Screw the Banks and Investment Firms

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Postby can't sit still » Tue Mar 29, 2011 8:37 pm

Y'all may have been wondering WHY we attacked Libya. We're blowing up people right and left to protect them. Might there be another reason why we attacked?
As a matter of coincidence, Libya was ONE of only 4 countries that had a central bank that was NOT controlled by the banking elites. Libya had a state bank. How nice.

The rebels have been fighting all day and, in the evenings, they have formed a state oil company and a new central bank. How quaint. Does anybody believe that this new central bank will slip through the hands of the banking cartel?
http://21stcenturywire.com/2011/03/29/w ... -of-libya/
So, the mercenaries,,, oops, rebels march out of the country after they trash it real well. When it is totally in turmoil, the good-guys come and straighten it out. The bankers will make sure that it is done "right"

There is another little-known fact about Libya. They built an enormous water project that would have made them much more independent of Western powers. WELL, we couldn't let the Libyans get all uppity and independent.
http://presscore.ca/2011/?p=1967
There were also plans to construct power generators that would take Mediterranean water and channel it to the Red? Sea and run hydro power. It was expected to produce more power than Aswan. Can't allow that. Turmoil is job # ONE in the Middle-East.
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Postby Elderberry » Wed Mar 30, 2011 11:40 am

Here's a nice long article CSS should love http://www.stansberryresearch.com/pro/1 ... PSIM308/PR
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Postby can't sit still » Wed Mar 30, 2011 6:31 pm

jk, I posted / linked that article a few weeks ago. It's very interesting. The guy is brilliant but, there are so many things going on behind the scene that it is very difficult to get a good picture. Bill Gross runs the biggest bond fund in the world. He warned about a meltdown in treasuries. He got out of treasuries and is sitting on the sidelines with $ 54.5 billion in cash.
One has to remember that this cash is sitting in some bank somewhere.
The banks "sweep" all accounts every day and remove excess money. They take it and put it to work.
The more cash that people pull out of equities and bonds, the more that the banks can grab. The banks work on the premise that; no matter what you do with your money, it will ALWAYS come back to some bank somewhere. 4/10 of a percent of American money is in the form of cash. There couldn't be an appreciable bank-run. If you buy gold, the mint puts your cash in a bank.
If you spend your last penny on bread, it goes to some bank. If you buy a $ billion in stock, it goes to a bank.

The banks create the original sum. You have to get the interest somewhere else. They don't create it. GOV prints new money to help supply the money needed for interest. Resources are sold for new money.
The banks created money out of thin air. The money that you pay back had to be created with work. This doesn't work out well in the long run because non-bankers run out of money. The consumer economy crashes for lack of money.
Credit grew at 6 times the rate of the GDP. Everyone is so debt saturated, the banks can't find people who are credit worthy.

So, the banks are sitting on all the money. Because of the drag of inflation, the banks invest the money in stocks and bonds. Bonds are payed back by taxpayers. Stocks earn money from the purchases of consumers. To avoid bond defaults, GOV mandates austerity for the taxpayers so that they have enough money left over to pay the bonds.
As people have less and less money, there is less spent to drive the consumer economy. The consumer economy shrinks and produces much less for corporations and taxes.
Argentina was a good example of this. As long as GOV taxes enough to service the bonds and banks, the economy never recovers. As GOV facilitates globalization, there is a continual drop in employment. As the wage base shrinks, there is less and less to support the bond market.

All the central banks are printing in concert so that there is no strong currency to flee to. Only a small percentage can flee into gold. If too many flee into commodities, food will go beyond reach of a billion or so. If they try to flee into energy, that drags the producing economy severely. The bankers may hold $ quadrillions worth of instruments. It remains to be see how long they will hold their value.
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Postby can't sit still » Tue Apr 12, 2011 8:01 pm

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Postby Dr. Pyro » Tue Apr 12, 2011 8:13 pm

True dat.

