As many already know, earlier today Senator Schumer announced the cleverly named Ex-PATRIOT act, which seeks nothing short of exile for anyone who effectively declines their US citizenship for tax avoidance purposes. So far so good. We have, however, one simple question. In light of recent media reports of rampant abuse of various international tax loopholes by US corporations (recall the Double Irish with a Dutch Sandwich), but much more importantly, the glaring abuse of offshore tax shelters by hedge funds - organization such as Paulson & Co., RenTec, York Capital, etc., and financial institutions, such as Lazard, Blackstone, and Credit Suisse, can Senator Schumer please rep, warrant and guarantee that none of his corporate sponsors, i.e., his Top 100 Contributors, have ever engaged in any form of explicit or implicit tax avoidance, tax offshoring, and tax shelter. To facilitate his checklisting, we have presented his top 100 contributors below. Because if he can't, one may be left with the impression that his whole anti-tax tirade and legislation is, you know, hypocritical.
I?ve been in the US for a little more than 24-hours. And having flipped through the TV channels trying to figure out what useless drivel big media is passing off as ?news?, I realized that I?m going to vomit if I hear the word ?fair? one more time.
This concept of ?fair? seems to be dominating discussion of the US government?s dismal fiscal condition. The talking heads say that it?s ?fair? for wealthy Americans to pay higher taxes and bail the country out? or that everyone needs to pay his/her ?fair? share.
The whole logic is absurd: you do not ?fix? the country?s fiscal imbalances by giving the idiots in charge even more resources to squander? it?s like dumping gasoline on a forest fire. Somehow the debate seems to have missed this point.
This ?fair? nonsense is also very dangerous. Just ask any three-year old? ?fair? is completely arbitrary. It?s like a Wiki version morality? if enough people agree on it, it?s fair.
In this case, ?fair? is defined in the sole discretion of those who are the direct beneficiaries of confiscating other people?s money. But let?s look at the numbers:
According to the IRS statistical database, the top 1% of income earners in the United States pays roughly 40% of all US individual income tax. They also get audited at least 5-times more than anyone else. Fair?
The other major complaint seems to be that the wealthy are ?abusing? capital gains rules in order to pay a 15% rate instead of a 35% rate. Duh. That?s why they?re wealthy, and stay wealthy? they don?t WORK for a living, they OWN assets which are subject to capital gains.
It seems so bizarre that a country once regarded as the freest, most economically enviable in the world would treat its productive citizens with such hostility.
This is where Eduardo Saverin comes in. The Facebook co-founder, who finds himself a few billion dollars richer this week, recently renounced his US citizenship. And, to the intelligentsia, it?s not ?fair?.
?Saverin needs to pay his fair share! He owes America more,? they whine, completely ignorant that the 30-year old is already forking over a $500+ million exit tax (which may end up in the billions).
Apparently it?s not good enough that the company Saverin co-founded has created tens of thousands of jobs, spawned entire industries, and produced oodles of new millionaires. Oh yeah, it?s also made things damn easy for the CIA, NSA, and FBI. You?d think Uncle Sam would pin a medal on his chest.
But no. Saverin left behind a lot of value and decided to move on to greener pastures in Singapore. Now the do-gooders in Congress are cooking up new legislation (the EX-PATRIOT Act) designed to permanently bar ?renunciants? like Saverin from re-entering the United States.
It?s interesting that, rather than change their ways of doing business and introducing legislation that provides incentives for productive people to come here and stay here, they maintain policies that chase people away, and introduce new ones to lock the door after they?re gone.
The lesson here (especially for natural-born citizens) is this: simply by accident of birth, you are born with a lifelong obligation that you never signed up for to finance the corrupt misdealings of the political class. And if you choose to abandon this obligation, they will bar you from ever entering your homeland again.
Regardless of what the propaganda says, this is not how a free society treats people. It might look and feel like a representative democracy on the surface, but under the hood it?s the modern day equivalent of feudal serfdom.
The land of the free has certainly fallen a long way
I am going to keep hammering on this point until candidates, especially Gary Johnson, wake the hell up and start listening not to me, but to what the people are saying:
TALLAHASSEE ? A new poll conducted by Public Policy Polling on behalf of Campaign for Fair Settlement, a coalition of grassroots groups, found that 49 percent of independent likely voters in Florida disapprove of the way President Obama has handled the housing crisis.
?The president should heed the message independent voters are sending and show stronger leadership on housing,? said Nish Suvarnakar, the group?s campaign manager. ?Obama can help homeowners, his campaign and the overall economy by more aggressively pursuing the banks? criminal acts and supporting meaningful solutions for underwater homeowners.?
"Nobody committed any crimes" doesn't cut it Gary. Your position on financial frauds is factual bull****, your refusal to address the issue is intentional, and the American people know it.
I said this back in 2008, I've been saying it since and I'm saying it again for 2012. In '08 I spent a lot of time, effort and money communicating this message to McCain's campaign. He ignored me despite a personal delivery of this message to Governors Ridge and Keating in Washington DC and he lost.
Here is an excerpt from the letter I sent and hand-delivered:
Force recognition of the losses by withdrawing artificial lending and price supports on housing, withdraw excess general liquidity and, at the same time, prosecute and (when and if proven guilty) jail those who committed fraud up and down the line, from investment bankers to mortgage brokers to realtors and appraisers to borrowers. This will cause the losses to be concentrated on those who committed the bad acts and force sound lending to take place going forward.
Was any of the position I put forward advocated and done? Nope.
What did I predict at the time?
Finally, I believe that before the election the capital markets may come to the realization contained in this document ? that the ?bad debt? issue is NOT limited to housing, but in fact is literally everywhere. If that occurs an all-out panic is essentially assured, and we could very easily see an S&P 500 trading under 1,000 before November.
Did it happen?
Yep.
I argue that as a direct consequence of McCain's outrageous and insane refusal to look at and acknowledge these facts we got President Obama.
Read the rest folks. Then, if you want to see Gary Johnson become relevant and actually have a shot at winning, relentlessly get on his ass to make this issue the centerpiece of his campaign.
This is an opportunity -- one that was squandered in 2008 by the Republicans and one that we, as Libertarians, are about to squander again.
Let me note that at the time the above letter was sent McCain was leading in the polls and there was no indication at all that the outcome we saw in the House and Senate would occur.
I'm sure there will be all sorts of name-calling that will come from some of the Libertarians as a consequence of this post. I don't care. This isn't about whether you think I should be "quiet" or "fall in line" as a good little soldier; it's about what I believe the key is to winning hearts, minds, and votes.
Gary Johnson cannot do any of the above if he continues to argue that "nobody committed any crimes" and make apologies for mathematically-bankrupt policies by government, central banks and private banks.
Math just is and the longer the stupidity is continued the worse the ultimate economic damage that must be absorbed will become. I will further make this prediction now: On the path we are on now we will have another economic and market dislocation before the election -- your choice, Mr. Johnson, is to either be in front of this issue and collect the votes that will be yours for having done so, or to cede all relevance by continuing to focus on divisive social issues while ignoring the screwing that our government has applied to the American population.
The scandal surrounding JP Morgan?s losses in its Chief Investment Office is not going away, and for good reason. Its trading book continues to lose money at an astounding rate. The most recent report estimates that the losses have increased by at least 50% more than the bank?s original loss estimates. The total damage is anyone?s guess at this point.
This fiasco is beginning to look a lot like accounting control fraud. The Justice Department and the FBI have begun criminal probes. The SEC is also investigating. So far, the objectives of these investigations are under wraps, but if I were an SEC or DOJ enforcement official I?d be laser-focused on bringing a Sarbanes-Oxley case against Jamie Dimon.
Sarbanes-Oxley emerged out of the Enron frauds. This law requires the CEO to certify that internal controls are operating effectively to give comfort to readers of the financial statements that the disclosures contained in the reporting are reliable. There are civil penalties for filing a false certification and criminal penalties, including jail time, for false filings found to be fraudulent. So far none of the obvious candidates like Dick Fuld at Lehman or Jon Corzine at MF Global have been prosecuted under the law.
Jamie Dimon looks like a very attractive candidate to investigate for SOX violations.
For starters, Dimon?s description of what happened rings SOX alarm bells:
First of all, there was one warning signal ? if you look back from today, there were other red flags. That particular red flag ? you know, we made a mistake, we got very defensive and people started justifying everything we did. You know, the benefit in life is to say, ?Maybe you made a mistake, let?s dig deep.? And the mistake had been brewing for a while, so it wasn?t just any one thing.
- Meet the Press, May 13, 2012
Warning signs and red flags were ignored. And they?ve apparently been ignored since 2007. Once again, echoing what happened at MF Global, risk managers who raised alarms about the riskiness of the positions in 2009 were replaced with more cooperative risk managers:
Several bankers said that risk controls were not sufficiently strengthened by Doug Braunstein, who took over as chief financial officer in 2010, another reason the bolder trades continued.
This indicates the firm was aware of deficiencies in the controls if other executives knew Braunstein had a mandate to improve them. These concerns are probably documented in the meeting minutes of the management committees responsible for risk, financial reporting and SOX compliance. It shouldn?t be difficult for the SEC to review these sources to determine who knew what and when about the state of the internal control environment.
JPM has issued quite a few financial statements since 2007 and 2009. If the controls and riskiness of the trades were as alarming and deficient as the managers indicate, then the reliability of the financial statements for the last 5 years are questionable. For a portfolio of this size and importance it?s inconceivable that the controls and risk issues were not reported up the management chain.
More damning is Dimon?s tacit admission that the controls designed to protect the firm from these sorts of blowups were ineffective, due to lack of intervention. Ignoring internal controls, or red flags as Dimon characterizes them, is a failure in the control environment. The failure to disclose inoperative key controls in the CEO certification is a violation the law.
That?s the big picture case. Recent reporting about the trade itself point to other areas that should be investigated for Sox violations.
When is a Hedge not a Hedge?
It appears that the JPM portfolio ?hedge? isn?t a hedge at all, at least according to current accounting standards. As Dina Dublon, CFO of JP Morgan Chase from 1998 to 2004, explained:
Dublon also pointed out that JP Morgan?s $200 billion mistake was not an accounting loss. ?There is a difference between accounting and economic valuations,? she said. ?You have a mark-to-market hedge against an accrual exposure that is not being marked to market. So you can have a gain or loss on the hedge, but you will not recognize the change in value of the loan portfolio, which is on an accrual accounting basis.
Translating this into non accountant language, JPM had a portfolio of assets which are available for sale. The change in the value of those securities is tracked, but since they aren?t considered to be trading assets, the change in value doesn?t hit the bottom line until they are sold. By contrast, positions held in trading books are ?marked to market,? meaning they are revalued as market prices change and the resulting gains or losses are reported on an ongoing basis.
JPM reported that this portfolio contains significant unrealized gains. Indeed, it realized some of those gains to offset the losses on the portfolio ?hedge?.
To hedge this portfolio JPM bought and sold credit default swaps. This portfolio ?hedge? is accounted for on a mark to market basis. This is odd since a true hedge should get the same accounting treatment as the asset it?s hedging. This indicates that the ?hedge? failed the hedge effectiveness test required by the accounting rules that would qualify it for hedge accounting treatment. More precisely the correlation between the hedge and the underlying isn?t strong enough to qualify it as a hedge.
Further confirmation that the ?hedge? wasn?t technically a hedge comes from Jamie Dimon himself.
In hindsight, the new strategy was flawed, complex, poorly reviewed, poorly executed and poorly monitored. The portfolio has proven to be riskier, more volatile and less effective an economic hedge than we thought.
As Dublon explained above, ?There is a difference between accounting and economic valuations.? Dimon takes care to refer to the ?economic hedge?, which is a term of art. It has no significance for financial disclosure purposes. It means whatever the user wants it to mean. If Dimon has not been vigilant in using the phrase ?economic hedge? in his disclosures and public comments about this portfolio then he?s made some false disclosures.
An ?economic hedge? is not a ?hedge? for financial disclosure purposes. ?Economic hedge? is a meaningless phrase. The abbreviated term ?hedge? when used to describe the trading portfolio embedded in the CIO book is a false characterization of the portfolio. He should not be permitted to describe this as a hedge in any of his comments about this book. At a minimum, he should be called on it every time he utters the phrase.
If It?s Not a Hedge Then What is It?
To recap, JPM owns a portfolio of securities it is ?economically hedging? with a portfolio of credit default swaps. The purpose of a hedge is to reduce the risk of adverse price moves on the underlying portfolio.
