Would you please define what loan tapes are? Thanks.

Oh yeah….crystal clear. Take a look at Krugman’s take:

The Great Recession versus the Great Depression

We goin’ down.

We need an INDEPENDENT EXAMINATION OF THE LOAN TAPES, don’t we?

You could not be more clear. This is truly disgusting. The treasury is being raided to the point this county could be bankrupt. Thank you for your clarity.

Hope I don’t sound totally ignorant but I am not sure what “toxic assets” means either. Are they documented loans or are they CDOs or some other derivative that may not have any relationship to something of value.

If I were a member of Congress, I would offer a resolution blocking Treasury from making the low-cost loans it expects to offer the PPIPs, until GAO or the FDIC has conducted an INDEPENDENT EXAMINATION OF THE LOAN TAPES underlying each class of securitized assets, and reported on the prevalence of missing documentation, misrepresentation, and signs of fraud. In the absence of a credible rating, this is the minimum due diligence that any private investor would require.

But this isn’t about true private investors and the creation of a legitimate market, is it? It’s about gambling for oligarchs with someone else’s money.

I think I do see what you’re driving at.

We’re screwed.

That was not actually Krugman’s take on Geithner’s plan. That is here.
The short version:

Or to put it another way, Treasury has decided that what we have is nothing but a confidence problem, which it proposes to cure by creating massive moral hazard.

This is analagous to the Japanese plan, keeping excess banking capacity in place for far too long because insiders don’t want to recognize the proplem. Coupled with too little too late fiscal stim, it’s beginning to seem pretty hopeless.

maybe it is just a trial balloon and they want a way to shoot it down and tell the banks and everyone else:
see, it wont work.

Lordie.
Wachovia just called and wanted their payment. Should I even bother? I either pay them now or pay them later with taxes.

Are they really that clueless?

They are not clueless. They are crooks. Spiffy crooks.

You really think that Geithner has worked for months just to bring out a plan to be shot down? Wow. That would make him stupider than even my low opinion.

It depends on what you mean by “they.” *g*

So, like, does anyone listen to Galbraith and Krugman et al? “Anyone” being the people who are making decisions. It seems as though their wisdom is being by-passed. I. Don’t. Get. It. But then, I am a bit-player in a megadrama.

Prof Galbraith, thank you.

digg is open.

Recommended.

I think Galbraith isn’t here to answer questions, so I’ll take a crack at it. I think “loan tapes” means the documentation of the loans and their payment (or lack thereof) records. I think the word “tapes” is a hangover from the early days of computers (1960s and 70s) when data was stored on magnetic tapes.

this is the minimum due diligence that any private investor would require.

Clearly, there is no longer a concept of due diligence in our society, let alone minimum due diligence.

Thank you for your post.

Jane, looks like we have round two for mobilization.

Jane, my take is that the uncovering of the AIG bonuses caused Geithner/Summers to disclose this; they saw their window of opportunity, closing, because of all the negative press.

If I put together a hedge fund and bought some of these “toxic assets” and had a house that had defaulted on a $100K mortgage, if I then sell the house for $50K have I made or lost money? Who determines the purchase price for these “assets” for which I am putting up 5% and borrowing 95% in a nonrecourse loan?

Geithner views these huge finacial institutions and those who run them and those who have invested in them as the cornerstone of America.
I don’t believe he is a con artist, just someone who has a very shallow and morally stunted view of who he is serving.

Loan tapes are the data tracking mechanism for each loan. The originator of each loan creates a computerized data set of information (with “tape” going back to an earlier technological level), that then can be used to examine the underlying value of the loan.

When loans get bundled and sold, and someone wants to verify the value of that bundle, “going back to the loan tapes” means trying to assess the value of each loan and not taking someone’s word for the value.

Of course, this only provides a certain amount of information about the loans. A great post at CalculatedRisk back in 2007 noted how if you really want to get the best information, looking at the loan tapes isn’t enough — you have to go back to the files on which those tapes were created.

CR’s bottom line (with emphasis added):

The whole thing really begins to take on an amazing Rube Goldberg quality once you refuse to accept the beginning premise–that these “innovative” ways of underwriting loans are a given, it’s the compensation mechanisms that are the question. You do not have to believe that traditional human underwriting is perfect to wonder whether the cure is worse than the disease when it comes to compensating for automation.

Rube Goldberg is not a name I want attached to the process for evaluating loans, thank you very much.

It would be nice if someone in the House would draft articles of impeachment for the Sec. of the Treasury.

I’ve faxed a copy of your post to Brown (D, OH), Voinovitch (R,OH), and Austria (R, OH-7). None are on the involved committees, as far as I know. But I did it anyway.

Boxturtle (Anybody else feel like faxing?)

What would happen if communities were to buy these assets. Then swap properties with other communities so they ended up with properties in their respective communities. Then give the properties to the homeless and tell the FED sorry we lost it all!

who to replace him?

I would like to see some modeling from the pro economic community. Suppose this goes through, suppose the toxic waste is 20%, 50%, 80%–what happens? Economists?

Whatever happened to the “stress test?”

Welcome to the stress test. My stress levels are arisin

“Are they really that clueless?”

Um..nope. They know exactly what they’re doing – raiding the treasury with the help of its boss. Sounds criminal to me.

Per Peterr’s excellent response above, here’s a nice NYT’s piece by Gretchen Morgenson Guess What Got Lost in the Loan Pool?”

It emphasises the importance of Prof. Galbraith’s point, we have to see the loan tapes.

It would be nice if the NSA would copy them, to prevent the data from getting “lost.”

Galbraith, Roubini, Krugman, Stilgitz, anyone but Larry Summers.

My guess is that Summers knows he would not survive a Senate confirmation after how badly he screwed up as Harvard’s President.

Seconded.

It’s been lovely Barack BUT I HAVE TO SCREAM NOW

Righto. I meant to mention in my 15: if the loan documentation actually exists. Which, I gather, it doesn’t for some large percentage of loans.

Hey Timmy: How about we haul you up in front of Congress and run a “stress test” on you?

Which would mean that Geitner is a front man for Summers. How sorry is that

seconded

Damn it Congress! Force Treasury to do their homework: an un-biased audit of the big banks.

Not one more red cent of taxpayer funds to the fat-cats. None, zilch, nada….

Refer cases of fraud to Justice for prosecution. Time to make this country work again!

Seconded.

The rhetoric is wearing thin. What we need now is substantive action, beginning with the replacement of Geithner and Summers. And as long as you’re cleaning house, hows about you ditch Rahm while you’re at it?

Bullseye.

Good way of putting it. That’s exactly right.

Thanks.

For a long time, I advocated an across the board cramdown in mortgages based on pre-bubble prices or about 40% off their their face value. Adjustments could be made within local markets but the principle would be the same. With deflation, it looks like those values might have to go lower into the 50-55% range.

If we look at mortgages at 50-60% of their current face values, I think most banks would be insolvent.

What is being discussed in the Geithner program is something different. It is about banks’ crap securities. These are not only worth less as above but the cashflows from them are threatened by default. Sampling the loan tapes, i.e. the loan documentation would help assess what that threat is. It could well show fraud. Worse it could show that many titles to the underlying asset were not clearly held by the banks.

I would point out too that Geithner’s program is not just a bailout of the banks, a way for them to dump their crap assets but as Galbraith says a way of “preserving the big banks and their incumbent management in all their dysfunctional glory.” And more. Government guarantees could also be a way for hedge funds to be bailed out as well.

Basically, the Geithner plan would allow banks to sell at 60% of par, hedge funds to acquire the assets at 25-30% of par, and for the government to be stuck with making up the difference. Now I think hedge funds are every bit as bankrupt as the banks. So it could well turn out, as has been previously suggested, that the Fed may loan them most of the money they invest in this. I think this is just insane, but, in a deflationary environment where sitting on money is often the best policy, it may be the only way for Geithner and Bernanke to entice hedge funds to enter into this. But I think the price of doing this is unacceptable, if not insane.

