Thursday, May 29, 2014

Bernanke’s cut of bankers’ bailout loot


Thursday, May 29,2014

By Jim Hightower
Perhaps you’ve been wondering:

How’s Ben doing?

Extremely well — thank you, now that he has stepped down as head of the Fed. Federal Reserve Chairman Ben Bernanke presided over most of the 2008 financial crash, the Wall Street bailout, the Great Recession, and today’s so-called “recovery-that-isn’t,” since 90 percent of Americans still have not recovered.

So what’s Ben been doing now that he’s no longer saving banksters with U.S. taxpayers’ dollars? Going to bankster gatherings to bask in their glowing gratitude — and collecting his cut of the bailout loot.

In one week in May, Bernanke was in Abu Dhabi on Tuesday, Johannesburg on Wednesday and Houston on Friday, speechifying to global bankers and hobnobbing with hedge fund billionaires and economic titans. Each of these private chats put $200,000 or more into Ben’s pockets. He’s doing beaucoup of these cash-on-the-barrelhead BenFests for the likes of JPMorgan Chase, Blackstone Group and Morgan Stanley. 

In conferences and in small dinners at four-star restaurants, Bernanke is offering “words of wisdom” to barons of high finance he bailed out, in exchange for a ridiculous fee that most could not have paid without those rescue funds that the Fed chief extracted from you and me.

But here’s an irony that’s gotta be chapping Ben’s butt — some of the banksters he saved are refusing to play the payback game. Not because they’re bothered by the totally corrupt ethics involved, but because they’re balking at his high fees. 

Goldman Sachs, for example, which got a $10 billion bailout and whose CEO took $23 million in personal pay last year, says Bernanke’s $200,000 tab is too steep.

Is there no honor among thieves?
What’s this world coming to when the robber barons won’t toss a couple of hundred thousand bailout crumbs to Ben, their loyal servant?

This opinion column does not necessarily reflect the views of Boulder Weekly.

Tuesday, May 27, 2014

You should fear 'the banksters,' not the stock market


Yes, big finance is probably out to empty your wallet. But don't let that stop you from investing.

By  | May 21, 2014

Wall Street does feature some unsavory characters — but investing is still important.
Wall Street does feature some unsavory characters — but investing is still important. ( Street)
y colleague Ryan Cooper argues that one key factor in millennials missing out on the current stock market boom is distrust in the financial system. Like very many millennials, he is apprehensive about becoming an investor, and cites numerous financial scandals from the past five years as events that have influenced this view:
I hear "we'll help you design the investment portfolio that fits your risk profile," and I translate "bankster scum are coming for your wallet."
That may sound a tad paranoid, but it's true! Mutual funds are, in fact, a giant scam. Barely a week goes by without some story about Wall Streetstealing people's houses, or looting pension funds, or money-laundering for drug traffickers, and on and on. [The Week]
Actually, he's barely scratched the surface of the whirling maelstrom of scandals that have hit the financial system in recent years. It's probably worse than Cooper suggests. There have been many cases of rapacious banksters coming for the wallets of the naive, the greedy, or the plain unlucky. Say "finance" these days and most people will instantly think of Bernie Madoff or the 2008 crash. (The more learned in this perverse association game might even say "the LIBOR scandal" or "Goldman Sachs betting against its own clients.")
So I can completely understand the fact that lots of people are very distrustful of the financial sector after the last six scandal-plagued years. In many ways, I am too. The financial sector has been sick for a long time.
Ostensibly, the financial sector's purpose is to act as an intermediary between investors and businesses, to channel money to productive endeavors that produce goods and services that people want. If done well, this can be a valuable service from which all three parties — investors, businesses, and financiers — benefit. Unfortunately, instead of doing that, many firms and individuals in the financial industry took advantage of their position and power to parasitize investors, government, and the wider economy.
But just because the financial sector has been rife with corruption and treachery for a long time doesn't mean that it's wise to forsake investment altogether and just sit on cash, which is what many millennials who have money to invest are doing. Sitting on cash might express frustration and antipathy, but it isn't going to offer decent returns — in the current environment it offersnegative real returns, i.e., you lose money to inflation. Nor will it improve the state of the economy, which relies on investment and spending for growth and jobs.
It's wise to remember that investment in "innovative financial products" like mortgage-backed securities — which is how so many people got screwed — isn't the same thing as investment in productive businesses through the stock market. You don't have to entrust your money to bankers and financiers and their complex financial products in order to invest. In fact, the opposite. Instead of trusting financiers who promise to beat the market for you, or sell you complex financial products, you can just buy a simple index fund.
Over my lifetime (I was born in 1987) investment in index funds such as the S&P 500 has been spectacularly profitable, a pattern which has held true for the last 200 years. And these decent returns have happened even though the financial system has been a treacherous mess for a significant portion of that time.
There's no doubt that the financial sector still has a heck of a lot to do to regain America's trust after the worst financial crisis for three generations. But if fear of "banksters" translates into a more general fear of investment, history suggests that the people who will lose out the most will be those who spurn investment and choose to fearfully sit on cash in the bank.

