Category Archives: Kleptocracy

Government Conspiracy Theory Blames Hybrid Mortgages for Depression

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Tom di Lorenzo at Lew Rockwell blog has this:

“Following Alan Greenspan’s pathetic “don’t blame me” speeches and books, various Fed branches have parroted his view that the Greenspan Depression we are in was caused by thrifty Orientals whose savings drove down interest rates.  So imagine my surprise upon receiving a hard copy of a Dallas Fed publicaton entitled “Taming the Credit Cycle by Limiting High-Risk Lending” and reading that “The present troubles emerged to a large extent from the growing use of hybrid adjustable-rate mortgages . . .”   Huh?  What happened to The New Yellow Peril?

There is no mention at all — not one word — of the role of Fed monetary policy in creating the housing bubble. The culprits, say these self-serving excuse makers (the author is Jeffrey W. Gunther), are “lightly regulated institutions” that are in need of the Fed’s “disciplining force.”

My Conment

Mr. di Lorenzo can relax –  this new tack does nothing to exonerate Greenspan. Look at this USA Today piece from early 2004, when housing was already showing bubbl-y tendencies:

“He [Greenspan] said a Fed study suggested many homeowners could have saved tens of thousands of dollars in the last decade if they had ARMs. Those savings would not have been realized, however, had interest rates shot up.

“American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage,” Greenspan said.”

Read through the whole piece and it’s  clear that American house buyers actually “preferred the stability” of the traditional fixed rate mortgages. In other words, it was only a concerted PR effort by Greenspan & Co. that changed people’s tastes in this.

Let that put an end to any moralizing of this issue.  Yes – rampant consumerism and debt binging exacerbated the problem. But the problem wasn’t caused by some moral defect in American consumers. It was caused by policies deliberately pushed by the federal government in the hope that the consumer would succumb. The chairman of the Federal Reserve thus acted no differently from any confidence man or grifter who spots a mark (a naive, uninformed person easy to manipulate), then sets about winning the mark’s confidence before baiting the trap….

You can see the chairman’s own words to the national association of credit unions on February 23, 2004. (Skip down to the last 2-3 paragraphs to catch the gist)

And now, just like any con man, the Fed chairman too blames his victims.

They had it coming to them...


It Was All Fake for Decades, Says Madoff COO

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From The Guardian, UK:

Frank DiPascali, a loyal lieutenant who worked for Madoff Investment Securities for 33 years, admitted he helped the fraudster run a $65bn (£39bn) pyramid scheme from the early 1990s to 2008.

……DiPascali, 52, faces a notional maximum sentence of 125 years in prison. But he has agreed to co-operate with prosecutors in return for more lenient treatment, in a deal which victims hope will lead to more Madoff conspirators being unmasked.

One of the firm’s longest serving employees, DiPascali joined Madoff Investment Securities as a high school leaver in 1975. He told the court that by the early 1990s, he knew that purported investments on behalf of thousands of clients were fake. “No purchases or sales of securities were actually taking place,” said DiPascali. “It was all fake, it was fictitious. It was wrong, and I knew it was wrong at the time.”

My Comment:

Check back on my posts on Madoff. You’ll see this blog was one of the first to say the Madoff fraud was obviously old, and dated way back before 2005. We think it was fraudulent from the get go. In fact, we think Madoff is taking the fall for many other people, for whatever reason.

Bit by damning bit, we’re going to find out that a LOT of people knew. You can’t run a racket like this without nearly everyone near you either knowing or suspecting something’s amiss.

We’re on record calling DC a den of thieves. We never said it was a den of morons. There were plenty of smart people there who caught on to what was going on. Why didn’t they speak up? We know Henry Markopoulous did, even though he was afraid for his family. So what about the rest?

Which powerful, well-organized group of insiders overawed them?

Warren Buffett Made Out Big From Bail-Outs

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We told you so…

We hate to say it, but a year back we noted on this blog and in a couple of pieces at Lew Rockwell that Mr. Buffett was profiting every which way from the Goldman bail-out.

We also noted his corrupt ties with AIG. And we refused to bow low before his genius at investment. We figured it was another American media myth. The man was an “insider.”