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Postby can't sit still » Wed Apr 13, 2011 7:31 am

This page has some good vids by Fitts on just how America was looted;
http://www.silverbearcafe.com/private/1 ... oting.html
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Postby RingO'Fire » Wed Apr 13, 2011 8:41 am

A link to a new article in Rolling Stone:
The Real Housewives of Wall Street
Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs?


http://www.rollingstone.com/politics/news/the-real-housewives-of-wall-street-look-whos-cashing-in-on-the-bailout-20110411?print=true

Most Americans know about that [official] budget. What they don't know is that there is another budget of roughly equal heft, traditionally maintained in complete secrecy. After the financial crash of 2008, it grew to monstrous dimensions, as the government attempted to unfreeze the credit markets by handing out trillions to banks and hedge funds. And thanks to a whole galaxy of obscure, acronym-laden bailout programs, it eventually rivaled the "official" budget in size — a huge roaring river of cash flowing out of the Federal Reserve to destinations neither chosen by the president nor reviewed by Congress, but instead handed out by fiat by unelected Fed officials using a seemingly nonsensical and apparently unknowable methodology.

Now, following an act of Congress that has forced the Fed to open its books from the bailout era, this unofficial budget is for the first time becoming at least partially a matter of public record. Staffers in the Senate and the House, whose queries about Fed spending have been rebuffed for nearly a century, are now poring over 21,000 transactions and discovering a host of outrages and lunacies in the "other" budget. It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure.

The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. "Our jaws are literally dropping as we're reading this," says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. "Every one of these transactions is outrageous."
...but it seemed like such a good idea at the time...

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Postby can't sit still » Wed Apr 13, 2011 9:25 pm

The situation previously in Argentine seems to be the pattern for America. The banks go wild with speculation. They crash. GOV comes in and places the load on the public. Paying off the crash,,, along with the compounded interest is debt-peonage for us and our children. It's been that way for centuries.
The banks produce "money" out of thin air. After the crash, the "air money" must be paid back with "hard work money"
The banks are holding Trillions of debt notes. The amount owed is FAR too high to ever be expressed as something tangible. So, bankers are holding paper that says that you and your children have to work at hard labor to provide them with a comfortable living for the next ??? years. After all, the interest accrues pretty fast.

There seems to be some fear that some bankers might possibly get left out of all the future largess that YOU are going to provide. George Soros has a solution;
http://www.businessinsider.com/george-s ... ebt-2011-4
Yes, the answer to their insecurities is more debt.

As we saw in Ireland, the political whores confirmed that they would honor all the debt agreements of their predecessors. Iceland , on the other hand, says that there is no justification for the public to pay the debt of private banks.
http://www.thedailybell.com/2037/Little ... Banks.html
Hopefully, the Icelanders can hang in there. This would set a very BAD example to other countries who don't want to provide a spectacular lifestyle for hordes of future bankers.

The European Monetary Union has just released some new rules. The EMU is failing because it instituted a common currency before there were any enforcement mechanisms. I suppose that this was done to keep individual countries from getting nervous about the Borg-like absorption.
Now, the EMU has issued new rules that mandate that the EMU control the finances of every country. The results of that should be pretty predictable. Austerity with a vengeance. The EMU is absolutely insisting that NO banks suffer even one farthing of loss on senior debt.
The U.S.S.R. gave us a very fine example of what the results are for central planning. Apparently, the Eurocrats want to copy the U.S.S.R. example.

The glaring weak point to all this is inflation and loss of productivity. The FED is printing $ trillions so that banks don't fail. The inflation will reduce the value of all their contracts to a tiny fraction of their original value. The debt service will strangle the economy. The morbid economy will not produce the taxes that the next generation of banker and offspring are counting on. They got too greedy and now, the whole thing is falling down.
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Postby can't sit still » Thu Apr 14, 2011 7:38 am

There is a small possibility that GOV may prosecute bankers;
"We will be referring this matter to the Justice Department and to the SEC," Levin said at the briefing, though he did not elaborate. A spokesman later said, "The subcommittee does not intend to reveal the specifics of any referral."

Carl Levin, chairman of the Senate Permanent Subcommittee on Investigations, one of Capitol Hill's most feared panels, has a history with Goldman Sachs.
http://www.newsdaily.com/stories/tre73c ... on-report/

Of course, we can't forget that the SEC was / is as rotten as all the rest.
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Postby can't sit still » Thu Apr 14, 2011 7:19 pm

There is more to the connection between banking and Libya.