Wednesday, May 21, 2014

How the War on Workers Is Changing

from truth-out

Tuesday, 20 May 2014 16:06By The Daily Take TeamThe Thom Hartmann Program | Op-Ed

Worker rights protest. (Photo: <a href=" " target="_blank"> Peoples World / Flickr</a>)

The War on Workers is going on a 50-state tour.

Ever since Ronald Reagan fired 11,000 striking air traffic controllers back on August 5, 1981, and appointed labor-hostile Raymond Donovan as the first anti-labor Secretary of Labor in our nation's history, there's been a War on Workers in America.
While worker productivity has skyrocketed since Reagan stepped foot inside the White House, wages have remained stagnant.
And the remnants of Reagan's War on Workers have been so successful - even during Democratic administrations - that it's not just keeping wages flat, it's even starting to erode them.

Since 2000, average worker take-home pay has been on a steady freefall, while pay for executives and CEO's has soared off the charts.
Thus, on the federal level, the War on Workers has been a huge success.

But while the War on Workers has been steadily eating away at the income of working-class Americans, its ultimate goal is to turn America's activist working middle-class into a dispirited, disheartened, and disempowered working poor-class.
To do that, the forces behind the War on Workers have to shift their focus to the state level, and do away with the last remaining state protections for workers.

That's where the Koch Brothers and other conservative political power players come in.
The Koch Brothers' Americans for Prosperity conservative front group, or AFP, has launched a massive campaign in Detroit, aimed at derailing that city's proposed bankruptcy settlement.
AFP is contacting nearly 90,000 conservatives in Michigan, ironically most of them working-class people who people like the Kochs refer to as "useful idiots."

AFP is urging their army of conservative "useful idiots" to oppose the bankruptcy settlement plan that would use $195 million in state money to help pay back former Detroit city workers the pension benefits that were taken out of their paychecks back in the day, and then stolen by Wall Street banksters in the Great Bush Crash of 2008.

In other words, the Koch Brothers and AFP don't want the Detroit city employees to have pensions for their retirement - after all, they are "evil government employees."

You know, firemen, police, sanitation workers - that sort of thing. And many of them are people of color, which is why trashing largely-black Detroit workers when talking to largely-white northern Michigan "conservative" AFP members isn't even slightly a racist dog-whistle, right?
Geez - "workers" and "Black" - for the conservatives kicking them upside the head is a two-for.
AFP has also threatened to run ads against any Michigan state legislators who vote in favor of the plan.

Outside of Michigan, AFP plans to spend at least $125 million to help conservatives across the country win in November's midterm elections, many of whom are helping to lead the way in the War on Workers.

As Corey Robin points out over at The New York Times, "Midterm elections at the state level can have tremendous consequences, especially for low-wage workers. What you don't know can hurt you — or them."