It’s hard for the public to distinguish motives here. Is this a bail-out of the financial system on a virtual “cost-plus” basis, typical of the Bush administration’s military contracts? Or is it a bail-out of neighbors at the Hamptons and on Park Avenue because, well, that’s what friends are for, especially when they spend other people’s money?

Otherwise, how could any public official believe he could spend trillions propping up a house without bothering to check whether its foundation rested on granite or quicksand. This has the potential to vastly outrank Iraq as a government debacle, and Mr. Obama has only been in office two months.

Summers was knee-deep in the Enron scandal. He’s gotta go…

Fax it is.

I think we need to get going on this.

“Not one more red cent of taxpayer funds to the fat-cats. None, zilch, nada….”

Let’s not be too hasty. Without taxpayer largess, how would they be able to fund their spa visits? And do you expect them to fly coach, drink off-the-shelf champagne?

I didn’t know that. Do you have a link?

Working on it as we speak. Going to have another big week of chats.

Remember that little nagging feeling you had about Obama during the election? That he was just a little too smooth……

Anyone wonder why this came out on a Saturday morning?

From left field, Eliot Spitzer, might be critical in this fight. He won’t be Treasury Sec., but he might have the political connections to persuade Barack that Summers, Geithner, and the Wall Street Cabal are destroying his political future.

If I’m right and the mortgages are largely trash, then the Geithner plan is a Rube Goldberg device for shifting inevitable losses from the banks to the Treasury, preserving the big banks and their incumbent management in all their dysfunctional glory. The cost will be continued vast over-capacity in banking, and a consequent weakening of the remaining, smaller, better- managed banks who didn’t participate in the garbage-loan frenzy.

That’s going to make the management at those smaller banks really happy.

Geithner needs to understand that his priority is not supposed to be the preservation of the big banks as big banks, but the preservation of the banking system and the economy as a whole. If that means pain for the big banks, so be it.

Meanwhile the accounting rules are being changed so that portfolios in the banks will no longer have to be mark to market.

Your comment needs to be repeated over and over and sent to the WH over and over.

Well written. I can just hear Jon Stewart reading this on the air.

Let us read tape!

If one is to believe John Anderson’s take yesterday, another Robert Rubin disciple. Obama’s surrounded himself with these people without any real countering voice, so it certainly looks like he can’t do without them. Hopefully, he’ll do as Anderson suggests, instead.

“For a long time, I advocated an across the board cramdown in mortgages based on pre-bubble prices or about 40% off their their face value. Adjustments could be made within local markets but the principle would be the same. With deflation, it looks like those values might have to go lower into the 50-55% range.”

Cramdown is the only thing that makes sense. It seems so obvious that it hardly merits discussion. However, I would amend that proposition slightly by requiring the procedure for only those institutions that are taking TARP (or other treasury) funds to prop up their operations. For banks not in trouble (smaller ones, generally speaking) I’d say let them run operate as usual and deal with them later, if necessary.

Heh. My snap judgement on him was negative, for reasons I could not have articulated at the time. But I have learned over the years to trust initial judgements, when they are negative. (My positive snap judgements are very unreliable. My idols often turn out to have feet of clay.) I am so sorry to be accurate in this case. I was so hoping to be wrong.

You think Obama et al were not involved in getting rid of Spitzer?

Copious amounts of tape.

Why am I so vehement about this? Because I’m afraid that this will be the administration’s only shot — that if the first bank plan is an abject failure, it won’t have the political capital for a second. So it’s just horrifying that Obama — and yes, the buck stops there

President Obama, this really is for all the marbles. Do you want to depend on a plan put together by the culprits and supported by a guy who can’t even figure out he owes taxes?

My gut went crazy when Rahm showed up. I knew we were screwed.

Excellent points and suggestions. If the issue is technically bankrupt lenders, it is needlessly expensive for taxpayers to immunize them against the market loss on ALL THEIR BUSINESS INVESTMENTS, which is what loans made by lenders are.

Far better to enforce current accounting, legal and reserve standards, for example, then wrestle with orderly and informed recapitalizations. That would require more information being given to, more information being processed by, and more decisions being made by government. But it would be far cheaper in the long run.

The will to do that would resuscitate confidence in the banking sector far faster than having an overstrained government continue to prop up bad loans (to prop up bad banks) until the taxpayer milk cow is so exhausted it’s sent off to the knackers yard to become hamburger. Allowing that to happen would precipitate loss of confidence in the USG and its economy for a decade or longer.

The ideological peanuts on the Right want the government to just ante up taxpayer’s money in hopes that it will fix whatever’s wrong. That was GM’s model for decades and look how well that turned out. Every debtor fantasizes about that, including several tens of millions of American households. But outside of Hollywood, it doesn’t happen, except in productions run by Villagers inside the Beltway.

to quote Morgenson

Bookkeeping is such a bore, especially when there are billions to be made shoveling loans into trusts like coal into the Titanic’s boilers. You can imagine the thought process: Assigning notes takes time and costs money, why bother? Who’s going to ask for proof of ownership of these notes anyhow?

Jamie emails a response:

Banks and other mortgage originators archive the paper records behind their loans by scanning them to digital format. “Tape” here is just an archaic reference to electronic storage.

Thanks Jane. I knew you would be on this. After all, you were behind our access to this great post.

Have you thought of a “vehicle” for citizens to back a resolution blocking the Treasury until an independent examination of the tapes is done?

Do we have a window to a congress person to offer the resolution?

Where does Jared Bernstein fit into the brain trust here?

I don’t know if this plan is worth a damn or not. But, I doubt it is as
horrible as many of these comments would suggest.
Geithner and/or Summers may not be your favorites or mine, but they really aren’t the corrupt fools many are accusing them of being. Conversely, although I like Krugman, he isn’t always right.

I always thought it was Dick Grasso, Hank Greenberg, and just about everyone else on Wall Street, using their Bush connections to trigger NSA surveillance. That led the FBI counter-terroism resources to be dedicated to “surveilling” high priced hookers to nail Spitzer. Gotta keep America safe.

Just my wild-ass guess.

If I’m right and the mortgages are largely trash, then the Geithner plan is a Rube Goldberg device for shifting inevitable losses from the banks to the Treasury, preserving the big banks and their incumbent management in all their dysfunctional glory. The cost will be continued vast over-capacity in banking, and a consequent weakening of the remaining, smaller, better- managed banks who didn’t participate in the garbage-loan frenzy.

Sounds like Galbraith would just as soon see the large banks go out of business. Then the only things needed are to liquidate their assets and distribute the proceeds to their creditors, i.e.:
* depositors
* bond holders
* purchasers of their CDSs
some of whom are soverign funds for wealthy nations.

Ilargi is right. “This is not a financial crisis, this is a full-blown political crisis.”

Matt Taibbi said as much too.

Not just screwed:

— we’re officially, royally fucked. no empire can survive being rendered a permanent laughingstock…

And now, we’ve been rolled over so the other orifice can be plundered.

Wasn’t there once a country that had a revolt over taxation without representation?

who is he?

It was Wall St in the first instance, but I think we don’t have a good idea who actually did the execution, who knew about it, etc. Obama has big Wall St connections too, who wouldn’t want Spitzer around in a position of power. Not saying he is the one, just saying we don’t know.

Obama was not my top choice but probably a little after New Hampshire I saw that he was going to be the nominee and defended him for about 6 months against all the Clinton attacks. I thought party unity was more important. Up until late June or early July 2008 when Obama went out of his way to back the FISA Amendments Act which immunized telecoms and legitimized domestic spying. At that point, I pulled my support from him, and subsequent history has only confirmed my belief that he is not anyone I could support. No he is not as bad as John McCain but that is setting the bar very, very low.

