[Majorityrights News] Trump will ‘arm Ukraine to the teeth’ if Putin won’t negotiate ceasefire Posted by Guessedworker on Tuesday, 12 November 2024 16:20.
[Majorityrights News] Alex Navalny, born 4th June, 1976; died at Yamalo-Nenets penitentiary 16th February, 2024 Posted by Guessedworker on Friday, 16 February 2024 23:43.
[Majorityrights Central] A couple of exchanges on the nature and meaning of Christianity’s origin Posted by Guessedworker on Tuesday, 25 July 2023 22:19.
[Majorityrights News] Is the Ukrainian counter-offensive for Bakhmut the counter-offensive for Ukraine? Posted by Guessedworker on Thursday, 18 May 2023 18:55.
Note: This blog is based on my notes for a speech at the Harvard Class of 1957 55th reunion in Cambridge, Mass. on May 22nd.
Armageddon was threatening the financial system on Wednesday, September 17, 2008. The largest bankruptcy in American history, that of investment bank Lehman Brothers on Monday, September 15, had roiled global markets, accelerating the stupendous decline in values of every possible investment vehicle—common stocks, corporate bonds, real estate, commodities like oil, copper and gold, private equity and hedge funds alike. In the midst of the chaos Merrill Lynch, the firm that had brought Wall Street to Main Street, was absorbed in a shotgun marriage by Bank of America BAC +0%.
Only days earlier came the recognition at the New York Federal Reserve Bank and the US Treasury that AIG, the largest insurance company in the world was running out of money. This required an immediate injection of $85 billion in bail-out funds. And later another $100 billion, still not paid back to Uncle Sam.
That day, Sept 17, an even greater crisis was pending. All day long the chairman of General Electric, a company recognized across the globe as a leading industrial giant, was calling the Secretary of the Treasury, Hank Paulson to warn that the next day, Sept. 18, that GE would no longer be able to roll over its short term debt. The American business system was on the cusp of faltering mightily. The US economy was on the brink of a precipice into the unknown.
Messrs Paulson and Bernanke, at the Fed, knew the nation could not suffer the risk of a total breakdown in industry and finance. So, they decided to instantly guarantee the $600 billion commercial paper market, which is widely used to finance day-to-day operations of all major firms. This guarantee became part of the total cost of bailing out Wall Street, which totaled over $7 trillion—when you added guarantees to loans, investments and outright grants. The bailouts were key to raising the Fed’s balance sheet from $1 trillion to $3 trillion—and to upping the nation’s total amount of debt some $5 trillion to a record $15 trillion.
Conversely, the household wealth of the nation, measured by losses in financial markets and the historic drop in residential real estate—was reduced by a sickenly humungus $12-$14 trillion at the very bottom of the whole process in March, 2009. You take that money—$12-14 trillion away from the asset side of the ledger and add another $5 trillion in debt—- and you are bound to experience a decline in the nation’s GDP and a very much slower rate of recovery from such a trauma. A recovery that could take 10 years or more according to Harvard economist Kenneth Rogoff. That brings us to 2018. Need I say more?
How did we reach this very near call on a total systemic breakdown?
Firstly, there were no cops on the beat. Laissez-faire free market economics was the prevailing public policy. Federal Reserve chairman Alan Greenspan spoke of irrational exuberance but took no steps to cool off markets in the late 1990s. In fact, he was asked by Loews chairman Larry Tisch and former Goldman Sachs co-chairman John Whitehead to raise the margins on trading, and refused, claiming falsely that such a move was up to the SEC—and not the Fed. Not true.
In 1999 the Glass-Steagall Act—which had separated commercial banking from investment banking for 66 years, was overturned—a move that opened the door to more speculative trading on the part of Wall Street firms.
Then, in 2000 Messrs. Greenspan, former Treasury Secretary Rubin and his successor Lawrence Summers pressed to pass a bill that would prohibit the regulation of derivatives—the fastest growing and most complicated and murky new financial product. This was an incredible mistake, as derivative contracts like mortgage backed bonds and credit default swaps mushroomed in across the globe without any oversight, strict capital requirements and on an organized exchange where buying and selling were handled daily.
The result of this vacuum; no one anywhere knew who owed what to whom across the world. Despite the danger lurking in the rapid depreciation of these contracts, Bernanke publicly stated the absurd amount of sub-prime mortgages being sold to unsuspecting buyers would not spread to a much wider, deeper crisis. He didn’t know what he was talking about, sadly..
Lastly, in 2004 the major firms convinced the SEC to let them value certain assets on their balance sheet at values they chose—rather than marking them t o market—which would reveal what losses they were carrying. This added another dangerous laxity to financial regulation. The system was falsifying its accounts believing the investments would bounce back.
