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Posts Tagged ‘Wall Street fraud

Overdose: The Next Financial Crisis

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by Jeff Harding
Posted July 16th, 2011

THIS MOVIE, ON THE SUBJECT OF THE CAUSES OF THE FINANCIAL CRISIS, was produced in Sweden by Henrik Devell, directed by Martin Borgs, and narrated by Johan Norberg, a Senior Fellow at Cato Institute, and a prominent libertarian and frequent guest on Stossel. It is very professionally done and entertaining. You can see it right here on The Daily Capitalist Theater. Turn your video setting up to 720p. It is a feature length film, 46 minutes, so sit back and enjoy it.

Here is a description of from their web site:

In times of crisis people seek strong leaders and simple solutions. But what if their solutions are identical to the mistakes that caused the very crisis? This is the story of the greatest economic crisis of our age, the one that awaits us.

When the world’s financial bubble blew, the solution was to lower interest rates and pump trillions of dollars into the sick banking system. “The solution is the problem, that’s why we had a problem in the first place”. For Economics Nobel laureate Vernon Smith, the Catch 22 is self-evident. But interest rates have been at rock bottom for years, and governments are running out of fuel to feed the economy. “The governments can save the banks, but who can save the governments?” Forecasts predict all countries’ debt will reach 100% of GDP by next year. Greece and Iceland have already crumbled, who will be next?

The storm that would rock the world, began brewing in the US when congress pushed the idea of home ownership for all, propping up those who couldn’t make the down payments. The Market even coined a term, NINA loans: “No Income, No Assets, No Problem!” Enter FannieMae and FreddieMac, privately owned, government sponsored. “Want that vacation? Wanna buy some new clothes? Use your house as a piggie bank!” Why earn money to pay for your home when you can make money just living in it? With the government covering all losses, you’d have been a fool not to borrow.

The years of growth had been a continuous party. But when the punchbowl ran dry, instead of letting investors go home to nurse their hangovers as usual, the Federal Reserve just filled it up again with phoney money. For analyst Peter Schiff, the consequence of the spending binge was crystal clear: “we’re in so much trouble now because we got drunk on all that Fed alcohol”. Yet along with other worried experts, he was mocked and derided during the boom.

Have you taken out a mortgage, invested capital or bought shares? If you have, likelihood is you lost out in the latest bust. Governments promised decisive action, the biggest financial stimulus packages in history, gargantuan bailouts: but what crazed logic is this, propping up debt with…more debt? This documentary brings an entirely fresh voice to the hottest topic of today.

Printing and Propaganda

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From Mike Krieger of KAM LP
Posted May 19th, 2011

Desolate and without purpose
Radiating from so many septic sources
Forming the fabric of a wayward people
Disappearing as the vestiges of our past

Scratched like tartan into virgin soil
A substrate for progress and disarray
A spreading network of broken dreams
Searching for a thoroughfare to take us away

Just a little tale from the streets of America
Sparkled promises paved with pathos and hysteria
Trenchant, weary native sons
Step back, step back
And see the damage done
Shoot straight to the horizon
The streets of America

– Bad Religion, “Streets of America”

A nation that is afraid to let its people judge truth and falsehood in an open market is a nation that is afraid of its people.
– John F. Kennedy

AS I HAVE BEEN SAYING FOR THE PAST SEVERAL YEARS, the misguided Keynesian witch doctor central planners unfortunately in charge of our economic fate are attempting a grand experiment on us based on completely insane and nonsensical theories that have no chance at success. These clowns claim to have all sorts of “tools” but in reality they have nothing. When faced with a complete credit collapse of proportions never seen before in recorded history there were and are only two “tools.” It’s the two P’s: Printing and Propaganda.

While I have written about both of these “tools” before I am going to focus on the propaganda part today since it is the most applicable to the current state of the financial markets. We all know by now that the centrals planners believe the tail wags the dog. So the economy doesn’t lead to higher stock prices but higher stock prices will lead to a better economy. Insane? Absolutely. Is it their religion? 100%. The other important thing for investors to be aware of now when they are comparing the current state of affairs to what many lived through in the 1970’s is that the central planners have learned some lessons. What we must always remember about central planners is that they will never renege on their core philosophy which is that an elite academic and political class in their wisdom are better stewards than free humans interacting in a marketplace.