The Taibbi piece was very good, I thought. (Thanks for the heads up on that one, Jane.)

Years ago, I remember Frank Zappa saying that “politics is just the finest art of pushing the bucks around.”

Yup.

AFAIK, he was mostly involved in defending Enron to CA Governor Gray Davis.

See Eichenwald’s CONSPIRACY OF FOOLS, pages 402 – 412.

He is now VP Biden’s economic advisor. Big Red was very happy with his appointment.
http://www.dailykos.com/storyo…..509/669712

Do you think he’ll come around, or is he essentially bought and paid for?

Hear! Hear!

thank you.

Some Obama defenders say he is better than Bush, which sets the bar a little higher than better than McCain.

The first real evidence of my gut was at last summer’s Netroots Nation, where Obama snot-nosed reps countered my complaint about the FISA switch with: Well, what’s your alternative?

This is a man who suggested that our veterans pay for their health insurance.

Sounds like Galbraith would just as soon see the large banks go out of business.

They need to. At the time we are seeing that “too big to fail” means “too big to function effectively,” we are seeing a wave of bank consolidations creating even more of these.

Obama only won 53% of the popular vote. If McCain had won, Phil Gramm would be Sec. of the Treasury.

Agree. We’re pouring coal into a dead engine. Better use the fuel for a good cremation and move on. And cramdown their crap in the process…

The guy’s problem is mostly that he’s full of shit. He’ll read one thing off he teleprompter and then do the opposite without being able to see the contradiction. The FISA episode is an excellent example, but by no means the only one.

I love Galbraith and Krugman and Stiglitz. I wish Obama was following their advice. But my question is, what will we say if the Geithner plan works?

They ARE out of business. The taxpayers are operating them now, but our representatives have foolishly chosen to continue business as usual. Our capital, and Mr. Obama’s, is dwindling fast.

How would that be any different?

So I guess the next question is how to position for 2010 and (more importantly) 2012. IMO, the failure of this presidency is going to leave a large opening for an ultra rightwing candidate to take the WH in 2012.

Thanks. I haven’t read Eichenwald, don’t even own it, which is amazing since I tend to buy every good book I hear about. I heard Eichenwald in several venues on his book tour. But, silly me, I thought (because I was paying attention to other important stuff like wars) that the Enron-type problems had been fixed. Seems like I should gear up with that scandal again.

Enron was another situtation where I had a snap negative judgement. In retrospect, I can articulate it by saying they were just too slick. (They did a bang-up presentation at a “New Economy” seminar for the Wall St firm I was at in September 1999.)

I can see how Summers would have been taken in, but it does not speak well of him. I had no idea he actually weighed in on the matter.

phew!

I had your position back in November.

U.S. Grant was a personally decent man, but his administration enabled some of the worst frauds perpetrated over the U.S., up to that time.

Transparency works. This is the future equity of the United States that we’re talking about. Their next step, after this one, is to raid Social Security and Medicare, to further bail out the bank/hedge fund aristocracy.

Do you think he’ll come around, or is he essentially bought and paid for?

Anything is possible but I don’t think that any of us understood (at least until he started putting together his Administration) just how much Obama believed in and bought into the center-right Clinton era Establishment.

When you look at things this way, his rapprochement with Lieberman, his “bipartisanship”, his retention of Gates at Defense, his choices of Clinton at State and Holder at Justice, and of course Summers and Geithner to head his economic team not only make sense, they are almost inevitable.

Do you have reasons to think that it will work? If so, please tell so that we don’t get mired in group think. (A genuine request, not snark.)

Very persuasive, alright. So what would you propose for a 2010 and 2012 game plan? It’s not too early to start thinking about it.

It’s not too early to think, but way too early to plan. Lots of stuff will happen between now & 2010, so we should be flexible in how we think about it.

Off the top of my head….

I doubt you would have even heard about the AIG bonuses. Liddy would never have had to testify.

GM and Ford would already be in Chapter 7, probably being sold to China.

There would have been no TARP 2, which means a lot of the state’s would have been filing for chapter 7. Unemployment would be north of where it is now. The dollar would be stronger, which means our exports would be down. Food stamps and most social services, that help people pay the rent and the car payment, would be facing massive cuts. FDA and EPA would continue with Bush/Reagan policies.

I am confident it would be significantly worse on many, many fronts.

Simply voting for Obama in 08, does not require me to in any way support SOME of his actions wrt the economy.

Hey,
Looking for links to articles, but the gist of the connection is captured here in a posting from WMR…

During the Calilfornia energy crisis of 2000, then Sec. of Treasury Larry Summers teamed with Alan Greenspan and Enron executive Kenneth Lay to lecture California Governor Gray Davis on the causes of the crisis, explaining that the problem was excessive government regulation. Under the advice of Kenneth Lay, Summers urged Davis to relax California’s environmental standards in order to reassure the markets.

After Enron went down, Larry Summers through D E Shaw Group bought up a lot of Enron assets and ex employees and formed the wind farm corporation First Wind. Totally corrupt corporation …sued everywhere they go.Larry Summers is known among environmentalists for dumping toxic waste into third world countries.

Larry Summers worked with Phil Gramm to deregulate energy and banking. They got the Glass/Stegall Act repealed so that banks could speculate with invested money. FDR put that law into place so we would never have another great depression.

Most definitely.

You are right. Perhaps the dem/Obama is a slower process with the same result. It looks more humane but the long term results may be the same.

Agree.

We don’t vote on a President until 2012. I am saving all my shekels to support Jane’s ACCOUNTABILITY NOW, which I think will be aimed at primary campaigns for the 2010 cycle.

Thanks very much. I have no idea what Summers did during his D.E. Shaw days. Guess I should do some more work on that.

Here’s an excellent analysis over at Oxdown:

Geithner’s Public-Private Plan for Toxic Assets – Private Investors can Lose at Most 3%, Taxpayers 97%

my question is, what will we say if the Geithner plan works?

I expect that we will say that it worked. But you have to understand a lot of us here saw the housing bubble when Geithner et al did not. We knew derivatives were dangerous. We knew too that the markets had not “factored in” the bubble’s collapse, that there were many shoes to fall, that recession was coming, that Paulson and Bernanke were too hands off for far too long, that the financial system was in danger of going splat, that the $700 billion bailout was a waste of money, that Bernanke’s trillion dollar gambles at the Fed were not going to ease up credit, that Obama’s stimulus was too small, and that his help to homeowners was really more help for banks.

When we come to Geithner’s plan we do what we have done in all these other cases. We look at the math. We look at the underlying fundamentals and ask will this fix the problem. I expect most of us even go further and look at the effect the Geithner plan will have even if it doesn’t succeed. And of course we also look at what the minimal conditions are for actually fixing the problem. So far our record has been pretty good. That’s all I can say.

http://www.commondreams.org/news2003/0428-03.htm

FOR IMMEDIATE RELEASE
APRIL 28, 2003
12:18 PM
CONTACT: Public Citizen
202-588-7742

Recently Released Treasury Documents Chronicle Enron’s Influence in Washington
Documents Reveal Extensive, Secretive Lobbying Efforts; Public Citizen Requests More Complete Release of Redacted Documents

WASHINGTON – April 28 – An examination of thousands of documents released by the U.S. Department of Treasury since March 2002 highlight a lobbying operation run by Enron that covered a range of issues: regulation of energy trading; valuation of futures contracts in the event of bankruptcy; regulatory responses to the West Coast energy crisis; and government assistance to the company’s problematic overseas investments.

[…]

“These documents help explain how Enron used its money and connections to distort government policies in a way that gave it a free rein to cheat consumers,” said Tyson Slocum, research director with Public Citizen’s Critical Mass Energy and Environment Program.