Back in the 2010 midterm elections, Republicans took over control of the executive and legislative branches in 11 states.

As soon as they stepped in office, those same Republicans, with a little nudging from groups like the U.S. Chamber of Commerce and the American Legislative Exchange Council or ALEC, began introducing bill after bill, which ate way at workers' rights, and gave more power to their employers.

Take Republicans in Wyoming for example.
In 2011, they introduced a bill that would have allowed restaurants to force their servers to pool their tips. The tips would then be redistributed among the non-serving staff.

In most states, tipped workers are paid an hourly wage that is under the minimum wage, because the thinking is that they'll make up the rest of the money with tips. Meanwhile, regular staff members are paid the minimum wage.

But, under the Wyoming legislation, by having servers pool their tips, and redistributing those tips to non-serving staff members, you would avoid having to pay non-serving staff members the minimum wage. The result? More poor working people!
Basically, Republicans in Wyoming wanted employers to be able to take away money that their employees had rightfully earned.

A year earlier in Florida, Republicans tried to pass legislation that would have prevented any "county, municipality, or political subdivision of the state" from passing laws that were designed to cut down on wage theft.

Meanwhile, Indiana, Mississippi, and Florida have all passed laws banning local governments from raising the minimum wage.

And the list goes on.

All across America, conservative lawmakers are doing everything in their power to quash working-class Americans, thus destroying the integrity and vitality of our democracy by turning the middle class into the working poor.

A functioning democracy requires a strong and functioning middle-class.
And despite what conservatives will try to tell you, unrestrained capitalism is not going to get us there, because unrestrained capitalism always produces a working poor-class, and not a strong middle-class.

To get a middle class, you must combine capitalism with government regulation and safety-net programs. It's really just that simple, and history tells the story over and over again.
Instead of following the Kochs like sheep, Michiganders and the rest of us should be working to put back into place the federal and state protections that protected workers for years and thus built America's once-strong middle class.

We need to put back into place laws and policies that balance the powers of employers and employees, and let workers unionize.

Only then will we once again have a strong and flourishing American middle class.

This article was first published on Truthout and any reprint or reproduction on any other website must acknowledge Truthout as the original site of publication.

Tuesday, May 20, 2014

What the 1% Don't Want You to Know

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As Monsieur Piketty has so eloquently helped us understand, oligarchy and dynastic wealth are taking over our society. And lots of Americans may very well remain blind to that fact until our democracy has been completely hollowed out and transformed into something very much different from what people commonly suppose it to be.

As ever more of the nation's wealth and income is being vacuumed up and/or systematically siphoned into the accounts of dynasties and oligarchs, this transition is actually being facilitated by our government. The result: an ever smaller middle class in the US, as former members are forced into poverty or near-poverty, by ever lower wages and an ever increasing scarcity of decently paid jobs.

Vacuumed up and siphoned off? How?

For starters, consider the banksters as well as the government stooges who help them. A recent news report tries to make a good case that the prosecution of banksters was only about budgets, ambitious prosecutors etc. It mentions Eric Holder only once, in the very last paragraph, and then as someone who merely "laments" the situation.

Not a word about how he came from a gold-plated Wall Street law firm, to which he expects to return when he tires of public service -- nor any word about his specialty in that firm:Defending the very banks of which he is now tasked with overseeing the prosecution!

Not a word, either, about the robo-signings, by the tens of thousands, that cannot in any way be excused as difficult to prosecute, and that should certainly not be excused as "recklessness rather than criminality" -- not when banksters deliberately stole the property of tens of thousands of innocent home owners, many of whom were not even behind on their mortgage payments!