That said, most people do not share their worldview for obvious reasons (who wants their lives micromanaged?) so the trick of the central planners is to micromanage your life while you think you are in charge. As Goethe said “None are more hopelessly enslaved than those who falsely believe they are free.” He didn’t just make up this clever quote, it is a tried a true method of the most successful control systems throughout history.

So even the brainwashed masses out there understand that price controls were tried in the 1970’s and failed. We also know why. Therefore, the last thing the current group of central planners will want to do is announce price controls. That doesn’t mean they don’t attempt them anyway. They have been rigging stocks in the United States consistently for the past two years and most people get this and accept it as a part of the current state of disunion we are in. However, as I wrote last week we have now entered Phase 2.  This was represented by the raid on commodities.

A tried and true strategy that TPTB have used in precious metals for years has been to create such tremendous volatility in gold and silver and especially the shares that most investors stay away since they can’t stomach it. This strategy is now seemingly being employed to a much wider spectrum of commodities, hence my warning on trading futures last week. The entire game was perfectly summarized by a quote in the most recent 13D report where it was stated:  “Unfortunately, this battle between finding a safe haven and the authorities’ desire to render it ‘unsafe’ is only in its earliest stages. Our mantra since 2007 – governments can and will do anything to survive.”

The Bernank Bluff    

So part of the propaganda “tool” used by the central planners is the manipulation of financial markets, which seems to increased in emphasis in recent weeks. The other consists of outright lies and disinformation. Put yourself in The Bernank’s shoes for a moment. This guy loves printing more than Hewlett Packard. He is despondent beyond belief that the markets and an increasing amount of financial commentators have criticized his precious QE insanity. Meanwhile, the economic data is starting to roll over and housing looks set to launch into another spiral lower. So what is a Bernank to do? Bluff the heck out of the markets. He knows that the only way he can have cover for his printing party is to smash commodities because the rise in commodities is the biggest point of contention amongst the masses.

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How Global Elites steal resources and technology

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by James Jaeger
Posted originally May 04, 2011

As many of you old-timers know, my colleagues and I have been working to expose the fraud of the Federal Reserve System for many decades, not only in our movie, Fiat Empire featuring Ron Paul, but at places like the MIND-X and The Daily Bell.

When I first invited artificial intelligence enthusiasts at the MIND-X to read The Creature From Jekyll Island by G. Edward Griffin many apologists, who are either naive or who live off the fiat-currency system, fought me and argued for at least ten years. Given that this subject is now in the mainstream every day: I hope these people will now acknowledge that the issue has merit and the Federal Reserve – the FED – is an instrument of unjust enrichment.

As Ron Paul says – and many others now acknowledge – it’s become common knowledge that the Fed “prints money out of thin air” and this activity inflates the money supply, thus causing the hidden tax of “inflation” and a destruction of the dollar’s purchasing power. It is thus the Federal Reserve System that is the CAUSE OF THE CURRENT GREAT RECESSION, THE 2008 FINANCIAL MELTDOWN, THE LINGERING UNEMPLOYMENT and THE MULTI-TRILLION DOLLAR DEFICITS we are now experiencing.

That bit of housekeeping done, allow me to say further: the Federal Reserve’s MONETIZING of debt – now known by the euphemism of QUANTITATIVE EASING – and its practice of FRACTIONAL RESERVE BANKING have allowed an elite class of people to emerge, a class that has exploited the American middle class, if not driven many of them into bankruptcy. This has happened because the major corporations – majority-owned by this class – have sought ever bigger profits provided by exploiting cheap foreign labor and military services. The American Middle Class is justifiably getting REALLY pissed-off.

GLOBAL FRAUD:

The banking class – and the corporations that do business with this class  – have reconfigured U.S. laws to enable them to facilitate massive mergers and acquisitions over the past several decades. This consolidation took massive financing, so where did the money come from? It came from the Federal Reserve Member Banks as loans driven by fiat currency and fractional reserve banking. In other words, the major banks created trillions out of thin air and gave it to their cronies in corporate America in exchange for stock in the consolidated multinational corporations.