"Later, the same general said they planned to take out seven countries in five years: Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran."
"What do these seven countries have in common? In the context of banking, one that sticks out is that none of them is listed among the 56 member banks of the Bank for International Settlements (BIS). That evidently puts them outside the long regulatory arm of the central bankers' central bank in Switzerland"
http://atimes.com/atimes/Middle_East/MD14Ak02.html
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Postby Elderberry » Thu Apr 14, 2011 7:30 pm

can't sit still wrote:There is a small possibility that GOV may prosecute bankers;
"We will be referring this matter to the Justice Department and to the SEC," Levin said at the briefing, though he did not elaborate. A spokesman later said, "The subcommittee does not intend to reveal the specifics of any referral."

Carl Levin, chairman of the Senate Permanent Subcommittee on Investigations, one of Capitol Hill's most feared panels, has a history with Goldman Sachs.
http://www.newsdaily.com/stories/tre73c ... on-report/

Of course, we can't forget that the SEC was / is as rotten as all the rest.


We can only hope.
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Postby can't sit still » Sun Apr 17, 2011 9:09 am

This is an excellent paper relating gold, currency, slavery and banking;
http://www.eurozine.com/articles/2009-0 ... er-en.html
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Postby cowboyangel » Mon Apr 18, 2011 9:03 am

jkisha wrote:
can't sit still wrote:There is a small possibility that GOV may prosecute bankers;
"We will be referring this matter to the Justice Department and to the SEC," Levin said at the briefing, though he did not elaborate. A spokesman later said, "The subcommittee does not intend to reveal the specifics of any referral."

Carl Levin, chairman of the Senate Permanent Subcommittee on Investigations, one of Capitol Hill's most feared panels, has a history with Goldman Sachs.
http://www.newsdaily.com/stories/tre73c ... on-report/

Of course, we can't forget that the SEC was / is as rotten as all the rest.


We can only hope.


Barring that maybe genetic scientists and create a compassion virus for bankers...just for them...causing them to renounce capitalism and embrace the creed of St. Francis....that or a case of continual runs.....
"We'll know our disinformation program is complete when everything the American public believe is false."- William Casey, CIA Director 1981

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Postby can't sit still » Mon Apr 18, 2011 7:09 pm

Cowboy, there is a good discussion going on at the Daily Bell concerning the constitution. I added this; I must quote Adams, "Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other."
You may posit a "compassion virus" but, I believe that what is needed is morality. I wrote that there is no possibility of holding the country together if the entire power structure is completely permeated by immorality. The morality of a parasite is no good for the rest of us. Here is the article. It is VERY good.
http://www.thedailybell.com/2096/James- ... Party.html
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Postby can't sit still » Sat Apr 30, 2011 4:41 pm

This is a good article on the screwups of Summers.

By Charles Ferguson

The Obama administration recently announced that Larry Summers is resigning as director of the National Economic Council and will return to Harvard early next year. His imminent departure raises several questions: Who will replace him? What will he do next? But more important, it's a chance to consider the hugely damaging conflicts of interest of the senior academic economists who move among universities, government, and banking.

Summers is unquestionably brilliant, as all who have dealt with him, including myself, quickly realize. And yet rarely has one individual embodied so much of what is wrong with economics, with academe, and indeed with the American economy. For the past two years, I have immersed myself in those worlds in order to make a film, Inside Job, that takes a sweeping look at the financial crisis. And I found Summers everywhere I turned.

Consider: As a rising economist at Harvard and at the World Bank, Summers argued for privatization and deregulation in many domains, including finance. Later, as deputy secretary of the treasury and then treasury secretary in the Clinton administration, he implemented those policies. Summers oversaw passage of the Gramm-Leach-Bliley Act, which repealed Glass-Steagall, permitted the previously illegal merger that created Citigroup, and allowed further consolidation in the financial sector. He also successfully fought attempts by Brooksley Born, chair of the Commodity Futures Trading Commission in the Clinton administration, to regulate the financial derivatives that would cause so much damage in the housing bubble and the 2008 economic crisis. He then oversaw passage of the Commodity Futures Modernization Act, which banned all regulation of derivatives, including exempting them from state antigambling laws.