And nothing whatsoever about the enormous amounts of campaign cash that banksters and other Wall Street fat cats passed to key political campaigns, in return for which they were granted (by gov't stooges) not merely immunity from prosecution, but impunity from any accountability whatsoever . . so that even now, as they continue to ransack the public till, almost all their profits now come from quantitative easing, in which the Fed creates money out of thin air and gives it to the largest financiers to spend as they see fit, which serves mostly to reward criminal-class executives with ever more astounding bonuses and stock options, taxed at a rate that doesn't even pay the transaction costs. And then Jamie Dimond has the gall to complain that he is not sufficiently respected for his high-minded public service, and Lloyd Blankfein says he, personally, is "doing God's work" -- this after both men have been given: a)scores of millions to maintain their obscenely extravagant lifestyle, b) absolute immunity from prosecution, and c) the guaranteed continuation of their historically criminal institutions.

Not one word, either, about the LIBOR scam, which bankrupted innumerable small towns and municipalities and further enriched our new plutocrats by billions if not trillions; nothing whatsoever about the deep-level corruption in Congress that enabled this enormous, world-class, and unprecedented grand larceny. Phil Gramm, who, at midnight, pushed through the immunity from regulation (of these newly designed instruments of financial thievery), is not even mentioned, even though his wife Wendy works on Wall Street, the scene of the crime.
Nor is there even a suggestion that the Racketeering Influenced and Corrupt Organizations Act (originally passed to facilitate Mafia prosecutions, and almost immediately turned into an all-purpose instrument for repressing the progressive side of politics), might be usefully applied to what are, without any doubt whatsoever, thoroughly corrupt banking organizations.
In short, a long apologetic that lacked even the appearance of investigative journalism.
* * *
For most of our lives (as Thom Hartmann recently pointed out), we've been taught that hard work pays off. Problem is, most of the super-rich didn't make their money by working hard -- at least not at any job that actually makes an actual contribution to society. According to a new analysis by Paul Buchheit of, those at the top now make most of their money by betting, in one form or another, against the American people,. For example, this growing sector of our wealthy elite makes a fortune on such things as speculating on rising food prices, which means that they profit by making it harder for people around the world to afford to eat.

They also have a history of betting against mortgages (specifically, mortgage-backed securities or 'packaged' mortgages). Why did they do this? It was so that they could make big profits when many Americans could no longer afford to stay in their homes -- a situation that they very perceptively saw coming. Then, once these unfortunate Americans were forced out of their homes, private equity firms swooped in, bought up the foreclosures, and rented these houses back to many of the very same people that had been swindled out of their homes.
The super-rich rake in ever more, by gambling on Wall Street, screwing over Main Street, and paying off the politicians that make it all possible. The only hard work these billionaires face is walking the fine line between their so-called 'investing,' and the easily identified (and therefore prosecutable) activities like the more common forms of bribery, fraud, and front-running the stock market.

Our nation used to genuinely value hard work, and that work was rewarded with a better life and brighter future -- for everyone who put forth the necessary effort. But for the last three decades, the super-rich have ever more completely rigged the system, while at the same time managing to convince the gullible majority that they're just not working hard enough -- in spite of the fact that our productivity has risen markedly over those same three decades. Therefore the time has come for us to stand up, speak out, and fix this broken system, which bribed politicians have saddled us with -- and do it while we still have the chance. Working hard and playing by the rules is no longer enough; we also need to fight to achieve a political-economic system that "pays off" for more folks than just those in the top 1%.

With respect to all this, Paul Krugman and Bill Moyers point to revolutionary developments in our society, of which most people are still unawares, but which are outlined in the revolutionary new book mentioned at the outset of this article. As already stated, this book has mainly to do with: a) this upwardly directed wealth redistribution, b) the corresponding rise of dynasties and oligarchy, and c) our disappearing democracy. Author Thomas Piketty is telling us, quite convincingly for those who will listen, that we are on a fast road not just to an ever moreunequal society, but to an oligarchy on steroids, i.e. a society that will be ever more undemocratic and ever more dominated, in every way, by inherited (and increasingly dynastic) wealth.
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Monday, May 19, 2014