But from those few communications that Treasury more fully released, it is clear that Enron had enormous influence over government officials. Personal letters between then-Treasury Secretary Larry Summers and then-Enron CEO Kenneth Lay in 1999, as well as numerous e-mails and meetings between Treasury officials and Enron executives, demonstrate that Enron used its influence over political appointees to override concerns of career civil service experts.

[…]With Treasury no longer voicing its opposition to the deregulation plans, it was far easier for then-Sen. Phil Gramm (R-Texas) to help push through Congress deregulation legislation that allowed Enron to gouge billions of dollars from West Coast consumers and taxpayers by manipulating energy markets.

During the time Enron successfully lobbied the Treasury Department to change the agency’s position on the regulation of over-the-counter (OTC) derivatives, the company was a major financial contributor to the Democratic Party. In just nine months — from March 1999 (when communications between Enron lobbyists and Treasury began) to December 1999 (weeks after Summers assured Lay that Treasury wouldn’t interfere with the company’s efforts to deregulate the OTC market) — Enron gave more than $147,000 to the Democratic National Committee, the Democratic Congressional Campaign Committee and the Democratic Senatorial Campaign Committee.

[…]

Enron executives clearly were not happy with the Treasury staff’s conclusion. Just a few months later, Lay went over their heads and wrote in a letter to Summers that Enron was “troubled by the notion that financial regulators may be considering any regulation of OTC dealers.” In his response to Lay a few weeks later, Summers wrote, “The Working Group is not recommending legislative action with respect to derivatives dealers” such as Enron.

Summers’ letter marked a departure from previous Working Group consensus and indicated a sea change in the Clinton administration’s policy, suggesting the administration would not oppose Enron in its pursuit of legislation to further deregulate the energy trading business. Following passage of the Commodity Futures Modernization Act of 2000, sponsored by Gramm and not opposed by the Clinton administration, Enron and other energy traders were allowed to operate unregulated power auctions that greatly enhanced their ability to manipulate deregulated electricity and natural gas markets.

Hugh is absolutely correct about his predictions.

I didn’t understand them back in November, but his old posts are practically timeless in accurately predicting what would happen.

I don’t have anything approaching Hugh’s understanding, but he’s been 100% right on EVERYTHING, I’ve seen him write. Hugh’s a capitalist. He believes in markets and risk. Hugh doesn’t think responsibility is just for the little people. Geithner and Summers disagree. They think capitalism means privatizing profits and socializing losses.

Math. It really is all about the math.

I also gave up on Obama over his FISA flipflop and when he aligned himself with Rahambo I knew we were screwed. Obama is going to go down in flames over his bankster actions.

Great stuff from the memory hole. So Summers was working for Enron while he was Treas Sec. Not taken in, but bought & paid for.

I don’t suppose any of this would have resurfaced if Summers had been nominated for Obama’s Treas Sec. The committee would have focused on the shiny object of his misogyny at Harvard, he would have been contrite, and he would have been confirmed. In fact may still be if the Villagers can be convinced that Geithner has really bombed.

I agree with eCahn that there is a lot of things that could happen between now and then. Things to keep in mind are that most of Obama’s stimulus is going to be spent in 2010 so we may see some mitigation in conomic conditions in that year. This may be helpful to Democrats or at least be a wash for them.

Most of the stimulus will have run out by 2011 and we could well find ourselves where we are now but with a lot more debt and fewer options. Obama’s main strength at this point might well be that there is no credible Republican to oppose him. I think it might be worthwhile to start thinking about progressive candidates and how to position them if Obama continues what look to be failed policies. The worst case scenario is if a right wing nutcase populist arises because that would likely destroy the country.

Enron was a template.

Thanks I didn’t know that Summers was so personally involved in the Enron affair. I knew about his connection to the CFMA but didn’t know he was in direct communication with Enron. Interesting, and not in a good way.

“The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.” ~ John Kenneth Galbraith

I have made a few small forays to reconnect with the business economists who are forecasters. Went to the annual NYC forecasting lunch in January, listened to an update of the national forecast on the NABE (Natl Assn of Bus Econs) site yesterday. A few others. The forecasts are all the same: great fiscal & monetary stimulus will pull the economy out of its slide before the end of this year. They don’t know any details about the financial system bailout, only that it will work to relieve the supply of credit. Etc.

IOW, the professional class takes as an article of faith (and I mean that literally) that the plans will work. Haven’t come across anyone yet who doubts that. In fact, last week SUNY-NP Foundation Finance Committee had a rep from our large cap equities manager come to talk to us. She did the same patter, and was absolutely astonished when I begged to differ. Apparently, in all her client exposure, I was the first to disagree.

I doubt that there is anyone in the Obama admin who thinks differently either.

YUP

I agree. That’s why I’m now kicking myself for not following through with my learning on the subject and who was involved.

not at all in a good way.
Parasites.

iirc, UBS bought up that division. I wonder how many ENRON traders are involved in our current crisis.

Summers seems to have a vested interest in perpetuating the ongoing Enron/WorldCom/UBS/AIG/Madoff chain of scandal, but it is too big for me to even try to comprehend.

Heh. I’m glad I asked about Summers & Enron. Seems Styve’s archeological digs have unearthed important pieces of the picture.

anyway to get through to them, in their own language?

Amazing how a TARP can conceal a LOT of unsightly stuff.

Like the fact that this is the second act of the earlier looting of the Treasury during an earlier Bush regime,GWH Bush-and the BCCI and S&L scandals involving Silverado Bank and junk bond mania.

It was the same cast of characters-Bushes,Saudis buying up Citibank stock, the Safari Club,Keating Five,Michael Milken, etc.,etc.

IMHO, the template goes back further than Enron.

If there had been justice after BCCI, the thieves couldn’t have come back twenty years later and finished the heist.

That is scary.

Not that I’ve been able to figure out. My personal demeanor is too confrontational, even when I tone it down and try to ask a judgement-free straightfoward Q. So I tend to put them on the defensive (prez of SUNY-NP loves me for doing that). But I suspect that they’re so wedded to their way of thinking about the world that reality could not impinge. I’ll keep thinking about it, since I’m going have a lunch with a recently laid off Wall St. economist in the next couple of weeks.

Completely agree. Maybe some FDL front-pager, can find an appropriate way to hang Summers’ legacy prominently in some posts?

I think the challenge for FDL is quite serious, what narratives drive the discussion the best over the long haul.

Some useful background info…

http://tinyurl.com/cnhyd4
ENRON’S COLLAPSE: THE COMPANY; UBS Wins The Bidding For Enron’s Trading Unit
By JONATHAN D. GLATER
Published: Saturday, January 12, 2002

The Enron Corporation announced yesterday that UBS Warburg had won the bidding for its energy-trading business, which was the crown jewel of Enron and was responsible for about 90 percent of its revenue.

Terms of the transaction were not disclosed in the company’s presentation to a federal bankruptcy judge yesterday afternoon, barely an hour after the end of nearly 24 hours of marathon negotiations.

Lawyers for Enron said details would be released on Monday morning, after various contracts are drafted over the weekend.

”UBS Warburg is excited by the prospect of re-establishing this technology-based trading business,” John P. Costas, chief executive of UBS Warburg, said in a statement. ”It will be a valuable extension of our worldwide trading activities.”
continued~

————-

http://journals.democraticunde…..Taylor/264
UBS Is Enron
Posted by McCamy Taylor in General Discussion
Fri Jul 25th 2008, 06:57 PM
Learn the name UBS . This company does not just act like Enron. It really is Enron. For one thing, as I will show, UBS Warburg bought the main money making operation of Enron, the Energy Trading Unit that Ken Lay used to price gouge California. And it bought Enron’s senator, Phil “Nation of Whiners” Gramm the on again off again on again John McCain financial adviser—-though he was an ex-senator by the time UBS acquired him. About the only difference is this round of scandals involves the banking/mortgage industry rather than energy price fixing. All the other ingredients are here. Investors have been defrauded. Insiders have dumped their own securities as prices have fallen. And Republican lawmakers in the administration are engaged in a cover up.
continued~

———-

http://www.commondreams.org/views06/0526-21.htm
Enron’s Schemes “The Very Nature of Profit-Based, Market Capitalism”
by Wallace Roberts

Despite the conviction of a couple of bad apples at Enron, its top management is not the real culprit in this case. The real culprit is a bad idea: deregulation of the natural gas and electric power industries.