And so it has come to pass…

Raw Story reports:

Aside from the nearly $100 billion in taxpayer aid extended to Buffett’s holdings — which include mortgage lender Wells Fargo and Bank of America, credit card leviathan American Express and the bonus-happy brokerage Goldman Sachs — his companies also benefit from $130 billion in FDIC backing for their debt.

“Were it not for government bailouts, for which Buffett lobbied hard,” writes Reuters’ Rolfe Winke, “many of his company’s stock holdings would have been wiped out.”

Buffett owns 27 percent of Berkshire Hathaway, for which he serves as chairman and chief executive for an annual salary of $100,000. He’s known for his frank and simple-worded investment advice, often laced with colorful sexual metaphors.

Winke says Goldman Sachs would have collapsed without government aid it received…”

************************

Oh these Masters of the Universe. Turns out that without the Universe, they are Masters of…nothing much at all.


Royal Canadian Mint Missing Gold, Silver, & PM Holdings

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In the news, a Canwest News report notes that the Royal Canadian Mint has been caught with its gold, silver and other precious metals AWOL…

“A significant quantity of gold, silver and other precious metals is unaccounted for at the Royal Canadian Mint.

External auditors are investigating a discrepancy between the mint’s 2008 financial accounting of its precious metals holdings and the physical stockpile at the plant on Sussex Drive in Ottawa.

The mystery raises possibilities from sloppy bookkeeping to a gold heist.

Officials with the commercial Crown corporation are saying little and refuse to confirm the amount and value of the unaccounted for gold, silver and palladium.”

Anne Williamson on the IMF’s Role in the Mexican Crisis

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An expert on the neo-liberal rape of Russia, as well as on international finance in general, Anne Williamson testified before the Committee on Banking and Financial Services of the U.S. House of Representatives, on Sept. 21, 1999.  The testimony is well worth reading through today. It shows how precisely the situation in the 1990s during the various financial crises parallels the crisis today in the US. Even the actors are the same  – from Harvard to the IMF to Goldman Sachs.

This is why I’ve consistently argued against any policy prescribed by this government. Anything suggested by such a corrupt group of actors should be suspect.  There’s no point criticizing a Summers or a Geithner or a Paulson alone, when those who oppose them also accept the underlying premises of their arguments; they merely split the difference over a solution that is in essence no different. That is, their “differences” are essentially cosmetic.

I had the privilege of talking at length to Anne and found that her own experiences with the media and publishers were much like mine, only worse. The reasons for that are obvious.  Ask for reform of the IMF or of the World Bank or of the Fed and you will get a sympathetic ear. Ask for the abolition of these institutions and you have questioned the entire system and the credibility of the functionaries and apparatchiks who run it. That’s unforgivable.

“Some governments — especially those with an election on the horizon — actually want to devalue since national exporters, their goods now being cheaper, sell more goods. Global lenders like the IMF are also fond of devaluations because a rising national income from bargain exports leave plenty in the national kitty for principal and interest payments to them. (Global direct investors — the “good guys” — fear devaluations, because their profits calculated in a devalued domestic currency buy fewer dollars for repatriation.)

But when exchange rates depreciate rapidly the specter of capital flowing out of a country appears. Foreigners and residents put their savings elsewhere. The currency goes into free fall, its value plummets, more investors flee and at the end of the cycle, interest rates skyrocket. This is exactly what happened in Asia in 1997, in Russia in 1998 and will soon happen in both Brazil and China.

Yet to curse the speculators is useless; since the 1972 collapse of Bretton Woods that broke the international link between the dollar and gold, the fear of the syndrome described above is the only remaining bit of discipline in the international system. How much better, the globalists reason, if there were to be one central bank and one fiat currency for everyone so that then national leaderships (and the financial oligarchies they sustain) could inflate and rob their own populations in unison, thereby perpetually enserfing all the world’s people….”

And on the role of the IMF:

“In mid-July 1994 — at the very moment dollar-based Mexican tesobonos were being oversold to prosperous clients of Goldman Sachs and other U.S. investment banks, which, in turn, would lead to the 1995 Mexican bailout and the introduction of moral hazard into the world’s financial system — Michel Camdessus told a press conference that he intended to press for the creation of a new IMF facility to give members resources with which to defend themselves against speculative attacks in financial markets.