After Summers left the Clinton administration, his candidacy for president of Harvard was championed by his mentor Robert Rubin, a former CEO of Goldman Sachs, who was his boss and predecessor as treasury secretary. Rubin, after leaving the Treasury Department—where he championed the law that made Citigroup's creation legal—became both vice chairman of Citigroup and a powerful member of Harvard's governing board.
Over the past decade, Summers continued to advocate financial deregulation, both as president of Harvard and as a University Professor after being forced out of the presidency. During this time, Summers became wealthy through consulting and speaking engagements with financial firms. Between 2001 and his entry into the Obama administration, he made more than $20-million from the financial-services industry. (His 2009 federal financial-disclosure form listed his net worth as $17-million to $39-million.)

Summers remained close to Rubin and to Alan Greenspan, a former chairman of the Federal Reserve. When other economists began warning of abuses and systemic risk in the financial system deriving from the environment that Summers, Greenspan, and Rubin had created, Summers mocked and dismissed those warnings. In 2005, at the annual Jackson Hole, Wyo., conference of the world's leading central bankers, the chief economist of the International Monetary Fund, Raghuram Rajan, presented a brilliant paper that constituted the first prominent warning of the coming crisis. Rajan pointed out that the structure of financial-sector compensation, in combination with complex financial products, gave bankers huge cash incentives to take risks with other people's money, while imposing no penalties for any subsequent losses. Rajan warned that this bonus culture rewarded bankers for actions that could destroy their own institutions, or even the entire system, and that this could generate a "full-blown financial crisis" and a "catastrophic meltdown."

When Rajan finished speaking, Summers rose up from the audience and attacked him, calling him a "Luddite," dismissing his concerns, and warning that increased regulation would reduce the productivity of the financial sector. (Ben Bernanke, Tim Geithner, and Alan Greenspan were also in the audience.)

Soon after that, Summers lost his job as president of Harvard after suggesting that women might be innately inferior to men at scientific work. In another part of the same speech, he had used laissez-faire economic theory to argue that discrimination was unlikely to be a major cause of women's underrepresentation in either science or business. After all, he argued, if discrimination existed, then others, seeking a competitive advantage, would have access to a superior work force, causing those who discriminate to fail in the marketplace. It appeared that Summers had denied even the possibility of decades, indeed centuries, of racial, gender, and other discrimination in America and other societies. After the resulting outcry forced him to resign, Summers remained at Harvard as a faculty member, and he accelerated his financial-sector activities, receiving $135,000 for one speech at Goldman Sachs.

Then, after the 2008 financial crisis and its consequent recession, Summers was placed in charge of coordinating U.S. economic policy, deftly marginalizing others who challenged him. Under the stewardship of Summers, Geithner, and Bernanke, the Obama administration adopted policies as favorable toward the financial sector as those of the Clinton and Bush administrations—quite a feat. Never once has Summers publicly apologized or admitted any responsibility for causing the crisis. And now Harvard is welcoming him back.

Summers is unique but not alone. By now we are all familiar with the role of lobbying and campaign contributions, and with the revolving door between industry and government. What few Americans realize is that the revolving door is now a three-way intersection. Summers's career is the result of an extraordinary and underappreciated scandal in American society: the convergence of academic economics, Wall Street, and political power.

Starting in the 1980s, and heavily influenced by laissez-faire economics, the United States began deregulating financial services. Shortly thereafter, America began to experience financial crises for the first time since the Great Depression. The first one arose from the savings-and-loan and junk-bond scandals of the 1980s; then came the dot-com bubble of the late 1990s, the Asian financial crisis; the collapse of Long Term Capital Management, in 1998; Enron; and then the housing bubble, which led to the global financial crisis. Yet through the entire period, the U.S. financial sector grew larger, more powerful, and enormously more profitable. By 2006, financial services accounted for 40 percent of total American corporate profits. In large part, this was because the financial sector was corrupting the political system. But it was also subverting economics.

