or plutonomists — choose your poison — have used their vastly increased wealth to capture the flag and assure the government does their bidding. Remember that Citigroup reference to "market-friendly governments" on their side? It hasn't mattered which party has been in power — government has done Wall Street's bidding.

Don't blame the lobbyists, by the way; they are simply the mules of politics, delivering the drug of choice to a political class addicted to cash — what polite circles call "campaign contributions" and Tony Soprano would call "protection."

This marriage of money and politics has produced an America of gross inequality at the top and low social mobility at the bottom, with little but anxiety and dread in between, as middle class Americans feel the ground falling out from under their feet. According to a study from the Pew Research Center last month, nine out of ten Americans give our national economy a negative rating. Eight out of ten report difficulty finding jobs in their communities, and seven out of ten say they experienced job-related or financial problems over the past year.

So it is that like those populists of that earlier era, millions of Americans have awakened to a sobering reality: they live in a plutocracy, where they are disposable. Then, the remedy was a popular insurgency that ignited the spark of democracy.

Now we have come to another parting of the ways, and once again the fate and character of our country are up for grabs.

So along with Jim Hightower and Iowa's concerned citizens, and many of you, I am biased: democracy only works when we claim it as our own.

Moyers will be terribly missed. His integrity and his intelligence set him apart from the rest of the press pack....