Kenneth Lay and Jeffrey Skilling, the former chairman and CEO respectively, can be said to be just “sharp traders,” businessmen who did what the free market demands of rational players: take advantage of every loophole they could find to make a profit.
continued~

Professor Galbraith, thank you for adding your distinguished voice to the concern about this Treasury proposal. I plan to contact Rep. John Lewis’ office and ask that he heed your recommendations.

Thank you.

I never noticed it when I was doing that kind of work. Or perhaps I noticed it but didn’t care. I did my own forecast. If it was in the consensus, fine; it not, that was fine too. There’s only a small amount of the time, i.e., turning points, when differences in economic forecasts really matter. I put great work into assessing those, and put my confidence in my own work when it was done, regardless of what others were saying. (Since that job requires making a lot of presentations, there is plenty of outside testing of one’s ideas. If I got a valid challenge, which was rare, I’d check it out.)

Of course, this situation is the highest stakes for group think in the post-WWII period.

That “nagging feeling” I got was that the corporate media picked our president for his friendliness to them and others. And that the 2 years long “election cycle” was a dog and pony show…while Bush finished US off.

Good point re the term “TARP”, because it likely was an inside chuckle among the elite.

@129

You’re very welcome indeed.And not to belabor the point,or overstay my welcome,here’s a little extra fillip:

“What’s useful is to look at the details of old news reports, since the corporate media used to actually report a lot of useful details.
For instance, after he was fired as CIA Director by President Carter in early 1977, Bush was appointed Director of Houston-based First International Bankshares, owned in part by Joe Allbriton, with foreign offices in London and Luxembourg. BCCI had its major offices in the same locations.
After Bush became VP, Allbriton sold out his shares in First Interbank to his crony, Jim Baker III, who owned Republic Bank. The merger went bankrupt a few years later, which became the largest financial bail-out in US history.
That set the model for the S&L rip-off, which was also centered in Southwest bank chains in whch BCCI and the Bush clan had a vested interest.
Allbriton went on to buy DC-based Riggs Bank, that along with UBS and other BCCI-linked banks, dispersed much of the funds held in diplomatic accounts by the Saudi Embassy”————————-leveymg

Styve, could you do an Oxdown diary on this, focussing on the Summers connection, but also where Enron is now? You’re clearly on top of it.

In essence, the Obama/Geithner play is to buy up the toxic misunderstood assets and give them to the banksters who’ll pay us back if and when they can.

And if they don’t, it’ll wreck their credit ratings.

Dayam. I bought the book that supposed to be the best on BCCI, but haven’t read that either. Don’t even know where it is right now. These bad apples just keep turning up.

muchas gracias,
and I second eCAHN’s suggestion:

could you do an Oxdown diary on this, focussing on the Summers connection, but also where Enron is now? You’re clearly on top of it.

It would be a big help for us pups.

overstay your welcome?! I think not!

Found the BCCI book: False Profits by Peter Truell and Larry Gurwin.

The one reviewer gives it only 2 stars, but doesn’t say why he doesn’t like it.

oh Bush so loved those little chuckles

Well, is it just coincidence that so much of this emanates from Houston,Texas?

Hmm,let’s see…

Harken Energy, Enron,Allen Stanford…just off the top of my head.

BTW, have you researched the Riggs Bank? [Now there’s another coincidental named-”rigged”bank?]

I am really not on top of it, because I was first tipped off about the Summers/Enron connection on the Wayne Madsen Report, just last week.

Those sources that I had compiled I collected for other reasons, and just conveniently had them bookmarked. Feel free to jump on it, but I was just about to head out for a run, so will check back. I do think the manipulation of the CFTC, FERC and other governmental bodies by the Corporatists is going to be a tough web to unwind.

Wayne Madsen is too consiratorial for my taste, but he often gets onto things before others do. But you need a second source.

I think this:

It’s all about not-measuring true asset quality at the big banks, permitting them to escape a clean audit, and therefore preserving them as institutions, while forcing the inevitable shrinkage of the financial sector to occur elsewhere. In short, the plan seems to me to be a very bad idea.

says almost the same thing… preserving the Fata Morgana of the plutocrats.

Styve:

Did you know Madsen was arrested the night os March 17,2009?

In flipping through the pages, I discover a partial packet of marigold seeds. Anyone know if they’d still be good after about 5 years between the pages of a book?

@145:

And all the while praying for an “ex deus machina”-otherwise known as a “Hail Mary” pass!

Plant them,
and many will sprout.

EDIT: give them a good soaking just before you sow them to give them the proverbial leg up.

Give em a try.

Yeah…it was a BS move to harass him and a source. Check out the site for info on the arrest and other public material.

eCahnomics, thus the links I provided are not WMR. He has over 20 years NSA and Naval Intelligence experience and sources all over the world, so who better to delve into the conspiratorial morass the world is in?!

Yeah, no loss in planting them. And I wouldn’t have thought of soaking them first. Came free with the used book!

“A neurotic is a man who builds a castle in the air. A psychotic is the man who lives in it. A psychiatrist is the man who collects the rent.”

Tim Geithner will apparently subsidize the whole purchase.

I’m off to do a few other things before Juan Cole at 5. See ya later.

Perfect!

An unsung heroine who has been the voice in the wilderness regarding the machinations of corporatocracy ,for years now ,is Lucy Komisar.

I cannot recommend her site and work highly enough. Much of her work has been published in the Nation,and her accomplishments are long and varied.

She was instrumental in setting up the Tax Justice Network that tracks corporate tax evasion and collusion hijinks,internationally. Incredible amounts of info there.

Here’s some links-the BCCI pieces and interviews are extraordinary-as are her pieces on the AIG reinsurance scams,written some years ago.

The Record: FTR #589 Interview with Lucy Komisar About the BCCI Highlighting information about the Bank of Credit and Commerce International (“BCCI”), this interview sets forth investigative journalist Lucy Komisar’s …
ftrsummary.blogspot.com/2007/04/ftr-589-interview-with-lucy-komisar.html – 340k – Cached – Similar pages

A Game As Old As Empire: Lucy Komisar Lucy Komisar is a New York–based journalist who travelled in the developing world in the 1980s and 1990s writing about movements to overthrow the despots …
http://www.gameasoldasempire.com/Cont…..omisar.htm – 21k – Cached – Similar pages

Kissinger Declassified by Lucy Komisar. The Progressive magazine, May 1999 …. Lucy Komisar, a New York journalist, is working on a book about US foreign policy and human rights …
http://www.thirdworldtraveler.com/Kis…..ified.html – 15k – Cached – Similar pages

Lucy Komisar — Profile — In These Times In These Times features award-winning investigative reporting about corporate malfeasance and government wrongdoing, insightful analysis of national and …
http://www.inthesetimes.com/community/profile/12/ – 25k – Cached – Similar pages

Lucy Komisar on blip.tv Nobel Laureate Joseph Stiglitz calls for the abolition of the offshore bank and corporate secrecy, the basis for the existence of tax havens which are used …
thekomisarscoop.blip.tv/ – 25k – Cached – Similar pages

Thanks for the link to Janushka’s diary today. In my comment there I questioned the possibility of Goldman Sachs’ input in drafting Geithner’s Pee-Poor Plan. Janushka replied, yes, and gave me this link to this article entitled, Goldman’s Rescue Plan? Excerpt:

I understand that Goldman representatives met with senior staff of Senate Banking, House Financial Services, the Joint Economic Committee and other leadership staff, late last week, to put forward a view on the good bank – bad bank type of approach.

