Economics is for Everyone!

"When Larry Summers, Obama's chief economic advisor, piously tells us that the administration's hands are tied because we all must abide "by the rule of law," perhaps it's time to ask: What rule and for whom?"
Tim Rutten March 18, 2009 LA Times

Our Obsolescent Economy

Without Knowledge of the Past There is No Future

Our Obsolescent Economy

Economics is defined as:

The science of household affairs, or of domestic management.

Social science dealing with the production, distribution and consumption of goods and services and the theory and management of economic systems.

"Poverty is the root of all evil."

"All must prosper for one to prosper."

"There's only one kind of leadership malpractice:
wasting the lives of those we lead
." - Susan Cram

It is the duty of those who have been enlisted in the organization of society to give every individual the opportunity of acquiring the necessary talent or skill and the means of utilizing such a talent so that that individual may exercise their inherent talent in the pursuit of a livelihood.

"Wherever politics intrudes upon economic life, political success is readily attained by saying what people like to hear rather than what is demonstrably true. Instead of safeguarding truth and honesty, the State then tends to become a major source of insincerity and mendacity." – Hans F. Sennholz

"Karl Marx, whose economic analyses are strikingly prescient and relevant today, demonstrated how the credit economy is one way that central banking systems attempt to stretch out and soften the boundary where the private accumulation of profit from production runs up against the waning purchasing power of the consuming public. In a nation whose governing parties and increasingly wealthy corporate elite can't restrain themselves from devastating and costly imperialist wars overseas while at the same time impoverishing ever-growing numbers of the struggling and poor at home, there isn't going to be any good economic news for most people." - Eric Brill 01/08

boy are you stupid

savings and loans debacle

"While my experience as Assistant Secretary cleaning up significant mortgage fraud that lost the government billions during the 1980s confirmed that HUD's financial reputation was deserved, leading the FHA provided invaluable insight into how government management of the economy one neighborhood at a time really harms communities." - Catherine Austin Fitts

The savings and loan debacle began the regression of the American republic into a "plutonomy" - a society in which the largest economic gains flow to an ever smaller portion of the population creating a decadent social order that poorly rewards human labor.

After the stockmarket crash of 1929, Congress passed a series of laws designed to restrict the ability of Wall Street to manipulate markets through the banking industry.

1933 Glass-Steagall Act

Congress passes the Glass-Steagall Act separating commercial banking activity, which accepted deposits and issued loans, from investment banking activity, which underwrote stocks and corporate bonds.

This is the governing economic principle for more than half a century.

Then along came Alan Greenspan*.

A known role of the Federal Reserve Board is to set interest rates and money supply.

A less publicized part of the job is to regulate banking institutions.

alan greenspan
late 1970's

Paul Adolph Volker attempts to reign in the money supply, and inflation, by raising interest rates to stratospheric heights.

Most savings and loans fixed rate assets rate of return are considerably below the prevailing rate of Federal Reserve funds.

Savings and loans are paying, assume 12 percent, for loan capital but their return on previous released capital is only 6 percent.

This policy basically obliterated the Savings and Loan industry.

December 12, 1980

Federal Reserve chairman Paul Adolph Volker BB /CFR/TC raises the prime loan rate to 21.5%.

Deregulation legislation is proposed to address the problem created by an investment portfolio full of long-term, low fixed-rate assets.

Savings and loans are given additional investment opportunities and adjustable rate mortgages are allowed.

Wall Street now sees the savings and loan industry as a "cash cow" to be "levered" accordingly.

"I was working in the Carter White House in 1979-80. Unbeknownst to the president, Federal Reserve Chairman Paul Volcker, another Rockefeller protégé, suddenly raised interest rates to fight the inflation the bankers had caused by the OPEC oil price deals, and plunged the nation into recession. It was through the "Reagan Revolution" that the regulatory controls over the banking industry were lifted, mainly in allowing the banks to use their fractional reserve privileges in making mortgage loans. Volcker's recession shattered American manufacturing and hastened the flight of jobs abroad. Under the "Reagan Doctrine," the US military embarked on an unprecedented mission of world conquest by attacking one small nation at a time, starting with Nicaragua. Global capitalism was also on the march, with the US armed forces its own private police force." - Richard C. Cook

1982 Gain-St Germain Depository Institutions Act deregulation legislation expands acceptable savings and loans investments by permitting savings and loans to make short-term consumer loans, issue credit cards, and make commercial real estate loans.