The CDS portfolio consists of CDS purchased and CDS sold.
CDS purchased for the portfolio may have been put on as a hedge against the ?available for sale? portfolio. But the CDS sold as a hedge doesn?t seem to make any sense. Selling CDS is equivalent to increasing the exposure to the underlying credits. The CDS sold don?t seem to have a risk mitigating role as part of a hedge, but to date JPM hasn?t provided the information to evaluate the overall portfolio.
It?s possible JPM was funding the CDS purchases by selling longer dated CDS and justifying the inclusion of the CDS sales as funding of the hedging purchases, but that would seem to be pretty expansive definition of a hedge. Perhaps ?economic hedging? as JPM defines it includes the funding sources of the combined ?economic hedge?. That seems ridiculous but the term is open to any interpretation.
Since the combined CDS portfolio is accounted for on a mark to market basis, the position may not have raised any red flags with readers of the financial statements as long as it was in the money. That appears to have been the case for an extended period, as evidenced by the enormous pay packages (over $100 million for the chief trader, the infamous Whale, if reports are to be believed) for the CIO desk. You don?t pay that kind of money to hedgers.
But the position has cratered this year and JPM was forced to disclose the losses on the CDS portfolio. To offset those losses JPM sold off some of its AFS portfolio. We?re still waiting for a precise definition of economic hedge from JPM.
This characterization raises additional alarms, since it appears that JPM effectively viewed the AFS/CDS portfolio combination as a net trading position. Normally, you wouldn?t sell your AFS portfolio (or enjoy the beneficial accounting treatment) unless there was an extraordinary exogenous event that caused you to liquidate the portfolio. Trading losses on a portfolio jointly managed as part of the AFS portfolio wouldn?t qualify.
This raises the question of whether JPM has correctly classified the available for sale assets since they acquired them. That?s a serious issue. If JPM misclassified a $200B position for years, it should be investigated for a host of regulatory violations and fraud.
For all intents and purposes the hedge portfolio is a separate trading book, and the financial reporting reflects that fact. There should be no way JPM should be able to spin this as a hedge of anything and deny the proprietary trading characterization the accounting treatment signifies.
What?s up With the Value at Risk?
Another area the SEC needs to investigate is the curious restatement of the VaR, which is a measure of risk used in disclosures to investors and regulatory reviews.
As discussed above, the risk exposure of the marked to market positions (the hedge porfolio) must be disclosed in the financial statements. JPM recently replaced the VaR model for this portfolio. It appears that the new model significantly understated the risk exposure and the bank has hastily reverted to an ?older? model. One benefit of a reduced risk exposure is a reduction in capital held against the portfolio. Under the new model JPM would only have been required to hold half as much capital on the portfolio, than it did under the original model
It is extremely unusual that a risk model for such a critical portfolio isn?t exhaustively vetted both internally and by the regulators before it was permitted to be installed. There was clearly a breakdown in the controls around that model replacement. This breakdown resulted in a significant and material underreporting of risk in the initial 1Q 2012 SEC reporting. The restatement validates that a material breakdown in internal controls existed before the model was implemented.
It also raises other questions. Blaming models for management failures has become a fairly standard first response during the financial crisis. When HSBC took their first big hit on their securitization business in the 2007 (for fiscal year 2006), and shut down their US securitization business, they attributed the losses to the discovery that their credit risk models were flawed. I have no doubt this was true, but the discovery of the flawed model also coincided with the beginning of the collapse of the RMBS market.
The revelation by JPM in the days immediately following the reports of the Whale?s trade, that the new VAR model seriously underestimated the riskiness of the portfolio, is more significant to a SOX investigation around adequacy of controls than an investigation into the adequacy of the model itself for risk management purposes.
This sort of ?whoops our models understated risk? is a convenient way to shift blame off management to ?model error? for a decision to take on additional risk. Given that easy profits in banking are vanishing, which are we to believe: that JPM, heretofore seen as a leader in the CDS marker, suddenly became grossly incompetent? Or did they decide to take on more risk and implement models that would mask from regulators and the public the scale of the wagers they were taking?
It also raises concerns about other models use for these portfolios. Many of the underlying assets in the portfolio are illiquid and complex securities. The models used for pricing these instruments and reporting valuations deserve additional scrutiny at this point as well.
It doesn?t look like JP Morgan made a bunch of egregious mistakes. It looks like they broke the law, at least the Sarbanes-Oxley law.
In 2007, the banks gambled on mortgages and lost, causing the largest global recession since 1929. They then gambled on European sovereign debt and lost. And now we hear J P Morgan Chase (JPM) just lost $2 billion on a derivatives' bet. Should this not be the last straw?
There are important lessons to be learned from all this, lessons the bank lobbyists don?t want anyone to hear.
Follow up:
Lesson One ? More Regulation Is Not the Answer
The immediate reaction to the JPM fiasco is to look at bank regulatory filings. But note: The New York Times reported that neither the US nor British regulators were even aware of the JPM unit that made the trades until they were tipped off by the media.
Are tougher regulations the answer? No. Banks given the latitude to do what they can do now will always be one step ahead of the regulators. We have had Basel I, II, and III standards. And despite these, we have had the US bank collapse, the Euro near bank collapse, and this latest loss.
How about this? In addition to bank presidents signing off and taking responsibility for all bank reports, let?s ask the regulators to take responsibility as well. The regulators would refuse. They have no idea what banks are really doing.
Do they know anything more than they did in 2008? I doubt it. I believe trying to regulate banks as currently constituted will never work. They are simply too complex to be regulated effectively.
Note further: the US banking crisis is not over yet. More than 50% of the 742 banks that borrowed money from the Troubled Asset Relief Program (TARP) had not even started to pay off their debts.
Lesson Two ? The Volcker Rule Is Not Enough
The Volcker Rule is in Dodd-Frank: Title VI, Sec. 619, (a)(1) reads:
?Unless otherwise provided in this section, a banking entity shall not? (A) engage in proprietary trading; or (B) acquire or retain any equity, partnership, or other ownership interest in or sponsor a hedge fund or a private equity fund.?in no case may the aggregate of all of the interests of the banking entity in all such funds exceed 3 percent of the Tier 1 capital of the banking entity.?
And Gabriel Sherman reported that banks were taking steps that made one think 'The Rule' had real teeth:
?Goldman Sachs ? ?Months before the Volcker Rule is set to kick in, star traders began to leave in droves.?
?Morgan Stanley - ??Morgan Stanley announced ?it was getting out of prop trading entirely.?
?Citigroup - ?Citigroup announced that it, too, was closing its prop-trading desk.?
And Sherman quoted JPMorgan Chase CEO Jamie Dimon:
?Certain products are gone forever?.Fancy derivatives are mostly gone. Prop trading is gone. There?s less leverage everywhere. Mortgages are back to old-fashioned conservative mortgages?.?
Volcker?s comment:
?My experience with ring fences is the gophers go underneath and the deer jump over it, and you get a lot of lawyers to help them.?
I was doubtful too. So I looked at the top three US banks. Table 1 does not suggest all trading is over.
Table 1. ? Bank Assets, Trading and Derivative Accounts, end 2011
Lesson Three ? Dodd Frank Is Just What the Bank Lobbyists Want
Let?s go back to the Dodd Frank text. Right after the Volcker Rule statement, it reads:
?Not later than 6 months after the date of enactment of this section, the Financial Stability Oversight Council shall study and make recommendations on implementing the provisions of this section so as to?promote and enhance the safety and soundness of banking entities?.?
In short, the bill calls for Federal financial regulators to study the measure, and then issue rules implementing it based on the results of that study. So who will be on this Financial Stability Oversight Council? It will be chaired by the Secretary of the Treasury Geithner ? Geithner is looking forward to a job in the financial industry. Other members: the Chairman of the Fed, the Comptroller of the Currency, the Director of the Bureau of Consumer Financial Protection Bureau, the Chairman of the Securities and Exchange Commission, the Chairperson of the Federal Deposit Insurance Corporation, the Chairperson of the Commodity Futures Trading Commission, the Director of the Federal Housing Finance Agency, the Chairman of the National Credit Union Administration Board, an independent member appointed by the President by and with the advice and consent of the Senate. With the exception of Bernanke, this will be a group of politically-driven bureaucrats.
Just after the Bill was enacted, I quoted from an article by Binyamin Appelbaum in the New York Times on what will happen next:
??Brett P. Barragate, a partner in the financial institutions practice at the law firm Jones Day, estimated that Congress had fixed in place no more than 25 percent of the details of that vast expansion?.Interest groups have been preparing for months. When the Consumer Bankers Association convened its annual meeting in early June, there was still plenty of time to lobby Congress. But the group?s president, Richard Hunt, told his board that the group should shift its focus to the rule-making process. The board voted to increase the group?s budget and staff. ?Now we hope to have a good give and take with the regulators on the best interests of the consumer and the industry,? said Mr. Hunt?.One clear consequence is a surge in the demand for lawyers with expertise in financial regulation, particularly those who have worked for regulatory agencies. Most of the major trade groups are hiring lawyers. The major banks say they are employing more, too.?
So what just happened? According to Senators Carl Levin and Jeff Merkley of Oregon, Dodd-Frank as currently drafted by the agencies charged with carrying out the new law, banks are allowed to amass a single, large bet as a hedge against possible declines in an entire portfolio of securities. Senator Levin:
?[That] ?is a big enough loophole that a Mack truck could drive right through it.?
Lesson Four ? What Dodd-Frank Missed
In earlier times, banks made money by getting paid more from lenders than they had to pay to attract deposits. In bankers? parlance, they made money on the spread (the interest rate on loans minus the interest rate paid depositors). Banks knew their survival depended on a positive ?spread?, so they were very careful to make low risk loans. And after making them, they stayed in touch and worked with the borrowers to insure interest payments were kept up to date.
Everything changed when banks started selling off their loans. Instead of lending to low risk individuals and firms and worrying about how their borrowers were doing, banks focused on generating commissions by selling off their mortgages and other loans. This constituted a fundamental change in incentive structures ? from worrying about the soundness of their loans to writing as many loans as they possibly could for commissions. Think about it: when loans are sold off, repackaged, and sold off again, nobody knows (or cares unless payments stop) who the borrower is. As long as banks are allowed to sell off their loans for commissions, they will not make sound loans. Why should they?
Lesson Five ? Why Banks Will Fight Against Any Limits on What They Can Do
The primary job of banks should be to protect our deposits. That is, they should invest them in safe loans and make a modest spread on what they earn on loans. Why has banking changed? It has changed because senior bank officials want to make a lot of money, and they can?t if they only do what banks are supposed to do. Today, taking risks are a win-win proposition for bank executives. If they guess right, they make a lot of money and justify their salaries. If they guess wrong, and the government bails them out. Have any of the big bank presidents lost their jobs as a result of the banking collapse in 2008? No.
I fully agree with Senator Merkley when he suggested to JPM President Dimon:
"If you want to be the head of a hedge fund, be a hedge fund?. Terminate your access to the Fed?s discount window, terminate your access to deposits, and then we have no quarrel.?
Where Do These Lessons Lead Us?
In 1933, Congress required that banks divest their trading arms. In 2012, Congress should insist that ?investment banks? divest their banking arms. If you look at the three ?banks? in Table 1, their derivative and other trading activities dwarf their deposit banking activities. We should require them to sell off their deposit banking activities. Spin them off in IPOs. This is what investment banks are good at doing. And then require all depository institutions to manage their own loans and not engage in trading for their own accounts. We should not allow banks to engage in any form of trading. It is too risky and regulation will not work.
But remember folks, Nobody committed any crimes (according to Gary Johnson, Obama and, I suspect, Mitt(ens) Romney.)
Last week, in response to an Overstock.com motion to unseal certain documents, the banks? lawyers, apparently accidentally, filed an unredacted version of Overstock?s motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they?ve been fighting for years to keep sealed.
For the un-initiated in this issue, Overstock went after virtually everyone in the big banking world, particularly Goldman, when their stock was shorted into the dirt. Their allegation was that the firm (and others) were counterfeiting their shares by selling short shares they never owned and couldn't locate for a borrow. In effect they were representing more shares in the market than existed, which is exactly identical to counterfeiting them in terms of economic impact, exactly as if you ran off some extra $100 bills on your office copier.
But what shows up here? Hubris and utter contempt for the law.