The entire catastrophe’s underlying theme was summed up later by this admission from former Fed chairman Greenspan . ” I made a mistake,” he admitted in a hearing, “in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms.” And we made this man into the wise parental guardian of American capitalism for 18 years. We journalists, that is.
Pressed again later on, Greenspan admitted to “shocked disbelief, (because his whole) intellectual edifice had collapsed.” Naive at minimum. At worst, locked into a narrow limited ideological viewpoint that set the stage for the meltdown. Let Goldman Sachs and Citigroup master their own appetite for profits. So much for reining in animals spirits.
Secondly, the banks and investment banks were using reckless amounts of leverage. They borrowed, in many cases, $30 to $40 of debt for every dollar of capital they had. In truth, this was a recipe for disaster, since a decline of only 4% in their capital put them on the road to insolvency. It was as if you bought a million dollar house, put down a payment of $30,000 and borrowed $970,000. What sense of irrational optimism allowed this mad way of doing business.
By the fall of 2008 the decline in the value just of subprime mortgage backed bonds—which lost up to 80% of their value in the market—meant that Fannie Mae, Freddie Mac, Lehman, Merrill Lynch, Citigroup, Bank of America, Washington Mutual and Wachovia were in a state of peril. The only way to make money in bank stocks was to short them. My favorite day trader told me after it was all over that I should be worth $50 million. With the run on Lehman Bros. both Morgan Stanley and Goldman Sachs were in danger of experiencing a run on their accounts.
Perhaps AIG is the most extreme example of leverage as financial hari-kari. It had sold protection to banks and insurance companies across the globe by issuing $540 billion of credit default swaps, which meant AIG promised to make good on any losses in value of their mortgage holdings.
LONDON, ENGLAND: Anti-Brexit campaigner Steve Bray protesting outside of the Houses of Parliament on January 30, 2020 in London, United Kingdom. At 11.00pm on Friday 31st January the UK and Northern Ireland will exit the European Union 188 weeks after the referendum on June 23rd 2016.
In 2016, Britain voted for Brexit. On Friday—four years, three prime ministers and two general elections later—the country will leave the European Union. Officially stepping out into the world is a major moment for a country that has driven itself mad on the tortuous path to the exit door. And yet, even the buildup to this historic event typified the silliest aspects of the years between the “leave” vote and the actual leaving.
Two quarrels about how Britain would mark the occasion broke out in recent weeks, one about a bell, the other about a coin. First came the fuss about whether Big Ben would ring out to mark the moment of independence. This Brexiteer wish was complicated by the fact that the bell, and the tower that houses it, are undergoing renovations, meaning a single bong would come with a $700,000 price tag. After Parliament refused to fund the move, and an online fundraising campaign failed to fill the gap, there will be no Big Ben bongs. “If Big Ben doesn’t bong, the world will see us as a joke,” lamented Brexit campaigner Nigel Farage.
A second brouhaha broke out over a commemorative 50 pence coin issued to mark the occasion. The coins, which read, “Peace, prosperity and friendship with all nations,” soon drew the ire of disbelieving Remainers. Otherwise serious and self-respecting members of the British establishment said they would refuse to use the coins or would deface any that came into their possession. (The novelist Philip Pullman also complained that the coin “is missing an Oxford comma and should be boycotted by all literate people.”)
Britain’s talent for turning these trivial rows into front-page stories illustrates how much the Brexit debate has become a negative-sum culture war, with Leavers and Remainers each compelled to take a side. Yet these dust-ups also obscure some of the more interesting, and important, divides over what Britain does with its newfound freedom. So far, much of the conversation has been backward looking, focused on whether the country would give effect to the 2016 vote with a viable version of Brexit, or whether that vote should be ignored. As Britain leaves the EU, and finally casts an eye forward, there are as many disputes as ever, with global implications, and the fault lines are more complicated than just Leave vs. Remain.
When Prime Minister Boris Johnson triumphed in last month’s election with a promise to “get Brexit done,” his opponents argued that after the sun rises on February 1, Britain’s future relationship with the EU, and a host of related questions, would remain unresolved. In a narrow sense, that claim is irrefutable. But it also misses the bigger picture.
The case for Brexit was built on possibilities. Among other things, exiting the EU allows Britain to decide for itself what trade relationships it should pursue with the rest of the world, the criteria it should set for its immigration system and how to regulate a host of areas that have been the competence of the EU for decades. These are big, difficult decisions in and of themselves. They aren’t part of a Brexit process that will ever be finished. Britain will not one day declare mission accomplished and no longer give any thought to, for example, trade policy—something that, as Americans will know, is an ongoing consideration in the politics of sovereign countries.
