Wednesday, July 08, 2009

[incest] the relationship of choice in finance

There's too much going on out there in the financial world but here are few snippets which give a glimpse of the climate we, the consumers, are subject to.

Let's start with the Goldman Sachs theft. A Goldman Sachs former employee somehow was able to walk away with trading software which would enable him to manipulate financial markets. Assistant U.S. Attorney Joseph Facciponti said:

The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways.

Now that's rather interesting, firstly because a former employee was able to walk away with this capacity [and who knows whom that has been sold on to] but also because of the position of Goldman Sachs in the markets. So, if whoever has this tool can manipulate the markets, what then was Goldman Sachs doing with it? Keeping it safe in the interests of the innocent consumer?

In a nasty exchange in July 2009, as Wiki reported, popular news website huffingtonpost listed an item from Rolling Stone Issue 1082-83, where Matt Taibbi takes on "the Wall Street Bubble Mafia" — investment bank Goldman Sachs.

Matt Taibbi writes 'The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.'

The piece has generated controversy, with Goldman Sachs firing back that Taibbi's piece is "an hysterical compilation of conspiracy theories" and a spokesman adding, "We reject the assertion that we are inflators of bubbles and profiteers in busts, and we are painfully conscious of the importance in being a force for good."

Taibbi shot back: "Goldman has its alumni pushing its views from the pulpit of the U.S. Treasury, the NYSE, the World Bank, and numerous other important posts; it also has former players fronting major TV shows. They have the ear of the president if they want it."

Let's move on. The Commodity Futures Trading Commission was criticized during the beginnings of the crisis for not exerting its powers to stem the tide of disaster. Now it's gone full circle:

The Commodity Futures Trading Commission will announce today plans to introduce curbs on speculation of commodities including energy, the Washington Post reported today, citing a statement from the U.S. agency.

The CFTC will limit the size of a single firm’s investments on a particular commodity, the newspaper reported on its Web site. The agency would hold hearings on its proposals, according to the newspaper.

The new curbs would require approval from CFTC’s commissioners, the newspaper said.

So, the CFTC, a supposedly independent government watchdog, now not only has the power to regulate markets but is being ordered to do so. And who is the Commodity Futures Trading Commission chairman? Gary Gensler, ex Goldman Sachs.

Moving on to the non-President himself:

The current chief economic adviser to President Obama, Lawrence Summers, was noted for receiving $5.2 million from hedge fund D.E. Shaw in 2008 and speaking fees (ranging from $45 thousand to $135 thousand per event) from banks including Goldman Sachs, JPMorgan Chase, Citigroup, Lehman Brothers and Merrill Lynch at a time when he was expected to become the most influential financial official in the U.S.

Interesting about Morgan there because they have an alleged history of producing crises in order to profit from them and having made their killing, then heartily support draconian regulation with new players favoured by them.

And how sound are the non-President's policies in job creation and its effect on the future economy? Just take the Cap and Trade plan:

Adversely affected employees in oil, coal and other fossil-fuel sector jobs would qualify for a weekly check worth 70 percent of their current salary for up to three years. In addition, they would get $1,500 for job-search assistance and $1,500 for moving expenses from the bill's "climate change worker adjustment assistance" program, which is expected to cost $4.2 billion from 2011 to 2019.

So, acting on advice, the non-Pres is investing trillions in new technologies which don't yet exist and at the same time, is using billions of the taxpayers' money to actually compensate, in a very real, money out of the coffers way, employees now consigned to the scrapheap for the non-Pres's "vision".

So, there seems to be a quite cozy, incestuous thing going on between government and the finance, especially where certain banks are automatically bailed out but others are left to go to the wall, where certain firms are favoured and others not helped at all, a la Morgan and Peabody op.cit.

The Bank for International Settlement's annual report, p124, states:




Translated, that means that certain zombie banks will be allowed to fail while the "good banks", e.g. Morgan and Goldman Sachs, are allowed to practise their sound financial policies [as in the 2008 crisis] and Paul Tucker of the Bank of England went further in saying that banks must now have inbuilt the mechanisms for orderly wind-ups so it doesn't impinge on the economy [read the financial operations of the successful banks].

Interesting that Paul Tucker is also a director of the Bank for International Settlements. A mini- profile of the man:

Paul Tucker (born 24 March 1958) is the Bank of England's executive director for Markets and has served on the Bank's Monetary Policy Committee from June 2002.

Although a central bank insider, Mr Tucker has been at odds with the governor at times. It is widely known that he, among others there, favoured relaxing the money-market rules in August and December last year – long before Mr King reluctantly agreed.

Another director of the BIS is a man called Ben Bernanke. A little profile:

Ben Shalom Bernanke is the Chairman of the Board of Governors of the United States Federal Reserve.

In a letter to Congress from New York Attorney General Andrew Cuomo dated April 23, 2009, Bernanke was mentioned along with former Treasury Secretary Henry Paulson in allegations of fraud concerning the acquisition of Merrill Lynch by Bank of America. The letter alleged that the extent of the losses at Merrill Lynch were not disclosed to Bank of America by Bernanke and Paulson.

Merrill Lynch, Morgan, Goldman Sachs – the names keep popping up, don't they?

In 1966, Carroll Quigley [do your own research on his connection with Bill Clinton] wrote a book: Tragedy and Hope: A History of the World in Our Time, in which he made a statement about what the world financial giants are trying to achieve:

This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations.

The simplest way for the layman to get an idea of the Bank for International Settlements is via Wiki:

It is not accountable to any national government. The BIS carries out its work through subcommittees, the secretariats it hosts, and through its annual General Meeting of all members. It also provides banking services, but only to central banks, or to international organizations like itself. Based in Basel, Switzerland, the BIS was established by the Hague agreements of 1930.

Urofsky, Melvin; Paul Finkelman (2002). A March of Liberty: A Constitutional History of the United States Volume II From 1877 to the Present, 2nd Edition. Oxford University Press. pp. 674, quoted President Franklin Roosevelt's comment to Edward M. House on November 21st,1933:

The country is going through a repetition of Jackson's fight with the Bank of the United States - only on a far bigger and broader basis.

Who was Colonel House? In 1921, Colonel House reorganized the American branch of the Institute of International Affairs into the Council on Foreign Relations (CFR). Since that time, the only President to have not been directly affiliated with the CFR was John F. Kennedy.

Kennedy Special Adviser John Kenneth Galbraith said:

Those of us who had worked for the Kennedy election were tolerated in the government for that reason and had a say, but foreign policy was still with the Council on Foreign Relations people.

You can draw your own conclusions about all of this.

3 comments:

Anonymous said...

Herewith

Gracchi said...

James- you know I disagree with you about the major point. With one of your quotes though don't you think that Galbraith was saying that Kennedy had been surrounded with the Foreign Policy Professionals as opposed to he, who had come in from an economics background. Worth saying as well that Galbraith was more moderate on the cold war than most of them- like Adlai Stevenson (who was the quintissential establishment figure in the Kennedy administration) Galbraith was out on a limb in his moderation visa vis the Soviets.

James Higham said...

Yes, that is true, Tiberius. He had been talking about that. the point still stands though that he WAS surrounded by CFR and that's why the quote was legitimate to use.