?**** the compliance area ? procedures, schmecedures,? chirps Peter Melz, former president of Merrill Lynch Professional Clearing Corp. (a.k.a. Merrill Pro), when a subordinate worries about the company failing to comply with the rules governing short sales.
Uh huh.
And against this backdrop we're supposed to expect that these very same banksters give a damn about the effective counterfeiting of United States currency that takes place when they emit unbacked credit, especially when the latter isn't considered an offense (but ought to be) while the former is and they thumb their noses at the regulations?
I repeat:
None -- absolutely none -- of the contenders in our Presidential contest will talk about this. Yet this issue -- the counterfeiting of financial assets, some unlawfully and some "legal", are how they fleece you, the common man, intentionally disadvantaging you as an individual and enriching themselves.
I will not support and in fact will and do actively oppose and will attempt to insure the defeat of any and all political candidates for a federal office who refuse to address this issue head on and deal with it, irrespective of party affiliation. I take this position because as a Libertarian I have signed the Libertarian oath which states:
I do not believe in the initiation of force to achieve political or social goals.
That includes fraud, and counterfeiting in all of its forms, whether recognized as felonious or not, is fraud.
Period.
We will not find solutions to our economic mess until we face what has been done and what is being done today, honestly examining the procedures and actions of these individuals and firms, stopping the abuses and holding the malefactors to account.
Jamie Dimon?s Hedge Fund - 17-05-2012
By Abigail Caplovitz Field, a freelance writer and attorney
Jamie Dimon, John Stumpf, and to a lesser extent, Vikram Pandit and Bryan Moynihan, are running massive hedge funds. They?re placing enormous, incredibly risky bets. ?Hot money? investors are giving them the cash to gamble because they all understand that you and me will make good on any losses, since we?ve started guarantying the banks-turned-hedge-funds as ?Too big to fail.?
The money flowing to these gamblers-in-chief is growing by double digit percentages, and includes so much borrowed money the ?leverage? may be six times what Lehman Brothers was doing when it flamed out. As long as this situation continues, a new financial crisis is inevitable, and the risks of it grow faster every day. There?s only one solution: cut these gamblers off from public support. The market will do the rest.
We cut them off by reinstating Glass-Steagall, a depression era law that kept the bankers in check for decades, until their Clinton-era lobbying prowess repealed it. Senate Candidate Elizabeth Warren has a petition going to do just that. Please sign it.
?Deposits?, the Word that?s Hiding the Hedge Funds
The information on the bailed out bankers? hedge funds I just summarized comes from this incredibly important Bloomberg interview of Amar Bhide. (H/T to Yves Smith at Naked Capitalism.) Bhide is a professor at Tufts University who knows a lot about the financial services industry, as the excerpts I discuss below make clear. In a little more than four minutes, Bhide detailed how and why JPM ?is a systemically important, structurally defective bank. As are all the other megabanks.?
Crucially, Bhide debunks the bailed-out-banker PR spin that his Bloomberg TV interviewers parrot, and he schools them in other ways too. If enough people are clued in to what is really going on, we will break up the banks and restore Glass-Steagall. But there?s no chance of that so long as major media embraces the bankers? key word for their hedge fund money: ?deposits?.
Hedge Fund Money is the ?Surplus Deposits?
The media keep talking about the money JPMorgan lost as ?surplus deposits? or ?excess deposits?. You know what deposits are, right? It?s your money at the bank, and mine. And the business?s down the street; even big businesses. It?s the cash we all give the banks for safe keeping.
But that?s not what Ina Drew was ?investing.? She playing hedge fund, speculating with hot international money.
Here?s Bhide?s first attempt to get Media Guy and Media Gal (his Bloomberg interviewers) to understand:
There?s this amazing narrative I keep hearing. The investment office exists to quote unquote ?invest surplus deposits.? It isn?t the case that the surplus deposits walk in through the door. JP Morgan goes out and solicits these deposits in hot markets in order to invest them, in order to speculate with them.
Later in the interview, Bhide twice has to revisit the point because the interviewers have bought into the imagery of the bankers? word ?deposits.?
Media Guy:
But let?s explore a little bit what the bank does. We?re taking in deposits, we?re in a deleveraging economy, loan growth is anemic, what do you do with these deposits??
See his subconscious bias in action? ?Taking in deposits.? That?s ?what the bank does? all right, the retail bank branch. The Chase that you and I might use. But the hedge fund branch, the ?Chief Investment Office?, doesn?t ?take in deposits.?
Bhide responds:
I think you have the chain possibly a little bit off. The deposits aren?t deposits put into the bank by individuals or even commercial deposits. These aren?t IBM?s deposits. These are deposits that JPM proactively goes out and solicits from hot money markets. If it didn?t solicit these deposits it would not have them to invest with.
But Media Guy isn?t ready to listen yet. Watch how he recites some data and then pronounces bank talking points, including the taking in deposits line.
Media Guy:
Well, I don?t know, the data suggest a couple of things. On the first hand, on a one-year basis JPM?s deposits on hand has grown by 13%. Wells Fargo?s have increased 11%. Citigroup 5%, Bank of America 2%. All of these banks are fighting for the same deposits. Either JPMorgan is doing something uniquely well, or, people think it?s a safer bank and Wells Fargo is a safer bank to put their money with. That?s a choice.
See how his words still evoke you and me? Notice too the ?fortress balance sheet? meme in ?safer bank?. Media Gal piles on that one: ?Or they think Jamie Dimon?s is the risk manager.?
Bhide tries again:
Again, the word deposits is so misleading. This is hot international money. Hot international money going wherever it sees too big to fail institutions, so they?re ?depositing? this money, more or less, with the US Government.
To recap: Jamie Dimon and his bailed out counterparts are soliciting money, money that is looking for a hedge fund to gamble with. Dimon?s sales pitch has two parts: 1) I won?t lose your money, because I?m the greatest risk manager ever was (very Barnum of him) and 2) I can?t lose your money, because I can stick my hand into Uncle Sam?s pocket if I really need to, as deep into his pocket as I want.
The Bankers Are Going All In With Our Money
The hundreds of billions in play right now are real money. But the numbers are system threatening when you consider the ?leverage.? Just like we shouldn?t call the solicited hot international money ?deposits?, we should say ?cash advance to gamble with? instead of ?leverage.? Because that?s what ?leverage? is in the hot money, hedge fund context.
Bhide:
Leverage upon leverage. The ?deposits? are leveraged 10 to 1. And the investor gets quote unquote ?invested? by the investment office for possibly another 10 to 1. Possibly 20 to 1. So the activities of the investment office are a levered fund, probably levered 200 to 1. Levered on the backs of guarantees by you and me. And this is an enormous threat to the public good.
Let?s be clear why: enormous bets can lose and that?s bad enough when we taxpayers stand behind them. But hugely levered bets not can not only lose, they increase the losses by an order of magnitude or two, and can bring a daisy chain of other institutions into play?the money was borrowed from somebody, right? And don?t kid yourself about how big the risks are that these funds are taking. As Bhide says:
What scares me is not the $2 billion that JPMorgan lost. It?s the record $19 billion profits that JP Morgan made. How on earth do they make a $19 billion profit quote unquote ?putting customers first? in an economy that?s supposedly slowing down and their customers are flat on their backs?
By placing really big, highly leveraged, very risky bets. That?s how.
The Mythology of Risk Management
Bhide makes one other extremely important point: the idea that these bailed out bankers are managing their hedge funds? risks is complete b.s.; it?s fundamentally an impossibility.
Here?s his first try to get Media Guy and Gal to understand:
[Dimon?s] managing an organization of over 200,000 people scattered all over the world. In dozens and dozens of businesses. This is not a ?Berkshire Hathaway who is on top of the specific trades that he?s doing. How could he possibly know?
Media Gal: ?It?s his job to know.?
Bhide: ?Well it?s a job that no human being can do.?
But the obviousness of what Bhide?s saying doesn?t sink in, so later on he tries again.
Media Gal: ?Do you think the risk managers understand the type of products these traders are trafficking in??
Bhide:
Well it?s one thing to understand the type of product generically, it?s another to know every single trade. The people running these very large organizations who are taking these very large audacious risks ought to be on top of every single trade. I know successful hedge fund managers, they make a fortune, it?s a well made fortune.
Media Guy:
So you?re saying if the CEO?cannot have enough visibility into these individual positions and understand the risks they present there?s no way that his or her institution should even be dabbling in this stuff.
Bhide: ?Absolutely. I mean I have nothing against these individual instruments per se??
Media Gal: ?So you?re saying the derivatives products, it?s not them. It?s the way they?re being managed??
Bhide: ?I?m saying they don?t belong in JPMorgan, they do not belong in a large commercial bank, period.?
Media Gal: ?Then where do they belong??
Bhide: ?In a specialized hedge fund!?
So there it is. Jamie Dimon and his peers are running massive hedge funds that are getting more massive (remember, Dimon?s grew by 13% last year alone), taking enormous, highly leveraged risks they cannot manage, secure in the knowledge that the American taxpayer is guaranteeing their bets.
We are accelerating toward our next, and larger, financial crisis. Time to bring back Glass-Steagall. Sign the petition, please. And watch the Bloomberg interview of Amar Bhide. And pass them both on.
This is the story of what happens when an average couple is up against a giant, wealthy, powerful bank.
Norman and Oriane Rousseau were one more couple pushed by a huge, greedy bank to the brink of homelessness. On Sunday, desperate and with nowhere to go, Norman Rousseau shot himself.
This is the story of what happens when an average couple is up against a giant, wealthy, powerful bank. Unfortunately the result is what the result always is when people are on their own against the wealthy and powerful: the bank ends up with all of their money, takes their house to sell and throws them out onto the street. In this case the bank is Wells Fargo.
The quick version of this terrible story is that Norman and Oriane Rousseau of Newbury Park, California were scammed into a predatory mortgage. But they made their payments anyway, always paying with a cashier?s check in person at the same branch. Then one day the bank misapplied their payment and said they still owed the money. This started a long, nasty process that led to the bank evicting the Rousseaus from their home.
Here?s the shocker: right at the start the Rousseaus came up with proof that the bank had received the payment and had cashed the check. But the bank continued to claim it had missed the payment, gave the Rousseaus the runaround, started applying fees, and used it as an excuse to foreclose on the house anyway.
The Rousseaus fought back, the bank dragged it out for so long and pulled so many tricks, getting its way every step of the process, until this last Sunday Norman Rousseau finally gave up and shot himself in despair ? two days before the scheduled eviction, Tuesday, May 15. (The Rousseau?s lawyer just said he was able to win a 2-week delay.)
It is a tragic story, but when you dig into the details it becomes much worse.
See for yourself. The court case filed by the Rousseaus puts on the record the facts as they state them. The complaint reads as one more story like so many others that we have been hearing about the abuses by banks and banksters and the tricks they pulled on people. Never mind the big ?National Mortgage Settlement? ? this story shows that the abuses are still going on, with the same tragic consequences. The following describes the facts in the lawsuit filed in Norman Rousseau and Oriane Rousseau vs. Wells Fargo Bank in the Superior Court of California, County of Ventura.
In March 2000, Norman and Oriane Rousseau put 30 percent down to buy a house at 580 Wilshire Place, Newbury Park, CA. In the following years they were solicited to refinance their loan. In October 2007 they met with the loan officer and ?stated that they were only interested in obtaining a conventional 30-year, fixed-rate loan, and explained their desire to have consistent payments over the life of the loan.?
They were ?assured ? that they could significantly reduce their monthly payments, by more than $600 per month, with a lower interest refinance loan.? The bank assured them that the Payment Option ARM was ?the new industry standard? that had ?historically low rates that were continuing to decrease? and in ?the worst case scenario [they were] assured that historical data for the index indicated that changes in interest rate were slight, and if an increase should occur it would have a negligible effect on their monthly payments of no more than a few dollars.?
They should ?expect to refinance within the next two years to take advantage of even more favorable interest rates and as the steadily rising housing values increased the amount their equity in the property.?
There were lots of assurances, smiles, don?t worry, we?re taking care of you, etc.
In May 2009 the bank claimed the couple had missed their April payment. They proved they had made a payment in person at the bank, using a cashier?s check and that the check had been cashed by the bank. The bank then claimed they had ordered a stop payment on the check, even though a cashier?s check payment cannot be stopped.
The runaround began. The bank began harassing them for payment, sometimes as many as six-eight calls per day, sometimes even late at night. On August 3, 2009 the bank claimed the Rousseaus hadn?t paid June or July?s payments either, demanding $3,406.50. But then on August 8 the bank assured them they were current on payments. Then the bank again claimed it had not been paid and that the bank had been trying to contact them without success, and that they now owed $3,478,25.