Understand that fact, and the divide between Leave and Remain starts to look less significant. On trade, for example, there is a split among Leavers. An image of buccaneering “Global Britain” striking trade deals with fast-growing economies around the world was a big part of the case pro-Brexit politicians made. There is little enthusiasm for this vision among Leave voters. According to one poll, Leave voters were more likely to support protectionist trade policies than Remainers. In fact, whether someone voted Leave was the single best predictor of a person’s support for barriers to trade. Politicians eager to use Brexit as an opportunity for liberalizing UK trade will have to think carefully about which voters they can rely on.
Posted by DanielS on Friday, 10 January 2020 05:00.
Although to most people, it is a $1-trillion-a-day credit machine, in which not just banks but hedge funds and other “shadow banks” borrow to finance their trades. Under the Federal Reserve Act, the central bank’s lending window is open only to licensed depository banks; but the Fed is now pouring billions of dollars into the repo (repurchase agreements) market, in effect making risk-free loans to speculators at less than 2%.
Ellen Brown is an attorney, chairman of the Public Banking Institute; author of twelve books including “Web of Debt” and “The Public Bank Solution.”
This does not serve the real economy, in which products, services and jobs are created. However, the Fed is trapped into this speculative monetary expansion to avoid a cascade of defaults of the sort it was facing with the long-term capital management crisis in 1998 and the Lehman crisis in 2008. The repo market is a fragile house of cards waiting for a strong wind to blow it down, propped up by misguided monetary policies that have forced central banks to underwrite its highly risky ventures.
The Financial Economy Versus the Real Economy
The Fed’s dilemma was graphically illustrated in a Dec. 19 podcast by entrepreneur/investor George Gammon, who explained we actually have two economies – the “real” (productive) economy and the “financialized” economy. “Financialization” is defined at Wikipedia as “a pattern of accumulation in which profits accrue primarily through financial channels rather than through trade and commodity production.” Rather than producing things itself, financialization feeds on the profits of others who produce.
The financialized economy – including stocks, corporate bonds and real estate – is now booming. Meanwhile, the bulk of the population struggles to meet daily expenses. The world’s 500 richest people got $12 trillion richer in 2019, while 45% of Americans have no savings, and nearly 70% could not come up with $1,000 in an emergency without borrowing.
Bring Back Oliver Cromwell - Vic Sarson
I support tougher prison sentences but what is a seriously long sentence in these times where a liberal elite controls the judiciary, the media, education, the civil service and nearly all politicians are signed up to it?
The application of capital punishment certainly needed reviewing but its outright abolition not only demoted the crime of murder but of all violent crime. Now, vicious, violent criminals are treated with greater leniency than someone who has not paid a TV licence.
A recent article in the Daily Mail showed the photographs of six such thugs that had walked out of court smiling having been given non-custodial sentences for vicious random attacks against members of the public. They were separate individuals unknown to each other in British courts in different towns. Another item on another date showed the photograph of an elderly woman who had suffered blows to the head with an axe that were so severe as to expose her skull. The robber had attacked her in broad daylight when she was out shopping. He too walked free from court.
Anyone, it seems, can be a magistrate and the liberals have got it sewn up: the interviewers are liberals and ensure that only liberals are appointed. Judges these days are, in the main, little better.
It was very gratifying to see Tucker Carlson’s recent attack on the activities of Paul Singer’s vulture fund, Elliot Associates, a group I first profiled four years ago. In many respects, it is truly remarkable that vulture funds like Singer’s escaped major media attention prior to this, especially when one considers how extraordinarily harmful and exploitative they are. Many countries are now in very significant debt to groups like Elliot Associates and, as Tucker’s segment very starkly illustrated, their reach has now extended into the very heart of small-town America. Shining a spotlight on the spread of this virus is definitely welcome. I strongly believe, however, that the problem presented by these cabals of exploitative financiers will only be solved if their true nature is fully discerned. Thus far, the descriptive terminology employed in discussing their activities has revolved only around the scavenging and parasitic nature of their activities. Elliot Associates have therefore been described as a quintessential example of a “vulture fund” practicing “vulture capitalism.” But these funds aren’t run by carrion birds. They are operated almost exclusively by Jews. In the following essay, I want us to examine the largest and most influential “vulture funds,” to assess their leadership, ethos, financial practices, and how they disseminate their dubiously acquired wealth. I want us to set aside colorful metaphors. I want us to strike through the mask.
Who Are The Vultures?