These multinational corporations, having driven most of their “free market” competition out of business (as a result of their access to fiat money) were now in a position to fund the campaigns of many congressmen. In exchange for campaign finances, many congressmen were behooved to relax anti-trust laws and provide all manner of special privileges. Such resulted in, for instance, the “financial services” industry whereby banks, stockbrokers and insurance companies were able to commingle their business plans to maximize market share and profits. The conflicts of interest that were created as a result caused the global financial meltdown which started in 2008 and proceeds more covertly to this day.

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The Real Housewives of Wall Street

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by Matt Taibbi
Posted originally April 12, 2011

Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs?

AMERICA HAS TWO NATIONAL BUDGETS, ONE OFFICIAL, ONE UNOFFICIAL. The official budget is public record and hotly debated: Money comes in as taxes and goes out as jet fighters, DEA agents, wheat subsidies and Medicare, plus pensions and bennies for that great untamed socialist menace called a unionized public-sector workforce that Republicans are always complaining about. According to popular legend, we’re broke and in so much debt that 40 years from now our granddaughters will still be hooking on weekends to pay the medical bills of this year’s retirees from the IRS, the SEC and the Department of Energy.

Most Americans know about that budget. What they don’t know is that there is another budget of roughly equal heft, traditionally maintained in complete secrecy. After the financial crash of 2008, it grew to monstrous dimensions, as the government attempted to unfreeze the credit markets by handing out trillions to banks and hedge funds. And thanks to a whole galaxy of obscure, acronym-laden bailout programs, it eventually rivaled the “official” budget in size — a huge roaring river of cash flowing out of the Federal Reserve to destinations neither chosen by the president nor reviewed by Congress, but instead handed out by fiat by unelected Fed officials using a seemingly nonsensical and apparently unknowable methodology.

Now, following an act of Congress that has forced the Fed to open its books from the bailout era, this unofficial budget is for the first time becoming at least partially a matter of public record. Staffers in the Senate and the House, whose queries about Fed spending have been rebuffed for nearly a century, are now poring over 21,000 transactions and discovering a host of outrages and lunacies in the “other” budget. It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure. The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. “Our jaws are literally dropping as we’re reading this,” says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. “Every one of these transactions is outrageous.”

But if you want to get a true sense of what the “shadow budget” is all about, all you have to do is look closely at the taxpayer money handed over to a single company that goes by a seemingly innocuous name: Waterfall TALF Opportunity. At first glance, Waterfall’s haul doesn’t seem all that huge — just nine loans totaling some $220 million, made through a Fed bailout program. That doesn’t seem like a whole lot, considering that Goldman Sachs alone received roughly $800 billion in loans from the Fed. But upon closer inspection, Waterfall TALF Opportunity boasts a couple of interesting names among its chief investors: Christy Mack and Susan Karches.

Christy is the wife of John Mack, the chairman of Morgan Stanley. Susan is the widow of Peter Karches, a close friend of the Macks who served as president of Morgan Stanley’s investment-banking division. Neither woman appears to have any serious history in business, apart from a few philanthropic experiences. Yet the Federal Reserve handed them both low-interest loans of nearly a quarter of a billion dollars through a complicated bailout program that virtually guaranteed them millions in risk-free income.

The technical name of the program that Mack and Karches took advantage of is TALF, short for Term Asset-Backed Securities Loan Facility. But the federal aid they received actually falls under a broader category of bailout initiatives, designed and perfected by Federal Reserve chief Ben Bernanke and Treasury Secretary Timothy Geithner, called “giving already stinking rich people gobs of money for no fucking reason at all.” If you want to learn how the shadow budget works, follow along. This is what welfare for the rich looks like.

In August 2009, John Mack, at the time still the CEO of Morgan Stanley, made an interesting life decision. Despite the fact that he was earning the comparatively low salary of just $800,000, and had refused to give himself a bonus in the midst of the financial crisis, Mack decided to buy himself a gorgeous piece of property — a 107-year-old limestone carriage house on the Upper East Side of New York, complete with an indoor 12-car garage, that had just been sold by the prestigious Mellon family for $13.5 million. Either Mack had plenty of cash on hand to close the deal, or he got some help from his wife, Christy, who apparently bought the house with him.