The Rousseaus hired a lawyer. From the lawyer the Rousseaus learned that the loan they received was not the loan they were promised, including, ?the 7.2% interest rate for the ? loan was actually higher than the 2006 loan and greater than the 6.8% quoted,? had enormous fees, and the bank had increased the income the Rousseau had stated, from $76,000 to $136,800.
In other words, the lender had scammed them to get those fees, which was a widespread practice at the time.
This continues, with the bank scamming, lying, obfuscating, ignoring, contradicting, even producing signatures it claimed were the Rousseau?s but were not, every step of the way. And, of course, adding late fees to the amount it claimed was due.
In September the bank stopped accepting payments at the branch, saying checks had to be mailed. About the same time the Rousseaus applied for a loan modification. They were told they were accepted for review in the loan modification program, were told the ?pre-foreclosure? notices were ?routine? and not to worry about them. Their lawyers were handling getting documents to the bank, the bank kept claiming it never received them, etc.
On and on this went, with the bank telling them they were in the loan modification program while demanding money then refusing to accept money and demanding documents while saying it had received them, and all the while proceeding with foreclosure notices. Then they were told they were denied their loan modification, went through a process to reinstate the loan, back and forth, late fees, loan fees, unspecified additional fees, more fees, then some fees, then some non-payment fees, and then given ONE HOUR to send payments to TEXAS and it goes on and on.
Read the court case the Rousseaus filed. It?s all there, and is even worse than this summary.
This is a story of what happens when, as Senator Dick Durbin said of the Senate during the effort to pass legislation to get the banks under control, ?Frankly they own the place.?
This last Sunday the bankers claimed one more victim. Norman Rousseau shot himself at 10 in the morning. Oriane Rousseau doesn?t even have the money to bury her husband, she is looking to the VA for help. If you want to help, please contact their attorney, Chris Gardas: chrisgardas@comcast.net
In part one of this research, we documented that fact that banksters have conquered the world by obtaining a monopoly on creating money from nothing and loaning it at interest.
The IRS and Federal Reserve
Like the Federal Reserve, the IRS was created in 1913. The purpose of the IRS is to enslave citizens by stealing the value of their labor through collecting income taxes.
Tax Freedom Day 2012 arrives on April 17 this year, four days later than last year due to higher federal income and corporate tax collections. That means Americans will work 107 days into the year, from January 1 to April 17, to earn enough money to pay this year?s combined 29.2% federal, state, and local tax bill. (Source)
That shows, on average, that the IRS and other tax collectors steal 3.5 months of each Americans? labor time each year, or one-third of earned income. Of course, many Americans pay much higher tax rates, with a top individual Federal tax bracket of 35%.
The private Federal Reserve is one of largest holders of U.S. government debt, owning approximately $1.65 trillion in U.S. Treasury securities. Much of the collected federal income taxes go towards paying interest on the national debt to the Fed for money that it created out of nothing and loaned to the government at interest. This unfortunate reality has been verified by G. Edward Griffin, Joe Plummer, IRS whistleblower, Joe Banister, and many others.
Fractional Reserve Banking
The rich rule over the poor, and the borrower is servant to the lender. (Source)
Your local bank also profits from the banking fraud known as fractional reserve lending. While the bankers may wear suits and appear respectable, they are actually looking to use your deposit to make themselves ten times wealthier or enslave you in debt that they create out of nothing should you be a borrower. It works like this:
I set up a Rothbard Bank, and invest $1,000 of cash. Then I 'lend out' $10,000 to someone, either for consumer spending or to invest in his business. How can I 'lend out' far more than I have? Ahh, that's the magic of the 'fraction' in the fractional reserve. I simply open up a checking account of $10,000 which I am happy to lend to Mr. Jones. Why does Jones borrow from me? Well, for one thing, I can charge a lower rate of interest than savers would. I don't have to save up the money myself, but simply can counterfeit it out of thin air. Since demand deposits at the Rothbard Bank function as equivalent to cash, the nation's money supply has just, by magic, increased by $10,000. The inflationary, counterfeiting process is under way.
In short, the money you borrow from a bank is created out of nothing. On the other hand, you must actually produce real goods and services to earn money to pay back the bank plus interest. Of course, the largest banks, which most likely own shares of the Fed as discussed in Part 1, make the most money from this magical fraud.
When banksters create money faster than the economy grows, the purchasing power of the dollar declines which is known as inflation. There is no question that each year Americans work harder for less money (reduced purchasing power) thanks to the private Fed?s criminal inflationary policies.
Home Mortgage Slavery
The great jurist Sir Edward Coke, who lived from 1552 to 1634, has explained why the term mortgage comes from the Old French words mort, 'dead,' and gage, 'pledge.' It seemed to him that it had to do with the doubtfulness of whether or not the mortgagor will pay the debt. (Source)
A thirty-year-debt-slave is someone that has a home mortgage (excluding cash-flowing investment property). First, the debtor is borrowing money that was created out of nothing through fractional reserve lending.
Second, after years of making payments, the debtor may become injured or unemployed. The bank will then foreclose and sell the house. The bank will keep the proceeds of the sale and all the principal and interest that the debtor paid prior to going into default.
Given the fact that home prices are back to 2001 levels thanks to the credit bubble created by the private Federal Reserve and large banks, many people have little or negative home equity.
Third, the cost of the house is almost double the sale price when thirty years of interest payments are included.
For example, if a debtor buys a $250,000 house and puts down 20 percent ($50,000), the debtor will borrow $200,000 from the banksters. The interest on a $200,000 loan at 5% over thirty years is $189,511.57 (which is interest paid on a loan created out of nothing). Therefore, the total cost of the $250,000 home is actually $439,511.57 (not including property taxes and insurance). Go ahead, run the numbers yourself.
One must determine if it is better to be a mortgage debt slave or a rent debt slave.
Banksters Starving/Robbing Billions of People Worldwide
Almost half the world, three billion people, live on less than $2.50 per day and 80 percent of humanity lives on less than $10 per day. According to UNICEF, 22,000 children die each day due to poverty. That is, people are dying because a bank did not create enough digits on a computer screen (money) for them to buy food. This is no accident; it is the banksters? move to depopulate the planet.
John Perkins wrote Confessions of an Economic Hit Man. During the 1970s he worked as an economic planner for an international consulting firm. In his book he describes how the globalists force the economic hegemony of the banksters, the IMF and World Bank on victim nations in the Third World.
Perkins? job was to negotiate huge loans to third-world nations, loans that the banksters created out of nothing and which they knew the borrower nation could not repay. Once the borrower defaulted, the banksters would move in to steal the nation?s natural resources and gain control of its political system and economy.
Several third-world leaders had integrity and refused to enslave their nations to the money changers. They also refused the cash, luxury, cocaine and hookers Perkins offered them on behalf of the banksters Perkins says that leaders who would not play ball would eventually be overthrown in a CIA sponsored coup or assassinated.
In the United States, the current economic depression caused by the Federal Reserve has resulted in 44 million once independent Americans relying on the government for food assistance. Many food assistance recipients hold college and post-graduate degrees.
Additionally, up to 1 million U.S. families are too broke to go bankrupt, that is they don?t have the money to cover legal fees.
Funding Wars
The banksters also support wars (often arming and funding both sides) by creating money out of nothing.
Since the beginning of the Iraq War in 2003, the New York Federal Reserve shipped tens of billions of dollars to the government and central bank of Iraq, allegedly for reconstruction. Between 2003 and 2008, over $40 billion in cash was secretly shipped in trucks from the New York Federal Reserve compound in East Rutherford, New Jersey to Andrews Air Force Base outside of Washington, where they were then flown by military aircraft to Baghdad International Airport. In just the first two years, the shipments of dollar bills weighed a total of 363 tons.
But much of that money was stolen, misappropriated, and simply lost. Despite Congressional hearings and reports, nobody is saying exactly what happened to the bulk of the money. Most likely, the stolen fiat dollars, secretly printed out of thin air to fund the US government?s illegal war and senseless slaughter of Iraqis, went towards intricate contracting schemes and corrupt Iraqi and American officials.
Global Government Run by Banks
The endgame for the banksters is ?nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.? Once the system is perfected the human population will be culled.
The first president (appointed) of the European Union, Belgian Prime Minister Herman Van Rompuy stated that 2009 was the first year of global governance with the establishment of the G20 in the middle of the financial crisis. Therefore, the banksters already have their planetary regime established and the lives of 90% of the population are threatened.
Solutions
Clearly banksters are the ultimate sewers of iniquity, reaping where they have not sewn. To defeat them and their plans to cull the population, the private Federal Reserve must be abolished when its 100-year charter expires in 2013. Fractional reserve lending must also be abolished.
We must educate others as to the issues in this article and the nature of the real government. No one would invest in Enron or trust MF Global today because their crimes are pubic knowledge. Likewise, the banksters will not be able to continue their crimes when they become common knowledge.
Boycotting the largest banks is a necessity as is refusing to own shares of their stock.
David Icke?s excellent lecture on the corrupt money and banking system is worth sharing with others.
As Coolio said, we spend our lives living in a gangsta?s paradise. What he failed to mention is that throughout history the most sinister and dangerous gangsters are banksters. There is no shortage of historical quotes to prove this point.
Gerald Celente points out that the only time the Prince of Peace became violent is when he cleansed the temple of the money changers.
? Jesus went up to Jerusalem. In the temple he found those who were selling oxen and sheep and pigeons, and the money-changers sitting there. And making a whip of cords, he drove them all out of the temple, with the sheep and oxen. And he poured out the coins of the money-changers and overturned their tables.
Today, the money changers have conquered the world through numerous frauds including debt-based currencies issued by their privately owned central banks, fractional reserve lending, fiat currencies and political think-tanks such as the Council on Foreign Relations, Trilateral Commission and Bilderberg Group, which control all major political parties.
To free the world of debt slavery and a totalitarian world government run by banksters, it is necessary to understand these frauds. Let us start with the private banking cartel known as the Federal Reserve, which issues and controls the value of the world?s first reserve paper currency, the U.S. dollar.
The Private Federal Reserve
It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning. - Henry Ford
The world financial system seems complex but it is actually very simple: a cabal of banksters has conquered the world by lending people and governments money that does not exist and charging interest on it.
The Creature from Jekyll Island documents the following individuals drafted the Federal Reserve legislation in secret at Jekyll Island in 1910 (page 5 of the fourth edition):
Paul Warburg, a partner of international investing giant Kuhn, Loeb & Company, a representative of the Rothschild banking dynasty in Europe, brother to Max Warburg who was head of the Warburg banking consortium in Germany.
Senator Nelson Aldrich: business associate of J.P. Morgan and father-in-law to John D. Rockefeller, Jr.
Frank Vanderlip: president of National City Bank of New York, one of the most powerful banks at the time, representing William Rockefeller and Kuhn, Loeb & Company.
Henry Davidson: senior partner of J.P. Morgan.
Charles Norton: president of J.P. Morgan?s First National Bank of New York.
Abraham Andrew, Assistant Secretary of the U.S. Treasury.
Benjamin Strong, head of J.P. Morgan?s Bankers Trust Company.
Bankster stooge Woodrow Wilson signed the Federal Reserve Act into law on December 23, 1913. On that day, the U.S. government officially transferred its power to create money and regulate the value thereof to the world?s wealthiest private banksters. Furthermore, the U.S. government would now borrow money from private banks, enslaving its citizens with the national debt, rather than creating its own money interest free.
Former Federal Reserve Chairman Alan Greenspan publicly brags that the private banking cartel is above the law and creates unlimited money out of nothing to loan its insolvent borrower, the U.S. government.
David Lang, a Federal Reserve employee, admits that the Federal Reserve is a private corporation that pays dividends to its undisclosed shareholders. The head of security at the San Antonio Federal Reserve also admits the institution is private.
The private Federal Reserve?s website says that the Fed:
? is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.
The 12 regional Federal Reserve Banks, which were established by the Congress as the operating arms of the nation's central banking system, are organized similarly to private corporations -- possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.
Despite its pathetic propaganda encouraging us to practice doublethink, the Federal Reserve freely admits that it is privately owned, is a monopoly empowered by Congress, now operates above Congress and the president, and pays its private undisclosed shareholder dividends.