It is commonly agreed that the most significant global vulture funds are Elliot Management, Cerberus, FG Hemisphere, Autonomy Capital, Baupost Group, Canyon Capital Advisors, Monarch Alternative Capital, GoldenTree Asset Management, Aurelius Capital Management, OakTree Capital, Fundamental Advisors, and Tilden Park Investment Master Fund LP. The names of these groups are very interesting, being either blankly nondescript or evoking vague inklings of Anglo-Saxon or rural/pastoral origins (note the prevalence of oak, trees, parks, canyons, monarchs, or the use of names like Aurelius and Elliot). This is the same tactic employed by Jew Jordan Belfort, “Wolf of Wall Street,” operating multiple major frauds under the business name Stratton Oakmont.
These names are masks. They are designed to cultivate trust and obscure the real background of the various groupings of financiers. None of these groups have Anglo-Saxon or venerable origins. None are based in rural idylls. All of the vulture funds named above were founded by, and continue to be operated by, ethnocentric, globalist, urban-dwelling Jews. A quick review of each of their websites reveals their founders and central figures to be:
Elliot Management — Paul Singer, Zion Shohet, Jesse Cohn, Stephen Taub, Elliot Greenberg and Richard Zabel
Cerberus — Stephen Feinberg, Lee Millstein, Jeffrey Lomasky, Seth Plattus, Joshua Weintraub, Daniel Wolf, David Teitelbaum
FG Hemisphere — Peter Grossman
Autonomy Capital — Derek Goodman
Baupost Group — Seth Klarman, Jordan Baruch, Isaac Auerbach
Canyon Capital Advisors — Joshua Friedman, Mitchell Julis
Monarch Alternative Capital — Andrew Herenstein, Michael Weinstock
GoldenTree Asset Management — Steven Tananbaum, Steven Shapiro
Aurelius Capital Management — Mark Brodsky, Samuel Rubin, Eleazer Klein, Jason Kaplan
OakTree Capital — Howard Marks, Bruce Karsh, Jay Wintrob, John Frank, Sheldon Stone
Fundamental Advisors — Laurence Gottlieb, Jonathan Stern
Tilden Park Investment Master Fund LP — Josh Birnbaum, Sam Alcoff
Former Federal Reserve Chairman Alan Greenspan called Paul Volcker “the most effective chairman in the history of the Federal Reserve.” But while Volcker, who passed away Dec. 8 at age 92, probably did have the greatest historical impact of any Fed chairman, his legacy is, at best, controversial.
Paul Volcker’s Long Shadow
“He restored credibility to the Federal Reserve at a time it had been greatly diminished,” wrote his biographer, William Silber. Volcker’s policies led to what was called “the New Keynesian revolution,” putting the Fed in charge of controlling the amount of money available to consumers and businesses by manipulating the federal funds rate (the interest rate at which banks borrow from each other). All this was because Volcker’s “shock therapy” of the early 1980s – raising the federal funds rate to an unheard of 20% – was credited with reversing the stagflation of the 1970s. But did it? Or was something else going on?
Less discussed was Volcker’s role at the behest of President Richard Nixon in taking the dollar off the gold standard, which he called “the single most important event of his career.” He evidently intended for another form of stable exchange system to replace the Bretton Woods system it destroyed, but that did not happen. Instead, freeing the dollar from gold unleashed an unaccountable central banking system that went wild printing money for the benefit of private Wall Street and London financial interests.
The power to create money can be a good and necessary tool in the hands of benevolent leaders working on behalf of the people and the economy. But like with the Sorcerer’s Apprentice in Disney’s “Fantasia,” if it falls in the wrong hands, it can wreak havoc on the world. Unfortunately for Volcker’s legacy and the well-being of the rest of us, his signature policies led to the devastation of the American working class in the 1980s and ultimately set the stage for the 2008 global financial crisis.
The Official Story and Where It Breaks Down
According to a Dec. 9 obituary in The Washington Post:
Mr. Volcker’s greatest historical mark was in eight years as Fed chairman. When he took the reins of the central bank, the nation was mired in a decade-long period of rapidly rising prices and weak economic growth. Mr. Volcker, overcoming the objections of many of his colleagues, raised interest rates to an unprecedented 20%, drastically reducing the supply of money and credit.
The Post acknowledges that the effect on the economy was devastating, triggering what was then the deepest economic downturn since the Depression of the 1930s, driving thousands of businesses and farms to bankruptcy and propelling the unemployment rate past 10%:
Mr. Volcker was pilloried by industry, labor unions and lawmakers of all ideological stripes. He took the abuse, convinced that this shock therapy would finally break Americans’ expectations that prices would forever rise rapidly and that the result would be a stronger economy over the longer run.
A Union Jack flag flutters in front of Big Ben as workers inspect one of its clocks, in London on Sept 11. (Reuters photo)
Ellen Brown is an attorney, chairman of the Public Banking Institute; author of twelve books including “Web of Debt” and “The Public Bank Solution.”