Credit Suisse pleads guilty in $2.6B settlement

from usatoday

GTY 474997437

Kevin McCoy and Kevin Johnson, USA TODAY8:35 p.m. EDT May 19, 2014

Swiss banking giant Credit Suisse pleaded guilty to criminal conspiracy Monday and agreed to pay $2.6 billion in penalties for helping wealthy American clients evade U.S. taxes in a scheme federal investigators said spanned decades.
Becoming the largest financial institution to enter a guilty plea in at least 20 years, the bank acknowledged it willfully aided thousands of U.S. clients who opened and maintained secret offshore accounts that hid their assets and income from the IRS, said U.S. Attorney General Eric Holder.
The settlement marks a major U.S. legal victory in a continuing U.S. investigation of approximately a dozen other Swiss banks on suspicion of similar tax-evasion-related wrongdoing to lure American clients.
"When a bank engages in misconduct this brazen, it should expect that the Justice Department will pursue criminal prosecution to the fullest extent possible, as has happened here," said Holder.
Credit Suisse has a large investment banking subsidiary and is headed by American CEO Brady Dougan. Under the settlement terms, the bank agreed to change its business operations, provide information to federal investigators and hire an independent monitor to ensure it complies with the agreement.
Holder announced the agreement at a news briefing after U.S. financial markets closed, part of an effort to avoid any economic disruption from the bank's guilty plea.
The consultations were aimed at avoiding any repeat of the job losses and economic disruption caused by the 1990 bankruptcy collapse of Drexel Burnham Lambert after the investment house pleaded guilty to fraud, and the 2002 obstruction of justice conviction that led to the implosion of accounting giant Arthur Andersen.
Credit Suisse's U.S. regulators, the Federal Reserve and the New York State Department of Financial Services, coordinated federal prosecutors during settlement talks and signaled they would not seek to revoke the bank's charter or shut it down.
Holder said the financial penalties include a federal fine that tops $1.13 billion, and nearly $670 million in restitution to the IRS. Additionally, Credit Suisse will pay a $100 million penalty to the Federal Reserve's Board of Governors and $715 million to the New York banking regulator.
The settlement is expected to set a legal template for future U.S. cases that target major banks. That includes the continuing tax-related investigations of other Swiss banks and a separate investigation of French banking giant BNP Paribas for allegedly doing business with Iran, Cuba, Sudan and other nations hit with U.S. economic sanctions.
"We deeply regret the past misconduct that led to this settlement," said Dougan in a statement issued Monday night. "The U.S. cross-border matter represented the most significant and longstanding regulatory and litigation issue for Credit Suisse. Having this matter fully resolved is an important step forward for us."
According to Holder, the Zurich-based bank tried to hide the tax-evasion scheme by destroying records, concealing transactions and using offshore credit and debit cards to help American clients secretly transfer their hidden assets and income home.
"When the bank finally began to feel pressure" from a federal investigation launched in 2010, "Credit Suisse failed to retain key documents, allowed evidence to be lost or destroyed and conducted a shamefully inadequate internal inquiry," said Holder.
The bank ultimately submitted a guilty plea to a four-page criminal information. Court filings in the case cited two unidentified Credit Suisse clients, one from Charlottesville, Va., and the other from Elizabeth, N.J., who allegedly sought and received bank help with their offshore accounts.
Holder prefigured the Credit Suisse penalties with a May 5 video statement in which he declared: "There is no such thing as too big to jail."
A Senate subcommittee hearing in February also provided an early preview of the case with a February report that said Credit Suisse bankers secretly traveled to the U.S. on tourist visas, and then met with potential clients at New York City parties and Florida golf outings.
One former client told Senate investigators a Credit Suisse banker evaded detection by passing bank account statements hidden in the pages of a Sports Illustratedmagazine.
The Senate Permanent Subcommittee on Investigations report showed that Credit Suisse bankers in some cases helped U.S. clients structure transactions below $10,000 in an effort to avoid mandatory disclosure laws for higher amounts.
The bankers also referred some U.S. clients to intermediaries who helped open accounts in the names of offshore companies that existed largely on paper, Senate investigators found.
Sen. Carl Levin, the Michigan Democrat who heads the panel, complained that Monday's settlement didn't require Credit Suisse to "cough up" the names of more than 20,000 Americans who held unreported offshore accounts with the bank.
The Credit Suisse penalties dwarf the $780 million settlement that UBS, Switzerland's largest bank, reached with federal prosecutors in 2009 for similarly helping wealthy U.S. clients duck the IRS. However, the UBS deal took the form of a deferred-prosecution agreement in which the bank admitted wrongdoing and turned over financial records for thousands of American clients — but did not have a criminal conviction entered against it.