In other words, long before bailouts of entire countries became routine Camdessus wanted a new loan program to feed the last disciplinarians in the world’s financial system — currency speculators — so that national governments might become even more unaccountable to their citizens. At the time, The Economist slammed the proposal, saying it was “absurd and almost certainly unworkable,” since Camdessus “bizarrely” was assuming the IMF would know more about economic fundamentals than the markets. And that assumption, The Economist noted, was the very assumption which had been the undoing of the USSR’s centrally planned empire. But Camdessus’ 1994 plan is the very one the U.S. President proposed just this week!”

Read the rest of her testimony here.

Award Winning Research Proves that Fed Fiddled Us Into Disaster

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A Distinguished Academic Research Award went to researchers who showed that Bernanke’s tinkering with the interest rate converted a minor recession in 2004 into a full-fledged implosion of the credit markets in 2008:

“In a correlative movement with the rise in the price of oil, the Federal Reserve moved from a low accommodative interest rate policy to one of a steady and consistent increase in interest rates between 2004 and 2007. The switch in policy, to higher interest rates, combined with the financially corrosive effects of low initial variable interest rates, between 2001 to 2004, converting to much higher indexed variable interest rates, between 2005-2008, became a prime cause of the financial services mortgage crisis of 2008. The study suggests that the Federal Reserve’s sustained manipulation of interest rates between 2000-2008 had a deleterious effect on financial lenders and individual borrowers.”

— “Federal Reserve Interest Rate Manipulation between 2000-2007 and the Housing Mortgage Crisis of 2008,” by Dr, Fred M. Carr and Dr. Jane A. Beese, August 8, 2008, of the University of Akron’s .K. Barker Center for Economic Education.

My Comment

(later)

Bail-Out for Insurers

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In the news:

“The Hartford Financial Services Group Inc. was the first to disclose Thursday that it had been notified by the Treasury Department that it was eligible for $3.4 billion from the Troubled Asset Relief Program, or TARP. Lincoln National Corp., which commonly goes by the name Lincoln Financial Group, said it has been initially approved for a $2.5 billion injection from TARP’s Capital Purchase Program.

Allstate Corp., Ameriprise Financial Inc., Principal Financial Group Inc. and Prudential Financial Inc. also are among insurers receiving preliminary investment approval, Treasury spokesman Andrew Williams confirmed. He declined to disclose the amount of investment each company will receive.

The total capital injection into the six companies will be less than $22 billion, The Wall Street Journal reported, citing a person familiar with the situation…”

My Comment

22 billion might not seem like a lot, but insurers’ holdings have taken a big hit in recent months, it seems, and a cut in their ratings would have been likely once their assets fell below a certain level.

So you have government ownership of large parts of the housing market (which itself covers, in all its aspects some 30% of the economy), extensive government intervention in banking and insurance, government run trade, government run schools and colleges, government run social security and medicaid and medicare, and what does the left think the problem is? The free market!

Allied Irish Chairman Pelted with Eggs

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In the news, BBC reports on another kind of Blackrock – Blackrock, South Dublin, where Gary Keogh was hastily removed from a building after chucking eggs at Dermot Gleeson, chairman of Keogh’s bank, Allied Irish. The outburst came at a shareholder’s meeting of Allied Irish to approve a 3.5 billion euro government recapitalization for the bank, which has lost 91% of its value over the past 12 months.

Said Keogh,

“I have no pension. My pension now is wiped out because of AIB. I cannot sell the shares because they are useless.

If we didn’t live in a tolerant society, the chairman and the rest of the board would be hanging by their necks with piano wire out on the road.

Meanwhile, inside, an unsettled Mr Gleeson stood in front of a blue AIB logo spattered with egg and continued to take questions from shareholders….”

My Comment

Hooray for Mr. Keogh.

Any society can only take so much ‘tolerance’ and ‘non-judgmentalism’ without bankrupting itself financially and spiritually.

The moral problem underlying all this is that we deny that actions have consequences. And we also refuse to judge our actions by their consequences.

We want to make every action free of consequence, although consequences are precisely what guide us in ordinary life.

We’re accountable when we drive on the roads, aren’t we?

So why do bankers get to abdicate that responsibility when it comes to larger social and economic issues?