Sources have informed me they wonder if the plan discussed by Goldman was put forward in coordination with, with knowledge by, or with support from the Treasury Department. Included in the presentation are several telling statements including:

Januska also gives a quote that Goldman had expressed an interest in the toxic assets, not in selling but in buying.

Hugh, how about giving us your clear-eyed opinion as to just what Goldman has done and is trying to do to us (again) here.

Styve @ 150

I think Madsen is one of the most intriguing reporters around.

I first came across him when I was researching the Cedars at Arlington,and came upon his piece “Christian Mafia” for Insider Magazine.

Anybody who has NOT read it should,ASAP.Imho,one of the most informative pieces I ever read-and I’ve read a lot.WAY more info than just Christian Dominionsim-a political autopsy of American theocracy of the last 50 years or so.

I thought this little tidbit from last year might be relevant in the discussion about Goldman Sachs:

Goldman Sachs gets brokerage license in Saudi Arabia

By Shaji Mathew
Last update: 7:45 a.m. EST Jan. 21, 2008

DUBAI (Zawya Dow Jones) — Goldman Sachs Monday received a license to offer brokerage services in Saudi Arabia, the Middle East’s largest equity market.

The Wall Street brokerage giant is among three new firms licensed to provided brokerage services in the kingdom’s bourse, the market regulator said in a statement on the bourse website.

Foreigners are not allowed to trade directly on the Saudi bourse, which permits only residents and nationals from the Gulf Cooperation Council states to buy shares. Foreign investors can access a few Saudi mutual funds.______________________________________________

Thank you for all your comments here Gitchegumee. Consider that the red carpet of welcome is rolled out for you. At your posts I found myself muttering, “Aw Man! don’t stop there!!!”

If Goldman is planning to buy the toxics at 3% with taxpayer/slaves footing the bill for 97%, and any losses borne at same percentage, is their idea to pull something like what UBS did in gobbling up the Enron Trading section?

Goldman is doing what he has always done. It is looking out for its own interests to the exclusion of everything else. It always thinks there will be an economy for it to game and a government to bail it out if things go awry.

And why should it not think so? It has been very good at spreading its cash and its people around. Remember in addition to the other cases cited, Kashkari, a Paulson protégé at Goldman, is still running the TARP and Liddy who Paulson put on Goldman’s board of directors was picked by Paulson then to head AIG. And of course there was Paulson himself. Kind of handy for an investment bank to have its own guy as Treasury Secretary.

Indeed if Paulson had not been Treasury Secretary Goldman would history by now. And make no mistake Goldman is still very much an investment bank. That rot about its conversion into a bank holding company is exactly that. How much of its business is related to normal bank operations? How much of it is still dominated by the investment side? (Answer: Not much and a lot, respectively) You can see this in the fact that Goldman wants to be a buyer not a seller of these governmented backed crap assets.

So short version: Goldman is a powerful, well-connected and completely amoral enterprise. If the apocalypse came tomorrow, it would see as a great shorting opportunity.

So short version: Goldman is a powerful, well-connected and completely amoral enterprise. If the apocalypse came tomorrow, it would see as a great shorting opportunity.

Thanks, Hugh! That wrap-up is as clear-eyed as anyone could ask for!

I appreciate all your diaries and comments.

The mortgages on the “tapes” should be ofreed to the homeowners first at the discounted value. The homeowner could then refinance.

It’s our money being used. We get to define the rules. Call your congress critter.

Obama isn’t the answer. VERY HARD for progs to swallow, but it’s true. In fact, he’s toast, and I voted for him.

We are all complicit.

Learn to do something useful. Can you build a table? Pluck a chicken??

Something to inform one’s priors on what would be found in those tapes:

[PDF]
Trends in Delinquencies and Foreclosures in California

I’d bet the other FRBs have or are producing something similar that we can all peruse while we wait for the banks, Treasury, and some qualified third party to get together over those tapes.

Bullseye

Thanks for the heads-up on the Xtian Mafia piece…youch…quite a bit of information there, parts of which I have read before, but the whole web is frightening. Here is the link I found… http://www.insider-magazine.co…..Mafia.htm.

Madsen is very connected and has a scoop on Madoff, Stanford and AIG that will never come out in the MSM. I highly recommend checking out the membership option to get the most cutting-edge reporting. The chat boards are littered with some disruptors, but we’re working on that. I do wish WMR had a sophisticated a format and as civil and sharp a readership as FDL.

Is there really a question about the worthlessness of the RMBSs?

Even if they have a theoretical underlying value of 60%, even 90%, of the value of the aggregate of martgages they’re written on, wasn’t the whole point of securitizing mortgages to take advantage of an expected constant and continuing rise in housing prices? Weren’t they structured to only show superior ROI under conditions of continuously rising house prices? If that’s the case, why would anyone want to own them, even at a discount of 10% or 40%, or whatever the fall in house prices? Wouldn’t you put your money elsewhere, some place with a better ROI?

To state the matter abstractly, you have two sets of concerns when investing: the risk to your principal, and the size of the return you will be getting on the principal. Even if we get past the idea that these things are worth only 60% or 40% of their face, and you get to discount what you pay for with your principal, what’s the expected ROI on these turkeys? And if no one’s buying, they’re not worth anything.

acquarius 74@ 59:

Thank you for your generous welcome.

UBS has been on my radar for about a year now.

My PC has crashed TWICE in the past year,and BOTH times I lost all my data that I had been compiling on UBS.

To the best of my increasingly faulty recollection, UBS had a high profile a few years back in gaining entry to the groundfloor of a particular Chinese bank…open to very,very few non Chinese nationals.

And for some reason, I keep thinking there was a link to Dianne Feinstein’s husband Richard Blum.Richard Blum and his Chinese investments.Now THERE’S some threadworthy and intriguing topics,to be sure,imho.

WHOA-there’s LOTS of unmined info there-damn-those links went bye- bye too with my PC crash and burned,the second time round.

There is a nifty little site called Inner City Press that has REAMS of info on these usual suspects like UBS,GE Capital,Bank of America,Goldman Sachs ,etc.

Of especial note is the CITIwatch section,devoted exclusively to Citibank.

Once again,thank you for your generous welcome.I hope not to disappoint or behave badly.

BTW,I should have mentioned earlier,out of respect and courtesy to him ,that JK Galbraith has been a personal hero and fave of mine for a very long time.

So is Chalmers Johnston.

Just a note that Galbraith’s ideas run across the political and economic spectrum. Willem Buiter, a self-professed and very ex-social democrat, some one who could be described as a sensible moderate conservative, agrees. In fact, he may be more aggressive, since I do not see him waiting around for audits. He says take them over now.

Good Bank/New Bank vs. Bad Bank: a rare example of a no-brainer
Willem Buiter
February 8, 2009 8:41pm
(http://blogs.ft.com/maverecon/2009/02/good-banknew-bank-vs-bad-bank-a-rare-example-of-a-no-brainer)

Time to take the banks into full public ownership
Willem Buiter
January 16, 2009 5:39pm
(http://blogs.ft.com/maverecon/2009/01/time-to-take-the-banks-into-full-public-ownership)

Sorry, no hyperlinks. The auto thingee is seems to be on the fritz when I try to check them.

Soak em in a weak instant tea solution. they like caffeine.