Sunday, May 18, 2014

Flash Boys by Michael Lewis – review

from the guardian

Can a book change Wall Street? Michael Lewis's bestselling expose of high-frequency trading has caused a 'shitstorm'. What will happen next? And will the real problems be solved?

Traders at the New York stock exchange.
Traders at the New York stock exchange. Photograph: Shen Hong/Xinhua Press/Corbis
The publication of Flash Boys, Michael Lewis's bestselling exposé of high frequency traders (HFTs) in the finance industry, could hardly have been better timed as a call for the Feds to step in. In the wake of the book's launch in early April, several regulatory agencies rushed to disclose that they were already taking action. For much of the past year, it appeared, the Justice Department, the FBI, the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority had been investigating HFT firms and exchanges for violations of insider trading and other Wall Street rules. Not to be upstaged, the New York state attorney general, Eric Schneiderman, threw his own white hat into the ring. His office recently announced that subpoenas were being sent out to exchanges as part of a probe into their relationships with the HFTs. On the same day, the NYSE, now only one of the many exchanges driven by electronic trading, reported it had reached a $4.5m settlement with the SEC over related violations regarding "co-location" – the practice of allowing HTFs to site their computers right next to the exchange's "matching engine" so that information can be accessed more rapidly.
  1. Flash Boys
  2. by Michael Lewis
  1. Tell us what you think:Star-rate and review this book
Closer scrutiny of these kinds of relationships is sure to follow, along with some new rules. There may even be some prosecutions, though it is widely held that receiving trading data a few milliseconds ahead of someone else – which is the raison d'etre of HFT – is not very illegal. Wrong perhaps, but technically above board, if only because the SEC rules actually oblige brokers to seek "the best price" for a security. Even so, the outrage and pushback from Wall Street (Lewis, unsurprisingly for a sales seeking author, has described it as a "shitstorm") has been cacophonous, and it's easy to see why. After all, Lewis's takeaway argument is that the stock market is being rigged in favour of front-running traders, and that other players are being screwed for having slower connections. This allegation is especially threatening to the all-important image of the stock market as open and transparent. If the odds really are being stacked against those Lewis calls "mom and pop investors" (middle-class retail investors), then we can retire the myth that finance is a clean game for all – as opposed to a turbocharged machine, or even a vampire squid, for sucking up revenue for the very rich 1%.
Perhaps this also explains why so many government regulators have lined up to show how zealously they are hunting down wrongdoers on Wall Street. For one thing, their hot pursuit of the miscreants is a handy response to the consensus view that elected officials have been lax in cracking down on the highly publicised transgressions of the finance industry. It might be late in the day, but here we are, working hard to nail the swindlers! And, perhaps more importantly, the unspoken (and unspeakable) goal of the regulators is to ensure that the illusion of market fairness is maintained. Every so often, that requires making a spectacle by throwing out some of the bad apples.
The HFT scandal is only the latest evidence that the stock market's clubby insiders have always enjoyed an advantage from better and faster information. Yet the fiction of equal access is necessary to draw the punters into the casino, and to ensure that the market escapes the fate of being heavily regulated. Lewis goes one step further: he does not trust that the regulators can do very much at all, so he showcases how the market can reform itself.