So who receives dividends from owning shares of the private Federal Reserve? Charts created by the House Banking Committee Staff Report of August, 1976 reveal the following people and companies own shares in the Federal Reserve: Rothschilds, J.P. Morgan, the Warburgs banks, Lehman Brothers, Kuhn, Loeb & Company, Jacob Schiff, William Rockefeller, David Rockefeller/Chase Bank, and many others.
Looting America
A more recent study found that Bank of America, JP Morgan Chase, Citigroup, Wells Fargo and HSBC now have the power of the Federal Reserve at their fingertips.
That makes sense because after years of making bad loans with artificially low interest rates and foreclosing on millions of American homes, the Fed bailed out the following banks with at least $16.9 trillion according to page 131 of the first GAO audit:
Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
and many more including banks in Belgium of all places
However, other economists estimate the bankster theft and financial raping of dollar holders since 2008 is $29 trillion.
That?s right, largest banks, many of which appear to own shares in the private Federal Reserve, bailed themselves out in excess of the U.S. 2010 GDP ($14.59 Trillion - value of all goods and services produced in the U.S. for the year). Yes, even the fictional national debt of $15.7 trillion dollars could have been paid-off for less than the bankster stole.
Why didn?t the Federal Reserve offer you a bailout?
Dollar Doomsday
The collapse of the dollar, a fiat currency, is guaranteed as there is always more debt and interest owed on the debt than there is money in circulation. It is important to understand that the real national debt, which increases every year, is not just a measly $15.7 trillion. When you factor in unfounded liabilities like Social Security and Medicare, the actual debt is $127 trillion - $211 trillion.
There is no question that the dollar?s doomsday will arrive, the question is when.
Paul Adams is your humble servant. Those that oppose the banksters and their New World Order have not the spirit of fear; but act with power, love, and a sound mind.
How would Obama supporters feel if they learned that their beloved President was running far-to-the-authoritarian-right of arch-hawk Charles Krauthammer on one particular civil liberties issue?
Sadly, the answer is that the most Obama supporters probably wouldn?t feel very much at all, because support for Obama has always predominantly been emotion-driven (he promised change ?you can believe in?, not ?change that I can logically convince you will be beneficial?).
But I digress. Charles Krauthammer weighed in on FOX yesterday to telegraph his opposition to bringing drone warfare to the skies of America.
Krauthammer said:
I?m going to go hard left on you here, I?m going ACLU. I don?t want regulations, I don?t want restrictions, I want a ban on this. Drones are instruments of war. The Founders had a great aversion to any instruments of war, the use of the military inside even the United States. It didn?t like standing armies, it has all kinds of statutes of using the army in the country.
I would say that you ban it under all circumstances and I would predict, I?m not encouraging, but I am predicting that the first guy who uses a Second Amendment weapon to bring a drone down that?s been hovering over his house is going to be a folk hero in this country.
The Founders we?re deeply opposed to the militarisation of civil society. There is all kinds of aversions to it and this is importing it because, as you say, it?s cheap, it?s easy, it?s silent. It?s something that you can easily deploy. It?s going to be, I think the bane of our existence. Stop it here, stop it now.
And this is a big deal. A recent report by Micah Zenko noted:
Worried about the militarization of U.S. airspace by unmanned aerial vehicles? As of October, the Federal Aviation Administration (FAA) had reportedly issued 285 active certificates for 85 users, covering 82 drone types. The FAA has refused to say who received the clearances, but it wasestimated over a year ago that 35 percent were held by the Pentagon, 11 percent by NASA, and 5 percent by the Department of Homeland Security (DHS). And it?s growing. U.S. Customs and Border Protection already operates eight Predator drones. Under pressure from the congressional Unmanned Systems Caucus ? yes, there?s already a drone lobby, with 50 members ? two additional Predators were sent to Texas in the fall, though a DHS official noted: ?We didn?t ask for them.? Last June, a Predator drone intended to patrol the U.S.-Canada border helped locate three suspected cattle rustlers in North Dakota in what was the first reported use of a drone to arrest U.S. citizens.
But I?m going to go even further than the threat to civil liberties: I am fairly certain that the militarisation of U.S. airspace by drones is itself a huge national security threat. While Zenko notes that drones ?tend to crash?, the downing of a U.S. drone over Iran late last year ? supposedly via an Iranian hack ? seems to suggest that it is possible for drones to be commandeered by hackers or hostile powers. And if that?s not the case today, then it almost certainly will be tomorrow. Putting drones into the air above the United States is like going to sleep on a bed of dynamite. It?s an invitation to anyone to try and commandeer a plane, possibly one stocked with high-tech weaponry.
The Federal government would do well to quit groping Grandma at the TSA checkpoint, and start worrying about the potential negative side-effects of systems they are putting into place. All the TSA security theater in the world cannot stop a determined hacker from commandeering a drone.
Charles Krauthammer is right (and after the Iraq invasion which he championed I never thought I would say that): it could be the bane of our existence. Stop it here. Stop it now.
Throughout the financial reform debate, the finance industry has waged an unprecedented assault on the democratic process, spending an estimated $1.4 million per day to influence Congress and hiring 70 members of Congress and 940 former federal employees to lobby on their behalf.
The six biggest banks?Goldman Sachs, Bank of America, JPMorgan Chase, Citigroup, Morgan Stanley, and Wells Fargo?account for a disproportionate share of this activity. In the two years since the first federal bailout of a big bank (Bear Stearns), these banks and their principal trade associations have hired over 240 former government insiders as lobbyists and spent hundreds of millions of dollars on an influence game designed to thwart reform, shape bailout programs and maintain their status as ?too-big-to-fail? institutions.
The big banks have employed an unrivaled network of in-house lobbying teams, hired guns, industry associations, front groups and behind-the-scenes influence peddlers with deep connections to Congress and the Obama administration, including the leadership of the House Financial Services Committee, the Senate Banking Committee, the Treasury Department, and key regulatory agencies.?
The lobbying spree is taxpayer-funded?it follows $160 billion in bailouts from Congress and trillions in cheap loans from the Federal Reserve. And as their influence has come to be viewed as increasingly toxic in Washington, the banks have shifted segments of their political activity to a ?shadow lobby? that includes such front groups as the U.S. Chamber of Commerce.
Many of the current big-bank lobbyists were architects of the too-big-to-fail banking regime while they were employed in Congress or elsewhere in the federal government, and they are now drawing lucrative salaries from the banking behemoths they helped create. Now, on a range of issues, the big banks? armies of lobbyists have scored victories that assure the continued existence of Wall Street?s casinos, despite the threat they pose to the American economy.
Findings from the report
?243 lobbyists for six big banks and their trade associations?used to work in the federal government ? 202 in Congress, the rest in the White House, Treasury, or at a relevant federal government agency. That?s equivalent to?40 revolving-door lobbyists per bank.
?This includes 33 chiefs of staff, 54 staffers to the House Financial Services Committee and Senate Banking Committee (or a current member of that committee) and 28 legislative directors. ?Many of the revolving-door lobbyists were key architects of financial deregulatory legislation during their time as congressional staffers, including the Financial Services Modernization (Gramm-Leach-Bliley) Act of 1999 and the Commodity Futures Modernization Act.
?The six big banks and their trade associations have spent close to?$600 million?since the first major federal bailout of Bear Stearns in March 2008 on lobbying, trade association activity and political contributions.?
?Citigroup employs 55 revolving-door lobbyists, more?than any other big bank or financial industry trade association. The federal government was until recently Citigroup?s largest shareholder. Other banks are also employing huge lobbying armies: Goldman Sachs with 45, JPMorgan Chase with 32, Morgan Stanley with 19, Wells Fargo with 14, and Bank of America with 12. ?The top big-bank lobbies, the Securities Industry & Financial Markets Association and the American Bankers Association, have hired 84 revolving-door lobbyists.
?The top big-bank lobbying firm in Washington is Elmendorf Strategies, founded by Steve Elmendorf, former chief of staff to Rep. Dick Gephardt.? Elmendorf?s financial team includes former top staffers to Senate Majority Leader Harry Reid, Maryland Sen. Paul Sarbanes, and Gephardt. The firm represents the most powerful Wall Street banks and associations, including Citigroup, Goldman Sachs, the Financial Services Forum, and the Securities Industry and Financial Markets Association. Other top lobbying firms include the Podesta Group and Porterfield, Lowenthal, & Fettig.
?Senate Banking Committee chair?Christopher Dodd (D-CT)?leads all current members of Congress, with five former staffers now working as big bank lobbyists. Banking Committee ranking member?Richard Shelby?(R-AL)?and members?Chuck Schumer (D-NY) and Tim Johnson?(D-SD)?each have four.
?Big banks are hiding lobbying activities in a burgeoning shadow industry?of generic business associations, ad hoc coalitions and front companies. Government bailouts and partial federal ownership have made it difficult for big banks to ramp up direct lobbying; instead, they are routing their dollars through this shadow lobby.
?Sullivan & Cromwell, the firm defending Goldman Sachs in its Securities and Exchange Commission fraud suit, secured the?most lucrative big bank lobbying contract in 2009, a $520,000 deal with Clearing House Payments Co. ? a company owned by JPMorgan Chase, Wells Fargo, Citigroup, Bank of America, and several other banks. The firm also lobbied on behalf of Goldman Sachs during the same period. In a past financial reform fight, lawyers at Sullivan & Cromwell lobbied on behalf of Enron, and appear to have helped craft the ?Enron loophole.?
Jamie Dimon, pompous ass of JP Morgan Chase, has gotten himself into an awkward situation. Losing $2 billion dollars, or was it three, or four or more, maybe much, much more. Somewhere in that massive financial fog known as derivatives, $865 trillion has gone missing so what is a couple of billion?
His difficulty at the moment is in defending his position that regulations that would have prevented this loss are unnecessary.
But what if it?s way more than a few billion? Could this be the first schism that foretells the avalanche of Euro and other nation defaults?
It isn?t so much that I?m sure that it?s coming, it is more that I do not see any way it can be avoided.
I spend way more time than I would like talking about the global economic meltdown, just now drawing to the close of its first quarter, and the thieving, rotten bastards who have flung us into an economic abyss.
We have a long way to go before anything ever improves because before anything can get better we have to change the system.
I?m not talking about tinkering with the system. There is nothing at all wrong with the system; it is working perfectly for the people who designed it, own it and run it; and, Brother, that ain?t you and me.
This thing they call capitalism and a free market economy couldn?t be anything further from it. The problem is that only about one out of a thousand people actually know anything about banking.
I was once one of you. I thought banking was sort of obvious and mundane. People need a place to keep their money. Innovation needs capital to create productivity.
Back in the day, it was all pretty local and that was about it. Bankers were still the richest guys in town and anyone who ever played Monopoly knows that you want to be the bank.
Those who really understand banking don?t talk about it in public. They are either part of the secret society or they have learned that, in discussions of the economy, if one actually knows how the banking system works and attempts to illuminate others, it will earn them a reputation for being odd.
Knowing the secrets of banking is like seeing a UFO. Who would ever believe you?
And, that is part of the problem. Released from our shackles, we can see that the shadows on the wall are not reality, but they are all we have ever known.
I used to think I was pretty savvy. But, I?m just country boy smart, not felonious smart. I had no idea what was going on. None. Even when I had been to the bottom of the rabbit hole, I was stunned and dumbfounded for six months. It was just so hard to believe.
And then, where do you even begin to tell the story? Let?s take the simplest part first.
The Banks that I am referring to aren?t really banks in the traditional sense; they are more akin to a cartel. They are called ??investment banks?, but financial intermediary would be a better definition. Among the largest are Bank of America, Citibank, Deutsche Bank, Goldman Sachs, JPMorgan Chase, UBS and Wells Fargo.
Banks borrow money at 0% and buy Treasury Bonds that pay them 3.5% interest.
Who would be stupid enough to loan money at 0%? The Federal Reserve Bank.
What is The Federal Reserve Bank?
Despite the title, it isn?t a federal agency or a bank, and it does not reserve anything. It is a private corporation that has taken control of our monetary system. Really! Why is Wall Street an island of prosperity in a global sea of poverty?
Where does the Federal Reserve get the money they loan the banks at 0%?
They make it up.
Who pays the interest on the treasuries the banks buy with the phony money created for them by the Federal Reserve Bank?
The American taxpayer. I told you it was hard to believe.
For now, we?ll skip the history of how this came about. Believe me you are not ready for that. More recently, the Financial Services Modernization Act of 1999, also known as the Gramm, Leach, Bliley Bill, and the Commodity Futures Modernization Act of 2000, brought home the bacon for the banks.