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‘Inside Job’ interview

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Charlie Rose interviews Charles Ferguson on his documentary, ‘Inside Job’

Charles Ferguson, who deservedly won an Oscar for his must watch movie of 2010Inside Job, which exposed such self-caricatures as Larry Summers, Napoleon Dynamite Sr, and Glenn Hubbard for the hollow shams they are, and who made waves by making the only logical statement at this year’s Oscar celebration by asking why nobody on Wall Street had gone to prison, appeared on Charlie Rose in yet another must watch interview.

Ferguson is once again given a chance to clarify his position on why nobody will likely ever go to prison for what amounts to the greatest generational and class heist ever witnessed: “Do you expect that there will be prosecutions for criminal wrongdoing coming out of what we now know?” The answer: “Whether there will be or not, is a function of political pressure because it is unfortunately disastrously, tragically clear that the Obama administration has no interest in doing anything about this.”

The reason, according to Ferguson for Obama’s (lack of) action is: “there is a menu of answers: he is personally very conflict averse, to cold-blooded political calculation, to lack of experience and therefore insecurity in large very scale economic and financial matters, and therefore being a prisoner of his advisors. Perhaps some combination of all of those things…”

In other words: true lack of change that banker pocket change can believe in. As for what would take to fix the broken system we find ourselves in: “(i) change the role of money in elections, (ii) to pay regulators well, and (iii) have law enforcement that is necessary to enforce the laws we have.” Alas the Inside Job director does not see any of these happening any time soon. Neither does anybody else. –Tyler Durden, Zero Hedge

The Return of Precious Metals and Sound Money

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by Giordano Bruno
Originally posted Neithercorp Press, March 15, 2011

WELL, THOSE DEVIOUS GOLD BUGS AND SOUND MONEY ADVOCATES ARE AT IT AGAIN! They had the audacity to produce economic analysis that consistently outshines and embarrasses mainstream Keynesian pundits. They had the nerve to expose the seedy underpinnings of the private Federal Reserve. They even had the gall to bring the long established short manipulations of metals markets by global banks like JP Morgan and HSBC into the light of day, where anyone whose head was not buried in the dark recesses of their own colon could see and say “My god! There really is an organized cabal against gold and silver!” But if you thought all that was outrageous, these people, who promote the insane notion that our currency should actually be backed by tangible wealth and should be under the control of the voting public instead of some unaccountable parasitic corporate central bank, have now brought state legislators into the mix! The return to sound money has begun…

Thirteen states currently have proposed measures which would reinstitute the long suppressed need for a precious metals standard. Utah is the furthest ahead in this battle, its House just recently passing a bill which would make gold and silver officially recognized as legal tender within its borders. All that remains is a signature from Utah’s governor:

http://www.foxnews.com/politics/2011/03/04/utah-house-passes-recognizing-gold-silver-legal-tender/

Colorado, Georgia, Montana, Missouri, Indiana, Iowa, New Hampshire, Oklahoma, South Carolina, Tennessee, Vermont and Washington all have similar bills to that of Utah in different stages of development. Why, after decades of treating gold and silver standards like a cocktail party joke, have the states suddenly turned friendly towards the idea of commodities as currency? It makes perfect sense when you examine what is happening all around us in the world today…

Necessity is the Mother of Prevention

The states are broke. Not just broke, but destitute. If California had a loan shark, its knee caps would have felt the splintery sting of a Louisville Slugger years ago. Illinois would have turned to prostitution (and maybe still will).

All the clawing of eyes and gnashing of teeth that went on in Wisconsin this past month over the rather tame cuts to labor union wage bargaining power is nothing compared to what many states have to look forward to when they decide to confiscate employee pensions and cut major funding to basic services like fire, and police. Some state governments know what is coming, and they are wisely moving to cushion the fall.

Legislators recognize that if municipal bond investment continues on its current downward spiral, there will be widespread defaults. These city and state bankruptcies will almost assuredly be met with offers from the Federal Reserve of a new bailout; QE3… or QE20 (does it really matter anymore?). This bailout would not be “substantial”, it would be gargantuan! What do you get when states bring in increasingly diminished revenues while constituents demand more and more money for welfare and public services because of inflation and the subsequent rise in poverty?