Over the past 30 years, the economics profession—in economics departments, and in business, public policy, and law schools—has become so compromised by conflicts of interest that it now functions almost as a support group for financial services and other industries whose profits depend heavily on government policy. The route to the 2008 financial crisis, and the economic problems that still plague us, runs straight through the economics discipline. And it's due not just to ideology; it's also about straightforward, old-fashioned money.

Prominent academic economists (and sometimes also professors of law and public policy) are paid by companies and interest groups to testify before Congress, to write papers, to give speeches, to participate in conferences, to serve on boards of directors, to write briefs in regulatory proceedings, to defend companies in antitrust cases, and, of course, to lobby. This is now, literally, a billion-dollar industry. The Law and Economics Consulting Group, started 22 years ago by professors at the University of California at Berkeley (David Teece in the business school, Thomas Jorde in the law school, and the economists Richard Gilbert and Gordon Rausser), is now a $300-million publicly held company. Others specializing in the sale (or rental) of academic expertise include Competition Policy (now Compass Lexecon), started by Richard Gilbert and Daniel Rubinfeld, both of whom served as chief economist of the Justice Department's Antitrust Division in the Clinton administration; the Analysis Group; and Charles River Associates.

In my film you will see many famous economists looking very uncomfortable when confronted with their financial-sector activities; others appear only on archival video, because they declined to be interviewed. You'll hear from:

Martin Feldstein, a Harvard professor, a major architect of deregulation in the Reagan administration, president for 30 years of the National Bureau of Economic Research, and for 20 years on the boards of directors of both AIG, which paid him more than $6-million, and AIG Financial Products, whose derivatives deals destroyed the company. Feldstein has written several hundred papers, on many subjects; none of them address the dangers of unregulated financial derivatives or financial-industry compensation.

Glenn Hubbard, chairman of the Council of Economic Advisers in the first George W. Bush administration, dean of Columbia Business School, adviser to many financial firms, on the board of Metropolitan Life ($250,000 per year), and formerly on the board of Capmark, a major commercial mortgage lender, from which he resigned shortly before its bankruptcy, in 2009. In 2004, Hubbard wrote a paper with William C. Dudley, then chief economist of Goldman Sachs, praising securitization and derivatives as improving the stability of both financial markets and the wider economy.

Frederic Mishkin, a professor at the Columbia Business School, and a member of the Federal Reserve Board from 2006 to 2008. He was paid $124,000 by the Icelandic Chamber of Commerce to write a paper praising its regulatory and banking systems, two years before the Icelandic banks' Ponzi scheme collapsed, causing $100-billion in losses. His 2006 federal financial-disclosure form listed his net worth as $6-million to $17-million.

Laura Tyson, a professor at Berkeley, director of the National Economic Council in the Clinton administration, and also on the Board of Directors of Morgan Stanley, which pays her $350,000 per year.

Richard Portes, a professor at London Business School and founding director of the British Centre for Economic Policy Research, paid by the Icelandic Chamber of Commerce to write a report praising Iceland's financial system in 2007, only one year before it collapsed.

And John Campbell, chairman of Harvard's economics department, who finds it very difficult to explain why conflicts of interest in economics should not concern us.

But could he be right? Are these professors simply being paid to say what they would otherwise say anyway? Unlikely. Mishkin and Portes showed no interest whatever in Iceland until they were paid to do so, and they got it totally wrong. Nor do all these professors seem to make policy statements contrary to the financial interests of their clients. Even more telling, they uniformly oppose disclosure of their financial relationships.

The universities avert their eyes and deliberately don't require faculty members either to disclose their conflicts of interest or to report their outside income. As you can imagine, when Larry Summers was president of Harvard, he didn't work too hard to change this.

Now, however, as the national recovery is faltering, Summers is being eased out while Harvard is welcoming him back. How will the academic world receive him? The simple answer: Better than he deserves.

While making my film, we wrote to the presidents and provosts of Harvard, Columbia, and other universities with detailed questions about their conflict-of-interest policies, requesting interviews about the subject. None of them replied, except to refer us to their Web sites.

Academe, heal thyself.
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Postby can't sit still » Mon May 02, 2011 7:20 am

I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.