Let?s pause for a moment and reflect on the above.
A private corporation makes up dollars to essentially give to banks guaranteeing them enormous risk free, tax payer funded profits.
For all of the money being pumped through the system, it creates not one job nor does it build a house or a microchip, and the value is steadily reduced as the supply continues to grow.
So there it is. The big banksta business plan in a nutshell. A direct tax-payer funded gift to the bonus babies of Wall Street. From us to them. They call that capitalism and the free market economy. I call it corporate welfare and organized crime.
But, they couldn?t stop there. When you can just go to the fed window and get all of the taxpayer funded cash you can carry, where?s the fun? Where?s the challenge?
What if, and this is where I lose most people, so stay with me, what if the real goal all along has been a global economic collapse?
Why would they want that to happen?
Because they own massive Credit Default Swaps that pay them for virtually every credit failure imaginable.
The recent Greek bailout, now unavoidably eroding, was achieved in order to prevent a ?Credit Event? triggering the payout of unknown sums the likes of which do not exist anywhere on the planet.
To the bond holders who took a 50% haircut it seemed like a ?credit event? had occurred, but because the ?voluntary? haircuts avoided, for the moment, a Greek default, the 15-member committee, known as the Determination Committee, within the International Swaps and Derivatives Association (a private group of derivatives dealers and bankers) ruled otherwise.
One of the most fascinating aspects of banks is that they just make the rules up as they go along.
In doing so, they postponed the global economic collapse until a real default occurs somewhere. And, it will.
The problems facing the banks that hold the Greek bonds are exacerbated by the banks inability to accept reality about its worthless bonds.
They have yet to account for the losses on their books and argue that they don?t have to because they have insurance on them via the CDS. Which aren?t going to pay them.
One can only wonder what bank balance sheets will look like if they have to pay out on the CDS paper they wrote. Given the total amount of money involved, it is unlikely that insurance companies such as AIG, other banks, and hedge funds will be able to pay them.
The mortgage bonds sold by banks to investors are a similar story. The bonds are backed by nothing at all. They were never properly securitized, the values are fiction, and the same mortgages are pledged to multiple pools.
Once you start breaking the law to make money, it would be a bad business decision to stop. Viewed in that context, one must realize that these people will do whatever they can get away with. And they have been allowed to get away with almost everything.
The recently signed consent decrees are another example of bank defiance of the law in that they continue to employ the same unlawful practices that they agreed to cease.
It?s been five years since I wrote my first column suggesting that mortgage servicers were foreclosing on homeowners who were not in breach of their agreements.
At that time, I knew nothing of debt securitization, credit default swaps or derivatives.
My earliest investigations led quickly to one important aspect of all of this, and in September of 2009, I wrote, ?Sixty Million Mortgages May Have Fatal Flaws?, one of the earliest articles exposing the murky MERS connection and the looming title problems.
As amazing as that is, that wasn?t the story, just a side bar. But, it raised the question of the real reason for MERS existence.
Now we know that Wall Street had designed a number of new mortgage products containing features that, based on their studies of mortgage risk, would lead to dramatically higher default rates than those of past mortgages. You read that right. They studied the risks associated with mortgage lending and wove into these new loans the very seeds of default.
For decades, the foreclosure rate for residential mortgages hovered under one half percent.
According to a recent report from the Mortgage Bankers Association, ?The combined percentage of loans in foreclosure or at least one payment past due was 12.63 percent on a non-seasonally adjusted basis.?
What about the performance of those new and improved mortgage loans designed by risk actuaries for Wall Street securitization? How are those performing?
Well, if we were in the business of minimizing risk, at minimum we might want to hire some better actuaries.
The delinquency and foreclosure rates are up astronomically for the newly improved mortgages.
The delinquency rate was 19.67 percent for subprime fixed-rate loans and 22.40 percent for subprime adjustable-rate loans.
The foreclosure rate for subprime ARM loans was 22.17 percent.
Either those actuaries are chimpanzees or the loans are performing even better than expected.
They were designed to be unsustainable.
Now we know why. They bought insurance on these products that paid them huge bonuses if the defaults occurred.
I?ll concede that there are those of you out there who know way more about this than I do and you are probably itching to set me straight on a thing or two, but the outcomes of bank practices speak for themselves.
Cities filing for bankruptcy, states facing bankruptcy, nations on the brink of collapse, global unemployment, austerity, fraudclosures, food stamp use and poverty rising right here.
Who gets the credit for that?
The next time someone says that we need the banks because they are the innovators who create jobs and fuel the economy, tell them that they are really parasites sucking the very marrow out of humanity. Because that is what banks really do.
Barack Obama swept into office on a tide of giddy enthusiasm. His ?Hope and Change? was a pledge to reverse Bush era policies, including socialism for the rich, adventurism in the Middle East, and attacks on civil liberties. He announced his intention to serve as a transformational leader, invoking Abraham Lincoln, FDR and Ronald Reagan as role models. Despite the frigid temperatures, people poured into Washington, DC to hear his inauguration speech, wanting to be part of a remarkable passage.
It wasn?t simply that Obama was the first black president, but also that the economic devastation of the financial crisis opened up a historic opportunity to remake the social contract, to punish the reckless and greedy, no matter how lofty, and to build new foundations and safeguards for ordinary citizens. Obama, with his youthful vigor, his technocratic command of policy details, his ?no drama? steadiness, his mastery of oratory, seemed uniquely suited to this time of need. His personal history of repeatedly breaking new ground fed optimism that he could do so for the nation as a whole.
Those times of heady promise are now a cruel memory. Again and again, Obama has shown his true colors. It isn?t simply that Obama lied. Politicians lie. But there are norms for political lying. The depth and dependability of Obama?s misrepresentations constitute a difference in kind.
His pattern of grand promises producing at-best-in-name only and at worst outright bait and switch was well established by his 2008 campaign. Some close observers pointed out his past legerdemain, for instance, his misleading account of his years in New York, his record of fronting for finance and real estate interests in Chicago, his promise to bring a state-wide health care program to Illinois, which in the end was walked back to a mere study. And there were more decisive tells in 2008: the high level of Wall Street funding for his campaign, the inclusion of neoliberal ?Chicago boys? in his economics team, his reversal on FISA after promising to filibuster it, which gave retroactive immunity to telecoms for aiding and abetting illegal wiretapping, and his whipping for TARP.
Obama didn?t make compromises necessary to lead effectively. He entered office with majorities in both houses and a country eager for a new direction. He has repudiated or retraded every pledge he made. He promised transformational leadership, and instead emulated Wall Street, devising complex programs that to sell average Americans short and reap his funders handsome rewards in the process. Rather than elevate his fellow citizens, Obama?s transactional focus and neoliberal philosophy have kicked the struggling middle class down the road greased by the right.
The ugly facts about how Obama has governed are beyond dispute. Numerous writers have set forth well documented bills of particulars against him, including ??Lucy? Obama and His ?Charlie Brown? Progressives? to ?21 reasons why I will not vote for Obama in 2012? or ?Obama?s Scandal List? (304 items long in 2009). And that?s before you get to the even longer list of despairing or outraged assessments on specific policy beats, such as this blog?s criticism of his coddling of the financial services industry, his failure to address festering problems in the housing market, his long-standing commitment to cutting Social Security and Medicare, and his refusal to address widening income inequality.
But even when you put aside the relentless propagandizing of the Democratic hackocracy and they way Obama has systematically neutered critics on the left, a mystery remains: why has his image remained largely immune to his performance? An insightful article in Australia?s The Age in January 2008 anticipated that Obama could not live up to his transformational promises even if he had made an earnest effort. It compared him to a high flying tech stock that would be hit by a sharp correction, and warned that the self-referential, messianic campaign would have to deal the disappointment that would come with trying to implementing the vision.
Yet puzzlingly, Obama retains a peculiar ability to elicit Pavlovian responses from many of his followers. Recall the press frenzy over the assassination of Osama bin Laden, who for years had been irrelevant to the operations of Al Qaeda. Contrast this reaction with the lack of widespread outrage over the fact that the Administration has bestowed on it the right to hit any American ?suspect? the same way. Similarly, the beatification of Obama for his support of gay marriage gives him more credit than he deserves for a cold, political calculation. Obama can see that his opposition is virtually unchanged by this endorsement and he?ll win some serious funding. As Lambert points out:
The whole thing is also distressing because of the authoritarian followership involved. The one time anybody not in Obama?s charmed circle ?made him do it? none of the doers claims credit for an amazing, generation-long triumph of courage and organizing skill (and, I might add, in the main, non-violent); the whole story is about Obama?s ?evolution? instead of the house-by-house and family-by-family success of ?coming out.? Gag me with a spoon.
Similarly, many of Obama?s betrayals go underreported. Obama promised to back labor and reneged. He vowed to support a card check bill that would facilitate the formation of unions at specific workplaces. After failing to act on it before the Democrats lost their filibuster-proof Senate majority, Obama simply declared it too difficult to pass, meaning not worthy of his time or political capital. He also pledged to the give 40,000 TSA employees the same bargaining rights as other Federal workers. Instead, after considerable delay, they were granted improved rights, but still less than those of other government employees.
Comparing the content of Obama?s actions with how they are presented to the public is key to understanding his distinctive skills as President. Obama, who sees the Great Communicator, Ronald Reagan, as his most important role model, is the Great Deceiver.
In many ways, Obama has simply taken the Reagan playbook to the next level. Reagan first and foremost was an actor, and succeeded in projecting sincerity, firmness of purpose, and idealism about America?.in selling a story line developed and honed over the preceding decade by well-funded right wing think tanks and Madison Avenue marketers. But Republicans have been straightforward about their love of policies that favor the wealthy, their hatred of labor, their belief in American military dominance. Reagan was effective in promoting the idea that freedom was tantamount to economic choice. But democracy and the unrestricted operation of markets are in fact at odds, as we now know all too well. Many areas of commerce have advantages to scale, so successful operators will come to wield financial power, which they can turn into political clout.
It would be easier to come to grips with Obama if he could be more easily compared to past executives, whether actual or fictional. Obama?s intelligence and willingness to delve into details of policy issues resonate with the modern idealization of expertise, even when technocratically oriented Administrations have not fared well, at least for ordinary Americans. Famously, the ?best and the brightest? of the Kennedy-Johnson era and Rubinite/Hamilton Project wonkery each paved the road to bad outcomes (the escalation of the Vietnam war, and the finance-friendly policies that produced the crisis, respectively).
At the same time, Obama is a stellar student of the best of Madison Avenue phrasemaking (don?t ?signature strikes? sound innocuous?) and impressively polished even when off Teleprompter. Consider how Tom Engelhardt struggles to reconcile Obama?s veneer with his actions:
He has few constraints (except those he?s internalized). No one can stop him or countermand his orders. He has a bevy of lawyers at his beck and call to explain the ?legality? of his actions. And if he cares to, he can send a robot assassin to kill you, whoever you are, no matter where you may be on planet Earth.
He sounds like a typical villain from a James Bond novel. You know, the kind who captures Bond, tells him his fiendish plan for dominating the planet, ties him up for some no less fiendish torture, and then leaves him behind to gum up the works.
As it happens, though, he?s the president of the United State, a nice guy with a charismatic wife and two lovely kids.
How could this be?
Engelhardt depicts a malevolent leader without using that word. It is hard to see a policy of drone strikes that have and will continue to kill innocents, a continuation of extraordinary renditions, and assassinations of American citizens merely suspected of terrorism, in any other light.
But his actions are detrimental not only for their overweening, super-hero-like force, but more often, for serving vested interests by being deliberately weak, badly watered down versions of real reforms (and correspondingly, notice how often Obama maintains he was boxed in by intransigent Republicans, when in fact they serve as convenient scapegoats for what he wanted to do anyhow?)
And by taking as much debate and energy as the genuine remedies, they prevent the topic from being revisited for years, if not decades. The frequently criticized Dodd Frank is one example, but the poster child is Obamacare. The program manages the difficult feat of worsening the fundamental problem of our health care system, which is bad incentives and resulting out-of-control costs. It enriched Big Pharma and the insurers rather than bringing them to heel. The result will be overpriced insurance that covers little. We?re seeing that start now as the FDA is looking into make a number of widely used drugs, such as high blood pressure and cholesterol medications, over the counter, which would mean they would not be covered by health care policies.