This became the preferred method of stoking commerce after dumping water on the entire economy by increasing the prime loan rate to 21.5% on December 12, 1980.

Financial engineers claimed that broader investment opportunities would allow savings and loans to better diversify their portfolios enabling them to increase their short-term earnings and financial stabilty.

Beginning from a situation where liabilities exceed assets, financial managers cannot overcome shortages by pursuing a conservative investment course.

The deregulation legislation provided the means for increased risk taking while ignoring the need for capital investments.

The legislation lowered capital requirements and revised the accounting rules so that when savings and loans reported fractional reserve equity it was artificially boosted.

Savings and loans began to look for new lending and investment opportunities that promised higher rates of returns.

Once the interstate lending rules had been suspended the preferred method became raising rates paid on certificates of deposits - CDs - to garner more deposits and to make new investments promising still higher returns.

In the past depositors had no reason to send funds to savings and loans halfway across America but rapidly advancing computer technology - the overnight transfer - changed that by making possible a nationwide market in deposits while the higher rates made it worth the trouble.

Federal deposit insurance (FDIC) put insolvent savings and loans in a position to abuse the new market as federally insured depositors were largely unconcerned about the health of the institutions in which they placed their money.

Undercapitalized savings and loans assured themselves a continuous inflow of funds by simply offering to pay slightly higher interest rates than their competitors.

Healthy savings and loans were asked to pay increasing deposit insurance premiums to protect depositors in failed institutions and consequently gained little or no cost advantage from the fact that they were well capitalized.

Funds flow from stronger banks and savings and loans to the weakest banks.

Public Banking Institute

Carroll Quigley: History of Banking and Money

It’s time for a public option in banking!

How to start a public bank: A Modeled Exercise

"People think the Federal Reserve central bank is US government institution.

It is not a government institution.

It is a private credit monopoly of those who prey upon the people of the US for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.

A dark crew of financial pirates are those who send money into States to buy votes to control our legislation; and there are those who maintain an international propaganda for the purpose of deceiving us and of wheedling us into the granting of new concessions which will permit them to cover up their past misdeeds and set again in motion their gigantic train of crime.

Twelve private credit monopolies were deceitfully foisted upon this country by bankers who came here from Europe and who repaid us for our hospitality by undermining our American institutions." - Louis T. McFadden House Banking Committee Congressional Record, pg 1295 & 1296, June 10, 1932

abolished Glass-Stegall

Depends on what the meaning of the word is is

Larry Summers and the Secret "End-Game" Memo

It's the Interest, Stupid! Why Bankers Rule the World

"Glass-Steagall is no longer appropriate to the economy in which we live."
William Jefferson Clinton

"Scores of banks failed in the Great Depression as a result of unsound banking practices. Their failure deepened the crisis. Glass-Steagall was intended to protect our financial system by insulating commercial banking from risk. It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place." - Paul Wellstone

"If we got a return to positive growth - an economy growing at 1 percent would be an economy with rising unemployment. I don't think we can hold out the prospect we'll stabilize at the current level." - Larry Summers 4/9/09


The movement to use the Federal Reserve Board to kill Glass-Steagall begins.

Federal Reserve Board reinterprets existing law to allow commercial banks to derive a minuscule 5% of their revenues from investment banking activities.


Alan Greenspan bumps investment banking activity up to 10%.


Through creeping incrementalism Alan Greenspan kills Glass-Steagall when he ups the limit investment banking activity to 25%.

July 1999

Larry Summers is appointed Treasury Secretary when Robert Rubin leaves to become Vice Chairman of Citigroup.

Larry Summers is the man directly responsible for the financial institution meltdown.

As William Jefferson Clinton's Treasury Secretary from July 1999 - January 2001 Larry Summers shaped and pushed the financial deregulation that unleashed the present crisis.

