Monday, November 3, 2008

Lipstick on a Pig, Part 3 of 3

We pick up from where we left off in Part 2, considering the question of who reaps the political harvest of this economic crisis we are in; we continue reviewing Who's Behind the Economic Collapse? by Cliff Kincaid, October 28, 2008:

Information from the Center for Responsive Politics identifies Goldman Sachs as a "strongly Democratic" firm, having contributed 73 percent of their almost $5 million in 2008 election cycle contributions to Democrats.

Some liberals understand the connection between Goldman Sachs and Obama. "Obama’s number one bundler is Goldman Sachs,” notes John R. MacArthur, publisher of Harper's Magazine, in a release from the "progressive" group calling itself the Institute for Public Accuracy. He was referring to how money from the firm is packaged for the Obama campaign.

"In his book, 'The Audacity of Hope,' Obama talks about how much he likes investment bankers, how bright and liberal they are," says MacArthur. He believes that Obama is a "socialist" only in the sense that he, like Bush and McCain, supports socialism for the rich through the Wall Street bailout.

Socialist or not, Obama is clearly the firm's favorite in the presidential race.

And -- Surprise! Surprise! -- Obama benefits politically from this crisis, as people look to him to save them from the evil speculators.

Lynn Sweet of the Chicago Tribune recently discovered that, on May 3, 2007, Obama had attended an event at the Museum of Modern Art in Manhattan "that was not on his public schedule and is only now surfacing ― a private dinner for Goldman Sachs traders with a discussion on issues moderated for the Wall Street firm by NBC's Tom Brokaw" ― the moderator of the second presidential debate.

Her column notes other Obama campaign connections to Goldman Sachs and mentions that Bloomberg had reported that Obama addressed the Goldman's annual partners meeting 2006 in Chicago.

It is not known, of course, what kind of illegal financial activities may have contributed to the current crisis. But based on what has been publicly said by the President and the SEC, the culprits could possibly include operators of the controversial, mysterious and secretive financial vehicles known as hedge funds.

A hedge fund operator such as George Soros, who was convicted of insider trading in France, is known to make money from the collapse of national economies and currencies. Labeled "The Man who broke the Bank of England" because of his financial activities against the British currency, he is said to be on a witness list of hedge fund operators that will be called to testify before Congress next month―probably after the election.

Isn't it interesting how the candidate that Soros has been backing for years now, Senator Barack Obama, is the main political beneficiary of an economic crisis -- the kind of crisis Soros has been known to generate?

And, isn't it interesting how Senator Obama led the charge in giving over $700 billion dollars of money, borrowed with an I.O.U. signed by the U.S. taxpayer, to financial speculators -- of which George Soros is a very successful example?

Our financial regulatory system is a pig -- corrupt government regulators taking care of their dishonest cronies in the private sector.

And, Barack Obama used his influence (and McCain went along with it, and Bush signed it) to put lipstick on that pig, and sell it to us in a poke. (For my foreign readers: Pig in a poke.)

If Barack Obama wins on Tuesday, the biggest difference we will have beginning in January is that of whose friends will benefit from the corruption and cronyism in Washington, as one crooked regime takes over from another.

Regime change? Change we can believe in!

Please finish reading the originals that I quoted from: Treasury Secretary Looks Out for His Buddies First and Who's Behind the Economic Collapse?

Sunday, November 2, 2008

Lipstick on a Pig, Part 2 of 3

We return now to Treasury Secretary Looks Out for His Buddies First, picking up where we left of in Part 1 reviewing that article:

There is no simple way to create markets for the collateralized debt obligations (CDOs) on the banks' books. Trade can only happen when you can discern a price and parties think they will benefit. The bank or hedge fund cannot value these assets correctly in the interbank market because they can't be sure the other party is not going to fail. This results in a price that is far away from where it normally would be quoted. A clearing house takes away much of the risk, leaving only the market risk of the CDO. Better pricing of these CDOs will save taxpayers billions of dollars, since in any auction you will be buying and selling at a more efficient market price.