You get a space-time-debt singularity so volatile it stretches the very fabric of your local economy until it tears wide open, unleashing a gravity well of capital destruction similar to a double-ended tornado that snatches your money and hurls it into the upper stratosphere never to be seen again. The point is, you get yet another Fanny and Freddy; a self perpetuating never ending bailout free-for-all that fizzles only when the dollar has been thoroughly cremated, which shouldn’t be long from now.

Intelligent and fiscally conservative local representatives have seen the obvious danger to the stability of the dollar in this equation, and are moving to PREVENT total collapse of their states, rather than wait until after the fact to initiate solutions. Sound money legislation and the creation of localized markets and barter networks give states the ability to function beyond the lifespan of the dollar and to ensure the continuing personal prosperity of residents.

Honestly, why should the states allow their destinies to be bound forever to the longevity of the ailing Greenback? If there is anything good to come out of our present predicament, it is that Americans, from average citizens to elected officials, are beginning to understand the reality of coming collapse and are preempting it with measures designed to insulate their communities from the inevitable firestorm.

Eventually, as this movement escalates, certain states will come out ahead of the pack, gaining a kind of “safe haven” status, and attracting liberty minded people from around the country to the protective shelter of their borders.

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Four time bombs that will blow up Wall Street

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by Paul B. Farrell, MarketWatch
Originally posted March 1, 2011

 

 

 

SAN LUIS OBISPO, Calif. (MarketWatch) — Put Goldman Sachs CEO Lloyd Blankfein in jail for six months, and all this will stop, all over Wall Street and America, a former congressional aide tells Matt Taibbi in his latest Rolling Stone attack, “Why Isn’t Wall Street in Jail? Financial crooks brought down the world’s economy — but the feds are doing more to protect them than to prosecute them.”

Taibbi’s right, everyone knows Wall Street’s run by a bunch of dictators who are doing more damage to democracy and capitalism than North Africa’s dictators. But jail the CEOs of Goldman, Citi, B. of A. or my old firm Morgan Stanley? Too late.

Only a revolution will stop Wall Street’s self-destructive capitalism. And watching the people revolt against dictators like Mubarak and Gadhafi reminds us of the spirit that sparked America’s revolution in 1776. But today we need a 1930s-style revolution.

During the S&L crisis two decades ago America had a backbone, indicted 3,800 executives and bankers. Today’s leaders have no backbone. Besides jail time won’t reform the darkness consuming Wall Street’s soul. We’re all asleep, in denial about the moral crisis facing America. Yes, we need a new revolution.

Jail time? We’ve heard that many times before. Journalists have been beating that dead horse for three years. Jailing CEOs made sense in early 2009. But our naïve president missed that opportunity, instead surrounded himself with Wall Street insiders as Bush did with Blankfein’s predecessor. Trojan Horses manipulating a Congress filled with clueless Dems mismanaging tired Keynesian theories.

Taibbi got it right: Washington’s error was in protecting Wall Street’s billion-dollar crooks when they should have been prosecuting CEOs for criminal behavior in getting us into the 2008 mess. So today, the political statute-of-limitations has run. Jail solution is wishful thinking, like praying to the tooth fairy for a miracle. Time for action. Time for a revolution on Wall Street.

Jail Wall Street? Old news. They got away with it. We chickened out

“Jail Bank CEOs” makes a great sound bite in the cable pundits’ echo chamber. Remember Taibbi’s earlier indictment of Goldman Sachs: 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.”

But so what? Just three years after Wall Street’s crooks “brought down the world’s economy” Goldman’s Blankfein and his buddies are paying record bonuses, and laughing at us.

Seriously, think about it folks: Since the 2008 meltdown magazines and newspapers have analyzed the 2008 crash to death. It really is old news, history. Journalists churned out book after book: “Greenspan’s Bubbles,” “House of Cards,” “Trillion Dollar Meltdown,” “13 Bankers,” “Dumb Money,” “Bailout Nation,” “All the Devils Are Here,” “The Big Short,” “Too Big to Fail,” “The Failure of Capitalism,” “This Time is Different,” “And Then the Roof Caved In,” on and on, ad nauseum. All talk, no action, and no effect.

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