November 12, 1999

Gramm-Leach-Bliley Act officially repeals the Glass-Steagall Act of 1933.

The merger of commercial and investment banking once again allows investment bankers to use FDIC insured personal commercial deposits to purchase "financial instruments" from hedge funds.


Larry Summers backs the Commodity Futures Modernization Act.

Larry Summers directly profits from the deregulation he vigorously supports advising DE Shaw and Taconic Capital Advisors in hedging strategies.

Larry Summers circle of friends include the hedge fund managers Nancy Zimmerman, Laurence D. Fink, Kenneth D. Brody, Frank P. Brosens, H. Rodgin Cohen, Orin S. Kramer, Ralph L. Schlosstein and Eric M. Mindich.

Larry Summers later has Harvard purchase interest rate default swaps while president of Harvard that ended up costing Harvard over $1 billion.

"The SEC's best estimate is that there are now approximately 8,800 hedge funds, with approximately $1.2 trillion of assets. If this estimate is accurate, it implies a remarkable growth in hedge fund assets of almost 3,000% in the last 16 years. We are also seeing hedge funds becoming more active in such varied activities as the market for corporate control, private lending, and the trading of crude petroleum. Hedge fund account for about 30% of all US equity trading volume. Investment strategies or operations of hedge fund include their use of derivatives trading, leverage, and short selling. The number of enforcement cases against hedge fund advisers has grown from just four in 2001 to more than 90 since then. These cases involve hedge fund managers who have misappropriated funds assets; engaged in insider trading; misrepresented portfolio performance; falsified their experience and credentials; and lied about past returns." - Securities and Exchange Commission Chairman Christopher Cox, July 25, 2006

Short-sellers attempt to profit from an expected decline due to volatility, fungible asset valuation, in the price of a fungible financial instrument.

The short-seller takes on loan fungible financial instruments - bonds, securities, stock, futures contracts, securitized loans and collateralized debt obligations.

The short-seller then hopes to be able to purchase identical fungible security instruments to repay the loan at a lower price than originally purchased shortly before the loan comes due.

Profit comes when the fungible financial instrument declines in value.

"The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the US government into a kind of giant Enron - a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers." - Matt Taibbi

securitized loans

securitizing loans

Credit Default Swaps

"What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn't be taking it to those who are willing to and are capable of doing so." - Alan Greenspan 2003

"Clearly, derivatives are a centerpiece of the crisis, and Alan Greenspan was the leading proponent of the deregulation of derivatives." - Frank Partnoy 10/08/08

"The derivatives market is $531 trillion, up from $106 trillion in 2002 and a relative pittance just two decades ago. Alan Greenspan banked on the good will of Wall Street to self-regulate." - Peter S. Goodman 10/08/09

Investment banks are able to "balance" and prove adequate reserves by "securitizing" loans which allows investment banks to move those loans off their balance sheets.

There are two ways to securitize a loan:

sell the securitized loan as a corporate bond (originally made popular by Michael Robert Milken* as junk bonds);

or "synthetic" securitization: use of derivatives to get rid of the default risk (with credit default swaps) and lock in the interest rate due on the loan (with interest-rate swaps).

Once a investment bank securitizes a loan that loan is moved off the balance sheet.

Once a loan has been moved off the balance sheet the capitalization ratio improves and the investment banks can make even more loans.

Investment banks created trillions of dollars of credit without maintaining adequate capital reserves (leveraged up to 33 to 1 - 3.3 times higher than the traditional fractional reserve of 10 to 1) by providing mortgages, student loans and credit card loans to millions of loan applicants who had no documentation, no income, no collateral and a bad credit history for enormous short term profits!