Who doesn't want the independent clearing house solution? Investment banks of New York. Over 30% of their revenue comes from proprietary trading. They reap massive profits in the over-the-counter (OTC) marketplace. They also would have to spend money to hold positions in the clearing house. This will limit their operations and profitability. Additionally, they are afraid because the clearing house would have access to all kinds of information that the banks deem sensitive. If that information were leaked, it could compromise a bank's competitive position. The New York banks will try to establish a clearing house that they control. They would keep the market fuzzy and to themselves. A bank-controlled clearing house would be a license to steal. This would be like the fox watching the hen house. It will be only a matter of time before we blow up again.

First of all, we already have an organization which, to a great extent, is supposed to be monitoring the financial sector, limiting the damage caused by bad moves there -- and despite that we had the Great Depression, other crises and scandals, and now this. So, now they propose more regulation and perhaps a reorganization -- a "new world economic order".

Kind of like 9/11 -- we had government agencies that had information that something was up, including some surprising particulars, but despite that, the terrorist attack succeeded literally against all odds. No one was ever held accountable or punished, we just had more regulation -- that "Patriot Act" -- and a reorganization -- the Directorate of Central Intelligence became the Directorate of National Intelligence.

We now return to Who's Behind the Economic Collapse?; we repeat the last paragraph that was quoted in the previous post, and continue with the next two paragraphs:

The growing suspicion that the financial meltdown is a "generated crisis" has been fed by statements from President Bush himself that illegal financial activities were taking place. On September 18, when he made a public statement about the growing economic problems, Bush announced that the Securities and Exchange Commission (SEC) was stepping up its enforcement actions "against illegal market manipulation."

By whom or what? The President didn't say.

The next day, September 19, Bush appeared in the Rose Garden with Paulson, SEC chairman Christopher Cox, and Federal Reserve chairman Ben Bernanke. Bush declared, "The SEC is also requiring certain investors to disclose their short selling, and has launched rigorous enforcement actions to detect fraud and manipulation in the market. Anyone engaging in illegal financial transactions will be caught and persecuted [sic]." Again, what was Bush talking about?

The only ones who will be "persecuted" -- and for my usage, I am spelling it correctly -- will be those whistleblowers who come forward to tell us what is really going on; consider the Sibel Edmonds case in connection with 9/11 to see what I am talking about.

Continuing with Who's Behind the Economic Collapse?:

For its part, on the same day, the SEC announced "a sweeping expansion of its ongoing investigation into possible market manipulation in the securities of certain financial institutions." The SEC declared, "Hedge fund managers, broker-dealers, and institutional investors with significant trading activity in financial issuers or positions in credit default swaps will be required, under oath, to disclose those positions to the Commission and provide certain other information."

But no details were provided. Don't voters have the right to know whether these illegal activities were being conducted for political purposes?

Almost as secretive were Treasury Secretary Paulson's maneuvers. He produced a quick three-page proposal to make himself a virtual financial dictator without judicial oversight or review. Then just as quickly it was secretly altered so that he would have the authority to bail out banks in China and other foreign countries.

A "financial dictator without judicial oversight or review" -- now surely we would not expect that from this White House?

For those interested in some of the fascinating details about Paulson's extremely close relationship with China, which may have provoked the financial crisis and stands to benefit from it, the October issue of Bloomberg Markets is a good place to start. It notes that Paulson was sworn in as secretary in July 2006 and that by September he was announcing "creation of the first U.S.-China Strategic Economic Dialogue." Paulson, the magazine reports, has a relationship with Chinese leaders and has traveled to China at least 70 times in his career. It reports that he personally had $25 million worth of holdings in a Goldman Sachs fund whose sole asset was a stake in the Industrial & Commercial Bank of China.

Goldman Sachs, a "full-service global investment banking and securities firm," is "the leading underwriter of Chinese equity securities and M&A [merger and acquisition] advisor in China," its website declares.