The moral champion in Flash Boys is Brad Katsuyama, a very well-paid stock trader at the Royal Bank of Canada, who figured out that the high-frequency guys were front-running his orders. Using fibre-optic cables that link superfast computers to brokers, the HFTs intercepted and bought his orders, selling the shares back to him at a higher price, and pocketing the margin. The mother of all schemes is an 827-mile cable running through mountains and under rivers from Chicago to New Jersey that reduces the journey of data from 17 to 13 milliseconds. Atransatlantic cable still under construction will give a 5.2 millisecond advantage to those looking to profit from the spread trade between New York and London. Convinced that a level playing field was a better business proposition, Katsuyama responded by helping to launch a fully transparent exchange (IEX), to ensure that trading information reaches all investors at the same time.
Lewis has written an effective exposé, but in arguing for the "commercial heroism" of IEX's founders, he ends up polishing the myth of the market as a self-correcting mechanism. Left to its own devices, and drawing on the non-stop innovation of the finance industry, the market will flush out impurities and revert to its benign state of nature in which all participants have an equal shot at beating each other. According to this scenario, the failure of the regulators is preordained. Besides, the second-string graduates who take government jobs in regulation can never outperform the brainiacs who flock to Wall Street.
Let's be clear about one thing. The inability to put "banksters" behind bars has nothing to do with the market's invisible hand or the mental superiority of the quantitative analysts who create algorithms for the supercomputers. Rather, it is a blunt reflection of the power of the creditor class to hold elected officials in thrall. Attorney general Eric Holder's confession, in Senate testimony last year, that the kingpins of high finance were "too big to jail", was a candid acknowledgment of the impotence of such officials. It confirmed the growing perception that the US has joined the ranks of failing democracies, where governments cannot protect their debt-burdened citizenry from economic damagecaused by the "creditocracy".
The hefty fines doled out in recent years to JP Morgan Chase, Wells Fargo, Citigroup, Bank of America, RBS, Barclays, UBS and other banking titans are now merely regarded as the wrist-slapping cost of doing business. Federal prosecutors are now threatening to bring criminal charges against BNP Paribas and Credit Suisse. But no one expects to see top executives in handcuffs any time soon. Mass economic disobedience in the form of debt refusal is more likely, and would be a more effective threat to Wall Street and other banking centres, though it is far off at present.
If the brouhaha around Flash Boys helps to pre-empt a jumbo meltdown automatically triggered by the HFT machines (the "flash crash" of 2010, which saw a 1,000 point swing in the Dow, was an advance warning), then it will have done some good. But let's ask why the publication of a book such as Matt Taibbi's The Divide has generated so much less attention. Drawing on his Rolling Stone reporting in the five years since the 2008 crash, Taibbi fully details the record of bankers' malfeasance and extortion. The result should enrage everyone who has been on the wrong end of the predatory lenders, crooked collection agents, illegal foreclosures, PPI ripoffs and other swindles that are considered business as usual by the finance industry. The dupes in Lewis's story are the Wall Street brokers and hedge-fund managers who were outrun by flash boys "who would sell their grandmothers for a microsecond". The victims in Taibbi's book are the rest of us.
• Andrew Ross is an NYU professor and author of Creditocracy and the Case for Debt Refusal.

Thursday, May 15, 2014

Robert Reich: Why Timothy Geithner Is Deluded About the Bailout


The Treasury Secretary's new book misses the mark entirely.