Investment banks did this without tying up any of their capital reserves while con-vincing the purchasers of the securitized commercial paper (toxic debt) that there was no risk of default! (thank you Maurice Greenberg!)

collateralized debt obligation

collateralized debt obligations

Financial Product Largely Blamed For Crisis Was Created In A Crisis

"We can't let them fail because it would bring the entire banking system down." - Barack Obama

"More than 100 securities cases involving losses of $400 billion were filed against financial firms last year, according to Cornerstone Research." - Vikas Bajaj 01/19/08

"Let's hope we are all wealthy and retired by the time this house of cards falls." - Standard & Poor analyst 'texting' about collateralized debt obligations

December 2008 A quarterly report issued by the Bank of International Settlements states the total outstanding notional amount of over-the- counter (OTC) derivatives in the world is $683 trillion while the gross market value for those same instruments was $22 trillion.

Bank-like investment strategies - such as the use of leverage and financing long-term investments with short-term debt - became common outside the safety net provided by deposit insurance and strong regulation.

As a result nonbank institutions became vulnerable to runs.

If markets lost confidence their sources of funds could dry up.

Complexity reduces transparency.

"Neither regulators nor market participants can easily assess the true financial condition of firms that hold or trade these newer instruments.

Since large parts of derivatives markets are unregulated, there is a global web of financial claims and counterclaims that is essentially invisible to financial supervisors and market participants alike.

Key characteristics that produced this systemic vulnerability include: the use of complex financial instruments, whose value is often linked by complex formulae to the value of other instruments or financial variables, and for which no active trading markets exist; extensive use of leverage, or borrowed funds, which permits institutions to take larger market positions with a given capital base, increasing potential profits (but also losses); and the practice of moving risky financial speculation off the books, into nominally independent accounting entities, so that the results do not appear in the financial accounts of the parent financial institution." - Mark Jickling

black hole of fungible assets

What does one TRILLION dollars look like?

World Derivatives Market Estimated As Big As
$1.2 Quadrillion Notional, as Banks Fight Efforts to Rein It In

America's Derivative Market :
Unbelievably Huge & Totally Unregulated

"Making the most of borrowed time"
speech delivered by Mr Jaime Caruana,
General Manager of the BIS

predatory lending

"Tight residential real estate markets and low mortgage rates fueled a five-year property boom as the number of US households paying more than half their incomes for housing jumped from 13.8 million in 2001 to 17.9 million in 2007." - Brian Louis

"Predatory lenders deserve a lot of blame for foreclosures and bankruptcies. How odd to think that the hopes of everyone owning a piece of property is now as utopian as the collectivist dreams of communism." - Doug Doepke

"Between 1999 and 2004, more than half the states, both red (North Carolina, 1999; South Carolina, 2004) and blue (California, 2001; New York, 2003), passed anti-predatory-lending laws. Georgia touched off a firestorm in 2002 when it sought to hold Wall Street bundlers and holders of mortgage-backed securities responsible for mortgages that were fraudulently conceived. Beginning in 2004 Michigan and forty-nine other states battled the US Comptroller of the Currency and the banking industry (and The Wall Street Journal's editorial page) for the right to examine the books of Wachovia's mortgage unit, a fight the Supreme Court decided in Wachovia's favor in 2007 - about a year before it cratered." - Dean Starkman

1863 National Bank Act

establishes the Office of the Comptroller of the Currency as part of the United States Department of the Treasury and a system of nationally chartered banks.
The Office of the Comptroller of the Currency examined the books of national banks to make sure they were balanced.

"Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders.

In 2003 the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative.

The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks.

The US government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, George Walker Bush in his goal of protecting the banks.

In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation." - Elliot Spitzer, Washington Post, February 13, 2008

elliot spitzer

On the afternoon of February 13 federal agents of the Office of the Comptroller of the Currency staked out Elliot Spitzer's hotel in Washington. Elliot Spitizer's dalliance with a prostitute became headline news on March 10.
Corporate news never questioned the actions of the Office of the Comptroller of the Currency.