Readers of this blog are likely to argue that they have a jaded view of Obama, but still regard him as preferable to Romney. But they seem to fail to appreciate another layer of Obama?s deception, that his charm and unflappable demeanor mask his ruthlessness. It?s no accident that he chose Rahm Emanuel as his initial chief of staff, an enforcer and by all accounts one of the members of what was an unusually tight inner team. The Democrats are now indistinguishable from the Republicans in their mastery of Rovian playing on identity politics. Obama has also proven adept at neutralizing well positioned actual or potential threats, such as David Petraeus, Elizabeth Warren, and Eric Schneiderman.
Glen Ford, in ?Why Barack Obama is the More Effective Evil? stresses that Obama gets what he wants and that makes him dangerous. Key extracts:
Let me say from the very beginning that we at Black Agenda Report do not think that Barack Obama is the Lesser Evil. He is the more Effective Evil?.
They [Wall Street] invested in Obama to protect them from harm, as a hedge against the risk of systemic disaster caused by their own predations..They had vetted Obama, thoroughly, before he even set foot in the U.S. Senate in 2004.
He protected their interests, there, helping shield corporations from class action suits, and voting against caps on credit card Interest. He was their guy back then ? and some of us were saying so, back then?
I have no doubt that New Gingrich and Republicans in general have worse intentions for the future of my people ? of Black people ? than Michelle Obama?s husband does. But, that doesn?t matter. Black people are not going to roll over for whatever nightmarish Apocalypse the sick mind of Newt Gingrich would like to bring about. But, they have already rolled over for Obama?s economic Apocalypse in Black America. There was been very little resistance. Which is just another way of saying that Obama has successfully blunted any retribution by organized African America against the corporate powers that have devastated and destabilized Black America in ways that have little precedence in modern times?
The real Obama was the initiator of this Austerity nightmare ? a nightmare scripted on Wall Street, which provided the core of Obama?s policy team from the very beginning?
The real Obama retained Bush?s Secretary of War, because he was determined to re-package the imperial enterprise and expand the scope and theaters of war?
He would make merciless and totally unprovoked war against Libya ? and then tell Congress there had been no war at all, and it was none of their business, anyway. And he got away with it.
Now, that is the Most Effective Evil war mongering imaginable. Don?t you dare call him a Lesser Evil. Obama is Awesomely Evil.
And remember, Obama has embraced deficit hawkery and has made ?reforming? Social Security and Medicare a top priority for his next term.
Ford is right. Defending Obama as ?the lesser of two evils? isn?t merely letting him off the hook for his betrayals. Those who take that position are actively enabling his conduct. They are part of the problem.
The success of gay rights activists shows how you effect change, and it isn?t primarily through the ballot box. Just like the successful program of the radical right launched in the the 1970s, these battles are fought on a much broader front, with national political change a lagging indicator of shifts in social tectonic plates. This a not a battle but a crusade, and takes more guts and tenacity than showing up and voting, or giving money to preferred candidates.
If you want this country to be different, you can?t just wish for it or expect voting to effect change. You need to be part of making it happen. And that was perhaps the greatest of Obama?s deceptions, that by listening to his seductive rhetoric, your passivity made you part of something greater and was tantamount to supporting change. That?s true only in the spiritual realm, not in the imperfect arena of here and now. Glenn Greenwald warned (emphasis his):
Obama is still a highly effective politician capable of this level of exploitation: exploiting people?s hopes and desires. When you combine that with the desire to believe ? to feel once again that he will uplift people?s lives and that the hope one placed in him was justified and not misguided: nobody wants to feel like they were successfully defrauded ? it?s an easy trick to repeat?that it?s a grand Manichean battle between Our Great Leader and Their Evil Villain ? and there will be plenty of endorphins pumping through people?s brains. There will be enough to drown a large country.
Groups that have has a lasting impact on the social order ? the Populists, the original Progressives, suffragettes, labor, blacks ? organized outside the party system; indeed, when they were brought in the tent, they became less effective. The public has been told, again and again, the only choice is to hold your nose and select one of the two parties. It?s time we recognize that that myth no longer serves us.
Those of us who care about decency, the rule of law, constraints on corporate power, civil rights, and economic protections for the downtrodden have become complacent, and we are now reaping the bitter harvest of our neglect. Many of these protections seemed so fundamental that there has been a tremendous amount of denial over the speed at which they are being stripped from us. But these gains were not granted freely or easily by those in authority. They came about as a result of long, persistent, difficult campaigns. If we want to preserve the rights previous generations fought hard to win, we have to make this battle our own.
Bill Black is the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.
German Chancellor Merkel wishes to stamp out any belief that there is a ?magic bullet? to deal with the renewed euro zone crisis. Merkel?s response to the crisis, however, is the fundamental cause of the second-stage of the crisis and it is the product of magical (un)realism ? a series of economic myths that she asserts as if they were facts.
Angela Merkel warns there is no ?magic bullet? to beat debt crisis
Merkel?s rhetoric is intended to ridicule opponents of the Berlin Consensus ? the austerity dogma that has thrown the euro zone back into recession and the periphery into depressions. Tens of millions of Europe?s citizens, however, hate the Berlin Consensus? austerity dogma as recent elections have shown. My colleagues and I have explained many times why pro-cyclical policies (e.g., austerity in response to a Great Recession) make recessions more common and severe. Counter-cyclical fiscal policies are not ?magic? ? automatic fiscal stabilizers work, they make recessions less common and less severe for reasons that are understood. As we have also explained, it is proponents of austerity as a response to a Great Recession who rely on magic. Paul Krugman?s withering phrase is that austerity proponents are perpetually waiting for the arrival of ?the confidence fairy.?
Even large segments of the German people are breaking from Merkel, as her party is routed in state elections in which she brands her political opponents as opponents of austerity. Merkel?s austerity arguments are premised on an initial myth that claims that the periphery is in trouble because they ran huge budget deficits that caused the Great Recession. ?Growth on credit would throw us back to the start of the crisis and therefore we will not do that.? The reality is that the right was praising much of the periphery for its budgetary rectitude on the eve of the financial crisis that drove the Great Recession.
Merkel?s strategy is to keep on repeating the debt-origins and TINA (?there is no alternative?) myths more stridently.
??So much has been talked about Eurobonds or leveraging. All these measures have come and gone like magic weapons and then it is recognised that they are not sustainable solutions.
Only one thing is and remains sustainable: accepting that overcoming the crisis will be a long and difficult process that will only be achieved if we attack the origins of the crisis, which are the horrendous debts and a lack of competitiveness in some European countries,? she said.?
Eurobonds would turn the euro into a true sovereign currency and dramatically reduce the extortion that the bond vigilantes can wield now because euro member nations? sovereign debt is not denominated in their (no longer existent) national currencies. Eurobonds have not been shown to fail ? they have not been used because they would succeed. The third myth is ?lack of competitiveness? myth. It is code for what we call the ?Road to Bangladesh? strategy. The Berlin Consensus? central goal is a dramatic reduction in working class wages in the EU that is designed to ?win? a race to the bottom of wages so that the EU nations can all become net exporters like Germany.
Merkel?s remarks also show that she is spreading two of the most basic and damaging myths an about sovereign financial systems.
?Around the same time, Mrs. Merkel was sticking to her guns on austerity; Europe?s ?credibility?, she said, depended on reducing deficits and debt.
?We?re not saying that saving solves all problems,? she told a conference in Berlin. Still, ?You can?t spend more than you take in. You can?t live your whole life this way. Everybody knows this.??
The first quoted sentence embraces the myth that governments in a Great Recession can control the size of their budget deficits and debt. As the events of the last year should make clear (and as economics has explained for over a half-century), the steps a nation takes to try to balance the budget during a recession or recovery phase ? reducing public expenditures and raising taxes ? will reduce public and private sector demand. Demand is already inadequate during a recession, so austerity increases unemployment which further reduces tax revenues and increases the need for public spending. The result is that trying to achieve a balanced budget through austerity can make the deficit, the debt, and unemployment increase instead of decrease.
The second quoted sentence propounds the myth that sovereign governments are just like households. Sovereign governments are not like households. Indeed, they are remarkably unlike households. Here?s one subtle hint about Merkel?s myth ? ?You can?t live your whole life this way.? That?s a reference to what is true of an individual with a finite life. Governments are not individuals and they do not have finite lives. Merkel?s view in the inerrancy of the myth she is propounding (?everybody know?) is betrayed by her inability to demonstrate that households and nation states are fiscal equivalents.
Nation states are also not like corporations, but it is striking that the proponents of austerity always claim that the household is the relevant analog for the federal government ? while ignoring corporations. Corporations have no finite life. They can, perpetually, have debt ratios far greater than nation states. Banks, for example, often had debt-to-capital ratios of 30:1. Why aren?t the deficit hawks railing at corporations? profligacy? Why aren?t they demanding that corporations end their use of debt? Why are the banks fighting for the right to continue to employ extreme leverage that would make Greece blush?
Nations with freely floating sovereign currencies and their debts denominated in their own currency are vastly less susceptible to attacks from the bond vigilantes. Japan and the U.S. are able to go to the markets (they need not do; they can and do create money via keystrokes) and borrow funds at an interest rate that is very close to zero. The financial markets treated the credit rating downgrade of the U.S. as what it was ? an act of striking ignorance about modern monetary systems. The U.S. has throughout its history typically run budget deficits ? while becoming the greatest store of wealth on the planet. The eight cases where the U.S. has significantly reduced its budget deficits and sovereign debt were followed by depressions and the Great Recession. That doesn?t prove causality, but the U.S. historical experience shows that running federal budget deficits is the norm ? not the road to perdition.
The Congressional REsearch Service released a report in March showing that US inequality is getting worse. Linda Levine, US income distribution and mobility: trends and international comparisons, Congressional Research Service (Mar. 7, 2012).
Here's an excerpt from the summary provided in the report itself.
Approaching three years into the recovery from the 2007-2009 recession, the unemployment rate remains over 8%. The persistent difficulty of many of the workers who lost jobs to find reemployment has meant reduced incomes for them and their families. A historically slow rebound in the labor market appears to be partly responsible for some groups? focus on the distribution of the benefits of economic growth and for some policymakers? interest in redistributing income through the tax code, for example. Varying perceptions about a trade-off between economic growth and income equality appear to underlie longstanding congressional deliberations about such policy issues as the progressivity of income tax rates, the tax treatment of capital gains, and the adjustment of the federal minimum wage. If income were equally divided across households, each quintile (fifth) would account for 20% of total income. The Congressional Budget Office and others have documented that the bottom fifth has long accounted for much less than 20% of total income. The bottom quintile?s share of income has remained little changed for the past few decades at less than 4%, according to U.S. Census Bureau data. In contrast, the income shares of the top fifth and the top 5% of households appear to have trended upward. The top fifth?s share of total household income rose from 42.6% in 1968 to 50.2% in 2010; the top 5%?s share, from 16.3% to 21.3%. (Estimates derived from
federal income tax data suggest that those at the very top of the income distribution have experienced greater gains.) The middle class, defined as the middle 60%, received a
disproportionately smaller share of the total economic pie in 2010 (46.5%) than in 1968 (53.2%).
*** Based on the limited data that are comparable across nations, the U.S. income distribution appears to be among the most uneven of all major industrialized countries and the United States appears to be among the nations experiencing the greatest increases in measures of inequality. Three leading explanations are put forth for these cross-country differences: (1) other advanced economies devote a larger share of national output to transfers, which tends to equalize income across households; (2) the progressivity of tax rates varies by country and thus has different effects on the distribution of after-tax income; and (3) equality in the distribution of earnings,
which account for most household income, varies substantially across countries.
So Inequality is increasing and mobility in the US economy is diminishing, as the rich get richer and the middle class gets poorer and the poor stay poor. Because so many Americans have believed the hype about "free markets" pushed by the right and the Chicago School economic perspective, they don't understand the failures of the "free market" theory --for example, that it cannot accurately predict much of anything about the economy,and that its policy dictates are likely to be total failures since they are based on assumptions that simply don't hold for actual societies (like infinite lifetimes, 100% consumption of incomes, a unitary preference and other nonsense).
They echo the radical right's rhetoric antagonistic to redistribution in favor of those who are disadvantaged by the growing inequality, and blithely miss the way tax policy and spending policy redistributes upwards in ways that contributes to the increase in inequality. Americans are also lulled into complacency about the harm of increasing inequality by the American myth that everybody that has the will to take the risks can be a self-made millionaire. Thus, they miss any opportunities to force Congress to bring the oligarchy under control through wiser tax policy and legislative initiatives focused on addressing genuine public needs through democratic egalitarianism.