May 15, 2014 

Timothy Geithner’s new book about the financial crisis, “Stress Test,” is basically an argument that the Wall Street bailout succeeded. That’s hardly surprising, given that Geithner was in charge of the bailout when Treasury Secretary (as was his predecessor at Treasury, Hank Paulson), and so has an inherit interest in telling the public it succeeded.
Even so, the bailout clearly did succeed, if success means avoiding another Great Depression.
But another Great Depression might have been avoided if the crisis had been handled differently — for example, by allowing the bankruptcy laws to do what they were intended to do, and forcing the big Wall Street banks to reorganize under them.
In fact, the bailout was a colossal failure in several respects Geithner barely mentions in his book, or avoids completely:  
(1) The biggest Wall Street banks are now bigger than ever, and no sane person on or off the Street now believes Washington will ever allow them to fail – which means they’ll continue to make big, risky bets because they know they can’t fail. And they’ll get even bigger because big depositors and lenders know they’ll never fail and therefore demand lower interest rates than demanded from smaller banks.
(2) No Wall Street executives have ever been prosecuted for what they did to the country, which means even more rampant irresponsibility in executive suites as well as even deeper cynicism in the public about the political power of Wall Street.
(3) The bailout helped the banks but did little or nothing for the tens of millions of Americans who lost billions of dollars in home equity and savings, and the millions more who lost their jobs. The toll was greatest on the poor and the middle class, who still haven’t recovered their losses, even though Wall Street has fully recovered (and then some). Nor have reforms been enacted that will help the middle class and the poor the next time Wall Street implodes.
So pardon me if I take issue with Tim Geithner. The bailout was a success in the narrowest terms. Seen more broadly it was a terrible failure.
We’d  have done better had we forced the biggest Wall Street banks, including the giant insurer AIG, to reorganize under bankruptcy rather than bail them out.

Robert B. Reich has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He also served on President Obama's transition advisory board. His latest book is "Aftershock: The Next Economy and America's Future." His homepage is

Acclaimed Japanese scientist praises book by NZ authors


Acclaimed Japanese scientist praises book by New Zealand authors
The Director of Japan’s Advanced-Science Technology Research Organization, Dr. Takaaki Musha, describes a new release book by a New Zealand father-and-son writing team as “the secret history of the 20th Century and the early 21st Century.”
Dr. Takaaki Musha, a former senior research scientist at the Technical Research and Development Institute of Japan’s Ministry of Defense, expresses his views in the foreword to Lance and James Morcan’s book, The Orphan Conspiracies: 29 Conspiracy Theories from The Orphan Trilogy.
Dr. Musha, who is also Editor-in-Chief of the Journal of Space Exploration, says the book also discloses exactly what is happening right now behind the scenes – in underground bunkers, in the corridors of power, in prime banks and meetings of the global elite.
“This book is also about the purposeful bankrupting of nations around the world, the inherently corrupt monetary system and the scam of modern banking – all of which have obviously become major vices of our era,” he says.
“I believe that financial domination is one of the main methods used to enslave the people of this world.
“I expect readers of this book will be surprised by the level of knowledge imparted in its pages especially with its revelations of exotic technologies, financial injustices, political deceptions and suppressed scientific discoveries. I also expect readers will be inspired by the lifting of the veil that occurs when long-guarded information is absorbed.”
Dr. Musha, who was employed for many years developing naval underwater weapon systems, says he often suspected there existed extraordinary technologies developed by the world’s superpowers.
“I am of the opinion that most of these technologies have been concealed from the public’s eyes.”
“The world’s governments have many classified layers and outsiders rarely gain access to their hidden secrets. And certainly no common man can get confirmation of the existence of exotic technologies.”
The Morcans say The Orphan Conspiracies, their first non-fiction book, examines 29 conspiracy theories highlighted in their top rating international thriller series, The Orphan Trilogy.
“It fully explores the real-world suppositions, assumptions and theories we included in our fictional series and provides answers to the questions our readers have been asking,” says Lance Morcan.
“Conspiracy theories explored range from false flag operations, international banksters, genius techniques of the elite and suppressed science to the Queen’s invisible riches, the Medical Industrial Complex and real-life Manchurian Candidates.”
Since its release in April, The Orphan Conspiracies has already appeared in Amazon’s bestseller lists in its appropriate category (Social Sciences and Media Studies).
The early chapters and Dr. Musha’s foreword can be freely accessed via the Amazon site at