"One is struck by the similarities with the Savings and Loan scandal which was allowed to continue through the 1980s, long after it became apparent that deliberate bankruptcy was being used by unscrupulous profiteers to amass illegal fortunes at what was ultimately public expense. The long drawn-out housing bubble of the current George Walker Bush decade, and particularly the derivative bubble that was floated upon it, allowed the Bush administration to help offset the trillion-dollar-plus cost of its Iraq misadventure." - Peter Dale Scott



"The development of "electronic" mortgages managed by MERS went hand in hand with the "securitization" of mortgage loans chopping them into pieces and selling them off to investors. In the heyday of mortgage securitizations, before investors got wise to their risks, lenders would slice up loans, bundle them into "financial products" called "collateralized debt obligations" (CDOs), ostensibly insure them against default by wrapping them in derivatives called "credit default swaps," and sell them to pension funds, municipal funds, foreign investment funds, and so forth. There were many secured parties, and the pieces kept changing hands; but MERS supposedly kept track of all these changes electronically. MERS would register and record mortgage loans in its name, and it would bring foreclosure actions in its name. MERS not only facilitated the rapid turnover of mortgages and mortgage-backed securities, but it has served as a sort of "corporate shield" that protects investors from claims by borrowers concerning predatory lending practices." - Ellen Brown

"MERS has reduced transparency in the mortgage market in two ways. First, consumers and their counsel can no longer turn to the public recording systems to learn the identity of the holder of their note. Today, county recording systems are increasingly full of one meaningless name, MERS, repeated over and over again. But more importantly, all across the country, MERS now brings foreclosure proceedings in its own name even though it is not the financial party in interest. This is problematic because MERS is not prepared for or equipped to provide responses to consumers' discovery requests with respect to predatory lending claims and defenses. In effect, the securitization conduit attempts to use a faceless and seemingly innocent proxy with no knowledge of predatory origination or servicing behavior to do the dirty work of seizing the consumer's home. . . . So imposing is this opaque corporate wall, that in a "vast" number of foreclosures, MERS actually succeeds in foreclosing without producing the original note "the legal sine qua non of foreclosure" much less documentation that could support predatory lending defenses." - Timothy McCandless

"MERS as straw man lacks standing to foreclose, but so does original lender, although it was a signatory to the deal. The lender lacks standing because title had to pass to the secured parties for the arrangement to legally qualify as a "security." The lender has been paid in full and has no further legal interest in the claim. Only the securities holders have skin in the game; but they have no standing to foreclose, because they were not signatories to the original agreement. They cannot satisfy the basic requirement of contract law that a plaintiff suing on a written contract must produce a signed contract proving he is entitled to relief." - Ellen Brown

credit card debt


Bankrupt Grand Chevrolet Firms Closed

"Madison Avenue helped drive the expansion of Americans use of credit cards. There was a lot of money to be made by collecting fees for debt creation and debt service, and the largest banks wanted in on the action. The 1980s was the age of a paradigm shift in American politics. The US transformed itself into a country where the profit motive supplanted the public good. The rich were taking it all for themselves and letting the good times roll and everyone who wasn't rich wanted to be or act as if they were rich. Advertisers suggested people could purchase the 10-day Caribbean cruise or expensive diamond ring that was once restricted to those with higher income levels creating the illusion that debt was equal to wealth." - Paul C. Wright

"In times past, bankruptcy would have wiped out the bad debts. The problem with debt write-offs is that bad savings go by the boards too. But today, the very wealthy hold most of the savings, so the government doesn't want to have them take a loss. It would rather wipe out pensioners, consumers, workers, industrial companies and foreign investors. So debts will be kept on the books and the economy will slowly be strangled by debt deflation." - Michael Hudson 06/08

Playing the Pension Funds

It's the Interest, Stupid! Why Bankers Rule the World

Here's Where State Pension Systems Are In The Most Trouble

Preparing To Asset-strip Local Government? The Fed's Bizarre New Rules

send in the antichrist

investment bank meltdown

"The injunction of Jesus to love others as ourselves is an endorsement of self-interest." - Brian Griffiths, Goldman Sachs public relations man

"We see TARP as an insurance policy. No matter how bad it gets, we're going to be one of the remaining banks."- John C. Hope III, Whitney National Bank chairman

1977 AL Williams establishes its base by mass-marketing the concept of "Buy Term and Invest the Difference." With "BTID" the incorporation illustrated how its middle-income client base could purchase sufficient protection with term life insurance and systematically save and invest in separate investment vehicles, such as mutual fund Individual Retirement Accounts.