Good Bank/New Bank vs. Bad Bank: a rare example of a no-brainer
Willem Buiter
February 8, 2009 8:41pm
(http://blogs.ft.com/maverecon/…..no-brainer)

Time to take the banks into full public ownership
Willem Buiter
January 16, 2009 5:39pm
(http://blogs.ft.com/maverecon/…..-ownership)

I hope this fixed the links for you. I tried, anyway.

Here is link to a 58 minute YouTube video interview with John Kenneth Galbraith, economist, writer, statesman, ambassador, and more. He was the father of James Kenneth Galbraith, author of this diary. He has a wonderful sense of humor and wisdom beyond anything we see or hear now-a-days.

thanks for doing the links. I think my browser was on the fritz momentarily -kept adding junk sybmols to end of the URL.

Something’s going on here that we’re not seeing.

Any administration can have industry-captured idiots at the helm making policy that screws the taxpayer. But to have two administrations within six months, with different ideologies, with different players, come up with the same bad idea seems too unlikely to be a mere accident.

So it probably isn’t an accident. Which means that an approach with low chance of success and high chance of blatant transfer of a great deal of wealth from public to private hands is being pursued deliberately.

Why?

Why is a second set of elected and appointed officials supposedly dedicated to the public good embarking on a course that will almost certainly cause great harm and further suffering to citizens who are innocent of causing this debacle?

Where is the pressure coming from? Can Wall Street and corporate kleptocrats, as disgraced as they are, still muster enough cojones to make their buds in D.C. dance? Are there foreign players (China, Saudi Arabia for two) with enough power to make the U.S. government actively promote policies that run against the best interests of the citizenry?

Something’s going on here that we’re not seeing.

You’re welcome. About a week-10 days ago I had an update to Windows; nearly drove me nuts. I sent enough error reports to them and it seems ok now. Had some trouble with Firefox, too, and got an alert from my McAfee security system that this (FDL) site had been infected and did I want them to send an alert. I checked yes. No trouble since. Maybe have your security system run a scan?

I’d sure be interested in seeing your answer to Cathyg @ 174. I’ve been groping for the answer to her questions for quite a long time.

Thanks again for your work.

Jamie wrote:

The NYT article points out that pools of RMBS can be sold for about 30 cents on the dollar now. But banks are unwilling to sell for less than 60 cents

Last Fall the Dodd/Frank HOPE for Homeowners plan would have let banks cooperate with homeowners and modify mortgages at only about a 20% loss in principal. They refused…because they’re idiots.

Now they are likely to lose 40% or more and they’re just plain blackmailing government by saying they must be paid big or they’ll hold the assets, refuse to make loans and let the economy crater.

I say they’re all criminals and Gitmo is calling.

Something’s going on here that we’re not seeing.

You’re getting to the real meat of the matter a lot faster than I, Cathyg. The only thing I know to do is stick with these fine diarists and commentators here at FDL and learn all I can from them. (I’d name them with high praise, but fear that I’d miss some – senior moment, ya know.)

Anyway, thank you for your comment. Join in often. We need to see this thing from many perspectives.

Kucinich

In response to Cathyg @ 174 (show text)

Something’s going on here that we’re not seeing.

The goal is and always has been to eliminate any national government (especially the US govt.) as a powerful force in the world and to remove any restrictions on asset accumulation that nations might enact to best protect their sovereign interests. The REAL reason for support of these programs is to provide for mechanisms where financiers and rulers outside the reach of US law who are not beholden to any sovereign people (i.e. the United States) can, for purely commercial driven reasons, funnel sovereign cash to multinational financial conglomerates and their minions. The true financial plan (not the one they sell to voters) that is well known by insiders is and always has been to so indebt the US government that no social programs can survive and thereby nullify the USA as a force for control of monopolistic interests around the world. The true goal of such programs is to provide for a means by which puppet administrations (that are elected via media driven programs owned by transnational corporate interests) can enact legislation that will destroy the US economy with a giant debt bomb that is at least ten times more destructive than any physical bomb could ever be.

When the current administration is doing financial things like directly taking treasury funds and stuffing them into the pockets of specialized interests that lay outside of our country while at the very same time they are actually increasing the US debt load so much that the USA could ACTUALLY and REALISTICALLY be facing bankruptcy – then there is a real threat to national sovereignty and security. Vastly powerful globalized interests support the election of such government representatives. THEY ARE COMMERCIAL AND BUSINESS ALLIES. It is ALWAYS about the mixing of foreign payoffs with trying to stop the ability of the US government to intervene and regulate them.

We are at the juncture of the most serious crisis in modern history, one that is not strictly a financial crisis but rather a much broader transformation, one that is not strictly limited to economic collapse. Let us be under no illusion, there are powerful interests behind these processes and the movement of these financial indicators.

Movements of the stock markets and money markets are heavily manipulated and they are manipulated largely as a result of what we understand as derivative trade. It is the capability of the financial institutions (and powerful individuals who are part of institutions that are not necessarily visible within the financial architecture such as the hedge funds) to trigger upward and downward movements in speculative onslaughts through mechanisms like “short selling” that can make the stock market go up or down without necessarily buying or selling. Disinformation concerning financial movements is then inserted into the circuit of financial and economic news with the ability to trigger major collapses.

We must understand the types of instruments that have been concocted over the last ten to fifteen years since the enactment of the Financial Services Modernization Act in 1999 which deregulated the financial architecture and created a new environment. It is the regulatory (policy) environment which creates the crisis rather than some spontaneous movement in market values. It is not the interplay of market values. What we are dealing with is a massive transfer of wealth resulting from speculative trade and the manipulation of stock markets, money markets, and currency markets. We are dealing with a very major transformation of the structure and architecture of the financial system. The bailouts that are being put forth do not constitute a solution to the crisis but are rather quite the opposite; they are the cause of the crisis. What they do is contribute to an even greater concentration and centralization of financial wealth into the hands of a very few financial institutions.

Our government is allocating bailout money to major financial institutions under the TARP that in point of fact results in a much broader ability to consolidate these institutions and use them to buy out other banks. The US Treasury is handing money to the banks that are using it to enrich themselves and these very same banks are also the creditors of the government. The 700 billion dollar bailout has increased the public debt which causes the debt rating to be affected negatively. WHAT THE HELL? We are actually bailing out the banks! Only a portion of government bonds and treasury bills are held by the banks so the creditors become the public at large and the banks become the brokers of that public debt. The banks then sell the government bonds on the money markets. Thus, by handing bailout money to the banks, our own government is in effect financing US indebtedness. The government is giving money to the banks so that the banks can then lend money back to the government to pay the bailout. It is an absolutely circular process. This leads to an absolute spiraling of the public debt. No one has of yet actually dared to discuss this. The situation is extremely critical.

Following the collapse of the Bretton Woods fixed exchange rate system in 1971 we saw the beginning of a massive restructuring of the financial architecture of our country. Such action was being handled by people in charge like Paul Volker, who was then the head of the Federal Reserve, and who is now on the Obama advisory board. In Nov. 99 there was a major turning point of the financial architecture through the adoption of what is called the Financial Services Modernization Act. This was a Republican initiative adopted in the Graham-Leach-Bliley bill. It was essentially pushed through by Republican Senator Phil Graham during the last year of the Clinton administration. Larry Summers played a very key role in this legislation and is now the White House Economic adviser to President Barack Obama. At that time Summers was the Chief Economist of the World Bank and had been appointed Secretary of the Treasury. Consequently, those persons who are now set to advise and manage the financial architecture under the Obama administration were the architects of the Financial Services Modernization Act of 1999. This act is essentially what created the environment that has triggered the current financial crisis. The people behind this piece of legislation are the people who are now in charge. The people who are the cause of the current crisis are now being brought back as the solution.