Carve this in the stones of history: a wrenching letter from Thaer Halahleh, on day 75 of hunger strike against his detention without charge, to his two-year-old daughter Lamar, who he has never seen. Translated by Jalal Najjar. Published by We Are All Hana Shalabi, with the help of IMEU.
?My Beloved Lamar, forgive me because the occupation took me away from you, and took away from me the pleasure of witnessing my first born child that I have always prayed to God to see, to kiss, to be happy with. It is not your fault, this is our destiny as Palestinian people to have our lives and the lives of our children taken away from us, to be apart from each other and to have a miserable life, nothing is complete in our lives because of this unjust occupation that is lurking on every corner of our lives turning it into eeriness, a continuous pursuit and torture. Despite that I was deprived from holding you and hearing your voice, from watching you grow up and move around in the house and in your be, and that I was deprived of my rule as a human and a father with my daughter your existence has given me all the power and hope, and when I saw your picture with your mother in the sit-in tent, you were so calm staring in wonder at people, as if you were looking for your father, looking at my pictures that are hung inside the tent asking in silence why is my father not coming back, I felt that you are with me, in my sentiment and inside my mind, as if you are a part of my heartbeats, steadfast and the blood that flows in my veins, opening all doors for me spreading clear skies around me, and unleashing your free childish voice after this long silence?.
?Lamar my love: I know that you are not to be blamed and that you don?t yet understand why your father is going through this battle of the hunger strike for the 75th day, but when you grow up you will understand that the battle of freedom is the battle of going back to you, so that I can never be taken away from you again or to be deprived of your smile or seeing you, so that the occupier will never kidnap me again from you?.
?When you grow up you will understand how injustice was brought upon your father and upon thousands of Palestinians whom the occupation has put in prisons and jail cells, shattering their lives and future for no guilt but their pursuit of freedom, dignity and independence, you will know that your father did not tolerate injustice and submission, that he will never accept insult and compromise, and that he is going through a hunger strike to protest against the Jewish state that wants to turn us into humiliated slaves without any rights or patriotic dignity?.
?My beloved Lamar keep your head up always and be proud of your father, and thank everyone who supported me, who supported the prisoners in their struggle, and don?t be afraid god is with us always, and god never lets people who have faith and patience, we are righteous, and right will always prevail against injustice and wrong doers?.
?Lamar my love: that day will come, and I will make it up to you for everything, and tell you the whole story, and your days that will follow will be more beautiful, so let your days pass now and wear your prettiest clothes, run and then run again in the gardens of your long life, go forward and forward nothing is behind you but the past, and this is your voice I hear all the time as a melody of freedom?.
A tribunal convened in Kuala Lumpur found George Bush, Donald Rumsfeld, Dick Cheney and five administration attorneys ? Gonzales, Yoo, Bybee, Addington and Haynes ? guilty of war crimes yesterday.
The eight accused persons were charged with the crime of torture, that they had wilfully participated in the formulation of executive orders and directives to exclude the applicability of international conventions and laws, namely Convention against Torture 1984, Geneva Convention 1949, Universal Declaration of Human Rights and the United Nations Charter, in relation to the war launched by the US and others in Afghanistan in 2001 and Iraq in March 2003.??Additionally, and/or on the basis and in furtherance thereof, the accused authorised, connived in, the commission of acts of torture and cruel, degrading and inhumane treatment against victims in violation of international law, treaties and aforesaid conventions.
The tribunal heard testimony from victims of torture:
Earlier in the week, the tribunal heard the testimonies of three witnesses namely Abbas Abid, Moazzam Begg and Jameelah Hameedi. They related the horrific tortures they had faced during their incarceration. The tribunal also heard two other Statutory Declarations of Iraqi citizen Ali Shalal and Rhuhel Ahmed, a British citizen.
Testimony showed that Abbas Abid, a 48-year-old chief engineer in the Science and Technology Ministry had his fingernails removed by pliers. Ali Shalal was attached with bare electrical wires and electrocuted and hung from the wall. Moazzam Begg was beaten and put in solitary confinement. Jameelah was almost nude and humiliated, used as a human shield whilst being transported by helicopter. All these witnesses have residual injuries till today.
These witnesses were taken prisoners and held in prisons in Afghanistan (Bagram), in Iraq (Abu Gharib, Baghdad International Airport) and two of them namely Moazzam Begg and Rhuhel Ahmed were transported to Guantanamo Bay.
The president of the tribunal Tan Sri Dato Lamin bin Haji Mohd Yunus Lamin announced their findings noting that the Tribunal does not have the power to enforce or impose sentences but will submit its findings to the ICC:
President Lamin told a packed courtroom: ?As a tribunal of conscience, the Tribunal is fully aware that its verdict is merely declaratory in nature. The tribunal has no power of enforcement, no power to impose any custodial sentence on any one or more of the 8 convicted persons. What we can do, under Article 31 of Chapter VI of Part 2 of the Charter is to recommend to the Kuala Lumpur War Crimes Commission to submit this finding of conviction by the Tribunal, together with a record of these proceedings, to the Chief Prosecutor of the International Criminal Court, as well as the United Nations and the Security Council.
?The Tribunal also recommends to the Kuala Lumpur War Crimes Commission that the names of all the 8 convicted persons be entered and included in the Commission?s Register of War Criminals and be publicised accordingly.
?The Tribunal recommends to the War Crimes Commission to give the widest international publicity to this conviction and grant of reparations, as these are universal crimes for which there is a responsibility upon nations to institute prosecutions if any of these Accused persons may enter their jurisdictions?.
While the Tribunal may not have the power to enforce, it?s findings do remind us that there is an internationally adopted legal framework for judging the actions of nations in war ? and perhaps will remind the Obama administration that they may face the same repercussions for their own war crimes.
In an admittedly strange twist of timing JP Morgan, the same JP Morgan that just announced a surprise $2 billion loss caused by the ?London Whale,? became the first and only of 26 banks disclosing subprime investor data to flip me the digital bird, refusing access to the public loan-level performance data for their Washington Mutual loans. WaMu, one of the most reckless subprime lenders, was swallowed whole by JPM and they?re having serious indigestion.
Nelson D. Schwartz and Jessica Silver-Greenberg of the New York Times verify that the purpose of the Chief Investment Office ? the London Whale ? is to offset risk caused by the Washington Mutual loans:
Under Mr. Dimon?s leadership, the chief investment office ? which was responsible for the outsize credit bet ? was retooled to make larger bets with the bank?s money, a former employee said. Bank executives said the chief investment office expanded after JPMorgan Chase?s 2008 acquisition of Washington Mutual, which added riskier securities to the company?s portfolio. The idea behind the strategy was to offset that risk.
It isn?t hard to figure out why JP Morgan doesn?t want anybody looking into and through their garbage. I have not been able to ascertain whether these reports are required under disclosure requirement Regulation AB (the law itself seems to say yes, but the experts I spoke to gave divergent readings). Whether they are or aren?t, JPM?s refusal ? when everybody else cooperated speaks for itself.
As those loans sour, and they continue to rot like a dead skunk on a hot July day, the bets needed to offset the losses are increasing. It looks like the bank, peering into that portfolio they refuse to share, is becoming more than a little bit desperate. Like a compulsive gambler after a multi-day bender resulting in crippling losses they decided to double down rather than walk away, leading to their current whale of a surprise and likely a mirror-image follow-up for the WaMu losses this was supposed to offset.
For anybody who believes that JPM?s position is normal .. it isn?t. Twenty-six other banks quickly popped open the doors to their repositories, as they?re required to do. Perennial bad-boy Aurora Loan Services is the only other one that?s ignored my requests, though since it looks like they?ve sold their servicing operations the jury?s out whether their silence is purposeful or whether there?s nobody home on the other side of those requests.
Like I said, I?m not sure whether these disclosures are exempt. There are certainly many marked private, but they seem to be overwhelmingly CDOs and similar more exotic or clearly closely held instruments. I?ve never seen an entire series of MBS from an issuer that is exempt: even a few stray WaMu deals that ended up in other repositories are open to the public.
JP Morgan?s insistence that ?[t]he site is maintained for JPMorgan Chase RMBS clients,? only, demanding that I include my JP Morgan Chase contact, may be legal but it is unprecedented. In context of their recent trading losses, the knowledge that those losses were to hedge against the WaMu losses, Dimon?s prior comments downplaying both losses, and strong analysis that the WaMu loans are some of the most impaired MBS it?s fair to conclude that JPM is hiding something in the basin of their loan outhouse.
I?ve spent the past couple months holed away downloading MBS data in bulk to enable investors, analysts, academics, government agencies, or whoever else wants to inspect performance information and project losses for every subprime loan trust. When finished, this week hopefully, I?ll have a veritable ABS MRI machine that can peer into the true health of the housing and housing finance market. It?s harder than it sounds: one of those projects where software engineers emerge from their digital caves after months, bleary eyed and long past due for a haircut but holding game-changing technology.
My database, which includes everything except WaMu loans thanks to Jamie, is finally almost finished. But even in preliminary form it is clear that the AAA-rated senior tranches ? the ones that really were never supposed to take losses ? are toast that?s burning worse by the day. Servicers, trustees, government officials have been doing anything to delay the inevitable losses but when people don?t pay their mortgages, and housing has declined by over 50% in many of their markets, there?s only so much accounting chicanery they can do: the money just isn?t there.
My suspicious are more grounded than tin-hat delusions we?ve been hearing from the housing is hot again crowd. R&R Consulting, a well-regarded structured valuation expert I work closely with conducted a portfolio-wide analysis of undisclosed (?limbo?) losses on RMBS. In a special in-depth report dated February 2012, long before JPM told me piss-off when asking for access to the more granular WaMu loan-level data, they reported that WAMU had the highest limbo loss level?about $810 million?in just one transaction. Repeat: experienced analysts dug this out even without loan level data. It sounds likely that it won?t be long until Dimon reports another ten-figure surprise that I?m sure he?ll apologetically pawn off on the US taxpayer.
For anybody asking ?um ? isn?t this over ? didn?t all this fall apart back in 2008?? the answer is not really. That mega-meltdown was really a mini tremor caused by the lower and smaller tiers of these securities; last time junior visited to stir things up but this time papa?s walking down the street carrying a mean look and a big stick. That?s because the mezzanine level tranches of most bubble-era MBA are either gone or guaranteed to be gone ? finally eaten up by current or pending losses ? leaving the lower AAA tranches to take their place as the bearer of losses. This was never supposed to happen. Everybody knew that CDOs created from the lower tranches were risky, even if the ratings agencies said otherwise, but nobody thought the meltdown would last this long that the actual top tranches would be nicked. But the data couldn?t be clearer: those bottom level A-class tranches of yesterday are the new bottom level M-class tranches of yesterday.
All this is surprising because these same MBS tranches have been on fire lately. Hedge funds bought them for very little when nobody wanted them ? setting their own price ? and now they?re selling them back at steep gains because housing is peachy again, never mind the enormous amount of shadow inventory. Hopefully the buyers of these same securities aren?t being set up, again, because nobody would be stupid enough to fall for that same trick, again. Hopefully.
It is these lower tranches and other derivative products, which are by definition exponentially smaller than the more senior securities like the ones JPM is hiding (well, before the banks multiplied them several times over using credit default swaps) that blew up the world economy in 2008.
I?m guessing that it is the inevitable meltdown of what remains of the AAAs (the amount outstanding has been reduced considerably by refis) that has been at the impetus for the housing cheerleaders. By refusing to move their foreclosures forward, then refusing to take title, then refusing to REO those homes, the trusts don?t have to recognize the losses because, ya? know, the abandoned and dilapidated properties will magically double in value as long as we hold our breath and wish.
My mountain of data that shows loss severity in excess of 100-percent is not uncommon. When we look at the loans, compare similar loans from those who report them more honestly, multiply the average severity by pending reported and, um, overlooked foreclosures, then it becomes clear that the lowest rated AAA?s are toast. This reaffirms the report by R&R Consulting report that $175 billion of loan level losses had not been allocated to the trusts. Whoops!
Jamie Dimon admitted his $2 billion loss ?plays right into the hands of a bunch of pundits out there? on his conference call explaining his stinky. Dimon went on to call the losses ?egregious? and ?self-inflicted.? In light of the London Whale it is clear that when it comes to sky-high risk, like JPM?s WaMu exposure, the bank has adopted an advanced risk management strategy: telling researchers to piss off then hiding.