AL Williams is initially established as a privately held general agency, at first selling term life insurance policies underwritten by Financial Assurance.

1980 A.L. Williams enters into a contract with Boston-based Massachusetts Indemnity and Life Insurance incorporation (MILICO), a larger underwriter of life insurance, whose parent is PennCorp Financial Services, Santa Monica.

1980s Salomon Brothers is acquired by the commodity trading firm Phibro.

Salomon is noted for its innovation in the bond market, selling the first mortgage-backed security, a hitherto obscure species of financial instrument created by Ginnie Mae.

Salomon begins purchasing home mortgages from thrifts throughout the US and packaged them into mortgage-backed securities, which it sells to local and international investors.

1981 First American National Corporation is established as a holding incorporation for First American Life Insurance (later renamed AL Williams Life Insurance) and First American National Securities (later renamed PFS Investments).

Shearson is acquired by American Express and operated as a subsidiary.

1982 First American National Corporation, renamed The AL Williams Corporation, underwrites a public stock offering.

1983 The AL Williams Corporation is listed on the NASDAQ exchange under ALWC.

American Can and PennCorp Financial Services merge.

1984 Shearson merges with Lehman Brothers Kuhn Loeb - now Shearson Lehman.

1986 Sanford Weill, scion David-Weill family purchases Commercial Credit from Control Data for $7 million.

Lazard Freres - the biggest investment bank in France - is owned by Lazard and David-Weill families - old Genoese banking scions.

1987 86-year-old American Can announces a name change to Primerica Corporation.

Primerica Corporation completes a hostile takeover of Smith Barney.

Sanford Weill acquires Gulf Insurance.

1988 Commercial Credit acquires Primerica Corporation for $1.54 billion.

Shearson Lehman acquires EF Hutton to be Shearson Lehman Hutton.

1989 Sanford Weill acquires Drexel Burnham Lambert's retail brokerage outlets.

Eight Charged in $50-Million Car Loan Fraud

1991 Primerica Corporation changes the name of AL Williams to Primerica Financial Services.

1993 Primerica acquires Travelers Insurance and adopts the name Travelers.

Sanford Weill purchases Shearson Lehman Hutton from American Express for $1.2 billion.

Shearson Lehman Hutton acquires Colorado-based lender, Aurora Loan Services, an Alt-A lender.

1995 Travelers becomes The Travelers Group.

1996 The Travelers Group purchases the property and casualty business of Atena.

1997 Timeline of the Asian financial crisis


1998 Citicorp and Travelers merge and form the behemoth Citigroup.

Travelers aquires Salomon and merges it with Smith Barney creating Salomon Smith Barney.

Citibank schemed with firm to hide its woes: Ex-Dewey partner

2000 Shearson Lehman Hutton purchases West Coast subprime mortgage lender BNC Mortgage LLC.

BNC Mortgage LLC quickly becomes a force in the subprime market.

September 11, 2001 Salomon Smith Barney is by far the largest tenant in 7 World Trade Center, occupying 1,202,900 sq ft (111,750 m2) (64 percent of the building) which included floors 28–45.

Lehman occupies three floors of World Trade Center where one employee dies.

2002 Citigroup spins off Travelers Property and Casualty.

2003 Lehman makes $18.2 billion in loans and ranked third in lending.

2004 Shearson Lehman Hutton makes over $40 billion.

Shearson Lehman Hutton has morphed into a real estate hedge fund disguised as an investment bank.

2005 Goldman Sachs receives approximately $1.6 billion in taxpayer subsidies (mostly through Liberty Bonds) from New York City and state taxpayers to finance a new headquarters near the World Financial Center in Lower Manhattan.

2006 Aurora and BNC are lending almost $50 billion per month.
Goldman Sachs changes its corporate structure into a bank holding incorporation.

Employees earn an average of $622,000 on a profit of $9.4 billion.

Much of the commercial paper wealth is made on takeovers and leveraged buyouts.