"Managing the U.S. relationship with China is an increasingly important part of the Treasury secretary's job," Bloomberg Markets says. "During the Fannie and Freddie crisis, Paulson used his credibility with Chinese leaders to reassure them that the U.S. mortgage companies weren't in jeopardy." Paulson is quoted as saying that "I clearly talked with the Chinese through this. They've worked with me enough that they knew I wouldn't say it unless I believed it."

Why was this necessary? Chinese institutions own more than $30 billion of Fannie Mae and Freddie Mac paper, the magazine reports.

On September 7, of course, the U.S. Government, under Paulson's direction, took control of Fannie Mae and Freddie Mac, putting the U.S. taxpayers on the hook for $5 trillion of mortgages. But Paulson's statement made no mention of the Chinese investments. Instead, he talked about protecting financial markets and U.S. taxpayers.

About a week and a half later the demands came for more taxpayer money for Wall Street, and the national economic crisis was well underway.

Rep. Scott Garrett, Republican of New Jersey, is leading the Congressional effort to find out how Paulson's proposal was developed and by whom. He wants to know what went on behind "closed conference room doors" in the U.S. Government.

Equally significant, on September 23, Paulson's former firm, Goldman-Sachs, received an infusion of $5 billion from Warren Buffett, a major Obama financial backer and booster.

The former Goldman Sachs CEO "does not act or sound much like a conservative Republican to the GOP remnant at the Treasury," noted Robert Novak in an October 2007 column. Novak reported that Paulson had "marched to his own drummer" by naming Eric Mindich, chairman of Eton Park Capital Management, to head the Asset Managers' Committee of the President's Working Group on Financial Markets. "A former Goldman Sachs colleague of Paulson's, Mindich is a top-level Democratic fundraiser," Novak noted. "He was in Sen. John Kerry's inner circle for the 2004 presidential campaign and backs Sen. Barack Obama for 2008."

Then, during the current crisis, Paulson appointed another former Goldman Sachs banker, Neel Kashkari, to run the new "Office of Financial Stability" and buy bad loans and distressed securities.

Talk about a revolving door of cronyism....

But, to whose political benefit does this happen?

Stay tuned for Part 3.

Lipstick on a Pig, Part 1 of 3

We begin with Treasury Secretary Looks Out for His Buddies First, by Jeffrey Carter, November 1, 2008; please see the original for links which I did not reproduce.

Hank Paulson has acted like the secretary of Wall Street rather than the secretary of the Treasury. This economic crisis manifested itself in August 2007 and nothing that Paulson has done has been a remedy for the problem. His solutions have only propped up his cronies on Wall Street. He is sidestepping the real problem in the market: counterparty risk. Only an independent clearing house can solve this crisis.

Secretary Paulson's bailout package does nothing for the problem. It injects money into bankrupt institutions by buying preferred stock, which only solves the easy part of the crisis. What if the stuff on the banks' books is worth less than they say? We will still have a problem. The crux of the problem is that there is so much counterparty risk that banks will not lend to each other. This has frozen what's called the interbank credit market. Banks do not trust each others' financial statements. This is why our credit system is clogged.

There are only two ways to get rid of counterparty risk. One is don't trade with each other. This is not an option; it's what is happening today. The other is to trade through an independent "clearing house" that erases counterparty risk by guaranteeing each trader is solvent. Once we recertify trust, the credit market will unlock and trading can resume.

I thought we established in Economic 9-11? that it was the job of the Federal Reserve to evaluate the general financial situations of its member banks.

In other words, we already have a "clearing house" -- but, the clearing house hasn't been doing its job.

The theory is that Federal Reserve -- which is not really a government entity, by the way -- is supposed to help police our financial sector.

The reality is that the Federal Reserve has become a place for cronies of those in power to leverage their knowledge of what is happening in the financial industry into big profits for select players on the financial scene.

We now consider Who's Behind the Economic Collapse? by Cliff Kincaid, October 28, 2008; again, please see the original for links that I did not reproduce.

Joe Biden made headlines by talking about a "generated crisis" for a President Obama. But is the current financial meltdown another "generated crisis?" Considering the problems in the economy, including too much federal debt, too much spending and easy credit, which have been with us for years, why did this crisis suddenly occur only six weeks before the election?