The Financial Services Modernization Act repealed a major piece of legislation that went back to 1930’s under the Roosevelt administration which was called the Glass-Steagall Act of 1933. The Glass-Steagall Act was a response to the speculation market with its attendant manipulation and fraud that had led to the crash of Wall Street in 1929. It was a reform policy of the banking and financial sectors to keep the commercial banks on one end and the merchant banks and stoke brokerage groups on the other to prevent them from coalescing.

Following the removal of this protective mechanism, the sovereignty of creditors over governmental policy has been established and made it possible for financial institutions to call the shots and maintain tremendous power. Politicians are being bought up and becoming figureheads for these same financial super powers. This is a deliberate process that has been preceded by mechanisms that involved deregulation of the exchange market. The intrigues behind this (and the way in which these financial institutions managed to ransack even our most technologically advanced systems) are enabled through the buying out of our capital and productive base. These financial institutions want to buy out the real economy of our country with all of its capabilities.

These very powerful cabals are embedded within globalized, transnational entities that have geopolitical agendas that control the flow of money and credit for their own profit and who have ultimately come to control the political apparatus. There are effective measures that can be implemented very expediently but the current power configuration within our government is more interested in protecting global financial interests than our own domestic interests. We must respond NOW and in a meaningful way to disarm the speculative apparatus that has been put in place to destroy or sovereignty by using what Keynesian economist refer to as Financial Disarmament.

In response to Cathyg @ 174 (show text)

Something’s going on here that we’re not seeing.

The goal is and always has been to eliminate any national government (especially the US govt.) as a powerful force in the world and to remove any restrictions on asset accumulation that nations might enact to best protect their sovereign interests. The REAL reason for support of these programs is to provide for mechanisms where financiers and rulers outside the reach of US law who are not beholden to any sovereign people (i.e. the United States) can, for purely commercial driven reasons, funnel sovereign cash to multinational financial conglomerates and their minions. The true financial plan (not the one they sell to voters) that is well known by insiders is and always has been to so indebt the US government that no social programs can survive and thereby nullify the USA as a force for control of monopolistic interests around the world. The true goal of such programs is to provide for a means by which puppet administrations (that are elected via media driven programs owned by transnational corporate interests) can enact legislation that will destroy the US economy with a giant debt bomb that is at least ten times more destructive than any physical bomb could ever be.

When the current administration is doing financial things like directly taking treasury funds and stuffing them into the pockets of specialized interests that lay outside of our country while at the very same time they are actually increasing the US debt load so much that the USA could ACTUALLY and REALISTICALLY be facing bankruptcy – then there is a real threat to national sovereignty and security. Vastly powerful globalized interests support the election of such government representatives. THEY ARE COMMERCIAL AND BUSINESS ALLIES. It is ALWAYS about the mixing of foreign payoffs with trying to stop the ability of the US government to intervene and regulate them.

We are at the juncture of the most serious crisis in modern history, one that is not strictly a financial crisis but rather a much broader transformation, one that is not strictly limited to economic collapse. Let us be under no illusion, there are powerful interests behind these processes and the movement of these financial indicators.

Movements of the stock markets and money markets are heavily manipulated and they are manipulated largely as a result of what we understand as derivative trade. It is the capability of the financial institutions (and powerful individuals who are part of institutions that are not necessarily visible within the financial architecture such as the hedge funds) to trigger upward and downward movements in speculative onslaughts through mechanisms like “short selling” that can make the stock market go up or down without necessarily buying or selling. Disinformation concerning financial movements is then inserted into the circuit of financial and economic news with the ability to trigger major collapses.

We must understand the types of instruments that have been concocted over the last ten to fifteen years since the enactment of the Financial Services Modernization Act in 1999 which deregulated the financial architecture and created a new environment. It is the regulatory (policy) environment which creates the crisis rather than some spontaneous movement in market values. It is not the interplay of market values. What we are dealing with is a massive transfer of wealth resulting from speculative trade and the manipulation of stock markets, money markets, and currency markets. We are dealing with a very major transformation of the structure and architecture of the financial system. The bailouts that are being put forth do not constitute a solution to the crisis but are rather quite the opposite; they are the cause of the crisis. What they do is contribute to an even greater concentration and centralization of financial wealth into the hands of a very few financial institutions.

In response to Cathyg @ 174

The goal is and always has been to eliminate any national government (especially the US govt.) as a powerful force in the world and to remove any restrictions on asset accumulation that nations might enact to best protect their sovereign interests. The REAL reason for support of these programs is to provide for mechanisms where financiers and rulers outside the reach of US law who are not beholden to any sovereign people (i.e. the United States) can, for purely commercial driven reasons, funnel sovereign cash to multinational financial conglomerates and their minions. The true financial plan (not the one they sell to voters) that is well known by insiders is and always has been to so indebt the US government that no social programs can survive and thereby nullify the USA as a force for control of monopolistic interests around the world. The true goal of such programs is to provide for a means by which puppet administrations (that are elected via media driven programs owned by transnational corporate interests) can enact legislation that will destroy the US economy with a giant debt bomb that is at least ten times more destructive than any physical bomb could ever be.

When the current administration is doing financial things like directly taking treasury funds and stuffing them into the pockets of specialized interests that lay outside of our country while at the very same time they are actually increasing the US debt load so much that the USA could ACTUALLY and REALISTICALLY be facing bankruptcy – then there is a real threat to national sovereignty and security. Vastly powerful globalized interests support the election of such government representatives. THEY ARE COMMERCIAL AND BUSINESS ALLIES. It is ALWAYS about the mixing of foreign payoffs with trying to stop the ability of the US government to intervene and regulate them.

We are at the juncture of the most serious crisis in modern history, one that is not strictly a financial crisis but rather a much broader transformation, one that is not strictly limited to economic collapse. Let us be under no illusion, there are powerful interests behind these processes and the movement of these financial indicators.

Movements of the stock markets and money markets are heavily manipulated and they are manipulated largely as a result of what we understand as derivative trade. It is the capability of the financial institutions (and powerful individuals who are part of institutions that are not necessarily visible within the financial architecture such as the hedge funds) to trigger upward and downward movements in speculative onslaughts through mechanisms like “short selling” that can make the stock market go up or down without necessarily buying or selling. Disinformation concerning financial movements is then inserted into the circuit of financial and economic news with the ability to trigger major collapses.

We must understand the types of instruments that have been concocted over the last ten to fifteen years since the enactment of the Financial Services Modernization Act in 1999 which deregulated the financial architecture and created a new environment. It is the regulatory (policy) environment which creates the crisis rather than some spontaneous movement in market values. It is not the interplay of market values. What we are dealing with is a massive transfer of wealth resulting from speculative trade and the manipulation of stock markets, money markets, and currency markets. We are dealing with a very major transformation of the structure and architecture of the financial system. The bailouts that are being put forth do not constitute a solution to the crisis but are rather quite the opposite; they are the cause of the crisis. What they do is contribute to an even greater concentration and centralization of financial wealth into the hands of a very few financial institutions.

Thank you, tx49holdem. I’ve read and re-read your excellent critique of our economic situation, and wish I could deny the truths I find there.

We are dealing with a very major transformation of the structure and architecture of the financial system

.

If we could see the unrolled blueprint of that economic plat, would the name at the top be: Architectural Plan for the Economic New World Order ??

I don’t think there are to be any rooms in that design allotted for the disappearing middle class or the poor among the peoples of the world.

@ 182:

The blueprint was created in the 70’s over at Stanford Research Institute.It was called the Changing Images of Man.It is the planned collapse of America-and the blueprint for economic shock and awe required to create an acquiescent populace,under martial law.

This is available in PDF form on the net,or you can read an excellent synopsis by Peter Chamberlin on a site called Online Journal.[Just type Changing Images of Man in the seqarch engine there .]

Of particular note are the quotes of David Rockefeller,publicly thanking the media for concealing this plan from the public for the last 40 years or so.