Goldman Sachs employees:

George Herbert Walker Bush (Lehman);
Robert Zoellick (World Bank BB CFR TC);
Henry Paulson (US Treasury Secretary);
Robert Rubin* (US Treasury Secretary, Chairman Citigroup);
John Thain (Merrill Lynch, Chairman NYSE);
Henry H. Fowler, (US Treasury Secretary);
Edward Lampert (hedge fund manager);
Michael Cohrs (Global Banking at Deutsche Bank);
Mark Carney (Bank of Canada);
Robert Steel (CEO of Wachovia);
Ed Liddy (CEO of AIG);
Neel Kashkari;
Gary Gensler (Commodity Futures Trading Commission)
Stephen Friedman (Chairman Intelligence Oversight Board, Memorial Sloan-Kettering Cancer Center, The Aspen Institute, CFR, Brookings Institution, Federal Reserve Bank of New York.

Goldman Sachs Proof that God hates its Customers

How Goldman Sachs Helped Greece to Mask its True Debt

Goldman Sachs Shorted Greek Debt After It Arranged Those Shady Swaps

Barack Obama received $981,000 for his campaign from Goldman.

2007 4th quarter Citigroup posts a $10 billion loss, 21,200 Citigroup employees are laid off.

Citigroup's single largest shareholder becomes Abu Dhabi Investment Authority, the investment arm of Abu Dhabi government, with a $7.5 billion injection of capital in late 2007 in exchange for a 4.9 percent stake which pays a $1.7 billion a year dividend.

The second largest Citigroup shareholder, with a 3.6 percent stake, is now Kingdom Holding incorporation owned by Prince Al-Waleed bin Talal of Saudi Arabia.

$6.88 billion of prefered stock is sold to an investment fund controlled by the government of Singapore.

March through September 2008
Five largest investment bankers on Wall Street go bankrupt.

March 2008 Lehman assets of $680 billion are supported by $22.5 billion of firm capital. From an equity position, its risky commercial real estate holdings are three times greater than capital. In such a highly leveraged structure, a 3 to 5 percent decline in real estate values wipes out all capital.

Federal Reserve sells Bear Stearns to JP Morgan Chase for ten dollars per share, a price far below the previous 52-week high of $133.20 per share.

June 2008 Merrill Lynch seizes $850 million worth of the underlying collateral from Bear Stearns but only recoups $100 million in auction.

Merrill Lynch is sold to Bank of America for 0.8595 shares of Bank of America common stock for each Merrill Lynch common share, or about $50 billion or $29 per share.

The market valuation of Merrill Lynch was about $100 billion one year earlier.

During the final quarter of 2008 Merrill Lynch loses $15.3 billion.

August 2008 Morgan Stanley is contracted by the Treasury Department to advise the government on potential rescue strategies for Fannie Mae and Freddie Mac.

September 21, 2008 Federal Reserve allows Morgan Stanley to change its status from investment bank to bank holding incorporation in order to survive.

November 23, 2008 Fed and Treasury announce a rescue package for Citigroup to provide insurance against large losses on bundled securities and derivatives of approximately $306 billion backed by residential and commercial real estate.

Citigroup agrees to absorb the first $29 billion in losses on the bundled securities and derivatives; the government will then cover 90% of losses that exceed that figure.

Citigroup spends $1.77 million on lobbying fees in the fourth quarter.

"Citigroup, like many others, had sought to insure itself against losses with a variety of transactions, including the purchase of insurance, only to learn that the losses were overwhelming those who had promised to pay. Insurance on the assets was issued both by the bond insurers and by others that wrote what were known as credit default swaps, which amounted to insurance but were not regulated in the same way. Those who wrote large amounts of such insurance are now in trouble, either negotiating to pay claims for less than promised or, in the case of the American International Group, still in business only because of a government bailout. The American International Group officials responsible for writing the swaps told investors they would never suffer any losses." - Floyd Norris, November 24, 2008

"Sovereign wealth funds operated by China, Singapore, Abu Dhabi, and other countries have taken large equity stakes in Citigroup, Merrill Lynch, Morgan Stanley, and other firms, including leading European financial institutions." - Mark Jickling