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Postby can't sit still » Sat May 07, 2011 1:13 pm

J P Morgan finds money everywhere. They even make money from foodstamps.
http://www.activistpost.com/2011/05/jp- ... -more.html
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Postby can't sit still » Thu May 12, 2011 9:04 pm

This is EXCELLENT news. It is also a testament to the power of the internet. Y'all know that the rating agencies are in collusion with the banks. BUT, after a certain point, the agencies HAVE to report the obvious. There was an article in Rolling Stone by Matt Taibbi about Goldman. Because of that article, Goldman's stock is a SELL.
http://www.businessinsider.com/wow-gold ... cle-2011-5
The best thing that could happen is that the sharks smell blood in the water. Jim Rogers is "shorting" U.S. debt. It would be great if investors could short Goldman to death.
The banks got FAT riding in the lap of luxury. They haven't cut back in any meaningful way. There are still over $ 600 trillion in derivatives floating around. Every house / person who goes bust causes more paper to fail. Bank income is FLAT because everyone is debt-saturated.
Banks may be hiding the toxic stuff off-balance sheet but, they still have to pay off counter-parties when it fails.
It is assumed that QE III will come about. There is always the possibility that Goldman will receive $ trillions. Some writers believe that QE III will push us over the hyperinflation cliff.
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Postby RingO'Fire » Fri May 13, 2011 10:12 am

can't sit still wrote:This is EXCELLENT news. It is also a testament to the power of the internet. Y'all know that the rating agencies are in collusion with the banks. BUT, after a certain point, the agencies HAVE to report the obvious. There was an article in Rolling Stone by Matt Taibbi about Goldman. Because of that article, Goldman's stock is a SELL.
http://www.businessinsider.com/wow-gold ... cle-2011-5
The best thing that could happen is that the sharks smell blood in the water. Jim Rogers is "shorting" U.S. debt. It would be great if investors could short Goldman to death.
The banks got FAT riding in the lap of luxury. They haven't cut back in any meaningful way. There are still over $ 600 trillion in derivatives floating around. Every house / person who goes bust causes more paper to fail. Bank income is FLAT because everyone is debt-saturated.
Banks may be hiding the toxic stuff off-balance sheet but, they still have to pay off counter-parties when it fails.
It is assumed that QE III will come about. There is always the possibility that Goldman will receive $ trillions. Some writers believe that QE III will push us over the hyperinflation cliff.



Here's the Matt Taibbi article in Rolling Stone that CSS cited above: http://www.rollingstone.com/politics/news/the-people-vs-goldman-sachs-20110511

Matt Taibbi wrote:Defenders of Goldman have been quick to insist that while the bank may have had a few ethical slips here and there, its only real offense was being too good at making money. We now know, unequivocally, that this is bullshit.
...but it seemed like such a good idea at the time...

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Postby Elderberry » Fri May 13, 2011 3:17 pm

Great article. Let's see if anything comes of it.
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Postby can't sit still » Fri May 13, 2011 6:00 pm

"A few ethical slips". Thanks to their manipulation and greed, hundreds on millions starved.
"250 million people joined the ranks of the hungry in 2008,"
That's just 2008. It has gotten much worse. So, let's say that just a few million more died early. Maybe a few hundred million went hungry. THAT is not what is referred to as an "ethical slip". Corporate bylaws do not have ethics or compassion written into them. A few million dead is not even worth mentioning at the corporate level.

http://www.agricorner.com/how-goldman-s ... od-crisis/
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Postby can't sit still » Fri May 13, 2011 8:57 pm

Well, Iceland has once again told the international bankers to SHOVE IT ! There really isn't much that the bankers can do. If the bankers don't figure out some way to severely punish Iceland, there are several other countries that might copy.
http://jhaines6.wordpress.com/2011/05/1 ... #more-4679
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Postby Elderberry » Mon May 16, 2011 6:29 pm

Looks like the shit is about to hit the fan for the big five banks and their mortgage policies. http://www.huffingtonpost.com/2011/05/1 ... 62686.html
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Postby can't sit still » Mon May 16, 2011 6:37 pm

"referred its findings to the Department of Justice, which must now decide whether to file charges."
We can always hope.
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Postby cowboyangel » Mon May 16, 2011 7:42 pm

Goldman=Evil Empire


Better still...Ellen Brown's latest:

What a Public Bank Could Mean for California
The state's facing big debt, but also big opportunity.


by Ellen Brown
posted May 16, 2011



California is the eighth largest economy in the world, and it has a debt burden to match. The state has outstanding general obligation bonds and revenue bonds of $158 billion, largely incurred for building infrastructure. Over $7 billion of California’s annual budget goes to pay interest on the state’s debt.