And is it just a coincidence that it occurred at a time when John McCain was leading in the national public opinion polls and appeared to be on his way to a November 4 election victory?

The crisis was man-made. It is a fact that President Bush's Treasury Secretary Henry Paulson, who worked for a Democratic firm, Goldman Sachs, and has very close ties to Communist China, is the one who convinced Bush to demand hundreds of billions of bailout dollars from Congress.

Let me interrupt this narrative to remind you all that Paulson is one of us rich, self-interested Republicans; Democrats, as we know, are all poor, or at the very least selflessly use their wealth for the benefit of all humanity, like George Soros does.

This is when McCain began falling in the polls. That's apparently because McCain, like Bush, is a Republican, and he has been blamed by Obama and the Democrats for the Republican policies that are said to have produced this crisis. This charge is debatable, but it has proven to be effective, with the cooperation of the major media.

Part of the problem, of course, was of McCain's own making. He voted for the $700-billion plan after flirting with the House conservatives opposing it. This was a major error on his part. He missed a critical opportunity to take on the incumbent President of his own party, Obama, the Democrats, and Wall Street interests.

The timing was important. If you examine the polling trend (see page two of this PDF document from Karl Rove & Company), one can see that McCain was moving ahead of Obama by mid-September. One poll, the Rasmussen poll, had McCain over Obama every day from September 12-17. McCain evened up the race again on September 23, after Obama had taken a lead, but it has been Obama ever since.

Clearly, the controversy over the legislative "bailout" or "rescue" for Wall Street, which emerged in a big way on September 18, changed the dynamics of the presidential race. It has hugely benefited Obama by making the economy take precedence over Obama's controversial associates, pro-socialist views, or lack of a background and security check.

The growing suspicion that the financial meltdown is a "generated crisis" has been fed by statements from President Bush himself that illegal financial activities were taking place. On September 18, when he made a public statement about the growing economic problems, Bush announced that the Securities and Exchange Commission (SEC) was stepping up its enforcement actions "against illegal market manipulation."

Illegal market manipulation -- what have I written about in the few posts where I have addressed this crisis?

Stay tuned for Part 2.

Whole Lotta Trouble: Intermezzo

From Two Plus Two, Part 8, October 28, 2008; this passage begins with an excerpt from What "incredibly tough" foreign policy actions is Obama preparing? by Patrick Martin, October 25, 2008:

Foreign policy journals and pundits linked to the Democratic Party have undoubtedly been discussing many such doomsday scenarios, and Biden's language suggests that the use of the US nuclear arsenal, the world's largest, is under consideration by those who are formulating the foreign and military policy of an Obama-Biden administration.

The expectation is that they will use nuclear weapons to show everybody how tough Obama is.

From Nuclear Strike on US Imminent?, February 16, 2007:

Bin Laden is believed to have bought some small nuclear weapons, possibly from organized crime figures in Chechnya.[snip]

It is vital to note that this isn't just a bunch of backwards tribesman running around in the mountains with something they may not be able to use. Bin Laden is anything but unintelligent and unsophisticated in his thinking.[snip]

Bin Laden contracted technicians and other personnel from the former Soviet Union to maintain his nuclear weapons and advise him regarding them. It would be quite foolish to assume that all these weapons are "duds" or that for some other reason Bin Laden can't pull this off. The 9/11 attack probably seemed quite unimaginable to many until it happend.


From Gotham City Teasers I, October 26, 2008:

The Detective (Touch the Sun) Part 10 of 12:

"The danger is not past, Bruce," his mother's voice answered.

The Detective (Touch the Sun) Part 12 of 12:

But Ra's al Ghul knew something more; he knew that it would not end with the destruction of the Gotham Towers.

The Eagle and the Butterfly:

"To murder a man and to destroy an entire village are both crimes, but, as terrible as the one is, it pales in significance when compared to the other."

Late at Night in the Batcave:

"You think this new crime syndicate, the Mujahideen, have nuclear weapons, don't you, sir?" It wasn't a question. "You think they have them here in Gotham."