Breakdown of 8.5 trillion rescue plan

The Shadow Superpower

"The Wall Street banks - which are the recipients of the bailout money - are also the brokers and underwriters of the US public debt. We are dealing with an absurd circular relationship: To finance the bailout, Washington must borrow from the banks, which are the recipients of the bailout." - Michel Chossudovsky

"With the Long-Term Capital bailout as a precedent, creditors came to believe that their loans to unsound financial institutions would be made good by the Fed - as long as the collapse of those institutions would threaten the global credit system. Bolstered by this sense of security, bad loans mushroomed. The major creditors of the fund included Bear Stearns, Merrill Lynch and Lehman Brothers, all of which went on to lend and invest recklessly. The ad hoc aspect of the bailout created a precedent for what has come to be called "regulation by deal" - now the government's modus operandi." - Tyler Cowen, December 26, 2008

"When the "credit crunch" began and Washington began the rush to solve the problem with taxpayer cash, no accounting of this derivative nightmare was ever brought to bear. In all the deliberations and press releases there was not a single mention of the fact that the primary cause of the bank collapse was due to these 'time bombs'." - Andrew Hughes 1/27/09

April 2, 2009 Financial Accounting Standards Board relaxes the "mark-to-market" rule.

Financial institutions are given the go ahead to value their derivative assets (toxic debt) in a "mark-to-model" manner.

Financial institutions are given the go ahead to use creative accounting methods to value their toxic debt at 'projected market value'.

"The announcement April 2, 2009 by the Financial Accounting Standards Board (FASB) weakening "mark-to-market" accounting rules allowing banks to value their toxic debt at inflated prices. This is a green light to continue the same methods of fraud and double bookkeeping that triggered the breakdown of the financial system in the first place." - Tom Eley

"US taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies." - Neil Barofsky, special inspector general for the Troubled Asset Relief Program (TARP) Treasury Department, July, 2009

November 25, 2008 to July 8, 2009

Financial institutions issue $274 billion in debt under the Temporary Liquidity Guarantee Program.

General Motors Financial Services auto and home lender which recieved $13.5 billion from US taxpayers in exchange for corporate debt in the form of junk bonds becomes a bank to qualify for the Temporary Liquidity Guarantee Program.

To insure $10 million of General Motors Acceptance Corporation junk bonds annually with a five-year credit default swap contract it costs $895,000.

To insure the entire $13.5 billion in General Motors Acceptance Corporation junk bonds annually will cost over $1.2 billion annually.

Scapegoat Economics 2015

Keiser Report: JP Morgan's Financial Herpes

JP Morgan invented credit-default swaps
to give Exxon credit line for Valdez liability

Exxon Valdez: Disaster Destroyed The Economy 20 Years Later

25 Years After Exxon Valdez Oil Spill,
Company Still Hasn’t Paid For Long-Term Environmental Damages

Bank of America Smacked
with Foreclosure Fraud Lawsuits

HSBC: The World's Dirtiest Bank

HSBC Helped Terrorists, Iran, Mexican
Drug Cartels Launder Money, Senate Report Says

"Dirty Money" Foundation of US Growth and Empire

rethink economics
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This website defines a new perspective with which to engage reality to which its author adheres. The author feels that the falsification of reality outside personal experience has created a populace unable to discern propaganda from reality and that this has been done purposefully by an international corporate cartel through their agents who wish to foist a corrupt version of reality on the human race. Religious intolerance occurs when any group refuses to tolerate religious practices, religious beliefs or persons due to their religious ideology. This web site marks the founding of a system of philosophy named The Truth of the Way of Life - a rational gnostic mystery religion based on reason which requires no leap of faith, accepts no tithes, has no supreme leader, no church buildings and in which each and every individual is encouraged to develop a personal relation with the Creator and Sustainer through the pursuit of the knowledge of reality in the hope of curing the spiritual corruption that has enveloped the human spirit. The tenets of The Truth of the Way of Life are spelled out in detail on this web site by the author. Violent acts against individuals due to their religious beliefs in America is considered a "hate crime."

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