As large as California’s liabilities are, they are exceeded by its assets, which are sufficient to capitalize a bank rivaling any in the world. That’s the idea behind Assembly Bill 750, introduced by Assemblyman Ben Hueso of San Diego, which would establish a blue ribbon task force to consider the viability of creating the California Investment Trust, a state-owned bank receiving deposits of state funds. Instead of relying on Wall Street banks for credit—or allowing a Wall Street bank to enjoy the benefits of lending its capital—California may decide to create its own, publicly owned bank.
What California can do with its own bank, other states can do as well, on a scale proportionate to their populations and economies.

On May 2, AB 750 moved out of the Banking and Finance Committee with only one nay vote, and is now on its way to the Appropriations Committee. Three unions—the California Nurses Association, the California Firefighters, and the California Labor Council—submitted their support for the bill. The state bank idea also got a nod from former Secretary of Labor Robert Reich in his speech at the California Democratic Convention in Sacramento the previous day.
Why a State Bank?

California joins eleven other states that have introduced bills to form state-owned banks or to study their feasibility. Eight of these bills were introduced just since January, including in Oregon, Washington State, Massachusetts, Arizona, Maryland, New Mexico, Maine and California. Illinois, Virginia, Hawaii and Louisiana introduced similar bills in 2010. [For more information about these proposals, see here.]

How Banks Make MoneyHow Banks Make Money

All of these bills were inspired by the Bank of North Dakota (BND), currently the nation’s only state-owned bank. While other states are teetering on the edge of bankruptcy, the state of North Dakota continues to report surpluses. On April 20, the BND reported profits for 2010 of $62 million, setting a record for the seventh straight year. The BND’s profits belong to the citizens and are produced without taxation.

The BND partners with local banks in providing much-needed credit for local businesses and homeowners. It also helps with state and local government funding. When North Dakota went over-budget a few years ago, according to the bank’s president Eric Hardmeyer, the BND acted as a rainy day fund for the state. And when a North Dakota town suffered a massive flood, the BND provided emergency credit lines to the city. Having a cheap and readily available credit line with the state’s own bank reduces the need for massive rainy-day funds (which are largely invested in out-of-state banks at very modest interest).

The Center for State Innovation, based in Madison, Wisconsin, was commissioned to do detailed analyses of the Washington and Oregon bills. Their conclusion was that a state-owned bank on the model of the Bank of North Dakota would have a substantial positive impact in those states, increasing employment, new lending, and government revenue.
What California Could Do with Its Own Bank

Banks create “bank creditâ€
"We'll know our disinformation program is complete when everything the American public believe is false."- William Casey, CIA Director 1981

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Postby Elderberry » Mon May 16, 2011 8:44 pm

I think State Banks are a good idea. (With my limited understanding of such things.)

I'm a supporter of community banks as well. The one my partner uses and I use for my personal accounts has only two branches.
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Postby can't sit still » Mon May 16, 2011 9:06 pm

JK, in a VERY simplified version. Banks take money and magically multiply it by 10 times. The really greedy ones,,, 50 times. Then, they collect interest on the multiplied money. States pay gobs of interest. With a state bank, they pay the interest to themselves. Instead of accruing a net debt, they accrue a net surplus.
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Postby Elderberry » Mon May 16, 2011 9:23 pm

LOL that really helped! Not.

But I do have a rudimentary understanding of how banks work.
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Postby Elderberry » Tue May 17, 2011 6:31 am

Looks like New York is going after the bankers too. http://www.nytimes.com/2011/05/17/business/17bank.html?_r=1&wpisrc=nl_fix
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Postby Ugly Dougly » Tue May 17, 2011 9:36 am

But they're the job-creators!


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